• Palomar Holdings, Inc. Reports Second Quarter 2021 Results

    Source: Nasdaq GlobeNewswire / 04 Aug 2021 15:29:57   America/Chicago

    LA JOLLA, Calif., Aug. 04, 2021 (GLOBE NEWSWIRE) -- Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported net income of $12.3 million, or $0.47 per diluted share, for the second quarter of 2021 as compared to $12.0 million, or $0.48 per diluted share, for the second quarter of 2020. Adjusted net income(1) was $13.2 million, or $0.51 per diluted share, for the second quarter of 2021 as compared to $13.0 million, or $0.52 per diluted share, for the second quarter of 2020.

    The Company reported net income of $29.0 million, or $1.11 per diluted share, for the six months ended June 30, 2021, as compared to $23.8 million, or $0.95 per diluted share, for the six months ended June 30, 2020. Adjusted net income(1) was $32.5 million, or $1.24 per diluted share for six months ended June 30, 2021, as compared to $25.4 million, or $1.02 per diluted share, for the six months ended June 30, 2020.

    Second Quarter 2021 Highlights

    • Gross written premiums increased by 54.4% to $129.4 million compared to $83.8 million in the second quarter of 2020
    • Net income increased by 2.7% to $12.3 million compared to $12.0 million in the second quarter of 2020
    • Adjusted net income(1) increased by 1.5% to $13.2 million compared to $13.0 million in the second quarter of 2020
    • Total loss ratio of 13.3% compared to 10.1% in the second quarter of 2020
    • Combined ratio of 76.0% compared to 68.4% in the second quarter of 2020
    • Adjusted combined ratio(1) of 73.8%, compared to 65.1% in the second quarter of 2020
    • Annualized return on equity of 13.1%, compared to 15.1% in the second quarter of 2020
    • Annualized adjusted return on equity(1) of 14.1%, compared to 16.4% in the second quarter of 2020

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

    “Our second quarter results, highlighted by year-over-year gross written premium growth of 54%, demonstrate the sustained momentum we are seeing across our business,” commented Mac Armstrong, Chairman and Chief Executive Officer. “We believe that our E&S business, which delivered $34.1 million in gross written premium and grew 43% sequentially from the first quarter, is in the very early innings of its development and has the potential to reach the size of our admitted carrier over time. In addition to our topline growth, importantly we delivered strong earnings, and grew net income despite $3.9 million of non-recurring, incremental reinsurance charges incurred as a result of Winter Storm Uri. During the quarter we continued our focus on using risk transfer to provide a stable earnings base and profitable growth as we successfully completed our June 1 reinsurance renewal in which we procured approximately $180 million of incremental reinsurance limit for earthquakes and $100 million of incremental limit for windstorms. Our reinsurance coverage now exhausts at $1.65 billion for earthquake events and $700 million for hurricane events, which we believe provides ample capacity for our growth.”

    Mr. Armstrong added, “While I am very pleased with our growth, I am most proud of our people and the culture they create at Palomar. We analytically and proactively manage our portfolio, product by product and state by state, at a granular level, as we seek to optimize risk adjusted returns, exposures, and most of all profitability. We continue to invest in the development of new product offerings that add value to the market and achieve target returns and as such launched several during the quarter. We remain confident in our ability to expand our product suite, distribution footprint, and earnings base over time. Moreover, we believe we have the capital to execute our strategy for the foreseeable future and opportunistically deploy it towards other initiatives that we believe generate an attractive return. Consistent with that philosophy, during the quarter we repurchased 239,000 shares of our stock under the share repurchase program we announced in late March.”

    Underwriting Results
    Gross written premiums increased 54.4% to $129.4 million compared to $83.8 million in the second quarter of 2020, while net earned premiums increased 37.9% compared to the prior year’s second quarter. Losses and loss adjustment expenses for the second quarter were $7.2 million due to attritional losses of $8.4 million offset by $1.1 million of favorable development on current and prior year catastrophe losses. The loss ratio for the quarter was 13.3%, including an attritional loss ratio of 15.4%, compared to a loss ratio of 10.1% during the same period last year comprised entirely of attritional losses. Non-catastrophe losses increased mainly due to growth of lines of business subject to attritional losses such as Specialty Homeowners, Flood, and Inland Marine.

    Underwriting income(1) was $13.0 million resulting in a combined ratio of 76.0% compared to underwriting income of $12.4 million and a combined ratio of 68.4% during the same period last year. The Company’s second quarter underwriting income and combined ratio were impacted by $3.9 million of additional reinsurance charges from Winter Storm Uri.

    The second quarter of 2021 results also include certain expenses related to stock-based compensation, amortization of intangibles, and catastrophe bond issuances. The second quarter of 2020 results include certain expenses related to the Company’s stock offerings, stock-based compensation, and expenses associated with a catastrophe bond. Without these items, the Company’s adjusted combined ratio was 73.8% in the second quarter compared to 65.1% during the same period last year.

    Investment Results
    Net investment income increased by 3.8% to $2.2 million compared to $2.1 million in the prior year’s second quarter. The year-over-year increase was primarily due to a higher average balance of investments held during the three months ended June 30, 2021, 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 "A1/A". The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 3.84 years at June 30, 2021. Cash and invested assets totaled $427.8 million at June 30, 2021. During the current year second quarter, the Company recognized realized and unrealized gains of $0.3 million due to unrealized gains on fixed income based equity securities as compared to realized and unrealized gains of $0.8 million in last year’s second quarter.

    Tax Rate
    The effective tax rate for the three months ended June 30, 2021 was 20.5% compared to 21.5% for the three months ended June 30, 2020.

    Stockholders’ Equity and Returns
    Stockholders' equity was $376.7 million at June 30, 2021, compared to $363.7 million at December 31, 2020. For the three months ended June 30, 2021, the Company’s annualized return on equity was 13.1% compared to 15.1% for the same period last year while annualized adjusted(1) return on equity was 14.1% compared to 16.4% for the same period last year. During the current quarter, the Company repurchased approximately 239,000 shares, or $15.8 million, of the Company’s previously announced $40 million share repurchase authorization.

    Full Year 2021 Outlook
    For the full year 2021, the Company expects to achieve adjusted net income of $64.0 million to $69.0 million.

    Conference Call
    As previously announced, Palomar will host a conference call August 5, 2021, to discuss its second quarter 2021 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 Second Quarter 2021 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 13721260. The telephonic replay will be available until 11:59 pm (Eastern Time) on August 12, 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.plmr.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. 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).

    To learn more, visit PLMR.com

    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 is a non-GAAP financial measure defined as income before income taxes 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 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.

    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 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 June 30, 2021 and 2020:

                 
      Three months ended       
      June 30,      
      2021 2020 Change % Change
      ($ in thousands, except per share data) 
    Gross written premiums $129,359  83,807 $45,552 54.4%
    Ceded written premiums  (51,568)  (30,198)  (21,370) 70.8%
    Net written premiums  77,791  53,609  24,182 45.1%
    Net earned premiums  54,215  39,320  14,895 37.9%
    Commission and other income  1,006  937  69 7.4%
    Total underwriting revenue (1)  55,221  40,257  14,964 37.2%
    Losses and loss adjustment expenses  7,235  3,978  3,257 81.9%
    Acquisition expenses  22,424  14,886  7,538 50.6%
    Other underwriting expenses  12,539  8,976  3,563 39.7%
    Underwriting income (1)  13,023  12,417  606 4.9%
    Net investment income  2,194  2,114  80 3.8%
    Net realized and unrealized gains on investments  300  778  (478) (61.4)%
    Income before income taxes  15,517  15,309  208 1.4%
    Income tax expense  3,177  3,297  (120) (3.6)%
    Net income  $12,340 $12,012 $328 2.7%
    Adjustments:            
    Expenses associated with transactions and stock offerings  —  456  (456) NM 
    Stock-based compensation expense  907  464  443 95.5%
    Amortization of intangibles  252  —  252
    		 NM 
    Expenses associated with catastrophe bond, net of rebate  16  399  (383) NM 
    Tax impact  (278)  (284)  6
    		 NM 
    Adjusted net income (1) $13,237 $13,047 $190 1.5%
    Key Financial and Operating Metrics            
    Annualized return on equity  13.1% 15.1%     
    Annualized adjusted return on equity (1)  14.1% 16.4%     
    Loss ratio  13.3% 10.1%     
    Expense ratio  62.6% 58.3%     
    Combined ratio  76.0% 68.4%     
    Adjusted combined ratio (1)  73.8% 65.1%     
    Diluted earnings per share $0.47 $0.48      
    Diluted adjusted earnings per share (1) $0.51 $0.52      
    Catastrophe losses $(1,137) $—      
    Catastrophe loss ratio (1)  (2.1)% —%     
    Adjusted combined ratio excluding catastrophe losses (1)  75.9% 65.1%     
    NM- not meaningful            

    (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.

    The following table summarizes the Company’s results for the six months ended June 30, 2021 and 2020:

                 
      Six months ended       
      June 30,       
      2021 2020 Change % Change 
      ($ in thousands, except per share data) 
    Gross written premiums $232,936 $155,301 $77,635 50.0%
    Ceded written premiums  (94,932)  (59,693)  (35,239) 59.0%
    Net written premiums  138,004  95,608  42,396 44.3%
    Net earned premiums  101,268  74,126  27,142 36.6%
    Commission and other income  1,717  1,675  42 2.5%
    Total underwriting revenue (1)  102,985  75,801  27,184 35.9%
    Losses and loss adjustment expenses  2,813  5,841  (3,028) (51.8)%
    Acquisition expenses  41,737  27,933  13,804 49.4%
    Other underwriting expenses  26,786  16,928  9,858 58.2%
    Underwriting income (1)  31,649  25,099  6,550 26.1%
    Net investment income  4,413  4,148  265 6.4%
    Net realized and unrealized gains (losses) on investments  (439)  1,219  (1,658) (136.0)%
    Income before income taxes  35,623  30,466  5,157 16.9%
    Income tax expense  6,653  6,681  (28) (0.4)%
    Net income $28,970 $23,785 $5,185 21.8%
    Adjustments:            
    Expenses associated with transactions and stock offerings  411  708  (297) NM 
    Stock-based compensation expense  1,845  907  938 103.4%
    Amortization of intangibles  589  —  589 NM 
    Expenses associated with catastrophe bond, net of rebate  1,698  399  1,299 NM 
    Tax impact  (990)  (433)  (557) NM 
    Adjusted net income (1) $32,523 $25,366 $7,157 28.2%
    Key Financial and Operating Metrics            
    Annualized return on equity  15.6% 16.0%     
    Annualized adjusted return on equity (1)  17.6% 17.1%     
    Loss ratio  2.8% 7.9%     
    Expense ratio  66.0% 58.3%     
    Combined ratio  68.7% 66.1%     
    Adjusted combined ratio (1)  64.3% 63.4%     
    Diluted earnings per share $1.11 $0.95      
    Diluted adjusted earnings per share (1) $1.24 $1.02      
    Catastrophe losses $(10,768) $—      
    Catastrophe loss ratio (1)  (10.6)% —%     
    Adjusted combined ratio excluding catastrophe losses (1)  74.9% 63.4%     
    NM- not meaningful            

    (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.

    Condensed Consolidated Balance sheets

    Palomar Holdings, Inc. and Subsidiaries

    Condensed Consolidated Balance Sheets (unaudited)

    (in thousands, except shares and par value data)

           
         June 30,     December 31, 
      2021 2020
      (Unaudited)   
    Assets      
    Investments:      
    Fixed maturity securities available for sale, at fair value (amortized cost: $384,450 in 2021; $381,279 in 2020) $396,637 $397,987
    Equity securities, at fair value (cost: $5,407 in 2021; $22,291 in 2020)  5,554  24,322
    Total investments  402,191  422,309
    Cash and cash equivalents  24,932  33,538
    Restricted cash  687  248
    Accrued investment income  2,629  2,545
    Premium receivable  71,605  48,842
    Deferred policy acquisition costs  46,007  35,481
    Reinsurance recoverable on unpaid losses and loss adjustment expenses  145,459  94,566
    Reinsurance recoverable on paid losses and loss adjustment expenses  49,458  10,162
    Ceded unearned premiums  37,419  35,031
    Prepaid expenses and other assets  37,787  34,119
    Property and equipment, net  633  739
    Intangible assets, net  10,849  11,512
    Total assets $829,656 $729,092
    Liabilities and stockholders' equity      
    Liabilities:      
    Accounts payable and other accrued liabilities $20,954 $20,730
    Reserve for losses and loss adjustment expenses  169,092  129,036
    Unearned premiums  222,612  183,489
    Ceded premium payable  29,019  22,233
    Funds held under reinsurance treaty  6,823  4,515
    Deferred tax liabilities, net  4,411  5,376
    Total liabilities  452,911  365,379
    Stockholders' equity:      
    Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020  —  —
    Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,369,503 and 25,525,796 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively  3  3
    Additional paid-in capital  313,910  310,507
    Accumulated other comprehensive income  9,757  13,246
    Retained earnings  53,075  39,957
    Total stockholders' equity  376,745  363,713
    Total liabilities and stockholders' equity $829,656 $729,092

    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  Six Months Ended
      June 30,  June 30, 
         2021 2020 2021 2020
    Revenues:            
    Gross written premiums $129,359 $83,807 $232,936 $155,301
    Ceded written premiums  (51,568)  (30,198)  (94,932)  (59,693)
    Net written premiums  77,791  53,609  138,004  95,608
    Change in unearned premiums  (23,576)  (14,289)  (36,736)  (21,482)
    Net earned premiums  54,215  39,320  101,268  74,126
    Net investment income  2,194  2,114  4,413  4,148
    Net realized and unrealized gains (losses) on investments  300  778  (439)  1,219
    Commission and other income  1,006  937  1,717  1,675
    Total revenues  57,715  43,149  106,959  81,168
    Expenses:            
    Losses and loss adjustment expenses  7,235  3,978  2,813  5,841
    Acquisition expenses  22,424  14,886  41,737  27,933
    Other underwriting expenses  12,539  8,976  26,786  16,928
    Total expenses  42,198  27,840  71,336  50,702
    Income before income taxes  15,517  15,309  35,623  30,466
    Income tax expense  3,177  3,297  6,653  6,681
    Net income  12,340  12,012  28,970  23,785
    Other comprehensive income, net:            
    Net unrealized gains (losses) on securities available for sale for the three and six months ended June 30, 2021 and 2020, respectively  2,710  10,676  (3,489)  4,843
    Net comprehensive income $15,050 $22,688 $25,481 $28,628
    Per Share Data:            
    Basic earnings per share $0.48 $0.49 $1.14 $0.98
    Diluted earnings per share $0.47 $0.48 $1.11 $0.95
                 
    Weighted-average common shares outstanding:            
    Basic  25,479,561  24,343,425  25,515,893  24,231,344
    Diluted  26,104,880  25,057,029  26,181,206  24,922,630

    Underwriting Segment Data

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

                           
      Three Months Ended June 30,   Six Months Ended June 30, 
      2021 2020  2021 2020 
      ($ in thousands)  ($ in thousands) 
         % of    % of     % of    % of 
      Amount GWP Amount GWP  Amount GWP Amount GWP 
    Product                      
    Residential Earthquake $42,192 32.6%$34,240 40.9% $78,090 33.5%$62,996 40.6%
    Specialty Homeowners  19,135 14.8% 11,568 13.8%  33,138 14.2% 21,413 13.8%
    Commercial Earthquake  17,343 13.4% 11,818 14.1%  38,619 16.6% 22,666 14.6%
    Commercial All Risk  14,976 11.6% 14,841 17.7%  23,165 9.9% 27,297 17.6%
    Inland Marine  11,681 9.0% 3,451 4.1%  19,515 8.4% 5,341 3.4%
    Hawaii Hurricane  7,788 6.0% 3,242 3.9%  13,925 6.0% 5,937 3.8%
    Residential Flood  2,865 2.2% 2,032 2.4%  5,149 2.2% 3,558 2.3%
    Other  13,379 10.4% 2,615 3.1%  21,335 9.2% 6,093 3.9%
    Total Gross Written Premiums $129,359 100.0%$83,807 100.0% $232,936 100.0%$155,301 100.0%


                           
      Three Months Ended June 30,   Six Months Ended June 30, 
      2021 2020  2021 2020 
      ($ in thousands)  ($ in thousands) 
         % of    % of     % of    % of 
      Amount GWP Amount GWP  Amount GWP Amount GWP 
    State                         
    California $54,223 41.9%$38,420 45.9% $104,725 45.0%$71,172 45.8%
    Texas  17,373 13.4% 18,796 22.4%  28,427 12.2% 34,587 22.3%
    Florida  11,697 9.0% — 0.0%  17,755 7.6% — 0.0%
    Hawaii  9,041 7.0% 3,840 4.6%  15,970 6.9% 6,892 4.5%
    Washington  4,663 3.6% 3,055 3.7%  8,751 3.8% 5,661 3.6%
    North Carolina  4,264 3.3% 2,609 3.1%  8,152 3.5% 4,293 2.8%
    Illinois  3,173 2.5% 1,694 2.0%  5,775 2.4% 2,841 1.8%
    Oregon  2,818 2.2% 2,289 2.7%  5,723 2.4% 4,386 2.8%
    Other  22,107 17.1% 13,104 15.6%  37,658 16.2% 25,469 16.4%
    Total Gross Written Premiums $129,359 100.0%$83,807 100.0% $232,936 100.0%$155,301 100.0%

    During the three months ended June 30, 2021, PSIC accounted for $95.3 million or approximately 73.6% of our gross written premiums and PESIC accounted for $34.1 million or approximately 26.4% of our gross written premiums.

    During the six months ended June 30, 2021, PSIC accounted for $175.1 million or approximately 75.2% of our gross written premiums and PESIC accounted for $57.8 million or approximately 24.8% of our gross written premiums.

    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         Six Months Ended       
      June 30,         June 30,       
         2021 2020 Change % Change  2021 2020 Change % Change
      ($ in thousands)  ($ in thousands)
    Gross earned premiums $102,520 $70,864 $31,656 44.7%  $193,812 $135,838 $57,974 42.7%
    Ceded earned premiums  (48,305)  (31,544)  (16,761) 53.1%   (92,544)  (61,712)  (30,832) 50.0%
    Net earned premiums $54,215 $39,320 $14,895 37.9%  $101,268 $74,126 $27,142 36.6%
                              
    Net earned premium ratio  52.9%  55.5%         52.3%  54.6%      

    Loss detail

                              
      Three Months Ended         Six Months Ended       
      June 30,         June 30,       
      2021 2020 Change % Change  2021 2020 Change % Change
      ($ in thousands)  ($ in thousands)
    Catastrophe losses $(1,137) $— $(1,137) NM   $(10,768) $— $(10,768) NM 
    Non-catastrophe losses  8,372  3,978  4,394 110.5%   13,581  5,841  7,740 132.5%
    Total losses and loss adjustment expenses $7,235 $3,978 $3,257 81.9%  $2,813 $5,841 $(3,028) (51.8)%
    NM- not meaningful                         

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

                 
      Three Months Ended June 30, Six Months Ended June 30, 
      2021 2020 2021 2020
       (in thousands)  (in thousands)
    Reserve for losses and LAE net of reinsurance recoverables at beginning of period $19,016 $4,499 $34,470 $3,869
    Add: Incurred losses and LAE, net of reinsurance, related to:            
    Current year  7,612  3,885  5,916  6,064
    Prior years  (377)  93  (3,103)  (223)
    Total incurred  7,235  3,978  2,813  5,841
    Deduct: Loss and LAE payments, net of reinsurance, related to:            
    Current year  (1,060)  1,171  620  1,522
    Prior years  3,678  219  13,030  1,101
    Total payments  2,618  1,390  13,650  2,623
    Reserve for losses and LAE net of reinsurance recoverables at end of period  23,633  7,087  23,633  7,087
    Add: Reinsurance recoverables on unpaid losses and LAE at end of period  145,459  17,129  145,459  17,129
    Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period $169,092 $24,216 $169,092 $24,216

    Reconciliation of Non-GAAP Financial Measures

    For the three and six months ended June 30, 2021 and 2020, the Non-GAAP financial measures discussed above reconcile to their most comparable GAAP measures as follows:

    Underwriting revenue

                  
      Three Months Ended   Six Months Ended
      June 30,   June 30, 
         2021 2020  2021 2020
      (in thousands)  (in thousands)
    Total revenue $57,715 $43,149  $106,959 $81,168
    Net investment income  (2,194)  (2,114)   (4,413)  (4,148)
    Net realized and unrealized (gains) losses on investments  (300)  (778)   439  (1,219)
    Underwriting revenue $55,221 $40,257  $102,985 $75,801

    Underwriting income

                  
      Three Months Ended   Six Months Ended
      June 30,   June 30, 
      2021 2020  2021 2020
      (in thousands)  (in thousands)
    Income before income taxes $15,517 $15,309  $35,623 $30,466
    Net investment income  (2,194)  (2,114)   (4,413)  (4,148)
    Net realized and unrealized gains (losses) on investments  (300)  (778)   439  (1,219)
    Underwriting income $13,023 $12,417  $31,649 $25,099

    Adjusted net income

                  
      Three Months Ended   Six Months Ended
      June 30,   June 30, 
         2021 2020  2021 2020
      (in thousands)  (in thousands)
    Net income $12,340 $12,012  $28,970 $23,785
    Adjustments:             
    Expenses associated with transactions and stock offerings  —  456   411  708
    Stock-based compensation expense  907  464   1,845  907
    Amortization of intangibles  252
    		  —   589  —
    Expenses associated with catastrophe bond, net of rebate  16  399   1,698  399
    Tax impact  (278)  (284)   (990)  (433)
    Adjusted net income $13,237 $13,047  $32,523 $25,366

    Annualized adjusted return on equity

                   
      Three Months Ended   Six Months Ended
      June 30,   June 30, 
      2021 2020  2021 2020 
      ($ in thousands)  ($ in thousands) 
                   
    Annualized adjusted net income $52,948 $52,188  $65,046 $50,732 
    Average stockholders' equity $376,563 $318,032  $370,229 $296,900 
    Annualized adjusted return on equity  14.1% 16.4%  17.6% 17.1%

    Adjusted combined ratio

                   
      Three Months Ended   Six Months Ended
      June 30,   June 30, 
      2021 2020  2021 2020 
      ($ in thousands)  ($ in thousands) 
    Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income $41,192 $26,903  $69,619 $49,027 
    Denominator: Net earned premiums $54,215 $39,320  $101,268 $74,126 
    Combined ratio  76.0% 68.4%  68.7% 66.1%
    Adjustments to numerator:              
    Expenses associated with transactions and stock offerings $— $(456)  $(411) $(708) 
    Stock-based compensation expense  (907)  (464)   (1,845)  (907) 
    Amortization of intangibles  (252)  —   (589)  — 
    Expenses associated with catastrophe bond, net of rebate  (16)  (399)   (1,698)  (399) 
    Adjusted combined ratio  73.8% 65.1%  64.3% 63.4%

    Diluted adjusted earnings per share

                  
      Three Months Ended   Six Months Ended
      June 30,   June 30, 
         2021 2020  2021 2020
      (in thousands, except per share data)  (in thousands, except per share data)
                  
    Adjusted net income    $13,237 $13,047  $32,523 $25,366
    Weighted-average common shares outstanding, diluted $26,104,880  25,057,029   26,181,206  24,922,630
    Diluted adjusted earnings per share $0.51 $0.52  $1.24 $1.02

    Catastrophe loss ratio

                   
      Three Months Ended   Six Months Ended  
      June 30,   June 30,  
      2021 2020  2021 2020 
      ($ in thousands)  ($ in thousands) 
    Numerator: Losses and loss adjustment expenses $7,235 $3,978  $2,813 $5,841 
    Denominator: Net earned premiums $54,215 $39,320  $101,268 $74,126 
    Loss ratio  13.3% 10.1%  2.8% 7.9%
                   
    Numerator: Catastrophe losses $(1,137) $—  $(10,768) $— 
    Denominator: Net earned premiums $54,215 $39,320  $101,268 $74,126 
    Catastrophe loss ratio  (2.1)% 0.0%  (10.6)% 0.0%

    Adjusted combined ratio excluding catastrophe losses

                   
      Three Months Ended   Six Months Ended  
      June 30,   June 30,  
      2021 2020  2021 2020 
      ($ in thousands)  ($ in thousands) 
    Numerator: Sum of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses, net of commission and other income $41,192 $26,903  $69,619 $49,027 
    Denominator: Net earned premiums $54,215 $39,320  $101,268 $74,126 
    Combined ratio  76.0% 68.4%  68.7% 66.1%
    Adjustments to numerator:              
    Expenses associated with transactions and stock offerings $— $(456)  $(411) $(708) 
    Stock-based compensation expense  (907)  (464)   (1,845)  (907) 
    Amortization of intangibles  (252)  —   (589)  — 
    Expenses associated with catastrophe bond, net of rebate  (16)  (399)   (1,698)  (399) 
    Catastrophe losses  1,137  —   10,768  — 
    Adjusted combined ratio excluding catastrophe losses  75.9% 65.1%  74.9% 63.4%

    Tangible Stockholders’ equity

           
      June 30,  December 31,
         2021 2020
      (in thousands)
    Stockholders' equity $376,745 $363,713
    Intangible assets  (10,849)  (11,512)
    Tangible stockholders' equity $365,896 $352,201

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