Skyward Specialty Insurance Group, Inc. Q4 FY2025 earnings call

Andrew mentioned that fourth quarter adjusted operating income and underwriting income were all-time highs, with 13% growth in gross written premiums in the quarter and 24% growth for the year. We exceeded mid-teens return on equity objectives, with 18.9% return on equity for the year and 20.9% return on tangible equity. Fully diluted book value per share grew to $23.87. The market is competitive, but we continued to strengthen in financial results, competitive position, portfolio construction and execution. Mark provided details that fourth quarter adjusted operating income was $49 million or $1.17 per diluted share and net income was $43 million or $1.03 per diluted share. Gross written premiums grew by more than 13% in the quarter, net written premiums grew 25% for the year and retention of 64.9% remained stable. Fourth quarter combined ratio improved 7.3 points to 88.5%, loss ratio of 59.6% included net favorable prior year development. We had a very strong reserve profile with 74% of reserves in IBNR. Net investment income for the fourth quarter increased $3 million. Financial leverage was modest but will be impacted by Apollo transaction related debt in Q1 2026, with fully diluted book value per share expected in the range of $26 to $26.10. Andrew also highlighted specific business segment performances like strong growth in A&H and surety, optimistic outlook for energy, and the partnership with Uber on autonomous vehicle insurance policy

Fourth quarter adjusted operating income increased 47% to $49 million and underwriting income reached $41 million, both all-time highs and the fourth consecutive quarter of record results for those 2 metrics. Growth in gross written premiums in the quarter of 13% caps off an outstanding year of 24% growth. Fourth quarter adjusted operating income increased 47% to $49 million and underwriting income reached $41 million, both all-time highs and the fourth consecutive quarter of record results for those 2 metrics. Our growth in gross written premiums in the quarter of 13% caps off an outstanding year of 24% growth. We continue to exceed our objectives of delivering mid-teens return on equity, reporting 18.9% for the year and a return on tangible equity of 20.9% was simply outstanding. Our fully diluted book value per share grew to $23.87, which is up 5% over the third quarter and an impressive 26% for the year. A&H, surety and specialty programs divisions drove growth in gross written premiums in the quarter. Our ag business had impressive year-to-date growth, we established leadership in the small employer market in A&H, market-leading innovations like EndWell powered growth in surety, and the Apollo combination will bring accretive impact to growth areas like the Life Sciences unit. We shrunk in Energy and Construction Solutions driven by intentional actions in commercial auto and construction, having reduced our commercial auto exposure by more than 62% over the last 12 quarters. We are bullish about the energy unit due to our strong market position, limited competition in specific markets we serve and broadened offerings in renewables and power. E&S and Professional Lines divisions faced more competition in Q4, effectively defended books but wrote less new business. Over 58% of our business is in short-tail lines and now 48% of our business in lines less exposed to the P&C cycles, and our largest division makes up only 16% of our premium

2026 guidance unchanged. Leverage related to Apollo transaction will make Q1 2026 debt-to-capital ratio in the range of 28% to 29%, and fully diluted book value per share is expected to fall within the range of $26 to $26.10 as compared to $23.87 at December 31

Market is becoming more competitive and difficult for many to navigate. Property market is more challenging and loss costs in casualty market are escalating.曾有IT controls material weakness but has been remediated

Q: Meyer Shields asked about surety growth and appetite for externally underwritten business.

A: Andrew said will never do externally underwritten business while he's CEO, strategy is Rule Our Niche.

Q: Paul Newsome asked about Apollo's 2025 performance, 2026 outlook under Skyward, and pricing competition.

A: Spoke about Apollo's complementary portfolio, its diversification analogous to Skyward, and confidence in navigating pricing pressure.

Q: Alex Scott asked about A&H growth and Uber partnership.

A: 1/1 renewals were off the chart, spoke about A&H's stop-loss writing, captive capabilities and strong performance, and details on Uber partnership.

Q: Michael Zaremski asked about loss ratio trend and material weaknesses resolution.

A: Mark said mix change causing slight loss ratio tick up, Andrew said IT controls material weakness was nonfinancial and remediated.

Q: Andrew Andersen asked about property competition bind ratios and Uber relationship income nature.

A: Spoke about property competition bind ratios and Uber relationship structure.

Q: Michael Phillips asked about captive division and California wildfires recovery.

A: Spoke about captive division dynamics and good recoveries from California wildfires.

Q: Tracy Benguigui asked about property reverse flow and autonomous vehicle insurance risk.

A: Spoke about property reverse flow in higher premium areas and detailed autonomous vehicle insurance risk.

Q: Andrew Kligerman asked about retention dynamics and acquisition pipeline.

A: Spoke about retention trend and strategic acquisition approach.

Q: Mark Hughes asked about property pricing pressure and liability competition.

A: Spoke about property pricing pressure and responsible liability competitors.

Q: Matthew Carletti asked about autonomous vehicle insurance loss and related statistics.

A: Spoke about autonomous vehicle insurance loss nature and related performance differences