Summary of Bowhead Specialty Holdings (BOW) 2025 Conference Call Industry Overview - The discussion primarily revolves around the casualty insurance market, particularly focusing on the dynamics of the Directors and Officers (D&O) and excess casualty business [1][2][3] - The current market is characterized by a significant reduction in capacity, which has not rebounded as seen in previous cycles, leading to ongoing demand for new capacity [4][5] Key Insights - **Market Conditions**: The casualty market is experiencing a prolonged period of reduced capacity, with the entry threshold for new companies decreasing from $25 million to as low as $5 million, allowing new entrants like Bowhead to emerge [2][3] - **Construction Sector**: There is a noted slowdown in construction projects due to uncertainties related to interest rates, supply chains, and immigration policies, which are affecting claim costs and project commitments [6][7] - **E&S Focus**: Bowhead has a significant focus on Excess and Surplus (E&S) lines, which allows for greater flexibility in policy pricing and language. However, there are potential regulatory risks associated with this focus [10][11] - **Claims Environment**: The company is observing rising rates in the construction sector, particularly in excess lines, due to ongoing issues with construction defect claims and social inflation [8][9] Business Strategy - **Primary vs. Excess**: Bowhead prefers to operate in the primary insurance space when possible but acknowledges that a significant portion of their business is in excess lines. They emphasize the importance of being involved early in the claims process to manage risks effectively [18][19][20] - **D&O Market**: The D&O market is stabilizing, but Bowhead is primarily positioned in higher excess layers, which are becoming less profitable. The company aims to move down into more stable primary positions but faces competition from larger firms [24][26] - **Healthcare Segment**: The healthcare insurance market, particularly hospital professional liability, is a key focus area. Bowhead has entered this market with a cautious approach, recognizing the increasing severity of claims [55][56] Talent Acquisition and Company Culture - **Remote Work Model**: Bowhead operates as a largely remote organization, which has been beneficial in attracting talent. The company emphasizes flexibility, unlimited vacation, and a strong culture of communication [34][36][37] - **Talent Development**: The company faces challenges in developing talent internally due to its remote structure, but it leverages technology to assist underwriters and improve efficiency [43][44] - **Hiring Practices**: Bowhead has a no-jerk policy and a thorough interview process to ensure cultural fit, which has contributed to a positive work environment and high employee satisfaction [46][47] Market Trends and Future Outlook - **Pricing Dynamics**: The pricing environment is becoming more granular, with varying trends across different segments. There is optimism regarding the healthcare segment's growth potential, driven by changing market conditions and increased awareness of risks [55] - **M&A Activity**: The relationship between M&A activity and insurance premiums is complex, with current market conditions not necessarily leading to increased premiums despite recent M&A deals [30][31][32] Conclusion - Bowhead Specialty Holdings is navigating a challenging casualty insurance market characterized by reduced capacity and rising claims costs. The company's strategic focus on E&S lines, coupled with a strong remote work culture, positions it well for future growth despite the competitive landscape.

(Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-42111 _________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (I.R.S. Employer Identification No.) (212) 970-0269 Registrant's telephone number, including area ...

Group 1 - Bowhead Specialty Holdings Inc. reported revenue of $133.26 million for the quarter ended June 2025, reflecting a year-over-year increase of 34.8% [1] - The company's EPS for the quarter was $0.37, up from $0.28 in the same quarter last year, indicating a positive earnings performance [1] - The reported revenue exceeded the Zacks Consensus Estimate of $130.63 million by 2.02%, and the EPS also surpassed the consensus estimate of $0.36 by 2.78% [1] Group 2 - Key financial metrics for Bowhead Specialty Holdings include an expense ratio of 30.6%, a combined ratio of 96.8%, and a loss ratio of 66.2%, all of which compare favorably against analyst estimates [4] - Net earned premiums were reported at $119.14 million, exceeding the average estimate of $116.53 million, while other insurance-related income was $0.46 million, surpassing the $0.2 million estimate [4] - Net investment income was reported at $13.68 million, slightly below the average estimate of $13.9 million [4] Group 3 - Over the past month, shares of Bowhead Specialty Holdings Inc. have returned -6.9%, contrasting with the Zacks S&P 500 composite's +1% change, indicating underperformance relative to the broader market [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance in the near term [3]

Financial Data and Key Metrics Changes - Gross written premiums increased by 32% year-over-year to a record $232 million in Q2 2025 [5][11] - Adjusted net income rose by 62% to $12.8 million, with diluted adjusted earnings per share increasing by 32% [5][11] - The loss ratio for the quarter was 66.2%, a 0.7 percentage point increase from 65.5% year-over-year [14] - The expense ratio decreased by 3.2 percentage points to 30.6% compared to 33.8% year-over-year [14] Business Line Data and Key Metrics Changes - The casualty division saw a 32% increase in premiums to $151 million, driven by the excess casualty book [6][7] - Professional liability premiums increased by 23% to $55 million, with commercial public D&O driving more than half of the growth [7][8] - Health care liability premiums grew by 39% to $24 million, with growth across all departments [8] - Baleen generated $3.4 million in premiums during its fourth full quarter of operations, showing steady month-over-month growth [9] Market Data and Key Metrics Changes - The excess casualty segment is experiencing a modest uptick in competition, but favorable underwriting and pricing conditions persist [18][19] - In the E&S construction project sector, there is a deceleration of new construction projects due to tariffs and labor availability concerns [19] - The professional liability market remains challenging, particularly for financial institutions and large cyber liability accounts [20][21] Company Strategy and Development Direction - The company emphasizes disciplined underwriting as a core strategy for enduring success and cross-cycle profitability [22] - Bowhead is expanding its craft and flow platforms to capitalize on market opportunities while maintaining a disciplined approach to underwriting [22] Management's Comments on Operating Environment and Future Outlook - Management noted that while competition is increasing, the overall discipline in limit deployment and rates in the excess casualty segment remains [18] - There are signs of market stabilization in public D&O, with brokers anticipating flat or rising rates [20] - The company is leveraging technology to underwrite small and middle market accounts effectively [21] Other Important Information - Net investment income increased by 56% year-over-year to $13.7 million, driven by higher average balances and yields on invested assets [16] - Total equity reached $408 million, resulting in a diluted book value per share of $12.04, a 9% increase from year-end [17] Q&A Session Summary Question: Comment on capacity available for financial institutions - Management indicated that the significant capacity is currently restricted to financial institutions and has not leaked into other professional liability products [25][26] Question: Update on social inflation in professional liability - Management noted that social inflation is more pronounced on the casualty side, with claims settlements increasing significantly [27][28] Question: Investment income outlook and reserve mix - Management expects investment income to grow due to increased balances being invested, with a focus on growing the portfolio size [32][35] Question: Update on Baleen's performance - Management expressed a positive outlook for Baleen, highlighting successful technology development and the ability to scale the business [40][42] Question: Expense ratio outlook - Management is optimistic about reducing the expense ratio below 30% in the near future, despite some headwinds from increased fees [48][50] Question: Timing of annual assumption review and reserve assumptions - Management confirmed that the annual review occurs in Q4, with ongoing internal assessments each quarter [54][55] Question: Opportunities to boost new money yield - Management is actively seeking opportunities to enhance yield but remains cautious about chasing high-risk investments [58][60]

Core Viewpoint - Bowhead Specialty Holdings Inc. reported quarterly earnings of $0.37 per share, exceeding the Zacks Consensus Estimate of $0.36 per share, and showing an increase from $0.28 per share a year ago, indicating a positive earnings surprise of +2.78% [1][2] Financial Performance - The company achieved revenues of $133.26 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.02%, and up from $98.9 million year-over-year [2] - Over the last four quarters, Bowhead Specialty Holdings has consistently exceeded consensus EPS estimates [2] Stock Performance - Bowhead Specialty Holdings shares have declined approximately 8.7% since the beginning of the year, contrasting with the S&P 500's gain of 7.6% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.42 on revenues of $142.81 million, and for the current fiscal year, it is $1.59 on revenues of $544.53 million [7] - The trend of estimate revisions prior to the earnings release was unfavorable, which may impact future stock performance [6] Industry Context - The Insurance - Property and Casualty industry, to which Bowhead Specialty Holdings belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Company Overview - Bowhead is a growing and profitable E&S focused specialty P&C business led by industry veteran Stephen Sills, with a strategic partnership with American Family Mutual Insurance Company, S I [16] - The company emphasizes an underwriting-first culture and sustainable underwriting across market cycles [16] - Bowhead's leadership team has an average of over 30 years of experience [21] Financial Highlights - Last Twelve Months (LTM) Q2'25 Gross Written Premium (GWP) reached $789 million [19] - The Combined Ratio for LTM June 2025 was 95 4%, consisting of a 65 1% loss ratio and a 30 3% expense ratio [19, 20] - Year-to-Date (YTD) June 2025 Adjusted Return on Equity (ROE) was 12 5% [19] - From 2021 through LTM Q2'25, the GWP Compound Annual Growth Rate (CAGR) was 43% [19] - 76% of LTM Q2'25 GWP was written on an E&S basis [21] Market Focus - The company is focused on profitable and growing lines within the ~$95 billion U S commercial E&S market [30] - Bowhead launched in September 2020, with a DPW CAGR of 20% from 2020-2024 and an average loss ratio of 59 1% [27] Strategic Advantages - Bowhead has a strong underwriting culture with a fully-integrated and accountable value chain [11, 32] - The company has a clean balance sheet with no reserves from accident years prior to 2020 [11, 40] - Bowhead balances its "craft" underwriting strategy with "flow" business launched in 2024 for continued growth [48]

Executive Summary & Second Quarter 2025 Highlights [CEO Commentary](index=1&type=section&id=1.1%20CEO%20Commentary) CEO Stephen Sills attributed strong Q2 2025 results to strategic execution and underwriting discipline, driving significant premium and net income growth - CEO Stephen Sills expressed satisfaction with Q2 2025 results, highlighting **strong strategic execution and underwriting discipline**[1](index=1&type=chunk) - The company achieved a **32% year-over-year growth in premiums** and impressive **double-digit expansion** across all craft underwriting divisions[1](index=1&type=chunk) - **Net income for the quarter soared by 123%** compared to the same period last year, underscoring dedication to sustainable and profitable growth[1](index=1&type=chunk) [Key Financial & Operational Highlights](index=1&type=section&id=1.2%20Key%20Financial%20%26%20Operational%20Highlights) Q2 2025 highlights include significant growth in gross written premiums, net income, and adjusted net income, with strong returns on equity Metric | Q2 2025 Value | :-------------------------------- | :------------ | | Gross written premiums | $232.4 million | | Net income | $12.3 million | | Adjusted net income | $12.8 million | | Diluted earnings per share | $0.36 | | Adjusted diluted earnings per share | $0.37 | | Return on equity | 12.4% | | Adjusted return on equity | 12.8% | | Book value per share | $12.44 | | Diluted book value per share | $12.04 | - **Gross written premiums increased 32.4% to $232.4 million in Q2 2025**[7](index=7&type=chunk) Division | Q2 2025 GWP | % Increase | :-------------------- | :---------- | :--------- | | Casualty | $150.7 million | 31.9% | | Professional Liability | $54.8 million | 23.3% | | Healthcare Liability | $23.5 million | 39.0% | | Baleen Specialty | $3.4 million | 23.2% (QoQ) | Financial Performance Analysis [Summary of Operating Results](index=3&type=section&id=2.1%20Summary%20of%20Operating%20Results) Bowhead Specialty achieved robust financial growth in Q2 and H1 2025, with significant revenue increases, doubled net income, and improved profitability Summary of Operating Results (Three Months Ended June 30) | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | % Change | | :-------------------------------- | :-------------------- | :-------------------- | :------- | | Gross written premiums | 232,361 | 175,539 | 32.4% | | Net written premiums | 148,853 | 112,053 | 32.8% | | Net earned premiums | 119,137 | 90,087 | 32.2% | | Net investment income | 13,677 | 8,777 | 55.8% | | Total revenues | 133,263 | 98,898 | 34.7% | | Net losses and loss adjustment expenses | 78,900 | 59,018 | 33.7% | | Total expenses | 117,347 | 91,488 | 28.3% | | Income before income taxes | 15,916 | 7,410 | 114.8% | | Net income | 12,342 | 5,533 | 123.1% | | Adjusted net income | 12,758 | 7,880 | 61.9% | | Loss ratio | 66.2% | 65.5% | +0.7 pts | | Expense ratio | 30.6% | 33.8% | -3.2 pts | | Combined ratio | 96.8% | 99.3% | -2.5 pts | | Diluted earnings per share | $0.36 | $0.20 | - | | Diluted adjusted earnings per share | $0.37 | $0.28 | - | Summary of Operating Results (Six Months Ended June 30) | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | % Change | | :-------------------------------- | :-------------------- | :-------------------- | :------- | | Gross written premiums | 407,209 | 313,971 | 29.7% | | Net written premiums | 265,622 | 202,905 | 30.9% | | Net earned premiums | 228,954 | 173,067 | 32.3% | | Net investment income | 26,236 | 16,437 | 59.6% | | Total revenues | 255,980 | 189,569 | 35.0% | | Net losses and loss adjustment expenses | 152,327 | 113,338 | 34.4% | | Total expenses | 225,593 | 173,103 | 30.3% | | Income before income taxes | 30,387 | 16,466 | 84.5% | | Net income | 23,767 | 12,545 | 89.5% | | Adjusted net income | 24,238 | 16,068 | 50.8% | | Loss ratio | 66.5% | 65.5% | +1.0 pts | | Expense ratio | 30.4% | 33.2% | -2.8 pts | | Combined ratio | 96.9% | 98.7% | -1.8 pts | | Diluted earnings per share | $0.70 | $0.48 | - | | Diluted adjusted earnings per share | $0.72 | $0.62 | - | [Underwriting Performance](index=1&type=section&id=2.2%20Underwriting%20Performance) Q2 2025 underwriting performance showed strong premium growth, a slight loss ratio increase from portfolio mix, and a notable expense ratio decrease [Gross Written Premiums](index=1&type=section&id=2.2.1%20Gross%20Written%20Premiums) - **Gross written premiums increased by 32.4% to $232.4 million in Q2 2025**, driven by an increasing renewal book and platform growth across all divisions[2](index=2&type=chunk)[7](index=7&type=chunk) Gross Written Premiums by Underwriting Division (Three Months Ended June 30) | Division | 2025 ($ in thousands) | % of Total (2025) | 2024 ($ in thousands) | % of Total (2024) | $ Change | % Change | | :-------------------- | :-------------------- | :------------------ | :-------------------- | :------------------ | :------- | :------- | | Casualty | 150,720 | 64.9% | 114,233 | 65.1% | 36,487 | 31.9% | | Professional Liability | 54,752 | 23.5% | 44,397 | 25.3% | 10,355 | 23.3% | | Healthcare Liability | 23,505 | 10.1% | 16,909 | 9.6% | 6,596 | 39.0% | | Baleen Specialty | 3,384 | 1.5% | — | —% | 3,384 | NM | | **Total** | **232,361** | **100.0%** | **175,539** | **100.0%** | **56,822** | **32.4%** | Gross Written Premiums by Underwriting Division (Six Months Ended June 30) | Division | 2025 ($ in thousands) | % of Total (2025) | 2024 ($ in thousands) | % of Total (2024) | $ Change | % Change | | :-------------------- | :-------------------- | :------------------ | :-------------------- | :------------------ | :------- | :------- | | Casualty | 273,034 | 67.1% | 205,730 | 65.5% | 67,304 | 32.7% | | Professional Liability | 80,752 | 19.8% | 69,679 | 22.2% | 11,073 | 15.9% | | Healthcare Liability | 47,293 | 11.6% | 38,562 | 12.3% | 8,731 | 22.6% | | Baleen Specialty | 6,130 | 1.5% | — | —% | 6,130 | NM | | **Total** | **407,209** | **100.0%** | **313,971** | **100.0%** | **93,238** | **29.7%** | [Loss Ratio Analysis](index=1&type=section&id=2.2.2%20Loss%20Ratio%20Analysis) - The **loss ratio increased by 0.7 points to 66.2%** in Q2 2025, primarily due to a **0.6 point increase in the current accident year loss ratio** and a **0.1 point increase in the prior accident year loss ratio**[2](index=2&type=chunk) - The increase in the current accident year loss ratio was driven by **changes in portfolio mix**, with the Casualty division (higher current accident year industry loss ratios) comprising a larger proportion of net earned premium[3](index=3&type=chunk) Loss Ratio Components (Three Months Ended June 30) | Component | 2025 % of Net Earned Premiums | 2024 % of Net Earned Premiums | | :------------------------------ | :---------------------------- | :---------------------------- | | Current accident year | 66.1% | 65.5% | | Prior accident year reserve development | 0.1% | —% | | **Total Loss Ratio** | **66.2%** | **65.5%** | [Expense Ratio Analysis](index=1&type=section&id=2.2.3%20Expense%20Ratio%20Analysis) - The **expense ratio decreased by 3.2 points to 30.6%** in Q2 2025, mainly due to a **3.7 point decrease in the operating expenses ratio** and a **0.4 point increase in other insurance-related income**[5](index=5&type=chunk) - The decrease in the operating expenses ratio was attributed to **business scaling**, where net earned premiums grew faster than expenses, and **prudent expense management**[6](index=6&type=chunk) Expense Ratio Components (Three Months Ended June 30) | Component | 2025 % of Net Earned Premiums | 2024 % of Net Earned Premiums | | :-------------------------- | :---------------------------- | :---------------------------- | | Net acquisition costs | 9.3% | 8.4% | | Operating expenses | 21.7% | 25.4% | | Less: Other insurance related-income | (0.4)% | —% | | **Total Expense Ratio** | **30.6%** | **33.8%** | [Investment Performance](index=2&type=section&id=2.3%20Investment%20Performance) Net investment income grew substantially in Q2 2025, driven by larger investment balance and higher yields, maintaining strong credit and moderate duration - **Net investment income increased 55.8% to $13.7 million in Q2 2025**, primarily due to a **higher balance of investments and increased yields**[10](index=10&type=chunk)[12](index=12&type=chunk) - As of June 30, 2025, the investment portfolio had a **book yield of 4.7%** and a **new money rate of 4.8%**[10](index=10&type=chunk) Net Investment Income by Source (Three Months Ended June 30) | Source | 2025 ($ in thousands) | 2024 ($ in thousands) | | :-------------------------------- | :-------------------- | :-------------------- | | U.S. government and government agency | 1,633 | 3,836 | | State and municipal | 876 | 388 | | Commercial mortgage-backed securities | 1,267 | 468 | | Residential mortgage-backed securities | 3,129 | 1,920 | | Asset-backed securities | 1,569 | (33) | | Corporate | 4,244 | 1,071 | | Short-term investments | 86 | 103 | | Cash and cash equivalents | 1,154 | 1,204 | | Gross investment income | 13,958 | 8,957 | | Investment expenses | (281) | (180) | | **Net investment income** | **13,677** | **8,777** | Condensed Consolidated Balance Sheets [Condensed Consolidated Balance Sheets](index=4&type=section&id=3.1%20Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $1.94 billion by June 30, 2025, driven by investments and reinsurance, with liabilities and stockholders' equity also growing Condensed Consolidated Balance Sheets (Selected Items) | Item | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :------------------------------------ | :----------------------------- | :--------------------------------- | | Total investments | 1,113,093 | 889,986 | | Cash and cash equivalents | 114,816 | 97,476 | | Reinsurance recoverable, net | 319,423 | 255,072 | | **Total assets** | **1,942,151** | **1,654,242** | | Reserve for losses and loss adjustment expenses | 950,719 | 756,859 | | Unearned premiums | 502,378 | 446,850 | | **Total liabilities** | **1,534,339** | **1,283,800** | | Total stockholders' equity | 407,205 | 370,177 | | **Total liabilities, mezzanine equity and stockholders' equity** | **1,942,151** | **1,654,242** | - **Total assets increased by $287.9 million** from December 31, 2024, to June 30, 2025[14](index=14&type=chunk) - **Total stockholders' equity increased by $37.0 million** from December 31, 2024, to June 30, 2025[14](index=14&type=chunk) Reconciliation of Non-GAAP Financial Measures [Adjusted Net Income](index=7&type=section&id=4.1%20Adjusted%20Net%20Income) Adjusted net income, a non-GAAP measure, evaluates core business performance by excluding non-recurring items, increasing 61.9% to $12.8 million in Q2 2025 - **Adjusted net income** is defined as net income excluding net realized investment (losses) gains, non-operating expenses, foreign exchange losses (gains), and certain strategic initiatives, net of tax impact[22](index=22&type=chunk) Adjusted Net Income Reconciliation (Three Months Ended June 30) | Item | 2025 After income taxes ($ in thousands) | 2024 After income taxes ($ in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Income as reported | 12,342 | 5,533 | | Adjustments: | | | | Net realized investment losses (gains) | 11 | (2) | | Non-operating expenses | 437 | 1,481 | | Foreign exchange losses (gains) | 79 | (4) | | Strategic initiatives | — | 1,496 | | Tax impact | (111) | (624) | | **Adjusted net income** | **12,758** | **7,880** | Adjusted Net Income Reconciliation (Six Months Ended June 30) | Item | 2025 After income taxes ($ in thousands) | 2024 After income taxes ($ in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Income as reported | 23,767 | 12,545 | | Adjustments: | | | | Net realized investment losses (gains) | 15 | (2) | | Non-operating expenses | 548 | 1,698 | | Foreign exchange losses | 33 | 30 | | Strategic initiatives | — | 2,733 | | Tax impact | (125) | (936) | | **Adjusted net income** | **24,238** | **16,068** | [Adjusted Return on Equity](index=8&type=section&id=4.2%20Adjusted%20Return%20on%20Equity) Adjusted return on equity, a non-GAAP measure, is annualized adjusted net income as a percentage of average equity, reaching 12.8% in Q2 2025 - **Adjusted return on equity** is defined as annualized adjusted net income as a percentage of average beginning and ending mezzanine equity and stockholders' equity[22](index=22&type=chunk)[24](index=24&type=chunk) Adjusted Return on Equity Reconciliation (Three Months Ended June 30) | Metric | 2025 ($ in thousands, except percentages) | 2024 ($ in thousands, except percentages) | | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Numerator: Adjusted net income (annualized) | 51,031 | 31,519 | | Denominator: Average mezzanine equity and stockholders' equity | 399,588 | 270,551 | | **Adjusted return on equity** | **12.8%** | **11.7%** | Adjusted Return on Equity Reconciliation (Six Months Ended June 30) | Metric | 2025 ($ in thousands, except percentages) | 2024 ($ in thousands, except percentages) | | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Numerator: Adjusted net income (annualized) | 48,477 | 32,135 | | Denominator: Average mezzanine equity and stockholders' equity | 389,127 | 265,971 | | **Adjusted return on equity** | **12.5%** | **12.1%** | [Diluted Adjusted Earnings Per Share](index=8&type=section&id=4.3%20Diluted%20Adjusted%20Earnings%20Per%20Share) Diluted adjusted EPS, a non-GAAP measure, is adjusted net income divided by diluted shares outstanding, reaching $0.37 in Q2 2025 - **Diluted adjusted earnings per share** is defined as adjusted net income divided by the weighted average common shares outstanding for the period, reflecting dilution from equity-based awards[22](index=22&type=chunk) Diluted Adjusted Earnings Per Share Reconciliation (Three Months Ended June 30) | Metric | 2025 ($ in thousands, except share and per share data) | 2024 ($ in thousands, except share and per share data) | | :------------------------------------------ | :--------------------------------------------------- | :--------------------------------------------------- | | Numerator: Adjusted net income | 12,758 | 7,880 | | Denominator: Diluted weighted average shares outstanding | 34,045,961 | 27,771,108 | | **Diluted adjusted earnings per share** | **$0.37** | **$0.28** | Diluted Adjusted Earnings Per Share Reconciliation (Six Months Ended June 30) | Metric | 2025 ($ in thousands, except share and per share data) | 2024 ($ in thousands, except share and per share data) | | :------------------------------------------ | :--------------------------------------------------- | :--------------------------------------------------- | | Numerator: Adjusted net income | 24,238 | 16,068 | | Denominator: Diluted weighted average shares outstanding | 33,885,414 | 25,885,554 | | **Diluted adjusted earnings per share** | **$0.72** | **$0.62** | Corporate Information [About Bowhead Specialty Holdings Inc.](index=9&type=section&id=5.1%20About%20Bowhead%20Specialty%20Holdings%20Inc.) Bowhead Specialty is a growing insurance business led by Stephen Sills, offering casualty, professional, and healthcare liability products with deep underwriting expertise - **Bowhead Specialty** is a growing specialty insurance business offering casualty, professional liability, and healthcare liability insurance products[27](index=27&type=chunk) - The company is led by industry veteran Stephen Sills and comprises **highly experienced professionals with decades of underwriting and management expertise**[27](index=27&type=chunk) - Bowhead focuses on providing **'craft' solutions** in specialty lines that demand **deep underwriting and claims expertise** to achieve **attractive financial results**, fostering a collaborative culture[27](index=27&type=chunk)[28](index=28&type=chunk) [Conference Call Information](index=9&type=section&id=5.2%20Conference%20Call%20Information) A conference call for Q2 2025 results will be held on August 5, 2025, at 8:30 a.m. ET, accessible via webcast or dial-in, with a replay - A conference call to discuss Q2 2025 results will be held on **Tuesday, August 5, 2025, at 8:30 a.m. Eastern Time**[29](index=29&type=chunk) - Access to the conference call is available through a live webcast at https://bowhead-2q25-earnings-call.open-exchange.net/ or the Company's Investor Relations website[29](index=29&type=chunk) - A replay of the webcast will be available on the Company's Investor Relations website for **one year**[30](index=30&type=chunk) [Forward-Looking Statements](index=9&type=section&id=5.3%20Forward-Looking%20Statements) This press release contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially - The press release includes **forward-looking statements**, as defined by the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties[31](index=31&type=chunk) - Actual results may **differ materially** from those contemplated by forward-looking statements due to risks described in the Company's SEC filings[31](index=31&type=chunk) - The Company does not undertake any obligation to update or revise any forward-looking information[31](index=31&type=chunk) [Investor Relations Contact](index=9&type=section&id=5.4%20Investor%20Relations%20Contact) For investor relations inquiries, Shirley Yap, Head of Investor Relations, can be contacted via email - **Investor Relations Contact: Shirley Yap, Head of Investor Relations**[32](index=32&type=chunk) - Email for investor inquiries: **investorrelations@bowheadspecialty.com**[32](index=32&type=chunk)

PART I. FINANCIAL INFORMATION [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) The unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, show growth in total assets to **$1.75 billion** and an increase in total stockholders' equity to **$391.0 million**, with net income of **$11.4 million** and strong operating cash flow of **$47.7 million** [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to **$1.75 billion** from **$1.65 billion** at year-end 2024, primarily due to growth in the investment portfolio, while total liabilities rose to **$1.36 billion** and total stockholders' equity grew to **$391.0 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total investments** | $1,044,836 | $889,986 | | **Total assets** | $1,753,072 | $1,654,242 | | **Reserve for losses and loss adjustment expenses** | $845,224 | $756,859 | | **Total liabilities** | $1,361,709 | $1,283,800 | | **Total stockholders' equity** | $390,954 | $370,177 | [Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) For the three months ended March 31, 2025, the company achieved significant top-line growth, with gross written premiums increasing 26.3% to **$174.8 million**, and net income rising 62.9% to **$11.4 million** Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Gross written premiums | $174,848 | $138,433 | | Net earned premiums | $109,816 | $82,981 | | Total revenues | $122,716 | $90,672 | | Net income | $11,425 | $7,012 | | Diluted EPS | $0.34 | $0.29 | [Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Mezzanine%20Equity%20and%20Stockholders%27%20Equity) Total mezzanine equity and stockholders' equity increased from **$370.4 million** at the end of 2024 to **$391.4 million** as of March 31, 2025, driven by net income and other comprehensive income - Key drivers for the increase in equity during Q1 2025 were net income of **$11.4 million**, other comprehensive income of **$7.4 million**, and stock-based compensation and warrant expenses totaling **$2.1 million**[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$47.7 million** for the first quarter of 2025, an increase from **$41.9 million** in the prior-year period, while net cash used in investing activities was significantly higher at **$146.3 million** Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $47,722 | $41,910 | | Net cash used in investing activities | ($146,329) | ($79,122) | | Net cash provided by financing activities | $0 | $2,839 | | **Net change in cash** | **($98,607)** | **($34,373)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business model as a specialty P&C insurer operating primarily on an E&S basis through a strategic partnership with AmFam, with a **$1.04 billion** investment portfolio and a single reportable segment - The company operates as a specialty property and casualty insurer in the U.S., focusing on Casualty, Professional Liability, and Healthcare risks, primarily on an excess and surplus (E&S) basis[16](index=16&type=chunk) - A key operational structure involves writing policies on AmFam Issuing Carriers' paper, with the company's subsidiary, BICI, assuming 100% of the premium through a Quota Share Agreement with AmFam[18](index=18&type=chunk) - The company operates as a single operating and reportable segment, with the Chief Executive Officer acting as the chief operating decision maker (CODM)[100](index=100&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 26.3% growth in gross written premiums in Q1 2025 to strong renewals and platform expansion, with the combined ratio improving to 97.3% and net investment income growing 64.0% to **$12.6 million** [Results of Operations](index=29&type=section&id=Results%20of%20Operations) In Q1 2025, gross written premiums increased by 26.3% to **$174.8 million**, led by 33.7% growth in the Casualty division, while the combined ratio decreased by 0.8 points to 97.3% due to an improved expense ratio Key Operating Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Loss ratio | 66.9% | 65.5% | | Expense ratio | 30.4% | 32.6% | | **Combined ratio** | **97.3%** | **98.1%** | - Gross written premiums grew **26.3%** to **$174.8 million**, driven by renewals and growth across all four divisions, particularly the Casualty division which grew **33.7%**[139](index=139&type=chunk)[141](index=141&type=chunk) - The **1.4 point** increase in the loss ratio was driven by a **1.0 point** increase in the current accident year loss ratio due to a portfolio mix shift towards the Casualty division and a **0.4 point** impact from prior accident year reserve development[145](index=145&type=chunk)[146](index=146&type=chunk) - The expense ratio decreased by **2.2 points**, primarily due to a **2.9 point** improvement in the operating expense ratio as net earned premiums grew faster than expenses[147](index=147&type=chunk)[148](index=148&type=chunk) [Reconciliation of Non-GAAP Financial Measures](index=33&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) The company provides reconciliations for several non-GAAP measures, reporting Underwriting Income of **$2.7 million** and Adjusted Net Income of **$11.5 million** for Q1 2025 Non-GAAP Financial Measures (Q1 2025, in thousands) | Non-GAAP Measure | Value | Comparable GAAP Measure | GAAP Value | | :--- | :--- | :--- | :--- | | Underwriting Income | $2,656 | Income before income taxes | $14,470 | | Adjusted Net Income | $11,479 | Net Income | $11,425 | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary sources of liquidity are premiums received and investment income, which are sufficient to cover operating needs, with **$20.8 million** in cash and investments at the holding company level and an undrawn **$75 million** credit facility - The company believes it has sufficient liquidity to meet operating needs for at least the next 12 months, with **$20.8 million** in cash and investments at the holding company level as of March 31, 2025[169](index=169&type=chunk) - The company has a **$75 million** revolving credit facility maturing in April 2027, which was undrawn as of March 31, 2025[170](index=170&type=chunk)[171](index=171&type=chunk) [Critical Accounting Policies and Estimates](index=41&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management identifies the reserve for losses and loss adjustment expenses as a critical accounting estimate, with total gross reserves of **$845.2 million** as of March 31, 2025, and reliance on actuarial methods for reserving due to less mature loss experience - Critical accounting estimates include reserves for losses and loss adjustment expenses, reinsurance recoverable, fair value measurements, and deferred income tax[200](index=200&type=chunk) - Reserves for losses and loss adjustment expenses represent the estimated ultimate cost of all reported and unreported losses, with IBNR reserves accounting for **89.0%** of net reserves as of March 31, 2025[202](index=202&type=chunk)[205](index=205&type=chunk) - Due to less mature loss experience, the company primarily relies on a weighting of the initial expected loss ratio and actuarial methods such as the Reported Bornhuetter-Ferguson and Cape Cod Methods for reserving[207](index=207&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk associated with its **$1.09 billion** fixed maturity securities portfolio, where a hypothetical 100 basis point increase in interest rates would decrease the portfolio's fair value by an estimated **$29.9 million** - The primary market risk is interest rate risk, with no material exposure to equity, foreign currency, or commodity risk[222](index=222&type=chunk) Interest Rate Sensitivity Analysis (as of March 31, 2025) | Change in Interest Rates | Estimated Change in Fair Value ($ in thousands) | Estimated % Change in Fair Value | | :--- | :--- | :--- | | +200 basis points | $(58,969) | (5.4)% | | +100 basis points | $(29,921) | (2.7)% | | -100 basis points | $29,375 | 2.7% | | -200 basis points | $57,440 | 5.3% | - Credit risk from the investment portfolio is managed by investing in high-quality securities, with the fixed maturity portfolio having an average rating of 'AA' and **90.6%** rated 'A' or better[227](index=227&type=chunk) - Reinsurance credit risk is mitigated by selecting reinsurers with an A.M. Best rating of 'A' (Excellent) or better; **100%** of reinsurance recoverables were with such reinsurers[228](index=228&type=chunk) [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the quarter, with no material changes in internal control over financial reporting - Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025[230](index=230&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[231](index=231&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to routine legal proceedings in the normal course of business but is not currently a party to any litigation expected to have a material adverse effect on its financial condition or results of operations - The company is not currently party to any legal proceedings that are expected to have a material adverse effect on its business, results of operations, or financial condition[235](index=235&type=chunk) [Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor has been added concerning the potential adverse effects of evolving trade relations between the United States and other countries, including tariffs, which could create economic volatility and negatively impact the company's insureds and financial results - A new risk factor was disclosed regarding uncertainty in trade policies, treaties, and tariffs between the United States and other countries, which could adversely affect the company's insureds and financial results[236](index=236&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period - Not applicable[237](index=237&type=chunk) [Other Information](index=48&type=section&id=Item%205.%20Other%20Information) During the first quarter of 2025, none of the company's directors or executive officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading plan during the three months ended March 31, 2025[240](index=240&type=chunk) [Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the principal executive and financial officers pursuant to the Sarbanes-Oxley Act of 2002 and Interactive Data Files (Inline XBRL)

Financial Data and Key Metrics Changes - Bowhead generated strong disciplined premium growth of over 26% in Q1 2025 compared to the same quarter in 2024, writing $175 million in premium [6][11] - Adjusted net income for Q1 was $11.5 million or $0.34 per diluted share, with an adjusted return on average equity of 12.1% [11] - The loss ratio for the quarter was 66.9%, an increase of 2.5 points from 64.4% for the full year ended 2024 [12] - The expense ratio for Q1 was 30.4%, a decrease of one point compared to 31.4% for the full year ended 2024 [13] - The combined ratio for the quarter was 97.3% [14] - Net investment income increased 64% year over year to $12.6 million [14] - Total equity was $391 million, giving a diluted book value per share of $11.61, an increase of 5% from year-end [15] Business Line Data and Key Metrics Changes - The casualty division drove the largest component of premium growth with a 34% increase [6] - Health care liability and professional liability divisions grew 103% respectively [6] - Baleen generated $2.7 million in premiums during its third full quarter of operations, indicating consistent growth [9][10] Market Data and Key Metrics Changes - The company noted that the uncertainty in the current environment is creating confusion, with some markets maintaining underwriting discipline while others exhibit reckless behavior [18] - The excess casualty market is reorganizing, creating opportunities despite compressing limits [27] - The company expects to profitably grow premiums by around 20% annually, indicating confidence in market conditions [20] Company Strategy and Development Direction - Bowhead's strategic priorities include profitably growing existing lines of business, expanding products and markets, maintaining an underwriting-first culture, and leveraging technology and analytics [16][21] - The company is focused on profitable growth in the attractive excess and surplus lines market, particularly in casualty and health care liability [16] - Bowhead aims to generate consistent underwriting profits across product offerings and through all market cycles [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties, including potential impacts from tariffs on the construction industry [20] - The company is optimistic about its growth trajectory, with expectations of continued premium growth despite potential challenges in Q3 and Q4 [66] - Management noted an upward trend in claims but believes that their renewal strategies will exceed these trends [55] Other Important Information - The effective tax rate for Q1 was 21%, lower than the previous year's rate of 24.3% [14] - The company is reliant on industry observed loss information for reserves due to its relatively new status, with a high ratio of IBNR at 89% [13] Q&A Session Summary Question: Comments on the competitive environment - Management noted increased competition in professional liability but indicated that casualty remains reorganizing with opportunities [26][27] Question: Mechanics of reserve development - Management explained that audit premiums impact reserves and that they are reallocating IBNR in prior accident years for good hygiene [28][29] Question: Insights on Baleen's rollout - Management expressed satisfaction with Baleen's technology and its ability to issue quotes quickly, while acknowledging challenges in broker receptivity [40][42] Question: Future premium growth expectations - Management indicated that casualty will drive the majority of growth, followed by Baleen, health care, and professional liability [74][76] Question: Expense ratio considerations - Management emphasized the importance of balancing efficiency with necessary investments in technology to support growth [80][84]

Financial Data and Key Metrics Changes - Bowhead generated strong disciplined premium growth of over 26% in Q1 2025 compared to the same quarter in 2024, writing $175 million in premium [6][10] - Adjusted net income for Q1 was $11.5 million or 34¢ per diluted share, with an adjusted return on average equity of 12.1% [10] - The loss ratio for the quarter was 66.9%, an increase of 2.5 points from 64.4% for the full year ended 2024 [11] - The expense ratio for Q1 was 30.4%, a decrease of one point compared to 31.4% for the full year ended 2024 [12] - The combined ratio for the quarter was 97.3% [13] - Net investment income increased 64% year over year to $12.6 million [13] - Total equity was $391 million, giving a diluted book value per share of $11.61, an increase of 5% from year-end [14] Business Line Data and Key Metrics Changes - The casualty division drove the largest component of premium growth with a 34% increase [6] - Health care liability and professional liability divisions grew 103% respectively [6] - Baleen generated $2.7 million in premiums during its third full quarter of operations, indicating consistent growth [8][9] Market Data and Key Metrics Changes - The company noted that the uncertainty in the current environment is creating confusion, with some markets maintaining underwriting discipline while others exhibit reckless behavior [18] - The excess casualty market is reorganizing, creating opportunities despite compressing limits [27] - The company expects to profitably grow premiums by around 20% annually, indicating confidence in market conditions [20] Company Strategy and Development Direction - Bowhead's strategic priorities include profitably growing existing lines of business, expanding products and markets, maintaining an underwriting-first culture, and leveraging technology and analytics [15][21] - The company is focused on profitable growth in the attractive excess and surplus lines market, with a disciplined approach to underwriting [15][21] - Bowhead aims to generate consistent underwriting profits across its product offerings and through all market cycles [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties, including potential impacts from tariffs on the construction industry [20] - The company is optimistic about its growth trajectory, with submission volume continuing to grow across all divisions [21] - Management highlighted the importance of maintaining underwriting discipline despite competitive pressures in the market [18][27] Other Important Information - The effective tax rate for Q1 was 21%, lower than the previous year's rate of 24.3% [13] - The company is reliant on industry observed loss information for determining reserves due to its relatively new status [12] Q&A Session Summary Question: Comments on the competitive environment - Management noted increased competition in professional liability but indicated some signs of stabilization [26] - Casualty remains reorganizing with opportunities arising from compressing limits [27] Question: Mechanics of reserve development - Management explained the handling of audit premiums and the impact on reserves, emphasizing a conservative approach [28][30] Question: Update on Baleen rollout - Management reported positive progress with Baleen, highlighting the need for broker engagement and technology effectiveness [41][43] Question: Tax rate expectations - Management indicated that the 21% tax rate is on the lower range and may fluctuate based on stock performance [44] Question: Seasonality of ULAE impact - Management clarified that the increase in ULAE was due to bonus payments and seasonal factors [49][51] Question: Changes in loss trends - Management observed pockets of worsening trends but remains confident in their renewal strategies [56] Question: Broker receptivity for Baleen - Management discussed efforts to engage brokers and improve receptivity to Baleen products [62][63] Question: Future premium growth expectations - Management expects casualty to drive the majority of growth, with Baleen showing potential for significant percentage growth [75][78] Question: Expense ratio considerations - Management emphasized the balance between maintaining a low expense ratio while investing adequately in technology [81][84]