天域特种保险公司（SKWD）：2025年第一季度要点年初开局良好；每股收益基本不变

1Q25 Takeaways: Favorable Start to Year; EPSMostly Unchanged 1Q25 growth was strong and the '25 guide of mid-teens was reiterated, implyingsome moderation which we expect to occur in 2Q25 before a modest re-accel in 2H. Mgmt pointed to consistent submission flow and pricing QoQwith improved retention. We leave our 2025/2026 EPS mostly unchanged andcontinue to model mid-teens GPW growth in '25. Remain Hold as we find sharesfairly valued at 2.8x P/B. PT $60. We increase our 2025 EPS estimate by 2% to $3.55, mostly reflecting the beat to our 1Q25 estimate.Our 2026 estimate of $4.20 is unchanged though our 2027 estimate of $4.90 is 3% higher reflecting20bps of favorable PYD we now include in results as well as 40bps of improvement in ER (relativeto our prior ER estimate). We model GPW growth of 15%/11%/9% over 2025-2027E with reportedCRs of 91.6%/91.8%/91.3%. Growth:We model 15% GPW growth for 2025, in-line with guidance of mid-teens, though a modestslowdown relative to 19% in FY24 (guidance was also mid-teens). We model 11% growth for 2Q25reflective of pressure on Global Property, though offset by continued strength in most other lines(Transactional E&S, Specialty Programs), before some rebound to 16%/15% for 3Q25/4Q25. Asa reminder SKWD's E&S business (~55% of GPW) is composed of policies that mostly remain inthe non-admitted market and do not float back to traditional channels. We model GPW growth of15%/11%/9% for '25E-27E Mid-single digit plus pure rate was unchanged QoQ though global property (-19% GPW growth in1Q25) remains pressured. Submission flows were in the mid-teens this quarter, similar to 4Q24,including 20%+ for Transactional E&S. Management notes some rising competition. Margins:We model 70bps YoY improvement in the reported combined ratio to 91.6% for '25E.The company expects policy acquisition costs to continue to increase given mix shift to highercosts lines such as surety and overall wholesale (transactional E&S, marine, professional lines). Weexpect this to be somewhat offset by the G&A ratio reflecting scale benefits. We model expenseratios of 28.8%/28.6%/28.0% for '25E-27E. We leave our underlying and CAT loss ratios mostlyunchanged, and model no PYD (until '27E with 20bps). We model reported combined ratios of91.6%/91.8%/91.3% for '25E-27E. Source: FactSet, Jefferies See changes to our estimates below... Andrew Andersen * | Equity Analyst(312) 750-4445 | aandersen@jefferies.comSuneet Kamath, CFA * | Equity Analyst(212) 778-8602 | skamath@jefferies.comCharlie Rodgers * | Equity Associate+1 (312) 750-4783 | crodgers@jefferies.com The Long View: Skyward Specialty Investment Thesis / Where We Differ We believe that the company’s specialty orientation and focus on nicheunderwriting segments position it well to benefit from favorable E&S industrytailwinds. This could result in robust premium growth while avoiding morevolatile CAT-exposed lines. While we might be in the late innings of this specialty cycle, the company’sfocus on lines and industries that are structurally oriented toward specialtyunderwriting should offer support even in a scenario in which flows out of theadmitted market slow or reverse. Upside Scenario,$76, +28% Downside Scenario,$41, -31% Base Case,$60, +1% •Pricing declines faster than anticipated•Loss trends deteriorate•High-single digit NPW growth•Negative underlying margin expansion•High-single digit Op ROE•BVPS ex AOCI: $19.10 /Target multiple: 2.2x /Price Target: $41 •Pricing momentum continues over next year•Loss trends moderating•Mid-20s NPW growth•Moderate underlying margin expansion•High-double digit Op ROE•BVPS ex AOCI: $27.50 /Target multiple: 2.8x /Price Target: $76 •Pricing moderates over next year•Loss trends stable•Low-double digit NPW growth•Flattish underlying margin expansion•Mid-teens Op ROE•BVPS ex AOCI: $23.90 /Target multiple: 2.5x /Price Target: $60 Sustainability Matters Catalysts Top Material Issue(s):1) Physical effects of climate change.In an underwriting capacity, SKWD isexposed to loss events (particularly catastrophes) that are increasing in severity and frequency due toclimate change. These natural catastrophes present risks and market opportunities.2) Systematic riskmanagement.Balancing revenue growth and risk exposure requires management to be diligent withunderwriting practices. SKWD’s focus on non-admitted markets allows it greater freedom of rate andform to manage exposure, but we also note greater cyclicality in that market. •Monthly stamping office data for surplus linesinsurers•Full-yearearningsresultsandindustrySchedule P data•Quarterly reports•Reallocation of investments Company Target(s):N/A Question(s) for Management: 1)What is the margin impact of changes you are implementing to reduceemissions to reach your climate goals?2)How are you balancing climate exposure with rate/T&C actionsand growth on property lines, and how are you managing the impacts of social inflation on exposure oncasualty lines? Linkto ES