The Palomar Gray Surety acquisition closed February 2, 2026, and the combined business is already reshaping how investors read PLMR’s balance sheet after a quarter that saw gross written premiums jump 42% to $629.8 million.
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Gross Written Premiums | $629.8M | $442.2M |
| Total Revenue (ex-interest) | $278.9M | $174.6M |
| Adjusted Net Income | $63.1M (+23%) | ~$51M |
| GAAP Diluted EPS | $1.57 | $1.57 |
| Combined Ratio | 84.5% | 73.1% |
| Consensus Price Target | $147.75 | — |
The prior-year baseline for gross written premiums was $442.2 million in Q1 2025, putting the scale of the growth in sharper focus. Revenue before interest expenses rose 60% to $278.9 million. Net investment income was up 49% to $18 million.
One number to watch underneath the headline: GAAP diluted EPS came in at $1.57, flat versus a year ago, according to Palomar’s 10-Q filing. The adjusted figure of $2.31 per share got the headlines, but the gap between GAAP and adjusted earnings reflects acquisition-related costs running through the income statement.
Palomar Gray Surety Acquisition: What the Balance Sheet Shows
The Palomar Gray Surety acquisition was funded through a $450 million credit facility put in place at closing. That breaks into a $150 million revolving line and a $300 million term loan. At March 31, $297.4 million remained outstanding on the term loan, essentially the full draw.
Goodwill and intangible assets jumped to $246.2 million from $61 million at year-end 2025. Total assets moved to $3.6 billion from $3 billion. For a company that ran with minimal leverage, that is a real shift in the capital structure.
The deal brings surety bonds into the mix, backing obligations for contractors, businesses, and government entities. Surety is a different risk profile from earthquake or hurricane exposure: less correlated to weather, smoother loss patterns. The transaction received board approval from both companies before the February close.
Loss Ratio Creep and What the Combined Ratio Signals
The combined ratio rose to 84.5% from 73.1% a year earlier. Still profitable on underwriting, but the direction matters. Net earned premiums reached $261.4 million, and the loss ratio came in at 33.3%, up on higher attritional losses and rising commission and operating costs. Catastrophe losses were minimal in the quarter, so the pressure was structural, not event-driven.
California represented 25% of premiums written, down from 32% a year ago. Texas was 10%. The geographic shift suggests deliberate underwriting discipline, trimming concentration in the highest-risk state while growing elsewhere.
Palomar’s specialty lines, earthquake, crop, flood, and surplus commercial risks, carry structurally better margins than standard personal lines because competition is thin. The tradeoff is always the same: a single major event can flip a clean combined ratio fast. Reinsurance provides a buffer but does not eliminate tail risk.
Analyst Ratings and Price Target Range
Four analysts rate PLMR a Buy. Two are at Hold. The consensus sits at Moderate Buy with an average 12-month price target of $147.75, roughly 30% above recent trading levels near $109. The high target is $159.
Full-year 2026 adjusted net income guidance is $262 million to $278 million, against $216 million in 2025. The company is budgeting $8 million to $12 million in catastrophe losses for the year, a relatively modest assumption that leaves the range exposed if storm activity picks up in the second half.
The stock is trading near its 52-week low of $107.51, well below the January high above $130. The Palomar Gray Surety acquisition adds leverage and integration risk, but it also opens a non-weather-correlated revenue stream that was not in the story a year ago.
The next real test is Q2 results, when the surety segment will start showing up in the numbers in a meaningful way. A combined ratio holding below 90% would confirm the cost creep is manageable. A hurricane or major seismic event before then changes the calculus entirely.
