• Adjusted Operating Income: $0.71 per diluted share for Q3 2024; $2.26 per diluted share year-to-date, up over 50% compared to 2023.
• Net Income: $36.7 million or $0.89 per diluted share for Q3 2024, compared to $21.7 million or $0.57 per diluted share for the same period a year ago.
• Gross Written Premiums: Grew by 12.4% for Q3 2024; 19% year-to-date.
• Net Written Premiums: $268 million for Q3 2024, with a 16.5% growth excluding the impact of a canceled quota share reinsurance contract.
• Combined Ratio: 92.2% for Q3 2024; ex-cat combined ratio of 89.4%.
• Catastrophe Losses: 2.8 points on the combined ratio for Q3 2024; year-to-date cat loss ratio of 1.5 points.
• Net Investment Income: $19.5 million for Q3 2024, an increase of $6.4 million compared to the same period of 2023.
• Debt-to-Capital Ratio: 13% at the end of Q3 2024.
• Share Repurchase Program: Approved up to $50 million of Skyward ordinary shares.
• Return on Equity: Annualized 19.1% through 9 months of 2024.
• Book Value Per Share: $18.99, up 19% from the beginning of the year.

• Warning! GuruFocus has detected 5 Warning Signs with POELF.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Skyward Specialty Insurance Group Inc (NASDAQ:SKWD) reported a strong adjusted operating income of $0.71 per diluted share for Q3 2024, with a year-to-date increase of over 50% compared to 2023.
• The company achieved a 92.2% combined ratio, demonstrating effective risk management and disciplined underwriting, despite an active catastrophe quarter.
• Gross written premiums grew by 12.4% in Q3 2024, with significant contributions from transactional E&S, surety, captives, programs, and agriculture.
• Skyward Specialty Insurance Group Inc (NASDAQ:SKWD) announced a share repurchase program of up to $50 million, reflecting confidence in its financial position and commitment to shareholder value.
• The company's investment strategy yielded positive results, with net investment income increasing to $19.5 million in the quarter, driven by a higher portfolio yield and increased invested asset base.

Negative Points

• The market for certain lines, such as D&O and miscellaneous E&O, has become more competitive, impacting growth in these areas.
• Global Property market conditions have deteriorated, with increased competition leading to irresponsible pricing practices by some competitors.
• The company is cautious about loss cost inflation, particularly in Commercial Auto and bodily injury-exposed risks, which may affect growth in these segments.
• Skyward Specialty Insurance Group Inc (NASDAQ:SKWD) experienced a loss of $1.1 million in its alternative and strategic investments portfolio due to a decrease in the fair value of limited partnership investments.
• The company's Professional Lines and Industry Solutions segments saw a decline in gross premiums written, attributed to competitive pressures and strategic adjustments.

Q & A Highlights

Q: Can you discuss the new initiatives driving growth, such as Media Liability, and any future plans for expansion? A: Andrew Robinson, CEO: We are strategically oriented and focus on talent acquisition, often engaging in long-term conversations before bringing new talent on board. We don't feel the need to add anything major at this moment but are filling out investments and adding adjacencies. Media Liability is a recent success, with a market-leading team and unmatched product. We aim to maintain a portfolio that delivers top quartile underwriting outcomes and are well-positioned for profitable growth.

Q: How are you managing casualty reserves, given the industry's focus on this area? A: Andrew Robinson, CEO: We reserve conservatively, often above our indications. While some areas have seen favorable development, others have experienced erosion. We focus on maintaining a conservative position relative to our booked reserves, particularly in bodily injury-exposed risks like Commercial Auto.

Q: What is your outlook for top-line growth, considering the share repurchase program and market conditions? A: Andrew Robinson, CEO: The share repurchase program is part of our maturation as a public company and provides a tool for when our stock is undervalued. We feel positive about our growth outlook, similar to last year, despite a challenging market. Our growth this quarter was consistent with our expectations, and we remain confident in our ability to execute.

Q: Could you elaborate on the investment income portfolio changes and future expectations? A: Mark Haushill, CFO: The portfolio structure and asset allocation are where we want them. We are focused on redeeming opportunistic fixed income, which will be a small portion by the end of 2025. Our core fixed income portfolio has an embedded yield of 5%, and we are considering longer-term investments for our short-term holdings.

Q: What are the competitive dynamics in the property market, and how do they affect your growth plans? A: Andrew Robinson, CEO: The property market is uneven, with competition affecting terms more than price in marine and transactional E&S. However, Global Property is seeing irresponsible pricing behavior. We plan to hold the line on pricing and expect to let some business go, focusing on maintaining profitability and leveraging our diverse portfolio for growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.