BATON ROUGE - Palomar Holdings, Inc. (NASDAQ:PLMR) has agreed to acquire The Gray Casualty & Surety Company from private equity firm BCP, according to a press release statement issued Thursday.
The transaction, which has received approval from both companies’ boards of directors, is expected to close during the first half of 2026, pending regulatory approvals and other customary closing conditions.
Gray Surety, a Treasury-listed carrier specializing in contract bonds for midsized and emerging contractors, operates across all 50 states through 13 regional offices. BCP made its investment in the company in 2021.
"Over the past four years, we have been proud to partner and work with Gray Surety and its leadership team to help position the company for long-term success," said Jeff Koonce, Partner at BCP.
Cullen Piske, President of Gray Surety, stated, "We are thrilled to join the Palomar team, a company that shares our entrepreneurial culture, disciplined underwriting approach, and commitment to the surety market." Palomar has demonstrated strong financial performance, with revenue growth of nearly 53% over the last twelve months and a return on equity of 22%.
J.P. Morgan is serving as exclusive financial advisor to Gray Surety, while Evercore is acting in the same capacity for Palomar. InvestingPro data shows Palomar is trading at a low P/E ratio of 19.89 relative to its near-term earnings growth, suggesting the acquisition could potentially add value to the already undervalued company.
Founded in 1996 as a subsidiary of The Gray Insurance Company, Gray Surety has maintained annual double-digit growth while operating with a loss ratio below industry average during BCP’s ownership, according to the announcement.
Financial terms of the transaction were not disclosed in the press release. Investors interested in Palomar’s future outlook may want to note the company’s upcoming earnings report on November 6, just 7 days away. For deeper insights into Palomar’s valuation, financial health metrics, and comprehensive analysis, check out the Pro Research Report available on InvestingPro, which offers expert analysis on over 1,400 US equities.
In other recent news, Palomar Holdings announced a definitive agreement to acquire The Gray Casualty & Surety Company for $300 million in cash, with the transaction expected to close in the first half of 2026. Truist Securities has reiterated a Buy rating on Palomar Holdings with a price target of $168, following meetings with the company’s management that highlighted potential for sustained topline growth. Meanwhile, JPMorgan has adjusted its price target for Palomar to $158, citing slower growth in the earthquake insurance segment after the company’s second-quarter earnings report. Keefe, Bruyette & Woods also lowered their price target to $172, attributing the change to "unusual seasonality" impacting the results. Piper Sandler reduced their price target to $151, despite Palomar exceeding earnings per share estimates, due to concerns over a higher-than-expected expense ratio. These developments reflect a range of analyst perspectives on Palomar’s recent performance and future potential.