BOW 10-K & 10-Q changes, risk factors and insider trading

•Our failure to comply with the terms of our credit facility,facility or senior notes indenture, including as a result of events beyond our control, could result in an event of default that could affect our business, financial condition, and results of operations.

•Our current debt and our ability to incur a substantial level of indebtedness may reduce our financial flexibility, affect our ability to operate our business, and divert cash flow from operations for debt service.

Our underwriting success depends on our ability to accurately assess the risks associated with the business we write and retain. E&S insurance covers risks that are typically more complex and unusual than standard risks and require a high degree of specialized underwriting. As a result, E&S risks often do not fit the underwriting criteria of standard insurance carriers, and are generally considered higher risk than those covered in the standard market. We rely on the experience of our underwriting staff in assessing those risks. If we misunderstand the nature or extent of the risks, we may fail to establish appropriate premium rates or terms and conditions which could adversely affect our financial results. In addition, our employees, including members of management and underwriters, make decisions and choices in the ordinary course of business that involve exposing us to risk.

The rapid evolution of artificial intelligence (“AI”) and technology in general may alter the competitive landscape. While we expect to continue to leverage technology, data, and analytics efficiently, it is possible that competitors will leverage AI and technology solutions more effectively which may adversely impact our competitive position. Competitors could enter the insurance market and further accelerate these trends. Our competitive position could be adversely impacted if we are unable to deploy, in a cost effective and competitive manner, technology or if our competitors collect and use data which we do not have the ability or access to utilize. A number of new, proposed or potential industry or legislative developments could further increase competition in our industry. Additionally, the possibility of federal regulatory reform of the insurance industry could increase competition from standard carriers.

As of December 31, 2024,2025, AmFam owns approximately 14.4%14.3% of our common stock. We leverage AmFam’s legal entities, ratings and licenses through the MGA Agreements and the Quota Share Agreement. Through our MGA Agreements, BSUI underwrites premiums on behalf of the AmFam Issuing Carriers. Through the Quota Share Agreement, as of December 31, 2024,2025, AmFam cedes 100.0% of this risk, along with the premiums to BICI and receives a ceding fee that is 2.0%2.75% on net premiums assumed. This ceding fee will increase to 3.25% on May 23, 2026 and 5.0% on May 23, 2027. Separately, anotheran AmFam subsidiary also negotiates reinsurance terms for its participation in our outward reinsurance program. Through our MGA Agreements, we also provide underwriting and claims handling services from BSUI to the AmFam Issuing Carriers. In essence, we originate business on the paper of AmFam through BSUI writing policies issued by AmFam under the name of AmFam and reinsure 100.0% of the insurance business we originate to BICI, since we do not currently have the ratings to write policies under our own name and on our own paper. As a result, we rely on our strategic partnership with AmFam and any inability to maintain our strategic relationship with AmFam would materially adversely affect our business. These contractual arrangements may terminate or be terminated under certain circumstances and there can be no assurance that this strategic relationship will continue in the future, including on the same or similar terms, and if not, that we would be able to find a suitable replacement or another strategic partnership on favorable terms if at all. In the event that the MGA Agreements were terminated and we were not able to find another carrier with similar financial strength ratings with which we could partner, our ability to write new and renewal business would be significantly impacted as the amount of business we could write directly on BICI paper without BICI having its own standalone financial strength rating from A.M. Best would be de minimis. See “––We may require additional capital in the future, which may not be available or may only be available on unfavorable terms.”

Due to our limited operating history, we have generated limited amounts of our own data and instead must rely on data from third parties. We use data from third parties in our BRATs and other underwriting tools as part of our underwriting process to evaluate risks and estimate losses. We rely on these third parties to help ensure that the data they provide is accurate. Inaccurate data could affect our ability to effectively estimate losses, resulting in actual losses that are materially different from our estimates, which could have an adverse impact on our business, financial condition and results of operations.

In addition, while we generally do not delegate underwriting and binding authority, we do distribute an insurance product through a program administrator in connection with a risk purchasing group to whom weour haveCasualty issueddivision has underwritten a master policy. See “Business—Marketing and Distribution” for additional information. While this program administrator is contractually obligated to follow our underwriting guidelines, it can issue individual certificates of insurance to policyholders without receiving our approval for each individual risk. If this program administrator takes excessive risks and fails to comply with our underwriting guidelines and the terms of its appointment, we could be bound on a particular risk or number of risks that were not anticipated when we developed the insurance product or estimated our potential losses and loss adjustment expenses. Such actions and excessive risk taking by the program administrator could adversely affect our results of operations.

BICI is required to comply with the Statutory Accounting Principles (“SAP”).SAP. SAP and various components of SAP are subject to constant review by the NAIC and its task forces and committees, as well as state insurance departments, in an effort to address emerging issues and otherwise improve financial reporting. Various proposals are pending before committees and task forces of the NAIC, some of which, if enacted and adopted on a state level, could have negative effects on insurance industry participants. The NAIC continuously examines existing laws and regulations. We cannot predict whether or in what form such reforms will be enacted and, if so, whether the enacted reforms will positively or negatively affect us.

Our investment portfolio consists almost entirely of cash, cash equivalents and investment-grade fixed-income securities. Although interest rates have slightly decreased recently, they have increased significantly since 2021.As2021. As rate increases cease or decline, a lower interest rate environment could place pressure on our net investment income, particularly as it relates to these securities and short-term investments, which, in turn, may adversely affect our results of operations. Conversely, increases in interest rates could cause the values of our fixed income securities portfolios to decline, with the magnitude of the decline depending on the duration of securities included in our portfolio and the amount by which interest rates increase. Some fixed income securities have call or prepayment options, which create possible reinvestment risk in declining rate environments. Other fixed income securities, such as mortgage-backed and asset-backed securities, carry prepayment risk, or, in a rising interest rate environment, may not prepay as quickly as expected.

In addition, the NAIC has developed the IRIS, which is part of a collection of analytical tools designed to provide state insurance regulators with an integrated approach to screening and analyzing the financial condition of insurance companies operating in their respective states. IRIS is intended to assist state insurance regulators in targeting resources to those insurers in greatest need of regulatory attention. IRIS consists of two phases: statistical and analytical. In the statistical phase, the NAIC database generates key financial ratio results based on financial information obtained from insurers’ annual statutory statements. The analytical phase is a review of the annual statements, financial ratios and other automated solvency tools. The primary goal of the analytical phase is to identify companies that appear to require immediate regulatory attention. A ratio result falling outside the usual range of IRIS ratios is not considered a failing result; rather, unusual values are viewed as part of the regulatory early monitoring system. Insurance regulators will generally begin to investigate, monitor or make inquiries of an insurance company if four or more of the company’s ratios fall outside the usual ranges. Although these inquiries can take many forms, regulators may require the insurance company to provide additional written explanation as to the causes of the particular ratios being outside of the usual range, the actions being taken by management to produce results that will be within the usual range in future years and what, if any, actions have been taken by the insurance regulator of the insurers’ state of domicile. Regulators are not required to take action if an IRIS ratio is outside of the usual range, but depending upon the nature and scope of the particular insurance company’s exception (for example, if a particular ratio indicates an insurance company has insufficient capital) regulators may act to reduce the amount of insurance the company can write or revoke the insurer’s certificate of authority and may even place the company under supervision.

A change in law, including relating to certain perils for which we write insurance or reinsurance, may have a significant impact on our ability to respond to certain events, including the manner and time frame for processing claims, the development of claim severity or the interpretation of the underlying policies. For example, plaintiff attorneys have been lobbying states to pass statutes prohibiting insurers from issuing defense within limits policies, particularly in the medical malpractice space, and Nevada has enacted a statute to that effect. If such a statute were to pass in a jurisdiction in which we operate, that would impede our ability to accurately price such policies. Additionally, new laws or regulations, may curtail the use of particular types of information underwriter consider when evaluating a risk. For example, geographic crime or credit scoring is considered by our underwriters for certain lines of business. Some consumer groups and/or regulators have alleged that the use of credit scoring violates the law by discriminating against persons belonging to a protected class and are calling for the prohibition or restrictions on the use of credit scoring in underwriting and pricing. If such prohibitions extended to criteria we currently utilize to evaluate risks, our ability to underwrite or price those exposures would be limited. In addition, the statute of limitations for certain types of claims have been extended in certain states, such as New York through the Adult Survivors Act, and this could retroactively extend the period for which an insurance company has exposure. Changes in law and practice, including relating to certain perils for which we write insurance or reinsurance, may have a material adverse effect on our business, financial condition, results of operations and prospects.

As a company with a remote-friendly operating model, our business is highly dependent on our information technology and telecommunications systems, including our underwriting systems. We rely on these systems to interact with brokers and insureds, to underwrite business, to prepare policies and process premiums, to perform actuarial and other modeling functions, to process claims and make claims payments and to prepare internal and external financial statements. We also rely on our information and telecommunications systems for employees to interact with each other within the company, as most employees work on a remote basis a majority of their time as opposed to in physical offices. SomeBecause some of these systems may include or rely on third-party systems provided by third party service providers and/or not located on our premises or under our control.control including cloud-based, we could experience service denials or failures of controls if demand for our service exceeds capacity or a third-party system fails or experiences an interruption. Business interruptions and failures of controls could also result if our internal systems do not interface with each other as intended or if changes to such systems or our other business processes.

We and our service providers face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of systems and confidential information, including vulnerabilities that could be exploited by threat actors in commercial software that is integrated into our (or our suppliers’ or service providers’) IT systems, products or services. The risk of a data security breach or a disruption has generally increased in frequency, intensity and sophistication.sophistication, and increased use of AI may heighten these risks. Techniques used to compromise or sabotage systems change frequently, may originate from less regulated and remote areas of the world and be difficult to detect and generally are not recognized until launched against a target. Events such as natural catastrophes, terrorist attacks, industrial accidents, computer viruses, ransomware, a security breach by an unauthorized person, employee error, malfeasance, faulty password management or other irregularity and other cyber-attacks may cause our systems to fail or be inaccessible for extended periods of time. We have implemented management, operational, and technical security controls designed to identify, protect, detect, respond to and recover from breaches of security, such as business contingency plans and other reasonable plans to protect our systems, whether housed internally or through third-party cloud services. In addition, while we generally monitor vendor risk, including the security and stability of our critical vendors, we may fail to properly assess and understand the risks and costs involved in the third-party relationships. However, we cannot guarantee that these measures will be effective and sustained or repeated system failures or service denials could severely limit our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or otherwise operate in the ordinary course of business. Even if the vulnerabilities that may lead to the foregoing are identified, we may be unable to adequately investigate or remediate due to attackers using tools and techniques that are designed to circumvent controls, avoid detection and remove or obfuscate forensic evidence.

We intend to grow our business in the future, which could require additional capital, systems development and skilled personnel. However, we must be able to meet our capital needs, expand our systems and our internal controls effectively, allocate our human resources optimally, identify, hire, train and develop qualified employees and effectively incorporate the components of any business we may acquire in our effort to achieve growth. The failure to manage our growth effectively could have a material adverse effect on our business, financial condition and results of operations. We also have a restriction in the AmFam Quota Share Agreement concerning the amount of gross written premium we can write on behalf of the AmFam Issuing Carriers through the MGA Agreement. An inability to amend the AmFam Quota Share Agreement or find an alternative issuing carrier may also limit our potential growth.

Our failure to comply with the terms of our credit facility,facility or senior notes indenture, including as a result of events beyond our control, could result in an event of default that could affect our business, financial condition, and results of operations.

The Company has a Credit Agreement (the “2025 Credit Agreement”) with certain lenders and JPMorgan ChasePNC Bank, N.A.,National Association, as administrative agent, swingline lender and issuing bank. The 2025 Credit Agreement provides for a senior secured revolving credit facility (the “2025 Facility”) in the aggregate principal amount of $75$35 million, which includes a 5$5 million sub-facility for letters of credit.credit, and an accordion feature permitting the Company to request a one-time increase in total commitments of up to $15 million, subject to lender participation. The Company also completed a public offering of $150 million aggregate principal amount of its 7.75% Senior Notes due 2030 (the “Senior Notes”). The Senior Notes were issued pursuant to an indenture, dated as of November 25, 2025 (the “Base Indenture”), as supplemented by a First Supplemental Indenture, dated as of November 25, 2025 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”). If there werewas an event of default under the Facility,2025 Facility or the lenders under the Facility could causeIndenture, all amounts outstanding with respect to thatthose debtdebts can be caused to be due and payable immediately. Our assets or cash flow may not be sufficient to fully repay borrowing under the 2025 Facility or the Indenture if accelerated upon an event of default. Furthermore, if we are unable to repay, refinance, or restructure our2025 Facility, the lenders under the 2025 Facility could proceed against the collateral granted to them to secure such indebtedness, which could force us into bankruptcy or liquidation. As a result, any default by us on our debt could have a materially adverse effect on our business, financial condition, and results of operations.

Our current debt and our ability to incur a substantial level of indebtedness may reduce our financial flexibility, affect our ability to operate our business, and divert cash flow from operations for debt service.

We have incurred substantial indebtedness under the Indenture and may incur substantial indebtedness under the Facility2025 Facility, or other debt instruments in the future, and, if we do so, the risks related to our level of indebtedness could increase. Our future borrowings will require interest payments and will need to be repaid or refinanced, which could require us to divert funds identified for other purposes to debt service and could create additional cash demands or impair our liquidity position and add financial risk. We may also sell additional debt or equity securities to help repay or refinance our borrowings. We do not know whether we would be able to take any of these actions on a timely basis, on terms satisfactory to us or at all.

BorrowingsAlthough interest payable on the Senior Notes is at a fixed rate, borrowings under the 2025 Facility bear interest at variable rates based on prevailing conditions in the financial markets, and changes to such variable market rates may affect both the amount of cash we must pay for interest as well as our reported interest expense. Assuming the 2025 Facility were to be fully drawn, a 100-basis point increase to the applicable variable rate of interest would increase the amount of interest expense by $0.75$0.35 million per annum. If we are unable to generate sufficient cash flows to pay the interest expense on our debt, future working capital, borrowings, or equity financing may not be available from which to pay or refinance such debt.

The 2025 Facility containsand Indenture contain restrictions on our ability to operate our business and to pursue our business strategies.

The Indenture and/or 2025 Facility restricts,restrict, subject to certain exceptions, among other things, our ability and the ability of our subsidiaries to:

You cannot be certain that an active trading market willfor continueour orcommon a specific share pricestock will be established.continue.

As of December 31, 2024,2025, we have an aggregate of approximately 32,662,68332,783,451 shares of our common stock outstanding. Of these outstanding shares, all of the shares sold in our IPO and subsequent secondary offering that closed on October 25, 2024 (the “Secondary Offering”) and block trade under taken by GPC Fund that closed on August 8, 2025 are freely tradable without restriction or further registration under the Securities Act, unless such shares are held by our directors, executive officers, or any of our affiliates, as that term is defined in Rule 144 under the Securities Act (“Rule 144”). As of December 31, 2024, all of our remaining sharesShares of common stock outstandingheld by AFMIC and GPC Fund, our directors and our executive officers are “restricted securities” within the meaning of Rule 144. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available. In connection with our IPOIPO, we entered into a Registration Rights Agreement with GPC Fund, AFMIC and our Chief Executive Officer, pursuant to which GPCthe Fund,stockholders AFMICparty to that agreement and their permitted transferees may require us to register the offer and sale of all or a portion of their shares of our common stock under the Securities Act, subject to certain customary conditions and exclusions. Sales of our common stock in the public market, or the perception that these sales could occur, could cause the market price of our common stock to decline and may make it more difficult for us to sell equity or equity-linked securities in the future at a time and at a price that we deem necessary or appropriate.

We have no current plans to pay cash dividends on our common stock. The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors, and will depend on, among other things, general and economic conditions, our financial condition, results of operations, capital requirements, general business conditions, legal, tax and regulatory limitations, contractual restrictions and other factors that our board of directors considers relevant. In addition, our ability to pay dividends on our capital stock is limited by the terms of the 2025 Credit Agreement and may be further restricted under the terms of any future debt or preferred securities or future credit facility. See “Dividend Policy.”

•a classified board of directors, subject to a seven-year sunset,sunset from the time of our IPO, as a result of which our board of directors will initially be divided into three classes, with each class serving for staggered three-year terms;

For a discussion of our year ended December 31, 20232024 results and a comparison between the years ended December 31, 20232024 and 2022,2023, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form S-110-K Registrationfor Statement,the year ended December 31, 2024, filed with the SEC on OctoberFebruary 21,27, 2024.2025.

We offer commercial specialty P&C insurance products to policyholders that vary in size, industry and complexity, focusing on casualty, professional liability, and healthcare liability risks. We provide “craft” underwriting solutions, which require deep underwriting and claims expertise in order to produce attractive financial results. In May 2024, we supplemented our “craft” solution with our “flow” underwriting operation, which is a streamlined, tech-enabled low touch form of underwriting, focused on small, niche and hard-to-place risks. Our policies are primarily written on a non-admitted, or E&S basis, which is free of rate and policy form restrictions, and provides the flexibility to rapidly adjust to emerging market opportunities. We distribute our products through carefully selected relationships with leading distribution partners in both the wholesale and retail markets.

Net earned premiums represent the earned portion of our net written premiums. Our insurance policies generally have a term of one year but occasionally could be as long as seventen years, and premiums are earned pro rata over the term of the policy.

Net realized investment gains (losses)

Net realized investment gains (losses) are a function of the difference between the amortized cost of securities sold and the proceeds received by the Company upon the sale of a security. Unrealized investment gains (losses) on fixed maturity securities are recorded within accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

Non-operating expenses represent expenses related to various transactions that we consider to be unique and non-recurring in nature, includingsuch as expenses related to our IPO and Secondarysecondary Offering.offerings, and other such offerings or registrations.

Warrant expense represents compensation costcosts for warrants issued to AmFam for the right to purchase shares of the Company’s common stock.

CreditInterest facility interest expensesexpense and financing fees

Credit facility interestInterest expenses and fees represent certain costs associated with theour Creditsenior Agreementunsecured (asnotes defined below), which provides for aand senior secured revolving credit facility.facilities.

Foreign exchange losses (gains) represent the remeasurement of a non-U.S. dollar operating expense to U.S. dollars due to the fluctuations in the exchange rate. The change in the liability due to the fluctuations in the exchange rate are included within the Consolidated Statements of Income and Comprehensive Income (Loss) at the end of each period.

Underwriting income is a non-GAAP financial measure defined as income before income taxes excluding the impact of net investment income, net realized investment losses,gains (losses), other insurance-related income, non-operating expenses, warrant expense, credit facility interest expenses and financing fees, loss on extinguishment of credit facility, foreign exchange losses (gains), and certain strategic initiatives. See “—Reconciliation of Non-GAAP Financial Measures” for a reconciliation of underwriting income to income before income taxes, which is the most directly comparable financial metric prepared in accordance with U.S. GAAP.

Adjusted net income is a non-GAAP financial measure defined as net income excluding the impact of net realized investment losses,gains (losses), non-operating expenses, loss on extinguishment of credit facility, foreign exchange losses (gains), and certain strategic initiatives. See “—Reconciliation of Non-GAAP Financial Measures” for a reconciliation of adjusted net income to net income, which is the most directly comparable financial metric prepared in accordance with U.S. GAAP.

Diluted adjusted earnings per share is a non-GAAP financial measure defined as adjusted net income divided by the weighted average common shares outstanding for the period, reflecting the dilution that may occur if equity based awards are converted into common stock equivalents as calculated using the treasury stock method. See “—Reconciliation of Non-GAAP Financial Measures” for a reconciliation of diluted adjusted earnings per share to diluted earnings per share, which is the most directly comparable financial metric prepared in accordance with U.S. GAAP.

NetGross written premiums increased $116.7$167.1 million, or 34.9%,24.0%, to $451.4$862.8 million for the year ended December 31, 20242025 from $334.7$695.7 million for the year ended December 31, 2023.2024. The increase was primarily due to the growth in gross written premiums forwas driven by our increasing renewal book and the yearcontinued endedgrowth Decemberin 31,our 2024,platform partiallyacross offsetall four divisions. Our Casualty division led the growth, primarily from our Excess Casualty portfolio, followed by the increasegrowth in ceded written premium primarily due to the volume of written premiums subject to the ceded quota share reinsurance treaties within our CasualtyBaleen underwriting division and the Cyber line of business within our Professional LiabilitySpecialty division.

Net earnedwritten premiums increased $121.2$106.8 million, or 45.9%,23.7%, to $385.1$558.2 million for the year ended December 31, 20242025 from $263.9$451.4 million for the year ended December 31, 2023.2024. The increase in net written premiums was primarily due to the earninggrowth of increasedin gross written premiums for the year ended December 31, 2025. This growth was partially offset by the earningincrease of increasedin ceded written premiumspremiums, underdriven ourby cededthe reinsurancecessions treaties.to the commercial auto quota share treaty and the increase in the proportion of Casualty subject gross written premium compared to the prior year.

Net investment income increased $20.8$17.7 million, or 107.1%,44.1%, to $57.8 million for the year ended December 31, 2025 from $40.1 million for the year ended December 31, 20242024. fromThe $19.4increase millionin net investment income is primarily due to a higher average balance of investments for the year ended December 31, 2023.2025 The increase was dueand, to thea growthlesser in our investment portfolio, stemming from net cash provided by operating activities and net proceeds we received from the IPO, andextent, higher yields on invested assets.

Income tax expense was $13.5 million for the year ended December 31, 2025, compared to $12.3 million for the year ended December 31, 2024,2024. comparedOur toeffective $7.1tax millionrate was 20.1% for the year ended December 31, 2023.2025, Ourcompared effective tax rate wasto 24.3% for the year ended December 31, 2024, compared to 22.0% for the year ended December 31, 2023.2024. The effective tax rate may vary slightlydiffers from the statutory tax rate of 21.0% primarily due to state taxesresearch and certaindevelop credits net of related uncertain tax adjustmentsposition forreserves, permanentexcess differences.tax benefits from the vesting of stock-based compensation, and state and local income and franchise taxes, partially offset by estimated non-deductible excess officer compensation and non-deductible expenses.

We define underwriting income as income before income taxes excluding the impact of net investment income, net realized investment losses,gains (losses), other insurance-related income, non-operating expenses, warrant expense, credit facility interest expenses and financing fees, loss on extinguishment of credit facility, foreign exchange losses (gains), and certain strategic initiatives. Underwriting income represents the pre-tax profitability of the Company's underwriting operations and allows us to evaluate our underwriting performance without regard to net investment income. We use this metric as we believe it gives our management and other users of our financial information useful insight into our underlying business performance. Underwriting income should not be viewed as a substitute for income before income taxes calculated in accordance with U.S. GAAP, and other companies may define underwriting income differently.

(1)Strategic initiatives for the yearsyear ended December 31, 2024 and 2023 represent costs incurred to set up our Baleen Specialty division, which is recorded in operating expenses within the Consolidated Statements of Income and Comprehensive Income (Loss).Income. The costs incurred primarily represent expenses to implement the new platform and processes supporting the Baleen Specialty division.

We define adjusted net income as net income excluding the impact of net realized investment losses,gains (losses), non-operating expenses, loss on extinguishment of credit facility, foreign exchange losses (gains), and certain strategic initiatives. Adjusted net income excludes the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. We calculate the tax impact only on adjustments that would be included in calculating our income tax expense using the estimated tax rate at which we received a deduction for these adjustments. We use adjusted net income as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Adjusted net income should not be viewed as a substitute for net income calculated in accordance with U.S. GAAP, and other companies may define adjusted net income differently.

_________________ (1)Strategic initiatives for the yearsyear ended December 31, 2024 and 2023 represent costs incurred to set up our Baleen Specialty division, which is recorded in operating expenses within the Consolidated Statements of Income and Comprehensive Income (Loss).Income. The costs incurred primarily represent expenses to implement the new platform and processes supporting the Baleen Specialty division.

We define diluted adjusted earnings per share adjusted net income divided by the weighted average common shares outstanding for the period, reflecting the dilution that may occur if equity based awards are converted into common stock equivalents as calculated using the treasury stock method. We use diluted adjusted earnings per share as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Diluted adjusted earnings per share should not be viewed as a substitute for diluted earnings per share calculated in accordance with U.S. GAAP, and other companies may define diluted adjusted earnings per shares differently Diluted adjusted earnings per share for the years ended December 31, 2024 and 2023 reconciles to diluted earnings per share as follows:differently.

BSHI is organized as a Delaware holding company with our operations primarily conducted by our wholly- owned insurance company subsidiary, BICI, domiciled in the State of Wisconsin, BSUI, our wholly-owned managing general agency, and Bowhead Underwriting Services, Inc. (“BUSI”),BUSI, our wholly-owned services company subsidiary.

Prior to the IPO, BSHI received capital contributions from BIHL. Following our Secondarysecondary Offeringoffering on October 25, 2024, since BIHL is no longer a holder of our common stock, BSHI may receive cash through (i) drawing on the 2025 Facility (as defined below) that we entered into on AprilNovember 22,26, 2024,2025, (ii) issuance of equity and debt securities, (iii) payments from our subsidiaries pursuant to our consolidated tax allocation agreement and other transactions and (iv) dividends from our insurance company subsidiary. We also may use the proceeds from these sources to contribute funds to our insurance company subsidiary in order to support premium growth, pay dividends and taxes and for other business purposes.

Our insurance company subsidiary, BICI, is licensed and domiciled in the State of Wisconsin. Under Wisconsin law, BICI is required to maintain specified levels of statutory capital and surplus and is restricted by law as to the amount of dividends it can pay without the approval of regulatory authorities. BICI is restricted from paying dividends by the lesser of: (i) 10% of statutory capital and surplus as of the preceding December 31, or; (ii) the greater of: (A) statutory net income for the calendar year preceding the date of the dividend distribution, minus realized capital gains for that year, or (B) aggregate of net income for the three monthscalendar years preceding the date of the dividend or distribution, minus realized capital gains for those calendar years and minus dividends paid or credited and distributions made within the first two of the preceding three calendar years. As of December 31, 2024,2025, the maximum dividend that BICI could pay without the approval of regulatory authorities was $16.1$34.1 million. Insurance regulators have broad powers to prevent the reduction of statutory surplus to inadequate levels, and there is no assurance that dividends of the maximum amounts calculated under any applicable formula would be permitted. State insurance regulatory authorities that have jurisdiction over the payment of dividends by our insurance company subsidiary may in the future adopt statutory provisions more restrictive than those currently in effect.

Revolving Credit FacilityFacilities

On April 22, 2024, the Company entered into a Credit Agreement (the “2024 Credit Agreement”) with certain lenders and JPMorgan Chase Bank, N.A., as administrative agent, swingline lender and issuing bank. The 2024 Credit Agreement providesprovided for a senior secured revolving credit facility (the “2024 Facility”) in the aggregate principal amount of $75 million, which includesincluded a $5 million sub-facility for letters of credit. All obligations under the 2024 Facility and obligations in respect of certain cash management services and swap agreements with the lenders and their affiliates arewere (i) unconditionally guaranteed by certain of the Company’s subsidiaries and (ii) secured by a first-priority perfected lien in substantially all of the Company’s and the subsidiaries guarantors’ assets. The 2024 Credit Agreement containscontained certain customary covenants, including financial maintenance covenants. The Company was in compliance with all of the Facility’s covenants as of December 31, 2024. The Facility matures on the earlier of April 22, 2027, or 91 days prior to the MGA Agreement termination date where no MGA Agreement replacement is found. The Company may request that the lenders extend the maturity date by an additional year, provided that the request is made no earlier than 90 days and no later than 55 days prior to the first or second anniversary of the effective date of the Facility.

As of December 31, 2024,2025, we did not have any borrowings outstanding under the 2025 Facility.

For the year ended December 31, 2024,2025, net cash used in investing activities ofwas $325.9$464.4 million was due to the growth in our business operations. For the year ended December 31, 2024,2025, funds from operations and net proceeds from the IPO, together with proceeds received from the sale and maturity on fixed maturity securities of $281.2 million and short-term investments of $9.0 million, were used to purchase fixed maturity securities of $603.0$828.2 million. For the year ended December 31,2025, we received proceeds from sales of and maturities of fixed maturity securities of $359.3 million and short-term investments of $9.9$10.0 million. Net cash used in investing activities also includes purchases of property and equipment of $3.1$5.6 million.

Foreign exchange losses (gains) losses

Foreign exchange losses (gains) losses represent the remeasurement of a non-U.S. dollar operating expense to U.S. dollars due to the fluctuations in the exchange rate. The change in the liability due to the fluctuations in the exchange rate are included within the Condensed Consolidated Statements of Income and Comprehensive Income at the end of each period.

Underwriting income is a non-GAAP financial measure defined as income before income taxes excluding the impact of net investment income, net realized investment losses, other insurance-related income, non-operating expenses, warrant expense, interest expenses and financing fees, loss on extinguishment of credit facility, foreign exchange losses (gains), losses, and certain strategic initiatives. See “—Reconciliation of Non-GAAP Financial Measures” for a reconciliation of underwriting income to income before income taxes, which is the most directly comparable financial metric prepared in accordance with U.S. GAAP.

Adjusted net income is a non-GAAP financial measure defined as net income excluding the impact of net realized investment losses, non-operating expenses, loss on extinguishment of credit facility, foreign exchange losses (gains), losses, and certain strategic initiatives. See “—Reconciliation of Non-GAAP Financial Measures” for a reconciliation of adjusted net income to net income, which is the most directly comparable financial metric prepared in accordance with U.S. GAAP.

Three Months Ended MarchJune 31,30, 2026 compared to Three Months Ended MarchJune 31,30, 2025

The following table summarizes our results of operations for the three months ended MarchJune 31,30, 2026 and 2025:

(2)For the three months ended MarchJune 31,30, 2026 and 2025, net income and adjusted net income are annualized to arrive at return on equity and adjusted return on equity.

The following table presents gross written premiums by underwriting division for the three months ended MarchJune 31,30, 2026 and 2025:

Gross written premiums increased $41.9$65.5 million, or 24.0%,28.2%, to $216.7$297.9 million for the three months ended MarchJune 31,30, 2026 from $174.8$232.4 million for the three months ended MarchJune 31,30, 2025. The increase in gross written premiums was driven by our increasing renewal book, new business and the continued growth in our platform across all four divisions. Our Casualty division led the growth with a $25.0$49.0 million increase, primarily from our Excess Casualty portfolio, followed by the growth in our Baleen Specialty division with ana $8.6$10.5 million increase.

For the three months ended MarchJune 31,30, 2026 and 2025, E&S(1) business made up 82.9%79.9% and 82.2%76.9% of gross written premiums, respectively, while admitted business made up 17.1%20.1% and 17.8%,23.1%, respectively. The 0.73.0 point increase in the proportion of E&S premiums was primarily attributable to an increase in admitted business written in our Casualty division related to real estate excess liability coverage written through a risk purchasing group, and the increase in proportion of Baleen Specialty division premiums, where policies are exclusively written on an E&S basis.

Net written premiums increased $23.5$32.1 million, or 20.2%,21.6%, to $140.3$181.0 million for the three months ended MarchJune 31,30, 2026 from $116.8$148.9 million for the three months ended MarchJune 31,30, 2025. The increase in net written premiums was primarily due to the growth in gross written premiums for the three months ended MarchJune 31,30, 2026. This growth was partially offset by the increase in ceded written premiums,premiums driven by the increase in our excess of loss treaty from 60.1% to 65%, as well as increased cessions to the quota share treaty coveringfrom our26% commercialto auto33.5% exposure.effective May 1, 2026.

Net earned premiums increased $27.0$24.8 million, or 24.6%,20.8%, to $136.8$144.0 million for the three months ended MarchJune 31,30, 2026 from $109.8$119.1 million for the three months ended MarchJune 31,30, 2025. The increase in net earned premiums was primarily due to the earning of increased gross written premiums offset by the earning of increased ceded written premiums under our ceded reinsurance treaties.

The following table summarizes the components of our loss ratio for the three months ended MarchJune 31,30, 2026 and 2025:

As communicated in the past, the existencedevelopment ofin our prior accident year reserveslosses were driven by expected loss ratios applied to net additional premiums that were billed and fully earned in the first quarter, but associated with policies from prior accident years. Once again, these amounts were not based on actual losses settling for more than reserved, and did not represent an increase in estimated reserves on unresolved claims.

The following table summarizes the components of the expense ratio for the three months ended MarchJune 31,30, 2026 and 2025:

Our expense ratio was 28.4% for the three months ended March 31, 2026 compared to 30.4% for the three months ended March 31, 2025, which was a decrease of 2.0 points. The decrease in our expense ratio was primarily driven by the 2.93.4 point decrease in our operating expenses ratio and a 0.3 point increase in other insurance-related income, which contributed to the lowering of our expense ratio. These improvements were partially offset by the 1.21.7 point increase in our net acquisition costs ratio.

The decrease in our operating expenses ratio was due to the continued scaling of our business, where net earned premiums grew at a higher rate than our expenses, as well as the prudent management of our expenses, including new estimates of deferrable costs.

The increase in our net acquisition costs ratio was driven by an increase in earned broker commissions due to changes in our portfolio mix and higher commission rates, an increase in the Ceding Fee, and deferred employment related underwriting costs, partially offset by an increase in earned ceding commissions from our ceded reinsurance treaties. Gross acquisition costs earned as a percentage of gross earned premiums was 17.0%17.7% for the three months ended MarchJune 31,30, 2026 compared to 15.9%16.1% for the three months ended MarchJune 31,30, 2025, and ceded earned commissions as a percentage of ceded earned premium was 29.2%29.3% for the three months ended MarchJune 31,30, 2026 compared to 29.0% for the three months ended 2025.

The combined ratio was 95.3%95.9% for the three months ended MarchJune 31,30, 2026, compared to 97.3%96.8% for the three months ended MarchJune 31,30, 2025. The 2.00.9 point decrease was duedriven toby the 2.0 point decrease in our expense ratio, partially offset by the 1.1 point increase in our loss ratio.

Return on equity was 14.1%13.8% for the three months ended MarchJune 31,30, 2026, compared to 12.0%12.4% for the three months ended MarchJune 31,30, 2025. The 2.11.4 point increase was primarily driven by the 40.1%30.8% increase in net income during the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, partially offset by the increase in average mezzanine equity and stockholders’ equity driven by the increase in retained earnings and additional paid-in capital for stock-based compensation.

Net investment income increased $5.5$5.1 million to $18.0$18.8 million for the three months ended MarchJune 31,30, 2026 from $12.6$13.7 million for the three months ended MarchJune 31,30, 2025. The increase in net investment income is primarily due to a higher average balance of investments during the three months ended MarchJune 31,30, 2026.

Income tax expense was $4.6$4.5 million for the three months ended MarchJune 31,30, 2026, compared to $3.0$3.6 million for the three months ended MarchJune 31,30, 2025. Our effective tax rate was 22.2%21.9% for the three months ended MarchJune 31,30, 2026, compared to 21.0%22.5% for the three months ended MarchJune 31,30, 2025. The effective tax rate differs from the statutory tax rate of 21.0% primarily due to estimated non-deductible excess officer compensation, state taxes,compensation and other non-deductible expenses.expenses, partially offset by excess tax benefits on the vesting of stock-based compensation.

(2) For the three months ended MarchJune 31,30, 2026 and 2025, net income is annualized to arrive at return on equity.

We define underwriting income as income before income taxes excluding the impact of net investment income, net realized investment losses, other insurance-related income, non-operating expenses, warrant expense, interest expenses and financing fees, loss on extinguishment of credit facility, foreign exchange losses (gains), losses, and certain strategic initiatives. Underwriting income represents the pre-tax profitability of the Company's underwriting operations and allows us to evaluate our underwriting performance without regard to net investment income. We use this metric as we believe it gives our management and other users of our financial information useful insight into our underlying business performance. Underwriting income should not be viewed as a substitute for income before income taxes calculated in accordance with U.S. GAAP, and other companies may define underwriting income differently.

Underwriting income for the three and six months ended MarchJune 31,30, 2026 and 2025 reconciles to income before income taxes as follows: