Why Is Palomar (PLMR) Up 8.9% Since Last Earnings Report?

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].