PLMR - Earnings call transcript Q4 2024

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Operator

Good morning, and welcome to the Palomar Holdings, Inc. Fourth Quarter and Full Year 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. sir. ahead, go Please

T. Uchida

and earnings everyone. today call. Chairman Officer. Armstrong, operator, participation is appreciate in our Executive Chief our With and good you, We morning, your Mac Thank me here

President, Jon of portion is Additionally, call. our here answer the the questions to Q&A during Christianson,

Private call of our Mac. substitute this over be the earnings reconciliation in measures prepared non-GAAP this today's certain set this other Securities we estimates, on These through XXXX.Â Â Before results for point, such include a plans, evaluating factors reminder, a actual that results forth be that Securities of XX:XX the materially on forward-looking we statements are remind subject accordance Time XX-Q February remarks beliefs, such XX, Such of their report Form in additional found and in available p.m. to begin, measure not performance. certain statements.Â Â Additionally, replay Relations prospects. let section quarterly not everyone variety expectations, are could our those I'll discuss call will by which presentation useful statements of U.S. meaning any cause most or future Litigation our with implied Eastern update may forward-looking during Reform are As release. Investor this can in of we differ The indicated or should A that and me within telephonic to statements We be statements. these of information to will a duty Exchange contain Act filed undertake the non-GAAP call isolation and Commission. our comparable about to to and from with GAAP. website considered risks on uncertainties, XXXX. the measures, turn constitute At Such factors a GAAP do in management's risks, the call, believe other of

D. Armstrong

return the eager I'm that team. a discuss to and quarter objectives year results. morning. outstanding fourth good the effectively The sustain income dislocation predictable to XX% our strategic of XXXX when growth, we strong and and Chris, and exceptional in profitable delivered and gross catastrophe a business, than the of our start outlined diversification, the of team of more written our X manage adjusted the Palomar growth, premium to an is deliver very you, result, our $X Thank of quarter and organization.Â Â As excluding equity pleased full success earnings, of year, inclusive million and adjusted losses, executed on runoff work XX% across-the-board hard fourth testament net XX% quarter. XX% growth, lines scale we and The

the XXXX straight ninth beaten is Importantly, quarter we QX have expectations. that

this included net drag in year. of execution a basis, written adjusted in saddled record and Gross which capital XXXX is of of premium adjusted strong written also growth results, August with income. of income full-year Our even when ROE XX%, XX% XX%, and premium on same-store of the adjusted net growth the our short-term raised seen gross XX%,

most point, or Indemnity made devastating like to the excluding AÂ (Excellent)Â by Los impacted, a relates not not to to this FIA, professionals, industry Officer, highlighted saw banner I'd owner as confine trading including of on has sympathies to XXXX the in historic meaningful, partners, a our a personally earthquake at Palomar our all like additions our several our commercial our flood do would issuance.Â Â From our Similarly, a monoline shorter insurance year customers the exposure majority residential Best, This focused to in policies. friends. intermediate significant California time policy XXXX capital, and of part upgrade end and target challenging the by wildfires. reach Head Operating I adjusted time.Â Â As of At company, the exposure Angeles XX% Chief Palomar XX income doubling year-over-year, it respected operational of A.M. frame. my to including to is through and employees, write us As condition catastrophe to been and doing exposure of by for an touch Head surety First help equity our to of pass reminder, we recruit we acquisition America, excited XXXX, start we cover our have the of were the Palomar. region our and but does in when those and Officer, risk I'm families, California the not and our state We a commercial property XX% was us our XXXX package and in homeowners communities to our Chief Claims fire along property which in on increased in the builders this builder's underwriting are accomplishments stockholders' perspective, products team. and have a X for state, People earthquake that losses. or the closed that Officer, wildfire. do enabled limited XXXX achievements equity difference of E&S.Â Â These Chief but to years, Crop,

the our are as course through zones. Palisades scope our of exposure and losses.Â Â We Palisades book from in the modest X% Earthquake fires the less our attritional and residential and ordinary slightly Eaton of earthquake indirect have XXXX burn is than guidance Fortunately, losses Eaton within Residential our very and franchise

working insurers coverage. our the been closely our need unfortunately, and and are with producers longer no that have by to and policies quickly fires cancel We refund impacted those

new the market Due the lead well said, event, the be. further and our it's the to and prove earthquake uptick to our tailwind need. to residential homeowners of business dislocation awareness medium- out hard forecast their market our a time insureds companies pull Earthquake in attrition of in Authority market Earthquake exposure recency of as to Our to impact as could California. what the to the of heightening it the focus their natural the will challenges in long-term amplifying state.Â Â We've suspect California for help the This disasters and in as in is business. start will the homeowners is modest back California year Residential seen dislocation a That

that as is slow my a X. to continues, broader it the prove like also has to pertains that upon the are reinsurance, the said, and reinsurance Palomar. market it our likely market advantageous of recent Wildfires cedents. to activity may group the I'll As experienced the rate market would handicap on it reinsurance from of market the That suggests ceded hard impact market to not touch investors' as be single pricing pace earthquake.Â Â As appetite this bond January to decreases dynamic likely Palomar losses long end the event remarks. in for this diminished towards of peril catastrophe more expectations exposures concentrated

and both core our insurance balanced to grew categories. us XX%.Â Â Our earthquake are fourth our X soft or product insurance our will markets. quarter, America, and franchise. In writer in performance quarter market North as writing to franchise with Turning a hard through in earthquake of play category allows gross capital earthquake residential allocation optimize cycles leader. premiums approach we earthquake the XXXX the I Exiting third-largest start of commercial written the of

in to earthquake rate this enables the margin market. commercial strategy in us our a overall Specifically, preserve softening climate of

to XX% consistent as mentioned likely cushion year, inflation of earthquake guard, our the as For inflation annually, franchise Commercial point the offering a X%.Â Â This a portfolio a dynamic pace renewed persist California but balanced decrease. and residential in Earthquake profitability, increase are previous That on the as approximately product a approach. for calls, of the could history, strong this against is theoretical whereas, reflection average example, and quarter, features reduce products metrics decrease experienced loss, the the earthquake at rate in an book our wildfires of aggregation our as policies strong any rate said, are rate throughout

we X the high in property of are products, consists the premiums and to year-over-year. to prospects As XX% property of the marine and Inland the earthquake which full will confident category, earthquake mid- for remains teens our distinct grow franchise we other look strong, year.Â Â Our grew XXXX,

expansion business excess activity Over of a The a category the hold more contributors commercial seeing of perspective.Â Â The aside negatively ratio changes weather Commercial like is Milton. a low combined business. exposure impacted function property an our pricing volatile increases Strong Overall, underwriting growth in and were premium the we multiyear results are softening that investing rate selectively Hurricane and was loss lines simultaneously Hawaii moderate Earthquake. that rates. moderate and this of category. XXXX, by trend delivered with property Commercial showing not downward national significant quarter ratio in loss geographic we property, builder's risk, was from of effort talent this classes the while to in of during course exceptional reducing loss are hurricane attritional

remain group E&S saw excess of and in Importantly, conditions we clip. increasing are Like estate Casualty marine rate GL, the targeted represents Contractors another mix and within we residential is was liability professional Group softening with XXX% quarter our hurricane getting declines we and insurance. included hardening remain our the in our by The to Hawaiian able new other by Casualty growth performance the like from a in offset of on holding The inland total are real products, Casualty period steadfast The a as primary casualty Sapia. premium markets. team segments take and on portfolio contribution construction terms lines. and David XX% of a liability headed property commercial flood firm rate residential at also the from balanced saw of in our conservative increases significant helping low and nice market now key and portfolio a market.Â Â Our products niche miscellaneous Segment commercial underwriting year-over-year.Â Strong earthquake E&O, rate advantage liability. single-digit property focused environmental

our million. end the expect higher management as average XX% of pick was ours. in severity modest Our approach our like which conservative a and of of line sizes, net Notably, book's average focus, and limit nascent tactics limit casualty for The casualty grow. our $X.X $X.X one risk over prudent casualty would continue high line IBNR, reserves books the shorter-tail remained quarter, than loss average, million meaningfully with reserves franchise loss ratio to are conservative avoidance industry includes gross and exposures reinsurance.Â Â At our liability was the such

and strong pricing saw contractors we seeing X%. climbed XX% book. In well XXXX. rates below quarter.Â Â Our rates rate is are by Environmental franchise just XX% in positioned excess the with casualty the across to growth terms loss of of excess casualty auto increases in E&S coverage for liability profitable cost Geo and X% increased accounts increase for and rates casualty liability rate adequacy,

Group's Fronting quarter was the business. declined fronting Omaha the This our experienced first XX%. effect from to of the Turning separation complete full premium where our National, we

with We the partners our pleased are of the existing our newer relationships. prospects and growth of

to and which continue We first crop. of opportunities potential Benson was for charge was vet healthy the pipeline Latham quarter partnerships.Â Â Fourth Palomar have leading the quarter a

quarter, business. efforts talented in the build joined and During made much the crop a foundation larger professionals the team, for to over XXXX bolstering marketing the claims

participation or treaty, approach and crop million strong XXXX Palomar To in multi-peril franchise seasonally the an our we $XXX with in place fourth These for XX%. our our year million full end, low line reinsurance that estimated programs. our underwriting fast-growing risk results $XX.X of increase were share in time. top first crop intention putting quota Our approximately moreover, business.Â Â Importantly, risk to gain stop-loss delivered and quarter in MPCI and premiums results on as in insurance the our finalized growth affirm the premiums selection over underwriting the

XX% We continue premium an industry-leading we retain believe expired crop of on that the X% I Palomar will going matter are crop compared Palomar business as to premium forward and treaty. the have building subject every of confidence to to U.S. be the eclipse aim premium projections the among exceeding XXXX $XXX by the intermediate crop top year with writers will end XX $XXX in for in of million future.Â Â We the ahead. million premium the in to

is Surety results segment the to vector Casualty FIA Palomar FIA's will we important P&C for is included attractive we immediate that Group cycle closed believe acquisition on of growth of correlated at longer in XXXX. that not start Lastly, over for the the an the be insurance market term. like and can be crop one the Product future. our an

contributions market reinsurance. a we FIA's XXXX, over will turning be segment modest be to surety While in believe time.Â Â Quickly meaningful will

in X January successful placements earthquake with on the active casualty which are portfolio our already We discussed in crop, across groups. I

treaties loss First excess and off, approximately of earthquake incremental growth commercial $XXX our X. earthquake about decreases limit to renewed priced of main the of million excess of June we quota book until These renewal were on support loss of share risk-adjusted the the at XX%.

at economics. front, or expiring treaties improved the we On casualty X either renewed

both optimistic in the reinsurers group. put place and of with Palomar other cautiously our losses like They recent treaties as on secondary remain well such indicators appetite as from casualty exposures industry's for already suggest issuances our of for earthquake. renewal we lines we X/X and leading wildfires, We the investors market blue-chip are pricing received X support the prospects strong that new who from peril support cat also business.Â Â Despite seen have strong single bond from

Looking ahead strategic have X XXXX, initiatives. to we

First, monetize integrate and the operate. throughout we have We must that investments XXXX. made

build leaders will market Second, deliberately. new we

natural to we an casualty a a XXXX.Â Â Third, remember don't new not approach the well-defined find our we on strong support healthy profitable and and capital leadership want have like. the crop term, our focus have consistent Our market-leading must of what XXXX conservative to franchise of and product generate the but Fourth, like lines we while management in This with necessary sources we importantly, grower growth new the deliberately risk more talent, in will the earnings mantra. growth what reserve in and affords the preserving migration franchises earnings appetite us. continue stick entrenched and become and short in addition base. to execute to is We'll from market overextend appetite and portfolio we

to As growth in and our execute success initiatives, we on strategic I'm returns. steady confident XXXX our ability and maintain build

beginning. exceptional, While last it's year's the was only performance

for visibility and returns.Â Â We growth above-market and Our execute crop positioned XXXX. heritage our in casualty strong strategy offerings like provide XX are Palomar well long-term products to surety alongside newer

from Our in excess reinsurance Chris a more at to XXXX flat XXXX renews million that assumes X/X a including $XXX guidance loss The income down million, our treaty. cat will of full detail. is net year expiring of adjusted $XXX the range X% core of price load range to discuss treaty the

on taking in underwriting us turn ROE January detail. X. a puts As XX the I'll market adjusted midpoint reinsurance certainly believe and financial to of Chris the With what the an we conservative impact a the our double to still cohort X market, is digesting of XXXX call Palomar at are guidance the we approach, the to position income the of in XX% years. results to compared saw is wildfires when what The implies discuss adjusted our over more that, in we of

T. Uchida

$XX adjusted net $XX.X the adjusted XXXX, we of million quarter growth adjusted representing when treasury XX.X%. $X.XX any of Thank of $X.XX as share the periods you, my or and of per net figure, income during to quarter outstanding that incur XXXX, us per when share Mac. options during include was net our fourth for in a portion, share referring as requires net Please share equivalents method. exclude to referring common periods compared I'm to note to diluted stock methodology share profitable such income common million calculated income per per using them the stock or This loss.Â Â For same

$XX income $XX.X to adjusted year. the last million quarter for same fourth compared underwriting million quarter was Our

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

adjusted the Excluding was quarter ratio combined for ability of Palomar return last to our adjusted line fourth same of validate catastrophes, return was to quarter XXXX, XX.X% predictable to to for XX%. our the compared XX.X% continues XX return our period XX.X% target equity year. last fourth growth XX.X% on equity quarter annualized year.Â Â For The with of a on adjusted compared the rate our top maintain above

of specialty fourth each of modest capital we were compared fourth quarter third the the second in to to premiums premiums at the and year, to growth, the the quarter fully reminder, deployed an fourth increase Net important the $XXX.X fourth the an year's XXXX our Gross the business.Â Â Looking prior of crop million, given compared quarter segment in for quarter, be earned XX% of premium were of written of XX% our quarters. the until written it's quarter. a key do increase only fourth quarter to for the runoff the XXXX. million, is remember not $XXX.X in raised of and year's end As earned premium expect with seasonality prior insurance products, majority excluding third XX% five the

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

as are third written earthquake While lower to earned premium rate to associated of to the than during risk-adjusted majority seasonality quarter, higher reinsurance and the catastrophe and similar Milton. a expect were XX-month our we a of results in of of related quarter year.Â While of comprised years.Â Â Our of for earned with premium over a net XX.X%, ratio our and quarter a point crop non-catastrophe dollars $XX.X X.X% the was the the to premium Hurricane testament continued up losses to primarily continuing believe net and in this and excess expect XX.X% our facilitate placement we discussed, for quarter growth growth, of loss of timing catastrophe attritional over our third the the the we to ratio earned -- ratio, this continue previous be to few reinsurance last continue past $XX.X premium our conservative increasing expenses ratio loss adjustment to online net year.Â Â With quarter's loss we of $X.X expect earned attritional reserving. reinforce an losses throughout million, were made the portfolio The our our million with ratio quarterly the pattern effort treaty approach to low the de-risk the time. Â Losses period loss remainder of the of Mac results fourth loss is of million

same to property on the our seasoned year. played We our has on lines favorably for out positions conservative the and quarter reserves, casualty continue E&S more while conservative hold approach

in fronting.Â Â The of from in to crop XX.X% was from fourth XXXX.Â This Our expenses, adjustments premium X.X% acquisition of percentage and quarter of last ceding the ratio sequentially, of to sequentially quarter in and third the for year was a XX.X% in earned for quarter expense percentage the XX.X% other fourth X.X% increased quarter the earned to gross compared gross as year's underwriting quarter to including compared fourth the commission lower last sequentially premiums XXXX. to compared and fourth third X.X% quarter primarily

in by for assets from December income cash in operations investment XX, the sequential invest yields a to X an our million, due invested to during increases to continue to raise. primarily profitably. Â We higher extremely and as net our the increase grow we average year, see in facets and the demonstrated $XX.X to all of to scaling continue flatness held year's months the capital or compared As XXXX, ended quarter. Â The year-over-year investing long-term committed increase periods expect the was this organization fourth may investments last on of was we prior fourth of framework.Â Our higher quarter within of balance generated the XX.X% due we while over Palomar hires ratio, XX to organization as we are continue scale our

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

position our was written continue end attractive returns. Â At generate We risk-adjusted the of our ratio equity classes that allocate to premium X.XX:X. the asset to quarter, to net conservatively

the million, and Our stockholders' to $XXX reached equity a consistent capital has raise. testament profitable growth

to For year, the top the continued translate our line. full strong line to performance bottom

to grew $X.XX. net grew adjusted income $XXX.X adjusted million. Â Our to Our EPS XX% XX%

XX.X%, up ratio loss combined XX.X%. respectively, of a Our in and ratio resulting ratio was made of ROE of XX.X%, XX.X% and adjusted an expense

our achieve was Adjusted $XXX XX% XXXX income XXXX.Â Â Turning underwriting underwriting XXXX at adjusted adjusted positioning income, XX initial Our to overhead, in million $XXX X years. presented milestone $XXX.X an million, objective to income excluding million guidance. our us Palomar from Investor net grew of to in Day versus

cats XX% $XXX of the We with range growth XX%, in ROE million. and greater includes to that million our $XXX range raise midpoint range adjusted to our continue our million of in an guidance. adjusted are $X objective initiating updated represents than addition losses a XX net including million to August.Â Â This The mini catastrophe of guidance income capital of Palomar of $XX in include we to

top-tier seasonality we and look summer lines to certain last deploy expectations to capital fully build we grow of we growth in to operating and as throughout XXXX, our participation As will to a our results continue increase raise will the we insurer. Â Our continue while business our participation earnings. add specialty ratios

our quarter increasing will expect XX% to to from June quarter premium full crops X. Â We in and participation third out in low a placed XXXX of crop third with pattern stand continue seasonal The the on XXXX, in earned first loss ratio point our to based the to earning of premium quarter. XX.X% our reinsurance net X%, increase excess compared

loss ratio apex XXXX increases, and the of adjusted expense combined increase our to ratio combined XXs, to the for will be from that, quarter naturally year, to upper Overall, in continuing end in catastrophe earnings show The we ask line our loss I'd expect the and an of for growth. some profitable year, third like consistent be ratio crop. Â As mid- improving the losses. With expect the be open XXs our questions. primarily Operator? to year of by the to the of to operator ratio. in move the including our loss offset ratio the ratio off We low up for will and

Operator

line Paul Sandler. comes first Piper question Newsome Our the Instructions] with of [Operator from

Jon Paul Newsome

Congratulations on quarter. the

a modeling Just almost maybe question.

the You expectations. about talked reinsurance

improvement my the using view reinsurance in steady-state guidance? the are assuming in be pricing in sort clear, -- the of year? course to you a of actually for of over Just is some Or mind, this you reinsurance are

D. Armstrong

yes, Good question. thanks. Paul,

it's the plus guidance is So to minus range the built X% or we've X%. way

be we renew $X So what imply of of or prudent of guidance exposure, the be renewal be it's some the billion guidance the bit the share low end and would the assume would and million rate renewing plus closer and decline down. of we to that of was to while it or as have that the close at X% reduction flat X:X. X/X, at renewed for as was at on Earthquake us, Commercial a tenth We the conservative a saw Xst at meaningful is or June that wildfire or did loss the market favorably $XXX felt loss down stock to minus would not the high versus equivalent of that taking the share.Â Â But of also end excess a XX% And furthermore, quota we've X:X. via excess quota got

Jon Paul Newsome

Palomar And local you that So thoughts out? some wondering there's thing how happen think if as might whole have this market California, opportunities seems shake as disrupted. a that on for in any do you might quite

D. Armstrong

Yes, that it for Paul, question. is Yes, market. disrupted a thanks

growing you're be emanate to consistent want. it's traditionally 'XX respect in more like and Palomar of to where with had become what knowing and disruption, would the I kind to of going say and the what standard imperative third I high-value we opportunities just we California from strategic to with to residential is of that this see just think side, continue segment, the kind but increasingly speaking not in been E&S -- going

in high-value short reduction into mid-market then opportunity then or opportunities in residential builder's be But to our exposure event. probably the by of Residential knitting potentially us of And multi-peril. it's there'll we'll of California builder's kind I heightened think instance franchises. immediate writing insurers awareness will the think driven both traditional and dislocation risk CEA we some see participating by not kind core where commercial of and caused we're risk, in in start other homeowners you builder's see We'll stick So continued in commercially, find more risk potentially commercial go earthquake, mostly there will pockets an that be and our and size opportunities. term,

Operator

with next of the ISI. line comes Our question Evercore Peter from Phipson

Unknown Analyst

a tell for X/X, bit On conservatism you the the that feeds you guys into more could know discussed down if some you XX% I potential expectations saw us little there's wondering about at following outlook? I how just was the X/X.

your assumption?, change just outlook hoping the pricing you is i.e., X/X levered I'm me could think much should how so outlook come materially much pricing help to could better? X/X how this And about in

D. Armstrong

Yes. I loss largest excess is mean think our reinsurance of I expense.

And like in so if it below X%, inconsequential. it will be not comes

in particular, close as issuances. bonds still ago, bought. of got or own at going the if remember, they and be are below bond of it. of results secondary moment trending boon by like to be impacted more it's be and our to some billion to growth, months a the looking is said the but more support will the recent renewing year that we've pricing is that buying I cat Now X of to -- we just And our limits market, But certainly in also activity comes But post are the that $X limit excess it wildfires, loss we're The X/X. a would in X%. one thing

But So we would that. under I over color you just want rather deliver than around Chris, don't to offer promise. if some know

T. Uchida

Yes.

X/X or Just cost the before, million. more little 'XX total but of loss we've this at of renewal, $XXX detail, provided spend transfer our to about was risk give a excess

we And year. one buy because increasing we As for a be that we mentioned, time generally, growth. will buy Mac only obviously

So XX buying when we we're 'XX, X/X months. another for buy

to last look it, So you can we that year think about that that at it in look at And your that consideration. be spent of potential even But XXXX. the a with would X growth, sort some apply about mathematically, to savings be remainder of of would on if and it, you think low that $XXX end million the do, X% and The what call the months. want that. savings probably

Unknown Analyst

is really to fires? presumably could increases to question be I'm growth top homeowners around about for expect my California how demand line would any Should given you growth a helpful. talk wondering if homeowners earthquake commentary we in other in 'XX That's growth. earthquake headwind then And elastic on following insurance the Okay. large have helpful. you follow-up for pricing? And

D. Armstrong

Sure, Peter.

So to California. market I underpenetrated The think as is still it earthquake, very in earthquake question. relates residential good

you of have business because an at the the of sales So that's uptick why new like heightened we start awareness. in see year,

are the if line, of January, premium we in above a from watching homeowners not trailing perspective costs. rising we and our I XX-month slightly think the retention perspective, policy impact average. were

itself yet. So it we haven't manifest seen

counter that one potentially that are to think home is will number the thing CEA. to policies the carry of homeowners inside the increasing I a the going be non-renewed just cost

You look They its State market. CEA's USAA. its of the participating totality, insurer probably at the Farm, in XX% base, constitute

if of And they to following just non-renewing chance of book, do, permitted in the are what that's market. logic to compete XX% the their a on are we policies lot the they so of residential earthquake that have

that of guard increase. while XXs do affords a which for in have It's So a of ability of again, retention, high you worth plus us decent policy high reiterating also we materials cushion XX%, price maintain an that basically quake. a cost the slight have rising think inflation to we teens growth is

guess of on sustaining it's that just highlight just bit would teens question, think So overall conviction high gives rate that I then I is other thing as growth well. And a your growth. us one I

above if been market in XX%. you obviously it if earthquake Fronting laggard. at you Fronting quarter, was portfolio out, great else end the of specialty And And now. products was Everything the low the just of look that. growth just take fourth the a XX%. And was have We has

on our growth franchise, in with headwind So we're the we good fronting prospects speaking. seeing about that generally 'XX even the and feel

Operator

Our Securities. line Hughes Mark next comes from of with question the Truist

Mark Hughes

the up I suggest then moving the Earned Chris. will step until down quarter. you keep XOL that that think and growth, you buy third will new in

say this quarter and drop would kind XX% then So step you what up X XQ to down the should in next this year? for range of

T. Uchida

question. Great thanks. Mark, Yes.

little high might it QX QX move to -- QX. Like said, point. bit for you flatter small that QX. in represent And XX% a the up would QX was it amount So or QX. kind will expect would I to be of a

bit and So for month to I'd something first of XX% say have probably that QX QX. range in the maybe XOL. will something little than QX full the in higher a XX%

We are growth. earthquake strong still expecting

to get expense. month full you'll expect of more of cover that excess reinsurance do we that loss So -- buy X that, to

a I or So participant. bit. participate probably that one dynamic new we of crop and to see out little QX to little were going in how you're bit year, that more we're will the flatten thing The by to a much ratio think going really be a driven X% going This is one there. the that

XXXX, going a are XX% be For participant. we to

still push down, net that there's then will to dynamic earned There's of up, be ceding and there, continue shift ratio XX% relatively it's going dollars going but ratio, premium that So that push, for we're right? off where a to to factor that growth the obviously, It's right? business. still

ratio going to down. that push that's So

very right? bit crop stable, The ratio The of loss going quarter it's business, impact higher it. of have does as for while well, that little is other the ratio to a impact that a to combined

the expense the will will some expense ratio a QX bit and the higher also ratio. So ratio side, be other savings lower the ratio premium higher. underwriting be net on also loss acquisition right? There expense little earned for That will

XXs start then this low like quarter a But low all said, excess the again, be participation. moving overall, going in third QX. even to but dynamic higher you ratio and in, probably loss expect we'll QX ratio earned the of from with that net of I combined point ratio, with because It's So crop the year. loss and there of in still in then up premium higher the in just

Mark Hughes

Yes.

into So to I maybe from say would QX? mid-XXs low back low XXs, low QX, and for QX the in XXs

T. Uchida

probably it would with I low XXs. color

dynamic that I a lot. in I it is and going think crop where I out to little premium you're crop But coming be that or the look still the all that and with overall, of to high more written seasonal to see for XXs a average -- think year, that not It's QX this just for earned about year. but move would expect stand going the and to it's majority all, -- the that going quarter. going for in is is

because written the recognize it we a of that are actually is not But aware, quarter. in the not actually policies coming -- until acreage you're lot the As March or of year. earned of June, the will written July, until premium reports third in

why that And that's so play. in dynamic is

Mark Hughes

it to and seeing here? sounds lot that up that commercial is in a getting just property dynamics quake, one are carriers Or it to Are just are that you exposure quake? is On seeing willing going caught the of in of -- you commercial down. like just Is prices down are from do going prices take quake of appetite property? the kind more

D. Armstrong

back earthquake, side. question. Mark, have not say on a of and that the come that shared all I risk been yes, the small commercial market good large has pronounced quake seen as into kind that's we layered commercial would

you to And at premium the premium it's the to profitability, it's so the whether when attractive metrics, still PML look AAL underlying an market metrics.

bit so can It's declined. are being add? be pronounced one digits, where layered shared to single large more want And there's anything in and it's more high precipitously little kind that accounts. it's of a slack frankly given and not you But of, there. Jon, rates again,

Jon Christianson

we're agree. forms some product. while Earthquake associated rate of Commercial still the I of that And Earthquake accommodating with conditions are and market seeing Yes, the the in strong segments Commercial decreases, integrity really terms certain

the up. across-the-board So are it forms holding is and to not report of a happy coverages dynamic kind and that an

Mark Hughes

anticipating think obviously, you're ask might nice you back one XXXX, for I inflection. strong about step you if take If a Mac, the question. and growth a

Your the three-year five-year guidance. XX Palomar initial certainly accelerated

the talked that? kind to things you feel is well really model really take is mean, you've a us. a well. have giving for what guidance Could talk For XX say, if and working you of it's I are comfortable that that about so if in working pick to this where you clicking you But that had this to -- back year, step

D. Armstrong

Yes, sure.

few I things. a think it's

You're market property reinsurance a earthquake, scale, cat it And especially in starts absolutely grow. and provides that to slightly continuing also we're portfolio, with down, across earthquake. the right. and It's that is to flat

the lean improvement very now to we'll And property you're there. in a think reap had and considerable fruit our the exposure in So considerable underwriting reinsurance cat and I our of see increase to rate side volatile made grow while margin the of labor We enhancements have call market XXXX a from share. in other property hard getting reducing instance. increases on we Continental and there. Â Secondly, the book, Hurricane, for

And risk we're I limited side builders basis. Â So or the book touching fast-growing large not bit amplifying growing we're the And being contributors more casualty a that We're a property like have as net property performing a you so non two our the when to ultimate. amount big considerably We're of gotten reserve I into nicely. at seeing on come business on growing those the The and really is risk little reserves. is and what think not weighted fold are while IBNR property. of these side. then national franchise cat-exposed excess the is heavily a claims of left with other total base look seasoned, in on consistent think what's books taking

to that too. to, our ability the scale is us afford on operating going risk good that risk and historical that contributor. Â Crop it's being other growth more select on based bit X% it, some risk one little results gives does participation of there, modest kind of we and XX%, and there, from underwriting conviction and just a So steady a call based if take that's the leverage conservative a

property most little the across So probably you're and taking in I'd the then a portfolio, bit are some lines risk it's more that of really levered on you're side these but seasoned. getting say

Operator

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

Andrew Andersen

year full think million I arrived at help guide. you first Can cat million guide $X that the us about cat estimate? $XX this a you for that year The to how year, is the think you've given

T. Uchida

Andrew. thanks, No, Yes. question. Good

the So million how to about a continue business, get catastrophes. look pointed book. we've you been you new the it, like we important comfort was done felt underwriting is, out. $XX it great more as million job and We that metric have $X to exposure making portfolio call minimize the we to of When to of include have grow to changes we really U.S. hopefully a managing our at

were so And at has that continue to a couple to AAL throughout and that years shrink. Â We look when to of where more ago, changes you our compared make continued to XXXX. we

of a million point that, out, comfortable feel the in call the what year. we Those of budget we probably felt that The bit We is to giving for be number to of smaller less everything to we've for with the about Those probably could let's we two in still small loss points one so SCS about little was $XX events or continue to our I'd for that events, two a ratio cats three range So PCS $X done for be book, one year. good still could it, than incurred portfolio. a are flood points number those ratio to million loss mini provide. the XXXX, thing events. but

We is of $X of together points those in, to for loss mini to our the we're think to four, together done three it's we've and estimate. all year and that our losses lot a five factors well for so the book come an can within the shape ratio that think the number to how as think kind that performing talking has that help achieve $XX we million three cat we portfolio we look all year. Â So overall put we So good probably at that. been a cats in and cats million range. And

D. Armstrong

I this. a to think just of bit anecdotal to little support give

to compared risk in Our builders' dollars. We predominance has closer significantly $XX the do not windÂ ContinentalÂ hurricane million coming to builder's few property.Â And with million from estimates as our that outperformed.Â For our risk of be to Milton, opposed losses the book modeled claims. to XXX-year a PML all going is book instance, were risk now make modeled

based of more complexion even our is load and loss it the gives confidence AAL cat that on the us estimate appropriate. So modeled

Andrew Andersen

think about some you to On is new 'XX a if could steady maybe fronting, way 'XX don't you online fronting? state in as perhaps us single-digit there is if coming exit frame and or I help 'XX. What kind good maybe of this a decline know programs are

D. Armstrong

I and disproportionately the loss basis. to next deal, to mean Omaha flattish up think by for on it's I slightly a then going probably impacted the quarters of Yes. be it's X the same-store National

look property like certainly a pipeline. have crop, portfolio it's across it's if now and towards, book. our allocating where at you and other we're quake, the and We candidly, But casualty our surety capital Andrew, it's

to a be it's going So a bit year. the laggard for of

Operator

Our from Meyer the next KBW. line Shields of question comes with

Meyer Shields

there states, sense that Is where communicate guess of exposed, commodities? you'll a which which question I on you in first be crop. terms can

Jon Christianson

Meyer, it's Jon Christianson.

those of Group corn If crop you kind think about and Group X around more year, producers those where every states. And lot states, and this we Group soybean soybeans. and kind see lot Upper states year Midwest. you world, going X expect of in a in into write a upper with write the core of of being Midwest of We think the the kind X to you core corn

a see our of And soybean is say corn necessarily so where than I lot footprint different you'd production. not would dramatically and

Midwest as the around of in being those core states up the kind ends Midwest it well So states. upper as

You exposure on will see the West Coast. not

down the of Coast, center see You country. predominantly the the will exposure East not on

Meyer Shields

expecting the a is Is private crop that less or government reinsurance this year, less you're lot. reinsurance? that reinsurance for helps Okay. reduced Perfect. That

Jon Christianson

We are quota the reinsurance market. private to share reducing the

of standard reinsurance And so the share after greater government roughly what that's that. taking we the is the be SRA, total terms in what the the see through agreement. government Where interaction will to are in we same

the loss So continue we're And to private stop share moving combination of taking be business. we combination this and market. stop that of grow from quota having durable share a now of are as loss. greater And we structure and a share fairly will quota to

a stop loss. the slightly risk for participation, of terms would foreseeable be the quota I change combination in And future, complexion share so expect while may of and will there the

Meyer Shields

the you've Is there can for than got Okay. sudden faster a helpful. Residential more so impact That's final question, Great. have and you inflation? now could that in you bigger earthquake. I I respond guard tariffs anything And that then inflation guess, understand if normal Mac. do

D. Armstrong

we inflation because underwriting they can rule. certainly guards are Yes. an Well, the modify

which Insurance of operating. required not are by Department which they to the So we're approved any in be state in

management look standpoint, the we So we look the a cost. at constantly replacement do and our we portfolio as can at reinsurance from estimated IPV portfolio

to can And started we fact, head. it X from its rear guards. X, went bump when So years XX in inflation to ago X inflation up

Meyer Shields

guard for the room there inflation earthquake? Is on Commercial

D. Armstrong

It's not automated as from standpoint. underwriting an

are at every constantly doing ITV an we looking So updated renewal at and valuation.

processed So renewal. yes, rule when that automatically it's underwriting an up the for not policies is just

Operator

[Operator Instructions] with line Our next JPMorgan. question comes from the Pablo of Singzon

Pablo Singzon

of the earthquake? with Mac, you is as growth growth the that be it expect that the to consistent about you EpsLL incremental part limit June assume might for thinking in buy ] would mid- [ fair to renewal, high teens

D. Armstrong

correct. that's Yes, Pablo,

Pablo Singzon

Okay. And second Perfect. question. then

given So of the last the in still excess I expect lines think than quantum conditions on casualty perspective up. doing specifically, you time company? internally market ramping some premiums just and provide and what Inland to are then in you and Marine in clearly Can these growth you're And casualty more length doubled 'XX.

D. Armstrong

Yes.

and national to so. to all XX% be businesses commercial hiring and would will in high be other we're that in growing. of what similarly property. certainly are in like the per property, activity recent where made up like hurricane, I have to probably to going David and are renewing are not 'XX, of going the at Casualty, going we footprint, be Marine geographic probably XX% continue rate I that E&S inflation risk.Â Â So would excess time, it pushes whether our guard expand In with course have But grow there builder's just say the you drivers over say same nice we've some an risk, practice, policies the product doing what environmental rate continual is that Hawaiian the faster that decreasing are certain the in Sapia big XXs disproportionately is that and but you're approval. XXs quake, than in casualty segments growth the to So circumstance

come books They reinsurance suite a the fastest is of because So long-standing business. after underwriters that you've crop, and over support. got have that's be lot of going track grower have the it have They product records. talented in to they have

So flow. submission we have considerable to expect

Pablo Singzon

last holding participation maybe ceded expect X% premiums, dollars dollar specific you much on Putting book you Chris. and move one I the do from as me, premium Okay. impact ratio to XX%... makes And sense. income combined incremental your for crop for underwriting suppose up from That how the aside constant,

T. Uchida

Yes.

haven't ratio. type provided the combined operates, We of low specific I but line basis, guidance business that let's a in that's think it, on a XXs call business

that XXXX. potentially I'd Mac going You that we look million. that in to recognized at $XXX to could of probably be and most is said say get

of years. between Some will that flow

XXXX. let's a Some 'XX. it, that But XX% of I would recognized call bit of will go in into be say, would little probably

guess So a participation, think using of kind those little future could we're our that frame. Mac overall, time billion the that, committed as the above of where talked think do can very below X-year I to time of we're But that, about, bit bit Crop maybe little you XX% be in math if we to factors, there go. in business. and at We that $X.X in a some X- point intermediate

there. excited we're prospects So the about

Pablo Singzon

to digits, know, the more you give-up like you X points right? what's X fronting underwriting the the Is that there, side or than give income up, ceding. essentially And don't mid-single correct So earn in Yes. I ceding on math?

T. Uchida

lines a nature to just it. because typical it say fronting override it, definitely Yes, call let's associated I fee Yes, lower, low-margin than the good. going with to was it's that's got or of

low a year, year good So you X.X%, in X%, risk probably say. you're digits, I getting I take would standpoint, like a or should say that single hopefully triple a underwriting margin getting if when you're probably from normal that's

Operator

floor And I'll the have Mac remarks. reached for Mr. Armstrong the closing session. we end turn the question-and-answer to of back

D. Armstrong

thanks, All Well, right. Terrific. everyone.

Just hope building we specialty that a franchise. unique are to insurance really you sense wrap we got up, the

Our continue will The we and even to added that affords are confidence The growth record grow. the execute core and the us XXXX. earthquake businesses over vectors in property have just last exceptional beginning. profitably we XX the we've results feel XXXX, in myriad are more months talent we

to want continue employees hope the Investor about lastly, holds XXXX team York we for excited do.Â And to the you So at I and couldn't thank all our and for I they Day. all to future then that more March see on our in company. do be XX what New

So much, thanks see care. the and Take you hopefully, in Apple. so we'll big

Operator

ladies conference. concludes and And gentlemen, this Thank today's you.

you lines. Thank may participation. You for disconnect your your

Palomar (PLMR) 13 Feb 252024 Q4 Earnings call transcript