Skyward Specialty Insurance Group Reports Fourth Quarter 2024 Results

HOUSTON, Feb. 25, 2025 (GLOBE NEWSWIRE) -- Skyward Specialty Insurance Group, Inc. (Nasdaq: SKWD) ("Skyward Specialty" or the "Company") today reported fourth quarter 2024 net income of $14.4 million, or $0.35 per diluted share, compared to $29.3 million, or $0.74 per diluted share, for the same 2023 period. Net income for the year ended 2024 was $118.8 million, or $2.87 per diluted share, compared to $86.0 million, or $2.24 per diluted share, for the same 2023 period.

Adjusted operating income(1) for the fourth quarter of 2024 was $33.2 million, or $0.80 per diluted share, compared to $24.3 million, or $0.61 per diluted share, for the same 2023 period. Adjusted operating income(1) for the year ended 2024 was $126.7 million, or $3.06 per diluted share, compared to $80.8 million, or $2.11 per diluted share, for the same 2023 period.

Highlights for the fourth quarter included:

   -- Gross written premiums of $388.4 million, an increase of $66.8 million, 
      or 20.8%, when compared to 2023; 
 
   -- Adjusted combined ratio(1) of 91.6%, including catastrophe losses of 2.2 
      points; 
 
   -- Return on equity of 16.3% for the year ended 2024 compared to 15.9% for 
      the same 2023 period; 
 
   -- Adjusted return on equity(1) of 17.4% for the year ended 2024 compared to 
      14.9% for the same 2023 period; and, 
 
   -- Book value per share of $19.79, an increase of 18% compared to December 
      31, 2023. 
 
(1) See "Reconciliation of Non-GAAP Financial Measures" 
 

Skyward Specialty Chairman and CEO Andrew Robinson commented, "We wrapped up another remarkable year for Skyward Specialty, delivering both outstanding underwriting results while growing gross written premiums at over 20% for the quarter and 19% for the full year, with six out of eight divisions growing double-digits over the prior year. Our 16.3% return on equity for the year was again an excellent outcome. Throughout 2024 we continued to thoughtfully diversify our product portfolio, strategically launching new units including Media Liability, Life Sciences, Mortgage and Credit, and Renewable Energy. Our focus and disciplined execution of our "Rule Our Niche" strategy, and the extraordinary efforts of my 600 plus colleagues made 2024 another impressive year for our Company, and we are confident that we have built the foundation that will propel us in 2025 and beyond."

Results of Operations

Underwriting Results

 
Premiums 
                    -------------  -------------  --------  --------------  --------------  -------- 
($ in thousands)       Three months ended December 31,          Twelve months ended December 31, 
                    --------------------------------------  ---------------------------------------- 
                                                     %                                         % 
unaudited                2024           2023       Change        2024            2023        Change 
Gross written 
 premiums           $ 388,355      $ 321,605      20.8%     $1,743,232      $1,459,829      19.4% 
Ceded written 
 premiums           $(117,328)     $(107,488)      9.2%     $ (619,654)     $ (549,138)     12.8% 
  Net retention          69.8%          66.6%        NM(1)        64.5%           62.4%        NM(1) 
Net written 
 premiums           $ 271,027      $ 214,117      26.6%     $1,123,578      $  910,691      23.4% 
Net earned 
 premiums           $ 293,240      $ 224,932      30.4%     $1,056,722      $  829,143      27.4% 
(1) Not meaningful 
 
 

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

 
                      Three months ended        Twelve months ended 
Combined Ratio           December 31,               December 31, 
                   ------------------------  ------------------------- 
(unaudited)           2024         2023          2024         2023 
                   -----------  -----------  ------------  ----------- 
  Non-cat loss 
   and LAE           60.5%        60.9%         60.6%        60.9% 
  Cat loss and 
   LAE(1)             2.2%         0.4%          1.7%         1.4% 
  Prior accident 
   year 
   development - 
   LPT(2)             4.2%        (0.2)%         1.1%        (0.2)% 
                   ------       ------       -------       ------ 
Loss Ratio           66.9%        61.1%         63.4%        62.1% 
                   ------       ------       -------       ------ 
  Net policy 
   acquisition 
   costs             15.3%        13.4%         14.2%        13.0% 
  Other operating 
   and general 
   expenses          13.9%        16.3%         15.3%        16.3% 
  Commission and 
   fee income        (0.3)%       (0.1)%        (0.6)%       (0.7)% 
                   ------       ------       -------       ------ 
Expense ratio        28.9%        29.6%         28.9%        28.6% 
                   ------       ------       -------       ------ 
Combined ratio       95.8%        90.7%         92.3%        90.7% 
                   ------       ------       -------       ------ 
Ex-Cat Combined 
 Ratio(3)            93.6%        90.3%         90.6%        89.3% 
                   ======       ======       =======       ====== 
 
Adjusted 
Underwriting 
Ratios 
---------------- 
Adjusted loss 
 ratio(2)            62.7%        61.3%         62.3%        62.3% 
Expense ratio        28.9%        29.6%         28.9%        28.6% 
                   ------       ------       -------       ------ 
Adjusted combined 
 ratio(2)            91.6%        90.9%         91.2%        90.9% 
                   ======       ======       =======       ====== 
(1) Current accident year 
(2) See "Reconciliation of Non-GAAP Financial Measures" 
(3) Defined as the combined 
 ratio excluding cat loss and 
 LAE(1) 
 
 

The loss ratios for the fourth quarter and year ended 2024 increased 5.8 points and 1.3 points, respectively, when compared to the same 2023 periods, primarily due to the net impact of prior accident year development related to the LPT. The fourth quarter and year ended 2024 were also impacted by higher catastrophe losses, primarily from Hurricane Milton in the fourth quarter of 2024 and Hurricanes Helene and Beryl in the third quarter of 2024. The improvement in the non-cat loss and LAE ratios for the fourth quarter and year ended 2024, when compared to the same 2023 periods, was driven by the business mix shift.

The expense ratio for the fourth quarter improved when compared to the same 2023 period primarily due to earnings leverage partially offset by the business mix shift. The expense ratio for the year ended 2024 increased slightly when compared to the same 2023 period, driven by the business mix shift.

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

Investment Results

 
Net Investment 
Income 
                  ---------  --------  --------  ----------- 
                  Three months ended    Twelve months ended 
$ in thousands        December 31,          December 31, 
                  -------------------  --------------------- 
(unaudited)          2024      2023      2024        2023 
                  ---------  --------  --------  ----------- 
Short-term 
 investments & 
 cash and cash 
 equivalents      $  3,998   $ 3,670   $17,643   $ 11,677 
Fixed income        15,909    11,680    57,631     36,547 
Equities               771       880     2,745      2,212 
Alternative & 
 strategic 
 investments            52    (2,226)    2,667    (10,114) 
                   -------    ------    ------    ------- 
Net investment 
 income           $ 20,730   $14,004   $80,686   $ 40,322 
                   =======    ======    ======    ======= 
Net unrealized 
 (losses) gains 
 on securities 
 still held       $ (7,688)  $ 8,736   $ 7,921   $ 11,130 
Net realized 
 losses             (2,721)     (992)   (1,665)       (58) 
                   -------    ------    ------    ------- 
    Net 
     investment 
     (losses) 
     gains        $(10,409)  $ 7,744   $ 6,256   $ 11,072 
                   =======    ======    ======    ======= 
 
 

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

Net investment income for the fourth quarter and year ended 2024 increased $6.7 million and $40.4 million, respectively when compared to the same 2023 periods, primarily driven by (i) increased income from our fixed income portfolio and short-term investments due to higher yields and larger asset bases, and (ii) income from alternative and strategic investments compared to losses for the same 2023 periods, which were impacted by the decline in the fair value of limited partnership investments.

Stockholders' Equity

Stockholders' equity was $794.0 million at December 31, 2024 which represented a decrease of 0.4% when compared to stockholders' equity of $797.5 million at September 30, 2024. The decrease in stockholders' equity was primarily due to a decline in the market value of our investment portfolio partially offset by net income.

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