Palomar Holdings, Inc. (PLMR): Business Model Canvas [Dec-2025 Updated]

You're digging into the nuts and bolts of Palomar Holdings, Inc. (PLMR) to see how they're actually making money in the tricky world of catastrophe insurance, and honestly, the numbers from late 2025 paint a clear picture. This isn't your standard carrier; they are laser-focused on underserved, high-risk properties, evidenced by their $597.2 million in Q3 2025 Gross Written Premiums and a tight 75% Adjusted Combined Ratio. They manage this by expertly offloading risk to over a hundred reinsurers while using proprietary tech to price those tricky earthquake and hurricane exposures granularly. It's a high-stakes game of risk transfer, and they seem to be winning right now. Dive below to see the full nine blocks of their business engine.

Palomar Holdings, Inc. (PLMR) - Canvas Business Model: Key Partnerships

You're looking at the core relationships Palomar Holdings, Inc. relies on to manage risk and grow its specialty book. These partnerships are critical, especially for a company focused on catastrophe-exposed lines.

The reinsurance panel is extensive and highly rated. Palomar Holdings, Inc. maintains a reinsurance panel consisting of over 100 reinsurers and Insurance Linked Securities (ILS) investors as of mid-2025. Every partner on this panel must have an "A-" (Excellent) or better financial strength rating from A.M. Best and/or S&P, or they must be fully collateralized. This deep bench of capital providers is fundamental to Palomar's risk management structure.

Capital markets investors, specifically catastrophe bond investors, provided a significant boost to earthquake capacity in 2025. Palomar Holdings, Inc. successfully priced its sixth and largest ILS transaction, the Torrey Pines Re Series 2025-1 catastrophe bond, securing an upsized limit of $525 million. This single issuance provided capital markets backed reinsurance protection against California earthquake losses, exceeding the initial target of $425 million. This deal, combined with other multi-year agreements, contributed to a total of $1.15 billion of multi-year ILS capacity in the reinsurance program as of June 1, 2025.

Here is a quick view of the ILS capacity secured through the latest major placement:

Distribution partners form the front end of the business. Palomar Holdings, Inc. works through established channels to bring its specialty products to market. These include:

• Retail agents
• Wholesale brokers
• Program administrators

The PLMR-FRONT division specifically targets strategic fronting partners for non-admitted lines. This business partners with reinsurers, insurance carriers, and Managing General Agents (MGAs) to offer customized insurance programs. PLMR-FRONT provides access to paper on an admitted basis via Palomar Specialty Insurance Company and on a non-admitted basis through Palomar Excess and Surplus Insurance Company. For instance, Palomar Holdings, Inc. entered a multi-year fronting arrangement with Advanced AgProtection in the crop insurance sector. In Q3 2025, all product groups within Palomar Holdings, Inc., save for the fronting business, experienced double-digit growth, showing the broader distribution network's strength.

Palomar Holdings, Inc. (PLMR) - Canvas Business Model: Key Activities

You're looking at the core engine of Palomar Holdings, Inc., which is all about taking on risks others shy away from, but doing it with a data-first approach. The primary activity is definitely specialty underwriting for catastrophe-exposed risks. For instance, looking at their Q3 2025 performance, you see the results of this focus: Net Premiums Earned hit $\text{225.1 million}$ for that quarter alone. That underwriting discipline is key; their reported Q3 2025 combined ratio was a tight $\text{78.1%}$. They are defintely driving hard on profitable growth, as evidenced by the $\text{26%}$ adjusted return on equity reported for that same period.

To manage that catastrophe exposure, securing and managing a vast reinsurance program is a non-negotiable key activity. Palomar Holdings announced the successful placement of key programs effective June 1, 2025, which solidified their capacity. This effort resulted in a total reinsurance coverage that extends to a massive $\text{3.53 billion}$ for earthquake events. They also secured $\text{100 million}$ in coverage for continental United States hurricane events. Here's a quick look at how that capacity was structured post-placement:

Also part of managing that risk is sourcing capital efficiently. A significant portion of that earthquake protection, specifically $\text{525 million}$ of the $\text{3.53 billion}$ limit, was sourced through their sixth and largest Torrey Pines Re catastrophe bond issuance. This activity shows a sophisticated reliance on capital markets to supplement traditional reinsurance panels, which themselves comprise over $\text{100}$ reinsurers and ILS investors.

The third critical activity is developing proprietary data analytics for granular pricing. Palomar Holdings operates on a proprietary platform that uses automated processes to apply detailed data and analytics across all functions. This isn't just back-office stuff; it directly impacts the front end of the business. The internally developed Palomar Automated Submission System (PASS) integrates several core functions, which helps them maintain that granular underwriting approach.

• Integrating policy issuance and quoting
• Streamlining billing processes
• Providing advanced risk-management insights
• Enabling rapid binding of policies

Finally, Palomar Holdings is actively engaged in integrating The Gray Casualty & Surety Company, a move announced in late October 2025. This is a $\text{300 million}$ cash acquisition, subject to customary closing adjustments, with an expected close in the first half of 2026. This key activity is about bolstering their surety franchise, adding a carrier licensed in all $\text{50}$ states and operating through $\text{13}$ regional offices. Finance: draft the integration budget allocation for the surety team by next Tuesday.

Palomar Holdings, Inc. (PLMR) - Canvas Business Model: Key Resources

You're looking at the core assets Palomar Holdings, Inc. (PLMR) relies on to execute its specialty insurance model. These aren't just abstract concepts; they are hard numbers and specific capabilities that drive their competitive edge in niche catastrophe and specialty lines.

The financial foundation is substantial. As of September 30, 2025, Palomar Holdings, Inc. reported $1.3 billion in cash and invested assets. This liquidity supports operations and capital requirements. Furthermore, the company is growing its top line significantly; Gross Written Premiums (GWP) increased to $597.2 million for the third quarter of 2025 alone. Management's confidence in their model is reflected in the raised full-year 2025 adjusted net income guidance, targeting a range of $210 million to $215 million.

A critical resource is the intellectual property underpinning their operations. Palomar Holdings, Inc. uses proprietary data analytics and a modern technology platform to price and select risks with granular precision. This technology, which includes the Palomar Risk Intelligence & Specialty Modeling (PRISM) platform, allows them to instantly quote and bind policies, which helps cut acquisition costs. This technological edge is paired with a focus on complex, niche markets where standard carriers often pull back.

The strength of the underwriting subsidiaries is a direct measure of their operational success and capital backing. AM Best assesses the balance sheet strength of the group as very strong. Here is a breakdown of the key ratings as of late 2025:

The holding company itself, Palomar Holdings, Inc., maintains a Long-Term ICR of "bbb" (Good). The outlook for FIA was revised to positive, reflecting expected integration benefits.

The specialized underwriting expertise is focused on specific, often catastrophe-exposed, lines of business. This focus allows Palomar Holdings, Inc. to better serve markets they believe are underserved. Their core areas of concentration include:

• Earthquake coverage, which remains a pillar of the portfolio.
• Inland Marine and Other Property.
• Casualty and Fronting business.
• Crop insurance.

Furthermore, Palomar Holdings, Inc. is actively expanding this expertise, notably into the surety space, through the acquisition of FIA in January 2025 and the announced agreement to purchase The Gray Casualty & Surety Company, which has a larger footprint in contract surety. This strategic use of reinsurance with a diverse panel of reinsurers is also a key resource for mitigating exposure volatility.

Finance: draft 13-week cash view by Friday.

Palomar Holdings, Inc. (PLMR) - Canvas Business Model: Value Propositions

Palomar Holdings, Inc. (PLMR) focuses its value proposition on providing specialized insurance capacity where traditional markets have retreated or underpriced risk.

Coverage for underserved catastrophe-exposed risks (e.g., Earthquake, Hawaii Hurricane)

Palomar Holdings, Inc. targets niche, high-risk, and catastrophe-exposed markets. The company established itself as the 2nd largest earthquake insurer in California and the 3rd largest in the U.S. based on 2024 figures.

• Product lines include Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop.
• Secured $455 million in incremental limit for Earthquake franchise in June 2025, bringing total coverage to $3.53 billion for earthquake events.
• Maintained an earthquake event retention of $20 million.
• Reduced hurricane event retention to $11 million from $15.5 million.
• Executed its first standalone excess of loss treaty for Hawaii hurricane policies through Laulima Exchange.

Flexible products with customized, granular pricing

The demand for Palomar Holdings, Inc.'s offerings is evident in its premium growth across its balanced book of business. Gross Written Premiums (GWP) reached $597.2 million in the third quarter of 2025, a 43.9% increase year-over-year. In the first quarter of 2025, GWP was $442.2 million, marking a 20.1% increase year-over-year.

The growth is driven by new products and a balanced mix of residential and commercial property products.

Financial security backed by a strong reinsurance panel

Financial strength is maintained through robust capital and extensive risk transfer mechanisms. Stockholders' Equity stood at $878.1 million as of September 30, 2025. Reinsurance recoverables, which represent funds owed to Palomar Holdings, Inc. from its reinsurers, totaled $436.87 million as of the second quarter of 2025.

The company leverages a strong panel of reinsurers and capital markets for security.

Efficient, technology-enabled policy issuance and service

Operational efficiency is demonstrated by strong underwriting results, which Palomar Holdings, Inc. attributes in part to its advanced technology. The company's adjusted combined ratio, excluding catastrophe losses, was 68.9% in the first quarter of 2025. For the third quarter of 2025, the adjusted combined ratio was 75%. The adjusted return on equity for the third quarter of 2025 was 26%.

• Adjusted Combined Ratio (Q2 2025): 73%.
• Adjusted Return on Equity (Q2 2025): 23.7%.
• Net Earned Premiums (Q3 2025): $225.1 million (66.0% year-on-year growth).

Palomar Holdings, Inc. (PLMR) - Canvas Business Model: Customer Relationships

You're looking at how Palomar Holdings, Inc. (PLMR) manages the flow of business from its various customer types. Honestly, for an insurer like Palomar, the relationship structure is all about who brings the risk to the table and how much hands-on work is needed to service it.

Indirect relationship managed through independent agents/brokers

The bulk of Palomar Holdings, Inc.'s business flows through intermediaries, which is standard for specialty lines. These agents and brokers are the primary touchpoint for many policyholders, meaning Palomar's success hinges on keeping this network happy and efficient. Think about the scale: in the third quarter of 2025 alone, Palomar Holdings, Inc. wrote gross premiums totaling $597.2 million. That massive volume requires a broad, indirect channel strategy to access diverse, underserved markets. The trust these agents place in Palomar Holdings, Inc. is underpinned by the financial strength rating of "A" (Excellent) held by its insurance subsidiaries from A.M. Best, which is a key selling point for them to use Palomar's paper.

Dedicated support for program administrators and wholesale partners

Program administrators and wholesale partners are more than just brokers; they often bring a specialized book of business, sometimes with unique risk characteristics. Palomar Holdings, Inc. provides dedicated support here because these relationships are strategic and high-volume. For instance, the crop segment, which relies heavily on these partners, involves ceding 70% of its premiums and losses. This level of cession means the relationship management must be tight to ensure proper risk transfer and alignment, even though Palomar retains less of the immediate premium. The company's focus on building strong relationships with distribution partners is crucial to its overall strategy.

Technology-driven self-service tools for policy management

To manage the sheer volume coming from the indirect channels without ballooning overhead, technology is the backbone. Palomar Holdings, Inc. emphasizes proprietary analytics and modeling for risk assessment, which also translates into streamlined operations for partners. While specific self-service adoption rates aren't public, the efficiency gains are visible in the financial results. For example, in the second quarter of 2025, the net earned premiums as a percentage of gross earned premiums-the net-to-gross ratio-was 44%, up from 37.4% in the prior year's second quarter. This year-over-year increase reflects improved reinsurance and potentially higher growth in non-fronting lines that seed less premium, suggesting technology helps manage the retained risk portfolio effectively.

High-touch relationship for large commercial and fronting clients

For the largest, most complex risks, especially in commercial property, the relationship shifts to a high-touch model. These clients require bespoke underwriting and service that technology alone can't provide. While Palomar Holdings, Inc. noted commercial property rate pressure, with large commercial earthquake pricing falling over 20% in one period, maintaining these relationships demands direct engagement to secure the remaining business and negotiate terms. The company's overall gross written premium growth, reaching $496.3 million in Q2 2025, shows they are successfully balancing the high-touch needs of large clients with the scale provided by their broader distribution network.

Here's a quick look at the scale of operations that these customer relationships support as of mid-to-late 2025:

The success in achieving an adjusted combined ratio of 75% in Q3 2025 is a direct reflection of how well these relationship structures-from the broad agent base to the dedicated wholesale partners-are feeding quality, well-priced risk into Palomar Holdings, Inc.'s underwriting engine.

Finance: draft the Q4 2025 partner commission accrual estimate by next Tuesday.

Palomar Holdings, Inc. (PLMR) - Canvas Business Model: Channels

Palomar Holdings, Inc. uses a multi-faceted approach to get its specialty insurance products to market, relying heavily on established intermediary relationships.

Independent Retail Agents and Brokers

Palomar Holdings, Inc. utilizes a national distribution network that includes independent brokers and agents to place its specialty property and casualty coverages. This network is the primary conduit for much of the company's business across its various lines.

Wholesale Brokers (for Excess & Surplus lines)

The Excess & Surplus (E&S) lines business is a core component of Palomar Holdings, Inc.'s portfolio, which is typically accessed through wholesale brokers. The company's book is described as a balanced mix of E&S and admitted products. For the second quarter of 2025, Gross Written Premiums reached $496.3 million, reflecting activity across these channels.

Program Administrators

The company operates a segment called Specialty Program Management, which aligns with the Program Administrator channel. Growth in specific lines suggests strong program uptake. For instance, the casualty segment GWP surged 118.8% to $128.2 million in the second quarter of 2025, representing over a quarter of total Gross Written Premium. Furthermore, the crop insurance business, which expanded via the Advanced AgProtection acquisition, had initial projections for premiums to reach $200 million for fiscal year 2025.

The company's focus on new product lines like Crop and Casualty is driving overall premium expansion, with Gross Written Premiums increasing by 20% year-over-year in the first quarter of 2025, reaching $442.2 million.

Direct-to-consumer digital channels (implied by modern platform)

While the primary focus remains on brokers, opportunities are noted in Digital distribution partnerships. The company supports its underwriting with proprietary data analytics and underwriting platforms, which facilitate efficient placement through its partners. The company's overall Gross Written Premiums for the third quarter of 2025 were $597.2 million, up 43.9% year-over-year.

The scale of business flowing through these channels is reflected in the following key financial metrics for the first three quarters of 2025:

The company's strategy involves maintaining a resilient and diversified portfolio, which is supported by these varied distribution methods.

• The casualty segment GWP growth in Q2 2025 was 118.8%.
• Inland marine and property lines GWP grew 28.4% in Q2 2025.
• The company raised its full-year 2025 adjusted net income guidance to a range of $210 million to $215 million as of the third quarter.
• The Q3 2025 combined ratio was 78.1%, with an adjusted combined ratio of 74.8%.

Finance: draft 13-week cash view by Friday.

Palomar Holdings, Inc. (PLMR) - Canvas Business Model: Customer Segments

You're looking at Palomar Holdings, Inc. (PLMR)'s customer base as of late 2025, and it's clear they are focused on specialty risks where standard carriers often pull back. The entire book is built around a balanced mix of residential and commercial property and casualty products, plus their growing specialty lines. For the third quarter of 2025, the total premium flowing in, or Gross Written Premiums (GWP), hit $597.2 million. This shows you the scale of the customer base they are serving across their various segments.

The core of the business remains tied to property owners in high-risk zones. For residential property owners, especially in catastrophe-exposed areas like California and Hawaii, Palomar is a major player. They are known as the second largest earthquake insurer in California, and you can see the focus on these specific risks in their rate setting; for instance, the Hawaii hurricane segment was expected to sustain strong growth, driven by rate increases of 26%. This segment is critical, as management noted that residential property products, like earthquake insurance, are expected to counterbalance challenges seen elsewhere.

Commercial businesses needing specialty property and casualty coverage form the other major pillar. Palomar serves this group through both their admitted and Excess & Surplus (E&S) lines. Management highlighted the stability derived from their balanced book of E&S and admitted residential and commercial property and casualty products. While the company noted they foresee challenges in the commercial property space due to competitive pressures, the overall GWP growth-which was 43.9% year-over-year in Q3 2025-shows continued demand across the commercial spectrum.

The segment of insurers seeking fronting services for specialty lines is an important, though less granularly detailed, part of the structure. Palomar lists Fronting as one of its five core product categories. This service allows other carriers to access Palomar's underwriting expertise and admitted paper without having to build out their own infrastructure for those specific, often complex, risks. While we don't have a standalone premium figure for Q3 2025 fronting revenue, its inclusion as a core product category confirms it's an active customer segment.

Finally, the agricultural producers segment has seen a significant, strategic build-out through the Crop Insurance Services. This was bolstered by the successful acquisition of Advanced AgProtection. This segment is now a key growth driver; management projected that the crop business written premium would exceed $200 million for the full year 2025. This aggressive growth in a new specialty line is a clear indicator of Palomar Holdings, Inc. (PLMR) actively diversifying its customer risk pool beyond traditional property catastrophe exposure.

Here's a quick look at the key performance indicators and segment-related scale as of the mid-to-late 2025 reporting periods:

You can see the diversification efforts are paying off with the growth in Crop and Casualty lines. The customer base is being intentionally broadened, moving from a heavy reliance on admitted residential property to a more complex mix:

• Residential property owners in catastrophe-prone states.
• Commercial businesses for specialty property and casualty risks.
• Insurers utilizing Palomar Holdings, Inc. (PLMR) for fronting services.
• Agricultural producers via the Crop franchise.

Finance: draft Q4 2025 segment exposure report by next Tuesday.

Palomar Holdings, Inc. (PLMR) - Canvas Business Model: Cost Structure

The cost structure for Palomar Holdings, Inc. is heavily weighted toward claims and risk transfer mechanisms, reflecting its core business as a specialty property and casualty insurer.

Reinsurance and ceded premium costs represent a significant outflow, essential for managing accumulation risk across its property catastrophe exposure. For the third quarter of 2025, Palomar Holdings ceded written premiums amounting to $321.9 million (or $321,927 thousand). This ceded premium is calculated against the gross written premiums for the period, which reached $597.2 million in Q3 2025.

Claims and loss adjustment expenses (LAE) are the next major cost component. For the third quarter of 2025, the total reported losses and LAE were $72.8 million. This translated directly into a reported loss ratio of 32.3% for the quarter. Breaking this down further, the attritional loss ratio stood at 31.5%, while the catastrophe loss ratio was notably low at 0.8% for Q3 2025.

Underwriting and operating expenses are captured within the combined ratio metrics. Palomar Holdings reported an adjusted combined ratio of 74.8% for Q3 2025, which aligns with the management commentary citing an adjusted combined ratio of 75%. The total underwriting expenses are composed of acquisition costs and other underwriting expenses.

Acquisition costs for new business, which include commissions paid to agents and brokers, were reported as $56.270 million (or $56,270 thousand) for Q3 2025, net of ceding commissions and fronting fees. As a ratio relative to gross earned premium for the quarter, this acquisition expense was 10.8%.

Other underwriting expenses, which encompass general administrative and operating costs, totaled $48.306 million (or $48,306 thousand) in the third quarter of 2025. The ratio of these other underwriting expenses was 7.9% of gross earned premium.

Technology maintenance and platform development costs are embedded within the Other underwriting expenses line item, as specific figures for technology spending are not separately itemized in the primary financial highlights. The overall expense structure for Q3 2025 can be summarized as follows:

The efficiency of the cost base is further evidenced by the components contributing to the overall underwriting performance:

• Loss Ratio (Attritional): 31.5% in Q3 2025.
• Loss Ratio (Catastrophe): 0.8% in Q3 2025.
• Combined Ratio (GAAP): 78.1% in Q3 2025.
• Adjusted Combined Ratio: 74.8% in Q3 2025.

You can see the core cost drivers are claims and the cost of transferring risk off the balance sheet.

Palomar Holdings, Inc. (PLMR) - Canvas Business Model: Revenue Streams

You're looking at how Palomar Holdings, Inc. actually brings in the cash to cover its claims and grow its book. Honestly, for an insurer, it boils down to a few core areas, and the latest numbers from Q3 2025 show a healthy mix, defintely leaning on premium growth.

The revenue streams for Palomar Holdings, Inc. are built around its specialty insurance operations and managing the money it holds before paying out claims (the float). Here are the key components making up the top line:

• Gross Written Premiums from specialty insurance products, which hit $597.2 million in Q3 2025.
• Net Earned Premiums from retained risk, representing the portion of premiums Palomar keeps after ceding some risk to reinsurers; this was $225.1 million for the quarter.
• Net Investment Income on invested assets, which saw a significant jump to $14.6 million in Q3 2025 due to higher yields and larger balances.
• Fee income from fronting arrangements, which is earned by providing the paper for other carriers to write business on, contributing to the total revenue figure.

To give you a clearer picture of the scale of these revenue drivers in the third quarter of 2025, check out this breakdown of the major components:

The total revenues, which include premiums earned, investment income, and other income like fronting fees, reached $244.7 million for the third quarter of 2025. This shows you the combined effect of writing new business and earning returns on the capital base.