What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-02 compared with 2025-03-03 · 434 added, 337 removed, 1337 unchanged (37% of the section changed)

3 unchanged sentences

Opinion on Internal Control Over Financial Reporting

We have audited Skyward Specialty Insurance Group, Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Skyward Specialty Insurance Group, Inc.

(the Company) has not maintained effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

Management has identified a material weakness that existed as of December 31, 2024, related to the ineffective implementation of information technology general controls (“ITGCs”) in the area of user access for systems that support the Company’s financial reporting processes.

Further, the Company’s related process-level IT dependent manual and automated controls that rely upon the affected ITGCs, or information coming from IT systems with affected ITGCs, were also deemed ineffective.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedules listed in the Index at Item 15(a).

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated March 3, 2025, which expressed an unqualified opinion thereon.

We have audited Skyward Specialty Insurance Group, Inc.

and subsidiaries’ internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Skyward Specialty Insurance Group, Inc.

and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedules listed in the Index at Item 15(a) and our report dated March 2, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

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/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2021.

Houston, Texas

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We have audited the accompanying consolidated balance sheets of Skyward Specialty Insurance Group, Inc.

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedules listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements”).

and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 2, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

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How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over management’s process for estimating losses and loss adjustment expense reserves.

This included, among others, the review and approval processes management has in place for the methods and assumptions used in estimating the reserves for losses and loss adjustment expenses.

With the assistance of actuarial specialists, our audit procedures to test the Company’s reserves for unpaid losses and LAE included, among others, an evaluation of the selection of the actuarial methods utilized by management, including comparison with the actuarial methods used in prior periods and those used in the industry.

In addition, we evaluated the assumptions used in the actuarial methods, by comparing the significant assumptions, including loss development factors, expected loss ratios, and trends to the Company’s historical experience and current industry

benchmarks and trends.

We developed an independent range of reserve estimates and compared the range of reserve estimates to management’s best estimate for unpaid losses and LAE.

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($ in thousands, except share and per share amounts)

Fixed maturity securities, available-for-sale, at fair value (amortized cost of $ 1,320,266 and $ 1,047,713 , respectively)

Fixed maturity securities, available-for-sale, at fair value (net of allowance for credit losses of $ 7,000 and $ 0 , respectively) (amortized cost of $ 1,848,755 and $ 1,320,266 , respectively)

$ 1,856,303 $ 1,292,218

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Additional paid-in capital 730,555 718,598

Stock notes receivable — ( 5,562 )

Accumulated other comprehensive loss ( 22,120 ) ( 22,953 )

Retained earnings (accumulated deficit) 97,120 ( 21,708 )

Accumulated other comprehensive income (loss) 11,457 ( 22,120 )

Retained earnings 267,148 97,120

Total stockholders’ equity 1,009,565 793,999

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Net investment income 83,619 80,600 40,340

Net investment gains (losses) 6,256 11,072 ( 15,705 )

Other (loss) income ( 167 ) ( 632 ) 1

Net investment gains 22,149 6,342 11,054

Other loss ( 587 ) ( 167 ) ( 632 )

Total revenues 1,416,541 1,150,200 885,969

1 unchanged sentence

Underwriting, acquisition and insurance expenses 377,359 311,757 243,444

Transaction costs 14,019 — —

Interest expense 7,919 9,496 10,024

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Net income $ 170,028 $ 118,828 $ 85,984

Other comprehensive income (loss):

Other comprehensive income:

Unrealized gains and losses on investments:

Net change in unrealized gains (losses) on investments, net of tax 9,792 25,516 ( 48,545 )

Reclassification adjustment for (losses) gains on securities no longer held, net of tax ( 8,959 ) ( 4,984 ) 420

Total other comprehensive income (loss) 833 20,532 ( 48,125 )

Comprehensive income (loss) $ 119,661 $ 106,516 $ ( 8,729 )

Net change in unrealized gains on investments, net of tax 33,092 9,792 25,516

Reclassification adjustment for gains (losses) on securities no longer held, net of tax 485 ( 8,959 ) ( 4,984 )

Total other comprehensive income 33,577 833 20,532

Comprehensive income $ 203,605 $ 119,661 $ 106,516

Per share data:

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Balance at December 31 $ — $ — $ ( 5,562 )

Accumulated other comprehensive loss:

Accumulated other comprehensive income (loss):

Balance at beginning of year $ ( 22,120 ) $ ( 22,953 ) $ ( 43,485 )

Other comprehensive income (loss), net of tax 833 20,532 ( 48,125 )

Other comprehensive income, net of tax 33,577 833 20,532

Balance at December 31 $ 11,457 $ ( 22,120 ) $ ( 22,953 )

18 unchanged sentences

Stock-based compensation expense 11,960 9,395 8,525

Undistributed loss (earnings) from long-term investments ( 6,338 ) 6,730 ( 16,032 )

Undistributed earnings (loss) from long-term investments 10,122 ( 6,252 ) 6,730

Net change in fair value of derivatives ( 34,857 ) — —

Deferred income tax, net ( 6,397 ) ( 8,708 ) 9,383

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Purchase of equity securities ( 13,213 ) ( 14,077 ) ( 26,009 )

Purchase of equity method investments ( 32,173 ) — —

Purchase of intangible assets — ( 50 ) —

Purchase of equity method investments and other long-term investments ( 6,814 ) ( 32,173 ) —

Purchase of intangible assets and goodwill ( 2,000 ) — ( 50 )

Investment in direct and indirect loans 19,674 27,480 2,984

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Proceeds from initial public offering — — 129,597

Net cash (used in) provided by financing activities ( 4,232 ) 130,947 2,180

Net cash provided by (used in) financing activities 411 ( 4,232 ) 130,947

Net increase (decrease) in cash and cash equivalents and restricted cash 41,589 57,189 ( 24,675 )

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Cash paid for interest $ 6,149 $ 8,573 $ 10,667

Cash paid for federal income taxes $ 36,980 $ 15,800 $ —

(1) The sum of cash and cash equivalents and restricted cash from the Consolidated Balance Sheets

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1 Limited, a Lloyd’s corporate member authorized to invest in Lloyd’s syndicates.

On January 1, 2026, the Company completed the acquisition of Apollo Group Holdings Limited for aggregate consideration of approximately $ 555.0 million.

See Note 24 for additional information.

Basis of Presentation

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The Company’s actual results could differ from those estimates .

Consolidation

Variable interest entity

The Company consolidates an entity in which it has a controlling financial interest by first considering if an entity meets the definition of a variable interest entity ("VIE") for which the Company is deemed to be the primary beneficiary, or if the Company has the power to control an entity through a majority of voting interest or through other arrangements.

A VIE is an entity that either (i) lacks sufficient equity to finance its activities without additional subordinated financial support from other parties;

(ii) whose equity holders lack the characteristics of a controlling financial interest;

and/or (iii) is established with non-substantive voting rights.

The Company’s assessment may involve subjectivity in the determination of which activities most significantly affect the VIE’s performance, and estimates about current and future fair value of the assets held by the VIE and financial performance of the VIE.

In performing the related party analysis, the Company considers both qualitative and quantitative factors, including, but not limited to:

the characteristics and size of its investment relative to the related party;

the Company’s and the related party's ability to control or significantly influence

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Summary of Significant Accounting Policies (continued)

key decisions of the VIE including consideration of involvement by de facto agents;

the obligation or likelihood for the Company or the related party to fund operating losses of the VIE;

and the similarity and significance of the VIE’s business activities to those of the Company and the related party.

The determination of whether an entity is a VIE, and whether the Company is the primary beneficiary, may involve significant judgment, and depends upon facts and circumstances specific to an entity at the time of the assessment.

At each reporting period, the Company reassesses whether changes in facts and circumstances cause a change in the status of an entity as a VIE, and/or a change in the Company's consolidation assessment.

Changes in consolidation status are applied prospectively.

An entity may be consolidated as a result of this reassessment, in which case, the assets, liabilities and noncontrolling interest in the entity are recorded at fair value upon initial consolidation.

Any existing equity interest held by the Company in the entity prior to the Company obtaining control will be remeasured at fair value, which may result in a gain or loss recognized upon initial consolidation.

The Company may also deconsolidate a subsidiary as a result of this reassessment, which may result in a gain or loss recognized upon deconsolidation depending on the carrying values of deconsolidated assets and liabilities compared to the fair value of any interests retained.

After performing the above assessments, the Company has determined one entity meets the definition of a VIE for which the Company is the primary beneficiary.

See Note 7 for further details and required disclosures.

Cash and Cash Equivalents

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Cash held in a depository account for others, or restricted by a state, is recorded as restricted cash.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

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Summary of Significant Accounting Policies (continued)

Available for Sale

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If the unrealized losses are due to credit-related factors, an allowance for credit losses is determined using a present value of cash flows compared to the amortized cost of the security.

The allowance for credit losses is limited to the amount by which fair value is below amortized cost.

Changes in the allowance for credit losses are recognized in net investment income on the consolidated statements of operations.

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.

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.

Prior to 2025, changes in the allowance for credit losses were recognized in net investment income on the Consolidated Statements of Operations.

As of 2025, changes in the allowance for credit losses are recognized in net investment gains.

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 income (loss).

Unrealized losses that are not credit-related continue to be recognized in stockholders’ equity, net of taxes, as a component of accumulated other comprehensive income (loss).

Held to maturity

2 unchanged sentences

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.

Changes in the allowance for credit losses are recognized in net investment income on the consolidated statements of operations.

The historical loss

SKYWARD SPECIALTY INSURANCE GROUP, INC.

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Summary of Significant Accounting Policies (continued)

rate is adjusted for current conditions and reasonable and supportable forecasts.

Prior to 2025, changes in the allowance for credit losses were recognized in net investment income on the Consolidated Statements of Operations.

As of 2025, changes in the allowance for credit losses are recognized in net investment gains.

Prior periods have been updated to conform to the current period presentation.

Equity securities with a readily determinable fair value

2 unchanged sentences

Investments in equity securities with a readily determinable fair value are carried on the balance sheet at fair value using quoted market prices.

Changes in the carrying value of equity securities are included in net investment (losses) gains within the consolidated statements of operations.

Changes in the carrying value of equity securities are included in net investment gains (losses) within the Consolidated Statements of Operations.

Mortgage loan s

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When an amount is determined to be uncollectible, the Company writes off the uncollectible amount in the period it was determined to be uncollectible.

Interest on the loans is recognized as interest receivable which the Company includes in other assets on the consolidated balance sheet.

Interest on the loans is recognized as interest receivable which the Company includes in other assets on the Consolidated Balance Sheets.

The Company elected the fair value option in accounting for mortgage loans effective January 1, 2023 as targeted transition relief from the adoption of ASU 2016-13.

Under the fair value option, mortgage loans are measured at fair value, and changes in unrealized gains and losses on mortgage loans are reported in net investment (losses) gains on the consolidated statements of operations.

Under the fair value option, mortgage loans are measured at fair value, and changes in unrealized gains and losses on mortgage loans are reported in net investment gains (losses) on the Consolidated Statements of operations.

Interest income and amortization continue to be recognized in net investment income on the Consolidated Statements of Operations.

5 unchanged sentences

Under the equity method, initial investment is recorded at cost and is subsequently adjusted based on its proportionate share of distributions and net income or loss of the equity method investee.

The difference between the cost of an investment and its proportionate share of the underlying equity in net assets recorded on the

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Summary of Significant Accounting Policies (continued)

investee’s books is a component of investment income.

The difference between the cost of an investment and its proportionate share of the underlying equity in net assets recorded on the investee’s books is a component of investment income.

The Company amortizes the difference as an adjustment to its pro-rata share of equity method income over the useful life which is based on the underlying asset.

8 unchanged sentences

Short-term investments consist primarily of money market funds and are carried at cost which approximates fair value.

Net Investment Income and Net Realized Gains and Losses

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Summary of Significant Accounting Policies (continued)

Net Investment Income and Net Investment Gains and Losses

Net investment income consists of interest, dividends and equity in earnings (losses) of unconsolidated subsidiaries net of investment expenses such as investment management expenses.

2 unchanged sentences

Included in interest income is the amortization of premium and accretion of discounts on debt securities.

Net realized gains and losses on investments are recognized in net income based upon the specific identification method.

Net investment gains and losses are recognized in net income based upon the specific identification method.

The Company uses commodity derivatives to assume risk and manage its exposures in the insurance industry.

Commodity derivatives expose the Company to potentially unfavorable price changes to the underlying commodities.

The Company accounts for its derivatives in accordance with FASB ASC Topic 815, Derivatives and Hedging, which requires all derivatives to be recorded at fair value on the Company’s balance sheet as either assets or liabilities, depending on their rights or obligations, with changes in fair value reflected in current earnings.

The Company meets the criteria in the guidance to net the assets and liabilities, which the Company includes in “other assets” on the Consolidated Balance Sheets.

While the Company considers these exchange-traded futures and forward purchase and sale contracts to be effective economic hedges, the Company has not elected hedge accounting treatment.

The fair value of the Company’s derivatives is estimated by reference to quoted prices or broker quotes, where available, or in the absence of quoted prices or broker quotes, the use of industry or internal valuation models.

See Note 8 for further details and required disclosures.

Reinsurance Accounting

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On the Consolidated Statements of Operations, net earned premiums, losses and loss adjustment expenses, net and underwriting, acquisition and insurance expenses are presented net of reinsurance ceded.

The Company purchases retroactive reinsurance on certain lines of business in the form of loss portfolio transfers (“LPT”) and adverse development covers.

The Company has purchased retroactive reinsurance on certain lines of business in the form of loss portfolio transfers (“LPT”) and adverse development covers in prior years.

These contracts provide indemnification of losses related to past loss events where the reinsurer shares losses, either a proportion of or in its entirety, depending on certain dollar thresholds.

1 unchanged sentence

Subsequent changes in the measurement of the retroactive reinsurance contract are accounted for under a full retrospective method.

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Summary of Significant Accounting Policies (continued)

Deposit Accounting

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For those contracts that transfer only significant timing risk and do not transfer sufficient underwriting risk, a deposit asset is recorded equal to the initial cash outflow under the contract, which will then be offset by cash inflows received from the reinsurers.

To the extent cash outflows are expected to differ from expected cash inflows, an accretion rate is established at inception of the contract based on actuarial estimates whereby the deposit accounting asset is increased/decreased to the estimated amount receivable over the contract term.

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Summary of Significant Accounting Policies (continued)

estimated amount receivable over the contract term.

The accretion of the deposit is based on the expected rate of return implied from the estimated cash inflows and outflows under the contract.

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Reinsurance recoverables present potential exposures to individual reinsurers.

Everest Reinsurance Co.

and eMaxx Captives represented 18.0 % and 16.8 %, respectively, of the Company’s reinsurance recoverable balances at December 31, 2024, and 20.4 % and 20.4 %, respectively, at December 31, 2023, and were the only reinsurers that represented 10% or more of the Company’s reinsurance recoverable balances.

Everest Reinsurance Co’s financial strength rating from A.M.

Best was A+ at December 31, 2024 and 2023 and eMaxx Captives was not rated by A.M.

Best at December 31, 2024 and 2023.

eMaxx Captives and Everest Reinsurance Co.

represented 17.7 % and 11.1 %, respectively, of the Company’s reinsurance recoverable balances at December 31, 2025, and 16.8 % and 18.0 %, respectively, at December 31, 2024, and were the only reinsurers that represented 10% or more of the Company’s reinsurance recoverable balances.

eMaxx Captives was not rated by A.M.

Best at December 31, 2025 and 2024 and Everest Reinsurance Co’s financial strength rating from A.M.

Best was A+ at December 31, 2025 and 2024.

Concentration of Credit Risk

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Failure by distribution sources to remit premiums could result in premium write-offs and a corresponding loss of income.

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Summary of Significant Accounting Policies (continued)

Deferred Policy Acquisition Costs

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If its premium deficiency is greater than unamortized acquisition costs, it accrues a liability for the excess deficiency.

Anticipated investment income is considered in the determination of premium deficiencies.

Anticipated investment income is

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Summary of Significant Accounting Policies (continued)

considered in the determination of premium deficiencies.

Management performed an analysis and determined no premium deficiency existed as of December 31, 2025 and 2024.

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Depreciation expense is recognized on a straight-line basis for financial statement purposes over periods ranging from three to seven years .

Right-of-use (ROU) assets are included in other assets and lease liabilities are included in accounts payable and accrued liabilities on the consolidated balance sheets.

For operating leases, the Company determines if a contract contains a lease at inception and recognizes the operating lease ROU assets and lease liabilities based on the present value of the future minimum lease payments at the commencement date.

As the Company does not have the interest rate implicit in its leases, it uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments.

Lease agreements may include options to extend or terminate.

The options are exercised at the Company’s discretion and are included in operating lease liabilities if it is reasonably certain the option will be exercised.

Lease agreements have lease and non-lease components, which are accounted for as a single lease component.

Operating lease cost for future minimum lease payments is recognized on a straight-line basis over the lease term.

Sublease income is recognized on a straight-line basis over the sublease term.

Reserves for Losses and Loss Adjustment Expenses

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Accordingly, the ultimate settlement of losses and the related LAE may vary significantly from the estimate included in our financial statements.

If actual liabilities do exceed recorded amounts,

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Summary of Significant Accounting Policies (continued)

there will be an adverse effect.

If actual liabilities do exceed recorded amounts, there will be an adverse effect.

Furthermore, we may determine that recorded reserves are more than adequate to cover expected losses, which would lead to a reduction in our reserves.

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These unearned premiums are calculated on a pro-rata basis over the terms of the policies for direct and ceded amounts.

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Summary of Significant Accounting Policies (continued)

Commission and Fee Income

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The Company files a consolidated federal income tax return in the United States and certain other state tax returns.

Its admitted insurance subsidiaries pay premium taxes on gross written premiums in lieu of most state income or franchise

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Summary of Significant Accounting Policies (continued)

Its admitted insurance subsidiaries pay premium taxes on gross written premiums in lieu of most state income or franchise taxes.

Premium tax expense is recognized within underwriting, acquisition and insurance expense on the Consolidated Statements of Operations.

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See note 18 for further discussion and related disclosures regarding stock-based compensation.

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Summary of Significant Accounting Policies (continued)

Employee Stock Purchase Plan

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When inclusion of common share adjustments increases the earnings per share or reduces the loss per share, the effect on earnings is anti-dilutive, and the diluted net earnings or net loss per share is computed excluding these common share equivalents.

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Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements

Recent Accounting Standards Adopted

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280).

ASU 2023-07 requires segment disclosures for (i) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), (ii) how the CODM uses the reported measure(s) of segment profitability in assessing segment performance and resource allocation and (iii) the title and position of the CODM.

This update states that entities with a single reportable segment are required to provide full segment disclosures.

The guidance became effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

This update is applied retrospectively to all prior periods presented.

The Company has added additional segment disclosures as required by ASU 2023-07, see Note 12 for the additional disclosures required by this ASU.

Recent Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740).

1 unchanged sentence

This update also requires public companies to, among other things, disaggregate income taxes paid by federal, state and foreign taxes.

The guidance is effective for fiscal years beginning after December 15, 2024.

The Company is continuing to evaluate the effect and currently does not expect the amendments will have a material impact on its consolidated financial statements.

The guidance became effective for fiscal years beginning after December 15, 2024.

This update is applied prospectively.

The Company has added additional disclosures as required by ASU 2023-09.

There was no impact to the consolidated financial statements.

See Note 13 for the additional disclosures required by this ASU.

Recent Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, which requires disaggregated disclosure of income statement expenses for public business entities (“PBEs”).

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The tabular disclosure will also include certain other expenses, when applicable.

In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03 as the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

In January 2025, the FASB issued ASU 2025-01 to clarify the effective

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Summary of Significant Accounting Policies (continued)

date of ASU 2024-03 as the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

The Company is evaluating the effect of the amendments on its consolidated financial statements.

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($ in thousands) Accident

and Health Surety Industry Solutions Other Total

and Health Surety Construction and Energy Solutions Other Total

Gross balance at December 31, 2024 $ 91,577 $ 6,781 $ 10,204 $ 3,879 $ 112,441

2 unchanged sentences

($ in thousands) Accident

and Health Surety Industry Solutions Other Total

and Health Surety Construction and Energy Solutions Other Total

Gross balance at December 31, 2023 $ 91,577 $ 6,781 $ 10,204 $ 3,879 $ 112,441

1 unchanged sentence

Net balance at December 31, 2024 $ 46,756 $ 6,781 $ 10,204 $ 1,993 $ 65,734

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Goodwill and Intangible Assets (continued)

The following tables set forth the carrying amount and changes in the balance of other intangible assets at December 31, 2025 and 2024:

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Accumulated amortization at December 31, 2024 ( 17,895 ) ( 1,117 ) — — ( 19,012 )

Additions 2,000 — — — 2,000

Amortization ( 1,308 ) — — — ( 1,308 )

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Accumulated amortization at December 31, 2023 ( 16,808 ) ( 1,117 ) — — ( 17,925 )

Additions 50 — — — 50

Amortization ( 1,087 ) — — — ( 1,087 )

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Its finite lived intangible assets, which relate to policy renewals, agency relationships, within agent relationships, and non-compete/exclusivity agreements, within non-competes, have a weighted average useful life of approximately 12 years as of December 31, 2025.

The Company recognized approximately $ 1.1 million in amortization expense for the year ended December 31, 2024, and $ 1.5 million for the years ended December 31, 2023 and 2022.

The following table sets forth the estimated future net amortization expense of intangible assets:

($ in thousands)

Years Ending December 31,

SKYWARD SPECIALTY INSURANCE GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables set forth the amortized cost and the fair value by investment category at December 31, 2024 and December 31, 2023:

Goodwill and Intangible Assets (continued)

The Company recognized approximately $ 1.3 million, $ 1.1 million and $ 1.5 million in amortization expense for the years ended December 31, 2025, 2024 and 2023, respectively.

The following table sets forth the estimated future net amortization expense of intangible assets:

($ in thousands)

Years Ending December 31,

The following tables set forth the amortized cost and the fair value by investment category at December 31, 2025 and 2024:

($ in thousands) Amortized

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Total fixed maturity securities, held-to-maturity $ 33,290 $ 829 $ ( 48 ) $ ( 468 ) $ 33,603

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Investments (continued)

($ in thousands) Amortized

31 unchanged sentences

government agencies mortgage-backed fixed maturity securities, with a carrying value of approximately $ 68.5 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 Loans, the Company retains all rights regarding these pledged securities.

At December 31, 2024, the Company had assets with fair values of approximately $ 28.0 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 $ 24.3 million are residential mortgage-backed securities, $ 2.2 million of short-term investments and $ 1.5 million of cash and cash equivalents and other assets.

In accordance with the terms of the FHLB Loan, the Company retains all rights regarding these pledged securities.

At December 31, 2025, the Company had assets with fair values of approximately $ 69.5 million pledged as collateral for performance obligations under reinsurance agreements.

In accordance with the terms of the trust agreements, the Company retains all rights regarding these securities, of which $ 57.8 million are residential mortgage-backed securities, $ 9.5 million of cash and cash equivalents and other assets and $ 2.2 million of short-term investments.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

44 unchanged sentences

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 December 31, 2024 and determined that no credit impairment existed in the gross unrealized holding losses, due to the reasons discussed below:

The Company reviewed its investments at December 31, 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:

government securities and municipal securities :

4 unchanged sentences

Therefore, the Company does not consider these impaired securities.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investments (continued)

• Corporate securities and miscellaneous :

5 unchanged sentences

Therefore, the Company does not consider these impaired securities.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investments (continued)

• Residential mortgage-backed securities, commercial mortgage-backed securities, and other asset-backed securities :

2 unchanged sentences

Therefore, the Company does not consider these impaired securities.

The following table sets forth the components of net investment gains (losses) for the years ended December 31, 2024, 2023 and 2022:

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 years ended December 31, 2025 and 2024:

($ in thousands) Fixed Maturity Securities, Available-For-Sale Fixed Maturity Securities, Held-to-Maturity

Balance at December 31, 2024 $ — $ 243

Current period provision for credit losses 7,000 257

Recoveries of amounts previously written off — ( 32 )

Balance at December 31, 2025 $ 7,000 $ 468

Fixed Maturity Securities, Held-to-Maturity

Balance at December 31, 2023 $ 329

Current period provision for credit losses $ 18

Recoveries of amounts previously written off $ ( 104 )

Balance at December 31, 2024 $ 243

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investments (continued)

The following table sets forth the components of net investment gains for the years ended December 31, 2025, 2024 and 2023:

($ in thousands) 2025 2024 2023

12 unchanged sentences

Mortgage loans ( 7 ) 421 ( 386 )

Net investment gains (losses) $ 6,256 $ 11,072 $ ( 15,705 )

Other 21,360 — —

Net investment gains

$ 22,149 $ 6,342 $ 11,054

The following table sets forth the proceeds from sales of available-for-sale fixed maturity securities and equity securities for the years ended December 31, 2025, 2024 and 2023:

4 unchanged sentences

($ in thousands) 2025 2024 2023

Income (loss):

Fixed maturity securities, available-for-sale $ 80,302 $ 57,574 $ 34,703

13 unchanged sentences

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 years ended December 31, 2024, 2023 and 2022:

The following table sets forth the change in net unrealized gains on the Company’s investment portfolio, net of deferred income taxes, included in other comprehensive loss for the years ended December 31, 2025, 2024 and 2023:

($ in thousands) 2025 2024 2023

31 unchanged sentences

Fair Value Measurements (continued)

Fixed maturity securities, available for sale and equity securities classified as Level 3

Fixed maturity securities, available for sale 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.

2 unchanged sentences

This rate represents Level 3 fair value inputs.

The following table sets forth the range of the discount rate as of December 31, 2024:

December 31, 2024

The following table sets forth the range of the discount rate as of December 31, 2025 and 2024:

High 11.10 % 8.00 %

Low 4.25 % 5.70 %

Weighted average 6.40 % 6.60 %

3 unchanged sentences

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 December 31, 2024 and December 31, 2023:

December 31, 2024 December 31, 2023

The following table sets forth the range and weighted average, weighted by relative fair value, of the spread as of December 31, 2025 and 2024:

High 8.34 % 10.00 %

1 unchanged sentence

Weighted average 7.74 % 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 $ 28.2 million at December 31, 2024, 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 $ 24.4 million at December 31, 2024.

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.

Included in other assets are derivatives which consist of certain exchange traded options contracts entered into by the Company.

The fair values of these options are measured using quoted prices in active markets on the relevant exchange, specifically utilizing either the volume-weighted average price of trades in similar contracts during a specified time window, or the last trade settlement price when no trades occur within that period.

This method represents Level 1 inputs.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

2 unchanged sentences

Fair Value Measurements (continued)

The following tables set forth the Company’s investments within the fair value hierarchy at December 31, 2024 and December 31, 2023:

The following tables set forth the Company’s investments and derivatives within the fair value hierarchy at December 31, 2025 and 2024:

December 31, 2025

12 unchanged sentences

Equity securities:

Common stocks 64,251 — — 64,251

Preferred stocks — 1,174 — 1,174

Mutual funds 40,839 — — 40,839

Total equity securities — 1,174 — 1,174

1 unchanged sentence

Short-term investments 264,299 — — 264,299

Derivatives 34,857 — — 34,857

Total $ 343,624 $ 1,662,092 $ 194,422 $ 2,200,138

31 unchanged sentences

Settlements — ( 16,732 )

Transfers into Level 3 6,143 —

Purchases 70,730 —

2 unchanged sentences

Balance at December 31, 2025 150,917 9,902

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 $ — $ 411

Total losses for the period recognized in net investment gains attributable to the change in unrealized gains or losses relating to assets held as of period end — ( 201 )

SKYWARD SPECIALTY INSURANCE GROUP, INC.

2 unchanged sentences

Fair Value Measurements (continued)

($ in thousands) Mortgage Loans

($ in thousands) Fixed Maturity Securities, Available-For-Sale Mortgage Loans

Balance at December 31, 2023 $ — $ 50,070

Total losses for the period recognized in net investment gains (losses) ( 385 )

Total gains (losses) for the period recognized in net investment gains (losses) ( 195 ) 420

Issuances — 649

Settlements — ( 24,649 )

Purchases 77,979 —

Sales/Disposals ( 374 ) —

Total unrealized gains for the period recognized in accumulated comprehensive income (loss) 510 —

Balance at December 31, 2024 77,920 26,490

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 ( 426 )

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 — 411

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.

1 unchanged sentence

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.

However, considerable judgments 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.

4 unchanged sentences

As of December 31, 2025, the Company determined the fair value of these instruments using the income approach utilizing inputs that are unobservable (Level 3).

Investment in RedBird Capital Partners:

The investment had a fair value of $ 55.6 million and $ 28.2 million at December 31, 2025 and 2024, respectively, 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 $ 18.3 million and $ 24.4 million at December 31, 2025 and 2024, respectively.

The Company may sell its interest in the investment with the appropriate prior written notice and approval by the general partner.

Net earned premiums related to this agreement for the years ended December 31, 2025 and 2024 were $ 41.5 million and $ 2.5 million, respectively.

Notes payable:

4 unchanged sentences

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 December 31, 2024 and December 31, 2023:

December 31, 2024 December 31, 2023

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements (continued)

The following table sets forth the Company’s carrying and fair values of notes payable and subordinated debt as of December 31, 2025 and 2024:

($ in thousands) Carrying

3 unchanged sentences

Revolving Credit Facility 114,500 114,500 43,000 43,000

Term Loan Facility 300,000 300,000 — —

Notes payable $ 471,500 $ 471,958 $ 100,000 $ 99,200

Subordinated debt

Junior subordinated interest debentures $ — $ — $ 59,186 $ 59,794

Unsecured subordinated notes $ 19,569 $ 21,020 $ 19,536 $ 20,541

1 unchanged sentence

Other financial instruments qualify as insurance-related products and are specifically exempted from fair value disclosure requirements.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Mortgage Loans

The Company has invested in Separately Managed Accounts (“SMA1” and “SMA2”).

As of December 31, 2024 and December 31, 2023, the Company held direct investments in mortgage loans from various creditors through SMA1 and SMA2.

As of December 31, 2025 and 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, mature in approximately 2 year to 3 years from loan origination and the principal amounts of the loans range between 64 % to 80 % of the property’s appraised value at the time the loans were made.

The following table sets forth the carrying value of the Company’s mortgage loans as of December 31, 2024 and December 31, 2023:

($ in thousands) December 31, 2024 December 31, 2023

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.

The following table sets forth the carrying value of the Company’s mortgage loans as of December 31, 2025 and 2024:

($ in thousands) 2025 2024

Commercial $ 3,334 $ 8,474

1 unchanged sentence

Hospitality 6,568 7,984

Industrial — 6,785

$ 9,902 $ 26,490

6 unchanged sentences

Multi-family — — 44

Industrial — — 565

$ 1,622 $ 5,155 $ 5,474

2 unchanged sentences

There was no write-off for uncollectible amounts during the years ended December 31, 2025 and 2024, respectively.

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.

As of December 31, 2023, approximately $ 7.1 million of mortgage loans were in the process of foreclosure and $ 6.8 million of mortgage loans were not producing income for the previous 12 months.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Mortgage Loans (continued)

As of December 31, 2025 and 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.

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 December 31, 2025 and 2024:

($ in thousands) December 31, 2024 December 31, 2023

($ in thousands) 2025 2024

Carrying Value Ownership % Carrying Value Ownership %

Arena Special Opportunities Fund, LP units $ 26,936 14.0 % $ 34,936 15.3 %

JVM Funds LLC units 17,229 10.1 % 20,061 10.1 %

RISCOM 5,013 20.0 % 4,121 20.0 %

Hudson Ventures Fund 2 LP units 4,967 2.5 % 4,669 2.5 %

Arena SOP LP units — 11.2 % 1,474 10.9 %

1 unchanged sentence

Dowling Capital Partners LP units 590 5.0 % 666 5.0 %

Hudson Ventures Fund 2 LP units 5,503 2.5 % 4,967 2.5 %

JVM Funds LLC units 14,911 10.1 % 17,229 10.1 %

RISCOM 3,307 20.0 % 5,013 20.0 %

$ 53,498 $ 65,325

1 unchanged sentence

($ in thousands) 2025 2024 2023

Arena SOP LP units ( 1,474 ) ( 989 ) ( 6,271 )

Arena Special Opportunities Fund, LP units ( 3,163 ) 2,375 ( 2,880 )

RISCOM 1,492 884 1,471

Dowling Capital Partners LP units 1,463 927 502

Universa Black Swan LP units — ( 988 ) ( 3,028 )

Brewer Lane Ventures Fund II LP 91 ( 110 ) ( 78 )

Dowling Capital Partners LP units 431 1,463 927

Hudson Ventures Fund II LP units 480 ( 153 ) 170

Arena SOP LP units ( 989 ) ( 6,271 ) 3,042

JVM Funds LLC ( 541 ) ( 1,554 ) ( 1,198 )

RISCOM 1,493 1,492 884

Universa Black Swan LP units — — ( 988 )

$ ( 2,683 ) $ 2,524 $ ( 9,434 )

The following table sets forth the unfunded commitment of equity method investments as of December 31, 2025 and 2024:

($ in thousands) December 31, 2024 December 31, 2023

($ in thousands) 2025 2024

Brewer Lane Ventures Fund II LP units $ 3,237 $ 4,077

Hudson Ventures Fund 2 LP units 397 848

Dowling Capital Partners LP units 386 386

Hudson Ventures Fund 2 LP units 166 397

Red Bird Capital Partners LP units 18,305 24,400

$ 22,094 $ 29,260

8 unchanged sentences

The following table sets forth the Company’s recorded investment in RISCOM compared to its share of underlying equity as of December 31, 2025 and 2024:

($ in thousands) December 31, 2024 December 31, 2023

($ in thousands) 2025 2024

Investment in RISCOM:

3 unchanged sentences

The following table sets forth the Company’s recorded investment in JVM Funds LLC compared to its share of underlying equity as of December 31, 2025 and 2024:

($ in thousands) December 31, 2024 December 31, 2023

($ in thousands) 2025 2024

Investment in JVM Funds LLC:

5 unchanged sentences

The carrying value of the SMA1 and SMA2 as of December 31, 2025 and 2024 were as follows:

($ in thousands) December 31, 2024 December 31, 2023

($ in thousands) 2025 2024

SMA1 $ 15,418 $ 20,296

1 unchanged sentence

Investment in indirect loans and loan collateral $ 23,867 $ 33,269

Variable Interest Entity

Pursuant to GAAP consolidation guidance, Skyward consolidates Separate Account HSIC-01 (“HSIC-01”), established by Mangrove Risk Solutions Bermuda Ltd.

(“Mangrove”).

HSIC-01 is a VIE for which the Company is the primary beneficiary.

The purpose of the VIE is to hedge price volatility risks of certain insurance products by investing in dairy and livestock commodities.

The Company directly manages the business;

therefore, it considers itself the primary beneficiary.

The Company does not provide performance guarantees and has no other financial obligation to provide funding to HSIC-01, other than its own capital commitments.

The assets of consolidated variable interest entities may only be used to settle obligations of these entities.

In addition, there is no recourse to the assets of HSIC-01 other than to satisfy associated liabilities.

The following table presents the assets of HSIC-01, included in the Consolidated Balance Sheets as of December 31, 2025.

The assets presented below only include third-party net assets and exclude any intercompany balances, which were eliminated upon consolidation:

($ in thousands) 2025

Cash and cash equivalents $ 15,816

Other assets 34,856

Total assets $ 50,672

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company uses derivatives as part of its financial risk management programs to mitigate price risk related to certain insurance contracts exposed to commodity price risk due to fluctuations in relevant market prices, including cattle and milk.

To mitigate revenue volatility and support financial stability, the Company employs a hedging strategy that utilizes derivatives, specifically put options and futures, as part of its risk management framework.

The primary objective of holding these derivative instruments is to manage exposure to adverse price movements.

The activity in these instruments generally reflects current market conditions and shifts in risk exposures throughout the year.

The notional value of derivative contracts held and the degree of hedged exposure are actively managed and may vary depending on the prevailing pricing environment in cattle, hogs, and milk markets.

The Company does not use derivatives for speculative or trading purposes.

All derivative positions are intended to support the overall risk transfer objectives of the business.

The Company has not elected hedge accounting for these derivatives.

The following table presents the notional amounts and fair value of derivative assets in the Consolidated Balance Sheets at December 31, 2025:

($ in thousands) Derivative Assets

Notional Amount Fair Value

Economic hedges $ 136,800 $ 34,857

The Company presents the net gain (loss) recognized on derivative instruments in economic hedging relationships in “losses and loss adjustment expenses” on the Consolidated Statements of Operations.

For the years ended December 31, 2025, the Company recognized $ 7.9 million, respectively, of pre-tax net gains in losses and loss adjustment expenses .

Allowance for Credit Losses

7 unchanged sentences

Balance at December 31, 2025 $ 544,217 $ 3,140

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Credit Losses (continued)

($ in thousands) Premiums Receivable, Net Allowance for Estimated Uncollectible Premiums

Balance at December 31, 2023 $ 179,235 $ 964

Cumulative effect of adoption of ASU 2016-13 at January 1, 2023 —

Current period change for estimated uncollectible premiums 3,235

2 unchanged sentences

Balance at December 31, 2024 $ 321,641 $ 2,432

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Credit Losses (continued)

Reinsurance Recoverables

6 unchanged sentences

Best as of December 31, 2025:

December 31, 2024

Best Rating Reinsurance Recoverables, Gross, Amortized Cost Percent of Total

1 unchanged sentence

B++ to B+ 5,077 0.8

B to B - 28 —

Not rated 6,919 1.0

3 unchanged sentences

Balance at December 31, 2024 $ 857,876 $ 2,295

Current period change for estimated uncollectible reinsurance 13,585

Write-offs of uncollectible reinsurance recoverables ( 13,585 )

Balance at December 31, 2025 $ 1,119,880 $ 2,295

1 unchanged sentence

Balance at December 31, 2023 $ 596,334 $ 2,295

Cumulative effect of adoption of ASU 2016-13 at January 1, 2023 2,295

Current period change for estimated uncollectible reinsurance 13,585

3 unchanged sentences

("R&Q") related to accident years 2018 and prior.

The Company recognized the uncollectible reinsurance recoverable balance related to the LPT as a net increase of $ 13.6 million to the allowance for estimated uncollectible reinsurance, which was subsequently written-off during the year ended December 31, 2024.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended December 31, 2024, the Company recognized the uncollectible reinsurance recoverable balance related to the LPT as a net increase of $ 13.6 million to the allowance for estimated uncollectible reinsurance, which was subsequently written-off.

Property and Equipment

7 unchanged sentences

Total $ 15,140 $ 12,179

Depreciation expense related to property and equipment was $ 2.9 million, $ 3.2 million, and $ 3.6 million for the years ended December 31, 2024, 2023 and 2022 respectively.

The Company determines if a contract contains a lease at inception and recognizes a right-of-use asset, within other assets, and lease liability, within accounts payable and accrued liabilities, based on the present value of future lease payments.

In cases where its leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available on the inception date to determine the lease liability.

The Company’s leases are primarily for office facilities which have been classified as operating leases.

Its leases have remaining lease terms ranging from less than 1 year to 6 years, some of which include options to extend the leases.

Lease expense for the years ended December 31, 2024, 2023, and 2022 was $ 2.1 million, $ 2.8 million and $ 2.6 million, respectively.

The following table provides information regarding the Company’s leases as of December 31, 2024 and 2023:

(in thousands) 2024 2023

Operating lease right-of-use assets $ 3,135 $ 4,905

Operating lease liabilities 3,213 5,228

Operating lease weighted-average remaining lease term 4.39 years 4.55 years

Operating lease weighted-average discount rate 5.01 % 3.95 %

The following table presents the Company’s lease expenses for the years ended December 31, 2024, 2023 and 2022:

(in thousands) 2024 2023 2022

Operating lease expense $ 1,714 $ 2,583 $ 2,414

Short-term lease expense 421 184 220

Total lease expense $ 2,135 $ 2,767 $ 2,634

Operating cash outflows from operating leases $ 2,082 $ 2,636 $ 2,382

SKYWARD SPECIALTY INSURANCE GROUP, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Leases (continued)

The following table sets forth the future minimum lease payment obligations of the Company’s operating leases at December 31, 2024:

(in thousands) 2024

Thereafter 133

Total future minimum operating lease payments $ 3,632

Less imputed interest ( 419 )

Total operating lease liability $ 3,213

Property and Equipment (continued)

Depreciation expense related to property and equipment was $ 3.3 million, $ 2.9 million, and $ 3.2 million for the years ended December 31, 2025, 2024 and 2023, respectively, which is presented in underwriting, acquisition and insurance expenses on the Consolidated Statements of Operations.

Notes Payable & Subordinated Debt

4 unchanged sentences

The FHLB Loan is fully secured by a pledge of specific investment securities of HSIC.

The Company used the proceeds to fund redemptions of the draws on the Revolving Credit Facility (see “Revolving Credit Facility” below for additional information regarding the redemption).

Revolving Credit Facility

The Company entered into an agreement to obtain a new unsecured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of participating banks during the first quarter of 2023.

The Revolving Credit Facility provided the Company with up to a $ 150.0 million revolving credit facility and a letter of credit sub-facility of up to $ 30.0 million.

As of December 31, 2023, the Company drew $ 50.0 million on the Revolving Credit Facility.

During the first quarter of 2024, the Company drew an additional $ 50.0 million on the Revolving Credit Facility and used the proceeds to pay off the principal on its existing Debentures (defined below).

On September 6, 2024, the Company redeemed $ 57.0 million of the draws on the Revolving Credit Facility.

The Company used the proceeds to fund redemptions of the draws on the 2023 Revolving Credit Facility (see “Revolving Credit Facilities” below).

Term Loan Facility

During the fourth quarter of 2025, the Company entered into a Term Loan Credit Agreement (the “Term Loan Facility”) with a syndicate of participating banks.

The Term Loan Facility includes (a) an unsecured senior delayed draw term loan facility (“DDTL”) in the aggregate principal amount of $ 150.0 million (the “Tranche A DDTL”) and (b) an additional unsecured senior DDTL in the aggregate principal amount of $ 150.0 million (the “Tranche B DDTL” and together with the Tranche A DDTL, the “Term Loan Facility”).

The Term Loan Facility was used by the Company to fund a portion of the consideration of the Company’s acquisition of Apollo Group Holdings Limited (“Apollo”) and related transaction fees and expenses.

Amounts drawn under the Term Loan Facility bear interest at either term SOFR plus a margin, which ranges from 150 basis points to 190 basis points, or the base rate plus a margin, which ranges from 50 basis points to 90 basis points, each depending on the Company’s debt to capitalization ratio.

SOFR is calculated using a SOFR floor of 0.00 % and a credit spread adjustment of 0.10 %.

The base rate is the highest of (i) the Agent’s then-current prime lending rate, (ii) the Federal Funds Rate plus 0.50 %, (iii) SOFR plus 1.00 % and (iv) zero percent (0%).

In addition, the Company pays a fee ranging from 0.20 % to 0.35 % on average daily undrawn amounts under the Facility, depending on the Company’s debt to capitalization ratio.

The Tranche A DDTL matures on January 1, 2028 and the Tranche B DDTL matures on July 2, 2029.

On December 30, 2025, the Company drew $ 150.0 million of the Tranche A DDTL and $ 150.0 million of the Tranche B DDTL for the acquisition of Apollo on January 1, 2026.

The Term Loan Facility includes customary covenants, including certain limitations on the incurrence by the Company of additional indebtedness exceeding $ 10.0 million and on the Company’s ability to make distributions to its stockholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants, including financial covenants relating to our minimum consolidated net worth, maximum total debt to capitalization, minimum A.M.

Best rating and minimum liquidity, as well as customary events of default.

As of December 31, 2025, the Company was in compliance with all covenants.

The Term Loan Facility is unsecured.

In connection with the Revolving Credit Facility (defined below), during the fourth quarter of 2025, the Company and the subsidiary guarantors party thereto, entered into a guaranty agreement, pursuant to which the Company’s obligations under the Term Loan Facility are guaranteed by the Company and its existing wholly-owned subsidiaries and subsequently acquired or organized subsidiaries, excluding insurance company subsidiaries and subject to certain other exceptions.

Revolving Credit Facilities

During the fourth quarter of 2025, the Company, entered into a Credit Agreement (the “Revolving Credit Facility”) with a syndicate of participating banks.

The Revolving Credit Facility is unsecured and provided the Company with up to a initial maximum principal amount of $ 150.0 million which was increased to $ 250.0 million on the closing date of the Company’s acquisition of Apollo.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Notes Payable & Subordinated Debt (continued)

The Company initially drew $ 43.0 million, which was used to redeem the Company’s prior revolving credit facility (described below).

On December 30, 2025, the company drew an additional $ 71.5 million which was used for the consideration paid for the acquisition of Apollo.

The proceeds from the draws on the Term Loan Facility and the draw of the Revolving Credit Facility are presented net with the liabilities on the Consolidated Balance Sheets for the year ended December 31, 2025.

The proceeds were used for the acquisition of Apollo on January 1, 2026.

Interest on the Revolving Credit Facility is payable quarterly.

The interest rate on the Revolving Credit Facility is the Secured Overnight Financing Rate (“SOFR”) plus a margin of between 150 and 190 basis points based on the ratio of debt to total capital and a credit spread adjustment of 10 basis points.

At December 31, 2024, the six-month SOFR on the Revolving Credit Facility was 4.25 %, plus a margin of 1.60 %.

Amounts drawn under the Facility bear interest at either term SOFR plus a margin, which will range from 150 and 190 basis points, or the base rate plus a margin, which ranges from 50 basis points to 90 basis points, each depending on the Company’s debt to capitalization ratio.

SOFR is calculated using a SOFR floor of 0.00 % and a credit spread adjustment of 0.10 %.

The base rate is the highest of (i) the Agent’s then current prime lending rate, (ii) the Federal Funds Rate plus 0.50 %, (iii) SOFR plus 1.00 % and (iv) zero percent (0%).

In addition, the Company pays a fee ranging from 0.20 % to 0.35 % on average daily undrawn amounts under the Facility, depending on the Company’s debt to capitalization ratio.

The availability period under the Facility will terminate on November 12, 2030.

The Company is subject to covenants on the Revolving Credit Facility based on minimum net worth, maximum debt to capital ratio, minimum A.M.

Best Rating and minimum liquidity.

Best Rating and minimum liquidity, as well as customary events of default.

As of December 31, 2025, the Company was in compliance with all covenants.

During the first quarter of 2023, the Company entered into an agreement to obtain a unsecured revolving credit facility (the “2023 Revolving Credit Facility”) with a syndicate of participating banks.

The 2023 Revolving Credit Facility provided the Company with up to a $ 150.0 million revolving credit facility and a letter of credit sub-facility of up to $ 30.0 million.

On November 13, 2025, the Company redeemed the 2023 Revolving Credit Facility, paid $ 0.3 million of accrued interest and recognized $ 0.6 million of expense for the remaining unamortized deferred financing costs.

In May 2019, the Company entered into an agreement to issue unsecured subordinated notes (the “Notes”) with an aggregate principal amount of $ 20.0 million.

3 unchanged sentences

The Notes have junior priority to all previously issued debt.

The Company reports debt related to the Notes in its December 31, 2024 and 2023 consolidated balance sheets, net of debt issuance costs of approximately $ 0.5 million.

The Company reports debt related to the Notes in its December 31, 2025 and 2024 Consolidated Balance Sheets, net of debt issuance costs of approximately $ 0.4 million and $ 0.5 million, respectively.

These deferred financing costs are presented as a direct deduction from the carrying amount of the subordinated debt.

In August 2006, the Company received $ 58.0 million of proceeds from a debenture offering through a statutory trust, Delos Capital Trust (the “Trust”).

The sole asset of the Trust consists of Fixed/Floating Rate Junior Subordinated

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Notes Payable & Subordinated Debt (continued)

Deferrable Interest Debentures (the “Debentures”) with a principal amount of $ 59.8 million issued by the Company and cash of $ 1.8 million from the issuance of Trust common shares purchased by the Company equal to 3 % of the Trust capitalization.

On March 15, 2024, the Company redeemed the Debentures and paid $ 1.4 million of accrued interest.

Stockholders Equity

Reverse Stock Split

On September 23, 2022, the Board of Directors approved a 4-for-1 reverse stock split of the Company’s common stock.

The reverse stock split became effective January 3, 2023.

All share and per share information included in the accompanying consolidated financial statements and notes to the consolidated financial statements have been retroactively adjusted to reflect the reverse stock split of common stock for all periods presented.

Initial Public Offering

The Company completed its initial public offering (“IPO”) on January 18, 2023 with 4,750,000 shares offered by the Company at a price of $ 15.00 per share.

The Company’s net proceeds from the IPO were approximately $ 62.0 million, after deducting underwriting discounts and specific incremental expenses directly attributable to the IPO.

Upon the closing of its IPO, the Company filed an amended and restated certificate of incorporation which, among other things, increased the number of authorized shares consisting of 500,000,000 shares of common stock, par value $ 0.01 per share, and 10,000,000 shares of preferred stock, par value $ 0.01 per share.

Preferred Shares Conversion

The Preferred Shares had preference in liquidation over common stock in the amount of the face value of $ 50.00 per share and any declared but unpaid dividends to related common shares at the applicable conversion rate.

The Preferred Shares provided the holder the option at any time to convert the Preferred Shares into common stock based on the Option Conversion Rate.

The Preferred Shares were subject to mandatory conversion upon the closing of an IPO at the Mandatory Conversion Rate.

At December 31, 2022, the Mandatory Conversion Rate allowed the holder of the Preferred Shares the right to convert into common stock based on a conversion price equal to $ 6.04 per common share.

On January 18, 2023, the 1,969,660 Preferred Shares converted to 16,305,113 shares of common stock upon the Company’s closing of its IPO.

Follow-On Offering

On November 20, 2023, the Company completed its follow-on offering with 2,150,000 shares sold by the Company at a price of $ 30.50 per share.

The Company’s net proceeds were approximately $ 62.5 million, after deducting underwriting discounts and specific incremental expenses directly attributable to the offering.

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 eight 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 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.

2 unchanged sentences

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 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.

The measure of segment assets is reported on the Consolidated Balance Sheets 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, return on equity and growth in book value per share in competitive analysis by benchmarking to the Company’s competitors.

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.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

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Segment (continued)

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.

The following table presents gross written premiums by underwriting division for the years ended December 31, 2025, 2024 and 2023:

Years Ended December 31,

($ in thousands) 2025 2024 2023

Industry Solutions $ 317,198 $ 305,476 $ 267,628

Global Property & Agriculture 311,402 273,191 205,081

Captives 241,902 167,624 124,286

Programs 218,407 178,726 163,653

Accident & Health $ 254,102 $ 173,073 $ 151,701

Transactional E&S 169,053 122,508 75,098

Agriculture and Credit (Re)insurance 346,212 118,070 30,598

Captives 275,694 241,902 167,624

Construction & Energy Solutions 274,318 296,582 299,748

Global Property 178,128 201,796 242,593

Professional Lines 149,231 159,785 154,565

Specialty Programs 322,705 218,407 178,726

Surety 168,148 143,965 106,056

Transactional E&S 197,779 189,669 128,236

Total continuing business 2,166,317 1,743,249 $ 1,459,847

19 unchanged sentences

Net investment income 83,619 80,600 40,340

Net investment gains (losses) 6,256 11,072 ( 15,705 )

Other (loss) income ( 167 ) ( 632 ) 1

Net investment gains 22,149 6,342 11,054

Other loss ( 587 ) ( 167 ) ( 632 )

Transaction costs 14,019 — —

Interest expense 7,919 9,496 10,024

8 unchanged sentences

Book value per share $ 24.92 $ 19.79 $ 16.72

The following table sets forth the components of the Company’s income tax expense for the years ended December 31, 2024, 2023 and 2022:

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the components of the Company’s income tax expense for the year ended December 31, 2025 after the adoption of ASU 2023-09:

($ in thousands) 2025

Income from continuing operations before income tax expense

United States $ 208,763

Foreign 7,661

Total 216,424

Income tax expense (benefit) from continuing operations

Current tax expense

United States 51,758

state and local 1,107

Deferred tax benefit related to:

United States ( 5,584 )

state and local ( 885 )

Total income tax expense $ 46,396

The following table sets forth the components of the Company's income tax expense for the years ended December 31, 2024 and 2023 prior to the adoption of ASU 2023-09:

($ in thousands) 2024 2023

Current income tax expense $ 42,626 $ 14,736

1 unchanged sentence

Total income tax expense $ 33,911 $ 24,118

The following table reconciles the Company's annual effective tax rate to the U.S.

Federal statutory tax rate for the year ended December 31, 2025 after the adoption of ASU 2023-09:

($ in thousands) Amount Percentage

federal statutory income tax rate $ 45,449 21.0 %

State income taxes, net of federal benefit (1)

( 508 ) ( 0.3 ) %

Foreign tax effects

Bermuda statutory rate differential ( 1,609 ) ( 0.7 ) %

Effects of other cross-border tax laws 717 0.3 %

Change of Valuation Allowance 68 — %

Nondeductible and Nontaxable items

Nondeductible transaction costs 1,689 0.8 %

Other nondeductible and nontaxable items 590 0.3 %

Effective tax rate $ 46,396 21.4 %

(1) The following state(s) and/or local jurisdictions make up more than 50% of the state income taxes:

SKYWARD SPECIALTY INSURANCE GROUP, INC.

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Income Taxes (continued)

The Company’s provision for income taxes generally does not deviate substantially from the statutory tax rate.

The effective tax rate may vary slightly from the statutory rate due to tax adjustments for tax-exempt income, dividends-received deduction and non-deductible expenses.

The following table sets forth the differences between income taxes expected at the federal statutory income tax rate of 21% and the reported income tax expense for the years ended December 31, 2024, 2023 and 2022:

2024 2023 2022

($ in thousands) Amount Percentage Amount Percentage Amount Percentage

The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the statutory U.S.

federal income tax rate to the Company’s effective tax rate for continuing operations for the years ended December 31, 2024 and 2023:

($ in thousands) Amount Percentage Amount Percentage

Income tax expense at federal statutory rate $ 32,075 21.0 % $ 23,121 21.0 %

2 unchanged sentences

Total income tax expense $ 33,911 22.2 % $ 24,118 21.9 %

The following table presents income taxes paid (net of refunds received) for the year ended December 31, 2025:

($ in thousands) 2025

United States $ 49,830

state and local (1)

Total income taxes paid $ 50,994

(1) No single state or jurisdiction accounts for greater than 5% of total taxes paid.

The Company paid $ 37.0 million and $ 15.8 million in federal income taxes during the years ended December 31, 2024 and 2023, respectively.

The following table sets forth the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024:

1 unchanged sentence

Deferred tax assets:

Unearned premiums $ 18,178 $ 15,365

Losses and loss adjustment expenses 16,967 11,581

Net operating losses $ 9,409 $ 9,389

Losses and loss adjustment expenses 21,401 16,967

Unearned premiums 22,775 18,178

Unrealized losses on fixed maturity securities, available-for-sale — 5,893

1 unchanged sentence

Other 8,933 6,067

Total deferred tax assets before valuation allowance 64,964 58,947

Valuation allowance ( 654 ) ( 586 )

Total deferred tax assets 64,310 58,361

Less valuation allowance ( 586 ) ( 586 )

Total deferred tax assets after valuation allowance 58,361 49,079

Deferred tax liabilities:

Deferred policy acquisition costs 19,132 15,277

Unrealized gains on equity securities 4,818 3,243

Other long-term investments 2,888 2,625

Depreciation 1,426 1,260

Section 481(a) adjustment 87 1,391

Unrealized gains on equity securities 7 4,818

Unrealized gains on fixed maturity securities, available-for-sale 3,101 —

Unrealized gains on other investments 5,465 —

Depreciation 2,152 1,426

Other 3,613 2,338

Total deferred tax liabilities 36,445 27,875

Deferred income taxes $ 30,486 $ 21,991

The Company paid $ 37.0 million in federal income taxes during the year ended December 31, 2024.

The Company’s federal income tax returns for tax years 2021 to 2023 are subject to examination by the Internal Revenue Service.

The Company has no current U.S.

federal or state and local income tax examinations on-going at this time.

At December 31, 2024, the Company carried no balance for uncertain tax positions.

The Company had no accrual for the payment of interest and penalties at December 31, 2024 or 2023.

The Company has federal net operating loss carryforwards of approximately $ 44.7 million.

These net operating losses are set to expire beginning in 2032.

The Company is limited on the utilization of $ 44.7 million of the net operating losses under Internal Revenue Code Section 382 (“Sec 382”) which imposes limitations on a corporation’s ability to utilize tax attributes if the corporation experiences an “ownership change” which occurred during 2014.

The Sec 382 limitation is

Net deferred tax asset $ 27,865 $ 30,486

SKYWARD SPECIALTY INSURANCE GROUP, INC.

2 unchanged sentences

Income Taxes (continued)

expected to result in an expiration of $ 2.8 million ($ 0.6 million tax effected) of net operating losses.

A valuation allowance was established against the balance that is expected to expire without utilization.

The Company generated a capital loss carryforward in 2022, resulting in a deferred tax asset of $ 1.7 million as of December 31, 2024.

No valuation allowance is recorded against this deferred tax asset as the Company expects to utilize this carryforward before it expires in 2027.

The Company provides a valuation allowance against deferred tax assets when it is more likely-than-not that some portion, or all, of deferred tax assets will not be realized.

Its deferred tax valuation allowance at December 31, 2024 and 2023 was $ 0.6 million.

The Company has federal net operating loss carryforwards of approximately $ 40.3 million.

These net operating losses are set to expire beginning in 2032.

The Company is limited on the utilization of $ 40.3 million of the net operating losses under Internal Revenue Code Section 382 which imposes limitations on a corporation’s ability to utilize tax attributes if the corporation experiences an “ownership change.” The Company experienced an ownership change during 2014.

The 382 limitation is expected to result in an expiration of $ 2.8 million ($ 0.6 million tax effected) of net operating losses.

In 2025, a valuation allowance has been established against this balance that is expected to expire without utilization.

Out of the total $ 40.3 million federal NOL, $ 0.3 million ($ 0.1 million tax effected) is related to dual consolidated loss that Skyward is not expected to be able to utilize.

The Company also has net operating losses in various state and local jurisdictions of $ 0.9 million which are set to expire between 5 and 20 years or carryforward indefinitely, depending on the jurisdiction.

The Company expects to fully utilize these state and local net operating losses.

The following table presents the change in the Company's valuation allowance for the years ended December 31, 2025 and 2024:

($ in thousands) 2025 2024

Balance at beginning of the period $ 586 $ 586

Increase related to net operating loss 68 —

Balance at the end of the period $ 654 $ 586

The Company’s federal income tax returns for tax years 2022-2024 are subject to examination by the Internal Revenue Service.

As of December 31, 2025, the Company had no provision for uncertain tax positions and no provision for penalties or interest.

In addition, management does not believe there are any uncertain tax benefits that could be recognized within the next twelve months that would impact the Company’s effective tax rate.

Tax Legislative Update

On July 4, 2025, the One Big Beautiful Bill Act (“OBBB Act”), which includes a broad range of tax reform provisions, was signed into law in the United States.

The OBBB Act did not have a material impact on the Company's annual effective tax rate in 2025 and no material impact is expected in 2026.

Reserves for Losses and Loss Adjustment Expenses

14 unchanged sentences

Due to the unique claim characteristics of each product and the longer-tail nature of the multi-line solutions, this introduces more uncertainty as over time the claims can be impacted by changes in regulation, inflation and other unforeseen factors.

Exited lines includes all underwriting units that the Company placed in run-off and are presented separately from on-going lines of business.

In 2024, the Company transitioned from evaluating reserves on a policy year basis to an accident year basis which results in earlier recognition of underlying claim trends, better alignment of exposure to risks, and adherence to commonly used industry best practices.

In prior years, the Company’s methodology allocated IBNR from its policy year analysis to accident year.

As a result of transitioning to accident year, IBNR within short-tail/monoline specialty lines, multi-line solutions, and exited lines was reallocated for the years ended December 31, 2023, 2022, 2021 and 2020, and certain amounts have been conformed to the current year presentation.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

2 unchanged sentences

Reserves for Losses and Loss Adjustment Expenses (continued)

Exited lines includes all underwriting units that the Company placed in run-off and are presented separately from on-going lines of business.

The following table sets forth the reconciliation of unpaid losses and loss adjustment expenses (“LAE”) as reported in the Consolidated Balance Sheets as of and for the years ended December 31, 2025 and 2024:

14 unchanged sentences

Reserves for losses and LAE, end of period $ 2,318,894 $ 1,782,383 $ 1,314,501

For the year ended December 31, 2025, the Company recognized favorable development related to prior years’ loss and loss expense reserves of $ 7.5 million driven by favorable development of $ 24.6 million and $ 5.3 million in short-tail/monoline specialty lines and multi-line solutions, respectively, partially offset by $ 22.4 million of adverse development in exited lines.

The adverse development is primarily attributable to commercial auto and excess over auto in divisions that have been non-renewed or have significantly reduced exposure over the past three years.

This was offset by favorable development in surety and property.

For the year ended December 31, 2024, the Company recognized adverse development related to prior years’ loss and loss expense reserves of $ 25.7 million, primarily related to losses previously subject to the LPT from accident years 2018 and prior, with $ 10.1 million and $ 15.2 million in multi-line solutions and exited lines, respectively.

For the year ended December 31, 2023, the Company recognized adverse development related to prior years’ loss and loss expense reserves of $ 10.8 million.

During the year ended December 31, 2023, the Company recognized adverse development related to prior years’ loss and loss expense reserves of $ 10.8 million.

Adverse development of $ 11.7 million in multi-line solutions was driven by greater than expected severity in auto, general, and excess liability lines of business primarily from accident years 2020 to 2022.

1 unchanged sentence

The favorable development was in the property line of business primarily from accident years 2021 and 2022.

During the year ended December 31, 2022, the Company’s net incurred losses for accident years 2021 and prior developed adversely by $ 33.8 million.

Adverse development of $ 20.2 million in exited lines was due to (i) losses previously subject to the LPT from accident years 2018 and prior, and (ii) increased frequency and severity in general and professional liability lines from accident years 2019 through 2021.

Adverse development of $ 13.0 million in multi-line solutions was driven by an increase in the frequency and severity of claims in commercial auto and general liability from accident years 2018 through 2021.

Short Duration Contract Disclosures

10 unchanged sentences

($ in thousands except number of claims)

Incurred Losses and Allocated Loss Adjustment Expense (“ALAE”), Net of Reinsurance As of December 31, 2024

Incurred Losses and ALAE, Net of Reinsurance As of December 31, 2025

Years Ended December 31,

89 unchanged sentences

2022 2,155 4,077 9,211 11,325

2022 2,155 4,077 9,211

Total $ 538,304

31 unchanged sentences

SUA commission revenue $ 8,323 $ 7,967 $ 7,222

SUA fee income 2,928 2,732 1,597

Other 180 468 378

Total commission and fee income $ 6,703 $ 6,064 $ 5,199

SUA fee revenue 2,333 2,443 2,732

Other commission and fee revenue (loss) 1,725 266 ( 135 )

Total commission and fee revenue 12,381 10,676 9,819

Commission and fee expenses ( 5,526 ) $ ( 3,973 ) $ ( 3,755 )

Net commission and fee income $ 6,855 $ 6,703 $ 6,064

The following table sets forth the Company’s opening and closing balances of contract assets from commission and fee income for the years ended December 31, 2025, 2024 and 2023:

13 unchanged sentences

The following tables set forth the effects of reinsurance on written and earned premiums and losses and loss adjustment expenses for the years ended December 31, 2025, 2024 and 2023:

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reinsurance (continued)

2025 2024 2023

5 unchanged sentences

Ceded losses and LAE incurred $ 697,978 $ 534,295 $ 337,011

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reinsurance (continued)

The following table sets forth the components of reinsurance recoverables and ceded unearned premium as of December 31, 2024 and December 31, 2023:

The following table sets forth the components of reinsurance recoverables and ceded unearned premium as of December 31, 2025 and 2024:

($ in thousands) 2025 2024

10 unchanged sentences

During the first quarter of 2020, the Company entered into an LPT retroactive reinsurance agreement (“LPT”) with R&Q.

At December 31, 2024 and 2023 the reinsurance recoverable from R&Q was $ 22.7 million and $ 20.9 million, respectively.

At December 31, 2024 the reinsurance recoverable from R&Q was $ 22.7 million.

The LPT was commuted effective January 31, 2025 and the Company received the reinsurance recoverable balance in full.

2 unchanged sentences

Stock Based Compensation

On September 23, 2022, the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) approved the Company’s 2022 Long-Term Incentive Plan (the “2022 Plan”), which became effective on January 12, 2023 and replaced the Company’s prior Long Term Incentive Plan (the “2020 Plan”).

On September 23, 2022, the Board of Directors approved the Company’s 2022 Long-Term Incentive Plan (the “2022 Plan”), which became effective on January 12, 2023 and replaced the Company’s prior Long Term Incentive Plan (the “2020 Plan”).

The 2022 Plan provides for the granting of restricted stock, restricted stock units, performance stock units, stock options as well as cash-based performance awards, to select employees and non-employee directors of the Company.

The 2022 Plan stated that 3,200,656 shares of common stock were available for issuance.

In November 2024, the Compensation Committee approved a program to permit the Company’s Board of Directors to defer receipt of their annual restricted stock units awards to the fifth anniversary of the grant date, the tenth anniversary of the grant date, or the date of separation of service from the Company.

This program will become available for the Directors who opt into the provisions for their 2025 grant.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

2 unchanged sentences

Stock Based Compensation (continued)

In November 2024, the Compensation Committee approved a program that permits the independent directors to elect to defer settlement of their annual restricted stock units (“RSU”) awards to the fifth anniversary of the grant date, the tenth anniversary of the grant date, or the date of separation of service from the Company.

This program became available for the Directors who elected in 2024 to defer settlement of their 2025 RSU awards which vest in 2026.

The following table sets forth the Company’s equity awards, target payout ranges and authorized target restricted stock and stock units for the years ended December 31, 2025, 2024 and 2023:

14 unchanged sentences

Service condition awards N/A 1 – 4 years

Stock options N/A 3 – 4 years

Year ended December 31, 2023

4 unchanged sentences

Service condition awards N/A 1 – 4 years

Stock options N/A 3 – 4 years

Stock options

6 unchanged sentences

Outstanding at January 1, 2025 759,990

Forfeited $ 15.00 ( 219 )

Outstanding at December 31, 2025 759,771

2 unchanged sentences

Outstanding at January 1, 2024 759,990

Granted $ 15.00 759,990

Outstanding at December 31, 2024 759,990

The intrinsic value of each option is determined based on the difference between the fair value of the underlying share and the exercise price of the underlying option.

The aggregate intrinsic value of options outstanding at December 31, 2024 and 2023 was $ 27.0 million and $ 14.3 million, respectively.

The weighted-average remaining contractual life of the options outstanding at December 31, 2024 was 8.0 years.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

2 unchanged sentences

Stock Based Compensation (continued)

The intrinsic value of each option is determined based on the difference between the fair value of the underlying share and the exercise price of the underlying option.

The aggregate intrinsic value of options outstanding at December 31, 2025 and 2024 was $ 27.4 million and $ 27.0 million, respectively.

The weighted-average remaining contractual life of the options outstanding at December 31, 2025 was 7.0 years.

Restricted stock awards and restricted stock units

35 unchanged sentences

Employee Stock Purchase Plan

On September 23, 2022, the Compensation Committee approved the Company’s 2022 Employee Stock Purchase Plan (the “ESPP”), which became effective on May 15, 2023.

On September 23, 2022, the Board of Directors approved the Company’s 2022 Employee Stock Purchase Plan (the “ESPP”), which became effective on May 15, 2023, and is administered by the Compensation Committee.

Under the ESPP, all employees of the Company may choose, at two different specified time intervals each year, to have a percentage of their annual base earnings withheld to purchase the Company’s common stock.

7 unchanged sentences

Earnings Per Share

The following table sets forth the compilation of basic and diluted net earnings per share for the years ended December 31, 2024, 2023 and 2022:

The following table sets forth the computation of basic and diluted net earnings per share for the years ended December 31, 2025, 2024 and 2023:

($ in thousands, except for share and per share amounts) 2025 2024 2023

12 unchanged sentences

Diluted earnings per share $ 4.07 $ 2.87 $ 2.24

The Company’s preferred shares participate in dividends and distributions with common stock on an as-converted basis and represent a participating security.

Instruments awarded to employees that provide the holder the right to purchase common stock at a fixed price were included as potential common shares, weighted for the portion of the period they were granted, if dilutive.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share (continued)

The following table presents anti-dilutive instruments that were excluded from the calculation of diluted weighted-average common share equivalents during the years ended December 31, 2025, 2024 and 2023:

2025 2024 2023

Stock Notes — — 60,576

Stock units 104,531 20,346 3,931

Options 242 859 914

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share (continued)

The following table presents common share equivalents of contingently issuable instruments that were excluded from basic earnings per share in the years ended December 31, 2025, 2024 and 2023:

1 unchanged sentence

Common shares — — 920,864

Preferred shares, if converted — — 1,059,602

Total — — 920,864

8 unchanged sentences

The Company holds a 20 % ownership interest in RISCOM.

Net earned premium and gross commission expense related to these agreements for the years ended December 31, 2024, 2023 and 2022 were as follows:

Net earned premiums and gross commission expense related to these agreements for the years ended December 31, 2025, 2024 and 2023 were as follows:

($ in thousands) 2025 2024 2023

1 unchanged sentence

Commissions 28,728 25,372 24,177

Premiums receivable as of December 31, 2024 and 2023 were $ 12.6 million and $ 10.6 million, respectively.

Advisory and professional services fees and expense reimbursements paid to various affiliated stockholders and directors for the years ended December 31, 2024, 2023 and 2022 were $ 0.6 million, $ 3.6 million and $ 3.4 million respectively.

Premiums receivable as of December 31, 2025 and December 31, 2024 were $ 13.9 million and $ 12.6 million, respectively.

Advisory and professional services fees and expense reimbursements paid to various affiliated stockholders and directors for the years ended December 31, 2025 and 2024 were $ 0.6 million and for the year ended December 31, 2023 were $ 3.6 million.

See Notes 5, 6 and 11 for investments involving affiliated companies and additional related party transactions.

See Note 11 for related party transactions related to the Company’s common and preferred shares.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

The Company is named as a defendant in various legal actions arising from claims made under insurance policies and contracts.

The Company is named as a party 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.

8 unchanged sentences

At this time, the Company does not have reason to believe any such significant claims exist.

SKYWARD SPECIALTY INSURANCE GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Statutory Accounting Principles and Regulatory Matters

7 unchanged sentences

The maximum amount of dividends which can be paid by GMIC without prior approval is subject to restrictions relating to policyholder surplus, net income, and dividends declared or distributed during the preceding 12 months.

As of December 31, 2024, GMIC is not restricted to paying ordinary dividends.

As of December 31, 2025, GMIC, as a company domiciled in Texas and subject to state insurance regulations, is restricted to paid dividends of the greater of ten percent of prior year ending capital and surplus or prior year net income.

GMIC did not declare or pay any dividend during the year ended December 31, 2025 and HSIC did not declare or pay any dividends during the year ended December 31, 2024.

1 unchanged sentence

Under those requirements, the amount of capital and surplus maintained by a property and casualty insurance company is to be determined based on the various risk factors related to it.

As of December 31, 2024 GMIC’s statutory capital and surplus substantially exceeded the regulatory requirements and as of December 31 2023, HSIC’s statutory capital and surplus substantially exceeded the regulatory requirements.

As of December 31, 2025 and 2024 GMIC’s statutory capital and surplus substantially exceeded the regulatory requirements.

Subsequent Events

On January 31, 2025, Skyward Re commuted its existing Loss Portfolio Transfer and Adverse Development and Retrocession Agreement, dated April 1, 2020 with R&Q pursuant to a Commutation Agreement and received $ 11.7 million in cash.

At December 31, 2024, the Company (i) strengthened LPT loss reserves and increased the paid loss reinsurance recoverable by $ 25.3 million, (ii) increased the allowance for estimated uncollectible reinsurance by $ 13.6 million which was subsequently written-off during the year ended December 31, 2024, and (iii) recognized a deferred gain of $ 2.0 million.

On September 2, 2025, the Company entered into two share purchase agreements (the "Apollo Majority SPAs") with institutional and management shareholders, respectively, of Apollo Group Holdings Limited ("Apollo") (the "Majority Sellers").

Pursuant to the Apollo Majority SPAs, in accordance with the terms and subject to the conditions therein, the Company agreed to acquire all of the issued shares of Apollo held by the Majority Sellers, representing approximately 87 % of the issued share capital of Apollo.

In addition, closing of the transaction ("Closing") was conditioned upon the Company acquiring 100 % of the issued share capital of Apollo (the “Acquisition”) at Closing pursuant to additional short-form share purchase agreements with the remaining minority shareholders of Apollo.

On January 1, 2026, the Company completed the acquisition for aggregate consideration of approximately $ 555.0 million, payable in a combination of cash and newly issued shares of the Company’s common stock.

The acquisition closed shortly before the issuance of these consolidated financial statements, therefore, the initial accounting under ASC 805 is not yet complete.

The Company is obtaining and evaluating the information necessary to determine the identifiable assets acquired, liabilities assumed, and any resulting goodwill or intangible assets.

The required purchase accounting disclosures will be provided in future filings once available.

The Company evaluated subsequent events from December 31, 2025, through the date these consolidated financial statements were issued and did not identify any additional subsequent events requiring disclosure.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data