Palomar Holdings boosts seismic line reinsurance

Palomar Holdings boosts seismic line reinsurance Insurance Business Australia Reinsurance Palomar Holdings promotes seismic line reinsurance and covers catastrophes, earthquakes and hurricanes in the US Reinsurance

Written by Kenneth Arullo

Palomar Holdings announced the successful completion of certain reinsurance programs effective June 1, 2024, and raised its full-year 2024 adjusted net income guidance.

The company secured approximately $400 million in additional coverage to support the growth of its earthquake insurance line. Palomar's total reinsurance coverage now stands at $3.06 billion for earthquake events, $735 million for hurricane events in Hawaii, and $117.5 million for all continental hurricane events in the United States.

This reinsurance program provides sufficient capacity for growth in these business lines and exceeds the maximum loss potential in the peak area of ​​1:250 a year.

Palomar's per-event retention was set at $15.5 million for hurricane events, down from $17.5 million the previous year, and $20 million for earthquake events. These levels are within management's guidance of less than a quarter of adjusted net income and less than 5% of the company's surplus on an after-tax basis – $420 million of the $3.06 billion seismic limit was obtained through new catastrophe bonds, the Torrey Pines Re series. 2024-1. This represents the fifth insurance-linked securities (ILS) transaction sponsored by Palomar.

Mac Armstrong (pictured above), Chairman and CEO of Palomar, commented on the recent reinsurance renewal.

“We are very pleased with the successful offering on June 1 and very grateful for the continued support from our reinsurance partners and ILS,” he said. “We have renewed our reinsurance program with better terms and rates than our initial expectations and reduced our exposure to hurricane events. As a result, we are raising our full-year 2024 adjusted net income guidance to a range of $122 million to $128 million from the previously indicated range of It ranges from $113 million to $118 million.

Other highlights of the company's reinsurance program include $895 million of multi-year ILS capacity providing diversified secured reinsurance capital, a reinsurance committee of 90 reinsurers and ILS investors including several new reinsurers, all with “A-” (Excellent) or better financial strength. Rating of AM Best and/or S&P or fully guaranteed, prepaid reinsurance operations for virtually all classes that include a reinsurance clause, limiting net pre-tax loss to $15.5 million for hurricane events and $20 million for earthquake events, with reinsurance premiums Extra modest right.

John Knutzen, chief risk officer at Palomar, added that the broad support from the reinsurance market reflects a well-coordinated business mix and risk profile aimed at delivering more stable and predictable outcomes.

“We appreciate all of our existing and new reinsurance partners who helped us successfully complete our June 1 placement,” Knutzen said.

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