Palomar Holdings, Inc. Common stock KBW Insurance Conference 2026

Yeah, thanks, Mayo. It's a pleasure to be here. Good to see everybody. As we think about Palomar, and to set up the conversation for the next half hour or so, really think of Palomar as a specialty insurance platform that has really diversified, particularly over the last 5 or 6 years. We are not just in property, but we're in casualty. We've built a surety business, crop insurance business. Really nice and diversified, both on commercial lines, personal lines, admitted, ENS, and really geographic scope throughout the U.S. So, really delivering on strong diversification, consistent earnings, and really that's translated into 15 consecutive earnings beats.

We've raised our guidance for adjusted net income 3 times so far in 2026, and we're very confident in continuing to deliver on what we refer to as Palomar 2X, which is an operating philosophy of doubling adjusted net income in a 3-to-5 year timeframe. So as we look at ourselves in 2026, really pleased with the composition of the book and our ability to continue to execute.

Yeah, sure. I'll start and Chris can jump in. As we think about leveraging AI within Palomar, it's really across three primary areas. One obviously is underwriting. We are an underwriting shop, so think about how we can leverage it for underwriting. Portfolio management and portfolio analytics would be the second area. And then operational efficiency, which a lot of people are talking about. As we look across those areas, we are employing and deploying our AI in a number of different ways. A few concrete examples that we can speak of. One, we talked about it in our last earnings call, but Palomar.Farm, the new technology platform that we've rolled out for crop insurance.

I'm sure we'll talk about crop more later, but really one of the ways in which we can differentiate ourselves in the crop market is not through pricing, because that's set by the U.S. government, or agent commissions. It's really kind of three things. It's one is customer service and relationships, second is claims adjusting, and then the third is technology. By bringing an AI-forward new platform into the market for crop insurance is really a differentiator, and AI's helped us do that and will continue to keep us ahead of the curve from a modernization standpoint. Second is on the underwriting side, improved AI-enabled underwriting workbenches for our underwriters across a number of different products. As we get into the operational efficiencies, we're bringing in AI into our operational workflows and customer service.

And then lastly, really on the portfolio analytics side, what we're able to do from a catastrophe modeling, obviously catastrophe modeling's a big part of what we do on the property and particularly the earthquake side of our business. Really able to enrich the data that we're using for catastrophe modeling and improve our portfolio analytics. That then translates into better risk selection and more appropriate pricing for those risks.

Okay. I'd say the only place you're probably not going to see it, or not to expect to see it, would be acquisition expense, right?

From our standpoint, you're going to see top-line performance improve. You're going to see better loss ratio, better other underwriting expenses, I don't know what to call it, growing at a different rate than the top line. I'd even expect to see it in investment income, right? Ultimately, you're going to see it for better improvement in adjusted net income, right? The Palomar 2X philosophy, AI will help that, where we can double every three to five years. But I would expect to see it almost throughout the P&L, as Jon kind of described, right? Except for acquisition expense. Maybe if we start a direct-to-consumer play at some point in time, maybe you'd see it there.

Overall, based on the way we're structured right now, I wouldn't expect to see it in acquisition expense. But every other line, you should see a benefit.

Okay. I think from our underwriters' perspectives, really looking forward to being able to do more.

So, any one of our P&L owners, say it was the individual that leads our builders risk, he's not looking forward to our AI enablement to be able to cut three heads next year. He's thinking about how he can do more with the team that he has and continue to grow in a very profitable fashion. So it's really more of the excitement around what we can do by being better enabled with technology than it is to, how are we going to cut heads?