Skyward Specialty Insurance Group, Inc.TM (Nasdaq: SKWD) (“Skyward
Specialty” or the “Company”) today reported fourth quarter 2023 net
income of $29.3 million, or $0.74 per diluted share, compared to
$20.4 million, or $0.63 per diluted share, for the same 2022
period. Net income for the year ended 2023 was $86.0 million, or
$2.24 per diluted share, compared to $39.4 million, or $1.21 per
diluted share, for the same 2022 period.
Adjusted operating income(1) for the fourth
quarter of 2023 was $24.3 million, or $0.61 per diluted share,
compared to $11.6 million, or $0.36 per diluted share, for the same
2022 period. Adjusted operating income(1) for the year ended 2023
was $80.8 million, or $2.11 per diluted share, compared to $58.6
million, or $1.79 per diluted share, for the same 2022 period.
Highlights for the quarter included:
- Gross written premiums increased
21.4%.
- Underwriting income(1) of $21.0
million compared to $12.8 million for the fourth quarter 2022.
- Combined ratio of 90.7% compared to
92.4% for the fourth quarter 2022.
- Current accident year non-cat loss
and LAE ratio of 60.9% compared to 63.2% for the fourth quarter
2022.
- Cat loss and LAE ratio of 0.4%
compared to 1.2% for the fourth quarter 2022.
- Year to date return on equity of
15.9% compared to 9.3% for the same 2022 period.
- Year to date return on tangible
equity(1) of 19.0% compared to 11.8% for the same 2022 period.
(1) See "Reconciliation of Non-GAAP Financial Measures" |
Skyward Specialty Chairman and CEO Andrew
Robinson commented, “We capped off an outstanding year with another
strong quarter, delivering a 90.7% combined ratio and growing gross
written premiums by 21%. For 2023, we delivered on every key
metric, growing gross written premiums by 28%, delivering a 90.7%
combined ratio, achieving a return on equity of 15.9%, and growing
our fully diluted book value per share by over 24% to $15.96. Our
“Rule Our Niche” strategy combined with our strong execution
continues to be the foundation of our commitment to being a top
quartile financial performer at all parts of the market cycle.”
“In the fourth quarter we also executed on an
upsized follow-on offering, a testament to our shareholder’s
confidence in our team, our strategy, and our execution. Our
journey to this point has been simply remarkable, and it is rooted
in the commitment of our employees, the partnership with our
distribution, and the support of our customers. We have every
reason to believe that 2024 will build on our outstanding success
in 2023.”
Results of Operations
Underwriting Results
Premiums |
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
Three months ended December 31 |
|
Twelve months ended December 31 |
unaudited |
|
2023 |
|
2022 |
|
%Change |
|
2023 |
|
2022 |
|
%Change |
Gross written premiums |
|
$ |
321,605 |
|
|
$ |
264,832 |
|
|
21.4 |
% |
|
$ |
1,459,829 |
|
|
$ |
1,143,952 |
|
|
27.6 |
% |
Ceded written premiums |
|
$ |
(107,488 |
) |
|
$ |
(84,876 |
) |
|
26.6 |
% |
|
$ |
(549,138 |
) |
|
$ |
(468,409 |
) |
|
17.2 |
% |
Net retention |
|
|
66.6 |
% |
|
|
68.0 |
% |
|
NM (1) |
|
|
|
62.4 |
% |
|
|
59.1 |
% |
|
NM (1) |
|
Net written premiums |
|
$ |
214,117 |
|
|
$ |
179,956 |
|
|
19.0 |
% |
|
$ |
910,691 |
|
|
$ |
675,543 |
|
|
34.8 |
% |
Net earned premiums |
|
$ |
224,932 |
|
|
$ |
170,143 |
|
|
32.2 |
% |
|
$ |
829,143 |
|
|
$ |
615,994 |
|
|
34.6 |
% |
(1) Not meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fourth quarter 2023 increase in gross
written premiums, when compared to the same 2022 period, was
primarily driven by our Transactional E&S, Captives, Industry
Solutions and Professional Lines underwriting divisions. For the
year ended 2023, five of our underwriting divisions experienced
over 30% growth compared to the same 2022 period.
Combined Ratio |
|
Three months ended December 31 |
|
Twelve months ended December 31 |
(unaudited) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Non-cat loss and LAE(1) |
|
60.9 |
% |
|
63.2 |
% |
|
60.9 |
% |
|
62.8 |
% |
Cat loss and LAE(1) |
|
0.4 |
% |
|
1.2 |
% |
|
1.4 |
% |
|
1.1 |
% |
Prior accident year development - non-LPT |
|
0.0 |
% |
|
0.0 |
% |
|
0.0 |
% |
|
0.0 |
% |
Prior accident year development - LPT(2) |
|
(0.2 |
)% |
|
(0.4 |
)% |
|
(0.2 |
)% |
|
1.4 |
% |
Loss
ratio |
|
61.1 |
% |
|
64.0 |
% |
|
62.1 |
% |
|
65.3 |
% |
Net policy acquisition costs |
|
13.4 |
% |
|
11.8 |
% |
|
13.0 |
% |
|
10.6 |
% |
Other operating and general expenses |
|
16.3 |
% |
|
17.5 |
% |
|
16.3 |
% |
|
18.9 |
% |
Commission and fee income |
|
(0.1 |
)% |
|
(0.9 |
)% |
|
(0.7 |
)% |
|
(0.8 |
)% |
Expense
ratio |
|
29.6 |
% |
|
28.4 |
% |
|
28.6 |
% |
|
28.7 |
% |
Combined
ratio |
|
90.7 |
% |
|
92.4 |
% |
|
90.7 |
% |
|
94.0 |
% |
Adjusted Underwriting
Ratios |
|
|
|
|
|
|
|
|
Adjusted loss ratio(2) |
|
61.3 |
% |
|
64.4 |
% |
|
62.3 |
% |
|
63.9 |
% |
Expense ratio |
|
29.6 |
% |
|
28.4 |
% |
|
28.6 |
% |
|
28.7 |
% |
Adjusted combined
ratio(2) |
|
90.9 |
% |
|
92.8 |
% |
|
90.9 |
% |
|
92.6 |
% |
(1) Current accident year |
(2) See "Reconciliation of Non-GAAP Financial Measures" |
|
|
|
|
|
|
|
|
|
The loss ratio for the fourth quarter of 2023
improved 2.9 points when compared to the same 2022 period. The
non-cat loss and LAE ratio improved 2.3 points when compared to the
same 2022 period, primarily driven by the shift in the mix of
business. Catastrophe losses only added 0.4 points to the current
quarter loss ratio compared to the fourth quarter of 2022, which
was impacted by 1.2 points of catastrophe losses from Winter Storm
Elliott.
The loss ratio for the year ended 2023 improved
3.2 points when compared to the same 2022 period. The non-cat loss
and LAE ratio improved 1.9 points when compared to the same 2022
period, driven by the shift in the mix of business and continued
run-off of exited business. Catastrophe losses from second and
third quarter convective storms and first quarter wind and hail
events, including tornadoes, added 1.4 points to the loss ratio
compared to 2022, which was impacted by 1.1 points of catastrophe
losses from Hurricane Ian and Winter Storm Elliott. The loss ratio
for the year ended 2022 included 1.4 points from the net impact of
LPT reserve strengthening.
The expense ratio for the fourth quarter
increased 1.2 points and was flat year to date 2023 when compared
to the same 2022 periods. The quarter to date increase was
primarily driven by the shift in the mix of business. The
improvement in the other operating and general expense ratios for
the fourth quarter and year ended 2023, when compared to the same
2022 periods, was primarily due to the increase in earned
premiums.
The expense ratios for the fourth quarter and
year ended 2023 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 (loss).
Investment Results
$
in thousands |
|
Three months ended December 31 |
|
Twelve months ended December 31 |
(unaudited) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
Cash and short-term investments(1) |
|
$ |
3,283 |
|
|
$ |
796 |
|
|
$ |
11,353 |
|
|
$ |
1,427 |
|
Core fixed income |
|
|
10,717 |
|
|
|
5,907 |
|
|
|
32,572 |
|
|
|
16,544 |
|
Opportunistic fixed
income |
|
|
(1,227 |
) |
|
|
(2,322 |
) |
|
|
(6,844 |
) |
|
|
16,784 |
|
Equities |
|
|
675 |
|
|
|
881 |
|
|
|
2,682 |
|
|
|
2,160 |
|
Net investment income(1) |
|
$ |
13,448 |
|
|
$ |
5,262 |
|
|
$ |
39,763 |
|
|
$ |
36,915 |
|
|
|
|
|
|
|
|
|
|
Net unrealized gains (losses)
on securities still held |
|
$ |
8,736 |
|
|
$ |
11,122 |
|
|
$ |
11,130 |
|
|
$ |
(15,058 |
) |
Net realized losses |
|
|
(992 |
) |
|
|
(710 |
) |
|
|
(58 |
) |
|
|
(647 |
) |
Net investment gains
(losses) |
|
$ |
7,744 |
|
|
$ |
10,412 |
|
|
$ |
11,072 |
|
|
$ |
(15,705 |
) |
(1) excludes income from operating cash for the fourth quarter and
years ended December, 31, 2023 and 2022. |
Net investment income for our investment
portfolio for the fourth quarter and year ended 2023 increased $8.1
million and $2.9 million, respectively, when compared to the same
2022 periods.
The increase in income from our core fixed
income portfolio for the fourth quarter and year ended 2023 was due
to (i) a larger asset base as we continued to increase our
allocation to our core fixed income portfolio and (ii) a higher
book yield of 4.5% at December 31, 2023 compared to 3.7% at
December 31, 2022. The increase in income from short-term and
money market investments for the fourth quarter and year ended
2023, when compared to the same 2022 periods, was due to a larger
asset base and higher investment yields when compared to the same
2022 periods. The opportunistic fixed income portfolio continued to
be impacted by a decline in the fair value of limited partnership
investments for the fourth quarter of 2023 and 2022 and for the
year ended 2023.
Stockholders’ Equity
Stockholders’ equity was $661.0 million at
December 31, 2023 which represents an increase of 23.5%
compared to stockholders' equity of $535.4 million at September 30,
2023. The increase in stockholders’ equity was primarily due to (i)
net proceeds of $62.5 million from our November follow-on offering,
(ii) an increase in the market value of our investment portfolio,
and (iii) net income.
Conference Call
At 9 a.m. central standard time tomorrow,
February 21, 2024, Skyward Specialty management will hold a
conference call to discuss quarterly results with insurance
industry analysts. Interested parties may listen to the discussion
at investors.skywardinsurance.com under Events &
Presentations. Additionally, investors can access the earnings call
via conference call by registering via the conference link. Users
will receive dial-in information and a unique PIN to join the call
upon registering.
Non-GAAP Financial Measures
This release contains certain financial measures
and ratios that are not required by, or presented in accordance
with, generally accepted accounting principles in the United States
(“GAAP”). We refer to these measures as “non-GAAP financial
measures.” We use these non-GAAP financial measures when planning,
monitoring, and evaluating our performance.
We have chosen to exclude the net impact of the
Loss Portfolio Transfer (“LPT”), all development on reserves fully
or partially covered by the LPT and amortization of deferred gains
associated with recoveries of prior LPT reserve strengthening in
certain non-GAAP metrics, where noted, as the business subject to
the LPT is not representative of our continuing business strategy.
The business subject to the LPT is primarily related to policy
years 2017 and prior, was generated and managed under prior
leadership, and has either been exited or substantially
repositioned during the reevaluation of our portfolio. We consider
these non-GAAP financial measures to be useful metrics for our
management and investors to facilitate operating performance
comparisons from period to period. While we believe that these
non-GAAP financial measures are useful in evaluating our business,
this information should be considered supplemental in nature and is
not meant to be a substitute for revenue or net income, in each
case as recognized in accordance with GAAP. In addition, other
companies, including companies in our industry, may calculate such
measures differently, which reduces their usefulness as comparative
measures. For more information regarding these non-GAAP financial
measures and a reconciliation of such measures to comparable GAAP
financial measures, see the section entitled “Reconciliation of
Non-GAAP Financial Measures.”
About Skyward Specialty Insurance Group,
Inc.
Skyward Specialty is a rapidly growing and
innovative specialty insurance company, delivering commercial
property and casualty products and solutions on a non-admitted and
admitted basis. The Company operates through eight underwriting
divisions - Accident & Health, Captives, Global Property &
Agriculture, Industry Solutions, Professional Lines, Programs,
Surety and Transactional E&S. SKWD stock is traded on the
Nasdaq Global Select Market, which represents the top fourth of all
Nasdaq listed companies.
Skyward Specialty's subsidiary insurance
companies consist of Houston Specialty Insurance Company, Imperium
Insurance Company, Great Midwest Insurance Company, and Oklahoma
Specialty Insurance Company. These insurance companies are rated A-
(Excellent) with positive outlook by A.M. Best Company. Additional
information about Skyward Specialty can be found on our website at
www.skywardinsurance.com.
Forward-Looking Statements
Except for historical information, all other
information in this news release consists of forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. The forward-looking statements are typically,
but not always, identified through use of the words "believe,"
"expect," "enable," "may," "will," "could," "intends," "estimate,"
"anticipate," "plan," "predict," "probable," "potential,"
"possible," "should," "continue," and other words of similar
meaning. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected, anticipated or implied. The most significant
of these uncertainties are described in Skyward Specialty's Form
10-K, and include (but are not limited to) legislative changes at
both the state and federal level, state and federal regulatory rule
making promulgations and adjudications, class action litigation
involving the insurance industry and judicial decisions affecting
claims, policy coverages and the general costs of doing business,
the potential loss of key members of our management team or key
employees and our ability to attract and retain personnel, the
impact of competition on products and pricing, inflation in the
costs of the products and services insurance pays for, product
development, geographic spread of risk, weather and weather-related
events, other types of catastrophic events, our ability to obtain
reinsurance coverage at prices and on terms that allow us to
transfer risk and adequately protect our company against financial
loss, and losses resulting from reinsurance counterparties failing
to pay us on reinsurance claims. These forward-looking statements
speak only as of the date of this release and the Company does not
undertake any obligation to update or revise any forward-looking
information to reflect changes in assumptions, the occurrence of
unanticipated events, or otherwise.
Skyward Specialty Insurance Group, Inc.
Media contact:Haley
Doughtyhdoughty@skywardinsurance.com 713-935-4944
or
Investor contact:Natalie Schoolcraft,
nschoolcraft@skywardinsurance.com 614-494-4988
|
Skyward Specialty Insurance Group, Inc. |
|
Consolidated Balance Sheets |
|
|
|
|
($ in thousands, except share and per share amounts) |
|
December 31 |
(unaudited) |
|
|
2023 |
|
|
|
2022 |
|
Assets |
|
|
|
|
Investments: |
|
|
|
|
Fixed maturity securities, available-for-sale, at fair value
(amortized cost of $1,047,713 and $662,616, respectively) |
|
$ |
1,017,651 |
|
|
$ |
607,572 |
|
Fixed maturity securities, held-to-maturity, at amortized cost (net
of allowance for credit losses of $329 as of December 31,
2023) |
|
|
42,986 |
|
|
|
52,467 |
|
Equity securities, at fair value |
|
|
118,249 |
|
|
|
120,169 |
|
Mortgage loans (at fair value as of December 31, 2023; at
amortized cost as of December 31, 2022) |
|
|
50,070 |
|
|
|
51,859 |
|
Other long-term investments |
|
|
114,505 |
|
|
|
129,142 |
|
Short-term investments, at fair value |
|
|
270,226 |
|
|
|
121,158 |
|
Total investments |
|
|
1,613,687 |
|
|
|
1,082,367 |
|
Cash and cash equivalents |
|
|
65,891 |
|
|
|
45,438 |
|
Restricted cash |
|
|
34,445 |
|
|
|
79,573 |
|
Premiums receivable, net |
|
|
179,235 |
|
|
|
139,215 |
|
Reinsurance recoverables, net |
|
|
596,334 |
|
|
|
581,359 |
|
Ceded unearned premium |
|
|
186,121 |
|
|
|
157,645 |
|
Deferred policy acquisition costs |
|
|
91,955 |
|
|
|
68,938 |
|
Deferred income taxes |
|
|
21,991 |
|
|
|
36,188 |
|
Goodwill and intangible assets, net |
|
|
88,435 |
|
|
|
89,870 |
|
Other assets |
|
|
75,341 |
|
|
|
82,846 |
|
Total assets |
|
$ |
2,953,435 |
|
|
$ |
2,363,439 |
|
Liabilities and stockholders’ equity |
|
|
|
|
Liabilities: |
|
|
|
|
Reserves for losses and loss adjustment expenses |
|
$ |
1,314,501 |
|
|
$ |
1,141,757 |
|
Unearned premiums |
|
|
552,532 |
|
|
|
442,509 |
|
Deferred ceding commission |
|
|
37,057 |
|
|
|
29,849 |
|
Reinsurance and premium payables |
|
|
150,156 |
|
|
|
113,696 |
|
Funds held for others |
|
|
58,588 |
|
|
|
36,858 |
|
Accounts payable and accrued liabilities |
|
|
50,880 |
|
|
|
48,499 |
|
Notes payable |
|
|
50,000 |
|
|
|
50,000 |
|
Subordinated debt, net of debt issuance costs |
|
|
78,690 |
|
|
|
78,609 |
|
Total liabilities |
|
|
2,292,404 |
|
|
|
1,941,777 |
|
Stockholders’ equity: |
|
|
|
|
Series A preferred stock, $0.01 par value; 10,000,000 and 2,000,000
shares authorized, 0 and 1,969,660 shares issued and outstanding,
respectively |
|
|
— |
|
|
|
20 |
|
Common stock, $0.01 par value, 500,000,000 and 168,000,000 shares
authorized, 39,863,756 and 16,832,955 shares issued,
respectively |
|
|
399 |
|
|
|
168 |
|
Treasury stock, $0.01 par value, 0 and 233,289 shares,
respectively |
|
|
— |
|
|
|
(2 |
) |
Additional paid-in capital |
|
|
710,855 |
|
|
|
577,289 |
|
Stock notes receivable |
|
|
(5,562 |
) |
|
|
(6,911 |
) |
Accumulated other comprehensive loss |
|
|
(22,953 |
) |
|
|
(43,485 |
) |
Accumulated deficit |
|
|
(21,708 |
) |
|
|
(105,417 |
) |
Total stockholders’ equity |
|
|
661,031 |
|
|
|
421,662 |
|
Total liabilities and stockholders’ equity |
|
$ |
2,953,435 |
|
|
$ |
2,363,439 |
|
|
|
|
|
|
|
Skyward Specialty Insurance Group, Inc. |
|
Consolidated Statements of Operations and Comprehensive
Income (Loss) |
($ in thousands, except share and per share amounts) |
|
Three months endedDecember 31 |
|
Twelve months endedDecember 31 |
(unaudited) |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
Net earned premiums |
|
$ |
224,932 |
|
|
$ |
170,143 |
|
$ |
829,143 |
|
|
$ |
615,994 |
|
Commission and fee income |
|
|
247 |
|
|
|
1,547 |
|
|
6,064 |
|
|
|
5,199 |
|
Net investment income |
|
|
14,004 |
|
|
|
5,264 |
|
|
40,322 |
|
|
|
36,931 |
|
Net investment gains (losses) |
|
|
7,744 |
|
|
|
10,412 |
|
|
11,072 |
|
|
|
(15,705 |
) |
Other (loss) income |
|
|
(632 |
) |
|
|
1 |
|
|
(632 |
) |
|
|
1 |
|
Total revenues |
|
|
246,295 |
|
|
|
187,367 |
|
|
885,969 |
|
|
|
642,420 |
|
Expenses: |
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
|
137,396 |
|
|
|
108,976 |
|
|
515,237 |
|
|
|
402,512 |
|
Underwriting, acquisition and insurance expenses |
|
|
66,791 |
|
|
|
49,913 |
|
|
243,444 |
|
|
|
182,171 |
|
Interest expense |
|
|
2,774 |
|
|
|
2,127 |
|
|
10,024 |
|
|
|
6,407 |
|
Amortization expense |
|
|
462 |
|
|
|
387 |
|
|
1,798 |
|
|
|
1,547 |
|
Other expenses |
|
|
1,303 |
|
|
|
— |
|
|
5,364 |
|
|
|
— |
|
Total expenses |
|
|
208,726 |
|
|
|
161,403 |
|
|
775,867 |
|
|
|
592,637 |
|
Income before income taxes |
|
|
37,569 |
|
|
|
25,964 |
|
|
110,102 |
|
|
|
49,783 |
|
Income tax expense |
|
|
8,304 |
|
|
|
5,545 |
|
|
24,118 |
|
|
|
10,387 |
|
Net income |
|
|
29,265 |
|
|
|
20,419 |
|
|
85,984 |
|
|
|
39,396 |
|
Net income attributable to participating securities |
|
|
— |
|
|
|
9,755 |
|
|
1,677 |
|
|
|
18,879 |
|
Net income attributable to common shareholders |
|
$ |
29,265 |
|
|
$ |
10,664 |
|
$ |
84,307 |
|
|
$ |
20,517 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
Net income |
|
$ |
29,265 |
|
|
$ |
20,419 |
|
$ |
85,984 |
|
|
$ |
39,396 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
Unrealized gains (losses) on investments: |
|
|
|
|
|
|
|
|
Net change in unrealized gains (losses) on investments, net of
tax |
|
|
30,825 |
|
|
|
763 |
|
|
25,516 |
|
|
|
(48,545 |
) |
Reclassification adjustment for gains on securities no longer held,
net of tax |
|
|
(105 |
) |
|
|
58 |
|
|
(4,984 |
) |
|
|
420 |
|
Total other comprehensive income (loss) |
|
|
30,720 |
|
|
|
821 |
|
|
20,532 |
|
|
|
(48,125 |
) |
Comprehensive income (loss) |
|
$ |
59,985 |
|
|
$ |
21,240 |
|
$ |
106,516 |
|
|
$ |
(8,729 |
) |
|
|
|
|
|
|
|
|
|
|
Skyward Specialty Insurance Group, Inc. |
|
Share and Per Share Data |
|
|
|
|
|
|
|
|
($ in thousands, except share and per share amounts) |
|
Three months endedDecember 31 |
|
Twelve months endedDecember 31 |
(unaudited) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Weighted average basic shares |
|
|
37,570,274 |
|
|
|
16,576,760 |
|
|
|
36,031,907 |
|
|
|
16,568,393 |
|
Weighted average diluted shares |
|
|
39,582,352 |
|
|
|
32,669,335 |
|
|
|
38,317,534 |
|
|
|
32,653,194 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.78 |
|
|
$ |
0.64 |
|
|
$ |
2.34 |
|
|
$ |
1.24 |
|
Diluted earnings per share |
|
$ |
0.74 |
|
|
$ |
0.63 |
|
|
$ |
2.24 |
|
|
$ |
1.21 |
|
Basic adjusted earnings per share |
|
$ |
0.65 |
|
|
$ |
0.37 |
|
|
$ |
2.20 |
|
|
$ |
1.84 |
|
Diluted adjusted earnings per share |
|
$ |
0.61 |
|
|
$ |
0.36 |
|
|
$ |
2.11 |
|
|
$ |
1.79 |
|
|
|
|
|
|
|
|
|
|
Annualized ROE (1) |
|
|
19.6 |
% |
|
|
19.9 |
% |
|
|
15.9 |
% |
|
|
9.3 |
% |
Annualized adjusted ROE (2) |
|
|
16.3 |
% |
|
|
11.3 |
% |
|
|
14.9 |
% |
|
|
13.8 |
% |
Annualized ROTE (3) |
|
|
23.0 |
% |
|
|
25.5 |
% |
|
|
19.0 |
% |
|
|
11.8 |
% |
Annualized adjusted ROTE (4) |
|
|
19.1 |
% |
|
|
14.5 |
% |
|
|
17.9 |
% |
|
|
17.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Shares outstanding |
|
|
|
|
|
|
39,863,756 |
|
|
|
16,599,666 |
|
Fully diluted shares outstanding |
|
|
|
|
|
|
41,771,854 |
|
|
|
33,290,638 |
|
|
|
|
|
|
|
|
|
|
Book value per share |
|
|
|
|
|
$ |
16.72 |
|
|
$ |
25.82 |
|
Fully diluted book value per share |
|
|
|
|
|
$ |
15.96 |
|
|
$ |
12.87 |
|
Fully diluted tangible book value per share |
|
|
|
|
|
$ |
13.84 |
|
|
$ |
10.17 |
|
|
|
|
|
|
|
|
|
|
(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 |
Skyward Specialty Insurance Group,
Inc.Reconciliation of Non-GAAP Financial
Measures
Adjusted operating income
(loss) – We define adjusted operating income (loss) as net
income (loss) excluding the impact of certain items that may not be
indicative of underlying business trends, operating results, or
future outlook, net of tax impact. We use adjusted operating income
as an internal performance measure in the management of our
operations because we believe it gives our management and other
users of our financial information useful insight into our results
of operations and our underlying business performance. Adjusted
operating income (loss) should not be viewed as a substitute for
net income (loss) calculated in accordance with GAAP, and other
companies may define adjusted operating income
differently.
($ in thousands) |
|
Three months ended December 31 |
|
Twelve months ended December 31 |
(unaudited) |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
|
|
Pre-tax |
|
After-tax |
|
Pre-tax |
|
After-tax |
|
Pre-tax |
|
After-tax |
|
Pre-tax |
|
After-tax |
Income as reported |
|
$ |
37,569 |
|
|
$ |
29,265 |
|
|
$ |
25,964 |
|
|
$ |
20,419 |
|
|
$ |
110,102 |
|
|
$ |
85,984 |
|
|
$ |
49,783 |
|
|
$ |
39,396 |
|
Less (Add): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impact of loss portfolio transfer |
|
|
457 |
|
|
|
361 |
|
|
|
699 |
|
|
|
552 |
|
|
|
1,427 |
|
|
|
1,127 |
|
|
|
(8,572 |
) |
|
|
(6,772 |
) |
Net investment gains (losses) |
|
|
7,744 |
|
|
|
6,118 |
|
|
|
10,412 |
|
|
|
8,225 |
|
|
|
11,072 |
|
|
|
8,747 |
|
|
|
(15,705 |
) |
|
|
(12,407 |
) |
Other (loss) income |
|
|
(632 |
) |
|
|
(499 |
) |
|
|
1 |
|
|
|
1 |
|
|
|
(632 |
) |
|
|
(499 |
) |
|
|
1 |
|
|
|
1 |
|
Other expenses |
|
|
(1,303 |
) |
|
|
(1,029 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,364 |
) |
|
|
(4,238 |
) |
|
|
— |
|
|
|
— |
|
Adjusted operating income |
|
$ |
31,303 |
|
|
$ |
24,314 |
|
|
$ |
14,852 |
|
|
$ |
11,641 |
|
|
$ |
103,599 |
|
|
$ |
80,847 |
|
|
$ |
74,059 |
|
|
$ |
58,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting income (loss) – We
define underwriting income (loss) as net income (loss) before
income taxes excluding net investment income, net realized and
unrealized gains and losses on investments, impairment charges,
interest expense, amortization expense and other income and
expenses. Underwriting income (loss) represents the pre-tax
profitability of our underwriting operations and allows us to
evaluate our underwriting performance without regard to investment
income. We use this metric as we believe it gives our management
and other users of our financial information useful insight into
our underlying business performance. Underwriting income (loss)
should not be viewed as a substitute for pre-tax income (loss)
calculated in accordance with GAAP, and other companies may define
underwriting income (loss) differently.
($ in thousands) |
|
Three months endedDecember 31 |
|
Twelve months endedDecember 31 |
(unaudited) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Income before federal income tax |
|
$ |
37,569 |
|
|
$ |
25,964 |
|
|
$ |
110,102 |
|
|
$ |
49,783 |
|
Add: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
2,774 |
|
|
|
2,127 |
|
|
|
10,024 |
|
|
|
6,407 |
|
Amortization expense |
|
|
462 |
|
|
|
387 |
|
|
|
1,798 |
|
|
|
1,547 |
|
Other expenses |
|
|
1,303 |
|
|
|
— |
|
|
|
5,364 |
|
|
|
— |
|
Less (Add): |
|
|
|
|
|
|
|
|
Net investment income |
|
|
14,004 |
|
|
|
5,264 |
|
|
|
40,322 |
|
|
|
36,931 |
|
Net investment gains (losses) |
|
|
7,744 |
|
|
|
10,412 |
|
|
|
11,072 |
|
|
|
(15,705 |
) |
Other (loss) income |
|
|
(632 |
) |
|
|
1 |
|
|
|
(632 |
) |
|
|
1 |
|
Underwriting income |
|
$ |
20,992 |
|
|
$ |
12,801 |
|
|
$ |
76,526 |
|
|
$ |
36,510 |
|
|
|
|
|
|
|
|
|
|
Adjusted Loss Ratio / Adjusted Combined
Ratio – We define adjusted loss ratio and adjusted
combined ratio as the corresponding ratio (calculated in accordance
with GAAP), excluding losses and LAE related to the LPT and all
development on reserves fully or partially covered by the LPT and
amortization of deferred gains associated with recoveries of prior
LPT reserve strengthening. We use these adjusted ratios as internal
performance measures in the management of our operations because we
believe they give our management and other users of our financial
information useful insight into our results of operations and our
underlying business performance. Our adjusted loss ratio and
adjusted combined ratio should not be viewed as substitutes for our
loss ratio and combined ratio, respectively.
($ in thousands) |
|
Three months endedDecember 31 |
|
Twelve months endedDecember 31 |
(unaudited) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net earned premiums |
|
$ |
224,932 |
|
|
$ |
170,143 |
|
|
$ |
829,143 |
|
|
$ |
615,994 |
|
|
|
|
|
|
|
|
|
|
Losses and LAE |
|
|
137,396 |
|
|
|
108,976 |
|
|
|
515,237 |
|
|
|
402,512 |
|
(Add) Less: pre-tax net impact of LPT |
|
|
(457 |
) |
|
|
(699 |
) |
|
|
(1,427 |
) |
|
|
8,572 |
|
Adjusted losses and LAE |
|
$ |
137,853 |
|
|
$ |
109,675 |
|
|
$ |
516,664 |
|
|
$ |
393,940 |
|
|
|
|
|
|
|
|
|
|
Loss ratio |
|
|
61.1 |
% |
|
|
64.0 |
% |
|
|
62.1 |
% |
|
|
65.3 |
% |
(Add) Less: net impact of LPT |
|
(0.2 |
)% |
|
(0.4 |
)% |
|
(0.2 |
)% |
|
|
1.4 |
% |
Adjusted loss ratio |
|
|
61.3 |
% |
|
|
64.4 |
% |
|
|
62.3 |
% |
|
|
63.9 |
% |
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
90.7 |
% |
|
|
92.4 |
% |
|
|
90.7 |
% |
|
|
94.0 |
% |
(Add) Less: net impact of LPT |
|
(0.2 |
)% |
|
(0.4 |
)% |
|
(0.2 |
)% |
|
|
1.4 |
% |
Adjusted combined ratio |
|
|
90.9 |
% |
|
|
92.8 |
% |
|
|
90.9 |
% |
|
|
92.6 |
% |
|
|
|
|
|
|
|
|
|
Tangible Stockholders’ Equity –
We define tangible stockholders’ equity as stockholders’ equity
less goodwill and intangible assets. Our definition of tangible
stockholders’ equity may not be comparable to that of other
companies and should not be viewed as a substitute for
stockholders’ equity calculated in accordance with GAAP. We use
tangible stockholders’ equity internally to evaluate the strength
of our balance sheet and to compare returns relative to this
measure.
($ in thousands) |
|
December 31 |
(unaudited) |
|
|
2023 |
|
|
|
2022 |
|
Stockholders' equity |
|
$ |
661,031 |
|
|
$ |
421,662 |
|
Less: Goodwill and intangible assets |
|
|
88,435 |
|
|
|
89,870 |
|
Tangible stockholders' equity |
|
$ |
572,596 |
|
|
$ |
331,792 |
|
|
|
|
|
|
|
Skyward Specialty Insurance Group, Inc.Gross Written
Premiums by Underwriting Division (Unaudited) |
|
|
|
Three months ended |
|
Twelve months ended |
|
|
December 31 |
|
December 31 |
($ in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
Industry Solutions |
|
$ |
78,796 |
|
|
$ |
65,391 |
|
|
20.5 |
% |
|
$ |
305,476 |
|
|
$ |
267,628 |
|
|
14.1 |
% |
Global Property & Agriculture |
|
|
25,996 |
|
|
|
27,516 |
|
|
(5.5 |
)% |
|
|
273,191 |
|
|
|
205,081 |
|
|
33.2 |
% |
Programs |
|
|
35,694 |
|
|
|
31,901 |
|
|
11.9 |
% |
|
|
178,726 |
|
|
|
163,653 |
|
|
9.2 |
% |
Accident & Health |
|
|
38,882 |
|
|
|
33,701 |
|
|
15.4 |
% |
|
|
151,701 |
|
|
|
130,808 |
|
|
16.0 |
% |
Captives |
|
|
40,375 |
|
|
|
26,706 |
|
|
51.2 |
% |
|
|
167,624 |
|
|
|
124,286 |
|
|
34.9 |
% |
Professional Lines |
|
|
40,145 |
|
|
|
30,884 |
|
|
30.0 |
% |
|
|
154,565 |
|
|
|
93,011 |
|
|
66.2 |
% |
Transactional E&S |
|
|
31,560 |
|
|
|
22,453 |
|
|
40.6 |
% |
|
|
122,508 |
|
|
|
75,098 |
|
|
63.1 |
% |
Surety |
|
|
30,157 |
|
|
|
25,328 |
|
|
19.1 |
% |
|
|
106,056 |
|
|
|
79,062 |
|
|
34.1 |
% |
Total continuing business |
|
$ |
321,605 |
|
|
$ |
263,880 |
|
|
21.9 |
% |
|
$ |
1,459,847 |
|
|
$ |
1,138,627 |
|
|
28.2 |
% |
Exited business |
|
|
— |
|
|
|
952 |
|
|
(100.0 |
)% |
|
|
(18 |
) |
|
|
5,325 |
|
|
(100.3 |
)% |
Total gross written premiums |
|
$ |
321,605 |
|
|
$ |
264,832 |
|
|
21.4 |
% |
|
$ |
1,459,829 |
|
|
$ |
1,143,952 |
|
|
27.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Skyward Specialty Insura... (NASDAQ:SKWD)
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