good day and thank you for standing by welcome to the fourth quarter 2025 skywood group earnings conference call at this time all participants are in listen-only mode after the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press star 11 on your telephone you will then hear an automated message advising your hand is raised to restore your question please press star 11 again please be advised of today's conferences being recorded. I would now like to turn the conference over to your speaker for today, Kevin Reed, Vice President, Investor Relations. Please go ahead.

Thank you, Lisa. Good morning, everyone, and welcome to our forum. Today I am joined by our Chairman and Chief Executive Officer. We will begin the call today, and we will open the lines. 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 and overlooking statements. These types of factors are discussed in our press release, as well as in our FEN-K that was previously filed through the Securities and Exchange. 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 you.

Thank you, Kevin. Good morning, and thank you for joining us. Our strong fourth quarter caps off another incredible year. Mark will cover the quarter in detail in a moment. I'll start our call today with a few quarter and full-year highlights. Fourth quarter just-to-date operating income increased 47% to $49 million, and underwriting income reached $41 million, both all-time highs, in the fourth consecutive quarter of record results for those two metrics. Our growth in gross written premiums in the quarter of 13% caps off an outstanding year of 24% growth. We continue to exceed our objectives of delivering mid-teens return on equity, reporting 18.9% for the year, and a return on tangible equity of 20.9% was simply outstanding. Our fully diluted book value per share grew to $23.87. cents, which is up 5% over the third quarter and an impressive 26% for the year. The market is becoming more competitive and difficult for many to navigate. And yet, we simply go from strength to strength in our financial results, our competitive position, our portfolio construction, and our execution. Whether it be the impressive year-to-date growth in our ag business, the leadership position we established in the small employer market in A&H, our market-leading innovations such as NWEL that are powering the growth insurity and similarly creative products that are driving profitable growth elsewhere, or now the accretive impact the Apollo combination will bring to growth areas like our life sciences unit. We are demonstrating every day that we're unique amongst the PNC universe in how we are competing, executing, and winning. While others are struggling to find their footing in a decidedly more challenging property market and endeavoring to stay in front of the escalating loss costs in areas of the casualty market, we have successfully navigated in a manner others have not. We have evolved nearly 50% of our business portfolio to less cyclical lines while executing on our strategy to rule our niche by attracting the very best talent, staying in the lead in the technology and AI arms race, and building defensible positions in a competitive moat around our business, all while delivering outstanding financial returns. It is unlikely that every quarter going forward can be an all-time best for our underwriting and operating income as it was in 2025. Yet relative to the market and the opportunities ahead, we believe Skyward has never been better positioned to deliver sustained top quartile shareholder value. With that, I'll turn it over to Mark to provide the financial details for the quarter and the year.

Thank you, Andrew. We had another great quarter reporting adjusted operating income of $49 million, or $1.17 per diluted share, and net income of $43 million, or $1.03 per diluted share. As Andrew mentioned, gross written premiums grew by more than 13% in the quarter, driven by our A&H, Surety and Specialty Programs Division. Net written premiums grew 25% for the year, and our retention of 64.9% remained stable year over year and consistent with our guidance. Turning to our underwriting performance, the fourth quarter combined ratio improved 7.3 points compared to the prior year quarter to 88.5%, reflecting net favorable development and a modest catastrophe quarter. However, our loss ratio of 59.6% includes net favorable prior year development. This was across multiple lines, primarily surety and property of 7.5 million or 2.1 points on the loss ratio. Our favorable development more than offset modest adverse development in more recent accident years, which was principally driven by commercial auto and excess auto in areas that have been exited over the past three years. Our 10-K and statutory filings provide additional details. We ended the year with a very strong reserve profile with 74% of reserves in IBNR. Our highest level of IBNR in the history of the company. Our pay to incurred is a low 65% for 2025, consistent with 2024. These metrics demonstrate our disciplined and conservative approach to reserving, even as our liability durations continue to shorten. The expense ratio for the quarter was 28.9%, consistent with the prior year quarter and in line with our expectation of sub-30s. Efficiency gains in controllable expenses were offset by higher acquisition costs, which were driven by business mix shifts and by regular fourth quarter profit share true-ups. Turning to our investment portfolio, net investment income for the fourth quarter 2025 increased $3 million compared to the fourth quarter 2024, driven by a larger asset base and higher yields in our fixed income portfolio. In the fourth quarter, we put $52 million to work at 5.6 percent. Our embedded yield was 5.3 percent on December 31st, up from 5.1 percent a year ago. Underlying marks of $2 million on the private credit holdings in our alternative asset portfolio continue to impact net investment income in the quarter. While the 2025 results in our alternative asset portfolio are disappointing. This portfolio only represents 3.8% of our investment portfolio at December 31st compared to 6% a year ago. For the year, $44 million of the alt capital was returned and reinvested into our fixed income portfolio. Our organic growth in capital arising from our strong 2025 results supports our 2026 business plan. That capital strength positions us well as we consider our balance sheet and our leverage profile going forward. Our financial leverage was modest as we finished the quarter at under 11% debt to capital ratio. However, rolling into the first quarter of 2026, our leverage will be impacted by debt related to the Apollo transaction, and we expect it to be in the range of 28 to 29%. Recall, as part of the consideration paid for Apollo, the company issued approximately 3.7 million shares at an accrete of $50 per share. At the closing of the Apollo transaction on January 1st, fully diluted book value per share is expected to fall within the range of $26 to $26.10 as compared to our $23.87 at December 31st. You'll recall that on December 3rd, we provided guidance for 2026, and that guidance is unchanged. As discussed in prior quarters, the material weakness in IT controls has been remediated and that will be visible in our 10k or no material weaknesses. We remain focused on our balance sheet strength and prudent capital management as we move into 2026. We will look to opportunistically deploy excess capital to take advantage of our extremely attractive share price via our share repurchase program. Now, I'll turn the call back over to Andrew.

Thank you, Mark. As Mark just shared, our financial results for the quarter were excellent again. We grew over 20% in surety, A&H, and specialty programs. We expect strong continued growth in A&H and surety given our winning positions. As noted in the prior calls, we expect flatter growth in specialty programs as the effects from the two programs added in early 2025 are fully reflected in written premium. We also grew in captives and modestly in global property, the latter of which simply reflects a small premium quarter, high retention on our in force, and a couple of account wins. We continue to see considerable competition in property. With strong growth in the quarter within the credit unit part of our ag and credit reporting division, we remain bullish about our profitable growth opportunity in both units. We shrunken energy and construction solutions driven by our ongoing intentional actions in commercial auto and construction. We have now reduced our commercial auto exposure by more than 62% over the last 12 quarters. As we signaled to you three years ago that the lost cost inflation backdrop is too unpredictable and too unsustainable, something only in the past few quarters others have started to discuss regularly. Regarding energy, given the strength of our market position, limited competition in the specific markets we serve, and our broadened offerings in renewables and power, we are bullish in our outlook for this unit. In Q4, as often happens, the market becomes more competitive as many try to make full-year plans. This was most visible in our ENS and Professional Lines divisions. We defended our books effectively, but wrote less new business given the price and terms on offer. While this continued into the 1-1 renewals, we remain positive about our ability to grow profitably in specific areas in these divisions, including healthcare professional, the specific target classes that make up our management liability book, and general and excess liability. It's important to note our outstanding portfolio construction diversification. Over 58% of our business is in short-tail lines, and now 48% of our business in lines less exposed to the P&C cycles. And our largest division makes up only 16% of our premium. These all continue trends that are visible over the past three years. We arrived at this point with clear strategic intentions, which we have spoken about quarter on quarter since being a public company. Turning to our operational metrics. We had a quarter similar to last. On pricing, we achieved mid-single-digit pure rate ex-global property. Retention was in the mid-70s, driven by our intentional actions in commercial auto. We continue to see strong submission growth, which was solidly in the teens again this quarter. I'd now like to take a moment to reflect on our progress as a public company over the last three years. On January 13, 2023, we listed as a public company. In February of 2023, we reported our Our 2022 fourth quarter and full year results with operating income of $11.6 million and 36 cents per fully diluted share, and $12.87 book value per fully diluted share. In just three years, our adjusted operating income of $49 million is more than 4X greater, our diluted EPS of $1.17 is more than 3X greater, and our fully diluted book value per share is over 2x greater at the close of the Apollo transaction on 1.1. Underlying this is a far stronger balance sheet, both on the asset and liability side of the ledger, a far more durable business portfolio, as I just discussed, market-leading underwriting and claims talent, a leadership position in the use of advanced technology and AI, and every single division executing exceptionally on its rule or niche strategy. None of this begins to contemplate the impact of the Apollo transaction, which further strengthens our talent, our innovation and earnings, and it provides attractive fee income, strengthens and expands our business portfolio into new specialty areas, and importantly, it builds on Apollo's distinct and obvious leadership position in providing solutions to the digital economy. To this end, you likely saw Uber's announcement yesterday regarding its launch of the first ever manufacturer-agnostic autonomous rideshare platform. One critical component Uber highlighted is the Autonomous Vehicle Insurance Policy, also known as AVIP. We are proud that Apollo is the sole carrier partner to Uber for this market-leading initiative. AVIP is a comprehensive liability product that combines general and product liability along with several other coverages from manufacturers, ADS providers, owners, fleet managers, and other supporting participants into one simple policy that is embedded directly within the Uber AV platform. Uber selected Apollo because of our expertise, intellectual property, proprietary data, track record, and leading position in providing insurance to the AV market. I noted autonomy as a large growth area for Apollo when we announced the transaction to acquire Apollo. This is a powerful demonstration that we are the leader in understanding AV risk and providing powerful risk transfer solutions to this market. Our collaboration with Uber has been central to the unique design of this product, including our proprietary context-specific and usage-based pricing approach. The embedded coverages mean this product is not sold, but rather consumed by AVs offering their services through the Uber platform. We'll share more specifics in the coming days and weeks, but when we speak about the impact of Apollo and the strength of the combined company that is now Skyward Group, this partnership with Uber is precisely what we envisaged. It reflects the differentiated capabilities we have brought together and our ability to deliver solutions at the forefront of innovation, technology, and serving markets being disrupted by AI. To wrap up, as I look back on 2025 and our last three years as a public company, I'm immensely proud of the integrity of our company and how we operate, the accomplishments of our Skyward team, and the results we've delivered to you, our shareholders. I'm even more excited about the next three years now with the capabilities and talents of our colleagues at Apollo. And despite a more challenging and uncertain market backdrop, at no point during my six years at the company have I viewed a better position for success than today. With that, I'd now like to turn the call back over to the operator to open it up for Q&A. Operator?

Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. You'll hear an automated message if you find it in your hand is raised. We also ask that you please wait your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. And our first question for the day will be coming from the line of Mayor Shields, of Keith, Bridget, and Woods. Your line is open.

Thank you so much. Good morning. Andrew, I was hoping you'd go a little bit deeper into the surety growth where it was very strong in the fourth quarter, you're pretty optimistic, is about 2026, because we've heard a lot of, I guess, concerns from other carriers about delayed construction projects.

Yeah, look, I mean, I think that we – thanks, Mayor, by the way, for the question. And there's nothing unusual about, you know, this quarter. You could see the growth building. The fourth quarter particularly was a release of a lot of federal funds. So with things that were backed up over the course of the year, you know, the monies sort of became available. Our view is really simple, which is, you know, we built a really well-diversified portfolio within surety, right? So it's not just, you know, contract and commercial. It is the fact that we're well across all the trades, that we're not exposed to, you know, home builders. On the surety side, you know, We have great areas like the SBA. We have our judiciary and fiduciary bond capabilities. We've done a great job with Enwell, which we obviously talked about over the last three quarters. More recently, there's been a failure of a large solar company with over a billion dollars of bonds out in the market. And, you know, probably every top 20 surety, you know, had some piece of that except us. And so we're certainly going to avoid a loss there. But that will sort of harden the backdrop around solar just the way that, you know, we saw the hardening on oil and gas. And so, you know, I think when I look at it all in, it's just the execution of our business along the lines of the way that we constructed that business, well diversified, different areas that we can press down, ease up, wait for some market opportunities like we saw in oil and gas. Now we'll probably see in solar. And so I would expect that we're just going to continue to outperform both on the growth and on the loss side as compared to the market.

Okay. Fantastic. That's helpful. If I could stay on premium growth prospects just for a second. So So wholesale brokers like Ryan are creating these sort of diversified facilities, and we've seen some other specialty carriers participate in that. I was wondering about Skyward's appetite for that sort of business that is externally underwritten.

Yeah, thanks for the question. We will never do that while I'm the CEO of the company. How about that? I think that it may be appropriate for others, but our strategy is about blue your niche. It is about distinct focus. It is about expertise and capabilities that we can look at and say, here's the source of your competitive advantage, your ability to, you know, to have a competitive moat. And whether people are doing it under we're managing other people's money, which some are doing, or just taking a straight quota share, you know, on other people's underwriting, that's just something we will never do as a company while I'm the CEO.

Okay, that was very clear. thank you so much thank you one moment for the next question and the next question is coming from the line of paul newsome of piper sandler your line is open hello paul your line is open one moment for the next question and the next question will be coming from the line of gregory peters of raymond james your line is open hey good morning everyone good morning greg so um uh i think you know you spoke about uh apollo

you spoke about um you met you mentioned this this um autonomous vehicle partnership with uber um you know as we're working through our financial forecasts maybe you could give us some perspective on how Apollo performed in 25 and what do you think they might be able to do in 26, you know, as we sort of blend it all together?

Well, I think that we will have some information out on Apollo here over the coming couple of weeks as part of sort of the ordinary reporting at Deloitte. So there's some things that will be will be available, but let me just say that just in sort of at the macro level, Apollo's financial results are uncannily similar to ours. They grew at about 20%. Their combined ratio was around 89 for the year, and probably the only difference that I would highlight is that their expense ratio is, you know, four or five points higher than ours for this past year, and the loss ratio accordingly four or five points lower. I also will tell you that Mark and I could not be any more pleased with the great work that David Iveson and James Slaughter and Terry McHarg had undertaken to ensure that the balance sheet was every bit as conservative as ours. And so I feel great about sort of our entry into 2026. I think beyond that, you know, Mark just said it best in the script, right? We gave guidance. Our guidance is unchanged. I believe that, you know, you can judge for yourself how it is that we perform against our guidance over, you know, over the prior three years. We're going to work hard, obviously, to do the best that we can. But in the end, you know, we can only sort of take what the market will allow us to take and still deliver the kind of returns that we're delivering to our investors. I'll highlight that this is really important that while others have put out, you know, some companies have put out monster growth numbers on Casually and so forth, you know, great for them, not right for us. We're very, very thoughtful about the lost cost inflation backdrop. And so the fact that we are exiting this year in the Skyward specialty part of the portfolio with 50% of our business in areas that are not exposed to the PNC cycles where we don't have the kind of concerns around property and casualty in that half of the portfolio is unique to us. And that gives us a real advantage as we're coming into 2026.

Just sticking on Apollo for a second, and then I do have a follow-up question on a different topic, but when we hear the rhetoric in the marketplace about pricing competition, obviously we've come to learn how your book of business has performed. Can you give us some perspective of how you think Apollo's going to perform under the Skyward banner given the fact that there's a lot more price competition in the marketplace now than there was maybe two or three years ago?

Yeah, well, I mean, what I'd say to you is that what we think about when we were evaluating the potential combination, and I think it's reinforced today, there's much about the a portfolio that is, first off, it's very complimentary. We certainly really appreciate what they're doing in their specialty businesses, areas like product recall, PR and PV, political risk, political violence, contingency. And I think that this point we just spoke about coming out of IBOT, 1971, the syndicate that's focused on the digital economy, is an example where I have said that they are one of one in that market. And I believe that this partnership with Uber, I mean, we're talking about embedded product where all of our expertise is really the foundation for the pricing. Our partnership with them and the insights that we bring is the foundation for the product. That's a unique place to be. You're not out, you know, sitting at the box competing with, you know, 50 other, you know, syndicates for, you know, for a piece of business. And I certainly feel really good about their portfolio construction. I would describe it as very analogous to us. And I see that, you know, pricing pressure is not something that you can ignore, But the portfolio is well diversified enough, like we have at Skyward Specialty, that I'm very confident that we can profitably grow and navigate the market while still delivering, you know, really exceptional returns for our shareholders.

All right. I mean, the other question I had was just about the reserve development and certainly appreciated your comment about, you know, how you've managed your commercial auto exposures over the last couple of years. But I was hoping that you could give us some commentary about the moving pieces inside the reserve development for the fourth quarter.

Hey, Greg, it's Mark. Thanks. I mean, look, in quick summary, commercial auto moved a little bit on us in actually years 22 and 24, maybe circa 25 million-ish, and it was offset by, as I mentioned in my comments, by some of the shorter tail lines. But I'm glad you asked the question because I think it's important for me to be very clear. Look, we review our reserves each and every quarter. In the event that we see something that we need to react to, we will of course do that. I think maybe the way I've communicated in the past may have led to a little bit of confusion. I gave you some metrics earlier in terms of just high level metrics on reserves. And look, I think it's worth noting to you and to anybody on the call, I feel as good about our reserves as I ever have since we have been public. Look, there are things that we need, the areas that we're looking at for sure, but coming into 26, I frankly feel better about our reserve than I ever have.

Greg, I don't think that you can look past the realities that we have dramatically shortened our liability durations over the course of the last six years since I've been at the company. We're at an incredibly high level of conservatism, if you measure it through an IV&R, are paid to encourage or as good as they possibly could be, I would say, at this point. And we do look at that as compared to others in the market. And I think the last thing that I would just highlight is that the auto and the excess over auto, the parts where we recognize some adverse development, are all parts of our business that we've exited as part of, you know, sort of slimming down the exposure that we have to commercial auto.

Got it. Thanks for the details.

Thank you. Thank you. One moment for the next question. And our next question is coming from the line of Alex Scott of Barclays. Your line is open.

Hey, good morning. Good morning, Alex. Good morning. The first one I had is on accident and health. Some of that I know is stop loss, and I think you guys have had pretty good performance for the rest of it. The industry has struggled a bit, so it might be one of the hardest markets we've seen in a while. It's pretty unique relative to some of the other things you guys do in P&C. Is that a place where you'd lean into growth, and could you tell us at all about what you did at 1.1 Renewals?

Yeah, our 1.1s were off the chart. We massively were ahead of where we thought we'd be, so that's just a quick answer to your first question. Here's what I think we're seeing. You know, we – I'll just sort of go back here on the history. You know, we are a stop-less writer. And, you know, six years ago when I joined the company, we focused very heavily on the smaller employer market, so think about 500 employees and less. We got the portfolio working well. About three years ago, we added captive's capabilities. I do think that the couple of players who are really great PNC names, companies that we respect very well, are really kind of the only other folks that we see with really compelling captive offerings. And I think that we are seeing a lot of growth in that market, but we're also taking share in addition to the growth that we're seeing. And that powered a lot of our growth over the course of the last 24 months. probably about starting about 12 months ago, we saw a return to growth in sort of the non-captive part. And as we came through 1-1, you're right in what you're saying, Alex. It is a, I don't know if you want to call it a hard market, but certainly it's a market where we're seeing a lot of opportunity at really attractive, you know, price. And we're staying true to our focus. Our captive capabilities are top notch. Our focus on medical cost management is, I would say, distinct and unique and second to nobody in the market. I think we'll recognize it as such. And whether it be somebody who wants to come into a group captive or somebody who is self-insuring on their own and buying the stop loss. We bring a lot of value to those companies. And I see our strength in 1-1 continuing out through the course of this year. I feel really good about it. And I'll highlight something that just reinforces what you said. You know, if you take a look at the 2024 stat data that's out there, our loss ratio is 15 points better than the market and a full 30 points better than, you know, the big names that sort of have performed really poorly over the course of the last couple of years, purely on the loss ratio side. You know, that you can't hide from. These are short-tail line of business, right? So the numbers don't lie, and I couldn't feel any better about what our team has done and what the year looks like for us, and I feel great. So you're right to highlight it. So thank you for that.

That was helpful. The follow-up question I had is on the Uber partnership. Obviously, longer-term, potential, bigger opportunity. As we think about the next year or two, is that going to cover some of the testing that they're doing initially? Like, will there be premium dollars that come online more immediately? And, you know, any color you can help us with that.

Well, let me say three things. First is, you know, as we said in the prepared remarks, we're going to come back with more data. You know, I've been cautioned by our colleagues at Apollo not to get out of our ski tips here. You know, Uber has put some information out. They're launching this in 15, you know, cities. And, you know, we'll see how the premium builds. It is in our guidance that we gave you, right? So this is not something that we didn't contemplate. It's in the guidance. What I would say is that, look, we are one of one. We are embedded in, you know, the dominant player in this market who has basically created a manufacturer agnostic platform. And, you know, like you just think about the potential, right? It's just, it's extraordinary. And I'll highlight something really important to you, which is that no company in the world is better positioned than Uber to demonstrate the safety and the difference between autonomy and human drivers, right? They have the data, and they're going to have more data as every day passes, right? So when you think about a legal and tort backdrop, I don't know who you'd like to be if you had to choose, but I couldn't imagine being better positioned as being a partner to them on the AV side, you know, as compared to being, you know, writing commercial auto, you know, for them in a very difficult tort backdrop that they've done a great job of navigating. But there's no question that, you know, the safety comparison between, you know, autonomous vehicles and human drivers is a marked difference, and no company is better positioned to demonstrate that than Uber, and, you know, we're in the middle of that.

Got it. Thank you.

Thank you. One moment for the next question. Our next question is coming from the line of Michael Zerimski of BMO. Your line is open.

Maybe a question on the loss ratio, you know, great all-in loss ratio. If we just kind of look at the underlying loss ratio, it ticked up a bit sequentially. It had been previously ticking down a bit. Is this, you know, you mentioned a commercial auto review. Should we kind of expect this new slightly higher level to be kind of the trend line?

Go ahead. Yeah. So, Mike, thanks for the question and good morning. Mark will provide more details. No change in our picks. This is a mix. It's a mixed change. We have two very considerable growth areas in A&H and ag, which are higher loss ratio businesses, which are, you know, earning in faster than the low loss ratio businesses like credit and surety and effectively on balance. that's what you're seeing. I will tell you that our internal plans are, you know, we gave you the guidance, but I think that it does reflect, you know, a bit of mixed change running through, but I wouldn't overread it, right? Those are also lower expense ratio businesses, and, you know, so I think on balance, what you're going to see is, you know, the sort of the performance of our business on a combined ratio, consistent with the guidance that we gave you, the geography will be changing a little bit, but nothing in terms of our underlying picks.

Got it. That's helpful. And then lastly, moving to the comments about the material weaknesses being resolved, congrats. Just curious, are there any kind of material learnings or system changes or anything you'd like to kind of highlight that has changed the way you guys do business as a result, or is it really just kind of small things behind the scenes?

Hey, Mike, it's Mark. This is a sore subject. Look, this whole controls thing is the bane of my existence, but no, we're not making any material changes to our systems as a result of it.

Mike, it was IT controls. I think we spoke at length. You know, this is a non-financial matter. We were mediated earlier in the year. It didn't get recognized until we, you know, until you issue your 10K. Hey, listen, we're a public company, right? This is not unusual, but it's not something that is financial in nature. And, you know, these things happen, right? It's a company that, you know, we took over a company that was in tough conditions six years ago, And we took it public three years ago, and we became, you know, an accelerated filer last year, and the stakes went up. And so I wouldn't overread any of it. We're just executing on all dimensions, including in finance.

Got it. Yeah, I meant to ask it in a positive way if it was taken differently.

No, don't worry about it. No, that's me and Mike. Yeah, we, you know, listen, being a public company is an absolute pleasure, as you can imagine when it comes to things like this.

Maybe I'll sneak one last in since you guys have, you know, you mentioned reduced commercial auto by almost two-thirds now over the last few years. Are we kind of towards the end of that and retention levels might start increasing or impacting growth differently? Or is that still kind of a consistent working process given commercial auto loss inflation remains higher than other lines?

That's a great question. So I do want to be clear that we have parts of our portfolio that are commercial auto heavy that we have one piece. It's a significant part that has, you know, been consistently delivering unbelievable returns for us over the course of, you know, 12 years, predated me. And so it's not the entire portfolio. But to answer your question directly, Mike, in the third quarter of this year, we narrowed our focus in construction, a particular area that had – well, I'll just describe it as, you know, Ford F-150 trucks that had unusually high severity, to be honest. Frequency was improving. I think that, you know, we had maybe a false confidence on the frequency. The severity, you know, really has been a byproduct of a really just an awful toward backdrop. And so we took action on that, and there will still be some development of, you know, sort of not development, reduction of our written premium over the course of the next couple quarters that works its way through. But there's no additional actions. And we feel very good about our portfolio. I don't think there's anything more that we would change at this point. And so, yeah, there will be some impacts, but it's not anything new. It's just the non-renewal of business that we took decisions on previously.

Thank you.

Thank you.

Thank you. One moment for the next question. And our next question will be coming from the line of Andrew Anderson of Jaffreys.

Your line is open. hey hey good morning um as property just becomes more competitive and you kind of manage the writings there what have you been seeing on kind of bind or hit ratios for either liability or just the broader book as probably the the rest of the market becomes more competitive uh thanks Andrew that's a good question I think I think just straight up on the on the bind ratio submit you Submission activity continues to be pretty good.

Buying ratios, I think maybe you might be asking the question specifically through maybe our transactional ENS lens, has been pretty consistent. There's a particular profile of business that we write, terms and conditions, still pretty good. And so we haven't really seen a backup on the buying ratio. We quote a lot to get the business we want. But away from E&S, so when you look at something like energy, it's quite different, right, because our competition is quite narrow. Our distribution is tight. You know, we see the business that we want to see, you know, and so, you know, that just continues to perform well for us. And, you know, with the introduction of things that we've done over the course of the last couple or three years on renewables, now more recently on sort of the unique way that we went into power, much of that's targeted towards the same distributors. And that has helped us in terms of kind of the strength of our position on their shelf. And so, yeah, I mean, I feel like, you know, we're doing what we should do and there's no real change just yet on, you know, on the liability side, I'm sure that it's going to become more competitive. The capital is connected. And, you know, as we're about to lap ourselves on the property side, you know, it was in the second quarter of last year that property rates really started to move down. And so we're lapping ourselves. And I'm sure companies are going to redeploy capital elsewhere in the market. Some of that's going to find its way into the liability side. And it's going to become more competitive.

But I feel like we're really well positioned. thanks and then maybe on one more on the uber piece i think you mentioned that was going to be in uh the 1971 syndicate i think that business does seed maybe 50 percent or so of net premiums but you know there's kind of a few layers to the apollo business with managed and then gross and net are you kind of thinking the uber relationship is maybe more of a fee income vehicle kind of the near-to-medium term rather than a retained premium?

So, first off, 1971 for 2026, with our capital, participates on a 25% basis. So 75% of the capital is provided by, you know, third parties, all very, you know, notable name reinsurers. And so, as we've talked about in the past, that itself has a fee-based component. we do have quota share support behind 1971 as well that quota share support like anything that we might do on quota share effectively seeks to take a portion of the underwriting profits and lock that in you know via a seed and so but that isn't unique to to the uber relationship that's you know, structurally in place across 1971. And I think as we get into the specifics of Apollo and future quarters, I think, you know, probably we can do a little bit more, Andrew, to, you know, give you sort of a better sense for that. But at this time, I think, you know, you kind of had the headlines right, and that's just the geography of what I described as sort of the macro geography behind that.

Thank you. You're welcome.

Thank you. One moment for the next question. Our next question is coming from the line of Michael Phillips. Your line is open.

Thank you. I want to touch, Andrew, on the captive division and a topic we sort of touched on a little bit last quarter with the demand of captives and the pricing cycle. The slowdown there, any anomalies in the quarter? Or is that maybe just a start of a continued slowdown given the overall PNC market is seeing Well, I think that – Michael, thanks for the question.

You know, I think that we have talked about in the past that captives have been sort of a structural, you know, share gainer in the PNC market. Even during the soft market years, captives were able to, as a share of the market, you know, have more, and we're talking specifically group captives, have more flow into the group captives market. But there is no question that, you know, the backdrop influences kind of maybe the value of somebody moving out of the guaranteed cost market into a captive market at this particular point in time. By and large, folks that do that do it for strategic reasons, right? They want to, you know, control their cost of risk. They're making that decision on a long-term basis. But oftentimes the pricing backdrop, you know, acts as an impetus. And I think that, you know, probably that's what you're seeing here.

Okay. Yes, that's helpful. Thank you, Andrew. And maybe just a quick second question on a topic we haven't talked about in a while. It's California and the wildfires. Given the suits on PG&E, any possible updates on any recoveries from that stuff?

Yeah, I mean, we had, I mean, I just will remind you, we had very little loss associated with it. And we're talking about, you know, a handful. And last I checked, it looks like our recoveries were very good. I think that we, yeah, I think we did the right things around that to ensure that we could just put some confidence behind what we could recover there. But, you know, for us, it just isn't – it's not even material enough to see through our P&L because our losses just weren't that great. Thank you very much. Thank you, Michael. Appreciate it.

Thank you. One moment for the next question. And our next question is coming from the line of Tracy Benjuju of Wolf Research. Your line is open.

Thank you. Good morning. We heard some folks on Earning Calls talking about reverse flow within small property accounts. What are you seeing in terms of any reverse flow at this point in the cycle? And if that's happening, like, what is the typical cadence? Is it small account than large? Or do you think high hazard risk will always stay in the E&S market?

Tracy, good morning. Thanks for the question. And so, you know, I just will remind you, and I think we're talking specifically about flow from, you know, from E&S back into the admitted markets. You know, our average premium per policy in our E&S business is about $40K, so we're not a small account writer. That said, on the property side, I think I've talked about these statistics in the past, about a little more than 50% of our business, we're writing, you know, the full limits, the full TIVs, and, you know, less than 50%, you know, we're writing, you know, the primer and somebody else is writing the excess. We did launch an excess property offering as well. And, you know, so I think that we're really not in the small market. We're certainly not in the binding authority market. We're not in the market that is kind of the submit business that comes out of the binding authority market. But if I were to highlight one area where I'm seeing it is that, you know, the march on property went from, you know, very large accounts visible in our global property to, you know, now we're seeing pressure on premiums that are less than 50K, right? It's just, it's come to sort of all levels. In general, we write very tough risks. So, you know, think things like – well, things that really can burn, like, you know, involved in the wood industry, as an example, or things that explode. And those are not the things that tend to flow back into the admitted market. That's intentional on our part. It's the same thing on the liability side. We write really, really tough classes, hazard, high severity, low frequency, and, you know, and we charge a lot and we get our terms and conditions. So it probably – we're probably not well positioned to address that question as compared to others because of the makeup, and I think that we're a little bit above where that flowback might occur.

Okay. Appreciate that. And I had a follow-up on – I know you guys already discussed commercial auto and Uber. You obviously have a conservative stance on this line of business given all your reductions, But as it relates to this Uber AV insurance policy, to be sure, does coverage include any bodily injury? And if it does, I heard what you had to say about autonomous vehicles being more safe. But I'm wondering if you worry about the mix of driver-enabled and driverless cars at the road at the same time presenting an untested type of risk.

Yeah. So the first thing I'd say – so thanks for the question, Tracy. See, the first thing I'd say is for the avoidance of doubt, this is not a commercial auto policy. Any AV on the road has to carry commercial auto to meet their legal requirements. This is not that. This is a coverage for anybody who participates on the platform embedded into the Uber platform for which that coverage applies when an AD is actually doing something in response to, you know, taking instructions on the platform, whether that be, you know, if you read what Uber is doing, it's more than just, you know, rideshare transporting people. It will contemplate other things. And, of course, the question of kind of the mixed environment is a critically important question. I will highlight to you what I said during the prepared remarks. We are not coming into this without really deep knowledge. We have been very active in the AV space. I can't say any more than that. leading up to this. Our data set on the insurer side, to our knowledge, is the largest data set available. And so we understand the risk that you're describing incredibly well. The other thing I would say to you is that every AV is equipped with far more information because of the nature of AV than vehicles that are being driven by people, except in the cases of those vehicles that could operate as AVs, but are being driven by people. So the information advantage that inures to the AVs is quite considerable if you're talking about a vehicle-to-vehicle collision. And so again, I think that that all goes into our calculus. And as I said, you think about Uber's position, you can take nearly any instruction, any ride in any city in the world, and the amount of information they have about that ride, the frequency of loss, you know, et cetera, et cetera, the driver errors associated with that, as compared to the emerging information on AVs, they are uniquely positioned to demonstrate the safety differences that AVs have over human drivers. There's no company better positioned, and in a difficult torque backdrop, that's an immensely valuable thing.

Really appreciate it. Thank you. Thank you. One moment for the next question. And our next question is coming from the line of Andrew Kegelman of TD Cal. Your line is open.

Thank you. Good morning. Question around retention, it looks like your net written premium as a percent of gross went to 64% from 70. Could you touch on the dynamics around that shift and what we should expect going into 26 and 27 around retention?

Andrew, this is Andrew. Mark will jump in here as well. We're looking for the numbers. I think that a couple different points I'd make. One is that I think our full year numbers were around 65%, which is, I believe, up a couple ticks over last year. If I remember last year, we were maybe 62%, 63% gross to net. And so we were up a couple of ticks. The quarter was, you know, it was on a relative basis, you know, a quarter where we seeded more. But there was nothing in that. It's just it's just the ebbs and flows of any given quarter and mix of business. But I I believe that, you know, we've been on this sort of consistent upward trajectory of, you know, of eating more of our own cooking, if you will. And, by the way, just in this quarter, as one example that, Andrew, we – on our excess, we went to market with a clear intention to increase our seed, and we were able to do that. and not in an immaterial fashion, but we also made the tradeoff that we were going to get the seed that we were aiming at, even if it meant that we kept more of our excess writings for ourselves. And so I think that, you know, we kept about 10% more, but we increased our seed quite considerably. And both those trades are very smart trades for us. Obviously, in one case, we're getting, you know, we're getting more fee income, you know, offsetting our expenses. In the other case, we feel really good about, you know, our loss picks on the excess side, so we're happy to keep our own cooking.

Got it. So maybe expect, you know, the annual number to kind of move up a little bit.

Yeah, I think in our guidance we basically said, you know, consistent with this year. Some of it's going to be mix-related, but I do think it's fair to say that if you looked at, you know, 23, 24, 25, we are on a consistent trajectory of increasing, you know, our net as a percentage of our growth. I think, you know, it's gone from kind of 60 to this year, about 65 over that horizon. And we'll get you the exact data. We'll follow up and make sure that we're closing the loop.

That makes a lot of sense. And then my follow-up is around the pipeline for potentially other acquisitions, or maybe you could do team lift-outs. Are you seeing much of a pipeline there to kind of move into new areas of insurance?

Yeah, I think that we are – well, we certainly see opportunities. And I think as a company, I've said this before, and I would absolutely say this is true of Apollo as well, we're strategically led, right? So there are places that we want to go, but we're not necessarily saying, well, you know, that has to happen this quarter. We're targeting people and teams that we know, that we have confidence in, and sometimes it takes quite some time to get those folks across. Ag was a great example of that. You know, what I can say is that there are things in the works, but whether those things crystallize in 26, hard to know, because, you know, we're more patient and strategically minded in targeting, you know, people and teams that, you know, we know are great performers in the categories we want to enter. On the M&A side, you know, I'll say what I've said in the past. We have a financial responsibility as a company to make sure that we are being incredibly mindful of the way that we use the capital that our shareholders give us. And we were never a company that said we are going to acquire to scale. The Apollo transaction was a unique transaction that matched what we thought would be appropriate for the next turn of our company. We were in London looking at ways to organically grow and develop our presence there. And so I wouldn't describe a sort of our position as being an active acquirer. We've made two small other acquisitions. We made an acquisition, insuring acquisition, aviation over the sort of five and a half year tenure that I've been at the company. But I think it's not something that, you know, will be a, you know, too much of a focus, but we are very active in making sure we stay abreast of what's out there should there be a unique opportunity that's a great match for us.

Great stuff. Thanks for the insights.

Thank you. Thank you. One moment for the next question. And our next question is coming from the line of Mark Hughes of Truist. Please go ahead.

Andrew, you talked about how the pricing pressure has extended from very large accounts down to all levels in property. That pressure on the very large accounts, has it gotten worse or did it step down and then has been reasonably stable, let's say, the last quarter or two?

The former, not the latter. I think that, as I mentioned, you know, earlier, Mark, that we're about to lap ourselves, right? It was the second quarter of 2025 that you really started to see the pressure come in. And so this is the point where, you know, if I'm me and I'm you, I would be watching that space to see whether at this point the market kind of settles at the point it's at or, you know, whether, you know, some of the bad behavior out there continues. And it's really hard to know, you know, because we're not quite at the point where we're lapping ourselves. We're just a few months away from it. But, yeah, I would not say that there's any signs of it improving. And I do think that, you know, at least for our global property business in particular, the most impacted area, we have done a downright extraordinary job given our ability to use larger line sizes to avail ourselves to attractive fact pricing. to effectively limit the net margin impact for every dollar premium that we've written, recognizing that, you know, we've written less, right? But the contribution, we feel, continues to be not far off where it was over the course of the year prior.

Yeah, I appreciate that. And then the final question on the liability side, you said you're concerned about the redeployment of capital. When you think about the competition there, is it from kind of the existing public players, we might know their names, or is it the outside MGA's new capital that's putting the marginal pressure on the liability side?

I would say, by and large, the companies that we hold out as being responsible competitors, I think that they're being responsible. I think they're great companies. We follow and try to mimic organizationally the good things they do, and I think that responsible competitors are responsible, and you see it in their results through the cycle. You should always take pause at companies that don't have a track record in casualty that grow a lot, whether they're public or private. because the casualty market is a, you know, it's an interesting and challenging market in really simple terms, right? You know, all you have to do is, you know, your own analysis, which looks at the, you know, what's been happening in the general liability market and occurrence liability broadly should be a concern. And the loss cost backdrop is a challenging backdrop. I'm sure some of the guys that are growing are doing it really growing in big numbers are doing it well but by and large the people who are you are chomping up big chunks of this market and growing at you know quite considerable levels are not doing it and and and beating the better to best players out there because they're better underwriters they're doing it to get share and they're doing it oftentimes with price and terms and that that's just that's the logics of our business right you know um Our strategy has been, and you can see it in our results, nobody should take pause by the fact that some of our divisions are flat or even shrinking because we're being the responsible purveyors of our shareholders' investment in us by redeploying our capital away from places that are overly competitive or where the lost cost of inflation is not something that you can have, you know, a high level of confidence in. And so I just think it's like use your common sense, and that common sense in three, four, and five years will prove to be right.

Yeah, very good. Thank you. I appreciate that. Thank you.

Thank you. One moment for the next question. And our next question is coming from the line of Matt Carletti of Citizens. Your line is open.

Hey, thanks. Andrew, I heard your comments on Uber. that is not a commercial auto policy. Can you help me understand, like, what a potential loss would stem from or what it might look like in the coverage you're writing?

Yeah, Matt, thanks. We're pleased that you can join. You just surprised us. We didn't think you were going to join. So, look, first off, commercial auto, you're required to carry coverage, you know, to have a vehicle on the road. So this is not that, right? This is an embedded coverage. But functionally, if you think about this, right, and I'll just – we'll just say an autonomous vehicle, you know, causes an accident, strikes something. You know, it's hard to say whether that's sort of commercial auto in a traditional sense, product liability, general liability, et cetera, et cetera. It's a redefinition. And the policy, which is not going to be visible to anybody, it's designed and it is proprietary and embedded into the Uber platform. So it's available to the participants to fully understand how it works. You know, it's unique to the specifics of the fact that you're dealing with effectively, you know, a robot, An autonomous vehicle, you know, moving around in an environment where you have, you know, you have people, other vehicles, physical, you know, physical structures and everything else. And so the fundamental exposure is the same, but the definition and the way things respond and certainly the information that we have available and, of course, What we believe to be true is both, you know, safety and – so frequency and severity are certainly meaningfully impacted as a result. And so I think that, you know, you can think about exposure has comparability. The product itself is a rather different product, unique to the specifics of an autonomous vehicle.

Okay, that's helpful. And then you've referenced a couple times, obviously, the kind of lower frequency severity of AVs versus human drivers. Waymo has published some statistics on this, kind of suggesting, depending how you slice it, like 80% to 90% lower accident frequency across various categories, kind of in the same cities where they're rolled out. Is kind of your understanding of kind of the pilot teams working with Uber that something of that magnitude should be expected in kind of the exposures you have too, or is there something unique to Waymo versus what Uber's doing that would make that different?

Well, one thing I'd say, Matt, is, you know, you should go on to the, you know, the Uber announcement because you can see all the terrific, you know, autonomous that, you know, the manufacturers of the product that are on the platform. And so, you know, the performance of any individual, you know, provider is going to be different based on their technology. So, I don't want to comment on any specific company, but here's what I'd say to you. What I'd say to you is that it is a dramatic difference on both frequency, but I also would say a dramatic difference in severity. We can say through our own analysis unequivocally that we can see that, for example, the way an AV responds in a particular situation that results in, you know, an accident of some sort, that the severity of the accident, and I'm talking specifically about bodily injury because, you know, the physical damage, which we would not be involved in covering of the AVs, can be very expensive, right, because these are very expensive, this is very expensive equipment, but the way the AD in the situations that form a good part of our view, the way that they behave is effectively in a way that would reduce severity of a loss event. And, you know, that's a big part of the calculus as well. And ultimately, you know, when you're sitting, you know, trying to basically, you know, resolve a claim and God forbid something ends up being litigated, the wealth of information that will be available to prove that out will be considerable. And that's going to be a huge advantage. I like the side that we are on in this instance. And I think over time that's going to be, you know, become very well understood across the industry, including in the personal auto market.

Wonderful. Thanks for the call. I appreciate it.

Thank you. Thank you. And that does conclude today's Q&A session. I would like to turn the call over to Kevin for closing remarks. Please go ahead.

Thank you, everyone, for your questions. for participating in our conference call and for your continued interest in and support of Skyward Group. I'm available after the call to answer any additional questions you may have, and we look forward to speaking with you again on our first quarter 2026 earnings call. Thank you, and have a wonderful day.

Thank you. Thank you all for joining today's conference call. You may now disconnect.