Core Insights - Alger Weatherbie Specialized Growth Fund's third-quarter 2025 investor letter indicates that equity markets continued to rise, with the S&P 500 Index increasing by 8.12% [1] - The fund's Class A shares underperformed compared to the Russell 2500 Growth Index during the same period [1] Company Overview - Palomar Holdings, Inc. (NASDAQ:PLMR) is identified as a specialty insurance company with a market capitalization of $3.02 billion, focusing on property and casualty coverage for risks like earthquakes, hurricanes, and floods [2][3] - The company primarily serves residential and commercial clients in the United States and generates revenue through underwriting specialized insurance policies and collecting premiums [3] Performance Metrics - Palomar Holdings, Inc. experienced a one-month return of -3.42% but saw a 20.86% increase in share value over the last 52 weeks, closing at $112.76 per share on October 28, 2025 [2] - The company's combined ratio, which reflects incurred losses and expenses as a percentage of earned premiums, was higher than analyst estimates, indicating margin pressure due to elevated expenses and a shift in premium mix [3] Market Position and Sentiment - Despite strong second-quarter earnings and raised full-year earnings guidance, investor concerns about underwriting quality negatively impacted Palomar's stock performance during the quarter [3] - The number of hedge funds holding Palomar Holdings increased from 25 to 28 in the second quarter, suggesting growing interest, although the company is not among the top 30 most popular stocks among hedge funds [4]

Core Viewpoint - Palomar Holdings, Inc. is set to release its third quarter 2025 results on November 6, 2025, followed by a conference call on November 7, 2025, to discuss the results [1] Group 1: Earnings Release and Conference Call - The third quarter 2025 results will be announced after market close on November 6, 2025 [1] - A conference call will take place at 12:00 p.m. (Eastern Time) on November 7, 2025, to discuss the earnings [1] - The conference call can be accessed by dialing 1-877-423-9813 for domestic callers and 1-201-689-8573 for international callers [2] Group 2: Replay and Webcast Information - A replay of the conference call will be available starting at 4:00 p.m. (Eastern Time) on November 7, 2025, accessible via specific dialing numbers [2] - The online replay will be available immediately after the call on the investor relations section of the Company's website [3] Group 3: Company Overview - Palomar Holdings, Inc. operates several subsidiaries, including Palomar Specialty Insurance Company and Palomar Specialty Reinsurance Company Bermuda Ltd. [4] - The company provides innovative specialty insurance across five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop [4] - Palomar's insurance subsidiaries have received strong financial strength ratings from A.M. Best, with PSIC, PSRE, and PESIC rated "A" (Excellent) and FIA rated "A-" (Stable) [4]

Core Insights - Wall Street anticipates a year-over-year increase in earnings for Palomar (PLMR) due to higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2] - The consensus EPS estimate for Palomar is $1.60 per share, reflecting a 30.1% increase year-over-year, while revenues are expected to reach $226.11 million, up 55.1% from the previous year [3] - The Earnings ESP for Palomar is -0.06%, indicating a bearish outlook from analysts, which complicates predictions of an earnings beat [12] Earnings Estimates and Revisions - The consensus EPS estimate has been revised 0.24% higher in the last 30 days, reflecting a slight positive adjustment from analysts [4] - The Most Accurate Estimate for Palomar is lower than the Zacks Consensus Estimate, suggesting recent bearish sentiment among analysts [12] Earnings Surprise History - Palomar has a history of beating consensus EPS estimates, having done so in the last four quarters, with a notable surprise of +4.76% in the last reported quarter [13][14] Comparison with Industry Peers - Hanover Insurance Group (THG), another player in the insurance sector, is expected to report an EPS of $3.79, indicating a year-over-year change of +24.3%, with revenues projected at $1.66 billion, up 5.2% [18][19] - Hanover Insurance has an Earnings ESP of +2.51% and a Zacks Rank of 3, suggesting a higher likelihood of beating consensus EPS estimates [19][20]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market engagement and confidence [1] - The Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum, aiding investors in selecting securities with high potential for market outperformance [2] Zacks Style Scores Overview - Stocks are rated from A to F based on their value, growth, and momentum characteristics, with A being the highest score indicating better chances of outperforming the market [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score [3][4][5][6] Value Score - The Value Style Score focuses on identifying undervalued stocks by analyzing financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - The Growth Style Score evaluates stocks based on projected and historical earnings, sales, and cash flow to identify those with sustainable growth potential [4] Momentum Score - The Momentum Style Score helps investors capitalize on price trends by assessing factors like short-term price changes and monthly earnings estimate shifts [5] VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors seeking attractive value, growth forecasts, and promising momentum [6] Zacks Rank Integration - The Zacks Rank utilizes earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks historically yielding an average annual return of +23.81% since 1988, outperforming the S&P 500 [7] - Investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal return potential [9] Stock Highlight: Palomar Holdings, Inc. (PLMR) - Palomar Holdings, Inc. is rated 3 (Hold) on the Zacks Rank and has a VGM Score of B, indicating a solid position in the market [11] - The company is projected to achieve year-over-year earnings growth of 43.2% for the current fiscal year, supported by a Growth Style Score of B [12] - With a strong Zacks Rank and favorable Style Scores, Palomar is recommended for investors' consideration [13]

Core Insights - Conestoga Capital Advisors reported strong equity market performance in Q3 2025, with their Micro-Cap Composite returning 11.7% net-of-fees, while the Russell Microcap Growth Index returned 19.9% [1] - Palomar Holdings, Inc. (NASDAQ:PLMR) is highlighted as a specialty insurance company with a market capitalization of $3.089 billion, experiencing a one-month return of -0.70% but a 52-week gain of 20.98% [2] - The stock of Palomar Holdings, Inc. faced challenges due to investor caution ahead of reinsurance renewals and hurricane season, despite solid underwriting and reinsurance programs [3] Company Performance - Palomar Holdings, Inc. closed at $115.34 per share on October 21, 2025 [2] - The company specializes in property and casualty insurance, particularly in earthquake and fronting [3] - Investor sentiment remained cautious in Q2, impacting the stock's performance despite positive disclosures [3] Hedge Fund Interest - Palomar Holdings, Inc. was held by 28 hedge fund portfolios at the end of Q2 2025, an increase from 25 in the previous quarter [4] - The company is not among the top 30 most popular stocks among hedge funds, with some analysts suggesting that AI stocks may offer better investment potential [4]

Industry Overview - The Zacks Property and Casualty Insurance industry ranks within the top 17% of 245 Zacks industries, currently holding a Zack Industry Rank of 42, indicating strong growth potential driven by better pricing, prudent underwriting, increased exposure, and ongoing economic expansion [1] Price Performance - The property and casualty (P&C) insurance industry has returned 6.4% over the past year, underperforming the Finance sector's growth of 17.9% and the Zacks S&P 500 composite's rise of 18.4% [2] - Notable performers include Palomar Holdings, Inc. (PLMR), W.R. Berkley Corporation (WRB), and Axis Capital Holdings Limited (AXS), which have outperformed both the industry and the sector [2] Driving Forces - Global commercial insurance rates fell by 4% in Q2 2025, marking the fourth consecutive decline after seven years of increases [3] - Gross premiums in the insurance sector are projected to exceed $722 billion by 2030, driven by price hikes, operational strength, and strong renewal rates [3] Catastrophe Losses - Global insured losses from natural catastrophes reached $80 billion in the first half of 2025, nearly double the 10-year average, with severe convective storms accounting for $31 billion [4] - Total global economic losses from natural catastrophes increased to $162 billion in the first half of 2025, which continues to drive policy renewal rates [4] Interest Rate Environment - The Federal Reserve cut rates by 25 basis points to a range of 4-4.25%, with expectations for two more cuts in 2025, which is beneficial for insurers with large invested asset bases [6][7] - An improving rate environment is advantageous for long-tail insurers, enhancing their investment income [7] Technological Investments - Insurers are heavily investing in technology, including blockchain, AI, and insurtech solutions, to improve efficiency and profitability, with projections of generating around $4.7 billion in annual global premiums from AI-related insurance by 2032 [9] Company Highlights Palomar Holdings, Inc. (PLMR) - PLMR focuses on catastrophe insurance and is well-positioned for growth due to strong premium retention, geographic expansion, and better pricing [11] - The company expects adjusted net income between $198 million and $205 million in 2025, with a projected revenue growth of 46.9% and 27.4% for 2025 and 2026, respectively [12][13] W.R. Berkley Corporation (WRB) - WRB is one of the largest commercial lines property casualty insurance providers, benefiting from premium increases and international market growth [14][15] - The consensus estimate for WRB's 2025 revenues is $14.64 billion, reflecting an 8.2% year-over-year improvement [16] Axis Capital Holdings Limited (AXS) - AXS provides a broad range of specialty insurance and reinsurance solutions, with a focus on growth in attractive lines and underwriting excellence [19][20] - The consensus estimate for AXS's 2025 revenues is $6.43 billion, indicating a year-over-year improvement of 5.5% [21]

Industry Overview - The property and casualty (P&C) insurance industry is experiencing an increase in catastrophic events, alongside a recent 25 basis points rate cut by the Fed, with indications of two more cuts in 2025 [1] - Despite challenges, the industry is expected to grow due to a shift towards personalized offerings and enhanced customer engagement through digital advancements [1] - Insurers are maintaining profitability through increased premium volumes, strong policyholder retention, and favorable rate environments [1] Heritage Insurance Holdings (HRTG) - HRTG is focusing on profitability by maintaining rate adequacy, applying stringent underwriting criteria, and limiting new policy issuance in saturated markets [3] - The company plans to cautiously resume personal lines underwriting in Florida and the Northeast due to recent legislative changes and a more favorable reinsurance environment [4] - HRTG aims to re-enter high-margin markets in 2025 while emphasizing rate integrity, data-driven exposure management, and operational efficiency [4] - The excess and surplus (E&S) lines segment is a significant growth driver as HRTG expands into new states and improves reinsurance cost efficiency [5] - HRTG is investing in technology to enhance InsurTech capabilities, including predictive modeling and cloud-based systems [6] - The Zacks Consensus Estimate for HRTG's 2025 revenues and EPS indicates a year-over-year increase of 3.1% and 104%, respectively [14] Palomar Holdings (PLMR) - PLMR is leveraging data analytics and underwriting prudence to capitalize on market dislocations, focusing on specialty lines to lower operational volatility [7] - The company aims to be a leader in the crop business, projecting over $200 million in premiums for 2025 and $500 million in the intermediate future [10] - PLMR's investment income is growing due to an increased average balance of investments and higher yields on invested assets [11] - The company maintains a strong capital position with a debt-free balance sheet and engages in share buybacks [13] - The Zacks Consensus Estimate for PLMR's 2025 revenues implies a year-over-year increase of 47%, with EPS expected to rise by 42.6% [16] Comparative Analysis - HRTG shows higher return on equity (ROE) at 33.4% compared to PLMR's 22.6%, indicating better efficiency in generating profit from shareholders' equity [18] - HRTG shares have gained 105.6% year-to-date, outperforming PLMR's 9% gain, and HRTG shares are considered less expensive than PLMR's [19] - HRTG is rated as a Zacks Rank 1 (Strong Buy), while PLMR holds a Zacks Rank 3 (Hold), suggesting HRTG may be a safer investment for higher returns [19]

Core Insights - Palomar Holdings, Inc. (PLMR) shares have increased by 18.4% over the past year, outperforming the Finance sector's growth of 18.2% but underperforming the Zacks S&P 500 composite's growth of 18.8% [1] - The company has a market capitalization of $3.10 billion and an average trading volume of 0.3 million shares over the last three months [1] - Palomar has consistently beaten earnings estimates in the past four quarters, with an average surprise of 14.71% [1] Valuation - PLMR shares are trading at a price-to-book value of 3.66X, which is significantly higher than the industry average of 1.55X, indicating a premium valuation [2] - Other insurers such as The Allstate Corporation, W.R. Berkley Corporation, and The Progressive Corporation are also trading at multiples above the industry average [2] Growth Projections - The Zacks Consensus Estimate for Palomar's 2025 earnings per share indicates a year-over-year increase of 42.6%, with revenues projected to reach $807.24 million, reflecting a 46.9% increase [3] - For 2026, earnings per share and revenues are expected to increase by 15.9% and 27.4%, respectively, compared to 2025 estimates [3] - Palomar Holdings has a Growth Score of B, indicating strong growth prospects [4] Analyst Sentiment - Four out of six analysts covering PLMR have raised their earnings estimates for 2025, and three out of five have done so for 2026 in the past 60 days, leading to a 1.9% and 0.3% increase in consensus estimates for those years [5] Financial Guidance - The company expects adjusted net income for 2025 to be between $198 million and $205 million, supported by rising policy volume and strong retention rates [7][16] - PLMR anticipates that crop insurance will contribute approximately $200 million in premiums by 2025 [13] Return on Capital - Palomar's return on equity stands at 20.3%, significantly higher than the industry average of 7.6%, and the return on invested capital is 19.6%, compared to the industry average of 5.9% [11] Strategic Initiatives - The company is focusing on its fee-based platform, PLMR-FRONT, to drive medium-term growth and strengthen its earnings foundation [12] - PLMR identifies Surety as a long-term growth opportunity, which is not correlated with traditional property and casualty insurance cycles, providing diversification [14] - The insurer maintains a strong capital position and a debt-free balance sheet, which supports its shareholder return initiatives, including share buybacks [15] Market Positioning - Palomar Holdings is positioning itself as a key player in the crop insurance sector, with ongoing geographic expansion and strategic partnerships expected to fuel its growth momentum [17] - The company leverages reinsurance to mitigate risk exposure, allowing it to underwrite policies effectively while managing potential losses [18]

Summary of Palomar (PLMR) 2025 Conference Call Company Overview - **Company**: Palomar Holdings, Inc. (PLMR) - **Industry**: Insurance, specifically focusing on property and casualty insurance, including specialty lines such as crop, surety, and casualty insurance. Key Points and Arguments Business Performance - Year-to-date performance shows a **25% increase in top-line revenue** and a **50% increase in bottom-line income** [4][5] - The company has raised its guidance three times in the current year, indicating strong operational execution and confidence in future growth [5] Strategic Goals - Palomar aims to **double underwriting income** within an intermediate timeframe while maintaining a **return on equity (ROE) above 20%** [5] - The strategic initiative, referred to as **Palomar 2X**, has been successful, achieving significant growth in net income over the past few years [25] Product Diversification - The company is expanding its portfolio beyond its traditional earthquake insurance to include: - **Casualty Insurance**: Focused on niche markets such as real estate errors and omissions and environmental liability, with a conservative approach to risk [7][8] - **Crop Insurance**: Targeting **$200 million in crop premiums** for the year, with long-term goals of reaching **$500 million** and eventually **$1 billion** [9][10] - **Surety Insurance**: Following an acquisition, the company is focusing on deepening its presence in existing markets rather than broad geographic expansion [11][72] Market Dynamics - The company is mindful of **social inflation** and has strategically avoided high-severity exposures, such as commercial auto, to mitigate risks associated with nuclear verdicts [13][16] - The **earthquake insurance market** is experiencing increased competition, particularly in large commercial segments, leading to a recalibration of growth expectations [31][32] Reinsurance Strategy - Palomar has over **140 reinsurers** in its property program, focusing on deepening relationships with existing partners rather than seeking new ones [17][20] - The company aims to balance earnings consistency with growth, opting to maintain retentions in certain lines to ensure stability [61][63] Talent Acquisition and Retention - The company has significantly increased its headcount through both acquisitions and talent attraction, implementing competitive compensation and long-term incentive plans to retain key personnel [93][94] Future Outlook - The company anticipates continued growth in its crop and casualty lines, with a focus on leveraging existing distribution relationships for expansion [70][76] - Palomar is exploring M&A opportunities that align with its specialty focus, emphasizing diversification and complementary expertise [76][78] Investment Strategy - The company plans to increase investment leverage as its balance sheet grows, aiming for investment income to grow at a rate comparable to net income [82][85] Flood Insurance - Palomar is expanding its flood insurance offerings through a partnership with Neptune, focusing on both inland and coastal flood risks [89][90] Additional Important Insights - The company is navigating a dynamic market environment, requiring agility and a diversified portfolio to manage risks effectively [35][36] - The integration of new acquisitions is focused on enhancing existing capabilities rather than broadening geographic reach too quickly [71][72] This summary encapsulates the key discussions and insights from the Palomar conference call, highlighting the company's strategic direction, market positioning, and future growth prospects.

Core Viewpoint - Palomar Holdings, Inc. has shown strong performance in its latest earnings report, with significant increases in operating income, revenues, and premiums, indicating effective execution of its business strategy and positive market conditions [2][3][5]. Financial Performance - The second-quarter 2025 operating income was reported at $1.76 per share, exceeding the Zacks Consensus Estimate by 4.7%, and reflecting a year-over-year increase of 40.8% [2]. - Total revenues rose by 48.9% year over year to $195 million, driven by higher premiums and net investment income, surpassing the Zacks Consensus Estimate by 4.7% [3]. - Gross written premiums increased by 28.8% year over year to $496.3 million, while net earned premiums grew by 47.2% to $164 million, both figures beating estimates [3]. Investment Income - Net investment income surged by 68% year over year to $13.4 million, primarily due to higher yields on invested assets and increased average balances of investments [4]. Underwriting Performance - Underwriting income reached $38.3 million, up 49.5% year over year, with adjusted underwriting income nearly at $48.4 million, reflecting a 47.1% increase [5]. - Total expenses increased by 46.8% year over year to $143.3 million, attributed to higher loss and adjustment expenses [5]. Ratios and Equity - The loss ratio was reported at 25.7, deteriorating by 80 basis points year over year, while the adjusted combined ratio was 73.1, worsening by 280 basis points [6]. - Cash and cash equivalents increased by 1.1% to $81.3 million, and shareholder equity rose by 16.2% to $847.7 million at the end of the second quarter [7]. Capital Management - The board approved a $150 million share repurchase program effective from July 31, 2025, to July 31, 2027, indicating a commitment to returning value to shareholders [8]. Future Outlook - Palomar aims for adjusted net income between $198 million and $205 million for 2025, an increase from the previous outlook, including an estimate of $8 million to $12 million in catastrophe losses [9]. - Despite recent strong performance, estimates have been trending downward, leading to a Zacks Rank 3 (Hold) for the stock, suggesting an expectation of in-line returns in the near term [10][12]. Industry Context - Palomar operates within the Zacks Insurance - Property and Casualty industry, where peers like NMI Holdings have also shown positive performance, gaining 3.6% over the past month [13].