SKWD 10-K & 10-Q changes, risk factors and insider trading
Skyward Specialty Insurance Group, Inc. · Nasdaq · Fire, Marine & Casualty Insurance · CIK 1519449 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our use of derivatives to mitigate exposure to market price volatility may subject us to risks such as hedge ineffectiveness, basis risk, collateral and margin call liquidity pressures, and valuation uncertainty inherent in futures and options markets, any of which could adversely affect our financial condition.”
New heading “The availability of credit under the Revolving Credit Facility is subject to conditions that may limit our access.”
New heading “The failure to meet certain financial covenants required by our credit agreements may materially and adversely affect our assets, financial position, and cash flows.”
New heading “Artificial intelligence is an evolving and rapidly growing technology which may impact our business and operations.”
New heading “The acquisition and integration of Apollo may adversely affect our business, financial condition and results of operations.”
Largest changes
“If we fail to remediate the material weakness in a timely manner or at all, or are otherwise unable to maintain effective internal control over ITGCs and the related process-level IT dependent manual and automated controls, management could be required to expend significant resources and be subject to fines, penalties, investigations or judgments, all of which could negatively affect investor confidence and adversely impact our stock price.”see in full comparison
“A breach of any of the covenants under the Term Loan Facility and Revolving Credit Facility could result in an event of default under the credit agreements. Upon the occurrence of an event of default under the credit agreements, all amounts outstanding, together with accrued interest, could be declared immediately due and payable by our lenders. If this happens, our assets may not be sufficient to repay in full the payments due under the credit agreements. …”see in full comparison
“We cannot make assurances that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal controls. In the future, current controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of the financial statements.”see in full comparison
“Furthermore, the current administration has included as part of its agenda a potential reform of U.S. tax laws. The details of the potential reform have not yet emerged, but several intended reforms have been outlined, including reducing the corporate tax rate, extending certain provisions of the Tax Cuts and Jobs Act of 2017 (“TCJA”), and imposing new tariffs. The combined impact of extending certain tax benefits pursuant to the TCJA and the implementation of new tariffs could potentially lead to increases in the U.S. …”see in full comparison
“Our use of derivatives to mitigate exposure to market price volatility may subject us to risks such as hedge ineffectiveness, basis risk, collateral and margin call liquidity pressures, and valuation uncertainty inherent in futures and options markets, any of which could adversely affect our financial condition.”see in full comparison
“The failure to meet certain financial covenants required by our credit agreements may materially and adversely affect our assets, financial position, and cash flows.”see in full comparison
Full comparison: every changed paragraph (51)
•if we fail to achieve and maintain effective internal controls, our operating results and financial condition could be impacted and the market price of our common stock may be negatively affected;
•our ability to maintain effective internal control over financial and management systems and remediate material weaknesses; and
•our use of derivatives to mitigate exposure to market price volatility may subject us to risks such as hedge ineffectiveness, basis risk, collateral and margin call liquidity pressures, and valuation uncertainty inherent in futures and options markets, any of which could adversely affect our financial condition; and
•the integration of Apollo may present unforeseen challenges, including potential difficulties in integrating technology systems, business processes, and risk management frameworks, which could result in operational disruptions, increased costs, or delays in realizing anticipated strategic benefits from the acquisition.
•pricing for our products, including the impact of hedging activities to protect against commodity price volatility;
•pricing for our products;
•When a claim is received, it may take considerable time to appreciate fully the extent of the covered loss suffered by the insured and, consequently, estimates of loss associated with specific claims can increase over time. Consequently, estimates of loss associated with specified claims can change as new information emerges, which could cause the reserves for the claim to become inadequate.
Consequently, estimates of loss associated with specified claims can change as new information emerges, which could cause the reserves for the claim to become inadequate.
Severe weather conditions, including the effects of climate change, catastrophes, pandemic, as well as man-made event events may adversely affect our business, results of operations and financial condition.
Our business is also exposed to the risk of pandemics, outbreaks, public health crises, and geopolitical and social events, and their related effects. While policy terms and conditions in the lines of business written by us would be expected to preclude coverage for virus-related claims, like the COVID-19 pandemic, court decisions and governmental actions may challenge the validity of any exclusions or our interpretation of how such terms and conditions operate.
Additionally, changes in domestic and international programs and initiatives with respect to climate policy as well as federal, state, and local legislation and regulation based on concerns about climate change cannot be predicted but could have a material adverse effect on our business, operational results and financial results.
In addition to the impacts that environmental incidents have on our business, changes to law and regulation related to climate change could also directly affect our business. The current administration made comments during their election campaign suggesting that it was not supportive of various clean energy programs and initiatives, including the United Nations (“U.N.”) Framework Convention on Climate Change, designed to curtail global warming. On January 20, 2025, President Trump signed an executive order to withdraw the U.S. from the Paris Agreement, marking a significant shift in U.S. climate policy. It remains unclear what further actions the current administration may take with respect to domestic and international programs and initiatives, and what support the administration would have for any potential changes to such legislative programs and initiatives in the U.N. or the U.S. Congress. Changes in federal, state, and local legislation and regulation based on concerns about climate change cannot be predicted but could have a material adverse effect on our business, operational and financial results.
Our use of derivatives to mitigate exposure to market price volatility may subject us to risks such as hedge ineffectiveness, basis risk, collateral and margin call liquidity pressures, and valuation uncertainty inherent in futures and options markets, any of which could adversely affect our financial condition.
Our use of derivatives to mitigate exposure to market price volatility subjects us to risks that could adversely affect our financial condition and results of operations. These risks include hedge ineffectiveness due to imperfect correlation between derivatives and the underlying exposures, a recognized limitation in commodity market hedge theory; basis risk, where futures prices do not move in line with cash market prices relevant to our business; and liquidity pressures arising from margin call or collateral requirements associated with futures positions during adverse market movements. Additionally, reliance on market based models introduces valuation uncertainty that may cause hedges to perform differently than expected. Together, these factors may prevent our hedging strategies from effectively reducing volatility and could materially adversely impact our financial results.
Although an individual insurance company’s financial performance depends on its own specific business characteristics, the profitability of most P&C insurance companies tends to follow this cyclical market pattern with higher gross written premium growth and improved profitability during hard market cycles. Further, this cyclical market pattern can be more pronounced in the E&S market than in the standard insurance market. When the standard insurance market hardens, the E&S market typically hardens, and growth in the E&S market can be significantly more rapid than growth in the standard insurance market. Similarly, when conditions begin to soften, many customers that were previously driven into the E&S market may return to the admitted market, exacerbating the effects of rate decreases on our financial results. Finally, the market may experience “micro cycles” where certain areas of the market harden or soften independently of the market as a whole, and perhaps at a more drastic rate. As a result, our operating results are subject to fluctuation and have historically varied from quarter to quarter. We expect our quarterly results will continue to fluctuate in the future due to a number of factors, including the general economic conditions in the markets where we operate, the frequency of occurrence or severity of catastrophe or other insured events, fluctuating interest rates, claims exceeding our loss reserves, competition in our industry, deviations from expected premium retention rates of our existing policies and contracts, adverse investment performance, and the cost of reinsurance coverage.
Finally, the market may experience “micro cycles” where certain areas of the market harden or soften independently of the market as a whole, and perhaps at a more drastic rate. As a result, our operating results are subject to fluctuation and have historically varied from quarter to quarter. We expect our quarterly results will continue to fluctuate in the future due to a number of factors, including the general economic conditions in the markets where we operate, the frequency of occurrence or severity of catastrophe or other insured events, fluctuating interest rates, claims exceeding our loss reserves, competition in our industry, deviations from expected premium retention rates of our existing policies and contracts, adverse investment performance, and the cost of reinsurance coverage.
Our insurance subsidiaries are part of an “insurance holding company system” within the meaning of applicable Texas statutes and regulations. As a result of such status, certain transactions between our insurance subsidiaries and one or more of their affiliates may not be effectedaffected unless the insurer has provided notice of that transaction to the Texas Department of Insurance. These prior notification requirements may result in business delays and additional business expenses. If our insurance subsidiaries fail to file a required notification or fail to comply with other applicable insurance regulations in Texas, we may be subject to significant fines and penalties and our working relationship with the Texas Department of Insurance may be impaired.
For example, on July 4, 2025, H.R. 1, the “One Big Beautiful Bill Act” (the “OBBBA”) was signed into law in the United States. Among other changes, the OBBBA modifies key business tax provisions, including the restoration of 100% bonus depreciation under Section 168(k) of the United States Internal Revenue Code of 1986, as amended (the “IRC”), the restoration of the immediate deduction of U.S. domestic research and experimental expenditures under Section 174A of the IRC, the restoration of the EBITDA-based business interest expense limitation under Section 163(j) of the IRC, and changes to the computation of taxes related to international operations. Based on our current analysis of these provisions, we do not believe these provisions will have a material impact on our business and our results of operations. However, regulations and other U.S. Internal Revenue Service guidance implementing the OBBBA may give rise to new issues that we did not foresee, and further changes to tax laws may be implemented. Therefore, there can be no assurance that our business will not be adversely affected by the OBBBA or any other tax law changes.
Furthermore, the current administration has included as part of its agenda a potential reform of U.S. tax laws. The details of the potential reform have not yet emerged, but several intended reforms have been outlined, including reducing the corporate tax rate, extending certain provisions of the Tax Cuts and Jobs Act of 2017 (“TCJA”), and imposing new tariffs. The combined impact of extending certain tax benefits pursuant to the TCJA and the implementation of new tariffs could potentially lead to increases in the U.S. deficit, inflation, and interest rates, all of which could contribute to increases in market interest rates and a decrease in U.S. economic growth with a possibility of a recession, all of which could negatively impact our business.
Our future capital requirements depend on many factors, including our ability to write new business successfully and to establish premium rates and reserves at levels sufficient to cover losses. To the extent that cash flows generated by our operations are insufficient to fund future operating requirements and cover claim losses, or that our capital position is adversely impacted by a decline in the fair value of our investment portfolio, losses from catastrophe eventsevents, adverse reserve development or otherwise, we may need to raise additional funds through financings or curtail our growth. Many factors will affect the amount and timing of our capital needs, including our growth rate and profitability, our claims experience, and the availability of reinsurance, market disruptions, and other unforeseeable developments. If we need to raise additional capital, equity or debt financing may not be available at all or may be available only on terms that are not favorable to us. In the case of equity financings, dilution to our stockholders could result. In the case of debt financings, we may be subject to covenants that restrict our ability to freely operate our business. In any case, such securities may have rights, preferences and privileges that are senior to those of the shares of our common stock. If we cannot obtain adequate capital on favorable terms or at all, we may not have sufficient funds to implement our operating plans and our business, financial condition or results of operations could be materially adversely affected.
The availability of credit under the Revolving Credit Facility is subject to conditions that may limit our access.
Our access to credit under the Revolving Credit Facility is subject to the satisfaction of certain conditions. If we are unable to satisfy these conditions, we would be unable to borrow under the Revolving Credit Facility. The inability to borrow under the Revolving Credit Facility may adversely affect our liquidity, financial position and results of operations.
The failure to meet certain financial covenants required by our credit agreements may materially and adversely affect our assets, financial position, and cash flows.
A breach of any of the covenants under the Term Loan Facility and Revolving Credit Facility could result in an event of default under the credit agreements. Upon the occurrence of an event of default under the credit agreements, all amounts outstanding, together with accrued interest, could be declared immediately due and payable by our lenders. If this happens, our assets may not be sufficient to repay in full the payments due under the credit agreements. The current credit market environment and other macro-economic challenges affecting the global economy may adversely impact our ability to borrow sufficient funds or sell assets or equity in order to pay existing debt.
Computer viruses, hackers, employee misconduct, and other external hazards could expose our systems to security breaches, cyber-attacks or other disruptions. While we have implemented security measures designed to protect against breaches of security and other interference with our systems and networks, our systems and networks may be subject to breaches or interference and we, and our third-party service providers, will likely continue to experience cybersecurity incidents of varying degrees. For instance, we experienced a data incident in which attackers acquired certain of our data. We completed our investigation and determined that the breach is immaterial in nature. At this time, there is no evidence that a nation-state actor or global hacker was involved or that there has been any misuse of this information. Any suchfuture eventcybersecurity events may result in operational disruptions as well as unauthorized access to, the disclosure of, or loss of our proprietary information or our customers’ data and information, which in turn may result in legal claims, regulatory scrutiny and liability, reputational damage, the incurrence of costs to eliminate or mitigate further exposure, the loss of customers or affiliated advisors, or other damage to our business. In addition, SEC and state law requirements regarding general public notification of such incidents could exacerbate the harm to our business, financial condition and results of operations. Even if we successfully protect our technology infrastructure and the confidentiality of sensitive data, we could suffer harm to our business and reputation if attempted security breaches are publicized. We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities in our systems, data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or breach the technology or other security measures protecting the networks and systems used in connection with our business.
Artificial intelligence is an evolving and rapidly growing technology which may impact our business and operations.
The rapid growth and development of artificial intelligence and machine learning may alter the competitive landscape in which we operate. Our employees utilize artificial intelligence for risk selection, pricing and claims handling to aid in their effectiveness and efficiency and we continue to research and implement artificial intelligence-based solutions in an effort to improve our business. Notwithstanding this, our competitive position may be harmed if competitors are able to leverage artificial intelligence solutions more quickly or more effectively. In addition, while we do not rely solely on information and analysis production through artificial intelligence in our decision making, if the content, analyses or recommendations that artificial intelligence applications assist in producing are, or are alleged to be, deficient, inaccurate or biased, such as due to limitations in algorithms, insufficient or biased base data or flawed training methodologies, our business, financial condition, results of operations and reputation may be adversely affected. Further, as artificial intelligence technology and products are continuously evolving, we may incur costs to adopt and deploy technologies that could become obsolete earlier than expected. There can be no assurance that we will realize the desired or anticipated benefits from artificial intelligence.
There is also uncertainty in the legal and regulatory landscape at the federal and state levels for the use of artificial intelligence, which is not fully developed. Any laws, regulations or industry standards adopted in response to the emergence of artificial intelligence may be burdensome, could entail significant costs, and may restrict or impede our ability to successfully develop, adopt and deploy artificial intelligence technologies efficiently and effectively.
Further, to the extent that we grow inorganically through acquisition the success of such acquisitions is dependent upon our ability to identify appropriate targets, negotiate transactions on favorable terms, complete transactions and successfully integrate the targets into our existing business. If acquisitions are made, we may not realizedrealize the anticipated benefits of such acquisitions, including but not limited to, revenue growth, operational efficiencies or expected synergies.
The acquisition and integration of Apollo may adversely affect our business, financial condition and results of operations.
On January 1, 2026, we completed the acquisition of Apollo. While the acquisition is expected to provide strategic benefits, expand our specialty insurance capabilities, and enhance our presence in the Lloyd’s market, the integration of Apollo into our business involves a number of risks and uncertainties, the occurrence of which could adversely affect our business, financial condition, and operating results. These risks include, but are not limited to:
•Integration Risks: The successful integration of Apollo’s operations, systems, technology platforms, and personnel with our own is subject to significant challenges. Difficulties in integrating Apollo may result in the diversion of management’s attention and resources, disruption of ongoing business, and the incurrence of unexpected costs or delays.
•Realization of Anticipated Benefits: There can be no assurance that we will realize the growth opportunities or other benefits from the acquisition within the expected time frame, or at all. Failure to achieve these benefits could adversely affect our results of operations and financial condition.
•Retention of Key Personnel and Customers: The success of the acquisition depends in part on our ability to retain key Apollo employees, partners, and customers. The loss of key personnel or business relationships could negatively impact the value of the acquired business and our overall operations.
•Cultural and Operational Differences: Apollo operates in the Lloyd’s market and has a distinct business culture and regulatory environment. Differences in business practices, risk appetite, and compliance requirements may create challenges in harmonizing policies and procedures across the combined organization.
•Financial and Accounting Risks: The acquisition may result in significant changes to our financial statements, including the recognition of goodwill and other intangible assets, which could be subject to future impairment. In addition, the acquired business may have undisclosed liabilities or risks that could adversely affect our financial results. Furthermore, as Apollo’s financial statements are currently prepared under U.K. GAAP, which will need to be converted to U.S. GAAP, which may require adjustments to accounting policies, estimates, and disclosures, potentially impacting reported balances and comparability with prior periods.
•Regulatory and Compliance Risks: The expansion of our operations into new jurisdictions and markets, including the Lloyd’s market, increases our exposure to regulatory scrutiny and compliance requirements. Failure to comply with applicable laws and regulations could result in fines, penalties, or other adverse consequences.
•Indebtedness and Financial Flexibility: In connection with the acquisition, we incurred additional indebtedness. Our ability to service this debt and comply with related covenants may be affected by events beyond our control, and could limit our financial flexibility or increase our cost of capital.
•Distraction from Ongoing Operations: The integration process may divert management’s attention from our existing business, which could negatively impact our ongoing operations and financial performance.
If we are unable to successfully integrate Apollo, realize the anticipated benefits of the acquisition, or manage the risks associated with the expanded business, our business, financial condition, and results of operations could be materially and adversely affected.
As a public company, and particularly sinceas wea arelarge noaccelerated longer an emerging growth company,filer, we incur significant legal, accounting and other expenses that we would not incur as a private company. In addition, the federal securities laws, including the Sarbanes-Oxley Act, the Dodd-Frank Act, and rules and regulations subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies, including requirements to file annual, quarterly and event-driven reports with respect to our business and financial condition, and to establish and maintain effective disclosure and financial controls and corporate governance practices. These rules and regulations increase our legal and financial compliance costs, make certain activities more time-consuming and costly, and require our management and other personnel to devote a substantial amount of time to compliance initiatives. Despite our best efforts, we may not be able to produce reliable financial statements or file such financial statements as part of a periodic report in a timely manner with the SEC or comply with Nasdaq listing requirements.
We havehad identified a material weakness in our internal control over information technology general controls (“ITGCs”). as of December 31, 2024, which was remediated as of December 31, 2025. If we fail to remediatemaintain the material weakness, or if we fail to establish and maintainan effective system of internal control over ITGCs,controls, the market price of our common stock could be adversely affected.
With the participation of our Chief Executive Officer, our Chief Financial Officer and our Chief Information and Technology Officer, management identified control deficiencies over ITGCs during the fiscal year ended December 31, 2024, that constituted a material weakness as described within “ITEM 9A. CONTROLS & PROCEDURES” of the Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
We have taken measures to remediate the material weakness described herein and believe that it has been remediated. However, if management identifies additional material weaknesses or significant deficiencies in our internal controls or disclosure controls, we may be unable to provide required financial information in a timely and reliable manner and we may incorrectly report financial information. If the financial statements are not filed on a timely basis, we could be subject to adverse action by shareholders, Nasdaq, the SEC or other regulatory authorities. The existence of material weaknesses or significant deficiencies in internal controls could adversely affect our reputation or investor perceptions, which could have a negative effect on the trading price of our common shares. In addition, we may incur additional costs to remediate material weaknesses or significant deficiencies in our internal controls.
We cannot make assurances that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal controls. In the future, current controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of the financial statements.
With the participation of our Chief Executive Officer, our Chief Financial Officer and our Chief Information and Technology Officer, management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2024 using criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our management concluded that a material weakness existed as of December 31, 2024 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. Further, the Company’s related process-level IT dependent manual and automated controls that rely upon the affected ITGCs, or information coming from IT systems with affected ITGCs, were also deemed ineffective. See “ITEM 9A. CONTROLS & PROCEDURES” in this form 10-K for additional information including management’s remediation plan.
If we fail to remediate the material weakness in a timely manner or at all, or are otherwise unable to maintain effective internal control over ITGCs and the related process-level IT dependent manual and automated controls, management could be required to expend significant resources and be subject to fines, penalties, investigations or judgments, all of which could negatively affect investor confidence and adversely impact our stock price.
The securities markets have from time to timetime-to-time experienced extreme price and volume fluctuations that often have been unrelated or disproportionate to the operating performance of particular companies. As a result of these factors, investors in our common stock may not be able to resell their shares at or above their purchase price. These broad market fluctuations, as well as general market, economic and political conditions, such as recessions, loss of investor confidence or interest rate changes, may negatively affect the market price of our common stock.
Anti-takeover provisions in our organizational documents could prevent or delay a change inof managementcontrol that is beneficial to shareholders and limit our share price.
Provisions of our certificate of incorporation and by-laws, as well as applicable Delaware law, federal and state regulations and insurance company regulations may discourage, delay or prevent a merger, tender offer or other change of control that holders of our securities may consider favorable. Some of these provisions impose various procedural and other requirements that could make it more difficult for shareholders to affect certain corporate actions. Therefore, these provisions could adversely affect the price of our common stock. Among other things, our charter documents:
Provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us even if such a change in control would increase the value of our common stock and prevent attempts by our stockholders to replace or remove our current Board of Directors or management. Therefore, these provisions could adversely affect the price of our common stock. Among other things, our charter documents:
Management's Discussion & Analysis (MD&A)
New heading “Revolving Credit Facilities”
Removed heading “Subordinated Debt”
Removed heading “•Reported and/or Paid Loss Development Methods”
Removed heading “•Reported Bornhuetter-Ferguson Methods”
Removed heading “•Paid Bornhuetter-Ferguson Method”
Largest changes
“The Term Loan Facility includes customary covenants, including certain limitations on the incurrence by us of additional indebtedness exceeding $10.0 million and on our ability to make distributions to our stockholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants, including financial covenants relating to our minimum consolidated net worth, maximum total debt to capitalization, minimum A.M. Best rating and minimum liquidity, as well as customary events of default. …”see in full comparison
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 minimumsee in full comparisonliquidity.liquidity, as well as customary events of default. As of December 31,2024,2025, wearewere in compliance with all covenants.
Full comparison: every changed paragraph (54)
Our portfolio of insured risks is highly diversified — we insure customers operating in a wide variety of industries; we distribute through multiple channels; we write multiple lines of business, including general liability, excess liability, professional liability (which includes cyber and media liability insurance), commercial auto, group accident and health, property, agriculture, credit, surety and workers’ compensation; we insure both short and medium duration liabilities; and our business mix is principally primary insurance and balanced between E&S and admitted markets. A small portion of our business is specialty reinsurance (principally agriculture and credit) which is similarly focused on attractive specialty classes where we believe it is more efficient to approach these classes through reinsurance given factors such as cost of entry, including the costs of geographic expansion. All of these factors enable us to respond to market opportunities and dislocations by deploying capital with attractive risk-adjusted returns. We believe this diversification, which includes businesses not typically aligned with traditional P&C pricing cycles, combined with our underwriting and claims expertise, will more consistently produce strong growth and profitability across all insurance pricing cycles.
During the first quarter of 2025, we updated our underwriting divisions to align with how management currently oversees the business, allocates resources and evaluates operating performance. We added a ninth division, Agriculture and Credit (Re)insurance, which includes the Global Agriculture unit, previously reported with Global Property, and the Mortgage and Credit units, and focuses on specialty classes for which reinsurance provides a more attractive market entry. 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.
On September 2, 2025, we entered into two share purchase agreements (the "Apollo Majority SPAs") with institutional and management shareholders, respectively, of Apollo Group Holdings Limited ("Apollo") (the "Majority Sellers"). Pursuant to the Apollo Majority SPAs and in accordance with the terms and subject to the conditions therein, we agreed to acquire all of the issued shares of Apollo held by the Majority Sellers, representing approximately 87% of the issued share capital of Apollo. In addition, closing of the transaction ("Closing") was conditioned upon our acquiring 100% of the issued share capital of Apollo (the “Acquisition”) at Closing pursuant to additional short-form share purchase agreements (the "Apollo Minority SPAs" and together with the Apollo Majority SPAs, the "Apollo SPAs") with the remaining minority shareholders of Apollo (the "Minority Sellers" and together with the Majority Sellers, the "Sellers"). The consideration for the entire issued share capital of Apollo under the Apollo SPAs was $555.0 million, which included (i) $371.0 million in cash (the “Cash Consideration”) and (ii) the issuance of 3,679,332 shares of the Company’s common stock. In connection with the Apollo SPAs, on December 30, 2025, we entered into a Term Loan Credit Agreement (the “Facility”) we the lenders from time to time parties thereto (each a “Lender” and collectively, the “Lenders”), Barclays Bank PLC, as Administrative Agent (the “Agent”), and the Agent, Truist Securities, Inc., Citizens Bank, N.A. and Texas Capital Bank as joint lead arrangers, joint book runners and co-syndication agents for the Tranche B Term Facility. The facility includes (a) an unsecured senior delayed draw term loan facility in the aggregate principal amount of $150.0 million (the “Tranche A Term Facility”) and (b) an additional unsecured senior delayed draw term loan facility in the aggregate principal of $150.0 million. The acquisition closed on January 1, 2026. The consideration for the transaction was satisfied by the issuance of common stock of the Company to certain sellers and the remainder in cash. As of December 31, 2025, we recognized $14.0 million in transaction expenses associated with the transaction.
The following table provides a reconciliation of the adjusted loss and LAE ratio and adjusted combined ratio to the loss and LAE ratio and combined ratio for the yearsyear ended December 31, 2024 and 2023:
The year-over-year increase of $423.1 million in gross written premiums, when compared to 2024, was primarily driven by growth from the agriculture and credit (re)insurance division due to (i) new opportunities in dairy and livestock and crop, and (ii) growth in our credit portfolio which we started writing in the fourth quarter of 2024. Specialty programs, accident & health, surety and captives also contributed meaningfully to the growth in 2025. The growth in specialty programs was primarily due to the addition of two new programs in 2025. The growth in accident and health was primarily driven by the acquisition of more high deductible accident and health captives when compared to 2024. The increase in surety was primarily due to market expansion in both commercial and contract bonds. The growth in the captives division was primarily due to rate increases and new business.
Partially offsetting the growth in gross written premiums were decreases in our global property, construction and energy solutions and professional lines divisions due to (i) continued downward pricing pressure in the global property market, although retention remained steady, and (ii) the exit of unprofitable lines in construction and energy solutions and professional lines during 2025.
The year-over-year increase in gross written premiums, when compared to 2023, was driven by double-digit premium growth from our captives, surety, transactional E&S, programs and global property & agriculture underwriting divisions. We continued to broaden and diversify our product portfolio during 2024, growing in areas that are less exposed to the P&C cycles. The gross written premium increases were primarily driven by (i) new captive members and growth in existing captives, (ii) new product offerings, including participation in the Small Business Administration (“SBA”) Bond Guarantee Program, and regional expansion in surety, (iii) new business and rate in transactional E&S, (iv) the addition of four new programs, including Aviation. and (iv) new business in global agriculture. Slightly offsetting the gross written premium increases were (i) downward pricing pressure in the global property market, and (ii) our intentional actions to address profitability in commercial auto.
Net written premiums were $1,123.6$1,406.2 million compared to $910.7$1,123.6 million in 2023,2024, an increase of $212.9$282.7 millionmillion, or 23.4%.25.2%. The increase in net written premiums was primarily driven by the same reasons that drove the increasesincrease in gross written premiums discussed above.
Net earned premiums for 20242025 were $1,056.7$1,304.5 million compared to $829.1$1,056.7 million for 2023,2024, an increase of $227.6$247.8 million, or 27.4%.23.4%. The increase in net earned premiums was primarily driven by the same reasons that drove the increasesincrease in gross written premiums discussed above.
The 20242025 loss ratio increasedimproved 1.32.5 points, respectively,points when compared to 2023,2024, primarily due to favorable prior accident year development compared to adverse development due to the net impact of prior accident year development related to the LPT,LPT whichin added 1.1 points to the loss ratio.2024. The non-cat loss and LAE ratio for 20242025 improved 0.3 points when compared to 2023,2024, primarily driven by the shift in the mix of business. The 20242025 cat loss and LAE ratio increasedimproved 0.30.5 points when compared to 2023,2024, primarilywhich duewas toimpacted catastrophe losses fromby Hurricanes Helene and Beryl in the third quarter of 2024 and Hurricane Milton in the fourth quarter of 2024.
In 2024, the Company transitioned from evaluating reserves on a policy year basis to an accident year basis which results in earlier recognition of underlying claim trends, better alignment of exposure to risks, and adherence to commonly used industry best practices. In prior years, the Company’s methodology allocated IBNR from its policy year analysis to accident year. As a result of transitioning to accident year, IBNR within short-tail/monoline specialty lines, multi-line solutions, and exited lines was reallocated for the years ended December 31, 2023, 2022, 2021 and 2020, and certain amounts have been conformed to the current year presentation.
For the year ended December 31, 2024,2025, the Companywe recognized adversefavorable development related to prior years’ loss and loss expense reserves of $25.7$7.5 million; $10.1due to favorable development of $24.6 million and $15.2$5.3 million in multi-lineshort-tail/monoline solutionsspecialty lines and exitedmulti-line lines,solutions, respectively, werepartially relatedoffset by $22.4 million of adverse development in exited lines. The adverse development is primarily attributable to lossescommercial previouslyauto subjectand toexcess over auto in divisions that we have non-renewed or significantly reduced our exposure over the LPTpast fromthree accidentyears. yearsThis 2018was offset by favorable development in surety and prior.property.
DuringFor the year ended December 31, 2023,2024, the Companywe recognized adverse development related to prior years’ loss and loss expense reserves of $10.8$25.7 million.million; Adverse$10.1 developmentmillion ofand $11.7$15.2 million in multi-line solutions was driven by greater than expected severity in auto, general, and excessexited liabilitylines, linesrespectively, ofwere businessrelated primarilyto losses previously subject to the LPT from accident years 2020 to 2022. The adverse development was partially offset by favorable development in short-tail/monoline specialty lines. The favorable development was in the property line of business primarily from accident years 20212018 and 2022.prior.
The expense ratio for 20242025 increasedimproved 0.30.5 points when compared 2023,to 2024, primarily drivendue to earnings leverage, partially offset by higher acquisition costs due to the business mix shift partially offset by earnings leverage.shift.
The expense ratios for the periods presented exclude the impact of IPO related stock compensation and secondary offering expenses, which are reported in other expenses in our consolidated statements of operations and comprehensive income.
Beginning January 1, 2024, we simplified the investment portfolio classifications to align with our strategy and the underlying risk characteristics of the portfolio. The prior period has been reclassified to conform to the current period presentation.
The increase in income from our fixed income portfolio for 2024,2025, when compared to 2023,2024, was due to (i) a larger asset base as we continued to increase our allocation to this part of our investment portfolio and (ii) a higher book yield of 5.4% at December 31, 2025 compared to 5.2% at December 31, 2024 compared to 4.5% at December 31, 2023.2024. The increasedecrease in income from short-term investments & cash and cash equivalents for 20242025 when compared to 20232024 was due to higheran investmentoverall yieldsdecrease andin a larger asset base.yields. The fairdecrease valuein ofincome from our alternative and strategic investments portfolio forin 2024 increased2025 when compared to 20232024 due to ana increasedecline in the fair value of limited partnership investments. The decrease in income from equities was due to the sale of the equity portfolio in the third quarter of 2025.
The weighted average credit rating of our available-for-sale fixed income portfolio was “AA-A+” by Standard & Poor’s Financial Services, LLC (“Standard & Poor’s”) at December 31, 20242025 and 2023.“AA-” at December 31, 2024. The following table sets forth the credit quality of our available-for-sale fixed income portfolio at December 31, 20242025 and 2023, as rated by Standard & Poor’s or equivalent designation2024:
The equities portfolio primarily consistsconsisted of domestic preferred stocks, common equities, exchange traded funds, limited partnerships, limited liability corporations and other types of equity interests, 100.0% of which arewere publicly traded. During the third quarter of 2025, we sold almost all of our equities portfolio, retaining only our preferred stocks.
Credit risk is the potential loss resulting from adverse changes in an issuer’s ability to repay its debt obligations. We have exposure to credit risk as a holder of debt instruments in our core fixed income and opportunistic fixed income portfolios. Our risk management strategy and investment policy is to invest primarily in debt instruments of high credit quality issuers and to limit the amount of credit exposure with respect to particular ratings categories and any one issuer. At December 31, 2024,2025, our core fixed income portfolio had an average rating of “AA-,A+,” with approximately 81.5%78.5% of securities in that portfolio rated “A” or better by at least one nationally recognized rating organization. Our policy is to invest in investment grade fixed income securities which are high quality and liquid, providing a stable income stream, supplemented by opportunistic fixed income and equity securities, with the objective of further enhancing the portfolio’s diversification and risk-adjusted returns. At December 31, 2024,2025, approximately 1.7%1.1% of our core fixed income portfolio was unrated or rated below investment-grade. Through our investment managers, we monitor the financial condition of all of the issuers of securities in our portfolio.
Equity price risk represents the potential economic losses due to adverse changes in equity security prices. At December 31, 2024,2025, approximately 6.7%0.1% of the fair value of our investment portfolio (excluding cash and cash equivalents and short-term investments) was invested in equity securities. We manage equity price risk through portfolio diversification and maintain a tail-risk management strategy that is designed to provide some protection forDuring the equitythird portfolioquarter ifof there2025, iswe asold significantalmost declineall inof theour S&Pequities 500portfolio, withinretaining aonly 30our daypreferred period.stocks.
The timing of our cash flows from operating activities can vary amongamongst 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.
The decreaseincrease in cash provided by operating activities in 20242025 when compared to 20232024 was primarily due to an increase in cash outflowsinflows from our netinsurance reinsurance recoverables and net premiums receivables.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 was primarily driven by purchases of fixed maturity securities, partially offset by sales and maturities of investment securities. Net cash used in investing activities in 2024 was primarily driven by purchases of fixed maturity securities, partially offset by sales and maturities of investment securities and sales of short-term investments. Net cash used in investing activities in 2023 was primarily driven by purchases of fixed maturity securities.
Net cash used in financing activities in 2024 was driven by net payments on debt.
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 redemptionredemptions of the March 15, 2024 drawdraws 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).
RevolvingTerm CreditLoan Facility
During the fourth quarter of 2025, we entered into a Term Loan Credit Agreement (the “Term Loan Facility”) with a syndicate of participating banks The Term Loan Facility includes (a) an unsecured senior delayed draw term loan facility (“DDTL”) in the aggregate principal amount of $150.0 million (the “Tranche A DDTL”) and (b) an additional unsecured senior DDTL in the aggregate principal amount of $150.0 million (the “Tranche B DDTL”) and together with the Tranche A DDTL, the “Term Loan Facility”).
We used the Term Loan Facility to fund a portion of the consideration of the acquisition of Apollo Group Holdings Limited (“Apollo”) and related transaction fees and expenses. Amounts drawn under the Term Loan Facility will bear interest at either term SOFR plus a margin, which will range from 150 basis points to 190 basis points, or the base rate plus a margin, which will range from 50 basis points to 90 basis points, each depending on our debt to capitalization ratio. SOFR will be calculated using a SOFR floor of 0.00% and a credit spread adjustment of 0.10%. The base rate will be the highest of (i) the Agent’s then-current prime lending rate, (ii) the Federal Funds Rate plus 0.50%, (iii) SOFR plus 1.00% and (iv) zero percent (0%). In addition, we will also pay a fee ranging from 0.20% to 0.35% on average daily undrawn amounts under the Facility, depending on our debt to capitalization ratio. The Tranche A DDTL matures on January 1, 2028 and the Tranche B DDTL matures on July 2, 2029. On December 30, 2025, we drew $150 million of the Tranche A DDTL and $150 million of the Tranche B DDTL for the acquisition of Apollo on January 1, 2026.
The Term Loan Facility includes customary covenants, including certain limitations on the incurrence by us of additional indebtedness exceeding $10.0 million and on our ability to make distributions to our stockholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants, including financial covenants relating to our minimum consolidated net worth, maximum total debt to capitalization, minimum A.M. Best rating and minimum liquidity, as well as customary events of default. As of December 31, 2025, we were in compliance with all covenants.
The Term Loan Facility is unsecured. In connection with the Credit Agreement, during the fourth quarter of 2025, we and the subsidiary guarantors party thereto, entered into a guaranty agreement, pursuant to which our obligations under the Term Loan Facility are guaranteed by us and our existing wholly-owned subsidiaries and subsequently acquired or organized subsidiaries, excluding insurance company subsidiaries and subject to certain other exceptions.
Revolving Credit Facilities
OnDuring Marchthe 29,fourth 2023,quarter of 2025, we entered into ana unsecuredCredit revolving credit facilityAgreement (the “Revolving Credit Facility”) with a syndicate of participating banks. The Revolving Credit Facility providesis unsecured and provided us with up to aan initial maximum principal amount of $150.0 million revolvingwhich creditwas facilityincreased andto a$250.0 lettermillion on the closing date of creditour sub-facilityacquisition of upApollo. Also, during the fourth quarter of 2025, we amended the Revolving Credit Facility to $30.0permit million.the funding of certain revolving loans in connection with the acquisition of Apollo, among other things.
We initially drew $43.0 million, which was used to redeem our prior revolving credit facility (described below). On December 30, 2025, we drew an additional $71.5 million which was used for the consideration paid for the acquisition. The proceeds from the draws on the Term Loan Facility and the draw of the Revolving Credit Facility are presented net with the liabilities on the Consolidated Balance Sheets for the year ended December 31, 2025. The proceeds were used for the acquisition of Apollo on January 1, 2026.
Interest on the Revolving Credit Facility is payable quarterly. Amounts drawn under the Facility bear interest at either term SOFR plus a margin, which range from 150 and 190 basis points, or the base rate plus a margin, which range from 50 basis points to 90 basis points, each depending on our debt to capitalization ratio. SOFR will be calculated using a SOFR floor of 0.00% and a credit spread adjustment of 0.10%. The base rate will be the highest of (i) the Agent’s then current prime lending rate, (ii) the Federal Funds Rate plus 0.50%, (iii) SOFR plus 1.00% and (iv) zero percent (0%). In addition, we will also pay a fee ranging from 0.20% to 0.35% on average daily undrawn amounts under the Facility, depending on our debt to capitalization ratio. The availability period under the Facility will terminate on November 12, 2030.
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 December 31, 2024, 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 December 31, 2024, the six-month SOFR on the Revolving Credit Facility was 4.25%, plus a margin of 1.60%.
We are subject to covenants on the Revolving Credit Facility based on minimum net worth, maximum debt to capital ratio, minimum A.M. Best Rating and minimum liquidity.liquidity, as well as customary events of default. As of December 31, 2024,2025, we arewere in compliance with all covenants.
During the first quarter of 2023, we entered into an agreement to obtain a unsecured revolving credit facility (the “2023 Revolving Credit Facility”) with a syndicate of participating banks. The 2023 Revolving Credit Facility provided us with up to a $150.0 million revolving credit facility and a letter of credit sub-facility of up to $30.0 million. On November 13, 2025, we redeemed the 2023 Revolving Credit Facility, paid $0.3 million of accrued interest and recognized $0.6 million of expense for the remaining unamortized deferred financing costs.
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 issuedentered into an agreement to issue unsecured subordinated notes (the “Notes”) with an aggregate principal amount of $20.0 million. Interest on the subordinated notesNotes is fixed at 7.25% fixed for the first eight8 years and fixed at 8.25% fixed thereafter. Early retirement of the debt ahead of the eight-year8-year commitment requires all interest payments to be paid in full,full as well as the return of alloutstanding capital.principal. Principal payment is due at maturity on May 24, 2039 and interest is payable quarterly. The Notes have junior priority to all previously issued debt. We report debt related to the Notes in our December 31, 2025 and 2024 Consolidated Balance Sheets, net of debt issuance costs of approximately $0.4 million and $0.5 million, respectively. These deferred financing costs are presented as a direct deduction from the carrying amount of the subordinated debt.
At December 31, 2024 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 13.1% and at December 31, 2023, the ratio of total debt outstanding, including the Term Loan, the Revolver, the Trust Preferred and the Notes, to total capitalization was 16.3%.
The reserves for unpaid losses and LAE is the largest and most complex estimate in our consolidatedConsolidated balanceBalance sheet.Sheets. The reserves for unpaid losses and LAE represent our estimated ultimate cost of all unreported and reported but unpaid insured claims and the cost to adjust these losses that have occurred as of or before the balance sheet date. We do not discount our reserves for losses and LAE to reflect estimated present value. We estimate the reserves using individual case-basis valuations of reported claims and statistical analyses and various actuarial procedures. Those estimates are based on our historical information, industry and peer group information and our estimates of future trends in variable factors such as loss severity, loss frequency and other factors such as inflation. We regularly review our estimates and adjust them as necessary as experience develops or as new information becomes known to us. Additionally, during the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward. Even after such adjustments, the ultimate liability may exceed or be less than the revised estimates. Accordingly, the ultimate settlement of losses and the related LAE may vary significantly from the estimate included in our financial statements.
Our Reserve Committee includes our Chief Actuary, Chief Reserving Actuary, Chief Financial Officer and Chief Claims Officer. The Reserve Committee meets quarterly to review the actuarial reserving recommendations made by the Chief Actuary and uses their judgment to determine the best estimate to be recorded for the reserve for losses and LAE on our balance sheet. In establishing the quarterly actuarial recommendation for the reserves for losses and LAE, our actuary estimates an initial expected ultimate loss ratio for each of our underwriting divisions. Input from our underwriting and claims departments, including premium pricing assumptions and historical experience, is considered in setting our reserves.
The actuarial review considers multiple actuarial methods to estimate the reserve for losses and LAE. These methods include paid and incurred loss development methods, paid and incurred Bornhuetter-Ferguson methods, paid and incurred loss ratio cape cod methods and frequency and severity methods. In circumstances where one actuarial method is considered more credible than the others, that method is used to set the point estimate. For example, the paid loss and incurred loss development methods rely on historical paid and incurred loss data. For new lines of business, where there is insufficient history of paid and incurred claims data, or in circumstances where there have been significant changes in claim practices, the paid and incurred loss development methods would be less credible than other actuarial methods. The actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods considered. These methods utilize, to varying degrees, the initial expected loss ratio, detailed statistical analysis of past claims reporting and payment patterns, claims frequency and severity, paid loss experience, industry loss experience, and changes in market conditions, policy forms, exclusions, and exposures.
The actuarial review considers multiple actuarial methods are used to estimate the reserve for losses and LAE. These methods utilize, to varying degrees, the initial expected loss ratio, detailed statistical analysis of past claims reporting and payment patterns, claims frequency and severity, paid loss experience, industry loss experience, and changes in market conditions, policy forms, exclusions, and exposures. The actuarial methods used to estimate losses and LAE reserves are:
•Reported and/or Paid Loss Development Methods
•Reported Bornhuetter-Ferguson Methods
•Paid Bornhuetter-Ferguson Method
When evaluating reserves related to less mature policy years, our actuaries rely on the Bornhuetter-Ferguson Method as the primary method for our ultimate loss indications. As we move to more mature policy years, we transition to the Reported and/or Paid Loss Development Methods. We primarily rely on reported methods where case reserving is consistently applied across policy years, however, when there is a change in reserving philosophy we will blend both reported and paid methods in our evaluation of ultimate loss indications.
In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). ASU 2023-07 requires segment disclosures for (i) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), (ii) how the CODM uses the reported measure(s) of segment profitability in assessing segment performance and resource allocation and (iii) the title and position of the CODM. This update states that entities with a single reportable segment are required to provide full segment disclosures. The guidance became effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. This update is applied retrospectively to all prior periods presented. We have added additional segment disclosures as required by ASU 2023-07. There was no impact to the consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). ASU 2023-09 requires public companies, on an annual basis, provide enhanced rate reconciliation disclosures, including disclosures of specific categories and additional information that meet a quantitative threshold. This update also requires public companies to, among other things, disaggregate income taxes paid by federal, state and foreign taxes. The guidance isbecame effective for fiscal years beginning after December 15, 2024. This update is applied prospectively. We do not expect the amendments will have aadded materialadditional disclosures as required by ASU 2023-09. There was no impact onto ourthe consolidated financial statements.
What changed in the latest 10-Q
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, 2025 (our “2025 Form 10-K”), as supplemented by the risk factor updates set forth in our Quarterly Report on Form 10-Q for the period ended March 31, 2026 (our “Q1 10-Q”). There have been no other material changes in our risk factors in the six months ended June 30, 2026 from those disclosed in our 2025 Form 10-K and our Q1 10-Q.
Removed heading “Increased public attention from regulators, policymakers, investors, and other stakeholders regarding environmental, social and governance matters may expose us to negative public perception, cause reputational harm, impose additional costs on our business or impact our stock price.”
Removed heading “We are subject to extensive regulation, which may adversely affect our ability to achieve our business objectives. In addition, if we fail to comply with these regulations, we may be subject to penalties, including fines and suspensions, which may adversely affect our financial condition and results of operations.”
Removed heading “U.K. Regulations”
Removed heading “Compliance with data protection, privacy, and cybersecurity laws exposes us to regulatory, operational, financial, and reputational risks.”
Removed heading “Failure to comply with corporate substance requirements could result in penalties, increased costs, and have an adverse impact on our business.”
Removed heading “We are subject to economic sanctions, anti-bribery, and foreign corrupt practices laws and regulations in multiple jurisdictions, the violation of which could have a material adverse impact on our business.”
Removed heading “Changes to the tax laws and implementation of new tax policies could have a significant negative impact on the overall economy and our business.”
Removed heading “Applicable insurance laws may make it difficult to effect a change of control.”
Largest changes
“Compliance with these laws and regulations requires significant and ongoing investment in people, systems, processes, and controls, and as we may be required to modify or enhance our security measures, monitoring systems, training programs, and contractual protections with third parties as these laws and regulations continue to evolve. These efforts may increase our operating costs and limit our ability to use data in ways that support operational efficiency, analytics, and product development. …”see in full comparison
“We are subject to extensive regulation, which may adversely affect our ability to achieve our business objectives. In addition, if we fail to comply with these regulations, we may be subject to penalties, including fines and suspensions, which may adversely affect our financial condition and results of operations.”see in full comparison
“We are subject to economic sanctions, anti-bribery, and foreign corrupt practices laws and regulations in multiple jurisdictions, the violation of which could have a material adverse impact on our business.”see in full comparison
“We operate in multiple non-U.S. jurisdictions through our Apollo subsidiaries, including Bermuda, which has enacted minimum economic or corporate substance laws and regulations through the Bermuda Economic Substance Act 2018 (the “BES Act”). Apollo monitors its corporate substance, through its subsidiary Apollo Bermuda Limited, in Bermuda closely to ensure that it continues to meet these requirements. …”see in full comparison
“Our U.S. insurance subsidiaries are part of an “insurance holding company system” within the meaning of applicable Texas statutes and regulations. As a result of such status, certain transactions between our insurance subsidiaries and one or more of their affiliates may not be affected unless the insurer has provided notice of that transaction to the Texas Department of Insurance. These prior notification requirements may result in business delays and additional business expenses. …”see in full comparison
“Failure to comply with corporate substance requirements could result in penalties, increased costs, and have an adverse impact on our business.”see in full comparison
Full comparison: every changed paragraph (27)
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, 2025 (our “2025 Form 10-K”), as supplemented by the below risk factor updates.updates set forth in our Quarterly Report on Form 10-Q for the period ended March 31, 2026 (our “Q1 10-Q”). There have been no other material changes in our risk factors in the threesix months ended MarchJune 31,30, 2026 from those disclosed in our 2025 Form 10-K.10-K and our Q1 10-Q.
Increased public attention from regulators, policymakers, investors, and other stakeholders regarding environmental, social and governance matters may expose us to negative public perception, cause reputational harm, impose additional costs on our business or impact our stock price.
Recently, more attention is being directed towards publicly traded companies regarding environmental, social and governance (“ESG”) matters. A wide variety of stakeholders, including institutional investors, regulators, and investor advocacy groups have become increasingly focused on companies’ ESG practices and disclosures, which has led to an environment of increased regulatory complexity and potentially conflicting directives. The heightened and sometimes conflicting stakeholder focus on ESG issues requires the continuous monitoring of evolving laws, regulations, standards and expectations, as well as associated reporting requirements. Regulators across various jurisdictions have adopted and could continue to adopt pro- or anti-ESG-related rules and guidance, which may conflict and impose additional compliance costs. A failure, or perceived failure, to respond to investor or customer expectations related to ESG concerns could cause harm to our business and reputation. Alternatively, there could be backlash by investors or customers relating to ESG related topics which could cause harm to our business and reputation. Damage to our reputation as a result of our provision of policies to certain insureds could result in decreased demand for our insurance products and could have a material adverse effect on our business, operational results and financial results, as well as require additional resources to rebuild our reputation, competitive position and brand strength.
We are subject to extensive regulation, which may adversely affect our ability to achieve our business objectives. In addition, if we fail to comply with these regulations, we may be subject to penalties, including fines and suspensions, which may adversely affect our financial condition and results of operations.
Our primary U.S. insurance subsidiaries, GMIC, HSIC and IIC, are subject to extensive regulation in Texas, their state of domicile, and to a lesser degree, the other states in which they operate. Most insurance regulations are designed to protect the interests of insurance policyholders, as opposed to the interests of investors or stockholders. These regulations generally are administered by a department of insurance in each state and relate to, among other things, capital and surplus requirements, investment and underwriting limitations, affiliate transactions, dividend limitations, changes in control, solvency and a variety of other financial and non-financial aspects of our business. Significant changes in these laws and regulations could further limit our discretion or make it more expensive to conduct our business. State insurance regulators also conduct periodic examinations of the affairs of insurance and reinsurance companies and require the filing of annual and other reports relating to financial condition, holding company issues and other matters. These regulatory requirements may impose timing and expense constraints that could adversely affect our ability to achieve some or all of our business objectives.
Our U.S. insurance subsidiaries are part of an “insurance holding company system” within the meaning of applicable Texas statutes and regulations. As a result of such status, certain transactions between our insurance subsidiaries and one or more of their affiliates may not be affected unless the insurer has provided notice of that transaction to the Texas Department of Insurance. These prior notification requirements may result in business delays and additional business expenses. If our insurance subsidiaries fail to file a required notification or fail to comply with other applicable insurance regulations in Texas, we may be subject to significant fines and penalties and our working relationship with the Texas Department of Insurance may be impaired.
In addition, state insurance regulators have broad discretion to deny or revoke licenses for various reasons, including the violation of regulations. In some instances, where there is uncertainty as to applicability, we follow practices based on our interpretations of regulations or practices that we believe generally to be followed by the industry. These practices may turn out to be different from the interpretations of regulatory authorities. If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, state insurance regulators could preclude or temporarily suspend us from carrying on some or all of our activities in their state or could otherwise penalize us. This could adversely affect our ability to operate our business. Further, changes in the level of regulation of the insurance industry or changes in laws or regulations themselves or interpretations by regulatory authorities could interfere with our operations and require us to bear additional costs of compliance, which could adversely affect our ability to operate our business.
Our insurance subsidiaries are subject to risk-based capital requirements, based upon the “risk based capital model” adopted by the NAIC, and other minimum capital and surplus restrictions imposed under Texas law. These requirements establish the minimum amount of risk-based capital necessary for a company to support its overall business operations. It identifies property and casualty insurers that may be inadequately capitalized by looking at certain inherent risks of each insurer’s assets and liabilities and its mix of net written premium. Insurers falling below a calculated threshold may be subject to varying degrees of regulatory action, including supervision, rehabilitation or liquidation. Failure to maintain our risk-based capital at the required levels could adversely affect the ability of our insurance subsidiary to maintain regulatory authority to conduct our business and our A.M. Best Rating.
U.K. Regulations
The laws and regulations of the jurisdictions and markets, including Lloyd’s may impose certain requirements on us or our subsidiaries that could have an impact on our business, including meeting solvency standards, maintaining minimum levels of statutory capital and liquidity, and potentially undergoing periodic examinations of their financial condition and compliance with underwriting and other regulations.
Compliance with data protection, privacy, and cybersecurity laws exposes us to regulatory, operational, financial, and reputational risks.
Our business involves the collection, use, storage, and transmission of sensitive personal, financial, and proprietary information of many parties, including policyholders, insureds, claimants, employees, and third-party service providers. We are subject to an increasingly complex and evolving framework of data protection, privacy, and information security laws and regulations in the U.S., U.K., and other jurisdictions in which we operate. These laws and regulations include U.S. federal and state privacy and cybersecurity requirements, such as state consumer privacy statutes, as well as sector-specific insurance regulations and, where applicable, non-U.S. data protection regimes. Many of these laws and regulations impose obligations regarding data governance, security controls, individual rights, incident response, vendor oversight, and cross-border data transfers. The interpretation and enforcement of these requirements are evolving, and regulatory guidance and expectations may change rapidly.
Compliance with these laws and regulations requires significant and ongoing investment in people, systems, processes, and controls, and as we may be required to modify or enhance our security measures, monitoring systems, training programs, and contractual protections with third parties as these laws and regulations continue to evolve. These efforts may increase our operating costs and limit our ability to use data in ways that support operational efficiency, analytics, and product development. Failure, or perceived failure, to comply with applicable data protection or privacy requirements could result in investigations, fines, penalties, remediation obligations, restrictions on processing activities, contractual liability, and litigation, including class actions. Any of these developments could materially and adversely affect our business, results of operations, financial condition, and prospects.
Failure to comply with corporate substance requirements could result in penalties, increased costs, and have an adverse impact on our business.
We operate in multiple non-U.S. jurisdictions through our Apollo subsidiaries, including Bermuda, which has enacted minimum economic or corporate substance laws and regulations through the Bermuda Economic Substance Act 2018 (the “BES Act”). Apollo monitors its corporate substance, through its subsidiary Apollo Bermuda Limited, in Bermuda closely to ensure that it continues to meet these requirements. Compliance with the BES Act may require us to incur additional operating costs, including costs related to personnel, facilities, professional services, and internal controls, or to modify aspects of our organizational structure, business processes, or decision-making authority. Failure to comply with Bermuda’s economic substance rules can result in penalties, fines, or in extreme cases, deregistration.
Lloyd’s has access to the EU market through Lloyd’s Insurance Company S.A., based in Belgium, and which has a third country branch in the U.K. In Belgium, the National Bank of Belgium has been silent regarding the European Insurance and Occupational Pensions Authority (“EIOPA”) Supervisory Statement. A ruling from the National Bank of Belgium on this topic could impact Lloyd’s Insurance Company S.A., and thus Apollo.
We are subject to economic sanctions, anti-bribery, and foreign corrupt practices laws and regulations in multiple jurisdictions, the violation of which could have a material adverse impact on our business.
We conduct business subject to a variety of economic sanctions, anti-bribery, and anti-corruption laws and regulations, including those administered or enforced by authorities in the U.S., the U.K., and Bermuda. These laws include restrictions on dealings with certain sanctioned jurisdictions, entities, and individuals, as well as prohibitions on improper payments or other corrupt practices involving government officials and private parties. These legal regimes are complex, continue to evolve, and can be applied based on a broad range of jurisdictional connections, including the location of insured risks, counterparties, intermediaries, payments, banking relationships, employees, or business operations. Compliance with sanctions and anti-corruption laws requires significant diligence, monitoring, and controls, and although we have policies in place to guard against the possibility of violating these laws, these measures may not be fully effective in preventing violations, particularly in circumstances involving deliberate misconduct, circumvention of controls, or actions taken by third parties. Changes in sanctions programs or enforcement priorities, including those arising from geopolitical developments, could further increase compliance risks and limit our ability to underwrite certain risks, transact with certain counterparties, or operate in particular markets. Any failure, or alleged failure, to comply with applicable sanctions or anti-bribery and anti-corruption laws could materially and adversely affect our business, results of operations, financial condition, and reputation.
Changes to the tax laws and implementation of new tax policies could have a significant negative impact on the overall economy and our business.
New and proposed changes to tax laws could increase our corporate taxes. On July 4, 2025, new U.S. tax legislation was signed into law (known as the “One Big Beautiful Bill Act” or “OBBB Act”), which, among other provisions, makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. We do not expect the OBBB Act to have a material impact on our results of operations. New tax laws, in particular those enacted in response to proposals by the Organisation for Economic Co-operation and Development, could make substantive changes to the global international tax regime. Such changes could increase our global tax costs. We continue to monitor and assess the impact of such proposals. Finally, it is possible that tax laws will be further changed either in a technical corrections bill or entirely new legislation. It remains difficult to predict whether or when there will be any tax law changes or further guidance by the authorities in the U.S. or elsewhere in the world. New or proposed changes to tax laws may have a material adverse effect on our business, consolidated results of operations, liquidity and financial condition, as the impact of proposals on our business can vary substantially depending upon the specific changes or further guidance made and how the changes or guidance are implemented by the authorities.
Applicable insurance laws may make it difficult to effect a change of control.
Under applicable Texas insurance laws and regulations, no person may acquire control of a domestic insurer until written approval is obtained from the state insurance commissioner on the proposed acquisition. Such approval would be contingent upon the state insurance commissioner’s consideration of a number of factors including, among others, the financial strength of the proposed acquirer, the acquirer’s plans for the future operations of the domestic insurer and any anti-competitive results that may arise from the consummation of the acquisition of control. Texas insurance laws and regulations pertaining to changes of control apply to both the direct and indirect acquisition of ten percent or more of the voting stock of a Texas-domiciled insurer. Accordingly, the acquisition of ten percent or more of our common stock would be considered an indirect change of control of Skyward Specialty and would trigger the applicable change of control filing requirements under Texas insurance laws and regulations, absent a disclaimer of control filing and its acceptance by the Texas Insurance Department.
The acquisition of control over a U.K. authorized insurance company or Lloyd’s managing agent is subject to regulation in the United Kingdom by the Prudential Regulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”) pursuant to the Financial Services and Markets Act 2000 (“FSMA”). A person will generally be regarded as having acquired “control” for UK regulatory purposes if that person, alone or together with persons acting in concert, directly or indirectly holds 10% or more of the shares or voting power of a U.K. authorized insurer, a Lloyd’s managing agent, or its parent undertaking, or is otherwise able to exercise significant influence over management.
Any person proposing to acquire control of a PRA-authorized insurance company or Lloyd’s managing agent must provide prior notification to, and obtain approval from, the PRA, which consults with the FCA as part of the review process. The PRA typically has up to 60 working days to assess a proposed acquisition, subject to extension in certain circumstances. Acquiring control without the required regulatory clearance may result in supervisory or enforcement action. In addition, a person who already exercises control over a U.K. authorized insurance company or Lloyd’s managing agent must obtain further regulatory approval before increasing its level of control above specified thresholds, generally 20%, 30% and 50%. Similar approval requirements apply to changes in control of UK-authorized insurance intermediaries, although such approvals are granted by the FCA rather than the PRA. Where the transaction involves a Lloyd’s managing agent or Lloyd’s entity, the Council of Lloyd’s must also approve the change of control. Lloyd’s applies control concepts and suitability standards that broadly align with those under FSMA and typically coordinates its consent process with the PRA’s review.
Under the Insurance Act 1978 of Bermuda, ownership and control of a Bermuda-registered insurer or reinsurer, or its parent company, are subject to regulatory oversight by the Bermuda Monetary Authority (“BMA”). Where the shares of a registered insurer or its parent are publicly traded on a recognized stock exchange, a person who becomes a shareholder controller is required to notify the BMA in writing within specified time periods. For these purposes, a shareholder controller generally includes any person who, directly or indirectly, acquires or holds 10% or more of the shares or voting power of a registered insurer or its parent, or who is otherwise able to exercise significant influence over the management of such insurer or parent company. Notification obligations are triggered at ownership or voting thresholds of 10%, 20%, 33% and 50%, and similar notification requirements apply where a shareholder controller reduces or disposes of its interest such that its holdings fall below one of those thresholds.
The BMA has the authority to object to a person acquiring or continuing to hold a shareholder controller position if it determines that such person does not meet applicable fitness and propriety standards. Where the BMA raises an objection, it may require the shareholder to reduce its ownership interest, restrict the exercise of voting rights, or take other actions deemed necessary to protect the insurer and its policyholders. Failure to comply with a BMA direction may constitute an offense and subject the affected party to regulatory enforcement measures.
The requirements of each of these jurisdictions may discourage potential acquisition proposals and may delay, deter or prevent a change of control of Skyward Specialty, including through transactions that some or all of the stockholders of Skyward Specialty might consider to be desirable.
Management's Discussion & Analysis (MD&A)
New heading “Adjusted pro forma gross written premiums”
New heading “Adjusted pro forma fee generating gross written premiums”
Largest changes
“Adjusted pro forma fee generating gross written premiums is a non-GAAP financial measure defined as pro forma fee generating gross written premiums adjusted for the impact of changes in Apollo syndicate participation percentages that provide a more meaningful comparison of fee generating business on a consistent participation basis across periods.”see in full comparison
The Apollo segment’s combined ratio for the three and six months endedsee in full comparisonMarchJune31,30, 2026 was85.3%.97.6% and 91.3%, respectively. Total non-cat losses and LAE for the three and six months endedMarchJune31,30, 2026 were$37.0$39.8 million and $76.8 million, or52.8%.60.1% and 56.4%, respectively. Cat losses and LAE for the three and six months ended June 30, 2026 were $3.6 million for each period, or 5.4% and 2.6%, respectively, primarily due to the conflict in the Middle East. Total underwriting, acquisition and insurance expenses for the three and six months endedMarchJune31,30, 2026 were$22.7$24.8 million and $47.5 million, or32.5%.37.5% and 34.9%, respectively. Net policy acquisition expenses were$8.6$18.2 million and $26.8 million, or12.2%,27.6% and 19.7%, respectively, and other operating and general expenses were$14.2$6.6 million and $20.7 million, or20.3%9.9%points.and 15.2%, respectively.
“Adjusted pro forma gross written premiums is a non-GAAP financial measure defined as pro forma gross written premiums adjusted for the impact of changes in Apollo syndicate participation to evaluate premium growth trends on a consistent participation basis across periods.”see in full comparison
Income tax expense for the three and six months endedsee in full comparisonMarchJune31,30, 2026 was$12.3$14.5 million and $26.9 million, respectively, compared to$9.4$11.0 million and $20.3 million, respectively, for the same 2025period.periods. Our effective tax rates for the three and six months ended June 30, 2026 were 22.8% and 21.4%, respectively, compared to 22.0% and 20.1%, respectively, for the same 2025 periods. The increase in the effective tax rate for the three months endedMarchJune31,30, 2026 was19.9%primarilycomparedattributable to18.2%aforreduction in thesameproportional2025taxperiod.benefit of stock-based compensation as pre-tax income increased. The increase in the effective tax rate for thethreesix months endedMarchJune31,30, 2026 wasimpactedprimarily attributable to foreign taxes associated with the Apollo acquisition, partially offset bycertaindiscrete taxitems,benefits, primarilytax benefitsfrom stock-basedcompensation, which reduced the effective tax rate by 3.1%.compensation. For additional information, see Note1112 of our condensed consolidated financial statements included in Item 1 of this Form 10-Q.
Full comparison: every changed paragraph (58)
The term “Skyward Group” as used below refers to the unified holding company brand for Skyward Specialty Insuranceand Group, Inc.Apollo and the terms “our Company,” “we,” “us,” and “our” as used below refer to Skyward Specialty Insurance Group and its consolidated subsidiaries. The term “firstsecond quarter” as used below refers to the three and six months ended MarchJune 31,30, 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 Group are defined in the sections entitled “Select Insurance and Financial Terms” and “Key Operating and Financial Metrics” included in our 2025 Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). Following the Apollo Acquisition, select insurance, accounting, operating and financial terms’ definitions have been updated in the “Updates to Key Operating and Financial Metrics” section below in this Form 10-Q.
The results of operations for the three and six months ended MarchJune 31,30, 2026 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2026, 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 2025 Form 10-K.
Founded in 2006, Skyward Group is the holding company brand for its U.S. and U.K. businesses, Skyward Specialty Insurance Group, Inc. and Apollo, respectively, delivering a comprehensive suite of specialized insurance and reinsurance solutions across global specialty property and casualty markets. 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.
Skyward Specialty and Apollo continue to operate as distinct, market facing brands under the newly introduced Skyward Group holding structure.brand. This brand architecture preserves the equity and reputational strength of both organizations while supporting a unified strategic direction and enhanced collaboration across the combined enterprise.
Adjusted pro forma gross written premiums is a non-GAAP financial measure defined as pro forma gross written premiums adjusted for the impact of changes in Apollo syndicate participation to evaluate premium growth trends on a consistent participation basis across periods.
Adjusted pro forma fee generating gross written premiums is a non-GAAP financial measure defined as pro forma fee generating gross written premiums adjusted for the impact of changes in Apollo syndicate participation percentages that provide a more meaningful comparison of fee generating business on a consistent participation basis across periods.
The following table summarizes our consolidated results for the three and six months ended MarchJune 31,30, 2026 and 2025:
The following table provides a reconciliation of operating income to net income for the three and six months ended MarchJune 31,30, 2026 and 2025:
The following table provides a reconciliation of underwriting income to income before federal income tax expense for the three and six months ended MarchJune 31,30, 2026 and 2025:
Adjusted pro forma gross written premiums
The following tables represent pro forma gross written premiums adjusted for the impact of changes in Apollo syndicate participation for the three and six months ended June 30, 2025:
Adjusted pro forma fee generating gross written premiums
The following tables represent pro forma fee generating gross written premiums adjusted for the impact of changes in Apollo syndicate participation for the three and six months ended June 30, 2025:
The following table provides a reconciliation of tangible stockholders’ equity to stockholders’ equity for the periods ended MarchJune 31,30, 2026 and 2025:
The following table provides a reconciliation of annualized operating return on equity to annualized return on equity for the three and six months ended MarchJune 31,30, 2026 and 2025:
Annualized return on tangible equity for the three and six months ended MarchJune 31,30, 2026 and 2025 reconciles to annualized return on equity as follows:
Annualized operating return on tangible equity for the three and six months ended MarchJune 31,30, 2026 and 2025 reconciles to annualized return on equity as follows:
Our Skyward Specialty segment is organized into nine distinct underwriting divisions each of which has dedicated underwriting leadership supported by high-quality technical staff with deep experience in their respective niches. We believe this structure and expertise allow us to serve the needs of our customers effectively and be a value-add partner to our distributors, while earning attractive risk-adjusted returns. During the first quarter of 2026, we updated our underwriting divisions to align with how management currently oversees the business, allocates resources and evaluates operating performance. Our Credit unit is now included in the Surety unit and has been renamed Credit & Surety and Agriculture and Credit (Re)insurance has been renamed Global Agriculture. The Construction & Energy Solutions division is now the Energy Solutions division. Certain lines ofLastly, business havethat been discontinued andwe are nowno presentedlonger writing is reported in exited business. Prior reporting periods have been conformed to reflect the new presentation.
The following tables present the Skyward Specialty segment’s gross written premiums by underwriting division, net written premiums and net earned premiums for the three and six months ended MarchJune 31,30, 2026 and 2025:
TheFor 9.0%the growthsecond quarter and first half of 2026, the 14.1% and 11.7% increases in gross written premiums for continuing business, when compared to the same 2025 period, waswere primarily driven by new business in our specialtyglobal programs,agriculture, accident & health, globalspecialty agricultureprograms, and credit & surety divisions. Partially offsetting the growth were decreases in the (i) energy solutions and captives divisions due to non-renewing business, and (ii) global property division due to increased competition in the property market and decreases in rates.
Net written premiums for the firstsecond quarter of 2026 were $371.0$427.0 million compared to $343.3$339.2 million for the same 2025 period, an increase of $27.7$87.8 million or 8.1%.25.9%. Net written premiums for the first half of 2026 were $798.0 million compared to $682.5 million for the same 2025 period, an increase of $115.5 million or 16.9%. 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 firstsecond quarter of 2026 were $363.9$378.3 million compared to $300.4$295.5 million for the same 2025 period, an increase of $63.6$82.8 million or 21.2%.28.0%. Net earned premiums for the first half of 2026 were $742.3 million compared to $595.9 million for the same 2025 period, an increase of $146.4 million or 24.6%. The increases in net earned premiums was primarily driven by the same reasons that drove the increases in gross written premiums discussed above.
The following tabletables setsset forth the components of the Skyward Specialty segment’s combined ratios for the three and six months ended MarchJune 31,30, 2026 and 2025:
The loss ratioratios for the second quarter and first quarterhalf of 2026 increased slightly1.3 points and 0.8 points, respectively, when compared to the same 2025 period.periods. Catastrophe losses in the firstsecond quarter decreasedand slightlyfirst whenhalf comparedof 2026 were primarily due to convective storms, while catastrophe losses in the same 2025 period,periods whichwere was impacteddriven by convective storms in the South and Midwest and the California wildfires. The first quarterhalf of 2026 was also impacted by winter and convective storms. TheIn addition, the increases in the non-cat loss and LAE ratio was impacted by business mix shiftratios, when compared to the same 2025 period.periods, were due to shifts in business mix, primarily from growth in the accident & health and global agriculture divisions, both of which generally have higher loss ratios.
The expense ratios for the second quarter and first quarterhalf of 2026 improved 0.62.7 points and 1.7 points, respectively, when compared to the same 2025 periodperiods, dueprimarily to earnings leverage partially offsetdriven by higher acquisition costs due to the business mix shift.shift, enhanced operating efficiencies, and scale benefits as net earned premiums outpaced expense growth.
Lloyd’s is a society of corporate and individual members that underwrite insurance and reinsurance as members of syndicates. A syndicate is made up of one or more members that form a group to accept insurance and reinsurance risks. Each syndicate is managed by a managing agent that writes insurance business on behalf of the members of the syndicate. Syndicate members receive profits or bear losses in proportion to their respective shares in the syndicate for each underwriting year of account.
Each syndicate is managed by a managing agent that writes insurance business on behalf of the members of the syndicate. Syndicate members receive profits or bear losses in proportion to their respective shares in the syndicate for each underwriting year of account.
Apollo Bermuda Limited ( “ABL”) is licensed in Bermuda as a Class 3A commercial insurer with the provisions of the Bermuda Insurance Act 1978 (the “Insurance Act”). ABL is a wholly owned subsidiary of Apollo. The principal activity of ABL is underwriting an affiliated quote share of Apollo 16 Limited, a corporate member supporting the underwriting capital for Syndicate 1969 and Syndicate 1971.
Select Apollo metrics for the second quarter and first quarterhalf of 2025 are presented on a pro forma basis for comparative purposes only and are not necessarily indicative of the operating results that Skyward Group would have recognized had the acquisition actually been completed on January 1, 2025. Pro forma information is unaudited.
The following tabletables setsset forth gross written premiums by underwriting division for the three and six months ended MarchJune 31,30, 2026 and 2025:
Gross written premiums for the second quarter and first half of 2026 increased $13.5$3.8 million and $30.5 million, or 18.7%,5.6% and 23.8%, respectively, compared to the same adjusted pro forma 2025 period.periods. The increaseincreases waswere primarily driven by growth in Syndicate 1969, which benefited from continuednew growthbusiness and expansion across select specialty lines.
The Apollo segment’s combined ratio for the three and six months ended MarchJune 31,30, 2026 was 85.3%.97.6% and 91.3%, respectively. Total non-cat losses and LAE for the three and six months ended MarchJune 31,30, 2026 were $37.0$39.8 million and $76.8 million, or 52.8%.60.1% and 56.4%, respectively. Cat losses and LAE for the three and six months ended June 30, 2026 were $3.6 million for each period, or 5.4% and 2.6%, respectively, primarily due to the conflict in the Middle East. Total underwriting, acquisition and insurance expenses for the three and six months ended MarchJune 31,30, 2026 were $22.7$24.8 million and $47.5 million, or 32.5%.37.5% and 34.9%, respectively. Net policy acquisition expenses were $8.6$18.2 million and $26.8 million, or 12.2%,27.6% and 19.7%, respectively, and other operating and general expenses were $14.2$6.6 million and $20.7 million, or 20.3%9.9% points.and 15.2%, respectively.
Apollo provides managing agency services to nine syndicates within its Lloyd’s managing agency platform. The capital aligned syndicates, Syndicate 1969, Syndicate 1971 and Syndicate 1972, are wholly managed and partly capitalized by Apollo’s Lloyd’s capital member Apollo No. 16. Platform Partner syndicates are managed by Apollo on behalf of third‑party partners and Apollo does not currently provide capital for underwriting of these syndicates. Apollo receives managing agency fees and performance‑based income for their managing agency services from all syndicates on its Lloyd's platform. For the three and six months ended MarchJune 31,30, 2026, underwriting fee income was $10.1$12.6 million.million and $22.7 million, respectively.
The following table sets forth the fee generating gross written premiums for the three and six months ended MarchJune 31,30, 2026 and 2025:
Total fee generating gross written premiums for the three and six months ended MarchJune 31,30, 2026 increased 48.8%28.8% and 33.9%, respectively, compared to the same pro forma 2025 period,periods, primarily driven by anthe additionaladdition of a new partner syndicate and organic growth across both aligned and partner syndicates.
In the first quarter of 2026, the Companywe revised itsthe presentation of our investment portfolio to (i) report short-term investments separately from cash and cash equivalents following the closing of the Apollo acquisition, and (ii) include equities in alternative & strategic investments after the sale of the majority of the equity portfolio in 2025. The prior year period has been recast to reflect this change.
The following table sets forth the components of our investment portfolio at carrying value at MarchJune 31,30, 2026 and December 31, 2025:
The following table sets forth the components of net investment income and net investment gains (losses) for the three and six months ended MarchJune 31,30, 2026 and 2025:
Net investment income for the second quarter and first quarterhalf of 2026 increased $7.6$12.0 million and $19.7 million, respectively when compared to the same 2025 period,periods, driven by increased income from our fixed income portfolio due to a larger asset base as a result of the Apollo acquisitionacquisition, a higher yield and a higherlarger bookasset yield of 5.3% at March 31, 2026 compared to 5.2% at March 31, 2025.base.
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. WeDuring reviewedthe oursecond available-for-sale fixed maturities at March 31,quarter 2026, we wrote off $2.0 million on a held-to-maturity security and recognized a recovery of $0.3 million of amounts previously written off for credit losses ofon $0.5 million for onean available-for-sale “corporate securities and miscellaneous” security,security. bringingThis brings our total allowance down to $6.5$8.5 million on twothree securities.securities, an increase of $1.7 million for the second quarter and $1.0 million for the first half of 2026. Other than the securities discussed previously, we determined that no other credit impairment existed at MarchJune 31,30, 2026. See Note 3, “Investments” to our condensed consolidated financial statements included in Item 1 of this Form 10-Q for additional information.
The following table sets forth the components of our fixed income securities at MarchJune 31,30, 2026 and December 31, 2025:
The weighted average credit rating of our available-for-sale fixed income portfolio was “A+” at MarchJune 31,30, 2026 and December 31, 2025. The following table sets forth the credit quality of our available-for-sale fixed income portfolio at MarchJune 31,30, 2026 and December 31, 2025:
The average duration of our fixed income portfolio was approximately 3.543.85 years and 3.60 years, respectively, as of MarchJune 31,30, 2026 and December 31, 2025.
Interest expense for the three and six months ended MarchJune 31,30, 2026 was $7.7$8.8 million and $16.5 million, respectively, compared to $1.8$1.9 million and $3.7 million, respectively, for the same 2025 period,periods. The increases were due to additional interest expense related to the Term Loan Facility and Revolving Credit Facility (both are defined in the “Credit Agreements” section below).
Amortization expense for the three and six months ended MarchJune 31,30, 2026 was $8.8 million and $17.7 million, respectively, compared to $0.3$0.4 million and $0.7 million, respectively, for the same 2025 period.periods. The increaseincreases waswere due to the amortization of the value of business acquired (“VOBA”) asset and additional definite-lived intangible assets recognized inas a result of the Apolloacquisition acquisition.of Apollo.
Income tax expense for the three and six months ended MarchJune 31,30, 2026 was $12.3$14.5 million and $26.9 million, respectively, compared to $9.4$11.0 million and $20.3 million, respectively, for the same 2025 period.periods. Our effective tax rates for the three and six months ended June 30, 2026 were 22.8% and 21.4%, respectively, compared to 22.0% and 20.1%, respectively, for the same 2025 periods. The increase in the effective tax rate for the three months ended MarchJune 31,30, 2026 was 19.9%primarily comparedattributable to 18.2%a forreduction in the sameproportional 2025tax period.benefit of stock-based compensation as pre-tax income increased. The increase in the effective tax rate for the threesix months ended MarchJune 31,30, 2026 was impactedprimarily attributable to foreign taxes associated with the Apollo acquisition, partially offset by certain discrete tax items,benefits, primarily tax benefits from stock-based compensation, which reduced the effective tax rate by 3.1%.compensation. For additional information, see Note 1112 of our condensed consolidated financial statements included in Item 1 of this Form 10-Q.
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 managereduce thevolatility riskand thatas wepart take onof our policies.capital management strategy. 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.
Payments made by our holding company to service the credit agreements are provided by our subsidiaries’ operating activities. During the six months ended June 30, 2026, GMIC paid a dividend of $50.0 million to the holding company to redeem a portion of the Tranche A DDTL detailed below.
Our cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025:
The increase in cashCash provided by operating activities in 2026 was consistent when compared to 2025 wasand primarily duecontinued to reflect 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.
We used the Term Loan Facility to fund a portion of the consideration of the acquisition of Apollo and related transaction fees and expenses. Amounts drawn under the Term Loan Facility will bear interest at either term SOFR plus a margin, which will range from 150 basis points to 190 basis points, or the base rate plus a margin, which will range from 50 basis points to 90 basis points, each depending on our debt to capitalization ratio. SOFR is calculated using a SOFR floor of 0.00% and a credit spread adjustment of 0.10%. The base rate is the highest of (i) the Agent’s then-current prime lending rate, (ii) the Federal Funds Rate plus 0.50%, (iii) SOFR plus 1.00% and (iv) zero percent (0%). In addition, we will also pay a fee ranging from 0.20% to 0.35% on average daily undrawn amounts under the Facility, depending on our debt to capitalization ratio. The Tranche A DDTL matures on January 1, 2028 and the Tranche B DDTL matures on July 2, 2029. On December 30, 2025, we drew $150$150.0 million of the Tranche A DDTL and $150$150.0 million of the Tranche B DDTL for the acquisition of Apollo on January 1, 2026. On June 26, 2026, the Company repaid $50.0 million of outstanding principal related to the Tranche A DDTL.
The Term Loan Facility includes customary covenants, including certain limitations on the incurrence by us of additional indebtedness exceeding $10.0 million and on our ability to make distributions to our stockholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants, including financial covenants relating to our minimum consolidated net worth, maximum total debt to capitalization, minimum A.M. Best rating and minimum liquidity, as well as customary events of default. As of MarchJune 31,30, 2026, we were in compliance with all covenants.
We report debt related to the Term Loan Facility as of MarchJune 31,30, 2026 Condensed Consolidated Balance Sheet, net of debt issuance costs of approximately $5.1$3.9 million. These deferred financing costs are presented as a direct deduction from the carrying amount of the debt.
During the fourth quarter of 2025, we entered into a Credit Agreement (the “Revolving Credit Facility”) with a syndicate of participating banks. The Revolving Credit Facility is unsecured and provided us with up to an initial maximum principal amount of $150.0 millionmillion, which was increased to $250.0 million on the closing date of our acquisition of Apollo.
We are subject to covenants on the Revolving Credit Facility based on minimum net worth, maximum debt to capital ratio, minimum A.M. Best Rating and minimum liquidity, as well as customary events of default. As of MarchJune 31,30, 2026, we were in compliance with all covenants.
In May 2019, we entered into an agreement to issue unsecured subordinated notes (the “Notes”) with an aggregate principal amount of $20.0 million. Interest on the Notes is fixed at 7.25% for the first 8 years and fixed at 8.25% thereafter. Early retirement of the debt ahead of the 8-year commitment requires all interest payments to be paid in full as well as the return of outstanding principal. Principal is due at maturity on May 24, 2039 and interest is payable quarterly. The Notes have junior priority to all previously issued debt. We report debt related to the Notes as of MarchJune 31,30, 2026 Condensed Consolidated Balance Sheet and December 31, 2025 Consolidated Balance Sheet, net of debt issuance costs of approximately $0.4 million. These deferred financing costs are presented as a direct deduction from the carrying amount of the subordinated debt.
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. On July 15, 2026, the Board authorized an increase to the share repurchase program authorizing the repurchase of up to an additional $50.0 million of our common stock. As a result, the total amount authorized under the share repurchase program increased to $100.0 million. 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. AsDuring ofthe Marchthree 31,and six months ended June 30, 2026, nowe repurchased 222,635 shares havefor beenapproximately repurchased$9.7 million under this plan. These shares represent the total repurchased under the plan as of June 30, 2026.
For the three and six months ended MarchJune 31,30, 2026 our net retention on a written basis (calculated as net written premiums as a percentage of gross written premiums) was 64.8%65.6% and 65.2%, respectively, compared to 64.1%58.0% and 60.9%, respectively, for the same 2025 period.periods.
SKWD insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 2,000 shares, about $94.2K) and open-market sales in 2 filings (2 insiders, 2 trade dates, 9,137 shares, about $465.2K). Net open-market shares: -7,137 (purchases minus sales); net value about -$371.0K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-12 | Schmitt Thomas N |
Open-market sale | 8,397 | $51.32 | $430.9K |
| 2026-05-21 | Kuczinski Anthony J |
Open-market purchase | 200 | $47.00 | $9.4K |
| 2026-05-21 | Kuczinski Anthony J |
Open-market purchase | 1,000 | $47.20 | $47.2K |
| 2026-05-21 | Kuczinski Anthony J |
Open-market purchase | 800 | $47.00 | $37.6K |
| 2026-05-11 | Ashe Gena L |
Open-market sale | 140 | $46.35 | $6.5K |
| 2026-05-11 | Ashe Gena L |
Open-market sale | 500 | $46.35 | $23.2K |
| 2026-05-11 | Ashe Gena L |
Open-market sale | 100 | $46.35 | $4.6K |
| 2026-05-11 | Ashe Gena L |
Option exercise | 1,797 | — | — |
| 2026-05-07 | Kuczinski Anthony J |
Option exercise | 1,797 | — | — |
| 2026-05-06 | Schmitt Thomas N |
Option exercise | 3,358 | — | — |
| 2026-05-06 | Schmitt Thomas N |
Shares withheld for tax | 1,322 | $43.68 | $57.7K |
| 2026-05-06 | Kapadia Sandip A |
Shares withheld for tax | 1,374 | $43.68 | $60.0K |
| 2026-05-06 | Kapadia Sandip A |
Option exercise | 2,686 | — | — |
| 2026-05-06 | Bodnar Dan Pk |
Shares withheld for tax | 1,004 | $43.68 | $43.9K |
| 2026-05-06 | Bodnar Dan Pk |
Option exercise | 2,686 | — | — |
| 2026-05-06 | Burkhart John A Iii |
Shares withheld for tax | 1,894 | $43.68 | $82.7K |
| 2026-05-06 | Burkhart John A Iii |
Option exercise | 4,813 | — | — |
| 2026-05-06 | Haushill Mark W |
Option exercise | 5,036 | — | — |
| 2026-05-06 | Haushill Mark W |
Shares withheld for tax | 1,982 | $43.68 | $86.6K |
| 2026-05-06 | Robinson Andrew S |
Option exercise | 20,150 | — | — |
| 2026-05-06 | Robinson Andrew S |
Shares withheld for tax | 7,930 | $43.68 | $346.4K |
| 2026-05-06 | Duffy Sean W |
Option exercise | 3,805 | — | — |
| 2026-05-06 | Duffy Sean W |
Shares withheld for tax | 1,671 | $43.68 | $73.0K |
| 2026-05-05 | Hays James Charles |
Option exercise | 1,797 | — | — |
| 2026-05-05 | Creager Robert E. |
Option exercise | 1,797 | — | — |
Well-known investors holding SKWD (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Two Sigma Investments | 2026-06-30 | 239,506 | $14.0M | 0.01% | Reduced 39% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 222,057 | $13.0M | 0.02% | Reduced 23% |
| D. E. Shaw & Co. | 2026-06-30 | 89,143 | $5.2M | 0.0% | Reduced 49% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 108,541 | $4.7M | — | Sold out |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 48,124 | $2.8M | 0.0% | Reduced 23% |
| Renaissance Technologies | 2026-06-30 | 45,000 | $2.6M | 0.0% | Reduced 35% |
| Millennium Management (Israel Englander) | 2026-06-30 | 40,647 | $2.4M | 0.0% | New position |