Skyward Specialty Insurance (US:SKWD)2025-11-06 20:02Financial Performance - Gross written premiums for Q3 2025 reached $606.5 million, a 51.6% increase from $400.0 million in Q3 2024[112] - Net written premiums for the nine months ended September 30, 2025, were $1.12 billion, up 32% from $852.6 million in the same period of 2024[112] - The company reported a net income of $45.9 million for Q3 2025, compared to $36.7 million in Q3 2024, reflecting a 25.5% year-over-year growth[112] - Adjusted operating income for Q3 2025 was $44.0 million, up from $29.4 million in Q3 2024, representing a 49.5% increase[113] - Net written premiums for Q3 2025 were $441.2 million, up 64.4% from $268.3 million in Q3 2024, with a year-to-date increase of 31.8% to $1,123.7 million compared to $852.6 million in the same period of 2024[120] - Net earned premiums for Q3 2025 increased by 30.5% to $351.8 million from $269.6 million in Q3 2024, with a year-to-date increase of 24.1% to $947.7 million compared to $763.5 million in the same period of 2024[121] Underwriting Performance - The loss and LAE ratio improved to 60.8% in Q3 2025 from 63.3% in Q3 2024, indicating better underwriting performance[112] - The combined ratio for the nine months ended September 30, 2025, was 89.6%, an improvement from 90.9% in the same period of 2024[112] - Total losses and LAE for Q3 2025 were $213.8 million, representing 60.8% of net earned premiums, an improvement from 63.3% in Q3 2024[123] - The expense ratio for Q3 2025 improved to 28.4% from 28.9% in Q3 2024, driven by earnings leverage despite higher acquisition costs[125] - Non-cat loss and LAE ratios improved by 0.4 points in Q3 2025 compared to Q3 2024, reflecting a favorable business mix shift[124] Investment Performance - Net investment income for Q3 2025 was $22.2 million, an increase of $2.6 million compared to $19.5 million in Q3 2024, attributed to higher income from the fixed income portfolio[127] - The investment portfolio's carrying value as of September 30, 2025, was $2.39 billion, up from $1.99 billion at the end of 2024, with fixed income representing 75.8% of the total portfolio[130] - As of September 30, 2025, the total fixed income portfolio was $1,815,216 thousand, an increase of 37.7% from $1,318,708 thousand at December 31, 2024[131] - The weighted average credit rating of the available-for-sale fixed income portfolio decreased from "AA-" in 2024 to "A+" in 2025[132] - The fair value of AAA-rated securities decreased from $483,099 thousand (37.3%) in 2024 to $311,740 thousand (17.3%) in 2025[132] Acquisition and Corporate Actions - The company announced an acquisition of Apollo Group Holdings Limited for $555.0 million, expected to close in Q1 2026[109] - The company recognized $3.1 million in acquisition-related expenses associated with the pending acquisition of Apollo[109] - The company approved a share repurchase program of up to $50.0 million in October 2024, with no shares repurchased as of September 30, 2025[150] Financial Strength and Ratings - The company has a financial strength rating of "A" (Excellent) with a stable outlook from A.M. Best Company[111] - A.M. Best affirmed the company's financial strength rating of A (Excellent) with a stable outlook on August 14, 2025[155] Cash Flow and Debt Management - Cash provided by operating activities increased to $356,308 thousand in the nine months ended September 30, 2025, compared to $283,216 thousand in the same period of 2024[139] - The ratio of total debt to total capitalization decreased from 13.1% at December 31, 2024, to 11.1% at September 30, 2025[149] - The company had $43.0 million outstanding under the Revolving Credit Facility as of September 30, 2025, with $107.0 million of undrawn capacity[144] Tax and Retention Metrics - The effective tax rate for the three months ended September 30, 2025, was 24.2%, up from 21.7% in the same period of 2024, primarily due to non-deductible acquisition expenses[136] - The net retention on a written basis for the three months ended September 30, 2025, was 72.7%, compared to 67.1% for the same period in 2024[153] Specialty Programs - Specialty programs saw a significant increase in gross written premiums, rising by 52.1% to $82.8 million in Q3 2025 compared to $54.4 million in Q3 2024[119] - Agriculture and credit (re)insurance gross written premiums surged by 886.3% to $168.1 million in Q3 2025 from $17.0 million in Q3 2024[119]