7 unchanged sentences
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;
−Removed: Our business is concentrated in California and Texas and we are exposed more significantly to California and Texas loss activity and regulatory environments;
+Added: Our business is concentrated in California and we are exposed more significantly to California loss activity and regulatory environments;
We rely on a select group of brokers and program administrators, and such relationships may not continue;
12 unchanged sentences
Risks Related to Our Business and Industry
−Removed: Claims arising from unpredictable and severe catastrophe events, including those caused by global climate change, could reduce or eliminate our earnings and stockholders ’
−Removed: equity and limit our ability to underwrite new insurance policies.
+Added: Claims arising from unpredictable and severe catastrophe events, including those caused by global climate change, could reduce or eliminate our earnings and stockholders ’ equity and limit our ability to underwrite new insurance policies.
Our insurance operations expose us to claims arising from unpredictable catastrophe events, such as earthquakes, hurricanes, windstorms, floods and other severe events.
−Removed: We have experienced significant losses from catastrophe events multiple times in our history and we may incur significant losses from future catastrophe events.
+Added: We have incurred significant losses from catastrophe events multiple times in our history and we may incur significant losses from future catastrophe events.
The actual occurrence, frequency and magnitude of such events are uncertain.
9 unchanged sentences
Increases in the replacement cost of insured property due to higher material and labor costs, increases in concentrations of insured property, the effects of inflation, and changes in cyclical weather patterns may increase the severity of claims from catastrophe events in the future.
−Removed: Claims from catastrophe events could reduce our earnings and cause substantial volatility in our results of operations for any fiscal quarter or year, which could materially adversely affect our financial condition, possibly to the extent of eliminating our total stockholders’
+Added: Claims from catastrophe events could reduce our earnings and cause substantial volatility in our results of operations for any fiscal quarter or year, which could materially adversely affect our financial condition, possibly to the extent of eliminating our total stockholders’ equity.
Our ability to underwrite new insurance policies could also be materially adversely impacted as a result of corresponding reductions in our capital.
In addition, a natural disaster could materially impact the financial condition of our policyholders, resulting in loss of premiums.
−Removed: Our reinsurance coverage currently exhausts at $2.68 billion for earthquake events, $900 million for Hawaii hurricane events, and $100 million for continental U.S.
+Added: Our reinsurance coverage currently exhausts at $2.71 billion for earthquake events, $800 million for Hawaii hurricane events, and $100 million for continental U.S.
hurricane events, with coverage in excess of our estimated peak zone 1 in 250 year PML event and in excess of our A.M.
−Removed: Best threshold. Our catastrophe event retention is currently $17.5 million for all perils.
+Added: Best threshold.
+Added: Our catastrophe event retention is currently $17.5 million for all perils.
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 retain primary liability.
−Removed: Our earthquake policies do not provide coverage for fire damage arising from an earthquake.
+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.
+Added: Our earthquake policies do not provide coverage for fire damage arising from an earthquake.
Catastrophe events which cause our reinsurers to incur losses may increase the cost of reinsurance in future periods or make it more difficult to obtain reinsurance on commercially acceptable terms.
−Removed: While we believe our risk transfer program reduces exposure to catastrophe losses and earnings volatility, one or more severe catastrophe events could result in claims that exceed the limits of our reinsurance coverage. 
+Added: While we believe our risk transfer program reduces exposure to catastrophe losses and earnings volatility, one or more severe catastrophe events could result in claims that exceed the limits of our reinsurance coverage.
Our reinsurers may not pay claims on a timely basis, or at all, which may materially adversely affect our business, financial condition, and results of operations.
6 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 September 30, 2023, we had $280.2 million of aggregate reinsurance recoverables. 
−Removed: 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.
+Added: As of March 31, 2024, we had $320.6 million of aggregate reinsurance recoverables.
+Added: Our loss reserves are established based on estimates which may be inadequate to cover actual incurred losses and could have a material adverse impact on our results of operations and financial condition.
The reserve for losses and loss adjustment expenses represents our estimated ultimate cost of all reported and unreported losses and loss adjustment expenses incurred and unpaid at the balance sheet date.
5 unchanged sentences
We are subject to uncertainties which impact the adequacy of our reserves.
−Removed: For example, when we write “occurrence”
−Removed: policies, we are obligated to pay covered claims, up to the contractually agreed amount, for any covered loss that occurs while the policy is in force.
+Added: For example, when we write “occurrence” policies, we are obligated to pay covered claims, up to the contractually agreed amount, for any covered loss that occurs while the policy is in force.
Accordingly, claims may arise in years after a policy has lapsed.
−Removed: In addition, catastrophe events often involve a significant number of claims and ultimate cost of settling all claims is inherently difficult to predict upon the event’s occurrence.
+Added: In addition, catastrophe events often involve a significant number of claims and ultimate cost of settling all claims is inherently difficult to predict upon the event’s occurrence.
Our reserves are driven by several important factors, including litigation and regulatory trends, legislative activity, climate change, social and economic patterns, and claims inflation assumptions.
−Removed: Our reserve estimates reflect current inflation in legal claims’
−Removed: settlements and assume we will not be subject to losses from significant new legal liability theories.
+Added: Our reserve estimates reflect current inflation in legal claims’ settlements and assume we will not be subject to losses from significant new legal liability theories.
Our reserve estimates assume that there will not be significant changes in the regulatory and legislative environment.
1 unchanged sentence
In the event of significant new regulation or legislation, we will attempt to quantify its impact on our business, but no assurance can be given that our attempt to quantify such inputs will be accurate or successful.
−Removed: If our loss reserves should prove to be inadequate, we will be required to increase our reserves resulting in a reduction in our net income and stockholders’
−Removed: equity in the period where the inadequacy is identified.
+Added: If our loss reserves should prove to be inadequate, we will be required to increase our reserves resulting in a reduction in our net income and stockholders’ equity in the period where the inadequacy is identified.
Material increases to our reserves may impact our liquidity, our financial rating, and our ability to comply with debt covenants.
−Removed: For further information on our loss reserving methodology, see “Management’s Discussion and Analysis-Critical Accounting Policies and Estimates- Reserve for Losses and Loss Adjustment Expenses”
−Removed: in our Annual Report on Form 10-K.
+Added: For further information on our loss reserving methodology, see “Management’s Discussion and Analysis-Critical Accounting Policies and Estimates- Reserve for Losses and Loss Adjustment Expenses” in our 2023 Annual Report on Form 10-K.
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.
1 unchanged sentence
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 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.
+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.
5 unchanged sentences
Hard market cycles may increase our cost of reinsurance, force us to increase our loss retention, or limit the amount of reinsurance we are able to purchase, all of which would have an adverse impact on our business and results of operations.
−Removed: In addition to reinsurance purchased from traditional reinsurers, the Company has historically incorporated collateralized protection from the insurance linked securities market via catastrophe bonds.
−Removed: During the first quarter of 2021, the Company closed a $400 million 144A catastrophe bond which became effective June 1, 2021.
+Added: In addition to reinsurance purchased from traditional reinsurers, we have historically incorporated collateralized protection from the insurance linked securities market via catastrophe bonds.
+Added: During the first quarter of 2021, we closed a $400 million 144A catastrophe bond which became effective June 1, 2021.
The catastrophe bond was completed through Torrey Pines Re Pte.
−Removed: (“Torrey Pines Re Pte.”).
(“Torrey Pines Re Pte.”).
+Added: Torrey Pines Re Pte.
is a special purpose reinsurance vehicle incorporated in Singapore that provides Palomar with indemnity-based reinsurance covering earthquake events through June 1, 2024.
−Removed: During the second quarter of 2022, the Company closed a $275 million 144A catastrophe bond which became effective June 1, 2022.
−Removed: This catastrophe bond was completed through Torrey Pines Re Ltd., a Bermuda-domiciled special purpose insurer that provides indemnity-based reinsurance covering earthquake events through June 1, 2025. During the second quarter of 2023, the Company also closed a $200 million 144A catastrophe bond which became effective June 1, 2023.
+Added: During the second quarter of 2022, we closed a $275 million 144A catastrophe bond which became effective June 1, 2022.
+Added: This catastrophe bond was completed through Torrey Pines Re Ltd., a Bermuda-domiciled special purpose insurer that provides indemnity-based reinsurance covering earthquake events through June 1, 2025.
+Added: During the second quarter of 2023, we also closed a $200 million 144A catastrophe bond which became effective June 1, 2023.
This catastrophe bond was also completed through Torrey Pines Re Ltd and provides indemnity-based reinsurance covering earthquake events through June 1, 2026.
2 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. These outcomes could adversely affect our business, financial condition, and results of operations.
−Removed: 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.
+Added: If we are unwilling to bear an increase in loss exposure, we may have to reduce our written premiums.
+Added: These outcomes could adversely affect our business, financial condition, and results of operations.
+Added: 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.
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.
11 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 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.
Changes in these estimates or assumptions or the use of inaccurate third-party data could cause our actual losses to be materially higher than our current expectation of losses generated by modeled catastrophe scenarios, which in turn could materially adversely affect our business, financial condition, and results of operations.
−Removed: We run many model simulations to understand the impact of these assumptions on a catastrophe’s loss potential.
+Added: We run many model simulations to understand the impact of these assumptions on a catastrophe’s loss potential.
Furthermore, there are risks associated with catastrophe events, which are either poorly represented or not represented at all by catastrophe models.
3 unchanged sentences
The models may not accurately reflect the true frequency or severity of events;
−Removed: The models may not accurately reflect a risk’s vulnerability or susceptibility to damage for a given event characteristic;
+Added: The models may not accurately reflect a risk’s vulnerability or susceptibility to damage for a given event characteristic;
The models may not account for unusual or unprecedented catastrophe events;
7 unchanged sentences
In setting its ratings, A.M.
−Removed: Best performs quantitative and qualitative analysis of a company’s balance sheet strength, operating performance and business profile.
−Removed: Best financial strength ratings range from “A++”
−Removed: (Superior) to “F”
−Removed: for insurance companies that have been publicly placed in liquidation.
−Removed: As of September 30, 2023, A.M.
−Removed: Best has assigned a financial strength rating of “A−”
−Removed: (Excellent) (Outlook Positive) to our insurance company subsidiaries, Palomar Specialty Insurance Company (“PSIC”) and Palomar Excess and Surplus Insurance Company (“PESIC”). 
−Removed: 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.
−Removed: Best’s analysis includes comparisons to peers and industry standards as well as assessments of operating plans, philosophy and management.
+Added: Best performs quantitative and qualitative analysis of a company’s balance sheet strength, operating performance and business profile.
+Added: Best financial strength ratings range from “A++” (Superior) to “F” for insurance companies that have been publicly placed in liquidation.
+Added: As of March 31, 2024, A.M.
+Added: Best has assigned a financial strength rating of “A−” (Excellent) (Outlook Positive) to our insurance company subsidiaries, Palomar Specialty Insurance Company (“PSIC”) and Palomar Excess and Surplus Insurance Company (“PESIC”).
+Added: 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.
+Added: Best’s analysis includes comparisons to peers and industry standards as well as assessments of operating plans, philosophy and management.
Best periodically reviews our financial strength rating and may revise it downward or revoke it at A.M.
−Removed: Best’s discretion based primarily on its analyses of our balance sheet strength (including capital adequacy and loss adjustment expense reserve adequacy), operating performance and business profile.
+Added: Best’s discretion based primarily on its analyses of our balance sheet strength (including capital adequacy and loss adjustment expense reserve adequacy), operating performance and business profile.
Factors that could affect such analyses include, but are not limited to:
If we change our business practices from our organizational business plan in a manner that no longer supports A.M.
−Removed: Best’s rating;
+Added: Best’s rating;
If unfavorable financial, regulatory or market trends affect us, including excess market capacity;
10 unchanged sentences
Causing us to be out of compliance with the financial covenants in our credit agreement.
−Removed: In addition, in view of the earnings and capital pressures experienced by many financial institutions, including insurance companies, it is possible that rating organizations will heighten the level of scrutiny that they apply to such institutions, will increase the frequency and scope of their credit reviews, will request additional information from the companies that they rate or will increase the capital and other requirements employed in the rating organizations’
−Removed: models for maintenance of certain ratings levels.
+Added: In addition, in view of the earnings and capital pressures experienced by many financial institutions, including insurance companies, it is possible that rating organizations will heighten the level of scrutiny that they apply to such institutions, will increase the frequency and scope of their credit reviews, will request additional information from the companies that they rate or will increase the capital and other requirements employed in the rating organizations’ models for maintenance of certain ratings levels.
If our credit rating were to be downgraded, or general market conditions were to ascribe higher risk to our rating levels, our access to capital markets and the cost of any equity or debt financing will be negatively impacted.
1 unchanged sentence
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.
−Removed: 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.
+Added: 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.
+Added: The extent of the impact of a 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.
1 unchanged sentence
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.
−Removed: The macroeconomic effects of a global health crisis may persist for an indefinite period, even after the it has subsided.
+Added: The macroeconomic effects of a global health crisis may persist for an indefinite period, even after it has subsided.
We cannot anticipate all the ways in which global health crises could adversely impact our business in the future.
−Removed: 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 52% and 8% for the nine months ended September 30, 2023.
−Removed: 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.
−Removed: Any single, major catastrophe event, series of events or other condition causing significant losses in California or Texas could materially adversely affect our business, financial condition and results of operations.
−Removed: Additionally, unfavorable business, economic or regulatory conditions in these states may result in a significant reduction of our premiums or increase our loss exposure.
−Removed: Changes in California or Texas political climates could result in new or changed legislation affecting the property and casualty insurance industry in general which could have a negative impact on our business.
+Added: Our business is concentrated in California and, as a result, we are exposed more significantly to California loss activity and regulatory environments.
+Added: Our policyholders and insurance risks are currently concentrated in California, which generated 53% of our gross written premiums for the year ended December 31, 2023 and 43% for the three months ended March 31, 2024.
+Added: 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 with a lower concentration of their premiums in California.
+Added: Any single, major catastrophe event, series of events or other condition causing significant losses in California could materially adversely affect our business, financial condition and results of operations.
+Added: Additionally, unfavorable business, economic or regulatory conditions in California may result in a significant reduction of our premiums or increase our loss exposure.
+Added: Changes to insurance-related laws or regulations in California could also have a negative impact on our business.
We could be adversely affected by the loss of one or more key executives or by an inability to attract and retain qualified personnel.
We depend on our ability to attract and retain experienced personnel and seasoned key executives who are knowledgeable about our business.
−Removed: The pool of talent from which we actively recruit is limited and may fluctuate based on market dynamics specific to our industry and independent of overall economic conditions.
+Added: The pool of talent from which we recruit is limited and may fluctuate based on market dynamics specific to our industry and independent of overall economic conditions.
As such, higher demand for employees having the desired skills and expertise could lead to increased compensation expectations for existing and prospective personnel, making it difficult for us to retain and recruit key personnel and maintain labor costs at desired levels.
12 unchanged sentences
There were no other program administrators which distributed greater than 10% of our gross written premiums for the year ended December 31, 2023.
−Removed: For the nine months ended September 30, 2023, our largest program administrator distributed $262.1  
−Removed: 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.
−Removed: 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.
−Removed: The agreement remains in effect until terminated by either party upon 180 days’
−Removed: prior written notice to the other party for cause.
+Added: For the three months ended March 31, 2024, our largest program administrator distributed $86.7 million or 23.6% of our gross written premiums and our second largest program administrator distributed $47.5 million, or 12.9% of our gross written premiums.
+Added: There were no other program administrators which distributed greater than 10% of our gross written premiums for the three months ended March 31, 2024.
+Added: 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 for the states of California, Oregon and Washington.
+Added: The agreement remains in effect until terminated by either party upon 180 days’ prior written notice to the other party for cause.
The termination of a relationship with one or more significant brokers or program administrators could result in lower gross written premiums and could have a material adverse effect on our results of operations or business prospects.
−Removed: Because we provide our program administrators with specific quoting and binding authority, if any of them fail to comply with pre ‑
−Removed: established guidelines, our results of operations could be adversely affected.
+Added: Because we provide our program administrators with specific quoting and binding authority, if any of them fail to comply with pre ‑ established guidelines, our results of operations could be adversely affected.
We market and distribute certain of our insurance products through program administrators that have limited quoting and binding authority and that in turn sell our insurance products to insureds through retail agents and wholesale brokers.
10 unchanged sentences
Additionally, the loss or disruption of business from our agents and brokers or the failure or inability of these agents and brokers to successfully market our insurance products could have a material adverse effect on our business, financial condition, and results of operations.
−Removed: Because the possibility of these events occurring depends in large part upon the financial condition and internal operations of our brokers, we regularly meet and communicate with our brokers, monitor broker behavior, and review broker financial information on an as‑needed basis.
+Added: Because the possibility of these events occurring depends in large part upon the financial condition and internal operations of our brokers, we regularly meet and communicate with our brokers, monitor broker behavior, and review broker financial information on an as‑needed basis.
If we are unable to collect premiums from our brokers in the future, our underwriting profits may decline, and our financial condition and results of operations could be materially and adversely affected.
2 unchanged sentences
Some of these competitors also have longer operating history and more market recognition than we do in certain lines of business.
−Removed: In addition, we compete against state or other publicly managed enterprises including the California Earthquake Authority (“CEA”), the National Flood Insurance Program, and the Texas Wind Insurance Association.
+Added: In addition, we compete against state or other publicly managed enterprises including the California Earthquake Authority (“CEA”), the National Flood Insurance Program, and the Texas Wind Insurance Association.
If the CEA decided to provide coverage to non-CEA member carriers or lessened the capital requirements for membership, we would face additional competition in our markets, and our operating results could be adversely affected.
9 unchanged sentences
If actual renewals of our existing policies do not meet expectations, our written premium in future years and our future results of operations could be materially adversely affected.
−Removed: Most of our insurance policies are written for a one‑year term.
−Removed: In our financial forecasting process, we make assumptions about the rates of renewal of our prior year’s policies.
+Added: Most of our insurance policies are written for a one‑year term.
+Added: In our financial forecasting process, we make assumptions about the rates of renewal of our prior year’s policies.
The insurance and reinsurance industries have historically been cyclical businesses with intense competition, often based on price.
3 unchanged sentences
We must accurately and timely evaluate and pay claims that are made under our policies.
−Removed: Many factors affect our ability to pay claims accurately and timely, including the training and experience of our claims representatives, including our third-party claims administrators (“TPAs”), the effectiveness of our management, and our ability to develop or select and implement appropriate procedures and systems to support our claims functions and other factors.
+Added: Many factors affect our ability to pay claims accurately and timely, including the training and experience of our claims representatives, including our third-party claims administrators (“TPAs”), the effectiveness of our management, our ability to develop or select and implement appropriate procedures and systems to support our claims functions, and other factors.
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.
14 unchanged sentences
Employees may, however, take such risks regardless of the structure of our compensation programs and practices.
−Removed: Similarly, although we employ controls and procedures designed to monitor employees’
−Removed: business decisions and prevent them from taking excessive risks, these controls and procedures may not be effective.
+Added: Similarly, although we employ controls and procedures designed to monitor employees’ business decisions and prevent them from taking excessive risks, these controls and procedures may not be effective.
If our employees take excessive risks, the impact of those risks could have a material adverse effect on our financial condition and business operations.
2 unchanged sentences
Many factors will affect the amount and timing of our capital needs, including our growth rate and profitability, our claims experience, the availability of reinsurance, market disruptions, and other unforeseeable developments.
−Removed: If we need to raise additional capital, equity or debt financing may not be available at all or may be available only on terms that are not favorable to us.
−Removed: In the case of equity financings, dilution to our stockholders could result.
−Removed: In the case of debt financings, we would be subject to covenants that restrict our ability to freely operate our business.
+Added: If we need to raise additional capital, equity or debt financing may not be available at all or only available on unfavorable terms.
+Added: Equity financings would result in dilution to our stockholders.
+Added: Debt financings could subject us to covenants that restrict our ability to freely operate our business.
If we cannot obtain adequate capital on favorable terms or at all, we may not have sufficient funds to implement our operating plans and our business, financial condition or results of operations could be materially adversely affected.
4 unchanged sentences
The failure to manage our growth effectively could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Our operating results have in the past varied from quarter to quarter and may not be indicative of our long ‑
−Removed: term prospects.
+Added: Our operating results have in the past varied from quarter to quarter and may not be indicative of our long ‑ term prospects.
Our operating results are subject to fluctuation and have historically varied from quarter to quarter.
−Removed: We expect our quarterly results to continue to fluctuate in the future due to a number of factors, including the general economic conditions in the markets where we operate, the frequency of occurrence and severity of catastrophe or other insured events, fluctuating interest rates, claims exceeding our loss reserves, competition in our industry, deviations from expected premium retention rates of our existing policies, volatility in investment performance and gains and losses on our equity securities, and the cost of reinsurance coverage.
−Removed: In addition, the insurance and reinsurance business historically has been a cyclical industry characterized by periods of intense price competition due to excessive underwriting capacity (soft market cycle) as well as periods when shortages of capacity increase premium levels (hard market cycle).
+Added: We expect our quarterly results to continue to fluctuate in the future due to a number of factors, including the general economic conditions in the markets where we operate, the frequency of occurrence and severity of catastrophe or other insured events, fluctuating interest rates, claims exceeding our loss reserves, competition in our industry, deviations from expected premium retention rates of our existing policies, volatility in investment performance, including gains and losses on our equity securities, and the cost of reinsurance coverage.
+Added: In addition, the insurance and reinsurance business historically has been a cyclical industry characterized by periods of intense price competition due to excess underwriting capacity (soft market cycle) as well as periods when shortages of capacity increase premium levels (hard market cycle).
We expect our business and results of operations to be continuously impacted by these market cycles.
−Removed: We seek to underwrite products and make investments to achieve favorable returns on tangible stockholders’
−Removed: equity over the long term.
−Removed: Our opportunistic nature and focus on long‑term growth in tangible equity may result in fluctuations in gross written premiums, reinsurance expenses, loss expenses, and other underwriting expenses from period to period as we concentrate on underwriting contracts that we believe will generate better long‑term, rather than short‑term, results.
−Removed: Accordingly, our short‑term results of operations may not be indicative of our long‑term prospects.
+Added: We seek to underwrite products and make investments to achieve favorable returns on tangible stockholders’ equity over the long term.
+Added: Our opportunistic nature and focus on long‑term growth in tangible equity may result in fluctuations in gross written premiums, reinsurance expenses, loss expenses, and other underwriting expenses from period to period as we concentrate on underwriting contracts that we believe will generate better long‑term, rather than short‑term, results.
+Added: Accordingly, our short‑term results of operations may not be indicative of our long‑term prospects.
Our Credit Agreement contains restrictions and covenants that limit our flexibility in operating our business and any debt borrowed under our Credit Agreement exposes us to additional risk and may adversely affect our financial condition and future financial results.
−Removed: In December 2021, we entered into a Credit Agreement (the “Credit Agreement”) with certain lenders which provides a revolving credit facility of up to $100.0 million.
−Removed: Borrowings under the Credit Agreement may impact our business and financial condition by:
+Added: In December 2021, we entered into a Credit Agreement (the “Credit Agreement”) with certain lenders which provides a revolving credit facility of up to $100.0 million.
+Added: Borrowings under the Credit Agreement may impact our business and financial condition by:
Requiring the dedication of a portion of our expected cash flows from operations to service our debt, thereby reducing the amount of expected cash flows available for other purposes, including investing, and paying claims and operating expenses and;
2 unchanged sentences
The financial covenants in the Credit agreement require the Company not to exceed a maximum leverage ratio and maintain a minimum net worth at the end of each quarter.
−Removed: The Company’s insurance subsidiaries are also required to maintain a minimum Risk Based Capital Ratio at the end of each year and must always maintain a minimum AM Best Financial Strength rating.
+Added: The Company’s insurance subsidiaries are also required to maintain a minimum Risk Based Capital Ratio at the end of each year and must always maintain a minimum AM Best Financial Strength rating.
All of these covenants and restrictions impact how we operate our business and may limit our flexibility in planning for, or reacting to, changes in our business and industry.
5 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 could be 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.
2 unchanged sentences
These outcomes would reduce our underwriting profit to the extent these factors are not reflected in the rates we charge.
−Removed: We underwrite a significant portion of our insurance in California and Texas.
−Removed: An economic downturn which particularly impacts either state could have an adverse effect on our financial condition and results of operations.
+Added: We underwrite a significant portion of our insurance in California.
+Added: An economic downturn which particularly impacts California could have an adverse effect on our financial condition and results of operations.
Performance of our investment portfolio is subject to a variety of investment risks that may adversely affect our financial results.
4 unchanged sentences
Future increases in interest rates could cause the values of our fixed maturity securities portfolios to decline, with the magnitude of the decline depending on the duration of securities included in our portfolio and the amount by which interest rates increase.
−Removed: Interest rate fluctuations can also impact the business and results of operations of the companies that issue fixed maturity securities and may cause a decline in fair value of their securities. Some fixed maturity securities have call or prepayment options, which create reinvestment risk in declining rate environments.
−Removed: Other fixed maturity securities, such as mortgage‑backed and asset‑backed securities, carry prepayment risk or, in a rising interest rate environment, may not prepay as quickly as expected.
−Removed: The value of our investment portfolio is subject to the risk that certain investments may default or become impaired due to deterioration in the financial condition of one or more issuers of the securities we hold, or due to deterioration in the financial condition of an insurer that guarantees an issuer’s payments on such investments.
+Added: Interest rate fluctuations can also impact the business and results of operations of the companies that issue fixed maturity securities and may cause a decline in fair value of their securities.
+Added: Some fixed maturity securities have call or prepayment options, which create reinvestment risk in declining rate environments.
+Added: Other fixed maturity securities, such as mortgage‑backed and asset‑backed securities, carry prepayment risk or, in a rising interest rate environment, may not prepay as quickly as expected.
+Added: The value of our investment portfolio is subject to the risk that certain investments may default or become impaired due to deterioration in the financial condition of one or more issuers of the securities we hold, or due to deterioration in the financial condition of an insurer that guarantees an issuer’s payments on such investments.
Such deteriorations may be caused or magnified by interest rate fluctuations.
2 unchanged sentences
Our investment portfolio is subject to increased valuation uncertainties when investment markets are illiquid.
−Removed: The valuation of investments is more subjective when markets are illiquid, thereby increasing the risk that the estimated fair value (i.e., the carrying amount) of the securities we hold in our portfolio does not reflect prices at which actual transactions would occur.
+Added: The valuation of investments is more subjective when markets are illiquid, thereby increasing the risk that the estimated fair value (i.e., the carrying amount) of the securities we hold in our portfolio does not reflect prices at which actual transactions would occur.
We also invest in marketable equity securities.
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 $39.8 million as of September 30, 2023.
−Removed: 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.
+Added: Our equity invested assets totaled $37.2 million as of March 31, 2024.
+Added: 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.
Although we seek to preserve our capital, we cannot be certain that our investment objectives will be achieved, and results may vary substantially over time.
In addition, although we seek to employ investment strategies that are not correlated with our insurance and reinsurance exposures, losses in our investment portfolio may occur at the same time as underwriting losses and, therefore, exacerbate the adverse effect of the losses on us.
−Removed: Our investment portfolio could also be adversely impacted by ratings downgrades, increased bankruptcies and credit spread widenings caused by economic downturns or other events.
+Added: Our investment portfolio could also be adversely impacted by ratings downgrades, increased bankruptcies and credit spread widenings caused by economic downturns or other events.
Severe economic downturns could cause impairments in our fixed income portfolio.
−Removed: In addition, declines in fixed income yields would result in decreases in net investment income from future investment activity, including re-investments.
+Added: In addition, declines in fixed income yields would result in decreases in net investment income from future investment activity, including re-investments.
We may, in certain circumstances, invest immaterial amounts in private companies we believe provide strategic opportunities.
−Removed: 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.
+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.
+Added: Net losses from these investments or impairment of these investments may negatively impact our operating results.
We could be forced to sell investments to meet our liquidity requirements.
8 unchanged sentences
We rely on these systems to interact with brokers and insureds, to underwrite business, to prepare policies and process premiums, to perform actuarial and other modeling functions, to process claims and make claims payments, and to prepare internal and external financial statements and information.
−Removed: Some of these systems may include or rely on third‑party systems not located on our premises or under our control.
+Added: Some of these systems may include or rely on third‑party systems not located on our premises or under our control.
Events such as natural catastrophes, pandemics, cyber-attacks, terrorist attacks, industrial accidents or computer viruses may cause our systems to fail or be inaccessible for extended periods of time.
While we have implemented business contingency plans and other reasonable plans to protect our systems, sustained or repeated system failures or service denials could severely limit our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or otherwise operate in the ordinary course of business.
−Removed: A significant portion of our employees work remotely and outside of our primary offices on a regular basis.
+Added: A portion of our employees work remotely and outside of our primary offices on a regular basis.
We believe remote work increases the need for our information technology and telecommunications systems to work properly and creates additional operational risk and difficulty should these systems fail.
1 unchanged sentence
Our operations depend on the reliable and secure processing, storage, and transmission of confidential and other data and information in our computer systems and networks.
−Removed: Computer viruses, hackers, employee misconduct, and other external hazards could expose our systems to security breaches, cyber‑attacks or other disruptions.
+Added: Computer viruses, hackers, employee misconduct, and other external hazards could expose our systems to security breaches, cyber‑attacks or other disruptions.
Cyberthreats are constantly evolving and becoming increasingly sophisticated and complex, making it increasingly difficult to detect and successfully defend against them.
−Removed:  In addition, cyber-attackers (which may include individuals or groups, as well as sophisticated groups such as nation-state and state-sponsored attackers, which can deploy significant resources to plan and carry out exploits) also develop and deploy viruses, worms, credential stuffing attack tools and other malicious software programs, some of which may be specifically designed to attack our products, information systems or networks.
+Added: In addition, cyber-attackers (which may include individuals or groups, as well as sophisticated groups such as nation-state and state-sponsored attackers, which can deploy significant resources to plan and carry out exploits) also develop and deploy viruses, worms, credential stuffing attack tools and other malicious software programs, some of which may be specifically designed to attack our products, information systems or networks.
Outside parties have in the past and may in the future attempt to fraudulently induce our employees or users of our products or services to disclose sensitive, personal or confidential information via illegal electronic spamming, phishing or other tactics.
While we have implemented security measures and employee training designed to protect against breaches of security and other interference with our systems and networks, our systems and networks may be, and at times are, subject to breaches or interference.
−Removed: Any such event may result in operational disruptions as well as unauthorized access to or the disclosure or loss of our proprietary information or our customers’
−Removed: data and information, which in turn may result in legal claims, regulatory scrutiny and liability, reputational damage, the incurrence of costs to eliminate or mitigate further exposure, the loss of customers or affiliated advisors, reputational harm or other damage to our business.
+Added: Any such event may result in operational disruptions as well as unauthorized access to or the disclosure or loss of our proprietary information or our customers’ data and information, which in turn may result in legal claims, regulatory scrutiny and liability, reputational damage, the incurrence of costs to eliminate or mitigate further exposure, the loss of customers or affiliated advisors, reputational harm or other damage to our business.
While we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses.
1 unchanged sentence
Even if we successfully protect our technology infrastructure and the confidentiality of sensitive data, we could suffer harm to our business and reputation if attempted security breaches are publicized.
−Removed: We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities in our systems, data thefts, physical system or network break‑ins or inappropriate access, or other developments will not compromise or breach the technology or other security measures protecting the networks and systems used in connection with our business.
−Removed: We employ third ‑
−Removed: party licensed software for use in our business, and the inability to maintain these licenses, problems with the software we license, or increases to the cost of software licenses could adversely affect our business.
−Removed: Multiple areas of our business rely on certain third‑party software obtained under licenses from other companies.
−Removed: We anticipate that we will continue to rely on such third‑party software in the future.
+Added: We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities in our systems, data thefts, physical system or network break‑ins or inappropriate access, or other developments will not compromise or breach the technology or other security measures protecting the networks and systems used in connection with our business.
+Added: We employ third ‑ party licensed software for use in our business, and the inability to maintain these licenses, problems with the software we license, or increases to the cost of software licenses could adversely affect our business.
+Added: Multiple areas of our business rely on certain third‑party software obtained under licenses from other companies.
+Added: We anticipate that we will continue to rely on such third‑party software in the future.
Unforeseen issues may arise in third-party software platforms which may have an adverse impact on our operations.
−Removed: Integration of new third‑party software or modifications to our existing third-party software may require substantial investment of our time and resources.
+Added: Integration of new third‑party software or modifications to our existing third-party software may require substantial investment of our time and resources.
The inability to integrate or operate third-party software successfully or the inadequacy of third-party software may have a material adverse impact on our operations.
1 unchanged sentence
If we have issues with the functionality or expense of third-party software, we may not be able to find acceptable alternatives in a timely manner or at all.
−Removed: Many of the risks associated with the use of third‑party software cannot be eliminated, and these risks could negatively affect our business.
+Added: Many of the risks associated with the use of third‑party software cannot be eliminated, and these risks could negatively affect our business.
Additionally, the software powering our technology systems incorporates software covered by open-source licenses.
1 unchanged sentence
courts, and there is a risk that the licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to operate our systems.
−Removed: In the event that portions of our proprietary software are determined to be subject to an open-source license, we could be required to publicly release the affected portions of our source code or re‑engineer all or a portion of our technology systems, each of which could reduce or eliminate the value of our technology systems.
+Added: In the event that portions of our proprietary software are determined to be subject to an open-source license, we could be required to publicly release the affected portions of our source code or re‑engineer all or a portion of our technology systems, each of which could reduce or eliminate the value of our technology systems.
Such risk could be difficult or impossible to eliminate and could adversely affect our business, financial condition, and results of operations.
−Removed: Any cloud provider service failure or control weakness could adversely affect our business.
−Removed: We employ cloud-based services to host our applications and intend to expand our use.
−Removed: As we expand our use of cloud-based services, we will increasingly rely on third-party cloud providers to maintain appropriate controls and safeguards to protect confidential information we receive, including personal, personally identifiable, sensitive, confidential or proprietary data, and the integrity and continuous operation of our proprietary technology platform.
+Added: Any control weakness or failure in cloud-based software could adversely affect our business.
+Added: We use cloud-based third-party software to host applications and for key financial and operational systems and we expect to expand their use in the future.
+Added: We will increasingly rely on third-party software providers to maintain appropriate controls and safeguards to protect the integrity of our data and any information we transmit, including personal, personally identifiable, sensitive, confidential or proprietary information.
While we conduct due diligence on these cloud providers with respect to their security and business controls, we may not have the visibility to effectively monitor the implementation and efficacy of these controls.
−Removed: Outside parties may be able to circumvent controls or exploit vulnerabilities, resulting in operational disruption, data loss, defects or a security event.
−Removed: Migrating to the cloud increases the risk of operational disruption should internet service be interrupted.
−Removed: While we have implemented business contingency and other plans to facilitate continuous internet access, sustained or concurrent service denials or similar failures could limit our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or otherwise operate our business.
+Added: If these controls do not operate effectively, we may not be able to rely on their software and cyber attackers may be able to exploit vulnerabilities, resulting in operational disruption, data loss, defects or a cybersecurity event.
+Added: Migrating our software to the cloud increases the risk of operational disruption should internet service be interrupted.
+Added: While we have implemented business contingency and other plans to facilitate continuous internet access, sustained or concurrent service denials or similar failures could limit our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner, maintain our accounting function, or otherwise operate our business.
Any such event or failure could have a material adverse effect on our business, financial condition and results of operations.
+Added: The growth and evolution of artificial intelligence may impact our business and operations
+Added: In the future, we may seek to deploy and/or further rely on technologies such as artificial intelligence or machine learning in operating our business.
+Added: If we are unable to deploy this technology effectively or if our competitors are better able to deploy this technology our business may be adversely impacted.
+Added: Our third-party software vendors and service providers are increasing incorporating artificial intelligence into their processes and this may expose us to additional risks should they not be able to incorporate the technology effectively.
+Added: The evolution and increased reliance on artificial intelligence may exacerbate our information technology and cybersecurity risks.
+Added: Furthermore, regulations around artificial intelligence continue to evolve and we may be subject to increased regulation around artificial intelligence in the future.
Risks Related to Laws and Regulations
3 unchanged sentences
PESIC is subject to extensive regulation in Arizona, its state of domicile, and to a lesser degree, the other states in which it writes business.
−Removed: Our Bermuda based reinsurance subsidiary, Palomar Specialty Reinsurance Company Bermuda Ltd.
−Removed: (“PSRE”), is subject to regulation in Bermuda.
+Added: Our Bermuda based reinsurance subsidiary, Palomar Specialty Reinsurance Company Bermuda Ltd.
+Added: (“PSRE”), is subject to regulation in Bermuda.
Most insurance regulations are designed to protect the interests of insurance policyholders, as opposed to the interests of investors or stockholders.
−Removed: These regulations generally are administered by a department of insurance in each state and relate to, among other things, capital and surplus requirements, investment and underwriting limitations, affiliate transactions, dividend limitations, changes in control, solvency and a variety of other financial and non‑financial aspects of our business.
+Added: These regulations generally are administered by a department of insurance in each state and relate to, among other things, capital and surplus requirements, investment and underwriting limitations, affiliate transactions, dividend limitations, changes in control, solvency and a variety of other financial and non-financial aspects of our business.
Significant changes in these laws and regulations could further limit our discretion or make it more expensive to conduct our business.
−Removed: State insurance regulators and the Bermuda Monetary Authority (the “BMA”), also conduct periodic examinations of the affairs of insurance and reinsurance companies and require the filing of annual and other reports relating to financial condition, holding company issues and other matters.
+Added: State insurance regulators and the Bermuda Monetary Authority (the “BMA”), also conduct periodic examinations of the affairs of insurance and reinsurance companies and require the filing of annual and other reports relating to financial condition, holding company issues and other matters.
These regulatory requirements may impose timing and expense constraints that could adversely affect our ability to achieve some or all our business objectives.
−Removed: insurance subsidiaries are part of an “insurance holding company system”
−Removed: within the meaning of applicable California, Oregon and Arizona statutes and regulations.
+Added: insurance subsidiaries are part of an “insurance holding company system” within the meaning of applicable California, Oregon and Arizona statutes and regulations.
As a result of such status, certain transactions between our U.S.
−Removed: insurance subsidiaries and one or more of their affiliates, such as a tax sharing agreement or cost sharing arrangement, may not be effected unless the insurer has provided notice of that transaction to the California Department of Insurance, the Oregon Division of Financial Regulation, or the Arizona Department of Insurance, as applicable, at least 30 days prior to engaging in the transaction and the California Department of Insurance, the Oregon Division of Financial Regulation, or the Arizona Department of Insurance, as applicable, has not disapproved such transaction within the 30‑day time period.
+Added: insurance subsidiaries and one or more of their affiliates, such as a tax sharing agreement or cost sharing arrangement, may not be effected unless the insurer has provided notice of that transaction to the California Department of Insurance, the Oregon Division of Financial Regulation, or the Arizona Department of Insurance, as applicable, at least 30 days prior to engaging in the transaction and the California Department of Insurance, the Oregon Division of Financial Regulation, or the Arizona Department of Insurance, as applicable, has not disapproved such transaction within the 30-day time period.
These prior notification requirements may result in business delays and additional business expenses.
If any of our U.S.
−Removed: insurance subsidiaries fail to file a required notification or fail to comply with other applicable insurance regulations in California, Oregon or Arizona, as applicable, we may be subject to significant fines and penalties and our working relationship with the California Department of Insurance, the Oregon Division of Financial Regulation, or the Arizona Department of Insurance, as applicable, may be impaired.
+Added: insurance subsidiaries fail to file a required notification or fail to comply with other applicable insurance regulations in California, Oregon or Arizona, as applicable, we may be subject to significant fines and penalties and our working relationship with the California Department of Insurance, the Oregon Division of Financial Regulation, or the Arizona Department of Insurance, as applicable, may be impaired.
In addition, state insurance regulators have broad discretion to deny, suspend, or revoke licenses for various reasons, including the violation of regulations.
4 unchanged sentences
Further, changes in the level of regulation of the insurance industry or changes in laws or regulations themselves or interpretations by regulatory authorities could interfere with our operations and require us to bear additional costs of compliance, which could adversely affect our ability to operate our business.
−Removed: insurance subsidiaries are subject to risk‑based capital requirements, based upon the “risk based capital model”
−Removed: adopted by the NAIC, and other minimum capital and surplus restrictions imposed under Arizona, Oregon and California law.
−Removed: These requirements establish the minimum amount of risk‑based capital necessary for a company to support its overall business operations.
−Removed: It identifies property and casualty insurers that may be inadequately capitalized by looking at certain inherent risks of each insurer’s assets and liabilities and its mix of net written premium.
+Added: insurance subsidiaries are subject to risk‑based capital requirements, based upon the “risk based capital model” adopted by the NAIC, and other minimum capital and surplus restrictions imposed under Arizona, Oregon and California law.
+Added: These requirements establish the minimum amount of risk based capital necessary for a company to support its overall business operations.
+Added: It identifies property and casualty insurers that may be inadequately capitalized by looking at certain inherent risks of each insurer’s assets and liabilities and its mix of net written premium.
Insurers falling below a calculated threshold may be subject to varying degrees of regulatory action, including supervision, rehabilitation or liquidation.
Failure by any of our U.S.
−Removed: subsidiaries to maintain risk‑based capital at the required levels could adversely affect their ability to maintain regulatory authority to conduct business.
+Added: subsidiaries to maintain risk-based capital at the required levels could adversely affect their ability to maintain regulatory authority to conduct business.
PSRE is subject to regulation from the European Union.
−Removed: The European Union adopted the Economic Substance Act 2018 and the Economic Substance Regulations 2018 (together, the “ES Requirements”).
+Added: The European Union adopted the Economic Substance Act 2018 and the Economic Substance Regulations 2018 (together, the “ES Requirements”).
As an insurance company, our Bermuda subsidiary conducts a relevant activity and is 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 these requirements. 
−Removed: 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.
+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.
+Added: 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.
8 unchanged sentences
As a result, the full extent of liability under our insurance contracts may not be known for many years after a contract is issued.
−Removed: We may become subject to additional government or market regulation, including additional regulation around cyber-attacks, which may have a material adverse impact on our business.
−Removed: Our business could be adversely affected by changes in state laws, including those relating to asset and reserve valuation requirements, surplus requirements, limitations on investments and dividends, enterprise risk and risk‑based capital requirements, and, at the federal level, by laws and regulations that may affect certain aspects of the insurance industry, including proposals for preemptive federal regulation.
+Added: We may become subject to additional government or market regulation, including additional regulation around cybersecurity, which may have a material adverse impact on our business.
+Added: Our business could be adversely affected by changes in state laws, including those relating to asset and reserve valuation requirements, surplus requirements, limitations on investments and dividends, enterprise risk and risk‑based capital requirements, and, at the federal level, by laws and regulations that may affect certain aspects of the insurance industry, including proposals for preemptive federal regulation.
federal government generally has not directly regulated the insurance industry except for certain areas of the market, such as insurance for flood, nuclear and terrorism risks.
2 unchanged sentences
As a result, the BMA has implemented and imposed additional requirements on the companies it regulates, which requirements could adversely impact the operations of PSRE.
−Removed: Any government mandates and/or legislative changes related to COVID-19 or other events, including mandated premium refunds or credits and extended premium grace periods, could have a material adverse effect on our results of operations and financial condition.
+Added: Any government mandates and/or legislative changes related to mandated premium refunds or credits and extended premium grace periods, could have a material adverse effect on our results of operations and financial condition.
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, 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.
−Removed: We are required to file compliance certifications pertaining to this legislation.
−Removed: 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.
+Added: Additionally, in response to the growing threat of cyber-attacks in the insurance industry, 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.
+Added: 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 abide by the provisions of and file compliance certifications pertaining to this legislation.
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 40 states.
+Added: PSIC is licensed to conduct insurance operations on an admitted basis in 42 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 nine months ended September 30, 2023.
+Added: PSIC paid assessments of $0.2 million in 2023 and paid $5.0 million of assessments for the three months ended March 31, 2024.
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.
9 unchanged sentences
State insurance regulators require insurance companies to maintain specified levels of statutory capital and surplus.
−Removed: The maximum dividend distribution absent the approval or non‑disapproval of the insurance regulatory authority in Oregon, California and Arizona is limited by Oregon law at ORS 732.576, California law at Cal. Ins.
−Removed: Code 1215.5(g) and Arizona Revised Statute 20-481.
+Added: The maximum dividend distribution absent the approval or non‑disapproval of the insurance regulatory authority in Oregon, California and Arizona is limited by Oregon law at ORS 732.576, California law at Cal.
+Added: Code 1215.5(g) and Arizona Revised Statute 20-481.
Under Oregon statute, dividend payments from PSIC are further limited to that part of available policyholder surplus that is derived from net profits on our business.
2 unchanged sentences
PSRE is highly regulated and is required to comply with various conditions before it is able to pay dividends or make distributions to us.
−Removed: Bermuda law, including the Insurance Act 1978, as amended (“Insurance Act”) and the Companies Act 1981, as amended (“Companies Act”) impose restrictions on PSRE’s ability to pay dividends to us based on solvency margins and surplus and capital requirements.
+Added: Bermuda law, including the Insurance Act 1978, as amended (“Insurance Act”) and the Companies Act 1981, as amended (“Companies Act”) impose restrictions on PSRE’s ability to pay dividends to us based on solvency margins and surplus and capital requirements.
These restrictions, and any other future restrictions adopted by the BMA, could have the effect, under certain circumstances, of significantly reducing dividends or other amounts payable to us by PSRE without affirmative approval of the BMA.
15 unchanged sentences
However, the steps we take to protect our intellectual property may be inadequate.
−Removed: Litigation brought to protect and enforce our intellectual property rights could be costly, time‑consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property.
+Added: Litigation brought to protect and enforce our intellectual property rights could be costly, time‑consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property.
Additionally, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability and scope of our intellectual property rights.
4 unchanged sentences
Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our services, or require that we comply with other unfavorable terms.
−Removed: Even if we were to prevail in such a dispute, any litigation could be costly and time‑consuming and divert the attention of our management and key personnel from our business operations.
+Added: Even if we were to prevail in such a dispute, any litigation could be costly and time‑consuming and divert the attention of our management and key personnel from our business operations.
Changes in accounting practices and future pronouncements may materially affect our reported financial results.
Developments in accounting practices may require us to incur considerable additional expenses to comply, particularly if we are required to prepare information relating to prior periods for comparative purposes or to apply the new requirements retroactively.
−Removed: Our consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”).
−Removed: The impact of changes in GAAP cannot be predicted but may affect the calculation of net income, stockholders’
−Removed: equity, and other relevant financial statement line items.
−Removed: In addition to compliance with GAAP on a consolidated basis, PSIC, PESIC, and PSRE are required to comply with statutory accounting principles (“SAP”).
+Added: Our consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”).
+Added: The impact of changes in GAAP cannot be predicted but may affect the calculation of net income, stockholders’ equity, and other relevant financial statement line items.
+Added: In addition to compliance with GAAP on a consolidated basis, PSIC, PESIC, PSRE and Laulima are required to comply with statutory accounting principles (“SAP”).
SAP and various components of SAP are subject to constant review by the NAIC and its task forces and committees, as well as state insurance departments to address emerging issues and otherwise improve financial reporting.
5 unchanged sentences
We are subject to the reporting requirements of the Exchange Act, which require, among other things, that we file with the SEC annual, quarterly, and current reports with respect to our business and financial condition and therefore we need to have the ability to prepare financial statements that comply with all SEC reporting requirements on a timely basis.
−Removed: In addition, we are subject to other reporting and corporate governance requirements, including certain requirements of and certain provisions of the Sarbanes‑Oxley Act and the regulations promulgated thereunder, which impose significant compliance obligations upon us.
−Removed: In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes‑Oxley Act.
−Removed: Our compliance with Section 404 requires that we incur substantial accounting expense and expend significant management efforts.
−Removed: We must maintain accounting and finance staff and consultants with appropriate public company reporting, technical accounting, and internal control knowledge to satisfy the ongoing requirements of Section 404 and provide internal audit services.
−Removed: The Sarbanes‑Oxley Act and the Dodd‑Frank Act, as well as new rules subsequently implemented by the SEC and Nasdaq, have increased regulation of, and imposed enhanced disclosure and corporate governance requirements on, public companies.
−Removed: Our efforts to comply with these evolving laws, regulations and standards increases our operating costs and divert management’s time and attention from revenue‑generating activities.
+Added: In addition, we are subject to other reporting and corporate governance requirements, including certain requirements of and certain provisions of the Sarbanes‑Oxley Act and the regulations promulgated thereunder, which impose significant compliance obligations upon us.
+Added: In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes‑Oxley Act.
+Added: Our compliance with Section 404 requires that we incur substantial accounting expense and expend significant management efforts.
+Added: We must maintain accounting and finance staff and consultants with appropriate public company reporting, technical accounting, and internal control knowledge to satisfy the ongoing requirements of Section 404 and provide internal audit services.
+Added: The Sarbanes‑Oxley Act and the Dodd‑Frank Act, as well as new rules subsequently implemented by the SEC and Nasdaq, have increased regulation of, and imposed enhanced disclosure and corporate governance requirements on, public companies.
+Added: We expect disclosure requirements to increase in the future and expand to areas such as climate change and greenhouse gas emissions.
+Added: Our efforts to comply with these evolving laws, regulations and standards increases our operating costs and divert management’s time and attention from revenue‑generating activities.
These requirements also place significant additional demands on our finance and accounting staff and on our financial accounting and information systems.
We must retain accounting and financial staff with appropriate public company reporting experience and technical accounting knowledge.
−Removed: Other expenses associated with being a public company include increased auditing, accounting and legal fees and expenses, investor relations expenses, increased directors’
−Removed: fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees, as well as other expenses.
+Added: Other expenses associated with being a public company include increased auditing, accounting and legal fees and expenses, investor relations expenses, increased directors’ fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees, as well as other expenses.
As a public company, we are required, among other things, to:
2 unchanged sentences
institute comprehensive compliance and investor relations functions;
−Removed: evaluate and maintain our system of internal control over financial reporting, and report on management’s assessment thereof, in compliance with rules and regulations of the SEC and the Public Company Accounting Oversight Board.
+Added: evaluate and maintain our system of internal control over financial reporting, and report on management’s assessment thereof, in compliance with rules and regulations of the SEC and the Public Company Accounting Oversight Board.
We may not be successful in complying with these requirements, and compliance with them could materially adversely affect our business.
6 unchanged sentences
Any such action could harm our reputation and the confidence of our investors and customers and could negatively affect our business and cause the price of our shares of common stock to decline.
−Removed: We are required by Section  
−Removed: 404 of the Sarbanes ‑
−Removed: Oxley Act to evaluate the effectiveness of our internal control over financial reporting.
+Added: We are required by Section 404 of the Sarbanes ‑ Oxley Act to evaluate the effectiveness of our internal control over financial reporting.
If we are unable to achieve and maintain effective internal controls, our operating results and financial condition could be harmed and the market price of our common stock may be negatively affected.
−Removed: As a public company with SEC reporting obligations, we are required to document and test our internal control procedures to satisfy the requirements of Section 404(b) of the Sarbanes‑Oxley Act, which requires annual assessments by management of the effectiveness of our internal control over financial reporting.
+Added: As a public company with SEC reporting obligations, we are required to document and test our internal control procedures to satisfy the requirements of Section 404(b) of the Sarbanes‑Oxley Act, which requires annual assessments by management of the effectiveness of our internal control over financial reporting.
We must implement and maintain substantial internal control systems and procedures to satisfy the reporting requirements under the Exchange Act.
During our assessments, we may identify deficiencies that we are unable to remediate in a timely manner.
−Removed: Testing and maintaining our internal control over financial reporting may also divert management’s attention from other matters that are important to the operation of our business.
−Removed: We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404(b) of Sarbanes‑Oxley.
+Added: Testing and maintaining our internal control over financial reporting may also divert management’s attention from other matters that are important to the operation of our business.
+Added: We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404(b) of Sarbanes‑Oxley.
If we conclude that our internal control over financial reporting is not effective, the cost and scope of remediation actions and their effect on our operations may be significant.
3 unchanged sentences
Under applicable Oregon, California and Arizona insurance laws and regulations, no person may acquire control of a domestic insurer until written approval is obtained from the state insurance commissioner following a public hearing on the proposed acquisition.
−Removed: Such approval would be contingent upon the state insurance commissioner’s consideration of a number of factors including, among others, the financial strength of the proposed acquiror, the acquiror’s plans for the future operations of the domestic insurer and any anti‑competitive results that may arise from the consummation of the acquisition of control.
+Added: Such approval would be contingent upon the state insurance commissioner’s consideration of a number of factors including, among others, the financial strength of the proposed acquiror, the acquiror’s plans for the future operations of the domestic insurer and any anti‑competitive results that may arise from the consummation of the acquisition of control.
Oregon, California and Arizona insurance laws and regulations pertaining to changes of control apply to both the direct and indirect acquisition of ten percent or more of the voting stock of an insurer domiciled in that state.
5 unchanged sentences
Future transactions where we raise capital may negatively affect our stock price.
−Removed: We are currently a “Well-Known Seasoned Issuer”
−Removed: and may file automatic shelf registration statements at any time with the SEC.
+Added: We are currently a “Well-Known Seasoned Issuer” and may file automatic shelf registration statements at any time with the SEC.
Sales of substantial amounts of shares of our common stock or other securities under our current or future shelf registration statements could lower the market price of our common stock and impair our ability to raise capital through the sale of equity securities.
5 unchanged sentences
You should consider an investment in our common stock to be risky, and you should invest in our common stock only if you can withstand a significant loss and wide fluctuation in the market value of your investment.
−Removed: The market price of our common stock is likely to continue to be subject to significant fluctuations in response to the factors described in this “Risk Factors”
−Removed: section and other factors, many of which are beyond our control.
+Added: The market price of our common stock is likely to continue to be subject to significant fluctuations in response to the factors described in this “Risk Factors” section and other factors, many of which are beyond our control.
Among the factors that could affect our stock price are:
2 unchanged sentences
introduction of new products or services by us or our competitors;
−Removed: issuance of new or changed securities analysts’
−Removed: reports or recommendations;
+Added: issuance of new or changed securities analysts’ reports or recommendations;
results of operations that vary from expectations of securities analysis and investors;
21 unchanged sentences
In addition, the stock markets, including Nasdaq, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
−Removed: If any of the foregoing occurs, it could cause our stock price to fall and may expose us to securities class action litigation that, even if unsuccessful, could be costly to defend, divert management’s attention and resources or harm our business.
−Removed: Anti ‑
−Removed: takeover provisions in our organizational documents could delay a change in management and limit our share price.
+Added: If any of the foregoing occurs, it could cause our stock price to fall and may expose us to securities class action litigation that, even if unsuccessful, could be costly to defend, divert management’s attention and resources or harm our business.
+Added: Anti ‑ takeover provisions in our organizational documents could delay a change in management and limit our share price.
Provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us even if such a change in control would increase the value of our common stock and prevent attempts by our stockholders to replace or remove our current Board of Directors or management.
−Removed: Our charter documents contain anti‑takeover provisions that will hinder takeover attempts and could reduce the market value of our common stock or prevent sale at a premium.
−Removed: Our anti‑takeover provisions:
+Added: Our charter documents contain anti‑takeover provisions that will hinder takeover attempts and could reduce the market value of our common stock or prevent sale at a premium.
+Added: Our anti‑takeover provisions:
permit the Board of Directors to establish the number of directors and fill any vacancies and newly created directorships;
provide, through 2027, that our Board of Directors are classified into three classes with staggered, three year terms and that directors may only be removed for cause;
−Removed: require super‑majority voting to amend provisions in our certificate of incorporation and bylaws;
−Removed: include blank‑check preferred stock, the preference, rights and other terms of which may be set by the Board of Directors and could delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise benefit our stockholders;
+Added: require super‑majority voting to amend provisions in our certificate of incorporation and bylaws;
+Added: include blank‑check preferred stock, the preference, rights and other terms of which may be set by the Board of Directors and could delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise benefit our stockholders;
eliminate the ability of our stockholders to call special meetings of stockholders;
4 unchanged sentences
establish advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
−Removed: In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law.
+Added: In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law.
These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a period of time.
−Removed: Our certificate of incorporation and bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders ’
−Removed: ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
+Added: Our certificate of incorporation and bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders ’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our certificate of incorporation and bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for the following civil actions:
5 unchanged sentences
However, this provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act.
−Removed: Furthermore, this provision applies to Securities Act claims and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
+Added: Furthermore, this provision applies to Securities Act claims and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
Accordingly, there is uncertainty as to whether a court would enforce such provision, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
−Removed: This choice of forum provision, if enforced, may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
+Added: This choice of forum provision, if enforced, may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation and bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition or results of operations.
3 unchanged sentences
If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which could cause our stock price and trading volume to decline.
−Removed: Unregistered Sales of Equity Securities and Use of Proceeds
−Removed: Share repurchases
−Removed: Our purchases of our equity securities in the third quarter of fiscal year 2023 were:
−Removed: Total Number of
−Removed: Total Number of Shares Purchased as
−Removed: Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
−Removed: Shares Purchased
−Removed: Average Price Paid Per Share (1)
−Removed: Part of Publicly Announced Plans
−Removed: ($ in thousands)
−Removed: July 1, 2023 to July 31, 2023
−Removed: August 1, 2023 to August 31, 2023
−Removed: September 1, 2023 to September 30, 2023
−Removed: (1) Average Price Paid Per Share excludes cash paid for commissions.
−Removed: (2) On January 24, 2022, the Company’s Board of Directors approved the adoption of a share repurchase plan that authorizes the repurchase of up to $100 million of outstanding shares of common stock through the period ending on March 31, 2024.
−Removed: The approved plan replaced the Company’s previous $40 million share repurchase program.
−Removed: Defaults Upon Senior Securities
−Removed: Mine Safety Disclosures
−Removed: Not applicable.
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.