Skyward Specialty Insurance Group (SKWD) risk factors, FY2025 10-K

Other

1. 01Summary of Material Risk Factors26% rewritten

Risks Related to Our Business and Industry

1. 02Our financial condition and results of operations could be materially adversely affected if we do not accurately assess our underwriting risk
2. 03Competition for business in our industry is intense
3. 04Because our business depends on insurance retail agents, brokers, wholesalers and program administrators, we are exposed to certain risks arising out of our reliance on these distribution channels that could adversely affect our results
4. 05We may be unable to purchase third-party reinsurance in amounts we desire on commercially acceptable terms or on terms that adequately protect us, and this inability may materially adversely affect our business, financial condition and results of operations
5. 06Our losses and loss expense reserves may be inadequate to cover our actual losses, which could have a material adverse effect on our financial condition, results of operations and cash flows54% rewritten
6. 07A decline in our financial strength rating may adversely affect the amount of business we write
7. 08Unexpected changes in the interpretation of our coverage or provisions, including loss limitations and exclusions, in our policies could have a material adverse effect on our financial condition and results of operations
8. 09Our reinsurers may not reimburse us for claims on a timely basis, or at all, which may materially adversely affect our business, financial condition and results of operations
9. 10Our failure to accurately and timely pay claims could materially and adversely affect our business, financial condition, results of operations, and prospects
10. 11Severe weather conditions, including the effects of climate change, catastrophes, pandemic, as well as man-made events may adversely affect our business, results of operations and financial condition27% rewritten
11. 12Because we provide our program administrators with specific quoting and binding authority, if any of them fail to comply with pre-established guidelines, our results of operations could be adversely affected
12. 13If actual renewals of our existing contracts or new business from repeat insureds do not meet expectations, our written premium in future years and our future results of operations could be materially adversely affected
13. 14Increased public attention to environmental, social and governance matters may expose us to negative public perception, cause reputational harm, impose additional costs on our business or impact our stock price
14. 15Changes in accounting practices and future pronouncements may materially affect our reported financial results
15. 16Our use of derivatives to mitigate exposure to market price volatility may subject us to risks such as hedge ineffectiveness, basis risk, collateral and margin call liquidity pressures, and valuation uncertainty inherent in futures and options markets, any of which could adversely affect our financial conditionNew

Risks Related to the Market and Economic Conditions

1. 17The insurance business is historically cyclical in nature, which may affect our financial performance and cause our operating results to vary from quarter to quarter and may not be indicative of future performance67% rewritten
2. 18Performance of our investment portfolio is subject to a variety of investment risks that may adversely affect our financial results
3. 19We also invest in marketable preferred and common equity securities and exchange traded funds. These securities are carried on the balance sheet at fair market value and are subject to potential losses and declines in market value
4. 20We could be forced to sell investments to meet our liquidity requirements

Risks Related to the Regulatory Environment

1. 21We are subject to extensive regulation, which may adversely affect our ability to achieve our business objectives. In addition, if we fail to comply with these regulations, we may be subject to penalties, including fines and suspensions, which may adversely affect our financial condition and results of operations
2. 22We may become subject to additional government or market regulation, which may have a material adverse impact on our business
3. 23Changes to the U.S. tax laws and implementation of new tax policies could have a significant negative impact on the overall economy and our business73% rewritten
4. 24Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited
5. 25Applicable insurance laws may make it difficult to effect a change of control

Risks Related to Our Liquidity and Access to Capital

1. 26We may require additional capital in the future, which may not be available or may only be available on unfavorable terms
2. 27The availability of credit under the Revolving Credit Facility is subject to conditions that may limit our accessNew
3. 28The failure to meet certain financial covenants required by our credit agreements may materially and adversely affect our assets, financial position, and cash flowsNew

Risks Related to Our Operations

1. 29We could be adversely affected by the loss of one or more key personnel or by an inability to attract and retain qualified personnel
2. 30Security breaches, loss of data, cyberattacks, and other information technology failures could disrupt our operations, damage our reputation, and adversely affect our business, operations, and financial results
3. 31Artificial intelligence is an evolving and rapidly growing technology which may impact our business and operationsNew
4. 32We may not be able to manage our growth effectively
5. 33We have experienced rapid growth in recent years, and our recent growth rates may not be indicative of our future growth
6. 34The acquisition and integration of Apollo may adversely affect our business, financial condition and results of operationsNew
7. 35The effects of litigation on our business are uncertain and could have an adverse effect on our business
8. 36Loss of key vendor relationships or failure of a vendor to protect our data, confidential and proprietary information could affect our operations
9. 37We may fail or be unable to protect our intellectual property rights for our proprietary technology platform and brand, or we may be sued by third parties for alleged infringement of their proprietary rights

Risks Related to Ownership of Our Common Stock

1. 38policies or procedures. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detectedNew
2. 39We had identified a material weakness in our internal control over information technology general controls (“ITGCs”) as of December 31, 2024, which was remediated as of December 31, 2025. If we fail to maintain an effective system of internal controls, the market price of our common stock could be adversely affected86% rewritten
3. 40Our operating results and stock price may be volatile, or may decline regardless of our operating performance, and you could lose all or part of your investment
4. 41We may change our underwriting guidelines or our strategy without stockholder approval
5. 42Anti-takeover provisions in our organizational documents could prevent or delay a change of control that is beneficial to shareholders and limit our share price32% rewritten
6. 43In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a period of time