Palomar Holdings, Inc.

Good morning and welcome to Palomar Holdings Incorporated's first quarter 2026 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference line will 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 May 14, 2026. 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 the quarterly report on Form 10Q filed with the Securities Exchange Commission. We do not undertake any duty to update such forward-looking statements. Additionally, during today's calls, we will discuss some 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, everyone. I'm very pleased with our first quarter results as they reflect a strong start to the year and are another example of our team's ability to deliver consistent, profitable growth. Our results reinforce the durability of our model and the uniqueness of our one-of-one specialty product portfolio. and its ability to generate compelling risk-adjusted returns. Our book consists of a broad array of specialty products and is truly diverse. The following breakdown of Q1 in-force premium illustrates this diversity. A 57-43% split between admitted and E&S premium. A 60-40 split between property, including earthquake and casualty premium. A 45-55 split between residential and commercial property. And 90% of the Q1 premium are from lines not impacted by the traditional P&C market cycle. Our differentiated portfolio is intentionally built to perform through any market cycle. We are well positioned to deploy capital toward more desirable opportunities while reducing exposure in areas where market conditions or loss trends are less favorable. Our strong first quarter results reflect this capability. Looking closely at the quarter, gross written premium increased 42% year over year. Importantly, growth was broad-braced across all five product categories, including earthquake. Profitability and capital efficiency also remained strong, highlighted by adjusted net income growth of 23%, an adjusted combined ratio of 76%, and an adjusted return on equity of 27%. These results mark our 14th consecutive quarterly earnings beat, extending the track record of consistent performance in our business. In recognition of our belief in the long-term opportunities we possess, our ability to execute the Palomar 2X strategic imperative, and what we feel is the depressed value of our shares, we repurchased 190,255 shares in the quarter. Furthermore, our board authorized a new two-year, $200 million share repurchase program on May 6th. I'd like to briefly talk about the current market conditions in our business. The marketplace is constantly changing and pricing varies significantly between different segments. In the property sector, competition remains strong, especially for larger commercial accounts where prices are still declining by double digits. Our residential business lines continue to offer rate stability, balance, and diversification, notably in the... You are now in talk mode. ...double-digit rate increases. Casualty pricing varies, with some lines, like healthcare liability, which has rates of 35% experiencing strong increases... while other casualty lines, like cyber, face intense competition from new interns or standard carriers returning to the market. We maintain disciplined underwriting practices and are prepared to non-renew accounts if pricing fails to align with our return requirements. Uncorrelated growth vectors in the surety and credit and crop space fortify this conviction. Overall, we believe our portfolio of specialty products You are now in silent mode. Turning to our earthquake franchise, which is 58% residential and 63% admitted, we delivered 3% year-over-year growth rate and premium growth despite continued pressure on commercial earthquake. Pricing in commercial earthquake remains competitive with rates decreasing approximately 18% on renewals and new business coming in at a higher average annual loss than the existing portfolio. We are pursuing opportunities outside peak zones and are willing to increase line size on high-quality existing large accounts at renewal when returns are compelling. Importantly, we remain committed to underwriting discipline and are not willing to pursue premium at the expense of profitability, especially on new business. Our residential earthquake business is performing well. As with our other admitted property products, market conditions remain favorable with steady new business production, stable rates, constructive engagement with the California Earthquake Authority, and participating insurers, and a healthy partnership pipeline. The balance of this line of business is clearly seen in our stellar premium retention, which was approximately 97% on our flagship emitted product in the first quarter. Looking ahead to remain confident in our earthquake outlook and our ability to deliver growth as well as strong profitability for full year 2026. In inland marine and property, gross rate and premiums grew 47%, up from 30% in Q4. Like Earthquake, the balance of our specialty portfolio across residential and commercial lines, a 34% to 66% split respectively, as well as admitted and ENS products, a 70% to 30% split respectively, is fueling the success of this line. As it pertains to our commercial product suite, Builder's Risk remains a key contributor with standout performance this quarter from our admitted portfolio. We are expanding our underwriting footprint, including the recent opening of an underwriting office in the Northeast. As well, we are pleased with the progress of our newly launched construction engineering line. With strong reinsurance backing, new team members, and enhanced infrastructure, our first quarter results are performing well above our initial plan. As a reminder, this business also provides an entry point into the data center market, which we view as an exciting long-term growth opportunity. The excess national property and large county and its property lines face the most intense competitive pressure, with rate decreases remaining in a range of 12 to 15%. Overall, our commercial property book is generating attractive risk-adjusted returns. Our seasoned underwriters are focused on retaining renewals and selectively writing new business. Our residential property practice was led by the Hawaii hurricane business. Laulima continues to perform well, benefiting from limited competition, strong rate adequacy, and embedded growth, which will be maintained by a recently approved 12.5% rate increase. We are encouraged by the progress of our flood partnership with Neptune. The growth and improved spread of risk from Neptune allowed us to endure elevated flood activity in Hawaii. Fortunately, prior period catastrophe gains offset flood losses, so our $8 to $12 million annual catastrophe load was not subsumed by the catastrophe activity in the first quarter. Turning to the casualty business, gross written premium increased approximately 55% year-over-year, reflecting slower sequential growth from the fourth quarter of 2025. Strong performing lines include environmental liability, primary general liability, and contractors general liability. Overall casualty growth in the quarter was driven by geographic and distribution expansion, recently added underwriting talent getting to scale, rate increases, as well as the launch of a sports and entertainment general liability program with a longstanding MGA partner. Our MGA strategy is founded on forming partnerships with a carefully selected group of established market leaders in business lines where we possess internal expertise. This approach allows our programs to be effectively managed by and seamlessly integrated with our in-house underwriting teams. As I mentioned earlier, conditions remain dynamic and increasingly nuanced in the casualty space. We continue to see rate increases in healthcare liability, primary contractors general liability, E&S casualty, and environmental liability. That said, the rate increases are moderating in several lines due to increased competition from Medicare's and new market entrants. Since our entry into the market, we have actively managed limits, attachment points, and exposures with a focus on lower net line sizes and avoiding more volatile classes with elevated severity risk. We are comfortable pulling back where underwriting conditions deteriorate. In addition, We maintain a conservative reserving philosophy with more than 85% of casualty reserves held as IBNR. The increased seating commissions earned on our casualty reinsurance renewals this year reinforce our confidence and validate the quality of underwriting in the portfolio. In an evolving market, we take confidence in the expertise of our casualty underwriting team who diligently manage our portfolio, maintain disciplined approaches to pricing and limit management, and rigorously apply clear walk-away criteria for each individual account. Turning to crop, we're off to a strong start for the year. Gross written premiums rose 82% year over year. Over the course of last year, we added marketing, underwriting, and claims professionals who focused on crop products and territories that are written in the first and fourth quarters of the year. The first quarter of 2026 benefited from this experienced talent who drove strong production in winter wheat and other off-cycle crop insurance products. Lastly, we are benefiting from strong sales of our enhanced coverage option products driven by higher demand resulting from increased subsidies under the one big beautiful bill. Commodity prices established in February remain generally in line with last year. We do not expect any meaningful impact from higher energy prices or tariffs. Current drought conditions put pressure on results in winter wheat in states such as Oklahoma and Kansas and PRF products in Mountain West and Plain states. That said, these results should be partially mitigated by our risk-sharing structure. Importantly, most of our retained exposure is tied to Midwest corn and soybeans, where planting is just beginning. Looking ahead, we now expect to deliver 35% growth versus the previously expressed level of 30% and nice profitability in 2026. Surety and credit, our newest product category, increased by 131% year over year. This segment includes our FIA and Gray surety acquisitions, along with other surety and credit insurance we write on an assumed reinsurance basis. The integration of Gray, which is now rebranded as Palomar Casualty and Surety, is going well, providing a strong foundation to build a leading franchise. The Palomar Surety leadership team has acclimated well to our organization, and they continue to bolster their already strong team of underwriters with key hires in targeted expansion markets. A key milestone Palomar surety achieved this quarter was the receipt of a T-listing authority for the group of more than $72 million. This will create an exciting long-term opportunity to write more bonds and federal projects in the years to come. That level of authority will increase our relevance to a larger distribution channel and attract new talent. We now have a surety platform with meaningful scale and geographic reach and a clear path to becoming a top 20 surety market in time. As previously mentioned, surety and credit alongside crop further diversifies our earnings base and reduces volatility caused by the traditional P&C cycle. In reinsurance, we completed six placements, three casualty and three property treaties, all with better economics and successfully issued our latest Torrey Pines re-catastrophe bond. On the property side, we were able to secure incremental capacity for the builder's risk, including construction engineering and excess national property lines of business. Besides the strong economics earned through the treaty, this added capacity further expands our ability to offer larger limits and opens new admitted market retail distribution channels in the case of builder's risk. The casualty quota shares renewed at higher seating commissions while maintaining their expiring session percentages. Again, a testament to the performance of these casualty lines. Last week, we completed our seventh Torrey Pines recatastrophe bond issuance, securing $410 million a fully collateralized multi-year reinsurance protection for California earthquake and, for the first time, a standalone Hawaii hurricane. On a risk-adjusted basis, pricing was down approximately 15%, which is in line with the assumption at the higher end of our adjusted net income guidance range. Before concluding, I want to touch on our organizational effort to leverage AI across Palomar. As a highly regulated and asset-intensive business, we view AI not as a source of obsolescence but rather and to the contrary, is an important tool to enhance efficiency, strengthen decision-making, and support our people. AI-enabled processes and tools are in use across departments such as underwriting, actuary, and analytics, reinsurance, customer service, and operations, technology, and claims. They are enhancing operational workflows, improving risk selection, accelerating system development times, and automating more clerical and perfunctory tasks. Our approach combines the use of innovative third-party tools with internally developed solutions, and these initiatives are already generating measurable gains. Advancing AI capabilities will remain a key strategic priority as we continue to scale the business. In summary, we are confident in our strong start to 2026 and our ability to sustain profitable growth and attractive returns in this market or any for that matter. As a result, we are increasing our adjusted net income guidance from $260 million to $275 million to $262 million to $278 million. As an aside, this marks our eighth adjusted net income guidance increase since 2024. With that, I'll turn the call over to Chris to discuss our financial results and guidance assumptions in more detail.