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On Monday, Keefe, Bruyette & Woods analysts maintained their Outperform rating on Skyward Specialty Insurance Group (NASDAQ:SKWD) with a steady price target of $62.00. The firm’s analysis of the company’s year-end 2024 Generally Accepted Accounting Principles (GAAP) reserve indicated that Skyward Specialty’s GAAP loss and allocated loss adjustment expenses (ALAE) reserves were overstated by approximately $56.5 million, based on estimates for the end of 2022.
The analysts observed that the reserve development for the calendar year 2024 largely reflected the strengthening of reserves from older accident years. This was connected to the company’s loss portfolio transfer commutation that took place in January 2025. The firm expressed their belief that Skyward Specialty Insurance is deliberately maintaining reserve redundancies with the expectation of consistent releases in the future. InvestingPro analysis reveals the company maintains a healthy current ratio of 1.96, indicating strong liquidity to meet its short-term obligations.
Keefe, Bruyette & Woods analysts have kept their earnings per share (EPS) estimates for Skyward Specialty unchanged at $3.45 for 2025 and $4.05 for 2026. These projections do not account for any net reserve development. The $62.00 price target is based on 15.3 times the firm’s estimated 2025 earnings per share.
In their statement, the analysts said, "Our year-end 2024 GAAP reserve analysis indicates that SKWD’s GAAP loss and ALAE reserves were overstated by about $56.5 million (YE22E: $25 million). SKWD’s calendar-year 2024 reserve development mostly reflected older accident-year reserve strengthening related to its January 2025 loss portfolio transfer commutation. We believe SKWD is intentionally retaining reserve redundancies until it can anticipate consistent releases; our unchanged 2025E/2026E EPS of $3.45/$4.05 assume no net reserve development. We maintain our $62 (15.3x our 2025E EPS) target price and Outperform rating."
The firm’s analysis and subsequent rating provide a perspective on Skyward Specialty Insurance’s financial health and reserve management strategies as the company moves forward. InvestingPro data supports this positive outlook, with the company receiving a "GREAT" overall financial health score of 3.54 out of 5. Subscribers to InvestingPro can access 8 additional key insights and a comprehensive Pro Research Report, offering deeper analysis of SKWD’s financial position and growth prospects.
In other recent news, Skyward Specialty Insurance Group reported impressive financial results for the fourth quarter of 2024, with earnings per share (EPS) of $0.8, surpassing analysts’ expectations of $0.65. The company’s revenue also exceeded forecasts, reaching $304.4 million compared to the anticipated $265.04 million. This robust performance was a factor in Keefe, Bruyette & Woods (KBW) raising their price target for Skyward Specialty to $62, citing strong earnings and maintained conservative loss ratios as key drivers. Jefferies also increased their price target to $62, maintaining a Buy rating based on the company’s reaffirmed 2025 guidance and anticipated underwriting actions in California.
Conversely, Wolfe Research downgraded Skyward Specialty from Outperform to Peer Perform, noting the company’s trading multiples and risk-return profile as reasons for the adjustment. Despite these mixed analyst ratings, Skyward Specialty continues to expand its business, appointing Patricia Ryan as the new General Counsel, effective April 1, as part of its ongoing leadership transition. This appointment is seen as a strategic move to enhance corporate governance and risk management expertise within the company. Overall, these developments reflect Skyward Specialty’s dynamic position in the specialty insurance market, with its financial performance and strategic initiatives drawing varied responses from analysts.
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