La Jolla, California-based insurance holding company, Palomar Holdings, Inc., has reported a significant rise in net income to $12 million for the second-quarter of 2020.
The insurer’s net income jumped by a huge 79.3% from the $6.7 million posted in the second-quarter of 2019, while adjusted net income hiked by 63% to $13 million, compared to $8 million a year earlier.
Palomar’s gross written premiums (GWP) also increased in the quarter by almost 44% to $83.8 million, while net earned premiums increased by over 69% year-on-year.
The company did book more losses in the quarter, reporting elevated losses and loss adjustment expenses for Q2 of $4 million, resulting in a loss ratio of 10.1%. This compares to a total loss ratio of 2.8% reported in Q2 2019.
According to Palomar, loss activity throughout Q2 2020 mostly came from attritional losses within the firm’s commercial all risk and specialty homeowners lines. In addition, Palomar booked $0.1 million of unfavourable prior year development in Q2 2020.
Underwriting income amounted to $12.4 million across the firm in the quarter, resulting in a combined ratio of 68.4%, compared with underwriting income of $7.2 million and a combined ratio of 69.2% in Q2 2019.
Net investment income improved significantly at Palomar in Q2, by 42.5% to $2.1 million against $1.5 million in the prior year quarter. The firm attributes the higher result mostly to a higher average balance of investments held during the quarter, mainly as a result of its IPO in April 2019.
Chairman and Chief Executive Officer (CEO) of Palomar, Mac Armstrong, commented: “The second quarter found Palomar continuing to operate capably in a difficult environment. While the COVID -19 pandemic and civil unrest challenged our nation, we navigated and will continue to navigate through these uncharted waters by focusing on Palomar’s founding principles, which compel us to help build and restore challenged and damaged areas of our country. That mantra along with our Company’s values and culture will allow us to ably face today’s challenges and moreover make a meaningful and lasting impact.
“A hallmark of our success has been our ability to not only embrace change but also to anticipate it. This mentality is ingrained in our people and our operations and it will ensure that we remain focused on delivering innovative products that meet the needs of our customers.”
Adding: “We also successfully completed our June 1st reinsurance placement procuring an incremental $200 million of limit to support future growth.
“Lastly, we announced the formation of Palomar Excess and Surplus Insurance Company (“Palomar E&S”), our newly established surplus lines insurance company. Palomar E&S presents a natural and exciting progression in our Company’s evolution as we extend our specialty property franchise to the surplus lines insurance market. We capitalized Palomar E&S with approximately $100 million in surplus including proceeds from a primary share issuance in June. We expect to begin writing business during the third quarter.”
Following the launch of Palomar Excess and Surplus Insurance Company (PESIC), financial services ratings agency A.M. Best has assigned the new start-up underwriting company a Financial Strength Rating of A- whilst also receiving a Long-Term Issuer Credit Rating of A-.