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Palomar's (PLMR) Q4 Earnings and Revenues Top, Rise Y/Y

Palomar Holdings, Inc. PLMR reported fourth-quarter 2023 operating income of 94 cents per share, which beat the Zacks Consensus Estimate by 10.6%. The bottom line increased 14.6% year over year. Palomar witnessed improved premiums and net investment income as well as improved losses and loss adjustment expenses.

Behind the Headlines

Total revenues improved 16% year over year to $102 million, mainly attributable to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 7.7%.

Gross written premiums increased 26.8% year over year to $303.2 million. Our estimate was $269.6 million. Net earned premiums increased 14% year over year to $93.7 million. Our estimate was $87.9 million. The Zacks Consensus Estimate was pegged at $90 million.

Net investment income increased 58.9% year over year to $7 million, driven by higher yields on invested assets and a higher average balance of investments. The Zacks Consensus Estimate was pegged at $6.2 million. Our estimate was $6.3 million.

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

Palomar witnessed an underwriting income of $24.2 million, up 20.4% year over year. Adjusted underwriting income was nearly $29.3 million, rising 24.5% year over year.

Total expenses of $71.9 million increased 13% year over year due to loss and loss adjustment expenses. Our estimate was $68.3 million.

The loss ratio was 19.1, which improved 330 basis points (bps) year over year. Our estimate was 20.3. The Zacks Consensus Estimate was pegged at 20.9.

Adjusted combined ratio, excluding catastrophe losses, improved 260 bps year over year to 68.8. The Zacks Consensus Estimate was pegged at 72.

Full-Year Highlights

Adjusted income of $3.69 per share increased 33.2% year over year.

Gross written premiums increased 29.4% year over year to $1.1 billion.

Underwriting income of $80.8 million improved 30.1% year over year. Total loss ratio was 21%, which improved 390 bps year over year. Adjusted combined ratio was 71.2, which improved 440 bps year over year.

Financial Update

Cash and cash equivalents declined 25.1% from 2022-end to $52.4 million at 2023-end. Shareholder equity increased 22.5% from 2022-end to $471.3 million at the end of 2023.

Annualized adjusted return on equity in 2023 was 21.9%, up 360 bps year over year. As of Dec 31, 2023, $43.5 million remained under authorization.

2024 View

Palomar aims to achieve adjusted net income in the range of $110 million-$115 million.

Zacks Rank

PLMR 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 Insurers

The Travelers Companies TRV reported fourth-quarter 2023 core income of $7.01 per share, which beat the Zacks Consensus Estimate of $5.04. The bottom line more than doubled year over year, driven by higher underlying underwriting gain, lower catastrophe losses and higher net investment income. Travelers’ total revenues increased 13.5% from the year-ago quarter to $10.9 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.2%.

Net written premiums increased 13% year over year to about $10 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.7 billion. TRV witnessed an underwriting gain of $1.4 billion, up more than three-fold year over year, driven by higher business volumes. The combined ratio improved 870 bps year over year to 85.8, driven by a lower underlying combined ratio and catastrophe losses.  

The Progressive Corporation’s PGR fourth-quarter 2023 earnings per share of $2.96 beat the Zacks Consensus Estimate of $2.38. The bottom line improved 97.3% year over year. Operating revenues of $16.6 billion beat the Zacks Consensus Estimate by 3% and increased 23.2% year over year.

Net premiums written were $15.1 billion in the quarter, up 21% from $12.5 billion a year ago. PGR’s premiums beat our estimate of $14 billion. Net premiums earned grew 22% to $15.8 billion and beat our estimate of $14.8 billion.

Progressive’s combined ratio improved 520 bps from the prior-year quarter’s level to 88.7.

W.R. Berkley Corporation’s WRB fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. Operating revenues came in at $3.2 billion, up 9.3% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line beat the consensus estimate by 1.3%

W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio remained flat year over year at 88.4.

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