California-headquartered specialty insurer Palomar Holdings has reported that 2022 full year gross written premiums increased by 64.8% to $881.9m compared to $535.2m in 2021.
Palomar’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.
Net income for Q4 alone was $18.8m, an increase of $2.2m from the same quarter of 2021.
The firm’s full-year combined ratio was 80.4%, a shade higher than 2021’s 80.0%.
Palomar reported that its adjusted combined ratio was 75.6%, compared to 76.1% in 2021, while the firm’s total loss ratio was 24.9%, up slightly from 17.7% in 2021. Return on equity was 13.4%, a marginal increase from 12.1% in 2021.
As for the firm’s underwriting results in Q4, gross written premiums increased 59.5% to $239.1m compared to $149.9 million in Q4 of 2021, while net earned premiums increased 21.2%.
Losses and loss adjustment expenses for the quarter were $18.4m including $16.6m of non-catastrophe attritional losses and $1.9m of unfavourable catastrophe development from prior periods.
The loss ratio for the quarter was 22.4%, comprised of a catastrophe loss ratio of 2.3% and an attritional loss ratio of 20.1%, compared to a loss ratio of 15.0% during the same period in 2021 comprised of a catastrophe loss ratio of negative 2.5% and attritional loss ratio of 17.5%.
Q4 underwriting income was $20.1m, resulting in a combined ratio of 75.5% compared to 2021’s Q4 underwriting income of $17m and combined ratio of 75.0%.
Palomar’s adjusted underwriting income was $23.5m, resulting in an adjusted combined ratio of 71.4% in the quarter compared to an adjusted underwriting income of $19.9m and an adjusted combined ratio of 70.7% in Q4 of 2021.
Mac Armstrong, Chairman and Chief Executive Officer of Palomar, commented, “Palomar’s strong fourth quarter results are the final illustration of success in a record-setting year.
“During the quarter we generated nearly 60% top-line growth while also achieving strong profitability with an annualized adjusted return on equity of 22.4%.
“For the full year 2022, we delivered record premium growth and earnings, generating an adjusted ROE of 18.3%. The fourth quarter and full-year results demonstrate further execution of Palomar 2X, our strategy to profitably grow the company, deliver predictable earnings, and achieve an ROE in excess of 20% while maintaining industry-leading profit margins.”
Armstrong continued, “Looking to 2023, we expect to earn adjusted net income of $86 million to $90 million. This guidance implies 23% net income growth and an adjusted ROE of 21% at the midpoint of our expected range – a target that exceeds our PLMR 2X stated objective of 20%.
“We believe our guidance points to the durability of our business model as we successfully navigate the reinsurance market; execute on diversifying endeavours like PLMR-Front as well as our casualty and inland marine divisions; and invest in underwriting talent, technology and data analytics to support new and existing products.”
