Skyward Specialty Insurance Group, Inc. 10-Q

Item 1A. Risk Factors In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risks and uncertainties described under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 (our “2024 Form 10-K”), as supplemented by the risk factor captioned “Security breaches, loss of data, cyberattacks, and other information technology failures could disrupt our operations, damage our reputation, and adversely affect our business, operations, and financial results” in our Quarterly Report on Form 10-Q for the period ended March 31, 2025 (our “Q1 10-Q”). Additionally, the following risk factors have been identified. Our pending acquisition of Apollo involves a number of risks, the occurrence of which could adversely affect our business, financial condition, and operating results. On September 2, 2025, we entered into the Apollo SPAs to acquire Apollo. The acquisition involves certain risks, the occurrence of which could adversely affect our business, financial condition, and operating results, including: • delays in completing the acquisition within the expected time period and the risk that the acquisition may not be completed at all; • diversion of management's attention to complete the acquisition and integrate Apollo’s operations thereafter; • disruption to our existing operations and plans or inability to effectively manage our expanded operations after the closing of the acquisition; • potential loss of key Apollo employees, partners or customers, or other adverse effects on existing business relationships with partners or customers; and • our expanded operations may not achieve the growth prospects, synergies or other financial results that we have projected for the acquisition. The agreements that will govern indebtedness to be incurred or assumed in connection with our acquisition of Apollo are expected to contain various covenants that will impose restrictions on that may affect our ability to operate our businesses. The agreements that will govern indebtedness to be incurred or assumed in connection with our acquisition of Apollo, including pursuant to the related debt financing contemplated by a debt commitment letter, are expected to contain various affirmative and negative covenants that will, subject to certain significant exceptions, restrict our ability to, among other things, have liens on our property, incur additional indebtedness, enter into sale and lease-back transactions, make loans, advances or other investments, make non-ordinary course asset sales, declare or pay dividends or make other distributions with respect to equity interests, and/or merge or consolidate with any other person or sell or convey certain of our assets to any one person, among other things. In addition, the debt financing may contain financial maintenance covenants that will require us to maintain a certain leverage ratio and an interest coverage ratio at the end of each fiscal quarter. Our ability to comply with these provisions may be affected by events beyond our control. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations under the applicable definitive documentation or under other debt agreements. The significant additional indebtedness that we will incur in connection with our acquisition of Apollo could adversely affect us, including by decreasing our business flexibility, increasing our interest expense and causing our credit ratings to be downgraded. We will have increased indebtedness following completion of the acquisition in comparison to what we have had on a recent historical basis. This additional indebtedness may reduce the flexibility in our operations. If we cannot service our indebtedness, we may have to take actions such as pursuing sales of additional debt or equity securities, or reducing or delaying expansion efforts, strategic acquisitions, investments, or partnerships. Artificial intelligence is an evolving and rapidly growing technology which may impact our business and operations. The rapid growth and development of artificial intelligence and machine learning may alter the competitive landscape in which we operate. Our employees utilize artificial intelligence for risk selection, pricing and claims handling to aid in their effectiveness and efficiency and we continue to research and implement artificial intelligence-based solutions in an 44 Table of Contents effort to improve our business. Notwithstanding this, our competitive position may be harmed if competitors are able leverage artificial intelligence solutions more quickly or more effectively. In addition, while we do not rely solely on information and analysis production through artificial intelligence in our decision making, if the content, analyses or recommendations that artificial intelligence applications assist in producing are, or are alleged to be, deficient, inaccurate or biased, such as due to limitations in algorithms, insufficient or biased base data or flawed training methodologies, our business, financial condition, results of operations and reputation may be adversely affected. Further, as artificial intelligence technology and products are continuously evolving, and we may incur costs to adopt and deploy technologies that could become obsolete earlier than expected. There can be no assurance that we will realize the desired or anticipated benefits from artificial intelligence. There is also uncertainty in the legal and regulatory landscape for artificial intelligence, which is not fully developed, and any laws, regulations or industry standards adopted in response to the emergence of artificial intelligence may be burdensome, could entail significant costs, and may restrict or impede our ability to successfully develop, adopt and deploy artificial intelligence technologies efficiently and effectively. Furthermore, state insurance regulators could have input on usage of artificial intelligence and machine learning. Any of these factors could adversely impact our business, financial condition and results of operations. There have been no other material changes in our risk factors in the nine months ended September 30, 2025 from those disclosed in our 2024 Form 10-K and our Q1 10-Q. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures None.