Kinsale Capital (KNSL) 16 Feb 242023 Q4 Earnings call transcript

Ladies and gentlemen, good morning. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter 2023 Kinsale Capital Group Inc. Earnings Conference Call.

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.

statements actual to results forward-looking which risk these cause could to always, are certain subject factors, As differ materially.

of the which over are in will these call XXXX press its the measures GAAP management financial Form Securities and Mr. factors filings, release has reconciliation in release, a reviewed to announcing the to risk can A listed press Commission company's non-GAAP with company's company CEO, sir. and also is Michael found the may be These conference the certain X-K President various carefully. including The now turn the www.kinsalecapitalgroup.com. I measures results. Kinsale's which that Please today. annual fourth XX-K, Kehoe. on Exchange ahead, on quarter Form report Kinsale's reference website the should be in at available SEC contains go the

I, Brian few CFO, President to Thank and Bryan Petrucelli, move we'll you you, our any and each morning, everyone. on questions operator, may Haney, our and and then will have. and offer good COO, remarks, a

of fourth grew the XXXX, by quarter over operating share increased earnings quarter by written XX% XX.X% the In fourth XXXX. premium per and gross Kinsale's

and combined ratio these results operating and For the the full-year take technology-enabled costs same drive XX.X% of share and to low time. returns company market at posted the of disciplined and allows posted strategy quarter, -- an XX.X% Company's of a from ROE XXXX. the for E&S competitors active underwriting us

only the ratio the use business, service We provide our we model much market advantage our while our in the believe company, systems, our potential the broadest years this Specifically also become competitively-priced with technology insurance, for powerful the technology accounts. offer to expense but on it, exclusively delivering our -- and low newer of margins stockholders. Since writing Kinsale durability our on team of focuses brokers and we to ahead. in the has predicated smaller has is and competitive expense customers best not appetite risk on E&S to the to best-in-class advantage more world-class of to customer those advanced our even the professionals,

noted benefit E&S the last years, inflow the we of from relatively several have conditions. driven standard and to from companies rate continues business market the over from tight As by inflation underwriting increases and

the orderly. in fourth more the Our was with third to consistent the largely growth about and similar property becoming quarter the industry was market commentary

optimistic We growth in continue XXXX. be to about

in a fashion. for to uncertainty a Accordingly, system a have claims collect inflation Finally, of We experienced subsequent and pay out we reserves set more have pay than towards what future. several set those will to need the reserving claims reserves some now conservative process, we possibility we in the in allow the reminder premiums We about and couple our changing will upfront of the approach. in the we last over deliberately aside years. and think years. more the of process recently we We post for uptick

years favorably trend, in additional very from have that partially developed But rate inception-to-date have used of with our years on I'm to to conservatism Our the above Investors significant favorably continue ahead. And the reserves. overall Petrucelli. years high XXXX level have in through we expect an loss add Kinsale the balance the rate to in increases level we of we benefited has to inflation. confidence in to turn Bryan that, sheet call level going should to a 'XX the reserves by of those XXXX, to develop as accident over of cost conservatism some have basis. Subsequent eroded been and

Mike. Thanks,

benefit XX.X% of by development ratio ceding higher respectively. income net to growth property casualty in as The loss quarter combined from XX.X% ratio low from commercial company's of year ratio a earnings very and and commissions year bounce negligible either with favorable and agreements in reserve expense cat losses and cat premium, increasing from points proportional period. The prior growth lines included business. activity reinsurance The the continues a from quarter in net those of compared around for the XX.X%, points to X.X result both solid and X.X quarter-to-quarter. net can XX.X% expense written bit Another operating last

ratio the evaluate expense a So we of components believe period. XX-month over it's best to the

decrease this the the net the we expenses. decreased from points a ratio For from X.X XXXX Breaking from remaining little by this down further, year, that X.X with point points other year. XX.X% expense noted came in to underwriting X.X XX.X% commissions

to increased the rates investment cash X% year growth side, from quarter X% year of over interest a continued result XX.X% investment compared investment for a return portfolio, by the year. as with income last generated operating in flows, higher the last fourth net the On and gross strong of

continues duration over diluted share $X.XX from was years money in the year. And pass I'll mid-X% per per $X.XX Brian improve shorter yields last lastly, with that, invest for securities end X.X last to X.X operating earnings to with to per of quarter to it compared duration year. And down continuing and averaging share share years, the and and to Haney. money low to We're new decreased at the range new

Bryan. Thanks,

the grew XX% XX% and premium year. in the As for fourth quarter earlier, mentioned

continue divisions quarter. business continues subject of divisions. Submission to Casualty growth. view Auto to growth we This and actually general, General variability, a some We acceleration across a to Excess in Commercial but as strong leading growth Entertainment, experienced of with indicator our be is submissions for an bit to Casualty, mid-XXs particularly the number the along in with growth and property see our of strong book

And we note, trend X%. and it's And so we rate change have but important Please products our a X up above rate don't and we to rates if up also things. number, different been we that down boil see growth see to signal. on the wide stress in positive rate as the a move now. around sell increasing products several real submission array of one loss adequacy are cost years it We rates rates staying those lockstep, for

market most our results were them shifts continually in on in as demonstrate, adequate. any history. on competition. number the return we've adjusting opportunity that the feel seen business based considerations our the We're priced our and But today As a on target than rates in the putting such equity, business more our and rates of we're event, is our we books adequately reviewing

adverse seen liability. generally workers' some on favorable like and we've Another are thing seeing in some comp, I'd development companies general industry a development offsetting to to extent, that note, trend commentary, that's

reminder, comp of the general doesn't our workers' any Kinsale a liability as write Just represents reserves. and largest share

a the see So in us somewhat in for general trend said, they weakness the result should diligently Kinsale market to being of favorable bodes development, the the that trends of and this of serve know you when general That you is staying does prolong the us industry. liability market, notable conditions. ahead having well in and differentiate favorable reserves it industry liability

see particularly of Finally, be the reserves, inflation The is inflation but ties, the proving forecast. has to longer Fed's longer moderated somewhat tail persists, much rate from to inflation on longer elevated the lines. will prognosticators on effort and many the getting more pressure industry a its target the

once dedicated continue we're develop to may results. And are a Overall, that are to more favorably it back have so likely adversely. reserves to staying I'll good happy over with with We to we quarter, vigilant than the that, really this, again, that about Mike. and hand

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

[Operator Instructions]

question from our take will Wolfe Bill first we Research. And Carcache with

reserving. with your bit wanted from trends sort implicit I follow could was period, more to a you resulting the are your comments you prior core on up elongation. tail in described, year accident offer I environment on loss carriers particularly the XXXX those some emergence this those experiencing effects as about hoping along adverse color closures and you're seeing during COVID, that latency lines conservatism development. in in that little of are And where associated

-- in much remains curious focus? that how Just whether

varies with us done And effectively, getting prior I would But business. good year and there by I job that basis. business. line good the into think Bill, was developed a there's our on that a dramatically say Mike. general, have much XX would an years inception-to-date too disruption preclude over year not the Kinsale has but accident job XX I reserves, this -- say our in of is I general, in call. some detail we've to aside really XXth favorably complexity single of accident conservative by level In pandemic. I think regard done I think year, setting our this on would a is conference from It that mean there of in every

So track record hopefully, investors that of conservatism. at look

row years even conservatism. the raising our adding a talked we given loss And now. about, trend us that's of more ahead As been a for add to number cost we've just rates of in opportunity

aside I think investors Kinsale et in the today to caution. understand social sorts law I setting And just with claims in cetera. reserves and there's warranted inflation, I conservative pay reasons it's to the Tort very think inflation for in mean of general, is the conservatism for in but future. is and uptick all important our in changes very that proactive

end the you're process in I court helpful, that thought But of year. you you written. just limited we the as that in described sort say of have understand the about that pressures years can risk X-K And following in could probably might at the social that than level, high the judgment and at That's about you Mike. business time what was coming prove filed think a at that contemplated pervasive more described inflation those the been last

you dynamic? You contemplated that feel of that you sort the protects like the outset from conservatism from

been claim In been the litigation. about Adequate get provision in active material because would we said as for statements into in financial liability last nutshell, company didn't couple say, adverse X-K, of reserves think say in that specific yes. effect. of over has social claims can't would commentary I to it Yes. any account to talking of the it's we have But lot we the such a made a related there's the proceeding. this existing years inflation. would legal general, I that and a of consolidated

E&S concept make Some of sales frequent of nuclear up this we verdicts limitations picks our and uptick. been us loss. exposure coverage and Can of to -- help use probably company that has to a and control dramatic there

a really focus we to into us translates on to accounts, good disciplined underwriting think And which manage operation. We've insulates systems, run tend a probably smaller very bit. robust also data little We I profitability. which got

balance think, that investors lot add again, reserving, approach So the sheet. changes system. think that conservatism very you I When Tort a confidence have in I industry. at Kinsale the staying the it's creates, for sales in But we to good how something in I think a ahead and challenge of the of should

one. thinking considering If last could for investors extending Bryan, you as the a could Fed of duration continues? maybe squeeze frame broadly. from rate lower debate I about are how in should timing one be you you Are just And to environment cuts risk earnings the downside potential considering, around

interest up an perspective. an We from what's certainly rate on are perspective with and keep going inflation

I rollover month working and every think to to risk in in it's being -- probably teams what but we're that But frame. invest look investment opportunistic, you. time hey, have aware continue quarter going we're being of and term, our the every something X-year with we to near and ensure taking that at

We Mike with BMO. will from take our Zaremski next question

on there's a I some Maybe know in grappling a can mid-XXs. like submissions been investors But the variability mentioned any flow that. increased the color you just there? insurance feel on on helpful. maybe extent pressures doesn't have the with of the property bit kind uptick potential in tough we too I social cited side start any you casualty than a given less price flow property more everyone or 'XX, lot would the inflationary be color wind by of but to offset has offset and gotten blow impacting into

mean to is the one actually steady. I been Yes. growth has thing note relatively rate

go think accelerated -- XXs range. been and slightly low I back that So you read if and in XX range the it's commentary,

that would could it probably just more the just I That continued some volatility. in it this competitors I of extending little sort issues which I agree casualty of seeing, be think, that a other acceleration we of the are are happened, inflow, from think was some having. submission quarter. reserve is

it's of So we a flow just orderly, the than and it's and that still distressed -- is a right, capacity, are Mike more strong market there's -- mentioned property last seeing was it's more less but year. it submissions, you're little just

get see is any the more feel risk be KPIs comments submissions allow you act we and your How be your your to as it or above more or On become you about Or just into translate of would more you would to could technology how would that evolving, Would technology submissions? the quicker all better price able or investors? potentially powerful. on it do like great. just color

think, Mike, Mike. is -- I Well, of the this one

about One it material a of in impacts business is the interesting multiple the technology things way. of areas

So and it effectively model? incorporate can and a Can more segment Absolutely. allow it it risk risk speed us Can Absolutely. up we drive data expenses? accurate customer in Absolutely. our more us the increase service? third-party individual evaluate of price underwriting an how and help workers our productivity lowering to

anecdotally department. model IT made XX%, and started we headcount company slightly Yes. our the to years we make these competency prioritized way our the it continue important to handling. core maybe think enormous have others, I and we XX it's is all I XX% about reasons our the to an for I speaks ago just we technology I of that it's having when that mean of underwriting of and claim how our probably business over the -- commitment. in and business think think is over mean, a years reason And alongside

us think aren't companies a interesting maybe far it just in very the that to of lot industry as compared along. today position puts I quite a in

decline about expects with long could been because company lot, but kind say guess the thoughts growth to along the I you've term know you long-term on decouple marketplace. it talking your feel haven't I a over it longing of still been the growth like I to

lastly, And your quickly commentary. just on

Or some Mike, to certain know data, I going of which understanding So I don't some we statutory remarks, the you conservatism, comments off we correctly, added light that see trying some if are you in that made see your prepared you're of higher us accident in anything prudent reserves, the levels. tell believe when to seems years? am I topping inflation there?

toward the all is this sorts There's the speaking uncertainty more but certainty, course Well, we a quantitative general of -- to element is claims recognizing I management collect to business approach to more of premiums and a over pay uncertain extent. an number of was really that there business, of years. use which upfront. is we an that methods drive some We

that setting negative within line don't pay up, stat it's conservatism in level case know file aside but of terms And specifically, soon of there's do the think accident cautious look think a but and of statutory by really wasn't anything years. reason granular at our those a speaking really to and to as going from by future. When our so in I wasn't in that terms lot we're couple reserves today statement very can prudent just soon of the thereafter to dollars information by business. possible people picked I of that be and year as by But I in certainly anybody, to of had us, claims I impact anticipated. a inflation not and so

be the think you past, year. or year favorably in But every has your said clear, most I that developed of just to

we'll different, as are something K? might So from file we peers probably saying a you bit see see when like little you many the many

XXXX Our business developed we the was first adversely, it full were the tiny. and year company year was in

developed our XXXX up million. our of I it's think $XX.X and were at million the losses ultimate end think I -- $XX to

rate but last -- been in I several general, So we've about one loss it was it's Brian fact we it's of that made cost think bad years, the comments yes, the The increases had Haney ahead trend. year, getting immaterial.

our tighter, with you and if most a coincides it having the will, companies the power. reserved are pricing more years bit becoming these history, again, little insurance company's market in conservatively So

grew that yes, net this in into great in pricing in the reserves leaned the fashion, environment, our So it dramatic reserves but pretty we favorable and our of -- I think a business is, a are spot. all reflect

with We'll take Truist. Mark next Hughes from question our

good in quite ratio quarter expense XX%. below The is the

commissions. the better assume a good XX% I XXXX? given you for Is is ceding the I you current now, mix, XXX mentioned, know acquisition and mix the guess, et With cetera, commission the I costs. business that's ceding bogey, of bps have

expense I think think very period, of XX-month where I the that's looking over consistent with to good expect forward. probably indication ratio Mark, I a the gives what said, be you at we going

makes the the anything Was quarter else quarter in I what full whether -- there some trying was hear year? I'm it fourth than but to saying, anything that that recall seasonality fourth has unusual? you're lower the

would always but there's I anything be quarter-to-quarter, of particular in to note bit going there No. a QX. to say in wasn't little variability,

goes -- periods, XX.X% property along some little what's then property with is maybe bit casualty that Or exposure, Understood. a outgrows down? And should ceded coming I come assume premiums, the in rough there? your if thoughts that

impact side mix little of going We natural when that goes the to Mike. buy business of are because we we It's with on always and some catastrophe, reinsurance buy reinsurance put limits. more is exposed a to accounts The certain property that. the larger more volatility up that of

So our keep typically excess policies, casualty book, that. we the primary

And that bit by accelerating Are the this be then, environment? little little accompanied submissions. more more the about you Haney in Will talked pushing grade a Brian on a pricing?

to affect how that's but It's the with are less pricing not kind to building. we flow of optimizing going we pushing wealth do at I do in submission up, the with mean, and look more hitting price. to

up all push we're and with to So are the market line coming what going into the we're by competitors account conditions taking rates. and where doing

business. how XX rate would from affect the now XX So to we going to not low XXs

attractive up going looking And for is given are then Is still mix still now. How property attractive is current your more as was The property and seems final levels? quarter, it it and the pricing just you if price orderly. your appetite it's question. last at attractive a it like now,

Well, this are would guess, that say say I I is I still Brian going Haney. -- prices up. would

when than it was So it's year less last orderly. more attractive it was

still see a great we So opportunity property. in

[Operator Instructions]

from We will next Andersen our Andrew with question Jefferies. take

Maybe I've of into looking to been thinking one pricing. trying about I that to ratio going back loss which about had hasn't And way over positioning, competitive the is ratio, to much at bound to on compete haven't policy the think how underlying pricing moved 'XX. suppose you years much. of quote the And couple is Kinsale and issue past

relative not loss you're a if like next way still position that pricing could sounds flat Is it into and year. a competitive ratios think versus margins? the we competing underlying see underlying more about to in So peers, fair with market

is Mike. take I with on buy this we Andrew, mean issue in idea probably price. don't we would XX%, XX%. the I compete that

I few our or is varies quotes. new say But of the customers. biggest I of our XX% last of a And bit more by been bit little little think a price huge years the Clearly, a It's have business. seller's would to XX% driver. market. it line buying we business concern a

to the really So around line at you're given rates price. completely top time, raise that's a us the sensitivity good from at grow the ability and divorced not clip. But same

competitive account in providing, up think publicly. really terms a the guesstimate. can So you But mean, where it's business information probably come I of with all still into a from that forecast can take don't loss you here. we good we're if ratios go I

the coming from property in down flows of context little in data. maybe submission industry a And some bit and rate

to average some an lose the versus business get trying transaction the average because idea property pricing in be property flow premium higher. premium to of if that would the because dynamic, you the does Just and of casualty there overweight were casualty

number but has team, homeowners property personal sort say on huge talking property that average I fourth team property the less -- not the in average explains to effect. from from premiums. I our quarter low small what property don't went a fourth property large large growth the a have I market don't orderly, still a about. insurance rate anticipate would a It high-value large, a would all becoming it's in the why high relatively our XXXX is our book number average depends the but relatively premium -- but more quarter and very, very Commercial XXXX. dramatic impact just wouldn't of of I premium, think for of we're

just maybe clarification. Mike, And one

'XX inception to favorable mentioned You year date. to 'XX accident

liability consolidated be it's on to clear, want general Just and not... as that both also but is well casualty basis, a basis on

a on It's consolidated basis.

I got business. of get a think statutory lines you about we've As -- down to dozen

You because in a variability record on smaller a conservative got good we've run that you favorably reserves developed into fashion But consolidated time. really more got numbers. track basis, posting over of a

I writing begin was property much trying really to at, casualty weren't get from with. to you benefiting guess to because back casualty not -- outweighing back be then it's property or then I

complex Yes. though, that is short-tail because quickly. Andrew, line It property a pretty pretty gets develops

actuary, casualty. in would a it but Some I of we not middle then lot of call I kind right? our Casualty business, and of I'm -- medium the It's an long-tail write tail,

I of business Casualty book occurrence, would medium the liability liability performed short, made, general, of line liability candidly, liability we excess claims products, I the the separately from liability. even products business general mix in our We occurrence, long. But say primary. of think claims made, don't other other may one and have business track It's well. for is a nice has

for to general, for is here. the investors lot point I that's is And balance past trying that kind But I big to need that, they we're complexity hey, confidence kind away put because the reiterating conference out the not take again, of give sheet. of coming of in a So our didn't in confidence hey, years. of we're coming earlier, a Brian's saying, takeaway to there's we we that's a think reason a investors lot charge Kinsale companies have enough a run-a-muck call. think in should And

our We next question Pablo with Singzon from take JPMorgan. will

maybe Haney. hoping but growing. I to and the growth, disclosure I perspective was policies appreciate for how some on get Brian question upon First submission were

And neighborhood to related if much more lower? Just given the is is growth? book be same your new reasonable count that would not, assume business PIF submission in to it of than how others, growth

my have the those of numbers off head. top don't I

you a at I one good estimate if back look then if PIF it way to of pretty and give that's average at is look other at growth And premium, it's premium probably premium growth, going up you the growth. our average bit. our our going out think you to a look

close So submission guessing don't would XX%. up I probably it's probably -- I I growth. up to be anything. if somewhere be say and might said going XX% it It's going between

That then makes one you, assume would If nominal Kinsale's And for cost that premiums Brian. X% and exposures? the are fair increasing sense. mid-single-digit high couple right, assuming with another a we that neighborhood, provided, it assume in flat loss growing be pricing single maybe to metric digits, you risk

So -- a yes, it's short answer.

competing real rate, the got premium trends. You've effects the of the

do then we up trend and inflation we the get going virtue by of of get premium elevated, the that. loss -- underlying So just more prices with being cost products offsetting

what that's said far. yes, you as So

of will And Those there Bryan in some rate? Was third 'XX. be Or X.X, for 'XX? that benefit more then full Petrucelli. question the XXX from commissions in run bps that net

overall Mike Again, are that book side. I mentioned business business, but larger of becomes we base, do grows a more mix earlier, and of on the the on, than of as percentage property think off that we seeding and casualty premium that depends as

from the if some It's get embedded for we to in it will, the away, that even that you a cede commission people important ceding has back, we probably reinsurers remind profit business do us.

I provide this third rates the hoping of about the I something Seems grew on you this consistent to like the could and in or Property, see quarter Haney. know last which the is those in that? I me, quarter, quarter, with compared quarter XX% specifically fourth but preview a are lines Mike fairly agree you breakdown of or thinking we'll filings, third And components in would then And between think premium for was for growth XX%. which more I'm Brian growth Casualty, the grew than right? disagree the maybe for

Well, grew very property robust growth. but strong in quarter. Brian mean, steady, double-digit clip fourth said, at Casualty, the pretty as I a

probably well. a Professional rest lines grew Transportation less segment of fairly little bit the grew the than book.

think what accurate. I you So said was

with questions from Truist. will We some take Hughes follow-up Mark

good you The that point and lower of what full a in the to for the cat the mix part of terms early do that. of current of accident the seasonality year given loss starting year XXXX were in understanding flat XXXX, to as all have that business, tend see be ex that for compared higher trends, year Is cost in losses progresses? year you

that, if we said do, -- that. you're take don't think forecast don't but that's Well, you I what with going we'd I to wouldn't issue

questions will We follow-up take Zaremski with Mike BMO. from

I some ratio quick. and pulls know you expense prepared remarks. the pushes nuggets Real on the us gave in

into help So I guess is wanted we and that hands can of little just run the our us think kind maybe through you 'XX quarters? bit use numbers, to through more rate how unless coming to think the a forward hold much of going to

any more don't can than I we mean, say did. think I we

the annual. at Look

that a look at you. for a take the guide ratio, pretty should expense you If good annual and be

Pablo We will with take follow-up Singzon question JPMorgan. from

I'd thought reserves. on just I in more throw one

for reserve that good. position Maybe recognizing is is the overall Mike. So one this

could was more crisp where I or specific are I you of correctly, -- if think called on it right? than I think in if overall the there I business spot, book a others? you're of in is you lines but sort wondering out probably classes construction, the good where was provide had pressure in remember past, recognizing lines, a perspective

million years. the X, that can time it's construction come They're Well, of a X be so which lines call one a sometimes water the what's that unique $X years claims, X, slow the the number discovered, the property tail owner longer fact business, extensive an And renovation, water we intrusion of construction to isn't defect. is of aware by of component it it construction, typically our intrusion for these late, of claims business, even specifically could in Pablo, later. it's claim. And is

repose. Sometimes of XX-year -- California, a statute I think, has

I I Colorado, like states other think Virginia, maybe year. X like think X years, it's

inflation So hit of a it we think But X% that labor building I you business, long-tail varies supply It costs. are. a little bit hit with, nature depending costs. couple That years hit combined on inflation the ago. of where

definitely at Kinsale. was on question? impact there your So answer that construction Does book the an

there sort I of not of these from are and broadly major was wondering, issues, And you rest mind okay? Yes. are the of or of or you sort class construction, like but construction are emerging lines where aside any guess, sort the top issues for lines latent of I other see like,

most I a business. our construction would big of part material. say the probably is It's

stands of level. book So at in quarter, of out not attractive performing for me. general, but just the results, That's our mean, is business that several in really kind last the to these why a years. kind publishing I of fourth we're

Those a a high-performing of reserving. of of business even face results a in the lot in the conservatism reflection are

And the generating claims construction we later a bit than of business a that some even us. those It's originally have healthy anticipated. maybe little developed for so is just return

will turn Kehoe Michael We at I have further no this for questions Mr. closing remarks. call time. to now the back

Well, we thank and everybody everybody, operator, great you, look joining for forward with here soon. to us and a Have today, thanks, day. very speaking again

and gentlemen, participation. for this we Ladies thank your today's you and concludes call,

You may now disconnect.