... introduce Stephen Sills, the CEO of Bowhead Specialty, Brad Mulcahy, the CFO. I'm gonna start with sort of a big picture cyclical question, and I'll present it to Stephen. You've seen a cycle or two in your career, and I was hoping you could compare and contrast what you're currently seeing in the casualty market with what you've seen in past cycles, and how that informs, I guess, both the foundation and the near-term planning for Bowhead. Sure. Well, one of the reasons for starting the company is I've been a serial failure at retirement. Looking at the opportunity in 2020, there was plenty at the time. What we were seeing is companies starting to recognize that there were real problems from the past and things had to change. Besides the fact of rates going up, we're starting to see capacity substantially shrink. Whereas the ticket of admission originally was maybe $25 million to go into publicly traded D&O or excess casualty business or hospital professional liability, it then became $10 million or $5 million. That enabled a company like ours to be able to get started without having to take business from people. There was just opportunities in layers that people needed new, clean capacity from a highly rated company. Has that line shrinkage, was that a factor in previous hard casualty markets? I saw it once before in the eighties, where there was a lot of shrinkage in capacity. But that snapped back pretty much right away. Here it is, we're almost five years on, and there hasn't been much of any movement in that space. There's still a need for capacity. We've seen some of it filled by MGAs, we've seen some of it filled by brokers putting together you know facilities to top off programs, but the coin of the realm is still frequently $5 million and certainly not $25 million. Okay. And my sense, and correct me if I'm wrong, not even five years on, we're not seeing those lines expand- Right ... even if the price increases, depending on line of business. In your book of business, there's a fair amount of exposure to construction, and I was hoping you could give us an update on what you're seeing. I know there's a lot of concern in construction, whether it's interest rates, tariffs, sometimes immigration policy enforcement, all of which can push up construction claim costs and maybe defer projects. What are you seeing in terms of demand for cover in that market? Yes to all your points. It's slowing things down. We've seen a slowdown in construction projects because of the uncertainty of interest rates, supply chains, employees, and with any kind of uncertainty, why are people committing hundreds of millions of dollars to a project? When we started to see some of this happen, even pre some of the tariff issues, just simply because of interest rates, we started to move our book away from construction projects to what we call practice policies. So instead of writing the construction wrap with everything, writing plumbers or electricians and things like that, which maybe the premium's not as big, but it's certainly steadier. The rates have been high. I think people are still seeing problems from before this decade with construction defect claims and problems with social inflation and rates. Even in those areas, the construction ones that we see or the practice policy we see, rates are still going up, particularly on the excess. Okay. One important attribute that Bowhead has really highlighted from the start is a significant percentage focus on E&S or non-admitted paper. To my mind, the reasons for that are obvious: you get more flexibility in policy, pricing, policy language. I wanted to ask two questions. One, is there any downside that I should be thinking about? In other words, here's the cost of being more focused on E&S. And second, broadly speaking, there is an increasing percentage of industry premiums written on E&S paper, and I'm wondering whether that reflects or what that reflects that would matter to Bowhead in terms of opportunity and risk. Sure. Potential risks, and some are minute, and some may rise to the level of a possible, is obviously if it's free of rate and form in the surplus lines market, it's outside of rate approval and form approval from most of the state regulators. And I suppose at some point in time, some of them could say, you know, no more, that they wanna constrain that. We don't see any hint of that happening. For all the reasons you mentioned, being free of rate and form gives us, as well as everybody else in that sector, a great deal of flexibility to do what they wanna do. If verdicts and settlements are going higher, whatever changes are necessary, the environment's better. Even if the state regulation becomes better, that we believe is legitimate and rates should go down, we don't have to wait months or years to have a state regulator approve it. We found some of that now. Our casualty business is 100% through wholesale brokers and 100% surplus lines. Some of our other business, directors and officers' liability, is admitted, generally. There are some places where it's a surplus lines policy, but overwhelmingly they're admitted policies, and they're done through retailers as well as wholesalers. But even when the marketplace was really hard, getting approval in some states for an admitted policy that was gonna be superior to what was being offered by the marketplace out there, took months and months, and I believe in certain cases, over a year to be approved. If you don't have to subject yourself to that torture, we see no reason to. So I always like to chime in here. I spent three months working as a regulator for the state of Maryland. It's not always malice, like sometimes it's really just limited competence in terms of addressing things. But it's still, you do end up with that outcome. And I wanted to get your thoughts on that because there are very different regulatory personalities in terms of how they interact with the insurance industry. If you're, I would say, coming from the business side of things, if you're an E&S paper or an E&S underwriter, you're solving problems. But if I'm a regulator and I want more power, then you're stepping out of my jurisdiction. Is there any fallout from that? Does that even matter? No. I think their biggest concern, I mean, as much as controlling a situation must be important to them, but having people clamor at the governor's door saying that they can't buy insurance or their insurance rates are going up 25%-50% a year, "Why can't I get somebody to write my insurance?" That's a pretty strong motivator to let things go. We're, for those of you that are familiar with our structure, with using American Family paper and our highly capitalized reinsurance vehicle behind it, which is based in Wisconsin. We've always found Wisconsin to be a very accommodating, favorable. I don't wanna say that they're doing any favors, but they're very responsive when we have a question or problem. They're just really responsive, and that helps. And if everybody was like that, that would be great, but we all know that they're not. And so we're staying surplus lines at about 75% of the business we do overall. Okay, fantastic. I do want to remind everyone in the room, if you've got a question, it is really my goal to make sure that you're getting the information that you want today. So please just raise your hand. If you do, we'll get a mic to you, and then you can ask your question. But in the interim, I just wanna take a minute because Bowhead, again, focused on specialty casualty, some primary, some excess, and when we listen to different executives, there are differences of opinion in terms of whether the primary is the best spot to be because of the relationships or maybe the excess is less subject to commoditization. And I know you write both, but I was hoping you could take us through the decision process of where to play and maybe your broader preference. Sure. Always prefer being primary when we're capable of it, and I'll run through the different lines and why in some places we're not, and then there's the preferred position, so if you look at the casualty, which as I said, is surplus lines on primary, surplus lines on excess, it's nice to be the primary, but when we're the excess, which is a much larger part of our business, we prefer to be down low. You find out about the claims sooner, you have more control over what's going on, and you're also being paid for it. What we find frequently is that in the excess world, it's your high up excess, your complete fungible capacity. For those of you that might have heard our earnings call from the first quarter, I mentioned a private equity firm that torched their tower upwards of $100 million, and they were looking for reductions on renewal. We thought, at least as a nice gesture, they ought to have some increase in premium, but we got left off the program because we wouldn't give a price reduction, so the further up you are, if you're 10x of 90 on a particular placement and you get torched, who needs you? There's somebody else prepared to step in line and take that position right away. Less so when you're really down low, actively involved with a particular claim, frequently having meetings with the insureds and things like that. So in the casualty space, we can write some of the primary business, the OL& T business. The same thing in the excess space. We don't write things like, on a primary basis, we don't do auto, we don't do workers' comp, we don't do on primary or excess, we don't do Fortune 500 business, we don't do New York construction business. All those sort of things which we believe are very volatile, no matter where you are in the placement. In the D&O world, we're unfortunately in the publicly traded space, we're more relegated to a higher up excess position, and what we've seen is on the real higher layers, the rates have gotten thin, and we've retired from the field on that. That we would love to write the primary, but that's really in the realm of the Chubbs, the XLs, the Zurichs, the AIGs. Because it's important if you're writing a large multinational company, you know, make up a company like Exxon, maybe they want their Italian subsidiary wants a policy on an Italian company in a policy written in Italian. We don't have those capabilities, those other companies do. So they get first dibs on the primary, and admittedly, that space is a more stable space, that people don't throw out their primary carrier or their first excess carrier so quickly. Their first excess carrier needs to be able to step in if they do have a problem with the primary, and so we're generally relegated above that area. When people talk about that the D&O business is stabilizing, it is, but I think it's more heavily weighted towards stabilizing because the primary is stabilized and versus the higher level excess. In the healthcare space, we divide that up into several areas, things like senior living, managed care, hospital professional liability, miscellaneous professional liability in the healthcare space. Hospitals are our largest space, and we much prefer to be either above their retention or above their captive, where we're very close to them, we have good relationships with them, and once again, are very actively involved with the claim if it's likely to be into a space where we are. One quick follow-up, if I can, on the professional line side. Does having more experience, longer relationships with either distribution or clients, will that help you move down into the towers where it sounds more attractive? It does. In the casualty space, where we probably have our strongest franchise, where we're, as I said, we're wholesale only. We have as we sit down quarterly and more frequently with the senior leadership of those wholesale organizations, we look at where they keep data on where we are in terms of the premium volume as a percentage of what they're doing by office, by underwriter, by class of business, and we believe that we're moving down in all the categories we want to move down in. Relationship, you know, you've heard it all many times that it's a people business. People want to do business with people that they're comfortable with. They want to know... They don't necessarily care if you're gonna decline the piece of business, but give them a quick answer. Don't drag them out for three weeks of asking questions and then decline it for a reason that you probably could have figured out in the first week of the submission. And from that standpoint, things like technology help and stuff like that. But with the idea that people want to do business with people that they're comfortable with, we have earned our stripes by having highly competent underwriters who have really close relationships with the brokerage community, and they know there's a mutual reliability. So I have two follow-ups, and I'm trying to decide the order. But you mentioned professional liability possibly leveling out, and it's interesting because a few years ago, when D&O. This is 2022, when D&O went soft, public company D&O went soft, that was attributed to the fact that there we'd seen interest rates rise, and a pretty sharp decline in de-SPACs and M&A activity and IPOs. And now, I don't know if it's coincidence or correlation that we're seeing more M&A. I mean, we've seen two insurance deals over the last 24 hours. And we're seeing some level of flattening out. Do those two issues actually do they influence one another? M&A, I'm not sure you necessarily unless a company is a serial acquirer. I don't know if you're getting paid for it. The marketplace is probably soft enough that if a billion-dollar company buys a 300 million dollar company, I'm not sure their premium's going up in this particular type of market. You're correct, SPACs, de-SPACs, and IPOs at the time the market was turning, there were some substantial premium increases. There were examples of 50% rates on line. You're not seeing that, and those policies were written three years, single aggregate. I don't think you're seeing that today. It's just, I don't believe you're being paid for that exposure. Okay, fair enough. And then you also mentioned that it's important to have relationships with distribution and ultimately with clients, and that brings me to the war for talent question. And I was hoping you'd talk a little bit about how Bowhead attracts talent, how you retain it, and maybe from a different perspective, how you develop it internally. Sure. Starting from the end, we don't do a lot of internal talent development to date for a couple of reasons. One is we're pretty much a virtual remote organization. We've got about 280 employees in 30 states and two countries, and we have two offices, one in New York, one in Chicago. Each one is, give or take, a little about, you know, 15,000 sq ft. We ask people to come in on Wednesdays and Tuesdays if they can. But coming on Wednesdays, we give them breakfast, we give them lunch, and that's the in-person contact. Everything else is virtual, and as a result, the whole company was built around that concept, that you work from home and everything is done by video. And I appreciate that companies that were always bricks-and-mortar had difficulty adapting to that environment and were anxious to get back to what they had. But we never had it. So when we hire somebody in, making up Des Moines, Iowa, they're never moving to Chicago to work for us. They might have worked for a company that required them to come in five days a week, and they didn't want to. We have also unlimited vacation time. So you know, the idea of some of these companies where the minimum time you could take off is a half day, right? Somebody's got to take their kids to the doctor or wanna go to a school play or a soccer game, that they got to burn a half a day is kind of ridiculous, we thought. So we don't have any problem attracting talent. When we first started out, people, obviously, I had a track record, and people knew that the companies were successful. I think most of the people that worked at the companies that I've started and that run would say it's probably the best work experience they've had. It's a good place to work. You're highly respected. And so people that have joined our organization enjoy the freedom to do what they have to do, but they're also very free to, you know, adjust their schedule. They might be working till all hours of the night because they did go to a school outing. But that's okay, you know. It's required that you be on video, that we don't accept regular phone calls. If somebody's doing a, you know, a telephone call, the first thing, if their video is not on, "Hey, is there something wrong with your video?" which is a slight reminder to put the video on. It always works. And in fact, we found that even when we've, like on a Wednesday, if we have half the people, and many of you must have found this out in your own businesses, when you have half the people in the office and half the people remote, who are you talking to? Are you talking to the camera? Are you talking to each other? And then once the meeting breaks up, where sometimes a lot of important things get discussed as people leave the room, the people that are on the video lose it. So even when we're all in the office and there's a video and there's a, a meeting, we'll have everybody will take it from their own space. They'll take it on their own laptop. And if there's more talking afterwards, we'll do follow-up, we'll do follow-up meetings. But we try and bring people in. There's an all-employee meeting every morning at 9:30 A.M. No matter where you are in the country or where you are in the world, you sign on at 9:30 A.M., and between myself and all the people that report to me, give a report on what's going on in the company, what's coming up, how they're doing in relationship to budget, and things like that. And then each of the departments have their own video gatherings with their people. And then there are several meetings a year where we actually meet in person in some remote location to bring the underwriters, the IT people, the finance people, the admin people that work with that unit. So we're just talking about planning the professional liability outing, so there might be 80 people at that outing when we ultimately have it. Now, the issue of developing talent, because of that, it's difficult to hire somebody right out of college and teach them in this type of environment. And so we have hired some people that are really young and relatively inexperienced in Chicago and New York because they could sit at the elbow of some people who are in the office, you know, three to five days a week. It's difficult to hire somebody in Des Moines who has no insurance experience and hope that they're gonna really learn the business remote. And I think that would. I don't think that's doing them any favors, and I don't think it's developing their career. What we are seeing today, though, with the use of technology is, you know, in terms of bringing more standardized information and judgment aids to the assistance of the underwriters, we are able to get by with underwriters who have less experience following rules and technology that's been set by people who have a substantial amount of experience. And that's what we believe over time is gonna be able to leverage our expense ratio. I said on the last call, we were gonna get it beneath 30, and then we'll go from there. But we believe through the use of technology and the type of people that we'll be bringing on into the organization, that we'll be able to change ultimately with the complexion from just when we started, where we were all what we call craft business and all extremely highly compensated people, to now more of a middle layer. ... I would just add, too, to quantify that, all the three hundred and some people that we've hired so far, never used a headhunter yet. So, that's great because we save money, but more importantly, that means all these people are coming through some sort of word-of-mouth. And, I think that's key to working as a remote company, that everybody who joins us has already knows somebody here, has sort of a spirit guide to the culture and how we work. So I think that kind of quantifies what Steve's talking about with the war on talent. We have a well-established no jerk policy in the company. Mm-hmm. That people get interviewed generally, depending on the position, up to by six or seven different people, and you've got to do well with all the interviews. I'm the last one. I've interviewed everybody that we've hired, not to quiz the IT person on their coding ability, that would be a waste of everyone's time, but to just talk about the culture of the company, have them, without the stress of an interview, you know, ask about things that they've been curious about and stuff like that, and it's really appreciated. Two quick follow-ups on that. One, is there any size beyond which that remote operating philosophy doesn't work? We talk about it. I think I don't think so. I don't think so. I think the question you could change that a bit to say, well, what if we acquired something, and those people operated out of one office? I think the remoteness, making the remoteness work really requires constant communication, and you can make the case that constant communication needs to take place whether you're in the office or out of the office. And I think this aids people to always being able to communicate, and that's really important for not only people understanding what's happening in the company, but in terms of underwriting talent. I'll give you an example that when we hire somebody, no matter what their experience level, it's kind of like, welcome to Bowhead. Congratulations, you have no underwriting authority. Nobody joins the company with underwriting authority, no matter if they had 20 years of experience. And the reason is that there's always consultation. There's always roundtables involved in talking about what we're interested in the business. And until this person understands the rules of the road, what we like, what we don't like, and everything gets socialized about the way we think of business, that's when the training wheels come off, and that's when they start to get a certain amount of authority. But it's made very clear that just because you have the authority doesn't mean you need to use the authority. You're free to call a roundtable, bring a couple of people together, and once again, because it's remote, it's you don't have to worry about, well, Bob and Susie and Mary, they'll be in next Thursday, we'll discuss it then. You can, you can look at everybody's schedule on Teams, schedule for, you know, 4:00 P.M. this afternoon, and people just jump on, it gets discussed, the huddle breaks, and you're off. Fantastic. And then second question: You've been public for a while now. How has that profile, I'm going to call it a profile enhancement, impacted your ability to identify talent or maybe even have talent coming to you saying, "I want to be more entrepreneurial"? I think that's been kind of the seeds of why most people have joined us, that they want an organization where they're respected. They want an organization where decisions can be made quickly. That whether they get what they want or not, they want to know what the answer is, and they want it without politics. They want to just know that you're here in this business to serve your brokers and make an underwriting profit. We've said in all of our, you know, discussions with investors and everybody else that, you know, underwriting profitability is the North Star, and that's what you're trying to get to. That's what decisions should be made on. So if you want to do something, if you want to change or do something different than what we're doing right now, you know, ask, talk about it, make your case for it. Let's stress test it to see if it makes sense, as opposed to, "We don't do that." I mean, there might be a couple of things we don't do. There's like a class of business that we will not write for various reasons. But other than that, everything's open for discussion to hear. And part of that discussion process helps make people better underwriters, more thoughtful with the kind of a Socratic method of determining what the best thing to do is. Okay. Again, if there are questions in the room, please let me know. I don't see any, so I'm going to move on. I've heard, you know, there's always chatter about pricing, and pricing is much more granular now in its cycles, and there seems to be an awful lot of enthusiasm around the healthcare segment and its prospects for growth. Can you talk about what you're seeing from- and maybe what the drivers are, which should inform the sustainability? Sure. I mentioned before that the hospital business is our larger segment in healthcare, and E&S market was probably slower to get into change mode than the rest. We started our professional liability on November 1st of 2020, and then we opened up for casualty on January 1 of 2021. We didn't hire a leader for healthcare till April, and then really started to get into the business till the middle of 2021. But what we saw in that time period in the healthcare space, there was still $25 million in limits put out by a few people. Things like, you know, sexual abuse, excuse me, and molestation did not, you know, become as apparent as it is today. It used to be, you know, in the old days, an inner-city hospital, if there was a traumatic birth injury, maybe it was a $30-$40 million verdict that maybe then settled for less, and so if people were writing healthcare accounts excess of $40-$50 million into north of $100 million, that was generally viewed as kind of free money. Those days are gone. There are some, and you could find it in the literature, there are many-