AM Best has commented that the Credit Ratings (ratings) of Palomar Holdings, Inc. (Palomar) (Delaware) [NASDAQ: PLMR], the ultimate parent and insurance holding company of Palomar Specialty Insurance Company (PSIC) (Portland, OR), Palomar Excess and Surplus Insurance Company (PESIC) (Phoenix, AZ), Palomar Specialty Reinsurance Company Bermuda Ltd. (Palomar Re) (Bermuda) and First Indemnity of America Insurance Company (FIA) (Morris Plains, NJ) remain unchanged following the Oct. 30, 2025 announcement that Palomar entered into a definitive agreement with Bernhard Capital Partners (the ultimate parent of The Gray Casualty & Surety Company {Gray}). Per the agreement, Palomar will purchase Gray with the transaction expected to close in the first half of 2026.

Palomar has a Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good), while PSIC, PESIC and Palomar Re have a Financial Strength Rating (FSR) of A (Excellent) and Long-Term ICRs of “a” (Excellent). The outlook for these ratings is stable.

FIA has an FSR of A- (Excellent) and a Long-Term ICR of “a-” (Excellent). The outlook for these ratings is positive.

Gray has an FSR of A- (Excellent) and a Long-Term ICR of “a-” (Excellent). These ratings have been placed under review with positive implications following the announcement of the transaction.

Post acquisition, Gray will continue to operate independently though under the guidance of new management and is expected to benefit from synergies with its new owner. The cost of the acquisition will be funded by both cash on hand and a bank loan with prospective financial leverage expected to have a neutral impact on the ratings.

Palomar writes a variety of risks through its admitted and nonadmitted entities, earthquake coverage remains a pillar of the portfolio, while the group also concentrates on inland marine/other property, casualty, fronting and crop businesses. The consolidated group consistently reports profitable results, reflective of diligent underwriting strategies. Within its casualty book, Palomar has been expanding into the surety space, most recently acquiring FIA. Palomar anticipates continuing its expansion into the contract surety space with the acquisition of Gray, which has a comparatively larger footprint in the segment across the United States. AM Best will monitor the transaction and its impact on the insurance operating entities up to and following the purchase of Gray.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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