Palomar Re financial strength rating affirmed

AM Best has revised the outlook to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) of Palomar Re, the Bermuda based-subsidiary of US-based Palomar Holdings.

Am Best also raised the outook and confirmed the FSR of Palomar Re’s associated companies in the US, saying the ratings reflected Palomar’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

“These positive outlooks reflect Palomar’s profitable operating performance in recent periods, which compares favourably to composite averages” AM Best said.  Palomar reported an increase in net income in each of the last five calendar years, achieving even greater levels of profitability in 2021 and 2022. Results have been influenced by favorable underwriting performance as reflected in a five-year combined ratio average below 90.”

It added: “The group has elevated reinsurance dependency, reflective of its catastrophe exposed risk profile with the strategic use of excess of loss and quota share arrangements to mitigate potential volatility.

“Palomar writes a variety of risks through its admitted and non-admitted entities, primarily focused on earthquake coverage in California, as well as hurricane, inland marine, and commercial excess and surplus all-risk products.

“Distribution strategies leverage several channels including retail agents, wholesale brokers, program administrators and carrier partnerships. While growth has been significant, an appropriate ERM programme has been implemented to partially mitigate volatility.”