Palomar Holdings: A Strong Finish to 2024

Palomar Holdings, Inc. (PLMR) wrapped up 2024 with a bang, reporting impressive financial results for the fourth quarter and the full year. The insurance holding company, which specializes in property and casualty insurance products, demonstrated robust growth and a commitment to strategic investments, positioning itself for continued success in 2025.

Net income for the fourth quarter of 2024 surged 35.0% to $35.0 million, or $1.29 per diluted share, compared to the same quarter in 2023. Adjusted net income also saw significant growth, rising 47.5% to $41.3 million, or $1.52 per diluted share. Gross written premiums increased by 23.3% to $373.7 million, reflecting strong business growth and customer demand. For the full year, gross written premiums were up 35.1% to $1.5 billion, while net income increased by 48.4% compared to the previous year.



Key metrics revealed a total loss ratio of 26.4% for 2024 and a combined ratio of 78.1%. CEO Mac Armstrong highlighted strategic accomplishments, including improving underwriting income and acquiring First Indemnity of America, a surety operation. Looking ahead, Palomar expects to achieve adjusted net income of $180 million to $192 million in 2025.

Potential positives from Palomar's earnings call include:

1. Strong profitability growth: Net income for the fourth quarter of 2024 increased by 35.0% compared to the same quarter in 2023, showcasing robust profitability.
2. Robust business growth: Gross written premiums rose by 23.3% in the fourth quarter of 2024, indicating strong customer demand and business expansion.
3. Effective management and operational efficiency: Adjusted net income for the fourth quarter grew by 47.5% to $41.3 million, reflecting the company's ability to manage resources effectively.
4. Strong financial returns for shareholders: Palomar achieved an annualized adjusted return on equity of 23.1%, demonstrating its commitment to generating value for its stakeholders.

Potential negatives from Palomar's earnings call include:

1. Reduction in profitability: Annualized return on equity decreased from 23.2% to 19.5%, suggesting a slight reduction in profitability.
2. Higher claims and reduced efficiency in claims management: The total loss ratio increased significantly from 19.1% to 25.7%, indicating higher claims and potential weaknesses in claims management.
3. Weakness in investment performance: Net realized and unrealized losses on investments turned negative at $1.2 million compared to gains of $3 million in the previous year, suggesting potential challenges in the company's investment strategy.

In conclusion, Palomar Holdings, Inc. reported strong financial results for the fourth quarter and full year of 2024, driven by robust business growth, strategic investments, and a commitment to operational efficiency. While there are some potential concerns regarding profitability and investment performance, the company's overall performance and outlook for 2025 remain positive. As Palomar continues to expand its product offerings and tap into new markets, investors should keep a close eye on the company's progress and potential opportunities for growth.