Document and Entity Information
Document and Entity Information - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | May 05, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-38873 | |
Entity Registrant Name | Palomar Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-3972551 | |
Entity Address, Address Line One | 7979 Ivanhoe Avenue | |
Entity Address, Address Line Two | Suite 500 | |
Entity Address, City or Town | La Jolla | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92037 | |
City Area Code | 619 | |
Local Phone Number | 567-5290 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | PLMR | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 24,857,872 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001761312 | |
Amendment Flag | false | |
Entity Listing, Par Value Per Share | $ 0.0001 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Investments: | ||
Fixed maturity securities available for sale, at fair value (amortized cost: $594,736 in 2023; $561,580 in 2022) | $ 554,489 | $ 515,064 |
Equity securities, at fair value (cost: $42,352 in 2023; $42,352 in 2022) | 39,356 | 38,576 |
Total investments | 593,845 | 553,640 |
Cash and cash equivalents | 80,295 | 68,108 |
Restricted cash | 65 | 56 |
Accrued investment income | 4,077 | 3,777 |
Premiums receivable | 187,910 | 162,858 |
Deferred policy acquisition costs, net of ceding commissions and fronting fees | 54,187 | 56,740 |
Reinsurance recoverable on paid losses and loss adjustment expenses | 45,801 | 39,718 |
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 183,601 | 153,895 |
Ceded unearned premiums | 232,425 | 204,084 |
Prepaid expenses and other assets | 41,291 | 44,088 |
Deferred tax assets, net | 9,005 | 10,622 |
Property and equipment, net | 540 | 603 |
Intangible assets, net | 7,948 | 8,261 |
Total assets | 1,440,990 | 1,306,450 |
Liabilities: | ||
Accounts payable and other accrued liabilities | 19,401 | 25,760 |
Reserve for losses and loss adjustment expenses | 264,967 | 231,415 |
Unearned premiums | 496,182 | 471,314 |
Ceded premium payable | 173,035 | 146,127 |
Funds held under reinsurance treaty | 11,356 | 10,680 |
Borrowings from credit agreements | 71,400 | 36,400 |
Total liabilities | 1,036,341 | 921,696 |
Stockholders' equity: | ||
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | ||
Common stock, $0.0001 par value, 500,000,000 shares authorized, 24,942,196 and 25,027,467 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 3 | 3 |
Additional paid-in capital | 337,492 | 333,558 |
Accumulated other comprehensive loss | (31,041) | (36,515) |
Retained earnings | 98,195 | 87,708 |
Total stockholders' equity | 404,649 | 384,754 |
Total liabilities and stockholders' equity | $ 1,440,990 | $ 1,306,450 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Fixed maturity securities available for sale, amortized cost | ||
Fixed maturity securities available for sale, amortized cost | $ 594,736 | $ 561,580 |
Equity securities, cost | ||
Equity securities, cost | $ 42,352 | $ 42,352 |
Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 24,942,196 | 25,027,467 |
Common stock, shares outstanding (in shares) | 24,942,196 | 25,027,467 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues: | ||
Gross written premiums | $ 250,112 | $ 170,934 |
Ceded written premiums | (170,344) | (89,552) |
Net written premiums | 79,768 | 81,382 |
Change in unearned premiums | 3,473 | (5,350) |
Net earned premiums | 83,241 | 76,032 |
Net investment income | 5,120 | 2,579 |
Net realized and unrealized gains (losses) on investments | 146 | (1,278) |
Commission and other income | 695 | 777 |
Total revenues | 89,202 | 78,110 |
Expenses: | ||
Losses and loss adjustment expenses | 20,652 | 14,954 |
Acquisition expenses, net of ceding commissions and fronting fees | 25,679 | 28,054 |
Other underwriting expenses | 19,222 | 15,925 |
Interest expense | 1,020 | 93 |
Total expenses | 66,573 | 59,026 |
Income before income taxes | 22,629 | 19,084 |
Income tax expense | 5,316 | 4,547 |
Net income | 17,313 | 14,537 |
Other comprehensive income (loss), net: | ||
Net unrealized gains (losses) on securities available for sale | 5,474 | (18,463) |
Net comprehensive income (loss) | $ 22,787 | $ (3,926) |
Per Share Data: | ||
Basic earnings per share | $ 0.69 | $ 0.57 |
Diluted earnings per share | $ 0.68 | $ 0.56 |
Weighted-average common shares outstanding: | ||
Basic (in shares) | 24,969,703 | 25,362,179 |
Diluted (in shares) | 25,442,902 | 25,899,290 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total |
Beginning balance at Dec. 31, 2021 | $ 3 | $ 318,902 | $ 5,312 | $ 69,952 | $ 394,169 |
Beginning balance (in shares) at Dec. 31, 2021 | 25,428,929 | ||||
Changes in Stockholders' Equity | |||||
Other comprehensive income (loss), net of tax | (18,463) | (18,463) | |||
Stock-based compensation | 2,760 | 2,760 | |||
Issuance of common stock via employee stock purchase plan | 333 | 333 | |||
Issuance of common stock via employee stock purchase plan (in shares) | 6,078 | ||||
Issuance of common stock via equity incentive plan | 53 | 53 | |||
Issuance of common stock via equity incentive plan (in shares) | 15,625 | ||||
Repurchases of common stock | (12,989) | (12,989) | |||
Repurchases of common stock (in shares) | (219,061) | ||||
Net income | 14,537 | 14,537 | |||
Balance at end of period at Mar. 31, 2022 | $ 3 | 322,048 | (13,151) | 71,500 | 380,400 |
Ending balance (in shares) at Mar. 31, 2022 | 25,231,571 | ||||
Beginning balance at Dec. 31, 2022 | $ 3 | 333,558 | (36,515) | 87,708 | $ 384,754 |
Beginning balance (in shares) at Dec. 31, 2022 | 25,027,467 | 25,027,467 | |||
Changes in Stockholders' Equity | |||||
Other comprehensive income (loss), net of tax | 5,474 | $ 5,474 | |||
Stock-based compensation | 3,450 | 3,450 | |||
Issuance of common stock via employee stock purchase plan | 394 | $ 394 | |||
Issuance of common stock via employee stock purchase plan (in shares) | 7,724 | 7,724 | |||
Issuance of common stock via equity incentive plan | 90 | $ 90 | |||
Issuance of common stock via equity incentive plan (in shares) | 41,685 | ||||
Repurchases of common stock | (6,826) | (6,826) | |||
Repurchases of common stock (in shares) | (134,680) | ||||
Net income | 17,313 | 17,313 | |||
Balance at end of period at Mar. 31, 2023 | $ 3 | $ 337,492 | $ (31,041) | $ 98,195 | $ 404,649 |
Ending balance (in shares) at Mar. 31, 2023 | 24,942,196 | 24,942,196 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating activities | ||
Net cash provided by operating activities | $ 17,437 | $ 49,190 |
Investing activities | ||
Purchases of property and equipment | (7) | |
Capitalized software costs | (1,658) | (1,389) |
Purchases of fixed maturity securities | (54,871) | (73,921) |
Purchases of equity securities | (10,002) | |
Sales and maturities of fixed maturity securities | 21,679 | 38,159 |
Change in securities receivable or payable, net | 950 | (7,843) |
Payment of additional costs associated with purchase of policy renewal rights | (15) | |
Net cash used in investing activities | (33,900) | (55,018) |
Financing activities | ||
Proceeds from line of credit | 35,000 | 15,000 |
Proceeds from common stock issued via employee stock purchase plan | 394 | 333 |
Proceeds from common stock issued via stock option exercises | 91 | 53 |
Repurchases of common stock | (6,826) | (12,989) |
Net cash provided by financing activities | 28,659 | 2,397 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 12,196 | (3,432) |
Cash, cash equivalents and restricted cash at beginning of period | 68,164 | 50,371 |
Cash, cash equivalents and restricted cash at end of period | 80,360 | $ 46,939 |
Supplementary cash flow information: | ||
Cash paid for income taxes | 1 | |
Cash paid for interest | $ 1,017 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Cash and cash equivalents and restricted cash and cash equivalents | ||||
Cash and cash equivalents | $ 80,295 | $ 68,108 | ||
Restricted cash | 65 | 56 | ||
Cash and cash equivalents and restricted cash | $ 80,360 | $ 68,164 | $ 46,939 | $ 50,371 |
Summary of Operations and Basis
Summary of Operations and Basis of Presentation | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Operations and Basis of Presentation | |
Summary of Operations and Basis of Presentation | 1. Summary of Operations and Basis of Presentation Summary of Operations Palomar Holdings, Inc. (the “Company”) is a Delaware incorporated insurance holding company that was founded in 2014. The Company has several wholly owned subsidiaries including an Oregon domiciled insurance company, Palomar Specialty Insurance Company (“PSIC”), a Bermuda based reinsurance company, Palomar Specialty Reinsurance Company Bermuda Ltd. (“PSRE”), an Arizona domiciled surplus lines insurance company, Palomar Excess and Surplus Insurance Company (“PESIC”), and a California domiciled property and casualty insurance agency, Palomar Insurance Agency, DBA Palomar General Insurance Agency (“PGIA”). Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and include the accounts of the Company and its wholly-owned subsidiaries. These condensed consolidated financial statements do not contain all information and footnotes required by U.S. GAAP for complete consolidated financial statements. For a more complete description of the Company’s business and accounting policies, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023 (the “2022 Annual Report on Form 10-K”). In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results of operations for the full year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. All revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, reserves for losses and loss adjustment expenses, reinsurance recoverables on unpaid losses, and the fair values of investments. Recent Accounting Pronouncements Recently adopted accounting pronouncements The Company has not adopted any new accounting guidance during the three months ended March 31, 2023. Recently issued accounting pronouncements not yet adopted There are not currently any recent accounting pronouncements or pending accounting guidance that have significance, or potential significance, to the Company’s consolidated financial statements. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2023 | |
Investments | |
Investments | 2. Investments The Company’s available-for-sale investments are summarized as follows: Gross Gross Allowance Amortized Unrealized Unrealized for Fair March 31, 2023 Cost or Cost Gains Losses Credit Losses Value (in thousands) Fixed maturities: U.S. Governments $ 51,405 $ 7 $ (1,763) $ — $ 49,649 States, territories, and possessions 5,852 128 (466) — 5,514 Political subdivisions 4,915 — (481) — 4,434 Special revenue excluding mortgage/asset-backed securities 37,698 112 (3,569) — 34,241 Corporate and other 302,810 363 (21,233) (896) 281,044 Mortgage/asset-backed securities 192,056 454 (12,903) — 179,607 Total available-for-sale investments $ 594,736 $ 1,064 $ (40,415) $ (896) $ 554,489 Gross Gross Allowance Amortized Unrealized Unrealized for Fair December 31, 2022 Cost or Cost Gains Losses Credit Losses Value (in thousands) Fixed maturities: U.S. Governments $ 50,802 $ 2 $ (2,253) $ — $ 48,551 States, territories, and possessions 5,857 49 (552) — 5,354 Political subdivisions 4,919 — (621) — 4,298 Special revenue excluding mortgage/asset-backed securities 37,260 26 (4,487) — 32,799 Corporate and other 278,164 79 (23,912) (236) 254,095 Mortgage/asset-backed securities 184,578 251 (14,862) — 169,967 Total available-for-sale investments $ 561,580 $ 407 $ (46,687) $ (236) $ 515,064 Security holdings in an unrealized loss position As of March 31, 2023, the Company held 538 fixed maturity securities in an unrealized loss position with a total estimated fair value of $497.9 million and total gross unrealized losses of $40.4 million. As of December 31, 2022, the Company held 543 fixed maturity securities in an unrealized loss position with a total estimated fair value of $484.7 million and total gross unrealized losses of $46.9 million. The aggregate fair value and gross unrealized losses of the Company’s investments aggregated by investment category and the length of time these individual securities have been in a continuous unrealized loss position as of March 31, 2023 and December 31, 2022, are as follows: Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized March 31, 2023 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 25,586 $ (391) $ 23,438 $ (1,372) $ 49,024 $ (1,763) States, territories, and possessions 3,310 (466) — — 3,310 (466) Political subdivisions 454 (21) 3,980 (460) 4,434 (481) Special revenue excluding mortgage/asset-backed securities 8,050 (595) 22,928 (2,974) 30,978 (3,569) Corporate and other 136,179 (6,630) 120,285 (14,603) 256,464 (21,233) Mortgage/asset-backed securities 77,660 (3,414) 76,058 (9,489) 153,718 (12,903) Total $ 251,239 $ (11,517) $ 246,689 $ (28,898) $ 497,928 $ (40,415) Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2022 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 41,077 $ (1,523) $ 6,853 $ (730) $ 47,930 $ (2,253) States, territories, and possessions 3,227 (552) — — 3,227 (552) Political subdivisions 4,298 (621) — — 4,298 (621) Special revenue excluding mortgage/asset-backed securities 25,091 (3,287) 5,080 (1,200) 30,171 (4,487) Corporate and other 192,185 (15,667) 55,605 (8,481) 247,790 (24,148) Mortgage/asset-backed securities 118,815 (9,908) 32,448 (4,954) 151,263 (14,862) Total $ 384,693 $ (31,558) $ 99,986 $ (15,365) $ 484,679 $ (46,923) The Company reviews all securities with unrealized losses on a quarterly basis to assess whether the decline in the securities fair value necessitates the recognition of an allowance for credit losses. The Company considers numerous factors in its review as described in Footnote 1 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K. Contractual maturities of available-for-sale fixed maturity securities The amortized cost and fair value of fixed maturity securities at March 31, 2023, by contractual maturity, are shown below. Amortized Fair Cost Value (in thousands) Due within one year $ 47,423 $ 45,867 Due after one year through five years 184,515 173,737 Due after five years through ten years 139,084 127,547 Due after ten years 31,658 27,731 Mortgage and asset-backed securities 192,056 179,607 $ 594,736 $ 554,489 Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations. Net investment income summary Net investment income is summarized as follows: Three Months Ended March 31, 2023 2022 (in thousands) Interest income $ 5,060 $ 2,558 Dividend income 181 155 Investment expense (121) (134) Net investment income $ 5,120 $ 2,579 Net realized and unrealized investment gains and losses The following table presents net realized and unrealized investment gains and losses: Three Months Ended March 31, 2023 2022 (in thousands) Realized gains: Gains on sales of fixed maturity securities $ 28 $ 2 Gains on sales of equity securities — — Total realized gains 28 2 Realized losses: Losses on sales of fixed maturity securities (3) — Losses on sales of equity securities — — Total realized losses (3) — Net realized investment gains 25 2 Change in allowance for credit losses (659) — Net unrealized gains (losses) on equity securities 780 (1,280) Net realized and unrealized gains (losses) on investments $ 146 $ (1,278) Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the settlement date. Proceeds from the sale of fixed maturity securities were $5.1 million and $4.8 million for the three months ended March 31, 2023 and 2022, respectively. The Company places securities on statutory deposit with certain state agencies to retain the right to do business in those states. These securities are included in available-for-sale investments on the balance sheet. As of March 31, 2023 and December 31, 2022, the carrying value of securities on deposit with state regulatory authorities was $9.6 million and $8.5 million, respectively. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | 3. Fair Value Measurements Fair value is defined as the price that the Company would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. The three-tier hierarchy of inputs is summarized in the three broad levels listed below: Level 1—Unadjusted quoted prices are available in active markets for identical investments as of the reporting date. Level 2—Pricing inputs are quoted prices for similar investments in active markets; quoted prices for identical or similar investments in inactive markets; or valuations based on models where the significant inputs are observable or can be corroborated by observable market data. Level 3—Pricing inputs into models are unobservable for the investment. The unobservable inputs require significant management judgment or estimation. To measure fair value, the Company obtains quoted market prices for its investment securities from its outside investment managers. If a quoted market price is not available, the Company uses prices of similar securities. The fair values obtained from the outside investment managers are reviewed for reasonableness and any discrepancies are investigated for final valuation. The fair value of the Company’s investments in fixed maturity securities is estimated using relevant inputs, including available market information, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. An Option Adjusted Spread model is also used to develop prepayment and interest rate scenarios. Industry standard models are used to analyze and value securities with embedded options or prepayment sensitivities. These fair value measurements are estimated based on observable, objectively verifiable market information rather than market quotes. Therefore, these investments are classified and disclosed in Level 2 of the hierarchy. The following tables present the hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022. March 31, 2023 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 49,649 $ — $ 49,649 States, territories, and possessions — 5,514 — 5,514 Political subdivisions — 4,434 — 4,434 Special revenue excluding mortgage/asset-backed securities — 34,241 — 34,241 Corporate and other — 281,044 — 281,044 Mortgage/asset-backed securities — 179,607 — 179,607 Equity securities 39,356 — — 39,356 Cash, cash equivalents, and restricted cash 80,360 — — 80,360 Total assets $ 119,716 $ 554,489 $ — $ 674,205 December 31, 2022 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 48,551 $ — $ 48,551 States, territories, and possessions — 5,354 — 5,354 Political subdivisions — 4,298 — 4,298 Special revenue excluding mortgage/asset-backed securities — 32,799 — 32,799 Corporate and other — 254,095 — 254,095 Mortgage/asset-backed securities — 169,967 — 169,967 Equity securities 38,576 — — 38,576 Cash, cash equivalents, and restricted cash 68,164 — — 68,164 Total assets $ 106,740 $ 515,064 $ — $ 621,804 The carrying amounts of financial assets and liabilities reported in the accompanying condensed consolidated balance sheet including cash and cash equivalents, restricted cash, receivables, reinsurance recoverable, and accounts payable and other accrued liabilities approximate fair value due to their short term- maturity. The carrying amount of the Company’s borrowings under the Federal Home Loan Bank (“FHLB”) line of credit and U.S. Bank credit agreement (the “Credit Agreement”) approximate fair value as the Company is currently borrowing at a variable rate which frequently reprices at market rates. Transfers between Level 3 and Level 2 securities result from changes in the availability of observable market inputs and are recorded at the beginning of the reporting period. As of March 31, 2023 and December 31, 2022, the Company had no fixed income securities classified as Level 3. |
Reserve for Losses and Loss Adj
Reserve for Losses and Loss Adjustment Expenses | 3 Months Ended |
Mar. 31, 2023 | |
Reserve for Losses and Loss Adjustment Expenses | |
Reserve for Losses and Loss Adjustment Expenses | 4. Reserve for Losses and Loss Adjustment Expenses The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses (“LAE”): Three Months Ended March 31, 2023 2022 (in thousands) Reserve for losses and LAE net of reinsurance recoverables at beginning of period $ 77,520 $ 45,419 Add: Incurred losses and LAE, net of reinsurance, related to: Current year 17,300 13,449 Prior years 3,352 1,505 Total incurred 20,652 14,954 Deduct: Loss and LAE payments, net of reinsurance, related to: Current year 1,393 1,490 Prior years 15,413 7,497 Total payments 16,806 8,987 Reserve for losses and LAE net of reinsurance recoverables at end of period 81,366 51,386 Add: Reinsurance recoverables on unpaid losses and LAE at end of period 183,601 113,726 Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period $ 264,967 $ 165,112 Considerable variability is inherent in the estimate of the reserve for losses and LAE. Although management believes the liability recorded for losses and LAE is adequate, the variability inherent in this estimate could result in changes to the ultimate liability, which may be material to stockholders’ equity. The Company experienced adverse prior year development of $3.4 and $1.5 million during the three months ended March 31, 2023 and 2022, respectively. Adverse prior year development during the three months ended March 31, 2023 was primarily due to higher than anticipated severity of attritional losses, offset by lower than anticipated severity of catastrophe losses. Adverse prior year development during the three months ended March 31, 2022 was primarily due to higher than anticipated severity of attritional losses from prior years. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | 5. Stockholders’ Equity Common stock reserved for future issuance Common stock reserved for future issuance consists of the following as of March 31, 2023: Stock options outstanding under 2019 Equity Incentive Plan 873,346 Restricted stock units outstanding under 2019 Equity Incentive Plan 355,234 Performance stock units outstanding under 2019 Equity Incentive Plan, at target 426,359 Shares authorized for future issuance under 2019 Equity Incentive Plan 3,143,477 Shares authorized for future issuance under 2019 Employee Stock Purchase Plan 1,140,126 Total 5,938,542 Stock based compensation The below table summarizes the Company’s stock-based compensation expense for each period presented: Three months ended March 31, 2023 2022 (in thousands) Stock-Based Compensation $ 3,450 $ 2,760 Stock-based compensation expense is recognized on a straight-line basis over the vesting period of equity-based awards. For performance stock units (“PSUs”), any changes to expense resulting from differences in actual performance versus target are recognized over the remaining vesting period of the awards. The Company does not apply a forfeiture rate to unvested awards and accounts for forfeitures as they occur. All stock-based compensation is included in other underwriting expenses in the Company’s unaudited condensed consolidated statement of income and comprehensive income. 2019 Equity Incentive Plan On April 16, 2019, the Company's 2019 Equity Incentive Plan (the “2019 Plan”) became effective. The 2019 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and units, and other cash-based or share-based awards. In addition, the 2019 Plan contains a mechanism through which the Company may adopt a deferred compensation arrangement in the future. A total of 2,400,000 shares of common stock were initially authorized and reserved for issuance under the 2019 Plan. This reserve increases on January 1 of each year through 2029 by an amount equal to the smaller of: 3% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or an amount determined by the board of directors. Stock Options Recipients of stock options can purchase shares of the Company’s common stock at a price equal to the stock's fair market value on the grant date, determined by the closing price of the Company's common stock on the grant date. Stock options vest over a two vesting first grant period The following table summarizes stock option transactions for the three months ended March 31, 2023: Number of shares Weighted-average exercise price Weighted-average remaining contractual term (in years) Aggregate intrinsic value (in thousands) Outstanding at January 1, 2023 882,892 $ 33.85 - $ - Options granted - - Options exercised (5,957) 15.24 Options canceled (3,589) 64.91 Outstanding at March 31, 2023 873,346 $ 33.85 6.63 $ 23,374 Vested and Exercisable at March 31, 2023 724,939 $ 28.15 6.33 $ 22,598 As of March 31, 2023, the Company had approximately $2.9 Restricted Stock Units RSUs are valued using the closing price of the Company’s common stock on their grant date. The Company has issued RSUs with vesting periods of one The following table summarizes RSU transactions for the three months ended March 31, 2023: Number of shares Weighted-average grant date fair value Outstanding at January 1, 2023 271,951 $ 68.90 Granted 123,396 51.32 Released (35,728) 59.92 Forfeited (4,385) 52.83 Non-vested outstanding at March 31, 2023 355,234 $ 63.89 As of March 31, 2023, the Company had approximately $19.7 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 2.8 years. Performance Stock Units The Company issues PSUs with a combination of service, performance, and market conditions. The majority of PSUs were issued via grants made to certain executives during 2021. These PSUs are earned based on the achievement of stock price milestones. If the Company’s stock price reaches and remains at certain milestones for 30 days, the PSUs shall become earned units and will vest upon completion of a requisite service period of approximately five years from the date of grant. As of March 31, 2023, none of the stock price milestones have been achieved. For other PSUs outstanding, vesting of PSUs requires a period of future service and the number of shares that vest depends on performance relative to predetermined targets of the Company’s Gross Written Premiums and Adjusted Return on Equity as set by the Compensation Committee. Prior to 2023, the PSU’s performance period was the fiscal year of the grant. Beginning in 2023, the PSU’s performance period is primarily a three-year period beginning with the grant date. At the end of the performance period, the actual results are measured against the predetermined targets to determine the number of PSUs to be earned as compensation. The earned PSUs are then subject to a required service period of approximately three years from the grant date before vesting and being issued as common stock. The following table summarizes PSU transactions for the three months ended March 31, 2023: Number of shares Weighted-average grant date fair value Outstanding at January 1, 2023 383,103 $ 37.62 Granted 44,354 51.25 Vested — — Forfeited (1,098) 55.36 Non-vested outstanding at March 31, 2023 426,359 $ 38.99 The PSU grants above represent the number of shares that would vest based on achievement of all stock price milestones in the 2021 executive stock grants and the 100% achievement of the predetermined performance conditions for the other PSU grants. The actual number of PSUs which will vest is subject to adjustment based on the Company’s actual stock price performance and financial performance relative to the predetermined targets. As of March 31, 2023, the Company had approximately $12.5 2019 Employee Stock Purchase Plan On April 16, 2019, the Company's 2019 Employee Stock Purchase Plan “the “2019 ESPP”) became effective. A total of 240,000 shares of common stock are initially authorized and reserved for issuance under the 2019 ESPP. In addition, the 2019 ESPP provides for annual increases in the number of shares available for issuance on January 1 of each year through 2029, equal to the smaller of 240,000 shares of the Company’s common stock or such other amount as may be determined by the board of directors. Under the 2019 ESPP, employees can purchase Company stock at a discount via payroll withholdings. The 2019 ESPP is administered through employee participation in discrete offering periods. During each discrete offering period employee funds are withheld, and the stock purchase occurs upon the conclusion of the offering period. The Company issued 7,724 shares pursuant to the ESPP during the three months ended March 31, 2023. Share repurchases In January 2022, the Board of Directors approved a new share repurchase program which replaced the existing program and authorized the repurchase of up to $100 million of outstanding shares of common stock over the period ending on March 31, 2024. The Company purchased 134,680 shares for $6.8 million during the three months ended March 31, 2023. The Company accounts for share repurchases by charging the excess of repurchase price over the common stock’s par value entirely to retained earnings. All repurchased shares are retired and become authorized but unissued shares. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2023 | |
Accumulated Other Comprehensive Income | |
Accumulated Other Comprehensive Income | 6. Accumulated Other Comprehensive Income Changes in accumulated other comprehensive income (loss) (“AOCI”) are as follows: Three Months Ended March 31, 2023 2022 (in thousands) Beginning Balance $ (36,515) $ 5,312 Other comprehensive income (loss) before reclassification 6,956 (23,368) Federal income tax expense (1,460) 4,907 Other comprehensive income (loss) before reclassification, net of tax 5,496 (18,461) Amounts reclassified from AOCI (28) (2) Federal income tax expense 6 — Amounts reclassified from AOCI, net of tax (22) (2) Other comprehensive income (loss) 5,474 (18,463) Balance at end of period $ (31,041) $ (13,151) |
Underwriting Information
Underwriting Information | 3 Months Ended |
Mar. 31, 2023 | |
Underwriting Information | |
Underwriting Information | 7. Underwriting Information The Company has a single reportable segment and offers primarily property and casualty insurance products. The Company also writes premiums under fronting agreements where it cedes the majority of the premium and risk in exchange for a fronting fee. Gross written premiums (“GWP”) by product are presented below: Three Months Ended March 31, 2023 2022 ($ in thousands) % of % of Amount GWP Amount GWP Product Fronting Premiums $ 91,755 36.7 % $ 29,845 17.5 % Residential Earthquake 55,725 22.3 % 46,336 27.1 % Commercial Earthquake 37,770 15.1 % 25,144 14.7 % Inland Marine 31,049 12.4 % 18,237 10.7 % Casualty 11,733 4.7 % 5,007 2.9 % Commercial All Risk 8,376 3.3 % 11,210 6.6 % Hawaii Hurricane 8,073 3.2 % 6,914 4.0 % Residential Flood 4,235 1.7 % 2,993 1.8 % Specialty Homeowners (59) — % 16,284 9.5 % Other 1,455 0.6 % 8,964 5.2 % Total Gross Written Premiums $ 250,112 100.0 % $ 170,934 100.0 % Three Months Ended March 31, 2023 2022 ($ in thousands) % of % of Amount GWP Amount GWP State California $ 131,889 52.7 % $ 68,718 40.2 % Texas 23,210 9.3 % 18,979 11.1 % Florida 12,096 4.8 % 4,962 2.9 % Washington 11,972 4.8 % 6,881 4.0 % Hawaii 10,105 4.0 % 8,540 5.0 % Oregon 6,780 2.7 % 4,373 2.6 % Illinois 4,702 1.9 % 4,273 2.5 % New York 3,871 1.5 % 2,380 1.4 % Other 45,487 18.3 % 51,828 30.3 % Total Gross Written Premiums $ 250,112 100.0 % $ 170,934 100.0 % Gross written premiums by insurance subsidiary are as follows: Three Months Ended March 31, 2023 2022 ($ in thousands) % of % of Amount GWP Amount GWP Subsidiary PSIC $ 150,704 60.3 % $ 104,004 60.8 % PESIC 99,408 39.7 % 66,930 39.2 % Total Gross Written Premiums $ 250,112 100.0 % $ 170,934 100.0 % |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Income Taxes | 8. Income Taxes The Company calculates its tax provision in interim periods using its best estimate of the effective tax rate expected for the full year. During the three months ended March 31, 2023, the Company’s income tax rate of 23.5% was higher than the statutory rate of 21% due primarily to non-deductible executive compensation expense. During the three months ended March 31, 2022, the Company’s income tax rate of 23.8% was higher than the statutory rate of 21% also due primarily to non-deductible executive compensation expense. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share | |
Earnings Per Share | 9. Earnings Per Share The following table sets out earnings per share of common stock: Three months ended March 31, 2023 2022 (in thousands, except shares and per share data) Net income $ 17,313 $ 14,537 Weighted average common shares outstanding: Basic 24,969,703 25,362,179 Common Share equivalents 473,198 537,111 Diluted 25,442,902 25,899,290 Earnings per share: Basic $ 0.69 $ 0.57 Diluted $ 0.68 $ 0.56 Common share equivalents relate primarily to outstanding stock options, RSUs and PSUs under the 2019 Plan and unpurchased shares under the 2019 ESPP and are calculated using the treasury stock method. |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2023 | |
Reinsurance | |
Reinsurance | 10. Reinsurance The Company utilizes reinsurance in order to limit its exposure to losses and enable it to underwrite policies with sufficient limits to meet policyholder needs. The Company utilizes both excess of loss (XOL) and quota share reinsurance. As of March 31, 2023, the Company’s catastrophe event retention is $12.5 million for all perils. As of March 31, 2023, the Company’s XOL reinsurance structure provides protection up to $2.15 billion for earthquake events, $1.01 billion for Hawaii hurricane events, and $250 million for continental U.S. hurricane events. In addition to reinsurance purchased from traditional reinsurers, the Company has historically incorporated collateralized protection from the insurance linked securities market via catastrophe bonds. During the first quarter of 2021, the Company closed a $400 million 144A catastrophe bond which became effective June 1, 2021. The catastrophe bond was completed through Torrey Pines Re Pte. Ltd. (“Torrey Pines Re Pte.”). Torrey Pines Re Pte. is a special purpose reinsurance vehicle incorporated in Singapore that provides Palomar with indemnity-based reinsurance covering earthquake events through June 1, 2024. During the second quarter of 2022, the Company also closed a $275 million 144A catastrophe bond which became effective June 1, 2022. This catastrophe bond was completed through Torrey Pines Re Ltd., a Bermuda-domiciled special purpose insurer that provides indemnity-based reinsurance covering earthquake events through June 1, 2025. |
Credit Agreements
Credit Agreements | 3 Months Ended |
Mar. 31, 2023 | |
Credit Agreements | |
Credit Agreements | 11. Credit Agreements U.S. Bank Credit Agreement In December 2021, the Company entered into a Credit Agreement with U.S. Bank National Association which provides a revolving credit facility of up to $100 million through December 8, 2026. Interest on the credit facility accrues on each SOFR rate loan at the applicable SOFR (as defined in the Credit Agreement) plus 1.75% and on each base rate loan at the applicable Alternate Base Rate (as defined in the Credit Agreement) plus 0.75%. A loan may be either a SOFR rate loan or a base rate loan, at the Company’s discretion. Outstanding amounts under the Credit Agreement may be prepaid in full or in part at any time with no prepayment premium and may be reduced in full or in part at any time upon prior notice. In addition to interest on funds borrowed, the Company must pay an unused line fee of 0.25% on any amounts not borrowed. The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, financial covenants, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions. The financial covenants include requirements to maintain a permissible debt to capital ratio, a minimum consolidated net worth, a minimum risk based capital ratio and minimum A.M. Best financial strength rating. The Credit Agreement also contains customary events of default, such as non-compliance with financial covenants. If an event of default occurs, any debt may be declared immediately due and payable. As of March 31, 2023, the Company was in compliance with all debt covenants. As of March 31, 2023, the Company had $35.0 million of borrowings outstanding on the Credit Agreement at a rate of 6.55%. Interest expense on the Credit Agreement was $0.6 million for the three months ended March 31, 2023. FHLB Line of Credit The Company’s PSIC subsidiary is a member of the Federal Home Loan Bank of San Francisco (“FHLB”). Membership in the FHLB provides PSIC access to collateralized advances, which can be drawn for general corporate purposes and used to enhance liquidity management. All borrowings are fully secured by a pledge of specific investment securities of PSIC and the borrowing capacity is equal to As of March 31, 2023, the Company had $36.4 million of borrowings outstanding through the FHLB at the overnight rate of 5.04%. Interest expense on the FHLB line of credit was $0.4 million for the three months ended March 31, 2023. |
Summary of Operations and Bas_2
Summary of Operations and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Operations and Basis of Presentation | |
Summary of Operations | Summary of Operations Palomar Holdings, Inc. (the “Company”) is a Delaware incorporated insurance holding company that was founded in 2014. The Company has several wholly owned subsidiaries including an Oregon domiciled insurance company, Palomar Specialty Insurance Company (“PSIC”), a Bermuda based reinsurance company, Palomar Specialty Reinsurance Company Bermuda Ltd. (“PSRE”), an Arizona domiciled surplus lines insurance company, Palomar Excess and Surplus Insurance Company (“PESIC”), and a California domiciled property and casualty insurance agency, Palomar Insurance Agency, DBA Palomar General Insurance Agency (“PGIA”). |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and include the accounts of the Company and its wholly-owned subsidiaries. These condensed consolidated financial statements do not contain all information and footnotes required by U.S. GAAP for complete consolidated financial statements. For a more complete description of the Company’s business and accounting policies, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023 (the “2022 Annual Report on Form 10-K”). In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results of operations for the full year. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. All revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, reserves for losses and loss adjustment expenses, reinsurance recoverables on unpaid losses, and the fair values of investments. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently adopted accounting pronouncements The Company has not adopted any new accounting guidance during the three months ended March 31, 2023. Recently issued accounting pronouncements not yet adopted There are not currently any recent accounting pronouncements or pending accounting guidance that have significance, or potential significance, to the Company’s consolidated financial statements. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Investments | |
Schedule of available-for-sale investments | Gross Gross Allowance Amortized Unrealized Unrealized for Fair March 31, 2023 Cost or Cost Gains Losses Credit Losses Value (in thousands) Fixed maturities: U.S. Governments $ 51,405 $ 7 $ (1,763) $ — $ 49,649 States, territories, and possessions 5,852 128 (466) — 5,514 Political subdivisions 4,915 — (481) — 4,434 Special revenue excluding mortgage/asset-backed securities 37,698 112 (3,569) — 34,241 Corporate and other 302,810 363 (21,233) (896) 281,044 Mortgage/asset-backed securities 192,056 454 (12,903) — 179,607 Total available-for-sale investments $ 594,736 $ 1,064 $ (40,415) $ (896) $ 554,489 Gross Gross Allowance Amortized Unrealized Unrealized for Fair December 31, 2022 Cost or Cost Gains Losses Credit Losses Value (in thousands) Fixed maturities: U.S. Governments $ 50,802 $ 2 $ (2,253) $ — $ 48,551 States, territories, and possessions 5,857 49 (552) — 5,354 Political subdivisions 4,919 — (621) — 4,298 Special revenue excluding mortgage/asset-backed securities 37,260 26 (4,487) — 32,799 Corporate and other 278,164 79 (23,912) (236) 254,095 Mortgage/asset-backed securities 184,578 251 (14,862) — 169,967 Total available-for-sale investments $ 561,580 $ 407 $ (46,687) $ (236) $ 515,064 |
Schedule of aggregate fair value and gross unrealized losses | Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized March 31, 2023 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 25,586 $ (391) $ 23,438 $ (1,372) $ 49,024 $ (1,763) States, territories, and possessions 3,310 (466) — — 3,310 (466) Political subdivisions 454 (21) 3,980 (460) 4,434 (481) Special revenue excluding mortgage/asset-backed securities 8,050 (595) 22,928 (2,974) 30,978 (3,569) Corporate and other 136,179 (6,630) 120,285 (14,603) 256,464 (21,233) Mortgage/asset-backed securities 77,660 (3,414) 76,058 (9,489) 153,718 (12,903) Total $ 251,239 $ (11,517) $ 246,689 $ (28,898) $ 497,928 $ (40,415) Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2022 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 41,077 $ (1,523) $ 6,853 $ (730) $ 47,930 $ (2,253) States, territories, and possessions 3,227 (552) — — 3,227 (552) Political subdivisions 4,298 (621) — — 4,298 (621) Special revenue excluding mortgage/asset-backed securities 25,091 (3,287) 5,080 (1,200) 30,171 (4,487) Corporate and other 192,185 (15,667) 55,605 (8,481) 247,790 (24,148) Mortgage/asset-backed securities 118,815 (9,908) 32,448 (4,954) 151,263 (14,862) Total $ 384,693 $ (31,558) $ 99,986 $ (15,365) $ 484,679 $ (46,923) |
Schedule of contractual maturities of available-for-sale securities | Amortized Fair Cost Value (in thousands) Due within one year $ 47,423 $ 45,867 Due after one year through five years 184,515 173,737 Due after five years through ten years 139,084 127,547 Due after ten years 31,658 27,731 Mortgage and asset-backed securities 192,056 179,607 $ 594,736 $ 554,489 |
Schedule of net investment income | Three Months Ended March 31, 2023 2022 (in thousands) Interest income $ 5,060 $ 2,558 Dividend income 181 155 Investment expense (121) (134) Net investment income $ 5,120 $ 2,579 |
Schedule of net realized and unrealized investment gains and losses | Three Months Ended March 31, 2023 2022 (in thousands) Realized gains: Gains on sales of fixed maturity securities $ 28 $ 2 Gains on sales of equity securities — — Total realized gains 28 2 Realized losses: Losses on sales of fixed maturity securities (3) — Losses on sales of equity securities — — Total realized losses (3) — Net realized investment gains 25 2 Change in allowance for credit losses (659) — Net unrealized gains (losses) on equity securities 780 (1,280) Net realized and unrealized gains (losses) on investments $ 146 $ (1,278) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Measurements | |
Schedule of hierarchy for financial assets and liabilities measured at fair value | March 31, 2023 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 49,649 $ — $ 49,649 States, territories, and possessions — 5,514 — 5,514 Political subdivisions — 4,434 — 4,434 Special revenue excluding mortgage/asset-backed securities — 34,241 — 34,241 Corporate and other — 281,044 — 281,044 Mortgage/asset-backed securities — 179,607 — 179,607 Equity securities 39,356 — — 39,356 Cash, cash equivalents, and restricted cash 80,360 — — 80,360 Total assets $ 119,716 $ 554,489 $ — $ 674,205 December 31, 2022 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 48,551 $ — $ 48,551 States, territories, and possessions — 5,354 — 5,354 Political subdivisions — 4,298 — 4,298 Special revenue excluding mortgage/asset-backed securities — 32,799 — 32,799 Corporate and other — 254,095 — 254,095 Mortgage/asset-backed securities — 169,967 — 169,967 Equity securities 38,576 — — 38,576 Cash, cash equivalents, and restricted cash 68,164 — — 68,164 Total assets $ 106,740 $ 515,064 $ — $ 621,804 |
Reserve for Losses and Loss A_2
Reserve for Losses and Loss Adjustment Expenses (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Reserve for Losses and Loss Adjustment Expenses | |
Schedule of reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses ("LAE") | Three Months Ended March 31, 2023 2022 (in thousands) Reserve for losses and LAE net of reinsurance recoverables at beginning of period $ 77,520 $ 45,419 Add: Incurred losses and LAE, net of reinsurance, related to: Current year 17,300 13,449 Prior years 3,352 1,505 Total incurred 20,652 14,954 Deduct: Loss and LAE payments, net of reinsurance, related to: Current year 1,393 1,490 Prior years 15,413 7,497 Total payments 16,806 8,987 Reserve for losses and LAE net of reinsurance recoverables at end of period 81,366 51,386 Add: Reinsurance recoverables on unpaid losses and LAE at end of period 183,601 113,726 Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period $ 264,967 $ 165,112 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders' Equity | |
Schedule of common stock reserved for future issuance | Stock options outstanding under 2019 Equity Incentive Plan 873,346 Restricted stock units outstanding under 2019 Equity Incentive Plan 355,234 Performance stock units outstanding under 2019 Equity Incentive Plan, at target 426,359 Shares authorized for future issuance under 2019 Equity Incentive Plan 3,143,477 Shares authorized for future issuance under 2019 Employee Stock Purchase Plan 1,140,126 Total 5,938,542 |
Schedule of stock-based compensation expense | Three months ended March 31, 2023 2022 (in thousands) Stock-Based Compensation $ 3,450 $ 2,760 |
Schedule of stock option transactions | Number of shares Weighted-average exercise price Weighted-average remaining contractual term (in years) Aggregate intrinsic value (in thousands) Outstanding at January 1, 2023 882,892 $ 33.85 - $ - Options granted - - Options exercised (5,957) 15.24 Options canceled (3,589) 64.91 Outstanding at March 31, 2023 873,346 $ 33.85 6.63 $ 23,374 Vested and Exercisable at March 31, 2023 724,939 $ 28.15 6.33 $ 22,598 |
Schedule of RSU transactions | Number of shares Weighted-average grant date fair value Outstanding at January 1, 2023 271,951 $ 68.90 Granted 123,396 51.32 Released (35,728) 59.92 Forfeited (4,385) 52.83 Non-vested outstanding at March 31, 2023 355,234 $ 63.89 |
Schedule of Performance stock unit transactions | Number of shares Weighted-average grant date fair value Outstanding at January 1, 2023 383,103 $ 37.62 Granted 44,354 51.25 Vested — — Forfeited (1,098) 55.36 Non-vested outstanding at March 31, 2023 426,359 $ 38.99 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accumulated Other Comprehensive Income | |
Schedule of changes in accumulated other comprehensive income (AOCI) | Three Months Ended March 31, 2023 2022 (in thousands) Beginning Balance $ (36,515) $ 5,312 Other comprehensive income (loss) before reclassification 6,956 (23,368) Federal income tax expense (1,460) 4,907 Other comprehensive income (loss) before reclassification, net of tax 5,496 (18,461) Amounts reclassified from AOCI (28) (2) Federal income tax expense 6 — Amounts reclassified from AOCI, net of tax (22) (2) Other comprehensive income (loss) 5,474 (18,463) Balance at end of period $ (31,041) $ (13,151) |
Underwriting Information (Table
Underwriting Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Underwriting Information | |
Schedule of gross written premiums | Three Months Ended March 31, 2023 2022 ($ in thousands) % of % of Amount GWP Amount GWP Product Fronting Premiums $ 91,755 36.7 % $ 29,845 17.5 % Residential Earthquake 55,725 22.3 % 46,336 27.1 % Commercial Earthquake 37,770 15.1 % 25,144 14.7 % Inland Marine 31,049 12.4 % 18,237 10.7 % Casualty 11,733 4.7 % 5,007 2.9 % Commercial All Risk 8,376 3.3 % 11,210 6.6 % Hawaii Hurricane 8,073 3.2 % 6,914 4.0 % Residential Flood 4,235 1.7 % 2,993 1.8 % Specialty Homeowners (59) — % 16,284 9.5 % Other 1,455 0.6 % 8,964 5.2 % Total Gross Written Premiums $ 250,112 100.0 % $ 170,934 100.0 % Three Months Ended March 31, 2023 2022 ($ in thousands) % of % of Amount GWP Amount GWP State California $ 131,889 52.7 % $ 68,718 40.2 % Texas 23,210 9.3 % 18,979 11.1 % Florida 12,096 4.8 % 4,962 2.9 % Washington 11,972 4.8 % 6,881 4.0 % Hawaii 10,105 4.0 % 8,540 5.0 % Oregon 6,780 2.7 % 4,373 2.6 % Illinois 4,702 1.9 % 4,273 2.5 % New York 3,871 1.5 % 2,380 1.4 % Other 45,487 18.3 % 51,828 30.3 % Total Gross Written Premiums $ 250,112 100.0 % $ 170,934 100.0 % Gross written premiums by insurance subsidiary are as follows: Three Months Ended March 31, 2023 2022 ($ in thousands) % of % of Amount GWP Amount GWP Subsidiary PSIC $ 150,704 60.3 % $ 104,004 60.8 % PESIC 99,408 39.7 % 66,930 39.2 % Total Gross Written Premiums $ 250,112 100.0 % $ 170,934 100.0 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share | |
Schedule of earnings per share of common stock | Three months ended March 31, 2023 2022 (in thousands, except shares and per share data) Net income $ 17,313 $ 14,537 Weighted average common shares outstanding: Basic 24,969,703 25,362,179 Common Share equivalents 473,198 537,111 Diluted 25,442,902 25,899,290 Earnings per share: Basic $ 0.69 $ 0.57 Diluted $ 0.68 $ 0.56 |
Investments - Available for Sal
Investments - Available for Sale Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Available for sale investments | ||
Amortized Cost or Cost | $ 594,736 | $ 561,580 |
Gross Unrealized Gains | 1,064 | 407 |
Gross Unrealized Losses | (40,415) | (46,687) |
Allowance for Credit Losses | (896) | (236) |
Fair Value | 554,489 | 515,064 |
U.S. Governments | ||
Available for sale investments | ||
Amortized Cost or Cost | 51,405 | 50,802 |
Gross Unrealized Gains | 7 | 2 |
Gross Unrealized Losses | (1,763) | (2,253) |
Fair Value | 49,649 | 48,551 |
States, territories, and possessions | ||
Available for sale investments | ||
Amortized Cost or Cost | 5,852 | 5,857 |
Gross Unrealized Gains | 128 | 49 |
Gross Unrealized Losses | (466) | (552) |
Fair Value | 5,514 | 5,354 |
Political subdivisions | ||
Available for sale investments | ||
Amortized Cost or Cost | 4,915 | 4,919 |
Gross Unrealized Losses | (481) | (621) |
Fair Value | 4,434 | 4,298 |
Special revenue excluding mortgage/asset-backed securities | ||
Available for sale investments | ||
Amortized Cost or Cost | 37,698 | 37,260 |
Gross Unrealized Gains | 112 | 26 |
Gross Unrealized Losses | (3,569) | (4,487) |
Fair Value | 34,241 | 32,799 |
Corporate and other | ||
Available for sale investments | ||
Amortized Cost or Cost | 302,810 | 278,164 |
Gross Unrealized Gains | 363 | 79 |
Gross Unrealized Losses | (21,233) | (23,912) |
Allowance for Credit Losses | (896) | (236) |
Fair Value | 281,044 | 254,095 |
Mortgage/asset-backed securities | ||
Available for sale investments | ||
Amortized Cost or Cost | 192,056 | 184,578 |
Gross Unrealized Gains | 454 | 251 |
Gross Unrealized Losses | (12,903) | (14,862) |
Fair Value | $ 179,607 | $ 169,967 |
Investments - Security Holdings
Investments - Security Holdings in an Unrealized Loss Position - General Information (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) security | Dec. 31, 2022 USD ($) security | |
Number of positions: | ||
Number of unrealized loss positions | security | 538 | 543 |
Fair Value | ||
Fair Value | $ | $ 497,928 | $ 484,679 |
Unrealized Losses | ||
Unrealized Losses | $ | $ 40,415 | $ 46,923 |
Number of securities for which allowance for credit losses has been recorded | security | 2 |
Investments - Security Holdin_2
Investments - Security Holdings in an Unrealized Loss Position - Tabular Disclosure (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value | ||
Fair Value - Less Than 12 Months | $ 251,239 | $ 384,693 |
Fair Value - More Than 12 Months | 246,689 | 99,986 |
Fair Value - Total | 497,928 | 484,679 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (11,517) | (31,558) |
Unrealized Losses - More Than 12 Months | (28,898) | (15,365) |
Unrealized Losses - Total | (40,415) | (46,923) |
U.S. Governments | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 25,586 | 41,077 |
Fair Value - More Than 12 Months | 23,438 | 6,853 |
Fair Value - Total | 49,024 | 47,930 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (391) | (1,523) |
Unrealized Losses - More Than 12 Months | (1,372) | (730) |
Unrealized Losses - Total | (1,763) | (2,253) |
States, territories, and possessions | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 3,310 | 3,227 |
Fair Value - Total | 3,310 | 3,227 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (466) | (552) |
Unrealized Losses - Total | (466) | (552) |
Political subdivisions | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 454 | 4,298 |
Fair Value - More Than 12 Months | 3,980 | |
Fair Value - Total | 4,434 | 4,298 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (21) | (621) |
Unrealized Losses - More Than 12 Months | (460) | |
Unrealized Losses - Total | (481) | (621) |
Special revenue excluding mortgage/asset-backed securities | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 8,050 | 25,091 |
Fair Value - More Than 12 Months | 22,928 | 5,080 |
Fair Value - Total | 30,978 | 30,171 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (595) | (3,287) |
Unrealized Losses - More Than 12 Months | (2,974) | (1,200) |
Unrealized Losses - Total | (3,569) | (4,487) |
Corporate and other | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 136,179 | 192,185 |
Fair Value - More Than 12 Months | 120,285 | 55,605 |
Fair Value - Total | 256,464 | 247,790 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (6,630) | (15,667) |
Unrealized Losses - More Than 12 Months | (14,603) | (8,481) |
Unrealized Losses - Total | (21,233) | (24,148) |
Mortgage/asset-backed securities | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 77,660 | 118,815 |
Fair Value - More Than 12 Months | 76,058 | 32,448 |
Fair Value - Total | 153,718 | 151,263 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (3,414) | (9,908) |
Unrealized Losses - More Than 12 Months | (9,489) | (4,954) |
Unrealized Losses - Total | $ (12,903) | $ (14,862) |
Investments - Contractual Matur
Investments - Contractual Maturities of Available for Sale Fixed Maturity Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Amortized Cost | ||
Due within one year | $ 47,423 | |
Due after one year through five years | 184,515 | |
Due after five years through ten years | 139,084 | |
Due after ten years | 31,658 | |
Mortgage and asset-backed securities | 192,056 | |
Amortized Cost or Cost | 594,736 | $ 561,580 |
Fair Value | ||
Due within one year | 45,867 | |
Due after one year through five years | 173,737 | |
Due after five years through ten years | 127,547 | |
Due after ten years | 27,731 | |
Mortgage and asset-backed securities | 179,607 | |
Fair Value | $ 554,489 | $ 515,064 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Net investment income | ||
Interest income | $ 5,060 | $ 2,558 |
Dividend income | 181 | 155 |
Investment expense | (121) | (134) |
Net investment income | $ 5,120 | $ 2,579 |
Investments - Net Realized and
Investments - Net Realized and Unrealized Investment Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Net realized and unrealized investment gains and losses | ||
Gains on sales of fixed maturity securities | $ 28 | $ 2 |
Total realized gains | 28 | 2 |
Losses on sales of fixed maturity securities | (3) | |
Total realized losses | (3) | |
Net realized investment gains | 25 | 2 |
Change in allowance for credit losses | (659) | |
Net unrealized gains (losses) on equity securities | 780 | (1,280) |
Net realized and unrealized gains (losses) on investments | 146 | (1,278) |
Proceeds from sales of fixed maturity securities | ||
Proceeds from the sale of fixed maturity securities | $ 5,100 | $ 4,800 |
Investments - Securities on Dep
Investments - Securities on Deposit (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Investments | ||
Fair Value | $ 554,489 | $ 515,064 |
Securities on deposit with state regulatory authorities | ||
Investments | ||
Fair Value | $ 9,600 | $ 8,500 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Assets: | ||
Fair Value | $ 554,489 | $ 515,064 |
Equity securities | 39,356 | 38,576 |
U.S. Governments | ||
Assets: | ||
Fair Value | 49,649 | 48,551 |
States, territories, and possessions | ||
Assets: | ||
Fair Value | 5,514 | 5,354 |
Political subdivisions | ||
Assets: | ||
Fair Value | 4,434 | 4,298 |
Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 34,241 | 32,799 |
Corporate and other | ||
Assets: | ||
Fair Value | 281,044 | 254,095 |
Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 179,607 | 169,967 |
Fair Value, Measurements, Recurring | ||
Assets: | ||
Equity securities | 39,356 | 38,576 |
Cash, cash equivalents, and restricted cash | 80,360 | 68,164 |
Total assets | 674,205 | 621,804 |
Fair Value, Measurements, Recurring | U.S. Governments | ||
Assets: | ||
Fair Value | 49,649 | 48,551 |
Fair Value, Measurements, Recurring | States, territories, and possessions | ||
Assets: | ||
Fair Value | 5,514 | 5,354 |
Fair Value, Measurements, Recurring | Political subdivisions | ||
Assets: | ||
Fair Value | 4,434 | 4,298 |
Fair Value, Measurements, Recurring | Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 34,241 | 32,799 |
Fair Value, Measurements, Recurring | Corporate and other | ||
Assets: | ||
Fair Value | 281,044 | 254,095 |
Fair Value, Measurements, Recurring | Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 179,607 | 169,967 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Assets: | ||
Equity securities | 39,356 | 38,576 |
Cash, cash equivalents, and restricted cash | 80,360 | 68,164 |
Total assets | 119,716 | 106,740 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Assets: | ||
Total assets | 554,489 | 515,064 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | U.S. Governments | ||
Assets: | ||
Fair Value | 49,649 | 48,551 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | States, territories, and possessions | ||
Assets: | ||
Fair Value | 5,514 | 5,354 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Political subdivisions | ||
Assets: | ||
Fair Value | 4,434 | 4,298 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 34,241 | 32,799 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Corporate and other | ||
Assets: | ||
Fair Value | 281,044 | 254,095 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | $ 179,607 | $ 169,967 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets Measured on Recurring Basis, Unobservable Input Reconciliation (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value Measurements | ||
Fixed income securities classified as Level 3 | $ 0 | $ 0 |
Reserve for Losses and Loss A_3
Reserve for Losses and Loss Adjustment Expenses - Roll Forward (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Reserve for Losses and Loss Adjustment Expenses | |||
Reserve for losses and LAE net of reinsurance recoverables at beginning of period | $ 77,520 | $ 45,419 | |
Add: Incurred losses and LAE, net of reinsurance, related to: | |||
Current year | 17,300 | 13,449 | |
Prior years | 3,352 | 1,505 | |
Total incurred | 20,652 | 14,954 | |
Deduct: Loss and LAE payments, net of reinsurance, related to: | |||
Current year | 1,393 | 1,490 | |
Prior years | 15,413 | 7,497 | |
Total payments | 16,806 | 8,987 | |
Reserve for losses and LAE net of reinsurance recoverables at end of period | 81,366 | 51,386 | |
Add: Reinsurance recoverables on unpaid losses and LAE at end of period | 183,601 | 113,726 | $ 153,895 |
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period | $ 264,967 | $ 165,112 | $ 231,415 |
Reserve for Losses and Loss A_4
Reserve for Losses and Loss Adjustment Expenses - Adverse (Favorable) Development (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Adverse (Favorable) Development | ||
Adverse (favorable) prior year development | $ 3,352 | $ 1,505 |
Stockholders' Equity - Reserved
Stockholders' Equity - Reserved for Future Issuance (Details) - shares | Mar. 31, 2023 | Dec. 31, 2022 | Apr. 16, 2019 |
Common stock reserved for future issuance | |||
Stock options outstanding (in shares) | 873,346 | 882,892 | |
Total (in shares) | 5,938,542 | ||
2019 Equity Incentive Plan | |||
Common stock reserved for future issuance | |||
Stock options outstanding (in shares) | 873,346 | ||
Shares authorized for future issuance (in shares) | 3,143,477 | 2,400,000 | |
2019 Employee Stock Purchase Plan | |||
Common stock reserved for future issuance | |||
Shares authorized for future issuance (in shares) | 1,140,126 | ||
Restricted Stock Units | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 355,234 | 271,951 | |
Restricted Stock Units | 2019 Equity Incentive Plan | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 355,234 | ||
Performance Stock Units | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 426,359 | 383,103 | |
Performance Stock Units | 2019 Equity Incentive Plan | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 426,359 |
Stockholders' Equity - Stock-ba
Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Stockholders' Equity | ||
Stock-based compensation expense | $ 3,450 | $ 2,760 |
Stockholders' Equity - 2019 Equ
Stockholders' Equity - 2019 Equity Incentive Plan (Details) - 2019 Equity Incentive Plan - shares | Mar. 31, 2023 | Apr. 16, 2019 |
Stock-Based Compensation | ||
Shares authorized (in shares) | 3,143,477 | 2,400,000 |
Annual automatic increase to the number of shares of common stock reserved for issuance, as a percentage of common stock issued and outstanding as at the immediately preceding fiscal year end (as a percent) | 3% |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options - Vesting (Details) | 3 Months Ended |
Mar. 31, 2023 | |
Stock Options | |
Stock-Based Compensation | |
Expiry period | 10 years |
Stock Options | Share-based Payment Arrangement, Tranche One | |
Stock-Based Compensation | |
Vesting period | 2 years |
Stock Options | Share-based Payment Arrangement, Tranche One, First Anniversary | |
Stock-Based Compensation | |
Vesting period | 1 year |
Stock Options | Share-based Payment Arrangement, Tranche Two | |
Stock-Based Compensation | |
Vesting period | 4 years |
Stock Options | Share-based Payment Arrangement, Tranche Two, First Anniversary | |
Stock-Based Compensation | |
Vesting period | 1 year |
Restricted Stock Units | Minimum | |
Stock-Based Compensation | |
Vesting period | 1 year |
Restricted Stock Units | Maximum | |
Stock-Based Compensation | |
Vesting period | 5 years |
Stockholders' Equity - Stock _2
Stockholders' Equity - Stock Options - Activity (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Number of shares | |
Outstanding at beginning of period (in shares) | shares | 882,892 |
Exercised (in shares) | shares | (5,957) |
Canceled (in shares) | shares | (3,589) |
Outstanding at end of period (in shares) | shares | 873,346 |
Weighted-average exercise price | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 33.85 |
Exercised (in dollars per share) | $ / shares | 15.24 |
Canceled (in dollars per share) | $ / shares | 64.91 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 33.85 |
Additional disclosures | |
Weighted average remaining contractual term | 6 years 7 months 17 days |
Aggregate intrinsic value | $ | $ 23,374 |
Vested and Exercisable | |
Vested and exercisable, number (in shares) | shares | 724,939 |
Vested and exercisable, weighted average exercise price (in dollars per share) | $ / shares | $ 28.15 |
Vested and exercisable, weighted average remaining contractual term | 6 years 3 months 29 days |
Vested and exercisable, aggregate intrinsic value | $ | $ 22,598 |
Stockholders' Equity - Unrecogn
Stockholders' Equity - Unrecognized Compensation Expense (Details) $ in Millions | 3 Months Ended | |
Jul. 15, 2021 | Mar. 31, 2023 USD ($) item D shares | |
Unrecognized stock-based compensation expense | ||
Total unrecognized stock-based compensation expense, options | $ 2.9 | |
Stock Options | ||
Unrecognized stock-based compensation expense | ||
Total unrecognized stock-based compensation expense, options | $ 2.9 | |
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 1 year 5 months 19 days | |
Restricted Stock Units | ||
Unrecognized stock-based compensation expense | ||
Total unrecognized stock-based compensation expense, restricted stock units and performance stock units | $ 19.7 | |
Granted (in shares) | shares | 123,396 | |
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 2 years 9 months 18 days | |
Performance Stock Units | ||
Unrecognized stock-based compensation expense | ||
Total unrecognized stock-based compensation expense, restricted stock units and performance stock units | $ 12.5 | |
Granted (in shares) | shares | 44,354 | |
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 3 years 2 months 23 days | |
Stock price milestones | item | 0 | |
Percentage of predetermined performance achievement | 100% | |
Performance Stock Units | Share-based Payment Arrangement, Tranche One | ||
Unrecognized stock-based compensation expense | ||
Number of days, achievement of milestone stock price | D | 30 | |
Award service period | 5 years | |
Performance Stock Units | Share-based Payment Arrangement, Tranche Two | ||
Unrecognized stock-based compensation expense | ||
Award service period | 3 years |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock Units (Details) - Restricted Stock Units | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number of shares | |
Outstanding at beginning of period (in shares) | shares | 271,951 |
Granted (in shares) | shares | 123,396 |
Vested (in shares) | shares | (35,728) |
Forfeited (in shares) | shares | (4,385) |
Non vested at end of period (in shares) | shares | 355,234 |
Weighted-average grant date fair value | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 68.90 |
Granted (in dollars per share) | $ / shares | 51.32 |
Vested (in dollars per share) | $ / shares | 59.92 |
Forfeited (in dollars per share) | $ / shares | 52.83 |
Non vested outstanding at end of period (in dollars per share) | $ / shares | $ 63.89 |
Stockholders' Equity - Performa
Stockholders' Equity - Performance Stock Units (Details) - Performance Stock Units | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number of shares | |
Outstanding at beginning of period (in shares) | shares | 383,103 |
Granted (in shares) | shares | 44,354 |
Forfeited (in shares) | shares | (1,098) |
Non vested at end of period (in shares) | shares | 426,359 |
Weighted-average grant date fair value | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 37.62 |
Granted (in dollars per share) | $ / shares | 51.25 |
Forfeited (in dollars per share) | $ / shares | 55.36 |
Non vested outstanding at end of period (in dollars per share) | $ / shares | $ 38.99 |
Stockholders' Equity - 2019 Emp
Stockholders' Equity - 2019 Employee Stock Purchase Plan (Details) - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 16, 2019 | |
Stock-Based Compensation | ||
Issuance of common stock via employee stock purchase plan (in shares) | 7,724 | |
Employee Stock | ||
Stock-Based Compensation | ||
Shares authorized (in shares) | 240,000 | |
Annual increase (in shares) | 240,000 |
Stockholders' Equity - Share Re
Stockholders' Equity - Share Repurchases (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Jan. 31, 2022 | |
Stockholders' Equity | ||
Amount of authorizes repurchase | $ 100 | |
Amount of repurchase of shares | $ 6.8 | |
Repurchase of shares (in shares) | 134,680 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Changes in accumulated other comprehensive income | ||
Beginning balance | $ 384,754 | $ 394,169 |
Other comprehensive income (loss) | 5,474 | (18,463) |
Balance at end of period | 404,649 | 380,400 |
Accumulated Other Comprehensive Income (Loss) | ||
Changes in accumulated other comprehensive income | ||
Beginning balance | (36,515) | 5,312 |
Other comprehensive income (loss) before reclassification | 6,956 | (23,368) |
Federal income tax expense | (1,460) | 4,907 |
Other comprehensive income (loss) before reclassification, net of tax | 5,496 | (18,461) |
Amounts reclassified from AOCI | (28) | (2) |
Federal income tax expense | 6 | |
Amounts reclassified from AOCI, net of tax | (22) | (2) |
Other comprehensive income (loss) | 5,474 | (18,463) |
Balance at end of period | $ (31,041) | $ (13,151) |
Underwriting Information - Repo
Underwriting Information - Reportable Segments (Details) - segment | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Reportable segment | ||
Number of reportable segments | 1 | 1 |
Underwriting Information - Gros
Underwriting Information - Gross Written Premiums by Product (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Gross written premiums | ||
Amount | $ 250,112 | $ 170,934 |
% of GWP | 100% | 100% |
Fronting Premiums | ||
Gross written premiums | ||
Amount | $ 91,755 | $ 29,845 |
% of GWP | 36.70% | 17.50% |
Residential Earthquake | ||
Gross written premiums | ||
Amount | $ 55,725 | $ 46,336 |
% of GWP | 22.30% | 27.10% |
Commercial Earthquake | ||
Gross written premiums | ||
Amount | $ 37,770 | $ 25,144 |
% of GWP | 15.10% | 14.70% |
Inland Marine | ||
Gross written premiums | ||
Amount | $ 31,049 | $ 18,237 |
% of GWP | 12.40% | 10.70% |
Casualty | ||
Gross written premiums | ||
Amount | $ 11,733 | $ 5,007 |
% of GWP | 4.70% | 2.90% |
Commercial All Risk | ||
Gross written premiums | ||
Amount | $ 8,376 | $ 11,210 |
% of GWP | 3.30% | 6.60% |
Hawaii Hurricane | ||
Gross written premiums | ||
Amount | $ 8,073 | $ 6,914 |
% of GWP | 3.20% | 4% |
Residential Flood | ||
Gross written premiums | ||
Amount | $ 4,235 | $ 2,993 |
% of GWP | 1.70% | 1.80% |
Specialty Homeowners | ||
Gross written premiums | ||
Amount | $ 16,284 | |
Amount, net | $ (59) | |
% of GWP | 9.50% | |
Others | ||
Gross written premiums | ||
Amount | $ 1,455 | $ 8,964 |
% of GWP | 0.60% | 5.20% |
Underwriting Information - Gr_2
Underwriting Information - Gross Written Premiums by State (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Gross written premiums | ||
Amount | $ 250,112 | $ 170,934 |
% of GWP | 100% | 100% |
California | ||
Gross written premiums | ||
Amount | $ 131,889 | $ 68,718 |
% of GWP | 52.70% | 40.20% |
Texas | ||
Gross written premiums | ||
Amount | $ 23,210 | $ 18,979 |
% of GWP | 9.30% | 11.10% |
Florida | ||
Gross written premiums | ||
Amount | $ 12,096 | $ 4,962 |
% of GWP | 4.80% | 2.90% |
Washington | ||
Gross written premiums | ||
Amount | $ 11,972 | $ 6,881 |
% of GWP | 4.80% | 4% |
Hawaii | ||
Gross written premiums | ||
Amount | $ 10,105 | $ 8,540 |
% of GWP | 4% | 5% |
Oregon | ||
Gross written premiums | ||
Amount | $ 6,780 | $ 4,373 |
% of GWP | 2.70% | 2.60% |
Illinois | ||
Gross written premiums | ||
Amount | $ 4,702 | $ 4,273 |
% of GWP | 1.90% | 2.50% |
New York | ||
Gross written premiums | ||
Amount | $ 3,871 | $ 2,380 |
% of GWP | 1.50% | 1.40% |
Other | ||
Gross written premiums | ||
Amount | $ 45,487 | $ 51,828 |
% of GWP | 18.30% | 30.30% |
Underwriting Information - Gr_3
Underwriting Information - Gross Written Premiums by Insurance Subsidiary (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Gross written premiums | ||
Amount | $ 250,112 | $ 170,934 |
% of GWP | 100% | 100% |
PSIC | ||
Gross written premiums | ||
Amount | $ 150,704 | $ 104,004 |
% of GWP | 60.30% | 60.80% |
PESIC | ||
Gross written premiums | ||
Amount | $ 99,408 | $ 66,930 |
% of GWP | 39.70% | 39.20% |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Effective Income Tax Rate Reconciliation, Percent | ||
Company's tax rate (as percent) | 23.50% | 23.80% |
Statutory tax rate (as a percent) | 21% | 21% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share | ||
Net income | $ 17,313 | $ 14,537 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 24,969,703 | 25,362,179 |
Common Share equivalents (in shares) | 473,198 | 537,111 |
Diluted (in shares) | 25,442,902 | 25,899,290 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.69 | $ 0.57 |
Diluted (in dollars per share) | $ 0.68 | $ 0.56 |
Reinsurance (Details)
Reinsurance (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2021 | |
Reinsurance Retention Policy | |||
Catastrophe bond, face value | $ 275 | $ 400 | |
Catastrophe | |||
Reinsurance Retention Policy | |||
Retention amount | $ 12.5 | ||
Earthquake | |||
Reinsurance Retention Policy | |||
XOL reinsurance, protection | 2,150 | ||
Hawaii Hurricane | |||
Reinsurance Retention Policy | |||
XOL reinsurance, protection | 1,010 | ||
U.S. Hurricane | |||
Reinsurance Retention Policy | |||
XOL reinsurance, protection | $ 250 |
Credit Agreements - Floating Ra
Credit Agreements - Floating Rate Notes (Details) - Revolving credit facility - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended |
Dec. 31, 2021 | Mar. 31, 2023 | |
Long-term debt | ||
Percentage of unused line fee payable on unborrowed amount | 0.25% | |
Line of credit facility outstanding | $ 35 | |
Interest rate (as a percent) | 6.55% | |
Interest expense | $ 0.6 | |
Line of credit prepayment premium | $ 0 | |
U.S. Bank Credit Agreement | ||
Long-term debt | ||
Maximum credit facility borrowing amount | $ 100 | |
Secured Overnight Financing Rate | ||
Long-term debt | ||
Interest rate spread (as a percent) | 1.75% | |
Alternate Base Rate | ||
Long-term debt | ||
Interest rate spread (as a percent) | 0.75% |
Credit Agreements - FHLB Line o
Credit Agreements - FHLB Line of Credit (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Credit Agreements | |
Percentage of borrowing capacity | 5% |
Federal home loan bank, advances, branch of FHLB bank, interest rate | 5.04% |
Interest expense on the FHLB Line of Credit | $ 0.4 |
Federal home loan bank, advances, branch of FHLB bank, amount of advances | $ 36.4 |