Palomar Holdings ((PLMR)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Palomar Holdings’ recent earnings call reflected a sentiment of robust growth and strategic expansion. The company achieved record-breaking financial metrics, despite facing challenges in the commercial earthquake segment and a decline in fronting premium. Overall, the performance and future outlook remain strong, signaling confidence in the company’s strategic direction.
Record Gross Written Premium and Net Income
Palomar Holdings reported an impressive 44% growth in gross written premium and a 70% increase in adjusted net income for the third quarter of 2025. These record figures underscore the company’s strong financial performance and its ability to capitalize on market opportunities.
Acquisition of Gray Casualty and Surety Company
The acquisition of Gray Casualty and Surety Company marks a strategic expansion for Palomar, enhancing its surety platform. This move provides the company with access to key markets such as Texas, Florida, and California, positioning it for further growth in these regions.
Strong Operating Metrics
Palomar achieved an adjusted combined ratio of 75% and an adjusted return on equity of 26%, highlighting the company’s operational efficiency and profitability. These metrics reflect Palomar’s effective management and strategic focus.
Growth in Specialty Lines
Specialty lines, including Casualty, Crop, and Builders Risk, demonstrated significant growth. The Casualty business grew by 170%, and the Crop franchise doubled its premium compared to the previous year, showcasing the company’s ability to diversify and expand its offerings.
Positive Revision of 2025 Guidance
Palomar raised its 2025 adjusted net income guidance to $210-$215 million, up from the previous $198-$208 million. This positive revision reflects the company’s confidence in its continued growth and financial performance.
Rate Pressure in Commercial Earthquake
The Commercial Earthquake business faced an 18% decrease in risk-adjusted pricing, with large accounts experiencing more pressure. Despite this challenge, Palomar remains committed to navigating these market conditions effectively.
Decline in Fronting Premium
The fronting premium saw a 32% decline year-over-year due to the termination of the Omaha National partnership. This decline highlights a challenge for the company, but it remains focused on other growth avenues.
Forward-Looking Guidance
Palomar Holdings provided an optimistic forward-looking guidance, with expectations of continued strong performance. The company anticipates closing the acquisition of Gray Casualty and Surety Company in the first quarter of 2026, which is expected to be accretive to earnings in its first year. Additionally, the raised 2025 net income guidance implies a full-year adjusted return on equity of over 20%.
In summary, Palomar Holdings’ earnings call conveyed a strong sentiment of growth and strategic expansion. The company reported record financial metrics and outlined a positive outlook for the future, despite facing some challenges. The acquisition of Gray Casualty and Surety Company and the growth in specialty lines are key highlights, reinforcing Palomar’s strategic direction and confidence in its market position.