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| language = English
| source_url = https://www.sec.gov/Archives/edgar/data/1519449/000151944926000015/0001519449-26-000015-index.htm
| archive_file =
| intro_sentence = This article presents Skyward's FY 2025 annual report — the
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''This article presents Skyward's FY 2025 annual report — the
== Business ==
* Skyward Specialty was formed as a Delaware corporation on January 3, 2006, as an insurance holding company <sup>p. 1</sup>.
* The company operated under the name Houston International Insurance Group, Ltd. until re-branding as Skyward Specialty in November 2020 <sup>p. 1</sup>.
* Skyward Specialty is a growing specialty insurance company delivering commercial insurance products and solutions on a non-admitted (E&S) and admitted basis, predominantly in the United States <sup>p. 1</sup>.
* The company focuses on underserved, dislocated, and/or markets where standard insurance coverages are insufficient or inadequate <sup>p. 1</sup>.
* Customers typically require highly specialized, customized underwriting solutions and claims capabilities <sup>p. 1</sup>.
* The portfolio of insured risks is highly diversified, covering various industries, distribution channels, and lines of business <sup>p. 1</sup>.
* Lines of business 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 <sup>p. 1</sup>.
* The business insures both short and medium duration liabilities <sup>p. 1</sup>.
* The business mix is principally primary insurance and balanced between E&S and admitted markets <sup>p. 1</sup>.
* A portion of the business is specialty reinsurance (principally property, agriculture, and credit) <sup>p. 1</sup>.
* The company's diversification, including businesses not typically aligned with traditional P&C pricing cycles, combined with underwriting and claims expertise, aims to produce consistent strong growth and profitability <sup>p. 1</sup>.
* The company is led by an entrepreneurial executive management team with decades of insurance leadership experience in the global P&C industry <sup>p. 1</sup>.
* All insurance company subsidiaries are group rated and have financial strength ratings of "A" (Excellent) from A.M. Best Company with a stable outlook <sup>p. 1</sup>.
* On September 2, 2025, the company entered into two share purchase agreements (the "Apollo Majority SPAs") with institutional and management shareholders of Apollo Group Holdings Limited ("Apollo") <sup>p. 2</sup>.
* The company agreed to acquire approximately 87% of the issued share capital of Apollo held by the Majority Sellers <sup>p. 2</sup>.
* Closing of the transaction ("Closing") was conditioned upon acquiring 100% of Apollo's issued share capital through additional short-form share purchase agreements (the "Apollo Minority SPAs") with remaining minority shareholders <sup>p. 2</sup>.
* The Acquisition closed on January 1, 2026 <sup>p. 2</sup>.
* Consideration for the transaction was satisfied by issuing common stock to certain sellers and the remainder in cash <sup>p. 2</sup>.
* Apollo is a U.S. centric specialty underwriting platform operating at Lloyd’s of London, characterized by low volatility, high growth, and a capital-light business model <sup>p. 2</sup>.
* Apollo has consistently grown gross written premium since its formation in 2010 <sup>p. 2</sup>.
* Through Syndicate 1969, Apollo underwrites a multi-class specialty insurance portfolio <sup>p. 2</sup>.
* Through Syndicate 1971, Apollo delivers a platform liability product for the digital and sharing economy <sup>p. 2</sup>.
* Apollo provides capital to syndicates 1969 and 1971 for a pro-rata share of underwriting income, with third parties providing the remaining capital <sup>p. 2</sup>.
* Apollo earns managing agency fees and profit commissions for managing its own syndicates and innovative third-party syndicates (platform partners) <sup>p. 2</sup>.
* The acquisition is aligned with Skyward Specialty’s strategy, bringing new specialty niches, a new economy offering, accelerating innovation, and adding Apollo’s advanced technology capabilities <sup>p. 2</sup>.
* David Ibeson will continue as CEO of Apollo, leading its growth as a subsidiary of Skyward Specialty <sup>p. 2</sup>.
* The company has one reportable segment offering a broad array of insurance coverages to various market niches <sup>p. 3</sup>.
* Each of the nine distinct underwriting divisions has dedicated underwriting leadership and technical staff <sup>p. 3</sup>.
* For the year ended December 31, 2025, ''gross written premiums'' were 41% on an admitted basis and 59% non-admitted <sup>p. 3</sup>.
* ''Accident & Health (A&H)'' underwriting division provides medical stop loss to self-insured employers and covers group and single-employer captives <sup>p. 3</sup>.
* A&H captives program provides tailored medical stop-loss and reinsurance solutions <sup>p. 3</sup>.
* The A&H division targets small and medium-sized enterprise market segments seeking to control healthcare costs by self-insuring <sup>p. 3</sup>.
* A&H products are written on an admitted basis and distributed primarily through retail and wholesale brokers <sup>p. 3</sup>.
* ''Agriculture and Credit (Re)insurance'' underwriting division provides specialty risk-transfer solutions across a diversified global portfolio <sup>p. 3</sup>.
* This division covers agriculture, dairy and livestock revenue protection, mortgage, and credit product lines <sup>p. 3</sup>.
* It supports insurers, MGAs, and other risk originators with tailored treaty protection using proportional and excess of loss structures <sup>p. 3</sup>.
* The global agriculture book covers weather, natural peril volatility, and other production/yield risks <sup>p. 3</sup>.
* The mortgage portfolio supports government-sponsored entities and private mortgage insurers against default and loss severity volatility <sup>p. 3</sup>.
* The credit portfolio provides protection against losses from default risk covering single obligors and multi-buyer trade credit <sup>p. 3</sup>.
* The dairy and livestock business provides producers with revenue protection against price volatility in milk, cattle, and hog markets <sup>p. 3</sup>.
* Derivative instruments (primarily put options and futures) are used to mitigate commodity price risk associated with cattle, hog, and milk prices <sup>p. 3</sup>.
* ''Captives'' underwriting division provides group captive solutions by leveraging expertise from other underwriting divisions <sup>p. 4</sup>.
* The Captives division writes property, general liability, commercial auto, excess liability, and workers’ compensation lines on E&S and admitted bases <sup>p. 4</sup>.
* This business is often administered through partnerships with third-party captive managers <sup>p. 4</sup>.
* ''Construction & Energy Solutions'' underwriting division focuses on high-severity exposures with tailored multi-line solutions <sup>p. 4</sup>.
* Solutions include general liability, excess liability, commercial auto, and workers’ compensation <sup>p. 4</sup>.
* Products are distributed through retail agents, brokers, and a select network of wholesalers <sup>p. 4</sup>.
* ''Global Property'' underwriting division provides comprehensive property insurance and reinsurance solutions for commercial clients worldwide <sup>p. 4</sup>.
* Offerings protect against physical loss or damage to assets due to natural catastrophes and other insured perils <sup>p. 4</sup>.
* ''Professional Lines'' underwriting division includes management liability, professional liability (including cyber), and allied health (including life sciences) <sup>p. 4</sup>.
* Management/Professional liability and allied health provide primary and excess claims-made liability products on E&S and admitted bases <sup>p. 4</sup>.
* These products are distributed through wholesale and retail brokers <sup>p. 4</sup>.
* ''Specialty Programs'' underwriting division partners with program administrators focused on specific markets <sup>p. 4</sup>.
* Program administrators often possess competitive advantages like scale or proprietary technology <sup>p. 4</sup>.
* Specialty Programs writes property, general liability, commercial auto liability, excess liability, and workers’ compensation lines on E&S and admitted bases <sup>p. 4</sup>.
* ''Surety'' underwriting division provides contract, commercial, and transactional surety solutions <sup>p. 5</sup>.
* The focus is on small to medium-sized enterprises with aggregate bond programs up to approximately $100.0 million for contract and $125.0 million for commercial and transactional <sup>p. 5</sup>.
* This business is written on an admitted basis and distributed through retail agents and brokers <sup>p. 5</sup>.
* ''Transactional E&S'' underwriting division provides primary and excess non-catastrophe prone property and general liability solutions <sup>p. 5</sup>.
* Emphasis is on hard-to-place risks due to complexity, loss history, or limited operating history <sup>p. 5</sup>.
* This division accesses the market exclusively through wholesale brokers <sup>p. 5</sup>.
* The company has "exited business" units and lines previously placed into run-off <sup>p. 5</sup>.
* The company's strategy, referred to as "Rule Our Niche," aims to lead in chosen market niches and establish sustainable, competitive positions <sup>p. 5</sup>.
* Key elements of the strategy include differentiated products, attracting talent, amplifying expertise with technology, empowering teams, and fostering a nimble culture <sup>p. 5</sup>.
* The strategy focuses on achieving best-in-class underwriting results through P&C insurance pricing cycles <sup>p. 5</sup>.
* Competitive strengths include focusing on profitable niches requiring technical underwriting and claims management as barriers to entry <sup>p. 6</sup>.
* The company targets underserved, dislocated, or markets where standard products are insufficient <sup>p. 6</sup>.
* Underwriting divisions are built around deeply experienced underwriters empowered with authority <sup>p. 6</sup>.
* Underwriters' experience is augmented with data and predictive analytics for risk selection and pricing <sup>p. 6</sup>.
* The company focuses on hiring and retaining highly skilled underwriting and technical staff <sup>p. 6</sup>.
* Claims professionals are highly knowledgeable about the niches and lines of business <sup>p. 6</sup>.
* Claims are addressed with fair and equitable solutions for first-party claims and holistic responses for third-party claims, aiming for consistent and early loss recognition <sup>p. 6</sup>.
* The company responds quickly to claims with specialized adjusters, technology, and analytics <sup>p. 7</sup>.
* ''SkyBI'', the business intelligence platform, provides real-time intelligence for senior leadership and technical teams <sup>p. 7</sup>.
* SkyBI is a single, comprehensive enterprise-wide data repository for reporting, business intelligence, analytics, and advanced data capabilities <sup>p. 7</sup>.
* Data in SkyBI can be filtered by distributor, customer segment, line of business, industry, underwriter, and risk feature <sup>p. 7</sup>.
* The company believes every underwriting and claims decision can be augmented with new types of risk data and advanced technology <sup>p. 7</sup>.
* Predictive analytics and generative artificial intelligence are used in underwriting and claims handling <sup>p. 7</sup>.
* The business is diversified across product lines, industries, geographies, and distribution channels, including business not typically aligned with traditional P&C cycles <sup>p. 7</sup>.
* The company aims to evolve with the market, growing certain lines in favorable conditions and limiting exposure in less favorable conditions <sup>p. 7</sup>.
* The company has a distinctive winning culture, evidenced by internal surveys and external recognition like "Best Places to Work in Insurance" <sup>p. 8</sup>.
* The culture features a flat communication and decision-making structure and a hybrid work schedule <sup>p. 8</sup>.
* The leadership team is experienced, innovative, and entrepreneurial, led by Chairman and CEO Andrew Robinson <sup>p. 8</sup>.
* Senior leadership compensation includes long-term and short-term incentives tied to underwriting returns and book value per share growth <sup>p. 8</sup>.
* The "Rule Our Niche" strategy aims to generate best-in-class underwriting profitability and superior long-term shareholder value <sup>p. 8</sup>.
* The strategy involves attracting and retaining blue-chip underwriting and claims talent <sup>p. 8</sup>.
* The company leverages its technology DNA to differentiate from competition, using SkyBI for market changes and core operating platforms for efficient market entry <sup>p. 9</sup>.
* The company is positioned to take advantage of trends like increased demand for specialized insurance due to rising risks (climate change, supply chain uncertainty, financial inflation, cyber, health risks, litigation) <sup>p. 9</sup>.
* Another market trend is the emergence of "micro cycles and micro dislocations" in the P&C market <sup>p. 9</sup>.
* The company has launched new underwriting units, entered underserved markets, partnered with technology providers, and launched new captive solutions in response to these trends <sup>p. 9</sup>.
* The company's ability to meet long-term goals relies on day-to-day operational excellence across underwriting, product management, and claims management <sup>p. 9</sup>.
* SkyBI provides the foundation for senior management to monitor performance, including renewal rates, new business pricing, portfolio performance, claims aging, and reserving practices <sup>p. 9</sup>.
* The company is committed to maintaining a strong balance sheet with conservative loss reserves and strong capitalization ratios <sup>p. 9</sup>.
* Claims case reserves aim to reserve to the expected ultimate loss within 90 days of the first notice of loss <sup>p. 9</sup>.
* The company maintains incurred but not reported (IBNR) reserves that, with case reserves, are above the actuarial central estimate <sup>p. 9</sup>.
* The approach to marketing and distribution mirrors the underwriting approach and is a key facet of the "Rule Our Niche" strategy <sup>p. 10</sup>.
* Distribution partners are chosen to access specific business, including retail agents, wholesale brokers, select program administrators, and captive managers <sup>p. 10</sup>.
* The underwriting approach is deeply embedded in the "Rule Our Niche" strategy, with specialized underwriting teams focusing on specific niches <sup>p. 10</sup>.
* The underwriting approach is underpinned by hiring experienced, best-in-class, and diverse technical underwriters <sup>p. 10</sup>.
* Underwriters' skills are amplified with advanced technology and data analytics, and they are empowered with appropriate decision-making authority <sup>p. 10</sup>.
* Underwriting data is captured in the SkyBI business intelligence platform <sup>p. 10</sup>.
* The company is highly selective in policies, encouraging underwriters to move on if premium and coverage terms do not meet standards <sup>p. 10</sup>.
* When accepting risks, terms and price are established to suit the underlying exposure <sup>p. 11</sup>.
* In the admitted market, approved forms and filed rates are ensured to be appropriate and adequate <sup>p. 11</sup>.
* In the E&S market, freedom of rate and form is used to ensure risk and coverage are appropriate <sup>p. 11</sup>.
* Underwriting teams are supported by active engagement and collaboration with Claims, Actuarial, Product Management, Legal and Compliance, and Finance departments <sup>p. 11</sup>.
* Skyward’s claims department is guided by principles including prompt investigations, quality service, timely reserve establishment, subrogation pursuit, fraud detection, and disciplined litigation management <sup>p. 11</sup>.
* The majority of claims are handled in-house, with Third Party Administrators (TPAs) used in certain instances (programs, captives, occupational accident, workers' compensation, runoff claims) <sup>p. 11</sup>.
* TPAs are actively managed and overseen to ensure compliance with claims handling and reserving guidelines <sup>p. 11</sup>.
* Independent legal counsel is retained for liability claims against an insured, selected based on geographical location and expertise <sup>p. 12</sup>.
* Litigation guidelines are developed for claims professionals and outside counsel <sup>p. 12</sup>.
* A legal spend management solution analyzes legal invoices for adherence to standards <sup>p. 12</sup>.
* Technology is leveraged for claims-handling efficiencies, including a Claims Development Severity Predictor model <sup>p. 12</sup>.
* The Claims Development Severity Predictor identifies claims likely to lead to large loss development for proactive management <sup>p. 12</sup>.
* A "quick strike" program for commercial auto deploys investigators and vendors to accident scenes within two hours <sup>p. 12</sup>.
* Claims handlers and managers are organized by line of business to ensure expertise <sup>p. 12</sup>.
* Technology drives competitive advantages in three primary functional ways: superior business intelligence, predictive analytics, and core transactional platforms <sup>p. 13</sup>.
* ''SkyBI'' provides real-time intelligence for decision-making, reflecting best practices from P&C insurance and technology sectors <sup>p. 13</sup>.
* ''Predictive Analytics Technology'' augments employee capabilities using new forms of risk data and AI for risk selection, pricing, and claims handling <sup>p. 13</sup>.
* ''Core Transactional Platforms'' (policy administration, underwriting workbench, billing, claims systems) are designed for nimble scaling and expansion <sup>p. 13</sup>.
* Third-party vendor developed core operating applications are customized for the company <sup>p. 13</sup>.
* Core platform organization is used for all business except accident & health, global property, agriculture and credit (re)insurance, and surety <sup>p. 13</sup>.
* Data from core operating platforms flows to SkyBI with comparable quality and granularity <sup>p. 13</sup>.
* The use of advanced technology provides a flywheel effect for risk selection, claims adjudication, communication with partners, and trend evaluation <sup>p. 14</sup>.
* The company faces external threats to IT systems, including system failure, data theft, and ransomware attacks <sup>p. 14</sup>.
* Technology infrastructure is designed for major disruptions, with real-time data replication to a third-party cloud disaster recovery site <sup>p. 14</sup>.
* Data is backed up daily for system restoration <sup>p. 14</sup>.
* Actions to prevent disruptions include monitoring CISA cybersecurity directives, monthly vulnerability scans, two-factor authentication, monthly security training, endpoint detection agents, desktop scenarios, and annual penetration testing <sup>p. 14</sup>.
* Reinsurance is strategically purchased from third parties to protect capital from severity events and reduce earnings volatility <sup>p. 14</sup>.
* Reinsurance contracts are predominantly one year in length and renew annually, primarily in January and June <sup>p. 14</sup>.
* Factors influencing reinsurance purchases include changes in underlying insurance coverage, updated loss activity, capital and surplus levels, risk appetite, and cost/availability of treaties <sup>p. 14</sup>.
* The company purchases quota share, excess of loss, and facultative reinsurance coverage <sup>p. 15</sup>.
* ''Quota share reinsurance'' involves the reinsurer assuming a specified percentage of losses for a corresponding percentage of premiums, net of a ceding commission <sup>p. 15</sup>.
* ''Excess of loss reinsurance'' involves the reinsurer assuming losses above a specified amount for a negotiated premium, including catastrophe reinsurance <sup>p. 15</sup>.
* ''Facultative coverage'' is for individual risks, supplementing treaty limits or covering excluded risks/perils <sup>p. 15</sup>.
* For the year ended December 31, 2025, ''property insurance'' represented 34% of gross written premiums <sup>p. 15</sup>.
* The company actively manages property writings aggregation by geographic area to limit loss potential from severe events <sup>p. 15</sup>.
* Catastrophe reinsurance is purchased to mitigate property losses from single or series of events <sup>p. 15</sup>.
* Third-party stochastic and deterministic models are used to analyze aggregation risk and inform catastrophe reinsurance purchases <sup>p. 15</sup>.
* Based on modeling, an event beyond a 1 in 250-year PML would be required to exhaust the $36.0 million property catastrophe coverage <sup>p. 15</sup>.
* The company aims to expose no more than 3.0% of stockholders’ equity to a catastrophic loss less than a 1 in 250-year event <sup>p. 15</sup>.
* Reinsurance is sought from reinsurers rated at least "A-" (Excellent) or better by A.M. Best <sup>p. 15</sup>.
* As of December 31, 2025, 98% of reinsurance recoverables were from reinsurers rated "A-" (Excellent) or better by A.M. Best, or were collateralized <sup>p. 15</sup>.
* The allowance for uncollectible reinsurance was $2.3 million at December 31, 2025 and 2024 <sup>p. 15</sup>.
* Enterprise Risk Management (ERM) is embedded in nearly every aspect of the company and guides day-to-day activities <sup>p. 16</sup>.
* The approach to ERM ensures an acceptable risk-adjusted return for shareholders while maintaining trust and reliability <sup>p. 16</sup>.
* The SVP, CFO & Head of ERM - US Operations oversees critical ERM processes and chairs the cross-functional corporate ERM Committee <sup>p. 16</sup>.
* The company uses an Economic Capital Model (ECM) to formalize its view of risk and solvency in terms of potential economic loss <sup>p. 16</sup>.
* ECM output measures potential earnings and capital loss for various scenarios against annually updated risk tolerances <sup>p. 16</sup>.
* The ECM provides a probabilistic modeled view of earnings and capital loss, combining potential loss from catastrophes, reserving, underwriting, market, credit risk, strategic, and operational risks <sup>p. 16</sup>.
* The SVP, CFO & Head of ERM and the ERM Committee review and maintain a comprehensive risk register and identify/quantify the top 10 risks quarterly <sup>p. 16</sup>.
* Operational processes and controls are constructed to identify, assess, and manage key risks <sup>p. 16</sup>.
* The Underwriting Committee oversees changes in risk appetite and product line/division expansion <sup>p. 16</sup>.
* The Claims department monitors handling practices, conducts monthly large loss reviews, and maintains a watchlist of potential high-severity claims <sup>p. 16</sup>.
* The Actuarial department performs quarterly reserve studies, and the Reserve Committee reviews loss emergence trends <sup>p. 16</sup>.
* Underwriting divisions assess rate change, retention, new business quality, pricing adequacy, and loss emergence monthly and quarterly <sup>p. 16</sup>.
* The ERM is central to decision-making and day-to-day activities, aiming for market-leading risk-adjusted returns and a culture of accountability <sup>p. 16</sup>.
* The company maintains reserves for specific claims incurred and reported, IBNR reserves, and reserves for uncollectible reinsurance <sup>p. 17</sup>.
* Reserves are continually monitored using new information and statistical analyses <sup>p. 17</sup>.
* Anticipated inflation is implicitly reflected in the reserving process <sup>p. 17</sup>.
* Reserves for losses and LAE are not discounted to reflect estimated present value <sup>p. 17</sup>.
* Case reserves are established for the estimated ultimate payment of reported claims after assessment <sup>p. 17</sup>.
* IBNR reserves are established for estimated future loss payments on incurred but not yet reported claims and potential development on reported claims <sup>p. 17</sup>.
* Loss reserves are regularly reviewed using actuarial techniques and updated as historical loss experience develops <sup>p. 17</sup>.
* The company seeks to maintain a balanced investment portfolio predominantly composed of investments generating predictable and stable returns <sup>p. 18</sup>.
* The investment allocation strategy uses an Enterprise Based Asset Allocation model, embedded in the Economic Capital Model <sup>p. 18</sup>.
* Investment risk is actively managed and monitored to balance stable growth and liquidity with regulatory and rating agency frameworks <sup>p. 18</sup>.
* The portfolio mainly comprises cash and cash equivalents and investment-grade fixed-maturity securities, supplemented by additional investments <sup>p. 18</sup>.
* The Investment Committee of the Board of Directors reviews and approves investment policy and strategy quarterly <sup>p. 18</sup>.
* The portfolio includes both self-managed investments and those managed by third-party investment management firms <sup>p. 18</sup>.
* The specialty lines property & casualty insurance market consists of many markets and sub-markets <sup>p. 18</sup>.
* Competition is based on pricing, financial strength, broker relationships, terms and conditions, ratings, claims payment speed, and team experience <sup>p. 18</sup>.
* Notable competitors include Markel Corporation, W.R. Berkley Corporation, American Financial Group Inc., Tokio Marine Holdings, Inc., CNA Financial Corporation, Hiscox, Ltd., RLI Corp., Intact Finance Corporation, Kinsale Capital Group, Inc., Arch Capital Group, and AXIS Capital Holdings, Ltd. <sup>p. 18</sup>.
* Operations are conducted principally through four insurance companies: Great Midwest Insurance Company (GMIC), Houston Specialty Company (HSIC), Imperium Insurance Company (IIC), and Oklahoma Specialty Insurance Company (OSIC) <sup>p. 19</sup>.
* ''GMIC'', the largest insurance subsidiary, underwrites multiple lines on an admitted basis in all 50 states and D.C., and is a certified surety bond company <sup>p. 19</sup>.
* ''HSIC'', a subsidiary of GMIC, underwrites multiple lines on a surplus lines basis in 50 states, D.C., and select foreign countries <sup>p. 19</sup>.
* ''IIC'', a subsidiary of HSIC, underwrites on an admitted basis in all 50 states and D.C. <sup>p. 19</sup>.
* ''OSIC'', a subsidiary of IIC, is an approved surplus lines company in 49 states and D.C. <sup>p. 19</sup>.
* Effective December 31, 2024, the insurance company subsidiaries were restacked to provide capital for the growing surety business <sup>p. 19</sup>.
* The company also owns Skyward Re, a wholly-owned captive reinsurance company domiciled in the Cayman Islands, incorporated on January 7, 2020 <sup>p. 19</sup>.
* Skyward Re was established to facilitate an LPT which was commuted effective January 31, 2025 <sup>p. 19</sup>.
* Three non-insurance companies are operated: Skyward Underwriters Agency, Inc. (licensed agent, MGA, reinsurance broker), Skyward Service Company (administrative services), and Skyward Specialty No. 1 Limited Company (UK company, authorized Lloyd’s corporate member) <sup>p. 19</sup>.
* The organizational structure at December 31, 2025, shows each entity wholly-owned by its immediate parent <sup>p. 19</sup>.
* The insurance group, Skyward Specialty Insurance Group, Inc., has an "A" (Excellent) rating with a stable outlook from A.M. Best <sup>p. 20</sup>.
* The "A" (Excellent) rating is the third highest among A.M. Best's 13 ratings, which range from "A++" (Superior) to "D" (Poor) <sup>p. 20</sup>.
* The company operates as an insurance holding company system and is subject to insurance holding company laws of Texas and Oklahoma <sup>p. 21</sup>.
* These statutes require registration with state insurance departments and disclosure of information concerning holding company system operations <sup>p. 21</sup>.
* Transactions among holding company system members must be fair and reasonable <sup>p. 21</sup>.
* Transactions between insurance subsidiaries and affiliates generally require disclosure to state regulators and notice or prior approval for material/extraordinary transactions <sup>p. 21</sup>.
* The company has applied for various trademark registrations in the United States at federal and state levels <sup>p. 21</sup>.
* Trademarks and service marks are monitored and protected from unauthorized use <sup>p. 21</sup>.
* As of December 31, 2025, the company had approximately 611 employees <sup>p. 21</sup>.
* Employees are not subject to any collective bargaining agreement <sup>p. 21</sup>.
* The company strives to cultivate an exceptional workforce and promote a culture valuing diversity of thought, background, and perspective <sup>p. 21</sup>.
* A competitive benefits package is offered, including medical, dental, vision insurance, 401(k) plan, paid time off, family leave, employee assistance programs, and an employee stock purchase plan <sup>p. 22</sup>.
* Opportunities for education and professional development are provided <sup>p. 22</sup>.
== Risk Factors ==
<blockquote>"Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this report, including our consolidated financial statements and related notes, as well as in our other filings with the SEC, in evaluating our business and before investing in our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that are not expressly stated, that we are unaware of, or that we currently believe are not material, may also become important factors that affect us. If any of the following risks occur, our business, operating results, financial condition and prospects could be materially harmed. In that event, the price of our common stock could decline, and you could lose part or all of your investment." <sup>p. 2</sup></blockquote>
* ''Financial condition and results of operations'' could be materially adversely affected if underwriting risk is not accurately assessed <sup>p. 2</sup>.
* ''Competition'' in the industry is intense <sup>p. 2</sup>.
* ''Reliance on distribution channels'' (retail agents, brokers, wholesalers, program administrators) exposes the company to risks that could adversely affect results <sup>p. 2</sup>.
* ''Inability to purchase third-party reinsurance'' on desired or acceptable terms could materially adversely affect business, financial condition, and results of operations <sup>p. 2</sup>.
* ''Losses and loss expense reserves'' may be inadequate, materially adversely affecting financial condition, results of operations, and cash flows <sup>p. 2</sup>.
* ''Decline in financial strength rating'' may adversely affect the amount of business written <sup>p. 2</sup>.
* ''Unexpected changes in coverage interpretation'' or policy provisions (including loss limitations and exclusions) could materially adversely affect financial condition and results of operations <sup>p. 2</sup>.
* ''Reinsurers may not reimburse claims'' timely or at all, materially adversely affecting business, financial condition, and results of operations <sup>p. 2</sup>.
* ''Failure to accurately and timely pay claims'' could materially and adversely affect business, financial condition, results of operations, and prospects <sup>p. 2</sup>.
* ''Adverse economic factors'' (recession, inflation, high unemployment, lower economic activity) could lead to fewer policy sales, increased claim frequency, premium defaults, or falsified claims, impacting growth and profitability <sup>p. 2</sup>.
* ''Cyclical nature of the insurance business'' may affect financial performance and cause operating results to vary quarterly, not indicative of future performance <sup>p. 2</sup>.
* ''Extensive regulation'' may adversely affect business objectives; non-compliance could lead to penalties (fines, suspensions) <sup>p. 2</sup>.
* ''Loss of key personnel'' or inability to attract and retain qualified personnel could adversely affect the company <sup>p. 2</sup>.
* ''Failure to achieve and maintain effective internal controls'' could impact operating results, financial condition, and negatively affect common stock market price <sup>p. 2</sup>.
* ''Increased costs of operating as a public company'' and substantial management time devoted to compliance initiatives <sup>p. 2</sup>.
* ''Use of derivatives'' to mitigate market price volatility may subject the company to risks like hedge ineffectiveness, basis risk, collateral/margin call liquidity pressures, and valuation uncertainty, adversely affecting financial condition <sup>p. 2</sup>.
* ''Integration of Apollo'' may present unforeseen challenges (technology, processes, risk management), leading to operational disruptions, increased costs, or delays in realizing anticipated strategic benefits <sup>p. 2</sup>.
* ''Underwriting success'' depends on accurately assessing risks and the experience of underwriting staff <sup>p. 2</sup>.
* ''Misunderstanding risks'' may lead to inappropriate premium rates, adversely affecting financial results <sup>p. 2</sup>.
* ''Employee decisions'' (management, underwriters) in the ordinary course of business involve exposing the company to risk <sup>p. 2</sup>.
* ''Competition'' in the insurance industry is based on price, reputation, financial strength, distribution relationships, product terms, ratings, claims payment speed, and underwriting team experience <sup>p. 2</sup>.
* ''Increasing consolidation'' in the insurance industry may further intensify competition <sup>p. 2</sup>.
* ''New industry or legislative developments'' could increase competition <sup>p. 2</sup>.
* ''Inability to compete successfully'' could change supply/demand, affect pricing at risk-adequate rates, and impact retention or new business underwriting <sup>p. 2</sup>.
* ''Substantially all products'' are distributed through independent retail agents and brokers who hold principal relationships with policyholders <sup>p. 3</sup>.
* ''Business model'' relies on relationships with, and success of, retail agents and brokers who generally own "renewal rights" <sup>p. 3</sup>.
* ''Dependence on wholesalers and program administrators'' relationships with agents and brokers for business sourcing <sup>p. 3</sup>.
* ''Relationships with distributors'' can be discontinued at any time or on unprofitable terms <sup>p. 3</sup>.
* ''Consolidation of insurance distribution firms'' may increase their influence on commission rates and concentrate business with particular brokers <sup>p. 3</sup>.
* ''Credit risk'' is assumed from brokers who collect premiums but may not remit them, potentially requiring the company to provide coverage despite non-payment <sup>p. 3</sup>.
* ''Failure of brokers to remit premiums'' has not been material to date, but instances could occur where the company is liable for coverage without receiving premiums <sup>p. 3</sup>.
* ''Limitations on policy cancellation for non-payment'' could reduce underwriting profits and materially adversely affect financial condition and results of operations <sup>p. 3</sup>.
* ''Financial condition of new brokers'' is reviewed before transacting business <sup>p. 3</sup>.
* ''Periodic review of distributors'' identifies those not meeting profitability standards or business objectives <sup>p. 3</sup>.
* ''Restrictions or termination of distributor relationships'' may occur following reviews, subject to contractual and regulatory requirements <sup>p. 3</sup>.
* ''Deterioration of distributor relationships'' or uncompetitive compensation could lead distributors to place more premium with other carriers <sup>p. 3</sup>.
* ''Distributors exceeding authority, failing to transfer premiums, or breaching obligations'' could expose the company to liability <sup>p. 3</sup>.
* ''Continued consolidation of insurance distribution firms'' could materially affect sales channels, including loss of market access or share <sup>p. 3</sup>.
* ''Negative impact from talent loss'' if knowledgeable personnel exit after acquisitions, or increased commission costs due to larger distributors' negotiating leverage <sup>p. 3</sup>.
* ''Digitization acceleration'' exposes the company to risks related to distributors' ability to keep pace and customer demand for technology-driven experiences <sup>p. 3</sup>.
* ''Strategic purchase of reinsurance'' from third parties enhances business by protecting capital from severity events and reducing earnings volatility <sup>p. 3</sup>.
* ''Reinsurance involves ceding risk exposure'' to a reinsurer in exchange for a cost <sup>p. 3</sup>.
* ''Inability to renew expiring contracts'', enter new arrangements, or expand coverage could increase loss exposure, potentially requiring reduced underwriting commitments <sup>p. 3</sup>.
* ''Reinsurers may exclude certain coverages'' or alter terms in contracts, creating gaps in reinsurance protection and exposing the company to greater risk and potential losses <sup>p. 3</sup>.
* ''Ability to accurately assess risks'' related to insured businesses and people is crucial for success <sup>p. 4</sup>.
* ''Losses and LAE reserves'' are established as the best estimate for ultimate payment of incurred claims and related adjustment costs <sup>p. 4</sup>.
* ''Reserves are estimates'', and ultimate liability may differ from the estimate <sup>p. 4</sup>.
* ''Reserving process'' reviews historical data and considers factors like claims inflation, claims development patterns, pricing, legislative activity, social/economic patterns, and litigation trends <sup>p. 4</sup>.
* ''Variables affecting loss exposure'' are influenced by internal and external events <sup>p. 4</sup>.
* ''Loss reserves are continually monitored'' using new information, statistical techniques, and modeling simulations <sup>p. 4</sup>.
* ''Process assumes past experience'' (adjusted for current developments, trends, market conditions) is a basis for predicting future events <sup>p. 4</sup>.
* ''No precise method'' for evaluating specific factor impact on reserve adequacy; actual results may deviate substantially <sup>p. 4</sup>.
* ''Uncertainties impacting reserve adequacy'' include: time to fully appreciate covered loss extent, leading to increased estimates over time <sup>p. 4</sup>.
* ''New theories of liability'' enforced retroactively by courts could affect loss limitations or exclusions <sup>p. 4</sup>.
* ''Volatility in financial markets, economic events, and external factors'' may increase claim frequency/severity <sup>p. 4</sup>.
* ''Elevated inflationary conditions'' would increase loss costs <sup>p. 4</sup>.
* ''Adverse economic factors'' (recession, inflation, high unemployment, lower economic activity) could lead to fewer policy sales or increased claim frequency/severity and premium defaults <sup>p. 4</sup>.
* ''Increased cost due to "social inflation"'' (medical/material costs, technology in vehicles, supply chain disruptions, attorney involvement, litigation financing, lawsuit abuse) could increase claim frequency/severity and affect reserve adequacy <sup>p. 4</sup>.
* ''Increased claim frequency'', even without liability, could escalate evaluation and handling costs beyond established reserves <sup>p. 4</sup>.
* ''Entering new lines of business'' or new theories of claims may increase claim frequency and handling costs <sup>p. 4</sup>.
* ''Inadequate reserves'' would require increasing reserves, reducing net income and stockholders' equity in the identification period <sup>p. 4</sup>.
* ''Future loss experience substantially exceeding reserves'' could materially adversely affect future earnings, liquidity, and financial rating <sup>p. 4</sup>.
* ''Independent ratings agencies'' (e.g., A.M. Best) provide ratings used by the insurance industry to assess financial strength <sup>p. 5</sup>.
* ''A.M. Best's rating process'' includes quantitative and qualitative analysis of balance sheet strength, operating performance, and business profile <sup>p. 5</sup>.
* ''A.M. Best financial strength ratings'' range from "A++" (Superior) to "F" (liquidation) <sup>p. 5</sup>.
* ''As of December 31, 2025'', A.M. Best assigned a financial strength rating of "A" (Excellent) with a stable outlook to the company <sup>p. 5</sup>.
* ''A.M. Best ratings'' are an independent opinion of an insurer's ability to meet policyholder obligations, not an evaluation for investors or a recommendation to buy/sell stock <sup>p. 5</sup>.
* ''A.M. Best's analysis'' includes comparisons to peers, industry standards, operating plans, philosophy, and management <sup>p. 5</sup>.
* ''A.M. Best periodically reviews'' financial strength ratings and may revise them downward based on balance sheet strength, operating performance, and business profile <sup>p. 5</sup>.
* ''Factors affecting A.M. Best ratings'' include changes in business practices, unfavorable financial/regulatory/market trends, losses exceeding reserves, unresolved regulatory issues, inability to retain key personnel, investment portfolio losses, limited liquidity, or alterations to capital adequacy assessment methodology <sup>p. 5</sup>.
* ''A downgrade or withdrawal of rating'' could cause distribution partners/insureds to choose competitors, increase reinsurance costs/reduce availability, or severely limit new/renewal insurance contracts <sup>p. 5</sup>.
* ''Rating organizations may heighten scrutiny'' due to earnings and capital pressures in financial institutions, potentially increasing review frequency/scope, requesting more information, or increasing capital requirements <sup>p. 5</sup>.
* ''No assurance'' that the rating will remain at its current level <sup>p. 5</sup>.
* ''Adverse ratings consequences'' from reviews could materially adversely affect financial condition and results of operations <sup>p. 5</sup>.
* ''No assurance'' that loss limitations or exclusions in policies will be enforceable as intended <sup>p. 5</sup>.
* ''Unexpected and unintended issues'' related to claims and coverage may emerge due to changes in industry practices, legal, judicial, social, and other conditions <sup>p. 5</sup>.
* ''Courts or regulatory authorities'' could nullify or void limitations/exclusions, or legislation could modify/bar their use <sup>p. 5</sup>.
* ''Governmental actions'' could result in higher than anticipated losses and LAE, materially adversely affecting financial condition or results of operations <sup>p. 5</sup>.
* ''Court decisions'' (e.g., 1995 Montrose decision in California) could narrowly read policy exclusions, expanding coverage and requiring new exclusions <sup>p. 5</sup>.
* ''Issues may adversely affect business'' by broadening coverage beyond underwriting intent or increasing claim frequency/severity <sup>p. 5</sup>.
* ''Full extent of liability'' under insurance contracts may not be known for many years after issuance <sup>p. 5</sup>.
* ''Reinsurance contracts'' require premium payments to carriers who reimburse for covered policy claims <sup>p. 6</sup>.
* ''Reinsurers may be called upon to reimburse claims'' many years after the company paid premiums <sup>p. 6</sup>.
* ''Reinsurance does not relieve the company'' of its primary liability to policyholders <sup>p. 6</sup>.
* ''Current reinsurance program'' is designed to limit financial risk <sup>p. 6</sup>.
* ''Reinsurers may not pay claims timely or at all'' due to insolvency, lack of liquidity, operational failure, political/regulatory prohibitions, fraud, asserted defenses, or documentation deficiencies <sup>p. 6</sup>.
* ''Disputes with reinsurers'' could be time-consuming, costly, and uncertain of success <sup>p. 6</sup>.
* ''Risks could cause increased net losses'', adversely affecting financial condition <sup>p. 6</sup>.
* ''As of December 31, 2025'', the company had ''$1,119.9 million'' in reinsurance recoverables <sup>p. 6</sup>.
* ''Accurate and timely evaluation and payment of claims'' is critical <sup>p. 6</sup>.
* ''Factors affecting claim payment ability'' include training/experience of claims representatives (including TPAs), management effectiveness, and appropriate procedures/systems <sup>p. 6</sup>.
* ''Failure to pay claims accurately and timely'' could lead to regulatory/administrative actions, litigation, reputational damage, and adversely affect business, financial condition, results of operations, and prospects <sup>p. 6</sup>.
* ''Ineffective TPA management'' or inability of internal staff/TPAs to handle claim volume could adversely affect workload capacity <sup>p. 6</sup>.
* ''Decreased quality of claims work'' could result from ineffective management, adversely affecting operating margins <sup>p. 6</sup>.
* ''Business is exposed to severe weather conditions'', earthquakes, and man-made catastrophes <sup>p. 6</sup>.
* ''Catastrophes'' can be natural (winter weather, storms, earthquakes, fires) or man-made (explosions, war, terrorism, riots) <sup>p. 6</sup>.
* ''Changing weather patterns and climatic conditions'' have increased unpredictability and frequency of natural disasters <sup>p. 6</sup>.
* ''Climate change'' may increase frequency and severity of extreme weather events, leading to conditions that increase hurricane activity and wildfire risks <sup>p. 6</sup>.
* ''Occurrence of a natural disaster or catastrophe loss'' could materially adversely affect business, financial condition, and results of operations <sup>p. 6</sup>.
* ''Catastrophes can impact the company indirectly'' even without direct insurance exposure, such as the ''2025 California wildfires'', where affected homes/businesses may cancel policies <sup>p. 6</sup>.
* ''Increased frequency and severity of weather events'' (hurricanes, convective storms) could materially adversely affect ability to predict, quantify, reinsure, and manage catastrophe risk, increasing losses <sup>p. 6</sup>.
* ''Extent of losses from catastrophes'' depends on frequency/severity of insured events and total insured exposure in affected areas <sup>p. 6</sup>.
* ''Incidence and severity of catastrophes'' and severe weather are inherently unpredictable <sup>p. 6</sup>.
* ''Exposure to losses is managed'' by analyzing probability/severity of loss events and their impact on underwriting/investment portfolio <sup>p. 6</sup>.
* ''Inability to obtain reinsurance coverage'' at reasonable rates and adequate amounts for severe weather/catastrophes could materially adversely affect business and results of operations <sup>p. 6</sup>.
* ''Business is exposed to pandemics, outbreaks, public health crises, and geopolitical/social events'' <sup>p. 7</sup>.
* ''Policy terms are expected to preclude coverage for virus-related claims'', but court decisions and governmental actions may challenge exclusions <sup>p. 7</sup>.
* ''Changes in domestic/international programs'' and initiatives regarding climate policy, and federal/state/local legislation, could materially adversely affect business, operational results, and financial results <sup>p. 7</sup>.
* ''Program administrators with quoting and binding authority'' could adversely affect results if they fail to comply with pre-established guidelines <sup>p. 7</sup>.
* ''Program administrators can bind certain risks'' without initial approval <sup>p. 7</sup>.
* ''Non-compliance by program administrators'' could bind the company to unanticipated risks, adversely affecting results of operations <sup>p. 7</sup>.
* ''Actual renewals or new business from repeat insureds'' not meeting expectations could materially adversely affect future written premium and results of operations <sup>p. 7</sup>.
* ''Most contracts are one-year term and renewable''; some insureds are repeat customers with new contracts <sup>p. 7</sup>.
* ''Assumptions about renewal rates'' and repeat business are made in financial forecasting <sup>p. 7</sup>.
* ''Cyclical nature of insurance/reinsurance industries'' with intense price-based competition <sup>p. 7</sup>.
* ''Failure of actual renewals/repeat business to meet expectations'', or choosing not to write them due to pricing, would materially adversely affect future written premium and operations <sup>p. 7</sup>.
* ''Increased public attention to ESG matters'' may expose the company to negative public perception, reputational harm, additional costs, or stock price impact <sup>p. 7</sup>.
* ''Failure or perceived failure to meet ESG expectations'' could harm business and reputation <sup>p. 7</sup>.
* ''Backlash related to ESG topics'' could harm business and reputation <sup>p. 7</sup>.
* ''Damage to reputation'' from providing policies to certain insureds could decrease demand for products, materially adversely affecting business, operational results, and financial results, and require resources to rebuild <sup>p. 7</sup>.
* ''Changes in accounting practices and future pronouncements'' may materially affect reported financial results <sup>p. 7</sup>.
* ''Compliance with new accounting practices'' may incur considerable additional expenses, especially for prior period information or retroactive application <sup>p. 7</sup>.
* ''Impact of accounting changes'' cannot be predicted but may affect net income, shareholder's equity, and other financial statement items <sup>p. 7</sup>.
* ''Insurance subsidiaries (GMIC, HSIC, IIC)'' must comply with Statutory Accounting Principles (SAP) <sup>p. 8</sup>.
* ''SAP is subject to constant review'' by NAIC and state insurance departments to address emerging issues and improve financial reporting <sup>p. 8</sup>.
* ''Pending proposals before NAIC committees'' could negatively affect insurance industry participants if enacted and adopted at state level <sup>p. 8</sup>.
* ''Uncertainty regarding enactment and impact'' of reforms on the company <sup>p. 8</sup>.
* ''Use of derivatives'' to mitigate market price volatility subjects the company to risks that could adversely affect financial condition and results of operations <sup>p. 8</sup>.
* ''Risks include hedge ineffectiveness'' due to imperfect correlation, basis risk (futures prices not moving with cash market prices), and liquidity pressures from margin calls/collateral requirements <sup>p. 8</sup>.
* ''Reliance on market-based models'' introduces valuation uncertainty, potentially causing hedges to perform differently than expected <sup>p. 8</sup>.
* ''Factors like business revenue, economic conditions, capital market volatility/strength, and inflation'' affect the business and economic environment, and the company's ability to generate revenue and profits <sup>p. 8</sup>.
* ''Economic downturns'' (high unemployment, declining spending, reduced corporate revenue) generally adversely affect demand for insurance products, impacting premium levels and profitability <sup>p. 8</sup>.
* ''Negative economic factors'' may affect ability to receive appropriate rates for risk, number of policies written, and opportunities for profitable business <sup>p. 8</sup>.
* ''Customers may reduce or cancel coverage'' or not renew policies during economic downturns <sup>p. 8</sup>.
* ''Existing policyholders may exaggerate or falsify claims'' to obtain higher payments <sup>p. 8</sup>.
* ''Collapse of certain economic segments'' (construction, credit markets, energy production/servicing) could adversely affect results <sup>p. 8</sup>.
* ''Reduced underwriting profit'' if these factors are not reflected in charged rates <sup>p. 8</sup>.
* ''Insurance carriers have historically experienced significant fluctuations'' in operating results due to competition, catastrophic events, capacity levels, litigation trends, regulatory constraints, and economic conditions <sup>p. 9</sup>.
* ''Supply of insurance'' is related to prevailing prices, insured losses, and available capital, which fluctuate with investment returns <sup>p. 9</sup>.
* ''Insurance business is cyclical'', characterized by intense price competition (soft market) and periods of increased premiums due to capacity shortages (hard market) <sup>p. 9</sup>.
* ''Demand for insurance'' depends on factors like catastrophic event frequency/severity, capacity levels, new capital providers, and economic conditions, all of which fluctuate and contribute to price declines <sup>p. 9</sup>.
* ''Profitability of most P&C insurance companies'' tends to follow cyclical market patterns, with higher gross written premium growth and improved profitability during hard market cycles <sup>p. 9</sup>.
* ''Cyclical market pattern is more pronounced in the E&S market'' than in the standard insurance market <sup>p. 9</sup>.
* ''E&S market hardens and grows more rapidly'' when the standard market hardens <sup>p. 9</sup>.
* ''Customers may return to the admitted market'' when conditions soften, exacerbating rate decrease effects on financial results <sup>p. 9</sup>.
* ''Market may experience "micro cycles"'' where certain areas harden or soften independently and more drastically <sup>p. 9</sup>.
* ''Operating results are subject to fluctuation'' and have historically varied quarter-to-quarter <sup>p. 9</sup>.
* ''Quarterly results are expected to continue fluctuating'' due to general economic conditions, catastrophe frequency/severity, interest rates, claims exceeding reserves, competition, premium retention deviations, adverse investment performance, and reinsurance costs <sup>p. 9</sup>.
* ''Results of operations depend'' partly on investment portfolio performance <sup>p. 9</sup>.
* ''Investment portfolio is diversified'' and managed by professional advisory firms, reviewed by the Investment Committee <sup>p. 9</sup>.
* ''Investments are subject to general economic conditions'', market risks, and specific security risks <sup>p. 9</sup>.
* ''Primary market risk exposures'' are to changes in interest rates and equity prices <sup>p. 9</sup>.
* ''Significant portion of investment portfolio'' is in fixed maturity securities, separately managed accounts, and limited partnerships primarily invested in fixed maturity securities <sup>p. 9</sup>.
* ''Material rise in interest rates'' occurred during ''2022 and 2023'' <sup>p. 9</sup>.
* ''Declining interest rates'' (e.g., from federal government actions like rate cuts and the Inflation Reduction Act of 2022) would pressure net investment income, particularly for fixed maturity securities and short-term investments, adversely affecting operating results <sup>p. 9</sup>.
* ''Recent and future interest rate increases'' could cause fixed income securities portfolio values to decline, depending on duration and rate increase magnitude <sup>p. 9</sup>.
* ''Some fixed income securities'' have call/prepayment options, creating reinvestment risk in declining rate environments <sup>p. 9</sup>.
* ''Mortgage-backed and other asset-backed securities'' carry prepayment risk or may not prepay as quickly as expected in rising rate environments <sup>p. 9</sup>.
* ''All fixed maturity securities'' (including those in separately managed accounts and limited partnerships) are subject to credit risk <sup>p. 10</sup>.
* ''Credit risk'' is the risk of investment default or impairment due to deterioration in the financial condition of issuers or guarantors <sup>p. 10</sup>.
* ''Downgrades in credit ratings'' of fixed maturity securities could significantly negatively affect their market valuation <sup>p. 10</sup>.
* ''Investments in marketable preferred/common equity securities and exchange traded funds'' are carried at fair market value and subject to potential losses and market value declines <sup>p. 10</sup>.
* ''Market and credit risks'' could reduce net investment income and result in realized investment losses <sup>p. 10</sup>.
* ''Investment portfolio is subject to increased valuation uncertainties'' when markets are illiquid, as with fixed maturity securities held to maturity, separately managed accounts, and limited partnership investments <sup>p. 10</sup>.
* ''Valuation of investments is more subjective'' in illiquid markets, increasing risk that estimated fair value does not reflect actual transaction prices <sup>p. 10</sup>.
* ''Risks for all security types are managed'' through an investment policy establishing parameters like maximum investment percentages and minimum credit quality, believed to be within NAIC, Texas Department of Insurance, and Oklahoma Department of Insurance guidelines <sup>p. 10</sup>.
* ''Investment Committee periodically reviews'' Enterprise Based Asset Allocation models for overall risk management <sup>p. 10</sup>.
* ''No certainty that investment objectives will be achieved'', and results may vary substantially <sup>p. 10</sup>.
* ''Investment strategies are sought to be uncorrelated'' with insurance/reinsurance exposures, but losses in the investment portfolio may coincide with underwriting losses, exacerbating adverse effects <sup>p. 10</sup>.
* ''Forced sale of investments'' may be necessary to meet liquidity requirements <sup>p. 10</sup>.
* ''Premiums are invested'' until needed to pay policyholder claims <sup>p. 10</sup>.
* ''Investment portfolio duration is managed'' based on losses and LAE reserves duration to provide liquidity and avoid liquidating investments for claims <sup>p. 10</sup>.
* ''Inadequate losses and LAE reserves'' or unfavorable litigation trends could necessitate selling investments to fund liabilities <sup>p. 10</sup>.
* ''Inability to sell investments at favorable prices or at all'' could result in significant realized losses depending on market conditions, interest rates, and credit issues <sup>p. 11</sup>.
* ''Primary insurance subsidiaries (GMIC, HSIC, IIC)'' are extensively regulated in Texas and other operating states <sup>p. 11</sup>.
* ''Insurance regulations'' primarily protect policyholders, not investors <sup>p. 11</sup>.
* ''Regulations cover'' capital/surplus requirements, investment/underwriting limitations, affiliate transactions, dividend limitations, changes in control, solvency, and other financial/non-financial aspects <sup>p. 11</sup>.
* ''Significant changes in laws/regulations'' could further limit discretion or increase business costs <sup>p. 11</sup>.
* ''State insurance regulators conduct periodic examinations'' and require filing of annual/other reports <sup>p. 11</sup>.
* ''Regulatory requirements'' may impose timing and expense constraints, adversely affecting business objectives <sup>p. 11</sup>.
* ''Insurance subsidiaries are part of an "insurance holding company system"'' under Texas statutes/regulations <sup>p. 11</sup>.
* ''Certain transactions between insurance subsidiaries and affiliates'' require prior notice to the Texas Department of Insurance, potentially causing business delays and additional expenses <sup>p. 11</sup>.
* ''Failure to file required notifications'' or comply with Texas insurance regulations could lead to significant fines, penalties, and impaired working relationship with the Texas Department of Insurance <sup>p. 11</sup>.
* ''State insurance regulators have broad discretion'' to deny or revoke licenses for regulation violations <sup>p. 11</sup>.
* ''Practices based on interpretations of regulations'' or industry norms may differ from regulatory authorities' interpretations <sup>p. 11</sup>.
* ''Lack of requisite licenses/approvals'' or non-compliance could lead to suspension of activities or penalties <sup>p. 11</sup>.
* ''Changes in insurance industry regulation'' or interpretations could interfere with operations and increase compliance costs <sup>p. 11</sup>.
* ''Insurance subsidiaries are subject to risk-based capital requirements'' (NAIC model) and minimum capital/surplus restrictions under Texas law <sup>p. 11</sup>.
* ''Risk-based capital requirements'' establish minimum capital for business operations and identify inadequately capitalized insurers <sup>p. 11</sup>.
* ''Falling below a calculated threshold'' may trigger regulatory action (supervision, rehabilitation, liquidation) <sup>p. 11</sup>.
* ''Failure to maintain required risk-based capital'' could adversely affect regulatory authority and A.M. Best Rating <sup>p. 11</sup>.
* ''Additional government or market regulation'' could materially adversely impact business <sup>p. 12</sup>.
* ''Changes in laws'' (asset/reserve valuation, surplus, investment/dividend limitations, enterprise risk, risk-based capital) could adversely affect business <sup>p. 12</sup>.
* ''U.S. federal government'' generally does not directly regulate insurance, except for flood, nuclear, and terrorism risks, but could consider legislation affecting the industry <sup>p. 12</sup>.
* ''Legislation could include'' privatization of government entities, reduction in federal subsidies, tort reform, corporate governance, and taxation of reinsurance companies <sup>p. 12</sup>.
* ''Changes to U.S. tax laws'' and new tax policies could significantly negatively impact the overall economy and business <sup>p. 12</sup>.
* ''Legislative or other actions relating to taxes'' could negatively affect the company, investments, or stockholders <sup>p. 12</sup>.
* ''Rules for U.S. federal income taxation'' are constantly under review <sup>p. 12</sup>.
* ''Uncertainty regarding impact of tax law changes'' on the company, stockholders, or portfolio investments <sup>p. 12</sup>.
* ''New legislation, U.S. Treasury regulations, administrative interpretations, or court decisions'' could have other adverse consequences <sup>p. 12</sup>.
* ''On July 4, 2025'', H.R. 1, the "One Big Beautiful Bill Act" (OBBBA), was signed into law in the U.S. <sup>p. 12</sup>.
* ''OBBBA modifies key business tax provisions'', including restoration of 100% bonus depreciation (Section 168(k) IRC), immediate deduction of U.S. domestic R&E expenditures (Section 174A IRC), and EBITDA-based business interest expense limitation (Section 163(j) IRC), and changes to international operations tax computation <sup>p. 12</sup>.
* ''Current analysis suggests OBBBA provisions will not materially impact'' business and results of operations <sup>p. 12</sup>.
* ''Regulations and IRS guidance implementing OBBBA'' may raise unforeseen issues, and further tax law changes may occur <sup>p. 12</sup>.
* ''No assurance'' that business will not be adversely affected by OBBBA or other tax law changes <sup>p. 12</sup>.
* ''Ability to utilize net operating loss carryforwards (NOLs)'' and other tax attributes may be limited <sup>p. 12</sup>.
* ''As of December 31, 2025'', the company had ''gross federal income tax NOLs of approximately $40.3 million'' available to offset future taxable income, prior to Section 382 limitations <sup>p. 12</sup>.
* ''NOLs are set to expire beginning in 2032'' <sup>p. 12</sup>.
* ''Under Section 382 of the Code'', an "ownership change" (greater than 50% change in equity ownership over three years) can limit the use of pre-ownership change NOLs <sup>p. 12</sup>.
* ''Future ownership changes'' may occur, some outside of control <sup>p. 12</sup>.
* ''Future regulatory changes'' could limit NOL utilization <sup>p. 12</sup>.
* ''Inability to offset future taxable income with NOLs'' could adversely affect net income and cash flows <sup>p. 12</sup>.
* ''As a holding company'', with substantially all operations conducted by insurance subsidiaries, liquidity at the holding company level (dividends, debt obligations) depends on cash dividends or other permitted payments from insurance subsidiaries <sup>p. 13</sup>.
* ''Continued operation and growth'' require substantial capital <sup>p. 13</sup>.
* ''No intention to declare and pay cash dividends'' on common stock in the foreseeable future <sup>p. 13</sup>.
* ''Ability to pay dividends and meet debt obligations'' depends largely on dividends and distributions from GMIC, HSIC, and IIC <sup>p. 13</sup>.
* ''State insurance laws'' (including Texas) restrict the ability of GMIC, HSIC, and IIC to declare stockholder dividends <sup>p. 13</sup>.
* ''State insurance regulators require specified levels of statutory capital and surplus'' <sup>p. 13</sup>.
* ''Dividend payments are limited'' to net profits from business <sup>p. 13</sup>.
* ''State insurance regulators have broad powers'' to prevent reduction of statutory surplus to inadequate levels <sup>p. 13</sup>.
* ''No assurance'' that dividends up to maximum calculated amounts would be permitted <sup>p. 13</sup>.
* ''Future statutory provisions'' regarding dividends by insurance subsidiaries may be more restrictive <sup>p. 13</sup>.
* ''Future dividend decisions'' are at the discretion of the Board of Directors, depending on results, financial condition, debt agreement restrictions, applicable law, and other relevant factors <sup>p. 13</sup>.
* ''Investors may need to sell common stock'' after price appreciation (if it occurs) to realize gains, as immediate cash dividends are not expected <sup>p. 13</sup>.
* ''Applicable insurance laws'' may make it difficult to effect a change of control <sup>p. 13</sup>.
* ''Under Texas insurance laws'', written approval from the state insurance commissioner is required to acquire control of a domestic insurer <sup>p. 13</sup>.
* ''Approval depends on factors'' including financial strength of acquirer, plans for future operations, and anti-competitive results <sup>p. 13</sup>.
* ''Texas insurance laws apply to direct and indirect acquisition of 10% or more'' of voting stock of a Texas-domiciled insurer <sup>p. 13</sup>.
* ''Acquisition of 10% or more of common stock'' would be considered an indirect change of control, triggering filing requirements unless a disclaimer of control is accepted by the Texas Insurance Department <sup>p. 13</sup>.
* ''Requirements may discourage acquisition proposals'' and delay/deter/prevent a change of control, even if desirable to stockholders <sup>p. 13</sup>.
* ''Future capital requirements'' depend on factors like ability to write new business, establish premium rates, and reserves sufficient to cover losses <sup>p. 14</sup>.
* ''Insufficient cash flows'' from operations, adverse impact on capital from investment portfolio decline, catastrophe losses, or adverse reserve development may necessitate raising additional funds or curtailing growth <sup>p. 14</sup>.
* ''Capital needs'' are affected by growth rate, profitability, claims experience, reinsurance availability, market disruptions, and unforeseeable developments <sup>p. 14</sup>.
* ''Equity or debt financing'' may not be available or only on unfavorable terms <sup>p. 14</sup>.
* ''Equity financings'' could result in dilution to stockholders <sup>p. 14</sup>.
* ''Debt financings'' may involve covenants restricting business operations <sup>p. 14</sup>.
* ''Securities may have rights, preferences, and privileges'' senior to common stock <sup>p. 14</sup>.
* ''Inability to obtain adequate capital'' could prevent implementation of operating plans, materially adversely affecting business, financial condition, or results of operations <sup>p. 14</sup>.
* ''Availability of credit under the Revolving Credit Facility'' is subject to conditions that may limit access <sup>p. 14</sup>.
* ''Inability to satisfy conditions'' would prevent borrowing under the Revolving Credit Facility, adversely affecting liquidity, financial position, and results of operations <sup>p. 14</sup>.
* ''Failure to meet financial covenants'' in credit agreements may materially and adversely affect assets, financial position, and cash flows <sup>p. 14</sup>.
* ''Breach of covenants'' under Term Loan Facility and Revolving Credit Facility could result in an event of default <sup>p. 14</sup>.
* ''Upon event of default'', all outstanding amounts and accrued interest could be declared immediately due and payable <sup>p. 14</sup>.
* ''Assets may be insufficient to repay debts'' in full <sup>p. 14</sup>.
* ''Current credit market environment'' and macro-economic challenges may adversely impact ability to borrow or sell assets/equity to pay existing debt <sup>p. 14</sup>.
* ''Loss of key personnel'' or inability to attract/retain qualified personnel could adversely affect the company <sup>p. 14</sup>.
* ''Dependence on experienced and seasoned personnel'' knowledgeable about the business <sup>p. 14</sup>.
* ''Limited talent pool'' and fluctuating market dynamics may lead to increased compensation expectations, making retention/recruitment difficult and impacting labor costs <sup>p. 14</sup>.
* ''Termination of key personnel'' or inability to attract/retain talent could prevent maintaining competitive position in specialized markets, adversely affecting results of operations <sup>p. 14</sup>.
* ''Business is highly dependent'' on information technology and telecommunications systems (underwriting, claims) <sup>p. 15</sup>.
* ''Systems are relied upon'' for broker/insured interaction, underwriting, policy/premium processing, actuarial functions, claims processing/payments, and financial statements <sup>p. 15</sup>.
* ''Some systems may be third-party'' and not under direct control <sup>p. 15</sup>.
* ''Events like natural catastrophes, terrorist attacks, industrial accidents, computer viruses, and cyber-attacks'' may cause system failures or inaccessibility <sup>p. 15</sup>.
* ''Business contingency plans'' and other measures are implemented to protect systems <sup>p. 15</sup>.
* ''Sustained or repeated system failures'' could severely limit ability to write/process business, provide customer service, pay claims, or operate <sup>p. 15</sup>.
* ''Computer viruses, hackers, employee misconduct, and other external hazards'' could expose systems to security breaches or disruptions <sup>p. 15</sup>.
* ''Security measures are implemented'' but systems may still be subject to breaches/interference <sup>p. 15</sup>.
* ''Cybersecurity incidents of varying degrees'' are likely to continue <sup>p. 15</sup>.
* ''A data incident occurred'' where attackers acquired certain data, determined to be immaterial <sup>p. 15</sup>.
* ''No evidence of nation-state actor'' or misuse of information from the data incident <sup>p. 15</sup>.
* ''Future cybersecurity events'' may result in operational disruptions, unauthorized access/disclosure/loss of proprietary/customer information, leading to legal claims, regulatory scrutiny, liability, reputational damage, costs, and customer loss <sup>p. 15</sup>.
* ''SEC and state law requirements'' for public notification of incidents could exacerbate harm <sup>p. 15</sup>.
* ''Harm to business and reputation'' could occur even with successful protection if attempted security breaches are publicized <sup>p. 15</sup>.
* ''No certainty that advances in criminal capabilities'', new vulnerabilities, exploitation attempts, data thefts, or physical break-ins will not compromise security measures <sup>p. 15</sup>.
* ''Third parties to whom functions are outsourced'' are also subject to these risks <sup>p. 15</sup>.
* ''Review and assessment of third-party providers' cybersecurity controls'' are performed, but success in preventing compromises and disclosures is not guaranteed <sup>p. 15</sup>.
* ''Increased use of third-party services'' (cloud technology, SaaS) can make identifying and responding to cyberattacks more difficult <sup>p. 15</sup>.
* ''Risks could increase'' as vendors adopt more cloud-based software services <sup>p. 15</sup>.
* ''Rapid growth and development of artificial intelligence (AI) and machine learning'' may alter the competitive landscape <sup>p. 16</sup>.
* ''Employees utilize AI'' for risk selection, pricing, and claims handling to improve effectiveness and efficiency <sup>p. 16</sup>.
* ''Competitive position may be harmed'' if competitors leverage AI solutions more quickly or effectively <sup>p. 16</sup>.
* ''Deficient, inaccurate, or biased AI content/analyses/recommendations'' (due to algorithm limitations, insufficient/biased data, flawed training) could adversely affect business, financial condition, results of operations, and reputation <sup>p. 16</sup>.
* ''Continuous evolution of AI technology'' may incur costs to adopt/deploy technologies that become obsolete earlier than expected <sup>p. 16</sup>.
* ''No assurance'' that desired or anticipated benefits from AI will be realized <sup>p. 16</sup>.
* ''Uncertainty in legal and regulatory landscape'' for AI at federal and state levels <sup>p. 16</sup>.
* ''New laws, regulations, or industry standards for AI'' may be burdensome, costly, and restrict ability to develop, adopt, and deploy AI technologies efficiently <sup>p. 16</sup>.
* ''Inability to manage growth effectively'' is a risk <sup>p. 16</sup>.
* ''Future business growth'' may require additional capital, systems development, and skilled personnel <sup>p. 16</sup>.
* ''Challenges include'' meeting capital needs, expanding systems/internal controls, allocating human resources, hiring/training/developing qualified employees, and incorporating acquired business components <sup>p. 16</sup>.
* ''Failure to manage growth effectively'' could materially adversely affect business, financial condition, and results of operations <sup>p. 16</sup>.
* ''Success of inorganic growth through acquisitions'' depends on identifying targets, negotiating favorable terms, completing transactions, and successfully integrating targets <sup>p. 16</sup>.
* ''Anticipated benefits of acquisitions'' (revenue growth, operational efficiencies, synergies) may not be realized <sup>p. 16</sup>.
* ''Rapid growth experienced in recent years'' may not be indicative of future growth <sup>p. 16</sup>.
* ''Significant revenue growth'' has occurred in recent years <sup>p. 16</sup>.
* ''No assurance of sustaining revenue growth'' consistent with recent history <sup>p. 16</sup>.
* ''Revenue growth depends on ability to'' price products effectively, deploy/implement products, obtain renewals, provide distribution support, attract/retain underwriters/claims professionals, enhance infrastructure/data systems, create new distribution channels, introduce new products, compete, and increase brand awareness <sup>p. 16</sup>.
* ''Failure to accomplish objectives'' makes forecasting future results difficult <sup>p. 17</sup>.
* ''Historical growth rate'' should not be considered indicative of future performance and may decline <sup>p. 17</sup>.
* ''Revenue could grow more slowly'' or decline for various reasons <sup>p. 17</sup>.
* ''Operating expenses could increase'', and if revenue growth does not offset this, business, financial position, and results of operations could be harmed, and profitability may not be achieved/maintained <sup>p. 17</sup>.
* ''Acquisition and integration of Apollo'' may adversely affect business, financial condition, and results of operations <sup>p. 17</sup>.
* ''Acquisition of Apollo was completed on January 1, 2026'' <sup>p. 17</sup>.
* ''Acquisition is expected to provide strategic benefits'', expand specialty insurance capabilities, and enhance presence in the Lloyd's market <sup>p. 17</sup>.
* ''Integration of Apollo involves risks and uncertainties'' that could adversely affect business, financial condition, and operating results <sup>p. 17</sup>.
* ''Integration risks'' include challenges in integrating operations, systems, technology platforms, and personnel, potentially diverting management attention, disrupting business, and incurring unexpected costs/delays <sup>p. 17</sup>.
* ''No assurance of realizing anticipated benefits'' (growth opportunities) from the acquisition within expected timeframe or at all <sup>p. 17</sup>.
* ''Failure to achieve benefits'' could adversely affect results of operations and financial condition <sup>p. 17</sup>.
* ''Success depends on retaining key Apollo employees, partners, and customers'' <sup>p. 17</sup>.
* ''Loss of key personnel or business relationships'' could negatively impact acquired business value and overall operations <sup>p. 17</sup>.
* ''Cultural and operational differences'' (Lloyd's market, distinct business culture, regulatory environment) may create challenges in harmonizing policies/procedures <sup>p. 17</sup>.
* ''Financial and accounting risks'' include significant changes to financial statements, recognition of goodwill/intangible assets (subject to impairment), undisclosed liabilities/risks, and conversion of Apollo's U.K. GAAP financial statements to U.S. GAAP <sup>p. 17</sup>.
* ''Conversion to U.S. GAAP'' may require adjustments to accounting policies, estimates, and disclosures, impacting reported balances and comparability <sup>p. 17</sup>.
* ''Regulatory and compliance risks'' increase with expansion into new jurisdictions/markets (Lloyd's market), potentially leading to fines, penalties, or other adverse consequences for non-compliance <sup>p. 17</sup>.
* ''Additional indebtedness incurred'' in connection with the acquisition <sup>p. 17</sup>.
* ''Ability to service debt and comply with covenants'' may be affected by external events, limiting financial flexibility or increasing capital cost <sup>p. 17</sup>.
* ''Integration process may divert management's attention'' from existing business, negatively impacting ongoing operations and financial performance <sup>p. 17</sup>.
* ''Inability to successfully integrate Apollo'', realize anticipated benefits, or manage expanded business risks could materially and adversely affect business, financial condition, and results of operations <sup>p. 18</sup>.
* ''Litigation risks'' are continually faced, including disputes related to insurance claims and general commercial/corporate litigation <sup>p. 18</sup>.
* ''Not currently involved in out-of-the-ordinary litigation'' with customers <sup>p. 18</sup>.
* ''Other insurance industry members are targets of class action lawsuits'' and other litigation with unpredictable outcomes and substantial/indeterminate amounts <sup>p. 18</sup>.
* ''Social inflation'' in third-party claims can lead to oversized judgments <sup>p. 18</sup>.
* ''Litigation costs and settlement amounts'' can be inflated beyond historical reasonable levels, even without judgment <sup>p. 18</sup>.
* ''Uncertainty regarding future involvement in litigation'' and its impact on business <sup>p. 18</sup>.
* ''Loss of key vendor relationships'' or vendor failure to protect data/information could affect operations <sup>p. 18</sup>.
* ''Reliance on services and products'' from many vendors in the U.S. and abroad (hardware/software, claims adjustment, HR benefits, investment management) <sup>p. 18</sup>.
* ''Vendor bankruptcy, inability to provide services, system breaches, or failure to protect information'' could cause operational impairments and financial losses <sup>p. 18</sup>.
* ''Failure to properly assess and understand vendor risks/costs'' could materially and adversely affect financial condition and results of operations <sup>p. 18</sup>.
* ''Anticipated continued reliance on third-party software'' <sup>p. 18</sup>.
* ''Commercially reasonable alternatives to current licensed third-party software'' are believed to exist, but this may not always be the case or may be difficult/costly to replace <sup>p. 18</sup>.
* ''Integration of new third-party software'' may require significant work and substantial investment of time/resources <sup>p. 18</sup>.
* ''Use of additional/alternative third-party software'' requires license agreements, which may not be available on commercially reasonable terms or at all <sup>p. 18</sup>.
* ''Many risks associated with third-party software use'' cannot be eliminated and could negatively affect business <sup>p. 18</sup>.
* ''Failure or inability to protect intellectual property rights'' for proprietary technology platform and brand, or being sued for infringement, is a risk <sup>p. 19</sup>.
* ''Success and ability to compete'' depend partly on intellectual property (brand rights, proprietary technology in product lines) <sup>p. 19</sup>.
* ''Primary reliance on copyright and trade secret laws'', and confidentiality agreements, to protect intellectual property <sup>p. 19</sup>.
* ''Steps to protect intellectual property may be inadequate'' <sup>p. 19</sup>.
* ''Efforts to enforce intellectual property rights'' may face defenses, counterclaims, and countersuits attacking validity, enforceability, and scope <sup>p. 19</sup>.
* ''Failure to secure, protect, and enforce intellectual property rights'' could adversely affect brand and business <sup>p. 19</sup>.
* ''Success also depends on not infringing'' on others' intellectual property rights <sup>p. 19</sup>.
* ''Third parties may claim infringement'' of their intellectual property rights <sup>p. 19</sup>.
* ''Claims or litigation'' could incur significant expenses, require substantial damages/royalty payments, prevent service offerings, or impose unfavorable terms <sup>p. 19</sup>.
* ''Litigation could be costly and time-consuming'', diverting management attention, even if successful <sup>p. 19</sup>.
* ''Increased costs are incurred and expected'' as a public company <sup>p. 19</sup>.
* ''Management devotes substantial time'' to compliance initiatives <sup>p. 19</sup>.
* ''Accounting and other management systems/resources'' may not be adequately prepared for financial reporting and other requirements <sup>p. 19</sup>.
* ''As a public company and large accelerated filer'', significant legal, accounting, and other expenses are incurred <sup>p. 19</sup>.
* ''Federal securities laws'' (Sarbanes-Oxley Act, Dodd-Frank Act) and SEC/Nasdaq rules impose requirements on public companies <sup>p. 19</sup>.
* ''Requirements include'' filing annual, quarterly, and event-driven reports, and establishing/maintaining effective disclosure/financial controls and corporate governance <sup>p. 19</sup>.
* ''Rules and regulations increase compliance costs'', make activities time-consuming, and require substantial management time <sup>p. 19</sup>.
* ''Despite efforts, reliable financial statements'' or timely filing with SEC/Nasdaq compliance may not be achieved <sup>p. 19</sup>.
* ''Section 404 of the Sarbanes-Oxley Act'' requires system/process evaluation and testing of internal control over financial reporting <sup>p. 19</sup>.
* ''Compliance with Section 404'' incurs substantial accounting expense and significant management efforts <sup>p. 19</sup>.
* ''Accounting and finance staff/consultants'' with public company reporting, technical accounting, and internal control knowledge are required <sup>p. 19</sup>.
* ''Process to document and evaluate internal control'' over financial reporting is costly and challenging <sup>p. 19</sup>.
* ''Dedication of internal resources'', engagement of outside consultants, detailed work plan, control process improvement, testing, and continuous reporting/improvement are required <sup>p. 19</sup>.
* ''Risk that neither the company nor independent registered public accounting firm'' can conclude on effectiveness of internal control over financial reporting within prescribed timeframe <sup>p. 19</sup>.
* ''Adverse reaction in financial markets'' due to loss of confidence in financial statement reliability could occur <sup>p. 19</sup>.
* ''Investigations by SEC or other regulatory authorities'' could require additional financial and management resources <sup>p. 19</sup>.
* ''Disclosure controls and procedures'' are required to ensure information is recorded, processed, summarized, and reported within SEC time periods <sup>p. 20</sup>.
* ''Control systems'' (disclosure controls, internal control over financial reporting) provide only reasonable, not absolute, assurance against errors and fraud <sup>p. 20</sup>.
* ''Inherent limitations in control systems'' mean misstatements due to error or fraud may occur and not be detected <sup>p. 20</sup>.
* ''Design of control systems'' is based on assumptions about future events and may not succeed under all conditions <sup>p. 20</sup>.
* ''Controls may become inadequate'' due to changing conditions or deterioration in compliance <sup>p. 20</sup>.
* ''Section 404 of Sarbanes-Oxley Act'' requires evaluation of internal control over financial reporting effectiveness <sup>p. 20</sup>.
* ''Inability to achieve and maintain effective internal controls'' could harm operating results/financial condition and negatively affect common stock market price <sup>p. 20</sup>.
* ''SEC reporting obligations'' require documenting and testing internal control procedures for Section 404(b) of Sarbanes-Oxley Act <sup>p. 20</sup>.
* ''Substantial internal control systems and procedures'' must be implemented and maintained <sup>p. 20</sup>.
* ''Deficiencies may be identified'' during assessments and not remediated timely <sup>p. 20</sup>.
* ''Testing and maintaining internal control'' may divert management attention <sup>p. 20</sup>.
* ''Inability to conclude on ongoing effectiveness'' of internal control over financial reporting in accordance with Section 404(b) of Sarbanes-Oxley is a risk <sup>p. 20</sup>.
* ''Ineffective internal control'' could lead to significant costs and scope of remediation actions <sup>p. 20</sup>.
* ''Material weaknesses or other deficiencies'' could impede timely and accurate SEC reports <sup>p. 20</sup>.
* ''Loss of investor confidence'' or suspension/termination of Nasdaq listing could negatively affect common stock trading price <sup>p. 20</sup>.
* ''A material weakness in internal control over information technology general controls (ITGCs)'' was identified as of ''December 31, 2024'', and remediated as of ''December 31, 2025'' <sup>p. 20</sup>.
* ''Failure to maintain an effective system of internal controls'' could adversely affect common stock market price <sup>p. 20</sup>.
* ''Effectiveness of controls/procedures'' is subject to inherent limitations; no absolute assurance of preventing/detecting misstatements <sup>p. 20</sup>.
* ''Even effective ITGCs'' provide only reasonable assurance <sup>p. 20</sup>.
* ''Control deficiencies over ITGCs'' constituting a material weakness were identified during fiscal year ended ''December 31, 2024'', as described in "ITEM 9A. CONTROLS & PROCEDURES" of the Annual Report on Form 10-K <sup>p. 20</sup>.
* ''Measures have been taken to remediate'' the material weakness, and it is believed to be remediated <sup>p. 20</sup>.
* ''Identification of additional material weaknesses'' or significant deficiencies could prevent timely/reliable financial information and lead to incorrect reporting <sup>p. 20</sup>.
* ''Untimely financial statement filing'' could lead to adverse action by shareholders, Nasdaq, SEC, or other regulators <sup>p. 20</sup>.
* ''Material weaknesses or significant deficiencies'' could adversely affect reputation or investor perceptions, negatively impacting common share trading price <sup>p. 20</sup>.
* ''Additional costs may be incurred'' to remediate material weaknesses or significant deficiencies <sup>p. 20</sup>.
* ''No assurances that additional material weaknesses'' or restatements will not arise in the future <sup>p. 20</sup>.
* ''Current controls/procedures may be inadequate'' to prevent/identify irregularities or errors or facilitate fair presentation of financial statements <sup>p. 20</sup>.
* ''Operating results and stock price may be volatile'' or decline regardless of operating performance, leading to loss of investment <sup>p. 21</sup>.
* ''Market price of common stock has been and is likely to remain highly volatile'' and fluctuate substantially due to many factors beyond control <sup>p. 21</sup>.
* ''Securities markets worldwide'' have experienced and will likely continue to experience significant price and volume fluctuations <sup>p. 21</sup>.
* ''Market volatility and general economic/market/political conditions'' could subject stock price to wide fluctuations regardless of operating performance <sup>p. 21</sup>.
* ''Investment in common stock is risky'', requiring ability to withstand significant loss and wide market value fluctuation <sup>p. 21</sup>.
* ''Stock price could fluctuate significantly'' due to factors in the "Risk Factors" section and other factors beyond control <sup>p. 21</sup>.
* ''Factors affecting stock price include'' market conditions, actual/anticipated fluctuations in quarterly financial/operating results, new product/service introductions, securities analysts' reports/recommendations, results varying from expectations, short sales/hedging, guidance changes/failure to meet guidance, strategic actions, announcements, sales of large stock blocks, Board/management changes, regulatory/legal/political developments, public response to announcements, litigation/investigations, changing economic conditions (social inflation), accounting principle changes, indebtedness/securities issuance, default under debt agreements, exposure to capital/credit market risks, credit rating changes, and other events (natural disasters, war, terrorism) <sup>p. 21</sup>.
* ''Securities markets have experienced extreme price and volume fluctuations'' unrelated to operating performance <sup>p. 21</sup>.
* ''Investors may not be able to resell shares'' at or above purchase price due to these factors <sup>p. 21</sup>.
* ''Broad market fluctuations'' and general market/economic/political conditions (recessions, loss of investor confidence, interest rate changes) may negatively affect common stock market price <sup>p. 21</sup>.
* ''Stock markets (including Nasdaq)'' have experienced extreme price and volume fluctuations affecting equity securities <sup>p. 21</sup>.
* ''Such occurrences could cause stock price to fall'' and expose the company to costly securities class action litigation, diverting management attention or harming business <sup>p. 21</sup>.
* ''Underwriting guidelines or strategy may be changed'' without stockholder approval <sup>p. 22</sup>.
* ''Management has authority to change underwriting guidelines or strategy'' without notice or stockholder approval <sup>p. 22</sup>.
* ''Fundamental changes to operations'' may occur without stockholder approval, potentially resulting in a strategy or guidelines materially different from those described in the "Business" section or elsewhere <sup>p. 22</sup>.
* ''Anti-takeover provisions'' in organizational documents could prevent or delay a beneficial change of control and limit share price <sup>p. 22</sup>.
* ''Provisions in certificate of incorporation/bylaws'', Delaware law, federal/state regulations, and insurance company regulations may discourage/delay/prevent mergers, tender offers, or other changes of control <sup>p. 22</sup>.
* ''Procedural and other requirements'' in these provisions could make certain corporate actions more difficult for shareholders <sup>p. 22</sup>.
* ''Provisions could adversely affect common stock price'' <sup>p. 22</sup>.
* ''Charter documents permit Board of Directors to establish director number'' and fill vacancies/new directorships <sup>p. 22</sup>.
* ''Board of Directors will be classified into three classes'' with staggered, three-year terms; directors may only be removed for cause <sup>p. 22</sup>.
* ''Super-majority voting is required'' to amend provisions in certificate of incorporation and bylaws <sup>p. 22</sup>.
* ''Blank-check preferred stock'' allows Board to set preference rights and terms, potentially delaying/preventing transactions or change of control <sup>p. 22</sup>.
* ''Stockholders' ability to call special meetings'' is eliminated <sup>p. 22</sup>.
* ''Special meetings of stockholders'' can only be called by the Board, Chairman, or CEO <sup>p. 22</sup>.
* ''Stockholder consent action'' is prohibited except by unanimous written consent <sup>p. 22</sup>.
* ''Vacancies on the Board'' may only be filled by a majority of directors then in office, even if less than a quorum <sup>p. 22</sup>.
* ''Cumulative voting'' in director election is prohibited <sup>p. 22</sup>.
* ''Advance notice requirements'' are established for director nominations or proposing matters at annual stockholder meetings <sup>p. 22</sup>.
* ''As a Delaware corporation'', the company is subject to Section 203 of the Delaware General Corporation Law <sup>p. 22</sup>.
* ''Section 203 may prohibit large stockholders'' (owning 15% or more of voting stock) from merging/combining for a period <sup>p. 22</sup>.
* ''Certificate of incorporation and bylaws designate Court of Chancery of Delaware'' as exclusive forum for substantially all disputes between the company and stockholders <sup>p. 22</sup>.
* ''Exclusive forum provision could limit stockholders' ability'' to obtain a favorable judicial forum for disputes <sup>p. 22</sup>.
* ''Exclusive forum applies to'' derivative actions, breach of fiduciary duty claims, claims under DGCL/certificate/bylaws, actions to interpret/apply/enforce/determine validity of certificate/bylaws, or claims governed by internal affairs doctrine <sup>p. 22</sup>.
* ''Unless written consent to an alternative forum is given'', federal district courts of the U.S. are the sole and exclusive forum for Securities Act claims <sup>p. 23</sup>.
* ''Securities Act claims and Section 22 of the Securities Act'' create concurrent jurisdiction for federal and state courts <sup>p. 23</sup>.
* ''Uncertainty exists whether a court would enforce'' the exclusive forum provision for Securities Act claims <sup>p. 23</sup>.
* ''Stockholders will not be deemed to have waived compliance'' with federal securities laws <sup>p. 23</sup>.
* ''Exclusive forum provision would not apply'' to Exchange Act claims or other claims with exclusive federal jurisdiction <sup>p. 23</sup>.
* ''If the choice of forum provision is found inapplicable/unenforceable'', additional costs may be incurred to resolve actions in other jurisdictions, materially adversely affecting business, financial condition, or results of operations <sup>p. 23</sup>.
== Cybersecurity ==
* ''IT Systems'' are central to nearly all business operations, including internal/external communications, document/record management, and shared work environments <sup>p. 3</sup>.
* ''Efficient and effective response'' to cybersecurity incidents and threats is a key component of the overall Enterprise Risk Management (ERM) strategy <sup>p. 3</sup>.
* A ''Crisis Response Plan (CRP)'' has been implemented to address cybersecurity incidents and threats <sup>p. 3</sup>.
<blockquote>"Our management and information technology personnel have implemented processes and procedures for assessing, identifying, managing and escalating material risks from cybersecurity threats." <sup>p. 3</sup></blockquote>
* These ''processes and procedures'' are integrated into overall risk management <sup>p. 3</sup>.
* ''Cybersecurity risks'' are included in the risk universe evaluated annually by the enterprise risk management committee <sup>p. 3</sup>.
* If a ''heightened cybersecurity risk'' is identified, risk owners are assigned to develop and track mitigation plans <sup>p. 3</sup>.
* ''Security events and data incidents'' are evaluated, ranked by severity, prioritized for response/remediation, and reviewed for materiality, operational/business impact, and privacy impact <sup>p. 3</sup>.
<blockquote>"Our cybersecurity risk management program leverages the National Institute of Standards and Technology framework, which organizes cybersecurity risks into six categories: identify, protect, detect, respond, recover and govern." <sup>p. 3</sup></blockquote>
* ''Company-wide policies and procedures'' cover cybersecurity matters, including encryption standards, antivirus protection, remote access, multifactor authentication, confidential information, and internet/social media/email use <sup>p. 3</sup>.
* A ''detailed crisis response playbook'' is followed in the event of an incident <sup>p. 3</sup>.
<blockquote>"Further, we have continued to expand investments in IT security, including additional end-user training, using layered defenses, identifying and protecting critical assets, strengthening monitoring and alerting, and engaging experts." <sup>p. 3</sup></blockquote>
* ''Defenses are regularly tested'' through simulations and drills at a technical level (e.g., penetration tests) and by reviewing operational policies/procedures with third-party experts <sup>p. 3</sup>.
* The ''IT security team'' monitors alerts, discusses threat levels/trends/remediation, prepares a quarterly cyber scorecard, collects data on cybersecurity threats/risks, and conducts an annual risk assessment <sup>p. 3</sup>.
* ''Periodic external penetration tests, red team testing, and maturity testing'' are conducted to assess processes, procedures, and the threat landscape <sup>p. 3</sup>.
* In the event of an incident, ''outside cybersecurity legal counsel'' would consult and coordinate with other third parties, including communication/notification, and cybersecurity vendors would perform investigation/recovery services <sup>p. 3</sup>.
* ''Cybersecurity experts'' would assist with incident validation and ransomware demands, and cybersecurity insurance providers would be involved <sup>p. 3</sup>.
<blockquote>"In addition, we have also implemented processes to oversee and identify risks from cybersecurity threats associated with our use of key third-party service providers, including requiring third-party service providers to provide provisions of their SOC-1 or SOC-2 report and their cybersecurity/disaster recovery plans." <sup>p. 3</sup></blockquote>
* ''Cybersecurity risk management and strategy processes'' are overseen by leaders from the Information Security Team, with assistance from Compliance and Legal teams <sup>p. 3</sup>.
* These individuals have ''decades of experience'' in IT roles, including security, auditing, compliance, systems, and programming <sup>p. 3</sup>.
* They monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management and participation in the described processes, including the crisis response plan <sup>p. 3</sup>.
* They ''report to the Risk Committee'' on appropriate items <sup>p. 3</sup>.
* The ''Risk Committee of the Board of Directors'' oversees cybersecurity strategy, reviews cybersecurity and other IT risks/controls/procedures, and receives periodic updates from management on the adequacy and effectiveness of cybersecurity measures <sup>p. 3</sup>.
* This review includes a ''thorough discussion of cybersecurity threat risks'' and their potential impact on operations <sup>p. 3</sup>.
<blockquote>"We have also instituted a separate process for communicating with the Risk Committee in the event we are the target of a specific cybersecurity incident." <sup>p. 3</sup></blockquote>
* In case of a specific cybersecurity incident, ''Crisis Management Team members'' would provide an initial awareness communication to the CEO/Chair of the Board <sup>p. 3</sup>.
* The ''CEO/Chair of the Board'' would then inform the Chair of the Risk Committee <sup>p. 3</sup>.
* Following an initial assessment by senior management and IT Systems personnel, a ''follow-up communication'' would be provided to the CEO and Risk Committee Chair to determine if escalation to the full Board is warranted <sup>p. 3</sup>.
<blockquote>"Although the risks from cybersecurity threats have not materially affected our business strategy, results of operations or financial condition, it is possible that a cybersecurity incident resulting in a serious compromise of our IT Systems or a demand for payment to restore our IT Systems, could have a material adverse effect on us by negatively impacting our ability to operate our business effectively and by diverting the attention of our management and other resources, including financial resources, to address the cybersecurity incident." <sup>p. 3</sup></blockquote>
== Properties ==
* The company leases its primary executive offices and insurance operations in Houston, Texas <sup>p. 4</sup>.
* The Houston office space occupies approximately 20,400 square feet <sup>p. 4</sup>.
* The lease for the Houston office space expires in 2029 <sup>p. 4</sup>.
* Additional office space is leased where appropriate <sup>p. 4</sup>.
* Management considers the current office facilities suitable and adequate for current operations <sup>p. 4</sup>.
== Legal Proceedings ==
* The company is involved in ''legal proceedings'' that occur in the ordinary course of business <sup>p. 5</sup>.
* The company believes that the outcome of these legal matters, individually and in aggregate, will ''not have a material adverse effect'' on its consolidated financial position <sup>p. 5</sup>.
== Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ==
* ''Common shares'' began trading on the NASDAQ Global Select Market under the symbol "SKWD" on January 13, 2023 <sup>p. 6</sup>.
* Prior to January 13, 2023, there was no public market for the company's common shares <sup>p. 6</sup>.
* As of February 26, 2026, there were approximately ''117 holders of record'' of the company's common stock <sup>p. 6</sup>.
* The number of holders of record does not represent the total number of stockholders due to shares being held by brokers and other institutions <sup>p. 6</sup>.
* Information about ''equity compensation plans'' will be included in the definitive proxy statement for the 2026 Annual Meeting of Stockholders and is incorporated by reference <sup>p. 6</sup>.
* On January 1, 2026, the company paid approximately ''$555.0 million'' in connection with the Apollo acquisition, pursuant to the Apollo SPAs <sup>p. 6</sup>.
* The ''Apollo acquisition payment'' included $371.0 million in cash <sup>p. 6</sup>.
* The ''Apollo acquisition payment'' also included the issuance of 3,679,332 unregistered shares of the company’s common stock <sup>p. 6</sup>.
* A ''performance graph'' compares the cumulative total shareholder return of the company's common stock, the Nasdaq Composite Index, and the Nasdaq Insurance Index <sup>p. 6</sup>.
* The ''performance graph period'' begins on January 13, 2023 (the date common stock began trading on Nasdaq) and ends on December 31, 2025 <sup>p. 6</sup>.
* The ''performance graph'' assumes an initial investment of $100 <sup>p. 6</sup>.
* The returns shown in the performance graph are based on historical results and are not indicative of future performance <sup>p. 6</sup>.
* The ''performance graph'' is not considered "soliciting material" or "filed" for purposes of Section 18 of the Exchange Act, nor is it subject to liabilities under that Section, and is not incorporated by reference into Securities Act filings <sup>p. 6</sup>.
== Management’s Discussion and Analysis of Financial Condition and Results of Operations ==
* Skyward Specialty Insurance Company is a growing specialty insurance company providing commercial P&C products and solutions on both non-admitted (E&S) and admitted bases, primarily in the United States <sup>p. 7</sup>.
* The company focuses on underserved, dislocated, or markets where standard insurance coverages are insufficient <sup>p. 7</sup>.
* Customers typically require highly specialized, customized underwriting solutions and claims capabilities <sup>p. 7</sup>.
* The portfolio of insured risks is highly diversified, covering various industries, distribution channels, and lines of business <sup>p. 7</sup>.
* 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 <sup>p. 7</sup>.
* The business mix is principally primary insurance, balanced between E&S and admitted markets <sup>p. 7</sup>.
* A portion of the business is specialty reinsurance, primarily in agriculture and credit, targeting attractive specialty classes where reinsurance offers efficient market entry <sup>p. 7</sup>.
* This diversification and expertise aim to produce strong growth and profitability across all insurance pricing cycles <sup>p. 7</sup>.
* The company's strategy, "Rule Our Niche," focuses on leading in chosen market niches and establishing sustainable competitive positions <sup>p. 7</sup>.
* The strategy aims to build a strong defensible market position, create a competitive moat, and achieve best-in-class underwriting results through P&C insurance pricing cycles <sup>p. 7</sup>.
* The company strives for excellence in risk selection, pricing, and claims outcomes, amplified by advanced technology and analytics <sup>p. 7</sup>.
* In Q1 2025, underwriting divisions were updated to align with management oversight, resource allocation, and operating performance evaluation <sup>p. 7</sup>.
* A ninth division, Agriculture and Credit (Re)insurance, was added, including Global Agriculture (previously with Global Property) and Mortgage and Credit units <sup>p. 7</sup>.
* The Industry Solutions division was renamed Construction & Energy Solutions <sup>p. 7</sup>.
* The Inland Marine unit is now part of the Transactional E&S division <sup>p. 7</sup>.
* Programs is now Specialty Programs <sup>p. 7</sup>.
* Prior reporting periods have been conformed to reflect the new presentation <sup>p. 7</sup>.
* On September 2, 2025, the company entered into two share purchase agreements (Apollo Majority SPAs) to acquire Apollo Group Holdings Limited ("Apollo") <sup>p. 7</sup>.
* The company agreed to acquire approximately 87% of Apollo's issued share capital from Majority Sellers <sup>p. 7</sup>.
* The closing of the transaction (Acquisition) was conditioned on acquiring 100% of Apollo's issued share capital through additional short-form share purchase agreements (Apollo Minority SPAs) <sup>p. 7</sup>.
* The total consideration for Apollo's entire issued share capital under the Apollo SPAs was USD 555.0 million <sup>p. 7</sup>.
* The consideration included USD 371.0 million in cash (Cash Consideration) and the issuance of 3,679,332 shares of the company’s common stock <sup>p. 7</sup>.
* In connection with the Apollo SPAs, on December 30, 2025, the company entered into a Term Loan Credit Agreement (Facility) <sup>p. 7</sup>.
* The Facility includes an unsecured senior delayed draw term loan facility (Tranche A Term Facility) of USD 150.0 million and an additional unsecured senior delayed draw term loan facility (Tranche B Term Facility) of USD 150.0 million <sup>p. 7</sup>.
* The acquisition closed on January 1, 2026 <sup>p. 7</sup>.
* Consideration for the transaction was satisfied by issuing common stock to certain sellers and the remainder in cash <sup>p. 7</sup>.
* As of December 31, 2025, the company recognized USD 14.0 million in transaction expenses related to the Apollo acquisition <sup>p. 7</sup>.
* ''Gross written premiums'' increased by USD 423.1 million YoY in 2025 compared to 2024 <sup>p. 7</sup>.
* This increase was primarily driven by growth in the agriculture and credit (re)insurance division due to new opportunities in dairy, livestock, crop, and growth in the credit portfolio (started in Q4 2024) <sup>p. 7</sup>.
* Specialty programs, accident & health, surety, and captives also contributed significantly to growth in 2025 <sup>p. 7</sup>.
* Growth in specialty programs was due to the addition of two new programs in 2025 <sup>p. 7</sup>.
* Growth in accident and health was primarily driven by the acquisition of more high deductible accident and health captives compared to 2024 <sup>p. 7</sup>.
* The increase in surety was due to market expansion in both commercial and contract bonds <sup>p. 7</sup>.
* Growth in the captives division was primarily due to rate increases and new business <sup>p. 7</sup>.
* Offsetting the growth in gross written premiums were decreases in global property, construction and energy solutions, and professional lines divisions <sup>p. 7</sup>.
* These decreases were due to continued downward pricing pressure in the global property market (despite steady retention) and the exit of unprofitable lines in construction and energy solutions and professional lines during 2025 <sup>p. 7</sup>.
* ''Net written premiums'' were USD 1,406.2 million in 2025, up USD 282.7 million (+25.2%) from USD 1,123.6 million in 2024 <sup>p. 7</sup>.
* The increase in net written premiums was driven by the same factors as gross written premiums <sup>p. 7</sup>.
* ''Net earned premiums'' for 2025 were USD 1,304.5 million, up USD 247.8 million (+23.4%) from USD 1,056.7 million for 2024 <sup>p. 7</sup>.
* The increase in net earned premiums was driven by the same factors as gross written premiums <sup>p. 7</sup>.
* The ''2025 loss ratio'' improved by 2.5 points compared to 2024, primarily due to favorable prior accident year development versus adverse development from the net impact of the LPT in 2024 <sup>p. 7</sup>.
* The ''non-cat loss and LAE ratio'' for 2025 improved by 0.3 points compared to 2024, driven by a shift in business mix <sup>p. 7</sup>.
* The ''2025 cat loss and LAE ratio'' improved by 0.5 points compared to 2024, which was impacted by Hurricanes Helene and Beryl in Q3 2024 and Hurricane Milton in Q4 2024 <sup>p. 7</sup>.
* For the year ended December 31, 2025, the company recognized ''favorable development'' of USD 7.5 million related to prior years’ loss and loss expense reserves <sup>p. 7</sup>.
* This included favorable development of USD 24.6 million in short-tail/monoline specialty lines and USD 5.3 million in multi-line solutions <sup>p. 7</sup>.
* This was partially offset by USD 22.4 million of adverse development in exited lines, primarily commercial auto and excess over auto in divisions non-renewed or significantly reduced over the past three years <sup>p. 7</sup>.
* Favorable development in surety and property offset the adverse development <sup>p. 7</sup>.
* For the year ended December 31, 2024, the company recognized ''adverse development'' of USD 25.7 million related to prior years’ loss and loss expense reserves <sup>p. 7</sup>.
* This included USD 10.1 million and USD 15.2 million in multi-line solutions and exited lines, respectively, related to losses previously subject to the LPT from accident years 2018 and prior <sup>p. 7</sup>.
* The ''expense ratio'' for 2025 improved by 0.5 points compared to 2024, primarily due to earnings leverage, partially offset by higher acquisition costs from business mix shift <sup>p. 7</sup>.
* ''Net investment income'' for 2025 increased by USD 3.0 million compared to 2024 <sup>p. 7</sup>.
* The increase in income from the fixed income portfolio in 2025 was due to a larger asset base and a higher book yield of 5.4% at December 31, 2025 (compared to 5.2% at December 31, 2024) <sup>p. 7</sup>.
* Income from short-term investments & cash and cash equivalents decreased in 2025 due to an overall decrease in yields <sup>p. 7</sup>.
* Income from the alternative and strategic investments portfolio decreased in 2025 due to a decline in the fair value of limited partnership investments <sup>p. 7</sup>.
* Income from equities decreased due to the sale of the equity portfolio in Q3 2025 <sup>p. 7</sup>.
* The ''weighted average credit rating'' of the available-for-sale fixed income portfolio was "A+" at December 31, 2025, and "AA-" at December 31, 2024 <sup>p. 7</sup>.
* The ''average duration'' of the fixed income portfolio was approximately 3.60 years at December 31, 2025, and 4.34 years at December 31, 2024 <sup>p. 7</sup>.
* The equities portfolio primarily consisted of domestic preferred stocks, common equities, exchange traded funds, limited partnerships, and limited liability corporations, with 100.0% publicly traded <sup>p. 7</sup>.
* During Q3 2025, almost all of the equities portfolio was sold, retaining only preferred stocks <sup>p. 7</sup>.
* ''Market risk'' is the risk of economic losses from adverse changes in fair value due to interest rates, equity prices, foreign currency exchange rates, and commodity prices <sup>p. 7</sup>.
* The primary components of market risk are credit risk and interest rate risk <sup>p. 7</sup>.
* The company does not have significant exposure to foreign currency exchange rate risk or commodity risk <sup>p. 7</sup>.
* ''Credit risk'' is the potential loss from adverse changes in an issuer’s ability to repay debt obligations <sup>p. 7</sup>.
* The company's risk management strategy is to invest primarily in high credit quality debt instruments and limit exposure to particular ratings categories and issuers <sup>p. 7</sup>.
* At December 31, 2025, the fixed income portfolio had an average rating of "A+", with approximately 78.5% of securities rated "A" or better by at least one nationally recognized rating organization <sup>p. 7</sup>.
* At December 31, 2025, approximately 1.1% of the fixed income portfolio was unrated or rated below investment-grade <sup>p. 7</sup>.
* The company is subject to credit risk from third-party reinsurers, as it remains ultimately liable to policyholders <sup>p. 7</sup>.
* This credit risk is addressed by purchasing reinsurance from reinsurers rated at least "A-" (Excellent) or better by A.M. Best <sup>p. 7</sup>.
* Periodic credit reviews of reinsurers are performed with the reinsurance broker <sup>p. 7</sup>.
* At December 31, 2025, 98% of reinsurance recoverables were from reinsurers rated "A-" (Excellent) or better by A.M. Best, or were collateralized <sup>p. 7</sup>.
* ''Interest rate risk'' is the risk of economic losses due to adverse changes in interest rates, primarily affecting fixed income securities <sup>p. 7</sup>.
* This risk is managed by investing in securities with varied maturity dates and managing the duration of the investment portfolio in relation to the duration of reserves <sup>p. 7</sup>.
* The
* Fixed income securities subject to interest rate risk had a fair value of USD 1,856.3 million at December 31, 2025 <sup>p. 7</sup>.
* Opportunistic fixed income securities are excluded from interest rate sensitivity analysis as they are primarily floating rate and held to maturity <sup>p. 7</sup>.
* ''Equity price risk'' is the potential economic losses due to adverse changes in equity security prices <sup>p. 7</sup>.
* At December 31, 2025, approximately 0.1% of the fair value of the investment portfolio (excluding cash and cash equivalents and short-term investments) was invested in equity securities <sup>p. 7</sup>.
* During Q3 2025, almost all of the equities portfolio was sold, retaining only preferred stocks <sup>p. 7</sup>.
* ''Income tax expense'' for 2025 was USD 46.4 million, compared to USD 33.9 million for 2024 <sup>p. 7</sup>.
* The ''effective tax rate'' for 2025 was 21.4%, compared to 22.2% for 2024 <sup>p. 7</sup>.
* The company is organized as a holding company, with operations primarily conducted by wholly-owned insurance subsidiaries: GMIC, HSIC (Texas), and OSIC (Oklahoma) <sup>p. 7</sup>.
* The holding company receives cash through corporate service fees, tax allocation agreement payments, dividends from subsidiaries (subject to limitations), bank loans, revolving loan agreement draws, and equity/debt issuance <sup>p. 7</sup>.
* Skyward Service Company receives corporate service fees from operating subsidiaries to reimburse for most operating expenses, based on actual costs with no mark-up <sup>p. 7</sup>.
* A consolidated U.S. federal income tax return is filed with subsidiaries, with taxes charged/refunded based on separate return filing <sup>p. 7</sup>.
* Applicable state insurance laws restrict insurance subsidiaries' ability to declare stockholder dividends without prior regulatory approval <sup>p. 7</sup>.
* Dividend payments are limited to the portion of available policyholder surplus derived from net profits <sup>p. 7</sup>.
* Insurance regulators have broad powers to prevent reduction of statutory surplus <sup>p. 7</sup>.
* The insurance subsidiaries did not pay dividends to the holding company for the years ended December 31, 2025 and 2024 <sup>p. 7</sup>.
* Management believes there is sufficient liquidity to meet operating cash needs, obligations, and committed capital expenditures for the next 12 months <sup>p. 7</sup>.
* The most significant source of cash is premiums received from insureds, typically at the beginning of the coverage period, net of commissions <sup>p. 7</sup>.
* The most significant cash outflow is for claims <sup>p. 7</sup>.
* Cash from operations in each of the past two years was primarily used to fund investing activities <sup>p. 7</sup>.
* ''Net cash used in investing activities'' in 2025 was primarily driven by purchases of fixed maturity securities, partially offset by sales and maturities of investment securities <sup>p. 7</sup>.
* ''Net cash used in investing activities'' in 2024 was driven by purchases of fixed maturity securities, partially offset by sales and maturities of investment securities and sales of short-term investments <sup>p. 7</sup>.
* On August 30, 2024, the company entered into a 4.5-year FHLB Loan with the Federal Home Loan Bank of Dallas for a principal amount of USD 57.0 million <sup>p. 7</sup>.
* The FHLB Loan has interest-only payments, principal due at maturity, and a fixed interest rate of 4.00% <sup>p. 7</sup>.
* The FHLB Loan is fully secured by a pledge of specific investment securities of HSIC <sup>p. 7</sup>.
* Proceeds from the FHLB Loan were used to fund redemptions of draws on the 2023 Revolving Credit Facility <sup>p. 7</sup>.
* During Q4 2025, the company entered into a Term Loan Credit Agreement (Term Loan Facility) <sup>p. 7</sup>.
* The Term Loan Facility includes a Tranche A DDTL of USD 150.0 million and a Tranche B DDTL of USD 150.0 million <sup>p. 7</sup>.
* The Term Loan Facility was used to fund a portion of the consideration for the Apollo acquisition and related fees <sup>p. 7</sup>.
* Amounts drawn bear interest at term SOFR plus a margin (150-190 bps) or base rate plus a margin (50-90 bps), depending on the debt to capitalization ratio <sup>p. 7</sup>.
* SOFR is calculated with a floor of 0.00% and a credit spread adjustment of 0.10% <sup>p. 7</sup>.
* The base rate is the highest of the Agent’s prime lending rate, Federal Funds Rate + 0.50%, SOFR + 1.00%, or 0% <sup>p. 7</sup>.
* A fee ranging from 0.20% to 0.35% is paid on average daily undrawn amounts <sup>p. 7</sup>.
* The Tranche A DDTL matures on January 1, 2028, and the Tranche B DDTL matures on July 2, 2029 <sup>p. 7</sup>.
* On December 30, 2025, USD 150 million of Tranche A DDTL and USD 150 million of Tranche B DDTL were drawn for the Apollo acquisition <sup>p. 7</sup>.
* The Term Loan Facility includes customary covenants, including limitations on additional indebtedness exceeding USD 10.0 million and distributions to stockholders <sup>p. 7</sup>.
* Financial covenants include minimum consolidated net worth, maximum total debt to capitalization, minimum A.M. Best rating, and minimum liquidity <sup>p. 7</sup>.
* As of December 31, 2025, the company was in compliance with all covenants <sup>p. 7</sup>.
* The Term Loan Facility is unsecured <sup>p. 7</sup>.
* Obligations under the Term Loan Facility are guaranteed by the company and its existing/subsequently acquired wholly-owned subsidiaries, excluding insurance company subsidiaries <sup>p. 7</sup>.
* During Q4 2025, the company entered into an unsecured Revolving Credit Facility with an initial maximum principal amount of USD 150.0 million, increased to USD 250.0 million upon the Apollo acquisition closing <sup>p. 7</sup>.
* The Revolving Credit Facility was amended in Q4 2025 to permit funding for the Apollo acquisition <sup>p. 7</sup>.
* Initially, USD 43.0 million was drawn to redeem the prior revolving credit facility <sup>p. 7</sup>.
* On December 30, 2025, an additional USD 71.5 million was drawn for the Apollo acquisition consideration <sup>p. 7</sup>.
* Interest on the Revolving Credit Facility is payable quarterly <sup>p. 7</sup>.
* Amounts drawn bear interest at term SOFR plus a margin (150-190 bps) or base rate plus a margin (50-90 bps), depending on the debt to capitalization ratio <sup>p. 7</sup>.
* A fee ranging from 0.20% to 0.35% is paid on average daily undrawn amounts <sup>p. 7</sup>.
* The availability period under the Facility terminates on November 12, 2030 <sup>p. 7</sup>.
* Covenants for the Revolving Credit Facility include minimum net worth, maximum debt to capital ratio, minimum A.M. Best Rating, and minimum liquidity <sup>p. 7</sup>.
* As of December 31, 2025, the company was in compliance with all covenants <sup>p. 7</sup>.
* In Q1 2023, the company entered into an unsecured 2023 Revolving Credit Facility for up to USD 150.0 million and a letter of credit sub-facility of up to USD 30.0 million <sup>p. 7</sup>.
* On November 13, 2025, the 2023 Revolving Credit Facility was redeemed, with USD 0.3 million of accrued interest paid and USD 0.6 million of expense recognized for unamortized deferred financing costs <sup>p. 7</sup>.
* In May 2019, the company issued unsecured subordinated notes (Notes) with an aggregate principal amount of USD 20.0 million <sup>p. 7</sup>.
* Interest on the Notes is fixed at 7.25% for the first 8 years and 8.25% thereafter <sup>p. 7</sup>.
* Early retirement requires all interest payments to be paid in full, plus outstanding principal <sup>p. 7</sup>.
* Principal is due at maturity on May 24, 2039, with interest payable quarterly <sup>p. 7</sup>.
* The Notes have junior priority to all previously issued debt <sup>p. 7</sup>.
* Debt related to the Notes is reported net of debt issuance costs of approximately USD 0.4 million (2025) and USD 0.5 million (2024) <sup>p. 7</sup>.
* In October 2024, the Board of Directors approved a share repurchase program authorizing up to USD 50.0 million of common stock repurchases <sup>p. 7</sup>.
* As of December 31, 2025, no shares had been repurchased under this plan <sup>p. 7</sup>.
* ''Reserves for losses and LAE'' represent the best estimate of the ultimate cost of settling reported and unreported claims and related expenses <sup>p. 7</sup>.
* Reinsurance balances recoverable on reserves for paid and unpaid losses and LAE totaled USD 1,119.9 million at December 31, 2025, and USD 857.9 million at December 31, 2024 <sup>p. 7</sup>.
* The ''reserves for unpaid losses and LAE'' is the largest and most complex estimate in the Consolidated Balance Sheets <sup>p. 7</sup>.
* Reserves are estimated using individual case-basis valuations, statistical analyses, and actuarial procedures, based on historical information, industry data, and estimates of future trends <sup>p. 7</sup>.
* Reserves for unpaid losses and LAE are categorized into case reserves and IBNR <sup>p. 7</sup>.
* ''Case reserves'' are established for individual reported claims, estimating ultimate losses including defense costs <sup>p. 7</sup>.
* The ''IBNR reserve'' is derived by estimating the ultimate unpaid reserve liability and subtracting case reserves <sup>p. 7</sup>.
* Management’s best estimate of the ultimate unpaid liability is set by the Reserve Committee, considering actuarial indications and other factors <sup>p. 7</sup>.
* The Reserve Committee includes the Chief Actuary, Chief Reserving Actuary, Chief Financial Officer, and Chief Claims Officer <sup>p. 7</sup>.
* Reserves are driven by factors such as litigation and regulatory trends, legislative activity, climate change, social and economic patterns, and claims inflation assumptions <sup>p. 7</sup>.
* A 5% change in net IBNR would result in a USD 51.8 million change in reserves for losses and LAE and a USD 40.9 million change in net income and stockholders’ equity <sup>p. 7</sup>.
* In December 2023, the FASB issued ASU 2023-09, requiring enhanced income tax disclosure, effective for fiscal years beginning after December 15, 2024 <sup>p. 7</sup>.
* The company has added additional disclosures as required by ASU 2023-09, with no impact on consolidated financial statements <sup>p. 7</sup>.
* In November 2024, the FASB issued ASU 2024-03, requiring disaggregated disclosure of income statement expenses for public business entities <sup>p. 7</sup>.
* ASU 2024-03 requires footnote disclosure of specific expenses by disaggregating relevant income statement captions into categories like purchases of inventory, employee compensation, depreciation, and intangible asset amortization <sup>p. 7</sup>.
* In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03 as the first annual reporting period beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027 <sup>p. 7</sup>.
* The company is evaluating the effect of these amendments on its consolidated financial statements <sup>p. 7</sup>.
== Quantitative and Qualitative Disclosures About Market Risk ==
* Qualitative and Quantitative Disclosures about Market Risk are included in Item 7 of this Form 10-K under
== Cover ==
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== Controls and Procedures ==
* ''Disclosure controls and procedures'' were evaluated by management, including the principal executive officer and principal financial officer, as of December 31, 2025 <sup>p. 9</sup>.
* ''Disclosure controls and procedures'' were concluded to be effective at a reasonable assurance level as of December 31, 2025 <sup>p. 9</sup>.
* Management acknowledges that any controls and procedures offer only reasonable assurance and require judgment in evaluating cost-benefit relationships <sup>p. 9</sup>.
* ''Management is responsible'' for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 <sup>p. 9</sup>.
* ''Internal control over financial reporting'' aims to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP <sup>p. 9</sup>.
* ''Internal control over financial reporting policies and procedures'' pertain to:
** Maintaining records that accurately reflect transactions and asset dispositions in reasonable detail <sup>p. 9</sup>.
** Providing reasonable assurance that transactions are recorded for financial statement preparation and that receipts/expenditures align with management and director authorizations <sup>p. 9</sup>.
** Providing reasonable assurance for preventing or timely detecting unauthorized acquisition, use, or disposition of assets that could materially affect financial statements <sup>p. 9</sup>.
* A ''material weakness'' in internal control over financial reporting was identified as of December 31, 2024, related to ineffective implementation of information technology general controls (ITGCs) for user access in systems supporting financial reporting <sup>p. 9</sup>.
* Related process-level IT dependent manual and automated controls, or information from IT systems with affected ITGCs, were also deemed ineffective as of December 31, 2024 <sup>p. 9</sup>.
* During the year ended December 31, 2025, management took actions to remediate the internal control deficiencies, including:
** Enhancing the IT compliance oversight function and expanding the team with ITGC design and implementation experience <sup>p. 9</sup>.
** Developing a training program for ITGCs and policies, educating control owners on principles and requirements <sup>p. 9</sup>.
** Implementing procedures to develop and maintain documentation of underlying ITGCs for knowledge transfer during IT personnel and function changes <sup>p. 9</sup>.
** Implementing IT management review and testing procedures to monitor ITGCs <sup>p. 9</sup>.
** Providing quarterly reporting on remediation measures to the Audit Committee of the board of directors <sup>p. 9</sup>.
* Management believes the remediation measures have addressed the material weakness, concluding that ''internal control over financial reporting was effective'' at a reasonable assurance level as of December 31, 2025 <sup>p. 9</sup>.
* ''Effectiveness of internal control over financial reporting'' was assessed as of December 31, 2025, using criteria from the Committee of Sponsoring Organizations of the Treadway Commission's Internal Control — Integrated Framework (2013 Framework) <sup>p. 9</sup>.
* Management concluded that ''internal control over financial reporting was effective'' as of December 31, 2025 <sup>p. 9</sup>.
* The effectiveness of internal control over financial reporting as of December 31, 2025, was audited by Ernst & Young, LLP, the Company’s independent registered public accounting firm <sup>p. 9</sup>.
* No changes in internal control over financial reporting occurred during the year ended December 31, 2025, that materially affected or are reasonably likely to materially affect it, except for those related to the remediation of the 2024 material weakness <sup>p. 9</sup>.
* Management recognizes that controls and procedures provide only reasonable assurance and require judgment in evaluating benefits versus costs due to resource constraints <sup>p. 9</sup>.
== Other Information ==
* During the quarter ended December 31, 2025, none of the company's directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement <sup>p. 10</sup>.
== Directors, Executive Officers and Corporate Governance ==
* The information required by Item 10 of Form 10-K will be included in the company's 2026 Proxy Statement and is incorporated herein by reference <sup>p. 11</sup>.
== Executive Compensation ==
* The information required by Item 11 of Form 10-K will be included in the 2026 Proxy Statement and is incorporated by reference <sup>p. 12</sup>.
== Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters ==
* The information required by Item 12 of Form 10-K will be included in the company's 2026 Proxy Statement and is incorporated by reference <sup>p. 13</sup>.
== Certain Relationships and Related Transactions, and Director Independence ==
* The information required by Item 13 of Form 10-K will be included in the company's 2026 Proxy Statement and is incorporated herein by reference <sup>p. 14</sup>.
== Principal Accounting Fees and Services ==
* Our independent registered public accounting firm is Ernst & Young LLP, Houston, Texas <sup>p. 15</sup>.
* The ''Auditor Firm ID'' is 42 <sup>p. 15</sup>.
* The information required by Item 14 of Form 10-K will be included in the 2026 Proxy Statement and is incorporated herein by reference <sup>p. 15</sup>.
== Exhibits, Financial Statement Schedules. ==
* The consolidated financial statements of the Company are filed as part of this Form 10-K and are included in Item 8 <sup>p. 16</sup>.
* These statements include the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets as of December 31, 2025 and 2024, Consolidated Statements of Operations and Comprehensive Income (loss) for the three years ended December 31, 2025, 2024, and 2023, Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2025, 2024, and 2023, and Consolidated Statements of Cash Flows for the three years ended December 31, 2025, 2024, and 2023 <sup>p. 16</sup>.
* On September 30, 2024, Skyward Specialty entered into an Intercompany Loan Promissory Note with Houston Specialty Insurance Company (HSIC) <sup>p. 16</sup>.
* Under the Promissory Note, Skyward Specialty borrowed USD 57.0m from HSIC <sup>p. 16</sup>.
* Interest on the Promissory Note is payable monthly at a fixed annual interest rate of 4.00%, with the principal due at maturity <sup>p. 16</sup>.
* There are no prepayment penalties and no collateral was given for the Promissory Note <sup>p. 16</sup>.
* During the year ended December 31, 2024, Skyward Specialty provided funds for a new subsidiary, Skyward Specialty No. 1 Limited Company, a UK company authorized as a Lloyd’s corporate member to invest in Lloyd’s syndicates <sup>p. 16</sup>.
* The Promissory Note is included in notes payable and its fair value was determined using the income approach with observable inputs <sup>p. 16</sup>.
* The Promissory Note has been placed in Level 2 of the fair value hierarchy <sup>p. 16</sup>.
* Other financial instruments qualify as insurance-related products and are exempt from fair value disclosure requirements <sup>p. 16</sup>.
* The report is signed pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 <sup>p. 16</sup>.
* The report has been signed by persons on behalf of the Registrant in their capacities and on the dates indicated, pursuant to the requirements of the Securities Exchange Act of 1934 <sup>p. 16</sup>.
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