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Bowhead Specialty Holdings Inc. Reports First Quarter 2025 Results

Bowhead Specialty Holdings Inc. Reports First Quarter 2025 Results

NEW YORK–(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.

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.

Investor Relations Contact:

Shirley Yap, Head of Investor Relations

[email protected]

KEYWORDS: United States North America New York

INDUSTRY KEYWORDS: Professional Services Insurance Finance

MEDIA:

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