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

| language = English

| source_url = https://www.sec.gov/Archives/edgar/data/1519449/000151944926000015/0001519449-26-000015-index.htm

| intro_sentence = This article presents Skyward's FY 2025 annual report — the narrative Items (each summarized into a factsheet), primary financial statements, and note schedules from its SEC Form 10-K.

}}

''This article presents Skyward's FY 2025 annual report — the narrative Items (each summarized into a factsheet), primary financial statements, and note schedules from its SEC Form 10-K.''

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

== Business ==

 

 

* Skyward Specialty was formed as a Delaware corporation on January 3, 2006, as an insurance holding company ^{p. 1}.

* All insurance company subsidiaries are group rated and have financial strength ratings of "A" (Excellent) from A.M. Best Company, with a stable outlook ^{p. 1}.

 

 

* 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") (the "Majority Sellers") ^{p. 2}.

* David Ibeson will continue as CEO of Apollo, leading Apollo's growth as a subsidiary of Skyward Specialty, along with Apollo’s management team ^{p. 2}.

 

 

* The company operates with one reportable segment, offering a broad range of insurance coverages across various market niches ^{p. 3}.

* The company strives for excellence in risk selection, pricing, and claims outcomes, amplified by advanced technology and analytics ^{p. 3}.

 

 

* The company focuses on profitable niches in the market that require technical underwriting and claims management, which act as barriers to entry ^{p. 4}.

* Executive leadership has additional long-term incentive targets directly tied to growth in book value per share ^{p. 4}.

 

 

* The company's "Rule Our Niche" strategy aims to generate best-in-class underwriting profitability within its niches and create superior long-term shareholder value through growth in book value per share ^{p. 5}.

* Loss reserves represent the company's best estimate of ultimate losses ^{p. 5}.

 

 

* The company's marketing and distribution approach mirrors its underwriting strategy and is central to its "Rule Our Niche" strategy ^{p. 6}.

* This distribution approach enables effective and efficient access to targeted business based on market niche needs and dynamics ^{p. 6}.

 

 

* The company's underwriting approach is central to its "Rule Our Niche" strategy and market success ^{p. 7}.

* Underwriting controls and procedures are regularly reviewed to ensure underwriters profitably underwrite in each market served ^{p. 7}.

 

 

* Skyward's claims department operates under six guiding principles: prompt and comprehensive investigations using advanced analytics and technology; quality claims handling and customer engagement; timely establishment of reserves based on best estimates; effective pursuit of contribution and subrogation; detection and prevention of fraud; and disciplined litigation management for superior legal defense and cost monitoring ^{p. 8}.

* Managers and adjusters collaborate closely with underwriting partners to inform them of legal trends and emerging claims issues, educating underwriters on loss experience for risk selection ^{p. 8}.

 

 

* Technology is central to Skyward Specialty Insurance Group's operations and decision-making, aiming for long-term competitive advantages ^{p. 9}.

* The company constantly reviews its security breach posture and regularly implements updated processes, best practices, and tools ^{p. 9}.

 

 

* The company strategically purchases reinsurance from third parties to protect capital from severity events (large single event losses or catastrophes) and reduce earnings volatility ^{p. 10}.

* The ''allowance for uncollectible reinsurance'' was $2.3 million at December 31, 2025, and 2024 ^{p. 10}.

 

 

<div style="overflow-x:auto">

(3) Catastrophe loss protection is purchased up to $36.0 million in excess of $12.0 million retention, which provides cover for a 1:250-year PML event.

 

 

<div style="overflow-x:auto">

| class="col-m" style="text-align:right" | —

|-

|}

</div>

(1) This reinsurer facilitates our eMaxx captive. At December 31, 2025, we held collateral in a statutory trust of $235.2 million on our net reinsurance recoverables.

 

 

* ''ERM'' is embedded in nearly every aspect of the company and guides day-to-day activities ^{p. 11}.

* ''ERM'' is a central component of the strategy to achieve market-leading risk-adjusted returns for shareholders and reinforce a culture of accountability, transparency, and sound judgment ^{p. 11}.

 

 

* Reserves are maintained for specific claims incurred and reported, IBNR reserves, and uncollectible reinsurance ^{p. 12}.

* Additional information on loss reserves is available in Item 7 of Form 10-K, "Management’s Discussion and Analysis of Financial Condition and Results of Operations - “Results of Operations - Losses and LAE” and “Critical Accounting Policies” ^{p. 12}.

 

 

* The company aims to maintain a balanced investment portfolio primarily consisting of investments that provide predictable and stable returns ^{p. 13}.

* For further discussion on investments, including market risks, refer to Item 7 of Form 10-K, "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Investments" ^{p. 13}.

 

 

* The specialty lines property & casualty insurance market comprises numerous markets and sub-markets ^{p. 14}.

* 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. ^{p. 14}.

 

 

* 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) ^{p. 15}.

* ''Imperium Insurance Company'' has a direct relationship with Oklahoma Specialty Insurance Company (Oklahoma insurance corporation) ^{p. 15}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 39.9

|-

|}

</div>

[[File:Skyward-2025-FY-Annual report-skwd-20251231_g1.jpg|thumb|Our Structure]]

 

 

* ''Skyward Specialty Insurance Group, Inc.'' has an "A" (Excellent) rating with a stable outlook from A.M. Best ^{p. 16}.

* ''Ratings'' are based on factors relevant to policyholders, agents, insurance brokers, and intermediaries, and are not specifically related to securities issued by the company ^{p. 16}.

 

 

* The company is regulated by insurance regulatory authorities in the states where it conducts business ^{p. 17}.

* Notice to or prior approval from the applicable state insurance regulator is generally required for any material or extraordinary transaction ^{p. 17}.

 

 

* The company has applied for various ''trademark registrations'' in the United States at both federal and state levels ^{p. 18}.

* The company monitors its ''trademarks and service marks'' and protects them from unauthorized use as necessary ^{p. 18}.

 

 

* As of ''December 31, 2025'', the company had approximately ''611 employees'' ^{p. 19}.

* Such events could lead to a decline in the common stock price, potentially resulting in a loss of part or all of an investment ^{p. 20}.

 

 

* ''Financial condition and results of operations'' could be materially adversely affected by inaccurate assessment of underwriting risk ^{p. 21}.

* ''Integration of Apollo'' may present unforeseen challenges, including difficulties with technology systems, business processes, and risk management frameworks, potentially causing operational disruptions, increased costs, or delays in realizing anticipated strategic benefits ^{p. 21}.

 

 

* ''Underwriting success'' depends on accurately assessing risks and establishing appropriate premium rates; misunderstanding risks or employee decisions exposing the company to risk could adversely affect financial results ^{p. 22}.

* ''These risks'' could prevent hedging strategies from effectively reducing volatility and materially adversely impact financial results ^{p. 22}.

 

 

* Adverse economic factors like recession, inflation, high unemployment, or lower economic activity can reduce policy sales, increase claim frequency, lead to premium defaults, or cause claim falsification, impacting growth and profitability ^{p. 23}.

* Sales could result in significant realized losses depending on general market conditions, interest rates, and credit issues with individual securities ^{p. 23}.

 

 

* The company is subject to extensive regulation, and non-compliance can lead to penalties like fines and suspensions, adversely affecting financial condition and results of operations ^{p. 24}.

* These requirements may discourage acquisition proposals and delay, deter, or prevent a change of control, even if desirable to some stockholders ^{p. 24}.

 

 

* ''Future capital requirements'' depend on factors such as the ability to write new business successfully and establish adequate premium rates and reserves to cover losses ^{p. 25}.

* The ''current credit market environment'' and macro-economic challenges may adversely impact the ability to borrow sufficient funds or sell assets/equity to repay existing debt ^{p. 25}.

 

 

* Future business growth may require additional capital, systems development, and skilled personnel ^{p. 26}.

* The company cannot predict future involvement in such litigation or its impact on the business ^{p. 26}.

* Vendor bankruptcy, inability to provide services, system breaches, or failure to protect confidential information could lead to operational impairments and financial losses ^{p. 26}.

 

 

* The company expects to incur increased costs as a public company and its management devotes substantial time to compliance initiatives ^{p. 27}.

* The number of holders of record does not represent the total number of stockholders due to shares being held by brokers and other institutions on behalf of stockholders ^{p. 31}.

 

 

* Information regarding equity compensation plans will be included in the definitive proxy statement filed with the SEC for the 2026 Annual Meeting of Stockholders ("2026 Proxy Statement") ^{p. 32}.

* Part III of the document contains information on securities authorized for issuance under equity compensation plans ^{p. 32}.

 

 

* ''Unregistered securities'' information is provided for the period covered by this Annual Report on Form 10-K ^{p. 33}.

* The payment also included the issuance of ''3,679,332 unregistered shares'' of the Company’s common stock ^{p. 33}.

 

 

* The graph is not considered "soliciting material" or "filed" for purposes of Section 18 of the Exchange Act ^{p. 34}.

* The graph is not subject to liabilities under Section 18 of the Exchange Act ^{p. 34}.

* ''Skyward Specialty Insurance Group, Inc. performance'':

** January 13, 2023: $100.00 ^{p. 34}

* ''Nasdaq Composite Index performance'':

** January 13, 2023: $100.00 ^{p. 34}

* ''Nasdaq Insurance Index performance'':

** January 13, 2023: $100.00 ^{p. 34}

 

 

<div style="overflow-x:auto">

== Management’s Discussion and Analysis of Financial Condition and Results of Operations ==

 

 

* The company is a specialty insurance provider of commercial P&C products and solutions, primarily in the United States, on both non-admitted (E&S) and admitted bases ^{p. 35}.

* As of ''December 31, 2025'', the company recognized ''$14.0 million'' in transaction expenses related to the acquisition ^{p. 35}.

 

 

* ''Net income'' was USD 100.0m for the year ended December 31, 2025, compared to USD 100.0m for the year ended December 31, 2024 ^{p. 36}.

* ''Combined ratio'' was 90.0% for the year ended December 31, 2025, compared to 90.0% for the year ended December 31, 2024 ^{p. 36}.

 

 

<div style="overflow-x:auto">

(2) Not meaningful.

 

 

* The provided text indicates that tables are available for reconciliation of ''adjusted operating income'' to net income for the years ended December 31, 2025 and 2024 ^{p. 37}.

* The provided text indicates that tables are available for reconciliation of ''adjusted return on tangible equity'' to return on equity for the years ended December 31, 2025 and 2024 ^{p. 37}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* ''Gross written premiums'' increased by USD 423.1m YoY compared to 2024 ^{p. 38}.

* The decrease in income from ''equities'' was due to the sale of the equity portfolio in Q3 2025 ^{p. 38}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 4.3%

|-

|}

</div>

(1) Excludes exited business.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 1.1%

|-

|}

</div>

(1) Current accident year.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | —

|-

|-

| style="text-align:left" | Reserve development on losses subject to LPT

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | (0.6%)

|-

|}

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* ''Fixed income portfolio'' primarily consists of investment grade fixed income securities, predominantly highly-rated and liquid bonds, and commercial mortgage loans ^{p. 39}.

* ''Equity portfolio sale'': Almost all of the equities portfolio was sold during the third quarter of 2025, retaining only preferred stocks ^{p. 39}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 8.6%

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 22.2%

|-

|-

| style="text-align:left" | Commercial mortgage loans

| style="text-align:right" | 2.0%

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 1.7%

|-

|}

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* ''Income tax expense'' for the year ended December 31, 2025, was USD 46.4m, compared to USD 33.9m for the year ended December 31, 2024 ^{p. 40}.

* For a reconciliation between actual federal income tax expense and the amount computed at the statutory rate for the years ended December 31, 2025 and 2024, refer to Note 13, “Income Taxes” in the consolidated financial statements included in Item 8 of this Form 10-K ^{p. 40}.

 

 

* The company is organized as a holding company, with operations primarily conducted by wholly-owned insurance subsidiaries GMIC, HSIC, IIC (domiciled in Texas), and OSIC (domiciled in Oklahoma) ^{p. 41}.

* Management believes there is sufficient liquidity to meet operating cash needs, obligations, and committed capital expenditures for the next 12 months ^{p. 41}.

 

 

* The most significant source of cash is from premiums received from insureds, typically at the beginning of the coverage period, net of related commission ^{p. 42}.

* ''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 ^{p. 42}.

 

 

<div style="overflow-x:auto">

</div>

 

 

* ''FHLB Loan'' was entered into on August 30, 2024, with the Federal Home Loan Bank of Dallas (FHLB) ^{p. 43}.

* ''Deferred financing costs'' are presented as a direct deduction from the carrying amount of the subordinated debt ^{p. 43}.

 

 

* In ''October 2024'', the Board of Directors approved a share repurchase program. ^{p. 44}

* As of ''December 31, 2025'', no shares had been repurchased under this plan. ^{p. 44}

 

 

* ''Reserves for losses and LAE'' represent the best estimate of the ultimate cost of settling reported and unreported claims and related expenses ^{p. 45}.

* ''Reinsurance balances recoverable'' on reserves for paid and unpaid losses and LAE totaled $857.9 million at December 31, 2024 ^{p. 45}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 80,242

|-

|}

</div>

 

 

* Critical accounting estimates are those important to portraying financial condition and results of operations and require significant judgment ^{p. 46}.

* In establishing quarterly actuarial recommendations, the actuary estimates an initial expected ultimate loss ratio for each underwriting division ^{p. 46}.

* Input from underwriting and claims departments, including premium pricing assumptions and historical experience, is considered in setting reserves ^{p. 46}.

* Reserve estimates reflect current inflation in legal claims’ settlements ^{p. 46}.

* Reserve estimates assume no subjection to losses from significant new legal liability theories ^{p. 46}.

* Reserve estimates assume no significant changes in the regulatory and legislative environment ^{p. 46}.

* In the event of significant new regulation or legislation, the company will attempt to quantify its impact, but accuracy or success is not assured ^{p. 46}.

* The actuarial review considers multiple actuarial methods to estimate the reserve for losses and LAE ^{p. 46}.

* Estimates are regularly reviewed and adjusted as experience develops or new information becomes known, with adjustments included in current operations ^{p. 46}.

* ''Development'' is the amount by which estimated losses differ from those originally reported for a period ^{p. 46}.

* A ''5% change in net IBNR'' would result in a ''$51.8 million change'' in reserves for losses and LAE ^{p. 46}.

* A ''5% change in net IBNR'' would result in a ''$40.9 million change'' in net income and stockholders’ equity ^{p. 46}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 69.2%

|-

|}

</div>

 

 

* In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures (Topic 740)" ^{p. 47}.

== Financial Statements ==

 

 

 

 

* ''Internal control over financial reporting'' of Skyward Specialty Insurance Group, Inc. and subsidiaries was audited as of December 31, 2025 ^{p. 50}.

* The ''report dated March 2, 2026'' expressed an unqualified opinion on the consolidated financial statements and related notes and schedules ^{p. 50}.

 

 

* The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment included in the accompanying Management’s Report on Internal Control over Financial Reporting ^{p. 51}.

* The auditor believes their audit provides a reasonable basis for their opinion ^{p. 51}.

 

 

* ''Internal control over financial reporting'' is a process designed to provide reasonable assurance about the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles ^{p. 52}.

* ''Projections of effectiveness evaluations'' to future periods carry the risk that controls may become inadequate due to changing conditions or that compliance with policies/procedures may deteriorate ^{p. 52}.

 

 

| /s/ Ernst & Young LLP |

| March 2, 2026 |

 

 

* ''Opinion'': The consolidated financial statements present fairly, in all material respects, the financial position of Skyward Specialty Insurance Group, Inc. and its subsidiaries as of December 31, 2023 and 2022, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America ^{p. 53}.

* ''Report Date'': February 29, 2024 ^{p. 53}.

 

 

* The consolidated financial statements of Skyward Specialty Insurance Group, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, and for the three years ended December 31, 2025, have been audited ^{p. 54}.

* The report dated March 2, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting ^{p. 54}.

 

 

* The Company's management is responsible for the financial statements ^{p. 55}.

* The auditors believe their audits provide a reasonable basis for their opinion ^{p. 55}.

 

 

* The critical audit matter discussed arises from the current period audit of the financial statements ^{p. 56}.

* Communicating the critical audit matter does not provide a separate opinion on the matter or its related account/disclosure ^{p. 56}.

 

 

* ''Company’s reserves'' for unpaid losses and loss adjustment expenses (LAE) were USD 2.3bn at December 31, 2025 ^{p. 57}.

* We also reviewed the ''development of prior year reserve estimates'' ^{p. 57}.

 

 

| /s/ Ernst & Young LLP |

| March 2, 2026 |

 

 

* The accompanying notes are an integral part of the consolidated financial statements ^{p. 58}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 274,929

|-

|-

| style="text-align:left" | Cash and cash equivalents

| style="text-align:right" | 86,698

|-

|-

| style="text-align:left" | Liabilities and stockholders’ equity

| style="text-align:right" | 19,536

|-

|-

| style="text-align:left" | Stockholders’ equity

| style="text-align:right" | 97,120

|-

|-

|}

</div>

 

 

* The accompanying notes are an integral part of the consolidated financial statements ^{p. 59}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | ( 632 )

|-

|-

| style="text-align:left" | Losses and loss adjustment expenses

| style="text-align:right" | 5,364

|-

|-

| style="text-align:left" | Income before income taxes

| style="text-align:right" | ( 4,984 )

|-

|-

| style="text-align:left" | Comprehensive income

</div>

 

 

* The accompanying notes are an integral part of the consolidated financial statements ^{p. 60}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | ( 21,708 )

|-

|}

</div>

 

 

* The accompanying notes are an integral part of the consolidated financial statements ^{p. 61}.

 

 

<div style="overflow-x:auto">

(1) The sum of cash and cash equivalents and restricted cash from the Consolidated Balance Sheets.

 

 

* ''Skyward Specialty Insurance Group, Inc.'' (the "Company") is a Delaware corporation organized in 2006 ^{p. 62}.

* Additional information regarding the acquisition is provided in Note 24 ^{p. 62}.

 

 

* The Company's consolidated financial statements are prepared according to Generally Accepted Accounting Principles in the United States of America (GAAP) ^{p. 63}.

* The Company's actual results may vary from these estimates ^{p. 63}.

 

 

* The Company consolidates an entity if it meets the definition of a variable interest entity (VIE) for which the Company is the primary beneficiary, or if the Company controls the entity through a majority of voting interest or other arrangements ^{p. 64}.

* Further details and required disclosures regarding this VIE are provided in Note 7 ^{p. 64}.

 

 

* ''Cash and cash equivalents'' include cash on hand and fixed maturity securities with original maturities of three months or less ^{p. 65}.

* The carrying value of the Company’s cash and cash equivalents approximates fair value ^{p. 65}.

 

 

* ''Restricted cash'' is cash with a legal restriction on withdrawal or use by the consolidated group ^{p. 66}.

* ''Cash held'' in a depository account for others, or restricted by a state, is recorded as restricted cash ^{p. 66}.

 

 

* ''Available for Sale fixed maturities'' are carried at fair value ^{p. 67}.

* ''Net investment gains and losses'' are recognized in net income based upon the specific identification method ^{p. 67}.

 

 

* The Company uses ''commodity derivatives'' to assume risk and manage exposures in the insurance industry ^{p. 68}.

* Further details and required disclosures regarding derivatives can be found in ''Note 8'' ^{p. 68}.

 

 

* The Company purchases prospective reinsurance for certain lines of business on a proportional, excess of loss, and facultative basis ^{p. 69}.

* ''Everest Reinsurance Co.'s'' financial strength rating from A.M. Best was A+ at December 31, 2025, and 2024 ^{p. 69}.

 

 

* ''Financial instruments'' that could lead to concentrations of credit risk include cash and cash equivalents, restricted cash, investments, and premiums receivable, excluding reinsurance recoverables ^{p. 70}.

* ''Failure by distribution sources'' to remit premiums could lead to premium write-offs and a corresponding loss of income ^{p. 70}.

 

 

* ''Policy acquisition costs'' include commissions and premium taxes that are directly related to new or renewal business production ^{p. 71}.

* Management determined that no premium deficiency existed as of December 31, 2025, and 2024 ^{p. 71}.

 

 

* ''Goodwill and intangible assets'' are recorded following a business combination ^{p. 72}.

* The Company had ''no goodwill impairment'' for the years ended December 31, 2025, and 2024 ^{p. 72}.

 

 

* ''Property and equipment'' is included in other assets on the Consolidated Balance Sheets ^{p. 73}.

* Depreciation periods range from three to seven years ^{p. 73}.

 

 

* ''Reserves for unpaid losses and loss adjustment expenses (LAE)'' represent the Company's estimated ultimate cost of all unreported and reported but unpaid insured claims and the cost to adjust losses incurred as of the balance sheet date ^{p. 74}.

* If recorded reserves are determined to be more than adequate, it would lead to a reduction in reserves ^{p. 74}.

 

 

* The Company recognizes property and casualty and surety premiums on a pro-rata basis over the policy terms ^{p. 75}.

* ''Unearned premiums'' (direct and ceded) are calculated on a pro-rata basis over the terms of the policies ^{p. 75}.

 

 

* ''SUA commission revenue'' is generated from placing insurance policies on reinsurance programs via a reinsurance broker ^{p. 76}.

* Changes in the estimate of variable consideration for SUA fee income are recognized in the month they occur ^{p. 76}.

 

 

* ''Income tax expense'' is accrued for the tax effects of transactions reported on the consolidated financial statements ^{p. 77}.

* ''Premium tax expense'' is recognized within underwriting, acquisition, and insurance expense on the Consolidated Statements of Operations ^{p. 77}.

 

 

* Fair value for each class of financial instrument is estimated based on the framework established in fair value accounting guidance ^{p. 78}.

* Further details regarding fair value disclosures are in Note 4 ^{p. 78}.

 

 

* The estimated fair value of employee stock options and similar awards is expensed ^{p. 79}.

* Compensation cost for the ESPP is recognized on a straight-line basis over the offering period ^{p. 79}.

 

 

* ''Basic earnings per share'' is calculated using the two-class method ^{p. 80}.

* When ''common share adjustments'' increase earnings per share or reduce loss per share, the effect is anti-dilutive, and diluted net earnings or net loss per share is computed excluding these common share equivalents ^{p. 80}.

 

 

* ''ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740)'' was issued by FASB in December 2023 ^{p. 81}.

* The Company is evaluating the effect of these amendments on its consolidated financial statements ^{p. 81}.

 

 

* The Company's indefinite-lived intangible assets include ''insurance licenses'' and ''trademarks'' ^{p. 82}.

* ''Amortization expense'' was approximately $1.5m for the year ended December 31, 2023 ^{p. 82}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* ''Fixed maturity securities, held-to-maturity'' at December 31, 2025, consisted entirely of asset-backed securities not due at a single maturity date ^{p. 83}.

* At December 31, 2024, ''cash and investment securities on deposit'' had carrying values of approximately $66.8 million ^{p. 83}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 513,695

|-

|-

| style="text-align:left" | Other asset-backed securities

| style="text-align:right" | 33,603

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 292,191

|-

|-

| style="text-align:left" | Other asset-backed securities

| style="text-align:right" | 38,717

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 513,695

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | ( 1,353 )

|-

|-

| style="text-align:left" | Other asset-backed securities

| style="text-align:right" | ( 48 )

|-

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | ( 1,834 )

|-

|-

| style="text-align:left" | Other asset-backed securities

| style="text-align:right" | ( 436 )

|-

|-

|}

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 2

|-

|-

| style="text-align:left" | Fixed maturity securities, available-for-sale

| style="text-align:right" | ( 20 )

|-

|-

| style="text-align:left" | Equity securities

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 318

|-

|-

| style="text-align:left" | Investment expenses

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | ( 5,420 )

|-

|}

</div>

 

 

* The Company's financial instruments include assets and liabilities carried at fair value, and those carried at cost or amortized cost but disclosed at fair value ^{p. 84}.

* Periodic analyses are conducted on third-party prices to ensure they are reasonable estimates of fair value, including reviewing month-to-month fluctuations and comparing valuations from different pricing services for identical securities ^{p. 84}.

* Financial instruments are classified into a three-level hierarchy ^{p. 84}.

* ''U.S. government securities, mutual funds, and common stock'' use unadjusted quoted prices for identical instruments in an active exchange, representing Level 1 inputs ^{p. 84}.

* ''Preferred stocks, municipal securities, corporate securities, and miscellaneous'' use a pricing model with market-based inputs like trades in illiquid markets for specific securities or active markets for similar securities, considering benchmark yields, issuer spreads, security terms, and other market data, representing Level 2 fair value inputs ^{p. 84}.

* ''Fixed maturity securities, available for sale classified as Level 3'', include corporate securities and other asset-backed securities managed by an independent asset manager and priced by an independent pricing provider ^{p. 84}.

* The provider estimates the value of these Level 3 securities using the discounted net present value of cash flows method with an unobservable discount rate ^{p. 84}.

* ''Mortgage loans'' have variable interest rates and are collateralized by real property ^{p. 84}.

* Fair value of mortgage loans is determined using the income approach with observable and unobservable (Level 3) inputs ^{p. 84}.

* Certain assets, including investments in indirect loans and loan collateral, equity method investments, and other invested assets, are measured at fair value on a nonrecurring basis only when impaired ^{p. 84}.

* The Company discloses fair values of other financial instruments where practicable to estimate, using quoted market prices or other valuation methodologies ^{p. 84}.

* This investment is measured at fair value using the net asset value per share practical expedient and is not classified in the fair value hierarchy, in accordance with Accounting Standard Codification 820-10 ^{p. 84}.

* Fair value for notes payable is determined using the income approach with observable (Level 2) inputs ^{p. 84}.

* Other financial instruments that qualify as insurance-related products are exempt from fair value disclosure requirements ^{p. 84}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 513,695

|-

|-

| style="text-align:left" | Other asset-backed securities

| style="text-align:right" | 33,603

|-

|-

| style="text-align:left" | Preferred stocks

| style="text-align:right" | 1,174

|-

|-

| style="text-align:left" | Mortgage loans

| style="text-align:right" | 34,857

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 292,191

|-

|-

| style="text-align:left" | Other asset-backed securities

| style="text-align:right" | 38,717

|-

|-

| style="text-align:left" | Common stocks

| style="text-align:right" | 40,839

|-

|-

| style="text-align:left" | Mortgage loans

| style="text-align:right" | 274,929

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 26,490

|-

|-

| style="text-align:left" | Issuances

| style="text-align:right" | —

|-

|-

| style="text-align:left" | Balance at December 31, 2025

| style="text-align:right" | 9,902

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 50,070

|-

|-

| style="text-align:left" | Issuances

| style="text-align:right" | —

|-

|-

| style="text-align:left" | Balance at December 31, 2024

| style="text-align:right" | 26,490

|-

|}

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* The Company invests in ''Separately Managed Accounts'' (SMA1 and SMA2) ^{p. 85}.

* As of December 31, 2025 and 2024, ''no mortgage loans were not producing income'' for the previous 12 months ^{p. 85}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* The difference between an investment's cost and its proportionate share of underlying equity in net assets is allocated to the equity method investment's assets and liabilities ^{p. 86}.

* As of December 31, 2025 and 2024, the Company held indirect investments in collateralized loans and loan collateral through SMA1 and SMA2 ^{p. 86}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* Skyward consolidates ''Separate Account HSIC-01'' ("HSIC-01"), established by Mangrove Risk Solutions Bermuda Ltd. ("Mangrove"), pursuant to GAAP consolidation guidance ^{p. 87}.

* The presented assets only include ''third-party net assets'' and exclude intercompany balances, which were eliminated upon consolidation ^{p. 87}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 34,856

|-

|}

</div>

 

 

* The Company uses derivatives for financial risk management to mitigate price risk in insurance contracts exposed to commodity price fluctuations, specifically cattle and milk ^{p. 88}.

* For the year ended December 31, 2025, the Company recognized pre-tax net gains of USD 7.9m in losses and loss adjustment expenses ^{p. 88}.

 

 

<div style="overflow-x:auto">

</div>

 

 

* The Company analyzes the credit risk of its ''reinsurance recoverables'' by monitoring the financial strength rating of its reinsurers from A.M. Best ^{p. 89}.

* This $13.6 million increase was subsequently written-off ^{p. 89}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* ''Depreciation expense'' for property and equipment was USD 3.3m for the year ended December 31, 2025 ^{p. 90}.

* Depreciation expense is presented in underwriting, acquisition, and insurance expenses on the Consolidated Statements of Operations ^{p. 90}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | ( 29,355 )

|-

|}

</div>

 

 

* On August 30, 2024, the Company entered into the ''FHLB Loan'' under the Advances and Security Agreement ^{p. 91}.

* These ''deferred financing costs'' are presented as a direct deduction from the carrying amount of the subordinated debt ^{p. 91}.

 

 

* The Company operates with one reportable segment, offering commercial property and casualty products and solutions primarily in the United States on both non-admitted (E&S) and admitted bases ^{p. 92}.

* This competitive analysis and the monitoring of budgeted versus actual results are used to assess segment performance and determine management's compensation ^{p. 92}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 128,236

|-

|-

| style="text-align:left" | Exited business

| style="text-align:right" | ( 18 )

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 6,064

|-

|-

| style="text-align:left" | Losses and LAE

| style="text-align:right" | 134,930

|-

|-

| style="text-align:left" | Net underwriting income

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* The Company paid ''federal income taxes'' of USD 37.0m in 2024 and USD 15.8m in 2023 ^{p. 93}.

* Management does not believe there are any ''uncertain tax benefits'' that could be recognized within the next twelve months that would impact the Company’s effective tax rate ^{p. 93}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 7,661

|-

|-

| style="text-align:left" | Current tax expense

| style="text-align:right" | ( 885 )

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 9,382

|-

|}

</div>

 

 

<div style="overflow-x:auto">

(1) The following state(s) and/or local jurisdictions make up more than 50% of the state income taxes: Florida.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 1.2

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 1,164

|-

|}

</div>

(1) No single state or jurisdiction accounts for greater than 5% of total taxes paid.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 6,067

|-

|-

| style="text-align:left" | Valuation allowance

| style="text-align:right" | ( 586 )

|-

|-

| style="text-align:left" | Deferred policy acquisition costs

| style="text-align:right" | 2,338

|-

|-

| style="text-align:left" | Net deferred tax asset

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* The One Big Beautiful Bill Act ("OBBB Act"), which includes a broad range of tax reform provisions, was signed into law in the United States on July 4, 2025 ^{p. 94}.

* No material impact from the OBBB Act is expected in 2026 ^{p. 94}.

 

 

* The Company evaluates net ultimate loss and LAE under three sub-categories: multi-line solutions, short-tail/monoline specialty lines, and exited lines ^{p. 95}.

** The favorable development in short-tail/monoline specialty lines was in the property line of business, primarily from accident years 2021 and 2022 ^{p. 95}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 10,770

|-

|-

| style="text-align:left" | Paid, net of reinsurance, related to:

| style="text-align:right" | 253,481

|-

|-

| style="text-align:left" | Net reserves for losses and LAE, end of period

</div>

 

 

* ''Losses and LAE reserves'' represent the Company's best estimate of the ultimate net cost of all reported and unreported losses that are unpaid as of the balance sheet dates ^{p. 96}.

* Claim counts include all claims reported, even if the Company does not establish a liability for the claim (i.e., reserve for loss and loss adjustment expenses) ^{p. 96}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 5,495

|-

|-

| style="text-align:left" | Cumulative net paid loss and ALAE from the table below

| style="text-align:right" | —

|-

|-

| style="text-align:left" | *Supplementary information and unaudited

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 79,856

|-

|-

| style="text-align:left" | *Supplementary information and unaudited

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 6,139

|-

|-

| style="text-align:left" | Cumulative net paid loss and ALAE from the table below

| style="text-align:right" | —

|-

|-

| style="text-align:left" | *Supplementary information and unaudited

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 49,558

|-

|-

| style="text-align:left" | *Supplementary information and unaudited

</div>

 

 

* The provided table reconciles net incurred and paid loss development tables to balance sheet reserves for losses and loss adjustment expenses as of December 31, 2025 and 2024 ^{p. 97}.

* This claims duration data is based on disaggregated information from paid loss development tables, net of reinsurance ^{p. 97}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | —

|-

|-

| style="text-align:left" | Cumulative net paid loss and ALAE from the table below

| style="text-align:right" | —

|-

|-

| style="text-align:left" | *Supplementary information and unaudited

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | —

|-

|-

| style="text-align:left" | *Supplementary information and unaudited

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 15,298

|-

|-

| style="text-align:left" | Unallocated LAE

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* ''Skyward Underwriters Agency, Inc. (SUA)'' is a subsidiary of the Company ^{p. 98}.

* This income is derived from the placement of insurance policies with third-party insurance or reinsurance companies ^{p. 98}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | ( 135 )

|-

|-

| style="text-align:left" | Commission and fee expenses

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* ''Underwriting, acquisition and insurance expenses'' were USD 390.0m in 2025, USD 330.0m in 2024, and USD 270.0m in 2023 ^{p. 99}.

* ''General and administrative expenses'' were USD 90.0m in 2025, USD 80.0m in 2024, and USD 70.0m in 2023 ^{p. 99}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 134,930

|-

|}

</div>

 

 

* The Company remains obligated for ceded amounts if reinsurers fail to meet their obligations ^{p. 100}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

* The ''2022 Long-Term Incentive Plan'' (2022 Plan) was approved by the Board of Directors on September 23, 2022, and became effective on January 12, 2023 ^{p. 101}.

* As of ''December 31, 2025'', the fair value of unrecognized ESPP expense was $0.3 million ^{p. 101}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

(2) Decreases below the 100% target level are reflected as forfeited.

 

 

* The table sets forth the computation of ''basic and diluted net earnings per share'' for the years ended December 31, 2025, 2024, and 2023 ^{p. 102}.

* The table presents ''common share equivalents of contingently issuable instruments'' excluded from basic earnings per share for the years ended December 31, 2025, 2024, and 2023 ^{p. 102}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 920,864

|-

|}

</div>

 

 

* The Company sponsors the ''401(k) Plan'' (the “Plan”), which is available to substantially all its employees ^{p. 103}.

* The Plan is subject to provisions of the ''Employee Retirement Income Security Act of 1974'' ^{p. 103}.

** ''2025'': USD 3.9m ^{p. 103}

** ''2024'': USD 3.2m ^{p. 103}

** ''2023'': USD 2.9m ^{p. 103}

 

 

* ''RISCOM'' provides wholesale brokerage services to the Company ^{p. 104}.

* ''Premiums receivable'' as of December 31, 2024, were USD 12.6m ^{p. 104}.

 

 

<div style="overflow-x:auto">

</div>

 

 

* ''Advisory and professional services fees and expense reimbursements'' paid to affiliated stockholders and directors were USD 0.6m for the years ended December 31, 2025 and 2024 ^{p. 105}.

* For investments involving affiliated companies and additional related party transactions, refer to Notes 5, 6, and 11 ^{p. 105}.

 

 

* Accruals for these items are recorded when losses are probable and reasonably estimable ^{p. 106}.

 

 

* The Company has provided ''indemnifications'' to certain buyers in conjunction with the sale of business assets and subsidiaries ^{p. 107}.

* The Company currently ''does not believe'' any significant claims exist related to these indemnifications ^{p. 107}.

 

 

* ''Statutory net income'' was $159.1 million for 2025, $108.2 million for 2024, and $73.1 million for 2023 ^{p. 108}.

* As of December 31, 2025, and 2024, GMIC’s statutory capital and surplus substantially exceeded the regulatory RBC requirements ^{p. 108}.

 

 

* On September 2, 2025, the Company entered into two share purchase agreements (the "Apollo Majority SPAs") with institutional and management shareholders (the "Majority Sellers") of Apollo Group Holdings Limited ("Apollo") ^{p. 109}.

== Controls and Procedures ==

 

 

* Management, including the principal executive officer and principal financial officer, evaluated the effectiveness of disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K ^{p. 110}.

* Management acknowledges that any controls and procedures can only provide reasonable assurance of achieving their objectives, and judgment is applied in evaluating the cost-benefit relationship of controls and procedures ^{p. 110}.

 

 

* ''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, as amended ^{p. 111}.

* ''Internal control over financial reporting'' includes policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements ^{p. 111}.

 

 

* Management believes the measures remediated the material weakness and concluded that ''internal control over financial reporting was effective'' at a reasonable assurance level as of December 31, 2025 ^{p. 112}.

 

 

* No change in internal control over financial reporting was identified during the year ended December 31, 2025, in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act, except for the remediation of the material weakness identified in 2024 ^{p. 113}.

* These changes have not materially affected, nor are they reasonably likely to materially affect, the company's internal control over financial reporting ^{p. 113}.

 

 

* Management acknowledges that disclosure controls and procedures, regardless of their design and operation, offer only reasonable assurance of achieving control objectives ^{p. 114}.

* Items marked with a plus (+) indicate a management contract or compensatory plan or arrangement ^{p. 121}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 513,695

|-

|-

| style="text-align:left" | Other asset-backed securities

| style="text-align:right" | 32,822

|-

|-

| style="text-align:left" | Preferred stocks

| style="text-align:right" | 1,174

|-

|-

| style="text-align:left" | Mortgage loans

| style="text-align:right" | 264,299

|-

|}

</div>

 

 

<div style="overflow-x:auto">

| style="text-align:right" | 14,000

|-

|-

| style="text-align:left" | Cash and cash equivalents

| style="text-align:right" | 2,905

|-

|-

| style="text-align:left" | Liabilities and Stockholders’ Equity

| style="text-align:right" | 19,536

|-

|-

| style="text-align:left" | Stockholders’ Equity:

| style="text-align:right" | 793,999

|-

|}

</div>

 

 

* See accompanying notes to financial statements ^{p. 122}.

 

 

<div style="overflow-x:auto">

| style="text-align:right" | ( 27 )

|-

|-

| style="text-align:left" | Operating expenses

| style="text-align:right" | 451

|-

|-

| style="text-align:left" | Loss before income tax expense

</div>

 

 

* ''Cash provided by operating activities'' was USD 100,000 for the year ended December 31, 2023 ^{p. 123}.

* ''Cash and cash equivalents at end of period'' were USD 0 for the year ended December 31, 2021 ^{p. 123}.

 

 

<div style="overflow-x:auto">

</div>

 

 

* ''Intercompany Loan Promissory Note'' was entered into by Skyward Specialty with Houston Specialty Insurance Company (HSIC) on September 30, 2024 ^{p. 124}.

* ''Skyward Specialty No. 1 Limited Company'' is a UK company authorized as a Lloyd’s corporate member to invest in Lloyd’s syndicates ^{p. 124}.

 

 

* The ''Promissory Note'' between Skyward Specialty and HSIC is included in notes payable ^{p. 125}.

* ''Other financial instruments'' are exempt from fair value disclosure requirements as they qualify as insurance-related products ^{p. 125}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">

(2) Amount does not include gain on retroactive reinsurance which is included in losses and loss adjustment expenses presented on the Consolidated Statements of Operations.

 

 

* This report was signed on behalf of the registrant pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 ^{p. 126}.

* This report was signed by the indicated 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 ^{p. 126}.

 

 

<div style="overflow-x:auto">

</div>

 

 

<div style="overflow-x:auto">