Today, and welcome to the Skyward Specialty Apollo Acquisition webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star one one on your touch-tone phone. As a reminder, this call may be recorded. I would like to turn the call over to Natalie Schoolcraft, Head of Investor Relations. Please go ahead.
Thank you, Michelle, and good morning, everyone. We appreciate you joining us to discuss yesterday's announcement regarding our acquisition of Apollo . Joining me today in New York City are our Chairman and Chief Executive Officer, Andrew Robinson, and Chief Financial Officer, Mark Haushill. Joining us from London is Chief Executive Officer of Apollo , David Ibeson. We will begin the call today with Andrew and Mark providing prepared remarks accompanying a presentation, then we will open the line for Andrew, Mark, and David to answer questions. 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 or forward-looking statements.
These types of factors are included in our press release, as well as in our 10-K that was previously filed with the Securities and Exchange Commission. In addition, the presentation will include non-GAAP measures that are presented for supplemental informational purposes only. I would like to turn the call over to Andrew. Andrew?
Thank you, Natalie, and good morning, everyone. Today marks an important milestone for Skyward Specialty. The acquisition of Apollo is another major step in building the premier specialty insurance company that is anchored in our rule-our- niche strategy, specifically to have strong, defensible positions in niche markets, powered by talent and technology, and delivering top- quartile underwriting returns across market cycles. Over nearly three years as a public company, we've been intentional, relentless, and exacting in our execution of this strategy, which has been reflected in our results. Every single quarter since our IPO in January, 2023, we've delivered an adjusted combined ratio at or below 92%, top line growth above 12%, and exceeded consensus EPS expectations. We've done this while continuing to diversify our portfolio, de-risk our balance sheet, invest in exceptional talent, and take a leading position in the use of advanced technology and data.
Simply put, we've done what we said we would do. Today's announcement is the next major step forward in the execution of our strategy. Apollo, in nearly all regards, shares our view and has similarly executed their own version of our rule-our- niche strategy. Their focus is and has been on building strong, leading, and defensible positions in niche markets. Their portfolio is nearly entirely additive, with little overlap to ours, and its underlying risks are largely U.S.-based. They have been the definitive leader at Lloyd’s in innovation and technology, and they've built a portfolio that is distinctive from other players in the Lloyd’s market. The other leaders share our commitment to building an engaged talent pool that leans into the future and approaches their business like us, with passion and creativity. The combination of Apollo and Skyward is powerful.
We broaden our specialty insurance portfolio, maintain our principal focus on the U.S. market, add powerful new niches to our business, and increase the technology DNA of our company, all while maintaining top- quartile underwriting returns and diversifying our earnings with fee-based income without increasing the volatility profile of our business. We're also adding just under 300 outstanding colleagues who share our passion for building the preeminent specialty insurance company in the industry. I, along with our entire Senior Leadership Team and the Leadership Team at Apollo, are exhilarated and confident about the bright future we will share together. I'd now like to turn the call over to Mark to provide an overview of the transaction. Mark?
Thank you, Andrew, and good morning, everyone. I would like to begin by echoing Andrew's comments. It's been an incredible journey over the past few years, building Skyward into the company we are today, and the acquisition of Apollo is an exciting, bold, and appropriate next step for our company. It is also very financially attractive. The purchase price of $555 million will be comprised of approximately 2/3 cash and 1/3 Skyward stock. The cash consideration will be funded through committed debt financing. We will pay cash to Apollo's financial investors, but strategic Apollo shareholders and employees will be rolling a substantial portion of their equity, reinforcing long-term alignment through shared ownership. The valuation is attractive, at less than 9 x 2025 estimated EBITDA, and we expect the deal to deliver double-digit operating EPS accretion in the first full year post-closing.
The transaction is expected to close in the first quarter of 2026, subject to customary regulatory approvals and closing conditions. Now, I'll turn the call back over to Andrew. Andrew?
Before explaining why Apollo, let me first address why entering Lloyd’s is a natural expansion for Skyward and our rule-our- niche strategy. It is fair to say that Lloyd’s is the preeminent specialty insurance marketplace, particularly as it relates to U.S. risks. There are classes that are principally written at Lloyd’s, such as political risk and political violence, that are difficult to access in the U.S. In addition, the underwriting talents skilled at writing these classes are concentrated at Lloyd’s. In aggregate, it is the largest writer of U.S. E&S business. There are many reasons why Apollo is uniquely attractive and a natural complement to our business. It is high growth, low volatility, specialty-focused, and has a track record of top- quartile underwriting.
Strategically, it will give us access to highly attractive new specialty niches, including a unique proposition serving the sharing economy, autonomy, and electrification, and other new economy industries. It also provides us leading technology we can leverage across the combined organization to enhance performance. Most importantly is the team and culture. Since late 2023, we’ve partnered with Apollo to win a credit opportunity, and we provided underwriting capacity to both syndicates 1969 and 1971. Working with David and his team up to and over that period, we learned that there was genuine alignment in philosophy, ethos, and simply the quality and depth of talent matched that of Skyward. Financially, the company will see compelling earnings accretion from year one, and the addition of fee-based income will meaningfully enhance Skyward Specialty’s earnings mix over time and provide an option to transition to a more capital-light model.
We’ve already identified considerable opportunities we intend to pursue that will add to the financial benefits in 2027 and beyond. Importantly, we are prepared. We’ve established a strong track record of delivery as a listed company, and our leadership team is deeply experienced in executing and overseeing successful Lloyd’s acquisitions and operating in the Lloyd’s market. We have the experience to realize the strategic and financial benefits of this transaction. Now, let me provide some background on Apollo, the business’s specialty insurance platform operating at Lloyd’s of London. It was founded in 2010 and has grown rapidly, generating $1.3 billion of premium in the last 12 months across two Lloyd’s syndicates: 1969, a diversified specialty insurance syndicate, and 1971, a differentiated new economy-focused syndicate known as ibott.
It has a capital-light model, only providing approximately 1/4 of the capital backing for these two syndicates and derives significant fee income for managing them. Additionally, it acts as the managing agency, generating fees for overseeing several innovative third-party partner syndicates that together write an additional approximately $200 million of premium. The pie chart on the bottom right highlights that, like us, Apollo has a well-balanced, highly diversified book of business. It generates roughly 2/3 of its premium from U.S. businesses, with the remainder coming from the U.K. and other international markets. Apollo has a capital-light model with 60% of its income, excluding investments, derived from fees. Over the last five years, Apollo has been a top- quartile performer at Lloyd’s of London, combining strong underwriting performance with a portfolio that is low volatility.
As you can see from the chart on the left-hand side of slide seven, syndicate 1971, or ibott, is one of the top-performing syndicates across the entire market. I'll talk more about this in a moment. Like us, Apollo is selectively partnering with leading program administrators and also providing specialty reinsurance solutions, but in both cases, at a level that we believe is appropriate and far lower than the average across Lloyd’s. With the addition of Apollo 1969 and 1971, we'll remain focused on the U.S. specialty market, with over 85% of our premium from U.S. clients. As the chart in the bottom left of slide eight highlights, there is less than 5% overlapping premium, and well over 50% of the premium is from new and entirely new hard-to-access niches, including the sharing- economy industries, political violence, product recall, fine art and species , just to highlight a handful.
The global licensing and credit rating of Lloyd’s will add immediate value and accelerate growth in our existing business, for example, to serve foreign coverage needs of our life science clients and broaden our reach and credit. Apollo has a truly distinctive track record of innovation, and they have been responsible for several Lloyd’s market firsts, including launching the first new economy syndicate, ibott, launching Lloyd’s only innovation consortium in which other syndicates support Apollo’s underwriting solutions in categories such as autonomy, launching the first Lloyd’s captive of the modern era with a major U.S.-headquartered global tech client. I’ll note for you that Lloyd’s has expressly identified captives as a critical strategic area of development, and Apollo’s success here is critically important to the Lloyd’s market. Importantly, this combination also advances our position as a magnet for top technology talent.
It further differentiates our technology capabilities that directly support smarter, faster, and more disciplined underwriting and claims decisions, which in turn should accelerate growth, enhance underwriting performance, and drive operational efficiencies. I want to take a moment to focus on ibott, Apollo’s dedicated syndicate focusing on new- economy industries and innovation. Ibott provides platform liability cover to some of the leading operators in industries including the sharing economy, autonomy, and electrification. Over the last five years, the business has grown premium at a compound annual rate of over 40%, supported by strong industry tailwinds, while also consistently delivering a sub-90% combined ratio. A large part of the business’s success has been a unique partnership approach with its customers that we have not observed anywhere else in our industry and aligns with our rule-our-niche strategy.
As our clients are a new economy and digitally native, core to ibott’s proposition is its foundation in data science and partnership to use their clients’ exposure information to craft tailored, often usage-based insurance solutions, as well as identify client-specific loss cost reduction and risk management opportunities. Our diligence has led us to the view that they are one of one in this market and by far the most advanced in having a singular dedicated business consisting of data scientists, pricing actuaries, underwriters, and claims technicians together as an integrated unit. Their clients recognize that their partnership model and the value they deliver is unique, and that’s evidenced by the robust growth and outstanding underwriting results. By adding ibott to our portfolio, we are broadening our underwriting reach into these fast-growing sectors. We are reinforcing our ability to attract top technology and data science talent.
We're adding a unique capability to deploy differentiated data-driven solutions for clients, and we are further strengthening the innovation engine to serve new markets and drive underwriting excellence.
As already mentioned, Apollo will bring significant fee-based earnings and third-party capital support to Skyward. Over the last 12 months, 60% of Apollo's non-investment income came from fees, with the business earning managing agency and performance fees across syndicates 1969 and 1971 and third-party managed syndicates. Combining this with existing fee income streams at Skyward means on a go-forward basis the combined company will generate almost a quarter of its non-investment income from fees. As of today, Apollo provides 27% of the capital in aggregate to Lloyd’s syndicates 1969 and 1971, with long-tenured third-party reinsurers and other capital providing the other 73%. This transaction adds an attractive capital-light fee-based model and provides further optionality to utilize this model as a complement to managing our own U.S. balance sheet.
Apollo is a highly experienced and dynamic team that we look forward to welcoming to our organization. Over the past few years, we've been consistently impressed with the caliber of the senior leadership team, the division heads, and the deep talent pool at Apollo across underwriting, claims, technology, finance, actuarial, and data science, as well as other areas of their organization. Equally important, we've experienced a strong cultural alignment between our organizations. Both Apollo and Skyward operate with flat structures that encourage direct communications and foster innovation through an entrepreneurial approach. Apollo, like us, are talent-led, performance-focused, and have a winning mindset. The cultural alignment will further strengthen and enrich our already outstanding culture and will help drive a smooth integration and provide a solid foundation for our shared success going forward.
Quite simply, the financial case for this transaction is compelling. We are acquiring the business at an attractive value and expect to deliver double-digit operating EPS accretion in the first full year post-closing before factoring in any upsides. We see multiple avenues for value creation, including establishing a U.S. platform for ibott, leveraging the Lloyd’s licensed network to support international needs of North American clients, capturing reinsurance purchasing efficiencies, and optimizing Apollo’s investment portfolio, amongst others. Taken together, these opportunities position the transaction to generate additional substantial long-term value for Skyward shareholders that we expect to begin to crystallize in 2027.
While there's work ahead to fully realize the benefits of this acquisition, our track record demonstrates our ability to execute with precision and at a remarkably high level of performance. At the executive leadership level, Mark, Shakoor, Sean, John, and I collectively bring deep Lloyd’s M&A and operational experience. As a team, we've successfully executed over 20 transactions combined over the course of our careers. Put simply, in partnership with the Apollo team, we are highly confident in our ability to drive meaningful shareholder returns from this transaction. Before we open it up for Q&A, let me reemphasize that the acquisition of Apollo fundamentally amplifies the strategy that we've been executing for five years. Apollo, like us, is a high-growth, top-quartile specialty business that adds attractive new niches, reinforcing our position as a leading specialty insurer.
Their leadership in innovation and technology, like us, is about leaning hard into the future, not the past. Their unique position in serving new economy, new economy digitally- native industries is distinctive and enormously strategically valuable. Their capital-light fee-based model adds earnings ballast and provides optionality for Skyward as we look forward to the future. Financially, the transaction is meaningfully accretive without real consideration for the upsides. We will pursue together beginning in 2026. We're not only adding expertise and scale, we're reinforcing our ability and commitment to attract the best talent with whom we pair market-leading technology in support of building the best specialty insurer, in turn delivering long-term value for our shareholders. Lastly, I'd like to thank my 600+ Skyward colleagues for their dedication and contribution to put us in a position to undertake this transaction.
I'd like to welcome the nearly 300 outstanding and talented staff at Apollo to our bright future together. We're excited for this combination and our partnership. I'd now like to turn the call over to the operator to open up the line for your questions. Operator?
Thank you. As a reminder, if you'd like to ask a question, please press star one one. If your question has been answered and you'd like to remove yourself from the queue, please press star one one again. One moment while we compile the Q&A roster. Our first question comes from Matt Carletti with JMP Securities. Your line is open.
Hey, thanks. Good morning.
Good morning, Matt.
Hey, congrats on the announcement. Exciting day for Skyward. Andrew, you mentioned a couple of times, and I see it as kind of the first item on one of the slides as a lever for creating significant value going forward is kind of create an ibott U.S. platform. Can you talk a little bit about the platform that is ibott today and how that looks? Maybe you could just go a little deeper on what creating a U.S. platform entails and how that might look different than what the business is set up as today.
Yeah, I would say to you, Matt, first thanks for the question and thank you for your kind comments at the beginning. It is an exciting day for sure. What I'd say to you is that the ibott U.S. concept, I don't really think is any material change to their business. Ibott tends to be principally a US-focused business, not entirely, but certainly their largest clients are U.S. The only way they access their business is through the London market, wholesale access points. Yet, some of the business is really served directly by some of the most sophisticated U.S., tends to be Silicon Valley technology-oriented brokers.
There, even during the course of our time in interacting with them, we saw a business that they ultimately did not write, largely because the cost of that business arriving to them versus really what was a sort of realistic price that they could deliver to the market. Yet they have relationships with many of those U.S. brokers that are quite deep and significant that with a U.S. writing entity really would shorten their distribution. I think that that's only in very specific circumstances. I can say Apollo is deeply committed to the Lloyd’s wholesale market. We are talking about technology companies where their model is very different around how they're partnering with them and the way that they're utilizing that data. It's actually quite a bit more conducive in certain instances to accessing that business more closely to the source.
Without even including it in our immediate benefit assumptions, we believe that that's an area that we can go after pretty quickly. It also happens to be that we have a U.S. writing entity, Oklahoma Specialty, that is fully licensed, and yet we have no business in it. Our ability to utilize it for strategic purposes such as this and rebrand it and so forth is very attractive.
Perfect. That makes a lot of sense. Maybe just a second question, if I could, looking at the capital, the capacity providers for the Apollo syndicates and the slide that shows roughly 3/4 is third-party capital and 1/4 Apollo. You made the comment both on that slide, I think, in your prepared remarks about having the optionality to utilize third-party capital to support growth going forward. Is the idea there that you obviously keep that existing third-party capital, but when you say utilize it to support growth going forward, is there potential to expand that further? Is that what you mean by that? If not, maybe you can clarify.
No, that's really the subtext of what I meant, Matt. I think that you've heard this from me. I think that our view is that we are deeply undervalued as a company, and we are constantly looking for ways for investors to appreciate the really powerful underwriting franchise that we've built. If part of that, as we're watching the movements and interests of investors, weighs more heavily towards a capital-light model, we now, in combination with Apollo, have a really interesting capability that previously we did not have. I think that this just goes straight to the point of we are underwriters to the core. Our business is going to be driven by top- quartile underwriting at all parts of the market cycle, but the economic model that sits behind that is now more flexible for us.
If our investors will reward us more through a capital-light model, then we're well positioned to seek that. If our investors would reward us more through being a traditional, fully insured, full-stack model where we're keeping as much of the risk as we possibly can, we have the means to do that as well.
Perfect. I appreciate the answers. Thank you.
Thank you. Our next question comes from Michael Zaremski with BMO Capital Markets. Your line is open.
Hey, good morning, and congrats again on the transaction. Maybe just starting off with a couple of modeling questions. Do we know the shareholders' equity so we can kind of properly calculate the book value and tangible book value?
Yeah, Mike, thanks for the nice comment. Are you asking for the number of shares specifically?
Sorry, what was the shareholders' equity of the company?
Of Apollo, you're saying, what is Apollo's shareholder equity?
Yes.
We estimate that at the end of the year, roughly sort of corresponding with when the transaction will close, it should be somewhere in the $180 million- $200 million range.
Okay, perfect. Also, just based on the double-digit guide in the first full year X transaction cost, what's the dollar amount of roughly, I think, would be after-tax income that you're guiding to in that first full year?
Yeah, we're not, Mike, thanks for the question, but we're not putting out guidance yet. I will refer you to, there's a slide in the appendix that forecasts a full-year view for 2025. I'll leave it to you to the extent that you'll be updating models before we provide guidance next year to sort of use that as the launch point. You'll see that back there, and you can just build your own sort of growth assumptions based on historical performance at Apollo.
Okay, yeah, great. Yeah, I see that slide. I just wanted to make sure we could use that because I know there's some nuances between the managed premium and the earned premium, which I think is a lot, you know, very different. Okay, maybe lastly, higher level, there's been a lot of growth, I think, from about $1 billion to maybe $2 billion annualized in managed premiums for Apollo over the last couple of years. Maybe you can kind of talk about what, you know, is that growth in the sharing economy premiums and what a sharing economy kind of directionally means. Also, I think, you know, the slide at the, there's $2 billion of managed premiums in the slide deck, but also verbiage saying adds over $1.5 billion. I'm not sure if you're suggesting that maybe there's some also managed premium you decide to not renew. Thanks.
Yeah, Mike, maybe after the call, you can follow up with, we don't believe there's a reference to $2 billion of premium in the deck. If there is, that is something that would be a mistake. It is about $1.5 billion of managed premiums. Talking to the growth, I think you have to deconstruct it a little bit into the three pieces. 1969, which I would describe as a sort of a true multi-class specialty insurer, has certainly grown, but I think that a lot of the growth has corresponded to where the market cycle has provided the greatest opportunity. Overall growth has not been quite as substantial as it has in the other two areas I'll talk about. 1971, the growth has been just downright astonishing. In my prepared comments, I mentioned 40% annualized growth.
What's super interesting about that is that a very large portion of that growth is actually same clients, new same clients, and growing exposure. By our estimations, the clients that they're serving through 1971 may be growing by as much as an order of magnitude larger than the client base that would make up sort of our and 1 969's core clients. Just exposure growth there alone drives a very large portion of that growth. The third part, there's roughly $200 million of managed premium in the partner syndicates. Those are chunky. If you just follow the announcements, they manage a large parametric. They announced at the beginning, or just a couple of weeks ago, in partnership with Coface, a Lloyd’s first trade credit syndicate. Those are quite chunky. They'll grow as these new syndicates that they're managing come online.
That's also been a big sort of driver of the premium growth. I would think about the pieces quite distinctly, and I feel quite confident that each of the components is sort of sensible and supported by what is, I think, sensible underwriting across the piece.
Got it. That's helpful. The $2 billion, just to make sure, in slide 18, that's where I saw the managed premium of $2 billion. I wasn't sure if that was apples to apples with slide six, which shows.
That is, in fact, thank you for drawing that to our attention. That, in fact, is a mistake and will be corrected. It should say $1.5 billion of premium, and I'm sorry about that.
No problem at all. I'm happy we flushed it out. Okay.
I'm sorry about that, Mike. Even my own data, but I will follow up. When we referenced the $1.5 billion, it was on a trailing 12 months. The $2 billion for the full year may actually be correct. I will follow up with you to, or Mark will, to just confirm. If we publish that, that actually is probably the right number.
Okay. Just lastly, on the sharing economy and innovation segment, one of your investors asked if there's any color on, you know, is that ride share, or obviously the sharing economy is a much bigger sector than just ride share. Any color would be great. Thank you so much.
Yeah, I mean, I think that when we talk about the sharing economy, it runs the full gamut, right? First off, it is important to note that what they are insuring is the platforms, and the platforms are effectively insured for direct negligence, vicarious liability, those sorts of things. It runs across the gamut, right? It's skills, it's spaces, it's certainly vehicles with and without ownership. It also runs well into micro-mobility, autonomy, electrification. I'll highlight for you on, I think, the slide that talked directly to innovation, the announcement of the $75 million drone facility, which is a market first. It manifests itself in a lot of different ways, but the key thing to note here is that the principal focus there is on platform liability, and the principal place where ibott focuses is in the first access right above where these entities will self-insure.
The reason that's important is that they're really setting the terms for the market, and the market is wholly reliant on them to do that.
That's great color. Thank you.
You're welcome, Mike. Thanks for the questions.
Thank you. Our next question comes from Andrew Anderson with Jefferies. Your line is open.
Hey, good morning. Looking at slide 18 again, and the fee-based income and the projections for 2024- 2025, it seems kind of flattish year over year despite the growth. Is there maybe some just conservatism in how you're thinking about profit commissions? Could you also just help us think about what is the split within that fee base between management and a profit commission?
I can't right now answer the first question behind the assumptions, but Andrew will definitely follow up with you. On the second question, the relative proportion of fee-based versus management, if you could give me a moment, I will pull that out so that I'm not giving you wrong information. The fee-based component is about, it's split relatively equally with the profit commission part of that, the performance-based, just slightly larger for 2025.
Okay. Can you maybe just help us think about within the projections and how 2024 shaped out the overall pricing trends for the company and what loss trends it's booking towards?
Yeah, I mean, the book is so diverse, Andrew, that in aggregate, it would be wrong for me to just give you just a simple number. What I will say to you is that the pricing trends today across, and I'll start with 1969, sort of top view is that roughly about half the classes are at or above a loss- cost trend, and half are slightly below loss- cost trend, or in instances, more than slightly. The pricing strength, which is, I think, one of the really powerful tools that we observed in how they're managing their portfolio, by and large, I think across just about every class except for one, and there are 26 classes in total, including 1971, are starting from positions that are immensely strong, meaning that the earnings power right now is really strong. Pricing aside, the starting point is very good.
In 1971, I would just say straight up that the pricing is at or above loss trend. It's very much a part of, I think, is the way that they run that part of the business. They're very much on top of, with their clients, ensuring that pricing year on year is keeping up with loss trend.
Thank you.
Thank you. Our next question comes from Paul Newsome with Piper Sandler. Your line is open.
Good morning. Thanks for the call, guys. Just a little bit of a follow-up on the underlying assumptions for the accretion expectation. Is it safe to say that we assume some level of both profit and revenue growth that's sort of somewhat commensurate with what they've historically done? It sounds like some of the businesses are very, very fast growing, but some are getting closer to maturity. Any thoughts about that? Just to make sure I know that that's kind of what we should be thinking about.
As I mentioned, Paul, we're not providing guidance for next year, but maybe just to help you and others, you should expect growth for 2026 from Apollo to be not immaterially above our expectations for 2025.
Different question, you mentioned technology several times in the presentation. Any way you could differentiate for us what is really the key advantage here versus what you're doing today? It's still hard for us as outsiders to determine technology relative to the advantages, but any thoughts there would be helpful, I think, and interesting.
Yeah, no, that's a great question, Paul. Thanks for that. The first thing I'd say is that 1971 fundamentally is, it is very much a data science-led approach. It doesn't look like anything else that we have seen or experienced in our careers. They have a partnership-driven model. It's an entirely different kind of orientation that I think is incredibly telling for a different way to serve digitally native new economy industries. I think that whole capability is new to our company and immensely interesting and powerful. I'll say it again, distinct. We have not seen it elsewhere. I think that if you look at the path that Apollo has traveled, particularly on the underwriting side and to an extent on the claims side, it is tending to follow a path that we have traveled with some important differences.
They have a critical partnership with a company that came out of the Lloyd’s Labs called Artificial. That partnership has been critical to how it is that they've built their sort of augmented underwriting model, and it is following very much how we are building ours. I think there are two really powerful differences that we've observed that seem to be things that both we can learn from and deploy into our organization where they're more advanced, and they tend to be around portfolio-level views of the pricing strength and quality of their business because they are quite advanced in deploying quite robust metrics against their portfolio and each risk around those two things.
They have the ability to sort of look at their portfolio and slice and dice their portfolio around those two dimensions, particularly in some classes where I think are directly relevant to our business that are capabilities that would be new to us. If you looked at what's happening at the underwriter's desktop and how the underwriter works a submission, we are following very similar paths as a company, which I find both super positive and reinforcing that we'd love seeing other forward-thinking companies do this. I also believe that from that, there's an opportunity for both companies to take some best practices that we can apply to each other.
Appreciate the help with all this. Thank you very much.
Thanks, Paul.
Thank you. Our next question comes from Mitchell Rubin with Raymond James. Your line is open.
Hey, good morning, guys. Thank you for taking my call. This is Mitch on behalf of Greg Peters. I was wondering if you could provide some additional color on the balance sheet risk you guys will be taking on and specifically how it's going to impact your leverage ratios, like net premiums written to total capital. Thank you.
Yeah, thanks for the question. I think just straight up, if you're asking about loss reserves specifically, which I think is probably where your question is going, their loss reserves are a little under $300 million. I think you'd find the profile of those reserves in terms of the position they reserve to. They're more specific. Apollo targets a range that is meaningfully above a central estimate. While we don't have that same range that we target, we're effectively in a very similar place as a company. You'll also find that their ratio of IBNR to CACE looks a lot like ours. Their seasoning is a little bit longer than ours. Where our liability sort of duration portfolio is 60/40, sort of short and long, theirs is closer to 40/60.
What I would say to you is that we wouldn't arrive at this place having this conversation with you if we weren't highly confident that the balance sheet wasn't in an excellent position. We feel very, very good about that. I think that amongst us, over the course of our careers, we all have enough sort of scar tissue to know that if we can't feel good about that as a first step, then it's probably not a combination that makes sense. In this case, we do feel very good about it.
Great. Thank you for the color. My follow-up, you mentioned on slide 13, there's an opportunity to optimize Apollo's investment portfolio. I was wondering if you could give some details on how their portfolios comprise in terms of risk, yield, duration, and how that might compare to your portfolio and what steps you might take to optimize that. Thanks.
In terms of steps, that's something that we will look into a little bit down the line. The portfolio is pretty simple, aligned pretty closely with ours, a little bit more overweight short-term investments. In the fixed income, it's mostly corporates and govies for the most part. It's in line with ours. Duration is a little bit shorter, but it's very consistent with ours and pretty simple.
Great. Congratulations again on the announcement. Have a good one.
Thank you. Appreciate that.
Thank you. Our next question comes from Michael Phillips with Oppenheimer. Your line is open.
Thanks. Good morning and congrats on this news. I just had one question, actually, a last question here for me. Andrew, it relates to your comments earlier. I appreciate the comments on kind of the more flexible business model at Skyward and how that might be more appreciated by investors and what this could do to your kind of, you know, I'm looking at slide 11 again, to the mix of fee-based versus underwriting. If you look at the business from Apollo over, say, the next couple of years that you'll get from Apollo over the next couple of years, would you expect that 60/40 split to kind of be maintained, or are there pieces that you would rather keep to the underwriting side yourself?
Thanks for the question. David Iverson is on from London. He's on his way to Monte Carlo here shortly, where he'll be gathering with a bunch of other folks, including a number of the capital providers to Apollo. I think that the general thinking is, having 25% of the risk is a good number as a company. The question earlier, I forget which person had asked it about a better view of the fees relative to the portion that is underwriting or profitability-driven versus other fees, brings to this effectively just the reinforcement that whether you're participating directly as a capital provider or not, you're tied to the underwriting outcomes, which is the way it should be in all situations.
I think that the general thinking is that's probably a good level that we will plan from simply because it seems to fit well and align with the expectations of the longstanding, very tenured capital providers that Apollo has that they partner with. I don't know, David, if there's anything more you might want to add on that, but if you're able to offer a couple of additional thoughts, that'd be great.
Andrew, I think you summarized it really well. The balance between our own line and that of third-party capital is important to them and to us, and at the moment, we think it's optimal.
Okay, no, thank you guys both. Appreciate it.
Thank you, Michael. Appreciate it.
Thank you. Our next question comes from Mark Hughes with Truist Securities. Your line is open.
Mark, are you out there?
Mark, if your telephone's muted, please unmute.
Operator, if there's another question, we can go to that and come back to Mark.
I'm showing no further questions at this time. I'd like to turn the call back over to Natalie Schoolcraft for any closing remarks.
Thank you, Michelle, and thank you, everyone, for your questions and for joining us today. We appreciate your time and continued interest in Skyward Specialty. We look forward to keeping you updated on our progress in the integration of Apollo as we move forward. Thank you again for your participation and have a wonderful day.
This concludes the program. You may now disconnect.