5 unchanged sentences
Our loss reserves are established based on estimates and may be inadequate to cover actual incurred losses which could have a material adverse impact on our results of operations and financial condition;
−Removed: The inability to purchase third-party reinsurance or otherwise expand our catastrophe coverage in amounts we desire on commercially acceptable terms or on terms that adequately protect us;
+Added: We may be unable to purchase third-party reinsurance or otherwise expand our catastrophe coverage in amounts we desire on commercially acceptable terms or on terms that adequately protect us, and this inability may materially adversely affect our business, financial condition and results of operations.
Our risk management and loss limitation methods, including estimates and models, may fail to adequately manage our exposure to losses from catastrophe events and our losses could be materially higher than our expectations;
36 unchanged sentences
In addition to our event retention, we may also incur additional reinsurance expenses upon a catastrophe event.
−Removed: While we only select reinsurers whom we believe to have acceptable credit, if our reinsurers are unable to pay the claims for which they are responsible, we ultimately retain primary liability.
+Added: While we only select reinsurers whom we believe to have acceptable credit, if our reinsurers are unable to pay the claims for which they are responsible, we retain primary liability.
Our earthquake policies do not provide coverage for fire damage arising from an earthquake.
9 unchanged sentences
We evaluate each reinsurance claim based on the facts of the case, historical experience with the reinsurer on similar claims and existing case law and consider including any amounts deemed uncollectible from the reinsurer in a reserve for uncollectible reinsurance.
−Removed: As of June 30, 2023, we had $255.9 million of aggregate reinsurance recoverables. 
+Added: As of September 30, 2023, we had $280.2 million of aggregate reinsurance recoverables. 
Our loss reserves are established based on estimates which may be inadequate to cover actual incurred losses which could have a material adverse impact on our results of operations and financial condition.
24 unchanged sentences
Reinsurance involves transferring, or ceding, a portion of our risk exposure on policies that we write to another insurer, the reinsurer, in exchange for a premium.
−Removed: We primarily use treaty reinsurance, consisting of excess of loss (“XOL”) coverage.
−Removed: Additionally, we buy program specific reinsurance coverage on a quota share, property per risk or a facultative basis.
+Added: We buy multiple types of reinsurance including treaty excess of loss (“XOL”) coverage and program specific reinsurance coverage on a quota share, property per risk or a facultative basis.
Treaty coverage refers to a reinsurance contract that is applied to a group or class of business where all the risks written meet the criteria for that class.
17 unchanged sentences
If we are unable to renew our expiring reinsurance contracts on acceptable terms or expand our reinsurance coverage through traditional reinsurers, catastrophe bonds, or otherwise, our loss exposure may increase, which would increase our potential losses related to catastrophe or non-catastrophe events.
−Removed: If we are unwilling to bear an increase in loss exposure, we may have to reduce our written premiums. 
−Removed: These outcomes could adversely affect our business, financial condition, and results of operations.
+Added: If we are unwilling to bear an increase in loss exposure, we may have to reduce our written premiums. These outcomes could adversely affect our business, financial condition, and results of operations.
In addition, as we grow our written premiums and enter new lines of business we will seek new types of reinsurance and will need to purchase reinsurance on commercially acceptable terms in order to reduce the risk associated with entering new lines of business.
−Removed: The inability to purchase appropriate reinsurance for new lines of business would have a negative impact on our ability to grow our written premiums and maintain our current level of profitability.
+Added: The inability to purchase appropriate reinsurance for new lines of business could negatively impact our ability to grow our written premiums and maintain our desired level of profitability.
Many reinsurance companies have begun to exclude certain coverages from, or alter terms in, our reinsurance contracts with them.
5 unchanged sentences
We manage our exposure to catastrophe losses by analyzing the probability of the occurrence of catastrophe events and their severity and impact on our underwriting and investment portfolio.
−Removed: We monitor and mitigate our exposure through a number of methods designed to minimize risk, including underwriting specialization, modeling and data systems, data quality control, strategic use of policy deductibles, regular review of aggregate exposure and probable maximum loss reports, which report the maximum amount of losses that one would expect based on computer or actuarial modeling techniques.
+Added: We monitor and mitigate our exposure through a number of methods designed to minimize risk, including underwriting specialization, modeling and data systems, data quality control, strategic use of policy deductibles, regular review of aggregate exposure and probable maximum loss reports, which report the maximum amount of expected losses based on computer or actuarial modeling techniques.
These estimates, models, data, and scenarios may not produce accurate predictions;
2 unchanged sentences
The estimates and assumptions we use are dependent on many variables, such as loss adjustment expenses, insurance to value, storm or earthquake intensity, building code compliance and demand surge, which is the temporary inflation of costs for building materials such as lumber and labor resulting from increased demand for rebuilding services in the aftermath of a catastrophe.
−Removed: Accordingly, if the estimates and assumptions used in our risk models are incorrect or if our risk models prove to be an inaccurate forecasting tool, the losses we might incur from an actual catastrophe could be materially higher than our expectation of losses generated from modeled catastrophe scenarios, and our business, financial condition, and results of operations could be materially adversely affected.
+Added: Accordingly, if the estimates and assumptions used in our risk models are incorrect or if our risk models prove to be an inaccurate forecasting tool, the losses we incur from an actual catastrophe could be materially higher than our expectation of losses generated from modeled catastrophe scenarios, and our business, financial condition, and results of operations could be materially adversely affected.
In addition, our third-party data providers may change the estimates or assumptions that we use in our risk models and/or their data may be inaccurate.
20 unchanged sentences
for insurance companies that have been publicly placed in liquidation.
−Removed: As of June 30, 2023, A.M.
+Added: As of September 30, 2023, A.M.
Best has assigned a financial strength rating of “A−”
−Removed: (Excellent) (Outlook Stable) to our insurance company subsidiaries, Palomar Specialty Insurance Company (“PSIC”) and Palomar Excess and Surplus Insurance Company (“PESIC”).
−Removed: Subsequent to our quarter-end on June 30, 2023, the Company's financial strength rating was upgraded to "A-" (Excellent) (Outlook Positive) on July 14, 2023.
+Added: (Excellent) (Outlook Positive) to our insurance company subsidiaries, Palomar Specialty Insurance Company (“PSIC”) and Palomar Excess and Surplus Insurance Company (“PESIC”). 
Best assigns ratings that are intended to provide an independent opinion of an insurance company’s ability to meet its obligations to policyholders and such ratings are not evaluations directed to investors and are not a recommendation to buy, sell or hold our common stock or any other securities we may issue.
22 unchanged sentences
It is possible that such reviews of us may result in adverse ratings consequences, which could have a material adverse effect on our financial condition and results of operations.
−Removed: We and our customers could be negatively and adversely impacted by pandemics, disease outbreaks and other public health crises, such as the COVID-19 pandemic.
−Removed: Since March 2020, the COVID-19 pandemic has impacted financial markets, businesses, households, and communities.
−Removed: The extent of the impact of COVID-19 or another similar event on our operational and financial performance depends on several factors, including the ultimate duration and severity of the event, the emergence and severity of variant strains, actions taken and restrictions imposed by the government and health officials in response, the effectiveness and adoption of vaccines and therapeutics, the ability for our customers to continue to pay premiums, contraction of the insurance and reinsurance markets, and the ability for reinsurers to satisfy claims, all of which are uncertain and cannot be predicted.
+Added: We and our customers could be negatively and adversely impacted by pandemics, disease outbreaks and other public health crises.
+Added: The extent of the impact of pandemic, disease outbreak or other public health crisis on our operational and financial performance depends on several factors, including the ultimate duration and severity of the event, the emergence and severity of variant strains, actions taken and restrictions imposed by the government and health officials in response, the effectiveness and adoption of vaccines and therapeutics, the ability for our customers to continue to pay premiums, contraction of the insurance and reinsurance markets, and the ability for reinsurers to satisfy claims, all of which are uncertain and cannot be predicted.
While policy terms and conditions in the lines of business written by us would be expected to preclude coverage for virus-related claims, court decisions and governmental actions may challenge the validity of any exclusions or our interpretation of how such terms and conditions operate.
−Removed: Pandemics have historically contributed to financial market volatility, supply chain disruptions, price inflation, and material and labor shortages, all of which may have a negative impact on our business.
−Removed: Furthermore, since our results of operations are partially dependent on the performance of our investment portfolio, a pandemic’s impact on the economy and financial markets could reduce our net investment income and result in realized investment losses in future periods.
−Removed: The macroeconomic effects of the COVID-19 Pandemic may persist for an indefinite period, even after the Pandemic has subsided.
−Removed: We cannot anticipate all the ways in which COVID-19 or other similar global health crises could adversely impact our business in the future.
+Added: Global health crises have historically contributed to financial market volatility, supply chain disruptions, price inflation, and material and labor shortages, all of which may have a negative impact on our business.
+Added: Furthermore, since our results of operations are partially dependent on the performance of our investment portfolio, a global health crisis' impact on the economy and financial markets could reduce our net investment income and result in realized investment losses in future periods.
+Added: The macroeconomic effects of a global health crisis may persist for an indefinite period, even after the it has subsided.
+Added: We cannot anticipate all the ways in which global health crises could adversely impact our business in the future.
Our business is concentrated in California and Texas and, as a result, we are exposed more significantly to California and Texas loss activity and regulatory environments.
−Removed: Our policyholders and insurance risks are currently concentrated in California and Texas, which generated 47% and 10% of our gross written premiums for the year ended December 31, 2022 and 57% and 9% for the six months ended June 30, 2023.
+Added: Our policyholders and insurance risks are currently concentrated in California and Texas, which generated 47% and 10% of our gross written premiums for the year ended December 31, 2022 and 52% and 8% for the nine months ended September 30, 2023.
We are exposed to business, economic, political, judicial and regulatory risks due to this concentration that are greater than the risks faced by insurance companies that conduct business over a more extensive geographic area.
19 unchanged sentences
There were no other program administrators which distributed greater than 10% of our gross written premiums for the year ended December 31, 2022.
−Removed: For the six months ended June 30, 2023, our largest program administrator distributed $164.3  
−Removed: million or 31.3%  of our gross written premiums and our second largest program administrator distributed $77.2 million, or 14.7% of our gross written premiums. There were no other program administrators which distributed greater than 10% of our gross written premiums for the six months ended June 30, 2023.
+Added: For the nine months ended September 30, 2023, our largest program administrator distributed $262.1  
+Added: million or 31.3%  of our gross written premiums and our second largest program administrator distributed $115.8 million, or 13.8% of our gross written premiums. There were no other program administrators which distributed greater than 10% of our gross written premiums for the nine months ended September 30, 2023.
Our largest program administrator, Arrowhead General Insurance Agency, distributes our Value Select Residential Earthquake program, which represents the majority of our Residential Earthquake premium and is administered through a mutually exclusive agreement with for the states of California, Oregon and Washington.
42 unchanged sentences
Our failure to evaluate and pay claims accurately and timely could lead to regulatory and administrative actions or material litigation, undermine our reputation in the marketplace and materially and adversely affect our business, financial condition, results of operations, and prospects.
−Removed: In addition, if we do not manage our TPAs effectively, or if our TPAs are unable to effectively handle our volume of claims, our ability to handle an increasing workload could be adversely affected.
+Added: In addition, if we do not manage our TPAs effectively, or if our TPAs are unable to effectively handle our volume of claims, our ability to handle our claims workload could be adversely affected.
In addition to potentially requiring that growth be slowed in the affected markets, our business could suffer from decreased quality of claims work which, in turn, could adversely affect our results of operations.
52 unchanged sentences
These same factors affect our ability to generate revenue and profits.
−Removed: In an economic downturn that is characterized by higher unemployment, declining spending, and reduced corporate revenue, the demand for insurance products is generally adversely affected, which directly affects our premium levels and profitability.
+Added: In an economic downturn that is characterized by higher unemployment, declining spending, and reduced corporate revenue, the demand for insurance products could be adversely affected, which directly affects our premium levels and profitability.
Negative economic factors may also affect our ability to receive the appropriate rate for the risk we insure with our policyholders and may adversely affect the number of policies we can write, and our opportunities to underwrite profitable business.
20 unchanged sentences
These securities are carried on the balance sheet at fair market value and are subject to potential losses and declines in market value based on the performance of equity markets.
−Removed: Our equity invested assets totaled $41.4 million as of June 30, 2023.
+Added: Our equity invested assets totaled $39.8 million as of September 30, 2023.
Risks for all types of securities are managed through the application of our investment policy, which establishes investment parameters that include but are not limited to, maximum percentages of investment in certain types of securities and minimum levels of credit quality, which we believe are within applicable guidelines established by the National Association of Insurance Commissioners (“NAIC”), the Oregon Division of Financial Regulation and the California and Arizona Departments of Insurance.
4 unchanged sentences
In addition, declines in fixed income yields would result in decreases in net investment income from future investment activity, including re-investments.
+Added: We may, in certain circumstances, invest immaterial amounts in private companies we believe provide strategic opportunities.
+Added: These types of investments are typically illiquid, and we have limited ability to take actions that protect or increase the value of this type of investment. Net losses from this investment or impairment of this investment may negatively impact our operating results.
We could be forced to sell investments to meet our liquidity requirements.
83 unchanged sentences
The European Union adopted the Economic Substance Act 2018 and the Economic Substance Regulations 2018 (together, the “ES Requirements”).
−Removed: As an insurance company, our Bermuda subsidiary conducts a relevant activity and will be subject to the ES Requirements.
−Removed: As a result, our Bermuda subsidiary may be required to change or increase our business operations in Bermuda to meet the new requirements.
−Removed: Compliance with the ES Requirements is required with effect from July 1, 2019.
+Added: As an insurance company, our Bermuda subsidiary conducts a relevant activity and is subject to the ES Requirements.
+Added: As a result, our Bermuda subsidiary may be required to change or increase our business operations in Bermuda to meet these requirements. 
+Added: Laulima is subject to regulation from the Hawaii Department of Commerce and Consumer Affairs, Hawaii Insurance Division which requires that Laulima comply with Hawaii Statutes and Insurance Code. If Laulima is unable to comply with the applicable insurance regulations in Hawaii, it may be subject to significant fines and penalties and its working relationship with the Hawaii Department of Commerce and Consumer Affairs, Hawaii Insurance Division may be impaired.
Unexpected changes in the interpretation of our coverage or provisions, including loss limitations and exclusions, in our policies could have a material adverse effect on our financial condition and results of operations.
16 unchanged sentences
Premium grace periods could significantly increase our expenses while decreasing our short-term revenues which would adversely impact our liquidity.
−Removed: Additionally, in response to the growing threat of cyber-attacks in the insurance industry, certain jurisdictions have begun to consider new cybersecurity measures, including the adoption of cybersecurity regulations which, among other things, would require insurance companies to establish and maintain a cybersecurity program and implement and maintain cybersecurity policies and procedures. On October 24, 2017, the NAIC adopted its Insurance Data Security Model Law, intended to serve as model legislation for states to enact in order to govern cybersecurity and data protection practices of insurers, insurance agents, and other licensed entities registered under state insurance laws.
−Removed: As we expand our insurance operations, we expect to be impacted by this legislation and be required to file compliance certifications pertaining to this legislation.
+Added: Additionally, in response to the growing threat of cyber-attacks in the insurance industry, new cybersecurity regulations have been adopted, which, among other things, require insurance companies to establish and maintain a cybersecurity program and implement and maintain cybersecurity policies and procedures. On October 24, 2017, the NAIC adopted its Insurance Data Security Model Law, intended to serve as model legislation for states to enact in order to govern cybersecurity and data protection practices of insurers, insurance agents, and other licensed entities registered under state insurance laws.
+Added: We are required to file compliance certifications pertaining to this legislation.
+Added: We will also be required by the SEC to make recurring cyber security disclosures in our annual reports and publicly disclose any material cybersecurity incidents beginning in December 2023.
We routinely transmit and receive personal, confidential and proprietary data and information by electronic means and are subject to numerous data privacy laws and regulations enacted in the jurisdictions in which we do business, including recent laws in California whose impact on our business are difficult to predict.
8 unchanged sentences
Some states permit member insurers to recover assessments paid through full or partial premium tax offset or in limited circumstances by surcharging policyholders.
−Removed: PSIC is licensed to conduct insurance operations on an admitted basis in 37 states.
+Added: PSIC is licensed to conduct insurance operations on an admitted basis in 40 states.
As PSIC grows, its share of any assessments in each state in which it underwrites business on an admitted basis may increase.
−Removed: PSIC paid assessments of and $0.6 million in 2022 and $0.2 million for the six months ended June 30, 2023.
+Added: PSIC paid assessments of and $0.6 million in 2022 and $0.2 million for the nine months ended September 30, 2023.
We cannot predict with certainty the amount of future assessments, because they depend on factors outside our control, such as insolvencies of other insurance companies as well as the occurrence of significant catastrophes.
176 unchanged sentences
Share repurchases
−Removed: Our purchases of our equity securities in the second quarter of fiscal year 2023 were:
+Added: Our purchases of our equity securities in the third quarter of fiscal year 2023 were:
Total Number of
Total Number of Shares Purchased as
−Removed: Approximate Dollar Value of Shares that May
+Added: Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Shares Purchased
2 unchanged sentences
($ in thousands)
−Removed: April 1, 2023 to April 30, 2023
−Removed: May 1, 2023 to May 31, 2023
−Removed: June 1, 2023 to June 30, 2023
+Added: July 1, 2023 to July 31, 2023
+Added: August 1, 2023 to August 31, 2023
+Added: September 1, 2023 to September 30, 2023
(1) Average Price Paid Per Share excludes cash paid for commissions.
5 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.