Palomar Holdings, Inc. (PLMR) | Investment Case

1. Company Snapshot

1.a. Company Description

Palomar Holdings, Inc., an insurance holding company, provides specialty property insurance to residential and commercial customers.The company offers personal and commercial specialty property insurance products, including residential and commercial earthquake, commercial all risk, specialty homeowners, inland marine, Hawaii hurricane, and residential flood, as well as other products, such as assumed reinsurance, commercial flood, real estate error and omission, and real estate investor products.It markets and distributes its products through retail agents, wholesale brokers, program administrators, and carrier partnerships.

The company was formerly known as GC Palomar Holdings.Palomar Holdings, Inc.was incorporated in 2013 and is headquartered in La Jolla, California.

Show Full description

1.b. Last Insights on PLMR

Palomar Holdings' recent performance was driven by strong Q1 2025 earnings, with net income of $42.9 million, or $1.57 per diluted share, surpassing the Zacks Consensus Estimate of $1.59 per share. The company's adjusted net income was $51.3 million, or $1.87 per diluted share, a significant increase from $27.8 million, or $1.09 per diluted share, in Q1 2024. The successful completion of reinsurance programs incepting June 1, 2025, has also contributed to the company's positive outlook, with full-year 2025 adjusted net income guidance increased to $195 million to $205 million.

1.c. Company Highlights

Last Price	130.89
Change Percentage	1.96%
Open	127.92
Previous Close	128.38
Market Cap ( Millions)	3493
Volume	126732
Year High	175.85
Year Low	107.75
M A 50	123.52
M A 200	125.02

FCF Yield	11.61%
Dividend Yield	0.00%
ROE	22.79%
Debt / Equity	0.75%
Net Debt / EBIDTA	-37.69%
Price To Book	3.68
Price Earnings Ratio	17.61
Price To FCF	8.61
Price To sales	4.0
EV / EBITDA	12.82

2. Palomar Holdings Delivers Strong Q4 and Full-Year 2025 Results

Palomar Holdings reported a robust fourth quarter and full-year 2025 performance, with adjusted net income reaching $61.1 million, or $2.24 per share, representing a 48% growth compared to the same quarter last year. The company's full-year 2025 adjusted net income surged 62% to $216.1 million, exceeding initial guidance by $30 million or 16%. Gross written premium increased 32% to $2 billion, while net earned premiums rose 57% to $802.6 million. The adjusted combined ratio for the year was 72.7%, resulting in adjusted underwriting income of $208.9 million, a 63% growth.

Publication Date: Mar -08

                                    📋 Highlights
                                    2025 Full-Year Growth:
                                                Achieved 32% increase in gross written premium and 62% growth in adjusted net income, exceeding initial guidance by $30M (16%).
Crop Franchise Performance:
                                                Generated $248M in written premium with a loss ratio under 80%, with retention increasing to 50% net of SRA by 2026 and expected 30%+ premium growth in 2026.
2026 Guidance:
                                                Projected adjusted net income of $260M–$275M, implying 24% growth and doubling 2024 results in two years, with an adjusted ROE >20%.
Gray Surety Acquisition:
                                                Closed at $311M, financed by $300M term loan (SOFR +1.75%), expected to be modestly accretive in 2026 before scaling in 2027.
Investment Yield & Equity:
                                                Fourth-quarter investment yield rose to 4.8% (up from 4.5%), and stockholders' equity reached $942.7M with a net written premium-to-equity ratio above 1:1.

                                

Segment Performance

The company's earthquake franchise declined 2% year-over-year, primarily due to a one-time headwind from a large unearned premium in 2024. However, the residential earthquake book performed in line with expectations. The inland marine and other property group grew 30% year-over-year, driven by strong performance from admitted and E&S builders risk book and Hawaiian hurricane products. The casualty business delivered 120% year-over-year gross written premium growth, driven by strong momentum in E&S casualty, primary and excess contractors general liability, and environmental liability.

Guidance and Outlook

For 2026, Palomar Holdings expects adjusted net income of $260 million to $275 million, representing 24% adjusted net income growth and an adjusted return on equity greater than 20%. The company is implementing four strategic imperatives for 2026, including leveraging scale to enhance profitable growth and curating a distinct portfolio. Analysts estimate next year's revenue growth at 22.2%. The actual EPS for Q4 came out at $2.24, beating estimates of $2.06.

Valuation and Profitability

With a Price-to-Book Ratio (P/B) of 3.58, the market is pricing in a premium for Palomar Holdings. The company's Return on Equity (ROE) stands at 22.79%, indicating strong profitability. The Combined Ratio, a measure of underwriting profitability, was 72.7% for the full year 2025, demonstrating the company's ability to generate underwriting income. The Dividend Yield is 0.0%, as the company does not pay a dividend.

Capital Deployment and M&A

Mac Armstrong, Palomar's CEO, prioritized opportunistic M&A, share buybacks, and organic growth when discussing capital deployment opportunities. The company recently closed the acquisition of Gray Surety, which is expected to be modestly accretive in 2026. The acquisition was financed with a $300 million term loan and cash on hand, with an interest rate of SOFR plus 1.75%.

3. NewsRoom

5 Stocks to Add From the Prospering P&C Insurance Industry

Apr -08

Source: zacks.com

PLMR Stock Trades Above 50-Day SMA: What Should Investors Do?

Apr -08

Source: zacks.com

3 Growth Stocks From the P&C Insurance Space to Enhance Your Portfolio

Apr -02

Source:

AXS vs. PLMR: Which P&C Insurance Stock Should You Buy Now?

Apr -01

Source:

Wall Street Analysts See a 35.8% Upside in Palomar (PLMR): Can the Stock Really Move This High?

Mar -25

Source: zacks.com

Palomar (PLMR) May Find a Bottom Soon, Here's Why You Should Buy the Stock Now

Mar -23

Source: zacks.com

Palomar Holdings, Inc. (NASDAQ:PLMR) Receives Average Rating of “Buy” from Analysts

Mar -10

Source: defenseworld.net

Elo Mutual Pension Insurance Co Acquires Shares of 11,927 Palomar Holdings, Inc. $PLMR

Mar -06

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.52%)

6. Segments

Fronting

Expected Growth: 9.98%

Palomar Holdings, Inc.'s 9.98% growth is driven by increasing demand for specialty insurance products, expansion into new markets, and strategic partnerships. Additionally, the company's focus on technology-enabled underwriting and risk management has improved operational efficiency, leading to higher profitability and growth.

Residential Earthquake

Expected Growth: 10.27%

Residential Earthquake insurance from Palomar Holdings, Inc. growth of 10.27% driven by increasing demand for catastrophe coverage, favorable regulatory environment, and expansion into new markets. Additionally, rising homeownership rates, growing awareness of earthquake risk, and competitive pricing strategies contribute to the segment's growth.

Commercial Earthquake

Expected Growth: 9.95%

Palomar Holdings, Inc.'s Commercial Earthquake segment growth of 9.95% is driven by increasing demand for earthquake insurance in high-risk zones, expansion into new markets, and a growing commercial property market. Additionally, the company's unique data-driven underwriting approach and competitive pricing strategy have contributed to its market share gain.

Inland Marine

Expected Growth: 7.88%

Inland Marine from Palomar Holdings, Inc. growth of 7.88% driven by increasing demand for specialized cargo insurance, expansion into new markets, and strategic partnerships. Additionally, investments in digital platforms and data analytics have improved underwriting efficiency and risk assessment, contributing to premium growth.

Casualty

Expected Growth: 7.77%

Palomar Holdings' Casualty segment growth of 7.77% is driven by increasing demand for specialty insurance products, expansion into new markets, and strategic partnerships. Additionally, the company's focus on technology-enabled underwriting and risk management has improved operational efficiency, leading to higher premiums and revenue growth.

Hawaii Hurricane

Expected Growth: 9.9%

Hawaii Hurricane from Palomar Holdings, Inc. growth of 9.9% driven by increasing hurricane frequency and severity, rising property values, and growing demand for specialty insurance products. Additionally, Palomar's expansion into new markets, strategic partnerships, and investments in technology and data analytics also contribute to the segment's growth.

Commercial All Risk

Expected Growth: 8.3%

Palomar Holdings, Inc.'s Commercial All Risk segment growth of 8.3% is driven by increasing demand for specialty insurance products, expansion into new markets, and a strong underwriting discipline. Additionally, the company's focus on technology-enabled risk assessment and pricing, as well as its ability to capitalize on emerging trends such as climate-related risks, contribute to its growth momentum.

Other

Expected Growth: 7.77%

Palomar Holdings, Inc.'s 7.77% growth in 'Other' segment is driven by increasing demand for specialty insurance products, expansion into new markets, and strategic partnerships. Additionally, the company's focus on technology-enabled underwriting and risk management has improved operational efficiency, leading to higher margins and revenue growth.

Residential Flood

Expected Growth: 9.95%

Residential Flood growth driven by increasing frequency and severity of natural disasters, government-backed flood insurance reform, and Palomar's innovative risk assessment and underwriting capabilities, resulting in 9.95% growth. Additionally, expanding distribution channels and partnerships with leading insurance companies contribute to the segment's rapid expansion.

Specialty Homeowners

Expected Growth: 8.23%

Palomar Holdings, Inc.'s Specialty Homeowners segment growth of 8.23% is driven by increasing demand for specialty homeowners insurance products, expansion into new states, and a growing market share in the high-value homeowners market. Additionally, the company's focus on catastrophe-exposed properties and its proprietary risk scoring model contribute to its growth.

7. Detailed Products

Homeowners Insurance

Provides financial protection to homeowners against damage to their homes and personal liability.

Flood Insurance

Offers protection against flood-related damages to homes and personal belongings.

Earthquake Insurance

Provides financial protection to homeowners against earthquake-related damages to their homes and personal belongings.

Rental Insurance

Provides financial protection to renters against damage to their personal belongings and liability for accidents that occur in their rented space.

Commercial Earthquake Insurance

Provides financial protection to businesses against earthquake-related damages to their commercial properties and business operations.

8. Palomar Holdings, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Palomar Holdings, Inc. operates in the insurance industry, which has a moderate threat of substitutes. While there are alternative insurance providers, customers may not easily switch due to loyalty and familiarity with the brand.

Bargaining Power Of Customers

Palomar Holdings, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's specialized products and services make it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

Palomar Holdings, Inc. relies on a network of suppliers for its insurance products and services. While suppliers have some bargaining power, the company's scale and diversification mitigate this risk.

Threat Of New Entrants

The insurance industry has high barriers to entry, including regulatory requirements and capital requirements. This makes it difficult for new entrants to compete with established players like Palomar Holdings, Inc.

Intensity Of Rivalry

The insurance industry is highly competitive, with many established players competing for market share. Palomar Holdings, Inc. must differentiate itself through innovative products and services to maintain its market position.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	18.25%
Debt Cost	5.12%
Equity Weight	81.75%
Equity Cost	5.12%
WACC	5.12%
Leverage	22.32%

11. Quality Control: Palomar Holdings, Inc. passed 7 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

United Fire Group

A-Score: 6.4/10

Value: 8.6

Growth: 5.9

Quality: 5.2

Yield: 4.0

Momentum: 8.5

Volatility: 6.3

1-Year Total Return ->

Safety Insurance

A-Score: 6.2/10

Value: 7.1

Growth: 3.9

Quality: 6.0

Yield: 8.0

Momentum: 2.5

Volatility: 9.7

1-Year Total Return ->

Global Indemnity

A-Score: 5.7/10

Value: 8.0

Growth: 4.2

Quality: 6.0

Yield: 8.0

Momentum: 1.5

Volatility: 6.3

1-Year Total Return ->

Heritage Insurance Holdings

A-Score: 5.7/10

Value: 7.7

Growth: 5.3

Quality: 7.6

Yield: 1.0

Momentum: 10.0

Volatility: 2.3

1-Year Total Return ->

Palomar Holdings

A-Score: 5.5/10

Value: 3.9

Growth: 9.4

Quality: 6.1

Yield: 0.0

Momentum: 8.5

Volatility: 5.0

1-Year Total Return ->

Stewart Information Services

A-Score: 5.4/10

Value: 6.5

Growth: 3.0

Quality: 5.1

Yield: 6.0

Momentum: 5.0

Volatility: 7.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-8.04%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.12%

Palomar Holdings, Inc. - US69753M1053

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on PLMR

1.c. Company Highlights

Higher Growth

Expensive

Better Quality

Earnings Beats

Revenues Miss

Strong Momentum

Lower Yield

Revenues Beats

2. Palomar Holdings Delivers Strong Q4 and Full-Year 2025 Results

Segment Performance

Guidance and Outlook

Valuation and Profitability

Capital Deployment and M&A

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.52%)

6. Segments

Fronting

Expected Growth: 9.98%

Residential Earthquake

Expected Growth: 10.27%

Commercial Earthquake

Expected Growth: 9.95%

Inland Marine

Expected Growth: 7.88%

Casualty

Expected Growth: 7.77%

Hawaii Hurricane

Expected Growth: 9.9%

Commercial All Risk

Expected Growth: 8.3%

Other

Expected Growth: 7.77%

Residential Flood

Expected Growth: 9.95%

Specialty Homeowners

Expected Growth: 8.23%

7. Detailed Products

Homeowners Insurance

Flood Insurance

Earthquake Insurance

Rental Insurance

Commercial Earthquake Insurance

8. Palomar Holdings, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Palomar Holdings, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.e Scoring ^Insights

12.f DCF ^BETA