On this page of StockholderLetter.com we present the latest annual shareholder letter from Skyward Specialty Insurance Group, Inc. — ticker symbol SKWD. Reading current and past SKWD letters to shareholders can bring important insights into the investment thesis.

 •  4/1/2024 Letter Continued (Full PDF)
 •  4/14/2023 SKWD Stockholder Letter
 •  More "Insurance Brokers" Category Stockholder Letters
 •  SKWD Benford's Law Stock Score = 95

SKWD Shareholder/Stockholder Letter Transcript:

2023
annual
report

Letter from the CEO
"WE HAVE AN INCREDIBLY ENGAGED, TECHNICALLY
SKILLED AND HIGHLY MARKET-CREDIBLE TEAM OF
PROFESSIONALS AND HAVE BECOME A MAGNET FOR
THE SPECIALTY P&C INDUSTRY   S TOP TALENT."
Dear Shareholders,
As I reflect on our progress in my second shareholder letter to you following
what was a remarkable and historic year for Skyward Specialty, I find myself
energized and inspired by what we have accomplished in such a short time.
2023, by nearly any measure, was a truly defining year for Skyward Specialty.
The 12 months following our debut as a public company on January 13, 2023,
were remarkable, achieving quarter-over-quarter record growth, profitability,
and return on equity. Our results, in turn, led Skyward Specialty to finish 2023
as the top-performing financial services IPO of the year and the third most
successful IPO of all companies with a market cap above $25 million. Beyond
these results, you, our shareholders, demonstrated your continued confidence
in us as we executed two highly successful follow-on offerings in July and
November, including the sale of secondary shares with an additional primary
capital raise in the latter offering. We accomplished all this while remaining
laser-focused on executing our strategy, including continuing to invest in
and broaden our business portfolio in markets where we can generate topquartile returns, backed by top talent and utilizing technology to establish
and maintain highly defensible positions. Our strategy execution positions us
well for continued profitable growth in 2024 and beyond.
Focus on Being Top Quartile | Executing our Rule Our Niche Strategy
ANDREW ROBINSON
Chairman of the
Board & CEO
During the lead up to our IPO, we communicated core metrics for the Company
and committed to building a company that delivers top quartile performance.
Our 2023 results demonstrate our progress towards this commitment.


Delivering record growth of 28%, a combined ratio
of 90.7 and adjusted operating income of $80.8 million(1)
Achieving return on equity of 15.9%
Growing fully diluted book value per share by 24%
from $12.87 to $15.96.
We achieved these results through our focused execution of our    Rule Our
Niche    strategy, which centers on taking the lead in the specific markets where
we choose to do business and delivering superior, tailored products and
services to those niche markets. Our strategy fosters our ability to capitalize on
market opportunities to grow both top line and margins, shaping our portfolio
to those areas that offer the best risk-adjusted returns on capital. It also
brings together the best in underwriting and claims handling with the latest
in advanced analytics and technology to further our ability to pick and price
risk with precision and consistently provide high-quality risk management
solutions and claims outcomes. In short, these financial results directly reflect
the power of our strategy and the strength of our team, particularly our
outstanding execution.
(1) Indicates non-GAAP financial measure; see    Management   s Discussion and Analysis of Financial Condition and Results of Operations    Reconciliation of non-GAAP Financial Measures   
included in this Annual Report for a reconciliation of the non-GAAP financial measures to their most directly comparable financial measures prepared in accordance with GAAP.
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ANNUAL REPORT 2023
A Culture that is a Magnet for Top Talent that Want to Win
Our difference is our talent. At our core, we are a valuesdriven Company with clear and meaningful goals that
extend beyond the workplace wherein we carry a strong
commitment to making a positive impact both at work and
in our communities. We are committed to creating a company
with a rich diversity of backgrounds and perspectives that
reflect the world in which we live, where our employees feel
empowered and where we can actively make a difference.
We have an incredibly engaged, technically skilled and highly
market-credible team of professionals and have become a
magnet for the specialty P&C industry   s top talent. It is no
surprise to our team that we were named a    Best Places to
Work in Insurance for 2023    by Business Insurance.The metrics
of our success reinforce this well-deserved recognition.
2023 Class of Summer Interns at Skyward Specialty's Corporate Offices
Our Underwriting Success


This year marked a significant underwriting achievement
for us     each of our eight underwriting divisions producing
more than $100 million, as compared to five at the end of
2022, evidence that each division is now of a scale that
can substantially contribute to the Company   s earnings.
The three divisions that reached $100M this year were
Surety, Professional Liability and Transactional E&S. In
just three years, we have grown these three businesses
in aggregate from $44 million to $383 million driven
by significant investments in talent and technology. All
three generate outstanding returns and have added
meaningfully to the diversification of our earnings. As
a measure of the success of these investments, our
Professional Lines division was recognized as a    5-Star
Winner 2023 - Professional Liability Provider    by Insurance
Business America, an extraordinary achievement.
134 New Hires
61 promotions / expanded roles
7% Voluntary turnover
Check out our Annual People Report on the Careers page of
our website to learn more about how we are winning in the
talent market.
We've also built an early-in-career pipeline that is amongst
the best in the industry. Our internship program has been
recognized as one of the    Elite 50 Internships    by Rise
Professionals for the second year in a row and 90% of offers
made to interns between 2021-2023 were accepted and
retention rate among interns over the three years is 95%.
Central to creating the engaged culture we   ve established is
our shared commitment to building a company we always
wanted to work for. We strive to be an employer of choice in
the marketplace and the results of our annual engagement
survey of all Skyward Specialty employees reinforce that we
have one of the most engaged teams not just in our industry
but in the country.
Our investment continued as we made five strategic and
significant expansions this year with the launch of new
Inland Marine and Global Agriculture underwriting units,
the addition of Occupational Accident to our Industry
Solutions Transportation unit, the expansion of our
Healthcare Solutions unit to include individual providers
and physicians and the growth of our Surety division
into the Small Business Administration and Judicial and
Fiduciary bonds markets.


Overall net promoter score (positive responses minus
negative responses) of over 80%.
45% of the 134 new hires were referrals by existing
employees
Fundamental to the underwriting successes we are
driving toward and achieving is our investment in
technology. We continue to develop and strategically
implement advanced technologies to augment the skill
and talent of our workforce. In fact, our proprietary
underwriting platform, SkyVUETM, was awarded the    2023
Insurance Technology Impact Award by Datos Insights    for
its innovation and impact on our businesses.
As I   ve noted before, in addition to    Ruling our
Niche(s)   , we intentionally focus on building a welldiversified portfolio of underwriting divisions to
allocate capital to the most attractive opportunities.
We think our ability to shift our resources quickly serves
us well as we see greater micro cycles that can create
opportunities on more of a business-by-business basis.
Andrew Robinson & Meyer Shields at the KBW Insurance
Conference in September
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95% or more of our employees strongly agreed/
agreed with the statements    I am proud to work for
this organization    and    I understand the importance
of how my role impacts company success   
Finally, through initiatives undertaken by our employeeled Employee Resource Groups, this year the Skyward
Foundation and our employees donated nearly $210,000
benefiting organizations and causes that mean the most to
our employees, and over 150 of our roughly 500 employees
participated in one of six company sponsored community
volunteer initiatives.
Board Governance and Independence
As we transitioned from a private company to a public company,
it was clear that Board Governance and Independence would
be an important focus for us and our investors and as such
we would need to undertake changes as a public company.
WSIA Broker Open House hosted by Skyward Specialty in San Diego, CA
Similarly, throughout 2023, ownership evolved, with Westaim
reducing its position from 44% to just under 18% through
the two follow-on offerings, once again addressing a significant
topic of interest from investors. Today, we are positioned
with a wonderful and supportive investor group that
understands our Company and strategy well.
Throughout 2023, we made several significant changes to
the Board. In November, we announced the departure of Cam
MacDonald, then Chairman, and Board Member Rob Kittel,
both representatives of Westaim, our largest shareholder at
the time of the IPO. Cam and Rob were critical in stewarding
the organization over a nearly ten-year period as investors
and Board members. We are immensely grateful for their
service to the Company, and their contribution will be lasting.
What to expect in 2024
We are fully engaged in executing our 2024 plan and our
strategy remains unchanged. Our commitment to being
a top quartile financial performer endures, as does our
dedication to executing our    Rule Our Niche    strategy. We
continue to be a magnet for the industry   s top talent and to
utilize technology to build real competitive advantages and
defensible market positions. The last four years have been
transformative for us in reshaping our business portfolio, our
teams, our capital structure and our Board. 2024 is the year
that all those transformations and changes come together.
While the specialty market is more nuanced, and the
complexities of sustaining and building a highly profitable
book of business remain, we are well prepared for this and
any market environment.
The Board is now comprised of eight members, all of
whom, excluding me are independent; with seven directors
joining post-2020. Joining us this year were Tony Kuczinski,
Gena Ashe, and Mike Morrissey, each with impressive track
records as executives and public company board members,
respectively. Each brings different skills and experiences,
sharing perspectives and wisdom that will serve the
Company and our shareholders incredibly well. Additionally,
following the exit of Cam and Rob, the Board asked that I
assume the additional role of Chairman - a role I am deeply
honored to accept. Subsequently, Tony Kuczinski assumed
the role of Lead Independent Director. With these changes,
we believe we have a world-class Board with diverse and
relevant experience poised to guide the Company through
the next leg of our journey.
Lastly, we could not be here without the steadfast belief and
commitment of our employees, trading partners, customers
and most certainly investors. We remain committed to
delivering top quartile performance and I am immensely
optimistic about our future. On behalf of the entire leadership
team and our Board of Directors, we thank you for your
support.
Thank you,
Andrew Robinson,
Chairman of the Board & CEO
Our Birmingham Office celebrate achieving record results in 2023!
4

ANNUAL REPORT 2023
"WE REMAIN LASER FOCUSED ON EXECUTING OUR "RULE OUR
NICHE" STRATEGY IN OUR PROGRESSION TOWARDS GENERATING
TOP QUARTILE RETURNS AT ALL PARTS OF THE MARKET CYCLE."
FINANCIAL HIGHLIGHTS
2023
2022
2021
$1,459,829
$1,143,952
$939,859
Net written premiums
$910,691
$675,543
$529,143
Net earned premiums
$829,143
$615,994
$499,823
Underwriting income(1)
$76,526
$36,510
$10,887
Net investment income
$40,322
$36,931
$24,646
Net income
$85,984
$39,396
$38,317
Adjusted operating income(1)
$80,847
$58,574
$36,062
Basic earnings per share
$2.34
$1.24
$1.21
Diluted earnings per share
$2.24
$1.21
$1.18
Diluted adjusted earnings per share
$2.11
$1.79
$1.11
$2,953,435
$2,363,439
$2,118,212
Stockholders' equity
$661,031
$421,662
$426,080
Tangible stockholders' equity(1)
$572,596
$331,792
$334,744
Book value per share
$16.72
$25.82
$26.32
Fully diluted book value per share
$15.96
$12.87
$13.15
Return on equity
15.9%
9.3%
9.4%
Return on tangible equity(1)
19.0%
11.8%
11.9%
Adjusted return on tangible equity(1)
17.9%
17.6%
11.2%
Combined ratio
90.7%
94.0%
97.8%
Adjusted combined ratio(1)
90.9%
92.6%
94.6%
($ in thousands, except per share amounts)
Gross written premiums
Total assets
(1) Indicates non-GAAP financial measure; see    Management   s Discussion and Analysis of Financial Condition and Results of Operations    Reconciliation of non-GAAP Financial Measures   
included in this Annual Report for a reconciliation of the non-GAAP financial measures to their most directly comparable financial measures prepared in accordance with GAAP.
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 4/1/2024 Letter Continued (Full PDF)