Bowhead Specialty Holdings Inc.BOW

Bowhead Specialty Holdings Inc. Fair Value Disclosure

10-KFiled Feb 24, 20262 min read
Fair Value Measurements
The Company’s investments in fixed maturity securities, all of which are classified as available for sale, are carried at fair value. All of the Company’s fixed maturity securities investments were priced by independent pricing services. The prices provided by the independent pricing services are estimated based on observable market data in active markets utilizing pricing models and processes, which may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, sector groupings, matrix pricing and reference data. Under certain circumstances, if a vendor price is unavailable, a price may be obtained from a broker. The pricing services may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs are available for each security evaluation on any given day. The pricing services used by the Company have indicated that they will only produce an estimate of fair value if objectively verifiable information is available. The determination of whether markets are active or inactive is based upon the volume and level of activity for a particular asset class.
The fair values of short-term investments approximate their carrying values due to their short-term maturity.
The following table presents the Company’s investments measured at fair value by level:
As of December 31, 2025Level 1Level 2Level 3Total
($ in thousands)
Fixed maturity securities
U.S. government and government agency$80,368 $— $— $80,368 
State and municipal— 129,278 — 129,278 
Commercial mortgage-backed securities— 171,322 — 171,322 
Residential mortgage-backed securities— 318,561 — 318,561 
Asset-backed securities— 169,004 — 169,004 
Corporate— 502,473 — 502,473 
Total fixed maturity securities
80,368 1,290,638 — 1,371,006 
Short-term investments— — — — 
Total investments
$80,368 $1,290,638 $— $1,371,006 
As of December 31, 2024Level 1Level 2Level 3Total
($ in thousands)
Fixed maturity securities
U.S. government and government agency$204,412 $— $— $204,412 
State and municipal— 67,784 — 67,784 
Commercial mortgage-backed securities— 82,438 — 82,438 
Residential mortgage-backed securities— 192,103 — 192,103 
Asset-backed securities— 120,577 — 120,577 
Corporate— 212,675 — 212,675 
Total fixed maturity securities
204,412 675,577 — 879,989 
Short-term investments9,997 — — 9,997 
Total investments
$214,409 $675,577 $— $889,986 

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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