The quarter beat the standing EPS hurdle. Adjusted diluted EPS was $2.36 versus published consensus of roughly $2.19, an approximately 8% beat. Adjusted net income increased 31% to $63.8 million, while gross written premiums rose 27% to $630.5 million. (Second Quarter Financial Highlights)
| Metric | Q2 2026 | Q2 2025 | Change / expectation |
|---|---|---|---|
| Gross written premiums | $630.5M | $496.3M | +27.0% (Second Quarter Financial Highlights) |
| Net earned premiums | $287.0M | $180.0M | +59.5% (Second Quarter Financial Highlights) |
| Adjusted diluted EPS | $2.36 | $1.76 | Published consensus: ~$2.19; beat by ~$0.17 (Reconciliation of Non-GAAP Metrics; external consensus) |
| Adjusted net income | $63.8M | $48.5M | +31.4% (Second Quarter Financial Highlights) |
| Adjusted combined ratio | 76.7% | 73.1% | 3.6 points worse (Second Quarter Financial Highlights) |
| Adjusted return on equity | 26.3% | 23.7% | +2.6 points (Second Quarter Financial Highlights) |
| Net investment income | $20.0M | $13.4M | +49.2% (Second Quarter Financial Highlights) |
Management raised the full-year earnings floor, but only modestly. Adjusted net income guidance moved to $270 million–$280 million from the prior $266 million–$280 million range, lifting the midpoint from $273 million to $275 million. (2026 Full Year Outlook; May 29, 2026 investor presentation) The change confirms continued earnings momentum, but it is a small revision rather than a major reset.
The earnings beat was helped by investment income while insurance margins deteriorated. Net investment income grew 49%, supporting results as underwriting income fell 25.5% year over year to $48.0 million. The adjusted combined ratio worsened to 76.7% from 73.1%, and the loss ratio rose to 34.5% from 25.7%, reflecting higher attritional losses from Crop and Casualty growth. (Second Quarter Financial Highlights; General Modeling Guidance) The company still produced a strong 26.3% adjusted ROE, but the quarter's operating quality was less clean than the headline EPS growth suggests.
Capital returns and reinsurance execution add support, but were not the main surprise. Palomar repurchased 368,700 shares for $41.0 million, announced its first $0.45 quarterly dividend, and renewed coverage with approximately $3.92 billion of earthquake limit. (Second Quarter Highlights; Reinsurance — Recent Activity) Those actions improve shareholder returns and capacity for growth, but the key new information is the EPS beat and slightly higher guidance—not a fundamental change in strategy.
Net read: better than expected, with a meaningful caveat on margin quality. The company delivered another consensus EPS beat and raised guidance, while maintaining an above-20% adjusted ROE outlook. Against that, weaker underwriting ratios and higher expenses show that growth is becoming more costly and that part of the earnings strength is coming from the investment portfolio. Overall, the filing lands moderately positive versus expectations, but not as a pristine operating beat.
Read the original 8-K on SEC EDGAR ↗