PLMR · Palomar Holdings
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $133
Note written ·
In the portfolio Since : +0.1% from the average price paid for its shares, 0.9 percentage points ahead of the S&P 500 from the minute it was bought. See the portfolio.
Why it was bought
Bought 11 November 2026 on results. The fact behind it, dated 4 November 2026: Q3 2026 results: gross written premium +28.4% to $767.0 million, adjusted net income +47.4% to $81.3 million, and fiscal 2026 adjusted net income guidance raised a fourth time, to $280–285 million from $270–280 million.
Price against the kill line
19.7% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $133.00, on record since 10 November 2026. The shares are up 28.9% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $133, under the 50-day moving average and the 4 November 2026 pre-report close of $144.04, which would erase the post-report gain. A cut to or miss of the $280–285 million fiscal 2026 adjusted net income guidance would also show the case failing.
The portfolio's case
Palomar is compounding earnings faster than premiums: Q3 gross written premium +28.4%, adjusted net income +47.4%, adjusted ROE 33.1%, expense ratio 39.3% vs 45.8%, and a fourth 2026 guide raise to $280–285 million. At about 13x Truist's $12.00 2027 EPS it is valued as an earthquake insurer in a softening market, not a diversified specialty carrier with about $425 million of crop premium.
The portfolio sells if one of these comes true
- Fiscal 2027 guidance (expected around February 2027) implies adjusted net income growth below about 10%, or Palomar cuts or misses its fiscal 2026 adjusted net income range of $280–285 million.
- Q4 2026 or Q1 2027 earthquake gross written premium declines year over year, or commercial earthquake renewal rate cuts deepen beyond about 20%.
- Casualty premium growth does not return to double digits by Q1 2027, or the adjusted combined ratio rises above roughly 80% outside catastrophe quarters.
It can also sell when that day's research finds the stock fully priced, for a clearly better use of the money, to limit risk in the portfolio, on the weekly review's plan, when a cash takeover pays the shares out or at the end set for a shorter trade when it was bought. A close through the kill line (on a weekly line, a weekly close) means the note's call is wrong: the note is re-read, and the portfolio reads the new note at its next decision. The price alone never sells.
Catalyst
The business · as of
Palomar Holdings is a specialty insurer. It sells earthquake, other catastrophe property, casualty, crop, surety and related cover to homeowners, businesses and farmers, and earns underwriting profit plus investment income on premiums it holds. Total revenue was $386.59 million in the quarter to 30 September 2026 (10-Q filed 6 November 2026).
What is changing, and what follows · as of
- What is changing now
- On 4 November 2026 Palomar raised fiscal 2026 adjusted net income guidance to $280–285 million, its fourth raise of 2026, after third-quarter gross written premium rose 28.4% to $767.0 million (results release).
- What follows for the company
- Crop premium of $226.7 million (up 89.3%) drives growth while the loss ratio rose to 41.5% from 32.3%; a lower expense ratio of 39.3% kept the adjusted combined ratio at 76.3% (results release, 4 November 2026).
- What follows for its customers, suppliers and competitors
- Commercial earthquake rate cuts of about 20% point to a softer market for rivals Palomar's 10-K names, including Chubb (CB), American International Group (AIG) and Heritage Insurance (HRTG).
What the price assumes · as of
At the 13 November 2026 close (filed inputs to 6 November 2026) the shares trade at 19.3 times earnings and 4.3 times book value, for a market value of $4,186 million, with enterprise value not meaningful for an insurer; that holds only if net income keeps growing from the $217 million of the four quarters to 30 September 2026 while revenue keeps rising near the 58% of the latest filed quarter.
Key figures from the filings · Financials
Quarter to 30 September 2026, filed 6 November 2026; valuation at the 13 November 2026 close
- Net income, latest quarter ($M)
- 65.3
- Net income, four quarters ($M)
- 217
- Shareholders' equity ($M)
- 985
- Price to earnings (×)
- 19.3
- Price to book value (×)
- 4.3
- Revenue, latest quarter ($M)total revenues, including investment gains and losses
- 387
- Revenue, change on a year (%)
- +58.0
- Market value ($M)
- 4,186
Palomar Holdings is an insurer: net cash, enterprise value and free cash flow are not shown, because a bank's or insurer's cash and investments back its deposits and policies.
All filed numbers
What Palomar Holdings reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 387 | +58.0 | 21.9 |
| first filed | 314 | +54.7 | 22.2 |
| first filed | 279 | +59.7 | 19.2 |
| first filed | 253 | +62.7 | 28.7 |
| first filed | 245 | +64.8 | 27.4 |
| first filed | 203 | +55.1 | 29.5 |
| Pre-tax income ($M) | 84.7 |
| Net income ($M) four quarters: 217 | 65.3 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −1.6 |
| Operating cash flow ($M) | 452 |
| Capital spending ($M) | 0.5 |
| Free cash flow ($M) | Not meaningful |
Not meaningful: a bank's or insurer's operating cash flow moves with its deposits, loans and policy reserves, so it is not cash free for its owners.
| Cash and short-term investments ($M) | 55.6 |
| Debt ($M) long-term debt | 294 |
| Net cash, cash less debt ($M) | Not meaningful |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 667 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 985 |
Not meaningful: a bank's or insurer's cash and investments back its deposits and policies.
| Market value ($M) | 4,186 |
| Enterprise value, market value plus net debt ($M) | Not meaningful |
| Enterprise value to sales (×) | Not meaningful |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | 19.3 |
| Price to book value (×) | 4.3 |
| Free-cash-flow yield (%) | Not meaningful |
Not meaningful: a bank's or insurer's cash and investments back its deposits and policies.
Not meaningful: a bank's or insurer's operating cash flow moves with its deposits, loans and policy reserves, so it is not cash free for its owners.
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 2.7% of shares outstanding sold short, 3.2 days of average trading to cover, −5.5% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $135 | $1.6M |
| 12 monthsfrom | $135 | $21.9M |
Linked companies · as of
- Competitors:
- CB, AIG, HRTG
The thesis
Palomar Holdings is more likely than not to beat the S&P 500 over the next three months, because earnings estimates are still rising after the company's fourth guidance raise of 2026. On 4 November 2026 it lifted fiscal 2026 adjusted net income guidance to $280–285 million. The fourth-quarter report, expected around February 2027, settles the case: it tests that range and shows whether earthquake and casualty premium recover.
Three brokers raised their targets after the report. Keefe, Bruyette & Woods (KBW) raised its target to $172 on 10 November 2026. Truist raised to $175 and Piper Sandler to $174 on 6 November 2026. Benzinga reported all three, and all three firms kept positive ratings.
The shares closed at $159.20 on 13 November 2026. That is 28.9% higher than three months earlier and 1.8% below the 52-week intraday high of $162.08 set on 5 November 2026. The rating is medium for two reasons. Estimates are still moving up, which supports the shares. The price has already closed much of the gap to the $172–175 targets, which leaves little room for a disappointment. The case fails if the $280–285 million range is cut or missed, or if the adjusted combined ratio rises above roughly 80% in a quarter without major catastrophe losses. The combined ratio measures losses and costs per dollar of premium earned.
Bullish and bearish views on Palomar Holdings, Inc.
The bull case on Palomar Holdings, Inc. (PLMR), in brief: guidance rose for the fourth time. The bear case: most of the growth came from crop.
Bull case
- Guidance rose for the fourth time. On 4 November 2026, Palomar raised fiscal 2026 adjusted net income guidance to $280–285 million, from the $270–280 million set on 4 August 2026. MarketBeat's summary of the 5 November 2026 call puts the midpoint at about 31% growth over 2025.
- The quarter beat by a wide margin. Adjusted earnings per share (EPS) were $3.01 against a $2.55 estimate, per Benzinga on 4 November 2026. Adjusted net income rose 47.4% to $81.3 million, per the company's results release.
- Revenue grew 58% in the filed quarter. The 10-Q filed on 6 November 2026 reports third-quarter revenue of $386.59 million, against $244.66 million a year earlier. Revenue has grown more than 54% from a year earlier in each of the last six filed quarters.
- Crop insurance keeps beating plan. Palomar raised its 2026 crop premium outlook to about $425 million, from an initial $320 million, per MarketBeat's summary of the 5 November 2026 call. Third-quarter crop premium rose 89.3% to $226.7 million.
- Lower costs lifted returns. The expense ratio fell to 39.3% from 45.8% a year earlier. Annualized adjusted return on equity rose to 33.1% from 25.6% (third-quarter results release, 4 November 2026).
- The share count is shrinking. Diluted shares fell 1.6% from a year earlier in the quarter to 30 September 2026, per the 10-Q filed on 6 November 2026.
Bear case
- Most of the growth came from crop. Gross written premium rose 28.4% to $767.0 million in the third quarter. Earthquake premium grew only 3.0%, to $154.5 million (third-quarter results release, 4 November 2026).
- Commercial earthquake prices are falling. Commercial earthquake renewal rates fell about 20% in the quarter, per MarketBeat's summary of the 5 November 2026 call.
- Casualty growth has nearly stalled. Casualty premium rose 3.4% to $176.8 million in the third quarter. On the call, Palomar said it had exited primary transactional liability and re-underwritten a fronted cyber program.
- The loss ratio keeps rising. It reached 41.5% in the third quarter, against 32.3% a year earlier. The quarter included unfavorable prior-year development after livestock losses were reallocated between 2025 and 2026 (results release; 5 November 2026 call).
- Filed operating margins are lower. The operating margin was 21.9% in the quarter to 30 September 2026, against 27.4% a year earlier, per the 10-Q filed on 6 November 2026.
- GAAP earnings trail adjusted earnings. Third-quarter net income under generally accepted accounting principles (GAAP) grew 27.0%, against 47.4% for adjusted net income. Over nine months the figures were 14.2% and 34.3%.
- The chief executive sells every month. CEO Mac Armstrong sold 3,500 shares on each of 21 August 2026, 21 September 2026 and 21 October 2026, at average prices of $130.60, $134.99 and $138.31, under a Rule 10b5-1 trading plan (SEC Form 4 filings).
Price setup
The shares closed at $159.20 on 13 November 2026, a little below the 10 November 2026 close of $161.08. The 52-week intraday high is $162.08, from 5 November 2026, the first session after the results. The last close before the report was $144.04, on 4 November 2026; the results came out after that session. The 52-week closing low was $101.42, on 3 June 2026.
As of 13 November 2026, the 50-day moving average was $137.60 and the 200-day moving average was $127.37. Both sit well below the price, and the 50-day average sits under the pre-report close. The $144.04 pre-report close and the 50-day average are the levels the post-report gain rests on.
The shares have held within about 2% of the 5 November 2026 high for six sessions. The 13 November 2026 close sits below the $172–175 targets from KBW, Piper Sandler and Truist. On 12 November 2026, Palomar filed an 8-K under Regulation FD attaching an updated investor presentation; the filing states no new guidance.
Catalysts ahead
- 17 November 2026: Record date for the $0.45 quarterly dividend, payable 2 December 2026. Confirms the quarterly payment; it slightly shifts dividend-adjusted historical closes.
- 30 November 2026: End of the Atlantic hurricane season. A landfall that pushes catastrophe losses above the $8–12 million full-year assumption would break part of the guidance; nine-month losses were $4.3 million.
- 1 January 2027: Reinsurance treaty renewal. Higher crop or property catastrophe retentions, which management said are possible, would make earnings more sensitive to a single large event.
- ~15 February 2027 (est.): Palomar fourth-quarter 2026 results and likely 2027 guidance; no date announced. Settles fiscal 2026 against the $280–285 million range and shows whether 2027 guidance implies adjusted net income growth of at least about 10% and whether casualty and earthquake premium recover.
What would change the view
A daily close below $133, under the 50-day moving average and the 4 November 2026 pre-report close of $144.04, which would erase the post-report gain. A cut to or miss of the $280–285 million fiscal 2026 adjusted net income guidance would also show the case failing.
The risks this note tracks, each with what would confirm it:
- Casualty premium growth stays weak, compressing the valuation premium. Confirmed by: casualty premium growth still below 10% at the first-quarter 2027 report, after 3.4% in the third quarter of 2026.
- Earthquake premium, the largest legacy line, shrinks as commercial earthquake prices fall. Confirmed by: earthquake gross written premium declining from a year earlier in the fourth quarter of 2026 or the first quarter of 2027, or commercial earthquake renewal rate cuts deeper than about 20%.
- Underwriting margins erode as the loss ratio keeps rising. Confirmed by: an adjusted combined ratio above roughly 80% in a quarter without major catastrophe losses, against 76.3% in the third quarter of 2026.
- Growth slows sharply in 2027 once the crop expansion is in the base. Confirmed by: fiscal 2027 guidance, expected around February 2027, implying adjusted net income growth below about 10%.
- A late-season hurricane or major earthquake exceeds the catastrophe load in guidance. Confirmed by: reported or pre-announced catastrophe losses taking fiscal 2026 above $12 million, against $4.3 million through nine months.
- The gap between adjusted and GAAP results widens, weakening guidance stated only on the adjusted line. Confirmed by: a quarter in which GAAP net income falls while adjusted net income grows; the third quarter of 2026 showed growth of 27.0% against 47.4%.
What it trades with
Palomar trades with specialty property and casualty insurers that write catastrophe-exposed business. A large California earthquake or a major hurricane would hit that whole group at once. The crop book adds exposure to growing-season weather and to crop claims that settle into early 2027, per management on the 5 November 2026 call. Commercial earthquake renewal rates fell about 20% in the third quarter, which ties the shares to a softening property catastrophe market. The reinsurance treaty renews on 1 January 2027, so reinsurance pricing feeds straight into next year's margins. The business has little direct link to technology spending cycles.
Caveats
- Palomar states its growth and margin guidance on adjusted net income; nine-month 2026 GAAP net income grew 14.2%, against 34.3% for adjusted net income. Palomar third-quarter 2026 results release (Form 8-K Exhibit 99.1) · as of
- The book is exposed to earthquake and wind catastrophes; fiscal 2026 guidance includes only $8–12 million of catastrophe losses, and an earthquake can occur in any season. Palomar third-quarter 2026 results release (Form 8-K Exhibit 99.1) · as of
- Screeners report different premium lines as sales: Benzinga's $365.391 million third-quarter figure is net earned premium, while $767.0 million is gross written premium and $386.59 million is total revenue. Palomar Form 10-Q for the third quarter of 2026 · as of
- The chief executive has sold 3,500 shares a month under a Rule 10b5-1 trading plan since August 2026. SEC Form 4 filed 22 October 2026 · as of
The evidence, claim by claim (8)
- Fiscal 2026 adjusted net income guidance raised to $280–285 million from $270–280 million, including $8–12 million of catastrophe losses; the fourth increase of 2026. Palomar third-quarter 2026 results release (Form 8-K Exhibit 99.1) · as of
- Third-quarter adjusted net income $81.3 million, up 47.4%; diluted adjusted EPS $3.01 versus $2.01 a year earlier; net income $65.3 million, up 27.0%. Palomar third-quarter 2026 results release (Form 8-K Exhibit 99.1) · as of
- Third-quarter gross written premium $767.0 million, up 28.4%; crop $226.7 million (up 89.3%), casualty $176.8 million (up 3.4%), earthquake $154.5 million (up 3.0%). Palomar third-quarter 2026 results release (Form 8-K Exhibit 99.1) · as of
- Third-quarter adjusted combined ratio 76.3% versus 74.8% a year earlier; loss ratio 41.5% versus 32.3%; expense ratio 39.3% versus 45.8%. Palomar third-quarter 2026 results release (Form 8-K Exhibit 99.1) · as of
- Third-quarter 2026 revenue $386.59 million, against $244.66 million in the third quarter of 2025; operating margin 21.9% against 27.4%. Palomar Form 10-Q for the period ended 30 September 2026 · as of
- 2026 crop premium outlook raised to about $425 million from an initial $320 million; commercial earthquake renewal rates fell about 20% in the third quarter. 5 November 2026 earnings call, per MarketBeat summary · as of
- Keefe, Bruyette & Woods raised its target to $172 on 10 November 2026; Truist raised to $175 and Piper Sandler to $174 on 6 November 2026. Benzinga analyst ratings headlines · as of
- CEO Mac Armstrong sold 3,500 shares at an average $138.31 on 21 October 2026 under a Rule 10b5-1 plan, after identical monthly sales in August and September. SEC Form 4 filed 22 October 2026 · as of
Sources
- SEC EDGAR
- MarketBeat ·
- SEC EDGAR ·
- Palomar targets $280M-$285M full-year adjusted net income amid $8M-$12M catastrophe loss assumption (NASDAQ:PLMR) · seekingalpha.com
- Reinsurance News
- Palomar beats again and lifts guidance a fourth time as crop and surety offset a stalling casualty engine · finviz.com
- Palomar (NASDAQ:PLMR) Issues Earnings Results · thestockobserver.com ·
- Palomar Holdings, Inc. - Form 10-K - FY2021 · sec.gov
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