# Bowhead Specialty Holdings Inc. (BOW) Informational only - not investment advice. CIK: 0002002473 SIC: 6331 Fire, Marine & Casualty Insurance SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [Insurance Carriers](/major-group/63/) > [SIC 6331 Fire, Marine & Casualty Insurance](/industry/6331/) Latest 10-K filed: 2026-02-24 SEC page: https://www.sec.gov/edgar/browse/?CIK=2002473 Filing source: https://www.sec.gov/Archives/edgar/data/2002473/000162828026011089/bow-20251231.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 551589000 | USD | 2025 | 2026-02-24 | | Net income | 53786000 | USD | 2025 | 2026-02-24 | | Assets | 2371376000 | USD | 2025 | 2026-02-24 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-24. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0002002473.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | | Revenue | 187,602,000 | 283,398,000 | 425,660,000 | 551,589,000 | | Net income | 11,256,000 | 25,047,000 | 38,243,000 | 53,786,000 | | Diluted EPS | 0.47 | 1.04 | 1.29 | 1.59 | | Operating cash flow | 181,644,000 | 236,225,000 | 294,287,000 | 331,587,000 | | Capital expenditures | 3,972,000 | 3,819,000 | 3,112,000 | 5,570,000 | | Assets | | 1,027,859,000 | 1,654,242,000 | 2,371,376,000 | | Liabilities | | 835,782,000 | 1,283,800,000 | 1,922,102,000 | | Stockholders' equity | | 192,077,000 | 370,177,000 | 448,266,000 | | Cash and cash equivalents | 64,659,000 | 118,070,000 | 97,476,000 | 193,545,000 | | Free cash flow | 177,672,000 | 232,406,000 | 291,175,000 | 326,017,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | | Net margin | 6.00% | 8.84% | 8.98% | 9.75% | | Return on equity | | 13.04% | 10.33% | 12.00% | | Return on assets | | 2.44% | 2.31% | 2.27% | | Liabilities / equity | | 4.35 | 3.47 | 4.29 | ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-05. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0002002473.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2024-Q2 | 2024-03-31 | | 7,012,000 | | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 98,898,000 | | 0.20 | reported discrete quarter | | 2024-Q3 | 2024-06-30 | | 5,533,000 | | reported discrete quarter | | 2024-Q3 | 2024-09-30 | 116,761,000 | | 0.36 | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 119,330,000 | 13,606,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-31 | 122,716,000 | 11,425,000 | 0.34 | reported discrete quarter | | 2025-Q2 | 2025-03-31 | | 11,425,000 | | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 133,263,000 | | 0.36 | reported discrete quarter | | 2025-Q3 | 2025-06-30 | | 12,342,000 | | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 143,932,000 | | 0.45 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 151,678,000 | 14,843,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 155,694,000 | 16,010,000 | 0.48 | reported discrete quarter | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate - [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm - [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate - [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio - [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed - [CE16OV](/indicator/CE16OV/): Employment Level - [ICSA](/indicator/ICSA/): Initial Claims - [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm - [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance - [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States - [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States - [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States - [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States - [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States - [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized - [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized - [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks - [GDP](/indicator/GDP/): Gross Domestic Product - [GPDI](/indicator/GPDI/): Gross Private Domestic Investment - [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment - [PCEC](/indicator/PCEC/): Personal Consumption Expenditures - [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services - [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt - [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product - [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit - [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts - [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures - [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing - [USCONS](/indicator/USCONS/): All Employees, Construction - [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade - [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities - [USGOVT](/indicator/USGOVT/): All Employees, Government - [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private - [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods - [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft - [BUSINV](/indicator/BUSINV/): Total Business Inventories - [EXPGS](/indicator/EXPGS/): Exports of Goods and Services - [IMPGS](/indicator/IMPGS/): Imports of Goods and Services - [IR](/indicator/IR/): Import Price Index (End Use): All Commodities - [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/2002473/000162828026030616/bow-20260331.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Filing date: 2026-05-05 Report date: 2026-03-31 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis below contains forward-looking statements. All statements other than statements of historical facts contained in this report, including, but not limited to, statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. Certain of the forward-looking statements can be identified by the use of terms such as “believes,” “expects,” “may,” “will,” “should,” “could,” “seeks,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms. However, not all forward-looking statements contain these identifying words. These forward-looking statements include all matters that are not related to present facts or current conditions or that are not historical facts. They appear in a number of places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our consolidated results of operations, financial condition, liquidity, prospects and growth strategies and the industries in which we operate, and including, without limitation, statements relating to our future performance. Forward-looking statements reflect our current expectations concerning future results and events, and are subject to known and unknown risks and uncertainties, many of which are beyond our control. Our actual results may differ materially from those expressed in, or implied by, the forward-looking statements included in this report as a result of various factors, including, among others: •our inability to accurately assess our underwriting risk; •intense competition for business in our industry; •our inability to maintain our strategic relationship with AFMIC; •a decline in AmFam’s financial strength rating or financial size category; •exposure to certain risks arising out of our reliance on insurance retail agents, brokers and wholesalers as distribution channels; •inadequate losses and loss expense reserves to cover our actual losses; •unexpected changes in the interpretation of our coverage or provisions, including loss limitations and exclusions, in our policies; •our reinsurers’ failure to reimburse us for claims on a timely basis, or at all; •adverse economic factors and their impact on our growth and profitability; •existing or future regulation and our ability to comply with these regulations; •the loss of one or more key personnel; •disruptions of our operations due to security breaches, loss of data, cyber-attacks and other information technology failures; •increased costs as a result of operating as a public company; and •other risks and uncertainties discussed under the heading “Risk Factors” in Part II, Item 1A. of this report. Please refer to “Risk Factors” in Part II, Item 1A. of this report for additional discussion of the foregoing factors and risks. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update any forward-looking statements made in this report to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. 26 Overview We were founded in September 2020, backed by capital provided by GPC Partners Investments (SPV III) LP, a private equity fund managed by Gallatin Point, and our strategic partner, AmFam, to take advantage of favorable pricing environments, and to address a growing and unmet demand from brokers and policyholders for specialized insurance solutions and quality service in complex lines of business. Our principal objective is to create and sustain superior returns for our stockholders by generating consistent, underwriting profits across our product offerings and through all market cycles, while prudently managing capital. 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. Our products are delivered through two complementary underwriting models designed to support sustainable and profitable growth across market cycles: a “craft” model for large, complex, higher-severity risks, and a “digital” model for smaller, simpler, and scalable business. Our craft underwriting model, Bowhead’s foundation, relies on experienced underwriters who apply deep technical expertise and long-standing broker relationships to deliver tailored solutions for complex, non-standard, and higher-severity risks. Our digital underwriting model, including Baleen Specialty and other small-business offerings, a capability we call “express”, emphasizes speed, consistency, and disciplined decision making through clear appetites, standardized products, and technology-enabled execution for small risks—without compromising underwriting discipline. While Baleen Specialty targets small, distressed, or hard-to-place risks with more restrictive coverage, our express offerings enhance Bowhead’s existing products by simplifying the submission, underwriting, and servicing for small and mid-sized accounts. 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. The policies we write are issued on AmFam paper under their own name through BSUI, our managing general agency, in exchange for a Ceding Fee, and reinsured 100% to BICI, our wholly-owned insurance company subsidiary. This mutually beneficial partnership with AmFam has enabled us to grow quickly, but prudently, to take advantage of favorable market conditions, and allows us to deploy capital efficiently. We built a nimble, remote-friendly organization that is able to attract best-in-class talent nationwide, who are committed to operational excellence and superior service. We are led by a highly experienced and respected underwriting team with a disciplined approach to underwriting and decades of individual, successful underwriting experience. We are supported by a collaborative culture that spans all functions of our business, which allows us to provide a consistent, positive experience for all our partners. We believe that our current market opportunity, differentiated expertise, relationships, culture and leadership team position us well to continue to grow our business profitably. Components of Our Results of Operations Gross written premiums Gross written premiums are the amounts received, or to be received, for insurance policies written or assumed by us during a specific period of time without reduction for policy acquisition costs, reinsurance costs or other deductions. The volume of our gross written premiums in any given period is generally influenced by new business submissions, binding of new business submissions into policies, renewals of existing policies and average size and premium rate of bound policies. 27 Ceded written premiums Ceded written premiums are the amount of gross written premiums ceded to reinsurers. We enter into reinsurance contracts to limit our exposure to potential losses. The volume of our ceded written premiums is impacted by the level of our gross written premiums and any decision we make to increase or decrease retention levels and policy limits. Net written premiums Net written premiums are gross written premiums less ceded written premiums. Net earned premiums 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 ten years, and premiums are earned pro rata over the term of the policy. Net losses and loss adjustment expenses Net losses and loss adjustment expenses represent the costs incurred for insured losses, which include losses under a claims made or occurrence policy, paid or unpaid, expenses for settling claims, such as attorneys’ fees, investigation, appraisal, adjustment, defense costs and a portion of operating expenses allocated to claim resolution, net of any losses ceded to reinsurers. Net losses and loss adjustment expenses also include a provision for claims that have occurred but have not yet been reported to the insurer. These expenses are a function of the amount and type of insurance contracts the Company writes and the loss experience associated with the underlying coverage. In general, our net losses and loss adjustment expenses are affected by: •the occurrence, frequency and severity of claims associated with the particular types of insurance contracts that we write; •the mix of business written by us; •changes in the legal or regulatory environment related to the business we write; •trends in legal defense costs; •inflation in the cost of claims, including inflation related to wages, medical costs, and building materials, as well as inflation related to the increase in the severity of claims above general economic inflation (i.e., social inflation); and •the reinsurance agreements we have in place at the time of a loss. Net losses and loss adjustment expenses are based on actual losses and expenses, as well as an actuarial analysis of the estimated losses, including losses incurred during the period and changes in estimates from prior periods. Net losses and loss adjustment expenses may be paid out over a period of years. Net acquisition costs Net acquisition costs are principally comprised of commissions we pay to our brokers, a Ceding Fee we pay to AmFam on net premiums assumed and other costs, such as premium-related taxes and employment related underwriting costs, which are net of ceding commissions we receive on business ceded through our reinsurance agreements. Net acquisition costs are deferred and amortized ratably over the terms of the related agreements. Operating expenses Operating expenses represent the general and administrative expenses of our operations including employee compensation and benefits, technology costs, office rent and professional service fees such as legal, accounting and actuarial services. 28 Net investment income We earn interest income on our portfolio of invested assets, which are comprised of fixed maturity securities, short-term investments and cash and cash equivalents. Net realized investment losses Net realized investment 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 (loss) income on the Condensed Consolidated Balance Sheets. Other insurance-related income Other insurance-related income represent fees associated with the issuance of policies and revenue we receive for providing insurance-related services. Non-operating expenses Non-operating expenses represent expenses related to various transactions that we consider to be unique and non-recurring in nature, such as expenses related to our IPO, secondary offerings, and other such offerings or registrations. Warrant expense Warrant expense represents compensation costs for warrants issued to AmFam for the right to purchase shares of the Company’s common stock. Interest expense and financing fees Interest expenses and fees represent certain costs associated with our senior unsecured notes and senior secured revolving cr [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization. Confidence: high ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Year ended December 31, 2024 compared to year ended December 31, 2023 For a discussion of our year ended December 31, 2024 results and a comparison between the years ended December 31, 2024 and 2023, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025. Overview We were founded in September 2020, backed by capital provided by GPC Fund, a private equity fund managed by Gallatin Point, and our strategic partner, AmFam, to take advantage of favorable pricing environments, and to address a growing and unmet demand from brokers and policyholders for specialized insurance solutions and quality service in complex lines of business. Our principal objective is to create and sustain superior returns for our stockholders by generating consistent, underwriting profits across our product offerings and through all market cycles, while prudently managing capital. 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. Our products are delivered through two complementary underwriting models designed to support sustainable and profitable growth across market cycles: a “craft” model for large, complex, higher-severity risks, and a “digital” model for smaller, simpler, and scalable business. Our craft underwriting model, Bowhead’s foundation, relies on experienced underwriters who apply deep technical expertise and long-standing broker relationships to deliver tailored solutions for complex, non-standard, and higher-severity risks. Our digital underwriting model, including Baleen Specialty and other small-business offerings, a capability we call “express”, emphasizes speed, consistency, and disciplined decision making through clear appetites, standardized products, and technology-enabled execution for small risks—without compromising underwriting discipline. While Baleen Specialty targets small, distressed, or hard-to-place risks with more restrictive coverage, our express offerings enhance Bowhead’s existing products by simplifying the submission, underwriting, and servicing for small and mid-sized accounts. 54 Table of Contents 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. The policies we write are issued on AmFam paper under their own name through BSUI, our managing general agency, in exchange for a Ceding Fee, and reinsured 100% to BICI, our wholly-owned insurance company subsidiary. This mutually beneficial partnership with AmFam has enabled us to grow quickly, but prudently, to take advantage of favorable market conditions, and allows us to deploy capital efficiently. We built a nimble, remote-friendly organization that is able to attract best-in-class talent nationwide, who are committed to operational excellence and superior service. We are led by a highly experienced and respected underwriting team with a disciplined approach to underwriting and decades of individual, successful underwriting experience. We are supported by a collaborative culture that spans all functions of our business, which allows us to provide a consistent, positive experience for all our partners. We believe that our current market opportunity, differentiated expertise, relationships, culture and leadership team position us well to continue to grow our business profitably. Components of Our Results of Operations Gross written premiums Gross written premiums are the amounts received, or to be received, for insurance policies written or assumed by us during a specific period of time without reduction for policy acquisition costs, reinsurance costs or other deductions. The volume of our gross written premiums in any given period is generally influenced by new business submissions, binding of new business submissions into policies, renewals of existing policies and average size and premium rate of bound policies. Ceded written premiums Ceded written premiums are the amount of gross written premiums ceded to reinsurers. We enter into reinsurance contracts to limit our exposure to potential losses. The volume of our ceded written premiums is impacted by the level of our gross written premiums and any decision we make to increase or decrease retention levels and policy limits. Net written premiums Net written premiums are gross written premiums less ceded written premiums. Net earned premiums 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 ten years, and premiums are earned pro rata over the term of the policy. Net losses and loss adjustment expenses Net losses and loss adjustment expenses represent the costs incurred for insured losses, which include losses under a claims made or occurrence policy, paid or unpaid, expenses for settling claims, such as attorneys’ fees, investigation, appraisal, adjustment, defense costs and a portion of operating expenses allocated to claim resolution, net of any losses ceded to reinsurers. Net losses and loss adjustment expenses also include a provision for claims that have occurred but have not yet been reported to the insurer. These expenses are a function of the amount and type of insurance contracts the Company writes and the loss experience associated with the underlying coverage. In general, our net losses and loss adjustment expenses are affected by: •the occurrence, frequency and severity of claims associated with the particular types of insurance contracts that we write; 55 Table of Contents •the mix of business written by us; •changes in the legal or regulatory environment related to the business we write; •trends in legal defense costs; •inflation in the cost of claims, including inflation related to wages, medical costs, and building materials, as well as inflation related to the increase in the severity of claims above general economic inflation (i.e., social inflation); and •the reinsurance agreements we have in place at the time of a loss. Net losses and loss adjustment expenses are based on actual losses and expenses, as well as an actuarial analysis of the estimated losses, including losses incurred during the period and changes in estimates from prior periods. Net losses and loss adjustment expenses may be paid out over a period of years. Net acquisition costs Net acquisition costs are principally comprised of commissions we pay to our brokers, a Ceding Fee we pay to AmFam on net premiums assumed and premium-related taxes, which are net of ceding commissions we receive on business ceded through our reinsurance agreements. Net acquisition costs are deferred and amortized ratably over the terms of the related agreements. Operating expenses Operating expenses represent the general and administrative expenses of our operations including employee compensation and benefits, technology costs, office rent and professional service fees such as legal, accounting and actuarial services. Net investment income We earn interest income on our portfolio of invested assets, which are comprised of fixed maturity securities, short-term investments and cash and cash equivalents. 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. Other insurance-related income Other insurance-related income represent fees associated with the issuance of policies and revenue we receive for providing insurance-related services. Non-operating expenses Non-operating expenses represent expenses related to various transactions that we consider to be unique and non-recurring in nature, such as expenses related to our IPO and secondary offerings, and other such offerings or registrations. Warrant expense Warrant expense represents compensation costs for warrants issued to AmFam for the right to purchase shares of the Company’s common stock. 56 Table of Contents Interest expense and financing fees Interest expenses and fees represent certain costs associated with our senior unsecured notes and senior secured revolving credit facilities. Loss on extinguishment of credit facility Loss on extinguishment of credit facility represents fully expensed, previously unamortized deferred issuance costs associated with the termination of our 2024 senior unsecured credit facility. Foreign exchange losses (gains) 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 at the end of each period. Income tax expense Currently, income tax expense primarily relates to federal income taxes. The amount of income tax expense or benefit recorded in future periods will depend on the jurisdictions in which we operate and the tax laws and regulations in effect. Key Operating and Financial Metrics We discuss certain key metrics, described below, which provide useful information about our business and the operational factors underlying our financial performance. Loss ratio, expressed as a percentage, is the ratio of net losses and loss adjustment expenses to net earned premiums. Expense ratio, expressed as a percentage, is the ratio of net acquisition costs and operating expenses, less other- insurance related income, to net earned premiums. Combined ratio, expressed as a percentage, is the sum of loss ratio and expense ratio. Return on equity is net income as a percentage of average beginning and ending mezzanine equity and stockholders’ equity. Underwriting income is a non-GAAP financial measure defined as income before income taxes excluding the impact of net investment income, net realized investment gains (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), 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 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. Adjusted return on equity is a non-GAAP financial measure defined as adjusted net income as a percentage of average beginning and ending mezzanine equity and stockholders’ equity. See “—Reconciliation of Non-GAAP Financial Measures” for a reconciliation of adjusted return on equity to return on equity, which is the most directly comparable financial metric prepared in accordance with U.S. GAAP. 57 Table of Contents 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. 58 Table of Contents Results of Operations Year ended December 31, 2025 compared to year ended December 31, 2024 The following table summarizes our results of operations for the years ended December 31, 2025 and 2024: Years Ended December 31, 2025 2024 $ Change % Change ($ in thousands, except percentages and per share data) Gross written premiums $ 862,806 $ 695,717 $ 167,089 24.0  % Ceded written premiums (304,619) (244,295) (60,324) 24.7  % Net written premiums $ 558,187 $ 451,422 $ 106,765 23.7  % Revenues Net earned premiums $ 491,677 $ 385,111 $ 106,566 27.7  % Net investment income 57,827 40,121 17,706 44.1  % Net realized investment gains (losses) 43 (16) 59 368.8  % Other insurance-related income 2,042 444 1,598 359.9  % Total revenues 551,589 425,660 125,929 29.6  % Expenses Net losses and loss adjustment expenses 328,022 248,099 79,923 32.2  % Net acquisition costs 46,513 32,397 14,116 43.6  % Operating expenses 102,264 89,112 13,152 14.8  % Non-operating expenses 1,425 2,807 (1,382) (49.2) % Warrant expense 3,142 1,917 1,225 63.9  % Interest expense and financing fees 2,012 725 1,287 177.5  % Loss on extinguishment of credit facility 862 — 862 NM Foreign exchange losses 50 68 (18) (26.5) % Total expenses 484,290 375,125 109,165 29.1  % Income before income taxes 67,299 50,535 16,764 33.2  % Income tax expense (13,513) (12,292) (1,221) 9.9  % Net income $ 53,786 $ 38,243 $ 15,543 40.6  % Key Operating and Financial Metrics: Underwriting income(1) $ 14,878 $ 18,236 $ (3,358) (18.4) % Adjusted net income(1) 55,598 42,686 12,912 30.2  % Loss ratio 66.7  % 64.4  % Expense ratio 29.8  % 31.4  % Combined ratio 96.5  % 95.8  % Return on equity 13.1  % 13.6  % Adjusted return on equity(1) 13.6  % 15.2  % Diluted earnings per share $ 1.59 $ 1.29 Diluted adjusted earnings per share(1) $ 1.65 $ 1.44 __________________ (1) Non-GAAP financial measure. See “—Reconciliation of Non-GAAP Financial Measures” for a reconciliation of the non-GAAP financial measure in accordance with the most comparable U.S. GAAP measure. 59 Table of Contents Premiums The following table presents gross written premiums by underwriting division for the years ended December 31, 2025 and 2024: Years Ended December 31, 2025 % of Total 2024 % of Total $ Change % Change ($ in thousands, except percentages) Casualty $ 550,666  63.8  % $ 431,817  62.1  % $ 118,849  27.5  % Professional Liability 174,419  20.2  % 160,651  23.1  % 13,768  8.6  % Healthcare Liability 116,290  13.5  % 101,619  14.6  % 14,671  14.4  % Baleen Specialty 21,431  2.5  % 1,630  0.2  % 19,801  1214.8  % Gross written premiums $ 862,806  100.0  % $ 695,717  100.0  % $ 167,089  24.0  % Gross written premiums increased $167.1 million, or 24.0%, to $862.8 million for the year ended December 31, 2025 from $695.7 million for the year ended December 31, 2024. The increase in gross written premiums was driven by our increasing renewal book and the continued growth in our platform across all four divisions. Our Casualty division led the growth, primarily from our Excess Casualty portfolio, followed by the growth in our Baleen Specialty division. For the years ended December 31, 2025 and 2024, E&S(1) business made up 80.0% and 79.8% of gross written premiums, respectively, while admitted business made up 20.0% and 20.2%, respectively. The 0.2 point increase in the proportion of E&S premiums was driven by the increase in proportion of Casualty division premiums, where policies are primarily written on an E&S basis, and the increase in proportion of Baleen Specialty division premiums, where policies are exclusively written on an E&S basis. Net written premiums increased $106.8 million, or 23.7%, to $558.2 million for the year ended December 31, 2025 from $451.4 million for the year ended December 31, 2024. The increase in net written premiums was primarily due to the growth in gross written premiums for the year ended December 31, 2025. This growth was partially offset by the increase in ceded written premiums, driven by the cessions 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 earned premiums increased $106.6 million, or 27.7%, to $491.7 million for the year ended December 31, 2025 from $385.1 million for the year ended December 31, 2024. The increase was primarily due to the earning of increased gross written premiums offset by the earning of increased ceded written premiums under our ceded reinsurance treaties. (1) E&S % previously disclosed did not include business written on a facultative reinsurance basis, which is free of rate and policy form restrictions, and provides the flexibility to rapidly adjust to emerging market opportunities. 60 Table of Contents Loss ratio The following table summarizes the components of our loss ratio for the years ended December 31, 2025 and 2024: Years Ended December 31, 2025 2024 Net Losses and Loss Adjustment Expenses % of Net Earned Premiums Net Losses and Loss Adjustment Expenses % of Net Earned Premiums ($ in thousands, except percentages) Current accident year $ 325,653  66.2  % $ 248,099  64.4  % Prior accident year 2,369  0.5  % —  —  % Total $ 328,022  66.7  % $ 248,099  64.4  % Our net loss ratio was 66.7% for the year ended December 31, 2025 compared to 64.4% for the year end December 31, 2024, or an increase of 2.3 points. The 1.8 point increase in our current accident year loss ratio was due in part to higher expected loss ratios on certain reserves within Professional Liability and Healthcare Liability to align more closely with industry expected loss ratios and our own limited loss experience. The increase was also due to mix changes in our portfolio, where Casualty, which had comparatively higher expected loss ratios, comprised a larger proportion of our net earned premiums compared to the prior year. The 0.5 point increase in our prior accident year loss ratio was due to expected loss ratios applied to audit premiums fully earned in the year, but associated with prior accident years. This increase was not based on actual losses settling for more than reserved, and did not represent an increase in estimated reserves on unresolved claims. We are simply putting loss reserves into the appropriate accident year regardless of when the premiums are billed and earned. As part of our annual independent actuarial reserve review, we also reallocated prior accident year loss reserves between accident years and by division, primarily from Casualty to Professional Liability, resulting in no prior accident year development on an aggregate basis. Due to Bowhead’s limited loss experience, we continue to hold expected loss ratios that rely on development patterns and other inputs primarily based on industry data. See Note 6, “Reserves for Losses and Loss Adjustment Expenses” in our Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K. Expense ratio The following table summarizes the components of our expense ratio for the years ended December 31, 2025 and 2024: Years Ended December 31, 2025 2024 Expenses % of Net Earned Premiums Expenses % of Net Earned Premiums ($ in thousands, except percentages) Net acquisition costs $ 46,513  9.5  % $ 32,397  8.4  % Operating expenses 102,264  20.8  % 89,112  23.1  % Less: Other insurance-related income (2,042) (0.4) % (444) (0.1) % Total $ 146,735  29.8  % $ 121,065  31.4  % 61 Table of Contents Our expense ratio was 29.8% for the year ended December 31, 2025 compared to 31.4% for the year ended December 31, 2024, a decrease of 1.6 points. The decrease in our expense ratio for the year ended December 31, 2025 was primarily driven by the 2.3 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 1.1 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. 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, to a lesser extent, the increase in Ceding Fee we pay to AmFam. Gross acquisition costs as a percentage of gross earned premiums was 16.3% for the year ended December 31, 2025 compared to 15.7% for the year ended December 31, 2024, and ceded earned commissions as a percentage of ceded earned premium was 29.1% for the year ended December 31, 2025 compared to 29.0% for the year ended December 31, 2024. Combined ratio The combined ratio was 96.5% for the year ended December 31, 2025, compared to 95.8% for the year ended December 31, 2024. The 0.7 point increase was due to the 2.3 point increase in the loss ratio, partially offset by the 1.6 point decrease in the expense ratio. Return on equity Return on equity was 13.1% for the year ended December 31, 2025, compared to 13.6% for the year ended December 31, 2024. The 0.5 point decrease was mainly due to the $128.6 million increase in average mezzanine equity and stockholders’ equity, primarily due to the $131.0 million of net proceeds received from the IPO for the year ended December 31, 2024, along with the increase in retained earnings and accumulated other comprehensive income (loss). The increase in average mezzanine equity and stockholders’ equity was partially offset by a 40.6% increase in net income for the year ended December 31, 2025. Investing results Net investment income increased $17.7 million, or 44.1%, to $57.8 million for the year ended December 31, 2025 from $40.1 million for the year ended December 31, 2024. The increase in net investment income is primarily due to a higher average balance of investments for the year ended December 31, 2025 and, to a lesser extent, higher yields on invested assets. Income tax expense Income tax expense was $13.5 million for the year ended December 31, 2025, compared to $12.3 million for the year ended December 31, 2024. Our effective tax rate was 20.1% for the year ended December 31, 2025, compared to 24.3% for the year ended December 31, 2024. The effective tax rate differs from the statutory tax rate of 21.0% primarily due to research and develop credits net of related uncertain tax position reserves, excess tax benefits from the vesting of stock-based compensation, and state and local income and franchise taxes, partially offset by estimated non-deductible excess officer compensation and non-deductible expenses. 62 Table of Contents Reconciliation of Non-GAAP Financial Measures Underwriting income We define underwriting income as income before income taxes excluding the impact of net investment income, net realized investment gains (losses), other insurance-related income, non-operating expenses, warrant expense, interest expenses and financing fees, loss on extinguishment of credit facility, foreign exchange losses (gains), and certain strategic initiatives. Underwriting income represents the pre-tax profitability of the Company's underwriting operations and allows us to evaluate our underwriting performance without regard to net investment income. We use this metric as we believe it gives our management and other users of our financial information useful insight into our underlying business performance. Underwriting income should not be viewed as a substitute for income before income taxes calculated in accordance with U.S. GAAP, and other companies may define underwriting income differently. Underwriting income for the years ended December 31, 2025 and 2024 reconciles to income before income taxes as follows: Years Ended December 31, 2025 2024 ($ in thousands) Income before income taxes $ 67,299  $ 50,535  Adjustments: Net investment income (57,827) (40,121) Net realized investment (gains) losses (43) 16  Other insurance-related income (2,042) (444) Non-operating expenses 1,425  2,807  Warrant expense 3,142  1,917  Interest expense and financing fees 2,012  725  Loss on extinguishment of credit facility 862  —  Foreign exchange losses 50  68  Strategic initiatives(1) —  2,733  Underwriting income $ 14,878  $ 18,236  __________________ (1)Strategic initiatives for the year ended December 31, 2024 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. The costs incurred primarily represent expenses to implement the new platform and processes supporting the Baleen Specialty division. Adjusted net income We define adjusted net income as net income excluding the impact of net realized investment 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. 63 Table of Contents Adjusted net income for the years ended December 31, 2025 and 2024 reconciles to net income as follows: Years Ended December 31, 2025 2024 Before Income Taxes After Income Taxes Before Income Taxes After Income Taxes ($ in thousands) Income as reported $ 67,299  $ 53,786  $ 50,535  $ 38,243  Adjustments: Net realized investment (gains) losses (43) (43) 16  16  Non-operating expenses 1,425  1,425  2,807  2,807  Loss on extinguishment of credit facility 862  862  —  —  Foreign exchange losses 50  50  68  68  Strategic initiatives(1) —  —  2,733  2,733  Tax impact —  (482) —  (1,181) Adjusted net income $ 69,593  $ 55,598  $ 56,159  $ 42,686  _________________ (1)Strategic initiatives for the year ended December 31, 2024 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. The costs incurred primarily represent expenses to implement the new platform and processes supporting the Baleen Specialty division. Adjusted return on equity We define adjusted return on equity as adjusted net income as a percentage of average beginning and ending mezzanine equity and stockholders’ equity. We use adjusted return on equity 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 return on equity should not be viewed as a substitute for return on equity calculated in accordance with U.S. GAAP, and other companies may define adjusted return on equity differently. Adjusted return on equity for the years ended December 31, 2025 and 2024 reconciles to return on equity as follows: Year Ended December 31, 2025 2024 ($ in thousands, except percentages) Numerator: Adjusted net income $ 55,598 $ 42,686 Denominator: Average mezzanine equity and stockholders' equity 409,858 281,259 Adjusted return on equity 13.6  % 15.2  % Diluted adjusted earnings per share 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. 64 Table of Contents Diluted adjusted earnings per share for the years ended December 31, 2025 and 2024 reconciles to diluted earnings per share as follows: Year Ended December 31, 2025 2024 ($ in thousands, except share and per share data) Numerator: Adjusted net income $ 55,598  $ 42,686  Denominator: Diluted weighted average shares outstanding 33,735,944 29,677,196 Diluted adjusted earnings per share $ 1.65  $ 1.44  Liquidity and Capital Resources Sources and Uses of Funds 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 BUSI, our wholly-owned services company subsidiary. Prior to the IPO, BSHI received capital contributions from BIHL. Following our secondary offering 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 November 26, 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. We file a consolidated U.S. federal income tax return with our subsidiaries, and under our tax allocation agreement, each participant is charged or refunded taxes according to the amount that the participant would have paid or received had it filed on a separate return basis with the Internal Revenue Service. 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 calendar 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, 2025, the maximum dividend that BICI could pay without the approval of regulatory authorities was $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. As of December 31, 2025, our holding company had $72.8 million in cash and investments. We believe we have sufficient liquidity available at our holding company and subsidiaries to meet our operating cash needs and obligations for at least the next 12 months. 65 Table of Contents Revolving Credit Facilities 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 provided for a senior secured revolving credit facility (the “2024 Facility”) in the aggregate principal amount of $75 million, which included 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 were (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 contained certain customary covenants, including financial maintenance covenants. On November 25, 2025, the Company terminated the 2024 Credit Agreement. As a result of the termination, the Company fully expensed previously unamortized deferred financing fees associated with the 2024 Facility and recognized a loss on extinguishment of debt of $0.9 million for the year ended December 31, 2025. The Company did not have any borrowings under the 2024 Facility immediately prior to its termination. On November 26, 2025, the Company entered into the 2025 Credit Agreement with PNC Bank, N.A., as administrative agent, swingline lender and issuing bank. The 2025 Credit Agreement provides for the 2025 Facility in the aggregate principal amount of $35 million, which includes a $5 million sub-facility for letters of 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. All obligations under the 2025 Facility and obligations in respect of certain cash management services and swap agreements with the lenders and their affiliates are (i) unconditionally guaranteed by certain of the Company’s subsidiaries were (ii) secured by a first-priority perfected lien in substantially all of the Company’s and the subsidiary guarantors’ assets. The 2025 Credit Agreement contains certain customary covenants, including financial maintenance covenants. As of December 31, 2025, the Company was in compliance with all of the 2025 Facility’s covenants. The 2025 Facility matures on the earlier of November 26, 2027, or 91 days prior to the earliest date any MGA Agreement will terminate where no MGA Agreement replacement is found. As of December 31, 2025, we did not have any borrowings outstanding under the 2025 Facility. Shelf Registration On June 6, 2025, we filed a shelf registration statement with the SEC to issue up to $300 million of common stock, preferred stock, depository shares, debt securities, warrants, subscription rights, purchase contracts and purchase units (the “Shelf Registration Statement”). The Shelf Registration Statement was declared effective on June 18, 2025. The specific terms of the securities we issue under the Shelf Registration Statement will be provided in the applicable prospectus supplements. As of December 31, 2025, $150 million is available for future issuance. Debt On November 25, 2025, BSHI issued $150 million aggregate principal amount of 7.75% senior unsecured debt (“Senior Notes”) under the Shelf Registration Statement, generating net proceeds of $146.4 million. Interest on the Senior Notes is payable semi-annually in arrears on June 1 and December 1 each year, beginning on June 1, 2026. The Senior Notes are scheduled to mature on December 1, 2030, unless redeemed earlier. Refer to Item 8, Note 8(a) to the Consolidated Financial Statements ‘Debt and Financing Arrangements’ for further details). 66 Table of Contents Cash Flows Our most significant source of cash is from premiums received, which, for most policies, we receive at the beginning of the coverage period, net of the related commission for the policies. Our most significant cash outflows include claims that arise when a policyholder incurs an insured loss. Because the payment of claims occurs after the receipt of the premium, often years later, we invest the cash in various investment securities that generally earn interest. We also use cash to pay ceded reinsurance premiums, net of ceding commissions received, and for payment of ongoing operating expenses, such as employee compensation and benefits, technology costs, office rent and professional service fees. The timing of our cash flows from operating activities can vary among periods due to the timing by which payments are made or received. Some of our payments and receipts, including loss settlements and subsequent reinsurance receipts, can be significant, and as a result their timing can influence cash flows from operating activities in any given period. We believe that cash receipts from premiums and proceeds from net investment income are sufficient to cover cash outflows in the foreseeable future. Our cash flows for the years ended December 31, 2025 and 2024 were as follows: Years Ended December 31, 2025 2024 ($ in thousands) Net cash provided by operating activities $ 331,587  $ 294,287  Net cash used in investing activities (464,391) (325,883) Net cash provided by (used in) financing activities 144,516  133,886  Net change in cash, cash equivalents and restricted cash $ 11,712  $ 102,290  The increase in cash provided by operating activities in the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to the growth in our business operations compared to the timing of claim payments and subsequent reinsurance recoveries, which occur later than cash collections on premiums. For the year ended December 31, 2025, net cash used in investing activities was $464.4 million due to the growth in our business operations. For the year ended December 31, 2025, funds from operations were used to purchase fixed maturity securities of $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 $10.0 million. Net cash used in investing activities also includes purchases of property and equipment of $5.6 million. For the year ended December 31, 2024, net cash used in investing activities was $325.9 million due to the growth in our business operations. For the year ended December 31, 2024, funds from operations and net proceeds from the IPO, together with proceeds received from sales and maturities of 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 million and short-term investments of $9.9 million. Net cash used in investing activities also includes purchases of property and equipment of $3.1 million. For the year ended December 31, 2025, net cash provided by financing activities of $144.5 million was primarily due to proceeds $150.0 million received from the issuance of the Senior Notes, offset by $3.6 million of debt issuance costs. For the year ended December 31, 2024, net cash provided by financing activities of $133.9 million was primarily due to the $131.0 million of net proceeds we received from the IPO. 67 Table of Contents Reinsurance We purchase various forms of reinsurance to manage loss exposures and safeguard our capital. Through reinsurance, we transfer certain exposures to a reinsurer, and in return, the reinsurer receives a portion of the premium, less a ceding commission paid to us. We strategically use a combination of quota share and excess of loss reinsurance treaties to retain risk, while providing balance sheet protection from larger losses. We may also place facultative reinsurance on specific risks we deem prudent. A quota share reinsurance treaty is an agreement where reinsurers assume a percentage of the company’s losses in exchange for a negotiated percentage of premium. An excess of loss reinsurance treaty is an agreement where reinsurers agree to assume a portion of losses for a specific event in excess of a specified amount in return for a negotiated premium. Reinsurance needs are determined with principal input from our Chief Underwriting Officer, based on a multitude of factors, including risk appetite, market conditions, loss history and reinsurance capacity. We place reinsurance through our insurance company subsidiary, BICI, which reinsures 100% of the premium placed by BSUI with the AmFam Issuing Carriers. In turn, BICI strategically transfers exposures to third-party reinsurers utilizing different structures depending on the line of business. We generally offer up to $15 million of limit on our insurance policies and seek not to retain more than $5 million, utilizing reinsurance to achieve that objective. At each renewal, we consider various factors when determining our reinsurance coverage, including (i) plans to change the underlying insurance coverage we offer, (ii) trends in loss activity, (iii) the level of our capital and surplus, (iv) changes in our risk appetite and (v) the cost, terms and availability of reinsurance coverage. We may adjust our reinsurance program, including our levels of retention based on these factors. As of December 31, 2025, we had the following significant reinsurance programs: •For all lines, except Cyber, we use a quota share reinsurance treaty, where 26.0% of the exposure is ceded to reinsurers, and an excess of loss reinsurance treaty, which cedes 65.0% of losses in excess of $5 million up to $15 million to our reinsurers. •Cyber, as a specialized line of business, is placed under a separate quota share structure, where 60.0% of the exposure is ceded to reinsurers. There is no separate excess of loss reinsurance program for our Cyber line of business. •Within our Casualty division, we have an additional quota share treaty covering a portion of our commercial auto exposure in excess of $1 million up to $5 million. Our reinsurance treaties are currently subject to caps, which range from 250% to 350% of the subject matter ceded premium, and should these caps be exceeded we would retain any losses in excess of those caps. Our reinsurance treaties typically have 12-month terms. While we intend to renew on similar terms as expiring to maintain our desired level of net risk appetite, during each renewal cycle, we may change our coverage terms or the composition of our reinsurance panel. Currently, the quota share reinsurance treaty for Cyber renews on January 1, the commercial auto quota share treaty within our Casualty division renews March 1, while the remainder of our reinsurance treaties renew on May 1. All reinsurance involves credit risk, since we maintain the direct obligation to pay losses incurred by our policyholders up to our policy limits. Accordingly, when selecting our reinsurers, a potential reinsurer’s financial strength is the paramount consideration. All of our reinsurance business is placed with reinsurers that have an A.M. Best rating of “A” (Excellent) or better. As of December 31, 2025, we have an allowance for credit losses of $0.2 million for our reinsurance recoverable balance. 68 Table of Contents The following table summarizes our top five reinsurers, their A.M. Best financial strength rating and percent of our total reinsurance recoverables as of December 31, 2025: Reinsurer A.M. Best Rating % of Total Renaissance Reinsurance U.S. Inc A+ 30.1% Endurance Assurance Corporation A+ 23.5% Markel Global Reinsurance Company A 18.4% American Family Connect Property and Casualty Insurance Company A 9.1% Ascot Bermuda Limited A 7.1% All other reinsurers At least A 11.8% Total 100.0% Contractual Obligations and Commitments We have entered into software service agreements that have purchase obligations depending on the amount of premiums written. The fixed and determinable portion of these purchase obligations were approximately $8.6 million for the years 2026 - 2029 as of December 31, 2025. The obligations may increase depending on the amount of premium written by the Company over the respective years. We have entered into a sublease agreement for our office in New York and a lease agreement for our office in Chicago. On December 1, 2024, the company exercised its option to extend the Chicago lease, which will expire on August 31, 2028, with a renewal option to extend. These leases are classified as operating leases. These leases expire in December 2027 and August 2028, respectively. Although each operating lease agreement contains an option to extend the length of the respective lease term, the Company is not reasonably certain it will exercise these options. As of December 31, 2025, the discounted operating lease liability was $3.0 million. Financial Condition Mezzanine equity and stockholders’ equity As of December 31, 2025, total mezzanine equity and stockholders’ equity was $449.3 million compared to $370.4 million as of December 31, 2024. The $78.9 million increase was primarily due to the $53.8 million of net income generated during the year, a decrease in the net unrealized loss position on available for sale investments, which shifted to a net unrealized gain in the current period, and net activity related to stock-based compensation plans. Dividend declarations We did not declare any dividends during the years ended December 31, 2025 and 2024. Investment portfolio We seek to maintain a diversified portfolio of fixed income instruments that prioritize capital preservation, with a secondary focus on generating predictable investment income. Our asset allocation strategy focuses on high-quality fixed income instruments, with no equity or alternative investment exposure. One of the primary features of our asset allocation is maintaining sufficient readily available funds to pay claims and expenses. Our portfolio consists entirely of cash, cash equivalents, short-term investments and investment grade fixed income securities. We actively manage and monitor our investment risk, balancing the goals of capital preservation and income generation with our need to comply with relevant insurance regulatory frameworks and the capital framework agreements with AmFam. Our board of directors reviews and approves our investment policy and strategy on a regular basis, and considers investment activities, performance against benchmarks and new investment opportunities as they arise. 69 Table of Contents As of December 31, 2025, our fixed income investment portfolio of $1,371.0 million was comprised entirely of fixed maturity securities that are classified as available-for-sale and carried at fair value with unrealized gains (losses) recognized in accumulated other comprehensive income within our Consolidated Balance Sheets. Our fixed maturity securities, including cash equivalents, had a weighted average effective duration of 3.0 years and an average rating of “AA” at December 31, 2025. Our investment portfolio,including cash equivalents, had a book yield of 4.6% and a market yield of 4.5% as of December 31, 2025, compared to 4.6% and 4.9%, respectively, as of December 31, 2024. As of December 31, 2025 and 2024, the amortized cost and estimated fair value of our fixed maturity and short-term investments were as follows: As of December 31, 2025 Amortized Cost Fair Value % of Total Fair Value ($ in thousands, except percentages) Fixed maturity securities U.S. government and government agency $ 80,184  $ 80,368  5.9  % State and municipal 131,607  129,278  9.4  % Commercial mortgage-backed securities 170,496  171,322  12.5  % Residential mortgage-backed securities 317,905  318,561  23.2  % Asset-backed securities 168,363  169,004  12.3  % Corporate 495,673  502,473  36.7  % Total fixed maturity securities $ 1,364,228  $ 1,371,006  100.0  % Short-term investments —  —  —  % Total investments $ 1,364,228  $ 1,371,006  100.0  % As of December 31, 2024 Amortized Cost Fair Value % of Total Fair Value ($ in thousands, except percentages) Fixed maturity securities U.S. government and government agency $ 204,205  $ 204,412  23.0  % State and municipal 73,289  67,784  7.6  % Commercial mortgage-backed securities 83,029  82,438  9.3  % Residential mortgage-backed securities 197,589  192,103  21.6  % Asset-backed securities 121,155  120,577  13.5  % Corporate 214,878  212,675  23.9  % Total fixed maturity securities $ 894,145  $ 879,989  98.9  % Short-term investments 9,961  9,997  1.1  % Total investments $ 904,106  $ 889,986  100.0  % 70 Table of Contents The table below summarizes the credit quality of our fixed maturity securities as of December 31, 2025 and 2024: Years Ended December 31, 2025 2024 Fair Value % of Total Fair Value Fair Value % of Total Fair Value ($ in thousands, except percentages) Rating AAA $ 432,121  31.5  % $ 247,433  28.1  % AA 382,549  27.9  % 385,358  43.8  % A 423,669  30.9  % 178,775  20.3  % BBB 132,667  9.7  % 68,423  7.8  % Total $ 1,371,006  100.0  % $ 879,989  100.0  % As of December 31, 2025 and 2024, the amortized cost and estimated fair value of our available-for-sale investments in fixed maturity securities summarized by contractual maturity were as follows: As of December 31, 2025 Amortized Cost Fair Value % of Total Fair Value ($ in thousands, except percentages) Fixed maturity securities Due in one year or less $ 113,224  $ 113,298  8.3  % Due after one year through five years 391,104  395,094  28.8  % Due after five years through ten years 119,589  120,687  8.8  % Due after ten years 83,547  83,040  6.1  % 707,464  712,119  52.0  % Commercial mortgage-backed securities 170,496  171,322  12.5  % Residential mortgage-backed securities 317,905  318,561  23.2  % Asset-backed securities 168,363  169,004  12.3  % Total $ 1,364,228  $ 1,371,006  100.0  % As of December 31, 2024 Amortized Cost Fair Value % of Total Fair Value ($ in thousands, except percentages) Fixed maturity securities Due in one year or less $ 206,764  $ 206,721  23.5  % Due after one year through five years 208,179  205,012  23.3  % Due after five years through ten years 45,230  43,199  4.9  % Due after ten years 32,199  29,939  3.4  % 492,372  484,871  55.1  % Commercial mortgage-backed securities 83,029  82,438  9.4  % Residential mortgage-backed securities 197,589  192,103  21.8  % Asset-backed securities 121,155  120,577  13.7  % Total $ 894,145  $ 879,989  100.0  % Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, and the lenders may have the right to put the securities back to the borrower. 71 Table of Contents Restricted assets We are required to maintain assets in trust accounts to support the obligations of the AmFam Quota Share Agreement. The assets held in trust include fixed maturity securities, short-term investments and cash and cash equivalents, as collateral for transactions with AmFam. The Company is entitled to interest income earned on these restricted assets, which is included in net investment income in the Consolidated Statements of Income and Comprehensive Income. The fair value of our restricted assets were as follows: As of December 31, 2025 2024 ($ in thousands) Restricted investments $ 838,840  $ 494,829  Restricted cash and cash equivalents 40,225  124,582     Total restricted assets $ 879,065  $ 619,411  Critical Accounting Policies and Estimates We identified the following accounting estimates as critical to the understanding of our financial position and results of operations: •reserve for losses and loss adjustment expenses; •reinsurance recoverable; •fair value measurements of financial assets and liabilities; and •deferred income tax. Critical accounting estimates are defined as those estimates that are both important to the portrayal of our financial condition and results of operations and require us to exercise significant judgment. We use significant judgment concerning future results and developments in applying these critical accounting estimates and in preparing our consolidated financial statements. These judgments and estimates affect our reported amounts of assets, liabilities, revenues and expenses and the disclosure of our material contingent assets and liabilities. Actual results may differ materially from the estimates and assumptions used in preparing the consolidated financial statements. We evaluate our estimates regularly using information that we believe to be relevant. For a detailed discussion of our accounting policies, see Note 2, “Significant Accounting Policies,” in our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. Reserve for losses and loss adjustment expenses Reserve for losses and loss adjustment expenses represents our estimated ultimate cost of all reported and unreported losses and loss adjustment expenses incurred and unpaid at the balance sheet date. We do not discount our reserves for losses to reflect estimated present value. We estimate the reserves using individual case-basis valuations of reported claims and various actuarial procedures. Those estimates are based on our historical information, industry and peer group information and our estimates of future trends in variable factors such as loss severity, loss frequency and other factors such as inflation. We regularly review our estimates and adjust them as necessary as experience develops or as new information becomes known to us. Additionally, during the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward. Even after such adjustments, the ultimate liability may exceed or be less than the revised estimates. Accordingly, the ultimate settlement of losses and loss adjustment expenses may vary significantly from the estimate included in our consolidated financial statements. We categorize our reserves for unpaid losses and loss adjustment expenses into two types: case reserves and reserves for IBNR. 72 Table of Contents Case reserves are established for individual claims that have been reported to us. We are notified of losses by our insureds, their agents or our brokers. Based on the information provided, we establish case reserves by estimating the ultimate losses from the claim, including defense costs associated with the ultimate settlement of the claim. Our claims department personnel use their knowledge of the specific claim along with advice from internal and external experts, including underwriters and legal counsel, to estimate the expected ultimate losses. With the assistance of an independent actuarial firm, we estimate the cost of losses and loss adjustment expenses related to IBNR based on an analysis of several commonly accepted actuarial loss projection methodologies. The IBNR that we book represents management’s best estimate. The following tables summarize our gross and net reserves for unpaid losses and loss adjustment expenses as of December 31, 2025 and 2024: Year Ended December 31, 2025 Gross % of Total Net % of Total ($ in thousands, except percentages) Case reserves $ 115,954  10.3  % $ 74,698  10.0  % IBNR 1,013,982  89.7  % 673,541  90.0  % Total reserves $ 1,129,936  100.0  % $ 748,239  100.0  % Year Ended December 31, 2024 Gross % of Total Net % of Total ($ in thousands, except percentages) Case reserves $ 71,420  9.4  % $ 47,378  9.3  % IBNR 685,439  90.6  % 462,566  90.7  % Total reserves $ 756,859  100.0  % $ 509,944  100.0  % The process of estimating the reserve for losses and loss adjustment expenses requires a high degree of judgment and is subject to several variables. In establishing the quarterly actuarial recommendation for the reserve for losses and loss adjustment expenses, consideration is given to several actuarial methods. A first step is to select an initial expected ultimate loss and allocated loss adjustment expense (“ALAE”) ratio for each reserving group. This is done with assistance from our actuarial consultants. Consideration is given to inputs from our underwriting and claims departments, internal pricing data and industry benchmarks provided by our actuarial consultants. The actuarial methods utilize, to varying degrees, the initial expected loss ratio, analysis of industry and internal claims reporting and payment patterns, paid and reported experience, industry loss experience and changes in market conditions, policy forms, exclusions and exposures. The actuarial methods used to estimate loss and loss adjustment expense reserves are: •Reported and/or Paid Loss Development Methods — Ultimate losses are estimated based on historical or industry loss reporting (or payout) patterns applied to current reported (or paid) loss and ALAE. Reported losses are the sum of paid and case losses. When there is insufficient historical data, industry development patterns are used. •Reported and/or Paid Bornhuetter-Ferguson Method — Ultimate losses are estimated as the sum of cumulative reported (or paid) losses and estimated IBNR (or unpaid) losses. IBNR (or unpaid) losses are estimated based on historical or industry reporting (or payout) development patterns and the initial expected ultimate loss and ALAE ratio. •Reported and/or Paid Cape Cod Method — Ultimate losses are estimated as the sum of cumulative reported (or paid) losses and estimated IBNR (or unpaid) losses. IBNR (or unpaid) losses are estimated based on historical or industry reporting (or payout) development patterns and a loss and ALAE ratio based on adjusted experience to date. 73 Table of Contents Since our loss experience is less mature, we are primarily relying on a weighting between the initial expected loss and ALAE ratio, the Reported Bornhuetter-Ferguson, the Reported Cape Cod Method, and the Reported Loss Development Method. The weighting varies by reserve group and accident year, considering the maturity and credibility of the loss experience, as well as exposure considerations. Our reserves are driven by several important factors, including litigation and regulatory trends, legislative activity, climate change, social and economic patterns, and claims inflation assumptions. Our reserve estimates reflect current inflation in legal claims’ settlements and assume we will not be subject to losses from significant new legal liability theories. Our reserve estimates assume that there will not be significant changes in the regulatory and legislative environment. The impact of potential changes in the regulatory or legislative environment is difficult to quantify in the absence of specific, significant new regulation or legislation. In the event of significant new regulation or legislation, we will attempt to quantify its impact on our business, but no assurance can be given that our attempt to quantify such inputs will be accurate or successful. Although we believe that our reserve estimates are reasonable, it is possible that our actual loss experience may not conform to our assumptions. Specifically, our actual ultimate loss ratio could differ from our initial expected loss ratio, or our actual reporting and payment patterns could differ from our expected reporting and payment patterns, which are based on our own data and industry data. Accordingly, the ultimate settlement of losses and the related loss adjustment expenses may vary significantly from the estimates included in our financial statements. We regularly review our estimates and adjust them as necessary as experience develops or as new information becomes known to us. Such adjustments are included in the results of current operations. The table below quantifies the impact of potential reserve deviations from our carried reserve as of December 31, 2025 and 2024. We applied a sensitivity factor to net reserves for unpaid losses and loss adjustment expenses by underwriting division below. We believe that potential changes such as these would not have a material impact on our liquidity. Potential Impact as of December 31, 2025 Underwriting Division Net Reserves for Unpaid Losses and Loss Adjustment Expenses 7.5% Higher Pre-tax Income Mezzanine Equity and Stockholders’ Equity(1) 7.5% Lower Pre-tax Income Mezzanine Equity and Stockholders’ Equity(1) ($ in thousands) Casualty $ 484,673 $ 521,024 $ (36,351) $ (28,717) $ 448,323  $ 36,351  $ 28,717  Professional Liability 161,059 173,138 (12,079) (9,543) 148,980  12,079  9,543  Healthcare Liability 97,612 104,933 (7,321) (5,784) 90,291  7,321  5,784  Baleen Specialty 4,895 5,262 (367) (290) 4,528  367  290  74 Table of Contents Potential Impact as of December 31, 2024 Underwriting Division Net Reserves for Unpaid Losses and Loss Adjustment Expenses 7.5% Higher Pre-tax Income Mezzanine Equity and Stockholders’ Equity(1) 7.5% Lower Pre-tax Income Mezzanine Equity and Stockholders’ Equity(1) ($ in thousands) Casualty $ 311,115  $ 334,449 $ (23,334) $ (18,434) $ 287,781  $ 23,334  $ 18,434  Professional Liability 119,741  128,722 (8,981) (7,095) 110,760  8,981  7,095  Healthcare Liability 78,925  84,844 (5,919) (4,676) 73,006  5,919  4,676  Baleen Specialty 163  175  (12) (10) 151  12  10  _________________ (1) The U.S. corporate income tax rate of 21% is used to estimate the potential impact to mezzanine equity and stockholders’ equity. The amount by which estimated losses differ from those originally reported for a period is known as “development.” Development is unfavorable when the losses ultimately settle for more than the amount reserved or subsequent estimates indicate a basis for reserve increases on unresolved claims. Development is favorable when losses ultimately settle for less than the amount reserved or subsequent estimates indicate a basis for reducing loss reserves on unresolved claims. We reflect favorable or unfavorable development of loss reserves in the results of operations in the period the estimates are changed. Reinsurance recoverable We purchase various forms of reinsurance to manage loss exposures and safeguard our capital. Our reinsurance is primarily contracted under quota-share reinsurance treaties and excess of loss treaties. We may also place facultative reinsurance on specific risks we deem prudent. A quota share reinsurance treaty is an agreement where reinsurers assume a percentage of the company’s losses in exchange for a negotiated percentage of premium. An excess of loss reinsurance treaty is an agreement where reinsurers agree to assume a portion of losses for a specific event in excess of a specified amount in return for a negotiated premium. The negotiated premium is based on the assessment of the amount of risk being ceded to the reinsurer because the reinsurer does not share proportionately in the ceding company's losses. The recognition of reinsurance recoverables requires two key estimates as follows: •The first estimate is the amount of loss reserves to be ceded to our reinsurers. This amount consists of our case reserves and IBNR. See “Reserves for losses and loss adjustment expenses” under “Critical Accounting Policies and Estimates” above and Note 2, “Significant Accounting Policies” in our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion. •The second estimate is the amount of the reinsurance recoverable balance we believe will ultimately not be collected from reinsurers. We are selective in choosing reinsurers, buying reinsurance from reinsurers with an A.M. Best rating of “A” (Excellent) or better. The amount we ultimately collect may differ from our estimate due to the ability and willingness of reinsurers to pay claims, which may be negatively impacted by factors such as insolvency, contractual disputes over contract language or coverage and/or other reasons. In addition, economic conditions and/or operational performance of a particular reinsurer may deteriorate, and this could also affect the ability and willingness of a reinsurer to meet their contractual obligations. As of December 31, 2025, we have an allowance for credit losses of $0.2 million for our reinsurance recoverable balance. 75 Table of Contents Fair value measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is determined based on a fair value hierarchy that prioritizes the use of observable inputs over the use of unobservable inputs and requires the use of observable inputs when available. The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels, as follows: ▪Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. ▪Level 2: Significant other observable inputs other than Level 1 inputs, such as quoted prices in active markets for similar assets or liabilities, quoted prices in inactive markets for identical assets or liabilities, or other inputs that are directly or indirectly observable through market-corroborated inputs, such as interest rates, yield curves, prepayment speeds, default rates, or loss severities. ▪Level 3: Significant unobservable inputs used to measure fair value to the extent that relevant observable inputs are not available, and that reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the measurement date. See Note 4, “Fair Value Measurements”, in our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion regarding our fair value disclosures. Deferred income taxes We record deferred income taxes as assets or liabilities on our Consolidated Balance Sheets to reflect the net tax effect of the temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred tax assets and liabilities are measured by applying enacted tax rates in effect for the years in which such differences are expected to reverse. Our deferred tax assets result from temporary differences primarily attributable to unearned premium reserves, loss reserves, deferred policy acquisition costs, share-based compensation, and unrealized gains or losses on investments. Our deferred tax liabilities result primarily from deferred policy acquisition costs. We review the need for a valuation allowance related to our deferred tax assets each quarter. We reduce our deferred tax assets by a valuation allowance when we determine that it is more likely than not that some portion or all of the deferred tax assets will not be realized. The assessment of whether or not a valuation allowance is needed requires us to use significant judgment. See Note 13, “Income Taxes” in our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion regarding our deferred tax assets and liabilities. Recent Accounting Pronouncements See Note 2, “Significant Accounting Policies,” in our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion regarding our recent accounting pronouncements.