Palomar earnings jump despite cat losses

Palomar Holdings, which has a Bermuda-based reinsurance subsidiary, said its net income jumped by 66% in the third quarter despite a rise in catastrophe claims. 

The re/insurer said gross written premiums increased by 32.2% to $415.0 million compared to $314.0 million in the third quarter of 2023 while catastrophes added 9.5% to its loss ratio, which rose from 18.8% to 29.7%. 

The company’s combined ration rose to 77.1% compared to 70.9%. 

Palomar said loss and loss adjustment expenses were $40.3 million comprised of $27.4 million of attritional loses and $12.4 million of catastrophe losses from the three hurricanes which made landfall in the US in the third quarter. 

 The company still increased its underwriting income to $26.4 million compared to $20.7 million in the same period in 2023. 

Investment income increased to $9.4 million from $6 million while it recorded $2.7 million in net  realised and unrealised gains compared to a loss of $1.4 million in the same period in 2023. 

Mac Armstrong, chairman and chief executive officer, said: "I am very pleased with our third quarter results as they clearly demonstrate our successful efforts to deliver consistent earnings and returns. 

In a quarter that experienced a heightened level of cat activity, we delivered 39% adjusted net income growth, a 77% adjusted combined ratio, and a 21% adjusted ROE. Our results further validate the concerted efforts that we have undertaken to diversify the business, reduce the volatility in our earnings base and profitably grow. 

“We continued to generate robust top line growth achieving 32% gross written premium growth, driven by strength in our earthquake and casualty products as well as strong growth from our burgeoning crop business. Importantly, our same-store premium growth rate was 38%, demonstrating the strong underlying momentum that exists across our portfolio of specialty insurance products.”

He added: “We have numerous energizing opportunities and initiatives associated with our Palomar 2X strategy. To capitalise on them, we successfully raised $116 million in August. A portion of the proceeds will fund our acquisition of First Indemnity of America Insurance Company and our entry into the surety market. 

“We will use the remaining proceeds for organic growth and selected increases in risk participation in product categories including Crop and Earthquake. Our diversification into attractive lines with limited correlation to the P&C cycle such as Crop and Surety will further position Palomar to deliver consistent earnings growth over time.”

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