Good morning, and welcome to the Palomar Holdings First Quarter 2024 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference line will be open for questions with instructions to follow. As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Chris Uchida, Chief Financial Officer. Please go ahead, sir. Thank you, operator, and good morning, everyone. We appreciate your participation in our earnings call. With me here today is Mac Armstrong, our Chairman and Chief Executive Officer. Additionally, Jon Christianson, our President, is here to answer questions during the Q&A portion of the call. As a reminder, a telephonic replay of this call will be available on the investor relations section of our website through 11:59 P.M. Eastern Time on May 10th, 2024. Before we begin, let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about management's future expectations, beliefs, estimates, plans, and prospects. Such statements are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in our quarterly report on Form 10-Q, filed with the Securities and Exchange Commission. We do not undertake any duty to update such forward-looking statements. Additionally, during today's call, we will discuss certain non-GAAP measures which we believe are useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to their most comparable GAAP measure can be found in our earnings release. At this point, I'll turn the call over to Mac. Thank you, Chris, and good morning. During the first quarter, Palomar celebrated its 10th birthday, and this quarter is a terrific illustration of how much we've accomplished in our young history. We produced another quarter of profitable growth and again demonstrated our ability to grow where we want while delivering predictable earnings. Five product categories generated gross written premium growth of 47.2%, with especially strong contributions from our crop and casualty products. Likewise, we delivered net earned premium growth of 30% in that first quarter, a nice increase from the 14% growth we achieved in the fourth quarter of 2023. Crop, casualty, and certain other property lines, combined with our market-leading earthquake franchise, drove adjusted net income growth of 36% and an adjusted return on equity of 22.9%. Another exciting result of our financial performance this quarter is our stockholders' equity surpassed $500 million, moving us into AM Best Financial Size Category X. This level should help us open new market segments, distribution channels, and attract talent. The year is off to a strong start, and we are on track to achieve the Palomar 2X goal of doubling our adjusted net income over a 3-5-year period. This goal was first introduced at our Investor Day in June 2022, which means we are tracking towards the shorter end of the timeframe objective. We remain steadfast in our commitment to maintain profitable growth with best-in-class risk-adjusted returns. First quarter puts us well on our way to attaining this objective in 2024 and beyond. Before I dive into our results, I'd like to point out that this quarter and going forward, we will provide performance commentary, including but not limited to gross written premium and market conditions on our five product categories: earthquake, inland marine and other property, casualty, fronting, and crop. We believe this will help our investors better understand how our portfolio of businesses are performing as we move forward. Starting with the earthquake franchise, we grew premium 13% in the first quarter of 2024. It is important to point out that the first quarter of 2023 benefited from a non-recurring premium transfer that came over in conjunction with the strategic carrier partnership. Excluding this one-time benefit, our earthquake book grew 18% on a same-store basis. We are confident that earthquake premiums will grow in the high teens to 20% in 2024. Our confidence stems from several factors, most notably a residential earthquake partnership with Cincinnati Financial, consummated in the fourth quarter of 2023, that did not go live until April, as well as new partnerships, one residential and one commercial, that should increase production in the second half of the year. The earthquake market remains stable and attractive from a pricing perspective. Commercial rates increased 11.6% this quarter as compared to 18.9% in the fourth quarter. The 8%-9% inflation guards of residential earthquake policies are now providing a cushion above inflationary levels and provide annual increases regardless of market condition. While rate increases have moderated from 2023 levels, our key portfolio metrics, average annual loss and 250-year probable maximum loss to premium ratio, are at all-time best levels. This should translate into strong net earned premium growth as the cost of excess of loss reinsurance moderates from previous levels over the near term. Looking forward, we remain positive on the growth and profitability prospects of our Earthquake franchise. Our Inland Marine and Other Property products business grew 46% year-over-year, driven by our Excess National Property, Hawaii Hurricane, and Builders Risk line of business. While growth in this product set has accelerated from the pace that we saw in recent quarters, I wanted to reiterate that this is the category that best typifies our grow-where-we-want mantra and where we are judiciously managing and, in certain cases, reducing our exposure. Specifically, we are not adding limit in continental hurricane-prone areas and reducing our balance sheet exposure in Hawaii as we transition our policies to our Laulima Reciprocal Exchange. Builders Risk, our largest Inland Marine product, had 16% same-store growth in the quarter. Our Excess National Property line saw approximately 178% year-over-year growth and 6% rate increases in the quarter as our teams build a portfolio of non-cat exposed property business. For both Builders Risk and Excess National Property, we hired experienced, regionally focused underwriters that we believe will sustain the growth in these lines of business for 2024. All Risk business grew 21%, while increasing rates 18%, down from 36% in the prior quarter. Flood written premium grew 18% year-over-year in the first quarter. The growth was somewhat muted by new business moratoriums throughout the quarter in California due to the heightened rain and flood activity. Importantly, catastrophe losses associated with the major floods in California in January were in line with the estimate provided on last quarter's call. Hawaii hurricane premiums grew 30% in the first quarter, a combination of rate increases, our Inflation Guard, and new business written on Laulima paper. Importantly, our policyholders are embracing Laulima, with approximately 92% of policies converting from Palomar Specialty Insurance Company in the quarter. It is worth reiterating that the migration of policies to Laulima transitions our business model from one that is risk-bearing to one that is fee generative. Once complete, we will all but eliminate balance sheet exposure to hurricane losses in Hawaii. Our casualty product set saw robust growth in the first quarter as premiums increased 327% over the previous year. Strong performing lines in the quarter were Commercial Contractors, General and Excess Liability, Real Estate Errors and Omissions, and Miscellaneous Professional Liability. Excess Liability particularly stood out as the investments made in talent and distribution over the course of 2023 allowed the book to grow fivefold year-over-year and 65% sequentially. Our Contractors General Liability book had close to an identical sequential growth rate of 64%, while growing 375% year-over-year. Our professional liability line grew premiums 81% year-over-year, while seeing a 28% sequential increase. Our strong growth in casualty products, which still comprise less than 15% of our total book, remains anchored in a conservative approach to our underwriting targeted niche segments of the market. We employ prudent risk management tactics such as modest gross and net line size, avoidance of heavy bodily injury and other high-severity exposure, and conservative reinsurance to cover our loss potential in the classes we write. Additionally, we continue to see decent rate increases across the casualty book. Our professional liability products saw a blended increase of 6.5%, with real estate and errors and omissions rates increasing 10.6%. The excess liability book was up 6.7%, and the contractors general liability book saw an increase of 9.9%. While there are certain pockets of our casualty book that are softer from a pricing perspective, private company D&O is up 2.4%, we continue to believe our rates are staying ahead of loss costs. For the quarter, the casualty book's loss ratio remained in line with our conservative loss picks. As the predominance of the book is less than two years old, we are focused on building a sizable reserve base that we believe will develop favorably over time. Our fronting business modestly grew premiums 3% year-over-year in the first quarter. Growth in the quarter was impacted by a few things. First, our cyber fronting program continued to see heightened competition and soft pricing as its average renewal decreased 6.7%. Second, two new partnerships were slower to ramp than initially forecast. Lastly, while our pipeline is strong, we did not add any new clients this quarter. As a reminder, we take a very selective approach to security in our fronting partner portfolio to ensure comprehensive management of the programs and no surprises. We do expect to bring on new fronting relationships in the second half of the year, but this product set will experience slower growth in 2024 than the others. Conversely, our newest product group, Crop, had a very strong start to 2024, writing $38.7 million in premium in the first quarter. Our success and market acceptance are a function of our expertise and our strong partnership with Advanced AgProtection. We successfully married Palomar's data-driven risk management underwriting model with Advanced AgProtection's long-standing market relationships, technology, and customer service to assemble an attractive and geographically diverse book this quarter. As a reminder, for 2024, our crop business is a participatory front where we are taking 5% risk. The expectation is that we will take a more meaningful risk participation in 2025. Production exceeded our expectations, and we are now forecasting more than $125 million in premium in 2024, up from the previous guidance of more than $100 million. Also, crop written premium is seasonal, so you should not expect much in the way of written premium next quarter. We are pleased with the traction to date and are confident that we will generate meaningful Net Earned Premium in the years ahead. Turning to reinsurance, the first quarter is lighter in activity. That said, we were still engaged on several placements, including our June 1st core Excess of Loss placement and two quota share treaties, casualty and Builders Risk. We are pleased that the ceding commission on the casualty quota share renewed a slightly better terms than expiring, and we enhanced the treaties, terms, and conditions. We also improved the economics on our Builders Risk quota share while increasing our growth and net line capacity. We are amid the 6/1 core XOL placement, as well as marketing Torrey Pines Re, our fifth catastrophe bond. We are encouraged by the progress to date on both key endeavors. As we discussed last quarter, we had two earthquake treaties renewed on January first at risk-adjusted decreases of approximately 5%. As we sit here today, certain layers of our core tower are bound, and the implied risk-adjusted decrease is directionally similar to the earthquake treaties renewed on January 1st. While most of the placement is still outstanding, we are encouraged with the results so far. It affords us confidence that we'll meet or beat the 5% price increase embedded in our full year 2024 guidance. To conclude, we are encouraged by the trends in our business and are raising the guidance range for our full year 2024 adjusted net income to $113 million-$118 million from $110 million-$115 million. And to reiterate, our guidance does assume a 5% risk-adjusted increase on our 6-1 core excess of loss program. Lastly, the midpoint of our guidance implies an adjusted ROE above our Palomar 2X target of 20%. With that, I'll turn the call over to Chris to discuss our results in more detail. Thank you, Mac. Please note that during my portion, when referring to any per share figure, I'm referring to per diluted common share as calculated using the treasury stock method. This methodology requires us to include common share equivalents, such as outstanding stock options, during profitable periods, and exclude them in periods when we incur a net loss. For the first quarter of 2024, our adjusted net income was $27.8 million or $1.09 per share, compared to adjusted net income of $20.4 million, or $0.80 per share, for the same quarter of 2023. Adjusted net income and earnings per share growth of 36%. Our first quarter adjusted underwriting income was $29.2 million, compared to $22.2 million last year. Our adjusted combined ratio was 73% for the first quarter, compared to 73.3% in the first quarter of 2023. Excluding catastrophes, our adjusted combined ratio was 69.8% for the quarter, compared to 71.2% last year. For the first quarter of 2024, our annualized adjusted return on equity was 22.9%, compared to 20.7% for the same period last year. The first quarter adjusted return on equity continues to validate our ability to maintain top-line growth with a predictable rate of return above our Palomar 2X target of 20%. Gross earned premiums for the first quarter were $368.1 million, an increase of 47.2% compared to the prior year's first quarter. Along with breaking out crop, we also regrouped our written premium to align with our five key specialty insurance products: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop. It is important to remember the seasonality of our crop premium. Based on our current expectations, the majority of our crop premium will be written in the third quarter of each year, with only modest premium in the second and fourth quarters. The $38.7 million of crop premium written in the first quarter should represent about 30% of the premium expected for the year. Net earned premiums for the first quarter were $107.9 million, an increase of 29.6% compared to the prior year's first quarter. For the first quarter of 2024, our ratio of net earned premiums as a percentage, percentage of gross earned premiums was 35.6%, compared to 37% in the first quarter of 2023, and compared sequentially to 33.9% in the fourth quarter of 2023. The year-over-year decrease is reflective of our growth in fronting and lines of business that use quota share reinsurance, and the increased cost of our excess of loss reinsurance program that renewed last June. With the mix of business maturing and our excess of loss reinsurance program in place, our net earned premium ratio has continued to increase from its low point in the third quarter of 2023. Based on our assumption that the excess of loss reinsurance costs will increase modestly, on a risk-adjusted basis, we expect our net earned premiums ratio to follow a similar pattern as last year. We expect a slight decrease in the net earned premium ratio for the second quarter, with the low point of this ratio in the third quarter, the first full quarter of our June first reinsurance renewal. From there, we expect the ratio to increase through the treaty year, similar pattern to what we have seen over the current treaty year. Losses and loss adjustment expenses for the first quarter were $26.8 million, comprised of $23.4 million of non-catastrophe attritional losses and $3.4 million of catastrophe losses from flood activity. The loss ratio for the quarter was 24.9%, compared to a loss ratio of 24.8% a year ago. For the first quarter, our attritional loss ratio was 21.8%, and our catastrophe loss ratio was 3.1%. We continue to expect our loss ratio to be approximately 21%-25% for the year. Our acquisition expense as a percentage of gross earned premium for the first quarter was 10.5%, compared to 11.4% in the first quarter last year, and in line with the fourth quarter of 2023. Additional ceding commission and fronting fees continue to drive the year-over-year improvement. With our growth and mix of business, we expect this ratio to be flat for the full year, with some potential for improvement. The ratio of other underwriting expenses, including adjustments to gross earned premiums for the first quarter, was 6.8%, the same as the first quarter last year, and compared sequentially to 6.9% in the fourth quarter of 2023. In line with our expectations, as we continue to invest in our organization, as we continue to grow, we continue to expect long-term scale in this ratio, while we may see periods of sequential flatness as we continue to invest in scaling the organization. Our investment income for the first quarter was $7.1 million, an increase of 39.4% compared to the prior year's first quarter. The year-over-year increase was primarily due to higher yields on invested assets and a higher average balance of investments held during the three months, ended March 31st, 2024, due to cash generated from operations. Our yield in the first quarter was 4.2%, compared to 3.4% in the first quarter last year. The average yield of investments made in the first quarter was 5.6% compared. We continue to conservatively allocate our positions to assets that generate attractive risk-adjusted return. There were no shares repurchased during the quarter. While the previous plan has expired, as a matter of good corporate governance, we will be authorizing a new share repurchase program. At the end of the quarter, our net written premium to equity ratio was 0.94 to 1. Our stockholders' equity has reached $501.7 million, a testament to our profitable growth. As Mac mentioned, we are raising our full year 2024 adjusted net income guidance to range to $113 million-$118 million, implying 23.5% adjusted net income growth at the midpoint of the range. It's important to remember that our loss estimate and guidance include our expectations of mini cat, such as severe convective storm activity. For the year, we expect our loss ratio to be approximately 21%-25%, including our estimate of mini cats, which represent approximately 2-3 points of our expected loss ratio. With that, I'd like to ask the operator to open the line for any questions. Operator? Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please, while we poll for questions. Our first question is from Paul Newsome with Piper Sandler. Please proceed with your question. Good morning. Congrats on the quarter. Is it fair to say that as we look out past 2024, that the attritional loss ratios should continue to rise? I think that was the answer in the past, but I just wanted to confirm that was still the case. Hi, Paul. Thanks for the comments. Yeah, no, good point. We still expect the attritional loss ratio to continue to tick up throughout 2024, and then obviously into 2025, as well, as the overall mix of business does change, and we continue to grow in lines like property, inland marine, special property, casualty, and also crop. Those lines will have attritional losses associated with them, and so we expect that to tick up moderately. Again, we don't expect that to go from, let's call it, 21% this quarter to 40% next quarter. This is gonna just go up moderately, maybe a point or two a quarter. Great. Yeah, Paul, this is Mac. I would agree. The only thing that I would add is, like Chris said, it won't swing wildly because of our use of quota share in our, you know, balanced risk participation in the lines that he referenced. And then our earthquake business, we still feel like is gonna grow 18%-20% this year, so it's not gonna meaningfully under index the growth, and that provides a nice anchor with its attritional loss ratio of zero. Great. And could you maybe, big picture, give us your most recent thoughts on the competitive environment for sort of specialty, commercial and E&S? There's lots of talk in the last several weeks because of the mixed data that came out of—from the stamp data from E&S, and I know that's a very simple way to look at growth in E&S, but your thoughts would be great, just as an update or your most recent thought of what you think you're seeing out there from a competitive perspective. Yeah, sure, Paul. I would say, you know, the term that I would use broadly to describe the market right now, and this, it was a year ago, probably would've leaned more on the property side, but now I would say it's broad-based and that there's rate integrity in the market. You know, I would say that there is discipline in pricing. You know, you're still seeing rate increases in property that may not be at the same level that you were seeing a year ago, when it was more severely dislocated. And then in casualty, and as I highlighted, you know, we did see consistent rate increases, really, with the exception of cyber and, you know, the private company D&O component of our MPL that was up and in excess of loss costs. So I would say that there is rate integrity in the market, and there is stability there. The other thing, as it pertains to the E&S side, you know, what we are writing on the E&S, on our E&S company, is traditional E&S business, and we are not seeing flows out into the admitted side. And I think what I would say or specifically point out, like for earthquake, for instance, our residential book has always been admitted business, but commercial earthquake, since before Palomar's formation, has always been an E&S product. And even if you can write it on an admitted basis, you do it with the filing that basically mirrors the E&S market from a coverage flexibility and a rating flexibility. So as it pertains to our book, we are not seeing flows out of E&S into the admitted market, and I think we're seeing rate integrity. Great. Maybe a little bit trivial, but, you know, any impact you see from that little earthquake we had on the East Coast and, you know, either from a product interest perspective or anything else that we might happen from there? Yeah- I just got the question this morning. Yeah, yeah, we, we jokingly call those marketing events, and so—and there's actually an earthquake in the Inland Empire, California, densely populated part of the state. It's about 4.3 magnitude, enough to, you know, be on the cover of the newspapers and, and the evening news and enough for people to feel it. So we like those because it drives awareness, and it does lead to a little bit of a tick up in new business sales. You know, a, an earthquake in New York is—we don't write a lot in New York, so but that does, garner some media attention, so that's not a bad thing. ... Good. Appreciate the help, as always. Thank you. Thanks, Paul. Our next question is from Mark Hughes with Truist Securities. Please proceed with your question. Yeah, thank you. Good morning. Morning, Mark. The net earned premium ratio, do you think it'll bottom out? I think last year's third quarter is 33%. Will it, would one anticipate that or maybe a little bit better this year, maybe a 34%? Hi, Mark. No, that's a great question. I think as we indicated in the prepared remarks, we are still expecting an increase in our reinsurance costs as we go into the 6/1 renewal. You know, I think there are some favorable winds out there, but right now, in our guidance and our expectations, we are still expecting a slight increase there. So with that type of mechanic, and you kind of know the stairstep that you see with our excess of loss and how that plays out through the net earned premium, I would expect that, let's call it Q2, net earned premium ratio, it might go down a little bit from where it was in Q1. But then, as you pointed out, Q3 should still be the low point of our net earned premium ratio based on our current assumptions. I think last year it was low thirties. I would expect a similar trend to play out in Q3 of this year as well. But similarly, over that, the next treaty year, I would expect very similar pattern to what you saw in our net earned premium ratio this year. Really, obviously dependent on what that renewal looks like, but in our model, we have a slight increase, so I would expect slightly lower net earned premium ratio compared to last year. But very, very close to what you saw this year, or over the last three years, excuse me. Okay. And then when we think about 2025, should that be migrating up a little bit, kind of offsetting some of the higher losses? Yeah. Mark, this is Mac. I would say so. Some of that's gonna be driven, frankly, by crop. So crop, right now is really more of a participatory front, as we describe it, with the 5% risk participation. Going forward in 2025, we will take it more meaningful, so that would help drive it up. If reinsurance pricing starts to decelerate or decline, that would be a driver of it. So, you should expect decent net earned premium growth this year and that ratio potentially to tick up in 2025 because our risk participation in lines like crop and maybe a selected group of casualty business that is beginning to mature and season more, that will help inform that as well. Yeah. And when you think about... When you say it's gonna step up 5%, what's the trajectory on that? Sure. If it all goes as planned, what's the, what's the next, next step? I'm sorry, the 5% for crop, is that what you're asking? Yeah. Yeah, exactly. Yeah. Yeah, I would say, you know, 15%-20% type participation. [Inaudible] You know, [inaudible] think we're bullish on the prospects for that line and think we can, you know, build a very meaningful franchise there. And, for what it's worth, you know, it was a very modest amount of premium that we wrote in 2023, but it was a very profitable book. We'd like to get our own. Yeah, exactly. The commercial quake, is that—how much is that tied to just broader commercial property supply and demand, or capacity and demand? Is there a separate dynamic within commercial quake or does that tend to parallel the broader market? I think earthquake is a unique line. You know, for commercial earthquake, especially layered and shared business, you need to have that coverage to satisfy a large commercial loan. I think you're riding in areas where people are very mindful of protecting assets that have considerable equity value. So I don't think it mirrors the broader property market, especially because it is, you know, the tried and true layered and shared market, where you have multiple participants on a singular risk. You know, if you have a $500 million property schedule, you're not gonna have one quake insurer, you're gonna have 10 to 15. So because of that nature, I think it's pretty nuanced and, you know, it does follow the cost of reinsurance to some degree and reinsurance pricing in the primary market, but not in the sense of coverage and participants. Thank you. Appreciate it. Thanks, Mark. Our next question is from Peter Knudsen with Evercore ISI. Please proceed with your question. Hi, good morning. My first question is on midyear renewals. I believe you mentioned an increased expectation of costs in the prepared remarks. But I'm just wondering if you could expand a bit on those updated views, and how that's shaping up. Yeah, happy to do so. Thanks for the question. What I would say is, you know, again, our guidance for the year, the start of the year and what we just affirmed, assumes a 5% increase in the cost of reinsurance. We are in the midst of our placement right now, and we are encouraged by the prospects of, as I said, beating that number. We did renew two small treaties at the, in January 1, that were down ± 5%. We have found some coverage in early April that incepts at June 1, but is down and covered, and that is down ±5%. So that constitutes roughly 10%-15% of the total tower. So there's a lot more to do. So we want to be conservative in what we are assuming. But, all indications, including, with what we are hearing, in the initial price check that we put out in the market on our cap bond, is, gives us confidence that we will certainly achieve that level, if not exceed it. Okay. Yeah, great. Thank you. That's helpful. My second question is around the strong acceleration in the casualty growth. I know you mentioned a little bit of the lines and the rate that was driving that, but I'm hoping you could talk a little bit more about the current market in some of those lines and how you guys are feeling about rate and loss trend in that space. And then also if you're expecting that same strong growth to continue. Thanks. Sure. Yeah, we do expect to see good growth from casualty throughout the year. You know, we've made considerable investments in casualty from, most importantly, a talent and leadership perspective. People like Ty Robben, Brian Pushic, and Gerrit VandeKemp have come across with great pedigrees and great followings and great experience in the market. So we are investing in them from a system standpoint, from a balance sheet standpoint, from, you know, incremental underwriting resources and want to build a meaningful franchise in these niche market segments. So, I would say right now, though, is we are going into the market, and we are doing so in a meaningful fashion, but also a conservative fashion. It's conservative from a risk selection standpoint, you know, whether we are avoiding severity exposed classes on the general liability side or the professional liability side, it's limits management. Whether, you know, our max gross line is $5 million, net is $2 million. When you think about nuclear verdicts that are in the $100 million range, like that, a $5 million gross line doesn't materially swing our balance sheet or our earnings base for that matter. And then we have a lot of different underwriting controls. Again, that's informed by the strong leadership that we have in place. Where we sit right now, we feel that we are getting adequate rate to cover our loss costs. You know, our general casualty book was up 9.9%. We think that's against loss cost. That's probably 4%-5%. Excess liability was up 6.7%. I think that's a similar type of loss cost. It's not to say, again, as I mentioned earlier, that all lines in casualty are getting the same level of rate or have that, that term rate integrity. You know, financial lines are tough, and we do not write a lot of that, but we do write some private company D&O inside of our miscellaneous professional liability suite, and that's not getting the rate that we'd like. So we have to be mindful of how much exposure we have there. I think the last thing that I would say is, you know, when you look at our loss picks, we think they're conservative. They were just vetted by our reinsurance panel at 6:1, or excuse me, at 4:1, with the renewal, and we got improved terms and conditions and improved pricing there, so I think that's a validation. I think the greatest validation is our loss picks meaningfully above the historical results of these underwriters that we've brought on. So I know that's a lot, but what I would say is we do feel good about our, our casualty strategy, the niche focus, feel exceptional about the leadership we have, helping us execute upon that. And we don't, you know, think that, we will, you know, releasing reserves anytime soon, so we're going to be conservatively building a reserve base. That's really helpful color. Thanks so much. Thank you. Our next question is from Matt Carletti with Citizens JMP. Please proceed with your question. Hey, thanks. Good morning. Good morning, Matt. Matt, morning. I was hoping to ask a high-level question on your, your residential quake book. You know, particularly thinking like California and, and other areas where, you know, the homeowners market has gotten super tight and rates have gone up a bunch. You know, what have you seen in terms of retention in that resi quake book, kind of as that's happened? You know, my thought process is being like, people are paying a ton more for homeowners. You know, how, how, how sticky? Have you seen retentions change at all, or they, or they feel in the wallet, get a little tight and, and maybe retentions are sliding a little bit? Yeah, Matt, that's a great question. You know, I, I'm pleased to say that our retention has been consistent. You know, it's always been a mid- to high-80s level. And you know, we have been able to continue to grow the quake book by taking share, by having great partnerships. But I would say that, you know, new home sales right now and increasing homeowners premiums is a headwind. It's no question that it is. But because of our franchise, because of our partnership strategy, and also because of the changes at the California Earthquake Authority, we've been able to sustain this kind of high teens, mid-teens growth in residential quake. We're optimistic, and we've been studying it, you know, as rates come down and, new home sales in more earthquake-exposed areas, pick up again, and the inventory starts turning over a bit more, that could be turned from a, a headwind into a tailwind. I'm just not going to call when. I'm not... You know, there are a lot of people that are focused on when rate changes are going to happen. We're gonna just play with the current market as it is, and hope that when rate changes come, it provides a nice tailwind for us. Great. Thanks, Mac. Appreciate it. Thank you, Matt. Thank you. Our next question is from Andrew Andersen with Jefferies. Please proceed with your question. Hey, good morning. On fronting, a little bit lower growth in the quarter, you mentioned some partnerships were slower to ramp. I think you had previously pointed to, for full year, perhaps, growth in fronting indexing growth of overall company. Is that still the case? Yeah, Andrew, good question. Thanks for asking it. I think it's not the case. I think it's gonna under index the growth. So, you know, the good thing is we have a portfolio of products in five different categories. Some are firing in all cylinders, some are indexing the growth rate. I would say fronting is the one that's now under indexing. A few of our new partnerships are slower to ramp. There is a little bit of rate headwinds in one of our larger relationships that I brought up. We have a pipeline, and we do expect to add to our portfolio of fronting partnerships, but it's gonna slow. Its growth is going to look more like the first quarter than it will the broader growth rate of the company. Got it. Okay. And then on earthquake, it sounds like high teens, 20%-ish for full year. If I think about the expense ratio here, does the mix of product between residential and commercial have an impact on the expense ratio? Is one lower than the other? You know, historically, residential earthquake had been a bit of a higher margin. The cost of acquisition is might be a little bit lower, but right now, in this market, just because of the rates, the increases that we've seen in commercial earthquake, the underlying, like, unit level economics are almost at parity. So, you know, a residential earthquake policy or commercial earthquake policy in 2024 are gonna have the same margins. Yeah, one follow-up on that. When you look at our acquisition expense ratio on a gross basis, right, I think 10.5% for the quarter, we expect that to be pretty flat for the year, right? So overall mix of business, whether it be Residential Earthquake, Commercial Earthquake, or even changes in the Fronting dynamic, we don't expect to have a material impact on that ratio as we go forward. Thank you. Thanks, Andrew. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Our next question is from Meyer Shields with KBW. Please proceed with your question. Great, thanks. Good morning. A bunch of, like, quick questions, if I can. First, I know Cincinnati is targeting higher net worth homeowners, and I'm wondering: Does that translate into maybe writing accompanying residential earthquake on non-admitted paper? Meyer, I apologize. We lost you for a second. Would you mind repeating that question? I heard the second half on non-admitted paper, but didn't hear the first part. Yeah, no problem at all. So I know Cincinnati is looking to grow its high net worth homeowners- Yes. I'm wondering whether that affords you the opportunity to write the earthquake on non-admitted paper? Yes, I'm sorry. Yeah, it is on a non-admitted basis, so we are writing that as an E&S policy and accompaniment to their high net worth E&S offering in California. Okay, perfect. On crop, I think Chris said that 30% of the written premiums come in the first quarter, the balance in the third. Is that a normal run rate, or when you're ramping up, should we see higher percentages in the first quarter than this year? Yeah. Hey, Meyer, it's Jon Christianson. You know, for the next few years, we'd expect that to be fairly consistent. And so you'll see the third quarter be by far the largest quarter of written premium. The second largest will be the first quarter, and then there'll be a little bit in the second and the fourth quarter, but really, the third quarter is gonna be where you'd expect to see the largest premium share for the year to come. Okay, perfect. And I know the retained premiums are, are gonna be really, really low. But there are different approaches that a lot of the crop insurers take in terms of booking profitability for that line of business. In other words, waiting till, let's say, the fourth quarter before taking the combined ratio on the retained book below 100. How is Palomar planning on, I guess, booking that line? Yeah, no, it's a good question. The third quarter premium that we book will have a little bit of a catch-up effect with it. A lot of that premium is originated earlier, and then we wait for the acreage reports to come in, which generally will start coming in, you know, June-ish, but mostly in July. And so at that point in time, we will book all of the written premium, and then there will be a slight catch-up of earned premium, which obviously comes with a combined ratio. So there will be some earning of it in the third quarter, and then throughout the remainder of the year, as most of that does end at the end of the year. So we will be booking most of the written premium, but then some of those called the profitability through the third and the fourth quarter for that book of business. Yeah, Meyer, I'd say that, you know, we'll look similar to others in the market in terms of how we, you know, the timing of when those profits are taken in or recognized. Usually, the modeling becomes clear at the end of the third quarter and into the fourth quarter, which gives you more confidence on the on the loss ratio for the year. Okay, perfect. And last question, and I, I'm not exactly sure how to ask this, but Mac, you talked about being bigger and how that should allow for growth on, on more accounts. Is there any way of, I don't know, ballparking it or describing the relevance of the higher size category? Yeah, you know, Meyer, I think it's hard for us to quantify right now. We had, you know, Ken, we just had a commercial underwriting meeting a week or two ago, and our underwriters were pleased with the increase in financial size category. It's probably most relevant for our environmental team and our professional liability team. But then they immediately asked: When are we gonna get an A rating? So that might be more impactful. So I would love to say, it's a lot like what it was in 2020 when we got, you know, over $250 million, and that opened up a few different distribution channels that we couldn't see previously. Now, it's just more about insurer appetite and the credit rating exposure requirements for certain larger accounts. So can't quantify it right now. I, I think it's gonna open up a lot, and I think it will definitely help from a recruiting standpoint, but I'd love to give you a dollar number. I just can't right now. Okay, fair enough. Thank you so much. Thanks, Meyer. Thank you. Our next question is from Pablo Singzon with J.P. Morgan. Please proceed with your question. Hi, good morning. Maybe for Mac or Chris, you mentioned about a 5% price increase on reinsurance embedded in the guidance. What dollar benefit would you get if prices go up by, say, only 4% or 3%? You know, I know the dollar cost of XOL will also depend on exposure and structure, but holding all that constant, how much dollar savings do you get if reinsurance pricing is more favorable than what you're assuming? Yeah, no, that's a great question. When you look at our book, and we've talked about it before, that the cost of risk transfer last June 1 was about $230 million, right? So we will be buying more excess of loss reinsurance to cover the increase in our exposure. So let's say our exposure went up 10%. Let's call it $250-ish million, $253 million that we're gonna be spending. Right? We were expecting some sort of rate increase. Right now, we're saying 5% on top of that. So you can kind of do that math, so you just kind of work it backwards. If you have a, you know, a 1% savings on $250 million, that's $2.5 million over the full treaty year. Yeah. So from our standpoint, that's probably the right way to think about it, when you go in. Now, I'm not saying that's our exposure change or anything like that, but just when you'd wanna do the math and you wanna. It's a good rule of thumb. That $230 million is probably the right base to think about, you know, what our opportunity is or what our potential additional cost is gonna be at the next renewal. Yep. Yep, all that makes sense. And then second question, just thinking about the business mix change, I think, Chris, you had said on this call about 1-2 points deterioration in the attritional per quarter. My memory might be rusty here, but it seems like that might be a tad faster than what you said before. Is that because attritional lines are growing faster? And then as a follow-up to that, you know, I think in the 2022 Investor Day, you guys had given all-in combined ratio guidance for earthquake and let's just call it non-earthquake. Do those, like, margin... does that margin guidance still stand in, you know, as we think about the mix here? Yeah, that's a good question. Yeah, I think maybe, you know, 1-2 points is, you know, I would say, a little bit conservative. I think if we get up to, you know, the midpoint of our range of 21-25, which is kind of in that 23% range, we'd feel good about where it is for the full year. I think it does move around on a quarterly basis. You guys are very familiar with the insurance business. Obviously, we don't control the losses, so if it swings up a point or two points in a quarter, it doesn't mean anything's going wrong. It's just naturally the way things go, and it could also go the other direction, 1-2 points down. But overall, we're very comfortable where things are going. We are seeing very good, strong growth in our lines of business that you have attritional. That's gonna be in the Marine and Special Property, that's gonna be some casualty. So everything is going the way we expected. Strong growth there. When I look back and think about Investor Day, I'd have to... I'm going off a lot of memory here, but it does feel pretty consistent with how we've lined up. We haven't made significant changes to any of our quota shares. We started taking a little bit more on some of those, but not what I'd call a material variation from what we shared with Investor Day. And some of that thesis in Investor Day was maintaining the same participation. And so that is still, I would say, a lever we have to pull over time, is that we can start—as our balance sheet grows, we can start taking more and more of some of those lines, which will obviously help profitability or the bottom line continue to grow. Because these are profitable lines of business where we are, I would say, sharing a lot of that margin with the reinsurers, that over time, we will start putting on our balance sheet. That's not gonna happen all next year, but I'd say over a 5-10-year horizon, more and more will start coming onto our balance sheet, which will help continue to grow that bottom line. And Pablo- Yep. The thing that I would add is, we still feel very good about, you know, a sub-75 combined, even if that loss ratio moves up 1 or 2 points, like Chris was describing. Yep. That makes sense. Then last for me, you had referenced better ceding commissions on the casualty quota share. But then you also said that I think as a percentage of gross earned, you think acquisition expenses stay flat. So it doesn't seem like that, you know, benefit on the ceding is that meaningful, right? Is that the correct read? I mean, the overall number, I guess, that's the more appropriate thing to say. Is that fair? Yeah, I mean, I think it's just a matter of business mix, right? You know, earthquake and the other property or casualties is only 14% of the business, and what was in that Quota Share probably constitutes about, 40% of that number. So, you know, that's called 5% of that overall did see in, you know, slightly improved ceding commission. It's just business mix. Yep, yep. Okay, thank you. Thank you. There are no further questions at this time. I would like to hand the floor back over to Mac Armstrong for any closing comments. Well, thank you, operator, and thank you to all who joined us this morning. We appreciate your participation, your questions, and most of all, your continued support. You know, to conclude, we're off to a strong start to the year, and I would be remiss if I didn't thank our team at Palomar for their continued dedication and hard work, which is ultimately the driving force behind our terrific results and success, not just this quarter, but these past ten years. I remain confident in the growth trajectory of our business, combined with our continued focus, and our ability to deliver predictable earnings and returns. You know, and as an aside, in addition to our 10-year anniversary, we recently celebrated our 5th year as a public company, and so I wanna thank our investors for their support these last five years. We will continue to work in earnest on your behalf, and we'll drive shareholder value. Thank you very much. Have a nice day, and speak to you next quarter.