Skyward Specialty Insurance Group Inc.

11/06/2026 | Press release | Distributed by Public on 11/06/2026 14:57

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The term "Skyward Group" as used below refers to the unified holding company brand for Skyward Specialty and Apollo and the terms "our Company," "we," "us," and "our" as used below refer to Skyward Specialty Insurance Group, Inc. and its consolidated subsidiaries. The term "third quarter" as used below refers to the three and nine months ended September 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 Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K"). Following our acquisition of Apollo on January 1, 2026 ("Apollo Acquisition"), the definitions of select insurance, accounting, operating and financial terms have been updated in the "Updates to Key Operating and Financial Metrics" section below in this Form 10-Q.
The discussion and analysis below include certain forward-looking statements that are subject to risks, uncertainties and other factors described in "Risk Factors" in our 2025 Form 10-K. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including our ability to successfully integrate Apollo and realize the anticipated benefits of the acquisition, risks related to our Lloyd's operations, including changes in syndicate participations and Lloyd's regulatory requirements, changes in interest rates, credit markets and the value of our investment portfolio, and fluctuations in foreign currency exchange rate.
The results of operations for the three and nine months ended September 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.
The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP").
Overview
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.
As previously disclosed, on January 1, 2026, the acquisition with Apollo closed. We subsequently announced the introduction of Skyward Group as the unified holding company brand for Skyward Specialty and Apollo, following the successful completion of the transaction. The consideration for the entire issued share capital of Apollo under the Apollo SPAs was $559.1 million, which included (i) $371.1 million in cash (the "Cash Consideration") and (ii) the issuance of 3,679,332 shares of the Company's common stock.
Apollo is an integrated specialty insurance and reinsurance group operating within the Lloyd's of London market, leveraging Lloyd's global licensing, centralized underwriting infrastructure, and long-standing distribution networks to access innovative specialty classes across international markets. Apollo's model incorporates technology enabled underwriting, innovative risk assessment tools, and data driven portfolio management frameworks that are closely aligned with our strategic priorities. Apollo's operations also include the management of a dedicated syndicate focused on emerging digital economy, autonomy, and platform-based risks, reflecting a long standing emphasis on innovation and forward-looking underwriting practices.
Skyward Specialty and Apollo continue to operate as distinct, market facing brands under the newly introduced Skyward Group 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.
Skyward Specialty's U.S. insurance companies are rated 'A' (Excellent) by AM Best, while Apollo's underwriting operations continue within the highly rated Lloyd's market, which carries an 'A+' (Superior) rating by AM Best and 'AA-' (Very Strong) ratings by S&P Global and Fitch Ratings.
Updates to Key Operating and Financial Metrics
We discuss certain key metrics which provide useful information about our business and the operational factors underlying our financial performance. These metrics are generally standard among insurance companies and help to provide comparability with our peers. For a glossary of terms for Skyward Specialty Insurance Group, Inc. and its subsidiaries and affiliates and a glossary of selected insurance and accounting terms, see the section entitled "Key Operating and Financial Metrics" included in the 2025 Form 10-K. The following terms have been updated after the Apollo acquisition.
Operating income (loss) is a non-GAAP financial measure defined as net income excluding net investment gains and losses, amortization expense, goodwill impairment charges and other income and expenses. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of operating income (loss) to net income (loss), which is the most directly comparable financial metric prepared in accordance with GAAP.
Underwriting income (loss) is a non-GAAP financial measure defined as income (loss) before income taxes excluding net investment income, net investment gains and losses, impairment charges, interest expense, amortization expense and other income and expenses. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of underwriting income (loss) to net income, which is the most directly comparable financial metric prepared in accordance with GAAP.
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.
Tangible stockholders' equity is a non-GAAP financial measure defined as stockholders' equity excluding goodwill and intangible assets and the related deferred tax impact. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of tangible stockholders' equity to stockholders' equity, which is the most directly comparable financial metric prepared in accordance with GAAP.
Consolidated Results of Operations
The following table summarizes our consolidated results for the three and nine months ended September 30, 2026 and 2025:
Three months ended September 30, Nine months ended September 30,
($ in thousands) 2026 2025 2026 2025
Gross written premiums $ 803,485 $ 606,509 $ 2,211,743 $ 1,726,749
Ceded written premiums (301,707) (165,342) (791,466) (603,098)
Net written premiums $ 501,778 $ 441,167 $ 1,420,277 $ 1,123,651
Net earned premiums $ 406,864 $ 351,797 $ 1,285,343 $ 947,705
Underwriting fee income(1)
11,000 - 33,666 -
Commission and fee income 3,118 1,904 6,979 6,440
Non-cat loss and LAE
243,876 211,760 769,455 569,831
Cat loss and LAE(2)
7,160 2,020 23,545 12,520
Losses and LAE 251,036 213,780 793,000 582,351
Net policy acquisition costs
61,622 49,243 192,392 138,369
Other operating and general expenses
51,415 48,836 159,259 124,714
Corporate expense
4,965 3,597 14,246 10,740
Underwriting, acquisition and insurance expenses 118,002 101,676 365,897 273,823
Fee-based service expenses(1)
4,075 - 12,807 -
Underwriting income(3)
$ 47,869 $ 38,245 $ 154,284 $ 97,971
Net investment income $ 33,879 $ 22,014 $ 91,661 $ 60,140
Net investment gains $ 466 $ 7,047 $ 3,050 $ 16,887
Interest expense $ 6,997 $ 1,919 $ 23,528 $ 5,629
Amortization expense $ 8,843 $ 455 $ 26,529 $ 1,164
Income before income taxes $ 63,644 $ 60,547 $ 189,277 $ 161,777
Net income $ 49,796 $ 45,901 $ 148,565 $ 126,798
Operating income(3)
$ 58,486 $ 44,228 $ 174,577 $ 119,512
Non-cat loss and LAE
59.9 % 60.2 % 59.9 % 60.1 %
Cat loss and LAE(2)
1.8 % 0.6 % 1.8 % 1.3 %
Net loss and LAE ratio 61.7 % 60.8 % 61.7 % 61.4 %
Net policy acquisition costs
15.2 % 14.0 % 14.9 % 14.6 %
Other operating and general expenses
12.6 % 13.9 % 12.4 % 13.2 %
Commission and fee income
(0.8) % (0.5) % (0.5) % (0.7) %
Corporate expense
1.2 % 1.0 % 1.1 % 1.1 %
Net expense ratio 28.2 % 28.4 % 27.9 % 28.2 %
Combined ratio 89.9 % 89.2 % 89.6 % 89.6 %
Annualized return on equity 15.7 % 19.7 % 17.3 % 19.3 %
Annualized return on tangible equity(3)
23.0 % 21.8 % 22.1 % 21.4 %
Annualized operating return on equity(3)
18.4 % 19.0 % 20.4 % 18.2 %
Annualized operating return on tangible equity(3)
27.0 % 21.0 % 25.9 % 20.2 %
(1) Not included in the combined ratio
(2) Current accident year
(3) See "Reconciliation of Non-GAAP Financial Measures" in this Item 2
(4) The underwriting, acquisition and insurance expense ratio includes corporate expenses not allocated to underwriting segments.
Reconciliation of Non-GAAP Financial Measures
Operating Income
The following table provides a reconciliation of operating income to net income for the three and nine months ended September 30, 2026 and 2025:
Three months ended September 30, Nine months ended September 30,
2026 2025 2026 2025
($ in thousands) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax
Income as reported $ 63,644 $ 49,796 $ 60,547 $ 45,901 $ 189,277 $ 148,565 $ 161,777 $ 126,798
Less (add):
Net investment gains 466 365 7,047 5,342 3,050 2,394 16,887 13,236
Amortization expense (8,843) (6,919) (455) (345) (26,529) (20,823) (1,164) (912)
Other income (loss) 14 11 (236) (179) 42 33 (216) (169)
Other expenses (2,744) (2,147) (4,149) (3,145) (9,703) (7,616) (6,212) (4,869)
Operating income $ 74,751 $ 58,486 $ 58,340 $ 44,228 $ 222,417 $ 174,577 $ 152,482 $ 119,512
Underwriting Income
The following table provides a reconciliation of underwriting income to income before income taxes for the three and nine months ended September 30, 2026 and 2025:
Three months ended September 30, Nine months ended September 30,
($ in thousands) 2026 2025 2026 2025
Income before income taxes $ 63,644 $ 60,547 $ 189,277 $ 161,777
Add:
Interest expense 6,997 1,919 23,528 5,629
Amortization expense 8,843 455 26,529 1,164
Other expenses 2,744 4,149 9,703 6,212
Less:
Net investment income 33,879 22,014 91,661 60,140
Net investment gains 466 7,047 3,050 16,887
Other income 14 (236) 42 (216)
Underwriting income $ 47,869 $ 38,245 $ 154,284 $ 97,971
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 nine months ended September 30, 2025:
$ in thousands Three months ended September 30,
Syndicate 1969 Syndicate 1971 Total Apollo Segment Total Skyward Group
Pro forma gross written premiums $ 73,525 $ 57,449 $ 130,974 $ 737,483
Impact of the change in participation(s) (12,420) 12,225 (195) (195)
Adjusted pro forma gross written premiums
$ 61,105 $ 69,674 $ 130,779 $ 737,288
$ in thousands Nine months ended September 30,
Syndicate 1969 Syndicate 1971 Total Apollo Segment Total Skyward Group
Pro forma gross written premiums $ 192,828 $ 86,727 $ 279,555 $ 2,006,304
Impact of the change in participation(s) (32,664) 12,079 (20,585) (20,585)
Adjusted pro forma gross written premiums
$ 160,164 $ 98,806 $ 258,970 $ 1,985,719
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 nine months ended September 30, 2025:
$ in thousands Three months ended September 30,
Aligned Syndicates Partner Syndicates Total
Pro forma fee generating gross written premiums $ 369,353 $ 67,355 $ 436,708
Impact of the change in participation(s) 195 N/A 195
Adjusted pro forma fee generating gross written premiums
$ 369,548 $ 67,355 $ 436,903
$ in thousands Nine months ended September 30,
Aligned Syndicates Partner Syndicates Total
Pro forma fee generating gross written premiums $ 696,593 $ 181,528 $ 878,121
Impact of the change in participation(s) 20,585 N/A 20,585
Adjusted pro forma fee generating gross written premiums
$ 717,178 $ 181,528 $ 898,706
Tangible Stockholders' Equity
The following table provides a reconciliation of tangible stockholders' equity to stockholders' equity for the periods ended September 30, 2026 and 2025:
September 30, December 31,
($ in thousands) 2026 2025 2025
Stockholders' equity $ 1,276,268 $ 961,423 $ 1,009,565
Less: Goodwill and intangible assets 469,054 88,417 88,040
Add: Deferred tax impact 65,500 - -
Tangible stockholders' equity $ 872,714 $ 873,006 $ 921,525
Annualized Operating Return on Equity
The following table provides a reconciliation of annualized operating return on equity to annualized return on equity for the three and nine months ended September 30, 2026 and 2025:
Three months ended September 30, Nine months ended September 30,
($ in thousands) 2026 2025 2026 2025
Numerator: annualized operating income $ 233,944 $ 176,912 $ 232,769 $ 159,349
Denominator: average stockholders' equity $ 1,271,903 $ 930,669 $ 1,142,917 $ 877,711
Annualized operating return on equity
18.4 % 19.0 % 20.4 % 18.2 %
Annualized Return on Tangible Equity
Annualized return on tangible equity for the three and nine months ended September 30, 2026 and 2025 reconciles to annualized return on equity as follows:
Three months ended September 30, Nine months ended September 30,
($ in thousands) 2026 2025 2026 2025
Numerator: annualized net income $ 199,184 $ 183,604 $ 198,087 $ 169,064
Denominator: average tangible stockholders' equity $ 867,283 $ 842,063 $ 897,120 $ 789,829
Annualized return on tangible equity
23.0 % 21.8 % 22.1 % 21.4 %
Annualized Operating Return on Tangible Equity
Annualized operating return on tangible equity for the three and nine months ended September 30, 2026 and 2025 reconciles to annualized return on equity as follows:
Three months ended September 30, Nine months ended September 30,
($ in thousands) 2026 2025 2026 2025
Numerator: annualized operating income $ 233,944 $ 176,912 $ 232,769 $ 159,349
Denominator: average tangible stockholders' equity $ 867,283 $ 842,063 $ 897,120 $ 789,829
Annualized operating return on tangible equity
27.0 % 21.0 % 25.9 % 20.2 %
Segment Information
Beginning in the first quarter of 2026, we reported our results under two reportable segments: the Skyward Specialty segment and the Apollo segment. The Skyward Specialty segment represents our U.S. based specialty insurance operations conducted under the Skyward Specialty brand and the Apollo segment represents Apollo's U.K. based operations, including its managed Lloyd's syndicates and managing agency activities.
This revised segment structure reflects the Company's organizational alignment under Skyward Group, and enhances the transparency of the distinct operating environments, regulatory frameworks, and market dynamics in which the Company operates. Our segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to our chief operating decision makers. The Chief Executive Officer is the Company's chief operating decision maker. They do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for our two underwriting segments based on underwriting income or loss. We do not manage our assets by segment, with the exception of goodwill and intangible assets, and investment income and corporate expenses are not allocated to each underwriting segment.
We determined our reportable segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of our consolidated financial statements.
Skyward Specialty Segment
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. Business that we are no longer writing is reported in exited business. Effective in the third quarter of 2026, the Company renamed the Specialty Programs division to Strategic Distribution Partners (or "Strategic "Distribution") to better reflect the breadth of this division's distribution model, the Company's ownership position in many of these distributors, and the addition of the U.S. distribution of ibott which will be captured in this division. Prior reporting periods have been conformed to reflect the new presentation.
Underwriting Results
Premiums
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 nine months ended September 30, 2026 and 2025:
Three months ended September 30,
($ in thousands) 2026 2025 Change % Change
Accident & Health $ 99,131 $ 63,147 $ 35,984 57.0 %
Captives 50,185 67,956 (17,771) (26.2 %)
Credit & Surety 67,210 52,785 14,425 27.3 %
Energy Solutions 55,646 66,576 (10,930) (16.4 %)
Global Agriculture 192,161 159,057 33,104 20.8 %
Global Property 22,318 27,649 (5,331) (19.3 %)
Professional Lines 31,323 34,637 (3,314) (9.6 %)
Strategic Distribution Partners 109,565 82,771 26,794 32.4 %
Transactional E&S 40,745 50,950 (10,205) (20.0 %)
Total continuing business 668,284 605,528 62,756 10.4 %
Exited business (2) 981 (983)
NM(1)
Total Skyward Specialty segment gross written premiums $ 668,282 $ 606,509 $ 61,773 10.2 %
Net written premiums $ 403,897 $ 441,167 $ (37,270) (8.4 %)
Net earned premiums $ 329,958 $ 351,797 $ (21,839) (6.2 %)
(1) Not meaningful.
Nine months ended September 30,
($ in thousands) 2026 2025 Change % Change
Accident & Health $ 286,596 $ 186,805 $ 99,791 53.4 %
Captives 172,350 211,879 (39,529) (18.7 %)
Credit & Surety 195,143 152,944 42,199 27.6 %
Energy Solutions 167,202 216,992 (49,790) (22.9 %)
Global Agriculture 406,452 296,853 109,599 36.9 %
Global Property 127,944 158,327 (30,383) (19.2 %)
Professional Lines 102,529 112,409 (9,880) (8.8 %)
Strategic Distribution Partners 315,773 231,401 84,372 36.5 %
Transactional E&S 143,105 156,417 (13,312) (8.5 %)
Total continuing business 1,917,094 1,724,027 193,067 11.2 %
Exited business 765 2,722 (1,957)
NM(1)
Total Skyward Specialty segment gross written premiums $ 1,917,859 $ 1,726,749 $ 191,110 11.1 %
Net written premiums $ 1,201,893 $ 1,123,651 $ 78,242 7.0 %
Net earned premiums $ 1,072,247 $ 947,705 $ 124,542 13.1 %
(1) Not meaningful.
For the third quarter and first nine months of 2026, the 10.4% and 11.2% increases in gross written premiums for continuing business, when compared to the same 2025 periods. Growth was primarily driven by new business in our accident & health, global agriculture, strategic distribution partners and credit & surety divisions, although growth in global agriculture was tempered by lower-than-expected demand in our dairy and livestock business as higher input costs continued to pressure farmer cash flows and margins. Premiums were lower in energy solutions and captives, primarily due to non-renewing business, and in global property, where increased competition and lower rates continued to pressure premium growth, while transactional E&S also experienced lower premiums in the third quarter, reflecting lower rates, renewals and new business.
Net written premiums for the third quarter of 2026 were $403.9 million compared to $441.2 million for the same 2025 period, a decrease of $37.3 million or 8.4%. Net earned premiums for the third quarter of 2026 were $330.0 million compared to $351.8 million for the same 2025 period, a decrease of $21.8 million or 6.2%. During the third quarter of 2026, net written and earned premiums were impacted by (i) lower-than-expected demand in our dairy and livestock business, reported in the global agriculture division, as higher input costs continued to pressure farmer cash flows and margins, and (ii) the new dairy and livestock reinsurance placement.
Net written premiums for the first nine months of 2026 were $1,201.9 million compared to $1,123.7 million for the same 2025 period, an increase of $78.2 million or 7.0%. Net earned premiums for the first nine months of 2026 were $1,072.2 million compared to $947.7 million for the same 2025 period, an increase of $124.5 million or 13.1%. The increases in net written and earned premiums for the first nine months of 2026 were primarily driven by the same factors that drove the increase in gross written premiums discussed above, partially offset by the impacts of lower-than-expected demand in our dairy and livestock business and the new dairy and livestock reinsurance placement.
For additional information regarding our reinsurance programs, see the "Reinsurance" discussion included in this Item 2.
Combined Ratio
The following tables set forth the components of the Skyward Specialty segment's combined ratios for the three and nine months ended September 30, 2026 and 2025:
Three months ended September 30,
2026 2025
($ in thousands)
$ Amount
% of
Net Earned
Premiums
$ Amount
% of
Net Earned
Premiums
Losses and LAE:
Non-cat loss and LAE
$ 201,413 61.1 % $ 211,760 60.2 %
Cat loss and LAE(1)
5,000 1.5 % 2,020 0.6 %
Total losses and LAE 206,413 62.6 % 213,780 60.8 %
Expenses:
Net policy acquisition expenses 47,033 14.2 % 49,243 13.9 %
Other operating and general expenses 41,018 12.4 % 48,836 13.9 %
Underwriting, acquisition and insurance expenses 88,051 26.6 % 98,079 27.8 %
Less: commission and fee income (3,118) (0.9 %) (1,904) (0.5 %)
Total net expenses $ 84,933 25.7 % $ 96,175 27.3 %
Combined ratio 88.3 % 88.1 %
(1) Current accident year
Nine months ended September 30,
2026 2025
($ in thousands)
$ Amount
% of
Net Earned
Premiums
$ Amount
% of
Net Earned
Premiums
Losses and LAE:
Non-cat loss and LAE
$ 653,823 60.9 % $ 569,831 60.1 %
Cat loss and LAE(1)
17,788 1.7 % 12,520 1.3 %
Total losses and LAE 671,611 62.6 % 582,351 61.4 %
Expenses:
Net policy acquisition expenses 151,019 14.2 % 138,369 14.6 %
Other operating and general expenses 128,126 11.9 % 124,714 13.2 %
Underwriting, acquisition and insurance expenses 279,145 26.1 % 263,083 27.8 %
Less: commission and fee income (6,979) (0.7 %) (6,440) (0.7 %)
Total net expenses $ 272,166 25.4 % $ 256,643 27.1 %
Combined ratio 88.0 % 88.5 %
(1) Current accident year
The loss ratios for the third quarter and first nine months of 2026 increased 1.8 points and 1.2 points, respectively, when compared to the same 2025 periods. Catastrophe losses in the third quarter and first nine months of 2026 were primarily due to convective storms, while catastrophe losses in the same 2025 periods were driven by convective storms in the South and Midwest and the California wildfires. The loss ratio for the first nine months of 2026 was also impacted by winter storms. The increases in the non-cat loss and LAE ratios, when compared to the same 2025 periods, were due to shifts in business mix driven by growth in the accident & health and global agriculture divisions, both of which generally have higher loss ratios.
The expense ratios for the third quarter and first nine months of 2026 improved 1.6 points and 1.7 points, respectively, when compared to the same 2025 periods, primarily driven by business mix shift and enhanced operating efficiencies. The expense ratio for the first nine months of 2026 also benefited from scale benefits as net earned premiums outpaced expense growth.
The expense ratios for all periods presented exclude the impact of corporate expenses which are presented separately in the combined group's expense ratio. It also excludes IPO and management incentive plan related stock compensation, which are reported in other expenses in our condensed consolidated statements of operations and comprehensive income.
Apollo Segment
Our Apollo segment operates within the Lloyd's of London market, leveraging Lloyd's global licensing, centralized underwriting infrastructure, and long-standing distribution networks to access innovative specialty classes across international markets.
Syndicate 1969 - Lloyd's Specialist Syndicate ("Syndicate 1969"): Syndicate 1969 is a diversified, multi-class specialty underwriting syndicate. Apollo underwrites a broad portfolio of traditional specialty lines, including property, casualty, marine, energy & transport, and a variety of other specialty classes. The syndicate's business mix is designed around disciplined risk selection, class-specific underwriting teams, and a balanced mix of short- and medium-tail exposures.
Syndicate 1971 - Digital Economy Syndicate ("Syndicate 1971"): Syndicate 1971 is a digital-economy and innovation-focused underwriting syndicate designed to support clients operating in the new economy, including technology-enabled platforms, autonomous mobility enterprises, human logistics operators, and other emerging, data-driven business models. Underwriting emphasizes data rich partnerships, bespoke coverage structures, and advanced analytical tools that inform pricing and risk assessment. The product suite includes liability coverages tailored for platform-based models, autonomous vehicle ecosystems, electrification transitions, and related next-generation exposures. The syndicate also partners with clients on ongoing data sharing, enabling enhanced portfolio insights and continuous refinement of underwriting models.
Syndicate 1972 - Reshare ("Syndicate 1972"): Syndicate 1972 commenced underwriting in 2026 and operates as a dedicated quota-share reinsurance vehicle supporting Apollo's broader underwriting platform. The syndicate provides
proportional reinsurance capacity primarily to Syndicates 1969 and 1971, enabling efficient capital deployment, portfolio optimization, and risk diversification across the Apollo segment.
Managed Premiums: In addition to its own underwriting syndicates, Apollo operates a managing-agency platform, administering several third-party syndicates on behalf of external capital providers. Through this structure, Apollo delivers managing agency services, including oversight, compliance, performance monitoring, and operational support. These arrangements allow Apollo to expand its access to innovative and emerging specialty products while generating fee based income.
U.K. and Lloyd's of London
In the U.K., under the Financial Services and Markets Act 2000 ("FSMA"), no person may carry on a regulated activity unless authorized or exempt. Effecting or intermediating contracts of insurance or reinsurance are regulated activities requiring authorization. Effecting contracts of insurance requires authorization by the Prudential Regulation Authority ("PRA") and is regulated by the Financial Conduct Authority ("FCA"). Intermediating contracts of insurance requires authorization by the FCA.
Under the Financial Services Act 2012, the FCA is a conduct regulator for all U.K. firms carrying on regulated activity in the U.K. while the PRA is the prudential regulator for U.K. banks, building societies, credit unions, insurers and major investment firms. As a prudential regulator, the PRA's general objective is to promote the safety and soundness of the firms it regulates. The PRA rules require financial firms to hold sufficient capital and have adequate risk controls in place.
The FCA's statutory strategic objective is to ensure that relevant markets function well and have operational objectives to protect consumers and protect financial markets and to promote competition. It makes rules covering how the firm must be managed and requirements relating to the firm's systems and controls, how business must be conducted and the firm's arrangements to manage financial crime risk. The PRA and the FCA require regular and ad hoc reporting and monitor compliance with their respective rule books through a variety of means including the collection of data, industry reviews and site visits.
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.
Lloyd's is subject to U.K. law and is authorized under the FSMA. The Lloyd's Act 1982 defines the governance structure and rules under which the society operates. Under the Lloyd's Act 1982, the Council of Lloyd's is responsible for managing, supervising and supporting the Lloyd's market. Lloyd's agrees to syndicates' business plans and evaluates performance against those plans. Syndicates are required to underwrite only in accordance with their agreed business plans. If they fail to do so, Lloyd's can take a range of actions including, as a last resort, prohibiting a syndicate from underwriting.
Lloyd's has a global network of licenses and authorizations, and underwriters at Lloyd's may write business in countries where Lloyd's has authorized status or exemptions available to non-admitted insurers or reinsurers. Lloyd's licenses can only be used if the Syndicate Business Forecast, agreed annually with Lloyd's, names those countries. Lloyd's also manages and protects the Lloyd's network of international licenses, monitors syndicates' compliance with Lloyd's Principles for doing business and is responsible for setting both member and central capital levels.
Apollo Group Holdings Limited
Apollo, through its subsidiary ASML, is authorized and regulated by the PRA and regulated by the FCA to conduct insurance and reinsurance business. ASML is a Lloyd's managing agent authorized by Lloyd's to manage approved Lloyd's syndicates.
Bermuda
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 quota share of Apollo 16 Limited, a corporate member supporting the underwriting capital for Syndicate 1969 and Syndicate 1971.
The Insurance Act provides that no person shall carry on any insurance or reinsurance business in or from within Bermuda unless registered as an insurer by the Bermuda Monetary Authority ("BMA") under the Insurance Act. The Insurance Act imposes upon Bermuda insurance companies, among other things, solvency and liquidity standards, auditing
and reporting requirements, and grants the BMA powers to supervise, investigate, require information and demand the production of documents and intervene in the affairs of insurance companies.
In addition, ABL must comply with all requirements pertaining to Class 3A insurers, which includes, among other things: the appointment of a loss reserve specialist and an independent auditor, maintaining a principal office in Bermuda and the appointment of a principal representative in Bermuda, the filing of annual Statutory Financial Returns together with annual GAAP financial statements and an annual Capital and Solvency Return, compliance with minimum and enhanced capital requirements, together with certain restrictions on reductions of capital and the payment of dividends and distributions as well as group solvency and supervision rules, if applicable, and compliance with the Insurance Code of Conduct.
Underwriting Results
Select Apollo metrics for the third quarter and first nine months 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.
Premiums
The following tables set forth gross written premiums by underwriting division for the three and nine months ended September 30, 2026 and 2025:
Three months ended September 30,
($ in thousands) 2026
2025(1)
Change % Change
Syndicate 1969 $ 67,520 $ 61,105 $ 6,415 10.5 %
Syndicate 1971 67,683 69,674 (1,991) (2.9 %)
Total gross written premiums $ 135,203 $ 130,779 $ 4,424 3.4 %
Net written premiums $ 97,881 $ - $ - - %
Net earned premiums $ 76,906 $ - $ - - %
(1) Prior year information is pro forma and is adjusted for the impact of the change in participations. See Reconciliation of Non-GAAP Financial Measures.
Nine months ended September 30,
($ in thousands) 2026
2025(1)
Change % Change
Syndicate 1969 $ 191,959 $ 160,164 $ 31,795 19.9 %
Syndicate 1971 101,925 98,806 3,119 3.2 %
Total gross written premiums $ 293,884 $ 258,970 $ 34,914 13.5 %
Net written premiums $ 218,384 $ - $ - - %
Net earned premiums $ 213,096 $ - $ - - %
(1) Prior year information is pro forma and is adjusted for the impact of the change in participations. See Reconciliation of Non-GAAP Financial Measures.
Gross written premiums for the third quarter and first nine months of 2026 increased $4.4 million and $34.9 million, or 3.4% and 13.5%, respectively, compared to the same adjusted pro forma 2025 periods, primarily driven by growth in Syndicate 1969, which benefited from new business and expansion across select specialty lines. Growth was partially offset by a modest decrease in our digital economy focused ibott Syndicate 1971, reflecting the timing of a renewal as well as seasonally lower new business opportunities.
Combined Ratio
The Apollo segment's combined ratio for the three and nine months ended September 30, 2026 was 90.5% and 91.0%, respectively. Total non-cat losses and LAE for the three and nine months ended September 30, 2026 were $42.5 million and $115.6 million, or 55.2% and 54.3%, respectively. Cat losses and LAE for the three and nine months ended September 30, 2026 were $2.2 million and $5.8 million, or 2.8% and 2.7%, respectively, primarily due to convective storms during the third quarter and, for the first nine months of 2026, catastrophe losses associated with the conflict in the Middle East during the second quarter. Total underwriting, acquisition and insurance expenses for the three and nine months ended September 30, 2026 were $25.0 million and $72.5 million, or 32.5% and 34.0%, respectively. Net policy acquisition expenses were $14.6 million and $41.4 million, or 19.0% and 19.4%, respectively, and other operating and general expenses were $10.4 million and $31.1 million, or 13.5% and 14.6%, respectively.
Managed Premiums and Underwriting Fee Income
Apollo provides managing agency services to ten syndicates within its Lloyd's managing agency platform. The capital aligned syndicates, Syndicate 1969, Syndicate 1971 and Syndicate 1972, are wholly managed by ASML 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. Because managed premiums are a key management operating metric intended to reflect the scale of business managed by Apollo, inter-syndicate reinsurance transactions, including those involving Syndicate 1972 and other Apollo-managed syndicates, are not eliminated in the calculation of managed premiums. 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 nine months ended September 30, 2026, underwriting fee income was $11.0 million and $33.7 million, respectively, and fee-based service expenses were $4.1 million and $12.8 million, respectively.
The following table sets forth the fee generating gross written premiums for the three and nine months ended September 30, 2026 and 2025:
Three months ended September 30, Nine months ended September 30,
($ in thousands) 2026
2025(1)
2026
2025(1)
Aligned Syndicates $ 401,468 $ 369,548 $ 855,183 $ 717,178
Partner Syndicates 115,647 67,355 280,058 181,528
Total fee generating gross written premiums $ 517,115 $ 436,903 $ 1,135,241 $ 898,706
(1) Prior year information is pro forma and is adjusted for the impact of the change in participations. See Reconciliation of Non-GAAP Financial Measures.
Total fee generating gross written premiums for the three and nine months ended September 30, 2026 increased 18.4% and 26.3%, respectively, compared to the same pro forma 2025 periods, primarily driven by the addition of a new partner syndicate and organic growth across both aligned and partner syndicates.
Investments
Composition of Investment Portfolio
In the first quarter of 2026, we revised the 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. Cash and cash equivalents includes funds at Lloyd's.
The following table sets forth the components of our investment portfolio at carrying value at September 30, 2026 and December 31, 2025:
September 30, 2026 December 31, 2025
($ in thousands)
Carrying Value
% of Total
Carrying Value
% of Total
Cash and cash equivalents $ 309,245 9.7 % $ 171,053 6.9 %
Short-term investments 531,449 16.6 % 264,299 10.7 %
Fixed income 2,198,288 68.8 % 1,866,205 75.5 %
Alternative and strategic investments 157,067 4.9 % 168,837 6.8 %
Total portfolio $ 3,196,049 100.0 % $ 2,471,568 100.0 %
Investment Results
The following table sets forth the components of net investment income and net investment gains (losses) for the three and nine months ended September 30, 2026 and 2025:
Three months ended September 30, Nine months ended September 30,
$ in thousands 2026 2025 2026 2025
Short-term investments $ 2,381 $ 3,268 $ 7,338 $ 10,182
Cash and cash equivalents 2,690 695 6,932 2,595
Fixed income 30,338 20,806 87,013 55,358
Alternative and strategic investments (1,530) (2,755) (9,622) (7,995)
Net investment income $ 33,879 $ 22,014 $ 91,661 $ 60,140
Net unrealized gains (losses) on securities still held
$ 2,444 $ (8,987) $ 6,146 $ (6,677)
Net realized (losses) gains (1,978) 16,034 (3,096) 23,564
Net investment (losses) gains $ 466 $ 7,047 $ 3,050 $ 16,887
Net investment income for the third quarter and first nine months of 2026 increased $11.9 million and $31.5 million, respectively when compared to the same 2025 periods, driven by increased income from our fixed income portfolio as a result of the Apollo acquisition, a higher yield and a larger asset base. The increase in income from cash and cash equivalents was due to an overall increase in the invested asset base from the addition of Apollo when compared to the same 2025 periods.
The alternative and strategic investments portfolio continued to be impacted by the decline in the fair value of limited partnership investments.
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. During the third 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 on an available-for-sale "corporate securities and miscellaneous" security. This brings our total allowance to $10.1 million on four securities, an increase of $1.6 million for the third quarter and $2.6 million for the first nine months of 2026. Other than the securities discussed previously, we determined that no other credit impairment existed at September 30, 2026. See Note 3, "Investments" to our condensed consolidated financial statements included in Item 1 of this Form 10-Q for additional information.
Fixed income
Our fixed income portfolio primarily consists of investment grade fixed income securities, which are predominantly highly-rated and liquid bonds, and commercial mortgage loans.
The following table sets forth the components of our fixed income securities at September 30, 2026 and December 31, 2025:
September 30, 2026 December 31, 2025
($ in thousands) Carrying Value
% of Total
Carrying Value
% of Total
U.S. government securities $ 136,282 6.2 % $ 44,468 2.4 %
Non-U.S. government securities 2,595 0.1 % - - %
Corporate securities and miscellaneous 807,837 36.7 % 636,387 34.1 %
Municipal securities 102,124 4.6 % 102,116 5.5 %
Residential mortgage-backed securities 428,565 19.5 % 486,587 26.1 %
Commercial mortgage-backed securities 81,441 3.7 % 73,050 3.9 %
Other asset-backed securities 632,732 28.8 % 513,695 27.5 %
Total fixed income portfolio, available-for-sale 2,191,576 99.6 % 1,856,303 99.5 %
Commercial mortgage loans 6,712 0.4 % 9,902 0.5 %
Total fixed income portfolio $ 2,198,288 100.0 % $ 1,866,205 100.0 %
The weighted average credit rating of our available-for-sale fixed income portfolio was "A+" at September 30, 2026 and December 31, 2025. The following table sets forth the credit quality of our available-for-sale fixed income portfolio at September 30, 2026 and December 31, 2025:
September 30, 2026 December 31, 2025
($ in thousands) Fair Value % of Total Fair Value % of Total
AAA $ 296,229 13.5 % $ 286,563 15.4 %
AA 617,761 28.2 % 548,030 29.6 %
A 725,683 33.1 % 620,813 33.5 %
BBB 530,113 24.2 % 379,586 20.4 %
BB and Lower 21,790 1.0 % 21,311 1.1 %
Total fixed income portfolio, available-for-sale $ 2,191,576 100.0 % $ 1,856,303 100.0 %
Our commercial mortgage loans are primarily senior loans on real estate across the U.S.
The average duration of our fixed income portfolio was approximately 3.34 years and 3.60 years, respectively, as of September 30, 2026 and December 31, 2025.
Alternative and strategic investments
Alternative investments consists of promissory notes, limited partnerships, joint ventures and equity interests. The underlying investments are primarily floating rate senior secured loans, comprised of short duration, collateralized, asset-oriented credit investments. The limited partnerships and joint ventures are subject to future increases or decreases in asset value as asset values are monetized and the income is distributed. Strategic investments consists of equity interests in private entities within the insurance industry.
Other Items
Interest expense
Interest expense for the three and nine months ended September 30, 2026 was $7.0 million and $23.5 million, respectively, compared to $1.9 million and $5.6 million, respectively, for the same 2025 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
Amortization expense for the three and nine months ended September 30, 2026 was $8.8 million and $26.5 million, respectively, compared to $0.5 million and $1.2 million, respectively, for the same 2025 periods. The increases were due to the amortization of the value of business acquired ("VOBA") asset and additional definite-lived intangible assets recognized as a result of the acquisition of Apollo.
Income Taxes
Income tax expense for the three and nine months ended September 30, 2026 was $13.8 million and $40.7 million, respectively, compared to $14.6 million and $35.0 million, respectively, for the same 2025 periods. Our effective tax rates for the three and nine months ended September 30, 2026 were 21.8% and 21.5%, respectively, compared to 24.2% and 21.6%, respectively, for the same 2025 periods. The decrease in the effective tax rate for the three months ended September 30, 2026 compared to the corresponding 2025 period was primarily attributable to a return-to-provision adjustment related to a research and development tax credit identified following the filing of the Apollo U.K. 2025 tax return, as well as the impact of Apollo transaction costs recognized in the third quarter of 2025 that increased the prior-year effective tax rate. For the nine months ended September 30, 2026, the effective tax rate was generally consistent with the corresponding 2025 period. The 2026 effective tax rate included discrete tax benefits from stock-based compensation, which reduced the rate by approximately 1%, partially offset by the impact of differing tax rates applicable to our Bermuda and U.K. operations, which increased the rate by approximately 1.5%.
Liquidity and Capital Resources
Sources and Uses of Funds
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 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 reduce volatility and as part of our 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.
The timing of our cash flows from operating activities can vary among 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.
Our cash flows for the nine months ended September 30, 2026 and 2025:
($ in thousands) 2026 2025
Cash and cash equivalents, restricted cash and funds at Lloyd's provided by (used in):
Operating activities $ 389,303 $ 356,308
Investing activities (485,943) (315,568)
Financing activities 300,937 -
Change in cash and cash equivalents, restricted cash and funds at Lloyd's $ 204,297 $ 40,740
Cash provided by operating activities in 2026 was consistent when compared to 2025 and continued 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 periods presented were used primarily to fund investing activities.
The increase in net cash used in investing activities in 2026 when compared to 2025 was primarily driven by the acquisition of Apollo.
The increase in net cash provided by financing activities in 2026 when compared to 2025 was due to proceeds from the Term Loan Facility and the draw on the Revolving Credit Facility used to fund the Apollo acquisition, partially offset by the repayment of long-term debt.
Credit Agreements
FHLB Loan
On August 30, 2024, we entered into the FHLB Loan pursuant to the 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 redemptions of the draws on the prior credit facility. On July 21, 2026, we repaid $1.0 million of outstanding principal.
Term Loan 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").
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 $150.0 million of the Tranche A DDTL and $150.0 million of the Tranche B DDTL for the acquisition of Apollo on January 1, 2026. On June 26, 2026, we 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 September 30, 2026, we were in compliance with all covenants.
The Term Loan Facility is unsecured. In connection with the Revolving Credit Facility, 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 and our existing wholly-owned subsidiaries and subsequently acquired or organized subsidiaries, excluding insurance company subsidiaries and subject to certain other exceptions.
We report debt related to the Term Loan Facility as of September 30, 2026 Condensed Consolidated Balance Sheet, net of debt issuance costs of approximately $3.5 million. These deferred financing costs are presented as a direct deduction from the carrying amount of the debt.
Revolving Credit Facility
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 million, which was increased to $250.0 million on the closing date of our acquisition of Apollo.
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 to fund a portion of the consideration paid for the acquisition of Apollo on January 1, 2026.
Interest on the Revolving Credit Facility is payable quarterly. Amounts drawn under the Revolving Credit Facility bear interest at either term SOFR plus a margin, which ranges from 150 to 190 basis points, or the base rate plus a margin, which ranges 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 also pay a fee ranging from 0.20% to 0.35% on average daily undrawn amounts under the Revolving Credit Facility, depending on our debt to capitalization ratio. The availability period under the Revolving Credit Facility will terminate on November 12, 2030.
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 September 30, 2026, we were in compliance with all covenants.
Debentures
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 September 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.
Share Repurchase Program
In October 2024, the Board 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. During the nine months ended September 30, 2026, we repurchased 222,635 shares for approximately $9.7 million under this plan. These shares represent the total repurchased under the plan as of September 30, 2026.
Reinsurance
We strategically purchase reinsurance from third parties which enhances our business by protecting capital from severity events (either large single event losses or catastrophes) and reducing volatility in our earnings. Our reinsurance contracts are predominantly one year in length and renew annually throughout the year, primarily in January and April. At each annual renewal, we consider several factors that influence any changes to our reinsurance purchases, including any plans to change the underlying insurance coverage we offer, updated loss activity, the level of our capital and surplus, changes in our risk appetite and the cost and availability of reinsurance treaties.
We purchase quota share reinsurance, excess of loss reinsurance, and facultative reinsurance coverage to limit our exposure from losses on any one occurrence. The mix of reinsurance purchased considers efficiency, cost, our risk appetite and specific factors of the underlying risks we underwrite.
•Quota share reinsurance refers to a reinsurance contract whereby the reinsurer agrees to assume a specified percentage of the ceding company's losses arising out of a defined class of business in exchange for a corresponding percentage of premiums, net of a ceding commission.
•Excess of loss reinsurance refers to a reinsurance contract whereby the reinsurer agrees to assume all or a portion of the ceding company's losses for an individual claim or an event in excess of a specified amount in exchange for a premium payable amount negotiated between the parties, which includes our catastrophe reinsurance program.
•Facultative coverage refers to a reinsurance contract on individual risks as opposed to a group or class of business. It is used for a variety of reasons, including supplementing the limits provided by the treaty coverage or covering risks or perils excluded from treaty reinsurance.
For the three and nine months ended September 30, 2026 our net retention on a written basis (calculated as net written premiums as a percentage of gross written premiums) was 62.5% and 64.2%, respectively, compared to 72.7% and 65.1%, respectively, for the same 2025 periods.
Credit and Financial Strength Ratings
On August 28, 2026, A.M. Best affirmed the A (Excellent) Financial Strength Rating of the members of Skyward Specialty Insurance Group, with a Stable outlook, and affirmed the "a" (Excellent) Long-Term Issuer Credit Ratings, while revising the outlook on the Long-Term Issuer Credit Ratings to positive from stable.
Skyward Specialty Insurance Group Inc. published this content on November 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 06, 2026 at 20:57 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]