Skyward Specialty Insurance Group, Inc. 10-K

Item 8. Financial Statements Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Skyward Specialty Insurance Group, Inc. Opinion on Internal Control Over Financial Reporting 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 The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Houston, Texas March 2, 2026 56 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Skyward Specialty Insurance Group, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Skyward Specialty Insurance Group, Inc. 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 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. Valuation of Reserves for Unpaid Losses and Loss Adjustment Expenses Description of the Matter At December 31, 2025, the Company’s reserves for unpaid losses and loss adjustment expenses (LAE) was $2.3 billion, of which a significant portion represents incurred but not reported reserves (IBNR). As described in Note 1 of the consolidated financial statements, the reserves for unpaid losses and LAE represents the Company’s estimated ultimate cost of all unreported and reported but unpaid insured claims and the cost to adjust the losses that have been incurred as of the balance sheet date. The Company estimates the reserves for unpaid losses and LAE using individual case-basis valuations of reported claims and statistical analyses and various actuarial procedures. Those estimates are based on historical information, industry and peer group information, and estimates of trends in factors such as loss severity, loss frequency, and other factors such as inflation. Auditing management’s estimate of reserves for unpaid losses and LAE, including IBNR, was complex and involved our actuarial specialists due to the significant estimation uncertainty associated with evaluating management’s methods and assumptions including loss development factors, expected loss ratios, and trends applied to the Company’s historical experience. These assumptions have a significant effect on the valuation of IBNR reserves. 57 Table of Contents 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. We also performed a review of the development of prior year reserve estimates. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2021. Houston, Texas March 2, 2026 58 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2025 2024 ($ in thousands, except share and per share amounts) Assets Investments: 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 Fixed maturity securities, held-to-maturity, at amortized cost (net of allowance for credit losses of $ 468 and $ 243 , respectively) 32,822 39,153 Equity securities, at fair value 1,174 106,254 Mortgage loans, at fair value 9,902 26,490 Equity method investments 77,365 98,594 Other long-term investments 58,650 33,182 Short-term investments, at fair value 264,299 274,929 Total investments 2,300,515 1,870,820 Cash and cash equivalents 168,544 121,603 Restricted cash 30,570 35,922 Premiums receivable, net 544,217 321,641 Reinsurance recoverables, net 1,119,880 857,876 Ceded unearned premium 238,948 203,901 Deferred policy acquisition costs 136,100 113,183 Deferred income taxes 27,865 30,486 Goodwill and intangible assets, net 88,040 87,348 Other assets 137,173 86,698 Total assets $ 4,791,852 $ 3,729,478 Liabilities and stockholders’ equity Liabilities: Reserves for losses and loss adjustment expenses $ 2,318,894 $ 1,782,383 Unearned premiums 774,035 637,185 Deferred ceding commission 46,453 40,434 Reinsurance and premium payables 279,888 177,070 Funds held for others 128,003 102,665 Accounts payable and accrued liabilities 115,034 76,206 Notes payable 100,411 100,000 Subordinated debt, net of debt issuance costs 19,569 19,536 Total liabilities 3,782,287 2,935,479 Stockholders’ equity Common stock, $ 0.01 par value, 500,000,000 shares authorized, 40,511,222 and 40,127,908 shares issued and outstanding, respectively 405 401 Additional paid-in capital 730,555 718,598 Accumulated other comprehensive income (loss) 11,457 ( 22,120 ) Retained earnings 267,148 97,120 Total stockholders’ equity 1,009,565 793,999 Total liabilities and stockholders’ equity $ 4,791,852 $ 3,729,478 The accompanying notes are an integral part of the consolidated financial statements. 59 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Years Ended December 31, ($ in thousands, except share and per share amounts) 2025 2024 2023 Revenues: Net earned premiums $ 1,304,505 $ 1,056,722 $ 829,143 Commission and fee income 6,855 6,703 6,064 Net investment income 83,619 80,600 40,340 Net investment gains 22,149 6,342 11,054 Other loss ( 587 ) ( 167 ) ( 632 ) Total revenues 1,416,541 1,150,200 885,969 Expenses: Losses and loss adjustment expenses 795,022 669,809 515,237 Underwriting, acquisition and insurance expenses 377,359 311,757 243,444 Transaction costs 14,019 — — Interest expense 7,919 9,496 10,024 Amortization expense 1,636 2,007 1,798 Other expenses 4,162 4,392 5,364 Total expenses 1,200,117 997,461 775,867 Income before income taxes 216,424 152,739 110,102 Income tax expense 46,396 33,911 24,118 Net income $ 170,028 $ 118,828 $ 85,984 Net income attributable to participating securities — — 1,677 Net income attributable to common stockholders $ 170,028 $ 118,828 $ 84,307 Comprehensive income Net income $ 170,028 $ 118,828 $ 85,984 Other comprehensive income: Unrealized gains and losses on investments: 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: Basic earnings per share $ 4.21 $ 2.97 $ 2.34 Diluted earnings per share $ 4.07 $ 2.87 $ 2.24 Weighted-average common shares outstanding Basic 40,407,310 40,056,475 36,031,907 Diluted 41,808,046 41,377,460 38,317,534 The accompanying notes are an integral part of the consolidated financial statements. 60 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended December 31, ($ in thousands, except share amounts) 2025 2024 2023 Preferred shares: Balance at beginning of year — — 1,969,660 Preferred stock conversion to common shares — — ( 1,969,660 ) Balance at December 31 — — — Common shares: Balance at beginning of year 40,127,908 39,863,756 16,599,666 Issuance of shares 383,314 264,152 6,958,977 Preferred stock conversion to common shares — — 16,305,113 Balance at December 31 40,511,222 40,127,908 39,863,756 Preferred stock: Balance at beginning of year $ — $ — $ 20 Preferred stock conversion to common shares — — ( 20 ) Balance at December 31 $ — $ — $ — Common stock: Balance at beginning of year $ 401 $ 399 $ 168 Issuance of common stock 4 2 22 Preferred stock conversion to common shares — — 161 Proceeds from equity offerings, net — — 48 Balance at December 31 $ 405 $ 401 $ 399 Treasury stock: Balance at beginning of year $ — $ — $ ( 2 ) Preferred stock conversion to common shares — — 2 Balance at December 31 $ — $ — $ — Additional paid-in capital: Balance at beginning of year $ 718,598 $ 710,855 $ 577,289 Issuance of common stock 11,957 7,743 9,213 Preferred stock conversion to common shares — — ( 143 ) Proceeds from equity offerings, net — — 124,496 Balance at December 31 $ 730,555 $ 718,598 $ 710,855 Stock notes receivable: Balance at beginning of year $ — $ ( 5,562 ) $ ( 6,911 ) Employee equity transactions — 5,562 1,349 Balance at December 31 $ — $ — $ ( 5,562 ) Accumulated other comprehensive income (loss): Balance at beginning of year $ ( 22,120 ) $ ( 22,953 ) $ ( 43,485 ) Other comprehensive income, net of tax 33,577 833 20,532 Balance at December 31 $ 11,457 $ ( 22,120 ) $ ( 22,953 ) Retained earnings (accumulated deficit): Balance at beginning of year $ 97,120 $ ( 21,708 ) $ ( 105,417 ) Cumulative effect on adoption of ASU No. 2016-13 — — ( 2,275 ) Net income 170,028 118,828 85,984 Balance at December 31 $ 267,148 $ 97,120 $ ( 21,708 ) Total stockholders’ equity $ 1,009,565 $ 793,999 $ 661,031 The accompanying notes are an integral part of the consolidated financial statements. 61 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, ($ in thousands) 2025 2024 2023 Cash flows from operating activities: Net income $ 170,028 $ 118,828 $ 85,984 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Net investment (gains) losses ( 22,149 ) ( 6,342 ) ( 11,054 ) Depreciation and amortization expense 3,535 3,358 3,891 Stock-based compensation expense 11,960 9,395 8,525 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 Changes in operating assets and liabilities: Premiums receivable, net ( 222,576 ) ( 142,406 ) ( 40,020 ) Reinsurance recoverables, net ( 262,004 ) ( 261,542 ) ( 17,270 ) Ceded unearned premium ( 35,047 ) ( 17,780 ) ( 28,476 ) Deferred policy acquisition costs ( 22,917 ) ( 21,228 ) ( 23,017 ) Federal income taxes 1,797 4,500 ( 1,892 ) Losses and loss adjustment expenses 536,511 467,882 172,744 Unearned premiums 136,850 84,653 110,023 Deferred ceding commission 6,019 3,377 7,208 Reinsurance and premium payables 102,818 26,914 36,460 Funds held for others 25,338 44,077 21,730 Accounts payable and accrued liabilities 37,032 19,177 2,285 Other, net ( 27,987 ) ( 12,788 ) ( 5,047 ) Net cash provided by operating activities 408,076 305,115 338,187 Cash flows from investing activities: Purchase of fixed maturity securities, available-for-sale ( 910,039 ) ( 617,606 ) ( 459,672 ) Purchase of illiquid investments — ( 75 ) ( 1,675 ) Purchase of equity securities ( 13,213 ) ( 14,077 ) ( 26,009 ) 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 Purchase of property and equipment ( 5,454 ) ( 4,224 ) ( 3,108 ) Proceeds from the sales of fixed maturity securities, available-for-sale 198,195 217,468 26,626 Maturities, calls, transfers and paydowns of fixed maturity securities, available-for-sale 183,951 122,694 48,957 Maturities, calls and paydowns of fixed maturity securities held-to-maturity 4,357 6,015 11,444 Proceeds from the sales of equity securities 126,738 37,534 40,201 Sales of and distributions from equity method and other long-term investments 11,902 14,073 3,572 Change in short-term investments 10,626 ( 4,799 ) ( 149,068 ) Change in receivable/payable for securities 11,928 34 76 Cash provided by deposit accounting 3,251 3,962 11,913 Net cash used in investment activities ( 366,898 ) ( 243,694 ) ( 493,809 ) Cash flows from financing activities: Employee share purchases — — 1,350 Repayment of stock notes receivable — 5,562 — Proceeds from long term borrowings 43,411 107,000 50,000 Payments on long term borrowings and trust preferred ( 43,000 ) ( 116,794 ) ( 50,000 ) Proceeds from initial public offering — — 129,597 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 ) Cash and cash equivalents and restricted cash at beginning of period (1) 157,525 100,336 125,011 Cash and cash equivalents and restricted cash at end of period (1) $ 199,114 $ 157,525 $ 100,336 Supplemental disclosure of cash flow information: Cash paid for interest $ 6,149 $ 8,573 $ 10,667 (1) The sum of cash and cash equivalents and restricted cash from the Consolidated Balance Sheets The accompanying notes are an integral part of the consolidated financial statements. 62 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1 . Summary of Significant Accounting Policies A. Description of Business Skyward Specialty Insurance Group, Inc. (the “Company”), an insurance holding company, is a Delaware corporation that was organized in 2006. It is a specialty insurance company operating in one segment delivering commercial property and casualty products insurance coverages through its underwriting divisions. The Company has four wholly owned insurance company subsidiaries based in the United States: • Great Midwest Insurance Company (“GMIC”) underwrites insurance on an admitted basis and is a certified surety bond company listed with the U.S. Department of the Treasury. • Houston Specialty Insurance Company (“HSIC”), a subsidiary of GMIC, underwrites insurance on a non-admitted basis. • Imperium Insurance Company (“IIC”), a subsidiary of HSIC, underwrites insurance on an admitted basis. • Oklahoma Specialty Insurance Company (“OSIC”), a subsidiary of IIC, underwrites insurance on a non-admitted basis. The Company has a wholly owned captive reinsurance company subsidiary, Skyward Re, that is domiciled in the Cayman Islands and assumed net reserves for certain divisions, related to a retroactive reinsurance contract, from the Company’s insurance companies and retroceded the net reserves to a third-party reinsurer. The Company has three non-risk bearing wholly owned subsidiaries, (i) Skyward Underwriters Agency, Inc. (“SUA”),a managing general insurance agent and reinsurance broker for property and casualty risks in specialty niche markets, (ii) Skyward Service Company an entity which provides various administrative services to the Company’s subsidiaries, and (iii) Skyward Specialty No. 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. B. Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), which differ in some respects from those followed in reports to insurance regulatory authorities. The consolidated financial statements include the accounts of the holding company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. The Company’s actual results could differ from those estimates . C. 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 63 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. 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. D. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and fixed maturity securities with original maturities of three months or less. The carrying value of the Company’s cash and cash equivalents approximates fair value. E. Restricted Cash Cash with a legal restriction on withdrawal or use by the consolidated group is recorded as restricted cash. The carrying value of the Company’s restricted cash approximates fair value. SUA collects premiums from clients, and after deducting commissions and any applicable fees, remits these premiums to the Company’s insurance companies, or to third-party insurance companies. SUA holds unremitted insurance premiums in a fiduciary capacity to third-party insurance companies, as restricted cash. The Company is required by state regulations to maintain assets on deposit with certain states and hold cash as collateral for certain reinsurance balances. Cash held in a depository account for others, or restricted by a state, is recorded as restricted cash. F. Investments Available for Sale Investments in fixed maturities that are classified as available-for-sale are carried at fair value. For available-for-sale fixed maturities in an unrealized loss position, the Company first determines whether there is an intent to sell the security or if it is more likely than not that the Company will be required to sell the security before maturity or recovery of its cost basis. If either of these criteria are met, the amortized cost of the security is written down to fair value with the losses recognized in net investment gains on the Consolidated Statements of Operations. If neither of the these criteria are met, the Company determines whether unrealized losses are due to credit-related factors. 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. 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 Investments in fixed maturity securities that are held-to-maturity are carried at amortized cost net of an allowance for credit losses. The allowance for credit losses represents the current estimate of expected credit losses. The Company develops a historical loss rate from Moody’s multi-year cumulative loss rates for asset-backed securities. The historical loss 64 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. 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 Equity securities consists of common stock or preferred stock. Mutual funds, including those that invest mostly in debt securities, are classified as equity securities. 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 gains (losses) within the Consolidated Statements of Operations. Mortgage loan s Investments in mortgage loans are classified as held for investment and carried on the balance sheet at cost adjusted for unamortized premiums, discounts and loan fees. 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 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 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. Equity method investments Equity method investments include investments in equity and equity securities of non-public entities and indirect investments in loans and loan collateral. The Company has equity investments in certain limited partnerships and corporations where it has significant influence but not control. The analysis of entities that are variable interest entities indicated the Company is not the primary beneficiary, and would not have to consolidate these entities. Equity method is used to account for these investments in unconsolidated subsidiaries. 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 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. The Company does not have significant influence in its investments in equity securities of non-public entities. When these securities do not have a readily determinable fair value, the Company carries these investments at cost, minus impairment, if any, and changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. Investments in indirect collateralized loans and loan collateral are held through and accounted for as an ownership interest in an unconsolidated subsidiary. The Company’s ownership interests in unconsolidated subsidiaries consists of investments in entities such as partnerships, joint ventures, and special purpose investment vehicles. The Company has significant influence, but not control of these unconsolidated subsidiaries and uses the equity method to account for these investments. Other long-term investments Other long-term investments consist of an investment in a limited partnership held at net asset value (“NAV”) and other long-term investment securities. Short-Term Investments Short-term investments consist primarily of money market funds and are carried at cost which approximates fair value. 65 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. 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. Interest income is recognized on the accrual basis, and dividends as earned at the ex-dividend date. Interest income on mortgage-backed and other asset-backed securities is recognized using the effective-yield method based on estimated principal repayments. Included in interest income is the amortization of premium and accretion of discounts on debt securities. Net investment gains and losses are recognized in net income based upon the specific identification method. G. Derivatives 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. H. Reinsurance Reinsurance Accounting In the normal course of business, the Company purchases prospective reinsurance for certain lines of business on a proportional, excess of loss and facultative basis. Proportional reinsurance requires the Company to share the losses and expenses with the reinsurer in exchange for a share of the premiums. Excess of loss reinsurance shares losses, either a proportion of or in its entirety, above a certain dollar threshold, in exchange for a negotiated cost. Facultative reinsurance covers specific risks and/or policies on either a proportional or excess of loss basis. Ceded unearned premium and reinsurance balances recoverable—on paid and unpaid losses and settlement expenses—are reported separately as assets, instead of netting them with the related liabilities, since reinsurance does not relieve the Company of its legal liability to its policyholders. Reinsurance on unpaid losses and settlement expenses represent estimates of the portion of the liabilities recoverable from reinsurers. 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 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. Income generated from retroactive reinsurance contracts is deferred and amortized into net income over the settlement period and losses are charged to net income immediately. Subsequent changes in the measurement of the retroactive reinsurance contract are accounted for under a full retrospective method. Deposit Accounting Certain ceded reinsurance contracts, which management determines do not transfer significant insurance risk, are accounted for using the deposit method of accounting. The evaluation of the transfer of significant insurance risk involves an assessment of both timing risk and underwriting risk. Management may determine that a reinsurance contract does not transfer significant insurance risk if either underwriting risk or timing risk or both are not deemed to have been transferred. 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 66 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. 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. Periodically, the Company reassesses the estimated ultimate receivable and the related expected rate of return on the deposit asset. The accretion of the deposit asset, including any changes in accretion resulting from changes in estimated cash flows, are reflected as part of investment income in the Company’s results of operations. Several reinsurance contracts require deposit accounting treatment due to not transferring sufficient underwriting risk. There were no reinsurance contracts that require deposit accounting treatment due to not transferring sufficient timing risk. Reinsurance Recoverables Reinsurance recoverables are carried net of an allowance for credit losses. The allowance for credit losses represents the current estimate of expected credit losses. The Company develops a historical loss rate using the A.M. Best impairment rate and rating transition study which provides historical loss data of similarly rated reinsurance companies based on the expected duration of the receivables. The historical loss rate is adjusted for current conditions, reasonable and supportable forecasts and consideration of current economic conditions. Changes in the allowance for credit losses are recognized in underwriting, acquisition and insurance expenses on the Consolidated Statements of Operations. Reinsurance does not relieve the Company of its legal liability to its policyholders. The Company continuously monitors the financial condition of its reinsurers. As part of its monitoring efforts, the Company reviews the reinsurers’ annual financial statements. The Company also reviews insurance industry developments that may impact the financial condition of its reinsurers. The Company analyzes the credit risk associated with its reinsurance recoverables by monitoring the financial strength rating of its reinsurers from A.M. Best. It also assesses the adequacy of collateral obtained, where applicable. Should its reinsurers fail to fulfill their obligations, the Company has access to collateral from various reinsurers. As of December 31, 2025 and 2024, reinsurance collateral from reinsurers was $ 344.1 million and $ 337.0 million, respectively. Reinsurance recoverables present potential exposures to individual reinsurers. 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. I. Concentration of Credit Risk Other than reinsurance recoverables, financial instruments that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents, restricted cash, investments and premiums receivable. Cash equivalents and short-term investments include U.S. government securities and money market funds. Investments are diversified throughout many industries and geographic regions. The Company limits the amount of credit exposure with any one financial institution or issuer and believes no significant concentration of credit risk exists with respect to cash and investments. As of December 31, 2025 and 2024, outstanding premiums receivable are generally diversified due to the large number of entities comprising the Company’s customer base and their dispersion across many different lines of business and geographic regions. Failure by distribution sources to remit premiums could result in premium write-offs and a corresponding loss of income. J. Deferred Policy Acquisition Costs Policy acquisition costs consist of commissions and premium taxes that vary with and are directly related to the successful production of new or renewal business. The Company defers policy acquisition costs and related ceding commissions and charges or credits them to earnings in proportion with the premium earned over the life of the policy. A premium deficiency is recognized if the sum of expected losses, loss adjustment expenses, and unamortized acquisition costs exceed its related unearned premiums. The Company first recognizes a premium deficiency by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If its premium deficiency is greater than unamortized acquisition costs, it accrues a liability for the excess deficiency. Anticipated investment income is 67 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. 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. K. Goodwill and Intangible Assets Goodwill and intangible assets are recorded as a result of a business combination. Goodwill represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. The Company reviews its purchase price allocation up to one year subsequent to an acquisition and may make adjustments within the one-year period. The Company amortizes identifiable intangible assets with a finite useful life over the period that the intangible asset is expected to contribute directly or indirectly to its future cash flows; however, it does not amortize indefinite lived intangible assets. The Company reviews goodwill and identifiable intangible assets for recoverability annually in the fourth quarter or on an interim basis should events or changes in circumstances indicate that a carrying amount may not be recoverable. Based upon this review, the Company did not have any goodwill impairment for the years ended December 31, 2025 and 2024. L. Property and Equipment Property and equipment, which is included in other assets on the Consolidated Balance Sheets, is recorded at cost less accumulated depreciation. Depreciation expense is recognized on a straight-line basis for financial statement purposes over periods ranging from three to seven years . M. Reserves for Losses and Loss Adjustment Expenses The reserves for unpaid losses and loss adjustment expenses (“LAE”) represents the Company’s estimated ultimate cost of all unreported and reported but unpaid insured claims and the cost to adjust the losses that have been incurred as of the balance sheet date. We estimate the reserves using individual case-basis valuations of reported claims and statistical analyses and various actuarial procedures. Those estimates are based on our historical information, industry and peer group information and our estimates of future trends in variable factors such as loss severity, loss frequency and other factors such as inflation. We regularly review our estimates and adjust them as necessary as experience develops or as new information becomes known to us. Additionally, during the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward. Even after such adjustments, the ultimate liability may exceed or be less than the revised estimates. 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, 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. N. Premiums The Company earns and recognizes property and casualty and surety premiums on a pro-rata basis over the terms of the policies. The Company earns accident and health premiums as billed, based on census data. Gross premiums written are reduced by ceded premiums from proportional, facultative and excess of loss reinsurance costs for prospective reinsurance. Its premiums receivable includes deferred premiums, which represent installment payments the Company is due from insureds under the payment terms of their policies. Premiums receivable are carried net of an allowance for credit losses. The allowance for credit losses represents the current estimate of expected credit losses. The Company develops a historical loss rate using historical write-offs and aging of receivables. This historical loss rate is adjusted for current conditions, reasonable and supportable forecasts and our ability to cancel coverage on a policy after premium is considered past due. Changes in the allowance for credit losses are recognized in underwriting, acquisition and insurance expenses on the Consolidated Statements of Operations. Unearned premiums represent the portion of gross premiums written which is applicable to the unexpired terms of insurance policies or reinsurance contracts in force. Ceded unearned premiums represent the portion of ceded premiums written which is applicable to the unexpired terms of insurance policies or reinsurance contracts in force. These unearned premiums are calculated on a pro-rata basis over the terms of the policies for direct and ceded amounts. 68 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (continued) O. Commission and Fee Income SUA commission revenue SUA commission revenue is generated from the placement of insurance policies on reinsurance programs through a reinsurance broker which represents the Company’s single performance obligation. Its transaction price is fixed at contract inception and based on a percentage of premiums placed. The Company recognizes 100% of the transaction price as the associated performance obligation is satisfied at the point in time a policy is placed as it has no constraints on revenue. SUA fee income SUA fee income is generated from the placement of insurance policies with a third-party insurance company. The Company’s single performance obligation consists of the placement of the policy. Its transaction price is variable at contract inception and based on a percentage of premium based on risk factors that vary every month such as employee census data and worker roles. The Company estimates its transaction price over the life of the policy using the expected value method and recognizes revenue at the point in time the policy is placed. When there are changes in the estimate of variable consideration, it recognizes those changes in the month they occur. P. Income Taxes Income tax expense is accrued for the tax effects of transactions reported on the consolidated financial statements, and this provision for income taxes consists of taxes currently due plus deferred taxes resulting from temporary differences between amounts reported for financial statement and income tax purposes. A valuation allowance is established for any deferred tax asset not expected to be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date. A liability for uncertain tax positions is recorded where it is more likely-than-not that the tax position will not be sustained upon examination by the appropriate tax authority. Changes in the liability for uncertain tax positions are reflected in income tax expense in the period when a new uncertain tax position arises, judgment changes about the likelihood of an uncertainty, the tax issue is settled, or the statute of limitation expires. Any potential net interest income or expense and penalties related to uncertain tax positions are recorded on the Consolidated Statements of Operations. 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 taxes. Premium tax expense is recognized within underwriting, acquisition and insurance expense on the Consolidated Statements of Operations. Q. Fair Value of Financial Instruments Fair value is estimated for each class of financial instrument based on the framework established in the fair value accounting guidance. This guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value hierarchy disclosures are based on the quality of inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). As a part of management’s process to determine fair value, the Company utilizes widely recognized, third-party pricing sources to determine the Company’s fair values of financial instruments. The Company has obtained an understanding of the third-party pricing sources’ valuation methodologies and inputs. See Note 4 for further details regarding fair value disclosures. R. Stock-Based Compensation We expense the estimated fair value of employee stock options and similar awards. We measure compensation cost for awards of equity instruments to employees based on the grant-date fair value of those awards and recognize compensation expense over the service period that the awards are expected to vest. The tax effects related to share-based payments are made through net earnings. See note 18 for further discussion and related disclosures regarding stock-based compensation. 69 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (continued) Employee Stock Purchase Plan The Company’s employee stock purchase plan (“ESPP”), offers all employees the option to purchase common stock at a discount. The Company recognizes compensation cost on a straight-line basis over the offering period. S. Earnings Per Share Basic earnings per share is calculated using the two-class method. Undistributed earnings are allocated to participating securities based on the extent to which each class may share in earnings as if all the earnings for the period have been distributed. Basic earnings per share is calculated by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Common shares, when contingencies, such as vesting requirements, exist and have not been satisfied, are excluded from basic earnings per share. 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. The Company’s common and preferred shares financed by stock notes are contingently issuable instruments where the holder must return, all or part of, the shares if the stock notes are not paid off. These instruments are excluded from basic and diluted earnings per share when the specified conditions are not met presuming the end of the period is the end of the contingency period. The impact of the contingently issuable instruments on diluted earnings per share was calculated using the treasury stock method and included in the reconciliation of the denominator of the basic and diluted earnings per share computations for the year ended December 31, 2024. All outstanding stock notes were settled during 2024, so there was no impact to the Company’s basic and diluted earnings per share computations for the year ended December 31, 2024. Instruments that are convertible into common shares are included in diluted weighted-average common shares outstanding on an if-converted basis based on the legal conversion rate for the respective period, if dilutive. Share-based awards to employees with only service conditions are included as potential common shares, weighted for the portion of the period they are unvested, if dilutive. Share-based awards to employees with performance and service or market conditions are included as potential common shares presuming the end of the period is the end of the contingency period, if dilutive. 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. T. Recent Accounting Pronouncements Recent Accounting Standards Adopted In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). ASU 2023-09 requires public companies, on an annual basis, to provide enhanced rate reconciliation disclosures, including disclosures of specific categories and additional information that meets a quantitative threshold. This update also requires public companies to, among other things, disaggregate income taxes paid by federal, state and foreign taxes. 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”). The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 require a footnote disclosure about specific expenses by requiring PBEs to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other types of depletion expenses. The tabular disclosure will also include certain other expenses, when applicable. In January 2025, the FASB issued ASU 2025-01 to clarify the effective 70 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. 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. 2. Goodwill and Intangible Assets The following tables set forth the carrying amount and changes in the balance of goodwill by reporting unit at December 31, 2025 and 2024: ($ in thousands) Accident and Health Surety Construction and Energy Solutions Other Total Goodwill Gross balance at December 31, 2024 $ 91,577 $ 6,781 $ 10,204 $ 3,879 $ 112,441 Accumulated impairment at December 31, 2024 ( 44,821 ) — — ( 1,886 ) ( 46,707 ) Net balance at December 31, 2025 $ 46,756 $ 6,781 $ 10,204 $ 1,993 $ 65,734 ($ in thousands) Accident and Health Surety Construction and Energy Solutions Other Total Goodwill Gross balance at December 31, 2023 $ 91,577 $ 6,781 $ 10,204 $ 3,879 $ 112,441 Accumulated impairment at December 31, 2023 ( 44,821 ) — — ( 1,886 ) ( 46,707 ) Net balance at December 31, 2024 $ 46,756 $ 6,781 $ 10,204 $ 1,993 $ 65,734 The following tables set forth the carrying amount and changes in the balance of other intangible assets at December 31, 2025 and 2024: ($ in thousands) Agent Relationships Non-competes Trademarks Licenses Total Other Intangible Assets Gross balance at December 31, 2024 $ 24,491 $ 1,117 $ 999 $ 14,019 $ 40,626 Accumulated amortization at December 31, 2024 ( 17,895 ) ( 1,117 ) — — ( 19,012 ) Additions 2,000 — — — 2,000 Amortization ( 1,308 ) — — — ( 1,308 ) Net balance at December 31, 2025 $ 7,288 $ — $ 999 $ 14,019 $ 22,306 ($ in thousands) Agent Relationships Non-competes Trademarks Licenses Total Other Intangible Assets Gross balance at December 31, 2023 $ 24,491 $ 1,117 $ 999 $ 14,019 $ 40,626 Accumulated amortization at December 31, 2023 ( 16,808 ) ( 1,117 ) — — ( 17,925 ) Amortization ( 1,087 ) — — — ( 1,087 ) Net balance at December 31, 2024 $ 6,596 $ — $ 999 $ 14,019 $ 21,614 The Company’s indefinite lived intangible assets relate to insurance licenses and trademarks. 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. 71 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. 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, Amount 2026 $ 1,053 2027 1,053 2028 1,053 2029 762 2030 553 3. Investments The following tables set forth the amortized cost and the fair value by investment category at December 31, 2025 and 2024: ($ in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value December 31, 2025 Fixed maturity securities, available-for-sale: U.S. government securities $ 44,190 $ 292 $ ( 14 ) $ — $ 44,468 Corporate securities and miscellaneous 632,244 14,223 ( 3,080 ) ( 7,000 ) 636,387 Municipal securities 102,691 1,725 ( 2,300 ) — 102,116 Residential mortgage-backed securities 487,145 8,928 ( 9,486 ) — 486,587 Commercial mortgage-backed securities 72,631 1,016 ( 597 ) — 73,050 Other asset-backed securities 509,854 5,194 ( 1,353 ) — 513,695 Total fixed maturity securities, available-for-sale $ 1,848,755 $ 31,378 $ ( 16,830 ) $ ( 7,000 ) $ 1,856,303 Fixed maturity securities, held-to-maturity: Other asset-backed securities $ 33,290 $ 829 $ ( 48 ) $ ( 468 ) $ 33,603 Total fixed maturity securities, held-to-maturity $ 33,290 $ 829 $ ( 48 ) $ ( 468 ) $ 33,603 72 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investments (continued) ($ in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Loss Allowance for Credit Losses Fair Value December 31, 2024 Fixed maturity securities, available-for-sale: U.S. government securities $ 26,577 $ 35 $ ( 126 ) $ — $ 26,486 Corporate securities and miscellaneous 433,298 5,618 ( 13,288 ) — 425,628 Municipal securities 89,966 116 ( 5,366 ) — 84,716 Residential mortgage-backed securities 408,585 1,875 ( 16,627 ) — 393,833 Commercial mortgage-backed securities 70,262 545 ( 1,443 ) — 69,364 Other asset-backed securities 291,578 2,447 ( 1,834 ) — 292,191 Total fixed maturity securities, available-for-sale $ 1,320,266 $ 10,636 $ ( 38,684 ) $ — $ 1,292,218 Fixed maturity securities, held-to-maturity: Other asset-backed securities $ 39,396 $ — $ ( 436 ) $ ( 243 ) $ 38,717 Total fixed maturity securities, held-to-maturity $ 39,396 $ — $ ( 436 ) $ ( 243 ) $ 38,717 73 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investments (continued) The amortized cost and estimated fair value of fixed maturity securities, available for sale, at December 31, 2025 by contractual maturity are shown below. ($ in thousands) Amortized Cost Fair Value Due in less than one year $ 45,682 $ 45,478 Due after one year through five years 449,790 449,145 Due after five years through ten years 219,293 224,696 Due after ten years 64,360 63,652 Mortgage-backed securities 559,776 559,637 Other asset-backed securities 509,854 513,695 Total $ 1,848,755 $ 1,856,303 Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Also, changing interest rates, tax considerations or other factors may result in portfolio sales prior to maturity. The Company’s fixed maturity securities, held-to-maturity, at December 31, 2025 consisted entirely of asset backed securities that were not due at a single maturity date. At December 31, 2025, the Company had U.S. 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 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. 74 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investments (continued) The following tables set forth the gross unrealized losses and the corresponding fair values of investments, aggregated by length of time that individual securities had been in a continuous unrealized loss position as of December 31, 2025 and 2024: Less than 12 Months 12 Months or More Total ($ in thousands) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses December 31, 2025 Fixed maturity securities, available-for-sale: U.S. government securities $ 349 $ ( 1 ) $ 1,565 $ ( 13 ) $ 1,914 $ ( 14 ) Corporate securities and miscellaneous 67,644 ( 346 ) 63,575 ( 2,734 ) 131,219 ( 3,080 ) Municipal securities 19,157 ( 400 ) 22,004 ( 1,900 ) 41,161 ( 2,300 ) Residential mortgage-backed securities 56,147 ( 262 ) 74,075 ( 9,224 ) 130,222 ( 9,486 ) Commercial mortgage-backed securities 4,646 ( 3 ) 8,363 ( 594 ) 13,009 ( 597 ) Other asset-backed securities 85,098 ( 424 ) 16,081 ( 929 ) 101,179 ( 1,353 ) Total fixed maturity securities, available-for-sale 233,041 ( 1,436 ) 185,663 ( 15,394 ) 418,704 ( 16,830 ) Fixed maturity securities, held-to-maturity: Other asset-backed securities 1,912 ( 48 ) — — 1,912 ( 48 ) Total fixed maturity securities, held-to-maturity: 1,912 ( 48 ) — — 1,912 ( 48 ) Total $ 234,953 $ ( 1,484 ) $ 185,663 $ ( 15,394 ) $ 420,616 $ ( 16,878 ) 75 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investments (continued) Less than 12 Months 12 Months or More Total ($ in thousands) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses December 31, 2024 Fixed maturity securities, available-for-sale: U.S. government securities $ 15,938 $ ( 34 ) $ 2,297 $ ( 92 ) $ 18,235 $ ( 126 ) Corporate securities and miscellaneous 136,888 ( 2,060 ) 81,232 ( 11,228 ) 218,120 ( 13,288 ) Municipal securities 41,930 ( 1,046 ) 27,687 ( 4,320 ) 69,617 ( 5,366 ) Residential mortgage-backed securities 201,407 ( 3,366 ) 82,496 ( 13,261 ) 283,903 ( 16,627 ) Commercial mortgage-backed securities 9,411 ( 126 ) 13,178 ( 1,317 ) 22,589 ( 1,443 ) Other asset-backed securities 75,119 ( 721 ) 29,851 ( 1,113 ) 104,970 ( 1,834 ) Total fixed maturity securities, available-for-sale 480,693 ( 7,353 ) 236,741 ( 31,331 ) 717,434 ( 38,684 ) Fixed maturity securities, held-to-maturity: Other asset-backed securities 2,144 ( 2 ) 36,573 ( 434 ) 38,717 ( 436 ) Total fixed maturity securities, held-to-maturity: 2,144 ( 2 ) 36,573 ( 434 ) 38,717 ( 436 ) Total $ 482,837 $ ( 7,355 ) $ 273,314 $ ( 31,765 ) $ 756,151 $ ( 39,120 ) The Company regularly monitors its available-for-sale fixed maturity securities that have fair values less than cost or amortized cost for signs of impairment, an assessment that requires significant management judgment regarding the evidence known. Such judgments could change in the future as more information becomes known, which could negatively impact the amounts reported. Among the factors that management considers for fixed maturity securities are the financial condition of the issuer including receipt of scheduled principal and interest cash flows, and intent to sell, including if it is more likely than not that the Company will be required to sell the investments before recovery. As of December 31, 2025, the Company had 450 lots of fixed maturity securities in an unrealized loss position. The Company does not have an intent to sell these securities and it is not more likely than not that the Company will be required to sell these securities before maturity or recovery of its cost basis. The Company reviewed its investments at 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: • U.S. government securities and municipal securities : These securities were issued by the U.S. Treasury Department, Federal government-sponsored entities or by state and local governments. The decline in fair values was attributable to changes in interest rates and not credit quality. The Company does not intend to sell these securities and it is likely that it will not do so before their anticipated recovery. Therefore, the Company does not consider these impaired securities. 76 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investments (continued) • Corporate securities and miscellaneous : Corporations in various industries issued these securities. The decline in fair values was attributable to changes in interest rates and not credit quality. The Company reviewed the issuers of these securities to identify any significant adverse change in financial condition, a change in the quality of credit enhancement (if any), a ratings decrease, or negative outlook assignment from a major credit rating agency, and any failure to make interest or principal payments. After these reviews, the Company determined that the decline in fair values was attributable to changes in interest rates and not credit quality. The Company does not intend to sell these securities and it is likely that it will not do so before their anticipated recovery. Therefore, the Company does not consider these impaired securities. • Residential mortgage-backed securities, commercial mortgage-backed securities, and other asset-backed securities : The decline in fair values was attributable to changes in interest rates and not credit quality. The Company does not intend to sell these securities and it is likely that it will not do so before their anticipated recovery. Therefore, the Company does not consider these impaired securities. The following table sets forth the changes in the allowance for credit losses on available-for-sale securities and held-to-maturity securities during the 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 77 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. 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 Gross realized gains Fixed maturity securities, available-for-sale $ 3,002 $ 2,662 $ 1,042 Equity securities 34,262 8,062 6,035 Other 685 213 2 Total 37,949 10,937 7,079 Gross realized losses Fixed maturity securities, available-for-sale ( 10,832 ) ( 8,161 ) ( 1,879 ) Equity securities ( 3,000 ) ( 4,132 ) ( 5,256 ) Other ( 413 ) ( 223 ) ( 20 ) Total ( 14,245 ) ( 12,516 ) ( 7,155 ) Net unrealized gains (losses) on investments Equity securities ( 22,908 ) 7,500 11,516 Mortgage loans ( 7 ) 421 ( 386 ) 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: ($ in thousands) 2025 2024 2023 Fixed maturity securities, available-for-sale $ 198,195 $ 217,468 $ 26,626 Equity securities 126,738 37,534 40,201 The following table sets forth the components of net investment income for the years ended December 31, 2025, 2024 and 2023: ($ in thousands) 2025 2024 2023 Income (loss): Fixed maturity securities, available-for-sale $ 80,302 $ 57,574 $ 34,703 Fixed maturity securities, held-to-maturity ( 804 ) 4,091 4,181 Equity securities 1,223 2,720 3,418 Equity method investments ( 2,683 ) 2,524 ( 9,434 ) Mortgage loans 1,622 5,153 5,474 Indirect loans ( 8,129 ) ( 2,400 ) ( 4,155 ) Short-term investments and cash 12,828 14,851 11,392 Other 3,307 3,000 318 Total investment income 87,666 87,513 45,897 Investment expenses ( 4,047 ) ( 6,913 ) ( 5,557 ) Net investment income $ 83,619 $ 80,600 $ 40,340 78 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investments (continued) 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 Fixed maturity securities $ 42,594 $ 1,046 $ 25,952 Deferred income taxes ( 9,017 ) ( 213 ) ( 5,420 ) Total $ 33,577 $ 833 $ 20,532 Various state regulations require the Company to maintain cash, investment securities or letters of credit on deposit with the states in a depository account. At December 31, 2025 and 2024, cash and investment securities on deposit had carrying values of approximately $ 70.0 million and $ 66.8 million, respectively. 4. Fair Value Measurements The Company’s financial instruments include assets and liabilities carried at fair value, as well as assets and liabilities carried at cost or amortized cost but disclosed at fair value in its consolidated financial statements. In determining fair value, the market approach is generally applied, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities. The Company uses data primarily provided by third-party investment managers or pricing vendors to determine the fair value of its investments. Periodic analyses are performed on prices received from third parties to determine whether the prices are reasonable estimates of fair value. The analyses include a review of month-to-month price fluctuations and, as needed, a comparison of pricing services’ valuations to other pricing services’ valuations for the identical security. The Company classifies its financial instruments into the following three-level hierarchy: Level 1 - Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. Level 2 - Inputs are other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date. Level 3 - Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The following methods and assumptions were used in estimating the fair value disclosures for financial instruments in the accompanying consolidated financial statements and in these notes: U.S. government securities, mutual funds and common stock The Company uses unadjusted quoted prices for identical instruments in an active exchange to measure fair value which represent Level 1 inputs. Preferred stocks, municipal securities, corporate securities and miscellaneous The Company uses a pricing model that utilizes market-based inputs such as trades in an illiquid market for a particular security or trades in active markets for securities with similar characteristics. The model considers other inputs such as benchmark yields, issuer spreads, security terms and conditions, and other market data. These represent Level 2 fair value inputs. Commercial mortgage-backed securities, residential mortgage-backed securities and other asset-backed securities The Company uses a pricing model that utilizes market-based inputs that may include dealer quotes, market spreads, and yield curves. It may evaluate individual tranches in a security by determining cash flows using the security’s terms and conditions, collateral performance, credit information benchmark yields and estimated prepayments. These represent Level 2 fair value inputs. 79 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Fair Value Measurements (continued) 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. The provider estimates the value of the securities using the discount net present value of cash flows method using an unobservable discount rate. The discount rate spread represents the risk associated with future cash flows, including inflation, opportunity cost and the time value of money. This rate represents Level 3 fair value inputs. The following table sets forth the range of the discount rate as of December 31, 2025 and 2024: 2025 2024 High 11.10 % 8.00 % Low 4.25 % 5.70 % Weighted average 6.40 % 6.60 % Mortgage loans Mortgage loans have variable interest rates and are collateralized by real property. The Company determines fair value of mortgage loans using the income approach utilizing inputs that are observable and unobservable (Level 3). The unobservable input consists of the spread applied to a prime rate used to discount cash flows. The spread represents the incremental cost of capital based on the borrower’s ability to make future payments and the value of the collateral relative to the loan balance and is subject to judgment and uncertainty. 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: 2025 2024 High 8.34 % 10.00 % Low 6.55 % 7.00 % Weighted average 7.74 % 7.93 % Derivatives 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. 80 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Fair Value Measurements (continued) 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 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed maturity securities, available-for-sale: U.S. government securities $ 44,468 $ — $ — $ 44,468 Corporate securities and miscellaneous — 503,274 133,113 636,387 Municipal securities — 102,116 — 102,116 Residential mortgage-backed securities — 486,587 — 486,587 Commercial mortgage-backed securities — 73,050 — 73,050 Other asset-backed securities — 495,891 17,804 513,695 Total fixed maturity securities, available-for-sale 44,468 1,660,918 150,917 1,856,303 Fixed maturity securities, held-to-maturity: Other asset-backed securities — — 33,603 33,603 Total fixed maturity securities, held-to-maturity — — 33,603 33,603 Equity securities: Preferred stocks — 1,174 — 1,174 Total equity securities — 1,174 — 1,174 Mortgage loans — — 9,902 9,902 Short-term investments 264,299 — — 264,299 Derivatives 34,857 — — 34,857 Total $ 343,624 $ 1,662,092 $ 194,422 $ 2,200,138 81 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Fair Value Measurements (continued) December 31, 2024 ($ in thousands) Level 1 Level 2 Level 3 Total Fixed maturity securities, available-for-sale: U.S. government securities $ 26,486 $ — $ — $ 26,486 Corporate securities and miscellaneous — 354,815 70,813 425,628 Municipal securities — 84,716 — 84,716 Residential mortgage-backed securities — 393,833 — 393,833 Commercial mortgage-backed securities — 69,364 — 69,364 Other asset-backed securities — 285,084 7,107 292,191 Total fixed maturity securities, available-for-sale 26,486 1,187,812 77,920 1,292,218 Fixed maturity securities, held-to-maturity: Other asset-backed securities — — 38,717 38,717 Total fixed maturity securities, held-to-maturity: — — 38,717 38,717 Equity securities: Common stocks 64,251 — — 64,251 Preferred stocks — 1,164 — 1,164 Mutual funds 40,839 — — 40,839 Total equity securities 105,090 1,164 — 106,254 Mortgage loans — — 26,490 26,490 Short-term investments 274,929 — — 274,929 Total $ 406,505 $ 1,188,976 $ 143,127 $ 1,738,608 The following tables set forth the changes in the fair value of instruments carried at fair value with a Level 3 measurement during the years ended December 31, 2025 and 2024: ($ in thousands) Fixed Maturity Securities, Available-For-Sale Mortgage Loans Balance at December 31, 2024 $ 77,920 $ 26,490 Total gains (losses) for the period recognized in net investment gains (losses) ( 5,180 ) ( 7 ) Issuances — 151 Settlements — ( 16,732 ) Transfers into Level 3 6,143 — Purchases 70,730 — Sales/Disposals ( 1,493 ) — Total unrealized gains for the period recognized in accumulated comprehensive income (loss) 2,797 — Balance at December 31, 2025 150,917 9,902 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 ) 82 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Fair Value Measurements (continued) ($ in thousands) Fixed Maturity Securities, Available-For-Sale Mortgage Loans Balance at December 31, 2023 $ — $ 50,070 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 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. In addition to the preceding disclosures on assets and liabilities recorded at fair value in the Consolidated Balance Sheets, the Company is also required to disclose the fair values of certain other financial instruments for which it is practicable to estimate fair value. Estimated fair value amounts, defined as the quoted market price of a financial instrument, have been determined using available market information and other appropriate valuation methodologies. However, considerable 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. The use of different market assumptions or estimating methodologies may have an effect on the estimated fair value amounts. The following methods and assumptions were used in estimating the fair value disclosures of other financial instruments: Fixed maturity securities, held-to-maturity: Fixed maturity securities, held-to-maturity consists of senior and junior notes with target rates of return. As of 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: 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 $ 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. 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. 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: The carrying value approximates the estimated fair value for notes payable as the notes payable accrue interest at current market rates plus a spread. The Company determines fair value using the income approach utilizing inputs that are observable (Level 2). Subordinated debt: Subordinated debt consists of the Unsecured Subordinated Notes, due May 24, 2039 and have a fixed interest rate. The Company determines the fair value of these instruments using the income approach utilizing inputs that are observable (Level 2). 83 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. 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: 2025 2024 ($ in thousands) Carrying Value Fair Value Carrying Value Fair Value Notes payable FHLB Loan $ 57,000 $ 57,458 $ 57,000 $ 56,200 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 Unsecured subordinated notes $ 19,569 $ 21,020 $ 19,536 $ 20,541 Subordinated debt, net of debt issuance costs $ 19,569 $ 21,020 $ 19,536 $ 20,541 Other financial instruments qualify as insurance-related products and are specifically exempted from fair value disclosure requirements. 5. Mortgage Loans The Company has invested in Separately Managed Accounts (“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 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 Retail — 10,032 Hospitality 6,568 7,984 $ 9,902 $ 26,490 The following table sets forth the Company’s gross investment income for mortgage loans for the years ended December 31, 2025, 2024 and 2023: ($ in thousands) 2025 2024 2023 Commercial $ 432 $ 2,025 $ 2,340 Retail 304 1,853 1,853 Hospitality 886 1,277 1,034 Office — — 203 Multi-family — — 44 $ 1,622 $ 5,155 $ 5,474 The uncollectible amounts on loans, on an individual loan basis, are determined based upon consultations and advice from the Company’s specialized investment manager and consideration of any adverse situations that could affect the borrower’s ability to repay, the estimated value of underlying collateral, and other relevant factors. The Company writes off the uncollectible amount in the period it was determined to be uncollectible. There was no write-off for uncollectible amounts during the years ended December 31, 2025 and 2024, respectively. 84 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. 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. 6. 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) 2025 2024 Carrying Value Ownership % Carrying Value Ownership % Arena Special Opportunities Fund, LP units $ 26,936 14.0 % $ 34,936 15.3 % Arena SOP LP units — 11.2 % 1,474 10.9 % Brewer Lane Ventures Fund II LP units 2,251 2.4 % 1,040 2.4 % 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 The following table sets forth the components of net investment income (loss) from equity method investments for the years ended December 31, 2025, 2024 and 2023: ($ 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 ) 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 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) 2025 2024 Brewer Lane Ventures Fund II LP units $ 3,237 $ 4,077 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 The difference between the cost of an investment and its proportionate share of the underlying equity in net assets is allocated to the various assets and liabilities of the equity method investment. The Company amortizes the difference in net assets over the same useful life of a similar asset as the underlying equity method investment. For investment in RISCOM, a similar asset would be agent relationships. The Company amortizes this difference over a 15 -year useful life. 85 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. Equity Method Investments and Other (continued) 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) 2025 2024 Investment in RISCOM: Underlying equity $ 2,292 $ 3,756 Difference 1,015 1,258 Recorded investment balance $ 3,307 $ 5,013 The following table sets forth the Company’s recorded investment in JVM Funds LLC compared to its share of underlying equity as of December 31, 2025 and 2024: ($ in thousands) 2025 2024 Investment in JVM Funds LLC: Underlying equity $ 14,457 $ 16,624 Difference 454 605 Recorded investment balance $ 14,911 $ 17,229 Investment in Indirect Loans and Loan Collateral As of December 31, 2025 and 2024, the Company held indirect investments in collateralized loans and loan collateral through SMA1 and SMA2. The carrying value of the SMA1 and SMA2 as of December 31, 2025 and 2024 were as follows: ($ in thousands) 2025 2024 SMA1 $ 15,418 $ 20,296 SMA2 8,449 12,973 Investment in indirect loans and loan collateral $ 23,867 $ 33,269 7. 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 Assets Cash and cash equivalents $ 15,816 Other assets 34,856 Total assets $ 50,672 86 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8 . Derivatives 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 . 9. Allowance for Credit Losses Premiums Receivable The following tables set forth the changes in the allowance for expected credit losses on premiums receivable for the years ended December 31, 2025 and 2024 : ($ in thousands) Premiums Receivable, Net Allowance for Estimated Uncollectible Premiums Balance at December 31, 2024 $ 321,641 $ 2,432 Current period change for estimated uncollectible premiums 2,351 Write-offs of uncollectible premiums receivable ( 2,141 ) Recoveries of amounts previously written off 498 Balance at December 31, 2025 $ 544,217 $ 3,140 ($ in thousands) Premiums Receivable, Net Allowance for Estimated Uncollectible Premiums Balance at December 31, 2023 $ 179,235 $ 964 Current period change for estimated uncollectible premiums 3,235 Write-offs of uncollectible premiums receivable ( 1,895 ) Recoveries of amounts previously written off 128 Balance at December 31, 2024 $ 321,641 $ 2,432 87 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9. Allowance for Credit Losses (continued) Reinsurance Recoverables The Company analyzes the credit risk associated with its reinsurance recoverables by monitoring the financial strength rating of its reinsurers from A.M. Best, a widely recognized rating agency with an exclusive insurance industry focus. The Company assesses the financial strength rating annually and throughout the year as A.M. Best provides updates on ratings and outlooks. The Company assesses the adequacy of various forms of credit enhancements such as reinsurance payables, letters of credit and funds held. The following table sets forth the Company’s reinsurance recoverables net of credit enhancements by A.M. Best as of December 31, 2025: 2025 A.M. Best Rating Reinsurance Recoverables, Gross, Amortized Cost Percent of Total A- and above $ 652,178 98.2 % B++ to B+ 5,077 0.8 B to B - 28 — Not rated 6,919 1.0 The Company considers reinsurance balances to be past due when they are 90 days past due. The following tables set forth the changes in the allowance for estimated uncollectible reinsurance for the years ended December 31, 2025 and 2024: ($ in thousands) Reinsurance Recoverables, Net Allowance for Estimated Uncollectible Reinsurance Balance at December 31, 2024 $ 857,876 $ 2,295 Balance at December 31, 2025 $ 1,119,880 $ 2,295 ($ in thousands) Reinsurance Recoverables, Net Allowance for Estimated Uncollectible Reinsurance Balance at December 31, 2023 $ 596,334 $ 2,295 Current period change for estimated uncollectible reinsurance 13,585 Write-offs of uncollectible reinsurance recoverables ( 13,585 ) Balance at December 31, 2024 $ 857,876 $ 2,295 On January 31, 2025, the Company commuted the LPT with R&Q Re (Bermuda) Ltd. ("R&Q") related to accident years 2018 and prior. 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. 10. Property and Equipment The following table presents the components of property and equipment as of December 31, 2025 and 2024, which are included within other assets on the Consolidated Balance Sheets: (in thousands) 2025 2024 Leasehold improvements $ 3,434 $ 3,056 Equipment 4,750 4,506 Software 39,263 33,972 47,447 41,534 Accumulated depreciation ( 32,307 ) ( 29,355 ) Total $ 15,140 $ 12,179 88 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. 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. 11. Notes Payable & Subordinated Debt FHLB Loan On August 30, 2024, the Company entered into the FHLB Loan pursuant to the Advances and Security Agreement. The FHLB Loan is a 4.5-year term loan in the principal amount of $ 57.0 million. The FHLB Loan provides for interest-only payments during its term, with principal due in full at maturity. The interest rate is fixed over the term of the loan at 4.00 %. 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 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. 89 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11. 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. 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, 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. Debentures 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. Interest on the Notes is fixed at 7.25 % for the first 8 years and fixed at 8.25 % thereafter. Early retirement of the debt ahead of 8 year commitment requires all interest payments to be paid in full as well as the return of outstanding principal. Principal is due at maturity on May 24, 2039 and interest is payable quarterly. The Notes have junior priority to all previously issued debt. 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. 12. Segment The Company has one reportable segment through which it offers a broad array of commercial property and casualty products and solutions on a non-admitted (or E&S) and admitted basis, predominantly in the United States. The segment is made up of nine distinct underwriting divisions, or “continuing business,” and has dedicated underwriting leadership supported by high-quality technical staff with deep experience in their respective niches. The Company defines its segment on the basis of the way in which internally reported financial information is regularly reviewed by the Chief Operating Decision Maker (“CODM”) to analyze financial performance, make decisions and allocate resources. The Company’s CODM is the chief executive officer. The accounting policies of the segment are the same as those described in Note 1 “Summary of Significant Accounting Policies” of this Form 10-K. 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 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, 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. 90 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. Segment (continued) The following table presents gross written premiums by underwriting division for the years ended December 31, 2025, 2024 and 2023: ($ in thousands) 2025 2024 2023 Accident & Health $ 254,102 $ 173,073 $ 151,701 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 Exited business ( 81 ) ( 17 ) ( 18 ) Total gross written premiums $ 2,166,236 $ 1,743,232 $ 1,459,829 91 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. Segment (continued) The following table presents information about reported segment net underwriting income, significant segment expenses and a reconciliation of net underwriting income to net income for the years ended December 31, 2025, 2024 and 2023: ($ in thousands) 2025 2024 2023 Underwriting income Revenues: Net earned premiums $ 1,304,505 $ 1,056,722 $ 829,143 Commission and fee income 6,855 6,703 6,064 Total underwriting revenues 1,311,360 1,063,425 835,207 Expenses: Losses and LAE 795,022 669,809 515,237 Amortization of policy acquisition costs 195,422 149,975 108,514 Other operating and general expenses 181,937 161,782 134,930 Total underwriting expenses 1,172,381 981,566 758,681 Net underwriting income $ 138,979 $ 81,859 $ 76,526 Reconciliation of net underwriting income to net income: Net underwriting income $ 138,979 $ 81,859 $ 76,526 Add: Net investment income 83,619 80,600 40,340 Net investment gains 22,149 6,342 11,054 Other loss ( 587 ) ( 167 ) ( 632 ) Less: Transaction costs 14,019 — — Interest expense 7,919 9,496 10,024 Amortization expense 1,636 2,007 1,798 Other expenses 4,162 4,392 5,364 Income before income taxes 216,424 152,739 110,102 Income tax expense 46,396 33,911 24,118 Net income $ 170,028 $ 118,828 $ 85,984 The following table presents return on equity and book value per share for the years ended December 31, 2025, 2024 and 2023: 2025 2024 2023 Return on equity 18.9 % 16.3 % 15.9 % Book value per share $ 24.92 $ 19.79 $ 16.72 92 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. Income Taxes 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 U.S. state and local 1,107 Deferred tax benefit related to: United States ( 5,584 ) U.S. 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 Deferred tax (benefit) expense related to temporary differences ( 8,715 ) 9,382 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: 2025 ($ in thousands) Amount Percentage U.S. 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: Florida 93 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. Income Taxes (continued) 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: 2024 2023 ($ in thousands) Amount Percentage Amount Percentage Income tax expense at federal statutory rate $ 32,075 21.0 % $ 23,121 21.0 % Tax advantaged investments ( 239 ) ( 0.2 ) ( 295 ) ( 0.3 ) Other 2,075 1.4 1,292 1.2 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 U.S. state and local (1) 1,164 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: ($ in thousands) 2025 2024 Deferred tax assets: 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 Stock options/awards 2,446 2,453 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 Deferred tax liabilities: Deferred policy acquisition costs 19,132 15,277 Other long-term investments 2,888 2,625 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 Net deferred tax asset $ 27,865 $ 30,486 94 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. Income Taxes (continued) 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. 14. Reserves for Losses and Loss Adjustment Expenses The Company presents its loss development on a consolidated basis; however, it evaluates net ultimate loss and LAE under three sub-categories: multi-line solutions, short-tail/monoline specialty lines and exited lines. The Company determined that these disaggregated groupings have more homogeneous risk characteristics with similar development patterns and are generally subject to similar trends. Short-tail/Monoline Specialty Lines Short-tail/monoline specialty lines includes the Company’s global property & agriculture, accident & health, surety, and professional lines underwriting divisions. These are market niches for which the Company serves with monoline solutions which generally have shorter durations for losses to fully develop. Losses for these lines are generally reported within a short period of time from the date of loss, and in most instances, claims are settled and paid within a relatively short timeframe. Short tail/monoline specialty can be impacted by larger losses which can be more complex due to factors such as difficulty determining actual damages, legal and regulatory impediments potentially extending the period of time it takes to settle and pay claims. Multi-line Solutions Multi-line solutions includes the Company’s industry solutions, programs, captives and transactional E&S underwriting divisions. These are market niches for which the Company provides multiple products most frequently as an integrated solution. The multi-line solution subcategory is made up predominantly of occurrence liability including general liability, excess liability, and commercial auto. Multi-line solutions have a longer duration for losses to fully develop compared to short-tail/monoline specialty lines. 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. 95 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. Reserves for Losses and Loss Adjustment Expenses (continued) Exited lines 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: ($ in thousands) 2025 2024 2023 Reserves for losses and LAE, beginning of period $ 1,782,383 $ 1,314,501 $ 1,141,757 Less: reinsurance recoverable on unpaid claims, beginning of period ( 670,846 ) ( 455,484 ) ( 435,986 ) Reserves for losses and LAE, beginning of period, net of reinsurance 1,111,537 859,017 705,771 Incurred, net of reinsurance, related to: Current period 810,375 657,783 505,894 Prior years ( 7,471 ) 25,728 10,770 Total incurred, net of reinsurance 802,904 683,511 516,664 Paid, net of reinsurance, related to: Current period 144,799 136,731 109,937 Prior years 371,913 294,260 253,481 Total paid 516,712 430,991 363,418 Net reserves for losses and LAE, end of period 1,397,729 1,111,537 859,017 Plus: reinsurance recoverable on unpaid claims, end of period 921,165 670,846 455,484 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. 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. The adverse development was partially offset by favorable development in short-tail/monoline specialty lines. The favorable development was in the property line of business primarily from accident years 2021 and 2022. Short Duration Contract Disclosures Losses and LAE reserves represent the Company’s best estimate of the ultimate net cost of all reported and unreported losses that are unpaid as of the balance sheet dates. The Company’s estimated reserves for losses and LAE include the accumulation of estimates for claims reported and unpaid prior to the balance sheet dates, estimates (based on projections of relevant historical data) of increases in claims costs for claims already reported, of claims incurred but not reported, and estimates of expenses for investigating and adjusting all incurred and unpaid claims. In determining the cumulative number of reported claims, the Company measures claim counts by incident. The claim counts include all claims reported, even if the Company does not establish a liability for the claim (i.e. reserve for loss and loss adjustment expenses). 96 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. Reserves for Losses and Loss Adjustment Expenses (continued) Short-tail/Monoline Specialty Lines ($ in thousands except number of claims) Incurred Losses and ALAE, Net of Reinsurance As of December 31, 2025 Years Ended December 31, Reported Claims Accident Year 2021* 2022* 2023* 2024* 2025 IBNR 2021 $ 92,780 $ 93,429 $ 92,143 $ 92,134 $ 99,783 $ 1,774 1,656 2022 108,299 105,394 104,095 96,874 6,266 2,414 2023 190,565 191,865 161,222 28,997 5,015 2024 280,147 292,220 99,302 5,819 2025 422,528 275,190 5,495 Total $ 1,072,627 Cumulative net paid loss and ALAE from the table below ( 528,255 ) Net reserves for loss and ALAE before 2021 1,570 Total net reserves for loss and ALAE $ 545,942 *Supplementary information and unaudited ($ in thousands) Cumulative Paid Losses and ALAE, Net of Reinsurance ($ in thousands) Years Ended December 31, Accident Year 2021* 2022* 2023* 2024* 2025 2021 $ 18,447 $ 56,803 $ 67,912 $ 78,439 $ 93,560 2022 27,773 64,594 77,150 85,696 2023 33,795 100,705 114,247 2024 53,691 154,896 2025 79,856 Total $ 528,255 *Supplementary information and unaudited Multi-line Solutions ($ in thousands except number of claims) Incurred Losses and ALAE, Net of Reinsurance ($ in thousands) As of December 31, 2025 Accident Year Years Ended December 31, Reported Claims 2016* 2017* 2018* 2019* 2020* 2021* 2022* 2023* 2024* 2025 IBNR 2016 $ 63,223 $ 62,843 $ 62,843 $ 62,643 $ 84,579 $ 84,579 $ 84,829 $ 84,829 $ 85,434 $ 85,098 $ 828 4,744 2017 65,332 65,332 64,260 78,166 78,166 78,766 78,766 80,493 79,819 837 5,592 2018 74,476 74,476 69,319 71,719 73,019 73,019 75,686 72,963 673 5,103 2019 107,432 109,226 112,378 115,530 116,230 116,206 110,564 1,384 6,113 2020 113,030 124,076 128,111 132,495 132,125 134,281 4,174 5,542 2021 156,067 158,891 160,331 160,546 157,006 7,932 6,727 2022 236,909 242,097 242,358 249,317 19,315 8,679 2023 306,511 306,511 320,637 96,700 8,468 2024 353,933 336,197 155,878 7,700 2025 356,590 257,468 6,139 Total $ 1,902,472 Cumulative net paid loss and ALAE from the table below ( 1,162,853 ) Net reserves for loss and ALAE before 2016 ( 189 ) Total net reserves for loss and ALAE $ 739,430 *Supplementary information and unaudited 97 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. Reserves for Losses and Loss Adjustment Expenses (continued) ($ in thousands) Cumulative Paid Losses and ALAE, Net of Reinsurance ($ in thousands) Years Ended December 31, Accident Year 2016* 2017* 2018* 2019* 2020* 2021* 2022* 2023* 2024* 2025 2016 $ 23,239 $ 42,528 $ 53,352 $ 58,895 $ 69,691 $ 72,544 $ 75,855 $ 77,160 $ 77,760 $ 77,825 2017 23,770 41,945 53,093 61,354 67,926 71,109 73,770 75,714 77,177 2018 26,201 42,568 47,226 58,655 65,635 69,893 70,128 72,429 2019 33,019 50,933 71,053 87,816 99,451 106,765 106,826 2020 29,499 60,680 82,236 105,283 121,097 126,965 2021 37,118 73,293 102,772 125,749 141,539 2022 50,148 114,794 165,854 205,410 2023 63,079 122,186 181,636 2024 58,281 123,488 2025 49,558 Total $ 1,162,853 *Supplementary information and unaudited Exited Lines — all lines in runoff ($ in thousands except number of claims) Incurred Losses and ALAE, Net of Reinsurance ($ in thousands) As of December 31, 2025 Years Ended December 31, Reported Claims Accident Year 2016* 2017* 2018* 2019* 2020* 2021* 2022* 2023* 2024* 2025 IBNR 2016 $ 93,019 $ 92,996 $ 91,372 $ 93,577 $ 97,301 $ 98,301 $ 100,651 $ 100,651 $ 102,801 $ 104,246 $ 1,851 4,911 2017 75,159 79,581 81,785 65,735 68,346 68,646 68,646 70,885 72,682 1,819 4,370 2018 74,357 68,990 76,506 79,006 84,165 84,165 92,082 91,897 4,093 4,941 2019 87,115 73,635 77,770 79,414 79,572 79,823 86,131 9,773 5,660 2020 132,248 136,469 137,835 137,907 137,671 138,320 10,644 4,867 2021 83,322 91,188 91,323 92,095 97,577 10,676 2,446 2022 12,717 12,240 11,800 14,362 2,025 246 2023 — — 2 1 1 2024 — 5 5 — 2025 11 11 — Total $ 605,233 Cumulative net paid loss and ALAE from the table below ( 538,304 ) Net reserves for loss and ALAE before 2015 14,737 Total net reserves for loss and ALAE $ 81,666 *Supplementary information and unaudited 98 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. Reserves for Losses and Loss Adjustment Expenses (continued) ($ in thousands) Cumulative Paid Losses and ALAE, Net of Reinsurance ($ in thousands) Years Ended December 31, Accident Year 2016* 2017* 2018* 2019* 2020* 2021* 2022* 2023* 2024* 2025 2016 $ 36,592 $ 57,638 $ 70,253 $ 78,070 $ 81,181 $ 87,482 $ 91,556 $ 95,114 $ 97,462 $ 98,831 2017 34,176 52,103 51,985 50,545 57,457 62,924 66,498 68,480 69,798 2018 25,553 60,149 39,870 54,339 67,001 74,604 79,860 82,244 2019 28,636 28,954 30,948 45,696 57,341 65,847 70,367 2020 102,725 98,202 102,132 114,543 120,831 124,139 2021 41,540 57,820 66,012 72,923 81,600 2022 2,155 4,077 9,211 11,325 2023 — — — 2024 — — 2025 — Total $ 538,304 *Supplementary information and unaudited The table below presents the reconciliation of the net incurred and paid loss development tables to the balance sheet reserves for losses and loss adjustment expenses at December 31, 2025 and 2024: ($ in thousands) 2025 2024 Net reserves for losses and ALAE: Short-tail/Monoline Specialty Lines $ 545,942 $ 367,226 Multi-line Solutions 739,430 631,065 Exited Lines 81,666 86,689 Reserves for losses and ALAE, net of reinsurance 1,367,038 1,084,980 Reinsurance recoverable on unpaid claims: Short-tail/Monoline Specialty Lines 388,276 275,204 Multi-line Solutions 514,393 380,344 Exited Lines 18,496 15,298 Total reinsurance recoverable on unpaid claims 921,165 670,846 Unallocated LAE 30,691 26,557 Reserves for losses and LAE at end of year $ 2,318,894 $ 1,782,383 The following table sets forth the historical average annual payout of incurred losses and allocated loss adjustment expenses (claims duration) for short-duration contracts, based on the disaggregated information in the paid loss development tables, net of reinsurance: Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1* 2* 3* 4* 5* 6* 7* 8* 9* 10* Short-Tail/Monoline Specialty Lines 21.1 % 38.1 % 10.8 % 9.7 % 15.2 % N/A N/A N/A N/A N/A Multi-line Solutions 23.9 % 21.6 % 15.6 % 13.6 % 10.5 % 4.8 % 1.9 % 2.4 % 1.3 % 0.1 % Exited Lines 27.5 % 12.2 % 4.9 % 9.9 % 8.9 % 6.8 % 4.9 % 2.9 % 2.0 % 1.3 % *Supplementary information and unaudited 99 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 15. Commission and Fee Income Skyward Underwriters Agency, Inc. (“SUA”), a subsidiary of the Company, is a managing general insurance agent and reinsurance broker for property and casualty and accident and health risks in specialty niche markets. Commission and fee income is primarily generated from SUA for the placement of insurance policies on either a third-party insurance or reinsurance company. The following table sets forth the Company’s disaggregated revenues from contracts with customers for the years ended December 31, 2025, 2024 and 2023: ($ in thousands) 2025 2024 2023 SUA commission revenue $ 8,323 $ 7,967 $ 7,222 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: ($ in thousands) Contract Assets Balance at December 31, 2023 $ 976 Balance at December 31, 2024 1,416 Balance at December 31, 2025 953 16. Underwriting, Acquisition and Insurance Expenses The following table sets forth the components of underwriting, acquisition and insurance expenses for the years ended December 31, 2025, 2024 and 2023: ($ in thousands) 2025 2024 2023 Amortization of policy acquisition costs $ 195,422 $ 149,975 $ 108,514 Other operating and general expenses 181,937 161,782 134,930 Total underwriting, acquisition and insurance expenses $ 377,359 $ 311,757 $ 243,444 17. Reinsurance Certain premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. The reinsurance agreements provide the Company with increased capacity to write larger risks and maintain its exposure to loss within its capital resources. The Company remains obligated for amounts ceded in the event that the reinsurers do not meet their obligations. The following tables set forth the effects of reinsurance on written and earned premiums and losses and loss adjustment expenses for the years ended December 31, 2025, 2024 and 2023: 100 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17. Reinsurance (continued) 2025 2024 2023 ($ in thousands) Written Earned Written Earned Written Earned Direct premiums $ 1,684,411 $ 1,622,594 $ 1,458,637 $ 1,375,917 $ 1,241,180 $ 1,155,835 Assumed premiums 481,825 406,792 284,595 282,662 218,649 193,971 Ceded premiums ( 760,004 ) ( 724,881 ) ( 619,654 ) ( 601,857 ) ( 549,138 ) ( 520,663 ) Net premiums $ 1,406,232 $ 1,304,505 $ 1,123,578 $ 1,056,722 $ 910,691 $ 829,143 Ceded losses and LAE incurred $ 697,978 $ 534,295 $ 337,011 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 Ceded unpaid losses and LAE $ 921,165 $ 670,846 Ceded paid losses and LAE 201,010 166,663 Loss portfolio transfer — 22,662 Allowance for credit losses ( 2,295 ) ( 2,295 ) Reinsurance recoverables $ 1,119,880 $ 857,876 Ceded unearned premium $ 238,948 $ 203,901 The Company entered into agreements with several of its reinsurers, whereby the reinsurer established funded trust accounts with the Company as the sole beneficiary. These trust accounts provide the Company additional security to collect claim recoverables under reinsurance contracts and the Company does not carry these on the balance sheet because the Company will only have custody over these accounts upon the failure of the reinsurer to pay amounts due. At December 31, 2025, the market value of these accounts was approximately $ 233.5 million. The trust amount will be adjusted periodically, by mutual agreement, based on claim payments and loss reserve recoverables. During the first quarter of 2020, the Company entered into an LPT retroactive reinsurance agreement (“LPT”) with R&Q. 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. Certain ceded reinsurance contracts that transfer only significant timing risk and do not transfer sufficient underwriting risk are accounted for using the deposit method of accounting. The Company’s deposit asset at December 31, 2025 and December 31, 2024 was $ 22.7 million and $ 25.9 million, respectively, and was included in other assets on the Consolidated Balance Sheets. 18. Stock Based Compensation 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. 101 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. 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: Award Payout Range Requisite Service Period Target Stock and Stock Units Year ended December 31, 2025 Market condition awards 0 %– 150 % 3 years 22,495 Performance condition awards 0 %– 150 % 3 years 59,769 Service condition awards N/A 1 – 4 years 144,921 227,185 Year ended December 31, 2024 Market condition awards 0 %– 150 % 3 years 32,058 Performance condition awards 0 %– 150 % 3 years 76,881 Service condition awards N/A 1 – 4 years 124,025 232,964 Year ended December 31, 2023 Market condition awards 0 %– 150 % 3 years 37,622 Performance condition awards 0 %– 150 % 3 years 95,456 Service condition awards N/A 1 – 4 years 968,778 Stock options N/A 3 – 4 years 759,990 1,861,846 Stock options The grant date fair value of the options under the 2022 Plan was determined using the Black-Scholes model where the term was the contractual term of 10 years less the weighted average service period. The volatility was determined based on the historical volatility of comparable publicly traded insurance companies. The stock options granted to employees during the year ended December 31, 2023 were valued at approximately $ 4.4 million based on the grant date fair value. The following tables sets forth option activity for the years ended December 31, 2025 and 2024: Weighted-Average Exercise Price Stock Outstanding at January 1, 2025 759,990 Forfeited $ 15.00 ( 219 ) Outstanding at December 31, 2025 759,771 Weighted-Average Exercise Price Stock Outstanding at January 1, 2024 759,990 Outstanding at December 31, 2024 759,990 102 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. 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 The fair value of restricted stock and restricted stock units under the 2022 Plan for awards granted at the time of the Company’s IPO were granted at the IPO price of $ 15.00 per share. The fair value of subsequent grants were equal to the closing stock price on the date the restricted stock units were granted. The expense for these equity-based incentives is based on their fair value at the date of grant and amortized over their vesting period. The restricted stock and restricted stock units granted to employees and the Board of Directors during the years ended December 31, 2025, 2024 and 2023 were valued at approximately $ 12.2 million, $ 8.5 million and $ 17.7 million respectively, based on the grant date fair value. The following table sets forth the Company’s restricted stock and restricted stock units activity for the years ended December 31, 2025, 2024 and 2023: Weighted-Average Grant-Date Fair Value Stock and Stock Units Non-vested at January 1, 2025 $ 19.06 1,325,483 Granted (1) 47.77 254,978 Vested 15.33 ( 391,746 ) Forfeited (2) 25.74 ( 53,247 ) Non-vested at December 31, 2025 $ 27.06 1,135,468 Non-vested at January 1, 2024 $ 15.13 1,445,449 Granted (1) 31.72 268,631 Vested 13.16 ( 285,957 ) Forfeited (2) 18.27 ( 102,640 ) Non-vested at December 31, 2024 $ 19.06 1,325,483 Non-vested at January 1, 2023 $ 12.55 419,896 Granted (1) 16.07 1,101,856 Vested 13.39 ( 40,645 ) Forfeited (2) 15.29 ( 35,658 ) Non-vested at December 31, 2023 $ 15.13 1,445,449 (1) Increases above the 100% target level are reflected as granted in the period after which performance-based stock unit goals are achieved. (2) Decreases below the 100% target level are reflected as forfeited. Members of the Board of Directors were granted 12,579 , 19,453 and 23,482 shares of restricted stock and restricted stock units during the years ended December 31, 2025, 2024 and 2023, respectively, with a service period of one year . The total fair value of shares vested for employees and members of the Board of Directors at December 31, 2025, 2024 and 2023 was $ 6.0 million, $ 3.8 million and $ 0.5 million, respectively. As of December 31, 2025 the total unrecognized compensation cost related to non-vested, stock-based compensation awards was $ 17.4 million and the weighted average period over which that cost is expected to be recognized is 1.6 years. For the years ended December 31, 2025, 2024 and 2023 the Company recognized $ 12.0 million, $ 9.4 million and $ 8.5 million, respectively, of stock-based compensation expense. 103 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. Stock Based Compensation (continued) Employee Stock Purchase Plan 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. The purchase price of the common stock is 85 % of the lower of its beginning-of-interval or end-of-interval market price. The Company has reserved 376,548 common shares under this plan. The grant date fair value of options under the ESPP was determined using the Black-Scholes model where the term was the length of time between the grant date and the date the options are exercisable of 6 months. The volatility was determined based on the historical volatility of comparable publicly traded insurance companies. As of December 31, 2025, a total of 141,845 shares had been purchased under this plan. The Company recognized $ 0.7 million and $ 0.5 million of expense during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the fair value of unrecognized expense was $ 0.3 million. 19. Earnings Per Share 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 Numerator Net income $ 170,028 $ 118,828 $ 85,984 Less: Undistributed income allocated to participating securities — — ( 1,677 ) Net income attributable to common stockholders (numerator for basic earnings per share) 170,028 118,828 84,307 Add back: Undistributed income allocated to participating securities — — 1,677 Net income (numerator for diluted earnings per share under the two-class method) $ 170,028 $ 118,828 $ 85,984 Denominator Basic weighted-average common shares 40,407,310 40,056,475 36,031,907 Dilutive effect of preferred shares — — 716,708 Dilutive effect of stock notes — — 696,110 Dilutive effect of stock units 897,426 917,510 736,837 Dilutive effect of options 503,310 403,475 135,972 Diluted weighted-average common share equivalents 41,808,046 41,377,460 38,317,534 Basic earnings per share $ 4.21 $ 2.97 $ 2.34 Diluted earnings per share $ 4.07 $ 2.87 $ 2.24 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 units 104,531 20,346 3,931 Options 242 859 914 104 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19. 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: 2025 2024 2023 Common shares — — 920,864 Total — — 920,864 20. Employee Benefit Plan The Company sponsors the 401(k) Plan (the “Plan”). The Plan, available to substantially all its employees, is subject to provisions of the Employee Retirement Income Security Act of 1974. The Company matches employee contributions on a discretionary basis. During the years ended December 31, 2025, 2024 and 2023, the Company contributed $ 3.9 million, $ 3.2 million, and $ 2.9 million in matching contributions to the Plan, respectively. 21. Related Party Transactions RISCOM RISCOM provides the Company with wholesale brokerage services. RISCOM and the Company also have a managing general agency agreement. The Company holds a 20 % ownership interest in RISCOM. Net earned 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 Net earned premium $ 120,067 $ 108,130 $ 99,736 Commissions 28,728 25,372 24,177 Premiums receivable as of December 31, 2025 and December 31, 2024 were $ 13.9 million and $ 12.6 million, respectively. Other 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. 22. Commitments and Contingencies Litigation 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. Also, from time to time, the Company is a defendant in various legal actions that relate to bad faith claims, disputes with third parties or that involve alleged errors and omissions. The Company records accruals for these items to the extent the losses are probable and reasonably estimable. Although the ultimate outcome of these matters cannot be determined at this time, based on present information, the availability of insurance coverage and advice received from outside legal counsel, the Company believes the resolution of any such matters will not, individually or in the aggregate, have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. Indemnification In conjunction with the sale of business assets and subsidiaries, the Company has provided indemnifications to certain buyers. Certain indemnifications cover typical representations and warranties related to the responsibilities to perform under the sales contracts. The amount of potential exposure covered by the indemnifications is difficult to determine because the indemnifications cover a variety of matters, operations and scenarios. Certain of these indemnifications have no time limit. At this time, the Company does not have reason to believe any such significant claims exist. 105 Table of Contents SKYWARD SPECIALTY INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 23. Statutory Accounting Principles and Regulatory Matters The Company’s statutory net income was $ 159.1 million, $ 108.2 million and $ 73.1 million for the years ended December 31, 2025, 2024 and 2023, respectively. The Company’s statutory capital and surplus was $ 872.0 million and $ 710.6 million as of December 31, 2025 and 2024, respectively. Effective December 31, 2024, the Company restacked its insurance company subsidiaries and GMIC became the lead insurance company which resulted in the following changes: • HSIC became a wholly owned subsidiary of GMIC; • IIC became a wholly owned subsidiary of HSIC; and, • OSIC became a wholly owned subsidiary of IIC. Dividend payments to the Company from GMIC are restricted by Texas state law as to the amount that may be paid without the approval of regulatory authorities. 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, 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. Property and casualty insurance companies are subject to certain Risk Based Capital (“RBC”) requirements as specified by the National Association of Insurance Commissioners (“NAIC”). 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, 2025 and 2024 GMIC’s statutory capital and surplus substantially exceeded the regulatory requirements. 24. Subsequent Events 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. 106 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures None.