Bowhead Specialty (BOW) Q4 2024 earnings summary

Executive summary

• Achieved a transformational year in 2024 with an upsized IPO in May and a secondary offering in October, positioning for cross-cycle profitability.

• Gross written premiums rose 37% to $696 million for the year, led by strong growth in Casualty, Healthcare Liability, and Professional Liability divisions, with 76% written on an E&S basis.

• Net income was $13.6 million ($0.41/diluted share) in Q4 and $38.2 million ($1.29/diluted share) for the year; adjusted net income was $14.1 million ($0.42/diluted share) in Q4 and $42.7 million ($1.44/diluted share) for the year.

• Maintained an underwriting-first culture, focusing on profitable growth and selectivity, avoiding property, natural catastrophe, and commercial auto risks.

• Launched Baleen Specialty and new environmental liability products, expanding product offerings and technology-driven underwriting.

Financial highlights

• Adjusted net income for Q4 was $14.1 million, up 143% year-over-year, or $0.42 per diluted share.

• Gross written premiums increased 26% to $185 million in Q4, with casualty division premiums up 43% to $106 million.

• Net investment income surged 80% in Q4 to $12.2 million and 107% for the year to $40.1 million, with a portfolio yield of 4.6%.

• Expense ratio for 2024 improved to 31.4%, down 0.5 points from 2023, driven by operating expense leverage.

• Combined ratio for 2024 was 95.8%.

Outlook and guidance

• Targeting around 20% premium growth in 2025, led by casualty and Baleen divisions.

• Expecting loss ratio to remain in the mid-60s and expense ratio in the low 30% range for 2025.

• Combined ratio projected to be in the mid-90s, with return on equity in the mid-teens.

• Management aims to build on 2024 momentum, focusing on profitable growth and cross-cycle profitability in 2025.