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	116.42
Change Percentage	-3.00%
Open	119.83
Previous Close	120.02
Market Cap ( Millions)	3101
Volume	213736
Year High	175.85
Year Low	98.42
M A 50	119.1
M A 200	134.1

FCF Yield	12.04%
Dividend Yield	0.00%
ROE	21.68%
Debt / Equity	0.00%
Net Debt / EBIDTA	-49.59%
Price To Book	3.54
Price Earnings Ratio	17.66
Price To FCF	8.3
Price To sales	3.98
EV / EBITDA	13.27

2. Palomar Holdings' Q3 2025 Earnings: A Strong Beat

Palomar Holdings reported an exceptional third quarter, with adjusted net income growing 70% to $55.2 million, or $2.01 per share, significantly beating estimates of $1.58 per share. Gross written premiums for the quarter were $597.2 million, a 44% increase compared to the prior year. The adjusted combined ratio was 74.8%, indicating strong underwriting profitability, and the annualized adjusted return on equity was 25.6%. The company's investment income also saw a significant increase, with a 55% rise to $14.6 million, driven by higher yields on invested assets and a higher average balance of investments.

Publication Date: Nov -12

                                    📋 Highlights
                                    Record Financial Growth:
                                                Palomar achieved 44% gross written premium growth ($597.2M) and 70% adjusted net income growth ($55.2M) in Q3 2025.
Casualty Business Expansion:
                                                Casualty gross written premium surged 170% YoY, while the crop franchise doubled to $120M in Q3, with a $230M 2025 target.
Strategic Acquisition:
                                                Gray Casualty acquisition, a leading surety carrier, expected to close Q1 2026, adding scale and accretive earnings in Year 1.
Revised Guidance:
                                                2025 adjusted net income guidance raised to $210–215M (59% growth), with a 24% midpoint adjusted ROE and $878M stockholders' equity.
Share Repurchase Activity:
                                                $37.3M spent repurchasing 308,000 shares under the $150M buyback program, reflecting confidence in capital allocation.

                                

Segment Performance

The company's Earthquake franchise saw 11% year-over-year growth, driven by healthy new business production and strong policy retention. The Inland Marine and Other Property category grew 50% year-over-year, with strong acceleration from the 28% growth in the second quarter. The Casualty business delivered 170% year-over-year gross written premium growth, with a focus on segments with sustained rate adequacy. The crop franchise doubled its gross written premium to $120 million in the third quarter, with a revised premium expectation of $230 million for 2025.

Guidance and Outlook

The company raised its 2025 adjusted net income guidance to $210 million to $215 million, implying an adjusted return on equity of 24%. The revised guidance implies the achievement of the Palomar 2X tenet of doubling adjusted net income in an intermediate time frame. Looking ahead to 2026, the company's results should provide a good framework to model its business, with analysts estimating revenue growth at 20.8%.

Valuation

With a Price-to-Book Ratio of 4.01, the market is pricing in a certain level of growth and profitability. The company's Return on Equity (ROE) of 21.68% is strong, indicating efficient use of shareholder capital. The current valuation multiples suggest that the market has a positive outlook on the company's future prospects, but it is essential to monitor the company's ability to sustain its growth momentum and maintain its underwriting profitability, as indicated by the adjusted combined ratio.

Growth Strategy

Mac Armstrong mentioned that Palomar has been primarily an organic growth story, but the Gray acquisition in the Surety market has given the company a boost. The company plans to continue growing organically by investing in talent, expanding geographic reach, and entering adjacencies, while being opportunistic about inorganic growth drivers. The crop business is expected to grow to $0.5 billion of premium in the next couple of years and eventually reach $1 billion.

3. NewsRoom

Palomar Holdings, Inc. $PLMR Shares Bought by Creative Planning

Nov -27

Source: defenseworld.net

Is Palomar Holdings (PLMR) Outperforming Other Finance Stocks This Year?

Nov -26

Source: zacks.com

Wall Street Analysts Believe Palomar (PLMR) Could Rally 27.95%: Here's is How to Trade

Nov -21

Source: zacks.com

PLMR Stock Outperforms Industry: Time to Add it for Better Returns?

Nov -20

Source: zacks.com

Alger Weatherbie Specialized Growth Fund Q3 2025 Portfolio Update

Nov -12

Source: seekingalpha.com

Palomar Holdings, Inc. (PLMR) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

Palomar Holdings Q3 Earnings Beat Estimates on Solid Underwriting

Nov -07

Source: zacks.com

Palomar (PLMR) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates

Nov -07

Source: zacks.com

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: 7.2/10

Value: 8.9

Growth: 5.9

Quality: 6.5

Yield: 5.0

Momentum: 9.5

Volatility: 7.3

1-Year Total Return ->

Safety Insurance

A-Score: 6.3/10

Value: 7.4

Growth: 3.9

Quality: 7.1

Yield: 8.0

Momentum: 1.5

Volatility: 9.7

1-Year Total Return ->

Heritage Insurance Holdings

A-Score: 5.9/10

Value: 8.3

Growth: 5.4

Quality: 8.2

Yield: 1.0

Momentum: 10.0

Volatility: 2.3

1-Year Total Return ->

Stewart Information Services

A-Score: 5.6/10

Value: 6.5

Growth: 3.0

Quality: 5.1

Yield: 6.0

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

Palomar Holdings

A-Score: 5.6/10

Value: 4.1

Growth: 9.4

Quality: 7.4

Yield: 0.0

Momentum: 7.5

Volatility: 5.0

1-Year Total Return ->

Global Indemnity

A-Score: 5.3/10

Value: 6.1

Growth: 4.2

Quality: 5.9

Yield: 8.0

Momentum: 2.0

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-7.46%

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' Q3 2025 Earnings: A Strong Beat

Segment Performance

Guidance and Outlook

Valuation

Growth Strategy

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