Palomar extends earthquake reinsurance coverage to $3.53bn at June 1

Palomar Holdings has completed key reinsurance placements effective June 1, 2025, adding approximately $455 million in incremental limit to support its expanding Earthquake franchise, bringing total earthquake coverage to $3.53 billion and U.S. hurricane coverage to $100 million.

The firm explained that per occurrence event retention is $11 million for hurricane events, reduced from $15.5 million the previous treaty year, and $20 million for earthquake events.

$525 million of the $3.53 billion earthquake limit was reportedly sourced through Palomar’s sixth and largest Torrey Pines Re catastrophe bond issuance, which exceeded management’s $425 million target and priced at the lower end of the indicated range.

You can read more about this catastrophe bond and all others in the Deal Directory of our sister publication, Artemis.

Effective June 1st, Palomar also revealed that it executed the first standalone excess of loss (XOL) treaty covering the Hawaii hurricane policies issued by Laulima Exchange.

“This business was previously covered through Palomar’s core reinsurance tower, which now consists of over 95% earthquake-only coverage as a result of this change. Laulima’s XOL reinsurance program consists of per occurrence coverage up to $735 million with a retention of $1.5 million,” Palomar explained.

Mac Armstrong, Palomar’s Chairman and Chief Executive Officer, commented, “We are very pleased with the outcome of our June 1 excess of loss placement and remain grateful for the continued support of our broad and diverse reinsurance panel.

“Beyond the risk adjusted rate decrease of approximately 10%, this renewal saw Palomar procure incremental earthquake limit to support our growth, maintain our earthquake event retention despite significant year-over-year exposure growth, reduce our wind event retention to $11 million, upsize our Torrey Pines Re catastrophe bond and successfully execute our first standalone Laulima excess of loss treaty.

“Importantly, these initiatives were consummated at attractive prices that should enhance our earnings prospects for the remainder of 2025 and the first half of 2026. As a result, we are raising our full-year 2025 adjusted net income guidance range to $195 million to $205 million from the previously indicated range of $186 million to $200 million.”

Palomar’s Chief Risk Officer, Jon Knutzen, added, “We are grateful for the strong and diversified support we received from the reinsurance market. The continued confidence from both incumbent and new partners is a testament to the strength of our portfolio and the disciplined execution of our risk transfer strategy.

“The June 1 placement further enhances the stability and predictability of our results, positioning us to deliver increased value to our shareholders over the long term. We appreciate the collaboration and partnership that made this successful outcome possible.”