KNSL - Earnings call transcript Q3 2018 | Kinsale Capital Group, Inc.

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Operator

Before we get started, let me remind everyone, that through the course of the teleconference, Kinsale'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 would cause actual results to differ materially. These risk factors are listed in the company's various SEC filings, including the 2017 Annual Report on Form 10-K, which should be reviewed carefully. The company has furnished a Form 8-K 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. to which can company's is www.kinsalecapitalgroup.com. GAAP the found website of release, press available reconciliation these be measures in at A at the would over the CEO, I to President Mr. Kinsale's and conference like now to turn Kehoe. Michael Please go sir. ahead,

Michael Kehoe

quarter, who over in Haney discuss manage within commentary deliver in smaller Kinsale We to and market With carefully accounts costs maintain to place to competitors provide coverage Brian highlights I'll then process Kinsale's management on Thank Bryan combines competitive control today underwriting our a low to market. pass outlook. like and strategy minimize surplus accounts. part some market, and We target do Haney, like the will lines provide the Petrucelli, attractive you, the discipline we After we market even hard enabled for to parties. with today. to the and excess to outsource the and who Officer. usually Petrucelli external have recap absolute returns and the claim Officer; our calls and are unlike stockholders on quarter our Chief Financial over call underwriting we underwriting begin me the we the inaccuracies in functions to not we Operating morning claims of process, which E&S will in focus growth those Chief technology some quick Operator, financial handling good Brian and and these We the review everyone. with Kinsale's Kinsale's introductory Bryan comments,

drive strategies Kinsale's loss attractive All ratios. of these

and expense every combined of an handling our healthy storm combined low winner proprietary the a culture, operator comments is over discipline The larger costs activity. time. with In addition competitors. enormous many A Kinsale underwriting owner in-game on of with combination recent operates of an and claims business technology automation with advantage because couple

measure approach, expose property limit margins volatility what are order we catastrophe that business Kinsale book specifically the but recall, and you conservatism compelling of we in and the business a reinsurance the business strict we to of we limits I'm robust area, rates in As disciplined a regularly course of think in about one any with line, of of model geographic program. fairly so talking the concentration underwriting on the do buy

As and Kinsale's consequence appetite recent been experience with our approach, of this catastrophe has consistent our both expectations. a risk

that, $X for losses Hurricane $XXX,XXX And pretax. current with to the going to Bryan current pass call the million Florence about are I and are estimates Michael Our am about estimates loss Petrucelli. over

Bryan Petrucelli

expectations. Increases operating and a is results by combined net income quarter largely company's demonstrate income Thanks in XXX% of and million $X.X earnings reduction losses of increased million compared $XX.X year. were believe third $X.X in million to market ratio third with XXX% XX.X% XXXX, in increase a investment the an reported the in income quarter to $XX.X the net earnings Net are over XXXX. effective of increase in the cat by XXXX, driven last third in tax income rate. our Mike. in a model competition. cost for reported periods of low our The of million particularly continues for quarter intense price for strength leader We line the the and the that We to quarter net operating

XX.X% The company nine for of XXXX of the last months four third generated Our XX.X% compared income and quarter Reform included million to ratio $X.X of Act. ratio meaningful points of the cat ratio net the million impact in $X.X compared nine no to to XX.X% tax income compared development increased XXXX. year. equity return year. XX.X% to contributed primarily for the a on quarter our and points favorable The combined first the cat reserve mid-teens combined lower compared and losses however prior-year guidance to rate quarter months last of loss the operating underwriting activity XX.X% was There in third of XX.X last for of Tax first combined points Annualized for XXXX effective of XX.X% the was X.X to year. to year due line XXXX, last with and

activity in million be third the increase First a and generated a written increase to from in in representing over lines premiums were business. an will give of And bit. continue little of detail on Brian XXXX, underwriting $XX.X that XX% across quarter most overall Haney a more

increased the per investment to year. Brian income side, and $X.XX to to investment $X.XX Basic and over million Haney. EPS pass and last $X.X as $X.XX portfolio for for growth over investment million X.X% rising diluted share interest returns in the $X.X X.X% were last of respectively On last gross I'll Annualized share increased XX.X% years. continued quarter result With per by that, net third investment it rates. quarter the compared from both from year to of

Brian Haney

Thanks Bryan.

As year mentioned the of the the but quarter robustly. first earlier, all for higher which than is one liability divisions all two grew XX divisions property our in management healthcare premium The grew quarters third Allied and grew. rate XX% commercial of the

XXXX. where XX% Submissions increase Overall XX of had quarter the divisions over for a quarter were to is and was quarter. indicator third and look in the good this XX% at the Our majority up business submissions. up business vast strong pace. our growth submission as going leading We positive a of the at for continued the third

to by Given we where looked the rates appropriate. push up growth easier has been come to have

various business in do have was number all we in as market a to heterogeneous state. boil movements but be difficult to it's rate that, down had X% to of transitional range. continues very the the say to to mix single the number a so The X% We we’d a somewhere

much. areas so Some Allied are other health definitely auto like and firming areas commercial some not experiencing

narrow years, the some program which few in past to noted tends the benefit. there in stress As our is we to space

programs the give and to in to see we are we and parties, don't business poor results ourselves programs or in few competitors when of out more are next results tend coming the experiencing suspect we underwriting more poor space industry continue program to years. I the will at up opportunities some authorities third shutdown. While shed see having do

that We expect results and even continue we to feel position. good the perhaps about more continue of about and growth competitive good appropriate in to rate the our that where we're state are press is taking market and Submission good. do regard, and to accelerating,

which on come the our to us turn and back it And our allow with better opportunities folks out We get that, internal over to continue get capitalize way. improvements make that to more processes in out incremental Mike. faster them I'll to should

Michael Kehoe

questions queue. in Operator, we’re Brian. for now Thanks any the ready

Operator

And Instructions] Hughes from comes of our [Operator Mark SunTrust. from question line first

You may begin.

Mark Hughes

buckets out The break the name the XX% submissions, if growth new wholesalers, kind terms coming in relationships I that of in could the you with anyway penetration of from people wonder it? to it’s you just

Michael Kehoe

it’s so one or it to say out segment. break widespread, would not class into it’s I very

products it Some it just of traction more is producers just producers of new the from with getting but already and have? we is certainly from coming coming most

Brian Haney

failry pretty - E&S market well. growing as good tell part that’s I the of well a so just clip at it is now as I’ll think

Mark Hughes

at in end would low done unusual range this I you lower this the level range. still expense going the that back area a is forward, recent is was XX. XX% of the quarter but higher would quite it the should The ratio you think end go quarter anything the see good good How at or to

Bryan Petrucelli

is some there Mark quarter-to-quarter always say would I variability natural on expenses. from

probably is I expectations. our XX% loss line that think to or ratio in XX% XX.X% with

think the you're quarter those quarters I some lower of little seeing third were XXXX. what of in that particularly

have of variable did those comp for a negative losses have activity, we the would If quarter. remember that sort the impact cat you we booked and some on

So I you're what that's there. seeing think

Mark Hughes

to Florence, the about pretax you make And Michael, have million that exposures $X meaningful? could as what impact talk Michael that on from there then you more opposed

Michael Kehoe

insurance all It's business. personal

personal communities. southeastern basically homes the coastal Our targets insurance manufactured from

and was insurance exclusively our for consistent it event again with of size plan appetite. risk the personal loss us. a our was But So, business the

Operator

our line Schmitt comes William from from of the And question next Jeff Blair.

may begin. You

Jeff Schmitt

been is time. for growing obviously - using here and is are there growing a a rate high Aspera big now states it some that now? has book rate many at at that How how high pretty

Michael Kehoe

at think we growing I clip years in in states, is were a book good because The part and ago of Couple South we're Florida geographically. two expanding Carolina.

in top premium Now teens continue a have I dozen somewhere Mid-Atlantic. footprint terms we're we so. have the And head can in off I my up the low-to-mid at don't to of we business - this Texas think but probably volume. right, numbers the you geographic from the to of the year And expect grow. there or to

Jeff Schmitt

maybe quarter, mix versus much ratio up loss of then at that, basis what's discuss just in how in driving last shift you to looking underlying changes you one business big the points the any underlying And trends? close seeing XXX can are is

Michael Kehoe

I when Yes, our higher. is current from accident exclude year referring ratio, you're slightly you loss to think prior periods changes

feel general, in think the very the about we good I of profitability business.

in we're the pretentious trend about conservative But The in general would you years I the reserve attribute they're in concerned. put very so favorably to very be always our how that take set try - general is I account feel we're But So always cost conservative we pricing. enough would in general executing into that reserve. high is but think say in the strategy, bulk. lost develop over numbers steady that it there's no I inflation goal likely to very looking up to we to there that we ahead know and we good to

Jeff Schmitt

the quick just for year-to-date. XX% And quarter, the rate, one tax on XX% one

there you a guidance had change think XX%, like or…? in there guided more at to is all I

Bryan Petrucelli

changing I wouldn't say guidance.

thing predict going are and that's whenever you vary and stock one that exercised, from get think a there tax is I any options quarter-to-quarter. difficult to benefit that's do to

I think to guide heightened level exercises going of - good the is option be stock the if little there of a lower. it's obviously XX%

Operator

Capital Dwelle And comes question Markets. the our RBC of line from Mark next from

You may begin.

Mark Dwelle

mine but covered quick just numbers a kind Couple have been of already question. of

that premium this is On some, little retention mix some there lower than is fundamental the or net-to-gross more timing or bit just change? quarter

Michael Kehoe

have cover. property a That's look you our mix primary level that up a limits. We our business We off the it cover then of casualty kind where we high we cat of business, put medium if of on on larger And risk keep where casualty, the business. we seed of fairly some excess our a percentage all a lines and net. at see premium

quarter-to-quarter So as shift no bit movement see to little change a a of there's bit but in strategy. little the mix going you're

Mark Dwelle

function a the a as to migration remarks growth a view And of of times course economy E&S E&S lots commented whatnot? that from versus new just market the of growing. primarily standard and business just about various of the in and risk a and of markets you of Would you the kind stronger a couple construction

Michael Kehoe

both it think right. I

typically business will I from commercial trend where standard with the XX% ago in month nonstandard of P&C back went the a strong ago market. a the businesses XX.X% market nonstandard they or report lot that So road. XX period over the came and today. A.M. about think of you to that in X% lines formations, Thinking of or start years market taking market Best the XX about And the I a in market can they where year economic the is But migrate growth E&S period. is surplus share look away a down market about from the excess there out think long-term new if

at So expense flow. year steady long and it’s you not it of the market other every of although ebb the does one growth a know

Operator

from Mark line question And of comes the from Hughes our next SunTrust.

may You begin.

Mark Hughes

auto, interesting in you? it close pricing Allied commercial hardening little and of might more in get update the how perhaps commercial category. You pricing possibly When us about be just auto health an talked give the could for

Michael Kehoe

I answer, it’s we’re those we at time, mean and products commercial and but there to the getting all not some definitely are new there are definitely question Tough to yet. of auto looking products related

Mark Hughes

how you XX%, XX%? away far speaking roughly How are

Michael Kehoe

It’s I'd tough XX%. answer, why not to say

Bryan Petrucelli

over dramatically for losses in the the in just commercial amount mean of couple shambles there's reaction hey a market of is auto years Typically in abysmal rates when last have up I industry. opportunity. moved to

years monitor something it three the specific I we think don’t have were we out to throw a but we’re we today, again a lot closer time. all is than number ago,

Mark Hughes

on a - And XX grew think very those. different then one divisions more Where growth and said XX you could you out areas? in mention touched of the you seeing you I of quickly again few were

Brian Haney

are We mean is pretty widespread. up a got pretty divisions pretty So growing property, Allied pretty health lot liability of commercial well, significantly. management that well. growing it is I

Our growing excess is pretty counts in well, obviously those well. Aspera current pretty

Operator

questions turn like this for speakers time. I'm call I further remarks. to closing to And at the the back you. Thank no showing

Michael Kehoe

just you we on in Okay, us the to few to well call forward again joining for want And look down road thank months. I the today. everybody a talking to

Operator

thank Ladies and you conclude participating does in program. for the today's gentlemen, conference. This

all disconnect. Everyone may have You great a day.

Kinsale Capital (KNSL) 2 Nov 182018 Q3 Earnings call transcript