Palomar Outperforms 2025 Reinsurance Forecasts
The reinsurance market in 2025 is showing increased favorability for buyers, and Palomar Holdings is leading the way. The company’s reinsurance investments have exceeded its earlier expectations, which had projected outcomes between flat and a 5% decline, according to CEO Mac Armstrong.
“Every placement to date has delivered better performance than our initial estimate,” Armstrong shared during Palomar’s latest earnings call. “When we set the flat to -5% range, we were still evaluating the impact of the Los Angeles wildfires on the broader reinsurance market. What we’ve done exceeded expectations.”
Palomar Reports Strong Q1 Performance and Reinsurance Momentum
Armstrong emphasized that the first quarter of 2025 was highly active across the company’s operations, particularly with preparations for the core excess-of-loss reinsurance program beginning June 1.
At the center of this program are catastrophe bonds and insurance-linked securities (ILS) . Palomar successfully raised $525 million in earthquake coverage through its sixth and largest Torrey Pines Re catastrophe bond, surpassing its $425 million target. The bond priced at the lower end of the expected range, reflecting strong investor demand. Risk-adjusted pricing on catastrophe bonds was down approximately 15%.
Palomar Enhances Structure with Strategic Hawaii Treaty Placement
Palomar placed a new Laulima excess-of-loss treaty effective June 1 to cover hurricane exposure in Hawaii. This risk, previously part of the June 1 program, now stands as a separate treaty. Consequently, Palomar’s core reinsurance program is now over 95% earthquake-focused—presenting a more streamlined and appealing structure for reinsurers.
“The pricing on the Hawaii treaty also came in lower than we’d expected,” said Armstrong. “With the cat bond and Laulima treaty positioned well, we’re on track to achieve or even beat our initial guidance of flat to down 5%.”
Palomar Expands Builders’ Risk Coverage Through Confident Renewals
Palomar also renewed its May 1 builders’ risk quota share treaty for a second year—this time with increased capacity and improved terms. Armstrong noted that the favorable renewal terms demonstrate growing confidence among reinsurers in Palomar’s underwriting and business strategy.
“This added capacity allows us to take on larger projects, grow the builders’ risk book, and enhance relationships with our broker partners,” Armstrong explained.
Palomar Extends Casualty Quota Share to Boost Flexibility
In another strategic move, Palomar extends its April 1 casualty quota share treaty to October 1. This extension enables greater alignment and flexibility within Palomar’s casualty reinsurance framework, supporting a broader and more adaptable strategy.
Palomar Maintains Cautious Optimism Amid Ongoing Placements
When asked whether the group’s reinsurance pricing is exceeding expectations, Armstrong emphasized the company’s prudent guidance . “Our outlook includes cat bond pricing at 15% down, with Laulima coming in better than projected. The rest of the program is about 2.5% lower at midpoint—still within our flat to down 5% forecast.”
Armstrong also highlighted that a large portion of coverage is still to be placed, including over $2 billion in earthquake limits and an additional $100 million in all-perils coverage .
“We are optimistic about reaching the lower end of our guidance but remain cautious,” he added.
Palomar Prepares for June Update as Performance Surges
Looking ahead, Palomar plans to provide an update following the conclusion of its reinsurance placements around June 1 . Armstrong closed by expressing continued optimism in Palomar’s performance and strategy.
“We hope to outperform,” Armstrong concluded, signaling Palomar’s confidence in maintaining its momentum through 2025 and beyond.
