California-headquartered specialty insurer Palomar Holdings has announced the successful placement of certain excess of loss (XOL) reinsurance treaties that support and provide incremental limit for its earthquake line of business.
In total, Palomar has secured approximately $187.5 million of incremental XOL limit from a syndicated panel of long-term trading partners which will incept between April 1, 2023 and June 1, 2023 and provide coverage through to June 1, 2024.
Palomar notes that the expanded XOL coverage will further enable the sustained growth of its profitable earthquake business.
Mac Armstrong, Chairman and Chief Executive Officer of Palomar, commented, “We are pleased with the continued and incremental support from our long-time reinsurance partners as we successfully secured approximately $187.5 million of additional XOL limit to support our growth in what remains a very attractive market for earthquake insurance.
“Importantly, the market for our reinsurance was orderly and the pricing was in-line with the expectations that we outlined on our fourth quarter earnings call.
“This limit affords us the ability to both grow and optimize our earthquake book of business and execute on our Palomar 2X strategic plan.”
Armstrong continued, “Delivering predictable earnings remains a strategic priority for our team. To achieve this, we have been executing a multi-year strategic plan designed to reduce volatility in our book of business and most notably contract our exposure to continental U.S. hurricane risk.
“The reduction in our continental hurricane exposure not only makes a positive impact on our risk profile but also diminishes the utility of our current aggregate XOL reinsurance treaty. As such, we opted to non-renew our aggregate cover.
“While there were compelling coverage offers from existing reinsurers, we will pursue alternative forms of risk transfer that provide protection from multiple severe events.
“I would like to personally thank all our reinsurance partners for their support as we continue to build Palomar into a premier specialty insurance company.”
In its full year 2022 results, Palomar reported that gross written premiums increased by 64.8% to $881.9m compared to $535.2m in 2021.
The firm’s net income for the full year was $52.2m compared to $45.8m in 2021, with an adjusted net income of $71.3m, in contrast to $52.4m in 2021.
