Bowhead Specialty Holdings Inc

Previous wording

Bowhead Specialty Holdings Inc. (“BSHI” or the “Company”) is a profitable and growing company providing specialty Property and Casualty (“P&C”) products. We focus on providing craft solutions in our specialty lines and classes of business that we believe require deep underwriting and claims expertise in order to produce attractive financial results. We have initially focused on underwriting Casualty, Professional Liability and Healthcare risks where our management team has deep experience. Across our underwriting divisions, our policyholders vary in size, industry and complexity and require specialized, innovative and customized solutions where we individually underwrite and structure policies for each account. As a result, our products are primarily written on an excess and surplus lines (“E&S”) basis, where we have flexibility of rate and policy form. We distribute our products through carefully selected relationships with leading distribution partners in both the wholesale and retail markets.

Current wording

Bowhead Specialty Holdings Inc. (“BSHI” or the “Company”) is a profitable and growing company providing specialty Property and Casualty (“P&C”) products. We focus on providing craft solutions in our specialty lines and classes of business that we believe require deep underwriting and claims expertise in order to produce attractive financial results. We have initially focused on underwriting Casualty, Professional Liability and Healthcare Liability risks where our management team has deep experience. Across our underwriting divisions, our policyholders vary in size, industry and complexity and require specialized, innovative and customized solutions where we individually underwrite and structure policies for each account. As a result, our products are primarily written on an excess and surplus lines (“E&S”) basis, where we have flexibility of rate and policy form. We distribute our products through carefully selected relationships with leading distribution partners in both the wholesale and retail markets.

Previous wording

Net realized investment gains 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 on the Condensed Consolidated Balance Sheets.

Current wording

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 on the Condensed Consolidated Balance Sheets.

Previous wording

Other insurance-related income represents revenue we receive for providing insurance-related services.

Current wording

Other insurance-related income represent fees associated with the issuance of policies and revenue we receive for providing insurance-related services.

Previous wording

Non-operating expenses represent expenses related to various transactions that we consider to be unique and non-recurring in nature, including expenses related to our initial public offering.

Current wording

Non-operating expenses represent expenses related to various transactions that we consider to be unique and non-recurring in nature, including expenses related to our initial public offering (the “IPO”).

Previous wording

Expense ratio, expressed as a percentage, is the ratio of net acquisition costs and operating expenses to net earned premiums.

Current wording

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.

Previous wording

Gross written premiums increased $58.8 million, or 50.4%, to $175.5 million for the three months ended June 30, 2024 from $116.7 million for the three months ended June 30, 2023. The increase in gross written premiums was driven by new business, renewals and continued growth in our platform across all three divisions. For the three months ended June 30, 2024 and June 30, 2023, E&S business made up 75.8% and 78.0% of gross written premiums, respectively, while admitted business made up 24.2% and 22.0%, respectively. The 2.2 point decrease in the proportion of E&S business written was driven by the Casualty division, where an admitted product was required on specialty business written.

Current wording

Gross written premiums increased $48.1 million, or 32.3%, to $197.0 million for the three months ended September 30, 2024 from $148.9 million for the three months ended September 30, 2023. The increase in gross written premiums was driven by renewals, including $4.4 million of additional gross written premium from a large audit premium, new business and continued growth in our platform across all four divisions. For the three months ended September 30, 2024 and 2023, E&S business made up 75.8% and 78.7% of gross written premiums, respectively, while admitted business made up 24.2% and 21.3%, respectively. The 2.9 point decrease in the proportion of E&S business written was driven by the Casualty division, where an admitted product was required on specialty business written.

Previous wording

Net written premiums increased $35.6 million, or 46.6%, to $112.1 million for the three months ended June 30, 2024 from $76.4 million for the three months ended June 30, 2023. The increase in net written premiums was primarily due to the growth in gross written premiums for the three months ended June 30, 2024, partially offset by the increase in ceded written premium primarily due to the volume of written premiums subject to the ceded quota share reinsurance treaties within our Casualty underwriting division.

Current wording

Net written premiums increased $29.0 million, or 29.2%, to $128.3 million for the three months ended September 30, 2024 from $99.3 million for the three months ended September 30, 2023. The increase in net written premiums was primarily due to the growth in gross written premiums for the three months ended September 30, 2024, partially offset by the increase in ceded written premium primarily due to the volume of written premiums subject to the ceded quota share reinsurance treaties within our Casualty underwriting division and the Cyber line of business within our Professional Liability division.

Previous wording

Net earned premiums increased $28.7 million, or 46.8%, to $90.1 million for the three months ended June 30, 2024 from $61.4 million for the three months ended June 30, 2023. The increase in net earned premiums was primarily due to the earning of increased gross written premiums offset by the earning of increased ceded written premiums under our ceded reinsurance treaties.

Current wording

Net earned premiums increased $34.3 million, or 48.4%, to $105.2 million for the three months ended September 30, 2024 from $70.9 million for the three months ended September 30, 2023. The increase in net earned premiums, which included $3.3 million of additional net earned premium from a large audit premium, 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.

Previous wording

Our loss ratio was 65.5% for the three months ended June 30, 2024 compared to 61.0% for the three months ended June 30, 2023, or an increase of 4.5 points. In the fourth quarter of 2023, we utilized updated current accident year loss ratios reflecting higher industry loss ratios for Casualty, which was carried into our current quarter loss ratios. As Casualty comprised 85.6% of the $58.8 million increase in gross written premiums for the three months ended June 30, 2024 compared to June 30, 2023 and comprised 65.1% of the Company’s gross written premiums compared to 54.7% in the three months ended June 30, 2023, the increase in our loss ratio is primarily driven by the increase in the proportion of business associated with the higher industry loss ratio for Casualty.

Current wording

Our loss ratio was 64.5% for the three months ended September 30, 2024 compared to 60.4% for the three months ended September 30, 2023, or an increase of 4.1 points. In the fourth quarter of 2023, we utilized updated current accident year loss ratios reflecting higher industry loss ratios for Casualty, which was carried into our current quarter loss ratios. As Casualty comprised 73.6% of the $48.1 million increase in gross written premiums for the three months ended September 30, 2024 compared to September 30, 2023 and comprised 61.0% of the Company’s gross written premiums compared to 57.0% in the three months ended September 30, 2023, the increase in our loss ratio is primarily driven by the increase in the proportion of business associated with the higher industry loss ratio for Casualty.

Previous wording

Gross acquisition costs as a percentage of gross earned premiums was 15.7% for the three months ended June 30, 2024 compared to 15.1% for the three months ended June 30, 2023, and ceded earned commissions as a percentage of ceded earned premium was 29.0% for the three months ended June 30, 2024 compared to 29.6% for the three months ended June 30, 2023.

Current wording

Gross acquisition costs as a percentage of gross earned premiums was 15.8% for the three months ended September 30, 2024 compared to 15.0% for the three months ended September 30, 2023, and ceded earned commissions as a percentage of ceded earned premium was 29.0% for the three months ended September 30, 2024 compared to 29.3% for the three months ended September 30, 2023.

Previous wording

The combined ratio was 99.3% for the three months ended June 30, 2024, compared to 92.8% for the three months ended June 30, 2023. The 6.5 point increase was due to the 4.5 point increase in the loss ratio and the 1.9 point increase in the expense ratio.

Current wording

The combined ratio was 94.4% for the three months ended September 30, 2024, compared to 91.4% for the three months ended September 30, 2023. The 3.0 point increase was due to the 4.1 point increase in the loss ratio, partially offset by the 1.1 point decrease in the expense ratio.

Previous wording

Net investment income increased $9.0 million to $16.4 million for the six months ended June 30, 2024 from $7.4 million for the six months ended June 30, 2023. The increase in net investment income is primarily due to a higher average balance of investments during the six months ended June 30, 2024 and higher yields on invested assets.

Current wording

Net investment income increased $6.3 million to $11.5 million for the three months ended September 30, 2024 from $5.2 million for the three months ended September 30, 2023. The increase in net investment income is primarily due to a higher average balance of investments during the three months ended September 30, 2024, which included our fully invested IPO proceeds, and higher yields on invested assets.

Previous wording

Income tax expense was $1.9 million for the three months ended June 30, 2024, compared to $1.9 million for the three months ended June 30, 2023. Our effective tax rate was 25.3% for the three months ended June 30, 2024, compared to 22.5% for the three months ended June 30, 2023. The effective tax rate may vary slightly from the statutory tax rate due to state taxes and certain tax adjustments for permanent differences.

Current wording

Income tax expense was $3.7 million for the three months ended September 30, 2024, compared to $2.6 million for the three months ended September 30, 2023. Our effective tax rate was 23.6% for the three months ended September 30, 2024, compared to 22.7% for the three months ended September 30, 2023. The effective tax rate may vary slightly from the statutory tax rate due to state taxes and certain tax adjustments for permanent differences.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023:

Previous wording

The following table presents gross written premiums by underwriting division for the six months ended June 30, 2024 and 2023:

Current wording

The following table presents gross written premiums by underwriting division for the nine months ended September 30, 2024 and 2023:

Previous wording

Gross written premiums increased $101.5 million, or 47.8%, to $314.0 million for the six months ended June 30, 2024 from $212.4 million for the six months ended June 30, 2023. The increase in gross written premiums was driven by new business, renewals and continued growth in our platform across all three divisions. For the six months ended June 30, 2024 and June 30, 2023, E&S business made up 75.5% and 79.4% of gross written premiums, respectively, while admitted business made up 24.5% and 20.6%, respectively. The 3.9 point decrease in the proportion of E&S business written was driven by the Casualty division, where an admitted product was required on specialty business written.

Current wording

Gross written premiums increased $149.6 million, or 41.4%, to $510.9 million for the nine months ended September 30, 2024 from $361.4 million for the nine months ended September 30, 2023. The increase in gross written premiums was driven by renewals, including $4.4 million of additional gross written premium from a large audit premium, new business and continued growth in our platform across all four divisions. For the nine months ended September 30, 2024 and 2023, E&S business made up 75.6% and 79.1% of gross written premiums, respectively, while admitted business made up 24.4% and 20.9%, respectively. The 3.5 point decrease in the proportion of E&S business written was driven by the Casualty division, where an admitted product was required on specialty business written.

Previous wording

Net written premiums increased $62.5 million, or 44.5%, to $202.9 million for the six months ended June 30, 2024 from $140.4 million for the six months ended June 30, 2023. The increase in net written premiums was primarily due to the growth in gross written premiums for the six months ended June 30, 2024, partially offset by the increase in ceded written premium primarily due to the volume of written premiums subject to the ceded quota share reinsurance treaties within our Casualty underwriting division.

Current wording

Net written premiums increased $91.5 million, or 38.2%, to $331.2 million for the nine months ended September 30, 2024 from $239.7 million for the nine months ended September 30, 2023. The increase in net written premiums was primarily due to the growth in gross written premiums for the nine months ended September 30, 2024, partially offset by the increase in ceded written premium primarily due to the volume of written premiums subject to the ceded quota share reinsurance treaties within our Casualty underwriting division and the Cyber line of business within our Professional Liability division.

Previous wording

Net earned premiums increased $56.0 million, or 47.9%, to $173.1 million for the six months ended June 30, 2024 from $117.0 million for the six months ended June 30, 2023. The increase in net earned premiums was primarily due to the earning of increased gross written premiums offset by the earning of increased ceded written premiums under our ceded reinsurance treaties.

Current wording

Net earned premiums increased $90.3 million, or 48.1%, to $278.2 million for the nine months ended September 30, 2024 from $187.9 million for the nine months ended September 30, 2023. The increase in net earned premiums, which included $3.3 million of additional net earned premium from a large audit premium, 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.

Previous wording

Our loss ratio was 65.5% for the six months ended June 30, 2024 compared to 60.6% for the six months ended June 30, 2023, or an increase of 4.9 points. In the fourth quarter of 2023, we utilized updated current accident year loss ratios reflecting higher industry loss ratios for Casualty, which was carried into our year to date loss ratios. As Casualty comprised 85.8% of the $101.5 million increase in gross written premiums for the six months ended June 30, 2024 compared to June 30, 2023 and comprised 65.5% of the Company’s gross written premiums compared to 55.8% in the six months ended June 30, 2023, the increase in our loss ratio is primarily driven by the increase in the proportion of business associated with the higher industry loss ratio for Casualty.

Current wording

Our loss ratio was 65.1% for the nine months ended September 30, 2024 compared to 60.5% for the nine months ended September 30, 2023, or an increase of 4.6 points. In the fourth quarter of 2023, we utilized updated current accident year loss ratios reflecting higher industry loss ratios for Casualty, which was carried into our year to date loss ratios. As Casualty comprised 81.9% of the $149.6 million increase in gross written premiums for the nine months ended September 30, 2024 compared to September 30, 2023 and comprised 63.8% of the Company’s gross written premiums compared to 56.3% in the nine months ended September 30, 2023, the increase in our loss ratio is primarily driven by the increase in the proportion of business associated with the higher industry loss ratio for Casualty.

Previous wording

The following table summarizes the components of the expense ratio for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes the components of the expense ratio for the nine months ended September 30, 2024 and 2023:

Previous wording

The increase in the expense ratio for the six months ended June 30, 2024 was primarily driven by our continued investment in the business and the $1.3 million acceleration of remaining stock-based compensation costs associated with Class P interests through operating expenses (see Note 9 within the condensed consolidated financial statements for additional information on the Company’s stock-based compensation). Excluding this one-time non-cash expense, our expense ratio for the six months ended June 30, 2024 was 32.4%.

Current wording

Our expense ratio was 31.9% for the nine months ended September 30, 2024 compared to 32.2% for the nine months ended September 30, 2023, a decrease of 0.3 points. The decrease in the expense ratio for the nine months ended September 30, 2024 was primarily driven by $3.3 million of additional net earned premium from a large audit premium earned within the nine months ended September 30, 2024, partially offset by our continued investment in the business and the $1.3 million acceleration of remaining stock-based compensation costs associated with Class P interests through operating expenses (see Note 9 within the condensed consolidated financial statements for additional information on the Company’s stock-based compensation).

Previous wording

Gross acquisition costs as a percentage of gross earned premiums was 15.5% for the six months ended June 30, 2024 compared to 15.1% for the six months ended June 30, 2023, and ceded earned commissions as a percentage of ceded earned premium was 29.0% for the six months ended June 30, 2024 compared to 29.7% for the six months ended June 30, 2023.

Current wording

Gross acquisition costs as a percentage of gross earned premiums was 15.6% for the nine months ended September 30, 2024 compared to 15.1% for the nine months ended September 30, 2023, and ceded earned commissions as a percentage of ceded earned premium was 29.0% for the nine months ended September 30, 2024 compared to 29.5% for the nine months ended September 30, 2023.

Previous wording

The combined ratio was 98.7% for the six months ended June 30, 2024, compared to 93.5% for the six months ended June 30, 2023. The 5.2 point increase was due to the 4.9 point increase in the loss ratio and the 0.3 point increase inthe expense ratio.

Current wording

The combined ratio was 97.0% for the nine months ended September 30, 2024, compared to 92.7% for the nine months ended September 30, 2023. The 4.3 point increase was due to the 4.6 point increase in the loss ratio, partially offset by the 0.3 point decrease inthe expense ratio.

Previous wording

Return on equity was 9.4% for the six months ended June 30, 2024, compared to 22.0% for the six months ended June 30, 2023. The 12.6 point decrease was driven by the $147.8 million increase in stockholders’ equity and a $3.2 million reduction in after tax net income as a result of the IPO. Costs incurred as a result of the IPO included non-deferrable and non-recurring costs directly attributable to the IPO, which are disclosed as non-operating expenses within the Consolidated Statements of Income and Comprehensive Income, and additional expenses that were incurred as a result of IPO, which included the acceleration of remaining stock-based compensation costs associated with the Class P interests, expenses associated with the issuances of RSUs, PSUs and warrants, and deferred financing costs associated with the establishment of our Facility. The increase in stockholders’ equity from December 31, 2023 was driven by net proceeds from the IPO, net income and capital contributions from BIHL.

Current wording

Return on equity was 11.8% for the nine months ended September 30, 2024, compared to 22.7% for the nine months ended September 30, 2023. The 10.9 point decrease was driven by the $210.4 million increase in mezzanine equity and stockholders’ equity and a $5.2 million reduction in after tax net income as a result of the IPO. Costs incurred as a result of the IPO included non-deferrable and non-recurring costs directly attributable to the IPO, which are disclosed as non-operating expenses within the Consolidated Statements of Income and Comprehensive Income, and additional expenses that were incurred as a result of IPO, which included the acceleration of remaining stock-based compensation costs associated with the Class P interests, expenses associated with the issuances of RSUs, PSUs and warrants, and deferred financing costs associated with the establishment of our Facility. The increase in mezzanine equity and stockholders’ equity from September 30, 2023 was driven by net proceeds from the IPO, net income, capital contributions from BIHL and reduction in accumulated other comprehensive loss.

Previous wording

Net investment income increased $4.7 million to $8.8 million for the three months ended June 30, 2024 from $4.0 million for the three months ended June 30, 2023. The increase in net investment income is primarily due to a higher average balance of investments during the three months ended June 30, 2024 and higher yields on invested assets.

Current wording

Net investment income increased $15.3 million to $27.9 million for the nine months ended September 30, 2024 from $12.6 million for the nine months ended September 30, 2023. The increase in net investment income is primarily due to a higher average balance of investments during the nine months ended September 30, 2024 and higher yields on invested assets.

Previous wording

Income tax expense was $3.9 million for the six months ended June 30, 2024, compared to $3.5 million for the six months ended June 30, 2023. Our effective tax rate was 23.8% for the six months ended June 30, 2024, compared to 23.2% for the six months ended June 30, 2023. The effective tax rate may vary slightly from the statutory tax rate due to state taxes and certain tax adjustments for permanent differences.

Current wording

Income tax expense was $7.6 million for the nine months ended September 30, 2024, compared to $6.0 million for the nine months ended September 30, 2023. Our effective tax rate was 23.7% for the nine months ended September 30, 2024, compared to 23.0% for the nine months ended September 30, 2023. The effective tax rate may vary slightly from the statutory tax rate due to state taxes and certain tax adjustments for permanent differences.

Previous wording

(1) For the six months ended June 30, 2024 and 2023, net income is annualized to arrive at return on equity.

Current wording

(1) For the nine months ended September 30, 2024 and 2023, net income is annualized to arrive at return on equity.

Previous wording

(1)Strategic initiatives for the three months ended June 30, 2024 represents costs incurred to set up our Baleen Specialty division, which is recorded in operating expenses within the Condensed 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. See “Business— Our Strategy.”

Current wording

(1)Strategic initiatives for the three months ended September 30, 2023 represents costs incurred to set up our Baleen Specialty division, which is recorded in operating expenses within the Condensed 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.

Previous wording

Underwriting income for the six months ended June 30, 2024 and 2023 reconciles to income before income taxes as follows:

Current wording

Underwriting income for the nine months ended September 30, 2024 and 2023 reconciles to income before income taxes as follows:

Previous wording

Adjusted net income for the six months ended June 30, 2024 and 2023 reconciles to net income as follows:

Current wording

Adjusted net income for the nine months ended September 30, 2024 and 2023 reconciles to net income as follows:

Previous wording

Adjusted return on equity for the six months ended June 30, 2024 and 2023 reconciles to return on equity as follows:

Current wording

Adjusted return on equity for the nine months ended September 30, 2024 and 2023 reconciles to return on equity as follows:

Previous wording

Diluted adjusted earnings per share for the six months ended June 30, 2024 and 2023 reconciles to diluted earnings per share as follows:

Current wording

Diluted adjusted earnings per share for the nine months ended September 30, 2024 and 2023 reconciles to diluted earnings per share as follows:

Previous wording

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 months 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, 2023, the maximum dividend that BICI could pay without the approval of regulatory authorities was $16.1 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.

Current wording

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 months 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, 2023, the maximum dividend that BICI could pay without the approval of regulatory authorities was $2.9 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.

Previous wording

As of June 30, 2024, our holding company had $140.1 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 the next 12 months.

Current wording

As of September 30, 2024, our holding company had $131.9 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 the next 12 months.

Previous wording

Our cash flows for the six months ended June 30, 2024 and 2023 were as follows:

Current wording

Our cash flows for the nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

The increase in cash provided by operating activities in the six months ended June 30, 2024 compared to the six months ended June 30, 2023 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.

Current wording

The increase in cash provided by operating activities in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 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.

Previous wording

For the six months ended June 30, 2024, net cash used in investing activities was $168.2 million due to growth in our business operations. For the six months ended June 30, 2024, funds from operations and net proceeds from the initial public offering were used to purchase fixed maturity securities and short-term investments of $219.8 million. During the six months ended June 30, 2024, we received proceeds of $57.0 million from sales of fixed maturity securities and short-term investments. Net cash used in investing activities also includes purchases of property and equipment of $1.6 million.

Current wording

For the nine months ended September 30, 2024, net cash used in investing activities was $324.7 million due to growth in our business operations. For the nine months ended September 30, 2024, funds from operations and net proceeds from the IPO were used to purchase fixed maturity securities of $458.4 million and short-term investments of $9.9 million. During the nine months ended September 30, 2024, we received proceeds of $137.2 million from sales of fixed maturity securities and $9.0 million from sales of short-term investments. Net cash used in investing activities also includes purchases of property and equipment of $2.6 million.

Previous wording

For the six months ended June 30, 2023, net cash used in investing activities was $115.2 million. For the six months ended June 30, 2023, funds from operations were used to purchase fixed maturity securities, and short-term investments of $161.0 million. During the six months ended June 30, 2023, we received proceeds of $12.8 million from sales of fixed maturity securities. Net cash used in investing activities also includes purchases of property and equipment of $1.8 million.

Current wording

For the nine months ended September 30, 2023, net cash used in investing activities was $174.0 million. For the nine months ended September 30, 2023, funds from operations were used to purchase fixed maturity securities of $217.9 million and short-term investments of $21.4 million. During the nine months ended September 30, 2023, we received proceeds of $16.7 million from sales of fixed maturity securities and $51.5 million from sales of short-term investments. Net cash used in investing activities also includes purchases of property and equipment of $2.9 million.

Previous wording

For the six months ended June 30, 2024, net cash provided by financing activities was $133.8 million and primarily reflected net proceeds from the initial public offering. For the six months ended June 30, 2023, net cash provided by financing activities was $31.0 million and reflected capital contributions from BIHL.

Current wording

For the nine months ended September 30, 2024, net cash provided by financing activities was $133.8 million and primarily reflected net proceeds from the IPO. For the nine months ended September 30, 2023, net cash provided by financing activities was $53.1 million and reflected capital contributions from BIHL.

Previous wording

Currently, all of our lines of business (except our Cyber line of business within our Professional Liability division) use a quota share reinsurance treaty where 25.0% of the exposure is ceded to reinsurers. Additionally, all of our lines of business (except Cyber) use an excess of loss reinsurance treaty ceding 60.1% of losses in excess of $5.0 million up to $15.0 million to our reinsurers. Cyber, as a specialized line of business, is placed under a separate quota share structure under which we currently cede 64.0% of the exposure to reinsurers. The only reinsurance covering our Cyber line of business is pursuant to this Cyber-specific quota share reinsurance agreement. Our Cyber line of business does not benefit from our excess of loss reinsurance program and there is no separate excess of loss reinsurance program for our Cyber line of business. In addition to the core treaties outlined above, we may also place additional reinsurance on specific risk classes, as we deem prudent. For example, on March 1, 2024, we placed a quota share treaty covering commercial auto exposure in excess of $1.0 million up to $5.0m within our Casualty book of business. Our reinsurance treaties are currently subject to caps which currently 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.

Current wording

Currently, all of our lines of business (except our Cyber line of business within our Professional Liability division) use a quota share reinsurance treaty where 25.0% of the exposure is ceded to reinsurers. Additionally, all of our lines of business (except Cyber) use an excess of loss reinsurance treaty ceding 60.1% of losses in excess of $5.0 million up to $15.0 million to our reinsurers. Cyber, as a specialized line of business, is placed under a separate quota share structure under which we currently cede 64.0% of the exposure to reinsurers. The only reinsurance covering our Cyber line of business is pursuant to this Cyber-specific quota share reinsurance agreement. Our Cyber line of business does not benefit from our excess of loss reinsurance program and there is no separate excess of loss reinsurance program for our Cyber line of business. In addition to the core treaties outlined above, we may also place additional reinsurance on specific risk classes, as we deem prudent. For example, on March 1, 2024, we placed a quota share treaty covering commercial auto exposure in excess of $1.0 million up to $5.0 million within our Casualty book of business. Our reinsurance treaties are currently subject to caps which currently 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.