PLMR — Palomar Holdings, Inc.

Summary of Palomar Holdings, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Adjusted Net Income: $63.1 million ($2.31 per share), up 23% from $51.3 million ($1.87 per share) in Q1 2025.
• Gross Written Premiums: Increased 42% year-over-year to $629.8 million.
• Adjusted Combined Ratio: 76%, compared to 68.5% in Q1 2025 and 73.4% in Q4 2025.
• Adjusted Return on Equity: 26.6%, consistent with the previous year.
• Net Earned Premiums: Grew 59% year-over-year to $261.4 million.
• Losses and Loss Adjustment Expenses: Increased to $87.1 million from $38.7 million in Q1 2025, with a total loss ratio of 33.3%.
• Net Investment Income: $18 million, a 49% increase year-over-year.

2. Strategic Updates and Business Highlights

• Product Portfolio: Strong performance across all five product categories, with notable growth in crop (up 82%) and surety/credit (up 131%).
• Earthquake Franchise: Residential earthquake business performed well with 3% growth in gross written premiums, while commercial earthquake faced competitive pricing pressures.
• Acquisition Strategy: Integration of Gray Surety is progressing well, enhancing the company’s surety platform.
• AI Initiatives: Ongoing efforts to leverage AI across various departments to improve efficiency and decision-making.

3. Forward Guidance and Outlook

• Adjusted Net Income Guidance: Increased to $262 million to $278 million for 2026, reflecting a 25% year-over-year growth.
• Combined Ratio Expectation: Anticipated to be in the mid-70s for 2026.
• Premium Growth: Expected growth of 35%, up from a previous estimate of 30%.

4. Bad News, Challenges, or Points of Concern

• Commercial Earthquake Pricing Pressure: Rates decreased by approximately 18%, with expectations for continued declines throughout 2026.
• Competitive Landscape: Intense competition in the property sector, particularly for larger commercial accounts, leading to double-digit price declines.
• Loss Ratios: Increased loss ratio driven by higher attritional losses, particularly in casualty and crop segments.
• Market Dynamics: Casualty pricing is moderating, with potential impacts on retention decisions.

5. Notable Q&A Insights

• Retention Decisions: Management indicated a cautious approach to retention in a moderating price environment, with a focus on maintaining flat cessions.
• Commercial Earthquake Outlook: Management expects continued pricing pressure but believes strong residential performance will support overall growth.
• Conservative Reserving Practices: Over 85% of casualty reserves are held as Incurred But Not Reported (IBNR), reflecting a conservative approach to reserving.
• Impact of Drought on Crop Insurance: Drought conditions are a concern for winter wheat but are expected to be mitigated by reinsurance structures.

Overall, Palomar Holdings reported strong financial results for Q1 2026, driven by growth across its diversified product portfolio, while also facing challenges from competitive pressures and pricing dynamics in certain segments. The company remains optimistic about its growth trajectory and strategic initiatives moving forward.