Hello, and welcome to Bowhead Specialty Q1 2026 Earnings Call. The operator will now provide instructions. Also, as a reminder, this conference is being recorded. If you have any objections, please disconnect at this time. With that, I would like to turn the call over to Shirley Yap, Head of Investor Relations. Shirley, you may begin.

Thanks, Mariana. Good morning, and welcome to Bowhead's First Quarter 2026 Earnings Conference Call. I'm Shirley Yap, Bowhead's Chief Accounting Officer and Head of Investor Relations. Joining me today are Stephen Sills, our Chief Executive Officer; and Brad Mulcahey, our Chief Financial Officer. And as we have done in previous quarters, we have invited a key member of our management team to our earnings calls to share insights from their area of expertise. Today, we are joined by Brandon Mezick, our Head of Digital, who will walk us through Bowhead's Digital Underwriting initiatives, which cover Baleen Specialty and Bowhead Express. Turning to our performance. Earlier this morning, we released our financial results for the first quarter of 2026. You can find our earnings release in the Investor Relations section of our website. And later this evening, you'll also be able to find our Form 10-Q on our website. I'd 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 measure can be found in the earnings release we issued this morning and in the Investor Relations section of our website. With that, it's my pleasure to turn the call over to Stephen Sills.

Thank you, Shirley. Good morning, everyone, and thank you for taking the time to join us today. Bowhead delivered a strong start to 2026 with gross written premiums increasing 24% year-over-year to approximately $217 million. Once again, we delivered disciplined premium growth across all divisions, with casualty driving the largest growth complemented by strong execution in Baleen. Starting with Casualty, GWP increased more than 20% to $147 million in the quarter. We continue to grow in areas where terms and pricing were favorable, while contracting in areas where we saw downward pricing pressure due to an overabundance of supply. This quarter, growth in casualty was driven by our excess portfolio. The major contributors included strong rate on our real estate book, new construction projects and an increase in manufacturing and hospitality business. Though we see some downward pressure from admitted carriers, nonrisk-bearing MGAs and broker sidecars, overall, while there are certainly exceptions, we still see the market exercising discipline in limit deployment and coverage expansion. That said, we continue to believe excess casualty remains the most favorable segment in our marketplace today. Turning to professional liability, GWP increased 6% to approximately $28 million in the quarter. Our growth was primarily driven by our Cyber liability Express portfolio, which targets small and midsized accounts through our digital underwriting platform. Partially offsetting this growth was a reduction in our commercial public D&O portfolio, driven by lost renewals to markets who we believe have overaggressive appetites and little to no discipline. In our Healthcare Liability division, GWP increased 28% to more than $30 million in the quarter. Growth was driven by our hospitals, senior care and miscellaneous medical facilities portfolios. While we remain disciplined in expanding the book and reducing average limits deployed, the market remains challenging, particularly in connection with coverage associated with sexual abuse and molestation. Finally, we're pleased to report that Baleen generated over $11 million in premiums during the quarter, an encouraging start to the year that reinforces the confidence we have in our digital underwriting platform. As a reminder, we built Bowhead to deliver sustainable and profitable growth across market cycles, and we do so by delivering our products through two complementary underwriting platforms. The first is our craft underwriting platform, which is our foundation, led by experienced underwriters who specialize in complex, nonstandard, high-severity risks and who deliver tailored solutions for our brokers and insurers. The second is our digital underwriting platform comprised of Baleen and Express, which represents our cutting-edge approach to specialty flow business. As Shirley mentioned, we have Brandon Mezick, our Head of Digital, here with us today. Having launched our digital underwriting platform and leading the expansion of our digital initiative, I'm pleased to pass the call over to Brandon to walk you through the details. Brandon?

Thanks, Stephen. I'll take a few minutes to describe our digital underwriting businesses, Baleen Specialty and Bowhead Express and why we believe they represent a long-term structural advantage for Bowhead. The core thesis is straightforward. Craft underwriting by its nature is hyper cycle sensitive. As market conditions shift, the risk-adjusted opportunity set in large account E&S narrows. Digital underwriting gives us a durable complementary channel, one that is specifically designed to access the SME E&S market efficiently and, we believe, more profitably with less volatility. The SME E&S market represents a massive opportunity, one that has historically required more underwriting effort than the returns justified because the right technology wasn't available. Our digital platforms change that equation, bringing technology-enabled efficiencies without sacrificing the underwriting discipline that defines Bowhead. Starting with Baleen, we focus exclusively on the E&S market. We target customers who are not eligible for admitted products, and we work through binding and light brokerage teams at our wholesale partners. Our current product offering is targeted at SME E&S customers in construction and real estate, where we provide primary general liability coverage for hard-to-place risks with minimum premiums below $1,000. The process is nearly fully automated from the moment a submission arrives via email and not a proprietary portal; through quote generation and policy delivery, the workflow is straight through. We meet brokers where they are, and that simplicity is a competitive advantage. In the SME E&S market, being first to quote matters enormously, and our brokers often tell us we are the first. In the first quarter, more than 75% of our new business submissions received a response within 15 minutes and 100% of submissions received a response within one business day. Those responses are overwhelmingly bindable quotes. Our new business quote ratio was above 75% in the first quarter. And if a customer decides to purchase, we deliver a complete policy in under five minutes. The market has long wrestled with a fundamental tension: how to deliver speed without sacrificing underwriting quality. Various approaches have emerged in an attempt to resolve it. Some have leaned on large teams of low-cost labor to process volume. Others have relied on legacy systems that, while familiar, were never built for the demands of today's market. Still others have simply asked their people to work harder and faster, substituting effort for infrastructure. Each of these approaches trades something essential away. Baleen was built on a different premise. Our platform combines modern, modular technology with experienced underwriting judgment at every critical decision point. The result is a process that is both disciplined and scalable, rigorous and repeatable, deliberate and fast. What separates Baleen from our competitors is not just the workflow. It's the underwriting rigor embedded within it. Behind the automation is a highly codified set of business rules governing eligibility, pricing and coverage built by experienced underwriters with direct input from our actuarial and claims teams. Third-party data is integrated at the point of submission to validate risk characteristics before any quote is generated and underwriters are engaged where judgment is required, but discretion, particularly on coverage, is intentionally constrained. This isn't a black box. It's a disciplined rules-based framework with experienced people behind it, underpinned by regular performance monitoring led by our actuarial and analytics teams. The results reflect that. In the first quarter, Baleen generated over $11 million in premium, more than three times the same period last year. New business submissions were up over 140%. New business quotes were up over 110% and new business binds were up over 260%. We're also seeing strong repeat engagement from broker partners, which tells us this is about consistency and ease of doing business, not just speed. Looking ahead, we see two clear avenues for continued growth. The first is broker expansion, both deepening relationships with our existing wholesale partners who have significant volumes of the business we want and extending into digitally native programmatic platforms where very few markets with our appetite and product set currently exist. Those platforms experience real leakage when risks fall outside the standard appetite, and we are well positioned to fill that gap. The second is product development, guided by our wholesale partners who actively bring us opportunities. We have a disciplined internal process to evaluate each opportunity on its merits and a team that can move from concept to launch quickly. Last week, we launched a supported access offering for construction risks that is nearly frictionless for our wholesale partners. Both paths, broker expansion and product development, expand our addressable market without requiring us to compromise on limits, coverage or what's made Baleen work. Turning now to Bowhead Express. This is a distinct model from Baleen, but relies on the same underlying technology. Bowhead Express is being built to serve smaller versions of the risks our craft business already underwrites. Express is generally low touch. Nearly every risk is reviewed by an underwriter, but that review is structured to take less than 15 minutes per risk. We aggregate internal and third-party data upfront, so an underwriter sees everything they need at the outset. There are no additional data requests and practically no back and forth with our broker partners. This frees our underwriters from repetitive, low-value work and allows them to focus their judgment where it matters most. The result is significant operating leverage. A key objective with Express is radical simplification, streamlining our process to the point where we can introduce no-touch capabilities while maintaining underwriting integrity. Our offering in Cyber Express is a good example, where we've evolved into a no-touch model for the smallest, simplest risks. The products offered through Express use the same core policy framework as Craft, the same forms and the same endorsement philosophy, but with much less customization. That means we're not introducing new underwriting exposure. We're simply applying a more efficient delivery model to a segment that was previously uneconomic for us to serve while driving more submissions to Craft as we deepen our relevance with brokers. In the first quarter, Express generated over $3 million in premium with a quote ratio of approximately 65%. The growth opportunity ahead for Express follows a similar pattern to Baleen. On the broker side, our existing wholesale partners have significant volumes of the business Express is designed to serve. To earn more of that flow, we are focused on being visible and delivering a great experience. On the product side, our road map is informed by two sources: our wholesale partners who actively tell us what they want us to build and our own craft underwriters who surface risks that Express could solve for. We have a disciplined process to evaluate each opportunity and a team that can move quickly. Later this month, we expect to be launching a primary casualty offering for middle market construction risks, which is a segment where we've received considerable submission flow but have been unable to serve economically until Express. Each new product and each expanded appetite expands our addressable market, and we are well supplied with opportunities to pursue. Stepping back, I want to offer a clear framework for how we think about digital underwriting within Bowhead. First, growth. Digital underwriting represents just under 7% of total Bowhead GWP in the first quarter, and we expect that contribution to grow as both Baleen and Express scale throughout the year, driven by strong broker engagement and a product pipeline that continues to expand our addressable market. Second, economics. Our digital underwriting businesses are structurally designed for attractive unit economics: shorter limit profiles and smaller average risks mean lower expected severity. And because technology replaces manual steps, the expense ratio for digital should be lower than Craft as these platforms scale. Third, discipline. Digital underwriting at scale only works if the underwriting works. We believe our approach—codified rules designed by experienced underwriters, data enhancement and validation, and actuarial oversight—is the right framework. We monitor performance daily and early results are consistent with our long-term expectations. And finally, differentiation. We built and launched both businesses in a matter of months with strong alignment across the organization. Our technology is modular and not legacy bound. That combination, the speed of execution, underwriting expertise and operational flexibility is difficult to replicate, particularly in large or more complex organizations. We're still early, but the first quarter results give us real confidence in both the model and the opportunity ahead. With that, I'll turn the call over to Brad to discuss our financial results.

Thanks, Brandon. Bowhead generated adjusted net income of $16 million in the first quarter of 2026, up approximately 40% year-over-year. Diluted adjusted earnings per share was $0.48 for the quarter and adjusted return on average equity was 14.1%. Our strong results were driven by top and bottom line growth. Gross written premiums increased 24% to approximately $217 million for the quarter. As Stephen mentioned, we achieved growth in each of our divisions with casualty continuing to be the largest driver and Baleen generating $11.4 million of premiums during the quarter. Our loss ratio for the quarter was 66.9%, unchanged from the same period in 2025. Our current accident year loss ratio was flat as the impact of the loss picks we made in the fourth quarter of 2025 were offset by changes in our business mix. As I've mentioned in past earnings calls, the continuation of approximately $600,000 of prior accident year reserves is simply due to IBNR booked on additional premiums that were billed and fully earned in the current quarter, but relating to policies from prior accident years. This is not based on actual losses settling for more than reserved and does not represent an increase in estimated reserves on unresolved claims. We are simply putting IBNR into the appropriate accident year regardless of when the premiums are billed and earned. As a reminder, since we're writing long-tail lines and have relatively short history of losses, when setting our loss reserves, we're heavily reliant on industry observed loss information over our own internal data. This reliance is evident in our high ratio of IBNR as a percentage of total reserves, which was 91% at the end of the quarter. Our expense ratio for the quarter was 28.4%, a decrease of 2 points compared to 30.4% year-over-year. The reduction was primarily driven by a 2.9 point decrease in our operating expense ratio, which is partially offset by a 1.2 point increase in our net acquisition ratio. The decrease in our operating expense ratio was due to the continued scaling of our business as well as the prudent management of our expenses, including new estimates of deferrable costs. The increase in our net acquisition ratio was driven by the increase in broker commissions due to mix changes in our portfolio, especially as more premiums are sourced from wholesalers and the ceding fee we pay to American Family. These increases were partially offset by an increase in earned ceding commissions from our outward reinsurance treaties. Overall, the effect of our loss ratio and expense ratio contributed to a combined ratio of 95.3% for the quarter. Turning to our investment portfolio, pre-tax net investment income increased approximately 44% year-over-year to $18 million for the quarter, primarily due to a larger investment portfolio resulting from increased free cash flow and our $150 million debt raise in late 2025. The investment portfolio had a book yield of 4.6% and a new money rate of 4.7% at the end of the quarter. The average credit quality of the investment portfolio was AA- at the end of the quarter, and the average duration increased from 3 years at the end of 2025 to 3.2 years at the end of the quarter. As we mentioned during last quarter's earnings call, we expect to extend our duration slightly over the course of the year from 3 to 4 years to closer match the duration of our investments to the duration of our liabilities. Our effective tax rate for the quarter was 22.2%. As a note, our effective tax rate may vary due to items such as state taxes, stock-based compensation and nondeductible excess officer compensation. Total equity at the end of the quarter was $459 million. This resulted in a diluted book value per share of $13.80 at the end of the quarter. I also wanted to provide an update on our May 1 ceded reinsurance renewals, which apply to all of our departments, except for our cyber liability products. Overall, we increased our quota share treaty from 26% in 2025 to 33.5%, while increasing our ceding commissions. We also had a decrease in our excess of loss treaty from 65% in 2025 to 57.5%. Our renewals continue to be placed with reinsurers with an AM Best financial strength rating of A or better. Finally, we expanded our agreement with American Family to support the around 20% GWP growth we're expecting this year. This update raises the $1 billion annual premium cap, which we are projected to exceed this year if we grow around 20%. For more details, please refer to the Form 8-K we filed earlier today. With that, we'll turn the call over for questions.

Thank you. Our first question comes from Rowland Mayor at RBC Capital Markets.

I wanted to quickly ask Brandon, the stats you cited on Baleen imply a pretty sharp increase in the bind rate year-over-year. Could you maybe elaborate on that change and how Baleen has iterated?

Sure. I think the major contributors to our bind rate include just simply the time we've spent in market. We are more well known to the brokers that we are working with. The process is more familiar. We're giving them a great experience. We've also invested a lot in distribution. We have a great head of distribution in Baleen that has us way more active and visible in the marketplace. And I think those two — relevance and being top of mind — are the biggest contributors for the bind rate increase year-over-year.

Okay. Perfect. And then I was wondering if we could go through the growth in the underwriting expenses and how we should think about it for the full year. It looks like in the first quarter, they were up about 8%. And should the remainder of 2026 be higher than that? Or is there any major investment down the road that we need to have?

Rowland, this is Brad. Just to be clear, are you talking about overall Bowhead or just in Baleen?

Our next question comes from Meyer Shields at Keefe, Bruyette & Woods.

Am I coming through?

We can hear you.

Sorry. Brad, you mentioned a reevaluation of deferrable costs. Was that an offset to operating expenses? Or is this just like a newer run rate going forward?

Thanks for the question, Meyer. On the overall expense ratio, we mentioned we updated an estimate on some of our deferrable internal costs that relate to acquisitions or acquisition costs. So that's a sort of, I would call it, a favorable timing item in Q1 that's going to normalize eventually in future quarters. So I think that's maybe the one item in Q1 I would highlight. But again, like I said, the expense ratio trend, we're comfortable with being under 30%. I don't want to read too much into one quarter. Obviously, it can be volatile.

Okay. That's helpful. And when we look at the changes that you went through on the 5/1 renewals, is the bottom line impact of that higher or lower net to gross written premium?

Yes, the headline on that is it's basically neutral to net income. There will be some puts and takes, obviously, as we see more premium, net earned premium will go down. But obviously, our losses will go down and our ceding commission should come up. There will also be maybe a little bit of pressure on investment income as we pay more to our reinsurers upfront. But otherwise, I think overall, it should be pretty much neutral to the bottom line.

Our next question comes from Cave Montazeri at Deutsche Bank.

First question is on the health care liability, which is a line we don't really talk about or spend much time on. There was some pretty strong growth this quarter. So — could you maybe tell us, I guess, where are we in the underwriting cycle for health care liability? And if you can unpack some of the growth drivers in the sector and how we should think about growth going forward this year?

Sure. I think it's a marketplace in flux. The last several years have experienced an increase in sexual abuse and molestation claims. And part of that was driven by the creation of these reviver statutes that suddenly brought claims to light that then got reported. I think the marketplace is bifurcating somewhat in that some people are just saying, well, it's behind us, and they're prepared to give full coverage for that. We think it's very situational in terms of attachment points and retentions. So I think overall, we're going to continue to see growth in that space driven mostly by hospitals themselves. I think senior care also, some areas though, are still — this goes back to different pockets again — there are some areas where people just get really aggressive. And so it's difficult to say. I don't know how satisfying that answer was because it really goes on a risk-by-risk basis. People sometimes they get confronted, we believe, with having to make budgets for the month or the quarter and suddenly get a lot more aggressive. But we think our positioning, our reputation where people like capping us on their business, I think, holds us in good stead for increasing our volume in that space.

Okay. And then my follow-up is on cyber. I'm just wondering how you protect yourself against tail risk as we see new AI technologies because — just wondering how you're thinking about the risk that some of those new technologies could bring into the world of cyber insurance if, I guess, cyber attacks become more frequent or more destructive.

Sure. We obviously think about it a lot. It is a concern on one level. But on the other hand, the type of business we're going after and the way we underwrite the business, we think, makes a big difference. Keep in mind that our large Fortune 500 type cyber risk is business that we have become less and less competitive on. And we've definitely lost ground in that space. We have picked up ground in the space that Brandon was talking about in the Express area. And there, once again, the underwriting is key: we believe things like having multifactor authentication makes a big difference, making that an important screen of what it is we're looking at, whether they operate in the cloud or not. Those are the screens we're using. So I think our underwriting will provide a lot of protection for us. Also, I think there's a general conversation that all these new cyber hacking tools are not only available to bad actors; the good guys have them also. So I'm sure there's going to be a battle going forward: as fast as people evolve to try and hack systems, the defenders are finding ways to close systems. So for the time being, we're very comfortable with what we see, the way we do it, and the type of business we're writing.

Our next question comes from Pablo Singzon at JPMorgan.

Can you hear me?

Yes.

All right. Perfect. One first question for Brad. I just wanted to follow up on the deferrable cost, right? Were these costs that you previously reported as OpEx will now amortize way back over time? And if yes, are you able to size how much the impact was in the first quarter?

Yes and yes. Yes. So they will amortize into the acquisition costs. And when we submit the 10-Q later today, you'll see the full disclosure on how much that is. Happy to point that out to you later if you want.

And then second one for Brandon. So some insurers and brokers have said they're seeing more small case E&S moving back to admitted on the margin. It probably doesn't matter as much to you just given your growth rate of where you are. But I wonder, as you're looking out to the broader market, small case market, if you're seeing any of that trend?

We are — especially as the property market continues to experience declines, we see admitteds playing more in what is traditionally an E&S segment. We're comfortable with the experience we're delivering to brokers. We're comfortable with the relationships we have with them. And we don't expect the emergence or reemergence of admitted markets to have any effect on the growth rate for digital.

And as a reminder, we do not write property insurance.

Our next question comes from Daniel Lee at Morgan Stanley.

My first one is just on the expense ratio. I know you guys are scaling and longer term, maybe I just wanted to think — what's a good way to think about the expense ratio as you guys continue to grow the business and maintain momentum with your tech investments and with Express. Is lower operating expense ratio possible in the long term for Bowhead?

Hey Dan, this is Brad. Thanks for the question. Yes, I think — you're right. Look at it longer term, like I said, there can be volatility each quarter for the expense ratio. Below the 30s in total is where we are comfortable at. Not really — we haven't really talked about the split between acquisition and operating. But I think if you're below the 30s for the remaining quarters of this year, I think that's probably pretty good.

My second question is also on the Casualty segment. I know construction projects has been a driver in the past, but with the market kind of softening now, how should we think about the business opportunities going forward for construction? Or how should we think about construction in 2026?

Sure. We're still seeing opportunities in that space. It's still an important driver of ours. Obviously, we can't predict what's going to be in the news, whether that starts to slow down construction projects or if interest rates were to spike. But at the current time, we're seeing a steady-as-she-goes environment in the construction opportunities for our book.

Our next question comes from Paul Newsome at Piper Sandler.

A couple of broad questions. One is we focus a lot on pricing. I wanted to ask if you're seeing any changes in terms and conditions. I tend to think of that as a pretty important determinant of rational or irrational behavior in the market. Anything out there of note with terms and conditions in the businesses that you're running?

I would say it's mostly in the pricing world that we're seeing changes, particularly in publicly traded D&O, where we're seeing people doing risks at rates per million that we think are not wise. And that's caused a decrease in that business for us. I mentioned earlier about the SAM coverage, sexual abuse and molestation with health care. Different markets are somewhat sporadic on that in terms of when they give it and how they give it. But I would say the biggest driver — to the extent that there's a driver of the market going south — would be price. People maybe having had a good few years and thinking that they can still drive things lower. We don't see that in the casualty space. We're still seeing rate increases in that space. But we have not seen that much, I would say, in the broadening of coverage area. There's still a good market for our Baleen product that Brandon talked about that offers somewhat restricted coverage. That hasn't diminished.

That's great. Second question, just any updates? It doesn't sound like you are, but I just want to make sure any updates on capital management philosophy here.

Yes, no updates other than maybe the reinsurance changes will help us. So that was something we plan to do. Anyway, the increase in our ceding quota share was more of a capital play than it was an appetite change or anything like that. So I think the debt raise we did in Q4 of last year should be enough to last us at least through this year. Reinsurance changes help. We also have a credit facility available for $35 million with an accordion of $15 million. So I think we're good this year, absent any growth much higher than we expected or something that would hopefully be good news. So I think we're set on capital.

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.

Thank you. Bowhead delivered another strong quarter to start the year. Thank you to our Bowhead team members for your continued dedication and hard work. To everyone else joining us on the call today, we appreciate your support, and we'll speak to you along the way. Thank you.

This concludes today's call. Thank you, everyone, for joining. You may now disconnect.