AM Best has affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good) of Palomar Holdings, Inc. (Palomar) (Delaware) [NASDAQ: PLMR], the ultimate parent and insurance holding company of Palomar Specialty Insurance Company (PSIC) (Portland, OR), Palomar Excess and Surplus Insurance Company (PESIC) (Phoenix, AZ) and Palomar Specialty Reinsurance Company Bermuda Ltd. (Palomar Re) (Bermuda). Concurrently, AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICRs of “a” (Excellent) of PSIC, PESIC and Palomar Re. The outlook of these Credit Ratings (ratings) is stable. At the same time, AM Best has revised the outlook to positive from stable and affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of First Indemnity of America Insurance Company (FIA) (Morris Plains, NJ), a wholly owned subsidiary of Palomar as of January 2025.

The ratings reflect Palomar’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

Palomar’s overall balance sheet strength is consistently supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), solid liquidity, relatively modest net underwriting leverage and improved loss reserve development patterns in recent periods. Partially offsetting these positions is material reinsurance dependency, reflective of the group’s strategic use of excess of loss and quota share arrangements to mitigate exposure. Palomar writes a variety of risks through its admitted and non-admitted entities, with earthquake coverage remaining a pillar of the portfolio alongside inland marine and other property, casualty, fronting and crop business. The consolidated group consistently reports profitable results, reflective of diligent underwriting strategies.

The ratings reflect FIA’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM.

In January 2025, Palomar completed its acquisition of FIA. The revised outlook to positive from stable for FIA reflects the expectation that the company will benefit from integration into the larger Palomar organization. Palomar has assumed corporate functions including investments, accounting, financial reporting, human resources, ERM and technology. Furthermore, Palomar participates in FIA’s reinsurance program. In years past, FIA consistently reported profitable results while maintaining the strongest level of risk-adjusted capitalization, as measured by BCAR. Surplus and premium have grown consistently over the last five years, and FIA remains focused on providing surety coverage to the municipal construction industry. In 2025, FIA’s operating results reflect the impact of that Company’s acquisition by Palomar and adoption of its accounting, compensation, and benefits policies. These impacts are expected to be net neutral on a go forward basis.

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