Palomar completes 1.6 placement of $3.53 billion earthquake reinsurance

By Rebecca Delaney

May 30 - (The Insurer) - Palomar Holdings has secured $455 million of incremental limit for its earthquake franchise, incepting June 1, taking its total reinsurance coverage for earthquake events to $3.53 billion.

In an announcement on Thursday, Palomar said that $525 million of the earthquake limit was sourced through its sixth and largest Torrey Pines Re cat bond issuance, exceeding the $425 million target.

Palomar's reinsurance coverage also includes $10 million for U.S. hurricane events.

The per occurrence event retention is $11 million for hurricane events (reduced from $15.5 million in the previous treaty year), and $20 million for earthquake events.

Palomar said the retention levels are "meaningfully" within its management's previously announced guideposts of less than one-quarter's adjusted net income and less than 5% of stockholders' equity.

Effective June 1, Palomar announced that it has also executed its inaugural standalone excess of loss treaty covering the Hawaii hurricane policies issued by Laulima Exchange. The XoL program consists of per occurrence coverage up to $735 million, with a retention of $1.5 million.

Previously, this business was covered through Palomar's core reinsurance tower. Following this change, the tower now consists of more than 95% earthquake-only coverage.

Mac Armstrong, chairman and CEO of Palomar, said in a statement that the XoL placement and the risk adjusted rate decrease of approximately 10% is expected to enhance the firm's earnings prospects for the remainder of 2025 and the first half of 2026.

"As a result, we are raising our full-year 2025 adjusted net income guidance range to $195 million to $205 million from the previously indicated range of $186 million to $200 million," he said.