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Bowhead Specialty Holdings Inc. (BOW)·Q3 2025 Earnings Summary

Executive Summary

  • Bowhead delivered another strong quarter with revenue of $143.9M and diluted EPS of $0.45; adjusted diluted EPS was $0.47. Both revenue and EPS exceeded S&P Global consensus, marking a beat on top and bottom lines (consensus EPS $0.41; revenue $140.8M)* .
  • Gross written premiums grew 17.5% year over year to $231.5M, driven by 20.4% growth in Casualty and continued scaling of Baleen Specialty to $6.2M (+83% q/q) .
  • Underwriting metrics were solid: loss ratio rose modestly to 65.9% (from 64.5% YoY) due to mix and prior accident-year audit premium effects; expense ratio improved to 29.5% (-40 bps YoY) as technology investments drove operating leverage; combined ratio was 95.4% .
  • Net investment income increased 31% YoY to $15.0M on higher balances and yields; diluted book value per share rose to $12.75 (+16% from year-end) .
  • Management highlighted continued discipline in Casualty and selective growth in Healthcare; reiterated technology-enabled efficiency gains; and indicated plans to access non-equity capital by year-end, a potential stock reaction catalyst for funding growth while avoiding dilution .

What Went Well and What Went Wrong

What Went Well

  • Strong growth and beat: Adjusted diluted EPS $0.47 and revenue $143.9M beat consensus; GWP up 17.5% YoY with Casualty +20.4% and Baleen ramp to $6.2M . S&P Global consensus: EPS $0.408, revenue $140.829M*.
  • Operating leverage: Expense ratio improved to 29.5% (-40 bps YoY) driven by automation, workflow, and data integration; management expects continued improvement as technology scales .
  • Investment income tailwind: Net investment income rose 30.9% YoY to $15.0M on higher balances and yields; portfolio AA-rated, duration 2.9 years .

Key quotes:

  • CEO: “Gross written premiums… grew 17.5% year-over-year and adjusted net income grew 25.5%… These results are a testament to our disciplined approach to underwriting [and] expansion of our ‘craft’ and ‘flow’ underwriting operations” .
  • COO: “Our expense ratio improved 40 basis points year over year… we streamlined submission intake, enriched underwriting data… [and] expect continued improvement” .

What Went Wrong

  • Loss ratio drift: Loss ratio increased 1.4 pts YoY to 65.9%, with +0.3 pt current accident-year mix effect (more Casualty) and +1.1 pt from audit premiums assigned to prior accident years (non-adverse reserve development) .
  • Acquisition cost pressure: Net acquisition ratio rose, driven by increased ceding fee to American Family and broker commissions due to portfolio mix; partly offset by other insurance-related income .
  • Competitive pockets: Professional Liability (financial institutions, large cyber) remains challenging; construction project activity decelerating amid macro uncertainties (rates, materials, labor, government shutdown) .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$116.761 $133.263 $143.932
Diluted EPS ($USD)$0.36 $0.36 $0.45
Diluted Adjusted EPS ($USD)$0.38 $0.37 $0.47
Loss Ratio (%)64.5% 66.2% 65.9%
Expense Ratio (%)29.9% 30.6% 29.5%
Combined Ratio (%)94.4% 96.8% 95.4%

Notes:

  • Revenue +23.3% YoY and +8.0% QoQ (computed from cited values) .
  • Adjusted EPS +23.7% YoY and +27.0% QoQ (computed from cited values) .

Segment GWP breakdown:

Segment GWP ($USD Millions)Q3 2024Q2 2025Q3 2025
Casualty$120.223 $150.720 $144.727
Professional Liability$44.962 $54.752 $45.739
Healthcare Liability$31.358 $23.505 $34.844
Baleen Specialty$0.433 $3.384 $6.205
Total GWP$196.976 $232.361 $231.515

KPIs:

KPIQ3 2024Q2 2025Q3 2025
Net Earned Premiums ($USD Millions)$105.180 $119.137 $128.407
Net Investment Income ($USD Millions)$11.491 $13.677 $15.038
Adjusted Net Income ($USD Millions)$12.520 $12.758 $15.832
ROE (%)13.7% 12.4% 14.5%
Adjusted ROE (%)14.2% 12.8% 15.1%

Book value per share:

MetricQ2 2025Q3 2025
Diluted Book Value per Share ($USD)$12.04 $12.75

Reserve mix:

MetricQ2 2025Q3 2025
IBNR as % of Total Reserves (%)87.5% 88.2%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / UpdateChange
Expense Ratio targetFY 2025Management aimed to get below 30% (Q2 commentary) Achieved 29.5% in Q3; management expects continued improvement with technology Raised confidence/achieved milestone
Capital actionsFY 2025Assess capital needs; avoid equity raise Plan to access non-equity capital by year-end given growth; net premium-to-surplus expected to stay under 1x next couple of years New action clarity
Reinsurance structure (context)Effective May 1, 2025Quota share 25%; XOL 60.1% Quota share increased to 26%; XOL increased to 65%; ceding commissions unchanged Adjusted structure
Tax rate (context)FY 202524.3% FY24 baseline Q1 effective tax rate ~21% expected lower in 2025 due to stock comp vesting benefits Lower expected tax rate

No formal revenue/EPS/margin quantitative guidance ranges were issued this quarter .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Technology/Operating leverageTargeting sub-30% expense ratio; automation and data integration underway Expense ratio 29.5%; further efficiencies from submission intake, rating optimization, claims triage; continued improvement expected Improving
Casualty market disciplineFavorable excess casualty conditions; compressed limits, rate strength; selective underwriting; avoiding FI and primary auto Continued discipline; growth driven by excess; limits not expected to rise; Everest-AIG renewal rights may catalyze re-underwriting Stable/constructive
Professional Liability (FI & large cyber)Competitive, overcapacity; stabilization in public D&O; leveraging tech for small/mid cyber FI still challenged; public D&O mostly flat to slightly up; expanding tech-enabled underwriting for small/mid cyber Mixed; selective growth
Healthcare LiabilityResponsible growth; monitoring regulatory/crime/abuse risks Growth in healthcare management liability, hospitals, senior care; SAM exclusions gaining traction Improving pockets
Construction projectsDeceleration due to rates, materials, labor; focus on practice policies Softer pipeline except data centers (terms may be unfavorable); projects expected to resume post-government shutdown; lumpiness acknowledged Softer near-term
Tariffs/MacroTariffs may slow E&S construction; overall E&S market growth intact Stamping data shows E&S property down; E&S casualty up; expect continued complex risk flow to E&S Divergent by line
Capital strategyMonitoring RBC/capital needs; reinsurance optimized Plan to access non-equity capital by year-end; avoid equity raise; NPtS under 1x trajectory Clearer action plan

Management Commentary

  • Strategic message: “Bowhead is a franchise built for enduring success and cross-cycle profitability,” underpinned by disciplined underwriting and expansion of “craft” and “flow” operations .
  • Underwriting discipline: CEO emphasized selective casualty underwriting, eschewing primary auto and underpriced Fortune 1000 risks; focus on construction, distribution, manufacturing, real estate, public entity .
  • Operating efficiency: COO detailed automation, workflow optimization, enriched underwriting data, rating improvements, and claims triage to reduce expense ratio and enable scale .
  • Loss ratio context: CFO reiterated mix-driven current accident-year loss ratio increase and prior-year audit premium allocation not representing adverse reserve development .
  • Capital: CFO signaled intent to access debt or other non-equity capital by year-end to fund faster-than-expected growth, maintaining a conservative net premium-to-surplus trajectory .

Q&A Highlights

  • D&O and cyber pricing: Public D&O largely flat to slightly up; FI remains crowded; small/mid cyber targeted via Baleen technology for “virtually no-touch” underwriting .
  • Healthcare SAM exclusions: Market increasingly accepts sexual abuse and molestation exclusions; some lower-limit coverage may emerge .
  • Construction outlook: Data centers noted but terms/conditions may be unfavorable; broader projects expected to resume post-shutdown; projects are inherently “lumpy” .
  • Expense ratio drivers: Efficiency gains from technology appear to be a primary factor; management expects continued improvement while acknowledging acquisition ratio headwinds (AmFam fee) .
  • Capital and reinsurance: No equity raise planned; exploring non-equity capital; reinsurance changes considered longer-term, but limited for immediate RBC requirements .
  • Investment portfolio: AA-rated, 2.9-year duration; net investment income poised to grow with long-tail float expansion; focus on risk-adjusted returns .

Estimates Context

  • Consensus vs actual (Q3 2025):
    • EPS (Primary): $0.408* vs actual $0.47*; company’s diluted GAAP EPS was $0.45 . Values retrieved from S&P Global.
    • Revenue: $140.829M* vs actual $143.932M*. Values retrieved from S&P Global.
MetricConsensus (Q3 2025)Actual (Q3 2025)
EPS (Primary) ($USD)0.40802*0.47*
Revenue ($USD Millions)140.829*143.932*
EBITDA ($USD Millions)—21.437*

Values retrieved from S&P Global.

  • Implications: A top- and bottom-line beat may prompt upward revisions to near-term EPS and revenue forecasts; continued expense ratio improvement and investment income growth support margin resilience*. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quarter beat: Bowhead posted a clean beat on revenue and EPS vs consensus, with strong YoY growth and sequential improvement in key operating metrics* . Values retrieved from S&P Global.
  • Underwriting discipline intact: Casualty growth remains robust under disciplined risk selection; loss ratio drift reflects mix and accounting allocation rather than adverse development .
  • Efficiency gains materializing: Technology investments are translating into operating leverage, evidenced by a sub-30% expense ratio; management sees more to come .
  • Investment income tailwind: Higher balances and yields lifted net investment income; conservative AA portfolio/duration profile supports steady contribution .
  • Baleen momentum: Flow underwriting scaled meaningfully (+83% q/q) and is enabling profitable growth in small/mid risks (cyber first, with expansion potential) .
  • Capital strategy: Management intends to fund growth without equity issuance, potentially reducing dilution risk and supporting growth capacity .
  • Near-term trading setup: A beat, sub-30% expense ratio milestone, and non-equity capital plan are positive narrative drivers; watch mix effects on loss ratio and acquisition-cost headwinds tied to ceding fees .

Appendices

S&P Global Consensus vs Actual Detail

MetricPeriodConsensusActual
Primary EPS Consensus Mean ($USD)Q3 20250.40802*0.47*
Revenue Consensus Mean ($USD Millions)Q3 2025140.829*143.932*
Revenue - # of EstimatesQ3 20251*—
Primary EPS - # of EstimatesQ3 20256*—

Values retrieved from S&P Global.

Source Documents

  • Q3 2025 8-K and EX-99.1 press release:
  • Q3 2025 earnings call transcript:
  • Q2 2025 8-K and EX-99.1 press release:
  • Q2 2025 earnings call transcript:
  • Q1 2025 8-K and EX-99.1 press release:
  • Q1 2025 earnings call transcript:
  • S&P Global consensus data (GetEstimates): EPS and revenue for Q3 2025* (Values retrieved from S&P Global).