What does Palomar Holdings do and what are its main business segments?

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What were the key takeaways from Palomar Holdings's earnings call?

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What were the key takeaways from Palomar Holdings’s earnings call?

- **Exceptional Growth**: Q3 2025 saw 44% YoY gross written premium and 70% YoY adjusted net income growth, driven by specialty insurance diversification.
- **Strategic Expansion**: $300 million Gray Surety acquisition to enhance surety platform and achieve top 20 market position.
- **Segment Strengths**: Earthquake (11% growth), Inland Marine (50% growth), Casualty (170% growth), and Crop ($120M Q3 premium) all outperformed expectations.
- **Financial Excellence**: 25.6% ROE, 74.8% combined ratio, and $878 million equity support future growth.
- **Guidance Update**: 2025 net income raised to $210-$215 million, achieving 3-year Palomar 2X target with 59% YoY growth.

**CEO Summary Section**
- **Record Growth**: Q3 2025 saw 44% YoY growth in gross written premium and 70% YoY increase in adjusted net income, driven by diversified specialty insurance products.
- **Strategic Acquisitions**: Announced acquisition of Gray Surety for $300 million, expected to close in Q1 2026, enhancing surety platform and market reach.
- **Key Business Segments**:
  - **Earthquake**: 11% YoY growth in admitted and E&S residential earthquake products, with 88% policy retention. Commercial earthquake faced 18% rate decline but still grew due to franchise strength.
  - **Inland Marine & Other Property**: 50% YoY growth, driven by Hawaii hurricane and builders' risk products. Added underwriters in Boston and Dallas for national expansion.
  - **Casualty**: 170% YoY growth, with strong performance in environmental liability and healthcare liability lines.
  - **Crop**: Doubled YoY premium to $120 million, on track for $230 million FY2025, targeting $500 million in intermediate term.
- **Guidance Update**: Raised 2025 adjusted net income to $210-$215 million (midpoint +59% YoY), implying 24% ROE and 3-year Palomar 2X target achievement.

**CFO Financial Commentary**
- **Financial Highlights**: Q3 2025 adjusted net income $55.2 million (+70% YoY), combined ratio 74.8%, ROE 25.6%.
- **Premium Metrics**: Gross earned premium $518.8 million (+44% YoY), net earned premium $225.1 million (+66% YoY). Crop and Casualty drove growth.
- **Loss Ratio**: 32.3% for Q3, 27.7% YoY, benefiting from conservative reserving and attritional losses.
- **Investment Income**: $14.6 million (+55% YoY) with 4.7% yield, supporting capital growth.
- **Capital Position**: Equity $878 million, enabling M&A and share buybacks ($37.3 million repurchased in Q3).

**Q&A Key Highlights**
- **Surety Market**: Gray acquisition positions Palomar as top 30 national surety carrier, targeting top 20 with $1 billion+ T-listed capacity.
- **Crop Growth**: 2025 premium target $230 million, 2026+ expansion via tech investment and talent in Kansas/Oklahoma.
- **Commercial Property**: 18% rate decline but growth sustained via residential earthquake and reinsurance market softening.
- **Net Earned Ratio**: Q3 low point (43.4%), expected to rise in Q4 and 2026 due to crop and Casualty growth.
- **Fronting Business**: Q3 decline due to Omaha National runoff, Q4 to reflect underlying performance with selective partnerships.
- **Healthcare Liability**: New line with 60% hospital liability focus, 20%+ rate increases in soft market.
- **Flood Policy Stickiness**: 88% retention in residential earthquake, private market confidence post-NFIP shutdown.

Palomar Holdings, Inc. (PLMR) Q3 2025 Earnings Call Transcript

Revenue

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PLMR

PLMR fundamentals

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