Palomar Holdings, Inc., has successfully completed its June 1 reinsurance renewal, securing a tower that extends to a $2.68 billion first-event.
The firm said that its reinsurance coverage now exhausts at $2.68 billion for earthquake events, which includes $17.5 million of additional limit incepting September 1, 2023, $900 million for Hawaii Hurricane events, and $100 million for all continental United States hurricane events.
At the same time, Palomar’s reinsurance program provides ample capacity for the firm’s growth in the subject business lines as well as coverage to a level exceeding Palomar’s 1:250-year peak zone Probable Maximum Loss (PML).
It was also confirmed that Palomar has now purchased approximately $550 million of reinsurance limit to support the growth of its earthquake franchise in 2023, with $200 million of the new limit being sourced through a new catastrophe bond – the Torrey Pines Re Series 2023-1 notes. The new catastrophe bonds were the fourth Insurance Linked Securities (ILS) issuance Palomar has sponsored.
Palomar’s per occurrence catastrophe event retention now stands at $17.5 million.
Additionally, Palomar’s reinsurance program includes $875 million of multi-year ILS capacity, which will provide diversifying and collateralized reinsurance capital.
Mac Armstrong, Palomar’s Chairman and Chief Executive Officer, commented: “In what most have deemed the hardest reinsurance market in thirty years, we successfully completed our 6/1 renewal. Importantly, we maintained our retention within our previously stated expectations, bought incremental limit to support our growth, preserved important terms and conditions such as prepaid reinstatements, and successfully completed our fourth catastrophe bond.
“While risk-adjusted pricing increased, the total expense was within our previously stated expectations. The success of this placement along with our strong start to the year allow us to raise our full year 2023 adjusted net income guidance to a range of $88 million to $92 million.”
Palomar’s Chief Risk Officer, Jon Knutzen, said: “We successfully navigated the June 1 renewal in an orderly fashion having achieved results in-line with our expectations and are pleased with the support of our reinsurance partners. Our reinsurance placement is a testament to the proactive and deliberate underwriting changes that we have implemented over the last few years designed to reduce our risk profile and deliver more predictable results.”
Armstrong, added: “Looking forward, we have the reinsurance capacity to sustain our profitable growth trajectory, execute our Palomar 2X strategic objective and build a preeminent specialty insurance company.”
