Palomar Holdings Inc

Palomar Holdings has completed its acquisition of Gray Surety for approximately $311 million, a Treasury-listed surety carrier focused on contract bonds for mid-sized and emerging contractors, with licenses in all 50 states and 13 regional offices. The acquisition is a key part of Palomar's diversification and growth strategy, contributing $33.6 million in revenue for the six months ended June 30, 2026, and driving a 235.6% year-over-year increase in Surety & Credit GWP to $39.2 million in the second quarter of 2026. Integration is substantially complete, allowing Palomar to focus on franchise building, including adding underwriting talent, geographic expansion, and new product capabilities. Management views the acquisition as a driver of scale and earnings within its strategy to double adjusted net income over three to five years while maintaining adjusted ROE above 20%. In related industry moves, Aon agreed to acquire USI from KKR for $17 billion to expand U.S. middle-market and E&S capabilities, and Arthur J. Gallagher's Risk Placement Services acquired Kansas-based Med James in July 2026. Palomar's shares have gained 10.7% in the past year, and the stock trades at a forward price-to-book of 3.62X, above the industry average of 1.42X. The Zacks Consensus Estimate for third-quarter 2026 EPS has moved down 2.5%, while fourth-quarter 2026 EPS estimates have moved up 5.1% in the past 60 days, and full-year 2026 and 2027 EPS estimates have moved up 2.8% and 2.7%, respectively. PLMR currently carries a Zacks Rank #2 (Buy).

Palomar Holdings reported second-quarter 2026 revenue and earnings above Wall Street estimates and announced its first quarterly cash dividend alongside a previously disclosed $150 million share repurchase program. The stock recently traded at $134.00, which is below a narrative fair value estimate of $161.17, though its price-to-earnings ratio of 17.3 times exceeds the US insurance industry average of 11.9 times and a fair ratio of 14.6 times. Despite the strong quarterly results and capital return initiatives, the share price fell 6.23% over the past seven days and 5.72% over the past 30 days, while longer-term returns remain robust with a 132.48% three-year total shareholder return. The company cited improved reinsurance terms, proactive risk management, and capital strength as factors supporting future earnings stability and growth in book value and return on equity.

Palomar Holdings declared a quarterly dividend of $0.45 per share. The dividend carries a forward yield of 1.32% and is payable on September 2 to shareholders of record as of August 19, with the ex-dividend date also set for August 19.

StockStory identifies Palomar Holdings as a resilient insurance stock to own for decades, while labeling The Hanover Insurance Group and Enact Holdings as risky. Palomar, a specialty insurer focused on catastrophe markets, saw net premiums earned surge 55.8% annually over the past two years and book value per share grow 34% annually. In contrast, Hanover's annual revenue growth of 4.9% over two years lagged peers, and Enact's net premiums earned remained stagnant over five years with flat sales forecasted. Palomar trades at 3.3 times forward price-to-book, Hanover at 2 times, and Enact at 1.1 times.

Palomar shares soared 7.2% in the last trading session to close at $126.32, backed by solid volume. The company raised its adjusted net income guidance to a range of $262 million to $278 million, up from the prior $260 million to $275 million. Palomar is expected to report quarterly earnings of $2.13 per share, a 21% year-over-year increase, on revenues of $287.44 million, up 47.4%. The consensus EPS estimate for the quarter has been revised 1.3% higher over the last 30 days. The stock carries a Zacks Rank #3, or Hold.

Palomar Holdings reported first-quarter revenues of $278.9 million, a 59.7% increase year on year, exceeding analyst expectations by 5.8%. The specialty insurer, which focuses on catastrophe coverage including earthquake insurance, posted a mixed quarter with a strong beat on net premiums earned but a significant miss on book value per share estimates. Among 32 property and casualty insurance stocks tracked, the group overall beat revenue consensus by 1.9% and saw average share prices rise 3.2% since reporting. Stewart Information Services delivered the best performance relative to estimates with revenues of $781.3 million, while Fidelity National Financial was the weakest, missing revenue expectations by 10.7% with $3.23 billion. Palomar shares are up 5% since the report, trading at $116.30.

Colorado State University forecasts a milder-than-normal 2026 Atlantic hurricane season with 11 named storms, including five hurricanes and two major hurricanes, yet four property and casualty insurers are expected to remain resilient. HCI Group, The Progressive Corporation, The Allstate Corporation and Palomar Holdings are supported by stronger pricing, disciplined underwriting, favorable reserve development, increased exposure and healthy capital positions. The industry generated an estimated net underwriting gain of $63 billion in 2025, up from $23 billion in 2024, with a combined ratio improving to 92.9% from 96.6%, according to Verisk. Swiss Re projects the combined ratio to deteriorate to 99% in 2026 as catastrophe pressures normalize, while Aon estimates first-quarter 2026 catastrophe-related economic losses at $37 billion and insured losses at roughly $20 billion. Marsh's Global Insurance Market Index reported a 5% decline in global commercial insurance rates in the first quarter of 2026, marking the seventh consecutive quarter of pricing moderation.