Palomar Q2 Earnings Top Estimates on Improved Premiums

Palomar Holdings, Inc. PLMR reported second-quarter 2024 operating income of $1.25 per share, which beat the Zacks Consensus Estimate by 11.6%. The bottom line increased 45.3% year over year.

Palomar witnessed improved premiums, increased adjusted underwriting income and higher yields on invested assets, partly offset by higher losses and loss adjustment expenses, as well as underwriting expenses.

Behind the Headlines

Total revenues improved 47.2% year over year to $131 million, mainly attributable to higher premiums, commission and other income and net investment income. The top line beat the Zacks Consensus Estimate by 9.2%.

Gross written premiums increased 40.4% year over year to $385.2 million. Our estimate was $362.7 million. Net earned premiums increased 47.1% year over year to $122.3 million. Our estimate was $109.2 million. The Zacks Consensus Estimate is pegged at $117.7 million.

Net investment income increased 43.7% year over year to $8 million, driven by higher yields on invested assets and a higher average balance of investments held during the three months ended Jun 30, 2024, due to cash generated from operations. The Zacks Consensus Estimate is pegged at $8.2 million. Our estimate was $8.9 million.

Palomar recorded an underwriting income of $25.6 million, which increased 47% from the year-ago quarter's income of $17.4 million. Our estimate was $23.2 million.

Adjusted underwriting income was $32.9 million, up 42.5% year over year.

Total expenses of $97.6 million increased 45% year over year due to higher losses and loss adjustment expenses, underwriting expenses and acquisition expenses, net of ceding commissions and fronting fees. Our estimate was $87.2 million.

The loss ratio was 24.9, which deteriorated 340 basis points (bps) year over year. Our estimate was 23.2. The Zacks Consensus Estimate was pegged at 24.7.

Adjusted combined ratio, excluding catastrophe losses, deteriorated 90 bps year over year to 73.1. The Zacks Consensus Estimate was pegged at 75.8.

Financial Update

Cash and cash equivalents decreased 7.1% from 2023-end to $47.8 million at the end of the second quarter of 2024. Shareholder equity increased 13% from 2023-end to $532.6 million at the end of the reported quarter.

Annualized adjusted return on equity in the second quarter of 2024 was 24.7%, expanding 340 bps year over year.

2024 View

Palomar expects adjusted net income in the range of $124-$130 million. This range includes $6.8 million of catastrophe losses incurred during the six months ended Jun 30, 2024, and additional catastrophe losses incurred during the third quarter of 2024 of nearly $5-$7 million related to Hurricanes Beryl and Debby.

Zacks Rank

PLMR currently carries a Zacks Rank #3 (Hold).

Performance of Other Property & Casualty Insurers

Cincinnati Financial Corporation CINF reported second-quarter 2024 operating income of $1.29 per share, which surpassed the Zacks Consensus Estimate by 33%. The bottom line increased 7% year over year. Total operating revenues in the quarter under review were $2.4 billion, which improved 10.8% year over year. However, the top line missed the consensus mark by 1.5%.

Net written premiums climbed 14% year over year to $2.4 billion. Investment income, net of expenses, increased 10% year over year to $242 million and missed our estimate of $246.2 million. The Zacks Consensus Estimate was pegged at $252 million. Total benefits and expenses of Cincinnati Financial increased 11.2% year over year to $2.1 billion. Our estimate was $2.2 billion. In its P&C insurance business, CINF witnessed an underwriting income of $35 million, which decreased 26% from the year-ago period. Our estimate was pegged at an income of $1.5 million.

RLI Corp. RLI reported second-quarter 2024 operating earnings of $1.72 per share, beating the Zacks Consensus Estimate by 27.4%. The bottom line improved 48.3% year over year. Operating revenues for the reported quarter were $413 million, up 17.6% year over year, driven by 17.6% higher net premiums earned and 18% higher net investment income. The top line beat the Zacks Consensus Estimate of $403 million. Gross premiums written increased 11% year over year to $563.4 million. Our estimate was $664 million.

Net investment income increased 18% year over year to $34 million. Our estimate was $39.1 million. The Zacks Consensus Estimate was pegged at $37.4 million. Total expenses increased 9.5% year over year to $314.8 million. Our estimate was $331.7 million. Underwriting income increased 70% year over year to $70 million. The combined ratio improved 570 bps year over year to 81.5. The Zacks Consensus Estimate for the metric was pegged at 95.3, while our estimate was 89.9.

CNA Financial Corporation CNA reported second-quarter 2024 core earnings of $1.19 per share, which missed the Zacks Consensus Estimate by 1.6%. However, the bottom line increased 5.3% year over year. Total operating revenues of CNA Financial were $3.1 billion, up 6.7% year over year. The top line beat the Zacks Consensus Estimate by 1.3%. Net written premiums of Property & Casualty Operations increased 6% year over year to $2.6 billion.

Net investment income rose 7.4% year over year to $618 million. Our estimate for net investment was $601.1 million. The Zacks Consensus Estimate was pegged at $592.3 million. Total claims, benefits and expenses increased 7.3% to $2.6 billion. Our estimate was $2.5 billion. Catastrophe losses were $82 million, wider than a loss of $68 million in the year-ago quarter. Underwriting income declined 10.1% year over year to $124 million. Our estimate was $175.3 million.

To read this article on Zacks.com click here.