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PLMR's Gray Surety Acquisition Boosts Scale and Diversification
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Key Takeaways
PLMR acquired Gray Surety for $311 million, expanding its surety capabilities across all 50 states.
Surety and Credit GWP surged 235.6% to $39.2 million in the second quarter.
Integration is substantially complete, allowing PLMR to focus on talent, geographic and product expansion.
Palomar Holdings, Inc. (PLMR - Free Report) acquired Gray Surety for approximately $311 million on Jan. 31, 2026. Gray is a Treasury-listed surety carrier focused on contract bonds for mid-sized and emerging contractors, with licenses in all 50 states and 13 regional offices. The acquisition has the potential to generate sustainable growth for Palomar Holdings and is becoming an important part of its diversification and growth strategy.
PLMR’s top line has increased over the last several years, supported by higher premiums, net investment income and commission and other income. Net earned premiums continue to benefit from strong premium retention and renewal activity, as well as the Gray Surety acquisition. For the six months ended June 30, 2026, Gray Surety contributed $33.6 million of revenue.
The acquisition is also accelerating Palomar Holdings’ diversification. Surety & Credit GWP increased 235.6% year over year to $39.2 million in the second quarter of 2026, reflecting the full-quarter contribution from Gray Surety. The acquisition also contributed to the year-over-year increase in PLMR’s net earned premium ratio in second-quarter 2026.
The integration of Gray Surety is substantially complete, allowing PLMR to shift its focus toward franchise building, including the addition of underwriting talent, geographic expansion and new product capabilities. These initiatives could enable the company to generate organic growth beyond the initial contribution from the acquired business.
Management views the Gray acquisition as a driver of scale and earnings within its strategy to double adjusted net income over three to five years while maintaining adjusted ROE above 20%. The acquisition strengthens PLMR’s growth platform by adding scale, underwriting expertise and national distribution in the surety market.
What About Its Peers?
Aon plc (AON - Free Report) agreed to acquire USI from KKR and other shareholders in August 2026 for a total purchase price of $17 billion to expand U.S. middle-market and E&S capabilities. USI has approximately $3 billion in revenues and 10,500+ employees. Aon expects the transaction to generate $395 million of annual run-rate adjusted EBITDA from revenues and cost synergies and become adjusted-EPS accretive in 2028.
Arthur J. Gallagher & Co.’s (AJG - Free Report) U.S. wholesale brokerage, binding authority and programs division, Risk Placement Services, Inc., has acquired Kansas-based Med James, Inc. in July 2026. The deal is expected to strengthen specialty distribution and retail-agent relationships of Risk Placement Services.
PLMR’s Price Performance
Shares of PLMR have gained 10.7% in the past year, outperforming the industry.
Image Source: Zacks Investment Research
PLMR’s Overvaluation
The stock is undervalued compared with its industry. Its forward price-to-book value of 3.62X is higher than the industry average of 1.42X.
Image Source: Zacks Investment Research
Estimate Movement for PFG
The Zacks Consensus Estimate for PLMR’s third-quarter 2026 EPS has moved down 2.5%, while the same for fourth-quarter 2026 has moved up 5.1% in the past 60 days. The Zacks Consensus Estimate for full-year 2026 and 2027 EPS has moved up 2.8% and 2.7%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
The consensus estimate for PLMR’s 2026 and 2027 EPS and revenues indicates a year-over-year increase.
View the Zacks #1 Rank List
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PLMR's Gray Surety Acquisition Boosts Scale and Diversification
Key Takeaways
Palomar Holdings, Inc. (PLMR - Free Report) acquired Gray Surety for approximately $311 million on Jan. 31, 2026. Gray is a Treasury-listed surety carrier focused on contract bonds for mid-sized and emerging contractors, with licenses in all 50 states and 13 regional offices. The acquisition has the potential to generate sustainable growth for Palomar Holdings and is becoming an important part of its diversification and growth strategy.
PLMR’s top line has increased over the last several years, supported by higher premiums, net investment income and commission and other income. Net earned premiums continue to benefit from strong premium retention and renewal activity, as well as the Gray Surety acquisition. For the six months ended June 30, 2026, Gray Surety contributed $33.6 million of revenue.
The acquisition is also accelerating Palomar Holdings’ diversification. Surety & Credit GWP increased 235.6% year over year to $39.2 million in the second quarter of 2026, reflecting the full-quarter contribution from Gray Surety. The acquisition also contributed to the year-over-year increase in PLMR’s net earned premium ratio in second-quarter 2026.
The integration of Gray Surety is substantially complete, allowing PLMR to shift its focus toward franchise building, including the addition of underwriting talent, geographic expansion and new product capabilities. These initiatives could enable the company to generate organic growth beyond the initial contribution from the acquired business.
Management views the Gray acquisition as a driver of scale and earnings within its strategy to double adjusted net income over three to five years while maintaining adjusted ROE above 20%. The acquisition strengthens PLMR’s growth platform by adding scale, underwriting expertise and national distribution in the surety market.
What About Its Peers?
Aon plc (AON - Free Report) agreed to acquire USI from KKR and other shareholders in August 2026 for a total purchase price of $17 billion to expand U.S. middle-market and E&S capabilities. USI has approximately $3 billion in revenues and 10,500+ employees. Aon expects the transaction to generate $395 million of annual run-rate adjusted EBITDA from revenues and cost synergies and become adjusted-EPS accretive in 2028.
Arthur J. Gallagher & Co.’s (AJG - Free Report) U.S. wholesale brokerage, binding authority and programs division, Risk Placement Services, Inc., has acquired Kansas-based Med James, Inc. in July 2026. The deal is expected to strengthen specialty distribution and retail-agent relationships of Risk Placement Services.
PLMR’s Price Performance
Shares of PLMR have gained 10.7% in the past year, outperforming the industry.
Image Source: Zacks Investment Research
PLMR’s Overvaluation
The stock is undervalued compared with its industry. Its forward price-to-book value of 3.62X is higher than the industry average of 1.42X.
Image Source: Zacks Investment Research
Estimate Movement for PFG
The Zacks Consensus Estimate for PLMR’s third-quarter 2026 EPS has moved down 2.5%, while the same for fourth-quarter 2026 has moved up 5.1% in the past 60 days. The Zacks Consensus Estimate for full-year 2026 and 2027 EPS has moved up 2.8% and 2.7%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
The consensus estimate for PLMR’s 2026 and 2027 EPS and revenues indicates a year-over-year increase.
PLMR stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.