Skyward/2025/FY/Annual report: Difference between revisions

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== Cover ==

* The company develops and delivers tailored insurance products and services for niche markets.

* The portfolio of insured risks is highly diversified, covering a wide variety of industries and distributed through multiple channels.

* The company insures both short and medium duration liabilities.

* A portion of the business is specialty reinsurance (principally property, agriculture, and credit), focused on attractive specialty classes where reinsurance is more efficient due to factors like cost of entry and geographic expansion.

* This diversification, including businesses not typically aligned with traditional [[Definition:Property & casualty|P&C]] pricing cycles, combined with underwriting and claims expertise, is expected to consistently produce strong growth and profitability across all insurance pricing cycles.

** Products are written on an admitted basis and distributed primarily through retail and wholesale broker partners.

* Agriculture and Credit (Re)insurance: Provides specialty risk-transfer solutions across a diversified global portfolio.

** Supports insurers, MGAs, and other risk originators with tailored treaty protection using proportional and excess of loss structures.

** Global agriculture book covers weather and natural peril-driven volatility and other production and yield risks.

'''Exited business'''

 

 

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* Underwriting teams are knowledgeable, experienced, and empowered, which is critical for success in markets with difficult-to-automate risks.

* Underwriters have freedom to use expertise and judgment in evaluating and pricing risks, rather than strict underwriting rules.

* Claims professionals address first-party claims with fair solutions and third-party claims with holistic responses, ensuring consistent and early loss recognition of indemnity and loss adjustment expenses (LAE).

* Respond quickly to claims with specialized adjusters using expertise, advanced technology, and analytics.

* SkyBI is a single, comprehensive enterprise-wide data repository for reporting, business intelligence, analytics, and advanced data capabilities.

* SkyBI provides information and performance metrics across the company in an easy-to-consume visualized format.

* SkyBI aids in establishing clear line of sight to objectives and facilitating decision-making processes.

* Underwriting and claims decisions are augmented with new types of risk data and advanced technology.

* Underwriting and claims prowess is amplified by combining historical data with new forms of risk data and predictive analytics.

* Generative artificial intelligence is utilized in underwriting and claims handling to aid effectiveness and efficiency, while still relying on employee expertise.

* Business includes areas not typically aligned with traditional [[Definition:Property & casualty|P&C]] cycles.

* Aims to evolve with and adapt to the market, growing certain lines in favorable conditions and limiting exposure in less favorable conditions.

'''Business growth and market trends'''

 

* It is positioned to take advantage of trends impacting customers in the United States and globally.

* One trend is the continued rise in demand for specialized insurance solutions due to increasing risks and complexity from climate change/severe weather events, supply chain uncertainty, financial inflation risk, cyber risk, novel health risks, increased litigation, attorney involvement, jury awards, and healthcare delivery and cost.

* The company's marketing and distribution approach mirrors its underwriting approach and is a key facet of its "Rule Our Niche" strategy.

* Underwriting teams and the company have strong relationships with distribution partners and reputations that facilitate new affiliations.

* All underwriting divisions invest time and effort into sustaining and expanding distribution partner loyalty and long-term relationships.

* The company tailors its choice of distribution partners to access specific business it seeks to write.

'''Claims team structure and collaboration'''

 

* Managers and adjusters collaborate closely with underwriting partners to inform them of legal trends and emerging claims issues.

* The goal is to educate underwriters on emerging areas of loss experience to assist in their risk selection processes.

* SkyBI is a single, comprehensive enterprise-wide data repository for reporting, business intelligence, analytics, and advanced data capabilities.

* SkyBI provides information and performance metrics across the Company in an easy-to-consume visualized format.

* SkyBI helps establish clear line of sight to objectives and facilitates decision-making.

* Predictive Analytics Technology: Skyward augments employee capabilities using new risk data and predictive analytics, including AI, for risk selection, pricing, and claims handling.

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! style="text-align:left" | Maximum Company Retention

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* Operational processes and controls are designed to identify, assess, and manage key risks continuously.

* Claims handling practices are monitored against guidelines through regular internal audits.

* Monthly large loss reviews are conducted within Claims.

* The company is a growing specialty insurance company providing commercial [[Definition:Property & casualty|P&C]] products and solutions on a non-admitted (E&S) and admitted basis, primarily in the United States.

* Business focuses on underserved, dislocated, or inadequately covered markets, requiring highly specialized, customized underwriting solutions and claims capabilities.

* The company insures both short and medium duration liabilities.

* A portion of the business is specialty reinsurance (principally agriculture and credit), focused on attractive specialty classes where reinsurance is more efficient due to factors like cost of entry and geographic expansion.

* Diversification, including businesses not typically aligned with traditional [[Definition:Property & casualty|P&C]] pricing cycles, combined with underwriting and claims expertise, aims to produce consistent growth and profitability across all insurance pricing cycles.

 

* The expense ratio for 2025 improved by 0.5 points compared to 2024.

 

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! style="text-align:left" | ($ in thousands)

* Methods include paid and incurred loss development methods, paid and incurred Bornhuetter-Ferguson methods, paid and incurred loss ratio cape cod methods, and frequency and severity methods.

* If one actuarial method is more credible, it is used to set the point estimate.

* The actuarial point estimate may be based on a judgmental weighting of estimates from each method.

* These methods utilize the initial expected loss ratio, statistical analysis of past claims reporting and payment patterns, claims frequency and severity, paid loss experience, industry loss experience, and changes in market conditions, policy forms, exclusions, and exposures.

* [[Definition:Net investment income|Net investment income]] consists of interest, [[Definition:Dividend|dividends]], and equity in earnings (losses) of unconsolidated subsidiaries, net of investment expenses such as investment management expenses.

* Interest income is recognized on the accrual basis.

* Interest income on mortgage-backed and other asset-backed securities is recognized using the effective-yield method based on estimated principal repayments.

* Amortization of premium and accretion of discounts on debt securities are included in interest income.

'''Reinsurance accounting principles'''

 

* Proportional reinsurance involves sharing losses and expenses with the reinsurer in exchange for a share of premiums.

* Excess of loss reinsurance shares losses, either proportionally or entirely, above a certain dollar threshold, for a negotiated cost.

'''Retroactive reinsurance accounting'''

 

* These contracts indemnify losses related to past loss events, with the reinsurer sharing losses based on dollar thresholds.

* Income from retroactive reinsurance contracts is deferred and amortized into net income over the settlement period.

* The Company limits credit exposure with any single financial institution or issuer.

* No significant concentration of credit risk is believed to exist with respect to cash and investments.

* Failure by distribution sources to remit premiums could lead to premium write-offs and a corresponding loss of income.

 

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! style="text-align:left" | ($ in thousands)

* Multi-line solutions have a longer duration for losses to fully develop compared to short-tail/monoline specialty lines.

* The unique claim characteristics and longer-tail nature of multi-line solutions introduce more uncertainty, as claims can be impacted by changes in regulation, inflation, and other unforeseen factors over time.

 

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* This included USD 10.1m in multi-line solutions and USD 15.2m in exited lines.

* During the year ended December 31, 2023, the Company recognized adverse development related to prior years’ loss and loss expense reserves of USD 10.8m.

* This adverse development was partially offset by favorable development in short-tail/monoline specialty lines.

 

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