Skyward Insurance has raised the roof on its initial public offering (IPO), marking one of the first big deals of 2023.  

Skyward priced its IPO on January 12 at $15, offering almost 9 million shares (precisely 8,952,383) – up from the 8.5 million cited in its latest prospectus filed on January 4, according to Renaissance Capital. At the revised terms, the deal will raise $134.25 million. The stock will float on the NASDAQ under the ticker symbol “SKWD” from January 13.

The company has shown topline growth. For the 12 months ending September 30 last year, Skyward generated revenue of $602.32 million and a net income of $20.29 million, per its prospectus. Free cash flow for the period was $162 million. Although Skyward paid dividends previously, its policy for “the foreseeable future” is to retain and reinvest earnings into running its business.

The Houston-based company provides specialty commercial property and casualty cover as both a non-admitted (excess and surplus) and admitted insurer. Skyward covers general liability, excess liability, professional liability, commercial auto, group accident and health, property, surety, and workers’ compensation. It is pursuing a “Rule Our Niche” strategy, aiming to double down on its leading position in these business lines while withdrawing from others. 

Insurance Niche Boom 

The excess and surplus (also known as “surplus line”) insurance market has boomed in recent years.  

According to a 2021 report by Insurance Business America, the U.S. excess and surplus market generated premiums of $41.7 billion in 2020, a 15% jump from 2019. That trend accelerated into 2021, with surplus line premiums exceeding $24 billion through the first six months of the year – a whopping 22% increase over the same period in 2020.

Other insurers competing with Skyward for this growing pie include Markel Corporation, American Financial Group, Tokio Marine Holdings, CNA Financial, and Argo Group International Holdings. 

Amid 2022’s historic IPO route, insurance company AIG spinoff Corebridge Financial became the biggest deal of the year, managing to raise $1.68 billion during the downturn. 

Markets have remained flat so far this year as Wall Street weighs up the potential fallout of a likely recession. Yet IPO investors are reportedly upbeat about the Skyward deal. 

“We like it,” one veteran trader told Renaissance Capital. “It’s insurance, it’s profitable, and it’s the first big IPO of the year.”

This article was produced and syndicated by Wealth of Geeks.

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