PLMR - Earnings call transcript Q3 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Palomar Holdings, Inc.

Third Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Chris Uchida, Chief Financial Officer. Please go ahead, sir.

T. Uchida

good and operator, you, morning, everyone. Thank to your today is appreciate Officer; the Jon is call. participation portion the and in here me additionally, here President, our call. With earnings Christianson, questions Mac of Executive during Q&A our Chief We answer Armstrong, Chairman our

be November our As XX:XX website a will p.m. of XX, Investor the Eastern this replay reminder, on Relations on XXXX. through a call Time telephonic available section of

actual contain quarterly everyone factors factors to Private XX-Q on indicated to beliefs, Before that Such remarks certain that risks, Act we may from those me such statements cause this the statements any statements. the future undertake remind our estimates, forward-looking implied of that of prospects. other of filed update risks Such We begin, uncertainties, the and and Securities other duty are within statements such in expectations, materially report include and could or about forward-looking forth management's constitute Exchange differ by Commission. statements. call to let subject Securities do Form variety not plans, Reform with XXXX. set meaning results These Litigation are and a

these reconciliation the can results turn release. At measures in to isolation which in call, or discuss point, be earnings today's prepared our not of the this as of we our substitute over Additionally, non-GAAP in this during most call with performance. A GAAP. presentation GAAP considered are certain a we non-GAAP will Mac. found useful measures believe The U.S. evaluating to should comparable measure accordance I'll in additional be for information

D. Armstrong

as a adjusted quarter XX% growth, third demonstrate I'm with experienced ratio, our delivered and they adjusted successful a a a to In level ROE. earnings and adjusted good XX% very Thank efforts activity, that net you, cat we XX% quarter and consistent combined morning. deliver clearly heightened of Chris, returns. our pleased results income

Our our business, undertaken concerted that in efforts have results the base, we diversify profitably earnings to grow. further volatilities the the and validate reduce

strong financial organization. we and want, execution the sustained earnings, scale the our imperatives, quarter's dislocation This reflect diversification, XXXX results provide grow and strategic also consistent where manage of

on across with Our on the premium strongest is the segments strong returns. achieving portfolio that growth those an centered first risk-adjusted emphasis imperative generate

top-line It's our For the highlighted across book the as same-store we XX%. our by our XX% of that third sales well as strong in from execution books quarter, worth growth of by noting delivered of driven significant business, solid and growth Crop growth book. continued was Casualty business, young Earthquake growth

Our second strategic mandate capitalizing requires our business. on market dislocation the diversifying further navigating and in while

where through business insurance $XXX specialty dislocation. Crop surety the First we the We of finance of During franchise rapidly our in further or to a balance growing Indemnity the both we support help portion strengthened position earmarked and proceeds sheet opportunity a existing see insure, America of raised to our FIA. to the business. acquisition Company, also Proceeds of Insurance quarter, classes diversify and equity issuance million our strengthen our primary

increase Lastly, the participation using and we growth organic lines in of for portion earthquake. targeted in are remaining capital the like risk

to Our earnings. is consistent steadfast third delivering a imperative commitment

that in equity Crop net losses even achieved the taken the income incurred. entry business of of As exemplified an XX% hurricane a with Separately, quarter, being an Palomar atypical our Palomar David business Chief best pending associated the this traditional Palomar Althea products requisite our portfolio to the growth consensus investments E&S team Head quarter. return period straight say additions in XX eighth catastrophe Notable by Casualty; to organization into adjusted of and Steps the effort recruit people, scaling in to of I'm the making and and Claims despite include we've Officer. Surety fourth our will adjusted P&C from and cycle. The to reduce for activity losses join of investment with to lead starts Sapia, a our earnings we and quarter. is with I Garvey, accomplish to mentioned, Crop; to on uncorrelated in catastrophe the talent Benson the volatility is industry-leading elevated objectives. continued proud imperative Latham, This XX% Head the

and we've in reputational In the humbled performance experienced like X addition that culture, key been the A growth the conditions thrilled and a able and and upgrading I'm in is by Palomar A.M. an an would innovative rating entrepreneurial product achieving, recruit financial our of veterans market highlighted categories. A Best to talent XXXX. I is now attracting from minus. by heft factor review to our that strength to to industry scale our

core Earthquake premium our written gross grew Firstly, franchise XX%.

and Our Residential business generate new retention. to policy high Earthquake strong business continued growth

coverages. noting into Angeles, decision worth sustain excess Residential $XXX CEA's that basis. It's our CEA our October market are Additionally, continues the loss continued the like more This are with higher a dislocation XX% will combined flow on year-over-year Earthquake homeowner's they rates Earthquake California. E&S renew as California business XX% on Residential like-for-like expiring in given can of saw by zones, to X. their peak million Los considerably West not be feel to growth than growth the reduce in to the personal the reinsurance E&S exposure continuing that market, seen in non-admitted business In lines of and book higher. We

reduce continues will paying the earthquake coverage remain Palomar As and the capacity, the in to primary option market. claims residential CEA California

conditions any underlying to on the in the market above cushion annual basis. therefore saw of as third policies in navigate conditions a to cycle. and earthquake a levels in inflationary writing company our to are guard reinsurance Terms market profitability improve, both to rates flat-to-down residential our provides Earthquake average XX% and plateau flat business and Earthquake market. quarter, continue in probable a Commercial levels our Residential the enhances and max inflation premium Our The the account as margins XXX-year in such best the growth meaningful risk-adjusted at business confirms premium commercial Commercial average did history. Current renewed our strategy loss and quarter. metrics In solid loss

Our strong, generate franchise permit when the high Earthquake to commercial range risk we book earthquake performance the full XX% and remains the conditions meaningful XXXX. of grow market demand. our increases year or are in allows us to will Ultimately, confident premiums that teens for

Risk, Other which Excess Our Hurricane, Cargo of Contractors Property Inland category, Marine Flood year-over-year. Property, Residential XX% Risk, Hawaii X National Motor products, grew All property and Builder's Equipment, Truck consists and

reducing we continuously this by a as measure we reminder, where a growth returns line are risk-adjusted category is product As and line. investing in exposure

saw a from quarter, National as business, the whereas of same we in catastrophe quarter XXXX the that primary expect The in book our be and to Risk is Milton. Risk During to losses contract, expected of Hurricane driver Property lines strong continued All book the we trend All performance Hurricane the well. Excess and was Hawaii our for

as of premium line, and heels focused we National robust our losses the regionally assess our the hurricane experience continued underwriters. writes active robust to and options Marine potential largest windstorms. Builder's non-catastrophe-exposed reduce this Property regions, continue Excess season, well business which higher in from Inland typically product to and growth Risk, U.S. as On submission to our continental

Property and quarter, now keeping while write team Hurricane is fashion. This our size the and large flowing quoting that in and Excess we production. Hawaii quarter facultative them XX% approved XX% third a through reinsurance so limits will capabilities net During allows an the treaty new implemented rate do agreement new line to a the reinsurance renewals. small increase enhance last in servicing grew for our National automated ultimately the premiums as quarter

varies over a effort reduces in large We have our Hawaii loss product. XX% exposure to enhances fee by widely and pricing region rate enforce standpoint, base. of Company Palomar onto Specialty From from rolled a policies Reciprocal. Laulima and Palomar's our our a This income meaningfully Insurance hurricane activity

our rate the down likely waiting lines at Builder's of to pricing states that of growth does heels the seeing really estate impacted quarter and are the Helene, such from casualty performers increasing included nationwide grew product intake that by group quoting policies Milton, adding up omissions, and up of XX% previous In of accelerate, renewing increases another and broadening previously year. grew were mentioned, Risk losses flat, footprint, environmental with liability, vary but Texas territory XX%, segments Hurricane general contractors increases product our instance, in least is a in XXX%. quarter Standout to liability, product in on commercial strong casualty and on Hurricane, Florida is errors XX%. approval. we're flat California, circumstance increase premiums but increasing We're quarter, talent, real and X% are as although level was these which of we both greater matter, in over by as XX%. All Helene, which than and and submission our had and growing rate It all the were this and X.X% for classes, risk by of XX%. Hawaii Hurricanes underwriting by distribution territory. Shifting activity. excess of business, flood, niche But Texas, in decline Casualty, to we policies the For Beryl.

bodily such XX% the Our in anchored line high another injury, which as avoidance conservative employ prudent the severity market. and potential total targeted the of of approach to gross loss net of niche We now in we our call tactics, comprises reinsurance heavily segments classes management casualty size, our market, remains underwriting write. book, modest exposure, and to risk

real that the $XXX,XXX netted our average application of $X.X During professional was the miscellaneous and down contractors E&O, for line gross reinsurance. liability general environmental liability, to million, liability, after quarter, estate

to book. increases rate to across As accuracy, loss and rate it pricing and the see decent excess costs casualty of continue we pertains

Our estate up with the miscellaneous omission increase and an errors excess general XX%, have while coverage and X.X%, saw was liability real increased book blended professional liability those XX%. a of that The accounts X%, X%. saw products increase rates auto contractors book liability up of

in Beyond liability the policies. and increases, policy auto liability and general rate the we in language both many include exclusions excess limit

loss that to with ratio are losses. reserves industry same we have XX% nearly large quarter, is experience are book's conservative and force shock to outsized loss do to which for of IBNR, averages the higher worth continuing than the the picks, activity, casualty. casualty recognize For our time, quick It's At reserve loss our noting build. in with reserves remained line conservative in we

optimistic are the will that We develop seasons, book favorably. as reserves

Palomar E&S importantly Casualty. fuel recently our but Re's E&S not operations, September, of current most years and Casualty strategic subsidiary. our David of initiatives. also Casualty, Lastly, having management experience, field underwriting His Head Hannover bolster XX most casualty only brings HDI Sapia in on for joined David as vision will run growth

Fronting the XX% next group's growth we an Omaha termination the our Fronting to decline new the the work business, will premiums experienced The to partnerships. from we given National. as in replace impede the of quarters over lost with Turning several contract separation business

Our are in healthy with prospects pipeline. partners quality the fronting

partnership reinsurer. quarter an we of with MGA This affiliate an a international new forged

We strong it in the we've exciting has selective quarter. has million we remain Crop. risk good manage will note, written acceptance just a in We compared planting been this million wrote premium strong. over in as an $XX.X segment, market $XX to we season turned though. On closely million to $XXX last of Overall, the Year-to-date, and premiums been a seasonally third year.

quarter shifting third are result premium the portion of production the in crops will mix to well. a of product the shift, will quarter, During a that fourth This quarter. to portion move we gross fourth which experienced in our written as planted our

We in diversifying and new to the quarter, in premium strong availability livestock to sector also capital expertise the plan of this our initiative. the support fourth given write

has and With Palomar the billion Risk leader the AIG, at held Great market founding Head insurance impressive has of team, an pleased and more expertise Crop to Crop. and Latham that He become Additionally, Benson market. $XX the I'm American ProAg, practice Palomar President roles will addition and Benson agricultural Benson's that XX Company. With joined Validus our of there Insurance executive responsible Group's crop even a crop is in for wealth Executive industry, report team. as years to brings in experience a Vice to conviction Insurance Services the is

from to but is are we marketing pleased received Turning of quarter broad reinsurance, feedback trips. placement third light from panel with reinsurers the the after a quarter's standpoint, and our accomplishments several

reinsurance National our an As we line automatic quarter. Property placed for successfully facultative program previously this Excess mentioned,

quota share estate economics. and renewed Additionally, E&O real improved treaty our successfully

general E&S we security share put Lastly, place liability new in quota also a a guards. targeting program for

instance. proved Importantly, relationships in key get at we a the were partners to De trading Economics. advantage this competitive Novo for reinsurance Palomar's able market with support to leverage global casualty our stature the in Competitive program

of our putting only to losses flat XOL any The XOL Palomar expectation, is it and renewal current for our prospects we are also as not bonds treaty, program. Two, do and are away only. Three, To reasons date. that than Hurricane to offer excess it the limit excess after down X/X million be from Palomar's continue catastrophe exposure to unique worthwhile conceivably cat is should next loss of expectation on is raised the views losses FIA, our the renewal. I such, of the November, renewal capacity were $XXX XX% placement we and at the program, support these treaty year to currently that insurer. down over catastrophe our the more several. One, to earthquake our briefly X position acquisition While our will to our think can our Again, only months Palomar's the our reduce of at we earthquake into of CEA in the surety the at following non-renewing on inform for germane excess are year. prices pricing will hurricane X/X we of earthquake loss Milton be issued growth. Fourthly, want contract create discuss the pending view year-over-year. items are

We close early expect end regulatory approval and receive to acquisition by year the XXXX. in

also out not we important any well, Overall, fourth FIA the to consistency will our the guidance receive the Chris year, Palomar but the despite detail and financial in be point results a hurricane net do and in our team for of from financial affirms to our into operation. With low tightened on in of of As turn the our quality more expect $XXX the strategy $XXX our I'll go income, but it's our are adjusted affirming to contribution The we this only with catastrophe that quarter. is to in very and of remainder range. should quarter, discuss range guidance over million season, performing losses the integration to the the detail. our straightforward. Chris we beat end that, million consensus XX performance of guidance call result, not financial third

T. Uchida

that I'm share, requires per we stock periods my referring such equivalents, using common net Mac. during loss. common figure, as to incur portion per you, Thank note stock and exclude share Please This calculated referring us methodology share to outstanding profitable the options, any as when include method. during a in treasury diluted to periods them

or to For for $X.XX million, growth the income of quarter adjusted of third net XX%. our XXXX, representing income net adjusted income quarter net $XX.X the of was $XX.X or per share per million, adjusted same share. of $X.XX XXXX, Compared

million Our underwriting third year. compared to last $XX adjusted was $XX million, income quarter

XXXX. the adjusted compared third quarter Our combined in was third to ratio of quarter for XX.X% the XX.X%

XX.X% Excluding for catastrophes, our ratio last adjusted was to the compared combined quarter XX.X% year.

XX%, quarter equity to third of year. was period the last compared on adjusted for For XXXX, return XX.X% the same annualized our

our modest That written the majority additional expect the the to of a and during quarter. the and in crop more validate with predictable have with experienced above relative the premium fourth would return the premium in important quarter property, quarter. Gross a the Even of our in written third what to key business. In prior only livestock seasonality Casualty, year, written write were excluding fourth Crop. said, premiums of premium. our our we elevated an changes, as target The and continued of with premium quarters. remember Mac face like equity rate insurance indicated, of activity, original XX% third expectations. Palomar to XX% third raised as cat second regroup to written to crop XX%. maintain our each market our ability compared It more million, quarter for continues premium of is bit we and The and with our the the we products, the quarter, adjusted XX to see third Other Marine align run-off premium, in third in on quarter to earned increase $XXX specialty quarter Inland and growth is Earthquake, return X of year's Fronting, the the quarter we growth, capital to top-line

crop earned in on seasonal our of in ratios the effect premium the third small and $XXX.X calculated percentage were our third has XX% Additionally, is compared written look prior the to quarter. a the ratios premium premium, premium the as a has underwriting to majority and impact the quarter similar the quarter the increase specifically been earned third earned gross net quarter, Since acquisition expense, of will ceded, previously for of expenses. premiums to million, year's expectations. Net financials our crop third shared earned an and for net other

improved our higher percentage business, reinsurance was results third earned cede to ratio XXXX, premiums this of of XXXX. The net excess started third June XX.X% the the the of premiums XX.X% the These growth year-over-year in of that a full as of Earthquake, For sequentially reflective ratio new of excess the non-fronting of X. loss quarter compared rate first XXXX, to increase in of second of lines quarter XX.X% include gross and quarter of that placement of compared earned quarter reinsurance in loss and less premium. is our including

ratio pattern to to in third low of expect the treaty be a the year. With reinsurance From we our associated the increase to year. our during the similar this and the crop there, remainder dollars place majority in ratio. higher reinsurance loss written last the earned premiums the premium to are While quarter, online earned net growth, the of than premium with risk-adjusted the third about to XX%, is the we for lower our excess placement and continued quarter currently facilitate of rate earthquake point net of cede which expect earned previous we

$XX.X Beryl, quarter While our earned for of the there for losses third XX.X% expected non-catastrophe ratio the seasonality ratio of and expect of of Helene. the X.X%. loss Debby, ratio, quarter is comprised a net was million catastrophe and grow. Losses loss attritional adjustment attritional loss some premium of ratio earned Hurricanes losses from to premium and made $XX.X and in expenses catastrophe net million, loss to continue The million up XX.X%, an $XX.X we were of

the derisk Mac As quarter's a believe indicated, effort testament to continued over results to we this few were portfolio years. our our past

primarily acquisition quarter to X.X% the gross to earned year's Our XXXX. sequentially last sequentially, compared the from expense in strong percentage growth from acquisition higher quarter the the third ceding resulting Crop quarter. the Most was primarily that of ratio of This in crop in ceded, as premium third decreased quarter percentage and XX.X%, written earned premium XX% a for a is of expense for has and third and lower second quarter. in commission

in this quarter other third expect and to X.X%, quarter ratio the the underwriting in in the the up for ratio point We sequentially adjustments XXXX. expenses, X.X% quarter compared X.X% low from third gross last of earned to to was second quarter. The including to move premiums third year of compared the

As crop expected, the quarter lower written the the result for quarter. influenced by in was the premium

all profitably. our as X hires by our organization months, extremely grow to investing in we new are last aspects demonstrated As committed to continue we the of over

scaling as to continue within ratio, our periods in scale invest we may to flatness XX expect in of framework. or the organization while increases sequential We Palomar we long-term this continue see

an yields cash operations. a ended $X.X September quarter held year's The XXXX, balance XX, third assets higher year-over-year was Our investments due income was third months the increase X increase during to of due higher for of invested compared net from to average investment and to the generated on XX% million, primarily the quarter. prior

quarter average the quarter was compared X.X% yield The in quarter X.X% the third the Our X.X%. on in to yield last in year. third investments made third was

allocate conservatively our to generate classes that to continue asset We positions risk-adjusted attractive returns.

the the reached $XXX.X net-run of to premium-to-equity raise. consistent X%. our the testament profitable equity quarter, growth stockholder's has end X.XX% At Our million, a capital ratio to was and

beginning income net adjusted million $XXX guidance, a initiated year. full-year $XXX to our we with at of to of the million the range XXXX Turning

quarter, performance increased million $XXX $XXX we Given our to range guidance the and strong that execution second to million. through

capital original catastrophe XXXX we significantly tightening of February any net full-year us in greater which updated open million I'd fourth income of in catastrophe represents $XXX from XXXX $X XX income growth of line losses. The than Now the doubling ahead Hurricane guidance quarter, August, questions. X Operator? for for goal XX% Palomar net like our not adjusted any to are including midpoint Milton achieving estimate underwriting guidance of million approximately adjusted in income to that, to well adjusted $XXX and an adjusted compared raise to full-year our years. With include guidance the the a ROE path losses in including our to of that outlined XX%, on our to ask operator puts million, did range the

Operator

Securities. Instructions] line Our comes first question the of Hughes Mark [Operator from Truist with

Mark Hughes

the reinsurance. think When a Yes. well? the its residential thinking for quake we of I business about about the you maybe about year, guess, versus prospects proportion as talked renewing not next authority commercial growth What earthquake next year, are

D. Armstrong

Mark, this about overall think is question. for good Good growth I very the broadly. prospects feel And earthquake we Mac.

that remarks, and As fact book quakes. in of residential I a the like said we have we really balanced commercial my

I but very XX% it's -- mentioned, attractive. commercial. rates as XX% right in So commercial, about the plateauing now, We still are remain residential, probably metrics

Earthquake, growth. So there think we with think some Well, I teens residential that rates again, with covering is guard, in from we I the can this at growth sustain we degradation XX% renew continue one a be Because, inflation maintain is have emphasize that XX% more for even which, little will day. is want balanced Commercial do relative We'll metrics it 'XX. in again, again, to approach. residential inflation compelling. We a quake, to on current a XX% versus that the see we thing we commercial. year. basis a probably growth grow But are We rate. the if teens want high to said in to next can think But, flat

scale scale quite as and and declines. reinsurance nice pricing pricing So reinsurance elegant if flat scale is certainly providing it's

the good pointed that invest, feel to you'll we So residential continue especially, of on you for the reinsurance the more even And quake, commercial. capacity and book just like available about the our prospects out, heels CEA balance as of made. changes becomes see us

Mark Hughes

basis? some the much but Chris, improvement how pricing we this, on taken of business to to how of step that won't a is have think year-over-year, go in And nice going premium then that mix positively may for continue up and but touched beyond earned And trend it's about step If the up to in you I you've this as And kind do through reinsurance? sequentially, going 'XX? is that think ratio. of on 'XX. that, versus go-forward we your

T. Uchida

Obviously, about business. by we're and XXXX. fundamentals we Yes, talked question. of about. the and by just going of there's kind placement to to from thanks, strong When the also It's all get going mix you we loss of be be the driven Mark. seeing the that of X/X excess driven above right, rate. you that performance at performance down saw there underlying, overall the dollars what Great then It's premium, growth the in what's net it's the to the of in of of by driven earned talk overall

When look went strong bit we do the when that. I point. this when by ratio premium point believe into so low that the talked still earned the would did than that before saw, the expect at look performance we we to QX we expect be a lower this will So XX% year. that it net we've I the probably at help quarter, overall do it be QX to I low be little it, of about book

to up tea showing the excess expect let's [ in a exposed placement earthquake. call QX But it our we fund, normal that see strongly we at But ] 'XX the go XXXX. from growth reset to see then primarily favorability growth renewal incrementally, with buy where in QX year little So are trend. QX point dollars leaves and the through strong of the it in we that earned I move of the to loss expect net continue just end should cat and this our overall, next and bit to same lines, and premium to of through we as next

D. Armstrong

Mac. to growth. and And lines, our also Mark, add, Chris that about drive the net is going is our other would slower I premium Fronting business talked One than fact this earned thing growing that's now it,

silver fronting that's slowdown and of in partnership So lining, one so expiration with National. to of speak, one our the the Omaha fronting

So a that is encouraging. catalyst that's also

Operator

comes Piper are Our Paul next mute? you of on question Paul, from Newsome the And, with Sandler. line

Jon Paul Newsome

it's been volatility. of was quarter? volatility? they've little something But Hopefully they picture more the there of as quarter, reduced with you've I'm not. of coming main hoping reducing And now. businesses. I to through about Or just a deal like I'm a ask actually not not big this bit last what a you have it obviously question fairly source hasn't over property It's really time your over been been you been period but time, natural. if look where back that's matter time, over and of your to exposures needed the profitable profitable has this

D. Armstrong

cat Yes, alike across portfolio to look property, Excuse portfolio at Paul. look at and the our board what the me, Mark. payback. We and call in case they our the casualty risk-adjusted And property we can also, volatility bring. returns of that

if So severe underwriting how a or would catastrophe average changes. through or from it there long take rate to them recoup losses, are

think exposed what well and Cargo, Hawaiian different products, our call that's aside portfolio, Property, Earthquake, Builder's Excess I Hurricane, all when Motor have has Marine strong non-cat products. our is portfolio, a National any and Hawaiian hold Excess been we some Flood, to what ] so Inland becoming of Hurricane X fee performed Property you're underperforming. Truck more of XX exceptional. within performers has Risk Equipment risk. And look which other that are and going some could [ property generator. And we Commercial you say at National Builder's now risk, exceptional,

well. as Cargo then that speak. long to consistent we're so a product, Motor And Truck performer limit is So small

ones think and book. been the watching the that I All have Flood Risk we are

And year one in the has All have losses been Risk been by been amplified It's bit that's probably a And this then then some storms. is rivers so the been profitable. of atmospheric and Flood disproportionately volatile. California

so in And very business. that of reducing have line good we our done job of a limits

if instance, Milton. the there Hurricane average limit Helene, For was net look for exposed about Same you $XXX,XXX. at

you we're from $XXX,XXX, damage get it's not taking losses if is That's exposed where average Milton. get $X limit the a and big million ratio. claims So you pops. of But XX% XX

that's premium So those that puts something or of our on of X% pressure something lines. only a little along bit

way winded saying, generally to and well. continuing exposure has of likely will to. of long property that we're a profitable back been and speaking, the at underperformers couple So are There look pull performed book

Jon Paul Newsome

that the business, diversifier additive related, it the exposures? to a Crop your or property is net for Somewhat P&Ls, is

Jon Christianson

one. it's Yes, us. I that Paul, is Jon can this for Christianson. great take No, a diversifier

really think you affect of about crop that can types the impacts as it's a drought. year, So negative

that's uncorrelated risk property think about an the book. So with you rest as the of

So past built over diversifier everything compliment decade. the it's we've really that a nice and a to

of a believe So a basis. lot in we be it'll of go-forward a diversification have conviction on that line and that great source

D. Armstrong

to is I uncorrelated that cycles thing that is the uncorrelated add too. to And it's P&C I it market Jon's think point would other and

on competence then a balance X-X-XX, sheet line, take that has August, on it. can it. it be a brought more of affords to we team our contributor in some do nice us the The earnings and basis. risk And some on heels to it capital So the starting steady to is intention, in that raising the go-forward

are, about really we in can So do Crop. what we again, enthused

Operator

ISI. of Our David next Evercore Motemaden line comes question from the with

David Motemaden

settle given Looks would of the year, given that business? a or expected a sort lot had a that expect of of would your several the on the cat AAL last could it'll of X you have terms out mix any catastrophe ratio. losses. the in the in this of changed Or of combined an question things in expected Is on your impact mix. the year just sort provide be over on Because sort helpful? of to I guys years commentary load X-point you the level like

D. Armstrong

storm would and was because flood it's had, that I this event, say, a XXX of little of -- severe slightly X tore activity losses. that's type was and year whether good that elevated in of what then loss a convective in Dave, bit what Yes, to And hail a really, the question. elevated Texas we AALs

wind, the of all would been events what is say our have well with these think within I I retention.

course So what that's it good that feel generate also we're about payback standpoint. that the of capital and return? means some hurricane therefore adjusted bring something that that of I risk does we But some. over us the back to expect pull it, reinsurance our load again, 'XX, the is for, an looking from or ongoing So cat cat down continental PML support would

we've X I points. about being think, to X So talked it

state good expect a changes make. we that's steady yes, of especially to some underwriting number, with underwriting or think I the changes

David Motemaden

we what's and result? as That's this on quarter's it. expense ratio sort run just And may the this adjusting Got rate moving of about flattered think have us impacts mix of us for underwriting you expense pieces Could as scales obviously, a Chris, helpful. the then, X.X%, other of of the ratio business that of a quarter. sort sense some at underwriting bunch give help the

T. Uchida

Yes, a expense all it written million to during in $XX X.X%. was, does that the premium Almost it talked in one So right push basis. I'd so The I continue the comes the look call right? bit, max no, emphasize way call of basis, I premium. quarter, would the when so it about run that the the the expect artificially rate the is of it. you we've crop talent. that to would X%, at is be expense say ratios, mid-X% that the it ratios probably third earned good about a, little -- gross and that and quarter, thing underwriting question, there think to to in steadier call are that's it a on down little, mid-Xs we ratio adding on a

try to building, and profitability. other level, hit scale am it certain beholden underwriting to the organization, right? call so adding So expenses to are We are the hold we a at not still I

I this continue build the are over scale. profitable. We in invest as expenses strong other but organization in do can that. not we scale long-term, the afford we trying all Overall, continue we our continue and to and our slow very We of will to in grow to still so to are to down to going expect people, teams underwriting to grow in

So within X% it probably I grow overall, we will to good around quarter-to-quarter, invest, continue we to a but but think to continue ratio but is but expectations, to it our will, well. about it's out mid-X% call performing this XX%, it this way move It's I'd performing point as organization. and from it, will don't vary to expect I to, jump call say

D. Armstrong

to David thing be player just to will our our extend The coach. you to some bring business, who a like Yes, and can who underwriters Chris's on also producing and long-term. -- They're is are someone that comments, a but adding they going add color footprint Sapia. great growth

investment long-term. you for making Same that great that up you're on that's thing Latham. So front get Benson an returns

in sacrifice is not growth it's So Chris the long-term short-term, to that going but not to like to ratio saying, the maintain we're investment earnings going vacillate in and wildly.

think direction good where go has to. very given I will on it Chris

David Motemaden

Great. competitive. some I'm that London being know know more the just coming avenue you could more commercial quake see that business. heard competition Maybe through bit that write some That's that of you from. little investments the another in detail the, lastly, guys is bit on I if And market market but good commercial guys about the market, scale come you directly spoke We've where of just considering to is don't a making. the and incremental provide you earthquake, conditions Mac, I wondering London for that a maybe despite little and the or are helpful.

plateauing is earthquake the that wondering, just really I'm driving So commercial that in rates?

D. Armstrong

Yes.

a you've plateauing rates had on the is earthquake things. think driven One I is increases of in few by rate consecutive loss-free business. years X

when they're we of terms let's a association at, fatigue increases. it account homeowner's call in of in midsize California, a rate you look what getting call so risk, kind small And

do earthquake sacrifice opposed move of up peril many we'll is in policy. or a conditions, only to deductibles, instances DIC what it make so as And rate, but hold name terms and

But It's there profitability some that in. that in guilty Lloyd some in been MGAs the So it syndicates brought been a to we're Commercial grow new been are going on somewhat. But indeed in of business have come of capacity. been as to whole, few instance that's contributing market to that's of aggressive. that D&F new the yes, capacity the And capacity. line and metrics in the has then that's look such, Earthquake. there's remain And compelling.

Earthquake Commercial it bit more the years. competitive year. a But been we is can in think I grow next little X.X last it's than

Operator

question of Andersen next line Andrew Our comes from Jeffries. with the

Andrew Andersen

for But new to the I think you online. of the $XXX crop had year? some to XQ some I $XXX be million to premium you know that full the shift you expect still mentioned previously products to case year. pointed million do for and

D. Armstrong

don't I think said Yes. $XXX Andrew. we million.

said several last to with good I I addition plus very think think to be $XXX million. about leader we building in James think quarter the number. And that and billion importantly, Long, here. million think hires We getting If bold going the million, half, feel have we I good X we're $X.X been we But ambition. Latham may and close market Benson to that million franchise a that $XXX to into $XXX said I my nonetheless, $XXX feel in of a next years. it terrific the a about

Jon Christianson

our are Jon a talked bit it add mix is, about QX just X that will I both to year-over-year. And But followed QX X some of that down written. $XXX the in being of Mac make and in as the what Crop, reiterate, first milestone months of million the the prices up call as it, high difference. commodity was I QX really Christianson had calendar I'd Yes. year. in despite we And, before, quarter seasonally -- year, for thing of a result, QX, achievements being favorable, more months Crop and we And mentioned will favorable mentioned year-to-date. One product surpassing remain Chris throughout here. the by Andrew, and shift we'll see QX proud

Andrew Andersen

a heard deceleration increase. quarter. Was mix seems Or to be that we is And just rate excess of? should then It the prior XX% I on XX% think I else thinking the there there a shift? liability, on going anything like in

D. Armstrong

it's mix also, Well, in it's of and policy and terms but a conditions we've put exclusions. more tightened bit shift, a

excess standpoint. liability from tightly or So think fleet other you I feel we of actual the about altogether too, is remain tight the a keeping risk-adjusted auto constrained the when activity increase, the we look and thing, either I very size think great it of range at that. And out on

is then our something So and endorsing. reinsurance which it's rate that constriction and a strongly we of coverage, of are combination panel

Operator

from the [Operator Shields Meyer comes line Instructions] question Our with next KBW. of

Meyer Shields

of Really, a earlier on couple questions. follow-ups

rising. in that we've over trends One season market? of earthquake of the the is the things Are that for commercial earnings you smaller or heard different is seeing a course this that too, just property are rate risks space,

D. Armstrong

Meyer. say that's different I a would market,

California, particularly ones especially where smaller you're that are ] book in rising. and also our risks, think budgetary constraints, into run to starting I the [ fire you have premiums

Commercial seeing in Earthquake. So we that not are

Meyer Shields

Okay. That's helpful.

is have I loss for on XXXX? Does in ratio guidance. better and fantastic, your the that third quarter, impact think any obviously, attritional So the than expectations

T. Uchida

that's think great I a question. Meyer,

to loss is we no, I'm with steady quarter. yes, this attritional in out very we of ratio happy First and of One some overall, are development so that thing but casualty by out that, results. in there, period it, casualty our minor really one performance thing ratios continue book. build as This I'd prior that any takedown reserves not any there being reserves, that loss the I'd point quarter, the of very driven is thing, key well business is casualty strong is performed property there, call a touching very our had are there. right, in on point held lines strong

point I'd thing first the that's So out.

about it. we've mini-cats before, in bit The talked a does some other have loss is point attritional thing little I'd that, our out ratio

be attritional activity obviously would were it, from would of category, some were moved and some what of loss or the and say was losses, elevated into elevated, those it out cats frequency points quarter cat This a so I standpoint, of that into to the cat X let's our, X category. mini-cats call maybe took elevated those so

what the ratio move loss we the continued mix XXXX the that that loss earthquake, to it diversify So as has shifts, a lines changes that that mix the in we improve, diversify, ratio or fronting, expect business in business, lines not up. little away so trend continues continue to brings bit. Overall, of no it but move to ratio, attritional doing continues to lines. for up around of do from expect and away kind from, of loss I the that those of losses, move those to and our some have as or kind is

lines up. very still I it highly again, lines move very combined to continue profitable strong of still of overall ratio business, to still business. So But, expect

D. Armstrong

But due want kind Meyer, I our would just where is add, of make to sure credit give and I underwriting team. credit to I

you ratio If ticked attritional loss while from look XX.X% year-over-year are the XX.X% we year-over-year. to just book -- XX% the up at grew casualty

the casualty side, property not think shows and of that I the with reserves So the the quality underwriting, on touching side.

gradually agree Chris the and function. I this Chris -- job up tick third steadily, with to prime up, of going team think said, like step everything a to was a while I going example our going did underwriting. great and it's So to It's it's quarter not up tick tick very

Meyer Shields

you casualty reinsurance do no, the Mac, you, perfect final XXXX? head ceding question, Yes, commissions thoughts that for have on on makes or as availability we sense. a And into any I guess,

D. Armstrong

market X frankly, at attractive in X on about Bermuda improved whole, think, our casualty and Novo, I the the a reinsurers one continue done We at economics. We I economics got was X saw they ago just consistent in I to think, book, to When quarter the expiring weeks us. De I or market treaty. in have and done, now and third capital. Well, look XX we're there, got on

we like we is, unique that feel casualty to there that's thing So about being of good the -- Palomar a now Chris buyer $XXX I of feel are now we're with. XOL, the over, I for is million by spent we that on niche the costs, that capacity lines. And other have and reinsurers XXX excess on loss our working about it, just we we guess, talks stature

support into 'XX, So our helps 'XX, feel good strong balance rest in of us and about the casualty market 'XX. the side, on certainly

on the in is our feel event at and ample stretch. individually, and earnings there a by capacity prospects I seen we whole, not event Milton think our ceding so point, on capital, more still and market, capital looking have about any good We pressure the not like with especially commissions this any a

Operator

our JPMorgan. comes the And Pablo question of line from next Singzon with

Pablo Singzon

something First question, more will the you sort up mix? shift pick the fast of loss business you could specific, you but talked on views about -- duration offer your latest this the over latest next couple already, and your how of attritional views as years

T. Uchida

think, I've call I it, points, would it. potentially about no, X Yes, X talked It point to be, quarter. a

more think I X is probably aggressive. little very X a is consistent. I'd say

results, have strong lower call low XX% to the, I'd finish year XXs, it, the quarter's based this see the that say, this on XX%, probably call been So if to range. end, XX% guideposts the on let's XX% right, it, expect in we to

caveat we the well of as guideposts. would up right? kind look by in bit that if hole burning to my points with some give growth, point, be it expectation a that's X risk within our And pocket. similar always that I have right? the new a of expect of So so moved capital participation, at little one do is to We would the X next end overall year I

really we're So performing type would really in going and use the have our that growth year it strategically by on next XX% we change my of that on as end be, lines call XX% it and may that's where expectations move But business own diversification of it, to up to. think the expect I of about range lines business. to really been of well. overall overall, to on doesn't try and bullish that we

a feel loss sub-XX% still fairly type ratio into overall, ] combined that [ So good overall. of And gets ratio that. still you about

Pablo Singzon

growing, question, right? E&S That how was is then I makes Mac, big had fast And it you number. mentioned second sense. a Earthquake Yes. Residential And think

you number. this business fast don't if pretty just the opinion, that your apart talk that's piece is outside But sort the of of at Like, E&S it's line well admitted you how of the earthquake what take in inflation think book? there's extent the the from to And this, that I'll migration resi influenced growth risks above side by step But right? like, did back, -- that, to it, from XX%. personal I guard. being resi remember about known exact an in of call I point. right, And think I earthquake -- on you growing? is a how side, admitted then can of mention

growth market, in bunch You're ] in So that who knows will but a other when benefiting hopefully... in change? think and more words from a it. your there, But there's you normal happens, [ profile do

D. Armstrong

you give on think and it. growth Yes, we'll Pablo, on residential let views me be quake, probably in to able of my just kind touch I

Angeles first Residential higher that I and to risks. very for It's to the West the and the probably foremost, going exposure be we Bay stock think selected and pronounced. of talk Earthquake, concentrated housing expensive admitted where outer be our value Los concentrated good Area in in It's growth is feel can and XX% like of be about going prospects about E&S, more both certain the areas E&S. When book. bounds, we is pockets about geographic

very new admitted E&S. both is our If across business now, right you consistent at it look and

continue that see to grow as just going third on increasingly the earthquake and in want in grows we California, getting to, like we're going side we that to as the standard did Now to us you you're the the of much book. rate, to we'd quarter. I not market E&S, think are more like E&S even But don't residential write so risk-adjusted

book, we benefited to the homeowners homeowners and the the changes of but changes have to in get for means CEA Additionally, also market, California to to means and like State leave are certainly the non-renewing the grow their as continue from swaths dislocation through CEA. that in the market Those well to we compete where large that they Farm the CEA, the changes companies the chance have market, them.

again, driver and a growth. products residential value-select standard the to policies, going standard that's of be So

a might are of the I into housing pick up, which buyers when expect and driver, likely 'XX-growth as 'XX-growth and quake other happens, going residential see the come on thing market, be we optimistic side. think you're the about, might driver, that than standard and activity that be those to down, see sales that interest means will cautiously rates transaction we new a come more be to do

quake. grower whole, feel pretty this we that in policy inflation So we good on in residential high close is to on that the It's about same was growth level the low on the bigger retention feel depending a a commercial guard month. the have It very quarter. XX% high when and you base, a the as in XXs, and do XXs, especially think I sustainable, teens

Pablo Singzon

something outside like get claims you're or as basically litigated. last makes is growing right, as rights, from sense, say, what Mac. and underwriting, to just me, that be Yes, then, more And that I'd the have business, you're you curious earthquake, more claims mind those of outside hear types investments policies I in of making Casualty of

So what's speak underwriting business new happening making? outside you're investments to of the the sort and of functions,

D. Armstrong

Angela asking. brought work Legal a we Officer. of Althea our Chief for on just side. a It to our Grant, new Claims little the and Yes, do We great chance gives Officer, alongside question, Garvey as for bit me Chief thanks commercial will just claims She a someone hired on.

counsel well So E&S also like large a defense running then over TPAs. companies litigator, insurance as and Althea claims, property and experience as having run for of has XX AIG, both as litigator, years claims Lexington and

TPAs of there in-house not So capabilities. she's we got build That we process, more taking is view continuing especially claims to active growing, be be that charge will part management a her the and probably also very of, organization the work certain with, on but into and will are of only holistic of control our casualty side. leaning that areas and

good So question.

taking loss probably investments to about side, in further the invest more on hearing making and we're control. 'XX prevention we're You'll management, over certain of that claims the and be actions course the

Operator

floor And remark. no I for closing Armstrong time. like would to a back this questions further there Mac to the turn at are

D. Armstrong

I'd work to by talented continued wrap dedication. team Great. Thanks, and our To [Audio call, like the start operator. Gap] for thanking their

Operator

[Audio and technical hear line Gap] Ladies not still And certain if Ladies you by. I'm apologize mute. the on for the please there? do gentlemen, and gentlemen, stand Mac, you. gentlemen, and Can't speaker to Gap] Ladies [Audio went are we seem difficulties.

do conclude However, teleconference, your you participation. this and today's we for does thank

You this may disconnect your at time. lines

Palomar (PLMR) 5 Nov 242024 Q3 Earnings call transcript