Palomar Holdings, Inc. closed the acquisition of The Gray Casualty & Surety Company on January 31 2026, paying an estimated $311 million in cash and debt. The deal adds a national surety carrier that operates in all 50 states and maintains 13 regional offices, expanding Palomar’s geographic footprint and adding a complementary line of business that is largely uncorrelated with property‑catastrophe cycles.
On January 27 2026, Palomar secured a $450 million unsecured credit facility composed of a $150 million revolving line and a $300 million term loan that matures on January 27 2031. The facility, which includes an uncommitted incremental component of up to $100 million, is intended to provide liquidity for integration costs, future growth initiatives, and general corporate purposes. The financing structure gives Palomar flexibility to deploy capital as opportunities arise while maintaining a strong balance‑sheet profile.
The acquisition is a cornerstone of Palomar’s “Palomar 2x” growth strategy, which seeks to double the company’s scale and diversify its risk profile. By combining Gray Surety’s established client base and underwriting expertise with Palomar’s data‑driven underwriting and conservative risk management, the company aims to build a market‑leading surety platform and achieve a top‑20 national ranking. The addition of a surety business also broadens Palomar’s product mix and reduces exposure to cyclical property‑catastrophe events, strengthening the company’s resilience in volatile markets.
Palomar’s insurance subsidiaries, including the newly acquired Gray Surety, hold an “A” (Excellent) rating from A.M. Best, underscoring the financial strength of the combined entity. The $450 million credit facility provides a robust liquidity buffer that supports the integration of Gray Surety’s operations and fuels future expansion, while the deal’s purchase price of roughly $311 million—funded through the term loan and cash on hand—keeps leverage in check and preserves capital for strategic investments.
Mac Armstrong, Palomar’s Chairman and CEO, said the transaction “meaningfully strengthens Palomar’s surety franchise, adds scale and geographic reach, and puts us well on our way to building a market leader in the attractive surety sector.” He added that the company is “thrilled to officially welcome the Gray Surety team to Palomar and look forward to their contributions in advancing our Palomar 2x strategic framework.”
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