CEO Robinson: Timing of Skyward IPO was a “smart bet”
After spending the second half of last year waiting for a window to go public, Skyward Specialty CEO Andrew Robinson told The Insurer TV that the decision to move forward with its IPO last week was based on instinct and a desire to focus on post-Ian opportunities in the insurance sector.
The specialty carrier listed on Friday in an upsized IPO, with its shares closing up 27 percent on the first day of trading.
Speaking to The Insurer TV from the Nasdaq MarketSite, Robinson shared his views on the listing, market conditions, the longevity of the E&S boom, Skyward’s individual story, and whether the specialty carrier could offer a read-across for others in the sector looking to go public, among other topics.
According to Robinson, Skyward had been ready to list publicly since the middle of last year, but stayed patient amid an historic surge in inflation and interest rates that put downward pressure on financial markets.
“We have been ready to go public since mid-2022, [but] the capital markets backdrop was obviously absolutely awful. Every time we thought there might be a window where we could go, we concluded that it wasn't the right time.”
“And there [were] really two things that converged: one was obviously just a decision to take the risk and go at the beginning of the year,” Robinson said. “And there wasn't a lot of good data to support it; it was as much about instinct.”
“And the second is that, in the third and fourth quarter, particularly post-Ian, there was a lot of disruption happening in the market - not just in cat.”
“And you sort of looked at those two things together and we just concluded that, quite honestly, we needed to get focused on our business, with all of our management taking advantage of the opportunities being presented to us.”
“And so at some level, it was a bit of a bet. I think it was a smart one, as it proved to be, but there was no set of data that said the timing now would have been the right time. It just seemed to have turned out that way.”
IPO high-water mark of Skyward turnaround
Skyward’s public listing last week marked a major milestone in the firm’s turnaround under Robinson. After the executive joined as CEO at the height of the pandemic in mid-2020, he immediately set about exiting underperforming lines and bringing in a major influx of talent.
“It's been very intense,” Robinson said of the three-year overhaul.
“There's a lot of things that we did, but the first thing was just to try to get our business portfolio right,” Robinson explained. The CEO called the work done to improve underwriting performance a “continuous journey”, but argued: “We got that right very quickly.”
Robinson also cited Skyward’s “huge investment in talent” as another pillar to the turnaround, where overall headcount has modestly increased to 450 from 360 when Robinson joined, but notably, the executive said about half the current workforce has joined the firm in that period.
“So we haven't grown our employee population, [but] we've aligned our talent to what we're doing as a business,” Robinson explained.
Potential read across for other specialty firms
Skyward’s turnaround and public listing has drawn parallels to other specialty firms that were either launched, re-capitalized or re-booted in some other form during the pandemic. But when asked whether Skyward’s public listing could offer a read across for other specialty companies looking to go public, Robinson demurred.
“I don't know if what I've learned is generalizable to other companies. What I can say is that we obviously presented our story,” Robinson said.
That story centres on Skyward being “really truly specialized”, with Robinson pointing to the firm’s mantra of “ruling its niche”, while also calling out Skyward’s investments in technology and talent as competitive advantages.
“We're very much about great underwriting talent and great claims talent. So, the technical side of our business is sort of the lead,” Robinson explained.
He then added: “We use technology to augment what we do and, and I think that that presentation of our company to investors was particularly compelling. And, I think they saw in us the potential for a company that is a very investable company, not just today, but one that is positioned to be very successful over the long term.”
Robinson refrained from making direct comparisons between his firm and other privately-held specialty insurers, but did say the competition was good for the market.
“I can't speak for other companies, but that's certainly what connected investors into our story.”
He said Skyward was making decisions it felt was in its best interests, and expects the CEOs of other specialty companies to manage their businesses similarly.
“If your competition is stronger, it makes you better, that's great for us,” Robinson said.
“Strong competition is a good thing. A group that is high performing, highly valued, is great for us. It elevates if you have a group that you can compare yourself against, and [if] they're high performing, that's terrific as well.”
No reservations about going public
Robinson was asked whether he had any reservations regarding taking the company public at the current juncture, when significant macroeconomic uncertainty has given other firms across industries pause.
“No, because the way we think about our business, we identify with a small number of companies who are highly valued, who have consistently demonstrated they're durable, they deliver terrific underwriting results at all parts of the cycle, and the capital markets obviously value those companies,” Robinson explained.
“And so what [we’re] looking at is, ‘how do I be like them?’” the CEO said, while referencing the famous quote from hockey legend Wayne Gretzky about anticipation: “I want to skate to where the puck is going, not where the puck is’,” Robinson philosophised.
“If I let the attention of the folks who have not been treated well by the capital markets - oftentimes because of underperformance - drive our thinking, well that sort of risk aversion is not only inconsistent with what we're trying to do as a company, but it also will stand in the way of the kind of success that's available to us,” Robinson said.
“And I think that one of the things that we've demonstrated is we just push right through that stuff and don't let that kind of fear drive the Northstar of what our company uses as the way that we are moving our business forward.”