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Palomar (PLMR) Q2 Earnings Beat, Revenues Miss Estimates

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Palomar Holdings, Inc. (PLMR - Free Report) reported second-quarter 2022 operating income of 73 cents per share, beating the Zacks Consensus Estimate by 10.6%. The bottom line increased 43% year over year.

Palomar witnessed improved premiums and net investment income, offset by higher expenses.

Palomar Holdings, Inc. Price, Consensus and EPS Surprise


Behind the Headlines

Total revenues improved 47% year over year to $84.4 million, mainly attributable to higher premiums and net investment income. The top line missed the Zacks Consensus Estimate by 3.3%.

Gross written premiums increased 69.1% year over year to $218.7 million. Net earned premiums surged 48% year over year to $80.3 million.

Net investment income increased 43.1% year over year to $3.1 million, driven by a higher average balance of investments.

Palomar witnessed an underwriting income of $20 million, up 53.9% year over year.

Total expenses of $61.4 million increased 45.4% year over year due to higher losses and loss adjustment expenses, acquisition and underwriting expenses as well as interest expenses. The loss ratio was 17.9, down 460 bps year over year.

Adjusted combined ratio, excluding catastrophe losses, improved 470 basis points (bps) year over year to 69.1.

Financial Update

Cash and cash equivalents decreased 27.5% from the 2021-end level to $36.5 million at the quarter end.

Shareholder equity decreased 4.1% from 2021 end to $378.1 million.

Annualized adjusted return on equity was 19.7%, expanding 560 bps year over year.

PLMR bought back 0.1 million shares for $7.3 million in the second quarter of 2022. As of Jun 30 2022, $79.7 million remains under authorization.

2022 Guidance Reiterated

Palomar estimates adjusted net income between $80 million and $85 million in 2022.

Zacks Rank

Palomar 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 Property & Casualty Insurers

Of the insurance industry players that have reported second-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) met the mark.

Travelers’ core income of $2.57 per share beat the Zacks Consensus Estimate by 28.5% but decreased 26% year over year. Total revenues increased 7% year over year, primarily due to higher premiums, and beat the consensus estimate by 1.8%. Net written premiums increased 11%, driven by strong retention rates and positive renewal premium changes across all the segments. Underwriting gain of $113 million decreased 65% year over year in the reported quarter.  

Travelers’ combined ratio deteriorated 300 bps year over year to 98.3 due to higher catastrophe losses and a higher underlying combined ratio.

RLI’s operating earnings of $1.49 per share beat the Zacks Consensus Estimate by 6.1% and improved 36.7% from the prior-year quarter. Operating revenues were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%.

RLI’s underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments. The combined ratio improved 460 bps year over year to 80.2.

Progressive’s earnings per share of 95 cents came in line with the Zacks Consensus Estimate. The bottom line declined 37.1% year over year. Progressive’s net premiums written were $12.4 billion in the quarter, up 8% from $11.7 billion a year ago.

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