NEW YORK, May 06, 2025--(BUSINESS WIRE)--Bowhead Specialty Holdings Inc. (NYSE: BOW), a specialty lines insurance group focused on providing casualty, professional liability and healthcare liability insurance products, today announced financial results for the first quarter ended March 31, 2025.(1)

First Quarter 2025 Highlights

Gross written premiums increased 26.3% to $174.8 million. Net income of $11.4 million, or $0.34 per diluted share. Adjusted net income(2) of $11.5 million, or $0.34 per diluted share(2). Return on equity of 12.0% and adjusted return on equity(2) of 12.1%. Book value per share $11.98 and diluted book value per share of $11.61.

Bowhead Chief Executive Officer, Stephen Sills, commented, "We are proud of our first quarter 2025 results, which demonstrated continued execution across all of our underwriting divisions. We grew premiums by more than 26% year-over-year, once again driven by outsized growth in our Casualty business. More importantly, we grew net income by over 60% compared to last year, which is a testament to our commitment to generating profitable growth. Although there is heightened uncertainty in the market given rising trade tensions and macroeconomic headwinds, we believe that Bowhead is currently well positioned to execute on our goal to grow premiums by around 20% on an annual basis."

Underwriting Results

The 26.3% increase in gross written premiums to $174.8 million in the first quarter of 2025 was driven by renewals and continued growth in our platform across all divisions:

Our Casualty division led the growth with a 33.7% increase to $122.3 million; Healthcare Liability increased 9.9% to $23.8 million; Professional Liability increased 2.8% to $26.0 million; and Late in the second quarter of 2024, we launched a new division called Baleen Specialty, which focuses on small, hard-to-place risks written 100% on a non-admitted basis. Baleen is a streamlined, tech-enabled low touch "flow" underwriting operation that supplements the "craft" solutions we offer today. In line with our deliberate, measured and limited roll out, Baleen Specialty generated $2.7 million of gross written premiums for the first quarter of 2025, a sequential growth of 131.1% from the previous quarter.

Our loss ratio of 66.9% in the first quarter of 2025 increased 1.4 points compared to 65.5% in the first quarter of 2024, driven by a 0.4 point increase due to prior accident year reserve development and a 1.0 point increase in our current accident loss ratio.

The 0.4 point prior accident year reserve development was driven by expected loss ratios applied to audit premiums being fully earned in the quarter but associated with prior accident years.

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The 1.0 point increase in our current accident year loss ratio was driven by changes in our portfolio mix. During the three months ended March 31, 2025, our Casualty division, which has comparatively higher current accident year industry loss ratios, comprised a larger proportion of our portfolio compared to the prior period.

Our expense ratio was 30.4% for the three months ended March 31, 2025 compared to 32.6% for the three months ended March 31, 2024, which was a decrease of 2.2 points. The decrease in our expense ratio was primarily driven by the 2.9 point decrease in our operating expenses ratio, which was partially offset by the 1.0 point increase in our net acquisition costs ratio.

The decrease in our operating expenses ratio was due to the continued scaling of our business, where net earned premiums grew at a higher rate than our expenses, as well as the prudent management of our expenses.

The increase in our net acquisition costs ratio was driven by the increase in earned broker commissions due to changes in our portfolio mix, as well as the reduction in earned ceding commissions in our ceded reinsurance treaties.

Investment Results

Net investment income increased 64.0% in the quarter to $12.6 million, driven by a higher balance of investments during the three months ended March 31, 2025, and higher yields on invested assets. Our investment portfolio had a had a book yield of 4.7% and a new money rate of 4.8% at the end of the quarter.

The weighted average effective duration of our investment portfolio, which included cash equivalents, was 2.8 years and had an average rating of "AA" at March 31, 2025.

__________________ (1) Comparisons in this release are made to March 31, 2024 financial results unless otherwise noted. (2) Non-GAAP financial measure. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of the non-GAAP financial measures to their most directly comparable U.S. GAAP measures.

Summary of Operating Results The following table summarizes the Company’s results of operations for the three months ended March 31, 2025 and 2024:  Three Months Ended March 31, 2025  2024  $ Change  % Change ($ in thousands, except percentages and per share data) Gross written premiums $ 174,848   $ 138,433   $ 36,415   26.3 % Ceded written premiums  (58,079 )   (47,580 )   (10,499 )  22.1 % Net written premiums $ 116,769   $ 90,853   $ 25,916   28.5 %  Revenues  Net earned premiums $ 109,816   $ 82,981   $ 26,835   32.3 % Net investment income  12,559    7,660    4,899   64.0 % Net realized investment losses  (4 )   —    (4 )  NM  Other insurance-related income  345    31    314   1012.9 % Total revenues  122,716    90,672    32,044   35.3 %  Expenses  Net losses and loss adjustment expenses  73,427    54,320    19,107   35.2 % Net acquisition costs  9,796    6,521    3,275   50.2 % Operating expenses  23,937    20,522    3,415   16.6 % Non-operating expenses  110    219    (109 )  (49.8 )% Warrant expense  775    —    775   NM  Credit facility interest expenses and fees  247    —    247   NM  Foreign exchange losses  (46 )   34    (80 )  (235.3 )% Total expenses  108,246    81,616    26,630   32.6 %  Income before income taxes  14,470    9,056    5,414   59.8 % Income tax expense  (3,045 )   (2,044 )   (1,001 )  49.0 % Net income $ 11,425   $ 7,012   $ 4,413   62.9 %  Key Operating and Financial Metrics:  Adjusted net income(1) $ 11,479   $ 8,189   $ 3,290   40.2 % Loss ratio  66.9 %   65.5 %  Expense ratio  30.4 %   32.6 %  Combined ratio  97.3 %   98.1 %  Return on equity(2)  12.0 %   14.3 %  Adjusted return on equity(1)(2)  12.1 %   16.7 %  Diluted earnings per share $ 0.34   $ 0.29  Diluted adjusted earnings per share(1) $ 0.34   $ 0.34   __________________

NM - Percentage change is not meaningful.

(1) Non-GAAP financial measure. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of the non-GAAP financial measures to their most directly comparable U.S. GAAP measures.

(2) For the three months ended March 31, 2025 and 2024, net income and adjusted net income are annualized to arrive at return on equity and adjusted return on equity.

Condensed Consolidated Balance Sheets  March 31, 
2025  December 31, 2024 ($ in thousands, except share data) Assets  Investments  Fixed maturity securities, available for sale, at fair value (amortized cost of $1,039,579 and $894,145, respectively) $ 1,034,837   $ 879,989  Short-term investments, at amortized cost, which approximates fair value  9,999    9,997  Total investments  1,044,836    889,986   Cash and cash equivalents  88,050    97,476  Restricted cash and cash equivalents  35,401    124,582  Accrued investment income  7,675    7,520  Premium balances receivable  73,230    63,672  Reinsurance recoverable, net  284,873    255,072  Prepaid reinsurance premiums  151,609    152,567  Deferred policy acquisition costs  28,153    27,625  Property and equipment, net  7,677    6,845  Income taxes receivable  610    586  Deferred tax assets, net  19,356    20,340  Other assets  11,602    7,971  Total assets $ 1,753,072   $ 1,654,242   Liabilities  Reserve for losses and loss adjustment expenses $ 845,224   $ 756,859  Unearned premiums  452,845    446,850  Reinsurance balances payable  42,847    51,856  Income taxes payable  5,603    1,571  Accrued expenses  5,783    18,010  Other liabilities  9,407    8,654  Total liabilities  1,361,709    1,283,800   Commitments and contingencies (Note 12)   Mezzanine equity  Performance stock units  409    265   Stockholders' equity  Common stock  327    327  ($0.01 par value; 400,000,000 shares authorized, 32,662,683 and 32,662,683 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively)  Additional paid-in capital  320,029    318,095  Accumulated other comprehensive loss  (3,736 )   (11,154 ) Retained earnings  74,334    62,909  Total stockholders' equity  390,954    370,177  Total mezzanine equity and stockholders' equity  391,363    370,442   Total liabilities, mezzanine equity and stockholders' equity $ 1,753,072   $ 1,654,242

Gross Written Premiums The following table presents gross written premiums by underwriting division for the three months ended March 31, 2025 and 2024:  Three Months Ended March 31, 2025  % of Total  2024  % of Total  $ Change  % Change ($ in thousands, except percentages) Casualty $ 122,314  70.0 %  $ 91,498  66.1 %  $ 30,816  33.7 % Professional Liability  26,000  14.8 %   25,282  18.3 %   718  2.8 % Healthcare Liability  23,788  13.6 %   21,653  15.6 %   2,135  9.9 % Baleen Specialty  2,746  1.6 %   —  — %   2,746  NM  Gross written premiums $ 174,848  100.0 %  $ 138,433  100.0 %  $ 36,415  26.3 %  __________________

NM - Percentage change is not meaningful.

Loss Ratio The following table summarizes current and prior accident loss ratios for the three months ended March 31, 2025 and 2024:  Three Months Ended March 31, 2025  2024 Net Losses and Loss Adjustment Expenses  % of Net Earned Premiums  Net Losses and Loss Adjustment Expenses  % of Net Earned Premiums ($ in thousands, except percentages) Current accident year $ 72,983  66.5 %  $ 54,320  65.5 % Prior accident year reserve development  444  0.4 %   —  — % Total $ 73,427  66.9 %  $ 54,320  65.5 %

Expense Ratio The following table summarizes the components of our expense ratio for the three months ended March 31, 2025 and 2024:  Three Months Ended March 31, 2025  2024 Expenses  % of Net Earned Premium  Expenses  % of Net Earned Premium ($ in thousands, except percentages) Net acquisition costs $ 9,796   8.9 %  $ 6,521   7.9 % Operating expenses  23,937   21.8 %   20,522   24.7 % Less: Other insurance-related income  (345 )  (0.3 )%   (31 )  — % Total expense ratio $ 33,388   30.4 %  $ 27,012   32.6 %

Net Investment Income The following table summarizes the sources of net investment income for the three months ended March 31, 2025 and 2024:  Three Months Ended

March 31, 2025  2024 ($ in thousands) U.S. government and government agency $ 1,844   $ 3,687  State and municipal  687    387  Commercial mortgage-backed securities  1,180    373  Residential mortgage-backed securities  2,539    244  Asset-backed securities  1,484    1,073  Corporate  3,253    932  Short-term investments  128    113  Cash and cash equivalents  1,704    1,015  Gross investment income  12,819    7,824  Investment expenses  (260 )   (164 ) Net investment income $ 12,559   $ 7,660

Reconciliation of Non-GAAP Financial Measures

This earnings release contains certain financial measures that are not presented in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). We use these non-GAAP financial measures when planning, monitoring and evaluating our performance. Management believes that each of the non-GAAP financial measures described below provides useful insight into our underlying business performance.

Adjusted net income is defined as net income excluding the impact of net realized investment losses, non-operating expenses, foreign exchange (gains) losses, and certain strategic initiatives. Adjusted net income excludes the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. We calculate the tax impact only on adjustments that would be included in calculating our income tax expense using the estimated tax rate at which we received a deduction for these adjustments. Adjusted return on equity is defined as adjusted net income as a percentage of average beginning and ending mezzanine equity and stockholders’ equity. Diluted adjusted earnings per share is defined as adjusted net income divided by the weighted average common shares outstanding for the period, reflecting the dilution that may occur if equity based awards are converted into common stock equivalents as calculated using the treasury stock method.

You should not rely on these non-GAAP financial measures as a substitute for any U.S. GAAP financial measure. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered supplemental in nature and not as a replacement for or superior to the comparable U.S. GAAP measures. In addition, other companies, including companies in our industry, may calculate such measures differently, which reduces their usefulness as comparative measures.

Adjusted net income Adjusted net income for the three months ended March 31, 2025 and 2024 reconciles to net income as follows:  Three Months Ended March 31, 2025  2024 Before income taxes  After income taxes  Before income taxes  After income taxes ($ in thousands) Income as reported $ 14,470   $ 11,425   $ 9,056  $ 7,012  Adjustments:  Net realized investment gains  4    4    —   —  Non-operating expenses  110    110    219   219  Foreign exchange (gains) losses  (46 )   (46 )   34   34  Strategic initiatives(1)  —    —    1,238   1,238  Tax impact  —    (14 )   —   (313 ) Adjusted net income $ 14,538   $ 11,479   $ 10,547  $ 8,189   _________________

(1) Strategic initiatives for the three months ended March 31, 2024 represents costs incurred to set up our Baleen Specialty division, which is recorded in operating expenses within the Condensed Consolidated Statements of Income and Comprehensive Income. The costs incurred primarily represent expenses to implement the new platform and processes supporting the Baleen Specialty division. See "Business— Our Business"

Adjusted return on equity Adjusted return on equity for the three months ended March 31, 2025 and 2024 reconciles to return on equity as follows:  Three Months Ended March 31, 2025  2024 ($ in thousands, except percentages) Numerator: Adjusted net income(1) $ 45,916   $ 32,757  Denominator: Average mezzanine equity and stockholders' equity  380,903    196,657  Adjusted return on equity  12.1 %   16.7 %  ________________

(1) For the three months ended March 31, 2025 and 2024, net income and adjusted net income are annualized to arrive at return on equity and adjusted return on equity.

Diluted adjusted earnings per share Diluted adjusted earnings per share for the three months ended March 31, 2025 and 2024 reconciles to diluted earnings per share as follows:  Three Months Ended March 31, 2025  2024 ($ in thousands, except share and per share data) Numerator: Adjusted net income $ 11,479  $ 8,189 Denominator: Diluted weighted average shares outstanding  33,711,924   24,000,000 Diluted adjusted earnings per share $ 0.34  $ 0.34

About Bowhead Specialty Holdings Inc.

Bowhead Specialty is a growing specialty insurance business providing casualty, professional liability and healthcare liability insurance products. We were founded and are led by industry veteran Stephen Sills. The team is composed of highly experienced and respected industry veterans with decades of individual, successful underwriting and management experience. We focus on providing "craft" solutions in our specialty lines and classes of business that we believe require deep underwriting and claims expertise in order to produce attractive financial results.

We pride ourselves on the quality and experience of our people, who are committed to exceeding our partners’ expectations through excellent service and expertise. Our collaborative culture spans all functions of our business and allows us to provide a consistent, positive experience for all of our partners.

Conference Call

The Company will host a conference call to discuss its results on the same day, Tuesday, May 6, 2025, beginning at 8:30 a.m. Eastern Time. Interested parties may access the conference call through a live webcast, which can be accessed by going to https://bowhead-1q25-earnings-call.open-exchange.net/, or by visiting the Company’s Investor Relations website. A dial-in option for listen-only participants will be available after registering for the call. Please join the live webcast or dial in at least 10 minutes before the start of the call.

A replay of the event webcast will be available on the company’s Investor Relations website for one year following the call.

Forward-Looking Statements

This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in press release are forward-looking statements. In some cases, forward-looking statements can be identified by terms such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "seeks," "future," "outlook," "prospects" "will," "would," "should," "could," "may," "can have" or similar words. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. These risks include those described in the Company’s filings made with the Securities and Exchange Commission. Forward-looking statements speak only as of the date of this press release and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250506197737/en/

Contacts

Investor Relations Contact: 
Shirley Yap, Head of Investor Relations
[email protected]

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