Bowhead Specialty has been treading water for the past six months, recording a small loss of 1.8% while holding steady at $27.22. The stock also fell short of the S&P 500’s 9.3% gain during that period.

Does this present a buying opportunity for BOW? Or is its underperformance reflective of its story and business quality? Find out in our full research report, it’s free.

Why Is Bowhead Specialty a Good Business?

Named after the Arctic bowhead whale known for navigating challenging waters, Bowhead Specialty Holdings (NYSE: BOW) is a specialty insurance company that provides customized coverage for complex and high-risk commercial sectors.

1. Net Premiums Earned Skyrocket, Fueling Growth Opportunities

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are:

• Gross premiums - what’s ceded to reinsurers as a risk mitigation and transfer strategy

Bowhead Specialty’s net premiums earned has grown at a 33.5% annualized rate over the last two years, much better than the broader insurance industry.

2. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Bowhead Specialty’s astounding 42.9% annual EPS growth over the last three years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

3. Growing BVPS Reflects Strong Asset Base

In the insurance industry, book value per share (BVPS) provides a clear picture of shareholder value, as it represents the total equity backing a company’s insurance operations and growth initiatives.

Fortunately for investors, Bowhead Specialty’s BVPS grew at an incredible 29.1% annual clip over the last two years.

Final Judgment

These are just a few reasons why we think Bowhead Specialty is one of the best insurance companies out there. With its shares underperforming the market lately, the stock trades at 1.8× forward P/B (or $27.22 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.

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