Specialty property insurer Palomar Holdings has announced the completion of its 2024 reinsurance renewal, raising the top of its tower to $3.06 billion for earthquake events, $735 million for Hawaii hurricane events, and $117.5 million for all continental United States hurricane events.
Last year, Palomar renewed its reinsurance towers to provide $2.68 billion of coverage for earthquake events, which included $875 million of multi-year ILS capacity.
So, the top of the tower has been lifted for 2024, with the new reinsurance program incepting at June 1st. For this renewal, the insurer procured approximately $400 million of incremental limit to support the growth of its Earthquake franchise.
The insurer notes that the reinsurance program provides ample capacity for its growth in the subject business lines as well as coverage to a level exceeding the firm’s 1:250-year peak zone Probable Maximum Loss.
Mac Armstrong, Chairman and Chief Executive Officer, Palomar, commented, “We are very pleased with the successful June 1 placement and are very grateful for the continued support of our reinsurance and ILS partners.
“Importantly, we renewed our reinsurance program at terms and pricing that were better than our initial expectations and reduced our hurricane event retention. As a result, we are raising our full-year 2024 adjusted net income guidance to a range of $122 million to $128 million from the previously indicated range of $113 million to $118 million.”
For 2024, Palomar’s per occurrence event retention is $15.5 million for hurricane events, reduced from $17.5 million in 2023, and $20 million for earthquake events, levels that continue to be meaningfully within management’s previously stated guideposts of less than one quarter’s adjusted net income and less than 5% of the insurer’s surplus on an after-tax basis.
$420 million of the $3.06 billion of earthquake reinsurance limit comes from the insurer’s fifth catastrophe bond issuance, Torrey Pines Re Ltd. (Series 2024-1).
Other highlights of the 2024 reinsurance program include $895 million of multi-year ILS capacity providing diversifying collateralized reinsurance capital.
Jon Knutzen, Chief Risk Officer, Palomar concluded, “We are grateful for the broad-based support we received from the reinsurance market. It is a testament to our business mix and risk profile, which has been curated with the goal of delivering more stable, predictable results. We appreciate all our incumbent and new reinsurance partners who have helped us successfully complete our June 1 placement.”
