Kinsale Capital Group, Inc. Q1 FY2025 earnings call

• Operating earnings per share increased by 6% and gross written premium grew by 8% in Q1 2025. - Combined ratio was 82%, annualized operating return on equity 22.5%. - Palisades wildfire loss estimated at $41M gross and $22M net of reinsurance. - Commercial Property division faced 18% premium decrease due to competition and rate declines; excluding it, direct written premium grew 16.7%. - Personal lines and small commercial property teams grew double-digit. - Investment income up 33.1% due to growth in investment portfolio. - Expense ratio 20%, consistent with prior year. - Property-related divisions shrank by 8% while the rest of the company grew 15%; casualty growing, professional lines competitive but still grew.

In the first quarter of 2025, Kinsale's operating earnings per share increased by 6% and gross written premium grew by 8% over the first quarter of 2024. The company posted a combined ratio of 82% and an annualized operating return on equity of 22.5%. The Commercial Property division, the largest underwriting unit last year, saw an 18% decrease in premium due to intense competition and rate declines. Excluding the Commercial Property division, Kinsale's direct written premium for the quarter grew by 16.7%. Personal lines and small commercial property teams continued to grow at double-digit rates. The investment portfolio generated a 33.1% increase in net investment income, with new money yields averaging in the low 5% range.

• Growth in premium was 8%, slightly below expectations. - Expect Commercial Property division to be a headwind in Q2 but less so in H2 2025. - Expect incremental share repurchases, with opportunistic larger purchases. - Confidence in continuing to grow and take market share with disciplined underwriting.

• Intense competition in large property account space, including from standard companies, MGAs, etc. - Fronting companies with high loss ratios that may not be sustainable. - Potential degradation in underwriting quality exacerbating top line concerns. - Impact of macroeconomic factors like tariffs on construction liability and building costs.

Q: Dan from BMO Capital Markets asks about 11% submission rate breakdown between property and casualty.

A: Brian Haney says commercial property has biggest decline, rest of properties still strong.

Q: Bill Carcache from Wolfe Research asks about confidence in sustaining underwriting performance.

A: Michael Kehoe says confident in business model, conservative balance sheet, and reserves.

Q: Andrew Andersen from Jefferies asks about loss trend on property and casualty lines.

A: Michael Kehoe says it's due to mix of business and reported losses.

Q: Pablo Singzon from JPMorgan asks about large commercial property pricing.

A: Michael Kehoe says prices down 20% on average, attracted more capital.

Q: Casey Alexander from Compass Point asks about California market opportunity.

A: Brian Haney says there's opportunity in personal and small commercial in California.