What changed in this filing

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Item 1. Business

2025-02-25 compared with 2024-02-23 · 120 added, 160 removed, 416 unchanged (40% of the section changed)

We are a specialty insurance company that provides property and casualty insurance products to individuals and businesses.

We use our underwriting and analytical expertise to provide products for select markets that we believe are underserved by other insurance companies, including the market for earthquake insurance.

We use our underwriting and analytical expertise to provide innovative insurance products serving five categories:

Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop.

We use proprietary data analytics and a modern technology platform to offer our customers flexible products with customized and granular pricing for both the admitted and excess and surplus lines (“E&S”) markets.

We provide admitted insurance products through our Oregon domiciled insurance company, Palomar Specialty Insurance Company (“PSIC”), and E&S insurance products through our Arizona domiciled surplus lines insurance company, Palomar Excess and Surplus Insurance Company (“PESIC”).

Each of our insurance company subsidiaries carries an “A-” rating from A.M.

Our insurance company subsidiaries, Palomar Specialty Insurance Company (“PSIC”) and Palomar Excess and Surplus Insurance Company (“PESIC”) carry an “A” rating from A.M.

Best Company (“A.M.

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We seek to continuously grow our income by developing products in lines of business that harness our core competencies and where we believe we can generate attractive risk adjusted returns.

In recent years, we have introduced several new products including Fronting, Excess Property, and Crop, as well as products targeting niche Casualty segments such as Real Estate Agent Errors and Omissions, Excess Liability, and Environmental Liability.

In recent years, we have introduced several new products including Crop, Environmental Liability, and E&S Casualty.

In January 2025, we completed the acquisition of First Indemnity of America ("FIA"), a New Jersey domiciled insurance carrier specializing in surety bonds for small to medium sized contractors primarily in the Northeast United States.

These new products diversify our book of business and broaden our product portfolio.

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These markets have primarily been served by either large generalist insurance companies and state-managed entities applying “one-size-fits-all” pricing and policy forms across broad geographies.

We sell both admitted and surplus lines products.

Our admitted products feature rates and policy forms approved by state insurance departments and are backed by state guaranty funds, providing a further level of security to policyholders.

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We also continue to experience growth and profitability across our other lines of business.

Our primary lines of business include:

Residential and Commercial Earthquake, Fronting, Inland Marine, and Casualty.

Our five product lines include:

Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop.

We seek to write a diverse mix of business by loss exposure, customer type and geography to capitalize on market opportunities, mitigate the potential impact of any single catastrophe event or shock loss, and reduce our cost of reinsurance.

We continue to develop product offerings for lines of business that harness our core competencies and where we believe we can generate attractive risk-adjusted returns.

Notable recent examples of our commitment to developing new products include the expansion of our Casualty and Fronting operations and the launch of our Crop insurance program.

We continue to develop new product offerings for lines of business that harness our core competencies and where we believe we can generate attractive risk-adjusted returns.

Recent examples of our commitment to developing new products include the expansion of our Casualty and Crop insurance offerings.

In January 2025, we completed the acquisition of FIA, a New Jersey domiciled insurance carrier specializing in surety bonds for small to medium sized contractors primarily in the Northeast United States.

We believe these markets complement our existing product offerings and offer significant growth opportunities across both the admitted and E&S markets.

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California represents our largest current exposure with 43% of our gross written premiums for the year ended December 31, 2024.

Our business strategy involves continuing to grow our core earthquake insurance business, diversifying our book of business into uncorrelated products such as Casualty and Fronting, and extending the reach of lines of business such as Inland Marine.

The following charts illustrate our business mix by product, residential versus commercial markets, state, and entity for the year ended December 31, 2023:

Our business strategy involves continuing to grow our core earthquake insurance business, extending the reach of Inland Marine and Other Property Products, and diversifying our book of business into uncorrelated products such as Casualty, Fronting and Crop.

The following charts illustrate our business mix by product, state, and entity for the year ended December 31, 2024:

We employ a highly granular and analytical underwriting process to assess each insurance policy that we write, and we ensure that the risk characteristics of business assumed through our channel partnerships or written by program administrator partners are consistent with our underwriting of direct business.

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Further, we buy program specific quota share reinsurance coverage for certain lines of business to mitigate the impact of attritional losses on underwriting results.

In our quota share agreements, we cede a portion of our premium for lines of business subject to attritional losses to reinsurers and, in return, we also cede a proportionate amount of losses and receive ceding commissions from the reinsurers.

In our quota share agreements, we cede a portion of our premiums to reinsurers and, in return, we also cede a proportionate amount of losses and receive ceding commissions from the reinsurers.

Emphasis on the use of technology and analytics across our business.

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We believe that this real-time access to data and analytics provides us with an advantage in distributing our products, managing our risk, and purchasing reinsurance.

Entrepreneurial and highly experienced management team and board.

Highly experienced management team and board.

Our management team is highly qualified, with an average of more than twenty years of relevant experience in insurance, reinsurance and capital markets.

We are led by our Chairman and Chief Executive Officer, Mac Armstrong, who prior to founding Palomar was President of Arrowhead General Insurance Agency (“Arrowhead”).

Many of our management team members such as Mr.

Armstrong, Jon Christianson, our President, Jon Knutzen, our Chief Risk Officer, and Chris Uchida, our Chief Financial Officer, have a long history of working together.

For example, while at Arrowhead, Mac Armstrong worked closely with Chris Uchida, who served as Executive Vice President and Chief Accounting Officer of Arrowhead.

As owners of approximately 2.6% of our outstanding common stock as of December 31, 2023, we believe our management team has closely aligned interests with our stockholders.

In addition, our Board of Directors is comprised of accomplished industry veterans who bring decades of experience from their prior roles working in insurance and financial services companies.

Many of our key management team members such as Mr.

Armstrong, Jon Christianson, our President, Jon Knutzen, our Chief Risk Officer, and Chris Uchida, our Chief Financial Officer, have served in their roles for over five years and worked together prior to Palomar.

We have also recently made key management hires in operations, technology, claims, people and talent, E&S Casualty, and Crop.

These new management hires are insurance industry veterans with proven track records and deep industry knowledge.

We believe their skills and experience will assist Palomar during our next phase of growth and expansion.

In addition, our Board of Directors is comprised of accomplished industry veterans who bring decades of experience from prior roles with insurance and other companies.

We believe that our approach will allow us to achieve our goals of both growing our business and generating attractive returns.

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We currently write a book of specialty insurance that is diversified by underlying loss exposure, customer type and geography.

Our major product lines and exposures are uncorrelated, such that events contributing to a loss in one line of business are unlikely to generate material losses in our other lines of business.

Our major product lines and exposures are uncorrelated, such that events contributing to a loss in one product line are unlikely to generate material losses in our other product lines.

Furthermore, our Crop products are uncorrelated with the traditional P&C cycle, enhancing the diversification of our specialty product portfolio.

The diversification of our book of business improves our risk-adjusted returns, insulates us from swings in any single insurance or reinsurance market, and allows us to capitalize on market shifts opportunistically.

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We generate fee income through the use of quota share reinsurance treaties whereby third-party reinsurers pay us a ceding commission in order to access attractive pools of risk.

Our Fronting and Crop businesses offers an additional source of fee income that we earn from program administrators and reinsurers seeking to access our licensed insurance companies.

Our Fronting and Crop products offer additional sources of fee income that we earn from program administrators and reinsurers seeking to access our licensed insurance companies.

Our multi-channel distribution model produces attractive business that we aim to translate into a balanced mix of underwriting and fee income.

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We are an insurance holding company that was originally incorporated under the laws of the Cayman Islands in October 2013.

In March 2019, we (i) implemented a domestication pursuant to Section 388 of the Delaware General Corporation Law and became a Delaware corporation.

In March 2019, we implemented a domestication pursuant to Section 388 of the Delaware General Corporation Law and became a Delaware corporation.

Our primary operating subsidiary, PSIC, is an insurance company domiciled in the state of Oregon and is an admitted insurer licensed to write business in 44 states as of December 31, 2024.

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With the goal of giving customers better options, we designed an analytical framework to create flexible products with innovative coverages and pricing that we believe better reflects the underlying risk.

Using this framework, we initially introduced Residential and Commercial Earthquake products in 2014 and have subsequently expanded our product portfolio to cover multiple specialty risks in several regions of the United States.

We have grown our business by entering markets that demonstrated one or more of the following attributes:

(i) have loss characteristics, including limited attritional losses, similar to our initial earthquake product, (ii) can benefit from our technology platform, data analytics and customer centric products, and/or (iii) allow us to leverage our existing underwriting talent, reinsurance expertise and/or distribution relationships.

Our primary insurance products include Residential and Commercial Earthquake, Fronting, Inland Marine, and Casualty.

Our lines of business include:

Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop.

We aim to develop a diversified portfolio with exposure spread across geographic regions with limited correlation.

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In total, we are licensed as an admitted insurer in 44 total states.

The following table shows gross written premium (“GWP”) by state for the years ended December 31, 2023, 2022 and 2021.

The following tables show gross written premiums (“GWP”) by state and product for the years ended December 31, 2024, 2023 and 2022.

Year Ended December 31,

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Total Gross Written Premiums

We believe that maintaining a balanced book of personal and commercial lines business is beneficial.

For example, while our Residential Earthquake products experience higher premium retention rates, our Commercial Earthquake products provide more flexibility on pricing, which enables us to increase premium rates more quickly when market conditions accommodate price increases.

For the year ended December 31, 2023, 31% of our gross written premium consisted of personal lines business and 69% of gross written premium consisted of commercial lines business, compared to 37% personal lines business and 63% commercial lines business during the year ended December 31, 2022.

The following table shows gross written premium by product line for the years ended December 31, 2023, 2022 and 2021:

Year Ended December 31,

($ in thousands)

Residential Earthquake

Commercial Earthquake

Inland Marine

Hawaii Hurricane

Commercial All Risk

Residential Flood

Specialty Homeowners

Inland Marine and Other Property

Total Gross Written Premiums

Residential Earthquake

We offer Residential Earthquake products on an admitted and E&S basis.

Our products insure against damage to the home, contents and any appurtenant structures, and reimburse for temporary housing costs in the event of an earthquake.

We design our products to provide agents and policyholders with coverage flexibility, including a full range of deductible options and the ability to tailor limits to a customer’s individual preferences.

We aim to sell our products to buyers who may not have previously purchased earthquake coverage.

We believe that our pricing model is a distinctive feature of our product offering.

Using data from industry-leading catastrophe models we can evaluate and accurately price exposures at the ZIP code or geocode level based on characteristics particular to the risk.

For example, we believe competing earthquake insurance products in California are commonly based on broad territorial pricing zones that do not consider regional differences in soil types, liquefaction potential and include little price differentiation between risks with varying proximity to known faults.

Our ability to divide geographies into highly resolute grids, or ZIP codes, and price according to more detailed information relating to the exposure allows us to obtain a more appropriate rate for the risk, and often allows us to offer rate relief, particularly in low risk areas that historically have low earthquake insurance penetration.

We write policy limits up to $15 million;

all policies involve automated underwriting and lower limit policies are issued via automated processing.

During the year ended December 31, 2023 and 2022, our Residential Earthquake products had a premium retention rate of approximately 97%.

Commercial Earthquake

We offer Commercial Earthquake products on an admitted and E&S basis.

(1) - Beginning in 2024, the Company has updated the categorization of its products to align with management's current strategy and view of the business.

Prior year amounts have been reclassified for comparability purposes.

The recategorization is for presentation purposes only and does not impact overall gross written premiums.

Our five product lines are summarized as follows:

We offer Residential and Commercial Earthquake products on both admitted and E&S basis.

Our Residential Earthquake products insure against home damage, contents, appurtenant structures, and temporary housing costs following an earthquake.

Our products are designed with flexibility, offering a variety of deductible options and customizable coverage limits.

We aim to attract customers who haven't previously purchased earthquake insurance.

Our pricing model, based on data from top catastrophe models, allows us to accurately assess and price risks at the ZIP code or geocode level.

Unlike competitors who use broad pricing zones, we factor in regional differences like soil types, liquefaction risk, and proximity to fault lines.

This approach helps us offer more precise rates and often provides rate relief, especially in low-risk areas with historically low earthquake insurance uptake.

Our Commercial Earthquake products focus on providing coverage for benign commercial risks where the business interruption exposure is typically less than 15% of the total insured value (“TIV”).

We attempt to avoid risks where the contents are hard to value or represent a disproportionate percentage of the value.

Our Fronting business offers reinsurers, insurance carriers and managing general agents the ability to utilize our licensed admitted and E&S insurance companies to design and operate customized insurance programs.

We issue insurance policies for other insurance companies that may not have the licensure, product suite or rating to serve their desired markets, or for programs supported by reinsurance or alternative capital providers.

In addition, we enter fronting arrangements with program administrators that require a broadly licensed, highly rated carrier to conduct business in certain states.

Inland Marine

Our Inland Marine products include Builder’s Risk, Contractor’s Equipment, Mobile Equipment, Motor Truck Cargo, Miscellaneous Floaters, Installation Floaters, and Special Property Floaters.

Our Inland Marine products are written on an admitted and on an E&S basis directly and through program administrators.

Policy limits vary by product, however, our E&S offerings are designed to target larger limit business and do not directly compete with our admitted offerings.

We believe the flexibility of our Inland Marine products enables us to compete in select market segments and price risk appropriately.

Inland Marine and Other Property

Our Inland Marine and Other Property products include Inland Marine, Hawaii Hurricane, Commercial All Risk, Excess National Property, Residential Flood, and other miscellaneous property products.

These products are written on an admitted and on an E&S basis directly and through program administrators.

Policy limits vary by product;

however, our E&S offerings are designed to target larger limit business and do not directly compete with our admitted offerings.

We believe the flexibility of these products enables us to compete in select market segments and price risk appropriately.

We provide Casualty products on an admitted and E&S basis.

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We utilize experienced underwriters and thorough actuarial review to optimize our pricing, terms and conditions, limits, and attachment points.

In addition to our existing Casualty product offerings, we announced the launch of our Environmental Liability product at the end of 2023.

The new product further demonstrates our commitment to providing comprehensive insurance solutions that address evolving market needs.

Hawaii Hurricane

We offer admitted residential property coverage for named hurricanes in the state of Hawaii, which is required for homeowners that carry a mortgage on their properties.

Similar to our residential earthquake product, insureds have the ability to tailor limits to their preferences.

The policies we write only trigger coverage if an insured risk incurs wind damage while directly under a hurricane watch or warning as deemed by the Pacific division of the National Weather Service.

Coverage only remains in effect for a period of 72 hours after the hurricane watch or warning expires.

Therefore, there is no exposure to attritional losses with this product.

We write this coverage through PSIC and Laulima, a reciprocal exchange comprised of an unincorporated association of Hawaii homeowners ("subscribers") that agree to insure one another.

Our management company, PUEO, acts as the attorney-in-fact for Laulima in exchange for a management fee.

Commercial All Risk

We offer Commercial All Risk insurance on a E&S basis nationwide through the underwriting division of a national wholesaler and through our internally underwritten Excess Property products.

Our products currently compete in the national layered and shared commercial property market, an area where we believe there is a high-level of market dislocation.

The Commercial All Risk policy covers the perils of fire and wind, with wind including hurricane, tornado, and hailstorm.

For additional premium, the policy can include the peril of earthquake.

We target occupancy types including government entities, homeowner’s associations, retail stores, hotels, motels, and office buildings.

Residential Flood

We provide Residential Flood products on an admitted and E&S basis.

Our products primarily compete against those of the NFIP, which caps dwelling coverage at $250,000 and prices risk using less granular regional zones.

We offer higher limits than the NFIP and price risk at the specific geocode level having developed detailed granular models of all current markets in partnership with a leading national catastrophe modeling agency.

Furthermore, due to our proprietary pricing grid models we eliminate the need for a waiting period or an elevation certificate prior to binding and issuance of policies.

We write policy limits up to $5 million, all of which involve automated underwriting and are issued via automated processing.

During 2023, we received regulatory approval and launched our Crop insurance business.

Our Crop insurance business is comprised primarily of multi-peril crop insurance offered in connection with the U.S.

In addition to our existing Casualty product offerings, we announced the launch of our E&S Casualty product at the end of 2024.

The new product will focus on Primary & Excess Construction and Excess Liability lines of business.

This new line of business further demonstrates our commitment to providing comprehensive insurance solutions that address evolving market needs.

On January 1, 2025 we completed the acquisition of FIA, a New Jersey domiciled insurance carrier specializing in surety bonds for small to medium sized contractors primarily in the Northeast United States.

Our Fronting products offer reinsurers, insurance carriers and managing general agents the ability to utilize our licensed admitted and E&S insurance companies to design and operate customized insurance programs.

In addition, we enter fronting arrangements with program administrators that require a broadly licensed, highly rated carrier to conduct business in certain states.

Our Crop insurance products are comprised primarily of multi-peril crop insurance offered in connection with the U.S.

Department of Agriculture's Risk Management Agency and designed to cover revenue shortfalls or production losses due to natural causes such as drought, hail, and wind.

We currently write Crop insurance through a strategic partnership with the goal of minimizing exposure to a single region.

We currently cede the majority of Crop premium and risk to reinsurers in exchange for a fronting fee and Crop premiums are currently included as a component of our Fronting premiums.

In the future, we intend to classify Crop as a separate product.

We continuously seek to develop product offerings and write business in areas that harness our core competencies and where we believe we can generate attractive risk adjusted returns.

Examples include our assumed reinsurance treaties where the exposure is uncorrelated to our existing product offerings.

We currently write Crop insurance with the goal of minimizing exposure to any single region.

We also offer Livestock and Private Product Crop solutions.

Marketing and Distribution

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We audit the underwriting, systems, financial strength and reporting capabilities of all of our program administrators on a regular basis.

Most notably, for our Value Select Residential Earthquake products, we have a mutually exclusive program administrator agreement with Arrowhead for the states of California, Oregon and Washington.

Under this agreement, which accounted for $208.1 million of written premiums for the year ended December 31, 2023, we conduct product development and underwriting while our program administrator manages a base of over 1,000 retail agents who individually bind policies through PASS or an internal system which automatically applies our pricing and underwriting guidelines to new policies, and is subjected to our disciplined risk management.

Carrier Partnerships:

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This analytical and underwriting expertise framework enables us to offer rate relief in low risk areas and to accurately price risks that are at higher risk.

Personal lines policies are issued via automated underwriting and account for approximately 31% of our gross written premium for the year ended December 31, 2023.

Personal lines policies are issued via automated underwriting.

Using our predefined underwriting guidelines, distribution partners can rapidly quote and bind accounts lower in limit via automated processing.

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Claims Management

Given the low frequency nature of the primary perils that we insure, we primarily outsource our claims handling infrastructure to third-party administrators (“TPAs”) to eliminate the expense associated with maintaining full-time dedicated claims personnel.

Claims are overseen by our in-house claims team, led by our Chief Claims Officer.

To supplement our in-house team, we outsource part of our claims handling infrastructure to third-party administrators (“TPAs”).

We currently contract with multiple TPAs to reduce our reliance on any single TPA, as well as to benefit from expertise of individual vendors in specific lines of business.

Our management team is responsible for overseeing our TPAs, including the management of catastrophe event preparation, loss reserves, claim evaluation, arbitration, mediation, and settlement.

Our Chief Claims Officer is responsible for overseeing our TPAs, including the management of catastrophe event preparation, loss reserves, claim evaluation, arbitration, mediation, and settlement.

Claims are reported directly to us and the applicable TPA, which adheres to agreed upon service level standards.

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Best, or whose surplus drops by more than 20%.

In addition to reinsurance purchased from traditional reinsurers, we have historically incorporated collateralized protection from the insurance linked securities market via catastrophe bonds.

During the first quarter of 2021, we closed a $400 million 144A catastrophe bond that became effective June 1, 2021.

The catastrophe bond was completed through Torrey Pines Re Pte.

(“Torrey Pines Re Pte.”).

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.

During the second quarter of 2022, we closed a $275 million 144A catastrophe bond that became effective June 1, 2022.

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, we also closed a $200 million 144A catastrophe bond that 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.

In addition to reinsurance from traditional reinsurers, we utilize collateralized protection via catastrophe bonds.

We currently have $895 million of multi-year indemnity-based reinsurance coverage for earthquake events, all issued through Torrey Pines Re Ltd, a Bermuda-domiciled special purpose insurer.

Our latest bond, a $420 million 144A issuance, became effective on June 1, 2024.

Our largest single XOL reinsurer, excluding Torrey Pines Re, comprises 9.14% of the total catastrophe XOL reinsurance limit we have in effect.

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Reinsurer Ratings

Torrey Pines, LTD.

(Cat Bond - 2021 Issuance)

Collateralized

Torrey Pines, LTD.

(Cat Bond - 2022 Issuance)

Collateralized

Torrey Pines, LTD.

(Cat Bond - 2023 Issuance)

Torrey Pines Re, LTD

Collateralized

Shelf Opco Bermuda Limited obo Fidelis Insurance Bermuda Limited

Ariel Re Bda Limited obo Synd 1910 (Bermuda)

Houston Casualty Company (UK Branch)

Leadenhall Capital Partners obo MS Amlin AG Bermuda Branch

Lancashire Insurance Company, Ltd.

Ariel Re BDA, Ltd obo Lloyds Syndicate 1910

Houston Casualty Company

Fidelis Insurance Bermuda

Arch Reinsurance, Ltd.

Quantedge Capital USA Inc.

obo Arch Reinsurance, Ltd.

Hannover Ruck

Swiss Reinsurance America

MS Amlin AG Bermuda

Lloyds Syndicate 1301 - Inigo

Lloyds Syndicate 1084 - Chaucer

Catastrophe XOL Reinsurance Coverage

Our catastrophe event retention before any tax effect is currently $17.5 million for all perils.

Our catastrophe event retention before any tax effect is currently $20 million for earthquake events and $15.5 million for hurricane events and all other perils.

Our reinsurance coverage exhausts at $3.08 billion for earthquake events, $735 million for Hawaii hurricane events, and $117.5 million for continental U.S.

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The below table shows the PML from selected historical catastrophe events, all of which are less than the amount covered by our current catastrophe reinsurance program.

Should an event equivalent to one of these historical events recur, our hypothetical net loss before any tax effect would be capped at our current net retention of $17.5 million.

Should an event equivalent to one of these historical events recur, our hypothetical net loss before any tax effect would be capped at our current net retention of $20.0 million for earthquake events or $15.5 million for hurricane events and all other perils.

Historical Event

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CA 1933 Long Beach M6.4

NW 1965 Puget Sound M6.5

While we only select reinsurers whom we believe to have acceptable credit or a minimum A.M.

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We purchase program specific reinsurance, consisting primarily of quota share coverage, for certain lines of business with an attritional loss component such as Inland Marine and Casualty.

We also utilize a combination of XOL and quota share reinsurance to provide coverage for our Flood products.

We also utilize a combination of XOL and quota share reinsurance to provide coverage for our Flood, Inland Marine, and Crop products.

Specific to our Crop portfolio, we purchase private reinsurance coverage which is applied to premiums and liabilities net of the inuring protection afforded by the Standard Reinsurance Agreement provided via the Federal Crop Insurance Corporation.

Our integrated technology systems form the backbone of our business as they enable us to offer quality and timely service to our policyholders and producers, communicate seamlessly with reinsurers and partner carriers, and run our business more efficiently and cost effectively.

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We have dedicated in-house software developers as well as external resources.

Our internally developed PASS provides producers direct access to our retail and wholesale distributed products including Residential Earthquake, Commercial Earthquake, Hawaii Hurricane, Inland Marine and Residential Flood.

Our internally developed PASS provides producers direct access to our retail and wholesale distributed products including Residential Earthquake, Hawaii Hurricane, and Residential Flood.

PASS also serves as the administration system for select policy data and the access point for business written through direct personal lines partnerships.

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For certain products where limited models are available, we have worked directly with the vendors to develop proprietary models.

We update all of our pricing models as new versions are released, which mitigates our exposure to changes in our business following industry-wide model changes.

We update our pricing models as new versions are released, which mitigates our exposure to changes in our business following industry-wide model changes.

For personal lines products issued through automated underwriting, our pricing models integrate directly into our policy administration system as well as the systems of program administrator partners.

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We emphasize the use of technology in our analytics and enterprise risk management (“ERM”) operations.

Our analytics team, which reports to our Chief Risk Officer, uses multiple catastrophe modeling software applications to evaluate our ongoing risk exposure.

Our data analytics enable us to provide real-time reporting of our in-force portfolio to our reinsurers, TPAs and distribution partners on a regular basis and during severe weather events.

Our data and analytics team, which reports to our Chief Technology Officer, uses multiple catastrophe modeling software applications to evaluate our ongoing risk exposure.

Our data analytics enable us to provide timely reporting of our in-force portfolio to our reinsurers, TPAs and distribution partners on a regular basis and during severe weather events.

This reporting combines content from the catastrophe models that we license with internally developed content.

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We believe our investment strategy allows us to eliminate the expense of a treasury department while allowing our management to maintain oversight over the investment portfolio.

Our cash and invested assets consist of fixed maturity securities, equity method investments, short-term investments, cash and cash equivalents, mutual funds, exchange traded funds and equity securities.

Our cash and invested assets consist of fixed maturity securities, short-term investments, cash and cash equivalents, mutual funds, exchange traded funds and equity securities.

We also have one equity method investment and a small portion of our portfolio invested in limited partnerships, which are classified as other investments on our consolidated balance sheet.

Our fixed maturity securities are classified as “available-for-sale” and are carried at fair value with unrealized gains and losses on these securities reported, net of tax, as a separate component of accumulated other comprehensive income (loss).

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Our equity method investment is measured following the consolidation model, by increasing or decreasing the carrying amount of the investment to reflect our share of contributions, distributions, earnings, or losses.

Our other investments are measured at estimated fair value utilizing a net asset value per share (or its equivalent) as a practical expedient.

Short-term investments are reported at cost and include investments that are both readily convertible to known amounts of cash and have maturities of 12 months or less upon acquisition by us.

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Equity method investment

Other investments

Total investments

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Equity securities

Equity method investment

Total investments

Our primary investment focus is to preserve capital to support our insurance operations through investing primarily in high quality fixed maturity securities with a secondary focus on maximizing our risk-adjusted investment returns.

Investment policy is set by our Board of Directors, subject to the limits of applicable regulations.

Our investment policy is set by our Board of Directors, subject to the limits of applicable regulations.

Our investment policy imposes strict requirements for credit quality, with a minimum average credit quality of the portfolio being rated “A” or higher by Standard & Poor’s or the equivalent rating from another nationally recognized rating agency.

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We continue to enhance our ERM framework, which is guided by the Own Risk and Solvency Assessment (“ORSA”) model developed by the National Association of Insurance Commissioners (“NAIC”) and the National Institute of Standards and Technology (“NIST”) cybersecurity framework.

These ongoing enhancements include the creation of an ERM Committee of the Board of Directors which is comprised select board members and select members of executive management, creation and maintenance of a risk register, and regular reporting on risk management.

These ongoing enhancements include the creation of an ERM Committee of the Board of Directors which is comprised of select board members and select members of executive management, creation and maintenance of a risk register, and regular reporting on risk management.

An additional important part of our ERM is business continuity, including in the circumstances of a catastrophe event.

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Our communications, virtual file servers, underwriting and distribution systems, and claims portal are hosted in geographically diverse data centers domestically and globally.

We maintain an additional office in Edina, Minnesota to use as a redundant location in the event of a disruptive event in San Diego, and purchase business continuity services to support the La Jolla office in the event of a disruptive event.

Environmental, Social and Governance Matters

In 2021, our Board of Directors established an Environmental, Social and Corporate Governance (“ESG”) Committee which is comprised of various members of our Board.

The ESG committee oversees and provides guidance on the company’s strategies related to several factors, including environmental, health and safety, corporate social responsibility, governance, sustainability and public policy matters relevant to our business.

Specific duties of the ESG committee include:

• Assisting the management team in setting general strategy relating to ESG matters;

We maintain an additional office in Edina, Minnesota and purchase business continuity services to support our offices in the event of a disruptive event.

The majority of our workforce is also equipped to work remotely should they be unable to access our offices.

Sustainability Matters

Our Board of Directors has established a Sustainability Committee which is comprised of various members of our Board.

The Sustainability Committee oversees and provides guidance on the company’s strategies related to several factors, including community resiliency, health and safety, corporate social responsibility, governance, partner diversity, and public policy matters relevant to our business.

Specific duties of the Sustainability Committee include:

• Assisting the management team in setting general strategy relating to sustainability matters;

• Developing, implementing and monitoring initiatives and policies based on that strategy;

• Overseeing communications with employees, investors and shareholders with respect to ESG matters.

The ESG committee meets on a regular basis to assess progress on ESG matters and will continue to look for opportunities to integrate ESG concerns in our strategy.

• Overseeing communications with employees, investors and shareholders with respect to sustainability matters.

The Sustainability Committee meets on a quarterly basis to assess progress on sustainability matters and will continue to look for opportunities to integrate sustainability concerns in our strategy.

Environmental and Climate Change

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Evidence of the Company’s commitment to the environment and combating climate change can be found in the Sustainability and Citizenship report available on our corporate website.

The company considers ESG factors as part of its investment strategy and reviews individual investments to ensure congruence with company goals in this area.

The company considers sustainability factors as part of its investment strategy and reviews individual investments to ensure congruence with company goals in this area.

We have also made commitments to automate manual or paper-intensive processes and promote the paperless delivery of documents to our policyholders and producers.

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The specialty insurance industry is highly competitive.

While we currently target underserved markets, some of our competitors have greater financial, marketing and management resources and experience than we do.

Our primary competitors include national insurance companies, including American International Group, Inc., Chubb Limited, State Farm Mutual Automobile Insurance Company and Zurich Insurance Group Ltd.

We also compete with the E&S market, including Lloyd’s of London in some of our lines.

While we currently target specialty markets, some of our competitors have greater resources than we do.

Our primary competitors include national specialty insurance companies, including Kinsale Capital Group, Inc., RLI Corp., Skyward Specialty Insurance Group, Inc.

We also compete with Lloyd’s of London in some of our lines.

In addition, we compete against state or other publicly managed enterprises including the California Earthquake Authority and the National Flood Insurance Program.

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Competition is based on many factors, including the reputation and experience of the insurer, coverages offered, pricing and other terms and conditions, customer service, relationships with brokers and agents (including ease of doing business, service provided and commission rates paid), size and financial strength ratings, among other considerations.

Each of our insurance company subsidiaries, PSIC and PESIC has a rating of “A−” (Excellent) (Outlook Positive) from A.M.

Our insurance company subsidiaries, PSIC and PESIC each has a rating of “A” (Excellent) (Outlook Stable) from A.M.

Best, which rates insurance companies based on factors of concern to policyholders.

Best currently assigns 16 ratings to insurance companies, which currently range from “A++” (Superior) to “F” for insurance companies that have been publicly placed in liquidation.

“A−” (Excellent) (Outlook Positive) is the fourth highest rating.

“A” (Excellent) (Outlook Stable) is the third highest rating.

In evaluating a company’s financial and operating performance, A.M.

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This is supported by competitive compensation, benefits and health and wellness programs, and by programs that build connections between our team members and their communities.

Diversity and Inclusion

We are committed to increasing diversity within our Company.

We believe that diversity leads to greater creativity and productivity, helps us serve our customers and partners more effectively, and ultimately benefits our shareholders and the communities in which we do business.

We set diversity goals in our annual Sustainability & Citizenship report.

In 2023, 42% of our team members identify as a member of an ethnic minority group, compared to 40% in 2022, and 50% of our senior executive team identifies as a member of an ethnic minority group.

Our commitment to Diversity and Inclusion follows:

We are committed to following best-in-class sustainability practices, and we believe that our focus on sustainability fosters greater creativity and productivity, helps us serve our customers and partners more effectively, and ultimately benefits our shareholders and the communities in which we do business.

As part of our sustainability efforts, we set diversity goals in our annual Sustainability & Citizenship report.

In 2024, 40% of our team members identify as a member of a minority group, and 43% of our senior executive team identifies as a member of a minority group.

Our commitment to sustainability further includes our focus on "D.I.C.E", defined as follows:

DIVERSITY – We are not all the same.

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We offer fair, competitive compensation and benefits to support our team members overall well-being.

Our compensation programs include base pay, annual incentive compensation and, in many cases, long-term equity-based compensation.

In 2023, 100% of our workforce received equity awards.

Our compensation programs include base pay, annual incentive compensation and long-term equity-based compensation.

In 2024, 100% of our workforce received equity awards and participated in our annual cash bonus plan, including all hourly personnel.

We offer team members a comprehensive and leading benefits program that includes a holistic approach to health and wellness.

We regularly benchmark programs to ensure our team has access to industry-leading benefits to address all aspects of well-being — physical and mental health, family care, financial support, and community engagement.

We have established a policy under which employees located near Palomar offices have a goal to work onsite a minimum of ten days per month.

We continue to provide team members a reimbursement to help manage incremental costs associated with remote work.

We also regularly check-in with team members to assess their mental health.

Team members receive 24/7 access to behavioral health tools and resources.

Effective January 1, 2023, the state of California implemented pay transparency legislation.

To comply with this legislation, we include base pay ranges in all our job listings.

Additionally, we voluntarily disclose our base pay ranges to all our internal employees for the roles they hold in alignment with our philosophy of pay transparency.

We believe in pay transparency and we include base pay ranges in all our job listings.

Additionally, we voluntarily disclose our base pay ranges to all our internal employees for the roles they hold.

Talent Development

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We believe in the dynamic allocation of talent, and therefore we encourage interested team members to explore functions outside their current role.

To support this belief, we provide a $3,000 tuition and/or certification reimbursement for ongoing development.

To support this belief, we provide a $3,000 per annum tuition and/or certification reimbursement for ongoing development.

Lastly, we have a methodical approach to talent development, offering organizational advancement and mentoring services to all team members regardless of position or title.

In 2024, 28% of our workforce was promoted or moved into new positions.

During the third quarter of 2023, our team members completed an engagement survey, and we received a 80% response rate, and a 77% overall engagement score.

During the third quarter of 2024, our team members completed an engagement survey, and we received an 85% response rate, and a 87% overall engagement score.

Consistent with historical practice, we use the responses and learnings from this survey to inform our future talent management strategies.

Additionally, the Company was voted one of the top places to work by the San Diego Union-Tribune.

Additionally, the Company was voted one of the top places to work by the San Diego Union-Tribune for the third consecutive year.

Available Information

We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other information with the SEC.

The SEC maintains an Internet web site that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC.

The address of that site is http://www.sec.gov .

Our financial and other material information is routinely posted to and accessible on the Investors section of our website, available at www.plmr.com.

Information that is contained in and can be accessed through our website or our social media is not incorporated into, and does not form a part of, this Annual Report on Form 10-K.

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.

What changed 10-K

Item 1. Business