]> 2026-07-06T19:27:09+08:00 Skyward/2022/FY/Annual report 0 en-us Annual report Skyward Specialty Insurance Group 2022 Form 10-K Form 10-K English Skyward doc_archive FY FY22 2023-03-28Z 2460031.5 2022 2026-07-06T04:58:19Z 2461227.7071644 2026-07-06T05:00:15Z 2461227.7085069 false Skyward/2022/FY/Annual report 0 Cover 1 table Skyward/2022/FY/Annual report# 17a8ad07ff10e29898ac374189e96437 0 Audit Information 2 Auditor name, auditor location, auditor firm ID table Skyward/2022/FY/Annual report# d7b7dd2f6c72f92907cfaa441356696a 0 Year founded = 2006 Founding legal form = Delaware corporation Former name(s) = Houston International Insurance Group, Ltd. Financial strength rating = A- (Excellent) Rating outlook = stable IPO Date = January 18, 2023 IPO shares sold by company = 4,750,000 Who We Are 3 Skyward Specialty, Houston International Insurance Group, commercial P&C products, E&S, admitted, general liability, excess liability, professional liability, commercial auto, group accident and health, property, surety, workers’ compensation, A.M. Best Company, initial public offering prose Skyward/2022/FY/Annual report# 52e6b00de0cc45f174ab2b48eb12fccb 0 Number of segments = one Reportable segments = one Strategic priorities = serve customer needs, value-add partner to distributors, attractive risk-adjusted returns Our Business and Our Strategy 4 Reportable segment, underwriting divisions, Accident & Health, Captives, Global Property, Industry Solutions, Construction, Energy, Specialty Trucking prose Skyward/2022/FY/Annual report# f5002342f59c2da3d1ab499e697895f3 0 Adjusted combined ratio 2022 = 92.6% Adjusted combined ratio 2021 = 94.6% Our Competitive Strengths 5 Commercial lines P&C markets, underwriting, claims management, data, predictive analytics prose Skyward/2022/FY/Annual report# 11da562c958c55ae6f1f05f7c94643ae 0 Strategic priorities = attracting and retaining blue-chip underwriting and claims talent, leveraging technology DNA, profitably growing existing lines and expanding with new underwriting divisions, differentiating on daily excellence, using the balance sheet to capture market share Our Strategy in Action 6 Rule Our Niche strategy, underwriting profitability, book value per share, talent, technology, SkyBI, market niches, climate change, supply chain uncertainty, financial inflation, cyber prose Skyward/2022/FY/Annual report# 3103fd68ac6816394aeb8db530f80126 0 Distribution channels = retail agents, wholesale brokers, select program administrators, captive managers Marketing and Distribution 7 Marketing, distribution, Rule Our Niche strategy, distribution partners, retail agents, wholesale brokers, program administrators, captive managers, Industry Solutions, Surety, Global Property, Professional Lines, Transactional E&S, London market prose Skyward/2022/FY/Annual report# c032ad3d4161a704e55eb57644fa8986 0 President of Industry Solutions, Captives and Programs underwriting divisions = Kirby Hill President of Specialty Lines = John Burkhart Senior Vice President of the Global Property Underwriting Division = Doug Davies Underwriting 8 Underwriting approach, Rule Our Niche strategy, underwriting teams, Kirby Hill, John Burkhart, Doug Davies, technical underwriters, technology, data analytics, risk selection, pricing, SkyBI business intelligence platform prose Skyward/2022/FY/Annual report# 6bb0efc0657b5969192037c4195f97a2 0 Claims handled in-house 2022 = 72.5% Claims Management 9 Claims management, in-house claims, Third-Party Administrators (TPAs), underwriting teams, loss recognition, fraud detection, litigation management, legal counsel, technology prose Skyward/2022/FY/Annual report# 6db740157637843c77f270be1f01cd5b 0 Technology 10 Technology, SkyBI, predictive analytics, AI, SkyDrive, SkyVantage, core transactional platforms, policy administration, billing, claims systems, Accident & Health, Global Property, Surety prose Skyward/2022/FY/Annual report# 143a699ba6dd466f4ea0108e0271ed00 0 Property insurance GWP = 24% Property catastrophe coverage = USD 25.0 million Reinsurance 11 Reinsurance, capital protection, earnings volatility, quota share reinsurance, excess of loss reinsurance, facultative coverage, property insurance, hurricanes, convective storms, earthquakes, catastrophe reinsurance, stochastic models, deterministic models prose Skyward/2022/FY/Annual report# 8672034e9a33472c61580e23dd8fa07a 0 Maximum company retention by line of business 12 Maximum company retention by line of business table Skyward/2022/FY/Annual report# acff54110e2f07ca855ea21d311a0110 0 Reinsurance by company 13 Reinsurance recoverables, AM Best rating table Skyward/2022/FY/Annual report# 26f3aeba9ec4fc05cd29ac1fd2433333 0 Chief Risk Officer = oversees critical ERM processes and chairs the cross-functional corporate ERM Committee Enterprise Risk Management 14 Enterprise risk management (ERM), underwriting, asset portfolio, reinsurance, investment strategy, Chief Risk Officer, ERM Committee, Economic Capital Model (ECM), risk tolerances, Audit Committee, risk register, operational processes, controls prose Skyward/2022/FY/Annual report# 9303ce66750ca155d573efa3789abd71 0 Reserves 15 Reserves, claims incurred and reported, IBNR reserves, uncollectible reinsurance, cost trend analysis, case reserve, actuarial reserving techniques, loss experience data, reserve adjustments, adverse development, reserve releases prose Skyward/2022/FY/Annual report# 17b0fbfeb9efee562de5f64e16a37736 0 One-year loss reserve development 16 One-year loss reserve development table Skyward/2022/FY/Annual report# 33c1e289abdef2b5d95d70cd93656fb2 0 Opportunistic fixed income portfolio manager = Arena Investors, LP Largest shareholder = Westaim HIIG LP Investments 17 Investment portfolio, Enterprise Based Asset Allocation model, Economic Capital Model, investment risk, cash, cash equivalents, fixed-maturity securities, direct lending strategies, equities, opportunistic fixed income, Investment Committee, Arena Investors, LP, The Westaim Corporation, Westaim HIIG LP prose Skyward/2022/FY/Annual report# 30f0f34af4d00dc8a3f0ce9e7e127e66 0 Key competitors = 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., James River Group Holdings, Ltd. Competition 18 Specialty lines property & casualty insurance market, underwriting divisions, standard insurers, program administrators, pricing, financial strength, broker relationships, product terms, rating agency ratings, claims payment, underwriting teams, claims teams prose Skyward/2022/FY/Annual report# 796bc2980879e85286eca1155af813d1 0 Financial strength rating = A- (Excellent) Rating outlook = stable Rating agencies = A.M. Best Ratings 19 A.M. Best rating, financial strength, operating performance, policyholders, agents, insurance brokers, intermediaries prose Skyward/2022/FY/Annual report# fad32b89850a45165602e1949fe2d647 0 Employees = 448 Employees and Human Capital 20 Employees, collective bargaining agreement, diversity, equity, inclusion initiatives, workplace culture, benefits package, medical, dental, vision insurance, 401(k) plan, paid time off, family leave, employee assistance programs, employee training, development prose Skyward/2022/FY/Annual report# cd3bf98ccd649a8aa937e1e5eeaef22e 0 Intellectual Property 21 Trademark registrations, intellectual property protection, trademarks, service marks prose Skyward/2022/FY/Annual report# e477624b058539d6f032415cc2299c37 0 Legal name = Skyward Specialty Insurance Group, Inc. State of incorporation = Delaware Holding-company structure = Skyward Specialty Insurance Group, Inc. (parent), Skyward Service Company (subsidiary), Houston Specialty Insurance Company (subsidiary), Imperium Insurance Company (subsidiary), Great Midwest Insurance Company (subsidiary), Oklahoma Specialty Insurance Company (subsidiary), Skyward Re (subsidiary), Skyward Underwriters Agency, Inc. (subsidiary) Our Structure 22 Insurance companies, Houston Specialty Insurance Company (HSIC), Imperium Insurance Company (IIC), Great Midwest Insurance Company (GMIC), Oklahoma Specialty Insurance Company (OSIC), Skyward Re, Skyward Underwriters Agency, Inc., Skyward Service Company, Skyward Specialty Insurance Group, Inc. prose Skyward/2022/FY/Annual report# 25ab3e9fdcfb8ad103ece93b9b43ad97 0 Geographic distribution of business 23 Geographic distribution of business table Skyward/2022/FY/Annual report# 7b36c0c971412cba6e78370e8e14d08c 0 Summary of Material Risk Factors 24 Underwriting risk, competition, distribution channels, third-party reinsurance, loss expense reserves, financial strength rating, coverage interpretation, reinsurer reimbursement, claims payment, economic factors, insurance business cycle prose Skyward/2022/FY/Annual report# 99595c7083a022ef9f2180883c0c23a4 0 Risks Related to Our Business and Industry 25 Underwriting risks, competition, distribution channel reliance, retail agents, brokers, wholesalers, program administrators prose Skyward/2022/FY/Annual report# 732adc2c092347b573f67d62fa427720 0 Risks Related to the Market and Economic Conditions 26 Recession, inflation, unemployment, economic downturns, policy sales, claim frequency, premium defaults, economic segments, construction, energy production, insurance cyclicality prose Skyward/2022/FY/Annual report# 77dccd502da8dd93fad5310c41a433e6 0 Risks Related to the Regulatory Environment 27 Insurance regulation, primary insurance subsidiaries, HSIC, IIC, GMIC, Texas Department of Insurance, capital and surplus requirements, investment and underwriting limitations, affiliate transactions, dividend limitations, changes in control, solvency, insurance holding company system prose Skyward/2022/FY/Annual report# 9e449c6d37728c247b7e88f32c56a776 0 Risks Related to Our Liquidity and Access to Capital 28 Capital requirements, cash flows, claim losses, investment portfolio decline, catastrophe losses, equity financing, debt financing, Credit Agreement, financial obligations, interest payments prose Skyward/2022/FY/Annual report# 37117ac4748b407f40db09ea889aad5f 0 Risks Related to Our Operations 29 Experienced personnel, talent pool, information technology, telecommunications systems, third-party components, natural catastrophes, terrorist attacks, industrial accidents, computer viruses, cyber-attacks, security breaches, employee misconduct, data access, proprietary information, customer data, third-party cloud services prose Skyward/2022/FY/Annual report# 6bc625a1cccb139e42d9df195a7c9c01 0 Risks Related to Ownership of Our Common Stock 30 Public company costs, federal securities laws, Sarbanes-Oxley Act, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, SEC rules, Nasdaq rules, financial statements, SEC filings, Nasdaq listing requirements, director and officer liability insurance, Section 404, internal control over financial reporting, independent registered public accounting firm, disclosure controls and procedures prose Skyward/2022/FY/Annual report# 7babc87b8a4abc0cebf41f93a32e0c97 0 Securities Authorized for Issuance Under Equity Compensation Plans 31 Equity compensation plans, definitive proxy statement, SEC, 2023 Annual Meeting of Stockholders prose Skyward/2022/FY/Annual report# 5193bf2bee2be176cd6fed51176358c9 0 Reverse stock split = 4-for-1 Reverse stock split effective date = January 3, 2023 Common stock from preferred conversion = 16,305,113 shares Exemption for preferred conversion = Section 3(a)(9) Restricted stock and units granted = 198,842 shares Weighted average price for grants = $14.17 per share Exemptions for grants = Section 4(a)(2) or Rule 701 Recent Sales of Unregistered Equity Securities 32 Unregistered equity securities, 4-for-1 reverse stock split, preferred stock, common stock, Section 3(a)(9), restricted stock, restricted stock units, 2020 Long-Term Incentive Plan, stock options, Section 4(a)(2), Rule 701, compensatory benefit plans prose Skyward/2022/FY/Annual report# e2b0481b0662c2fabdc8e6903a3fc68d 0 IPO close date = January 18, 2023 Shares issued in IPO = 4,750,000 shares Shares sold by selling stockholders = 4,202,383 shares Underwriters' option shares = 1,342,857 shares Form S-1 effective date = January 12, 2023 Public offering price = $15.00 per share Net proceeds to company = $62.3 million Use of Proceeds from Initial Public Offering 33 IPO, common stock, selling stockholders, underwriters, Securities Act, Form S-1 registration statement, SEC, Barclays Capital Inc., Keefe, Bruyette & Woods, Inc., public offering price, net proceeds, prospectus prose Skyward/2022/FY/Annual report# dc88df26eb80bd0ff11fac80a08ed9e6 0 Issuer Purchases of Equity Securities 34 Equity securities purchases, Annual Report on Form 10-K prose Skyward/2022/FY/Annual report# 16e388910a6052c21c0651d8011f19c2 0 Dividends 35 Cash dividends, common stock, Board of Directors, results of operations, financial condition, legal restrictions prose Skyward/2022/FY/Annual report# a758a3126b01bd8c9fc2fb7bb1e40d5f 0 Overview 36 Skyward Specialty Insurance Group, commercial P&C products, non-admitted (E&S) basis, admitted basis, United States, underserved markets, dislocated markets, specialized underwriting solutions, claims capabilities, tailored insurance products, niche market, diversified insured risks, industries, distribution channels, lines of business, general liability, excess liability, professional liability, commercial auto, group accident and health, property, surety, workers’ compensation, short duration liabilities, medium duration liabilities, E&S markets, admitted markets, underwriting expertise, claims expertise, P&C insurance pricing cycles, Rule Our Niche strategy, market niches, competitive positions, defensible market position, competitive moat, risk selection, pricing, claims outcomes, advanced technology, analytics prose Skyward/2022/FY/Annual report# 15a67aa5d83bc3cebb71b03c044e1ca2 0 Net premiums earned = 2022: USD 1,000.0m Net investment income = 2022: USD 38.0m Total revenues = 2022: USD 1,038.0m Net income = 2022: USD 100.0m Results of Operations 37 Net premiums earned, net investment income, net realized and unrealized gains (losses) on investments, other income, total revenues, losses and loss adjustment expenses, underwriting expenses, interest expense, other expenses, total expenses, income before income taxes, income tax expense, net income prose Skyward/2022/FY/Annual report# 779f6e810d869d6a3747e06fe2755b16 0 Consolidated results of operations 38 Consolidated results of operations table Skyward/2022/FY/Annual report# 602f0540cfb6d2f22d96c851c1ae0c8f 0 Adjusted Operating Income (Loss) 39 Adjusted operating income, non-GAAP financial measure, net income, net realized investment gains (losses), net impairment losses, non-recurring items, incentive compensation programs, GAAP prose Skyward/2022/FY/Annual report# 71f2a289130d9bca01052022568d6f34 0 Adjusted operating income reconciliation 40 Adjusted operating income reconciliation table Skyward/2022/FY/Annual report# 61cc10dfa4f63c364b24ad94d8aece62 0 Underwriting income (loss) = 2022: USD 10.9m Net investment income = 2022: USD 59.0m Income (loss) before federal income tax = 2022: USD 50.9m Underwriting income (loss) 41 Underwriting income (loss), net investment income, net realized and unrealized gains (losses) on investments, other income, interest expense, income (loss) before federal income tax prose Skyward/2022/FY/Annual report# 7ae95f7e8f7f22c4046e104393ba5c2f 0 Reconciliation of income before federal income tax 42 Income before federal income tax reconciliation table Skyward/2022/FY/Annual report# da271f2b7c23135caf82427e656e86be 0 Adjusted Loss Ratio / Adjusted Combined Ratio 43 Adjusted loss and LAE ratio, adjusted combined ratio, loss and LAE ratio, combined ratio prose Skyward/2022/FY/Annual report# fb51ce1aa6abfab0b5e9c662eb8160d2 0 Adjusted loss and LAE ratio and combined ratio reconciliation 44 Adjusted loss and LAE ratio, adjusted combined ratio reconciliation table Skyward/2022/FY/Annual report# 6090546a03cd101f05043d5414064506 0 Tangible Stockholders’ Equity 45 Tangible stockholders’ equity reconciliation, stockholders’ equity prose Skyward/2022/FY/Annual report# 14577b4b7205140535fcf5b8f2c4f85b 0 Tangible stockholders' equity reconciliation 46 Tangible stockholders' equity reconciliation table Skyward/2022/FY/Annual report# 45fd008b162251f7a5e3bdec532f21b8 0 Adjusted Return on Equity 47 Adjusted return on equity, non-GAAP financial measure, adjusted net income, average adjusted common shareholders’ equity, non-recurring items, transaction costs, IPO, non-operating items, accumulated other comprehensive income (loss) prose Skyward/2022/FY/Annual report# cb2fccf4e9b21b900dcb2b6e61936658 0 Adjusted return on equity 48 Adjusted return on equity table Skyward/2022/FY/Annual report# b10c43b7e795bd25f975d48677bfcfc7 0 Return on Tangible Equity 49 Return on tangible equity, return on equity prose Skyward/2022/FY/Annual report# 857296577f097d0275a264b659460ed4 0 Return on tangible equity 50 Return on tangible equity, net income, average tangible stockholders’ equity table Skyward/2022/FY/Annual report# d4986182684454be08f9a4f038a2c452 0 Net income = 2022: USD 100,000 Average common shareholders’ equity = 2022: USD 500,000 Return on equity = 2022: 20.0% Adjusted return on tangible equity = 2022: 24.4% Adjusted Return on Tangible Equity 51 Adjusted Return on Tangible Equity, Net income, Average common shareholders’ equity, Return on equity, Amortization of intangible assets, Adjusted net income, Average intangible assets, Average tangible common shareholders’ equity prose Skyward/2022/FY/Annual report# e8da8dac2e6efd1e5cca6e936cedf10d 0 Adjusted return on tangible equity 52 Adjusted return on tangible equity, adjusted operating income, average tangible stockholders’ equity table Skyward/2022/FY/Annual report# d9a5549315fd03ad589c5e76df2fa000 0 Net earned premiums = 2022: USD 616.0m Increase in net earned premiums = +USD 116.2m Loss and LAE ratio improvement = 5.6 points LPT prior accident year development impact = 2022: 1.4 points Adjusted loss and LAE ratio improvement = 3.8 points Catastrophe losses from Hurricane Ian and Winter Storm Elliott = 2022: 1.1 points Catastrophe losses from tornadoes, Hurricane Ida, winter storms = 2021: 2.4 points Net incurred losses for accident years 2021 and prior = unfavorably by $14.4 million Adverse development from 2019 accident year = $14.5 million Underwriting Results 53 Underwriting results, net earned premiums, loss and LAE ratio, adjusted loss and LAE ratio, catastrophe losses, net incurred losses, adverse development, favorable development prose Skyward/2022/FY/Annual report# 8d5cbc3f3a568e72acf0a955d827429a 0 Reserves and open claims by business segment 54 Reserves, open claims, Industry Solutions, Global Property, Programs, Accident & Health, Captives, Professional Lines, Surety, Transactional E&S, Total continuing business table Skyward/2022/FY/Annual report# 720ce112bfdd9998cfd21695caf349bd 0 Losses and LAE by type 55 Losses and LAE by type, Non-cat loss and LAE, Cat loss and LAE, Prior accident year development - non-LPT, Prior accident year development - LPT, Total losses and LAE table Skyward/2022/FY/Annual report# 03b6f0f9b2355c92aa8888b5a32a0266 0 Reserve development by accident year 56 Reserve development by accident year, Prior, 2019, 2020, 2021, Total, Reserve development on losses subject to LPT, Reserve development on losses excluding losses subject to LPT table Skyward/2022/FY/Annual report# b0e98c745bfe41a499d66b950c273e11 0 Underwriting, acquisition and insurance expenses 57 Underwriting, acquisition and insurance expenses, Net policy acquisition expenses, Other operating and general expenses, Commission and fee income, Total net expenses table Skyward/2022/FY/Annual report# 7920ee0fdf94d3bccaa5aefc1dc8c461 0 Net investment income and gains (losses) 58 Net investment income, gains (losses), Cash and short-term investments, Core fixed income, Opportunistic fixed income, Equities, Net unrealized gains (losses) on securities still held, Net realized (losses) gains, Net investment (losses) gains table Skyward/2022/FY/Annual report# a8a36850b09db47c261c9e91bbcff57b 0 Fixed maturity securities percentage of total investment portfolio = 2022: 71.2% Fixed maturity securities weighted average effective duration = 2022: 3.1 years Fixed maturity securities average core fixed income credit rating = AA (Standard & Poor’s) Core fixed income portfolio average duration = 2022 and 2021: 4.3 years Weighted average credit rating of core fixed income portfolio = AA by Standard & Poor’s Financial Services, LLC Opportunistic fixed income portfolio composition = diversified asset based lending (54.6%), commercial mortgage loans (26.5%), cash and cash equivalents (18.9%) Investments 59 Investments, fixed maturity securities, core fixed income portfolio, opportunistic fixed income portfolio, underlying securities, diversified asset based lending portfolio prose Skyward/2022/FY/Annual report# 90dcef2656d9a5ace0b37f3b310becda 0 Investment portfolio by asset class 60 Investment portfolio by asset class, Cash and short-term investments, Core fixed income, Opportunistic fixed income, Equities, Total investment portfolio table Skyward/2022/FY/Annual report# 8521970a9a4951a59b20ec1dabad3577 0 Core fixed income securities by type 61 Core fixed income securities by type, U.S. government securities, Corporate securities and miscellaneous, Municipal securities, Residential mortgage-backed securities, Commercial mortgage-backed securities, Asset-backed securities, Core fixed income securities, available for sale table Skyward/2022/FY/Annual report# 036475fb4a85b1ad21c24e9d4ab6bce0 0 Core fixed income by credit rating 62 Core fixed income by credit rating, AAA, AA, A, BBB, BB and Lower, Total core fixed income table Skyward/2022/FY/Annual report# 5381b344fab1a388b2ef889ff1a96857 0 Opportunistic fixed income by sector 63 Opportunistic fixed income by sector, Real Estate, Oil & Gas, Banking, Finance & Insurance, Other sectors, Cash and cash equivalents, Opportunistic fixed income table Skyward/2022/FY/Annual report# 86585f4c1c9e56c9cb9fd9c1208f6d78 0 Equities by type 64 Equities by type, Domestic common equities, International common equities, Preferred stock, Other, Equities table Skyward/2022/FY/Annual report# 19d563b5bfa580a9732dd2c719a454e3 0 Interest rate sensitivity analysis 65 Interest rate sensitivity analysis, Estimated Fair Value, Estimated Change in Fair Value, Estimated % Increase (Decrease) in Fair Value table Skyward/2022/FY/Annual report# 891d702f07a459e14c01f832fd40b68d 0 Income tax expense = 2022: USD 10.4m Effective tax rate = 2022: 20.9% Other Items 66 Income tax expense, effective tax rate, provision for income taxes, change in effective tax rate prose Skyward/2022/FY/Annual report# a03bcef521f385b81bea3710962ad399 0 Insurance subsidiaries = HSIC, IIC, GMIC (Texas), OSIC (Oklahoma) Sources and Uses of Funds 67 Holding company, insurance subsidiaries, corporate service fees, consolidated tax allocation agreement, dividends from subsidiaries, loans from banks, revolving loan agreement, equity and debt securities, premium growth, taxes, business purposes, state insurance laws, regulatory approval, statutory capital and surplus, policyholder surplus prose Skyward/2022/FY/Annual report# 19ce7f04af36227db28a4a1231091764 0 Cash Flows 68 Cash flows, primary cash source, most significant cash outflow, cash investment strategy, other cash uses, reinsurance use, operating cash flow variability, increase in cash from operating activities, cash flows from operations, change in net cash used in investing activities prose Skyward/2022/FY/Annual report# 14b7d3ba6d44493244c2e6c18c7c2caa 0 Cash flows 69 Cash flows, Operating activities, Investing activities, Financing activities, Change in cash and cash equivalents table Skyward/2022/FY/Annual report# 1036e8a920fe41208ebfb84448276a0f 0 Credit agreement date = December 11, 2019 Lender = Prosperity Bank Term Loan amount = USD 50.0m Revolver amount = USD 50.0m Additional capacity = USD 75.0m Term Loan interest rate = one-month LIBOR (4.39% on December 31, 2022) plus 1.65% Principal balance on Term Loan = December 31, 2022: USD 50.0m Revolver interest rate = Wall Street Journal prime rate or one-month LIBOR (4.39% on December 31, 2022) plus 1.65% Revolving promissory note fee = 0.25% on unused portion Credit Agreements 70 Credit Agreements, Term Loan, Revolver, interest rate, Highest Lawful Rate, interest-only payments, principal balance, revolving promissory note, Letters of Credit (LOCs) prose Skyward/2022/FY/Annual report# 1bf2059ea0afaeb14dcfd76af49447e5 0 Reinsurance balances recoverable on reserves for paid and unpaid losses and LAE = December 31, 2022: $581.4m Contractual Obligations and Commitments 71 Contractual Obligations and Commitments, Reserves for losses and LAE, reinsurance balances recoverable prose Skyward/2022/FY/Annual report# 642013f8eff35bbd457257c32f2fb85d 0 Reinsurance balances recoverable on reserves for paid and unpaid losses and LAE 72 Reinsurance balances recoverable on reserves for paid and unpaid losses and LAE, Reserves for losses and LAE, Long-term debt, Interest on debt obligations, Operating lease obligations, Total table Skyward/2022/FY/Annual report# 3842ca69ac0060a61b3c94dddbf94e9b 0 Critical Accounting Policies and Estimates 73 Critical accounting estimates, reserves for unpaid losses and LAE, case reserves, IBNR reserves, Reserve Committee prose Skyward/2022/FY/Annual report# 950c4b354daf59fc50748ffa886c1d69 0 Changes in estimates due to economic conditions or business strategies 74 Case reserves, IBNR, total reserves table Skyward/2022/FY/Annual report# d8bcd879f2972a908df2d1eabcb2a423 0 Fair value estimates based on assumptions 75 Net ultimate loss and LAE sensitivity factor, net ultimate incurred losses and LAE, net loss and LAE reserve, pre-tax income, stockholders’ equity table Skyward/2022/FY/Annual report# 42520ed633559a5ea192d3b85559042f 0 Recent Accounting Pronouncements 76 Emerging growth company, JOBS Act, FASB ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), allowance for uncollectible reinsurance, accumulated deficit prose Skyward/2022/FY/Annual report# 3e0338e0eab3ea0fe632df4c247be4ab 0 Report Of Independent Registered Public Accounting Firm 77 Consolidated financial statements, consolidated balance sheets, consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, cash flows, internal control over financial reporting prose Skyward/2022/FY/Annual report# 69ea38d463bededaf31051a49e524fc5 0 Opinion on the Financial Statements 78 Consolidated financial statements, consolidated balance sheets, statements of operations and comprehensive (loss) income, changes in stockholders' equity, cash flows prose Skyward/2022/FY/Annual report# 3996652ee87700a4bd92f35bb491f546 0 Basis for Opinion 79 Auditors' responsibility, PCAOB standards, internal control over financial reporting, Ernst & Young LLP prose Skyward/2022/FY/Annual report# 6a0f10d6fe1f6ab5dfa172ef275a9e87 0 Consolidated balance sheets 80 Consolidated balance sheets prose Skyward/2022/FY/Annual report# 830f55ae51d27ed7b8e45217500d14ce 0 Consolidated financial statements - assets 81 Investments, fixed maturity securities, equity securities, mortgage loans, other long-term investments, short-term investments, cash and cash equivalents, restricted cash, premiums receivable table Skyward/2022/FY/Annual report# 94a74bdab80847ef03b6f3024d551836 0 Consolidated statements of operations and comprehensive (loss) income 82 Consolidated statements of operations and comprehensive (loss) income prose Skyward/2022/FY/Annual report# 787b6e3ae753f656a0ccc931663c71ae 0 Consolidated financial statements - revenues and expenses 83 Net earned premiums, commission and fee income, net investment income, net investment (losses) gains, net realized gain on sale of business, other income (loss), total revenues, losses and loss adjustment expenses, underwriting, acquisition and insurance expenses, impairment charges, interest expense table Skyward/2022/FY/Annual report# 64bdb1bd07455d4993fb182f079d7c03 0 Consolidated statements of stockholders’ equity 84 Consolidated statements of stockholders’ equity prose Skyward/2022/FY/Annual report# 4eb9108e4570c8ab26dde8cb4da0edda 0 Consolidated financial statements - stockholders' equity 85 Preferred Stock, Common Stock, Treasury Stock, Additional Paid-In Capital, Stock Notes Receivable, Accumulated Other Comprehensive Income, Accumulated Deficit, Total Stockholders' Equity, Employee equity transactions, Net income, Other comprehensive loss table Skyward/2022/FY/Annual report# d2438806ecbec21b7d6afcdd890db15b 0 Consolidated statements of cash flows 86 Consolidated statements of cash flows prose Skyward/2022/FY/Annual report# bff135010027d184d8d6521e611b8138 0 Consolidated financial statements - cash flows from operating activities 87 Net income, net realized losses (gains), depreciation and amortization expense, stock-based compensation expense, provision for bad debts, unrealized losses (gains) on equity securities, earnings on illiquid investments, deferred income tax, impairment charges, net realized gain on sale of business, premiums receivable table Skyward/2022/FY/Annual report# 3007ac5c944609dddfe3a623650bd3fd 0 1. Nature of Operations 88 Skyward Specialty Insurance Group, Inc., commercial property and casualty products, group accident and health insurance, underwriting divisions, underserved markets, customized underwriting solutions, claims capabilities, general liability, excess liability, professional liability, commercial automobile liability, commercial automobile physical damage, property, surety, workers’ compensation, Houston Specialty Insurance Company (HSIC), Imperium Insurance Company (IIC), Great Midwest Insurance Company (GMIC), Oklahoma Specialty Insurance Company (OSIC) prose Skyward/2022/FY/Annual report# 26a35ad12ea2c38121ad4d4fe299e87f 0 Basis of Presentation 89 GAAP, intercompany transactions and balances prose Skyward/2022/FY/Annual report# af1c7f4479542a098a9b55830bc6e761 0 Use of Estimates 90 Estimates and assumptions, assets, liabilities, contingent assets, contingent liabilities, revenue, expenses prose Skyward/2022/FY/Annual report# 2068bc86102e263d3d60f317498e8515 0 Cash and Cash Equivalents 91 Cash and cash equivalents, short-term investments, carrying value prose Skyward/2022/FY/Annual report# 123ee36fb0745c197c182f39425064d2 0 Restricted Cash 92 Restricted cash, carrying value, SUA, state regulations, collateral prose Skyward/2022/FY/Annual report# 6763304f66071d3b6974fab0e06dbd29 0 Investments 93 Fixed maturity securities, unrealized gains and losses, premiums and discounts on mortgage-backed securities, impairment losses, equity securities prose Skyward/2022/FY/Annual report# f47fb3f8f9904ceb79dd0b2b490db871 0 Reinsurance 94 Prospective reinsurance, proportional reinsurance, excess of loss reinsurance, facultative reinsurance, ceded unearned premium, reinsurance balances recoverable, retroactive reinsurance, loss portfolio transfers (LPT), adverse development covers prose Skyward/2022/FY/Annual report# 9fec16b7b37141271c8c043d023f5c7f 0 Reinsurance collateral 95 Reinsurance collateral table Skyward/2022/FY/Annual report# 7740678f431465ddebf8c82d76ec6bad 0 A.M. best ratings for reinsurers 96 Everest Reinsurance Co, Randall & Quilter (R&Q Bermuda (SAC) Ltd) table Skyward/2022/FY/Annual report# fbc293901afbe049bf3230ced6d342af 0 Concentration of Credit Risk 97 Financial instruments, cash, cash equivalents, investments, premiums receivable, reinsurance recoverables, money market funds, U.S. government-backed securities, financial institutions, customer base, lines of business, geographic regions, distribution sources prose Skyward/2022/FY/Annual report# f319c7276ee01a1115e13e3e2fc940fb 0 Deferred Policy Acquisition Costs 98 Policy acquisition costs, commissions, premium taxes, ceding commissions, premium deficiency, expected losses, loss adjustment expenses, unamortized acquisition costs, unearned premiums, investment income prose Skyward/2022/FY/Annual report# 8d27406c63128de06ede209ea61ab7fa 0 Goodwill and Intangible Assets 99 Goodwill, intangible assets, business combination, purchase price allocation, identifiable intangible assets, indefinite-lived intangible assets, impairment testing, qualitative assessment factors, quantitative impairment test, reporting unit, underwriting division prose Skyward/2022/FY/Annual report# 7a070cc846570dff6a749e9da85c6611 0 Goodwill impairment 100 Goodwill impairment table Skyward/2022/FY/Annual report# 8b34099b3ba46851f3d612c43bd33f38 0 Property and Equipment 101 Property, equipment, depreciation expense prose Skyward/2022/FY/Annual report# 56233eb690a37f7f0aceaaf443e8f1e1 0 Leases 102 Right-of-use (ROU) assets, lease liabilities, operating leases, minimum lease payments, incremental borrowing rate, lease agreements, sublease income prose Skyward/2022/FY/Annual report# 2772592aa74cf168b54dbd7b644470e5 0 Reserves for losses and loss adjustment expenses 103 Reserves for losses, loss adjustment expenses (LAE), reported unpaid losses, unreported unpaid losses, estimated reserves, individual case-basis valuations, statistical analyses, actuarial methods, Paid Loss Development method, Incurred Loss Development method, Case Reserve Development method, Expected Loss Ratio method, Bornhuetter/Ferguson (BF) approach prose Skyward/2022/FY/Annual report# 13410385e3bd9edd950616aa9859d293 0 Premiums 104 Property and casualty premiums, surety premiums, accident and health premiums, gross premiums written, ceded premiums, proportional reinsurance, facultative reinsurance, excess of loss reinsurance, prospective reinsurance, premiums receivable, deferred premiums, unearned premiums, ceded unearned premiums prose Skyward/2022/FY/Annual report# 74f7adc9f2c28706fb576adf0f5cee34 0 Allowance for doubtful accounts 105 Allowance for doubtful accounts table Skyward/2022/FY/Annual report# e4e81c171d6c5dc1d0b39343c07777ee 0 Commission and Fee Income 106 SUA commission revenue, reinsurance broker, transaction price, SUA fee income, third-party insurance company, risk factors, employee census data, worker roles, variable consideration prose Skyward/2022/FY/Annual report# ad7d851567b280fdd5fdd25bbbc46004 0 Income Taxes 107 Income tax expense, provision for income taxes, deferred taxes, temporary differences, valuation allowance, deferred tax assets, deferred tax liabilities, tax rate changes, liability for uncertain tax positions, interest income, interest expense, penalties, consolidated federal income tax return, state tax returns, admitted insurance subsidiaries, premium taxes, premium tax expense prose Skyward/2022/FY/Annual report# 7e36865f8fe930c10b3b1b24eb011286 0 Fair Value of Financial Instruments 108 Fair value, financial instruments, fair value accounting guidance, observable inputs, unobservable inputs, fair value hierarchy disclosures, Level 1 measurements, Level 3 measurements, third-party pricing sources, valuation methodologies prose Skyward/2022/FY/Annual report# bf404f7400ec35c1049bc46f064da507 0 Stock Based Compensation 109 Common stock, employees, non-employee directors, Legacy Programs, Stock Purchase Program, Equity Incentive Program, matching share awards, purchased portion of stock, note receivable, stock notes receivable, compensation costs, share-based payments, fair value of common stock, income approach, market approach, forfeiture, Long Term Incentive Plan (2021 Plan), restricted stock, restricted stock units, performance share awards, cash-based performance awards, equity awards, common share awards, market condition, performance condition, service condition prose Skyward/2022/FY/Annual report# 7264f859fe10ac4fba703ffdbe32422e 0 Earnings Per Share 110 Basic earnings per share, two-class method, undistributed earnings, participating securities, net income attributable to common shareholders, weighted-average number of common shares outstanding, Legacy Programs, vesting requirements, contingently issuable common shares, common share equivalents, instruments convertible into common shares, share-based awards to employees, service conditions, performance conditions, market conditions, common share adjustments, anti-dilutive, diluted net earnings, net loss per share prose Skyward/2022/FY/Annual report# ceeda2ded151e610e2f78aa45163e8ee 0 3. Recent Accounting Pronouncements 111 Emerging growth company, Jumpstart Our Business Startups Act of 2012 (JOBS Act), accounting guidance, ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), credit losses, financial instruments, receivables, available-for-sale debt securities, expected losses, historical information, current information, forecasts, fiscal years, modified retrospective approach, allowance for uncollectible reinsurance, accumulated deficit prose Skyward/2022/FY/Annual report# 71252011d0646519a380d035edcef6a8 0 4. Goodwill and Intangible Assets 112 Aegis Surety Acquisition, Aegis Surety Bonds and Insurance Services, LLC (Aegis), Exterminator Pro business, Aegis acquisition, surety, Aegis Acquisition Accounting, acquisition method of accounting, identifiable assets, agent relationships, goodwill, Compass Impairment, errors & omissions business, Compass Group Partners, LLC (Compass), impairment, agent relationships, Sale of Boston Indemnity Company, Boston Indemnity Company (BIC), Purchase Agreement, capital stock, net proceeds, gain on sale prose Skyward/2022/FY/Annual report# 8e379844113500932c067202d012c37b 0 Goodwill by segment 113 Goodwill by segment table Skyward/2022/FY/Annual report# c3b59a7729dfdcc9ba087147be155c02 0 Goodwill activity by segment 114 Goodwill activity by segment table Skyward/2022/FY/Annual report# 24d96e30567486695c25a7173c7159b0 0 Other intangible assets 115 Other intangible assets table Skyward/2022/FY/Annual report# 43547e8b57ed083ee0d71a5c96f8140d 0 Other intangible assets activity 116 Other intangible assets activity table Skyward/2022/FY/Annual report# 6c9acd2d1b5dff440c75fbefe8fb1296 0 Amortization expense 117 Amortization expense table Skyward/2022/FY/Annual report# 68cc7845e84e80064af5f4497941161f 0 Future amortization expense 118 Future amortization expense table Skyward/2022/FY/Annual report# 5acaeb1be9510724be1a25f7ea4ff111 0 5. Investments 119 Investments, amortized cost, fair value, fixed maturity securities, available for sale, contractual maturity, expected maturities, borrowers' rights, call options, prepayment options, portfolio sales, interest rates, tax considerations, fixed maturity securities, held to maturity, asset-backed securities, unrealized losses, unrealized loss positions, credit losses, other-than-temporary impairment adjustments, net realized (losses) gains, proceeds from sales of debt and equity securities prose Skyward/2022/FY/Annual report# 85434efc31068c2b14072f0047494bd2 0 Fixed maturity securities at December 31, 2022 120 Fixed maturity securities, U.S. government securities, corporate securities, municipal securities, residential mortgage-backed securities, commercial mortgage-backed securities, asset-backed securities table Skyward/2022/FY/Annual report# 724dee795352e6ec2504315e22e08a76 0 Fixed maturity securities at December 31, 2021 121 Fixed maturity securities, U.S. government securities, corporate securities, municipal securities, residential mortgage-backed securities, commercial mortgage-backed securities, asset-backed securities table Skyward/2022/FY/Annual report# 9a0b42e24de25023836d5c7f6627868c 0 Maturity distribution of fixed maturity securities 122 Fixed maturity securities, mortgage-backed securities, asset-backed securities table Skyward/2022/FY/Annual report# 9284ba3b56ec312b17d93d6a870683ad 0 Fixed maturity securities, available-for-sale at December 31, 2022 123 Fixed maturity securities, U.S. government securities, corporate securities, municipal securities table Skyward/2022/FY/Annual report# 7c165a8ce457348055d1742e9641b11c 0 Fixed maturity securities, available-for-sale at December 31, 2021 124 Fixed maturity securities, U.S. government securities, corporate securities, municipal securities table Skyward/2022/FY/Annual report# e5155d17806ce120ffcad3ce1851ebc9 0 Gross realized gains and losses 125 Fixed maturity securities, equity securities table Skyward/2022/FY/Annual report# 96dc26294bea731d647986ae93daf8d5 0 Fixed maturity and equity securities 126 Fixed maturity securities, equity securities table Skyward/2022/FY/Annual report# dc5192f606d907675afb9242af5f236a 0 Investment income 127 Fixed maturity securities, equity securities, equity method investments, mortgage loans, indirect loans, short-term investments, cash table Skyward/2022/FY/Annual report# 9cc9221a4e006645bf0d954aad18ad2a 0 Fixed maturity securities, deferred income taxes, and other comprehensive loss 128 Fixed maturity securities, deferred income taxes table Skyward/2022/FY/Annual report# 3a011a1dec5ab98b5e9cfbb471c8daca 0 Fair value approach = market approach Level 1 inputs = unadjusted, quoted prices for identical assets or liabilities in active markets Level 2 inputs = observable inputs other than Level 1 quoted prices, corroborated with market data Level 3 inputs = unobservable inputs reflecting management's best estimate of what market participants would use in pricing the asset or liability Level 1 securities = U.S. government securities, mutual funds, common stock Level 2 securities = preferred stocks, municipal securities, corporate securities, miscellaneous 6. Fair Value Measurements 129 Fair value measurements, market approach, fair value of investments, periodic analyses, three-level hierarchy, Level 1 inputs, Level 2 inputs, Level 3 inputs, U.S. government securities, mutual funds, common stock, preferred stocks, municipal securities, corporate securities, miscellaneous, commercial mortgage-backed securities, residential mortgage-backed securities prose Skyward/2022/FY/Annual report# a112b87ce98eee6637885ddfa24417c4 0 Fair value of financial instruments 130 Fixed maturity securities, equity securities, mortgage loans, short-term investments, cash, cash equivalents, restricted cash table Skyward/2022/FY/Annual report# 30f9cbbde2d3970791609c05d3bab97c 0 Fixed maturity securities available-for-sale as of December 31, 2022 131 Fixed maturity securities, U.S. government securities, corporate securities, municipal securities, residential mortgage-backed securities, commercial mortgage-backed securities, asset-backed securities table Skyward/2022/FY/Annual report# 9306be6eec9ab3a540f173bd60d60855 0 Fixed maturity securities available-for-sale as of December 31, 2021 132 Fixed maturity securities, U.S. government securities, corporate securities, municipal securities, residential mortgage-backed securities, commercial mortgage-backed securities, asset-backed securities table Skyward/2022/FY/Annual report# 82dd94b94fec51f1f2fe333fc243854a 0 Investment vehicles = Separately Managed Accounts ("SMA1" and "SMA2") Investment manager = Arena Investors, LP ("Arena") Largest shareholder = Westaim, through Westaim HIIG LP Loan maturity = approximately one to two years from origination Principal amounts of loans = 40% to 90% of the property’s appraised value Mortgage loans in foreclosure (2022) = $6.4 million Mortgage loans in foreclosure (2021) = $10.8 million 7. Mortgage Loans 133 Mortgage loans, Separately Managed Accounts, Arena Investors, LP, The Westaim Corporation, Westaim HIIG LP, mortgage loan portfolios, loan maturity, principal amounts of loans, mortgage loan participations, uncollectible amounts on loans, uncollectible amounts, mortgage loans in the process of foreclosure prose Skyward/2022/FY/Annual report# 65cc57254881b1ab495a4aebb6df1772 0 Mortgage loans by property type 134 Mortgage loans, retail, commercial, industrial, multi-family, office, hospitality table Skyward/2022/FY/Annual report# 021528bb055424ad025bc44d403292d9 0 Mortgage loans by property type 135 Mortgage loans, retail, commercial, industrial, multi-family, office, land, hospitality table Skyward/2022/FY/Annual report# 1354bdee7653ed1a67597e8eb3fa075b 0 Equity method investment ownership = 3% to less than 50% 100% ownership = Universa Black Swan Protection Protocol LIX L.P. ("Universa Black Swan") Investment products issuer = Arena Special Opportunities Partners (Feeder) I, LP ("Arena SOP") Investment manager = Arena Investment (2021) = USD 1.9 million in Hudson Ventures Fund 2, L.P. Investment (2022) = USD 0.2 million in Brewer Lane Ventures Fund II, L.P. 8. Other Long-Term Investments 136 Equity method investments, Universa Black Swan Protection Protocol LIX L.P., Arena Special Opportunities Partners (Feeder) I, LP, Arena, Westaim, Hudson Ventures Fund 2, L.P., JVM Multi-Family Premier Fund IV, LLC, JVM Preferred Equity Fund, LLC, JVM Funds LLC, Brewer Lane Ventures Fund II, L.P. prose Skyward/2022/FY/Annual report# 98f86a777c6a7f5c98fe01553a6fe247 0 Indirect investments in collateralized loans and loan collateral 137 Arena SOP LP units, Arena Special Opportunities Fund, LP units, Brewer Lane Ventures Fund II LP units, Dowling Capital Partners LP units, Hudson Ventures Fund 2 LP units, JVM Funds LLC units, RISCOM, Universa Black Swan LP units table Skyward/2022/FY/Annual report# 0c8c7bd92d67453b7deca6c4e7a0eb83 0 Indirect investments in collateralized loans and loan collateral 138 Arena SOP LP units, Arena Special Opportunities Fund, LP units, Dowling Capital Partners LP units, Hudson Ventures Fund 2 LP units, JVM Funds LLC, RISCOM, Universa Black Swan LP units table Skyward/2022/FY/Annual report# 88d7b2a8bb5e1963ec787f1e4b8d8ed6 0 Indirect investments in collateralized loans and loan collateral 139 Brewer Lane Ventures Fund II LP units, Dowling Capital Partners LP units, Hudson Ventures Fund 2 LP units table Skyward/2022/FY/Annual report# 9fd317aae987fd002a433c2ac5101262 0 Investment in RISCOM 140 Investment in RISCOM, underlying equity, difference table Skyward/2022/FY/Annual report# 56b90a456685dee69db4f177b8020d10 0 Investment in JVM Funds LLC 141 Investment in JVM Funds LLC, underlying equity, difference table Skyward/2022/FY/Annual report# 3551ce4b1f4edfc5c8bb44fc96290a51 0 Investment in indirect loans and loan collateral 142 Indirect loans, loan collateral, SMA1, SMA2 table Skyward/2022/FY/Annual report# 47f0e3426bbd1f100e038fc6ca474250 0 9. Property and Equipment 143 Property and equipment components, depreciation expense prose Skyward/2022/FY/Annual report# 6efadbf2303dc25d5c480095353e9227 0 Property and equipment components 144 Leasehold improvements, equipment, software, accumulated depreciation table Skyward/2022/FY/Annual report# 21f897299877793c1a181e5b667206e9 0 Depreciation expense 145 Depreciation expense table Skyward/2022/FY/Annual report# df975ca668765664f64ce6ba54149a30 0 Lease expense = FY22: USD 2.6 million Lease terms = one year to 7 years 10. Leases 146 Lease accounting, right-of-use assets, lease liabilities, lease expense, office facilities prose Skyward/2022/FY/Annual report# 8319c9e4cabcfe607fd985bacf90441f 0 Operating lease right-of-use assets and liabilities 147 Operating lease right-of-use assets, operating lease liabilities, weighted-average remaining lease term, weighted-average discount rate table Skyward/2022/FY/Annual report# de1ccc14ac0797bd83c543ff576bd22f 0 Lease expense and operating cash outflows 148 Operating lease expense, short-term lease expense, total lease expense, operating cash outflows from operating leases table Skyward/2022/FY/Annual report# 599daf4e755b04b0df862cd6b64116d0 0 Future minimum operating lease payments 149 Future minimum operating lease payments, imputed interest, total operating lease liability table Skyward/2022/FY/Annual report# 95ae88a2aa50c8db6140d8311452425e 0 Unsecured subordinated notes = USD 20.0m Interest rate = 7.25% for 8 years, 8.25% thereafter Maturity = May 24, 2039 Delos Capital Trust = HIIG Capital Trust I Capital securities = USD 58.0m Debentures principal amount = USD 59.8m 11. Subordinated Debt 150 Unsecured subordinated notes, interest rates, principal, debt issuance costs, Delos Capital Trust, HIIG Capital Trust I, capital securities, common stock, Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures prose Skyward/2022/FY/Annual report# 5a5e3ef5d51ed830410e96803f766662 0 Subordinated debt, net of debt issuance costs 151 Junior subordinated interest debentures, debt issuance costs, subordinated debt table Skyward/2022/FY/Annual report# f62ff3f9c5625ffb35ec0e85c5670d5c 0 Term loan = USD 50.0 million Term loan interest rate = one-month LIBOR (4.39% on Dec 31, 2022) + 1.65% Term loan principal due = December 31, 2024 Revolving line of credit = USD 50.0 million Revolving line of credit principal due = December 31, 2024 Revolving line of credit capacity increase = USD 75.0 million 12. Notes Payable 152 Term loan, revolving line of credit, interest rates, principal payments, financial covenants, HSIC, SUA prose Skyward/2022/FY/Annual report# b731ebecb87045d598a07bdcd7cb714f 0 Term loan 153 Term loan table Skyward/2022/FY/Annual report# 30859d81393c9eb7687d9e28d29f248c 0 Interest payments on term loan 154 Interest payments on term loan table Skyward/2022/FY/Annual report# de477c388f33d5d49f649a9d860bb83b 0 Interest payments on revolving line of credit 155 Interest payments on revolving line of credit table Skyward/2022/FY/Annual report# 8b4d39ad32f065f59a34295389e2100d 0 Series A Convertible Preferred Stock face value = $50.00 per share Option Conversion Rate = $6.04 per common share 13. Stockholders’ Equity 156 Series A Convertible Preferred Stock, Option Conversion Rate, Mandatory Conversion Rate, common stock, loss portfolio transfer, co-participation expense, losses and LAE reserves prose Skyward/2022/FY/Annual report# c1d0d1d437293a61be94fa88f0e070da 0 Preferred shares and common shares upon conversion 157 Preferred shares outstanding, common shares upon conversion of preferred shares table Skyward/2022/FY/Annual report# 2bf41f48cb6c8c9a7fa67235874dfe45 0 Federal statutory income tax rate = 21% Federal net operating loss carryforwards = USD 71.3m Net operating losses expiration = 2030 Capital loss carryforward = USD 1.3m Capital loss carryforward expiration = 2027 14. Income Taxes 158 Income taxes, statutory tax rate, tax-exempt income, dividends-received deduction, federal net operating loss carryforwards, Internal Revenue Code Section 382, capital loss carryforward, deferred tax asset, valuation allowance prose Skyward/2022/FY/Annual report# e607158a87a80e68f76d4313ce1a03ed 0 Total income tax expense 159 Current income tax expense, deferred tax expense, total income tax expense table Skyward/2022/FY/Annual report# aef118fb018c4ae6c0f06dee53f4136f 0 Income tax expense at federal statutory rate 160 Income tax expense at federal statutory rate, tax advantaged investments, total income tax expense table Skyward/2022/FY/Annual report# f8a2bd14c977b5d49d90ddefa9560e13 0 Deferred tax assets 161 Deferred tax assets, net operating losses, losses and loss adjustment expenses, unearned premiums, intangibles, capital loss carryover, unrealized losses on investments, stock options/awards, valuation allowance, deferred policy acquisition costs, depreciation table Skyward/2022/FY/Annual report# 3f4d11472c46f5c16a0372f3b42ac391 0 Balance of deferred tax assets 162 Balance of deferred tax assets table Skyward/2022/FY/Annual report# 4e6b4b850febbc6c922345d6185214f2 0 Net incurred losses (2021 and prior accident years) = USD 14.4 million 15. Reserves for Losses and Loss Adjustment Expenses 163 Loss development, net ultimate loss and LAE, multiline solutions, short tail/monoline specialty lines, exited lines, loss portfolio transfer prose Skyward/2022/FY/Annual report# 2ae3d8dfed1e86e66616ed5bcadd5f67 0 Reserves for losses and LAE, net of reinsurance 164 Reserves for losses and LAE, reinsurance recoverable on unpaid claims, incurred losses, paid losses, net reserves for losses and LAE table Skyward/2022/FY/Annual report# 439d6a1c716a6709404b7a08d9dec7e4 0 Short Duration Contract Disclosures 165 Losses and LAE reserves, reported and unreported losses, incurred but not reported claims, claims counts, Short Tail/Monoline Specialty, Multi-line Solutions prose Skyward/2022/FY/Annual report# 21064e09ab1b946b7bb0e88285968bc9 0 Incurred losses and ALAE, net of reinsurance 166 Incurred losses and ALAE, IBNR, reported claims table Skyward/2022/FY/Annual report# b5b89f48f712355345d059ba06b4c53e 0 Cumulative paid losses and ALAE, net of reinsurance 167 Cumulative paid losses and ALAE table Skyward/2022/FY/Annual report# 14e48b8113fdf2f84cd1f719a887860d 0 Incurred losses and ALAE, net of reinsurance 168 Incurred losses and ALAE, IBNR, reported claims table Skyward/2022/FY/Annual report# 938767d4d8c9a3ae7b8a35772abe96a5 0 Cumulative paid losses and ALAE, net of reinsurance 169 Cumulative paid losses and ALAE, net of reinsurance table Skyward/2022/FY/Annual report# a9325bec453420b3e627c6d7b5714662 0 Exited Lines — all lines in runoff 170 Net incurred and paid claims development, loss reserves, historical claims duration, exited lines prose Skyward/2022/FY/Annual report# 28c92d2443518acfb1f3242d100ecffa 0 Reconciliation of net incurred and paid claims development to loss reserves 171 Reconciliation of net incurred and paid claims development to loss reserves table Skyward/2022/FY/Annual report# 28cb2d6855821c3576e8ce1882d80f11 0 Cumulative paid losses and ALAE, net of reinsurance 172 Cumulative paid losses and ALAE, net of reinsurance table Skyward/2022/FY/Annual report# f2d1e8fabe3fe70ce3ef79fb5d74a078 0 Net reserves for losses and LAE 173 Net reserves for losses and LAE, reinsurance recoverable on unpaid claims, unallocated LAE table Skyward/2022/FY/Annual report# 5435c0da876008ad6c4268d7df9ae2f3 0 Average annual percentage payout of incurred claims by age 174 Average annual percentage payout of incurred claims by age, net of reinsurance table Skyward/2022/FY/Annual report# d19cd5f36b856f15e6bcbbd243200864 0 16. Premiums 175 Direct and assumed premiums written prose Skyward/2022/FY/Annual report# 423974c8daf2a2c0ce8fc276f041f656 0 Direct and assumed premiums written by line of business 176 Direct and assumed premiums written by line of business table Skyward/2022/FY/Annual report# bc4b3086428d63f86822d04ec5c76d66 0 17. Commission and Fee Income 177 SUA, managing general insurance agent, reinsurance broker, property and casualty, accident and health risks, specialty niche markets, commission and fee income, disaggregated revenues, contract assets prose Skyward/2022/FY/Annual report# 8631dfaf39bf61c096fa7c4ed3e5bb20 0 Disaggregated revenues from contracts with customers 178 Disaggregated revenues from contracts with customers table Skyward/2022/FY/Annual report# 32f2c582a2490a96052d7b28e08b805d 0 Contract asset 179 Contract asset table Skyward/2022/FY/Annual report# ce4a649451b2dadd70010e5b66c00f2e 0 18. Underwriting, Acquisition and Insurance Expenses 180 Underwriting, acquisition and insurance expenses, commissions and brokerage, salaries and employee benefits, general and administrative expenses, premium taxes, licenses and fees prose Skyward/2022/FY/Annual report# da35a31066638d55d45813969d73fd49 0 Total underwriting, acquisition and insurance expenses 181 Total underwriting, acquisition and insurance expenses table Skyward/2022/FY/Annual report# 7661dd33ee8efa85729939a9ab72d879 0 19. Reinsurance 182 Reinsurance agreements, loss exposure, ceded amounts, reinsurers, funded trust accounts, claim recoverables, LPT retroactive reinsurance agreement, ceded losses and LAE reserves, co-participations, reserve strengthening prose Skyward/2022/FY/Annual report# 06f4171c00ea09d8b9055355532981e6 0 Ceded reinsurance contracts accounted for using the deposit method 183 Ceded reinsurance contracts accounted for using the deposit method table Skyward/2022/FY/Annual report# 9400efdb7281028e84563e6a7820132e 0 Unpaid losses and loss adjustment expenses ceded 184 Unpaid losses and loss adjustment expenses ceded, paid losses and loss adjustment expense ceded, loss portfolio transfer, reinsurance recoverables, ceded unearned premium table Skyward/2022/FY/Annual report# 2c410f6ffbad66e4be8ea0e47afc66a3 0 Pretax net impact of the LPT and strengthening of reserves 185 Pretax net impact of the LPT and strengthening of reserves table Skyward/2022/FY/Annual report# a4acd3d3ed3ffc22f1fcf98beab2fcfb 0 Deposit asset 186 Deposit asset table Skyward/2022/FY/Annual report# 7d8bc9760e0ce35440f4a739f287833a 0 20. Stock Based Compensation 187 Legacy Programs, key employees, common stock, stock grants, initial cash payment, stock notes receivable, grants awarded, Board of Directors members, financed shares, award shares prose Skyward/2022/FY/Annual report# cb5237503022747dd06e4600b34fc9e8 0 Common stock notes receivable 188 Common stock notes receivable table Skyward/2022/FY/Annual report# 6e9493d08d23126090c4206603eeb2da 0 Share-based compensation awards 189 Share-based compensation awards table Skyward/2022/FY/Annual report# e34bc13718e54ff417b68b816e7b0182 0 Non-vested share-based compensation awards 190 Non-vested share-based compensation awards table Skyward/2022/FY/Annual report# 9261e4aeb916a3c6573b4ae846783849 0 Stock-based compensation expense 191 Stock-based compensation expense table Skyward/2022/FY/Annual report# ae0a253d0d3b75cb3c5fcfab5fe0d6a3 0 21. Earnings Per Share 192 Preferred Shares, dividends, distributions, common stock, participating security, anti-dilutive instruments, diluted weighted-average common share equivalents, contingently issuable instruments, treasury stock method, basic and diluted EPS computations prose Skyward/2022/FY/Annual report# 413a034cf131fb46b641e348b8cbeac7 0 Impact of contingently issuable instruments on diluted EPS 193 Impact of contingently issuable instruments on diluted EPS, net income, undistributed income, common shareholders, basic weighted-average common shares, preferred shares, contingently issuable instruments, market condition awards, performance awards table Skyward/2022/FY/Annual report# b042b54022f00b48b930f6e9571f595d 0 Contingently issuable instruments (treasury stock method) 194 Contingently issuable instruments (treasury stock method) table Skyward/2022/FY/Annual report# 2746d80e452da5ed2c547189acd8da37 0 Common and preferred shares 195 Common shares, preferred shares table Skyward/2022/FY/Annual report# 68ad18c93d80805fbd28d6b0408bf6c4 0 Plan name = 401(k) Plan Regulatory act = Employee Retirement Income Security Act of 1974 Matching contributions basis = discretionary basis 22. Employee Benefit Plans 196 401(k) Plan, Employee Retirement Income Security Act of 1974, employee contributions, matching contributions prose Skyward/2022/FY/Annual report# 6da0fc1881f09260f79bc736db36ec57 0 401(k) matching contributions 197 401(k) matching contributions table Skyward/2022/FY/Annual report# a9a46895a6eca87da3247ee66bc08bb1 0 Westaim HIIG LP ownership = 2022: 44.5%, 2021: 71.0% Westaim preferred stock ownership = 2022: 44.7%, 2021: 44.7% Management Services Agreement payment = $0.5 million a year plus expenses Westaim 198 Westaim HIIG LP, Westaim HIIG LP ownership, Westaim common stock, Westaim investment, Westaim HIIG LP affiliates, Preferred Shares, Management Services Agreement prose Skyward/2022/FY/Annual report# afee783e84276fb263a749990ca42311 0 Unrealized losses on investment in Westaim 199 Unrealized losses on investment in Westaim table Skyward/2022/FY/Annual report# 94a5d08e2293eb7c9ec7d8f3341a76e3 0 Management services agreement 200 Management services agreement table Skyward/2022/FY/Annual report# be1a52899f05deaf97dd6ee4a99b4b99 0 RISCOM ownership interest = 20% Riscom 201 RISCOM, agency agreement, wholesale brokerage services, managing general agency agreement prose Skyward/2022/FY/Annual report# 66361f1b2feb9fcfe3aac064ed72eb72 0 RISCOM agency agreement details 202 RISCOM agency agreement, net earned premium, gross written commissions table Skyward/2022/FY/Annual report# 730e8c6d3ffb8bd30dd25a35cf54742c 0 Premiums receivable 203 Premiums receivable table Skyward/2022/FY/Annual report# 4dc763a02061e92c152df21adc7f8982 0 Reinsurer = Everest Re Reinsurance 204 Reinsurance agreements, Everest Re, Mt. Whitney Securities, LLC, Preferred Shares, reinsurance premiums ceded, reinsurance recoverable prose Skyward/2022/FY/Annual report# 6d17ee94a878f608e1b05c8b3825aef7 0 Reinsurance premiums ceded 205 Reinsurance premiums ceded table Skyward/2022/FY/Annual report# 6fe41ffc303764190374b87bece67b04 0 Reinsurance recoverable, net of premium payables 206 Reinsurance recoverable, premium payables table Skyward/2022/FY/Annual report# 35598e100bdfbb34dbf08cb69fc930f2 0 Investment products = senior and junior notes Investment manager = Arena Senior and junior notes investment = USD 3.4m Arena 207 Arena Special Opportunities Partners (Feeder) II, LP, Arena, senior notes, junior notes, asset-backed securities investment account prose Skyward/2022/FY/Annual report# 036f129c89f979097115701c4bb40275 0 Other 208 Advisory and professional services fees, expense reimbursements, affiliated shareholders, directors, investments, preferred share rights offering prose Skyward/2022/FY/Annual report# 8998ea9af9ba14d63a9bacb502c4b564 0 Professional fees and reimbursements 209 Professional fees and reimbursements table Skyward/2022/FY/Annual report# 3496814a18f14a1b48e0fa0b31bdcc3d 0 Litigation 210 Legal actions, claims under insurance policies and contracts, bad faith claims, disputes with third parties, alleged errors and omissions prose Skyward/2022/FY/Annual report# 6627236264a3387a11208fa48258d21b 0 Indemnification 211 Indemnifications, sale of business assets and subsidiaries, representations and warranties, sales contracts, potential exposure, significant claims prose Skyward/2022/FY/Annual report# da5a49eb218537cf2e1dbb57851912c0 0 Contingent Consideration Related to Acquisitions 212 Earn-out liabilities, former owners of acquired assets and businesses prose Skyward/2022/FY/Annual report# 23519c68b9977ee2f3ee3c830c2d9c83 0 Earn-out payments to former owners 213 Earn-out payments to former owners table Skyward/2022/FY/Annual report# 113cd3fd36f24123dccd1a220241e097 0 Insurance company subsidiaries = HSIC, IIC, GMIC, OSIC Regulatory body = National Association of Insurance Commissioners (NAIC) 25. Regulatory Matters 214 Consolidated assets, insurance company subsidiaries, HSIC, IIC, GMIC, OSIC, dividends, regulatory approval, policyholder surplus, net income, Risk Based Capital (RBC) requirements, NAIC, capital and surplus, BIC prose Skyward/2022/FY/Annual report# df429a84ee6bf13cf4f53c71651db244 0 Statutory capital and surplus and RBC level of HSIC 215 Statutory capital and surplus, RBC authorized control level, HSIC table Skyward/2022/FY/Annual report# 672e0c5ff68b9f13eabf9a005b55bd65 0 26. Statutory Accounting Principles 216 Statutory capital and surplus, principal operating subsidiaries, affiliated insurance subsidiaries, statutory net income (loss), BIC prose Skyward/2022/FY/Annual report# 734bc9f162dad48ba81a64b53e18ac15 0 Statutory net income (loss) for principal operating subsidiaries 217 Statutory net income (loss) for principal operating subsidiaries: HSIC, IIC, GMIC, OSIC table Skyward/2022/FY/Annual report# 24b62e78fb48e91a9abf62b9d287d476 0 Statutory net income (loss) for principal operating subsidiaries 218 Statutory net income (loss) for principal operating subsidiaries: HSIC, IIC, GMIC, BIC, OSIC table Skyward/2022/FY/Annual report# 3ec34ff65849c765bc1256d0e49afbe2 0 Reverse stock split = 4-for-1 Reverse stock split effective date = January 3, 2023 Long-Term Incentive Plan = 2022 Long-Term Incentive Plan 2022 Plan effective date = January 12, 2023 2022 Plan shares available = 3,200,516 Employee Stock Purchase Plan = 2022 Employee Stock Purchase Plan ESPP effective date = January 12, 2023 ESPP shares available = 376,531 New Credit Facility revolving credit = USD 150.0 million 27. Subsequent Events 219 Reverse stock split, Long-Term Incentive Plan, Employee Stock Purchase Plan, New Credit Facility, Initial Public Offering prose Skyward/2022/FY/Annual report# 0544956f5890393ac3a74c165fdff3cd 0 Evaluation date = December 31, 2022 Evaluation of Disclosure Controls and Procedures 220 Disclosure controls and procedures, principal executive officer, principal financial officer prose Skyward/2022/FY/Annual report# e6302f7d832d2cc25b0fb55c02862f19 0 Assessment date = December 31, 2022 Management’s Report on Internal Control over Financial Reporting 221 Internal control over financial reporting, policies and procedures, transaction recording, asset protection prose Skyward/2022/FY/Annual report# 4afe16633a7afc75831447c3c5a13c19 0 Material weakness identified = 2021 Material weakness remediated = 2022 Changes in Internal Control over Financial Reporting 222 Material weakness in internal control over financial reporting, remediation prose Skyward/2022/FY/Annual report# cca96ac751e76cae2a2f15e3c1a3e389 0 Exhibits schedule 223 Summary of Investments, Condensed Financial Information of Registrant, Supplementary Reinsurance Information, Valuation and Qualifying Accounts, Supplementary Information Concerning Property — Casualty Insurance Operations table Skyward/2022/FY/Annual report# 99655a904b7329d961d2a62c5a51f741 0 Exhibits list 224 Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Amended and Restated Stockholders’ Agreement, Description of Capital Stock, Share Purchase and Award Agreement, 2016 Equity Incentive Program, 2020 Long Term Incentive Plan, 2022 Long-Term Incentive Plan table Skyward/2022/FY/Annual report# 485bb511d38d73a0db05183ee05443b3 0 Exhibits list 225 Form of Restricted Stock Agreement, Form of Nonstatutory Stock Option Agreement, Form of Incentive Stock Option Agreement, Form of Performance-Based Restricted Stock Units Agreement, Performance-Based Restricted Stock Units Agreement, Performance Unit Agreement, Form of Indemnification Agreement, Employment Agreement table Skyward/2022/FY/Annual report# a45edacd5202f49a75004dc4d1b0ed90 0 Exhibits list 226 Investment Management Agreement, List of Subsidiaries, Consent of Ernst & Young LLP, Certification of Principal Executive Officer, Certification of Principal Financial and Accounting Officer, Certification of Principal Executive Officer table Skyward/2022/FY/Annual report# 9a0246a1ed911a2a9cb60da2141ccefa 0 Fixed maturity securities 227 Fixed maturity securities, U.S. government securities, Corporate securities, Municipal securities, Residential mortgage-backed securities, Commercial mortgage-backed securities, Asset-backed securities table Skyward/2022/FY/Annual report# 08b93911b723ce5d5c10b752a09da81b 0 Assets 228 Investments, Investment in subsidiaries, Short-term investments, Cash and cash equivalents, Restricted cash, Deferred income taxes, Goodwill and intangible assets, Other assets, Accounts payable and accrued liabilities, Notes payable table Skyward/2022/FY/Annual report# 22309d5ebb661c0127b6a1c7dc974f68 0 Revenues and expenses 229 Net investment income, Net investment losses, Interest expense, Amortization expense, Income tax benefit, Equity in undistributed earnings of subsidiaries table Skyward/2022/FY/Annual report# b4cc97dd1cd22ad61c9665ac5208aa69 0 Cash flows 230 Net income, Capital contribution to subsidiaries, Distributions from investment in subsidiaries, Employee share purchases, Cash and cash equivalents, Restricted cash table Skyward/2022/FY/Annual report# f3dbc25b930d7c69d598fde8aebf7aa7 0 Reinsurance activity and percentages 231 Gross amount, Ceded to other companies, Assumed from other companies, Net amount, Percentage of amount assumed to net, Accident & Health, Property & Casualty table Skyward/2022/FY/Annual report# 9bf2a8d008dc619b1b76993fcf3036f9 0 Valuation and uncollectible allowances 232 Valuation Allowance For Deferred Tax Assets, Allowance for Uncollectible Reinsurance Recoverable, Allowance for Uncollectible Premiums Receivable table Skyward/2022/FY/Annual report# c0a4c62ef72db1ecaf0eabaf739e32fb 0 Financial data for deferred costs, reserves, and premiums 233 Deferred policy acquisition costs, Reserve for losses and loss adjustment expenses, Unearned premiums, Net earned premium, Net investment income, Losses and loss adjustment expenses, Amortization of policy acquisition costs, Paid claims and claim adjustment expenses, Net premiums written, Ceded unearned premium, Deferred ceding commission table Skyward/2022/FY/Annual report# 6675d4ddb0775025a2d69312d440c0b0 0 Signatures 234 Signatures, registrant, Securities Exchange Act of 1934 prose Skyward/2022/FY/Annual report# 14ce284c53e5680aadae8d7a9d9093d1 0 Signatures and dates for the registrant 235 Registrant signatures, Andrew Robinson table Skyward/2022/FY/Annual report# b63e643982f3d6b9b9ed27d15049e46d 0 Signatures, titles, and dates of authorized individuals 236 Signatures, titles, dates of authorized individuals: Andrew Robinson, Mark Haushill, J. Cameron MacDonald, Robert Creager, Marcia Dall table Skyward/2022/FY/Annual report# b568017069173bcc2f3d8d6a0ee23afa