Palomar Holdings, Inc. Announces Proposed Public Offering of Common Stock

Rhea-AI Summary

Palomar Holdings (NASDAQ:PLMR) announced a proposed underwritten public offering of 1,200,000 shares of its common stock, subject to market and other conditions. The company may also grant underwriters a 30-day option to purchase up to 180,000 additional shares.

Proceeds from the offering will fund general corporate purposes, including $25 million for acquiring First Indemnity of America Insurance Company, a New Jersey-based insurer specializing in surety bonds for small to medium-sized contractors. J.P. Morgan, Evercore ISI, and Keefe, Bruyette & Woods will act as joint lead book-running managers for the offering. Shares are offered under Palomar's shelf registration statement filed with the SEC.

Positive

• Intended acquisition of First Indemnity of America Insurance Company for $25 million.
• Use of proceeds to fund future growth.
• Participation of reputable underwriters: J.P. Morgan, Evercore ISI, Keefe, Bruyette & Woods.

Negative

• Potential dilution of existing shareholders with an offering of up to 1,380,000 shares.

Financial Analyst

Palomar's proposed public offering of 1,200,000 shares of common stock, with an option for an additional 180,000 shares, signals a significant capital raise. The primary use of $25 million for the acquisition of First Indemnity of America Insurance Company indicates strategic expansion into the surety bond market. This move could diversify Palomar's revenue streams and strengthen its market position in the Northeast.

However, the dilutive effect on existing shareholders is a concern. The offering's impact on earnings per share and book value per share needs careful evaluation. The market's reaction to this dilution will be important to watch. The involvement of major underwriters like J.P. Morgan and Evercore ISI lends credibility to the offering, potentially attracting institutional investors.

Insurance Industry Expert

Palomar's acquisition of First Indemnity of America Insurance Company marks a strategic pivot into the surety bond sector, specifically targeting small to medium-sized contractors. This move could complement Palomar's existing specialty property insurance offerings, potentially creating cross-selling opportunities and diversifying risk exposure.

The Northeast focus of First Indemnity aligns with construction industry growth in that region. However, the surety bond market can be cyclical and tied to economic conditions affecting construction. Palomar will need to demonstrate underwriting discipline in this new line to maintain profitability. The success of this acquisition will depend on Palomar's ability to integrate First Indemnity's operations and leverage its existing distribution channels effectively.

LA JOLLA, Calif., Aug. 08, 2024 (GLOBE NEWSWIRE) -- Palomar Holdings, Inc. (NASDAQ:PLMR) (“Palomar” or “Company”), today announced the underwritten public offering of 1,200,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), subject to market and other conditions. All of the shares in the offering are to be sold by Palomar. Palomar intends to grant the underwriters a 30-day option to purchase up to 180,000 additional shares of common stock at the public offering price, less the underwriting discounts and commissions.

The Company intends to use the net proceeds that it will receive from the offering for general corporate purposes, including using approximately $25.0 million to finance the contemplated acquisition of First Indemnity of America Insurance Company, a New Jersey domiciled insurance carrier specializing in surety bonds for small to medium sized contractors primarily in the Northeast United States, and to fund future growth.

J.P. Morgan, Evercore ISI, and Keefe, Bruyette & Woods, Inc., A Stifel Company, will act as joint lead book-running managers for the offering.

The shares of common stock described above are being offered by Palomar pursuant to its shelf registration statement on Form S-3 that became automatically effective upon filing with the Securities and Exchange Commission (the “SEC”) on August 8, 2024. The offering may be made only by means of a prospectus supplement and accompanying prospectus, copies of which may be obtained by contacting J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, by email at prospectus-eq_fi@jpmchase.com and postsalemanualrequests@broadridge.com; Evercore Group L.L.C., Attention: Equity Capital Markets, 55 East 52^nd Street, 35^th Floor, New York, NY 10055, by telephone at 1-888-474-0200, or by email at ecm.prospectus@evercore.com; or Keefe, Bruyette & Woods, Inc., 787 Seventh Ave., 4^th Floor, New York, NY, 10019, Attention: Equity Capital Markets, or by calling 800-966-1559, or by emailing kbwsyndicatedesk@kbw.com.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Palomar Holdings, Inc.

Palomar Holdings, Inc. is the holding company of subsidiaries Palomar Specialty Insurance Company (“PSIC”), Palomar Specialty Reinsurance Company Bermuda Ltd., Palomar Insurance Agency, Inc., Palomar Excess and Surplus Insurance Company (“PESIC”), and Palomar Underwriters Exchange Organization, Inc. Palomar's consolidated results also include Laulima Reciprocal Exchange, a variable interest entity for which the Company is the primary beneficiary. Palomar is an innovative specialty insurer serving residential and commercial clients in five product categories: Earthquake, Inland Marine and Other Property, Casualty, Fronting, and Crop. Palomar’s insurance subsidiaries, Palomar Specialty Insurance Company, Palomar Specialty Reinsurance Company Bermuda Ltd., and Palomar Excess and Surplus Insurance Company, have a financial strength rating of “A” (Excellent) from A.M. Best.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this press release are forward-looking statements, including statements regarding the offering. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “seek,” “plan,” “intend,” “believe,” “will,” “may,” “could,” “continue,” “likely,” “should,” and other words.

The forward-looking statements contained in this press release are based on our current expectations and assumptions regarding our business, the economy, and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements as a result of several factors including market risks and uncertainties and the satisfaction of customary closing conditions for an offering of securities, and other factors discussed in greater detail in the Company's filings with the SEC. Any forward-looking statement made by us in this press release speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should be viewed as historical data.

Investor Relations

Jamie Lillis
1-203-428-3223
investors@plmr.com

FAQ

What is the purpose of Palomar's stock offering (PLMR)?

The offering aims to raise funds for general corporate purposes, including financing the $25 million acquisition of First Indemnity of America Insurance Company.

How many shares is Palomar offering in the public stock offering?

Palomar is offering 1,200,000 shares, with an option for underwriters to purchase an additional 180,000 shares.

Who are the underwriters for Palomar's stock offering?

J.P. Morgan, Evercore ISI, and Keefe, Bruyette & Woods are the joint lead book-running managers.

When was Palomar's shelf registration statement filed with the SEC?

The shelf registration statement was filed and became effective on August 8, 2024.

What impact does this stock offering have on existing shareholders of PLMR?

The offering could dilute existing shareholders' equity with the issuance of up to 1,380,000 new shares.