Item 5. Market for Registrant’s Common Equity
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common shares began trading on the NASDAQ Global Select Market under the symbol “PLMR” on April 17, 2019. Prior to that time, there was no public market for our common shares. As of March 3, 2021, there were approximately 11 holders of record of our common stock. Because most of our shares of common stock are held by brokers and other institutions on behalf of our stockholders, this number is not representative our total stockholders.
The continued operation and growth of our business will require substantial capital. We do not intend to declare and pay cash dividends on shares of our common stock in the foreseeable future. Because we are a holding company with no business operations of our own, our ability to pay dividends to stockholders largely depends on dividends and other distributions from our U.S. subsidiaries, PESIC and PSIC, and our Bermuda subsidiary, PSRE. State insurance laws, including the laws of Arizona, Oregon and California, and the laws of Bermuda restrict the ability these subsidiaries to declare stockholder dividends. State insurance regulators require insurance companies to maintain specified levels of statutory capital and surplus and restrict dividend payments. Dividend payments are further limited to that part of available policyholder surplus that is derived from net profits on our business. 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. Moreover, state insurance regulators may in the future adopt statutory provisions more restrictive than those currently in effect.
Our Bermuda reinsurance subsidiary is highly regulated and is required to comply with various conditions before it is able to pay dividends or make distributions to us. Bermuda law, including the Insurance Act 1978, as amended (“Insurance Act”) and the Companies Act 1981, as amended (“Companies Act”) impose restrictions on our Bermuda reinsurance subsidiary’s ability to pay dividends to us based on solvency margins and surplus and capital requirements. These restrictions, and any other future restrictions adopted by the BMA, could have the effect, under certain circumstances, of significantly reducing dividends or other amounts payable to us by our Bermuda reinsurance subsidiary without affirmative approval of the BMA.
Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, restrictions imposed by applicable law and other factors our Board of Directors deems relevant. Consequently, investors may need to sell all or part of their holdings of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking immediate cash dividends should not purchase our common stock.
Performance Graph
The following performance graph compares the cumulative total shareholder return of an investment in (1) our common stock, (2) the cumulative total returns to the Nasdaq Composite Index and (3) the cumulative total returns to the Nasdaq Insurance Index, for the period from April 17, 2019 (the date our common stock began trading on Nasdaq) through December 31, 2020.
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The graph assumes an initial investment of $100. Such returns are based on historical results and are not indicative of future performance.
April 17, 2019
December 31, 2019
December 31, 2020
Palomar Holdings, Inc
$
100.00
$
265.88
$
467.83
Nasdaq Composite Index
$
100.00
$
112.21
$
161.18
Nasdaq Insurance Index
$
100.00
$
110.88
$
111.93
Item 6. Selected Consolidated Financial and Other Data
The following tables present selected consolidated financial and other data as of and for the periods indicated below. This selected data has been derived from our audited consolidated financial statements.
Our historical results are not necessarily indicative of the results that should be expected in any future period. You should read this data together with our audited consolidated financial statements and related notes which are included elsewhere in this Annual Report on Form 10-K, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” also included elsewhere this Annual Report on Form 10-K.
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Year Ended December 31,
Selected Operating Data and Key Ratios
2020
2019
2018
2017
2016
(in thousands except shares and per share data)
Results of Operations:
Gross written premiums
$
354,360
$
251,961
$
154,891
$
120,234
$
82,287
Ceded written premiums
(155,102)
(108,332)
(82,949)
(46,951)
(29,636)
Net written premiums
199,258
143,629
71,942
73,283
52,651
Net earned premiums
155,068
100,207
69,897
55,545
40,322
Total underwriting revenue (1)
158,363
102,878
72,302
56,733
40,582
Losses and loss adjustment expenses
64,115
5,593
6,274
12,125
7,292
Underwriting income (loss) (1)
(3,877)
8,727
19,847
3,940
5,797
Net income
6,257
10,621
18,219
3,783
6,614
Adjusted net income (1)
8,867
37,879
19,824
3,783
6,614
Per Share Data:
Diluted earnings per share
$
0.24
$
0.49
$
1.07
$
0.22
$
0.39
Diluted adjusted earnings per share (1)
$
0.35
$
1.73
$
1.17
$
0.22
$
0.39
Key Financial and Operating Metrics:
Return on equity
2.1
%
6.7
%
20.9
%
5.0
%
9.6
%
Adjusted return on equity(1)
3.0
%
24.1
%
22.7
%
5.0
%
9.6
%
Loss ratio
41.3
%
5.6
%
9.0
%
21.8
%
18.1
%
Expense ratio
61.2
%
85.7
%
62.6
%
71.1
%
67.5
%
Combined ratio
102.5
%
91.3
%
71.6
%
92.9
%
85.6
%
Adjusted combined ratio (1)
100.4
%
63.3
%
69.5
%
92.9
%
85.6
%
Catastrophe losses
$
50,986
$
—
$
5,000
$
6,500
$
—
Catastrophe loss ratio (1)
32.9
%
—
%
7.2
%
11.7
%
—
%
Adjusted combined ratio excluding catastrophe losses (1)
67.5
%
63.3
%
62.4
%
81.2
%
85.6
%
NM-Not Meaningful
(1) Indicates non-GAAP financial measure; see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—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.
December 31,
Selected Balance Sheet Data
2020
2019
2018
2017
2016
(in thousands)
Total investments
$
422,309
$
239,479
$
147,391
$
125,499
$
104,821
Cash and cash equivalents
33,538
33,119
9,525
10,780
9,755
Premium receivable
48,842
36,237
18,633
15,087
11,242
Deferred policy acquisition costs
35,481
25,201
14,052
15,161
10,654
Reinsurance recoverable
104,728
17,255
14,562
14,632
1,543
Ceded unearned premiums
35,031
26,105
18,284
3,175
1,648
Other assets
49,163
18,066
8,687
4,021
5,469
Total assets
729,092
395,462
231,134
188,355
145,132
Accounts payable and other accrued liabilities
20,730
13,555
9,245
6,497
4,259
Reserve for losses and loss adjustment expenses
129,036
16,821
16,061
17,784
4,778
Unearned premiums
183,489
130,373
79,130
61,976
42,710
Ceded premium payable
22,233
11,383
10,607
5,069
1,582
Other liabilities
9,891
4,774
720
1,528
1,721
Long‑term notes payable
—
—
19,079
17,087
16,973
Total liabilities
365,379
176,906
134,842
109,941
72,023
Total stockholders’ equity
363,713
218,556
96,292
78,414
73,109
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