What Happened?
Shares of specialty insurance provider Palomar Holdings (NASDAQ: PLMR) fell 14.2% in the afternoon session after its mixed second-quarter financial report, where investors focused on weaker underwriting profitability despite a beat on earnings per share. The specialty insurer posted adjusted earnings of $1.76 per share, which topped analyst forecasts. However, the company's combined ratio, a key measure of profitability for insurers, landed at 78.8%, missing estimates.
A higher combined ratio indicated that the company paid out more in claims and expenses relative to the premiums it earned. This detail overshadowed other positive news, including an increase in gross written premiums and a raised full-year profit forecast. The market reaction suggested that concerns about underwriting performance outweighed the strong earnings and improved outlook.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Palomar Holdings? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Palomar Holdings’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. But moves this big are rare even for Palomar Holdings and indicate this news significantly impacted the market’s perception of the business.
Palomar Holdings is up 9.8% since the beginning of the year, but at $114.64 per share, it is still trading 34.7% below its 52-week high of $175.67 from June 2025. Investors who bought $1,000 worth of Palomar Holdings’s shares 5 years ago would now be looking at an investment worth $1,160.
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