Palomar Holdings, Inc.  PLMR reported third-quarter 2024 operating income of $1.23 per share, which beat the Zacks Consensus Estimate by 13.9%. The bottom line increased 33.7% year over year. 

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Palomar witnessed higher premiums, improved adjusted underwriting income and higher yields on invested assets, partly offset by higher losses and loss adjustment expenses, as well as underwriting expenses. Palomar incurred higher-than-expected catastrophe loss in the reported quarter.

Behind the Headlines

Total revenues improved 60.3% year over year to $145.8 million, mainly attributable to higher premiums, commission and other income and net investment income. The top line beat the Zacks Consensus Estimate by 8.2%.

Palomar Holdings, Inc. Price, Consensus and EPS Surprise

Palomar Holdings, Inc. price-consensus-eps-surprise-chart | Palomar Holdings, Inc. Quote

Gross written premiums increased 32.2% year over year to $415 million, driven by strength in earthquake and casualty products as well as strong growth from growing crop business. Our estimate was $403.6 million.
Net earned premiums increased 58.1% year over year to $135.6 million. Our estimate was $121.6 million. The Zacks Consensus Estimate is pegged at $126 million.

Net investment income increased 56% year over year to $9.4 million, driven by higher yields on invested assets and a higher average balance of investments held during the three months ended Sept. 30, 2024 due to cash generated from operations. The Zacks Consensus Estimate is pegged at $8.3 million. Our estimate was $7.8 million.

Palomar recorded an adjusted underwriting income of $31 million, which increased 24% from the year-ago quarter. Underwriting income was $26.4 million, up 27.5% year over year. Our estimate was $22.1 million.  

Total expenses of $110 million increased 65.6% 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 $110 million. 

The loss ratio was 29.7, which deteriorated 1090 basis points (bps) year over year. Our estimate was 26.5. The Zacks Consensus Estimate was pegged at 28.6.

Adjusted combined ratio, excluding catastrophe losses, deteriorated 620 bps year over year to 77.1. The Zacks Consensus Estimate was pegged at 79.

Financial Update

Cash and cash equivalents increased 67% from 2023-end to $86.5 million at the end of the third quarter of 2024. Shareholder equity increased 49% from 2023-end to $703.3 million at the end of the reported quarter. 

Annualized adjusted return on equity in the third quarter of 2024 was 21%, contracting 130 bps year over year.

2024 View

Palomar expects adjusted net income in the range of $124-$128 million. This range includes catastrophe  losses incurred during the fourth quarter of 2024 of nearly $8 million related to Hurricane Milton.

Zacks Rank

PLMR currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

The Travelers Companies TRV reported third-quarter 2024 core income of $5.24 per share, which beat the Zacks Consensus Estimate by 38.2%. Total revenues increased 10.7% from the year-ago quarter to $11.84 billion, primarily driven by higher premiums, net investment income, fee income and other revenues. The top-line figure beat the Zacks Consensus Estimate by 1.4%.

Travelers’ net written premiums increased 8% year over year to a record $11.31 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $10.5 billion. Travelers witnessed an underwriting gain of $685 million against a loss of $136 million incurred in the year-ago quarter. The consolidated underlying combined ratio of 85.6 improved 500 bps year over year. The combined ratio improved 780 bps year over year to 93.2 due to an improvement in the underlying combined ratio and net favorable prior-year reserve development. 

The Progressive Corporation’s PGR third-quarter 2024 earnings per share of $3.97 beat the Zacks Consensus Estimate of $3.40. The bottom line more than doubled year over year.  Operating revenues of $19.5 billion improved 24.9% year over year and beat the consensus estimate by 2.6%.

Net premiums written were $19.5 billion in the quarter, up 25% from $15.6 billion a year ago. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 340 bps from the prior-year quarter’s level to 89.

RLI Corp. RLI reported third-quarter 2024 operating earnings of $1.31 per share, beating the Zacks Consensus Estimate by 33.7%. The bottom line more than doubled year over year. Operating revenues for the reported quarter were $426 million, up 1.4% year over year. The top line beat the Zacks Consensus Estimate of $420 million.

Gross premiums written increased 13% year over year to $563.4 million. This uptick can be attributed to the solid performance of the Casualty (up 15.7%), Property (up 9.6%) and Surety segments (up 9%). Our estimate was $572.3 million. Underwriting income increased to $40.7 million from $4.2 million in the year-ago quarter. The combined ratio improved 910 bps year over year to 89.6. The Zacks Consensus Estimate for the metric was pegged at 96, while our estimate was 103.1.

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