Skyward Specialty Insurance Group Reports Fourth Quarter 2023 Results
- Strong financial performance in Q4 2023 with net income of $29.3 million.
- Gross written premiums increased by 21.4% compared to the same period in 2022.
- Adjusted operating income for the year was $80.8 million.
- Achieved a combined ratio of 90.7% and a return on equity of 15.9%.
- CEO emphasized growth in key metrics like gross written premiums and return on equity.
- None.
Insights
The reported net income and adjusted operating income for Skyward Specialty Insurance Group indicate a robust performance, with significant year-over-year growth. The increase in net income from $39.4 million to $86.0 million and a jump in adjusted operating income from $58.6 million to $80.8 million, reflect a solid financial position and operational efficiency. The growth in gross written premiums by 21.4% for Q4 and 28% for the year suggests successful market penetration and product uptake.
Furthermore, the combined ratio, a key indicator of profitability in the insurance industry, improved from 92.4% to 90.7%. A combined ratio below 100% typically signifies that the company is making an underwriting profit, which is a positive sign for investors. The company's ability to grow its fully diluted book value per share by over 24% to $15.96 is also noteworthy, as it suggests an increase in the intrinsic value of the company's shares.
The reported return on equity (ROE) and return on tangible equity figures are impressive, standing at 15.9% and 19.0%, respectively. These metrics are crucial for assessing the company's ability to generate profits from its equity base and the reported figures are indicative of strong performance, likely to be well-received by shareholders.
The insurance sector is highly sensitive to catastrophic events and Skyward Specialty's low catastrophe loss and LAE ratio of 0.4% for Q4 2023, compared to 1.2% for the same period in 2022, indicates effective risk management and favorable conditions. The reduction in the current accident year non-cat loss and LAE ratio from 63.2% to 60.9% further suggests improved underwriting discipline and portfolio optimization.
It is also important to consider the broader market context. The insurance industry has been facing challenges such as increased claims due to natural disasters and a competitive underwriting environment. Skyward Specialty's performance, particularly the growth in gross written premiums and a stable combined ratio, suggests that the company is navigating these industry headwinds successfully.
The company's strategy, termed 'Rule Our Niche', appears to be effectively driving growth and operational excellence. This strategy's impact on long-term sustainability and competitive advantage in the niche markets served by Skyward Specialty should be monitored by stakeholders.
The economic landscape for insurers has been influenced by fluctuating interest rates and market volatility. Skyward Specialty's increase in net investment income, particularly from its core fixed income portfolio, is indicative of strategic asset allocation and potentially favorable interest rate movements. A higher book yield of 4.5% at the end of 2023, up from 3.7% at the end of 2022, may reflect rising interest rates and their positive impact on investment income for insurers.
Additionally, the company's stockholders' equity growth of 23.5% is a strong signal of financial health and may provide resilience against potential economic downturns. The successful follow-on offering, which contributed to this equity increase, demonstrates investor confidence and provides the company with additional capital to potentially invest in growth opportunities or further strengthen its financial position.
HOUSTON, Feb. 20, 2024 (GLOBE NEWSWIRE) -- Skyward Specialty Insurance Group, Inc.TM (Nasdaq: SKWD) (“Skyward Specialty” or the “Company”) today reported fourth quarter 2023 net income of
Adjusted operating income(1) for the fourth quarter of 2023 was
Highlights for the quarter included:
- Gross written premiums increased
21.4% . - Underwriting income(1) of
$21.0 million compared to$12.8 million for the fourth quarter 2022. - Combined ratio of
90.7% compared to92.4% for the fourth quarter 2022. - Current accident year non-cat loss and LAE ratio of
60.9% compared to63.2% for the fourth quarter 2022. - Cat loss and LAE ratio of
0.4% compared to1.2% for the fourth quarter 2022. - Year to date return on equity of
15.9% compared to9.3% for the same 2022 period. - Year to date return on tangible equity(1) of
19.0% compared to11.8% for the same 2022 period.
| (1) See "Reconciliation of Non-GAAP Financial Measures" |
Skyward Specialty Chairman and CEO Andrew Robinson commented, “We capped off an outstanding year with another strong quarter, delivering a
“In the fourth quarter we also executed on an upsized follow-on offering, a testament to our shareholder’s confidence in our team, our strategy, and our execution. Our journey to this point has been simply remarkable, and it is rooted in the commitment of our employees, the partnership with our distribution, and the support of our customers. We have every reason to believe that 2024 will build on our outstanding success in 2023.”
Results of Operations
Underwriting Results
| Premiums | ||||||||||||||||||||||
| ($ 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
| 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
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
Stockholders’ Equity
Stockholders’ equity was
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 Doughty
hdoughty@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 | $ | 1,017,651 | $ | 607,572 | ||||
| Fixed maturity securities, held-to-maturity, at amortized cost (net of allowance for credit losses of | 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, | — | 20 | ||||||
| Common stock, | 399 | 168 | ||||||
| Treasury stock, | — | (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 ended December 31 | Twelve months ended December 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 ended December 31 | Twelve months ended December 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 ended December 31 | Twelve months ended December 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 ended December 31 | Twelve months ended December 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 | % | ||||||||||
FAQ
What was Skyward Specialty Insurance Group's net income for Q4 2023?
How much did the gross written premiums increase by in Q4 2023 compared to the same period in 2022?
What was the adjusted operating income for Skyward Specialty Insurance Group for the year?
What was the combined ratio achieved by Skyward Specialty Insurance Group?
What was the return on equity for Skyward Specialty Insurance Group in 2023?
What did the CEO highlight in terms of growth for Skyward Specialty Insurance Group?
