The disclosed purchase price was $300 million in cash, subject to customary post-closing adjustments for Book Value, Indebtedness and Transaction Expenses as set out in the agreement's purchase-price adjustment mechanism. No per-share price, exchange ratio, or EV/EBITDA-style multiple was disclosed, consistent with a private, cash acquisition of a privately held target with no public shareholder vote. Gray Surety is described as a Treasury-listed surety carrier specializing in contract bonds for midsized and emerging contractors, founded in 1996 as a subsidiary of The Gray Insurance Company (a family-owned Louisiana insurer) and recapitalized by Bernhard Capital Partners in 2021; it is licensed in all 50 states, operates thirteen regional offices, and is described as a "Top 50" surety carrier that sustained annual double-digit growth while maintaining a below-industry-average loss ratio.
Mac Armstrong, Palomar's Chairman and CEO, said the deal "meaningfully enhances Palomar's surety franchise, bolstering our current market position and complementing our existing operations," and that the Gray Surety team's expertise "will play a key role in advancing our Palomar 2x strategic imperative and driving sustained profitable growth." Cullen Piske, President of Gray Surety, said Palomar "shares our entrepreneurial culture, disciplined underwriting approach and commitment to the surety market" and that the deal provides "the financial strength, scale, and strategic support to expand our reach." No dollar synergy estimate, cost-base percentage, or phase-in timeline was disclosed in the filings reviewed.
On the financial advisory side, Evercore acted as exclusive financial advisor to Palomar and J.P. Morgan acted as exclusive financial advisor to Gray Surety. On the legal side, DLA Piper LLP (US) represented Palomar and Kirkland & Ellis LLP represented Gray Surety.
The original agreement called for closing conditions including expiration or termination of HSR Act waiting periods, required insurance regulatory approvals, and other customary closing conditions, with an outside termination date of March 27, 2026 (extendable to May 27, 2026 under the agreement's terms). No standalone termination fee was disclosed in the purchase agreement.
The transaction has since closed. On January 30, 2026, the parties amended the purchase agreement to provide that closing would be effective on the last day of the month in which closing conditions were satisfied. The transaction closed on January 31, 2026, as disclosed in a Form 8-K filed February 2, 2026 (Items 1.01, 2.01, 2.03, 7.01 and 9.01). At closing, Palomar paid approximately $311 million in cash for Gray Surety's equity interests (reflecting the post-closing purchase-price adjustment from the originally disclosed $300 million), funded with proceeds from a new Term Loan and cash on hand. In connection with the closing, Palomar also entered into a new unsecured credit agreement on January 27, 2026 with U.S. Bank National Association (administrative agent), KeyBank National Association (syndication agent), and Citizens Bank, The Huntington National Bank, PNC Bank and Wells Fargo Bank as co-documentation agents, providing $450 million of unsecured credit facilities (a $150 million revolver and a $300 million term loan, maturing January 27, 2031, plus an uncommitted $100 million incremental facility), with proceeds usable for general corporate purposes, permitted acquisitions including this transaction, and refinancing of existing debt. Borrowings bear interest at Term SOFR or the Alternate Base Rate plus a margin of 1.5%-1.75% (Term SOFR) or 0.5%-0.75% (Alternate Base Rate), determined by Palomar's Debt to Capital Ratio. Obligations are guaranteed by several Palomar insurance subsidiaries pursuant to a Guaranty dated January 27, 2026. JPMorgan Chase Bank also participated in the term loan.
Announcing the closing, Mac Armstrong said, "This transaction meaningfully strengthens Palomar surety franchise. It adds scale and geographic reach, complements our existing operations and puts us well on our way to building a market leader in the attractive surety sector." No EPS accretion/dilution guidance, pro forma combined financial metrics, or integration cost figures were disclosed in the filings reviewed. Gray Surety is now listed among Palomar's insurance subsidiaries with an "A" (Excellent) A.M. Best financial strength rating.