Bowhead Specialty does not expect direct material losses from Q3 hurricanes

Specialty lines insurance group Bowhead Specialty does not expect material direct losses from the recent hurricanes in the third quarter of 2024, as the firm does not write any property risks, the company recently said in its preliminary third quarter earnings.

In their preliminary third quarter earnings, the company revealed that its gross written premiums (GWP) are expected to increase 27% to 34% year over year, reaching between $193 million and $200 million.

Bowhead revealed that the expected increase in GWP was driven by renewals, new business, and continued growth within the company’s platform across all divisions.

The company’s casualty division reportedly led the GWP growth with an approximately 40% increase year over year, which also included a preliminary $4 million of additional GWP (a preliminary $3 million from a net earned premium basis) from an unusually large audit premium from one insured;

Healthcare Liability GWP grew over 25% year over year, while Professional Liability GWP grew over 10% year over year, the firm noted.

At the same time, net income is also expected to sit between $11.5 million and $12.5 million, with adjusted net income  expected to be between $12 million and $13 million.

In terms of investment, Bowhead’s net investment income is expected to be between $11 million and $12 million for the third quarter of 2024. Importantly, the firm explained that its IPO proceeds were fully invested during the quarter and there were no changes to their investment strategy from the previous quarter.

In addition, Bowhead’s loss ratio for Q3’24 is expected to be between 64.0% and 65.0%, which utilized the same industry loss ratios used since the fourth quarter of 2023.

As well as this, the company’s expense ratio is expected to sit between 29.5% and 30.5% for Q3’24, representing an expected decrease from 33.8% in Q2’24, or 32.3% excluding the one-time stock-based compensation acceleration expense of $1.3 million in Q2’24.

Lastly, Bowhead revealed that its return on equity (ROE) is expected to be between 13.0% and 14.0% for the quarter, while its adjusted ROE is expected to sit between 13.5% and 14.5%.

Bowhead Chief Executive Officer Stephen Sills commented: “We are pleased to share our preliminary third quarter results. Additionally, since Bowhead does not write any property risks, we do not expect any material direct losses as a result of the recent hurricane activities. We look forward to sharing more about our third quarter results on November 5^th.”

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