Palomar Holdings, Inc. · NASDAQ:PLMR
Palomar — Investor Presentation (December 2020)
27 slides from Palomar's investor presentation, Dec 7, 2020
Slide 1: Investor Presentation December 2020
INVESTOR PRESENTATION December 2020
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: Q3 2020 Update
Q3 2020 UPDATE
Slide 4: Company Overview
COMPANY OVERVIEW YTD GWP of $258.2 million up 44.6% versus 2019 Q3 gross written premiums of $103.0 million, up 55.4% versus the third quarter of 2019 YTD adjusted net income(1) of $10.1 million Q3 adjusted net income excluding catastrophe losses(1) of $13.7 million; YTD adjusted net income
Slide 5: Meaningful growth in GWP since inception
Meaningful growth in GWP since inception EVOLUTION OF BUSINESS MIX 2014 2015 2016 2017 2018 2019 LTM as of Q3 20 $120M $82M $55M $17M $252M $155M Page | 4 Consistent Growth and Diversification over Time (Quarterly GWP in $M) $332M $33.0 $37.3 $40.0 $43.5 $54.0 $58.4 $66.2 $73.4 $71.5 $83.8 $103.0 $0
Slide 6: Q3 Key Developments
Q3 KEY DEVELOPMENTS Page | 5 Launch of Palomar Excess and Surplus Insurance Company (“PESIC”) PESIC received A- IX (g) rating from AM Best in July Achievement of national recognition by surplus lines associations Q3 commercial launch; GWP of $9 million primarily driven by Commercial Earthquake
Slide 7: Q3 Takeaways
Q3 TAKEAWAYS The historic 2020 wind season, 12 named storms making landfall in the United States, affords Palomar the opportunity to assess and make the requisite changes to its underwriting framework, product suite and risk transfer strategy Safeguarding our policyholders and our balance sheet
Slide 8: Environmental, Social Responsibility, Governance
Employees encouraged to work from home, reducing carbon footprint Eliminated the use of disposable plastic water bottles in favor of filtered water dispensers in HQ Addition of dual computer monitors to eliminate the need for printing ENVIRONMENTAL SOCIAL RESPONSIBILITY GOVERNANCE Inclusive
Slide 9: Investment Highlights
INVESTMENT HIGHLIGHTS
Slide 10: Differentiated, Market Leading Products
YTD 2020 GWP: $258M DIFFERENTIATED, MARKET LEADING PRODUCTS Residential Earthquake Expand the market by attracting new buyers Granular pricing and flexible features Residential Flood Broad, full limit coverages Distribution partnership with Torrent Specialty Homeowners Hybrid of fee + unde
Slide 11: Analytically Driven, Disciplined Underwriting
ANALYTICALLY DRIVEN, DISCIPLINED & UNDERWRITING “Write what we know” Avoid exposures that are overly complex Write business with limited attritional loss potential Proprietary granular data modeling drives analytical pricing Use of extensive geospatial and actuarial data Granular analyti
Slide 12: Multi-Channel Distribution Model
MULTI-CHANNEL DISTRIBUTION MODEL Multiple sources of growth and the flexibility to rapidly capitalize on changing market conditions Primarily distribute commercial lines products Control most of the premium within commercial property insurance Much higher average premium than retail business
Slide 13: Conservative Risk Transfer Program
CONSERVATIVE RISK TRANSFER PROGRAM Current Reinsurance Program (1) 1. Historical scenarios are modeled using the in-force portfolio as of September 30, 2020 $10 million event retention in place through June 1, 2021; represents less than 3% of surplus $3 million vertical co-participation in selec
Slide 14: Scalable Proprietary Operating Platform
SCALABLE PROPRIETARY OPERATING PLATFORM Modern technology platform driving competitive advantage Operating without the burden of legacy IT systems Scalable platform reduces operating costs & improves efficiency Seamless communication with partner carriers and reinsurers Better service to policyholde
Slide 15: Capturing Admitted and E&S Growth Opportunities
CAPTURING ADMITTED AND E&S GROWTH OPPORTUNITIES Avenues Where we are now Continued opportunity New Products 13 Specialty products Commercial and Personal Lines Admitted and E&S markets Continuous R&D efforts to introduce differentiated new products that harness our core competencies New Geog
Slide 16: Entrepreneurial & Experienced Management
Decades of Insurance, Reinsurance, and Capital Markets expertise ENTREPRENEURIAL & EXPERIENCED MANAGEMENT NAME EXPERIENCE (YRS) PRIOR PROFESSIONAL EXPERIENCE Mac Armstrong CEO & Founder 20+ Arrowhead General Insurance Agency Spectrum Equity | Alex. Brown & Sons Heath Fisher President & Co-Founde
Slide 17: Investment Highlights
Entrepreneurial and Experienced Management Team Scalable Proprietary Operating Platform Conservative Risk Transfer Program Multi-Channel Distribution Model Differentiated, Market Leading Products Analytically Driven and Disciplined Underwriting Capturing Admitted and E&S Growth Opportunities 1 INVES
Slide 18: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 19: Proven Business Model
68% 71% 61% 57% 60% 57% 18% 10% 2% 6% 5% 9% 12% 7% 31% 86% 93% 70% 63% 65% 97% 2016 2017 2018 2019 YTD 19 YTD 20 Expenses Attritional Losses Cat Losses PROVEN BUSINESS MODEL Growth $82 $120 $155 $252 $179 $258 2016 2017 2018 2019 YTD 19 YTD 20 Gross Written Premium ($M) Shareholder Returns 10% 5% 23
Slide 20: YTD 2020 Performance
YTD 2020 Performance NINE MONTHS ENDED SEPTEMBER 30, 2020 FINANCIAL HIGHLIGHTS In Thousands Nine Months Ended September 30, 2020 2019 Gross written premiums $258,268 $178,619 Ceded written premium (101,264) (78,797) Net written premiums 157,004 99,822 Net earned premiums 116,145 69,220 Commission an
Slide 21: Full Year 2020 Guidance
FULL YEAR 2020 GUIDANCE Current Outlook Prior Outlook Adjusted net income excluding catastrophe losses(2) $51.0 to $52.0 million $50.5 to $53.0 million The Company updated its 2020 Outlook on November 10, 2020, within its third quarter 2020 earnings release. These assumptions assume that there are n
Slide 22: Appendix
APPENDIX
Slide 23: Reconciliation of Non-GAAP Metrics Used in This Presentation
RECONCILIATION OF NON-GAAP METRICS USED IN THIS PRESENTATION Page | 22 In Thousands Quarter Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Gross earned premiums $79,428 $53,453 $215,266 $141,554 Ceded earned premiums (37,408) (25,791) (99,120) (72,334) Net earned premiums 42
Slide 24: Reconciliation of Non-GAAP Metrics Used in This Presentation
RECONCILIATION OF NON-GAAP METRICS USED IN THIS PRESENTATION Page | 23 In Thousands Quarter Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Sum of Losses & LAE, acquisition expenses, and other underwriting expenses, net of commission and other income $66,025 $20,30
Slide 25: Reconciliation of Non-GAAP Metrics Used in This Presentation
RECONCILIATION OF NON-GAAP METRICS USED IN THIS PRESENTATION Page | 24 In Thousands Quarter Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and othe
Slide 26: Net Written Premium Comparison Assumptions
Assumptions: Year 1 Year 2 Year 3 Q1-Q2 Year 3 Q3-Q4 Ceded Quota Share % 10% 10% 10% 10% XOL Annual Expense 8,000 10,000 12,000 22,000 Year 1 Q1 Year 1 Q2 Year 1 Q3 Year 1 Q4 Year 2 Q1 Year 2 Q2 Year 2 Q3 Year 2 Q4 Year 3 Q1 Year 3 Q2 Year 3 Q3 Year 3 Q4 Year 1 Year 2 Year 3 Gross written premium 5,
Slide 27: Theoretical Example of Net Written Premium Comparison to Net Earned Premium
THEORETICAL EXAMPLE OF NET WRITTEN PREMIUM COMPARISON TO NET EARNED PREMIUM This example represents flat written premium with no changes to XOL reinsurance expense. With flat written premium the difference between net written and earned premium only exists in Year 1 when the earned premium is buildi
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