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plmr.com Acquisition of Gray Surety October 30, 2025
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Disclaimer 2 This presentation contains forward-looking statements about Palomar Holdings, Inc. (the “Company”). These statements involve known and unknown risks that relate to the Company’s future events or future financial performance and the actual results could differ materially from those discussed in this presentation. This presentation also includes financial measures which are not prepared in accordance with generally accepted accounting principles (“GAAP”). Forward-looking statements generally relate to future events or the Company’s future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as ‘‘may’’, ‘‘will’’, ‘‘should’’, ‘‘expects’’, ‘‘plans’’, ‘‘anticipates’’, ‘‘could’’, ‘‘intends’’, ‘‘target’’, ‘‘projects’’, ‘‘contemplates’’, ‘‘believes’’, ‘‘estimates’’, ‘‘predicts’’, ‘‘would’’, ‘‘potential’’ or ‘‘continue’’ or the negative of these words or other similar terms or expressions that concern the Company’s expectations, strategy, plans or intentions. These forward-looking statements include, among others, statements relating to our future financial performance, our business prospects and strategy, anticipated financial position, liquidity and capital needs and other similar matters. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Such risks and uncertainties include, among others, future results of operations; financial position; the impact of the ongoing and global COVID-19 pandemic; general economic, political and other risks, including currency and stock market fluctuations and uncertain economic environment; the volatility of the trading price of our common stock; and our expectations about market trends. The Company may not actually achieve the plans, intentions or expectations disclosed in its forward-looking statements, and you should not place undue reliance on the Company’s forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements the Company makes. While the Company may elect to update these forward-looking statements at some point in the future, the Company has no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing the Company’s views as of any date subsequent to the date of this presentation. Additional risks and uncertainties relating to the Company and its business can be found in the "Risk Factors" section of Palomar Holdings, Inc.’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and other filings with the United States Securities and Exchange Commission.
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• Profitable growth • Anchored by earthquake franchise • Low volatility – specialty lines focus • Conservative and comprehensive risk transfer strategy • Selective entry into new markets • Sustain attractive margins FUNDAMENTAL PRINCIPLES 3 Palomar 2X Strategy A BUSINESS STRATEGY TO DOUBLE ADJUSTED NET INCOME AND ACHIEVE AN ADJUSTED ROE ABOVE 20% OVER THE INTERMEDIATE TERM Integrate and Operate Build New Market Leaders Deliberately Remember What We Like (And What We Don’t) Generate Consistent Earnings 2025 STRATEGIC IMPERATIVES The acquisition of Gray Casualty & Surety Company (“Gray Surety”) will play a key role in advancing our Palomar 2x strategic imperative and driving sustained profitable growth
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Gray Surety Overview 4 Transaction Overview SUMMARY OF TERMS FOR THE $300M ACQUISITION OF GRAY SURETY 4 Transaction Summary • Palomar to acquire 100% of equity interests of Gray Surety Purchase Price • $300m2 Consideration • All-cash transaction Financing • Transaction expected to be funded with a combination of cash and debt Required Approvals • HSR and insurance regulatory approvals (e.g. Louisiana Department of Insurance) Timing • Expected to close in first half of 2026 Source S&P Capital IQ 1. All figures shown represent Statutory financials 2. Subject to customary closing adjustments • Gray Surety is privately held and was established in 1996 as a wholly-owned subsidiary of The Gray Insurance Company • Headquartered in Louisiana and admitted/licensed in all 50 states with a current Treasury-listing (“T-listing”) of $13m • Specialize in contract bonds for midsized and emerging contractors • Led by an experienced, entrepreneurial management team that maintains a disciplined underwriting approach Key Stats1 / 20% Loss & LAE Ratio (2021-6/30/25) 80% Combined Ratio (2021-6/30/25) Transaction Highlights $81m GWP (TTM 6/30/25, up from $21m in 2021) $122m Statutory Surplus (6/30/25)
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5 Significant Value Creation Opportunity SIGNIFICANT ENHANCEMENT OF OUR MARKET POSITION AND FINANCIAL PROFILE Attractive Financial Profile Expansion into Attractive Surety Market Surety markets have seen a recent acceleration in growth, 13% CAGR since 2021 (vs. 15-year CAGR of 4.5%) Surety continues to produce attractive combined ratios, outperforming the broader P&C industry by ~30ppts Scarce asset providing foothold in new markets including Texas, Florida, and California Transaction is expected to be immediately accretive to Adjusted EPS (excluding synergies) Opportunity to accelerate high-growth trajectory through Palomar scale and capital advantages Highly profitable underwriting allows for incremental reinsurance optimization / risk participation Builds upon prior FIA acquisition, enhancing financial strength, scale, and strategic support Complements and enhances existing capabilities, access to all 50 state licenses and increases T-listing to $13m Enhances business diversification with limited correlation to existing lines and broader P&C market Strategic Alignment
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$5.4bn $7.3bn $10.4bn 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 6 Expansion into Attractive Surety Market THE SURETY MARKET REMAINS HIGHLY ATTRACTIVE WITH SIGNIFICANT WHITESPACE FOR GRAY SURETY Source S&P Capital IQ Note: All figures shown represent Statutory financials 1. Simple Combined Ratio includes direct losses, DCC, commissions, tax, licenses, and fees by line. Excludes allocated LAE and other underwriting expenses 2. Simple Loss Ratio includes direct losses • The U.S. surety market generated $10.4 billion of direct written premium in 2024 • While the market has historically grown at a 4.5% CAGR since 2009, it has seen an acceleration in recent years, growing at a 13% CAGR since 2021 • The U.S. surety market consistently outperforms the broader P&C market, with a 15-year average Simple Combined Ratio1 of 49% vs. 79% for the broader P&C market Scarce asset as one of the few scaled, independent surety platforms 50% GWP CAGR (2021-2024) vs. the broader surety industry’s 13% DWP CAGR 18% average Simple Loss Ratio2 (2021-2024) vs. surety industry’s 21% average Simple Loss Ratio2 Broad geographic footprint and product suite is highly complementary to the existing FIA footprint 78.8% 79.4% 50.4% 56.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 P&C Industry Combined Ratio Surety Combined Ratio Average: 79% Average: 49% Premium Growth Underwriting Profitability The Gray Surety Advantage
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7 Strategic Alignment MEANINGFULLY ENHANCES SURETY FRANCHISE, BOLSTERING CURRENT MARKET POSITION AND COMPLEMENTING EXISTING OPERATIONS Strategic Rationale Gray Surety GWP will be reported within Casualty, alongside FIA Surety • Combination of FIA and Gray Surety accelerates the scale of surety operations to create a top 40 writerScale • Ability to move up market to write larger contractors with increased bond and aggregate bond program requirementsNew Markets • Expansion into new states, including Texas, Florida and CaliforniaNew Geographies • Added underwriting / claims / systems capabilities, led by an experienced management team with proven ability to grow profitably Operating Capabilities • Expansion into a profitable market with limited correlation to existing lines and broader P&C market Limited Correlation Diversification and Scale (LTM Q2 2025 GWP) 20% 19% 1% 5% 79% 75% $1,727m $1,808m All Other Lines Surety Casualty (excl. Surety)
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Synergy Opportunities 8 Transaction Generates Attractive Economics TRANSACTION PRODUCES AN ATTRACTIVE FINANCIAL OUTCOME WITH SIGNIFICANT LONG-TERM GROWTH POTENTIAL 8 Financially Attractive Transaction Immediately accretive to Adjusted EPS (excluding synergies) Synergies offer upside to Adjusted EPS Strong cash flow generation of combined business Manageable debt-to-total capital with strong growth in book value for the combined business • Operating efficiencies across back-office functions • Most expense synergies are realized shortly after closing, 100% within 12 months Expense • Further optimize reinsurance program to enhance risk-adjusted return profile • Highly profitable underwriting allows for incremental risk participation Reinsurance Opportunity to accelerate Gray Surety’s current high-growth trajectory – supported by Palomar scale and capital advantages (larger T-listing) and ability to move up market to write larger contractors with increased bond and aggregate bond program needs