Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| We continue to invest in both our core lines as well as new lines of business to ensure we are positioned to achieve our Palomar 2X goals, notably doubling our underwriting income over a 3 to 5 year period, while delivering adjusted return on equity above 20% |
| So we are building up a nice loss reserve base that we have not touched and don't intend to touch but we do expect it to develop favorably based on the quality of the underwriting and the underwriter leading the team |
| The quarterly results included record gross written premium and adjusted net income, premium adjusted net income growth of 27% and 33%, respectively, and importantly, an adjusted return on equity of 25% |
| When looking at the full year, we're equally proud of record gross written premium and adjusted net income, strong top and bottom line growth and numerous initiatives that led to diversification and reduced earnings volatility |
| This robust and disciplined growth translated into an adjusted return on equity well above the 20% benchmark levels passed in our Palomar 2X strategic plan |
| We also have quake that we feel great about, high teens, 20% growth |
| At the beginning of last year, we outlined 4 strategic objectives for the year: one, sustained strong growth; two, managed dislocation; three, enhance earnings predictability; and fourthly, scale the organization |
| I'm pleased to report we execute on all of these objectives and the execution not only led to record gross written premium and earnings but also put us in a position for long-term success |
| And as such, we feel very good about what we're writing |
| The successful navigation of the generationally hard property catastrophe reinsurance market in which we renewed our reinsurance program in line with the expectations implied in our full year 2023 earnings guidance, and procured more excess of loss to support our growth in earthquake |
| I am equally confident that Palomar's sound and consistent execution will be recognized by the market and hence, we will deliver real value to our shareholders |
| I'm confident that 2024 will generate equally strong performance and results and our guidance indicates as much |
| These nascent products will enhance our specialty insurance franchise and create shareholder value |
| I think, overall, for the year, we're very pleased with how it all played out |
| Last but not least, the successful beaten raise of our quarterly adjusted net income targets every quarter of the year |
| These accomplishments allow us to exit the year energized by our prospects for profitable growth in 2024 and beyond |
| Overarchingly, the quarter saw a robust growth with gross written premium increasing 27% year-over-year, a nice sequential acceleration from 24% gross written premium growth delivered in the third quarter |
| But moreover, how proud I am of the team at Palomar who allowed us to achieve these results |
| Likewise, net earned premiums grew 14% in the fourth quarter, which is an acceleration from the 10% that we delivered in the third quarter of 2023 |
| So we think that both of those are good dynamics to sustain that high teens growth in residential quake for the immediate future |
| We are very pleased with the opportunities that are there |
| Fourth quarter provided a strong end to what was a stellar 2023 |
| And as a result, the book has performed very well |
| Mac Armstrong But Mark, I think to your question around broadly, we feel great about top line growth for the company |
| We believe high-teens growth is sustainable in the year ahead and that a new partnership with the top 25 insurance brand, offering earthquake insurance to their E&S policyholders to provide a further catalyst for sustained profitable growth |
| During the quarter, commercial earthquake conditions remained attractive as we achieved rate increases of approximately 26% on a risk-adjusted basis and record best levels for average annual loss and 250-year probable maximum loss of premium |
| We remain positive on the growth and profitability prospects of our earthquake franchise as we enter 2024 |
| So yes, I do feel there is upside investment income but I am happy with the overall organization and the improvements that we've made and the growth in the underwriting income that we're seeing for the organization |
| Our adjusted underwriting income grew 29.1% to $99.5 million, positioning us to achieve our Palomar 2X objective from 2021 in less than 4 years |
| So we think that there is good potential there, especially the one that's focusing on high-value E&S business in California, it's with an entrenched operator in the space |
| Statement |
|---|
| Our real estate E&O book of business, which is right now heavily concentrated in California because of slower transaction activity, the rates were a little bit down |
| The second and fourth quarters will see only modest premiums |
| What you are seeing now is risk-adjusted increases coming under a little bit of pressure year-over-year from the amount of increase |
| As an inside, if the 2020 wind season were to happen again, our total losses from the cohort of storms will be less than $10 million on a net basis |
| This concerted effort meaningfully lowered the volatility in our book but did lead to the decline in our commercial all risk premium by 13% year-over-year |
| So we do think that's going to come down |
| What it does not include is a large major hurricane or earthquake impacting our portfolio |
| Meyer Shields Mac I don't want to misinterpret it, but it sounded like you were a little cautious on fronting appetite for 2024 |
| The $3.5 million losses related to floods in California, the atmospheric river El Nino, what you saw kind of on the front page news in San Diego and other parts of the state |
| Fourth quarter is a seasonally light period for crop insurers and one of which most AIPs, Palomar included, right negligible premium |
| Best changing the outlook in their rating of Palomar to positive from stable |
| It was down |
| And I guess, I would have expected that to moderate slightly |
| It is important to remember that our loss estimates and guidance include our expectations of mini cats such as severe convective storm activity |
| Chris Uchida When we think about it, right, we've said this all along that the gross-to-net ratio was probably at its lowest point after Q3 of this year and after the full reinsurance placement was put in place |
| That cat load is made up of mini cats, which is going to be severe convective storms |
| That also being said, we are still booking everything at our loss picks |
| The loss expectation you gave for '24, I think 21% to 25% |
| Mark Hughes Mac, you had mentioned that the layered and shared pricing might moderate |
| We've now reduced our continental hurricane probable maximum loss to $100 million and the average annual loss to $4 million |
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