Pelagos Insurance Capital (PLGO) Q3 2024 earnings summary

Executive summary

• Gross premiums written grew 25.2% year-over-year to $741.9 million in Q3 2024 and 23.4% year-to-date to $3.45 billion, with strong performance across all segments.

• Combined ratio improved to 87.4% for Q3 and 88.6% year-to-date, reflecting disciplined underwriting and favorable market conditions.

• Annualized operating ROAE was 16.4% for Q3 and 13.3% year-to-date, with operating EPS of $2.18 and book value per share at $23.43, up 13.2% since year-end 2023.

• Returned $141 million to shareholders via dividends and share buybacks year-to-date, including repurchase of 6.57 million shares for $105.5 million.

• Launched Lloyd's Syndicate 3123 and announced a strategic partnership with Euclid Mortgage, expected to generate $35 million in gross premiums in 2025.

Financial highlights

• Net premiums earned were $635 million for Q3 and $1.62 billion year-to-date, with net investment income of $139 million YTD and $52 million in Q3.

• Operating net income for Q3 was $105.1 million ($0.92 per diluted share); net income for Q3 was $100.6 million ($0.88 per diluted share).

• Book value per diluted share rose to $23.43, up 13% from year-end and 44% since YE 2022.

• Debt-to-total capital ratio stood at 16.2% with total capital over $3.1 billion.

• Catastrophe and large losses in Q3 2024 were $91.6 million, mainly from Hurricane Helene and European storm Boris.

Outlook and guidance

• Expect to achieve approximately 20% premium growth for the full year, with a target combined ratio in the mid to high 80s% and operating ROAE in the 14%-16% range for 2025.

• Focused on maximizing shareholder value through book value growth, consistent returns, and optimized capital management.

• Market conditions remain favorable, with sustained pricing discipline expected into 2025.

• Anticipate manageable net losses from Hurricane Milton ($50-$100 million pre-tax), with robust reinsurance protection.

• Management remains focused on leveraging scale and producing superior underwriting results.