Palomar Holdings, Inc. 10-Q

Item 1: Financial Statements ​ Palomar Holdings, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands, except shares and par value data) ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ 2020 ​ 2019 ​ ​ (Unaudited) ​ ​ ​ Assets ​ ​ Investments: ​ ​ Fixed maturity securities available for sale, at fair value (amortized cost: $377,658 in 2020; $211,278 in 2019) ​ $ 390,811 ​ $ 217,151 Equity securities, at fair value (cost: $43,071 in 2020; $21,336 in 2019) ​ 45,037 ​ 22,328 Total investments ​ 435,848 ​ 239,479 Cash and cash equivalents ​ 14,033 ​ 33,119 Restricted cash ​ 163 ​ 230 Accrued investment income ​ 2,366 ​ 1,386 Premium receivable ​ 48,117 ​ 36,237 Deferred policy acquisition costs ​ 34,584 ​ 25,201 Reinsurance recoverable on unpaid losses and loss adjustment expenses ​ 92,537 ​ 12,952 Reinsurance recoverable on paid losses and loss adjustment expenses ​ 10,497 ​ 4,303 Ceded unearned premiums ​ 28,461 ​ 26,105 Prepaid expenses and other assets ​ 31,656 ​ 14,861 Property and equipment, net ​ 753 ​ 845 Intangible assets ​ 744 ​ 744 Total assets ​ $ 699,759 ​ $ 395,462 Liabilities and stockholders' equity ​ ​ Liabilities: ​ ​ Accounts payable and other accrued liabilities ​ $ 13,226 ​ $ 13,555 Reserve for losses and loss adjustment expenses ​ 132,077 ​ 16,821 Unearned premiums ​ 173,587 ​ 130,373 Ceded premium payable ​ 11,685 ​ 11,383 Funds held under reinsurance treaty ​ 3,061 ​ 1,658 Income and excise taxes payable ​ — ​ 1,117 Deferred tax liabilities, net ​ ​ 4,228 ​ ​ 1,999 Total liabilities ​ 337,864 ​ 176,906 Stockholders' equity: ​ ​ Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of September 30, 2020 and December 31, 2019, respectively, 0 shares issued and outstanding as of September 30, 2020 and December 31, 2019 ​ ​ — ​ ​ — Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,518,957 and 23,468,750 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively ​ 3 ​ 2 Additional paid-in capital ​ 309,496 ​ 180,012 Accumulated other comprehensive income ​ 10,438 ​ 4,686 Retained earnings ​ 41,958 ​ 33,856 Total stockholders' equity ​ 361,895 ​ 218,556 Total liabilities and stockholders' equity ​ $ 699,759 ​ $ 395,462 ​ See accompanying notes. ​ 3 Table of Contents Palomar Holdings, Inc. and Subsidiaries ​ Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Unaudited) (in thousands, except shares and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2020 2019 2020 2019 Revenues: ​ ​ ​ ​ Gross written premiums ​ $ 102,967 ​ $ 66,242 ​ $ 258,268 ​ $ 178,619 Ceded written premiums ​ (41,570) ​ (28,060) ​ (101,264) ​ (78,797) Net written premiums ​ 61,397 ​ 38,182 ​ 157,004 ​ 99,822 Change in unearned premiums ​ (19,377) ​ ​ (10,520) ​ (40,859) ​ ​ (30,602) Net earned premiums ​ 42,020 ​ 27,662 ​ 116,145 ​ 69,220 Net investment income ​ 2,138 ​ ​ 1,729 ​ 6,287 ​ ​ 4,172 Net realized and unrealized gains on investments ​ 24 ​ ​ 361 ​ 1,243 ​ ​ 3,265 Commission and other income ​ 816 ​ ​ 709 ​ 2,492 ​ ​ 2,017 Total revenues ​ 44,998 ​ 30,461 ​ 126,167 ​ 78,674 Expenses: ​ ​ ​ ​ Losses and loss adjustment expenses ​ 41,060 ​ ​ 2,439 ​ ​ 46,901 ​ ​ 3,398 Acquisition expenses ​ 17,976 ​ ​ 10,243 ​ ​ 45,909 ​ ​ 26,189 Other underwriting expenses (includes stock-based compensation of $551 and $410 for the three months ended September 30, 2020 and 2019, respectively and $1,457 and $23,677 for the nine months ended September 30, 2020 and 2019, respectively) ​ 7,805 ​ ​ 8,330 ​ ​ 24,732 ​ ​ 44,348 Interest expense ​ — ​ ​ — ​ ​ — ​ ​ 1,068 Total expenses ​ 66,841 ​ 21,012 ​ 117,542 ​ 75,003 Income (loss) before income taxes ​ (21,843) ​ 9,449 ​ 8,625 ​ 3,671 Income tax expense (benefit) ​ (6,158) ​ ​ 1,995 ​ ​ 523 ​ ​ 3,929 Net income (loss) ​ (15,685) ​ 7,454 ​ 8,102 ​ (258) Other comprehensive income, net: ​ ​ ​ ​ Net unrealized gains on securities available for sale for the three and nine months ended September 30, 2020 and 2019, respectively ​ 909 ​ ​ 974 ​ ​ 5,752 ​ ​ 6,459 Net comprehensive income (loss) ​ $ (14,776) ​ $ 8,428 ​ $ 13,854 ​ $ 6,201 Per Share Data: ​ ​ ​ ​ Basic earnings per share ​ $ (0.62) ​ $ 0.32 ​ $ 0.33 ​ $ (0.01) Diluted earnings per share ​ $ (0.62) ​ $ 0.31 ​ $ 0.32 ​ $ (0.01) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 25,492,274 ​ ​ 23,468,750 ​ ​ 24,654,722 ​ ​ 20,838,599 Diluted ​ ​ 25,492,274 ​ ​ 23,885,137 ​ ​ 25,384,518 ​ ​ 20,838,599 ​ See accompanying notes. ​ 4 Table of Contents Palomar Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ Common ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ Total ​ ​ Shares ​ Common ​ Paid-In ​ Comprehensive ​ Retained ​ Stockholders' ​ ​ Outstanding ​ Stock ​ Capital ​ Income (Loss) ​ Earnings ​ Equity Balance at December 31, 2018 17,000,000 ​ $ 2 ​ $ 68,498 ​ $ (563) ​ $ 28,355 ​ $ 96,292 Other comprehensive income, net of tax — ​ — ​ — ​ 6,459 ​ — ​ 6,459 Distribution to stockholder — ​ — ​ — ​ — ​ (5,120) ​ (5,120) Stock-based compensation — ​ — ​ 23,677 ​ — ​ — ​ 23,677 Proceeds from common stock sold in initial public offering, net of offering costs ​ 6,468,750 ​ ​ — ​ ​ 87,412 ​ ​ — ​ ​ — ​ ​ 87,412 Net loss — ​ — ​ — ​ — ​ (258) ​ (258) Balance at September 30, 2019 23,468,750 ​ $ 2 ​ $ 179,587 ​ $ 5,896 ​ $ 22,977 ​ $ 208,462 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2019 23,468,750 ​ $ 2 ​ $ 180,012 ​ $ 4,686 ​ $ 33,856 ​ $ 218,556 Other comprehensive income, net of tax — ​ ​ — ​ ​ — ​ ​ 5,752 ​ ​ — ​ 5,752 Stock-based compensation — ​ ​ — ​ ​ 1,457 ​ ​ — ​ ​ — ​ 1,457 Issuance of common stock in January 2020 stock offering, net of offering costs ​ 750,000 ​ ​ — ​ ​ 35,464 ​ ​ — ​ ​ — ​ ​ 35,464 Issuance of common stock in June 2020 stock offering, net of offering costs ​ 1,150,000 ​ ​ 1 ​ ​ 90,082 ​ ​ — ​ ​ — ​ ​ 90,083 Issuance of common stock via employee stock purchase plan ​ 28,367 ​ ​ — ​ ​ 741 ​ ​ — ​ ​ — ​ ​ 741 Issuance of common stock via equity incentive plan ​ 121,840 ​ ​ — ​ ​ 1,740 ​ ​ — ​ ​ — ​ ​ 1,740 Net income — ​ ​ — ​ ​ — ​ ​ — ​ ​ 8,102 ​ 8,102 Balance at September 30, 2020 25,518,957 ​ $ 3 ​ $ 309,496 ​ $ 10,438 ​ $ 41,958 ​ $ 361,895 ​ See accompanying notes. ​ 5 Table of Contents Palomar Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2020 2019 Operating activities ​ ​ Net cash provided by operating activities ​ $ 44,170 ​ $ 35,659 Investing activities ​ ​ ​ ​ Purchases of property and equipment ​ (84) ​ (72) Purchases of fixed maturity securities ​ (251,504) ​ (181,446) Purchases of equity securities ​ (46,340) ​ (58,735) Sales and maturities of fixed maturity securities ​ 84,663 ​ 87,541 Sales of equity securities ​ 24,662 ​ 64,820 Securities receivable or payable, net ​ ​ (2,748) ​ ​ (3,081) Net cash used in investing activities ​ (191,351) ​ (90,973) Financing activities ​ ​ Proceeds from initial public offering, net of offering costs ​ ​ — ​ ​ 87,412 Redemption of Floating Rate Notes ​ ​ — ​ ​ (20,000) Distribution to stockholder ​ ​ — ​ ​ (5,120) Proceeds from January 2020 stock offering, net of offering costs ​ ​ 35,464 ​ ​ — Proceeds from June 2020 stock offering, net of offering costs ​ ​ 90,083 ​ ​ — Proceeds from common stock issued via employee stock purchase plan ​ ​ 741 ​ ​ — Proceeds from common stock issued via stock option exercises ​ ​ 1,740 ​ ​ — Net cash provided by financing activities ​ 128,028 ​ 62,292 Net increase (decrease) in cash, cash equivalents and restricted cash ​ (19,153) ​ 6,978 Cash, cash equivalents and restricted cash at beginning of period ​ 33,349 ​ 9,924 Cash, cash equivalents and restricted cash at end of period ​ $ 14,196 ​ $ 16,902 Supplementary cash flow information: ​ ​ Cash paid for income taxes ​ $ 7,053 ​ $ — Cash paid for interest ​ $ — ​ $ 1,162 ​ 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, ​ December 31, ​ ​ 2020 ​ 2019 ​ ​ (unaudited) ​ ​ ​ Cash and cash equivalents ​ $ 14,033 ​ $ 33,119 Restricted cash ​ 163 ​ 230 Cash and cash equivalents and restricted cash ​ $ 14,196 ​ $ 33,349 ​ See accompanying notes. ​ 6 Table of Contents Palomar Holdings, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) ​ ​ 1. Summary of Operations and Basis of Presentation Summary of Operations Palomar Holdings, Inc. (“the Company”) is a Delaware incorporated insurance holding company that was founded in 2014. 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”), and a California domiciled property and casualty insurance agency, Palomar Insurance Agency, DBA Palomar General Insurance Agency (“PGIA”). 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. These condensed consolidated financial statements do not contain all information and footnotes required by U.S. 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, 2019. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. All intercompany balances and transactions have been eliminated in consolidation. Interim results are not necessarily indicative of results of operations for the full year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. All revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, reserves for losses and loss adjustment expenses, reinsurance recoverables on unpaid losses, and the fair values of investments. Recent Accounting Pronouncements The Company currently qualifies as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. The Company is currently electing to adopt new or revised accounting guidance within the same time periods as private companies as permitted by its status as an EGC. Based on the market value of the Company’s common stock held by non-affiliates as of the last business day of its second fiscal quarter, the Company will become a large accelerated filer on December 31, 2020 and will no longer be permitted to adopt guidance within the same time periods as private companies at that time. 7 Table of Contents Recently adopted accounting pronouncements In August 2018, the FASB issued “ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement .” Among other things, this new guidance eliminates the need to disclose transfers between Level 1 and Level 2 of the fair value hierarchy, changes the policy for timing of transfers and the valuation processes for Level 3 fair value measurements and includes requirements to disclose quantitative information about Level 3 measurements. The Company adopted this guidance on January 1, 2020 and adoption did not have an impact on the Company’s consolidated financial statements. The Company will continue to monitor the composition of its investment portfolio and will make appropriate disclosures based on this guidance. Recently issued accounting pronouncements not yet adopted In February 2016, the FASB issued new guidance for accounting for leases, “ASU 2016-02, Leases (Topic 842) .” Under current guidance, leases are only included on the balance sheet if the criteria to classify the agreement as a capital lease are met. This update will require the recognition of a right-of-use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months. This guidance was subsequently amended multiple times and offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This new guidance requires a modified retrospective adoption, applying the new standard to all leases existing at the date of initial application, with early adoption permitted. An entity may choose to use the standard’s effective date, rather than the beginning of the earliest comparative period presented, as the date of initial application. An entity would record the effects of initially applying the new guidance as a cumulative-effect adjustment to retained earnings. Consequently, an entity’s reporting for the comparative periods presented in the year of adoption would continue to be in accordance with the current guidance, including the current disclosure requirements. To facilitate transition, the new guidance includes a package of practical expedients that entities may elect to apply on adoption. The package of practical expedients relates to the identification and classification of leases and initial direct costs for leases that commenced before the effective date. The new guidance also includes a practical expedient permitting the use of hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The Company will adopt this guidance for annual reporting on December 31, 2020 and will account for leases under this guidance beginning with its 2020 Annual Report on Form 10-K. The Company will adopt this guidance for quarterly reporting beginning the first quarter of fiscal year 2021. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements. In June 2016, the FASB issued “ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments .” Current guidance delays the recognition of credit losses until it is probable a loss has been incurred. This updated guidance will require financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Credit losses relating to available-for- sale debt securities will also be recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which fair value is below amortized cost. In 2019, the FASB issued amendments to this guidance which provide an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost and provide additional clarification and implementation guidance. ​ The Company will adopt this guidance for annual reporting on December 31, 2020 and will account for potential credit losses under this guidance beginning with its 2020 Annual Report on Form 10-K. The Company will adopt this guidance for quarterly reporting beginning the first quarter of fiscal year 2021. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements. 8 Table of Contents ​ 2. Investments The Company’s available-for-sale investments are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair September 30, 2020 ​ Cost or Cost ​ Gains ​ Losses ​ Value ​ (in thousands) Fixed maturities: ​ ​ ​ ​ ​ U.S. Governments ​ $ 15,809 ​ $ 844 ​ $ (1) ​ $ 16,652 States, territories, and possessions ​ 4,338 ​ 352 ​ (18) ​ 4,672 Political subdivisions ​ 2,286 ​ 88 ​ — ​ 2,374 Special revenue excluding mortgage/asset-backed securities ​ 36,075 ​ 1,099 ​ (81) ​ 37,093 Industrial and miscellaneous ​ 239,007 ​ 9,575 ​ (1,150) ​ 247,432 Mortgage/asset-backed securities ​ 80,143 ​ 2,799 ​ (354) ​ 82,588 Total available-for-sale investments ​ $ 377,658 ​ $ 14,757 ​ $ (1,604) ​ $ 390,811 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair December 31, 2019 ​ Cost or Cost ​ Gains ​ Losses ​ Value ​ (in thousands) Fixed maturities: ​ ​ ​ ​ U.S. Governments ​ $ 13,371 ​ $ 321 ​ $ (13) ​ $ 13,679 States, territories, and possessions ​ 2,298 ​ 147 ​ — ​ 2,445 Political subdivisions ​ 1,913 ​ 29 ​ — ​ 1,942 Special revenue excluding mortgage/asset-backed securities ​ 18,139 ​ 343 ​ (46) ​ 18,436 Industrial and miscellaneous ​ 124,726 ​ 4,326 ​ (39) ​ 129,013 Mortgage/asset-backed securities ​ 50,831 ​ 824 ​ (19) ​ 51,636 Total available-for-sale investments ​ $ 211,278 ​ $ 5,990 ​ $ (117) ​ $ 217,151 ​ Security holdings in an unrealized loss position As of September 30, 2020, the Company held 145 fixed maturity securities in an unrealized loss position with a total estimated fair value of $96.3 million and total gross unrealized losses of $1.6 million. As of December 31, 2019, the Company held 51 fixed maturity securities in an unrealized loss position with a total estimated fair value of $20.9 million and total gross unrealized losses of $0.1 million. 9 Table of Contents 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, 2020 and December 31, 2019, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than 12 Months ​ More Than 12 Months ​ Total ​ Fair Unrealized Fair Unrealized Fair Unrealized September 30, 2020 ​ Value ​ Losses ​ Value ​ Losses ​ Value ​ Losses ​ ​ (in thousands) Fixed maturity securities: ​ ​ ​ ​ ​ ​ U.S. Governments $ 500 ​ $ (1) ​ $ — ​ $ — ​ $ 500 ​ $ (1) States, territories, and possessions ​ 1,490 ​ ​ (18) ​ — ​ — ​ 1,490 ​ (18) Political subdivisions ​ — ​ ​ — ​ — ​ — ​ — ​ — Special revenue excluding mortgage/asset-backed securities ​ 7,893 ​ ​ (81) ​ — ​ — ​ 7,893 ​ (81) Industrial and miscellaneous ​ 64,592 ​ ​ (1,150) ​ — ​ — ​ 64,592 ​ (1,150) Mortgage/asset-backed securities ​ 21,812 ​ ​ (354) ​ 1 ​ — ​ 21,813 ​ (354) Total ​ $ 96,287 ​ $ (1,604) ​ $ 1 ​ $ — ​ $ 96,288 ​ $ (1,604) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than 12 Months ​ More Than 12 Months ​ Total ​ Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2019 ​ Value ​ Losses ​ Value ​ Losses ​ Value ​ Losses ​ ​ (in thousands) Fixed maturity securities: ​ ​ ​ ​ ​ ​ U.S. Governments ​ $ 1,235 ​ $ (11) ​ $ 1,827 ​ $ (2) ​ $ 3,062 ​ $ (13) States, territories, and possessions ​ — ​ — ​ — ​ — ​ — ​ — Political subdivisions ​ — ​ — ​ — ​ — ​ — ​ — Special revenue excluding mortgage/asset-backed securities ​ 3,548 ​ (46) ​ — ​ — ​ 3,548 ​ (46) Industrial and miscellaneous ​ 6,929 ​ (38) ​ 188 ​ (1) ​ 7,117 ​ (39) Mortgage/asset-backed securities ​ 7,035 ​ (19) ​ 182 ​ — ​ 7,217 ​ (19) Total ​ $ 18,747 ​ $ (114) ​ $ 2,197 ​ $ (3) ​ $ 20,944 ​ $ (117) ​ The Company considers the following factors in determining whether declines in the fair value of investments are other-than-temporary: ● The significance of the decline in fair value compared to the cost basis, ● The time period during which there has been a significant decline in fair value, ● Whether the unrealized loss is credit-driven or a result of changes in market interest rates, ● A fundamental analysis of the business prospects and financial condition of the issuer, ● The Company’s intent to sell the securities as of each reporting date, and ● If the Company does not expect to recover the entire amortized cost basis or cost of the investment. Based on the Company’s reviews as of September 30, 2020 and December 31, 2019, 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. None of the fixed maturity securities were determined to be other-than-temporarily impaired. 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. Therefore, none of the fixed maturity securities were written down during the respective periods. ​ 10 Table of Contents Contractual maturities of available-for-sale fixed maturity securities The amortized cost and fair value of fixed maturity securities at September 30, 2020, by contractual maturity, are shown below. ​ ​ ​ ​ ​ ​ ​ ​ Amortized Fair ​ ​ Cost ​ Value ​ (in thousands) Due within one year ​ $ 11,521 ​ $ 11,650 Due after one year through five years ​ 144,424 ​ 148,032 Due after five years through ten years ​ 104,751 ​ 110,836 Due after ten years ​ 36,819 ​ 37,705 Mortgage and asset-backed securities ​ 80,143 ​ 82,588 ​ ​ $ 377,658 ​ $ 390,811 ​ Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations. ​ Net investment income summary Net investment income is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2020 2019 2020 2019 ​ (in thousands) (in thousands) Interest income ​ $ 2,149 ​ $ 1,678 ​ $ 6,242 ​ $ 4,140 Dividend income ​ 109 ​ 132 ​ 354 ​ 299 Investment expense ​ (120) ​ (81) ​ (309) ​ (267) Net investment income ​ $ 2,138 ​ $ 1,729 ​ $ 6,287 ​ $ 4,172 ​ Net realized and unrealized investment gains and losses The following table presents net realized and unrealized investment gains and losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, September 30, ​ 2020 2019 2020 2019 ​ ​ (in thousands) ​ (in thousands) Realized gains: ​ ​ ​ ​ Gains on sales of fixed maturity securities ​ $ 66 ​ $ 38 ​ $ 256 ​ $ 135 Gains on sales of equity securities ​ 59 ​ — ​ 57 ​ 64 Total realized gains ​ 125 ​ 38 ​ 313 ​ 199 Realized losses: ​ ​ ​ ​ Losses on sales of fixed maturity securities ​ — ​ (1) ​ (44) ​ ​ (70) Losses on sales of equity securities ​ — ​ (21) ​ — ​ ​ (174) Total realized losses ​ — ​ (22) ​ (44) ​ (244) Net realized investment gains (losses) ​ 125 ​ 16 ​ 269 ​ (45) Net unrealized gains (losses) on equity securities ​ (101) ​ 345 ​ 974 ​ 3,310 Net realized and unrealized gains on investments ​ $ 24 ​ $ 361 ​ $ 1,243 ​ $ 3,265 ​ Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the settlement date. 11 Table of Contents Proceeds from the sale of fixed maturity securities were $16.3 million and $28.8 million for the three months ended September 30, 2020 and 2019, respectively and $29.2 million and $88.1 million for the nine months ended September 30, 2020 and 2019, 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. At September 30, 2020 and December 31, 2019, the carrying value of securities on deposit with state regulatory authorities was $6.5 million and $5.1 million, respectively. 3. Fair Value Measurements Fair value is defined as the price that the Company would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. The three-tier hierarchy of inputs is summarized in the three broad levels listed below: Level 1—Unadjusted quoted prices are available in active markets for identical investments as of the reporting date. Level 2—Pricing inputs are quoted prices for similar investments in active markets; quoted prices for identical or similar investments in inactive markets; or valuations based on models where the significant inputs are observable or can be corroborated by observable market data. Level 3—Pricing inputs into models are unobservable for the investment. The unobservable inputs require significant management judgment or estimation. To measure fair value, the Company obtains quoted market prices for its investment securities from its outside investment managers. If a quoted market price is not available, the Company uses prices of similar securities. The fair values obtained from the outside investment managers are reviewed for reasonableness and any discrepancies are investigated for final valuation. ​ 12 Table of Contents The fair value of the Company’s investments in fixed maturity securities is estimated using relevant inputs, including available market information, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. An Option Adjusted Spread model is also used to develop prepayment and interest rate scenarios. Industry standard models are used to analyze and value securities with embedded options or prepayment sensitivities. These fair value measurements are estimated based on observable, objectively verifiable market information rather than market quotes. Therefore, these investments are classified and disclosed in Level 2 of the hierarchy. The following tables present the Company’s fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2020 Level 1 Level 2 Level 3 Total ​ (in thousands) Assets: ​ ​ ​ ​ Fixed maturity securities ​ ​ ​ ​ U.S. Governments ​ $ — ​ $ 16,652 ​ $ — ​ $ 16,652 States, territories, and possessions ​ — ​ 4,672 ​ — ​ 4,672 Political subdivisions ​ — ​ 2,374 ​ — ​ 2,374 Special revenue excluding mortgage/asset-backed securities ​ — ​ 37,093 ​ — ​ 37,093 Industrial and miscellaneous ​ — ​ 247,432 ​ — ​ 247,432 Mortgage/asset-backed securities ​ — ​ 82,588 ​ — ​ 82,588 Equity securities ​ 45,037 ​ — ​ — ​ 45,037 Cash, cash equivalents, and restricted cash ​ 14,196 ​ — ​ — ​ 14,196 Total assets ​ $ 59,233 ​ $ 390,811 ​ $ — ​ $ 450,044 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 Level 1 Level 2 Level 3 Total ​ (in thousands) Assets: ​ ​ ​ ​ Fixed maturity securities ​ ​ ​ ​ U.S. Governments ​ $ — ​ $ 13,679 ​ $ — ​ $ 13,679 States, territories, and possessions ​ — ​ 2,445 ​ — ​ 2,445 Political subdivisions ​ — ​ 1,942 ​ — ​ 1,942 Special revenue excluding mortgage/asset-backed securities ​ — ​ 18,436 ​ — ​ 18,436 Industrial and miscellaneous ​ — ​ 129,013 ​ — ​ 129,013 Mortgage/asset-backed securities ​ — ​ 50,136 ​ 1,500 ​ 51,636 Equity securities ​ — ​ 22,328 ​ — ​ 22,328 Cash, cash equivalents, and restricted cash ​ 28,350 ​ 4,999 ​ — ​ 33,349 Total assets ​ $ 28,350 ​ $ 242,978 ​ $ 1,500 ​ $ 272,828 ​ ​ ​ ​ ​ ​ The carrying amounts of financial assets and liabilities reported in the accompanying condensed consolidated balance sheet including cash and cash equivalents, restricted cash, receivables, reinsurance recoverable, and accounts payable and other accrued liabilities approximate fair value due to their short term-maturity. Transfers between Level 3 and Level 2 securities result from changes in the availability of market observable inputs and are recorded at the beginning of the reporting period. As of September 30, 2020, the Company had no fixed income securities classified as Level 3. As of December 31, 2019, the Company had $1.5 million of fixed income securities classified as Level 3 due to the availability of market observable inputs which were transferred to Level 2 during the nine months ended September 30, 2020. 13 Table of Contents 4. 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, ​ 2020 2019 2020 2019 ​ ​ ​ (in thousands) ​ (in thousands) Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period ​ $ 7,087 ​ $ 1,428 ​ $ 3,869 ​ $ 4,165 Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current year ​ 40,803 ​ 2,647 ​ 46,867 ​ ​ 3,660 Prior years ​ 257 ​ (208) ​ 34 ​ ​ (262) Total incurred ​ 41,060 ​ 2,439 ​ 46,901 ​ 3,398 Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to: ​ ​ ​ ​ Current year ​ 8,232 ​ ​ 641 ​ ​ 9,754 ​ ​ 1,044 Prior years ​ 375 ​ ​ 312 ​ ​ 1,476 ​ ​ 3,605 Total payments ​ 8,607 ​ 953 ​ 11,230 ​ 4,649 Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period ​ 39,540 ​ 2,914 ​ 39,540 ​ 2,914 Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period ​ 92,537 ​ ​ 14,052 ​ ​ 92,537 ​ ​ 14,052 Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period ​ $ 132,077 ​ $ 16,966 ​ $ 132,077 ​ $ 16,966 ​ 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 adverse development of $0.3 million and $0.03 million in the three and nine months ended September 30, 2020 and favorable development of $0.2 million and $0.3 million in the three and nine months ended September 30, 2019. ​ Adverse development in the three and nine months ended September 30, 2020 was primarily due to reported activity in the assumed reinsurance line of business, partially offset by favorable development in the specialty homeowners line of business. ​ Favorable development during for the three and nine months ended September 30, 2019 was primarily due to lower than originally anticipated frequency and severity of claims in the specialty homeowners line of business. ​ ​ ​ 5. Long-term Debt In September 2018, the Company completed a private placement financing of $20.0 million floating rate senior secured notes (“Floating Rate Notes”). These Floating Rate Notes were redeemed in May 2019 pursuant to their terms and the Company did not have any debt subsequent to May 2019. The Company recognized a charge of $1.3 million upon redemption with $0.4 million due to the redemption premium and $0.9 million due to the write-off of unamortized debt issuance costs. The $0.4 million redemption premium was recognized as a component of interest expense and the $0.9 million issuance cost write-off was recognized as a 14 Table of Contents component of other underwriting expenses in the Company's unaudited condensed consolidated statement of income (loss) and comprehensive income (loss). The Company incurred and paid $1.1 million and $1.2 million in interest related to the Floating Rate Notes for the nine months ended September 30, 2019. 6. Income Taxes Prior to March 2019, the Company was a Cayman Islands incorporated holding company with U.K. tax residency. On March 14, 2019, the Company implemented a domestication (“the Domestication”) pursuant to Section 388 of the Delaware General Corporation Law and Section 206 of the Companies Law (2018 Revision), as amended, of the Cayman Islands pursuant to which it became a Delaware corporation and no longer subject to the laws of the Cayman Islands. Historically, the Company’s Bermuda based subsidiary, PSRE, was not required to pay any taxes on its income or capital gains but was subject to a 1% U.S. federal excise tax on reinsurance premiums assumed. The Company has filed an irrevocable election for PSRE to be taxed as a U.S. domestic corporation under Section 953(d) of the Code effective January 1, 2019. Prior to 2019, the Company maintained a valuation allowance on the U.S. tax attributes due to significant negative evidence, including cumulative U.S. losses in the most recent three-year period and our assessment that the realization of the net deferred tax assets did not meet the "more likely than not" criteria under ASC 740, Income Taxes . Management assessed available positive and negative evidence to estimate whether sufficient future taxable income would be generated to permit use of the existing deferred tax assets. The projected reversal of temporary differences, the Domestication, and projected future operating income in the U.S. represents significant positive evidence, which outweighed the historical negative evidence. Based on this evidence, management determined it was more likely than not that the federal deferred tax assets are recoverable and released the associated $1.7 million valuation allowance as of March 31, 2019. The Company will continue to have a valuation allowance on deferred tax assets associated with state net operating loss carryforwards as they do not meet the “more likely than not” criteria due to the limited carryforward period. The amount of the deferred tax assets considered realizable could be adjusted if estimates of future taxable income during the carryforward period change or if objective negative evidence in the form of cumulative losses is no longer present. The tax expense for the three and nine months ended September 30, 2020 differs from the statutory rate of 21% due primarily to the tax impact of the permanent component of employee stock option exercises. For the three months ended September 30, 2019 differs from the statutory rate of 21% due to miscellaneous differences between taxable income calculated under GAAP and IRS regulations. The tax expense for the nine months ended September 30, 2019 differs significantly the statutory rate of 21% primarily due to a U.S. tax benefit of $1.7 million for the reversal of a significant portion of the Company’s U.S. deferred tax valuation allowance offset by tax expense of $4.8 million from an addback related to a nondeductible stock compensation charge incurred upon modification of the Company’s management incentive plan in March 2019. 7. Capital Stock As of September 30, 2020 and December 31, 2019, the Company has 5,000,000 preferred shares authorized with a par value of $0.0001 and no preferred shares issued and outstanding. As of September 30, 2020 and December 31, 2019, the Company has 500,000,000 common shares authorized and 25,518,957 and 23,468,750 common shares issued and outstanding, respectively, with a par value of $0.0001. Additional paid in capital is $309.5 million as of September 30, 2020 and $180.0 million as of December 31, 2019. On March 15, 2019, the Company effected a 17,000,000 for one forward stock split in conjunction with domestication in the United States. All share and per share information included in the condensed consolidated financial 15 Table of Contents statements and notes to the condensed consolidated financial statements have been retroactively adjusted to reflect the stock split for the Company’s common stock for all periods presented. On April 22, 2019, the Company completed its IPO with the sale of 6,468,750 shares of common stock at a price to the public of $15.00 per share. The Company received net proceeds of approximately $87.4 million, after deducting underwriting discounts and commissions and offering costs. On January 9, 2020, the Company sold 750,000 shares of common stock to the public at a price of $49.00 per share (along with 5,000,000 shares sold by existing stockholders) in an underwritten public offering. The Company received net proceeds of approximately $35.5 million, after deducting underwriting discounts and commissions and offering costs. On June 26, 2020, the Company sold 1,150,000 shares of common stock to the public at a price of $82.00 per share in an underwritten public offering. The Company received net proceeds of approximately $90.1 million, after deducting underwriting discounts and commissions and offering costs. Common stock reserved for future issuance consists of the following as of September 30, 2020: ​ ​ Stock options outstanding under 2019 Equity Incentive Plan 996,870 Restricted stock units outstanding under 2019 Equity Incentive Plan 14,734 Shares authorized for future issuance under 2019 Equity Incentive Plan 1,970,618 Shares authorized for future issuance under 2019 Employee Stock Purchase Plan 451,633 Total 3,433,855 ​ ​ 8. Stock-Based Compensation 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, ​ 2020 2019 2020 2019 ​ (in thousands) (in thousands) Stock-Based Compensation ​ $ 551 ​ $ 410 ​ $ 1,457 ​ $ 23,677 Stock-based compensation expense is recognized on a straight-line basis over the vesting period of equity-based awards. The Company does not apply a forfeiture rate to unvested awards and accounts for forfeitures as they occur. All stock-based compensation is included in other underwriting expenses in the Company’s unaudited condensed consolidated statement of income (loss) and comprehensive income (loss). The Company recognized approximately $23.0 million of stock-based compensation expense in March 2019 relating to the modification of its 2014 Management Incentive Plan. The Company began recognizing stock-based compensation expense relating to its 2019 Equity Incentive Plan and the 2019 Employee Stock Purchase Plan upon their inception and initial stock grants in April 2019 and all stock based compensation expense recognized subsequent to April 2019 relates to the 2019 Equity Incentive Plan and 2019 Employee Stock Purchase Plan. Management Incentive Plan prior to IPO The Company’s former parent, GC Palomar Investor LP, adopted a 2014 Management Incentive Plan (in the form of profits interests) on February 12, 2014 under which certain officers and employees of PSIC and its affiliates were entitled to Class P Units in GC Palomar Investor LP. Class P unit holders were expected to realize value only upon the occurrence of liquidity events meeting requisite financial thresholds after the Class A unit holders recovered their investment. The Class P unit holders had no voting rights. The Company did not record stock-based compensation expense related to this plan prior to 2019 because no liquidity events were probable of occurring. 16 Table of Contents On March 15, 2019, the Company modified its 2014 Management Incentive Plan by eliminating the requirement of a liquidity event to occur for the holders of its Class P units to realize value. The 12,552,825 Class P units outstanding were modified such that the vesting of each Class P unit holder’s awards was accelerated and their Class P distribution percentages were determined and distributed based on these percentages. This modification resulted in a stock compensation charge and corresponding increase to additional paid-in capital of $23.0 million during the quarter ending March 31, 2019. 2019 Equity Incentive Plan On April 16, 2019, the Company's 2019 Equity Incentive Plan (“the 2019 Plan”) became effective. The 2019 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and units, and other cash-based or share-based awards. In addition, the 2019 Plan contains a mechanism through which the Company may adopt a deferred compensation arrangement in the future. A total of 2,400,000 shares of common stock were initially authorized and reserved for issuance under the 2019 Plan. This reserve increases on January 1 of each year through 2029 by an amount equal to the smaller of: 3% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or an amount determined by the board of directors. Stock Options Recipients of stock options can purchase shares of the Company’s common stock at a price equal to the stock's fair market value on the grant date, determined by the closing price of the Company's stock on the grant date. Stock options vest over a two or four-year period with 25% or 50% vesting on the first anniversary of the grant date and the remainder vesting monthly over the remaining period, subject to continued employment. Stock options expire ten years after the grant date. The following table summarizes stock option transactions for the 2019 Plan for the nine months ended September 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of shares ​ ​ Weighted-average exercise price ​ Weighted average remaining contractual term (in years) ​ ​ Aggregate intrinsic value (in thousands) Outstanding at December 31, 2019 1,046,373 ​ $ 17.05 ​ 9.33 ​ $ 35,039 Options granted 90,757 ​ ​ 80.43 ​ ​ ​ ​ ​ Options exercised (115,774) ​ ​ 15.03 ​ ​ ​ ​ ​ Options canceled (24,486) ​ ​ 21.46 ​ ​ ​ ​ ​ Outstanding at September 30, 2020 996,870 ​ $ 22.95 ​ 8.68 ​ $ 81,128 Vested and Exercisable at September 30, 2020 422,203 ​ $ 15.07 ​ 8.54 ​ $ 37,649 As of September 30, 2020, the Company had approximately $3.7 million of total unrecognized stock-based compensation expense related to stock options expected to be recognized over a weighted-average period of 2.27 years. The fair value of each option granted during the nine months ended September 30, 2020 was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions: ​ ​ Risk free rate of return (1) 0.32% - 1.52% Expected share price volatility (2) 18.13% - 25.12% Expected life in years (3) 5.63 - 6.08 years Dividend yield (4) 0% 17 Table of Contents (1) Determined based on the U.S. Treasury yield in effect at the time of the grant for zero-coupon U.S. Treasury notes with remaining terms similar to the expected term of the options. (2) Determined based on analysis of the volatility of a peer group of publicly traded companies. (3) Determined using the “simplified method” for estimating the expected option life, which is the average of the weighted-average vesting period and contractual term of the option as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its common stock has been publicly traded. (4) Determined to be zero as the Company has not historically issued dividends. ​ Restricted Stock Units Restricted stock units are valued on their grant date and generally vest either on the first anniversary of the grant date or over a three-year period with one third vesting on each anniversary date, subject to continued service. The fair value of RSUs is determined using the closing price of the Company's common stock on the grant date. The following table summarizes RSU transactions for the 2019 Plan for the nine months ended September 30, 2020: ​ ​ ​ ​ ​ ​ Number of shares ​ ​ Weighted-average grant date fair value Non vested outstanding at December 31, 2019 6,066 ​ $ 16.49 Granted 14,734 ​ ​ 95.86 Vested (6,066) ​ ​ 16.49 Forfeited — ​ ​ — Non vested outstanding at September 30, 2020 14,734 ​ $ 95.86 As of September 30, 2020, the Company had approximately $1.3 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 2.66 years. 2019 Employee Stock Purchase Plan On April 16, 2019, the Company's 2019 Employee Stock Purchase Plan (“the 2019 ESPP”) became effective. A total of 240,000 shares of common stock are initially authorized and reserved for issuance under the 2019 ESPP. In addition, the 2019 ESPP provides for annual increases in the number of shares available for issuance on January 1 of each year through 2029, equal to the smaller of 240,000 shares of the Company’s common stock or such other amount as may be determined by the board of directors. Under the 2019 ESPP, employees can purchase Company stock at a discount via payroll withholdings. The 2019 ESPP is administered through employee participation in discrete offering periods. During each discrete offering period employee funds are withheld, and the stock purchase occurs upon the conclusion of the offering period. The Company issued 28,367 shares pursuant to the ESPP during the nine months ended September 30, 2020. 18 Table of Contents 9. Accumulated Other Comprehensive Income Changes in accumulated other comprehensive income (“AOCI”) are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ 2020 2019 ​ ​ ​ (in thousands) Beginning Balance ​ $ 4,686 ​ $ (563) Other comprehensive income before reclassification ​ 7,494 ​ ​ 8,090 Federal income tax expense ​ (1,573) ​ ​ (1,666) Other comprehensive income before reclassification, net of tax ​ 5,921 ​ 6,424 Amounts reclassified from AOCI ​ (214) ​ ​ 44 Federal income tax expense ​ 45 ​ ​ (9) Amounts reclassified from AOCI, net of tax ​ (169) ​ 35 Other comprehensive income ​ 5,752 ​ 6,459 Balance at end of period ​ $ 10,438 ​ $ 5,896 ​ ​ ​ ​ 10. Earnings Per Share The following table sets out earnings per share of common stock: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, ​ Nine months ended September 30, ​ 2020 2019 2020 2019 ​ (in thousands, except shares and per share data) (in thousands, except shares and per share data) Net income (loss) ​ $ (15,685) ​ $ 7,454 ​ $ 8,102 ​ $ (258) Weighted average common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 25,492,274 ​ 23,468,750 ​ 24,654,722 ​ 20,838,599 Common Share equivalents ​ ​ — ​ ​ 416,387 ​ ​ 729,796 ​ ​ — Diluted ​ ​ 25,492,274 ​ ​ 23,885,137 ​ ​ 25,384,518 ​ ​ 20,838,599 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ (0.62) ​ $ 0.32 ​ $ 0.33 ​ $ (0.01) Diluted ​ $ (0.62) ​ $ 0.31 ​ $ 0.32 ​ $ (0.01) ​ Common share equivalents relate primarily to outstanding stock options and RSUs under the 2019 Plan and unpurchased shares under the 2019 ESPP and are calculated using the treasury stock method. For the respective three months ended September 31, 2020 and nine months ended September 30, 2019, there were 761,337 and 196,741 common share equivalents excluded from the calculation of diluted earnings per share as their effects were anti-dilutive due to the net loss reported in these periods. ​ 11. Cash Distribution In March 2019, the Company made a one-time cash distribution totaling approximately $5.1 million to its then-sole stockholder, GC Palomar Investor LP, enabling it to distribute funds to its partners in order to allow such partners to satisfy tax obligations incurred as a result of the Domestication transactions. ​ 19 Table of Contents 12. Underwriting Information The Company has a single reportable segment and offers primarily earthquake, wind, and flood insurance products. Gross written premiums (“GWP”) by product are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2020 ​ 2019 ​ 2020 ​ 2019 ​ ​ ($ in thousands) ​ ($ in thousands) ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ Amount ​ GWP ​ Amount ​ GWP ​ Amount ​ GWP ​ Amount ​ GWP Product ​ ​ ​ ​ ​ ​ Residential Earthquake ​ $ 40,507 ​ 39.3 % $ 35,711 ​ 53.9 % ​ $ 103,503 ​ 40.1 % $ 95,005 ​ 53.2 % Commercial Earthquake ​ 18,061 ​ 17.5 % 8,402 ​ 12.7 % ​ 40,727 ​ 15.8 % 23,020 ​ 12.9 % Specialty Homeowners ​ 17,048 ​ 16.6 % 8,572 ​ 12.9 % ​ 38,461 ​ 14.9 % 24,994 ​ 14.0 % Commercial All Risk ​ ​ 12,467 ​ 12.1 % ​ 7,077 ​ 10.7 % ​ ​ 39,765 ​ 15.4 % ​ 21,929 ​ 12.3 % Inland Marine ​ ​ 4,406 ​ 4.3 % ​ 1,060 ​ 1.6 % ​ ​ 9,747 ​ 3.8 % ​ 1,294 ​ 0.7 % Hawaii Hurricane ​ 4,360 ​ 4.2 % 3,299 ​ 5.0 % ​ 10,296 ​ 4.0 % 8,048 ​ 4.5 % Residential Flood ​ 2,170 ​ 2.1 % 1,450 ​ 2.2 % ​ 5,728 ​ 2.2 % 3,494 ​ 2.0 % Other ​ 3,948 ​ 3.9 % ​ 671 ​ 1.0 % ​ ​ 10,041 ​ 3.8 % ​ 835 ​ 0.4 % Total Gross Written Premiums ​ $ 102,967 100.0 % $ 66,242 100.0 % ​ $ 258,268 100.0 % $ 178,619 100.0 % ​ Gross written premiums by state are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2020 ​ 2019 ​ 2020 ​ 2019 ​ ​ ($ in thousands) ​ ($ in thousands) ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ Amount ​ GWP ​ Amount ​ GWP ​ Amount ​ GWP ​ Amount ​ GWP State ​ ​ ​ ​ ​ ​ California ​ $ 52,960 ​ 51.4 % $ 36,789 ​ 55.5 % ​ $ 124,131 ​ 48.1 % $ 99,543 ​ 55.7 % Texas ​ ​ 20,460 ​ 19.9 % ​ 11,239 ​ 17.0 % ​ ​ 55,047 ​ 21.3 % ​ 32,678 ​ 18.3 % Hawaii ​ ​ 5,097 ​ 5.0 % ​ 3,675 ​ 5.5 % ​ ​ 11,990 ​ 4.6 % ​ 8,688 ​ 4.9 % Washington ​ ​ 4,340 ​ 4.2 % ​ 2,910 ​ 4.4 % ​ ​ 10,002 ​ 3.9 % ​ 6,430 ​ 3.6 % South Carolina ​ 2,089 ​ 2.0 % 1,258 ​ 1.9 % ​ 7,203 ​ 2.8 % 4,614 ​ 2.5 % North Carolina ​ ​ 2,839 ​ 2.8 % ​ 967 1.5 % ​ ​ 7,131 ​ 2.8 % ​ 2,654 1.5 % Oregon ​ ​ 2,912 ​ 2.8 % ​ 2,153 ​ 3.3 % ​ ​ 7,298 ​ 2.8 % ​ 5,279 ​ 3.0 % Mississippi ​ 2,173 ​ 2.1 % 1,315 ​ 2.0 % ​ 5,628 ​ 2.2 % 3,383 ​ 1.9 % Other ​ 10,097 ​ 9.8 % 5,936 ​ 8.9 % ​ 29,838 ​ 11.5 % 15,350 ​ 8.6 % Total Gross Written Premiums ​ $ 102,967 100.0 % $ 66,242 100.0 % ​ $ 258,268 100.0 % $ 178,619 100.0 % ​ ​ 13. Subsequent Events On November 10, 2020, the Company announced that its wholly-owned subsidiary, PSIC, had entered into a Renewal Rights Agreement, dated as of November 9, 2020, with GeoVera Holdings Inc. (“GeoVera”), pursuant to which GeoVera agreed to sell, and the Company’s PSIC subsidiary agreed to purchase, the renewal rights to GeoVera’s Hawaii residential Hurricane policies. The sale was consummated on November 9, 2020. ​ 20 Table of Contents As part of this agreement, the Company has the ability to gain approximately $17 million of written premiums over the next 12 months. There is no guarantee that current GeoVera policyholders will renew their Hurricane policies with the Company; therefore, the ultimate impact to the Company’s written premiums is uncertain. ​ ​ ​ 21 Table of Contents