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Palomar (PLMR) Q3 Earnings Miss, Rise Y/Y, View Tightened

Palomar Holdings, Inc. PLMR reported third-quarter 2022 operating income of 29 cents per share, missing the Zacks Consensus Estimate by 51.7%. The bottom line increased more than fourfold year over year.

Palomar witnessed improved premiums and net investment income, offset by higher losses and loss adjustment expenses.

Palomar Holdings, Inc. Price, Consensus and EPS Surprise

 

Palomar Holdings, Inc. Price, Consensus and EPS Surprise
Palomar Holdings, Inc. Price, Consensus and EPS Surprise

Palomar Holdings, Inc. price-consensus-eps-surprise-chart | Palomar Holdings, Inc. Quote

Behind the Headlines

Total revenues improved 22.2% year over year to $83.1 million, mainly attributable to higher premiums and net investment income. The top line missed the Zacks Consensus Estimate by 13.5%.

Gross written premiums increased 66.2% year over year to $253.1 million. Net earned premiums surged 20.4% year over year to $77.9 million.

Net investment income increased 67.4% year over year to $3.7 million, driven by a higher average balance of investments.

Palomar witnessed an underwriting income of $4.1 million, rebounding from the year-ago loss of $1.8 million. Adjusted underwriting income was $7.5 million, rebounding from the year-ago loss of $0.2 million.

Total expenses of $75.5 million increased 11.8% year over year due to higher losses and loss adjustment expenses, acquisition and underwriting expenses as well as interest expenses. The loss ratio was 39.6, up 440 bps year over year.

Adjusted combined ratio, excluding catastrophe losses, improved 990 basis points (bps) year over year to 90.3.

Financial Update

Cash and cash equivalents decreased 41.3% from the 2021-end level to $29.5 million at quarter end.

Shareholder equity decreased 6.7% from 2021 end to $367.8 million.

Annualized adjusted return on equity was 7.9%, expanding 610 bps year over year.

PLMR bought back shares worth $3 million in the third quarter of 2022. As of Sep 30 2022, $76.7 million remains under authorization.

2022 Guidance Tightened

Palomar estimates adjusted net income between $82 million and $85 million compared with $80 million to $85 million guided earlier.

Zacks Rank

Palomar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Property & Casualty Insurers

Of the insurance industry players that have reported third-quarter results so far, The Travelers Companies TRV and RLI Corporation RLI beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation PGR missed the mark.

Travelers’ third-quarter 2022 core income of $2.20 per share beat the Zacks Consensus Estimate by 24.3% but decreased 15.4% year over year. Total revenues increased 6.8% from the year-ago quarter to $9.4 billion and beat the Zacks Consensus Estimate by 2.5%.

Net written premiums increased 110% year over year to $9.2 billion. Underwriting gain of $115 million increased 53.3% year over year in the reported quarter.  The combined ratio improved 40 bps year over year to 98.2.

RLI’s third-quarter 2022 operating earnings of 50 cents per share beat the Zacks Consensus Estimate by 51.5% but declined 23.1% from the prior-year quarter. Operating revenues of $312.7 million were up 15.3% year over year but missed the Zacks Consensus Estimate by 1.3%.

Gross premiums written increased 13.3% year over year to $403.8 million. RLI’s underwriting income of $8.8 million decreased 35.8% while the combined ratio deteriorated 240 bps year over year to 97.

Progressive’s earnings per share of 49 cents missed the Zacks Consensus Estimate of $1.24 as well as our estimate of $1.38. The bottom line, however, improved more than threefold from 14 cents earned in the year-ago quarter.

Net premiums written were $13 billion in the quarter, up 5% from $11.7 billion a year ago but missed our estimate of $14.2 billion. Progressive’s combined ratio — the percentage of premiums paid out as claims and expenses — improved 120 bps from the prior-year quarter’s level to 99.2.




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