California-based Palomar Holdings, Inc. has reported a more than 56% rise in gross written premiums (GWP) for the second-quarter of 2019 to $58.3 million, while net income fell slightly to $6.7 million, when compared with the second-quarter of 2018.
Net income fell by approximately 3% from the $6.9 million recorded in Q2 2018, while adjusted net income (which excludes certain expenses related to the firm’s IPO) increased by 15.4% to $8 million.
Palomar Holdings’ GWP increased significantly from the $37.3 million recorded in the second-quarter of 2018, and at $23.2 million, net earned premiums increased by 27%, year-on-year.
The firm attributes the rise in net earned premiums to the growth in GWP, offset by ceded written premiums under reinsurance agreements.
The loss ratio came down by 1.2 percentage points in Q2 2019 to 2.8%, while the company’s expense ratio increased from 61.1% in Q2 2018 to 66.4% in Q2 2019. Underwriting income reached $7.2 million in the quarter and the firm produced a combined ratio of 69.2%, which compares to underwriting income of $6.4 million and a combined ratio of 65.1% in Q2 2018.
Mac Armstrong, Palomar Holdings’ Chief Executive Officer (CEO) and Founder, said: “We are pleased with our second quarter results, highlighted by gross written premium growth of 56.2%, year over year, driven by strong performance across all of our product lines.
“Additionally, we successfully renewed $470 million of our core reinsurance program at June 1, 2019 and purchased $200 million of incremental limit at the top of our reinsurance tower, expanding our coverage for earthquake events up to $1.05 billion.”
“We continue to pursue what we believe is a substantial market opportunity while maintaining a thoughtful and conservative risk transfer strategy. Our retention remains at $5.0 million per earthquake or wind event, which not only provides loss protection but also strong visibility into our earnings.”
The company’s previously announced IPO also benefited its investment return in the quarter, with net investment income up by 103.4% to $1.5 million, driven by interest income generated by the proceeds received in its IPO.
“Our core products continued to demonstrate high retention, improving pricing trends, and strong new business activity. In addition, we maintained our focus on developing innovative products that address underserved markets and saw increasing contributions from several of our newer product offerings including our recently launched Inland Marine and Assumed Reinsurance divisions.
“Looking forward, we believe we are well positioned for growth as we continue to scale our existing lines of business, introduce new products and expand our geographic footprint,” said Armstrong.