0001519449-25-000061
SEC filingGrowth driven by Agriculture & Credit division and improved combined ratio to 89.2% in Q3 2025.
For the nine months ended September 30, 2025, net earned premiums grew 24.1% to $947.7M, driven by expansion in the Agriculture and Credit (Re)insurance division and continued momentum in Specialty Programs, Accident & Health, and Captives. Net income increased 21.4% to $126.8M, while underwriting income rose 40.7% to $98.0M. The combined ratio improved to 89.6% from 90.9% in the prior year period, benefiting from a lower loss and LAE ratio (61.4% vs. 62.0%) and expense ratio (28.2% vs. 28.9%). The improvement in the loss ratio was partly attributable to reduced catastrophe losses (1.3% of net earned premiums vs. 1.5%) and favorable business mix shift. Net investment income remained relatively stable at $60.1M, as higher fixed income yields offset declines from alternative investments and the sale of the equity portfolio.
Gross written premiums increased 27.4% in the first nine months of 2025, with the Agriculture and Credit (Re)insurance division surging 237.8% to $327.5M, reflecting significant growth from new business and market demand. Specialty Programs grew 39.2% to $231.4M, while Accident & Health rose 45.4% to $186.8M. These gains were partially offset by declines in Global Property (-13.5%), Professional Lines (-4.8%), and Construction & Energy Solutions (-3.1%). The company's net retention on a written basis increased to 65.1% from 62.9%, indicating a lower reliance on ceded premiums.
Management's strategic focus remains on expanding underserved markets, as evidenced by the pending acquisition of Apollo Group Holdings for $555M, expected to close in Q1 2026. The company has secured debt financing commitments to support the cash portion of the deal. No formal revenue or earnings guidance was provided, but the continued investment in underwriting divisions and reinsurance optimization suggests an aim to sustain combined ratio improvement and top-line growth. The sale of the equity portfolio reduces earnings volatility from market movements. The company's A.M. Best rating of A (Excellent) with stable outlook was reaffirmed in August 2025.
As of September 30, 2025, Skyward Specialty's balance sheet shows total assets of $4.59B, up 23% from $3.73B at year-end 2024. Cash and cash equivalents stand at $160.1M, with an additional $38.2M in restricted cash. Total investments of $2,233.8M include $1,805.2M in available-for-sale fixed maturity securities, $34.6M held-to-maturity, and $247.4M in short-term investments. The debt structure consists of $100M in notes payable (FHLB loan and revolving credit facility) and $19.6M in subordinated debt, for total debt of $119.6M. Stockholders' equity is $961.4M, yielding a book value per share of $23.75. The debt-to-equity ratio is healthy at approximately 12.4%. Unearned premiums of $885.7M represent deferred revenue, indicating strong premium growth.
The most significant commitment is the Apollo acquisition: $555M total consideration (≈33% in stock, remainder cash) expected to close in Q1 2026. The company has secured $300M in delayed draw term loans and a potential $150M bridge facility. Additionally, there are $25.5M in unfunded commitments to equity method investments, primarily $21.5M for RedBird Capital Partners. The company also maintains a $22.0M deposit asset from reinsurance contracts. Derivative notional amounts of $130.6M are used for hedging, not speculative purposes.
The notes do not disclose any share repurchase programs or dividend payments during the period. Debt levels remained stable compared to year-end 2024. The primary capital allocation event is the Apollo acquisition, which will be funded through a mix of debt and equity. Capital expenditures are not separately reported in the notes, but the cash flow statement shows $3.7M in property and equipment purchases for the nine months.
The company operates as a single reportable segment, offering commercial property and casualty products in the U.S. The segment is broken into nine underwriting divisions, with gross written premiums of $1.73B for the nine months ended September 30, 2025, up 27.5% from $1.35B in the prior year. Key divisions include Agriculture and Credit (Re)insurance ($327.5M), Captives ($213.3M), and Specialty Programs ($231.4M). Net underwriting income for the segment was $97.97M, a 40.7% increase, driven by a combined ratio improvement (implied by LAE and expense ratios). No geographic mix is disclosed as the entire business is U.S.-focused.
Net income of $126.8M was well covered by operating cash flow of $356.3M, reflecting strong non-cash adjustments (e.g., $229.5M in amortization, impairments, etc.) and favorable working capital. The cash conversion ratio (CFO / Net Income) is 2.8x, indicating high earnings quality with no apparent working capital drag.
Capex intensity remains low at $3.7M (1.0% of CFO), typical for an insurance holding company. Total investing cash outflows of $315.6M were dominated by purchases of fixed maturity and equity securities, partially offset by sales and maturities. No financing activities occurred in 9M 2025 versus a net paydown of $4.2M in the prior period.
Overall, the company generated significant free cash flow (implicitly CFO minus capex = $352.6M) with no debt or equity capital returned to shareholders. The cash balance increased by $40.7M, providing ample liquidity.