Bullish indicating open at $55-$60, IPO prices at $37
HOUSTON - Skyward Specialty Insurance Group, Inc. (NASDAQ:SKWD), a specialty insurance company, announced the commutation of its reinsurance agreement with R&Q Re (Bermuda) Ltd. for accident years 2018 and earlier. The termination of the Loss Portfolio Transfer and Adverse Development and Retrocession Agreement resulted in Skyward Specialty receiving $11.7 million in cash. Additionally, the company strengthened its loss reserves for the Loss Portfolio Transfer by $25.3 million as of December 31, 2024, and recognized a $9.8 million net tax impact due to uncollectible reinsurance recoverable from R&Q.
Skyward Specialty also disclosed preliminary results for the fourth quarter of 2024, showcasing a gross written premium of $388.4 million, marking a 20.8% increase compared to the previous year. The adjusted combined ratio was reported at 91.6%, inclusive of catastrophe losses accounting for 2.2 percentage points. Net investment income reached $20.7 million, while net income stood at $14.4 million, and adjusted operating income was $33.2 million. According to InvestingPro, the company has demonstrated impressive performance with a 57.62% return over the past year, making it one of the strongest performers in its sector. InvestingPro analysts have identified 8 key investment factors for SKWD, with 3 analysts recently revising earnings upward.
Looking ahead, the company provided guidance for the full year 2025, projecting a net income range between $138.0 million and $150.0 million. The combined ratio is anticipated to be between 91.0% and 92.0%, factoring in catastrophe losses of 2.0 to 2.5 points. Trading at a P/E ratio of 16.42, InvestingPro analysis suggests the stock is currently overvalued compared to its Fair Value. Investors seeking detailed valuation insights can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, covering this and 1,400+ other US equities.
Andrew Robinson, Chairman and CEO of Skyward Specialty, expressed satisfaction with the commutation of the reinsurance agreement, noting it eliminates future credit risk associated with the portfolio. He highlighted the fourth quarter’s strong preliminary results, attributing the growth to strategic investments in various divisions. Robinson also conveyed confidence in the company’s financial outlook for 2025, citing expectations for continued premium growth and sustained top-tier financial performance.
The company has assessed its exposure to the January California wildfires and expects total losses and loss adjustment expenses to be under $10 million after reinsurance.
Skyward Specialty plans to release its complete fourth quarter 2024 earnings after market close on February 25, 2025, followed by a conference call with management on February 26 to discuss the results.
The information in this article is based on a press release statement.
In other recent news, Palomar Holdings (NASDAQ:PLMR) has received a price target increase from Piper Sandler, reflecting a positive outlook for the company’s future. Analyst Paul Newsome has raised the target from $119 to $133, maintaining an Overweight rating. The adjustment is based on the anticipation of a favorable environment for primary insurers by 2025, along with an estimated 19 times the projected earnings per share of $6.80 for 2026. However, potential risks were also noted, including the company’s focus on niche lines of business that could be affected by changes in competition and regulation.
In another development, Piper Sandler has also boosted the price target for Skyward Specialty Insurance Group from $54 to $58, while keeping an Overweight rating. The new target reflects an increased earnings multiple based on the firm’s forward earnings estimate for 2026. The decision was influenced by Skyward Specialty’s positive performance in the recent year, with results outpacing those of its peers. These are recent developments that investors in both companies may find noteworthy.
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