BOW - Earnings call transcript Q3 2024 | Bowhead Specialty Holdings Inc.

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Operator

Greetings, and welcome to the Bowhead Specialty Holdings Third Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Ms. Shirley Yap, Chief Accounting Officer and Head of Investor Relations for Bowhead Specialty Holdings. Thank you.

begin. may You

Shek Yap

morning, Earnings Good Accounting to Third Bowhead's and Thanks, Call. and I'm XXXX Relations. Conference of Chief Shirley Quarter Head Melissa. Investor welcome Yap, Officer Bowhead's

Chief me Executive Chief Joining Officer. Stephen are Sills, Financial Officer; Brad Mulcahey, today and our our

this quarter financial for results October offering announced quarter released and the preliminary release XX. our follows on XXXX. secondary This the we of morning, third Earlier results of our third we

website. Investor You can our these section find the Relations in of announcements

begin, to the date call of expectations are and Reform like we on contains statement. statements forward-looking should management's the and on Litigation any beliefs. based this Before everyone that reliance These Investors are I'd remind Securities place this XXXX. statements meaning Act current the made of call undue forward-looking of not only within of Private as

to that differ statements. statements and materially Forward-looking those cause to contemplated from risks subject by these actual results are uncertainties could

fully expressly should described statements, required You and SEC by any law. any except to disclaim filings. forward-looking as review update our in duty these risks uncertainties We

certain in be we this this directly the Additionally, section Relations their With morning I'll GAAP over in website. most that, call. be financial measures non-GAAP these turn release call referencing financial to respective measures we Stephen. comparable can the Investor measure Reconciliations the will earnings of found on non-GAAP and issued of our to

Stephen?

Stephen Sills

the joining experienced begin on we the everyone Thank third premium with of to overview call To the you, brief strong organize during Shirley, good and remarks, quarter. a us today. my I'll morning growth

growth, identifying our opportunities where the an on views greatest specialty growth then Bowhead profitable most initiatives. recent conclude the sees on with our industry, insurance update for provide I'll Next, broader

million of begin, written $XXX quarter. To divisions or had to the grew in another of a third our XX% ago. premiums by Gross to quarter compared million year premium growth $XX each strong across Bowhead

to ago a to favorable This primarily grew see quarter. casualty over driven XX% underwriting was compared excess conditions. division by continue year Casualty Premiums pricing had a we standout our $XXX and Our to million. where book,

liability were casualty, in While divisions growth underwriting healthcare maintaining discipline. premium we the while in our professional nuanced conditions more both liability experienced in and double-digit divisions

grew Liability driven the business certain XX% lines. in quarter, rate division $XX primarily increases Healthcare and by to million new Our in

Our $XX driven saw professional our we limits liability where new being division liability purchased and increased increased XX% market. the million, to by in portfolio, cyber

the market Overall, we're pleased and with strategy. our cycle third our continual of production quarter execution

mixed by through increases. rate and professional. in is views conditions. market broader and insurance in rate continuing drive strong Turning the casualty, health in strongest the on terms casualty, previous division, mixed excess rates to coming the in competitive specialty care and of pricing conditions where to remained our We on see in terms industry resilient industry. see We casualty The

the continues continuing to to react As the older limits market year into E&S accident and to decrease market. seeing losses, we're specialty

conditions increased as view We the competitive believe of continue in behavior conditions favorable market care, believe the a is we're liability, seeing the healthcare favorable we competition In the medical will We're story. undisciplined remains market excluding Bowhead market conditions mixed and In for cyber liability. and softening market. in facilities management remain continued in what professional, conditions in space, these it's health that our for foreseeable tailwinds these hospital but seeing future. are

and to grow entrants from share. are that legacy trying markets capacity market New increased

optimize these our is future, finding portfolio. in don't conditions to opportunities to underwriting team the maintaining expect While discipline we and near change our

start what recent over we call provide our division in growth non-admitted to with the basis. turn Baleen, review initial out Baleen our issue of written quote XX is risks the I initiatives. we within Once contractor ingest quote the hard-to-place on on to XXX% before and a accepted, a accomplish. policies started Brad focusing minutes. minutes. initially with submission to issued underwriting I'll update and an financials, the flow with to within QX, I QX. details our can We're QX, We launched end our set achieved the and are end Finally, of late by bound small, product pleased low-touch streamlined, a offered we codes lines. results on as class or owners, XX And and eligible of at contractors the tenants wanted OL&T classes eligible in landlord we

now contractors and codes. eligible and of class we offer over OL&T continued today, As our expansion XXX

by of While this market, addressable half the requested broker our partners. represents just covers our codes the under frequently class expansion most

primary announced expanding our liability we complex pollution pollution, over initial To business, that released with next include the environmental team craft division professional writing environmental risks. to call we October earnings X, our liability X excess a date, are XX to first hired in contractors, back underwriters and we've experience combined casualty the contractors of and We in our years liability our pollution next of products, last of products, On we environmental site Pivoting plan X process to the of X year. release liability. capabilities.

growth XXXX to with market we're and to for cycles. approach we from expanding While platforms, underwriting across expect material disciplined don't our well-positioned be premiums and believe craft our we environmental, sustainable and Baleen flow or profitable

to the our With Brad third call discuss results. over to turn that, quarter I'll

Brad Mulcahey

the per than diluted with a for Gross with larger additional year. to our adjusted of premium on more casualty equity unusually the generated each quarter. last million average $X on net audit growing accelerated included which $X.XX one large premium of book saw or compared return representing portion from premiums in XX% Bowhead an the share and million $XXX to income We $XX.X XX.X% of adjusted Stephen. insured. an from most premium divisions of quarter, the million of written growth Thanks,

along in particularly to continues line. in Rate top to the contribute improvement, increase increased production casualty, and our volume with

premiums Baleen disclosed this time year. also first the We for

encouraged our While early it's still by days, performance. we're initial

XX.X% was by year-over-year updated the from increased Our year-over-year, we've ratios points of XXXX. the loss the quarter quarter fourth but X in used The XX.X% for X.X from decreased loss driven increase ratio since point XX.X% QX. of

net and older no lower the the premium reserves this we to in Similar pick The driven loss decrease quarter, changes year accident XX%. earned primarily IBNR quarter. as loss to mix represent assumptions. made in portion September had with fully portfolio our net audit from was that by And reserves XX, of years prior associated over prior QX at being of large the and changes or our picks to a continued loss

to write given we do and not a Bowhead future quarters. reminder, recent the does direct third from expect any As activities quarter material property did any the experience losses hurricane in risks, not in not

XX.X% fully ratio of comparable of volatility net over the view XX.X% ratio our a there's of in for quarter. decreased Since the from quarterly expenses longer time suggest ratio, premium quarter expense being horizon. that investors management to operating a QX in in our audit the earned the expense our we and due Our prudent expense

far expense first the in expectations. So is year, ratio low line of our of the X for ratio XXs months with our expense XX.X%

the of combined ratio ratio the expense contributed loss quarter. Overall, for the and of the ratio effect XX.X% to a

million were and in the the income Proceeds than the Turning to investment quarter, investment in portfolio increase to $XX.X the Pretax our end the quarter. fully our by by invested more current driven net investment portfolio. higher of doubled IPO yields. from investment

Specifically, rate quarter. the end money yield of of X.X% our the at investment portfolio new had a and book

AA the the was us quality an duration tax third the a quarter, remains million, credit around of of The portfolio average the giving the And our effective XX% total rate equity lastly, X.X for diluted The and average in at of for at full year. was with quarter per $XXX value was expectations investment XX.X%, years. quarter from our end $XX.XX third share of year-end. of the book increase line

turn call questions. over With for the that, we'll

Operator

first the comes Criscitiello with line Our question Instructions] from [Operator Dean of KBW.

Dean Criscitiello

being there. about sort I need to you up bit? of see premium you press within was like like Can you start leaning deliberate with what into wanted growth the with that there? growth Baleen the I confident Baleen. growth and you how you a the sort curious and feel unpack signs to measured talked -- expect in guys of to release really about to of ramp Can

Brad Mulcahey

Sure. Thank you.

idea we build -- need to had we things do a first of couple sequence. got thing that wanted the to and Baleen in there's is when out, The Baleen for it we when

is to We've profitably. create business thing the that. the done that write can first we underwriting The obviously that screens we feel

if The that second issue already, for, able looking is will be bind they that a we've is bind which ingest And minutes. build much That a -- the and to to brokers what it technology works. it to it, and able to want we minutes. to within are done able submission, within policy quote be be deliver

that a or XX of advance. sit the and issue getting The Those change habits. it competitors their people's Keep in mind to brokers renewal next support in files. is in quotes the quotes days things part lot

are expecting we is premiums, So people of like turn going a for a $XX,XXX business, that are to world unrealistic. down piece little the upside think $XX,XXX move things to

we're and a report We've gotten good get the some when submissions we're very traction brokers. to showing on our from brokers. making lot we'll We've that that of that Baleen. from started have confident our favorable fourth reviews news And we with quarter

Dean Criscitiello

just sequential else try of basis Got Or XXX it. a that mix we that as should improvement to can second there of business? And anything the loss in then there? unpack you the into ratio that sort Is one, my about is points, of change read well?

Brad Mulcahey

Yes.

booked premiums release. to years. You're of related in a premium right. our highlight a of audit this $X well business. accident mix It's We mostly We had did the as quarter change in million older that earnings in

those bit so a years lower. And on were the picks loss accident little older

as adjust was year a drove picks. prior So little our down there that it no We we mentioned, change loss didn't to But reserves. bit. our also

the all the that So essentially would drive you mix is change. left have it's

Operator

Markets. comes Scott line Our from next Heleniak RBC Capital question the with of

Scott Heleniak

Is on going the Or Just you excess again. I there, wanted called you you And there I any the other first to on? there? where what's casualty? seeing touch strong of or mentioned out. kind there it is other strong know growth share areas can growth that casualty, classes mostly anything Just you're any casualty, excess

Stephen Sills

Sure. hard The excess the excess It's as mostly as nowhere is near casualty. primary is.

And we excess casualty. seeing so the kind see that of area in in not that we're the growth

Scott Heleniak

about observations that growth in the seeing certain D&O seeing -- that the so share? growth. Or areas that that I or the market categories, but on And is commentary market small made still Is increased cyber? And opportunities and helpful. the on then you're the there, the than capacity. that liability, is and growth touch That's know lower in that other out conditions, liability line, can Okay. of some it middle are just in? Is was I that you in you you're competitors, just mainly you're seeing areas specifically undisciplined of wanted playing area, still seeing you're you to some professional professional

Stephen Sills

D&O, traded Sure. We traded, traded of because in publicly the small of their issue we not-for-profit, to large those primary on A We able be large don't operate companies, things. to virtually do businesses. in areas much publicly private, have couple some countries, in they ability in languages these don't and different primary and lot the publicly require capabilities. of a carrier policies different all

in those take also a on. rate butter well Likewise, the we large for exposure bread that the lot on best is excess the somebody areas, and primary. We're public. see see wherever But we by they business. and -- on want frequently, competition down drop to But our being best we're those it's above that the small policies, there seeing private as be could of as business. opportunity, asked all first sliced where

beyond of years a a premiums in that reports de-SPACs SPACs, stuff of lot when are strict Part the liability. past the that rates of of dropping. are dates and were in due you getting has to you've of IPOs been seen Some was dropping, lot -- the

saw reduced. prices being the You

think We the companies being cases were cases, than substantial seen on certain should. renewal reduced they have getting in where premium. reductions they had We've more and claims

portfolio, particular the the from of the looking in and coming us or growth where last for continually to on cyber most we're towers, a that's The of best the part from. of at part play question professional biggest -- is professional, account. play on all and looking not field at your withdraw our the and is So growth place

Operator

of with from Our next JPMorgan. Pablo comes line Singzon the question

Pablo Singzon

So if right Brad, the mentioned end the yield the was book a interest at moment, money on yield your new of top right? freeze you environment for had the of quarter, even that duration, you think different by right, asset or adding big do your I is adding which increase recognize whether here, or to a ask, yields from there's risk, you classes? credit maybe optimize rate room

Brad Mulcahey

target we're Yes, side at X.X to we're duration, of Yes, the actually the sure. -- -- X think lower our years there's duration Thanks, Pablo. on I years. lower on X of

lever one could that that's So we pull.

But markets pull. We we money I the we the on haven't as something yield the would yield monitor can definitely portfolio. the being on that as the that new same add that's the about also yet. pulled and portfolio, your opportunities actual point

was of snapshot end of at September I the more portfolio just XX. think the a that at fact of our

are There has our since have changed -- and of been there bit gap little new now yields -- higher. a obviously, there's bit, a money then, more where yields little those a

I that there. duration some even think opportunity So drastically, changing without still there's

in this changes almost that course, daily Of environment.

here. not So we're going drastic make any to moves

and have, time, the but we'll are. appropriate. get duration There's we and are changes where still changing we have we comfortable we we're where more if we by it's yields all think can yield actually really we on make monitor with duration happy comfort the and something that we risk, We're that the

Pablo Singzon

makes it. what follow-up, That And is assets assets? then Got percentage sense. your my floating rate of invested

Brad Mulcahey

say Sorry, time, Pablo? one can that more you

Pablo Singzon

rate Just that's assets. the in the percentage investment of portfolio floating

Brad Mulcahey

don't me. pretty have treasuries. most Can it's floating back? it's small. very though. queue, have that detail in some do that we that with even have corporates, basic don't if the get know but portfolio, be know I I we our rate, got to We of I

don't have off Sorry, right I bat. the that

Operator

for to session. final gentlemen, the question-and-answer that turn Mr. our and Sills floor Ladies concludes comments. I'll back any

Stephen Sills

speaking everyone along QX, to the our like thank and We call operator. the To joining and continued their today, your another forward I'd in and support way. delivered dedication employees to work. for you. strong Thank us to quarter appreciate else you, we on hard you Thank look

Operator

Thank you. This concludes today's conference call.

your this disconnect Thank may time. for at your you You lines participation.

Bowhead Specialty (BOW) 5 Nov 242024 Q3 Earnings call transcript