Palomar Holdings Inc (PLMR, Financial) released its third-quarter earnings report on November 1, 2023, revealing a substantial increase in net income to $18.4 million, or $0.73 per diluted share, compared to $4.3 million, or $0.17 per diluted share, in the third quarter of 2022. The company's adjusted net income was $23.3 million, or $0.92 per diluted share, marking a 153% growth from $9.2 million, or $0.36 per diluted share, in the same period last year.
Financial Highlights
Palomar Holdings Inc (PLMR, Financial) reported gross written premiums of $314.0 million, a 24.0% increase from $253.1 million in the third quarter of 2022. The company's net earned premiums also increased by 10.1% compared to the prior year's third quarter. Losses and loss adjustment expenses for the third quarter were $16.1 million, resulting in a loss ratio of 18.8%, a significant improvement from a loss ratio of 39.6% during the same period last year.
Underwriting income for the third quarter was $20.7 million, resulting in a combined ratio of 75.8% compared to underwriting income of $4.1 million and a combined ratio of 94.8% during the same period last year. The company's adjusted underwriting income was $25.0 million, resulting in an adjusted combined ratio of 70.9% in the third quarter compared to adjusted underwriting income of $7.5 million and an adjusted combined ratio of 90.3% during the same period last year.
Investment and Tax Rate
Net investment income increased by 61.0% to $6.0 million compared to $3.7 million in the prior year’s third quarter. The effective tax rate for the three months ended September 30, 2023, was 24.9% compared to 17.5% for the same period in 2022.
Stockholders’ Equity and Returns
Stockholders' equity was $421.3 million at September 30, 2023, compared to $367.8 million at September 30, 2022. For the three months ended September 30, 2023, the Company’s annualized return on equity was 17.7% compared to 4.6% for the same period in the prior year while adjusted return on equity was 22.3% compared to 9.9% for the same period in the prior year.
Outlook for 2023
For the full year 2023, the Company expects to achieve adjusted net income of $90 million to $93 million. This includes $3.4 million of catastrophe losses incurred during the nine months ended September 30, 2023.
CEO's Commentary
Mac Armstrong, Chairman and Chief Executive Officer, commented on the results,
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."
Explore the complete 8-K earnings release (here) from Palomar Holdings Inc for further details.
