Conference Transcript - BOW 2026-03-11

Joe Colletti, Analyst — RBC Capital Markets

Welcome to Innovators and Ideas, an interview series from RBC Capital Markets, where we explore bold thinking and impactful leadership shaping the future of the financial sector. I'm your host, Joe Colletti. Today, we're at RBC's Global Financial Institutions Conference in New York, and I'm speaking with Stephen Sills, CEO of Bowhead Specialty Holdings, Inc., a specialty insurance group built on deep underwriting expertise and a clear vision for disciplined, sustainable growth. Stephen, welcome to the podcast.

Stephen Sills, CEO

Thank you for having me.

Joe Colletti, Analyst — RBC Capital Markets

So I want to start with your vision, which is where we start with most of our guests. When you set out to build Bowhead, how has your original vision then evolved and changed to where it is now?

Stephen Sills, CEO

Well, I think it's been a matter of executing on the vision. The vision hasn't really changed. In 2020, the market was pretty much in disarray. I think a lot of companies had been writing business for a lot of years at less than optimal price. And there was a large reshuffling of how business was placed. At that point in time, accounts that bought large limits had to go from maybe four carriers giving them $100 million in capacity to maybe 15 or 20 carriers giving them $100 million in capacity. We realized at that point in time that there was going to be an opportunity for a new company to come in there and fill in some of those holes. And we were extremely well-received by the market. So we had the vision originally that there was craft business, which is what I was talking about, that buys large limits, and what we call flow business, business that is generally small, technology-enabled. A couple of years ago, we started building, the first step was a product called Baleen. And Baleen was a company, a part of our organization that enabled us to turn business around in minutes, be able to issue policies within minutes, restricted coverage, wholesale lines only. And that's been quite successful from a standing start. Within a year, we did about $21 million in business. We've now taken that technology and are applying it to smaller standard type business. started doing that with cyber business and we're soon going to be doing it with small primary

Joe Colletti, Analyst — RBC Capital Markets

casualty business. So you mentioned the craft business and we know you talked about your business being rooted in this craft underwriting, which we've seen before. How does that foundation continue to shape how you think about things like growth and risk and also differentiation

Stephen Sills, CEO

in today's market. I kind of view it as like my loose brick philosophy, whereas you're competing against somebody and their wall. How do you exploit the weaknesses in their wall? And that wall, the weaknesses can generally be in price, service, coverage. So if you go out there and bring in high quality underwriters who have good broker relationships, and design your products to make an underwriting profit in a moment of transition that we saw in 20, it's a good time to jump in and establish a beachhead. We did that. We originally partnered with American Family. We still have a great relationship with them and also with Gallatin Point that was a major capital provider to us. We thought it was very important we started out to establish ourselves with high-quality paper. And there were two ways of going about it. Some people started out, raised a billion-plus of money, maybe got an A-minus rating, and started to write business. Well, we thought it was best to scale the business with just-in-time capital, but having a high-quality partner in American family. And they've been a phenomenal, fast-moving partner for us and enabled us to get into the business right away.

Joe Colletti, Analyst — RBC Capital Markets

So that's interesting. So I want to pivot a little bit to ENS's specialty markets, which, again, we know we're in an interesting world. There's a lot of macro force at play. We have rates. It's very competitive in your space, as you've mentioned. Can we talk about some of the bigger tailwinds and headwinds that you're watching over the next 6 to 12 months and how sort of client needs, competition, and kind of like the risk dynamics in particular,

Stephen Sills, CEO

how they continue to evolve? I think last year we were in a pretty hard market. I think we're in a hard market today, but I am cautious as to what could happen in the future in terms of will rates start to moderate. One of the major things that enabled us to get into the business was that people, as I mentioned earlier, had been reducing capacity. What we haven't seen is people competing on capacity where people who before did five and now want to put out 25 million in limits. We haven't seen that. So I think that will enable the marketplace to be stable. We have seen brokers create sidecar vehicles, which I think will create a bit of a downward pressure on the marketplace, but it remains to be seen how strong that pressure will be. But at the current time, I think we like what we see in the marketplace. And I think our relationship with brokers, we're about 80% wholesale business that we do. And we think we have good support from the wholesale community because of how much we're dedicated to them. And so we're comfortable working with them going forward also.

Joe Colletti, Analyst — RBC Capital Markets

When you think about the wholesale community, you talk about your dedication to them. What does that entail? How did you decide that that was the way we were going to go with the business?

Stephen Sills, CEO

Well, I think the wholesale community understands the specialty business in a way that aligns very much with the way we think about the business. There are certain lines, like, for example, publicly traded D&O, where we do wholesale and retail. In large publicly traded companies, Fortune 100 companies for directors and officers liability, much of that business, particularly today, is in the retail community. So that's not an issue. In the casualty space, we are 100% wholesale. And we don't write Fortune 1000 type business, which is frequently in the retail domain. When you're very much wholesale-only business, particularly like we are in the casualty space, the wholesale brokers, we believe, will support us more because one thing we will not do is if a retailer goes to a wholesaler, the wholesaler places the business with us, and the following year, the retailer says, oh, so that's the market you used. I'll just go to them directly. There are some markets that will then recognize a broker record letter and do business with the retailer. We will not do that. And because of that mutual support, we think it serves us and the wholesalers very well over time.

Joe Colletti, Analyst — RBC Capital Markets

You know, another thing I wanted to ask you about, post-IPO, Bowhead has obviously levers to grow. How do you balance that organic expansion with platform investment? And where does capital deployment create sort of the most long-term advantage for your company?

Stephen Sills, CEO

Great question, because it goes back to the original vision question of how are we going to build the business that's sustainable cross-market cycle? And we believe the answer is in the small, mid-size business. So the investment is in the platform that's going to leverage underwriting talent. So if you look at the large craft business we do, we do a major construction project. We've got underwriters, 20, 30 years of experience that spend days working on that kind of account. So we're not getting away from that. I don't think anybody's getting away from that anytime soon. What we've done is invest in high quality technology. So, for example, right now we have a system. This system happens to be called Calepa. And what it does is it prioritizes the pile for our craft underwriters. So the pile is, the top of the pile is from brokers who we have a history of doing business with and types of risks that we have a history of success. So the underwriter doesn't waste their time working on things, looking at things from brokers that don't support us or in lines of business that are not good for us. Then when the underwriter opens up the file, all the third party data is all displayed there for them to make a decision. Now, in the smaller business, if you're working on things that are $5,000 or $8,000 in premium, if the technology can help put it on the underwriter's plate with everything or what they need right there and suggested rates and things of what we can and can't do, and the underwriter can then do that risk in 15 minutes or less, that's a great point for us. And we don't need an underwriter who has 20 years of experience on doing that. We can do that with underwriters that have five years of experience doing that, which also helps us from a expense ratio standpoint.

Joe Colletti, Analyst — RBC Capital Markets

You talked about digital underwriting platform. You embraced automation, obviously, in some key areas. Where else do you see the big opportunities? Is that one of the big opportunities? Are there more areas that you're looking at when it comes to transformation of the company?

Stephen Sills, CEO

We think last year, five years old, we did about, give or take, $800 million in business in a hundreds of billions of dollar world. We think there's plenty more to say grace over. We don't think we're running at a runway. It's just the beginning. Just the beginning. And that small business, once again, between the technology in the specialty space uh we think is uh is a winner for the real long term but we always always talk about how this

Joe Colletti, Analyst — RBC Capital Markets

is a period of just general immense change across the board um thinking about your leadership for a minute and the principles that have kind of driven you as a founder as a ceo what do you think is to be required from leaders in this space to really navigate what's coming next?

Stephen Sills, CEO

Well, I think it's important that everybody in senior leadership, everybody throughout the company doesn't look at their job as a task. They look at their job as, how am I going to satisfy my brokers? How am I going to make an underwriting profit? What am I going to have to do to continue this and perpetuate the business. Now, the thing that drives that is the culture of the organization. I've always liked the definition of culture as the thing that gets people to do what you'd like them to do when there's nobody around to tell them what to do. And so we have a very solid culture in our organization that drives people to fulfill what the vision is. How do we help our brokers continue to make an underwriting profit? And how do we all get along with one another and work really well together? What keeps you up at night? I'd be remiss if I didn't mention social inflation, you know, the concern that could there be a misalignment at what's happening with rates versus what's happening with the tort system. But, um, you know, it's things that we're on top of all the time, all the time with our, you know, our actuaries and our underwriters always talking about it. So, um, I think we've got

Joe Colletti, Analyst — RBC Capital Markets

that under control. I want to end with a little bit of a bigger picture question. Um, so our global research team puts out this product called RBC Imagine, which is encouraging investors, companies to think longer term as you think about the insurance segment what legacy norms do you see as potential bigger obstacles to future growth but i think also where do you see those bigger opportunities or forces emerging sort of faster in the space i think speed is a major competitive

Stephen Sills, CEO

advantage that we have and companies like us have that to be able to react to have actuaries that are looking over the horizon not just looking at what's happened in the past to have underwriters always thinking about what it takes to make an underwriting profit we got to keep moving and And it's important for us to make mid-course adjustments when it's proper. If it means letting a piece of business go because we can't get the premium we need, sometimes larger companies don't appreciate that. And they're more stuck in the process than they are the wisdom. And I think that when people are always aware that something bad can happen to them, if they don't make the right moves, you make better decisions. And so that's something we're always thinking about.

Joe Colletti, Analyst — RBC Capital Markets

I think that's the perfect way to end. Stephen, thanks so much for being here. Thanks for being at the conference. And hopefully we'll have you back again next year.

Stephen Sills, CEO

Thank you very much for having me.

Operator

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