Palomar Holdings’ third quarter results were positively received by the market, as management credited robust premium growth and expanding margins to its diversified specialty insurance portfolio and disciplined underwriting. CEO Mac Armstrong highlighted the company’s broad mix of admitted and excess and surplus (E&S) property and casualty offerings, noting, “All our product groups, save for fronting, experienced double-digit growth in the third quarter.” The addition of new specialty lines, including crop and surety, further enhanced the company’s balanced risk exposure and earnings consistency.
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Palomar Holdings (PLMR) Q3 CY2025 Highlights:
- Revenue: $244.7 million vs analyst estimates of $221.9 million (64.8% year-on-year growth, 10.2% beat)
- Adjusted EPS: $2.01 vs analyst estimates of $1.61 (24.8% beat)
- Adjusted Operating Income: $67.14 million (27.4% margin, 74.4% year-on-year growth)
- Operating Margin: 27.4%, up from 25.9% in the same quarter last year
- Market Capitalization: $3.51 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Palomar Holdings’s Q3 Earnings Call
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Jon Paul Newsome (Piper Sandler) asked about the competitive landscape and expansion strategy in surety. CEO Mac Armstrong detailed plans for cross-selling, regional expansion, and leveraging Gray Surety’s market entry model to reach top-20 status.
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Jon Paul Newsome (Piper Sandler) inquired if crop insurance could be a long-term growth driver. Armstrong said crop could reach $500 million in premiums, citing talent acquisition and technology as key enablers.
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Andrew Andersen (Jefferies) questioned the loss ratio guidance and exposure to catastrophe losses. CFO Chris Uchida confirmed expected loss ratios include mini catastrophes and that major events are not anticipated in current forecasts.
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Mark Hughes (Truist Securities) sought clarification on the net earned premium ratio’s trajectory. Uchida explained that the third quarter is typically the low point, with ratios expected to rise in subsequent quarters due to reinsurance and crop seasonality.
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Meyer Shields (KBW) asked about the sustainability of private flood policy retention during the National Flood Insurance Program shutdown. President Jon Christianson indicated strong policy stickiness and increased private market confidence.
Catalysts in Upcoming Quarters
Looking ahead, our team will be watching (1) the successful integration and financial impact of the Gray Surety acquisition, (2) sustained growth in crop and specialty insurance lines as new talent and partnerships mature, and (3) the company's ability to navigate ongoing rate pressures in commercial earthquake. Execution on technology investments and expansion into new markets will also be important indicators of future performance.
Palomar Holdings currently trades at $132.80, up from $117.93 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).
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