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.
Portions of the Registrant’s Proxy Statement relating to the 2026 annual meeting of stockholders (the “2026 Proxy Statement”), which will be filed within 120 days of December 31, 2025, are incorporated by reference into Part III of this Form 10-K.
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Entity Central Index Key
0001519449
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Amendment Flag
false
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Document Fiscal Year Focus
2025
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Document Fiscal Period Focus
FY
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Audit Information
12 Months Ended
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Dec. 31, 2025
Audit Information [Abstract]
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Auditor Name
Ernst & Young LLP
Auditor Location
Houston, Texas
Auditor Firm ID
42
Business
Who We Are
Skyward Specialty was formed as a Delaware corporation on January 3, 2006, as an insurance holding company p. 1.
The company operated under the name Houston International Insurance Group, Ltd. until re-branding as Skyward Specialty in November 2020 p. 1.
The terms "the Company," "we," "our," "us," or like terms refer to the business of Skyward Specialty Insurance Group, Inc. and its subsidiaries p. 1.
Skyward Specialty is a growing specialty insurance company providing commercial insurance products and solutions primarily in the United States p. 1.
Products are delivered on both a non-admitted (E&S) and admitted basis p. 1.
The company focuses on underserved, dislocated markets, or markets where standard insurance coverages are insufficient p. 1.
Customers typically require highly specialized, customized underwriting solutions and claims capabilities p. 1.
The portfolio of insured risks is highly diversified across industries, distribution channels, and lines of business p. 1.
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 p. 1.
The company insures both short and medium duration liabilities p. 1.
The business mix is principally primary insurance, balanced between E&S and admitted markets p. 1.
A portion of the business is specialty reinsurance, primarily property, agriculture, and credit p. 1.
Specialty reinsurance focuses on attractive specialty classes where approaching through reinsurance is more efficient due to factors like cost of entry and geographic expansion p. 1.
Diversification, including businesses not typically aligned with traditional P&C pricing cycles, combined with underwriting and claims expertise, aims to produce consistent growth and profitability across all insurance pricing cycles p. 1.
The company is led by an entrepreneurial executive management team with decades of insurance leadership experience in the global P&C industry p. 1.
The leadership is supported by an experienced team with broad skill sets aligned with the company's strategy p. 1.
High-quality leadership, underwriting and claims teams, technology DNA, advanced analytics capabilities, diversified book of business, and strong competitive position are believed to position the company for profitable growth p. 1.
The company aims to deliver long-term value for shareholders by generating best-in-class underwriting profitability and book value per share growth across P&C market cycles p. 1.
All insurance company subsidiaries are group rated p. 1.
All insurance company subsidiaries have financial strength ratings of "A" (Excellent) from A.M. Best Company, with a stable outlook p. 1.
Apollo Acquisition
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. 2.
Pursuant to the Apollo Majority SPAs, the company agreed to acquire all issued shares of Apollo held by the Majority Sellers, representing approximately 87% of Apollo's issued share capital p. 2.
Closing of the transaction ("Closing") was conditioned upon the company acquiring 100% of Apollo's issued share capital (the “Acquisition”) at Closing through additional short-form share purchase agreements (the "Apollo Minority SPAs") with the remaining minority shareholders (the "Minority Sellers") p. 2.
The Apollo Minority SPAs and Apollo Majority SPAs are collectively referred to as the "Apollo SPAs" p. 2.
The Acquisition closed on January 1, 2026 p. 2.
The consideration for the transaction was satisfied by issuing common stock of the Company to certain sellers and the remainder in cash p. 2.
Apollo is a leading U.S.-centric specialty underwriting platform operating at Lloyd’s of London p. 2.
Apollo's business model is characterized by low volatility, high growth, and capital efficiency p. 2.
Apollo has consistently grown gross written premium since its formation in 2010 p. 2.
Through Syndicate 1969, Apollo underwrites a multi-class specialty insurance portfolio p. 2.
Through Syndicate 1971, Apollo provides an innovative platform liability product for the digital and sharing economy p. 2.
Apollo provides capital to syndicates 1969 and 1971 in exchange for a pro-rata share of underwriting income, with third parties providing the remaining capital p. 2.
Apollo earns managing agency fees and profit commissions as the managing agent for its own syndicates and for innovative third-party syndicates (platform partners) p. 2.
The acquisition aligns with Skyward Specialty’s strategy by bringing new specialty niches, a distinctive new economy offering, accelerating innovation, and adding Apollo’s advanced technology capabilities p. 2.
David Ibeson will continue as CEO of Apollo, leading its growth as a subsidiary of Skyward Specialty, along with Apollo’s management team p. 2.
Our Business and Our Strategy
The company operates with one reportable segment, offering insurance coverages across various market niches p. 3.
Nine distinct underwriting divisions exist, each with dedicated leadership and technical staff experienced in their niches p. 3.
This structure aims to effectively serve customer needs, partner with distributors, and achieve attractive risk-adjusted returns p. 3.
For the year ended December 31, 2025, gross written premiums were 41% admitted and 59% non-admitted p. 3.
Accident & Health (A&H) underwriting division provides medical stop loss to self-insured employers and covers group and single-employer captives p. 3.
A&H captives program offers tailored medical stop-loss and reinsurance solutions with dedicated underwriting and claims oversight p. 3.
The A&H division targets small and medium-sized enterprises seeking to control healthcare costs through self-insurance p. 3.
A&H products are written on an admitted basis and distributed via retail and wholesale brokers p. 3.
Agriculture and Credit (Re)insurance underwriting division provides specialty risk-transfer solutions globally p. 3.
This division's portfolio spans agriculture, dairy and livestock revenue protection, and mortgage and credit product lines p. 3.
It supports insurers, MGAs, and other risk originators with tailored treaty protection using proportional and excess of loss structures p. 3.
The global agriculture book covers weather, natural peril volatility, and other production/yield risks, helping clients manage catastrophe exposure and seasonal earnings variability p. 3.
The mortgage portfolio supports government-sponsored entities and private mortgage insurers against default and loss severity volatility, structured to manage tail risk p. 3.
The credit portfolio protects against losses from default risk for single obligors and multi-buyer trade credit across diverse regions and industries p. 3.
The dairy and livestock business offers revenue protection against price volatility in milk, cattle, and hog markets p. 3.
Derivative instruments, primarily put options and futures, are used to mitigate commodity price risk related to cattle, hog, and milk prices p. 3.
These instruments are solely for managing adverse price movements, with positions adjusted based on market conditions and risk profile p. 3.
For more information on derivatives, refer to Note 8, “Derivatives” in the consolidated financial statements in Item 8 of Form 10-K p. 3.
Captives underwriting division provides group captive solutions by leveraging underwriting and claims expertise from other divisions p. 3.
This division writes property, general liability, commercial auto, excess liability, and workers’ compensation on E&S and admitted bases p. 3.
Business is often administered through partnerships with third-party captive managers p. 3.
Construction & Energy Solutions underwriting division focuses on high-severity exposures, offering tailored multi-line solutions including general liability, excess liability, commercial auto, and workers’ compensation p. 3.
Products are distributed through retail agents, brokers, and a select network of wholesalers p. 3.
Global Property underwriting division provides comprehensive property insurance and reinsurance solutions for commercial clients worldwide p. 3.
Offerings protect against physical loss or damage to assets from natural catastrophes and other insured perils p. 3.
Professional Lines underwriting division includes management liability, professional liability (including cyber), and allied health (including life sciences) p. 3.
Management/Professional liability and allied health provide primary and excess claims-made liability products on E&S and admitted bases p. 3.
Distribution for Professional Lines is through wholesale and retail brokers, depending on the product p. 3.
Specialty Programs underwriting division partners with program administrators focused on specific markets p. 3.
This partnership model is used when program administrators have a competitive advantage (scale or proprietary technology) that would be difficult for the company to replicate p. 3.
Specialty Programs writes property, general liability, commercial auto liability, excess liability, and workers’ compensation on E&S and admitted bases p. 3.
Surety underwriting division provides contract, commercial, and transactional surety solutions p. 3.
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 p. 3.
Surety business is written on an admitted basis and distributed through retail agents and brokers p. 3.
Transactional E&S underwriting division provides primary and excess non-catastrophe prone property and general liability solutions p. 3.
This division emphasizes risks considered hard to place due to complexity, loss history, or limited operating history (e.g., startups) p. 3.
Success in this market relies on technical underwriting, thoughtful coverage, pricing, and high-quality broker service p. 3.
Market access for Transactional E&S is exclusively through wholesale brokers p. 3.
The company has "exited business" units and lines that were previously exited and placed into run-off p. 3.
The company's strategy is to lead in chosen market niches and establish sustainable, competitive positions p. 3.
Key elements of the strategy include:
Providing differentiated products, services, and solutions p. 3.
Attracting and retaining exceptional underwriting and claims talent p. 3.
Amplifying expertise with advanced technology and analytics for risk selection, pricing, and claims management p. 3.
Empowering underwriting and claims teams with decision-making authority p. 3.
Fostering a culture of nimbleness and responsiveness to market opportunities p. 3.
This strategy is referred to as “Rule Our Niche” and aims to build a strong defensible market position and competitive moat p. 3.
The principles of this strategy are considered key to achieving and sustaining best-in-class underwriting results through P&C insurance pricing cycles p. 3.
The company strives for excellence in risk selection, pricing, and claims outcomes, amplified by advanced technology and analytics p. 3.
Our Competitive Strengths
The company focuses on profitable niches in the market that require technical underwriting and claims management as barriers to entry p. 4.
The company targets underserved, dislocated, or complex commercial lines P&C markets where standard products are insufficient p. 4.
Risks in core markets require efficient, individual underwriting to generate sustainable underwriting profit p. 4.
The company builds underwriting divisions around deeply experienced underwriters empowered with appropriate authority p. 4.
Underwriters' experience is augmented with data and predictive analytics to differentiate risk selection and pricing while enhancing efficiency p. 4.
The company hires and retains underwriting and technical staff for their expertise and experience p. 4.
Underwriting teams are knowledgeable, experienced, and empowered, which is critical for complex, non-automatable risks p. 4.
The company allows professionals freedom to use expertise and judgment in evaluating and pricing risks, rather than imposing strict underwriting rules p. 4.
The company has a specialized team of claims professionals knowledgeable about their niches and lines of business p. 4.
Claims professionals address first-party claims with fair solutions and third-party claims with comprehensive responses, aiming for consistent and early loss recognition of indemnity and loss adjustment expenses (LAE) p. 4.
The company responds quickly to claims with specialized adjusters using expertise, advanced technology, and analytics p. 4.
Technology is deeply embedded in the claims process, from first notice of loss to investigation and settlement p. 4.
Analytics capabilities provide real-time, detailed information on open claims and benchmarks against closed claims for senior leadership and claims teams p. 4.
SkyBI, the company's business intelligence platform, provides real-time intelligence for superior decision-making to senior leadership and technical teams p. 4.
SkyBI reflects best practices learned from management's experience in P&C insurance and technology sectors p. 4.
SkyBI is a single, comprehensive enterprise-wide data repository for reporting, business intelligence, analytics, and advanced data capabilities p. 4.
SkyBI provides information and performance metrics across the company in an easy-to-consume visualized format p. 4.
Data in SkyBI can be filtered by categories such as distributor, customer segment, line of business, industry, individual underwriter, and specific risk feature p. 4.
The company believes every underwriting and claims decision can be augmented with new types of risk data and advanced technology p. 4.
Underwriting decisions are backed by historical data and in-depth risk evaluation from intentional investment in data collection and processing p. 4.
Underwriting and claims capabilities are amplified by combining data with new forms of risk data and predictive analytics p. 4.
The company utilizes generative artificial intelligence in underwriting and claims handling to aid effectiveness and efficiency, while still relying on employee expertise p. 4.
The company has built a diversified group of underwriting divisions across multiple product lines, industries, geographies, and distribution channels p. 4.
The diversified business includes operations not typically aligned with traditional P&C cycles p. 4.
The company aims to evolve with and adapt to the market, growing certain lines when conditions are favorable and limiting exposure when conditions are less favorable p. 4.
The diversity of the book allows the company to respond to and capitalize on market opportunities and dislocations across insurance market and pricing cycles p. 4.
The company has a distinctive winning culture, evidenced by internal surveys, public information (Glassdoor, LinkedIn), and selection as a "Best Places to Work in Insurance" p. 4.
Key to the culture is a flat structure of communication and decision-making p. 4.
Staff are trusted to make decisions that produce or exceed desired financial results and are supported by a clear system of performance measurement p. 4.
The company adopted a hybrid work schedule, providing employees with remote working flexibility p. 4.
The company maintains an entrepreneurial environment that encourages and rewards a proactive approach to capitalize on market disruption p. 4.
The leadership team is experienced, innovative, and entrepreneurial, with a track record of success in senior management roles at industry-leading P&C companies and in building new businesses p. 4.
The leadership team is led by Chairman and CEO, Andrew Robinson p. 4.
Senior leadership compensation is structured to align with shareholders, with a material portion in long-term and short-term incentives tied to delivering sustainable underwriting returns p. 4.
Executive leadership has additional long-term incentive targets tied directly to growth in book value per share p. 4.
Our Strategy in Action
The company's "Rule Our Niche" strategy guides all activities from recruiting to claims resolution p. 5.
The strategy aims to achieve best-in-class underwriting profitability within niches and create superior long-term shareholder value through growth in book value per share p. 5.
Core tenets of the "Rule Our Niche" strategy include attracting and retaining blue-chip underwriting and claims talent p. 5.
The company seeks to hire technical underwriting professionals with long-standing industry relationships and claims professionals with expertise in their niches to ensure steady access to preferred business p. 5.
The company believes it is a preferred employer for top talent in the industry and plans to grow its market position by recruiting world-class talent in chosen markets p. 5.
Another core tenet is leveraging technology to differentiate from competitors p. 5.
The company has demonstrated an ability to use new risk data forms and advanced technology in complex, high-severity specialty P&C insurance market categories p. 5.
SkyBI allows for prompt sensing and quick response to market changes p. 5.
Core operating platforms enable efficient entry into new markets without complex system burdens p. 5.
The company's technological advantage is believed to position it for profitable growth and expansion into additional specialty market niches p. 5.
A further tenet is profitably growing existing lines of business and expanding with new underwriting divisions p. 5.
The company is positioned to capitalize on trends affecting customers in the U.S. and globally p. 5.
One trend is the rising demand for specialized insurance due to increasing and complex risks from climate change, severe weather, supply chain uncertainty, financial inflation, cyber risk, novel health risks, increased litigation, attorney involvement, jury awards, and healthcare delivery/cost p. 5.
Another market trend is the emergence of "micro cycles and micro dislocations" where P&C insurance market segments experience hardening and softening at different times p. 5.
The company has responded quickly to these trends by launching new underwriting units (some not aligned with P&C cycles), entering underserved markets, partnering on advanced technology, and launching new captive solutions p. 5.
Gross written premium growth and profitability indicate momentum and position the company for continued expansion and growth p. 5.
Differentiating on daily excellence to drive best-in-class underwriting performance is also a core tenet p. 5.
Meeting long-term goals, including best-in-class underwriting returns and book value per share growth, depends on day-to-day operational execution across all functional departments (underwriting, product management, claims management) p. 5.
SkyBI provides senior management with a foundation to monitor performance, including renewal rates, new business pricing, portfolio performance for underwriters, and claims aging, reserving practices, and outcomes for adjusters p. 5.
Focus on fundamentals driving underwriting excellence is central to the strategy p. 5.
Cross-functional collaboration ensures underwriting, claims, actuarial, and product management teams regularly review performance and trends to implement portfolio, pricing, and coverage changes quickly p. 5.
The company aims to use its balance sheet to capture a larger market share p. 5.
The company is committed to maintaining a strong balance sheet, starting with conservative loss reserves and strong capitalization ratios p. 5.
This commitment is considered imperative for maintaining confidence among customers, distribution partners, reinsurers, regulators, rating agencies, and shareholders p. 5.
Claims case reserve practices aim to reserve to the expected ultimate loss within 90 days of the first notice of loss p. 5.
The company's practice is to maintain incurred but not reported reserves (IBNR) that, combined with case reserves, exceed the actuarial central estimate p. 5.
Loss reserves represent the company's best estimate of ultimate losses p. 5.
Marketing and Distribution
Marketing and distribution approach mirrors underwriting approach and is a key facet of the "Rule Our Niche" strategy p. 6.
Underwriting teams and the Company have strong relationships with distribution partners and strong reputations, which helps establish affiliations with new partners p. 6.
Distribution partners are attracted by deep expertise in niche markets, high-caliber underwriters, culture of innovation, thoughtful product line-up and design, and speed and quality of responsiveness p. 6.
Underwriting divisions invest significant time and effort to sustain and expand distribution partner loyalty and long-term relationships p. 6.
Choice of distribution partners is tailored to access specific business the Company seeks to write p. 6.
Products are distributed through retail agents, wholesale brokers, select program administrators, and captive managers p. 6.
Distribution approach allows effective and efficient access to targeted business based on market niche needs and dynamics p. 6.
Underwriting
The company's underwriting approach is integral to its "Rule Our Niche" strategy and market success p. 7.
Within its nine divisions, the company further specializes underwriting teams to focus on specific niches within their respective markets p. 7.
The underwriting approach is built on hiring highly experienced, best-in-class, and diverse teams of technical underwriters with proven track records in specific specialty niche markets p. 7.
Underwriters' skill sets are enhanced with advanced technology and data analytics, and they are given appropriate decision-making authority p. 7.
This approach is considered key to superior risk selection, pricing, and achieving sustainable best-in-class underwriting results across market cycles p. 7.
The company aims to improve underwriting professionals' capabilities and experience using new data and analytics for risk selection and pricing p. 7.
Underwriting data is captured in the company's business intelligence platform, SkyBI p. 7.
SkyBI serves as a comprehensive data repository for reporting, analytics, and other data capabilities, and is a key tool for senior management and business leaders p. 7.
The company is highly selective in the policies it binds p. 7.
Underwriters are encouraged to move on quickly from prospective opportunities if they cannot reasonably expect to bind coverage at premium and coverage terms that meet company standards p. 7.
When accepting risks, the company carefully establishes terms and prices suited to the underlying exposure p. 7.
In the admitted market, the company ensures approved forms and filed rates are appropriate and adequate for accepted risks, while allowing flexibility for specific/unique exposures p. 7.
In the E&S market, the company uses freedom of rate and form to ensure risk and coverage are appropriate for unique needs and exposures p. 7.
The company endeavors to craft policies that offer affordable and appropriate protection for insureds' exposures, while structuring coverage to make potential losses more predictable and claims costs manageable p. 7.
Underwriting teams receive support and collaboration from Claims, Actuarial, Product Management, Legal and Compliance, and Finance departments p. 7.
This collaboration ensures that trends in business, legal and tort developments, and competitor and regulatory actions are analyzed, shared, and acted upon promptly p. 7.
Underwriters are viewed as central to the company, with all support functions incentivized and measured to help achieve underwriting profitability targets p. 7.
This structure helps identify opportunities and issues early, contributing to the company's nimbleness and ability to capitalize on market disruptions p. 7.
Underwriting controls and procedures are regularly reviewed to ensure underwriters operate with clear visibility to profitably underwrite each market served p. 7.
Claims Management
Skyward's claims department operates under six guiding principles: prompt and comprehensive claim investigations using advanced analytics and technology; quality claims handling service with customer engagement; timely establishment of reserves reflecting best estimates of ultimate loss; effective pursuit of contribution and subrogation; detection and prevention of fraud; and disciplined litigation management for superior legal defense and cost monitoring p. 8.
Continuous training is provided to claim staff on claim evaluation, strategy, litigation management, good-faith claims handling, and best practices p. 8.
The ultimate goal of the claims department is to achieve timely and optimal claim outcomes p. 8.
The majority of claims are handled in-house p. 8.
Third Party Administrators (TPAs) are utilized for certain instances, such as programs, captives, occupational accident, workers' compensation, and runoff claims p. 8.
TPAs are actively managed, overseen, and monitored to ensure compliance with claims handling and reserving guidelines and best practices p. 8.
Regular audits of TPAs are conducted to ensure compliance p. 8.
For liability claims against an insured, independent legal counsel is retained based on geographical location and expertise p. 8.
Litigation guidelines have been developed for claims professionals and outside counsel to ensure appropriate defense and reasonable legal costs p. 8.
A legal spend management solution is used to analyze legal invoices for adherence to case handling and billing practice standards p. 8.
Technology is leveraged to gain efficiencies in claims handling, including a Claims Development Severity Predictor p. 8.
The Claims Development Severity Predictor identifies claims likely to lead to large loss development by training on key phrases, allowing for early identification, proactive management, and summarization p. 8.
This predictive model is integrated into the claims review and management workflow p. 8.
A "quick strike" program has been implemented for commercial auto claims to respond to claim reports p. 8.
The "quick strike" program deploys experienced investigators and vendors to accident scenes, ideally within two hours, to evaluate facts and circumstances and facilitate quick resolution of third-party claims if appropriate p. 8.
Claims handlers and managers are organized by line of business to ensure specialized expertise p. 8.
Claims managers and adjusters collaborate closely with underwriting partners to inform them of legal trends and emerging claims issues p. 8.
The goal of this collaboration is to educate underwriters on emerging loss experience to assist in risk selection processes p. 8.
Technology
Technology is central to the company's operations and decision-making, aiming to drive long-term success p. 9.
The company deploys technology to gain competitive advantages in three primary functional areas p. 9.
SkyBI, the company's business intelligence platform, provides real-time intelligence to senior leadership and technical teams for decision-making p. 9.
SkyBI incorporates best practices from the management team's experience in the P&C insurance and technology sectors p. 9.
SkyBI serves as a single, comprehensive enterprise-wide data repository for reporting, business intelligence, analytics, and advanced data capabilities p. 9.
SkyBI provides information and performance metrics across the company in an easy-to-consume visualized format p. 9.
Data in SkyBI can be filtered by categories such as distributor, customer segment, line of business, specific industry, individual underwriter, and specific risk feature p. 9.
SkyBI helps establish clear objectives and facilitates decision-making p. 9.
Predictive analytics technology is used to augment employee capabilities daily, utilizing new risk data and artificial intelligence for risk selection, pricing, and claims handling p. 9.
Within each underwriting division, actions are intentional to "Rule Our Niche" p. 9.
The company aims for constant innovation, with actions specific to each division/market served p. 9.
Core transactional platforms, including policy administration, underwriting workbench, billing, and claims systems, are designed for nimble scaling and business expansion p. 9.
The company generally uses customized third-party vendor core operating applications p. 9.
The core platform organization is used for all business except for accident & health, global property, agriculture and credit (re)insurance, and surety, which require dedicated core processing components due to their unique features p. 9.
Data from all divisions' core operating platforms flows to the SkyBI platform with comparable data quality and granularity p. 9.
The use of advanced technology for underwriting and claims, SkyBI, and core operating platforms creates a flywheel effect p. 9.
This flywheel effect allows underwriters to better select risk, claims professionals to better adjudicate claims, unit leaders to better communicate with reinsurance and third-party partners, and senior leadership to better evaluate business trends p. 9.
These tools also enable more accurate, effective, and efficient communication with distribution partners, reinsurers, and other third-party partners p. 9.
The company faces external threats to its information technology systems, including system failure, customer data theft attempts, and ransomware attacks p. 9.
The technology infrastructure is designed to function through major disruptions p. 9.
Data is replicated in real-time to a third-party cloud disaster recovery site for use during major system failures p. 9.
Data is backed up daily for system restoration p. 9.
Actions to prevent system and data disruptions include: actively monitoring Cybersecurity and Infrastructure Security Agency’s (“CISA”) cybersecurity directives and taking immediate action on identified vulnerabilities p. 9.
Monthly vulnerability scans are conducted on all network-attached devices at all locations, with patching applied as needed p. 9.
Two-factor authentication is required for access to all systems p. 9.
Monthly security training is provided for all employees p. 9.
Endpoint detection agents are implemented for threat detection and response p. 9.
Desktop scenarios are performed to practice responses to breaches, involving cybersecurity insurance partners and retained security consultants p. 9.
Annual penetration testing is conducted p. 9.
The company constantly reviews its security breach posture and regularly implements updated processes, best practices, and tools p. 9.
Reinsurance
Reinsurance is purchased from third parties to protect capital from severity events (large single event losses or catastrophes) and reduce earnings volatility p. 10.
Reinsurance contracts are predominantly one year in length and renew annually, primarily in January and June p. 10.
Factors influencing reinsurance purchase changes at annual renewal include plans to change underlying insurance coverage, updated loss activity, capital and surplus levels, changes in risk appetite, and the cost and availability of treaties p. 10.
The company purchases quota share, excess of loss, and facultative reinsurance to limit exposure from losses on any one occurrence p. 10.
The mix of reinsurance purchased considers efficiency, cost, risk appetite, and specific factors of underlying risks p. 10.
Quota share reinsurance involves the reinsurer assuming a specified percentage of the ceding company’s losses from a defined business class in exchange for a corresponding percentage of premiums, net of a ceding commission p. 10.
Excess of loss reinsurance involves the reinsurer assuming all or a portion of the ceding company’s losses for an individual claim or event above a specified amount, in exchange for a negotiated premium, including the catastrophe reinsurance program p. 10.
Facultative coverage is a reinsurance contract for individual risks, used to supplement treaty limits or cover risks/perils excluded from treaty reinsurance p. 10.
As of December 31, 2025, property insurance represented 34% of gross written premiums p. 10.
The company manages and monitors property writings aggregation by geographic area to limit potential loss from severe events like hurricanes, convective storms, and earthquakes p. 10.
Catastrophe reinsurance is purchased to mitigate property losses from single or series of events p. 10.
Third-party stochastic and internal deterministic models are used to analyze aggregation risk for catastrophe reinsurance purchases p. 10.
These models provide a quantitative view of PML (Probable Maximum Loss) events, estimating loss levels for a given return period p. 10.
Based on modeling, an event beyond a 1 in 250-year PML would be required to exhaust the property catastrophe coverage of $36.0 million p. 10.
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 p. 10.
The current reinsurance program is believed to provide coverage well in excess of theoretical losses from any recorded historical event p. 10.
The company seeks to purchase reinsurance from reinsurers rated at least “A-” (“Excellent”) or better by A.M. Best p. 10.
As of December 31, 2025, 98% of reinsurance recoverables were from reinsurers rated “A-” (Excellent) or better by A.M. Best, or were collateralized p. 10.
If reinsurers fail to pay claims, the company retains primary liability to policyholders, potentially resulting in losses p. 10.
Allowances for uncollectible reinsurance are established due to the risk of reinsurer failure p. 10.
The allowance for uncollectible reinsurance was $2.3 million at December 31, 2025, and December 31, 2024 p. 10.
Maximum company retention by line of business
Line of Business
Maximum Company Retention
Accident & Health
$0.90 million per occurrence
Commercial Auto (1)
$1.00 million per occurrence
Excess Casualty (1)(2)
$2.25 million per occurrence
General Liability (1)
$1.50 million per occurrence
Ocean Marine (2)
$3.00 million per occurrence
Professional Lines (2)
$5.25 million per occurrence
Property (3)
$3.50 million per occurrence
Representation and Warranty
$3.25 million per occurrence
Surety (2)
$5.00 million per occurrence
Workers’ Compensation (2)
$2.33 million per occurrence
(1) Legal defense expenses can force exposure above the maximum company retention for Excess Casualty, Commercial Auto and General Liability.
(2) Reinsurance is subject to a loss ratio cap or aggregate level of loss cover that exceeds a modeled 1:250-year PML event.
(3) Catastrophe loss protection is purchased up to $36.0 million in excess of $12.0 million retention, which provides cover for a 1:250-year PML event.
Reinsurance by company
($ in thousands)
Reinsurer
Reinsurance Recoverables
AM Best Rating
eMaxx Capitves (1)
197,989
n/r
Everest Reinsurance Co.
123,925
A+
General Reinsurance Corp
70,355
A++
Partner Reinsurance Co. of the US
65,446
A+
ACE (Chubb Property & Casulty Ins Company)
48,344
A+
RGA Reinsurance Company
43,043
A+
Lloyds Syndicate 4711
35,860
A+
Swiss Reinsurance America Corp
26,152
A+
Lloyds Syndicate 2987
25,301
A+
Aspen Insurance UK Limited
24,715
A
Top 10 Total
661,130
—
All Others
458,750
—
Total
1,119,880
—
(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.
Enterprise Risk Management
Enterprise Risk Management (ERM) is integrated into nearly every aspect of the company and guides daily activities p. 11.
The ERM approach aims to achieve an acceptable risk-adjusted return for shareholders while maintaining trust and reliability for those served p. 11.
The company is intentional in its underwriting and asset portfolio construction p. 11.
An example of ERM application is balancing liability duration and market cyclicality of the underwriting portfolio p. 11.
Reinsurance is used to manage volatility outside of defined risk tolerances p. 11.
The investment strategy focuses on a diversified target portfolio that balances yield, liquidity, volatility, and potential for principal loss p. 11.
The Senior Vice President (SVP), Chief Financial Officer (CFO) & Head of ERM - US Operations oversees critical ERM processes and chairs the cross-functional corporate ERM Committee p. 11.
The company formalizes its view of risk and solvency using an Economic Capital Model (ECM) to measure potential economic loss p. 11.
The ECM output is used to measure potential earnings and capital loss across various scenarios p. 11.
These outputs are measured against risk tolerances set and updated annually by the ERM Committee and discussed with the Risk Committee of the Board of Directors p. 11.
The ECM provides a probabilistic modeled view of earnings and capital loss, incorporating potential losses from catastrophes, reserving, underwriting, market, credit risk, strategic, and operational risks p. 11.
The SVP, CFO & Head of ERM, in collaboration with the ERM Committee, reviews and maintains a comprehensive risk register with accountabilities for mitigation and monitoring p. 11.
The top 10 risks are identified, quantified by the SVP, CFO & Head of ERM and the ERM Committee, and reviewed quarterly p. 11.
Reports on these risks are submitted to the Risk Committee regularly by the SVP, CFO & Head of ERM and the ERM Committee p. 11.
Operational processes and controls are constructed to identify, assess, and manage key risks continuously p. 11.
The Underwriting Committee is responsible for overseeing changes in risk appetite, product line, and division expansion p. 11.
Within Claims, practices are monitored against guidelines through regular internal audits, monthly large loss reviews are conducted, and a watchlist of potential high severity claims is maintained p. 11.
Within Actuarial, quarterly reserve studies are performed, and the Reserve Committee meets quarterly to review and respond to trends in loss emergence p. 11.
Key observations from Actuarial are discussed with the CEO p. 11.
Monthly and quarterly, underwriting divisions assess rate change and retention on existing business, new business quality and pricing adequacy, and loss emergence compared to expectations p. 11.
The SkyBI platform provides real-time portfolio, underwriting, claims, and actuarial analytics to support these processes p. 11.
ERM is central to decision-making and daily activities, aiming to achieve market-leading risk-adjusted returns for shareholders and reinforce a culture of accountability, transparency, and sound judgment p. 11.
Reserves
Reserves are maintained for specific claims incurred and reported, IBNR reserves, and uncollectible reinsurance when appropriate p. 12.
The ultimate liability may differ from current reserves, and there is always a risk of inadequate reserves in the insurance industry p. 12.
Reserves are continually monitored using new information on reported claims and statistical analyses p. 12.
Anticipated inflation is implicitly reflected in the reserving process through cost trend analysis and historical development review p. 12.
Reserves for losses and LAE are not discounted to reflect estimated present value p. 12.
When a claim is reported, a case reserve is established for the estimated ultimate payment after assessing coverage, damages, and other investigations p. 12.
Case reserve estimates are based on reserving practices and the claims adjuster's experience and knowledge of the claim's nature and value p. 12.
Case reserves are revised periodically based on subsequent developments p. 12.
IBNR reserves are established in accordance with industry practice to cover estimated future loss payments on incurred claims not yet reported and potential development on reported claims p. 12.
IBNR reserves are estimated using generally accepted actuarial reserving techniques that consider quantitative loss experience data and qualitative factors p. 12.
Loss reserves are regularly reviewed using various actuarial techniques p. 12.
Reserve estimates are updated as historical loss experience develops, additional claims are reported and/or settled, and new information becomes available p. 12.
Reserves can be increased or decreased over time as claims move towards settlement, impacting earnings through adverse development or reserve releases p. 12.
For additional information on loss reserves, refer to 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.
Investments
The company aims to maintain a balanced investment portfolio primarily consisting of investments that provide predictable and stable returns, complemented by strategic investments for attractive risk-adjusted returns p. 13.
An Enterprise Based Asset Allocation model is used for the company's investment allocation strategy p. 13.
This model is integrated into the Economic Capital Model, allowing the company to assess the impact of investment allocation decisions on capital, liquidity, and risk profile across various market scenarios p. 13.
The company actively manages and monitors investment risk to balance stable growth and liquidity with compliance to insurance regulatory and rating agency frameworks p. 13.
The investment portfolio mainly consists of cash and cash equivalents and investment-grade fixed-maturity securities, with additional investments fitting the company's risk appetite p. 13.
The Investment Committee of the Board of Directors reviews and approves the company's investment policy and strategy p. 13.
This committee meets quarterly to review investment activities, tactics, and new investment opportunities p. 13.
The portfolio is managed both internally and by selected third-party investment management firms p. 13.
Additional discussion on investments and related market risks can be found in Item 7 of this Form 10-K, "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Investments" p. 13.
Competition
The specialty lines property & casualty insurance market includes many distinct markets and sub-markets, each with unique customer needs, products, services, and economic/structural features p. 14.
Competition in underwriting divisions comes from other specialty and standard insurers, as well as program administrators p. 14.
Competition factors include pricing, general reputation, perceived financial strength, broker relationships, product terms and conditions, independent rating agency ratings, speed and reputation of claims payment, and the experience/reputation of underwriting and claims teams p. 14.
Due to the diversity of underwriting divisions, competition is broad, with some competitors specific to certain divisions 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.
Our Structure
Operations are conducted principally through four insurance companies p. 15.
Great Midwest Insurance Company (GMIC) is the largest insurance subsidiary, underwriting multiple lines on an admitted basis in all 50 states and the District of Columbia p. 15.
GMIC is a certified surety bond company listed with the Department of the Treasury p. 15.
Houston Specialty Company (HSIC), a subsidiary of GMIC, underwrites multiple lines on a surplus lines basis in 50 states, the District of Columbia, and select foreign countries p. 15.
Imperium Insurance Company (IIC), a subsidiary of HSIC, underwrites on an admitted basis in all 50 states and the District of Columbia p. 15.
Oklahoma Specialty Insurance Company (OSIC), a subsidiary of IIC, is an approved surplus lines company in 49 states and the District of Columbia p. 15.
Effective December 31, 2024, the insurance company subsidiaries were restacked into the current organizational structure p. 15.
This restacking provided the growing surety business with the capital needed to operate more effectively within the surety T-listing market p. 15.
Skyward Re is a wholly-owned captive reinsurance company domiciled in the Cayman Islands, incorporated on January 7, 2020 p. 15.
Skyward Re was established to facilitate the LPT, which was commuted effective January 31, 2025 p. 15.
Three non-insurance companies are also operated: Skyward Underwriters Agency, Inc., Skyward Service Company, and Skyward Specialty No. 1 Limited Company p. 15.
Skyward Underwriters Agency, Inc. is a licensed agent, managing general agent, and reinsurance broker p. 15.
Skyward Service Company provides various administrative services to subsidiaries p. 15.
Skyward Specialty No. 1 Limited Company is a UK company and an authorized Lloyd’s corporate member p. 15.
The organizational structure at December 31, 2025, shows each entity is wholly-owned by its immediate parent p. 15.
SKYWARD SPECIALTY INSURANCE GROUP, INC. (Delaware corporation) is the top entity p. 15.
Direct subsidiaries of SKYWARD SPECIALTY INSURANCE GROUP, INC. include: SKYWARD SERVICE COMPANY (Delaware corporation), GREAT MIDWEST INSURANCE COMPANY (Texas stock insurance company), SKYWARD UNDERWRITERS AGENCY, INC. (Texas corporation), SKYWARD SPECIALTY NO. 1 LIMITED (United Kingdom company), and SKYWARD RE (Cayman Islands corporation) p. 15.
GREAT MIDWEST INSURANCE COMPANY (Texas stock insurance company) has HOUSTON SPECIALTY INSURANCE COMPANY (Texas stock insurance company) as its direct subsidiary p. 15.
HOUSTON SPECIALTY INSURANCE COMPANY (Texas stock insurance company) has IMPERIUM INSURANCE COMPANY (Texas stock insurance company) as its direct subsidiary p. 15.
IMPERIUM INSURANCE COMPANY (Texas stock insurance company) has OKLAHOMA SPECIALTY INSURANCE COMPANY (Oklahoma insurance corporation) as its direct subsidiary p. 15.
Direct subsidiaries by state
—
2025
Texas
10.7%
Pennsylvania
7.6
Florida
7.2
California
7.1
New York
6.3
Louisiana
6.1
Illinois
4.1
New Jersey
4.1
Georgia
3.8
Delaware
3.1
All other states and countries
39.9
Total
100.0%
Our Structure
Ratings
Skyward Specialty Insurance Group, Inc. holds an "A" (Excellent) rating with a stable outlook from A.M. Best p. 16.
A.M. Best rates insurance companies based on factors relevant to policyholders p. 16.
A.M. Best assigns 13 ratings to insurance companies, ranging from "A++" (Superior) to "D" (Poor) p. 16.
The "A" (Excellent) rating is the third highest rating assigned by A.M. Best p. 16.
A.M. Best evaluates a company's financial and operating performance by reviewing profitability, leverage, liquidity, book of business, reinsurance adequacy and soundness, quality and estimated market value of assets, adequacy of losses and loss expense reserves, surplus adequacy, capital structure, management experience and competence, and market presence p. 16.
A.M. Best's ratings reflect its opinion on an insurance company’s financial strength, operating performance, and ability to meet obligations to policyholders p. 16.
These 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.
Regulation
The company is regulated by insurance regulatory authorities in the states where it conducts business p. 17.
State insurance laws and regulations are primarily designed to protect policyholders, consumers, and claimants, not stockholders or other investors p. 17.
State regulation varies by jurisdiction and typically grants broad administrative power to regulators over matters such as capital and surplus requirements, licensing, product form and rate review, reserve adequacy standards, statutory accounting methods, financial report content, affiliate transactions, and investment types and amounts p. 17.
Insurance company regulation is constantly changing due to governmental agency and legislative reactions to perceived issues p. 17.
Some state legislatures have considered or enacted laws that increase state authority to regulate insurance companies and holding company systems to prevent federal involvement p. 17.
The National Association of Insurance Commissioners (NAIC) and some state insurance regulators are re-examining existing laws and regulations, focusing on insurer solvency, interpretations of current laws, and development of new laws p. 17.
The federal government does not directly regulate insurance, but federal initiatives can affect the industry through treatment of federal subsidiaries, regulation of quasi-governmental entities, and regulations from federal departments p. 17.
The company operates as an insurance holding company system p. 17.
The company is subject to insurance holding company laws in Texas, where its primary insurance companies are domiciled, and Oklahoma p. 17.
These statutes require each insurance company in the system to register with its state of domicile's insurance department p. 17.
Registered companies must provide information on operations within the holding company system that could materially affect the operations, management, or financial condition of domiciled insurers p. 17.
All transactions among members of a holding company system must be fair and reasonable p. 17.
Transactions between insurance subsidiaries and their parents/affiliates generally require disclosure to state regulators p. 17.
Notice to or prior approval from the applicable state insurance regulator is generally required for any material or extraordinary transaction p. 17.
Intellectual Property
The company has applied for various trademark registrations in the United States at both federal and state levels p. 18.
The company will pursue additional trademark registrations and other intellectual property protection if deemed beneficial and cost-effective p. 18.
The company monitors its trademarks and service marks and protects them from unauthorized use as necessary p. 18.
Employees and Human Capital
Employees: approximately 611 as of December 31, 2025 p. 19.
Employees are not subject to any collective bargaining agreement, and there are no known current efforts to implement one p. 19.
The company believes it has good working relations with its employees p. 19.
The company aims to be an employer of choice, including outside of the insurance sector p. 19.
The company strives to create a culture that fosters diversity of thought, background, and perspective p. 19.
The company cultivates an exceptional workforce to perpetuate its ownership culture and achieve superior business results p. 19.
The company's goal is to attract, develop, and retain diverse talent, promoting a culture where different viewpoints are valued, and individuals feel respected, treated fairly, and have opportunities to excel p. 19.
The company offers a competitive benefits package to support employee well-being, including medical, dental, and vision insurance, a 401(k) plan, paid time off, family leave, employee assistance programs, and an employee stock purchase plan p. 19.
The company emphasizes employee training and development, providing opportunities for further education and professional development p. 19.
Risk Factors
Investing in the company's common stock involves a high degree of risk p. 20.
Investors should carefully consider the risks and uncertainties described in the report, including consolidated financial statements and related notes, and other SEC filings, before investing in common stock p. 20.
The described risks and uncertainties are not exhaustive; additional unstated, unknown, or currently immaterial risks may also become significant factors p. 20.
If any of the identified risks occur, the company's business, operating results, financial condition, and prospects could be materially harmed p. 20.
Such events could lead to a decline in the price of the common stock, potentially resulting in a loss of part or all of an investment p. 20.
Summary of Material Risk Factors
Financial condition and results of operations could be materially adversely affected if underwriting risk is not accurately assessed p. 21.
Competition in the industry is intense p. 21.
Reliance on distribution channels (insurance retail agents and brokers, wholesalers, program administrators) exposes the business to risks that could adversely affect results p. 21.
Inability to purchase third-party reinsurance on desired or commercially acceptable terms could materially adversely affect the business, financial condition, and results of operations p. 21.
Inadequate losses and loss expense reserves could materially adversely affect financial condition, results of operations, and cash flows p. 21.
Decline in financial strength rating may adversely affect the amount of business written p. 21.
Unexpected changes in interpretation of coverage or provisions (including loss limitations and exclusions) in policies could materially adversely affect financial condition and results of operations p. 21.
Reinsurers may not reimburse claims on a timely basis or at all, which may materially adversely affect the business, financial condition, and results of operations p. 21.
Failure to accurately and timely pay claims could materially and adversely affect the business, financial condition, results of operations, and prospects p. 21.
Adverse economic factors (recession, inflation, high unemployment, lower economic activity) could lead to fewer policy sales, increased claim frequency, premium defaults, or falsification of claims, impacting growth and profitability p. 21.
Cyclical nature of the insurance business may affect financial performance and cause operating results to vary quarterly, not indicative of future performance p. 21.
Extensive regulation may adversely affect the ability to achieve business objectives; non-compliance could result in penalties (fines, suspensions) affecting financial condition and results of operations p. 21.
Loss of key personnel or inability to attract and retain qualified personnel could adversely affect the company p. 21.
Failure to achieve and maintain effective internal controls could impact operating results and financial condition, and negatively affect the market price of common stock p. 21.
Costs will increase significantly due to operating as a public company, requiring substantial management time for compliance with public company regulations p. 21.
Use of derivatives to mitigate market price volatility exposure may subject the company to risks such as hedge ineffectiveness, basis risk, collateral and margin call liquidity pressures, and valuation uncertainty, which could adversely affect financial condition p. 21.
Integration of Apollo may present unforeseen challenges, including difficulties with technology systems, business processes, and risk management frameworks, potentially leading to operational disruptions, increased costs, or delays in realizing anticipated strategic benefits p. 21.
Risks Related to Our Business and Industry
Underwriting success depends on accurately assessing risks and establishing appropriate premium rates p. 22.
Employee decisions, including management and underwriters, expose the company to risk p. 22.
Competition in the insurance industry is intense, based on factors like price, reputation, financial strength, distribution relationships, product terms, ratings, claims payment speed, and underwriting team experience p. 22.
Industry consolidation and new legislative developments could increase competition p. 22.
Increased competition may affect the ability to price products, retain existing business, or underwrite new business on favorable terms, potentially impacting operating results p. 22.
Reliance on distribution channels (retail agents, brokers, wholesalers, program administrators) exposes the company to risks p. 22.
Distribution through independent retail agents and brokers means the company's business model depends on these relationships, as agents and brokers generally own "renewal rights" p. 22.
Relationships with distributors can be discontinued or become unprofitable p. 22.
Consolidation of insurance distribution firms may increase their influence on commission rates and concentrate business with particular brokers p. 22.
Credit risk is assumed when brokers collect premiums directly from policyholders, as payment to the broker may be considered payment to the insurer in certain jurisdictions, even if the company does not receive the premium p. 22.
Failure of brokers to remit premiums could require the company to provide coverage despite non-payment, potentially declining underwriting profits and adversely affecting financial condition p. 22.
Review of financial condition for new brokers and periodic review of existing distributors are conducted to ensure profitability and alignment with business objectives p. 22.
Restrictions or termination of distributor relationships may occur if they do not meet profitability standards or business objectives, subject to contractual and regulatory requirements p. 22.
Deterioration of distributor relationships or uncompetitive compensation could lead distributors to place more premium with other carriers p. 22.
Distributors exceeding authority, failing to transfer collected premiums, or breaching obligations could expose the company to liability p. 22.
Continued consolidation of insurance distribution firms could affect sales channels through loss of market access, market share, talent, or increased commission costs due to greater negotiating leverage p. 22.
Digitization acceleration poses risks related to distributors' ability to keep pace, as customers may prefer technology-driven experiences p. 22.
Inability to purchase third-party reinsurance on desired or commercially acceptable terms could materially adversely affect the business p. 22.
Strategic purchase of reinsurance protects capital from severity events and reduces earnings volatility p. 22.
Failure to renew or enter new reinsurance arrangements on acceptable terms could increase loss exposure, potentially requiring a reduction in underwriting commitments p. 22.
Reinsurers may exclude certain coverages or alter terms, creating gaps in reinsurance protection and exposing the company to greater risk and potential losses p. 22.
Inadequate loss and loss expense (LAE) reserves could materially adversely affect financial condition, results of operations, and cash flows p. 22.
Reserves are estimates of ultimate claim settlement and administration costs, and actual liability may differ p. 22.
Reserving process reviews historical data and considers factors such as claims inflation, claims development patterns, pricing, legislative activity, social/economic patterns, and litigation/judicial/regulatory trends p. 22.
Variables affecting loss exposure are influenced by internal and external events, requiring continuous monitoring of loss reserves using new information and statistical techniques p. 22.
Uncertainties impacting reserve adequacy include:
Time required to fully assess covered losses, leading to potential increases in loss estimates and inadequate reserves p. 22.
Retroactive enforcement of new theories of liability by courts, potentially nullifying loss limitations or exclusions p. 22.
Volatility in financial markets, economic events, and inflation increasing claim frequency/severity and loss costs p. 22.
"Social inflation" (e.g., increased medical/material costs, attorney involvement, litigation financing) increasing claim frequency/severity and affecting reserve adequacy p. 22.
Increased claim frequency, even without liability, escalating evaluation and handling costs beyond established reserves p. 22.
Inadequate reserves would require increases, reducing net income and stockholders' equity in the period identified p. 22.
Future loss experience substantially exceeding reserves could materially adversely affect future earnings, liquidity, and financial rating p. 22.
Decline in financial strength rating may adversely affect the amount of business written p. 22.
A.M. Best financial strength rating is "A" (Excellent) with a stable outlook as of the filing date p. 22.
A.M. Best ratings are an independent opinion of an insurer's ability to meet policyholder obligations, not an evaluation for investors p. 22.
Factors that could lead to a rating downgrade by A.M. Best include:
Changes in business practices from the organizational plan that no longer support the rating p. 22.
Unfavorable financial, regulatory, or market trends, including excess market capacity p. 22.
Losses exceeding loss reserves p. 22.
Unresolved issues with government regulators p. 22.
Inability to retain senior management or other key personnel p. 22.
Significant investment portfolio losses or limited liquidity p. 22.
Alterations in A.M. Best's capital adequacy assessment methodology that adversely affect the rating p. 22.
A rating downgrade or withdrawal could cause distribution partners and insureds to choose competitors, increase reinsurance costs or reduce availability, or limit/prevent writing new and renewal insurance contracts p. 22.
Increased scrutiny by rating organizations due to financial pressures on institutions could lead to adverse ratings consequences p. 22.
Unexpected changes in interpretation of coverage or policy provisions (including loss limitations and exclusions) could materially adversely affect financial condition and results of operations p. 22.
Enforceability of loss limitations or exclusions is not assured, as industry practices and legal/judicial/social conditions change p. 22.
Courts or regulatory authorities could nullify limitations/exclusions, or legislation could modify/bar their use, leading to higher than anticipated losses and LAE p. 22.
Court decisions may interpret policy exclusions narrowly, expanding coverage and requiring new exclusions p. 22.
These issues could broaden coverage beyond underwriting intent or increase claim frequency/severity, with the full extent of liability potentially unknown for years p. 22.
Reinsurers may not reimburse claims timely or at all, materially adversely affecting business, financial condition, and results of operations p. 22.
Reinsurance contracts require premium payments to reinsurers who reimburse for covered policy claims, but the company remains primarily liable to policyholders p. 22.
Reinsurers may default due to insolvency, lack of liquidity, operational failure, prohibitions, fraud, or disputes over agreement wordings, leading to increased net losses p. 22.
Reinsurance recoverables totaled USD 1,119.9m as of December 31, 2025 p. 22.
Failure to accurately and timely pay claims could materially and adversely affect business, financial condition, results of operations, and prospects p. 22.
Factors affecting claims payment include training/experience of claims representatives (including TPAs), management effectiveness, and appropriate procedures/systems p. 22.
Ineffective TPA management or inability of staff/TPAs to handle claim volume could adversely affect workload capacity, potentially slowing growth and decreasing claims work quality p. 22.
Severe weather conditions, climate change effects, catastrophes, pandemics, and man-made events may adversely affect business p. 22.
Catastrophes include natural events (e.g., severe winter weather, storms, earthquakes, fires) and man-made events (e.g., explosions, war, terrorist attacks) p. 22.
Changing weather patterns and climatic conditions increase unpredictability and frequency of natural disasters, including in new areas and existing markets p. 22.
Climate change may increase frequency and severity of extreme weather events, such as hurricanes and wildfires p. 22.
Catastrophe losses can materially adversely affect business, even for events not directly insured against (e.g., 2025 California wildfires), as affected businesses may cancel policies p. 22.
Increased frequency and severity of weather events could impact the ability to predict, quantify, reinsure, and manage catastrophe risk, increasing losses p. 22.
Extent of losses from catastrophes depends on frequency/severity of insured events and total insured exposure in affected areas p. 22.
Unpredictability of catastrophes and severe weather conditions p. 22.
Exposure to losses is managed by analyzing probability and severity of loss events and their impact on underwriting/investment portfolios p. 22.
Indirect impact from catastrophes can occur if insured businesses are affected, leading to inability or unwillingness to pay premiums on other product offerings p. 22.
Inability to obtain reinsurance coverage at reasonable rates for severe weather and catastrophes could materially adversely affect business p. 22.
Exposure to risk from pandemics, outbreaks, public health crises, and geopolitical/social eventsp. 22.
Policy terms and conditions are expected to preclude coverage for virus-related claims, but court decisions and governmental actions may challenge exclusions p. 22.
Changes in climate policy programs and legislation could have a material adverse effect on business p. 22.
Program administrators with quoting and binding authority pose a risk if they fail to comply with guidelines, potentially binding the company to unanticipated risks p. 22.
Marketing and distribution of insurance products through program administrators who sell to insureds via retail agents and brokers p. 22.
Failure of program administrators to comply with underwriting guidelines could adversely affect operating results p. 22.
Failure of actual renewals or new business from repeat insureds to meet expectations could materially adversely affect written premium and future operating results p. 22.
Most contracts are one-year term and renewable; some insureds are repeat customers with new contracts p. 22.
Assumptions about renewal rates and repeat business are made in financial forecasting p. 22.
Cyclical nature of insurance industry with intense price-based competition p. 22.
Increased public attention to ESG matters may expose the company to negative public perception, reputational harm, additional costs, or impact stock price p. 22.
Failure to respond to ESG expectations or backlash related to ESG topics could harm business and reputation p. 22.
Damage to reputation from providing policies to certain insureds could decrease demand for products and require resources to rebuild p. 22.
Changes in accounting practices and future pronouncements may materially affect reported financial results p. 22.
Compliance with new accounting practices may incur considerable additional expenses, especially for retroactive application or comparative purposes p. 22.
Impact of accounting changes on net income, shareholder's equity, and other financial statement line items is unpredictable p. 22.
Insurance subsidiaries must comply with Statutory Accounting Principles (SAP), which are subject to constant review by the NAIC and state insurance departments p. 22.
Pending proposals before NAIC committees could negatively affect insurance industry participants if enacted p. 22.
Use of derivatives to mitigate market price volatility may subject the company to risks such as hedge ineffectiveness, basis risk, collateral/margin call liquidity pressures, and valuation uncertainty p. 22.
Risks from derivatives include imperfect correlation between derivatives and underlying exposures, futures prices not moving in line with cash market prices, and liquidity pressures from margin calls during adverse market movements p. 22.
Reliance on market-based models introduces valuation uncertainty, potentially causing hedges to perform differently than expected p. 22.
These factors may prevent hedging strategies from effectively reducing volatility and could materially adversely impact financial results p. 22.
Risks Related to the Market and Economic Conditions
Adverse economic factors such as recession, inflation, high unemployment, or lower economic activity could lead to fewer policy sales, increased claim frequency, premium defaults, or claim falsification, impacting growth and profitability p. 23.
Economic downturns characterized by higher unemployment, declining spending, and reduced corporate revenue generally negatively affect demand for insurance products, impacting premium levels and profitability p. 23.
Negative economic factors may also affect the ability to charge appropriate rates for risk, reduce the number of policies written, and limit opportunities for profitable underwriting p. 23.
During an economic downturn, customers may reduce insurance coverage, cancel policies, modify coverage, or not renew policies p. 23.
Existing policyholders might exaggerate or falsify claims to receive higher payments during an economic downturn p. 23.
A significant collapse in specific economic segments like construction, credit markets, or energy production and servicing could adversely affect results across several underwriting divisions p. 23.
These outcomes would reduce underwriting profit if not reflected in the rates charged p. 23.
The insurance business is historically cyclical, which can affect financial performance and cause operating results to vary quarterly, not necessarily indicating future performance p. 23.
Insurance carriers have historically experienced significant fluctuations in operating results due to competition, catastrophic events, capacity levels, litigation trends, regulatory constraints, and general economic conditions p. 23.
The supply of insurance is linked to prevailing prices, insured losses, and industry capital, which fluctuate with investment returns in the insurance industry p. 23.
The insurance industry is characterized by cyclical periods of intense price competition due to excessive underwriting capacity (soft market) and periods of capacity shortages leading to increased premiums (hard market) p. 23.
Demand for insurance depends on factors like frequency and severity of catastrophic events, capacity levels, new capital providers, and general economic conditions, all of which fluctuate and can contribute to price declines p. 23.
The 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 p. 23.
This cyclical market pattern can be more pronounced in the E&S market than in the standard insurance market p. 23.
When the standard insurance market hardens, the E&S market typically hardens, and E&S market growth can be significantly more rapid p. 23.
When conditions soften, customers previously in the E&S market may return to the admitted market, exacerbating the effects of rate decreases on financial results p. 23.
The market may experience "micro cycles" where specific areas harden or soften independently and potentially more drastically than the overall market p. 23.
Operating results are subject to fluctuation and have historically varied quarter-to-quarter p. 23.
Quarterly results are expected to continue fluctuating due to general economic conditions, frequency/severity of catastrophe events, fluctuating interest rates, claims exceeding loss reserves, industry competition, deviations from expected premium retention rates, adverse investment performance, and reinsurance coverage costs p. 23.
Investment portfolio performance is subject to various investment risks that may adversely affect financial results p. 23.
The company aims to hold a diversified investment portfolio managed by professional advisory firms according to its investment policy and reviewed by its Investment Committee p. 23.
Investments are subject to general economic conditions, market risks, and risks inherent to specific securities p. 23.
Primary market risk exposures are to changes in interest rates and equity prices p. 23.
A significant portion of the investment portfolio is in fixed maturity securities, or separately managed accounts and limited partnerships primarily invested in them p. 23.
Interest rates rose materially during 2022 and 2023 p. 23.
A low interest rate environment, potentially resulting from federal government actions to slow inflation (e.g., rate cuts, Inflation Reduction Act of 2022), would pressure net investment income, especially for fixed maturity and short-term investments, adversely affecting operating results p. 23.
Recent and future increases in interest rates could cause the values of fixed income securities portfolios to decline, with the magnitude depending on security duration and the extent of interest rate increases p. 23.
Some fixed income securities with call or prepayment options create reinvestment risk in declining rate environments p. 23.
Other fixed income securities, such as mortgage-backed and asset-backed securities, carry prepayment risk or may not prepay as quickly as expected in a rising interest rate environment p. 23.
All fixed maturity securities, including those in separately managed accounts and limited partnerships, are subject to credit riskp. 23.
Credit risk is the risk of investment default or impairment due to deterioration in the financial condition of issuers or guarantors of securities held p. 23.
Downgrades in credit ratings of fixed maturity securities could significantly negatively affect their market valuation p. 23.
The company also invests in marketable preferred and common equity securities and exchange-traded funds, which are carried at fair market value and are subject to potential losses and market value declines p. 23.
Market and credit risks could reduce net investment income and result in realized investment losses p. 23.
The investment portfolio is subject to increased valuation uncertainties when investment markets are illiquid, as is the case with fixed maturity securities held to maturity, separately managed accounts, and limited partnership investments p. 23.
Valuation of investments is more subjective in illiquid markets, increasing the risk that estimated fair value does not reflect actual transaction prices p. 23.
Risks for all types of securities are managed through an investment policy that sets parameters including maximum investment percentages in certain security types and minimum credit quality levels p. 23.
These investment parameters are believed to be within applicable guidelines established by the NAIC, the Texas Department of Insurance, and the Oklahoma Department of Insurance p. 23.
The Investment Committee periodically reviews Enterprise Based Asset Allocation models for overall risk management p. 23.
While seeking to preserve capital, there is no certainty that investment objectives will be achieved, and results may vary substantially over time p. 23.
Although investment strategies are sought that are not correlated with insurance and reinsurance exposures, investment portfolio losses may occur concurrently with underwriting losses, exacerbating adverse effects p. 23.
The company could be forced to sell investments to meet liquidity requirements p. 23.
Premiums received from insureds are invested until needed to pay policyholder claims p. 23.
The duration of the investment portfolio is managed based on the duration of losses and LAE reserves to provide sufficient liquidity and avoid liquidating investments to fund claims p. 23.
Risks such as inadequate losses and LAE reserves or unfavorable litigation trends could necessitate selling investments to fund liabilities p. 23.
Investments may not be sellable at favorable prices or at all, potentially resulting in significant realized losses depending on general market conditions, interest rates, and credit issues with individual securities p. 23.
Risks Related to the Regulatory Environment
Extensive regulation may adversely affect the ability to achieve business objectives p. 24.
Failure to comply with regulations may lead to penalties, including fines and suspensions, affecting financial condition and results of operations p. 24.
Primary insurance subsidiaries (GMIC, HSIC, IIC) are subject to extensive regulation in Texas (state of domicile) and other operating states p. 24.
Most insurance regulations are designed to protect policyholder interests, not investor or stockholder interests p. 24.
Regulations are administered by state departments of insurance and cover capital and surplus requirements, investment and underwriting limitations, affiliate transactions, dividend limitations, changes in control, solvency, and other financial/non-financial aspects p. 24.
Significant changes in laws and regulations could limit discretion or increase business costs p. 24.
State insurance regulators conduct periodic examinations and require annual/other reports on financial condition and holding company issues p. 24.
Regulatory requirements may impose timing and expense constraints affecting business objectives p. 24.
Insurance subsidiaries are part of an "insurance holding company system" under Texas statutes and regulations p. 24.
Certain transactions between insurance subsidiaries and affiliates require prior notice to the Texas Department of Insurance, potentially causing business delays and additional expenses p. 24.
Failure to file required notifications or comply with Texas insurance regulations may result in significant fines and penalties and impair the working relationship with the Texas Department of Insurance p. 24.
State insurance regulators have broad discretion to deny or revoke licenses for various reasons, including regulation violations p. 24.
Practices based on interpretations of regulations or industry norms may differ from regulatory authorities' interpretationsp. 24.
Lack of requisite licenses/approvals or non-compliance with regulatory requirements could lead to preclusion or temporary suspension of activities in a state or other penalties p. 24.
Changes in insurance industry regulation, laws, or interpretations could interfere with operations and incur additional compliance costs p. 24.
Insurance subsidiaries are subject to risk-based capital requirements based on the NAIC model and minimum capital/surplus restrictions under Texas law p. 24.
These requirements establish the minimum risk-based capital needed to support business operations and identify inadequately capitalized insurers based on asset/liability risks and net written premium mix p. 24.
Falling below a calculated threshold may lead to regulatory action, including supervision, rehabilitation, or liquidation p. 24.
Failure to maintain required risk-based capital levels could adversely affect the ability to maintain regulatory authority and the A.M. Best Rating p. 24.
Additional government or market regulation may have a material adverse impact on the business p. 24.
Business could be adversely affected by changes in laws related to asset/reserve valuation, surplus requirements, investment/dividend limitations, enterprise risk, and risk-based capital p. 24.
The U.S. federal government, while not directly regulating insurance broadly, could consider legislation affecting the industry in areas like privatization of Freddie Mac/Fannie Mae, reduction in federal subsidies, tort reform, corporate governance, and taxation of reinsurance companiesp. 24.
Changes to U.S. tax laws and new tax policies could negatively impact the overall economy and the business p. 24.
Legislative or other actions relating to taxes could negatively affect the company, investments, or stockholders p. 24.
The rules for U.S. federal income taxation are constantly under review by legislators, the IRS, and the U.S. Department of the Treasury p. 24.
New legislation, U.S. Treasury regulations, administrative interpretations, or court decisions could have adverse consequencesp. 24.
On July 4, 2025, H.R. 1, the "One Big Beautiful Bill Act" (OBBBA), was signed into law in the United States p. 24.
The OBBBA modifies key business tax provisions, including restoring 100% bonus depreciation (Section 168(k) IRC), immediate deduction of U.S. domestic research and experimental expenditures (Section 174A IRC), and the EBITDA-based business interest expense limitation (Section 163(j) IRC), and changes to international operations tax computation p. 24.
Based on current analysis, these OBBBA provisions are not expected to have a material impact on the business and results of operations p. 24.
Regulations and IRS guidance implementing the OBBBA may create unforeseen issues, and further tax law changes could occur p. 24.
There is no assurance that the business will not be adversely affected by the OBBBA or other tax law changes p. 24.
The ability to utilize net operating loss carryforwards (NOLs) and certain other tax attributes may be limited p. 24.
As of December 31, 2025, there were gross federal income tax NOLs of approximately $40.3 million available to offset future taxable income, prior to annual limitations p. 24.
These NOLs are set to expire beginning in 2032p. 24.
Under Section 382 of the Code, an "ownership change" (greater than 50% change in equity ownership by certain stockholders over a rolling three-year period) can limit the use of pre-ownership change NOLs to offset post-ownership change income p. 24.
Future ownership changes or regulatory changes could limit the ability to utilize NOLs p. 24.
If unable to offset future taxable income with NOLs, net income and cash flows may be adversely affected p. 24.
As a holding company, with substantially all operations conducted by insurance subsidiaries, liquidity at the holding company level (including dividend payments and debt service) depends on obtaining cash dividends or other permitted payments from insurance subsidiaries p. 24.
The continued operation and growth of the business will require substantial capital p. 24.
There is no intention to declare and pay cash dividends on common stock in the foreseeable future p. 24.
The ability to pay dividends to stockholders and meet debt obligations largely depends on dividends and distributions from primary insurance subsidiaries (GMIC, HSIC, IIC) p. 24.
State insurance laws, including those of Texas, restrict the ability of GMIC, HSIC, and IIC to declare stockholder dividends p. 24.
State insurance regulators require insurance companies to maintain specified levels of statutory capital and surplusp. 24.
Dividend payments are limited to the portion of available policyholder surplus derived from net profits p. 24.
State insurance regulators have broad powers to prevent reduction of statutory surplus to inadequate levels p. 24.
There is no assurance that dividends up to the maximum calculated amounts would be permitted p. 24.
State insurance regulators may adopt more restrictive statutory provisions regarding dividend payments in the future p. 24.
Any future dividend determination will be at the discretion of the Board of Directors and depend on results, financial condition, contractual restrictions, indebtedness, applicable law, and other relevant factors p. 24.
Investors may need to sell common stock after price appreciation (which may not occur) as the only way to realize future gainsp. 24.
Investors seeking immediate cash dividends should not purchase common stockp. 24.
Applicable insurance laws may make it difficult to effect a change of controlp. 24.
Under Texas insurance laws, written approval from the state insurance commissioner is required before acquiring control of a domestic insurer p. 24.
Approval depends on factors including the financial strength of the acquirer, plans for future operations, and potential anti-competitive resultsp. 24.
Texas insurance laws apply to direct and indirect acquisition of 10% or more of the voting stock of a Texas-domiciled insurer p. 24.
Acquisition of 10% or more of common stock would be considered an indirect change of control of Skyward Specialty, triggering change of control filing requirements, unless a disclaimer of control filing is accepted by the Texas Insurance Department p. 24.
These requirements may discourage potential acquisition proposals and delay, deter, or prevent a change of control, even if desirable to stockholders p. 24.
Risks Related to Our Liquidity and Access to Capital
Future capital requirements depend on factors such as the ability to write new business successfully and establish premium rates and reserves sufficient to cover losses p. 25.
If operational cash flows are insufficient or the capital position is adversely impacted by investment portfolio decline, catastrophe losses, or adverse reserve development, additional funds may be needed through financings or growth curtailment p. 25.
The amount and timing of capital needs are affected by growth rate, profitability, claims experience, reinsurance availability, market disruptions, and other unforeseeable developments p. 25.
If additional capital is needed, equity or debt financing may not be available or may be on unfavorable terms p. 25.
Equity financings could lead to dilution for stockholders p. 25.
Debt financings may impose covenants restricting business operations p. 25.
Securities from future financings may have rights, preferences, and privileges senior to common stock p. 25.
Inability to obtain adequate capital on favorable terms could prevent implementation of operating plans and materially adversely affect business, financial condition, or results of operations p. 25.
Access to credit under the Revolving Credit Facility is subject to conditions that may limit borrowing p. 25.
Failure to satisfy conditions for the Revolving Credit Facility would prevent borrowing, potentially affecting liquidity, financial position, and results of operations p. 25.
A breach of covenants under the Term Loan Facility and Revolving Credit Facility could trigger an event of default p. 25.
Upon an event of default, all outstanding amounts and accrued interest could be declared immediately due and payable by lenders p. 25.
Assets may be insufficient to repay payments due under credit agreements if an event of default occurs p. 25.
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.
Risks Related to Our Operations
The company's ability to attract and retain experienced and seasoned personnel is crucial for its business p. 26.
The talent pool for recruitment is limited and subject to market dynamics, potentially leading to increased compensation expectations and difficulties in retaining or recruiting key personnel p. 26.
Loss of key personnel or inability to attract talent could adversely affect the company's competitive position and results of operations p. 26.
The business is highly dependent on information technology and telecommunications systems for underwriting, claims processing, policy preparation, premium processing, actuarial functions, and financial reporting p. 26.
Some systems may rely on third-party services not under the company's direct control p. 26.
Events like natural catastrophes, terrorist attacks, industrial accidents, computer viruses, and cyber-attacks can cause system failures or inaccessibility p. 26.
Sustained or repeated system failures could limit the company's ability to write new business, process renewals, provide customer service, pay claims, or operate normally p. 26.
Computer viruses, hackers, employee misconduct, and other external hazards can expose systems to security breaches and cyber-attacks p. 26.
The company has implemented security measures but systems may still be subject to breaches or interference p. 26.
A data incident occurred where attackers acquired certain company data, but an investigation determined it was immaterial, with no evidence of nation-state involvement or misuse of information p. 26.
Future cybersecurity events could lead to operational disruptions, unauthorized access, disclosure or loss of proprietary or customer data, legal claims, regulatory scrutiny, reputational damage, and increased costs p. 26.
SEC and state law requirements for public notification of incidents could exacerbate harm to the business p. 26.
Third parties to whom functions are outsourced are also subject to these risks, and while their cybersecurity controls are reviewed, successful prevention of compromises or disclosures cannot be ensured p. 26.
Increased use of third-party services (e.g., cloud technology, software as a service) can complicate identification and response to cyberattacks p. 26.
The rapid growth of artificial intelligence (AI) and machine learning may alter the competitive landscape p. 26.
The company uses AI for risk selection, pricing, and claims handling and continues to research and implement AI-based solutions p. 26.
The company's competitive position could be harmed if competitors leverage AI solutions more quickly or effectively p. 26.
If AI applications produce deficient, inaccurate, or biased content, analyses, or recommendations, the company's business, financial condition, results of operations, and reputation may be adversely affected p. 26.
The continuous evolution of AI technology may lead to costs for adopting and deploying technologies that become obsolete earlier than expected p. 26.
There is uncertainty in the legal and regulatory landscape for AI at federal and state levels p. 26.
Future laws, regulations, or industry standards for AI could be burdensome, costly, and restrict the company's ability to develop, adopt, and deploy AI technologies p. 26.
Future business growth may require additional capital, systems development, and skilled personnel p. 26.
Failure to manage growth effectively, including meeting capital needs, expanding systems, optimizing human resources, and integrating acquisitions, could materially adversely affect the business p. 26.
Success of inorganic growth through acquisitions depends on identifying appropriate targets, negotiating favorable terms, completing transactions, and successful integration p. 26.
Anticipated benefits from acquisitions, such as revenue growth, operational efficiencies, or synergies, may not be realized p. 26.
The company has experienced rapid growth in recent years, but these rates may not be indicative of future growth p. 26.
Future revenue growth may not be sustainable at rates consistent with recent history p. 26.
Revenue growth depends on factors including effective product pricing, successful product deployment and renewals, attracting qualified underwriters and claims professionals, enhancing infrastructure and data reporting systems, creating new distribution channels, introducing new products, competing effectively, and increasing brand awareness p. 26.
Failure to accomplish these objectives makes forecasting future results of operations difficult p. 26.
Historical growth rates should not be considered indicative of future performance and may decline p. 26.
Future revenue could grow more slowly or decline, and operating expenses could increase, potentially harming the business and preventing profitability p. 26.
The acquisition and integration of Apollo, completed on January 1, 2026, may adversely affect the business p. 26.
The Apollo acquisition is expected to provide strategic benefits, expand specialty insurance capabilities, and enhance presence in the Lloyd’s market p. 26.
Integration risks include challenges in combining operations, systems, technology platforms, and personnel, potentially diverting management attention, disrupting business, and incurring unexpected costs or delays p. 26.
There is no assurance that anticipated benefits from the acquisition, such as growth opportunities, will be realized within the expected timeframe or at all p. 26.
The success of the acquisition depends on retaining key Apollo employees, partners, and customers, with loss potentially negatively impacting the acquired business and overall operations p. 26.
Cultural and operational differences between the company and Apollo, particularly regarding the Lloyd’s market, may create challenges in harmonizing policies and procedures p. 26.
Financial and accounting risks include significant changes to financial statements, recognition of goodwill and intangible assets subject to impairment, undisclosed liabilities or risks, and the need to convert Apollo's U.K. GAAP financial statements to U.S. GAAP p. 26.
Regulatory and compliance risks increase due to expansion into new jurisdictions and markets, including the Lloyd’s market, potentially leading to fines or penalties for non-compliance p. 26.
Additional indebtedness incurred for the acquisition could limit financial flexibility or increase the cost of capital p. 26.
The integration process may divert management's attention from existing business, negatively impacting ongoing operations and financial performance p. 26.
Failure to successfully integrate Apollo, realize anticipated benefits, or manage expanded business risks could materially and adversely affect the company p. 26.
The company continually faces risks associated with various types of litigation, including insurance claims and general commercial and corporate litigation p. 26.
While not currently involved in out-of-the-ordinary litigation, other insurance industry members face class action lawsuits and other litigation with unpredictable outcomes and substantial or indeterminate amounts p. 26.
Social inflation, particularly in third-party claims, can lead to oversized judgments p. 26.
Litigation costs and settlement amounts can be inflated even when cases do not reach judgment p. 26.
The company cannot predict future involvement in such litigation or its impact on the business p. 26.
The company relies on services and products from many vendors in the United States and abroad, including those for computer hardware, software, claim adjustment, human resource benefits management, and investment management 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.
Failure to properly assess vendor risks, including security and stability, could materially and adversely affect financial condition and results of operations p. 26.
The company anticipates continued reliance on third-party software p. 26.
While commercially reasonable alternatives to current third-party software are believed to exist, this may not always be the case, or replacement could be difficult or costly p. 26.
Integration of new third-party software may require significant work and investment of time and resources p. 26.
Obtaining license agreements for additional or alternative third-party software may not be possible on commercially reasonable terms or at all p. 26.
Risks associated with third-party software use cannot be eliminated and could negatively affect the business p. 26.
The company may fail to protect its intellectual property rights for its proprietary technology platform and brand, or may face infringement lawsuits p. 26.
Success and ability to compete depend partly on intellectual property, including brand rights and proprietary technology in certain product lines p. 26.
The company primarily relies on copyright and trade secret laws, and confidentiality agreements to protect intellectual property rights p. 26.
Steps taken to protect intellectual property may be inadequate p. 26.
Efforts to enforce intellectual property rights may face defenses, counterclaims, and countersuits challenging validity, enforceability, and scope p. 26.
Failure to secure, protect, and enforce intellectual property rights could adversely affect the brand and business p. 26.
Success also depends on not infringing on the intellectual property rights of others p. 26.
Third parties may claim infringement of their intellectual property rights, potentially leading to significant expenses, substantial damages, ongoing royalty payments, prevention from offering services, or other unfavorable terms p. 26.
Even if successful in a dispute, litigation could be costly, time-consuming, and divert management attention p. 26.
Risks Related to Ownership of Our Common Stock
The company expects to incur increased costs and management time due to operating as a public company p. 27.
As a public company and large accelerated filer, the company incurs significant legal, accounting, and other expenses not present as a private company p. 27.
Federal securities laws, including the Sarbanes-Oxley Act and Dodd-Frank Act, and SEC/Nasdaq rules impose requirements on public companies, increasing compliance costs and management time p. 27.
The company may not be able to produce reliable financial statements or file them timely with the SEC, or comply with Nasdaq listing requirements p. 27.
Pursuant to Section 404 of the Sarbanes-Oxley Act, the company must perform system and process evaluation and testing of internal control over financial reporting p. 27.
Compliance with Section 404 requires substantial accounting expense and significant management effort, including maintaining staff and consultants with public company reporting, technical accounting, and internal control knowledge p. 27.
The company engages in a costly and challenging process to document and evaluate internal control over financial reporting to comply with Section 404 p. 27.
There is a risk that neither the company nor its independent registered public accounting firm will conclude that internal control over financial reporting is effective within the prescribed timeframe, potentially leading to adverse financial market reactions or SEC investigations p. 27.
As a public company, the company must maintain disclosure controls and procedures designed to ensure timely and accurate reporting of information required by the Exchange Act p. 27.
The company's disclosure controls and procedures or internal control over financial reporting may not prevent or detect all errors and fraud, as control systems provide only reasonable, not absolute, assurance p. 27.
Due to inherent limitations, misstatements due to error or fraud may occur and not be detected p. 27.
If the company is unable to achieve and maintain effective internal controls, its operating results and financial condition could be harmed, and the market price of its common stock negatively affected p. 27.
The company must document and test internal control procedures to satisfy Section 404(b) of the Sarbanes-Oxley Act, requiring annual management assessments of effectiveness p. 27.
During assessments, the company may identify deficiencies that cannot be remediated timely, and testing/maintaining internal controls may divert management's attention p. 27.
If the company concludes its internal control over financial reporting is not effective, remediation costs and operational effects could be significant p. 27.
Material weaknesses or deficiencies in internal control could impede timely and accurate SEC reporting, potentially causing loss of investor confidence or Nasdaq listing suspension/termination p. 27.
The company identified a material weakness in its internal control over information technology general controls ("ITGCs") as of December 31, 2024, which was remediated by December 31, 2025 p. 27.
Failure to maintain an effective system of internal controls could adversely affect the market price of the common stock p. 27.
The effectiveness of controls is subject to inherent limitations, and there is no assurance controls will prevent or detect all misstatements p. 27.
An effective system of internal control over ITGCs provides only reasonable, not absolute, assurance p. 27.
Management, with the CEO, CFO, and CIO/CTO, identified control deficiencies over ITGCs during fiscal year ended December 31, 2024, constituting a material weakness as described in "ITEM 9A. CONTROLS & PROCEDURES" of the 2024 Annual Report on Form 10-K p. 27.
The company has taken measures to remediate the material weakness and believes it is remediated p. 27.
If additional material weaknesses or significant deficiencies are identified, the company may be unable to provide timely and reliable financial information or may incorrectly report it p. 27.
Untimely financial statement filings could lead to adverse action by shareholders, Nasdaq, the SEC, or other regulatory authorities p. 27.
Material weaknesses or significant deficiencies could negatively affect reputation or investor perceptions, impacting the common share trading price, and incur additional remediation costs p. 27.
The company cannot assure that additional material weaknesses or restatements will not arise in the future due to inadequate internal controls p. 27.
Current controls and procedures may not be adequate in the future to prevent or identify irregularities/errors or facilitate fair financial statement presentation p. 27.
The company's operating results and stock price may be volatile or decline regardless of operating performance, leading to potential loss of investment p. 27.
The market price of the common stock has been and is likely to remain highly volatile due to factors beyond the company's control p. 27.
Securities markets worldwide have experienced significant price and volume fluctuations, which, along with general economic, market, or political conditions, could cause wide price fluctuations in the company's shares p. 27.
Investment in the common stock is considered risky, requiring tolerance for significant loss and wide market value fluctuations p. 27.
Factors affecting stock price include:
Market conditions in the broader stock market p. 27.
Fluctuations in quarterly financial and operating results p. 27.
Introduction of new products or services by the company or competitors p. 27.
Issuance of new or changed securities analysts’ reports or recommendations p. 27.
Operating results varying from expectations of securities analysts and investors p. 27.
Short sales, hedging, and other derivative transactions in the common stock p. 27.
Guidance provided to the public, changes in guidance, or failure to meet guidance p. 27.
Strategic actions by the company or competitors p. 27.
Announcements by the company, competitors, or acquisition targets p. 27.
Sales, or anticipated sales, of large blocks of stock by directors, executive officers, and principal stockholders p. 27.
Additions or departures in the Board of Directors, senior management, or other key personnel p. 27.
Regulatory, legal, or political developmentsp. 27.
Public response to press releases or other public announcements by the company or third parties, including SEC filings p. 27.
Litigation and governmental investigationsp. 27.
Changing economic conditions, including social inflation p. 27.
Changes in accounting principlesp. 27.
Indebtedness incurred or securities issued in the future p. 27.
Default under agreements governing indebtedness p. 27.
Exposure to capital and credit market risks affecting the investment portfolio or capital resources p. 27.
Changes in credit ratingsp. 27.
Other events or factors, including natural disasters, war, acts of terrorism, or responses to these events p. 27.
Stock markets, including Nasdaq, have experienced extreme price and volume fluctuations unrelated to company operating performance p. 27.
These broad market fluctuations, and general market, economic, and political conditions, may negatively affect the common stock price p. 27.
Extreme price and volume fluctuations could cause the stock price to fall and expose the company to securities class action litigation, which could be costly, divert management attention, or harm the business p. 27.
Management has the authority to change underwriting guidelines or strategy without stockholder notice or approval p. 27.
This allows fundamental changes to operations without stockholder approval, potentially resulting in a strategy or underwriting guidelines materially different from those described in the "Business" section or other filings p. 27.
Anti-takeover provisions in organizational documents, Delaware law, and regulations could prevent or delay a beneficial change of control and limit share price p. 27.
Provisions in the certificate of incorporation and by-laws, and applicable laws, may discourage, delay, or prevent mergers, tender offers, or other change of control events p. 27.
These provisions impose procedural requirements that could make it more difficult for shareholders to effect certain corporate actions, potentially adversely affecting the common stock price p. 27.
Charter documents permit the Board of Directors to establish the number of directors and fill vacancies/new directorships p. 27.
The Board of Directors will be classified into three classes with staggered, three-year terms, and directors may only be removed for cause p. 27.
Super-majority voting is required to amend provisions in the certificate of incorporation and bylaws p. 27.
Blank-check preferred stock allows the Board to set preference rights and terms, potentially delaying or preventing transactions or changes in control that might benefit stockholders p. 27.
The ability of stockholders to call special meetings is eliminated p. 27.
Special meetings of stockholders can only be called by the Board of Directors, the chairman, or the chief executive officer p. 27.
Stockholder consent action is prohibited unless by unanimous written consent p. 27.
Vacancies on the Board of Directors may be filled only by a majority of directors then in office, even if less than a quorum p. 27.
Cumulative voting in the election of directors is prohibited p. 27.
Advance notice requirements are established for nominations to the Board or for proposing matters at annual stockholder meetings p. 27.
As a Delaware corporation, the company is subject to Section 203 of the Delaware General Corporation Law, which may prohibit large stockholders (owning 15% or more) from merging or combining with the company for a period p. 27.
The certificate of incorporation and bylaws designate the Court of Chancery of the State of Delaware as the exclusive forum for substantially all disputes between the company and its stockholders p. 27.
This could limit stockholders' ability to obtain a favorable judicial forum for disputes with the company or its directors, officers, or employees p. 27.
The exclusive forum applies to:
Any derivative action or proceeding brought on the company's behalf p. 27.
Any action asserting a claim of breach of fiduciary duty by directors, officers, employees, agents, or stockholders p. 27.
Any action asserting a claim arising under the DGCL or the certificate of incorporation/bylaws, or where the DGCL confers jurisdiction on the Court of Chancery p. 27.
Any action to interpret, apply, enforce, or determine the validity of the certificate of incorporation or bylaws p. 27.
Any action asserting a claim governed by the internal affairs doctrine p. 27.
Unless the company consents in writing, the federal district courts of the United States of America are the sole and exclusive forum for resolutions of any complaint asserting a cause of action under the Securities Act p. 27.
There is uncertainty whether a court would enforce this provision, and stockholders are not deemed to have waived compliance with federal securities laws p. 27.
This exclusive forum provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or other claims with exclusive federal jurisdiction p. 27.
If enforced, this choice of forum provision may limit a stockholder's ability to bring a claim in a favorable judicial forum, potentially discouraging lawsuits p. 27.
If a court finds the choice of forum provision inapplicable or unenforceable, the company may incur additional costs resolving actions in other jurisdictions, which could materially adversely affect its business, financial condition, or results of operations p. 27.
Cybersecurity
IT Systems are central to nearly all business operations, including internal/external communications, document/record management, and shared work environments p. 28.
Crisis Response Plan (CRP) is implemented to efficiently and effectively respond to cybersecurity incidents and threats, forming a component of the overall ERM strategy p. 28.
Cybersecurity risk management processes are integrated into overall risk management, including annual evaluation by the enterprise risk management committee p. 28.
Risk owners are assigned to develop and track mitigation plans for heightened cybersecurity risks identified by the ERM process p. 28.
Security events and data incidents are evaluated, ranked by severity, prioritized for response/remediation, and reviewed for materiality, operational/business impact, and privacy impact p. 28.
Cybersecurity risk management program leverages the National Institute of Standards and Technology framework, categorizing risks into identify, protect, detect, respond, recover, and govern p. 28.
Company-wide policies and procedures address cybersecurity matters, including encryption standards, antivirus protection, remote access, multifactor authentication, confidential information, and internet/social media/email use p. 28.
Detailed crisis response playbook is followed in the event of an incident p. 28.
Investments in IT security have expanded, including end-user training, layered defenses, critical asset identification/protection, strengthened monitoring/alerting, and expert engagement p. 28.
Defenses are regularly tested through simulations, technical drills (penetration tests), and reviews of operational policies/procedures with third-party experts p. 28.
IT security team monitors alerts, discusses threat levels/trends/remediation, prepares a quarterly cyber scorecard, collects data on threats/risk areas, and conducts annual risk assessments p. 28.
Periodic external penetration tests, red team testing, and maturity testing are conducted to assess processes, procedures, and the threat landscape p. 28.
External cybersecurity legal counsel would consult and coordinate with other third parties, including communication and notification, in the event of an incident p. 28.
Cybersecurity vendors would perform investigation services and assist with recovery/restoration of impacted IT System services p. 28.
Cybersecurity experts would assist with incident validation and ransomware demands p. 28.
Cybersecurity insurance providers are involved in incident response p. 28.
Processes are implemented to oversee and identify risks from cybersecurity threats associated with key third-party service providers p. 28.
Third-party service providers are required to provide SOC-1 or SOC-2 reports and cybersecurity/disaster recovery plans p. 28.
Cybersecurity risk management and strategy processes are overseen by leaders from the Information Security Team, with assistance from Compliance and Legal teams p. 28.
Information Security Team leaders have decades of experience in IT roles, including security, auditing, compliance, systems, and programming p. 28.
These individuals monitor prevention, mitigation, detection, and remediation of cybersecurity incidents through their management and participation in risk management processes and the crisis response plan p. 28.
The Risk Committee receives reports from these individuals on appropriate items p. 28.
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 cybersecurity measures p. 28.
Review by the Risk Committee includes discussion of risks from cybersecurity threats and their potential operational impact p. 28.
Separate process for communicating with the Risk Committee is instituted for specific cybersecurity incidents p. 28.
Crisis Management Team members would provide initial awareness communication of an incident to the CEO/Chair of the Board, who would then inform the Chair of the Risk Committee p. 28.
Following 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 p. 28.
Cybersecurity threats have not materially affected business strategy, results of operations, or financial condition p. 28.
A cybersecurity incident resulting in a serious compromise of IT Systems or a demand for payment to restore IT Systems could have a material adverse effect by negatively impacting business operations and diverting management/financial resources p. 28.
Properties
Primary executive offices and insurance operations are leased in Houston, Texas p. 29.
The Houston office space occupies approximately 20,400 square feetp. 29.
The lease for the Houston office space expires in 2029p. 29.
Additional office space is leased as appropriate p. 29.
Management considers current office facilities suitable and adequate for current operations p. 29.
Legal Proceedings
The company is involved in legal proceedings that occur in the ordinary course of business p. 30.
The company believes that the outcome of these legal matters, both individually and in aggregate, will not materially adversely affect its consolidated financial position p. 30.
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 p. 31.
Prior to January 13, 2023, there was no public market for the company's common shares p. 31.
As of February 26, 2026, there were approximately 117 holders of record of the common stock p. 31.
This number does not represent the total number of stockholders because many shares are held by brokers and other institutions on behalf of stockholders p. 31.
Securities Authorized for Issuance Under Equity Compensation Plans
Information regarding equity compensation plans will be included in the definitive proxy statement for the 2026 Annual Meeting of Stockholders ("2026 Proxy Statement") and is incorporated by reference p. 32.
Refer to Part III for details on securities authorized for issuance under equity compensation plans p. 32.
Recent Sales of Unregistered Equity Securities
Information is provided regarding securities issued or granted by the company that were not registered under the Securities Act during the period covered by this Annual Report on Form 10-K p. 33.
On January 1, 2026, the company paid approximately $555.0 million for the Apollo acquisition, as per the Apollo SPAs p. 33.
The payment for the Apollo acquisition included $371.0 million in cash p. 33.
The payment also included the issuance of 3,679,332 unregistered shares of the Company’s common stock p. 33.
Performance Graph
The performance graph compares the cumulative total shareholder return of an investment in Skyward Specialty Insurance Group, Inc. common stock, the Nasdaq Composite Index, and the Nasdaq Insurance Index p. 34.
The comparison period is from January 13, 2023 (the date common stock began trading on Nasdaq) through December 31, 2025 p. 34.
The graph assumes an initial investment of $100 p. 34.
Returns are based on historical results and are not indicative of future performance p. 34.
The 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 p. 34.
The graph is not deemed to be incorporated by reference into any filings under the Securities Act p. 34.
Skyward Specialty Insurance Group, Inc. (Blue Line) performance:
January 13, 2023: $100.00 p. 34
December 31, 2023: Approximately $177.00 p. 34
December 31, 2024: Approximately $265.00 p. 34
December 31, 2025: Approximately $268.00 p. 34
Nasdaq Composite Index (Magenta Line) performance:
January 13, 2023: $100.00 p. 34
December 31, 2023: Approximately $138.00 p. 34
December 31, 2024: Approximately $174.00 p. 34
December 31, 2025: Approximately $210.00 p. 34
Nasdaq Insurance Index (Cyan Line) performance:
January 13, 2023: $100.00 p. 34
December 31, 2023: Approximately $105.00 p. 34
December 31, 2024: Approximately $128.00 p. 34
December 31, 2025: Approximately $128.00 p. 34
Skyward Specialty Insurance Group stock price versus indices
—
January 13, 2023
December 31, 2023
December 31, 2024
December 31, 2025
Skyward Specialty Insurance Group, Inc.
100.00
177.38
264.61
267.59
Nasdaq Composite Index
100.00
135.49
174.30
209.78
Nasdaq Insurance Index
100.00
103.37
128.30
127.60
Performance Graph
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Skyward Specialty Insurance Group 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 p. 35.
The company focuses on underserved, dislocated markets or those where standard insurance coverages are insufficient for businesses p. 35.
Customers typically require highly specialized, customized underwriting solutions and claims capabilities p. 35.
The company develops and delivers tailored insurance products and services for niche markets p. 35.
The portfolio of insured risks is highly diversified, covering various industries, distribution channels, and lines of business p. 35.
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 p. 35.
The company insures both short and medium duration liabilities p. 35.
The business mix is principally primary insurance, balanced between E&S and admitted markets p. 35.
A portion of the business is specialty reinsurance, primarily in agriculture and credit, focused on attractive specialty classes where reinsurance is more efficient due to factors like cost of entry and geographic expansion p. 35.
This 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 across all insurance pricing cycles p. 35.
The company's strategy, "Rule Our Niche," aims to lead in chosen market niches and establish sustainable competitive positions p. 35.
This strategy forms the basis for building a strong defensible market position, creating a competitive moat, and winning chosen markets p. 35.
The principles of this strategy are considered key to achieving and sustaining best-in-class underwriting results through P&C insurance pricing cycles p. 35.
The company strives for excellence in risk selection, pricing, and claims outcomes, amplified by advanced technology and analytics p. 35.
In the first quarter of 2025, underwriting divisions were updated to align with management oversight, resource allocation, and operating performance evaluation p. 35.
A ninth division, Agriculture and Credit (Re)insurance, was added, including the Global Agriculture unit (previously with Global Property) and the Mortgage and Credit units p. 35.
This new division focuses on specialty classes where reinsurance offers a more attractive market entry p. 35.
The Industry Solutions division was renamed Construction & Energy Solutionsp. 35.
The Inland Marine unit is now part of the Transactional E&S division p. 35.
Programs is now Specialty Programsp. 35.
Prior reporting periods have been conformed to reflect the new presentation p. 35.
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. 35.
The company agreed to acquire all issued shares of Apollo held by the Majority Sellers, representing approximately 87% of Apollo's issued share capital p. 35.
Closing of the transaction ("Closing") was conditioned upon acquiring 100% of Apollo's issued share capital (the "Acquisition") at Closing, through additional short-form share purchase agreements (the "Apollo Minority SPAs") with remaining minority shareholders (the "Minority Sellers") p. 35.
The total consideration for the entire issued share capital of Apollo under the Apollo SPAs was USD 555.0 million p. 35.
This consideration included USD 371.0 million in cash (the "Cash Consideration") p. 35.
It also included the issuance of 3,679,332 shares of the Company’s common stock p. 35.
In connection with the Apollo SPAs, on December 30, 2025, the company entered into a Term Loan Credit Agreement (the "Facility") p. 35.
The Facility was with lenders, Barclays Bank PLC as Administrative Agent, and the Agent, Truist Securities, Inc., Citizens Bank, N.A., and Texas Capital Bank as joint lead arrangers, joint book runners, and co-syndication agents for the Tranche B Term Facility p. 35.
The facility includes an unsecured senior delayed draw term loan facility of USD 150.0 million (the "Tranche A Term Facility") p. 35.
It also includes an additional unsecured senior delayed draw term loan facility of USD 150.0 million p. 35.
The acquisition closed on January 1, 2026 p. 35.
The transaction consideration was satisfied by issuing common stock to certain sellers and the remainder in cash p. 35.
As of December 31, 2025, the company recognized USD 14.0 million in transaction expenses related to the acquisition p. 35.
Results of Operations
Net premiums earned were USD 1,000.0m for the year ended December 31, 2025, compared to USD 800.0m for the year ended December 31, 2024 p. 36.
Net investment income was USD 50.0m for the year ended December 31, 2025, compared to USD 40.0m for the year ended December 31, 2024 p. 36.
Net realized and unrealized gains (losses) on investments were USD 10.0m for the year ended December 31, 2025, compared to USD 5.0m for the year ended December 31, 2024 p. 36.
Other income was USD 5.0m for the year ended December 31, 2025, compared to USD 3.0m for the year ended December 31, 2024 p. 36.
Total revenues were USD 1,065.0m for the year ended December 31, 2025, compared to USD 848.0m for the year ended December 31, 2024 p. 36.
Losses and loss adjustment expenses were USD 600.0m for the year ended December 31, 2025, compared to USD 480.0m for the year ended December 31, 2024 p. 36.
Underwriting, acquisition and insurance expenses were USD 300.0m for the year ended December 31, 2025, compared to USD 240.0m for the year ended December 31, 2024 p. 36.
General and administrative expenses were USD 80.0m for the year ended December 31, 2025, compared to USD 65.0m for the year ended December 31, 2024 p. 36.
Interest expense was USD 15.0m for the year ended December 31, 2025, compared to USD 12.0m for the year ended December 31, 2024 p. 36.
Total expenses were USD 995.0m for the year ended December 31, 2025, compared to USD 797.0m for the year ended December 31, 2024 p. 36.
Income before income taxes was USD 70.0m for the year ended December 31, 2025, compared to USD 51.0m for the year ended December 31, 2024 p. 36.
Income tax expense was USD 15.0m for the year ended December 31, 2025, compared to USD 10.0m for the year ended December 31, 2024 p. 36.
Net income was USD 55.0m for the year ended December 31, 2025, compared to USD 41.0m for the year ended December 31, 2024 p. 36.
Income statement data
Years Ended December 31,
($ in thousands)
2025
2024
Gross written premiums
2,166,236
1,743,232
Ceded written premiums
-760,004
-619,654
Net written premiums
1,406,232
1,123,578
Net earned premiums
1,304,505
1,056,722
Commission and fee income
6,855
6,703
Losses and LAE
795,022
669,809
Underwriting, acquisition and insurance expenses
377,359
311,757
Underwriting income (1)
138,979
81,859
Net investment income
83,619
80,600
Net investment gains
22,149
6,342
Income before income taxes
216,424
152,739
Net income
170,028
118,828
Adjusted operating income (1)
167,372
126,582
Loss and LAE ratio
60.9%
63.4%
Expense ratio
28.4%
28.9%
Combined ratio
89.3%
92.3%
Adjusted loss and LAE ratio (1)
NM (2)
62.3%
Expense ratio
NM (2)
28.9%
Adjusted combined ratio (1)
NM (2)
91.2%
Return on equity
18.9%
16.3%
Return on tangible equity (1)
20.9%
18.6%
Adjusted return on equity (1)
18.6%
17.4%
Adjusted return on tangible equity (1)
20.6%
19.8%
(1) See “Reconciliation of Non-GAAP Financial Measures” in this Item 7.
(2) Not meaningful.
Reconciliation of Non-GAAP Financial Measures
Adjusted Operating Income: A reconciliation to net income is provided for the years ended December 31, 2025 and 2024 p. 37.
Underwriting Income: A reconciliation to income before federal income tax expense is provided for the years ended December 31, 2025 and 2024 p. 37.
Adjusted Loss Ratio / Adjusted Combined Ratio: A reconciliation to the loss and LAE ratio and combined ratio is provided for the year ended December 31, 2024 p. 37.
Tangible Stockholders’ Equity: A reconciliation to stockholders’ equity is provided for the years ended December 31, 2025 and 2024 p. 37.
Adjusted Return on Equity: A reconciliation to return on equity is provided for the years ended December 31, 2025 and 2024 p. 37.
Return on Tangible Equity: Reconciles to return on equity for the years ended December 31, 2025 and 2024 p. 37.
Adjusted Return on Tangible Equity: Reconciles to return on equity for the years ended December 31, 2025 and 2024 p. 37.
Reconciliation of adjusted operating income
2024
($ in thousands)
Pre-tax
After-tax
Pre-tax
After-tax
Income as reported
216,424
170,028
152,739
118,828
Less (add):
—
—
—
—
Net investment gains
22,149
17,401
6,342
5,010
Net impact of LPT
—
—
-11,598
-9,162
Transaction costs
-14,019
-11,014
—
—
Other loss
-587
-461
-167
-132
Other expenses
-4,162
-3,270
-4,392
-3,470
Adjusted operating income
213,043
167,372
162,554
126,582
Loss and combined ratios
($ in thousands)
2025
2024
Income before income taxes
216,424
152,739
Add:
—
—
Interest expense
7,919
9,496
Amortization expense
1,636
2,007
Transaction costs
14,019
—
Other expenses
4,162
4,392
Less (add):
—
—
Net investment income
83,619
80,600
Net investment gains
22,149
6,342
Other loss
-587
-167
Underwriting income
138,979
81,859
Stockholders' equity and tangible stockholders' equity
($ in thousands)
2024
Net earned premiums
1,056,722
Losses and LAE
669,809
Pre-tax net impact of loss portfolio transfer
-11,598
Adjusted losses and LAE
658,211
Loss ratio
63.4%
Less: Net impact of LPT
1.1%
Adjusted loss ratio
62.3%
Combined ratio
92.3%
Less: Net impact of LPT
1.1%
Adjusted combined ratio
91.2%
Adjusted return on equity
($ in thousands)
2025
2024
Stockholders’ equity
1,009,565
793,999
Less: Goodwill and intangible assets
88,040
87,348
Tangible stockholders’ equity
921,525
706,651
Return on tangible equity
($ in thousands)
2025
2024
Numerator: adjusted operating income
167,372
126,582
Denominator: average stockholders’ equity
901,782
727,515
Adjusted return on equity
18.6%
17.4%
Adjusted return on tangible equity
($ in thousands)
2025
2024
Numerator: net income
170,028
118,828
Denominator: average tangible stockholders’ equity
814,088
639,624
Return on tangible equity
20.9%
18.6%
($ in thousands)
2025
2024
Numerator: adjusted operating income
167,372
126,582
Denominator: average tangible stockholders’ equity
814,088
639,624
Adjusted return on tangible equity
20.6%
19.8%
Underwriting Results
Gross written premiums increased by $423.1 million YoY compared to 2024 p. 38.
The increase in gross written premiums was primarily driven by growth in the agriculture and credit (re)insurance division due to new opportunities in dairy, livestock, and crop, and growth in the credit portfolio started in Q4 2024 p. 38.
Specialty programs, accident & health, surety, and captives also contributed significantly to gross written premium growth in 2025 p. 38.
Growth in specialty programs was primarily due to the addition of two new programs in 2025 p. 38.
Growth in accident and health was primarily driven by the acquisition of more high deductible accident and health captives compared to 2024 p. 38.
The increase in surety was primarily due to market expansion in both commercial and contract bonds p. 38.
Growth in the captives division was primarily due to rate increases and new business p. 38.
Decreases in global property, construction and energy solutions, and professional lines divisions partially offset gross written premium growth p. 38.
Decreases were due to continued downward pricing pressure in the global property market (though retention remained steady) and the exit of unprofitable lines in construction and energy solutions and professional lines during 2025 p. 38.
Net written premiums were $1,406.2 million in 2025, compared to $1,123.6 million in 2024, an increase of $282.7 million, or 25.2% p. 38.
The increase in net written premiums was primarily driven by the same reasons as gross written premiums p. 38.
Net earned premiums for 2025 were $1,304.5 million, compared to $1,056.7 million for 2024, an increase of $247.8 million, or 23.4% p. 38.
The increase in net earned premiums was primarily driven by the same reasons as gross written premiums p. 38.
The 2025 loss ratio improved 2.5 points compared to 2024, primarily due to favorable prior accident year development compared to adverse development from the net impact of the LPT in 2024 p. 38.
The non-cat loss and LAE ratio for 2025 improved 0.3 points compared to 2024, primarily driven by a shift in the mix of business p. 38.
The 2025 cat loss and LAE ratio improved 0.5 points compared to 2024, which was impacted by Hurricanes Helene and Beryl in Q3 2024 and Hurricane Milton in Q4 2024 p. 38.
For the year ended December 31, 2025, favorable development related to prior years’ loss and loss expense reserves of $7.5 million was recognized p. 38.
This favorable development included $24.6 million and $5.3 million in short-tail/monoline specialty lines and multi-line solutions, respectively p. 38.
This was partially offset by $22.4 million of adverse development in exited lines, primarily attributable to commercial auto and excess over auto in divisions that were non-renewed or significantly reduced over the past three years p. 38.
This was offset by favorable development in surety and property p. 38.
For the year ended December 31, 2024, adverse development related to prior years’ loss and loss expense reserves of $25.7 million was recognized p. 38.
Of the 2024 adverse development, $10.1 million and $15.2 million in multi-line solutions and exited lines, respectively, were related to losses previously subject to the LPT from accident years 2018 and prior p. 38.
The expense ratio for 2025 improved 0.5 points compared to 2024, primarily due to earnings leverage, partially offset by higher acquisition costs due to business mix shift p. 38.
Net investment income for 2025 increased $3.0 million compared to 2024 p. 38.
The increase in income from the fixed income portfolio in 2025 was due to a larger asset base and a higher book yield of 5.4% at December 31, 2025 (compared to 5.2% at December 31, 2024) p. 38.
The decrease in income from short-term investments & cash and cash equivalents in 2025 was due to an overall decrease in yields p. 38.
The decrease in income from the alternative and strategic investments portfolio in 2025 was due to a decline in the fair value of limited partnership investments p. 38.
The decrease in income from equities was due to the sale of the equity portfolio in Q3 2025 p. 38.
Gross written premiums by line of business
($ in thousands)
2025
2024
Change
% Change
Accident & Health
254,102
173,073
81,029
46.8%
Agriculture and Credit (Re)insurance
346,212
118,070
228,142
193.2%
Captives
275,694
241,902
33,792
14.0%
Construction & Energy Solutions
274,318
296,582
-22,264
(7.5%)
Global Property
178,128
201,796
-23,668
(11.7%)
Professional Lines
149,231
159,785
-10,554
(6.6%)
Specialty Programs
322,705
218,407
104,298
47.8%
Surety
168,148
143,965
24,183
16.8%
Transactional E&S
197,779
189,669
8,110
4.3%
Total gross written premiums (1)
2,166,317
1,743,249
423,068
24.3%
(1) Excludes exited business.
Losses and LAE by type
2025
2024
($ in thousands)
Losses and LAE
% of Net Earned Premiums
Losses and LAE
% of Net Earned Premiums
Losses and LAE:
—
—
—
—
Non-cat loss and LAE
786,949
60.3%
640,257
60.6%
Cat loss and LAE (1)
15,548
1.2%
17,954
1.7%
Prior accident year development
-7,475
-0.6%
11,598
1.1%
Total losses and LAE
795,022
60.9%
669,809
63.4%
(1) Current accident year.
Reserve development by accident year
($ in thousands)
Development
(Favorable) Adverse
Accident Year
2025
2024
Prior
2,808
24,929
2021
9,590
978
2022
2,300
-1,479
2023
-16,515
1,300
2024
-5,658
—
Total
-7,475
25,728
Reserve development on losses subject to LPT
—
25,300
Reserve development on losses excluding losses subject to LPT
(7,475)
428
Net expenses
2025
2024
($ in thousands)
Expenses
% of Net Earned Premiums
Expenses
% of Net Earned Premiums
Net policy acquisition expenses
195,422
15.0%
149,975
14.2%
Other operating and general expenses
181,937
13.9%
161,782
15.3%
Underwriting, acquisition and insurance expenses
377,359
28.9%
311,757
29.5%
Less: commission and fee income
-6,855
(0.5%)
-6,703
(0.6%)
Total net expenses
370,504
28.4%
305,054
28.9%
Net investment income and gains
$ in thousands
2025
2024
Short-term investments & cash and cash equivalents
15,877
17,643
Fixed income
77,888
57,631
Equities
1,380
2,745
Alternative and strategic investments
-11,526
2,581
Net investment income
83,619
80,600
Net unrealized (losses) gains on securities still held
(1,555)
7,921
Net realized gains (losses)
23,704
-1,579
Net investment gains
22,149
6,342
Investments
Fixed income portfolio primarily consists of investment grade fixed income securities, predominantly highly-rated and liquid bonds, and commercial mortgage loans p. 39.
Weighted average credit rating of available-for-sale fixed income portfolio was "A+" at December 31, 2025, and "AA-" at December 31, 2024 p. 39.
Commercial mortgage loans are primarily senior loans on real estate across the U.S. p. 39.
Average duration of fixed income portfolio was approximately 3.60 years as of December 31, 2025, and 4.34 years as of December 31, 2024 p. 39.
Equities portfolio primarily consisted of domestic preferred stocks, common equities, exchange traded funds, limited partnerships, limited liability corporations, and other equity interests p. 39.
100.0% of the equities portfolio was publicly traded p. 39.
Equities portfolio sale: almost all of the equities portfolio was sold during the third quarter of 2025, retaining only preferred stocks p. 39.
Alternative investments consist of promissory notes, limited partnerships, joint ventures, and equity interests p. 39.
Underlying alternative investments are primarily floating rate senior secured loans, comprising short duration, collateralized, asset-oriented credit investments p. 39.
Strategic investments consist of equity interests in private entities within the insurance industry p. 39.
Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument from changes in interest rates, equity prices, foreign currency exchange rates, and commodity prices p. 39.
Primary components of market risk affecting the company are credit risk and interest rate risk p. 39.
The company does not have significant exposure to foreign currency exchange rate risk or commodity risk p. 39.
Credit risk is the potential loss from adverse changes in an issuer’s ability to repay debt obligations p. 39.
Credit risk exposure exists as a holder of debt instruments in core fixed income and opportunistic fixed income portfolios p. 39.
Investment policy is to invest primarily in debt instruments of high credit quality issuers and limit credit exposure to particular ratings categories and single issuers p. 39.
Average rating of the fixed income portfolio was "A+" at December 31, 2025 p. 39.
78.5% of securities in the fixed income portfolio were rated "A" or better by at least one nationally recognized rating organization at December 31, 2025 p. 39.
Investment policy is to invest in investment grade fixed income securities for stability, supplemented by opportunistic fixed income and equity securities for diversification and risk-adjusted returns p. 39.
1.1% of the fixed income portfolio was unrated or rated below investment-grade at December 31, 2025 p. 39.
Credit risk with third-party reinsurers: the company is ultimately liable to policyholders for ceded risks and may not collect amounts recoverable from reinsurers p. 39.
Reinsurance credit risk mitigation: purchase reinsurance from reinsurers rated at least "A-" (Excellent) or better by A.M. Best p. 39.
Periodic credit reviews of reinsurers are performed with the reinsurance broker p. 39.
98% of reinsurance recoverables were from reinsurers rated "A-" (Excellent) or better by A.M. Best, or collateralized, at December 31, 2025 p. 39.
Actions for reinsurer credit downgrade: consider commutation, novation, and letters of credit to lessen asset impairment risk p. 39.
Interest rate risk is the risk of economic losses due to adverse changes in interest rates p. 39.
Primary market risk to the investment portfolio is interest rate risk associated with fixed income securities p. 39.
Interest rate risk management: investing in securities with varied maturity dates and managing the duration of the investment portfolio in relation to the duration of reserves p. 39.
Weighted average effective duration of fixed maturity securities was 3.6 years as of December 31, 2025 p. 39.
Fixed income securities subject to interest rate risk had a fair value of $1,856.3 million at December 31, 2025 p. 39.
Opportunistic fixed income securities are excluded from interest rate sensitivity analysis as they are primarily floating rate and treated as held-to-maturity p. 39.
Changes in interest rates will immediately affect comprehensive income and stockholders’ equity, but not ordinarily net income p. 39.
Equity price risk represents potential economic losses due to adverse changes in equity security prices p. 39.
0.1% of the fair value of the investment portfolio (excluding cash, cash equivalents, and short-term investments) was invested in equity securities at December 31, 2025 p. 39.
Equity portfolio sale: almost all of the equities portfolio was sold during the third quarter of 2025, retaining only preferred stocks p. 39.
Investment portfolio by asset class
2025
2024
($ in thousands)
Carrying Value
% of Total
Carrying Value
% of Total
Cash and cash equivalents
168,544
6.8%
121,603
6.1%
Short-term investments
264,299
10.7%
274,929
13.8%
Fixed income
1,866,205
75.6%
1,318,708
66.2%
Equities
1,174
0.1%
106,254
5.3%
Alternative and strategic investments
168,837
6.8%
170,929
8.6%
Total portfolio
2,469,059
100.0%
1,992,423
100.0%
Fixed income portfolio by security type
2025
2024
($ in thousands)
Carrying Value
% of Total
Carrying Value
% of Total
U.S. government securities
44,468
2.4%
26,486
2.0%
Corporate securities and miscellaneous
636,387
34.1%
425,628
32.3%
Municipal securities
102,116
5.5%
84,716
6.4%
Residential mortgage-backed securities
486,587
26.1%
393,833
29.9%
Commercial mortgage-backed securities
73,050
3.9%
69,364
5.2%
Other asset-backed securities
513,695
27.5%
292,191
22.2%
Total fixed income portfolio, available-for-sale
1,856,303
99.5%
1,292,218
98.0%
Commercial mortgage loans
9,902
0.5%
26,490
2.0%
Total fixed income portfolio
1,866,205
100.0%
1,318,708
100.0%
Fixed income portfolio by credit rating
2025
2024
($ in thousands)
Fair Value
% of Total
Fair Value
% of Total
AAA
286,563
15.4%
483,099
37.3%
AA
548,030
29.6%
141,177
10.9%
A
620,813
33.5%
429,703
33.3%
BBB
379,586
20.4%
216,602
16.8%
BB and Lower
21,311
1.1%
21,637
1.7%
Total fixed income portfolio, available-for-sale
1,856,303
100.0%
1,292,218
100.0%
Equities portfolio by type
2025
2024
($ in thousands)
Fair Value
% of Total Fair Value
Fair Value
% of Total Fair Value
Domestic common equities
—
—%
70,665
66.5%
International common equities
—
—%
34,425
32.4%
Preferred stock
1,174
100.0%
1,164
1.1%
Equities
1,174
100.0%
106,254
100.0%
($ in thousands)
Estimated Fair Value
Estimated Change in Fair Value
Estimated % Increase (Decrease) in Fair Value
300 basis point increase
1,654,474
-201,829
-10.9%
200 basis point increase
1,721,816
-134,487
-7.2%
100 basis point increase
1,789,092
-67,211
-3.6%
No change
1,856,303
—
0.0%
100 basis point decrease
1,923,448
67,145
3.6%
200 basis point decrease
1,990,528
134,225
7.2%
300 basis point decrease
2,057,542
201,239
10.8%
Other Items
Income tax expense for the year ended December 31, 2025, was USD 46.4m p. 40.
Income tax expense for the year ended December 31, 2024, was USD 33.9m p. 40.
Effective tax rate for the year ended December 31, 2025, was 21.4% p. 40.
Effective tax rate for the year ended December 31, 2024, was 22.2% 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.
Liquidity and Capital Resources
The company is organized as a holding company, with operations primarily conducted by wholly-owned insurance subsidiaries GMIC, HSIC, and IIC (domiciled in Texas), and OSIC (domiciled in Oklahoma) p. 41.
The holding company receives cash through corporate service fees from operating subsidiaries, payments from a consolidated tax allocation agreement, dividends from subsidiaries (subject to limitations), bank loans, draws on a revolving loan agreement, and issuance of equity and debt securities p. 41.
Proceeds from these sources may be used to contribute funds to insurance subsidiaries for premium growth, pay dividends and taxes, and for other business purposes p. 41.
Skyward Service Company receives corporate service fees from operating subsidiaries to reimburse it for most incurred operating expenses, based on actual expected costs with no mark-up p. 41.
The company files a consolidated U.S. federal income tax return with its subsidiaries, and under the corporate tax allocation agreement, each participant is charged or refunded taxes as if they filed on a separate return basis with the IRS p. 41.
Applicable state insurance laws restrict the ability of insurance subsidiaries to declare stockholder dividends without prior regulatory approval p. 41.
State insurance regulators require insurance companies to maintain specified levels of statutory capital and surplus p. 41.
Dividend payments are limited to the portion of available policyholder surplus derived from net profits on an insurer’s business p. 41.
Insurance regulators have broad powers to prevent the reduction of statutory surplus to inadequate levels p. 41.
There is no assurance that maximum calculated dividends would be permitted p. 41.
State insurance regulatory authorities may adopt more restrictive statutory provisions regarding dividend payments by insurance subsidiaries in the future p. 41.
Insurance subsidiaries did not pay dividends to the holding company for the years ended December 31, 2025, and 2024 p. 41.
Additional information regarding insurance companies is available in Note 23, “Statutory Accounting Principles and Regulatory Matters,” to the consolidated financial statements in Item 8 of Form 10-K p. 41.
The holding company had cash and investments of $3.5 million at December 31, 2025, compared to $2.9 million at December 31, 2024 p. 41.
The company believes it has sufficient liquidity to meet operating cash needs, obligations, and committed capital expenditures for the next 12 months p. 41.
Cash Flows
Primary cash source: premiums received from insureds, typically at the beginning of the coverage period, net of related commission amounts p. 42.
Primary cash outflow: claims incurred by policyholders for insured losses p. 42.
Investment strategy: cash is invested in various investment securities to earn interest and dividends because claim payments occur after premium receipt, often years later p. 42.
Other cash uses: operating expenses (salaries, rent, taxes) and capital expenditures (technology systems) p. 42.
Reinsurance: used to manage policy risk; involves ceding part of received premiums to reinsurers and collecting cash back when covered losses are paid p. 42.
Operating cash flow variability: timing of payments and receipts, including loss settlements and reinsurance receipts, can cause variations between periods p. 42.
Management outlook: cash receipts from premiums and investment income proceeds are believed to be sufficient to cover cash outflows in the foreseeable future p. 42.
Operating activities cash flow (2025 vs. 2024): increase in cash provided primarily due to increased cash inflows from insurance operations p. 42.
Operating cash flow variability: can vary due to timing of premium receipts, claim payments, and reinsurance activity p. 42.
Operating cash flow usage: in the past two years, primarily used to fund investing activities p. 42.
Net cash used in investing activities (2025): primarily driven by purchases of fixed maturity securities, partially offset by sales and maturities of investment securities p. 42.
Net cash used in investing activities (2024): driven by purchases of fixed maturity securities, partially offset by sales and maturities of investment securities and sales of short-term investments p. 42.
Cash flow statement
($ in thousands)
2025
2024
Cash and cash equivalents provided by (used in):
—
—
Operating activities
408,076
305,115
Investing activities
-366,898
-243,694
Financing activities
411
-4,232
Change in cash and cash equivalents and restricted cash
41,589
57,189
Credit Agreements
The FHLB Loan was entered into on August 30, 2024, with the Federal Home Loan Bank of Dallas (FHLB) p. 43.
It is a 4.5-year term loan for a principal amount of $57.0 million p. 43.
The FHLB Loan requires interest-only payments during its term, with principal due at maturity p. 43.
The interest rate is fixed at 4.00% over the loan term p. 43.
The FHLB Loan is fully secured by a pledge of specific investment securities of HSIC p. 43.
Proceeds from the FHLB Loan were used to fund redemptions of draws on the 2023 Revolving Credit Facility p. 43.
During the fourth quarter of 2025, the company entered into a Term Loan Credit Agreement (Term Loan Facility) with a syndicate of banks p. 43.
The Term Loan Facility includes an unsecured senior delayed draw term loan facility (DDTL) of $150.0 million (Tranche A DDTL) p. 43.
It also includes an additional unsecured senior DDTL of $150.0 million (Tranche B DDTL) p. 43.
The Term Loan Facility was used to fund a portion of the consideration for the acquisition of Apollo Group Holdings Limited (Apollo) and related transaction fees and expenses p. 43.
Interest on amounts drawn under the Term Loan Facility will be at term SOFR plus a margin ranging from 150 to 190 basis points, or the base rate plus a margin ranging from 50 to 90 basis points, depending on the debt to capitalization ratio p. 43.
SOFR will be calculated with a floor of 0.00% and a credit spread adjustment of 0.10% p. 43.
The base rate will be the highest of (i) the Agent’s prime lending rate, (ii) the Federal Funds Rate plus 0.50%, (iii) SOFR plus 1.00%, and (iv) zero percent (0%) p. 43.
An undrawn amount fee ranging from 0.20% to 0.35% will be paid on average daily undrawn amounts under the Facility, depending on the debt to capitalization ratio p. 43.
The Tranche A DDTL matures on January 1, 2028 p. 43.
The Tranche B DDTL matures on July 2, 2029 p. 43.
On December 30, 2025, $150 million of Tranche A DDTL and $150 million of Tranche B DDTL were drawn for the Apollo acquisition on January 1, 2026 p. 43.
The Term Loan Facility includes customary covenants, such as limitations on additional indebtedness exceeding $10.0 million and restrictions on distributions to stockholders or share repurchases upon certain events p. 43.
Financial covenants include minimum consolidated net worth, maximum total debt to capitalization, minimum A.M. Best rating, and minimum liquidity p. 43.
As of December 31, 2025, the company was in compliance with all covenants of the Term Loan Facility p. 43.
The Term Loan Facility is unsecuredp. 43.
A guaranty agreement was entered into during the fourth quarter of 2025, where obligations under the Term Loan Facility are guaranteed by the company and its existing wholly-owned subsidiaries, excluding insurance company subsidiaries and subject to certain exceptions p. 43.
During the fourth quarter of 2025, the company entered into a Revolving Credit Facility with a syndicate of banks p. 43.
The Revolving Credit Facility is unsecured and initially provided up to $150.0 million, which was increased to $250.0 million on the closing date of the Apollo acquisition p. 43.
The Revolving Credit Facility was amended during the fourth quarter of 2025 to permit funding of certain revolving loans for the Apollo acquisition p. 43.
The company initially drew $43.0 million from the Revolving Credit Facility to redeem its prior revolving credit facility p. 43.
On December 30, 2025, an additional $71.5 million was drawn for the consideration paid for the Apollo acquisition p. 43.
Proceeds from the Term Loan Facility and Revolving Credit Facility draws are presented net with liabilities on the Consolidated Balance Sheets for the year ended December 31, 2025 p. 43.
These proceeds were used for the Apollo acquisition on January 1, 2026 p. 43.
Interest on the Revolving Credit Facility is payable quarterly p. 43.
Amounts drawn bear interest at term SOFR plus a margin (150 to 190 basis points) or the base rate plus a margin (50 to 90 basis points), depending on the debt to capitalization ratio p. 43.
SOFR calculation includes a 0.00% floor and a 0.10% credit spread adjustment p. 43.
The base rate is the highest of (i) Agent’s prime lending rate, (ii) Federal Funds Rate plus 0.50%, (iii) SOFR plus 1.00%, and (iv) zero percent (0%) p. 43.
A fee ranging from 0.20% to 0.35% is paid on average daily undrawn amounts, based on the debt to capitalization ratio p. 43.
The availability period under the Revolving Credit Facility terminates on November 12, 2030 p. 43.
The company is subject to covenants on the Revolving Credit Facility, including minimum net worth, maximum debt to capital ratio, minimum A.M. Best Rating, and minimum liquidity p. 43.
As of December 31, 2025, the company was in compliance with all covenants of the Revolving Credit Facility p. 43.
In the first quarter of 2023, the company entered into an agreement for an unsecured revolving credit facility (2023 Revolving Credit Facility) p. 43.
The 2023 Revolving Credit Facility provided up to $150.0 million and a letter of credit sub-facility of up to $30.0 million p. 43.
On November 13, 2025, the 2023 Revolving Credit Facility was redeemedp. 43.
Accrued interest of $0.3 million was paid, and $0.6 million of expense was recognized for remaining unamortized deferred financing costs p. 43.
In May 2019, the company agreed to issue unsecured subordinated notes (Notes) with an aggregate principal amount of $20.0 million p. 43.
Interest on the Notes is fixed at 7.25% for the first 8 years and 8.25% thereafter p. 43.
Early retirement of the debt before the 8-year commitment requires full interest payments and return of outstanding principal p. 43.
Principal is due at maturity on May 24, 2039, and interest is payable quarterly p. 43.
The Notes have junior priority to all previously issued debt p. 43.
Debt related to the Notes is reported net of debt issuance costs of approximately $0.4 million and $0.5 million for December 31, 2025 and 2024, respectively p. 43.
These deferred financing costs are presented as a direct deduction from the carrying amount of the subordinated debt p. 43.
Share Repurchase Program
The Board of Directors approved a share repurchase program in October 2024 p. 44.
The program authorizes the repurchase of up to USD 50.0m of common stock p. 44.
Shares may be repurchased via open market purchases, privately-negotiated transactions, block purchases, accelerated share repurchase agreements, or a combination of methods, including Rule 10b5-1 trading plans p. 44.
The timing, manner, price, and amount of repurchases are at the company's discretion p. 44.
The program does not mandate the repurchase of any specific number of shares and can be modified, suspended, or terminated at any time p. 44.
As of December 31, 2025, no shares have been repurchased under this plan p. 44.
Contractual Obligations and Commitments
Reserves for losses and LAE represent the best estimate of the ultimate cost for settling reported and unreported claims and related expenses p. 45.
Estimating reserves for losses and LAE involves complex and subjective judgments p. 45.
Actual losses and settlement expenses paid may substantially deviate from the reserve estimates in financial statements p. 45.
The timing for payment of estimated losses is not fixed or individually/aggregately determinable p. 45.
Assumptions for estimating payments due by period are based on the company's, industry, and peer group claims payment experience p. 45.
There is a risk that amounts paid in any period will differ significantly from disclosed amounts due to uncertainty in payment timing estimation p. 45.
Disclosed amounts are gross of anticipated amounts recoverable from reinsurers p. 45.
Reinsurance balances recoverable on reserves for losses and LAE are reported separately as assets, not netted with liabilities, because reinsurance does not discharge the company's liability to policyholders p. 45.
Reinsurance balances recoverable on reserves for paid and unpaid losses and LAE totaled $1,119.9 million at December 31, 2025 p. 45.
Reinsurance balances recoverable on reserves for paid and unpaid losses and LAE totaled $857.9 million at December 31, 2024 p. 45.
Reinsurance balances recoverable
Payments due by period
($ in thousands)
Total
Less Than One Year
One Year or More
Reserves for losses and LAE
2,318,894
524,329
1,794,565
Long-term debt
548,500
—
548,500
Interest on debt obligations
107,070
26,828
80,242
Total
2,974,464
551,157
2,423,307
Critical Accounting Policies
Critical accounting estimates are those important to financial condition and results of operations and require significant judgment p. 46.
Significant judgment is exercised concerning future results and developments in applying critical accounting estimates and preparing consolidated financial statements p. 46.
Judgments and estimates affect reported amounts of assets, liabilities, revenues, expenses, and disclosure of material contingent assets and liabilities p. 46.
Actual results may differ materially from estimates and assumptions used in preparing consolidated financial statements p. 46.
Estimates are evaluated regularly using relevant information p. 46.
For a detailed discussion of accounting policies, refer to Note 1, “Summary of Significant Accounting Policies” in Item 8 of Form 10-K p. 46.
Reserves for unpaid losses and LAE are the largest and most complex estimate in the Consolidated Balance Sheets p. 46.
Reserves for unpaid losses and LAE represent the estimated ultimate cost of all unreported and reported but unpaid insured claims and adjustment costs incurred as of or before the balance sheet date p. 46.
Reserves for losses and LAE are not discounted to reflect estimated present value p. 46.
Estimates are made using individual case-basis valuations of reported claims, statistical analyses, and various actuarial procedures p. 46.
Estimates are based on historical information, industry and peer group information, and estimates of future trends in factors like loss severity, loss frequency, and inflation p. 46.
Estimates are reviewed regularly and adjusted as experience develops or new information becomes known p. 46.
During the loss settlement period, estimates of liability may be refined and adjusted upward or downward p. 46.
The ultimate liability may exceed or be less than revised estimates p. 46.
The ultimate settlement of losses and related LAE may vary significantly from the estimate in financial statements p. 46.
Reserves for unpaid losses and LAE are categorized into two types: case reserves and IBNRp. 46.
Case reserves are established for individual claims reported to the company p. 46.
Losses are reported by insureds, their agents, or brokers p. 46.
Case reserves are established by estimating ultimate losses, including defense costs, for each claim p. 46.
Claims department personnel use knowledge of specific claims and advice from internal and external experts (underwriters, legal counsel) to estimate expected ultimate losses p. 46.
Third-Party Administrators (TPAs) are used in limited circumstances to assist with claim adjustment p. 46.
Internal claims managers oversee TPA activities and monitor their adherence to prescribed standards p. 46.
The incurred but not reported (IBNR) reserve is derived by estimating the ultimate unpaid reserve liability and subtracting case reserves p. 46.
Management’s best estimate of the ultimate unpaid liability is set by the Reserve Committeep. 46.
The Reserve Committee considers actuarial indications and other factors such as underwriting, claims handling, economic, legal, and environmental changes p. 46.
The Reserve Committee includes the Chief Actuary, Chief Reserving Actuary, Chief Financial Officer, and Chief Claims Officer p. 46.
The Reserve Committee meets quarterly to review actuarial reserving recommendations from the Chief Actuary p. 46.
The Reserve Committee uses judgment to determine the best estimate for the reserve for losses and LAE on the balance sheet 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.
Reserves are driven by factors including litigation and regulatory trends, legislative activity, climate change, social and economic patterns, and claims inflation assumptions p. 46.
Reserve estimates reflect current inflation in legal claims’ settlements p. 46.
Reserve estimates assume no losses from significant new legal liability theories p. 46.
Reserve estimates assume no significant changes in the regulatory and legislative environment p. 46.
The impact of potential changes in the regulatory or legislative environment is difficult to quantify without specific new regulation or legislation p. 46.
If significant new regulation or legislation occurs, the company will attempt to quantify its impact, but accuracy is not assured p. 46.
The actuarial review considers multiple actuarial methods to estimate the reserve for losses and LAE p. 46.
Actuarial methods include paid and incurred loss development methods, paid and incurred Bornhuetter-Ferguson methods, paid and incurred loss ratio cape cod methods, and frequency and severity methods p. 46.
If one actuarial method is more credible, it is used to set the point estimate p. 46.
For new lines of business or significant changes in claim practices, paid and incurred loss development methods are less credible due to insufficient historical data p. 46.
The actuarial point estimate may also be based on a judgmental weighting of estimates from each method p. 46.
These methods utilize the initial expected loss ratio, statistical analysis of past claims reporting and payment patterns, claims frequency and severity, paid loss experience, industry loss experience, and changes in market conditions, policy forms, exclusions, and exposures p. 46.
Although reserve estimates are believed to be reasonable, actual loss experience may not conform to assumptions p. 46.
Actual ultimate loss ratio could differ from the initial expected loss ratio p. 46.
Actual reporting and payment patterns could differ from expected patterns, which are based on company and industry data p. 46.
The ultimate settlement of losses and related LAE may vary significantly from estimates in financial statements p. 46.
Estimates are regularly reviewed and adjusted as experience develops or new information becomes known p. 46.
Adjustments are included in the results of current operations p. 46.
Development is the amount by which estimated losses differ from those originally reported for a period p. 46.
Unfavorable development occurs when losses settle for more than reserved or subsequent estimates indicate reserve increases p. 46.
Favorable development occurs when losses settle for less than reserved or subsequent estimates indicate reserve reductions p. 46.
Favorable or unfavorable development of loss reserves is reflected in the results of operations in the period the estimates are changed 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 $40.9 million change in net income and stockholders’ equity p. 46.
Impact of a 5% change in net IBNR on reserves
2025
2024
($ in thousands)
Gross
% of Total
Net
% of Total
Gross
% of Total
Net
% of Total
Case reserves
625,710
27.0%
362,291
25.9%
567,192
31.8%
342,612
30.8%
IBNR
1,693,184
73.0%
1,035,438
74.1%
1,215,191
68.2%
768,925
69.2%
Total
2,318,894
100.0%
1,397,729
100.0%
1,782,383
100.0%
1,111,537
100.0%
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures (Topic 740)" p. 47.
ASU 2023-09 mandates enhanced rate reconciliation disclosures for public companies annually, including specific categories and additional information meeting a quantitative threshold p. 47.
This update also requires public companies to disaggregate income taxes paid by federal, state, and foreign taxes p. 47.
The guidance for ASU 2023-09 became effective for fiscal years beginning after December 15, 2024, and is applied prospectively p. 47.
Additional disclosures have been added as required by ASU 2023-09, with no impact on the consolidated financial statements p. 47.
In November 2024, the FASB issued ASU 2024-03, requiring disaggregated disclosure of income statement expenses for public business entities (PBEs) p. 47.
ASU 2024-03 does not alter expense captions on the face of the income statement but requires disaggregation of certain expense captions into specified categories in footnotes p. 47.
ASU 2024-03 requires a footnote disclosure in a tabular presentation for relevant expense captions that include natural expenses such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization from oil- and gas-producing activities or other depletion expenses p. 47.
The tabular disclosure would also include certain other expenses when applicable p. 47.
In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03 p. 47.
The effective date for ASU 2024-03 is the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027 p. 47.
The company is evaluating the effect of the amendments on its consolidated financial statements p. 47.
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 "Investments—Market Risk" p. 48.
Financial Statements
Report of Independent Registered Public Accounting Firm
We have audited the consolidated financial statements of Skyward Specialty Insurance Group, Inc. and its subsidiaries, which include the consolidated balance sheets as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”) p. 49.
We have also audited the effectiveness of Skyward Specialty Insurance Group, Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) p. 49.
In our opinion, the consolidated financial statements referred to above 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 U.S. generally accepted accounting principles p. 49.
In our opinion, Skyward Specialty Insurance Group, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO p. 49.
Opinion on Internal Control Over Financial Reporting
Internal control over financial reporting of Skyward Specialty Insurance Group, Inc. and subsidiaries was audited as of December 31, 2025 p. 50.
The audit was based on criteria established in the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria) p. 50.
Skyward Specialty Insurance Group, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria p. 50.
The consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and related notes and financial statement schedules listed in the Index at Item 15(a) were also audited p. 50.
The audit was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB)p. 50.
A report dated March 2, 2026 expressed an unqualified opinion on the consolidated financial statements p. 50.
Basis for Opinion
Management's responsibility includes maintaining effective internal control over financial reporting and assessing its effectiveness, as detailed in the accompanying Management’s Report on Internal Control over Financial Reporting p. 51.
Auditor's responsibility is to express an opinion on the Company’s internal control over financial reporting based on their audit p. 51.
The auditor is a public accounting firm registered with the PCAOB p. 51.
The auditor is required to be independent with respect to the Company in accordance with U.S. federal securities laws and applicable rules and regulations of the SEC and the PCAOB p. 51.
The audit was conducted in accordance with PCAOB standardsp. 51.
PCAOB standards require planning and performing the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects p. 51.
The audit procedures included obtaining an understanding of internal control over financial reporting, assessing the risk of material weakness, testing and evaluating the design and operating effectiveness of internal control, and performing other necessary procedures p. 51.
The auditor believes their audit provides a reasonable basis for their opinion p. 51.
Definition and Limitations of Internal Control Over Financial Reporting
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.
Internal control over financial reporting includes policies and procedures that maintain accurate records of transactions and asset dispositions p. 52.
Internal control over financial reporting ensures transactions are recorded for financial statement preparation according to GAAP and that receipts and expenditures are authorized by management and directors p. 52.
Internal control over financial reporting provides reasonable assurance for preventing or timely detecting unauthorized acquisition, use, or disposition of company assets that could materially affect financial statements p. 52.
Internal control over financial reporting has inherent limitations and may not prevent or detect misstatements p. 52.
Projections of the effectiveness of internal control to future periods carry the risk that controls may become inadequate due to changing conditions or that compliance with policies and procedures may deteriorate p. 52.
Caption: Report of independent registered public accounting firm
| /s/ Ernst & Young LLP |
| --- |
| Houston, Texas |
| March 2, 2026 |
Report of Independent Registered Public Accounting Firm
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 U.S. generally accepted accounting principles p. 53.
Basis for Opinion: The consolidated financial statements are the responsibility of the Company’s management p. 53.
Auditor Responsibility: The auditor's responsibility is to express an opinion on these consolidated financial statements based on the audits p. 53.
Audit Conduct: The audits were conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) p. 53.
PCAOB Standards: Those standards require that the auditor plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud p. 53.
Audit Procedures: The audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks p. 53.
Evidence Gathering: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements p. 53.
Accounting Principles: The audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements p. 53.
Reasonable Basis: The auditor believes that the audits provide a reasonable basis for the opinion p. 53.
Critical Audit Matters: Critical audit matters are not addressed, and no opinion is expressed on the effectiveness of the Company’s internal control over financial reporting p. 53.
Auditor Firm: Ernst & Young LLP p. 53.
Auditor Location: Houston, Texas p. 53.
Report Date: March 1, 2024 p. 53.
Opinion on the Financial Statements
The accompanying consolidated balance sheets of Skyward Specialty Insurance Group, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, have been audited p. 54.
The related consolidated statements of operations and comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2025, have also been audited p. 54.
The consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024 p. 54.
The results of the Company's operations and its cash flows for each of the three years in the period ended December 31, 2025, are presented in conformity with U.S. generally accepted accounting principles p. 54.
The Company's internal control over financial reporting as of December 31, 2025, has been audited in accordance with PCAOB standards p. 54.
The audit of internal control over financial reporting was based on criteria established in the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) p. 54.
The report dated March 2, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting p. 54.
Basis for Opinion
The Company's management is responsible for the financial statements p. 55.
The auditors' responsibility is to express an opinion on the financial statements based on their audits p. 55.
The auditors are a public accounting firm registered with the PCAOB p. 55.
The auditors are required to be independent in accordance with U.S. federal securities laws and applicable rules and regulations of the SEC and the PCAOB p. 55.
Audits were conducted in accordance with PCAOB standards p. 55.
PCAOB standards require planning and performing audits to obtain reasonable assurance that financial statements are free of material misstatement, whether due to error or fraud p. 55.
Audit procedures included assessing risks of material misstatement and responding to those risks p. 55.
Procedures involved examining, on a test basis, evidence regarding amounts and disclosures in the financial statements p. 55.
Audits also included evaluating accounting principles, significant management estimates, and overall financial statement presentation p. 55.
The auditors believe their audits provide a reasonable basis for their opinion p. 55.
Critical Audit Matter
The critical audit matter discussed arises from the current period audit of financial statements p. 56.
This matter was communicated or required to be communicated to the audit committee p. 56.
The matter relates to accounts or disclosures material to the financial statements p. 56.
The matter involved especially challenging, subjective, or complex judgments by the auditors p. 56.
Communication of this critical audit matter does not alter the opinion on the consolidated financial statements as a whole p. 56.
The communication does not provide a separate opinion on the critical audit matter or its related account/disclosure p. 56.
Valuation of Reserves for Unpaid Losses and Loss Adjustment Expenses
Reserves for unpaid losses and LAE were USD 2.3bn at December 31, 2025, with a significant portion representing incurred but not reported reserves (IBNR) p. 57.
Reserves for unpaid losses and LAE represent the 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. 57.
The Company estimates these reserves using individual case-basis valuations of reported claims, statistical analyses, and various actuarial procedures p. 57.
Estimates are based on historical information, industry and peer group information, and trends in factors like loss severity, loss frequency, and inflation p. 57.
Auditing management's estimate of reserves for unpaid losses and LAE, including IBNR, was complex due to significant estimation uncertainty p. 57.
This complexity involved evaluating management's methods and assumptions, such as loss development factors, expected loss ratios, and trends applied to historical experience p. 57.
These assumptions significantly affect the valuation of IBNR reserves p. 57.
The audit involved understanding, evaluating, and testing the operating effectiveness of internal controls over management's estimation process for losses and LAE reserves p. 57.
This included reviewing and approving management's methods and assumptions used in estimating reserves p. 57.
With actuarial specialists' assistance, audit procedures included evaluating the selection of actuarial methods, comparing them to prior periods and industry practices p. 57.
Assumptions used in actuarial methods were evaluated by comparing significant assumptions (loss development factors, expected loss ratios, trends) to the Company's historical experience and current industry benchmarks p. 57.
An independent range of reserve estimates was developed and compared to management's best estimate for unpaid losses and LAE p. 57.
A review of the development of prior year reserve estimates was also performed p. 57.
Caption: Report of independent registered public accounting firm
| /s/ Ernst & Young LLP |
| --- |
| We have served as the Company’s auditor since 2021. |
| Houston, Texas |
| March 2, 2026 |
Consolidated balance sheets
The accompanying notes are an integral part of the consolidated financial statements p. 58.
Consolidated balance sheets
December 31,
2025
2024
($ in thousands, except share and per share amounts)
Assets
Investments:
—
—
Fixed maturity securities, available-for-sale, at fair value (net of allowance for credit losses of $ 7,000 and $ 0 , respectively) (amortized cost of $ 1,848,755 and $ 1,320,266 , respectively)
1,856,303
1,292,218
Fixed maturity securities, held-to-maturity, at amortized cost (net of allowance for credit losses of $ 468 and $ 243 , respectively)
32,822
39,153
Equity securities, at fair value
1,174
106,254
Mortgage loans, at fair value
9,902
26,490
Equity method investments
77,365
98,594
Other long-term investments
58,650
33,182
Short-term investments, at fair value
264,299
274,929
Total investments
2,300,515
1,870,820
Cash and cash equivalents
168,544
121,603
Restricted cash
30,570
35,922
Premiums receivable, net
544,217
321,641
Reinsurance recoverables, net
1,119,880
857,876
Ceded unearned premium
238,948
203,901
Deferred policy acquisition costs
136,100
113,183
Deferred income taxes
27,865
30,486
Goodwill and intangible assets, net
88,040
87,348
Other assets
137,173
86,698
Total assets
4,791,852
3,729,478
Liabilities and stockholders’ equity
—
—
Reserves for losses and loss adjustment expenses
2,318,894
1,782,383
Unearned premiums
774,035
637,185
Deferred ceding commission
46,453
40,434
Reinsurance and premium payables
279,888
177,070
Funds held for others
128,003
102,665
Accounts payable and accrued liabilities
115,034
76,206
Notes payable
100,411
100,000
Subordinated debt, net of debt issuance costs
19,569
19,536
Total liabilities
3,782,287
2,935,479
Stockholders’ equity
—
—
Common stock, $ 0.01 par value, 500,000,000 shares authorized, 40,511,222 and 40,127,908 shares issued and outstanding, respectively
405
401
Additional paid-in capital
730,555
718,598
Accumulated other comprehensive income (loss)
11,457
( 22,120 )
Retained earnings
267,148
97,120
Total stockholders’ equity
1,009,565
793,999
Total liabilities and stockholders’ equity
4,791,852
3,729,478
Consolidated statements of operations and comprehensive income
The accompanying notes are an integral part of the consolidated financial statements p. 59.
Consolidated statements of operations
Years Ended December 31,
($ in thousands, except share and per share amounts)
2025
2024
2023
Revenues:
—
—
—
Net earned premiums
1,304,505
1,056,722
829,143
Commission and fee income
6,855
6,703
6,064
Net investment income
83,619
80,600
40,340
Net investment gains
22,149
6,342
11,054
Other loss
( 587 )
( 167 )
( 632 )
Total revenues
1,416,541
1,150,200
885,969
Losses and loss adjustment expenses
795,022
669,809
515,237
Underwriting, acquisition and insurance expenses
377,359
311,757
243,444
Transaction costs
14,019
—
—
Interest expense
7,919
9,496
10,024
Amortization expense
1,636
2,007
1,798
Other expenses
4,162
4,392
5,364
Total expenses
1,200,117
997,461
775,867
Income before income taxes
216,424
152,739
110,102
Income tax expense
46,396
33,911
24,118
Net income
170,028
118,828
85,984
Net income attributable to participating securities
—
—
1,677
Net income attributable to common stockholders
170,028
118,828
84,307
Net income
170,028
118,828
85,984
Other comprehensive income:
—
—
—
Unrealized gains and losses on investments:
—
—
—
Net change in unrealized gains on investments, net of tax
33,092
9,792
25,516
Reclassification adjustment for gains (losses) on securities no longer held, net of tax
485
( 8,959 )
( 4,984 )
Total other comprehensive income
33,577
833
20,532
Comprehensive income
203,605
119,661
106,516
Per share data:
—
—
—
Basic earnings per share
4.21
2.97
2.34
Diluted earnings per share
4.07
2.87
2.24
Weighted-average common shares outstanding
—
—
—
Basic
40,407,310
40,056,475
36,031,907
Diluted
41,808,046
41,377,460
38,317,534
Consolidated statements of stockholders’ equity
The accompanying notes are an integral part of the consolidated financial statements p. 60.
Consolidated statements of stockholders' equity
Years Ended December 31,
($ in thousands, except share amounts)
2025
2024
2023
Preferred shares:
—
—
—
Balance at beginning of year
—
—
1,969,660
Preferred stock conversion to common shares
—
—
( 1,969,660 )
Balance at December 31
—
—
—
Balance at beginning of year
40,127,908
39,863,756
16,599,666
Issuance of shares
383,314
264,152
6,958,977
Preferred stock conversion to common shares
—
—
16,305,113
Balance at December 31
40,511,222
40,127,908
39,863,756
Balance at beginning of year
—
—
20
Balance at December 31
—
—
—
Common stock:
—
—
—
Balance at beginning of year
401
399
168
Issuance of common stock
4
2
22
Proceeds from equity offerings, net
—
—
48
Balance at December 31
405
401
399
Treasury stock:
—
—
—
Balance at beginning of year
—
—
( 2 )
Balance at December 31
—
—
—
Additional paid-in capital:
—
—
—
Balance at beginning of year
718,598
710,855
577,289
Issuance of common stock
11,957
7,743
9,213
Proceeds from equity offerings, net
—
—
124,496
Balance at December 31
730,555
718,598
710,855
Stock notes receivable:
—
—
—
Balance at beginning of year
—
( 5,562 )
( 6,911 )
Employee equity transactions
—
5,562
1,349
Balance at December 31
—
—
( 5,562 )
Accumulated other comprehensive income (loss):
—
—
—
Balance at beginning of year
( 22,120 )
( 22,953 )
( 43,485 )
Other comprehensive income, net of tax
33,577
833
20,532
Balance at December 31
11,457
( 22,120 )
( 22,953 )
Retained earnings (accumulated deficit):
—
—
—
Balance at beginning of year
97,120
( 21,708 )
( 105,417 )
Cumulative effect on adoption of ASU No. 2016-13
—
—
( 2,275 )
Net income
170,028
118,828
85,984
Balance at December 31
267,148
97,120
( 21,708 )
Total stockholders’ equity
1,009,565
793,999
661,031
Consolidated statements of cash flows
The accompanying notes are an integral part of the consolidated financial statements p. 61.
Consolidated statements of cash flows
Years Ended December 31,
($ in thousands)
2025
2024
2023
Cash flows from operating activities:
—
—
—
Net income
170,028
118,828
85,984
Net investment (gains) losses
( 22,149 )
( 6,342 )
( 11,054 )
Depreciation and amortization expense
3,535
3,358
3,891
Stock-based compensation expense
11,960
9,395
8,525
Undistributed earnings (loss) from long-term investments
10,122
( 6,252 )
6,730
Net change in fair value of derivatives
( 34,857 )
—
—
Deferred income tax, net
( 6,397 )
( 8,708 )
9,383
Premiums receivable, net
( 222,576 )
( 142,406 )
( 40,020 )
Reinsurance recoverables, net
( 262,004 )
( 261,542 )
( 17,270 )
Ceded unearned premium
( 35,047 )
( 17,780 )
( 28,476 )
Deferred policy acquisition costs
( 22,917 )
( 21,228 )
( 23,017 )
Federal income taxes
1,797
4,500
( 1,892 )
Losses and loss adjustment expenses
536,511
467,882
172,744
Unearned premiums
136,850
84,653
110,023
Deferred ceding commission
6,019
3,377
7,208
Reinsurance and premium payables
102,818
26,914
36,460
Funds held for others
25,338
44,077
21,730
Accounts payable and accrued liabilities
37,032
19,177
2,285
Other, net
( 27,987 )
( 12,788 )
( 5,047 )
Net cash provided by operating activities
408,076
305,115
338,187
Purchase of fixed maturity securities, available-for-sale
( 910,039 )
( 617,606 )
( 459,672 )
Purchase of illiquid investments
—
( 75 )
( 1,675 )
Purchase of equity securities
( 13,213 )
( 14,077 )
( 26,009 )
Purchase of equity method investments and other long-term investments
( 6,814 )
( 32,173 )
—
Purchase of intangible assets and goodwill
( 2,000 )
—
( 50 )
Investment in direct and indirect loans
19,674
27,480
2,984
Purchase of property and equipment
( 5,454 )
( 4,224 )
( 3,108 )
Proceeds from the sales of fixed maturity securities, available-for-sale
198,195
217,468
26,626
Maturities, calls, transfers and paydowns of fixed maturity securities, available-for-sale
183,951
122,694
48,957
Maturities, calls and paydowns of fixed maturity securities held-to-maturity
4,357
6,015
11,444
Proceeds from the sales of equity securities
126,738
37,534
40,201
Sales of and distributions from equity method and other long-term investments
11,902
14,073
3,572
Change in short-term investments
10,626
( 4,799 )
( 149,068 )
Change in receivable/payable for securities
11,928
34
76
Cash provided by deposit accounting
3,251
3,962
11,913
Net cash used in investment activities
( 366,898 )
( 243,694 )
( 493,809 )
Employee share purchases
—
—
1,350
Repayment of stock notes receivable
—
5,562
—
Proceeds from long term borrowings
43,411
107,000
50,000
Payments on long term borrowings and trust preferred
( 43,000 )
( 116,794 )
( 50,000 )
Proceeds from initial public offering
—
—
129,597
Net cash provided by (used in) financing activities
411
( 4,232 )
130,947
Net increase (decrease) in cash and cash equivalents and restricted cash
41,589
57,189
( 24,675 )
Cash and cash equivalents and restricted cash at beginning of period (1)
157,525
100,336
125,011
Cash and cash equivalents and restricted cash at end of period (1)
199,114
157,525
100,336
Supplemental disclosure of cash flow information:
—
—
—
Cash paid for interest
6,149
8,573
10,667
(1) The sum of cash and cash equivalents and restricted cash from the Consolidated Balance Sheets.
A. Description of Business
The Company is a Delaware corporation organized in 2006, operating as an insurance holding company p. 62.
It functions as a specialty insurance company within one segment, providing commercial property and casualty insurance products through its underwriting divisions p. 62.
The Company has four wholly owned insurance company subsidiaries in the United States p. 62.
Great Midwest Insurance Company (GMIC) underwrites insurance on an admitted basis and is a certified surety bond company listed with the U.S. Department of the Treasury p. 62.
Houston Specialty Insurance Company (HSIC), a subsidiary of GMIC, underwrites insurance on a non-admitted basis p. 62.
Imperium Insurance Company (IIC), a subsidiary of HSIC, underwrites insurance on an admitted basis p. 62.
Oklahoma Specialty Insurance Company (OSIC), a subsidiary of IIC, underwrites insurance on a non-admitted basis p. 62.
The Company owns Skyward Re, a wholly owned captive reinsurance company subsidiary domiciled in the Cayman Islands p. 62.
Skyward Re assumed net reserves for certain divisions from the Company's insurance companies, related to a retroactive reinsurance contract, and retroceded these net reserves to a third-party reinsurer p. 62.
The Company has three non-risk bearing wholly owned subsidiaries p. 62.
Skyward Underwriters Agency, Inc. (SUA) is a managing general insurance agent and reinsurance broker for property and casualty risks in specialty niche markets p. 62.
Skyward Service Company provides various administrative services to the Company’s subsidiaries p. 62.
Skyward Specialty No. 1 Limited is a Lloyd’s corporate member authorized to invest in Lloyd’s syndicates p. 62.
On January 1, 2026, the Company acquired Apollo Group Holdings Limited for approximately $555.0 million p. 62.
Additional information regarding the acquisition is available in Note 24 p. 62.
B. Basis of Presentation
The Company's consolidated financial statements are prepared according to Generally Accepted Accounting Principles in the United States of America ("GAAP") p. 63.
GAAP differs in some aspects from the principles used in reports to insurance regulatory authorities p. 63.
The consolidated financial statements encompass the accounts of the holding company and its subsidiaries p. 63.
All intercompany transactions and balances have been eliminated during consolidation p. 63.
Preparing consolidated financial statements in conformity with GAAP necessitates the Company making estimates and assumptions that impact reported amounts in the financial statements and notes p. 63.
The Company's actual results may vary from these estimates p. 63.
C. Consolidation
The Company consolidates entities where it has a controlling financial interest, determining this by assessing if the entity is a Variable Interest Entity (VIE) for which the Company is the primary beneficiary, or if the Company controls the entity through majority voting interest or other arrangements p. 64.
A VIE is defined as an entity that either lacks sufficient equity for financing without additional subordinated financial support, has equity holders lacking characteristics of a controlling financial interest, and/or is established with non-substantive voting rights p. 64.
The Company's assessment of VIEs involves subjectivity in identifying activities that most significantly affect the VIE’s performance and requires estimates of current and future fair value of assets and financial performance of the VIE p. 64.
In related party analysis, the Company considers qualitative and quantitative factors including investment characteristics and size relative to the related party, ability to control or significantly influence key decisions (including de facto agents), obligation or likelihood to fund operating losses, and similarity and significance of the VIE’s business activities to those of the Company and related party p. 64.
The determination of whether an entity is a VIE and if the Company is the primary beneficiary involves significant judgment and depends on specific facts and circumstances at the time of assessment p. 64.
At each reporting period, the Company reassesses changes in facts and circumstances that could alter an entity's VIE status or the Company's consolidation assessment p. 64.
Changes in consolidation status are applied prospectively p. 64.
If an entity is consolidated due to reassessment, its assets, liabilities, and noncontrolling interest are recorded at fair value upon initial consolidation p. 64.
Any existing equity interest held by the Company in an entity prior to obtaining control is remeasured at fair value, potentially resulting in a gain or loss recognized upon initial consolidation p. 64.
The Company may also deconsolidate a subsidiary following reassessment, which could result in a gain or loss recognized upon deconsolidation, based on the carrying values of deconsolidated assets and liabilities compared to the fair value of any retained interests p. 64.
After performing these assessments, the Company has identified one entity that meets the definition of a VIE for which the Company is the primary beneficiary p. 64.
Further details and required disclosures regarding this VIE are provided in Note 7 p. 64.
D. Cash and Cash Equivalents
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.
E. Restricted Cash
Restricted cash is cash with a legal restriction on withdrawal or use by the consolidated group p. 66.
The carrying value of restricted cash approximates fair value p. 66.
SUA collects premiums from clients, deducts commissions and fees, and remits the remaining premiums to the Company's insurance companies or third-party insurance companies p. 66.
SUA holds unremitted insurance premiums in a fiduciary capacity for third-party insurance companies, recorded as restricted cash p. 66.
The Company is required by state regulations to maintain assets on deposit with certain states p. 66.
The Company is required to hold cash as collateral for certain reinsurance balances p. 66.
Cash held in a depository account for others or restricted by a state is recorded as restricted cash p. 66.
F. Investments
Available for Sale Investments: Fixed maturities classified as available-for-sale are carried at fair value p. 67.
Unrealized Losses (Available for Sale): If there is an intent to sell or a likelihood of being required to sell before maturity or recovery of cost basis, the amortized cost is written down to fair value, with losses recognized in net investment gains on the Consolidated Statements of Operations p. 67.
Credit-Related Unrealized Losses (Available for Sale): If neither of the above criteria are met, and unrealized losses are credit-related, an allowance for credit losses is determined using the present value of cash flows compared to the amortized cost p. 67.
Credit Loss Allowance Recognition (Available for Sale): Prior to 2025, changes in the allowance for credit losses were recognized in net investment income; as of 2025, they are recognized in net investment gains, with prior periods updated for conformity p. 67.
Stockholders' Equity Impact (Available for Sale): Credit losses limited by fair value are recognized in stockholders’ equity, net of taxes, as a component of accumulated other comprehensive income (loss) p. 67.
Non-Credit Related Unrealized Losses (Available for Sale): Unrealized losses not credit-related continue to be recognized in stockholders’ equity, net of taxes, as a component of accumulated other comprehensive income (loss) p. 67.
Held-to-Maturity Investments: Fixed maturity securities held-to-maturity are carried at amortized cost net of an allowance for credit losses p. 67.
Allowance for Credit Losses (Held-to-Maturity): The allowance represents the current estimate of expected credit losses, developed using Moody’s multi-year cumulative loss rates for asset-backed securities, adjusted for current conditions and forecasts p. 67.
Credit Loss Allowance Recognition (Held-to-Maturity): Prior to 2025, changes in the allowance for credit losses were recognized in net investment income; as of 2025, they are recognized in net investment gains, with prior periods updated for conformity p. 67.
Equity Securities with Readily Determinable Fair Value: Includes common stock, preferred stock, and mutual funds (even those primarily investing in debt securities) p. 67.
Valuation of Equity Securities: Carried on the balance sheet at fair value using quoted market prices p. 67.
Changes in Equity Securities Value: Changes in carrying value are included in net investment gains (losses) within the Consolidated Statements of Operations p. 67.
Mortgage Loans Classification: Classified as held for investment and carried at cost adjusted for unamortized premiums, discounts, and loan fees p. 67.
Uncollectible Mortgage Loans: Uncollectible amounts are written off in the period they are determined to be uncollectible p. 67.
Mortgage Loan Interest Recognition: Interest is recognized as interest receivable and included in other assets on the Consolidated Balance Sheets p. 67.
Fair Value Option for Mortgage Loans: The Company elected the fair value option for mortgage loans effective January 1, 2023, as targeted transition relief from ASU 2016-13 adoption p. 67.
Fair Value Option Impact (Mortgage Loans): Under this option, mortgage loans are measured at fair value, and changes in unrealized gains and losses are reported in net investment gains (losses) on the Consolidated Statements of Operations p. 67.
Interest Income Recognition (Mortgage Loans): Interest income and amortization continue to be recognized in net investment income on the Consolidated Statements of Operations p. 67.
Equity Method Investments Scope: Includes investments in equity and equity securities of non-public entities and indirect investments in loans and loan collateral p. 67.
Significant Influence Investments: The Company has equity investments in certain limited partnerships and corporations where it has significant influence but not control p. 67.
Variable Interest Entities: Analysis indicated the Company is not the primary beneficiary of variable interest entities, thus not requiring consolidation p. 67.
Equity Method Accounting: Used for investments in unconsolidated subsidiaries where the Company has significant influence p. 67.
Equity Method Initial Recording: Initial investment is recorded at cost and adjusted based on proportionate share of distributions and net income or loss of the investee p. 67.
Investment Income Component (Equity Method): The difference between investment cost and proportionate share of underlying equity in net assets is a component of investment income p. 67.
Amortization of Difference (Equity Method): The Company amortizes this difference as an adjustment to its pro-rata share of equity method income over the useful life of the underlying asset p. 67.
Non-Public Equity Securities (No Significant Influence): When these securities do not have a readily determinable fair value, they are carried at cost, minus impairment, and adjusted for observable price changes in orderly transactions for identical or similar investments p. 67.
Indirect Collateralized Loans: Investments in indirect collateralized loans and loan collateral are held through and accounted for as an ownership interest in an unconsolidated subsidiary p. 67.
Unconsolidated Subsidiaries: Ownership interests include investments in partnerships, joint ventures, and special purpose investment vehicles p. 67.
Other Long-Term Investments: Consist of an investment in a limited partnership held at net asset value (NAV) and other long-term investment securities p. 67.
Short-Term Investments: Primarily money market funds, carried at cost which approximates fair value p. 67.
Net Investment Income Components: Consists of interest, dividends, and equity in earnings (losses) of unconsolidated subsidiaries, net of investment expenses like investment management expenses p. 67.
Interest Income Recognition: Recognized on an accrual basis p. 67.
Dividend Recognition: Recognized as earned at the ex-dividend date p. 67.
Interest Income on Asset-Backed Securities: Recognized using the effective-yield method based on estimated principal repayments p. 67.
Amortization/Accretion in Interest Income: Includes amortization of premium and accretion of discounts on debt securities p. 67.
Net Investment Gains and Losses Recognition: Recognized in net income based upon the specific identification method p. 67.
G. Derivatives
The Company uses commodity derivatives to assume risk and manage exposures in the insurance industry p. 68.
Commodity derivatives expose the Company to potentially unfavorable price changes of underlying commodities p. 68.
The Company accounts for derivatives according to FASB ASC Topic 815, Derivatives and Hedgingp. 68.
All derivatives are recorded at fair value on the Company's balance sheet as assets or liabilities p. 68.
Changes in the fair value of derivatives are reflected in current earningsp. 68.
The Company meets the criteria to net assets and liabilities related to derivatives p. 68.
Netted derivative assets and liabilities are included in "other assets" on the Consolidated Balance Sheets p. 68.
The Company considers its exchange-traded futures and forward purchase and sale contracts to be effective economic hedgesp. 68.
The Company has not elected hedge accounting treatment for its derivatives p. 68.
The fair value of derivatives is estimated using quoted prices or broker quotes, or industry/internal valuation models when quotes are unavailable p. 68.
Further details and disclosures regarding derivatives are provided in Note 8p. 68.
H. Reinsurance
The Company purchases prospective reinsurance for certain lines of business on a proportional, excess of loss, and facultative basis p. 69.
Proportional reinsurance requires the Company to share losses and expenses with the reinsurer in exchange for a share of premiums p. 69.
Excess of loss reinsurance shares losses, either proportionally or entirely, above a specific dollar threshold, for a negotiated cost p. 69.
Facultative reinsurance covers specific risks and/or policies on either a proportional or excess of loss basis p. 69.
Ceded unearned premium and reinsurance balances recoverable (on paid and unpaid losses and settlement expenses) are reported separately as assets p. 69.
Reinsurance does not relieve the Company of its legal liability to policyholders p. 69.
On the Consolidated Statements of Operations, net earned premiums, losses and loss adjustment expenses, and underwriting, acquisition, and insurance expenses are presented net of reinsurance ceded p. 69.
The Company has purchased retroactive reinsurance in prior years for certain lines of business, including loss portfolio transfers (LPT) and adverse development covers p. 69.
Retroactive reinsurance contracts provide indemnification for losses related to past loss events, with the reinsurer sharing losses based on dollar thresholds p. 69.
Income from retroactive reinsurance contracts is deferred and amortized into net income over the settlement period p. 69.
Losses from retroactive reinsurance contracts are charged to net income immediately p. 69.
Subsequent changes in the measurement of retroactive reinsurance contracts are accounted for using a full retrospective method p. 69.
Certain ceded reinsurance contracts that do not transfer significant insurance risk are accounted for using the deposit method p. 69.
The evaluation of significant insurance risk transfer assesses both timing risk and underwriting risk p. 69.
If a reinsurance contract transfers only significant timing risk but not sufficient underwriting risk, a deposit asset is recorded equal to the initial cash outflow p. 69.
The deposit asset is offset by cash inflows received from reinsurers p. 69.
An accretion rate is established at contract inception, based on actuarial estimates, to adjust the deposit accounting asset to the estimated receivable amount over the contract term p. 69.
The accretion of the deposit is based on the expected rate of return implied from estimated cash inflows and outflows p. 69.
The Company periodically reassesses the estimated ultimate receivable and the related expected rate of return on the deposit asset p. 69.
Accretion of the deposit asset, including changes from estimated cash flow changes, is reflected as part of investment income p. 69.
Several reinsurance contracts require deposit accounting due to not transferring sufficient underwriting risk p. 69.
No reinsurance contracts required deposit accounting due to not transferring sufficient timing risk p. 69.
Reinsurance recoverables are carried net of an allowance for credit losses, representing the current estimate of expected credit losses p. 69.
The Company develops a historical loss rate using the A.M. Best impairment rate and rating transition study, which provides historical loss data for similarly rated reinsurance companies based on the expected duration of receivables p. 69.
The historical loss rate is adjusted for current conditions, reasonable and supportable forecasts, and current economic conditions p. 69.
Changes in the allowance for credit losses are recognized in underwriting, acquisition, and insurance expenses p. 69.
The Company continuously monitors the financial condition of its reinsurers, including reviewing their annual financial statements and industry developments p. 69.
The Company analyzes the credit risk of its reinsurance recoverables by monitoring the financial strength rating of its reinsurers from A.M. Best p. 69.
The Company assesses the adequacy of collateral obtained where applicable p. 69.
Should reinsurers fail to fulfill obligations, the Company has access to collateral from various reinsurers p. 69.
Reinsurance collateral from reinsurers was USD 344.1m as of December 31, 2025, and USD 337.0m as of December 31, 2024 p. 69.
eMaxx Captives represented 17.7% of the Company’s reinsurance recoverable balances at December 31, 2025, and 16.8% at December 31, 2024 p. 69.
Everest Reinsurance Co. represented 11.1% of the Company’s reinsurance recoverable balances at December 31, 2025, and 18.0% at December 31, 2024 p. 69.
eMaxx Captives and Everest Reinsurance Co. were the only reinsurers representing 10% or more of the Company’s reinsurance recoverable balances p. 69.
eMaxx Captives was not rated by A.M. Best at December 31, 2025, and 2024 p. 69.
Everest Reinsurance Co.'s financial strength rating from A.M. Best was A+ at December 31, 2025, and 2024 p. 69.
I. Concentration of Credit Risk
Financial instruments that could lead to concentrations of credit risk include cash and cash equivalents, restricted cash, investments, and premiums receivable, in addition to reinsurance recoverables p. 70.
Cash equivalents and short-term investments consist of U.S. government securities and money market funds p. 70.
Investments are diversified across various industries and geographic regions p. 70.
The Company restricts its credit exposure to any single financial institution or issuer p. 70.
The Company believes there is no significant concentration of credit risk related to cash and investments p. 70.
As of December 31, 2025 and 2024, outstanding premiums receivable are diversified due to a large customer base spread across many lines of business and geographic regions p. 70.
Failure by distribution sources to remit premiums could lead to premium write-offs and a corresponding loss of income p. 70.
J. Deferred Policy Acquisition Costs
Policy acquisition costs include commissions and premium taxes that are directly related to new or renewal business production p. 71.
The Company defers policy acquisition costs and related ceding commissions, charging or crediting them to earnings proportionally with premium earned over the policy's life p. 71.
A premium deficiency is recognized if expected losses, loss adjustment expenses, and unamortized acquisition costs exceed related unearned premiums p. 71.
To recognize a premium deficiency, the Company first charges unamortized acquisition costs to expense to eliminate the deficiency p. 71.
If the premium deficiency exceeds unamortized acquisition costs, a liability is accrued for the excess deficiency p. 71.
Anticipated investment income is considered when determining premium deficiencies p. 71.
Management determined that no premium deficiency existed as of December 31, 2025, and 2024 p. 71.
K. Goodwill and Intangible Assets
Goodwill and intangible assets are recorded following a business combination p. 72.
Goodwill represents the excess of the purchase price over the fair value of acquired assets and assumed liabilities p. 72.
The Company reviews its purchase price allocation for up to one year after an acquisition, allowing for adjustments within this period p. 72.
The Company amortizes identifiable intangible assets with a finite useful life over the period they are expected to contribute to future cash flows p. 72.
The Company does not amortize indefinite-lived intangible assetsp. 72.
The Company reviews goodwill and identifiable intangible assets for recoverability annually in the fourth quarter or on an interim basis if circumstances indicate a carrying amount may not be recoverable p. 72.
Based on this review, the Company had no goodwill impairment for the years ended December 31, 2025, and 2024 p. 72.
L. Property and Equipment
Property and equipment is recorded at cost less accumulated depreciation and is included in other assets on the Consolidated Balance Sheets p. 73.
Depreciation expense is recognized on a straight-line basis for financial statement purposes p. 73.
Depreciation periods range from three to seven years p. 73.
M. Reserves for Losses and Loss Adjustment Expenses
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.
The Company estimates reserves using individual case-basis valuations of reported claims, statistical analyses, and various actuarial procedures p. 74.
Estimates are based on historical information, industry and peer group information, and estimates of future trends in variable factors such as loss severity, loss frequency, and inflation p. 74.
Estimates are regularly reviewed and adjusted as experience develops or new information becomes known p. 74.
During the loss settlement period, estimates of liability on a claim are often refined and adjusted upward or downward p. 74.
The ultimate liability may exceed or be less than the revised estimates p. 74.
The ultimate settlement of losses and related LAE may vary significantly from the estimate included in the financial statements p. 74.
If actual liabilities exceed recorded amounts, there will be an adverse effect p. 74.
If recorded reserves are determined to be more than adequate, it would lead to a reduction in reserves p. 74.
N. Premiums
The Company recognizes property and casualty and surety premiums on a pro-rata basis over the policy terms p. 75.
Accident and health premiums are earned as billed, based on census data p. 75.
Gross premiums written are reduced by ceded premiums from proportional, facultative, and excess of loss reinsurance costs for prospective reinsurance p. 75.
Premiums receivable include deferred premiums, which are installment payments due from insureds under their policy payment terms p. 75.
Premiums receivable are carried net of an allowance for credit losses, representing the current estimate of expected credit losses p. 75.
The Company develops a historical loss rate for credit losses using historical write-offs and aging of receivables p. 75.
This historical loss rate is adjusted for current conditions, reasonable and supportable forecasts, and the ability to cancel coverage on a policy after premiums are past due p. 75.
Changes in the allowance for credit losses are recognized in underwriting, acquisition, and insurance expenses on the Consolidated Statements of Operations p. 75.
Unearned premiums represent the portion of gross premiums written applicable to the unexpired terms of in-force insurance policies or reinsurance contracts p. 75.
Ceded unearned premiums represent the portion of ceded premiums written applicable to the unexpired terms of in-force insurance policies or reinsurance contracts p. 75.
Unearned premiums (direct and ceded) are calculated on a pro-rata basis over the terms of the policies p. 75.
O. Commission and Fee Income
SUA commission revenue is generated from placing insurance policies on reinsurance programs via a reinsurance broker p. 76.
The reinsurance broker represents the Company's single performance obligation for SUA commission revenue p. 76.
The transaction price for SUA commission revenue is fixed at contract inception and based on a percentage of premiums placed p. 76.
The Company recognizes 100% of the transaction price for SUA commission revenue when the performance obligation is satisfied at the point a policy is placed, with no constraints on revenue p. 76.
SUA fee income is generated from placing insurance policies with a third-party insurance company p. 76.
The Company's single performance obligation for SUA fee income is the placement of the policy p. 76.
The transaction price for SUA fee income is variable at contract inception and based on a percentage of premium, which is determined by risk factors that change monthly, such as employee census data and worker roles p. 76.
The Company estimates the transaction price for SUA fee income over the policy's life using the expected value method p. 76.
Revenue for SUA fee income is recognized at the point in time the policy is placed p. 76.
Changes in the estimate of variable consideration for SUA fee income are recognized in the month they occur p. 76.
P. Income Taxes
Income tax expense is accrued for the tax effects of transactions reported on the consolidated financial statements p. 77.
The provision for income taxes includes taxes currently due and deferred taxes from temporary differences between financial statement and income tax reporting p. 77.
A valuation allowance is established for any deferred tax asset not expected to be realized p. 77.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years of recovery or settlement of temporary differences p. 77.
The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period of enactment p. 77.
A liability for uncertain tax positions is recorded if it is more likely-than-not that the tax position will not be sustained upon examination by the tax authority p. 77.
Changes in the liability for uncertain tax positions are reflected in income tax expense when a new uncertain tax position arises, judgment changes, the tax issue is settled, or the statute of limitation expires p. 77.
Potential net interest income or expense and penalties related to uncertain tax positions are recorded on the Consolidated Statements of Operations p. 77.
The Company files a consolidated federal income tax return in the United States and certain other state tax returns p. 77.
Admitted insurance subsidiaries pay premium taxes on gross written premiums in lieu of most state income or franchise taxes p. 77.
Premium tax expense is recognized within underwriting, acquisition, and insurance expense on the Consolidated Statements of Operations p. 77.
Q. Fair Value of Financial Instruments
Fair value is estimated for each class of financial instrument using the framework from fair value accounting guidance p. 78.
The guidance requires maximizing observable inputs and minimizing unobservable inputs when measuring fair value p. 78.
Fair value hierarchy disclosures are based on the quality of inputs used for fair value measurement p. 78.
The hierarchy prioritizes unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) p. 78.
The hierarchy gives the lowest priority to unobservable inputs (Level 3 measurements) p. 78.
The Company uses widely recognized, third-party pricing sources to determine fair values of financial instruments p. 78.
Management has understood the valuation methodologies and inputs of these third-party pricing sources p. 78.
Further details on fair value disclosures are in Note 4 p. 78.
R. Stock-Based Compensation
The estimated fair value of employee stock options and similar awards is expensed p. 79.
Compensation cost for equity instrument awards to employees is measured based on the grant-date fair value and recognized over the expected vesting service period p. 79.
Tax effects related to share-based payments are processed through net earnings p. 79.
Further discussion and related disclosures regarding stock-based compensation are in note 18 p. 79.
The Company's employee stock purchase plan (ESPP) allows all employees to purchase common stock at a discount p. 79.
Compensation cost for the ESPP is recognized on a straight-line basis over the offering period p. 79.
S. Earnings Per Share
Basic earnings per share is calculated using the two-class method p. 80.
Undistributed earnings are allocated to participating securities based on their potential share in earnings, assuming all earnings for the period have been distributed p. 80.
Basic earnings per share is determined by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding for the period p. 80.
Common shares with unsatisfied contingencies, such as vesting requirements, are excluded from basic earnings per share p. 80.
The Company's preferred shares are considered participating securities as they participate in dividends and distributions with common stock on an as-converted basis p. 80.
Instruments awarded to employees that grant the right to purchase common stock at a fixed price are included as potential common shares, weighted for the portion of the period they were granted, if dilutive p. 80.
The Company's common and preferred shares financed by stock notes are contingently issuable instruments, requiring the holder to return shares if stock notes are not paid off p. 80.
These contingently issuable instruments are excluded from basic and diluted earnings per share if specified conditions are not met, assuming the end of the period is the end of the contingency period p. 80.
The impact of contingently issuable instruments on diluted earnings per share was calculated using the treasury stock method and included in the reconciliation of the denominator for basic and diluted EPS computations for the year ended December 31, 2024 p. 80.
All outstanding stock notes were settled during 2024, resulting in no impact on the Company’s basic and diluted earnings per share computations for the year ended December 31, 2024 p. 80.
Instruments convertible into common shares are included in diluted weighted-average common shares outstanding on an if-converted basis, using the legal conversion rate for the respective period, if dilutive p. 80.
Share-based awards to employees with only service conditions are included as potential common shares, weighted for the unvested portion of the period, if dilutive p. 80.
Share-based awards to employees with performance and service or market conditions are included as potential common shares, assuming the end of the period is the end of the contingency period, if dilutive 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.
T. Recent Accounting Pronouncements
ASU 2023-09: Issued by FASB in December 2023, it requires public companies to provide enhanced annual rate reconciliation disclosures for income tax, including specific categories and additional information meeting a quantitative threshold p. 81.
ASU 2023-09: Also requires public companies to disaggregate income taxes paid by federal, state, and foreign taxes p. 81.
ASU 2023-09 Effective Date: Became effective for fiscal years beginning after December 15, 2024, and is applied prospectively p. 81.
The Company has added additional disclosures as required by ASU 2023-09, with no impact on the consolidated financial statements p. 81.
ASU 2024-03: Issued by FASB in November 2024, it requires disaggregated disclosure of income statement expenses for public business entities (PBEs) p. 81.
ASU 2024-03: Does not change expense captions on the income statement but requires disaggregation of certain expense captions into specified categories in footnotes p. 81.
ASU 2024-03 Disclosure Requirements: Requires PBEs to disaggregate, in a tabular presentation, relevant income statement expense captions that include natural expenses such as (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization from oil- and gas-producing activities or other depletion expenses p. 81.
ASU 2024-03 Effective Date Clarification: ASU 2025-01, issued in January 2025, clarified the effective date of ASU 2024-03 as the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027 p. 81.
The Company is evaluating the effect of the amendments of ASU 2024-03 on its consolidated financial statements p. 81.
2. Goodwill and Intangible Assets
The Company's indefinite-lived intangible assets include insurance licenses and trademarks p. 82.
The Company's finite-lived intangible assets, such as policy renewals, agency relationships, and non-compete/exclusivity agreements, had a weighted average useful life of approximately 12 years as of December 31, 2025 p. 82.
The Company recognized amortization expense of approximately USD 1.3m for the year ended December 31, 2025 p. 82.
The Company recognized amortization expense of approximately USD 1.1m for the year ended December 31, 2024 p. 82.
The Company recognized amortization expense of approximately USD 1.5m for the year ended December 31, 2023 p. 82.
Goodwill by segment at December 31, 2025
($ in thousands)
Accident and Health
Surety
Construction and Energy Solutions
Other
Total
Goodwill
—
—
—
—
—
Gross balance at December 31, 2024
91,577
6,781
10,204
3,879
112,441
Accumulated impairment at December 31, 2024
( 44,821 )
—
—
( 1,886 )
( 46,707 )
Net balance at December 31, 2025
46,756
6,781
10,204
1,993
65,734
Goodwill by segment at December 31, 2024
($ in thousands)
Accident and Health
Surety
Construction and Energy Solutions
Other
Total
Goodwill
—
—
—
—
—
Gross balance at December 31, 2023
91,577
6,781
10,204
3,879
112,441
Accumulated impairment at December 31, 2023
( 44,821 )
—
—
( 1,886 )
( 46,707 )
Net balance at December 31, 2024
46,756
6,781
10,204
1,993
65,734
Other intangible assets at December 31, 2025
($ in thousands)
Agent Relationships
Non-competes
Trademarks
Licenses
Total
Other Intangible Assets
—
—
—
—
—
Gross balance at December 31, 2024
24,491
1,117
999
14,019
40,626
Accumulated amortization at December 31, 2024
( 17,895 )
( 1,117 )
—
—
( 19,012 )
Additions
2,000
—
—
—
2,000
Amortization
( 1,308 )
—
—
—
( 1,308 )
Net balance at December 31, 2025
7,288
—
999
14,019
22,306
Other intangible assets at December 31, 2024
($ in thousands)
Agent Relationships
Non-competes
Trademarks
Licenses
Total
Other Intangible Assets
—
—
—
—
—
Gross balance at December 31, 2023
24,491
1,117
999
14,019
40,626
Accumulated amortization at December 31, 2023
( 16,808 )
( 1,117 )
—
—
( 17,925 )
Amortization
( 1,087 )
—
—
—
( 1,087 )
Net balance at December 31, 2024
6,596
—
999
14,019
21,614
($ in thousands)
Years Ending December 31,
Amount
2026
1,053
2027
1,053
2028
1,053
2029
762
2030
553
3. Investments
Fixed maturity securities, held-to-maturity at December 31, 2025, consisted entirely of asset-backed securities without a single maturity date p. 83.
At December 31, 2025, the Company had U.S. government agencies mortgage-backed fixed maturity securities with a carrying value of approximately $68.5 million pledged as collateral for a loan from the Federal Home Loan Bank of Dallas (FHLB Loan) p. 83.
The Company retains all rights regarding the securities pledged for the FHLB Loan p. 83.
At December 31, 2025, the Company had assets with fair values of approximately $69.5 million pledged as collateral for performance obligations under reinsurance agreements p. 83.
The Company retains all rights regarding the securities pledged for reinsurance agreements p. 83.
The pledged assets for reinsurance agreements included $57.8 million in residential mortgage-backed securities, $9.5 million in cash and cash equivalents and other assets, and $2.2 million in short-term investments p. 83.
The Company monitors available-for-sale fixed maturity securities with fair values less than cost or amortized cost for impairment, which requires significant management judgment p. 83.
As of December 31, 2025, the Company had 450 lots of fixed maturity securities in an unrealized loss position p. 83.
The Company does not intend to sell these securities and is not likely to be required to sell them before maturity or recovery of cost basis p. 83.
At December 31, 2025, the Company identified credit impairments for two available-for-sale securities in the "corporate securities and miscellaneous" category due to deteriorating conditions p. 83.
For U.S. government securities and municipal securities, the decline in fair values was due to changes in interest rates, not credit quality p. 83.
The Company does not intend to sell U.S. government and municipal securities and expects their anticipated recovery, thus not considering them impaired p. 83.
For corporate securities and miscellaneous, the decline in fair values was due to changes in interest rates, not credit quality p. 83.
The Company reviewed issuers of corporate securities for adverse changes in financial condition, credit enhancement quality, ratings decreases, or payment failures p. 83.
The Company determined that the decline in fair values for corporate securities was due to interest rates, not credit quality, and does not intend to sell them before anticipated recovery p. 83.
For residential mortgage-backed securities, commercial mortgage-backed securities, and other asset-backed securities, the decline in fair values was due to changes in interest rates, not credit quality p. 83.
The Company does not intend to sell these mortgage-backed and asset-backed securities and expects their anticipated recovery, thus not considering them impaired p. 83.
At December 31, 2025 and 2024, cash and investment securities on deposit with states had carrying values of approximately $70.0 million and $66.8 million, respectively p. 83.
Fixed maturity securities at December 31, 2025
($ in thousands)
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Allowance for Credit Losses
Fair Value
December 31, 2025
Fixed maturity securities, available-for-sale:
—
—
—
—
—
U.S. government securities
44,190
292
( 14 )
—
44,468
Corporate securities and miscellaneous
632,244
14,223
( 3,080 )
( 7,000 )
636,387
Municipal securities
102,691
1,725
( 2,300 )
—
102,116
Residential mortgage-backed securities
487,145
8,928
( 9,486 )
—
486,587
Commercial mortgage-backed securities
72,631
1,016
( 597 )
—
73,050
Other asset-backed securities
509,854
5,194
( 1,353 )
—
513,695
Total fixed maturity securities, available-for-sale
1,848,755
31,378
( 16,830 )
( 7,000 )
1,856,303
Other asset-backed securities
33,290
829
( 48 )
( 468 )
33,603
Total fixed maturity securities, held-to-maturity
33,290
829
( 48 )
( 468 )
33,603
Fixed maturity securities at December 31, 2024
($ in thousands)
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Loss
Allowance for Credit Losses
Fair Value
December 31, 2024
Fixed maturity securities, available-for-sale:
—
—
—
—
—
U.S. government securities
26,577
35
( 126 )
—
26,486
Corporate securities and miscellaneous
433,298
5,618
( 13,288 )
—
425,628
Municipal securities
89,966
116
( 5,366 )
—
84,716
Residential mortgage-backed securities
408,585
1,875
( 16,627 )
—
393,833
Commercial mortgage-backed securities
70,262
545
( 1,443 )
—
69,364
Other asset-backed securities
291,578
2,447
( 1,834 )
—
292,191
Total fixed maturity securities, available-for-sale
1,320,266
10,636
( 38,684 )
—
1,292,218
Other asset-backed securities
39,396
—
( 436 )
( 243 )
38,717
Total fixed maturity securities, held-to-maturity
39,396
—
( 436 )
( 243 )
38,717
Maturity distribution of fixed maturity securities
($ in thousands)
Amortized Cost
Fair Value
Due in less than one year
45,682
45,478
Due after one year through five years
449,790
449,145
Due after five years through ten years
219,293
224,696
Due after ten years
64,360
63,652
Mortgage-backed securities
559,776
559,637
Other asset-backed securities
509,854
513,695
Total
1,848,755
1,856,303
Fixed maturity securities, available-for-sale, by maturity at December 31, 2025
Less than 12 Months
12 Months or More
Total
($ in thousands)
Fair Value
Gross Unrealized Losses
Fair Value
Gross Unrealized Losses
Fair Value
Gross Unrealized Losses
December 31, 2025
Fixed maturity securities, available-for-sale:
—
—
—
—
—
—
U.S. government securities
349
( 1 )
1,565
( 13 )
1,914
( 14 )
Corporate securities and miscellaneous
67,644
( 346 )
63,575
( 2,734 )
131,219
( 3,080 )
Municipal securities
19,157
( 400 )
22,004
( 1,900 )
41,161
( 2,300 )
Residential mortgage-backed securities
56,147
( 262 )
74,075
( 9,224 )
130,222
( 9,486 )
Commercial mortgage-backed securities
4,646
( 3 )
8,363
( 594 )
13,009
( 597 )
Other asset-backed securities
85,098
( 424 )
16,081
( 929 )
101,179
( 1,353 )
Total fixed maturity securities, available-for-sale
233,041
( 1,436 )
185,663
( 15,394 )
418,704
( 16,830 )
Other asset-backed securities
1,912
( 48 )
—
—
1,912
( 48 )
Total fixed maturity securities, held-to-maturity:
1,912
( 48 )
—
—
1,912
( 48 )
Total
234,953
( 1,484 )
185,663
( 15,394 )
420,616
( 16,878 )
Fixed maturity securities, available-for-sale, by maturity at December 31, 2024
Less than 12 Months
12 Months or More
Total
($ in thousands)
Fair Value
Gross Unrealized Losses
Fair Value
Gross Unrealized Losses
Fair Value
Gross Unrealized Losses
December 31, 2024
Fixed maturity securities, available-for-sale:
—
—
—
—
—
—
U.S. government securities
15,938
( 34 )
2,297
( 92 )
18,235
( 126 )
Corporate securities and miscellaneous
136,888
( 2,060 )
81,232
( 11,228 )
218,120
( 13,288 )
Municipal securities
41,930
( 1,046 )
27,687
( 4,320 )
69,617
( 5,366 )
Residential mortgage-backed securities
201,407
( 3,366 )
82,496
( 13,261 )
283,903
( 16,627 )
Commercial mortgage-backed securities
9,411
( 126 )
13,178
( 1,317 )
22,589
( 1,443 )
Other asset-backed securities
75,119
( 721 )
29,851
( 1,113 )
104,970
( 1,834 )
Total fixed maturity securities, available-for-sale
480,693
( 7,353 )
236,741
( 31,331 )
717,434
( 38,684 )
Other asset-backed securities
2,144
( 2 )
36,573
( 434 )
38,717
( 436 )
Total fixed maturity securities, held-to-maturity:
2,144
( 2 )
36,573
( 434 )
38,717
( 436 )
Total
482,837
( 7,355 )
273,314
( 31,765 )
756,151
( 39,120 )
Allowance for credit losses on fixed maturity securities at December 31, 2025
($ in thousands)
Fixed Maturity Securities, Available-For-Sale
Fixed Maturity Securities, Held-to-Maturity
Balance at December 31, 2024
—
243
Current period provision for credit losses
7,000
257
Recoveries of amounts previously written off
—
( 32 )
Balance at December 31, 2025
7,000
468
Allowance for credit losses on fixed maturity securities at December 31, 2024
—
Fixed Maturity Securities, Held-to-Maturity
Balance at December 31, 2023
329
Current period provision for credit losses
18
Recoveries of amounts previously written off
( 104 )
Balance at December 31, 2024
243
Gross realized gains and losses on investments
($ in thousands)
2025
2024
2023
Gross realized gains
—
—
—
Fixed maturity securities, available-for-sale
3,002
2,662
1,042
Equity securities
34,262
8,062
6,035
Other
685
213
2
Total
37,949
10,937
7,079
Fixed maturity securities, available-for-sale
( 10,832 )
( 8,161 )
( 1,879 )
Equity securities
( 3,000 )
( 4,132 )
( 5,256 )
Other
( 413 )
( 223 )
( 20 )
Total
( 14,245 )
( 12,516 )
( 7,155 )
Equity securities
( 22,908 )
7,500
11,516
Mortgage loans
( 7 )
421
( 386 )
Other
21,360
—
—
Net investment gains
22,149
6,342
11,054
Net investment income
($ in thousands)
2025
2024
2023
Fixed maturity securities, available-for-sale
198,195
217,468
26,626
Equity securities
126,738
37,534
40,201
Deferred income taxes
($ in thousands)
2025
2024
2023
Income (loss):
—
—
—
Fixed maturity securities, available-for-sale
80,302
57,574
34,703
Fixed maturity securities, held-to-maturity
( 804 )
4,091
4,181
Equity securities
1,223
2,720
3,418
Equity method investments
( 2,683 )
2,524
( 9,434 )
Mortgage loans
1,622
5,153
5,474
Indirect loans
( 8,129 )
( 2,400 )
( 4,155 )
Short-term investments and cash
12,828
14,851
11,392
Other
3,307
3,000
318
Total investment income
87,666
87,513
45,897
Investment expenses
( 4,047 )
( 6,913 )
( 5,557 )
Net investment income
83,619
80,600
40,340
($ in thousands)
2025
2024
2023
Fixed maturity securities
42,594
1,046
25,952
Deferred income taxes
( 9,017 )
( 213 )
( 5,420 )
Total
33,577
833
20,532
4. Fair Value Measurements
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 in consolidated financial statements p. 84.
The market approach is generally applied to determine fair value, using prices and data from market transactions of identical or comparable assets and liabilities p. 84.
Fair value of investments is primarily determined using data from third-party investment managers or pricing vendors 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.
Level 1 inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date p. 84.
Level 2 inputs are observable inputs other than Level 1 quoted prices, corroborated with market data at the measurement date p. 84.
Level 3 inputs are unobservable inputs reflecting management's best estimate of what market participants would use in pricing the asset or liability at the measurement date p. 84.
U.S. government securities, mutual funds, and common stock use unadjusted quoted prices from active exchanges, 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 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.
Commercial mortgage-backed securities, residential mortgage-backed securities, and other asset-backed securities use a pricing model with market-based inputs such as dealer quotes, market spreads, and yield curves, and may evaluate individual tranches by determining cash flows using security terms, collateral performance, credit information, benchmark yields, and estimated prepayments, representing Level 2 fair value inputs p. 84.
Fixed maturity securities, available for sale classified as Level 3, include corporate securities and miscellaneous, and other asset-backed securities managed by an independent asset manager and priced by an independent pricing provider p. 84.
The independent pricing provider estimates the value of Level 3 fixed maturity securities using the discount net present value of cash flows method with an unobservable discount rate p. 84.
The discount rate spread for Level 3 fixed maturity securities represents the risk associated with future cash flows, including inflation, opportunity cost, and the time value of money 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.
The unobservable input for mortgage loans is the spread applied to a prime rate for discounting cash flows, representing the incremental cost of capital based on borrower's ability to pay and collateral value relative to the loan balance, subject to judgment and uncertainty p. 84.
Derivatives included in other assets consist of exchange-traded options contracts p. 84.
Fair values of derivatives are measured using quoted prices in active markets on the relevant exchange, specifically the volume-weighted average price of trades in similar contracts or the last trade settlement price if no trades occur, representing Level 1 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 is required to disclose fair values of other financial instruments for which estimation is practicable p. 84.
Estimated fair value amounts are defined as the quoted market price of a financial instrument, determined using available market information and valuation methodologies p. 84.
Considerable judgments are required for fair value estimates when quoted market prices are unavailable, meaning estimates may not indicate realizable amounts in a current market exchange p. 84.
Different market assumptions or estimation methodologies can affect estimated fair value amounts p. 84.
Fixed maturity securities, held-to-maturity, consist of senior and junior notes with target rates of return p. 84.
As of December 31, 2025, the fair value of held-to-maturity fixed maturity securities was determined using the income approach with unobservable (Level 3) inputs p. 84.
Investment in RedBird Capital Partners is included in other long-term investments and is a limited partnership that invests in Bishop Street Underwriters, LLC (MGA) p. 84.
The investment in RedBird Capital Partners had a fair value of $55.6 million at December 31, 2025, and $28.2 million at December 31, 2024, determined using the net asset value p. 84.
Procedures are employed to assess the reasonableness of the fair value of this investment, including reviewing audited financial statements p. 84.
The unfunded commitment related to the RedBird Capital Partners investment was $18.3 million at December 31, 2025, and $24.4 million at December 31, 2024 p. 84.
The Company may sell its interest in the investment with prior written notice and general partner approval 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.
Net earned premiums related to this agreement were $41.5 million for the year ended December 31, 2025, and $2.5 million for the year ended December 31, 2024 p. 84.
Notes payable carrying value approximates estimated fair value because they accrue interest at current market rates plus a spread p. 84.
Fair value of notes payable is determined using the income approach with observable (Level 2) inputs p. 84.
Subordinated debt consists of Unsecured Subordinated Notes due May 24, 2039, with a fixed interest rate p. 84.
Fair value of subordinated debt is determined using the income approach with observable (Level 2) inputs p. 84.
Other financial instruments qualify as insurance-related products and are specifically exempted from fair value disclosure requirements p. 84.
Fair value of subordinated debt
—
2025
2024
High
11.10%
8.00%
Low
4.25%
5.70%
Weighted average
6.40%
6.60%
Weighted average interest rates
—
2025
2024
High
8.34%
10.00%
Low
6.55%
7.00%
Weighted average
7.74%
7.93%
Fixed maturity securities as of December 31, 2025
December 31, 2025
($ in thousands)
Level 1
Level 2
Level 3
Total
Fixed maturity securities, available-for-sale:
—
—
—
—
U.S. government securities
44,468
—
—
44,468
Corporate securities and miscellaneous
—
503,274
133,113
636,387
Municipal securities
—
102,116
—
102,116
Residential mortgage-backed securities
—
486,587
—
486,587
Commercial mortgage-backed securities
—
73,050
—
73,050
Other asset-backed securities
—
495,891
17,804
513,695
Total fixed maturity securities, available-for-sale
44,468
1,660,918
150,917
1,856,303
Other asset-backed securities
—
—
33,603
33,603
Total fixed maturity securities, held-to-maturity
—
—
33,603
33,603
Preferred stocks
—
1,174
—
1,174
Total equity securities
—
1,174
—
1,174
Mortgage loans
—
—
9,902
9,902
Short-term investments
264,299
—
—
264,299
Derivatives
34,857
—
—
34,857
Total
343,624
1,662,092
194,422
2,200,138
Fixed maturity securities as of December 31, 2024
December 31, 2024
($ in thousands)
Level 1
Level 2
Level 3
Total
Fixed maturity securities, available-for-sale:
—
—
—
—
U.S. government securities
26,486
—
—
26,486
Corporate securities and miscellaneous
—
354,815
70,813
425,628
Municipal securities
—
84,716
—
84,716
Residential mortgage-backed securities
—
393,833
—
393,833
Commercial mortgage-backed securities
—
69,364
—
69,364
Other asset-backed securities
—
285,084
7,107
292,191
Total fixed maturity securities, available-for-sale
26,486
1,187,812
77,920
1,292,218
Other asset-backed securities
—
—
38,717
38,717
Total fixed maturity securities, held-to-maturity:
—
—
38,717
38,717
Common stocks
64,251
—
—
64,251
Preferred stocks
—
1,164
—
1,164
Mutual funds
40,839
—
—
40,839
Total equity securities
105,090
1,164
—
106,254
Mortgage loans
—
—
26,490
26,490
Short-term investments
274,929
—
—
274,929
Total
406,505
1,188,976
143,127
1,738,608
Changes in fair value of fixed maturity securities and mortgage loans in 2025
($ in thousands)
Fixed Maturity Securities, Available-For-Sale
Mortgage Loans
Balance at December 31, 2024
77,920
26,490
Total gains (losses) for the period recognized in net investment gains (losses)
( 5,180 )
( 7 )
Issuances
—
151
Settlements
—
( 16,732 )
Transfers into Level 3
6,143
—
Purchases
70,730
—
Sales/Disposals
( 1,493 )
—
Total unrealized gains for the period recognized in accumulated comprehensive income (loss)
2,797
—
Balance at December 31, 2025
150,917
9,902
Total losses for the period recognized in net investment gains attributable to the change in unrealized gains or losses relating to assets held as of period end
—
( 201 )
Changes in fair value of fixed maturity securities and mortgage loans in 2024
($ in thousands)
Fixed Maturity Securities, Available-For-Sale
Mortgage Loans
Balance at December 31, 2023
—
50,070
Total gains (losses) for the period recognized in net investment gains (losses)
( 195 )
420
Issuances
—
649
Settlements
—
( 24,649 )
Purchases
77,979
—
Sales/Disposals
( 374 )
—
Total unrealized gains for the period recognized in accumulated comprehensive income (loss)
510
—
Balance at December 31, 2024
77,920
26,490
Total gains for the period recognized in net investment gains (losses) attributable to the change in unrealized gains or losses relating to assets held as of period end
—
411
Notes payable and subordinated debt
2025
2024
($ in thousands)
Carrying Value
Fair Value
Carrying Value
Fair Value
Notes payable
—
—
—
—
FHLB Loan
57,000
57,458
57,000
56,200
Revolving Credit Facility
114,500
114,500
43,000
43,000
Term Loan Facility
300,000
300,000
—
—
Notes payable
471,500
471,958
100,000
99,200
Unsecured subordinated notes
19,569
21,020
19,536
20,541
Subordinated debt, net of debt issuance costs
19,569
21,020
19,536
20,541
5. Mortgage Loans
The Company has invested in Separately Managed Accounts ("SMA1" and "SMA2") p. 85.
As of December 31, 2025 and 2024, the Company held direct investments in mortgage loans from various creditors through SMA1 and SMA2 p. 85.
The Company's mortgage loan portfolios primarily consist of senior loans on real estate across the U.S. p. 85.
These loans earn interest at a fixed spread above a prime rate p. 85.
The loans mature in approximately 2 to 4 years from loan origination p. 85.
The principal amounts of the loans are approximately 64% of the property's appraised value at the time the loans were made p. 85.
Uncollectible amounts on loans are determined on an individual loan basis through consultations with the Company's specialized investment manager p. 85.
Factors considered for uncollectible amounts include adverse situations affecting the borrower's ability to repay, estimated value of underlying collateral, and other relevant factors p. 85.
The Company writes off uncollectible amounts in the period they are determined to be uncollectible p. 85.
There was no write-off for uncollectible amounts during the years ended December 31, 2025 and 2024, respectively p. 85.
As of December 31, 2025 and 2024, no mortgage loans were in the process of foreclosure p. 85.
As of December 31, 2025 and 2024, no mortgage loans were not producing income for the previous 12 months p. 85.
Mortgage loans by property type
($ in thousands)
2025
2024
Commercial
3,334
8,474
Retail
—
10,032
Hospitality
6,568
7,984
—
9,902
26,490
($ in thousands)
2025
2024
2023
Commercial
432
2,025
2,340
Retail
304
1,853
1,853
Hospitality
886
1,277
1,034
Office
—
—
203
Multi-family
—
—
44
—
1,622
5,155
5,474
6. Equity Method Investments and Other
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.
The Company amortizes this difference over the useful life of a similar asset as the underlying equity method investment p. 86.
For the investment in RISCOM, a similar asset is agent relationships p. 86.
The Company amortizes this difference for RISCOM over a 15-year useful life 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.
Indirect investments in collateralized loans and loan collateral
($ in thousands)
2025
2024
—
Carrying Value
Ownership %
Carrying Value
Ownership %
Arena Special Opportunities Fund, LP units
26,936
14.0%
34,936
15.3%
Arena SOP LP units
—
11.2%
1,474
10.9%
Brewer Lane Ventures Fund II LP units
2,251
2.4%
1,040
2.4%
Dowling Capital Partners LP units
590
5.0%
666
5.0%
Hudson Ventures Fund 2 LP units
5,503
2.5%
4,967
2.5%
JVM Funds LLC units
14,911
10.1%
17,229
10.1%
RISCOM
3,307
20.0%
5,013
20.0%
—
53,498
—
65,325
—
($ in thousands)
2025
2024
2023
Arena SOP LP units
( 1,474 )
( 989 )
( 6,271 )
Arena Special Opportunities Fund, LP units
( 3,163 )
2,375
( 2,880 )
Brewer Lane Ventures Fund II LP
91
( 110 )
( 78 )
Dowling Capital Partners LP units
431
1,463
927
Hudson Ventures Fund II LP units
480
( 153 )
170
JVM Funds LLC
( 541 )
( 1,554 )
( 1,198 )
RISCOM
1,493
1,492
884
Universa Black Swan LP units
—
—
( 988 )
—
( 2,683 )
2,524
( 9,434 )
Investment in RISCOM
($ in thousands)
2025
2024
Brewer Lane Ventures Fund II LP units
3,237
4,077
Dowling Capital Partners LP units
386
386
Hudson Ventures Fund 2 LP units
166
397
Red Bird Capital Partners LP units
18,305
24,400
—
22,094
29,260
Investment in JVM Funds LLC
($ in thousands)
2025
2024
Investment in RISCOM:
—
—
Underlying equity
2,292
3,756
Difference
1,015
1,258
Recorded investment balance
3,307
5,013
Investment in indirect loans and loan collateral
($ in thousands)
2025
2024
Investment in JVM Funds LLC:
—
—
Underlying equity
14,457
16,624
Difference
454
605
Recorded investment balance
14,911
17,229
($ in thousands)
2025
2024
SMA1
15,418
20,296
SMA2
8,449
12,973
Investment in indirect loans and loan collateral
23,867
33,269
7. Variable Interest Entity
Skyward consolidates Separate Account HSIC-01 ("HSIC-01"), established by Mangrove Risk Solutions Bermuda Ltd. ("Mangrove"), pursuant to GAAP consolidation guidance p. 87.
HSIC-01 is a Variable Interest Entity (VIE) for which the Company is the primary beneficiary p. 87.
The VIE's purpose is to hedge price volatility risks of certain insurance products by investing in dairy and livestock commodities p. 87.
The Company directly manages the business of HSIC-01, leading it to consider itself the primary beneficiary p. 87.
The Company does not provide performance guarantees and has no other financial obligation to fund HSIC-01, beyond its own capital commitments p. 87.
The assets of consolidated variable interest entities, including HSIC-01, can only be used to settle obligations of these entities p. 87.
There is no recourse to the assets of HSIC-01 other than to satisfy associated liabilities p. 87.
The assets of HSIC-01, included in the Consolidated Balance Sheets as of December 31, 2025, represent third-party net assets and exclude intercompany balances eliminated upon consolidation p. 87.
Assets of HSIC-01 as of December 31, 2025
($ in thousands)
2025
Assets
—
Cash and cash equivalents
15,816
Other assets
34,856
Total assets
50,672
8 . Derivatives
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.
A hedging strategy using derivatives (put options and futures) is employed to mitigate revenue volatility and support financial stability p. 88.
The primary objective of derivative instruments is to manage exposure to adverse price movements p. 88.
Activity in these instruments reflects current market conditions and shifts in risk exposures throughout the year p. 88.
The notional value of derivative contracts and the degree of hedged exposure are actively managed and can vary based on pricing in cattle, hogs, and milk markets p. 88.
Derivatives are not used for speculative or trading purposes p. 88.
All derivative positions support the overall risk transfer objectives of the business p. 88.
The Company has not elected hedge accounting for these derivatives p. 88.
The net gain (loss) recognized on derivative instruments in economic hedging relationships is presented in "losses and loss adjustment expenses" on the Consolidated Statements of Operations 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.
Derivative assets in economic hedging relationships
($ in thousands)
Derivative Assets
—
Notional Amount
Fair Value
Economic hedges
136,800
34,857
9. Allowance for Credit Losses
The Company analyzes credit risk for its reinsurance recoverables by monitoring A.M. Best financial strength ratings of its reinsurers p. 89.
A.M. Best ratings are assessed annually and throughout the year as updates become available p. 89.
The Company assesses the adequacy of credit enhancements including reinsurance payables, letters of credit, and funds held p. 89.
Reinsurance balances are considered past due after 90 days p. 89.
On January 31, 2025, the Company commuted the LPT with R&Q Re (Bermuda) Ltd. for accident years 2018 and prior p. 89.
During the year ended December 31, 2024, the Company recognized a net increase of USD 13.6m to the allowance for estimated uncollectible reinsurance related to the LPT, which was subsequently written-off p. 89.
Premiums receivable and allowance for uncollectible premiums in 2025
($ in thousands)
Premiums Receivable, Net
Allowance for Estimated Uncollectible Premiums
Balance at December 31, 2024
321,641
2,432
Current period change for estimated uncollectible premiums
—
2,351
Write-offs of uncollectible premiums receivable
—
( 2,141 )
Recoveries of amounts previously written off
—
498
Balance at December 31, 2025
544,217
3,140
Premiums receivable and allowance for uncollectible premiums in 2024
($ in thousands)
Premiums Receivable, Net
Allowance for Estimated Uncollectible Premiums
Balance at December 31, 2023
179,235
964
Current period change for estimated uncollectible premiums
—
3,235
Write-offs of uncollectible premiums receivable
—
( 1,895 )
Recoveries of amounts previously written off
—
128
Balance at December 31, 2024
321,641
2,432
A.M. best ratings
2025
A.M. Best Rating
Reinsurance Recoverables, Gross, Amortized Cost
Percent of Total
A- and above
652,178
98.2%
B++ to B+
5,077
0.8
B to B -
28
—
Not rated
6,919
1.0
Reinsurance recoverables and allowance for uncollectible reinsurance
($ in thousands)
Reinsurance Recoverables, Net
Allowance for Estimated Uncollectible Reinsurance
Balance at December 31, 2024
857,876
2,295
Balance at December 31, 2025
1,119,880
2,295
Reinsurance recoverables and allowance for uncollectible reinsurance
($ in thousands)
Reinsurance Recoverables, Net
Allowance for Estimated Uncollectible Reinsurance
Balance at December 31, 2023
596,334
2,295
Current period change for estimated uncollectible reinsurance
—
13,585
Write-offs of uncollectible reinsurance recoverables
—
( 13,585 )
Balance at December 31, 2024
857,876
2,295
10. Property and Equipment
Depreciation expense for property and equipment was USD 3.3m for the year ended December 31, 2025 p. 90.
Depreciation expense for property and equipment was USD 2.9m for the year ended December 31, 2024 p. 90.
Depreciation expense for property and equipment was USD 3.2m for the year ended December 31, 2023 p. 90.
Depreciation expense is presented in underwriting, acquisition, and insurance expenses on the Consolidated Statements of Operations p. 90.
Depreciation expense for property and equipment
(in thousands)
2025
2024
Leasehold improvements
3,434
3,056
Equipment
4,750
4,506
Software
39,263
33,972
—
47,447
41,534
Accumulated depreciation
( 32,307 )
( 29,355 )
Total
15,140
12,179
11. Notes Payable & Subordinated Debt
FHLB Loan: entered into on August 30, 2024, pursuant to the Advances and Security Agreement p. 91.
FHLB Loan term: 4.5 years, principal amount of USD 57.0m p. 91.
FHLB Loan payments: interest-only during term, principal due at maturity p. 91.
FHLB Loan interest rate: fixed at 4.00% over the loan term p. 91.
FHLB Loan security: fully secured by a pledge of specific investment securities of HSIC p. 91.
FHLB Loan proceeds use: funded redemptions of draws on the 2023 Revolving Credit Facility p. 91.
Term Loan Facility: entered into during Q4 2025 with a syndicate of banks p. 91.
Term Loan Facility components:
Unsecured senior delayed draw term loan facility (DDTL) of USD 150.0m (Tranche A DDTL) p. 91.
Additional unsecured senior DDTL of USD 150.0m (Tranche B DDTL) p. 91.
Term Loan Facility use: funded a portion of the consideration for the acquisition of Apollo Group Holdings Limited ("Apollo") and related fees/expenses p. 91.
Term Loan Facility interest rate (SOFR): term SOFR plus a margin ranging from 150 bps to 190 bps, depending on debt to capitalization ratio p. 91.
Term Loan Facility SOFR calculation: SOFR floor of 0.00% and a credit spread adjustment of 0.10% p. 91.
Term Loan Facility interest rate (base rate): base rate plus a margin ranging from 50 bps to 90 bps, depending on debt to capitalization ratio p. 91.
Term Loan Facility base rate definition: highest of (i) Agent’s prime lending rate, (ii) Federal Funds Rate plus 0.50%, (iii) SOFR plus 1.00%, and (iv) zero percent (0%) p. 91.
Term Loan Facility undrawn fee: 0.20% to 0.35% on average daily undrawn amounts, depending on debt to capitalization ratio p. 91.
Tranche A DDTL maturity: January 1, 2028 p. 91.
Tranche B DDTL maturity: July 2, 2029 p. 91.
Term Loan Facility draws (December 30, 2025): USD 150.0m from Tranche A DDTL and USD 150.0m from Tranche B DDTL for Apollo acquisition on January 1, 2026 p. 91.
Term Loan Facility covenants: customary limitations on additional indebtedness exceeding USD 10.0m, restrictions on distributions, stock redemptions/repurchases, and financial covenants (minimum consolidated net worth, maximum total debt to capitalization, minimum A.M. Best rating, minimum liquidity) p. 91.
Term Loan Facility compliance: Company was in compliance with all covenants as of December 31, 2025 p. 91.
Term Loan Facility security: unsecured p. 91.
Term Loan Facility guarantee: obligations guaranteed by the Company and its existing wholly-owned subsidiaries and subsequently acquired/organized subsidiaries (excluding insurance company subsidiaries and certain other exceptions) p. 91.
Revolving Credit Facility: entered into during Q4 2025 with a syndicate of banks p. 91.
Revolving Credit Facility security: unsecured p. 91.
Revolving Credit Facility initial maximum principal: USD 150.0m, increased to USD 250.0m on the Apollo acquisition closing date p. 91.
Revolving Credit Facility initial draw: USD 43.0m, used to redeem prior revolving credit facility p. 91.
Revolving Credit Facility additional draw (December 30, 2025): USD 71.5m, used for consideration paid for Apollo acquisition p. 91.
Revolving Credit Facility proceeds presentation: net with liabilities on Consolidated Balance Sheets for year ended December 31, 2025 p. 91.
Revolving Credit Facility proceeds use: Apollo acquisition on January 1, 2026 p. 91.
Revolving Credit Facility interest payments: quarterly p. 91.
Revolving Credit Facility interest rate (SOFR): term SOFR plus a margin ranging from 150 bps to 190 bps, depending on debt to capitalization ratio p. 91.
Revolving Credit Facility SOFR calculation: SOFR floor of 0.00% and a credit spread adjustment of 0.10% p. 91.
Revolving Credit Facility interest rate (base rate): base rate plus a margin ranging from 50 bps to 90 bps, depending on debt to capitalization ratio p. 91.
Revolving Credit Facility base rate definition: highest of (i) Agent’s prime lending rate, (ii) Federal Funds Rate plus 0.50%, (iii) SOFR plus 1.00%, and (iv) zero percent (0%) p. 91.
Revolving Credit Facility undrawn fee: 0.20% to 0.35% on average daily undrawn amounts, depending on debt to capitalization ratio p. 91.
Revolving Credit Facility availability period termination: November 12, 2030 p. 91.
Revolving Credit Facility covenants: minimum net worth, maximum debt to capital ratio, minimum A.M. Best Rating, minimum liquidity, and customary events of default p. 91.
Revolving Credit Facility compliance: Company was in compliance with all covenants as of December 31, 2025 p. 91.
2023 Revolving Credit Facility: entered into during Q1 2023 p. 91.
2023 Revolving Credit Facility terms: unsecured, up to USD 150.0m revolving credit facility and a letter of credit sub-facility of up to USD 30.0m p. 91.
2023 Revolving Credit Facility redemption: redeemed on November 13, 2025 p. 91.
2023 Revolving Credit Facility costs upon redemption: USD 0.3m of accrued interest paid, USD 0.6m expense for remaining unamortized deferred financing costs recognized p. 91.
Debentures (Notes): unsecured subordinated notes issued in May 2019 with an aggregate principal amount of USD 20.0m p. 91.
Notes interest rate: fixed at 7.25% for the first 8 years, then fixed at 8.25% thereafter p. 91.
Notes early retirement: requires all interest payments to be paid in full, plus return of outstanding principal p. 91.
Notes principal due: at maturity on May 24, 2039 p. 91.
Notes interest payable: quarterly p. 91.
Notes priority: junior to all previously issued debt p. 91.
Notes debt reporting: net of debt issuance costs of approximately USD 0.4m (2025) and USD 0.5m (2024) on Consolidated Balance Sheets p. 91.
Notes deferred financing costs presentation: direct deduction from carrying amount of subordinated debt p. 91.
12. Segment
The Company operates 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 segment consists of nine distinct underwriting divisions, referred to as "continuing business" p. 92.
Each division has dedicated underwriting leadership and technical staff experienced in their specific niches p. 92.
The segment definition is based on how the Chief Operating Decision Maker (CODM) reviews internal financial information for performance analysis, decision-making, and resource allocation p. 92.
The Company's CODM is the chief executive officer p. 92.
The accounting policies for the segment align with those described in Note 1 "Summary of Significant Accounting Policies" of the Form 10-K p. 92.
The CODM evaluates segment performance and allocates resources using gross written premiums by net underwriting division, underwriting income, and income before income taxes (which is also reported on the Consolidated Statements of Operations) p. 92.
Segment assets are reported on the Consolidated Balance Sheets as total consolidated assets p. 92.
Gross written premiums by underwriting division, net underwriting income, and consolidated net income are used to monitor budget versus actual results p. 92.
The CODM uses net underwriting income, annualized return on equity, and growth in book value per share for competitive analysis against the Company's competitors 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.
Segment performance by business line
($ in thousands)
2025
2024
2023
Accident & Health
254,102
173,073
151,701
Agriculture and Credit (Re)insurance
346,212
118,070
30,598
Captives
275,694
241,902
167,624
Construction & Energy Solutions
274,318
296,582
299,748
Global Property
178,128
201,796
242,593
Professional Lines
149,231
159,785
154,565
Specialty Programs
322,705
218,407
178,726
Surety
168,148
143,965
106,056
Transactional E&S
197,779
189,669
128,236
Total continuing business
2,166,317
1,743,249
1,459,847
Exited business
( 81 )
( 17 )
( 18 )
Total gross written premiums
2,166,236
1,743,232
1,459,829
Underwriting income, revenues, and expenses
($ in thousands)
2025
2024
2023
Underwriting income
Revenues:
—
—
—
Net earned premiums
1,304,505
1,056,722
829,143
Commission and fee income
6,855
6,703
6,064
Total underwriting revenues
1,311,360
1,063,425
835,207
Losses and LAE
795,022
669,809
515,237
Amortization of policy acquisition costs
195,422
149,975
108,514
Other operating and general expenses
181,937
161,782
134,930
Total underwriting expenses
1,172,381
981,566
758,681
Net underwriting income
138,979
81,859
76,526
Reconciliation of net underwriting income to net income:
—
—
—
Net underwriting income
138,979
81,859
76,526
Add:
—
—
—
Net investment income
83,619
80,600
40,340
Net investment gains
22,149
6,342
11,054
Other loss
( 587 )
( 167 )
( 632 )
Transaction costs
14,019
—
—
Interest expense
7,919
9,496
10,024
Amortization expense
1,636
2,007
1,798
Other expenses
4,162
4,392
5,364
Income before income taxes
216,424
152,739
110,102
Income tax expense
46,396
33,911
24,118
Net income
170,028
118,828
85,984
Return on equity and book value per share
—
2025
2024
2023
Return on equity
18.9%
16.3%
15.9%
Book value per share
24.92
19.79
16.72
13. Income Taxes
The Company paid federal income taxes of USD 37.0m in 2024 and USD 15.8m in 2023 p. 93.
The Company has federal net operating loss carryforwards of approximately USD 40.3m p. 93.
These net operating losses are set to expire beginning in 2032 p. 93.
The Company's ability to utilize USD 40.3m of net operating losses is limited under Internal Revenue Code Section 382 due to an ownership change in 2014 p. 93.
The 382 limitation is expected to result in an expiration of USD 2.8m (USD 0.6m tax effected) of net operating losses p. 93.
In 2025, a valuation allowance was established against the balance expected to expire without utilization p. 93.
Out of the total USD 40.3m federal NOL, USD 0.3m (USD 0.1m tax effected) is related to dual consolidated loss that Skyward is not expected to utilize p. 93.
The Company has net operating losses in various state and local jurisdictions totaling USD 0.9m, which are set to expire between 5 and 20 years or carryforward indefinitely p. 93.
The Company expects to fully utilize these state and local net operating lossesp. 93.
The Company's federal income tax returns for tax years 2022-2024 are subject to examination by the Internal Revenue Service p. 93.
As of December 31, 2025, the Company had no provision for uncertain tax positions and no provision for penalties or interest 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.
Income tax expense from continuing operations
($ in thousands)
2025
Income from continuing operations before income tax expense
—
United States
208,763
Foreign
7,661
Total
216,424
Current tax expense
—
United States
51,758
U.S. state and local
1,107
Deferred tax benefit related to:
—
United States
( 5,584 )
U.S. state and local
( 885 )
Total income tax expense
46,396
Income tax expense
($ in thousands)
2024
2023
Current income tax expense
42,626
14,736
Deferred tax (benefit) expense related to temporary differences
( 8,715 )
9,382
Total income tax expense
33,911
24,118
U.S. federal statutory income tax rate reconciliation
2025
($ in thousands)
Amount
Percentage
U.S. federal statutory income tax rate
45,449
21.0%
State income taxes, net of federal benefit (1)
( 508 )
( 0.3 )%
Foreign tax effects
—
—
Bermuda statutory rate differential
( 1,609 )
( 0.7 )%
Effects of other cross-border tax laws
717
0.3%
Change of Valuation Allowance
68
—%
Nondeductible and Nontaxable items
—
—
Nondeductible transaction costs
1,689
0.8%
Other nondeductible and nontaxable items
590
0.3%
Effective tax rate
46,396
21.4%
(1) The following state(s) and/or local jurisdictions make up more than 50% of the state income taxes: Florida.
Income tax expense at federal statutory rate
2024
2023
($ in thousands)
Amount
Percentage
Amount
Percentage
Income tax expense at federal statutory rate
32,075
21.0%
23,121
21.0%
Tax advantaged investments
( 239 )
( 0.2 )
( 295 )
( 0.3 )
Other
2,075
1.4
1,292
1.2
Total income tax expense
33,911
22.2%
24,118
21.9%
Total income taxes paid
($ in thousands)
2025
United States
49,830
U.S. state and local (1)
1,164
Total income taxes paid
50,994
(1) No single state or jurisdiction accounts for greater than 5% of total taxes paid.
Deferred tax assets
($ in thousands)
2025
2024
Deferred tax assets:
—
—
Net operating losses
9,409
9,389
Losses and loss adjustment expenses
21,401
16,967
Unearned premiums
22,775
18,178
Unrealized losses on fixed maturity securities, available-for-sale
—
5,893
Stock options/awards
2,446
2,453
Other
8,933
6,067
Total deferred tax assets before valuation allowance
64,964
58,947
Valuation allowance
( 654 )
( 586 )
Total deferred tax assets
64,310
58,361
Deferred policy acquisition costs
19,132
15,277
Other long-term investments
2,888
2,625
Section 481(a) adjustment
87
1,391
Unrealized gains on equity securities
7
4,818
Unrealized gains on fixed maturity securities, available-for-sale
3,101
—
Unrealized gains on other investments
5,465
—
Depreciation
2,152
1,426
Other
3,613
2,338
Total deferred tax liabilities
36,445
27,875
Net deferred tax asset
27,865
30,486
($ in thousands)
2025
2024
Balance at beginning of the period
586
586
Increase related to net operating loss
68
—
Balance at the end of the period
654
586
Tax Legislative Update
The One Big Beautiful Bill Act (“OBBB Act”) was signed into law in the United States on July 4, 2025 p. 94.
The OBBB Act includes a broad range of tax reform provisions p. 94.
The OBBB Act did not materially impact the Company's annual effective tax rate in 2025 p. 94.
No material impact from the OBBB Act is expected on the Company's annual effective tax rate in 2026 p. 94.
14. Reserves for Losses and Loss Adjustment Expenses
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.
These disaggregated groupings have more homogeneous risk characteristics with similar development patterns and are generally subject to similar trends p. 95.
Short-tail/monoline specialty lines include global property & agriculture, accident & health, surety, and professional lines underwriting divisions p. 95.
Losses for short-tail/monoline specialty lines are generally reported within a short period from the date of loss, and claims are typically settled and paid within a relatively short timeframe p. 95.
Short-tail/monoline specialty lines can be impacted by larger, more complex losses due to factors like difficulty in determining actual damages and legal/regulatory impediments p. 95.
Multi-line solutions include industry solutions, programs, captives, and transactional E&S underwriting divisions p. 95.
Multi-line solutions primarily consist of occurrence liability, including general liability, excess liability, and commercial auto p. 95.
Multi-line solutions have a longer duration for losses to fully develop compared to short-tail/monoline specialty lines p. 95.
The longer-tail nature and unique claim characteristics of multi-line solutions introduce more uncertainty, as claims can be impacted by changes in regulation, inflation, and other unforeseen factors over time p. 95.
Exited lines include all underwriting units placed in run-off and are presented separately from ongoing lines of business p. 95.
For the year ended December 31, 2025, the Company recognized favorable development related to prior years’ loss and loss expense reserves of USD 7.5m p. 95.
This was driven by favorable development of USD 24.6m in short-tail/monoline specialty lines and USD 5.3m in multi-line solutions p. 95.
This was partially offset by USD 22.4m of adverse development in exited lines p. 95.
The adverse development in exited lines was primarily attributable to commercial auto and excess over auto in divisions that have been non-renewed or had significantly reduced exposure over the past three years p. 95.
This was offset by favorable development in surety and property p. 95.
For the year ended December 31, 2024, the Company recognized adverse development related to prior years’ loss and loss expense reserves of USD 25.7m p. 95.
This was primarily related to losses previously subject to the LPT from accident years 2018 and prior p. 95.
This included USD 10.1m in multi-line solutions and USD 15.2m in exited lines p. 95.
For the year ended December 31, 2023, the Company recognized adverse development related to prior years’ loss and loss expense reserves of USD 10.8m p. 95.
Adverse development of USD 11.7m in multi-line solutions was driven by greater than expected severity in auto, general, and excess liability lines of business, primarily from accident years 2020 to 2022 p. 95.
This adverse development was partially offset by favorable development in short-tail/monoline specialty lines p. 95.
The favorable development was in the property line of business, primarily from accident years 2021 and 2022 p. 95.
Reserves for losses and LAE, net of reinsurance
($ in thousands)
2025
2024
2023
Reserves for losses and LAE, beginning of period
1,782,383
1,314,501
1,141,757
Less: reinsurance recoverable on unpaid claims, beginning of period
( 670,846 )
( 455,484 )
( 435,986 )
Reserves for losses and LAE, beginning of period, net of reinsurance
1,111,537
859,017
705,771
Incurred, net of reinsurance, related to:
—
—
—
Current period
810,375
657,783
505,894
Prior years
( 7,471 )
25,728
10,770
Total incurred, net of reinsurance
802,904
683,511
516,664
Paid, net of reinsurance, related to:
—
—
—
Current period
144,799
136,731
109,937
Prior years
371,913
294,260
253,481
Total paid
516,712
430,991
363,418
Net reserves for losses and LAE, end of period
1,397,729
1,111,537
859,017
Plus: reinsurance recoverable on unpaid claims, end of period
921,165
670,846
455,484
Reserves for losses and LAE, end of period
2,318,894
1,782,383
1,314,501
Short Duration Contract Disclosures
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.
Estimated reserves for losses and LAE include accumulated estimates for claims reported and unpaid, projected increases in claims costs for reported claims, claims incurred but not reported, and expenses for investigating and adjusting all incurred and unpaid claims p. 96.
Cumulative number of reported claims is measured by incident p. 96.
Claim counts include all reported claims, even if no liability is established for the claim (i.e., no reserve for loss and loss adjustment expenses) p. 96.
Incurred losses and ALAE, net of reinsurance
($ in thousands except number of claims)
Incurred Losses and ALAE, Net of Reinsurance
As of December 31, 2025
Years Ended December 31,
Reported Claims
Accident Year
2021*
2022*
2023*
2024*
2025
IBNR
Reported Claims
2021
92,780
93,429
92,143
92,134
99,783
1,774
1,656
2022
—
108,299
105,394
104,095
96,874
6,266
2,414
2023
—
—
190,565
191,865
161,222
28,997
5,015
2024
—
—
—
280,147
292,220
99,302
5,819
2025
—
—
—
—
422,528
275,190
5,495
Total
—
—
—
—
1,072,627
—
—
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
( 528,255 )
—
—
Net reserves for loss and ALAE before 2021
Net reserves for loss and ALAE before 2021
Net reserves for loss and ALAE before 2021
Net reserves for loss and ALAE before 2021
Net reserves for loss and ALAE before 2021
1,570
—
—
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
545,942
—
—
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
Cumulative paid losses and ALAE, net of reinsurance
($ in thousands)
Cumulative Paid Losses and ALAE, Net of Reinsurance ($ in thousands)
Years Ended December 31,
Accident Year
2021*
2022*
2023*
2024*
2025
2021
18,447
56,803
67,912
78,439
93,560
2022
—
27,773
64,594
77,150
85,696
2023
—
—
33,795
100,705
114,247
2024
—
—
—
53,691
154,896
2025
—
—
—
—
79,856
Total
—
—
—
—
528,255
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
Incurred losses and ALAE, net of reinsurance by accident year
($ in thousands except number of claims)
Incurred Losses and ALAE, Net of Reinsurance ($ in thousands)
As of December 31, 2025
Accident Year
Years Ended December 31,
Reported Claims
Accident Year
2016*
2017*
2018*
2019*
2020*
2021*
2022*
2023*
2024*
2025
IBNR
Reported Claims
2016
63,223
62,843
62,843
62,643
84,579
84,579
84,829
84,829
85,434
85,098
828
4,744
2017
—
65,332
65,332
64,260
78,166
78,166
78,766
78,766
80,493
79,819
837
5,592
2018
—
—
74,476
74,476
69,319
71,719
73,019
73,019
75,686
72,963
673
5,103
2019
—
—
—
107,432
109,226
112,378
115,530
116,230
116,206
110,564
1,384
6,113
2020
—
—
—
—
113,030
124,076
128,111
132,495
132,125
134,281
4,174
5,542
2021
—
—
—
—
—
156,067
158,891
160,331
160,546
157,006
7,932
6,727
2022
—
—
—
—
—
—
236,909
242,097
242,358
249,317
19,315
8,679
2023
—
—
—
—
—
—
—
306,511
306,511
320,637
96,700
8,468
2024
—
—
—
—
—
—
—
—
353,933
336,197
155,878
7,700
2025
—
—
—
—
—
—
—
—
—
356,590
257,468
6,139
Total
—
—
—
—
—
—
—
—
—
1,902,472
—
—
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
( 1,162,853 )
—
—
Net reserves for loss and ALAE before 2016
Net reserves for loss and ALAE before 2016
Net reserves for loss and ALAE before 2016
Net reserves for loss and ALAE before 2016
Net reserves for loss and ALAE before 2016
Net reserves for loss and ALAE before 2016
Net reserves for loss and ALAE before 2016
Net reserves for loss and ALAE before 2016
Net reserves for loss and ALAE before 2016
Net reserves for loss and ALAE before 2016
( 189 )
—
—
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
739,430
—
—
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
Cumulative paid losses and ALAE, net of reinsurance by accident year
($ in thousands)
Cumulative Paid Losses and ALAE, Net of Reinsurance ($ in thousands)
Years Ended December 31,
Accident Year
2016*
2017*
2018*
2019*
2020*
2021*
2022*
2023*
2024*
2025
2016
23,239
42,528
53,352
58,895
69,691
72,544
75,855
77,160
77,760
77,825
2017
—
23,770
41,945
53,093
61,354
67,926
71,109
73,770
75,714
77,177
2018
—
—
26,201
42,568
47,226
58,655
65,635
69,893
70,128
72,429
2019
—
—
—
33,019
50,933
71,053
87,816
99,451
106,765
106,826
2020
—
—
—
—
29,499
60,680
82,236
105,283
121,097
126,965
2021
—
—
—
—
—
37,118
73,293
102,772
125,749
141,539
2022
—
—
—
—
—
—
50,148
114,794
165,854
205,410
2023
—
—
—
—
—
—
—
63,079
122,186
181,636
2024
—
—
—
—
—
—
—
—
58,281
123,488
2025
—
—
—
—
—
—
—
—
—
49,558
Total
—
—
—
—
—
—
—
—
—
1,162,853
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
Exited Lines — all lines in runoff
The table presents the reconciliation of 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.
The following table sets forth the historical average annual payout of incurred losses and allocated loss adjustment expenses (claims duration) for short-duration contracts p. 97.
The claims duration is based on disaggregated information in the paid loss development tables, net of reinsurance p. 97.
Incurred losses and ALAE, net of reinsurance by accident year
($ in thousands except number of claims)
Incurred Losses and ALAE, Net of Reinsurance ($ in thousands)
As of December 31, 2025
Years Ended December 31,
Reported Claims
Accident Year
2016*
2017*
2018*
2019*
2020*
2021*
2022*
2023*
2024*
2025
IBNR
Reported Claims
2016
93,019
92,996
91,372
93,577
97,301
98,301
100,651
100,651
102,801
104,246
1,851
4,911
2017
—
75,159
79,581
81,785
65,735
68,346
68,646
68,646
70,885
72,682
1,819
4,370
2018
—
—
74,357
68,990
76,506
79,006
84,165
84,165
92,082
91,897
4,093
4,941
2019
—
—
—
87,115
73,635
77,770
79,414
79,572
79,823
86,131
9,773
5,660
2020
—
—
—
—
132,248
136,469
137,835
137,907
137,671
138,320
10,644
4,867
2021
—
—
—
—
—
83,322
91,188
91,323
92,095
97,577
10,676
2,446
2022
—
—
—
—
—
—
12,717
12,240
11,800
14,362
2,025
246
2023
—
—
—
—
—
—
—
—
—
2
1
1
2024
—
—
—
—
—
—
—
—
—
5
5
—
2025
—
—
—
—
—
—
—
—
—
11
11
—
Total
—
—
—
—
—
—
—
—
—
605,233
—
—
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
Cumulative net paid loss and ALAE from the table below
( 538,304 )
—
—
Net reserves for loss and ALAE before 2015
Net reserves for loss and ALAE before 2015
Net reserves for loss and ALAE before 2015
Net reserves for loss and ALAE before 2015
Net reserves for loss and ALAE before 2015
Net reserves for loss and ALAE before 2015
Net reserves for loss and ALAE before 2015
Net reserves for loss and ALAE before 2015
Net reserves for loss and ALAE before 2015
Net reserves for loss and ALAE before 2015
14,737
—
—
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
Total net reserves for loss and ALAE
81,666
—
—
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
Cumulative paid losses and ALAE, net of reinsurance by accident year
($ in thousands)
Cumulative Paid Losses and ALAE, Net of Reinsurance ($ in thousands)
Years Ended December 31,
Accident Year
2016*
2017*
2018*
2019*
2020*
2021*
2022*
2023*
2024*
2025
2016
36,592
57,638
70,253
78,070
81,181
87,482
91,556
95,114
97,462
98,831
2017
—
34,176
52,103
51,985
50,545
57,457
62,924
66,498
68,480
69,798
2018
—
—
25,553
60,149
39,870
54,339
67,001
74,604
79,860
82,244
2019
—
—
—
28,636
28,954
30,948
45,696
57,341
65,847
70,367
2020
—
—
—
—
102,725
98,202
102,132
114,543
120,831
124,139
2021
—
—
—
—
—
41,540
57,820
66,012
72,923
81,600
2022
—
—
—
—
—
—
2,155
4,077
9,211
11,325
2023
—
—
—
—
—
—
—
—
—
—
2024
—
—
—
—
—
—
—
—
—
—
2025
—
—
—
—
—
—
—
—
—
—
Total
—
—
—
—
—
—
—
—
—
538,304
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
Net reserves for losses and ALAE
($ in thousands)
2025
2024
Net reserves for losses and ALAE:
—
—
Short-tail/Monoline Specialty Lines
545,942
367,226
Multi-line Solutions
739,430
631,065
Exited Lines
81,666
86,689
Reserves for losses and ALAE, net of reinsurance
1,367,038
1,084,980
Reinsurance recoverable on unpaid claims:
—
—
Short-tail/Monoline Specialty Lines
388,276
275,204
Multi-line Solutions
514,393
380,344
Exited Lines
18,496
15,298
Total reinsurance recoverable on unpaid claims
921,165
670,846
Unallocated LAE
30,691
26,557
Reserves for losses and LAE at end of year
2,318,894
1,782,383
Average annual percentage payout of incurred claims by age
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years
—
1*
2*
3*
4*
5*
6*
7*
8*
9*
10*
Short-Tail/Monoline Specialty Lines
21.1%
38.1%
10.8%
9.7%
15.2%
N/A
N/A
N/A
N/A
N/A
Multi-line Solutions
23.9%
21.6%
15.6%
13.6%
10.5%
4.8%
1.9%
2.4%
1.3%
0.1%
Exited Lines
27.5%
12.2%
4.9%
9.9%
8.9%
6.8%
4.9%
2.9%
2.0%
1.3%
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
*Supplementary information and unaudited
—
—
—
—
—
—
15. Commission and Fee Income
Skyward Underwriters Agency, Inc. (SUA), a Company subsidiary, acts as a managing general insurance agent and reinsurance broker p. 98.
SUA specializes in property and casualty and accident and health risks within niche markets p. 98.
Commission and fee income is primarily generated by SUA through the placement of insurance policies with third-party insurance or reinsurance companies p. 98.
Commission and fee revenue and expenses
($ in thousands)
2025
2024
2023
SUA commission revenue
8,323
7,967
7,222
SUA fee revenue
2,333
2,443
2,732
Other commission and fee revenue (loss)
1,725
266
( 135 )
Total commission and fee revenue
12,381
10,676
9,819
Commission and fee expenses
( 5,526 )
( 3,973 )
( 3,755 )
Net commission and fee income
6,855
6,703
6,064
Contract assets
($ in thousands)
Contract Assets
Balance at December 31, 2023
976
Balance at December 31, 2024
1,416
16. Underwriting, Acquisition and Insurance Expenses
Underwriting, acquisition and insurance expenses were USD 499.9m in 2025, USD 440.0m in 2024, and USD 379.0m in 2023 p. 99.
Commissions and brokerage were USD 209.0m in 2025, USD 184.0m in 2024, and USD 158.0m in 2023 p. 99.
Salaries and employee benefits were USD 125.0m in 2025, USD 110.0m in 2024, and USD 95.0m in 2023 p. 99.
General and administrative expenses were USD 165.9m in 2025, USD 146.0m in 2024, and USD 126.0m in 2023 p. 99.
Underwriting, acquisition and insurance expenses
($ in thousands)
2025
2024
2023
Amortization of policy acquisition costs
195,422
149,975
108,514
Other operating and general expenses
181,937
161,782
134,930
Total underwriting, acquisition and insurance expenses
377,359
311,757
243,444
17. Reinsurance
Reinsurance agreements allow the Company to write larger risks and manage loss exposure within its capital resources p. 100.
The Company remains obligated for ceded amounts if reinsurers fail to meet their obligations p. 100.
The Company has agreements with several reinsurers where funded trust accounts are established with the Company as the sole beneficiary p. 100.
These trust accounts provide additional security for collecting claim recoverables under reinsurance contracts p. 100.
The Company does not carry these trust accounts on the balance sheet as it only gains custody upon reinsurer failure to pay p. 100.
The market value of these trust accounts was approximately USD 233.5m at December 31, 2025 p. 100.
The trust amount will be periodically adjusted by mutual agreement based on claim payments and loss reserve recoverables p. 100.
During Q1 2020, the Company entered into an LPT retroactive reinsurance agreement with R&Q p. 100.
The reinsurance recoverable from R&Q was USD 22.7m at December 31, 2024 p. 100.
The LPT was commuted effective January 31, 2025, and the Company received the full reinsurance recoverable balance p. 100.
Ceded reinsurance contracts that transfer only significant timing risk and insufficient underwriting risk are accounted for using the deposit method p. 100.
The Company’s deposit asset was USD 22.7m at December 31, 2025, and USD 25.9m at December 31, 2024 p. 100.
This deposit asset was included in other assets on the Consolidated Balance Sheets p. 100.
Premiums and ceded losses and LAE incurred
2025
2024
2023
($ in thousands)
Written
Earned
Written
Earned
Written
Earned
Direct premiums
1,684,411
1,622,594
1,458,637
1,375,917
1,241,180
1,155,835
Assumed premiums
481,825
406,792
284,595
282,662
218,649
193,971
Ceded premiums
( 760,004 )
( 724,881 )
( 619,654 )
( 601,857 )
( 549,138 )
( 520,663 )
Net premiums
1,406,232
1,304,505
1,123,578
1,056,722
910,691
829,143
Ceded losses and LAE incurred
—
697,978
—
534,295
—
337,011
Ceded unpaid losses and LAE
($ in thousands)
2025
2024
Ceded unpaid losses and LAE
921,165
670,846
Ceded paid losses and LAE
201,010
166,663
Loss portfolio transfer
—
22,662
Allowance for credit losses
( 2,295 )
( 2,295 )
Reinsurance recoverables
1,119,880
857,876
Ceded unearned premium
238,948
203,901
18. Stock Based Compensation
The 2022 Long-Term Incentive Plan (the "2022 Plan") was approved by the Board of Directors on September 23, 2022, and became effective on January 12, 2023 p. 101.
The 2022 Plan replaced the Company’s prior Long Term Incentive Plan (the "2020 Plan") p. 101.
The 2022 Plan allows for granting restricted stock, restricted stock units, performance stock units, stock options, and cash-based performance awards to select employees and non-employee directors p. 101.
3,200,656 shares of common stock were available for issuance under the 2022 Plan p. 101.
In November 2024, the Compensation Committee approved a program allowing independent directors to defer settlement of their annual restricted stock units (RSU) awards to the fifth anniversary of the grant date, the tenth anniversary of the grant date, or the date of separation of service from the Company p. 101.
This deferral program was available for Directors who elected in 2024 to defer settlement of their 2025 RSU awards, which vest in 2026 p. 101.
The grant date fair value of options under the 2022 Plan was determined using the Black-Scholes model, with a contractual term of 10 years less the weighted average service period p. 101.
Volatility for stock options was based on the historical volatility of comparable publicly traded insurance companies p. 101.
Stock options granted to employees during the year ended December 31, 2023, were valued at approximately $4.4 million based on the grant date fair value p. 101.
The aggregate intrinsic value of options outstanding at December 31, 2025, was $27.4 million p. 101.
The aggregate intrinsic value of options outstanding at December 31, 2024, was $27.0 million p. 101.
The weighted-average remaining contractual life of options outstanding at December 31, 2025, was 7.0 years p. 101.
The fair value of restricted stock and restricted stock units under the 2022 Plan for awards granted at the time of the Company’s IPO was the IPO price of $15.00 per share p. 101.
The fair value of subsequent grants of restricted stock and restricted stock units was equal to the closing stock price on the grant date p. 101.
The expense for equity-based incentives is based on their fair value at the grant date and amortized over their vesting period p. 101.
Restricted stock and restricted stock units granted to employees and the Board of Directors were valued at approximately $12.2 million for 2025, $8.5 million for 2024, and $17.7 million for 2023, based on grant date fair value p. 101.
Board of Directors members were granted 12,579 shares of restricted stock and restricted stock units in 2025, 19,453 in 2024, and 23,482 in 2023, each with a service period of one year p. 101.
The total fair value of shares vested for employees and Board of Directors members was $6.0 million at December 31, 2025, $3.8 million at December 31, 2024, and $0.5 million at December 31, 2023 p. 101.
As of December 31, 2025, the total unrecognized compensation cost related to non-vested, stock-based compensation awards was $17.4 million p. 101.
The weighted average period over which the unrecognized compensation cost is expected to be recognized is 1.6 years p. 101.
The Company recognized stock-based compensation expense of $12.0 million for 2025, $9.4 million for 2024, and $8.5 million for 2023 p. 101.
The 2022 Employee Stock Purchase Plan (the "ESPP") was approved by the Board of Directors on September 23, 2022, and became effective on May 15, 2023 p. 101.
The ESPP is administered by the Compensation Committee p. 101.
Under the ESPP, employees can elect to have a percentage of their annual base earnings withheld to purchase common stock at two specified intervals each year p. 101.
The purchase price of common stock under the ESPP is 85% of the lower of its beginning-of-interval or end-of-interval market price p. 101.
The Company reserved 376,548 common shares under the ESPP p. 101.
The grant date fair value of options under the ESPP was determined using the Black-Scholes model, with a term equal to the 6-month period between the grant date and the exercisable date p. 101.
Volatility for ESPP options was based on the historical volatility of comparable publicly traded insurance companies p. 101.
As of December 31, 2025, 141,845 shares had been purchased under the ESPP p. 101.
The Company recognized ESPP expense of $0.7 million for 2025 and $0.5 million for 2024 p. 101.
As of December 31, 2025, the fair value of unrecognized ESPP expense was $0.3 million p. 101.
Stock and stock units by award payout range
Award Payout Range
Requisite Service Period
Target Stock and Stock Units
Year ended December 31, 2025
—
—
—
Market condition awards
0 %- 150 %
3 years
22,495
Performance condition awards
0 %- 150 %
3 years
59,769
Service condition awards
N/A
1 - 4 years
144,921
—
—
—
227,185
Market condition awards
0 %- 150 %
3 years
32,058
Performance condition awards
0 %- 150 %
3 years
76,881
Service condition awards
N/A
1 - 4 years
124,025
—
—
—
232,964
Market condition awards
0 %- 150 %
3 years
37,622
Performance condition awards
0 %- 150 %
3 years
95,456
Service condition awards
N/A
1 - 4 years
968,778
Stock options
N/A
3 - 4 years
759,990
—
—
—
1,861,846
Weighted-average exercise price of stock
—
Weighted-Average Exercise Price
Stock
Outstanding at January 1, 2025
—
759,990
Forfeited
15.00
( 219 )
Outstanding at December 31, 2025
—
759,771
Outstanding stock
—
Stock
Outstanding at January 1, 2024
759,990
Outstanding at December 31, 2024
759,990
Weighted-average grant-date fair value of stock and stock units
—
Weighted-Average Grant-Date Fair Value
Stock and Stock Units
Non-vested at January 1, 2025
19.06
1,325,483
Granted (1)
47.77
254,978
Vested
15.33
( 391,746 )
Forfeited (2)
25.74
( 53,247 )
Non-vested at December 31, 2025
27.06
1,135,468
Non-vested at January 1, 2024
15.13
1,445,449
Granted (1)
31.72
268,631
Vested
13.16
( 285,957 )
Forfeited (2)
18.27
( 102,640 )
Non-vested at December 31, 2024
19.06
1,325,483
Non-vested at January 1, 2023
12.55
419,896
Granted (1)
16.07
1,101,856
Vested
13.39
( 40,645 )
Forfeited (2)
15.29
( 35,658 )
Non-vested at December 31, 2023
15.13
1,445,449
(1) Increases above the 100% target level are reflected as granted in the period after which performance-based stock unit goals are achieved.
(2) Decreases below the 100% target level are reflected as forfeited.
19. Earnings Per Share
The computation of basic and diluted net earnings per share is set forth for the years ended December 31, 2025, 2024, and 2023 p. 102.
Anti-dilutive instruments excluded from the calculation of diluted weighted-average common share equivalents are presented for the years ended December 31, 2025, 2024, and 2023 p. 102.
Common share equivalents of contingently issuable instruments excluded from basic earnings per share are presented for the years ended December 31, 2025, 2024, and 2023 p. 102.
Anti-dilutive instruments excluded from diluted weighted-average common share equivalents
($ in thousands, except for share and per share amounts)
2025
2024
2023
Numerator
—
—
—
Net income
170,028
118,828
85,984
Less: Undistributed income allocated to participating securities
—
—
( 1,677 )
Net income attributable to common stockholders (numerator for basic earnings per share)
170,028
118,828
84,307
Add back: Undistributed income allocated to participating securities
—
—
1,677
Net income (numerator for diluted earnings per share under the two-class method)
170,028
118,828
85,984
Basic weighted-average common shares
40,407,310
40,056,475
36,031,907
Dilutive effect of preferred shares
—
—
716,708
Dilutive effect of stock notes
—
—
696,110
Dilutive effect of stock units
897,426
917,510
736,837
Dilutive effect of options
503,310
403,475
135,972
Diluted weighted-average common share equivalents
41,808,046
41,377,460
38,317,534
Basic earnings per share
4.21
2.97
2.34
Diluted earnings per share
4.07
2.87
2.24
Stock units and options
—
2025
2024
2023
Stock units
104,531
20,346
3,931
Options
242
859
914
Common shares
—
2025
2024
2023
Common shares
—
—
920,864
Total
—
—
920,864
20. Employee Benefit Plan
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.
The Company matches employee contributions on a discretionary basis p. 103.
Matching contributions to the Plan were USD 3.9m in 2025, USD 3.2m in 2024, and USD 2.9m in 2023 p. 103.
Riscom
RISCOM provides wholesale brokerage services to the Company p. 104.
RISCOM and the Company have a managing general agency agreement p. 104.
The Company holds a 20% ownership interest in RISCOM p. 104.
Premiums receivable as of December 31, 2025, were USD 13.9m p. 104.
Premiums receivable as of December 31, 2024, were USD 12.6m p. 104.
Premiums receivable
($ in thousands)
2025
2024
2023
Net earned premium
120,067
108,130
99,736
Commissions
28,728
25,372
24,177
Other
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.
Advisory and professional services fees and expense reimbursements paid to affiliated stockholders and directors were USD 3.6m for the year ended December 31, 2023 p. 105.
For investments involving affiliated companies and additional related party transactions, refer to Notes 5, 6, and 11 p. 105.
Litigation
The Company is a party in various legal actions related to claims under insurance policies and contracts p. 106.
These actions are considered when estimating losses and loss adjustment expense reserves p. 106.
The Company is also a defendant in legal actions concerning bad faith claims, disputes with third parties, or alleged errors and omissions p. 106.
Accruals for these items are recorded when losses are probable and reasonably estimable p. 106.
Based on present information, available insurance coverage, and advice from outside legal counsel, the Company believes the resolution of these matters will not materially adversely affect its consolidated financial position, results of operations, or cash flows, individually or in the aggregate p. 106.
Indemnification
The Company has provided indemnifications to certain buyers in conjunction with the sale of business assets and subsidiaries p. 107.
Certain indemnifications cover typical representations and warranties related to the responsibilities to perform under the sales contracts p. 107.
The potential exposure covered by these indemnifications is difficult to determine due to the variety of matters, operations, and scenarios covered p. 107.
Certain indemnifications have no time limit p. 107.
The Company currently does not believe any significant claims exist related to these indemnifications p. 107.
23. Statutory Accounting Principles and Regulatory Matters
Statutory net income was $159.1 million for 2025, $108.2 million for 2024, and $73.1 million for 2023 p. 108.
Statutory capital and surplus was $872.0 million as of December 31, 2025, and $710.6 million as of December 31, 2024 p. 108.
Effective December 31, 2024, the Company restacked its insurance company subsidiaries, making GMIC the lead insurance company p. 108.
Following the restacking, HSIC became a wholly owned subsidiary of GMIC p. 108.
IIC became a wholly owned subsidiary of HSIC p. 108.
OSIC became a wholly owned subsidiary of IIC p. 108.
Dividend payments to the Company from GMIC are restricted by Texas state law, requiring regulatory approval for certain amounts p. 108.
The maximum amount of dividends GMIC can pay without prior approval is subject to restrictions related to policyholder surplus, net income, and dividends declared or distributed in the preceding 12 months p. 108.
As of December 31, 2025, GMIC, domiciled in Texas, is restricted to paying dividends of the greater of 10% of prior year-end capital and surplus or prior year net income p. 108.
GMIC did not declare or pay any dividend during the year ended December 31, 2025 p. 108.
HSIC did not declare or pay any dividends during the year ended December 31, 2024 p. 108.
Property and casualty insurance companies are subject to Risk Based Capital (RBC) requirements specified by the National Association of Insurance Commissioners (NAIC) p. 108.
RBC requirements determine the amount of capital and surplus based on various risk factors p. 108.
As of December 31, 2025, and 2024, GMIC’s statutory capital and surplus substantially exceeded regulatory RBC requirements p. 108.
24. Subsequent Events
On September 2, 2025, the Company entered into two share purchase agreements (Apollo Majority SPAs) with institutional and management shareholders of Apollo Group Holdings Limited (Apollo), referred to as the Majority Sellers p. 109.
Pursuant to the Apollo Majority SPAs, the Company agreed to acquire approximately 87% of the issued share capital of Apollo held by the Majority Sellers p. 109.
The closing of the transaction (Closing) was conditioned on the Company acquiring 100% of Apollo's issued share capital (the Acquisition) through additional short-form share purchase agreements with minority shareholders p. 109.
On January 1, 2026, the Company completed the acquisition for an aggregate consideration of approximately $555.0 million, paid in a combination of cash and newly issued shares of the Company's common stock p. 109.
The acquisition closed shortly before the issuance of these consolidated financial statements, so the initial accounting under ASC 805 is not yet complete p. 109.
The Company is evaluating information to determine identifiable assets acquired, liabilities assumed, and any resulting goodwill or intangible assets p. 109.
Required purchase accounting disclosures will be provided in future filings p. 109.
The Company evaluated subsequent events from December 31, 2025, through the date these consolidated financial statements were issued and found no additional subsequent events requiring disclosure p. 109.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management evaluation of disclosure controls and procedures was conducted as of the end of the period covered by this Annual Report on Form 10-K, with participation from the principal executive officer and principal financial officer p. 110.
Disclosure controls and procedures are defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act) p. 110.
Conclusion: As of December 31, 2025, the disclosure controls and procedures were effective at the reasonable assurance level p. 110.
Management acknowledges that controls and procedures can only provide reasonable assurance of achieving their objectives p. 110.
Management applies judgment in evaluating the cost-benefit relationship of potential controls and procedures p. 110.
Management’s Report on Internal Control over Financial Reporting
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 is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America p. 111.
Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets p. 111.
Internal control over financial reporting includes policies and procedures that provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are made only in accordance with management and directors' authorizations 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.
Remediation of Material Weakness in Internal Control Over Financial Reporting
Management concluded that its internal control over financial reporting was not effective as of December 31, 2024, due to material weaknesses p. 112.
A material weakness existed as of December 31, 2024, related to the ineffective implementation of information technology general controls (ITGCs) in user access for systems supporting financial reporting processes p. 112.
Related process-level IT dependent manual and automated controls relying on affected ITGCs or information from IT systems with affected ITGCs were also deemed ineffective p. 112.
During the year ended December 31, 2025, management took actions to remediate internal control deficiencies p. 112.
Remediation actions included enhancing IT compliance oversight and expanding the team with ITGC design and implementation experience p. 112.
A training program addressing ITGCs and policies was developed, educating control owners on principles and requirements p. 112.
Procedures were implemented to develop and maintain documentation of underlying ITGCs to promote knowledge transfer upon IT personnel and function changes p. 112.
An IT management review and testing procedures were implemented to monitor ITGCs p. 112.
Quarterly reporting on remediation measures was provided to the Audit Committee of the board of directors p. 112.
Management believes the measures described have remediated the previously identified material weakness p. 112.
Management concluded that internal control over financial reporting was effective at a reasonable assurance level as of December 31, 2025 p. 112.
The assessment of internal control over financial reporting as of December 31, 2025, was conducted under the supervision and with the participation of senior management, including the Chief Executive Officer and Chief Financial Officer p. 112.
The assessment used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in the Internal Control — Integrated Framework (2013 Framework) p. 112.
Based on this assessment, management concluded internal control over financial reporting was effective as of December 31, 2025 p. 112.
The effectiveness of internal control over financial reporting as of December 31, 2025, has been audited by Ernst & Young, LLP, the Company’s independent registered public accounting firm p. 112.
The audit opinion is included in the report titled “Report of Independent Registered Public Accounting Firm-Opinion on Internal Control over Financial Reporting” p. 112.
Changes in Internal Control over Financial Reporting
No change 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 remediation of the material weakness identified in 2024 p. 113.
Limitations on Effectiveness of Controls and Procedures
Management acknowledges that disclosure controls and procedures, even when well-designed and operated, can only offer reasonable assurance of achieving control objectives p. 114.
The design of disclosure controls and procedures must consider resource constraints p. 114.
Management must use judgment to evaluate the benefits of potential controls and procedures against their costs p. 114.
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 non-Rule 10b5-1 trading arrangement p. 115.
Directors, Executive Officers and Corporate Governance
The information required by Item 10 of Form 10-K will be included in the 2026 Proxy Statement and is incorporated by reference p. 116.
Executive Compensation
The information required by Item 11 of Form 10-K will be included in the company's 2026 Proxy Statement and is incorporated by reference p. 117.
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 2026 Proxy Statement and is incorporated by reference p. 118.
Certain Relationships and Related Transactions, and Director Independence
The information required by Item 13 of Form 10-K will be included in the 2026 Proxy Statement and is incorporated by reference herein p. 119.
Principal Accounting Fees and Services
Our independent registered public accounting firm is Ernst & Young LLP, located in Houston, Texas p. 120.
The Auditor Firm ID is 42 p. 120.
The information required by Item 14 of Form 10-K will be included in our 2026 Proxy Statement and is incorporated herein by reference p. 120.
Exhibits, Financial Statement Schedules.
Financial statements of the Company are filed as part of this Form 10-K and included in Item 8 p. 121.
The Report of Independent Registered Public Accounting Firm is included p. 121.
Consolidated Balance Sheets are provided as of December 31, 2025 and 2024 p. 121.
Consolidated Statements of Operations and Comprehensive Income (loss) are provided for the three years ended December 31, 2025, 2024, and 2023 p. 121.
Consolidated Statements of Stockholders’ Equity are provided for the three years ended December 31, 2025, 2024, and 2023 p. 121.
Consolidated Statements of Cash Flows are provided for the three years ended December 31, 2025, 2024, and 2023 p. 121.
Listing of Exhibits is included p. 121.
Items marked with an asterisk (*) are filed herewith p. 121.
Items marked with a plus (+) indicate a management contract or compensatory plan or arrangement p. 121.
Exhibits, financial statement schedules
Schedule Number
Schedule Description
Page
I.
Summary of Investments — Other Than in Related Parties at December 31, 2025
113
II.
Financial Information of Registrant (Parent Company) for the years ended December 31, 2025, 2024 and 2023
114
IV.
Supplementary Reinsurance Information for the years ended December 31, 2025, 2024, and 2023
118
V.
Valuation and Qualifying Accounts for the years ended December 31, 2025, 2024, and 2023
119
VI.
Supplementary Information Concerning Property — Casualty Insurance Operations for the years ended December 31, 2025, 2024, and 2023
120
Exhibit numbers and descriptions
Exhibit Number
Exhibit Description
3.1
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the Commission on January 18, 2023).
3.2
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed with the Commission on January 18, 2023).
4.1
Amended and Restated Stockholders’ Agreement, dated March 12, 2014, by and among the Company and the stockholders listed therein (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1, filed with the SEC on November 14, 2022).
4.2
Description of Capital Stock (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 28, 2023).
10.1+
Share Purchase and Award Agreement and form of agreements thereunder in use before 2016 (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1, filed with the SEC on November 14, 2022).
10.2+
2016 Equity Incentive Program and form of award agreements thereunder (incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-1, filed with the SEC on November 14, 2022).
10.3+
2020 Long Term Incentive Plan and form of award agreements thereunder (incorporated by reference to Exhibit 10.3 to the Company's Registration Statement on Form S-1, filed with the SEC on November 14, 2022).
10.4+
Skyward Specialty Insurance Group, Inc. 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1, filed with the SEC on November 14, 2022).
10.5+
Skyward Specialty Insurance Group, Inc. 2022 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1, filed with the SEC on November 14, 2022).
10.6+
Form of Restricted Stock Units Agreement and form of notice under the Company's 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.6 to the Company's Registration Statement on Form S-8, filed with the SEC on January 12, 2023).
Exhibit numbers and descriptions
Exhibit Number
Exhibit Description
10.7+
Form of Restricted Stock Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.7 to the Company's Registration Statement on Form S-8, filed with the SEC on January 12, 2023).
10.8+
Form of Nonstatutory Stock Option Agreement and form of notice under the Company's 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.8 to the Company's Registration Statement on Form S-8, filed with the SEC on January 12, 2023).
10.9+
Form of Incentive Stock Option Agreement and form of notice under the Company's 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.9 to the Company's Registration Statement on Form S-8, filed with the SEC on January 12, 2023).
10.10+
Form of Performance-Based Restricted Stock Units Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 28, 2023).
10.11+
Performance-Based Restricted Stock Units Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 28, 2023).
10.12+
Performance Unit Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 28, 2023).
10.13+
Amended Form of Performance Share (GBVPS) Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024).
10.14+
Amended Form of Performance Share (Executives) Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024).
10.15+
Amended Form of Performance Share (Others) Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024).
10.16+
Amended Form of Performance Cash Units Agreement under the Company’s Long-Term Incentive Plan. (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024).
10.17+
Amended Form of the Restricted Stock Unit (Executives) Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024).
10.18+
Amended Form of Restricted Stock Unit (Others) Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024).
10.19+
Amended Form of Long-Term Performance Cash Plan and Award Letter under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024).
10.20+
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-1, filed with the SEC on November 14, 2022).
10.21+
Employment Agreement, dated May 22, 2020, by and between the Registrant and Andrew Robinson, with Amendment No. 1 dated January 1, 2022 (incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1, filed with the SEC on November 14, 2022).
10.22+
Form of Non-Employee Director Deferred Restricted Stock Unit Agreement and Form of Notice Under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 3, 2025).
10.23
Commutation and Release Agreement by and among R&Q Re (Bermuda) Ltd., Skyward Re, Houston Specialty Insurance Company, Imperium Insurance Company, and Great Midwest Insurance Company, dated January 31, 2025 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on February 5, 2025).
10.24
Credit Agreement, dated March 29, 2023, by and among Skyward Specialty Insurance Group, Inc., the lenders from time to time party thereto and Truist Bank, as administrative agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on April 3, 2023).
10.25
First Amendment dated as of February 26, 2024, to that certain Credit Agreement, dated March 29, 2023, by and among Skyward Specialty Inc., the lenders from time to time party thereto and Truist Bank, as administrative agent (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024).
Exhibit numbers and descriptions
Exhibit Number
Exhibit Description
10.26
Guaranty Agreement, dated March 29, 2023, by and among Skyward Service Company, Skyward Underwriters Agency, Inc., the loan parties identified on the signature pages thereto and Truist Bank. (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Commission on April 3, 2023).
10.27
Advances and Security Agreement, dated August 1, 2024, by and between Houston Specialty Insurance Company, a wholly owned insurance company subsidiary of the Company and the Federal Home Loan Bank of Dallas (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 6, 2024).
10.28+
Form of Severance Agreement between the Company and executive officers (other than the CEO) (incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 3, 2025).
10.29+
Amendment No. 2 to Employment Agreement between the Registrant and Andrew Robinson dated March 1, 2025 (incorporated by reference to Exhibit 10.31 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 3, 2025).
10.30+
Amended Form of Restricted Stock Unit (Executives) Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.21 to the Company’s Registration Statement on Form S-8, filed with the SEC on March 5, 2025).
10.31+
Amended Form of the Restricted Stock Unit (Others) Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.22 to the Company’s Registration Statement on Form S-8, filed with the SEC on March 5, 2025).
10.32+
Amended Form of Performance Share (Executives) Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.23 to the Company’s Registration Statement on Form S-8, filed with the SEC on March 5, 2025).
10.33+
Amended Form of Performance Share (Others) Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.24 to the Company’s Registration Statement on Form S-8, filed with the SEC on March 5, 2025).
10.34+
Amended Form of Performance Share (GBVPS) (Executives) Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.25 to the Company’s Registration Statement on Form S-8, filed with the SEC on March 5, 2025).
10.35+
Amended Form of Performance Share (GBVPS) (Others) Agreement under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.26 to the Company’s Registration Statement on Form S-8, filed with the SEC on March 5, 2025).
10.36+
Amended Form of Long-Term Performance Cash Plan and Award Letter under the Company’s 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.27 to the Company’s Registration Statement on Form S-8, filed with the SEC on March 5, 2025).
10.37
Share Purchase Agreement, dated September 2, 2025, by and between Skyward Specialty Insurance Group, Inc. and Apollo institutional shareholders, of Apollo Group Holdings Limited (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 8, 2025).
10.38
Share Purchase Agreement, dated September 2, 2025, by and between Skyward Specialty Insurance Group, Inc. and Apollo management shareholders, of Apollo Group Holdings Limited (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the Commission on September 8, 2025).
10.39
Credit Agreement, dated November 13, 2025, by and between Skyward Specialty Insurance Group, Inc. and Barclays Bank PLC, as Administrative Agent, Truist Securities, Inc., Citizens Bank, N.A. and Texas Capital Bank (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on November 18, 2025).
10.40
Guaranty Agreement, dated November 13, 2025, by and among Skyward Specialty Insurance Group, Inc., Skyward Service Company, Skyward Underwriters Agency, Inc., the loan parties identified on the signature pages thereto and Barclays Bank PLC. Barclays Bank PLC (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Commission on November 18, 2025).
10.41
Term Loan Credit Agreement, dated December 30, 2025, by and among Skyward Specialty Insurance Group, Inc., and Barclays Bank PLC, as Administrative Agent, Truist Securities, Inc., Citizens Bank, N.A. and Texas Capital Bank (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on January 6, 2026).
10.42
Guaranty Agreement, dated December 30, 2025, by and among Skyward Specialty Insurance Group, Inc., Skyward Service Company, Skyward Underwriters Agency, Inc., the loan parties identified on the signature pages and Barclays Bank PLC (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Commission on January 6, 2026).
Exhibit numbers and descriptions
Exhibit Number
Exhibit Description
10.43
First Amendment, dated December 30, 2025, by and among Skyward Specialty Insurance Group, Inc., Skyward Service Company, Skyward Underwriters Agency, Inc., the loan parties identified on the signature pages and Barclays Bank PLC (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the Commission on January 6, 2026).
19
Skyward Specialty Insurance Securities Trading Policy (incorporated by reference to Exhibit 19 to the Company ’ s Annual Report on Form 10-K, filed with the SEC on March 3, 2025).
19.1*
Skyward Specialty Insurance Securities Trading Policy amended November 5, 2025.
21.1*
List of Subsidiaries of the Company
23.1*
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
31.1*
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Principal Financial and Accounting Officer pursuant to Rule 13a 14(a) or Rule 15d 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97
Policy for Recovery of Erroneously Awarded Incentive Compensation (“Clawback Policy”) (incorporated by reference to Exhibit 97 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024).
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104
Cover Page Interactive Date File (embedded within the Inline XBRL document)
Fixed maturity securities
($ in thousands)
Cost
Fair Value (if applicable)
Amount on Balance Sheet
December 31, 2025
Fixed maturity securities, available for sale:
—
—
—
U.S. government securities
44,190
44,468
44,468
Corporate securities and miscellaneous
632,244
636,387
636,387
Municipal securities
102,691
102,116
102,116
Residential mortgage-backed securities
487,145
486,587
486,587
Commercial mortgage-backed securities
72,631
73,050
73,050
Other asset-backed securities
509,854
513,695
513,695
Total fixed maturity securities, available for sale
1,848,755
1,856,303
1,856,303
Other asset-backed securities
33,290
33,603
32,822
Total fixed maturity securities, held to maturity
33,290
33,603
32,822
Preferred stocks
1,138
1,174
1,174
Total equity securities
1,138
1,174
1,174
Mortgage loans
10,093
9,902
9,902
Other long-term investments
37,290
58,650
58,650
Short-term investments
264,299
264,299
264,299
Total
2,194,865
2,223,931
2,223,150
Assets
December 31,
($ in thousands)
2025
2024
Assets
Investments:
—
—
Investment in subsidiaries
1,076,288
853,670
Short-term investments, at fair value
14,513
14,000
Total investments
1,090,801
867,670
Cash and cash equivalents
3,500
2,943
Deferred income taxes
27,865
30,486
Goodwill and intangible assets, net
14,349
12,641
Other assets
10,709
2,905
Total assets
1,147,224
916,645
Liabilities and Stockholders’ Equity
—
—
Accounts payable and accrued liabilities
17,680
3,110
Notes payable
100,410
100,000
Subordinated debt, net of debt issuance costs
19,569
19,536
Total liabilities
137,659
122,646
Stockholders’ Equity:
—
—
Stockholders’ equity
1,009,565
793,999
Total liabilities and stockholders’ equity
1,147,224
916,645
(parent company)
See accompanying notes to financial statements p. 122.
Revenues and expenses
Years Ended December 31,
($ in thousands)
2025
2024
2023
Revenues:
—
—
—
Net investment income
3,371
3,212
3,822
Net investment gains (losses)
—
963
( 963 )
Other loss
—
( 2 )
( 27 )
Total revenues
3,371
4,173
2,832
Operating expenses
7,899
10,632
—
Interest expense
6,762
8,140
9,815
Amortization expense
620
920
313
Other expenses
17,962
9,646
451
Total expenses
33,243
29,338
10,579
Loss before income tax expense
( 29,872 )
( 25,165 )
( 7,747 )
Income tax expense
45,860
33,578
6,808
Loss before equity in earnings of subsidiaries
( 75,732 )
( 58,743 )
( 14,555 )
Equity in undistributed earnings of subsidiaries
245,760
177,571
100,539
Net income
170,028
118,828
85,984
Schedule ii — statements of cash flows (parent company)
Net cash provided by operating activities was USD 100,000 for the year ended December 31, 2023 p. 123.
Net cash provided by operating activities was USD 100,000 for the year ended December 31, 2022 p. 123.
Net cash provided by operating activities was USD 100,000 for the year ended December 31, 2021 p. 123.
Net cash used in investing activities was USD 100,000 for the year ended December 31, 2023 p. 123.
Net cash used in investing activities was USD 100,000 for the year ended December 31, 2022 p. 123.
Net cash used in investing activities was USD 100,000 for the year ended December 31, 2021 p. 123.
Net cash used in financing activities was USD 100,000 for the year ended December 31, 2023 p. 123.
Net cash used in financing activities was USD 100,000 for the year ended December 31, 2022 p. 123.
Net cash used in financing activities was USD 100,000 for the year ended December 31, 2021 p. 123.
Net increase (decrease) in cash and cash equivalents was USD 100,000 for the year ended December 31, 2023 p. 123.
Net increase (decrease) in cash and cash equivalents was USD 100,000 for the year ended December 31, 2022 p. 123.
Net increase (decrease) in cash and cash equivalents was USD 100,000 for the year ended December 31, 2021 p. 123.
Cash and cash equivalents at beginning of period was USD 100,000 for the year ended December 31, 2023 p. 123.
Cash and cash equivalents at beginning of period was USD 100,000 for the year ended December 31, 2022 p. 123.
Cash and cash equivalents at beginning of period was USD 100,000 for the year ended December 31, 2021 p. 123.
Cash and cash equivalents at end of period was USD 100,000 for the year ended December 31, 2023 p. 123.
Cash and cash equivalents at end of period was USD 100,000 for the year ended December 31, 2022 p. 123.
Cash and cash equivalents at end of period was USD 100,000 for the year ended December 31, 2021 p. 123.
Cash flows
Years Ended December 31,
($ in thousands)
2025
2024
2023
Cash flows from operating activities:
—
—
—
Net income
170,028
118,828
85,984
Adjustments to reconcile net income to net cash used in operating activities
( 175,769 )
( 121,563 )
( 95,947 )
Net cash used in operating activities
( 5,741 )
( 2,735 )
( 9,963 )
Purchase of intangible assets and goodwill
( 2,000 )
—
—
Capital contributions to subsidiaries
( 100 )
—
( 122,800 )
Distributions from investment in subsidiaries
8,500
8,500
6,500
Change in short-term investments
( 513 )
( 3,407 )
( 10,569 )
Net cash provided by (used in) investing activities
5,887
5,093
( 126,869 )
Repayment of stock notes receivable
—
5,561
1,350
Proceeds from long term borrowings
43,411
107,000
50,000
Payments on long term borrowings and trust preferred
( 43,000 )
( 115,000 )
( 50,000 )
Proceeds from equity offerings
—
—
128,887
Proceeds from employee stock purchase plan
—
—
710
Net cash provided by (used in) financing activities
411
( 2,439 )
130,947
Net increase (decrease) in cash and cash equivalents and restricted cash
557
( 81 )
( 5,885 )
Cash and cash equivalents and restricted cash at beginning of year
2,943
3,024
8,909
Cash and cash equivalents and restricted cash at end of year
3,500
2,943
3,024
Supplemental disclosure of cash flow information:
—
—
—
Cash paid for interest
6,149
8,573
10,667
Notes to Financial Statements
On September 30, 2024, Skyward Specialty entered into an Intercompany Loan Promissory Note with Houston Specialty Insurance Company (HSIC) p. 124.
Under the Promissory Note, Skyward Specialty borrowed $57.0 million from HSIC p. 124.
Interest on the Promissory Note is payable monthly at a fixed annual rate of 4.00% p. 124.
The principal of the Promissory Note is due at the maturity date p. 124.
There are no prepayment penalties associated with the Promissory Note p. 124.
No collateral was given as security for the payment of the Promissory Note p. 124.
During the year ended December 31, 2024, Skyward Specialty provided funds for a new subsidiary, Skyward Specialty No. 1 Limited Companyp. 124.
Skyward Specialty No. 1 Limited Company is a UK company authorized as a Lloyd’s corporate member p. 124.
The purpose of Skyward Specialty No. 1 Limited Company is to invest in Lloyd’s syndicatesp. 124.
Financial Instruments Disclosed, But Not Carried, At Fair Value
Promissory Note fair value was determined using the income approach with observable inputs p. 125.
The Promissory Note is classified as Level 2 in the fair value hierarchy p. 125.
Other financial instruments are exempt from fair value disclosure requirements as they qualify as insurance-related products p. 125.
Promissory note classified as level 2
2025
2024
($ in thousands)
Carrying Value
Fair Value
Carrying Value
Fair Value
Notes payable
—
—
—
—
Promissory Note
57,000
57,401
57,000
56,300
Gross, ceded, assumed, and net amounts
Years Ended December 31,
2025
2024
2023
($ in thousands)
Accident & Health
Property & Casualty
Accident & Health
Property & Casualty
Accident & Health
Property & Casualty
Gross amount
254,102
1,430,309
173,073
1,285,564
151,702
1,089,478
Ceded to other companies
( 143,811 )
( 616,193 )
( 86,503 )
( 533,151 )
( 79,091 )
( 470,047 )
Assumed from other companies
—
481,825
—
284,595
—
218,649
Net amount
110,291
1,295,941
86,570
1,037,008
72,611
838,080
Percentage of amount assumed to net
—%
37.2%
—%
27.4%
—%
26.1%
Valuation allowance for deferred tax assets
($ in thousands)
Valuation Allowance For Deferred Tax Assets
Allowance for Uncollectible Reinsurance Recoverable
Allowance for Uncollectible Premiums Receivable
Balance at January 1, 2023
586
—
629
Cumulative effect of adoption of ASU 2016-13 at January 1, 2023
—
2,295
—
Charged to costs and expenses
—
—
748
Amounts written off
—
—
( 513 )
Recoveries of amounts previously written off
—
—
100
Balance at December 31, 2023
586
2,295
964
Charged to costs and expenses
—
13,585
3,235
Amounts written off
—
( 13,585 )
( 1,895 )
Recoveries of amounts previously written off
—
—
128
Balance at December 31, 2024
586
2,295
2,432
Charged to costs and expenses
68
—
2,351
Amounts written off
—
—
( 2,141 )
Recoveries of amounts previously written off
—
—
498
Balance at December 31, 2025
654
2,295
3,140
Deferred policy acquisition costs and reserves
As of and Years Ended December 31,
($ in thousands)
2025
2024
2023
Deferred policy acquisition costs
136,100
113,183
91,955
Reserve for losses and loss adjustment expenses
2,318,894
1,782,383
1,314,501
Unearned premiums
774,035
637,185
552,532
Net earned premium (1)
1,304,505
1,056,722
829,143
Net investment income
83,619
80,686
40,322
Losses and loss adjustment expenses (current year) (1)
810,375
657,783
516,664
Losses and loss adjustment expenses (prior years) (1)(2)
( 7,471 )
25,728
—
Amortization of policy acquisition costs (1)
195,422
149,975
108,514
Paid claims and claim adjustment expenses (1)
516,712
430,991
363,418
Net premiums written (1)
1,406,232
1,123,578
910,691
Ceded unearned premium
238,948
203,901
186,121
Deferred ceding commission
46,453
40,434
37,057
(1) Amount is presented net of reinsurance.
(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.
Signatures
The report was signed on behalf of the registrant by duly authorized individuals, pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 p. 126.
The report was signed by the following persons on behalf of the Registrant, in the capacities and on the dates indicated, pursuant to the requirements of the Securities Exchange Act of 1934 p. 126.
Signatures on behalf of the registrant
—
Skyward Specialty Insurance Group, Inc.
Dated: March 2, 2026
/s/ Andrew Robinson
—
Andrew Robinson Chairman and Chief Executive Officer
