Specialty insurer Palomar Holdings has published its third quarter 2023 results reporting a net income of $18.4 million, a 24.0% increase in gross written premiums and an improved combined ratio of 75.8%.
Q3 2023 net income compares to the $4.3 million reported in the third quarter of 2022. Adjusted net income was $23.3 million as compared to $9.2 million for Q3 2022.
The insurer also reported its gross written premiums increased by 24.0%, to $314.0 million, compared to $253.1 million in last year’s third quarter. Whilel net written premiums went up 21.3%, to $110.6 million, from the $91.2 million reported in Q3 2022, net earned premiums also saw an increase, from $77.9 million in Q3 2022 to $85.8 million in Q3 2023.
Losses and loss adjustment expenses for the third quarter were $16.1 million, comprised of $16.7 million of non-catastrophe attritional losses, offset by $0.5 million of favourable catastrophe development from prior periods, Palomar noted.
The loss ratio for the quarter was 18.8%, comprised of a catastrophe loss ratio of -0.6% and an attritional loss ratio of 19.4%, compared to a loss ratio of 39.6% during the same period last year comprised of a catastrophe loss ratio of 16.0% and attritional loss ratio of 23.6%.
Palomar also reported an underwriting income of $20.7 million for Q3 2023 resulting in a combined ratio of 75.8% compared to underwriting income of $4.1 million, which resulted in a combined ratio of 94.8% during the same period last year.
The insurer’s adjusted underwriting income was $25.0 million resulting in an adjusted combined ratio of 70.9% in Q3 2023 compared to adjusted underwriting income of $7.5 million and an adjusted combined ratio of 90.3% during the same period last year.
Mac Armstrong, Chairman and Chief Executive Officer, commented: “We are very pleased with our strong third quarter. The results included record quarterly gross written premium, adjusted net income growth of 153%, and an adjusted return on equity of 22.3%.
“Our concerted effort over the last several years to reduce the volatility in our book of business and earnings base was also on full display in the third quarter as we incurred negligible loss from catastrophes despite elevated activity across the industry. The execution of our Palomar 2X strategic plan during the quarter instills a high level of confidence that Palomar will produce consistent profitable growth in the quarters and years ahead.”
He continued: “In addition to the strong underwriting results, we also continued to invest in growth across the organisation. Beyond growing gross written premium 24% year-over-year, during the quarter we hired an experienced leader to build an Environmental practice, wrote our first Crop premium, and established new fronting partnerships. Overall, we continue to dedicate our capital and resources towards targeted segments of our book of business that maximise our risk-adjusted returns.”
For the full year 2023, Palomar expects to achieve adjusted net income of $90 million to $93 million, the insurer stated. This includes $3.4 million of catastrophe losses incurred during the nine months ended September 30, 2023.
