Skyward Specialty Insurance Group Reports Third Quarter 2024 Results

GlobeNewswire Inc.

October 29, 2024 8:05PM GMT

HOUSTON, Oct. 29, 2024 (GLOBE NEWSWIRE) -- Skyward Specialty Insurance Group, Inc. (Nasdaq: SKWD) (“Skyward Specialty” or the “Company”) today reported third quarter 2024 net income of $36.7 million, or $0.89 per diluted share, compared to $21.7 million, or $0.57 per diluted share, for the same 2023 period. Net income for the first nine months of 2024 was $104.4 million, or $2.53 per diluted share, compared to $56.7 million, or $1.50 per diluted share, for the same 2023 period.

Adjusted operating income(1) for the third quarter of 2024 was $29.4 million, or $0.71 per diluted share, compared to $25.0 million, or $0.65 per diluted share, for the same 2023 period. Adjusted operating income(1) for the first nine months of 2024 was $93.4 million, or $2.26 per diluted share, compared to $56.5 million, or $1.49 per diluted share, for the same 2023 period.

Highlights for the third quarter included:

  • Gross written premiums of $400.0 million an increase of 12.4% compared to the third quarter of 2023.
  • Combined ratio of 92.2% and ex-Cat combined ratio of 89.4% compared to 90.2% and 89.8%, respectively, for the third quarter of 2023.
  • Annualized return on equity of 19.1% through the first nine months of 2024 compared to 15.8% for the same 2023 period.
  • Book value per share of $19.89, an increase of 19% compared to December 31, 2023.

(1) See "Reconciliation of Non-GAAP Financial Measures"

Skyward Specialty Chairman and CEO Andrew Robinson commented, "These past weeks have proven to be a very difficult time and our thoughts continue to be with those impacted by Hurricanes Helene and Milton; I am proud of the extraordinary efforts of our claims team and partners who continue to deliver exceptional service to our customers affected by these catastrophes."

"As for our third quarter, our results reflect our continued excellent execution of our "Rule our Niche" strategy, and our disciplined underwriting and our strategic risk management. Our adjusted operating income was up nearly 18% over the prior year quarter, continuing the trend of strong earnings growth we have delivered every quarter as a public company, and our 19.1% annualized return on equity year to date is outstanding. We delivered gross written premiums growth of 12.4% over the prior year quarter while continuing to increase our mix of business to areas that are less exposed to the P&C cycles. Given investments into our business, the momentum building in certain divisions, and with full consideration for the market backdrop, I am confident that we are well positioned to deliver strong growth as we look forward to the coming quarters."

Results of Operations

Underwriting Results

Premiums

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Three months ended September 30,

 

Nine months ended September 30,

unaudited

 

 

2024

 

 

 

2023

 

 

% Change

 

 

2024

 

 

 

2023

 

 

% Change

Gross written premiums

 

$

400,014

 

 

$

355,732

 

 

12.4

%

 

$

1,354,877

 

 

$

1,138,224

 

 

19.0

%

Ceded written premiums

 

$

(131,692

)

 

$

(75,036

)

 

75.5

%

 

$

(502,326

)

 

$

(441,650

)

 

13.7

%

Net retention

 

 

67.1

%

 

 

78.9

%

 

NM

 (1)

 

 

 

62.9

%

 

 

61.2

%

 

NM

 (1)

 

Net written premiums

 

$

268,322

 

 

$

280,696

 

 

(4.4

)%

 

$

852,551

 

 

$

696,574

 

 

22.4

%

Net earned premiums

 

$

269,557

 

 

$

227,033

 

 

18.7

%

 

$

763,482

 

 

$

604,211

 

 

26.4

%

(1) Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The increase in gross written premiums for the third quarter and first nine months of 2024, when compared to the same 2023 periods, was driven by double-digit premium growth primarily from our transactional E&S, programs, captives, surety and global property & agriculture underwriting divisions.

During the third quarter and first nine months of 2023, the Company cancelled a quota share reinsurance contract. Excluding the impact of the cancellation, net written premiums for the third quarter and first nine months of 2024 increased 16.5%(2) and 32.0%(2), respectively, when compared to the same 2023 periods.

Combined Ratio

 

Three months ended September 30,

 

Nine months ended September 30,

(unaudited)

 

2024

 

2023

 

2024

 

2023

Non-cat loss and LAE

(1)

 

60.6

%

 

60.7

%

 

60.6

%

 

60.9

%

Cat loss and LAE

(1)

 

2.8

%

 

0.4

%

 

1.5

%

 

1.8

%

Prior accident year development - LPT

(2)

 

(0.1

)%

 

(0.1

)%

 

(0.1

)%

 

(0.2

)%

Loss Ratio

 

63.3

%

 

61.0

%

 

62.0

%

 

62.5

%

Net policy acquisition costs

 

13.9

%

 

15.0

%

 

13.9

%

 

13.0

%

Other operating and general expenses

 

15.7

%

 

15.1

%

 

15.8

%

 

16.3

%

Commission and fee income

 

(0.7

)%

 

(0.9

)%

 

(0.8

)%

 

(1.0

)%

Expense ratio

 

28.9

%

 

29.2

%

 

28.9

%

 

28.3

%

Combined ratio

 

92.2

%

 

90.2

%

 

90.9

%

 

90.8

%

Ex-Cat Combined Ratio(3)

 

89.4

%

 

89.8

%

 

89.4

%

 

89.0

%

 

 

 

 

 

 

 

 

 

Adjusted Underwriting Ratios

 

 

 

 

 

 

 

 

Adjusted loss ratio

(2)

 

63.4

%

 

61.1

%

 

62.1

%

 

62.7

%

Expense ratio

 

28.9

%

 

29.2

%

 

28.9

%

 

28.3

%

Adjusted combined ratio

(2)

 

92.3

%

 

90.3

%

 

91.0

%

 

91.0

%

(1) Current accident year

(2) See "Reconciliation of Non-GAAP Financial Measures"

(3) Defined as the combined ratio excluding cat loss and LAE(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The loss ratios for the third quarter and first nine months of 2024 increased 2.3 points and improved 0.5 points, respectively, when compared to the same 2023 periods. The third quarter of 2024 was impacted by higher catastrophe losses, primarily from Hurricanes Helene and Beryl.

The expense ratios for the third quarter and first nine months of 2024 were comparable to the same 2023 periods.

The expense ratios for all periods presented exclude the impact of IPO related stock compensation and secondary offering expenses, which are reported in other expenses in our condensed consolidated statements of operations and comprehensive income.

Investment Results

Net Investment Income

 

 

 

 

 

 

 

 

$ in thousands

 

Three months ended September 30,

 

Nine months ended September 30,

(unaudited)

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

2023

 

Short-term investments & cash and cash equivalents

 

$

4,537

 

 

$

3,022

 

 

$

13,645

 

$

8,007

 

Fixed income

 

 

15,458

 

 

 

9,488

 

 

 

41,722

 

 

24,867

 

Equities

 

 

596

 

 

 

650

 

 

 

1,974

 

 

1,332

 

Alternative & strategic investments

 

 

(1,070

)

 

 

(71

)

 

 

2,615

 

 

(7,888

)

Net investment income

 

$

19,521

 

 

$

13,089

 

 

$

59,956

 

$

26,318

 

Net unrealized gains (losses) on securities still held

 

$

8,378

 

 

$

(6,391

)

 

$

15,609

 

$

2,394

 

Net realized gains

 

 

1,809

 

 

 

3,407

 

 

 

1,056

 

 

934

 

Net investment gains (losses)

 

$

10,187

 

 

$

(2,984

)

 

$

16,665

 

$

3,328

 

 


Beginning January 1, 2024 we simplified the investment portfolio classifications to align with our strategy and the underlying risk characteristics of the portfolio. The prior period has been reclassified to conform to the current period presentation.

Net investment income for the third quarter and first nine months of 2024 increased $6.4 million and $33.6 million, respectively when compared to the same 2023 periods, primarily driven by increased income from our fixed income portfolio and short-term investments due to higher yields and larger asset bases.

Stockholders’ Equity

Stockholders’ equity was $797.5 million at September 30, 2024 which represents an increase of 10.2% when compared to stockholders' equity of $723.6 million at June 30, 2024. The increase in stockholders’ equity was primarily due to net income and an increase in the market value of our investment portfolio.

Share Repurchase Authorization

In October 2024, the Company's Board of Directors authorized a share repurchase program authorizing the repurchase of up to $50.0 million of the Company's common stock.

Skyward Specialty Chairman and CEO Andrew Robinson commented, “The share repurchase program allows Skyward to opportunistically deploy our capital in an accretive fashion and ultimately drive long-term value creation for our shareholders. Given our strong cash position and financing flexibility, the repurchase program will not limit our ability to support our near-term growth or our flexibility to support ongoing investment in the key growth areas of our business, or to capture additional value creating opportunities.”

The shares may be repurchased from time to time in open market purchases, privately-negotiated transactions, block purchases, accelerated share repurchase agreements or a combination of methods and pursuant to safe harbors provided by Rule 10b-18 and Rule 10b5-1 under the Securities Exchange Act of 1934. The timing, manner, price and amount of any repurchases under the share repurchase program will be determined by the Company in its discretion. The stock repurchase program does not require the Company to repurchase any specific number of shares, and may be modified, suspended or terminated at any time.

Conference Call

At 9:30 a.m. eastern time tomorrow, October 30, 2024, Skyward Specialty management will hold a conference call to discuss quarterly results with insurance industry analysts. Interested parties may listen to the discussion at investors.skywardinsurance.com under Events & Presentations. Additionally, investors can access the earnings call via conference call by registering via the conference link. Users will receive dial-in information and a unique PIN to join the call upon registering.

Non-GAAP Financial Measures

This release contains certain financial measures and ratios that are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). We refer to these measures as “non-GAAP financial measures.” We use these non-GAAP financial measures when planning, monitoring, and evaluating our performance.

We have chosen to exclude the net impact of the Loss Portfolio Transfer (“LPT”), all development on reserves fully or partially covered by the LPT and amortization of deferred gains associated with recoveries of prior LPT reserve strengthening in certain non-GAAP metrics, where noted, as the business subject to the LPT is not representative of our continuing business strategy. The business subject to the LPT is primarily related to policy years 2017 and prior, was generated and managed under prior leadership, and has either been exited or substantially repositioned during the reevaluation of our portfolio. We consider these non-GAAP financial measures to be useful metrics for our management and investors to facilitate operating performance comparisons from period to period. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered supplemental in nature and is not meant to be a substitute for revenue or net income, in each case as recognized in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate such measures differently, which reduces their usefulness as comparative measures. For more information regarding these non-GAAP financial measures and a reconciliation of such measures to comparable GAAP financial measures, see the section entitled “Reconciliation of Non-GAAP Financial Measures.”

About Skyward Specialty Insurance Group, Inc.

Skyward Specialty is a rapidly growing and innovative specialty insurance company, delivering commercial property and casualty products and solutions on a non-admitted and admitted basis. The Company operates through eight underwriting divisions - Accident & Health, Captives, Global Property & Agriculture, Industry Solutions, Professional Lines, Programs, Surety and Transactional E&S. SKWD stock is traded on the Nasdaq Global Select Market, which represents the top fourth of all Nasdaq listed companies.

Skyward Specialty's subsidiary insurance companies consist of Houston Specialty Insurance Company, Imperium Insurance Company, Great Midwest Insurance Company, and Oklahoma Specialty Insurance Company. These insurance companies are rated A (Excellent) with stable outlook by A.M. Best Company. Additional information about Skyward Specialty can be found on our website at www.skywardinsurance.com.

Forward-Looking Statements

Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are typically, but not always, identified through use of the words "believe," "expect," "enable," "may," "will," "could," "intends," "estimate," "anticipate," "plan," "predict," "probable," "potential," "possible," "should," "continue," and other words of similar meaning. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in Skyward Specialty's Form 10-K, and include (but are not limited to) legislative changes at both the state and federal level, state and federal regulatory rule making promulgations and adjudications, class action litigation involving the insurance industry and judicial decisions affecting claims, policy coverages and the general costs of doing business, the potential loss of key members of our management team or key employees and our ability to attract and retain personnel, the impact of competition on products and pricing, inflation in the costs of the products and services insurance pays for, product development, geographic spread of risk, weather and weather-related events, other types of catastrophic events, our ability to obtain reinsurance coverage at prices and on terms that allow us to transfer risk and adequately protect our company against financial loss, and losses resulting from reinsurance counterparties failing to pay us on reinsurance claims. These forward-looking statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Skyward Specialty Insurance Group, Inc.

Investor contact:
Natalie Schoolcraft,
nschoolcraft@skywardinsurance.com
614-494-4988

or

Media contact:
Haley Doughty
hdoughty@skywardinsurance.com
713-935-4944

Skyward Specialty Insurance Group, Inc.

Consolidated Balance Sheets

 

 

 

 

($ in thousands, except share and per share amounts)

 

 

 

 

(unaudited)

 

September 30, 2024

 

December 31, 2023

Assets

 

 

 

 

Investments:

 

 

 

 

Fixed maturity securities, available-for-sale, at fair value (amortized cost of $1,359,700 and $1,047,713, respectively)

 

$

1,357,500

 

 

$

1,017,651

 

Fixed maturity securities, held-to-maturity, at amortized cost (net of allowance for credit losses of $239 and $329, respectively)

 

 

39,321

 

 

 

42,986

 

Equity securities, at fair value

 

 

124,719

 

 

 

118,249

 

Mortgage loans, at fair value

 

 

36,267

 

 

 

50,070

 

Equity method investments

 

 

102,111

 

 

 

110,653

 

Other long-term investments

 

 

23,802

 

 

 

3,852

 

Short-term investments, at fair value

 

 

206,358

 

 

 

270,226

 

Total investments

 

 

1,890,078

 

 

 

1,613,687

 

Cash and cash equivalents

 

 

105,573

 

 

 

65,891

 

Restricted cash

 

 

45,783

 

 

 

34,445

 

Premiums receivable, net

 

 

327,176

 

 

 

179,235

 

Reinsurance recoverables, net

 

 

686,725

 

 

 

596,334

 

Ceded unearned premium

 

 

236,962

 

 

 

186,121

 

Deferred policy acquisition costs

 

 

119,910

 

 

 

91,955

 

Deferred income taxes

 

 

18,502

 

 

 

21,991

 

Goodwill and intangible assets, net

 

 

87,607

 

 

 

88,435

 

Other assets

 

 

80,547

 

 

 

75,341

 

Total assets

 

$

3,598,863

 

 

$

2,953,435

 

Liabilities and stockholders’ equity

 

 

 

 

Liabilities:

 

 

 

 

Reserves for losses and loss adjustment expenses

 

$

1,568,777

 

 

$

1,314,501

 

Unearned premiums

 

 

692,452

 

 

 

552,532

 

Deferred ceding commission

 

 

44,984

 

 

 

37,057

 

Reinsurance and premium payables

 

 

200,967

 

 

 

150,156

 

Funds held for others

 

 

102,219

 

 

 

58,588

 

Accounts payable and accrued liabilities

 

 

73,001

 

 

 

50,880

 

Notes payable

 

 

100,000

 

 

 

50,000

 

Subordinated debt, net of debt issuance costs

 

 

18,956

 

 

 

78,690

 

Total liabilities

 

 

2,801,356

 

 

 

2,292,404

 

Stockholders’ equity

 

 

 

 

Common stock, $0.01 par value, 500,000,000 shares authorized, 40,099,931 and 39,863,756 shares issued and outstanding, respectively

 

 

401

 

 

 

399

 

Additional paid-in capital

 

 

716,095

 

 

 

710,855

 

Stock notes receivable

 

 

 

 

 

(5,562

)

Accumulated other comprehensive loss

 

 

(1,703

)

 

 

(22,953

)

Retained earnings (accumulated deficit)

 

 

82,714

 

 

 

(21,708

)

Total stockholders’ equity

 

 

797,507

 

 

 

661,031

 

Total liabilities and stockholders’ equity

 

$

3,598,863

 

 

$

2,953,435

 

 

 

 

 

 

Skyward Specialty Insurance Group, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income

($ in thousands)

 

Three months ended September 30,

 

Nine months ended September 30,

(unaudited)

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Net earned premiums

 

$

269,557

 

 

$

227,033

 

 

$

763,482

 

 

$

604,211

 

Commission and fee income

 

 

1,818

 

 

 

2,085

 

 

 

5,897

 

 

 

5,817

 

Net investment income

 

 

19,521

 

 

 

13,089

 

 

 

59,956

 

 

 

26,318

 

Net investment gains (losses)

 

 

10,187

 

 

 

(2,984

)

 

 

16,665

 

 

 

3,328

 

Other loss

 

 

(195

)

 

 

 

 

 

(202

)

 

 

 

Total revenues

 

 

300,888

 

 

 

239,223

 

 

 

845,798

 

 

 

639,674

 

Expenses:

 

 

 

 

 

 

 

 

Losses and loss adjustment expenses

 

 

170,521

 

 

 

138,536

 

 

 

473,489

 

 

 

377,841

 

Underwriting, acquisition and insurance expenses

 

 

79,817

 

 

 

68,315

 

 

 

226,270

 

 

 

176,653

 

Interest expense

 

 

2,229

 

 

 

2,632

 

 

 

7,405

 

 

 

7,250

 

Amortization expense

 

 

351

 

 

 

463

 

 

 

1,099

 

 

 

1,336

 

Other expenses

 

 

1,117

 

 

 

1,482

 

 

 

3,350

 

 

 

4,061

 

Total expenses

 

 

254,035

 

 

 

211,428

 

 

 

711,613

 

 

 

567,141

 

Income before income taxes

 

 

46,853

 

 

 

27,795

 

 

 

134,185

 

 

 

72,533

 

Income tax expense

 

 

10,185

 

 

 

6,084

 

 

 

29,763

 

 

 

15,814

 

Net income

 

 

36,668

 

 

 

21,711

 

 

 

104,422

 

 

 

56,719

 

Net income attributable to participating securities

 

 

 

 

 

 

 

 

 

 

 

1,492

 

Net income attributable to common stockholders

 

$

36,668

 

 

$

21,711

 

 

$

104,422

 

 

$

55,227

 

Comprehensive income:

 

 

 

 

 

 

 

 

Net income

 

$

36,668

 

 

$

21,711

 

 

$

104,422

 

 

$

56,719

 

Other comprehensive income:

 

 

 

 

 

 

 

 

Unrealized gains and losses on investments:

 

 

 

 

 

 

 

 

Net change in unrealized gains (losses) on investments, net of tax

 

 

31,396

 

 

 

(8,722

)

 

 

24,527

 

 

 

(5,309

)

Reclassification adjustment for losses on securities no longer held, net of tax

 

 

(1,963

)

 

 

(3,667

)

 

 

(3,277

)

 

 

(4,879

)

Total other comprehensive income (loss)

 

 

29,433

 

 

 

(12,389

)

 

 

21,250

 

 

 

(10,188

)

Comprehensive income

 

$

66,101

 

 

$

9,322

 

 

$

125,672

 

 

$

46,531

 

 

 

 

 

 

 

 

 

 

Skyward Specialty Insurance Group, Inc.

Share and Per Share Data

 

 

 

 

 

 

 

 

($ in thousands, except share and per share amounts)

 

Three months ended September 30,

 

Nine months ended September 30,

(unaudited)

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares

 

 

40,098,345

 

 

 

36,743,393

 

 

 

40,039,269

 

 

 

35,502,843

 

Weighted average diluted shares

 

 

41,428,557

 

 

 

38,403,843

 

 

 

41,302,108

 

 

 

37,830,431

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.91

 

 

$

0.59

 

 

$

2.61

 

 

$

1.56

 

Diluted earnings per share

 

$

0.89

 

 

$

0.57

 

 

$

2.53

 

 

$

1.50

 

Basic adjusted operating earnings per share

 

$

0.73

 

 

$

0.68

 

 

$

2.33

 

 

$

1.55

 

Diluted adjusted operating earnings per share

 

$

0.71

 

 

$

0.65

 

 

$

2.26

 

 

$

1.49

 

 

 

 

 

 

 

 

 

 

Annualized ROE

(1)

 

 

19.3

%

 

 

16.4

%

 

 

19.1

%

 

 

15.8

%

Annualized adjusted ROE

(2)

 

 

15.5

%

 

 

18.9

%

 

 

17.1

%

 

 

15.8

%

Annualized ROTE

(3)

 

 

21.8

%

 

 

19.7

%

 

 

21.7

%

 

 

19.4

%

Annualized adjusted ROTE

(4)

 

 

17.5

%

 

 

22.8

%

 

 

19.4

%

 

 

19.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30

 

December 31

 

 

 

 

 

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

 

 

 

 

 

40,099,931

 

 

 

39,863,756

 

Fully diluted shares outstanding

 

 

 

 

 

 

41,986,881

 

 

 

41,771,854

 

 

 

 

 

 

 

 

 

 

Book value per share

 

 

 

 

 

$

19.89

 

 

$

16.72

 

Fully diluted book value per share

 

 

 

 

 

$

18.99

 

 

$

15.96

 

Fully diluted tangible book value per share

 

 

 

 

 

$

16.91

 

 

$

13.84

 

 

 

 

 

 

 

 

 

 

(1) Annualized ROE is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders' equity during the period

(2) Annualized adjusted ROE is adjusted operating income expressed on an annualized basis as a percentage of average beginning and ending stockholders' equity during the period

(3) Annualized ROTE is net income expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders' equity during the period

(4) Annualized adjusted ROTE is adjusted operating income expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders' equity during the period



Skyward Specialty Insurance Group, Inc.
Reconciliation of Non-GAAP Financial Measures

Adjusted operating income – We define adjusted operating income as net income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. We use adjusted operating income as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Adjusted operating income should not be viewed as a substitute for net income calculated in accordance with GAAP, and other companies may define adjusted operating income differently.        

($ in thousands)

Three months ended September 30,

 

Nine months ended September 30,

(unaudited)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

Pre-tax

 

After-tax

 

Pre-tax

 

After-tax

 

Pre-tax

 

After-tax

 

Pre-tax

 

After-tax

Income as reported

$

46,853

 

 

$

36,668

 

 

$

27,795

 

 

$

21,711

 

 

$

134,185

 

 

$

104,422

 

 

$

72,533

 

 

$

56,719

 

Less (add):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment gains (losses)

 

10,187

 

 

 

8,048

 

 

 

(2,984

)

 

 

(2,357

)

 

 

16,665

 

 

 

13,165

 

 

 

3,328

 

 

 

2,629

 

Net impact of loss portfolio transfer

 

318

 

 

 

251

 

 

 

266

 

 

 

210

 

 

 

800

 

 

 

632

 

 

 

970

 

 

 

766

 

Other loss

 

(195

)

 

 

(154

)

 

 

 

 

 

 

 

 

(202

)

 

 

(160

)

 

 

 

 

 

 

Other expenses

 

(1,117

)

 

 

(882

)

 

 

(1,482

)

 

 

(1,171

)

 

 

(3,350

)

 

 

(2,647

)

 

 

(4,061

)

 

 

(3,208

)

Adjusted operating income

$

37,660

 

 

$

29,405

 

 

$

31,995

 

 

$

25,029

 

 

$

120,272

 

 

$

93,432

 

 

$

72,296

 

 

$

56,532

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Quota Share Reinsurance Cancellation Reconciliation - to exclude the impact of the cancellation of a quota share reinsurance contract on ceded written premiums, net retention, net written premiums and net earned premiums for the three and nine months ended September 30, 2023:

 

Three months ended September 30,

 

 

2024

 

 

 

2023

 

 

%

(unaudited)

As Reported

 

As Reported

 

Adjustment

 

Adjusted

 

Change

Ceded written premiums

$

(131,692

)

 

$

(75,036

)

 

$

(50,462

)

 

$

(125,498

)

 

4.9

%

Net retention

 

67.1

%

 

 

78.9

%

 

 

 

 

64.7

%

 

NM

 (1)

Net written premiums

$

268,322

 

 

$

280,696

 

 

$

(50,462

)

 

$

230,234

 

 

16.5

%

Net earned premiums

$

269,557

 

 

$

227,033

 

 

$

(13,145

)

 

$

213,888

 

 

26.0

%

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

 

2024

 

 

 

2023

 

 

%

 

As Reported

 

As Reported

 

Adjustment

 

Adjusted

 

Change

Ceded written premiums

$

(502,326

)

 

$

(441,650

)

 

$

(50,462

)

 

$

(492,112

)

 

2.1

%

Net retention

 

62.9

%

 

 

 

 

 

 

56.8

%

 

NM

 (1)

Net written premiums

$

852,551

 

 

$

696,574

 

 

$

(50,462

)

 

$

646,112

 

 

32.0

%

Net earned premiums

$

763,482

 

 

$

604,211

 

 

$

(13,145

)

 

$

591,066

 

 

29.2

%

 

 

 

 

 

 

 

 

 

 

(1) Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Underwriting income – We define underwriting income as net income before income taxes excluding net investment income, net realized and unrealized gains and losses on investments, impairment charges, interest expense, amortization expense and other income and expenses. Underwriting income represents the pre-tax profitability of our underwriting operations and allows us to evaluate our underwriting performance without regard to investment income. We use this metric as we believe it gives our management and other users of our financial information useful insight into our underlying business performance. Underwriting income should not be viewed as a substitute for pre-tax income calculated in accordance with GAAP, and other companies may define underwriting income differently.

($ in thousands)

 

Three months ended September 30,

 

Nine months ended September 30,

(unaudited)

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

2023

Income before federal income tax expense

 

$

46,853

 

 

$

27,795

 

 

$

134,185

 

 

$

72,533

Add:

 

 

 

 

 

 

 

 

Interest expense

 

 

2,229

 

 

 

2,632

 

 

 

7,405

 

 

 

7,250

Amortization expense

 

 

351

 

 

 

463

 

 

 

1,099

 

 

 

1,336

Other expenses

 

 

1,117

 

 

 

1,482

 

 

 

3,350

 

 

 

4,061

Less:

 

 

 

 

 

 

 

 

Net investment income

 

 

19,521

 

 

 

13,089

 

 

 

59,956

 

 

 

26,318

Net investment gains (losses)

 

 

10,187

 

 

 

(2,984

)

 

 

16,665

 

 

 

3,328

Other loss

 

 

(195

)

 

 

 

 

 

(202

)

 

 

Underwriting income

 

$

21,037

 

 

$

22,267

 

 

$

69,620

 

 

$

55,534

 

 

 

 

 

 

 

 

 


Adjusted Loss Ratio / Adjusted Combined Ratio – We define adjusted loss ratio and adjusted combined ratio as the corresponding ratio (calculated in accordance with GAAP), excluding losses and LAE related to the LPT and all development on reserves fully or partially covered by the LPT and amortization of deferred gains associated with recoveries of prior LPT reserve strengthening. We use these adjusted ratios as internal performance measures in the management of our operations because we believe they give our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Our adjusted loss ratio and adjusted combined ratio should not be viewed as substitutes for our loss ratio and combined ratio, respectively.

($ in thousands)

 

Three months ended September 30,

 

Nine months ended September 30,

(unaudited)

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net earned premiums

 

$

269,557

 

 

$

227,033

 

 

$

763,482

 

 

$

604,211

 

 

 

 

 

 

 

 

 

 

Losses and LAE

 

 

170,521

 

 

 

138,536

 

 

 

473,489

 

 

 

377,841

 

Less: Pre-tax net impact of LPT

 

 

(318

)

 

 

(266

)

 

 

(800

)

 

 

(970

)

Adjusted losses and LAE

 

$

170,839

 

 

$

138,802

 

 

$

474,289

 

 

$

378,811

 

 

 

 

 

 

 

 

 

 

Loss ratio

 

 

63.3

%

 

 

61.0

%

 

 

62.0

%

 

 

62.5

%

Less: net impact of LPT

 

(0.1

)%

 

(0.1

)%

 

(0.1

)%

 

(0.2

)%

Adjusted loss ratio

 

 

63.4

%

 

 

61.1

%

 

 

62.1

%

 

 

62.7

%

 

 

 

 

 

 

 

 

 

Combined ratio

 

 

92.2

%

 

 

90.2

%

 

 

90.9

%

 

 

90.8

%

Less: net impact of LPT

 

(0.1

)%

 

(0.1

)%

 

(0.1

)%

 

(0.2

)%

Adjusted combined ratio

 

 

92.3

%

 

 

90.3

%

 

 

91.0

%

 

 

91.0

%

 

 

 

 

 

 

 

 

 


Tangible Stockholders’ Equity – We define tangible stockholders’ equity as stockholders’ equity less goodwill and intangible assets. Our definition of tangible stockholders’ equity may not be comparable to that of other companies and should not be viewed as a substitute for stockholders’ equity calculated in accordance with GAAP. We use tangible stockholders’ equity internally to evaluate the strength of our balance sheet and to compare returns relative to this measure.

($ in thousands)

 

September 30,

 

December 31,

(unaudited)

 

2024

 

2023

 

2023

Stockholders' equity

 

$

797,507

 

$

535,397

 

$

661,031

Less: Goodwill and intangible assets

 

 

87,607

 

 

88,808

 

 

88,435

Tangible stockholders' equity

 

$

709,900

 

$

446,589

 

$

572,596

 

 

 

 

 

 

 

Skyward Specialty Insurance Group, Inc.
Gross Written Premiums by Underwriting Division (Unaudited)

 

 

Three months ended September 30,

 

Nine months ended September 30,

($ in thousands)

 

2024

 

2023

 

% Change

 

2024

 

2023

 

% Change

Global Property & Agriculture

 

$

54,360

 

$

48,775

 

11.5

%

 

$

279,721

 

$

247,195

 

13.2

%

Industry Solutions

 

 

74,089

 

 

79,798

 

(7.2

)%

 

 

236,460

 

 

226,680

 

4.3

%

Captives

 

 

53,630

 

 

41,886

 

28.0

%

 

 

184,137

 

 

127,249

 

44.7

%

Programs

 

 

54,434

 

 

41,735

 

30.4

%

 

 

166,256

 

 

143,032

 

16.2

%

Transactional E&S

 

 

44,885

 

 

30,699

 

46.2

%

 

 

132,791

 

 

90,948

 

46.0

%

Accident & Health

 

 

43,490

 

 

39,554

 

10.0

%

 

 

128,479

 

 

112,819

 

13.9

%

Professional Lines

 

 

40,310

 

 

48,259

 

(16.5

)%

 

 

120,655

 

 

114,420

 

5.4

%

Surety

 

 

34,816

 

 

24,977

 

39.4

%

 

 

106,395

 

 

75,899

 

40.2

%

Total gross written premiums(1)

 

$

400,014

 

$

355,683

 

12.5

%

 

$

1,354,894

 

$

1,138,242

 

19.0

%

(1) Excludes exited business