Executive Summary

Q2 2025 delivered strong growth and improving profitability: GWP +32.4% to $232.4M, net income $12.3M ($0.36 GAAP EPS), adjusted net income $12.8M ($0.37 adj. EPS), and combined ratio improved sequentially to 96.8% (Q1’25: 97.3%) .
Versus S&P Global consensus, adjusted EPS modestly beat ($0.37 vs $0.358*), while total revenue was slightly below ($133.3M vs $134.7M*)—a small mixed print driven by portfolio mix and modest loss ratio uptick YoY, partly offset by lower operating expense ratio .
Expense ratio fell 320 bps YoY to 30.6% on scale benefits; management indicated confidence in breaking below 30% expense ratio run-rate “next quarter,” despite headwinds from a higher AmFam fee (2.00% → 2.75% effective late May) .
Reinsurance renewals improved protection (quota share 25%→26%; XoL 60.1%→65%; commissions unchanged), and net investment income rose 56% YoY to $13.7M (book yield 4.7%, new money 4.8%)—both supportive of forward earnings power .

What Went Well and What Went Wrong

What Went Well

Broad-based growth: GWP +32.4% to $232.4M, with double-digit increases across all “craft” divisions; Casualty +31.9% to $150.7M; Healthcare +39.0% to $23.5M; Professional Liability +23.3% to $54.8M; Baleen Specialty reached $3.4M .
Operating leverage: Expense ratio fell to 30.6% (from 33.8% YoY) on scaling and disciplined cost control, driving sequential combined ratio improvement to 96.8% (from 97.3% in Q1) .
Investment income tailwind: Net investment income +55.8% YoY to $13.7M; investment portfolio book yield 4.7% and new money rate 4.8%, AA average rating, 2.8-year duration—supporting sustainable earnings accretion .

Selected quotes:

“Underwriting matters… net income for the quarter soared by 123% compared to the same period last year.” — CEO Stephen Sills (press release) .
“We’re right on the cusp of breaking 30% [expense ratio]… confident we’re gonna get below 30 in the next quarter.” — CEO/CFO (call) .
“Ceding commissions in our May 1 renewals remained unchanged from 2024.” — CFO (call) .

What Went Wrong

Loss ratio drift: Loss ratio rose 70 bps YoY to 66.2% (current AY +60 bps on mix shift to higher-loss Casualty; +10 bps from audit premiums assigned to prior AYs) .
Acquisition cost headwind: Net acquisition ratio pressure from higher earned broker commissions (mix) and lower earned ceding commissions; AmFam fee increased to 2.75% (from 2.00%) effective late May—expected to trickle through earnings .
Market pockets of pressure: Professional Liability (financial institutions) remains most challenging due to excess capacity; large-account Cyber remains competitive; E&S construction project activity decelerating amid tariffs, immigration, and rate uncertainty .

Financial Results

Revenue and EPS vs prior periods and estimates

Metric	Q2 2024	Q1 2025	Q2 2025 Actual	Q2 2025 Consensus*
Total Revenues ($M)	$98.9	$122.7	$133.3	$134.7*
Diluted EPS (GAAP)	$0.20	$0.34	$0.36	—
Diluted Adjusted EPS	$0.28	$0.34	$0.37	$0.358*

Notes: “Consensus” figures are S&P Global; asterisks denote S&P Global values retrieved via tool. EPS beat ≈ +$0.012 vs consensus (~~+3.5%); revenue slight miss ≈ -$1.4M (~~-1.0%)*.

Margins progression

Metric	Q2 2024	Q1 2025	Q2 2025
Loss Ratio	65.5%	66.9%	66.2%
Expense Ratio	33.8%	30.4%	30.6%
Combined Ratio	99.3%	97.3%	96.8%

Segment GWP mix (Q2 2025 vs Q2 2024)

Segment	Q2 2024 GWP ($M)	Q2 2025 GWP ($M)	YoY %
Casualty	$114.2	$150.7	+31.9%
Professional Liability	$44.4	$54.8	+23.3%
Healthcare Liability	$16.9	$23.5	+39.0%
Baleen Specialty	—	$3.4	NM
Total GWP	$175.5	$232.4	+32.4%

Additional KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
Net Investment Income ($M)	$12.2	$12.6	$13.7
Book Value/Share	$11.34	$11.98	$12.44
Diluted Book Value/Share	$11.03	$11.61	$12.04
ROE / Adj. ROE	14.8% / 15.3%	12.0% / 12.1%	12.4% / 12.8%
Portfolio Book Yield / New Money	4.6% / 4.9%	4.7% / 4.8%	4.7% / 4.8%
Avg. Duration / Rating	2.2 yrs / AA	2.8 yrs / AA	2.8 yrs / AA

Guidance Changes

Metric	Period	Previous Guidance/Level	Current Guidance/Level	Change
Expense Ratio run-rate	Near-term (next quarter)	Not explicitly guided	“Confident we’re gonna get below 30” (mgmt)	Introduced / Raised ambition
AmFam Service Fee	Effective late May 2025	2.00%	2.75%	Raised (headwind to net acquisition)
Quota Share (non-cyber)	May 1, 2025 renewals	25%	26%	Raised protection
Excess-of-Loss	May 1, 2025 renewals	60.1%	65%	Raised protection
Ceding Commissions	May 1, 2025 renewals	2024 level	Unchanged	Maintained
Annual GWP Growth Objective	Ongoing	“Grow premiums by around 20% on an annual basis” (Q1 commentary)	No update reiterated in Q2 materials	Maintained stance

No separate Q2 2025 press releases beyond the earnings release were located (searched 7/1–9/30; none found) [List: press-release returned 0].

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Expense discipline	Q4: Expense ratio 30.1% on scale benefits ; Q1: 30.4% with operating expense leverage	30.6%; mgmt targeting sub-30% next quarter	Improving runway despite AmFam fee headwind
Mix/Loss ratio	Q4: Mix shift to Casualty raised loss ratio YoY ; Q1: AY loss +1.0 pt on mix	Loss ratio 66.2%; +0.6 pt AY on mix; +0.1 pt prior AY from audit premiums	Mix remains key driver; stable sequentially
Reinsurance	Q4: Stable program (noted)	QS to 26%, XoL to 65%; commissions unchanged	Protective posture slightly increased
FI D&O / Pro Liability	Q1: Challenging segments; small stabilization shoots	FI remains toughest (excess capacity); Public D&O stabilizing; Markel exit creates turnover	Mixed; selective growth
Cyber	Q1: Large-account competition	Large-account competitive; leveraging tech for SME/middle market	Focus on smaller accounts
Construction projects	Q1: Not highlighted	Decelerating new projects; tariffs, immigration, rates cited	Macro headwind emerging
Digital/Flow (Baleen)	Q4 launch; Q1: $2.7M GWP	$3.4M GWP; platform scalable; increasing submissions key	Gradual scaling

Management Commentary

Strategic message: “Underwriting matters… Our strategic execution and underwriting discipline have led to a strong 32% year-over-year growth in premiums… net income… soared by 123%.” — CEO (release) .
Market stance: “Excess casualty… overall discipline… modest uptick in competition… we don’t expect… limits going back up or an across the board price drop anytime soon.” — CEO (call) .
Cost trajectory: “We’re right on the cusp of breaking 30% [expense ratio]… confident we’re gonna get below 30 in the next quarter.” — CEO/CFO (call) .
Investment income outlook: “Adding another $60–$90M to the portfolio each quarter… ~5% new money rate.” — CFO (call) .
Reserving cadence: Annual external review in Q4; intra-year changes possible; current loss picks heavily industry-informed given short history (IBNR 87.5% of reserves) — CFO (call) .

Q&A Highlights

Professional liability capacity and social inflation: FI capacity not spilling over meaningfully into other Pro lines; social inflation more acute in Casualty with higher settlements and tower dynamics pressuring outcomes — CEO (call) .
Investment income mechanics: Long-tail lines drive investable balances; ~$60–$90M added per quarter at ~5% new money; portfolio yield converging toward new money rate; no “reach for yield” — CFO (call) .
Baleen (flow) update: Tech stack working (ingest, quote, bind, issue with minimal human touch); scaling hinges on submission flow; confident trajectory — CEO (call) .
Expense ratio outlook: On glide path to sub-30%; acknowledges AmFam fee increase will affect acquisition component, but expects operating leverage to offset — CFO/CEO (call) .
Reinsurance renewals: QS 26%, XoL 65%; ceding commissions unchanged — CFO (call) .

Estimates Context

Q2 2025 vs S&P Global consensus: adjusted EPS $0.37 vs $0.358* (beat ~+3.5%); total revenue $133.3M vs $134.7M* (miss ~-1.0%). Given sequential margin improvement and investment income strength, estimate revisions may bias modestly upward for EPS, while revenue models should reflect mix and earned premium cadence.
Target price consensus stood at $34.83* during Q2 2025.
EBITDA actual reported (appears $17.8M in S&P system for Q2) lacked a consensus point in the tool output.*

Values marked with an asterisk are retrieved from S&P Global.

Key Takeaways for Investors

Growth + underwriting: Sustained 30%+ GWP growth across all divisions with a sub-100 combined ratio and sequential improvement underscores the “profitable growth” narrative .
Mix management matters: Casualty-led mix pressures loss ratio modestly, but operating leverage and reinsurance enhancements are offsetting—monitor mix vs. acquisition costs and ceding commission trends .
Expense ratio catalyst: Management’s near-term push to sub-30% expense ratio is a tangible margin catalyst; track run-rate in Q3 and the net effect of the AmFam fee increase .
Investment income tailwind: Higher balances and stable 4.7%–4.8% yields support EPS resilience; watch rate path and portfolio repositioning for incremental upside .
Competitive landscape: FI D&O and large Cyber remain competitive; Public D&O stabilizing; construction decelerating due to tariffs/immigration/rates—expect continued selectivity and disciplined underwriting .
Reinsurance support: Slightly higher QS and XoL shares with unchanged commissions improve risk transfer without margin give-up—constructive for volatility management .
Non-GAAP clarity: Adjusted EPS excludes realized gains/losses, non-operating items, FX, and strategic initiative costs; reconciliations are clean and consistent—no signs of reserve strain; prior-year adjustments reflect audit premium mechanics, not adverse development .

Additional materials reviewed:

Q2 2025 8-K earnings release and investor presentation .
Q2 2025 earnings call transcript .
Prior quarters: Q1 2025 8-K (release + deck) ; Q4 2024 8-K (release) .
No separate Q2 2025 press releases beyond the earnings release were found (7/1–9/30 search) [ListDocuments press-release=0].

Bowhead Specialty Holdings Inc. (BOW)·Q2 2025 Earnings Summary