Palomar Holdings, Inc. entered into a definitive agreement to acquire Gray Casualty & Surety Company for $300 million in cash, subject to customary closing adjustments. The transaction is expected to close in the first half of 2026 pending regulatory approvals.
Gray Casualty & Surety is a Treasury‑listed surety carrier that provides contract bonds for midsized and emerging contractors across the United States. The company is licensed in all 50 states, operates 13 regional offices, and has delivered double‑digit growth since 2021 while maintaining a loss ratio below the industry average.
The acquisition expands Palomar’s surety franchise, adding a national footprint that complements its existing surety operations, including First Indemnity of America. Palomar CEO Mac Armstrong said the deal will strengthen the company’s market position and support its "Palomar 2X" growth strategy, which aims to double underwriting income and maintain a return on equity above 20%.
Palomar’s recent financial results show revenue growth and a focus on specialty insurance markets. The company’s "Palomar 2X" strategy emphasizes diversification across high‑risk, catastrophe‑exposed lines. Adding Gray Surety positions Palomar to capture a larger share of the profitable surety market and leverage its underwriting expertise across residential, commercial, and surety lines.
J.P. Morgan and Kirkland & Ellis LLP advised Gray Surety, while Evercore and DLA Piper advised Palomar on the transaction.
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