Palomar Holdings’s stock price has taken a beating over the past six months, shedding 20.1% of its value and falling to $128.73 per share. This may have investors wondering how to approach the situation.

Following the drawdown, is now the time to buy PLMR? Find out in our full research report, it’s free for active Edge members.

Why Is PLMR a Good Business?

Founded in 2013 to fill gaps in catastrophe insurance markets, Palomar Holdings (NASDAQ: PLMR) is a specialty insurance provider that offers property and casualty insurance products in underserved markets, with a focus on earthquake coverage.

1. Net Premiums Earned Skyrocket, Fueling Growth Opportunities

Insurers sell policies then use reinsurance (insurance for insurance companies) to protect themselves from large losses. Net premiums earned are therefore what's collected from selling policies less what’s paid to reinsurers as a risk mitigation tool.

Palomar Holdings’s net premiums earned has grown at a 46.1% annualized rate over the last two years, much better than the broader insurance industry.

2. Growing BVPS Reflects Strong Asset Base

We consider book value per share (BVPS) a critical metric for insurance companies. BVPS represents the total net worth per share, providing insight into a company’s financial strength and ability to meet policyholder obligations.

Palomar Holdings’s BVPS increased by 18.5% annually over the last five years, and growth has recently accelerated as BVPS grew at an incredible 39.5% annual clip over the past two years (from $17.04 to $33.14 per share).

3. Projected BVPS Growth Is Remarkable

Book value per share (BVPS) growth is driven by an insurer’s ability to earn consistent underwriting profits while generating strong investment returns.

Over the next 12 months, Consensus estimates call for Palomar Holdings’s BVPS to grow by 25.4% to $33.49, elite growth rate.

Final Judgment

These are just a few reasons why Palomar Holdings ranks near the top of our list. With the recent decline, the stock trades at 3.7× forward P/B (or $128.73 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .

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