Skyward Specialty Insurance Group, Inc. 10-Q

Item 1. Financial Statements SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) June 30, 2025 December 31, 2024 ($ in thousands, except share and per share amounts) (Unaudited) Assets Investments: Fixed maturity securities, available-for-sale, at fair value (net of allowance for credit losses of $ 6,150 and $ 0 , respectively) (amortized cost of $ 1,638,973 and $ 1,320,266 , respectively) $ 1,629,464 $ 1,292,218 Fixed maturity securities, held-to-maturity, at amortized cost (net of allowance for credit losses of $ 268 and $ 243 , respectively) 35,253 39,153 Equity securities, at fair value 58,001 106,254 Mortgage loans, at fair value 10,168 26,490 Equity method investments 88,804 98,594 Other long-term investments 44,479 33,182 Short-term investments, at fair value 214,338 274,929 Total investments 2,080,507 1,870,820 Cash and cash equivalents 136,617 121,603 Restricted cash 36,547 35,922 Premiums receivable, net 518,441 321,641 Reinsurance recoverables, net 925,291 857,876 Ceded unearned premium 294,124 203,901 Deferred policy acquisition costs 140,903 113,183 Deferred income taxes 28,727 30,486 Goodwill and intangible assets, net 88,795 87,348 Other assets 86,440 86,698 Total assets $ 4,336,392 $ 3,729,478 Liabilities and stockholders’ equity Liabilities: Reserves for losses and loss adjustment expenses $ 1,918,753 $ 1,782,383 Unearned premiums 814,063 637,185 Deferred ceding commission 54,952 40,434 Reinsurance and premium payables 299,481 177,070 Funds held for others 127,377 102,665 Accounts payable and accrued liabilities 102,298 76,206 Notes payable 100,000 100,000 Subordinated debt, net of debt issuance costs 19,553 19,536 Total liabilities 3,436,477 2,935,479 Stockholders’ equity Common stock, $ 0.01 par value, 500,000,000 shares authorized, 40,486,656 and 40,127,908 shares issued and outstanding, respectively 405 401 Additional paid-in capital 724,159 718,598 Accumulated other comprehensive loss ( 2,666 ) ( 22,120 ) Retained earnings 178,017 97,120 Total stockholders’ equity 899,915 793,999 Total liabilities and stockholders’ equity $ 4,336,392 $ 3,729,478 The accompanying notes are an integral part of the consolidated financial statements. 3 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) Three months ended June 30, Six months ended June 30, ($ in thousands, except share and per share amounts) 2025 2024 2025 2024 Revenues: Net earned premiums $ 295,542 $ 257,583 $ 595,908 $ 493,925 Commission and fee income 2,560 2,053 4,536 4,079 Net investment income 18,589 22,034 37,927 40,331 Net investment gains (losses) 3,205 ( 1,721 ) 10,039 6,582 Other income (loss) 7 ( 7 ) 20 ( 7 ) Total revenues 319,903 279,942 648,430 544,910 Expenses: Losses and loss adjustment expenses 181,262 159,054 368,571 302,968 Underwriting, acquisition and insurance expenses 85,596 76,679 172,147 146,453 Interest expense 1,876 2,449 3,710 5,176 Amortization expense 372 360 709 748 Other expenses 1,002 1,045 2,063 2,233 Total expenses 270,108 239,587 547,200 457,578 Income before income taxes 49,795 40,355 101,230 87,332 Income tax expense 10,956 9,385 20,333 19,578 Net income $ 38,839 $ 30,970 $ 80,897 $ 67,754 Comprehensive income Net income $ 38,839 $ 30,970 $ 80,897 $ 67,754 Other comprehensive income (loss): Unrealized gains and losses on investments: Net change in unrealized gains (losses) on investments, net of tax 11,005 ( 1,451 ) 23,260 ( 6,869 ) Reclassification adjustment for losses on securities no longer held, net of tax ( 3,624 ) ( 406 ) ( 3,806 ) ( 1,314 ) Total other comprehensive income (loss) 7,381 ( 1,857 ) 19,454 ( 8,183 ) Comprehensive income $ 46,220 $ 29,113 $ 100,351 $ 59,571 Per share data: Basic earnings per share $ 0.96 $ 0.79 $ 2.01 $ 1.73 Diluted earnings per share $ 0.93 $ 0.75 $ 1.94 $ 1.65 Weighted-average common shares outstanding Basic 40,445,391 39,177,457 40,322,051 39,142,825 Diluted 41,871,496 41,168,082 41,771,215 41,110,384 The accompanying notes are an integral part of the consolidated financial statements. 4 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) Three months ended June 30, ($ in thousands, except share amounts) 2025 2024 Common shares: Balance at beginning of period 40,402,879 39,995,027 Issuance of shares 83,777 101,105 Balance at June 30 40,486,656 40,096,132 Common stock: Balance at beginning of period $ 404 $ 400 Issuance of common stock 1 1 Balance at June 30 $ 405 $ 401 Additional paid-in capital: Balance at beginning of period $ 721,186 $ 711,309 Issuance of common stock 2,973 2,233 Balance at June 30 $ 724,159 $ 713,542 Stock notes receivable: Balance at beginning of period $ — $ ( 5,234 ) Employee equity transactions — 1 Balance at June 30 $ — $ ( 5,233 ) Accumulated other comprehensive loss: Balance at beginning of period $ ( 10,047 ) $ ( 29,279 ) Other comprehensive income (loss), net of tax 7,381 ( 1,857 ) Balance at June 30 $ ( 2,666 ) $ ( 31,136 ) Retained earnings: Balance at beginning of period $ 139,178 $ 15,076 Net income 38,839 30,970 Balance at June 30 $ 178,017 $ 46,046 Total stockholders’ equity $ 899,915 $ 723,620 The accompanying notes are an integral part of the consolidated financial statements. 5 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) Six months ended June 30, ($ in thousands, except share amounts) 2025 2024 Common shares: Balance at beginning of year 40,127,908 39,863,756 Issuance of shares 358,748 232,376 Balance at June 30 40,486,656 40,096,132 Common stock: Balance at beginning of year $ 401 $ 399 Issuance of common stock 4 2 Balance at June 30 $ 405 $ 401 Additional paid-in capital: Balance at beginning of year $ 718,598 $ 710,855 Issuance of common stock 5,561 2,687 Balance at June 30 $ 724,159 $ 713,542 Stock notes receivable: Balance at beginning of year $ — $ ( 5,562 ) Employee equity transactions — 329 Balance at June 30 $ — $ ( 5,233 ) Accumulated other comprehensive loss: Balance at beginning of year $ ( 22,120 ) $ ( 22,953 ) Other comprehensive income (loss), net of tax 19,454 ( 8,183 ) Balance at June 30 $ ( 2,666 ) $ ( 31,136 ) Retained earnings (accumulated deficit): Balance at beginning of year $ 97,120 $ ( 21,708 ) Net income 80,897 67,754 Balance at June 30 $ 178,017 $ 46,046 Total stockholders’ equity $ 899,915 $ 723,620 The accompanying notes are an integral part of the consolidated financial statements. 6 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six months ended June 30, ($ in thousands) 2025 2024 Cash flows from operating activities Net income $ 80,897 $ 67,754 Adjustments to reconcile net income to net cash provided by operating activities 104,043 47,466 Net cash provided by operating activities 184,940 115,220 Cash flows from investing activities: Purchase of fixed maturity securities, available-for-sale ( 405,609 ) ( 266,800 ) Purchase of equity securities ( 12,626 ) ( 6,293 ) Purchase of equity method investments ( 2,839 ) ( 1,100 ) Purchase of intangible assets and goodwill ( 2,000 ) — Investment in direct and indirect loans 13,435 14,224 Purchase of property and equipment ( 1,287 ) ( 2,769 ) Proceeds from the sales of fixed maturity securities, available-for-sale 25,524 17,917 Maturities, calls, transfers and paydowns of fixed maturity securities, available-for-sale 60,628 56,607 Maturities, calls and paydowns of fixed maturity securities held-to-maturity 3,459 4,135 Proceeds from the sales of equity securities 67,495 17,760 Sales of and distributions from equity method and other long-term investments 8,730 7,951 Change in short-term investments 60,606 55,185 Change in receivable/payable for securities — 34 Cash provided by deposit accounting 15,183 5,325 Net cash used in investment activities ( 169,301 ) ( 97,824 ) Cash flows from financing activities: Repayment of stock notes receivable — 329 Proceeds from long term borrowings — 50,000 Payments on long term borrowings and trust preferred — ( 59,794 ) Net cash used in financing activities — ( 9,465 ) Net increase in cash and cash equivalents and restricted cash 15,639 7,931 Cash and cash equivalents and restricted cash at beginning of period (1) 157,525 100,336 Cash and cash equivalents and restricted cash at end of period (1) $ 173,164 $ 108,267 Supplemental disclosure of cash flow information: Cash paid for interest $ 3,234 $ 4,835 Cash paid for federal income taxes $ 20,330 $ 13,980 (1) The sum of cash and cash equivalents and restricted cash from the consolidated balance sheets The accompanying notes are an integral part of the consolidated financial statements. 7 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Basis of Presentation The unaudited condensed consolidated financial statements of Skyward Specialty Insurance Group, Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America for interim financial reporting and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all the disclosures required by GAAP for complete consolidated financial statements. Readers are urged to review the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for a more complete description of the Company’s business and accounting policies. In the opinion of management, all adjustments necessary for a fair statement of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results of operations for the full year. The consolidated balance sheet as of December 31, 2024 was derived from the Company’s audited annual consolidated financial statements. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these estimates. Updates to Significant Accounting Policies The following accounting policy has been updated to align with reporting of peer companies. Investments Available-for-sale The allowance for credit losses is limited to the amount by which fair value is below amortized cost. Prior to June 30, 2025, changes in the allowance for credit losses were recognized in net investment income on the consolidated statements of operations. As of June 30, 2025, changes in the allowance for credit losses are recognized in net investment gains (losses). Prior periods have been updated to conform to the current period presentation. Credit losses that are limited by the fair value of the security are recognized in stockholders’ equity, net of taxes, as a component of accumulated other comprehensive (loss) income. Unrealized losses that are not credit-related continue to be recognized in stockholders’ equity, net of taxes, as a component of accumulated other comprehensive (loss) income. Held to maturity Investments in fixed maturity securities that are held-to-maturity are carried at amortized cost net of an allowance for credit losses. The allowance for credit losses represents the current estimate of expected credit losses. The Company develops a historical loss rate from Moody’s multi-year cumulative loss rates for asset backed securities. The historical loss rate is adjusted for current conditions and reasonable and supportable forecasts. Prior to June 30, 2025, changes in the allowance for credit losses were recognized in net investment income on the consolidated statements of operations. As of June 30, 2025, changes in the allowance for credit losses are recognized in net investment gains (losses). Prior periods have been updated to conform to the current period presentation. 8 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2. Investments The following tables set forth the amortized cost and the fair value by investment category at June 30, 2025 and December 31, 2024: ($ in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value June 30, 2025 Fixed maturity securities, available-for-sale: U.S. government securities $ 46,036 $ 285 $ ( 56 ) $ — $ 46,265 Corporate securities and miscellaneous 552,258 10,453 ( 7,063 ) ( 6,150 ) 549,498 Municipal securities 102,246 811 ( 2,903 ) — 100,154 Residential mortgage-backed securities 474,693 4,682 ( 12,688 ) — 466,687 Commercial mortgage-backed securities 82,647 895 ( 753 ) — 82,789 Other asset-backed securities 381,093 4,247 ( 1,269 ) — 384,071 Total fixed maturity securities, available-for-sale $ 1,638,973 $ 21,373 $ ( 24,732 ) $ ( 6,150 ) $ 1,629,464 Fixed maturity securities, held-to-maturity: Other asset-backed securities $ 35,521 $ 1,856 $ ( 11 ) $ ( 268 ) $ 37,098 Total fixed maturity securities, held-to-maturity $ 35,521 $ 1,856 $ ( 11 ) $ ( 268 ) $ 37,098 ($ in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Loss Allowance for Credit Losses Fair Value December 31, 2024 Fixed maturity securities, available-for-sale: U.S. government securities $ 26,577 $ 35 $ ( 126 ) $ — $ 26,486 Corporate securities and miscellaneous 433,298 5,618 ( 13,288 ) — 425,628 Municipal securities 89,966 116 ( 5,366 ) — 84,716 Residential mortgage-backed securities 408,585 1,875 ( 16,627 ) — 393,833 Commercial mortgage-backed securities 70,262 545 ( 1,443 ) — 69,364 Other asset-backed securities 291,578 2,447 ( 1,834 ) — 292,191 Total fixed maturity securities, available-for-sale $ 1,320,266 $ 10,636 $ ( 38,684 ) $ — $ 1,292,218 Fixed maturity securities, held-to-maturity: Other asset-backed securities $ 39,396 $ — $ ( 436 ) $ ( 243 ) $ 38,717 Total fixed maturity securities, held-to-maturity $ 39,396 $ — $ ( 436 ) $ ( 243 ) $ 38,717 9 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2. Investments (continued) The following table sets forth the amortized cost and fair value of available-for-sale fixed maturity securities by contractual maturity at June 30, 2025: ($ in thousands) Amortized Cost Fair Value Due in less than one year $ 40,340 $ 38,986 Due after one year through five years 358,402 354,861 Due after five years through ten years 250,982 252,563 Due after ten years 50,816 49,507 Mortgage-backed securities 557,340 549,476 Other asset-backed securities 381,093 384,071 Total $ 1,638,973 $ 1,629,464 Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Also, changing interest rates, tax considerations or other factors may result in portfolio sales prior to maturity. The Company’s fixed maturity securities, held-to-maturity, at June 30, 2025 consisted entirely of asset backed securities that were not due at a single maturity date. At June 30, 2025, the Company had U.S. government agencies mortgage-backed fixed maturity securities, with a carrying value of approximately $ 65.7 million pledged as collateral for a loan (the “FHLB Loan”) from the Federal Home Loan Bank of Dallas (“FHLB”) pursuant to an Advances and Security Agreement between the Company and FHLB (the “Advances and Security Agreement”). In accordance with the terms of the FHLB Loan, the Company retains all rights regarding these pledged securities. At June 30, 2025, the Company had assets with fair values of approximately $ 51.5 million pledged as collateral for the performance obligations under reinsurance agreements. In accordance with the terms of the trust agreements, the Company retains all rights regarding these securities, of which $ 43.7 million are residential mortgage-backed securities, $ 5.6 million of cash and cash equivalents and other assets and $ 2.2 million of short-term investments. 10 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2. Investments (continued) The following tables set forth the gross unrealized losses and the corresponding fair values of investments, aggregated by length of time that individual securities had been in a continuous unrealized loss position as of June 30, 2025 and 2024: Less than 12 Months 12 Months or More Total ($ in thousands) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses June 30, 2025 Fixed maturity securities, available-for-sale: U.S. government securities $ 14,389 $ ( 6 ) $ 2,033 $ ( 50 ) $ 16,422 $ ( 56 ) Corporate securities and miscellaneous 62,592 ( 652 ) 69,641 ( 6,411 ) 132,233 ( 7,063 ) Municipal securities 31,198 ( 792 ) 20,021 ( 2,111 ) 51,219 ( 2,903 ) Residential mortgage-backed securities 113,437 ( 1,263 ) 80,795 ( 11,425 ) 194,232 ( 12,688 ) Commercial mortgage-backed securities 5,142 ( 43 ) 10,562 ( 710 ) 15,704 ( 753 ) Other asset-backed securities 62,756 ( 488 ) 27,845 ( 781 ) 90,601 ( 1,269 ) Total fixed maturity securities, available-for-sale 289,514 ( 3,244 ) 210,897 ( 21,488 ) 500,411 ( 24,732 ) Fixed maturity securities, held-to-maturity: Other asset-backed securities 37,098 ( 11 ) 37,098 ( 11 ) Total fixed maturity securities, held-to-maturity: 37,098 ( 11 ) — — 37,098 ( 11 ) Total $ 326,612 $ ( 3,255 ) $ 210,897 $ ( 21,488 ) $ 537,509 $ ( 24,743 ) 11 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2. Investments (continued) Less than 12 Months 12 Months or More Total ($ in thousands) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses December 31, 2024 Fixed maturity securities, available-for-sale: U.S. government securities $ 15,938 $ ( 34 ) $ 2,297 $ ( 92 ) $ 18,235 $ ( 126 ) Corporate securities and miscellaneous 136,888 ( 2,060 ) 81,232 ( 11,228 ) 218,120 ( 13,288 ) Municipal securities 41,930 ( 1,046 ) 27,687 ( 4,320 ) 69,617 ( 5,366 ) Residential mortgage-backed securities 201,407 ( 3,366 ) 82,496 ( 13,261 ) 283,903 ( 16,627 ) Commercial mortgage-backed securities 9,411 ( 126 ) 13,178 ( 1,317 ) 22,589 ( 1,443 ) Other asset-backed securities 75,119 ( 721 ) 29,851 ( 1,113 ) 104,970 ( 1,834 ) Total fixed maturity securities, available-for-sale 480,693 ( 7,353 ) 236,741 ( 31,331 ) 717,434 ( 38,684 ) Fixed maturity securities, held-to-maturity: Other asset-backed securities 2,144 ( 2 ) 36,573 ( 434 ) 38,717 ( 436 ) Total fixed maturity securities, held-to-maturity: 2,144 ( 2 ) 36,573 ( 434 ) 38,717 ( 436 ) Total $ 482,837 $ ( 7,355 ) $ 273,314 $ ( 31,765 ) $ 756,151 $ ( 39,120 ) The Company regularly monitors its available-for-sale fixed maturity securities that have fair values less than cost or amortized cost for signs of impairment, an assessment that requires significant management judgment regarding the evidence known. Such judgments could change in the future as more information becomes known, which could negatively impact the amounts reported. Among the factors that management considers for fixed maturity securities are the financial condition of the issuer including receipt of scheduled principal and interest cash flows, and intent to sell, including if it is more likely than not that the Company will be required to sell the investments before recovery. As of June 30, 2025, the Company had 613 lots of fixed maturity securities in an unrealized loss position. The Company does not have an intent to sell these securities and it is not more likely than not that the Company will be required to sell these securities before maturity or recovery of its cost basis. The Company reviewed its investments at June 30, 2025 and determined that for two available-for-sale securities in the “corporate securities and miscellaneous” category, credit impairments existed, based on new recovery analysis that showed deteriorating conditions raising credit concerns. Other than the securities discussed previously, the Company determined that no other credit impairment existed in the gross unrealized holding losses, due to the reasons discussed below: • U.S. government securities and municipal securities : These securities were issued by the U.S. Treasury Department, Federal government-sponsored entities or by state and local governments. The decline in fair values was attributable to changes in interest rates and not credit quality. The Company does not intend to sell these securities and it is likely that it will not do so before their anticipated recovery. Therefore, the Company does not consider these impaired securities. 12 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2. Investments (continued) • Corporate securities and miscellaneous : Corporations in various industries issued these securities. The decline in fair values was attributable to changes in interest rates and not credit quality. The Company reviewed the issuers of these securities to identify any significant adverse change in financial condition, a change in the quality of credit enhancement (if any), a ratings decrease, or negative outlook assignment from a major credit rating agency, and any failure to make interest or principal payments. After these reviews, the Company determined that the decline in fair values was attributable to changes in interest rates and not credit quality. The Company does not intend to sell these securities and it is likely that it will not do so before their anticipated recovery. Therefore, the Company does not consider these impaired securities. • Residential mortgage-backed securities, commercial mortgage-backed securities, and other asset-backed securities : The decline in fair values was attributable to changes in interest rates and not credit quality. The Company does not intend to sell these securities and it is likely that it will not do so before their anticipated recovery. Therefore, the Company does not consider these impaired securities. The following table sets forth the changes in the allowance for credit losses on available-for-sale securities and held-to-maturity securities during the six months ended June 30, 2025 and 2024: Fixed Maturity Securities, Available-For-Sale Fixed Maturity Securities, Held-to-Maturity Balance at December 31, 2024 $ — $ 243 Current period provision for credit losses — 7 Balance at March 31, 2025 $ — $ 250 Current period provision for credit losses 6,150 18 Balance at June 30, 2025 $ 6,150 $ 268 Fixed Maturity Securities, Held-to-Maturity Balance at December 31, 2023 $ 329 Balance at March 31, 2024 $ 329 Recoveries of amounts previously written off ( 104 ) Balance at June 30, 2024 $ 225 13 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2. Investments (continued) The following table sets forth the components of net investment gains (losses) for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, ($ in thousands) 2025 2024 2025 2024 Gross realized gains Fixed maturity securities, available-for sale $ 452 $ 331 $ 905 $ 830 Equity securities 15,441 493 17,186 1,574 Other 596 104 600 122 Total 16,489 928 18,691 2,526 Gross realized losses Fixed maturity securities, available-for sale ( 8,477 ) ( 466 ) ( 8,597 ) ( 860 ) Equity securities ( 1,577 ) ( 417 ) ( 2,255 ) ( 2,291 ) Other ( 49 ) ( 6 ) ( 110 ) ( 24 ) Total ( 10,103 ) ( 889 ) ( 10,962 ) ( 3,175 ) Net unrealized gains (losses) on investments Equity securities ( 9,429 ) ( 730 ) ( 8,349 ) 7,290 Mortgage loans 330 ( 1,030 ) 264 ( 59 ) Other 5,918 — 10,395 — Net investment gains (losses) $ 3,205 $ ( 1,721 ) $ 10,039 $ 6,582 The following table sets forth the proceeds from sales of available-for-sale fixed maturity securities and equity securities for the six months ended June 30, 2025 and 2024: Six months ended June 30, ($ in thousands) 2025 2024 Fixed maturity securities, available-for sale $ 25,524 $ 17,917 Equity securities 67,495 17,760 The following table sets forth the components of net investment income for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, ($ in thousands) 2025 2024 2025 2024 Income: Fixed maturity securities, available-for sale $ 18,453 $ 13,407 $ 35,741 $ 25,638 Fixed maturity securities, held-to-maturity ( 822 ) 1,126 — 2,252 Equity securities 492 751 1,109 1,378 Equity method investments ( 898 ) 2,642 ( 2,886 ) 3,740 Mortgage loans 270 1,588 931 3,007 Indirect loans ( 4,249 ) 221 ( 4,990 ) ( 1,473 ) Short-term investments and cash 3,707 3,421 6,899 7,661 Other 794 655 1,771 1,524 Total investment income 17,747 23,811 38,575 43,727 Investment expenses 842 ( 1,777 ) ( 648 ) ( 3,396 ) Net investment income $ 18,589 $ 22,034 $ 37,927 $ 40,331 14 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2. Investments (continued) The following table sets forth the change in net unrealized gains (losses) on the Company’s investment portfolio, net of deferred income taxes, included in other comprehensive loss for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, ($ in thousands) 2025 2024 2025 2024 Fixed maturity securities $ 9,403 $ ( 2,370 ) $ 24,687 $ ( 10,359 ) Deferred income taxes ( 2,022 ) 513 ( 5,233 ) 2,176 Total $ 7,381 $ ( 1,857 ) $ 19,454 $ ( 8,183 ) 3. Fair Value Measurements The Company’s financial instruments include assets and liabilities carried at fair value, as well as assets and liabilities carried at cost or amortized cost but disclosed at fair value in its consolidated financial statements. In determining fair value, the market approach is generally applied, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities. The Company uses data primarily provided by third-party investment managers or pricing vendors to determine the fair value of its investments. Periodic analyses are performed on prices received from third parties to determine whether the prices are reasonable estimates of fair value. The analyses include a review of month-to-month price fluctuations and, as needed, a comparison of pricing services’ valuations to other pricing services’ valuations for the identical security. The Company classifies its financial instruments into the following three-level hierarchy: Level 1 - Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. Level 2 - Inputs are other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date. Level 3 - Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The following methods and assumptions were used in estimating the fair value disclosures for financial instruments in the accompanying consolidated financial statements and in these notes: U.S. government securities, mutual funds and common stock The Company uses unadjusted quoted prices for identical instruments in an active exchange to measure fair value which represent Level 1 inputs. Preferred stocks, municipal securities, corporate securities and miscellaneous The Company uses a pricing model that utilizes market-based inputs such as trades in an illiquid market for a particular security or trades in active markets for securities with similar characteristics. The model considers other inputs such as benchmark yields, issuer spreads, security terms and conditions, and other market data. These represent Level 2 fair value inputs. Commercial mortgage-backed securities, residential mortgage-backed securities and other asset-backed securities The Company uses a pricing model that utilizes market-based inputs that may include dealer quotes, market spreads, and yield curves. It may evaluate individual tranches in a security by determining cash flows using the security’s terms and conditions, collateral performance, credit information benchmark yields and estimated prepayments. These represent Level 2 fair value inputs. 15 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3. Fair Value Measurements (continued) Fixed maturity securities, available for sale and equity securities classified as Level 3 The Company has corporate securities and miscellaneous, other asset-backed securities that are managed by an independent asset manager and priced by an independent pricing provider. The provider estimates the value of the securities using the discount net present value of cash flows method using an unobservable discount rate. The discount rate spread represents the risk associated with future cash flows, including inflation, opportunity cost and the time value of money. This rate represents Level 3 fair value inputs. The following table sets forth the range of the discount rate as of June 30, 2025 and December 31, 2024: June 30, 2025 December 31, 2024 High 10.54 % 8.00 % Low 5.16 % 5.70 % Weighted average 6.28 % 6.60 % Mortgage loans Mortgage loans have variable interest rates and are collateralized by real property. The Company determines fair value of mortgage loans using the income approach utilizing inputs that are observable and unobservable (Level 3). The unobservable input consists of the spread applied to a prime rate used to discount cash flows. The spread represents the incremental cost of capital based on the borrower’s ability to make future payments and the value of the collateral relative to the loan balance and is subject to judgement and uncertainty. The following table sets forth the range and weighted average, weighted by relative fair value, of the spread as of June 30, 2025 and December 31, 2024: June 30, 2025 December 31, 2024 High 9.34 % 10.00 % Low 6.61 % 7.00 % Weighted average 8.40 % 7.93 % Investment in RedBird Capital Partners Included in other long-term investments is an investment in a limited partnership with RedBird Capital Partners, which invests in Bishop Street Underwriters, LLC (“Bishop Street”), a managing general agent (MGA). The investment had a fair value of $ 41.4 million at June 30, 2025, which was determined using the net asset value. The Company employs procedures to assess the reasonableness of the fair value of the investment including obtaining and reviewing the audited financial statements. The unfunded commitment related to the investment was $ 21.5 million at June 30, 2025. The Company may sell its interest in the investment with the appropriate prior written notice and approval by the general partner. In accordance with Accounting Standard Codification 820-10, this investment is measured at fair value using the net asset value per share practical expedient and has not been classified in the fair value hierarchy. 16 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3. Fair Value Measurements (continued) The following tables set forth the Company’s investments within the fair value hierarchy at June 30, 2025 and December 31, 2024: June 30, 2025 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed maturity securities, available-for-sale: U.S. government securities $ 46,265 $ — $ — $ 46,265 Corporate securities and miscellaneous — 463,822 85,676 549,498 Municipal securities — 100,154 — 100,154 Residential mortgage-backed securities — 466,687 — 466,687 Commercial mortgage-backed securities — 82,789 — 82,789 Other asset-backed securities — 374,879 9,192 384,071 Total fixed maturity securities, available-for-sale 46,265 1,488,331 94,868 1,629,464 Fixed maturity securities, held-to-maturity: Other asset-backed securities — — 37,098 37,098 Total fixed maturity securities, held-to-maturity — — 37,098 37,098 Equity securities: Common stocks 33,593 — — 33,593 Preferred stocks — 1,160 — 1,160 Mutual funds 23,248 — — 23,248 Total equity securities 56,841 1,160 — 58,001 Mortgage loans — — 10,168 10,168 Short-term investments 214,338 — — 214,338 Total $ 317,444 $ 1,489,491 $ 142,134 $ 1,949,069 17 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3. Fair Value Measurements (continued) December 31, 2024 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed maturity securities, available-for-sale: U.S. government securities $ 26,486 $ — $ — $ 26,486 Corporate securities and miscellaneous — 354,815 70,813 425,628 Municipal securities — 84,716 — 84,716 Residential mortgage-backed securities — 393,833 — 393,833 Commercial mortgage-backed securities — 69,364 — 69,364 Other asset-backed securities — 285,084 7,107 292,191 Total fixed maturity securities, available-for-sale 26,486 1,187,812 77,920 1,292,218 Fixed maturity securities, held-to-maturity: Other asset-backed securities — — 38,717 38,717 Total fixed maturity securities, held-to-maturity: — — 38,717 38,717 Equity securities: Common stocks 64,251 — — 64,251 Preferred stocks — 1,164 — 1,164 Mutual funds 40,839 — — 40,839 Total equity securities 105,090 1,164 — 106,254 Mortgage loans — — 26,490 26,490 Short-term investments 274,929 — — 274,929 Total $ 406,505 $ 1,188,976 $ 143,127 $ 1,738,608 18 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3. Fair Value Measurements (continued) The following tables set forth the changes in the fair value of instruments carried at fair value with a Level 3 measurement during the six months ended June 30, 2025 and 2024: ($ in thousands) Fixed Maturity Securities, Available-For-Sale Mortgage Loans Balance at December 31, 2024 $ 77,920 $ 26,490 Total losses for the period recognized in net investment gains (losses) ( 110 ) ( 66 ) Issuances — 5 Settlements — ( 10,417 ) Purchases 5,164 — Sales/Disposals ( 199 ) — Total unrealized gains for the period recognized in accumulated comprehensive income (loss) 682 — Balance at March 31, 2025 $ 83,457 $ 16,012 Total losses for the period recognized in net investment gains (losses) attributable to the change in unrealized gains or losses relating to assets held as of period end $ — $ ( 84 ) Total losses for the period recognized in net investment (losses) gains ( 4,081 ) 330 Issuances — 8 Settlements — ( 6,182 ) Transfers into Level 3 6,144 — Purchases 8,838 Sales/Disposals ( 237 ) — Total unrealized gains for the period recognized in accumulated comprehensive income (loss) 747 — Balance at June 30, 2025 $ 94,868 $ 10,168 Total gains for the period recognized in net investment gains (losses) attributable to the change in unrealized gains or losses relating to assets held as of period end $ — $ 92 ($ in thousands) Mortgage Loans Balance at December 31, 2023 $ 50,070 Total gains for the period recognized in net investment gains (losses) 971 Issuances 187 Settlements ( 6,919 ) Balance at March 31, 2024 $ 44,309 Total gains for the period recognized in net investment gains (losses) attributable to the change in unrealized gains or losses relating to assets held as of period end $ 952 Total losses for the period recognized in net investment gains (losses) ( 1,030 ) Issuances 449 Settlements ( 58 ) Balance at June 30, 2024 $ 43,670 Total losses for the period recognized in net investment gains (losses) attributable to the change in unrealized gains or losses relating to assets held as of period end $ ( 1,031 ) The transfers into Level 3 during the three and six months ended June 30, 2025 were the result of securities that began receiving valuations from asset managers that utilized unobservable inputs at the end of the period. 19 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3. Fair Value Measurements (continued) The Company measures certain assets, including investments in indirect loans and loan collateral, equity method investments and other invested assets, at fair value on a nonrecurring basis only when they are deemed to be impaired. In addition to the preceding disclosures on assets and liabilities recorded at fair value in the consolidated balance sheets, the Company is also required to disclose the fair values of certain other financial instruments for which it is practicable to estimate fair value. Estimated fair value amounts, defined as the quoted market price of a financial instrument, have been determined using available market information and other appropriate valuation methodologies. However, considerable judgements are required in developing the estimates of fair value where quoted market prices are not available. Accordingly, these estimates are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions or estimating methodologies may have an effect on the estimated fair value amounts. The following methods and assumptions were used in estimating the fair value disclosures of other financial instruments: Fixed maturity securities, held-to-maturity: Fixed maturity securities, held-to-maturity consists of senior and junior notes with target rates of return. As of June 30, 2025, the Company determined the fair value of these instruments using the income approach utilizing inputs that are unobservable (Level 3). Notes payable: The carrying value approximates the estimated fair value for notes payable as the notes payable accrue interest at current market rates plus a spread. The Company determines fair value using the income approach utilizing inputs that are observable (Level 2). Subordinated debt: Subordinated debt consists of the Unsecured Subordinated Notes, due May 24, 2039 and have a fixed interest rate. The Company determines the fair value of these instruments using the income approach utilizing inputs that are observable (Level 2). The following table sets forth the Company’s carrying and fair values of notes payable and subordinated debt as of June 30, 2025 and December 31, 2024: June 30, 2025 December 31, 2024 ($ in thousands) Carrying Value Fair Value Carrying Value Fair Value Notes payable FHLB Loan $ 57,000 $ 57,411 $ 57,000 $ 56,200 Revolving credit facility 43,000 43,000 43,000 43,000 Notes payable $ 100,000 $ 100,411 $ 100,000 $ 99,200 Subordinated debt Unsecured subordinated notes $ 19,553 $ 20,522 $ 19,536 $ 20,541 Subordinated debt, net of debt issuance costs $ 19,553 $ 20,522 $ 19,536 $ 20,541 Other financial instruments qualify as insurance-related products and are specifically exempted from fair value disclosure requirements. 4. Mortgage Loans The Company has invested in Separately Managed Accounts (“SMA1” and “SMA2”). As of June 30, 2025 and December 31, 2024, the Company held direct investments in mortgage loans from various creditors through SMA1 and SMA2. The Company’s mortgage loan portfolios are primarily senior loans on real estate across the U.S. The loans earn interest at a fixed spread above a prime rate and mature in approximately 2 to 4 years from loan origination. The principal amounts of the loans are approximately 64 % of the property’s appraised value at the time the loans were made. 20 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4. Mortgage Loans (continued) The following table sets forth the carrying value of the Company’s mortgage loans as of June 30, 2025 and December 31, 2024: ($ in thousands) June 30, 2025 December 31, 2024 Commercial $ 3,496 $ 8,474 Retail — 10,032 Hospitality 6,672 7,984 $ 10,168 $ 26,490 The following table sets forth the Company’s gross investment income for mortgage loans for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, ($ in thousands) 2025 2024 2025 2024 Commercial $ 109 $ 850 $ 217 $ 1,309 Retail — 470 304 960 Hospitality 161 268 410 738 $ 270 $ 1,588 $ 931 $ 3,007 The uncollectible amounts on loans, on an individual loan basis, are determined based upon consultations and advice from the Company’s specialized investment manager and consideration of any adverse situations that could affect the borrower’s ability to repay, the estimated value of underlying collateral, and other relevant factors. The Company writes off the uncollectible amount in the period it was determined to be uncollectible. There was no write-off for uncollectible amounts during the three and six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025 and as of December 31, 2024, no mortgage loans were in the process of foreclosure and there were no mortgage loans that were not producing income for the previous 12 months. 5. Equity Method Investments and Other The following table sets forth the carrying value and ownership percentage of the Company’s equity method investments as of June 30, 2025 and December 31, 2024: ($ in thousands) June 30, 2025 December 31, 2024 Carrying Value Ownership % Carrying Value Ownership % Arena Special Opportunities Fund, LP units $ 29,020 14.2 % $ 34,936 15.3 % JVM Funds LLC units 16,055 10.1 % 17,229 10.1 % Hudson Ventures Fund 2 LP units 5,037 2.5 % 4,967 2.5 % RISCOM 3,941 20.0 % 5,013 20.0 % Brewer Lane Ventures Fund II LP units 1,384 2.4 % 1,040 2.4 % Dowling Capital Partners LP units 881 5.0 % 666 5.0 % Arena SOP LP units — 11.3 % 1,474 10.9 % $ 56,318 $ 65,325 21 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 5. Equity Method Investments and Other (continued) The following table sets forth the components of net investment (loss) income from equity method investments for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, ($ in thousands) 2025 2024 2025 2024 RISCOM $ 1,055 $ 389 $ 927 $ 675 Dowling Capital Partners LP units 203 40 216 1,382 Brewer Lane Ventures Fund II LP ( 27 ) ( 24 ) 143 ( 56 ) Hudson Ventures Fund II LP units 90 210 65 158 JVM Funds LLC ( 304 ) ( 535 ) ( 515 ) ( 1,019 ) Arena SOP LP units ( 218 ) 390 ( 1,474 ) 679 Arena Special Opportunities Fund, LP units ( 1,697 ) 2,172 ( 2,248 ) 1,921 $ ( 898 ) $ 2,642 $ ( 2,886 ) $ 3,740 The following table sets forth the unfunded commitment of equity method investments as of June 30, 2025 and December 31, 2024: ($ in thousands) June 30, 2025 December 31, 2024 Brewer Lane Ventures Fund II LP units $ 3,570 $ 4,077 Dowling Capital Partners LP units 386 386 Hudson Ventures Fund 2 LP units 266 397 Red Bird Capital Partners LP units 21,506 24,400 $ 25,728 $ 29,260 The difference between the cost of an investment and its proportionate share of the underlying equity in net assets is allocated to the various assets and liabilities of the equity method investment. The Company amortizes the difference in net assets over the same useful life of a similar asset as the underlying equity method investment. For investment in RISCOM, a similar asset would be agent relationships. The Company amortizes this difference over a 15 -year useful life. The following table sets forth the Company’s recorded investment in RISCOM compared to its share of underlying equity as of June 30, 2025 and December 31, 2024: ($ in thousands) June 30, 2025 December 31, 2024 Investment in RISCOM: Underlying equity $ 2,805 $ 3,756 Difference 1,136 1,258 Recorded investment balance $ 3,941 $ 5,013 The following table sets forth the Company’s recorded investment in JVM Funds LLC compared to its share of underlying equity as of June 30, 2025 and December 31, 2024: ($ in thousands) June 30, 2025 December 31, 2024 Investment in JVM Funds LLC: Underlying equity $ 15,526 $ 16,624 Difference 529 605 Recorded investment balance $ 16,055 $ 17,229 22 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 5. Equity Method Investments and Other (continued) Investment in Indirect Loans and Loan Collateral As of June 30, 2025 and December 31, 2024, the Company held indirect investments in collateralized loans and loan collateral through SMA1 and SMA2. The carrying value of the SMA1 and SMA2 as of June 30, 2025 and December 31, 2024 were as follows: ($ in thousands) June 30, 2025 December 31, 2024 SMA1 $ 17,495 $ 20,296 SMA2 14,991 12,973 Investment in indirect loans and loan collateral $ 32,486 $ 33,269 6. Segment The Company has one reportable segment through which it offers a broad array of commercial property and casualty products and solutions on a non-admitted (or E&S) and admitted basis, predominantly in the United States. The segment is made up of nine distinct underwriting divisions, or “continuing business,” and has dedicated underwriting leadership supported by high-quality technical staff with deep experience in their respective niches. The Company defines its segment on the basis of the way in which internally reported financial information is regularly reviewed by the Chief Operating Decision Maker (“CODM”) to analyze financial performance, make decisions and allocate resources. The Company’s CODM is the chief executive officer. The accounting policies of the segment are the same as those described in Note 1 “Summary of Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The CODM assesses performance for the segment and decides how to allocate resources based on gross written premiums by net underwriting division, underwriting income, and income before income taxes that also is reported on the condensed consolidated statements of operations as consolidated income before income taxes. The measure of segment assets is reported on the balance sheet as total consolidated assets. Gross written premiums by underwriting division, net underwriting income, and consolidated net income are used to monitor budget versus actual results. The chief operating decision maker also uses net underwriting income, annualized return on equity and growth in book value per share in competitive analysis by benchmarking to the Company’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation. 23 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 6. Segment (continued) The following table presents gross written premiums by underwriting division for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, ($ in thousands) 2025 2024 2025 2024 Accident & Health $ 60,489 $ 44,088 $ 123,658 $ 84,989 Agriculture and Credit (Re)insurance 71,573 36,592 159,420 79,913 Captives 76,961 62,099 145,362 130,507 Construction & Energy Solutions 73,613 78,214 149,184 152,436 Global Property 83,992 88,231 130,678 145,543 Professional Lines 38,147 38,106 79,313 80,345 Specialty Programs 85,955 59,644 148,630 111,822 Surety 40,737 37,642 78,535 71,484 Transactional E&S 53,461 51,609 105,467 97,841 Total continuing business 584,928 496,225 1,120,247 954,880 Exited business ( 14 ) 18 ( 7 ) ( 17 ) Total gross written premiums $ 584,914 $ 496,243 $ 1,120,240 $ 954,863 24 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 6. Segment (continued) The following table presents information about reported segment net underwriting income, significant segment expenses and a reconciliation of net underwriting income to net income for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, ($ in thousands) 2025 2024 2025 2024 Underwriting income Revenues: Net earned premiums $ 295,542 $ 257,583 $ 595,908 $ 493,925 Commission and fee income 2,560 2,053 4,536 4,079 Total underwriting revenues 298,102 259,636 600,444 498,004 Expenses: Losses and LAE 181,262 159,054 368,571 302,968 Amortization of policy acquisition costs 44,636 35,931 89,126 67,908 Other operating and general expenses 40,960 40,748 83,021 78,545 Total underwriting expenses 266,858 235,733 540,718 449,421 Net underwriting income $ 31,244 $ 23,903 $ 59,726 $ 48,583 Reconciliation of net underwriting income to net income: Net underwriting income $ 31,244 $ 23,903 $ 59,726 $ 48,583 Add: Net investment income 18,589 22,034 37,927 40,331 Net investment gains 3,205 ( 1,721 ) 10,039 6,582 Other income 7 ( 7 ) 20 ( 7 ) Less: Interest expense 1,876 2,449 3,710 5,176 Amortization expense 372 360 709 748 Other expenses 1,002 1,045 2,063 2,233 Income before income taxes 49,795 40,355 101,230 87,332 Income tax expense 10,956 9,385 20,333 19,578 Net income $ 38,839 $ 30,970 $ 80,897 $ 67,754 The following table presents annualized return on equity for the three and six months ended June 30, 2025 and 2024 and book value per share as of June 30, 2025 and December 31, 2024: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Annualized return on equity 17.7 % 17.5 % 19.1 % 19.6 % June 30, 2025 December 31, 2024 Book value per share $ 22.23 $ 19.79 25 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 7. Income Taxes The following table sets forth the Company’s income tax expense and effective tax rates for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, ($ in thousands) 2025 2024 2025 2024 Income tax expense $ 10,956 $ 9,385 $ 20,333 $ 19,578 Effective tax rate 22.0 % 23.3 % 20.1 % 22.4 % The effective tax rate will differ from the statutory rate of 21 percent due to permanent differences for disallowed expenses for tax and beneficial adjustments for tax-exempt income, dividends-received deduction, non-deductible expenses and discrete items. The effective tax rate for the three and six months ended June 30, 2025 decreased 1.3 % and 2.3 %, respectively, when compared to the same 2024 periods. The effective tax rate for the six months ended June 30, 2025 was impacted by certain discrete tax items, primarily tax benefits from stock-based compensation, which reduced the effective tax rate by 1.7 %. The Company paid federal income taxes of $ 20.3 million during the three and six months ended June 30, 2025 and $ 14.0 million during the three and six months ended June 30, 2024. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing its impact on the consolidated financial statements. 8. Losses and Loss Adjustment Expenses The following table sets forth the reconciliation of unpaid losses and loss adjustment expenses (“LAE”) as reported in the condensed consolidated balance sheets as of and for the six months ended June 30, 2025 and 2024: Six months ended June 30, ($ in thousands) 2025 2024 Reserves for losses and LAE, beginning of period $ 1,782,383 $ 1,314,501 Less: reinsurance recoverable on unpaid claims, beginning of period ( 670,846 ) ( 455,484 ) Reserves for losses and LAE, beginning of period, net of reinsurance 1,111,537 859,017 Incurred, net of reinsurance, related to: Current period 368,571 303,450 Prior years — — Total incurred, net of reinsurance 368,571 303,450 Paid, net of reinsurance, related to: Current period 42,153 39,202 Prior years 230,232 158,857 Total paid 272,385 198,059 Net reserves for losses and LAE, end of period 1,207,723 964,408 Plus: reinsurance recoverable on unpaid claims, end of period 711,030 505,698 Reserves for losses and LAE, end of period $ 1,918,753 $ 1,470,106 26 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 9. Commission and Fee Income Skyward Underwriters Agency, Inc. (“SUA”), a subsidiary of the Company, is a managing general insurance agent and reinsurance broker for property and casualty and accident and health risks in specialty niche markets. Commission and fee income is primarily generated from SUA for the placement of insurance policies on either a third-party insurance or reinsurance company. The following table sets forth the Company’s disaggregated revenues from contracts with customers for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, ($ in thousands) 2025 2024 2025 2024 SUA commission revenue $ 1,410 $ 699 $ 2,275 $ 1,689 SUA fee income 1,143 564 2,772 1,410 Other 7 790 ( 511 ) 980 Total commission and fee income $ 2,560 $ 2,053 $ 4,536 $ 4,079 The Company’s contract assets from commission and fee income as of June 30, 2025 and December 31, 2024 were $ 2.7 million and $ 1.4 million, respectively. 10. Underwriting, Acquisition and Insurance Expenses The following table sets forth the components of underwriting, acquisition and insurance expenses for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, ($ in thousands) 2025 2024 2025 2024 Amortization of policy acquisition costs $ 44,636 $ 35,931 $ 89,126 $ 67,908 Other operating and general expenses 40,960 40,748 83,021 78,545 Total underwriting, acquisition and insurance expenses $ 85,596 $ 76,679 $ 172,147 $ 146,453 11. Reinsurance Certain premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. The reinsurance agreements provide the Company with increased capacity to write larger risks and maintain its exposure to loss within its capital resources. The Company remains obligated for amounts ceded in the event that the reinsurers do not meet their obligations. The following tables set forth the effects of reinsurance on written and earned premiums and losses and loss adjustment expenses for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, 2025 2024 ($ in thousands) Written Earned Written Earned Direct premiums $ 461,081 $ 392,777 $ 404,443 $ 335,398 Assumed premiums 123,833 86,420 91,800 70,786 Ceded premiums ( 245,701 ) ( 183,655 ) ( 199,114 ) ( 148,601 ) Net premiums $ 339,213 $ 295,542 $ 297,129 $ 257,583 Ceded losses and LAE incurred $ 138,438 $ 106,954 27 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO (UNAUDITED) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 11. Reinsurance (continued) Six months ended June 30, 2025 2024 ($ in thousands) Written Earned Written Earned Direct premiums $ 869,391 $ 778,215 $ 771,239 $ 662,570 Assumed premiums 250,849 165,147 183,624 132,972 Ceded premiums ( 437,756 ) ( 347,454 ) ( 370,634 ) ( 301,617 ) Net premiums $ 682,484 $ 595,908 $ 584,229 $ 493,925 Ceded losses and LAE incurred $ 273,905 $ 192,573 The following table sets forth the components of reinsurance recoverables and ceded unearned premium as of June 30, 2025 and December 31, 2024: ($ in thousands) June 30, 2025 December 31, 2024 Ceded unpaid losses and LAE $ 711,030 $ 670,846 Ceded paid losses and LAE 216,556 166,663 Loss portfolio transfer — 22,662 Allowance for credit losses ( 2,295 ) ( 2,295 ) Reinsurance recoverables $ 925,291 $ 857,876 Ceded unearned premium $ 294,124 $ 203,901 The Company entered into agreements with several of its reinsurers, whereby the reinsurer established funded trust accounts with the Company as the sole beneficiary. These trust accounts provide the Company additional security to collect claim recoverables under reinsurance contracts and the Company does not carry these on the balance sheet because the Company will only have custody over these accounts upon the failure of the reinsurer to pay amounts due. At June 30, 2025, the market value of these accounts was approximately $ 225.7 million. The trust amount will be adjusted periodically, by mutual agreement, based on claim payments and loss reserve recoverables. Certain ceded reinsurance contracts that transfer only significant timing risk and do not transfer sufficient underwriting risk are accounted for using the deposit method of accounting. The Company’s deposit asset at June 30, 2025 and December 31, 2024 was $ 10.7 million and $ 25.9 million, respectively, and was included in other assets on the condensed consolidated balance sheets. 28 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 12. Earnings Per Share The following table sets forth the computation of basic and diluted net earnings per share for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, ($ in thousands, except for share and per share amounts) 2025 2024 2025 2024 Numerator Net income $ 38,839 $ 30,970 $ 80,897 $ 67,754 Denominator Basic weighted-average common shares 40,445,391 39,177,457 40,322,051 39,142,825 Dilutive effect of stock notes — 722,153 — 717,217 Dilutive effect of stock units 893,067 900,119 940,951 900,565 Dilutive effect of options 533,038 368,353 508,213 349,777 Diluted weighted-average common share equivalents 41,871,496 41,168,082 41,771,215 41,110,384 Basic earnings per share $ 0.96 $ 0.79 $ 2.01 $ 1.73 Diluted earnings per share $ 0.93 $ 0.75 $ 1.94 $ 1.65 The following table presents anti-dilutive instruments that were excluded from the calculation of diluted weighted-average common share equivalents during the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Stock units 49,540 21,813 109,359 135,027 Options 868 1,134 834 706 The following table presents common share equivalents of contingently issuable instruments that were excluded from basic earnings per share in the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Common shares — 866,428 — 866,428 Total — 866,428 — 866,428 13. Related Party Transactions RISCOM RISCOM provides the Company with wholesale brokerage services. RISCOM and the Company also have a managing general agency agreement. The Company holds a 20 % ownership interest in RISCOM. Net earned premium and gross commission expense related to these agreements for the three and six months ended June 30, 2025 and 2024 were as follows: Three months ended June 30, Six months ended June 30, ($ in thousands) 2025 2024 2025 2024 Net earned premium $ 29,886 $ 26,161 $ 58,846 $ 52,055 Commissions 7,533 6,347 15,165 13,234 Premiums receivable as of June 30, 2025 and December 31, 2024 were $ 16.4 million and $ 12.6 million, respectively. 29 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 13. Related Party Transactions (continued) Other Advisory and professional services fees and expense reimbursements paid to various affiliated stockholders and directors for the three and six months ended June 30, 2025 were $ 0.1 million and $ 0.3 million, compared to $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2024. See Note 5 for investments involving affiliated companies and additional related party transactions. 14. Commitments and Contingencies Litigation The Company is named as a defendant in various legal actions arising from claims made under insurance policies and contracts. Those actions are considered by the Company in estimating the losses and loss adjustment expense reserves. Also, from time to time, the Company is a defendant in various legal actions that relate to bad faith claims, disputes with third parties or that involve alleged errors and omissions. The Company records accruals for these items to the extent the losses are probable and reasonably estimable. Although the ultimate outcome of these matters cannot be determined at this time, based on present information, the availability of insurance coverage and advice received from outside legal counsel, the Company believes the resolution of any such matters will not, individually or in the aggregate, have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. Indemnification In conjunction with the sale of business assets and subsidiaries, the Company has provided indemnifications to certain buyers. Certain indemnifications cover typical representations and warranties related to the responsibilities to perform under the sales contracts. The amount of potential exposure covered by the indemnifications is difficult to determine because the indemnifications cover a variety of matters, operations and scenarios. Certain of these indemnifications have no time limit. At this time, the Company does not have reason to believe any such significant claims exist. 30 Table of Contents