AM Best Removes From Under Review With Positive Implications and Affirms Credit Ratings of Palomar Casualty and Surety Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has removed from under review with positive implications and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Palomar Casualty and Surety Company (PCSC) (Metairie, LA). The outlook assigned to these Credit Ratings (ratings) is positive.

The ratings reflect PCSC’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).

In early 2026, Palomar Holdings, Inc. (Palomar) completed the acquisition of The Gray Casualty & Surety Company, which has since been renamed to Palomar Casualty and Surety Company. PCSC focuses on writing contract surety throughout the United States and has expanded its geographic footprint considerably over the preceding five years. The company fits well into Palomar’s current strategy and further expands on the organization’s ability to write surety coverage, with Palomar also having completed the acquisition recently of another surety company, First Indemnity of America Insurance Company. The positive outlooks reflect the expected benefit PCSC will receive as it integrates into a larger organization with more sophisticated distribution channels, a formidable capital structure and established back-office functions. The strategic importance of PCSC is expected to grow as it establishes itself within the organization as a lead source of surety premium.

PCSC reported pretax operating income in four of the last five years, with the outlier influenced by front-loaded acquisition costs related to an affiliated book roll. The company’s combined and operating ratios have been consistently below 100, however, while favorable, key operating metrics do not outperform composite averages materially. Profitable operations have helped grow surplus in most years and help fortify PCSC’s strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Underwriting leverage is aligned roughly with composite averages and loss reserve development has been favorable generally. These positions have been maintained despite considerable growth in premium and exposure, with material premium increases associated with geographic expansion. Management prudently reviews all accounts and keeps the level of bound submissions relatively low. The ERM program is considered appropriate for the company and is expected to assimilate to the sophisticated and ORSA-compliant program used by Palomar.

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