Palomar (PLMR) Financials

Palomar Holdings (NASDAQ:PLMR) continued to expand rapidly in the second quarter of 2026, although rising claims and financing costs compressed profitability. The insurer’s latest results show strong premium growth, higher investment assets and improving operating cash flow, but also a more leveraged balance sheet and increasing expense pressure.

Revenue and earnings growth remained positive. Q2 2026 revenue increased to $309.5 million from $203.2 million in Q2 2025, a 52% year-over-year gain. Premiums earned rose 59% to $287.0 million, while net income increased 13% to $52.6 million. Diluted earnings per share climbed to $1.94 from $1.68. Sequentially, revenue rose 12% from Q1 2026 and net income increased 23%.

However, profitability did not grow as quickly as sales. The net profit margin declined to approximately 17.0% in Q2 2026 from 22.9% a year earlier. Property and liability claims more than doubled year over year to $99.0 million, and total non-interest expenses rose 67% to $239.7 million. These trends suggest that underwriting and operating costs are absorbing a larger portion of Palomar’s premium growth.

Operating cash flow improved meaningfully. Net cash from operating activities increased to $167.2 million in Q2 2026, compared with $120.9 million in Q2 2025 and $47.0 million in Q1 2026. Palomar also repurchased $41.0 million of common stock during the quarter, compared with $23.1 million in Q1, which may support per-share results but reduced cash available for other uses.

The balance sheet has expanded substantially over the period presented. Total assets reached $4.0 billion in Q2 2026, up from $2.8 billion in Q2 2025 and $1.2 billion in Q3 2022. Trading account securities increased to $1.6 billion, while shareholders’ equity reached $980.9 million. At the same time, long-term debt rose to $295.8 million from zero a year earlier, contributing to a sharp increase in interest expense.

• Strong premium momentum: Q2 2026 premiums earned rose 59% year over year and have increased substantially from $77.9 million in Q3 2022.
• Higher earnings and EPS: Net income increased 13% year over year, while diluted EPS rose 15% to $1.94, helped in part by a lower diluted share count than in Q2 2025.
• Improving operating cash flow: Cash generated from operations reached $167.2 million in Q2 2026, the strongest quarterly figure in the supplied 2026 data.
• Growing capital base: Total equity increased to $980.9 million from $847.2 million in Q2 2025, providing a larger cushion to support business expansion.
• Share repurchases: Palomar repurchased $41.0 million of common stock in Q2 2026, potentially enhancing long-term per-share value if earnings continue to grow.
• Investment portfolio expansion: Trading securities rose to $1.6 billion from $1.2 billion a year earlier, increasing the company’s asset base but also exposing results to investment-market fluctuations.
• Large investment cash flows: Palomar purchased $264.4 million of investment securities and sold or matured $147.0 million during Q2, reflecting active portfolio management rather than traditional capital expenditure.
• Claims are rising faster than revenue: Property and liability insurance claims increased 114% year over year, outpacing the 52% increase in revenue and contributing to margin compression.
• Higher operating expenses: Total non-interest expenses rose 67% year over year, with policy acquisition costs and amortization also increasing substantially.
• Leverage and interest costs increased: Long-term debt reached $295.8 million in Q2 2026, while quarterly interest expense climbed to $4.9 million from only $86,000 in Q2 2025.