# EDGAR Filing Document

**Accession Number:** 0001761312
**File Stem:** 0001558370-23-001371
**Filing Date:** 2023-2
**Character Count:** 50148
**Document Hash:** 32fc11138cbeed7e4d8b46075d42b16b
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001558370-23-001371.hdr.sgml**: 20230215

**ACCESSION NUMBER**: 0001558370-23-001371

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230215

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230215

**DATE AS OF CHANGE**: 20230215

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Palomar Holdings, Inc.
- **CENTRAL INDEX KEY:** 0001761312
- **STANDARD INDUSTRIAL CLASSIFICATION:** FIRE, MARINE & CASUALTY INSURANCE [6331]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38873
- **FILM NUMBER:** 23635647

**BUSINESS ADDRESS:**
- **STREET 1:** 7979 IVANHOE AVENUE
- **STREET 2:** SUITE 500
- **CITY:** LA JOLLA
- **STATE:** CA
- **ZIP:** 92037
- **BUSINESS PHONE:** 619-567-5290

**MAIL ADDRESS:**
- **STREET 1:** 7979 IVANHOE AVENUE
- **STREET 2:** SUITE 500
- **CITY:** LA JOLLA
- **STATE:** CA
- **ZIP:** 92037

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** GC Palomar Holdings
- **DATE OF NAME CHANGE:** 20181211

?xml version='1.0' encoding='UTF-8'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K**

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

Date of Report (Date of earliest event reported): February 15, 2023

**Palomar Holdings, Inc.**

(Exact name of registrant as specified in its charter)

**Commission File Number: 001-38873**

---

| | |
|:---|:---|
| **Delaware** | **83-3972551** |
| (State or other jurisdiction<br>of incorporation) | (I.R.S. Employer<br>Identification No.) |

---

**7979 Ivanhoe Avenue, Suite 500**

**La Jolla, California 92037**

(Address of principal executive offices, including zip code)

**(619) 567-5290**

(Registrant's telephone number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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| |
|:---|
| ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |

---

Securities registered pursuant to Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;Title of each class | &nbsp;&nbsp;Trading Symbol(s) | &nbsp;&nbsp;Name of each exchange on which registered |
| &nbsp;&nbsp;Common Stock, par value $0.0001 per share | &nbsp;&nbsp;PLMR | &nbsp;&nbsp;Nasdaq Global Select Market |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Selection 13(a) of the Exchange Act. ☐

**Item 2.02 Results of Operations and Financial Condition**

On February 15, 2023, Palomar Holdings, Inc. (the "Company") issued a press release announcing its financial results for the fiscal quarter and year ended December 31, 2022. A copy of the press release is attached hereto as Exhibit 99.1.

The information contained under this Item 2.02, including Exhibit 99.1 attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act, regardless of any general incorporation language in any such filing, unless the Company expressly sets forth in such filing that such information is to be considered "filed" or incorporated by reference therein.

**Item 9.01. Financial Statements and Exhibits** 

(d)Exhibits

---

| | |
|:---|:---|
| 9<br>|  |
| **Exhibit No.** | **Description** |
| 99.1 | [Press release, dated February 15, 2023](plmr-20230215xex99d1.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  |  | **PALOMAR HOLDINGS, INC.** |
| Date: | February 15, 2023 | /s/ T. Christopher Uchida |
|  |  | T. Christopher Uchida |
|  |  | Chief Financial Officer |
|  |  | (Principal Financial and Accounting Officer) |

---

## Exhibit 99.1

**Exhibit 99.1**

![Logo Description automatically generated](plmr-20230215xex99d1001.jpg)

**Palomar Holdings, Inc. Reports Fourth Quarter & Full Year 2022 Results**

LA JOLLA, Calif. (February 15, 2023) — Palomar Holdings, Inc. (NASDAQ:PLMR) ("Palomar" or "Company") reported net income of $18.8 million, or $0.73 per diluted share, for the fourth quarter of 2022 compared to net income of $16.6 million, or $0.64 per diluted share, for the fourth quarter of 2021. Adjusted net income<sup>(1)</sup> was $21.1 million, or $0.82 per diluted share, for the fourth quarter of 2022 as compared to $17.6 million, or $0.68 per diluted share, for the fourth quarter of 2021. Effective December 31, 2022, the Company adjusts for net realized and unrealized gains and losses when calculating and presenting adjusted net income, diluted adjusted earnings per share, and adjusted return on equity. All prior year amounts have been adjusted accordingly.<br>

**Fourth Quarter 2022 Highlights** 

● Gross written premiums increased by 59.5% to $239.1 million compared to $149.9 million in the fourth quarter of 2021

● Net income of $18.8 million, compared to $16.6 million in the fourth quarter of 2021

● Adjusted net income <sup>(1)</sup> of $21.1 million, compared to $17.6 million in the fourth quarter of 2021

● Total loss ratio of 22.4% compared to 15.0% in the fourth quarter of 2021

● Combined ratio of 75.5% compared to 75.0% in the fourth quarter of 2021

● Adjusted combined ratio <sup>(1)</sup> of 71.4%, compared to 70.7%, in the fourth quarter of 2021

● Annualized return on equity of 19.9%, compared to 17.2% in the fourth quarter of 2021

● Annualized adjusted return on equity <sup>(1)</sup> of 22.4%, compared to 18.2% in the fourth quarter of 2021

**Full Year 2022 Highlights** 

● Gross written premiums increased by 64.8% to $881.9 million compared to $535.2 million in 2021

● Net income of $52.2 million, compared to $45.8 million in 2021

● Adjusted net income <sup>(1)</sup> of $71.3 million, compared to $52.4 million in 2021

● Total loss ratio of 24.9%, compared to 17.7% in 2021

● Combined ratio of 80.4%, compared to 80.0% in 2021

● Adjusted combined ratio <sup>(1)</sup> of 75.6%, compared to 76.1% in 2021

● Return on equity of 13.4%, compared to 12.1% in 2021

● Adjusted return on equity <sup>(1)</sup> of 18.3%, compared to 13.8% in 2021

*(1) See discussion of "Non-GAAP and Key Performance Indicators" below.*

Mac Armstrong, Chairman and Chief Executive Officer, commented, "Palomar's strong fourth quarter results are the final illustration of success in a record-setting year. During the quarter we generated nearly 60% top-line growth while also achieving strong profitability with an annualized adjusted return on equity of 22.4%. For the full year 2022, we delivered record premium growth and earnings, generating an adjusted ROE of 18.3%. The fourth quarter and full year results demonstrate further execution of Palomar 2X, our strategy to profitably grow the company, deliver predictable earnings, and achieve an ROE in excess of 20% while maintaining industry leading profit margins."

Mr. Armstrong continued, "Looking to 2023, we expect to earn adjusted net income of $86 million to $90 million. This guidance implies 23% net income growth and an adjusted ROE of 21% at the midpoint of our expected range – a target that exceeds our PLMR 2X stated objective of 20%. We believe our guidance points to the durability of our business model as we successfully navigate the reinsurance market; execute on diversifying endeavors like PLMR-Front as well as our casualty and inland marine divisions; and invest in underwriting talent, technology and data analytics to support new and existing products."

**Underwriting Results**

Gross written premiums increased 59.5% to $239.1 million compared to $149.9 million in the fourth quarter of 2021, while net earned premiums increased 21.2% compared to the prior year's fourth quarter.

Losses and loss adjustment expenses for the fourth quarter were $18.4 million including $16.6 million of non-catastrophe attritional losses, and $1.9 million of unfavorable catastrophe development from prior periods. The loss ratio for the quarter was 22.4%, comprised of a catastrophe loss ratio of 2.3%<sup>(1)</sup> and an attritional loss ratio of 20.1%, compared to a loss ratio of 15.0% during the same period last year comprised of a catastrophe loss ratio of negative 2.5% and attritional loss ratio of 17.5%.

Underwriting income<sup>(1)</sup> for the fourth quarter was $20.1 million resulting in a combined ratio of 75.5% compared to underwriting

------

income of $17.0 million and a combined ratio of 75.0% during the same period last year. The Company's adjusted underwriting income<sup>(1)</sup> was $23.5 million resulting in an adjusted combined ratio<sup>(1)</sup> of 71.4% in the fourth quarter compared to adjusted underwriting income<sup>(1)</sup> of $19.9 million and an adjusted combined ratio<sup>(1)</sup> of 70.7% during the same period last year.

**Investment Results**

Net investment income increased by 81.6% to $4.4 million compared to $2.4 million in the prior year's fourth quarter. The increase was primarily due to higher yields on invested assets and a higher average balance of investments held during the three months ended December 31, 2022 due to cash generated from operations. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 3.81 years at December 31, 2022. Cash and invested assets totaled $621.8 million at December 31, 2022. During the fourth quarter, the Company recorded net realized and unrealized gains of $0.8 million related to its investment portfolio as compared to realized and unrealized gains of $2.0 million in last year's fourth quarter.

**Tax Rate**

The effective tax rate for the three months ended December 31, 2022 was 24.9% compared to 22.3% for the three months ended December 31, 2021. For the current quarter and prior year quarter, the Company's income tax rate differed from the statutory rate due primarily to non-deductible executive compensation expense.

**Stockholders' Equity and Returns**

Stockholders' equity was $384.8 million at December 31, 2022, compared to $394.2 million at December 31, 2021. For the three months ended December 31, 2022, the Company's annualized return on equity was 19.9% compared to 17.2% for the same period in the prior year while adjusted return on equity<sup>(1)</sup> was 22.4% compared to 18.2% for the same period in the prior year. During the current quarter, the Company repurchased 222,217 shares for $11.1 million of the Company's previously announced $100 million share repurchase authorization. As of December 31, 2022, $65.6 million remains available for future repurchases.

**Full Year 2023 Outlook**

For the full year 2023, the Company expects to achieve adjusted net income of $86 million to $90 million. This includes catastrophe flood losses incurred in the first quarter of approximately $2.5 million. The expected results do not include any additional catastrophe losses.

**Conference Call**

As previously announced, Palomar will host a conference call Thursday February 16, 2023, to discuss its fourth quarter and full year 2022 results at 12:00 p.m. (Eastern Time). The conference call can be accessed live by dialing 1-877-423-9813 or for international callers, 1-201-689-8573, and requesting to be joined to the Palomar Fourth Quarter 2022 Earnings Conference Call. A replay will be available starting at 4:00 p.m. (Eastern Time) on February 16, 2023, and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13735679. The replay will be available until 11:59 p.m. (Eastern Time) on February 23, 2023.

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 ("PSIC"), Palomar Specialty Reinsurance Company Bermuda Ltd., Palomar Insurance Agency, Inc. and Palomar Excess and Surplus Insurance Company ("PESIC"). Palomar is an innovative insurer serving residential and commercial clients in specialty markets including the market for earthquake insurance. Palomar's insurance subsidiaries, Palomar Specialty Insurance Company, Palomar Specialty Reinsurance Company Bermuda Ltd., and Palomar Excess and Surplus Insurance Company, have a financial strength rating of "A-" (Excellent) from A.M. Best.

To learn more, visit PLMR.com.

**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* 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.

*Adjusted net income* 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 calculated in accordance with GAAP to adjusted net income.

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

*Annualized 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 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.

*Adjusted underwriting income* is a non-GAAP financial measure defined as underwriting income 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 income before income taxes calculated in accordance with GAAP to adjusted underwriting income.

*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,

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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

Lindsay Conner

1-551-206-6217

<u>lconner@plmr.com</u>

Investor Relations

Jamie Lillis

1-203-428-3223

investors@plmr.com

Source: Palomar Holdings, Inc.

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*Summary of Operating Results*:

The following table summarizes the Company's results for the three months ended December 31, 2022 and 2021:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months ended**  | **Three months ended**  | | |
|  | **December 31,**  | **December 31,**  | | |
|  | **2022** | **2021** | <br>**Change** | <br>**Percent**<br>**Change** |
|  | **($ in thousands, except per share data)** | **($ in thousands, except per share data)** | **($ in thousands, except per share data)** | **($ in thousands, except per share data)** |
| Gross written premiums | $239117 | $149908 | $89209 | 59.5% |
| Ceded written premiums | (150466) | (70437) | (80029) | 113.6% |
| &nbsp;&nbsp;Net written premiums | 88651 | 79471 | 9180 | 11.6% |
| Net earned premiums | 82228 | 67840 | 14388 | 21.2% |
| Commission and other income | 1143 | 872 | 271 | 31.1% |
| &nbsp;&nbsp;Total underwriting revenue <sup>(1)</sup> | 83371 | 68712 | 14659 | 21.3% |
| Losses and loss adjustment expenses | 18421 | 10169 | 8252 | 81.1% |
| Acquisition expenses | 26843 | 27284 | (441) | (1.6)% |
| Other underwriting expenses | 17986 | 14285 | 3701 | 25.9% |
| &nbsp;&nbsp;Underwriting income <sup>(1)</sup> | 20121 | 16974 | 3147 | 18.5% |
| Interest expense | (398) | (40) | (358) | NM |
| Net investment income | 4415 | 2431 | 1984 | 81.6% |
| Net realized and unrealized (losses) gains on investments | 841 | 2029 | (1188) | (58.6)% |
| &nbsp;&nbsp;Income before income taxes | 24979 | 21394 | 3585 | 16.8% |
| Income tax expense | 6219 | 4762 | 1457 | 30.6% |
| &nbsp;&nbsp;**Net income** | $18760 | $16632 | $2128 | 12.8% |
| Adjustments: |  |  |  |  |
| Net realized and unrealized losses (gains) on investments <sup>(2)</sup> | (841) | (2029) | 1188 | (58.6)% |
| Expenses associated with transactions |  | 153 | (153) | (100.0)% |
| Stock-based compensation expense | 3068 | 2214 | 854 | 38.6% |
| Amortization of intangibles | 313 | 547 | (234) | (42.8)% |
| Expenses associated with catastrophe bond, net of rebate |  | 5 | (5) | (100.0)% |
| Tax impact | (214) | 76 | (290) | (381.6)% |
| &nbsp;&nbsp;**Adjusted net income** <sup>(1) (2)</sup> | $21086 | $17598 | $3488 | 19.8% |
| Key Financial and Operating Metrics |  |  |  |  |
| Annualized return on equity | 19.9% | 17.2% |  |  |
| Annualized adjusted return on equity <sup>(1)</sup> | 22.4% | 18.2% |  |  |
| Loss ratio | 22.4% | 15.0% |  |  |
| Expense ratio | 53.1% | 60.0% |  |  |
| Combined ratio | 75.5% | 75.0% |  |  |
| Adjusted combined ratio <sup>(1)</sup> | 71.4% | 70.7% |  |  |
| Diluted earnings per share | $0.73 | $0.64 |  |  |
| Diluted adjusted earnings per share <sup>(1)</sup> | $0.82 | $0.68 |  |  |
| Catastrophe losses | $1865 | $(1704) |  |  |
| Catastrophe loss ratio <sup>(1)</sup> | 2.3% | (2.5)% |  |  |
| Adjusted combined ratio excluding catastrophe losses <sup>(1)</sup> | 69.2% | 73.2% |  |  |
| Adjusted underwriting income <sup>(1)</sup> | $23502 | $19893 | $3609 | 18.1% |
| NM-Not Meaningful |  |  |  |  |

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(1)- Indicates Non-GAAP financial measure- see above for definition of Non-GAAP financial measures and see below for reconciliation of Non-GAAP financial measures to their most directly comparable measures prepared in accordance with GAAP.

(2)- Beginning with this earnings release, we are including the impact of net realized and unrealized losses and gains on investments as an adjustment to our net income. As this line is primarily driven by equity market fluctuations rather than our underlying business performance, we believe adding this adjustment provides a more meaningful comparison of our performance. We have also changed the prior year adjusted net income to conform to this presentation.

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The following table summarizes the Company's results for the year ended December 31, 2022 and 2021:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year ended**  | **Year ended**  | | |
|  | **December 31,**  | **December 31,**  | | |
|  | **2022** | **2021** | <br>**Change** | <br>**Percent**<br>**Change** |
|  | **($ in thousands, except per share data)** | **($ in thousands, except per share data)** | **($ in thousands, except per share data)** | **($ in thousands, except per share data)** |
| Gross written premiums | $881868 | $535175 | $346693 | 64.8% |
| Ceded written premiums | (524575) | (223443) | (301132) | 134.8% |
| &nbsp;&nbsp;Net written premiums | 357293 | 311732 | 45561 | 14.6% |
| Net earned premiums | 316466 | 233826 | 82640 | 35.3% |
| Commission and other income | 4272 | 3608 | 664 | 18.4% |
| &nbsp;&nbsp;Total underwriting revenue <sup>(1)</sup> | 320738 | 237434 | 83304 | 35.1% |
| Losses and loss adjustment expenses | 78672 | 41457 | 37215 | 89.8% |
| Acquisition expenses | 110771 | 95433 | 15338 | 16.1% |
| Other underwriting expenses | 69219 | 53723 | 15496 | 28.8% |
| &nbsp;&nbsp;Underwriting income <sup>(1)</sup> | 62076 | 46821 | 15255 | 32.6% |
| Interest expense | (873) | (40) | (833) | NM |
| Net investment income | 13877 | 9080 | 4797 | 52.8% |
| Net realized and unrealized (losses) gains on investments | (7529) | 1277 | (8806) | NM |
| &nbsp;&nbsp;Income before income taxes | 67551 | 57138 | 10413 | 18.2% |
| Income tax expense | 15381 | 11291 | 4090 | 36.2% |
| &nbsp;&nbsp;**Net income**  | $52170 | $45847 | $6323 | 13.8% |
| Adjustments: |  |  |  |  |
| Net realized and unrealized losses (gains) on investments <sup>(2)</sup> | 7529 | (1277) | 8806 | NM |
| Expenses associated with transactions | 130 | 563 | (433) | (76.9)% |
| Stock-based compensation expense | 11624 | 5584 | 6040 | 108.2% |
| Amortization of intangibles | 1255 | 1251 | 4 | 0.3% |
| Expenses associated with catastrophe bond, net of rebate | 1992 | 1704 | 288 | 16.9% |
| Tax impact | (3366) | (1238) | (2128) | 171.9% |
| &nbsp;&nbsp;**Adjusted net income** <sup>(1) (2)</sup> | $71334 | $52434 | $18900 | 36.0% |
| Key Financial and Operating Metrics |  |  |  |  |
| Return on equity | 13.4% | 12.1% |  |  |
| Adjusted return on equity <sup>(1)</sup> | 18.3% | 13.8% |  |  |
| Loss ratio | 24.9% | 17.7% |  |  |
| Expense ratio | 55.5% | 62.2% |  |  |
| Combined ratio | 80.4% | 80.0% |  |  |
| Adjusted combined ratio <sup>(1)</sup> | 75.6% | 76.1% |  |  |
| Diluted earnings per share | $2.02 | $1.76 |  |  |
| Diluted adjusted earnings per share <sup>(1)</sup> | $2.77 | $2.01 |  |  |
| Catastrophe losses | $15394 | $5015 |  |  |
| Catastrophe loss ratio <sup>(1)</sup> | 4.9% | 2.1% |  |  |
| Adjusted combined ratio excluding catastrophe losses <sup>(1)</sup> | 70.8% | 73.9% |  |  |
| Adjusted underwriting income <sup>(1)</sup> | $77077 | $55923 | $21154 | 37.8% |
| NM-Not Meaningful |  |  |  |  |

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*Condensed Consolidated Balance sheets*

**Palomar Holdings, Inc. and Subsidiaries**

**Condensed Consolidated Balance Sheets (unaudited)**

**(in thousands, except shares and par value data)**

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| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2022** | **December 31,** <br>**2021** |
| **Assets** |  |  |
| Investments: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed maturity securities available for sale, at fair value (amortized cost: $561,580 in 2022; $426,122 in 2021) | $515064 | $432682 |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity securities, at fair value (cost: $42,352 in 2022; $31,834 in 2021) | 38576 | 33261 |
| Total investments | 553640 | 465943 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | 68108 | 50284 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash | 56 | 87 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued investment income | 3777 | 2725 |
| &nbsp;&nbsp;&nbsp;&nbsp;Premium receivable | 159025 | 88012 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred policy acquisition costs | 56740 | 55953 |
| &nbsp;&nbsp;&nbsp;&nbsp;Reinsurance recoverable on paid losses and loss adjustment expenses | 35425 | 29368 |
| &nbsp;&nbsp;&nbsp;&nbsp;Reinsurance recoverable on unpaid losses and loss adjustment expenses | 153895 | 127947 |
| &nbsp;&nbsp;&nbsp;&nbsp;Ceded unearned premiums | 204084 | 58315 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 44582 | 37072 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax assets, net | 10622 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Property and equipment, net | 603 | 527 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets, net | 8261 | 9501 |
| Total assets | $1298818 | $925734 |
| **Liabilities and stockholders' equity** |  |  |
| Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and other accrued liabilities | $25760 | $21284 |
| &nbsp;&nbsp;&nbsp;&nbsp;Reserve for losses and loss adjustment expenses | 231415 | 173366 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unearned premiums | 471314 | 284665 |
| &nbsp;&nbsp;&nbsp;&nbsp;Ceded premium payable | 138495 | 37460 |
| &nbsp;&nbsp;&nbsp;&nbsp;Funds held under reinsurance treaty | 10680 | 10882 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax liabilities, net |  | 3908 |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowings from credit agreements | 36400 |  |
| Total liabilities | 914064 | 531565 |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2022 and December 31, 2021, 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,027,467 and 25,428,929 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | 3 | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 333557 | 318902 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income  | (36514) | 5312 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | 87708 | 69952 |
| Total stockholders' equity | 384754 | 394169 |
| Total liabilities and stockholders' equity | $1298818 | $925734 |

---

------

*Condensed Consolidated Income Statement*

**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**  | **Three Months Ended**  | **Year Ended**  | **Year Ended**  |
|  | **December 31,**  | **December 31,**  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** | **2022** | **2021** |
| **Revenues:** |  |  |  |  |
| Gross written premiums | $239117 | $149908 | $881868 | $535175 |
| Ceded written premiums | (150466) | (70437) | (524575) | (223443) |
| &nbsp;&nbsp;Net written premiums | 88651 | 79471 | 357293 | 311732 |
| Change in unearned premiums | (6423) | (11631) | (40827) | (77906) |
| &nbsp;&nbsp;Net earned premiums | 82228 | 67840 | 316466 | 233826 |
| Net investment income | 4415 | 2431 | 13877 | 9080 |
| Net realized and unrealized (losses) gains on investments | 841 | 2029 | (7529) | 1277 |
| Commission and other income | 1143 | 872 | 4272 | 3608 |
| &nbsp;&nbsp;Total revenues | 88627 | 73172 | 327086 | 247791 |
| **Expenses:** |  |  |  |  |
| Losses and loss adjustment expenses | 18421 | 10169 | 78672 | 41457 |
| Acquisition expenses | 26843 | 27284 | 110771 | 95433 |
| Other underwriting expenses  | 17986 | 14285 | 69219 | 53723 |
| Interest expense | 398 | 40 | 873 | 40 |
| &nbsp;&nbsp;Total expenses | 63648 | 51778 | 259535 | 190653 |
| &nbsp;&nbsp;Income before income taxes | 24979 | 21394 | 67551 | 57138 |
| Income tax expense | 6219 | 4762 | 15381 | 11291 |
| &nbsp;&nbsp;Net income | 18760 | 16632 | 52170 | 45847 |
| **Other comprehensive income, net:** |  |  |  |  |
| Net unrealized (losses) gains on securities available for sale for the three months and years ended December 31, 2022 and 2021, respectively | 6114 | (2790) | (41827) | (7934) |
| &nbsp;&nbsp;Net comprehensive income | $24874 | $13842 | $10343 | $37913 |
| **Per Share Data:** |  |  |  |  |
| Basic earnings per share | $0.74 | $0.65 | $2.07 | $1.80 |
| Diluted earnings per share | $0.73 | $0.64 | $2.02 | $1.76 |
| Weighted-average common shares outstanding: |  |  |  |  |
| Basic | 25199074 | 25419477 | 25243397 | 25459514 |
| Diluted | 25729681 | 26045213 | 25796008 | 26111904 |

---

------

*Underwriting Segment Data*

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

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,**  | **Three Months Ended December 31,**  | **Three Months Ended December 31,**  | **Three Months Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2022** | **2022** | **2021** | **2021** | **2022** | **2022** | **2021** | **2021** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
|  |  | **% of** |  | **% of** |  | **% of** |  | **% of** |
|  | **Amount** | **GWP** | **Amount** | **GWP** | **Amount** | **GWP** | **Amount** | **GWP** |
| **Product** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Fronting | $69003 | 28.9% | $11459 | 7.7% | $223249 | 25.3% | $11459 | 2.2% |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Earthquake | 53808 | 22.5% | 42883 | 28.6% | 213803 | 24.2% | 171048 | 32.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Earthquake | 40782 | 17.1% | 24500 | 16.3% | 131677 | 14.9% | 90552 | 16.9% |
| &nbsp;&nbsp;&nbsp;&nbsp;Inland Marine | 32855 | 13.7% | 18077 | 12.1% | 105068 | 11.9% | 57124 | 10.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial All Risk | 10025 | 4.2% | 8609 | 5.7% | 51671 | 5.9% | 38640 | 7.2% |
| &nbsp;&nbsp;&nbsp;&nbsp;Casualty | 10078 | 4.2% | 4080 | 2.7% | 35791 | 4.1% | 9584 | 1.9% |
| &nbsp;&nbsp;&nbsp;&nbsp;Hawaii Hurricane | 8388 | 3.5% | 7377 | 4.9% | 32967 | 3.7% | 30298 | 5.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Flood | 4089 | 1.7% | 3218 | 2.2% | 14539 | 1.7% | 11652 | 2.2% |
| &nbsp;&nbsp;&nbsp;&nbsp;Specialty Homeowners | (108) | —% | 14875 | 9.9% | 29959 | 3.4% | 67894 | 12.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 10197 | 4.2% | 14830 | 9.9% | 43144 | 4.9% | 46924 | 8.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Gross Written Premiums | $239117 | 100.0% | $149908 | 100.0% | $881868 | 100.0% | $535175 | 100.0% |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,**  | **Three Months Ended December 31,**  | **Three Months Ended December 31,**  | **Three Months Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2022** | **2022** | **2021** | **2021** | **2022** | **2022** | **2021** | **2021** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
|  |  | **% of** |  | **% of** |  | **% of** |  | **% of** |
|  | **Amount** | **GWP** | **Amount** | **GWP** | **Amount** | **GWP** | **Amount** | **GWP** |
| **State** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;California | $128490 | 53.7% | $63956 | 42.7% | $418809 | 47.5% | $244416 | 45.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Texas | 18960 | 7.9% | 14729 | 9.8% | 90459 | 10.3% | 62893 | 11.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;Washington | 12436 | 5.2% | 7671 | 5.1% | 41827 | 4.7% | 23608 | 4.4% |
| &nbsp;&nbsp;&nbsp;&nbsp;Florida | 11499 | 4.8% | 8407 | 5.6% | 38715 | 4.4% | 27386 | 5.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;Hawaii | 10428 | 4.4% | 8680 | 5.8% | 40157 | 4.5% | 34993 | 6.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;Oregon | 7625 | 3.2% | 3991 | 2.7% | 24108 | 2.7% | 13677 | 2.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Illinois | 4215 | 1.8% | 3465 | 2.3% | 17368 | 2.0% | 12133 | 2.3% |
| &nbsp;&nbsp;&nbsp;&nbsp;New York | 4109 | 1.7% | 1790 | 1.2% | 12510 | 1.4% | 3077 | 0.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 41355 | 17.3% | 37219 | 24.8% | 197915 | 22.5% | 112992 | 21.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Gross Written Premiums | $239117 | 100.0% | $149908 | 100.0% | $881868 | 100.0% | $535175 | 100.0% |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,**  | **Three Months Ended December 31,**  | **Three Months Ended December 31,**  | **Three Months Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  | **Year Ended December 31,**  |
|  | **2022** | **2022** | **2021** | **2021** | **2022** | **2022** | **2021** | **2021** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
|  |  | **% of** |  | **% of** |  | **% of** |  | **% of** |
|  | **Amount** | **GWP** | **Amount** | **GWP** | **Amount** | **GWP** | **Amount** | **GWP** |
| **Subsidiary** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;PSIC | $132562 | 55.4% | $97074 | 64.8% | $489720 | 55.5% | $383064 | 71.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;PESIC | 106555 | 44.6% | 52834 | 35.2% | 392148 | 44.5% | 152111 | 28.4% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Gross Written Premiums | $239117 | 100.0% | $149908 | 100.0% | $881868 | 100.0% | $535175 | 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** | **Three Months Ended** | | | **Year Ended**  | **Year Ended**  | | |
|  | **December 31,**  | **December 31,**  | | | **December 31,**  | **December 31,**  | | |
|  | **2022** | **2021** | <br>**Change** | <br>**% Change** | **2022** | **2021** | <br>**Change** | <br>**% Change** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Gross earned premiums | $211267 | $122910 | $88357 | 71.9% | $695272 | $433999 | $261273 | 60.2% |
| Ceded earned premiums | (129039) | (55070) | (73969) | 134.3% | (378806) | (200173) | (178633) | 89.2% |
| Net earned premiums | $82228 | $67840 | $14388 | 21.2% | $316466 | $233826 | $82640 | 35.3% |
| Net earned premium ratio | 38.9% | 55.2% |  |  | 45.5% | 53.9% |  |  |

---

------

*Loss detail*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | | | **Year Ended**  | **Year Ended**  | | |
|  | **December 31,**  | **December 31,**  | | | **December 31,**  | **December 31,**  | | |
|  | **2022** | **2021** | <br>**Change** | <br>**% Change** | **2022** | **2021** | <br>**Change** | <br>**% Change** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Catastrophe losses | $1865 | $(1704) | $3569 | (209.4)% | $15394 | $5015 | $10379 | 207.0% |
| Non-catastrophe losses | 16556 | 11873 | 4683 | 39.4% | 63278 | 36442 | 26836 | 73.6% |
| Total losses and loss adjustment expenses | $18421 | $10169 | $8252 | 81.1% | $78672 | $41457 | $37215 | 89.8% |

---

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period | $74248 | $46643 | $45419 | $34470 |
| &nbsp;&nbsp;&nbsp;&nbsp;Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current year | 16384 | 10840 | 75087 | 45042 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior years | 2037 | (671) | 3585 | (3585) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total incurred | 18421 | 10169 | 78672 | 41457 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current year | 7896 | 8656 | 21658 | 12063 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior years | 7253 | 2737 | 24913 | 18445 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total payments | 15149 | 11393 | 46571 | 30508 |
| Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period | 77520 | 45419 | 77520 | 45419 |
| Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period | 153895 | 127947 | 153895 | 127947 |
| Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period | $231415 | $173366 | $231415 | $173366 |

---

*Reconciliation of Non-GAAP Financial Measures*

For the three months and year ended December 31, 2022 and 2021, the Non-GAAP financial measures discussed above reconcile to their most comparable GAAP measures as follows:

*Underwriting revenue*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Year Ended**  | **Year Ended**  |
|  | **December 31,**  | **December 31,**  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Total revenue | $88627 | $73172 | $327086 | $247791 |
| Net investment income | (4415) | (2431) | (13877) | (9080) |
| Net realized and unrealized losses (gains) on investments | (841) | (2029) | 7529 | (1277) |
| Underwriting revenue | $83371 | $68712 | $320738 | $237434 |

---

------

*Underwriting income and adjusted underwriting income*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Year Ended**  | **Year Ended**  |
|  | **December 31,**  | **December 31,**  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Income before income taxes | $24979 | $21394 | $67551 | $57138 |
| Net investment income | (4415) | (2431) | (13877) | (9080) |
| Net realized and unrealized losses (gains) on investments | (841) | (2029) | 7529 | (1277) |
| Interest expense | 398 | 40 | 873 | 40 |
| Underwriting income | $20121 | $16974 | $62076 | $46821 |
| Expenses associated with transactions |  | 153 | 130 | 563 |
| Stock-based compensation expense | 3068 | 2214 | 11624 | 5584 |
| Amortization of intangibles | 313 | 547 | 1255 | 1251 |
| Expenses associated with catastrophe bond, net of rebate |  | 5 | 1992 | 1704 |
| Adjusted underwriting income | $23502 | $19893 | $77077 | $55923 |

---

*Adjusted net income*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Year Ended**  | **Year Ended**  |
|  | **December 31,**  | **December 31,**  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Net income | $18760 | $16632 | $52170 | $45847 |
| Adjustments: |  |  |  |  |
| Net realized and unrealized losses (gains) on investments | (841) | (2029) | 7529 | (1277) |
| Expenses associated with transactions |  | 153 | 130 | 563 |
| Stock-based compensation expense | 3068 | 2214 | 11624 | 5584 |
| Amortization of intangibles | 313 | 547 | 1255 | 1251 |
| Expenses associated with catastrophe bond |  | 5 | 1992 | 1704 |
| Tax impact | (214) | 76 | (3366) | (1238) |
| Adjusted net income | $21086 | $17598 | $71334 | $52434 |

---

*Annualized adjusted return on equity*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Year Ended**  | **Year Ended**  |
|  | **December 31,**  | **December 31,**  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Annualized adjusted net income | $84344 | $70392 | $71334 | $52434 |
| Average stockholders' equity | $376299 | $385973 | $389461 | $378941 |
| Annualized adjusted return on equity | 22.4% | 18.2% | 18.3% | 13.8% |

---

*Adjusted combined ratio*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Year Ended**  | **Year Ended**  |
|  | **December 31,**  | **December 31,**  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Numerator: Sum of losses, loss adjustment expenses, underwriting, acquisition and other underwriting expenses, net of commission and other income | $62107 | $50866 | $254390 | $187005 |
| Denominator: Net earned premiums | $82228 | $67840 | $316466 | $233826 |
| Combined ratio | 75.5% | 75.0% | 80.4% | 80.0% |
| Adjustments to numerator: |  |  |  |  |
| Expenses associated with transactions | $— | $(153) | $(130) | $(563) |
| Stock-based compensation expense | (3068) | (2214) | (11624) | (5584) |
| Amortization of intangibles | (313) | (547) | (1255) | (1251) |
| Expenses associated with catastrophe bond |  | (5) | (1992) | (1704) |
| Adjusted combined ratio | 71.4% | 70.7% | 75.6% | 76.1% |

---

------

*Diluted adjusted earnings per share*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Year Ended**  | **Year Ended**  |
|  | **December 31,**  | **December 31,**  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **(in thousands, except shares and per share data)** | **(in thousands, except shares and per share data)** | **(in thousands, except shares and per share data)** | **(in thousands, except shares and per share data)** |
| Adjusted net income | $21086 | $17598 | $71334 | $52434 |
| Weighted-average common shares outstanding, diluted  | 25729681 | 26045213 | 25796008 | 26111904 |
| Diluted adjusted earnings per share | $0.82 | $0.68 | $2.77 | $2.01 |

---

*Catastrophe loss ratio*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Year Ended**  | **Year Ended**  |
|  | **December 31,**  | **December 31,**  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Numerator: Losses and loss adjustment expenses | $18421 | $10169 | $78672 | $41457 |
| Denominator: Net earned premiums | $82228 | $67840 | $316466 | $233826 |
| Loss ratio | 22.4% | 15.0% | 24.9% | 17.7% |
| Numerator: Catastrophe losses | $1865 | $(1704) | $15394 | $5015 |
| Denominator: Net earned premiums | $82228 | $67840 | $316466 | $233826 |
| Catastrophe loss ratio | 2.3% | (2.5)% | 4.9% | 2.1% |

---

*Adjusted combined ratio excluding catastrophe losses*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Year ended**  | **Year ended**  |
|  | **December 31,**  | **December 31,**  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** | **2022** | **2021** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income | $62107 | $50866 | $254390 | $187005 |
| Denominator: Net earned premiums | $82228 | $67840 | $316466 | $233826 |
| Combined ratio | 75.5% | 75.0% | 80.4% | 80.0% |
| Adjustments to numerator: |  |  |  |  |
| Expenses associated with transactions | $— | $(153) | $(130) | $(563) |
| Stock-based compensation expense | (3068) | (2214) | (11624) | (5584) |
| Amortization of intangibles | (313) | (547) | (1255) | (1251) |
| Expenses associated with catastrophe bond |  | (5) | (1992) | (1704) |
| Catastrophe losses | (1865) | 1704 | (15394) | (5015) |
| Adjusted combined ratio excluding catastrophe losses | 69.2% | 73.2% | 70.8% | 73.9% |

---

*Tangible Stockholders' equity*

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | **(in thousands)** | **(in thousands)** |
| Stockholders' equity | $384754 | $394169 |
| Intangible assets | (8261) | (9501) |
| Tangible stockholders' equity | $376493 | $384668 |

---

------