KNSL

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 2025 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 first 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 Kinsale's Chairman, President, and CEO, Mr. Michael Kehoe.

Please go ahead, sir.

Thank you, operator, and good morning, everyone. Today I'm joined by Bryan Petrucelli, our Chief Financial Officer, Stuart Winston, our Chief Underwriting Officer, and Salmaan Allibhai, our Chief Actuary and head of our data and analytics team. In the first quarter 2026, Kinsale's diluted operating earnings per share increased by 37.7% over the first quarter of 2025, generating an annualized operating return on equity of 24%. Gross written premium was down half of 1%, but net written premium grew by 5.6% for the quarter, as our business lines with the least reinsurance participation continued to show positive top-line growth. Kinsale's combined ratio was 77.4%. E&S market conditions in the first quarter continued to be competitive, with the level of competition and our growth rate varying from one market segment to another.

We added additional disclosure to our 10-Q this quarter with gross written premium detailed by underwriting division first quarter of 2026 and 2025. This quarterly disclosure complements the annual disclosure of premium by underwriting division in our 10-K and provides some insight into market conditions and growth prospects at a more granular level. Continuing the trend from the last few quarters, much of the headwind to our growth emanates from our large commercial property division, where we write larger layered property accounts and where there's an abundance of competition and falling rates. Excluding the commercial property division, Kinsale's growth in gross written premium was 6% for the first quarter. The investment thesis in Kinsale has always started with our disciplined underwriting and low-cost business model.

By maintaining control over our underwriting operation and never outsourcing it to third parties, we drive a more accurate and more profitable underwriting process while offering our brokers the best customer service and the broadest risk appetite in the E&S market. Likewise, our 17-year commitment to making technology and analytics a core competency allows us to operate a smarter business with a tremendous cost advantage over every competitor in the market, no exceptions. In this competitive period of the insurance cycle, the Kinsale model continues to succeed. In the first quarter, new business submissions were up 6%, new business quotes were up 8%, and new business bind orders were up 9%. We are seeing the largest headwind to growth among larger accounts, particularly within our commercial property division.

It's on the larger premium accounts where the competition is most intense, hence our continued focus on smaller transactions where margins continue to be robust. You can see this smaller account trend in our average policy premium for the quarter. It was $12,200 per policy, down from $14,200 in the first quarter of 2025. Finally, we continue to work on technology innovation, including extensive use of AI models to drive automation in our business process, especially underwriting and claim handling, and throughout our software development and analytics teams. This innovation is improving efficiency, customer service, accuracy, and data collection across our business, and we have begun incorporating various AI agents into our enterprise system. With the talent of our technology professionals and our bespoke enterprise system and the lack of any legacy software, we are well positioned to expand our tech lead to the benefit of both profitability and growth.

With that, I'll turn the call over to Bryan Petrucelli.

Thanks, Mike. As Mike just noted, the profitability of the business continues to be strong, with net income and net operating earnings increasing by 26.1% and 36.3% respectively quarter-over-quarter. The 77.4% combined ratio for the quarter included 4.5 points from net favorable prior year loss reserve development compared to 3.9 points last year. With less than 1 point in cat losses this year, compared to 6 points in Q1 last year. Gross written premium decreased by 0.5 point for the quarter, while net written premium grew by 5.6%. As Mike mentioned, the growth in net written premium was higher than gross, as the lesser reinsured lines continue to grow at a nice clip. We produced a 21.1% expense ratio for the quarter, compared to 20% last year.

The other underwriting expense portion of the ratio, which is the best measure of the operational efficiency of the business, was 10.3% for the quarter, compared to 10.5% in Q1 2024. The overall expense ratio increase is attributable to a higher net commission ratio, resulting from higher reinsurance retentions. The larger retention provides a positive economic trade for the company, with a higher net commission ratio being more than offset by greater underwriting and investment income. On the investment side, net investment income increased by 26.5% for the first quarter over last year, as a result of continued growth in the investment portfolio generated from strong operating cash flows. Kinsale's float, mostly unpaid losses and unearned premium, grew to $3.3 billion at March 31, from $3.1 billion at the end of 2025. The annual gross return was 4.5% for the quarter, compared to 4.3% last year, New money yields are averaging around 5%, with an average duration slightly above four years on the company's fixed maturity investment portfolio. Lastly, diluted earnings per share continues to improve and was $5.11 per share for the quarter, compared to $3.71 per share for the first quarter of 2025. With that, I'll pass it over to Stuart.

Thanks, Bryan. There's plenty of competition in the E&S market. There's also opportunity, and it's also a market in constant transition. Areas like large, shared, and layered placements in commercial property, certain Professional Lines, Management Liability, and Public Entity all continue to experience strong competition and headwinds to growth. Recently, we have noticed more aggressive competition in some long-tail lines like Construction over the last quarter as well. There are also strong areas of opportunity with favorable growth prospects within the E&S market. Within the overall property market are Small Business Property in the Ocean Marine, Agribusiness Property, and Personal Insurance divisions all experienced favorable underwriting conditions and strong growth in the quarter. Within casualty, our Agribusiness Casualty, Allied Health, General Casualty, Health Care, Entertainment, and Products Liability divisions saw favorable markets and growth in the quarter as well.

We also continue to drive growth through new product offerings and product expansions, robust marketing efforts, new broker appointments, and continually improving service standards, combined with the broadest risk appetite in the business. As Mike mentioned, overall new business submission growth increased 6% in the first quarter, a similar rate to the fourth quarter of 2025. We continue to see a decline in new business submissions in the commercial property division that handles large, shared, and layered deals. Excluding the commercial property division, new business submissions were up 9% for the quarter. While our lines of business are experiencing varying levels of competition and pricing pressure, the combined pricing trend for Kinsale is in line with the Amwins Pricing Index, which showed a rate decrease of 3.3% compared to a 2.7% decrease in the fourth quarter of 2025.

Although large commercial property placements continue to experience strong rate pressure, other property lines like small business property, and in the Ocean Marine and casualty lines like Commercial Auto, Excess Casualty, and General Casualty present opportunities for meaningful rate increases. We continue to have a high level of confidence in our model and in its ability to perform throughout all parts of the market cycle. The foundation of that confidence is our underwriting discipline, our market responsiveness, our low cost, and maintaining the flexibility to adapt to changing conditions. What is especially encouraging is that the business continued to show very good momentum. For small to medium-sized risks, submissions are up, quotes are up, and binders are up. That tells us the market is responding well to what we offer and that our value proposition continues to resonate with brokers and insureds.

In a hard market, our model allows us to lean into opportunity. In a soft market, it gives us the discipline to stay selective and focused on business that meets our return thresholds and to exploit our low-cost advantage over our competition. We do not need a specific market environment to perform well. The model is designed to adapt, and we believe that adaptability is a real competitive advantage. When we look ahead, we feel good about where we are, we feel good about the opportunities for profit and growth, and we remain very confident in the long-term strength and durability of the platform. With that, I'll hand it back over to Mike.

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

At this time, if you like to ask a question, press star followed by the number one on your telephone keypad. Again, that's star followed by the number one. We'll pause for a moment to compile the Q&A roster. Your first question comes from Daniel Cohen with BMO Capital Markets.

Hey, morning. Thanks. Just first on the new disclosure of the new business quotes and the new bind orders. Can you just maybe expand on how that's trended year over year and quarter over quarter? I understand, Stuart, you said this was up. Just wondering if you could quantify that and how should we be thinking about this KPI relative to submission growth? Thanks.

Dan, this is Mike. I would say we've had requests from people over the years for a little bit more granular disclosure. We're providing it.

You know, the more granular, the more volatile those numbers are. I wouldn't overthink how important it is that in a 90-day period, something's up or down. Across the 25 divisions, I think you can see what we're talking about, which is, overall, we're in a competitive market, but there's plenty of opportunities in some places. In other places, there's a lot more competition, and we're going to grow a little bit more slowly.

Okay, thanks. Maybe just given the material expense ratio advantage and the best-in-class returns today, just wondering, is Kinsale willing to deteriorate some of its accident year loss ratio for higher growth in the near term? Is that a part of the equation at this point?

Listen, we always manage all of our product lines to a low 20s return on equity or greater. We're constantly adjusting pricing in both directions based on our understanding of the relative profitability of a given line. That's just a normal part of managing an insurance company. Our ROE for the quarter was 24%, so I wouldn't expect a meaningful deterioration from that, no.

Your next question is from Hristian Getsov with Wells Fargo.

Hi, good morning. My first question's on the accident year loss ratio. I think it was much better than people expected, up 40 basis points year-over-year, but is there anything one-off you'd like to highlight, maybe in favorable non-cat weather? Or how should we think about the accident year loss ratio movement from here, just given more mix shift towards casualty and just loss trend versus rate in lines away from property?

Hey, this is Salmaan. There's nothing out of the ordinary. No one-time adjustments to the accident year loss ratio. I'll just remind you that, throughout the course of the year, there is a little bit of seasonality when it comes to that current accident year loss ratio. Typically, the first quarter is a little bit higher than the other quarters, but nothing out of the ordinary to report.

Got it. Just given the new disclosure, I was surprised to see E&S Homeowners decline 22% in the quarter. Was that driven by increased competition, or was it something more timing related?

Yeah. This is Stuart. The high-value market is experiencing some increased competition. The limits that we're offering are going to be lower, so the average premium is dropping a little bit. We're still showing, I think, good growth in our Personal Insurance division, which is obviously also a homeowners book.

Got you. If I could just sneak one more. I know your reinsurance renewal is coming up, and you guys increased retentions last year, but how are you guys thinking about it for this year, just given the below average forecasted hurricane season, but also counterbalancing that with just the lower cost of reinsurance?

Yeah. This is Mike. We look at reinsurance retentions, limits, et cetera, every year. We've obviously increased our retention many times over the 17 years in business, and so obviously we'll look at it again this year. Can't really commit at this moment to how the treaties will be placed. I'll just note it's a 6/1 renewal date.

Thank you.

Your next question is from Andrew Andersen with Jefferies.

Hey, good morning. On the casualty side, Mike, maybe you could just talk a bit about how competitive behavior has been changing over the past six months, whether that's from MGAs or admitted carriers. On the flip side, maybe where it's been more stable than we would expect.

Andrew, I would just say, in general, we're looking at a competitive market. I think Stuart highlighted at the underwriting division level, where we're seeing, I would look at the growth rate as a proxy for how competitive things are, right? The faster we're growing, the more opportunities we're finding. Stuart, I think you commented about the increase in competition on the long-tail lines.

We're starting to see a lot of competition from fronts and MGAs and new companies on long-tail lines, specifically in construction, over the last four-five months. It's revving up pretty aggressively there, but there's still premises liabilities is strong for us. Anything related to auto, we're seeing meaningful opportunities there.

Maybe one other thing, just to reiterate, is that it's a different market when you're looking at larger transactions than when you're looking at smaller. Hence, we've always focused predominantly on small to medium-size accounts. In a more competitive market, we always feel like that's a great safe harbor for Kinsale.

Got it. That kind of ties into this question, but the submission growth seems pretty similar quarter-over-quarter, but down from where it was maybe a year or so ago. How much of the slowdown of the submissions would you characterize as demand driven versus some pullback on just irrational pricing? Perhaps you could also update us on some initiatives to expand broker relationships or the penetration with the existing brokers, and how that could help top line as we go through the year.

In terms of the submission growth, again, we've always looked at that as a little bit of a leading indicator, maybe not a perfect one. The ex commercial property, the fact that our submissions were up, I think, 9% for the quarter. We look at that as an attractive growth rate. If you had to characterize it's a competitive market, but reasonably steady, and we're excited about the growth prospects. There is a little bit of this shift from where larger accounts are under more competitive stress. That has the near term impact of, if you will, it has a depressing effect on the growth rate, but only until some of those accounts transition off the books, and then we see more of a normalization. In terms of new broker appointments, we're always looking for top quality brokers to trade with, and that's a dynamic market.

We're principally a wholesale distribution model. If there are changes in the marketplace and an experienced team of brokers want to start a new shop, we're typically quite supportive of that.

Thank you.

Your next question is from Pablo Singzon with JPMorgan.

Mike, thanks for the disclosure into the submission growth. Are you noticing any change in retention, or is the delta between gross premium and submission mostly pricing exposure as well as the mix impact from large commercial property?

Yeah, Pablo, this is Stuart. New business hit ratios and renewal hit ratios have been consistent quarter to quarter for a long time. No big change there.

Okay. Thanks, Stuart. Maybe a broader question. Small business E&S and even an admitted side has historically been challenging to break into, and some of your larger competitors have said that technology might enable them to be more competitive with smaller customers. Are you seeing any evidence of that emerging in the market today? Thank you.

No. Obviously, technology's always been an enormous priority for Kinsale. We talk about it in terms of making technology a core competency of our business 17 years ago when we started the company, alongside of underwriting and claim handling, and I think that's providing some pretty powerful benefits. I think you can use our expense ratio in part as a proxy for the lead we have over competitors in terms of technology. We like to think we're going to be able to adapt new technologies that are coming out, whether it's software and hardware or whether it's AI models. We think we can adapt that and incorporate those innovations into our business more quickly because of the skill of our tech professionals, because of the fact that we don't have legacy software going back 20, 30, 40 years. We don't have thousands of legacy applications to maintain.

I think our competitors would have to speak to their own positions on that issue, but we feel like we're in a good spot.

Thank you.

Your next question is from Mark Hughes with Truist.

Yeah. Thank you. Good morning. On the property front, where do we stand in terms of the sequential change in competition or pricing? The question is has it reset at the lower level, and now you're just kind of running through that, and then eventually you'll hit the easier comp, or is it continuing to drift to the downside?

Yeah. We don't really have any good news to report there. I would say the easier comps, just like last year, will be in the second half of the year because we've always had a little bit of a disproportionate percentage of that commercial property volume in the first six months of the calendar year.

The expense advantage, I think you had kind of touched on this earlier, that your focus is going to be on keeping, managing the low 20s ROE, but you've talked about using the expense advantage. Would you say that essentially you're using that to the degree that's appropriate at this point, that you're not going to be pushing more or using the expense advantage to grow the top line? That's something you've already deployed, so to speak, to the extent that you choose to?

Mark, I think the way I'd characterize it is, we're always estimating our loss cost. Some lines of business we write are short tail. Like the property cat exposed business, it's heavily dependent near term on the weather. The fire peril on a property book is a little bit more statistically predictable. We write short, medium, and long tail casualty. Those things are impacted by different things like changes in tort law and inflation. Yeah, we're always thinking about our expense advantage. We also think about our underwriting advantage, controlling our own underwriting, having a more accurate process. We think about the tremendous amount of work we've done in terms of analytics. Constantly figuring out smarter ways to segment and price risk. I think that's an advantage. Then on top of that, we've got a tort system that's not 100% predictable, right? There's the law of large numbers.

We've got accurate ways to reserve for future claims, but you never know definitively the cost of goods sold, and so hence the conservative reserving. We've got a 17-year track record of those reserves developing favorably on a GAAP basis. Yeah, all those things go into the mix, and we think it puts us in a great position to not only generate best-in-class returns, but to continue to grow the business. We are ambitious. We do want to grow, but we subordinate the growth, if we have to profitability. I think the message on this call is that even in a highly competitive market, we're finding lots of ways to grow.

Admittedly, the gross written premium number being down 0.5% for the quarter might seem to contradict that, but when you consider all the commentary we're making around large accounts being under more stress, in a lot of ways, the book is just shifting or transitioning to a little bit more of a smaller average premium, and we're fine with that. The profitability in that business is top-notch. Long term, we're confident we're going to continue to grow and take market share, but certainly never at the expense of an attractive level of profitability.

Just out of curiosity, how's the equity portfolio performing?

It's performing well. Keep in mind, we're about 2/3 actively managed equities and 1/3 passive. Principally, the S&P 500. I think since late 2022, we've lagged the S&P, but we've more or less matched our benchmark, which is the Vanguard VYM, the high-dividend ETF. Lagging the S&P is mostly related to the fact that we've got little bit less of a weighting toward tech. It's not that we're not big believers in technology, it's just that we're a little bit more of a value orientation.

Very good. Thank you.

Okay.

Again, if you would like to ask a question, press star followed by the number one on your telephone keypad. Your next question comes from Rowland Mayor with RBC Capital Markets.

Hi, good morning. I appreciate the new disclosures on the growth rates by unit. I was just wondering on the commercial property, it looks like it was $65 million of premium in the first quarter and $375 million last year. What portion of that is actually in the large property category you're talking about the competition?

We don't have a specific breakout, but the average premium in that division, I think, is somewhere between $30,000-$40,000 per policy.

Rowland, that commercial property division, that is the large shared and layered division. Everything else is handled.

Okay. Yeah.

Small properties broken out separately. Commercial property is a standalone division for the large shared layered deals.

Okay. Perfect.

Rowland, if you looked at that, say, a year or two ago, I think the average premium might have been north of $50,000. You can see where, hey, we're either losing some of those larger accounts or maybe we're participating higher in the schedule where there's less risk, so hence less premium. It's a variety of factors, but definitely a trend towards smaller accounts where, again, we're very confident around the margin in that business.

Okay, perfect. Thank you. I wanted to ask, you had mentioned the low 20s target for ROEs, and I guess with the amount of capital coming into the space and seemingly going after lower return targets, do you think it'll normalize back to your market, or do you think you might long-term need to come down into the high teens at some point?

I think with a better underwriting model and a cost advantage that's so significant, it's hard to believe that it exists. No, we're confident in a low 20s return on equity. We kind of look at it, if you will, as like a spread over the risk-free rate, which is admittedly slightly, if you use the 10-year treasury, that's a little bit below 5%. Just generally speaking, we're about 15 percentage points above the risk-free rate.

That's very helpful. Thank you so much.

Your next question is from Pablo Singzon with JPMorgan.

Hi. Thanks for taking my call. Mike, the submission growth rate you provided, do you have a sense of how that compares to the overall market or maybe the sub-segment of E&S where you compete in, right? I just want to get a sense of, first, where the macro is trending, and I guess more importantly, how you are running against it. Thanks.

Yeah, Pablo, we don't have any specific information for the overall market, but I would say in general, brokers do a great job working hard for their clients. Their clients want low cost, broad coverage. They typically canvass the market to make sure they're getting the best terms and conditions for their customer. I assume there's some commonality to the stats we have versus what our competitors have. But we don't really know that.

Got it. Thanks, Mike.

Your next question is from Mark Hughes with Truist.

Yeah, thank you. You talked about more competition in construction. How are you seeing the volume of opportunities? Have you seen any kind of slowdown or delay in construction activity?

Mark, this is Stuart. We haven't seen any delay, but we don't also focus on large project-specific policies for the most part. I think you will see that in certain areas, out west and in the northeast for wraps, that projects are being delayed a little bit. That's not really where we focus in the construction book.

In the general casualty, the growth was still pretty strong, double digits. It, what, 11% or 12%? How did that compare to the fourth quarter? I think for all of last year, you were up in the low 20s. I'm just sort of curious sequentially what you've seen on the general casualty book.

Mark, we don't have those stats to provide today, but we do have in the [10-K]. You've got the by underwriting division gross written premium for the year, and it's a three-year look back.

Yeah. Exactly. Okay. Bryan, on the cash flow, the cash from operations up 8%. Is that going to track along with net written perhaps, or how would you think about the cash flow dynamic playing out this year? What are the guideposts we should keep an eye on in terms of the free cash? Obviously, it's helping to drive investment income. I'm just sort of curious any thoughts there.

I think that's a good way to look at it, Mark, trending it with net written premium.

Yeah. Okay. All right, very good. Thank you.

Thanks, Mark. Next.

There are no further questions at this time. I'll now turn the call back over to Mr. Kehoe for any closing remarks.

All right. Well, I just want to thank everybody for participating, and hopefully you get a sense of our optimism, and hope everybody has a great day. Goodbye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.