Delaware
(State or other jurisdiction of
incorporation or organization)
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001-41591
(Commission File Number)
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14-1957288
(I.R.S. Employer Identification Number)
|
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800 Gessner Road, Suite 600
Houston, Texas
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77024-4284 |
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(Address of principal executive offices and zip code) |
(Zip Code) | |||||||
(713) 935-4800 | ||||||||
(Registrant's telephone number, including area code) |
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
||||||
Common stock, par value $0.01 |
SKWD |
The Nasdaq Stock Market LLC |
Emerging growth company |
x |
Item 2.02. |
Results of Operations and Financial Condition |
Item 9.01. |
Financial Statements and Exhibits |
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(d) | Exhibits |
Exhibit No. | Description | |||||||
99.1 | ||||||||
104.1 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SKYWARD SPECIALTY INSURANCE GROUP, INC. | |||||||||||
Date: | August 5, 2024 |
/s/ Mark Haushill | |||||||||
Mark Haushill | |||||||||||
Chief Financial Officer |
(1) See "Reconciliation of Non-GAAP Financial Measures" |
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Premiums | ||||||||||||||||||||||||||||||||||||||
($ in thousands) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||||
unaudited | 2024 | 2023 | % Change |
2024 | 2023 | % Change |
||||||||||||||||||||||||||||||||
Gross written premiums | $ | 496,243 | $ | 421,994 | 17.6% | $ | 954,863 | $ | 782,492 | 22.0% | ||||||||||||||||||||||||||||
Ceded written premiums | $ | (199,114) | $ | (208,257) | (4.4)% | $ | (370,634) | $ | (366,614) | 1.1% | ||||||||||||||||||||||||||||
Net retention | 59.9% | 50.6% | NM (1) |
61.2% | 53.1% | NM (1) |
||||||||||||||||||||||||||||||||
Net written premiums | $ | 297,129 | $ | 213,737 | 39.0 | % | $ | 584,229 | $ | 415,878 | 40.5% | |||||||||||||||||||||||||||
Net earned premiums | $ | 257,583 | $ | 194,347 | 32.5 | % | $ | 493,925 | $ | 377,178 | 31.0% | |||||||||||||||||||||||||||
(1) Not meaningful |
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Combined Ratio | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||
(unaudited) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
Non-cat loss and LAE(1) |
60.6 | % | 60.7 | % | 60.6 | % | 60.9 | % | ||||||||||||||||||
Cat loss and LAE(1) |
1.2% | 3.5 | % | 0.8 | % | 2.7 | % | |||||||||||||||||||
Prior accident year development - LPT(2) |
(0.1) | % | (0.2)% | (0.1) | % | (0.2)% | ||||||||||||||||||||
Loss Ratio | 61.7 | % | 64.0 | % | 61.3 | % | 63.4 | % | ||||||||||||||||||
Net policy acquisition costs | 14.0 | % | 11.9 | % | 13.7 | % | 11.7 | % | ||||||||||||||||||
Other operating and general expenses | 15.8 | % | 17.3 | % | 15.9 | % | 17.0 | % | ||||||||||||||||||
Commission and fee income | (0.8) | % | (1.2) | % | (0.8) | % | (1.0) | % | ||||||||||||||||||
Expense ratio | 29.0 | % | 28.0 | % | 28.8 | % | 27.7 | % | ||||||||||||||||||
Combined ratio | 90.7 | % | 92.0 | % | 90.1 | % | 91.1 | % | ||||||||||||||||||
Adjusted Underwriting Ratios | ||||||||||||||||||||||||||
Adjusted loss ratio(2) |
61.8 | % | 64.2 | % | 61.4 | % | 63.6 | % | ||||||||||||||||||
Expense ratio | 29.0 | % | 28.0 | % | 28.8 | % | 27.7 | % | ||||||||||||||||||
Adjusted combined ratio(2) |
90.8 | % | 92.2 | % | 90.2 | % | 91.3 | % | ||||||||||||||||||
(1) Current accident year | ||||||||||||||||||||||||||
(2) See "Reconciliation of Non-GAAP Financial Measures" | ||||||||||||||||||||||||||
Net Investment Income | ||||||||||||||||||||||||||
$ in thousands | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||
(unaudited) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
Short-term investments & cash and cash equivalents | $ | 4,021 | $ | 3,206 | $ | 9,108 | $ | 4,985 | ||||||||||||||||||
Fixed income |
13,786 | 7,919 | 26,264 | 15,380 | ||||||||||||||||||||||
Equities |
751 | 684 | 1,378 | 682 | ||||||||||||||||||||||
Alternative & strategic investments |
3,580 | (3,226) | 3,685 | (7,818) | ||||||||||||||||||||||
Net investment income |
$ | 22,138 | $ | 8,583 | $ | 40,435 | $ | 13,229 | ||||||||||||||||||
Net unrealized (losses) gains on securities still held |
$ | (1,760) | $ | 5,017 | $ | 7,231 | $ | 8,784 | ||||||||||||||||||
Net realized (losses) gains |
(65) | 334 | (753) | (2,472) | ||||||||||||||||||||||
Net investment (losses) gains | $ | (1,825) | $ | 5,351 | $ | 6,478 | $ | 6,312 | ||||||||||||||||||
Consolidated Balance Sheets | ||||||||||||||
($ in thousands, except share and per share amounts) | ||||||||||||||
(unaudited) | June 30, 2024 |
December 31, 2023 | ||||||||||||
Assets | ||||||||||||||
Investments: | ||||||||||||||
Fixed maturity securities, available-for-sale, at fair value (amortized cost of $1,239,724 and $1,047,713, respectively) | $ | 1,200,273 | $ | 1,017,651 | ||||||||||
Fixed maturity securities, held-to-maturity, at amortized cost (net of allowance for credit losses of $225 and $329, respectively) | 39,962 | 42,986 | ||||||||||||
Equity securities, at fair value | 112,823 | 118,249 | ||||||||||||
Mortgage loans, at fair value | 43,670 | 50,070 | ||||||||||||
Equity method investments | 101,903 | 110,653 | ||||||||||||
Other long-term investments | 2,665 | 3,852 | ||||||||||||
Short-term investments, at fair value | 215,041 | 270,226 | ||||||||||||
Total investments | 1,716,337 | 1,613,687 | ||||||||||||
Cash and cash equivalents | 72,989 | 65,891 | ||||||||||||
Restricted cash | 35,278 | 34,445 | ||||||||||||
Premiums receivable, net | 377,333 | 179,235 | ||||||||||||
Reinsurance recoverables, net | 667,837 | 596,334 | ||||||||||||
Ceded unearned premium | 255,138 | 186,121 | ||||||||||||
Deferred policy acquisition costs | 116,499 | 91,955 | ||||||||||||
Deferred income taxes | 25,107 | 21,991 | ||||||||||||
Goodwill and intangible assets, net | 87,868 | 88,435 | ||||||||||||
Other assets | 81,108 | 75,341 | ||||||||||||
Total assets | $ | 3,435,494 | $ | 2,953,435 | ||||||||||
Liabilities and stockholders’ equity | ||||||||||||||
Liabilities: | ||||||||||||||
Reserves for losses and loss adjustment expenses | $ | 1,470,106 | $ | 1,314,501 | ||||||||||
Unearned premiums | 711,854 | 552,532 | ||||||||||||
Deferred ceding commission | 47,948 | 37,057 | ||||||||||||
Reinsurance and premium payables | 207,638 | 150,156 | ||||||||||||
Funds held for others | 95,596 | 58,588 | ||||||||||||
Accounts payable and accrued liabilities | 59,796 | 50,880 | ||||||||||||
Notes payable | 100,000 | 50,000 | ||||||||||||
Subordinated debt, net of debt issuance costs | 18,936 | 78,690 | ||||||||||||
Total liabilities | 2,711,874 | 2,292,404 | ||||||||||||
Stockholders’ equity | ||||||||||||||
Common stock, $0.01 par value, 500,000,000 shares authorized, 40,096,132 and 39,863,756 shares issued and outstanding, respectively |
401 | 399 | ||||||||||||
Additional paid-in capital | 713,542 | 710,855 | ||||||||||||
Stock notes receivable | (5,233) | (5,562) | ||||||||||||
Accumulated other comprehensive loss | (31,136) | (22,953) | ||||||||||||
Retained earnings (accumulated deficit) | 46,046 | (21,708) | ||||||||||||
Total stockholders’ equity | 723,620 | 661,031 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 3,435,494 | $ | 2,953,435 | ||||||||||
Condensed Consolidated Statements of Operations and Comprehensive Income | ||||||||||||||||||||||||||
($ in thousands) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||
(unaudited) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Net earned premiums | $ | 257,583 | $ | 194,347 | $ | 493,925 | $ | 377,178 | ||||||||||||||||||
Commission and fee income | 2,053 | 2,240 | 4,079 | 3,732 | ||||||||||||||||||||||
Net investment income | 22,138 | 8,583 | 40,435 | 13,229 | ||||||||||||||||||||||
Net investment (losses) gains | (1,825) | 5,351 | 6,478 | 6,312 | ||||||||||||||||||||||
Other loss | (7) | — | (7) | — | ||||||||||||||||||||||
Total revenues | 279,942 | 210,521 | 544,910 | 400,451 | ||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||
Losses and loss adjustment expenses | 159,054 | 124,405 | 302,968 | 239,305 | ||||||||||||||||||||||
Underwriting, acquisition and insurance expenses | 76,679 | 56,683 | 146,453 | 108,338 | ||||||||||||||||||||||
Interest expense | 2,449 | 2,466 | 5,176 | 4,618 | ||||||||||||||||||||||
Amortization expense | 360 | 486 | 748 | 873 | ||||||||||||||||||||||
Other expenses | 1,045 | 1,465 | 2,233 | 2,579 | ||||||||||||||||||||||
Total expenses | 239,587 | 185,505 | 457,578 | 355,713 | ||||||||||||||||||||||
Income before income taxes | 40,355 | 25,016 | 87,332 | 44,738 | ||||||||||||||||||||||
Income tax expense | 9,385 | 5,564 | 19,578 | 9,730 | ||||||||||||||||||||||
Net income | 30,970 | 19,452 | 67,754 | 35,008 | ||||||||||||||||||||||
Net income attributable to participating securities | — | — | — | 1,402 | ||||||||||||||||||||||
Net income attributable to common stockholders | $ | 30,970 | $ | 19,452 | $ | 67,754 | $ | 33,606 | ||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||
Net income | $ | 30,970 | $ | 19,452 | $ | 67,754 | $ | 35,008 | ||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||
Unrealized gains and losses on investments: | ||||||||||||||||||||||||||
Net change in unrealized (losses) gains on investments, net of tax | (1,451) | (4,375) | (6,869) | 3,413 | ||||||||||||||||||||||
Reclassification adjustment for losses on securities no longer held, net of tax | (406) | (1,165) | (1,314) | (1,212) | ||||||||||||||||||||||
Total other comprehensive (loss) income | (1,857) | (5,540) | (8,183) | 2,201 | ||||||||||||||||||||||
Comprehensive income | $ | 29,113 | $ | 13,912 | $ | 59,571 | $ | 37,209 | ||||||||||||||||||
Share and Per Share Data |
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($ in thousands, except share and per share amounts) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||
(unaudited) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
Weighted average basic shares | 39,177,457 | 36,603,779 | 39,142,825 | 34,746,874 | ||||||||||||||||||||||
Weighted average diluted shares | 41,168,082 | 38,143,585 | 41,110,384 | 37,503,914 | ||||||||||||||||||||||
Basic earnings per share | $ | 0.79 | $ | 0.53 | $ | 1.73 | $ | 0.97 | ||||||||||||||||||
Diluted earnings per share | $ | 0.75 | $ | 0.51 | $ | 1.65 | $ | 0.93 | ||||||||||||||||||
Basic adjusted operating earnings per share | $ | 0.84 | $ | 0.44 | $ | 1.64 | $ | 0.87 | ||||||||||||||||||
Diluted adjusted operating earnings per share | $ | 0.80 | $ | 0.42 | $ | 1.56 | $ | 0.84 | ||||||||||||||||||
Annualized ROE (1) |
17.5% | 15.1 | % | 19.6 | % | 14.8% | ||||||||||||||||||||
Annualized adjusted ROE (2) |
18.7 | % | 12.4 | % | 18.5 | % | 13.3 | % | ||||||||||||||||||
Annualized ROTE (3) |
20.0% | 18.3 | % | 22.4 | % | 18.3 | % | |||||||||||||||||||
Annualized adjusted ROTE (4) |
21.3 | % | 15.1 | % | 21.2 | % | 16.5 | % | ||||||||||||||||||
June 30 | December 31 | |||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||||
Shares outstanding | 40,096,132 | 39,863,756 | ||||||||||||||||||||||||
Fully diluted shares outstanding | 41,945,532 | 41,771,854 | ||||||||||||||||||||||||
Book value per share | $ | 18.18 | $ | 16.72 | ||||||||||||||||||||||
Fully diluted book value per share | $ | 17.38 | $ | 15.96 | ||||||||||||||||||||||
Fully diluted tangible book value per share | $ | 15.28 | $ | 13.84 | ||||||||||||||||||||||
(1) Annualized ROE is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders' equity during the period | ||||||||||||||||||||||||||
(2) Annualized adjusted ROE is adjusted operating income expressed on an annualized basis as a percentage of average beginning and ending stockholders' equity during the period | ||||||||||||||||||||||||||
(3) Annualized ROTE is net income expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders' equity during the period | ||||||||||||||||||||||||||
(4) Annualized adjusted ROTE is adjusted operating income expressed on an annualized basis as a percentage of average beginning and ending tangible stockholders' equity during the period |
($ in thousands) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||
Pre-tax | After-tax | Pre-tax | After-tax | Pre-tax | After-tax | Pre-tax | After-tax | ||||||||||||||||||||||||||||||||||||||||
Income as reported | $ | 40,355 | $ | 30,970 | $ | 25,016 | $ | 19,452 | $ | 87,332 | $ | 67,754 | $ | 44,738 | $ | 35,008 | |||||||||||||||||||||||||||||||
Less (add): | |||||||||||||||||||||||||||||||||||||||||||||||
Net investment (losses) gains | (1,825) | (1,442) | 5,351 | 4,227 | 6,478 | 5,118 | 6,312 | 4,986 | |||||||||||||||||||||||||||||||||||||||
Net impact of loss portfolio transfer | 241 | 190 | 462 | 365 | 482 | 381 | 704 | 556 | |||||||||||||||||||||||||||||||||||||||
Other loss | (7) | (6) | — | — | (7) | (6) | — | — | |||||||||||||||||||||||||||||||||||||||
Other expenses | (1,045) | (826) | (1,465) | (1,157) | (2,233) | (1,764) | (2,579) | (2,037) | |||||||||||||||||||||||||||||||||||||||
Adjusted operating income | $ | 42,991 | $ | 33,054 | $ | 20,668 | $ | 16,017 | $ | 82,612 | $ | 64,025 | $ | 40,301 | $ | 31,503 | |||||||||||||||||||||||||||||||
($ in thousands) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||
(unaudited) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
Income before federal income tax expense | $ | 40,355 | $ | 25,016 | $ | 87,332 | $ | 44,738 | ||||||||||||||||||
Add: | ||||||||||||||||||||||||||
Interest expense | 2,449 | 2,466 | 5,176 | 4,618 | ||||||||||||||||||||||
Amortization expense | 360 | 486 | 748 | 873 | ||||||||||||||||||||||
Other expenses | 1,045 | 1,465 | 2,233 | 2,579 | ||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||
Net investment income | 22,138 | 8,583 | 40,435 | 13,229 | ||||||||||||||||||||||
Net investment (losses) gains | (1,825) | 5,351 | 6,478 | 6,312 | ||||||||||||||||||||||
Other loss | (7) | — | (7) | — | ||||||||||||||||||||||
Underwriting income | $ | 23,903 | $ | 15,499 | $ | 48,583 | $ | 33,267 | ||||||||||||||||||
($ in thousands) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||
(unaudited) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
Net earned premiums | $ | 257,583 | $ | 194,347 | $ | 493,925 | $ | 377,178 | ||||||||||||||||||
Losses and LAE | 159,054 | 124,405 | 302,968 | 239,305 | ||||||||||||||||||||||
Add: Pre-tax net impact of LPT | (241) | (462) | (482) | (704) | ||||||||||||||||||||||
Adjusted losses and LAE | $ | 159,295 | $ | 124,867 | $ | 303,450 | $ | 240,009 | ||||||||||||||||||
Loss ratio | 61.7 | % | 64.0% | 61.3 | % | 63.4 | % | |||||||||||||||||||
Add: net impact of LPT | (0.1) | % | (0.2)% | (0.1) | % | (0.2)% | ||||||||||||||||||||
Adjusted loss ratio | 61.8 | % | 64.2 | % | 61.4 | % | 63.6 | % | ||||||||||||||||||
Combined ratio | 90.7 | % | 92.0 | % | 90.1 | % | 91.1 | % | ||||||||||||||||||
Add: net impact of LPT | (0.1) | % | (0.2)% | (0.1) | % | (0.2)% | ||||||||||||||||||||
Adjusted combined ratio | 90.8 | % | 92.2 | % | 90.2 | % | 91.3 | % | ||||||||||||||||||
($ in thousands) | June 30, | December 31, | ||||||||||||||||||
(unaudited) | 2024 | 2023 | 2023 | |||||||||||||||||
Stockholders' equity | $ | 723,620 | $ | 522,678 | $ | 661,031 | ||||||||||||||
Less: Goodwill and intangible assets | 87,868 | 89,181 | 88,435 | |||||||||||||||||
Tangible stockholders' equity | $ | 635,752 | $ | 433,497 | $ | 572,596 | ||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||
($ in thousands) | 2024 | 2023 | % Change |
2024 | 2023 | % Change | ||||||||||||||||||||||||||||||||
Global Property & Agriculture | $ | 124,728 | $ | 124,080 | 0.5 | % | $ | 225,361 | $ | 198,420 | 13.6 | % | ||||||||||||||||||||||||||
Industry Solutions | 84,112 | 79,249 | 6.1% | 162,371 | 146,882 | 10.5% | ||||||||||||||||||||||||||||||||
Captives | 62,099 | 39,283 | 58.1 | % | 130,507 | 85,363 | 52.9 | % | ||||||||||||||||||||||||||||||
Programs | 59,644 | 52,598 | 13.4 | % | 111,822 | 101,297 | 10.4 | % | ||||||||||||||||||||||||||||||
Transactional E&S | 45,711 | 30,632 | 49.2 | % | 87,906 | 60,249 | 45.9 | % | ||||||||||||||||||||||||||||||
Accident & Health | 44,088 | 37,252 | 18.4 | % | 84,989 | 73,265 | 16.0 | % | ||||||||||||||||||||||||||||||
Professional Lines | 38,106 | 32,989 | 15.5 | % | 80,345 | 66,161 | 21.4 | % | ||||||||||||||||||||||||||||||
Surety | 37,737 | 26,221 | 43.9 | % | 71,579 | 50,922 | 40.6 | % | ||||||||||||||||||||||||||||||
Total gross written premiums(1) |
$ | 496,225 | $ | 422,304 | 17.5% | $ | 954,880 | $ | 782,559 | 22.0% | ||||||||||||||||||||||||||||
(1) Excludes exited business |