Kinsale Capital Group, Inc. Stock

Hello, everyone. Thank you for joining us and welcome to the Second Quarter 2026 Kinsale Capital Group Inc. Earnings Conference Call. After today's prepared remarks, we will host a question-and-answer session.

[Operator Instructions] 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 second quarter results.

Kinsale's management may also reference certain non-GAAP financial measures in the call today. A reconciliation of GAAP to these 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 Analytics and Technology Officer. In the second quarter 2026, Kinsale's diluted operating earnings per share increased by 15.9% over the second quarter 2025, generating an annualized operating return on equity of 24.4%. Gross written premium was down 5% and net written premium was down 1.4%, and net earned premium was up 8.9% for the quarter.

Kinsale's combined ratio was 75.5% for the quarter. E&S market conditions in the second quarter continued to be competitive and largely consistent with conditions in the first quarter. The level of competition and our growth rate continue to vary from one market segment to another. And continuing the trend from the last few quarters, our commercial property division, where we write larger layered property accounts is where competition is the most intense and where you are seeing material rate declines combined with expanding coverage.

It's definitely a buyer's market. And as a consequence, we are writing a shrinking volume of business in that specific market. Excluding the commercial property division, Kinsale had growth in gross written premium of 3.7% for the quarter and 4.8% for the first half of the year. And given that 60% of the Commercial Property division premium was written in the first half of last year, the year-over-year growth comparison becomes modestly easier in the next 2 quarters of 2026.

Just as we always do, in today's competitive market, we prioritize profitability over growth. When competition in the market is intense, it's not unusual to see some competitors underpricing risk, and that is a common occurrence in today's market. Notwithstanding the state of the market, we are working hard to grow our business through product enhancements and new products, geographic expansion of some product lines, new broker appointments, robust marketing efforts and improved customer service.

Stuart Winston will offer further detail and commentary on the market environment and our efforts to drive growth here in a moment. In addition to working harder, we are also using analytics and technology to work smarter. Kinsale has made technology a core competency of our business since our founding 17 years ago. We own our own custom-built enterprise system. We don't have legacy applications dating back decades in time, and we are driving system enhancements and automation at the fastest pace in our company history.

Additionally, analysis of our own data and data that we acquire allows us to continually refine our underwriting and pricing models, thereby driving exceptional loss ratios even in a competitive market and even with a conservative approach to loss reserving. Salmaan Allibhai will provide some additional detail on our efforts in this area shortly.

And finally, we continue to use excess capital to buy back our own stock. Last night, we announced an expansion of our buyback authorization to include an additional $250 million, bringing our current authorization to $337 million. Given the competitive advantages of the Kinsale business model around underwriting accuracy, data and analytics, technology, combined with the enormous cost advantage we have over every single competitor, Kinsale shares represent a good value at today's price, a very good value.

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

Thanks, Mike. The business continues to generate strong profitability even in this period of heightened competitiveness that Mike just noted. Net income and net operating earnings increased by 31.1% and 13.3%, respectively, quarter-over-quarter. The 75.5% 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 1.3 points in cat losses this year compared to less than 1 point in the second quarter of last year.

We produced a 21.7% expense ratio for the quarter compared to 20.7% last year. The other underwriting expense portion of this ratio, which is the best measure of the operational efficiency of the business, was 10.3% for the quarter compared to 10.6% in the second quarter of 2025. 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 19.9% in the second 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 $3.4 billion at June 30, up from $3.1 billion at the end of 2025. Annualized gross return was 4.5% for the first half of 2026 compared to 4.3% last year.

New money yields are averaging around 5.25% with an average duration of 4.25 years on the company's fixed maturity investment portfolio. And lastly, diluted operating earnings per share continues to improve. and was $5.54 per share for the quarter compared to $4.78 per share for the second quarter of 2025.

And with that, I'll pass it over to Stuart.

Thanks, Bryan. The soft E&S market continued in the second quarter, but still offers opportunities for growth. Growth driven by compromised profit margins is easy to manufacture, but costly to unwind. And because of this, our approach to soft markets like commercial property, construction or certain professional lines is not to chase the market down, but to continue to price business in a way that meets our return thresholds and to be opportunistic where it makes sense.

In markets where favorable conditions exist, we'll lean into them. Areas like excess casualty, commercial auto, entertainment, environmental, agribusiness casualty and energy, all had favorable underwriting conditions during the quarter and all saw meaningful growth. Overall, new business submission growth increased 6% in the second quarter, a similar rate to the first quarter 2026.

We continue to see a decline in new business submissions in the Commercial Property division that handles large shared and layered deals. And excluding the commercial property division, new business submissions were up 8% for the quarter and over half of our divisions are seeing submission growth in the double digits. As I mentioned last quarter, we continue to see strong momentum across the business, especially in the small to medium enterprise segment where we are most focused.

With an average premium of approximately $12,000, our platform is built around smaller accounts, and that part of the market remained active in the quarter. Submissions, quotes and binders, all increased for the company with the most meaningful growth coming from accounts with premiums of $25,000 and below. We believe that consistency highlights the durability of our model across all market environments.

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 Amlin pricing index, which showed a decrease of 5.9% compared to a 3.3% decrease in Q1 of 2026. While we continue to see strong rate pressure in commercial property, other lines like commercial auto, excess casualty and entertainment present opportunities for meaningful rate increases.

Distribution and product expansion remain key drivers of growth. On the product side, we have rolled out 9 new product offerings or enhancements across various underwriting groups so far this year, with 5 more set to launch imminently and another 10 in the pipeline, a pace that reflects the depth of our appetite and our ability to move quickly when we see opportunity.

We've also made meaningful progress on distribution, appointing 24 new wholesale brokers to the Kinsale platform and 176 new retail brokers to Aspera, our in-house broker through which we distribute most of our personal lines products. With new offerings in our homeowners line, Aspera continues to expand both its product line and geographic footprint, extending our reach into personal lines markets where we see long-term demand.

Underpinning all of this is our ongoing focus on operational efficiency. Workflow improvements, utilizing AI and other technology upgrades across our underwriting functions have allowed us to maintain our service standards and in many areas, improve them, ensuring that growth does not come at the expense of the execution our brokers and insureds expect from us, all the while staying disciplined in managing returns.

And staying disciplined on price and terms means that there will be business that we choose not to write, and we are comfortable with that. The long-term health of the portfolio matters more than any individual account. That mindset is embedded in how we evaluate every risk that comes through the door. When the market softens and competitors begin to stretch on terms and conditions to hold on to accounts, we're going to stay disciplined to our underwriting standards.

If we lose accounts due to competition, whether it's pricing or terms that no longer meet our profitability threshold, we view that as the model working as intended. We will not -- what we will not do is sacrifice profitability for the sake of top line growth. We will continue to leverage our low-cost advantage over our competition to write profitable business in the softening market and focus on small- to medium-sized risks where there's still strong market opportunity and be opportunistic when large deals come our way. With that, I'll hand it over to Salmaan.

Thanks, Stuart. As Mike noted earlier, we continue to use analytics and technology to drive profitability and efficiency in the business. Several months ago, we brought the 2 functions together as a single team. Both have been core competencies from day 1, and now they are working more efficiently from the same strategic road map.

In a more competitive part of the cycle, the importance of analytics and actuarial functions increased dramatically. Every day, we are working to get better at segmenting and pricing risk by adding to our ever-expanding third-party data repository and utilizing more sophisticated statistical and machine learning algorithms to identify the characteristics that drive loss.

We've been able to do this well over the years because we have all 17 years of our company's data in one database. This data-driven approach gives us an advantage balancing profitability with growth. On the technology front, we are working hard to drive efficiency and automation across our business processes. One of our greatest advantages is that we do not have legacy software dating back decades. This means our team is primarily focused on innovation and developing new capabilities as opposed to maintaining outdated systems.

When it comes to AI, we continue to see meaningful benefits via increased productivity and new capabilities. Every associate in the company has an enterprise license for 2 of the leading frontier models. Our analytics, technology, underwriting and claims teams are all using AI daily to improve the way we work, employing dozens of skills, bots and agentic tools. We've built AI functionality into our proprietary underwriting worksheets and those efforts are accelerating.

We also have a team of our analytics and technology professionals working directly with folks in the business to develop additional custom AI solutions. Artificial intelligence is changing the way we work for the better. It is improving productivity, customer service and accuracy across our business and doing so at a rapid pace. We are confident that the technology lead Kinsale has built over our competitors is growing even larger.

And with that, I'll hand it back over to Mike. .

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

[Operator Instructions] The first question comes from the line of Pablo Singzon with JPMorgan.

The current year accident loss ratio improved from 2Q '25, which I think is a bit different from what many other commercial insurers are reporting. So I was hoping you could please talk through the key factors that drove that. Was it lower non-cat property losses mix, changes in loss picks and so on? .

Pablo, this is Salmaan. Yes, I would just reiterate that losses for the quarter came in below expectations as they have for the last few quarters. There's really nothing out of the ordinary. It's just kind of normal variability and mix of business. The loss ratio was a composite of a dozen statutory lines of business. I would just reiterate that our reserves are as conservative as they've ever been in our company's history.

And then my second question, just on the reinsurance and ceding commission rates. So I think the commission rate has actually been going up for Kinsale over the past couple of years. I was wondering if you expect the same this year after the renewals.

Pablo, this is Bryan. I said if you look at what we had here in second quarter, it's a pretty good indication, I think, of where we're going to be going forward. You could see a slight uptick in that going forward, we renewed our reinsurance treaties on June 1st, so there's only 1 month of effect of the new treaty. But I think you're just looking at the loss ratio in general, you may have a slight uptick there in commissions. We could get some efficiency gains on the operating side given the AI activities that we talked about previously. So I think if you look in aggregate, the second quarter expense ratio should be a good measure for you going forward.

The second question is from Hristian Getsov with Wells Fargo.

My first question is on the E&S casualty. Just given that segment is softening a bit. I guess, given GWP, I think, was up 3% versus up 4% in the first quarter. How much are ROEs compressing in the line, assuming your views on loss trends, high single digits to low double digits haven't changed?

Well, we manage everything to a 20% ROE or greater, and I think most of our product lines are probably running ahead of that. I think we're what, 24.4% for the quarter. So there's always a give and take where we're trying to balance profit and growth.

Got it. And then for my second question, I guess, given the softer market and you've been pretty protective of your commission ratios to brokers. I guess, how are you guys thinking about broker commissions on a go-forward basis is typically brokers like to up their commissions in a softer market, and it seems like maybe they're placing more business with the admitted side, just given the economics are a bit better on that front. So how are you guys thinking about changes there?

Yes, Hristian, this is Mike again. I would say, look, brokers are critical to our success. Obviously, they're looking to maximize their economics. That makes sense. There's some tension between the wholesalers that we distribute most of our business through and their retail clients in terms of how they split the gross commission. Of course, the customer, the buyer is keenly focused on lower-cost insurance. So you're always going to have some tension across the spectrum, if you will. And of course, in a soft market when rates have drifted down, that puts pressure on everybody.

So I think it's a normal tension in the business. I would say we offer our brokers the best customer service in the industry. I don't think there's anybody even close to Kinsale's quote ratio and response time. And I think we also offer the broadest risk appetite. We're a go-to-market for your very hard-to-place accounts. And so between that and just competition in the market, as Stuart Winston mentioned a few minutes ago, we continue to grow our business especially when you set aside that 1 commercial property division, which is going through kind of a unique correction. So we're confident in our model and acknowledge the tension in the market, if you will.

Next question is from Dan Cohen with BMO.

Maybe just focusing on the commercial property side. Does Kinsale view this 2Q as maybe the trough there, given some larger players are pulling out, is the view that property pricing can maybe become less negative in '27? Or could maybe Kinsale get back on some of these larger shared placements next year as they continue to pull back?

Dan, it's Stuart Winston. Yes, there's no telling on where it's going to go in 2027. We still are seeing -- we do hear that a lot of large players are pulling out, but there's still pressure from various MGAs in London. A lot of traditional markets are still heavy in the shared and layered deals is putting up larger limits, stretch primary. So it's still squeezing and it's still competitive. And our role now is to keep our pricing as close to technical and meet our return thresholds. And if we shrink because of it, it is what it is in that division.

And then maybe just focusing on the 3.7% growth that you're excluding the large account property just what's driving that acceleration? Is it pricing? Or are you seeing some business starting to return to the mid market, and I guess just what would need to change maybe for that number to start to inflect here in the future?

Yes. I mean, like I said in my comments, there's still -- there's heavy competition in some long-tail lines from -- London is starting to creep into some other liability occurrence long-tail lines. It's depressing pricing across the market for construction lines of business. We're starting to see some more competition around general casualty type business. So it's -- but there are pockets of opportunity that we can grow, and we're going to lean into those.

Are you seeing any of that business return to the mid market at this time or no?

There is some flow to the mid-market, but it's not pervasive.

Next question is from Andrew Andersen with Jefferies.

You had mentioned in the press release that there was an increase in inbound accounts. I think that was some new language added. But maybe you could just talk about how much of that increase inbound accounts is coming from some of the broker engagement that you've been working on versus more competitive pricing?

It's a little bit of both. We -- sorry, Stuart, still. It's a little bit of both. There's -- we're doing a good job with our idle broker initiative to reengage brokers that have slipped off over the years. We're seeing an increase of flow from them. Our hit ratios have stayed roughly the same, renewal and new business. And with the growth in submissions, we're just seeing more accounts buying.

Andrew, the part of why we put that in there is just to explain, if you will, some of where our confidence in our business model comes from, right? We wrote a ton of business in that commercial property division as that market went into a crisis. And obviously, the crisis is over and rates are coming down pretty dramatically. But the underlying business, although obviously, we're growing at a slower clip, the business model is still working quite well.

Yes. And some carriers have been pointing to maybe some incremental improvement in claims emergence and loss cost trends even if they're not declaring victory on social inflation by any means. But what is your current view of the social inflation and casualty loss trend landscape?

This is Salmaan. For casualty loss cost trends, we'd say probably mid-single digits. It varies by line of business. Social inflation, we -- because we write smaller accounts and lower limits, I don't think we've been as exposed to social inflation as some of the other carriers. So we're just not seeing a whole lot of it.

Okay. And maybe just a clarification. When you were explaining the accident year loss ratio earlier, you kind of mentioned normal variability and some lower losses. Was that entirely on short-tail property business?

I think it's across the board, but the short-tail lines of business have been performing well for us, especially well for us.

And Andrew, we're allowing the -- we're being a little more conservative as we have for a couple of years in slowing down the release of IBNR in the longer tail occurrence business and allowing it to flow out a little bit more quickly in the short tail lines, where there's a lot more certainty around ultimate loss ratios. .

Next question is from Mark Hughes with Truist.

Yes. I just wanted to revisit the question on property pricing in the property cycle. Any kind of granularity you can provide around what you saw in 2Q versus 1Q? I'm thinking of the E&S data seem to point to incremental softening in 2Q. Just trying to understand when or if we can get to a point of some kind of equilibrium and it might stabilize at this lower level. Any thoughts there would be helpful.

Mark, this is Mike. I'll start, and then I'll flip it over to Stuart for his comments. But eventually, we're going to get to some equilibrium because it's -- although catastrophe losses, in particular, can be intermittent and kind of unpredictable, they do happen. And I think being disciplined on how we price that business, combined with, just as a reminder, a very disciplined risk management protocol around concentration of business and the like, we're very confident about what we're doing in that space. But when it happens, I think we don't have any insight into that. And -- but we do have some other property-oriented underwriting divisions that are seeing growth opportunity.

Yes, Mark, if you look at specialized areas like agribusiness property, we're seeing growth there. That's a more stable market. Our small business property is definitely more stable than large shared and layered deals. It's been a much more consistent market over the last 1.5 years, 2 years...

Inland Marine..

Inland Marine. We're starting to see a little more competition in Inland Marine, but that's -- we have 5 buckets of products in that division. So it's spread out -- but yes, there's no telling. -- if the wind blows, we'll be in a better position. But I think people are starting to get to the floor of their pricing for property, which is just there's still pressure from London.

You touched on the current accident year number, which was quite good in the quarter. I think you've been -- as I read your results, the property has been more profitable than casualty, but the mix has been changing here. What do you -- what should we think about the underlying current accident year loss ratio given the mix shift out of property into casualty. Should it drift up? Or is this kind of level sustainable?

Mark, this is Salmaan. It's hard to say. It could drift up over time. But like I alluded to earlier, I mean, the losses are coming in below our expectations. And so we feel good about where we're booking the loss ratios right now..

And we feel very good about the level of conservatism in the IBNR, the reserves, which is a positive indicator for future, you know, loss ratio performance.

Then 1 final one, if I might. The buyback, a pretty meaningful number this quarter. As you think about it on a go-forward basis, if you're maintaining moderate top line growth, is that going to be something that you'll continue to lean into? Or how do you think about the pacing there?

Yes, Mark, this is Mike. We're going to continue to lean into it. You recall, I guess, about a year -- a little over a year ago, we had our first buyback authorization of $100 million that we exhausted. We did a $250 million authorization after that, that we're -- I think we have $80 million or so left on. And then this new $250 million authorization. So that's our principal capital allocation strategy.

Obviously, we pay a small dividend. But as growth accelerates in the future, we'll obviously lean back into growth. That would be our first priority. But in this interim phase where growth is a little bit more limited, we think this is a wise use of capital given our confidence in the business model and future profitability and price appreciation..

Next question is from Dan Cohen with BMO.

Maybe just on the product expansion that you mentioned in your prepared remarks, just how has that contributed to growth over the past year or so and maybe the potential growth uplift going forward on those new products and whatnot?

Yes, Dan, it's Stuart Winston. Yes, so when we roll out new products and new enhancements, we never want to be the market that jumps in feet first into the market and grows like a weed. It's always going to be a crawl walk run pace to growth. So they are -- the new products are creating growth. They are driving submissions. They are driving new premium, but it's going to be -- it will be a slow growth. And as the market turns, we'll ramp up and go from there.

Operator, it looks like that's the end of the questions.

Yes. There are no further questions at this time. We've reached the end of our Q&A session. I will now turn the call back to Michael Kehoe.

Okay. Well, thanks, everybody, for participating. I want to thank all the Kinsale employees for their tremendous effort in driving these good results, and we look forward to speaking with everybody again at the end of the next quarter. Have a great day. .

This concludes today's call. Thank you for attending. You may now disconnect.

[Audio Gap] before we get started, let me remind everyone that through the course of the teleconference, Kimtel'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 Simon Olive 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% and over the first quarter of 2025, generating an annualized operating return on equity of 24%. Gross written premium was jdown 0.5%, 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 1 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. And 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 is an abundance of competition and falling rates.

Excluding the Commercial Property division, in sales 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 at core competency, allows us to operate a smarter business with a tremendous cost advantage over every competitor in the market, no exceptions. And 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 and 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 in 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. And 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% and 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 2025. 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.

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 4 years on the company's fixed maturity investment portfolio. And 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. And 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 and 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, our small business property, in the 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 product liability division 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 and 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 3.33% 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 inland 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 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 continues 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 focus 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. So 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. And with that, I'll hand it back over to Mike.

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

[Operator Instructions] Your first question comes from Dan Cohen with BMO Capital Markets.

Just first on the new disclosure of the new business quotes and the new bond orders. Can you just maybe expand on how that trended year-over-year and quarter-over-quarter. -- 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?

Dan, this is Mike. I would say we've had requests from people over the years for a little bit more granular disclosure. So we're providing it. The more granular, the more volatile those numbers are. So I wouldn't overthink how important it is that in a 90-day period, some things up or down. But 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. And then maybe just given the material expense ratio and the best-in-class returns today, just wondering, is contain deteriorate some of its accident in your 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. And we're constantly adjusting pricing in both directions based on our understanding of the relative profitability of a given line. So that's just a normal part of managing an insurance company. But 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.

My first question is on the accident year loss ratio. So I think it was much better than people expected, up 40 bps 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 moving from here just given more mix shift towards casualty and just loss trend versus rate in lines away from property? .

This is Solomon. There's nothing out of the ordinary, no onetime 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. And so typically, the first quarter is a little bit higher than the other quarters, but nothing out of the ordinary to report.

Got it. And then just given the new disclosure, I was surprised to see ENS homeowners declined 22% in the quarter. Was that driven by increased competition? Or was it something more timing related.

Yes. It's the high value -- this is Stuart. The high-value market is experiencing some increased competition, and we're -- the limits that we're offering are tend to be lower. So it's -- 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 homeowner split.

Got you. And then if I could just sneak 1 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 given the below average forecasted hurricane season. But also cost counterbalancing that, which is the lower cost of reinsurance?

Yes. 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, but I 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.

Our next question is from Andrew Andersen with Jefferies.

On the casualty side, Mike, maybe you could just talk a bit about how competitive behavior has been changing over the past 6 months, whether that's from MGAs or admitted carriers and 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 front and MGAs and new companies on long-tail lines, specifically in construction over the last 4 to 5 months. So that's -- it's ramping up pretty aggressively there, but there's still premises liability strong for us. Anything related to auto, you're seeing meaningful opportunities there.

So -- and maybe 1 other thing, just to reiterate is that there's -- it's a different market when you're looking at larger transactions than when you're looking at smaller. And hence, we've always focused predominantly on small- to medium-sized accounts. And in a more competitive market, we always feel like that's a great safe harbor for Kinsale.

Got it. And 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 kind of characterize as demand driven versus some pullback on just irrational pricing? And 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. But 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, it's a competitive market, but reasonably steady, and we're excited about the growth prospects. There is a little bit of the shift from larger accounts are under more competitive stress. So 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.

But 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 who want to start a new shop, we're typically quite supportive of that.

Our next question is from Pablo Singzon with JPMorgan.

Mike, thanks for the disclosure and 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 impact from large commercial property?

Yes. Pablo, this is Stuart. New business hit ratios and renewal in ratios have been consistent quarter-to-quarter for a long time. So no big change there.

Okay. And then maybe a broader question. So small business E&S and even on the admitted side, historic have been charging 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?

No. Obviously, technology has 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.

Your next question is from Mark Hughes with Truist.

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

Yes. 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 6 months of the calendar year.

And then the -- yes, 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 talked about using the expense advantage. Would you say that essentially, you're in the -- you're using that to the degree that appropriate at this point that you're not going to be pushing more or using the expense advantage to grow the top line. Is that -- 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 and -- so yes, 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. But then on top of that, we've got a torch 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 there's -- 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. But yes, 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, to profitability. But 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. So 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.

And then just out of curiosity, how is the equity portfolio performing?

It's performing well. I think if you look back over -- so keep in mind, we're about 2/3 actively managed equities and 1/3 passive, principally the I think since late 2022, we've lagged the S&P, but we've more or less matched our benchmark, which is the Vanguard BYM, the high dividend ETF and lagging the S&P is mostly related to the fact that we've got a 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. .

[Operator Instructions] Your next question comes from Rowland Mayor with RBC Capital Markets.

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 and $40,000 per policy.

That commercial -- rolling that commercial property division, that is the large shared layered division. So -- everything else is handled operating small properties broken out separately. So Commercial Properties is a stand-alone division for the large share-led deals.

Yes. And if you look at that division, Rowland, if you looked at that, like, say, a year or 2 ago, I think the average premium might have been north of $50,000. So you can see where 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. And then 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 will 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 -- 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, it's 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%. But just generally speaking, we're about 15 percentage points above the risk-free rate. .

Your next question is from Pablo Singzon with JPMorgan.

Mike, the submission growth rate you provided, do you have a sense of how that compares to the overall market or maybe the subsegment of E&S where you compete in, right? I just want to get a sense of, first, like sort of where the macro is trending? And I guess, more importantly, how you are running against it?

Yes. 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. So they typically canvass the market to make sure they're getting the best terms and conditions for their customer. So I assume there's some commonality to the stats we have versus what our competitors have. But we don't really know that. .

Your next question is from Mark Hughes with Truist. .

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 delays, but we don't also focus on large project specific policies for those parts. I think you will see that in certain areas, outlets in the Northeast for wraps that projects are being delayed a little bit, but that's not really where we focus on in the construction book.

And then 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 the stats to provide today, but we do have in the K, you've got the by underwriting division, gross written premium for the year, and it's a 3-year look back.

Yes. Yes. Exactly. Okay. And then Brian, on the cash flow, the cash from operations up 8%. Should we think -- 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 would be guideposts we should keep an eye on in terms of the free cash. Obviously, it's helping to drive investment income. So 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 premiums.

Thanks, Mark. .

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

Thank you for standing by. My name is Carl, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kinsale Capital Group Q4 2025 Earnings Conference Call. [Operator Instructions] 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 2023 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 fourth 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 Kinzel Chairman and CEO, Mr. Michael Kehoe. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Bryan Petrucelli, our Chief Financial Officer; Brian Haney, our President and COO; and Stuart Winston, our Chief Underwriter, are joining me this morning for the call. In the fourth quarter, 2025 Kinsale's diluted operating earnings per share increased by 26% and gross and net written premium grew by 1.8% and 7.1%, respectively, over the fourth quarter 2024. For the quarter, the company posted a combined ratio of 71.7% and a full year operating ROE of 26%. Our book value per share increased by 33% since the year-end 2024, and our float increased by 23%. Overall, E&S market conditions in the fourth quarter continued to be competitive with the level of competition and our growth rate varying from 1 market segment to another.

As we've noted for the last year or so, much of the recent headwind to Kinsale's overall growth rate is due to the shrinking of our Commercial Property division, which writes larger catastrophe-exposed accounts and operates in one of the more competitive segments of the market. This decline in premium comes after several years of extraordinary growth. Excluding Commercial Property division, Kinsale had growth in gross written premium of 10.2% for the quarter and 13.3% for the year. Given the success of Kinsale's disciplined underwriting and low cost business model over the last 17 years. We have confidence in our ability to generate best-in-class returns and growth while maintaining a strong balance sheet with conservative loss reserves, it's always important to maintain underwriting discipline, but especially so when the market competition is intense.

Likewise, it's in a more competitive moment in the insurance cycle that can sales enormous expense advantage is most impactful. Kinsale last year had an expense ratio under 21%, and many of our competitors tend to run in the mid-30s or higher, some even above 40%. Given the customers' focus on low cost, it's hard to overstate the significance and the durability of this advantage. Another competitive advantage that we speak about frequently is technology. We consider tech to be a core competency of ours alongside underwriting and claim handling.

We own our one core operating system, which we custom built for our operation, and we don't have any Lysisoftware going back 20, 30 years or longer. In addition, we have spent years developing our analytics capabilities with a growing team of actuaries and data scientists who use our data and data we acquire to discern insights and improve decision-making and profitability in our business. Further, over a year ago, we began a company-wide push to introduce and promote the use of AI in our operation. We are making consistent use of these tools in our technology and analytical teams.

We are also using AI extensively in other areas of the company, particularly underwriting. Every employee in the company has access to an enterprise AI license, and we have dozens of bots and agents being used every day in our business process, yielding interesting productivity gains even at this early stage. Many of these AI innovations will be quickly integrated into our custom enterprise system and the continued gains we expect for both productivity and improved segmenting and pricing of risk or material.

Lastly, given our recent growth rate, we are returning more excess capital to shareholders, mostly through the $250 million buyback authorization that we announced in December, subject to a variety of considerations, we generally expect to deploy this authorization over the next year or so. Likewise, we announced an increase in our quarterly dividend to $0.25, up from 17%. Note that even with this activity, can sale still maintains a conservative level of capital well above that required by both regulators and rating agencies.

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

Thanks, Mike. As Mike just noted, we continue to generate great bottom line results with net income and net operating earnings increasing by 27% and 25%, respectively, quarter-over-quarter, 71.7% combined ratio for the quarter included 4 points from net favorable prior year loss reserve development. Compared to 2.6 points last year with less than 1 point of cat losses this year compared to 2.2 points in the fourth quarter of last year. Gross written premiums grew by 1.8% for the quarter, while net written premiums grew by 7.1%. The growth in net written premiums was higher than gross due to an increase in the retention levels when we renewed our reinsurance program on June 1 of last year. We produced a 20.8% expense ratio for the full year compared to 20.6% last year. The other underwriting expense piece of the ratio which is the best measure of the operational efficiency of the business was 10.5% for the year and about 0.5 point better than 2024.

On the investment side, Net investment income increased by 24.9% in the fourth quarter over last year as a result of continued growth in the investment portfolio generated from strong operating cash flows. Can sales float mostly on paid losses and unearned premiums grew to $3.1 billion at the end of 2024, up from $2.5 billion at the end of 2024. The gross return for 4.4% for the year and consistent with last year. New money yields are averaging around 5% with an average duration of 4 years on the company's fixed maturity investment portfolio. And lastly, diluted operating earnings per share continues to improve and was $5.81 per share for the quarter compared to $4.62 per share for the fourth quarter of 2024.

And with that, I'll pass it over to Stuart Winston.

Thanks, Brian. But the level of competition in the E&S market differs by underwriting group with some areas experiencing more competitive pressure than others. We continue to see soft pricing around D&A and some other professional lines. And while large shared and layered commercial property lines experienced heightened competition during the quarter, we were able to realize growth in other property lines like small business property, high-value homeowners, Inland Marine, Personal Insurance and Agribusiness property. .

Casualty remained a strong area of growth for the quarter. This growth was led by our commercial auto, Agribusiness casualty, general casualty, entertainment and excess capacity divisions. We will continue to explore new products and enhance our current offerings within these growing areas to capitalize on opportunities throughout the year. Overall, new business submission growth, excluding unsolicited submissions was up 6% for the quarter. We continue to see a decline in new business submissions in commercial property in the Commercial Property division that handles large shared layer deals.

However, most divisions are still seeing submission growth with about half of those seeing double-digit growth. Excluding commercial property, new business submissions were up 9% for the quarter. While our lot of business are experiencing varying levels of competition and pricing pressure, the combined pricing trend is in line with the AM Wins Index, which showed a rate decrease of 2.7% compared to 0.4% compared to a 0.4% decrease in Q3. Although large commercial property placements continue to experience strong rate pressure, other property lines like small business property and inland marine in casualty lines like commercial auto, excess casualty and general casualty, present opportunities for meaningful rate increases.

We remain confident about our position and opportunity in the E&S market. Our low-cost model provides a durable advantage that helps us remain competitive in both hard and soft market environments. This advantage, combined with our broad risk appetite, best-in-class service standards, fast turnaround times and the ability to quote more than 70% of all new business submissions will enable us to gain market share and deliver strong returns for our investors.

And with that, I'll hand it back over to Mike.

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

[Operator Instructions]. Your first question comes from Michael Phillips with Oppenheimer.

I guess I wanted to talk on the commercial property. -- down pretty hard this quarter. Was that a change from what you were seeing last quarter or maybe I misinterpreted, I thought you were talking about an inflection there. Was there something else that happened that caused that to go down harder than what you said last quarter.

Yes. Steve, I think what we mentioned in the last call in September, October, it seemed like it was stabilizing a little bit. And then November, December, there was an influx from London and some MGAs in that large Lardon shared space that the deceleration in growth.

And I guess, any thoughts on how that might proceed at least for the next foreseeable feature this year? Is that going to stay where you saw in November, December?

This is Mike. It ebbs and flows month by month. But I would just say, in general, at some point, after the next couple of quarters, it should stabilize. Okay. And Stuart, last quarter, you said the excess casualty rates were holding strong, and you mentioned it again this quarter. I guess if we specifically -- I don't know how much of your commercial casualty is commercial auto. Can you say what percent that is? And maybe a little bit more on what you're seeing and you said commercial auto rates were moving up. What are you seeing there in terms of loss trends begin to how much of that is commercial auto in your excess casualty? .

It's actually a pretty small percentage in our actual excess casualty book. And even with our Commercial Auto division without getting into the details, it's actually -- there's no primary auto and it's a small portion of excess wheels. .

Your next question comes from Andrew Anderson with Jefferies. .

On the submission figure that you quoted of up 6%, I think you added excluding solicited submissions, is that like-for-like for the 6% in 3Q? Or is that a different metalogy now?

That's the same .

And then -- could you maybe just talk about what you're seeing in business retention ratios, not so much the retention versus reinsurers, but just year-over-year business retention and maybe just some color on how you're thinking about any flow back to the admitted market that you may be seeing in either property or casualty?

Yes. Andrew, it's Mike. We're -- I think our renewal retention is in the very low 70% range, and that's been pretty steady. We don't see a big movement there. And -- in terms of move to. --

Your next question comes from Mike Zaremski with BMO. --

Just wanted to make sure I'm teasing this out correctly. Is the -- most of the diesel and the growth rate on premiums is coming from property kind of larger accounts shared layered. If that's correct, maybe you can kind of help us with kind of what percentage of the portfolio at this point is made up of that type of business at this point? I know it's been shrinking.

Yes, Mike, this is Mike. We're going to publish that next week in our K. If you look at our investor slide deck on the Internet, we break out all the divisions. I think it's through the end of 2024, and that will be updated at the same time with the '25 stats. But yes, it's essentially the commercial property division. It was our largest division last year. And they're larger accounts and they're just subject to a much more intense level of competition. I think Stuart mentioned the fact that all of our other 5 or 6 property divisions are experiencing pretty robust growth. They're just off a smaller premium base at the moment. .

So I just want to -- just because I think we're probably focusing too much on this divisions kind of cyclicality. But I just -- so is it fair for us to -- if we want to kind of get ahead of this trend for '26, I think the consensus in the market is that large account property stays similarly soft to '25. So I guess, unless you think I'm off, we should just kind of assume that this this portion of your business is still material and we should kind of make sure we're accounting for further potential shrinkage in this part of your business for next year. Is that fair?

Yes. I mean it's a very competitive market. And so I think what you saw in the fourth quarter, again, the specific numbers are going to ebb and flow, but the fact that we're in a hypercompetitive environment there, I think we'll continue over into '26. .

And then pivoting to casualty. Look, we're seeing kind of a stabilization of the trend line there, excellent what appears to be loss ratios. Are you specifically for casualty, pricing and submission? Is that kind of have we trough there on those KPIs. I'm assuming pricing still competitive? Or is there still kind of incremental pricing competition on the casualty side?

Yes. I would say, in general, we're in a competitive moment in the insurance cycle with the level of competition varying quite a bit from one, if you will, market segment to the next. The commercial property we've been talking about the larger Southeastern wind accounts. That's an example of one of the most competitive areas. And then Stuart, a few minutes ago, listed a number of areas where we're still seeing very reasonably strong premium growth and upward movement in pricing.

So we feel very positive about the business overall, given our underwriting and our cost advantages. And one of the reasons we broke out that commercial property in our press release and in our comments is just to reiterate that -- that's a little bit of unique market segment and division for us and then it grew tremendously over the prior several years. And now we're kind of giving back a little bit of that outsized growth. But if you pull that out and look at the rest of the business, it's still running not just great margins, but 10% growth in this competitive environment, I think, is quite positive.

Your next question is from Hristian Getsov from Wells Fargo.

Any quantification you could provide on how much better in terms of percentage points, the underlying combined ratio is between commercial property and kind of the rest of your business? Because I'm trying to get a sense of how much deterioration we could see just from business mix shift I feel like simple calc, I think properties down to 20% versus the '24 at the start of 2025. So I'm just trying to get a sense of what that gap is. .

Yes. We're not going to be able to provide that on a conference call. But when our Ks published next week, there's some accident year exhibits that break out occurrence casualty, claims made casualty and property. And then when our statutory statements filed in a couple of weeks, that gives you even more granular loss data on an accident year basis by statutory line of business so you can really get into the weeds there.

I think that would be better. But I would just say, overall, I would remind all of our investors certainly that it is -- it's a strategy of ours over the 17 years we've been in business to post loss reserves in a conservative fashion. And if you look at our history, every year, we've had favorable reserve development in our GAAP financials. And so hopefully, we're building a lot of confidence among the investment community.

We have also commented that over the last couple of years, we've been quick to release IBNR, so reserves for future claims from the short tail lines of business like property, and we're being a little more cautious on the long tail lines like casualty. But again, that's a good thing. That's -- we're still posting best-in-class financial results, but we're doing it with a high level of conservatism in our reserving practices. So hopefully, our investors take some comfort in that.

And then for my follow-up, how big of an opportunity are data centers for Kinsale -- are you guys writing that business currently? And I guess, any general market commentary on how the competition and the terms of conditions are developing in that area? .

Yes. It's not -- it is Stuart, by the way. It's not a meaningful percentage of our book of business in property or casualty, the layer the limits required on those placements is just not now where we're competitive. .

Your next question comes from Mark Hughes with Truist. .

Yes. I think, Stuart, you had mentioned in November and December in property, you saw an influx from London and MGAs anything in casualty on that front? Did you see a little more competitive pressure across the board? .

There's always been competition from the NGA and front end companies on the casualty side, but no real increase in the quarter.

Yes. When you look across the industry as a whole, it seems like casualty has meaningfully decelerated from 3Q to 4Q. Is that pricing? Is that competition? Is it business going to other other carriers or nonpublic carriers .

The normal variability in the market Mark, between quarter to quarter. .

Very good, very good. Bryan, you talked about the expense ratio. How much impact this quarter just from the mix shift, maybe lower ceding commission from lower property?

Yes, I think we didn't break out the components by quarter, Mark. But the portion of the expense ratio related to net commissions was relatively constant with the third quarter. I think we mentioned -- and I've mentioned in the past sort of looking at it quarter-by-quarter, there is a fair amount of variability. So we're sort of guiding you to the to the annual metric. But again, I commented in my remarks that, hey, the other underwriting component of the expense ratio did improve by about 0.5 point year-over-year. .

Okay. So 1 could assume mix might account for a little bit of an uptick in the expense ratio. .

Yes, exactly. .

Yes. And then how about kind of new business trends excess versus primary -- has there been any material shift in that if access is more attractive? Is that -- are you leaning into that? Or is it still more balanced? .

It's still pretty balanced. It stayed -- the mix has stayed pretty similar since day 1.

Your next question comes from [indiscernible] Bank of America. .

Just a quick question. I know obviously, social replacement increased litigation as has been much more prevalent in the larger accounts. But I wasn't sure if that was starting to migrate at all more towards the area you guys dial play? Do you have any comments there on how that environment is kind of shaping up?

Joe, this is Mike. There's plenty of claims and litigation activity in the small account market like there is in larger accounts. So small accounts definitely aren't immune from that. I don't know that there's any pronounced change in recent months, but it's -- the litigation industry in the United States is large and growing, and the plaintiff attorneys or entrepreneurial as hell looking for new ways to drive claims and serve their clients. So we're vigilant for sure.

And then just as a follow-up, a quick question. I know you guys talked about kind of leading until the AI in your opening remarks. I'm just kind of wondering if you can expand a little bit more on that, where you kind of see more of the opportunities or where you're most excited for AI really to be deployed within the business, whether it's on claims, underwriting or what have you kind of for the next year or so?

Well, I think broadly speaking, AI in the business operation allows you to automate tasks that are repetitive and whatnot. And so it's a cost savings opportunity. It's an opportunity to drive better customer service. It's an opportunity to reduce errors in a business, we had, give or take, 1 million submissions last year. So hundreds and hundreds of thousands of quotes and policies. So automation is something we've been working on for 10 years.

AI is just a powerful new tool in that regard. But I would say in our analytics and our IT area, it's probably being used most effectively today in terms of writing code and testing code and converting unstructured data to structured data, et cetera. I mean it's got a lot of use cases, but it's -- I think the two things we're focused on. One is driving automation in our business; and 2 is to get smarter about how we segment and price risk.

Your next question comes from Rowan Mayer with RBC Capital Markets.

At the Investor Day last month, you guys highlighted a bunch of new products. that were launched in the last year. I was wondering if you could maybe talk about how much growth is new product versus existing any new plans for 2026.

Well, we're going to publish in our K, the breakout of our written premium for 2025 by underwriting division. And that will be out, I think, it's next week. So if you look at the Agribusiness casualty, agribusiness property, personal insurance isn't new, but we've expanded into the homeowner space there. So you can look at that.

Yes, a lot of the new products in '25 were enhancements to existing products. So it's not necessarily going to be split out within divisions. There is an element of growth with those.

Yes. But generally, new products, we rolled them out. It's kind of a methodical rollout. And so it's really over a series of the first couple of years that they start to be meaningful. If you look at the Small Business Property division, I think last year, there was $100 million of premium, give or take. And 5 years ago, I think it was -- nothing right? So it does take time, but it's been a big part of our growth story really for 17 years.

That's great. And I wanted to just ask on the leverage and the capital return. You guys have highlighted you're underlevered its peers on a number of metrics. And I think it's on your debt to cap, you're below kind of the long-term target you've talked about. -- it's a nice step up in the capital return in the last 18 months, but we'll not do more now with the competitive environment the way it is.

Well, with the capital allocation strategy with the buyback in particular, we're in fact, shrinking the denominator and increasing the ratio. So we're pursuing it through the denominator, I guess you could say .

And then I guess just 1 more. Can we talk about the durability of the softness in the property markets? And what does it take to actually push this competition out? .

Well, keep in mind, we're talking about intense competition in these larger southeastern wind accounts in particular. But in our agribusiness property, Inland Marine, high-value homeowners, personal insurance, small business property, they may have all grown in the double digits in the quarter. So it's just a reminder that the market does not move monolithically. It's the whole series of individual segments that kind of ebb and flow independently. .

Your next question comes from Pablo Singzon with JPMorgan. .

It's Pablo from JPMorgan. So first question, some other public insurers that have large or newer businesses have been reporting premium growth or submission growth that's running much higher than where you are now. So is there evidence in your minds that they might be taking some flow that used to go to you? And I know in the past, you peas a main source of competition, but I was just wondering if you're seeing more competition from traditional markets as well. And as you know, small social E&S and technologies to focus for many of your peers. .

Yes, Pablo, this is Mike. I would answer that question this way. A, we're bullish on our opportunity. We're working hard to grow, but we're in a much more competitive environment overall. And so you have to be careful in balancing the growth with the profitability of the business. I can't really speak for other companies and what they're doing. But I would say our investors should have a lot of confidence that in sales producing not only very strong margins, but that we're continuing to grow and take market share with the 1 caveat that we've got 1 large division that, if you will, is going through a little bit of a unique correction. But overall, if you look at the disciplined underwriting model and the low-cost platform, we're confident we're going to continue to grow, take market share and deliver very quality returns at the same time. .

And I guess just following up on the expense advantage, right? So I guess philosophically, how do you think Kinsale demonstrates or exercise that advantage in this market, right? So effectively, are you willing to write at ROEs below 26%, but still of your minimums? Or is your approach to sort of let the market do what it does, and you'll just keep on printing 26% ROEs for the foreseeable future? .

Well, we manage our under -- each product line to a, I would call it, a low 20s ROE or greater. And of course, there's in an insurance company, you don't know the cost of goods sold immediately, right? So there's some assumptions there. Those assumptions, I think, lean into the conservative side. And so historically, we've outperformed our target. I don't think that would change overnight for sure. But like every business, we balance growth and profitability. .

It's just that we're always going to prioritize generating that ROE or better. And then where the specific return goes quarter-by-quarter, of course, is subject to claim activity and the weather and sorts of things. But I think we've got a long-term track record of producing pretty attractive margins, and I would expect those to continue.

Your next question comes from Andrew Kligerman with TD Cowen.

Could you provide a little more clarity on the casualty lines and the rates that you're getting on the new business and the degree to which those rates are ahead of loss costs or maybe even not ahead of loss costs.

Andrew, that's a tough question to answer. On a conference call like this because, again, we've got 25 different underwriting divisions. They're operating in very unique market segments in terms of the coverages they sell, the industries that we target. And as Stuart mentioned, right, our commercial auto is experiencing strong price increases. Management liability, I think those rates are probably down. nonmedical professional liability, they're down.

The Commercial Property division, clearly, those rates are down in the quarter. So -- we kind of directed in our comments to look at the Amwins pricing index. I think that's a good composite of what Amlin is a very large wholesale broker. They see a ton of business -- and I think they've got a really interesting window into pricing trends across the industry. And I think that's probably the best point of reference we can guide you to.

And I guess what I was trying to get at, even with that question is you've got pressure in property. It sounds a little mixed in casualty on rate. And I mean -- and I get that the 75% combined ratio in part is due to your expense ratio, but your loss ratio is outstanding -- it's exceptional. So given what the Mosaic is with pricing right now. Should we expect the underlying combined of 75 to kind of drift up gradually over the course of the next year, 2 years, 3 years?

We don't really offer guidance going out like that. I would just say we're in a competitive environment. Some of our results on an annual basis are driven by things we don't directly control. like the weather or what have you. In general, we are managing to a low 20s early or better. We're very conservative in setting aside loss reserves to pay claims that are reported in the future, right? So investors should have a lot of confidence in our balance sheet. We've got competitive advantages that are in my opinion, quite significant.

If you look at -- if we have a 15 percentage point cost advantage and we're in a commodity business where the customers want and focus on cost sometimes over and above everything else in the transaction. So I think that's probably the best guidance we can offer. We're bullish on our opportunity. It's a competitive environment. we're quite conservative in the reserving, and the actual results, obviously, are going to ebb and flow quarter-by-quarter. But I think our investors should expect us to generate very high and attractive returns for the foreseeable future.

Next question comes from Mike Zaremski with BMO.

Switching gears a bit to home insurance. I thought 1 of the new items that came out at your recent Investor Day was the opportunity of maybe it being up to 10% of your revenues even over time. As long as it's not too competitive and you're willing to share any color. Any thoughts on kind of how that's shaping up in terms of nuances on the types of policies you're at the offering and the states and the trajectory of growth there?.

Yes. It's -- this is Stuart. The Homes product is definitely a long-term project for us, starting small to crawl walk mentality that Mike mentioned earlier. And where the opportunity to expand exist, we're going to take that opportunity to expand on

4, 5 states for homes, and that continues to expand. The manufactured homes are in Fiscal.

Yes, about 15 states, and we're expanding the geography within the state, diversifying away from Coal there.

And then we write high-value homes and another focus stage -- it's an ongoing process, but we're bullish you are seeing across the industry a little bit more premium being pushed from the standard to the nonstandard side in the homeowner space. And obviously, we're leaning into that in order to try to take advantage.

And just as a follow-up, it sounds like this is both high value and not high value. Are these like atypical like a standard market policies in terms of just much higher deductibles or different exclusions. Just is there any broad brush that you can paint .

Yes, it's a mix. I mean it could be a pretty standard policy, but there's also some in tough areas that might have nonstandard exclusions in there. .

Next question comes from Mark Hughes with Truist. .

What do you make of the idea that AI might take over some of the brokers' role. Do you think that's likely? Is that a way to get efficiency go more direct? Or is that just a fantasy at this point? .

Look, I mean, the short answer, Mark, is we don't know. I've always been impressed with Pat Ryan's commentary around the fact that the customer needs an adviser and an advocate. And I don't think that changes with AI. But I do think AI is going to drive -- it's a new tool for the whole economy. And I think businesses in P&C, but in really in every industry are going to have to lean in and use this tool to get better at what they do and serve their customers.

Your final question comes from Pablo Single with JPMorgan. Fab, your line is open.

It's Bob again from JPMorgan. So I guess first question, with growth slowing, like is there an opportunity on your end to take up reinsurance retentions and therefore, just retain more premium economics? Is that something you're actively considering? .

Yes, Pablo, this is Mike. We've looked at retentions in our reinsurance program. We look at it every year, and we're constantly making adjustments to settle on what we think makes the most sense for the company and managing volatility and that type of thing. So yes, absolutely. Our program renews on 6/1. So we'll be starting that process here in the next month or so. .

And then last question for me. So if we just focus on book ex large account, right, growth has been growing there, too. It's still a good level, but it's been slowing. So I think it was 22% and 24% and 25% is 13%. So I realize this line of questioning might be too simplistic, but does that slow down more a reflection of pricing or submission flow? And if both -- how would you break down the attribution? .

I would characterize it as mostly a function of just increased level of competition. And as the competition increases, if you're a disciplined underwriting company, you just have to be a little more cautious -- maybe the submission flows down slightly, but ex commercial property, I think it was 9%. I think maybe 2 years ago, maybe in mid-teens. -- so yes, it's down a little bit. But still pretty robust. And the 13% growth overall ex commercial property, I think it's pretty strong. If you look at how all the public brokers that have reported growth rates, I think, tend to be kind of low to mid-single digits. .

So I think it speaks to the competitiveness of our model even in a competitive moment in the cycle. And hence, that's why we continue to be bullish on our opportunity.

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 we look forward to speaking with you again in the near future. Have a great day.

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

Good morning, and welcome to Kinsale Capital Group's Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded.

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 2024 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 second 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 and CEO, Mr. Michael Kehoe. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Bryan Petrucelli, our CFO, Brian Haney, our President and COO; and Stuart Winston, our EVP and CUO, Chief Underwriting Officer, are joining me on the call this morning.

We announced some management changes last night, the most significant of which is Brian Haney's recent election to the Board of Directors and the announcement of his retirement and new role as Senior Adviser beginning next year. We congratulate him on his election and are encouraged that he will continue to have a prominent role in the governance and direction of Kinsale.

Brian and I have worked together for almost 30 years at three different E&S companies. He was one of the original founders of Kinsale and has made tremendous contributions to our success over the almost 17 years we have been in business. It's been a great run. And needless to say, we are fortunate that he will continue contributing to Kinsale as a Director and as a Senior Adviser with a focus on investor communications.

I'd also like to congratulate Stuart Winston on his promotion to Executive Vice President and Chief Underwriting Officer. Stuart and his team have delivered some of the best underwriting results in the industry. So this recognition is well earned, and under his leadership, we have great expectations for continued profit and growth in the future.

In the third quarter 2025, Kinsale's operating earnings per share increased by 24% and gross written premium grew by 8.4% over the third quarter of 2024. For the quarter, the company posted a combined ratio of 74.9% and a 9-month operating return on equity of 25.4%. Our book value per share has increased by 25.8% since the year-end 2024, and our float has increased by 20%. E&S market conditions were steady in the third quarter, generally competitive with our growth rate varying from one market segment to another with our overall growth rate at 8.4%.

Our Commercial Property division saw premium dropped by 8% in the third quarter compared to a 17% drop in the second quarter. The overall third quarter growth rate, excluding our Commercial Property division was 12.3%. And Brian Haney is going to provide some commentary on the market here in a moment.

Kinsales' disciplined underwriting and low-cost business model is a consistent winner in an industry where the customers are intensely focused on cost. As the E&S market has become more competitive over the last 2 years, Kinsales' efficiency has become a more significant competitive advantage, by allowing us to deliver competitive policy terms to our customers, without compromising our margins.

Likewise, in a moment in the P&C cycle characterized by loose underwriting standards, Kinsales' control of its underwriting process and superior data and analytics helps deliver consistent and attractive results. And with that, I'll turn the call over to Bryan Petrucelli.

Thanks, Mike. As Mike just noted, we continue to generate great results, with net income and net operating earnings, both increasing by 24% quarter-over-quarter. The 74.9% combined ratio for the quarter included 3.7 points from net favorable prior year loss reserve development, compared to 2.8 points last year with less than 1 point in CAT losses this year compared to 3.8 points in the third quarter of last year. We continue to take a cautious approach to releasing reserves.

Gross written premium grew by 8.4% for the quarter, while net earned premium grew by 17.8%, which was higher than the gross written premium due to an increase in retention levels upon renewal of our reinsurance program on June 1. We produced a 21% expense ratio in the third quarter compared to 19.6% last year. Higher expense ratio is attributable to lower ceding commissions, generated on the company's Casualty and Commercial Property quota share reinsurance agreements, as a result of the higher reinsurance retention levels that I just mentioned.

On the investment side, net investment income increased by 25.1% in the third quarter over last year, as a result of continued growth in the investment portfolio generated from strong operating cash flows. Kinsales' flow, mostly unpaid losses and unearned premium grew to $3 billion at September 30 up from $2.5 billion at the year-end 2024. The annual gross return was 4.3% for the first 9-months of this year and consistent with last year.

New money yields are averaging slightly below 5%, with an average duration of 3.6 years on the company's fixed maturity investment portfolio. And lastly, diluted operating earnings per share continues to improve and was $5.21 per share for the quarter, compared to $4.20 per share for the third quarter of 2024. And with that, I'll pass it over to Brian Haney.

Thanks, Brian. First, let me say it's been an absolute honor and privilege to have worked at Kinsale for the last 17 years. There's no better E&S company in the business, and there's no better group of people to work with.

Kinsale has come a long way from its first days in 2009 when we were just starting out with Bryan Petrucelli, Mike, myself as well as Bill Kenney, [ Emery Morrison ] and Ed Desch, who I see is on the phone call today. I'm grateful for the opportunities I've been giving by Mike and the Board over the years. I'm proud to have played whatever part I could in the success of Kinsale. It's a tremendous honor to have the opportunity to serve on this Board with so many talented Directors, whom I've worked with over the years, and I'm really pleased that I will continue to be associated with this great company. And I am very confident in our future.

We have built an amazingly deep bench. We have great young executives like Stuart and many others like him. The investors should rest assured that this company is in great hands and will continue to be going forward.

With that said, on to business. The E&S market remains competitive, as Mike said, that the intensity varies by division. The shared layered Commercial Property continues to be very competitive. But it appears we hit an inflection point sometime early in the third quarter, perhaps late in the second, where the rate of decline is abating. When you look at all the Property business in total, including the Small Property, Agribusiness Property and in the Marine, the book actually grew in the third quarter.

In other areas, we're seeing the most growth in Commercial Auto, Entertainment, Energy and Allied Health. Although the market is competitive, our model of low expenses and absolute control over the underwriting and claims handling works well in any market. I would argue it works better in a competitive market because it makes our expense ratio more telling, also the fastest-growing participants in the market today are largely funding companies, whose risk-bearing partners must contend with expense ratios often double ours or higher. And that math isn't going to work out for them.

Submission growth was 6% for the quarter, which is down from 9% in the first quarter. That decline is driven by our Commercial Property division. Our pricing trends are similar to the Amwins Index, which reported an overall 0.4% decrease. Commercial Property rates are still declining, but we feel we have reached that inflection point, as I mentioned, where the rates are -- rate declines are stabilizing, and I expect we will see rates in the Commercial Property market, moderate going forward.

Overall, we remain optimistic. Our results are good. Our growth prospects are good and as the low-cost provider in our space, we have a durable competitive advantage that should allow us to continue to gradually take market share from our higher expense competitors, while continuing to deliver strong returns and build wealth for our investors. And with that, I will turn it back over to Mike.

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

[Operator Instructions] Our first question will come from Bob Huang from Morgan Stanley.

So Brian, congratulations on the new role and the retirement. But just maybe if we go into your business outside of Commercial Property, can you maybe comment on where you think the future opportunities would be? Especially given it seems like there's a little bit of a growth deceleration for the quarter. Just kind of curious outside of Commercial Property, what are the areas that you think that are very attractive for you? And what are the areas you think you want to pullback a little bit?

Well, I think we've got opportunity across the whole book. I would say some of our newer areas that we've developed recently would be the Transportation segment and the Agribusiness segment. But I think there's still a great opportunity in Casualty. And then some of the other property-related lines, I think there's still a great opportunity, high-value homeowners and our Personal Lines, it is an area we're putting a lot of emphasis into. We think that's a great opportunity. So I think it's really by the spread. There's a lot of different places we can grow.

Yes. For the quarter, all of our Property Lines, except for the Large Commercial Property division, all the other property-focused lines grew at a double-digit clip. So I would reiterate what Brian said. We're pretty confident.

That's very helpful. My second question is with regards to technology, obviously, that's one of your core competencies here. But just curious if you can give us a little bit of color in terms of new tech innovation and implementation into the business?

And then just curious as to how you're incorporating emerging technology into your business and where are the areas you feel that would be advantageous for Kinsale going forward?

Well, Bob, this is Mike. When we started the business 17 years ago, we talked about making tech, a core competency of our company alongside of the underwriting and the claim handling. And I think we've done that. We build our own enterprise system over the years, took a long time. And about 2 or so years ago, we started what we call target state architecture, which is a complete rewrite of that entire enterprise system. It's an enormous undertaking, but it kind of puts us in a position to really speed up the implementation of new technologies and whatnot.

So that target state is an enormous project. We're always enhancing and expanding our product line, that involves our technology department. We've been making ample use of the new AI tools that have come out, both in our IT department, as well as underwriting and claims, trying to drive automation in our business process.

So I mean there's a there's a million ways, but I think it goes a long way to explaining why we're able to operate at such a significant cost advantage over our competitors. And I think a lot of it is, hey, we've got a really well-designed enterprise systems, specifically for our company. We don't have legacy software going back 20, 30, 40 years. We don't have thousands of legacy applications. I think we're just in a really attractive spot.

Our next question comes from Michael Phillips from Oppenheimer.

I wanted to touch on one line of business, the construction liability line. I was curious, was there any change in assumptions in that segment that affected your current year loss pick?

I don't know that there were any changes there specifically. We do a quarterly review of our loss reserves by stat line of business. And that goes -- we're in our, I think, 16th accident year. We've got about a dozen lines of business. So there's a high degree of complexity in that analysis -- could very well have picked up some adjustments in the construction, but I just don't know off the top of my head.

I think in general, we feel great about the quarter. I think our losses continue to come in below our expectations. There's a little bit of variability in the loss ratios when you roll everything together, and I think that's normal. But again, we feel really positive about the loss performance.

Okay. And then second one would be on your Excess Casualty segment. Could you talk about that segment, what you're seeing? Is there any growth opportunities there? And what you're seeing maybe for loss trends in that segment?

Yes. Michael, this is Stuart. We're still seeing good opportunities in Excess Casualty. Rates are holding strong. We're seeing some pressure in the market at the high excess attachment points, where those are being more attractive for various competitors. But that's typically not where we play. We're typically in the lead or the first $10 million on most of our placements. So there's still a good opportunity for growth and rates are holding strong, where we participate in the market.

Our next question comes from Mike Zaremski from BMO Capital Markets.

Going back to Casualty, but broader brush on all Casualty ex-Property, which is kind of your core business. You saw a bit of a sequential de-cel in premium growth there. Any color you can offer on just the state of the marketplace, Casualty-specific, pricing? You talked about MGAs in the past as well. Is that still -- are they still just as competitive?

I'll start, Mike, and then I'll maybe get Stuart to make a few comments. But I would just remind you that we write Casualty business across many specific underwriting divisions, each one focused on a different industry segment or coverage, and they never move in tandem, right? There's always variability as you go from one area to the next. But in general, I think things are still going well.

Yes. The long-tail Casualty lines, we're seeing moderate competition, but there's a lot of rational actors out there with the adverse development over the last couple of years in the market. But there's segments like -- areas like Excess Casualty, Social Services and the Allied Health Group that are still really strong and the market will experience some dislocation, the same with Premises Liability, so General Casualty, Entertainment groups like that, it's still a very strong market there for growth.

Okay. I mean, I guess that's very helpful. So if we look at the Casualty trend, though it's still kind of -- it's decelerating from a growth perspective. I'm not saying growth, we want profitability, not growth.

But is your view -- you shared your view that shared layer, things are becoming less negative, I guess, from a pricing standpoint, I'm assuming. Do you think the Casualty is also getting less competitive or it will remain -- increasing competition will remain kind of impacting the top line?

Mike, it's Mike again. I would say we're in a very competitive period in the insurance cycle. Again, it varies a little bit, division by division. But I think the -- you've seen over the last 2 years, the Kinsale growth rate has kind of come in from kind of an extraordinary 40% rate to this quarter's high single digits. I think we've reiterated many times that over the cycle, we think 10% to 20% is a good conservative estimate of our growth potential. I think that's probably the best commentary we can offer.

I mean it's a diverse product line. It's a very competitive market. We've got a very competitive business strategy with the control we exercise over our underwriting. It drives a more accurate process. And then when you look at the cost advantage we have over competitors, it's extraordinary. So I think we're in a great spot.

We were encouraged that the growth rate going from the second to the third quarter ticked up from 5% to 8.4%. Brian Haney highlighted the fact that if you took the Commercial Property out, that put us in the low double digits. Admittedly, that was down from -- it went from 14% to 12%. But to me, that's just kind of normal variability quarter-by-quarter. I wouldn't read too much into that 2-point decline.

Okay. That's helpful. And just to sneak one last one in. Part of your -- I think part of your special sauce, I believe, uniquely allows Kinsale to, I guess, maybe not need to [ profit share ] commissions to some of your broker partners. Is it ever a consideration, especially in more competitive times like today to rethink that strategy or that's not on the table?

The profit commissions are typically associated with delegated underwriting, right? So many companies, especially in the SME area, aren't able to handle the volume of transactions internally or for whatever reason, right? It's very common to outsource underwriting to MGAs and MGUs. And I think a lot of companies try to put some sort of

profit or growth contingency into the compensation mix for the broker in order to better align incentives. We're not in that space, and we're not considering it.

Our business model is to control the underwriting, provide the best customer service in the industry. I think we also offer the broadest risk appetite. So a lot of the business we write, falls out of the delegated or binding programs that are in the marketplace. So really for those reasons, no, we're not considering a change in our compensation model.

Our next question comes from Mark Hughes from Truist.

Congratulations, Brian, and also Stuart. Current accident year loss ratio was up a little bit. Was that mix? Was that competitive pressure? What would you say that was caused by?

Mark, I would just kind of write that off to normal variability. The overall numbers are phenomenal. The reported losses are coming in below expectations. We're always trying to be cautious with our reserving. You can look around the industry. There's a lot of examples of companies that are too optimistic in their loss reserving. We never want to be in that group. So can I would look at the loss performance is good news. Admittedly, it was up a couple of points. But to me, that's just normal kind of variability.

Yes. Bryan Petrucelli, the ceded premium at 17% and then the expense ratio at 21%, given the kind of the reinsurance structure at this point to ceding commissions? Are those reasonable starting point for the next few quarters?

I think so, Mark. So the first full quarter that we've had with the new reinsurance terms. So it's a pretty good match for you. I would say mix of business is always going to drive a little bit of variability in that. But I think as we sit now, as good a guess as you can -- we can give you.

Very good. And then one final question. The state E&S data in some of the coastal states, Florida, Texas, New York, it looked like your growth is a little faster there kind of implying that maybe in other states, growth was a little slower. Is that a correct perception? Is there anything we should read into that or the non-coastal state perhaps a little more competitive? Is there anything to think about there?

Mark, this is Brian Haney. I wouldn't read too much into it. We don't -- we don't know exactly how those numbers are calculated, and we don't do anything to try to match them up with our own data.

I think it's better to look at those state tax numbers over a number of months. I think there's a little bit more credibility to further look back.

Well, if we put those numbers to the side, we say there's any sort of dynamic where non-coastal, the kind of those traditional E&S states, the New York, California, Texas, Florida. Are they -- are you seeing more opportunity there perhaps than elsewhere? Or would you not see it that way?

I think it stayed relatively the same since Mark, it's Stuart. Relatively the same since we've been in business with obviously, the core E&S states are going to the largest bulk of our business. But I haven't seen a mix in that. Or change in that.

Our next question comes from Andrew Andersen from Jefferies.

I think maybe 5 to 7 years ago, you kind of had talked about how there were certain areas you don't write like public company D&O or trucking. Maybe just bigger picture, pockets that 5 to 7 years ago, you did not write and now you're kind of rethinking that and perhaps see some new opportunities for growth?

Well, there's a bunch of examples. We've made a bigger push into homeowners. We started an Agribusiness Division. We started an Aviation Division, Ocean Marine, we're always enhancing the product line.

Yes. We're always looking at new products not that we don't, right that. We want to write it on our terms and our pricing to maintain our margin. So if you look at commercial auto, - we write a lot of auto adjacent, wheels adjacent business, but we will look at some small fleets at tighter terms. It's just not the large trucking schedule. So we will take a look at these out, but it's going to be a little more control.

Got it. And on the net commission ratio, about 10.5% in the quarter and recognizing there was some change to reinsurance, but the direct commission was pretty much unchanged. But if we go back a few years when the mix was more tilted towards casualty, it was kind of in a 12% to 13% range. Could we see it getting back up to that level? Or are there some offsets within there that might help keep it maybe around 11% or so?

Again, I think the 10.7% is as good a guide as we can give you. If we did have a change in mix of business, you could see that move around a little bit. Whether that goes up to 12% or 13%, who knows. But I think the best guide we can give you is what we have here for this first full quarter since those agreements have been in place.

Our next question comes from Andrew Kligerman from TD Cowen.

Congrats to Brian and Stuart. And first question is on the net reserve release of $10 million or 3.7 points. Just curious as to what the kind of mix on that was short tail versus casualty maybe on the casualty side vintage. Just kind of curious on the breakdown of that release.

Andrew, this is Mike. I would say, without getting too specific, the last couple of quarters, maybe even the last 2 years, including the quarter, most of the release -- the releases have been disproportionately on our first-party business. So short-tail business like property.

Got it. Okay. And I've been noticing when talking to some of your competitors, some of them starting up micro and small, maybe even mid businesses. But I'm seeing a lot of micro and start-ups in the E&S area. Could you talk a little bit about maybe the number of competitors you're seeing in that area versus, say, 3 years ago?

I think we have more competitors today than 3 years ago, but it's not just insurance companies. There are hundreds and hundreds of MGAs that have started in the last several years. There used to be one fronting company. Somebody told me the other day, they're now 30. So a lot of capital has come into the industry, and there's just a lot more competition that reflects that. And that's certainly not new. I mean, it's always been a cyclical business, and we're hardwired to compete and win in this environment, I think.

Got it. And the last one, in your commentary, you talked about rates in property. I heard the word stabilizing. I heard moderate. Could you possibly put some numbers around where rates were in property? I think you said that it started to inflect at the end of the second quarter. Maybe where were rates early in the second quarter going? And maybe where are they now? Just to kind of get some numbers around the commentary?

I don't have the exact numbers in front of me. I would have said it was double digits in the second quarter, down. If I had to guess now, I would say it's probably single digits, down. Let's call it, high single. I don't have it in front of me. So that's just an absolute speculative guess. But I do get the sense that at least in the market we're in, you have seen that inflection point, and I would expect to see that trend continue. Like I think it's going to normalize relatively quickly.

Your next question comes from Ryan Tunis from Cantor Fitzgerald.

I guess just a follow-up on the underlying loss ratio. It sounded like you attributed kind of the 2-point year-over-year increase to just normal variability. Does that imply that we're not yet seeing pressure on that ratio coming from property lines?

No, we're not seeing pressure on our loss ratio from property lines because we've over-performed in property. That's why a disproportionate amount of the reserve redundancy has come from the short-tail lines like property. We've had great experience on property. And I think that's a tailwind.

I think where we're being more cautious, and it's not because we're seeing any kind of a negative trend. It's just that on long-tail casualty, there's a higher degree of uncertainty. It just takes time for those accident years to mature, and coming out of a period a few years ago where we had a significant uptick in inflation, all sorts of supply chain disruptions with COVID. We saw some of our long-tail lines develop a little bit higher and a little bit later than we would have anticipated. And starting several years ago, we've addressed that with much more conservative loss picks. And so we're maintaining that conservatism to make sure that we -- we always have more than enough. We want our reserves to kind of develop favorably year by year. And when that happens, it just has a very therapeutic effect on the financial performance of our business.

That makes sense. And then I guess just a follow-up on the property. Yes. I guess it makes sense naturally that there'll be less price pressure in the third quarter simply because there's fewer like Florida [ shared and layer ] renewals. I mean to what extent is the improved pricing environment just sort of a function of seasonal mix? If you will.

Well, I'm going to start by just saying we didn't say it improved. It deteriorated at a slower rate.

Yes. I would characterize it more as rates were going down so fast that -- the faster rates go down, the quicker they're going to normalize, because the industry can't go around giving double-digit rate increases indefinitely. And I think we've reached that point where you're starting -- you saw that second order derivative turn positive. So I don't think it's based on the third quarter being less hurricane-intensive.

Our next question comes from Joe Tumillo from Bank of America.

Most of my questions have been answered, but I guess the first question is kind of thinking about. I appreciate the submission rate was decelerating a little bit to commercial property. If we exclude commercial property, has the submission rate kind of remained steady? Or has that also kind of decreased along with the ex property premiums?

It's closer to around 9%, excluding Commercial Properties.

Okay. Great. And then the other question, just thinking about -- I saw you guys kind of stepped up the share repurchases this quarter from the $10 million from the previous ones. just kind of thinking, was that just more opportunistic where you saw the share price going? Or is that more of a function of kind of lower growth and a lot of the cash flow? I know you guys have mentioned before about kind of keeping the business kind of efficient capital.

I think it's the latter, Joe. We're generating mid-teens ROEs on a year-to-date basis and I think our year-to-date growth rate is high single digits. So we're definitely producing a lot of excess capital. And our first goal is always to grow the business. And then secondarily to that, the last couple of years, we've been looking at a very small dividend and a very small share repurchase, but I think both of those could continue to grow.

Our next question comes from Pablo Singzon from JPMorgan.

So first question, with premium growth having slowed, how do you think about other underwriting expenses over the next 1 to 2 years, right? So I think over the past several years, it's been a good story. But given that growth has slowed, are you managing that line to sort of trail the growth in premiums? Or just given where you think opportunities might lie, there's a chance that you might see some degradation as you're building out new opportunity?

I think we have always worked like crazy to be as efficient as we can as a business. Given the industry that we compete in. And I think the other underwriting expenses will gradually come down over time as we drive productivity gains in the business through technology, et cetera. I don't think it's going to be sudden, but I think a gradual decline is what investors should expect.

Okay. And then, I guess, second question also related to expenses, right? So clearly, Kinsale has an expense advantage over the rest of the industry. I'd be curious to hear your thoughts about whether or not you're willing to trade some of that expense ratio to generate higher premiums and underwriting income? And I guess even if that trade is possible to begin with, right? Or are you sort of happy with the current configuration of pricing, profitability and volume?

Look, I mean, I think there's just a clear recognition that the customers we serve, principally small business owners, are intensely focused on limiting how much money they spend on insurance. And so we're doing everything we can to be as efficient as possible, to give them competitively priced insurance policies but also to protect our margins. So I don't see an advantageous trade where we would deliberately raise our costs, become less competitive and somehow that's going to net a better opportunity for our company. I was just going to say, we're going to continue to work -- do everything we can to be the efficient insurance provider in the E&S space.

Got you. And then just one small one. On reinsurance retention, do you think that could go up again in the next couple of years or you don't see any change from current status quo?

Yes. Again, I think what you're seeing this quarter is our best guess. Now if we had some dramatic mix of business, it could move one way or the other.

But our retention has changed many times over the years. Right. We've taken a bigger net position over and over again, and that's just consistent with our growth as a business.

Our last question comes from Casey Alexander from Compass Point.

Yes. And congrats to Brian and Stuart, particularly to Brian on his retirement. I'm sure that's something that we all look forward to. So not to beat a dead horse. Not to beat a dead horse, but Brian, I am particularly taken by your comments that the property rate decline is stabilizing, simply because the 20 years of covering property in the Southeast particularly in the Southeast U.S. when you have a year like this, it has a particularly low level of cat activity, at least up-to-date fingers crossed, right? You never know what happens in the month of November.

It tends to attract alternative forms of capital that see very low loss ratios and think that they can get into the business and they tend to get into the business in commercial, because its than quicker than residential, and it's irrational. And so I just wondered, does that not concern you that you're possibly going to see alternative capital in 2026 enter the property market and leading with some irrational price structures?

You might be right. I was kind of referring more to the dynamics in the third quarter. So who knows?

We have no further questions in queue. I'd like to turn the call back over to Michael Kehoe for any closing remarks.

All right. Well, we appreciate everybody joining us and look forward to speaking with you again here in a few months. Have a great day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.