Palomar Breaks Above 200-Day Moving Average as Gray Surety Acquisition Targets Lower P&C Exposure
Palomar shares crossed above the 200-day moving average this week, signaling a potential shift to a long-term bullish trend for technical traders. Its acquisition of Gray Surety is projected to reduce Property & Casualty cycle exposure and improve the companywide loss ratio ahead of Q4 results next month.
1. Technical Breakout Above 200-Day Moving Average
On January 5, Palomar’s share line moved decisively above its 200-day moving average of approximately 23.8. This shift marks the first sustained close above that level since early September 2025, signaling a potential transition from consolidation into a long-term bullish trend. Over the past three months, Palomar’s technical indicators have strengthened, with its 50-day moving average rising by 8% and the relative strength index climbing above 60, which historically has preceded further upward momentum for the stock.
2. Gray Surety Acquisition Strengthens P&C Position
In mid-December 2025, Palomar closed its acquisition of Gray Surety Group for $120 million in cash, expanding its footprint in the Excess & Surplus lines and reducing exposure to the cyclical Property & Casualty market. Management projects that integrating Gray Surety will improve Palomar’s combined ratio by 2.5 percentage points over the next 12 months, as the acquired business generated a 92.3% loss ratio in fiscal 2024 compared with Palomar’s 95.8%. This acquisition adds over $50 million in annualized premium and provides cross-sell opportunities into Palomar’s existing broker network.
3. Favorable Q4 Excess & Surplus Premium Trends
According to state insurance department filings for December 2025, Excess & Surplus premium in Texas grew 14.2%, Florida 11.7% and California 9.5% year-over-year. These figures point to strengthening market conditions that should flow through to Palomar’s Q4 results, due for release in late February. Analysts expect Palomar’s Q4 written premium to increase by 12–15% sequentially, supported by rate renewals averaging 6.8% across its portfolio and new business growth in key regions.
4. Analyst Buy Rating and 2026 Outlook
Following the technical breakout and strategic acquisition, several research firms have maintained a Buy rating on Palomar, highlighting an estimated 18% upside based on consensus targets. For full-year 2026, analysts forecast 10–12% growth in net written premiums and anticipate a mid-60s combined ratio, reflecting improved underwriting discipline and margin expansion. Management has reiterated its goal of achieving $600 million in total written premium by year-end, up from $530 million in 2025, driven by organic growth and selective M&A.