Schedule II

12 Months Ended

Dec. 31, 2022

Schedule II

Schedule II

Schedule II

Palomar Holdings, Inc. and Subsidiaries

Balance Sheets (Parent Company)

(In Thousands, except shares and par value data)

	December 31,		December 31,
	2022		2021
Assets
Investments:
Fixed maturity securities available for sale, at fair value (amortized cost: $51,993 in 2022, $50,916 in 2021)	$	45,511	$	49,221
Equity securities, at fair value: (cost: $1,725 in 2022, $1,725 in 2021)		1,626		1,839
Total investments		47,136		51,060
Cash and cash equivalents		781		4,437
Accrued investment income		320		313
Prepaid expenses and other assets		2,267		966
Receivables from subsidiaries		3,689		2,322
Investment in subsidiaries		405,524		365,018
Total assets	$	459,718	$	424,116
Liabilities and Stockholders' equity
Liabilities:
Accounts payable and other liabilities	$	7,359	$	4,672
Payables to subsidiaries		57,324		11,102
Federal income tax payable		10,282		10,265
Deferred tax liabilities		—		3,908
Total liabilities		74,965		29,947
Stockholders' equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2022 and December 31, 2021, 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021		—		—
Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,027,467 and 25,428,929 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively		3		3
Additional paid‑in capital		333,557		318,902
Accumulated other comprehensive income (loss)		(36,514)		5,312
Retained earnings		87,708		69,952
Total stockholders' equity		384,753		394,169
Total liabilities and stockholders' equity	$	459,718	$	424,116

See accompanying notes.

Schedule II

Palomar Holdings, Inc. and Subsidiaries

Statements of Income (Parent Company)

(In Thousands)

	Year Ended December 31,
	2022		2021		2020
Revenues:
Net investment income	$	1,048	$	555	$	939
Net realized and unrealized gains (losses) on investments		(320)		217		63
Total revenues		728		772		1,002
Expenses:
Other operating expenses		33,292		19,480		8,696
Income (loss) before income taxes		(32,564)		(18,708)		(7,694)
Income tax expense (benefit)		(8,464)		11,039		(34)
Loss before equity in net income of subsidiaries		(24,100)		(29,747)		(7,660)
Equity in net income of subsidiaries		76,270		75,594		13,917
Net income		52,170		45,847		6,257
Other comprehensive income:
Net unrealized gains (losses) on securities available for sale		(3,997)		580		1,075
Equity in other comprehensive income (loss) of subsidiaries, net of taxes		(37,830)		(8,514)		7,485
Total comprehensive income	$	10,343	$	37,913	$	14,817

See accompanying notes.

Schedule II

Palomar Holdings, Inc. and Subsidiaries

Statements of Cash Flows (Parent Company)

(In Thousands)

	Year Ended December 31,
	2022		2021		2020
Operating activities
Net income	$	52,170	$	45,847	$	6,257
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of subsidiaries		(76,270)		(75,594)		(13,917)
Stock-based compensation expense		8,820		4,755		—
Net realized and unrealized losses on investments		320		(217)		(63)
Amortization of premium on fixed maturity securities		347		443		350
Deferred income tax expense		7,210		634		1,094
Changes in operating assets and liabilities:		36,449		13,596		7,772
Net cash provided by (used in) operating activities		29,046		(10,536)		1,493
Investing activities
Purchases of fixed maturity securities		(9,807)		(2,177)		(71,048)
Sales and maturities of fixed maturity securities		8,488		11,396		6,651
Cash paid to subsidiaries		—		(15,595)		(59,789)
Cash received from subsidiaries		—		27,100		—
Net cash provided by (used in) investing activities		(1,319)		20,724		(124,186)
Financing activities
Proceeds from January 2020 stock offering, net of offering costs		—		—		35,464
Proceeds from June 2020 stock offering, net of offering costs		—		—		90,083
Proceeds from common stock issued via equity incentive plans		3,032		2,811		2,782
Repurchase of common stock		(34,415)		(15,852)		—
Net cash provided by (used in) financing activities		(31,383)		(13,041)		128,329
Net (decrease) increase in cash and cash equivalents		(3,656)		(2,853)		5,636
Cash and cash equivalents at beginning of period		4,437		7,290		1,654
Cash and cash equivalents at end of period	$	781	$	4,437	$	7,290
Supplementary cash flow information:
Cash paid for income taxes	$	18,890	$	2,104	$	7,182
Cash paid for interest	$	704	$	—	$	—

See accompanying notes.

Schedule II

1.Accounting Policies

Organization

Palomar Holdings, Inc. (“the Company”), is an insurance holding company that domesticated in Delaware in March 2019. Prior to domestication in Delaware, the Company was known as GC Palomar Holdings (“GCPH”), which was a Cayman Islands incorporated insurance holding company formed on October 4, 2013 when GC Palomar Investor LP (“GCPI”) acquired control of GCPH.

Basis of Presentation

The accompanying condensed financial statements have been prepared using the equity method. Under the equity method, the investment in consolidated subsidiaries is stated at cost plus equity in undistributed earnings of consolidated subsidiaries since the date of acquisition. These condensed financial statements should be read in conjunction with the Company’s consolidated financial statements.

Estimates and Assumptions

Preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Those estimates are inherently subject to change, and actual results may ultimately differ from those estimates.