Palomar Holdings, Inc. Leases Disclosure
9. Leases
The Company has operating leases for office space used to conduct its insurance operations and administration activities. Operating lease right-of-use (“ROU”) assets are a component of prepaid expenses and other assets and operating lease liabilities are included in accounts payable and other accrued liabilities in the Company’s consolidated balance sheets.
The Company determines whether an arrangement is a lease at its inception. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. To determine the present value of lease payments, the Company uses its incremental borrowing rate, which it calculates based on information available at the lease commencement date. For certain leases that contain options to extend, the options are included in lease liabilities only if the company is reasonably certain the option will be exercised. Variable lease costs such as parking are expensed in the period the obligation is incurred and are not included in the Company’s operating lease liability. The Company’s lease agreements do not contain any residual value guarantees.
Operating lease costs for the years ended December 31, 2025, 2024 and 2023 were $1.1 million, $0.8 million, and $0.8 million, respectively. Operating lease costs are comprised of rental expense for operating leases. Lease expense is recognized on a straight-line basis over the lease term and is included as a component of other underwriting expenses in the Company’s consolidated statements of income and comprehensive income.
The following tables provide supplementary information about the Company’s leases:
Year ended December 31, 2025 |
|
($ in thousands) |
|
|
Operating cash outflows from operating leases |
|
$ |
708 |
|
December 31, 2025 |
|
($ in thousands) |
|
|
Operating lease ROU |
|
$ |
6,879 |
|
Operating lease |
|
$ |
7,091 |
|
Weighted-average remaining lease term on operating leases (years) |
|
|
8.3 |
|
Weighted-average discount rate on operating leases |
|
|
5.1 |
% |
Future minimum lease payments as of December 31, 2025 are as follows:
Years ending December 31, |
|
($ in thousands) |
|
|
2026 |
|
|
927 |
|
2027 |
|
|
927 |
|
2028 |
|
|
1,338 |
|
2029 |
|
|
1,378 |
|
2030 |
|
|
1,419 |
|
Thereafter |
|
|
4,587 |
|
Total future minimum lease payments |
|
$ |
10,576 |
|
Less: imputed interest |
|
|
(3,485 |
) |
Total operating lease liability |
|
$ |
7,091 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Mar 9, 2021 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.