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Section 1: 8-K (8-K)

PLMR_currentfolio_8k_33119

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): May 16, 2019

 

Palomar Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

Commission File Number: 001-38873

 

 

 

 

Delaware

 

83-3972551

(State or other jurisdiction

of incorporation)

 

(I.R.S. Employer

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):

 

 

 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))

 

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.

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

 

 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

PLMR

Nasdaq Global Select Market

 


 

Item 2.02. Results of Operations and Financial Condition.

 

On May 16, 2019, Palomar Holdings, Inc. (the "Company") issued a press release announcing its financial results for the fiscal quarter ended March 31, 2019. 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

 

 

Exhibit No.

Description

99.1

Press release, dated May 16, 2019

 

 

 

 


 

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:

May 16, 2019

/s/ T. Christopher Uchida

 

 

T. Christopher Uchida

 

 

Chief Financial Officer

 

 

(Principal Financial and Accounting Officer)

 

 

 


(Back To Top)

Section 2: EX-99.1 (EX-99.1)

PLMR_Exhibit99.1

Exhibit 99.1

2A6E996A

 

 

 

 

 

 

Palomar Holdings, Inc. Reports First Quarter 2019 Results

 

La Jolla, CA,  May 16,  2019 – Palomar Holdings, Inc. (NASDAQ:PLMR)  (‘Palomar’ or the ‘Company’) reported a  net loss of $14.4 million, or ($0.85) per diluted share, for the first quarter of 2019 compared to net income of $5.6 million,  or $0.33 per diluted share, for the first quarter of 2018.  

 

Adjusted net income(1) was $8.8 million, or $0.52 per diluted share, for the first quarter of 2019 as compared to $5.6 million, or  $0.33 per diluted share, for the first quarter of 2018. Adjusted net income for the first quarter of 2019 excludes initial public offering (‘IPO’) and tax restructuring expenses of $0.3 million, net of tax, and a stock based compensation charge of $23.0 million. 

 

First Quarter 2019 Highlights and comparison to the First Quarter of 2018

·

Gross written premium increased by 58.8% to $54.0 million

·

Net written premium increased by 37.8% to $27.9 million

·

Net loss of $14.4 million compared to net income of $5.6 million in the first quarter of 2018

·

Adjusted net income(1) increased by 58.0% to $8.8 million compared to $5.6 million in the first quarter of 2018

·

Total loss ratio of 1.7% compared to 5.2%  in the first quarter of 2018

·

Combined ratio of 193.8%  compared to 66.7%  in the first quarter of 2018

·

Adjusted combined ratio(1) of 66.7%, compared to 66.7% in the first quarter of 2018

·

Annualized return on equity of (58.2)%, compared to 27.7% in the first quarter of 2018

·

Annualized adjusted return on equity of 35.7%, compared to 27.7% in the first quarter of 2018

 

(1)

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

 

“We founded Palomar to address a unique and attractive opportunity within several specialty property insurance markets across the U.S. Based on the experience of our founding team combined with thorough data analysis, we identified market segments that had primarily been served by “one-size-fits-all” pricing and limited coverage options. We strongly believed that we could develop products to better meet the specific needs of both individuals and businesses. By serving our customers well, we believed we could achieve rapid growth, earn substantial market share, and generate strong profitability,” commented Mac Armstrong, Chief Executive Officer and Founder. “To address this opportunity, we developed an analytically driven product framework that enables our team to create innovative and unique product offerings that address specific customer needs.  Our dedicated efforts can be seen in our first quarter results, where we delivered gross written premium growth of 58.8%, as compared to the year ago quarter, and achieved annualized adjusted return on equity of 35.7%.  Due to  our conviction around our market opportunity and our unique business model, over the past several months we have pursued the completion of an initial public offering, and we are pleased to report that we achieved this milestone when our shares began trading on the NASDAQ Stock Market on April 17th.  Our IPO would not have been possible without years of hard work by our employees as well as the support of our customers and partners. Furthermore, our IPO will provide growth capital to accelerate our ambitions, expand our platform and deliver additional value to our customers and shareholders.”

 

Underwriting Results

Gross written premiums increased by 58.8% to $54.0 million compared to $34.0 million in the first quarter of 2018. This growth was driven by strong premium retention and new business across multiple lines as well as continued geographic expansion, as we are now an admitted insurance carrier in 25 states across the country. Approximately $8.0 million of our written premiums increase was due to

1


 

a new Residential Earthquake partnership with a homeowners carrier in which we assumed $6.6 million of unearned premiums and wrote an additional $1.4 million in premiums.  Net earned premiums increased by 2.0% compared to the prior year’s first quarter. This increase was due to gross written premium growth offset by increased ceded premium, primarily related to a quota share of our Specialty Homeowners and Commercial All Risk programs. Commission and other income increased by 8.5% compared to the prior year first quarter as we generate increased fee income from underwriting on behalf of third party capacity. Underwriting loss(1) was $17.2 million resulting in a combined ratio of 193.8% compared to underwriting income of $6.0 million and a combined ratio of 66.7% during the same period last year. This decrease was principally due to a  stock-compensation charge of $23.0 million related to the modification of our former parent company’s management incentive plan in March 2019. Excluding the impact of stock-based compensation and other one-time items our adjusted combined ratio was 66.7%. Additionally, our adjusted net income during the quarter increased by 58.0% to $8.8 million compared to last year’s first quarter.

 

Investment Results

Net investment income increased by 55.6%  to $1.0 million compared to $0.6 million in the prior year’s quarter. 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 "AA." The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents,  was 3.93 years at March 31, 2019. Cash and invested assets totaled $159.2 million at March 31, 2019. During the quarter, the Company recognized realized and unrealized gains of $2.4 million related to its investment portfolio.    

 

Tax Rate

The effective tax rate for the three months ended March 31, 2019 was negative 1.0%. The  change in the effective tax rate for the three months ended March 31, 2019 compared to the prior-year period was attributable to higher taxable income during the quarter partially offset by the reduction of the valuation allowance on the federal deferred tax assets.

 

 

Stockholders’ Equity and Returns

Stockholders' equity was $101.9 million at March 31, 2019, compared to $96.3 million at December 31, 2018.  For the three months ended March 31, 2019, our annualized return on equity was (58.2)% which compares to 27.7% for the same period last year. Over the same period, annualized adjusted return on equity increased to 35.7% from 27.7%. Increases in adjusted return on equity were due to improvements in underwriting performance and higher returns on the investment portfolio.

 

Conference Call

As previously announced, Palomar Holdings will host a conference call May 16, 2019, to discuss its first quarter 2019 results at 5:00 pm (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 Holdings First Quarter 2019 Earnings Call. A telephonic replay will be available approximately three 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 13690355. The telephonic replay will be available until 11:59 pm (Eastern Time) on May 23, 2019.

 

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 ultimate parent and insurance holding company of its operating subsidiaries, Palomar Specialty Insurance Company and Palomar Specialty Reinsurance Company Bermuda Ltd.  Palomar is an innovative insurer that focuses on the provision of specialty property insurance for residential and commercial clients.  Palomar’s underwriting and analytical acumen allow it to concentrate on certain markets that it believes are underserved by other insurance companies, such as the markets for earthquake, wind and flood insurance.  Based in La Jolla, California, the company is an admitted carrier in 25 states.  Palomar Specialty Insurance Company has an A.M. Best financial strength rating of “A-” (Excellent). To learn more about us, visit www.palomarspecialty.com.

 

2


 

Non-GAAP and Key Performance Indicators

We discuss certain key performance indicators, described below, which provide useful information about our business and the operational factors underlying our 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 to underwriting revenue in accordance with GAAP.

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 to underwriting income in accordance with GAAP.

Adjusted net income is a non‑GAAP financial measure defined as net income excluding the impact of expenses relating to various transactions that we consider to be unique and possibly non‑recurring in nature, net of tax impact. We calculate the tax impact only on adjustments which would be included in calculating our income tax expense using the effective tax rate at the end of each period. See “—Reconciliation of Non‑GAAP Financial Measures” for a reconciliation of net income to adjusted net income in accordance with GAAP.

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 shareholder’s equity during the period. See “—Reconciliation of Non‑GAAP Financial Measures” for a reconciliation of return on equity to adjusted return on equity in accordance with GAAP.

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 a non‑GAAP financial measure 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 expenses relating to various transactions that we consider to be unique and possibly non‑recurring in nature. See “—Reconciliation of Non‑GAAP Financial Measures” for a reconciliation of combined ratio to adjusted combined ratio in accordance with GAAP.

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 to tangible stockholders’ equity in accordance with GAAP.

Safe Harbor Statement

Palomar Holdings cautions you that statements contained in this press release may regard matters that are not historical facts 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 Holdings 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," "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, unexpected 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.

 

3


 

 

 

Investor Relations

1-619-771-1743

[email protected] 

 

 

Source: Palomar Holdings, Inc.

4


 

Summary of Operating Results

The following table summarizes our results for the three months ended March 31, 2019 and 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

 

 

 

 

March 31, 

 

 

 

Percent

 

 

    

2019

    

2018

    

Change

    

Change

 

 

 

($ in thousands)

 

Revenue:

 

 

  

 

 

  

 

  

 

  

 

Gross written premiums

 

$

54,031

 

$

34,033

 

19,998

 

58.8

%

Ceded written premiums

 

 

(26,106)

 

 

(13,762)

 

(12,344)

 

89.7

%

Net written premiums

 

 

27,925

 

 

20,271

 

7,654

 

37.8

%

Net earned premiums

 

 

18,350

 

 

17,987

 

363

 

2.0

%

Commission and other income

 

 

586

 

 

540

 

46

 

8.5

%

Total underwriting revenue

 

 

18,936

 

 

18,527

 

409

 

2.2

%

Losses and loss adjustment expenses

 

 

316

 

 

938

 

(622)

 

(66.3)

%

Acquisition expenses

 

 

6,975

 

 

7,790

 

(815)

 

(10.5)

%

Other underwriting expenses

 

 

28,853

 

 

3,805

 

25,048

 

658.3

%

Underwriting (loss) income

 

 

(17,208)

 

 

5,994

 

(23,202)

 

(387.1)

%

Interest expense

 

 

(429)

 

 

(404)

 

(25)

 

6.2

%

Net investment income

 

 

960

 

 

617

 

343

 

55.6

%

Net realized and unrealized gains (losses) on investments

 

 

2,411

 

 

(621)

 

3,032

 

(488.2)

%

(Loss) income before income taxes

 

 

(14,266)

 

 

5,586

 

(19,852)

 

(355.4)

%

Income tax expense (benefit)

 

 

145

 

 

(6)

 

151

 

(2,516.7)

%

Net (loss) income

 

$

(14,411)

 

$

5,592

 

(20,003)

 

(357.7)

%

Adjustments:

 

 

  

 

 

  

 

 

 

  

 

Expenses associated with IPO and tax restructuring

 

 

358

 

 

 —

 

358

 

N/A

 

Expenses associated with modification of management incentive plan

 

 

22,961

 

 

 —

 

22,961

 

N/A

 

Less: Tax impact

 

 

(75)

 

 

 —

 

(75)

 

N/A

 

Adjusted net income

 

$

8,833

 

$

5,592

 

3,241

 

58.0

%

Key Financial and Operating Metrics

 

 

  

 

 

  

 

  

 

  

 

Annualized return on equity

 

 

(58.2)

%  

 

27.7

%  

  

 

  

 

Annualized adjusted return on equity

 

 

35.7

%  

 

27.7

%  

  

 

  

 

Loss ratio

 

 

1.7

%  

 

5.2

%  

  

 

  

 

Expense ratio

 

 

192.1

%  

 

61.5

%  

  

 

  

 

Combined ratio

 

 

193.8

%  

 

66.7

%  

  

 

  

 

Adjusted combined ratio

 

 

66.7

%  

 

66.7

%  

 

 

 

 

 

5


 

Condensed Consolidated Balance sheets

 

Palomar Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except shares and par value data)

 

 

 

 

 

 

 

 

 

    

March 31, 

    

December 31, 

 

 

2019

 

2018

 

 

 

(unaudited)

 

 

 

Assets

 

 

  

 

 

  

Investments:

 

 

  

 

 

  

Fixed maturity securities available for sale, at fair value (amortized cost: $125,051 in 2019; $122,949 in 2018)

 

$

126,946

 

$

122,220

Equity securities, at fair value (cost: $21,429 in 2019; $27,188 in 2018)

 

 

21,778

 

 

25,171

Total investments

 

 

148,724

 

 

147,391

Cash and cash equivalents

 

 

10,494

 

 

9,525

Restricted cash

 

 

397

 

 

399

Accrued investment income

 

 

856

 

 

734

Premium receivable

 

 

24,348

 

 

18,633

Deferred policy acquisition costs

 

 

16,741

 

 

14,052

Reinsurance recoverable on unpaid losses and loss adjustment expenses

 

 

10,296

 

 

11,896

Reinsurance recoverable on paid losses and loss adjustment expenses

 

 

2,094

 

 

2,666

Prepaid reinsurance premium

 

 

21,838

 

 

18,284

Prepaid expenses and other assets

 

 

8,264

 

 

5,863

Property and equipment, net

 

 

921

 

 

947

Intangible assets

 

 

744

 

 

744

Deferred tax assets, net

 

 

523

 

 

 —

Total assets

 

$

246,240

 

$

231,134

Liabilities and stockholders' equity

 

 

  

 

 

  

Liabilities:

 

 

  

 

 

  

Accounts payable and other accrued liabilities

 

$

8,361

 

$

9,245

Reserve for losses and loss adjustment expenses

 

 

12,628

 

 

16,061

Unearned premiums

 

 

92,259

 

 

79,130

Ceded premium payable

 

 

9,664

 

 

10,607

Funds held under reinsurance treaty

 

 

750

 

 

720

Income and excise taxes payable

 

 

1,566

 

 

 —

Long-term notes payable

 

 

19,103

 

 

19,079

Total liabilities

 

 

144,331

 

 

134,842

Stockholders' equity:

 

 

  

 

 

  

Preferred stock, $0.0001 par value, 5,000,000 and 0 shares authorized as of March 31, 2019 and December 31, 2018, respectively, 0 shares issued and outstanding as of March 31, 2019 and December 31, 2018

 

 

 

 —

 

 

 —

Common stock, $0.0001 par value, 500,000,000 shares authorized, 17,000,000 shares issued and outstanding as of March 31, 2019 and December 31, 2018

 

 

 2

 

 

 2

Additional paid-in capital

 

 

91,459

 

 

68,498

Accumulated other comprehensive income (loss)

 

 

1,624

 

 

(563)

Retained earnings

 

 

8,824

 

 

28,355

Total stockholders' equity

 

 

101,909

 

 

96,292

Total liabilities and stockholders' equity

 

$

246,240

 

$

231,134

 

6


 

Condensed Consolidated Income Statement

 

Palomar Holdings, Inc. and Subsidiaries

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

(in thousands, except shares and per share data)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

 

    

2019

    

2018

Revenues:

 

 

  

 

 

  

Gross written premiums

 

$

54,031

 

$

34,033

Ceded written premiums

 

 

(26,106)

 

 

(13,762)

Net written premiums

 

 

27,925

 

 

20,271

Change in unearned premiums

 

 

(9,575)

 

 

(2,284)

Net earned premiums

 

 

18,350

 

 

17,987

Net investment income

 

 

960

 

 

617

Net realized and unrealized gains (losses) on investments

 

 

2,411

 

 

(621)

Commission and other income

 

 

586

 

 

540

Total revenues

 

 

22,307

 

 

18,523

Expenses:

 

 

  

 

 

  

Losses and loss adjustment expenses

 

 

316

 

 

938

Acquisition expenses

 

 

6,975

 

 

7,790

Other underwriting expenses (includes stock-based compensation of $22,961 and $0, respectively)

 

 

28,853

 

 

3,805

Interest expense

 

 

429

 

 

404

Total expenses

 

 

36,573

 

 

12,937

(Loss) Income before income taxes

 

 

(14,266)

 

 

5,586

Income tax expense (benefit)

 

 

145

 

 

(6)

Net (loss) income

 

 

(14,411)

 

 

5,592

Other comprehensive income, net:

 

 

  

 

 

  

Net unrealized gains (losses) on securities available for sale for the three months ended March 31, 2019 and 2018 respectively

 

 

2,187

 

 

(899)

Net comprehensive (loss) income

 

$

(12,224)

 

$

4,693

Per Share Data:

 

 

  

 

 

  

Earnings per share, basic and diluted

 

$

(0.85)

 

$

0.33

Weighted-average common shares outstanding

 

 

17,000,000

 

 

17,000,000

 

7


 

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 are presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

 

2019

 

2018

 

 

 

($ in thousands)

 

 

 

 

 

 

% of

 

 

 

 

% of

 

 

 

Amount

 

GWP

 

Amount

 

GWP

 

Product

    

 

  

    

  

    

 

  

    

  

 

Residential Earthquake

 

$

29,308

 

54.3

%  

$

16,751

 

49.3

%

Specialty Homeowners

 

 

7,780

 

14.4

%  

 

6,636

 

19.5

%

Commercial All Risk

 

 

7,565

 

14.0

%  

 

2,936

 

8.6

%

Commercial Earthquake

 

 

6,532

 

12.1

%  

 

5,830

 

17.1

%

Hawaii Hurricane

 

 

2,074

 

3.8

%  

 

1,504

 

4.4

%

Flood

 

 

772

 

1.4

%  

 

376

 

1.1

%

Total Gross Written Premium

 

$

54,031

 

100

%  

$

34,033

 

100

%

 

Reconciliation of Non‑GAAP Financial Measures

 

For the three months ended March 31, 2019 and 2018, the Non-GAAP financial measures discussed above reconcile to their respective GAAP measures as follows:

 

Underwriting revenue

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

 

    

2019

    

2018

 

 

(in thousands)

Total revenues

 

$

22,307

 

$

18,523

Net investment income

 

 

960

 

 

617

Net realized and unrealized gains (losses) on investments

 

 

2,411

 

 

(621)

Underwriting revenue

 

$

18,936

 

$

18,527

 

Underwriting income

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

 

    

2019

    

2018

 

 

(in thousands)

(Loss) income before income taxes

 

$

(14,266)

    

$

5,586

Net investment income

 

 

960

 

 

617

Net realized and unrealized gains (losses) on investments

 

 

2,411

 

 

(621)

Interest expense

 

 

(429)

 

 

(404)

Underwriting (loss) income

 

$

(17,208)

 

$

5,994

 

Adjusted net income

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31, 

 

    

2019

    

2018

 

 

(in thousands)

Net (loss) income

 

$

(14,411)

    

$

5,592

Adjustments:

 

 

  

 

 

  

Expenses associated with IPO and tax restructuring

 

 

358

 

 

 —

Expenses associated with modification of management incentive plan

 

 

22,961

 

 

 —

Less: Tax impact

 

 

(75)

 

 

 —

Adjusted net income

 

$

8,833

 

$

5,592

 

8


 

 

 

Annualized adjusted return on equity

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 

 

 

    

2019

    

2018

 

 

 

($ in thousands)

 

 

 

 

  

 

 

  

 

Annualized adjusted net income

 

$

35,332

 

$

22,368

 

Average shareholder’s equity:

 

$

99,101

 

$

80,761

 

Annualized adjusted return on equity

 

 

35.7

%  

 

27.7

%

 

 

Adjusted combined ratio

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 

 

 

 

2019

    

2018

 

 

 

($ in thousands)

 

Numerator: Sum of Losses, loss adjustment expenses, underwriting, acquisition and other underwriting expenses, net of commission and other income

 

$

35,558

 

$

11,993

 

Denominator: Net earned premiums

 

$

18,350

 

$

17,987

 

Combined ratio

 

 

193.8

%  

 

66.7

%  

Adjustments to numerator:

 

 

 

 

 

 

 

Expenses associated with IPO and tax restructuring

 

$

(358)

 

$

 —

 

Expenses associated with modification of management incentive plan

 

 

(22,961)

 

 

 —

 

Adjusted combined ratio

 

 

66.7

%  

 

66.7

%  

 

 

Tangible Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

Period Ended

 

 

March 31, 

 

December 31,

 

    

2019

    

2018

 

 

(in thousands)

Stockholders' equity

 

$

101,909

    

$

96,292

Less: Intangible assets

 

 

(744)

 

 

(744)

Tangible stockholders' equity

 

$

101,165

 

$

95,548

 

9


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