Thank you, Gigi. Good morning, everyone, and welcome to our second quarter 2023 earnings conference call. Today, I am joined by our Chief Executive Officer, Andrew Robinson; and Chief Financial Officer, Mark Haushill. We will begin the call today with our prepared remarks and then we will open the lines for questions. Our comments today may include forward-looking statements, which by their nature involve a number of risk factors and uncertainties, which may affect future financial performance. Such risk factors may cause actual results to differ materially from those contained in our projections or forward-looking statements. These types of factors are discussed in our press release as well as in our 10-K that was previously filed with the Securities and Exchange Commission. Financial schedules containing reconciliations of certain non-GAAP measures, along with other supplemental financial information, are included as part of our press release and available on our website, skywardinsurance.com under the Investors section. Now I will turn the call over to Skyward's CEO, Andrew Robinson. Andrew?

Thank you, Natalie. Good morning, everyone, and thank you for joining us. 2Q was another excellent quarter. We continue to execute our ruler niche strategy and to deliver solid financial performance. We reported strong underwriting results in the face of a high level of industry-wide catastrophe losses in the quarter. Specifically, gross written premiums grew approximately 29% in the quarter. The quality and breadth of our growth is a testament to the high level of execution across our underwriting divisions. We continue to benefit from broadly favorable market conditions as 60% of our writings in the quarter were in excess and surplus and non-admitted lines and 58% were short-tail lines of business. Our combined ratio of 92% for the quarter included only 3.5 points of catastrophe losses, despite industry-incurred record convective storm losses. Our pure rate increased to double-digits this quarter and continues to be materially above our loss cost inflation estimates. New business pricing remains in line with our in-force book. Our ongoing investments in talent acquisition and development have been instrumental in driving our success. We continue to add A-plus talent across the organization, including new teams and products in our surety, professional lines, and captives divisions. With that, I'll turn the call over to Mark to discuss our financial results in greater detail. Mark?

Thank you, Andrew. For the quarter, we reported net income of $19.5 million, or $0.51 per diluted share compared to $5.1 million or $0.16 per diluted share for the same period a year ago. On an adjusted operating basis, we reported net income of $16 million or $0.42 per diluted share compared to $16.4 million or $0.50 per diluted share the same period a year ago. In the quarter, gross written premiums grew by approximately 29%. Every underwriting division grew in the quarter, and transactional E&S, global property and agriculture, professional lines, sureties, and captives were each up over 20%. Net written premiums grew approximately 13% to approximately $214 million in the quarter, compared to $189 million in the second quarter of '22. In the second quarter of 2023, net retention was approximately 51% versus 58% in the second quarter of 2022. The decrease in net retention was driven by our mix of business and considerable growth in global property and agriculture where we have a lower retention. As a reminder, we expect our net premium retention to be lower in the first half of the year and higher in the second half of the year. For the full year, we anticipate that our retention will be slightly higher compared to 2022. The second quarter adjusted combined ratio of 92.2% includes an improved accident year non-cat loss ratio and an improved expense ratio compared to the second quarter of '22. The 2.1-point improvement in the current accident year non-cat loss ratio to 60.7% was driven by the changing mix of business and runoff of higher loss ratio exited business. We had no prior accident year loss development in the quarter. During the quarter, catastrophe losses were $6.8 million and accounted for 3.5 points on the combined ratio resulting from 3 large convective storm losses in the south and our global property and transactional E&S divisions, compared to the second quarter of '22, which was not impacted by catastrophe losses. The expense ratio improved 1 point compared to the second quarter of '22, driven by a higher earned premium base. We continue to invest in the business and expect a higher run rate in the back half of the year. Partially offsetting the operating expense ratio improvement were slightly higher acquisition costs driven by our change in the business mix. Turning to our investment results, net investment income was $8.6 million in the quarter, down $1.9 million compared to the same period in '22. Our investment strategy initiated in 2022 to deploy all free cash flow to core fixed income is truly paying off. We continue to deploy cash to this portfolio given the attractive yield environment. The net investment income from our core fixed income portfolio more than doubled to $7 million from $3.3 million in the prior year quarter, driven by an improving portfolio yield and a significant increase in the invested asset base. Our core fixed income portfolio now stands at $820 million, up from $673 million at March 31, '23. During the quarter, we invested approximately $116 million in the portfolio at 5.2% without increasing duration and our embedded yield on the portfolio is now above 4%. The decrease in net investment income in the quarter was driven by our opportunistic fixed income portfolio. Both second quarter 2023 and 2022 were significantly impacted by the equity mark-to-market adjustments. During this past quarter, the marks were negative compared to the positive marks in the second quarter of '22. Again, despite the volatility we have experienced over the last 3 quarters, the inception-to-date return for this portfolio is approximately 7.3%. This portion of our portfolio continues to decrease as we deploy cash flow to core fixed income. At June 30, we had approximately $190 million in short-term and money market investments, resulting from strong operating cash flow of over $100 million. During the quarter, our yield on short-term investments was north of 5%. And we continue to deploy this liquidity into our core fixed income. Lastly, during the quarter, we executed a successful secondary offering of approximately 4.4 million shares of common stock. The offering was primarily a sale of West Ames Holdings, which now stands at approximately 28%. We continue to see incredibly strong interest from our existing and new shareholders and we appreciate their support for our company and our strategy. With that, I'll turn the call back over to Andrew for concluding remarks. Andrew?

Thank you, Mark. Q2 is a truly terrific quarter and the metrics bear this out. The breadth of our 29% growth is notable, with 5 of 8 underwriting divisions growing at 20% or more and all 8 divisions growing over the prior year quarter. The quality of our growth is equally notable as our new business pricing continues to be in line with our in-force book. Our underlying underwriting profitability was again strong with an 88.7% combined ratio, excluding the deferred benefit of loss portfolio transfer and the 3.5 points of cats referenced earlier. We continue to maintain our focus on being a consistent top quartile underwriter. Each division is delivering at or above our minimum target returns on capital and is visible in our results. Some of our divisions are seeing outstanding market opportunities to grow both top line and margins. Our pricing is the strongest it has been since I joined over 3 years ago. In this quarter, we delivered double-digit pure rate with all divisions consistent or above the prior quarter, complemented by a significant increase in overall rate being driven by global property. Given the pricing along with the mix of business we are driving, we believe that the new business coming onto the books will further fuel margin expansion in line with the margin expansion we are observing on renewals. Retention was similarly strong, increasing from the high 70%s in the prior quarter to the low 80%s this quarter, and exposure growth continues to be in the low to mid-single-digits. Operationally, all indicators are green as submission counts were up around 20% from the prior year and our in-force unit count is up 14% year-over-year and 3% from the prior quarter. And while all the metrics I just referenced directly reflect the progress we're making in growing a highly profitable book of business, we have equally impressive progress in other critical areas. These include claims, where we're reserving potential losses earlier, closing claims faster and achieving more optimal outcomes. In our technology, pricing, and data science efforts, we continue to deliver predictive analytics capabilities that amplify the strong technical skills of our underwriters and our claims professionals. Altogether, I could not be more pleased with the superb execution of our 470 colleagues. We believe we are very well positioned to continue our strong execution and take advantage of the favorable market backdrop. I'd now like to turn the call back over to the operator to open it up for Q&A. Operator?

Our first question comes from Mark Hughes from Truist Securities.

It sounds like the growth environment is pretty good. I'm not hearing you say anything that makes me think there's any sort of slowdown. Is the environment in Q3 as good as you saw in 2Q from a top line perspective?

This is Andrew. I believe that we have a well-diversified business, which allows us to identify opportunities differently than some others. While there may not be uniformity across all eight underwriting divisions, overall, I would characterize the environment as generally favorable for the market segments we are targeting. We're just starting the current quarter, but July has been a positive market backdrop for us, and we are optimistic that this trend will continue. Our 29% growth is attributed to both the market conditions and our strong execution. Our excellent execution positions us to outpace many of our peer companies, and the favorable market backdrop has enabled us to achieve results like the 29% growth we reported last quarter. However, I believe that our execution is a significant factor in our success as well, Mark.

Appreciate that. Mark, any early view on the opportunistic fixed income, how that'll shape up for the third quarter? What are your early thoughts on it?

Mark, the short answer is no, not really any early indications on that. That can move day to day and month to month, so the short answer is no.

Mark, I would just add to Mark's comment, the volatility that we experienced in this past quarter, same thing we've spoken to you about. It is a very small number of equity positions that we actively follow. And again, we think it certainly does not provide any indication as to the ultimate performance. It's really, from our vantage point, it's just a bit of a distraction here as the volatility occurs, but nothing that we're concerned about.

Our next question comes from the line of Matt Carletti from JMP.

Andrew, you touched on it briefly in your opening comments and we've seen certainly press releases kind of since the last call around some of the advances or investments you're making in captives, in expanded surety capabilities, around cyber, tech, and partnership with Cowbell. Just talk a little bit about what's happening there and your outlooks for those areas? And then maybe even the next step, what are some other areas that we might see you investing in the business?

Thanks, Matt. Great question. And appreciate sort of acknowledging the things that we've been doing there. Look, what I would just generally say is that we're strategically oriented. So we are actively pursuing talent and very selectively looking for partnerships in places that include those that we were already in. I'll note for you that in surety in this past quarter that included 2 focused expansions, right, so which we highlighted, we brought on 2 teams that really created an adjacency for what we do. I think that you're going to see that continue here in this quarter. I don't want to speak explicitly to potential new divisions or new categories that we're entering into or could potentially enter into, but we're certainly focused on a couple of areas that have been squarely in our focus for a number of quarters. And as you know, Matt, we start with targeting the people who we believe can lead those divisions. And when we ultimately get to them, we're patient, right? We will wait until we get to the right person or persons. And so it's hard to sort of say timing. And not to be opaque, it's probably not helpful for us to sort of say, well, here are specific categories. I can say in this quarter, you will see some notable talent additions that sort of are of the same quality and help to sort of grow and develop our business consistent with the kind of things that you saw in the last quarter and the quarter before.

That's perfect. And then one quick follow-up just on your commentary around the pure pricing in the quarter, I think I caught you say kind of double-digits and if I recall Q1 was kind of high single-digits, so the question is, how should we think about that? Are there areas of the business that are seeing acceleration in pricing or is it more of just a mix of business different areas in different growth or different policies renewing in the quarter?

No, great question. Yes, I did try to connect that in the prepared remarks, but maybe just for clarity, every underwriting division was at or above where it was last quarter. So first thing is we didn't see a backup. And I'll remind you that we've been consistent in kind of right around the high single-digits. There's been I think 1 or 2 quarters in the past where we were very low double-digits. I've been very consistent and the background of that is, as I've mentioned to you, we weren't really in the categories that saw the massive increases, right? What happened in public D&O or in cyber or the period where excess was getting 30, 40, 50 points that skewed a lot of numbers. We've just been ticking along. And in this particular quarter, every single underwriting division was at or above its pricing for the last quarter and then we saw a very big step up in global property which when you sort of average that all out put us into sort of the highest pure rate that we've seen since I've joined the organization. And importantly, we believe that our loss cost inflation average across our book is probably about between 5% and 6%, with some areas, particularly personal injury exposed classes being high single-digits. But what that would tell you is that we're not reflecting that in our picks. Time will tell whether that conservatism that we're assuming, the gap between our pure pricing and lost cost inflation. But this quarter, in theory, should produce some of the highest margin spread that we've seen since I joined the organization. It was a really positive quarter for us overall on pricing.

Our next question comes from the line of Meyer Shields from KBW.

We'll start with a question from Mark. When you discussed the accident year ex-cat loss ratio improvements, you mentioned business mix and the runoff of other lines, but you didn't address rate increases beyond trend. This seems consistent with the conservative booking we've seen so far, but I was hoping you could elaborate on it because it appears that the earned rate increases are picking up speed while the trend remains stable.

I mean, Meyer, I would echo exactly what Andrew really just said. The incremental earnings or the rate above loss cost, we're not reflecting that in our picks and have not for quite some time. Does that answer your question?

It does, yes. I guess I was looking for a number, but I don't know how realistic that is.

Yes, I think we, like any other carrier, have our perspective. We have consistently stated that we are being deliberately conservative, and only time will reveal whether this approach proves to be correct. Our indicators suggest it might be true. However, as Mark often notes, we tend to respond quickly to negative news but are slower to acknowledge positive news. This also applies to how we allow prices that exceed our loss cost inflation to be reflected in our picks, which we are currently not doing. The remixing and runoff that Mark mentioned are the primary factors influencing our accident year results.

Okay. That's helpful. I'm more than happy to wait. I know the weather across the industry was absolutely horrific in the second quarter. I'm wondering whether there's any change in your appetite for more explicitly capacity-exposed property risk?

Yes, this is Andrew. I believe when you ask that question, you might be referring to the North Atlantic hurricane or earthquake, rather than the numerous convective storms we are currently experiencing, which are much more challenging to model and have a distinctly different profile. Is that a fair understanding of your inquiry?

Yes. That's exactly right just given the market dislocation there.

Yes. Here's what I would say, again our notion about our strategy is about building really highly durable positions. And by the way, we have great respect for some of our peers and our competitors who look at the cat market and see it as a terrific opportunity, a good risk trade. I won't say that we don't have some coming into our books, but it is not our focus. We believe that certainly it appears to be a very attractive time to write true North Atlantic hurricane cat, but there will be a point in our view where the tide goes out on that. And what we're trying to do in our business is not have that kind of revenue. And quite honestly, margin volatility is sort of a core part of what we do. So I guess probably that's a long-winded way, Meyer, to say that it's really not a principal focus for us as a company.

Okay. No, that's tremendously helpful. Final question if I can, I know you addressed the second half expenses likely going up. Is 30% still the right bogey or given overall growth, should we start taking that down a little?

That's a great question because we've been adding costs. If you look at the number of high-quality underwriters we've mentioned, it's clear that we're incurring additional expenses. Fortunately, the growth has helped us translate that into net earned premium, which aids in maintaining a stable ratio. Mark's guidance has consistently targeted a ratio below 30%, and we believe that's still the right figure. We're benefiting from earned premium coming through as we continue to invest significantly in talent ahead of realizing the full production benefits. This strategy is working well, as we're seeing strong growth, enabling us to invest more in talent. Overall, the financial results align with the expectations we've discussed, and we maintain that a target of 30% and under is appropriate for our company.

Our next question comes in the line of Paul Newsome from Piper Sandler.

Congratulations on the quarter. I have a couple of follow-up questions. I heard what you mentioned to Mark, but I want to confirm that you are indeed growing the property book. I'm curious if that will have any impact on the overall cat load as we consider the future of the company.

Yes, I completely understand the question. There are two main areas where we are significantly increasing our property exposure. One is in transactional excess and surplus lines. I'll remind you that we avoid Tier 1 catastrophe risks, such as North Atlantic hurricanes, where fire is the primary peril we are focusing on. While we might accumulate some catastrophe exposure, it is not our primary focus, and we are not specifically targeting it. For global property, the risks and exposures are highly diversified, including both technical and catastrophe risks. As we expand our global property, we will naturally increase our catastrophe exposure, but I see that as part of a broader risk strategy rather than a focus on catastrophe alone. We experienced substantial growth last year, reflected in our placement strategies; we slightly increased our attachment point and added a few million dollars of coverage while maintaining a protection level well above a 1 in 250 loss event threshold. This indicates that while our exposure is indeed growing, it is not our main priority or target area for the reasons I mentioned earlier.

Okay. That makes sense. And then maybe some general thoughts on cost of talent. I don't know if it's getting more or less expensive, given the craziness in the industry itself at the moment, but you're obviously out there looking for people and paying them. Is it getting more or less expensive to find the good talent?

That's a great question. I think there was a time when I viewed the cost of talent as somewhat irrational. Currently, we're not competing in the spot market; people are interested in us due to the comprehensive benefits we offer. This includes a strong cultural environment and attractive compensation, along with equity participation, which many find appealing. We believe our underwriters should be compensated for their long-term exceptional performance, creating opportunities for them to earn more. This has not been a barrier for us; the right people are joining us for valid reasons. They are world-class professional underwriters who want to work in an environment that allows them to excel, and we ensure they are rewarded fairly. The quality and number of talented individuals who have joined our organization in recent years is impressive and stands out compared to other organizations. Our ability to attract top talent in our industry has been one of our most compelling strengths.

That makes sense. My question a little bit stems from the fact that it seemed like a couple of years ago, there was a lot of private equity going after the formation of a lot of MGAs and pulling a lot of talent out with big numbers. And I don't know if that's really changed, given the change in the interest rate environment.

Yes, I believe it's settled down. However, it is quite uncommon for us to be competing with private equity-backed MGAs for talent. We have noticed that nearly all the individuals who want to join our organization are interested in being part of something that has direct control over the balance sheet and is closely tied to the underwriting contribution. This may or may not be a clear distinction in the industry, but it certainly is for those who decide to join us.

Our next question comes from the line of Michael Zaremski from BMO.

I guess just back to the cat load discussion, it's cognizant that your cat levels weren't on an absolute level that high, but any context around how abnormal this cat load was versus kind of "normal expectations?"

The situation regarding the losses is fairly straightforward. We experienced three significant losses. One occurred when a tornado struck a very high-value building. The second involved a large roof with hail damage and numerous HVAC units. We designed the cover to match the exposure appropriately. The third loss was also due to hail, and together, these three accounted for most of our losses. I can't really describe it any differently; there was a considerable amount of convective storms, tornadoes, straight-line winds, and hail during the second quarter. Our risk distribution is solid, but we ended up experiencing slightly more than we had anticipated for this period. I don't believe this indicates any issues with our risk or aggregation management. We view the losses as completely acceptable considering the overall industry losses during that time. It doesn't change our perspective or approach in any way. It is simply a result of the spread of risk and the storms that occurred in the second quarter.

I guess my follow-up is on the expense ratio. I know you've given some color already, but the expense ratio overall seems like it's been coming down a little bit more than expected. And is that mostly just due to kind of operating leverage? And so if growth continues, we should keep that in mind at a heightened pace? And also just curious if there are any higher reinsurance costs flowing through the expense ratio too?

I will address them in order, and Mark may have additional comments. Firstly, to be clear, we are currently investing in new resources and talent as per our plan. What's exceeding our expectations is the net earned premium we are seeing, which is positively affecting our ratios. This explains the difference between the absolute numbers and the ratios, as they reflect two distinct aspects. Our growth has certainly played a role. Regarding the second question, we discussed this on the March 1 call, and following the first quarter, our reinsurance placements went very well, aligning with our expectations. There was a slight increase in the cost associated with our catastrophic placement, but it’s minimal. Keep in mind that our cat tower is relatively small, so even a small change in rates doesn’t significantly impact us. Overall, most of our placements have remained consistent, with orderly terms and conditions, and this has no adverse effect on our financial results.

Okay. Lastly, I find the commentary from last quarter helpful. Regarding the overall marketplace pricing environment, could you provide a bit more context? I believe you provided some insights on the property side, but are you observing the market becoming less competitive? You mentioned it's the strongest pricing you've seen in three years. Are you surprised that the competitive landscape might be easing a bit? I don’t want to misinterpret your position, so any additional context on this marketplace would be appreciated.

No, I wouldn't say it's easing. What I can say is that some of this is just math; if we're at or above in nearly every area except for global property, and global property makes a significant jump, then when you average everything together, it results in the best rate we've achieved. We are constantly evaluating the relationship between pure rate and exposure. There might be some margin in exposure that resembles rate. We also consider our retention and our new business pricing. This combination is what we routinely assess to understand our perspective on the market. I would describe the market as orderly in the sectors where we compete, particularly attractive on the property side. In this environment, a well-executing organization like ours, with strong underwriting capabilities, has the opportunity to excel. You can see that reflected in our results. An orderly market is generally beneficial for a company like ours, and the disruptions occurring in other parts of the market may, in fact, be advantageous. The tightening of reinsurance is, in my opinion, mostly beneficial. Therefore, outside of property in the areas we compete, I would describe the market as orderly and very supportive of our ability to capture more than our fair share.

Our next question comes from the line of Tracy Benguigui from Barclays.

Some of my questions were already asked, so maybe I'll just ask for more specifics. So at your prop cat treaty renewal at 5.1, what were the specific changes? I think the prior was $25 million in excess of $10 million retention. And I think you also mentioned that the pricing increases were modest, but if you could add more context to that?

Yes, thank you, Tracy. Our attachment point is expiring, and I'll do my best to provide the details accurately. It was $10 million in our previous treaty year, and we increased it to $12 million. I believe our exhaustion in the prior treaty year was $36 million, and we raised it to $40 million. Our model-based attachment point decreased slightly; we were just above a 1 in 10 return period, which is an average for both quake and hurricane, and now it's below that. So, we've made a slight reduction in the model detachment point even with the increase of a couple of million dollars. Our risk-adjusted rate experienced an increase in the range of 15% to 20%. For a purchase like ours at $28 million for coverage, we can just apply an average rate across the tower, which is relatively minor for an organization of our size. Additionally, in the case of the second and third event, the coverage diminishes. You can think of this as providing more protection during a series or frequency of severity. Overall, we are quite pleased with our placement and believe it was a strong outcome given the current environment. Lastly, we've been making a consistent effort to advance our treaty renewal by a month each of the last two years to gain more distance from the significant Florida placement. As a result, we are now set for next year’s placement, which I believe is on March 1, allowing us to focus more on the market without the complications associated with the Florida placements.

I think you said 15%, 20% risk-adjusted pricing. I mean how much of that are you able to pass down in your global property pricing?

Yes. First off, it's important to remember that the cat price represents only a small portion of the overall pricing across transactional E&S, global property, and our other lines. We are passing on that cost plus a bit more specifically for cat exposure, and additionally, we are capturing significant pure rate increases on X cat, fire, and other areas, as indicated in the results I just discussed. So, in response to your question about cat margins being immune, the answer is no, not at all. Yes. For sure. I think we are very actively monitoring our risk and exposure surrounding our LOCs and collateral provided by our reinsurance partners. We're always working to ensure we maintain high standards and manage those risks appropriately.

I would now like to turn the conference back over to Natalie for closing remarks.

Thanks, Gigi, and thank you everyone for your question, for participating in our conference call and for your continued interest in and support of Skyward Specialty. I am available after the call to answer any additional questions that you may have. We look forward to speaking with you again on our third quarter earnings call. Thank you, and have a wonderful day.

This concludes today's conference call. Thank you for participating. You may now disconnect.