Palomar Holdings, Inc.

Previous wording

Participants in the insurance industry use ratings from independent ratings agencies, such as A.M. Best, as an important means of assessing the financial strength and creditworthiness of insurers. In setting its ratings, A.M. Best performs quantitative and qualitative analysis of a company’s balance sheet strength, operating performance and business profile. A.M. Best financial strength ratings range from “A++” (Superior) to “F” for insurance companies that have been publicly placed in liquidation. As of June 30, 2026, A.M. Best has assigned a financial strength rating of “A” (Excellent) (Outlook Stable) to our insurance company subsidiaries, Palomar Specialty Insurance Company (“PSIC”), Palomar Excess and Surplus Insurance Company (“PESIC”) and First Indemnity of America Insurance Co. (“FIA”), and “A-” (Excellent) (Outlook Positive) to Palomar Casualty and Surety Company (“PCSC”).

Current wording

Participants in the insurance industry use ratings from independent ratings agencies, such as A.M. Best, as an important means of assessing the financial strength and creditworthiness of insurers. In setting its ratings, A.M. Best performs quantitative and qualitative analysis of a company’s balance sheet strength, operating performance and business profile. A.M. Best financial strength ratings range from “A++” (Superior) to “F” for insurance companies that have been publicly placed in liquidation. As of September 30, 2026, A.M. Best has assigned a financial strength rating of “A” (Excellent) (Outlook Stable) to our insurance company subsidiaries, Palomar Specialty Insurance Company (“PSIC”), Palomar Excess and Surplus Insurance Company (“PESIC”), First Indemnity of America Insurance Co. (“FIA”), and Palomar Specialty Reinsurance Company Bermuda Ltd. (“PSRE”), and “A-” (Excellent) (Outlook Positive) to Palomar Casualty and Surety Company (“PCSC”).

Previous wording

Causing us to be out of compliance with the financial covenants in our credit agreement.

Current wording

Causing us to be out of compliance with the financial covenants in the 2026 Credit Agreement.

Previous wording

Our policyholders and insurance risks are currently concentrated in California, which generated 30.9% of our gross written premiums for the year ended December 31, 2025 and 25.6% for the six months ended June 30, 2026. We are exposed to business, economic, political, judicial and regulatory risks due to this concentration that are greater than the risks faced by insurance companies with a lower concentration of their premiums in California. Any single, major catastrophe event, series of events or other condition causing significant losses in California could materially adversely affect our business, financial condition and results of operations. This may include catastrophes even where we do not insure against the loss, such as the 2025 California wildfires, as homes and businesses lost or damaged due to catastrophe events may cancel or not renew their policies with us following such events. Additionally, unfavorable business, economic or regulatory conditions in California may result in a significant reduction of our premiums or increase our loss exposure. Changes to insurance-related laws or regulations in California could also adversely affect our business. In addition, the California Department of Insurance has continued to implement regulatory reforms, including changes to catastrophe modeling and rate regulation. We cannot predict how these or other regulatory changes may affect our California business. Delays in obtaining adequate rate approvals or restrictions on underwriting actions could reduce our ability to respond to changing loss trends and effectively manage catastrophe exposure.

Current wording

Our policyholders and insurance risks are currently concentrated in California, which generated 30.9% of our gross written premiums for the year ended December 31, 2025 and 24.6% for the nine months ended September 30, 2026. We are exposed to business, economic, political, judicial and regulatory risks due to this concentration that are greater than the risks faced by insurance companies with a lower concentration of their premiums in California. Any single, major catastrophe event, series of events or other condition causing significant losses in California could materially adversely affect our business, financial condition and results of operations. This may include catastrophes even where we do not insure against the loss, such as the 2025 California wildfires, as homes and businesses lost or damaged due to catastrophe events may cancel or not renew their policies with us following such events. Additionally, unfavorable business, economic or regulatory conditions in California may result in a significant reduction of our premiums or increase our loss exposure. Changes to insurance-related laws or regulations in California could also adversely affect our business. In addition, the California Department of Insurance has continued to implement regulatory reforms, including changes to catastrophe modeling and rate regulation. We cannot predict how these or other regulatory changes may affect our California business. Delays in obtaining adequate rate approvals or restrictions on underwriting actions could reduce our ability to respond to changing loss trends and effectively manage catastrophe exposure.

Previous wording

In particular, our future success is substantially dependent on the continued service of our Founder, Chief Executive Officer and Chairman, Mac Armstrong, our Chief Financial Officer, Christopher Uchida, and our President, Jon Christianson, as well as other members of our senior management team. Should any of our key executives terminate their employment with us, or if we are unable to retain and attract talented personnel, we may be unable to maintain our current competitive position in the specialized markets in which we operate, which could adversely affect our results of operations.

Current wording

In particular, our future success is substantially dependent on the continued service of our Founder, Chief Executive Officer and Chairman, Mac Armstrong, our Chief Financial Officer, T. Christopher Uchida, and our President, Jon Christianson, as well as other members of our senior management team. Should any of our key executives terminate their employment with us, or if we are unable to retain and attract talented personnel, we may be unable to maintain our current competitive position in the specialized markets in which we operate, which could adversely affect our results of operations.

Previous wording

We rely on a select group of brokers and program administrators, and such relationships may not continue or may not perform as expected.

Current wording

We rely on a select group of third-party brokers and program administrators, and such relationships may not continue or may not perform as expected.

Previous wording

The distribution networks of our products are multi-faceted and distinct to each line of business. Our relationships with our brokers or program administrators may be discontinued or materially modified at any time. Even if these relationships do continue, they may not be on terms that are profitable for us. We distribute a significant portion of our Earthquake products through relationships with certain program administrators. Each of the products managed by the program administrators operates as a separate program that is governed by an independent, separately negotiated agreement with unique terms and conditions, including geographic scope, key person provisions, economics and exclusivity. These programs also feature separate managerial oversight and leadership, policy administration systems and retail agents originating policies.

Current wording

The distribution networks of our products are multi-faceted and distinct to each line of business. Our relationships with third-party brokers or program administrators may be discontinued or materially modified at any time. Even if these relationships do continue, they may not be on terms that are profitable for us. We distribute a significant portion of our Earthquake products through relationships with certain third-party program administrators. Each of the products managed by these program administrators operates as a separate program that is governed by an independent, separately negotiated agreement with unique terms and conditions, including geographic scope, key person provisions, economics and exclusivity. These programs also feature separate managerial oversight and leadership, policy administration systems and retail agents originating policies.

Previous wording

For the year ended December 31, 2025, our largest program administrator distributed $411.0 million, or 20.3% of our gross written premiums and our second largest administrator distributed $237.3 million, or 11.7% of our gross written premiums. There were no other program administrators that distributed greater than 10% of our gross written premiums for the year ended December 31, 2025.

Current wording

For the year ended December 31, 2025, our largest third-party program administrator distributed $411.0 million, or 20.3% of our gross written premiums. There were no other third-party program administrators that distributed greater than 10% of our gross written premiums for the year ended December 31, 2025.

Previous wording

For the six months ended June 30, 2026, our largest program administrator distributed $207.6 million, or 16.5% of our gross written premiums and our second largest program administrator distributed $164.5 million, or 13.0% of our gross written premiums. There were no other program administrators that distributed greater than 10% of our gross written premiums for the six months ended June 30, 2026.

Current wording

For the nine months ended September 30, 2026, our largest third-party program administrator distributed $320.3 million, or 15.8% of our gross written premiums. There were no other third-party program administrators that distributed greater than 10% of our gross written premiums for the nine months ended September 30, 2026.

Previous wording

Our largest program administrator, Arrowhead General Insurance Agency, distributes our Value Select Residential Earthquake program, which represents the majority of our Residential Earthquake premium and is administered through a mutually exclusive agreement for the states of California, Oregon and Washington. The agreement remains in effect until terminated by either party upon 180 days’ prior written notice to the other party for cause. The termination of a relationship with one or more significant brokers or program administrators could result in lower gross written premiums and could have a material adverse effect on our results of operations or business prospects.

Current wording

Our largest third-party program administrator, Arrowhead General Insurance Agency, distributes our Value Select Residential Earthquake program, which represents the majority of our Residential Earthquake premium and is administered through a mutually exclusive agreement for the states of California, Oregon and Washington. The agreement remains in effect until terminated by either party upon 180 days’ prior written notice to the other party for cause. The termination of a relationship with one or more significant third-party brokers or program administrators could result in lower gross written premiums and could have a material adverse effect on our results of operations or business prospects.

Previous wording

If acquisitions are made, we may not realize the anticipated benefits of such acquisitions, including, but not limited to, revenue growth, operational efficiencies, or expected synergies. Many of the businesses and assets that we have acquired or may acquire have unaudited historical financial statements or records prepared by the management of such companies and have not been, or will not be, independently reviewed or audited. We cannot be certain that the financial statements or records of companies or assets we have acquired or may acquire would not, or will not, be materially different if such statements were independently reviewed or audited. If such statements were to be materially different, the tangible and intangible assets we acquire may be more susceptible to impairment charges, which could have a material adverse effect on us.

Current wording

If acquisitions are made, we may not realize the anticipated benefits of such acquisitions, including, but not limited to, revenue growth, operational efficiencies, or expected synergies. Many of the businesses and assets that we have acquired or may acquire have unaudited historical financial statements or records prepared by the management of such companies and have not been, or will not be, independently reviewed or audited. We cannot be certain that the financial statements or records of companies or assets we have acquired or may acquire would not, or will not, be materially different if such statements were independently reviewed or audited. If such statements were to be materially different, the goodwill, tangible and intangible assets we acquire may be more susceptible to impairment charges, which could have a material adverse effect on us.

Previous wording

Our Credit Agreement contains restrictions and covenants that limit our operating flexibility, and any debt borrowed under our Credit Agreement exposes us to additional risks and may adversely affect our financial condition and future financial results.

Current wording

Our 2026 Credit Agreement contains restrictions and covenants that limit our operating flexibility, and any borrowings under our 2026 Credit Agreement expose us to additional risks and may adversely affect our financial condition and future financial results.

Previous wording

We have entered into a Credit Agreement (the “Credit Agreement”) with certain lenders that provides for revolving and term loan credit facilities. Borrowings under the Credit Agreement may impact our business and financial condition by:

Current wording

We have entered into the 2026 Credit Agreement, which provides for revolving and term loan credit facilities. Borrowings under the 2026 Credit Agreement may impact our business and financial condition by:

Previous wording

Exposing us to interest rate risk since the interest rate in the Credit Agreement is a variable rate

Current wording

Exposing us to interest rate risk since the interest rate in the 2026 Credit Agreement is a variable rate.

Previous wording

In addition, the Credit Agreement contains financial covenants, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions. The financial covenants in the Credit Agreement require that we do not exceed a maximum leverage ratio and maintain a minimum net worth at the end of each quarter. Our insurance subsidiaries are also required to maintain a minimum risk-based capital ratio at the end of each year and must always maintain a minimum A.M. Best Financial Strength rating. All of these covenants and restrictions impact how we operate our business and may limit our flexibility in planning for, or reacting to, changes in our business and industry. Our ability to comply with these covenants may be affected by events beyond our control. If we breach any of the covenants and do not obtain a waiver from the noteholders or lenders, then, subject to applicable cure periods, any outstanding debt may be declared immediately due and payable.

Current wording

In addition, the 2026 Credit Agreement contains financial covenants, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions. The financial covenants in the 2026 Credit Agreement require that we do not exceed a maximum debt-to-capital ratio and maintain a minimum net worth at the end of each quarter. Our insurance subsidiaries are also required to maintain a minimum risk-based capital ratio at the end of each year and must always maintain a minimum A.M. Best Financial Strength rating. All of these covenants and restrictions impact how we operate our business and may limit our flexibility in planning for, or reacting to, changes in our business and industry. Our ability to comply with these covenants may be affected by events beyond our control. If we breach any of the covenants and do not obtain a waiver from our lenders, then, subject to applicable cure periods, any outstanding debt may be declared immediately due and payable.

Previous wording

Weather conditions, including too much moisture (flooding or excessive rainfall), insufficient moisture (droughts), and the level of crop prices in the commodities market, heavily impact our crop insurance products. These factors are inherently unpredictable and could result in significant volatility in our operating results from period to period. Our results could also be negatively impacted by pests, plant disease or other biological risks. A significant decline in the commodity prices for one or more of the major crops that we insure could have a material adverse effect on our results of operations or financial condition.

Current wording

Weather conditions, including too much moisture (flooding or excessive rainfall), insufficient moisture (droughts), and the level of crop prices in the commodities market, heavily impact our crop insurance products. These factors are inherently unpredictable and could result in significant volatility in our operating results from period to period. Our results could also be negatively impacted by pests, plant disease or other biological risks. A significant decline in the commodity prices for one or more of the major crops that we insure could have a material adverse effect on our results of operations or financial condition. We also write certain coverages exposed to livestock prices and use put options to hedge a portion of that exposure, which may not fully offset adverse price movements.

Previous wording

Such factors could reduce our net investment income and result in realized investment losses. Our investment portfolio is subject to increased valuation uncertainties when investment markets are illiquid. The valuation of investments is more subjective when markets are illiquid, thereby increasing the risk that the estimated fair value (i.e., the carrying amount) of the securities we hold in our portfolio does not reflect prices at which actual transactions would occur.

Current wording

Such factors could reduce our net investment income and result in realized investment losses. Our investment portfolio is subject to increased valuation uncertainties when investment markets are illiquid. The valuation of investments is more subjective when markets are illiquid, thereby increasing the risk that the estimated fair value at which we carry securities does not reflect prices at which actual transactions would occur.

Previous wording

We may, in certain circumstances, invest a small percentage of our investment portfolio in private companies or limited partnerships which we believe provide strategic opportunities. These types of investments are typically illiquid, and we have limited ability to take actions that protect or increase the value of this type of investment. Net losses from these investments or impairment of these investments may negatively impact our operating results.

Current wording

We have invested, and may in the future invest, a small percentage of our investment portfolio in private companies, limited partnerships and other less liquid instruments, which we believe provide strategic opportunities. These types of investments are typically illiquid, and we have limited ability to take actions that protect or increase the value of this type of investment. In addition, we have invested, and may in the future invest, in securities that we classify as held-to-maturity, which may have no active market, may be valued using significant unobservable inputs, and, in the case of instruments such as surplus notes, may have payments that are subject to regulatory approval and may be deferred. Net losses from these investments or impairment of these investments may negatively impact our operating results.

Previous wording

PSRE is subject to regulation by the European Union. The European Union adopted the Economic Substance Act 2018 and the Economic Substance Regulations 2018 (together, the “ES Requirements”). As an insurance company, our Bermuda subsidiary conducts a relevant activity and is subject to the ES Requirements. As a result, our Bermuda subsidiary may be required to change or increase our business operations in Bermuda to meet these requirements.

Current wording

PSRE is subject to Bermuda’s Economic Substance Act 2018 and the Economic Substance Regulations 2018 (together, the “ES Requirements”). As an insurance company, our Bermuda subsidiary conducts a relevant activity and is subject to the ES Requirements. As a result, our Bermuda subsidiary may be required to change or increase our business operations in Bermuda to meet these requirements.

Previous wording

In addition, regulatory standards relating to the use of artificial intelligence are evolving in the states where certain states have issued regulatory guidance to insurance companies on the use of AI. Certain states have adopted the NAIC Model Bulletin on the Use of Artificial Intelligence, while the New York Department of Financial Services issued its circular letter. Such state guidance on the use of AI sets forth expectations that companies have governance and risk management practices in place to ensure the use of AI complies with various state laws governing the business of insurance

Current wording

In addition, regulatory standards relating to the use of artificial intelligence are evolving, and certain states have issued regulatory guidance to insurance companies on the use of AI. Certain states have adopted the NAIC Model Bulletin on the Use of Artificial Intelligence, while the New York Department of Financial Services issued a circular letter on the use of AI in insurance underwriting and pricing. Such state guidance on the use of AI sets forth expectations that companies have governance and risk management practices in place to ensure the use of AI complies with various state laws governing the business of insurance.

Previous wording

The continued operation and growth of our business will require substantial capital. Although we did not pay cash dividends on our common stock prior to 2026, our Board of Directors has declared a cash dividend of $0.45 per share of our common stock, payable on September 2, 2026 to stockholders of record as of August 19, 2026, representing the first cash dividend declared on our common stock. Any future declaration and payment of dividends, including whether we continue to pay dividends at all, in the current amount, or on a quarterly schedule, will be at the discretion of our Board of Directors and will depend on, among other things, our results of operations, financial condition, capital requirements, regulatory restrictions, and other factors. Because we are a holding company with no business operations of our own, our ability to return capital to stockholders, including through dividends and other distributions from our insurance subsidiaries largely depends on dividends and other distributions from our insurance subsidiaries, PSIC, PESIC, PSRE, FIA, and PCSC.

Current wording

The continued operation and growth of our business will require substantial capital. Because we are a holding company with no business operations of our own, our ability to support our growth and return capital to stockholders, including through dividends and share repurchases, largely depends on dividends and other distributions from our insurance subsidiaries, PSIC, PESIC, PSRE, FIA, and PCSC.

Previous wording

Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, restrictions imposed by applicable law and other factors our Board of Directors deems relevant. Consequently, investors may need to sell all or part of their holdings of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking immediate cash dividends should not purchase our common stock.

Current wording

Any determination to pay dividends in the future, including whether we continue to pay dividends at all, in the current amount, or on a quarterly schedule, will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, capital requirements, restrictions imposed by applicable law and other factors our Board of Directors deems relevant. If we reduce or discontinue dividends, investors may need to rely on price appreciation, which may never occur, to realize any gains on their investment.

Previous wording

As a public company with SEC reporting obligations, we are required to document and test our internal control procedures to satisfy the requirements of Section 404(b) of the Sarbanes‑Oxley Act, which requires annual assessments by management of the effectiveness of our internal control over financial reporting. We must implement and maintain substantial internal control systems and procedures to satisfy the reporting requirements under the Exchange Act.

Current wording

As a public company with SEC reporting obligations, we are required to document and test our internal control procedures to satisfy the requirements of Sections 404(a) and Section 404(b) of the Sarbanes‑Oxley Act, which require annual assessments by management of the effectiveness of our internal control over financial reporting and an attestation report by our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. We must implement and maintain substantial internal control systems and procedures to satisfy the reporting requirements under the Exchange Act.

Previous wording

During our assessments, we may identify deficiencies that we are unable to remediate in a timely manner. Testing and maintaining our internal control over financial reporting may also divert management’s attention from other matters that are important to the operation of our business. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404(b) of Sarbanes‑Oxley. If we conclude that our internal control over financial reporting is not effective, the cost and scope of remediation actions and their effect on our operations may be significant. Moreover, any material weaknesses or other deficiencies in our internal control over financial reporting may impede our ability to file timely and accurate reports with the SEC. Any of the above could cause investors to lose confidence in our reported financial information or our common stock listing on Nasdaq to be suspended or terminated, which could have a negative effect on the trading price of our common stock.

Current wording

During our assessments, we may identify deficiencies that we are unable to remediate in a timely manner. Testing and maintaining our internal control over financial reporting may also divert management’s attention from other matters that are important to the operation of our business. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes‑Oxley Act. If we conclude that our internal control over financial reporting is not effective, the cost and scope of remediation actions and their effect on our operations may be significant. Moreover, any material weaknesses or other deficiencies in our internal control over financial reporting may impede our ability to file timely and accurate reports with the SEC. Any of the above could cause investors to lose confidence in our reported financial information or our common stock listing on Nasdaq to be suspended or terminated, which could have a negative effect on the trading price of our common stock.

Previous wording

Our purchases of our equity securities in the second quarter of fiscal year 2026 were:

Current wording

Our purchases of our equity securities in the third quarter of fiscal year 2026 were:

Previous wording

On July 31, 2025, our Board of Directors approved the adoption of a share repurchase plan that authorizes the repurchase of up to $150 million of outstanding shares of common stock through the period ending on July 31, 2027. On April 30, 2026, our Board of Directors approved the adoption of a share repurchase plan, effective May 6, 2026, which replaces the previous program, and authorizes the repurchase of up to $200 million of outstanding shares of common stock through May 6, 2028.

Current wording

On April 30, 2026, our Board of Directors approved the adoption of a share repurchase program, effective May 6, 2026, which replaced the 2025 Repurchase Program and authorized the repurchase of up to $200 million of outstanding shares of common stock through May 6, 2028.