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Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Palomar Holdings, Inc. Reports Third Quarter 2021 Results 

November 3, 2021 GMT

LA JOLLA, Calif., Nov. 03, 2021 (GLOBE NEWSWIRE) -- Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”) reported net income of $0.2 million, or $0.01 per diluted share, for the third quarter of 2021 as compared to a net loss of $15.7 million, or $0.62 per diluted share, for the third quarter of 2020. Adjusted net income(1) was $1.7 million, or $0.07 per diluted share, for the third quarter of 2021 as compared to an adjusted net loss of $15.2 million, or $0.60 per diluted share, for the third quarter of 2020. 

The Company reported net income of $29.2 million, or $1.12 per diluted share, for the nine months ended September 30, 2021, as compared to $8.1 million, or $0.32 per diluted share, for the nine months ended September 30, 2020. Adjusted net income(1) was $34.2 million, or $1.31 per diluted share for the nine months ended September 30, 2021, as compared to $10.1 million, or $0.40 per diluted share, for the nine months ended September 30, 2020. 

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Third Quarter 2021 Highlights  

  • Gross written premiums increased by 47.9% to $152.3 million compared to $103.0 million in the third quarter of 2020 
  • Net income of $0.2 million compared to a net loss of $15.7 million in the third quarter of 2020 
  • Adjusted net income(1) of $1.7 million compared to an adjusted net loss of $15.2 million in the third quarter of 2020 
  • Total loss ratio of 44.0% compared to 97.7% in the third quarter of 2020 
  • Catastrophe loss ratio(1) of 27.0% compared to 86.9% in the third quarter of 2020
  • Combined ratio of 102.8% compared to 157.1% in the third quarter of 2020 
  • Adjusted combined ratio excluding catastrophe losses(1) of 73.2%, compared to 68.9% in the third quarter of 2020 
  • Annualized return on equity of 0.3%, compared to negative 17.0% in the third quarter of 2020  
  • Annualized adjusted return on equity(1) of 1.8%, compared to negative 16.5% in the third quarter of 2020 

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

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“Our third quarter results demonstrated continued execution of Palomar’s commitment to building a market leading specialty insurer,” commented Mac Armstrong, Chairman and Chief Executive Officer. “The quarter’s results are highlighted by year-over-year gross written premium increases of 48% most notably in our surplus lines, or E&S operation, which delivered $41.4 million of gross written premium and 22% sequential growth.  Additionally, our core earthquake business grew at a healthy rate of 32% as our innovative products continued to capitalize on attractive market conditions. While our results reflect the impact of catastrophe losses from Hurricanes Ida and Nicholas as well as a single excess liability policy shock loss, we take solace in the fact that approximately 61% of the gross losses from these events came from discontinued lines of business and are non-recurring in nature. It is also worth noting those discontinued operations contributed 34% of our gross attritional losses in the quarter.

Mr. Armstrong added, “Importantly, we embarked upon several initiatives during the quarter that will translate into profitable growth into 2022 and beyond. One such example is our entrance into the fronting sector of the U.S. insurance market, where we are partnering with reinsurers, insurance carriers, and managing general agents to design customized insurance programs. Our PLMR-FRONT initiative provides us access and deeper reach into attractive markets, high leverage of our talent and capital, and generates recurring fee income. Beyond PLMR-FRONT, we launched new products and made several terrific additions to our team who will broaden our product suite and addressable market.”  
  
Underwriting Results 
Gross written premiums increased 47.9% to $152.3 million compared to $103.0 million in the third quarter of 2020, while net earned premiums increased 54.0% compared to the prior year’s third quarter. Losses and loss adjustment expenses for the third quarter were $28.5 million due to attritional losses of $11.0 million and catastrophe losses of $17.5 million. The third quarter catastrophe loss results include Hurricanes Ida and Nicholas, the PG&E excess liability loss, and were partially offset by favorable prior period development.

The loss ratio for the quarter was 44.0%, comprised of a catastrophe loss ratio of 27.0%(1) and an attritional loss ratio of 17.0%, compared to a loss ratio of 97.7% during the same period last year comprised of a catastrophe loss ratio of 86.9%(1) and an attritional loss ratio of 10.8%. 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 loss(1) was approximately $1.8 million resulting in a combined ratio of 102.8% compared to underwriting loss of $24.0 million and a combined ratio of 157.1% during the same period last year. The Company’s adjusted combined ratio excluding catastrophe losses(1)  was 73.2% in the third quarter compared to 68.9% during the same period last year.

Investment Results 
Net investment income increased by 4.6% to $2.2 million compared to $2.1 million in the prior year’s third quarter. The year-over-year increase was primarily due to a higher average balance of investments held during the three months ended September 30, 2021, offset by lower yields on invested assets. Funds are generally invested in high quality securities, including government agency, asset and mortgage-backed securities, municipal and corporate bonds with an average credit quality of “A2/A”. The weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 4.04 years at September 30, 2021. Cash and invested assets totaled $467.0 million at September 30, 2021. During the current year third quarter, the Company recognized realized and unrealized losses of $0.3 million due to unrealized losses on equity securities as compared to realized and unrealized gains of $0.02 million in last year’s third quarter. 

Tax Rate 
The effective tax rate for the three months ended September 30, 2021 was negative 101.6% compared to 28.2% for the three months ended September 30, 2020.  For both periods, the effective tax rate differed from the statutory rate primarily due to the tax impact of the permanent component of employee stock option exercises.

Stockholders’ Equity and Returns 
Stockholders’ equity was $377.8 million at September 30, 2021, compared to $363.7 million at December 31, 2020. For the three months ended September 30, 2021, the Company’s annualized return on equity was 0.3% compared to negative 17.0% for the same period last year while annualized adjusted return on equity was 1.8% compared to negative 16.5% for the same period last year. 

The Company did not repurchase any of its shares during the current quarter relating to its previously announced $40 million share purchase authorization. For the current year to date, the Company has repurchased approximately $15.8 million or 239,000 shares of its common stock.

Fourth quarter 2021 Outlook 
For the fourth quarter of 2021, the Company expects to achieve adjusted net income of $17.0 million to $18.5 million, excluding any losses from a catastrophe.

Conference Call 
As previously announced, Palomar will host a conference call November 4, 2021, to discuss its third 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 Third 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 13723673. The telephonic replay will be available until 11:59 pm (Eastern Time) on November 11, 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 insurance subsidiaries, Palomar Specialty Insurance Company, Palomar Specialty Reinsurance Company Bermuda Ltd., and Palomar Excess and Surplus Insurance Company, have a financial strength rating of “A-” (Excellent) from A.M. Best.

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
Bill Bold
1-619-890-5972
bbold@plmr.com  

Investor Relations
Jamie Lillis
1-203-428-3223
investors@plmr.com    

Source: Palomar Holdings, Inc.

Summary of Operating Results

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

                
  Three months ended        
  September 30,        
     2021     2020     Change     % Change
  ($ in thousands, except per share data) 
Gross written premiums $152,332  $102,967  $49,365  47.9%
Ceded written premiums  (58,073)  (41,570)  (16,503 39.7%
Net written premiums  94,259   61,397   32,862  53.5%
Net earned premiums  64,720   42,020   22,700  54.0%
Commission and other income  1,018   816   202  24.8%
Total underwriting revenue (1)  65,738   42,836   22,902  53.5%
Losses and loss adjustment expenses  28,475   41,060   (12,585) (30.7)%
Acquisition expenses  26,412   17,976   8,436  46.9%
Other underwriting expenses  12,652   7,805   4,847  62.1%
Underwriting income (loss) (1)  (1,801  (24,005)  22,204  (92.5)%
Net investment income  2,236   2,138   98  4.6%
Net realized and unrealized gains (losses) on investments  (313  24   (337) (1,404.2)%
Income (loss) before income taxes  122   (21,843)  21,965  (100.6)%
Income tax expense  (124  (6,158)  6,034  (98.0)%
Net income (loss) $246  $(15,685) $15,931  (101.6)%
Adjustments:                  
Stock-based compensation expense  1,525   551   974  176.8%
Amortization of intangibles  115      115  NM 
Tax impact  (166)  (101)  (65) NM 
Adjusted net income (loss) (1) $1,720  $(15,235) $16,955  (111.3)%
Key Financial and Operating Metrics                   
Annualized return on equity  0.3%    (17.0)%           
Annualized adjusted return on equity (1)  1.8%    (16.5)%           
Loss ratio  44.0%    97.7%           
Expense ratio  58.8%    59.4%           
Combined ratio  102.8%    157.1%           
Adjusted combined ratio (1)  100.2%    155.8%         
Diluted earnings per share $0.01  $(0.62       
Diluted adjusted earnings per share (1) $0.07  $(0.60       
Catastrophe losses $17,487  $36,512        
Catastrophe loss ratio (1)  27.0%    86.9%         
Adjusted combined ratio excluding catastrophe losses (1)  73.2%    68.9%         
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 nine months ended September 30, 2021 and 2020:

                
  Nine months ended        
  September 30,         
     2021     2020     Change     % Change 
  ($ in thousands, except per share data) 
Gross written premiums $385,267  $258,268  $126,999  49.2%
Ceded written premiums  (153,005  (101,264)  (51,741 51.1%
Net written premiums  232,262   157,004   75,258  47.9%
Net earned premiums  165,988   116,145   49,843  42.9%
Commission and other income  2,735   2,492   243  9.8%
Total underwriting revenue (1)  168,723   118,637   50,086  42.2%
Losses and loss adjustment expenses  31,288   46,901   (15,613 (33.3)%
Acquisition expenses  68,150   45,909   22,241  48.4%
Other underwriting expenses  39,438   24,732   14,706  59.5%
Underwriting income (1)  29,847   1,095   28,752  2,625.8%
Net investment income  6,649   6,287   362  5.8%
Net realized and unrealized gains (losses) on investments  (752  1,243   (1,995 (160.5)%
Income before income taxes  35,744   8,625   27,119  314.4%
Income tax expense  6,529   523   6,006  1,148.4%
Net income $29,215  $8,102  $21,113  260.6%
Adjustments:                  
Expenses associated with transactions and stock offerings  411   708   (297 NM 
Stock-based compensation expense  3,370   1,457   1,913  131.3%
Amortization of intangibles  704      704  NM 
Expenses associated with catastrophe bond, net of rebate  1,698   399   1,299  NM 
Tax impact  (1,156  (534  (622 NM 
Adjusted net income (1) $34,242  $10,132  $24,110  238.0%
Key Financial and Operating Metrics                   
Annualized return on equity  10.5%    3.7%           
Annualized adjusted return on equity (1)  12.3%    4.7%           
Loss ratio  18.8%    40.4%           
Expense ratio  63.2%    58.7%           
Combined ratio  82.0%    99.1%           
Adjusted combined ratio (1)  78.3%    96.8%         
Diluted earnings per share $1.12  $0.32        
Diluted adjusted earnings per share (1) $1.31  $0.40        
Catastrophe losses $6,719  $36,512        
Catastrophe loss ratio (1)  4.0%    31.4%         
Adjusted combined ratio excluding catastrophe losses (1)  74.2%    65.4%         
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)

       
     September 30,     December 31, 
  2021 2020
  (Unaudited)   
Assets        
Investments:        
Fixed maturity securities available for sale, at fair value (amortized cost: $397,955 in 2021; $381,279 in 2020) $408,046 $397,987
Equity securities, at fair value (cost: $17,829 in 2021; $22,291 in 2020)  17,358  24,322
Total investments  425,404  422,309
Cash and cash equivalents  41,405  33,538
Restricted cash  229  248
Accrued investment income  2,506  2,545
Premium receivable  75,543  48,842
Deferred policy acquisition costs  53,995  35,481
Reinsurance recoverable on unpaid losses and loss adjustment expenses  129,044  94,566
Reinsurance recoverable on paid losses and loss adjustment expenses  54,431  10,162
Ceded unearned premiums  42,949  35,031
Prepaid expenses and other assets  40,212  34,119
Property and equipment, net  578  739
Intangible assets, net  10,512  11,512
Total assets $876,808 $729,092
Liabilities and stockholders' equity        
Liabilities:        
Accounts payable and other accrued liabilities $21,551 $20,730
Reserve for losses and loss adjustment expenses  175,687  129,036
Unearned premiums  257,667  183,489
Ceded premium payable  32,426  22,233
Funds held under reinsurance treaty  7,282  4,515
Deferred tax liabilities, net  4,418  5,376
Total liabilities  499,031  365,379
Stockholders' equity:        
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020    
Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,415,299 and 25,525,796 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively  3  3
Additional paid-in capital  316,352  310,507
Accumulated other comprehensive income  8,102  13,246
Retained earnings  53,320  39,957
Total stockholders' equity  377,777  363,713
Total liabilities and stockholders' equity $876,808 $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  Nine Months Ended
  September 30,   September 30, 
     2021     2020     2021     2020
Revenues:                    
Gross written premiums $152,332  $102,967  $385,267  $258,268 
Ceded written premiums  (58,073  (41,570  (153,005  (101,264)
Net written premiums  94,259   61,397   232,262   157,004 
Change in unearned premiums  (29,539  (19,377  (66,274  (40,859)
Net earned premiums  64,720   42,020   165,988   116,145 
Net investment income  2,236   2,138   6,649   6,287 
Net realized and unrealized gains (losses) on investments  (313  24   (752  1,243 
Commission and other income  1,018   816   2,735   2,492 
Total revenues  67,661   44,998   174,620   126,167 
Expenses:                    
Losses and loss adjustment expenses  28,475   41,060   31,288   46,901 
Acquisition expenses  26,412   17,976   68,150   45,909 
Other underwriting expenses  12,652   7,805   39,438   24,732 
Total expenses  67,539   66,841   138,876   117,542 
Income (loss) before income taxes  122   (21,843  35,744   8,625 
Income tax expense  (124  (6,158  6,529   523 
Net income (loss)  246   (15,685  29,215   8,102 
Other comprehensive income, net:                    
Net unrealized gains (losses) on securities available for sale for the three and nine months ended September 30, 2021 and 2020, respectively  (1,655  909   (5,144  5,752 
Net comprehensive income (loss) $(1,409 $(14,776 $24,071  $13,854 
Per Share Data:                    
Basic earnings per share $0.01  $(0.62)  $1.15  $0.33 
Diluted earnings per share $0.01  $(0.62)  $1.12  $0.32 
                 
Weighted-average common shares outstanding:                
Basic  25,388,630   25,492,274   25,473,006   24,654,722 
Diluted  26,043,680   25,492,274   26,133,664   25,384,518 

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 September 30,   Nine Months Ended September 30, 
  2021  2020  2021  2020 
  ($ in thousands)  ($ in thousands) 
     % of     % of     % of     % of 
  Amount GWP  Amount GWP  Amount GWP  Amount GWP 
Product                                                        
Residential Earthquake $50,075 32.9%   $40,507 39.3% $128,165 33.3%   $103,503 40.1%
Commercial Earthquake  27,433 18.0%    18,061 17.5%  66,052 17.1%    40,727 15.8%
Specialty Homeowners  19,881 13.1%    17,048 16.6%  53,018 13.8%    38,461 14.9%
Inland Marine  19,532 12.8%  4,406 4.3%  39,047 10.1%    9,747 3.8%  
Hawaii Hurricane  8,996 5.9%    4,360 4.2%  22,921 5.9%    10,296 4.0%
Commercial All Risk  6,867 4.5%    12,467 12.1%  30,032 7.8%    39,765 15.4%
Residential Flood  3,228 2.1%    2,170 2.1%  8,377 2.2%    5,728 2.2%
Other  16,320 10.7%    3,948 3.9%  37,655 9.8%    10,041 3.8%
Total Gross Written Premiums $152,332 100.0%   $102,967 100.0% $385,267 100.0%   $258,268 100.0%
                         
  Three Months Ended September 30,   Nine Months Ended September 30, 
  2021  2020  2021  2020 
  ($ in thousands)  ($ in thousands) 
     % of     % of     % of     % of 
  Amount GWP  Amount GWP  Amount GWP  Amount GWP 
State                                                        
California $72,505 47.6%   $52,960 51.4% $180,142 46.8%   $124,131 48.1%
Texas  19,715 13.0%    20,460 19.9%  48,142 12.5%    55,047 21.3%
Hawaii  10,342 6.8%    5,097 5.0%  26,312 6.8%    11,990 4.6%
Florida  7,203 4.7%    685 0.7%  24,958 6.5%    685 0.3%
Washington  7,180 4.7%    4,340 4.2%  15,931 4.1%    10,002 3.9%
Oregon  3,964 2.6%    2,912 2.8%  9,686 2.5%    7,298 2.8%
North Carolina  3,719 2.4%    2,839 2.8%  11,871 3.1%    7,131 2.8%
Illinois  2,893 1.9%    1,575 1.5%  8,668 2.2%    4,416 1.7%
Other  24,811 16.3%    12,099 11.7%  59,557 15.5%    37,568 14.5%
Total Gross Written Premiums $152,332 100.0%   $102,967 100.0% $385,267 100.0%   $258,268 100.0%

During the three months ended September 30, 2021, PSIC accounted for $110.9 million or approximately 72.8% of our gross written premiums and PESIC accounted for $41.4 million or approximately 27.2% of our gross written premiums.

During the nine months ended September 30, 2021, PSIC accounted for $286.0 million or approximately 74.2% of our gross written premiums and PESIC accounted for $99.3 million or approximately 25.8% 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          Nine Months Ended        
  September 30,           September 30,         
     2021     2020     Change     % Change  2021     2020     Change     % Change
  ($ in thousands)  ($ in thousands)
Gross earned premiums $117,276  $79,428  $37,848  47.7%  $311,088  $215,266  $95,822  44.5%
Ceded earned premiums  (52,556  (37,408  (15,148 40.5%   (145,100  (99,120  (45,980 46.4%
Net earned premiums $64,720  $42,020  $22,700  54.0%  $165,988  $116,146  $49,842  42.9%
                                
Net earned premium ratio  55.2%   52.9%           53.4%   54.0%        

Loss detail

                                
  Three Months Ended          Nine Months Ended        
  September 30,           September 30,         
     2021     2020     Change     % Change  2021     2020     Change     % Change
  ($ in thousands)  ($ in thousands)
Catastrophe losses $17,487  $36,512  $(19,025 (52.1)   $6,719  $36,512  $(29,793 (81.6) 
Non-catastrophe losses  10,988   4,548   6,440  141.6%   24,569   10,389   14,180  136.5%
Total losses and loss adjustment expenses $28,475  $41,060  $(12,585 (30.7)%  $31,288  $46,901  $(15,613 (33.3)%
                                
                
  Three Months Ended September 30,  Nine Months Ended September 30, 
     2021     2020  2021     2020
   (in thousands)   (in thousands)
Reserve for losses and LAE net of reinsurance recoverables at beginning of period $23,633  $7,087  $34,470  $3,869
Add: Incurred losses and LAE, net of reinsurance, related to:               
Current year  28,286   40,803   34,202   46,867
Prior years  189   257   (2,914  34
Total incurred  28,475   41,060   31,288   46,901
Deduct: Loss and LAE payments, net of reinsurance, related to:                   
Current year  2,787   8,232   3,407   9,754
Prior years  2,678   375   15,708   1,476
Total payments  5,465   8,607   19,115   11,230
Reserve for losses and LAE net of reinsurance recoverables at end of period  46,643   39,540   46,643   39,540
Add: Reinsurance recoverables on unpaid losses and LAE at end of period  129,044   92,537   129,044   92,537
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period $175,687  $132,077  $175,687  $132,077

Reconciliation of Non-GAAP Financial Measures

For the three and nine months ended September 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  Nine Months Ended
  September 30,   September 30, 
     2021     2020     2021     2020
  (in thousands)  (in thousands)
Total revenue $67,661  $44,998  $174,620  $126,167 
Net investment income  (2,236  (2,138  (6,649  (6,287)
Net realized and unrealized (gains) losses on investments  313   (24  752   (1,243)
Underwriting revenue $65,738  $42,836  $168,723  $118,637 

Underwriting income (loss)

                 
  Three Months Ended  Nine Months Ended
  September 30,   September 30, 
     2021     2020     2021     2020
  (in thousands)  (in thousands)
Income before income taxes $122     $(21,843 $35,744     $8,625 
Net investment income  (2,236  (2,138  (6,649  (6,287)
Net realized and unrealized gains (losses) on investments  313   (24  752   (1,243)
Underwriting income (loss) $(1,801 $(24,005 $29,847  $1,095 

Adjusted net income (loss)

                 
  Three Months Ended  Nine Months Ended
  September 30,   September 30, 
     2021     2020     2021     2020
  (in thousands)  (in thousands)
Net income (loss) $246     $(15,685 $29,215     $8,102 
Adjustments:                    
Expenses associated with transactions and stock offerings        411   708 
Stock-based compensation expense  1,525   551   3,370   1,457 
Amortization of intangibles  115      704    
Expenses associated with catastrophe bond, net of rebate        1,698   399 
Tax impact  (166  (101  (1,156  (534)
Adjusted net income (loss) $1,720  $(15,235 $34,242  $10,132 

Annualized adjusted return on equity

                 
  Three Months Ended  Nine Months Ended
  September 30,   September 30, 
     2021     2020     2021     2020 
  ($ in thousands)  ($ in thousands) 
                     
Annualized adjusted net income    $6,880     $(60,940)        $45,656     $13,509    
Average stockholders' equity $377,260  $368,568  $370,745  $290,225 
Annualized adjusted return on equity  1.8%    (16.5)%  12.3%    4.7%

Adjusted combined ratio

                 
  Three Months Ended  Nine Months Ended
  September 30,   September 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 $66,521  $66,025  $136,141  $115,050 
Denominator: Net earned premiums $64,720  $42,020  $165,988  $116,145 
Combined ratio  102.8%    157.1%    82.0%    99.1%  
Adjustments to numerator:                
Expenses associated with transactions and stock offerings $  $  $(411 $(708
Stock-based compensation expense  (1,525  (551  (3,370  (1,457
Amortization of intangibles  (115     (704   
Expenses associated with catastrophe bond, net of rebate        (1,698  (399)
Adjusted combined ratio  100.2%    155.8%    78.3%    96.8%  

Diluted adjusted earnings per share

                
  Three Months Ended  Nine Months Ended
  September 30,   September 30, 
     2021     2020     2021     2020
  (in thousands, except per share data)  (in thousands, except per share data)
                    
Adjusted net income (loss)    $1,720     $(15,235)      $34,242     $10,132
Weighted-average common shares outstanding, diluted $26,043,680   25,492,274   26,133,664   25,384,518
Diluted adjusted earnings per share $0.07  $(0.60 $1.31  $0.40

Catastrophe loss ratio

                 
  Three Months Ended  Nine Months Ended 
  September 30,   September 30,  
  2021     2020  2021     2020 
  ($ in thousands)  ($ in thousands) 
Numerator: Losses and loss adjustment expenses $28,475  $41,060  $31,288  $46,901 
Denominator: Net earned premiums $64,720  $42,020  $165,988  $116,145 
Loss ratio  44.0%    97.7%    18.8%    40.4%  
                 
Numerator: Catastrophe losses $17,487  $36,512  $6,719  $36,512 
Denominator: Net earned premiums $64,720  $42,020  $165,988  $116,145 
Catastrophe loss ratio  27.0%    86.9%    4.0%    31.4%  

Adjusted combined ratio excluding catastrophe losses

                 
  Three Months Ended  Nine Months Ended 
  September 30,   September 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 $66,521  $66,025  $136,141  $115,050 
Denominator: Net earned premiums $64,720  $42,020  $165,988  $116,145 
Combined ratio  102.8%    157.1%    82.0%    99.1%  
Adjustments to numerator:                
Expenses associated with transactions and stock offerings $  $  $(411 $(708
Stock-based compensation expense  (1,525  (551  (3,370  (1,457
Amortization of intangibles  (115     (704   
Expenses associated with catastrophe bond, net of rebate        (1,698  (399
Catastrophe losses  (17,487  (36,512  (6,719  (36,512
Adjusted combined ratio excluding catastrophe losses  73.2%    68.9%    74.2%    65.4%  

Tangible Stockholders’ equity

         
  September 30,   December 31,
     2021     2020
  (in thousands)
Stockholders' equity $377,777     $363,713 
Intangible assets  (10,512  (11,512)
Tangible stockholders' equity $367,265  $352,201