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Skyward Specialty Insurance Group
SKWD
#4757
Rank
$2.03 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$45.72
Share price
-0.74%
Change (1 day)
-15.22%
Change (1 year)
๐Ÿฆ Insurance
Categories
  1. Skyward Specialty Insurance Group
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2025 Q2

Skyward Specialty Insurance Group - 10-Q quarterly report FY2025 Q2


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________
FORM 10-Q
__________________________________________
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________  to ____________

Commission file number 001-41591

SKYWARD SPECIALTY INSURANCE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
14-1957288
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer
Identification No.)
800 Gessner Road, Suite 600
Houston, Texas
77024-4284
(Address of Principal Executive Offices)(Zip Code)
(713) 935-4800
Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01SKWDThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☒   No  ☐ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer  
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes ☐   No  ☒

As of August 1, 2025, the registrant had 40,486,656 shares of common stock outstanding.

Table of Contents

TABLE OF CONTENTS
Form 10-QItem and DescriptionPage
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, 2025December 31, 2024
($ in thousands, except share and per share amounts)(Unaudited)
Assets
Investments:
Fixed maturity securities, available-for-sale, at fair value (net of allowance for credit losses of $6,150 and $0, respectively) (amortized cost of $1,638,973 and $1,320,266, respectively)
$1,629,464 $1,292,218 
Fixed maturity securities, held-to-maturity, at amortized cost (net of allowance for credit losses of $268 and $243, respectively)
35,253 39,153 
Equity securities, at fair value58,001 106,254 
Mortgage loans, at fair value10,168 26,490 
Equity method investments88,804 98,594 
Other long-term investments44,479 33,182 
Short-term investments, at fair value214,338 274,929 
Total investments2,080,507 1,870,820 
Cash and cash equivalents136,617 121,603 
Restricted cash36,547 35,922 
Premiums receivable, net518,441 321,641 
Reinsurance recoverables, net925,291 857,876 
Ceded unearned premium294,124 203,901 
Deferred policy acquisition costs140,903 113,183 
Deferred income taxes28,727 30,486 
Goodwill and intangible assets, net88,795 87,348 
Other assets86,440 86,698 
Total assets$4,336,392 $3,729,478 
Liabilities and stockholders’ equity
Liabilities:
Reserves for losses and loss adjustment expenses$1,918,753 $1,782,383 
Unearned premiums814,063 637,185 
Deferred ceding commission54,952 40,434 
Reinsurance and premium payables299,481 177,070 
Funds held for others127,377 102,665 
Accounts payable and accrued liabilities102,298 76,206 
Notes payable100,000 100,000 
Subordinated debt, net of debt issuance costs19,553 19,536 
Total liabilities3,436,477 2,935,479 
Stockholders’ equity
Common stock, $0.01 par value, 500,000,000 shares authorized, 40,486,656 and 40,127,908 shares issued and outstanding, respectively
405 401 
Additional paid-in capital724,159 718,598 
Accumulated other comprehensive loss(2,666)(22,120)
Retained earnings178,017 97,120 
Total stockholders’ equity899,915 793,999 
Total liabilities and stockholders’ equity$4,336,392 $3,729,478 
The accompanying notes are an integral part of the consolidated financial statements.
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (UNAUDITED)
Three months ended June 30,Six months ended June 30,
($ in thousands, except share and per share amounts)2025202420252024
Revenues:
Net earned premiums$295,542 $257,583 $595,908 $493,925 
Commission and fee income2,560 2,053 4,536 4,079 
Net investment income18,589 22,034 37,927 40,331 
Net investment gains (losses)3,205 (1,721)10,039 6,582 
Other income (loss)7 (7)20 (7)
Total revenues319,903 279,942 648,430 544,910 
Expenses:
Losses and loss adjustment expenses181,262 159,054 368,571 302,968 
Underwriting, acquisition and insurance expenses85,596 76,679 172,147 146,453 
Interest expense1,876 2,449 3,710 5,176 
Amortization expense372 360 709 748 
Other expenses1,002 1,045 2,063 2,233 
Total expenses270,108 239,587 547,200 457,578 
Income before income taxes49,795 40,355 101,230 87,332 
Income tax expense10,956 9,385 20,333 19,578 
Net income$38,839 $30,970 $80,897 $67,754 
Comprehensive income
Net income$38,839 $30,970 $80,897 $67,754 
Other comprehensive income (loss):
Unrealized gains and losses on investments:
Net change in unrealized gains (losses) on investments, net of tax11,005 (1,451)23,260 (6,869)
Reclassification adjustment for losses on securities no longer held, net of tax(3,624)(406)(3,806)(1,314)
Total other comprehensive income (loss)7,381 (1,857)19,454 (8,183)
Comprehensive income$46,220 $29,113 $100,351 $59,571 
Per share data:
Basic earnings per share$0.96 $0.79 $2.01 $1.73 
Diluted earnings per share$0.93 $0.75 $1.94 $1.65 
Weighted-average common shares outstanding
Basic40,445,391 39,177,457 40,322,051 39,142,825 
Diluted41,871,496 41,168,082 41,771,215 41,110,384 
The accompanying notes are an integral part of the consolidated financial statements.
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
Three months ended June 30,
($ in thousands, except share amounts)20252024
Common shares:
Balance at beginning of period40,402,879 39,995,027 
Issuance of shares83,777 101,105 
Balance at June 3040,486,656 40,096,132 
Common stock:
Balance at beginning of period$404 $400 
Issuance of common stock1 1 
Balance at June 30$405 $401 
Additional paid-in capital:
Balance at beginning of period$721,186 $711,309 
Issuance of common stock2,973 2,233 
Balance at June 30$724,159 $713,542 
Stock notes receivable:
Balance at beginning of period$— $(5,234)
Employee equity transactions— 1 
Balance at June 30$— $(5,233)
Accumulated other comprehensive loss:
Balance at beginning of period$(10,047)$(29,279)
Other comprehensive income (loss), net of tax7,381 (1,857)
Balance at June 30$(2,666)$(31,136)
Retained earnings:
Balance at beginning of period$139,178 $15,076 
Net income38,839 30,970 
Balance at June 30$178,017 $46,046 
Total stockholders’ equity$899,915 $723,620 
The accompanying notes are an integral part of the consolidated financial statements.















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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
Six months ended June 30,
($ in thousands, except share amounts)20252024
Common shares:
Balance at beginning of year40,127,908 39,863,756 
Issuance of shares358,748 232,376 
Balance at June 3040,486,656 40,096,132 
Common stock:
Balance at beginning of year$401 $399 
Issuance of common stock4 2 
Balance at June 30$405 $401 
Additional paid-in capital:
Balance at beginning of year$718,598 $710,855 
Issuance of common stock5,561 2,687 
Balance at June 30$724,159 $713,542 
Stock notes receivable:
Balance at beginning of year$— $(5,562)
Employee equity transactions— 329 
Balance at June 30$— $(5,233)
Accumulated other comprehensive loss:
Balance at beginning of year$(22,120)$(22,953)
Other comprehensive income (loss), net of tax19,454 (8,183)
Balance at June 30$(2,666)$(31,136)
Retained earnings (accumulated deficit):
Balance at beginning of year$97,120 $(21,708)
Net income80,897 67,754 
Balance at June 30$178,017 $46,046 
Total stockholders’ equity$899,915 $723,620 
The accompanying notes are an integral part of the consolidated financial statements.
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six months ended June 30,
($ in thousands)20252024
Cash flows from operating activities
Net income$80,897 $67,754 
Adjustments to reconcile net income to net cash provided by operating activities104,043 47,466 
Net cash provided by operating activities184,940 115,220 
Cash flows from investing activities:
Purchase of fixed maturity securities, available-for-sale(405,609)(266,800)
Purchase of equity securities(12,626)(6,293)
Purchase of equity method investments(2,839)(1,100)
Purchase of intangible assets and goodwill(2,000)— 
Investment in direct and indirect loans13,435 14,224 
Purchase of property and equipment(1,287)(2,769)
Proceeds from the sales of fixed maturity securities, available-for-sale25,524 17,917 
Maturities, calls, transfers and paydowns of fixed maturity securities, available-for-sale60,628 56,607 
Maturities, calls and paydowns of fixed maturity securities held-to-maturity3,459 4,135 
Proceeds from the sales of equity securities67,495 17,760 
Sales of and distributions from equity method and other long-term investments8,730 7,951 
Change in short-term investments60,606 55,185 
Change in receivable/payable for securities— 34 
Cash provided by deposit accounting15,183 5,325 
Net cash used in investment activities(169,301)(97,824)
Cash flows from financing activities:
Repayment of stock notes receivable— 329 
Proceeds from long term borrowings— 50,000 
Payments on long term borrowings and trust preferred— (59,794)
Net cash used in financing activities— (9,465)
Net increase in cash and cash equivalents and restricted cash15,639 7,931 
Cash and cash equivalents and restricted cash at beginning of period(1)
157,525 100,336 
Cash and cash equivalents and restricted cash at end of period(1)
$173,164 $108,267 
Supplemental disclosure of cash flow information:
Cash paid for interest$3,234 $4,835 
Cash paid for federal income taxes$20,330 $13,980 
(1)The sum of cash and cash equivalents and restricted cash from the consolidated balance sheets
The accompanying notes are an integral part of the consolidated financial statements.
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements of Skyward Specialty Insurance Group, Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America for interim financial reporting and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all the disclosures required by GAAP for complete consolidated financial statements. Readers are urged to review the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for a more complete description of the Company’s business and accounting policies. In the opinion of management, all adjustments necessary for a fair statement of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results of operations for the full year. The consolidated balance sheet as of December 31, 2024 was derived from the Company’s audited annual consolidated financial statements.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these estimates.
Updates to Significant Accounting Policies
The following accounting policy has been updated to align with reporting of peer companies.
Investments
Available-for-sale
The allowance for credit losses is limited to the amount by which fair value is below amortized cost. Prior to June 30, 2025, changes in the allowance for credit losses were recognized in net investment income on the consolidated statements of operations. As of June 30, 2025, changes in the allowance for credit losses are recognized in net investment gains (losses). Prior periods have been updated to conform to the current period presentation. Credit losses that are limited by the fair value of the security are recognized in stockholders’ equity, net of taxes, as a component of accumulated other comprehensive (loss) income. Unrealized losses that are not credit-related continue to be recognized in stockholders’ equity, net of taxes, as a component of accumulated other comprehensive (loss) income.
Held to maturity
Investments in fixed maturity securities that are held-to-maturity are carried at amortized cost net of an allowance for credit losses. The allowance for credit losses represents the current estimate of expected credit losses. The Company develops a historical loss rate from Moody’s multi-year cumulative loss rates for asset backed securities. The historical loss rate is adjusted for current conditions and reasonable and supportable forecasts. Prior to June 30, 2025, changes in the allowance for credit losses were recognized in net investment income on the consolidated statements of operations. As of June 30, 2025, changes in the allowance for credit losses are recognized in net investment gains (losses). Prior periods have been updated to conform to the current period presentation.
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2.    Investments
The following tables set forth the amortized cost and the fair value by investment category at June 30, 2025 and December 31, 2024:
($ in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Allowance for Credit LossesFair Value
June 30, 2025
Fixed maturity securities, available-for-sale:
U.S. government securities$46,036 $285 $(56)$— $46,265 
Corporate securities and miscellaneous552,258 10,453 (7,063)(6,150)549,498 
Municipal securities102,246 811 (2,903)— 100,154 
Residential mortgage-backed securities474,693 4,682 (12,688)— 466,687 
Commercial mortgage-backed securities82,647 895 (753)— 82,789 
Other asset-backed securities381,093 4,247 (1,269)— 384,071 
Total fixed maturity securities, available-for-sale$1,638,973 $21,373 $(24,732)$(6,150)$1,629,464 
Fixed maturity securities, held-to-maturity:
Other asset-backed securities$35,521 $1,856 $(11)$(268)$37,098 
Total fixed maturity securities, held-to-maturity$35,521 $1,856 $(11)$(268)$37,098 
($ in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Loss		Allowance for Credit LossesFair Value
December 31, 2024
Fixed maturity securities, available-for-sale:
U.S. government securities$26,577 $35 $(126)$— $26,486 
Corporate securities and miscellaneous433,298 5,618 (13,288)— 425,628 
Municipal securities89,966 116 (5,366)— 84,716 
Residential mortgage-backed securities408,585 1,875 (16,627)— 393,833 
Commercial mortgage-backed securities70,262 545 (1,443)— 69,364 
Other asset-backed securities291,578 2,447 (1,834)— 292,191 
Total fixed maturity securities, available-for-sale$1,320,266 $10,636 $(38,684)$— $1,292,218 
Fixed maturity securities, held-to-maturity:
Other asset-backed securities$39,396 $— $(436)$(243)$38,717 
Total fixed maturity securities, held-to-maturity$39,396 $— $(436)$(243)$38,717 
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2.     Investments (continued)
The following table sets forth the amortized cost and fair value of available-for-sale fixed maturity securities by contractual maturity at June 30, 2025:
($ in thousands)Amortized
Cost		Fair Value
Due in less than one year$40,340 $38,986 
Due after one year through five years358,402 354,861 
Due after five years through ten years250,982 252,563 
Due after ten years50,816 49,507 
Mortgage-backed securities557,340 549,476 
Other asset-backed securities381,093 384,071 
Total$1,638,973 $1,629,464 
Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Also, changing interest rates, tax considerations or other factors may result in portfolio sales prior to maturity.
The Company’s fixed maturity securities, held-to-maturity, at June 30, 2025 consisted entirely of asset backed securities that were not due at a single maturity date.
At June 30, 2025, the Company had U.S. government agencies mortgage-backed fixed maturity securities, with a carrying value of approximately $65.7 million pledged as collateral for a loan (the “FHLB Loan”) from the Federal Home Loan Bank of Dallas (“FHLB”) pursuant to an Advances and Security Agreement between the Company and FHLB (the “Advances and Security Agreement”). In accordance with the terms of the FHLB Loan, the Company retains all rights regarding these pledged securities.
At June 30, 2025, the Company had assets with fair values of approximately $51.5 million pledged as collateral for the performance obligations under reinsurance agreements. In accordance with the terms of the trust agreements, the Company retains all rights regarding these securities, of which $43.7 million are residential mortgage-backed securities, $5.6 million of cash and cash equivalents and other assets and $2.2 million of short-term investments.
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2.     Investments (continued)
The following tables set forth the gross unrealized losses and the corresponding fair values of investments, aggregated by length of time that individual securities had been in a continuous unrealized loss position as of June 30, 2025 and 2024:
Less than 12 Months12 Months or MoreTotal
($ in thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
June 30, 2025
Fixed maturity securities, available-for-sale:
U.S. government securities$14,389 $(6)$2,033 $(50)$16,422 $(56)
Corporate securities and miscellaneous62,592 (652)69,641 (6,411)132,233 (7,063)
Municipal securities31,198 (792)20,021 (2,111)51,219 (2,903)
Residential mortgage-backed securities113,437 (1,263)80,795 (11,425)194,232 (12,688)
Commercial mortgage-backed securities5,142 (43)10,562 (710)15,704 (753)
Other asset-backed securities62,756 (488)27,845 (781)90,601 (1,269)
Total fixed maturity securities, available-for-sale289,514 (3,244)210,897 (21,488)500,411 (24,732)
Fixed maturity securities, held-to-maturity:
Other asset-backed securities37,098 (11)37,098 (11)
Total fixed maturity securities, held-to-maturity:37,098 (11)— — 37,098 (11)
Total$326,612 $(3,255)$210,897 $(21,488)$537,509 $(24,743)
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2.     Investments (continued)
Less than 12 Months12 Months or MoreTotal
($ in thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
December 31, 2024
Fixed maturity securities, available-for-sale:
U.S. government securities$15,938 $(34)$2,297 $(92)$18,235 $(126)
Corporate securities and miscellaneous136,888 (2,060)81,232 (11,228)218,120 (13,288)
Municipal securities41,930 (1,046)27,687 (4,320)69,617 (5,366)
Residential mortgage-backed securities201,407 (3,366)82,496 (13,261)283,903 (16,627)
Commercial mortgage-backed securities9,411 (126)13,178 (1,317)22,589 (1,443)
Other asset-backed securities75,119 (721)29,851 (1,113)104,970 (1,834)
Total fixed maturity securities, available-for-sale480,693 (7,353)236,741 (31,331)717,434 (38,684)
Fixed maturity securities, held-to-maturity:
Other asset-backed securities2,144 (2)36,573 (434)38,717 (436)
Total fixed maturity securities, held-to-maturity:2,144 (2)36,573 (434)38,717 (436)
Total$482,837 $(7,355)$273,314 $(31,765)$756,151 $(39,120)
The Company regularly monitors its available-for-sale fixed maturity securities that have fair values less than cost or amortized cost for signs of impairment, an assessment that requires significant management judgment regarding the evidence known. Such judgments could change in the future as more information becomes known, which could negatively impact the amounts reported. Among the factors that management considers for fixed maturity securities are the financial condition of the issuer including receipt of scheduled principal and interest cash flows, and intent to sell, including if it is more likely than not that the Company will be required to sell the investments before recovery.
As of June 30, 2025, the Company had 613 lots of fixed maturity securities in an unrealized loss position. The Company does not have an intent to sell these securities and it is not more likely than not that the Company will be required to sell these securities before maturity or recovery of its cost basis. The Company reviewed its investments at June 30, 2025 and determined that for two available-for-sale securities in the “corporate securities and miscellaneous” category, credit impairments existed, based on new recovery analysis that showed deteriorating conditions raising credit concerns. Other than the securities discussed previously, the Company determined that no other credit impairment existed in the gross unrealized holding losses, due to the reasons discussed below:
•U.S. government securities and municipal securities: These securities were issued by the U.S. Treasury Department, Federal government-sponsored entities or by state and local governments. The decline in fair values was attributable to changes in interest rates and not credit quality. The Company does not intend to sell these securities and it is likely that it will not do so before their anticipated recovery. Therefore, the Company does not consider these impaired securities.
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2.     Investments (continued)
•Corporate securities and miscellaneous: Corporations in various industries issued these securities. The decline in fair values was attributable to changes in interest rates and not credit quality. The Company reviewed the issuers of these securities to identify any significant adverse change in financial condition, a change in the quality of credit enhancement (if any), a ratings decrease, or negative outlook assignment from a major credit rating agency, and any failure to make interest or principal payments. After these reviews, the Company determined that the decline in fair values was attributable to changes in interest rates and not credit quality. The Company does not intend to sell these securities and it is likely that it will not do so before their anticipated recovery. Therefore, the Company does not consider these impaired securities.
•Residential mortgage-backed securities, commercial mortgage-backed securities, and other asset-backed securities: The decline in fair values was attributable to changes in interest rates and not credit quality. The Company does not intend to sell these securities and it is likely that it will not do so before their anticipated recovery. Therefore, the Company does not consider these impaired securities.
The following table sets forth the changes in the allowance for credit losses on available-for-sale securities and held-to-maturity securities during the six months ended June 30, 2025 and 2024:
Fixed Maturity Securities, Available-For-SaleFixed Maturity Securities, Held-to-Maturity
Balance at December 31, 2024$— $243 
Current period provision for credit losses— 7 
Balance at March 31, 2025$— $250 
Current period provision for credit losses6,150 18 
Balance at June 30, 2025$6,150 $268 
Fixed Maturity Securities, Held-to-Maturity
Balance at December 31, 2023$329 
Balance at March 31, 2024$329 
Recoveries of amounts previously written off(104)
Balance at June 30, 2024$225 
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2.     Investments (continued)
The following table sets forth the components of net investment gains (losses) for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Gross realized gains
Fixed maturity securities, available-for sale$452 $331 $905 $830 
Equity securities15,441 493 17,186 1,574 
Other596 104 600 122 
Total16,489 928 18,691 2,526 
Gross realized losses
Fixed maturity securities, available-for sale(8,477)(466)(8,597)(860)
Equity securities(1,577)(417)(2,255)(2,291)
Other(49)(6)(110)(24)
Total(10,103)(889)(10,962)(3,175)
Net unrealized gains (losses) on investments
Equity securities(9,429)(730)(8,349)7,290 
Mortgage loans330 (1,030)264 (59)
Other5,918 — 10,395 — 
Net investment gains (losses)
$3,205 $(1,721)$10,039 $6,582 
The following table sets forth the proceeds from sales of available-for-sale fixed maturity securities and equity securities for the six months ended June 30, 2025 and 2024:
Six months ended June 30,
($ in thousands)20252024
Fixed maturity securities, available-for sale$25,524 $17,917 
Equity securities67,495 17,760 
The following table sets forth the components of net investment income for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Income:
Fixed maturity securities, available-for sale$18,453 $13,407 $35,741 $25,638 
Fixed maturity securities, held-to-maturity(822)1,126 — 2,252 
Equity securities492 751 1,109 1,378 
Equity method investments(898)2,642 (2,886)3,740 
Mortgage loans270 1,588 931 3,007 
Indirect loans(4,249)221 (4,990)(1,473)
Short-term investments and cash3,707 3,421 6,899 7,661 
Other794 655 1,771 1,524 
Total investment income17,747 23,811 38,575 43,727 
Investment expenses842 (1,777)(648)(3,396)
Net investment income$18,589 $22,034 $37,927 $40,331 
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2.     Investments (continued)
The following table sets forth the change in net unrealized gains (losses) on the Company’s investment portfolio, net of deferred income taxes, included in other comprehensive loss for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Fixed maturity securities$9,403 $(2,370)$24,687 $(10,359)
Deferred income taxes(2,022)513 (5,233)2,176 
Total$7,381 $(1,857)$19,454 $(8,183)
3.    Fair Value Measurements
The Company’s financial instruments include assets and liabilities carried at fair value, as well as assets and liabilities carried at cost or amortized cost but disclosed at fair value in its consolidated financial statements. In determining fair value, the market approach is generally applied, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities.
The Company uses data primarily provided by third-party investment managers or pricing vendors to determine the fair value of its investments. Periodic analyses are performed on prices received from third parties to determine whether the prices are reasonable estimates of fair value. The analyses include a review of month-to-month price fluctuations and, as needed, a comparison of pricing services’ valuations to other pricing services’ valuations for the identical security.
The Company classifies its financial instruments into the following three-level hierarchy:
Level 1 - Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement
date.
Level 2 - Inputs are other than quoted prices included in Level 1 that are observable for the asset or liability through
corroboration with market data at the measurement date.
Level 3 - Unobservable inputs that reflect management’s best estimate of what market participants would use in
pricing the asset or liability at the measurement date.
The following methods and assumptions were used in estimating the fair value disclosures for financial instruments in the accompanying consolidated financial statements and in these notes:
U.S. government securities, mutual funds and common stock
The Company uses unadjusted quoted prices for identical instruments in an active exchange to measure fair value which represent Level 1 inputs.
Preferred stocks, municipal securities, corporate securities and miscellaneous
The Company uses a pricing model that utilizes market-based inputs such as trades in an illiquid market for a particular security or trades in active markets for securities with similar characteristics. The model considers other inputs such as benchmark yields, issuer spreads, security terms and conditions, and other market data. These represent Level 2 fair value inputs.
Commercial mortgage-backed securities, residential mortgage-backed securities and other asset-backed securities
The Company uses a pricing model that utilizes market-based inputs that may include dealer quotes, market spreads, and yield curves. It may evaluate individual tranches in a security by determining cash flows using the security’s terms and conditions, collateral performance, credit information benchmark yields and estimated prepayments. These represent Level 2 fair value inputs.
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3.    Fair Value Measurements (continued)
Fixed maturity securities, available for sale and equity securities classified as Level 3
The Company has corporate securities and miscellaneous, other asset-backed securities that are managed by an independent asset manager and priced by an independent pricing provider. The provider estimates the value of the securities using the discount net present value of cash flows method using an unobservable discount rate. The discount rate spread represents the risk associated with future cash flows, including inflation, opportunity cost and the time value of money. This rate represents Level 3 fair value inputs.
The following table sets forth the range of the discount rate as of June 30, 2025 and December 31, 2024:
June 30, 2025December 31, 2024
High10.54 %8.00 %
Low5.16 %5.70 %
Weighted average6.28 %6.60 %
Mortgage loans
Mortgage loans have variable interest rates and are collateralized by real property. The Company determines fair value of mortgage loans using the income approach utilizing inputs that are observable and unobservable (Level 3). The unobservable input consists of the spread applied to a prime rate used to discount cash flows. The spread represents the incremental cost of capital based on the borrower’s ability to make future payments and the value of the collateral relative to the loan balance and is subject to judgement and uncertainty.
The following table sets forth the range and weighted average, weighted by relative fair value, of the spread as of June 30, 2025 and December 31, 2024:
June 30, 2025December 31, 2024
High9.34 %10.00 %
Low6.61 %7.00 %
Weighted average8.40 %7.93 %
Investment in RedBird Capital Partners
Included in other long-term investments is an investment in a limited partnership with RedBird Capital Partners, which invests in Bishop Street Underwriters, LLC (“Bishop Street”), a managing general agent (MGA). The investment had a fair value of $41.4 million at June 30, 2025, which was determined using the net asset value. The Company employs procedures to assess the reasonableness of the fair value of the investment including obtaining and reviewing the audited financial statements. The unfunded commitment related to the investment was $21.5 million at June 30, 2025. The Company may sell its interest in the investment with the appropriate prior written notice and approval by the general partner. In accordance with Accounting Standard Codification 820-10, this investment is measured at fair value using the net asset value per share practical expedient and has not been classified in the fair value hierarchy.
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3.    Fair Value Measurements (continued)
The following tables set forth the Company’s investments within the fair value hierarchy at June 30, 2025 and December 31, 2024:
June 30, 2025
($ in thousands)Level 1Level 2Level 3Total
Fixed maturity securities, available-for-sale:
U.S. government securities$46,265 $— $— $46,265 
Corporate securities and miscellaneous— 463,822 85,676 549,498 
Municipal securities— 100,154 — 100,154 
Residential mortgage-backed securities— 466,687 — 466,687 
Commercial mortgage-backed securities— 82,789 — 82,789 
Other asset-backed securities— 374,879 9,192 384,071 
Total fixed maturity securities, available-for-sale46,265 1,488,331 94,868 1,629,464 
Fixed maturity securities, held-to-maturity:
Other asset-backed securities— — 37,098 37,098 
Total fixed maturity securities, held-to-maturity— — 37,098 37,098 
Equity securities:
Common stocks33,593 — — 33,593 
Preferred stocks— 1,160 — 1,160 
Mutual funds23,248 — — 23,248 
Total equity securities56,841 1,160 — 58,001 
Mortgage loans— — 10,168 10,168 
Short-term investments214,338 — — 214,338 
Total$317,444 $1,489,491 $142,134 $1,949,069 


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3.    Fair Value Measurements (continued)
December 31, 2024
($ in thousands)Level 1Level 2Level 3Total
Fixed maturity securities, available-for-sale:
U.S. government securities$26,486 $— $— $26,486 
Corporate securities and miscellaneous— 354,815 70,813 425,628 
Municipal securities— 84,716 — 84,716 
Residential mortgage-backed securities— 393,833 — 393,833 
Commercial mortgage-backed securities— 69,364 — 69,364 
Other asset-backed securities— 285,084 7,107 292,191 
Total fixed maturity securities, available-for-sale26,486 1,187,812 77,920 1,292,218 
Fixed maturity securities, held-to-maturity:
Other asset-backed securities— — 38,717 38,717 
Total fixed maturity securities, held-to-maturity:— — 38,717 38,717 
Equity securities:
Common stocks64,251 — — 64,251 
Preferred stocks— 1,164 — 1,164 
Mutual funds40,839 — — 40,839 
Total equity securities105,090 1,164 — 106,254 
Mortgage loans— — 26,490 26,490 
Short-term investments274,929 — — 274,929 
Total$406,505 $1,188,976 $143,127 $1,738,608 
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3.    Fair Value Measurements (continued)
The following tables set forth the changes in the fair value of instruments carried at fair value with a Level 3 measurement during the six months ended June 30, 2025 and 2024:
($ in thousands)Fixed Maturity Securities, Available-For-SaleMortgage Loans
Balance at December 31, 2024$77,920 $26,490 
Total losses for the period recognized in net investment gains (losses)(110)(66)
Issuances— 5 
Settlements— (10,417)
Purchases5,164 — 
Sales/Disposals(199)— 
Total unrealized gains for the period recognized in accumulated comprehensive income (loss)682 — 
Balance at March 31, 2025$83,457 $16,012 
Total losses for the period recognized in net investment gains (losses) attributable to the change in unrealized gains or losses relating to assets held as of period end$— $(84)
Total losses for the period recognized in net investment (losses) gains(4,081)330 
Issuances— 8 
Settlements— (6,182)
Transfers into Level 36,144 — 
Purchases8,838 
Sales/Disposals(237)— 
Total unrealized gains for the period recognized in accumulated comprehensive income (loss)747 — 
Balance at June 30, 2025$94,868 $10,168 
Total gains for the period recognized in net investment gains (losses) attributable to the change in unrealized gains or losses relating to assets held as of period end$— $92 
($ in thousands)Mortgage Loans
Balance at December 31, 2023$50,070 
Total gains for the period recognized in net investment gains (losses)971 
Issuances187 
Settlements(6,919)
Balance at March 31, 2024$44,309 
Total gains for the period recognized in net investment gains (losses) attributable to the change in unrealized gains or losses relating to assets held as of period end$952 
Total losses for the period recognized in net investment gains (losses)(1,030)
Issuances449 
Settlements(58)
Balance at June 30, 2024$43,670 
Total losses for the period recognized in net investment gains (losses) attributable to the change in unrealized gains or losses relating to assets held as of period end$(1,031)
The transfers into Level 3 during the three and six months ended June 30, 2025 were the result of securities that began receiving valuations from asset managers that utilized unobservable inputs at the end of the period.
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3.    Fair Value Measurements (continued)
The Company measures certain assets, including investments in indirect loans and loan collateral, equity method investments and other invested assets, at fair value on a nonrecurring basis only when they are deemed to be impaired.
In addition to the preceding disclosures on assets and liabilities recorded at fair value in the consolidated balance sheets, the Company is also required to disclose the fair values of certain other financial instruments for which it is practicable to estimate fair value. Estimated fair value amounts, defined as the quoted market price of a financial instrument, have been determined using available market information and other appropriate valuation methodologies. However, considerable judgements are required in developing the estimates of fair value where quoted market prices are not available. Accordingly, these estimates are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions or estimating methodologies may have an effect on the estimated fair value amounts.
The following methods and assumptions were used in estimating the fair value disclosures of other financial instruments:
Fixed maturity securities, held-to-maturity: Fixed maturity securities, held-to-maturity consists of senior and junior notes with target rates of return. As of June 30, 2025, the Company determined the fair value of these instruments using the income approach utilizing inputs that are unobservable (Level 3).
Notes payable: The carrying value approximates the estimated fair value for notes payable as the notes payable accrue interest at current market rates plus a spread. The Company determines fair value using the income approach utilizing inputs that are observable (Level 2).
Subordinated debt: Subordinated debt consists of the Unsecured Subordinated Notes, due May 24, 2039 and have a fixed interest rate. The Company determines the fair value of these instruments using the income approach utilizing inputs that are observable (Level 2).
The following table sets forth the Company’s carrying and fair values of notes payable and subordinated debt as of June 30, 2025 and December 31, 2024:
June 30, 2025December 31, 2024
($ in thousands)Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Notes payable
FHLB Loan$57,000 $57,411 $57,000 $56,200 
Revolving credit facility43,000 43,000 43,000 43,000 
Notes payable$100,000 $100,411 $100,000 $99,200 
Subordinated debt
Unsecured subordinated notes$19,553 $20,522 $19,536 $20,541 
Subordinated debt, net of debt issuance costs$19,553 $20,522 $19,536 $20,541 
Other financial instruments qualify as insurance-related products and are specifically exempted from fair value disclosure requirements.
4.    Mortgage Loans
The Company has invested in Separately Managed Accounts (“SMA1” and “SMA2”). As of June 30, 2025 and December 31, 2024, the Company held direct investments in mortgage loans from various creditors through SMA1 and SMA2.
The Company’s mortgage loan portfolios are primarily senior loans on real estate across the U.S. The loans earn interest at a fixed spread above a prime rate and mature in approximately 2 to 4 years from loan origination. The principal amounts of the loans are approximately 64% of the property’s appraised value at the time the loans were made.
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4.    Mortgage Loans (continued)
The following table sets forth the carrying value of the Company’s mortgage loans as of June 30, 2025 and December 31, 2024:
($ in thousands)June 30, 2025December 31, 2024
Commercial$3,496 $8,474 
Retail— 10,032 
Hospitality6,672 7,984 
$10,168 $26,490 
The following table sets forth the Company’s gross investment income for mortgage loans for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Commercial$109 $850 $217 $1,309 
Retail— 470 304 960 
Hospitality161 268 410 738 
$270 $1,588 $931 $3,007 
The uncollectible amounts on loans, on an individual loan basis, are determined based upon consultations and advice from the Company’s specialized investment manager and consideration of any adverse situations that could affect the borrower’s ability to repay, the estimated value of underlying collateral, and other relevant factors. The Company writes off the uncollectible amount in the period it was determined to be uncollectible. There was no write-off for uncollectible amounts during the three and six months ended June 30, 2025 and 2024, respectively.
As of June 30, 2025 and as of December 31, 2024, no mortgage loans were in the process of foreclosure and there were no mortgage loans that were not producing income for the previous 12 months.
5.    Equity Method Investments and Other
The following table sets forth the carrying value and ownership percentage of the Company’s equity method investments as of June 30, 2025 and December 31, 2024:
($ in thousands)June 30, 2025December 31, 2024
Carrying ValueOwnership %Carrying ValueOwnership %
Arena Special Opportunities Fund, LP units$29,020 14.2 %$34,936 15.3 %
JVM Funds LLC units16,055 10.1 %17,229 10.1 %
Hudson Ventures Fund 2 LP units5,037 2.5 %4,967 2.5 %
RISCOM3,941 20.0 %5,013 20.0 %
Brewer Lane Ventures Fund II LP units1,384 2.4 %1,040 2.4 %
Dowling Capital Partners LP units881 5.0 %666 5.0 %
Arena SOP LP units— 11.3 %1,474 10.9 %
$56,318 $65,325 
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NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5.    Equity Method Investments and Other (continued)
The following table sets forth the components of net investment (loss) income from equity method investments for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
RISCOM$1,055 $389 $927 $675 
Dowling Capital Partners LP units203 40 216 1,382 
Brewer Lane Ventures Fund II LP(27)(24)143 (56)
Hudson Ventures Fund II LP units90 210 65 158 
JVM Funds LLC(304)(535)(515)(1,019)
Arena SOP LP units(218)390 (1,474)679 
Arena Special Opportunities Fund, LP units(1,697)2,172 (2,248)1,921 
$(898)$2,642 $(2,886)$3,740 
The following table sets forth the unfunded commitment of equity method investments as of June 30, 2025 and December 31, 2024:
($ in thousands)June 30, 2025December 31, 2024
Brewer Lane Ventures Fund II LP units$3,570 $4,077 
Dowling Capital Partners LP units386 386 
Hudson Ventures Fund 2 LP units266 397 
Red Bird Capital Partners LP units 21,506 24,400 
$25,728 $29,260 
The difference between the cost of an investment and its proportionate share of the underlying equity in net assets is allocated to the various assets and liabilities of the equity method investment. The Company amortizes the difference in net assets over the same useful life of a similar asset as the underlying equity method investment. For investment in RISCOM, a similar asset would be agent relationships. The Company amortizes this difference over a 15-year useful life.
The following table sets forth the Company’s recorded investment in RISCOM compared to its share of underlying equity as of June 30, 2025 and December 31, 2024:
($ in thousands)June 30, 2025December 31, 2024
Investment in RISCOM:
Underlying equity$2,805 $3,756 
Difference1,136 1,258 
Recorded investment balance$3,941 $5,013 
The following table sets forth the Company’s recorded investment in JVM Funds LLC compared to its share of underlying equity as of June 30, 2025 and December 31, 2024:
($ in thousands)June 30, 2025December 31, 2024
Investment in JVM Funds LLC:
Underlying equity$15,526 $16,624 
Difference529 605 
Recorded investment balance$16,055 $17,229 
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NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5.    Equity Method Investments and Other (continued)
Investment in Indirect Loans and Loan Collateral
As of June 30, 2025 and December 31, 2024, the Company held indirect investments in collateralized loans and loan collateral through SMA1 and SMA2.
The carrying value of the SMA1 and SMA2 as of June 30, 2025 and December 31, 2024 were as follows:
($ in thousands)June 30, 2025December 31, 2024
SMA1$17,495 $20,296 
SMA214,991 12,973 
Investment in indirect loans and loan collateral$32,486 $33,269 
6.     Segment
The Company has one reportable segment through which it offers a broad array of commercial property and casualty products and solutions on a non-admitted (or E&S) and admitted basis, predominantly in the United States. The segment is made up of nine distinct underwriting divisions, or “continuing business,” and has dedicated underwriting leadership supported by high-quality technical staff with deep experience in their respective niches. The Company defines its segment on the basis of the way in which internally reported financial information is regularly reviewed by the Chief Operating Decision Maker (“CODM”) to analyze financial performance, make decisions and allocate resources. The Company’s CODM is the chief executive officer.
The accounting policies of the segment are the same as those described in Note 1 “Summary of Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The CODM assesses performance for the segment and decides how to allocate resources based on gross written premiums by net underwriting division, underwriting income, and income before income taxes that also is reported on the condensed consolidated statements of operations as consolidated income before income taxes. The measure of segment assets is reported on the balance sheet as total consolidated assets.
Gross written premiums by underwriting division, net underwriting income, and consolidated net income are used to monitor budget versus actual results. The chief operating decision maker also uses net underwriting income, annualized return on equity and growth in book value per share in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation.
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NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6.     Segment (continued)
The following table presents gross written premiums by underwriting division for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Accident & Health$60,489 $44,088 $123,658 $84,989 
Agriculture and Credit (Re)insurance71,573 36,592 159,420 79,913 
Captives76,961 62,099 145,362 130,507 
Construction & Energy Solutions73,613 78,214 149,184 152,436 
Global Property83,992 88,231 130,678 145,543 
Professional Lines38,147 38,106 79,313 80,345 
Specialty Programs85,955 59,644 148,630 111,822 
Surety40,737 37,642 78,535 71,484 
Transactional E&S53,461 51,609 105,467 97,841 
Total continuing business584,928 496,225 1,120,247 954,880 
Exited business(14)18 (7)(17)
Total gross written premiums$584,914 $496,243 $1,120,240 $954,863 

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6.     Segment (continued)
The following table presents information about reported segment net underwriting income, significant segment expenses and a reconciliation of net underwriting income to net income for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Underwriting income
Revenues:
Net earned premiums$295,542 $257,583 $595,908 $493,925 
Commission and fee income2,560 2,053 4,536 4,079 
Total underwriting revenues298,102 259,636 600,444 498,004 
Expenses:
Losses and LAE181,262 159,054 368,571 302,968 
Amortization of policy acquisition costs44,636 35,931 89,126 67,908 
Other operating and general expenses40,960 40,748 83,021 78,545 
Total underwriting expenses266,858 235,733 540,718 449,421 
Net underwriting income$31,244 $23,903 $59,726 $48,583 
Reconciliation of net underwriting income to net income:
Net underwriting income$31,244 $23,903 $59,726 $48,583 
Add:
Net investment income18,589 22,034 37,927 40,331 
Net investment gains3,205 (1,721)10,039 6,582 
Other income7 (7)20 (7)
Less:
Interest expense1,876 2,449 3,710 5,176 
Amortization expense372 360 709 748 
Other expenses1,002 1,045 2,063 2,233 
Income before income taxes49,795 40,355 101,230 87,332 
Income tax expense10,956 9,385 20,333 19,578 
Net income$38,839 $30,970 $80,897 $67,754 
The following table presents annualized return on equity for the three and six months ended June 30, 2025 and 2024 and book value per share as of June 30, 2025 and December 31, 2024:
Three months ended June 30,Six months ended June 30,
2025202420252024
Annualized return on equity17.7 %17.5 %19.1 %19.6 %
June 30, 2025December 31, 2024
Book value per share$22.23$19.79
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7.    Income Taxes
The following table sets forth the Company’s income tax expense and effective tax rates for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Income tax expense$10,956 $9,385 $20,333 $19,578 
Effective tax rate22.0%23.3%20.1%22.4%
The effective tax rate will differ from the statutory rate of 21 percent due to permanent differences for disallowed expenses for tax and beneficial adjustments for tax-exempt income, dividends-received deduction, non-deductible expenses and discrete items. The effective tax rate for the three and six months ended June 30, 2025 decreased 1.3% and 2.3%, respectively, when compared to the same 2024 periods. The effective tax rate for the six months ended June 30, 2025 was impacted by certain discrete tax items, primarily tax benefits from stock-based compensation, which reduced the effective tax rate by 1.7%.
The Company paid federal income taxes of $20.3 million during the three and six months ended June 30, 2025 and $14.0 million during the three and six months ended June 30, 2024.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing its impact on the consolidated financial statements.
8.    Losses and Loss Adjustment Expenses
The following table sets forth the reconciliation of unpaid losses and loss adjustment expenses (“LAE”) as reported in the condensed consolidated balance sheets as of and for the six months ended June 30, 2025 and 2024:
Six months ended June 30,
($ in thousands)20252024
Reserves for losses and LAE, beginning of period$1,782,383 $1,314,501 
Less: reinsurance recoverable on unpaid claims, beginning of period(670,846)(455,484)
Reserves for losses and LAE, beginning of period, net of reinsurance1,111,537 859,017 
Incurred, net of reinsurance, related to:
Current period368,571 303,450 
Prior years— — 
Total incurred, net of reinsurance368,571 303,450 
Paid, net of reinsurance, related to:
Current period42,153 39,202 
Prior years230,232 158,857 
Total paid272,385 198,059 
Net reserves for losses and LAE, end of period1,207,723 964,408 
Plus: reinsurance recoverable on unpaid claims, end of period711,030 505,698 
Reserves for losses and LAE, end of period$1,918,753 $1,470,106 
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9.    Commission and Fee Income
Skyward Underwriters Agency, Inc. (“SUA”), a subsidiary of the Company, is a managing general insurance agent and reinsurance broker for property and casualty and accident and health risks in specialty niche markets. Commission and fee income is primarily generated from SUA for the placement of insurance policies on either a third-party insurance or reinsurance company.
The following table sets forth the Company’s disaggregated revenues from contracts with customers for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
SUA commission revenue$1,410 $699 $2,275 $1,689 
SUA fee income1,143 564 2,772 1,410 
Other7 790 (511)980 
Total commission and fee income$2,560 $2,053 $4,536 $4,079 
The Company’s contract assets from commission and fee income as of June 30, 2025 and December 31, 2024 were $2.7 million and $1.4 million, respectively.
10.    Underwriting, Acquisition and Insurance Expenses
The following table sets forth the components of underwriting, acquisition and insurance expenses for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Amortization of policy acquisition costs$44,636 $35,931 $89,126 $67,908 
Other operating and general expenses40,960 40,748 83,021 78,545 
Total underwriting, acquisition and insurance expenses$85,596 $76,679 $172,147 $146,453 
11.    Reinsurance
Certain premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. The reinsurance agreements provide the Company with increased capacity to write larger risks and maintain its exposure to loss within its capital resources. The Company remains obligated for amounts ceded in the event that the reinsurers do not meet their obligations.
The following tables set forth the effects of reinsurance on written and earned premiums and losses and loss adjustment expenses for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,
20252024
($ in thousands)WrittenEarnedWrittenEarned
Direct premiums$461,081 $392,777 $404,443 $335,398 
Assumed premiums123,833 86,420 91,800 70,786 
Ceded premiums(245,701)(183,655)(199,114)(148,601)
Net premiums$339,213 $295,542 $297,129 $257,583 
Ceded losses and LAE incurred$138,438 $106,954 
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11.     Reinsurance (continued)
Six months ended June 30,
20252024
($ in thousands)WrittenEarnedWrittenEarned
Direct premiums$869,391 $778,215 $771,239 $662,570 
Assumed premiums250,849 165,147 183,624 132,972 
Ceded premiums(437,756)(347,454)(370,634)(301,617)
Net premiums$682,484 $595,908 $584,229 $493,925 
Ceded losses and LAE incurred$273,905 $192,573 
The following table sets forth the components of reinsurance recoverables and ceded unearned premium as of June 30, 2025 and December 31, 2024:
($ in thousands)June 30, 2025December 31, 2024
Ceded unpaid losses and LAE$711,030 $670,846 
Ceded paid losses and LAE216,556 166,663 
Loss portfolio transfer— 22,662 
Allowance for credit losses(2,295)(2,295)
Reinsurance recoverables$925,291 $857,876 
Ceded unearned premium$294,124 $203,901 
The Company entered into agreements with several of its reinsurers, whereby the reinsurer established funded trust accounts with the Company as the sole beneficiary. These trust accounts provide the Company additional security to collect claim recoverables under reinsurance contracts and the Company does not carry these on the balance sheet because the Company will only have custody over these accounts upon the failure of the reinsurer to pay amounts due. At June 30, 2025, the market value of these accounts was approximately $225.7 million. The trust amount will be adjusted periodically, by mutual agreement, based on claim payments and loss reserve recoverables.
Certain ceded reinsurance contracts that transfer only significant timing risk and do not transfer sufficient underwriting risk are accounted for using the deposit method of accounting. The Company’s deposit asset at June 30, 2025 and December 31, 2024 was $10.7 million and $25.9 million, respectively, and was included in other assets on the condensed consolidated balance sheets.
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12.    Earnings Per Share
The following table sets forth the computation of basic and diluted net earnings per share for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands, except for share and per share amounts)2025202420252024
Numerator
Net income$38,839 $30,970 $80,897 $67,754 
Denominator
Basic weighted-average common shares40,445,39139,177,45740,322,05139,142,825
Dilutive effect of stock notes—722,153—717,217
Dilutive effect of stock units893,067900,119940,951900,565
Dilutive effect of options533,038368,353508,213349,777
Diluted weighted-average common share equivalents41,871,49641,168,08241,771,21541,110,384
Basic earnings per share$0.96 $0.79 $2.01 $1.73 
Diluted earnings per share$0.93 $0.75 $1.94 $1.65 
The following table presents anti-dilutive instruments that were excluded from the calculation of diluted weighted-average common share equivalents during the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
2025202420252024
Stock units49,54021,813109,359135,027
Options8681,134834706
The following table presents common share equivalents of contingently issuable instruments that were excluded from basic earnings per share in the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
2025202420252024
Common shares—866,428—866,428
  Total —866,428—866,428
13.    Related Party Transactions
RISCOM
RISCOM provides the Company with wholesale brokerage services. RISCOM and the Company also have a managing general agency agreement. The Company holds a 20% ownership interest in RISCOM.
Net earned premium and gross commission expense related to these agreements for the three and six months ended June 30, 2025 and 2024 were as follows:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Net earned premium$29,886 $26,161 $58,846 $52,055 
Commissions7,533 6,347 15,165 13,234 
Premiums receivable as of June 30, 2025 and December 31, 2024 were $16.4 million and $12.6 million, respectively.
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SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13.    Related Party Transactions (continued)
Other
Advisory and professional services fees and expense reimbursements paid to various affiliated stockholders and directors for the three and six months ended June 30, 2025 were $0.1 million and $0.3 million, compared to $0.1 million and $0.2 million for the three and six months ended June 30, 2024.
See Note 5 for investments involving affiliated companies and additional related party transactions.
14.    Commitments and Contingencies
Litigation
The Company is named as a defendant in various legal actions arising from claims made under insurance policies and contracts. Those actions are considered by the Company in estimating the losses and loss adjustment expense reserves. Also, from time to time, the Company is a defendant in various legal actions that relate to bad faith claims, disputes with third parties or that involve alleged errors and omissions. The Company records accruals for these items to the extent the losses are probable and reasonably estimable. Although the ultimate outcome of these matters cannot be determined at this time, based on present information, the availability of insurance coverage and advice received from outside legal counsel, the Company believes the resolution of any such matters will not, individually or in the aggregate, have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
Indemnification
In conjunction with the sale of business assets and subsidiaries, the Company has provided indemnifications to certain buyers. Certain indemnifications cover typical representations and warranties related to the responsibilities to perform under the sales contracts. The amount of potential exposure covered by the indemnifications is difficult to determine because the indemnifications cover a variety of matters, operations and scenarios. Certain of these indemnifications have no time limit. At this time, the Company does not have reason to believe any such significant claims exist.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The term “Skyward Specialty” as used below refers only to Skyward Specialty Insurance Group, Inc. and the terms “our Company,” “we,” “us,” and “our” as used below refer to Skyward Specialty Insurance Group and its consolidated subsidiaries. The term “second quarter” as used below refers to the three and six months ended June 30 for the time period then ended. We discuss certain key metrics which provide useful information about our business and the operational factors underlying our financial performance. Many of these metrics are generally standard among insurance companies and help to provide comparability with our peers. Select insurance, accounting, operating and financial terms for Skyward Specialty are defined in the sections entitled “Select Insurance and Financial Terms” and “Key Operating and Financial Metrics” included in our 2024 Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).
The discussion and analysis below include certain forward-looking statements that are subject to risks, uncertainties and other factors described in “Risk Factors” in our 2024 Form 10-K. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors.
The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2025, or for any other future period. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report, and in conjunction with our audited consolidated financial statements and the notes thereto included in our 2024 Form 10-K.
The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).
Overview
Founded in 2006, Skyward Specialty is a specialty insurance holding company incorporated in Delaware. We have one reportable segment through which we offer a broad array of commercial property and casualty products and solutions on a non-admitted (or E&S) and admitted basis, predominantly in the United States. We focus our business on markets that are underserved, dislocated and/or for which standard insurance coverages are insufficient or inadequate to meet the needs of businesses, including our customers and prospective customers operating in these markets. Our customers typically require highly specialized, customized underwriting solutions and claims capabilities. As such, we develop and deliver tailored insurance products and services to address each of the niche markets we serve.
During the first quarter of 2025, the Company updated its underwriting divisions to align with how management currently oversees the business, allocates resources and evaluates operating performance. The Company added a ninth division, Agriculture and Credit (Re)insurance, which includes the Global Agriculture unit, previously reported with Global Property, and the Mortgage and Credit units, and focuses on specialty classes for which reinsurance provides a more attractive market entry. The Industry Solutions division is now the Construction & Energy Solutions division and the Inland Marine unit is now included in the Transactional E&S division. Programs is now Specialty Programs. Prior reporting periods have been conformed to reflect the new presentation.
All of our insurance company subsidiaries are group rated and have financial strength ratings of “A” (Excellent) with stable outlook from the A.M. Best Company.
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Results of Operations
The following table summarizes our results for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Gross written premiums$584,914 $496,243 $1,120,240 $954,863 
Ceded written premiums(245,701)(199,114)(437,756)(370,634)
Net written premiums$339,213 $297,129 $682,484 $584,229 
Net earned premiums$295,542 $257,583 $595,908 $493,925 
Commission and fee income2,560 2,053 4,536 4,079 
Losses and LAE181,262 159,054 368,571 302,968 
Underwriting, acquisition and insurance expenses85,596 76,679 172,147 146,453 
Underwriting income(1)
$31,244 $23,903 $59,726 $48,583 
Net investment income$18,589 $22,034 $37,927 $40,331 
Net investment gains (losses)$3,205 $(1,721)$10,039 $6,582 
Income before income taxes$49,795 $40,355 $101,230 $87,332 
Net income$38,839 $30,970 $80,897 $67,754 
Adjusted operating income(1)
$37,116 $32,972 $74,507 $63,943 
Loss and LAE ratio61.3 %61.7 %61.9 %61.3 %
Expense ratio28.1 %29.0 %28.1 %28.8 %
Combined ratio89.4 %90.7 %90.0 %90.1 %
Annualized return on equity17.7 %17.5 %19.1 %19.6 %
Annualized return on tangible equity(1)
19.7 %20.0 %21.3 %22.4 %
Annualized adjusted return on equity(1)
17.0 %18.7 %17.6 %18.5 %
Annualized adjusted return on tangible equity(1)
18.9 %21.3 %19.6 %21.2 %
(1) See “Reconciliation of Non-GAAP Financial Measures” in this Item 2
Reconciliation of Non-GAAP Financial Measures
Adjusted Operating Income
The following table provides a reconciliation of adjusted operating income to net income for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
2025202420252024
($ in thousands)Pre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-tax
Income as reported$49,795 $38,839 $40,355 $30,970 $101,230 $80,897 $87,332 $67,754 
Less (add):
Net investment gains3,205 2,500 (1,721)(1,360)10,039 8,023 6,582 5,200 
Net impact of LPT— — 241 190 — — 482 381 
Other income7 5 (7)(6)20 16 (7)(6)
Other expenses(1,002)(782)(1,045)(826)(2,063)(1,649)(2,233)(1,764)
Adjusted operating income$47,585 $37,116 $42,887 $32,972 $93,234 $74,507 $82,508 $63,943 
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Underwriting Income
The following table provides a reconciliation of underwriting income to income before federal income tax expense for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Income before income taxes$49,795 $40,355 $101,230$87,332
Add:
Interest expense1,876 2,449 3,7105,176 
Amortization expense372 360 709748
Other expenses1,002 1,045 2,0632,233
Less:  
Net investment income18,589 22,034 37,92740,331
Net investment gains3,205 (1,721)10,0396,582
Other income7 (7)20(7)
Underwriting income$31,244 $23,903 $59,726$48,583
Tangible Stockholders’ Equity
The following table provides a reconciliation of tangible stockholders’ equity to stockholders’ equity for the periods ended June 30, 2025 and 2024:
($ in thousands)20252024
Stockholders’ equity$899,915$723,620
Less: Goodwill and intangible assets88,79587,868
Tangible stockholders’ equity$811,120$635,752
Annualized Adjusted Return on Equity
The following table provides a reconciliation of annualized adjusted return on equity to annualized return on equity for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Numerator: annualized adjusted operating income$148,464 $132,214 $149,014 $128,050 
Denominator: average stockholders’ equity$875,318 $707,946 $846,957 $692,326 
Annualized adjusted return on equity
17.0 %18.7 %17.6 %18.5 %
Annualized Return on Tangible Equity
Annualized return on tangible equity for the three and six months ended June 30, 2025 and 2024 reconciles to annualized return on equity as follows:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Numerator: annualized net income$155,356 $123,880 $161,794 $135,508 
Denominator: average tangible stockholders’ equity$787,376 $619,944 $758,886 $604,174 
Annualized return on tangible equity
19.7 %20.0 %21.3 %22.4 %
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Annualized Adjusted Return on Tangible Equity
Annualized adjusted return on tangible equity for the three and six months ended June 30, 2025 and 2024 reconciles to annualized return on equity as follows:
Three months ended June 30,Six months ended June 30,
($ in thousands)2025202420252024
Numerator: annualized adjusted operating income$148,464 $132,214 $149,014 $128,050 
Denominator: average tangible stockholders’ equity$787,376 $619,944 $758,886 $604,174 
Annualized adjusted return on tangible equity
18.9 %21.3 %19.6 %21.2 %
Underwriting Results
Premiums
The following tables present gross written premiums by underwriting division for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,
($ in thousands)20252024Change% Change
Accident & Health$60,489 $44,088 $16,401 37.2%
Agriculture and Credit (Re)insurance71,573 36,592 34,981 95.6%
Captives76,961 62,099 14,862 23.9%
Construction & Energy Solutions73,613 78,214 (4,601)(5.9%)
Global Property83,992 88,231 (4,239)(4.8%)
Professional Lines38,147 38,106 41 0.1%
Specialty Programs85,955 59,644 26,311 44.1%
Surety40,737 37,642 3,095 8.2%
Transactional E&S53,461 51,609 1,852 3.6%
Total gross written premiums(1)
$584,928 $496,225 $88,703 17.9%
(1) Excludes exited business
Six months ended June 30,
($ in thousands)20252024Change% Change
Accident & Health$123,658 $84,989 $38,669 45.5%
Agriculture and Credit (Re)insurance159,420 79,913 79,507 99.5%
Captives145,362 130,507 14,855 11.4%
Construction & Energy Solutions149,184 152,436 (3,252)(2.1%)
Global Property130,678 145,543 (14,865)(10.2%)
Professional Lines79,313 80,345 (1,032)(1.3%)
Specialty Programs148,630 111,822 36,808 32.9%
Surety78,535 71,484 7,051 9.9%
Transactional E&S105,467 97,841 7,626 7.8%
Total gross written premiums(1)
$1,120,247 $954,880 $165,367 17.3%
(1) Excludes exited business
The increases in gross written premiums for the second quarter and first half of 2025, when compared to the same 2024 periods, were driven by double-digit premium growth primarily from the agriculture and credit (re)insurance, accident & health, specialty programs and captives divisions, partially offset by decreases in gross written premiums in the global property and construction & energy solutions divisions.
Net written premiums for the second quarter of 2025 were $339.2 million compared to $297.1 million for the same 2024 period, an increase of $42.1 million or 14.2%. Net written premiums for the first half of 2025 were $682.5 million
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compared to $584.2 million for the same 2024 period, an increase of $98.3 million or 16.8%. The increases 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 the second quarter of 2025 were $295.5 million compared to $257.6 million for the same 2024 period, an increase of $37.9 million or 14.7%. Net earned premiums for the first half of 2025 were $595.9 million compared to $493.9 million for the same 2024 period, an increase of $102.0 million or 20.6%. The increases in net earned premiums was primarily driven by the same reasons that drove the increases in gross written premiums discussed above.
For additional information regarding our reinsurance programs, see the “Reinsurance” discussion included in this Item 2.
Losses and LAE
The following tables set forth the components of the loss and LAE ratios and adjusted loss and LAE ratios for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,
20252024
($ in thousands)
Losses
and LAE
% of
Net Earned
Premiums
Losses
and LAE
% of
Net Earned
Premiums
Losses and LAE:
Non-cat loss and LAE
$177,262 59.9 %$156,295 60.6 %
Cat loss and LAE(1)
4,000 1.4 %3,000 1.2 %
Prior accident year development - LPT
— — %(241)(0.1)%
Total losses and LAE$181,262 61.3 %$159,054 61.7 %
(1) Current accident year
Six months ended June 30,
20252024
($ in thousands)
Losses
and LAE
% of
Net Earned
Premiums
Losses
and LAE
% of
Net Earned
Premiums
Losses and LAE:
Non-cat loss and LAE
$358,071 60.1 %$299,450 60.6 %
Cat loss and LAE(1)
10,500 1.8 %4,000 0.8 %
Prior accident year development - LPT
— — %(482)(0.1)%
Total losses and LAE$368,571 61.9 %$302,968 61.3 %
(1) Current accident year
The loss ratio for the second quarter improved 0.4 points and it increased 0.6 points for the first half of 2025, when compared to the same 2024 periods, respectively. Catastrophe losses in the second quarter increased marginally when compared to the same 2024 period, driven by convective storms in the South and Midwest. The first half of 2025 was also impacted by convective storms in the Midwest and the California wildfires.
The non-cat loss and LAE ratios for the second quarter and first half of 2025 improved 0.7 points and 0.5 points, respectively, when compared to the same 2024 periods, primarily driven by the business mix shift.
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Expense Ratio
The following tables set forth the components of the expense ratios for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,
20252024
($ in thousands)Expenses% of
Net Earned Premiums		Expenses% of
Net Earned Premiums
Net policy acquisition expenses $44,636 15.1%$35,931 14.0%
Other operating and general expenses 40,960 13.9%40,748 15.8%
Underwriting, acquisition and insurance expenses 85,596 29.0%76,679 29.8%
Less: commission and fee income (2,560)(0.9%)(2,053)(0.8%)
Total net expenses $83,036 28.1%$74,626 29.0%
Six months ended June 30,
20252024
($ in thousands)Expenses% of
Net Earned Premiums		Expenses% of
Net Earned Premiums
Net policy acquisition expenses $89,126 15.0%$67,908 13.7%
Other operating and general expenses 83,021 13.9%78,545 15.9%
Underwriting, acquisition and insurance expenses 172,147 28.9%146,453 29.6%
Less: commission and fee income (4,536)(0.8%)(4,079)(0.8%)
Total net expenses $167,611 28.1%$142,374 28.8%
The expense ratios for the second quarter and first half of 2025 improved 0.9 points and 0.7 points, respectively, when compared to the same 2024 periods due to earnings leverage partially offset by higher acquisition costs due to the business mix shift.
The expense ratios for all periods presented exclude the impact of IPO related stock compensation and secondary offering expenses, which are reported in other expenses in our condensed consolidated statements of operations and comprehensive income.
Investment Results
The following table sets forth the components of net investment income and net investment gains (losses) for the three and six months ended June 30, 2025 and 2024:
Three months ended June 30,Six months ended June 30,
$ in thousands2025202420252024
Short-term investments & cash and cash equivalents $4,574 $4,021 $8,615 $9,108 
Fixed income17,822 13,78634,55226,264
Equities531 7511,1881,378
Alternative and strategic investments(4,338)3,476(6,428)3,581
Net investment income$18,589 $22,034 $37,927 $40,331 
Net unrealized gains (losses) on securities still held
$(3,181)$(1,760)$2,310$7,231
Net realized gains (losses)6,386(39)7,729(649)
Net investment gains (losses)$3,205 $(1,721)$10,039 $6,582 
Net investment income for the second quarter and first half of 2025 decreased $3.4 million and $2.4 million, respectively when compared to the same 2024 periods. The decreases in net investment income were primarily driven by losses from our alternative & strategic investments portfolio due to the decline in the fair value of limited partnership investments. Partially offsetting the decreases in net investment income were increases in income from our fixed income
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portfolio for the second quarter and first half of 2025, when compared to the same 2024 periods, due to (i) a larger asset base, and (ii) a higher book yield of 5.3% at June 30, 2025 compared to 4.4% at June 30, 2024.
When a fixed maturity has been determined to have an impairment, the impairment charge is separated into an amount representing the credit loss, which is recognized in earnings as a realized loss and on the balance sheet as an allowance for credit losses netted with the amortized cost of fixed maturities. Future increases in fair value, if related to credit factors, are recognized through earnings limited to the amount previously recognized as an allowance for credit losses. The amount related to non-credit factors is recognized in accumulated other comprehensive income and future increases or decreases in fair value, if not credit losses, are included in accumulated other comprehensive (loss) income. We reviewed our available-for-sale fixed maturities at June 30, 2025 and determined that for two available-for-sale securities in the “corporate securities and miscellaneous” category, and recognized a provision for credit losses of $6.2 million. This determination was made based on new recovery analysis that showed deteriorating conditions raising credit concerns. Other than the securities discussed previously, we determined that no other credit impairment existed. See Note 2, “Investments” to our condensed consolidated financial statements included in Item 1 of this Form 10-Q for additional information.
Investments
Composition of Investment Portfolio
The following table sets forth the components of our investment portfolio at carrying value at June 30, 2025 and December 31, 2024:
20252024
($ in thousands)
Carrying Value
% of Total
Carrying Value
% of Total
Cash and cash equivalents$136,617 6.2 %$121,603 6.1 %
Short-term investments214,338 9.7 %274,929 13.8 %
Fixed income1,639,632 74.0 %1,318,708 66.2 %
Equities58,001 2.6 %106,254 5.3 %
Alternative and strategic investments168,536 7.5 %170,929 8.6 %
Total portfolio$2,217,124 100.0 %$1,992,423 100.0 %
Fixed income
Our fixed income portfolio primarily consists of investment grade fixed income securities, which are predominantly highly-rated and liquid bonds, and commercial mortgage loans.
The following table sets forth the components of our fixed income securities at June 30, 2025 and December 31, 2024:
20252024
($ in thousands)Carrying Value
% of Total
Carrying Value
% of Total
U.S. government securities$46,265 2.8 %$26,486 2.0 %
Corporate securities and miscellaneous549,498 33.5 %425,628 32.3 %
Municipal securities100,154 6.1 %84,716 6.4 %
Residential mortgage-backed securities466,687 28.5 %393,833 29.9 %
Commercial mortgage-backed securities82,789 5.1 %69,364 5.2 %
Other asset-backed securities384,071 23.4 %292,191 22.2 %
Total fixed income portfolio, available-for-sale1,629,464 99.4 %1,292,218 98.0 %
Commercial mortgage loans$10,168 0.6 %$26,490 2.0 %
Total fixed income portfolio$1,639,632 100.0 %$1,318,708 100.0 %
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The weighted average credit rating of our available-for-sale fixed income portfolio was “A+” at June 30, 2025 and “AA-” at December 31, 2024. The following table sets forth the credit quality of our available-for-sale fixed income portfolio at June 30, 2025 and December 31, 2024:
20252024
($ in thousands)Fair Value% of TotalFair Value% of Total
AAA$314,365 19.3 %$483,099 37.3 %
AA512,399 31.4 %141,177 10.9 %
A493,250 30.3 %429,703 33.3 %
BBB286,964 17.6 %216,602 16.8 %
BB and Lower22,486 1.4 %21,637 1.7 %
Total fixed income portfolio, available-for-sale$1,629,464 100.0 %$1,292,218 100.0 %
Our commercial mortgage loans are primarily senior loans on real estate across the U.S.
The average duration of our fixed income portfolio was approximately 4.35 years and 4.34 years, respectively, as of June 30, 2025 and December 31, 2024.
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.
Alternative and strategic investments
Alternative investments consists of promissory notes, limited partnerships, joint ventures and equity interests. The underlying investments are primarily floating rate senior secured loans, comprised of short duration, collateralized, asset-oriented credit investments. The limited partnerships and joint ventures are subject to future increases or decreases in asset value as asset values are monetized and the income is distributed. Strategic investments consists of equity interests in private entities within the insurance industry.
Other Items
Income Taxes
Income tax expense for the three and six months ended June 30, 2025 was $11.0 million and $20.3 million, respectively, compared to $9.4 million and $19.6 million, respectively, for the same 2024 periods. Our effective tax rates for the three and six months ended June 30, 2025 were 22.0% and 20.1%, respectively, compared to 23.3% and 22.4% for the same 2024 periods, respectively. The effective tax rate for the six months ended June 30, 2025 was impacted by certain discrete tax items, primarily tax benefits from stock-based compensation, which reduced the effective tax rate by 1.7%. For additional information, see Note 7 of our condensed consolidated financial statements included in Item 1 of this Form 10-Q.
Liquidity and Capital Resources
Sources and Uses of Funds
Our most significant source of cash is from premiums received from our insureds, which, for most policies, we receive at the beginning of the coverage period, net of the related commission amount for the policies. Our most significant cash outflow is for claims that arise when a policyholder incurs an insured loss. Because the payment of claims occurs after the receipt of the premium, often years later, we invest the cash in various investment securities that generally earn interest and dividends. We also use cash to pay for operating expenses such as salaries, rent and taxes and capital expenditures such as technology systems. We use reinsurance to manage the risk that we take on our policies. We cede, or pay out, part of the premiums we receive to our reinsurers and collect cash back when losses subject to our reinsurance coverage are paid.
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. Management believes that cash receipts from premiums and proceeds from investment income are sufficient to cover cash outflows in the foreseeable future.
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Our cash flows for the six months ended June 30, 2025 and 2024:
($ in thousands)20252024
Cash and cash equivalents provided by (used in):
Operating activities $184,940 $115,220 
Investing activities (169,301)(97,824)
Financing activities — (9,465)
Change in cash and cash equivalents and restricted cash$15,639 $7,931 
The increase in cash provided by operating activities in 2025 when compared to 2024 was primarily due to positive cash flow from our insurance operations. Cash from operations can vary from period to period due to the timing of premium receipts, claim payments and reinsurance activity. Cash flows from operations in each of the past two years were used primarily to fund investing activities.
Net cash used in investing activities in 2025 and 2024 were primarily driven by purchases of fixed maturity securities. Net cash used in financing activities in 2024 was driven by net payments on debt.
Credit Agreements
FHLB Loan
On August 30, 2024, we entered into a loan (the “FHLB Loan”) with the Federal Home Loan Bank of Dallas (the “FHLB”) pursuant to its Advances and Security Agreement. The FHLB Loan is a 4.5-year term loan in the principal amount of $57.0 million. The FHLB Loan provides for interest-only payments during its term, with principal due in full at maturity. The interest rate is fixed over the term of the loan at 4.00%. The FHLB Loan is fully secured by a pledge of specific investment securities of HSIC. 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).
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.
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).
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 June 30, 2025, we had $43.0 million outstanding under the Revolving Credit Facility with another $107.0 million of undrawn capacity.
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. At June 30, 2025, the six-month SOFR on the Revolving Credit Facility was 4.22%, 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 June 30, 2025, we are in compliance with all covenants.
Debentures
In August 2006, we received $58.0 million of proceeds from a debenture offering through a statutory trust, Delos Capital Trust (the “Trust”). The sole asset of the Trust consists of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Trust Preferred”) with a principal amount of $59.8 million issued by us and cash of $1.8 million from the issuance of Trust common shares purchased by us equal to 3% of the Trust capitalization. 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. 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.
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At June 30, 2025 the ratio of total debt outstanding, including the FHLB Loan, the Revolving Credit Facility and the Notes, to total capitalization (defined as total debt plus stockholders’ equity) was 11.7% and at December 31, 2024, the ratio of total debt outstanding, including the Term Loan, the Revolver, the Trust Preferred and the Notes, to total capitalization was 13.1%.
Share Repurchase Program
In October 2024, the Board of Directors approved a share repurchase program authorizing the repurchase of up to $50.0 million of our common stock. The shares may be repurchased from time to time in open market purchases, privately-negotiated transactions, block purchases, accelerated share repurchase agreements or a combination of methods, including through Rule 10b5-1 trading plans. 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 June 30, 2025, no shares had been repurchased under this plan.
Reinsurance
We strategically purchase reinsurance from third parties which enhances our business by protecting capital from severity events (either large single event losses or catastrophes) and reducing volatility in our earnings. Our reinsurance contracts are predominantly one year in length and renew annually throughout the year, primarily in January and April. 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.
We purchase quota share reinsurance, excess of loss reinsurance, and facultative reinsurance coverage to limit our exposure from losses on any one occurrence. The mix of reinsurance purchased considers efficiency, cost, our risk appetite and specific factors of the underlying risks we underwrite.
•Quota share reinsurance refers to a reinsurance contract whereby the reinsurer agrees to assume a specified percentage of the ceding company’s losses arising out of a defined class of business in exchange for a corresponding percentage of premiums, net of a ceding commission.
•Excess of loss reinsurance refers to a reinsurance contract whereby the reinsurer agrees to assume all or a portion of the ceding company’s losses for an individual claim or an event in excess of a specified amount in exchange for a premium payable amount negotiated between the parties, which includes our catastrophe reinsurance program.
•Facultative coverage refers to a reinsurance contract on individual risks as opposed to a group or class of business. 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.
For the three and six months ended June 30, 2025 our net retention on a written basis (calculated as net written premiums as a percentage of gross written premiums) was 58.0% and 60.9%, respectively, compared to 59.9% and 61.2%, respectively, for the same 2024 period.
The following is a summary of our reinsurance programs as of June 30, 2025:
Line of BusinessMaximum 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
Ocean Marine(2)
$3.00 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)
$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.
(2) Reinsurance is subject to a loss ratio cap or aggregate level of loss cover that exceeds a modeled 1:250-year PML event.
(3) Catastrophe loss protection is purchased up to $36.0 million in excess of $12.0 million retention, which provides cover for a 1:250-year PML event.
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Credit and Financial Strength Ratings
On August 1, 2024, A.M. Best upgraded Skyward Specialty’s financial strength rating to A (Excellent) from A- (Excellent) and revised the outlook to stable from positive.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in market risk from the information provided in our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required financial disclosure.
As previously disclosed within Item 9A. Controls and Procedures of our 2024 Form 10-K, management concluded that a material weakness existed related to the ineffective implementation of information technology general controls (“ITGCs”) in the area of user access for systems that support the Company’s financial reporting processes as well as the related process-level IT dependent manual and automated controls that rely upon the affected ITGCs, or information coming from IT systems with affected ITGCs. As part of our efforts to remediate the material weakness, new controls and procedures have been designed and are in process of being implemented as previously disclosed within Item 9A. Controls and Procedures of our 2024 Form 10-K. Therefore, our CEO and CFO concluded that, as of June 30, 2025, our disclosure controls and procedures were not effective. Despite the foregoing, our CEO and CFO have certified that, based on their knowledge, the financial statements, and other financial information included in this Form 10-Q, fairly present in all material respects our financial condition, results of operations and cash flows as of, and for, the periods presented in this Form 10-Q.
Status of Remediation Activities
With the oversight of the Audit Committee, our management has implemented, and is in process of implementing, additional measures to improve our internal control over ITGCs to remediate the material weakness identified above, including (i) conducting a thorough review of existing ITGCs to identify areas of weakness, (ii) enhancing access controls, (iii) strengthening system access procedures and (iv) providing regular training and awareness programs for employees to ensure they understand ITGC policies and procedures and adhere to best practices for maintaining data integrity and security. We are committed to continuing to improve our ITGCs.
We cannot assure you that the measures we have taken to date, and are continuing to implement, will be sufficient to remediate the identified material weakness, or to avoid potential future material weaknesses or significant deficiencies. While we believe our efforts have improved our internal control over ITGCs, remediation of the material weakness will require further validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. We have invested, and expect to continue to invest, significant resources to improve our ITGCs.
Changes in Internal Control over Financial Reporting
Except for the ongoing remediation efforts relating to the material weaknesses identified above, there has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the year ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. 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 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risks and uncertainties described under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 (our “2024 Form 10-K”), as supplemented by the risk factor captioned “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” in our Quarterly Report on Form 10-Q for the period ended March 31, 2025 (our “Q1 10-Q”). There have been no other material changes in our risk factors in the six months ended June 30, 2025 from those disclosed in our 2024 Form 10-K and our Q1 10-Q.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
On May 9, 2025, Tom Schmitt entered into a new Rule 10b5-1 Trading Arrangement. The material terms of the trading plan are set forth in the table below. This plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and our policies regarding transactions in our securities.
Disclosure Events
Name (Title)
Date of AdoptionNature of Trading ArrangementDuration of Trading ArrangementAggregate Number of Securities
1
Tom Schmitt (Chief People Officer)
May 9, 2025Rule 10b5-1(c) Trading Arrangement
11/10/2025 – 6/9/2026
Up to 8,485 shares
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Item 6. Exhibits
(a)Exhibits.
Exhibit NumberExhibit Description
3.1
3.2
4.1
31.1
31.2
32.1
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

(b)Financial Statement Schedules. All financial statement schedules are omitted because the information called for is not required or is shown either in the consolidated financial statements or in the notes thereto.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Skyward Specialty Insurance Group, Inc.
Date: August 7, 2025
By:/s/ Andrew Robinson
Andrew Robinson
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: August 7, 2025
By:/s/ Mark Haushill
Mark Haushill
Chief Financial Officer
(Principal Financial and Accounting Officer)
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