Executive Summary

Q2 2025 delivered record underwriting with a 89.4% combined ratio (ex-cat 88.0%) and underwriting income of $31.2M, while adjusted operating EPS was $0.89 and GAAP diluted EPS was $0.93 .
Against S&P Global consensus, adjusted/“Primary” EPS modestly beat ($0.89 vs $0.8665*), while total revenues were slightly below ($319.9M vs $324.4M*) as alternative investments weighed on net investment income; underwriting strength drove the EPS outperformance .
Premium growth remained broad-based (GWP +17.9% YoY to $584.9M) led by Agriculture & Credit (Re)insurance, A&H, Specialty Programs and Captives; Global Property and Construction & Energy were intentionally reduced amid softening markets .
Management maintained full-year assumptions (expense ratio sub-30s; cat load ~2 points; net retention ~60%; ETR 21–22%) and emphasized cycle management: growing in attractive niches (Ag, Credit, A&H) and pulling back in softening/volatile areas (Global Property/certain casualty) .
Near-term stock narrative: clean underwriting beat with disciplined cycle management; watch alt-investment runoff, property pricing pressure, and continued execution in Ag/A&H as key catalysts .

Note: Items marked with * are S&P Global consensus values.

What Went Well and What Went Wrong

What Went Well
- Record underwriting performance: combined ratio 89.4%, ex-cat 88.0%; non-cat loss ratio improved 70 bps YoY; expense ratio improved 90 bps YoY to 28.1% .
- Broad premium growth and portfolio agility: GWP +17.9% YoY to $584.9M, led by Ag & Credit, A&H, Specialty Programs, Captives, with deliberate pullback in Global Property and Construction & Energy .
- Management tone and strategy: “Our 18% growth… and best ever 89.4% combined ratio are again a demonstration of the power of our portfolio diversity…” — Andrew Robinson, CEO . Also, early-mover AI underwriter enablement via Skyview platform highlighted as a differentiator .
What Went Wrong
- Investment income headwind: Net investment income declined to $18.6M (vs $22.0M LY) due to alternative & strategic investment losses; alts in redemption (<5% of portfolio), causing volatility .
- Market headwinds: Management flagged rapid softening in Global Property with net rate down high-single-digits; retention dipped to mid-70s on business mix; selective pullback in occurrence liability lines amid severity concerns .
- Slight top-line miss vs Street: Total revenues were $319.9M vs ~$324.4M* consensus despite strong net earned premium growth; EPS outperformance driven by underwriting leverage and lower OUE .

Financial Results

Overall P&L, EPS and key underwriting metrics

Metric	Q2 2024	Q4 2024	Q1 2025	Q2 2025
Total Revenues ($000s)	$279,942	$304,402	$328,527	$319,903
Net Earned Premiums ($000s)	$257,583	$293,240	$300,366	$295,542
GAAP Diluted EPS ($)	$0.75	$0.35	$1.01	$0.93
Adjusted Operating Diluted EPS ($)	$0.80	$0.80	$0.90	$0.89
Combined Ratio (%)	90.7	95.8	90.5	89.4
Ex-Cat Combined Ratio (%)	89.5	93.6	88.3	88.0
Loss Ratio (%)	61.7	66.9	62.4	61.3
Expense Ratio (%)	29.0	28.9	28.1	28.1

Q2 2025 vs S&P Global Consensus

Metric	Actual	Consensus	Note
Total Revenues ($M)	319.9	324.4*	Slight miss
Primary EPS ($)	0.89	0.8665*	Beat

Note: Items marked with * are S&P Global consensus values.

Underwriting and investment drivers

Metric	Q2 2024	Q1 2025	Q2 2025
Underwriting Income ($000s)	$23,903	$28,482	$31,244
Net Investment Income ($000s)	$22,034	$19,331	$18,589
Cat Loss & LAE (pts)	1.2	2.2	1.4

Premiums and retention

Metric	Q2 2024	Q1 2025	Q2 2025
Gross Written Premiums ($000s)	$496,243	$535,326	$584,914
Net Written Premiums ($000s)	$297,129	$343,271	$339,213
Net Retention (%)	59.9	64.1	58.0

Capital and book value

Metric	Q4 2024	Q1 2025	Q2 2025
Book Value/Share ($)	19.79	21.06	22.23
Annualized ROE (%)	16.3 (FY24)	20.5	17.7

Segment breakdown (GWP)

Division	Q2 2025 ($000s)	Q2 2024 ($000s)	YoY %
Accident & Health	60,489	44,088	37.2%
Agriculture & Credit (Re)insurance	71,573	36,592	95.6%
Captives	76,961	62,099	23.9%
Construction & Energy Solutions	73,613	78,214	(5.9%)
Global Property	83,992	88,231	(4.8%)
Professional Lines	38,147	38,106	0.1%
Specialty Programs	85,955	59,644	44.1%
Surety	40,737	37,642	8.2%
Transactional E&S	53,461	51,609	3.6%
Total	584,928	496,225	17.9%

KPIs and balance sheet quality

KPI	Q2 2025	Q1 2025	Comment
IBNR as % of net reserves	>70% (qualitative)	>70%	Conservative reserving discussed
Stockholders’ Equity ($M)	899.9	850.7	Up 5.8% QoQ on NI and AFS gains
Cash & Equivalents ($000s)	136,617	112,916	Liquidity improved

Guidance Changes

Metric	Period	Previous Guidance	Current Update	Change
Catastrophe load (combined ratio)	FY 2025	~2 points	Unchanged	Maintained
Expense Ratio	FY 2025	“Sub-30s”	Still targeting sub-30s	Maintained
Effective Tax Rate	FY 2025	21%–22%	21%–22% reiterated earlier; no change signaled in Q2	Maintained
Net Retention	FY 2025	~60% (mix dependent)	~60% with mix effects (captives/A&H)	Maintained
Property Reinsurance	4/1/2025 renewals	Renewed at expiring cat structure; increased global property QS capacity	No change in Q2; renewals “orderly” as of Q1	Maintained
Growth Outlook	FY 2025	Mid-teens GWP growth framework	No formal change; selective growth reiterated	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
AI/technology enablement	Leadership in tech/AI for pricing/claims (Q1)	“Leading position using AI… Skyview platform” expanding across units	Strengthening
Property market conditions	Q1 noted quick softening; defended position with longer stretches and QS fac; 95% retention	Net rate down high-single-digits; softening “fast”; selective participation	Softening
Casualty severity/loss inflation	Manage exposure; loss trend 5–6% (Q1)	Selective on occurrence liability; pockets of auto/GL severity; overall strong E&S/professional emergence	Mixed; cautious
A&H stop-loss dynamics	Captive-led growth; distinct cost controls; negotiate before paying; strong RFP flow (+59%) (Q1)	Continued strength; focus on ≤500 lives; captive engagement aids cost management	Positive
Agriculture & credit (re)insurance	Global, diversified portfolio; conservative picks; hedging strategy (Q1)	Growth continues; bullish; unique products; conservative booking	Positive
Reinsurance/cat program	Cat treaty renewed at $15M xs $36M (Q1)	Cat load guidance unchanged (~2 pts)	Stable
Reserve adequacy	IBNR >70%; margin above actuarial indication (Q1)	IBNR >70%; no net reserve development; margin maintained	Stable/strong
Programs/MGA alignment	Ownership stakes; data/claims control; alignment (Q1)	Ownership ≈70% of division; deep strategic ties; alignment reinforced	Positive

Management Commentary

Strategy and cycle management: “Our… best ever 89.4% combined ratio are… a demonstration of… portfolio diversity and our ability to deploy capital to attractive markets… while managing our volatility.” — Andrew Robinson, CEO .
Selective growth posture: “We pulled back again in global and E&S property… and… held our current liability exposure base roughly flat… loss inflation continues to be a serious headwind” .
Investment portfolio transition: “Alternative… positions… have lagged expectations… portfolio is in redemption and on June 30 it comprised less than 5%… $30 million of capital was returned… reinvested in fixed income” — CFO .
AI moat: “Given the AI arms race, I believe our early mover advantage will compound and contribute to the competitive moat…” — CEO .

Q&A Highlights

Alternative investments volatility and runoff: Management unhappy with the quarter’s alt-volatility but reiterated the runoff and reallocation plan to fixed income; expect quarters where volatility could flip positive, but alts are not part of go-forward strategy .
Property pricing and positioning: Net rate negative high-single digits; pricing near 2Q23 levels; if rates continue sliding, posture may adjust; current portfolio risk-adjusted returns still adequate .
Captives/programs strategy: Deeply aligned MGA/program relationships, including ownership stakes and claims control, drive growth and underwriting discipline .
Retention and mix: Net retention guided around ~60% but can vary with captives/A&H mix and treaty timing; Q2 is seasonally a dip in retention .
Guidance clarifications: Cat load ~2 points unchanged; loss picks not lowered despite favorable emergence (mix drove quarterly improvement); expense ratio targeted sub-30s .
New niches: Aviation unit expansion through acquisition of a small-book program; growth opportunity to ~$50M without margin dilution .

Estimates Context

Q2 vs consensus (S&P Global): Adjusted/“Primary” EPS of $0.89 beat ~$0.8665*, while total revenues of $319.9M trailed ~$324.4M* as alt-investment losses reduced NII despite record underwriting results .
Implications: Street models may adjust to stronger underwriting income/expense leverage and lower alt-income run-rate; watch assumptions for Global Property rate trajectory and mix impact on net retention/commission ratio .

Note: Items marked with * are S&P Global consensus values. Values retrieved from S&P Global.

Key Takeaways for Investors

Underwriting engine is outperforming: record 89.4% combined ratio and stronger non-cat loss and OUE ratios provide resilience against top-line volatility .
Mix shift is deliberate and working: growth concentrated in Ag, A&H, Captives, and Programs while property/certain casualty exposures are curtailed amid softening/severity concerns .
Investment headwind is transitory: alts are sub-5% and in redemption; fixed income redeployment at ~5–6% yields supports forward NII; near-term NII can remain lumpy .
Risk posture remains conservative: IBNR >70%, no net reserve development, and margin above actuarial indication reduce downside tail risk .
Guidance intact: sub-30s expense ratio, ~2 pts cat load, ~60% retention, 21–22% ETR; execution rather than guidance changes should drive shares near term .
Watchlist catalysts: continued Ag/A&H growth contribution, property rate/terms evolution, pace of alt runoff and NII trajectory, and AI-driven underwriting productivity gains .

Appendix: Additional Financial Detail (for reference)

Balance sheet snapshot (selected)

Item	Jun 30, 2025	Mar 31, 2025
Total Investments ($000s)	2,080,507	1,993,390
Cash & Equivalents ($000s)	136,617	112,916
Total Assets ($000s)	4,336,392	4,030,633
Total Liabilities ($000s)	3,436,477	3,179,912
Stockholders’ Equity ($000s)	899,915	850,721

Non-GAAP reconciliation (Q2 2025)

Metric	Q2 2025
Net Income ($000s)	38,839
Adjusted Operating Income ($000s)	37,116
Diluted GAAP EPS ($)	0.93
Diluted Adjusted Operating EPS ($)	0.89

Management confirms non-GAAP adjustments primarily exclude net investment gains/losses and select other items; see reconciliation for details .

Skyward Specialty Insurance Group, Inc. (SKWD)·Q2 2025 Earnings Summary