Palomar Holdings, Inc. · NASDAQ:PLMR
Palomar — Investor Presentation (May 2023)
23 slides from Palomar's investor presentation, May 30, 2023
Slide 1: Investor Presentation June 2023
Investor Presentation June 2023
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about Palomar Holdings, Inc. (the “Company”). These statements involve known and unknown risks that relate to the Company’s future events or future financial performance and the actual results could differ materially from those discuss
Slide 3: Company Profile and YTD 2023 Highlights
Company Profile PLMR YTD 2023 HIGHLIGHTS Q1 gross written premiums (GWP) of $250.1 million, up 46.3% from Q1 2022 Q1 adjusted net income of $20.4 million, compared to $18.6 million in Q1 2022 Q1 adjusted return on equity of 20.7%, compared to 19.2% in Q1 2022 Q1 adjusted combined ratio of 73
Slide 4: Historical Growth and Specialized Business Mix
$92 $56 $38 $8 $31 $8 $12 $- $4 $2 Q1 2023 GWP: $250M 4 Fronting Residential Earthquake Commercial Earthquake Hawaii Hurricane Inland Marine Commercial All Risk Casualty Specialty Homeowners(1) Residential Flood Other DIVERSIFICATION OF OUR PORTFOLIO THROUGH SPECIALIZED PRODUCT OFFERINGS SUPPORTS OU
Slide 5: The Palomar Approach
LEARNING IDENTIFY MARKETS LEVERAGE TALENT SYSTEMS & ANALYTICS RISK TRANSFER DISTRIBUTION DIVERSIFY GROWTH 5 PREDICTABLE EARNINGS E&S COMMERCIAL ALL RISK RESIDENTIAL EARTHQUAKE ADMITTED COMMERCIAL ALL RISK HAWAII HURRICANE COMMERCIAL EARTHQUAKE INLAND MARINE NON-TX SPECIALTY HOMEOWNERS ESTABLISHED EM
Slide 6: Philosophy: An Organic Business Strategy
FUNDAMENTAL PRINCIPLES KEY COMPONENTS • Organic growth • Anchored by non-attritional loss business • Entry into new markets driven by replicable, analytics-driven process • Continued reduction in non-earthquake catastrophe exposure • Conservative and comprehensive risk transfer strategy • Fee income
Slide 7: 2023 Strategic Initiatives
Scale the organization via process, technology and people Capitalize on dislocation in primary insurance and reinsurance markets while preserving our strong balance sheet Reduce volatility and enhance risk-adjusted returns Achieve top and bottom-line growth objectives SUSTAIN STRONG PROFITABLE GROWT
Slide 8: YTD Update: 2023 Strategic Initiatives
8 YTD Update: 2023 Strategic Initiatives SUSTAIN STRONG PROFITABLE GROWTH • Generated GWP growth of 46% year-over-year • Core earthquake business grew 31%; Residential Earthquake 20% and Commercial Earthquake 50% • Additional product growth; Fronting 207%, Inland Marine 70%, Casualty 134% • PLMR – F
Slide 9: Deliver Predictable Earnings: Underwriting Case Study
9 Deliver Predictable Earnings: Underwriting Case Study 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 % of GWP Historical GWP Business Mix Continental US Wind EQ Other Key Underwriting Initiatives • For the 2020 wind season, Palomar purch
Slide 10: 2023 Reinsurance Accomplishments
2023 Reinsurance Accomplishments 6/1 Catastrophe XOL Update • Reinsurance coverage now exhausts at $2.68 billion for earthquake events including $17.5 million of additional limit incepting at 9/1, $900 million for Hawaii Hurricane events and $100 million for all continental United States hurricane e
Slide 11: Reinsurance coverage well in excess of modeled historical events
• Reinsurance strategy combines the use of both excess of loss and quota share reinsurance • Portfolio analytics process utilizes multiple catastrophe models, deterministic loss scenarios and exposure profiles to asses s risk and evaluate reinsurance coverage needs • The current XOL program provides
Slide 12: Reinsurance program structure
• Reinsurance coverage now exhausts at $2.68 billion for earthquake events including $17.5 million of additional limit incepting at 9/1, $900 million for Hawaii Hurricane events and $100 million for all continental United States hurricane events • First event retention of $17.5 million, on an after-
Slide 13: Entrepreneurial and Experienced Management Team
Entrepreneurial and Experienced Management Team 13 NAME EXPERIENCE (YRS) PRIOR PROFESSIONAL EXPERIENCE Mac Armstrong | Chairman & Chief Executive Officer 25+ Arrowhead General Insurance Agency | Spectrum Equity | Alex. Brown & Sons Jon Christianson | President 20+ Holborn Corporation | John B. Colli
Slide 14: Commitment to ESG
14 • Commitment to Environmental, Social and Governance (“ESG”) matters are fundamental to the business strategy and mission • Values-driven workplace that integrates ESG considerations into strategy, operations, capital allocation and investment decisions • Continue to take steps to reduce overall
Slide 15: Proven Business Model
24% 3% 14% 18% 19% 21% 2019 2020 2021 2022 Q1'22 Q1'23 +11% 15 GROWTH PROFITABILITY SHAREHOLDER RETURNS $38 $9 $53 $71 $19 $20 2019 2020 2021 2022 Q1'22 Q1'23 Gross Written Premium ($M) Adjusted Net Income ($M) Adjusted Return on Equity $252 $354 $535 $882 $171 $250 2019 2020 2021 2022 Q1'22 Q1'23 +
Slide 16: Appendix
Appendix @ Palomar
Slide 17: First Quarter 2023 Financial Highlights
17 First Quarter 2023 Financial Highlights In Thousands Three Months Ended March 31 2023 2022 Gross w ritten premiums $ 250,112 $ 170,934 Ceded w ritten premium (170,344) (89,552) Net w ritten premiums 79,768 81,382 Net earned premiums 83,241 76,032 Commission and other income 695 777 Total underw r
Slide 18: Reconciliation Of Non-GAAP Metrics Used In This Presentation
Reconciliation Of Non-GAAP Metrics Used In This Presentation 18 In Thousands Three Months Ended March 31 2023 2022 Gross earned premiums $ 225,243 $ 138,924 Ceded earned premiums (142,002) (62,892) Net earned premiums $ 83,241 $ 76,032 Net earned premium ratio 37.0% 54.7% Total revenue $ 89,202 $ 78
Slide 19: Reconciliation Of Non-GAAP Metrics Used In This Presentation
Reconciliation Of Non-GAAP Metrics Used In This Presentation 19 In Thousands Three Months Ended March 31 2023 2022 Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income $ 64,858 $ 58,156 Denominator: Net earne
Slide 20: Reconciliation Of Non-GAAP Metrics Used In This Presentation
Reconciliation Of Non-GAAP Metrics Used In This Presentation 20 In Thousands Three Months Ended March 31 2023 2022 Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income $ 64,858 $ 58,156 Denominator: Net earne
Slide 21: Innovative Technology Platform
Innovative Technology Platform 21 • Technology systems built for automation and efficiency • Integration between pricing models, policy administration and analytics • Ability to rapidly quote and bind policies for producers • API development for partners with Palomar Automated Submission System (PAS
Slide 22: Flexible Distribution Network
Flexible Distribution Network 22 • Predominant channel for commercial property and casualty insurance • Much higher average premium than retail business • Rapid scale via utilization of existing distribution infrastructures • Products ultimately sold by retailers and wholesalers • Companion offers •
Slide 23: Strategic Partnerships
*Does not include all partnerships 2014 2015 2016 2017 2018 2019 2020 2021 2022 Strategic Partnerships 23 Ten years of partnerships continue with one of the most robust pipelines in the company’s history across multiple product categories 2023