SKWD Q3 Deep Dive: Agriculture and Diversification Drive Outperformance, Apollo Acquisition on Horizon

Specialty insurance provider Skyward Specialty Insurance (NASDAQ:SKWD) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 27.1% year on year to $382.5 million. Its non-GAAP profit of $1.05 per share was 18.6% above analysts’ consensus estimates.

Is now the time to buy SKWD? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Skyward Specialty Insurance’s third quarter results stood out for robust top-line expansion and profitability, with revenue and non-GAAP earnings both surpassing Wall Street expectations. Management attributed this performance to outsized growth in the Agriculture unit—particularly in U.S. dairy and livestock—and continued strength in Accident & Health, Captives, Surety, and specialty programs. CEO Andrew Robinson emphasized, “Our results highlight the strength, durability and execution excellence of our Rule Our Niche strategy,” pointing to the company’s diversified portfolio as a shield against challenging property and casualty markets. Growth was balanced with underwriting discipline, especially in more competitive or inflation-exposed segments.

Looking forward, Skyward Specialty Insurance’s outlook is shaped by the integration of new specialty programs, disciplined underwriting in a more competitive property and casualty environment, and the anticipated closing of the Apollo acquisition in early 2026. Management expects future growth to be uneven due to the renewal cycles of key divisions, with Mark Haushill, CFO, noting, “There will be quarters where growth is lower than what we have reported in each of the first 3 quarters this year.” The company remains focused on expanding fee-based business lines and leveraging technology, such as AI-driven underwriting tools, to maintain its competitive edge and adapt to evolving market dynamics.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to exceptional Agriculture segment performance, targeted growth in non-cyclical units, and active risk management in the face of industry competition.

• Agriculture unit surge: The Agriculture segment led growth, driven by heightened demand for dairy and livestock revenue protection products as producers and insurance providers sought stable risk transfer amid market volatility.
• Diversified growth across divisions: Five of nine business divisions—including Accident & Health, Captives, Surety, and specialty programs—each expanded by over 25%, offsetting more competitive dynamics in property lines.
• Selective underwriting in challenging markets: The company deliberately reduced exposure in Global Property, construction, and parts of Professional Lines, reflecting a disciplined approach as competition increased and loss inflation persisted in certain liability segments.
• Investment portfolio repositioning: Management completed a shift from equities to fixed income to enhance predictability and support growth, with CFO Mark Haushill noting the improved embedded yield and reduced investment income volatility.
• Technology-driven underwriting: Ongoing investment in automation and AI, such as the SkyView workstation and AI-powered risk analytics, has improved underwriting efficiency and risk selection, contributing to both growth and profitability.

Drivers of Future Performance

Management expects future performance to be shaped by the integration of new specialty programs, disciplined underwriting, and the closing of the Apollo acquisition, while remaining attentive to cyclical risks and operational efficiency.

• Apollo acquisition and capital structure: The anticipated close of the Apollo transaction in early 2026 is expected to diversify specialty capabilities and introduce a more capital-light, fee-based business model. Management believes this will enhance long-term earnings potential, but notes leverage will temporarily rise to about 28%.
• Technology and operational leverage: Continued investment in AI-enabled underwriting tools aims to drive efficiencies and support selective growth, especially in Accident & Health and Captives, which management considers less sensitive to property and casualty cycles.
• Market competition and underwriting discipline: Heightened competition in property and E&S (excess and surplus) markets, as well as inflation in liability lines, are prompting more selective risk-taking. Management cautions that quarterly growth may be uneven due to renewal timing and product mix shifts.

Catalysts in Upcoming Quarters

Looking ahead, our analyst team will be closely watching (1) the successful integration and performance of new specialty programs and the Agriculture unit’s continued momentum, (2) progress toward the Apollo acquisition closing and its impact on capital structure and business mix, and (3) management’s ability to sustain underwriting discipline in increasingly competitive property and E&S markets. The ongoing deployment of AI-driven underwriting tools and efficiency initiatives will also be important markers for future profitability.

Skyward Specialty Insurance currently trades at $45.70, up from $44.98 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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