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), Palomar Specialty Reinsurance Company Bermuda Ltd. (Palomar Re) (Bermuda), First Indemnity of America Insurance Company (FIA) (Morris Plains, NJ), and Palomar Casualty and Surety Company (Metairie, LA). Concurrently, AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICRs of “a” (Excellent) of PSIC, PESIC, Palomar Re and FIA, which are collectively rated as a group. The outlook of these Credit Ratings (ratings) is stable. In addition, AM Best has also affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Palomar Casualty and Surety Company, which is a separately rated sister company. The outlook of these ratings is positive.
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), though the position has moderated from prior levels reflecting planned capital deployment. Solid liquidity, net underwriting leverage that remains at an acceptable level relative to its capital base and favorable loss reserve development patterns in recent periods remain supportive of the assessment. Furthermore, the implementation of shareholder dividends is not expected to materially impact key balance sheet metrics but is expected to partially offset future capital growth. The group maintains a material level of reinsurance dependency, reflective of the strategic use of excess of loss and quota share arrangements to mitigate exposure. Palomar writes a variety of risks through its admitted and nonadmitted entities, with earthquake coverage remaining a pillar of the portfolio, while the group also concentrates on inland marine/other property, surety/credit, casualty and crop business. Management continues to expand its footprint and curate a portfolio of non-correlated risks. The consolidated group consistently reports profitable results, reflective of diligent underwriting strategies.
The ratings reflect Palomar Casualty and Surety Company’s balance sheet strength, the ratings reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM.
In early 2026, Palomar completed the acquisition of The Gray Casualty & Surety Company, which has since been renamed to Palomar Casualty and Surety Company. The acquisition materially expanded Palomar’s surety portfolio. The positive outlooks reflect the expected benefit Palomar Casualty and Surety Company will receive as it integrates into a larger organization with more sophisticated distribution channels, a formidable capital structure and established back-office functions. The strategic importance of Palomar Casualty and Surety Company is expected to grow as it establishes itself within the organization as a lead source of surety premium.
Palomar Casualty and Surety Company maintains the strongest level of risk-adjusted capitalization, as measured by BCAR. Underwriting leverage does not materially deviate from composite averages and loss reserve development has been generally favorable. These positions are maintained despite considerable growth in premium and exposure, with material premium increases associated with geographic expansion. Results have been consistently profitable over the last five years; however, 2026 results have been affected by changes to expense structures post-acquisition. Nonetheless, the company is expected to be profitable in 2026. The ERM program is considered appropriate for the company as it has been absorbed into the sophisticated and ORSA- compliant program used by Palomar.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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