Palomar Holdings ((PLMR)) has held its Q1 earnings call. Read on for the main highlights of the call.
Palomar Holdings’ recent earnings call reflected a robust financial performance, marked by significant growth across key segments and successful strategic initiatives. The company showcased strong results, although challenges such as temporary premium declines in the fronting business and rate pressures in the commercial property sector were noted.
Record Adjusted Net Income Growth
Palomar Holdings reported an impressive 85% year-over-year growth in adjusted net income, reaching $51.3 million. This substantial increase underscores the company’s strong financial performance and the successful execution of its strategic initiatives.
Sustained Premium Growth
The company experienced a 20% increase in gross written premium during the first quarter, driven by the introduction of new products and a balanced portfolio. Same-store premium growth was particularly strong at 37%, highlighting the effectiveness of Palomar’s growth strategies.
Strong Earthquake and Hawaiian Hurricane Growth
Palomar’s earthquake gross written premium grew by 23% year-over-year, while Hawaiian hurricane premiums surged by 82%. These figures indicate strong demand and effective market adaptation in these segments.
Casualty Segment Expansion
The casualty segment saw a remarkable 113% growth in gross written premium year-over-year. This expansion was fueled by strong performances in general liability, E&S casualty, real estate E&O, and environmental liability.
Crop Business Expansion
Palomar’s crop franchise generated $48 million in written premium, marking a 25% increase year-over-year. This growth was supported by strategic investments in talent and geographic expansion.
Successful Reinsurance Placements
The company secured $525 million in earthquake limit through the Torrey Pines Re catastrophe bond issuance and placed a new Laulima excess loss treaty, both at favorable pricing, demonstrating effective risk management.
Raised Full-Year 2025 Guidance
Palomar Holdings increased its full-year adjusted net income guidance to a range of $186 million to $200 million. This upward revision reflects the company’s confidence in continued growth and profitability.
Fronting Business Premium Decline
The fronting business experienced a 43% decline in premiums year-over-year due to the runoff of the Omaha National partnership, presenting a temporary growth headwind for the company.
Commercial Property Rate Pressure
Palomar is facing increased competition and rate decreases in the commercial property segment, particularly in large commercial layered and shared accounts, which could impact future growth.
Elevated Tariff Concerns
Global economic uncertainty and tariffs pose potential risks, but the impact on Palomar’s short-tail property products is expected to be minimal at current levels.
Expenses from Crop Business Acquisition
The acquisition of Advanced AgProtection led to increased expenses in the second quarter, with revenue from this acquisition anticipated later in the year.
Forward-Looking Guidance
Palomar Holdings’ forward-looking guidance indicates robust financial performance, with significant growth across various metrics. The company achieved an 85% increase in adjusted net income and maintained an adjusted combined ratio of 69%. With a 20% growth in gross written premiums and a notable 37% increase in same-store premium growth, Palomar is well-positioned for long-term growth, supported by strategic acquisitions and a diversified portfolio.
In summary, Palomar Holdings’ earnings call highlighted a strong financial performance with significant growth across key segments. Despite facing some challenges, the company’s strategic initiatives and successful reinsurance placements position it well for continued growth and profitability. The raised guidance further underscores Palomar’s confidence in its future prospects.