What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-11 · 208 added, 101 removed, 361 unchanged (46% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The term “Skyward Group” as used below refers to Skyward Specialty Insurance Group, Inc.

and the terms “our Company,” “we,” “us,” and “our” as used below refer to Skyward Specialty Insurance Group and its consolidated subsidiaries.

The term “first quarter” as used below refers to the three months ended March 31, for the time period then ended.

The term “Skyward Group” as used below refers to the unified holding company brand for Skyward Specialty and Apollo and the terms “our Company,” “we,” “us,” and “our” as used below refer to Skyward Specialty Insurance Group and its consolidated subsidiaries.

The term “second quarter” as used below refers to the three and six months ended June 30, for the time period then ended.

We discuss certain key metrics which provide useful information about our business and the operational factors underlying our financial performance.

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Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors.

The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2026, or for any other future period.

The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2026, or for any other future period.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report, and in conjunction with our audited consolidated financial statements and the notes thereto included in our 2025 Form 10-K.

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businesses, Skyward Specialty Insurance Group, Inc.

and Apollo, respectively, delivering a comprehensive suite of specialized insurance solutions across global specialty property and casualty markets.

and Apollo, respectively, delivering a comprehensive suite of specialized insurance and reinsurance solutions across global specialty property and casualty markets.

We focus our business on markets that are underserved, dislocated and/or for which standard insurance coverages are insufficient or inadequate to meet the needs of businesses, including our customers and prospective customers operating in these markets.

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Apollo’s operations also include the management of a dedicated syndicate focused on emerging digital economy, autonomy, and platform‑based risks, reflecting a long standing emphasis on innovation and forward‑looking underwriting practices.

Skyward Specialty and Apollo continue to operate as distinct, market facing brands under the newly introduced Skyward Group holding structure.

Skyward Specialty and Apollo continue to operate as distinct, market facing brands under the newly introduced Skyward Group brand.

This brand architecture preserves the equity and reputational strength of both organizations while supporting a unified strategic direction and enhanced collaboration across the combined enterprise.

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For a glossary of terms for Skyward Specialty Insurance Group, Inc.

and its subsidiaries and affiliates and a glossary of selected insurance and accounting terms, see the section entitled “Key

Operating and Financial Metrics” included in the 2025 Form 10-K.

and its subsidiaries and affiliates and a glossary of selected insurance and accounting terms, see the section entitled “Key Operating and Financial Metrics” included in the 2025 Form 10-K.

The following terms have been updated after the Apollo acquisition.

Underwriting income (loss) is a non-GAAP financial measure defined as income (loss) before income taxes excluding net investment income, net investment gains and losses, impairment charges, interest expense, amortization expense and other income and expenses.

See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of underwriting income (loss) to net income, which is the most directly comparable financial metric prepared in accordance with GAAP.

Operating income (loss) is a non-GAAP financial measure defined as net income excluding net investment gains and losses, amortization expense, goodwill impairment charges and other income and expenses.

See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of operating income (loss) to net income (loss), which is the most directly comparable financial metric prepared in accordance with GAAP.

Adjusted pro forma gross written premiums is a non-GAAP financial measure defined as pro forma gross written premiums adjusted for the impact of changes in Apollo syndicate participation to evaluate premium growth trends on a consistent participation basis across periods.

Adjusted pro forma fee generating gross written premiums is a non-GAAP financial measure defined as pro forma fee generating gross written premiums adjusted for the impact of changes in Apollo syndicate participation percentages that provide a more meaningful comparison of fee generating business on a consistent participation basis across periods.

Tangible stockholders’ equity is a non-GAAP financial measure defined as stockholders’ equity excluding goodwill and intangible assets and the related deferred tax impact.

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Consolidated Results of Operations

The following table summarizes our consolidated results for the three months ended March 31, 2026 and 2025:

Three months ended March 31,

The following table summarizes our consolidated results for the three and six months ended June 30, 2026 and 2025:

Three months ended June 30, Six months ended June 30,

($ in thousands) 2026 2025 2026 2025

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Underwriting fee income (1)

12,588 — 22,666 —

Commission and fee income 2,334 2,560 3,861 4,536

Non-cat loss and LAE

268,141 177,262 525,579 358,071

Cat loss and LAE (2)

8,600 4,000 16,385 10,500

Losses and LAE 276,741 181,262 541,964 368,571

Net policy acquisition costs

71,154 44,636 130,770 89,126

Other operating and general expenses

47,755 37,730 107,844 75,878

Corporate expense

4,372 3,230 9,281 7,143

Underwriting, acquisition and insurance expenses 123,281 85,596 247,895 172,147

Fee‑based service expenses (1)

4,562 — 8,732 —

Underwriting income (3)

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Net investment income $ 30,727 $ 18,704 $ 57,782 $ 38,126

Net investment gains $ 3,185 $ 6,750

Net investment (loss) gains $ (601) $ 3,090 $ 2,584 $ 9,840

Interest expense $ 8,812 $ 1,876 $ 16,531 $ 3,710

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$ 59,198 $ 37,496 $ 116,091 $ 75,233

Loss and LAE ratio 61.1 % 62.4 %

Net expense ratio (3)

Non-cat loss and LAE

60.4 % 59.9 % 59.8 % 60.1 %

Cat loss and LAE (2)

1.9 % 1.4 % 1.9 % 1.8 %

Net loss and LAE ratio 62.3 % 61.3 % 61.7 % 61.9 %

Net policy acquisition costs

16.0 % 15.1 % 14.8 % 15.0 %

Other operating and general expenses

10.7 % 12.8 % 12.3 % 12.7 %

Commission and fee income

(0.5) % (0.9) % (0.4) % (0.8) %

Corporate expense

1.0 % 1.1 % 1.1 % 1.2 %

Net expense ratio 27.2 % 28.1 % 27.8 % 28.1 %

Combined ratio 89.5 % 89.4 % 89.5 % 90.0 %

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(1) Not included in the combined ratio

(2) Current accident year

(3) See “Reconciliation of Non-GAAP Financial Measures” in this Item 2

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Operating Income

The following table provides a reconciliation of operating income to net income for the three months ended March 31, 2026 and 2025:

Three months ended March 31,

($ in thousands) Pre-tax After-tax Pre-tax After-tax

The following table provides a reconciliation of operating income to net income for the three and six months ended June 30, 2026 and 2025:

Three months ended June 30, Six months ended June 30,

2026 2025 2026 2025

($ in thousands) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax

Income as reported $ 63,557 $ 49,038 $ 49,795 $ 38,839 $ 125,633 $ 98,769 $ 101,230 $ 80,897

Net investment gains 3,185 2,552 6,841 5,594

Net investment (losses) gains (601) (464) 3,090 2,410 2,584 2,031 9,840 7,864

Amortization expense (8,843) (6,823) (372) (290) (17,686) (13,904) (709) (567)

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Underwriting Income

The following table provides a reconciliation of underwriting income to income before federal income tax expense for the three months ended March 31, 2026 and 2025:

Three months ended March 31,

The following table provides a reconciliation of underwriting income to income before federal income tax expense for the three and six months ended June 30, 2026 and 2025:

Three months ended June 30, Six months ended June 30,

($ in thousands) 2026 2025 2026 2025

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Net investment income 30,727 18,704 57,782 38,126

Net investment gains 3,185 6,750

Net investment (losses) gains (601) 3,090 2,584 9,840

Other income 13 7 28 20

Underwriting income $ 54,810 $ 31,244 $ 106,415 $ 59,726

Adjusted pro forma gross written premiums

The following tables represent pro forma gross written premiums adjusted for the impact of changes in Apollo syndicate participation for the three and six months ended June 30, 2025:

$ in thousands Three months ended June 30, 2025

Syndicate 1969 Syndicate 1971 Total Apollo Segment Total Skyward Group

Pro forma gross written premiums $ 65,854 $ 10,337 $ 76,191 $ 661,105

Impact of the change in participation(s) (10,647) 3,403 (7,244) (7,244)

Adjusted pro forma gross written premiums

$ 55,207 $ 13,740 $ 68,947 $ 653,861

$ in thousands Six months ended June 30, 2025

Syndicate 1969 Syndicate 1971 Total Apollo Segment Total Skyward Group

Pro forma gross written premiums $ 119,303 $ 29,278 $ 148,581 $ 1,268,821

Impact of the change in participation(s) (20,244) (146) (20,390) (20,390)

Adjusted pro forma gross written premiums

$ 99,059 $ 29,132 $ 128,191 $ 1,248,431

Adjusted pro forma fee generating gross written premiums

The following tables represent pro forma fee generating gross written premiums adjusted for the impact of changes in Apollo syndicate participation for the three and six months ended June 30, 2025:

$ in thousands Three months ended June 30, 2025

Aligned Syndicates Partner Syndicates Total

Pro forma fee generating gross written premiums $ 184,283 $ 55,461 $ 239,744

Impact of the change in participation(s) 7,244 N/A 7,244

Adjusted pro forma fee generating gross written premiums

$ 191,527 $ 55,461 $ 246,988

$ in thousands Six months ended June 30, 2025

Aligned Syndicates Partner Syndicates Total

Pro forma fee generating gross written premiums $ 327,240 $ 114,173 $ 441,413

Impact of the change in participation(s) 20,390 N/A 20,390

Adjusted pro forma fee generating gross written premiums

$ 347,630 $ 114,173 $ 461,803

Tangible Stockholders’ Equity

The following table provides a reconciliation of tangible stockholders’ equity to stockholders’ equity for the periods ended March 31, 2026 and 2025:

Three months ended March 31,

The following table provides a reconciliation of tangible stockholders’ equity to stockholders’ equity for the periods ended June 30, 2026 and 2025:

June 30, December 31,

($ in thousands) 2026 2025 2025

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Annualized Operating Return on Equity

The following table provides a reconciliation of annualized operating return on equity to annualized return on equity for the three months ended March 31, 2026 and 2025:

Three months ended March 31,

The following table provides a reconciliation of annualized operating return on equity to annualized return on equity for the three and six months ended June 30, 2026 and 2025:

Three months ended June 30, Six months ended June 30,

($ in thousands) 2026 2025 2026 2025

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Annualized Return on Tangible Equity

Annualized return on tangible equity for the three months ended March 31, 2026 and 2025 reconciles to annualized return on equity as follows:

Three months ended March 31,

Annualized return on tangible equity for the three and six months ended June 30, 2026 and 2025 reconciles to annualized return on equity as follows:

Three months ended June 30, Six months ended June 30,

($ in thousands) 2026 2025 2026 2025

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Annualized Operating Return on Tangible Equity

Annualized operating return on tangible equity for the three months ended March 31, 2026 and 2025 reconciles to annualized return on equity as follows:

Three months ended March 31,

Annualized operating return on tangible equity for the three and six months ended June 30, 2026 and 2025 reconciles to annualized return on equity as follows:

Three months ended June 30, Six months ended June 30,

($ in thousands) 2026 2025 2026 2025

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We believe this structure and expertise allow us to serve the needs of our customers effectively and be a value-add partner to our distributors, while earning attractive risk-adjusted returns.

During the first quarter of 2026, we updated our underwriting divisions to align with how management currently oversees the business, allocates resources and evaluates

operating performance.

During the first quarter of 2026, we updated our underwriting divisions to align with how management currently oversees the business, allocates resources and evaluates operating performance.

Our Credit unit is now included in the Surety unit and has been renamed Credit & Surety and Agriculture and Credit (Re)insurance has been renamed Global Agriculture.

The Construction & Energy Solutions division is now the Energy Solutions division.

Certain lines of business have been discontinued and are now presented in exited business.

Lastly, business that we are no longer writing is reported in exited business.

Prior reporting periods have been conformed to reflect the new presentation.

Underwriting Results

The following tables present the Skyward Specialty segment’s gross written premiums by underwriting division, net written premiums and net earned premiums for the three months ended March 31, 2026 and 2025:

Three months ended March 31,

The following tables present the Skyward Specialty segment’s gross written premiums by underwriting division, net written premiums and net earned premiums for the three and six months ended June 30, 2026 and 2025:

Three months ended June 30,

($ in thousands) 2026 2025 Change % Change

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Net earned premiums $ 378,346 $ 295,542 $ 82,804 28.0 %

The 9.0% growth in gross written premiums for continuing business, when compared to the same 2025 period, was primarily driven by new business in our specialty programs, accident & health, global agriculture and credit & surety divisions.

Six months ended June 30,

($ in thousands) 2026 2025 Change % Change

Accident & Health $ 187,465 $ 123,658 $ 63,807 51.6 %

Captives 122,165 143,923 (21,758) (15.1 %)

Credit & Surety 127,933 100,159 27,774 27.7 %

Energy Solutions 111,556 150,416 (38,860) (25.8 %)

Global Agriculture 214,291 137,796 76,495 55.5 %

Global Property 105,626 130,678 (25,052) (19.2 %)

Professional Lines 71,206 77,772 (6,566) (8.4 %)

Specialty Programs 206,208 148,630 57,578 38.7 %

Transactional E&S 102,360 105,467 (3,107) (2.9 %)

Total continuing business 1,248,810 1,118,499 130,311 11.7 %

Exited business 767 1,741 (974) (55.9 %)

Total Skyward Specialty segment gross written premiums $ 1,249,577 $ 1,120,240 $ 129,337 11.5 %

Net written premiums $ 797,996 $ 682,484 $ 115,512 16.9 %

Net earned premiums $ 742,289 $ 595,908 $ 146,381 24.6 %

For the second quarter and first half of 2026, the 14.1% and 11.7% increases in gross written premiums for continuing business, when compared to the same 2025 period, were primarily driven by new business in our global agriculture, accident & health, specialty programs, and credit & surety divisions.

Partially offsetting the growth were decreases in the (i) energy solutions and captives divisions due to non-renewing business, and (ii) global property division due to increased competition in the property market and decreases in rates.

Net written premiums for the first quarter of 2026 were $371.0 million compared to $343.3 million for the same 2025 period, an increase of $27.7 million or 8.1%.

Net written premiums for the second quarter of 2026 were $427.0 million compared to $339.2 million for the same 2025 period, an increase of $87.8 million or 25.9%.

Net written premiums for the first half of 2026 were $798.0 million compared to $682.5 million for the same 2025 period, an increase of $115.5 million or 16.9%.

The increases in net written premiums was primarily driven by the same reasons that drove the increases in gross written premiums discussed above.

Net earned premiums for the first quarter of 2026 were $363.9 million compared to $300.4 million for the same 2025 period, an increase of $63.6 million or 21.2%.

Net earned premiums for the second quarter of 2026 were $378.3 million compared to $295.5 million for the same 2025 period, an increase of $82.8 million or 28.0%.

Net earned premiums for the first half of 2026 were $742.3 million compared to $595.9 million for the same 2025 period, an increase of $146.4 million or 24.6%.

The increases in net earned premiums was primarily driven by the same reasons that drove the increases in gross written premiums discussed above.

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Combined Ratio

The following table sets forth the components of the Skyward Specialty segment’s combined ratios for the three months ended March 31, 2026 and 2025:

Three months ended March 31,

The following tables set forth the components of the Skyward Specialty segment’s combined ratios for the three and six months ended June 30, 2026 and 2025:

Three months ended June 30,

($ in thousands) $ Amount

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(1) Current accident year

The loss ratio for the first quarter of 2026 increased slightly when compared to the same 2025 period.

Catastrophe losses in the first quarter decreased slightly when compared to the same 2025 period, which was impacted by convective storms in the Midwest and the California wildfires.

The first quarter of 2026 was impacted by winter and convective storms.

The non-cat loss and LAE ratio was impacted by business mix shift when compared to the same 2025 period.

The expense ratios for the first quarter of 2026 improved 0.6 points when compared to the same 2025 period due to earnings leverage partially offset by higher acquisition costs due to the business mix shift.

Six months ended June 30,

($ in thousands) $ Amount

Losses and LAE:

Non-cat loss and LAE

$ 452,410 61.0 % $ 358,071 60.1 %

Cat loss and LAE (1)

12,788 1.7 % 10,500 1.8 %

Total losses and LAE 465,198 62.7 % 368,571 61.9 %

Net policy acquisition expenses 103,986 14.0 % 89,126 15.0 %

Other operating and general expenses 87,108 11.7 % 75,878 12.7 %

Underwriting, acquisition and insurance expenses 191,094 25.7 % 165,004 27.7 %

commission and fee income (3,861) (0.5 %) (4,536) (0.8 %)

Total net expenses $ 187,233 25.2 % $ 160,468 26.9 %

Combined ratio 87.9 % 88.8 %

(1) Current accident year

The loss ratios for the second quarter and first half of 2026 increased 1.3 points and 0.8 points, respectively, when compared to the same 2025 periods.

Catastrophe losses in the second quarter and first half of 2026 were primarily due to convective storms, while catastrophe losses in the same 2025 periods were driven by convective storms in the South and Midwest and the California wildfires.

The first half of 2026 was also impacted by winter storms.

In addition, the increases

in the non-cat loss and LAE ratios, when compared to the same 2025 periods, were due to shifts in business mix, primarily from growth in the accident & health and global agriculture divisions, both of which generally have higher loss ratios.

The expense ratios for the second quarter and first half of 2026 improved 2.7 points and 1.7 points, respectively, when compared to the same 2025 periods, primarily driven by business mix shift, enhanced operating efficiencies, and scale benefits as net earned premiums outpaced expense growth.

The expense ratios for all periods presented exclude the impact of corporate expenses which is presented separately in the combined group’s expense ratio.

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Syndicate 1972 commenced underwriting in 2026 and operates as a dedicated quota‑share reinsurance vehicle supporting Apollo’s broader underwriting platform.

The syndicate provides

proportional reinsurance capacity primarily to Syndicates 1969 and 1971, enabling efficient capital deployment, portfolio optimization, and risk diversification across the Apollo Segment.

The syndicate provides proportional reinsurance capacity primarily to Syndicates 1969 and 1971, enabling efficient capital deployment, portfolio optimization, and risk diversification across the Apollo segment.

Managed Premiums:

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The Insurance Act provides that no person shall carry on any insurance or reinsurance business in or from within Bermuda unless registered as an insurer by the Bermuda Monetary Authority (“BMA”) under the Insurance Act.

The Insurance Act imposes upon Bermuda insurance companies, among other things, solvency and liquidity standards, auditing

and reporting requirements, and grants the BMA powers to supervise, investigate, require information and demand the production of documents and intervene in the affairs of insurance companies.

The Insurance Act imposes upon Bermuda insurance companies, among other things, solvency and liquidity standards, auditing and reporting requirements, and grants the BMA powers to supervise, investigate, require information and demand the production of documents and intervene in the affairs of insurance companies.

In addition, ABL must comply with all requirements pertaining to Class 3A insurers, which includes, among other things:

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Underwriting Results

Select Apollo metrics for the first quarter of 2025 are presented on a pro forma basis for comparative purposes only and are not necessarily indicative of the operating results that Skyward Group would have recognized had the acquisition actually been completed on January 1, 2025.

Select Apollo metrics for the second quarter and first half of 2025 are presented on a pro forma basis for comparative purposes only and are not necessarily indicative of the operating results that Skyward Group would have recognized had the acquisition actually been completed on January 1, 2025.

Pro forma information is unaudited.

The following table sets forth gross written premiums by underwriting division for the three months ended March 31, 2026 and 2025:

Three months ended March 31,

The following tables set forth gross written premiums by underwriting division for the three and six months ended June 30, 2026 and 2025:

Three months ended June 30,

($ in thousands) 2026 2025 (1)

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Net earned premiums $ 66,126 $ — $ — — %

(1) Prior year information is pro forma

Gross written premiums for the quarter increased $13.5 million, or 18.7%, compared to the pro forma 2025 period.

The increase was primarily driven by growth in Syndicate 1969, which benefited from continued growth and expansion across select specialty lines.

(1) Prior year information is pro forma and is adjusted for the impact of the change in participations.

See Reconciliation of Non-GAAP Financial Measures.

Six months ended June 30,

($ in thousands) 2026 2025 (1)

Change % Change

Syndicate 1969 $ 124,439 $ 99,059 $ 25,380 25.6 %

Syndicate 1971 34,242 29,132 5,110 17.5 %

Total gross written premiums $ 158,681 $ 128,191 $ 30,490 23.8 %

Net written premiums $ 120,503 $ — $ — — %

Net earned premiums $ 136,190 $ — $ — — %

(1) Prior year information is pro forma and is adjusted for the impact of the change in participations.

See Reconciliation of Non-GAAP Financial Measures.

Gross written premiums for the second quarter and first half of 2026 increased $3.8 million and $30.5 million, or 5.6% and 23.8%, respectively, compared to the same adjusted pro forma 2025 periods.

The increases were primarily driven by growth in Syndicate 1969, which benefited from new business and expansion across select specialty lines.

Combined Ratio

The Apollo segment’s combined ratio for the three months ended March 31, 2026 was 85.3%.

Total non-cat losses and LAE for the three months ended March 31, 2026 were $37.0 million, or 52.8%.

Total underwriting, acquisition and insurance expenses for the three months ended March 31, 2026 were $22.7 million, or 32.5%.

Net policy acquisition expenses were $8.6 million, or 12.2%, and other operating and general expenses were $14.2 million, or 20.3% points.

The Apollo segment’s combined ratio for the three and six months ended June 30, 2026 was 97.6% and 91.3%, respectively.

Total non-cat losses and LAE for the three and six months ended June 30, 2026 were $39.8 million and $76.8 million, or 60.1% and 56.4%, respectively.

Cat losses and LAE for the three and six months ended June 30, 2026 were $3.6 million for each period, or 5.4% and 2.6%, respectively, primarily due to the conflict in the Middle East.

Total underwriting, acquisition and insurance expenses for the three and six months ended June 30, 2026 were $24.8 million and $47.5 million, or 37.5% and 34.9%, respectively.

Net policy acquisition expenses were $18.2 million and $26.8 million, or 27.6% and 19.7%, respectively, and other operating and general expenses were $6.6 million and $20.7 million, or 9.9% and 15.2%, respectively.

Managed Premiums and Underwriting Fee Income

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Apollo receives managing agency fees and performance‑based income for their managing agency services from all syndicates on its Lloyd's platform.

For the three months ended March 31, 2026, underwriting fee income was $10.1 million.

The following table sets forth the fee generating gross written premiums for the three months ended March 31, 2026 and 2025:

Three months ended March 31,

For the three and six months ended June 30, 2026, underwriting fee income was $12.6 million and $22.7 million, respectively.

The following table sets forth the fee generating gross written premiums for the three and six months ended June 30, 2026 and 2025:

Three months ended June 30, Six months ended June 30,

($ in thousands) 2026 2025 (1)

2026 2025 (1)

Aligned Syndicates $ 217,196 $ 191,527 $ 427,745 $ 347,630

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Total fee generating gross written premiums $ 318,121 $ 246,988 $ 618,126 $ 461,803

(1) Prior year information is pro forma

Total fee generating gross written premiums for the three months ended March 31, 2026 increased 48.8% compared to the same pro forma 2025 period, primarily driven by an additional partner syndicate and organic growth across both aligned and partner syndicates.

(1) Prior year information is pro forma and is adjusted for the impact of the change in participations.

See Reconciliation of Non-GAAP Financial Measures.

Total fee generating gross written premiums for the three and six months ended June 30, 2026 increased 28.8% and 33.9%, respectively, compared to the same pro forma 2025 periods, primarily driven by the addition of a new partner syndicate and organic growth across both aligned and partner syndicates.

Composition of Investment Portfolio

In the first quarter of 2026, the Company revised its presentation of our investment portfolio to (i) report short-term investments separately from cash and cash equivalents following the closing of the Apollo acquisition, and (ii) include equities in alternative & strategic investments after the sale of the majority of the equity portfolio in 2025.

In the first quarter of 2026, we revised the presentation of our investment portfolio to (i) report short-term investments separately from cash and cash equivalents following the closing of the Apollo acquisition, and (ii) include equities in alternative & strategic investments after the sale of the majority of the equity portfolio in 2025.

The prior year period has been recast to reflect this change.

The following table sets forth the components of our investment portfolio at carrying value at March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

The following table sets forth the components of our investment portfolio at carrying value at June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

($ in thousands) Carrying Value

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Investment Results

The following table sets forth the components of net investment income and net investment gains (losses) for the three months ended March 31, 2026 and 2025:

Three months ended March 31,

The following table sets forth the components of net investment income and net investment gains (losses) for the three and six months ended June 30, 2026 and 2025:

Three months ended June 30, Six months ended June 30,

$ in thousands 2026 2025 2026 2025

4 unchanged sentences

Net investment income $ 30,727 $ 18,704 $ 57,782 $ 38,126

Net unrealized gains on securities still held

Net unrealized gains (losses) on securities still held

$ 1,927 $ (3,181) $ 3,702 $ 2,310

Net realized gains 1,410 1,258

Net investment gains $ 3,185 $ 6,750

Net investment income for the first quarter of 2026 increased $7.6 million when compared to the same 2025 period, driven by increased income from our fixed income portfolio due to a larger asset base as a result of the Apollo acquisition and a higher book yield of 5.3% at March 31, 2026 compared to 5.2% at March 31, 2025.

Net realized (losses) gains (2,528) 6,271 (1,118) 7,530

Net investment (losses) gains $ (601) $ 3,090 $ 2,584 $ 9,840

Net investment income for the second quarter and first half of 2026 increased $12.0 million and $19.7 million, respectively when compared to the same 2025 periods, driven by increased income from our fixed income portfolio as a result of the Apollo acquisition, a higher yield and a larger asset base.

The alternative and strategic investments portfolio continued to be impacted by the decline in the fair value of limited partnership investments.

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The amount related to non-credit factors is recognized in accumulated other comprehensive income and future increases or decreases in fair value, if not credit losses, are included in accumulated other comprehensive (loss) income.

We reviewed our available-for-sale fixed maturities at March 31, 2026, we recognized a recovery of amounts previously written off for credit losses of $0.5 million for one available-for-sale “corporate securities and miscellaneous” security, bringing our total allowance down to $6.5 million on two securities.

Other than the securities discussed previously, we determined that no other credit impairment existed at March 31, 2026.

During the second quarter 2026, we wrote off $2.0 million on a held-to-maturity security and recognized a recovery of $0.3 million of amounts previously written off for credit losses on an available-for-sale “corporate securities and miscellaneous” security.

This brings our total allowance to $8.5 million on three securities, an increase of $1.7 million for the second quarter and $1.0 million for the first half of 2026.

Other than the securities discussed previously, we determined that no other credit impairment existed at June 30, 2026.

See Note 3, “Investments” to our condensed consolidated financial statements included in Item 1 of this Form 10-Q for additional information.

Our fixed income portfolio primarily consists of investment grade fixed income securities, which are predominantly highly-rated and liquid bonds, and commercial mortgage loans.

The following table sets forth the components of our fixed income securities at March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

The following table sets forth the components of our fixed income securities at June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

($ in thousands) Carrying Value % of Total

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Total fixed income portfolio $ 2,201,401 100.0 % $ 1,866,205 100.0 %

The weighted average credit rating of our available-for-sale fixed income portfolio was “A+” at March 31, 2026 and December 31, 2025.

The following table sets forth the credit quality of our available-for-sale fixed income portfolio at March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

The weighted average credit rating of our available-for-sale fixed income portfolio was “A+” at June 30, 2026 and December 31, 2025.

The following table sets forth the credit quality of our available-for-sale fixed income portfolio at June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

($ in thousands) Fair Value % of Total Fair Value % of Total

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Our commercial mortgage loans are primarily senior loans on real estate across the U.S.

The average duration of our fixed income portfolio was approximately 3.54 years and 3.60 years, respectively, as of March 31, 2026 and December 31, 2025.

The average duration of our fixed income portfolio was approximately 3.85 years and 3.60 years, respectively, as of June 30, 2026 and December 31, 2025.

Alternative and strategic investments

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The underlying investments are primarily floating rate senior secured loans, comprised of short duration, collateralized, asset-oriented credit investments.

The limited partnerships and joint ventures are subject to future increases or decreases in asset value as asset values are monetized and the income is distributed.

The limited partnerships and joint ventures are subject to future increases or decreases in asset

value as asset values are monetized and the income is distributed.

Strategic investments consists of equity interests in private entities within the insurance industry.

Interest expense

Interest expense for the three months ended March 31, 2026 was $7.7 million compared to $1.8 million for the same 2025 period, due to additional interest expense related to the Term Loan Facility and Revolving Credit Facility (both are defined in the “Credit Agreements” section below).

Interest expense for the three and six months ended June 30, 2026 was $8.8 million and $16.5 million, respectively, compared to $1.9 million and $3.7 million, respectively, for the same 2025 periods.

The increases were due to additional interest expense related to the Term Loan Facility and Revolving Credit Facility (both are defined in the “Credit Agreements” section below).

Amortization expense

Amortization expense for the three months ended March 31, 2026 was $8.8 million compared to $0.3 million for the same 2025 period.

The increase was due to the amortization of the value of business acquired (“VOBA”) asset and additional definite-lived intangible assets recognized in the Apollo acquisition.

Income tax expense for the three months ended March 31, 2026 was $12.3 million compared to $9.4 million for the same 2025 period.

Our effective tax rate for the three months ended March 31, 2026 was 19.9% compared to 18.2% for the same 2025 period.

The effective tax rate for the three months ended March 31, 2026 was impacted by certain discrete tax items, primarily tax benefits from stock-based compensation, which reduced the effective tax rate by 3.1%.

Amortization expense for the three and six months ended June 30, 2026 was $8.8 million and $17.7 million, respectively, compared to $0.4 million and $0.7 million, respectively, for the same 2025 periods.

The increases were due to the amortization of the value of business acquired (“VOBA”) asset and additional definite-lived intangible assets recognized as a result of the acquisition of Apollo.

Income tax expense for the three and six months ended June 30, 2026 was $14.5 million and $26.9 million, respectively, compared to $11.0 million and $20.3 million, respectively, for the same 2025 periods.

Our effective tax rates for the three and six months ended June 30, 2026 were 22.8% and 21.4%, respectively, compared to 22.0% and 20.1%, respectively, for the same 2025 periods.

The increase in the effective tax rate for the three months ended June 30, 2026 was primarily attributable to a reduction in the proportional tax benefit of stock-based compensation as pre-tax income increased.

The increase in the effective tax rate for the six months ended June 30, 2026 was primarily attributable to foreign taxes associated with the Apollo acquisition, partially offset by discrete tax benefits, primarily from stock-based compensation.

For additional information, see Note 12 of our condensed consolidated financial statements included in Item 1 of this Form 10-Q.

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Sources and Uses of Funds

Our most significant source of cash is from premiums received from our insureds, which, for most policies, we receive at the beginning of the coverage period, net of the related commission amount for the policies.

Our most significant cash outflow is for claims that arise when a policyholder incurs an insured loss.

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We also use cash to pay for operating expenses such as salaries, rent and taxes and capital expenditures such as technology systems.

We use reinsurance to manage the risk that we take on our policies.

We use reinsurance to reduce volatility and as part of our capital management strategy.

We cede, or pay out, part of the premiums we receive to our reinsurers and collect cash back when losses subject to our reinsurance coverage are paid.

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Management believes that cash receipts from premiums and proceeds from investment income are sufficient to cover cash outflows in the foreseeable future.

Our cash flows for the three months ended March 31, 2026 and 2025:

Payments made by our holding company to service the credit agreements are provided by our subsidiaries’ operating activities.

During the six months ended June 30, 2026, GMIC paid a dividend of $50.0 million to the holding company to redeem a portion of the Tranche A DDTL detailed below.

Our cash flows for the six months ended June 30, 2026 and 2025:

($ in thousands) 2026 2025

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Change in cash and cash equivalents and restricted cash $ 103,409 $ 15,639

The increase in cash provided by operating activities in 2026 when compared to 2025 was primarily due to positive cash flow from our insurance operations.

Cash provided by operating activities in 2026 was consistent when compared to 2025 and continued to reflect positive cash flow from our insurance operations.

Cash from operations can vary from period to period due to the timing of premium receipts, claim payments and reinsurance activity.

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On December 30, 2025, we 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.

On June 26, 2026, the Company repaid $50.0 million of outstanding principal related to the Tranche A DDTL.

The Term Loan Facility includes customary covenants, including certain limitations on the incurrence by us of additional indebtedness exceeding $10.0 million and on our ability to make distributions to our 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 March 31, 2026, we were in compliance with all covenants.

As of June 30, 2026, we were in compliance with all covenants.

The Term Loan Facility is unsecured.

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

We report debt related to the Term Loan Facility as of March 31, 2026 Condensed Consolidated Balance Sheet, net of debt issuance costs of approximately $5.1 million.

We report debt related to the Term Loan Facility as of June 30, 2026 Condensed Consolidated Balance Sheet, net of debt issuance costs of approximately $3.9 million.

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

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

As of March 31, 2026, we were in compliance with all covenants.

As of June 30, 2026, we were in compliance with all covenants.

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

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The Notes have junior priority to all previously issued debt.

We report debt related to the Notes as of March 31, 2026 Condensed Consolidated Balance Sheet and December 31, 2025 Consolidated Balance Sheet, net of debt issuance costs of approximately $0.4 million.

We report debt related to the Notes as of June 30, 2026 Condensed Consolidated Balance Sheet and December 31, 2025 Consolidated Balance Sheet, net of debt issuance costs of approximately $0.4 million.

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

Share Repurchase Program

In October 2024, the Board of Directors approved a share repurchase program authorizing the repurchase of up to $50.0 million of our common stock.

The shares may be repurchased from time to time in open market purchases, privately-

negotiated transactions, block purchases, accelerated share repurchase agreements or a combination of methods, including through Rule 10b5-1 trading plans.

In October 2024, the Board approved a share repurchase program authorizing the repurchase of up to $50.0 million of our common stock.

On July 15, 2026, the Board authorized an increase to the share repurchase program authorizing the repurchase of up to an additional $50.0 million of our common stock.

As a result, the total amount authorized under the share repurchase program increased to $100.0 million.

The shares may be repurchased from time to time in open market purchases, privately-negotiated transactions, block purchases, accelerated share repurchase agreements or a combination of methods, including through Rule 10b5-1 trading plans.

The timing, manner, price and amount of any repurchases under the share repurchase program will be determined by us in our discretion.

The share repurchase program does not require us to repurchase any specific number of shares, and may be modified, suspended or terminated at any time.

As of March 31, 2026, no shares have been repurchased under this plan.

During the three and six months ended June 30, 2026, we repurchased 222,635 shares for approximately $9.7 million under this plan.

These shares represent the total repurchased under the plan as of June 30, 2026.

We strategically purchase reinsurance from third parties which enhances our business by protecting capital from severity events (either large single event losses or catastrophes) and reducing volatility in our earnings.

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It is used for a variety of reasons, including supplementing the limits provided by the treaty coverage or covering risks or perils excluded from treaty reinsurance.

For the three months ended March 31, 2026 our net retention on a written basis (calculated as net written premiums as a percentage of gross written premiums) was 64.8% compared to 64.1% for the same 2025 period.

For the three and six months ended June 30, 2026 our net retention on a written basis (calculated as net written premiums as a percentage of gross written premiums) was 65.6% and 65.2%, respectively, compared to 58.0% and 60.9%, respectively, for the same 2025 periods.

Credit and Financial Strength Ratings

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis