Specialty property insurer Palomar Holdings has reported a combined ratio of 75.0% for the fourth quarter of 2021, following a push to improve its underwriting profitability.
Underwriting income improved to $17.0 million during the quarter, versus a loss of $5.0 million for the same period in the previous year.
The twelve-month picture was similar, with Palomar improving on an underwriting loss of $3.9 million in 2020 to income of $46.8 million over 2021, on a combined ratio of 80.0%, versus 102.5% previously.
Likewise, net income increased from a loss of $1.8 million to a positive result of $16.6 million for the quarter, and from $6.3 million to $45.8 million for the full year.
Gross written premiums increased 56.0% to $149.9 million compared to $96.1 million in the fourth quarter, while net earned premiums increased 74.3% compared to the prior year period.
Losses and loss adjustment expenses for the fourth quarter were $10.2 million including $11.9 million of non-catastrophe attritional losses, offset by $1.7 million of favorable development on catastrophe losses from prior periods.
The loss ratio for the quarter was 15.0%, comprised of a catastrophe loss ratio of negative 2.5% and an attritional loss ratio of 17.5%, compared to a loss ratio of 44.2% during the same period last year comprised of a catastrophe loss ratio of 37.2% and attritional loss ratio of 7.0%.
Additionally, Palomar’s net investment income increased by 4.6% to $2.4 million compared to $2.3 million in the prior year’s fourth quarter.
“At the onset of 2021, Palomar announced four key strategic initiatives that it intended to implement over the course of the year,” commented Mac Armstrong, Chairman and Chief Executive Officer of Palomar.
“First, we would grow our core book of business at a level similar to that of 2020; next, we would build our newly launched E&S company, Palomar Excess & Surplus Insurance Company (“PESIC”); additionally, we would launch several new initiatives that would position Palomar for sustained long-term, profitable growth; and lastly, we would reduce the volatility of our operating results through the exit of unprofitable business segments, underwriting enhancements and conservative risk transfer solutions.”
“I am pleased to report that our results in 2021 reflect the significant progress made on each of these initiatives,” Armstrong continued.
“While expanding our business is important, we remained acutely focused on delivering predictable results over time. To accomplish this, during the year we successfully ran-off our Admitted All Risk business, took meaningful rate increases across the portfolio, made enhancements to our underwriting guidelines and purchased an aggregate reinsurance cover which not only protects our business from losses generated from multiple severe catastrophic events but also put a floor on our 2021 adjusted ROE.”
He concluded: “Our strong fourth quarter results, most notably the 19.9% adjusted ROE and the aforementioned top line growth of 56%, demonstrate the momentum in our business and the confidence we have in our ability to profitably grow Palomar in 2022 and beyond.”
