Skyward Specialty Reports Q2 2026 Results: Full Earnings Call Transcript

Skyward Specialty (NASDAQ: SKWD ) held its second-quarter earnings conference call on Wednesday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

30 and a strong annualized operating return on equity of 19%. Gross written premiums rose 13%, while managed premiums increased 18%, showcasing robust top-line growth and strong underwriting profitability. The company repurchased approximately $10 million of shares and increased its share repurchase authorization to $100 million, reflecting confidence in its valuation and capital position. 6, indicating excellent underwriting performance.

3%. The company is focusing on growth opportunities in accident and health, agriculture, credit and surety, and specialty programs, while maintaining disciplined underwriting in softer market segments. Management expressed confidence in leveraging AI and technology to improve operational efficiency, notably in underwriting and expense management. Skyward Specialty continues to prioritize portfolio diversification and capital allocation to areas with attractive returns, while maintaining a disciplined approach in competitive markets.

Full Transcript OPERATOR Good day, and thank you for standing by. Welcome to the 2026 Q2 Skyward Specialty earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session.

To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Jordan Arnold, VP of Investor Relations. Please go ahead. Jordan Arnold, VP of Investor Relations Thank you, Shannon. Good morning, everyone, and welcome to our second quarter 2026 earnings conference call.

Today I am joined by our Chairman and Chief Executive Officer, Andrew Robinson, and Chief Financial Officer, Mark Hauschel. We will begin the call with our prepared remarks, and then we will open the line for questions. Our comments may include forward-looking statements, which by their nature involve a number of risk factors and uncertainties that may affect future financial performance. Such risk factors may cause actual results to differ materially from those contained in our projections or forward-looking statements.

These types of factors are discussed in our press release, as well as in our 10-K that was previously filed with the Securities and Exchange Commission. Financial schedules containing reconciliations of certain non-GAAP measures, along with other supplemental financial schedules, are included as part of our press release and available on our website under the Investors section. With that, I will turn the call over to Andrew. Andrew Robinson, Chairperson of the Board and Chief Executive Officer Thank you, Jordan, and welcome to the Skyward team.

We're pleased to have you on board. To our conference call participants, good morning, and thank you for joining us. The second quarter was simply outstanding. 30.

Our annualized operating return on equity was an excellent 19%. Gross written premiums increased 13% over the prior-year quarter, while managed premiums were up 18%. We continue to execute at an incredibly high level across Skyward Specialty and Apollo, delivering strong top-line growth and results that reinforce the strength, diversification, quality, and profitability of our business. Our ruler—niche strategy, and in particular our business portfolio diversification, allows us to lean into markets where pricing, underwriting conditions, and returns remain attractive.

We will continue to protect margins and play sensible defense in the softest parts of the market where pricing and terms are less attractive or loss cost inflation is uncertain. Our strong capital position provides significant flexibility as we continue to allocate capital with discipline. We believe share repurchases remain an attractive use of capital given our returns, earnings growth, and current valuation. During the quarter, we repurchased approximately $10 million of shares, and in July increased our repurchase authorization to $100 million.

With that, I'll turn it over to Mark to provide the financial details for the quarter. Mark Hauschel, Chief Financial Officer Thank you, Andrew, and good morning. We are pleased with our second quarter performance, which included double-digit premium growth, continued excellent underwriting profitability, and attractive returns on capital. We reported net income of $49 million and operating income of $59 million.

30, an increase of 46% year over year. 9 points of catastrophe losses. 6 underscores the quality of our underwriting, the diversity of our business portfolio, and the operating leverage we are achieving as we continue to scale the business. 4%.

Premium growth remains strong. 1 billion during the quarter, while gross written premiums increased 13% to $741 million. Within Skyward Specialty, gross written premiums increased 14% to $668 million, led by continued momentum in accident and health, agriculture, credit and surety, and specialty programs. Apollo gross written premiums increased 6% to $73 million, driven by the specialty lines in Syndicate 1969, which grew 8% year over year.

Apollo's fee generation continued to be a meaningful growth driver, with fee-generating gross written premiums increasing 29% to $318 million, including 80% growth in partner syndicates and 13% growth in aligned syndicates. Underwriting fee income of $13 million during the quarter was excellent, as we are realizing the benefit of Apollo's capital-light business model. Given Apollo's seasonal production patterns, second quarter results are not necessarily indicative of longer-term growth trends. Our focus remains on the long-term opportunity to grow managed premiums, expand both underwriting and fee-based earnings, and continue building scale within the platform.

6. 3 points of catastrophe losses. 4 points year over year, driven by business mix—specifically A&H and agriculture, both of which are higher loss ratio divisions. Loss emergence was in line with expectations, and no development was recognized.

3. The reduction in net policy acquisition costs is positively impacted by the A&H and agriculture business just noted. For other operating and general expenses, we again delivered another quarter of meaningful improvement driven by expense discipline and leverage from our technology, in particular the widespread benefits we are realizing from AI. 4 points of catastrophe losses related primarily to the conflict in the Middle East.

7 for the quarter reflects strong underlying underwriting performance and disciplined portfolio management across the platform. 5 for the quarter. The quarter included adjustments between net policy acquisition costs and other operating and general expenses. 3% provide a more representative view of Apollo's performance.

Investment income continued to benefit from a larger asset base inclusive of the addition of Apollo. Net investment income increased to $31 million in the quarter, up more than 60% from the prior year period, primarily due to $29 million of income from the fixed income portfolio. 8 billion of invested assets. 3%.

Our balance sheet remains exceptionally strong. 55. Financial leverage decreased by 2 points compared to the first quarter to 26%. During the quarter, we repaid $50 million of the $150 million term loan that matures at the end of 2027.

We're rapidly moving towards our target debt-to-cap ratio of low 20s. We also repurchased 223,000 shares for approximately $10 million. In July, we announced that we increased our share repurchase authorization from $50 million to $100 million, reflecting our confidence in the quality of our business, earnings outlook, capital position, and improved leverage. Now I'll turn the call back over to Andrew.

Andrew Robinson, Chairperson of the Board and Chief Executive Officer Thank you, Mark. As discussed, our financial results for the quarter were once again excellent, reflecting the benefits of our diversified portfolio and ruler—niche strategy. The strength of our business mix is unique amongst commercial insurers and continues to differentiate Skyward and support attractive top-line and earnings growth. As is visible over recent quarters, we continue to see meaningful growth opportunities in accident and health, credit and surety, and agriculture, all businesses which are largely insulated from the pressures affecting the more traditional P&C markets.

There are units within our reporting divisions with attractive opportunities for growth as well. Those include Healthcare Solutions within Professional, Power and Renewables within Energy Solutions, political risk and political violence within Syndicate 1969, and a strong pipeline of partner syndicates to drive fee-based income growth. Additionally, the initiatives that bring together Skyward Specialty and Apollo are further providing unique and attractive opportunities for profitable growth. That said, market conditions remain more challenging in property, both global and E&S, and in miscellaneous professional.

Some other areas, such as E&S liability, are clearly transitioning to a more price-competitive market. We continue to prioritize underwriting profitability over volume and are being selective in areas where competitive pressures or loss cost trends do not support our return objectives. Overall, our portfolio continues to demonstrate exactly what we intended when we constructed it: a business with multiple growth engines, less dependence on the traditional P&C cycle, and the flexibility to allocate capital toward the most attractive opportunities while remaining disciplined where market conditions warrant.

Turning to our operational metrics for Skyward Specialty, pure rate remained in the high single digits ex Global Property and low single digits including the larger premium contribution from Global Property in the second quarter. Retention remained in the 70s, and we continue to see strong submission growth, which was in the teens. Once again this quarter, Apollo's risk-adjusted rate change moderated to a low single-digit decline. The business remains focused on maintaining rate adequacy and optimizing the portfolio with disciplined underwriting and selective growth in the most attractive opportunities.

Similar to Skyward Specialty, Apollo's diversified portfolio provides multiple levers to grow, reposition, and deploy capital as market conditions evolve. This flexibility enables us to capitalize on attractive opportunities while remaining disciplined in areas where competitive pressures warrant a more defensive approach. To wrap up, we delivered another outstanding quarter and strong first six months as Skyward Group. Our ruler—niche strategy, diversified portfolio, disciplined underwriting and execution, and growing fee-based income continues to drive top-quartile financial performance.

We are well positioned to capitalize on opportunities in all market cycles and to continue to create significant long-term value for our shareholders. With that, I'll turn the call over to the operator to open it up for questions. OPERATOR Thank you. At this time, we will conduct the question-and-answer session.

As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. Our first question comes from Tracy Bengige from Wolfe Research.

Please go ahead. Tracy Bengige, Analyst at Wolfe Research Thank you. Good morning. The buyback this quarter made sense given the implied share price when that was done.

But unlike most P&C insurers that sit on a ton of excess capital, you run a more efficient capital structure and have historically raised equity to fund growth. So with the authorization that doubled to 100 million, how should we read it? Does it signal less underwriting capacity ahead or now that you have delevered a bit, would you tap the debt markets to fund buybacks if the opportunity arises? Andrew Robinson, Chairperson of the Board and Chief Executive Officer Hey, Tracy, this is Andrew and I'll start and Mark might join in here on this.

Thanks for the question and good morning. So look, I think I would just start with the fundamentals. We are, first off, we're growing at an attractive rate, but we are generating excess capital. That just is true.

I think that it's a nice problem to have. It has a lot to do with our returns. But look, I think in the end what we see is strong earnings growth and still an attractive valuation. So we think buybacks are viable.

We sort of took the preemptive move to reduce our leverage, really to create the headroom. Right. Because you can't sort of execute buybacks if we're starting, you know, leverage level that really we want to reduce. And I think we're doing a good job of that.

So I would just say that we'll stay opportunistic. We feel very good about our business. And I think at the core we're trading at roughly 12 times our earnings guidance for 2026. And we think at the most basic level, the company is immensely, attractively valued.

And that informs some of our thinking. Tracy Bengige, Analyst at Wolfe Research Wasn't sure if Mark was going to chime in. Andrew Robinson, Chairperson of the Board and Chief Executive Officer He gave me the perfect signal. So I think he doesn't want to say anymore.

Tracy Bengige, Analyst at Wolfe Research Okay, got it, got it. Okay, perfect. You know, this quarter the topic of loss cost trends have come up a number of times. Just curious on your thoughts.

I did notice that your underlying loss ratio did deteriorate year over year. So if you could just touch on what you think about loss cost trends and you're maybe choosing some higher loss picks. Andrew Robinson, Chairperson of the Board and Chief Executive Officer Yeah. So first off, the simple answer on the accident year is entirely mixed.

I mean, the fact is that the growth from A&H and AG is earning in. Really earning in now. And that's the change. And I think that there isn't anything more to it than that.

I believe, Tracy, that we have been one of the most early and direct and action oriented around our concerns around loss cost trends, particularly in occurrence liability and in particular anything that had bodily injury, personal injury, exposure. We were talking about this a long time ago and I think my point was just this simple, which is if you really cannot confidently know what your loss cost inflation is, why would you grow into a market?

So if you think, hey listen, I'm getting 10 points of rate because the market will give it to me, but 10 points of rate may actually not be enough rate to cover the loss cost inflation because we've seen it move period on, period on, period. We have intentionally tried to steer our portfolio away from that. So even in occurrence liability lines, much of what we write is really not the personal injury intensively exposed stuff. And then where we are exposed to it or trying, as any good underwriter should, keep your limits short.

And so I think that we obviously respect the commentary of others who are talking about this, but I really do think that we were one of the earliest to be talking about it and acting as far back as four years ago when people were thinking that occurrence liability was five points of loss inflation and in certain areas it's well over 10%. And I think that we've been sort of sensible stewards of our investors' capital in thinking about this. Tracy Bengige, Analyst at Wolfe Research Thank you. Andrew Robinson, Chairperson of the Board and Chief Executive Officer Thank you.

Thanks, Tracy. OPERATOR Thank you. Our next question comes from Andrew Kleigerman from TD Cowen. Please go ahead.

Andrew Kleigerman, Analyst at TD Cowen Hey, good morning. First question is around the expense ratio.