Specialty insurer Palomar Holdings has published its second quarter 2023 results reporting a net income of $17.6 million, a 25.4% increase in gross written premiums and a combined ratio of 79.0%.
This first quarter the company’s net income was up 20% compared to Q1 2022, when Palomar reported a net income of $14.6 million. Adjusted net income was $21.8 million for Q2 2023 as compared to $22.4 million for the same period last year.
Gross written premiums (GWP) increased from $218.7 million reported in the second quarter of 2022, to $274.3 million in Q2 2023. Net earned premiums increased 3.5% compared to the prior year’s second quarter.
Net written premiums went up 9.5%, to $105.9 million, from the $96 million reported in the second quarter of 2022.
Losses and loss adjustment expenses for Q2 were $17.9 million including $15.7 million of non-catastrophe attritional losses, and $2.2 million of catastrophe losses from severe convective storms during the second quarter offset slightly by favourable prior period development of catastrophe losses.
Palomar also reported an underwriting income of $17.4 million for Q2 2023, resulting in a combined ratio of 79.0%. This compares to underwriting income of $20.0 million reported in the same period last year, which resulted in a combined ratio of 75.1%.
The company’s adjusted underwriting income was $23.1 million, with an adjusted combined ratio of 72.2% in Q2, compared to last year’s $24.8 million and an adjusted combined ratio of 69.1%.
Mac Armstrong, Chairman and Chief Executive Officer, commented: “I am very pleased with our strong second quarter results. Our team successfully executed our Palomar 2X strategy of profitable growth despite the elevated catastrophe activity and the historically hard reinsurance market that has significantly impacted the insurance industry.
“In the quarter, we focused our capital and resources towards targeted segments of our book of business, such as earthquake, inland marine, and casualty to maximize our risk-adjusted returns while we continued to reduce exposure to segments of our book that add volatility to our results. This prudent approach resulted in gross written premium growth of 25% and, importantly, an adjusted return on equity of 21.3%.”
Armstrong continued: “Beyond the strong financial results, the quarter featured several noteworthy accomplishments that position us well for near and long-term success. We effectively placed our June 1 reinsurance program in line with our expectations and subsequently raised our adjusted net income guidance for the full year.
“We also hired a team of professional liability underwriters to expand the expertise within our casualty franchise, and, in July, we received a “positive outlook” from A.M Best. On the heels of this quarter, we are further raising our adjusted net income guidance range to $89 million to $93 million for 2023.”
For the full year 2023, Palomar Holdings expects to achieve adjusted net income of $89 million to $93 million. This includes catastrophe losses incurred in the first and second quarters of approximately $4.0 million.
The expected results do not include any additional catastrophe losses for the remainder of the year, the company noted.
