Palomar Holdings’s 21.9% return over the past six months has outpaced the S&P 500 by 16.9%, and its stock price has climbed to $131 per share. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is now still a good time to buy PLMR? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.

Why Is Palomar Holdings a Good Business?

Founded in 2013 to fill gaps in catastrophe insurance markets, Palomar Holdings (NASDAQ: PLMR) is a specialty insurance provider that offers property and casualty insurance products in underserved markets, with a focus on earthquake coverage.

1. Net Premiums Earned Skyrockets, Fueling Growth Opportunities

Our experience and research show the market cares primarily about an insurer’s net premiums earned growth as investment and fee income are considered more susceptible to market volatility and economic cycles.

Palomar Holdings’s net premiums earned has grown at a 32.3% annualized rate over the last two years, much better than the broader insurance industry.

2. Growing BVPS Reflects Strong Asset Base

For insurers, book value per share (BVPS) is a vital measure of financial health, representing the total assets available to shareholders after accounting for all liabilities, including policyholder reserves and claims obligations.

Palomar Holdings’s BVPS increased by 22.4% annually over the last five years, and growth has recently accelerated as BVPS grew at an incredible 35% annual clip over the past two years (from $16.22 to $29.57 per share).

3. Projected BVPS Growth Is Remarkable

The key to book value per share (BVPS) growth is an insurer’s ability to earn underwriting profits while generating strong returns on its float - Warren Buffet’s secret sauce.

Over the next 12 months, Consensus estimates call for Palomar Holdings’s BVPS to grow by 24.6% to $30.15, elite growth rate.

Final Judgment

These are just a few reasons why we think Palomar Holdings is an elite insurance company, and with its shares topping the market in recent months, the stock trades at 3.9× forward P/B (or $131 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

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