What Happened?
Shares of specialty insurance provider Palomar Holdings (NASDAQ: PLMR) jumped 8.6% in the afternoon session after the company reported strong third-quarter 2025 financial results that surpassed analyst expectations for both revenue and profitability.
The company posted adjusted earnings per share of $2.01, handily beating the consensus estimate of $1.61. Revenue also showed robust growth, increasing by 64.8% year-over-year to $244.7 million, which also topped Wall Street's forecast. A key driver of this performance was a 66% surge in net premiums earned. Adding to the positive results, Palomar's combined ratio, a measure of an insurer's underwriting profitability where lower is better, was 78.1%, beating expectations and indicating greater efficiency in its core operations.
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What Is The Market Telling Us
Palomar Holdings’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock dropped 14.2% on the news that its mixed second-quarter financial report, where investors focused on weaker underwriting profitability despite a beat on earnings per share. The specialty insurer posted adjusted earnings of $1.76 per share, which topped analyst forecasts. However, the company's combined ratio, a key measure of profitability for insurers, landed at 78.8%, missing estimates. A higher combined ratio indicated that the company paid out more in claims and expenses relative to the premiums it earned. This detail overshadowed other positive news, including an increase in gross written premiums and a raised full-year profit forecast. The market reaction suggested that concerns about underwriting performance outweighed the strong earnings and improved outlook.
Palomar Holdings is up 22.6% since the beginning of the year, but at $128.01 per share, it is still trading 27.1% below its 52-week high of $175.67 from June 2025. Investors who bought $1,000 worth of Palomar Holdings’s shares 5 years ago would now be looking at an investment worth $1,288.
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