California-based insurance holding company Palomar has reported a net loss of $15.7 million for the third quarter of 2020, driven by the active US hurricane season.
This compares with a net income of $7.5 million for the same period last year.
Palomar had previously warned ahead of an estimated $38 million Q3 catastrophe hit, including the impacts of hurricanes Hanna, Isaias, Laura and Sally.
This caused the insurer to post an underwriting loss of $24.0 million last quarter and a combined ratio of 157.1%, versus underwriting income of $7.4 million and a combined ratio of 73.4% in the previous year.
Gross written premiums increased 55.4% to $103.0 million compared to $66.2 million in the third quarter of 2019, while net earned premiums increased 51.9% compared to the prior year’s third quarter.
Palomar’s loss ratio for the quarter was 97.7%, comprised of a catastrophe loss ratio of 86.9% and an attritional loss ratio of 10.8%, compared to a loss ratio of 8.8%, comprised entirely of attritional losses, during the same period last year.
Net investment income increased by 23.7% to $2.1 million compared to $1.7 million in the prior year’s third quarter.
“The third quarter demonstrated the sustained execution of Palomar’s strategic plan while also serving as a test of our analytically driven underwriting and risk management frameworks due to the impact from several damaging hurricanes that made landfall in areas of our exposure,” said Mac Armstrong, Chairman and Chief Executive Officer.
“Our country experienced an unusual frequency of severe weather-related events during the quarter, from the Midwest derecho to an unprecedented windstorm season to the devastating wildfires in our home state of California,” Armstrong continued.
“Palomar and our policyholders were impacted by the spate of hurricanes that made landfall in the United States including Hurricanes Hanna, Isaias, Laura, Sally, and Beta.”
“These events also afford Palomar the opportunity to learn from this wind season and apply the data we have gathered to improve our underwriting, analytics and risk transfer strategy and, moreover, to ensure predictable earnings long-term.”
