Palomar IPO: What You Need To Know

Climate change exacerbates the risk of natural disasters. To prepare for these dire scenarios, catastrophe insurer Palomar Holdings is turning to the public markets.

The IPO

Palomar will issue more than 5.6 million shares on the Nasdaq under the ticker "PLMR," according to the firm’s S-1 filing. Priced between $15 and $17, the offering represents about 24.9 percent of outstanding shares and is expected to bring in about $80.5 million.

The lead underwriters include Barclays, JPMorgan and Keefe, Bruyette & Woods.

Palomar qualifies as an emerging growth company under the U.S. JOBS Act, which exempts management from certain SEC disclosure requirements.

The Company

Based in California, Palomar Specialty provides catastrophe insurance in underserved markets.

In 2014, the company's first year of business, it recorded entirely earthquake premiums, but it has since expanded to provide specialty homeowners, commercial all risk, Hawaii hurricane, residential flood and real estate investor insurance.

Last year, non-earthquake premiums grew 31 percent, while earthquake premiums grew 28 percent. Even so, earthquake premiums still accounted for 67 percent of Palomar's 2018 business.

Palomar is licensed in 25 states and has received approval by each insurance department to secure the backing of state guaranty funds. California and Texas represent 53 percent and 21 percent of premiums, respectively.

Last year, 77 percent of premiums were related to residential policies, while 23 percent were commercial. Palomar said it boasts 84-percent retention across all business lines.

The Finances

In 2018, Palomar recorded net income investment of $3.24 million — far exceeding 2017’s rate of $2.13 million. Adjusted net income came in at $19.82 million against the previous year’s $3.78 million.

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