Palomar Holdings, Inc.

and welcome to the Palomar Holdings Incorporated Second Quarter 2025 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference line will be open for questions with instructions to follow. As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Chris Uchida, Chief Financial Officer. Please go ahead, sir.

Thank you, Operator, and good morning, everyone. We appreciate your participation in our earnings call. With me here today is Mac Armstrong, our Chairman and Chief Executive Officer. Additionally, John Christensen, our President, is here to answer questions during the Q&A portion of the call. As a reminder, a telephonic replay of this call will be available on the Investor Relations section of our website through 1159 p.m. Eastern Time on August 12, 2025. Before we begin, Let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about management's future expectations, beliefs, estimates, plans, and prospects. Such statements are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in our quarterly report on Form 10Q, filed with the Securities and Exchange Commission. We do not undertake any duty to update such forward-looking statements. Additionally, during today's call, we will discuss certain non-GAAP measures which we believe are useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to their most comparable GAAP measure can be found in our earnings release. At this point, I'll turn the call over to Mac.

Thank you, Chris, and good morning. I'm pleased to discuss our second quarter results as they further demonstrate our success in building a specialty insurance market leader, as well as the execution of our Palomar 2X strategic imperative. We not only achieved exceptional top line growth of 29%, 45% on the same store basis, but we also saw strong bottom line growth with adjusted net income increasing 52% year over year. The strong growth underscores the strength and diversity of our product suite and the effectiveness of our balanced book of property and casualty and residential and commercial risks. Our financial metrics were equally impressive as we generated an adjusted combined ratio of 73% and a 24% adjusted return on equity. Our portfolio is one of a kind in specialty insurance and our second quarter results reflect its unique nature. As I reflect on the results and the broader specialty insurance market backdrop, there are five key themes that I hope you take away from today's call. First, our ability to operate seamlessly across residential and commercial products in the admitted and ENS markets is a core strength and differentiator. This flexibility allows us to respond adeptly to any shift in market conditions and deploy capital where the exposure and terms and conditions are most attractive. The strategy is broad. proven the most opportune this quarter in our earthquake and in the marine and other property lines of business. Second, the breadth of our specialty portfolio provides ballast across insurance and macroeconomic cyclicality. Beyond the mix of ENS, admitted residential and commercial lines, products like surety and crop are not subject to traditional P&C insurance market cycles and as such afford us distinctive earning stability. Third, crop and casualty are now not only meaningful growth engines, but moreover contributors to our near and long-term success. Both product categories have strong quarters and have exceptional leadership orchestrating our business plans. Fourth, we remain disciplined in our approach to underwriting and reserving. We are building reserves across the book and only releasing redundancies in short-tail, mature lines of business. Furthermore, we are maintaining conservative gross and net line sizes as our books season in newer lines of business like casualty and surety. Fifth, our June 1st reinsurance placements were executed from a position of strength, enabling us to meaningfully reduce volatility, improve risk-adjusted returns, and importantly ensure consistency in our earnings base for the remainder of the year and into 2026. With that said, I will now offer further commentary on the performance and market conditions of our five product categories. Our earthquake franchise delivered consistent results with gross written premium growth of 9% year-over-year. This performance highlights the strength of our purposely structured portfolio of residential, small commercial, and large commercial earthquake insurance products. The strategy, which has been in place since our formation in 2014, allows us to achieve steady growth and returns regardless of the market environment. With an increasingly competitive commercial earthquake market, our current focus is directed towards the residential earthquake book. During the quarter, we wrote record new business premium that complemented the 87% policy retention and 10% inflation guard on the existing book. Residential earthquake continues to see growth opportunities from both the emitted and ENS markets, as well as new distribution partnerships. We are seeing increased competition in commercial earthquake, most notably in large commercial accounts, which saw an average rate decrease above 20%, albeit from record levels. We remain disciplined on pricing in terms of conditions, but are still allocating capital to large account business that meet risk-adjusted return targets. Small commercial business, which represents a third of the commercial earthquake book, is more insulated than the pricing pressure exhibited in the larger commercial E&S market. That said, it is still seeing rate decreases above 10%. While the conditions in the large commercial segment have softened, the strength of our residential book positioned us to sustained growth in 2025. For the remainder of the year, we expect high single-digit growth in our earthquake franchise, driven by the continued strength in residential earthquakes. Our Inland Marine and Other Property category grew 28% year-over-year, driven by a well-diversified mix of residential and commercial lines. Like the earthquake book, residential and residential-oriented admitted products were the best performers in the quarter. The admitted nature of the residential earthquake, Hawaiian hurricane, and residential builders' risk business requires considerable investment in systems, distribution, process, and infrastructure, and therefore has a more pronounced barrier to entry than commercial ENS segments. Our Hawaii hurricane line grew 39% as we continued to increase rates on the held book and selectively increase the exposure in our Laulima reciprocal. Our residential builder's risk products performed well in the quarter, highlighted by our admitted single location business, which grew 52% in the quarter as recently added underwriting talent was able to service new and existing distribution partners. The residential builder's risk market, both standard and high value, continues to present attractive opportunities. In June, we also announced a strategic partnership with Neptune Flood to enhance our residential flood offering. The partnership with Neptune will expand our flood exposure from geographically concentrated inland flood risk to a more diversified nationwide portfolio that leverages Neptune's market-leading technology and distribution reach. Importantly, reductions in wind exposure over recent years have freed the capacity to right flood risk in coastal areas without stacking exposure and increasing earnings volatility. While commercial property rates have softened in the builders risk and excess national property segment, we are still growing and generating compelling results. Builders risk grew more than 30% and renewed its quota share reinsurance program and improved economics from the expiring treaty. Excess national property grew over 50% in the quarter in the teeth of low teens rate decreases. The growth was driven by a 30% increase in submissions and a larger gross line. With significant prospects still available, we will continue to add underwriting talent in these commercial property lines. Casualty had another strong quarter of growth as gross written premium increased 119% year-over-year in the second quarter. The strongest performers in the quarter were the ENS casualty business led by David Sapia that continues to write buffer layer accounts that are seeing rate increases of 15%, environmental liability, which nearly tripled year-over-year, albeit from a modest base, and the real estate E&O franchise, which grew 87% year-over-year as we expanded our geographic reach and distribution footprint. On the whole, rate momentum remains healthy, and our risk appetite remains conservative, if not modest. In the second quarter, our average casualty net line was less than $1 million, with our largest line of business, E&S Casualty, having a net line of approximately 800,000. We also added stellar talent to our casualty team in the quarter that will both strengthen our underwriting bench and also launch new products. During the quarter, we welcomed Jason Porter to lead primary E&S Casualty, and Frank Castro to build out our healthcare liability business. Jason and Frank are well-regarded professionals with long-standing distribution and reinsurance relationships. These additions reinforce our confidence in sustaining profitable growth in the casualty market while remaining disciplined on attachment points, net lines, and rate. Our new surety business performed in line with expectations, growing at a pace consistent with our overall portfolio. Similar to the other casualty lines, we added experienced underwriting talent, expanded our geographic reach, and bolstered our distribution network and surety during the quarter. We remain highly confident in the long-term growth potential of this new franchise. Our casualty reserve approach remains conservative. Our approach is informed by consistent monitoring of loss emergence patterns, attachment points, and portfolio mix. As discussed in prior quarters, we continue to carry nearly 80% of our reserves as IV&R, well above industry standards. Maintaining this conservative stance reinforces the strength of our balance sheet and provides confidence in the stability and predictability of our future results. Our crop franchise generated $39 million of written premium in the second quarter compared to $2.2 million in the prior year period. The elevated result in the second quarter reflects scale, execution, and an earlier than expected reporting of acreage related to localized mild weather in geographies where we are strong. which ultimately shifted some premium volume forward from the third quarter. Our April acquisition of Advanced Ag Protection has been well received by the market. As such, we are adding experienced talent to enhance our sales, claims, and technology teams. These investments should expedite our long-term plan and crop. We remain confident in attaining our $200 million premium target this year and building the business to $500 million in the intermediate term. Fronting premium declined 38% year-over-year, reflecting the final full quarter of impact from the conclusion of our partnership with Omaha National. This headwind will be all but gone in the third quarter, allowing the underlying growth of our fronting portfolio to become more visible. Looking ahead, we will continue to add partners selectively, but fronting is not our highest strategic priority. As it pertains to reinsurance, the second quarter was equally productive and successful. We completed the placement of our June 1 Core Excessive Loss Treaty, achieving a 10% risk-adjusted rate decrease. better than the flat to down 5% we originally guided towards. This terrific result locks in favorable economics through 2025 and into the first five months of 2026. Our reinsurance coverage now extends to $3.5 billion for earthquake events, inclusive of $1.2 billion of catastrophe bonds, and $100 million for continental U.S. hurricane events. In addition, we introduced a stand-alone excess of loss treaty for Hawaii hurricane policies issued by Laulima providing up to $735 million in coverage. As a result, our core excess of loss reinsurance tower is over 95% earthquake-only coverage, which makes the program both attractive and scarce to property catastrophe reinsurers. Beyond securing the limit to support our earthquake and wind books, we also improved our risk profile by lowering our all perils excluding earthquake per occurrence retention to $11 million from $15.5 million. Maintained a $20 million retention for earthquake events, even with a 15% increase in limited exposure. And lastly, put in place a $1.5 million retention for Laulima. These retentions are considerably inside of our stated guidelines of less than a quarter of earnings and 5% of surplus. We also successfully renewed 11 other reinsurance treaties during the second quarter, including quota shares for two large lines of business and builders risk and our cyber fronting program. Both renewed at improved economics. Separately, I'm pleased to share that our board has authorized a two-year $150 million share repurchase program that permits us to opportunistically deploy capital and buy back our shares at levels that we believe are attractive. Stock buybacks will not impede our ability to capitalize on already identified or future market opportunities and that they could enhance our Palomar 2X strategic imperative. The buyback program simply demonstrates the conviction we have in our long-term strategic plan and the future of Palomar. In conclusion, we executed and delivered strong results this quarter, our 11th consecutive earnings beat, in the face of a softening commercial property market. The results are a testament to our distinct portfolio of specialty products. On the heels of the second quarter's performance, we are raising our 2025 adjusted net income guidance to $198 million to $208 million, from $195 million to $205 million, a midpoint that implies an adjusted ROE of 24%. With that, I'll turn the call over to Chris to discuss our financial results and guidance assumptions in more detail.