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plmr.com Investor Day March 20, 2025 2025
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2025 Investor Day | March 20, 2025 2 Disclaimer PALOMAR HOLDINGS INVESTOR DAY 2025 This presentation contains forward-looking statements about Palomar Holdings, Inc. (the “Company”). These statements involve known and unknown risks that relate to the Company’s future events or future financial performance and the actual results could differ materially from those discussed in this presentation. This presentation also includes financial measures which are not prepared in accordance with generally accepted accounting principles (“GAAP”). For a description of these non-GAAP financial measures and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see the appendix to this presentation. Forward-looking statements generally relate to future events or the Company’s future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as ‘‘may’’, ‘‘will’’, ‘‘should’’, ‘‘expects’’, ‘‘plans’’, ‘‘anticipates’’, ‘‘could’’, ‘‘intends’’, ‘‘target’’, ‘‘projects’’, ‘‘contemplates’’, ‘‘believes’’, ‘‘estimates’’, ‘‘predicts’’, ‘‘would’’, ‘‘potential’’ or ‘‘continue’’ or the negative of these words or other similar terms or expressions that concern the Company’s expectations, strategy, plans or intentions. These forward-looking statements include, among others, statements relating to our future financial performance, our business prospects and strategy, anticipated financial position, liquidity and capital needs and other similar matters. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Such risks and uncertainties include, among others, future results of operations; financial position; the impact of the ongoing and global COVID-19 pandemic; general economic, political and other risks, including currency and stock market fluctuations and uncertain economic environment; the volatility of the trading price of our common stock; and our expectations about market trends. The Company may not actually achieve the plans, intentions or expectations disclosed in its forward-looking statements, and you should not place undue reliance on the Company’s forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements the Company makes. While the Company may elect to update these forward-looking statements at some point in the future, the Company has no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing the Company’s views as of any date subsequent to the date of this presentation. Additional risks and uncertainties relating to the Company and its business can be found in the "Risk Factors" section of Palomar Holdings, Inc.’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and other filings with the United States Securities and Exchange Commission.
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2025 Investor Day | March 20, 2025 3 Palomar’s Leadership PALOMAR INVESTOR DAY 2025 Mac Armstrong Chief Executive Officer Jon Christianson President Chris Uchida Chief Financial Officer Robert Beyerle Chief Underwriting Officer Tim Carter Chief People Officer Althea Garvey Chief Claims Officer Angela Grant Chief Legal Officer Corporate Secretary Ethan Genteman Chief Actuarial Officer Rudy Hervé Chief Operating Officer James Long Chief Technology Officer Chris Cebula Executive Vice President Reinsurance Jake Armstrong Executive Vice President Operations Jon Knutzen Chief Risk Officer Kyle Morgan Chief Strategy Officer Benson Latham Executive Vice President Head of Crop Jason Sears Executive Vice President Head of Programs and Fronting Tricia Panaguiton Executive Vice President Reinsurance David Sapia Executive Vice President Head of E&S Casualty 2025 Investor Day Speaker
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4 Today’s Agenda PALOMAR INVESTOR DAY 2025 8:30am – 9:00am Executive Summary 9:00am – 10:15am Specialty Product Lines 10:15am – 11:00am Q&A 11:00am – 11:15am Break 11:15am – 11:55am Operational Departments 11:55am – 12:15pm Palomar 2X and Modeling Update 12:15pm – 12:40pm Q&A 12:40pm – 12:45pm Closing Remarks 2025 Investor Day | March 20, 2025
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Executive Summary Mac Armstrong Chief Executive Officer, Founder and Chairman of the Board
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2025 Investor Day | March 20, 2025 6 Palomar Overview PALOMAR IS BUILDING A SPECIALTY MARKET LEADER Admitted and E&S offerings with nationwide scope Multi-channel distribution serving residential and commercial clients; products resonate with producers, other insurers and reinsurers Risk transfer strategy limits exposure to major events and reduces earnings volatility Experienced management team with industry expertise and longstanding collaboration Specialty insurer using data analytics, underwriting acumen, and risk transfer expertise to capitalize on market dislocations AM Best “A” (Excellent) Financial Strength Rating (FSC) X group rating Five product categories: Earthquake, Inland Marine & Other Property, Casualty, Fronting, and Crop 3rd largest earthquake insurer in the United States
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2025 Investor Day | March 20, 2025 7 Delivering Profitable Growth and Strong Returns for Investors REDUCED VOLATILITY TO DRIVE CONSISTENT GROWTH AND MARKET-LEADING RETURNS $252 $354 $535 $882 $1,142 $1,542 $34 $8 $52 $71 $94 $134 2019 2020 2021 2022 2023 2024 Gross Written Premium ($M) Adjusted Net Income ($M) Total Shareholder Return Since IPOGross Written Premium and Adjusted Net Income 0% 100% 200% 300% 400% 500% 600% 700% 2019 2020 2021 2022 2023 2024 Series1 March 17, 2025 PLMR Price: $134 TSR
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$353,927 $373,476 $439,061 $527,711 $74,166 $68,833 $86,381 $103,678 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 2021 2022 2023 2024 Palomar ANI per Employee Median Peer Group ANI per Group 2025 Investor Day | March 20, 2025 8 Industry Leading Profitability ATTRACTIVE BUSINESS MODEL GENERATING INDUSTRY LEADING PROFITS 1. Palomar metrics use Adjusted Combined Ratio and Adjusted Return on Equity 2. Source: S&P CapIQ 3. Return on Average Equity 4. 2024 Palomar Proxy Peer Group 76% 76% 71% 74% 100% 103% 102% 97% 2021 2022 2023 2024 Palomar P&C Industry 14% 18% 22% 22% 6% 4% 8% 2021 2022 2023 2024 Palomar P&C Industry (1) (1) (2,3)(2) Combined Ratio Return on Equity (ROE) Adjusted Net Income (ANI) per Employee (4)
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2025 Investor Day | March 20, 2025 9 Palomar 2X Strategy A STRATEGIC IMPERATIVEINTRODUCED IN 2022 TO DOUBLE ADJUSTED UNDERWRITING INCOME AND ACHIEVE AN ADJUSTED ROE ABOVE 20% OVER AN INTERMEDIATE TIMEFRAME FUNDAMENTAL PRINCIPLES ACHIEVED INTIAL ADJUSTED UNDERWRITING INCOME GOAL WITHIN 3 YEARS ORGANIC GROWTH LOW VOLATILITY – SPECIALTY LINES FOCUS SCALE THE BUSINESS ENTRY INTO NEW MARKETS ANCHORED BY OUR EARTHQUAKE FRANCHISE CONSERVATIVE AND COMPREHENSIVE RISK TRANSFER STRATEGY
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$394 $385 $471 $729 $34 $2214% 18% 22% 22% 2021 2022 2023 2024 Book Value Stock Buyback Adjusted ROE 2025 Investor Day | March 20, 2025 10 Since our Last Investor Day (June 2022) STRONG EARNINGS GROWTH AND BALANCE SHEET EXPANSION $52 $71 $94 $134 $186 $- $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 2021 2022 2023 2024 2025E 1. Midpoint of 2025 adjusted net income guidance range (1) Book Value ($M) and Adjusted ROE Adjusted Net Income ($M)
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Name Year Joined Prior Professional Experience Matt Grunewald Executive Vice President, Reinsurance 2023 Tamesis DUAL | Greenlight Re | Guy Carpenter | Collins Tricia Panaguiton Executive Vice President, Reinsurance 2024 Guy Carpenter | Abbott | Aon Benfield Tim Carter Chief People Officer 2024 LPL Financial, Inc. | G4S Integrated Services | Parexel | Home Depot Rudy Hervé Chief Operations Officer 2024 SCOR | QBE | Bain & Company | Orange Ventures | Morgan Stanley Althea Garvey Chief Claims Officer 2024 LifeCare | AIG | Jacoby & Meyers Benson Latham Executive Vice President, Head of Crop 2024 Great American | Validus Specialty | ProAg James Long Chief Technology Officer 2024 RenaissanceRe | Guy Carpenter | John B. Collins Associates David Sapia Executive Vice President, Head of E&S Casualty 2024 HDI Global | Axis | Guy Carpenter Tim O’Donavon Executive Vice President, Investments 2025 Goldman Sachs 2025 Investor Day | March 20, 2025 11 Since Our Last Investor Day (June 2022) NOTABLE ACHIEVEMENTS AND ADDITIONS OF TOP INDUSTRY TALENT • Formed Laulima Reciprocal Exchange • Upgraded to “A” and achieved FSC X by AM Best • Scaled Casualty franchise and entered E&S Casualty market • Entered the Crop Market • Crop MGA acquisition: Advanced AgProtection ("AAP") • Surety acquisition: First Indemnity of America ("FIA") • Significantly reduced wind exposure and associated earnings volatility
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2025 Investor Day | March 20, 2025 12 2025 Strategic Imperatives WELL-POSITIONED TO CAPITALIZE ON OPPORTUNITIES IN THE YEAR AHEAD • Monetize and scale 2024 investments • Integrate FIA and AAP • Execute on framework for operational excellence • Industry leader in analytics, data, talent development • Invest where clear ROE is achievable Integrate and Operate • Lean into the market with a long-term view • Leverage growing balance sheet • Grow net earned premium on targeted lines of business • Continue to develop Crop and Casualty into market- leading franchises Build New Market Leaders Deliberately • Sustain profitable growth in heritage markets • Strong market knowledge and positioning provide continued growth and profitability • Scalable business mix offers opportunity to hedge in soft market cycles Remember What We Like (and Don't) • Disciplined underwriting and reinsurance remain central to predictable results • Crop and Surety aren’t tied to traditional P&C market cycles • Additional meaningful impacts as we achieve critical mass: • Investment portfolio • Conservative reserves • Claims management Consistent Earnings (+ from New Areas)
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2025 Investor Day | March 20, 2025 7 Key Themes for Today DRIVING PROFITABLE GROWTH WITH A PROVEN STRATEGY AND INDUSTRY-LEADING TALENT Company Vision: We are building a market-leading specialty insurer Business Strategy and Palomar 2X: We have a proven approach to execution and to delivering consistent and profitable growth Competitive Advantage: Our success stems from differentiated underwriting, strategic risk transfer, and experienced leadership Underwriting & Risk Transfer: Our conservative underwriting and risk management ensure steady returns without sacrificing growth Attracting Best-in-Class Talent: We are an attractive destination for industry-leading talent Market Adaptability: We enter markets that meet our risk-adjusted return profile and decisively exit unprofitable businesses Consistent Earnings: We are focused on delivering consistent earnings growth through a diversified portfolio of businesses
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Benson Latham EVP, Head of Crop David Sapia EVP, Head of E&S Casualty Kyle Morgan Chief Strategy Officer Jon Christianson President Robert Beyerle Chief Underwriting Officer Specialty Product Lines Kyle Morgan Chief Strategy Officer
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2025 Investor Day | March 20, 2025 15 Portfolio of Specialty Insurance Products THE EVOLUTION AND GROWTH OF A DIVERSIFIED SPECIALTY INSURANCE LEADER 34% 66% TOTAL GWP: $155M 2018 27% 25% 9% 39% TOTAL GWP: $882M 2022 22% 22% 15% 7% 34% TOTAL GWP: $1.5B 2024 Earthquake Inland Marine & Other Property Fronting Casualty Crop
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2025 Investor Day | March 20, 2025 16 Earthquake — Product Overview & Underwriting Focus INDUSTRY LEADER IN THE COMMERCIAL AND RESIDENTIAL EARTHQUAKE MARKETS • Analytical underwriting with distinctive pricing model • Sector expert with specialized product offerings • Attractive risk-adjusted returns • Admitted and E&S product offerings • Balanced portfolio of residential and commercial business • Best-in-class reputation makes Palomar the go-to Earthquake partner • Comprehensive risk transfer strategy 1. Annual GWP in $M $262 $346 $437 $523 2021 2022 2023 2024 Earthquake GWP Residential Earthquake Commercial Earthquake (1)
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1. Annual GWP in $M 2. Source: S&P CapIQ 3. FM Global reclassified Earthquake premium in 2021 $3,251 $3,596 $4,262 $4,777 $5,269 $6,151 2% 4% 4% 5% 7% 7% 2018 2019 2020 2021 2022 2023 Total Earthquake Market GWP Palomar Market Share (3) 2025 Investor Day | March 20, 2025 17 United States Earthquake Insurance Market STEADILY TAKING SHARE IN A GROWING EARTHQUAKE MARKET United States Earthquake Insurance Market Growth (1)(2)
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2025 Investor Day | March 20, 2025 18 Earthquake — Current Outlook CONTINUED MARKET EXPANSION AND PROFITABILITY • Continued dislocation in California (CEA and Homeowners) creates growth opportunity • Residential and Commercial products provide balance across all market cycles • Underlying profitability metrics near all-time high • Softening property catastrophe reinsurance market offers potential for material cost savings and earnings growth Market Conditions • Execute mid-teens GWP growth in 2025 • Increase market share in California and the United States • Maintain terms and conditions and inflation guards • Leverage E&S company in the residential market • Strengthen strategic partnerships (new and existing) • Continuously evaluate risk transfer strategy to enhance economics Areas of Focus
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• Mix of residential and commercial business • Admitted and E&S product offerings • Deliberate exposure management • Controlled net line size • Limited continental United States hurricane exposure • Proven risk-adjusted returns 2025 Investor Day | March 20, 2025 19 Inland Marine & Other Property — Product Overview & Underwriting Focus A DEFINED APPETITE OF SPECIALTY PROPERTY PRODUCTS $193 $233 $250 $334 2021 2022 2023 2024 Inland Marine & Other Property GWP Builders Risk Excess National Property Contractors Equipment Hawaii Hurricane Motor Truck Cargo Residential Flood Commercial All Risk 1. Annual GWP in $M (1)
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• Large market opportunity • Stabilizing property market • Favorable reinsurance capacity and pricing available • Rate change varies by risk profile and geography Market Conditions • Remember what we like and what we don’t • Strategically expand geographic presence • Continuous investment in adding industry leading underwriting talent • Accelerate operational scalability • Deliberately increase net retention Areas of Focus 2025 Investor Day | March 20, 2025 20 Inland Marine & Other Property — Current Outlook OPPORTUNITIES FOR EXPANSION AND OPERATIONAL EXCELLENCE
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• Recognized as the 2nd largest provider of standalone Hawaii Hurricane insurance coverage • Fee-based model via Laulima designed to limit earnings volatility and enhance stability • Growth driven by rate increases rather than substantial exposure expansion • Proven line of business driven by top-tier underwriting expertise and long-term relationships • Significant market opportunity with strong growth potential • Continued geographic expansion for risk diversification and access to new distribution channels • Mitigating shock loss exposure through risk selection, attachment and reinsurance • Maintaining minimal catastrophe exposure for portfolio stability • Opportunity to increase net retention as the book of business develops and matures 21 Inland Marine & Other Property — Primary Growth Vectors PRODUCT DIVERSIFICATION AND STABLE GROWTH VECTORS Builders Risk Excess National Property Hawaii Hurricane 2025 Investor Day | March 20, 2025
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$223 $352 $333 2022 2023 2024 Fronting GWP 2025 Investor Day | March 20, 2025 22 Fronting — Product Overview & Underwriting Focus FEE GENERATIVE PROGRAMS PROVIDING PRODUCT DIVERSIFICATION 1. Annual GWP in $M • Deliver fee-generating services to a select group of MGAs, carriers, and reinsurers • Offers R&D opportunity for emerging underwriting disciplines • Focus on comprehensive partner and program management • Target partners with high credit quality lacking regulatory qualifications • Enter new markets as a non-risk-bearing insurance entity • Flexibility to selectively participate in risk over time • Fully reinsured and collateralized model (1)
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• Increased carrier competition softening the market • Trend toward “participatory front” arrangements • MGAs exploring integrated carrier arrangements • Dependence on multiple third parties Market Conditions • Monitor potential marketplace disruption • Continued emphasis on credit worthiness of counterparties • Maintain high standards of selectivity within pipeline • Contract certainty remains key in this segment Areas of Focus 2025 Investor Day | March 20, 2025 23 Fronting — Current Outlook STRONG GROWTH WITH EXISTING PARTNERS AND A HEALTHY PIPELINE OF POTENTIAL PARTNERSHIPS
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• Specialty Casualty insurance for niche markets • Targeting shorter-tail Casualty lines • Complementary to property products • Insulated from pre-2020 accident year adverse market development • Admitted and E&S product offerings • Disciplined growth: modest gross and net limits to manage volatility • Prudent risk selection to mitigate exposure to social inflation • Implemented conversative reserving practices across entire portfolio $46 $80 $90 $236 2021 2022 2023 2024 Casualty GWP 2025 Investor Day | March 20, 2025 24 Casualty — Product Overview & Underwriting Focus INDUSTRY EXPERTS RESPONSIBLY GROWING PALOMAR’S FOOTPRINT IN A LARGE ADDRESSABLE MARKET 1. Annual GWP in $M Professional Liability E&S Casualty Real Estate Errors and Omissions Primary Casualty Environmental Liability (1)
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• Ample opportunities within current risk appetite • Inflation continues to cause industry-wide adverse development • Outsized large loss activity • Adequate reinsurance capacity Market Conditions • Adhere to disciplined underwriting • Scale new lines of business and explore market adjacencies • Maintain conservative reserving philosophy • Drive operational scale (Technology and Claims) • Deliberately increase net retention • Integrate FIA and expand existing footprint Areas of Focus 2025 Investor Day | March 20, 2025 25 Casualty — Current Outlook NICHE PRODUCT FOCUS AND CONSERVATIVE RESERVING PRACTICES
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26 Casualty – E&S Casualty Case Study E&S CASUALTY WILL BOLSTER CASUALTY FRANCHISE AND FUEL PROFITABLE GROWTH Market Thesis • Post-COVID market hardening has created a profitable E&S opportunity • Capacity deploymentin the low attaching excess space where competition is lessened, rates are redundant, and reinsurance support more available • Deepen Palomar's distribution relationships with an E&S Casualty offering in an underserved space Underwriting Appetite • Two underwriting verticals: construction and non- construction risks • Focus on differentiated segments for diversification while giving the broker the optic of Palomar as a "go-to" market • Prioritize vetted commercial contractors with strong risk management protocols and a stable/highly experienced workforce Avoiding & Minimizing • Auto liability,construction defect, and latent/catastrophic injury product exposures • Jumbo and National accounts • States where third-party litigation funding and nuclear verdict activity thrive Managing Volatility • Leverage disciplined underwritingof experienced leadership • Real-time portfolio monitoring to steer the portfolio as market conditions and litigation trends dictate • Mindful of net and aggregate limits • Robust treatyand facultative reinsurance support
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• Access to the $18 billion annual Crop insurance market • One of only 12 approved insurance providers (AIP) recognized by the federal government • Uncorrelated to traditional P&C cycles • Internal investments and strategic partnerships provide deep expertise, innovative technology and analytics • Transformed risk participation from 5% to 30% in 2025 $12 $116 $200 2023 2024 2025E 2025 Investor Day | March 20, 2025 27 Crop – Product Overview & Underwriting Focus EMERGING NEW LINE DIVERSIFIES EXISTING PRODUCT PORTFOLIO 1. Annual GWP in $M 2. CAGR includes 2025 estimated GWP target Multi-Peril Crop Insurance Crop Hail Livestock Crop GWP (1)
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• Consistent market growth over the past decade • 2024 realized expected underwriting profitability • Q3 earned premium seasonality • Stable but reduced panel of long-term market participants • Relationship based business Market Conditions • Deliver over $200 million of GWP in 2025; targeting $500 million in the intermediate future • Drive operational scale and increase market share • Geographic expansion and diversification • Utilize both private reinsurance and the Risk Management Agency (RMA) to spread risk and optimize economics Areas of Focus 2025 Investor Day | March 20, 2025 28 Crop – Current Outlook SIGNIFICANT GROWTH CONTRIBUTOR IN 2025 AND BEYOND
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29 Crop – Geographic Focus and Calendar FL NM DE MD TX OK KS NE SD NDMT WY COUT ID AZ NV WA CA OR KY ME NY PA VT NH MA RI CT WV INIL NCTN SC ALMS AR LA MO IA MN WI NJ GA DCVA OH MI HI AK Groups 2 & 3 Production States Targeted Palomar States CURRENT STATE OF THE MARKET + CORE TARGET AREAS 1st Quarter • Sales closing date for Multi-Peril Crop Insurance (MPCI) • Private reinsurance placement • Annual PRF premium recorded as written 2nd Quarter • Majority of row crops are planted in the US • Private Products are purchased 3rd Quarter • MPCI premium established • Livestock sales • Greater than 60% of the gross written and gross earned premiums for the year are recognized 4th Quarter • Loss adjustments • Farmers pay premiums Group 1 Production States 1. Projected premium range Quarterly Seasonality of Gross Earned and Written Premiums Products Q1 Q2 Q3 Q4 Total 2024 Gross Written Premium Total Crop 33% 2% 51% 14% 100% 2024 Gross Earned Premium Total Crop 12% 8% 56% 24% 100% 2025 Gross Written Premium(1) Total Crop 15-25% 0-10% 60-70% 5-15% 100% 2025 Gross Earned Premium(1) Total Crop 0-10% 0-10% 65-75% 15-25% 100%
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2025 Investor Day | March 20, 2025 30 Strategy for Entering New Lines of Business REPEATABLE AND SCALABLE PROCESS FOR EFFECTIVELY BRINGING PRODUCTS TO MARKET Identify Market Buy or Build Leverage Talent Apply Systems & Analytics Comprehensive Risk Transfer Strategy Launch Product KEY ATTRIBUTES Strong growth profile | Attractive risk-adjusted returns | Minimal volatility | Modest net line size | Predictable earnings
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2025 Investor Day | March 20, 2025 31 Crop Acquisition - Advanced AgProtection (AAP) EXPANSION INTO HIGHLY SPECIALIZED AND PROFITABLE LINE OF BUSINESS WITH A HEALTHY GROWTH PROFILE 1. Annual GWP in $B Strategic Rationale • Strengthen agency relationships to expand distribution and market penetration • Optimize reinsurance to improve economics • Transition to a traditional AIP model for broader appeal and credibility • Leverage scalable infrastructure for growth • Create operational efficiency with in-house oversight Multi-Peril Crop Insurance Crop Hail Livestock Company Profile • Texas headquartered MGA • Industry experts with longstanding Crop Insurance relationships • Palomar made strategic investment in AAP in 2023 -25% -15% -5% 5% 15% 25% 35% 45% $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 P&C MPCI GWP UW Gain Average Underwriting Gain 20% (1)
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76% 76% 71% 100% 103% 102% 2021 2022 2023 Combined Ratio Surety P&C Industry 2025 Investor Day | March 20, 2025 32 Surety Market Entry + Acquisition of First Indemnity of America ENTRY INTO PROFITABLE, GROWING LINE OF BUSINESS WITH LIMITED CORRELATION TO THE P&C CYCLE • Acquired First Indemnity of America (FIA), a NJ-based surety carrier, in January 2025 • FIA specializes in contract surety bonds for small to medium sized contractors in the NortheastUS • Deep expertise in underwriting and claims • 2024 results: 21% GWP growth, 22% ROE • Opportunity toexpand limitsand retain additional risk • Will utilize Palomar's existing surety licenses • Pursuing a Federal T-Listing Combined Ratio – Surety vs P&C Industry Contract Bonds Average Spread of 27% 1. Source: Conning 2. Source: S&P CapIQ (1) (2)
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Q&A
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Break
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Tim Carter Chief People Officer Rudy Hervé Chief Operating Officer Althea Garvey Chief Claims Officer Jon Knutzen Chief Risk Officer Ethan Genteman Chief Actuarial Officer Operations
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2025 Investor Day | March 20, 2025 36 Palomar Approach to Risk Transfer RISK TRANSFER IS CENTRAL TO PALOMAR’S OVERALL STRATEGY AND 2X PHILOSOPHY Manage Volatility • Conservative risk tolerances that mitigate net exposure to catastrophe, shock, and attritional losses • Efficient management of gross and net lines Support Growth • Dynamic programs designed to scale with exposure growth and needs of underwriting • Diverse and well- capitalized reinsurance panels • Growth in Palomar’s capital enables increased net retentions Control Ceded Expense • Robust portfolio analytics • Access to both traditional reinsurance and insurance- linked securities
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2025 Investor Day | March 20, 2025 37 Comprehensive & Diverse Utilization of Risk Transfer Products EMPLOY A DIVERSE SUITE OF PRODUCTS TO MANAGE RISK, REDUCE EARNINGS VOLATILITY AND SUPPORT GROWTH Inland Marine Other Property Casualty Other Property Inland Marine Earthquake FrontingCasualty Crop Facultative • Individual risk-specific protection • ‘Second set of eyes’ for individual risk underwriting • Effective for newer lines of business or complex risks Excess of Loss(XOL) • Applies on either a per-risk or a portfolio basis (e.g. Catastrophe XOL) • Efficient protection against severity of a single event or loss above a fixed dollar retention Quota Share • ‘First dollar' pro-rata partner for portfolio • Control net line size and volatility for new and existing business • Mitigate shock losses • Generate fee income Catastrophe Bond • Provides fixed economics and capacity via multi-year treaties • Diversify beyond traditional reinsurance • Fully collateralized model Earthquake Other Property Earthquake Crop Inland Marine
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2025 Investor Day | March 20, 2025 38 Risk Transfer Case Study PROPERTY CAT REINSURANCE PROGRAM DEPLOYS MULTIPLE TOOLS TO ACHIEVE OPTIMAL RESULT • Strategy blends Excess of Loss, Quota Share, and Insurance-Linked Securities • Program supported by over 100 reinsurers, accessing both rated and fully collateralized markets • Mix of one-year and multi-year limit to reduce reinsurance market price volatility • Consideration given to reinsurers' risk appetite (e.g., single peril exposures) • Successful 1/1 Earthquake Quota Share renewal with sufficient reinsurance market capacity to support future growth 1. Core Catastrophe XOL retention excludes modest additional premium of first and second layers 2. $15.5M retention for all covered events excluding Earthquake 3. $20M retention for Earthquake events RETENTION 15% CESSION CA COMMERCIAL EARTHQUAKE QUOTA SHARE RETENTION $1.125B xs $325M CAT BONDS & TRADITIONAL LIMIT SINGLE SHOT INURING EQ ALL PERILS RETENTION(1) EQ + HAWAII HURRICANE EQ-ONLY CORE CAT XOL TOWER $15.5M(2) $100M $735M $20M(3) $1.855B $3.2B Total EQ
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39 Actuarial Strategy & Reserving Philosophy BUILDING STRENGTH: A DISCIPLINED APPROACH TO RESERVING 2025 Investor Day | March 20, 2025 • Streamlined analysis using actuarial-standard models • Reserves set by experienced actuaries and claims professionals • Analysis of loss types to capture seasonality, demand surge, and trends Quantitative Data-Driven Precision: Leveraging Stochastic Models for Unbiased Estimates • Swift response to negative developments, cautious approach to positive news • Casualty reserves remain unreleased • Scenario testing to ensure downside risk is understood Conservative Reserving with Caution: Protecting Against Future Uncertainty Integrated Insights: Aligning Data with Business Expertise Collaborative • Incorporation of insights from claims, underwriting, and senior management • Results leveraged to enhance the pricing/reserving feedback loop
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$394 $385 $471 $729 11% 20% 21% 21% -3.0% 2.0% 7.0% 12.0% 17.0% 22.0% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2021 2022 2023 2024 Surplus Total Net Reserves as % of Surplus 59% 44% 39% 26% 41% 56% 61% 74% 2021 2022 2023 2024 Net Case Reserves Net IBNR Overall Net Reserves 2025 Investor Day | March 20, 2025 Reserve History BUILT FOR STABILITY: RESERVING TRENDS AND FINANCIAL STRENGTH (1) Gross and Net Reserves in $M (2) Surplus figures are in $M Palomar Reserves & Surplus 40 (2) $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 + Total Net Casualty Net + Total Gross Casualty Gross 2020 2021 2022 2023 2024 Gross and Net Reserves (1)
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• Third-party data enrichment leveraging AI models for mining data and images • AI-driven automation in underwriting process • Active monitoring of Insurtech innovation landscape Leveraging AI & New Technologies • PASS(1) and frontends endorsed by Producer and Carrier partners • Sophisticated pricing tools with automated external data ingestion • Performance and exposure management data assets Investing in What Differentiates Palomar • Scalable core systems leveraging best-in-class vendors • Proven playbooks for new product launches • Early adoption of business process outsourcing services for rapid scaling and cost efficiency Built for Speed 2025 Investor Day | March 20, 2025 41 Technology & Operations KEY ENABLER OF SPEED-TO-MARKET AND DIFFERENTIATION 1. Palomar Automated Submission System
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• Building the ecosystem and infrastructure for a best-in-class specialty insurer • Enabling up to five product launches per year • Continue to scale the organization, fully decoupling premium growth from operational expenses growth • Continue to stay at the forefront of new technology adoption in support of differentiated risk selection, pricing, and risk transfers • Specific initiatives for the launch and integration of Crop and Surety • Continued investments in modernizing Producer, Underwriting and Claims systems • Continued investments in underlying data infrastructure • Risk-selection and pricing model upgrades driven by AI- enabled datasets 2025 Roadmap Long-term Objectives 2025 Investor Day | March 20, 2025 42 Technology & Operations INTEGRATE AND OPERATE: DRIVING EFFICIENCY GAINS WHILE BUILDING THE FUTURE PALOMAR
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DIVERSIFIED USE OF THIRD-PARTY ADMINISTRATORS (TPAS) TO MANAGE CLAIMS AND LIMIT DOWNSIDE RISK Claims Management 43 • Outsource claims handling to multiple specialized TPAs due to low frequency of mature books (Earthquake, Hawaii Hurricane) • Use of in-house expertise, external analysis, underwriters, and legal counsel to estimate ultimate losses • Opportunity to leverage TPA expertise in specialized lines of business • Management oversees TPAs, ensuring catastrophe preparation, loss reserves, claim evaluation, arbitration, mediation, and settlement • TPAs enable quick mobilization of adjusters to affected areas, helping mitigate demand surge after catastrophes 2025 Objectives • Investment in full service in-house claims handling • TPA assessments and benchmarking • Advancements in technology and data initiatives PARTNER ACROSS THE ORGANIZATION Continue working closely with Underwriting, Programs, Actuarial and Operations to ensure risks are being managed closely Enhanced claims data views and reporting Internal data team and external partnerships allow for analytical claims management DATA MONITORING AND REPORTING OVERSIGHT OF TPAs AND PROGRAM ADMINISTRATORS Proactive performance management of TPAs and Program Partners Monthly claims data review, quarterly audits schedule, SOX reviews and loss cost management DEEP RELATIONSHIPS Constant communication with claims panel including TPAs, legal partners, reinsurers, claimants and regulators Claims Management Strategies to Limit Downside Risk 2025 Investor Day | March 20, 2025
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Mission Palomar is built on a culture of agility, innovation and problem-solving that delivers peace of mind and protection to individuals and businesses impacted by adversity. Vision To build solutions that expand our positive impact on the people, businesses, and communities we serve. Values Authenticity, Agility, Innovation, Diversity, Accountability 44 Palomar 2X Strategy is Strengthened by Our People TALENT SYSTEMS ARE INFORMED BY OUR MISSION, VISION AND VALUES OUR INTENTIONAL FOCUS ON MISSION, VISION AND VALUES TRANSLATES INTO CREATING A DYNAMIC, RESILIENT, AND GROWING WORKFORCE Key People Metrics *Current headcount jump (compared to YE 2024) largely impacted by FIA acquisition effective 1-1-25 *Past 3 years average is 84% **Our pay and benefits remain a competitive advantage *Maintaining a strong culture is important as one out of every four employees is a new hire Total Rewards** Percentile 75th Engagement* 87% Volunteerism 40% Satisfaction Employees with less than one- year* 23% Turnover YE 24 9% Internal Mobility 25% MovementHeadcount YE 2024 253 Current* 310 3-year growth rate 105% 2025 Investor Day | March 20, 2025
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Support Palomar's "Integrate and Operate" strategic imperative • Optimize operational excellence through proven employee performance management systems • Drive Palomar values and behaviors through heightened individual and team goals alignment • Provide consistent approach to change management to bolster efficiency on how we get things done How We Work 45 2025 Talent Priorities FOCUS ON ATTRACTING AND DEVELOPING GREAT TALENT TO CREATE A DYNAMIC, RESILIENT, AND EFFICIENT WORKFORCE Develop workforce capabilities to meet present and future demands • Continue to attract, develop and retain underwriters and operational support • Create predictable talent pipeline by investing in "early-in-career" programs (internships, rotations) • Commit to intentional cross- functional development (build redundancy of key skills) How We Grow Invest in building great people leaders • Prioritize development of mid-level people managers • Build muscle to deliver expected outcomes with pragmatic focus on adjusted net income per employee • Monitor and develop "over the horizon" skills that may impact our business model How We Win 2025 Investor Day | March 20, 2025
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Palomar 2X and Modeling Update Chris Uchida Chief Financial Officer
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PALOMAR 2X PHILOSOPHY WAS INTRODUCED DURING THE 2022 INVESTOR DAY Palomar 2X – Original Framework Initial financial objectives included: • Double underwriting income over an intermediate timeframe • Adjusted ROE greater than 20% • Organic growth strategy New For 2025 • Double adjusted net income over an intermediate timeframe (3-5 years) Available levers to enhance execution: • Growth in our capital base provides the flexibility to increase our risk participation over time 2025 Investor Day | March 20, 2025 47
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2025 Investor Day | March 20, 2025 48 Palomar 2X – Execution Versus First Cohort INITIAL 2021 PALOMAR 2X GOALS ACHIEVED WITHIN 3 YEARS 1. Adjusted Net Income is the new Palomar 2X metric 2024 Actuals $256.9M 2021 $105.6M Goal $211.1M Adjusted Underwriting Income (Ex-Overhead and Ex-Cat) +22% 2024 Actuals $134.1M 2021 $55.9M Goal $111.8M Adjusted Underwriting Income +20% 2024 Actuals $133.5M 2021 $52.4M Goal $104.9M Adjusted Net Income (1) +27% 2024 Actuals 22% 2021 14% Goal 20% Adjusted Return on Equity +10% Execution Versus First Cohort Performance Above Goal 2022 Investor Day Palomar 2X Illustration 2024 Actuals $256.9M 2021 $110.0M Goal $220.0M Underwriting Income (Ex-Overhead and Ex-Cat) +17% Performance Above Goal
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2022 Actuals $71.3M Goal $142.7M Adjusted Net Income 2023 Actuals $93.5M Goal $187.0M Adjusted Net Income 2024 Actuals $133.5M Goal $267.0M Adjusted Net Income 49 2025 Full Year Guidance GUIDANCE RANGE IMPLIES EXCEEDING 2022 PALOMAR 2X GOAL IN THREE YEARS 2025 FULL YEAR OUTLOOK ADJUSTED NET INCOME $180M–$192M CURRENT RANGE IMPLIES: • Adjusted net income growth of 39% at the midpoint of the guidance range • Midpoint of guidance range implies an adjusted ROE above Palomar 2X goal of 20% • Includes $8M–$12M of catastrophe losses in 2025
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2025 Investor Day | March 20, 2025 50 Palomar 2X – Modeling Update 2023-2024 GROSS EARNED PREMIUM AND NET EARNED PREMIUM RATIO 37.0% 34.3% 31.6% 33.9% 35.6% 37.4% 34.3% 39.0% $225 $242 $272 $277 $303 $327 $396 $372 $50 $100 $150 $200 $250 $300 $350 $400 $450 28.0% 33.0% 38.0% 43.0% 48.0% 53.0% Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 NEP Ratio Gross Earned Premium Increase in GEP and decrease in NEP ratio are due to Crop Business Q3 seasonality 1. Gross Earned Premium in $M (1)
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2025 Investor Day | March 20, 2025 51 Palomar 2X – Modeling Update 2023-2024 NET EARNED PREMIUM $83 $83 $86 $94 $108 $122 $136 $145 37.0% 34.3% 31.6% 33.9% 35.6% 37.4% 34.3% 39.0% 30.0% 32.0% 34.0% 36.0% 38.0% 40.0% 42.0% 44.0% $- $20 $40 $60 $80 $100 $120 $140 $160 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Net Earned Premium Net Earned Premium Ratio Decrease in NEP Ratio due to Crop business seasonality 6/1/2023 XOL placement caused decrease in NEP Ratio 1. Net earned premium in $M (1)
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2025 Investor Day | March 20, 2025 52 Palomar 2X – Modeling Update 2023-2024 ACQUISITION EXPENSE $26 $26 $27 $29 $32 $36 $41 $41 11.4% 10.8% 9.9% 10.5% 10.5% 11.0% 10.5% 10.9% 9.0% 9.5% 10.0% 10.5% 11.0% 11.5% 12.0% $- $5 $10 $15 $20 $25 $30 $35 $40 $45 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Acquisition Expense Acquisition Expense Ratio Decrease in Acquisition Expense Ratio due to Crop business seasonality 1. Acquisition expense in $M (1)
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2025 Investor Day | March 20, 2025 53 Palomar 2X – Modeling Update 2023-2024 ADJUSTED UNDERWRITING EXPENSE $15 $17 $18 $19 $21 $24 $24 $27 6.8% 6.9% 6.7% 6.9% 6.8% 7.3% 5.9% 7.2% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% $(2) $3 $8 $13 $18 $23 $28 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Adjusted UW Expense Adjusted UW Expense Ratio Decrease in Adjusted Underwriting Expense Ratio due to Crop business seasonality 1. Adjusted UW expense in $M (1)
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2025 Investor Day | March 20, 2025 54 Palomar 2X – Modeling Update THIRD QUARTER CROP SEASONALITY AND ITS IMPACT ON NET EARNED PREMIUM RATIO 25% 27% 29% 31% 33% 35% 37% 39% 41% 43% 45% $- $50 $100 $150 $200 $250 $300 $350 $400 $450 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Net earned premiums Gross Earned Premium NEP Ratio Moving forward, our third quarter results will experience seasonality due to our Crop business: • Gross and Net Earned Premium will continue to increase for the year but will be seasonally higher in the third quarter o The fourth quarter will be more in line with the overall growth trend for the year, but sequentially, we expect both to be lower in the fourth quarter • Based on our expected participation, we expect the Net Earned Premium ratio to approach 40% for the year, increasing from 36.5% in 2024, with the seasonal low point in the third quarter of the year and continuing to increase from there, similar to prior years pattern Crop Season at Palomar 1. Gross and net earned premium in $M (1) (1)
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2025 Investor Day | March 20, 2025 55 Palomar 2X – Modeling Update THIRD QUARTER CROP SEASONALITY AND ITS IMPACT ON ACQUISITION AND ADJUSTED UNDERWRITING EXPENSE RATIOS 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% $- $50 $100 $150 $200 $250 $300 $350 $400 $450 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Net earned premiums Gross Earned Premium Adjusted UW Expense Ratio Acquisition Expense Ratio Continued: • Acquisition Expense will continue to increase • We expect the Acquisition Expense Ratio to be flatter for the year, 10.7% in 2024, with a seasonal dip in the third quarter • Adjusted UW Expense will continue to increase • We expect the Adjusted UW Expense Ratio to be flatter for the year, 6.8% in 2024, with a seasonal dip in the third quarter • While not shown, on a typical combined ratio basis, we expect our Loss Ratio for the year to be in the low 30’s for the year with a seasonal spike in the third quarter closer to the low 40’s Crop Season at Palomar 1. Gross and net earned premium in $M (1) (1)
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2025 Investor Day | March 20, 2025 56 Investment Overview HIGH QUALITY, LIQUID INVESTMENT PORTFOLIO PROVIDES COMPLEMENTARY EARNINGS STREAM Objectives: Maintain liquidity, preserve capital, and generate investment income within a comprehensive risk management framework. Portfolio Construction: We primarily own high quality, liquid corporate bonds and mortgage-backed securities with an appropriate level of cash and cash equivalents. We have a modest allocation to high yield bonds and to the broad equity market, which we access through ownership of passive equity index ETFs. High Quality Orientation: We prioritize high quality assets given currently inadequate compensation for credit risk. Weighted Average Duration: 4.04 Years Average Portfolio Credit Quality: “A” S&P Average Fixed Income Book Yield: 4.6% Average Yield on New Investments in Q4 2024: 5.3% 14% 34% 26% 25% 1% Palomar Portfolio: Credit Rating AAA A AA BBB High Yield 47% 25% 14% 5%4% 3% 2% 1% $1 Billion Total Investment Portfolio Corporate Bonds Municipal Bonds ABS Cash MBS / CMBS Treasurys/Agencies Equities Corporate HY Bonds
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Q&A
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Closing Remarks
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2025 Investor Day | March 20, 2025 7 Closing Remarks PALOMAR IS BUILDING A SPECIALTY MARKET LEADER PLMR 2X: It is a philosophy that will sustain profitable growth Growth: The growth vectors are numerous which affords Palomar the ability to be deliberate if not conservative We are Investing: Investments across the organization will persist and drive long-term scale and operating leverage Underwriting & Risk Transfer: Our conservative underwriting & risk management ensure steady returns without sacrificing growth We have the team: Our team has the experience,expertise and desire to build a best-in-class specialty insurer THANK YOU FOR YOUR TIME
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Appendix
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2025 Investor Day | March 20, 2025 61 Reconciliation of Non-GAAP Measures Used in this Presentation WITHIN THIS PRESENTATION, WE HAVE USED CERTAIN NON-GAAP MEASURES. THESE MEASURES RECONCILE TO THEIR MOST COMPARABLE GAAP MEASURES AS FOLLOWS: Year Ended December 31, (in thousands) 2024 2023 2022 2021 2020 2019 Net income $117,573 $79,201 $52,170 $45,847 $6,257 $10,621 Adjustments: Net realized and unrealized losses (gains) on investments (4,568) (2,941) 7,529 (1,277) (1,488) (4,443) Expenses associated with transactions 1,479 706 130 563 708 3,007 Stock-based compensation expense 16,685 14,913 11,624 5,584 2,167 24,103 Amortization of intangibles 1,558 1,481 1,255 1,251 — — Expenses associated with retirement of debt — — — — — 1,297 Expenses associated with catastrophe bond 2,483 1,640 1,992 1,704 399 — Tax impact (1,699) (1,480) (3,366) (1,238) (338) (171) Adjusted net income $133,511 $93,520 $71,334 $52,434 $7,705 $34,414
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2025 Investor Day | March 20, 2025 62 Reconciliation of Non-GAAP Measures Used in this Presentation WITHIN THIS PRESENTATION, WE HAVE USED CERTAIN NON-GAAP MEASURES. THESE MEASURES RECONCILE TO THEIR MOST COMPARABLE GAAP MEASURES AS FOLLOWS: Year Ended December 31, (in thousands) 2024 2023 2022 2021 Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income $398,745 $265,142 $254,390 $187,005 Denominator: Net earned premiums $510,687 $345,913 $316,466 $233,826 Combined ratio 78.1% 76.6% 80.4% 80.0% Adjustments to numerator: Expenses associated with transactions $(1,479) $(706) $(130) $(563) Stock-based compensation expense (16,685) (14,913) (11,624) (5,584) Amortization of intangibles (1,558) (1,481) (1,255) (1,251) Expenses associated with catastrophe bond (2,483) (1,640) (1,992) (1,704) Adjusted combined ratio 73.7% 71.2% 75.6% 76.1%
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2025 Investor Day | March 20, 2025 63 Reconciliation of Non-GAAP Measures Used in this Presentation WITHIN THIS PRESENTATION, WE HAVE USED CERTAIN NON-GAAP MEASURES. THESE MEASURES RECONCILE TO THEIR MOST COMPARABLE GAAP MEASURES AS FOLLOWS: Year Ended December 31, (in thousands) 2024 2023 2022 2021 Annualized adjusted net income $133,511 $93,520 $71,334 $52,434 Average stockholders' equity $600,140 $428,002 $389,461 $378,941 Annualized adjusted return on equity 22.2% 21.9% 18.3% 13.8% Beginning in 2022, we modified our definition of adjusted net income to adjust for the net realized and unrealized gains and losses. We believe adding this adjustment provides a more meaningful comparison to our performance. We have modified the prior peri od figures accordingly Income before income taxes $151,196 $103,642 $ 67,551 $ 57,138 Net investment income (35,824) (23,705) (13,877) (9,080) Net realized and unrealized losses (gains) on investments (4,568) (2,941) 7,529 (1,277) Interest expense 1,138 3,775 873 40 Underwriting income $111,942 $ 80,771 $ 62,076 $ 46,821 Expenses associated with transactions 1,479 706 130 563 Stock-based compensation expense 16,685 14,913 11,624 5,584 Amortization of intangibles 1,558 1,481 1,255 1,251 Expenses associated with catastrophe bond 2,483 1,640 1,992 1,704 Adjusted underwriting income $134,147 $ 99,511 $ 77,077 $ 55,923