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Palomar Holdings, Inc. (PLMR)
Chart Events
Performance Outlook
| Previous Close | 87.32 |
| Open | 88.35 |
| Bid | 0.00 x 800 |
| Ask | 0.00 x 800 |
| Day's Range | 84.92 - 87.72 |
| 52 Week Range | 39.21 - 121.87 |
| Volume | 147,432 |
| Avg. Volume | 244,715 |
| Market Cap | 2.183B |
| Beta (5Y Monthly) | N/A |
| PE Ratio (TTM) | 356.42 |
| EPS (TTM) | 0.24 |
| Earnings Date | May 03, 2021 - May 07, 2021 |
| Forward Dividend & Yield | N/A (N/A) |
| Ex-Dividend Date | N/A |
| 1y Target Est | 101.67 |
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- Motley Fool
PALOMAR HOLDINGS, INC. (PLMR) Q4 2020 Earnings Call Transcript
PLMR earnings call for the period ending December 31, 2020.
- ACCESSWIRE
Palomar Holdings, Inc. to Host Earnings Call
NEW YORK, NY / ACCESSWIRE / February 25, 2021 / Palomar Holdings, Inc. (NASDAQ:PLMR) will be discussing their earnings results in their 2020 Fourth Quarter Earnings call to be held on February 25, 2021 at 12:00 PM Eastern Time.
- GlobeNewswire
Palomar Holdings, Inc. Reports Fourth Quarter & Full Year 2020 Results
LA JOLLA, Calif., Feb. 24, 2021 (GLOBE NEWSWIRE) -- Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported a net loss of $1.8 million, or $0.07 per diluted share, for the fourth quarter of 2020 compared to net income of $10.9 million, or $0.45 per diluted share, for the fourth quarter of 2019. Fourth Quarter 2020 Highlights Gross written premiums increased by 31.0% to $96.1 million compared to $73.3 million in the fourth quarter of 2019Net loss of $1.8 million, or $0.07 per diluted share, compared to net income of $10.9 million, or $0.45 per diluted share, in the fourth quarter of 2019Total loss ratio of 44.2% compared to 7.1% in the fourth quarter of 2019Catastrophe loss ratio(1) of 37.2% compared to zero in the fourth quarter of 2019Combined ratio of 112.8% compared to 63.1% in the fourth quarter of 2019Adjusted combined ratio excluding catastrophe losses(1) of 73.8%, compared to 60.7% in the fourth quarter of 2019Annualized return on equity of (2.0)%, compared to 20.4% in the fourth quarter of 2019 Full Year 2020 Highlights Gross written premiums increased by 40.6% to $354.4 million compared to $252.0 million in 2019Net income of $6.3 million, compared to $10.6 million in 2019Adjusted net income(1) of $8.9 million, compared to $37.9 million in 2019Total loss ratio of 41.3%, compared to 5.6% in 2019Catastrophe loss ratio(1) of 32.9% compared to zero in 2019Combined ratio of 102.5%, compared to 91.3% in 2019Adjusted combined ratio excluding catastrophe losses(1) of 67.5%, compared to 63.3% in 2019Return on equity of 2.1%, compared to 6.7% in 2019Adjusted return on equity(1) of 3.0%, compared to 24.1% in 2019 (1) See discussion of “Non-GAAP and Key Performance Indicators” below. “I am inspired by the efforts of our team to grow and evolve our business during the past year,” commented Mac Armstrong, Chairman and Chief Executive Officer. “We launched new products and a new insurance carrier, entered into new geographies, made key additions to our team, and continued our pursuit of the Company’s strategic vision all while navigating circumstances that few of us could have anticipated. Our newly launched E&S carrier, Palomar Excess and Surplus Insurance Company, or PESIC, represents an exciting progression in our evolution. PESIC enables us to extend the breadth and reach of our product suite and was a key contributor to the 95% year on year growth in our commercial lines gross written premiums for the full year. Overall, we grew gross written premiums by 31.0% in the fourth quarter and 40.6% for the full year while maintaining profitability in the face of an historic wind season.” Mr. Armstrong shared, “We are committed to applying data and lessons learned to the continuous improvement of our business. During this past year we modified our approach to and participation in specific wind-exposed markets upon review of potential risk-adjusted returns, catastrophe payback and prevailing market conditions. We also made additional refinements to our risk transfer strategy. The combination of these efforts will not only reduce volatility but also further enhance visibility into our financial results. Finally, we continued investing in our technology and our team as we position Palomar for near and long-term success.” Mr. Armstrong further offered, “Separately, I would like to address the severe weather activity throughout the country this past week, specifically Winter Storm Uri in Texas where Palomar has a considerable market presence. I want to tell our policyholders in Texas that our thoughts are with them, we stand ready to support them and we are here to help them rebound. Palomar has substantial resources in place to support both residential and commercial policyholders in Texas, including comprehensive reinsurance coverage on both an excess of loss and quota share basis. Both our commercial and residential quota shares will apply to this event from the first dollar of loss, and as such we do not expect to incur material losses from the storm.” Underwriting ResultsGross written premiums increased 31.0% to $96.1 million compared to $73.3 million in the fourth quarter of 2019, while net earned premiums increased 25.6% compared to the prior year’s fourth quarter. Losses and loss adjustment expenses for the fourth quarter were $17.2 million including $14.5 million of catastrophe losses and $2.7 million of non-catastrophe attritional losses. The loss ratio for the quarter was 44.2%, comprised of a catastrophe loss ratio of 37.2%(1) and an attritional loss ratio of 7.0%, compared to a loss ratio of 7.1% during the same period last year comprised entirely of attritional losses. The fourth quarter losses include $0.1 million of favorable prior year development. In addition to catastrophe losses, the Company’s fourth quarter 2020 results were impacted by a reinsurance expense acceleration charge of $4.1 million and reinstatement premium of $0.8 million on backup reinsurance purchased. Underwriting loss(1) was $5.0 million resulting in a combined ratio of 112.8% compared to underwriting income of $11.4 million and a combined ratio of 63.1% during the same period last year. The fourth quarter of 2020 results include certain expenses related to stock-based compensation and catastrophe losses. The fourth quarter of 2019 results include certain expenses related to the Company’s stock offering and stock-based compensation. Without these items, the Company’s adjusted combined ratio excluding catastrophe losses(1) was 73.8% in the fourth quarter compared to 60.7% during the same period last year. This increase was significantly due to the reinsurance acceleration charge and reinstatement premium incurred in the fourth quarter of 2020. Investment ResultsNet investment income increased by 29.0% to $2.3 million compared to $1.8 million in the prior year’s fourth quarter. The year over year increase was primarily due to a higher average balance of investments held during the three months ended December 31, 2020 due to cash generated from operations as well as proceeds from the Company’s January and June 2020 stock offerings, offset by lower yields on invested assets. Funds are generally invested conservatively in high quality securities, including government agency, asset and mortgage-backed securities, municipal and corporate bonds with an average credit quality of "A2/A". The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 3.96 years at December 31, 2020. Cash and invested assets totaled $456.1 million at December 31, 2020. During the fourth quarter, the Company recognized realized and unrealized gains of $245 thousand related to its investment portfolio as compared to a $1.2 million gain in last year’s fourth quarter. Tax RateThe effective tax rate for the three months ended December 31, 2020 was 23.1% compared to 24.6% for the three months ended December 31, 2019. For the current quarter, the Company’s income tax rate differed from the statutory rate due to the tax impact of the permanent component of employee stock option exercises. The 2019 fourth quarter tax rate includes an adjustment from prior periods of $0.4 million, or approximately 3 points of the effective tax rate for the fourth quarter. Stockholders’ Equity and ReturnsStockholders’ equity was $363.7 million at December 31, 2020, compared to $218.6 million at December 31, 2019. For the three months ended December 31, 2020, the Company’s annualized return on equity was (2.0%) compared to 20.4% for the same period last year. Full Year 2021 OutlookFor the full year 2021, the Company expects to achieve adjusted net income of $62 million to $67 million. This adjusted net income guidance considers the impact of Winter Storm Uri in Texas. Conference CallAs previously announced, Palomar will host a conference call February 25, 2021, to discuss its fourth quarter and full year 2020 results at 12:00 p.m. (Eastern Time). The conference call can be accessed by dialing 1-877-423-9813 (domestic) or 1-201-689-8573 (international) and asking for the Palomar Fourth Quarter and Full Year 2020 Earnings Call. A telephonic replay will be available approximately two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers 1-412-317-6671 and providing the access code 13716031. The telephonic replay will be available until 11:59 pm (Eastern Time) on March 4, 2021. 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, Palomar Specialty Reinsurance Company Bermuda Ltd., Palomar Insurance Agency, Inc. and Palomar Excess and Surplus Insurance Company. Palomar is an innovative insurer that focuses on the provision of specialty insurance for residential and commercial clients. Palomar’s underwriting and analytical expertise allow it to concentrate on certain markets that it believes are underserved by other insurance companies, such as the markets for earthquake, hurricane and flood insurance. Palomar’s principal insurance subsidiary, Palomar Specialty Insurance Company, is an admitted carrier in 32 states and has an A.M. Best financial strength rating of “A-” (Excellent).Follow Palomar on Facebook, LinkedIn and Twitter: @PLMRInsurance Non-GAAP and Key Performance IndicatorsPalomar 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 (loss) 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 (loss). Adjusted net income (loss) 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 (loss) calculated in accordance with GAAP to adjusted net income (loss). Return on equity is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period. 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 (loss) 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. Tangible stockholders’ equity is a non-GAAP financial measure defined as stockholders’ equity less 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 StatementPalomar 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. ContactMedia InquiriesSarah Flocken1-240-630-0316sarah@conwaymarketinggroup.com Investor RelationsShannon Devine1-619-771-1743investors@plmr.com Source: Palomar Holdings, Inc. Summary of Operating Results The following table summarizes the Company’s results for the three months ended December 31, 2020 and 2019: Three months ended December 31, Percent 2020 2019 Change Change ($ in thousands, except per share data) Gross written premiums $96,092 $73,342 $22,750 31.0%Ceded written premiums (53,839) (29,535) (24,304) 82.3%Net written premiums 42,253 43,807 (1,554) (3.5)%Net earned premiums 38,922 30,988 7,934 25.6%Commission and other income 803 654 149 22.8%Total underwriting revenue (1) 39,725 31,642 8,083 25.5%Losses and loss adjustment expenses 17,214 2,195 15,019 684.2%Acquisition expenses 18,131 11,070 7,061 63.8%Other underwriting expenses 9,356 6,943 2,413 34.8%Underwriting income (loss) (1) (4,976) 11,434 (16,410) (143.5)%Net investment income 2,325 1,803 522 29.0%Net realized and unrealized gains on investments 245 1,178 (933) (79.2)%Income (loss) before income taxes (2,406) 14,415 (16,821) (116.7)%Income tax expense (benefit) (557) 3,535 (4,092) NM Net income (loss) $(1,849) $10,880 $(12,729) (117.0)%Adjustments: Expenses associated with secondary offerings — 307 (307) NM Stock-based compensation expense 710 426 284 66.7 Tax impact (130) (155) 25 NM Adjusted net income (loss) (1) $(1,269) $11,458 $(12,727) (111.1)%Key Financial and Operating Metrics Annualized return on equity (2.0)% 20.4% Annualized adjusted return on equity (1) (1.4)% 21.5% Loss ratio 44.2% 7.1% Expense ratio 68.6% 56.0% Combined ratio 112.8% 63.1% Adjusted combined ratio (1) 111.0% 60.7% Diluted earnings (loss) per share $(0.07) $0.45 Diluted adjusted earnings (loss) per share (1) $(0.05) $0.48 Catastrophe losses $14,474 $— Catastrophe loss ratio (1) 37.2% —% Adjusted combined ratio excluding catastrophe losses (1) 73.8% 60.7% NM-Not Meaningful (1) Indicates non-GAAP financial measure; see “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of the non-GAAP financial measures to their most directly comparable financial measures prepared in accordance with GAAP. The following table summarizes the Company’s results for the years ended December 31, 2020 and 2019: Year ended December 31, Percent 2020 2019 Change Change ($ in thousands, except per share data) Gross written premiums $354,360 $251,961 $102,399 40.6%Ceded written premiums (155,102) (108,332) (46,770) 43.2%Net written premiums 199,258 143,629 55,629 38.7%Net earned premiums 155,068 100,207 54,861 54.7%Commission and other income 3,295 2,671 624 23.4%Total underwriting revenue (1) 158,363 102,878 55,485 53.9%Losses and loss adjustment expenses 64,115 5,593 58,522 1,046.3%Acquisition expenses 64,041 37,259 26,782 71.9%Other underwriting expenses 34,084 51,299 (17,215) (33.6)%Underwriting income (loss) (1) (3,877) 8,727 (12,604) (144.4)%Interest expense — (1,068) 1,068 (100.0)%Net investment income 8,612 5,975 2,637 44.1%Net realized and unrealized gains on investments 1,488 4,443 (2,955) (66.5)%Income before income taxes 6,223 18,077 (11,854) (65.6)%Income tax expense (benefit) (34) 7,456 (7,490) NM Net income $6,257 $10,621 $(4,364) (41.1)%Adjustments: Expenses associated with IPO, tax restructuring, secondary offerings, and one time incentive cash bonuses 708 3,007 (2,299) NM Stock-based compensation expense 2,167 24,103 (21,936) NM Expenses associated with retirement of debt — 1,297 (1,297) NM Expenses associated with catastrophe bond 399 — 399 NM Tax impact (664) (1,149) 485 NM Adjusted net income (1) $8,867 $37,879 $(29,012) (76.6)%Key Financial and Operating Metrics Return on equity 2.1% 6.7% Adjusted return on equity (1) 3.0% 24.1% Loss ratio 41.3% 5.6% Expense ratio 61.2% 85.7% Combined ratio 102.5% 91.3% Adjusted combined ratio (1) 100.4% 63.3% Diluted earnings per share $0.24 $0.49 Diluted adjusted earnings per share (1) $0.35 $1.73 Catastrophe losses $50,986 $— Catastrophe loss ratio (1) 32.9% —% Adjusted combined ratio excluding catastrophe losses (1) 67.5% 63.3% NM-Not Meaningful (1) Indicates non-GAAP financial measure; see “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of the non-GAAP financial measures to their most directly comparable financial 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) December 31, December 31, 2020 2019Assets Investments: Fixed maturity securities available for sale, at fair value (amortized cost: $381,279 in 2020; $211,278 in 2019) $397,987 $217,151Equity securities, at fair value (cost: $22,291 in 2020; $21,336 in 2019) 24,322 22,328Total investments 422,309 239,479Cash and cash equivalents 33,538 33,119Restricted cash 248 230Accrued investment income 2,545 1,386Premium receivable 48,842 36,237Deferred policy acquisition costs 35,481 25,201Reinsurance recoverable on unpaid losses and loss adjustment expenses 94,566 12,952Reinsurance recoverable on paid losses and loss adjustment expenses 10,162 4,303Ceded unearned premiums 35,031 26,105Prepaid expenses and other assets 34,119 14,861Property and equipment, net 739 845Intangible assets 11,512 744Total assets $729,092 $395,462Liabilities and stockholders’ equity Liabilities: Accounts payable and other accrued liabilities $20,730 $13,555Reserve for losses and loss adjustment expenses 129,036 16,821Unearned premiums 183,489 130,373Ceded premium payable 22,233 11,383Funds held under reinsurance treaty 4,515 1,658Income and excise taxes payable — 1,117Deferred tax liabilities, net 5,376 1,999Total liabilities 365,379 176,906Stockholders’ equity: Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2020 and December 31, 2019, 0 shares issued and outstanding as of December 31, 2020 and December 31, 2019 — —Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,525,796 and 23,468,750 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively 3 2Additional paid-in capital 310,507 180,012Accumulated other comprehensive income 13,246 4,686Retained earnings 39,957 33,856Total stockholders’ equity 363,713 218,556Total liabilities and stockholders’ equity $729,092 $395,462 Condensed Consolidated Income Statement Palomar Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Unaudited) (in thousands, except shares and per share data) Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019Revenues: Gross written premiums $96,092 $73,342 $354,360 $251,961Ceded written premiums (53,839) (29,535) (155,102) (108,332)Net written premiums 42,253 43,807 199,258 143,629Change in unearned premiums (3,331) (12,819) (44,190) (43,422)Net earned premiums 38,922 30,988 155,068 100,207Net investment income 2,325 1,803 8,612 5,975Net realized and unrealized gains on investments 245 1,178 1,488 4,443Commission and other income 803 654 3,295 2,671Total revenues 42,295 34,623 168,463 113,296Expenses: Losses and loss adjustment expenses 17,214 2,195 64,115 5,593Acquisition expenses 18,131 11,070 64,041 37,259Other underwriting expenses (includes stock-based compensation of $710 and $426 for the three months ended December 31, 2020 and 2019, respectively and $2,167 and $24,103 for the year ended December 31, 2020 and 2019, respectively) 9,356 6,943 34,084 51,299Interest expense — — — 1,068Total expenses 44,701 20,208 162,240 95,219Income (loss) before income taxes (2,406) 14,415 6,223 18,077Income tax expense (benefit) (557) 3,535 (34) 7,456Net income (loss) (1,849) 10,880 6,257 10,621Other comprehensive income, net: Net unrealized (losses) gains on securities available for sale for the three months and years ended December 31, 2020 and 2019, respectively 2,808 (1,210) 8,560 5,249Net comprehensive income $959 $9,670 $14,817 $15,870Per Share Data: Basic earnings (loss) per share $(0.07) $0.46 $0.25 $0.49Diluted earnings (loss) per share $(0.07) $0.45 $0.24 $0.49 Weighted-average common shares outstanding: Basic 25,520,111 23,468,750 24,872,251 21,501,541Diluted 25,520,111 24,092,325 25,598,647 21,834,934 Underwriting Segment Data The Company has a single reportable segment and offers primarily earthquake, wind, and flood insurance products. Gross written premiums (GWP) by product and location are presented below: Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 ($ in thousands) ($ in thousands) % of % of % of % of Amount GWP Amount GWP Amount GWP Amount GWP Product Residential Earthquake $37,432 39.0%$35,468 48.4% $140,934 39.8%$130,473 51.8%Commercial Earthquake 18,163 18.9% 15,721 21.4% 58,890 16.6% 38,741 15.4%Commercial All Risk 14,185 14.8% 8,429 11.5% 53,933 15.2% 30,358 12.0%Specialty Homeowners 11,388 11.9% 7,796 10.6% 49,849 14.1% 32,788 13.0%Inland Marine 5,676 5.9% 1,177 1.6% 15,423 4.3% 2,465 1.0%Hawaii Hurricane 3,528 3.7% 2,714 3.7% 13,824 3.9% 10,764 4.3%Flood 2,448 2.5% 1,722 2.4% 8,176 2.3% 5,216 2.1%Other 3,272 3.3% 315 0.4% 13,331 3.8% 1,156 0.4%Total Gross Written Premiums $96,092 100.0%$73,342 100.0% $354,360 100.0%$251,961 100.0% Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 ($ in thousands) ($ in thousands) % of % of % of % of Amount GWP Amount GWP Amount GWP Amount GWP State California $48,857 50.8%$42,198 57.5% $172,765 48.8%$141,743 56.3%Texas 12,927 13.5% 11,409 15.6% 67,974 19.2% 44,087 17.5%Florida 5,110 5.3% — —% 5,795 1.6% — —%Washington 4,326 4.5% 3,177 4.3% 14,328 4.0% 9,607 3.8%Hawaii 4,285 4.5% 3,164 4.3% 16,398 4.6% 11,851 4.7%North Carolina 4,011 4.2% 1,240 1.7% 11,143 3.1% 3,894 1.5%Oregon 2,740 2.9% 2,117 2.9% 10,038 2.8% 7,396 2.9%South Carolina 1,993 2.1% 1,547 2.1% 9,196 2.6% 6,185 2.5%Other 11,843 12.2% 8,490 11.6% 46,723 13.3% 27,198 10.8%Total Gross Written Premiums $96,092 100.0%$73,342 100.0% $354,360 100.0%$251,961 100.0% Gross and net earned premiums The table below shows the amount of premiums the Company earned on a gross and net basis and the Company’s net earned premiums as a percentage of gross earned premiums for each period presented: Three Months Ended Year Ended December 31, December 31, 2020 2019 Change % Change 2020 2019 Change % Change ($ in thousands) ($ in thousands)Gross earned premiums $86,191 $58,967 $27,224 46.2% $301,457 $200,521 $100,936 50.3%Ceded earned premiums (47,269) (27,979) (19,290) 68.9% (146,389) (100,314) (46,075) 45.9%Net earned premiums $38,922 $30,988 $7,934 25.6% $155,068 $100,207 $54,861 54.7% Net earned premium ratio 45.2% 52.6% 51.4% 50.0% Loss detail The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses: Three Months Ended December 31, Year ended December 31, 2020 2019 2020 2019 (in thousands) (in thousands)Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period $39,540 $2,914 $3,869 $4,165Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to: — —Current year 17,312 2,114 64,179 5,774Prior years (98) 81 (64) (181)Total incurred 17,214 2,195 64,115 5,593Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to: Current year 22,125 1,135 31,879 2,179Prior years 159 105 1,635 3,710Total payments 22,284 1,240 33,514 5,889Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period 34,470 3,869 34,470 3,869Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period 94,566 12,952 94,566 12,952Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period $129,036 $16,821 $129,036 $16,821 Reconciliation of Non-GAAP Financial Measures For the three months and years ended December 31, 2020 and 2019, the Non-GAAP financial measures discussed above reconcile to their most comparable GAAP measures as follows: Underwriting revenue Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 (in thousands) (in thousands)Total revenue $42,295 $34,623 $168,463 $113,296Net investment income (2,325) (1,803) (8,612) (5,975)Net realized and unrealized gains on investments (245) (1,178) (1,488) (4,443)Underwriting revenue $39,725 $31,642 $158,363 $102,878 Underwriting income (loss) Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 (in thousands) (in thousands)Income (loss) before income taxes $(2,406) $14,415 $6,223 $18,077Net investment income (2,325) (1,803) (8,612) (5,975)Net realized and unrealized gains on investments (245) (1,178) (1,488) (4,443)Interest expense — — — 1,068Underwriting income (loss) $(4,976) $11,434 $(3,877) $8,727 Adjusted net income (loss) Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 (in thousands) (in thousands)Net income (loss) $(1,849) $10,880 $6,257 $10,621Adjustments: Expenses associated with IPO, tax restructuring, secondary offerings, and one-time incentive cash bonuses — 307 708 3,007Stock-based compensation expense 710 426 2,167 24,103Expenses associated with retirement of debt — — — 1,297Expenses associated with catastrophe bond — — 399 —Tax impact (130) (155) (664) (1,149)Adjusted net income (loss) $(1,269) $11,458 $8,867 $37,879 Annualized adjusted return on equity Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 ($ in thousands) ($ in thousands) Annualized adjusted net income (loss) $(5,076) $45,832 $8,867 $37,879 Average stockholders’ equity $362,804 $213,509 $291,135 $157,424 Annualized adjusted return on equity (1.4)% 21.5% 3.0% 24.1% Adjusted combined ratio Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 ($ in thousands) ($ in thousands) Numerator: Sum of losses, loss adjustment expenses, underwriting, acquisition and other underwriting expenses, net of commission and other income $43,898 $19,554 $158,945 $91,480 Denominator: Net earned premiums $38,922 $30,988 $155,068 $100,207 Combined ratio 112.8% 63.1% 102.5% 91.3%Adjustments to numerator: Expenses associated with IPO, tax restructuring, secondary offerings, and one-time incentive cash bonuses $— $(307) $(708) $(3,007) Stock-based compensation expense (710) (426) (2,167) (24,103) Portion of expenses associated with retirement of debt classified as other underwriting expenses — — — (897) Expenses associated with catastrophe bond — — (399) — Adjusted combined ratio 111.0% 60.7% 100.4% 63.3% Diluted adjusted earnings per share Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 ( in thousands, except shares and per share data) ( in thousands, except shares and per share data) Adjusted net income (loss) $(1,269) $11,458 $8,867 $37,879Weighted-average common shares outstanding, diluted 25,520,111 24,092,325 25,598,647 21,834,934Diluted adjusted earnings per share $(0.05) $0.48 $0.35 $1.73 Catastrophe loss ratio Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 ($ in thousands) ($ in thousands) Numerator: Losses and loss adjustment expenses $17,214 $2,195 $64,115 $5,593 Denominator: Net earned premiums $38,922 $30,988 $155,068 $100,207 Loss ratio 44.2% 7.1% 41.3% 5.6% Numerator: Catastrophe losses $14,474 $— $50,986 $— Denominator: Net earned premiums $38,922 $30,988 $155,068 $100,207 Catastrophe loss ratio 37.2% 0.0% 32.9% 0.0% Adjusted combined ratio excluding catastrophe losses Three Months Ended Year ended December 31, December 31, 2020 2019 2020 2019 ($ in thousands) ($ in thousands) Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income $43,898 $19,554 $158,945 $91,480 Denominator: Net earned premiums $38,922 $30,988 $155,068 $100,207 Combined ratio 112.8% 63.1% 102.5% 91.3%Adjustments to numerator: Expenses associated with IPO, tax restructuring, secondary offerings, and one-time incentive cash bonuses $— $(307) $(708) $(3,007) Stock-based compensation expense (710) (426) (2,167) (24,103) Portion of expenses associated with retirement of debt classified as other underwriting expenses — — — (897) Expenses associated with catastrophe bond — — (399) — Catastrophe losses (14,474) — (50,986) — Adjusted combined ratio excluding catastrophe losses 73.8% 60.7% 67.5% 63.3% Tangible Stockholders’ equity December 31, 2020 2019 (in thousands)Stockholders’ equity $363,713 $218,556Intangible assets (11,512) (744)Tangible stockholders’ equity $352,201 $217,812
