Palomar Holdings (PLMR) Risk Analysis

Our management has the authority to change our underwriting guidelines or our strategy without notice to, or approval from, our stockholders. As a result, we may make fundamental changes to our operations without stockholder approval, which could result in our pursuing a strategy or implementing underwriting guidelines that may be materially different from those described in our public filings.

Under applicable state insurance laws and regulations which govern our subsidiaries' operations, no person may acquire control of a domestic insurer until written approval is obtained from the state insurance commissioner following a public hearing on the proposed acquisition. Such approval would be contingent upon the state insurance commissioner's consideration of a number of factors including, among others, the financial strength of the proposed acquiror, the acquiror's plans for the future operations of the domestic insurer and any anti-competitive results that may arise from the consummation of the acquisition of control. State insurance laws and regulations pertaining to changes of control apply to both the direct and indirect acquisition of ten percent or more of the voting stock of an insurer domiciled in that state. Accordingly, the acquisition of ten percent or more of our common stock would be considered an indirect change of control of Palomar Holdings, Inc. and would trigger the applicable change of control filing requirements under state insurance laws and regulations, absent a disclaimer of control filing and its acceptance by the respective state insurance departments. These requirements may discourage potential acquisition proposals and may delay, deter or prevent a change of control of Palomar Holdings, Inc., including through transactions that some or all of the stockholders of Palomar Holdings, Inc. might consider to be desirable.

Our quarterly operating results are likely to fluctuate in the future as a publicly traded company. In addition, securities markets worldwide have experienced, and are likely to continue to experience, significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could subject the market price of our shares to wide price fluctuations regardless of our operating performance. Although we believe we have adequate sources of liquidity over the short- and long-term, the success of our operations, the global economic outlook, and the pace of sustainable growth in our markets, among other factors, could impact our business and liquidity. You should consider an investment in our common stock to be risky, and you should invest in our common stock only if you can withstand a significant loss and wide fluctuation in the market value of your investment. The market price of our common stock is likely to continue to be subject to significant fluctuations in response to the factors described in this "Risk Factors" section and other factors, many of which are beyond our control. Among the factors that could affect our stock price are: - market conditions in the broader stock market;- actual or anticipated fluctuations in our quarterly financial and operating results;- introduction of new products or services by us or our competitors;- issuance of new or changed securities analysts' reports or recommendations;- results of operations that vary from expectations of securities analysts and investors;- short sales, hedging and other derivative transactions in our common stock;- guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;- strategic actions by us or our competitors;- announcements by us, our competitors or our acquisition targets;- sales, or anticipated sales, of large blocks of our stock, including by our directors, executive officers and principal stockholders;- additions or departures in our Board of Directors, senior management or other key personnel;- regulatory, legal or political developments;- public response to press releases or other public announcements by us or third parties, including our filings with the SEC;- litigation and governmental investigations;- changing economic conditions;- changes in accounting principles;- any indebtedness we may incur or securities we may issue in the future;- default under agreements governing our indebtedness;- exposure to capital and credit market risks that adversely affect our investment portfolio or our capital resources;- changes in our credit ratings;- changes in corporate tax rates;- interest or exchange rate fluctuations; and - other events or factors, including those from natural disasters, war, pandemics, acts of terrorism, cyber-attacks or responses to these events. The securities markets have from time to time experienced extreme price and volume fluctuations that often have been unrelated or disproportionate to the operating performance of particular companies. As a result of these factors, investors in our common stock may not be able to resell their shares at or above the price at which they purchased their shares. These broad market fluctuations, as well as general market, economic and political conditions, such as recessions, loss of investor confidence or interest rate changes, may negatively affect the market price of our common stock. In addition, the stock markets, including Nasdaq, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to securities class action litigation that, even if unsuccessful, could be costly to defend, divert management's attention and resources or harm our business.

Provisions in our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if such a change in control would increase the value of our common stock and prevent attempts by our stockholders to replace or remove our current Board of Directors or management. Our charter documents contain anti-takeover provisions that will hinder takeover attempts and could reduce the market value of our common stock or prevent sale at a premium. Our anti-takeover provisions: - permit the Board of Directors to establish the number of directors and fill any vacancies and newly created directorships;- provide, through 2027, that our Board of Directors are classified into three classes with staggered, three year terms and that directors may only be removed for cause;- require, through 2027, super-majority voting to amend provisions in our certificate of incorporation and bylaws;- include blank-check preferred stock, the preference, rights and other terms of which may be set by the Board of Directors and could delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise benefit our stockholders;- eliminate the ability of our stockholders to call special meetings of stockholders;- specify that special meetings of our stockholders can be called only by our Board of Directors, the chairman of our Board of Directors, or our chief executive officer;- prohibit stockholder action by other than unanimous written consent;- provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum;- prohibit cumulative voting in the election of directors; and - establish advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings. In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a period of time.

Our certificate of incorporation and bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for the following civil actions: - any derivative action or proceeding brought on our behalf;- any action asserting a claim of breach of a fiduciary duty by any of our directors, officers, employees or agents or our stockholders;- any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware;- any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or our bylaws; or - any action asserting a claim governed by the internal affairs doctrine. However, this provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, this provision applies to Securities Act claims and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such provision, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder. This choice of forum provision, if enforced, may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation and bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition or results of operations.