Business Context and Reporting Period
Company: Skyward Specialty Insurance Group, Inc. (Skyward Group)
Filing Type: Form 10-Q (Unaudited)
Period Ended: June 30, 2026
Key Event: The Company completed the acquisition of Apollo Group Holdings Limited ("Apollo") on January 1, 2026, for approximately $559.1 million. This transaction expanded Skyward's operations into the Lloyd's of London market. The Company now reports two segments: Skyward Specialty (U.S.) and Apollo (U.K./Lloyd's).
Key Financial Metrics
| Metric ($ in thousands) | Three Months Ended June 30, 2026 |
Six Months Ended June 30, 2026 |
Six Months Ended June 30, 2025 |
|---|---|---|---|
| Gross Written Premiums | $740,554 | $1,408,258 | $1,120,240 |
| Net Earned Premiums | $444,472 | $878,479 | $595,908 |
| Net Income | $49,038 | $98,769 | $80,897 |
| Diluted EPS | $1.07 | $2.17 | $1.94 |
| Combined Ratio | 89.5% | 89.5% | 90.0% |
| Total Assets | $6,781,139 | As of June 30, 2026 | |
| Total Liabilities | $5,513,602 | As of June 30, 2026 | |
| Stockholders' Equity | $1,267,537 | As of June 30, 2026 | |
| Notes Payable | $417,620 | As of June 30, 2026 | |
| Operating Cash Flow (6mo) | $184,167 | $184,940 |
Material Changes vs. Prior Period
- Revenue Growth: Net earned premiums increased 50.4% for the six months ended June 30, 2026, compared to the same period in 2025, driven primarily by the inclusion of Apollo's results and organic growth in Skyward Specialty's Global Agriculture and Accident & Health divisions.
- Profitability: Net income rose 22.1% year-over-year for the six-month period. The combined ratio improved slightly to 89.5% from 90.0% in the prior year.
- Expense Increases: Interest expense surged to $16.5 million (6 months) from $3.7 million in the prior year due to new Term Loan and Revolving Credit Facilities utilized to fund the Apollo acquisition. Amortization expense increased significantly to $17.7 million due to the amortization of Value of Business Acquired (VOBA) and intangible assets from the Apollo deal.
- Balance Sheet Expansion: Total assets grew by approximately $2.0 billion to $6.8 billion, reflecting the acquisition of Apollo's assets and increased investment portfolio size.
Guidance, Outlook, and Risks
- Segment Performance: The Skyward Specialty segment reported a combined ratio of 87.9% for the six months ended June 30, 2026. The Apollo segment reported a combined ratio of 91.3% for the same period, with catastrophe losses primarily attributed to the conflict in the Middle East.
- Capital Management: The Company repurchased 222,635 shares for approximately $9.7 million during the first half of 2026. The Board authorized an additional $50 million for share repurchases in July 2026, bringing the total authorized program to $100 million.
- Debt Covenants: The Company is in compliance with all financial covenants related to its Term Loan Facility and Revolving Credit Facility as of June 30, 2026.
- Risks: Key risks include integration challenges with Apollo, volatility in commodity prices affecting Global Agriculture results (hedged via derivatives), and potential credit impairments in the investment portfolio. The Company noted $8.5 million in total allowance for credit losses on three securities as of June 30, 2026.
- Controls: The evaluation of disclosure controls and procedures as of June 30, 2026, excluded Apollo as integration of its systems is ongoing.
Investor Verification Checklist
- Acquisition Integration: Verify the progress of integrating Apollo's financial reporting systems and controls, which were excluded from the current period's internal control evaluation.
- Debt Servicing: Monitor the impact of increased interest expense ($16.5M for 6 months) on future operating income and cash flow, given the new $300M Term Loan and $250M Revolver.
- Loss Development: Review the development of loss reserves for the Apollo segment, particularly regarding catastrophe losses linked to the Middle East conflict.
- Investment Portfolio: Assess the credit quality of the fixed income portfolio, noting the $8.5 million allowance for credit losses and the concentration in asset-backed securities.
- Amortization Impact: Confirm the duration and magnitude of amortization expenses related to VOBA and intangible assets from the Apollo acquisition, which significantly impacted net income in the current period.