• Palomar Holdings, Inc. Reports Fourth Quarter & Full Year 2020 Results

    المصدر: Nasdaq GlobeNewswire / 24 فبراير 2021 15:11:57   America/Chicago

    LA JOLLA, Calif., Feb. 24, 2021 (GLOBE NEWSWIRE) -- Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported a net loss of $1.8 million, or $0.07 per diluted share, for the fourth quarter of 2020 compared to net income of $10.9 million, or $0.45 per diluted share, for the fourth quarter of 2019.

    Fourth Quarter 2020 Highlights

    • Gross written premiums increased by 31.0% to $96.1 million compared to $73.3 million in the fourth quarter of 2019
    • Net loss of $1.8 million, or $0.07 per diluted share, compared to net income of $10.9 million, or $0.45 per diluted share, in the fourth quarter of 2019
    • Total loss ratio of 44.2% compared to 7.1% in the fourth quarter of 2019
    • Catastrophe loss ratio(1) of 37.2% compared to zero in the fourth quarter of 2019
    • Combined ratio of 112.8% compared to 63.1% in the fourth quarter of 2019
    • Adjusted combined ratio excluding catastrophe losses(1) of 73.8%, compared to 60.7% in the fourth quarter of 2019
    • Annualized return on equity of (2.0)%, compared to 20.4% in the fourth quarter of 2019

    Full Year 2020 Highlights

    • Gross written premiums increased by 40.6% to $354.4 million compared to $252.0 million in 2019
    • Net income of $6.3 million, compared to $10.6 million in 2019
    • Adjusted net income(1) of $8.9 million, compared to $37.9 million in 2019
    • Total loss ratio of 41.3%, compared to 5.6% in 2019
    • Catastrophe loss ratio(1) of 32.9% compared to zero in 2019
    • Combined ratio of 102.5%, compared to 91.3% in 2019
    • Adjusted combined ratio excluding catastrophe losses(1) of 67.5%, compared to 63.3% in 2019
    • Return on equity of 2.1%, compared to 6.7% in 2019
    • Adjusted return on equity(1) of 3.0%, compared to 24.1% in 2019

    (1)    See discussion of “Non-GAAP and Key Performance Indicators” below.

    “I am inspired by the efforts of our team to grow and evolve our business during the past year,” commented Mac Armstrong, Chairman and Chief Executive Officer. “We launched new products and a new insurance carrier, entered into new geographies, made key additions to our team, and continued our pursuit of the Company’s strategic vision all while navigating circumstances that few of us could have anticipated. Our newly launched E&S carrier, Palomar Excess and Surplus Insurance Company, or PESIC, represents an exciting progression in our evolution. PESIC enables us to extend the breadth and reach of our product suite and was a key contributor to the 95% year on year growth in our commercial lines gross written premiums for the full year. Overall, we grew gross written premiums by 31.0% in the fourth quarter and 40.6% for the full year while maintaining profitability in the face of an historic wind season.”

    Mr. Armstrong shared, “We are committed to applying data and lessons learned to the continuous improvement of our business. During this past year we modified our approach to and participation in specific wind-exposed markets upon review of potential risk-adjusted returns, catastrophe payback and prevailing market conditions. We also made additional refinements to our risk transfer strategy. The combination of these efforts will not only reduce volatility but also further enhance visibility into our financial results. Finally, we continued investing in our technology and our team as we position Palomar for near and long-term success.”

    Mr. Armstrong further offered, “Separately, I would like to address the severe weather activity throughout the country this past week, specifically Winter Storm Uri in Texas where Palomar has a considerable market presence. I want to tell our policyholders in Texas that our thoughts are with them, we stand ready to support them and we are here to help them rebound. Palomar has substantial resources in place to support both residential and commercial policyholders in Texas, including comprehensive reinsurance coverage on both an excess of loss and quota share basis. Both our commercial and residential quota shares will apply to this event from the first dollar of loss, and as such we do not expect to incur material losses from the storm.”  

    Underwriting Results
    Gross written premiums increased 31.0% to $96.1 million compared to $73.3 million in the fourth quarter of 2019, while net earned premiums increased 25.6% compared to the prior year’s fourth quarter. Losses and loss adjustment expenses for the fourth quarter were $17.2 million including $14.5 million of catastrophe losses and $2.7 million of non-catastrophe attritional losses. The loss ratio for the quarter was 44.2%, comprised of a catastrophe loss ratio of 37.2%(1) and an attritional loss ratio of 7.0%, compared to a loss ratio of 7.1% during the same period last year comprised entirely of attritional losses. The fourth quarter losses include $0.1 million of favorable prior year development. In addition to catastrophe losses, the Company’s fourth quarter 2020 results were impacted by a reinsurance expense acceleration charge of $4.1 million and reinstatement premium of $0.8 million on backup reinsurance purchased. Underwriting loss(1) was $5.0 million resulting in a combined ratio of 112.8% compared to underwriting income of $11.4 million and a combined ratio of 63.1% during the same period last year. The fourth quarter of 2020 results include certain expenses related to stock-based compensation and catastrophe losses. The fourth quarter of 2019 results include certain expenses related to the Company’s stock offering and stock-based compensation. Without these items, the Company’s adjusted combined ratio excluding catastrophe losses(1) was 73.8% in the fourth quarter compared to 60.7% during the same period last year. This increase was significantly due to the reinsurance acceleration charge and reinstatement premium incurred in the fourth quarter of 2020.

    Investment Results
    Net investment income increased by 29.0% to $2.3 million compared to $1.8 million in the prior year’s fourth quarter. The year over year increase was primarily due to a higher average balance of investments held during the three months ended December 31, 2020 due to cash generated from operations as well as proceeds from the Company’s January and June 2020 stock offerings, offset by lower yields on invested assets. Funds are generally invested conservatively in high quality securities, including government agency, asset and mortgage-backed securities, municipal and corporate bonds with an average credit quality of "A2/A". The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 3.96 years at December 31, 2020. Cash and invested assets totaled $456.1 million at December 31, 2020. During the fourth quarter, the Company recognized realized and unrealized gains of $245 thousand related to its investment portfolio as compared to a $1.2 million gain in last year’s fourth quarter.

    Tax Rate
    The effective tax rate for the three months ended December 31, 2020 was 23.1% compared to 24.6% for the three months ended December 31, 2019. For the current quarter, the Company’s income tax rate differed from the statutory rate due to the tax impact of the permanent component of employee stock option exercises. The 2019 fourth quarter tax rate includes an adjustment from prior periods of $0.4 million, or approximately 3 points of the effective tax rate for the fourth quarter.

    Stockholders’ Equity and Returns
    Stockholders’ equity was $363.7 million at December 31, 2020, compared to $218.6 million at December 31, 2019. For the three months ended December 31, 2020, the Company’s annualized return on equity was (2.0%) compared to 20.4% for the same period last year.

    Full Year 2021 Outlook
    For the full year 2021, the Company expects to achieve adjusted net income of $62 million to $67 million. This adjusted net income guidance considers the impact of Winter Storm Uri in Texas.

    Conference Call
    As previously announced, Palomar will host a conference call February 25, 2021, to discuss its fourth quarter and full year 2020 results at 12:00 p.m. (Eastern Time). The conference call can be accessed by dialing 1-877-423-9813 (domestic) or 1-201-689-8573 (international) and asking for the Palomar Fourth Quarter and Full Year 2020 Earnings Call. A telephonic replay will be available approximately two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers 1-412-317-6671 and providing the access code 13716031. The telephonic replay will be available until 11:59 pm (Eastern Time) on March 4, 2021.

    Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of the Company’s website at http://ir.palomarspecialty.com/. The online replay will remain available for a limited time beginning immediately following the call.

    About Palomar Holdings, Inc.
    Palomar Holdings, Inc. is the holding company of subsidiaries Palomar Specialty Insurance Company, Palomar Specialty Reinsurance Company Bermuda Ltd., Palomar Insurance Agency, Inc. and Palomar Excess and Surplus Insurance Company. Palomar is an innovative insurer that focuses on the provision of specialty insurance for residential and commercial clients. Palomar’s underwriting and analytical expertise allow it to concentrate on certain markets that it believes are underserved by other insurance companies, such as the markets for earthquake, hurricane and flood insurance. Palomar’s principal insurance subsidiary, Palomar Specialty Insurance Company, is an admitted carrier in 32 states and has an A.M. Best financial strength rating of “A-” (Excellent).
    Follow Palomar on Facebook, LinkedIn and Twitter: @PLMRInsurance

    Non-GAAP and Key Performance Indicators
    Palomar discusses certain key performance indicators, described below, which provide useful information about the Company’s business and the operational factors underlying the Company’s financial performance.

    Underwriting revenue is a non-GAAP financial measure defined as total revenue, excluding net investment income and net realized and unrealized gains and losses on investments. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of total revenue calculated in accordance with GAAP to underwriting revenue.

    Underwriting income (loss) is a non-GAAP financial measure defined as income before income taxes excluding net investment income, net realized and unrealized gains and losses on investments and interest expense. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of income before income taxes calculated in accordance with GAAP to underwriting income (loss).

    Adjusted net income (loss) is a non-GAAP financial measure defined as net income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. Palomar calculates the tax impact only on adjustments which would be included in calculating the Company’s income tax expense using the estimated tax rate at which the company received a deduction for these adjustments. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of net income (loss) calculated in accordance with GAAP to adjusted net income (loss).

    Return on equity is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period.

    Adjusted return on equity is a non-GAAP financial measure defined as adjusted net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of return on equity calculated using unadjusted GAAP numbers to adjusted return on equity.

    Loss ratio, expressed as a percentage, is the ratio of losses and loss adjustment expenses, to net earned premiums.

    Expense ratio, expressed as a percentage, is the ratio of acquisition and other underwriting expenses, net of commission and other income to net earned premiums.

    Combined ratio is defined as the sum of the loss ratio and the expense ratio. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.

    Adjusted combined ratio is a non-GAAP financial measure defined as the sum of the loss ratio and the expense ratio calculated excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of combined ratio calculated using unadjusted GAAP numbers to adjusted combined ratio.

    Diluted adjusted earnings per share is a non-GAAP financial measure defined as adjusted net income (loss) divided by the weighted-average common shares outstanding for the period, reflecting the dilution which could occur if equity-based awards are converted into common share equivalents as calculated using the treasury stock method. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of diluted earnings per share calculated in accordance with GAAP to diluted adjusted earnings per share.

    Catastrophe loss ratio is a non-GAAP financial measure defined as the ratio of catastrophe losses to net earned premiums. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of loss ratio calculated using unadjusted GAAP numbers to catastrophe loss ratio.

    Adjusted combined ratio excluding catastrophe losses is a non-GAAP financial measure defined as adjusted combined ratio excluding the impact of catastrophe losses.  See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of combined ratio calculated using unadjusted GAAP numbers to adjusted combined ratio excluding catastrophe losses.

    Tangible stockholders’ equity is a non-GAAP financial measure defined as stockholders’ equity less intangible assets. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of stockholders’ equity calculated in accordance with GAAP to tangible stockholders’ equity.

    Safe Harbor Statement
    Palomar cautions you that statements contained in this press release may regard matters that are not historical facts but are forward-looking statements. These statements are based on the company’s current beliefs and expectations. The inclusion of forward-looking statements should not be regarded as a representation by Palomar that any of its plans will be achieved. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in the Company’s business. The forward-looking statements are typically, but not always, identified through use of the words “believe,” “expect,” “enable,” “may,” “will,” “could,” “intends,” “estimate,” “anticipate,” “plan,” “predict,” “probable,” “potential,” “possible,” “should,” “continue,” and other words of similar meaning. Actual results could differ materially from the expectations contained in forward-looking statements as a result of several factors, including unexpected expenditures and costs, unexpected results or delays in development and regulatory review, regulatory approval requirements, the frequency and severity of adverse events and competitive conditions. These and other factors that may result in differences are discussed in greater detail in the Company’s filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

    Contact
    Media Inquiries
    Sarah Flocken
    1-240-630-0316
    sarah@conwaymarketinggroup.com

    Investor Relations
    Shannon Devine
    1-619-771-1743
    investors@plmr.com
    Source: Palomar Holdings, Inc.



    Summary of Operating Results

    The following table summarizes the Company’s results for the three months ended December 31, 2020 and 2019:

                 
      Three months ended       
      December 31,     Percent 
      2020 2019 Change Change 
      ($ in thousands, except per share data) 
    Gross written premiums $96,092 $73,342 $22,750 31.0%
    Ceded written premiums  (53,839)  (29,535)  (24,304) 82.3%
    Net written premiums  42,253  43,807  (1,554) (3.5)%
    Net earned premiums  38,922  30,988  7,934 25.6%
    Commission and other income  803  654  149 22.8%
    Total underwriting revenue (1)  39,725  31,642  8,083 25.5%
    Losses and loss adjustment expenses  17,214  2,195  15,019 684.2%
    Acquisition expenses  18,131  11,070  7,061 63.8%
    Other underwriting expenses  9,356  6,943  2,413 34.8%
    Underwriting income (loss) (1)  (4,976)  11,434  (16,410) (143.5)%
    Net investment income  2,325  1,803  522 29.0%
    Net realized and unrealized gains on investments  245  1,178  (933) (79.2)%
    Income (loss) before income taxes  (2,406)  14,415  (16,821) (116.7)%
    Income tax expense (benefit)  (557)  3,535  (4,092) NM 
    Net income (loss) $(1,849) $10,880 $(12,729) (117.0)%
    Adjustments:            
    Expenses associated with secondary offerings  —  307  (307) NM 
    Stock-based compensation expense  710  426  284 66.7 
    Tax impact  (130)  (155)  25 NM 
    Adjusted net income (loss) (1) $(1,269) $11,458 $(12,727) (111.1)%
    Key Financial and Operating Metrics            
    Annualized return on equity  (2.0)% 20.4%     
    Annualized adjusted return on equity (1)  (1.4)% 21.5%     
    Loss ratio  44.2% 7.1%     
    Expense ratio  68.6% 56.0%     
    Combined ratio  112.8% 63.1%     
    Adjusted combined ratio (1)  111.0% 60.7%     
    Diluted earnings (loss) per share $(0.07) $0.45      
    Diluted adjusted earnings (loss) per share (1) $(0.05) $0.48      
    Catastrophe losses $14,474 $—      
    Catastrophe loss ratio (1)  37.2% —%     
    Adjusted combined ratio excluding catastrophe losses (1)  73.8% 60.7%     
    NM-Not Meaningful            

    (1)   Indicates non-GAAP financial measure; see “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.



    The following table summarizes the Company’s results for the years ended December 31, 2020 and 2019:

      Year ended       
      December 31,     Percent 
      2020 2019 Change Change 
      ($ in thousands, except per share data) 
    Gross written premiums $354,360 $251,961 $102,399 40.6%
    Ceded written premiums  (155,102)  (108,332)  (46,770) 43.2%
    Net written premiums  199,258  143,629  55,629 38.7%
    Net earned premiums  155,068  100,207  54,861 54.7%
    Commission and other income  3,295  2,671  624 23.4%
    Total underwriting revenue (1)  158,363  102,878  55,485 53.9%
    Losses and loss adjustment expenses  64,115  5,593  58,522 1,046.3%
    Acquisition expenses  64,041  37,259  26,782 71.9%
    Other underwriting expenses  34,084  51,299  (17,215) (33.6)%
    Underwriting income (loss) (1)  (3,877)  8,727  (12,604) (144.4)%
    Interest expense  —  (1,068)  1,068 (100.0)%
    Net investment income  8,612  5,975  2,637 44.1%
    Net realized and unrealized gains on investments  1,488  4,443  (2,955) (66.5)%
    Income before income taxes  6,223  18,077  (11,854) (65.6)%
    Income tax expense (benefit)  (34)  7,456  (7,490) NM 
    Net income  $6,257 $10,621 $(4,364) (41.1)%
    Adjustments:            
    Expenses associated with IPO, tax restructuring, secondary offerings, and one time incentive cash bonuses  708  3,007  (2,299) NM 
    Stock-based compensation expense  2,167  24,103  (21,936) NM 
    Expenses associated with retirement of debt  —  1,297  (1,297) NM 
    Expenses associated with catastrophe bond  399  —  399 NM 
    Tax impact  (664)  (1,149)  485 NM 
    Adjusted net income (1) $8,867 $37,879 $(29,012) (76.6)%
    Key Financial and Operating Metrics            
    Return on equity  2.1% 6.7%     
    Adjusted return on equity (1)  3.0% 24.1%     
    Loss ratio  41.3% 5.6%     
    Expense ratio  61.2% 85.7%     
    Combined ratio  102.5% 91.3%     
    Adjusted combined ratio (1)  100.4% 63.3%     
    Diluted earnings per share $0.24 $0.49      
    Diluted adjusted earnings per share (1) $0.35 $1.73      
    Catastrophe losses $50,986 $—      
    Catastrophe loss ratio (1)  32.9% —%     
    Adjusted combined ratio excluding catastrophe losses (1)  67.5% 63.3%     
    NM-Not Meaningful            

    (1)   Indicates non-GAAP financial measure; see “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.



    Condensed Consolidated Balance sheets

    Palomar Holdings, Inc. and Subsidiaries

    Condensed Consolidated Balance Sheets (unaudited)

    (in thousands, except shares and par value data)

         December 31,     December 31, 
      2020 2019
    Assets      
    Investments:      
    Fixed maturity securities available for sale, at fair value (amortized cost: $381,279 in 2020; $211,278 in 2019) $397,987 $217,151
    Equity securities, at fair value (cost: $22,291 in 2020; $21,336 in 2019)  24,322  22,328
    Total investments  422,309  239,479
    Cash and cash equivalents  33,538  33,119
    Restricted cash  248  230
    Accrued investment income  2,545  1,386
    Premium receivable  48,842  36,237
    Deferred policy acquisition costs  35,481  25,201
    Reinsurance recoverable on unpaid losses and loss adjustment expenses  94,566  12,952
    Reinsurance recoverable on paid losses and loss adjustment expenses  10,162  4,303
    Ceded unearned premiums  35,031  26,105
    Prepaid expenses and other assets  34,119  14,861
    Property and equipment, net  739  845
    Intangible assets  11,512  744
    Total assets $729,092 $395,462
    Liabilities and stockholders’ equity      
    Liabilities:      
    Accounts payable and other accrued liabilities $20,730 $13,555
    Reserve for losses and loss adjustment expenses  129,036  16,821
    Unearned premiums  183,489  130,373
    Ceded premium payable  22,233  11,383
    Funds held under reinsurance treaty  4,515  1,658
    Income and excise taxes payable  —  1,117
    Deferred tax liabilities, net  5,376  1,999
    Total liabilities  365,379  176,906
    Stockholders’ equity:      
    Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2020 and December 31, 2019, 0 shares issued and outstanding as of December 31, 2020 and December 31, 2019  —  —
    Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,525,796 and 23,468,750 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively  3  2
    Additional paid-in capital  310,507  180,012
    Accumulated other comprehensive income  13,246  4,686
    Retained earnings  39,957  33,856
    Total stockholders’ equity  363,713  218,556
    Total liabilities and stockholders’ equity $729,092 $395,462



    Condensed Consolidated Income Statement

    Palomar Holdings, Inc. and Subsidiaries

    Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Unaudited)

    (in thousands, except shares and per share data)

      Three Months Ended  Year Ended
      December 31,  December 31, 
      2020 2019 2020 2019
    Revenues:            
    Gross written premiums $96,092 $73,342 $354,360 $251,961
    Ceded written premiums  (53,839)  (29,535)  (155,102)  (108,332)
    Net written premiums  42,253  43,807  199,258  143,629
    Change in unearned premiums  (3,331)  (12,819)  (44,190)  (43,422)
    Net earned premiums  38,922  30,988  155,068  100,207
    Net investment income  2,325  1,803  8,612  5,975
    Net realized and unrealized gains on investments  245  1,178  1,488  4,443
    Commission and other income  803  654  3,295  2,671
    Total revenues  42,295  34,623  168,463  113,296
    Expenses:            
    Losses and loss adjustment expenses  17,214  2,195  64,115  5,593
    Acquisition expenses  18,131  11,070  64,041  37,259
    Other underwriting expenses (includes stock-based compensation of $710 and $426 for the three months ended December 31, 2020 and 2019, respectively and $2,167 and $24,103 for the year ended December 31, 2020 and 2019, respectively)  9,356  6,943  34,084  51,299
    Interest expense  —  —  —  1,068
    Total expenses  44,701  20,208  162,240  95,219
    Income (loss) before income taxes  (2,406)  14,415  6,223  18,077
    Income tax expense (benefit)  (557)  3,535  (34)  7,456
    Net income (loss)  (1,849)  10,880  6,257  10,621
    Other comprehensive income, net:            
    Net unrealized (losses) gains on securities available for sale for the three months and years ended December 31, 2020 and 2019, respectively  2,808  (1,210)  8,560  5,249
    Net comprehensive income $959 $9,670 $14,817 $15,870
    Per Share Data:            
    Basic earnings (loss) per share $(0.07) $0.46 $0.25 $0.49
    Diluted earnings (loss) per share $(0.07) $0.45 $0.24 $0.49
                 
    Weighted-average common shares outstanding:            
    Basic  25,520,111  23,468,750  24,872,251  21,501,541
    Diluted  25,520,111  24,092,325  25,598,647  21,834,934


    Underwriting Segment Data

    The Company has a single reportable segment and offers primarily earthquake, wind, and flood insurance products. Gross written premiums (GWP) by product and location are presented below:

      Three Months Ended December 31,   Year Ended December 31,  
      2020 2019  2020 2019 
      ($ in thousands)  ($ in thousands) 
         % of    % of     % of    % of 
      Amount GWP Amount GWP  Amount GWP Amount GWP 
    Product                      
    Residential Earthquake $37,432 39.0%$35,468 48.4% $140,934 39.8%$130,473 51.8%
    Commercial Earthquake  18,163 18.9% 15,721 21.4%  58,890 16.6% 38,741 15.4%
    Commercial All Risk  14,185 14.8% 8,429 11.5%  53,933 15.2% 30,358 12.0%
    Specialty Homeowners  11,388 11.9% 7,796 10.6%  49,849 14.1% 32,788 13.0%
    Inland Marine  5,676 5.9% 1,177 1.6%  15,423 4.3% 2,465 1.0%
    Hawaii Hurricane  3,528 3.7% 2,714 3.7%  13,824 3.9% 10,764 4.3%
    Flood  2,448 2.5% 1,722 2.4%  8,176 2.3% 5,216 2.1%
    Other  3,272 3.3% 315 0.4%  13,331 3.8% 1,156 0.4%
    Total Gross Written Premiums $96,092 100.0%$73,342 100.0% $354,360 100.0%$251,961 100.0%


      Three Months Ended December 31,   Year Ended December 31,  
      2020 2019  2020 2019 
      ($ in thousands)  ($ in thousands) 
         % of    % of     % of    % of 
      Amount GWP Amount GWP  Amount GWP Amount GWP 
    State                      
    California $48,857 50.8%$42,198 57.5% $172,765 48.8%$141,743 56.3%
    Texas  12,927 13.5% 11,409 15.6%  67,974 19.2% 44,087 17.5%
    Florida  5,110 5.3% — —%  5,795 1.6% — —%
    Washington  4,326 4.5% 3,177 4.3%  14,328 4.0% 9,607 3.8%
    Hawaii  4,285 4.5% 3,164 4.3%  16,398 4.6% 11,851 4.7%
    North Carolina  4,011 4.2% 1,240 1.7%  11,143 3.1% 3,894 1.5%
    Oregon  2,740 2.9% 2,117 2.9%  10,038 2.8% 7,396 2.9%
    South Carolina  1,993 2.1% 1,547 2.1%  9,196 2.6% 6,185 2.5%
    Other  11,843 12.2% 8,490 11.6%  46,723 13.3% 27,198 10.8%
    Total Gross Written Premiums $96,092 100.0%$73,342 100.0% $354,360 100.0%$251,961 100.0%


    Gross and net earned premiums

    The table below shows the amount of premiums the Company earned on a gross and net basis and the Company’s net earned premiums as a percentage of gross earned premiums for each period presented:

      Three Months Ended       Year Ended       
      December 31,        December 31,       
      2020 2019 Change % Change 2020 2019 Change % Change
      ($ in thousands) ($ in thousands)
    Gross earned premiums $86,191 $58,967 $27,224 46.2% $301,457 $200,521 $100,936 50.3%
    Ceded earned premiums  (47,269)  (27,979)  (19,290) 68.9%  (146,389)  (100,314)  (46,075) 45.9%
    Net earned premiums $38,922 $30,988 $7,934 25.6% $155,068 $100,207 $54,861 54.7%
                             
    Net earned premium ratio  45.2%  52.6%        51.4%  50.0%      


    Loss detail

    The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses:

      Three Months Ended December 31, Year ended December 31,
      2020 2019 2020 2019
       (in thousands)  (in thousands)
    Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period $39,540 $2,914 $3,869 $4,165
    Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to:        —  —
    Current year  17,312  2,114  64,179  5,774
    Prior years  (98)  81  (64)  (181)
    Total incurred  17,214  2,195  64,115  5,593
    Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to:            
    Current year  22,125  1,135  31,879  2,179
    Prior years  159  105  1,635  3,710
    Total payments  22,284  1,240  33,514  5,889
    Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period  34,470  3,869  34,470  3,869
    Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period  94,566  12,952  94,566  12,952
    Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period $129,036 $16,821 $129,036 $16,821



    Reconciliation of Non-GAAP Financial Measures

    For the three months and years ended December 31, 2020 and 2019, the Non-GAAP financial measures discussed above reconcile to their most comparable GAAP measures as follows:


    Underwriting revenue

      Three Months Ended  Year Ended
      December 31,  December 31, 
      2020 2019 2020 2019
      (in thousands) (in thousands)
    Total revenue $42,295 $34,623 $168,463 $113,296
    Net investment income  (2,325)  (1,803)  (8,612)  (5,975)
    Net realized and unrealized gains on investments  (245)  (1,178)  (1,488)  (4,443)
    Underwriting revenue $39,725 $31,642 $158,363 $102,878


    Underwriting income (loss)

      Three Months Ended   Year Ended
      December 31,   December 31, 
      2020 2019  2020 2019
      (in thousands)  (in thousands)
    Income (loss) before income taxes $(2,406) $14,415  $6,223 $18,077
    Net investment income  (2,325)  (1,803)   (8,612)  (5,975)
    Net realized and unrealized gains on investments  (245)  (1,178)   (1,488)  (4,443)
    Interest expense  —  —   —  1,068
    Underwriting income (loss) $(4,976) $11,434  $(3,877) $8,727


    Adjusted net income (loss)

      Three Months Ended   Year Ended
      December 31,   December 31, 
      2020 2019  2020 2019
      (in thousands)  (in thousands)
    Net income (loss) $(1,849) $10,880  $6,257 $10,621
    Adjustments:             
    Expenses associated with IPO, tax restructuring, secondary offerings, and one-time incentive cash bonuses  —  307   708  3,007
    Stock-based compensation expense  710  426   2,167  24,103
    Expenses associated with retirement of debt  —  —   —  1,297
    Expenses associated with catastrophe bond  —  —   399  —
    Tax impact  (130)  (155)   (664)  (1,149)
    Adjusted net income (loss) $(1,269) $11,458  $8,867 $37,879


    Annualized adjusted return on equity

      Three Months Ended   Year Ended  
      December 31,   December 31,  
      2020 2019  2020 2019 
      ($ in thousands)  ($ in thousands) 
                   
    Annualized adjusted net income (loss) $(5,076) $45,832  $8,867 $37,879 
    Average stockholders’ equity $362,804 $213,509  $291,135 $157,424 
    Annualized adjusted return on equity  (1.4)% 21.5%  3.0% 24.1%


    Adjusted combined ratio

      Three Months Ended   Year Ended  
      December 31,   December 31,  
      2020 2019  2020 2019 
      ($ in thousands)  ($ in thousands) 
    Numerator: Sum of losses, loss adjustment expenses, underwriting, acquisition and other underwriting expenses, net of commission and other income $43,898 $19,554  $158,945 $91,480 
    Denominator: Net earned premiums $38,922 $30,988  $155,068 $100,207 
    Combined ratio  112.8% 63.1%  102.5% 91.3%
    Adjustments to numerator:              
    Expenses associated with IPO, tax restructuring, secondary offerings, and one-time incentive cash bonuses $— $(307)  $(708) $(3,007) 
    Stock-based compensation expense  (710)  (426)   (2,167)  (24,103) 
    Portion of expenses associated with retirement of debt classified as other underwriting expenses  —  —   —  (897) 
    Expenses associated with catastrophe bond  —  —   (399)  — 
    Adjusted combined ratio  111.0% 60.7%  100.4% 63.3%


    Diluted adjusted earnings per share

      Three Months Ended   Year Ended
      December 31,   December 31, 
      2020 2019  2020 2019
      ( in thousands, except shares and per share data)  ( in thousands, except shares and per share data)
                  
    Adjusted net income (loss) $(1,269) $11,458  $8,867 $37,879
    Weighted-average common shares outstanding, diluted  25,520,111  24,092,325   25,598,647  21,834,934
    Diluted adjusted earnings per share $(0.05) $0.48  $0.35 $1.73


    Catastrophe loss ratio

      Three Months Ended  Year Ended  
      December 31,   December 31,  
      2020 2019  2020 2019 
               
      ($ in thousands)  ($ in thousands) 
    Numerator: Losses and loss adjustment expenses $17,214 $2,195  $64,115 $5,593 
    Denominator: Net earned premiums $38,922 $30,988  $155,068 $100,207 
    Loss ratio  44.2% 7.1%  41.3% 5.6%
                   
    Numerator: Catastrophe losses $14,474 $—  $50,986 $— 
    Denominator: Net earned premiums $38,922 $30,988  $155,068 $100,207 
    Catastrophe loss ratio  37.2% 0.0%  32.9% 0.0%


    Adjusted combined ratio excluding catastrophe losses

      Three Months Ended  Year ended  
      December 31,   December 31,  
      2020 2019  2020 2019 
               
      ($ in thousands)  ($ in thousands) 
    Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income $43,898 $19,554  $158,945 $91,480 
    Denominator: Net earned premiums $38,922 $30,988  $155,068 $100,207 
    Combined ratio  112.8% 63.1%  102.5% 91.3%
    Adjustments to numerator:              
    Expenses associated with IPO, tax restructuring, secondary offerings, and one-time incentive cash bonuses $— $(307)  $(708) $(3,007) 
    Stock-based compensation expense  (710)  (426)   (2,167)  (24,103) 
    Portion of expenses associated with retirement of debt classified as other underwriting expenses  —  —   —  (897) 
    Expenses associated with catastrophe bond  —  —   (399)  — 
    Catastrophe losses  (14,474)  —   (50,986)  — 
    Adjusted combined ratio excluding catastrophe losses  73.8% 60.7%  67.5% 63.3%


    Tangible Stockholders’ equity

      December 31,
      2020    2019
         
      (in thousands)
    Stockholders’ equity $363,713 $218,556
    Intangible assets  (11,512)  (744)
    Tangible stockholders’ equity $352,201 $217,812


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