Specialty insurer Palomar Holdings has published its first quarter 2023 results reporting a net income of $17.3 million, a 46.3% increase in gross written premiums (GWP) and a combined ratio of 77.9%.
This first quarter the company’s net income was up 19% compared to Q1 2022, when Palomar reported a net income of $14.5 million. Adjusted net income was $20.4 million for Q1 2023 as compared to $18.6 million for the same period last year.
GWP increased from $170.9 million reported in the first quarter of 2022, to $250.1 million in Q1 2023. Net earned premiums increased 9.5% compared to the prior year’s first quarter.
Net written premiums went down 2%, to $79.7 million, from the $81.3 million reported in the first quarter of 2022.
Losses and loss adjustment expenses for Q1 were $20.7 million including $18.9 million of non-catastrophe attritional losses, and $1.8 million of catastrophe losses from the California flood activity during the first quarter, offset slightly by favourable prior period development of catastrophe losses.
Palomar also reported an underwriting income of $18.4 million for Q1 2023, resulting in a combined ratio of 77.9%. This compares to underwriting income of $17.9 million reported in the same period last year, which resulted in a combined ratio of 76.5%.
The company’s adjusted underwriting income was $22.2 million, with an adjusted combined ratio of 73.3% in Q1, compared to last year’s $21.2 million and an adjusted combined ratio of 72.1%.
Mac Armstrong, Chairman and Chief Executive Officer, commented: “Following a record year in 2022, I am pleased with the strong start to 2023. Our first quarter results demonstrate continued momentum in our business and further execution of our Palomar 2X strategy.
“Highlights for the quarter include gross written premium growth of 46%, an adjusted combined ratio of 73.3%, and an adjusted return on equity of 20.7%. Importantly, these results were achieved even with elevated catastrophe activity during the quarter.”
Armstrong continued: “Additionally, in March we secured approximately $188 million of incremental excess of loss (“XOL”) limit providing support for further growth in our core earthquake business.
“Pricing for the recent XOL placement was in line with budgeted expectations and as a result, we remain confident in our ability to deliver our full-year target of $86 million to $90 million of adjusted net income.”
For the full year 2023, Palomar Holdings expects to achieve adjusted net income of $86 million to $90 million. This includes catastrophe losses incurred in the first quarter of approximately $1.8 million. The expected results do not include any additional catastrophe losses, the company noted.
