AM Best Re-affirms Palomar’s Rating as A Minus June 2022

In a press release dated June 2022, Palomar states “A.M. Best affirmed the A− (Excellent) rating for Palomar and our A− (Excellent)” group rating for Palomar Holdings, Inc. Palomar Specialty Insurance Company, Palomar Excess and Surplus Insurance Company, and Palomar Specialty Reinsurance Company Bermuda Ltd. were also affirmed the rating of “A− (Excellent)” by A.M. Best.”

An A- [A minus] rating is near the top and is considered the forth highest FSR that an insurer can gain. Speciality insurers that take on outsize risks [Earthquakes] have more unique exposures than other insurers. AM Best states in their press note that: “The ratings reflect Palomar’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).”

AM Best is a New Jersey based rating agency that specializes in insurance ratings. Financial Strength Ratings are different from the more commonly known credit ratings. Credit Ratings and Financial Strength Ratings are distinct and different.

Additionally they state that their “overall balance sheet strength is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), solid liquidity, positive operating cash flows and generally favorable loss reserve development….Palomar writes a variety of risks through its admitted and nonadmitted entities, primarily focused on earthquake coverage in California, Hawaii hurricane, inland marine and commercial all-risk products. The consolidated group consistently has reported net income, reflective of prudent underwriting strategies that Palomar continues to refine in an effort to curb volatility, particularly in the admitted markets.”

As a point of referance for consumers, the largest earthquake insurer in California is the CEA or California Earthquake Authority. They too have a financial strength rating [as of August 2022] of an A-. Therefore Palomar, an independent earthquake vendor, has the same financial strength rating as the CEA.

According to their website – AM Best has a “stable” outlook for Palomar and their group of insurers. The initial A- rating for Palomar is from 2014. Palomar Speciality maintains an administrative office in La Jolla, California.