Executive Summary

Strong close to 2024: adjusted operating EPS of $0.80 with adjusted combined ratio of 91.6% as GWP grew 20.8% to $388.4M; reported combined ratio of 95.8% reflected a 4.2-pt LPT impact and 2.2-pt cat loss (Hurricane Milton) .
Balance sheet de-risking: company commuted its legacy LPT effective Jan 31, 2025, removed reinsurance credit risk, strengthened LPT reserves by $25.3M, and recognized ~$9.8M after-tax uncollectible reinsurance, depressing GAAP earnings in Q4; management emphasized reserves are in their “best position” with IBNR at 69% of total reserves .
Investment income tailwind intact: net investment income rose to $20.7M in Q4 (fixed-income NII $15.9M), embedded yield reached 5.1% and short-term investments were ~$275M; financial leverage remained modest at ~13% debt-to-capital .
2025 outlook: net income guidance of $138–$150M, combined ratio 91–92% (incl. 2.0–2.5 cat pts), and low-to-mid-teens GWP growth; management reiterated emphasis on less cycle-exposed niches (A&H, Surety, Captives, Mortgage/Credit, Ag now 42% of Q4 GWP) as the growth engine .
Potential stock catalysts: LPT commutation (legacy uncertainty removed), solid reserve posture (higher IBNR share), and credible 2025 guide amid disciplined underwriting and portfolio mix shift; offset by continued property pricing softness and cautious posture on casualty inflation .

What Went Well and What Went Wrong

What Went Well
- Topline and underwriting quality: GWP +20.8% to $388.4M in Q4; adjusted combined ratio 91.6% with non-cat loss ratio of 60.5% demonstrating underlying consistency .
- Investment income and portfolio positioning: Q4 NII of $20.7M, fixed income NII of $15.9M, embedded yield 5.1%; management continued deploying free cash flow to fixed income at attractive yields .
- Strategic mix shift and talent: 42% of Q4 GWP came from less cycle-exposed lines (A&H, Surety, Captives, Mortgage/Credit, Ag); “We added 19 underwriters in Q4… our ability to attract talent is amongst the very best in the industry” .
What Went Wrong
- Reported results hit by legacy LPT: reported combined ratio 95.8% and net income of $14.4M ($0.35) included a 4.2-pt LPT impact and ~$9.8M after-tax uncollectible reinsurance; adjusted operating EPS was $0.80 .
- Cat headwinds and property pricing: Q4 cat losses were 2.2 pts (Hurricane Milton), and property markets—especially large global property—remain highly competitive with downward pricing trends .
- Submission growth deceleration and professional softness: submissions rose in the teens vs >20% prior quarters; professional lines saw softness in some targeted lines, though healthcare PL and new initiatives (e.g., media liability) are expected to offset in 2025 .

Financial Results

Consolidated P&L and Margins (USD millions except per-share; columns oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Net Earned Premiums	$257.6	$269.6	$293.2
Total Revenues	$279.9	$300.9	$304.4
Net Income	$31.0	$36.7	$14.4
Diluted EPS ($)	$0.75	$0.89	$0.35
Adjusted Op. Income (After-tax)	$33.1	$29.4	$33.2
Adjusted Diluted EPS ($)	$0.80	$0.71	$0.80
Combined Ratio (Reported)	90.7%	92.2%	95.8%
Adjusted Combined Ratio	90.8%	92.3%	91.6%
Non-Cat Loss Ratio	60.6%	60.6%	60.5%
Cat Loss Ratio	1.2%	2.8%	2.2%
Expense Ratio	29.0%	28.9%	28.9%
Net Investment Income	$22.1	$19.5	$20.7

Notes: Q4 reported CR elevated by LPT (4.2 pts); adjusted ratios exclude LPT impacts per non-GAAP reconciliations .

Premiums and Retention

Metric	Q2 2024	Q3 2024	Q4 2024
Gross Written Premiums	$496.2	$400.0	$388.4
Net Retention	59.9%	67.1%	69.8%

Segment GWP Mix (USD millions)

Underwriting Division	Q2 2024	Q3 2024	Q4 2024
Industry Solutions	$84.1	$74.1	$80.7
Global Property & Agriculture	$124.7	$54.4	$31.7
Captives	$62.1	$53.6	$57.8
Programs	$59.6	$54.4	$52.2
Accident & Health	$44.1	$43.5	$44.6
Transactional E&S	$45.7	$44.9	$36.3
Professional Lines	$38.1	$40.3	$39.1
Surety	$37.7	$34.8	$46.0
Total	$496.2	$400.0	$388.4

KPIs and Capital

KPI	Q2 2024	Q3 2024	Q4 2024
Book Value per Share ($)	$18.18	$19.89	$19.79
Annualized Adjusted ROE	18.7%	15.5%	16.7%
Debt-to-Capital (approx.)	~14% (qtr-end commentary)	~13%	~13%
Cash From Operations (FY)	—	—	~$300M (full-year)

Versus Estimates

S&P Global consensus (EPS/Revenue) for Q4 2024 was unavailable at the time of analysis due to provider request limits; therefore, vs-consensus comparisons are omitted. If needed, we can refresh and incorporate when access resumes. Values would be retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Income	FY 2025	—	$138–$150M	New
Combined Ratio	FY 2025	—	91–92% incl. 2.0–2.5 cat pts	New
GWP Growth	FY 2025	—	Low-to-mid-teens	New
Cat Loss Assumption	FY 2025	—	2.0–2.5 pts (embedded in CR guide)	New
CA Wildfires Loss Update	Q1 2025	—	Expected < $10M net	New risk update
LPT Commutation	Effective 1/31/2025	LPT in place	Commuted; removed reinsurance recoverable credit risk	De-risking

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2, Q3)	Current Period (Q4)	Trend
Casualty inflation/selectivity	Cautious on BI-exposed lines; reserve conservatism and select growth	“10–12 pts of rate may not be enough” for some occurrence liability; selective growth	Continued caution
Property pricing	Global property softening; rational in TE&S/IM; warned of irrational pricing in large property	Downward trends persist in global property and some professional lines; selective participation	Softening persists
Commercial Auto remediation	Reducing exposure; more quarters of adjustments ahead	Remediation to be complete by end of Q1’25; ~12–13% of Q4 premium; exposure down, price up	Nearing completion
Mix shift to less cyclical niches	36% (Q2) to 37% (Q3) of GWP	42% of Q4 GWP in A&H/Surety/Captives/Mortgage/Credit/Ag	Increasing
A&H/Stop-loss	Stable, low-volatility structure; excess cover purchased	Performing “never better”; strong 1/1; group captive traction	Strengthening
Captives (incl. Understory)	Growth drivers; innovative auto dealer property captive	Continued strong growth; highlighted tech-enabled risk management and reinsurance support	Accelerating
Talent & hiring	Winning talent; AM Best A upgrade helps	19 underwriters added in Q4, 7 in surety	Accelerating
Reserves/IBNR	Conservative picks since 2020	Converted to accident year; IBNR now 69% of reserves; reserve position “best ever”	Strengthened
Capital/leverage	Modest leverage; buyback authorized in Q3	Leverage ~13%; ample revolver capacity; capital “great”	Stable/flexible
M&A posture	—	Active sourcing with a very high bar; protect organic engine	Watchful
Submission flow	>25% increases in Q2/Q3	Teens in Q4; not a concern per mgmt	Moderation

Management Commentary

“We finished the year strong, reporting adjusted operating income of $0.80 per diluted share... For the year, our adjusted operating income of $2.87 per diluted share is up over 28% compared to 2023.”
“Our fourth quarter adjusted combined ratio was 91.6%... included 2.2 points of cat losses, principally from Hurricane Milton… we increased reserves by $25.3 million related to losses previously subject to the LPT… On January 31, we commuted the LPT, removing future reinsurance recoverable credit risk.”
“For 2025 we expect net income of between $138 million and $150 million, a combined ratio between 91% and 92%… and gross written premium growth in the low to mid-teens.”
“This currently includes A&H, surety, captives, mortgage, credit, and agriculture, which together accounted for 42% of our $388 million of gross written premiums this quarter.”

Q&A Highlights

Casualty inflation and growth posture: Management will “take a more cautious approach” despite industry rate increases; concern that double-digit rate may still lag loss inflation in BI-exposed classes .
Hiring and organic engine: Added 19 underwriters in Q4 (seven in surety); confident in 2025 hiring and organic growth runway .
M&A discipline: Active pipeline under new Corp Dev head; bar is “exceptionally high” to avoid disrupting organic growth and adding balance sheet risk .
Capital/leverage: Comfortable at ~1.5x net premium-to-surplus; see room to lever slightly; emphasize benefits from diversified portfolio .
Commercial auto timeline: Remediation expected to conclude by end of Q1’25; Q4 CA ~12–13% of premium; exposure decreasing while price rising .
Cash from operations: ~“$300 million” for FY 2024, per CFO .

Estimates Context

Wall Street consensus from S&P Global for Q4 2024 EPS/Revenue was unavailable at the time of analysis due to provider request limits; as a result, we do not present vs-consensus comparisons. We can refresh this section upon restored access to S&P Global.

Key Takeaways for Investors

Underlying earnings quality remains solid: adjusted combined ratio of 91.6% and consistent non-cat loss ratios support durable underwriting margins despite cat and LPT headwinds in reported results .
Balance sheet de-risked: LPT commutation removes a legacy uncertainty and reinsurance credit risk; reserve posture strengthened with IBNR at 69% of reserves and conversion to accident-year reserving .
2025 guide credible: net income $138–$150M and CR 91–92% embed measured cat assumptions and portfolio discipline; growth skewed to niches less exposed to P&C cycles .
Growth engines intact: Surety, Captives, A&H, and Ag continue to scale; innovative captive structures (e.g., Understory Weather) and strong talent inflows should sustain momentum .
Risk controls in softening markets: Management is deliberately letting go of poorly priced global property business and staying selective in casualty amid social/loss inflation .
Capital flexibility: Modest leverage (~13%) and ample revolver capacity support both growth and opportunistic capital deployment; full-year cash from ops approximated $300M .
Near-term watch items: Completion of commercial auto remediation by end of Q1’25, property pricing trajectory, and execution vs. 2025 guide; CA wildfire losses expected < $10M net .

Sources: Q4 2024 earnings press release and financials ; Q4 earnings call transcript - and -; LPT commutation and preliminary Q4 results/guidance 8-K -; Q3 2024 earnings materials - -; Q2 2024 earnings materials - -.

Skyward Specialty Insurance Group, Inc. (SKWD)·Q4 2024 Earnings Summary