Why Palomar Holdings Stock Popped Today

Shares of Palomar (NASDAQ:PLMR) jumped 18.4% on Thursday after the specialty insurance company announced better-than-expected quarterly results.

Palomar delivered an exceptional quarter

Palomar's fourth-quarter gross written premiums grew by 26.8% year over year to $303.2 million, while total underwriting revenue (including net earned premiums and commissions) grew 14.3% to $95.3 million. On the bottom line, that translated to adjusted net income of $28 million, or $1.11 per share -- up 33% year over year and well above estimates for $0.82 per share.

Palomar's adjusted combined ratio contracted to 68.8% during the quarter -- essentially meaning it earned $31.20 for every $100 in premiums it wrote -- from 71.4% in the same year-ago period. Palomar also delivered healthy adjusted return on equity of 25.1% during the quarter, up from 22.4% a year earlier and well above its internal benchmark target for 20%.

"Our 'grow where we want to' mantra not only reduces the volatility in our book of business, but also provides numerous growth vectors," stated Palomar Chairman and CEO Mac Armstrong.

What's next for Palomar investors?

For the full year 2024, Palomar expects to deliver adjusted net income of $110 million to $115 million -- up from $93.5 million in 2023 and including $3.5 million of losses incurred from the recent catastrophic flooding in California.

All told, there was nothing not to like from Palomar in this quarterly update. Shares of the specialty insurance company are simply responding in kind.

Should you invest $1,000 in Palomar right now?

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.