Palomar Expands Reinsurance Coverage to $3.53 Billion
Palomar Holdings has significantly grown its reinsurance coverage as of June 1, 2025, signaling the company’s confidence in its expanding catastrophe insurance portfolio. The insurer has added approximately $455 million of incremental earthquake protection, pushing its total earthquake reinsurance limit to $3.53 billion. It also maintains $100 million of U.S. hurricane coverage, highlighting a continued focus on risk diversification.
Palomar Strengthens Earthquake and Hurricane Risk Mitigation
With the latest reinsurance positions, Palomar has bolstered its catastrophe risk mitigation strategy. One of the major changes is a reduction in hurricane per-event retention, lowered from $15.5 million to $11 million. Earthquake event retention remains steady at $20 million, even with increased exposure, showcasing Palomar’s capacity to absorb more risk while maintaining financial discipline.
A standout feature of this enhancement is the sixth Torrey Pines Re catastrophe bond issuance, which secured $525 million—well above the initially targeted $425 million. This is Palomar’s largest cat bond deal to date, priced attractively at the lower end of expectations, reflecting strong investor confidence.
Palomar Launches Standalone Treaty for Hawaiian Hurricane Risk
On June 1, Palomar introduced its first standalone excess-of-loss (XOL) treaty for hurricane risks in Hawaii. Previously, these policies were covered under the group’s core reinsurance tower, which now focuses over 95% of its capacity on earthquake risk.
The new Laulima XOL reinsurance program offers per occurrence coverage of up to $735 million, with a retention of $1.5 million. This strategic realignment allows the group to isolate and manage regional hurricane exposures more precisely, improving overall risk transfer efficiency.
Palomar CEO Highlights Favorable Reinsurance Terms and Outlook
Mac Armstrong, Chairman and CEO of Palomar, highlighted the positive results from the June 1 placements. He noted a 10% reduction in risk-adjusted rates, which allowed the firm to secure additional earthquake coverage without increasing retention levels or pricing burdens.
“We are very pleased with the outcome of our June 1 excess-of-loss placement,” Armstrong said. “These results reflect our commitment to disciplined underwriting and strategic growth.”
He emphasized that the expansion of the Torrey Pines Re bond and the successful execution of the Laulima standalone treaty were achieved at attractive rates. These measures are expected to enhance the group’s profitability through the remainder of 2025 and into 2026.
As a result, the group raised its full-year 2025 adjusted net income guidance to a new range of $195 million to $205 million, up from the prior forecast of $186 million to $200 million.
Palomar’s Risk Officer Underscores Long-Term Strategy Jon Knutzen, Palomar’s Chief Risk Officer, credited the successful placements to a well-executed risk transfer strategy and the diverse support from reinsurance partners.
“The backing from both incumbent and new reinsurers is a testament to the strength of our portfolio and the discipline of our approach,” Knutzen said. “This renewal improves our capital efficiency and positions us to generate long-term value for shareholders.”
Knutzen added that the updated program also enhances the stability and predictability of the group’s financial performance, which are crucial benchmarks for companies operating in the catastrophe insurance space.
Palomar Executes a Timely Strategic Reinsurance Upgrade
The revamped reinsurance strategy underlines the group’s focus on scalable growth and sustainable earnings. By increasing its earthquake coverage and isolating hurricane risk more effectively, Palomar mitigates high-impact risks while reinforcing its capital strength.
The insurer’s leveraging of catastrophe bonds, particularly the expanded Torrey Pines Re issuance, showcases its ability to merge traditional and alternative risk transfer mechanisms. Meanwhile, the implementation of standalone XOL treaties like Laulima demonstrates an effective targeting of region-specific risks.
Looking Ahead: Palomar Positioned for Resilient Growth
With upgraded support and refined risk segmentation, Palomar is entering the second half of 2025 in a strong position to capitalize on emerging opportunities while maintaining resilience against catastrophic events. The company’s decisive actions in risk management and capital structure optimization reaffirm its status as a forward-looking leader in the property catastrophe insurance market.
