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DATE

Tuesday, Feb. 24, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Stephen Sills
  • President, Casualty — Derek Broaddus
  • Chief Financial Officer — Brad Mulcahey
  • Vice President, Investor Relations — Shek [no last name provided]

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TAKEAWAYS

  • Gross Written Premiums (GWP) -- $224.1 million in Q4, up 21%, and $862.8 million for the year, up 24%, driven by growth in all divisions, especially casualty.
  • Casualty GWP -- $133 million for Q4, up approximately 26%, and $551 million for the year, up 28%, with nearly 30% of Q4 growth from construction project risks delayed earlier in the year.
  • Professional Liability GWP -- $48 million in Q4, up about 4%, and $174 million for the year, up 9%, with Q4 growth primarily from the cyber liability portfolio.
  • Healthcare Liability GWP -- $34 million in Q4, rising 8%, and $116 million for the year, rising 14%, driven by healthcare management liability, senior care, and a hospital portfolio representing almost 30% of the division’s annual premiums.
  • Baleen GWP -- over $9.1 million in Q4, an increase of 47% from Q3, and $21.4 million for the year, supporting digital underwriting expansion.
  • Adjusted Net Income -- $15.5 million in Q4 ($0.47 per diluted share), $55.6 million for the year ($1.65 per diluted share), a 30.2% year-over-year increase.
  • Adjusted Return on Average Equity -- 14.1% for Q4, 13.6% for the full year.
  • Loss Ratio -- 66.7% for the year, up 2.3 percentage points versus 2024, reflecting annual reserve review outcomes and changes in business mix.
  • Expense Ratio -- 29.8% for the year, down 1.6 percentage points versus 2024, aided by technology adoption and operating scale.
  • Combined Ratio -- 96.5% for the year, with no aggregate net prior-year development following actuarial reserve reallocation.
  • Net Investment Income -- $16.6 million for Q4, up 36%, and $57.8 million for the year, up 44%, with a portfolio yield of 4.6% at year end.
  • Book Value Per Share -- $13.45 at year end, a 22% increase versus the previous year.
  • Headcount -- Increased by 19% during the year, from 249 to 296, compared with 24% GWP growth.
  • 2026 Outlook -- Management expects GWP growth around 20%, a loss ratio and combined ratio in the mid to high 60s and 90s, respectively, and return on equity in the mid teens.
  • Reinsurance -- Cyber quota share was renewed at 65% for 2026 (up from 60%), with an increase in ceding commissions.
  • Capital Actions -- Issued $150 million of 7.75% senior unsecured notes maturing 12/01/2030 to meet year-end 2026 regulatory capital needs.

SUMMARY

Management detailed that almost 30% of the quarter's casualty premium growth resulted from one-time construction project activity, warning this may cause lumpiness in future GWP results. Division-level adjustments during the annual reserve review led to risk-specific increases and decreases, especially in professional and healthcare liability segments, while producing no prior-year net development at the aggregate level. Executives stated that technology-enabled underwriting (Baleen and Xpress platforms) contributed to the sub-30% expense ratio, and that these digital tools are positioned for expanded small and mid-market business capture as they scale. Management confirmed that nearly all business is conducted through wholesale and retail brokers, and that direct-to-customer disintermediation is not anticipated, as specialty insurance complexity requires broker expertise. As interest rates remained stable, leadership signaled that portfolio duration would be extended conservatively to better match liabilities, without moving up the credit risk curve.

  • Management emphasized that disciplined risk selection and limit deployment differentiate Bowhead Specialty Holdings (BOW 1.61%) from peers with greater prior-year adverse development exposure.
  • Executives described headcount growth trailing premium increases, attributing operational leverage to early realization of technology investments in both digital and craft lines.
  • In response to investor inquiry, Mulcahey stated, "We think pricing is coming in above trend," but indicated that reserving adjustments were minor and not a sign of price inadequacy.
  • CEO Sills stated, "the Baleen loss ratio will be superior to the general large casualty business," crediting lower inherent risk due to policy restrictions.
  • The company’s expense guidance cited technology initiatives as the primary driver lowering the expense ratio below 30%, with scale effects less significant at current levels.
  • Executives restated the plan to capture more small premium submissions with Xpress, noting this will increase addressable market share without requiring headcount expansion.
  • The effective tax rate for the year was 20.1%, with management acknowledging future variability due to factors like state taxes and stock-based compensation.
  • Bowhead Specialty Holdings continues to limit property and catastrophe exposure, reaffirming its focus on casualty and professional liability lines.
  • Management confirmed all main quota share and excess-of-loss treaties come up for renewal in May, except cyber, which was renewed early at enhanced terms.

INDUSTRY GLOSSARY

  • Gross Written Premiums (GWP): The total insurance premiums written before deductions for reinsurance and ceding.
  • Combined Ratio: The sum of the loss and expense ratios, indicating underwriting profitability.
  • Excess Casualty: Insurance coverage that provides protection above a specified amount of underlying liability coverage.
  • Quota Share Treaty: A reinsurance agreement where the insurer and reinsurer share premiums and losses in a fixed proportion.
  • IBNR (Incurred But Not Reported): Reserves set aside for claims that have occurred but have not yet been reported to the insurer.
  • Xpress: Bowhead Specialty Holdings’ digital underwriting platform for automating decision-making on small and mid-sized specialty submissions.
  • Baleen: The company’s digitally enabled underwriting program launched to target small, harder-to-place risks with restricted coverage.
  • Surplus Lines: Insurance coverage for unique or difficult risks not typically written by admitted insurers, often sold through specialized brokers.

Full Conference Call Transcript

Turning to our performance, earlier this morning, we released our financial results for 2025. You can find our earnings release in the Investor Relations section of our website and later this evening, you will also be able to find our Form 10-K on our website. I would like to remind everyone that this call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors should not place undue reliance on any forward-looking statement. These statements are made only as of the date of this call and are based on management's current expectations and beliefs.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. You should review the risks and uncertainties fully described in our SEC filings. We expressly disclaim any duty to update any forward-looking statement except as required by law. Additionally, we will be referencing certain non-GAAP financial measures on this call. Reconciliations of these non-GAAP financial measures to their respective most directly comparable GAAP measures can be found in the earnings release we issued this morning and in the Investor Relations section of our website. With that, it is my pleasure to turn the call over to Stephen Sills.

Stephen Sills: Thank you, Shek. Good morning, everyone, and thank you for taking the time to join us today. I am very proud of Bowhead Specialty Holdings Inc.'s accomplishments in 2025. We delivered disciplined premium growth of 24% for the year, surpassing our original expectation of 20%. We also had a meaningful improvement in our expense ratio, coming in below 30% for the year and better than the low-30s range we expected at the start of 2025. Together, these achievements resulted in over 30% growth in our adjusted net income for the year, an adjusted return on equity of 13.6%, and diluted adjusted earnings per share of $1.65. I will begin with gross written premiums.

Bowhead Specialty Holdings Inc.'s GWP increased 21% in the fourth quarter to $224 million and 24% for the full year to approximately $863 million. We achieved disciplined premium growth from each of our divisions in the quarter and for the full year, with casualty driving the increase. Given our emphasis on underwriting discipline and prioritizing profitability over volume, we are pleased to have delivered stronger-than-expected growth in the fourth quarter. In casualty, GWP increased approximately 26% in the fourth quarter to $133 million and 28% for the full year to $551 million. The growth in both periods was primarily driven by our excess casualty portfolio.

Our fourth quarter growth came in stronger than expected, driven by construction project risks that were quoted earlier in the year but delayed due to macroeconomic factors we discussed in previous earnings calls. The green-lighting of these projects added just under 30% to our fourth quarter casualty premiums. While we like the profitability of the construction project business and expect new construction projects to continue, the nonrecurring nature of this business may create lumpiness in our GWP. In our professional liability division, GWP increased approximately 4% in the fourth quarter to $48 million and 9% for the full year to $174 million.

Our fourth quarter growth was primarily driven by our cyber liability portfolio, where we continued to target small and mid-sized accounts facilitated by our digital underwriting capabilities. Our full-year growth was driven by commercial public D&O and miscellaneous errors and omissions. In our healthcare liability division, GWP increased approximately 8% in the fourth quarter to $34 million and 14% for the full year to $116 million. Our growth in both periods was driven by our healthcare management liability and senior care portfolios. Additionally, our hospitals portfolio, which represents the largest portion of the division's full-year premiums at almost 30%, continued to grow while we reduced our total limits deployed.

For Baleen, GWP increased 47% from Q3 to over $9.1 million, and we are proud of the fact that for the full year, Baleen generated over $21 million. The momentum we saw in the fourth quarter gives us confidence in Baleen's continued expansion and its anticipated contribution to our broader digital initiative. With a strong year behind us, I am even more excited about Bowhead Specialty Holdings Inc.'s future. As we have said before, Bowhead Specialty Holdings Inc. was built to deliver sustainable and profitable growth across market cycles, and we do that by delivering our products through two complementary underwriting models. Our first model is our craft underwriting model, the foundation of our company.

It is led by experienced underwriters who specialize in complex, nonstandard, high-severity risks, and who deliver tailored solutions for our brokers and insurers. Our second model is our digital underwriting model, which represents the technology-enabled, low-touch approach to our specialty flow business. This model began with the launch of Baleen in 2024, focusing on small, harder-to-place risks with restricted coverage. We then expanded this technology to handle the high volume of small and mid-sized submissions that were within our appetite but, historically, not cost-effective for our craft underwriters to get to, a capability we call Xpress. Xpress automates the underwriting process that used to be repetitive and time-consuming, allowing our underwriters to make disciplined underwriting decisions within minutes.

We first applied Xpress to our small and middle-market cyber liability products in Q2, then broadened it to an E&O product in 2025. While our craft model delivered over 97% of our GWP in 2025, we have been able to achieve our sub-30 expense ratio even before the digital model is fully scaled. For example, in 2025, headcount grew just under 19% from 249 people to 296, while GWP grew 24%. And in the fourth quarter alone, headcount increased less than 3% while GWP grew 21%. Together, Baleen and Xpress form our digital underwriting model designed for speed, consistency, and disciplined decision-making, all while preserving the underwriting culture that defines Bowhead Specialty Holdings Inc.

We look forward to introducing you to our head of digital on a future earnings call so you can hear directly from the team leader driving this effort. Turning to our premium outlook for 2026, we continue to expect profitable premium growth of around 20% for the full year. While we anticipate the growth coming from each of our divisions, we believe the main source of this growth will be driven by our casualty division, followed by the growth stemming from our digital capabilities. I will now turn the call over to Derek, who has been in the casualty business over thirty years and won The Insurer's 2025 E&S Underwriter of the Year Award. Derek, over to you.

Thank you for the introduction, Stephen, and good morning, everybody.

Derek Broaddus: Bowhead Specialty Holdings Inc. wrote its first casualty policy in 2020, so we never wrote large limits for low premiums in the pre-2020 years. We were born in an up-rate, relatively low-limit environment, which still largely exists today. When Bowhead Specialty Holdings Inc. began, the commercial casualty market had just emerged from a 15-year-plus soft market where pricing was suppressed and limits were abundant, all while social inflation was brewing in the background. We think that the payback equation between limit and price in that time was way off, and because of the tail, we still do not think the bill has totally come due for the industry's pre-2020 prior-year adverse development.

As a thirty-year veteran of the industry, I am happy to say that it has never been a better time to be a casualty underwriter. Our trading partners ask us what differentiates Bowhead Specialty Holdings Inc.'s approach to casualty. Well, many of you have heard the insurance business is a people business. The best way to build a successful underwriting organization is to have the best underwriters in the business. Bowhead Specialty Holdings Inc. attracts top talent with our underwriting-first culture, focusing on profitability over volume. Underwriters are also attracted to our straightforward distribution model, supporting and partnering with our trading partners. We are overwhelmingly surplus lines. We also are not distracted by fixing a book of business.

We are laser-focused on managing and building our current portfolio. It is worth mentioning here that while we remain a predominantly remote organization, we are constantly on video talking about risks with what we call roundtables. Our underwriters are accessible anytime, anywhere. It is an advantage to be able to hire talent no matter where they sit. Another meaningful benefit to this structure is that it is easy to include less-senior underwriters from around the country in complicated underwriting meetings that might have been near-impossible in a traditional office setting. No one is above being questioned or challenged at Bowhead Specialty Holdings Inc. In fact, it is encouraged.

Additionally, Bowhead Specialty Holdings Inc. casualty deliberately avoids classes that are well-known hotspots. Two examples are for-hire commercial auto; we do not write risks that are in the business of hauling people or things for others. And we have limited exposure to large national accounts. Our focus remains on profitable classes where we have expertise. We manage limits carefully in today's market. Our average excess limit deployed is just over $5 million, rather than the $25 million blocks that were common pre-2020. Large excess towers that once required only a few markets to complete now require many markets at better pricing.

We also avoid low price-per-million, high-excess placements that require the deployment of large limits and are more exposed to loss than ever before due to social inflation and nuclear verdicts. Bowhead Specialty Holdings Inc.'s casualty portfolio benefits from today's positive rate environment, lower required limit to participate on towers, and the ability to exercise disciplined risk selection. We know that outsized awards and litigation funding are not going away. Social inflation is not a surprise to anyone anymore. Even with improved attachments, risk selection and rate still matter. In terms of our disciplined approach to underwriting, our focus is on deal fundamentals.

We believe that walking away from deals that do not make sense is just as important, probably more important, than any piece of new or renewal business. Some might say knowing when to walk away is the toughest but most valuable underwriting skill there is. From a market perspective, in excess, limit discipline largely remains. Many excess towers continue to see limit compression from incumbents. This creates new opportunities for underwriters like Bowhead Specialty Holdings Inc. However, one moderating influence on rate is the movement of admitted markets into the E&S space, as was typical in past insurance cycles. Also, non-risk-bearing MGAs and broker sidecars are bringing more capacity into the U.S. casualty market.

We agree with certain industry leaders who say there is a fundamental misalignment of interest in some non-risk-bearing underwriting facilities. Overall, we remain confident in our ability to grow profitably. We think the current market is competitive, but there is a relatively healthy balance of rate and limit management. Our brand in casualty continues to grow and strengthen. Submissions are growing faster than we can quote, and investments in technology, our digital platform, and talent will allow us to capture more opportunities that fit our appetite. With that, I will pass the call over to Brad to discuss our financial results. Thanks, Derek. Bowhead Specialty Holdings Inc. generated adjusted net income of

Brad Mulcahey: $15.5 million, or $0.47 per diluted share, and adjusted return on average equity of 14.1% in 2025. For the full year, Bowhead Specialty Holdings Inc.'s adjusted net income increased 30.2% to $55.6 million, or $1.65 per diluted share, and adjusted return on average equity was 13.6%. Our strong results were driven by top- and bottom-line growth. Gross written premiums increased 21% to $224.1 million for the quarter, and 24% for the full year to $862.8 million. Our growth story was consistent throughout the year. We achieved premium growth in each of our divisions, casualty continuing to be the largest driver, and Baleen generating $21.4 million for the year.

Due to the timing of our annual reserve review in Q4 each year, we consider our full-year loss ratio a more meaningful metric. For the full year, our 2025 loss ratio of 66.7% increased 2.3 points compared to 64.4% in 2024. The current accident-year loss ratio increased 1.8 points due in part to higher expected loss ratios and trends after the annual reserve review as well as mix changes in the portfolio. The prior accident-year loss ratio was unchanged as a result of the annual reserve review, but increased 0.5 points due to audit premiums recorded in 2025 that related to prior accident years.

As a reminder from previous earnings calls, the audit premium-related reserves in the prior accident years are not based on actual losses settling for more than reserved and did not represent an increase in estimated reserves on unresolved claims. We are simply putting loss reserves into the appropriate accident year regardless of when the premiums are billed and earned. And remember, since we have only been in operations for five years and write long-tail lines, our actual loss experience is limited. Because of this, our annual reserve review is primarily based on inputs from data.

Our initial expected loss ratios are derived from a combination of internal pricing data and external benchmarks, while development patterns are mostly based on external benchmark patterns. We attempt to align all industry benchmarks to the nuances of our portfolio, including not writing risks that are in the business of hauling people or things for others and our lack of large national account exposures in casualty. Additionally, the development patterns we use attempt to take into account our excess position in particular lines, which generally results in later development patterns than primary positions.

The most recent annual reserve review in Q4 resulted in various adjustments that were smaller compared to our adjustments in Q4 2024, but most importantly, we had no prior accident-year development in our aggregate net losses for 2025 as a result of this review. As you will see in our 10-K, we reallocated prior accident-year reserves by division to align more closely with the actuarially derived projected loss ratios and development patterns. These reallocations were primarily in professional liability, where we reduced the 2021 accident year while increasing the newer accident years; in healthcare, where we reduced the 2023 accident year and increased 2022 and 2024 accident years.

These were offset by a decrease in casualty for the 2022 accident year to align with projected loss ratios, all resulting in no prior-year development on an aggregate net basis. More specifically, in professional, the 2021 accident year is performing well, resulting in a favorable $3.5 million reduction in IBNR. However, the limited experience in subsequent years, coupled with declining rates, warrants caution. The 2022 accident year in particular, where our early experience is deviating from the industry development patterns, was increased by $2.8 million at year-end. Similarly, in healthcare, the 2023 accident year is performing well, but in the 2022 year, our early experience is also deviating from the industry development patterns.

This warranted a $2.2 million increase in the 2022 accident year at year-end, along with a $3.3 million increase in the 2024 accident year out of an abundance of caution. These adjustments to the industry development patterns are another example of conservatism in our reserving. We are reserving as if the industry patterns are correct for now and therefore reallocating reserves in select areas. Lastly, we increased some of the 2025 accident-year initial expected loss

Stephen Sills: picks

Brad Mulcahey: to align with actuarial estimates. In alignment with our conservative approach to reserving, we are carrying loss ratios in the 2025 accident year above the industry estimates on a majority of our product groups. Overall, our actual experience of paid claims and reserves continues to be better than we actuarially expected, and at the end of the year, IBNR as a percentage of total reserves was 90%. Turning to our expense ratio, we consider our full-year ratio a more meaningful metric to monitor the trending of our expense ratio due to the inherent volatility quarter to quarter. For the year, our 2025 expense ratio of 29.8% decreased 1.6 points compared to 31.4% in 2024.

The reduction was driven by a 2.3-point decrease in our operating expense ratio, which was partially offset by a 1.1-point increase in our net acquisition ratio. The decrease in our operating expense ratio was due to the continued scaling of our business, scaling that is accelerated by the realization of various technology initiatives to improve efficiencies. The increase in our net acquisition ratio was driven by the increase in broker commissions due to mix changes in our portfolio and, to a lesser extent, the increase in the ceding fee we pay to American Family. Overall, the effect of our loss ratio and expenses contributed to a combined ratio of 96.5% for the year.

As a reminder, we do not write property, and we do not write natural catastrophe-exposed risks. Turning to our investment portfolio, pretax net investment income for the quarter increased approximately 36% to $16.6 million and 44% for the year to $57.8 million. The increase was primarily due to a larger investment portfolio resulting from increased free cash flow. At the end of the year, our investment portfolio had a book yield of 4.6% and a new money rate of 4.5%. The average credit quality of our investment portfolio remained at AA. Our duration increased from 2.9 years in Q3 to 3 years at year-end. Our effective tax rate for the year was 20.1%.

As a note, our effective tax rate may vary due to items such as state taxes and stock-based compensation. Total equity was $449 million, giving us a diluted book value per share of $13.45 for the year, an increase of 22% from year-end 2024. Turning to our expectations for 2026, we continue to expect a GWP growth of around 20% for the year. As Stephen mentioned, the growth should come from all divisions, but led by continued momentum in our casualty division and growth driven by our digital underwriting capabilities.

From a ceded perspective, although our main quota share and XOL treaties renew in May later this year, we have renewed our cyber quota share treaty effective January 1 at 65%, up from 60% in 2025, and increased our ceding commissions. As a note, at each renewal, we consider various factors when determining our reinsurance coverage. While we may adjust our reinsurance program, including our retention, to support capital needs, we expect our reinsurers to maintain a financial strength rating of A or better. Furthermore, we expect our 2026 loss ratio to be in the mid to high 60s due to product mix and our reliance on industry loss trends.

Additionally, we expect our expense ratio to be below 30% for the full year due to the continued scaling of our business, scaling that is accelerated by the realization of various technology initiatives to improve efficiencies. We expect our expense ratio in the first half of the year to be slightly higher than the second half due to payroll taxes. Therefore, we believe our combined ratio will be in the mid to high 90s for the full year and return on equity to be in the mid teens. Turning to our investment portfolio, we expect to extend our duration slightly from 3 to 4 years.

This change is not because we are predicting interest rates to decrease, but to closer match the duration of our investments to the duration of our liabilities. Lastly, from a capital perspective, in November, we issued $150 million of 7.75% senior unsecured notes that are scheduled to mature on 12/01/2030. We expect the proceeds to be sufficient for our year-end 2026 regulatory capital requirements, but we will continue to assess throughout the year. We will now open for questions. Thank you.

Operator: If you would like to ask a question, we ask that you please use the Raise Hand function at the bottom of your Zoom screen. Once called upon, please unmute your audio to ask your question. As a reminder, we are allowing analysts one question and a relevant follow-up. We will pause for a moment to allow questioners to enter the queue. Our first question will come from Meyer Shields with KBW. You may now unmute and ask your question.

Meyer Shields: Great. Thanks so much. Brad, I appreciate all the detail on the prior-year reserve development. You walk us through what that implies for price adequacy for 2026? For professional and financial lines? I am sorry, for professional healthcare?

Brad Mulcahey: Hey, Meyer. Thanks for the question. Yes, we detailed quite a bit on our prior accident-year development changes around in our IBNR in particular. We think we are priced well. We think pricing is coming in above trend. But we do have a couple of pockets that was just normal changes. I do not want to read too much into it. They were actually pretty small changes. So I do not think there is really a pricing impact from it. It is more just taking a conservative approach to the reserving and adjusting where it was warranted, and tucking around the edges, if you will.

Meyer Shields: Okay. No, that is helpful. And I guess a question on Baleen. When right now, obviously, it is a very, very small percentage. But when, as it grows, should we think of it as having the same loss ratio characteristics as casualty? Is it going to be more evenly distributed? That is the wrong way of phrasing it, but when you look at the different segments, you have got different loss ratio profiles there. I am wondering how we should think of a mature Baleen in that context.

Stephen Sills: I think that this is Stephen. I think that the Baleen loss ratio will be superior to the general large casualty business. I am not as certain as when we get into the Xpress casualty business, whether that will probably mirror more of what the larger casualty business is. But the Baleen business, based upon the restricted nature of the coverage, we think that will have a superior loss ratio.

Meyer Shields: Okay. Fantastic. Thank you so much.

Operator: Your next question will come from Roland Meyer at RBC Capital Markets.

Roland Meyer: Hi, good morning. I wanted to quickly ask on how you translate industry data into the loss ratio picks. I assume you are trying to be better than the industry, and your business is much more niche. But how do you get granular on that data and use it in your business?

Brad Mulcahey: Yes. Hey, Roland. This is Brad. Thanks for the question. We have been doing this for a couple of years now. Obviously, we do not have enough data on our own to set our picks and development patterns, but we do have a third-party actuary who has very detailed proprietary information that they give us. So this is not Schedule P industry data that we are using. This is something that we can slice and dice. As I mentioned, we do not really have a big Fortune 1000 exposure in casualty, for example. That has given everybody a lot of heartburn. So we are able to tailor these industry benchmarks to our portfolio to an extent.

There is only so much you can do, obviously. But we think that the proprietary information that we now have helps us in, you know, looking backwards, it has been pretty accurate with foretelling what is happening in the casualty market and the other markets that we participate in. The development patterns are probably the one that, you know, we are starting to see our own data, but I do not know if we can say we have a trend in our data for that. So we are definitely using the industry development patterns, and, you know, I think that is adding a little bit more conservatism into our reserves as well. Does that help?

Roland Meyer: Yes, that is super helpful. And then I wanted to talk about the expense ratio target. You are now sub-30. I get there is going to be a step-up in acquisition cost from the deal in May and maybe some first-half payroll taxes. But is there a place you are thinking about long term where you can get the expense ratio down to?

Brad Mulcahey: Yes. I think we have headwinds with our ceding fee going to American Family, as you point out. But we have got a lot of tailwinds in the technology initiatives that we have put in place. We saw halfway through last year. We are starting to see the benefits of those a lot faster than we had thought, surprisingly so. So we are still going to squeeze as much as we can out of this expense ratio. But it is sort of a, you know, last year, low-30s. We were happy being in the low-30s. This is sort of a new paradigm now with some of the tools out there.

So hard to say where we will come in, but I think we are comfortable low-30s, and we will do our best to get it even lower than that.

Roland Meyer: Right. Perfect. Thank you.

Operator: Your next question will come from Bob Huang with Morgan Stanley.

Bob Huang: Hi. Good morning. So my first question revolves around casualty. I want to just follow up with something that you talked about a little earlier. As we, I think previously, right, you talked about the undisciplined nature of some of the underwriters but also the risk of these eye-watering verdicts from social inflation. As we go into 2026, is there any sign that pricing environment in excess casualty maybe is beginning to plateau? Is the market significantly offering substantial growth in 2026 and beyond just given where we are in the underwriting cycle for the casualty side?

Derek Broaddus: Hey, Bob. This is Derek. I like directionally the limit discipline that we are seeing in the market. I think that is holding pretty well. I would say that there is a lumpy moderation going on. You are seeing some deals in particular that are still dealing with adverse development from prior years, and then on other deals, you are seeing, you know, five years of compounded double-digit rate, and great loss experience. So you are going to see a little bit of a mix of response from the market for those two different types of risks that are coming in. For the most part, though, as Brad said, I think directionally, we are seeing rate exceed loss trend.

Bob Huang: Got it. Okay. No, that is very helpful. Thank you. My second question is more of AI and automation. So when I look at Baleen on the automated underwriting side, is there a reason to believe that at some point in time, the technology on that side is advanced enough that you can essentially disintermediate brokers, as in you are going directly to customers for that line of business? Or maybe even if that line of business gets bigger, like higher limits, can you skip the brokers and go directly to customers?

Stephen Sills: In the type of business we do, I do not see that happening anytime soon. I mean, carriers for as long as I have been in the business have talked about could brokers be disintermediated. At the end of the day, the type of specialty insurance we do is not homogenous, not like a family automobile policy or a homeowner's policy. There is a lot of complexity to it that I think needs a lot of explaining, and I think the broker brings a lot to the table.

And even further than that, the wholesalers play a large role because many of the retailers who are good producers of the business are not experts in the nuances, the ins and outs of some of the specialty insurance. So we do not see that going away anytime soon, number one. Number two, we think the biggest advantage this time is the speed at being able to get to the business. I think we have mentioned before that in the casualty space, we do not even have the ability to get to 90% of our submissions that come in the door.

It is just, unless it is a premium that is maybe $50,000 or above, we do not have the resources to handle it. In the next several months, we are going to be able to get our system online in Xpress where we will start to be able to handle that business. So it is a matter of being a great underwriter, assist in doing the business to help us grow profitably. But the idea of disintermediating is not on our radar.

Bob Huang: Okay. Really appreciate it. Thank you.

Operator: Your next question will come from Pablo Singzon with JPMorgan.

Pablo Singzon: Hi. Good morning. So first question for Brad. How much did mix contribute to the 1.8 attributable loss ratio uptick in 2025? I think about 2026, the rebase loss effect should flow through at the same level. So, if we use 66.7% in 2025 as the base, how do we frame the impact of any mix impacts in 2026?

Brad Mulcahey: Hey, Pablo. Thanks for the question. I do not really have an answer for that yet. You are right. We will use our 2025 loss picks as sort of a starting point for 2026. That does not mean it is set in stone at that level. We will review these every quarter, and if we need to make changes, we will based on rate or anything else we are seeing or the industry changing as well. I think we are probably reaching the upper limit of how much mix plays into it as you see the casualty portfolio such a bigger portion of the overall premium, but even with that, within casualty, there is mix.

So the primary casualty has a different loss pick from excess, for example. So there is mix within mix, if you will, and we just have to see how that plays out. I wish I could give you a more precise number for next year, but that is the best I have.

Pablo Singzon: Okay. Thanks. And to take a step back, and I appreciate, Brad, you provided a lot of detail on the combined ratio. But as I think about the overall number, it seems to me that, all else equal, maybe the loss ratio should go up a bit, maybe for mix. Acquisition expense will probably go up, and the question is, do you expect to fully offset those with a lower expense ratio? Or will it offset only partial? And I know that is putting a finer point here, but given where the combined ratio is, even a 50-basis-point movement can be meaningful. So any perspective you could provide there? Thanks.

Brad Mulcahey: Sure. I guess, and, Stephen, feel free to jump in. But I think the way that we approach this is we will try to get as low of an expense ratio as we can regardless of where the loss ratio is going, and we will let the loss ratio do what it does based on how we feel comfortable with our reserves, regardless of what the expense ratio is doing. So hopefully, those two come together, and there will be some offset if the loss ratio does trend up. We do have the benefit of older accident years that have lower loss picks. As those roll off each year, you will see that impact the loss ratio.

So I think that is why we are saying our target is the mid to high 60s on the loss ratio. But I would not read too much into that of being a huge increase, but probably where I would stand on that.

Stephen Sills: Well said.

Pablo Singzon: Okay. Thank you.

Operator: Your next question will come from Cave Montazeri with Deutsche Bank.

Cave Montazeri: Morning. First question is on Baleen. Looks like growth is picking up nicely after what was arguably a slower-than-expected first half of the year. So my question is, what has been working well in 2025, and how should we think about growth in 2026 for Baleen specifically?

Stephen Sills: Well, part of it has to do with acceptance. That there are certain entrenched markets and with relatively small premiums of, say, $5,000, there is not a ready acceptance to market them. So there is a certain amount of hanging around the net, if you will, and continuing getting our message out to brokers of what we are offering, how our policy form compares, how our commission level compares, our service level, all those things, and ultimately getting the message through till people start to try us and it becomes more and more accepted.

And now as it starts to build, we have started to put more infrastructure behind it in terms of more people going out and speaking to brokers about the business. And then success breeds success. They see that what we have done has been worth the effort to try us, and they are trying us more. And with adding more marketing people, we have been able to add more distribution points that are still building on itself.

But also even beyond Baleen, and we tried to make this clear earlier, but even beyond Baleen, building on that technology is enabling us to do that smaller business, not the restricted type business of Baleen, but the smaller business that we call Xpress, is going to be another real plus, I think, in 2026. Does that help?

Cave Montazeri: Yes. Thank you. A second question. For Brad. On the investment portfolio, it is good to hear that you can increase the duration from three to four years. With your new money yield being below the book yield, would you also consider maybe going up the risk curve? You have a very defensive portfolio right now.

Brad Mulcahey: Yes. Thanks for the question, Cave. The answer is no on that one. When we discussed moving our duration up, we explicitly kind of agreed that we are not going to change the risk profile of the portfolio. We like the conservative position.

Cave Montazeri: Clear. Thank you.

Operator: Your last question will come from Jon Paul Newsome with Piper Sandler.

Jon Paul Newsome: Hi. Great. Thanks. This is Cam on for Jon Paul Newsome. Just one question for me. On the lower expense ratio guide for 2026, how much of that improvement would we say is attributable to scale versus mix?

Brad Mulcahey: Yes. Good question. I think our previous guidance of low-30s, that was scale. I think the new guidance of being below 30, that is the impact of the technology. And it is not just technology in the digital platform as well. We are deploying technology on the craft business as well that is helping with efficiencies. Our claims team is getting more efficient, so we are really seeing that across both. So I would say the difference between the low-30s and where we actually end up would be the effect of the non-scaling of the business, if you will.

Jon Paul Newsome: Great. Thanks. That is all for me.

Operator: That concludes the question-and-answer portion of today's call. I will now hand the call back to Stephen Sills, CEO, for closing remarks.

Stephen Sills: Thank you. Bowhead Specialty Holdings Inc. delivered another strong quarter to end a great year. Before we go, I wanted to say thank you again to our colleagues and brokers for making 2025 such a successful year. Thank you, and we look forward to speaking to you along the way.

Operator: Thank you for joining today's session, the call has now concluded.