Palomar (PLMR 1.41%), a specialty property insurance coverage supplier identified for its give attention to area of interest markets corresponding to earthquake and specialty traces, introduced its Q2 2025 outcomes on August 4, 2025. A very powerful headline: Palomar delivered better-than-expected non-GAAP earnings per share and raised its outlook for adjusted internet earnings for 2025. Non-GAAP earnings per share got here in at $1.76, forward of the $1.67 non-GAAP analyst estimate, whereas GAAP income was reported as $203.3 million. Web earned premiums, a core insurance coverage metric, climbed 47.2% year-over-year (GAAP). Total, the interval was marked by stable natural progress throughout key enterprise traces, will increase in profitability, and tangible progress on Palomar’s diversification initiatives.
MetricQ2 2025Q2 2025 EstimateQ2 2024Y/Y ChangeEPS (Non-GAAP)$1.76$1.67$1.2540.8 %Income (GAAP)$203.3 millionN/A$131.1 million55.1 %Web Earned Premiums$180.0 million$122.3 million47.2 %Adjusted Mixed Ratio73.1 %73.1 %0.0 %Annualized Adjusted Return on Equity23.7 %24.7 %(1.0) pp
Supply: Analyst estimates supplied by FactSet. Administration expectations based mostly on administration’s steerage, as supplied in Q1 2025 earnings report.
Palomar’s Enterprise and Progress Focus
Palomar’s core enterprise facilities on specialty property and casualty insurance coverage for underserved danger classes. It holds a outstanding place in earthquake insurance coverage in California, is rising quickly in casualty, with gross written premium for casualty rising 113% year-over-year, and in addition serves markets like inland marine, fronting, and crop insurance coverage. Its aggressive edge comes from utilizing superior expertise platforms and proprietary analytics for underwriting and pricing, permitting for velocity and adaptability.
Lately, Palomar has prioritized diversification. It’s broadening its insurance coverage choices outdoors earthquake protection, specializing in product growth, geographic attain, and buyer combine. These strikes goal to scale back its reliance on any single danger kind or area. Key success components embody disciplined danger administration, robust reinsurance packages, and investments in operational expertise.
Quarter in Element: Income Progress, Phase Traits, and Profitability Drivers
Palomar noticed a notable improve in enterprise exercise. Web earned premiums (GAAP) elevated from $122.3 million in Q2 2024 to $180.0 million, reflecting growth throughout product traces. Progress in premiums written was strongest within the casualty section, which surged 118.8% to $128.2 million and The casualty section now composes over 1 / 4 of whole gross written premium. Inland marine and property traces gross written premiums grew 28.4%. Crop insurance coverage posted spectacular good points, with gross written premium rising from $2.2 million to $39.5 million yr over yr. Conversely, the fronting section, beforehand a bigger contributor, declined 36.5% as anticipated as a result of wind-down of a significant partnership.
The diversification technique was evident within the quarterly combine: earthquake made up 29.8% of gross written premiums (down from 35.1% in Q2 2024), whereas no single line exceeded that share. Geographically, California publicity was 33.0% of gross written premium, additional highlighting Palomar’s broader portfolio. This stability limits focus danger and displays a shift towards markets with increased progress potential.
Key profitability metrics additionally improved. The adjusted mixed ratio (non-GAAP), which measures claims and bills as a share of premiums earned, remained secure at 73.1%. The mixed ratio excluding disaster losses ticked up, and upfront expense recognition associated to crop enterprise growth. Loss ratios, which present claims prices in comparison with premiums, rose modestly from 24.9% in Q2 2024 to 25.7%, whereas the disaster loss ratio (non-GAAP) dropped to zero, signaling an absence of main insured occasions this era. The expense ratio (GAAP) improved, falling to 53.1% from 54.2% in comparison with Q2 2024.
Earthquake insurance coverage, Palomar’s unique specialty, recorded slower however regular progress, with administration anticipating mid- to high-teens gross written premium progress for FY2025. Because of investments in new expertise and acquisitions like Superior AgProtection. Notably, the fronting enterprise is in runoff and turning into much less vital for the corporate’s outlook. On the finance facet, internet funding earnings rose 68.0% yr over yr, benefiting from increased yields and a much bigger asset base, whereas annualized adjusted return on fairness (non-GAAP) was 23.7%.
Strategic Initiatives and Threat Administration Execution
Throughout the interval, Palomar made progress on a number of strategic initiatives. Specialty insurance coverage markets like earthquake stay core to its identification, however growth in casualty, crop, and inland marine has reshaped its income stability. The acquisition of Superior AgProtection expanded the crop enterprise’s geographic attain and distribution footprint. In the meantime, the deliberate runoff of the fronting section, notably following the termination of bigger partnerships, continued as forecast and may have much less influence after the following quarter.
The corporate additionally executed a profitable renewal of its reinsurance program at an adjusted charge lower of roughly 10% year-over-year. Reinsurance is a type of insurance coverage for insurers, letting Palomar restrict its publicity to giant, unpredictable occasions like pure disasters. The construction of its disaster bond placements and reinsurance treaties has additional decreased volatility, as evidenced by the minimal disaster losses this quarter.
Funding in expertise and analytics was once more highlighted, supporting automation and operational scale. These efforts permit for extra focused underwriting in specialty traces and keep Palomar’s aggressive place, although the corporate is incurring further prices because it builds out new traces, particularly crop.
The corporate doesn’t presently pay a dividend.
Wanting Forward: Outlook and Watch Factors
Administration raised its full-year adjusted internet earnings steerage to a variety of $198–208 million (non-GAAP) for 2025, up from the prior estimate of $186–200 million (adjusted internet earnings). This new outlook components in a possible $8–12 million in catastrophe-related losses for the rest of the yr, in addition to the anticipated seasonal results from crop insurance coverage operations. Total, the corporate expects the mixed ratio to be within the mid-to-upper 70% vary.
Traders ought to monitor a number of evolving developments and dangers. These embody sustained progress in casualty and crop gross written premiums, ongoing discount within the fronting section, expense ranges tied to scaling new traces, the attritional loss ratio as enterprise combine adjustments, and potential shifts in reinsurance market circumstances. Analysts will look to see—particularly as the corporate adapts to altering aggressive pressures.
Income and internet earnings offered utilizing U.S. typically accepted accounting ideas (GAAP) until in any other case famous.
