Financial Performance - Gross written premiums increased from $16.6 million in 2014 to $1.5 billion for the year ended December 31, 2024, reflecting a compound annual growth rate of approximately 57%[104] - The company has been profitable since 2016, with net income growth reflecting a compound annual growth rate of 43% since that year[104] - Net income for the three months ended September 30, 2025, was $51.5 million, an increase of $20.9 million or 68.7% from $30.5 million in 2024[145] - The company reported net income of $140.9 million for the nine months ended September 30, 2025, an increase of $58.3 million, or 70.6%, compared to $82.6 million for the same period in 2024[154] - Total revenue for the nine months ended September 30, 2025, was $622.6 million, up from $398.1 million in 2024[174] Premiums and Underwriting - Gross written premiums increased by $182.2 million, or 43.9%, to $597.2 million for the three months ended September 30, 2025, compared to $414.9 million for the same period in 2024[138] - Net written premiums rose by $115.5 million, or 72.3%, to $275.2 million for the three months ended September 30, 2025, from $159.7 million in the prior year[142] - Net earned premiums increased by $89.5 million, or 66.0%, to $225.1 million for the three months ended September 30, 2025, compared to $135.6 million for the same period in 2024[143] - Gross written premiums increased by $367.4 million, or 31.4%, to $1.5 billion for the nine months ended September 30, 2025, compared to $1.2 billion for the same period in 2024[155] - Net written premiums rose by $240.8 million, or 50.6%, to $716.5 million for the nine months ended September 30, 2025, driven primarily by increased gross written premiums in the Casualty and Crop lines[160] Expenses and Losses - Losses and loss adjustment expenses surged by $32.5 million, or 80.6%, to $72.8 million for the three months ended September 30, 2025, from $40.3 million in 2024[145] - Acquisition expenses increased by $14.8 million, or 35.7%, to $56.3 million for the three months ended September 30, 2025, compared to $41.5 million for the same period in 2024[147] - Other underwriting expenses rose by $20.2 million, or 71.7%, to $48.3 million for the three months ended September 30, 2025, from $28.1 million in 2024[148] - Losses and loss adjustment expenses increased by $60.2 million, or 61.6%, to $157.7 million for the nine months ended September 30, 2025, compared to $97.6 million in 2024[164] - Non-catastrophe losses surged by $78.5 million, or 100.9%, to $156.4 million for the nine months ended September 30, 2025, from $77.9 million in 2024[164] Investment Income - Net investment income increased by $5.2 million, or 54.9%, to $14.6 million for the three months ended September 30, 2025, compared to $9.4 million in 2024[145] - Net investment income rose by $15.5 million, or 63.3%, to $40.0 million for the nine months ended September 30, 2025, compared to $24.5 million for the same period in 2024[154] Ratios and Returns - The combined ratio is defined as the sum of the loss ratio and the expense ratio, with a ratio under 100% indicating an underwriting profit[129] - The combined ratio decreased to 78.1% for the three months ended September 30, 2025, from 80.5% in 2024, indicating improved underwriting performance[145] - The annualized return on equity improved to 23.9% for the three months ended September 30, 2025, compared to 19.7% in the prior year[145] - The annualized return on equity improved to 23.4% for the nine months ended September 30, 2025, up from 18.8% in the prior year[154] - Annualized adjusted return on equity for Q3 2025 is 25.6%, up from 21.0% in Q3 2024[181] Equity and Dividends - Tangible stockholders' equity is defined as stockholders' equity less intangible assets, providing a clearer view of the company's financial health[135] - Total stockholders' equity increased to $878.1 million as of September 30, 2025, up from $729.0 million at the end of 2024, driven by net income and unrealized gains on fixed maturity securities[217] - The maximum dividend PSIC can pay in 2025 without regulatory approval is $99.6 million[195] - The maximum dividend PESIC can pay in 2025 without regulatory approval is $4.2 million[196] - FIA has the capacity to pay a dividend of $2.3 million in 2025, subject to regulatory approval[197] Reinsurance and Risk Management - The company utilizes a comprehensive risk transfer program with reinsurance coverage to reduce earnings volatility[103] - The company has $1.2 billion of multi-year indemnity-based reinsurance coverage for earthquake events, issued through Torrey Pines Re Ltd[224] - Catastrophe event retention is $20 million for earthquake events and $11 million for hurricane events, with reinsurance coverage exhausting at $3.53 billion for earthquake events and $100 million for continental U.S. hurricane events[225] - The company utilizes a mix of traditional reinsurers and insurance linked securities, purchasing reinsurance from over 100 reinsurers with a minimum rating of "A−" (Excellent) or better[223] - The company employs treaty reinsurance primarily consisting of catastrophe excess of loss (XOL) coverage, which assumes losses relating to specified events[224] Cash Flow and Liquidity - Cash provided by operating activities for the nine months ended September 30, 2025, was $291.7 million, compared to $188.5 million for the same period in 2024, reflecting a significant increase[206] - As of September 30, 2025, the company had $1.3 billion in cash and investment securities available, ensuring sufficient liquidity for future operating cash flows[210] - The company had no borrowings outstanding through the Credit Agreement as of September 30, 2025, indicating strong liquidity management[214] - The company’s cash and cash equivalents totaled $111.7 million as of September 30, 2025, contributing to overall liquidity[219] Investment Portfolio - The investment portfolio as of September 30, 2025, included $1.1 billion in fixed maturity securities, with a book yield of 4.84%, compared to 4.59% at the end of 2024[220] - The fixed maturity portfolio has an average rating of "AA−," with approximately 68.8% rated "A−" or better, and 4.9% unrated or rated below investment grade as of September 30, 2025[231] - The majority of the investment portfolio is in high credit quality, investment grade fixed maturity securities, managing credit risk through diversification[230]

Financial Data and Key Metrics Changes - The company reported a 44% increase in gross written premiums, reaching $597.2 million for the third quarter of 2025 compared to the same period in 2024 [19] - Adjusted net income grew 70% to $55.2 million or $2.01 per share, up from $32.4 million or $1.23 per share year-over-year [18] - The adjusted combined ratio improved to 74.8% from 77.1% in the previous year, indicating better underwriting performance [18] - Annualized adjusted return on equity was 25.6%, compared to 21% for the same period last year [18] Business Line Data and Key Metrics Changes - The earthquake franchise grew 11% year-over-year, driven by strong performance in the residential earthquake market with an 88% policy retention rate [7] - Inland marine and other property categories saw a 50% year-over-year growth, significantly up from 28% in the second quarter [10] - The casualty business experienced a remarkable 170% year-over-year growth in gross written premiums [12] - The Crop franchise doubled its gross written premium to $120 million, exceeding the previous year's $60 million [14] Market Data and Key Metrics Changes - The commercial earthquake business faced rate pressure, with average risk prices decreasing approximately 18% on a risk-adjusted basis [8] - The company expects single-digit growth in the earthquake book for the fourth quarter, influenced by a one-time under premium transfer from the previous year [9] - The partnership with Neptune Flood is anticipated to accelerate growth in the residential flood product over the next three years [10] Company Strategy and Development Direction - The company is focused on profitable growth and has entered select specialty markets that offer compelling, risk-adjusted returns [5] - The acquisition of Gray Casualty and Surety Company is expected to enhance the company's surety platform and market position [5] - The company aims to double adjusted net income over a three to five-year timeframe as part of its Palomar 2X initiative [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term ability to profitably grow the earthquake business despite market challenges [9] - The company anticipates favorable conditions in the Crop market, with expectations to exceed the 15-year average industry loss ratio [15] - Management remains optimistic about achieving the revised full-year adjusted net income guidance of $210 million to $215 million [27] Other Important Information - The company placed seven reinsurance treaties during the third quarter, all renewing on favorable terms [15] - Investment income for the third quarter increased by 55% year-over-year, driven by higher yields on invested assets [25] - The acquisition of Gray Surety is expected to close in the first quarter of 2026 and should be accretive to earnings in its first year [16] Q&A Session Summary Question: Market opportunity in surety and competition - Management highlighted the complementary nature of Gray Surety to existing operations and the potential to become a top 20 surety carrier [29][30] Question: Future of the Crop business - Management expressed confidence in growing the Crop business to $500 million in the near term, emphasizing service and technology investments [33] Question: Net income guidance and catastrophe losses - Management confirmed that the updated guidance includes expectations for catastrophe losses, with a favorable outlook for the loss ratio [34] Question: Rate pressure in commercial earthquake - Management acknowledged ongoing rate pressure but indicated that the residential earthquake book's strength would support growth [36] Question: Net earned premium ratio expectations - Management expects the net earned premium ratio to increase in the fourth quarter and into the first half of the following year [37] Question: Healthcare liability book specifics - Management provided details on the healthcare liability book, including targeted segments and the current market conditions [45] Question: Stickiness of flood policies - Management noted strong policy renewal rates and increased interest in new business due to the federal program's shutdown [46] Question: Growth trajectory and future hiring - Management indicated plans for continued organic growth and potential opportunistic hiring to sustain growth momentum [51]

Core Insights - Palomar Holdings, Inc. (PLMR) reported a third-quarter 2025 operating income of $2.01 per share, exceeding the Zacks Consensus Estimate by 25.6% and reflecting a year-over-year increase of 63.4% [1][9] - Total revenues rose 65% year over year to $241 million, driven by higher premiums and investment income, surpassing the Zacks Consensus Estimate by 6.6% [2][9] - The company raised its 2025 adjusted net income forecast to a range of $210 million to $215 million, up from the previous estimate of $198 million to $208 million [7][9] Revenue and Premiums - Gross written premiums increased by 43.9% year over year to $597.2 million, although this was below the estimate of $676.8 million [2] - Net earned premiums saw a significant rise of 66% year over year, reaching $225.1 million, exceeding the estimate of $194.2 million [2] Investment Income - Net investment income grew by 54.9% year over year to $14.6 million, driven by higher yields and a larger average balance of investments [3] Underwriting Performance - Adjusted underwriting income was reported at $56.6 million, an increase of 82.5% from the previous year, while total underwriting income rose 86% year over year to $49.2 million [4] - The loss ratio was recorded at 32.3, deteriorating by 260 basis points year over year, while the adjusted combined ratio improved by 230 basis points to 74.8 [5] Financial Position - Cash and cash equivalents increased by 38.9% from the end of 2024 to $111.7 million at the end of Q3 2025 [6] - Shareholder equity rose by 20.4% from the end of 2024 to $878.1 million [6] - The annualized adjusted return on equity for Q3 2025 was 25.6%, expanding by 460 basis points year over year [6]

Core Insights - Palomar (PLMR) reported a revenue of $241.17 million for the quarter ended September 2025, reflecting a year-over-year increase of 65.4% [1] - The earnings per share (EPS) for the quarter was $2.01, up from $1.23 in the same quarter last year, indicating a significant growth [1] - The reported revenue exceeded the Zacks Consensus Estimate by 6.66%, while the EPS surpassed the consensus estimate by 25.63% [1] Financial Metrics - Loss Ratio was reported at 32.3%, significantly better than the five-analyst average estimate of 37.9% [4] - Combined Ratio stood at 78.1%, outperforming the four-analyst average estimate of 83.3% [4] - Expense Ratio was recorded at 45.8%, slightly above the average estimate of 44.1% based on four analysts [4] - Adjusted combined ratio was 74.8%, better than the two-analyst average estimate of 79.8% [4] - Net investment income was $14.57 million, exceeding the average estimate of $13.59 million by analysts, representing a year-over-year increase of 54.9% [4] - Net earned premiums reached $225.15 million, surpassing the five-analyst average estimate of $211.64 million, with a year-over-year growth of 66% [4] - Commission and other income amounted to $1.45 million, exceeding the average estimate of $1.08 million, reflecting a year-over-year increase of 102.5% [4] - Net realized and unrealized gains (losses) on investments were reported at $3.49 million, below the two-analyst average estimate of $5.88 million [4] Stock Performance - Over the past month, Palomar's shares have returned -1.9%, contrasting with the Zacks S&P 500 composite's +1.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Performance - Net income for Q3 2025 was $51.5 million, or $1.87 per diluted share, compared to $30.5 million, or $1.15 per diluted share, in Q3 2024[2] - Adjusted net income increased 70% to $55.2 million, or $2.01 per diluted share, from $32.4 million, or $1.23 per diluted share, in Q3 2024[4] - Net income for Q3 2025 was $51,455, up 68.7% from $30,497 in Q3 2024[36] - Total underwriting revenue for Q3 2025 increased to $226,595, a 66.2% rise from $136,361 in Q3 2024[36] - The company’s net comprehensive income for the nine months ended September 30, 2025, was $163.658 million, compared to $96.460 million in the same period of 2024, reflecting a 69.7% increase[42] - Adjusted net income for the nine months ended September 30, 2025, was $155,003, representing a 68.1% increase from $92,219 in 2024[37] Premiums and Revenue - Gross written premiums rose 43.9% to $597.2 million compared to $415.0 million in Q3 2024[5] - Gross written premiums for Q3 2025 reached $597,171, a 43.9% increase from $414,977 in Q3 2024[36] - Net written premiums for Q3 2025 were $275,244, reflecting a 72.3% growth compared to $159,710 in Q3 2024[36] - For the nine months ended September 30, 2025, gross written premiums totaled $1,535,623, a 31.4% increase from $1,168,239 in the same period of 2024[37] - The company reported total revenues of $244.660 million for Q3 2025, a 64.6% increase from $148.503 million in Q3 2024[42] Ratios and Returns - The total loss ratio for Q3 2025 was 32.3%, up from 29.7% in Q3 2024, with a catastrophe loss ratio of 0.8% compared to 9.5% in the prior year[9] - The combined ratio improved to 78.1% from 80.5% in Q3 2024, while the adjusted combined ratio was 74.8% compared to 77.1% in the same period last year[7] - Annualized return on equity was 23.9%, up from 19.7% in Q3 2024, with an annualized adjusted return on equity of 25.6% compared to 21.0% in the prior year[12] - Annualized adjusted return on equity for Q3 2025 was 25.6%, compared to 21.0% in Q3 2024[48] - Adjusted combined ratio for the nine months ended September 30, 2025, is 78.1%, compared to 80.5% for the same period in 2024[49] Investments and Assets - Net investment income increased by 54.9% to $14.6 million from $9.4 million in Q3 2024, driven by higher yields on invested assets[8] - Total assets as of September 30, 2025, were $2,943,546, an increase from $2,262,220 as of December 31, 2024[39] - Stockholders' equity increased to $878.1 million at September 30, 2025, from $703.3 million at the same date in 2024[12] - Tangible stockholders' equity as of September 30, 2025, is $815,572,000, an increase from $715,788,000 as of December 31, 2024[50] Expenses and Losses - The company’s total expenses for Q3 2025 were $177.521 million, compared to $110.000 million in Q3 2024, an increase of 61.0%[42] - Total losses and loss adjustment expenses for Q3 2025 were $72,812,000, an increase of 80.6% from $40,315,000 in Q3 2024[45] - Catastrophe losses decreased significantly by 85.3% to $1,900,000 in Q3 2025 from $12,924,000 in Q3 2024[45] - The company incurred catastrophe losses of $1,900,000 for the three months ended September 30, 2025, down from $12,924,000 in 2024[50] Acquisitions - The company announced the acquisition of The Gray Casualty and Surety Company during the quarter, aiming to drive long-term profitable growth[4]

Core Insights - Palomar Holdings, Inc. reported a significant increase in net income for Q3 2025, reaching $51.5 million or $1.87 per diluted share, compared to $30.5 million or $1.15 per diluted share in Q3 2024, marking a 68.7% increase [1][8] - Adjusted net income also saw a substantial rise of 70% to $55.2 million or $2.01 per diluted share, up from $32.4 million or $1.23 per diluted share in the same quarter last year [1][8] - The company achieved record gross written premiums of $597.2 million, a 43.9% increase from $415.0 million in Q3 2024, indicating strong growth in its insurance portfolio [4][8] Financial Performance - Gross written premiums increased by 43.9% to $597.2 million compared to $415.0 million in Q3 2024 [4][8] - Net earned premiums rose by 66.0% to $225.1 million from $135.6 million in the prior year [4][8] - The total loss ratio for the quarter was 32.3%, up from 29.7% in Q3 2024, while the catastrophe loss ratio significantly decreased to 0.8% from 9.5% [5][8] - The combined ratio improved to 78.1% from 80.5% year-over-year, indicating better underwriting performance [6][8] Underwriting and Investment Results - Underwriting income for Q3 was $49.2 million, with an adjusted underwriting income of $56.7 million, reflecting an adjusted combined ratio of 74.8% compared to 77.1% in the previous year [6][8] - Net investment income increased by 54.9% to $14.6 million, driven by higher yields on invested assets [7][8] - The company recorded $3.5 million in net realized and unrealized gains on investments, compared to $2.7 million in the same period last year [9][8] Strategic Initiatives - The company is focused on its "Palomar 2X" strategic imperatives, with notable growth in its crop insurance segment and the recent acquisition of The Gray Casualty and Surety Company [3][8] - Investments in Crop and Surety are expected to drive long-term profitable growth and enhance portfolio differentiation [3][8] Stockholder Equity and Returns - Stockholders' equity increased to $878.1 million as of September 30, 2025, compared to $703.3 million a year earlier [11][8] - The annualized return on equity was reported at 23.9%, up from 19.7% in Q3 2024, while the annualized adjusted return on equity reached 25.6%, compared to 21.0% in the prior year [11][8] Full Year Outlook - For the full year 2025, the company expects adjusted net income to be in the range of $210 million to $215 million, an increase from the previously announced range of $198 million to $208 million [12][8]

Core Insights - Palomar Holdings, Inc. is a specialty insurance company focused on property and casualty insurance products, with a quarterly earnings release scheduled for November 6, 2025, where an EPS of $1.58 and revenue of approximately $210.65 million are expected [1][5] Financial Performance - The upcoming earnings release is anticipated to show an increase in earnings compared to the previous year, with Wall Street's consensus estimate suggesting quarterly earnings of $1.60 per share [3] - The company's financial metrics include a P/E ratio of approximately 20.12, a price-to-sales ratio of about 4.58, and an enterprise value to sales ratio of around 4.46, indicating the market's valuation of its earnings and revenue [4][5] Strategic Developments - Palomar has announced a definitive agreement to acquire The Gray Casualty & Surety Company for $300 million in cash, with the acquisition expected to close in the first half of 2026, pending regulatory approvals [2][5] - This acquisition aligns with Palomar's growth strategy, as stated by the company's Chairman and CEO, Mac Armstrong [2]

Core Insights - AM Best has commented that the Credit Ratings of Palomar Holdings, Inc. and its member companies remain unchanged following the announcement of Palomar's acquisition of The Gray Casualty & Surety Company, expected to close in the first half of 2026 [1][12] Credit Ratings - Palomar has a Long-Term Issuer Credit Rating of "bbb†(Good), while its subsidiaries, PSIC, PESIC, and Palomar Re, have a Financial Strength Rating of A (Excellent) and Long-Term ICRs of "aâ€(Excellent) with a stable outlook [2] - FIA has an FSR of A- (Excellent) and a Long-Term ICR of "a-†(Excellent) with a positive outlook [2] - Gray has an FSR of A- (Excellent) and a Long-Term ICR of "a-†(Excellent), which have been placed under review with positive implications following the acquisition announcement [3] Acquisition Details - Post-acquisition, Gray will operate independently under new management and is expected to benefit from synergies with Palomar [4] - The acquisition will be funded through cash on hand and a bank loan, with expected financial leverage having a neutral impact on the ratings [4] Business Operations - Palomar writes various risks, with earthquake coverage being a significant part of its portfolio, alongside inland marine/other property, casualty, fronting, and crop businesses [5] - The group consistently reports profitable results due to diligent underwriting strategies and is expanding into the surety space, particularly through the acquisition of Gray, which has a larger footprint in the contract surety segment across the U.S. [5]

Core Viewpoint - BCP has announced the sale of The Gray Casualty & Surety Company to Palomar Holdings, marking a significant transaction in the surety bond market for midsized and emerging contractors [1][2]. Group 1: Transaction Details - The transaction has received approval from the boards of directors of both Gray Surety and Palomar and is expected to close in the first half of 2026, pending regulatory approvals and customary closing conditions [2]. - J.P. Morgan is serving as the exclusive financial advisor for Gray Surety, while Evercore is advising Palomar on the transaction [4]. Group 2: Company Background - Gray Surety specializes in contract bonds for midsized and emerging contractors across the United States and is licensed in all 50 states, operating through 13 regional offices [3][7]. - Since BCP's investment in 2021, Gray Surety has experienced significant growth, maintaining a loss ratio below the industry average and achieving annual double-digit growth [7]. Group 3: Strategic Implications - The partnership with Palomar is expected to provide Gray Surety with enhanced financial strength, scale, and strategic support, allowing for expanded reach and improved relationships with agency partners [4]. - The transaction reflects the successful positioning of Gray Surety for long-term success, as noted by BCP's partner Jeff Koonce [4].

Core Viewpoint - Palomar Holdings, Inc. has announced a definitive agreement to acquire The Gray Casualty & Surety Company for a total consideration of $300 million in cash, enhancing its position in the surety market [1][3] Company Overview - Palomar Holdings, Inc. operates as a holding company for various subsidiaries, providing innovative specialty insurance across five product categories, including Earthquake and Casualty [5] - The Gray Casualty & Surety Company specializes in contract surety bonds for midsized and emerging contractors in the U.S., licensed in all 50 states and operating through thirteen regional offices [2][6] Transaction Details - The acquisition is expected to close in the first half of 2026, pending regulatory approvals and customary closing conditions [1] - The transaction has been approved by the boards of directors of both Palomar and Gray Surety [1] Strategic Implications - The acquisition is anticipated to significantly enhance Palomar's surety franchise, complementing its existing operations and market position [3] - Gray Surety's management team, known for its entrepreneurial culture and disciplined underwriting, is expected to contribute to Palomar's strategic growth initiatives [3][6] Financial Performance - Gray Surety has demonstrated sustained annual double-digit growth while maintaining a loss ratio below the industry average, indicating strong operational performance [6]