Bowhead Specialty (BOW) is well-positioned for continued growth and profitability due to its focus on the Excess & Surplus insurance market, Deutsche Bank said in a report Friday.
Analysts at Deutsche Bank said the company is one of the few public insurers still profiting from what they call "meaningful cyclical tailwinds," a trend they expect to continue, the report said.
"We expect these cyclical tailwinds to continue for the foreseeable future, given persistent concerns around social inflation," a market analyst said in a recent report, Deutsche Bank added.
With no reserve liabilities from accident years prior to 2020, Bowhead is free from the legacy issues burdening many of its peers, Deutsche Bank said, adding that entering its fifth year of underwriting, Bowhead is also expected to begin realizing operating leverage as it grows in scale.
The company's conservative investment portfolio, with a short asset duration and high credit quality, provides future flexibility to boost investment income, the report said.
Deutsche Bank has initiated coverage on Bowhead with a buy rating and a price target of $39.
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