Peter Phipson's questions to Palomar Holdings Inc (PLMR) leadership • Q4 2024
Question
An analyst from Evercore ISI asked for more detail on how the 6/1 reinsurance renewal pricing assumption impacts the 2025 outlook and questioned the elasticity of earthquake insurance demand relative to rising homeowners insurance costs in California.
Answer
CEO Mac Armstrong explained that reinsurance is the largest expense, so pricing better than the conservative flat-to-down-5% assumption would be a significant 'boon to the results.' Executive T. Uchida quantified that the prior year's spend was ~$262 million, providing a baseline for potential savings. Armstrong also noted that the underpenetrated earthquake market sees increased demand from heightened awareness, and the pullback of other insurers from the California Earthquake Authority (CEA) creates a major growth opportunity that should offset pressures from rising homeowner costs.