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Skyward Specialty Insurance Group Reports First Quarter 2025 Results

1. SKWD reported Q1 2025 net income of $42.1 million, up 14.3%. 2. Gross written premiums increased by 16.7% to $535.3 million. 3. Combined ratio improved to 90.5%, showing effective underwriting management. 4. Annualized return on equity reached 20.5%, reflecting strong profitability. 5. The diversified business strategy is yielding significant growth in key insurance sectors.

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Why Very Bullish?

The strong financial results surpass market expectations, often leading to stock price increases. Historical data indicates that similar earnings surprises have positively impacted SKWD's stock price in the past.

How important is it?

The article highlights key financial metrics that strongly impact investor perception of SKWD. Outstanding performance ratios indicate robust company health, likely attracting attention and investment.

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Investor sentiment typically reacts quickly to earnings reports, leading to potential short-term price increases. Immediate coverage and interest from analysts in earnings calls can bolster the stock's market performance.

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HOUSTON, May 01, 2025 (GLOBE NEWSWIRE) -- Skyward Specialty Insurance Group, Inc. (Nasdaq: SKWD) (“Skyward Specialty” or the “Company”) today reported first quarter 2025 net income of $42.1 million, or $1.01 per diluted share, compared to $36.8 million, or $0.90 per diluted share, for the same 2024 period. Adjusted operating income(1) for the first quarter of 2025 was $37.3 million, or $0.90 per diluted share, compared to $31.0 million, or $0.75 per diluted share, for the same 2024 period. Highlights for the first quarter included: Gross written premiums of $535.3 million, an increase of 16.7% compared to 2024;Combined ratio of 90.5%;Ex-Cat combined ratio of 88.3%;Annualized return on equity of 20.5%; and,Book value per share of $21.06, an increase of 6% compared to December 31, 2024. (1) See "Reconciliation of Non-GAAP Financial Measures" Skyward Specialty Chairman and CEO Andrew Robinson commented, "We delivered outstanding first quarter results, including adjusted operating income(1) which increased over 20% to $37.3 million, which is the best in Company history, and we achieved annualized return on equity of 20.5%. We continued our consistent and strong record of growth in underwriting performance as gross written premiums increased by approximately 17%, and we delivered a 90.5% combined ratio inclusive of 2.2 points of catastrophe losses. Our strong growth this quarter highlights the strength of our diversified business portfolio, with our global agriculture unit and our accident & health division each having a breakout quarter; we have highlighted these two areas as part of our intentional strategy to grow in areas less exposed to the P&C market." "As we look out to the remainder of the year, we remain confident that the strength of our diversified business portfolio, the power of our Rule Our Niche strategy, our investment in technology and talent, and our track record for consistent execution, positions us to continue to deliver strong financial results that create long-term value for our shareholders." Results of Operations Underwriting Results Premiums      ($ in thousands) Three months ended March 31,unaudited  2025   2024  %ChangeGross written premiums $535,326  $458,620  16.7%Ceded written premiums $(192,055) $(171,520) 12.0%Net retention  64.1%  62.6% NM(1)Net written premiums $343,271  $287,100  19.6%Net earned premiums $300,366  $236,342  27.1%(1)Not meaningful              The increase in gross written premiums for the first quarter of 2025, when compared to the same 2024 period, was driven by double-digit premium growth primarily from the agriculture and credit (re)insurance, accident & health and specialty programs divisions, partially offset by a decrease in gross written premiums in the global property division. During the first quarter 2025, the Company updated its underwriting divisions to align with how management currently oversees the business, allocates resources and evaluates operating performance. The Company added a ninth division, Agriculture and Credit (Re)insurance, which includes the Global Agriculture unit, previously reported with Global Property, and the Mortgage and Credit units, and focuses on specialty classes for which reinsurance provides a more attractive market entry. The Industry Solutions division is now the Construction & Energy Solutions division and the Inland Marine unit is now included in the Transactional E&S division. Programs is now Specialty Programs. Prior reporting periods have been conformed to reflect the new presentation. Combined Ratio Three months ended March 31,(unaudited) 2025 2024Non-cat loss and LAE 60.2% 60.6%Cat loss and LAE(1) 2.2% 0.4%Prior accident year development - LPT 0.0% (0.1)%Loss Ratio 62.4% 60.9%Net policy acquisition costs 14.8% 13.6%Other operating and general expenses 14.0% 16.0%Commission and fee income (0.7)% (0.9)%Expense ratio 28.1% 28.7%Combined ratio 90.5% 89.6%Ex-Cat Combined Ratio(2) 88.3% 89.2%     (1)Current accident year(2)Defined as the combined ratio excluding cat loss and LAE(1)          The loss ratio for the first quarter of 2025 increased 1.5 points when compared to the same 2024 period, due to higher catastrophe losses, primarily from convective storms in the Midwest and the California wildfires. Partially offsetting the increase in the cat loss and LAE ratio was improvement in the non-cat loss and LAE ratio driven by the business mix shift. The expense ratio for the first quarter improved 0.6 points when compared to the same 2024 period due to earnings leverage partially offset by higher acquisition costs due to the business mix shift. The expense ratios for the first quarters of 2025 and 2024 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 March 31,(unaudited)  2025   2024 Short-term investments & cash and cash equivalents $4,041  $5,088 Fixed income  16,730   12,478 Equities  657   627 Alternative & strategic investments  (2,097)  104 Net investment income $19,331  $18,297 Net unrealized gains on securities still held $5,491  $8,991 Net realized gains (losses)  1,350   (688)Net investment gains $6,841  $8,303   Net investment income for the first quarter of 2025 increased $1.0 million when compared to the same 2024 period, driven by increased income from our fixed income portfolio due to a higher yield and larger asset base. Partially offsetting the increase in income from our fixed income portfolio were (i) losses from the alternative and strategic investments portfolio due to the decline in the fair value of limited partnership investments, and (ii) less income from short-term investments driven by a lower yield. Stockholders’ Equity Stockholders’ equity was $850.7 million at March 31, 2025 which represented an increase of 7.1% when compared to stockholders' equity of $794.0 million at December 31, 2024. The increase in stockholders’ equity was primarily due to an increase in the market value of our investment portfolio and net income. Conference Call At 9:30 a.m. eastern time tomorrow, May 2, 2025, 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 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 nine underwriting divisions - Accident & Health, Agriculture and Credit (Re)insurance, Captives, Construction & Energy Solutions, Global Property, Professional Lines, Specialty 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 Great Midwest Insurance Company, Houston Specialty Insurance Company, Imperium 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.com614-494-4988 or Media contact:Haley Doughtyhdoughty@skywardinsurance.com713-935-4944 Consolidated Balance Sheets    ($ in thousands, except share and per share amounts)    (unaudited) March 31,2025 December 31, 2024Assets    Investments:    Fixed maturity securities, available-for-sale, at fair value (amortized cost of $1,410,269 and $1,320,266, respectively) $1,397,508  $1,292,218 Fixed maturity securities, held-to-maturity, at amortized cost (net of allowance for credit losses of $250 and $243, respectively)  37,519   39,153 Equity securities, at fair value  108,075   106,254 Mortgage loans, at fair value  16,012   26,490 Equity method investments  88,588   98,594 Other long-term investments  37,646   33,182 Short-term investments, at fair value  308,042   274,929 Total investments  1,993,390   1,870,820 Cash and cash equivalents  112,916   121,603 Restricted cash  40,590   35,922 Premiums receivable, net  417,542   321,641 Reinsurance recoverables, net  902,970   857,876 Ceded unearned premium  232,147   203,901 Deferred policy acquisition costs  126,439   113,183 Deferred income taxes  26,984   30,486 Goodwill and intangible assets, net  87,089   87,348 Other assets  90,566   86,698 Total assets $4,030,633  $3,729,478 Liabilities and stockholders’ equity    Liabilities:    Reserves for losses and loss adjustment expenses $1,871,491  $1,782,383 Unearned premiums  708,347   637,185 Deferred ceding commission  45,544   40,434 Reinsurance and premium payables  243,083   177,070 Funds held for others  113,748   102,665 Accounts payable and accrued liabilities  78,154   76,206 Notes payable  100,000   100,000 Subordinated debt, net of debt issuance costs  19,545   19,536 Total liabilities  3,179,912   2,935,479 Stockholders’ equity    Common stock, $0.01 par value, 500,000,000 shares authorized, 40,402,879 and 40,127,908 shares issued and outstanding, respectively  404   401 Additional paid-in capital  721,186   718,598 Accumulated other comprehensive loss  (10,047)  (22,120)Retained earnings  139,178   97,120 Total stockholders’ equity  850,721   793,999    Total liabilities and stockholders’ equity $4,030,633  $3,729,478       Condensed Consolidated Statements of Operations and Comprehensive Income($ in thousands) Three months ended March 31,(unaudited)  2025   2024      Revenues:    Net earned premiums $300,366  $236,342 Commission and fee income  1,976   2,026 Net investment income  19,331   18,297 Net investment gains  6,841   8,303 Other income  13   — Total revenues  328,527   264,968 Expenses:    Losses and loss adjustment expenses  187,309   143,914 Underwriting, acquisition and insurance expenses  86,551   69,774 Interest expense  1,834   2,727 Amortization expense  337   388 Other expenses  1,061   1,188 Total expenses  277,092   217,991 Income before income taxes  51,435   46,977 Income tax expense  9,377   10,193 Net income  42,058   36,784 Comprehensive income:    Net income $42,058  $36,784 Other comprehensive income:    Unrealized gains and losses on investments:    Net change in unrealized gains (losses) on investments, net of tax  12,255   (5,418)Reclassification adjustment for losses on securities no longer held, net of tax  (182)  (908)Total other comprehensive income (loss)  12,073   (6,326)Comprehensive income $54,131  $30,458       Share and Per Share Data    ($ in thousands, except share and per share amounts) Three months ended March 31,(unaudited)  2025   2024      Weighted average basic shares  40,196,416   39,108,351 Weighted average diluted shares  41,680,595   41,085,136      Basic earnings per share $1.05  $0.94 Diluted earnings per share $1.01  $0.90 Basic adjusted operating earnings per share $0.93  $0.79 Diluted adjusted operating earnings per share $0.90  $0.75      Annualized ROE(1)  20.5%  21.7%Annualized adjusted ROE(2)  18.2%  18.3%Annualized ROTE(3)  22.9%  25.0%Annualized adjusted ROTE(4)  20.3%  21.1%       March 31 December 31   2025   2024      Shares outstanding  40,402,879   40,127,908 Fully diluted shares outstanding  42,234,957   42,059,182      Book value per share $21.06  $19.79 Fully diluted book value per share $20.14  $18.88 Fully diluted tangible book value per share $18.08  $16.80      (1)Annualized ROE is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders' equity during the period(2)Annualized adjusted ROE is adjusted operating income expressed on an annualized basis as a percentage of average beginning and ending stockholders' equity during the period(3)Annualized ROTE is net income expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders' equity during the period(4)Annualized adjusted ROTE is adjusted operating income expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders' equity during the period Adjusted operating income – We define adjusted operating income as net income excluding the impact of certain items that may not be indicative of underlying business trends, operating results, or future outlook, net of tax impact. We use adjusted operating income as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Adjusted operating income should not be viewed as a substitute for net income calculated in accordance with GAAP, and other companies may define adjusted operating income differently.         ($ in thousands) Three months ended March 31,(unaudited)  2025   2024   Pre-tax After-tax Pre-tax After-taxIncome as reported $51,435  $42,058  $46,977  $36,784 Less (add):        Net investment gains  6,841   5,594   8,303   6,501 Net impact of loss portfolio transfer  —   —   241   189 Other income  13   11   —   — Other expenses  (1,061)  (868)  (1,188)  (930)Adjusted operating income $45,642  $37,321  $39,621  $31,024           Underwriting income – We define underwriting income as net income before income taxes excluding net investment income, net realized and unrealized gains and losses on investments, impairment charges, interest expense, amortization expense and other income and expenses. Underwriting income represents the pre-tax profitability of our underwriting operations and allows us to evaluate our underwriting performance without regard to investment income. We use this metric as we believe it gives our management and other users of our financial information useful insight into our underlying business performance. Underwriting income should not be viewed as a substitute for pre-tax income calculated in accordance with GAAP, and other companies may define underwriting income differently. ($ in thousands) Three months ended March 31,(unaudited) 2025 2024Income before income taxes $51,435 $46,977Add:    Interest expense  1,834  2,727Amortization expense  337  388Other expenses  1,061  1,188Less:    Net investment income  19,331  18,297Net investment gains  6,841  8,303Other income  13  —Underwriting income $28,482 $24,680      Tangible Stockholders’ Equity – We define tangible stockholders’ equity as stockholders’ equity less goodwill and intangible assets. Our definition of tangible stockholders’ equity may not be comparable to that of other companies and should not be viewed as a substitute for stockholders’ equity calculated in accordance with GAAP. We use tangible stockholders’ equity internally to evaluate the strength of our balance sheet and to compare returns relative to this measure. ($ in thousands) March 31, December 31,(unaudited) 2025 2024 2024Stockholders' equity $850,721 $692,272 $793,999Less: Goodwill and intangible assets  87,089  88,137  87,348Tangible stockholders' equity $763,632 $604,135 $706,651          Three months ended March 31,($ in thousands) 2025 2024 % ChangeAccident & Health $63,169 $40,901 54.4%Agriculture and Credit (Re)insurance  87,847  43,321 102.8%Captives  68,401  68,408 —%Construction & Energy Solutions  75,571  74,222 1.8%Global Property  46,686  57,312 (18.5)%Professional Lines  41,166  42,239 (2.5)%Specialty Programs  62,675  52,178 20.1%Surety  37,798  33,842 11.7%Transactional E&S  52,006  46,232 12.5%Total gross written premiums(1) $535,319 $458,655 16.7%(1)Excludes exited business      

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