]> 2026-07-06T18:10:59+08:00 Skyward/2023/FY/Annual report 0 en-us Annual report Skyward Specialty Insurance Group 2023 Form 10-K Form 10-K English Skyward doc_archive FY FY23 2024-04-01Z 2460401.5 2023 2026-07-06T04:53:23Z 2461227.7037384 2026-07-06T04:55:20Z 2461227.7050926 false Skyward/2023/FY/Annual report 0 Cover ($ in millions) 1 table Skyward/2023/FY/Annual report# 821be5582d8622bb79fe255e1786100e 0 Audit Information 2 Auditor name, location, firm ID table Skyward/2023/FY/Annual report# 24d99c070a772a9cbd7b2a8234547896 0 Year founded = 2006 Founding legal form = Delaware corporation Former name(s) = Houston International Insurance Group, Ltd. Major acquisitions = re-branding as Skyward Specialty in November 2020 Primary segments = commercial property and casualty (P&C) Principal lines = general liability, excess liability, professional liability (including cyber insurance), commercial auto, group accident and health, property, agriculture, surety, and workers’ compensation Who We Are 3 Company formation, re-branding, P&C products, market focus, lines of business, business mix prose Skyward/2023/FY/Annual report# fc191df1f0f4b302f30b61a305573d48 0 Reportable segments = one Number of segments = eight underwriting divisions Gross written premiums admitted = 43% Gross written premiums non-admitted = 57% Gross written premiums per division = over $100.0 million Lines of business = Accident & Health, Captives, Global Property and Agriculture Our Business and Our Strategy 4 Reportable segment, underwriting divisions, gross written premiums by admitted/non-admitted, Accident & Health, Captives, Global Property and Agriculture prose Skyward/2023/FY/Annual report# b388e4b84d7a016b6c62e1d661ed94f6 0 Competitive advantages = profitable niches, skilled underwriters, superior claims staff, business intelligence platform, advanced technology, diversified business, attractive culture, experienced leadership Our Competitive Strengths 5 Competitive strengths, niche focus, underwriting expertise, data and predictive analytics, claims professionals prose Skyward/2023/FY/Annual report# 0fb504353df781ecc9480be719168093 0 Strategic priorities = attracting and retaining underwriting and claims talent, leveraging technology, profitably growing existing lines, expanding with new underwriting divisions Plan horizon = long-term Technology platform = SkyBI Our Strategy in Action 6 Rule Our Niche strategy, talent acquisition, technology leverage, profitable growth, market trends prose Skyward/2023/FY/Annual report# 20f5cf14687f4c4a7fecf5d76c722a54 0 Distribution channels = retail agents, wholesale brokers, select program administrators, captive managers Marketing and Distribution 7 Marketing and distribution approach, distribution partners, channel selection prose Skyward/2023/FY/Annual report# 36b3fe190ef03bd5f0cd7eacf6bac471 0 President of Industry Solutions, Captives and Programs = Kirby Hill President of Specialty Lines = John Burkhart SVP Global Property and Agriculture Underwriting Division = Doug Davies Technology platform = SkyBI Underwriting 8 Underwriting approach, specialized divisions, underwriting leadership, technology and data analytics, risk selection and pricing prose Skyward/2023/FY/Annual report# 52e549b89f8da50f8b8302ee4b0b0a20 0 Claims Management 9 Claims department guiding principles, claims handling, Third Party Administrators, legal counsel, legal spend management, technology, artificial intelligence, Large Language Model prose Skyward/2023/FY/Annual report# 125e3578dd0f5c784c808c287521831f 0 Business intelligence platform = SkyBI Technology 10 Technology in operations, SkyBI platform, predictive analytics, core transactional platforms, third-party vendor applications prose Skyward/2023/FY/Annual report# cf5c570a2ee8fa78cd1d944750ed7f39 0 Reinsurance contract length = one year Reinsurance renewal = annually, primarily in January and June Property insurance gross written premiums = 27% Reinsurance 11 Reinsurance strategy, contract types (quota share, excess of loss, facultative), property insurance, catastrophe reinsurance prose Skyward/2023/FY/Annual report# 1518f8ae27b32d6ce095619296c706fd 0 Allowance for uncollectible reinsurance by line of business 12 Maximum company retention by line of business table Skyward/2023/FY/Annual report# f292bdc65fc1b8982a4669b66fb893da 0 Reinsurance by company 13 Reinsurance recoverables and AM Best ratings by reinsurer table Skyward/2023/FY/Annual report# 90a7c38193ddb40cb0bb36806156c2d9 0 Enterprise Risk Management 14 Enterprise Risk Management, underwriting portfolio, reinsurance, investment strategy, Chief Risk Officer, ERM Committee, Economic Capital Model, risk tolerances, risk register, top 10 risks, operational processes and controls, Underwriting Committee prose Skyward/2023/FY/Annual report# b153fecd07a9ded45e221b0aaab4c09b 0 Reserves 15 Reserves for claims, IBNR, uncollectible reinsurance, reserve monitoring, anticipated inflation, case reserves, actuarial reserving techniques prose Skyward/2023/FY/Annual report# fc02bb21df47d5d4da174ea7876dba33 0 Investments 16 Investment portfolio, Enterprise Based Asset Allocation model, investment risk, Investment Committee, self-managed investments, third-party investment management firms, opportunistic fixed income portfolio, Arena Investors, LP, The Westaim Corporation prose Skyward/2023/FY/Annual report# a3bea06c0ee593f134fa6a4454a44f7b 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 17 Specialty lines P&C insurance market, competition factors, competitors prose Skyward/2023/FY/Annual report# 61ddb55226af294b3b6ccfb211ff06ee 0 Legal name = Skyward Specialty Insurance Group, Inc. State of incorporation = Delaware Holding-company structure = parent company, four insurance companies, two non-insurance companies Insurance subsidiaries = Houston Specialty Insurance Company, Imperium Insurance Company, Great Midwest Insurance Company, Oklahoma Specialty Insurance Company Captive reinsurance company = Skyward Re Non-insurance companies = Skyward Underwriters Agency, Inc., Skyward Service Company Our Structure 18 Organizational structure, insurance companies, non-insurance companies, parent company, subsidiaries prose Skyward/2023/FY/Annual report# e56b8ae58fddcdda436e2ec65a2aaa2b 0 Geographic distribution of premiums 19 Geographic distribution of premiums by state table Skyward/2023/FY/Annual report# cbdec4c277b07d8083e9d9ee42823c2a 0 Financial strength rating = A- (Excellent) Rating outlook = positive Rating agencies = A.M. Best Ratings 20 A.M. Best rating, rating factors, financial strength, operating performance, policyholder obligations prose Skyward/2023/FY/Annual report# 3efe09fb623fca3be14f65f66cb3a9bd 0 Regulation 21 State insurance regulation, capital and surplus requirements, licensing, product form and rate review, reserve adequacy, accounting methods, financial reports, affiliate transactions, investment types, federal scrutiny, NAIC, FIO, Dodd-Frank Act prose Skyward/2023/FY/Annual report# 9dac0d2dfd0e9d5cf5065a2b46f1c42b 0 Intellectual Property 22 Trademark registrations, intellectual property protection, trademark and service mark monitoring prose Skyward/2023/FY/Annual report# 9c31b1204998a3082e24cd0d031c5c77 0 Employees = approximately 515 as of December 31, 2023 Employees and Human Capital 23 Employee headcount, collective bargaining, workplace culture, diversity, equity, inclusion, benefits package, training and development prose Skyward/2023/FY/Annual report# 7e2c89d1e63b201002aae7ffbf93a47d 0 Summary of Material Risk Factors 24 Underwriting risk, competition, distribution channels, reinsurance, loss reserves, financial strength rating, coverage interpretation, reinsurer reimbursement, claims payment, economic factors prose Skyward/2023/FY/Annual report# e9c06972b7d6d21fc2d5e0bb658bfaed 0 Key competitors = Other specialty insurance companies, standard insurance companies, underwriting agencies Distribution channels = Insurance retail agents, brokers, wholesalers, program administrators Risks Related to Our Business and Industry 25 Underwriting, employee decisions, competition, industry consolidation, capital-raising, federal regulatory reform, distribution relationships prose Skyward/2023/FY/Annual report# ca90021fa0361baa9429decd4d1fe25b 0 Risks Related to the Market and Economic Conditions 26 Recession, inflation, unemployment, economic downturn, capital market volatility, insurance cycle prose Skyward/2023/FY/Annual report# 579776a857f4a5ec1dd26fb25d28145b 0 Primary insurance subsidiaries = HSIC, IIC, GMIC State of domicile = Texas Risks Related to the Regulatory Environment 27 Regulatory compliance, state departments of insurance, Texas Department of Insurance, insurance holding company system prose Skyward/2023/FY/Annual report# 16a03440e5cb3a430ca7e36e3ea42e4d 0 Risks Related to Our Liquidity and Access to Capital 28 Capital requirements, operational cash flows, investment portfolio declines, catastrophe events, equity financing, debt financing prose Skyward/2023/FY/Annual report# 15cb90b03e95c57942ecf99b676834ab 0 Risks Related to Our Operations 29 Key personnel, talent recruitment, security breaches, data loss, cyberattacks, IT failures, information technology systems, telecommunications systems prose Skyward/2023/FY/Annual report# 4c7081a7c50b77e8e44a0e5246c3ee60 0 Sarbanes-Oxley Act Section = 404 Internal control report effective date = January 18, 2024 Risks Related to Ownership of Our Common Stock 30 Public company operating costs, financial reporting, Sarbanes-Oxley Act, Dodd-Frank Act, SEC regulations, Nasdaq regulations, internal control over financial reporting prose Skyward/2023/FY/Annual report# 0da99a7da858f4bb74bdd98866102387 0 Securities Authorized for Issuance Under Equity Compensation Plans 31 Equity compensation plans prose Skyward/2023/FY/Annual report# 7778b5ace7fcdb4ba87b11dfa0730e87 0 Reverse stock split effective date = January 3, 2023 Preferred stock converted to common stock = 16,305,113 shares Securities Act exemption for common shares = Section 3(a)(9) Restricted stock granted = 1,101,856 shares Weighted average price of restricted stock = $16.07 per share Stock options granted = 759,990 Stock option strike price = $15.00 Securities Act exemption for other securities = Section 4(a)(2), Rule 701 Recent Sales of Unregistered Equity Securities 32 Unregistered equity securities, preferred stock conversion, common stock, restricted stock, stock options prose Skyward/2023/FY/Annual report# eab5dd5138fd937b09b13646cdfabb64 0 IPO closing date = January 18, 2023 Common stock sold in IPO = 4,750,000 shares Additional shares sold by selling stockholders = 1,342,857 shares Registration statement = Form S-1 (File No. 333-265326) Registration statement effective date = January 12, 2023 Underwriters = Barclays Capital Inc., Keefe, Bruyette & Woods, Inc. Public offering price = $15.00 per share Net proceeds to company = $62.3 million Use of Proceeds from Initial Public Offering 33 Initial Public Offering, common stock, selling stockholders, underwriters, registration statement, net proceeds prose Skyward/2023/FY/Annual report# 7f7b4e25272b8c6a9ce43ec6f852a37d 0 Issuer Purchases of Equity Securities 34 Equity securities purchases prose Skyward/2023/FY/Annual report# f400d6ea717ba9df59c8c641d84f05d2 0 Dividends 35 Cash dividends, common stock, Board of Directors discretion prose Skyward/2023/FY/Annual report# d622148bfaeab749a43048e23056220e 0 Comparison period = January 13, 2023 through December 31, 2023 Initial investment = $100 Skyward Specialty Insurance Group, Inc. performance (Jan 13, 2023) = $100.00 Skyward Specialty Insurance Group, Inc. performance (Dec 31, 2023) = $175.00 Nasdaq Composite performance (Jan 13, 2023) = $100.00 Nasdaq Composite performance (Dec 31, 2023) = $138.00 Nasdaq Insurance performance (Jan 13, 2023) = $100.00 Nasdaq Insurance performance (Dec 31, 2023) = $102.00 Performance Graph 36 Cumulative total shareholder return, Skyward Specialty Insurance Group common stock, Nasdaq Composite Index, Nasdaq Insurance Index prose Skyward/2023/FY/Annual report# cf9b6e5408c093a9138bb0596e0ac16b 0 Skyward Specialty Insurance Group stock performance 37 Skyward Specialty Insurance Group stock performance, Nasdaq Composite Index, Nasdaq Insurance Index table Skyward/2023/FY/Annual report# f5ce482d31ffe783808c6711e0948f68 0 Strategic priorities = Lead in chosen market niches, establish sustainable competitive positions Overview 38 Specialty insurance, commercial P&C products, non-admitted (E&S) basis, admitted basis, United States operations, underserved markets, customized underwriting solutions, claims capabilities, diversified portfolio of insured risks, multiple distribution channels, general liability, excess liability, professional liability, cyber insurance, commercial auto, group accident and health, property, agriculture, surety, workers’ compensation, short duration liabilities, medium duration liabilities, E&S markets, admitted markets, Rule Our Niche strategy prose Skyward/2023/FY/Annual report# aea7028a5e0dbf47e50b74c25aaba2d2 0 Net income (2023) = USD 100.0m Net income (2022) = USD 10.0m Net income attributable to common stockholders (2023) = USD 99.9m Net income attributable to common stockholders (2022) = USD 9.9m Diluted earnings per share (2023) = USD 2.50 Diluted earnings per share (2022) = USD 0.25 Gross written premiums (2023) = USD 1,470.0m Gross written premiums (2022) = USD 1,200.0m Net earned premiums (2023) = USD 1,090.0m Results of Operations 39 Net income, net income attributable to common stockholders, diluted earnings per share, gross written premiums, net earned premiums, net investment income, net realized and unrealized gains on investments, other income, total revenues, losses and loss adjustment expenses, underwriting expenses, interest expense, other expenses prose Skyward/2023/FY/Annual report# ae7571f481693ef5bf0521bd6179ad7e 0 Loss and expense ratios 40 Gross written premiums, ceded written premiums, net written premiums, net earned premiums, commission and fee income, losses and LAE, underwriting, acquisition and insurance expenses, underwriting income, net investment income, net investment gains (losses), income before income taxes, net income, adjusted operating income table Skyward/2023/FY/Annual report# 439ee89d4acb81ddba2cc894027bb783 0 Reconciliation of Non-GAAP Financial Measures 41 Adjusted Operating Income, net income, Underwriting income (loss), income before federal income tax, Adjusted Loss Ratio, Adjusted Combined Ratio, loss and LAE ratio, combined ratio, Tangible Stockholders’ Equity, stockholders’ equity, Adjusted Return on Equity, return on equity, Return on Tangible Equity, Adjusted Return on Tangible Equity prose Skyward/2023/FY/Annual report# 2f9c8c59cf9ac1b127db33caa6fc3bc7 0 Reconciliation of return on tangible equity to return on equity 42 Income as reported, net impact of LPT, net investment gains (losses), other (loss) income, other expenses, Adjusted operating income table Skyward/2023/FY/Annual report# a2498efcf2c13d5280ec5b98cff9dc94 0 Reconciliation of income before federal income tax to underwriting income 43 Income before federal income tax, interest expense, amortization expense, other expenses, net investment income, net investment gains (losses), other (loss) income, Underwriting income table Skyward/2023/FY/Annual report# 82d70474f49173e89c0dc8e080a83ada 0 Loss and combined ratios 44 Net earned premiums, losses and LAE, pre-tax net impact of loss portfolio transfer, Adjusted losses and LAE, loss ratio, net impact of LPT, Adjusted loss ratio, combined ratio, Adjusted combined ratio table Skyward/2023/FY/Annual report# e6c0bdfc9ec66ceb501a782e25fb8b8c 0 Stockholders’ equity and tangible stockholders’ equity 45 Stockholders’ equity, goodwill and intangible assets, Tangible stockholders’ equity table Skyward/2023/FY/Annual report# 309024c6952d39294a5157effb11fd8a 0 Adjusted return on equity 46 Adjusted operating income, average stockholders’ equity, Adjusted return on equity table Skyward/2023/FY/Annual report# 13cab241478b8d71c91ead61acd31704 0 Return on tangible equity 47 Net income, average tangible stockholders’ equity, Return on tangible equity table Skyward/2023/FY/Annual report# 2bdbec887cd45cad67d69ed986ee295a 0 Adjusted return on tangible equity 48 Adjusted operating income, average tangible stockholders’ equity, Adjusted return on tangible equity table Skyward/2023/FY/Annual report# 5f8a21ce379854bddab7710c0e03f788 0 Net earned premiums 2023 = USD 829.1m Net earned premiums 2022 = USD 616.0m Loss ratio improvement 2023 = 3.2 points Non-cat loss and LAE ratio improvement 2023 = 1.9 points Catastrophe losses impact 2023 = 1.4 points Catastrophe losses impact 2022 = 1.1 points Favorable development 2023 = USD 9.2m Adverse development 2023 = USD 11.9m Adverse development 2022 = USD 14.4m Underwriting Results 49 Net earned premiums, loss ratio, non-cat loss and LAE ratio, catastrophe losses, favorable development, adverse development, short tail/monoline specialty lines, multi-line solutions, exited lines prose Skyward/2023/FY/Annual report# acc52d734bb475ce037bed2c4a683f8e 0 Total incurred and open claims by business segment 50 Total incurred and open claims by business segment table Skyward/2023/FY/Annual report# 1bbaa37c2d4749aa62bd51360bc059ba 0 Losses and LAE by type 51 Losses and LAE by type table Skyward/2023/FY/Annual report# 13bcdd0faf5a1ee084f9675766b43025 0 Reserve development on losses 52 Reserve development on losses table Skyward/2023/FY/Annual report# fd842579cfa90e71cd9c4fbc3491566c 0 Underwriting, acquisition, and insurance expenses 53 Underwriting, acquisition, and insurance expenses table Skyward/2023/FY/Annual report# 9ae834325f036dad9fc19c1900bac53f 0 Net investment income and gains (losses) 54 Net investment income and gains (losses) table Skyward/2023/FY/Annual report# e74984e8a5ca0ccb6f3518d56ff8c035 0 Fixed maturity securities 2023 = 73.8% Fixed maturity securities 2022 = 74.2% Weighted average effective duration 2023 = 3.2 years Weighted average effective duration 2022 = 3.1 years Average core fixed income credit rating 2023 = AA- (Standard & Poor’s) Average core fixed income credit rating 2022 = AA (Standard & Poor’s) Core fixed income portfolio average duration 2023 = 4.4 years Core fixed income portfolio average duration 2022 = 4.3 years Opportunistic fixed income portfolio weighted average loan-to-value = 74% Investments 55 Fixed maturity securities, weighted average effective duration, average core fixed income credit rating, core fixed income portfolio, opportunistic fixed income portfolio, underlying securities, investments prose Skyward/2023/FY/Annual report# b4a5bb8735ffe8dad4d6e7c907798800 0 Investment portfolio by type 56 Investment portfolio by type table Skyward/2023/FY/Annual report# ffe403cc4646f97cc57e63d2d299a20f 0 Core fixed income securities by type 57 Core fixed income securities by type table Skyward/2023/FY/Annual report# 6f80c8684b67e8f217c64db622308d39 0 Core fixed income by credit rating 58 Core fixed income by credit rating table Skyward/2023/FY/Annual report# 8364c043c82e349108526f1295516173 0 Opportunistic fixed income by sector 59 Opportunistic fixed income by sector table Skyward/2023/FY/Annual report# 1014ff955b89770e4cd9d57590db7111 0 Equities by type 60 Equities by type table Skyward/2023/FY/Annual report# dff5053b15d65a43430604933ae0540d 0 Estimated change in fair value due to interest rate changes 61 Estimated change in fair value due to interest rate changes table Skyward/2023/FY/Annual report# 9ca03de1f0efb77e346d528b2c54847a 0 Income tax expense 2023 = USD 24.1m Income tax expense 2022 = USD 10.4m Effective tax rate 2023 = 21.9% Effective tax rate 2022 = 20.9% Other Items 62 Income tax expense, effective tax rate, change in effective tax rate, provision for income taxes prose Skyward/2023/FY/Annual report# c5d1192f09d07de7b982e6cc8af8c197 0 Insurance subsidiaries = HSIC, IIC, GMIC, OSIC HSIC, IIC, GMIC domicile = Texas OSIC domicile = Oklahoma Sources and Uses of Funds 63 Holding company, insurance subsidiaries, corporate service fees, tax allocation agreement, dividends from subsidiaries, bank loans, revolving loan agreement, equity and debt securities, Skyward Service Company, state insurance laws, regulatory approval, policyholder surplus prose Skyward/2023/FY/Annual report# 77d4424b1e3f4ed2c7969f9d3669696e 0 Cash Flows 64 Premiums, claims, investment strategy, operating expenses, capital expenditures, reinsurance, operating cash flow timing, operating activities cash flow, investing activities cash flow, financing activities cash flow, IPO, November follow-on offering prose Skyward/2023/FY/Annual report# 65e17dc6c246317910e7152d63c7be45 0 Cash and cash equivalents provided by (used in) activities 65 Cash and cash equivalents provided by (used in) activities table Skyward/2023/FY/Annual report# c8ebfbed1325e7067504ae0f1570a665 0 Revolving Credit Facility amount = USD 150.0 million Revolving Credit Facility accordion = USD 50.0 million Revolving Credit Facility letter of credit sub-facility = USD 30.0 million Revolving Credit Facility draw 2023 = USD 50.0 million Revolving Credit Facility interest rate margin = 150 to 190 basis points Revolving Credit Facility credit spread adjustment = 10 basis points Six-month SOFR 2023 = 5.47% Revolving Credit Facility draw 2024 = USD 50.0 million Debenture offering 2006 = USD 58.0 million Credit Agreements 66 Unsecured revolving credit facility, Term Loan, Revolver, interest rate, SOFR, covenants, Debentures, Delos Capital Trust, Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures prose Skyward/2023/FY/Annual report# 742b1eee6531e15427bdbeb8f3dd6f4d 0 Reinsurance balances recoverable 2023 = $596.3 million Reinsurance balances recoverable 2022 = $581.4 million Contractual Obligations and Commitments 67 Reserves for losses and LAE, actual losses, settlement expenses, timing for payment, assumptions for periodic payments, reinsurance balances recoverable prose Skyward/2023/FY/Annual report# bb7566c43a5b1a1089e8de31bb137c62 0 Reinsurance balances recoverable on reserves for paid and unpaid losses and LAE 68 Reinsurance balances recoverable on reserves for paid and unpaid losses and LAE table Skyward/2023/FY/Annual report# 1cdda07021711f11b8e1d3045fb9ac1c 0 Critical Accounting Policies 69 Critical accounting estimates, future results, judgments, estimates, assets, liabilities, revenues, expenses, contingent assets, contingent liabilities, reserves for unpaid losses and LAE, case-basis valuations, statistical analyses, actuarial procedures, historical information, industry information, peer group information, future trends, loss severity, loss frequency, inflation prose Skyward/2023/FY/Annual report# e84fe4997f98f70370a7fd0ecd1e40d5 0 Impact of a 5% change in net IBNR on reserves and net income 70 Impact of a 5% change in net IBNR on reserves and net income table Skyward/2023/FY/Annual report# f78c20b5522ed1a4f815c777490c6218 0 Total annual gross revenues threshold = USD 1.235 billion Nonconvertible debt threshold = USD 1 billion ASU 2016-13 effective date = January 1, 2023 ASU 2016-13 impact on allowance for uncollectible reinsurance = USD 2.3 million increase ASU 2016-13 impact on accumulated deficit = USD 2.3 million increase, net of tax ASU 2023-07 issuance date = November 2023 Recent Accounting Pronouncements 71 Emerging growth company, JOBS Act, extended transition period, accounting guidance, private companies' timelines, total annual gross revenues, fifth anniversary of offering completion date, nonconvertible debt, large accelerated filer, ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), expected loss approach, historical information, current information, forecasted information, modified retrospective approach, cumulative-effect adjustment, retained earnings, fair value option, mortgage loans, allowance for uncollectible reinsurance, accumulated deficit, ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280) prose Skyward/2023/FY/Annual report# a20c1b7082e0b0f5dcc2686b5a5933e8 0 Auditor = Ernst & Young LLP Auditor location = Houston, Texas Report date = February 28, 2024 Report of Independent Registered Public Accounting Firm 72 Consolidated financial statements, consolidated balance sheets, consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, cash flows, notes, accounting principles generally accepted in the United States of America, internal control over financial reporting, Public Company Accounting Oversight Board (United States) (PCAOB), Internal Control—Integrated Framework (2013), Committee of Sponsoring Organizations of the Treadway Commission (COSO), Ernst & Young LLP prose Skyward/2023/FY/Annual report# a12b9509c6d286c709a12cfb0aea025e 0 Audited financial statements as of = December 31, 2023 and 2022 Audit period = two years ended December 31, 2023 Accounting principles = U.S. generally accepted accounting principles Opinion on the Financial Statements 73 Consolidated financial statements, audit opinion, financial position, operations, cash flows prose Skyward/2023/FY/Annual report# ce831b0adb2b4acdf344a525b7762c9b 0 Auditor registration = Public Company Accounting Oversight Board (United States) (PCAOB) Audit standards = PCAOB standards Basis for Opinion 74 Company's management, auditor's responsibility, PCAOB standards, internal control over financial reporting, risks of material misstatement, accounting principles prose Skyward/2023/FY/Annual report# 31a59fabcbb9783e799a6583ed870cdd 0 Consolidated balance sheets 75 Consolidated balance sheets, accompanying notes prose Skyward/2023/FY/Annual report# c215dbd26378be145234a37cdbff77e0 0 Consolidated balance sheets - assets 76 Investments, fixed maturity securities, equity securities, mortgage loans, other long-term investments, short-term investments, cash and cash equivalents, restricted cash table Skyward/2023/FY/Annual report# 43007b9760335aaaada88b2ac57c7f28 0 Consolidated statements of operations and comprehensive income (loss) 77 Consolidated statements of operations and comprehensive income (loss), accompanying notes prose Skyward/2023/FY/Annual report# f8f9844585a7f29ea58bc6e6c8969313 0 Consolidated statements of operations - revenues and expenses 78 Revenues, expenses, net earned premiums, commission and fee income, net investment income, net investment gains (losses), other (loss) income, losses and loss adjustment expenses, underwriting, acquisition and insurance expenses, interest expense, amortization expense, other expenses table Skyward/2023/FY/Annual report# 8cd6cf4f16a428449644457319e37134 0 Consolidated statements of stockholders’ equity 79 Consolidated statements of stockholders’ equity, accompanying notes prose Skyward/2023/FY/Annual report# 3dbcbfdf87146e985559acd5f50b2c68 0 Consolidated statements of changes in stockholders' equity 80 Preferred Stock, Common Stock, Treasury Stock, Additional Paid-In Capital table Skyward/2023/FY/Annual report# 1e97f16a20ee6fa6e725948fda5e12dc 0 Consolidated statements of cash flows 81 Consolidated statements of cash flows, accompanying notes prose Skyward/2023/FY/Annual report# 272563d801d83ce548c78980be11e794 0 Consolidated statements of cash flows - operating activities 82 Cash flows from operating activities, net income, net investment (gains) losses, depreciation and amortization expense, stock-based compensation expense, undistributed loss (earnings) from long-term investments, deferred income tax, premiums receivable, reinsurance recoverables, ceded unearned premium, deferred policy acquisition costs table Skyward/2023/FY/Annual report# 567030656cce044ea6a8ddc1287ddada 0 State of incorporation = Delaware Year founded = 2006 Number of insurance subsidiaries = four Reinsurance company domicile = Cayman Islands A. Description of Business 83 Skyward Specialty Insurance Group, Inc., Delaware corporation, specialty insurance company, commercial property and casualty insurance products, underwriting divisions, Houston Specialty Insurance Company, Imperium Insurance Company, Great Midwest Insurance Company, Oklahoma Specialty Insurance Company, Skyward Re, Skyward Underwriters Agency, Inc., Skyward Service Company prose Skyward/2023/FY/Annual report# 5215afed9b9befcc813335acee8d3de9 0 Reporting framework = Generally Accepted Accounting Principles in the United States of America (GAAP) B. Basis of Presentation 84 Consolidated financial statements, Generally Accepted Accounting Principles in the United States of America (GAAP), holding company, subsidiaries, intercompany transactions, estimates and assumptions prose Skyward/2023/FY/Annual report# 122e0c39687dd59b80f1cd259db9c82b 0 Cash equivalents include = fixed maturity securities with original maturities of three months or less C. Cash and Cash Equivalents 85 Cash and cash equivalents, fixed maturity securities, fair value prose Skyward/2023/FY/Annual report# 0a34c6c6a1467c00ed94fa2e2b3c5948 0 Restricted cash definition = cash with a legal restriction on withdrawal or use by the consolidated group D. Restricted Cash 86 Restricted cash, legal restriction, SUA, unremitted insurance premiums, fiduciary capacity, state regulations, assets on deposit, collateral for reinsurance balances, cash held in a depository account prose Skyward/2023/FY/Annual report# b0b4b88178e91619a619862c6641a1b1 0 Historical loss rate source = Moody’s multi-year cumulative loss rates for asset-backed securities E. Investments 87 Available for Sale fixed maturities, fair value, unrealized loss position, intent to sell, amortized cost, net investment gains, credit-related factors, allowance for credit losses, stockholders’ equity, accumulated other comprehensive loss, Held to maturity fixed maturity securities, historical loss rate, Moody’s multi-year cumulative loss rates, asset-backed securities prose Skyward/2023/FY/Annual report# 5497f81039c84095407220448ecbaecf 0 Reinsurance types = proportional, excess of loss, facultative, retroactive F. Reinsurance 88 Prospective reinsurance, proportional, excess of loss, facultative, ceded unearned premium, reinsurance balances recoverable, unpaid losses, settlement expenses, net earned premiums, losses and loss adjustment expenses, underwriting, acquisition, and insurance expenses, retroactive reinsurance, loss portfolio transfers (LPT), adverse development covers, deposit method prose Skyward/2023/FY/Annual report# b6d674b86d1ce23bcbb5ebb84a64b025 0 Cash equivalents and short-term investments = U.S. government securities and money market funds Credit risk concentration = no significant concentration Outstanding premiums receivable as of = December 31, 2023, and 2022 G. Concentration of Credit Risk 89 Financial instruments, concentrations of credit risk, cash and cash equivalents, restricted cash, investments, premiums receivable, reinsurance recoverables, U.S. government securities, money market funds, industries, geographic regions, single financial institution or issuer, outstanding premiums receivable, distribution sources prose Skyward/2023/FY/Annual report# 20e01d0a46ccd4e01270a8929ec83240 0 Premium deficiency as of = December 31, 2023, and 2022: none H. Deferred Policy Acquisition Costs 90 Policy acquisition costs, commissions, premium taxes, new or renewal business production, ceding commissions, deferred costs, premium deficiency, unearned premiums, anticipated investment income, unamortized acquisition costs, liability prose Skyward/2023/FY/Annual report# 16fe0382b37b74440caac0554f96146b 0 Goodwill impairment for years ended = December 31, 2023, and 2022: none I. Goodwill and Intangible Assets 91 Goodwill and intangible assets, business combination, purchase price, acquired assets, assumed liabilities, purchase price allocation, identifiable intangible assets with a finite useful life, indefinite-lived intangible assets, recoverability, goodwill impairment prose Skyward/2023/FY/Annual report# 7a8a7febdd10046457e2920ec823c0d6 0 Depreciation periods = three to seven years J. Property and Equipment 92 Property and equipment, cost, accumulated depreciation, other assets, consolidated balance sheets, depreciation expense, straight-line basis, depreciation periods prose Skyward/2023/FY/Annual report# 825c8cec3daf20e85e1f55d8511966b0 0 ROU assets included in = other assets Lease liabilities included in = accounts payable and accrued liabilities K. Leases 93 Right-of-use (ROU) assets, other assets, lease liabilities, accounts payable, accrued liabilities, operating leases, contract, inception, present value of future minimum lease payments, commencement date, incremental borrowing rate, interest rate implicit in leases, options to extend or terminate, lease and non-lease components, operating lease cost, straight-line basis, sublease income prose Skyward/2023/FY/Annual report# 6aeea71da6516fcdf0065fc9c2bb25ed 0 Reserves for losses and LAE represent = Company's best estimate of the ultimate net cost of all reported and unreported unpaid losses L. Reserves for Losses and Loss Adjustment Expenses 94 Reserves for losses and LAE, ultimate net cost, reported and unreported unpaid losses, balance sheet dates, actuarial and other assumptions, economic, social, and political conditions, environmental and other toxic tort type claim liabilities, developing experience, new information, adjustments to reserves, results of operations, inherent uncertainty, ultimate liability, recorded amounts prose Skyward/2023/FY/Annual report# efbcd3c86d7d161113747ceec228c2e2 0 Property and casualty and surety premiums recognized = on a pro-rata basis over the policy terms Accident and health premiums earned = as billed, based on census data M. Premiums 95 Property and casualty, surety premiums, pro-rata basis, policy terms, accident and health premiums, census data, gross premiums written, ceded premiums, proportional, facultative, excess of loss reinsurance, prospective reinsurance, premiums receivable, deferred premiums, installment payments, insureds, policy payment terms, allowance for credit losses, historical loss rate, historical write-offs, aging of receivables, cancel coverage, unearned premiums, unexpired terms, insurance policies, reinsurance contracts, ceded unearned premiums, direct and ceded amounts prose Skyward/2023/FY/Annual report# 0ac75f132915765e56fbb215d92521aa 0 SUA commission revenue performance obligation = placement of insurance policies SUA fee income performance obligation = placement of the policy N. Commission and Fee Income 96 SUA commission revenue, insurance policies, reinsurance programs, reinsurance broker, performance obligation, transaction price, percentage of premiums, policy placement, SUA fee income, third-party insurance company, variable transaction price, percentage of premium, risk factors, employee census data, worker roles, expected value method, variable consideration prose Skyward/2023/FY/Annual report# ceb5ab8390b8a5cc70ef57dd1be656b3 0 O. Income Taxes 97 Income tax expense, provision for income taxes, valuation allowance, deferred tax assets and liabilities, uncertain tax positions, consolidated federal income tax return, admitted insurance subsidiaries, premium tax expense prose Skyward/2023/FY/Annual report# f7e7f26b71f1b397466b4041bbe162a6 0 P. Fair Value of Financial Instruments 98 Fair value, financial instruments, fair value hierarchy disclosures, Level 1 measurements, Level 3 measurements, third-party pricing sources prose Skyward/2023/FY/Annual report# e570acaf4b92d733aab65e042b186d37 0 Q. Stock-Based Compensation 99 Employee stock options, stock-based compensation, equity instruments, employee stock purchase plan (ESPP) prose Skyward/2023/FY/Annual report# e416f276127b0fd7153b9e9ad0af1e76 0 R. Earnings Per Share 100 Basic earnings per share, two-class method, participating securities, common shares, preferred shares, contingently issuable instruments, treasury stock method prose Skyward/2023/FY/Annual report# fd3c73d77d128400cf0ff2c2f36d49f6 0 S. Recent Accounting Pronouncements 101 Emerging growth company, Jumpstart Our Business Startups Act of 2012 (JOBS Act), ASU 2016-13 (Measurement of Credit Losses on Financial Instruments), ASU 2023-07 (Improvements to Reportable Segment Disclosures) prose Skyward/2023/FY/Annual report# d01f30832c2e35f1ce86092b9bb14f2e 0 2. Goodwill and Intangible Assets 102 Indefinite-lived intangible assets, insurance licenses, trademarks, finite-lived intangible assets, policy renewals, agency relationships, non-compete/exclusivity agreements, amortization expense prose Skyward/2023/FY/Annual report# 19a5c4b589feb9304a510d754e5bf553 0 Goodwill by segment for 2023 103 Goodwill by segment, Accident and Health, Surety, Industry Solutions, Other table Skyward/2023/FY/Annual report# 73730b19bfeee05fa76c01cb3d382031 0 Goodwill by segment for 2022 104 Goodwill by segment, Accident and Health, Surety, Industry Solutions, Other table Skyward/2023/FY/Annual report# 73de0ea77184c18e8535abf37cff82c5 0 Other intangible assets for 2023 105 Other intangible assets, Agent Relationships, Non-competes, Trademarks, Licenses table Skyward/2023/FY/Annual report# 672fa3683bbec4ce4ef2d3bcf7ec29f5 0 Other intangible assets for 2022 106 Other intangible assets, Agent Relationships, Non-competes, Trademarks, Licenses table Skyward/2023/FY/Annual report# 7e84f52fbee1765fa412228fcc781525 0 Future payments by year 107 Future payments by year table Skyward/2023/FY/Annual report# b7cea946020fad1dd979f5e1c389fa47 0 3. Investments 108 Fixed maturity securities, asset-backed securities, available-for-sale fixed maturity securities, impairment assessment, credit impairment, cash and investment securities on deposit prose Skyward/2023/FY/Annual report# d626d5d2c28be9c7d94669b8307783c5 0 Fixed maturity securities at December 31, 2023 109 Fixed maturity securities, available-for-sale, U.S. government securities, corporate securities, municipal securities, residential mortgage-backed securities, commercial mortgage-backed securities table Skyward/2023/FY/Annual report# f0c01f5edb78e9ba91278b099d7ca4ce 0 Fixed maturity securities at December 31, 2022 110 Fixed maturity securities, available-for-sale, U.S. government securities, corporate securities, municipal securities, residential mortgage-backed securities, commercial mortgage-backed securities, other asset-backed securities table Skyward/2023/FY/Annual report# 232c930682564c33fafe606d5dc0b306 0 Maturity distribution of fixed maturity securities 111 Maturity distribution of fixed maturity securities, mortgage-backed securities, other asset-backed securities table Skyward/2023/FY/Annual report# 44a965f0fe6d0153782e5cf83d7afbc2 0 Unrealized losses by duration at December 31, 2023 112 Unrealized losses by duration, fixed maturity securities, available-for-sale, U.S. government securities, corporate securities, municipal securities table Skyward/2023/FY/Annual report# 5d8978d0f7fba9dcf599fe51829401f9 0 Unrealized losses by duration at December 31, 2022 113 Unrealized losses by duration, fixed maturity securities, available-for-sale, U.S. government securities, corporate securities, municipal securities table Skyward/2023/FY/Annual report# 6c00128f225a86ed02b18db0d53c59e2 0 Gross realized gains and losses on investments 114 Gross realized gains and losses on investments, fixed maturity securities, equity securities, mortgage loans, net investment gains (losses) table Skyward/2023/FY/Annual report# a5b50005bf7d79719f54a3a60624c183 0 Proceeds from sales of investments 115 Proceeds from sales of investments, fixed maturity securities, equity securities table Skyward/2023/FY/Annual report# 3cd2faedd2cfde7f781e43250d14e55c 0 Net investment income by source 116 Net investment income by source, fixed maturity securities, equity securities, equity method investments, mortgage loans, indirect loans, short-term investments, investment expenses table Skyward/2023/FY/Annual report# 3b0b932a8b27aa4aa144be6872198826 0 Deferred income taxes 117 Deferred income taxes, fixed maturity securities table Skyward/2023/FY/Annual report# f23624799a2c0c3ef31bc4cc58059a7d 0 4. Fair Value Measurements 118 Financial instruments, fair value, market approach, third-party investment managers, pricing vendors, three-level hierarchy, Level 1, Level 2, Level 3, U.S. government securities, mutual funds, common stock, preferred stocks, municipal securities, corporate securities prose Skyward/2023/FY/Annual report# 879a8af5e6deaef83e0b8cf17061d24a 0 Weighted average interest rates on subordinated debt 119 Weighted average interest rates on subordinated debt table Skyward/2023/FY/Annual report# da69f0023f557ee93dd9bcc7aad23102 0 Fair value hierarchy for investments at December 31, 2023 120 Fair value hierarchy for investments, fixed maturity securities, available-for-sale, U.S. government securities, corporate securities, municipal securities, residential mortgage-backed securities, commercial mortgage-backed securities, other asset-backed securities table Skyward/2023/FY/Annual report# 5f60e3b7da0b60ad63e8baae263e5f79 0 Fair value hierarchy for investments at December 31, 2022 121 Fair value hierarchy, investments, fixed maturity securities, U.S. government securities, corporate securities, municipal securities, residential mortgage-backed securities, commercial mortgage-backed securities, other asset-backed securities table Skyward/2023/FY/Annual report# 884b4fd8c9288d22f73090c0d8a992cc 0 Mortgage loans activity 122 Mortgage loans, net investment gains (losses), issuances, settlements table Skyward/2023/FY/Annual report# 0089c53cbaa196803fc721564ea268a2 0 Notes payable and subordinated debt 123 Notes payable, subordinated debt, term loan, revolving credit facility, junior subordinated interest debentures, unsecured subordinated notes table Skyward/2023/FY/Annual report# 96ff2c49a7900b6dfac5348da7eb69db 0 Investment manager = Arena Investors, LP Largest stockholder = The Westaim Corporation Mortgage loans in foreclosure 2023 = USD 7.1m Mortgage loans in foreclosure 2022 = USD 6.4m Mortgage loans not producing income 2023 = USD 6.8m 5. Mortgage Loans 124 Mortgage loans, Separately Managed Accounts (SMA1, SMA2), Arena Investors, LP, The Westaim Corporation, direct investments, mortgage loan portfolios, interest, principal amounts, mortgage loan participations, uncollectible amounts, foreclosure prose Skyward/2023/FY/Annual report# 0fe4f2577202bd6c6f4200abea90eced 0 Mortgage loans by property type 125 Mortgage loans, property type, retail, commercial, industrial, multi-family, office, hospitality table Skyward/2023/FY/Annual report# fd914b4b803b6d18f87a210f076f6b7d 0 Mortgage loans by property type 126 Mortgage loans, property type, retail, commercial, industrial, multi-family, office, hospitality table Skyward/2023/FY/Annual report# fd48d7be1efe8924fb3326c6d79d96f4 0 Investment manager = Arena Affiliated with = Westaim Investment in Brewer Lane Ventures Fund II, L.P. 2023 = USD 0.4m Investment in Brewer Lane Ventures Fund II, L.P. 2022 = USD 0.2m Investment in Hudson Ventures Fund 2, LP 2023 = USD 0.9m Investment in Hudson Ventures Fund 2, LP 2022 = USD 1.3m RISCOM asset amortization = 15-year useful life JVM Funds LLC asset amortization = 7-year estimated useful life 6. Other Long-Term Investments 127 Equity method investments, Arena Special Opportunities Partners (Feeder) I, LP (Arena SOP), Arena, Westaim, investment products, senior notes, junior notes, Brewer Lane Ventures Fund II, L.P., Hudson Ventures Fund 2, LP, RISCOM, JVM Funds LLC prose Skyward/2023/FY/Annual report# 4dd566468d411d2a592559fb6b0716b3 0 Investments in limited partnerships 128 Investments, limited partnerships, 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/2023/FY/Annual report# f3137eb92da7dd03167fe8e63892715b 0 Investments in limited partnerships 129 Investments, limited partnerships, 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, Brewer Lane Ventures Fund II LP, Universa Black Swan LP units table Skyward/2023/FY/Annual report# 186a5f62246d53c859ae6676a0a0f3d3 0 Investments in limited partnerships 130 Investments, limited partnerships, Brewer Lane Ventures Fund II LP units, Dowling Capital Partners LP units, Hudson Ventures Fund 2 LP units table Skyward/2023/FY/Annual report# 0a0e0bc3ff7a6302f4e31d5b67442743 0 Investment in RISCOM 131 Investment in RISCOM, underlying equity, difference table Skyward/2023/FY/Annual report# 12d122c1a32b7dee1a7599127ab8d461 0 Investment in JVM Funds LLC 132 Investment in JVM Funds LLC, underlying equity, difference table Skyward/2023/FY/Annual report# 756e7137801d29bb4415b5ebebddc096 0 Investments in indirect loans and loan collateral 133 Investments, indirect loans, loan collateral, SMA1, SMA2 table Skyward/2023/FY/Annual report# de0eb952e98a200d1d4977ff37f01fd4 0 Rating agency = A.M. Best Reinsurance balances past due threshold = 90 days 7. Allowance for Credit Losses 134 Allowance for credit losses, premiums receivable, credit risk, reinsurance recoverables, A.M. Best, financial strength rating, credit enhancements, reinsurance payables, letters of credit, funds held, uncollectible reinsurance prose Skyward/2023/FY/Annual report# 4f7a971ea51e686b35f4deb7083cde2a 0 Changes in allowance for estimated uncollectible premiums 135 Allowance for estimated uncollectible premiums, premiums receivable, ASU 2016-13, write-offs, recoveries table Skyward/2023/FY/Annual report# 31fa8243c3e0543f960e96da1eb165c3 0 Reinsurance recoverables by A.M. Best rating 136 Reinsurance recoverables, A.M. Best rating, A- and above, B++ to B+, B to B-, not rated table Skyward/2023/FY/Annual report# 9dbc4f291f03f6ea99846009d9922546 0 Changes in allowance for estimated uncollectible reinsurance 137 Allowance for estimated uncollectible reinsurance, reinsurance recoverables, ASU 2016-13, write-offs table Skyward/2023/FY/Annual report# 12f6f396744972ed6cbaf839f2390659 0 Depreciation expense 2023 = USD 3.2m Depreciation expense 2022 = USD 3.6m 8. Property and Equipment 138 Depreciation expense prose Skyward/2023/FY/Annual report# 7eeb4a9b1051bdfba4bcf84516d26336 0 Property and equipment, net 139 Property and equipment, leasehold improvements, equipment, software, accumulated depreciation table Skyward/2023/FY/Annual report# 7b4e890372664ad146dc77d7427c20bb 0 Lease expense 2023 = USD 2.8m Lease expense 2022 = USD 2.6m 9. Leases 140 Leases, right-of-use asset, lease liability, lease payments, incremental borrowing rate, office facilities, operating leases, lease terms, options to extend, lease expense prose Skyward/2023/FY/Annual report# 6bbb1ee9a17da19b4753dd451ee75a6e 0 Operating lease assets and liabilities 141 Operating lease assets, operating lease liabilities, operating lease weighted-average remaining lease term, operating lease weighted-average discount rate table Skyward/2023/FY/Annual report# fe289aa5afb07e2525fb37722643e861 0 Lease expense and cash outflows 142 Lease expense, cash outflows, operating lease expense, short-term lease expense, operating cash outflows from operating leases table Skyward/2023/FY/Annual report# 7d69ae5d7e4ff4e1b82385962d7eb185 0 Future minimum operating lease payments 143 Future minimum operating lease payments, imputed interest, total operating lease liability table Skyward/2023/FY/Annual report# cb0c05bc38ae969978dfd8726a00cada 0 Unsecured subordinated notes principal = USD 20.0m Interest rate (first 8 years) = 7.25% Interest rate (thereafter) = 8.25% Maturity date (unsecured subordinated notes) = May 24, 2039 Debt issuance costs = USD 0.5m Capital securities principal = USD 58.0m Common stock issued to Trust = USD 1.8m Debentures principal = USD 59.8m Maturity date (Debentures) = September 15, 2036 10. Subordinated Debt 144 Subordinated debt, unsecured subordinated notes, interest, principal, debt issuance costs, fixed/floating rate capital securities, Trust, common stock, Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures (Debentures) prose Skyward/2023/FY/Annual report# a49c5f8522cd75f5e7b54a2dc2fc5d0e 0 Subordinated debt, net of debt issuance costs 145 Subordinated debt, debt issuance costs table Skyward/2023/FY/Annual report# a5f7f79b58aedbd3f710d7ac439f5554 0 Revolving Credit Facility = USD 150.0m Accordion feature = USD 50.0m Letter of credit sub-facility = USD 30.0m Drawn on Revolving Credit Facility = USD 50.0m Interest rate = SOFR plus a margin of between 150 and 190 basis points Credit spread adjustment = 10 basis points Six-month SOFR (Dec 31, 2023) = 5.47% Previous term loan interest rate (Dec 31, 2022) = one-month LIBOR (4.39%) plus 1.65% Previous revolving line of credit fee = 0.25% on unused portion 11. Notes Payable 146 Unsecured revolving credit facility, term loan, interest rates, covenants prose Skyward/2023/FY/Annual report# 4e811d6339bdd5846f513cc013c680cb 0 Interest payments on debt 147 Interest payments on terminated term loan, interest payments on revolving credit facility table Skyward/2023/FY/Annual report# 342196cbfb24e996164036f7e6688eab 0 Reverse stock split = 4-for-1 Reverse stock split effective date = January 3, 2023 IPO date = January 18, 2023 Shares offered in IPO = 4,750,000 IPO price per share = $15.00 Net proceeds from IPO = approximately $62.0 million Authorized common stock shares = 500,000,000 Authorized preferred stock shares = 10,000,000 Preferred Shares converted to common stock (Jan 18, 2023) = 1,969,660 Preferred Shares to 16,305,113 common shares 12. Stockholders’ Equity 148 Reverse stock split, initial public offering (IPO), authorized shares, preferred shares, follow-on offering prose Skyward/2023/FY/Annual report# a3b7b927aa745a94a70ba841f7869511 0 Federal statutory income tax rate = 21% Federal income taxes paid (FY23) = USD 15.8m Federal net operating loss carryforwards = approximately USD 49.4m Capital loss carryforward deferred tax asset (Dec 31, 2023) = USD 0.7m 13. Income Taxes 149 Income taxes, statutory tax rate, tax adjustments, federal income taxes, net operating loss carryforwards, capital loss carryforward, deferred tax valuation allowance prose Skyward/2023/FY/Annual report# 70a294319b3b20dac622adccf853a32c 0 Income tax expense 150 Current income tax expense, deferred tax expense, total income tax expense table Skyward/2023/FY/Annual report# 9b2051d8805f685b98495e7401d49846 0 Reconciliation of income tax expense 151 Income tax expense at federal statutory rate, tax advantaged investments, other table Skyward/2023/FY/Annual report# 8db22d9a99b48e6c451f95fa9db87eec 0 Deferred tax assets 152 Deferred tax assets, net operating losses, losses and loss adjustment expenses, unearned premiums, unrealized losses on fixed maturity securities, stock options/awards, deferred policy acquisition costs, other long-term investments, Section 481(a) adjustment, unrealized gains on equity table Skyward/2023/FY/Annual report# dad2181c18fa4d83e2f8754c9dbada58 0 14. Reserves for Losses and Loss Adjustment Expenses 153 Loss development, net ultimate loss and LAE, multiline solutions, short tail/monoline specialty lines, exited lines, claims characteristics, longer-tail nature prose Skyward/2023/FY/Annual report# 5ad2890403def43f8f4c635dada4bfab 0 Activity in reserves for losses and LAE 154 Reserves for losses and LAE, reinsurance recoverable on unpaid claims, incurred losses, paid losses table Skyward/2023/FY/Annual report# 93193ae9037198318d953377daca057c 0 Short Duration Contract Disclosures 155 Losses and LAE reserves, estimated reserves, claim counts prose Skyward/2023/FY/Annual report# ad056f610272bc544a761c3323927857 0 Incurred losses and LAE, net of reinsurance 156 Incurred losses and LAE, IBNR, reported claims by accident year table Skyward/2023/FY/Annual report# 1c8d0b7f8d1a67cdc738a028492119b8 0 Cumulative paid losses and LAE, net of reinsurance by accident year 157 Cumulative paid losses and LAE by accident year table Skyward/2023/FY/Annual report# 743621c3b5f0c12239351182a488702b 0 Incurred losses and LAE, net of reinsurance by accident year 158 Incurred losses and LAE, IBNR, reported claims by accident year table Skyward/2023/FY/Annual report# 2dbc8db45650828f2ad249abe2f810e3 0 Cumulative paid losses and LAE, net of reinsurance by accident year 159 Cumulative paid losses and LAE by accident year table Skyward/2023/FY/Annual report# a2ae4f6922a77ddd3a410fa1db9a2052 0 Exited Lines — all lines in runoff 160 Exited lines, net incurred and paid loss development tables, balance sheet reserves, historical average annual payout, claims duration prose Skyward/2023/FY/Annual report# 10563ffddf888c6e945802f44d2129ec 0 Historical average annual payout of incurred losses and LAE for short-duration contracts 161 Incurred losses and LAE, IBNR, reported claims by accident year table Skyward/2023/FY/Annual report# 7ba3bd4b77a84d586fe2d973b694e499 0 Cumulative paid losses and LAE, net of reinsurance by accident year 162 Cumulative paid losses and LAE by accident year table Skyward/2023/FY/Annual report# d4fa1d6296b91678517261b86284f04d 0 Net reserves for losses and LAE and reinsurance recoverable on unpaid claims 163 Net reserves for losses and LAE, reinsurance recoverable on unpaid claims, short tail/monoline specialty, multi-line solutions, exited lines table Skyward/2023/FY/Annual report# bc883902595bfbc3dad7a00f475a7aad 0 Average annual percentage payout of incurred claims by age, net of reinsurance 164 Average annual percentage payout of incurred claims by age, short tail/monoline specialty, multi-line solutions, exited lines table Skyward/2023/FY/Annual report# bafe444b5f5482529c770efb6bb81096 0 Commission and fee income (FY23) = USD 10.9m Commission and fee income (FY22) = USD 10.2m Contract assets opening balance (FY23) = USD 0.3m Contract assets closing balance (FY23) = USD 0.3m Contract assets opening balance (FY22) = USD 0.3m Contract assets closing balance (FY22) = USD 0.3m 15. Commission and Fee Income 165 Commission and fee income, contract assets prose Skyward/2023/FY/Annual report# 0f7724c75ab6992b512626a566e62802 0 Commission and fee income 166 SUA commission revenue, SUA fee income, other table Skyward/2023/FY/Annual report# 695de07c5dffdb79c02796800e2591fe 0 Contract assets 167 Contract assets balance table Skyward/2023/FY/Annual report# f763850ebe8cc731c611acde9fe0d9d2 0 Underwriting, acquisition and insurance expenses (FY23) = USD 309,000 Underwriting, acquisition and insurance expenses (FY22) = USD 230,000 16. Underwriting, Acquisition and Insurance Expenses 168 Underwriting, acquisition and insurance expenses prose Skyward/2023/FY/Annual report# da3f663cb9d4e215e5b0cdec3a3e220a 0 Underwriting, acquisition and insurance expenses 169 Amortization of policy acquisition costs, other operating and general expenses, total underwriting, acquisition and insurance expenses table Skyward/2023/FY/Annual report# 272e2c2df28636f2ad87bd1e48eea15f 0 Market value of trust accounts = USD 158.1m at December 31, 2023 LPT retroactive reinsurance agreement = first quarter of 2020 Reinsurance protection = USD 127.4m Reserves for certain divisions strengthened = USD 14.4m in 2022 Recognized gain = USD 5.8m Deposit assets = USD 29.9m as of December 31, 2023 17. Reinsurance 170 Reinsurance agreements, funded trust accounts, LPT retroactive reinsurance agreement, deposit method of accounting, deposit assets prose Skyward/2023/FY/Annual report# 2cf3bf9eec0c5af4a6a6c6f8e3ca57da 0 Deposit assets 171 Direct premiums, assumed premiums, ceded premiums, net premiums, ceded losses and LAE incurred table Skyward/2023/FY/Annual report# b946f98da1908e37b828b44eedffbb50 0 Ceded unpaid losses and LAE and reinsurance recoverables 172 Ceded unpaid losses and LAE, ceded paid losses and LAE, loss portfolio transfer, allowance for credit losses, reinsurance recoverables, ceded unearned premium table Skyward/2023/FY/Annual report# bcbecabd56f31e5e52be8e72e9325701 0 Impact of loss portfolio transfer 173 Strengthening of reserves subject to the LPT, reinsurance recoveries under the LPT, pretax net impact of the LPT table Skyward/2023/FY/Annual report# ace40e39fc6b2aa7e5df441457d6177d 0 2022 Long-Term Incentive Plan effective = January 12, 2023 Shares available under 2022 Plan = 3,200,656 Shares granted under 2022 Plan = 1,101,856 in 2023 Shares granted under 2021 Plan = 198,842 in 2022 Shares granted to Board of Directors = 23,482 in 2023 Fair value of restricted stock and units = USD 15.00 per share Stock options granted = 759,990 in 2023 18. Stock-Based Compensation 174 2022 Long-Term Incentive Plan, 2021 Long Term Incentive Plan, restricted stock, restricted stock units, performance stock units, stock options, cash-based performance awards prose Skyward/2023/FY/Annual report# 0134cca3c6bd4ecb048132d4435c3e81 0 Equity incentive plan awards 175 Market condition awards, performance condition awards, service condition awards, stock options, restricted stock unit awards table Skyward/2023/FY/Annual report# 483b983f9bf7f5d6f01c13b92a1bdfda 0 Stock option activity 176 Stock option activity, granted, outstanding table Skyward/2023/FY/Annual report# 8818bd896e38d413050fdf849eb4ef63 0 Non-vested stock and stock units activity 177 Non-vested stock and stock units activity, granted, vested, forfeited table Skyward/2023/FY/Annual report# 0f6db139d790e9b59afdc6f951c6ec3c 0 19. Earnings Per Share 178 Basic net earnings per share, diluted net earnings per share, anti-dilutive instruments, contingently issuable instruments prose Skyward/2023/FY/Annual report# cd0cbff4caa2abe95e9e3e3e46743cd6 0 Earnings per share 179 Net income, undistributed income, net income attributable to common shareholders, basic weighted-average common shares, dilutive effect of preferred shares, dilutive effect of stock notes, dilutive effect of awarded stock units, dilutive effect of awarded options, diluted weighted-average common share equivalents table Skyward/2023/FY/Annual report# 1e26a403376100f9846aa6d7709cef24 0 Anti-dilutive instruments excluded from diluted weighted-average common share equivalents 180 Stock notes, awarded stock units, awarded options table Skyward/2023/FY/Annual report# 0a2224f20c000e927cc21af73c8a456d 0 Common share equivalents of contingently issuable instruments 181 Common shares, preferred shares table Skyward/2023/FY/Annual report# 063813e5a2c83c5632753894a8421d4b 0 401(k) Plan = available to substantially all employees Matching contributions = USD 2.9 million for 2023 20. Employee Benefit Plans 182 401(k) Plan, Employee Retirement Income Security Act of 1974, matching contributions prose Skyward/2023/FY/Annual report# 1bf70720cc9561d7268d81945e66acee 0 Westaim HIIG LP acquisition = 2014 and 2015 Westaim HIIG LP dissolved = July 2023 Westaim ownership = 17.5% as of December 31, 2023 Westaim ownership (including Westaim HIIG LP) = 44.5% as of December 31, 2022 Shares of Westaim common stock purchased = 3,076,924 for $8.4 million in 2015 Unrealized gain on Westaim investment = $0.5 million at December 31, 2023 Unrealized loss on Westaim investment = $2.3 million at December 31, 2022 Management Services Agreement terminated = upon IPO closing Westaim 183 Westaim HIIG LP, Westaim, equity offerings, preferred common stock conversion, share distribution, Management Services Agreement prose Skyward/2023/FY/Annual report# 8f887b188c3e0c085e13b81e29c8f009 0 RISCOM ownership interest = 20% Premiums receivable from RISCOM = USD 10.6 million as of December 31, 2023 Riscom 184 RISCOM, wholesale brokerage services, managing general agency agreement, premiums receivable prose Skyward/2023/FY/Annual report# fb9059b623ac4c8087835141230b3c4c 0 Premiums receivable from RISCOM 185 Net earned premium, gross written commissions table Skyward/2023/FY/Annual report# dad4aab0f77e3505861e9c189161e52a 0 Reinsurance premiums ceded = $59.6 million for 2022 Reinsurance recoverable from Everest Re = $177.5 million at December 31, 2022 Reinsurance 186 Everest Re, Mt. Whitney Securities, LLC, reinsurance agreements, reinsurance premiums ceded, reinsurance recoverable prose Skyward/2023/FY/Annual report# 301e47c8a4204feee3adf631323920e5 0 Advisory and professional services fees = $3.6 million for 2023 Other 187 Advisory and professional services fees, expense reimbursements, affiliated stockholders, directors prose Skyward/2023/FY/Annual report# 03898cbd741046422354819a3fee6538 0 Litigation 188 Legal actions, claims under insurance policies and contracts, bad faith claims, disputes with third parties, alleged errors and omissions prose Skyward/2023/FY/Annual report# c87fbe0828e9340bbe68f7677d5bd140 0 Indemnification 189 Indemnifications, sale of business assets and subsidiaries, representations and warranties, performance responsibilities prose Skyward/2023/FY/Annual report# 138ea9a35f2cdc60bd6816c5308e7dde 0 Contingent Consideration Related to Acquisitions 190 Earn-out liabilities, acquired assets and businesses, earn-out payments prose Skyward/2023/FY/Annual report# 751428d2ad578c4b79408aa65139fa6e 0 HSIC not restricted from paying ordinary dividends = As of December 31, 2023 HSIC did not declare or pay dividend = 2023 and 2022 HSIC’s statutory capital and surplus = substantially exceeded regulatory requirements as of December 31, 2023 and 2022 23. Statutory Accounting Principles and Regulatory Matters 191 Dividend payments, Texas state law, policyholder surplus, net income, Risk Based Capital (RBC) requirements, National Association of Insurance Commissioners (NAIC), HSIC’s statutory capital and surplus prose Skyward/2023/FY/Annual report# 07c2ca2982b6edbd932a0be0ff4f981f 0 Statutory net income and capital and surplus 192 Statutory net income, statutory capital and surplus table Skyward/2023/FY/Annual report# 8d628cbf02239c1d26cc6d2c2bf5aaf7 0 Debentures redemption date = March 15, 2024 Accrued interest paid = $1.4 million Revolving Credit Facility draw = $50.0 million Revolving Credit Facility outstanding = $100.0 million Revolving Credit Facility undrawn capacity = $50.0 million 24. Subsequent Events 193 Debentures redemption, Revolving Credit Facility draw, accrued interest, existing cash prose Skyward/2023/FY/Annual report# 547317c4be5b5ba6371c8fd66df653b5 0 Evaluation date = December 31, 2023 Disclosure controls and procedures effectiveness = effective at the reasonable assurance level Evaluation of Disclosure Controls and Procedures 194 Disclosure controls and procedures, management evaluation, principal executive officer, principal financial officer prose Skyward/2023/FY/Annual report# 73d6701a865ed0a6d32b646d5c60d9ad 0 Assessment date = December 31, 2023 Framework = Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission Management’s Report on Internal Control over Financial Reporting 195 Internal control over financial reporting, management responsibility, GAAP, COSO framework prose Skyward/2023/FY/Annual report# f9d9e6a248ebbf511a58f70606a46ce6 0 Year ended = December 31, 2023 Changes in Internal Control over Financial Reporting 196 Internal control over financial reporting, identified changes, evaluation prose Skyward/2023/FY/Annual report# 3f52febf487f48c2796842320d629e4b 0 Financial statement schedules 197 Summary of Investments, Condensed Financial Information, Supplementary Reinsurance Information, Valuation and Qualifying Accounts, Supplementary Information Concerning Property — Casualty Insurance Operations table Skyward/2023/FY/Annual report# 3f40d74c8d67999df3adba5cbe394a4d 0 Exhibits 198 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 table Skyward/2023/FY/Annual report# be10f567544909622c820961d1ee23eb 0 Exhibits 199 Form of Restricted Stock Units Agreement, 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 table Skyward/2023/FY/Annual report# 6bd7f7d34a96c957b6dd37685fe78ee0 0 List of exhibits 200 Investment Management Agreement, Second Amendment Agreement, Credit Agreement, First Amendment, Guaranty Agreement table Skyward/2023/FY/Annual report# 4d21cc9ab3d3690c8c655d1325d94f34 0 Fixed maturity securities 201 Fixed maturity securities, U.S. government securities, Corporate securities, Municipal securities, Residential mortgage-backed securities, Commercial mortgage-backed securities, Other asset-backed securities table Skyward/2023/FY/Annual report# 76f7f172ef0c75b297e3d11e1bd9e1b1 0 Assets 202 Investments, Investment in subsidiaries, Short-term investments, Cash and cash equivalents, Deferred income taxes, Goodwill and intangible assets, Other assets, Accounts payable and accrued liabilities, Notes payable, Subordinated debt table Skyward/2023/FY/Annual report# 306f3694ab205c12fa961cd7626e55df 0 Revenues and expenses 203 Net investment income, Net investment losses, Other losses, Interest expense, Amortization expense, Other expenses, Loss before income tax expense, Income tax expense (benefit), Net loss before equity in earnings of subsidiaries, Equity in undistributed earnings of subsidiaries table Skyward/2023/FY/Annual report# 09e025c589c7eb6174104808b89467ea 0 Cash flows 204 Cash flows from operating activities, Net income, Adjustments to reconcile net income to net cash used in operating activities, Net cash provided by operating activities, Capital contributions to subsidiaries, Distributions from investment in subsidiaries, Change in short-term investments, Net cash (used in) provided by investing activities, Employee share purchases, Draw on revolving line of credit, Repayment of term loan, Proceeds from equity offerings table Skyward/2023/FY/Annual report# 199b953d3bbe1578bf7e9bdaf0cf347f 0 Reinsurance activity 205 Reinsurance activity, Gross amount, Ceded to other companies, Assumed from other companies, Net amount, Percentage of amount assumed to net, Accident & Health, Property & Casualty table Skyward/2023/FY/Annual report# ff661c9f3d4a8a196357fca7c28d8547 0 Valuation allowances 206 Valuation Allowance For Deferred Tax Assets, Allowance for Uncollectible Reinsurance Recoverable, Allowance for Uncollectible Premiums Receivable, Balance at January 1, 2022, Charged to costs and expenses, Amounts written off, Cumulative effect of adoption of ASU 2016-13, Recoveries of amounts previously written off, Balance at December 31, 2023 table Skyward/2023/FY/Annual report# 9addf94595176e86883f160a8605fd2e 0 Financial data 207 Deferred policy acquisition costs, Reserve for losses and loss adjustment expenses, Unearned premiums, Net earned premium, Net investment income, Losses and loss adjustment expenses (current year), Losses and loss adjustment expenses (prior years), Amortization of policy acquisition costs, Paid claims and claim adjustment expenses, Net premiums written, Ceded unearned premium, Deferred ceding commission table Skyward/2023/FY/Annual report# 6faa91d3c47832331ad7fe2060dec3c9 0 Signatures 208 Registrant, undersigned, Securities Exchange Act of 1934 prose Skyward/2023/FY/Annual report# ab269a289735f712c0b860c4baf2682e 0 Signatures for the report 209 Skyward Specialty Insurance Group, Inc., Andrew Robinson, Chairman and Chief Executive Officer table Skyward/2023/FY/Annual report# 8cbdabbc1bc5b7b7e2c14731548e6414 0 Signatures, titles, and dates 210 Signatures, titles, dates, Andrew Robinson, Mark Haushill, Gena Ashe, Robert Creager, Marcia Dall, James Hays table Skyward/2023/FY/Annual report# d030d7c7200bcd03c406ad0b0676cd83