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What changed in Skyward Specialty Insurance Group, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Skyward Specialty Insurance Group, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+287 added−241 removedSource: 10-K (2026-03-02) vs 10-K (2025-03-03)

Top changes in Skyward Specialty Insurance Group, Inc.'s 2025 10-K

287 paragraphs added · 241 removed · 187 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

59 edited+19 added−10 removed114 unchanged
Biggest changeOur Business and Our Strategy We have one reportable segment through which we offer a broad array of insurance coverages to a number of market niches. Each of our eight distinct underwriting divisions has dedicated underwriting leadership supported by high-quality technical staff with deep experience in their respective niches.
Biggest changeContinuing to lead Apollo’s growth as a subsidiary of Skyward Specialty will be David Ibeson, who will continue as CEO of Apollo, along with Apollo’s entrepreneurial and dynamic management team. Our Business and Our Strategy We have one reportable segment through which we offer a broad array of insurance coverages to a number of market niches.
SkyBI, our business intelligence platform, focuses on providing our senior leadership, as well as our technical teams, with real-time intelligence to drive superior decision making. SkyBI reflects the best practices our management team has learned from its extensive experience across the P&C insurance and technology sectors.
SkyBI, our business intelligence platform, focuses on providing our senior leadership, as well as our technical teams, with real-time intelligence to drive superior decision making. SkyBI reflects the best practices our management team has learned from its extensive experience across the P&C insurance and technology sectors.
Competition is based on many factors including pricing of coverage, the general reputation and perceived financial strength of the company, relationships with brokers, terms and conditions of products offered, ratings assigned by independent rating agencies, speed of claims payment and reputation, and the experience and reputation of the members of the underwriting and claims teams.
Competition is based on many factors including pricing of coverage, the general reputation and perceived financial strength of the company, relationships with brokers, terms and conditions of products offered, ratings assigned by independent rating agencies, speed and reputation of claims payment, and the experience and reputation of the members of the underwriting and claims teams.
High-quality, experienced leadership team that is aligned with our shareholders. Led by our CEO, Andrew Robinson, we have an experienced, innovative and entrepreneurial executive leadership team with a track record of success in senior management roles at industry leading property and casualty companies as well as in starting and building new businesses in our industry.
High-quality, experienced leadership team that is aligned with our shareholders. Led by our Chairman and CEO, Andrew Robinson, we have an experienced, innovative and entrepreneurial executive leadership team with a track record of success in senior management roles at industry leading property and casualty companies as well as in starting and building new businesses in our industry.
We focus on hiring underwriting and technical staff who help differentiate our company through their expertise and experience. Our underwriting teams are knowledgeable, experienced, and empowered — characteristics which are critical to operate successfully in the markets we serve, especially since many of the risks we underwrite are particularly difficult to automate.
We focus on hiring and retaining underwriting and technical staff who help differentiate our company through their expertise and experience. Our underwriting teams are knowledgeable, experienced, and empowered — characteristics which are critical to operate successfully in the markets we serve, especially since many of the risks we underwrite are particularly difficult to automate.
Our Programs underwriting division writes property, general liability, commercial auto liability, excess liability, and workers’ compensation lines of business on an E&S and an admitted basis. Surety : Our Surety underwriting division provides contract, commercial and transactional surety solutions to a range of trade and services organizations requiring bonding.
Our Specialty Programs underwriting division writes property, general liability, commercial auto liability, excess liability and workers’ compensation lines of business on an E&S and an admitted basis. Surety : Our Surety underwriting division provides contract, commercial and transactional surety solutions to a range of trade and services organizations requiring bonding.
We use the output of our ECM to measure potential earnings and capital loss for a range of scenarios. These outputs are measured against risk tolerances that are set out and updated annually by the ERM Committee and discussed with the Risk Committee of our Board.
We use the output of our ECM to measure potential earnings and capital loss for a range of scenarios. These outputs are measured against risk tolerances that are set out and updated annually by the ERM Committee and discussed with the Risk Committee of our Board of Directors.
We seek to hire the most talented technical underwriting professionals who have long-standing industry relationships with distribution partners and claims professionals with expertise in the niches we write. These relationships are key to getting steady access to our preferred business.
We seek to hire and retain the most talented technical underwriting professionals who have long-standing industry relationships with distribution partners and claims professionals with expertise in the niches we write. These relationships are key to getting steady access to our preferred business.
Many carriers have chosen to reject businesses that they deem to be too complex, or that requires thoughtful individual underwriting; or, alternatively, have focused on simple account risks for which more automated underwriting can be effective. Instead, we have chosen to build our underwriting divisions around deeply experienced underwriters who we empower with appropriate authority to make underwriting decisions.
Many carriers have chosen to reject businesses that they deem to be too complex, or that require thoughtful individual underwriting; or, alternatively, have focused on simple account risks for which more automated underwriting can be effective. Instead, we have chosen to build our underwriting divisions around deeply experienced underwriters who we empower with appropriate authority to make underwriting decisions.
Our analytics capabilities used by our senior leadership and claims teams include real-time, detailed information on open claims and benchmarks against closed claims. We believe that our industry expertise, nimble culture, and technology-embedded claims processes enables us to reach fair and appropriate claims outcomes for our customers. Superior business intelligence platform.
Our analytics capabilities used by our senior leadership and claims teams include real-time, detailed information on open claims and benchmarks against closed claims. We believe that our industry expertise, nimble culture, and technology-embedded claims processes enable us to reach fair and appropriate claims outcomes for our customers. Superior business intelligence platform.
A small portion of our business is specialty reinsurance (principally agriculture and credit) which is similarly focused on attractive specialty classes where we believe it is more efficient to approach these classes through reinsurance given factors such as cost of entry, including the costs of geographic expansion.
A portion of our business is specialty reinsurance (principally property, agriculture and credit) which is similarly focused on attractive specialty classes where we believe it is more efficient to approach these classes through reinsurance given factors such as cost of entry, including the costs of geographic expansion.
We believe our gross written premium growth and profitability is indicative of our momentum and provides a powerful reference for the positioning of our Company to continue to expand and grow in the markets we seek to serve. Differentiate on daily excellence to drive best-in-class underwriting performance.
We believe our gross written premium growth and profitability are indicative of our momentum and provides a powerful reference for the positioning of our Company to continue to expand and grow in the markets we seek to serve. Differentiate on daily excellence to drive best-in-class underwriting performance.
Within the eight divisions, we further specialize underwriting teams with a focus on specific niches within the markets the eight divisions serve. Our underwriting approach is underpinned by hiring highly experienced, best-in-class and diverse teams of technical underwriters with established track records in specific specialty niche markets.
Within the nine divisions, we further specialize underwriting teams with a focus on specific niches within the markets the nine divisions serve. Our underwriting approach is underpinned by hiring highly experienced, best-in-class and diverse teams of technical underwriters with established track records in specific specialty niche markets.
If our underwriters cannot reasonably expect to bind coverage at the combination of premium and coverage terms that meets our standard, we encourage them to move on quickly to other prospective opportunities. When accepting risks, we are careful to establish terms and price that are suited to the underlying exposure.
If our underwriters cannot reasonably expect to bind coverage at the combination of premium and coverage terms that meet our standard, we encourage them to move on quickly to other prospective opportunities. When accepting risks, we are careful to establish terms and price that are suited to the underlying exposure.
Our SkyBI platform provides real-time portfolio, underwriting, claims and actuarial analytics which is critical to ensuring that the above processes achieve the desired outcome. 9 Table of Contents Altogether, our ERM is at the center of our decision making and our day-to-day activities.
Our SkyBI platform provides real-time portfolio, underwriting, claims and actuarial analytics which is critical to ensuring that the above processes achieve the desired outcome. 15 Table of Contents Altogether, our ERM is at the center of our decision making and our day-to-day activities.
We principally focus on small to medium sized enterprises with aggregate bond programs up to approximately $75.0 million for contract and $100.0 million for commercial and transactional. We write this business on an admitted basis and distribute through retail agents and brokers.
We principally focus on small to medium sized enterprises with aggregate bond programs up to approximately $100.0 million for contract and $125.0 million for commercial and transactional. We write this business on an admitted basis and distribute through retail agents and brokers.
In addition, although the federal government does not directly regulate the business of insurance, federal initiatives often affect the insurance industry in a 12 Table of Contents variety of ways, such as treatment of federal subsidiaries, regulations of quasi-governmental entities and regulations issued by federal governmental departments.
In addition, although the federal 18 Table of Contents government does not directly regulate the business of insurance, federal initiatives often affect the insurance industry in a variety of ways, such as treatment of federal subsidiaries, regulations of quasi-governmental entities and regulations issued by federal governmental departments.
This structure enables us to offer innovative and unique products and solutions to our distribution partners and customers, regardless of how challenging or complex a risk may be. Further, we augment our underwriters’ experience with data and predictive analytics that are intended to differentiate risk selection and pricing decision-making while enhancing efficiency. Highly skilled underwriters .
This structure enables us to offer innovative and unique products and solutions to our distribution partners and customers, regardless of how challenging or complex a risk 8 Table of Contents may be. Further, we augment our underwriters’ experience with data and predictive analytics that are intended to differentiate risk selection and pricing decision-making while enhancing efficiency. Highly skilled underwriters .
The data can be filtered by many categories, including distributor, customer segment, line of business, specific industry, individual underwriter, and specific risk feature among others. SkyBI aids in establishing clear line of sight to objectives as well as facilitating our decision-making processes. 3 Table of Contents Advanced technology and new risk data for underwriting and claims.
The data can be filtered by many categories, including distributor, customer segment, line of business, specific industry, individual underwriter, and specific risk feature among others. SkyBI aids in establishing clear line of sight to objectives as well as facilitating our decision-making processes. Advanced technology and new risk data for underwriting and claims.
We pride ourselves on maintaining an entrepreneurial environment that encourages and rewards a proactive approach to capitalize on market disruption. This environment is not only consistent with our identity as a specialty insurer but also a foundation for our success in attracting great talent and our objective of delivering best-in-class results.
We pride ourselves on maintaining an entrepreneurial environment that encourages and rewards a proactive approach to capitalize on market disruption. This environment is not only consistent with our identity as a 9 Table of Contents specialty insurer but also a foundation for our success in attracting great talent and our objective of delivering best-in-class results.
Transactional E&S : Our Transactional E&S underwriting division provides primary and excess non-catastrophe prone property and general liability solutions, with particular emphasis on risks that are considered hard to place because of the complexity of the underlying exposure, loss history, and/or limited operating history (i.e., start up and newer businesses).
Transactional E&S : Our Transactional E&S underwriting division provides primary and excess non-catastrophe prone property and general liability solutions, with particular emphasis on risks that are considered hard to place because of the complexity of the underlying exposure, loss history, and/or limited operating history (for example, start up and newer businesses).
We generally use, third-party vendor developed core operating applications that we have customized for our company. Our core platform organization is used for all business except for accident & health, global property and agriculture and surety as the unique features of these underwriting divisions require select dedicated core processing components.
We generally use third-party vendor developed core operating applications that we have customized for our company. Our core platform organization is used for all business except for accident & health, global property, agriculture and credit (re) insurance, and surety as the unique features of these underwriting divisions require select dedicated core processing components.
This 5 Table of Contents comprehensive data repository forms the foundation of our reporting, analytics, and other data capabilities and is a key tool for our senior management team and business leaders. See the section entitled “Technology” below for more information on SkyBI. We are highly selective in the policies we choose to bind.
This comprehensive data repository forms the foundation of our reporting, analytics, and other data capabilities and is a key tool for our senior management team and business leaders. See the section entitled “Technology” below for more information on SkyBI. We are highly selective in the policies we choose to bind.
Furthermore, our cross functional collaboration ensures that our underwriting, claims, actuarial and product management teams regularly review performance and trends so that portfolio, pricing and coverage changes can be implemented quickly. Use our balance sheet to capture a larger part of the market we serve.
Furthermore, our cross functional collaboration ensures that our underwriting, claims, actuarial and product management teams regularly review performance and trends so that portfolio, pricing and coverage changes can be implemented quickly. 10 Table of Contents Use our balance sheet to capture a larger part of the market we serve.
This program involves deploying experienced investigators and other appropriate vendors to the scene of a reported auto accident, ideally within two hours of the accident, regardless of the location. This quick response assists us in evaluating 6 Table of Contents the facts and circumstances of the accident to begin our investigation as quickly as possible.
This program involves deploying experienced investigators and other appropriate vendors to the scene of a reported auto accident, ideally within two hours of the accident, regardless of the location. This quick response assists us in evaluating the facts and circumstances of the accident to begin our investigation as quickly as possible.
Another such noticeable market trend is the emergence of “micro cycles and micro dislocations” where different pockets of the P&C insurance market experience hardening and softening at different times.
Another such notable market trend is the emergence of “micro cycles and micro dislocations” where different pockets of the P&C insurance market experience hardening and softening at different times.
Our captive underwriting division 1 Table of Contents writes property, general liability, commercial auto, excess liability, and workers’ compensation lines of business on an E&S and an admitted basis. We often administer this business through partnerships with third-party captive managers.
Our captive underwriting division writes property, general liability, commercial auto, excess liability, and workers’ compensation lines of business on an E&S and an admitted basis. We often administer this business through partnerships with third-party captive managers.
Aside from maintaining our ECM and overseeing our risk tolerance framework, our SVP of Finance & ERM works with our ERM Committee to review and maintain a comprehensive risk register with accountabilities to ensure appropriate mitigations are in place and are monitored for any change.
Aside from maintaining our ECM and overseeing our risk tolerance framework, our SVP, CFO & Head of ERM works with our ERM Committee to review and maintain a comprehensive risk register with accountabilities to ensure appropriate mitigations are in place and are monitored for any change.
We do not impose strict underwriting rules (i.e., we are not “box” underwriters), but rather allow our professionals the freedom to use their expertise and judgment when evaluating and pricing risks. Simply put, we give our people the tools and appropriate authority to make decisions and do what they do best — profitably underwrite complex risks.
We do not impose strict underwriting rules (for example, we are not “box” underwriters), but rather allow our professionals the freedom to use their expertise and judgment when evaluating and pricing risks. Simply put, we give our people the tools and appropriate authority to make decisions and do what they do best — profitably underwrite complex risks.
References to “the Company,” “we,” “our,” “us” or like terms refer to the business of Skyward Specialty Insurance Group, Inc. and its subsidiaries. We are a growing specialty insurance company delivering commercial property and casualty (P&C) products and solutions on a non-admitted (or E&S) and admitted basis, predominantly in the United States.
References to “the Company,” “we,” “our,” “us” or like terms refer to the business of Skyward Specialty Insurance Group, Inc. and its subsidiaries. We are a growing specialty insurance company delivering commercial insurance products and solutions on a non-admitted (or E&S) and admitted basis, predominantly in the United States.
For the year ended December 31, 2024, property insurance represented 29% of our gross written premiums. We actively manage and continuously monitor our aggregation of property writings by geographic area to limit our potential for aggregation of loss resulting from severe events such as hurricanes, convective storms, and earthquakes.
For the year ended December 31, 2025, property insurance represented 34% of our gross written premiums. We actively manage and continuously monitor our aggregation of property writings by geographic area to limit our potential for aggregation of loss resulting from severe events such as hurricanes, convective storms, and earthquakes.
We strive to augment the capabilities of our employees daily using new forms of risk data and the use of predictive analytics including artificial intelligence for risk selection, pricing and claims handling.
We strive to augment the capabilities of our employees daily using new forms of risk data and the use of predictive analytics including artificial intelligence for risk selection, pricing and claims 12 Table of Contents handling.
We seek to purchase reinsurance from reinsurers that are rated at least “A-” (“Excellent”) or better by A.M. Best. As of December 31, 2024, 99% of our reinsurance recoverables were either derived from reinsurers rated “A-” (Excellent) by A.M. Best, or better, or were collateralized for our reinsurance recoverable by the reinsurer.
We seek to purchase reinsurance from reinsurers that are rated at least “A-” (“Excellent”) or better by A.M. Best. As of December 31, 2025, 98% of our reinsurance recoverables were either derived from reinsurers rated “A-” (Excellent) by A.M. Best, or better, or were collateralized for our reinsurance recoverable by the reinsurer.
We also emphasize the training and development of our employees and provide opportunities to further their education and professional development. We know that we cannot win at our business unless we first win with our people. 13 Table of Contents
We also emphasize the training and development of our employees and provide opportunities to further their education and professional development. We know that we cannot win at our business unless we first win with our people.
Our entire senior leadership’s compensation is directly aligned with our shareholders. Each of our leaders have a material portion of their compensation in the form of long-term and short-term incentives tied to delivering sustainable, best-in-class underwriting returns. Our executive leadership team have additional long-term incentive targets tied directly to growth in book value per share.
Our entire senior leadership’s compensation is carefully constructed to ensure alignment with our shareholders. Each of our leaders have a material portion of their compensation in the form of long-term and short-term incentives tied to delivering sustainable, best-in-class underwriting returns. Our executive leadership team have additional long-term incentive targets tied directly to growth in book value per share.
The top 10 risks are further identified and quantified by the SVP of Finance & ERM and the ERM Committee and reviewed every quarter. The SVP of Finance & ERM and the ERM Committee submit these reports to the Risk Committee on a regular basis.
The top 10 risks are further identified and quantified by the SVP, CFO & Head of ERM and the ERM Committee and reviewed every quarter. The SVP, CFO & Head of ERM and the ERM Committee submit these reports to the Risk Committee on a regular basis.
We also operate three non-insurance companies: Skyward Underwriters Agency, Inc., a licensed agent, managing general agent and reinsurance broker, Skyward Service Company, which provides various administrative services to our subsidiaries and Skyward Specialty No. 1 Limited Company, a UK company which is an authorized Lloyd’s corporate member. 11 Table of Contents Our organizational structure is set forth below.
We also operate three non-insurance companies: Skyward Underwriters Agency, Inc., a licensed agent, managing general agent and reinsurance broker, Skyward Service Company, which provides various administrative services to our subsidiaries and Skyward Specialty No. 1 Limited Company, a UK company which is an authorized Lloyd’s corporate member. 17 Table of Contents Our organizational structure at December 31, 2025 is set forth below.
Employees and Human Capital As of December 31, 2024, we had approximately 580 employees. Our employees are not subject to any collective bargaining agreement, and we are not aware of any current efforts to implement such an agreement. We believe we have good working relations with our employees.
Employees and Human Capital As of December 31, 2025, we had approximately 611 employees. Our employees are not subject to any collective bargaining agreement, and we are not aware of any current efforts to implement such an agreement. We believe we have good working relations with our employees.
At December 31, 2024 and 2023, our allowance for uncollectible reinsurance was $2.3 million. 8 Table of Contents The following table sets forth our most significant reinsurers by amount of reinsurance recoverables, as well as the reinsurers A.M.
At December 31, 2025 and 2024, our allowance for uncollectible reinsurance was $2.3 million. 14 Table of Contents The following table sets forth our most significant reinsurers by amount of reinsurance recoverables, as well as the reinsurers A.M.
Professional liability and allied health provide primary and excess claims-made liability products, on an E&S and admitted basis, distributed through both wholesale and retail brokers, depending on the product. Programs : Our Programs underwriting division partners with program administrators focused on certain markets that align with our expertise and strategy.
Management/Professional liability and allied health provide primary and excess claims-made liability products, on an E&S and admitted basis, distributed through both wholesale and retail brokers, depending on the product. 7 Table of Contents Specialty Programs : Our Specialty Programs underwriting division partners with program administrators focused on certain markets that align with our expertise and strategy.
Empowering our underwriting and claims teams with considerable authority to make decisions and apply their expertise; and 2 Table of Contents 5. Fostering a culture that promotes nimbleness and responsiveness to market opportunities and dislocation.
Empowering our underwriting and claims teams with considerable authority to make decisions and apply their expertise; and 5. Fostering a culture that promotes nimbleness and responsiveness to market opportunities and dislocation.
We also utilize generative artificial intelligence in our underwriting and claims handling where doing so can aid in our effectiveness and efficiencies without sacrificing the necessary expertise of our employees. Diversified business that allows us to respond to, and capitalize on, changes in market conditions across P&C cycles.
We also utilize generative artificial intelligence in our underwriting and claims handling where doing so can aid in our effectiveness and efficiencies while still relying upon the expertise of our employees. Diversified business that allows us to respond to, and capitalize on, changes in market conditions across P&C cycles.
The following table sets forth the geographic distribution of our gross written premiums for the year ended December 31, 2024: 2024 Texas 11.2 % California 8.8 Florida 8.3 Louisiana 6.8 New York 6.5 Georgia 4.4 Pennsylvania 3.9 New Jersey 3.2 Illinois 2.9 Massachusetts 2.5 All other states 41.5 Total 100.0 % In addition to our primary insurance companies, we also own Skyward Re, a wholly-owned captive reinsurance company domiciled in the Cayman Islands that was incorporated on January 7, 2020.
The following table sets forth the geographic distribution of our gross written premiums for the year ended December 31, 2025: 2025 Texas 10.7 % Pennsylvania 7.6 Florida 7.2 California 7.1 New York 6.3 Louisiana 6.1 Illinois 4.1 New Jersey 4.1 Georgia 3.8 Delaware 3.1 All other states and countries 39.9 Total 100.0 % In addition to our primary insurance companies, we also own Skyward Re, a wholly-owned captive reinsurance company domiciled in the Cayman Islands that was incorporated on January 7, 2020.
Our Senior Vice President (“SVP”) of Finance & ERM oversees several critical ERM processes as well as chairing our cross-functional corporate ERM Committee. We formalize our own view of risk and solvency in terms of potential economic loss using our Economic Capital Model (“ECM”).
Our Senior Vice President (“SVP”), Chief Financial Officer (“CFO”) & Head of ERM - US Operations, oversees several critical ERM processes as well as chairing our cross-functional corporate ERM Committee. We formalize our own view of risk and solvency in terms of potential economic loss using our Economic Capital Model (“ECM”).
Claims Management Skyward’s claims department is guided by the following principles: (1) prompt and comprehensive claim investigations, considering all aspects of each loss, and using advanced analytics and technology to improve efficiency, accuracy and speed of response; (2) providing our customers with quality claims handling service while engaging customers through the entire claims resolution process; (3) promptly establishing reserves reflective of our best estimate of ultimate loss; (4) effectively pursuing contribution and subrogation where appropriate and warranted; (5) detecting and preventing fraud activity throughout the claims handling process using a variety of tools; and (6) disciplined litigation management to provide our customers with a superior legal defense while closely monitoring legal costs.
Finally, our underwriting controls and procedures are regularly reviewed to ensure our underwriters are acting with clear line of sight to profitably underwrite each of the markets we serve. 11 Table of Contents Claims Management Skyward’s claims department is guided by the following principles: (1) prompt and comprehensive claim investigations, considering all aspects of each loss, and using advanced analytics and technology to improve efficiency, accuracy and speed of response; (2) providing our customers with quality claims handling service while engaging customers through the entire claims resolution process; (3) promptly establishing reserves reflective of our best estimate of ultimate loss; (4) effectively pursuing contribution and subrogation where appropriate and warranted; (5) detecting and preventing fraud activity throughout the claims handling process using a variety of tools; and (6) disciplined litigation management to provide our customers with a superior legal defense while closely monitoring legal costs.
At each annual renewal, we consider several factors that influence any changes to our reinsurance purchases, including any plans to change the underlying insurance coverage we offer, updated loss activity, the level of our capital and surplus, changes in our risk appetite and the cost and availability of reinsurance treaties. 7 Table of Contents We purchase quota share reinsurance, excess of loss reinsurance, and facultative reinsurance coverage to limit our exposure from losses on any one occurrence.
At each annual renewal, we consider several factors that influence any changes to our reinsurance purchases, including any plans to change the underlying insurance coverage we offer, updated loss activity, the level of our capital and surplus, changes in our risk appetite and the cost and availability of reinsurance treaties.
The following is a summary of our reinsurance programs as of December 31, 2024: Line of Business Maximum Company Retention Accident & Health $0.90 million per occurrence Commercial Auto (1) $1.00 million per occurrence Excess Casualty (1)(2) $1.25 million per occurrence General Liability (1) $1.50 million per occurrence Professional Lines (2) $5.21 million per occurrence Property (3) $3.50 million per occurrence Representation and Warranty $3.25 million per occurrence Surety (2) $4.00 million per occurrence Workers’ Compensation (2) $2.33 million per occurrence (1) Legal defense expenses can force exposure above the maximum company retention for Excess Casualty, Commercial Auto and General Liability.
It is used for a variety of reasons, including supplementing the limits provided by the treaty coverage or covering risks or perils excluded from treaty reinsurance. 13 Table of Contents The following is a summary of our reinsurance programs as of December 31, 2025: Line of Business Maximum Company Retention Accident & Health $0.90 million per occurrence Commercial Auto (1) $1.00 million per occurrence Excess Casualty (1)(2) $2.25 million per occurrence General Liability (1) $1.50 million per occurrence Ocean Marine (2) $3.00 million per occurrence Professional Lines (2) $5.25 million per occurrence Property (3) $3.50 million per occurrence Representation and Warranty $3.25 million per occurrence Surety (2) $5.00 million per occurrence Workers’ Compensation (2) $2.33 million per occurrence (1) Legal defense expenses can force exposure above the maximum company retention for Excess Casualty, Commercial Auto and General Liability.
Berkley Corporation; American Financial Group Inc.; Tokio Marine Holdings, Inc.; CNA Financial Corporation; Hiscox, Ltd.; RLI Corp.; Intact Finance Corporation; and Kinsale Capital Group, Inc. 10 Table of Contents Our Structure We conduct our operations principally through four insurance companies: Great Midwest Insurance Company (“GMIC”), our largest insurance subsidiary, underwrites multiple lines of insurance on an admitted basis in all 50 states and the District of Columbia and is a certified surety bond company listed with the Department of the Treasury.
Our Structure We conduct our operations principally through four insurance companies: Great Midwest Insurance Company (“GMIC”), our largest insurance subsidiary, underwrites multiple lines of insurance on an admitted basis in all 50 states and the District of Columbia and is a certified surety bond company listed with the Department of the Treasury.
We believe our technological advantage positions us for profitable growth and expansion into additional specialty market niches where we can establish a strong and defensible market position. 4 Table of Contents Profitably grow existing lines of business and expand with new underwriting divisions.
We believe our technological advantage positions us for profitable growth and expansion into additional specialty market niches where we can establish a strong and defensible market position. Profitably grow existing lines of business and expand with new underwriting divisions. We believe that we are well-positioned to take advantage of several trends impacting our customers in the United States and globally.
We regularly review our loss reserves using a variety of actuarial techniques. We also update the reserve estimates as historical loss experience develops, additional claims are reported and/or settled and new information becomes available.
IBNR reserves are estimated based on generally accepted actuarial reserving techniques that take into account quantitative loss experience data and, where appropriate, qualitative factors. We regularly review our loss reserves using a variety of actuarial techniques. We also update the reserve estimates as historical loss experience develops, additional claims are reported and/or settled and new information becomes available.
It is a central component to our strategy to achieve market leading risk adjusted returns for our shareholders. Reserves We maintain reserves for specific claims incurred and reported, IBNR reserves and reserves for uncollectible reinsurance when appropriate. Our ultimate liability may be greater or less than the current reserves.
It is a central component to our strategy to achieve market leading risk adjusted returns for our shareholders and to reinforce a culture of accountability, transparency, and sound judgment across the organization. Reserves We maintain reserves for specific claims incurred and reported, IBNR reserves and reserves for uncollectible reinsurance when appropriate.
We do not discount our reserves for losses and LAE to reflect estimated present value. When a claim is reported, we establish a case reserve for the estimated amount of the ultimate payment after an appropriate assessment of coverage, damages and other investigation as applicable.
When a claim is reported, we establish a case reserve for the estimated amount of the ultimate payment after an appropriate assessment of coverage, damages and other investigation, as applicable. The estimate is based on our reserving practices and on the claims adjuster’s experience and knowledge of the nature and value of the specific type of claim.
In the insurance industry, there is always the risk that reserves may prove inadequate. We continually monitor reserves using new information on reported claims and a variety of statistical analyses. Anticipated inflation is reflected implicitly in the reserving process through analysis of cost trends and the review of historical development.
Our ultimate liability may be greater or less than the current reserves. In the insurance industry, there is always the risk that reserves may prove inadequate. We continually monitor reserves using new information on reported claims and a variety of statistical analyses.
We distribute these products through retail agents and brokers and a select network of wholesalers. Professional Lines : Our Professional Lines underwriting division includes three underwriting units: management liability, professional liability (which includes cyber and media liability insurance), and allied health (which includes life sciences).
Professional Lines : Our Professional Lines underwriting division includes three underwriting units: management liability, professional liability (which includes cyber), and allied health (which includes life sciences).
Enterprise Risk Management Our enterprise risk management (“ERM”) is embedded in nearly every aspect of our company and guides our day-to-day activities.
At December 31, 2025, we held collateral in a statutory trust of $235.2 million on our net reinsurance recoverables. Enterprise Risk Management Our enterprise risk management (“ERM”) is embedded in nearly every aspect of our company and guides our day-to-day activities.
Our Underwriting Divisions Accident & Health : Our Accident & Health (“A&H”) underwriting division provides medical stop loss to employers who self-insure their employee benefits, as well as covering group and single-employer captives. Our approach for managing medical costs, combined with our claims oversight, enables us to partner with select distribution partners.
For the year ended December 31, 2025, 41% of our gross written premiums were written on an admitted basis and 59% were non-admitted. Our Underwriting Divisions Accident & Health : Our Accident & Health (“A&H”) underwriting division provides medical stop loss to employers who self-insure their employee benefits, as well as covering group and single-employer captives.
We establish IBNR reserves in accordance with industry practice to provide for (i) the estimated amount of future loss payments on incurred claims not yet reported, and (ii) potential development on reported claims. IBNR reserves are estimated based on generally accepted actuarial reserving techniques that take into account quantitative loss experience data and, where appropriate, qualitative factors.
Case reserves are revised periodically based on subsequent developments associated with each claim. See the section entitled “Claims Management” included in this Item 1 for more information. We establish IBNR reserves in accordance with industry practice to provide for (i) the estimated amount of future loss payments on incurred claims not yet reported, and (ii) potential development on reported claims.
Best rating, if applicable, as of December 31, 2024: ($ in thousands) Reinsurer Reinsurance Recoverables AM Best Rating Everest Reinsurance Co. $ 154,181 A+ eMaxx Captives (1) 144,196 n/r Partner Reinsurance Co. of the US 52,442 A+ General Reinsurance Corp 48,234 A++ Swiss Reinsurance America Corp 37,789 A+ ACE (Chubb Property & Casualty Ins Company) 36,527 A+ RGA Reinsurance Company 24,945 A+ Randall & Quilter (R&Q Bermuda (SAC) Ltd) (2) 22,663 n/r Aspen Insurance UK Limited 19,998 A Insurance Company of the West 18,112 A Top 10 Total 559,087 All Others 298,789 Total $ 857,876 (1) This reinsurer facilitates our eMaxx captive.
Best rating, if applicable, as of December 31, 2025: ($ in thousands) Reinsurer Reinsurance Recoverables AM Best Rating eMaxx Capitves (1) $ 197,989 n/r Everest Reinsurance Co. 123,925 A+ General Reinsurance Corp 70,355 A++ Partner Reinsurance Co. of the US 65,446 A+ ACE (Chubb Property & Casulty Ins Company) 48,344 A+ RGA Reinsurance Company 43,043 A+ Lloyds Syndicate 4711 35,860 A+ Swiss Reinsurance America Corp 26,152 A+ Lloyds Syndicate 2987 25,301 A+ Aspen Insurance UK Limited 24,715 A Top 10 Total 661,130 All Others 458,750 Total $ 1,119,880 (1) This reinsurer facilitates our eMaxx captive.
We believe this structure and expertise allow us to serve the needs of our customers effectively and be a value-add partner to our distributors, while earning attractive risk-adjusted returns. For the year ended December 31, 2024, 44% of our gross written premiums were written on an admitted basis and 56% were non-admitted.
Each of our nine distinct underwriting divisions has dedicated underwriting leadership supported by high-quality technical staff with deep experience in their respective niches. We believe this structure and expertise allow us to serve the needs of our customers effectively and be a value-add partner to our distributors, while earning attractive risk-adjusted returns.
Removed
Global Property and Agriculture : Our Global Property underwriting unit provides property-only solutions to large multi-jurisdictional entities with complex property exposures. The business is written entirely on an E&S basis. We distribute this product through retail brokers and select wholesale brokers.
Added
Apollo Acquisition On September 2, 2025, we entered into two share purchase agreements (the "Apollo Majority SPAs") with institutional and management shareholders, respectively, of Apollo Group Holdings Limited ("Apollo") (the "Majority Sellers").
Removed
Our book and position with our customers and distribution partners has been curated over more than ten years, and we have become an important partner to the brokers that place this business and an equally important part of our insureds’ risk transfer program. Our Global Agriculture underwriting unit provides secondary and reinsurance solutions for crop, livestock and other renewable resources.
Added
Pursuant to the Apollo Majority SPAs, in accordance with the terms and subject to the conditions therein, we agreed to acquire all of the issued shares of Apollo held by the Majority Sellers, representing approximately 87% of the issued share capital of Apollo.
Removed
Industry Solutions : Our Industry Solutions underwriting division includes three underwriting units that each provide multiple coverages to the businesses they serve: construction, energy and inland marine.
Added
In addition, closing of the transaction ("Closing") was conditioned upon our acquiring 100% of the issued share capital of Apollo (the “Acquisition”) at Closing pursuant to additional short-form share purchase agreements (the "Apollo Minority SPAs" and together with the Apollo Majority SPAs, the "Apollo SPAs") with the remaining minority shareholders of Apollo (the "Minority Sellers" and together with the Majority Sellers, the "Sellers").
Removed
Our construction and energy underwriting units provide general liability, excess liability, commercial auto, workers’ compensation, and adjacent inland marine solutions, written principally on an admitted basis, to a broad range of middle market construction and energy production and servicing customers, including many in the alternative/renewable energy fields.
Added
The Acquisition closed on January 1, 2026. The consideration for the transaction was satisfied by the issuance of common stock of the Company to certain sellers and the remainder in cash. Apollo is a leading U.S. centric specialty underwriting platform operating at Lloyd’s of London that is low volatility, high growth and employs a capital light business model.
Removed
Our inland marine underwriting unit focuses on logistics and other specialty property risk for assets that are constantly on the move. The industry segments we seek to underwrite often have high severity exposures that our teams of skilled and experienced underwriters and claims professionals are able to address quickly and creatively, frequently with multi-line solutions.
Added
The business has grown gross written premium consistently since its formation in 2010. Through Syndicate 1969, Apollo underwrites a multi-class specialty insurance portfolio. Through Syndicate 1971, Apollo delivers a unique, innovative platform liability product for the digital and sharing economy.
Removed
We believe we are well-positioned to take advantage of several trends impacting our customers in the United States and globally.
Added
Apollo provides capital to syndicates 1969 and 1971 in exchange for a pro-rata share of the underwriting income, with the remainder of the capital provided by third parties.
Removed
Finally, our underwriting controls and procedures are regularly reviewed to ensure our underwriters are acting with clear line of sight to profitably underwrite each of the markets we serve.
Added
Additionally, Apollo earns managing agency fees and profit commissions for being the managing agent to both its own syndicates, as well as to innovative third-party syndicates, known as platform partners. 6 Table of Contents We believe the acquisition is exceptionally well aligned to Skyward Specialty’s strategy, bringing new specialty niches, a distinctive new economy offering, accelerating innovation, and adding Apollo’s advanced technology capabilities.
Removed
It is used for a variety of reasons, including supplementing the limits provided by the treaty coverage or covering risks or perils excluded from treaty reinsurance.
Added
Our A&H captives program provides tailored medical stop-loss and reinsurance solutions for group and single-employer captive arrangements, supported by dedicated underwriting and proactive claims oversight. Our approach for managing medical costs, combined with our claims oversight, enables us to partner with select distribution partners.
Removed
At December 31, 2024, we held collateral in a statutory trust of $188.9 million on our net reinsurance recoverables. (2) This reinsurer facilitated our LPT reinsurance agreement which was commuted effective January 31, 2025. At December 31, 2024, we held collateral in a statutory trust of $22.7 million on our net reinsurance recoverables.
Added
Agriculture and Credit (Re)insurance : Our Agriculture and Credit (Re)insurance underwriting division provides specialty risk-transfer solutions across a diversified global portfolio, spanning agriculture, dairy and livestock revenue protection, mortgage and credit product lines. We support insurers, MGAs, and other risk originators by delivering tailored treaty protection using proportional and excess of loss structures.
Removed
The estimate is based on our reserving practices and on the claims adjuster’s experience and knowledge of the nature and value of the specific type of claim. Case reserves are revised periodically based on subsequent developments associated with each claim. See the section entitled “Claims Management” included in this Item 1 for more information.
Added
Our global agriculture book provides coverage for weather and natural peril driven volatility and other production and yield risks, helping clients manage catastrophe exposure and seasonal earnings variability across regions.
Added
The mortgage portfolio supports government sponsored entities and private mortgage insurers against default and loss severity volatility typically due to macroeconomic stress, structured to manage tail risk and protect against adverse cycle turns. Our credit portfolio provides protection against losses driven by default risk covering single obligors and multi-buyer trade credit across a diverse portfolio across regions and industries.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

63 edited+44 added−15 removed196 unchanged
Biggest changeAmong others, these risks relate to: • our financial condition and results of operations could be materially adversely affected if we do not accurately assess our underwriting risk; • competition for business in our industry is intense; • because our business depends on insurance retail agents and brokers, wholesalers and program administrators, we are exposed to certain risks arising out of our reliance on these distribution channels that could adversely affect our results; • we may be unable to purchase third-party reinsurance in amounts we desire on commercially acceptable terms or on terms that adequately protect us, and this inability may materially adversely affect our business, financial condition and results of operations; • our losses and loss expense reserves may be inadequate to cover our actual losses, which could have a material adverse effect on our financial condition, results of operations and cash flows; • a decline in our financial strength rating may adversely affect the amount of business we write; • unexpected changes in the interpretation of our coverage or provisions, including loss limitations and exclusions, in our policies could have a material adverse effect on our financial condition and results of operations; • our reinsurers may not reimburse us for claims on a timely basis, or at all, which may materially adversely affect our business, financial condition and results of operations; • our failure to accurately and timely pay claims could materially and adversely affect our business, financial condition, results of operations, and prospects; • adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity could result in the sale of fewer policies than expected or an increase in the frequency of claims and premium defaults, and even the falsification of claims, or a combination of these effects, which, in turn, could affect our growth and profitability; • the insurance business is historically cyclical in nature, which may affect our financial performance and cause our operating results to vary from quarter to quarter and may not be indicative of future performance; • we are subject to extensive regulation, which may adversely affect our ability to achieve our business objectives; failure to comply with these regulations could subject us to penalties, including fines and suspensions, which may adversely affect our financial condition and results of operations; • we could be adversely affected by the loss of one or more key personnel or by an inability to attract and retain qualified personnel; • our ability to maintain effective internal control over financial and management systems and remediate material weaknesses; and • our costs will increase significantly as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations. 14 Table of Contents Risks Related to Our Business and Industry Our financial condition and results of operations could be materially adversely affected if we do not accurately assess our underwriting risk.
Biggest changeAmong others, these risks relate to: • our financial condition and results of operations could be materially adversely affected if we do not accurately assess our underwriting risk; • competition for business in our industry is intense; 19 Table of Contents • because our business depends on insurance retail agents and brokers, wholesalers and program administrators, we are exposed to certain risks arising out of our reliance on these distribution channels that could adversely affect our results; • we may be unable to purchase third-party reinsurance in amounts we desire on commercially acceptable terms or on terms that adequately protect us, and this inability may materially adversely affect our business, financial condition and results of operations; • our losses and loss expense reserves may be inadequate to cover our actual losses, which could have a material adverse effect on our financial condition, results of operations and cash flows; • a decline in our financial strength rating may adversely affect the amount of business we write; • unexpected changes in the interpretation of our coverage or provisions, including loss limitations and exclusions, in our policies could have a material adverse effect on our financial condition and results of operations; • our reinsurers may not reimburse us for claims on a timely basis, or at all, which may materially adversely affect our business, financial condition and results of operations; • our failure to accurately and timely pay claims could materially and adversely affect our business, financial condition, results of operations, and prospects; • adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity could result in the sale of fewer policies than expected or an increase in the frequency of claims and premium defaults, and even the falsification of claims, or a combination of these effects, which, in turn, could affect our growth and profitability; • the insurance business is historically cyclical in nature, which may affect our financial performance and cause our operating results to vary from quarter to quarter and may not be indicative of future performance; • we are subject to extensive regulation, which may adversely affect our ability to achieve our business objectives; failure to comply with these regulations could subject us to penalties, including fines and suspensions, which may adversely affect our financial condition and results of operations; • we could be adversely affected by the loss of one or more key personnel or by an inability to attract and retain qualified personnel; • if we fail to achieve and maintain effective internal controls, our operating results and financial condition could be impacted and the market price of our common stock may be negatively affected; • our costs will increase significantly as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations. • our use of derivatives to mitigate exposure to market price volatility may subject us to risks such as hedge ineffectiveness, basis risk, collateral and margin call liquidity pressures, and valuation uncertainty inherent in futures and options markets, any of which could adversely affect our financial condition; and • the integration of Apollo may present unforeseen challenges, including potential difficulties in integrating technology systems, business processes, and risk management frameworks, which could result in operational disruptions, increased costs, or delays in realizing anticipated strategic benefits from the acquisition.
Among the factors that could affect our stock price are: • market conditions in the broader stock market; • actual or anticipated fluctuations in our quarterly financial and operating results; • introduction of new products or services by us or our competitors; • issuance of new or changed securities analysts’ reports or recommendations; • results of operations that vary from expectations of securities analysts and investors; • short sales, hedging and other derivative transactions in our common stock; • guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; • strategic actions by us or our competitors; • announcement by us, our competitors or our acquisition targets; • sales, or anticipated sales, of large blocks of our stock, including by our directors, executive officers and principal stockholders; • additions or departures in our Board or Directors, senior management or other key personnel; • regulatory, legal or political developments; 28 Table of Contents • public response to press releases or other public announcements by us or third parties, including our filings with the SEC; • litigation and governmental investigations; • changing economic conditions, including social inflation; • changes in accounting principles; • any indebtedness we may incur or securities we may issue in the future; • default under agreements governing our indebtedness; • exposure to capital and credit market risks that adversely affect our investment portfolio or our capital resources; • changes in our credit ratings; and • other events or factors, including those from natural disasters, war, actors of terrorism or responses to these events.
Among the factors that could affect our stock price are: • market conditions in the broader stock market; 35 Table of Contents • actual or anticipated fluctuations in our quarterly financial and operating results; • introduction of new products or services by us or our competitors; • issuance of new or changed securities analysts’ reports or recommendations; • results of operations that vary from expectations of securities analysts and investors; • short sales, hedging and other derivative transactions in our common stock; • guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; • strategic actions by us or our competitors; • announcement by us, our competitors or our acquisition targets; • sales, or anticipated sales, of large blocks of our stock, including by our directors, executive officers and principal stockholders; • additions or departures in our Board or Directors, senior management or other key personnel; • regulatory, legal or political developments; • public response to press releases or other public announcements by us or third parties, including our filings with the SEC; • litigation and governmental investigations; • changing economic conditions, including social inflation; • changes in accounting principles; • any indebtedness we may incur or securities we may issue in the future; • default under agreements governing our indebtedness; • exposure to capital and credit market risks that adversely affect our investment portfolio or our capital resources; • changes in our credit ratings; and • other events or factors, including those from natural disasters, war, actors of terrorism or responses to these events.
Among other things, our charter documents: • permit the Board of Directors to establish the number of directors and fill any vacancies and newly created directorships; • provide that our Board of Directors will be classified into three classes with staggered, three-year terms and that directors may only be removed for cause; • require super-majority voting to amend provisions in our certificate of incorporation and bylaws; • include blank-check preferred stock, the preference rights and other terms of which may be set by the Board of Directors and could delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise benefit our stockholders; • eliminate the ability of our stockholders to call special meetings of stockholders; • specify that special meetings of our stockholders can be called only by our Board of Directors, the chairman of our Board of Directors, or our chief executive officer; • prohibit stockholder consent action by other than unanimous written consent; • provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum; • prohibit cumulative voting in the election of directors; and 29 Table of Contents • establish advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Among other things, our charter documents: 36 Table of Contents • permit the Board of Directors to establish the number of directors and fill any vacancies and newly created directorships; • provide that our Board of Directors will be classified into three classes with staggered, three-year terms and that directors may only be removed for cause; • require super-majority voting to amend provisions in our certificate of incorporation and bylaws; • include blank-check preferred stock, the preference rights and other terms of which may be set by the Board of Directors and could delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise benefit our stockholders; • eliminate the ability of our stockholders to call special meetings of stockholders; • specify that special meetings of our stockholders can be called only by our Board of Directors, the chairman of our Board of Directors, or our chief executive officer; • prohibit stockholder consent action by other than unanimous written consent; • provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum; • prohibit cumulative voting in the election of directors; and • establish advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity could result in the sale of fewer policies than expected or an increase in frequency or severity of claims and premium defaults or both, which, in turn, could affect our growth and profitability. • Increased cost due to “social inflation,” including continued increase of medical and material costs, more costly technology in vehicles, supply chain disruptions, more involvement of attorneys in claims matters, third-party financing of litigation, lawsuit abuse and other factors, all of which could increase the frequency and severity of claims and affect the adequacy of our loss reserves. • If claims were to become more frequent, even if we had no liability for those claims, the cost of evaluating and handling such potential claims could escalate beyond the amount of the reserves we have established.
Adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity could result in the sale of fewer policies than expected or an increase in frequency or severity of claims and premium defaults or both, which, in turn, could affect our growth and profitability. 22 Table of Contents • Increased cost due to “social inflation,” including continued increase of medical and material costs, more costly technology in vehicles, supply chain disruptions, more involvement of attorneys in claims matters, third-party financing of litigation, lawsuit abuse and other factors, all of which could increase the frequency and severity of claims and affect the adequacy of our loss reserves. • If claims were to become more frequent, even if we had no liability for those claims, the cost of evaluating and handling such potential claims could escalate beyond the amount of the reserves we have established.
Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation and bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition or results of operations. Item 1B.
Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation and bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition or results of operations.
We believe our revenue growth depends on a number of factors, including, but not limited to, our ability to: • price our products effectively so that we are able to attract and retain insureds without compromising our profitability; • successfully deploy and implement our products, obtain renewals and provide our distribution partners with excellent support; • attract and retain highly qualified underwriters and claims professionals; • enhance our infrastructure and data reporting systems to ensure that we can effectively and efficiently deliver our products; • successfully create new distribution channels; • successfully introduce new products and enhance existing products; • successfully compete against larger companies and new market entrants; and 25 Table of Contents • increase awareness of our brand.
We believe our revenue growth depends on a number of factors, including, but not limited to, our ability to: • price our products effectively so that we are able to attract and retain insureds without compromising our profitability; • successfully deploy and implement our products, obtain renewals and provide our distribution partners with excellent support; • attract and retain highly qualified underwriters and claims professionals; • enhance our infrastructure and data reporting systems to ensure that we can effectively and efficiently deliver our products; • successfully create new distribution channels; • successfully introduce new products and enhance existing products; • successfully compete against larger companies and new market entrants; and • increase awareness of our brand.
As a result of such status, certain transactions between our insurance subsidiaries and one or more of their affiliates may not be effected unless the insurer has provided notice of that transaction to the Texas Department of Insurance. These prior notification requirements may result in business delays and additional business expenses.
As a result of such status, certain transactions between our insurance subsidiaries and one or more of their affiliates may not be affected unless the insurer has provided notice of that transaction to the Texas Department of Insurance. These prior notification requirements may result in business delays and additional business expenses.
If acquisitions are made, we may not realized the anticipated benefits of such acquisitions, including but not limited to, revenue growth, operational efficiencies or expected synergies. We have experienced rapid growth in recent years, and our recent growth rates may not be indicative of our future growth. We have experienced significant revenue growth in recent years.
If acquisitions are made, we may not realize the anticipated benefits of such acquisitions, including but not limited to, revenue growth, operational efficiencies or expected synergies. We have experienced rapid growth in recent years, and our recent growth rates may not be indicative of our future growth. We have experienced significant revenue growth in recent years.
In particular, competition in the insurance industry is based on many factors, including price of coverage, the general reputation and perceived financial strength of the company, relationships with distribution partners, terms and conditions of products offered, ratings assigned by independent rating agencies, speed of claims payment and reputation, and the experience and reputation of the members of our underwriting team in the particular lines of insurance and reinsurance we seek to underwrite.
In particular, competition in the insurance industry is based on many factors, including price of coverage, the general reputation and perceived financial strength of the company, relationships with distribution partners, terms and conditions of products offered, ratings assigned by independent rating agencies, speed of claims payment and reputation, 20 Table of Contents and the experience and reputation of the members of our underwriting team in the particular lines of insurance and reinsurance we seek to underwrite.
To the extent that cash flows generated by our operations are insufficient to fund future operating requirements and cover claim losses, or that our capital position is adversely impacted by a decline in the fair value of our investment portfolio, losses from catastrophe events or otherwise, we may need to raise additional funds through financings or curtail our growth.
To the extent that cash flows generated by our operations are insufficient to fund future operating requirements and cover claim losses, or that our capital position is adversely impacted by a decline in the fair value of our investment portfolio, losses from catastrophe events, adverse reserve development or otherwise, we may need to raise additional funds through financings or curtail our growth.
A downgrade or withdrawal of our rating could result in any of the following consequences, among others: • causing our current and future distribution partners and insureds to choose other, more highly-rated competitors; 17 Table of Contents • increasing the cost or reducing the availability of reinsurance to us; or • severely limiting or preventing us from writing new and renewal insurance contracts.
A downgrade or withdrawal of our rating could result in any of the following consequences, among others: • causing our current and future distribution partners and insureds to choose other, more highly-rated competitors; • increasing the cost or reducing the availability of reinsurance to us; or • severely limiting or preventing us from writing new and renewal insurance contracts.
If we conclude that our 27 Table of Contents internal control over financial reporting is not effective, the cost and scope of remediation actions and their effect on our operations may be significant. Moreover, any material weaknesses or other deficiencies in our internal control over financial reporting may impede our ability to file timely and accurate reports with the SEC.
If we conclude that our internal control over financial reporting is not effective, the cost and scope of remediation actions and their effect on our operations may be significant. Moreover, any material weaknesses or other deficiencies in our internal control over financial reporting may impede our ability to file timely and accurate reports with the SEC.
Failure to maintain our risk-based capital at the required levels could adversely affect the ability of our insurance subsidiary to maintain regulatory authority to conduct our business and our A.M. Best Rating. 22 Table of Contents We may become subject to additional government or market regulation, which may have a material adverse impact on our business.
Failure to maintain our risk-based capital at the required levels could adversely affect the ability of our insurance subsidiary to maintain regulatory authority to conduct our business and our A.M. Best Rating. We may become subject to additional government or market regulation, which may have a material adverse impact on our business.
The impact of changes in current accounting practices and future pronouncements cannot be predicted but may affect the calculation of net income, shareholder’s equity and other relevant financial statement line items. Our insurance subsidiaries are required to comply with statutory accounting principles, or SAP.
The impact of changes in current accounting practices and future pronouncements cannot be predicted but may affect the calculation of net income, shareholder’s equity and other relevant financial statement line items. 25 Table of Contents Our insurance subsidiaries are required to comply with statutory accounting principles, or SAP.
Some of these systems may include or rely on third-party systems not located on our premises or under our control. Events such as natural catastrophes, terrorist attacks, 24 Table of Contents industrial accidents, computer viruses and other cyber-attacks may cause our systems to fail or be inaccessible for extended periods of time.
Some of these systems may include or rely on third-party systems not located on our premises or under our control. Events such as natural catastrophes, terrorist attacks, industrial accidents, computer viruses and other cyber-attacks may cause our systems to fail or be inaccessible for extended periods of time.
In addition to potentially requiring that growth be slowed in the affected markets, our business could suffer from decreased quality of claims work which, in turn, could adversely affect our operating margins. 18 Table of Contents Severe weather conditions, including the effects of climate change, catastrophes, pandemic, as well as man-made event events may adversely affect our business, results of operations and financial condition.
In addition to potentially requiring that growth be slowed in the affected markets, our business could suffer from decreased quality of claims work which, in turn, could adversely affect our operating margins. Severe weather conditions, including the effects of climate change, catastrophes, pandemic, as well as man-made events may adversely affect our business, results of operations and financial condition.
Demand for insurance depends on numerous factors, including the frequency and severity of catastrophic events, levels of capacity, the introduction of 20 Table of Contents new capital providers and general economic conditions. All of these factors fluctuate and may contribute to price declines generally in the insurance industry.
Demand for insurance depends on numerous factors, including the frequency and severity of catastrophic events, levels of capacity, the introduction of new capital providers and general economic conditions. All of these factors fluctuate and may contribute to price declines generally in the insurance industry.
While policy terms and conditions in the lines of business written by us would be expected to preclude coverage for virus-related claims, like the COVID-19 pandemic, court decisions and governmental actions may challenge the validity of any exclusions or our interpretation of how such terms and conditions operate.
While policy terms and conditions in the lines of business written by us would be expected to preclude coverage for virus-related claims, court decisions and governmental actions may challenge the validity of any exclusions or our interpretation of how such terms and conditions operate.
In addition, our Investment Committee periodically reviews our Enterprise Based Asset Allocation models to assist in overall risk management. 21 Table of Contents Although we seek to preserve our capital, we cannot be certain that our investment objectives will be achieved, and results may vary substantially over time.
In addition, our Investment Committee periodically reviews our Enterprise Based Asset Allocation models to assist in overall risk management. Although we seek to preserve our capital, we cannot be certain that our investment objectives will be achieved, and results may vary substantially over time.
Risks such as inadequate losses and LAE reserves or unfavorable trends in litigation could potentially result in the need to sell investments to fund these liabilities. We may not be able to sell our investments at favorable prices or at all.
Risks such as inadequate losses and LAE reserves or unfavorable trends in litigation could potentially result in the need to sell investments to fund these 27 Table of Contents liabilities. We may not be able to sell our investments at favorable prices or at all.
Any such event may result in operational disruptions as well as unauthorized access to, the disclosure of, or loss of our proprietary information or our customers’ data and information, which in turn may result in legal claims, regulatory scrutiny and liability, reputational damage, the incurrence of costs to eliminate or mitigate further exposure, the loss of customers or affiliated advisors, or other damage to our business.
Any future cybersecurity events may result in operational disruptions as well as unauthorized access to, the disclosure of, or loss of our proprietary information or our customers’ data and information, which in turn may result in legal claims, regulatory scrutiny and liability, reputational damage, the incurrence of costs to eliminate or mitigate further exposure, the loss of customers or affiliated advisors, or other damage to our business.
Any disputes with reinsurers regarding coverage under reinsurance contracts could be time consuming, costly, and uncertain of success. These risks could cause us to incur increased net losses, and, therefore, adversely affect our financial condition. As of December 31, 2024, we had $857.9 million of reinsurance recoverables.
Any disputes with reinsurers regarding coverage under reinsurance contracts could be time consuming, costly, and uncertain of success. These risks could cause us to incur increased net losses, and, therefore, adversely affect our financial condition. As of December 31, 2025, we had $1,119.9 million of reinsurance recoverables.
As of December 31, 2024, we had gross federal income tax net operating losses, or NOLs, of approximately $44.7 million available to offset our future taxable income, if any, prior to consideration of annual limitations that may be imposed under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, or otherwise.
As of December 31, 2025, we had gross federal income tax net operating losses, or NOLs, of approximately $40.3 million available to offset our future taxable income, if any, prior to consideration of annual limitations that may be imposed under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, or otherwise.
As part of the reserving process, we review historical data and consider the impact of such factors as: • claims inflation, which is the sustained increase in cost of raw materials, labor, medical services and other components of claims cost; • claims development patterns by line of business, as well as frequency and severity trends; • pricing for our products; • legislative activity; • social and economic patterns; and • litigation, judicial and regulatory trends.
As part of the reserving process, we review historical data and consider the impact of such factors as: • claims inflation, which is the sustained increase in cost of raw materials, labor, medical services and other components of claims cost; • claims development patterns by line of business, as well as frequency and severity trends; • pricing for our products, including the impact of hedging activities to protect against commodity price volatility; • legislative activity; • social and economic patterns; and • litigation, judicial and regulatory trends.
In addition, we could be adversely affected if the distributors with whom we do business exceed their granted authority, fail to transfer collected premium to us or breach the obligations that they owe to us.
In addition, we could be adversely affected if the distributors with whom we do business exceed their granted authority, fail to transfer collected premium to us or breach the obligations that they owe to us. Although we routinely monitor our distribution relationships, such actions could expose us to liability.
We rely on these systems to interact with brokers and insureds, to underwrite business, to prepare policies and process premiums, to perform actuarial and other modeling functions, to process claims and make claims payments, and to prepare internal and external financial statements.
Our business is highly dependent upon our information technology and telecommunications systems, including our underwriting and claims systems. We rely on these systems to interact with brokers and insureds, to underwrite business, to prepare policies and process premiums, to perform actuarial and other modeling functions, to process claims and make claims payments, and to prepare internal and external financial statements.
If we cannot obtain adequate capital on favorable terms or at all, we may not have sufficient funds to implement our operating plans and our business, financial condition or results of operations could be materially adversely affected.
If we cannot obtain adequate capital on favorable terms or at all, we may not have sufficient funds to implement our operating plans and our business, financial condition or results of operations could be materially adversely affected. The availability of credit under the Revolving Credit Facility is subject to conditions that may limit our access.
Any of the above could cause investors to lose confidence in our reported financial information or our common stock listing on Nasdaq to be suspended or terminated, which could have a negative effect on the trading price of our common stock. We have identified a material weakness in our internal control over information technology general controls (“ITGCs”).
Any of the above could cause investors to lose confidence in our reported financial information or our common stock listing on Nasdaq to be suspended or terminated, which could have a negative effect on the trading price of our common stock.
The effects of litigation on our business are uncertain and could have an adverse effect on our business. As is typical in our industry, we continually face risks associated with litigation of various types, including disputes relating to insurance claims under our policies as well as other general commercial and corporate litigation.
As is typical in our industry, we continually face risks associated with litigation of various types, including disputes relating to insurance claims under our policies as well as other general commercial and corporate litigation.
The U.S. federal government generally has not directly regulated the insurance industry except for certain areas of the market, such as insurance for flood, nuclear and terrorism risks, but could consider legislation in several areas that may affect the insurance industry, including privatization of government entities such as Freddie Mac or Fannie Mae, reduction in federal subsidiaries for certain businesses, such as agriculture, tort reform, corporate governance and the taxation of reinsurance companies.
The U.S. federal government generally has not directly regulated the insurance industry except for certain areas of the market, such as insurance for flood, nuclear and terrorism risks, but could consider legislation in several areas that may affect the insurance industry, including privatization of government entities such as Freddie Mac or Fannie Mae, reduction in federal subsidiaries for certain businesses, such as agriculture, tort reform, corporate governance and the taxation of reinsurance companies. 28 Table of Contents Changes to the U.S. tax laws and implementation of new tax policies could have a significant negative impact on the overall economy and our business.
Changes in federal, state, and local legislation and regulation based on concerns about climate change cannot be predicted but could have a material adverse effect on our business, operational and financial results.
Additionally, changes in domestic and international programs and initiatives with respect to climate policy as well as federal, state, and local legislation and regulation based on concerns about climate change cannot be predicted but could have a material adverse effect on our business, operational results and financial results.
Our underwriting success is dependent on our ability to accurately assess the risks associated with the business we write and retain. We rely on the experience of our underwriting staff in assessing those risks. If we misunderstand the nature or extent of the risks, we may fail to establish appropriate premium rates which could adversely affect our financial results.
We rely on the experience of our underwriting staff in assessing those risks. If we misunderstand the nature or extent of the risks, we may fail to establish appropriate premium rates which could adversely affect our financial results.
Although we routinely monitor our distribution relationships, such actions could expose us to liability. 15 Table of Contents Also, if insurance distribution firm consolidation continues at its current pace or increases in the future, our sales channels could be materially affected in a number of ways, including loss of market access or market share in certain geographic areas.
Also, if insurance distribution firm consolidation continues at its current pace or increases in the future, our sales channels could be materially affected in a number of ways, including loss of market access or market share in certain geographic areas.
If we are unable to achieve and maintain effective internal controls, our operating results and financial condition could be harmed and the market price of our common stock may be negatively affected.
We are required by Section 404 of the Sarbanes‑Oxley Act to evaluate the effectiveness of our internal control over financial reporting. If we are unable to achieve and maintain effective internal controls, our operating results and financial condition could be harmed and the market price of our common stock may be negatively affected.
Should any of our key personnel terminate their employment with us, or if we are unable to retain and attract talented personnel, we may be unable to maintain our current competitive position in the specialized markets in which we operate, which could adversely affect our results of operations.
Should any of our key personnel terminate their employment with us, or if we are unable to retain and attract talented personnel, we may be unable to maintain our current competitive position in the specialized markets in which we operate, which could adversely affect our results of operations. 30 Table of Contents Security breaches, loss of data, cyberattacks, and other information technology failures could disrupt our operations, damage our reputation, and adversely affect our business, operations, and financial results.
The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions.
For instance, the following uncertainties may have an impact on the adequacy of our reserves: • When a claim is received, it may take considerable time to appreciate fully the extent of the covered loss suffered by the insured and, consequently, estimates of loss associated with specific claims can increase over time. 16 Table of Contents Consequently, estimates of loss associated with specified claims can change as new information emerges, which could cause the reserves for the claim to become inadequate. • New theories of liability are enforced retroactively from time to time by courts.
For instance, the following uncertainties may have an impact on the adequacy of our reserves: • When a claim is received, it may take considerable time to appreciate fully the extent of the covered loss suffered by the insured and, consequently, estimates of loss associated with specific claims can increase over time.
The occurrence of a natural disaster or other catastrophe loss could materially adversely affect our business, financial condition, and results of operations. This may include catastrophes even where we do not insure against the loss, such as the 2025 California wildfires, as homes and businesses lost or damaged due to catastrophe may otherwise cancel our policies following such event.
This may include 24 Table of Contents catastrophes even where we do not insure against the loss, such as the 2025 California wildfires, as homes and businesses lost or damaged due to catastrophe may otherwise cancel our policies following such event.
If actual renewals and repeat business do not meet expectations or if we choose not to write renewals or accept repeat business because of pricing conditions, our written premium in future years and our future operations would be materially adversely affected.
The insurance and reinsurance industries have historically been cyclical businesses with intense competition, often based on price. If actual renewals and repeat business do not meet expectations or if we choose not to write renewals or accept repeat business because of pricing conditions, our written premium in future years and our future operations would be materially adversely affected.
Consequently, investors may need to sell all or part of their holdings of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking immediate cash dividends should not purchase our common stock. Applicable insurance laws may make it difficult to effect a change of control.
Consequently, investors may need to sell all or part of their holdings of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
However, the steps we take to protect our intellectual property may be inadequate. Our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability and scope of our intellectual property rights.
Our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability and scope of our intellectual property rights. Our failure to secure, protect and enforce our intellectual property rights could adversely affect our brand and adversely impact our business.
Our competitors, as well as a number of other entities and individuals, may own or claim to own intellectual property relating to our industry or the Company. In the future, third parties may claim that we are infringing on their intellectual property rights, and we may be found to be infringing on such rights.
Our success depends also in part on our not infringing on the intellectual property rights of others. Our competitors, as well as a number of other entities and individuals, may own or claim to own intellectual property relating to our industry or the Company.
Moreover, state insurance regulators that have jurisdiction over the payment of dividends by our insurance subsidiaries may in the future adopt statutory provisions more restrictive than those currently in effect. 23 Table of Contents Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, contractual restrictions pursuant to our debt agreements, our indebtedness, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.
Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, contractual restrictions pursuant to our debt agreements, our indebtedness, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.
As industry practices and legal, judicial, social, and other conditions change, unexpected and unintended issues related to claims and coverage may emerge. For example, many of our policies limit the period during which a policyholder may bring a claim, which may be shorter than the statutory period under which such claims can be brought against our policyholders.
For example, many of our policies limit the period during which a policyholder may bring a claim, which may be shorter than the statutory period under which such claims can be brought against our policyholders.
Anti-takeover provisions in our organizational documents could delay a change in management and limit our share price.
Anti-takeover provisions in our organizational documents could prevent or delay a change of control that is beneficial to shareholders and limit our share price.
We may be unable to purchase third-party reinsurance in amounts we desire on commercially acceptable terms or on terms that adequately protect us, and this inability may materially adversely affect our business, financial condition and results of operations.
In an increasingly digital world, distributors who cannot provide a digital or technology-driven experience risk losing customers who demand such an experience, and such customers may choose to utilize more technology-driven distributors. 21 Table of Contents We may be unable to purchase third-party reinsurance in amounts we desire on commercially acceptable terms or on terms that adequately protect us, and this inability may materially adversely affect our business, financial condition and results of operations.
Under applicable Texas insurance laws and regulations, no person may acquire control of a domestic insurer until written approval is obtained from the state insurance commissioner on the proposed acquisition.
Investors seeking immediate cash dividends should not purchase our common stock. 29 Table of Contents Applicable insurance laws may make it difficult to effect a change of control. Under applicable Texas insurance laws and regulations, no person may acquire control of a domestic insurer until written approval is obtained from the state insurance commissioner on the proposed acquisition.
Similarly, when conditions begin to soften, many customers that were previously driven into the E&S market may return to the admitted market, exacerbating the effects of rate decreases on our financial results.
Similarly, when conditions begin to soften, many customers that were previously driven into the E&S market may return to the admitted market, exacerbating the effects of rate decreases on our financial results. 26 Table of Contents Finally, the market may experience “micro cycles” where certain areas of the market harden or soften independently of the market as a whole, and perhaps at a more drastic rate.
Our success and ability to compete depend in part on our intellectual property, which includes our rights in our brand and our proprietary technology used in certain of our product lines. We primarily rely on copyright and trade secret laws, and confidentiality agreements with our employees, customers, service providers, partners and others to protect our intellectual property rights.
Our success and ability to compete depend in part on our intellectual property, which includes our rights in our brand and our proprietary technology used in certain of our product lines.
Even if we were to prevail in such a dispute, any litigation could be costly and time-consuming and divert the attention of our management and key personnel from our business operations. 26 Table of Contents Risks Related to Ownership of Our Common Stock We have and expect to continue to incur increased costs as a result of operating as a public company, and our management devotes substantial time to compliance initiatives.
Even if we were to prevail in such a dispute, any litigation could be costly and time-consuming and divert the attention of our management and key personnel from our business operations.
Unexpected changes in the interpretation of our coverage or provisions, including loss limitations and exclusions, in our policies could have a material adverse effect on our financial condition and results of operations. There can be no assurances that loss limitations or exclusions in our policies will be enforceable in the manner we intend.
It is possible that such reviews of us may result in adverse ratings consequences, which could have a material adverse effect on our financial condition and results of operations. 23 Table of Contents Unexpected changes in the interpretation of our coverage or provisions, including loss limitations and exclusions, in our policies could have a material adverse effect on our financial condition and results of operations.
Our operating results and stock price may be volatile, or may decline regardless of our operating performance, and you could lose all or part of your investment.
In the future, current controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of the financial statements. Our operating results and stock price may be volatile, or may decline regardless of our operating performance, and you could lose all or part of your investment.
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. We cannot predict with certainty how any changes in the tax laws might affect us, our stockholders, or our portfolio investments. New legislation and any U.S.
Legislative or other actions relating to taxes could have a negative effect on us, our investments, or our stockholders. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury.
If we fail to remediate the material weakness, or if we fail to establish and maintain effective internal control over ITGCs, the market price of our common stock could be adversely affected.
We had identified a material weakness in our internal control over information technology general controls (“ITGCs”) as of December 31, 2024, which was remediated as of December 31, 2025. If we fail to maintain an effective system of internal controls, the market price of our common stock could be adversely affected.
These risks could increase as vendors adopt and use more cloud-based software services rather than software services which can be run within our data centers. We may not be able to manage our growth effectively. We intend to grow our business in the future, which could require additional capital, systems development and skilled personnel.
These risks could increase as vendors adopt and use more cloud-based software services rather than software services which can be run within our data centers. Artificial intelligence is an evolving and rapidly growing technology which may impact our business and operations.
Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
Therefore, there can be no assurance that our business will not be adversely affected by the OBBBA or any other tax law changes. Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
We are subject to financial reporting and other requirements for which our accounting and other management systems and resources may not be adequately prepared. As a public company, and particularly since we are no longer an emerging growth company, we incur significant legal, accounting and other expenses that we would not incur as a private company.
Risks Related to Ownership of Our Common Stock We have and expect to continue to incur increased costs as a result of operating as a public company, and our management devotes substantial time to compliance initiatives. We are subject to financial reporting and other requirements for which our accounting and other management systems and resources may not be adequately prepared.
Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected. We are required by Section 404 of the Sarbanes‑Oxley Act to evaluate the effectiveness of our internal control over financial reporting.
Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with 34 Table of Contents policies or procedures. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.
Finally, the market may experience “micro cycles” where certain areas of the market harden or soften independently of the market as a whole, and perhaps at a more drastic rate. As a result, our operating results are subject to fluctuation and have historically varied from quarter to quarter.
As a result, our operating results are subject to fluctuation and have historically varied from quarter to quarter.
Treasury regulations, administrative interpretations or court decisions interpreting such legislation could have other adverse consequences. Stockholders are urged to consult with their tax advisors regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our securities.
Stockholders are urged to consult with their tax advisors regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our securities. For example, on July 4, 2025, H.R. 1, the “One Big Beautiful Bill Act” (the “OBBBA”) was signed into law in the United States.
Therefore, these provisions could adversely affect the price of our common stock.
Some of these provisions impose various procedural and other requirements that could make it more difficult for shareholders to affect certain corporate actions. Therefore, these provisions could adversely affect the price of our common stock.
We can offer no assurance that our rating will remain at its current level. It is possible that such reviews of us may result in adverse ratings consequences, which could have a material adverse effect on our financial condition and results of operations.
We can offer no assurance that our rating will remain at its current level.
With the participation of our Chief Executive Officer, our Chief Financial Officer and our Chief Information and Technology Officer, management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2024 using criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
With the participation of our Chief Executive Officer, our Chief Financial Officer and our Chief Information and Technology Officer, management identified control deficiencies over ITGCs during the fiscal year ended December 31, 2024, that constituted a material weakness as described within “ITEM 9A.
Removed
In an increasingly digital world, distributors who cannot provide a digital or technology-driven experience risk losing customers who demand such an experience, and such customers may choose to utilize more technology-driven distributors.
Added
Risks Related to Our Business and Industry Our financial condition and results of operations could be materially adversely affected if we do not accurately assess our underwriting risk. Our underwriting success is dependent on our ability to accurately assess the risks associated with the business we write and retain.
Removed
In addition to the impacts that environmental incidents have on our business, changes to law and regulation related to climate change could also directly affect our business.
Added
Consequently, estimates of loss associated with specified claims can change as new information emerges, which could cause the reserves for the claim to become inadequate. • New theories of liability are enforced retroactively from time to time by courts.
Removed
The current administration made comments during their election campaign suggesting that it was not supportive of various clean energy programs and initiatives, including the United Nations (“U.N.”) Framework Convention on Climate Change, designed to curtail global warming.
Added
There can be no assurances that loss limitations or exclusions in our policies will be enforceable in the manner we intend. As industry practices and legal, judicial, social, and other conditions change, unexpected and unintended issues related to claims and coverage may emerge.
Removed
On January 20, 2025, President Trump signed an executive order to withdraw the U.S. from the Paris Agreement, marking a significant shift in U.S. climate policy.
Added
The occurrence of a natural disaster or other catastrophe loss could materially adversely affect our business, financial condition, and results of operations.
Removed
It remains unclear what further actions the current administration may take with respect to domestic and international programs and initiatives, and what support the administration would have for any potential changes to such legislative programs and initiatives in the U.N. or the U.S. Congress.
Added
Our use of derivatives to mitigate exposure to market price volatility may subject us to risks such as hedge ineffectiveness, basis risk, collateral and margin call liquidity pressures, and valuation uncertainty inherent in futures and options markets, any of which could adversely affect our financial condition.
Removed
The insurance and reinsurance industries have historically been cyclical businesses with intense competition, 19 Table of Contents often based on price.
Added
Our use of derivatives to mitigate exposure to market price volatility subjects us to risks that could adversely affect our financial condition and results of operations.
Removed
Changes to the U.S. tax laws and implementation of new tax policies could have a significant negative impact on the overall economy and our business. Legislative or other actions relating to taxes could have a negative effect on us, our investments, or our stockholders.
Added
These risks include hedge ineffectiveness due to imperfect correlation between derivatives and the underlying exposures, a recognized limitation in commodity market hedge theory; basis risk, where futures prices do not move in line with cash market prices relevant to our business; and liquidity pressures arising from margin call or collateral requirements associated with futures positions during adverse market movements.
Removed
Furthermore, the current administration has included as part of its agenda a potential reform of U.S. tax laws. The details of the potential reform have not yet emerged, but several intended reforms have been outlined, including reducing the corporate tax rate, extending certain provisions of the Tax Cuts and Jobs Act of 2017 (“TCJA”), and imposing new tariffs.
Added
Additionally, reliance on market based models introduces valuation uncertainty that may cause hedges to perform differently than expected. Together, these factors may prevent our hedging strategies from effectively reducing volatility and could materially adversely impact our financial results.
Removed
The combined impact of extending certain tax benefits pursuant to the TCJA and the implementation of new tariffs could potentially lead to increases in the U.S. deficit, inflation, and interest rates, all of which could contribute to increases in market interest rates and a decrease in U.S. economic growth with a possibility of a recession, all of which could negatively impact our business.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIncidents are evaluated to determine materiality as well as operational and business impact and reviewed for privacy impact. 30 Table of Contents Our cybersecurity risk management program leverages the National Institute of Standards and Technology framework, which organizes cybersecurity risks into six categories: identify, protect, detect, respond, recover and govern.
Biggest changeOur cybersecurity risk management program leverages the National Institute of Standards and Technology framework, which organizes cybersecurity risks into six categories: identify, protect, detect, respond, recover and govern.
As part of our response to such an incident, members of the Crisis Management Team would provide an initial awareness communication of the incident to our Chief Executive Officer/Chair of the Board who would in turn inform the Chair of the Risk Committee.
As part of our response to such an incident, members of the Crisis Management Team would provide an initial awareness communication of the incident to our Chief Executive Officer/Chair of the Board who 38 Table of Contents would in turn inform the Chair of the Risk Committee.
Further, security events and data incidents are evaluated, ranked by severity and prioritized for response and remediation.
Further, security events and data incidents are evaluated, ranked by severity and prioritized for response and remediation. Incidents are evaluated to determine materiality as well as operational and business impact and reviewed for privacy impact.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings We are party to legal proceedings which arise in the ordinary course of business. We believe that the outcome of such matters, individually and in the aggregate, will not have a material adverse effect on our consolidated financial position. 31 Table of Contents Item 4. Mine Safety Disclosures None. 32 Table of Contents PART II
Biggest changeItem 3. Legal Proceedings We are party to legal proceedings which arise in the ordinary course of business. We believe that the outcome of such matters, individually and in the aggregate, will not have a material adverse effect on our consolidated financial position. Item 4. Mine Safety Disclosures None. 39 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+1 added−9 removed1 unchanged
Biggest changeJanuary 13, 2023 December 31, 2023 December 31, 2024 Skyward Specialty Insurance Group, Inc. $ 100.00 $ 177.38 $ 264.61 Nasdaq Composite Index $ 100.00 $ 135.49 $ 174.30 Nasdaq Insurance Index $ 100.00 $ 103.37 $ 128.30 Item 6. [Reserved] - Not applicable.
Biggest changeThis graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act. 40 Table of Contents January 13, 2023 December 31, 2023 December 31, 2024 December 31, 2025 Skyward Specialty Insurance Group, Inc. $ 100.00 $ 177.38 $ 264.61 $ 267.59 Nasdaq Composite Index $ 100.00 $ 135.49 $ 174.30 $ 209.78 Nasdaq Insurance Index $ 100.00 $ 103.37 $ 128.30 $ 127.60 Item 6. [Reserved] - Not applicable. 41 Table of Contents
Performance Graph The following performance graph compares the cumulative total shareholder return of an investment in (1) our common stock, (2) the cumulative total returns to the Nasdaq Composite Index and (3) the cumulative total returns to the Nasdaq Insurance Index, for the period beginning January 13, 2023 (the date our common stock began trading on Nasdaq) through December 31, 2024.
Performance Graph The following performance graph compares the cumulative total shareholder return of an investment in (1) our common stock, (2) the cumulative total returns to the Nasdaq Composite Index and (3) the cumulative total returns to the Nasdaq Insurance Index, for the period beginning January 13, 2023 (the date our common stock began trading on Nasdaq) through December 31, 2025.
Securities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans will be included in our definitive proxy statement to be filed with the SEC with respect to our 2025 Annual Meeting of Stockholders (“2025 Proxy Statement”) and is incorporated herein by reference.
Securities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans will be included in our definitive proxy statement to be filed with the SEC with respect to our 2026 Annual Meeting of Stockholders (“2026 Proxy Statement”) and is incorporated herein by reference.
As of February 26, 2025, there were approximately 5 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of our stockholders, this number is not representative of the total number of stockholders represented by these stockholders of record.
As of February 26, 2026, there were approximately 117 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of our stockholders, this number is not representative of the total number of stockholders represented by these stockholders of record.
Recent Sales of Unregistered Equity Securities Set forth below is information regarding securities issued or granted by us during the period covered by this Annual Report on Form 10-K that were not registered under the Securities Act. The information presented in this Item 5 gives effect to a 4-for-1 reverse stock split, which became effective on January 3, 2023.
See Part III for information on securities authorized for issuance under our equity compensation plans. Recent Sales of Unregistered Equity Securities Set forth below is information regarding securities issued or granted by us during the period covered by this Annual Report on Form 10-K that were not registered under the Securities Act.
The graph assumes an initial investment of $100.
The graph assumes an initial investment of $100. Such returns are based on historical results and are not indicative of future performance.
Removed
Issuance of Class A Common Stock upon Conversion of Preferred Stock and Class B Common Stock Immediately prior to completing the IPO, all preferred stock converted into 16,305,113 shares of common stock.
Added
On January 1, 2026, pursuant to the Apollo SPAs (as defined below), we paid approximately $555.0 million in connection with the Apollo acquisition, which included (i) $371.0 million in cash and (ii) the issuance of 3,679,332 unregistered shares of the Company’s common stock.
Removed
The issuance of such common shares was exempt from the registration requirements of the Securities Act, pursuant to Section 3(a)(9) of the Securities Act, involving an exchange of securities exchanged by the issuer with its existing security holders exclusively where no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange.
Removed
No underwriters were involved in this issuance of shares. Use of Proceeds from Initial Public Offering On January 18, 2023, we closed our IPO, in which we issued and sold 4,750,000 shares of common stock and the selling stockholders sold 4,202,383 shares.
Removed
The underwriters also exercised in full their option to purchase 1,342,857 additional shares of common stock from the selling stockholders. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-265326), which was declared effective by the SEC on January 12, 2023.
Removed
Barclays Capital Inc. and Keefe, Bruyette & Woods, Inc. acted as the representatives of the underwriters. The public offering price of the shares sold in the offering was $15.00 per share. The net proceeds to the Company were approximately $62.3 million, after deducting underwriting discounts and specific incremental expenses directly attributable to the IPO.
Removed
All the proceeds from the IPO have been distributed to the Company’s insurance company subsidiaries. Issuer Purchases of Equity Securities We did not purchase any of our equity securities during the period covered by this Annual Report on Form 10-K. Dividends We do not currently intend to pay any cash dividends on our common stock in the foreseeable future.
Removed
Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.
Removed
Consequently, investors may need to sell all or part of their holdings of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking immediate cash dividends should not purchase our common stock.
Removed
Such returns are based on historical results and are not indicative of future performance. 33 Table of Contents This graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

55 edited+36 added−20 removed54 unchanged
Biggest changeResults of Operations The following table summarizes our results for the years ended December 31, 2024 and 2023: Years Ended December 31, ($ in thousands) 2024 2023 Gross written premiums $ 1,743,232 $ 1,459,829 Ceded written premiums (619,654) (549,138) Net written premiums $ 1,123,578 $ 910,691 Net earned premiums $ 1,056,722 $ 829,143 Commission and fee income 6,703 6,064 Losses and LAE 669,809 515,237 Underwriting, acquisition and insurance expenses 311,757 243,444 Underwriting income (1) $ 81,859 $ 76,526 Net investment income $ 80,686 $ 40,322 Net investment gains (losses) $ 6,256 $ 11,072 Income before income taxes $ 152,739 $ 110,102 Net income $ 118,828 $ 85,984 Adjusted operating income (1) $ 126,650 $ 80,847 Loss and LAE ratio 63.4 % 62.1 % Expense ratio 28.9 % 28.6 % Combined ratio 92.3 % 90.7 % Adjusted loss and LAE ratio (1) 62.3 % 62.3 % Expense ratio 28.9 % 28.6 % Adjusted combined ratio (1) 91.2 % 90.9 % Return on equity 16.3 % 15.9 % Return on tangible equity (1) 18.6 % 19.0 % Adjusted return on equity (1) 17.4 % 14.9 % Adjusted return on tangible equity (1) 19.8 % 17.9 % (1) See “Reconciliation of Non-GAAP Financial Measures” in this Item 2 Reconciliation of Non-GAAP Financial Measures Adjusted Operating Income The following table provides a reconciliation of adjusted operating income to net income for the years ended December 31, 2024 and 2023: 2024 2023 ($ in thousands) Pre-tax After-tax Pre-tax After-tax Income as reported $ 152,739 $ 118,828 $ 110,102 $ 85,984 Less (add): Net investment gains (losses) 6,256 4,942 11,072 8,747 Net impact of LPT (11,598) (9,162) 1,427 1,127 Other (loss) income (167) (132) (632) (499) Other expenses (4,392) (3,470) (5,364) (4,238) Adjusted operating income $ 162,640 $ 126,650 $ 103,599 $ 80,847 35 Table of Contents Underwriting Income The following table provides a reconciliation of underwriting income to income before federal income tax expense for the years ended December 31, 2024 and 2023: ($ in thousands) 2024 2023 Income before income taxes $ 152,739 $ 110,102 Add: Interest expense 9,496 10,024 Amortization expense 2,007 1,798 Other expenses 4,392 5,364 Less (add): Net investment income 80,686 40,322 Net investment gains 6,256 11,072 Other loss (167) (632) Underwriting income $ 81,859 $ 76,526 Adjusted Loss Ratio / Adjusted Combined Ratio The following table provides a reconciliation of the adjusted loss and LAE ratio and adjusted combined ratio to the loss and LAE ratio and combined ratio for the years ended December 31, 2024 and 2023: ($ in thousands) 2024 2023 Net earned premiums $ 1,056,722 $ 829,143 Losses and LAE 669,809 515,237 Pre-tax net impact of loss portfolio transfer (11,598) 1,427 Adjusted losses and LAE $ 658,211 $ 516,664 Loss ratio 63.4 % 62.1 % Less: Net impact of LPT 1.1 % (0.2)% Adjusted loss ratio 62.3 % 62.3 % Combined ratio 92.3 % 90.7 % Less: Net impact of LPT 1.1 % (0.2)% Adjusted combined ratio 91.2 % 90.9 % Tangible Stockholders’ Equity The following table provides a reconciliation of tangible stockholders’ equity to stockholders’ equity for the years ended December 31, 2024 and 2023: ($ in thousands) 2024 2023 Stockholders’ equity $ 793,999 $ 661,031 Less: Goodwill and intangible assets 87,348 88,435 Tangible stockholders’ equity $ 706,651 $ 572,596 36 Table of Contents Adjusted Return on Equity The following table provides a reconciliation of adjusted return on equity to return on equity for the years ended December 31, 2024 and 2023: ($ in thousands) 2024 2023 Numerator: adjusted operating income $ 126,650 $ 80,847 Denominator: average stockholders’ equity $ 727,515 $ 541,347 Adjusted return on equity 17.4 % 14.9 % Return on Tangible Equity Return on tangible equity for the years ended December 31, 2024 and 2023 reconciles to return on equity as follows: ($ in thousands) 2024 2023 Numerator: net income $ 118,828 $ 85,984 Denominator: average tangible stockholders’ equity $ 639,624 $ 452,194 Return on tangible equity 18.6 % 19.0 % Adjusted Return on Tangible Equity Adjusted return on tangible equity for the years ended December 31, 2024 and 2023 reconciles to return on equity as follows: ($ in thousands) 2024 2023 Numerator: adjusted operating income $ 126,650 $ 80,847 Denominator: average tangible stockholders’ equity $ 639,624 $ 452,194 Adjusted return on tangible equity 19.8 % 17.9 % 37 Table of Contents Underwriting Results Premiums The following tables present gross written premiums by underwriting division for the years ended December 31, 2024 and 2023: Years Ended December 31, ($ in thousands) 2024 2023 Change % Change Industry Solutions 317,198 305,476 11,722 3.8 % Global Property & Agriculture $ 311,402 $ 273,191 $ 38,211 14.0 % Captives 241,902 167,624 74,278 44.3 % Programs 218,407 178,726 39,681 22.2 % Accident & Health 173,073 151,701 21,372 14.1 % Transactional E&S 169,053 122,508 46,545 38.0 % Professional Lines 159,785 154,565 5,220 3.4 % Surety 152,429 106,056 46,373 43.7 % Total gross written premiums (1) $ 1,743,249 $ 1,459,847 $ 283,402 19.4 % (1) Excludes exited business The year-over-year increase in gross written premiums, when compared to 2023, was driven by double-digit premium growth from our captives, surety, transactional E&S, programs and global property & agriculture underwriting divisions.
Biggest changeAs of December 31, 2025, we recognized $14.0 million in transaction expenses associated with the transaction. 42 Table of Contents Results of Operations The following table summarizes our results for the years ended December 31, 2025 and 2024: Years Ended December 31, ($ in thousands) 2025 2024 Gross written premiums $ 2,166,236 $ 1,743,232 Ceded written premiums (760,004) (619,654) Net written premiums $ 1,406,232 $ 1,123,578 Net earned premiums $ 1,304,505 $ 1,056,722 Commission and fee income 6,855 6,703 Losses and LAE 795,022 669,809 Underwriting, acquisition and insurance expenses 377,359 311,757 Underwriting income (1) $ 138,979 $ 81,859 Net investment income $ 83,619 $ 80,600 Net investment gains $ 22,149 $ 6,342 Income before income taxes $ 216,424 $ 152,739 Net income $ 170,028 $ 118,828 Adjusted operating income (1) $ 167,372 $ 126,582 Loss and LAE ratio 60.9 % 63.4 % Expense ratio 28.4 % 28.9 % Combined ratio 89.3 % 92.3 % Adjusted loss and LAE ratio (1) NM (2) 62.3 % Expense ratio NM (2) 28.9 % Adjusted combined ratio (1) NM (2) 91.2 % Return on equity 18.9 % 16.3 % Return on tangible equity (1) 20.9 % 18.6 % Adjusted return on equity (1) 18.6 % 17.4 % Adjusted return on tangible equity (1) 20.6 % 19.8 % (1) See “Reconciliation of Non-GAAP Financial Measures” in this Item 7 (2) Not meaningful Reconciliation of Non-GAAP Financial Measures Adjusted Operating Income The following table provides a reconciliation of adjusted operating income to net income for the years ended December 31, 2025 and 2024: 2025 2024 ($ in thousands) Pre-tax After-tax Pre-tax After-tax Income as reported $ 216,424 $ 170,028 $ 152,739 $ 118,828 Less (add): Net investment gains 22,149 17,401 6,342 5,010 Net impact of LPT — — (11,598) (9,162) Transaction costs (14,019) (11,014) — — Other loss (587) (461) (167) (132) Other expenses (4,162) (3,270) (4,392) (3,470) Adjusted operating income $ 213,043 $ 167,372 $ 162,554 $ 126,582 43 Table of Contents Underwriting Income The following table provides a reconciliation of underwriting income to income before federal income tax expense for the years ended December 31, 2025 and 2024: ($ in thousands) 2025 2024 Income before income taxes $ 216,424 $ 152,739 Add: Interest expense 7,919 9,496 Amortization expense 1,636 2,007 Transaction costs 14,019 — Other expenses 4,162 4,392 Less (add): Net investment income 83,619 80,600 Net investment gains 22,149 6,342 Other loss (587) (167) Underwriting income $ 138,979 $ 81,859 Adjusted Loss Ratio / Adjusted Combined Ratio The following table provides a reconciliation of the adjusted loss and LAE ratio and adjusted combined ratio to the loss and LAE ratio and combined ratio for the year ended December 31, 2024: ($ in thousands) 2024 Net earned premiums $ 1,056,722 Losses and LAE 669,809 Pre-tax net impact of loss portfolio transfer (11,598) Adjusted losses and LAE $ 658,211 Loss ratio 63.4 % Less: Net impact of LPT 1.1% Adjusted loss ratio 62.3 % Combined ratio 92.3 % Less: Net impact of LPT 1.1% Adjusted combined ratio 91.2 % Tangible Stockholders’ Equity The following table provides a reconciliation of tangible stockholders’ equity to stockholders’ equity for the years ended December 31, 2025 and 2024: ($ in thousands) 2025 2024 Stockholders’ equity $ 1,009,565 $ 793,999 Less: Goodwill and intangible assets 88,040 87,348 Tangible stockholders’ equity $ 921,525 $ 706,651 44 Table of Contents Adjusted Return on Equity The following table provides a reconciliation of adjusted return on equity to return on equity for the years ended December 31, 2025 and 2024: ($ in thousands) 2025 2024 Numerator: adjusted operating income $ 167,372 $ 126,582 Denominator: average stockholders’ equity $ 901,782 $ 727,515 Adjusted return on equity 18.6 % 17.4 % Return on Tangible Equity Return on tangible equity for the years ended December 31, 2025 and 2024 reconciles to return on equity as follows: ($ in thousands) 2025 2024 Numerator: net income $ 170,028 $ 118,828 Denominator: average tangible stockholders’ equity $ 814,088 $ 639,624 Return on tangible equity 20.9 % 18.6 % Adjusted Return on Tangible Equity Adjusted return on tangible equity for the years ended December 31, 2025 and 2024 reconciles to return on equity as follows: ($ in thousands) 2025 2024 Numerator: adjusted operating income $ 167,372 $ 126,582 Denominator: average tangible stockholders’ equity $ 814,088 $ 639,624 Adjusted return on tangible equity 20.6 % 19.8 % Underwriting Results Premiums The following tables present gross written premiums by underwriting division for the years ended December 31, 2025 and 2024: ($ in thousands) 2025 2024 Change % Change Accident & Health $ 254,102 $ 173,073 $ 81,029 46.8 % Agriculture and Credit (Re)insurance 346,212 118,070 228,142 193.2 % Captives 275,694 241,902 33,792 14.0 % Construction & Energy Solutions 274,318 296,582 (22,264) (7.5 %) Global Property 178,128 201,796 (23,668) (11.7 %) Professional Lines 149,231 159,785 (10,554) (6.6 %) Specialty Programs 322,705 218,407 104,298 47.8 % Surety 168,148 143,965 24,183 16.8 % Transactional E&S 197,779 189,669 8,110 4.3 % Total gross written premiums (1) $ 2,166,317 $ 1,743,249 $ 423,068 24.3 % (1) Excludes exited business The year-over-year increase of $423.1 million in gross written premiums, when compared to 2024, was primarily driven by growth from the agriculture and credit (re)insurance division due to (i) new opportunities in dairy and livestock and crop, and (ii) growth in our credit portfolio which we started writing in the fourth quarter of 2024.
A small portion of our business is specialty reinsurance (principally agriculture and credit) which is similarly focused on attractive specialty classes where we believe it is more efficient to approach these classes through reinsurance given factors such as cost of entry, including the costs of geographic expansion.
A portion of our business is specialty reinsurance (principally agriculture and credit) which is similarly focused on attractive specialty classes where we believe it is more efficient to approach these classes through reinsurance given factors such as cost of entry, including the costs of geographic expansion.
Management’s best estimate of the ultimate unpaid liability is set by our Reserve Committee, who consider the actuarial indications along with other factors such as underwriting, claims handling, economic, legal and environmental changes. Our Reserve Committee includes our Chief Actuary, Chief Financial Officer and Chief Claims Officer.
Management’s best estimate of the ultimate unpaid liability is set by our Reserve Committee, who consider the actuarial indications along with other factors such as underwriting, claims handling, economic, legal and environmental changes. Our Reserve Committee includes our Chief Actuary, Chief Reserving Actuary, Chief Financial Officer and Chief Claims Officer.
ASU 2023-09 requires public companies, on an annual basis, provide enhanced rate reconciliation disclosures, including disclosures of specific categories and additional information that meet a quantitative threshold. This update also requires public companies to, among other things, disaggregate income taxes paid by federal, state and foreign taxes. The guidance is effective for fiscal years beginning after December 15, 2024.
ASU 2023-09 requires public companies, on an annual basis, provide enhanced rate reconciliation disclosures, including disclosures of specific categories and additional information that meet a quantitative threshold. This update also requires public companies to, among other things, disaggregate income taxes paid by federal, state and foreign taxes. The guidance became effective for fiscal years beginning after December 15, 2024.
We also may use the proceeds from these sources 43 Table of Contents to contribute funds to insurance subsidiaries in order to support premium growth, pay dividends and taxes and for other business purposes. Skyward Service Company receives corporate service fees from the operating subsidiaries to reimburse it for most of the operating expenses that it incurs.
We also may use the proceeds from these sources 50 Table of Contents to contribute funds to insurance subsidiaries in order to support premium growth, pay dividends and taxes and for other business purposes. Skyward Service Company receives corporate service fees from the operating subsidiaries to reimburse it for most of the operating expenses that it incurs.
For the year ended December 31, 2024, the Company recognized adverse development related to prior years’ loss and loss expense reserves of $25.7 million; $10.1 million and $15.2 million in multi-line solutions and exited lines, respectively, were related to losses previously subject to the LPT from accident years 2018 and prior.
For the year ended December 31, 2024, we recognized adverse development related to prior years’ loss and loss expense reserves of $25.7 million; $10.1 million and $15.2 million in multi-line solutions and exited lines, respectively, were related to losses previously subject to the LPT from accident years 2018 and prior.
See Note 13, “Income Taxes” to our consolidated financial statements included in Item 8 of this Form 10-K for a reconciliation between our actual federal income tax expense and the amount computed at the indicated statutory rate for the years ended December 31, 2024 and 2023.
See Note 13, “Income Taxes” to our consolidated financial statements included in Item 8 of this Form 10-K for a reconciliation between our actual federal income tax expense and the amount computed at the indicated statutory rate for the years ended December 31, 2025 and 2024.
The timing of our cash flows from operating activities can vary among periods due to the timing by which payments are made or received. Some of our payments and receipts, including loss settlements and subsequent reinsurance receipts, can be significant, and as a result their timing can influence cash flows from operating activities in any given period.
The timing of our cash flows from operating activities can vary amongst periods due to the timing by which payments are made or received. Some of our payments and receipts, including loss settlements and subsequent reinsurance receipts, can be significant, and as a result their timing can influence cash flows from operating activities in any given period.
The increase in income from our fixed income portfolio for 2024, when compared to 2023, was due to (i) a larger asset base as we continued to increase our allocation to this part of our investment portfolio and (ii) a higher book yield of 5.2% at December 31, 2024 compared to 4.5% at December 31, 2023.
The increase in income from our fixed income portfolio for 2025, when compared to 2024, was due to (i) a larger asset base as we continued to increase our allocation to this part of our investment portfolio and (ii) a higher book yield of 5.4% at December 31, 2025 compared to 5.2% at December 31, 2024.
State insurance regulatory authorities that have jurisdiction over the payment of dividends by our insurance subsidiaries may in the future adopt statutory provisions more restrictive than those currently in effect. Our insurance subsidiaries did not pay dividends to us for the years ended December 31, 2024 and 2023.
State insurance regulatory authorities that have jurisdiction over the payment of dividends by our insurance subsidiaries may in the future adopt statutory provisions more restrictive than those currently in effect. Our insurance subsidiaries did not pay dividends to us for the years ended December 31, 2025 and 2024.
For a detailed discussion of our accounting policies, see Note 1, “Summary of Significant Accounting Policies” to our consolidated financial statements included in Item 8 of this Form 10-K. Reserves for unpaid losses and LAE The reserves for unpaid losses and LAE is the largest and most complex estimate in our consolidated balance sheet.
For a detailed discussion of our accounting policies, see Note 1, “Summary of Significant Accounting Policies” to our consolidated financial statements included in Item 8 of this Form 10-K. Reserves for unpaid losses and LAE The reserves for unpaid losses and LAE is the largest and most complex estimate in our Consolidated Balance Sheets.
We believe that the principles underlying our strategy are key to achieving and sustaining best-in-class underwriting results through P&C insurance pricing cycles. We consistently 34 Table of Contents strive for excellence in risk selection, pricing, and claims outcomes, and to amplify these critical functions with the use of advanced technology and analytics.
We believe that the principles underlying our strategy are key to achieving and sustaining best-in-class underwriting results through P&C insurance pricing cycles. We consistently strive for excellence in risk selection, pricing, and claims outcomes, and to amplify these critical functions with the use of advanced technology and analytics.
The non-cat loss and LAE ratio for 2024 improved 0.3 points when compared to 2023, primarily driven by the shift in the mix of business.
The non-cat loss and LAE ratio for 2025 improved 0.3 points when compared to 2024, primarily driven by the shift in the mix of business.
Critical accounting estimates are defined as those estimates that are both important to the portrayal of our financial condition and results of operations and require us to exercise significant judgment. We use significant judgment concerning future results and developments in applying these critical accounting estimates and in preparing our consolidated financial statements.
Critical accounting estimates are defined as those estimates that are both important to the portrayal of our 53 Table of Contents financial condition and results of operations and require us to exercise significant judgment. We use significant judgment concerning future results and developments in applying these critical accounting estimates and in preparing our consolidated financial statements.
Our policy is to invest in investment grade fixed income securities which are high quality and liquid, providing a stable income stream, supplemented by opportunistic fixed income and equity securities, with the objective of further enhancing the portfolio’s diversification and risk-adjusted returns. At December 31, 2024, approximately 1.7% of our core fixed income portfolio was unrated or rated below investment-grade.
Our policy is to invest in investment grade fixed income securities which are high quality and liquid, providing a stable income stream, supplemented by opportunistic fixed income and equity securities, with the objective of further enhancing the portfolio’s diversification and risk-adjusted returns. At December 31, 2025, approximately 1.1% of our fixed income portfolio was unrated or rated below investment-grade.
See Note 23, “Statutory Accounting Principles and Regulatory Matters” to our consolidated financial statements included in Item 8 of this Form 10-K for additional information regarding our insurance companies. At December 31, 2024, our holding company had $2.9 million in cash and investments compared to $3.0 million at December 31, 2023.
See Note 23, “Statutory Accounting Principles and Regulatory Matters” to our consolidated financial statements included in Item 8 of this Form 10-K for additional information regarding our insurance companies. At December 31, 2025, our holding company had $3.5 million in cash and investments compared to $2.9 million at December 31, 2024.
We also perform, along with our reinsurance broker, periodic credit reviews of our reinsurers. At December 31, 2024, 99% of our reinsurance recoverables were either derived from reinsurers rated “A-” (Excellent) by A.M. Best, or better, or were collateralized through funds held, trusts and letters of credit by the reinsurer.
We also perform, along with our reinsurance broker, periodic credit reviews of our reinsurers. At December 31, 2025, 98% of our reinsurance recoverables were either derived from reinsurers rated “A-” (Excellent) by A.M. Best, or better, or were collateralized through funds held, trusts and letters of credit by the reinsurer.
In the event of significant new regulation or legislation, we will attempt to quantify its impact on our business, but no assurance can be given that our attempt to quantify such inputs will be accurate or successful. The actuarial review considers multiple actuarial methods are used to estimate the reserve for losses and LAE.
In the event of significant new regulation or legislation, we 54 Table of Contents will attempt to quantify its impact on our business, but no assurance can be given that our attempt to quantify such inputs will be accurate or successful. The actuarial review considers multiple actuarial methods to estimate the reserve for losses and LAE.
Net cash used in investing activities in 2024 was primarily driven by purchases of fixed maturity securities, partially offset by sales and maturities of investment securities and sales of short-term investments.
Net cash used in investing activities in 2025 was primarily driven by purchases of fixed maturity securities, partially offset by sales and maturities of investment securities. Net cash used in investing activities in 2024 was driven by 51 Table of Contents purchases of fixed maturity securities, partially offset by sales and maturities of investment securities and sales of short-term investments.
Reinsurance balances recoverable on reserves for paid and unpaid losses and LAE totaled $857.9 million and $596.3 million at December 31, 2024 and December 31, 2023, respectively. Critical Accounting Policies We identified the accounting estimates below as critical to the understanding of our financial position and results of operations.
Reinsurance balances recoverable on reserves for paid and unpaid losses and LAE totaled $1,119.9 million and $857.9 million at December 31, 2025 and December 31, 2024, respectively. Critical Accounting Policies We identified the accounting estimates below as critical to the understanding of our financial position and results of operations.
Accordingly, the ultimate settlement of losses and the related LAE may vary significantly from the estimates included in our financial statements. We regularly review our estimates and adjust them as necessary as experience develops or as new information becomes known to us.
Accordingly, the ultimate settlement of losses and the related LAE may vary significantly from the estimates included in our financial statements. We regularly review our estimates and adjust them as necessary as experience develops or as new information becomes known to us. Such adjustments are included in the results of current operations.
The primary market risk to our investment portfolio is interest rate risk associated with investments in fixed income securities. Fluctuations in interest rates have a direct effect on the market valuation of these securities. When market interest rates rise, the fair value of our securities decreases. Conversely, as interest rates fall, the fair value of our securities increases.
The primary market risk to our investment portfolio is interest rate risk associated with investments in fixed income securities. Fluctuations in interest rates have a direct effect on the market valuation of these securities. When market interest rates rise, 49 Table of Contents the fair value of our securities decreases.
Other Items Income Taxes Income tax expense for the year ended December 31, 2024 was $33.9 million, compared to $24.1 million, for the year ended December 31, 2023. Our effective tax rate for the year ended December 31, 2024 was 22.2%, compared to 21.9%, for the year ended December 31, 2023.
Other Items Income Taxes Income tax expense for the year ended December 31, 2025 was $46.4 million, compared to $33.9 million, for the year ended December 31, 2024. Our effective tax rate for the year ended December 31, 2025 was 21.4%, compared to 22.2%, for the year ended December 31, 2024.
At December 31, 2024, our core fixed income portfolio had an average rating of “AA-,” with approximately 81.5% of securities in that portfolio rated “A” or better by at least one nationally recognized rating organization.
At December 31, 2025, our fixed income portfolio had an average rating of “A+,” with approximately 78.5% of securities in that portfolio rated “A” or better by at least one nationally recognized rating organization.
The average duration of our fixed income portfolio was approximately 4.34 years and 4.24 years, respectively, as of December 31, 2024 and 2023. 41 Table of Contents Equities The equities portfolio primarily consists of domestic preferred stocks, common equities, exchange traded funds, limited partnerships, limited liability corporations and other types of equity interests, 100.0% of which are publicly traded.
The average duration of our fixed income portfolio was approximately 3.60 years and 4.34 years, respectively, as of December 31, 2025 and 2024. 48 Table of Contents Equities The equities portfolio primarily consisted of domestic preferred stocks, common equities, exchange traded funds, limited partnerships, limited liability corporations and other types of equity interests, 100.0% of which were publicly traded.
The timing, manner, price and amount of any repurchases under the share repurchase program will be determined by us in our discretion. The share repurchase program does not require us to repurchase any specific number of shares, and may be modified, suspended or terminated at any time.
The timing, manner, price and amount of any repurchases under the share repurchase program will be determined by us in our discretion. The share repurchase program does not require us to repurchase any specific number of shares, and may be modified, suspended or terminated at any time. As of December 31, 2025, no shares have been repurchased under this plan.
The following table sets forth the components of our equities portfolio by security type at December 31, 2024 and 2023: 2024 2023 ($ in thousands) Fair Value % of Total Fair Value Fair Value % of Total Fair Value Domestic common equities $ 70,665 66.5 % $ 71,502 60.5 % International common equities 34,425 32.4 % 39,389 33.3 % Preferred stock 1,164 1.1 % 7,358 6.2 % Equities $ 106,254 100.0 % $ 118,249 100.0 % Alternative and strategic investments Alternative investments consists of promissory notes, limited partnerships, joint ventures and equity interests.
The following table sets forth the components of our equities portfolio by security type at December 31, 2025 and 2024: 2025 2024 ($ in thousands) Fair Value % of Total Fair Value Fair Value % of Total Fair Value Domestic common equities $ — — % $ 70,665 66.5 % International common equities — — % 34,425 32.4 % Preferred stock 1,174 100.0 % 1,164 1.1 % Equities $ 1,174 100.0 % $ 106,254 100.0 % Alternative and strategic investments Alternative investments consists of promissory notes, limited partnerships, joint ventures and equity interests.
Our fixed maturity securities had a weighted average effective duration of 4.34 years as of December 31, 2024. We had fixed income securities that were subject to interest rate risk with a fair value of $1,292.2 million at December 31, 2024.
Our fixed maturity securities had a weighted average effective duration of 3.6 years as of December 31, 2025. We had fixed income securities that were subject to interest rate risk with a fair value of $1,856.3 million at December 31, 2025.
Even after such adjustments, the ultimate liability may exceed or be less than the revised estimates. Accordingly, the ultimate settlement of losses and the related LAE may vary significantly from the estimate included in our financial statements.
Even after such adjustments, the ultimate liability may exceed or be less than the revised estimates. Accordingly, the ultimate settlement of losses and the related LAE may vary significantly from the estimate included in our financial statements. We categorize our reserves for unpaid losses and LAE into two types: case reserves and IBNR.
Such adjustments are included in the results of current operations. 47 Table of Contents The amount by which estimated losses differ from those originally reported for a period is known as “development.” Development is unfavorable when the losses ultimately settle for more than the amount reserved or subsequent estimates indicate a basis for reserve increases on unresolved claims.
The amount by which estimated losses differ from those originally reported for a period is known as “development.” Development is unfavorable when the losses ultimately settle for more than the amount reserved or subsequent estimates indicate a basis for reserve increases on unresolved claims.
We 42 Table of Contents manage this interest rate risk by investing in securities with varied maturity dates and by managing the duration of our investment portfolio in directional relation to the duration of our reserves.
Conversely, as interest rates fall, the fair value of our securities increases. We manage this interest rate risk by investing in securities with varied maturity dates and by managing the duration of our investment portfolio in directional relation to the duration of our reserves.
The increase in net written premiums was primarily driven by the same reasons that drove the increases in gross written premiums discussed above. Net earned premiums for 2024 were $1,056.7 million compared to $829.1 million for 2023, an increase of $227.6 million, or 27.4%.
Net earned premiums for 2025 were $1,304.5 million compared to $1,056.7 million for 2024, an increase of $247.8 million, or 23.4%. The increase in net earned premiums was primarily driven by the same reasons that drove the increase in gross written premiums discussed above.
Early retirement of the debt ahead of the eight-year commitment requires all interest payments to be paid in full, as well as the return of all capital. Principal payment is due at maturity on May 24, 2039 and interest is payable quarterly.
Interest on the Notes is fixed at 7.25% for the first 8 years and fixed at 8.25% thereafter. Early retirement of the debt ahead of the 8-year commitment requires all interest payments to be paid in full as well as the return of outstanding principal. Principal is due at maturity on May 24, 2039 and interest is payable quarterly.
Revolving Credit Facility On March 29, 2023, we entered into an unsecured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of participating banks. The Revolving Credit Facility provides us with up to a $150.0 million revolving credit facility and a letter of credit sub-facility of up to $30.0 million.
During the first quarter of 2023, we entered into an agreement to obtain a unsecured revolving credit facility (the “2023 Revolving Credit Facility”) with a syndicate of participating banks. The 2023 Revolving Credit Facility provided us with up to a $150.0 million revolving credit facility and a letter of credit sub-facility of up to $30.0 million.
Expense Ratio The following tables set forth the components of the expense ratios for the years ended December 31, 2024 and 2023: Twelve months ended December 31, 2024 2023 ($ in thousands) Expenses % of Net Earned Premiums Expenses % of Net Earned Premiums Net policy acquisition expenses $ 149,975 14.2 % $ 108,514 13.0 % Other operating and general expenses 161,782 15.3 % 134,930 16.3 % Underwriting, acquisition and insurance expenses 311,757 29.5 % 243,444 29.3 % Less: commission and fee income (6,703) (0.6 %) (6,064) (0.7 %) Total net expenses $ 305,054 28.9 % $ 237,380 28.6 % The expense ratio for 2024 increased 0.3 points when compared 2023, primarily driven by the business mix shift partially offset by earnings leverage.
Expense Ratio The following tables set forth the components of the expense ratios for the years ended December 31, 2025 and 2024: 2025 2024 ($ in thousands) Expenses % of Net Earned Premiums Expenses % of Net Earned Premiums Net policy acquisition expenses $ 195,422 15.0 % $ 149,975 14.2 % Other operating and general expenses 181,937 13.9 % 161,782 15.3 % Underwriting, acquisition and insurance expenses 377,359 28.9 % 311,757 29.5 % Less: commission and fee income (6,855) (0.5 %) (6,703) (0.6 %) Total net expenses $ 370,504 28.4 % $ 305,054 28.9 % The expense ratio for 2025 improved 0.5 points when compared to 2024, primarily due to earnings leverage, partially offset by higher acquisition costs due to the business mix shift.
A 5% change in net IBNR would result in a $38.4 million change in our reserves for losses and LAE and a $30.4 million change in net income and stockholders’ equity. Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280).
A 5% change in net IBNR would result in a $51.8 million change in our reserves for losses and LAE and a $40.9 million change in net income and stockholders’ equity. Recent Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740).
The following table sets forth the credit quality of our available-for-sale fixed income portfolio at December 31, 2024 and 2023, as rated by Standard & Poor’s or equivalent designation: 2024 2023 ($ in thousands) Fair Value % of Total Fair Value % of Total AAA $ 483,099 37.3 % $ 493,252 48.6 % AA 141,177 10.9 % 105,906 10.4 % A 429,703 33.3 % 233,487 22.9 % BBB 216,602 16.8 % 154,096 15.1 % BB and Lower 21,637 1.7 % 30,910 3.0 % Total fixed income portfolio, available-for-sale $ 1,292,218 100.0 % $ 1,017,651 100.0 % Our commercial mortgage loans are primarily senior loans on real estate across the U.S.
The following table sets forth the credit quality of our available-for-sale fixed income portfolio at December 31, 2025 and 2024: 2025 2024 ($ in thousands) Fair Value % of Total Fair Value % of Total AAA $ 286,563 15.4 % $ 483,099 37.3 % AA 548,030 29.6 % 141,177 10.9 % A 620,813 33.5 % 429,703 33.3 % BBB 379,586 20.4 % 216,602 16.8 % BB and Lower 21,311 1.1 % 21,637 1.7 % Total fixed income portfolio, available-for-sale $ 1,856,303 100.0 % $ 1,292,218 100.0 % Our commercial mortgage loans are primarily senior loans on real estate across the U.S.
At December 31, 2024, the six-month SOFR on the Revolving Credit Facility was 4.25%, plus a margin of 1.60%. We are subject to covenants on the Revolving Credit Facility based on minimum net worth, maximum debt to capital ratio, minimum A.M. Best Rating and minimum liquidity. As of December 31, 2024, we are in compliance with all covenants.
We are subject to covenants on the Revolving Credit Facility based on minimum net worth, maximum debt to capital ratio, minimum A.M. Best Rating and minimum liquidity, as well as customary events of default. As of December 31, 2025, we were in compliance with all covenants.
We used the proceeds to fund the redemption of the March 15, 2024 draw on the Revolving Credit Facility and redeemed $7.0 million of the March 29, 2023 draw on the Revolving Credit Facility (see “Revolving Credit Facility” below for additional information regarding the redemption).
We used the proceeds to fund redemptions of the draws on the 2023 Revolving Credit Facility (see “Revolving Credit Facility” below for additional information regarding the redemption).
The following table sets forth our cash flows for the years ended December 31, 2024 and 2023: ($ in thousands) 2024 2023 Cash and cash equivalents provided by (used in): Operating activities $ 305,115 $ 338,187 Investing activities (243,694) (493,809) Financing activities (4,232) 130,947 Change in cash and cash equivalents and restricted cash $ 57,189 $ (24,675) The decrease in cash provided by operating activities in 2024 when compared to 2023 was primarily due an increase in cash outflows from our net reinsurance recoverables and net premiums receivables.
The following table sets forth our cash flows for the years ended December 31, 2025 and 2024: ($ in thousands) 2025 2024 Cash and cash equivalents provided by (used in): Operating activities $ 408,076 $ 305,115 Investing activities (366,898) (243,694) Financing activities 411 (4,232) Change in cash and cash equivalents and restricted cash $ 41,589 $ 57,189 The increase in cash provided by operating activities in 2025 when compared to 2024 was primarily due to an increase in cash inflows from our insurance operations.
The following table sets forth the components of our fixed income securities at December 31, 2024 and 2023: 2024 2023 ($ in thousands) Carrying Value % of Total Carrying Value % of Total U.S. government securities $ 26,486 2.0 % $ 44,166 4.1 % Corporate securities and miscellaneous 425,628 32.3 % 383,420 35.9 % Municipal securities 84,716 6.4 % 92,778 8.7 % Residential mortgage-backed securities 393,833 29.9 % 281,626 26.4 % Commercial mortgage-backed securities 69,364 5.2 % 29,934 2.8 % Other asset-backed securities 292,191 22.2 % 185,727 17.4 % Total fixed income portfolio, available-for-sale 1,292,218 98.0 % 1,017,651 95.3 % Commercial mortgage loans $ 26,490 2.0 % $ 50,070 4.7 % Total fixed income portfolio $ 1,318,708 100.0 % $ 1,067,721 100.0 % The weighted average credit rating of our available-for-sale fixed income portfolio was “AA-” by Standard & Poor’s Financial Services, LLC (“Standard & Poor’s”) at December 31, 2024 and 2023.
The following table sets forth the components of our fixed income securities at December 31, 2025 and 2024: 2025 2024 ($ in thousands) Carrying Value % of Total Carrying Value % of Total U.S. government securities $ 44,468 2.4 % $ 26,486 2.0 % Corporate securities and miscellaneous 636,387 34.1 % 425,628 32.3 % Municipal securities 102,116 5.5 % 84,716 6.4 % Residential mortgage-backed securities 486,587 26.1 % 393,833 29.9 % Commercial mortgage-backed securities 73,050 3.9 % 69,364 5.2 % Other asset-backed securities 513,695 27.5 % 292,191 22.2 % Total fixed income portfolio, available-for-sale 1,856,303 99.5 % 1,292,218 98.0 % Commercial mortgage loans $ 9,902 0.5 % $ 26,490 2.0 % Total fixed income portfolio $ 1,866,205 100.0 % $ 1,318,708 100.0 % The weighted average credit rating of our available-for-sale fixed income portfolio was “A+” at December 31, 2025 and “AA-” at December 31, 2024.
The 2024 cat loss and LAE ratio increased 0.3 points when compared to 2023, primarily due to catastrophe losses from Hurricanes Helene and Beryl in the third quarter of 2024 and Hurricane Milton in the fourth quarter of 2024.
The 2025 cat loss and LAE ratio improved 0.5 points when compared to 2024, which was impacted by Hurricanes Helene and Beryl in the third quarter of 2024 and Hurricane Milton in the fourth quarter of 2024.
The fair value of our alternative and strategic investments portfolio for 2024 increased when compared to 2023 due to an increase in the fair value of limited partnership investments. 40 Table of Contents Investments Composition of Investment Portfolio The following table sets forth the components of our investment portfolio at carrying value at December 31, 2024 and 2023: 2024 2023 ($ in thousands) Carrying Value % of Total Carrying Value % of Total Cash and cash equivalents $ 121,603 6.1 % $ 65,891 3.9 % Short-term investments 274,929 13.8 % 270,259 16.1 % Fixed income 1,318,708 66.2 % 1,067,721 63.6 % Equities 106,254 5.3 % 118,249 7.0 % Alternative and strategic investments 170,929 8.6 % 157,458 9.4 % Total portfolio $ 1,992,423 100.0 % $ 1,679,578 100.0 % Fixed income Our fixed income portfolio primarily consists of investment grade fixed income securities, which are predominantly highly-rated and liquid bonds, and commercial mortgage loans.
The decrease in income from equities was due to the sale of the equity portfolio in the third quarter of 2025. 47 Table of Contents Investments Composition of Investment Portfolio The following table sets forth the components of our investment portfolio at carrying value at December 31, 2025 and 2024: 2025 2024 ($ in thousands) Carrying Value % of Total Carrying Value % of Total Cash and cash equivalents $ 168,544 6.8 % $ 121,603 6.1 % Short-term investments 264,299 10.7 % 274,929 13.8 % Fixed income 1,866,205 75.6 % 1,318,708 66.2 % Equities 1,174 0.1 % 106,254 5.3 % Alternative and strategic investments 168,837 6.8 % 170,929 8.6 % Total portfolio $ 2,469,059 100.0 % $ 1,992,423 100.0 % Fixed income Our fixed income portfolio primarily consists of investment grade fixed income securities, which are predominantly highly-rated and liquid bonds, and commercial mortgage loans.
We categorize our reserves for unpaid losses and LAE into two types: case reserves and IBNR. 46 Table of Contents The following table sets forth our gross and net reserves for unpaid losses and LAE at December 31, 2024 and 2023: 2024 2023 ($ in thousands) Gross % of Total Net % of Total Gross % of Total Net % of Total Case reserves $ 567,192 31.8 % $ 342,612 30.8 % $ 561,474 42.7 % $ 318,863 37.1 % IBNR 1,215,191 68.2 % 768,925 69.2 % 753,027 57.3 % 540,154 62.9 % Total $ 1,782,383 100.0 % $ 1,111,537 100.0 % $ 1,314,501 100.0 % $ 859,017 100.0 % Case reserves are established for individual claims that have been reported to us.
The following table sets forth our gross and net reserves for unpaid losses and LAE at December 31, 2025 and 2024: 2025 2024 ($ in thousands) Gross % of Total Net % of Total Gross % of Total Net % of Total Case reserves $ 625,710 27.0 % $ 362,291 25.9 % $ 567,192 31.8 % $ 342,612 30.8 % IBNR 1,693,184 73.0 % 1,035,438 74.1 % 1,215,191 68.2 % 768,925 69.2 % Total $ 2,318,894 100.0 % $ 1,397,729 100.0 % $ 1,782,383 100.0 % $ 1,111,537 100.0 % Case reserves are established for individual claims that have been reported to us.
The following table sets forth the components of net investment income and net investment gains (losses) for the years ended December 31, 2024 and 2023: Twelve months ended December 31, $ in thousands 2024 2023 Short-term investments & cash and cash equivalents $ 17,643 $ 11,677 Fixed income 57,631 36,547 Equities 2,745 2,212 Alternative and strategic investments 2,667 (10,114) Net investment income $ 80,686 $ 40,322 Net unrealized gains on securities still held $ 7,921 $ 11,130 Net realized losses (1,665) (58) Net investment gains $ 6,256 $ 11,072 Net investment income for the year ended 2024 increased $40.4 million when compared to 2023.
Investment Results The following table sets forth the components of net investment income and net investment gains (losses) for the years ended December 31, 2025 and 2024: $ in thousands 2025 2024 Short-term investments & cash and cash equivalents $ 15,877 $ 17,643 Fixed income 77,888 57,631 Equities 1,380 2,745 Alternative and strategic investments (11,526) 2,581 Net investment income $ 83,619 $ 80,600 Net unrealized (losses) gains on securities still held $ (1,555) $ 7,921 Net realized gains (losses) 23,704 (1,579) Net investment gains $ 22,149 $ 6,342 Net investment income for the year ended 2025 increased $3.0 million when compared to 2024.
At December 31, 2024, approximately 6.7% of the fair value of our investment portfolio (excluding cash and cash equivalents and short-term investments) was invested in equity securities.
At December 31, 2025, approximately 0.1% of the fair value of our investment portfolio (excluding cash and cash equivalents and short-term investments) was invested in equity securities. During the third quarter of 2025, we sold almost all of our equities portfolio, retaining only our preferred stocks.
For additional information regarding our reinsurance programs, see the discussion included in “Item 1 Business - Reinsurance” . 38 Table of Contents Losses and LAE The following tables set forth the components of the loss and LAE ratios and adjusted loss and LAE ratios for the years ended December 31, 2024 and 2023: Twelve months ended December 31, 2024 2023 ($ in thousands) Losses and LAE % of Net Earned Premiums Losses and LAE % of Net Earned Premiums Losses and LAE: Non-cat loss and LAE $ 640,257 60.6 % $ 504,664 60.9 % Cat loss and LAE (1) 17,954 1.7 % 12,000 1.4 % Prior accident year development - LPT 11,598 1.1 % (1,427) (0.2)% Total losses and LAE $ 669,809 63.4 % $ 515,237 62.1 % Adjusted losses and LAE (2) : Non-cat loss and LAE $ 640,257 60.6 % $ 504,664 60.9 % Cat loss and LAE (1) 17,954 1.7 % 12,000 1.4 % Total adjusted losses and LAE (2) $ 658,211 62.3 % $ 516,664 62.3 % (1) Current accident year (2) See "Reconciliation of Non-GAAP Financial Measures" included in this Item 2 The 2024 loss ratio increased 1.3 points, respectively, when compared to 2023, primarily due to the net impact of prior accident year development related to the LPT, which added 1.1 points to the loss ratio.
Losses and LAE The following tables set forth the components of the loss and LAE ratios and adjusted loss and LAE ratios for the years ended December 31, 2025 and 2024: 2025 2024 ($ in thousands) Losses and LAE % of Net Earned Premiums Losses and LAE % of Net Earned Premiums Losses and LAE: Non-cat loss and LAE $ 786,949 60.3 % $ 640,257 60.6 % Cat loss and LAE (1) 15,548 1.2 % 17,954 1.7 % Prior accident year development (7,475) (0.6)% 11,598 1.1% Total losses and LAE $ 795,022 60.9 % $ 669,809 63.4 % (1) Current accident year The 2025 loss ratio improved 2.5 points when compared to 2024, primarily due to favorable prior accident year development compared to adverse development due to the net impact of the LPT in 2024.
We do not expect the amendments will have a material impact on our consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, which requires disaggregated disclosure of income statement expenses for public business entities (“PBEs”).
This update is applied prospectively. We have added additional disclosures as required by ASU 2023-09. There was no impact to the consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, which requires disaggregated disclosure of income statement expenses for public business entities (“PBEs”).
The following table sets forth what changes might occur in the value of our core fixed income portfolio given hypothetical changes in interest rates as of December 31, 2024: ($ in thousands) Estimated Fair Value Estimated Change in Fair Value Estimated % Increase (Decrease) in Fair Value 300 basis point increase $ 1,118,982 $ (173,236) (13.4) % 200 basis point increase $ 1,177,074 $ (115,144) (8.9) % 100 basis point increase $ 1,234,820 $ (57,398) (4.4) % No change $ 1,292,218 $ — 0.0 % 100 basis point decrease $ 1,349,269 $ 57,051 4.4 % 200 basis point decrease $ 1,405,973 $ 113,755 8.8 % 300 basis point decrease $ 1,462,329 $ 170,111 13.2 % Changes in interest rates will have an immediate effect on comprehensive income and stockholders’ equity but will not ordinarily have an immediate effect on net income.
The following table sets forth what changes might occur in the value of our core fixed income portfolio given hypothetical changes in interest rates as of December 31, 2025: ($ in thousands) Estimated Fair Value Estimated Change in Fair Value Estimated % Increase (Decrease) in Fair Value 300 basis point increase $ 1,654,474 $ (201,829) (10.9) % 200 basis point increase $ 1,721,816 $ (134,487) (7.2) % 100 basis point increase $ 1,789,092 $ (67,211) (3.6) % No change $ 1,856,303 $ — 0.0 % 100 basis point decrease $ 1,923,448 $ 67,145 3.6 % 200 basis point decrease $ 1,990,528 $ 134,225 7.2 % 300 basis point decrease $ 2,057,542 $ 201,239 10.8 % Changes in interest rates will have an immediate effect on comprehensive income and stockholders’ equity but will not ordinarily have an immediate effect on net income.
The increase in net earned premiums was primarily driven by the same reasons that drove the increases in gross written premiums discussed above.
Net written premiums were $1,406.2 million compared to $1,123.6 million in 2024, an increase of $282.7 million, or 25.2%. The increase in net written premiums was primarily driven by the same reasons that drove the increase in gross written premiums discussed above.
The increase in income from short-term investments & cash and cash equivalents for 2024 when compared to 2023 was due to higher investment yields and a larger asset base.
The decrease in income from short-term investments & cash and cash equivalents for 2025 when compared to 2024 was due to an overall decrease in yields. The decrease in income from our alternative and strategic investments portfolio in 2025 when compared to 2024 due to a decline in the fair value of limited partnership investments.
As of December 31, 2024, no shares have been repurchased under this plan. 45 Table of Contents Contractual Obligations and Commitments The following table sets forth our contractual obligations and commercial commitments by due date as of December 31, 2024: Payments due by period ($ in thousands) Total Less Than One Year One Year or More Reserves for losses and LAE $ 1,782,383 $ 433,204 $ 1,349,179 Long-term debt 120,000 — 120,000 Interest on debt obligations 41,443 6,246 35,197 Operating lease obligations 3,632 968 2,664 Total $ 1,947,458 $ 440,418 $ 1,507,040 Reserves for losses and LAE represent our best estimate of the ultimate cost of settling reported and unreported claims and related expenses.
Contractual Obligations and Commitments The following table sets forth our contractual obligations and commercial commitments by due date as of December 31, 2025: Payments due by period ($ in thousands) Total Less Than One Year One Year or More Reserves for losses and LAE $ 2,318,894 $ 524,329 $ 1,794,565 Long-term debt 548,500 — 548,500 Interest on debt obligations 107,070 26,828 80,242 Total $ 2,974,464 $ 551,157 $ 2,423,307 Reserves for losses and LAE represent our best estimate of the ultimate cost of settling reported and unreported claims and related expenses.
On March 15, 2024, the Company redeemed the Debentures and paid $1.4 million of accrued interest. Subordinated Debt In May 2019, we issued unsecured subordinated notes (the “Notes”) with an aggregate principal amount of $20.0 million. Interest on the subordinated notes is 7.25% fixed for the first eight years and 8.25% fixed thereafter.
On November 13, 2025, we redeemed the 2023 Revolving Credit Facility, paid $0.3 million of accrued interest and recognized $0.6 million of expense for the remaining unamortized deferred financing costs. Debentures In May 2019, we entered into an agreement to issue unsecured subordinated notes (the “Notes”) with an aggregate principal amount of $20.0 million.
Losses and LAE Development The following table sets forth the presentation of the development of the ultimate liability by accident year for the years ended December 31, 2024 and 2023: ($ in thousands) Development (Favorable) Adverse Accident Year 2024 2023 Prior $ 25,535 $ 4,333 2020 (606) 4,341 2021 978 289 2022 (1,479) 1,807 2023 1,300 — Total $ 25,728 $ 10,770 Reserve development on losses subject to LPT $ 25,300 $ — Reserve development on losses excluding losses subject to LPT $ 428 $ 10,770 In 2024, the Company transitioned from evaluating reserves on a policy year basis to an accident year basis which results in earlier recognition of underlying claim trends, better alignment of exposure to risks, and adherence to commonly used industry best practices.
Losses and LAE Development The following table sets forth the presentation of the development of the ultimate liability by accident year for the years ended December 31, 2025 and 2024: ($ in thousands) Development (Favorable) Adverse Accident Year 2025 2024 Prior $ 2,808 $ 24,929 2021 9,590 978 2022 2,300 (1,479) 2023 (16,515) 1,300 2024 (5,658) — Total $ (7,475) $ 25,728 Reserve development on losses subject to LPT $ — $ 25,300 Reserve development on losses excluding losses subject to LPT $ (7,475) $ 428 46 Table of Contents For the year ended December 31, 2025, we recognized favorable development related to prior years’ loss and loss expense reserves of $7.5 million due to favorable development of $24.6 million and $5.3 million in short-tail/monoline specialty lines and multi-line solutions, respectively, partially offset by $22.4 million of adverse development in exited lines.
Interest on the Revolving Credit Facility is payable quarterly. The interest rate on the Revolving Credit Facility is the SOFR plus a margin of between 150 and 190 basis points based on the ratio of debt to total capital and a credit spread adjustment of 10 basis points.
Amounts drawn under the Facility bear interest at either term SOFR plus a margin, which range from 150 and 190 basis points, or the base rate plus a margin, which range from 50 basis points to 90 basis points, each depending on our debt to capitalization ratio.
Removed
We continued to broaden and diversify our product portfolio during 2024, growing in areas that are less exposed to the P&C cycles.
Added
During the first quarter of 2025, we updated our underwriting divisions to align with how management currently oversees the business, allocates resources and evaluates operating performance.
Removed
The gross written premium increases were primarily driven by (i) new captive members and growth in existing captives, (ii) new product offerings, including participation in the Small Business Administration (“SBA”) Bond Guarantee Program, and regional expansion in surety, (iii) new business and rate in transactional E&S, (iv) the addition of four new programs, including Aviation. and (iv) new business in global agriculture.
Added
We 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.
Removed
Slightly offsetting the gross written premium increases were (i) downward pricing pressure in the global property market, and (ii) our intentional actions to address profitability in commercial auto. Net written premiums were $1,123.6 million compared to $910.7 million in 2023, an increase of $212.9 million or 23.4%.
Added
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.
Removed
In prior years, the Company’s methodology allocated IBNR from its policy year analysis to accident year. As a result of transitioning to accident year, IBNR within short-tail/monoline specialty lines, multi-line solutions, and exited lines was reallocated for the years ended December 31, 2023, 2022, 2021 and 2020, and certain amounts have been conformed to the current year presentation.
Added
On September 2, 2025, we entered into two share purchase agreements (the "Apollo Majority SPAs") with institutional and management shareholders, respectively, of Apollo Group Holdings Limited ("Apollo") (the "Majority Sellers").
Removed
During the year ended December 31, 2023, the Company recognized adverse development related to prior years’ loss and loss expense reserves of $10.8 million. Adverse development of $11.7 million in multi-line solutions was driven by 39 Table of Contents greater than expected severity in auto, general, and excess liability lines of business primarily from accident years 2020 to 2022.
Added
Pursuant to the Apollo Majority SPAs and in accordance with the terms and subject to the conditions therein, we agreed to acquire all of the issued shares of Apollo held by the Majority Sellers, representing approximately 87% of the issued share capital of Apollo.
Removed
The adverse development was partially offset by favorable development in short-tail/monoline specialty lines. The favorable development was in the property line of business primarily from accident years 2021 and 2022.
Added
In addition, closing of the transaction ("Closing") was conditioned upon our acquiring 100% of the issued share capital of Apollo (the “Acquisition”) at Closing pursuant to additional short-form share purchase agreements (the "Apollo Minority SPAs" and together with the Apollo Majority SPAs, the "Apollo SPAs") with the remaining minority shareholders of Apollo (the "Minority Sellers" and together with the Majority Sellers, the "Sellers").
Removed
The expense ratios for the periods presented exclude the impact of IPO related stock compensation and secondary offering expenses, which are reported in other expenses in our consolidated statements of operations and comprehensive income. Investment Results Beginning January 1, 2024, we simplified the investment portfolio classifications to align with our strategy and the underlying risk characteristics of the portfolio.
Added
The consideration for the entire issued share capital of Apollo under the Apollo SPAs was $555.0 million, which included (i) $371.0 million in cash (the “Cash Consideration”) and (ii) the issuance of 3,679,332 shares of the Company’s common stock.
Removed
The prior period has been reclassified to conform to the current period presentation.
Added
In connection with the Apollo SPAs, on December 30, 2025, we entered into a Term Loan Credit Agreement (the “Facility”) we the lenders from time to time parties thereto (each a “Lender” and collectively, the “Lenders”), Barclays Bank PLC, as Administrative Agent (the “Agent”), and the Agent, Truist Securities, Inc., Citizens Bank, N.A. and Texas Capital Bank as joint lead arrangers, joint book runners and co-syndication agents for the Tranche B Term Facility.
Removed
We manage equity price risk through portfolio diversification and maintain a tail-risk management strategy that is designed to provide some protection for the equity portfolio if there is a significant decline in the S&P 500 within a 30 day period.
Added
The facility includes (a) an unsecured senior delayed draw term loan facility in the aggregate principal amount of $150.0 million (the “Tranche A Term Facility”) and (b) an additional unsecured senior delayed draw term loan facility in the aggregate principal of $150.0 million. The acquisition closed on January 1, 2026.
Removed
Net cash used in investing activities in 2023 was primarily driven by purchases of fixed maturity securities. 44 Table of Contents Net cash used in financing activities in 2024 was driven by net payments on debt.
Added
The consideration for the transaction was satisfied by the issuance of common stock of the Company to certain sellers and the remainder in cash.
Removed
On March 14, 2024, we drew $50.0 million on the Revolving Credit Facility and used the proceeds and existing cash to fund the redemption of the Debentures (see “Debentures” below for additional information regarding the redemption).
Added
Specialty programs, accident & health, surety and captives also contributed meaningfully to the growth in 2025. The growth in specialty programs was primarily due to the addition of two new programs in 2025. The growth in accident and health was primarily driven by the acquisition of more high deductible accident and health captives when compared to 2024.
Removed
On August 30, 2024, we fully redeemed the March 15, 2024 draw on the Revolving Credit Facility and redeemed $7.0 million of the March 29, 2023 draw on the Revolving Credit Facility. As of December 31, 2024, we had $43.0 million outstanding under the Revolving Credit Facility with another $107.0 million of undrawn capacity.
Added
The increase in 45 Table of Contents surety was primarily due to market expansion in both commercial and contract bonds. The growth in the captives division was primarily due to rate increases and new business.
Removed
Debentures In August 2006, we received $58.0 million of proceeds from a debenture offering through a statutory trust, Delos Capital Trust (the “Trust”).

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