Palomar Holdings: Fast-growing catastrophe insurer with possible upside of up to 33.3%

Palomar Holdings is a specialty insurance company that provides property and casualty products. It focuses on niche, high-risk, and catastrophe-exposed markets. Palomar has grown rapidly since its founding in 2014, scaling gross written premiums from $16.6 million in its first year to $1.5 billion in 2024 (~57% CAGR). It is now the 2nd largest earthquake insurer in California and the 3rd largest in the U.S. The company’s 2024 ROE was 19.6%, improving significantly from 2.2% in 2020 but slightly trailing the 22.1% average of peers. Palomar’s growth strategy targets expansion within the $965 billion U.S. property and casualty market, while maintaining profitability and diversification. Financially, Q2 2025 showed strong momentum with gross written premiums of $496.3 million (+28.8% YoY) and net earned premiums of $180 million (+47% YoY). Net investment income rose 68% to $13.4 million, supported by higher yields (4.7% vs. 4.3% in Q2 2024) and a larger investment base. Supported by solid results, Palomar raised its 2025 adjusted net income guidance to $198–$208 million, implying growth above 50% and a full-year ROE of ~24%, even after factoring in $8–$12 million of additional catastrophe losses.