Skyward Specialty Insurance Group, Inc. Q4 FY2024 Earnings Call

Thank you for standing by, and welcome to the Skyward Specialty Insurance Group's Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Natalie Schoolcraft, Vice President of Investor Relations. Please go ahead.

Thank you, Jonathan. Good morning, everyone, and welcome to our fourth quarter 2024 earnings conference call. Today, I am joined by our Chairman and 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, that 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-Ks that were 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 are available on our website. With that, I will turn the call over to Andrew. Andrew?

Thank you, Natalie. Good morning, everyone, and thank you for joining us. We finished the year strong, reporting adjusted operating income of $0.80 per diluted share for the quarter, driven by both outstanding underwriting and investment results. For the third time this year, we delivered quarterly growth above 20%. For the year, our adjusted operating income of $2.87 per diluted share is up over 28% compared to 2023. Our book value per share was up 18% from the beginning of the year to $19.79, and our full year return on equity of 16.3% was again a strong result. The 19% full year top line growth was outstanding given the current market backdrop. And our focus on shifting our portfolio to less P&C cycle exposed parts of the market is working. I'll talk more about that later in the call. With that, I'll turn the call over to Mark to discuss our financial results in greater detail. Mark?

Thank you, Andrew. We had another strong quarter reporting adjusted operating income of $33.2 million or $0.80 per diluted share and net income of $14.4 million or $0.35 per diluted share. For the full year, our adjusted operating income of $126.7 million was up 57% over the prior year. Gross written premiums grew by 21% for the quarter and 19% for the year with surety, programs, captives, transactional E&S, and agriculture each contributing meaningfully to the growth this quarter. Net written premiums grew by 23% for the year, and our retention of 64.5% was up over the prior year of 62.4%. Turning to our underwriting results, our fourth-quarter adjusted combined ratio was 91.6% and included 2.2 points of cat losses, principally from Hurricane Milton. Our adjusted operating combined ratio of 91.2% for the year was elevated slightly compared to 2023, driven by the marginal increase in our cat loss ratio. The non-cat loss ratio of 60.5% for the quarter and 60.6% for the year were consistent with the prior quarter and the year. In line with what we previously disclosed, in the fourth quarter, we increased reserves by $25.3 million related to losses previously subject to the LPT from accident years 2018 and prior. The net impact of the LPT on the combined ratio was 4.2 points in the quarter and 1.1 points for the year. On January 31, we commuted the LPT, removing future reinsurance recoverable credit risk related to this portfolio. As we previously discussed, during 2024, we completely rebuilt our actuarial data and converted from policy to accident year for accident years 2020 and after. This undertaking was considerable as we mapped gross, ceded and net premiums and losses to each accident year, which improved the fidelity of our accident year data compared to our prior estimation method of reserving by policy year and allocating to accident year. I'll note that our reserve position continues to be strong. And as a measure of that strength, our IBNR now makes up over 69% of total reserves, up from 63% last year and 57% in 2020. This is particularly notable as we continue to shorten the liability durations and increase the speed of recognition in claims. The quarter-to-date expense ratios of 28.9% respectively are in line with our expectations of sub-30%. The business mix shift continued to impact acquisition costs for both the quarter and the year, but were offset by improvements in our other operating and general expenses ratio benefiting from the scale of our business. Turning to our investment results, our strategy to derisk the portfolio continued to pay off with net investment income of $20.7 million in the quarter and $80.7 million for the year, an increase of over $40 million compared to year end 2023. Consistent with our investment strategy to deploy free cash flow to fixed income, in the fourth quarter, we put $46 million to work at 5.8%. The net investment income from our fixed income portfolio increased to $15.9 million from $11.7 million in the prior year quarter, driven by improving portfolio yield and significant increase in the invested asset base. Our embedded yield was 5.1% at December 31 compared to 4.8% a year ago and 5% at September 30. We reported a slight gain of $100,000 in our alternative and strategic investments portfolio compared to a loss of $2.2 million in the prior year quarter. Both periods were impacted by the change in the fair value of limited partnership investments that was previously classified as opportunistic fixed income. At December 31, this portion of our portfolio only comprised 6% of our overall portfolio compared to 9% a year ago. At December 31, we had approximately $275 million in short-term investments and our yield on short-term investments was 4.2%. Our financial leverage is modest as we finish the year with a low 13% debt to capital ratio, and given our undrawn capacity from our revolver, our current leverage gives us ample debt financing flexibility. Lastly, as previously communicated in our press release on February 5, for 2025, we expect net income of between $138 million and $150 million, a combined ratio between 91% and 92% inclusive of 2 to 2.5 points of catastrophe losses, and we expect gross written premium growth in the low to mid-teens. Now, I'll turn the call back over to Andrew.

Thank you, Mark. It is hard to believe that we've been reporting as a public company for two years now. We're hitting our stride as we continue to deliver outstanding and consistent earnings growth in mid to upper teens ROEs. We remain laser-focused on executing our niche strategy and generating top quartile returns across all parts of the market cycle. Our emphasis on seeking growth in high return areas that are less exposed to the P&C cycles appears to be prudent. For Skyward, this currently includes A&H, surety, captives, mortgage, credit, and agriculture, which together accounted for 42% of our $388 million of gross written premiums this quarter and 39% of gross written premiums for the year. This aspect of portfolio management has increasingly been an area of focus in our drive to consistently deliver top quartile underwriting returns. Beyond the portfolio focus I just noted, we had double-digit growth in six of eight divisions. Professional lines growth was down slightly given softening conditions in more of the lines we target. We do expect that to reverse in 2025 given the investments we have made in healthcare and media, which should offset a more defensive posture in some of the other professional lines. Industry solutions continued to be impacted by our intentional actions in commercial auto but grew modestly in the quarter as we continue to find attractive new business opportunities in construction and energy. Turning to our operational metrics, we had a quarter similar to last. On pricing, we achieved mid-single-digit plus pure rate in global property and as I just noted, some of the lines in professional are being impacted by downward pricing trends. The market backdrop in occurrence liability including auto liability continues to be very supportive of decent rate, although the loss cost inflation environment continues to be challenging. As such, we are being very selective in our growth in these areas. Retention was strong in the upper 70s for the quarter, driven by business mix and our intentional actions in commercial auto. Lastly, we continue to see strong submission growth, which was solidly in the teens this quarter but modestly down from the 20% plus in the prior quarters. We are confident that strong submissions growth will continue across most of our divisions. As I look back on 2024, I have immense pride in the accomplishments of our Skyward team. This year was extraordinary with remarkable growth and industry recognition. From earning our upgrade by AM Best to a full A to securing our place as ninth on S&P Global's list of top-performing P&C companies to earning accolades that affirm our place as an employer of choice. We solidified ourselves as a leader in the specialty property and casualty insurance market. 2025 will mark a significant milestone for our company as it is our fifth year since rebranding and reintroducing ourselves to the industry as Skyward Specialty. In just five short years, we've redefined who we are, consistently performed at a high level, and built a company that reflects our vision for the future we are creating. We've transformed our business, reshaped our teams and capabilities, placing us in the strongest position yet to defend and expand our increasing leadership in key markets. On behalf of my colleagues and our board, we thank you for your continued support, and we look forward to our continued success in 2025. I'd now like to turn the call back over to the operator to open it up for Q&A.

Certainly, and our first question for today comes from the line of Mark Hughes from Truist Securities. Your question please.

Just looking at some of this early company data, it seems like there's still a lot of inflation in casualty, particularly in access. How do you see the adequacy of the pricing in that market? Do you think that's going to be a grower for you this year?

Thanks, Mark. Great question. Boy, there's a lot to that. So, let me just say, I think when I look across the market, there's a lot of folks that are reporting pretty hefty rate increases, generally in the occurrence liability lines. And I think what I'd say to you is that might be an indication that now is the time to grow there. I think for us specifically, we will take a more cautious approach. I don't differentiate this that greatly from our discussion a couple of years ago on cat. The cat market was like rock hard. People were loading up on it. It was pretty extraordinary, and we just sort of stuck to our plan, right? Which is, let's be sensible. And in this particular case, I'd say that you can only be confident to the extent that you're confident in the loss inflation. And I think that there's probably not a company out there that is not surprised at the increasing loss inflation as compared to what they thought the loss inflation would be two or three years ago. And if that trend continues, it may very well be that 10 or 11 or 12 points of rate is not enough. Moreover, it's probably not enough if your starting point isn't right. And so, I think we're being really selective about where we're growing. We're trying to make sure that we're shying away from the places where personal injury, bodily injury may be most prevalent in the loss makeup. And I think in that regard, we're being smart. But I do find it interesting, right? Because there's a lot of companies out there growing, and it seems like investors are applauding it when you see the growth particularly, a lot of that's being driven by rate not as much as units. And like I wonder whether that ultimately is going to produce the kind of outcome that people believe it will. I think for us, we're taking a more measured approach as we have been over the course of the last probably eighteen months or so.

Yes, I appreciate that. How about your pace of hiring? You've done well growing the top line by adding new teams, new capabilities. How do you see 2025 shaping up?

I think that we are a winner, a very strong winner. We added 19 underwriters in Q4, a very difficult time to add underwriters. We had seven in surety, and I need not to sort of wax on about the wonders of our surety business. And by the way, back to your other question, Mark, it's a fantastic position to be in that we can grow there with people whose books of business will generally follow them versus having to sort of lean in on an uncertain loss inflation environment on casualty. So, I feel really good about it. We've definitely been a winner. I think our ability to attract talent is amongst the very best in the industry, and I don't see any reason that's not going to continue here in 2025.

Thank you. And our next question comes from the line of Matt Carletti from Citizens JMP. Your question please.

Andrew, maybe following on Mark's question there, I mean, you guys have obviously done a really good job adding teams and growing organically. Can you talk a little bit about how you view M&A? Just if it is part of the discussion, if it is off the table, if it's just something you look at, just want to get inside your head and think a little bit about how you, if there's a time and place for that or if that's just not for Skyward?

Yes. Thanks, Matt. So, here's what I'd say. Over sort of my five-year arc, right? We had a lot of work to do to get the business fully in the position that we wanted it to be in. And by the way, I'll tell you, we are there. I think that 2024 was a watershed year for us in many regards, and I think we're there. That said, like we just delivered a 21% organic growth outcome. And by the way, we did it in places that maybe others aren't doing it because we're having to work really hard on like if you want to grow in surety, right, you have to be able to attract great talent. So, the first thing I'd say is that we cannot do anything that impedes what is an incredibly successful organic engine that we've created here, and so that is topmost of mind. And then, the second thing of course is, if you're going to do M&A, you have to be proportional in terms of the kind of risk that you're taking on. If it brings with it balance sheet risk, we want to be incredibly measured there. That said, during 2024, we hired a Head of Corporate Development, Shakoor Khan, who had worked for me in my prior career. I personally trained and developed him myself, and we are much more active at looking at opportunities. But I would just say to you and to our investors that rest assured that the bar is exceptionally high because we recognize that even if something mathematically looks like it's accretive to our shareholders, it brings with it a different profile of risk and we neither can have any undue risk on anything that we may acquire. But more importantly, we just can't disrupt the organic engine that we have going as a company because it is really a distinctive feature of this company that I'm really proud of what we created, and you just don't want to interfere with that.

Yes, that makes perfect sense. As a follow-up question on capital, how should we consider whether you have excess capital right now? Do you feel your capital position is appropriate given your growth, or is it worth reassessing? I'm looking at premiums to equity, understanding that it's a rather basic method. Is there a specific level we should monitor to help us gauge the right leverage ratio over time?

Hey, Matt, it's Mark. First, feel really great about our capital. I mean, you're right, 1.5-ish to 1, we're pretty balanced. I think we could lever that up a little bit. So, I don't feel any pressure on capital. We talked about the flexibility we have with the revolver. So, I feel really good about where we are. And Matt, the organic capital that we're generating is supporting what we see as growth opportunities. So sorry, for the third time, I feel great about it.

And Matt, I'd add one other thing, which is that something I don't believe we get enough credit for as a company. We are distinct, certainly amongst companies our size, in the diversity of our portfolio and that has obvious benefits in terms of options for where we'd apply capital. It creates multiple avenues for growth, for earnings diversification, but really importantly, it creates capital diversification for us. And the one thing I can say is that without revealing too much, our internal plans as we look out through 2025 will put us, when we put up the pie chart at the end of this year, you're going to go, my God, this is like an incredibly well-diversified portfolio with every single one of the businesses at scale, and that's a hugely capital-efficient approach. And so, when Mark says 1.5 to 1, he's talking about net premium to surplus, if you think about it in statutory terms, that number may go up here in terms of leverage as we continue to get more balance in our portfolio. And as I said, I don't think we get enough credit for it.

Thank you. And our next question comes from the line of Andrew Andersen from Jefferies. Your question please.

This is Charlie on for Andrew. I was wondering if you could provide some color in terms of what you're seeing on submission flows and what might be driving the slowdown to the mid-teens and maybe if that's coming from mix or if there are other drivers? And then to that end, have there been any changes in the quote to submission ratio or the bind to quote?

Thank you for the question. I wouldn't read too much into the current situation. We're seeing a significant number of submissions, and there’s no concern on our end about what we're observing. There are fluctuations in the quality of submissions that align with our focus. For instance, in our E&S segment, we're primarily a true E&S writer and very little of our portfolio consists of the marginal opportunities that come and go in the market. However, we're experiencing a strong flow of submissions, which is evident in our results. Last quarter, although growth slipped slightly compared to previous levels, we reported submission growth well above 20%. This quarter, we're at 21% growth, even as it edged down into the teens. I don't see this as a concern, and we are optimistic about the opportunities to write new business in 2025. I wouldn't consider this a particular area of worry for us.

Okay, great. And then, sorry, I just want to follow-up on that, the quote to submission ratio or the bind to quote, any major changes there?

I don't think we're seeing any significant changes in that area. As I mentioned, a lot depends on whether what we observe in a quarter aligns with our preferences. Sometimes, for example, a competitor might leave the market, leading to a sudden influx of business, but often that business doesn't suit us. Overall, I wouldn’t highlight any noticeable trends in our operations. There is usually some variability from quarter to quarter, but this variability often tends to balance out. Therefore, there's nothing particularly noteworthy that I would share with you.

Okay. Understood. And then last one, if I could sneak one in, could you just provide an update on how much work is left to be done on the commercial auto portfolio?

Yes. I think I reported out on this last quarter or the quarter before the question was asked. I think at the end of this quarter that we're in right now, there will be no more work done on the portfolio. I don't have the numbers in front of me, but I believe roughly about 12% or 13% of our premium this quarter was in commercial auto. And we have a little bit more work to do, and that will be it. By the way, I'll point you as well to the obvious fact that exposure is coming down. But not unlike everything you've heard from everybody else, price is going up. That written premium is a far lower exposure base just because of the pricing actions that are happening on top of the exposure that we're keeping.

And our next question comes from the line of Meyer Shields from KBW. Your question, please.

This is Dean on for Meyer. I was curious, as your business mix shifts towards those lines of business that aren't as correlated with the P&C market cycle, I was wondering what implications that has on the expense ratio?

That's a great question. Thank you for bringing it up. We are observing the trends here. It's not just about the expense ratio; it's about all aspects of the combined ratio metrics. For instance, our acquisition costs are increasing, and I believe this trend will likely persist. Regarding other underwriting expenses, we are now at a stage where our business growth is offering us scale and leverage. We aim to maintain a sub-30% expense ratio, which is essential for us to grow our underwriting income as planned. You'll notice this trend geographically as well. Additionally, some businesses, like Accident and Health, typically operate in the mid-70s for loss ratios, yet our A&H business functions almost without capital requirements. In other words, if we were to eliminate it, we wouldn't free up any capital, and growth in that area could actually increase our combined ratio since it is higher than our average of about 90% to 91%. However, from a capital return perspective, it's highly beneficial. While other factors are at play, to summarize your question, we will continue to stay below 30%, with a slight rise in acquisition costs and ongoing leverage in our other underwriting expenses.

Got it. That makes sense. And then just last one, are there any new units you guys expect to launch in 2025 or 2026? I know there were a few you rolled out this year, so I was just curious about that.

Yes. Well, in this past year we launched a bunch. We launched mortgage and credit. We did a renewables launch inside of energy. We launched media liability, life sciences. I mean the list goes on. We did quite a bit. You can imagine, as I've said in the past, we are strategy-led. Kind of in our thinking, there are always things to do. Frequently, those are tied to teams or leaders that we will target, and that targeting might take quarters, if not years, to actually get those people into our organization. Because we're kind of patient in that regard. So, the answer is yes, we have some things that we're working on. Whether we have new launches here in 2026 or not depends a lot on whether we get the talent across that we're aiming at. We're going to be doing some things to change up our divisional reporting as we roll into '25 to put a bit more granularity around that, which will be helpful to everybody, I hope. But otherwise, I think that what you should assume is that we have a pretty strong growth engine from the range of things that we've done here over the past few quarters that now will start making a meaningful contribution towards our topline.

Our next question comes from Michael Zaremski from BMO. Please go ahead with your question.

It's Dan on for Mike. Maybe first, can you just walk us through the reserve change where you're going from the policy year to accident year? And just is this now the industry norm and maybe why Skyward wasn't conforming to that in the past?

Well, this is Andrew, I'll let Mark answer the question. Why we weren't conforming to it, I don't know. I inherited an organization that reported by policy year, and in due course, we always knew that we were going to fully convert it. But I would just say God invented time so that everything doesn't happen at once, and we got to this in the sort of the timeframe we could. And the fidelity of what we have now is terrific. I don't have much more to say about it than that's the context. I don't know if there's anything you'd add?

Yes, exactly. Earlier, we mentioned that we used to allocate information based on policy year, but we have now refined it to represent it accurately by accident year. This change was necessary and involved a significant project. Accident year is indeed the standard, and we anticipated this transition, executing it in 2024.

It's a norm here in the United States. Lloyd's works on a policy year basis, and my predecessor grew up inside of Lloyd's, and so maybe that's the reason, but I don't know that.

Okay. That's helpful. And then just sticking with reserves maybe, you mentioned that normally there's a ground-up review at the conclusion of the year. Just wondering outside of the LPT noise in this quarter, if there are any puts and takes to that annual review?

I mean, look, let me just say this. We will be filing our K on March 3. There are a little bit of puts and takes, but nothing really major to talk about. But once you get the K and the annual statements are filed, we're happy to have any discussions or go through that with you.

And the Q will be out next week as well. And look, I'd just, I'd say this. Yes, we did a bottom-up. In no uncertain terms, our reserves are in the best position they've ever been in. Our redundancy relative to our central estimate is the strongest, both on a dollar and percentage basis, that it's ever been in. It's near impossible not to look at an increase from 63% of our reserves in IBNR to 69% while we're simultaneously shortening liabilities and speeding our claims recognition as indicators of a really strong position on the liability side of our balance sheet. I think that everything is in the context of we were in a good position, and we are in a better position.

And our next question comes from the line of Alex Scott from Barclays. Your question please.

I was hoping you could kind of give us an update on the niche strategy you all have. Where are you seeing good opportunities as you look forward into '25 and '26?

Thanks, Alex. There's likely a long list of opportunities out there. I should mention that with a change in administration, the focus on certain opportunities shifts. I'll highlight a couple. There's definitely significant potential in the energy sector, which we were focused on even before the administration change. We initiated a focus on renewables alongside our traditional energy sector interests, and that area shows a lot of promise. In life sciences, it seems we entered at the right time. We have a strong leader and an excellent product, and early feedback from brokers suggests that this segment will contribute meaningfully to our growth. Regarding our healthcare professional liability, the market is intriguing; while I wouldn't label it as a hard market, the exposure dynamics are changing dramatically. We are operating as a true excess and surplus lines writer there, adapting to the risks. Consequently, within that part of our professional liability division, there's plenty of opportunity to capitalize on. In summary, we're seeing a wide range of prospects across our business. As we look ahead another couple of quarters, the administration's impact on the economy may lead to discussions about a variety of different areas. However, the examples I provided illustrate the breadth of opportunities we are encountering.

That's really helpful. As a follow-up, and apologies ahead of time, there were some overlapping calls, so if I'm asking something repetitive, my apologies. I wanted to ask you about stop loss. I know it's a small business. It's something you guys have grown a little bit in. It seems like it's been fine for you all. I mean it hasn't affected the consolidated result, seemingly at least. The industry is facing some pressure there. I think even some of the better underwriters disclosed a bit more pressure this quarter. Interested in what your experience has been. And if it's been good, I mean it seems like 2025 is going to be a hard market for that business. Were you able to lean into anything around the new year?

Thank you, Alex, for your question. No one else has asked about this, and I’m quite puzzled. If there are issues at companies like Voya, they have nothing to do with our business. In fact, 80% of our operations focus on the market with 500 employees or fewer, and we don’t even interact with the companies being mentioned. Our business is thriving and performing better than ever. The contribution from this segment is excellent, and despite my earlier comments about operating at a higher level on a normalized basis, it is currently in line with our overall combined ratio while requiring very little capital. Additionally, our results at the beginning of the year have been remarkable. We had a fantastic start in Accident & Health and are experiencing growth in several areas. Notably, about 24 months ago, we launched a captive capability within our A&H business that supports individual employer medical stop loss. This approach has gained significant traction in 2024, and we are also witnessing the revival of traditional business. Some entities have scaled back, including MGAs that have lost clients, which has opened up the market for us. Our growth has been in the low teens, and we see tremendous potential ahead. It's important to emphasize that the challenges mentioned in the market have nothing to do with us. We are not encountering any of the companies experiencing problems, and this could be one of the most successful years for us in 2024, leading into 2025. Our results from the renewals at the beginning of the year, which represent about 55% of our business for the year, were truly exceptional.

And our next question comes from the line of Rowland Mayor from Oppenheimer. Your question please.

It's Rowland on for Mike. I wanted to quickly go back to commercial auto. Given the industry challenges and your own caution on that line, is there any sort of loss trend detail you're able to give on your book, reserve stats, what sort of classes of business, etc.?

I want to emphasize something I've mentioned before. We essentially have three categories within our commercial auto business. The first category is a well-established program with an entity in which we hold a significant stake. This entity specializes in a very specific area, and this partnership has yielded excellent results for us for over ten years. Due to the nature of this business, we are observing a lower loss trend, which I would categorize in the mid to upper single-digit range. The second category involves our group captives, which include a substantial amount of auto coverage. These principal captives are highly technology-driven, consisting mostly of heavy vehicles equipped with a wide array of features. This comprehensive data is valuable for risk management and allows for rapid insights into loss patterns. Here, we are experiencing industry-standard severity trends, around 10%. Our frequency of claims has significantly decreased, roughly 50% on a per-exposure basis, as well as 50% on an open claims basis throughout the entire claims lifecycle. The third category underpins our industry solutions. Again, we're observing a severity trend similar to the broader industry, fluctuating around 10%. However, I remain cautious about this figure, as it’s reasonable to consider that this 10% could rise to 12%, 14%, or more in the next couple of years. This presents a puzzling contrast to the confidence expressed by others in the market. Although there is significant rate potential to be captured, it comes with considerable risk. Additionally, this week, Georgia's legislature proposed a bill supporting necessary tort reform that could significantly impact loss cost inflation if it is enacted. Without such changes, the scenario where we see a 10% loss trend escalate to 12% or higher is plausible. This is why we are exercising caution and ensuring that we have increased our IBNR reserves for the smaller segment of our business that is exposed to bodily injury, to prepare for any potential shifts in trends moving forward.

That's super helpful. Shifting a little bit, I was just curious how much of your growth expectation is from the new hires or teams versus convertibles? And then on that topic, how do you book new product? Is there a sort of extra layer of caution that goes into the loss pick there? And sort of what timeline does it take for you to be comfortable with your loss picks on new business?

Yes. Great question. For nearly all of our businesses, we endeavor to put a margin above our indicated. For newer businesses, that margin is greater. Also, in every single planning year when we come into the year, Mark and I hold back what we call corporate IBNR so that should we launch a business during the course of the year, we can put further risk margin into that. The answer is yes, yes, and yes across the board.

And our next question comes from the line of Andrew Kligerman from TD Cowen. Your question please.

Nice quarter. I was particularly interested, you saw some great growth, and I was particularly interested in the two growth areas programs, where I know you've got kind of a broad mix of products, property, GL, commercial auto, excess liability, workers' comp. Kind of curious where you're seeing the growth within programs? And then in that excess liability area, are you seeing a lot of growth there as well?

Thank you for the question. I will try to get to the source of your inquiry before concluding my full response. Yes, there was an increase in programs for this quarter, but I believe that for the entire year, it has been much more moderate. There can be some fluctuations in that area. Regarding our program strategy, it aligns with what I have been explaining. We are cautious about liability programs, as delegating authority demands an additional level of care. Most of our growth is coming from areas outside those you mentioned. For the areas you referenced, we have a specific cannabis program that involves both property and liability. It's not exposed to catastrophic risks, and while there is liability, it does not involve the typical bodily injury cases found elsewhere. Therefore, it shouldn't be surprising that our development aligns with our overall strategy, as we are identifying niches that complement our business. Regarding excess, it is important to clarify that we maintain short limits, offering only $5 million limits. For nearly all areas, our excess is written over our own primary, functioning as an umbrella instead of a standalone excess. In instances of standalone excess in our transactional E&S business, we write almost no auto, focusing on the same kinds of very low volatility exposure found on the primary side. We are aware of the classes where bodily injury drives loss inflation, and in our E&S business, we are being very selective about liability. Where we are involved, we may add low-level supplements rather than just offering comprehensive assault and battery exclusions. We're prepared to pay a limited amount in cases of assault and battery, avoiding disputes over coverage. Overall, we've developed an approach that protects us in the current environment for both excess writing and our strategy regarding the liability landscape.

That was very helpful. I have a similar question regarding captives, where gross written premiums increased by 43%. I believe you're operating within the same range of lines and captives as you do in programs. If I recall correctly, you mentioned an average attachment point of around $350,000?

It's anywhere between $350,000 and $500,000, creating a specific layer. Depending on the business, we may partially underwrite the excess, but it will be through our own policies. I want to emphasize that most of the growth in captives is coming from an innovative captive we introduced in 2023. We developed a unique property captive for the automotive dealer sector in collaboration with our insurtech partner, Understory Weather, and the results have been remarkable. We've seen phenomenal growth, and our loss experience has been outstanding. I recall mentioning that we had about $200 million of exposure in Bradenton, which we managed to eliminate thanks to the technology we employed. Forming a captive focused on property, especially with those vertical limits, is quite challenging, but we successfully achieved it with strong reinsurance support, which has fueled our growth.

And our next question comes from the line of Mark Hughes from Truist Securities. Your question please.

Mark, I don't know if you'll have this, but do you happen to have the cash from operations for the full year?

Right at about $300 million, Mark.

And our next question comes from the line of Alex Scott from Barclays.

Sorry about that, I didn't mean to get back in the queue. Thank you.

Certainly. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Natalie Schoolcraft for any further remarks.

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

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.