KNSL - Earnings call transcript Q1 2022 | 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 could cause actual results to differ materially. These risk factors are listed in the company's various SEC filings including the 2021 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 it's first 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 will Kinsale's over I the CEO, and Mr. to turn now President conference Kehoe. Michael go sir. Please ahead,

Michael Kehoe

Thank you, Welcome first conference quarter morning, to our call. And operator. good everyone.

Kinsale's couple you Bryan quarter proceed and own environment to the business growth on comments in year. market expert tailwind operation, ratio have. seeing premium The growth CFO; the for increased E&S years strong together of first A written the high XXXX of you technology-driven the raise in and and at The the operating a Adding market was then unusually combined opportunity Petrucelli, and As remain course any further remain which and by is that company the particular, tailwind and rate grow with and quarter E&S combination COO of up next XX.X%. an best-in-class questions allow the Kinsale's may favorable strategy, few Haney, for know, us annualized the profit the make earnings in and rates first of a been allowing to ahead. low-cost creates quarter XXXX, an favorable growing years. Kinsale, me. over joining XX%. have a a deliver in both increases and really what gross to quarter powerful a confident we and We will that our XX% for level. are creating by unique They premium the handling, is business this return-on-equity for our last of underwriting to claim same is Kinsale's for Brian XX% operating will the each posted quarter XXXX continuation of a the of premium over performance

boosting the them, like durability on out not do a less claim just our around have systems benefits course, own automated now accurate driving which of parties real that and and our Beyond to visibility turn on controlling that, advantages that to relying gains, our little not core broader I'll do and the competitive the and and to handling, have for all ratio we contributes more service, on specifically market, various technology, competency owning superior it, underwriting that third-parties; core function returns. have from our we and Petrucelli. it's we process building and secondly, visibility external our low a our contracting flow to and call own underwriting but business over believe highly customer productivity robust we data, expense Bryan

Bryan Petrucelli

equity favorable from million ratio and generated $XX $XX compared up last to of cap underwriting on development losses loss quarter XXXX a prior first from income written our to values level gross reserve premiums company year, reported The X.X earnings, in income last very first periods. perform for by the year, business operating and the XXXX, for last favorable compared ratio net million The the at quarter being increased both due primarily slightly million $XX.X year XX%, by points million $XX $XX Mike portfolio. of a to Mike. high with with last to from X.X million the of to to included Thanks, growing Net mentioned. continual from net points We the combined approximately XX% $XX.X impact year. conditions excludes unrealized XX% market continues on losses which down million negligible combined of XX% The quarter equity due for fluctuations year. just of

for quarter, fixed continues company scale quarter that again, ahead with continues to the ability us to environment. higher XX.X% our interest securities to and rate from our XX% We ratio losses are year, cash last environment share last excluding faster income year. [ph] million for new operating was growth X.X% invest X.X% the compared for year positive Haney. in guidance. gives over the per by the lastly, interest to expenses. cash ultimately of returns rate economies share due on resulting last unrealized growing compared last $X.XX hold the quarter and year. the portfolio. mid-teens these approximately return-on-equity the $X year benefits per $X per diluted to of for a the generate and earned investment cash primarily operating that, for operating Operating benefit which share premiums increased to was to to company The over some strong our have expense equivalents XX% Book upto to higher maturity, flows Annual money yields; securities allows was X.X% than from first decreased Net from the value quarter this result income pass $X.XX the us at investment it quarter Brian the gross earnings long-term. million I'll as And investment the better by With continued over of

Brian Haney

Bryan. Thanks,

the in in and fourth the further exposed hurricane earlier, saw grew up market, mentioned the XX% hardening Gulf in first XX% quarter. As premium states. in property quarter, particularly in the Atlantic areas from We

general the the that average. with that [ph] acceleration increasing Also, by are change in in in which generally in the where fastest has are the fastest, digits We as up, the first driven up activity past to was reason quarters. grew gradual rate low moderating Beyond economic in raise by of by helped aggregate saw high carriers particularly and Growth tends the bases casualty submission rates several inflation. weighted Exposure we not by other the we reopening growth; The that, strong and areas are economy. is quarter, book marine first been overall property in are the it consistent some during reported the our is commercial in going was double the rates growing the the significantly divisions. teens. seeing our quarter, inland

and have monitoring further press in events loss prolong of carefully now. a of our pan the market combined it's control from our our fact cause in being we than to in industry, significant that navigate inflation cost to are competitors more in hard earlier effects which strategy in conservative XXX% had for may of over the peers economy on are increase are increases as trend that much company with approach. means business. Clearly, that, to. With noting admitted technology, and in authority through our our will to are so Also, work in that and we And disruption technology. understand rely time underwriting, our margins out. abrupt hand a that inflation our not in massive low that than worth have it than ahead more do inflation serve ratio much protect our supply our more write the The our is delegate The several that likely trend that market. money was with reserving, the people rate to We the and current to Again, exposed These insurance better transitory position of well position some or the quickly competitors. peers take the E&S been necessary many and I'll many would who loss react achieving of more we the business threat and the the of will again, superior back expense going to we results. years book, to be what prognostications processes longer who it have good cautious a pain data situation with with Kinsale a Mike. as economic efficient we of nimble underwriting the increases higher the on cost quarter. antiquated over happy is And our thought

Michael Kehoe

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

Operator

of comes Our Instructions] [Operator Hughes from from first the Truist. line Mark Certainly. question

please. question, Your

Mark Hughes

Yes, thank you. Good morning.

Michael Kehoe

Mark. morning, Good

Mark Hughes

seen the on size, you Anything policy have much there? change average

Michael Kehoe

target like quarter of is any or bit, could like as is a but that think our depending little rate XX,XXX clearly, on around very still in general, that; accounts, to something In small medium-sized mix I helping it premium modestly. strategy shift the is be may average well. our business up the size to

Mark Hughes

mentioned Yes. ceded that? primary the issue The year-over-year; a ceded property I premiums, You a just is how impacts is don't influencing focus there excess points of for you; the ratio versus a down that's that few whether premium know an or

Michael Kehoe

see yes. just we policies that. than The we in the primary mix excess the of it off business; Yes, casualty keep more

the is that. to impact So going mix

increased. If retentions incrementally you're year-over-year, our comparing have

So...

Bryan Petrucelli

that quarter Yes. think in too, there Mark. some year first I last reinstatement And premiums we booked were the

Mark Hughes

Okay.

it? more of keeping to have so Is you say the about business your And that think way increased, just retentions the yourself.

Michael Kehoe

of in retention, kind -- in Well, incremental reinstatement years, change yes. if things has the of I those business, all our number you year-over-year the last look year, obfuscate mix could guess, been There back comparison. of the your retention; premium a so adjustments

Mark Hughes

in -- did talked then about Brian, I you -- gradual say And think submissions? Yes. you acceleration

Brian Haney

Yes.

Mark Hughes

Okay.

continue that's so of quarter, you kind first And see through the to acceleration?

Brian Haney

higher the the Yes. growth in rate About fourth than in the submissions the was rate first in marginally growth quarter. quarter

Mark Hughes

relevant. business you make Yes. -- casualty rate detail more Any markets that -- about you're any on your front? property, other might seems And then you're more mentioned observations point or commercial the lines very you after other is end general any marine, -- that getting going

Brian Haney

in mean, as rate. little that a divisions but and core I do most pockets grow the may say grow I the growth we -- be say is of case is like the widespread. would what like has grow faster while slower, of very No. or And now, I'd been most just there for steady our quarters. those that here there

Michael Kehoe

And now. then of couple years consistent, Mark, really, been the that's last

Mark Hughes

market. the you And any know talked I yes. frequency, then more; with your deal to are signs severity, it, one in inflation how any -- claims you've about hard tools book? you've the got about But that but of Yes. anything Yes, prolongs inflation, seeing

Michael Kehoe

yes, of in I'd claims, mean especially settlement. that's two we're adjusting I we when comment building and cost materials property inflation, being are; The trends Yes. whatnot; see right, factored do all on the

that the those driven to to by loss the system. disruption a trends I trying trends mean. as are question that's we reported to offset yes, the in question real would the I the around inflation [ph] slower now more than at come And losses moment, is have we is lower continued has IVNR play interesting higher little reopened courts And if say, COVID core they're probably whether in have those a So in there's losses the a losses revert because expected. there's the reported trend think whether the principally to throughout of and continue reported case, largely and the being with have again real. kind catch up; which would now

to future, And them approach so then don't, of But they of I waterfall our of that some year year. we investors we very extra with we're a prepared like sheet. in for confidence a kind lot the and that. do always have think to our should conservative after reiterate out reserving, we will If balance to that in take redundancy

Mark Hughes

very much. you Thank

Michael Kehoe

Thanks, Mark.

Operator

you. Thank

of Our from the next question Singzon line JPMorgan. Pablo comes from

question, Your please.

Pablo Singzon

Hello.

So booked you close of through absolute similar in of type pace your terms it's think quarter? highest million one see rate the or terms absolute growth you that a this in I an our whether growth year, of the was the unusual premium with measured in Was about do versus continuing there business of remainder on to last the gross anything percentage? Or year. $XX basis recent history;

Michael Kehoe

write Pablo, hospitality Brian a casualty portfolio. across in seeing we're highlighted property Marine, would of where a couple premises area, bit seeing lot say our growth of good liability, the we're and the is the a Mike. general divisions growth; apartment we business, type stronger this that where I little but

the have last think quarters, to we it growth does but the positive some XXs. remember to trying very several look quarters; optimistic little comments about quarter, volatility of to a don't fourth rate we I'm was that obviously, you in going If bit very back you're specifically growth forecast in really several it. we've the see feel made And our the the rate overall, next growth I about and the market

Bryan Petrucelli

XX%.

Michael Kehoe

Yes.

grew we XX% the fourth at in quarter, in So XX% the first.

for and E&S in a take working volatility of allow advantage you but that, think market them. to times general, to have these are extraordinary of like in bit we're really the really little hard I

Pablo Singzon

pattern prominent business less renewing the a half. quarter? a if that any distinct Understood. first was accident ratio in was this function you then there your loss in versus present or of the was similar XXXX half lower margins, second expect turn little a ratio in pattern year maybe It I -- XXXX, -- specific in a in And is also the to where quarterly loss where do but ratio the year as

Michael Kehoe

is is, course Yes, it there any impact the general, cats the the reported accident year, a we I of -- including those beginning of most of relying It's would of door; [ph], went the at policies we're best -- in maybe ratio say brand-new assumptions can losses, number don't have the of given out say type at we a things that have just to year, as really no loss indication that real stage to a year. well, this we're conservative year, thing. on the -- actuarial over just the right. way you don't But

and becomes can the etcetera. in year the that more react As third part year year, loss you obviously, get towards pronounced you the year, second activity; to the the and fourth reported later of

Pablo Singzon

Yes.

words, there more picks maybe in that loss right, other your is you're fair? flexibility picks to loss what Is -- Mike, in that the So is accidental year, later adjust saying?

Michael Kehoe

Yes. to see that do the there We expected, expected, cautious or pace, is year than even the losses which at part as I year. than end early develop loss you the a of said highly -- think I they're more we're assuming the the would at think little likely better of conservative

Pablo Singzon

And Okay, have understood. more I then here. two

mentioned double I think pricing as you low increasing digits.

today, environment a where two loss see trends in ago? any I or the moving, guess, versus change quarters Given quarter you

Michael Kehoe

products at going take sort up. roll to of a underlying of the net probably to I'd right mean, exposure-based net mean, the while to prices of obviously, now, through. underlying we're I is X% we're going so X% inflation trends, trend, say covering I and

think So, cost rate of -- still of excess trends. increases we're in I in loss we're excess achieving the

Bryan Petrucelli

about, very several for to lot we position attention think a we And it's it. but now respect -- something concerned to and have been so with pay we're it's a I comfortable again, years; in inflation, we're of

Pablo Singzon

at it. And last slower for submissions past comment seems submissions -- me, disclosure the actually have then a on growing over in rate. your at region looking been growing the was Got but find I the K. It like I

was it was XX. on 'XX, based high year-over-year, seems it in think in quarter. I So they're it But first like your XX% growing in 'XX teens comments, the

of in growth And growing that think that; this weren't will be that in is there that driving you an So do inflection as lines much you basically maybe year? before? level in what's it

Bryan Petrucelli

expected and growth what really don't settled that We If that like of forward. think out bottomed think prognosticate is that; submission the kind we're I But in getting and and the all more the this happened, past in see of lockdown more we to submission the going guess. little growth I speculate teens. the COVID probably what lot was you rate run the and returning a I'd and normal, the say low our effect kind areas, where when and will now that ripple of submissions saying lockdown bit my got some I created COVID so be more start to of that so so the out, industry kind of effect to actually economy you're is a where

Michael Kehoe

But be volatility to number around. in it either, it wouldn't some does unprecedented bounce that see

Bryan Petrucelli

that's right. Yes,

Pablo Singzon

Got it.

answers. Okay. your for Thanks

Michael Kehoe

Pablo. Thanks,

Operator

from line Instructions] the next [Operator question Our Point. Casey Alexander of Compass from comes

please. question, Your

Casey Alexander

available-for-sale. wondering, may was can to this an with kind with even back you percentage space what And fixed I and know morning. characterized fixed of the don't, it just portfolio of good what maturity is that the price as if Hi, portion par? of of the to arcane not me it. relative do of the Yes. on And seemed question, the portfolio, you come available-for-sale average is you like But you; the portion have -- income portfolio, you

Brian Haney

front it the I answer XXX% second on To that get have to for have do of of first part I in you back sale. me. not available is the question. is to

Casey Alexander

much. my That's you. Thank very great. question. Okay, Thanks only

Michael Kehoe

Thanks, Casey.

Operator

you. Thank

Our from follow-up Mark the Hughes of next Truist. question line is a from

Mark, on mute. Your be you question, please. might

Mark Hughes

Mike, mute, on the a I'm be there's apologize. talked and maybe of about was competitors going competitive aggressive Yes, your sorry. would program or about a little either in topic on front. Any that past, I behaviors on too be Lloyd's reckoning you've updates also helpful. being observations Any to some

Michael Kehoe

in in successful other at companies the are a with are are been Yes, period time, think of of that market where than a around And there of period many I've lot said no those the quite updates it's in not. for a underwriting business the are there a I number have but we're delegated growth that being there's a -- fronting lot a transacted, programs assist underwriting past, authority there's and that. delegated that huge long of

so real -- where we and that space a of but quickly. last And there go is if MGAs, with change -- lot of usual. of compete it's have, volatility, year; will, the kind we business in in programs always you can amount rather so come mean, I a ways, certain no some But in as

Mark Hughes

the give You you a certainly XXXX I about think level? still expected. some we and in to -- at than losses with, wonder COVID had that frequency. if a that perspective on reported could if in here coming know, start I we decline of depressed how you And are walk you XXXX kind XXXX then wonder trajectory. us saw the slower in mentioned developed could when just through

Michael Kehoe

percentage way recent that P pull more look the think most incurred the of for that, look our is lines business, statutory see to Schedule accident I Mark, loss at higher at the of years. you'll our you statement least if at think information; at and in best is I a our total IBNR

perhaps the accident it's reported activity years. down, by a reported year out in hey, this And seeing slowdown temporary, right now, kind loss was up. to really of but as those that's well come of if you're come we're if before, losses, quantify, know the This realizing for the has bounce perhaps like were the then, year is will IBNR it's I in think component of I to not. -- has loss positioned to it the some point way gone right, that trying redundancy make We the we're think don't I benefit doesn't, hey, back future. not

Mark Hughes

in similar saw least to Is at XXXX you what XXXX starting out front? on be that to

Michael Kehoe

Yes.

is 'XX the we've what I last and think similar seen XXXX 'XX. in to

Mark Hughes

very Thank much. you Okay.

Michael Kehoe

Mark. Thanks,

Operator

you. Thank

Our question from the from follow-up of a next is line Singzon Pablo JPMorgan.

Your please. question,

Pablo Singzon

taking follow-up. Hi, thanks my for

So, are your your you guess, how could several income portfolio net benefit over interest the is. years? higher rates, than able is much your of new where to offer next some It seems like estimate yield already I money yield from investment higher

Brian Haney

would closer What the our Pablo, X% now. I new the I I fourth in think probably Yes. to and say, in was yield range, quarter, it's X.X% somewhere think money

Pablo Singzon

Got it.

I Okay. guess will And the trickle of just in. sort benefit

duration So think X is X no I your change... to assuming about right? years,

Brian Haney

Right.

Pablo Singzon

Okay. And then one for me. last

Thanks. perspective, debt higher little will confirm but capital interest on your growth? be issue plan be to this just the but a capital. to is rates a now, can later if still it you, material will year of sort from to fund suppose I thinking don't you Just the think I

Michael Kehoe

Pablo, I you don't ask... got Did think we that.

Pablo Singzon

Sorry?

Michael Kehoe

got distracted we sorry, I'm your... with Okay.

Pablo Singzon

Yes.

Michael Kehoe

Can me question? and just a you repeat do favor the

Pablo Singzon

what there. sorry happened Oh, sure yes, that. not I'm about Yes, yes,

suppose are confirm debt interests but be still is the can but So plan this so you, And growth? okay, a higher I don't I later to perspective, Thanks. to think it -- I material capital [ph]. to year just issue fund from will

Michael Kehoe

Okay.

Operator

you. Thank

of Capital the from from Markets. Our RBC line next question Roland comes [ph]

please. question, Your

Unidentified Analyst

was saw just, ask X.X or I morning. that took read the extended year-end. there investments the course, years to just to that is to of X.X the was years anything from the good into of if wanted Hi, I duration in portfolio at quarter?

Michael Kehoe

environment wouldn't in just I now. read bit uncertain into a right think I'd I it. anything, interest If little it to come with lot Yes, rate the expect a

Unidentified Analyst

the than portfolio, the then how year up could portfolio get an to break much you can trying within of of next one that a over less turn at has higher in the of I'm percentage And that rates? just understanding year? maturity

Michael Kehoe

I to one of It's I very got impacts cash. a strong positively guess, XX%. of around would the think is probably, flow But thing kind that we've

number was at given year, the we flow million, number that last would think which growth big clip. premium a our the a a bit of expect I portfolio. cash $XXX relative grow to to year, is think over this pretty size And the good little I

it's new maturities So money the the plus and like. and paydowns

Unidentified Analyst

Thank questions. two you. my are Those

Michael Kehoe

Thanks a lot.

Operator

today's the Michael you. the conclude remarks. does like further any I'd for to of session This Kehoe Thank program hand to back question-and-answer program.

Michael Kehoe

Thank months. joining for here us, you, Okay. everybody, to in forward and few Thanks, with we operator. speaking you a look again

Operator

the your participation you, and This does program. conclude today's in for Thank conference. ladies gentlemen,

You day. may now disconnect. Good

Kinsale Capital (KNSL) 29 Apr 222022 Q1 Earnings call transcript