Palomar Holdings, Inc. Reports First Quarter 2024 Results

Advertisement

LA JOLLA, Calif., May 02, 2024 (GLOBE NEWSWIRE) — Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported net income of $26.4 million, or $1.04 per diluted share, for the first quarter of 2024 compared to net income of $17.3 million, or $0.68 per diluted share, for the first quarter of 2023. Adjusted net income(1) was $27.8 million, or $1.09 per diluted share, for the first quarter of 2024 as compared to $20.4 million, or $0.80 per diluted share, for the first quarter of 2023.

First Quarter 2024 Highlights

  • Gross written premiums increased by 47.2% to $368.1 million compared to $250.1 million in the first quarter of 2023
  • Net income of $26.4 million, compared to $17.3 million in the first quarter of 2023
  • Adjusted net income(1) of $27.8 million, compared to $20.4 million in the first quarter of 2023
  • Total loss ratio of 24.9% compared to 24.8% in the first quarter of 2023
  • Combined ratio of 76.9% compared to 77.9% in the first quarter of 2023
  • Adjusted combined ratio(1) of 73.0%, compared to 73.3%, in the first quarter of 2023
  • Annualized return on equity of 21.7%, compared to 17.5% in the first quarter of 2023
  • Annualized adjusted return on equity(1) of 22.9%, compared to 20.7% in the first quarter of 2023

Advertisement

(1)         See discussion of Non-GAAP and Key Performance Indicators below.

Mac Armstrong, Chairman and Chief Executive Officer, commented, “The strong results of our first quarter are a testament to Palomar’s focus on profitable growth. We further demonstrated our ability to ‘grow where we want to’ and deliver predictable earnings. Our five product categories combined to generate gross written premium growth of 47.2% with especially strong contributions from our Crop and Casualty products. These younger product lines combined with our market leading Earthquake franchise, which grew 18% on a same-store basis, drove adjusted net income growth of 36.0%, and an adjusted return on equity of 22.9%.” 

Mr. Armstrong continued, “Our portfolio of specialty insurance products is well positioned and provides a strong foundation to our full year outlook which we have raised today. Additionally, our continued investment across the organization will sustain not only our Palomar 2X strategic plan but also deliver industry leading profitability and returns. We are off to a terrific start to the year.”

Underwriting Results

Gross written premiums increased 47.2% to $368.1 million compared to $250.1 million in the first quarter of 2023, while net earned premiums increased 29.6% compared to the prior year’s first quarter. 

Losses and loss adjustment expenses for the first quarter were $26.8 million, comprised of $23.5 million of non-catastrophe attritional losses and $3.4 million of catastrophe losses from flood activity. The loss ratio for the quarter was 24.9%, comprised of a catastrophe loss ratio(1) of 3.1% and an attritional loss ratio of 21.8%, compared to a loss ratio of 24.8% during the same period last year comprised of a catastrophe loss ratio(1) of 2.2% and attritional loss ratio of 22.6%.

Underwriting income(1) for the first quarter was $25.0 million resulting in a combined ratio of 76.9% compared to underwriting income of $18.4 million resulting in a combined ratio of 77.9% during the same period last year. The Company’s adjusted underwriting income(1) was $29.2 million resulting in an adjusted combined ratio(1) of 73.0% in the first quarter compared to adjusted underwriting income(1) of $22.2 million and an adjusted combined ratio(1) of 73.3% during the same period last year.

Investment Results
Net investment income increased by 39.4% to $7.1 million compared to $5.1 million in the prior year’s first quarter. The increase was primarily due to higher yields on invested assets and a higher average balance of investments held during the three months ended March 31, 2024 due to cash generated from operations. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 3.62 years at March 31, 2024. Cash and invested assets totaled $766.4 million at March 31, 2024. During the first quarter, the Company recorded net realized and unrealized gains of $3.0 million related to its investment portfolio as compared to net realized and unrealized gains of $0.1 million during the same period last year.

Tax Rate
The effective tax rate for the three months ended March 31, 2024 was 23.2% compared to 23.5% for the three months ended March 31, 2023. For the current quarter, the Company’s income tax rate differed from the statutory rate due primarily to the non-deductible executive compensation expense.

Stockholders Equity and Returns
Stockholders’ equity was $501.7 million at March 31, 2024, compared to $404.6 million at March 31, 2023. For the three months ended March 31, 2024, the Company’s annualized return on equity was 21.7% compared to 17.5% for the same period in the prior year while adjusted return on equity(1) was 22.9% compared to 20.7% for the same period in the prior year. There were no share repurchases during the three months ended March 31, 2024.

Full Year 2024 Outlook
For the full year 2024, the Company is increasing its guidance range and now expects to achieve adjusted net income of $113 million to $118 million. This range includes $3.4 million of catastrophe losses incurred during the three months ended March 31, 2024. 

Conference Call
As previously announced, Palomar will host a conference call Friday May 3, 2024, to discuss its first quarter 2024 results at 11:00 a.m. (Eastern Time). The conference call can be accessed live by dialing 1-877-423-9813 or for international callers, 1-201-689-8573, and requesting to be joined to the Palomar First Quarter 2024 Earnings Conference Call. A replay will be available starting at 4:00 p.m. (Eastern Time) on May 3, 2024, and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13745676. The replay will be available until 11:59 p.m. (Eastern Time) on May 10, 2024.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of the Company’s website at http://ir.palomarspecialty.com/. The online replay will remain available for a limited time beginning immediately following the call.

About Palomar Holdings, Inc.
Palomar Holdings, Inc. is the holding company of subsidiaries Palomar Specialty Insurance Company (“PSIC”), Palomar Specialty Reinsurance Company Bermuda Ltd., Palomar Insurance Agency, Inc.,  Palomar Excess and Surplus Insurance Company (“PESIC”), and Palomar Underwriters Exchange Organization, Inc. Palomar’s consolidated results also include Laulima Reciprocal Exchange, a variable interest entity for which the Company is the primary beneficiary. Palomar is an innovative specialty insurer serving residential and commercial clients in five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop. Palomar’s insurance subsidiaries, Palomar Specialty Insurance Company, Palomar Specialty Reinsurance Company Bermuda Ltd., and Palomar Excess and Surplus Insurance Company, have a financial strength rating of “A-” (Excellent) from A.M. Best. 

To learn more, visit PLMR.com.

Non-GAAP and Key Performance Indicators

Palomar discusses certain key performance indicators, described below, which provide useful information about the Company’s business and the operational factors underlying the Company’s financial performance.

Underwriting revenue is a non-GAAP financial measure defined as total revenue, excluding net investment income and net realized and unrealized gains and losses on investments. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of total revenue calculated in accordance with GAAP to underwriting revenue.

Underwriting income is a non-GAAP financial measure defined as income before income taxes excluding net investment income, net realized and unrealized gains and losses on investments, and interest expense. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of income before income taxes calculated in accordance with GAAP to underwriting income.

Adjusted net income is a non-GAAP financial measure defined as net income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. Palomar calculates the tax impact only on adjustments which would be included in calculating the Company’s income tax expense using the estimated tax rate at which the company received a deduction for these adjustments. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of net income calculated in accordance with GAAP to adjusted net income.

Annualized Return on equity is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period.

Annualized adjusted return on equity is a non-GAAP financial measure defined as adjusted net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of return on equity calculated using unadjusted GAAP numbers to adjusted return on equity.

Loss ratio, expressed as a percentage, is the ratio of losses and loss adjustment expenses, to net earned premiums.

Expense ratio, expressed as a percentage, is the ratio of acquisition and other underwriting expenses, net of commission and other income to net earned premiums.

Combined ratio is defined as the sum of the loss ratio and the expense ratio. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.

Adjusted combined ratio is a non-GAAP financial measure defined as the sum of the loss ratio and the expense ratio calculated excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of combined ratio calculated using unadjusted GAAP numbers to adjusted combined ratio.

Diluted adjusted earnings per share is a non-GAAP financial measure defined as adjusted net income divided by the weighted-average common shares outstanding for the period, reflecting the dilution which could occur if equity-based awards are converted into common share equivalents as calculated using the treasury stock method. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of diluted earnings per share calculated in accordance with GAAP to diluted adjusted earnings per share.

Catastrophe loss ratio is a non-GAAP financial measure defined as the ratio of catastrophe losses to net earned premiums. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of loss ratio calculated using unadjusted GAAP numbers to catastrophe loss ratio.

Adjusted combined ratio excluding catastrophe losses is a non-GAAP financial measure defined as adjusted combined ratio excluding the impact of catastrophe losses.  See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of combined ratio calculated using unadjusted GAAP numbers to adjusted combined ratio excluding catastrophe losses.

Adjusted underwriting income is a non-GAAP financial measure defined as underwriting income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of income before income taxes calculated in accordance with GAAP to adjusted underwriting income.

Tangible stockholders equity is a non-GAAP financial measure defined as stockholders’ equity less goodwill and intangible assets. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of stockholders’ equity calculated in accordance with GAAP to tangible stockholders’ equity.

Safe Harbor Statement
Palomar cautions you that statements contained in this press release may regard matters that are not historical facts but are forward-looking statements. These statements are based on the company’s current beliefs and expectations. The inclusion of forward-looking statements should not be regarded as a representation by Palomar that any of its plans will be achieved. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in the Company’s business. The forward-looking statements are typically, but not always, identified through use of the words “believe,” “expect,” “enable,” “may,” “will,” “could,” “intends,” “estimate,” “anticipate,” “plan,” “predict,” “probable,” “potential,” “possible,” “should,” “continue,” and other words of similar meaning. Actual results could differ materially from the expectations contained in forward-looking statements as a result of several factors, including unexpected expenditures and costs, unexpected results or delays in development and regulatory review, regulatory approval requirements, the frequency and severity of adverse events and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the Company’s filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Contact
Media Inquiries 
Lindsay Conner 
1-551-206-6217 
[email protected] 

Investor Relations
Jamie Lillis
1-203-428-3223
[email protected]
Source: Palomar Holdings, Inc.


Summary of Operating Results:

The following tables summarize the Company’s results for the three months ended March 31, 2024 and 2023:

    Three Months Ended                  
    March 31,                  
    2024     2023     Change     % Change
    ($ in thousands, except per share data)  
Gross written premiums   $ 368,078     $ 250,112     $ 117,966       47.2 %
Ceded written premiums     (228,171 )     (170,344 )     (57,827 )     33.9 %
Net written premiums     139,907       79,768       60,139       75.4 %
Net earned premiums     107,866       83,241       24,625       29.6 %
Commission and other income     528       695       (167 )     (24.0 )%
Total underwriting revenue (1)     108,394       83,936       24,458       29.1 %
Losses and loss adjustment expenses     26,837       20,652       6,185       29.9 %
Acquisition expenses, net of ceding commissions and fronting fees     31,798       25,679       6,119       23.8 %
Other underwriting expenses     24,804       19,222       5,582       29.0 %
Underwriting income (1)     24,955       18,383       6,572       35.8 %
Interest expense     (740 )     (1,020 )     280       (27.5 )%
Net investment income     7,139       5,120       2,019       39.4 %
Net realized and unrealized gains on investments     3,002       146       2,856       NM  
Income before income taxes     34,356       22,629       11,727       51.8 %
Income tax expense     7,974       5,316       2,658       50.0 %
Net income   $ 26,382     $ 17,313     $ 9,069       52.4 %
Adjustments:                                
Net realized and unrealized gains on investments     (3,002 )     (146 )     (2,856 )     NM  
Stock-based compensation expense     3,820       3,450       370       10.7 %
Amortization of intangibles     390       313       77       24.6 %
Expenses associated with catastrophe bond           50       (50 )     (100.0 )%
Tax impact     204       (540 )     744       (137.8 )%
Adjusted net income (1)   $ 27,794     $ 20,440     $ 7,354       36.0 %
Key Financial and Operating Metrics                                
Annualized return on equity     21.7 %     17.5 %                
Annualized adjusted return on equity (1)     22.9 %     20.7 %                
Loss ratio     24.9 %     24.8 %                
Expense ratio     52.0 %     53.1 %                
Combined ratio     76.9 %     77.9 %                
Adjusted combined ratio (1)     73.0 %     73.3 %                
Diluted earnings per share   $ 1.04     $ 0.68                  
Diluted adjusted earnings per share (1)   $ 1.09     $ 0.80                  
Catastrophe losses   $ 3,359     $ 1,806                  
Catastrophe loss ratio (1)     3.1 %     2.2 %                
Adjusted combined ratio excluding catastrophe losses (1)     69.8 %     71.2 %                
Adjusted underwriting income (1)   $ 29,165     $ 22,196     $ 6,969       31.4 %
NM – not meaningful                                
                                 

(1)- Indicates Non-GAAP financial measure- see above for definition of Non-GAAP financial measures and see below for reconciliation of Non-GAAP financial measures to their most directly comparable measures prepared in accordance with GAAP.

Condensed Consolidated Balance sheets

Palomar Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except shares and par value data)

 
    March 31,     December 31,  
    2024     2023  
    (Unaudited)          
Assets                
Investments:                
Fixed maturity securities available for sale, at fair value (amortized cost: $697,505 in 2024; $675,130 in 2023)   $ 662,992     $ 643,799  
Equity securities, at fair value (cost: $32,785 in 2024; $43,003 in 2023)     37,171       43,160  
Equity method investment     2,597       2,617  
Other investments     1,871        
Total investments     704,631       689,576  
Cash and cash equivalents     61,387       51,546  
Restricted cash     377       306  
Accrued investment income     5,192       5,282  
Premiums receivable     322,723       261,972  
Deferred policy acquisition costs, net of ceding commissions and fronting fees     66,508       60,990  
Reinsurance recoverable on paid losses and loss adjustment expenses     28,542       32,172  
Reinsurance recoverable on unpaid losses and loss adjustment expenses     292,024       244,622  
Ceded unearned premiums     298,975       265,808  
Prepaid expenses and other assets     82,679       72,941  
Deferred tax assets, net     9,408       10,119  
Property and equipment, net     312       373  
Goodwill and intangible assets, net     11,926       12,315  
Total assets   $ 1,884,684     $ 1,708,022  
Liabilities and stockholders’ equity                
Liabilities:                
Accounts payable and other accrued liabilities   $ 39,637     $ 42,376  
Reserve for losses and loss adjustment expenses     402,187       342,275  
Unearned premiums     662,307       597,103  
Ceded premium payable     215,329       181,742  
Funds held under reinsurance treaty     13,716       13,419  
Income taxes payable     6,850       7,255  
Borrowings from credit agreements     43,000       52,600  
Total liabilities     1,383,026       1,236,770  
Stockholders’ equity:                
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of March 31, 2024 and December 31, 2023            
Common stock, $0.0001 par value, 500,000,000 shares authorized, 24,921,060 and 24,772,987 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively     3       3  
Additional paid-in capital     357,135       350,597  
Accumulated other comprehensive loss     (26,505 )     (23,991 )
Retained earnings     171,025       144,643  
Total stockholders’ equity     501,658       471,252  
Total liabilities and stockholders’ equity   $ 1,884,684     $ 1,708,022  

Condensed Consolidated Income Statement

Palomar Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income (loss) (Unaudited)

(in thousands, except shares and per share data)

 
    Three Months Ended  
    March 31,  
    2024     2023  
Revenues:                
Gross written premiums   $ 368,078     $ 250,112  
Ceded written premiums     (228,171 )     (170,344 )
Net written premiums     139,907       79,768  
Change in unearned premiums     (32,041 )     3,473  
Net earned premiums     107,866       83,241  
Net investment income     7,139       5,120  
Net realized and unrealized gains on investments     3,002       146  
Commission and other income     528       695  
Total revenues     118,535       89,202  
Expenses:                
Losses and loss adjustment expenses     26,837       20,652  
Acquisition expenses, net of ceding commissions and fronting fees     31,798       25,679  
Other underwriting expenses     24,804       19,222  
Interest expense     740       1,020  
Total expenses     84,179       66,573  
Income before income taxes     34,356       22,629  
Income tax expense     7,974       5,316  
Net income   $ 26,382     $ 17,313  
Other comprehensive income, net:                
Net unrealized (losses) gains on securities available for sale     (2,514 )     5,474  
Net comprehensive income   $ 23,868     $ 22,787  
Per Share Data:                
Basic earnings per share   $ 1.06     $ 0.69  
Diluted earnings per share   $ 1.04     $ 0.68  
                 
Weighted-average common shares outstanding:                
Basic     24,862,367       24,969,703  
Diluted     25,468,564       25,442,902  

Underwriting Segment Data

The Company has a single reportable segment and offers specialty insurance products. Gross written premiums (GWP) by product, location and company are presented below:

    Three Months Ended March 31,                
    2024   2023                
    ($ in thousands)          
            % of           % of           %
    Amount   GWP   Amount   GWP   Change   Change
Product (1)                                                
Earthquake   $ 105,729       28.7 %   $ 93,495       37.4 %   $ 12,234       13.1 %
Fronting     94,831       25.8 %     91,755       36.7 %     3,076       3.4 %
Inland Marine and Other Property     76,876       20.9 %     52,705       21.1 %     24,171       45.9 %
Casualty     51,935       14.1 %     12,157       4.9 %     39,778       327.2 %
Crop     38,707       10.5 %           %     38,707       %
Total Gross Written Premiums   $ 368,078       100.0 %   $ 250,112       100.0 %   $ 117,966       47.2 %
                                                 

(1) – Beginning in 2024, the Company has updated the categorization of its products to align with management’s current strategy and view of the business. Prior year amounts have been reclassified for comparability purposes. The recategorization is for presentation purposes only and does not impact overall gross written premiums.

    Three Months Ended March 31,
    2024   2023
    ($ in thousands)  
            % of           % of
    Amount   GWP   Amount   GWP
State                                
California   $ 157,217       42.7 %   $ 131,889       52.7 %
Texas     40,795       11.1 %     23,210       9.3 %
Florida     13,924       3.8 %     12,096       4.8 %
Hawaii     12,516       3.4 %     10,105       4.0 %
Washington     12,002       3.3 %     11,972       4.8 %
Colorado     9,605       2.6 %     1,848       0.7 %
New York     8,030       2.2 %     3,871       1.5 %
New Mexico     7,469       2.0 %     194       0.1 %
Other     106,520       28.9 %     54,927       22.0 %
Total Gross Written Premiums   $ 368,078       100.0 %   $ 250,112       100.0 %

    Three Months Ended March 31,
    2024   2023
    ($ in thousands)  
            % of           % of
    Amount   GWP   Amount   GWP
Subsidiary                                
PSIC   $ 222,657       60.5 %   $ 150,704       60.3 %
PESIC     136,493       37.1 %     99,408       39.7 %
Laulima     8,928       2.4 %           %
Total Gross Written Premiums   $ 368,078       100.0 %   $ 250,112       100.0 %

Gross and net earned premiums

The table below shows the amount of premiums the Company earned on a gross and net basis and the Company’s net earned premiums as a percentage of gross earned premiums for each period presented:

    Three Months Ended                
    March 31,                
    2024   2023   Change   % Change
    ($ in thousands)  
Gross earned premiums   $ 302,872     $ 225,243     $ 77,629       34.5 %
Ceded earned premiums     (195,006 )     (142,002 )     (53,004 )     37.3 %
Net earned premiums   $ 107,866     $ 83,241     $ 24,625       29.6 %
                                 
Net earned premium ratio     35.6 %     37.0 %                
                                 

Loss detail

    Three Months Ended                
    March 31,                
    2024   2023   Change   % Change
    ($ in thousands)  
Catastrophe losses   $ 3,359     $ 1,806     $ 1,553       86.0 %
Non-catastrophe losses     23,478       18,846       4,632       24.6 %
Total losses and loss adjustment expenses   $ 26,837     $ 20,652     $ 6,185       29.9 %

The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses:

    Three Months Ended March 31,  
    2024     2023  
    (in thousands)  
Reserve for losses and LAE net of reinsurance recoverables at beginning of period   $ 97,653     $ 77,520  
Add: Incurred losses and LAE, net of reinsurance, related to:                
Current year     26,333       17,300  
Prior years     504       3,352  
Total incurred     26,837       20,652  
Deduct: Loss and LAE payments, net of reinsurance, related to:                
Current year     4,895       1,393  
Prior years     9,432       15,413  
Total payments     14,327       16,806  
Reserve for losses and LAE net of reinsurance recoverables at end of period     110,163       81,366  
Add: Reinsurance recoverables on unpaid losses and LAE at end of period     292,024       183,601  
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period   $ 402,187     $ 264,967  


Reconciliation of Non-GAAP Financial Measures

For the three months ended March 31, 2024 and 2023, the Non-GAAP financial measures discussed above reconcile to their most comparable GAAP measures as follows:

Underwriting revenue

    Three Months Ended  
    March 31,  
    2024     2023  
    (in thousands)  
Total revenue   $ 118,535     $ 89,202  
Net investment income     (7,139 )     (5,120 )
Net realized and unrealized gains on investments     (3,002 )     (146 )
Underwriting revenue   $ 108,394     $ 83,936  

Underwriting income and adjusted underwriting income

    Three Months Ended  
    March 31,  
    2024     2023  
    (in thousands)  
Income before income taxes   $ 34,356     $ 22,629  
Net investment income     (7,139 )     (5,120 )
Net realized and unrealized gains on investments     (3,002 )     (146 )
Interest expense     740       1,020  
Underwriting income   $ 24,955     $ 18,383  
Stock-based compensation expense     3,820       3,450  
Amortization of intangibles     390       313  
Expenses associated with catastrophe bond           50  
Adjusted underwriting income   $ 29,165     $ 22,196  


Adjusted net income

    Three Months Ended  
    March 31,  
    2024     2023  
    (in thousands)  
Net income   $ 26,382     $ 17,313  
Adjustments:                
Net realized and unrealized gains on investments     (3,002 )     (146 )
Stock-based compensation expense     3,820       3,450  
Amortization of intangibles     390       313  
Expenses associated with catastrophe bond           50  
Tax impact     204       (540 )
Adjusted net income   $ 27,794     $ 20,440  


Annualized adjusted return on equity

    Three Months Ended  
    March 31,  
    2024     2023  
    (in thousands)  
                 
Annualized adjusted net income   $ 111,176     $ 81,761  
Average stockholders’ equity   $ 486,455     $ 394,701  
Annualized adjusted return on equity     22.9 %     20.7 %

Adjusted combined ratio

    Three Months Ended  
    March 31,  
    2024     2023  
    (in thousands)  
Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income   $ 82,911     $ 64,858  
Denominator: Net earned premiums   $ 107,866     $ 83,241  
Combined ratio     76.9 %     77.9 %
Adjustments to numerator:                
Stock-based compensation expense     (3,820 )     (3,450 )
Amortization of intangibles     (390 )     (313 )
Expenses associated with catastrophe bond           (50 )
Adjusted combined ratio     73.0 %     73.3 %

Diluted adjusted earnings per share

    Three Months Ended  
    March 31,  
    2024     2023  
    (in thousands, except per share data)  
                 
Adjusted net income   $ 27,794     $ 20,440  
Weighted-average common shares outstanding, diluted     25,468,564       25,442,902  
Diluted adjusted earnings per share   $ 1.09     $ 0.80  


Catastrophe loss ratio

    Three Months Ended  
    March 31,  
    2024     2023  
    (in thousands)  
Numerator: Losses and loss adjustment expenses   $ 26,837     $ 20,652  
Denominator: Net earned premiums   $ 107,866     $ 83,241  
Loss ratio     24.9 %     24.8 %
                 
Numerator: Catastrophe losses   $ 3,359     $ 1,806  
Denominator: Net earned premiums   $ 107,866     $ 83,241  
Catastrophe loss ratio     3.1 %     2.2 %


Adjusted combined ratio excluding catastrophe losses

    Three Months Ended  
    March 31,  
    2024     2023  
    (in thousands)  
Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income   $ 82,911     $ 64,858  
Denominator: Net earned premiums   $ 107,866     $ 83,241  
Combined ratio     76.9 %     77.9 %
Adjustments to numerator:                
Stock-based compensation expense     (3,820 )     (3,450 )
Amortization of intangibles     (390 )     (313 )
Expenses associated with catastrophe bond           (50 )
Catastrophe losses     (3,359 )     (1,806 )
Adjusted combined ratio excluding catastrophe losses     69.8 %     71.2 %


Tangible Stockholders equity

    March 31,     December 31,  
    2024     2023  
    (in thousands)  
Stockholders’ equity   $ 501,658     $ 471,252  
Goodwill and intangible assets     (11,926 )     (12,315 )
Tangible stockholders’ equity   $ 489,732     $ 458,937  

Disclaimer: The above press release comes to you under an arrangement with GlobeNewswire. AfternoonHeadlines.com takes no editorial responsibility for the same.