Thoughts from the Road: Confidence in Growth, Minimizing Soft Market Exposure

Research evidence excerpt

Thoughts from the Road: Confidence in Growth, Minimizing Soft Market Exposure

ortant consideration with respect to how PLMR

allocates capital.

o Theme from management: PLMR talked much about how they feel they can

play through soft and hard markets. Only a minority of their current business is

exposed to the current soft market (mainly non-admitted large commercial

earthquake). PLMR believes that it can continue to grow faster than its peers by

continuing to develop niche markets that are often outside of the general P/C

market cycle, and its new efforts with surety insurance are an example.

Investors have raised the following concerns to us:

1. How do we know that the growth in the casualty business is profitable and sustainable?

2. Will the sharp price declines in commercial earthquake a) get worse, b) materially hurt

profitability, c) expand into residential earthquake?

3. How can PLMR keep increasing earnings guidance if pricing is soft in earthquake?

4. How much growth can be achieved in crop insurance?

5. Is there more potential benefit from lower reinsurance pricing in the future?

6. Capital management as the company shifts to retaining more of the risk?

7. Should we be worried that the ROE will come under pressures as earthquake becomes a

smaller proportion of the business and the loss ratio continues to rise?

We think many of these questions were addressed successfully in our meetings with PLMR this

week.

Bull Case

1. Top-line Revenue Growth Above Peers: Total underwriting revenue – earned premiums,

commission and other grew to $808.1 million in 2025 which is roughly a 39% compounded

revenue growth in the past five years. Prospectively we believe PLMR can continue to grow

insurance premiums at a roughly 40% plus pace in the next couple of years.

2.