Good day, everyone, and thank you for being here. Welcome to the Second Quarter 2025 Skyward Specialty Earnings Conference Call. I would now like to hand it over to Natalie Schoolcraft from Investor Relations. Please go ahead.

Thank you, Howard. Good morning, everyone, and welcome to our second quarter 2025 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-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 schedules, are included as part of our press release and available on our website under the Investors section. With that, I will turn the call over to Andrew. Andrew?

Thank you, Natalie. Good morning, and thank you for joining us. We're pleased to report another outstanding quarter with adjusted operating income of $37.1 million or $0.89 per diluted share, driven by $31.2 million of pretax underwriting income, our best in company history. Year-to-date annualized return on equity continues to be excellent at 19.1%. Gross written premiums grew 18% for the quarter, and our 89.4% combined ratio, also a company best, are a direct result of our diversified business portfolio and the strong execution of our Rule Our Niche strategy. We continue to generate profitable growth in areas less exposed to the cycles impacting the broader P&C market. Our portfolio mix, risk selection, and operational agility are allowing us to grow where conditions are attractive and moderate where they are not, all while delivering top quartile returns, maintaining our low volatility and not extending our average liability duration. Our growth this quarter is particularly notable as we pulled back again in global and E&S property in response to increasingly softening conditions. We elected to hold our current liability exposure base roughly flat in spite of an overall positive rate environment simply due to our view that loss inflation continues to be a serious headwind, and we want to be selective in the areas we seek to grow our casualty business. In contrast, our growth in areas including ag, credit, and A&H demonstrates, again, that we are exceptionally well positioned to adapt and reallocate capital elsewhere in our portfolio to continue to grow underwriting income. We are built not just for today's environment but for all cycles to deliver long-term outperformance. 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 $37.1 million or $0.89 per diluted share and net income of $38.8 million or $0.93 per diluted share. Gross written premiums grew by 18% for the quarter; agriculture and credit, accident and health, captives, and specialty programs contributed meaningfully to the growth this quarter. Net written premiums grew by 14%, and our net retention through 6 months of 60.9% was in line with the prior year of 61.2%. Turning to our underwriting results; our second quarter combined ratio was 89.4% and included 1.4 points of cat losses, principally from convective storms in the South and Midwest. The non-cat loss ratio of 59.9% for the quarter improved 0.7 points compared to 2024 and is the best in company history. While in pockets, we observe auto liability and to a lesser extent, general liability severity trends, we also have units where auto and GL continue to emerge favorably. If for this reason, we're being selective on growing exposure in occurrence liability lines, our shorter tail lines, including property and surety, continue to emerge favorably as does our professional portfolio. There was no net reserve development this quarter. Our reserve position continues to be strong as IBNR makes up more than 70% of our net reserves while the duration of our liabilities continues to shorten. In line with our conservative reserving philosophy, we maintained our margin above actuarial indications. The expense ratio of 28.1% improved 0.9 points over the prior year quarter and was in line with our expectations of sub 30. The business mix shift continued to impact acquisition costs for the quarter, but was offset by 2 points of improvement over the prior year in our other operating and general expense ratio, which benefited from the scale of our business. Operating income benefited from our company best underwriting results in the quarter, but was impacted by a reduction in investment income to $18.6 million as a result of our alternative asset portfolio. These positions, primarily in private credit, have lagged expectations in this quarter with no exception. Due to the accounting treatment, we mark the underlying positions to market quarterly, and as we have seen, that can and has resulted in some volatility. This quarter, our oil and gas and real estate holdings impacted our net investment income. As we've previously discussed, this portfolio is in redemption, and on June 30, it comprised less than 5% of our investment portfolio. Through 6 months, $30 million of capital was returned and reinvested in our fixed income portfolio. Excluding alternative investments, net investment income increased 23.5% over the prior year due to the 30% increase in income from our fixed income portfolio, driven by a higher portfolio yield and a significant increase in the invested asset base. In the second quarter, we put $170 million to work at just under 6%. Our embedded yield was 5.3% at June 30 versus 4.8% a year ago. Our financial leverage is modest as we finished the quarter just shy of 12% debt-to-capital ratio. Given our undrawn capacity from our revolver and our current leverage, we have ample debt financing flexibility. Lastly, I wanted to make everyone aware that we will be filing an amended 10-K around the same time as we file the second quarter 10-Q. To be clear, this is administrative and simply adds a standard sentence to E&Y's unqualified opinion. Now I'll turn the call back over to Andrew.

Thank you, Mark. Our outstanding second quarter performance reflects the strength of our diversified portfolio, our underwriting discipline in light of softening conditions across several lines, and our ability to adapt quickly to evolving market conditions. We continue to grow with precision, targeting segments where our expertise, data, technology, and underwriting discipline give us a durable advantage. We are seeing sustained momentum across several key areas of our business, including agriculture, credit, and A&H, where our specialized knowledge and capabilities are key differentiators. As a reminder, in agriculture, we serve markets that have government-subsidized programs, and we have constructed a well-diversified global portfolio. In this quarter, we continue to see opportunities in the U.S. dairy and livestock program, and we were able to close several new accounts. As we have built this portfolio, we have accumulated a depth of knowledge and insight that we believe is distinct. Similarly, we provided a product to this market that we also believe is unique, and we have now achieved the size to selectively utilize a proprietary hedging strategy to mute the potential volatility. Moreover, we are currently booking this portfolio at the most conservative outcome we can reasonably expect, and so we are bullish about the future contribution as we continue to earn in the growth from ag. In credit, increased economic uncertainty is reshaping risk profiles, and we continue to experience favorable pricing and conditions. We believe that both the credit and agriculture markets offer opportunities for profitable growth. Our accident and health division started the year strong, and the second quarter was a continuation of that trend, principally driven by a group captive offering to the medical stop-loss market. Just as a reminder, we are not competing against companies focused on large accounts. Our focus is on smaller accounts generally with 500 lives or less. That said, the poor performance in the large group market has been a contributor to the improving conditions in the market we serve. In surety, we had moderate growth, largely driven by reduced federal funding, including that flowing to states and municipalities. We remain bullish in our surety outlook, and we believe we are well positioned to continue to grow this market-leading business. In transactional E&S, as noted in my earlier comments, we pulled back our property book in response to increasingly competitive market conditions, but this is more than offset by the growth in our liability book, and we continue to see selective opportunities to grow inland marine. In specialty programs, our growth was driven by those program managers where we have an ownership position, which is roughly 70% of our total division. This ownership is a further measure of alignment in addition to the underwriting performance compensation structures we employ when we delegate authority. Two programs added over recent quarters contributed meaningfully to the growth this quarter, and growth in specialty programs will be lumpy, driven principally by program ads. The growth in our captives division is a result of new insureds joining existing captives. As these companies seek more control over their risk programs, our ability to partner on unique solutions opens new capital-efficient revenue streams. These are sticky relationship-driven opportunities that align well with our long-term strategy. Professional lines growth was flat as we continue to experience competition in miscellaneous E&O, and we've been very selective in management liability. We are leaning into opportunities in healthcare, which is an attractive market and where we are exceptionally well positioned with an extraordinary team of deeply technical underwriters. We are staying disciplined in global property given the current market backdrop. Our account retention was in the high 80s as we continue to maintain a cautious, deliberate approach participating where pricing in terms reflect the true risk and stepping back where they do not. Finally, in construction and energy solutions, these were impacted by further intentional actions in construction, particularly commercial, auto, and a selective approach to other casualty. Nonetheless, in energy, we are very pleased with the consistent growth and profitability, including in the renewables market. Turning to our operational metrics, renewal pricing was consistent with the prior quarter at mid-single-digit pure rate and an encouraging mid-digit exposure growth, both excluding global property. New business pricing continued to be in line with our in-force book. Retention dipped slightly to the mid-70s for the quarter, driven by business mix and construction, as noted earlier. Lastly, we continue to see strong submission growth, which was in the mid-teens this quarter. We've doubled down on our investment in augmenting the deep expertise of our underwriters and claims professionals with advanced technology, as demonstrated by our award-winning SkyVantage platform. We believe that we are in a leading position using AI in this regard, particularly in the specialty insurance markets where we compete. We have every business seeking to leverage the powerful advancements we have been implementing in specific units, including A&H, healthcare, miscellaneous E&O, and energy. Given the AI arms race, I believe our early mover advantage will compound and contribute to the competitive moat we're building around every division and unit in our company. Altogether, we delivered another outstanding quarter, and our results reflect the strength of our strategy, the quality of our execution, and the resilience of our business model. Our deep expertise, disciplined underwriting, and focus on complex underserved markets continue to differentiate us. We are seeing the market shift in real time. Certain areas continue to soften while others remain dislocated and underserved. These are the environments where Skyward thrives, our ability to adapt with discipline and precision to grow where conditions support our return thresholds and moderate where they do not is exactly why we built the portfolio we have. Our Rule Our Niche strategy is not just a tagline; it is a blueprint for durable top quartile performance through the market cycles. We remain committed to this strategy and confident in our ability to execute it. I'd now like to turn the call back over to the operator to open it up for Q&A.

Our first question or comment comes from the line of Greg Peters from Raymond James.

Good afternoon, everyone. Andrew, in your comments, you discussed growth areas and where you're scaling back, effectively outlining your cycle management strategy. Could you elaborate on these key growth lines, specifically in the ag business, credit, captives, and the programs where you're assuming higher loss picks, particularly regarding the ag business to mitigate volatility risk? Can you also discuss your approach to reserving as these businesses grow?

Thank you for the question, Greg. If we look back over the last five years, particularly during our time as a public company, we have consistently built and launched new businesses, scaled them, and seen positive results. I want to emphasize that we haven't changed our reserving philosophy for the businesses you mentioned. We generally take a conservative approach, especially for lines that we anticipate may have volatility. For instance, in the agricultural sector, which does involve some volatility, our choices reflect a conservative mindset. Additionally, we are implementing strategies to mitigate that volatility. While we have highlighted certain growth areas, there are many opportunities within divisions that may not appear to be growing at first glance. For example, we're seeing growth in healthcare solutions and within our renewable energy division, but those may not be obvious in our discussions. It's important to note that our approach to cycle management involves more than just that; we are also mindful of loss inflation. We don't want to increase our exposure in areas where we observe significant loss inflation. All these factors play a role in our strategy, even if they aren't always clearly articulated in our reports.

I appreciate the detailed information. For my follow-up question, I want to focus on the investment aspect. You mentioned that alternatives and strategic investments only account for 5%, and this has been a consistent trend for some time. This percentage of the investment mix has decreased significantly. As we look ahead, could you share your perspective on these results? Additionally, when you outline projections, what are your thoughts regarding that line and the overall investment income segment?

Great question. So let me just say this: Obviously, we're not happy with results at top to bottom on the growth in underwriting are outstanding, and we have one item where we didn't meet our own internal expectations nor your expectations. I think that that is a bit of a red herring in terms of the performance of our business, and we think it's just not something that people should get distracted by because we have had volatility. I think that at the point that we took the company public, our alternative investments were north of 20% of our portfolio. We have done everything that we said that we were going to do, which included that every dollar of investing was going to go into our core fixed income. Obviously, we've grown our investment base at a faster pace than we thought. We've been helped by a decent yield environment, and we've taken the right steps in managing down this portfolio. Mark mentioned in his prepared remarks, $30 million of redemption in the first half of this year. I feel great about what we've done. Am I happy with the volatility in this quarter? No, I'm not happy with the volatility in this quarter, but that's the way business is sometimes. I'm very confident that we have roughly 30 positions remaining in this portfolio. We're on top of it, and I do suspect that there will be quarters ahead where the volatility will work to our advantage coming the other way. Otherwise, I don't think there's really much that we want to say about the alternatives because it's not part of our investment strategy going forward.

Our next question or comment comes from the line of Michael Zaremski from BMO Capital Markets.

Thank you for your comments regarding the alignment with some of your MGAs in which you have ownership stakes. It appears from the statutory disclosure that several MGAs are aligned with Skyward. I am curious if you could provide more insight into how these relationships were formed and any additional details that would help us understand the nature of your alignment with these MGAs.

Thank you, Mike. One of our longest-standing relationships is with a company where we hold a 20% stake and have refusal rights. This relationship accounts for nearly two-thirds of our total premium in that division, and they are compensated similarly to our underwriters, which is positive news. The second notable partnership we initiated is with an MGA that is experiencing growth, where we are a direct investor and play an active role with specific rights that are favorable to us. We made our philosophy clear to them before entering the partnership, and they recognized the value of having our formal commitment as a unique aspect in building their business. This has resulted in a mutually beneficial situation. Almost all of our new program additions, excluding one, have emerged from that partnership. You can describe it as you see fit, but 15% of our premium falls within the delegated authority, program administrator MGA market. These relationships are strategically deep rather than transactional. We are quite discerning about delegating authority, similar to any top-tier underwriting firm. We've heard the perspectives of some of our peers on this matter and generally agree with those views. Nonetheless, we believe we have established an appropriate tone and relationship with our business partners.

Okay, that's a good disclosure and insight. I want to switch to the pricing commentary. I believe you provided pricing information excluding property for the first time, correct? It's understood that property pricing has slowed down, right? I just want to confirm that when we compare this to your last quarter or previous quarters' pricing comments that didn't include global property, I have that right?

You are correct, Mike. It only applies to global property; all other property lines are affected as well. I believe you've heard enough from others about how property sector is experiencing some impacts, particularly the larger accounts affected more significantly. When we share our rates, we typically discuss gross because the growth rate tends to align closely with the net rate for us. However, global property is a bit different due to our reinsurance structure. Our net rate for the quarter was a negative high single digits pure rate. Currently, our pricing for global property is similar to what it was in the second quarter of '23, and it has decreased rapidly. Right now, if we assess the situation, we feel very positive about the technical rate of that book and its performance at that rating level. Given the recent changes, we might have a different discussion in a month or a quarter. The decline has been quite sharp, indicating a very dynamic situation.

Okay, understood. Lastly, regarding headcount, the 10-K report from some time ago indicated a headcount increase of around 15%, although I think it might have been in the low double digits, which is slightly below levels of 2023. Do you anticipate headcount to slow down a bit while still being close to a 10% increase if the year goes as planned? Additionally, I assume that headcount figures do not account for some of the MGA ownership and relationships that you do not fully own.

Yes, I would like to point out that the share of the premium from delegated authorities has been consistently between 13% and 15%. Although we experienced a higher growth quarter, it did not significantly impact the overall portfolio. Importantly, our controllable expenses have decreased by 2 points compared to last year, reaching our best ever at 13.1%, which is quite impressive. I believe we are achieving economies of scale, and our use of technology plays a significant role in this. Our strategy, especially in underwriting and claims, is to enhance the productivity of our underwriters over time through advancements in AI. This means our underwriters can be notably more productive. We aim to leverage this potential, as skilled underwriters can be rare. If we can enhance the performance of our team, we're already seeing some positive results reflected in our current numbers.

Our next question or comment comes from the line of Alex Scott from Barclays.

First one I had for you guys is on the captive piece of the premiums that I was expecting to slow a little bit more because I figured maybe there was a little more sensitivity there to softening market, capacity is a little easier to come by, maybe less demand for captives. The growth was very good actually. I'm just interested if you could provide a little more color around what's driving that, if there is sensitivity to sort of the cycle in the market or if there's something more idiosyncratic about it?

I believe the main factor driving our success is our innovative property-focused captive in the automotive dealers market, which utilizes on-the-ground weather technology to significantly enhance risk management and controls. This unique offering has proven to be successful, especially in a market that has remained relatively unchanged. Within this sector, there is also a considerable amount of moral hazard regarding property damage at dealerships. We have developed a strong proposition that attracts top operators in the market, which has been the key driver of our growth. There are few excellent examples of property captives in general, and ours is now in its fourth year. At this stage, we are really beginning to expand our capabilities. Our partnership with Understory Weather, a technology company, is truly distinctive and sets us apart.

Got it. Okay. And I also wanted to ask about the A&H growth. Can you just talk a little bit about exposure to things like medical cost inflation? We all see the health insurers and what they're saying, and there's been a fair amount of pressure there. On the other hand, I know you guys have a pretty differentiated and unique way that you're going about it at the small end of the stop-loss market in particular. So maybe you could just help us think through that and how you're being thoughtful about the growth into this, I guess, business that's faced a little bit of headwind?

Yes. Thanks, Alex. To recap the growth, as I mentioned in my opening remarks, it has been driven by the group captive segment of our business, which is becoming a key theme for us. The group captives really enhance our medical cost management strategy because they are directly linked to performance. Participants in these captives are engaged and eager to collaborate. We've discussed our reference-based pricing that is based on Medicare pricing, as well as our efforts to operate outside of major pharmacy benefit managers. We have specific programs aimed at accessing very expensive drugs through unique relationships. This is particularly relevant given the current global context, and we believe we are in a strong position. What stands out is that our approach differs from the traditional market method of paying large bills first and negotiating afterward. Instead, we negotiate the payment before processing it. This often involves a legal strategy, and we've seen great success, which has significantly benefited our customers and the members of the group captives.

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

Andrew, you talked about the limited growth in surety because of, I guess, declining infrastructure spend. Is any of that impacting loss activity on the surety side?

Surety has been truly remarkable. We have an exceptional team that is very responsible, equipped with outstanding tools. Our new claims leader, a lawyer who recently won a landmark case recognized by the surety industry, has just gone through a succession. I really appreciate our team mix; we brought in a great group from a competitor focusing on fiduciary and judicial bonds, and we've seen significant growth in that area. The oil and gas sector in commercial surety is currently under considerable stress due to major losses, causing reinsurers to pull back. As we move forward this quarter, we're preparing to launch what we believe will be the most innovative product in that market, which I am very excited about. It's a challenging market, but we think this product will provide a viable solution without introducing unusual risk for us. We are being very strategic and thoughtful about our approach. I also believe that federal funding, particularly from our key trading partners, will recover in the second half of the year, potentially increasing growth above the 8% we've seen. 8% growth in surety is already respectable, so I feel positive about our situation. Currently, there are no significant loss indicators suggesting changes in our performance.

If I can touch briefly on commercial auto. I know, Mark, you made some comments about, I think, severity. I was hoping to get a better handle on whether there were any reserve movements in commercial auto and whether the current book loss picks are changing for 2025?

Meyer, a good question. No. So loss picks are not changing. My comments were relative to emergence indicated to indicated. So we are booked higher than indicated. So there are no changes in loss picks, no. But what I will say to add to my commentary, look, in the quarter, the favorable emergence in our E&S and surety and professional lines was frankly quite a bit more than I would have expected. The favorable pockets that we saw on severity really weren't that unexpected, but didn't change our picks at all. Does that make sense?

Our next question or comment comes from the line of Andrew Andersen from Jefferies.

Could you expand a bit on the sentence being added to the amended filing?

Sure. It was exciting. There was a clear sentence in E&Y's opinion that referred to their control opinion, which somehow got omitted in the K. It's just an administrative issue, and I'm glad you asked. It doesn't change anything regarding the unqualified opinion; it’s simply a requirement for us to refile the 10-K. The only part being refiled will be the opinion in the financial statements, not the entire 10-K.

And Andrew, just to give you some context about how this emerged because we recently became an accelerated filer, EY, we were selected to basically have an internal audit on EY auditing us, and that audit came back very well, but this was the one item that emerged.

Okay. Have you completed addressing the weakness that was noted for the year '25?

So another good question. Look, we won't get formal sign off if you will, until EY issues their opinion for '25. Internally, we are working on the remediation with respect to the material weakness. We believe it's been remediated, but until the end of the year, when the opinions are actually issued, that will be at the point in time where that would be lifted.

Okay. Maybe switching just to the session rate. It was up year-over-year and quarter-over-quarter. I would have thought it would have been a little bit lighter year-over-year given less property growth. Anything kind of one-off there? And how should we think about that in the back half of the year?

Well, the way I think about it is the way we referred to it earlier. We've guided to about a 60% ratio. It can move around quarter-over-quarter due to the way we book reinsurance treaties at inception. When we renew treaties, we ceded upfront as opposed to over time. The second quarter is typically when you see a dip in the retention ratio. It's pretty much in line with what we've done year-over-year and quarter-over-quarter. I wouldn't read anything more into that other than Andrew has talked a lot about captives. You do know that our retention ratio on captives is lower than I would say the non-captive or the property business. So as the captives grow, our retention ratio could move a little bit. I feel good about the 60%.

And Andrew, that includes within A&H, where there's been a lot of growth. So there's some mix going on here, but we've said it plenty of times, we're gross line underwriters. We want to take more risk, and where we have an opportunity to do that, we will. An example of that is that as we've grown and diversified our surety portfolio, we've upped our retention. We came through a renewal this year. We upped our retention again because we didn't want to swap dollars at sort of the bottom $1 million there. You'll find, as you see our annual disclosures around this that in general, we try to eat more of our own cooking where we can, but some of these things are more structural. In this case, really, it is the captive piece working its way through.

Our next question or comment comes from the line of Matt Carletti from Citizens Capital Markets.

Just a quick question. Andrew, your team has consistently excelled at forming new teams and exploring emerging markets. Since our last conversation, you've initiated an aviation unit. Could you provide some insights into its focus? I believe you've mentioned targeting underserved markets, so I assume it's not about major airlines. What risks are you considering in this area?

Yes. No, we're not, as you described. So the background on this matter is actually a little more straightforward. We had in place a relationship with a program administrator focused on what I would describe as really kind of the small part of the aviation market, a lot of personal aircraft and such. So you can really think about sort of truly the noncommercial end of things. We really, really like that team, and we had an inside line to effectively bring the business in-house by buying it. It was not a marketed process. It was a convenient means to create a process for over time for succession. We did that with a belief as well that we could invest and grow the business. The book we acquired was circa $20 million. We probably believe that that's something that we can grow and not deteriorate margins at all by probably up to like $50 million. It fits really well with the kind of things that we look for. It's quite niche, and there's just a small number of competitors there. We think we have a great team, and we're going to bring the Skyward, sort of the chemistry that we can bring to catalyze these things around technology and hopefully build a really great little business for ourselves.

Our next question or comment comes from the line of Andrew Kligerman from TD Cowen.

Nice to talk to you. Going back on the retention item. So it looks like over the last few years, you've been around, I don't know, low 60s in terms of retention. Part A, I'd like to understand the dynamic of the impact of captives on the retention. Maybe you could, in that area, give us a sense of how much you retain on those premiums? And then secondly, it's a little bit on the low end. Where do you see that 62-ish percent annually going over time?

That's a great question, and I appreciate it. We've received this question often enough that we should probably include an explanation in our regular materials. Regarding the property and casualty side, which is the larger segment of our captives, the captives usually retain between $350,000 and $500,000. You can think of it as 80% of premiums within that range, with 20% above it. If the captives have excess, it essentially contributes to our gross revenue after accounting for what goes into our excess treaty, which affects our figures. Additionally, as we’ve mentioned previously, we have a substantial global property line, with two-thirds being quota shared. Currently, in the market, brokers are transitioning many accounts to longer stretches instead of using layered programs, which are now extended stretches. We provide a significant quota share capacity for that and also offer a line that requires using facts to determine our net line. These factors result from our particular business mix and market conditions. It’s difficult to directly answer your question. Our net retentions are typically in the low 80s, which isn’t significantly different from what a company without our business mix might have.

That was very helpful. And then maybe shifting over, Andrew, you were talking about the casualty business and pulling back in some areas, but you were seeking to grow in some areas of casualty as well. I was kind of curious, what you think looks somewhat attractive at this stage?

Yes, I believe our E&S business is delivering exceptional results, which continue to impress. In the primary GL segment, where we operate, the average premium is approximately $45,000. It's a decent market, although there are instances of foolish behavior that raise concerns. I encourage our underwriters to report weekly examples of unwise practices in the market. The primary GL E&S market remains strong, albeit with intermittent irrationalities. The excess market is seeing robust pricing. Our focus is on writing policies for occupancies and classes that avoid areas heavily affected by inflation trends that could harm our E&S business. Within our energy sector, we've historically maintained comfortable combined ratios in the 80s on a fully loaded basis. We have successfully ventured into renewables and are now exploring power markets. I feel optimistic about these areas as we are not currently witnessing adverse inflation trends there. On the other hand, we are consciously avoiding sectors where inflation is a concern, even if they may seem modestly inflationary now, as we anticipate potential escalation in the future. Therefore, we are being very selective.

Our next question or comment comes from the line of Mark Hughes from Truist Securities.

Mark, the cat loss assumption either for the third quarter or the full year, given kind of the mix change, the deceleration in property, how should we think about cat losses?

Mark, I don't see any change to the guidance that we've given.

And that's what, roughly 2 points for the full year? Is that right?

Yes. That's right.

How about current accident year loss picks? A little bit better this quarter? Is this the right level on a go-forward? Or how should we think about it?

You know what, Mark, no, we're not moving loss picks. It's just business mix.

Yes, Mark, I would just refer back to the guidance that we provided at the beginning of the year. We are satisfied with that guidance and pleased that we are exceeding it. We believe that is a sensible approach, but we want to emphasize that we are sticking to the guidance. I understand that some companies aim for constant increases in estimates, but we will provide our guidance on an annual basis and adhere to it. If our performance is strong, we will continue to exceed expectations, and so far, we have been doing just that.

Yes, very good. When considering the mix, Andrew mentioned some variability in the programs and possibly some seasonality in other businesses. Regarding the third and fourth quarters, you mentioned adding recent programs that could impact the written trend. Are there any factors from the third or fourth quarter that we should be aware of, such as challenging comparisons or easier comparisons from the latter half of last year, which might help us in our analysis?

We had a strong second half last year, as well as a solid first half. This year is following the same trend with good performance in the first half. I don't want to emphasize the programs too much; they represent about 15% of our portfolio, with one significant relationship accounting for a large portion. I've mentioned the fluctuations because we added two programs over the past three quarters, and you're seeing some of that impact this quarter. However, I don't want to make too much of it. Looking at the current market, it's clear that it varies significantly, with some companies struggling while others are thriving. As I assess our performance for the third quarter, I believe it will be strong, driven not by the programs but by our diverse business portfolio that is well-positioned to capitalize on market opportunities while being prudent in more challenging areas.

And I just want to add one more thing, Mark. It's difficult to pinpoint one specific aspect. I believe we stand out in this market, especially as a company of our size. We are fortunate to have a diversified portfolio, with no single business accounting for more than 16% of our premiums, if I recall correctly, and none below 8%. All of our segments are substantial, and our ability to operate effectively in various areas is unique to us. While some companies may experience significant growth in areas like casualty because of favorable rates, it’s important to recognize that those favorable rates stem from challenging starting conditions due to loss inflation. We aspire to achieve growth when the right opportunities arise, but we also want to ensure we are confident in the initial conditions, loss inflation, and related factors. We do not feel compelled to grow solely in response to available pricing; our portfolio enables us to allocate our capital in ways that many others cannot.

I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Natalie Schoolcraft for any closing remarks.

Thanks, 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 third quarter earnings call. Thank you, and have a wonderful day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.