Palomar Q1 Earnings Top Estimates on Higher Net Investment Income

Palomar Holdings Inc. PLMR reported first-quarter 2025 operating income of $1.87 per share, which beat the Zacks Consensus Estimate by 17.6%. The bottom line increased 71.5% year over year.

The quarter’s results overall benefited from improved premiums and net investment income, higher yields on invested assets and solid underwriting income, offset by higher expenses. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Behind the Headlines

Total revenues improved 52.6% year over year to $177 million, mainly attributable to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 2.9%.

Gross written premiums increased 20.1% year over year to $442.1 million. Our estimate was $530.9 million.

Net earned premiums increased 52.1% year over year to $164 million. Our estimate was $161.7 million. The Zacks Consensus Estimate was pegged at $160 million.

Palomar Holdings, Inc. Price, Consensus and EPS Surprise

Palomar Holdings, Inc. price-consensus-eps-surprise-chart | Palomar Holdings, Inc. Quote

Net investment income surged 69.1% year over year to $12.1 million. The increase was primarily driven by higher yields on invested assets and a higher average balance of investments held during the three months ended March 31, 2025, due to cash generated from operations and proceeds from the August 2024 public offering. The Zacks Consensus Estimate was pegged at $11.2 million. Our estimate was $8.5 million.

Palomar Holdings recorded an underwriting income of $44 million, up 76.5% year over year. Adjusted underwriting income was nearly $51.6 million, up 77% year over year.

Total expenses of $120.9 million increased 43.6% year over year due to higher loss and loss adjustment expenses, acquisition expenses and other underwriting expenses. Our estimate was $124.9 million.

The loss ratio was 23.6, which improved 130 basis points (bps) year over year. Our estimate was 24.8. The Zacks Consensus Estimate was pegged at 26.9.

Adjusted combined ratio, excluding catastrophe losses, improved 90 bps year over year to 68.9. The Zacks Consensus Estimate was pegged at 73.

Financial Update

Cash and cash equivalents increased 48.3% from 2024-end to $119.3 million at first-quarter 2025-end. Shareholder equity increased 8.4% from 2024-end to $790.4 million at the end of the first quarter.

Annualized adjusted return on equity in the first quarter of 2025 was 27%, up 410 bps year over year.

2025 View

Palomar Holdings aims to achieve adjusted net income of $186 million to $200 million, up from PLMR’s initial outlook of adjusted net income of $180 million to $192 million. This range includes an estimate of $8 million to $12 million of catastrophe losses for the remainder of the year.

Zacks Rank

PLMR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other P&C Insurers

Arch Capital Group Ltd. ACGL reported first-quarter 2025 operating income of $1.54 per share, which beat the Zacks Consensus Estimate by 12.4%. The bottom line, however, declined 37.1% year over year. Gross premiums written improved 8.9% year over year to $6.4 billion. Net premiums written climbed 10.5% year over year to $4.5 billion on higher premiums written across its Insurance and Reinsurance segments.

Net investment income grew 15.6% year over year to $378 million and beat our estimate of $436.2 million. The Zacks Consensus Estimate was pegged at $415 million. Operating revenues of $4.5 billion rose 21.2% year over year, driven by higher net premiums earned and net investment income. It missed the Zacks Consensus Estimate by 0.9%.

RLI Corp. RLI reported first-quarter 2025 operating earnings of 92 cents per share, which beat the Zacks Consensus Estimate by 4.5%. The bottom line, however, decreased 9.2% from the prior-year quarter. Operating revenues for the reported quarter were $436 million, up 10.7% year over year, driven by higher net premiums earned and net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.9%. 

Gross premiums written increased 5% year over year to $491 million. This uptick can be attributed to the solid performance of the Casualty segment (up 13.5%). Our estimate was $577.9 million. Net investment income increased 12% year over year to $36.7 million. The Zacks Consensus Estimate was pegged at $38.6 million, while our estimate for the metric was $38.9 million. The investment portfolio’s total return was 1.3% in the quarter. 

Cincinnati Financial Corporation CINF reported first-quarter 2025 operating loss of 24 cents per share, narrower than the Zacks Consensus Estimate of a loss of 61 cents. CINF had reported an operating income of $1.72 per share in the prior-year quarter. The year-over-year decrease of $309 million was primarily due to a $356 million increase in after-tax catastrophe losses.

Total operating revenues in the quarter under review were $2.6 billion, which missed the Zacks Consensus Estimate by 2.5%. The top line, however, improved 13.3% year over year. Net written premiums climbed 11% year over year to $2.5 billion. Investment income, net of expenses, increased 14% year over year to $280 million, as bond interest grew 24% and stock portfolio dividends declined 7%. The figure was higher than our estimate of $274.8 million. 

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This article originally published on Zacks Investment Research (zacks.com).

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