The Artificial Intelligence (AI) revolution is often framed as an algorithmic and silicon story. But under the heading there is a much more concrete reality. It is an insatiable demand for AI's energy, resilient infrastructure and specialized structures. From data centers gazing megawatts to renewable energy projects that power AI clusters, the physical backbone of this digital transformation is just as important as the code itself. However, investors rarely consider the companies that guarantee and enable this infrastructure. input Palomar Holdings (PLMR)It is a specialized insurance company that is quietly located to benefit from the AI infrastructure boom despite being overlooked by most market participants.
Hidden links between AI and infrastructure
The growth of AI depends on two pillars: Energy and construction. Training large language models requires Ascale computing, and as a result, large power is required. This has spurred a surge in renewable energy projects (Salah Farm, Wind Power, Grid Upgrades) to meet AI's energy needs. At the same time, AI infrastructure requires specialized construction, from data centers to subsea cables, often managed by engineering, procurement and construction (EPC) companies. These projects are inherently dangerous. Natural disasters, supply chain disruptions and regulatory hurdles could derail billion-dollar ventures.
This is where Palomar appears. The company does not directly guarantee energy infrastructure or EPC projects; Inland Ocean and Property Insurance The line covers key components of the AI infrastructure. For example, Palomar's residential and commercial builder risk policies protect construction sites, including data centers. Inland marine coverage protects high value equipment transported to AI facilities. Furthermore, recent partnerships Neptune Flood– AI-led flood insurance leader – Designed to guarantee AI hubs in flood-prone regions, concerns are growing as the climate intensifies.
Palomar's Strategic Movement: Blueprint for Growth
Palomar's 2025 results highlight its ability to exploit infrastructure-related risks. Total premiums rose 28.8% year-on-year to $496.3 million, driven by disciplined underwriting and expansion into the high-growth segment. the Victims and crop insurance The division is not directly linked to AI, but shows the company's ability to scale in a niche market, a skill that could lead to guaranteeing AI infrastructure.
Company's Neptune Flood Partnership It's particularly noteworthy. By integrating Neptune's AI-based underwriting technology, Palomar has increased its ability to price flood risk with accuracy, a key ability to ensure AI facilities in vulnerable locations. This partnership is also consistent with a wider trend. As AI hubs expand into areas with infrastructure and climate vulnerabilities, demand for specialized insurance will increase.
Palomar Acquiring Advanced Agricultural Protection (AAP) It also shows strategic agility. Although AAP focuses on crop insurance, the acquisition has resulted in a digital platform that can be adapted to manage AI infrastructure policies. The company focuses on technology-driven infrastructure through AI, data science and scalable platforms, and will turn to new markets as the physical demands of AI evolve.
Why PLMR is Underrated
Despite these strengths, Palomar remains under the radar. The market is stuck in its central earthquake and crop insurance segment, overlooking a broader infrastructure exposure. For example, Hawaii Hurricane Line It rose 39% in the second quarter of 2025, driven by rate rises and selective expansion. This is a model that can be replicated in AI infrastructure hotspots. Furthermore, Palomar's reinsurance strategy, which includes a 10% reduction in risk-adjusting rates for the core excess of the loss treaty, stabilizes revenues, reduces volatility, and makes it an attractive long-term play.
Investment paper: Long-term play in the physical layer of AI
Palomar's finances tell a compelling story. With $1.3 billion in cash and investment assets, an adjusted gross ratio of 73.1% and a $150 million stock repurchase program, the company is both resilient and growth-oriented. Its leadership set a target of $180 million in adjusted net income for 2025, up 15-20% from previous guidance.
For investors, what's important is to look beyond Palomar's current segment. As AI infrastructure spending accelerates, the company's expertise in ensuring high-risk, high-value projects is increasingly valuable. The partnership with Neptune Flood and AAP, combined with a disciplined underwriting track record, will be placed to gain an increased share of the AI infrastructure insurance market.
Conclusion: Infrastructure play no one can see
The AI revolution is not just about software, but about potential energy grids, data centers, and construction projects. Palomar Holdings focuses on infrastructure-related risks and strategic use of technology, and is uniquely positioned to benefit from this shift. With an assessment that still reflects traditional insurance roots, PLMR offers an attractive opportunity for investors who are willing to look beyond what is obvious. In a world where the physical layer of AI is just as important as the digital layer, Palomar is the unnamed hero of the infrastructure boom.
