What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-06 compared with 2024-11-06 · 207 added, 495 removed, 940 unchanged (43% of the section changed)

4 unchanged sentences

(in thousands, except shares and par value data)

September 30,

Fixed maturity securities available for sale, at fair value (amortized cost:

42 unchanged sentences

34,200 27,869

Income taxes payable

Borrowings from credit agreements

Total liabilities

1 unchanged sentence

Stockholders' equity:

Preferred stock, $ 0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023

Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 26,452,242 and 24,772,987 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Preferred stock, $ 0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of March 31, 2025 and December 31, 2024

Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 26,735,132 and 26,529,402 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

14 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Gross written premiums

4 unchanged sentences

Net investment income

Net realized and unrealized gains (losses) on investments

Net realized and unrealized (losses) gains on investments

Commission and other income

23 unchanged sentences

Balance at December 31, 2023

24,772,987 $ 3 $ 350,597 $ ( 23,991 ) $ 144,643 $ 471,252

Other comprehensive loss, net of tax

— — — ( 2,514 ) — ( 2,514 )

Stock-based compensation

— — 3,820 — — 3,820

Issuance of common stock via employee stock purchase plan

9,806 — 434 — — 434

Issuance of common stock via equity incentive plan

138,267 — 1,857 — — 1,857

Policyholder contribution to surplus

— — 427 — — 427

— — — — 26,382 26,382

Balance at March 31, 2024

24,921,060 $ 3 $ 357,135 $ ( 26,505 ) $ 171,025 $ 501,658

Other comprehensive loss, net of tax

— — — ( 1,550 ) — ( 1,550 )

Stock-based compensation

— — 3,968 — — 3,968

Issuance of common stock via employee stock purchase plan

Issuance of common stock via equity incentive plan

63,578 — 2,112 — — 2,112

Policyholder contribution to surplus

— — 689 — — 689

— — — — 25,729 25,729

Balance at June 30, 2024

24,984,638 $ 3 $ 363,904 $ ( 28,055 ) $ 196,754 $ 532,606

Other comprehensive income, net of tax

— — — 17,916 — 17,916

Stock-based compensation

— — 4,117 — — 4,117

Issuance of common stock in stock offering, net of offering costs

1,380,000 — 115,724 — — 115,724

Issuance of common stock via employee stock purchase plan

7,294 — 468 — — 468

Issuance of common stock via equity incentive plan

80,310 — 1,064 — — 1,064

Policyholder contribution to surplus

— — 921 — — 921

— — — — 30,497 30,497

Balance at September 30, 2024

26,452,242 $ 3 $ 486,198 $ ( 10,139 ) $ 227,251 $ 703,313

See accompanying notes.

7 unchanged sentences

Balance at December 31, 2024

25,027,467 $ 3 $ 333,558 $ ( 36,515 ) $ 87,708 $ 384,754

Other comprehensive income, net of tax

— — — 5,474 — 5,474

Stock-based compensation

— — 3,450 — — 3,450

Issuance of common stock via employee stock purchase plan

7,724 — 394 — — 394

Issuance of common stock via equity incentive plan

41,685 — 90 — — 90

Repurchases of common stock

( 134,680 ) — — — ( 6,826 ) ( 6,826 )

— — — — 17,313 17,313

Policyholder contribution to surplus

Offering Costs (related to prior year offering)

Balance at March 31, 2025

24,942,196 $ 3 $ 337,492 $ ( 31,041 ) $ 98,195 $ 404,649

Other comprehensive income, net of tax

— — — ( 3,685 ) — ( 3,685 )

Stock-based compensation

— — 3,697 — — 3,697

Issuance of common stock via employee stock purchase plan

Issuance of common stock via equity incentive plan

18,555 — 224 — — 224

Repurchases of common stock

( 166,482 ) — — — ( 8,739 ) ( 8,739 )

— — — — 17,562 17,562

Balance at June 30, 2023

24,794,269 $ 3 $ 341,413 $ ( 34,726 ) $ 107,018 $ 413,708

Other comprehensive loss, net of tax

— — — ( 8,495 ) — ( 8,495 )

Stock-based compensation

— — 3,589 — — 3,589

Issuance of common stock via employee stock purchase plan

9,356 — 406 — — 406

Issuance of common stock via equity incentive plan

44,999 — 265 — — 265

Repurchases of common stock

( 117,739 ) — — — ( 6,571 ) ( 6,571 )

— — — — 18,432 18,432

Balance at September 30, 2023

24,730,885 $ 3 $ 345,673 $ ( 43,221 ) $ 118,879 $ 421,334

See accompanying notes.

3 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities

Net cash provided by operating activities

$ 188,520 $ 93,836

Investing activities

Purchases of property and equipment

( 194 ) ( 15 )

Capitalized software costs

( 4,115 ) ( 5,324 )

Purchases of fixed maturity securities

( 448,968 ) ( 190,560 )

Purchases of equity securities

( 202 ) ( 945 )

Purchase of equity method investment

Sales and maturities of fixed maturity securities

227,748 104,505

Sales of equity securities

Change in securities receivable or payable, net

( 2,960 ) ( 3,576 )

Investments in limited partnerships

1 unchanged sentence

Net cash used in investing activities

( 224,884 ) ( 104,156 )

Financing activities

Net (payments on) proceeds from line of credit

( 52,600 ) 16,200

Proceeds from stock offering, net of offering costs

Offering costs (related to prior year offering)

Proceeds from common stock issued via employee stock purchase plan

1 unchanged sentence

Policy holder contribution to surplus

Repurchases of common stock

Net cash provided by (used in) financing activities

71,096 ( 4,556 )

Net increase (decrease) in cash, cash equivalents and restricted cash

34,732 ( 14,876 )

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

51,852 68,164

Cash, cash equivalents and restricted cash at end of period

$ 86,584 $ 53,288

Supplementary cash flow information:

Cash paid for income taxes

$ 29,299 $ 21,093

Cash paid for interest

$ 968 $ 2,428

The following table summarizes our cash and cash equivalents and restricted cash and cash equivalents within the condensed consolidated balance sheets (in thousands):

September 30,

Cash and cash equivalents

10 unchanged sentences

The Company has several wholly owned subsidiaries including an Oregon domiciled insurance company, Palomar Specialty Insurance Company (“PSIC”), a Bermuda based reinsurance company, Palomar Specialty Reinsurance Company Bermuda Ltd.

(“PSRE”), an Arizona domiciled surplus lines insurance company, Palomar Excess and Surplus Insurance Company (“PESIC”), a California domiciled property and casualty insurance agency, Palomar Insurance Agency, DBA Palomar General Insurance Agency (“PGIA”), and a Delaware incorporated management company, Palomar Underwriters Exchange Organization, Inc.

("PUEO"), that provides services to Laulima Exchange (“Laulima”), a Hawaii domiciled reciprocal exchange, as its attorney-in-fact.

(“PSRE”), an Arizona domiciled surplus lines insurance company, Palomar Excess and Surplus Insurance Company (“PESIC”), a California domiciled property and casualty insurance agency, Palomar Insurance Agency, Inc., DBA Palomar General Insurance Agency (“PGIA”), a Delaware incorporated management company, Palomar Underwriters Exchange Organization, Inc.

("PUEO"), that provides services to a Hawaii domiciled reciprocal exchange, Laulima Exchange (“Laulima”), as its attorney-in-fact, a New Jersey domiciled insurance carrier specializing in surety bonds, First Indemnity of America Insurance Co.

("FIA") and a Delaware incorporated insurance management company, Palomar Crop Insurance Services, Inc.

Segment Reporting

The Company has a single operating segment, the property and casualty insurance business.

The Company's chief operating decision maker ("CODM") is the Chief Executive Officer.

The significant segment expenses provided to the CODM are consistent with the categories shown in the Company's Condensed Consolidated Statements of Income and Comprehensive Income and there are no other segment items used by the CODM.

The CODM reviews the Company's revenue, expenses and net income as reported under U.S.

generally accepted accounting principles (“GAAP”), which is the primary measure of segment profit or loss.

The CODM reviews these measures, comparing them to prior periods and expectations, and makes resource allocation decisions based on the analysis.

While the Company’s CODM also reviews the revenue streams attributable to individual products, operations are managed, resources are allocated, and financial performance is evaluated on a consolidated basis.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) for interim financial information and include the accounts of the Company and its wholly‑owned subsidiaries.

The accompanying condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and include the accounts of the Company and its wholly‑owned subsidiaries.

The condensed consolidated financial statements also include the accounts of Laulima, as Laulima is a variable interest entity ("VIE") for which the Company is the primary beneficiary.

Within footnote 7, certain prior year amounts have been reclassified to conform to the current year presentation.

These condensed consolidated financial statements do not contain all information and footnotes required by U.S.

GAAP for complete consolidated financial statements.

These condensed consolidated financial statements do not contain all information and footnotes required by GAAP for complete consolidated financial statements.

For a more complete description of the Company’s business and accounting policies, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2024 , filed with the SEC on February 25, 2025 ( the “2024 Annual Report on Form 10 -K”).

10 unchanged sentences

Recently adopted accounting pronouncements

The Company has not adopted any new accounting guidance during the nine months ended September 30, 2024 .

The Company has not adopted any new accounting guidance during the three months ended March 31, 2025.

Recently issued accounting pronouncements not yet adopted

Segment Reporting

In November 2023, the FASB issued ASU No.

2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss to assess potential future cash flows for each reportable segment and the entity as a whole.

The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures.

ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023 - 09, Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures .

Improvements to Income Tax Disclosures ("ASU 2023 - 09" ) .

ASU 2023 - 09 requires public business entities to disclose additional information with respect to the reconciliation of the effective tax rate to the statutory rate.

Additionally, public business entities will need to disaggregate federal, state and foreign taxes paid in their financial statements.

ASU 2023 - 09 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024.

ASU 2023 - 09 is effective for public business entities for fiscal years beginning after December 15, 2024.

The Company will adopt this guidance beginning with the Annual Report on Form 10 -K for the year ending December 31, 2025 and the adoption is not expected to have a significant impact on the Company's required disclosures.

Income Statement Expenses

In November 2024, the FASB issued ASU No.

2024 - 03, Disaggregation of Income Statement Expenses ("ASU 2023 - 03" ) , which will require disclosure of additional information about specific expense categories in the notes to financial statements for all public business entities.

ASU 2024 - 03 is effective for annual reporting beginning with the fiscal year ending December 31, 2027, and for interim periods thereafter.

Early adoption is permitted.

The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

The Company’s available‑for‑sale investments are summarized as follows:

September 30, 2024

March 31, 2025

Credit Losses

28 unchanged sentences

Security holdings in an unrealized loss position

As of September 30, 2024 , the Company held 399 fixed maturity securities in an unrealized loss position with a total estimated fair value of $ 387.5 million and total gross unrealized losses of $ 23.6 million.

As of March 31, 2025 , the Company held 640 fixed maturity securities in an unrealized loss position with a total estimated fair value of $ 602.5 million and total gross unrealized losses of $ 29.9 million.

As of December 31, 2024 , the Company held 595 fixed maturity securities in an unrealized loss position with a total estimated fair value of $ 664.0 million and total gross unrealized losses of $ 37.3 million.

The aggregate fair value and gross unrealized losses of the Company’s investments aggregated by investment category and the length of time these individual securities have been in a continuous unrealized loss position as of September 30, 2024 and December 31, 2023 , are as follows:

The aggregate fair value and gross unrealized losses of the Company’s investments aggregated by investment category and the length of time these individual securities have been in a continuous unrealized loss position as of March 31, 2025 and December 31, 2024 , are as follows:

Less Than 12 Months

More Than 12 Months

September 30, 2024

March 31, 2025

(in thousands)

28 unchanged sentences

The Company reviews all securities with unrealized losses on a quarterly basis to assess whether the decline in the securities fair value necessitates the recognition of an allowance for credit losses.

The Company considers numerous factors in its review as described in Footnote 1 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report on Form 10 -K.

The Company has recorded an immaterial allowance for credit losses for two investment securities.

Based on the Company’s review as of September 30, 2024 , for the remainder of securities, the Company determined that the fixed maturity securities’ unrealized losses were primarily the result of the interest rate environment and not the credit quality of the issuers.

The Company considers numerous factors in its review as described in Note 1 of the Notes to the Consolidated Financial Statements in the 2024 Annual Report on Form 10 -K.

Based on the Company’s review as of March 31, 2025 , the Company determined that the fixed maturity securities’ unrealized losses were primarily the result of the interest rate environment and not the credit quality of the issuers.

The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before the recovery of their amortized cost basis.

Contractual maturities of available ‑ for ‑ sale fixed maturity securities

The amortized cost and fair value of fixed maturity securities at September 30, 2024 , by contractual maturity, are shown below.

The amortized cost and fair value of fixed maturity securities at March 31, 2025 , by contractual maturity, are shown below.

(in thousands)

14 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Interest income

1 unchanged sentence

Dividend income

220 211 675 602

Investment expense

5 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Realized gains:

Gains on sales of fixed maturity securities

$ 42 $ — $ 59 $ 65

Gains on sales of equity securities

Total realized gains

6 unchanged sentences

( 469 ) ( 1,206 )

Net realized investment (losses) gains

Net realized investment losses

( 428 ) ( 1,206 )

Change in allowance for credit losses

327 — — ( 667 )

Net unrealized gains (losses) on equity securities

Net unrealized (losses) gains on equity securities

( 2,332 ) 4,229

Net unrealized gains (losses) on equity method investment

Net unrealized losses on equity method investment

( 18 ) ( 21 )

Net unrealized gains on other investments

Net realized and unrealized gains (losses) on investments

Net realized and unrealized (losses) gains on investments

$ ( 2,338 ) $ 3,002

Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the settlement date.

Proceeds from the sale of fixed maturity securities were $ 3.2 million and insignificant for the three months ended September 30, 2024 and 2023 , respectively.

Proceeds from the sale of fixed maturity securities were $ 5.4 and $ 9.8 million for the nine months ended September 30, 2024 and 2023 , respectively.

Proceeds from the sale of fixed maturity securities were $ 2.0 million and $ 2.2 million for the three months ended March 31, 2025 and 2024 , respectively.

Proceeds from the sale of equity securities were $ 1.8 and insignificant for the three months ended March 31, 2025 and 2024 , respectively.

The Company places securities on statutory deposit with certain state agencies to retain the right to do business in those states.

These securities are included in available‑for‑sale investments on the balance sheet.

As of September 30, 2024 and December 31, 2023 , the carrying value of securities on deposit with state regulatory authorities was $ 7.8 million and $ 8.6 million, respectively.

As of March 31, 2025 and December 31, 2024 , the carrying value of securities on deposit with state regulatory authorities was $ 12.0 million and $ 9.9 million, respectively.

The Company has investments in limited partnerships, recorded in the Other Investments line of the Unaudited Condensed Consolidated Balance Sheets.

These investments represent capital commitments to private equity funds structured as limited partnerships, which primarily hold illiquid securities.

The funds have a ten -year term with no redemption rights.

Capital is contributed as called by the general partners, and distributions are received as proceeds are generated from the underlying investments.

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

As of September 30, 2024 , the Company had unfunded commitments to invest an additional $ 50.1 million in these limited partnerships.

As of March 31, 2025 , the Company had unfunded commitments to invest an additional $ 75.5 million in these limited partnerships.

Fair Value Measurements

15 unchanged sentences

Therefore, these investments are classified and disclosed in Level 2 of the hierarchy.

The following tables present the hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 .

September 30, 2024

The following tables present the hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 .

March 31, 2025

(in thousands)

35 unchanged sentences

Transfers between Level 3 and Level 2 securities result from changes in the availability of observable market inputs and are recorded at the beginning of the reporting period.

As of September 30, 2024 and December 31, 2023 , the Company had no fixed income securities classified as Level 3.

As of March 31, 2025 and December 31, 2024 , the Company had no fixed income securities classified as Level 3.

Reserve for Losses and Loss Adjustment Expenses

The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses (“LAE”):

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

(in thousands)

Reserve for losses and LAE net of reinsurance recoverables at beginning of period

$ 118,761 $ 81,300 $ 97,653 $ 77,520

Balance acquired from FIA (1)

Incurred losses and LAE, net of reinsurance, related to:

40,536 15,116 100,225 50,954

( 221 ) 1,023 ( 2,642 ) 3,742

Total incurred

40,315 16,139 97,583 54,696

Loss and LAE payments, net of reinsurance, related to:

16,153 6,646 27,909 14,215

5,649 ( 1,385 ) 30,053 25,823

Total payments

21,802 5,261 57,962 40,038

Reserve for losses and LAE net of reinsurance recoverables at end of period

137,274 92,178 137,274 92,178

Reinsurance recoverables on unpaid losses and LAE at end of period

360,164 232,170 360,164 232,170

Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period

$ 497,438 $ 324,348 $ 497,438 $ 324,348

( 1 ) - Represents amounts recognized in Reserve for losses and LAE net of reinsurance recoverables upon acquisition of FIA on 1/1/2025, in accordance with ASC 805, Business Combinations.

See Note 12 for additional information regarding the acquisition.

Considerable variability is inherent in the estimate of the reserve for losses and LAE.

Although management believes the liability recorded for losses and LAE is adequate, the variability inherent in this estimate could result in changes to the ultimate liability, which may be material to stockholders’ equity.

The Company experienced favorable prior year development of $ 0.2 million and adverse prior year development $ 1.0 million during the three months ended September 30, 2024 and 2023 , respectively.

The Company experienced favorable prior year development of $ 2.6 million and adverse prior year development of $ 3.7 million during the nine months ended September 30, 2024 and 2023 , respectively.

Favorable prior year development during the three months ended September 30, 2024 was primarily due to lower than anticipated severity of attritional losses.

Adverse prior year development during the three months ended September 30, 2023 was primarily due to higher than anticipated severity of attritional losses, offset by lower than anticipated severity of catastrophe losses.

Favorable prior year development during the nine months ended September 30, 2024 was primarily due to lower than anticipated severity of attritional losses.

Adverse prior year development during the nine months ended September 30, 2023 was primarily due to higher than anticipated severity of attritional losses, offset by lower than anticipated severity of catastrophe losses.

The Company experienced favorable prior year development of $ 4.3 million and adverse prior year development $ 0.5 million during the three months ended March 31, 2025 and 2024 , respectively.

Favorable prior year development during the three months ended March 31, 2025 was primarily due to lower than anticipated severity of attritional losses.

Adverse prior year development during the three months ended March 31, 2024 was primarily due to higher than anticipated severity of attritional losses on certain discontinued lines of business.

Stockholders ’ Equity

As of September 30, 2024 and December 31, 2023 , the Company had 5,000,000 preferred shares authorized with a par value of $ 0.0001 and no preferred shares issued and outstanding.

As of September 30, 2024 and December 31, 2023 , the Company had 500,000,000 common shares authorized and 26,452,242 and 24,772,987 common shares issued and outstanding, respectively, with a par value of $ 0.0001 .

Additional paid in capital was $ 486.2 million as of September 30, 2024 and $ 350.6 million as of December 31, 2023 .

In August 2024, the Company completed a registered sale ( August 2024 Secondary Offering) of 1,380,000 shares of common stock at a public offering price of $ 88.00 per share, inclusive of 180,000 shares sold pursuant to the underwriter’s option to purchase additional shares.

Our net proceeds from the August 2024 Secondary Offering were approximately $ 115.7 million, after deducting underwriting discounts and commissions and offering costs.

As of March 31, 2025 and December 31, 2024 , the Company had 5,000,000 preferred shares authorized with a par value of $ 0.0001 and no preferred shares issued and outstanding.

As of March 31, 2025 and December 31, 2024 , the Company had 500,000,000 common shares authorized and 26,735,132 and 26,529,402 common shares issued and outstanding, respectively, with a par value of $0.0001 .

Additional paid in capital was $ 502.0 million as of March 31, 2025 and $ 493.7 million as of December 31, 2024 .

Common stock reserved for future issuance

Common stock reserved for future issuance consists of the following as of September 30, 2024 :

Common stock reserved for future issuance consists of the following as of March 31, 2025 :

Stock options outstanding under 2019 Equity Incentive Plan

5 unchanged sentences

The below table summarizes the Company’s stock-based compensation expense for each period presented:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

(in thousands)

16 unchanged sentences

Stock options expire ten years after the grant date.

The following table summarizes stock option transactions for the nine months ended September 30, 2024 :

The following table summarizes stock option transactions for the three months ended March 31, 2025 :

Number of shares

9 unchanged sentences

( 328 ) 94.84

Outstanding at September 30, 2024

Outstanding at March 31, 2025

529,610 $ 32.96 4.7 $ 26,659

Vested and Exercisable at September 30, 2024

Vested and Exercisable at March 31, 2025

528,554 $ 32.87 4.6 $ 26,651

As of September 30, 2024 , the Company had approximately $ 0.3 million of total unrecognized stock-based compensation expense related to stock options expected to be recognized over a weighted-average period of 0.4 years.

As of March 31, 2025 , the Company had immaterial unrecognized stock-based compensation expense related to stock options expected to be recognized over a weighted-average period of 0.5 years.

Restricted Stock Units

2 unchanged sentences

All vesting is subject to continued service.

The following table summarizes RSU transactions for the nine months ended September 30, 2024 :

The following table summarizes RSU transactions for the three months ended March 31, 2025 :

Number of shares

5 unchanged sentences

( 2,592 ) 76.52

Non-vested outstanding at September 30, 2024

Non-vested outstanding at March 31, 2025

322,630 $ 81.85

As of September 30, 2024 , the Company had approximately $ 16.8 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 1.9 years.

As of March 31, 2025 , the Company had approximately $ 23.3 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 2.0 years.

Performance Stock Units

3 unchanged sentences

If the Company’s stock price reaches and remains at certain milestones for 30 days, the PSUs shall become earned units and will vest upon completion of a requisite service period of approximately five years from the date of grant.

As of September 30, 2024 , none of the stock price milestones have been achieved.

As of March 31, 2025 , two stock price milestones have been achieved solely with respect to the PSU award granted to the Chief Executive Officer.

These PSUs have been earned, but will not vest until the fifth anniversary of the grant date, subject to continued service.

For other PSUs outstanding, vesting of PSUs requires a period of future service and the number of shares that vest depends on performance relative to predetermined targets of the Company’s Gross Written Premiums and Adjusted Return on Equity as set by the Compensation Committee.

Prior to 2023, the PSU’s performance period was the fiscal year of the grant.

Beginning in 2023, the PSU’s performance period is primarily a three -year period beginning with the grant date.

The PSU’s performance period is primarily a three -year period beginning with the grant date.

At the end of the performance period, the actual results are measured against the predetermined targets to determine the number of PSUs to be earned as compensation.

The earned PSUs are also subject to a required service period of approximately three years from the grant date before vesting and being issued as common stock.

The following table summarizes PSU transactions for the nine months ended September 30, 2024 :

Effective starting with 2025 grants, PSUs issued to executives include a relative total shareholder return (“RTSR”) modifier.

The RTSR modifier adjusts PSU payouts up or down based on the Company's shareholder return relative to the S&P 1500 Property & Casualty Insurance Index (the “Index”) over a three -year measurement period.

The following table summarizes PSU transactions for the three months ended March 31, 2025 :

Number of shares

4 unchanged sentences

( 2,052 ) 63.82

Non-vested outstanding at September 30, 2024

Non-vested outstanding at March 31, 2025

502,155 $ 49.38

1 unchanged sentence

The actual number of PSUs which will vest is subject to adjustment based on the Company’s actual stock price performance and financial performance relative to the predetermined targets.

As of September 30, 2024 , the Company had approximately $ 9.1 million of total unrecognized stock-based compensation expense related to PSUs expected to be recognized over a weighted-average period of 1.9 years.

As of March 31, 2025 , the Company had approximately $ 14.8 million of total unrecognized stock-based compensation expense related to PSUs expected to be recognized over a weighted-average period of 1.6 years.

2019 Employee Stock Purchase Plan

5 unchanged sentences

During each discrete offering period employee funds are withheld, and the stock purchase occurs upon the conclusion of the offering period.

The Company issued 17,100 shares pursuant to the ESPP during the nine months ended September 30, 2024 .

The Company issued 6,310 shares pursuant to the ESPP during the three months ended March 31, 2025 .

Share repurchases

In January 2022, Company's the Board of Directors approved a share repurchase program which replaced the existing program and authorized the repurchase of up to $ 100 million of outstanding shares of common stock.

The program ended on March 31, 2024 and no shares have been repurchased in 2024.

The Company accounts for share repurchases by charging the excess of repurchase price over the common stock’s par value entirely to retained earnings.

All repurchased shares are retired and become authorized but unissued shares.

The Company's share repurchase program ended on March 31, 2024.

There were no share repurchases made during the three months ended March 31, 2025.

Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income (loss) (“AOCI”) are as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Beginning Balance

Other comprehensive (loss) income before reclassification

Federal income tax expense (benefit)

Other comprehensive (loss) income before reclassification, net of tax

$ ( 26,845 ) $ ( 23,991 )

Other comprehensive income (loss) before reclassification

11,829 ( 3,185 )

Federal income tax (benefit) expense

( 1,970 ) 669

Other comprehensive income (loss) before reclassification, net of tax

9,859 ( 2,516 )

Amounts reclassified from AOCI

Federal income tax expense (benefit)

Federal income tax benefit

Amounts reclassified from AOCI, net of tax

Other comprehensive (loss) income

Other comprehensive income (loss)

10,203 ( 2,514 )

Balance at end of period

$ ( 16,642 ) $ ( 26,505 )

Underwriting Information

1 unchanged sentence

Gross written premiums (“GWP”) by product are presented below:

Three Months Ended September 30,

Nine Months Ended September 30,

($ in thousands)

Three Months Ended March 31,

($ in thousands)

1 unchanged sentence

Total Gross Written Premiums

( 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.

Gross written premiums by state are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

($ in thousands)

Three Months Ended March 31,

($ in thousands)

1 unchanged sentence

Gross written premiums by insurance subsidiary are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

($ in thousands)

Three Months Ended March 31,

($ in thousands)

1 unchanged sentence

The Company calculates its tax provision in interim periods using its best estimate of the effective tax rate expected for the full year.

During the three months ended September 30, 2024 , the Company’s income tax rate of 20.8 % was lower than the statutory rate of 21 % due primarily to the tax impact of the permanent component of employee stock option exercises.

During the three months ended September 30, 2023 , the Company’s income tax rate of 24.9 % was higher than the statutory rate of 21 % due primarily to non-deductible executive compensation expense.

For the nine months ended September 30, 2024 , the Company’s tax rate of 22.2 % was higher than the statutory rate due primarily to non-deductible executive compensation expense.

For the nine months ended September 30, 2023 , the Company’s tax rate of 24.0 % was higher than the statutory rate also due primarily to non-deductible executive compensation expense.

During the three months ended March 31, 2025 , the Company’s income tax rate of 20.1 % was lower than the statutory rate of 21 % due primarily to the tax impact of the permanent component of employee stock option exercises offset by non-deductible executive compensation expense.

During the three months ended March 31, 2024 , the Company’s income tax rate of 23.2 % was higher than the statutory rate of 21 % due primarily to non-deductible executive compensation expense.

Earnings Per Share

The following table sets out earnings per share of common stock:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except shares and per share data)

Three Months Ended March 31,

(in thousands, except shares and per share data)

5 unchanged sentences

The Company utilizes both excess of loss (XOL) and quota share reinsurance.

As of September 30, 2024 , the Company’s catastrophe event retention is $ 20 million for earthquake events and $ 15.5 million for hurricane events and all other perils, and the Company’s XOL reinsurance structure provides protection up to $ 3.06 billion for earthquake events, $ 735 million for Hawaii hurricane events, and $ 117.5 million for continental U.S.

As of March 31, 2025 , the Company’s catastrophe event retention is $ 20 million for earthquake events and $ 15.5 million for hurricane events and all other perils.

As of March 31, 2025 , the Company’s XOL reinsurance structure provides protection up to $ 3.2 billion for earthquake events, $ 735 million for Hawaii hurricane events, and $ 117.5 million for continental U.S.

hurricane events.

2 unchanged sentences

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 closed a $ 200 million 144A catastrophe bond which became effective June 1, 2023.

During the second quarter of 2023, the Company 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.

During the second quarter of 2024, the Company closed a $ 420 million 144A catastrophe bond which became effective June 1, 2024.

During the second quarter of 2024, the Company also closed a $ 420 million 144A catastrophe bond which became effective June 1, 2024.

This catastrophe bond was also completed through Torrey Pines Re Ltd and provides indemnity-based reinsurance covering earthquake events through June 1, 2027.

12 unchanged sentences

If an event of default occurs, any debt may be declared immediately due and payable.

As of September 30, 2024 , the Company was in compliance with all debt covenants.

As of September 30, 2024 and December 31, 2023 , the Company had no borrowings outstanding on the Credit Agreement.

Interest expense on the Credit Agreement was $ 0.1 million and $ 0.3 million for the three and nine months ended September 30, 2024 , respectively.

Interest expense on the Credit Agreement was $ 0.1 million and $ 0.9 million for the three and nine months ended September 30, 2023 , respectively.

As of March 31, 2025 , the Company was in compliance with all debt covenants.

As of March 31, 2025 and December 31, 2024 , the Company had no borrowings outstanding on the Credit Agreement.

Interest expense on the Credit Agreement was $ 0.1 million for both the three months ended March 31, 2025 and March 31, 2024 .

FHLB Line of Credit

3 unchanged sentences

All advances have a predetermined term and the interest rate varies based on the term of the advance.

As of September 30, 2024 , the Company had no borrowings outstanding through the FHLB.

Interest expense on the FHLB line of credit was immaterial and $ 0.8 million for the three and nine months ended September 30, 2024 , respectively.

As of December 31, 2023 , the Company had $ 52.6 million of borrowings outstanding through the FHLB at the overnight rate of 5.62 %.

Interest expense on the FHLB line of credit was $ 0.8 million and $ 2.1 million for the three and nine months ended September 30, 2023 , respectively.

As of March 31, 2025 and December 31, 2024 , the Company had no borrowings outstanding through the FHLB.

Interest expense on the FHLB line of credit was immaterial and $ 0.7 million for the three months ended March 31, 2025 and March 31, 2024 , respectively.

Business Acquisitions

On January 1, 2025, the Company completed the acquisition of FIA.

The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification (ASC) 805, Business Combinations.

As the acquisition did not meet the significance thresholds under Rule 3 - 05 of Regulation S- X, separate financial statements of FIA are not required to be filed.

In connection with the acquisition, the Company recognized the acquired assets and assumed liabilities of FIA at their estimated fair values as of the acquisition date.

Accordingly, the Company’s financial statements as of March 31, 2025 reflect adjustments to record opening balances for the assets acquired and liabilities assumed.

These adjustments primarily result from purchase accounting fair value measurements and cause some balances as of January 1, 2025 to differ from the amounts reported as of December 31, 2024.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

The discussion and analysis below includes certain forward-looking statements that are subject to risks, uncertainties and other factors described in part II, item 1A of this Quarterly Report.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors.

The results of operations for the nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2024, or for any other future period.

Forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 appear throughout this report.

These forward looking statements generally include words such as “expect,” “predict,” “estimate,” “will,” “should,” “anticipate,” “believe” and similar expressions.

Such assumptions are, in turn, based on information available and internal estimates and analyses of general economic conditions, competitive factors, conditions specific to the property and casualty insurance and reinsurance industries, claims development and the impact thereof on our loss reserves, the adequacy and financial security of our reinsurance programs, developments in the securities market and the impact on our investment portfolio, regulatory changes and conditions and other factors.

These assumptions are subject to various risks, uncertainties and other factors, including, without limitation those set forth in “Item 1A.

Risk Factors” within the Annual Report on Form 10-K for the year ended December 31, 2024 and Part II within this report.

Actual results could differ materially from those expressed in, or implied by, these forward looking statements.

Forward looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this report.

While the Company may elect to update these forward looking statements at some point in the future, the Company specifically disclaims any obligation to do so.

You should review the various risks, uncertainties and other factors listed from time to time in our Securities and Exchange Commission filings.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2025, or for any other future period.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report, and in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K as filed with the SEC on February 25, 2025.

5 unchanged sentences

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.

Best”), a leading rating agency for the insurance industry.

First Indemnity of America Insurance Co.

("FIA") carries an “A-” (Stable) rating from A.M.

We distribute our products through multiple channels, including retail agents, program administrators, wholesale brokers, and partnerships with other insurance companies.

5 unchanged sentences

We seek to continuously grow our income by developing product offerings for 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.

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

1 unchanged sentence

Recent Developments

In June 2024, the Company executed a definitive purchase agreement to acquire First Indemnity of America Insurance Company (“FIA”), a New Jersey domiciled insurance carrier that specializes in the underwriting of surety bonds for small to medium sized contractors primarily in the Northeast United States.

FIA is licensed in 16 states and is rated "A-" by A.M.

The transaction has been approved by the respective board of directors of both companies and is expected to close in late 2024 or early 2025 subject to the satisfaction of customary closing conditions and regulatory approval by the New Jersey Department of Banking and Insurance.

In August 2024, we completed a registered sale (August 2024 Secondary Offering) of 1,380,000 shares of common stock at a public offering price of $88.00 per share, inclusive of 180,000 shares sold pursuant to the underwriter’s option to purchase additional shares.

Our net proceeds from the August 2024 Secondary Offering were approximately $115.7 million, after deducting underwriting discounts and commissions and offering costs.

In April 2025, the Company completed the acquisition of Advanced AgProtection (“AAP”), a Texas-domiciled managing general agent specializing in Crop insurance.

The AAP team brings extensive industry experience, longstanding client, carrier and reinsurer relationships, and a demonstrated track record of performance in the Crop insurance sector.

The Company is currently in the market with a 144A catastrophe bond which is scheduled to close during the second quarter of 2025.

Components of Our Results of Operations

10 unchanged sentences

In periods where we assume a large volume of unearned premiums, our gross written premiums may increase significantly compared to prior periods and the increase may not be indicative of future trends.

The majority of our Crop written premiums are recognized in the third quarter, as we receive the requisite reporting from insureds at that time.

Ceded Written Premiums

12 unchanged sentences

The majority of our insurance policies have a term of one year and premiums are earned pro rata over the terms of the policies.

Crop premiums are earned ratably over the risk period.

The requisite reporting of Crop premiums is primarily received in the third quarter, after the start of the risk period, and earned premium is caught up to cover the period between the start of the risk period and receipt of reporting.

Generally, this process results in most of the Crop earned premiums being recognized in the third quarter of each year.

Commission and Other Income

4 unchanged sentences

These expenses are a function of the size and term of the insurance policies we write and the loss experience associated with the underlying coverage.

Certain policies we write subject us to attritional losses such as building fires.

Certain policies we write subject us to attritional losses such as building fires or casualty claims.

In addition, many of the policies we write subject us to catastrophe losses.

65 unchanged sentences

Results of Operations

Three months ended September 30, 2024 compared to three months ended September 30, 2023

The following table summarizes our results for the three months ended September 30, 2024 and 2023:

Three months ended March 31, 2025 compared to three months ended March 31, 2024

The following table summarizes our results for the three months ended March 31, 2025 and 2024:

Three Months Ended

September 30,

($ in thousands, except per share data)

11 unchanged sentences

Net investment income

Net realized and unrealized gains (losses) on investments

Net realized and unrealized (losses) gains on investments

Income before income taxes

Income tax expense

Net realized and unrealized (gains) losses on investments

Net realized and unrealized losses (gains) on investments

Expenses associated with transactions

14 unchanged sentences

Adjusted underwriting income (1)

NM - not meaningful

Indicates non-GAAP financial measure;

1 unchanged sentence

Gross Written Premiums

Gross written premiums increased $101.0 million, or 32.2% to $415.0 million for the three months ended September 30, 2024 compared to $314.0 million for the three months ended September 30, 2023.

Premium growth was primarily due to an increased volume of policies written across our lines of business which was driven by new business generated with existing partners, strong premium retention rates for existing business, expansion of our distribution footprint, and new partnerships.

Gross written premiums increased $74.1 million, or 20.1%, to $442.2 million for the three months ended March 31, 2025 compared to $368.1 million for the three months ended March 31, 2024.

Premium growth was primarily due to an increased volume of policies in the majority of our lines of business which was driven by new business generated with existing partners, strong premium retention rates for existing business, expansion of our distribution footprint, and new partnerships.

The following table summarizes our gross written premiums by line of business and shows each line’s percentage of total gross written premiums for each period:

Three Months Ended September 30,

Three Months Ended March 31,

($ in thousands)

1 unchanged sentence

Total Gross Written Premiums

NM - not meaningful

(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.

Fronting premiums represent premium where we subsequently cede the majority of the premium and risk in exchange for a fronting fee, which is our primary source of profit in the arrangement.

The volume of fronting premiums written each period may vary due to the timing of entering new fronting partnerships and terminations of existing fronting partnerships.

A large fronting partnership terminated in the third quarter of 2024, causing the decline in fronting premiums shown above.

The following table summarizes our gross written premiums by insurance subsidiary:

Three Months Ended September 30,

Three Months Ended March 31,

($ in thousands)

1 unchanged sentence

Ceded Written Premiums

Ceded written premiums increased $51.9 million, or 25.5%, to $255.3 million for the three months ended September 30, 2024 from $203.3 million for the three months ended September 30, 2023.

The increase was primarily due to increased premiums ceded under quota share and fronting agreements due to growth in the volume of written premiums subject to quota share or fronting agreements.

In addition, we incurred increased XOL reinsurance expense due to growth in exposure

Although our volume of ceded written premiums increased, ceded written premiums as a percentage of gross written premiums decreased to 61.5% for the three months ended September 30, 2024 from 64.8% for the three months ended September 30, 2023.

Ceded written premiums increased $2.6 million, or 1.1%, to $230.7 million for the three months ended March 31, 2025 from $228.2 million for the three months ended March 31, 2024.

The increase was primarily due to an increase in XOL reinsurance expense driven by growth in exposure, offset by a decrease in quota share cessions primarily driven by lower fronting written premiums.

Although our volume of ceded written premiums increased, ceded written premiums as a percentage of gross written premiums decreased to 52.2% for the three months ended March 31, 2025 from 62.0% for the three months ended March 31, 2024.

This percentage decrease was driven by changes in our composition of business whereby premiums written in the current period were subject to lower quota share or XOL cession percentages compared to premiums written in the prior period.

Net Written Premiums

Net written premiums increased $49.0 million, or 44.3%, to $159.7 million for the three months ended September 30, 2024 from $110.7 million for the three months ended September 30, 2023.

Net written premiums increased $71.5 million, or 51.1%, to $211.4 million for the three months ended March 31, 2025 from $139.9 million for the three months ended March 31, 2024.

The increase was primarily due to an increase in gross written premiums, primarily in our Casualty and Earthquake lines, partially offset by increased ceded written premiums.

Net Earned Premiums

Net earned premiums increased $49.8 million, or 58.1%, to $135.6 million for the three months ended September 30, 2024 from $85.8 million for the three months ended September 30, 2023 due primarily to the earning of increased gross written premiums offset by the earning of ceded written premiums under reinsurance agreements.

Net earned premiums increased $56.2 million, or 52.1%, to $164.1 million for the three months ended March 31, 2025 from $107.9 million for the three months ended March 31, 2024 due primarily to the earning of increased gross written premiums offset by the earning of ceded written premiums under reinsurance agreements.

The table below shows the amount of premiums we earned on a gross and net basis and net earned premiums as a percentage of gross earned premiums in each period presented:

Three Months Ended

September 30,

($ in thousands)

5 unchanged sentences

Commission and Other Income

Commission and other income increased $0.2 million to $0.7 million for the three months ended September 30, 2024 from $0.5 million for the three months ended September 30, 2023.

Commission and other income increased $0.3 million to $0.8 million for the three months ended March 31, 2025 from $0.5 million for the three months ended March 31, 2024.

The balance increased due to an increase in commissions and policy related fees driven by increased premiums written.

Losses and Loss Adjustment Expenses

Losses and loss adjustment expenses increased $24.2 million, or 149.8% to $40.3 million for the three months ended September 30, 2024 from $16.1 million for the three months ended September 30, 2023.

Losses and loss adjustment expenses increased $11.9 million, or 44.4% to $38.7 million for the three months ended March 31, 2025 from $26.8 million for the three months ended March 31, 2024.

Losses and loss adjustment expenses consisted of the following elements during the respective periods:

Three Months Ended

September 30,

($ in thousands)

5 unchanged sentences

Total loss ratio

NM - not meaningful

Catastrophe losses for the quarter ended September 30, 2024 were related to Hurricanes Beryl, Debby, and Helene.

Catastrophe loss activity for the quarter ended September 30, 2023 was primarily related to favorable development on severe convective storms that occurred during the second quarter of 2023 and favorable development on prior year hurricanes.

Non-catastrophe losses increased for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due mainly to higher attritional losses on lines of business subject to attritional losses such as Casualty and Inland Marine and Other Property due to premium growth in these lines of business.

Catastrophe loss activity for the quarter ended March 31, 2025 was related to favorable development on prior period catastrophe events.

Catastrophe loss activity for the quarter ended March 31, 2024 was primarily related to flood losses.

Non-catastrophe losses increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due mainly to higher attritional losses driven by premium growth on lines of business subject to attritional losses such as Casualty and Inland Marine and Other Property.

Acquisition Expenses

Acquisition expenses increased $14.5 million, or 53.6%, to $41.5 million for the three months ended September 30, 2024 from $27.0 million for the three months ended September 30, 2023.

Acquisition expenses increased $14.6 million, or 45.8%, to $46.4 million for the three months ended March 31, 2025 from $31.8 million for the three months ended March 31, 2024.

The increase was primarily due to higher commissions and premium-related taxes resulting from higher gross earned premiums.

This was partially offset by higher earned ceding commissions and fronting fees due to an increase in premiums subject to a quota share or fronting agreement.

Acquisition expenses as a percentage of gross earned premiums were 10.5% for the three months ended September 30, 2024 compared to 9.9% for the three months ended September 30, 2023.

Acquisition expenses as a percentage of gross earned premiums were 12.3% for the three months ended March 31, 2025 compared to 10.5% for the three months ended March 31, 2024.

Acquisition expenses as a percentage of gross earned premiums increased due to higher commissions and premium-related taxes as a percentage of gross earned premiums and lower ceded commissions and fronting fees as a percentage of gross earned premiums due to changes in the composition of our business.

Other Underwriting Expenses

Other underwriting expenses increased $5.7 million, or 25.6%, to $28.1 million for the three months ended September 30, 2024 from $22.4 million for the three months ended September 30, 2023.

Other underwriting expenses increased $10.9 million, or 44.1%, to $35.7 million for the three months ended March 31, 2025 from $24.8 million for the three months ended March 31, 2024.

The increase was primarily due to the Company incurring higher payroll, technology, and stock-based compensation expenses associated with growth of the Company.

Other underwriting expenses as a percentage of gross earned premiums were 7.1% for the three months ended September 30, 2024 compared to 8.2% for the three months ended September 30, 2023.

Excluding the impact of expenses relating to transactions, stock-based compensation, and amortization of intangibles, other underwriting expenses as a percentage of gross earned premiums were 5.9% for the three months ended September 30, 2024 compared to 6.7% for the three months ended September 30, 2023.

Other underwriting expenses as a percentage of gross earned premiums were 9.5% for the three months ended March 31, 2025 compared to 8.2% for the three months ended March 31, 2024.

Excluding the impact of expenses relating to transactions, stock-based compensation, and amortization of intangibles, other underwriting expenses as a percentage of gross earned premiums were 7.5% for the three months ended March 31, 2025 compared to 6.8% for the three months ended March 31, 2024.

Other underwriting expenses as a percentage of gross earned premiums may fluctuate period over period based on timing of certain expenses relative to premium growth.

Net Investment Income and Net Realized and Unrealized Gains (Losses) on Investments

Net investment income increased $3.4 million, or 56.0%, to $9.4 million for the three months ended September 30, 2024 from $6.0 million for the three months ended September 30, 2023.

The increase was primarily due to a higher average balance of investments during the three months ended September 30, 2024 due primarily to the use of proceeds from our August 2024 secondary offering and also due to higher yields on invested assets versus the prior year.

The Company incurred $2.7 million of net realized and unrealized gains on investments for the three months ended September 30, 2024 compared to $1.4 million of net realized and unrealized losses for the three months ended September 30, 2023 In both periods, the balance was primarily driven by unrealized gains and losses on our equity securities.

Net investment income increased $4.9 million, or 69.1%, to $12.1 million for the three months ended March 31, 2025 from $7.1 million for the three months ended March 31, 2024.

The increase was primarily due to a higher average balance of investments during the three months ended March 31, 2025 due primarily to the use of proceeds from our August 2024 secondary offering and also due to higher yields on invested assets versus the prior year.

The Company incurred $2.3 million of net realized and unrealized losses on investments for the three months ended March 31, 2025 compared to $3.0 million of net realized and unrealized gains for the three months ended March 31, 2024 In both periods, the balance was primarily driven by unrealized gains and losses on our equity securities.

Unrealized gains and losses on fixed maturity securities are recognized as a component of other comprehensive income and do not impact our net income.

1 unchanged sentence

Three Months Ended

September 30,

($ in thousands)

3 unchanged sentences

Net investment income

Net realized and unrealized gains (losses) on investments

Income Tax Expense

Income tax expense increased $1.9 million to $8.0 million for the three months ended September 30, 2024 from $6.1 million for the three months ended September 30, 2023 due to higher pre-tax income for the period ended September 30, 2024.

During the three months ended September 30, 2024, our income tax rate of 20.8% was lower than the statutory rate of 21% due primarily to permanent component of employee stock option exercises.

During the three months ended September 30, 2023, our income tax rate of 24.9% was higher than the statutory rate of 21% due primarily to non-deductible executive compensation expense.

Results of Operations

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

The following table summarizes our results for the nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30,

($ in thousands, except per share data)

Gross written premiums

Ceded written premiums

Net written premiums

Net earned premiums

Commission and other income

Total underwriting revenue (1)

Losses and loss adjustment expenses

Acquisition expenses, net of ceding commissions and fronting fees

Other underwriting expenses

Underwriting income (1)

Interest expense

Net investment income

Net realized and unrealized gains (losses) on investments

Income before income taxes

Income tax expense

Net realized and unrealized (gains) losses on investments

Expenses associated with transactions

Stock-based compensation expense

Amortization of intangibles

Expenses associated with catastrophe bond

Adjusted net income (1)

Key Financial and Operating Metrics

Annualized return on equity

Annualized adjusted return on equity (1)

Expense ratio

Combined ratio

Adjusted combined ratio (1)

Diluted earnings per share

Diluted adjusted earnings per share (1)

Catastrophe losses

Catastrophe loss ratio (1)

Adjusted combined ratio excluding catastrophe losses (1)

Adjusted underwriting income (1)

NM - not meaningful

Indicates non-GAAP financial measure;

see “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of the non-GAAP financial measures to their most directly comparable financial measures prepared in accordance with GAAP.

Gross Written Premiums

Gross written premiums increased $329.8 million, or 39.3% to $1,168.2 million for the nine months ended September 30, 2024 compared to $838.4 million for the nine months ended September 30, 2023.

The following table summarizes our gross written premiums by line of business and shows each line’s percentage of total gross written premiums for each period:

Nine Months Ended September 30,

($ in thousands)

Inland Marine and Other Property

Total Gross Written Premiums

NM - not meaningful

(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.

Fronting premiums represent premium where we subsequently cede the majority of the premium and risk in exchange for a fronting fee, which is our primary source of profit in the arrangement.

The volume of fronting premiums written each period may vary due to the timing of entering new fronting partnerships and terminations of existing fronting partnerships.

The following table summarizes our gross written premiums by insurance subsidiary:

Nine Months Ended September 30,

($ in thousands)

Total Gross Written Premiums

Ceded Written Premiums

Ceded written premiums increased $149.8 million, or 27.6%, to $692.6 million for the nine months ended September 30, 2024 from $542.8 million for the nine months ended September 30, 2023.

The increase was primarily due to increased premium ceded under quota share and fronting agreements due to growth in fronting premiums written and growth in the volume of written premiums subject to quota shares.

In addition, we incurred increased XOL reinsurance expense due to growth in exposure, in addition to higher rates on XOL reinsurance.

Although our volume of ceded written premiums increased, ceded written premiums as a percentage of gross written premiums decreased to 59.3% for the nine months ended September 30, 2024 from 64.7% for the nine months ended September 30, 2023.

Net Written Premiums

Net written premiums increased $180.0 million, or 60.9%, to $475.6 million for the nine months ended September 30, 2024 from $295.6 million for the nine months ended September 30, 2023.

The increase was primarily due to an increase in gross written premiums, primarily in our Casualty and Inland Marine and Other Property lines, partially offset by increased ceded written premiums.

Net Earned Premiums

Net earned premiums increased $113.6 million, or 45.1%, to $365.8 million for the nine months ended September 30, 2024 from $252.2 million for the nine months ended September 30, 2023 due primarily to the earning of increased gross written premiums offset by the earning of ceded written premiums under reinsurance agreements.

The table below shows the amount of premiums we earned on a gross and net basis and net earned premiums as a percentage of gross earned premiums in each period presented.

Nine Months Ended

September 30,

($ in thousands)

Gross earned premiums

Ceded earned premiums

Net earned premiums

Net earned premium ratio

Our net earned premium ratio increased due to changes in our composition of business whereby premiums earned in the current period were subject to lower quota share or XOL cessions compared to premiums earned in the prior period.

Commission and Other Income

Commission and other income increased $0.3 million, or 14.3%, to $2.0 for the nine months ended September 30, 2024 from $1.8 for the nine months ended September 30, 2023.

The balance increased due to an increase in commissions and policy related fees driven by increased premiums written.

Losses and Loss Adjustment Expenses

Losses and loss adjustment expenses increased $42.9 million to $97.6 million for the nine months ended September 30, 2024 from $54.7 million for the nine months ended September 30, 2023.

Losses and loss adjustment expenses consisted of the following elements during the respective periods:

Nine Months Ended

September 30,

($ in thousands)

Catastrophe losses

Non-catastrophe losses

Total losses and loss adjustment expenses

Catastrophe loss ratio

Non-catastrophe loss ratio

Total loss ratio

NM - not meaningful

Catastrophe losses for the nine months ended September 30, 2024 were related to floods occurring during the first quarter, severe convective storms occurring during the second quarter, and Hurricanes Beryl, Debby, and Helene which occurred during the third quarter.

Catastrophe losses for the nine months ended September 30, 2023 were related to floods occurring during the first quarter and severe convective storms occurring during the second quarter.

Non-catastrophe losses increased for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due mainly to higher attritional losses on lines of business subject to attritional losses such as Casualty and Inland Marine and Other Property due to premium growth in these lines of business.

Acquisition Expenses

Acquisition expenses increased $30.3 million, or 38.5%, to $109.1 million for the nine months ended September 30, 2024 from $78.7 million for the nine months ended September 30, 2023.

The increase was primarily due to higher commissions and premium-related taxes resulting from higher gross earned premiums.

This was partially offset by higher earned ceding commissions and fronting fees due to an increase in premiums subject to a quota share or fronting agreement.

Acquisition expenses as a percentage of gross earned premiums were 10.6% for the nine months ended September 30, 2024 compared to 10.7% for the nine months ended September 30, 2023.

Acquisition expenses as a percentage of gross earned premiums decreased due to the recognition of higher ceding commission and fronting fee income as a percentage of gross earned premiums due to changes in mix of business produced.

Other Underwriting Expenses

Other underwriting expenses increased $20.2 million, or 31.6%, to $84.2 million for the nine months ended September 30, 2024 from $64.0 million for the nine months ended September 30, 2023.

The increase was primarily due to the Company incurring higher payroll, technology, stock-based compensation, and professional fees expenses associated with growth of the Company.

Other underwriting expenses as a percentage of gross earned premiums were 8.2% for the nine months ended September 30, 2024 compared to 8.7% for the nine months ended September 30, 2023.

Excluding the impact of expenses relating to transactions, stock-based compensation, amortization of intangibles, and catastrophe bonds, other underwriting expenses as a percentage of gross earned premiums were 6.6% for the nine months ended September 30, 2024 compared to 6.8% for the nine months ended September 30, 2023.

Other underwriting expenses as a percentage of gross earned premiums may fluctuate period over period based on timing of certain expenses relative to premium growth.

Net Investment Income and Net Realized and Unrealized Gains (Losses) on Investments

Net investment income increased $7.8 million, or 46.8%, to $24.5 million for the nine months ended September 30, 2024 from $16.7 million for the nine months ended September 30, 2023.

The increase was primarily due to a higher average balance of investments during the nine months ended September 30, 2024 and also due to higher yields on invested assets versus the prior year.

The Company incurred $5.8 million of net realized and unrealized gains on investments for the nine months ended September 30, 2024 compared to $0.1 million of net realized and unrealized losses for the nine months ended September 30, 2023 due primarily to higher gains on our equity securities during the period ended September 30, 2024 compared to the period ended September 30, 2023.

Unrealized gains and losses on fixed maturity securities are recognized as a component of other comprehensive income and do not impact our net income.

The following table summarizes the components of our investment income for each period presented:

Nine Months Ended

September 30,

($ in thousands)

Interest income

Dividend income

Investment management fees and expenses

Net investment income

Net realized and unrealized gains (losses) on investments

NM- not meaningful

Net realized and unrealized (losses) gains on investments

Income Tax Expense

Income tax expense increased $6.7 million or 40.0% to $23.6 million for the nine months ended September 30, 2024 from $16.9 million for the nine months ended September 30, 2023 due to higher pre-tax income and a higher effective tax rate during the nine months ended September 30, 2024.

During the nine months ended September 30, 2024, our income tax rate of 22.2% was higher than the statutory rate of 21% due primarily to non-deductible executive compensation expense.

For the nine months ended September 30, 2023 our income tax rate of 24.0% was higher than the statutory rate also due primarily to non-deductible executive compensation expense.

Income tax expense increased $2.8 million to $10.8 million for the three months ended March 31, 2025 from $8.0 million for the three months ended March 31, 2024 due to higher pre-tax income for the period ended March 31, 2025.

During the three months ended March 31, 2025, our income tax rate of 20.1% was lower than the statutory rate of 21% due primarily to permanent component of employee stock option exercises offset by non-deductible executive compensation expense.

During the three months ended March 31, 2024, our income tax rate of 23.2% was higher than the statutory rate of 21% due primarily to non-deductible executive compensation expense.

Reconciliation of Non ‑ GAAP Financial Measures

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Total revenue

Net investment income

Net realized and unrealized (gains) losses on investments

Net realized and unrealized losses (gains) on investments

Underwriting revenue

10 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Income before income taxes

Net investment income

Net realized and unrealized (gains) losses on investments

Net realized and unrealized losses (gains) on investments

Interest expense

3 unchanged sentences

Amortization of intangibles

Expenses associated with catastrophe bond

Adjusted underwriting income

7 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Net realized and unrealized (gains) losses on investments

Net realized and unrealized losses (gains) on investments

Expenses associated with transactions

1 unchanged sentence

Amortization of intangibles

Expenses associated with catastrophe bond

Adjusted net income

5 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Annualized adjusted net income

7 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income

5 unchanged sentences

Amortization of intangibles

Expenses associated with catastrophe bond

Adjusted combined ratio

5 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands, except per share data)

Adjusted net income

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Losses and loss adjustment expenses

10 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income

5 unchanged sentences

Amortization of intangibles

Expenses associated with catastrophe bond

Catastrophe losses

5 unchanged sentences

Stockholders’ equity calculated in accordance with GAAP reconciles to tangible stockholders’ equity as follows:

September 30,

(in thousands)

7 unchanged sentences

The Company’s U.S.

insurance company subsidiaries, PSIC and PESIC, are restricted by the statutes as to the amount of dividends that they may pay without prior approval by state insurance commissioners.

Under California and Oregon statute which govern PSIC, dividends paid in a consecutive twelve month period cannot exceed the greater of (i) 10% of an insurance company’s statutory policyholders’ surplus as of December 31 of the preceding year or (ii) 100% of its statutory net income for the preceding calendar year.

insurance company subsidiaries, PSIC, PESIC and FIA, are restricted by the statutes as to the amount of dividends that they may pay without prior approval by state insurance commissioners.

Under California and Oregon statutes which govern PSIC, dividends paid in a consecutive twelve month period cannot exceed the greater of (i) 10% of an insurance company’s statutory policyholders’ surplus as of December 31 of the preceding year, or (ii) 100% of its statutory net income for the preceding calendar year.

Any dividends or distributions in excess of these amounts would require regulatory approval.

2 unchanged sentences

Based on the above restrictions, PSIC may pay a dividend or distribution of no greater than $99.6 million in 2025 without approval by the California and Oregon Insurance Commissioners.

During October 2024, PSIC elected to pay a dividend of $95.0 million to its parent company.

Under Arizona statute which governs PESIC, dividends paid in a consecutive twelve month period cannot exceed the lesser of (i) 10% of an insurance company’s statutory policyholders’ surplus as of December 31 of the preceding year, or (ii) 100% of its statutory net income for the preceding calendar year.

Based on the above restrictions, PESIC may pay a dividend or distribution of no greater than $4.2 million in 2025 without approval of the Arizona Insurance Commissioner.

The Company is subject to New Jersey law, such that all dividend payments require 30-day prior approval of the New Jersey Commissioner of Banking and Insurance ("the Commissioner").

The maximum dividend, which may be paid in any twelve-month period, is limited to the greater of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year.

Cash dividends may only be paid out of surplus derived from realized net profits.

Based on these limitations, FIA has capacity to pay a dividend of $2.3 million in 2025, conditional upon the Commissioner's approval.

State insurance regulators have broad powers to prevent the reduction of statutory surplus to inadequate levels, and there is no assurance that dividends up to the maximum amounts calculated under any applicable formula would be permitted.

2 unchanged sentences

A Class 3A insurer is prohibited from declaring or paying a dividend if it is in breach of its minimum solvency margin, its enhanced capital requirement, or its minimum liquidity ratio, or if the declaration or payment of such dividend would cause such a breach.

If a Class 3A insurer has failed to meet its minimum solvency margin on the last day of any financial year, it will also be prohibited, without the approval of the BMA, from declaring or paying any dividends during the next financial year.

If a Class 3A insurer has failed to meet its minimum solvency margin on the last day of any financial year, it will also be prohibited, without the approval of the Bermuda Monetary Authority ("BMA"), from declaring or paying any dividends during the next financial year.

Furthermore, the Insurance Act limits the ability of PSRE to pay dividends or make capital distributions by stipulating certain margin and solvency requirements and by requiring approval from the BMA prior to a reduction of 15% or more of a Class 3A insurer’s total statutory capital as reported on its prior year statutory balance sheet.

Moreover, an insurer must submit an affidavit to the BMA, sworn by at least two directors and the principal representative in Bermuda of the Class 3A insurer, at least seven days prior to payment of any dividend which would exceed 25% of that insurer’s total statutory capital and surplus as reported on its prior year statutory balance sheet.

The affidavit must state that in the opinion of those swearing the declaration of such dividend has not caused the insurer to fail to meet its relevant margins.

Further, under the Companies Act, PSRE may only declare or pay a dividend, or make a distribution out of contributed surplus, if it has no reasonable grounds for believing that:

The affidavit must state that in the opinion of those swearing the declaration of such dividend, such dividend has not caused the insurer to fail to meet its relevant margins.

Further, under the Companies Act (as defined below), PSRE may only declare or pay a dividend, or make a distribution out of contributed surplus, if it has no reasonable grounds for believing that:

(1) it is, or would after the payment be, unable to pay its liabilities as they become due or (2) the realizable value of its assets would be less than its liabilities.

13 unchanged sentences

Management believes that our current liquidity and cash receipts from written premiums, investment income, proceeds from investment sales and redemptions, and reinsurance recoveries, if necessary, are sufficient to cover cash outflows for each of the Company’s insurance subsidiaries in the foreseeable future.

The following table summarizes our cash flows for the nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30,

The following table summarizes our cash flows for the three months ended March 31, 2025 and 2024:

Three Months Ended

($ in thousands)

4 unchanged sentences

Change in cash, cash equivalents, and restricted cash

Our cash flow from operating activities was positive during the nine months ended September 30, 2024 and 2023 due to net income and a decrease in net operating assets in each period.

Our cash flow from operating activities was positive during the three months ended March 31, 2025 and 2024 due to net income and a decrease in net operating assets in each period.

Variations in operating cash flow between periods are primarily driven by variations in our gross and ceded written premiums and the volume and timing of premium receipts, claim payments, reinsurance payments, and reinsurance recoveries on paid losses.

In addition, fluctuations in losses and loss adjustment expenses and other insurance operating expenses impact operating cash flows.

Cash used in investing activities for the nine months ended September 30, 2024 and 2023 related primarily to purchases of fixed maturity securities in excess of sales and maturities in each period.

Cash provided by financing activities for nine months ended September 30, 2024 was related to the receipt of $115.7 million in net proceeds from the August 2024 Secondary Offering, the receipt of $5.0 million in proceeds from stock option exercises, the receipt of $0.9 million in proceeds from our employee stock purchase plan and the receipt of $2.0 million in proceeds from policy holder contributions of surplus, offset by $52.6 million in payments on our lines of credit.

Cash used in financing activities for nine months ended September 30, 2023 was related to the repurchase of $22.1 million of our common stock, offset by $16.2 million in borrowings from our FHLB line of credit, the receipt of $0.6 million in proceeds from stock option exercises and the receipt of $0.8 million in proceeds from our employee stock purchase plan.

Cash used in investing activities for the three months ended March 31, 2025 and 2024 related primarily to purchases of fixed maturity securities in excess of sales and maturities in each period.

Cash provided by financing activities for the three months ended March 31, 2025 was related to the receipt of $2.4 million in proceeds from stock option exercises, the receipt of $0.5 million in proceeds from our employee stock purchase plan and the receipt of $0.8 million in proceeds from policy holder contributions of surplus, offset by $0.1 million in offering costs from the August 2024 Secondary Offering.

Cash used in financing activities for three months ended March 31, 2024 was related to $9.6 million in payments on our FHLB line of credit, offset by the receipt of $1.9 million in proceeds from stock option exercises and the receipt of $0.4 million in proceeds from our employee stock purchase plan.

We do not have any current plans for material capital expenditures other than current operating requirements.

1 unchanged sentence

The key factor that will affect our future operating cash flows is the frequency and severity of catastrophe losses.

To the extent our future operating cash flows are insufficient to cover our net losses from catastrophic events, we had $1,017.5 million in cash and investment securities available at September 30, 2024.

To the extent our future operating cash flows are insufficient to cover our net losses from catastrophic events, we had $1,168.7 million in cash and investment securities available at March 31, 2025.

We also have the ability to access additional capital through pursuing third‑party borrowings, sales of our equity or debt securities or entrance into a reinsurance arrangement.

Share Repurchases

We have previously administered a share repurchase plan and have used and may use our cash in the future to purchase outstanding shares of our common stock.

Under our previous share repurchase program, shares were repurchased from time to time in the open market or negotiated transactions at prevailing market rates, or by other means in accordance with federal securities laws.

Our previous share repurchase program ended on March 31, 2024 and no shares have been repurchased in 2024.

The Company accounts for share repurchases by charging the excess of repurchase price over the common stock’s par value entirely to retained earnings.

All repurchased shares are retired and become authorized but unissued shares.

Our share repurchase program expired on March 31, 2024 and we did not make any share repurchases during the three months ended March 31, 2025.

Credit Agreements

6 unchanged sentences

Currently, $5.6 million of the borrowing capacity of the Credit Agreement is pledged as collateral and not able to be utilized.

As of September 30, 2024, we had no borrowings outstanding through the Credit Agreement.

As of March 31, 2025, we had no borrowings outstanding through the Credit Agreement.

Our PSIC subsidiary is a member of the Federal Home Loan Bank of San Francisco (“FHLB”).

2 unchanged sentences

All advances have predetermined term and the interest rate varies based on the term of the advance.

As of September 30, 2024, we had no borrowings outstanding through the FHLB line of credit.

As of March 31, 2025, we had no borrowings outstanding through the FHLB line of credit.

Stockholders ’ Equity

At September 30, 2024 total stockholders’ equity was $703.3 million and tangible stockholders’ equity was $692.2 million, compared to total stockholders’ equity of $471.3 million and tangible stockholders’ equity of $458.9 million as of December 31, 2023.

Stockholder’s equity increased primarily due to the receipt of $115.7 million in net proceeds from our August 2024 Secondary Offering.

In addition, stockholders' equity increased due to net income earned for the period, activity related to stock-based compensation, and unrealized gains on fixed maturity securities.

At March 31, 2025 total stockholders’ equity was $790.4 million and tangible stockholders’ equity was $765.5 million, compared to total stockholders’ equity of $729.0 million and tangible stockholders’ equity of $715.8 million as of December 31, 2024.

Stockholders' equity increased due to net income earned for the period, activity related to stock-based compensation, and unrealized gains on fixed maturity securities.

Tangible stockholders’ equity is a non‑GAAP financial measure.

6 unchanged sentences

Our cash and invested assets consist of cash and cash equivalents, fixed maturity securities, and equity securities.

As of September 30, 2024, the majority of our investment portfolio, or $883.0 million, was comprised of fixed maturity securities that are classified as available‑for‑sale and carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of accumulated other comprehensive income.

As of March 31, 2025, the majority of our investment portfolio, or $991.8 million, was comprised of fixed maturity securities that are classified as available‑for‑sale and carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of accumulated other comprehensive income.

Also included in our investment portfolio were $44.4 million of equity securities, $2.3 million of equity method investments and $11.0 million of investments in limited partnerships.

In addition, we maintained a non‑restricted cash and cash equivalent balance of $86.5 million at September 30, 2024.

Our fixed maturity securities, including cash equivalents, had a weighted average effective duration of 3.86 and 3.48 years and an average rating of “A1/A+” and “Aa3/A+” at September 30, 2024 and December 31, 2023, respectively.

Our fixed income investment portfolio had a book yield of 4.58% as of September 30, 2024, compared to 4.07% as of December 31, 2023.

At September 30, 2024 and December 31, 2023 the amortized cost and fair value on available‑for‑sale securities were as follows:

September 30, 2024

In addition, we maintained a non‑restricted cash and cash equivalent balance of $119.3 million at March 31, 2025.

Our fixed maturity securities, including cash equivalents, had a weighted average effective duration of 4.09 and 4.04 years and an average rating of “A1/A+” and “A1/A+” at March 31, 2025 and December 31, 2024, respectively.

Our fixed income investment portfolio had a book yield of 4.65% as of March 31, 2025, compared to 4.59% as of December 31, 2024.

At March 31, 2025 and December 31, 2024 the amortized cost and fair value on available‑for‑sale securities were as follows:

March 31, 2025

($ in thousands)

13 unchanged sentences

Total available-for-sale investments

The following tables provide the credit quality of investment securities as of September 30, 2024 and December 31, 2023:

September 30, 2024

The following tables provide the credit quality of investment securities as of March 31, 2025 and December 31, 2024:

March 31, 2025

($ in thousands)

1 unchanged sentence

($ in thousands)

The amortized cost and fair value of our available‑for‑sale investments in fixed maturity securities summarized by contractual maturity as of September 30, 2024 were as follows:

September 30, 2024

The amortized cost and fair value of our available‑for‑sale investments in fixed maturity securities summarized by contractual maturity as of March 31, 2025 were as follows:

March 31, 2025

($ in thousands)

22 unchanged sentences

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

During the second quarter of 2023, we 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.

During the second quarter of 2024, we closed a $420 million 144A catastrophe bond which became effective June 1, 2024.

This catastrophe bond was also completed through Torrey Pines Re Ltd and provides indemnity-based reinsurance covering earthquake events through June 1, 2027.

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 catastrophe event retention is $20 million for earthquake events and $15.5 million for hurricane events and all other perils.

13 unchanged sentences

Our critical accounting policies and estimates are described in our annual consolidated financial statements and the related notes in our 2024 Annual Report on Form 10-K.

There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Operations included in our 2023 Annual Report on Form 10-K

There have been no material changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Operations included in our 2024 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-Q

Item 1. Financial Statements