AM Best gives Palomar Re ‘Excellent’ rating following IPO

Ratings agency AM Best has affirmed the financial strength rating of A- (Excellent) of Palomar Re, the Bermuda-based specialty reinsurer, following its parent Palomar Holdings filing an initial public offering (IPO) on April 17 on the Nasdaq Global Select Market.

Concurrently, AM Best has assigned a long-term issuer credit rating of ‘bbb-’ to Palomar Holdings.

Prior to the IPO, Palomar Holdings was renamed from GC Palomar Holdings and re-domesticated to Delaware from Cayman Islands.

Palomar’s ratings reflect its balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

Furthermore, Palomar’s capital assessment reflects moderate underwriting leverage, a sound liquidity position and consistently favorable loss reserve development that is offset partially by significant reinsurance dependence.

AM Best also noted that Palomar’s adequate operating performance reflects its geographic concentration in catastrophe prone areas, which results in potential for volatility.

“This was evident in 2017, when Palomar’s underwriting results were impacted adversely by net losses from Hurricane Harvey and Texas wind and hailstorms. However, despite these losses, Palomar managed to generate favorable operating earnings for the year,” said AM Best.