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) ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2021 ​ 2020 ​ ​ (Unaudited) ​ ​ ​ Assets ​ ​ Investments: ​ ​ Fixed maturity securities available for sale, at fair value (amortized cost: $ 384,450 in 2021; $ 381,279 in 2020) ​ $ 396,637 ​ $ 397,987 Equity securities, at fair value (cost: $ 5,407 in 2021; $ 22,291 in 2020) ​ 5,554 ​ 24,322 Total investments ​ 402,191 ​ 422,309 Cash and cash equivalents ​ 24,932 ​ 33,538 Restricted cash ​ 687 ​ 248 Accrued investment income ​ 2,629 ​ 2,545 Premium receivable ​ 71,605 ​ 48,842 Deferred policy acquisition costs ​ 46,007 ​ 35,481 Reinsurance recoverable on unpaid losses and loss adjustment expenses ​ 145,459 ​ 94,566 Reinsurance recoverable on paid losses and loss adjustment expenses ​ 49,458 ​ 10,162 Ceded unearned premiums ​ 37,419 ​ 35,031 Prepaid expenses and other assets ​ 37,787 ​ 34,119 Property and equipment, net ​ 633 ​ 739 Intangible assets, net ​ 10,849 ​ 11,512 Total assets ​ $ 829,656 ​ $ 729,092 Liabilities and stockholders' equity ​ ​ Liabilities: ​ ​ Accounts payable and other accrued liabilities ​ $ 20,954 ​ $ 20,730 Reserve for losses and loss adjustment expenses ​ 169,092 ​ 129,036 Unearned premiums ​ 222,612 ​ 183,489 Ceded premium payable ​ 29,019 ​ 22,233 Funds held under reinsurance treaty ​ 6,823 ​ 4,515 Deferred tax liabilities, net ​ ​ 4,411 ​ ​ 5,376 Total liabilities ​ 452,911 ​ 365,379 Stockholders' equity: ​ ​ Preferred stock, $ 0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020 ​ ​ — ​ ​ — Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 25,369,503 and 25,525,796 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively ​ 3 ​ 3 Additional paid-in capital ​ 313,910 ​ 310,507 Accumulated other comprehensive income ​ 9,757 ​ 13,246 Retained earnings ​ 53,075 ​ 39,957 Total stockholders' equity ​ 376,745 ​ 363,713 Total liabilities and stockholders' equity ​ $ 829,656 ​ $ 729,092 ​ See accompanying notes. ​ 3 Table of Contents Palomar Holdings, Inc. and Subsidiaries ​ Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) (in thousands, except shares and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, ​ 2021 2020 2021 2020 Revenues: ​ ​ ​ ​ Gross written premiums ​ $ 129,359 ​ $ 83,807 ​ $ 232,936 ​ $ 155,301 Ceded written premiums ​ ( 51,568 ) ​ ( 30,198 ) ​ ( 94,932 ) ​ ( 59,693 ) Net written premiums ​ 77,791 ​ 53,609 ​ 138,004 ​ 95,608 Change in unearned premiums ​ ( 23,576 ) ​ ​ ( 14,289 ) ​ ( 36,736 ) ​ ​ ( 21,482 ) Net earned premiums ​ 54,215 ​ 39,320 ​ 101,268 ​ 74,126 Net investment income ​ 2,194 ​ ​ 2,114 ​ 4,413 ​ ​ 4,148 Net realized and unrealized gains (losses) on investments ​ 300 ​ ​ 778 ​ ( 439 ) ​ ​ 1,219 Commission and other income ​ 1,006 ​ ​ 937 ​ 1,717 ​ ​ 1,675 Total revenues ​ 57,715 ​ 43,149 ​ 106,959 ​ 81,168 Expenses: ​ ​ ​ ​ Losses and loss adjustment expenses ​ 7,235 ​ ​ 3,978 ​ ​ 2,813 ​ ​ 5,841 Acquisition expenses ​ 22,424 ​ ​ 14,886 ​ ​ 41,737 ​ ​ 27,933 Other underwriting expenses ​ 12,539 ​ ​ 8,976 ​ ​ 26,786 ​ ​ 16,928 Total expenses ​ 42,198 ​ 27,840 ​ 71,336 ​ 50,702 Income before income taxes ​ 15,517 ​ 15,309 ​ 35,623 ​ 30,466 Income tax expense ​ 3,177 ​ ​ 3,297 ​ ​ 6,653 ​ ​ 6,681 Net income ​ 12,340 ​ 12,012 ​ 28,970 ​ 23,785 Other comprehensive income, net: ​ ​ ​ ​ Net unrealized gains (losses) on securities available for sale for the three and six months ended June 30, 2021 and 2020, respectively ​ 2,710 ​ ​ 10,676 ​ ​ ( 3,489 ) ​ ​ 4,843 Net comprehensive income ​ $ 15,050 ​ $ 22,688 ​ $ 25,481 ​ $ 28,628 Per Share Data: ​ ​ ​ ​ Basic earnings per share ​ $ 0.48 ​ $ 0.49 ​ $ 1.14 ​ $ 0.98 Diluted earnings per share ​ $ 0.47 ​ $ 0.48 ​ $ 1.11 ​ $ 0.95 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 25,479,561 ​ ​ 24,343,425 ​ ​ 25,515,893 ​ ​ 24,231,344 Diluted ​ ​ 26,104,880 ​ ​ 25,057,029 ​ ​ 26,181,206 ​ ​ 24,922,630 ​ 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, 2019 23,468,750 ​ $ 2 ​ $ 180,012 ​ $ 4,686 ​ $ 33,856 ​ $ 218,556 Other comprehensive income (loss), net of tax — ​ — ​ — ​ 4,843 ​ — ​ 4,843 Stock-based compensation — ​ — ​ 907 ​ — ​ — ​ 907 Issuance of common stock in stock offerings, net of offering costs ​ 1,900,000 ​ ​ — ​ ​ 125,688 ​ ​ — ​ ​ — ​ ​ 125,688 Issuance of common stock via employee stock purchase plan ​ 21,111 ​ ​ — ​ ​ 416 ​ ​ — ​ ​ — ​ ​ 416 Issuance of common stock via equity incentive plan ​ 78,460 ​ ​ — ​ ​ 1,048 ​ ​ — ​ ​ — ​ ​ 1,048 Net income — ​ — ​ — ​ — ​ 23,785 ​ 23,785 Balance at June 30, 2020 25,468,321 ​ $ 2 ​ $ 308,071 ​ $ 9,529 ​ $ 57,641 ​ $ 375,243 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2020 25,525,796 ​ $ 3 ​ $ 310,507 ​ $ 13,246 ​ $ 39,957 ​ $ 363,713 Other comprehensive income (loss), net of tax — ​ ​ — ​ ​ — ​ ​ ( 3,489 ) ​ ​ — ​ ( 3,489 ) Stock-based compensation — ​ ​ — ​ ​ 1,845 ​ ​ — ​ ​ — ​ 1,845 Issuance of common stock via employee stock purchase plan ​ 4,596 ​ ​ — ​ ​ 333 ​ ​ — ​ ​ — ​ ​ 333 Issuance of common stock via equity incentive plan ​ 78,207 ​ ​ — ​ ​ 1,225 ​ ​ — ​ ​ — ​ ​ 1,225 Repurchases of common stock ​ ( 239,096 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 15,852 ) ​ ​ ( 15,852 ) Net income — ​ ​ — ​ ​ — ​ ​ — ​ ​ 28,970 ​ 28,970 Balance at June 30, 2021 25,369,503 ​ $ 3 ​ $ 313,910 ​ $ 9,757 ​ $ 53,075 ​ $ 376,745 ​ See accompanying notes. ​ 5 Table of Contents Palomar Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ ​ June 30, ​ 2021 2020 Operating activities ​ ​ Net cash provided by (used in) operating activities ​ $ ( 9,352 ) ​ $ 24,499 Investing activities ​ ​ ​ ​ Purchases of property and equipment ​ ( 18 ) ​ ( 63 ) Purchases of fixed maturity securities ​ ( 56,267 ) ​ ( 130,755 ) Purchases of equity securities ​ ( 6,157 ) ​ ( 27,736 ) Sales and maturities of fixed maturity securities ​ 52,164 ​ 71,027 Sales of equity securities ​ 24,268 ​ 13,492 Securities receivable or payable, net ​ ​ 1,500 ​ ​ ( 1,023 ) Payment of additional costs associated with purchase of policy renewal rights ​ ​ ( 11 ) ​ ​ — Net cash provided by (used in) investing activities ​ 15,479 ​ ( 75,058 ) Financing activities ​ ​ Proceeds from stock offerings, net of offering costs ​ ​ — ​ ​ 125,688 Proceeds from common stock issued via employee stock purchase plan ​ ​ 333 ​ ​ 416 Proceeds from common stock issued via stock option exercises ​ ​ 1,225 ​ ​ 1,048 Repurchases of common stock ​ ​ ( 15,852 ) ​ ​ — Net cash provided by (used in) financing activities ​ ( 14,294 ) ​ 127,152 Net increase (decrease) in cash, cash equivalents and restricted cash ​ ( 8,167 ) ​ 76,593 Cash, cash equivalents and restricted cash at beginning of period ​ 33,786 ​ 33,349 Cash, cash equivalents and restricted cash at end of period ​ $ 25,619 ​ $ 109,942 Supplementary cash flow information: ​ ​ Cash paid for income taxes ​ $ — ​ $ — Cash paid for interest ​ $ — ​ $ — ​ The following table summarizes our cash and cash equivalents and restricted cash and cash equivalents within the condensed consolidated balance sheets (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2021 ​ 2020 ​ ​ (unaudited) ​ ​ ​ Cash and cash equivalents ​ $ 24,932 ​ $ 33,538 Restricted cash ​ 687 ​ 248 Cash and cash equivalents and restricted cash ​ $ 25,619 ​ $ 33,786 ​ 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, 2020, filed with the SEC on March 9, 2021 (the “2020 Annual Report on Form 10-K”) 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 Recently adopted accounting pronouncements Income Taxes In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. Among other things, ASU 2019-12 eliminates certain exceptions for recognizing deferred taxes for investments, performing intra-period tax allocation and calculating income taxes in interim periods. ASU 2019-12 also clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 7 Table of Contents 2020. The Company adopted this guidance on January 1, 2021 and adoption did not have a material impact on the consolidated financial statements. ​ ​ 2. Investments The Company’s available-for-sale investments are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair June 30, 2021 ​ Cost or Cost ​ Gains ​ Losses ​ Value ​ (in thousands) Fixed maturities: ​ ​ ​ ​ ​ U.S. Governments ​ $ 18,967 ​ $ 522 ​ $ ( 113 ) ​ $ 19,376 States, territories, and possessions ​ 6,183 ​ 383 ​ ( 10 ) ​ 6,556 Political subdivisions ​ 2,013 ​ 115 ​ — ​ 2,128 Special revenue excluding mortgage/asset-backed securities ​ 39,819 ​ 1,510 ​ ( 3 ) ​ 41,326 Corporate and other ​ 235,195 ​ 8,632 ​ ( 865 ) ​ 242,962 Mortgage/asset-backed securities ​ 82,273 ​ 2,101 ​ ( 85 ) ​ 84,289 Total available-for-sale investments ​ $ 384,450 ​ $ 13,263 ​ $ ( 1,076 ) ​ $ 396,637 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair December 31, 2020 ​ Cost or Cost ​ Gains ​ Losses ​ Value ​ (in thousands) Fixed maturities: ​ ​ ​ ​ U.S. Governments ​ $ 16,308 ​ $ 756 ​ $ ( 5 ) ​ $ 17,059 States, territories, and possessions ​ 6,208 ​ 428 ​ — ​ 6,636 Political subdivisions ​ 2,027 ​ 125 ​ — ​ 2,152 Special revenue excluding mortgage/asset-backed securities ​ 39,704 ​ 1,525 ​ ( 2 ) ​ 41,227 Corporate and other ​ 234,049 ​ 11,602 ​ ( 291 ) ​ 245,360 Mortgage/asset-backed securities ​ 82,983 ​ 2,785 ​ ( 215 ) ​ 85,553 Total available-for-sale investments ​ $ 381,279 ​ $ 17,221 ​ $ ( 513 ) ​ $ 397,987 ​ Security holdings in an unrealized loss position As of June 30, 2021, the Company held 111 fixed maturity securities in an unrealized loss position with a total estimated fair value of $ 76.0 million and total gross unrealized losses of $ 1.1 million. As of December 31, 2020, the Company held 90 fixed maturity securities in an unrealized loss position with a total estimated fair value of $ 41.5 million and total gross unrealized losses of $ 0.5 million. 8 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 June 30, 2021 and December 31, 2020, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than 12 Months ​ More Than 12 Months ​ Total ​ Fair Unrealized Fair Unrealized Fair Unrealized June 30, 2021 ​ Value ​ Losses ​ Value ​ Losses ​ Value ​ Losses ​ ​ (in thousands) Fixed maturity securities: ​ ​ ​ ​ ​ ​ U.S. Governments $ 7,519 ​ $ ( 113 ) ​ $ — ​ $ — ​ $ 7,519 ​ $ ( 113 ) States, territories, and possessions ​ 3,352 ​ ​ ( 10 ) ​ — ​ — ​ 3,352 ​ ( 10 ) Political subdivisions ​ — ​ ​ — ​ — ​ — ​ — ​ — Special revenue excluding mortgage/asset-backed securities ​ 2,398 ​ ​ ( 3 ) ​ — ​ — ​ 2,398 ​ ( 3 ) Corporate and other ​ 50,842 ​ ​ ( 662 ) ​ 56 ​ ( 203 ) ​ 50,898 ​ ( 865 ) Mortgage/asset-backed securities ​ 9,412 ​ ​ ( 57 ) ​ 2,467 ​ ( 28 ) ​ 11,879 ​ ( 85 ) Total ​ $ 73,523 ​ $ ( 845 ) ​ $ 2,523 ​ $ ( 231 ) ​ $ 76,046 ​ $ ( 1,076 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than 12 Months ​ More Than 12 Months ​ Total ​ Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2020 ​ Value ​ Losses ​ Value ​ Losses ​ Value ​ Losses ​ ​ (in thousands) Fixed maturity securities: ​ ​ ​ ​ ​ ​ U.S. Governments ​ $ 1,496 ​ $ ( 5 ) ​ $ — ​ $ — ​ $ 1,496 ​ $ ( 5 ) States, territories, and possessions ​ — ​ — ​ — ​ — ​ — ​ — Political subdivisions ​ — ​ — ​ — ​ — ​ — ​ — Special revenue excluding mortgage/asset-backed securities ​ 520 ​ ( 2 ) ​ — ​ — ​ 520 ​ ( 2 ) Corporate and other ​ 22,718 ​ ( 234 ) ​ 203 ​ ( 57 ) ​ 22,921 ​ ( 291 ) Mortgage/asset-backed securities ​ 16,092 ​ ( 211 ) ​ 496 ​ ( 4 ) ​ 16,588 ​ ( 215 ) Total ​ $ 40,826 ​ $ ( 452 ) ​ $ 699 ​ $ ( 61 ) ​ $ 41,525 ​ $ ( 513 ) ​ 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 2020 Annual Report on Form 10-K. Based on the Company’s reviews as of June 30, 2021, the Company recorded an immaterial allowance for credit losses pertaining to one investment security. 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 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. ​ 9 Table of Contents Contractual maturities of available-for-sale fixed maturity securities The amortized cost and fair value of fixed maturity securities at June 30, 2021, by contractual maturity, are shown below. ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized Fair ​ ​ Cost ​ Value ​ (in thousands) Due within one year ​ $ 28,427 ​ $ 28,687 Due after one year through five years ​ 131,078 ​ 134,954 Due after five years through ten years ​ 105,491 ​ 110,016 Due after ten years ​ 37,181 ​ 38,691 Mortgage and asset-backed securities ​ 82,273 ​ 84,289 ​ ​ $ 384,450 ​ $ 396,637 ​ 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 ​ Six Months Ended ​ ​ June 30, ​ June 30, ​ 2021 2020 2021 2020 ​ (in thousands) (in thousands) Interest income ​ $ 2,262 ​ $ 2,092 ​ $ 4,501 ​ $ 4,093 Dividend income ​ 58 ​ 120 ​ 157 ​ 245 Investment expense ​ ( 126 ) ​ ( 98 ) ​ ( 245 ) ​ ( 190 ) Net investment income ​ $ 2,194 ​ $ 2,114 ​ $ 4,413 ​ $ 4,148 ​ Net realized and unrealized investment gains and losses The following table presents net realized and unrealized investment gains and losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Six Months Ended ​ ​ June 30, June 30, ​ 2021 2020 2021 2020 ​ ​ (in thousands) ​ (in thousands) Realized gains: ​ ​ ​ ​ Gains on sales of fixed maturity securities ​ $ 166 ​ $ 175 ​ $ 218 ​ $ 185 Gains on sales of equity securities ​ 420 ​ — ​ 1,229 ​ — Total realized gains ​ 586 ​ 175 ​ 1,447 ​ 185 Realized losses: ​ ​ ​ ​ Losses on sales of fixed maturity securities ​ — ​ ( 44 ) ​ ( 2 ) ​ ​ ( 44 ) Losses on sales of equity securities ​ — ​ ( 2 ) ​ — ​ ​ ( 2 ) Total realized losses ​ — ​ ( 46 ) ​ ( 2 ) ​ ( 46 ) Net realized investment gains ​ 586 ​ 129 ​ 1,445 ​ 139 Net unrealized gains (losses) on equity securities ​ ( 286 ) ​ 649 ​ ( 1,884 ) ​ 1,080 Net realized and unrealized gains (losses) on investments ​ $ 300 ​ $ 778 ​ $ ( 439 ) ​ $ 1,219 ​ Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the settlement date. 10 Table of Contents Proceeds from the sale of fixed maturity securities were $ 11.1 million and $ 10.5 million for the six months ended June 30, 2021 and 2020, 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 both June 30, 2021 and December 31, 2020, the carrying value of securities on deposit with state regulatory authorities was $ 7.5 million. 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. 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 hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2021 Level 1 Level 2 Level 3 Total ​ (in thousands) Assets: ​ ​ ​ ​ Fixed maturity securities ​ ​ ​ ​ U.S. Governments ​ $ — ​ $ 19,376 ​ $ — ​ $ 19,376 States, territories, and possessions ​ — ​ 6,556 ​ — ​ 6,556 Political subdivisions ​ — ​ 2,128 ​ — ​ 2,128 Special revenue excluding mortgage/asset-backed securities ​ — ​ 41,326 ​ — ​ 41,326 Corporate and other ​ — ​ 242,962 ​ — ​ 242,962 Mortgage/asset-backed securities ​ — ​ 84,289 ​ — ​ 84,289 Equity securities ​ 5,554 ​ — ​ — ​ 5,554 Cash, cash equivalents, and restricted cash ​ 25,619 ​ — ​ — ​ 25,619 Total assets ​ $ 31,173 ​ $ 396,637 ​ $ — ​ $ 427,810 11 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 Level 1 Level 2 Level 3 Total ​ (in thousands) Assets: ​ ​ ​ ​ Fixed maturity securities ​ ​ ​ ​ U.S. Governments ​ $ — ​ $ 17,059 ​ $ — ​ $ 17,059 States, territories, and possessions ​ — ​ 6,636 ​ — ​ 6,636 Political subdivisions ​ — ​ 2,152 ​ — ​ 2,152 Special revenue excluding mortgage/asset-backed securities ​ — ​ 41,227 ​ — ​ 41,227 Corporate and other ​ — ​ 245,360 ​ — ​ 245,360 Mortgage/asset-backed securities ​ — ​ 85,553 ​ — ​ 85,553 Equity securities ​ 24,322 ​ — ​ — ​ 24,322 Cash, cash equivalents, and restricted cash ​ 33,786 ​ — ​ — ​ 33,786 Total assets ​ $ 58,108 ​ $ 397,987 ​ $ — ​ $ 456,095 ​ ​ ​ ​ ​ ​ 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 June 30, 2021 and December 31, 2020, the Company had no fixed income securities classified as Level 3. 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 June 30, Six Months Ended June 30, ​ 2021 2020 2021 2020 ​ ​ ​ (in thousands) ​ (in thousands) Reserve for losses and LAE net of reinsurance recoverables at beginning of period ​ $ 19,016 ​ $ 4,499 ​ $ 34,470 ​ $ 3,869 Add: Incurred losses and LAE, net of reinsurance, related to: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current year ​ 7,612 ​ 3,885 ​ 5,916 ​ ​ 6,064 Prior years ​ ( 377 ) ​ 93 ​ ( 3,103 ) ​ ​ ( 223 ) Total incurred ​ 7,235 ​ 3,978 ​ 2,813 ​ 5,841 Deduct: Loss and LAE payments, net of reinsurance, related to: ​ ​ ​ ​ Current year ​ ( 1,060 ) ​ ​ 1,171 ​ ​ 620 ​ ​ 1,522 Prior years ​ 3,678 ​ ​ 219 ​ ​ 13,030 ​ ​ 1,101 Total payments ​ 2,618 ​ 1,390 ​ 13,650 ​ 2,623 Reserve for losses and LAE net of reinsurance recoverables at end of period ​ 23,633 ​ 7,087 ​ 23,633 ​ 7,087 Add: Reinsurance recoverables on unpaid losses and LAE at end of period ​ 145,459 ​ ​ 17,129 ​ ​ 145,459 ​ ​ 17,129 Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period ​ $ 169,092 ​ $ 24,216 ​ $ 169,092 ​ $ 24,216 ​ 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. ​ 12 Table of Contents The Company experienced favorable prior year development of $ 0.4 million during the three months ended June 30, 2021 and adverse development of $ 0.09 million in the three months ended June 30, 2020. ​ The Company experienced favorable prior year development of $ 3.1 million and $ 0.2 million during the six months ended June 30, 2021 and June 30, 2020, respectively. ​ Favorable prior year development during the three months ended June 30, 2021 was primarily due to lower than anticipated severity of catastrophe losses associated with certain hurricanes which occurred during the second half of 2020 in the Company’s Commercial All Risk and Specialty Homeowners line of business. Adverse development in the three months ended June 30, 2020 was primarily due to reported activity in the Assumed Reinsurance line of business. ​ Favorable prior year development during the six months ended June 30, 2021 was primarily due to lower than anticipated severity of catastrophe losses associated with certain hurricanes which occurred during the second half of 2020 in the Company’s Commercial All Risk and Specialty Homeowners line of business. Favorable development in the six months ended June 30, 2020 was primarily due to lower than anticipated frequency and severity of claims in the Specialty Homeowners and Residential Flood lines of business. ​ 5. Stockholders’ Equity Common stock reserved for future issuance Common stock reserved for future issuance consists of the following as of June 30, 2021: ​ ​ ​ Stock options outstanding under 2019 Equity Incentive Plan 994,991 Restricted stock units outstanding under 2019 Equity Incentive Plan 44,964 Performance stock units outstanding under 2019 Equity Incentive Plan, at target 8,186 Shares authorized for future issuance under 2019 Equity Incentive Plan 2,606,622 Shares authorized for future issuance under 2019 Employee Stock Purchase Plan 687,037 Total 4,341,800 ​ Stock based compensation The below table summarizes the Company’s stock-based compensation expense for each period presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended June 30, ​ Six months ended June 30, ​ 2021 2020 2021 2020 ​ (in thousands) (in thousands) Stock-Based Compensation ​ $ 907 ​ $ 464 ​ $ 1,845 ​ $ 907 ​ Stock-based compensation expense is recognized on a straight-line basis over the vesting period of equity-based awards. For performance stock units (“PSUs”), any changes to expense resulting from differences in actual performance versus target are recognized over the remaining vesting period of the 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 and comprehensive income. 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. 13 Table of Contents 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 common stock on the grant date. Stock options vest over a two to 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 service . Stock options expire ten years after the grant date. The following table summarizes stock option transactions for the six months ended June 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of shares ​ ​ Weighted-average exercise price ​ Weighted average remaining contractual term (in years) ​ ​ Aggregate intrinsic value (in thousands) Outstanding at January 1, 2021 1,008,648 ​ $ 23.92 ​ 8.43 ​ $ 66,028 Options granted 67,248 ​ ​ 95.52 ​ ​ ​ ​ ​ Options exercised ( 76,412 ) ​ ​ 16.03 ​ ​ ​ ​ ​ Options canceled ( 4,493 ) ​ ​ 46.96 ​ ​ ​ ​ ​ Outstanding at June 30, 2021 994,991 ​ $ 29.26 ​ 7.90 ​ $ 48,672 Vested and Exercisable at June 30, 2021 602,621 ​ $ 16.85 ​ 7.67 ​ $ 35,322 ​ As of June 30, 2021, the Company had approximately $ 4.2 million of total unrecognized stock-based compensation expense related to stock options expected to be recognized over a weighted-average period of 2.29 years. The fair value of each option granted during the six months ended June 30, 2021 was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions: ​ ​ ​ Risk free rate of return (1) 0.57 % - 1.09 % Expected share price volatility (2) 26.06 % - 26.27 % Expected life in years (3) 5.89 years Dividend yield (4) 0 % (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. ​ ​ 14 Table of Contents Restricted Stock Units RSUs are valued using the closing price of the Company’s common stock 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 thereafter, subject to continued service. The following table summarizes RSU transactions for the six months ended June 30, 2021: ​ ​ ​ ​ ​ ​ ​ Number of shares ​ ​ Weighted-average grant date fair value Outstanding at January 1, 2021 14,734 ​ $ 95.86 Granted 32,249 ​ ​ 93.57 Released ( 1,795 ) ​ ​ 73.60 Forfeited ( 224 ) ​ ​ 97.87 Non vested outstanding at June 30, 2021 44,964 ​ $ 95.10 ​ As of June 30, 2021, the Company had approximately $ 3.5 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 2.32 years. Performance Stock Units During the six months ended June 30, 2021, the Company began issuing PSUs to certain employees. PSUs are generally valued using the closing price of the Company’s common stock on the grant date with vesting conditions described below. 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. The PSU’s performance period is the fiscal year of the grant. At the end of the performance period, the actual results will be measured against the predetermined targets to determine the number of PSUs to be earned as compensation. The earned PSUs are then 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 six months ended June 30, 2021: ​ ​ ​ ​ ​ ​ ​ Number of shares ​ ​ Weighted-average grant date fair value Outstanding at January 1, 2021 — ​ $ — Granted 8,186 ​ ​ 97.38 Vested — ​ ​ — Forfeited — ​ ​ — Non vested outstanding at June 30, 2021 8,186 ​ $ 97.38 ​ The PSU grants above represent shares that would vest based on achievement of the predetermined targets and do not reflect potential increases or decreases resulting from the Company’s actual performance relative to the predetermined targets. The actual number of PSUs which vest is subject to adjustment based on the Company’s actual performance relative to the predetermined targets. As of June 30, 2021, the Company had approximately $ 0.7 million of total unrecognized stock-based compensation expense related to PSUs expected to be recognized over a weighted-average period of 2.5 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 15 Table of Contents 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 4,596 shares pursuant to the ESPP during the six months ended June 30, 2021. Share repurchases On March 29, 2021, the Company’s Board of Directors approved the adoption of a share repurchase program which became effective March 31, 2021. The program authorizes the repurchase by the Company of up to $ 40 million of its outstanding shares of common stock through the period ending on March 31, 2023. Under the share repurchase program, shares may be 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. The Company purchased 239,096 shares for $ 15.8 million under this program during the six months ended June 30, 2021. 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. 6. Accumulated Other Comprehensive Income Changes in accumulated other comprehensive income (“AOCI”) are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ 2021 2020 ​ ​ ​ (in thousands) Beginning Balance ​ $ 13,246 ​ $ 4,686 Other comprehensive income before reclassification ​ ( 4,199 ) ​ ​ 6,277 Federal income tax expense ​ 881 ​ ​ ( 1,318 ) Other comprehensive income before reclassification, net of tax ​ ( 3,318 ) ​ 4,959 Amounts reclassified from AOCI ​ ( 217 ) ​ ​ ( 147 ) Federal income tax expense ​ 46 ​ ​ 31 Amounts reclassified from AOCI, net of tax ​ ( 171 ) ​ ( 116 ) Other comprehensive income ​ ( 3,489 ) ​ 4,843 Balance at end of period ​ $ 9,757 ​ $ 9,529 ​ ​ ​ ​ 16 Table of Contents 7. Underwriting Information The Company has a single reportable segment and offers primarily earthquake, wind, inland marine, and flood insurance products. Gross written premiums (“GWP”) by product are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ Six Months Ended June 30, ​ ​ 2021 ​ 2020 ​ 2021 ​ 2020 ​ ​ ($ in thousands) ​ ($ in thousands) ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ Amount ​ GWP ​ Amount ​ GWP ​ Amount ​ GWP ​ Amount ​ GWP Product ​ ​ ​ ​ ​ ​ Residential Earthquake ​ $ 42,192 ​ 32.6 % $ 34,240 ​ 40.9 % ​ $ 78,090 ​ 33.5 % $ 62,996 ​ 40.6 % Specialty Homeowners ​ 19,135 ​ 14.8 % 11,568 ​ 13.8 % ​ 33,138 ​ 14.2 % 21,413 ​ 13.8 % Commercial Earthquake ​ 17,343 ​ 13.4 % 11,818 ​ 14.1 % ​ 38,619 ​ 16.6 % 22,666 ​ 14.6 % Commercial All Risk ​ ​ 14,976 ​ 11.6 % ​ 14,841 ​ 17.7 % ​ ​ 23,165 ​ 9.9 % ​ 27,297 ​ 17.6 % Inland Marine ​ ​ 11,681 ​ 9.0 % ​ 3,451 ​ 4.1 % ​ ​ 19,515 ​ 8.4 % ​ 5,341 ​ 3.4 % Hawaii Hurricane ​ 7,788 ​ 6.0 % 3,242 ​ 3.9 % ​ 13,925 ​ 6.0 % 5,937 ​ 3.8 % Residential Flood ​ 2,865 ​ 2.2 % 2,032 ​ 2.4 % ​ 5,149 ​ 2.2 % 3,558 ​ 2.3 % Other ​ 13,379 ​ 10.4 % ​ 2,615 ​ 3.1 % ​ ​ 21,335 ​ 9.2 % ​ 6,093 ​ 3.9 % Total Gross Written Premiums ​ $ 129,359 100.0 % $ 83,807 100.0 % ​ $ 232,936 100.0 % $ 155,301 100.0 % ​ Gross written premiums by state are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ Six Months Ended June 30, ​ ​ 2021 ​ 2020 ​ 2021 ​ 2020 ​ ​ ($ in thousands) ​ ($ in thousands) ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ Amount ​ GWP ​ Amount ​ GWP ​ Amount ​ GWP ​ Amount ​ GWP State ​ ​ ​ ​ ​ ​ California ​ $ 54,223 ​ 41.9 % $ 38,420 ​ 45.9 % ​ $ 104,725 ​ 45.0 % $ 71,172 ​ 45.8 % Texas ​ ​ 17,373 ​ 13.4 % ​ 18,796 ​ 22.4 % ​ ​ 28,427 ​ 12.2 % ​ 34,587 ​ 22.3 % Florida ​ ​ 11,697 ​ 9.0 % ​ — ​ 0.0 % ​ ​ 17,755 ​ 7.6 % ​ — ​ 0.0 % Hawaii ​ ​ 9,041 ​ 7.0 % ​ 3,840 ​ 4.6 % ​ ​ 15,970 ​ 6.9 % ​ 6,892 ​ 4.5 % Washington ​ 4,663 ​ 3.6 % 3,055 ​ 3.7 % ​ 8,751 ​ 3.8 % 5,661 3.6 % North Carolina ​ ​ 4,264 ​ 3.3 % ​ 2,609 3.1 % ​ ​ 8,152 ​ 3.5 % ​ 4,293 2.8 % Illinois ​ 3,173 ​ 2.5 % 1,694 ​ 2.0 % ​ 5,775 ​ 2.4 % 2,841 1.8 % Oregon ​ ​ 2,818 ​ 2.2 % ​ 2,289 ​ 2.7 % ​ ​ 5,723 ​ 2.4 % ​ 4,386 ​ 2.8 % Other ​ 22,107 ​ 17.1 % 13,104 ​ 15.6 % ​ 37,658 ​ 16.2 % 25,469 16.4 % Total Gross Written Premiums ​ $ 129,359 100.0 % $ 83,807 100.0 % ​ $ 232,936 100.0 % $ 155,301 100.0 % ​ During the three months ended June 30, 2021, PSIC accounted for $ 95.3 million or approximately 73.6 % of the Company’s gross written premiums and PESIC accounted for $ 34.1 million or approximately 26.4 % of our gross written premiums. During the six months ended June 30, 2021, PSIC accounted for $ 175.1 million or approximately 75.2 % of the Company’s gross written premiums and PESIC accounted for $ 57.8 million or approximately 24.8 % of our gross written premiums . ​ 17 Table of Contents 8. Income Taxes The Company calculates its tax provision in interim periods using its best estimate of the effective tax rate expected for the full year. The tax rate for the three and six months ended June 30, 2021 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 and six months ended June 30, 2020 the tax rate differs from the statutory rate of 21 % due to miscellaneous differences between taxable income calculated under GAAP and IRS regulations. 9. Earnings Per Share The following table sets out earnings per share of common stock: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended June 30, ​ Six months ended June 30, ​ 2021 2020 2021 2020 ​ (in thousands, except shares and per share data) (in thousands, except shares and per share data) Net income ​ $ 12,340 ​ $ 12,012 ​ $ 28,970 ​ $ 23,785 Weighted average common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 25,479,561 ​ 24,343,425 ​ 25,515,893 ​ 24,231,344 Common Share equivalents ​ ​ 625,319 ​ ​ 713,604 ​ ​ 665,313 ​ ​ 691,286 Diluted ​ ​ 26,104,880 ​ ​ 25,057,029 ​ ​ 26,181,206 ​ ​ 24,922,630 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.48 ​ $ 0.49 ​ $ 1.14 ​ $ 0.98 Diluted ​ $ 0.47 ​ $ 0.48 ​ $ 1.11 ​ $ 0.95 ​ 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. 10. Reinsurance The Company utilizes reinsurance in order to limit its exposure to losses and enable it to underwrite policies with sufficient limits to meet policyholder needs. The Company utilizes both excess of loss (XOL) and quota share reinsurance. As of June 30, 2021, the Company’s catastrophe event retention is $ 12.5 million for all perils. As of June 30, 2021, the Company’s XOL reinsurance structure provides protection up to $ 1.65 billion for earthquake events and $ 700 million for hurricane events. In addition to reinsurance purchased from traditional reinsurers, the Company has historically incorporated collateralized protection from the insurance linked securities market (i.e. catastrophe bonds). During the first quarter of 2021, the Company closed a $ 400 million 144A catastrophe bond which became effective June 1, 2021. The catastrophe bond was completed through Torrey Pines Re Pte. Ltd. (“Torrey Pines Re”). Torrey Pines Re. is a special purpose insurer established in Singapore whereby Torrey Pines Re provides Palomar with indemnity-based reinsurance covering earthquake events. ​ ​ ​ 18 Table of Contents