• Premium Growth: 37% increase in premiums for 2024, exceeding the annual target of 20%.
• Adjusted Net Income: $14.1 million in Q4, up 143% year over year.
• Adjusted Return on Equity (ROE): 15.2% for 2024.
• Gross Written Premiums: Increased 26% to $185 million in Q4.
• Casualty Division Premiums: 43% increase year over year to $106 million in Q4.
• Healthcare Liability Premiums: Increased 9% year over year to $32 million in Q4.
• Professional Liability Premiums: Increased 7% year over year to $46 million in Q4.
• Baleen Premiums: $1.2 million in Q4, a 175% growth from the previous quarter.
• Loss Ratio: 64.4% for 2024, up 1.4 points from 2023.
• Expense Ratio: 31.4% for 2024, a decrease of 0.5 points from 2023.
• Combined Ratio: 95.8% for 2024.
• Pre-Tax Net Investment Income: Increased 80% to $12 million in Q4.
• Book Yield: 4.6% at the end of 2024.
• Total Equity: $370 million, with a diluted book value per share of $11.03, up 38% from 2023.

• Warning! GuruFocus has detected 7 Warning Sign with SGHC.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bowhead Specialty Holdings Inc (NYSE:BOW) achieved a 37% growth in premiums in 2024, surpassing their annual target of 20%.
• The company successfully completed an upsized IPO and a secondary public offering, reflecting strong demand for its stock.
• Bowhead's adjusted return on equity for the year was 15.2%, delivering attractive returns on capital to investors.
• The company launched a new division, Baleen Specialty, focusing on small, hard-to-place risks, which showed promising initial results.
• Bowhead improved its expense ratio by 0.5 points in 2024, demonstrating effective cost management.

Negative Points

• The company's 2024 loss ratio increased by 1.4 points compared to 2023, primarily due to changes in portfolio mix.
• Bowhead faces challenges in recruiting underwriting talent, particularly in the excess and primary casualty space.
• The healthcare liability division experienced decelerated growth due to increased competition.
• The professional liability division faced pressure from aggressive pricing by competitors, particularly in large publicly traded risks.
• The company's net acquisition ratio increased due to higher broker commissions, impacting overall expenses.

Q & A Highlights

Q: Can you provide more color on the fourth quarter accident or loss ratio compared to the first nine months? A: (Brad Mulcahy, CFO) The full-year loss ratio is a better indicator due to the Q4 review and mix changes. The mix, particularly in casualty, impacts the loss ratio as it has a higher loss pick. Adjustments were made in Q4 for current accident year loss ratios across divisions.

Q: How is the availability of underwriting talent in the market affecting your expansion plans? A: (Stephen Sills, CEO) We are primarily seeking talent in the excess and primary casualty space, which is scarce. We've hired some and plan to hire more. The Baleen division, being tech-driven, requires fewer people, making it more scalable.

Q: What are your expectations for growth in the healthcare liability line in 2025? A: (Stephen Sills, CEO) We expect growth, particularly in the hospital space, as rates catch up with increased claims and settlement values. The healthcare liability line should see significant growth in 2025.

Q: What opportunities do you see in the excess casualty line for 2025? A: (Stephen Sills, CEO) We believe the growth in excess casualty is sustainable for a few more years due to social inflation and nuclear verdicts. There are opportunities for new business and increased rates on existing business.

Q: Given the sequential decline in the loss ratio, was the net impact of the loss exchange positive? A: (Brad Mulcahy, CFO) Yes, the net impact of the loss exchange was positive.

Q: How do you foresee the loss ratio changing with the projected mix change in 2025? A: (Brad Mulcahy, CFO) The change will be more due to the roll-off of older years with lower loss picks rather than mix changes. This will impact 2025 unfavorably, but the mix issue will be less significant.

Q: How will the increase in the fronting fee impact the expense ratio? A: (Brad Mulcahy, CFO) The incremental change is a half-point increase, which we can manage through business scaling and projections.

Q: Can you discuss the outlook for professional liability and healthcare growth? A: (Stephen Sills, CEO) Professional liability, particularly cyber, shows growth potential. The healthcare space, especially hospitals, also has growth opportunities, despite competition in miscellaneous medical.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.