Earnings call transcript: Kinsale Capital Q3 2025 earnings beat forecasts, stock dips

Kinsale Capital Group (KNSL) reported stronger-than-expected financial results for Q3 2025, with earnings per share (EPS) reaching $5.21, surpassing the forecast of $4.80. Revenue also exceeded expectations, totaling $497.5 million against a forecast of $379.72 million. Despite these positive results, the company’s stock fell 6.68% in after-hours trading, closing at $422.38, down from $452.60.

Key Takeaways

• Kinsale Capital’s EPS of $5.21 exceeded expectations by 8.54%.
• Revenue of $497.5 million surpassed forecasts by 31.02%.
• Stock price declined by 6.68% in after-hours trading.
• The company reported a 24% increase in operating earnings per share year-over-year.
• Kinsale continues to expand its product lines and invest in technology.

Company Performance

Kinsale Capital demonstrated robust performance in Q3 2025, with a notable 24% increase in operating earnings per share compared to the previous year. The company also reported an 8.4% growth in gross written premiums and a combined ratio of 74.9%, reflecting strong underwriting performance. The book value per share increased by 25.8% since the end of 2024, showcasing the company’s financial strength and operational efficiency.

Financial Highlights

• Revenue: $497.5 million, up significantly from forecasts.
• Earnings per share: $5.21, up from $4.20 in Q3 2024.
• Combined ratio: 74.9%, indicating efficient underwriting.
• Net investment income increased by 25.1%.
• Nine-month operating return on equity reached 25.4%.

Earnings vs. Forecast

Kinsale Capital’s Q3 2025 earnings per share of $5.21 exceeded the forecast of $4.80, resulting in an 8.54% surprise. Revenue also outperformed expectations, reaching $497.5 million compared to the anticipated $379.72 million. This positive earnings surprise continues the company’s trend of surpassing market expectations, although the magnitude of the beat was larger this quarter.

Market Reaction

Despite the earnings beat, Kinsale Capital’s stock declined by 6.68% in after-hours trading, closing at $422.38. This movement contrasts with the broader market trend and may reflect investor concerns about future growth or potential competitive pressures. The stock remains below its 52-week high of $531.79, suggesting some investor caution.

Outlook & Guidance

Looking forward, Kinsale Capital expects 10-20% growth over the insurance cycle, driven by continued expansion of product lines and technological advancements. The company is also anticipating a gradual decline in other underwriting expenses and remains focused on efficiency and technology. Future guidance includes potential increases in share repurchases and dividends.

Executive Commentary

CEO Michael Kehoe emphasized the company’s competitive edge, stating, "We’re hardwired to compete and win in this environment." He highlighted Kinsale’s commitment to controlling underwriting and providing top-tier customer service. Kehoe also noted the favorable development of reserves, reflecting the company’s conservative approach.

Risks and Challenges

• Market Competition: Increasing competition from new MGAs and fronting companies could pressure margins.
• Rate Stabilization: Declining commercial property rates may impact future revenue growth.
• Expense Management: Rising expense ratios could affect profitability if not managed carefully.
• Economic Conditions: Broader macroeconomic pressures could influence market dynamics.
• Technological Integration: Successful implementation of new technology projects is crucial for maintaining a competitive edge.

Q&A

During the earnings call, analysts inquired about growth opportunities in casualty, transportation, and agribusiness sectors. Management expressed confidence in these areas while acknowledging the challenges posed by new market entrants. The company reiterated its focus on maintaining a low-cost, technology-driven model to sustain its competitive advantage.

Full transcript - Kinsale Capital Group Inc (KNSL) Q3 2025:

Conference Operator: Good morning, and welcome to Kinsale Capital Group’s Third Quarter twenty twenty five Earnings Conference Call. All participants are in a listen only mode. After the speakers’ remarks, we will conduct a question and answer session. As a reminder, this conference call is being recorded. Before we get started, let me remind everyone that through the course of the teleconference, Intel’s management may make comments that reflect their intentions, beliefs and expectations for the future.

As always, these forward looking statements are subject to certain risk factors, which could cause actual results to differ materially. These risk factors are listed in the company’s various SEC filings, including the 2024 Annual Report on Form 10 ks, which should be reviewed carefully. The company has furnished a Form eight ks with the Securities and Exchange Commission that contains the press release announcing its third quarter results. Kinsale’s management may also reference certain non GAAP financial measures in the call today. A reconciliation of GAAP to these measures can be found in the press release, which is available at the company’s website at www.kinsalecapitalgroup.com.

I will now turn the conference over to Kinsal’s Chairman and CEO, Mr. Michael Kehoe. Please go ahead, sir.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: Thank you, operator, and good morning, everyone. Brian Petrucelli, our CFO Brian Haney, our President and COO and Stuart Winston, our EVP and COO, Chief Underwriting Officer, are joining me on the call this morning. We announced some management changes last night, the most significant of which is Brian Haney’s recent election to the Board of Directors and the announcement of his retirement and new role as Senior Advisor beginning next year. We congratulate him on his election and are encouraged that he will continue to have a prominent role in the governance and direction of Kinsale. Brian and I have worked together for almost thirty years at three different E and S companies.

He was one of the original founders of Kinsale and has made tremendous contributions to our success over the almost seventeen years we have been in business. It’s been a great run. And needless to say, we are fortunate that he will continue contributing to Kinsale as a Director and as a Senior Advisor with a focus on investor communications. I’d also like to congratulate Stuart Winston on his promotion to Executive Vice President and Chief Underwriting Officer. Stuart and his team have delivered some of the best underwriting results in the industry, so this recognition is well earned.

And under his leadership, we have great expectations for continued profit and growth in the future. In the third quarter twenty twenty five, Kinsale’s operating earnings per share increased by 24% and gross written premium grew by 8.4% over the 2024. For the quarter, the company posted a combined ratio of 74.9% and a nine month operating return on equity of 25.4. Our book value per share has increased by 25.8% since the year end 2024, and our float has increased by 20%. E and S market conditions were steady in the third quarter, generally competitive with our growth rate varying from one market segment to another with our overall growth rate at 8.4%.

Our commercial property division premium dropped by 8% in the third quarter compared to a 17% drop in the second quarter. The overall third quarter growth rate, excluding our Commercial Property division, was 12.3. And Brian Haney is going to provide some commentary on the market here in a moment. Kinsale’s disciplined underwriting and low cost business model is a consistent winner in an industry where the customers are intensely focused on cost. As the E and S market has become more competitive over the last two years, Kinsale’s efficiency has become a more significant competitive advantage by allowing us to deliver competitive policy terms to our customers without compromising our margins.

Likewise, in a moment in the P and C cycle characterized by loose underwriting standards, sales control of its underwriting process and superior data and analytics helps deliver consistent and attractive results. And with that, I’ll turn the call over to Brian Petrucelli.

Brian Petrucelli, CFO, Kinsale Capital Group: Thanks, Mike. As Mike just noted, we continue to generate great results with net income and net operating earnings both increasing by 24% quarter over quarter. The 74.9% combined ratio for the quarter included 3.7 points from net favorable prior year loss reserve development compared to 2.8 points last year, but less than a point in cat losses this year compared to 3.8 points in the third quarter of last year. We continue to take a cautious approach to releasing reserves. Gross written premium grew by 8.4% for the quarter, while net earned premium grew by 17.8%, which was higher than the gross written premium due to an increase in retention levels upon renewal of our reinsurance program on June 1.

We produced a 21% expense ratio in the third quarter compared to 19.6% last year. Higher expense ratio is attributable to lower ceding commissions generated on the company’s casualty and commercial property quota share reinsurance agreements as a result of the higher reinsurance retention levels that I just mentioned. On the investment side, net investment income increased by 25.1% in the third quarter over last year as a result of continued growth in the investment portfolio generated from strong operating cash flows. Kin sales float, mostly unpaid losses and unearned premium grew to $3,000,000,000 at September 30, up from $2,500,000,000 at the year end 2024. The annual gross return was 4.3% for the first nine months of this year and consistent with last year.

New money yields are averaging slightly below 5% with an average duration of three point six years on the company’s fixed maturity investment portfolio. And lastly, diluted operating earnings per share continues to improve and was $5.21 per share for the quarter compared to $4.2 per share for the 2024. And with that, I’ll pass it over to Brian Haney.

Brian Haney, President and COO (Retiring), Kinsale Capital Group: Thanks, Brian. First, let me say it’s been an absolute honor and privilege to have worked at Kinsale for the last seventeen years. There’s no better E and S company in the business and there’s no better group of people to work with. Kinsale has come a long way from those first days in 2009 when we were just starting out with Brian Petrucelli, Mike, myself as well as Bill Kenny, Anne Marie Morrison and Ed Desch, who I see is on the phone call today. I’m grateful for the opportunities I’ve been given by Mike and the Board over the years.

I’m proud to have played whatever part I could in the success of Conseil. It’s a tremendous honor to have the opportunity to serve on this Board so many talented directors whom I’ve worked with over the years, and I’m really pleased that I will continue to be associated with this great company. And I’m very confident in our future. We have built an amazingly deep bench. We have great young executives like Stuart and many others like him.

The investors should rest assured that this company is in great hands and will continue to be going forward. With that said on to business, the E and S market remains competitive, as Mike said, though the intensity varies by division. The shared and layered commercial property continues to be very competitive, but it appears we hit an inflection point sometime early in the third quarter or perhaps late in the second where the rate of decline is abating. When you look at all the property business in total, including the small property, agribusiness property and inland marine, the book actually grew in the third quarter. In other areas, we’re seeing the most growth in commercial auto, entertainment, energy and allied health.

Although the market is competitive, our model of low expenses and absolute control over the underwriting and claims handling works well in any market. I would argue it works better in a competitive market because it makes our expense ratio more telling. Also, the fastest growing participants in the market today are largely fronting companies whose risk bearing partners must contend with expense ratios often double Rs or higher, and that math isn’t going to work out for them. Submission growth was 6% for the quarter, which is down from 9% in the first quarter. That decline is driven by our commercial property division.

Pricing trends are similar to the AmWin’s index, which reported an overall 0.4% decrease. Commercial property rates are still declining, but we feel we have reached that inflection point, as I mentioned, where the rates are rate declines are stabilizing. And I expect we will see rates in the commercial property market moderate going forward. Overall, we remain optimistic. Our results are good.

Our growth prospects are good. And as the low cost provider in our space, we have a durable competitive advantage that should allow us to continue to gradually take market share from our higher expense competitors while continuing to deliver strong returns and build wealth for our investors. And with that, I

Michael Phillips, Analyst, Oppenheimer: will turn it

Conference Operator: back over to Mike.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: Thanks, Brian. Operator, we’re now ready for any calls in the queue

Ryan Tunis, Analyst, Cantor Fitzgerald: or call’s questions.

Conference Operator: Our first question will come from Bob Huang from Morgan Stanley. Please go ahead. Your line is open.

Bob Huang, Analyst, Morgan Stanley: Good morning. So Brian, congratulations on the new role and the retirement. But just maybe if we go into the your business outside of commercial property, can you maybe comment on where you think the future opportunities would be, especially given it seems like there’s a little bit of a growth deceleration for the quarter? Just kind of curious outside of commercial property, what are the areas that you think that are very attractive for you? And what are the areas you think you want to pull back a little bit?

Brian Haney, President and COO (Retiring), Kinsale Capital Group: Well, I think we’ve got opportunity across the whole book. I would say some of our newer areas that we’ve developed recently would be the transportation segment and the agribusiness segment. But I think there’s still a great opportunity in casualty. And then some of the other property related lines, I think there’s still a great opportunity. High value homeowners and our personal lines is an area we’re putting a lot of emphasis into.

We think that’s a great opportunity. So I think it’s really widespread. There’s a lot of different places we can grow.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: Yes. For the quarter, all of our property lines, except for the large commercial property division, all the other property focused lines grew at a double digit clip. So I would reiterate what Brian said. We’re pretty confident.

Bob Huang, Analyst, Morgan Stanley: Okay. Got it. No, that’s very helpful. Thank you. My second question is with regards to technology, obviously that’s one of your core competencies here, but just curious if you can give us a little bit of color in terms of new tech innovation and implementation into the business.

And then just curious as to how you’re incorporating emerging technology into your business and where are the areas you feel that would be advantageous for Kingsdale going forward?

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: Well, Bob, this is Mike. We’ve when we started the business seventeen years ago, we talked about making tech a core competency of our company alongside of the underwriting and the claim handling. And I think we’ve done that. We built our own enterprise system over the years, took a long time. And about two or so years ago, we started what we call target state architecture, which is a complete rewrite of that entire enterprise system.

It’s an enormous undertaking, but it kind of puts us in a position to really speed up the implementation of new technologies and whatnot. So that target state is an enormous project. We’re always enhancing and expanding our product line. That involves our technology department. We’ve been making ample use of the new AI tools that have come out both in our IT department as well as underwriting and claims trying to drive automation in our business process.

So I mean there’s a million ways, but I think it goes a long way to explaining why we’re able to operate at such a significant cost advantage over our competitors. And I think a lot of it is, hey, we’ve got a really well designed enterprise system specifically for our company. We don’t have legacy software going back twenty, thirty, forty years. We don’t have thousands of legacy applications. I think we’re just in a really attractive spot.

Bob Huang, Analyst, Morgan Stanley: Okay. Got it. Really appreciate it. Thank you.

Conference Operator: Our next question comes from Michael Phillips from Oppenheimer. Please go ahead. Your line is open.

Michael Phillips, Analyst, Oppenheimer: Thank you. Good morning. I wanted to

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: touch on one line of business, construction liability line. I’m curious was there any change in assumptions in that segment that affected your current year loss pick? I don’t know that there were any changes there specifically. We do a quarterly review of our loss reserves by stat line of business and that goes we’re in our, I think, sixteenth accident year. We’ve got about a dozen lines of business.

So there’s a high degree of complexity in that analysis. It could very well have picked up some adjustments in the construction, but I just don’t know off the top of my head. I think in general, we feel great about the quarter. I think our losses continue to come in below our expectations. There’s a little bit of variability in the loss ratios when you roll everything together.

And I think that’s normal. But again, we feel really positive about the loss performance. Okay. Thank you, Mike. And then second one would be on your Excess Casualty segment.

Maybe could you talk about that segment, what you’re seeing? Is there any growth opportunities there? And what you’re seeing maybe for loss trends in that segment?

Ryan Tunis, Analyst, Cantor Fitzgerald: Thank you.

Stuart Winston, EVP and Chief Underwriting Officer, Kinsale Capital Group: Yes. Michael, this is Stuart. We’re still seeing good opportunities in excess casualty. Rates are holding strong. We’re seeing some pressure in the market at the high excess attachment points where those are being more attractive for various competitors, but that’s typically not where we play.

We’re typically in the lead or the first $10,000,000 most of our placements. So there’s still a good opportunity for growth and rates are holding strong where we participate in the market.

Ryan Tunis, Analyst, Cantor Fitzgerald: Okay. Thank you, Stuart. Appreciate it.

Conference Operator: Our next question comes from Mike Zaremski from BMO Capital Markets. Please go ahead. Your line is open.

Mike Zaremski, Analyst, BMO Capital Markets: Hey, thanks. Good morning. Just going back to casualty, but broader brush on the on all casualty ex property, obviously, kind of your core business. You saw a bit of a sequential decel in premium growth there. Any color you can offer on just the state of the marketplace, casualty specific pricing, you talked about MGAs in the past as well as it’s still just as competitive?

Thanks.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: I’ll start Mike and then I’ll maybe get Stuart to make a few comments. But I would just remind you that we write casualty business across many specific underwriting divisions, each one focused on a different industry segment or coverage. And they never move in tandem, right? There’s always variability as you go from one area to the next. But in general, I think things are still going well.

Stuart Winston, EVP and Chief Underwriting Officer, Kinsale Capital Group: Yes. The long tail casualty lines, we’re seeing moderate competition, but there’s a lot of rational actors out there with the adverse development over the last couple of years in the market. But there’s segments like areas like excess casualty, social services and the allied health group that are still really strong and the market will experience some dislocation. The same with premises liability, so general casualty, entertainment, groups like that, it’s still a very strong market there for growth.

Mike Zaremski, Analyst, BMO Capital Markets: Okay. I mean, I guess, that’s very helpful. If we look at the cash flow trend, that’s still kind of it’s decelerating from a growth perspective. I’m not saying growth we want profitability, not growth. But is your view you shared your view that in shared layer, things are becoming less negative, I guess, a pricing standpoint I’m assuming.

Do you think the casualty is also getting less competitive or it will remain increasing competition will remain kind of impacting the top line?

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: Mike, it’s Mike again. I would say we’re in a very competitive period in the insurance cycle. Again, it varies a little bit division by division. But I think the you’ve seen over the last two years the Kinsale growth rate has kind of come in from kind of an extraordinary 40% rate this quarter high single digits. I think we’ve reiterated many times that over the cycle we think 10% to 20% is a good conservative estimate of our growth potential.

I think that’s probably the best commentary we can offer. I mean, it’s a diverse product line. It’s a very competitive market. We’ve got a very competitive business strategy with the control we exercise over our underwriting. It drives a more accurate process.

And then when you look at the cost advantage we have over competitors, it’s extraordinary. So I think we’re in a great spot. We were encouraged that the growth rate going from the second to the third quarter ticked up from 5% to 8.4%. Brian Haney highlighted the fact that if you took the commercial property out, that put us in the low double digits. Admittedly, was down from went from 14% to 12%.

But to me, that’s just kind of normal variability quarter by quarter. I wouldn’t read too much into that two point decline.

Mike Zaremski, Analyst, BMO Capital Markets: Okay. That’s helpful. And just sneak one last one in, part of your I think part of your special sauce, I believe uniquely allows Ginsale to, I guess, maybe not need to pay profit share commissions to some of your broker partners. Is it ever a consideration especially in more competitive times like today to rethink that strategy or that’s not on the table?

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: The profit commissions are typically associated with delegated underwriting, right? So many companies, in the SME area, aren’t able to handle the volume of transactions internally or for whatever reason, right? It’s very common to outsource underwriting to MGAs and MGUs. And I think a lot of companies try to put some sort of profit or growth contingency into the compensation mix for the broker in order to better align incentives. We’re not in that space and we’re not considering it.

Our business model is to control the underwriting, provide the best customer service in the industry. I think we also offer the broadest risk appetite. So a lot of the business we write falls out of the delegated or binding programs that are in the marketplace. So really for those reasons, no, we’re not considering a change in our compensation model.

Mike Zaremski, Analyst, BMO Capital Markets: Thank you.

Conference Operator: Our next question comes from Mark Hughes from Truist. Please go ahead. Your line is open.

Mark Hughes, Analyst, Truist: Yes. Thank you very much. Congratulations, Brian and also Stuart. Thank you.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group0: Thanks Mark.

Mark Hughes, Analyst, Truist: Current accident year loss ratio was up a little bit. Was that mix? Was that competitive pressure? What would you say that was caused by?

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: Mark, I would just kind of write that off to normal variability. The overall numbers are phenomenal. The reported losses are coming in below expectations. We’re always trying to be cautious with our reserving. You can look around the industry.

There’s a lot of examples of companies that are too optimistic in their loss reserving. We never want to be in that group. So candidly, I would look at the loss performance as good news. Admitting admittedly, it was up a couple of points. But to me, that’s just normal kind of variability.

Mark Hughes, Analyst, Truist: Brian, Petracelli, the ceded premium at 17% and then the expense ratio at 21% given the kind of the reinsurance structure at this point, the ceding commissions, are those reasonable starting points for the next few quarters?

Brian Petrucelli, CFO, Kinsale Capital Group: I think so, Mark. So it’s the first full quarter that we’ve had with the new reinsurance terms. So it’s a pretty good match for you. I would say mix of business is always going to drive a little bit of variability in that. But I think as we sit now, that’s as good a guess as you can we can give you.

Mark Hughes, Analyst, Truist: Yes, very good. And then one final question. The state E and S data in some of the coastal states, Florida, Texas, New York, it looked like your growth is a little faster there kind of implying that maybe in other states growth was a little slower. Is that a correct perception? Is there anything we should read into that?

Are the non coastal states perhaps a little more competitive? There anything to think about there?

Brian Haney, President and COO (Retiring), Kinsale Capital Group: Mark, this is Brian. I wouldn’t read too much into it. We know exactly how those numbers are calculated and we don’t do anything to try to match them up with our own data. I think it’s better to look

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: at those state tax numbers over a number of months. I think there’s a little bit more credibility the further you look back.

Mark Hughes, Analyst, Truist: Well, if we put those numbers to the side, would you say there’s any sort of dynamic where noncoastal, the kind of those traditional E and S states, New York, California, Texas, Florida, are they are you seeing more opportunity there perhaps than elsewhere? Or would you not see it that way?

Stuart Winston, EVP and Chief Underwriting Officer, Kinsale Capital Group: No. I think it’s stayed relatively the same since Martin Stewart, relatively the same since we’ve been in business with those obviously, the Corie and S states are going be the largest bulk of our business. But I haven’t seen a mix in that change in that.

Mark Hughes, Analyst, Truist: Very good. Thank you.

Brian Haney, President and COO (Retiring), Kinsale Capital Group: Thanks, Mark.

Conference Operator: Our next question comes from Andrew Anderson from Jefferies. Please go ahead. Your line is open.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group0: Hey, good morning. I think maybe five to seven years ago, you kind of had talked about how there were certain areas you don’t write like public company DNO or trucking. Maybe just bigger picture, are there pockets that five to seven years ago you did not write and now you’re kind of rethinking that and perhaps see some new opportunities for growth?

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: Well, there’s a bunch of examples. We’ve made a bigger push into homeowners. We started an agribusiness division. We started an Aviation division, Ocean Marine. We’re always enhancing the product line.

Stuart Winston, EVP and Chief Underwriting Officer, Kinsale Capital Group: Yes. We’re always looking at new products. It’s not that we don’t write that. We want to write it on our terms and our pricing to maintain our margin. So if you look at commercial auto, we write a lot of auto adjacent, wheels adjacent business, but we will look at some small fleets at tighter tarp.

It’s just not the large trucking schedule. So we will take a look at these accounts, but it’s going be a little more controlled.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group0: Got it. And on the net commission ratio, about 10.5% in the quarter and recognizing there were some change to reinsurance, but the direct commission was pretty much unchanged. But if we go back a few years when the mix was more tilted towards casualty, it was kind of in a 12 to 13% range. Could we see it getting back up to that level? Or are there some offsets within there that might help keep it maybe around 11% or so?

Brian Petrucelli, CFO, Kinsale Capital Group: Again, I think the 10.7% is as good a guide as we can give you. If we did have change in mix of business, you could see that move around a little bit. Whether that goes up to 12% or 13%, who knows. But I think the best guide we can give you is what we have here for this first full quarter since those agreements have been in place. Thank you.

Conference Operator: Our next question comes from Andrew Kligerman from TD Cowen. Please go ahead. Your line is open.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group1: Hey, good morning. Congrats to Brian and Stuart. And first question is on the net reserve release of $10,000,000 or 3.7 points. Just curious as to what the kind of mix on that was short tail versus casualty and maybe on the casualty side vintage. Just kind of curious on the breakdown of that release?

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: Andrew, this is Mike. I would say without getting too specific, the last couple of quarters, maybe even the last two years, including this quarter, most of the release the releases have been disproportionately on our first party business, so short tail business like property.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group1: Got it. Okay. And I’ve been noticing when talking to some of your competitors, some of them starting up micro and small, maybe even mid businesses. But I’m seeing a lot of micro and small startups in the E And S area. Could you talk a little bit about maybe the number of competitors you’re seeing in that area versus say three years ago?

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: I think we have more competitors today than three years ago, but it’s not just insurance companies. There are hundreds and hundreds of MGAs that have started in the last several years. There used to be one fronting company. Somebody told me the other day they’re now 30. So it’s a lot of capital has come into the industry and there’s just a lot more competition that reflects that and that’s certainly not new.

I mean, it’s always been a cyclical business and we’re hardwired to compete and win in this environment, I think.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group1: Got it. And the last one, in your commentary, you talked about rates in property. I heard the word stabilizing. I heard moderating. Could you possibly put some numbers around where rates were in property?

I think you said that it started to inflect at the end of the second quarter. Maybe where were rates early in the second quarter going? And maybe where are they now? Just to kind of get some numbers around that commentary.

Brian Haney, President and COO (Retiring), Kinsale Capital Group: I don’t have the exact numbers in front of me. Would have said it was double digits in the second quarter down. If I had to guess now, I’d say it’s probably single digits down.

Ryan Tunis, Analyst, Cantor Fitzgerald: I think Let’s call it high digit.

Brian Haney, President and COO (Retiring), Kinsale Capital Group: Let’s call it high single. I don’t have it in front of me, so that’s just an absolute speculative guess. But I do get the sense that, at least in the part of the market we’re in, you have seen that inflection point, and I would expect to see that trend continue. But I think it’s going to normalize relatively quickly.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group1: Thanks. Thanks for the insights.

Conference Operator: Our next question comes from Ryan Tunis from Cantor Fitzgerald. Please go ahead. Your line is open.

Ryan Tunis, Analyst, Cantor Fitzgerald: Hey, guys. Good morning. Guess just a follow-up on the underlying loss ratio. It sounded like you attributed kind of the two point year over year increase to just normal variability. Does that imply that we’re not yet seeing pressure on that ratio coming from property lines?

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: No, we’re not seeing pressure on our loss ratio from property lines because we’ve over performed in property. That’s why a disproportionate amount of the reserve redundancy has come from the short tail lines like property. We’ve had great experience on property and I think that’s a tailwind. I think where we’re being more cautious and it’s not because we’re seeing any kind of negative trend. It’s just that on long tail casualty, there’s a higher degree of uncertainty.

It just takes time for those accident years to mature. And coming out of a period a few years ago where we had a significant uptick in inflation, all sorts of supply chain disruptions with COVID. We saw some of our long tail lines develop a little bit higher and a little bit later than we would have anticipated. And starting several years ago, we’ve addressed that with much more conservative loss picks. And so we’re maintaining that conservatism to make sure that we always have more than enough.

We want our reserves to kind of develop favorably year by year. And when that happens, it just has a very therapeutic effect on the financial performance of our business.

Ryan Tunis, Analyst, Cantor Fitzgerald: Got it. That makes sense. And then I guess just a follow-up on the property. Yes. I guess it makes sense naturally that there’d be less pricing pressure in the third quarter simply because there’s fewer like Florida certain layer renewals.

I mean to what extent is the improved pricing environment just sort of a function of seasonal mix, if you will?

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: Well, I’m going to start by just saying, we didn’t say it improved, it deteriorated at a slower rate.

Brian Haney, President and COO (Retiring), Kinsale Capital Group: Yes. I would characterize it more as rates were going down so fast that the faster rates go down, the quicker they’re going to normalize because the industry can’t go around giving double digit rate increases indefinitely. And I think we’ve reached that point where you’re starting to you saw that second order derivative turn positive. So I don’t think it’s based on the third quarter being less hurricane

Ryan Tunis, Analyst, Cantor Fitzgerald: intensive. Got it. Thanks for the answers.

Conference Operator: Our next question comes from Joe Tamayo from Bank of America. Please go ahead. Your line is open.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group2: Hey, good morning guys. Most of my questions have been answered, but I guess the first question Tom speaking about, I appreciate the submission rate was decelerating a bit to commercial property.

Brian Haney, President and COO (Retiring), Kinsale Capital Group: If we exclude commercial property,

Michael Kehoe, Chairman and CEO, Kinsale Capital Group2: has the submission rate kind of remained steady or has that also kind of decreased along with the ex property premiums?

Brian Haney, President and COO (Retiring), Kinsale Capital Group: It’s closer to around 9% excluding commercial property.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group2: Okay, great. Thank you. And then the other question just thinking about I saw you guys kind of stepped up the share repurchases this quarter from the $10,000,000 from the previous ones. Just kind of thinking was that just more opportunistic where you saw the share price going or is that more

Ryan Tunis, Analyst, Cantor Fitzgerald: of a

Michael Kehoe, Chairman and CEO, Kinsale Capital Group2: function of lower growth and a lot the cash flow? I know you guys have mentioned before about kind of keeping the business kind of efficient with capital.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: I think it’s the latter Joe. We’re generating mid teens ROEs on a year to date basis and I think our year to date growth rate is high single digits. So we’re definitely producing a lot of excess capital. And our first goal is always to grow the business. And then secondarily to that, last couple of years, we’ve been looking at a very small dividend and a very small share repurchase.

But I think both of those could continue to grow.

Ryan Tunis, Analyst, Cantor Fitzgerald: Great. Thank you, guys.

Conference Operator: Our next question comes from Pablo Singzon from JPMorgan. Please go ahead. Your line is open.

Michael Phillips, Analyst, Oppenheimer: Hi. Good morning all and congrats Brian and Stuart. So first question with premium growth having slowed, how do you think about other underwriting expenses over the next one to two years, right? So I think over the past several years, that’s been a good story. But given that growth has slowed, are you managing that line to sort of trail the growth in premiums?

Or just given where you think opportunities might lie, there’s a chance that you might see some degradation as you’re building out new opportunities?

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: I think we have always worked like crazy to be as efficient as we can as a business given the industry that we compete in. And I think the other underwriting expenses will gradually come down over time as we drive productivity gains in the business through technology, etcetera. I don’t think it’s going to be sudden, but I think a gradual decline is what investors should expect.

Michael Phillips, Analyst, Oppenheimer: Okay. And then guess second question also related to expenses, right? So clearly, think sales and expense advantage over the rest of the industry. I’d be curious to hear your thoughts about whether or not you’re willing to trade some of that expense ratio to generate higher premiums and underwriting income and I guess even if that trade is possible to begin with, right? Or are you sort of happy with the current configuration of pricing, profitability and volume?

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: Look, I mean, I think there’s just a clear recognition that the customers we serve, principally small business owners are intensely focused on limiting how much money they spend on insurance. And so we’re doing everything we can to be as efficient as possible to give them competitively priced insurance policies, but also to protect our margins. So I don’t see an advantageous trade where we would deliberately raise our costs, become less competitive and somehow that’s going to net a better opportunity for our company.

Michael Phillips, Analyst, Oppenheimer: Okay. And we’re going continue Mike, go ahead. Yes.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: I was just going say, we’re going to continue to work do everything we can to be the efficient insurance provider in the E and S space.

Michael Phillips, Analyst, Oppenheimer: Got you. And then just one small one. On reinsurance retention, do you think that could go up again in the next couple of years or you don’t see any change from current status quo? Thank you.

Brian Petrucelli, CFO, Kinsale Capital Group: Yes. Again, I think what you’re seeing this quarter is our best guess. Now if we had some dramatic mix of business, it could move one way or the other.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: But our retention has changed many times over the years.

Brian Petrucelli, CFO, Kinsale Capital Group: It has, yes.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: Right. We’ve taken a bigger net position over and over again and that’s just consistent with our growth as a business.

Michael Phillips, Analyst, Oppenheimer: Okay. Thank you for your answers.

Conference Operator: Our last question comes from Casey Alexander from Compass Point. Please go ahead. Your line is open.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group3: Yes. Good morning and congrats to Brian and Stuart, particularly to Brian on his retirement.

Brian Haney, President and COO (Retiring), Kinsale Capital Group: Am sure that’s something that we

Michael Kehoe, Chairman and CEO, Kinsale Capital Group3: all look forward to. So, not to beat a dead horse, but Brian, I am particularly taken by your comments that property rate decline is stabilizing simply because in twenty years of covering property in the Southeast, particularly in the Southeast U. S, when you have a year like this, it has a particularly low level of cat activity, at least up to date, fingers crossed, right? You never know what happens in the month of November. It tends to attract alternative forms of capital that see very low loss ratios and think that they can get into the business and they tend to get into the business in commercial, because it’s quicker than residential and it’s irrational.

I just wondered, does that not concern you that you’re possibly going to see alternative capital in 2026 enter the property market and leading with some irrational pricing structures?

Brian Haney, President and COO (Retiring), Kinsale Capital Group: You might be right. I was kind of referring more to the dynamics in the third quarter. Who knows?

Mike Zaremski, Analyst, BMO Capital Markets: Okay. Thank you.

Conference Operator: We have no further questions in queue. I’d like to turn the call back over to Michael Kehoe for any closing remarks.

Michael Kehoe, Chairman and CEO, Kinsale Capital Group: All right. Well, we appreciate everybody joining us and look forward to speaking with you again here in a few months. A great day.

Conference Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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