Specialty property insurer Palomar Holdings has announced the successful completion of its June 1, 2020 reinsurance programs.
The company procured $200 million of incremental limit for California earthquakes, $300 million of incremental limit for all earthquake zones, and $80 million of incremental windstorm limit.
Reinsurance coverage now exhausts at $1.4 billion for earthquake events and $600 million for hurricane events.
Palomar also increased its catastrophe event retention from $5 million to $10 million for all perils, and opted to retain $3 million as a vertical co-participation in selected layers of the program.
“We are very pleased to successfully complete our 6/1 placement,” said Mac Armstrong, Palomar’s Chief Executive Officer and Founder.
“We were able to procure an incremental $200 million of limit to buttress our growth with the requisite reinsurance capital, adjust our retention modestly to reflect our growing and strong balance sheet while keeping our retention inside of one quarter of earnings and less than 5% of surplus, and maintain our strategy of minimizing attritional loss and generating fee income from our Specialty Homeowners business.”
Armstrong continued: “This placement marks the first true hard market Palomar has faced since its formation, and we are pleased to have come through with the requisite capacity to sustain our growth and margin profile.”
“While the costs are higher, they are digestible,” he added. “The rising cost of reinsurance associated with this placement should create several opportunities within our commercial lines portfolio.”
The June 1 placement also saw the addition of 18 new reinsurers to Palomar’s reinsurance panel, bringing the total number to 90.
Additionally, Palomar reported the expiration of its 2017 catastrophe bond, Torrey Pines Re, and the completion of its Specialty Homeowners Facility, which provides quota share reinsurance for specialty homeowners business in Alabama, Louisiana, Mississippi, North Carolina and Texas.
“Palomar strategically implemented a number of changes to simplify and streamline our program for the betterment of all parties,” said Palomar President, Heath Fisher.
“This decision reflects our commitment to collaborate with our panel to refine the program in a mutually beneficial manner, and we are thrilled at how well our reinsurers responded. In the teeth of a challenging market, it is gratifying to see our panel step up and grow their capacity to support our business,” Fisher remarked.
“This further validates our strong results, unique portfolio, and the work we have put in to develop long-term partnerships that will endure all market cycles. We are grateful for the continued support of our reinsurers.”