Data:Skyward/2025/FY/Annual report.json: Difference between revisions

"Business linemix",

"Business linemix",

"content": "* Skyward Specialty is a growing specialty insurance company delivering commercial insurance products and solutions on a non-admitted (E\u0026S) and admitted basis, predominantly in the United States.\n* The business focuses on underserved, dislocated markets, or markets where standard insurance coverages are insufficient.\n* Customers typically require highly specialized, customized underwriting solutions and claims capabilities.\n* The company develops and delivers tailored insurance products and services for niche markets.\n* The portfolio of insured risks is highly diversified, covering a wide variety of industries and distributed through multiple channels.\n* Lines of business (Business linemix) include general liability, excess liability, professional liability (including cyber and media liability insurance), commercial auto, group accident and health, property, agriculture, credit, surety, and workers’ compensation.\n* The company insures both short and medium duration liabilities.\n* The business mix is principally primary insurance and balanced between E\u0026S and admitted markets.\n* 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.\n* This diversification, including businesses not typically aligned with traditional P\u0026C (Property \u0026 casualty) pricing cycles, combined with underwriting and claims expertise, is expected to consistently produce strong growth and profitability across all insurance pricing cycles."

"ProductBusiness linemix"

"ProductBusiness linemix"

"content": "* Accident \u0026 Health (A\u0026H): Provides medical stop loss to self-insured employers and covers group and single-employer captives.\n** A\u0026H captives program offers tailored medical stop-loss and reinsurance solutions with dedicated underwriting and proactive claims oversight.\n** Targets small and medium-sized enterprises seeking to control healthcare costs by self-insuring a portion of their healthcare insurance.\n** Products are written on an admitted basis and distributed primarily through retail and wholesale broker partners.\n* Agriculture and Credit (Re)insurance: Provides specialty risk-transfer solutions across a diversified global portfolio.\n** Covers agriculture, dairy and livestock revenue protection, and mortgage and credit product lines (Business mix).\n** Supports insurers, MGAs, and other risk originators with tailored treaty protection using proportional and excess of loss structures.\n** Global agriculture book covers weather and natural peril-driven volatility and other production and yield risks.\n** Mortgage portfolio supports government-sponsored entities and private mortgage insurers against default and loss severity volatility.\n** Credit portfolio protects against losses from default risk for single obligors and multi-buyer trade credit across diverse regions and industries.\n** Dairy and livestock business provides revenue protection against price volatility in milk, cattle, and hog markets.\n** Uses derivative instruments (primarily put options and futures) to mitigate commodity price risk, solely for managing exposure to adverse price movements.\n** Positions are adjusted throughout the year based on market conditions and risk profile.\n** Additional information on derivatives is in Note 8, \"Derivatives\" to consolidated financial statements in Item 8 of Form 10-K.\n* Captives: Provides group captive solutions by leveraging underwriting and claims expertise from other divisions.\n** Creates group captives for companies seeking to self-insure.\n** Writes property, general liability, commercial auto, excess liability, and workers’ compensation lines on an E\u0026S and admitted basis.\n** Business is often administered through partnerships with third-party captive managers.\n* Construction \u0026 Energy Solutions: Focuses on high-severity exposures with tailored, often multi-line solutions.\n** Includes general liability, excess liability, commercial auto, and workers’ compensation.\n** Distributed through retail agents, brokers, and a select network of wholesalers.\n* Global Property: Provides comprehensive property insurance and reinsurance solutions for commercial clients worldwide.\n** Offerings protect against physical loss or damage to assets from natural catastrophes and other insured perils.\n* Professional Lines: Includes three underwriting units: management liability, professional liability (including cyber), and allied health (including life sciences).\n** Provides primary and excess claims-made liability products on an E\u0026S and admitted basis.\n** Distributed through wholesale and retail brokers, depending on the product.\n* Specialty Programs: Partners with program administrators focused on specific markets.\n** Believes partnering with program administrators is optimal for profitable participation or market reach.\n** Program administrators often have competitive advantages in scale or proprietary technology.\n** Writes property, general liability, commercial auto liability, excess liability, and workers’ compensation lines on an E\u0026S and admitted basis.\n* Surety: Provides contract, commercial, and transactional surety solutions to trade and services organizations.\n** Focuses on small to medium-sized enterprises with aggregate bond programs up to approximately USD 100.0m for contract and USD 125.0m for commercial and transactional.\n** Written on an admitted basis and distributed through retail agents and brokers.\n* Transactional E\u0026S: Provides primary and excess non-catastrophe prone property and general liability solutions.\n** Emphasizes risks considered hard to place due to complexity, loss history, or limited operating history (e.g., start-ups).\n** Success is determined by technical underwriting, thoughtful coverage, pricing, and high-quality broker service.\n** Accesses the market exclusively through wholesale brokers."

"Business unitmix"

"Business unitmix"

"content": "* Business units (Business mix) and lines previously exited and placed into run-off are referred to as \"exited business\"."

"Business linemix",

"Business linemix",

"content": "* Focus on profitable market niches requiring technical underwriting and claims management as barriers to entry.\n* Niche areas of commercial lines P\u0026C (Property \u0026 casualty) markets are an attractive subset of the P\u0026C insurance market, offering opportunities for attractive risk-adjusted returns.\n* Actively target underserved, dislocated markets or those where standard products are insufficient.\n* Risks in core markets require efficient, individual underwriting to generate sustainable underwriting profit.\n* Underwriting divisions are built around deeply experienced underwriters empowered with authority to make decisions.\n* This structure allows for innovative products and solutions for distribution partners and customers, regardless of risk complexity.\n* Underwriters' experience is augmented with data and predictive analytics to differentiate risk selection and pricing while enhancing efficiency.\n* Focus on hiring and retaining underwriting and technical staff to differentiate the company through expertise and experience.\n* Underwriting teams are knowledgeable, experienced, and empowered, which is critical for success in markets with difficult-to-automate risks.\n* Underwriters have freedom to use expertise and judgment in evaluating and pricing risks, rather than strict underwriting rules.\n* Cultivated a best-in-class, highly specialized team of claims professionals knowledgeable about niches and lines of business (Business linemix).\n* 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).\n* Respond quickly to claims with specialized adjusters using expertise, advanced technology, and analytics.\n* Technology is deeply embedded in the claims process, leveraging a technology-enabled platform from first notice of loss to settlement.\n* Analytics capabilities provide real-time, detailed information on open claims and benchmarks against closed claims for senior leadership and claims teams.\n* Industry expertise, nimble culture, and technology-embedded claims processes enable fair and appropriate claims outcomes.\n* SkyBI, the business intelligence platform, provides real-time intelligence to senior leadership and technical teams for superior decision-making.\n* SkyBI reflects best practices learned from management's experience in P\u0026C insurance and technology sectors.\n* SkyBI is a single, comprehensive enterprise-wide data repository for reporting, business intelligence, analytics, and advanced data capabilities.\n* SkyBI provides information and performance metrics across the company in an easy-to-consume visualized format.\n* Data in SkyBI can be filtered by categories including distributor, customer segment, line of business, industry, underwriter, and risk feature.\n* SkyBI aids in establishing clear line of sight to objectives and facilitating decision-making processes.\n* Underwriting and claims decisions are augmented with new types of risk data and advanced technology.\n* Underwriting decisions are backed by historical data and in-depth risk evaluation from intentional data collection and processing.\n* Underwriting and claims prowess is amplified by combining historical data with new forms of risk data and predictive analytics.\n* Generative artificial intelligence is utilized in underwriting and claims handling to aid effectiveness and efficiency, while still relying on employee expertise.\n* Built a diversified group of underwriting divisions across multiple product lines, industries, geographies, and distribution channels.\n* Business includes areas not typically aligned with traditional P\u0026C cycles.\n* Aims to evolve with and adapt to the market, growing certain lines in favorable conditions and limiting exposure in less favorable conditions.\n* Diversity of the book allows response to and capitalization on market opportunities and dislocations across insurance market and pricing cycles, resulting in a durable insurance franchise.\n* Built a distinctive winning culture, evidenced by internal surveys, public information (Glassdoor, LinkedIn), and selection as a \"Best Places to Work in Insurance\".\n* Key to culture and operating approach is a flat communication and decision-making structure.\n* Staff are trusted to make decisions that produce or exceed desired financial results and are supported by a clear system of performance measurement.\n* Adopted a hybrid work schedule providing flexibility for remote working.\n* Maintains an entrepreneurial environment that encourages and rewards a proactive approach to capitalize on market disruption.\n* This environment is consistent with identity as a specialty insurer and a foundation for attracting talent and delivering best-in-class results.\n* High-quality, experienced leadership team is aligned with shareholders.\n* Executive leadership team, led by Chairman and CEO Andrew Robinson, is experienced, innovative, and entrepreneurial.\n* Leadership team has a track record of success in senior management roles at industry-leading P\u0026C companies and in starting new businesses.\n* Senior leadership's compensation is structured to ensure alignment with shareholders.\n* A material portion of leaders' compensation is in long-term and short-term incentives tied to delivering sustainable, best-in-class underwriting returns.\n* Executive leadership team has additional long-term incentive targets tied directly to growth in book value per share.\n\n=== Our Strategy in Action ==="

"Business linemix",

"Business linemix",

"content": "* The company aims to profitably grow existing lines of business (Business linemix) and expand with new underwriting divisions.\n* It is positioned to take advantage of trends impacting customers in the United States and globally.\n* 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.\n* Another market trend is the emergence of \"micro cycles and micro dislocations\" where different pockets of the P\u0026C (Property \u0026 casualty) insurance market experience hardening and softening at different times.\n* The company has reacted quickly to these trends by launching new underwriting units (many not aligned with P\u0026C cycles), entering underserved markets, partnering with advanced technology providers, and launching new captive solutions.\n* Gross written premium growth and profitability indicate momentum and provide a reference for the company's positioning to expand and grow in target markets."

"ProductBusiness linemix"

"ProductBusiness linemix"

"content": "* The company's marketing and distribution approach mirrors its underwriting approach and is a key facet of its \"Rule Our Niche\" strategy.\n* Underwriting teams and the company have strong relationships with distribution partners and reputations that facilitate new affiliations.\n* The company wins with distribution partners due to deep expertise in niche markets, high-caliber underwriters, culture of innovation, thoughtful product line (Business mix)-up and design, and speed/quality of responsiveness.\n* All underwriting divisions invest time and effort into sustaining and expanding distribution partner loyalty and long-term relationships.\n* The company tailors its choice of distribution partners to access specific business it seeks to write.\n* Products are distributed through retail agents, wholesale brokers, select program administrators, and captive managers.\n* This distribution approach allows effective and efficient access to targeted business based on market niche needs and dynamics.\n\n=== Underwriting ==="

"Business linemix"

"Business linemix"

"content": "* Claims handlers and managers are organized by line of business (Business linemix) to ensure appropriate expertise in handling claims.\n* Managers and adjusters collaborate closely with underwriting partners to inform them of legal trends and emerging claims issues.\n* The goal is to educate underwriters on emerging areas of loss experience to assist in their risk selection processes.\n\n=== Technology ==="

"Business linemix"

"Business linemix",

"content": "* Technology is central to Skyward's operations and decision-making, driving long-term competitive advantages.\n* Skyward deploys technology in three primary functional ways: Superior Business Intelligence Platform, Predictive Analytics Technology, and Core Transactional Platforms.\n* Superior Business Intelligence Platform: SkyBI provides senior leadership and technical teams with real-time intelligence for decision-making.\n* SkyBI incorporates best practices from management's experience in P\u0026C (Property \u0026 casualty) insurance and technology sectors.\n* SkyBI is a single, comprehensive enterprise-wide data repository for reporting, business intelligence, analytics, and advanced data capabilities.\n* SkyBI provides information and performance metrics across the Company in an easy-to-consume visualized format.\n* Data in SkyBI can be filtered by categories including distributor, customer segment, line of business (Business linemix), specific industry, individual underwriter, and specific risk feature.\n* SkyBI helps establish clear line of sight to objectives and facilitates decision-making.\n* Predictive Analytics Technology: Skyward augments employee capabilities using new risk data and predictive analytics, including AI, for risk selection, pricing, and claims handling.\n* Skyward's actions within every underwriting division are intentional to \"Rule Our Niche\".\n* Skyward aims for constant innovation, with actions specific to each division/market served.\n* Core Transactional Platforms: Core operating platforms (policy administration, underwriting workbench, billing, claims systems) are designed for nimble scaling and business expansion.\n* Skyward generally uses customized third-party vendor core operating applications.\n* The core platform organization is used for all business except accident \u0026 health, global property, agriculture, credit (re)insurance, and surety, which require dedicated core processing components due to unique features.\n* Data from all divisions' core operating platforms flows to SkyBI with comparable data quality and granularity.\n* The use of advanced technology for underwriting and claims, SkyBI, and core operating platforms creates a flywheel effect.\n* This flywheel effect allows underwriters to better select risk, claims professionals to better adjudicate claims, unit leaders to better communicate with reinsurance and third-party partners, and senior leadership to better evaluate business trends.\n* These tools also enable more accurate, effective, and efficient communication with distribution partners, reinsurers, and other third-party partners."

"Business linemix"

"Business linemix"

"content": "**Maximum Company Retention by Line of Business (Business linemix)**\n\n| Line of Business | Maximum Company Retention |\n| --- | --- |\n| Accident \u0026 Health | $0.90 million per occurrence |\n| Commercial Auto (1) | $1.00 million per occurrence |\n| Excess Casualty (1)(2) | $2.25 million per occurrence |\n| General Liability (1) | $1.50 million per occurrence |\n| Ocean Marine (2) | $3.00 million per occurrence |\n| Professional Lines (2) | $5.25 million per occurrence |\n| Property (3) | $3.50 million per occurrence |\n| Representation and Warranty | $3.25 million per occurrence |\n| Surety (2) | $5.00 million per occurrence |\n| Workers’ Compensation (2) | $2.33 million per occurrence |\n\n(1) Legal defense expenses can force exposure above the maximum company retention for Excess Casualty, Commercial Auto and General Liability.\n(2) Reinsurance is subject to a loss ratio cap or aggregate level of loss cover that exceeds a modeled 1:250-year PML event.\n(3) Catastrophe loss protection is purchased up to $36.0 million in excess of $12.0 million retention, which provides cover for a 1:250-year PML event.\n\n| ($ in thousands) Reinsurer | Reinsurance Recoverables | AM Best Rating |\n| --- | --- | --- |\n| eMaxx Capitves (1) | 197,989 | n/r |\n| Everest Reinsurance Co. | 123,925 | A+ |\n| General Reinsurance Corp | 70,355 | A++ |\n| Partner Reinsurance Co. of the US | 65,446 | A+ |\n| ACE (Chubb Property \u0026 Casulty Ins Company) | 48,344 | A+ |\n| RGA Reinsurance Company | 43,043 | A+ |\n| Lloyds Syndicate 4711 | 35,860 | A+ |\n| Swiss Reinsurance America Corp | 26,152 | A+ |\n| Lloyds Syndicate 2987 | 25,301 | A+ |\n| Aspen Insurance UK Limited | 24,715 | A |\n| **Top 10 Total** | 661,130 | — |\n| All Others | 458,750 | — |\n| Total | 1,119,880 | — |\n\n(1) This reinsurer facilitates our eMaxx captive. At December 31, 2025, we held collateral in a statutory trust of $235.2 million on our net reinsurance recoverables.\n\n=== Enterprise Risk Management ==="

"ProductBusiness linemix"

"ProductBusiness linemix"

"content": "* Operational processes and controls are designed to identify, assess, and manage key risks continuously.\n* The Underwriting Committee oversees changes in risk appetite, product line (Business mix), and division expansion.\n* Claims handling practices are monitored against guidelines through regular internal audits.\n* Monthly large loss reviews are conducted within Claims.\n* A watchlist of potential high-severity claims is maintained and monitored within Claims.\n* Quarterly reserve studies are performed by Actuarial.\n* The Reserve Committee meets quarterly to review and respond to trends in loss emergence.\n* Key observations from reserve studies are discussed with the CEO.\n* Underwriting divisions assess rate change and retention on existing business, new business quality, pricing adequacy, and loss emergence versus expectations on a monthly and quarterly basis.\n* The SkyBI platform provides real-time portfolio, underwriting, claims, and actuarial analytics to support these processes.\n* ERM is central to decision-making and day-to-day activities.\n* ERM is a core component of the strategy to achieve market-leading risk-adjusted returns for shareholders and foster a culture of accountability, transparency, and sound judgment.\n\n=== Reserves ==="

"Business linemix"

"Business linemix",

"content": "* The company is a growing specialty insurance company providing commercial P\u0026C (Property \u0026 casualty) products and solutions on a non-admitted (E\u0026S) and admitted basis, primarily in the United States.\n* Business focuses on underserved, dislocated, or inadequately covered markets, requiring highly specialized, customized underwriting solutions and claims capabilities.\n* The portfolio of insured risks is highly diversified across industries, distribution channels, and lines of business (Business linemix).\n* Lines of business include general liability, excess liability, professional liability (cyber and media liability), commercial auto, group accident and health, property, agriculture, credit, surety, and workers’ compensation.\n* The company insures both short and medium duration liabilities.\n* Business mix is principally primary insurance, balanced between E\u0026S and admitted markets.\n* 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.\n* Diversification, including businesses not typically aligned with traditional P\u0026C pricing cycles, combined with underwriting and claims expertise, aims to produce consistent growth and profitability across all insurance pricing cycles.\n* The company's strategy, \"Rule Our Niche,\" focuses on leading in chosen market niches and establishing sustainable competitive positions.\n* This strategy aims to build a strong defensible market position, create a competitive moat, and win chosen markets.\n* Principles underlying the strategy are key to achieving and sustaining best-in-class underwriting results through P\u0026C insurance pricing cycles.\n* The company strives for excellence in risk selection, pricing, and claims outcomes, amplified by advanced technology and analytics."

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"Business linemix",

"Business linemix",

"content": "**Gross written premiums by line of business (Business linemix)**\n\n| ($ in thousands) | 2025 | 2024 | Change | % Change |\n| --- | --- | --- | --- | --- |\n| Accident \u0026 Health | 254,102 | 173,073 | 81,029 | 46.8% |\n| Agriculture and Credit (Re)insurance | 346,212 | 118,070 | 228,142 | 193.2% |\n| Captives | 275,694 | 241,902 | 33,792 | 14.0% |\n| Construction \u0026 Energy Solutions | 274,318 | 296,582 | (22,264) | (7.5%) |\n| Global Property | 178,128 | 201,796 | (23,668) | (11.7%) |\n| Professional Lines | 149,231 | 159,785 | (10,554) | (6.6%) |\n| Specialty Programs | 322,705 | 218,407 | 104,298 | 47.8% |\n| Surety | 168,148 | 143,965 | 24,183 | 16.8% |\n| Transactional E\u0026S | 197,779 | 189,669 | 8,110 | 4.3% |\n| Total gross written premiums (1) | 2,166,317 | 1,743,249 | 423,068 | 24.3% |\n\n(1) Excludes exited business.\n\n| ($ in thousands) Losses and LAE: | 2025 Losses and LAE | 2025 % of Net Earned Premiums | 2024 Losses and LAE | 2024 % of Net Earned Premiums |\n| --- | --- | --- | --- | --- |\n| Non-cat loss and LAE | 786,949 | 60.3% | 640,257 | 60.6% |\n| Cat loss and LAE (1) | 15,548 | 1.2% | 17,954 | 1.7% |\n| Prior accident year development | (7,475) | (0.6)% | 11,598 | 1.1% |\n| Total losses and LAE | 795,022 | 60.9% | 669,809 | 63.4% |\n\n(1) Current accident year.\n\n**Development (Favorable) Adverse**\n\n| ($ in thousands) Accident Year | 2025 | 2024 |\n| --- | --- | --- |\n| Prior | 2,808 | 24,929 |\n| 2021 | 9,590 | 978 |\n| 2022 | 2,300 | (1,479) |\n| 2023 | (16,515) | 1,300 |\n| 2024 | (5,658) | — |\n| Total | (7,475) | 25,728 |\n| **Reserve development on losses subject to LPT** | — | 25,300 |\n| **Reserve development on losses excluding losses subject to LPT** | (7,475) | 428 |\n\n| ($ in thousands) | 2025 Expenses | 2025 % of Net Earned Premiums | 2024 Expenses | 2024 % of Net Earned Premiums |\n| --- | --- | --- | --- | --- |\n| Net policy acquisition expenses | 195,422 | 15.0% | 149,975 | 14.2% |\n| Other operating and general expenses | 181,937 | 13.9% | 161,782 | 15.3% |\n| **Underwriting, acquisition and insurance expenses** | 377,359 | 28.9% | 311,757 | 29.5% |\n| Less: commission and fee income | (6,855) | (0.5%) | (6,703) | (0.6%) |\n| Total net expenses | 370,504 | 28.4% | 305,054 | 28.9% |\n\n| $ in thousands | 2025 | 2024 |\n| --- | --- | --- |\n| Short-term investments \u0026 cash and cash equivalents | 15,877 | 17,643 |\n| Fixed income | 77,888 | 57,631 |\n| Equities | 1,380 | 2,745 |\n| Alternative and strategic investments | (11,526) | 2,581 |\n| **Net investment income** | 83,619 | 80,600 |\n| **Net unrealized (losses) gains on securities still held** | (1,555) | 7,921 |\n| Net realized gains (losses) | 23,704 | (1,579) |\n| **Net investment gains** | 22,149 | 6,342 |\n\n=== Investments ==="

"Business linemix"

"Business linemix"

"content": "* Reserves are driven by factors including litigation and regulatory trends, legislative activity, climate change, social and economic patterns, and claims inflation assumptions.\n* Reserve estimates reflect current inflation in legal claims’ settlements.\n* Reserve estimates assume no losses from significant new legal liability theories.\n* Reserve estimates assume no significant changes in the regulatory and legislative environment.\n* The impact of potential changes in regulatory or legislative environment is difficult to quantify without specific new regulation or legislation.\n* In the event of significant new regulation or legislation, the company will attempt to quantify its impact, but accuracy or success is not assured.\n* The actuarial review considers multiple actuarial methods to estimate reserves for losses and LAE.\n* 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.\n* If one actuarial method is more credible, it is used to set the point estimate.\n* For new lines of business (Business linemix) or significant changes in claim practices, paid and incurred loss development methods are less credible due to insufficient historical data.\n* The actuarial point estimate may be based on a judgmental weighting of estimates from each method.\n* 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.\n* Reserve estimates are believed to be reasonable, but actual loss experience may not conform to assumptions.\n* Actual ultimate loss ratio or reporting and payment patterns could differ from expected, which are based on company and industry data.\n* The ultimate settlement of losses and related LAE may vary significantly from financial statement estimates.\n* Estimates are regularly reviewed and adjusted as experience develops or new information becomes known.\n* Such adjustments are included in the results of current operations."

"Business linemix"

"Business linemix"

"content": "* The Company purchases prospective reinsurance for certain lines of business (Business linemix) on a proportional, excess of loss, and facultative basis.\n* Proportional reinsurance involves sharing losses and expenses with the reinsurer in exchange for a share of premiums.\n* Excess of loss reinsurance shares losses, either proportionally or entirely, above a certain dollar threshold, for a negotiated cost.\n* Facultative reinsurance covers specific risks and/or policies on either a proportional or excess of loss basis.\n* Ceded unearned premium and reinsurance balances recoverable (on paid and unpaid losses and settlement expenses) are reported separately as assets, not netted with related liabilities, because reinsurance does not relieve the Company of its legal liability to policyholders.\n* Reinsurance on unpaid losses and settlement expenses represents estimates of the portion of liabilities recoverable from reinsurers.\n* On the Consolidated Statements of Operations, net earned premiums, losses and loss adjustment expenses, net, and underwriting, acquisition, and insurance expenses are presented net of reinsurance ceded."

"Business linemix"

"Business linemix"

"content": "* The Company has purchased retroactive reinsurance on certain lines of business (Business linemix) in prior years, including loss portfolio transfers (LPT) and adverse development covers.\n* These contracts indemnify losses related to past loss events, with the reinsurer sharing losses based on dollar thresholds.\n* Income from retroactive reinsurance contracts is deferred and amortized into net income over the settlement period.\n* Losses from retroactive reinsurance contracts are charged to net income immediately.\n* Subsequent changes in the measurement of retroactive reinsurance contracts are accounted for under a full retrospective method."

"Business linemix"

"Business linemix"

"content": "* Financial instruments potentially subject to concentrations of credit risk include cash and cash equivalents, restricted cash, investments, and premiums receivable, in addition to reinsurance recoverables.\n* Cash equivalents and short-term investments include U.S. government securities and money market funds.\n* Investments are diversified across many industries and geographic regions.\n* The Company limits credit exposure with any single financial institution or issuer.\n* No significant concentration of credit risk is believed to exist with respect to cash and investments.\n* As of December 31, 2025 and 2024, outstanding premiums receivable are generally diversified due to the large number of entities in the customer base and their dispersion across various lines of business (Business linemix) and geographic regions.\n* Failure by distribution sources to remit premiums could lead to premium write-offs and a corresponding loss of income.\n\n=== J. Deferred Policy Acquisition Costs ==="

"Business linemix",

"Business linemix",

"content": "**Net balance of goodwill by line of business (Business linemix)**\n\n| ($ in thousands) Goodwill | Accident and Health | Surety | Construction and Energy Solutions | Other | Total |\n| --- | --- | --- | --- | --- | --- |\n| Gross balance at December 31, 2024 | 91,577 | 6,781 | 10,204 | 3,879 | 112,441 |\n| Accumulated impairment at December 31, 2024 | ( 44,821 ) | — | — | ( 1,886 ) | ( 46,707 ) |\n| **Net balance at December 31, 2025** | 46,756 | 6,781 | 10,204 | 1,993 | 65,734 |\n\n| ($ in thousands) Goodwill | Accident and Health | Surety | Construction and Energy Solutions | Other | Total |\n| --- | --- | --- | --- | --- | --- |\n| Gross balance at December 31, 2023 | 91,577 | 6,781 | 10,204 | 3,879 | 112,441 |\n| Accumulated impairment at December 31, 2023 | ( 44,821 ) | — | — | ( 1,886 ) | ( 46,707 ) |\n| **Net balance at December 31, 2024** | 46,756 | 6,781 | 10,204 | 1,993 | 65,734 |\n\n| ($ in thousands) Other Intangible Assets | Agent Relationships | Non-competes | Trademarks | Licenses | Total |\n| --- | --- | --- | --- | --- | --- |\n| Gross balance at December 31, 2024 | 24,491 | 1,117 | 999 | 14,019 | 40,626 |\n| Accumulated amortization at December 31, 2024 | ( 17,895 ) | ( 1,117 ) | — | — | ( 19,012 ) |\n| Additions | 2,000 | — | — | — | 2,000 |\n| Amortization | ( 1,308 ) | — | — | — | ( 1,308 ) |\n| **Net balance at December 31, 2025** | 7,288 | — | 999 | 14,019 | 22,306 |\n\n| ($ in thousands) Other Intangible Assets | Agent Relationships | Non-competes | Trademarks | Licenses | Total |\n| --- | --- | --- | --- | --- | --- |\n| Gross balance at December 31, 2023 | 24,491 | 1,117 | 999 | 14,019 | 40,626 |\n| Accumulated amortization at December 31, 2023 | ( 16,808 ) | ( 1,117 ) | — | — | ( 17,925 ) |\n| Amortization | ( 1,087 ) | — | — | — | ( 1,087 ) |\n| **Net balance at December 31, 2024** | 6,596 | — | 999 | 14,019 | 21,614 |\n\n| ($ in thousands) Years Ending December 31, | Amount |\n| --- | --- |\n| 2026 (Year 2026) | 1,053 |\n| 2027 | 1,053 |\n| 2028 | 1,053 |\n| 2029 | 762 |\n| 2030 | 553 |\n\n=== 3. Investments ==="

"Business linemix"

"Business linemix"

"content": "* The Company presents its loss development on a consolidated basis.\n* Net ultimate loss and LAE are evaluated under three sub-categories: multi-line solutions, short-tail/monoline specialty lines, and exited lines.\n* These disaggregated groupings have more homogeneous risk characteristics with similar development patterns and are generally subject to similar trends.\n* Short-tail/Monoline Specialty Lines include global property \u0026 agriculture, accident \u0026 health, surety, and professional lines underwriting divisions.\n* These are market niches served with monoline solutions that generally have shorter durations for losses to fully develop.\n* Losses for short-tail/monoline specialty lines are generally reported within a short period from the date of loss, and claims are typically settled and paid within a relatively short timeframe.\n* Short-tail/monoline specialty lines can be impacted by larger, more complex losses due to factors like difficulty determining actual damages, and legal and regulatory impediments that can extend settlement and payment periods.\n* Multi-line Solutions include industry solutions, programs, captives, and transactional E\u0026S underwriting divisions.\n* These are market niches where the Company provides multiple products, most frequently as an integrated solution.\n* The multi-line solution subcategory is predominantly made up of occurrence liability, including general liability, excess liability, and commercial auto.\n* Multi-line solutions have a longer duration for losses to fully develop compared to short-tail/monoline specialty lines.\n* 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.\n* Exited lines include all underwriting units that the Company placed in run-off and are presented separately from ongoing lines of business (Business linemix)."

"Business linemix"

"Business linemix"

"content": "* The following table sets forth the reconciliation of unpaid losses and loss adjustment expenses (“LAE”) as reported in the Consolidated Balance Sheets as of and for the years ended December 31, 2025 and 2024.\n* For the year ended December 31, 2025, the Company recognized favorable development related to prior years’ loss and loss expense reserves of USD 7.5m.\n* This favorable development was driven by USD 24.6m in short-tail/monoline specialty lines and USD 5.3m in multi-line solutions.\n* This was partially offset by USD 22.4m of adverse development in exited lines.\n* The adverse development in exited lines was primarily attributable to commercial auto and excess over auto in divisions that have been non-renewed or had significantly reduced exposure over the past three years.\n* This was offset by favorable development in surety and property.\n* For the year ended December 31, 2024, the Company recognized adverse development related to prior years’ loss and loss expense reserves of USD 25.7m.\n* This adverse development was primarily related to losses previously subject to the LPT from accident years 2018 and prior.\n* This included USD 10.1m in multi-line solutions and USD 15.2m in exited lines.\n* 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.\n* Adverse development of USD 11.7m in multi-line solutions was driven by greater than expected severity in auto, general, and excess liability lines of business (Business linemix), primarily from accident years 2020 to 2022.\n* This adverse development was partially offset by favorable development in short-tail/monoline specialty lines.\n* The favorable development in short-tail/monoline specialty lines was in the property line of business, primarily from accident years 2021 and 2022."