Palomar Holdings, Inc. · NASDAQ:PLMR
Palomar — Investor Presentation (March 2021)
26 slides from Palomar's investor presentation, Mar 1, 2021
Slide 1: Investor Presentation March 2021
Investor Presentation March 2021
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 discusse
Slide 3: Company Overview
Company Overview NASDAQ: PLMR Q4/YE 2020 HIGHLIGHTS 2020 GWP of $354.4 million, up 41% versus 2019 ▪ Q4 GWP of $96.1 million, up 31% versus Q4 of 2019 ▪ 2020 GWP of $29.5 million via PESIC 2020 adjusted net income(1) of $8.9 million 2020 adjusted combined ratio excluding catastrophe losses (1)
Slide 4: Recent Developments
Recent Developments 4 • Q4 GWP of $96.1 million, up 31% versus Q4 of 2019 • Launched four new products via PESIC and an admitted Real Estate E&O offering • Updated 2021 adjusted net income guidance: $62 to $67 million CONTINUED GROWTH • Newly launched PESIC grew 128% sequentially during Q4 • Entered
Slide 5: Palomar Excess and Surplus Insurance Company
Palomar Excess and Surplus Insurance Company • Launched in June 2020, began writing business during Q3 • Received A-(Excellent) FSC IX by A.M. Best in July 2020 • 2020 GWP of $29.5 million; 128% sequential growth in Q4 • Achievement of national recognition by surplus lines associations • Primary lin
Slide 6: Investment Highlights
Investment Highlights # Palomar
Slide 7: Analytically Driven Underwriting
Analytically Driven Underwriting 7 Only 3 Pricing Zones Leading Competitor Over 23,000 Pricing Points Lower Rate Higher Rate Palomar • Broad appetite to underwrite specialty risks within both admitted and surplus lines markets •“Write what we know” • Avoid exposures that are overly complex • Proprie
Slide 8: Scalable Proprietary Operating Platform
Scalable Proprietary Operating Platform 8 OPERATING WITHOUT THE BURDEN OF LEGACY IT SYSTEMS Modern technology platform driving competitive advantage Scalable platform reduces operating costs & improves efficiency Seamless communication with partner carriers and reinsurers Better service to policyhol
Slide 9: Adaptive Specialty Products
Adaptive Specialty Products 9 Residential Earthquake Commercial Earthquake Hawaii Hurricane Commercial All Risk Specialty Homeowners Inland Marine Residential Flood Other 2020 GWP: $354M 40% 17% 4% 15% 14% 4% 2% 4%
Slide 10: Multiple Dimensions of Growth
Multiple Dimensions of Growth 10 EXPANSION SINCE INCEPTION (ANNUAL GWP IN $M) 2014 2015 2016 2017 2018 2019 2020 PSIC GWP PESIC GWP $120M $82M $55M $17M $252M $155M $354M DIVERSIFICATION OF BUSINESS MIX (QUARTERLY GWP IN $M) $33 $37 $40 $44 $54 $58 $66 $73 $72 $84 $103 $96 $0 $15 $30 $45 $60 $75 $90
Slide 11: Continued Opportunity within Commercial Markets
11 ABILITY TO CAPITALIZE ON AN ATTRACTIVE COMMERCIAL RATE ENVIROMENT AND RETAIN POLICYHOLDERS Continued Opportunity within Commercial Markets 1. Includes Commercial Earthquake and Commercial All Risk product rate increases 2. Exited admitted Commercial All Risk in during Q4 2020 10.8% 12.1% 14.2% 14
Slide 12: Expanding Our Distribution Network
Expanding Our Distribution Network 12 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 busin
Slide 13: Leveraging Strategic Partnerships
Leveraging Strategic Partnerships 13 BUILDING SCALE WITHIN NEW AND EXISTING MARKETS • 20+ strategic partnerships • Existing relationships validate the quality of our products, service offerings and systems • Highly scalable distribution model • Ability to quickly grow within new and existing markets
Slide 14: Enhanced Risk Transfer Program
Enhanced Risk Transfer Program • Total coverage up to $1.4 billion for earthquake events and $600 million for wind events • $10 million event retention in place through June 1, 2021; represents less than 3% of surplus • $1 million vertical co-participation in selected layers of the program • Reinsta
Slide 15: Entrepreneurial and Experienced Management Team
Entrepreneurial and Experienced Management Team 15 DECADES OF INSURANCE, REINSURANCE, AND CAPITAL MARKETS EXPERTISE MANAGEMENT OVERVIEW NAME EXPERIENCE (YRS) PRIOR PROFESSIONAL EXPERIENCE Mac Armstrong | CEO & Founder 20+ Arrowhead General Insurance Agency | Spectrum Equity | Alex. Brown & Sons Heat
Slide 16: ESG Statement
ESG Statement 16 ENVIRONMENTAL SOCIAL RESPONSIBILITY GOVERNANCE • Employees encouraged to work from home, reducing carbon footprint • Eliminated the use of disposable plastic water bottles in favor of filtered water dispensers in HQ • Addition of dual computer monitors to eliminate the need for prin
Slide 17: Financial Highlights
Financial Highlights # Palomar
Slide 18: Proven Business Model
68% 71% 61% 57% 61% 18% 10% 2% 6% 7% 12% 7% 32% 86% 93% 70% 63% 100% 2016 2017 2018 2019 2020 Expenses Attritional Losses Cat Losses Proven Business Model 18 GROWTH PROFITABILITY SHAREHOLDER RETURNS Gross Written Premium ($M) Adjusted Return on Equity (1) Adjusted Combined Ratio (1) 1. This is a non
Slide 19: Full Year 2021 Guidance
Full Year 2021 Guidance 19 FULL YEAR 2021 CURRENT OUTLOOK Adjusted net income(1) $62 to $67 million • Updated 2021 Outlook on February 24, 2021 within fourth quarter 2020 earnings release • Adjusted net income guidance considers the impact of Winter Storm Uri in Texas • Aggregate cover will establis
Slide 20: Appendix
Appendix # Palomar
Slide 21: Financial Highlights
Financial Highlights Q4 2020 PERFORMANCE Top-line growth continues to be driven by new products, accelerating rate increases in commercial business, expansion of E&S footprint, and extension of distribution network GWP of $96.1 million, up 31% versus 2019ion up 41% versus 20 Average monthly pr
Slide 22: Reconciliation Of Non-GAAP Metrics Used In This Presentation
Reconciliation Of Non-GAAP Metrics Used In This Presentation 22 In Thousands Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 Gross earned premiums $86,191 $58,967 $301,457 $200,521 Ceded earned premiums (47,269) (27,979) (146,389) (100,314) Net earned premiums 38,922 30,9
Slide 23: Reconciliation Of Non-GAAP Metrics Used In This Presentation
Reconciliation Of Non-GAAP Metrics Used In This Presentation 23 In Thousands Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 Numerator: Sum of Losses & LAE, acquisition expenses, and other underwriting expenses, net of commission and other income $43,898 $19,554 $158,945
Slide 24: Reconciliation Of Non-GAAP Metrics Used In This Presentation
Reconciliation Of Non-GAAP Metrics Used In This Presentation 24 In Thousands Three Months end December 31, Year Ended December 31, 2020 2019 2020 2019 Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income $43,
Slide 25: Theoretical Net Written Premium vs Net Earned Premium
Theoretical Net Written Premium vs Net Earned Premium 25 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 Q
Slide 26: Theoretical Net Written Premium vs Net Earned Premium
Theoretical Net Written Premium vs Net Earned Premium 26 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 building to steady state.
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