Specialty insurance provider Palomar Holdings (NASDAQ: PLMR) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 62.7% year on year to $253.4 million. Its non-GAAP profit of $2.24 per share was 7.1% above analysts’ consensus estimates.

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Company Overview

Founded in 2013 to fill gaps in catastrophe insurance markets, Palomar Holdings (NASDAQ: PLMR) is a specialty insurance provider that offers property and casualty insurance products in underserved markets, with a focus on earthquake coverage.

Revenue Growth

In general, insurance companies earn revenue from three primary sources. The first is the core insurance business itself, often called underwriting and represented in the income statement as premiums earned. The second source is investment income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from various sources such as policy administration, annuities, or other value-added services. Luckily, Palomar Holdings’s revenue grew at an incredible 39.1% compounded annual growth rate over the last five years. Its growth surpassed the average insurance company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Palomar Holdings’s annualized revenue growth of 52.6% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Palomar Holdings reported magnificent year-on-year revenue growth of 62.7%, and its $253.4 million of revenue beat Wall Street’s estimates by 13.2%.

Net premiums earned made up 92.8% of the company’s total revenue during the last five years, meaning Palomar Holdings lives and dies by its underwriting activities because non-insurance operations barely move the needle.

Net premiums earned commands greater market attention due to its reliability and consistency, whereas investment and fee income are often seen as more volatile revenue streams that fluctuate with market conditions.

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Net Premiums Earned

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are:

• Gross premiums - what’s ceded to reinsurers as a risk mitigation and transfer strategy

Palomar Holdings’s net premiums earned has grown at a 38.9% annualized rate over the last five years, much better than the broader insurance industry and in line with its total revenue.

When analyzing Palomar Holdings’s net premiums earned over the last two years, we can see that growth accelerated to 52.3% annually. This performance was similar to its total revenue.

Palomar Holdings produced $233.5 million of net premiums earned in Q4, up a hearty 61.1% year on year and topping Wall Street Consensus estimates by 13.2%.

Key Takeaways from Palomar Holdings’s Q4 Results

We were impressed by how significantly Palomar Holdings blew past analysts’ net premiums earned expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 2.1% to $134.56 immediately after reporting.

Indeed, Palomar Holdings had a rock-solid quarterly earnings result, but is this stock a good investment here? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).