Kinsale Cap Gr (NYSE:KNSL) released first-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.
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Access the full call at https://events.q4inc.com/attendee/540154483
Summary
Kinsale Cap Gr reported a 37.7% increase in diluted operating earnings per share for Q1 2026, with an annualized operating return on equity of 24%.
Net written premium grew by 5.6%, despite a 0.5% decrease in gross written premium, reflecting growth in business lines with less reinsurance participation.
The company highlighted its commitment to disciplined underwriting and a low-cost business model, supported by a strong focus on technology and analytics.
Operationally, new business submissions, quotes, and bind orders increased, with significant growth seen in smaller accounts amid increased competition in larger commercial property divisions.
The company continues to leverage AI and technology innovations to enhance efficiency and maintain an expense ratio advantage.
Management expressed confidence in maintaining strong ROE, targeting a low 20s return, and adapting to competitive market conditions.
The overall sentiment from management was optimistic about future growth opportunities, particularly in small to medium-sized accounts, despite some market challenges.
Full Transcript
OPERATOR
Before we get started, let me remind everyone that through the course of the teleconference, Kinsale Capital Group’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 10K, which should be reviewed carefully. The Company has furnished a Form 8K with the securities and Exchange Commission that contains the press release announcing its first quarter results. Kinsale Capital Group’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 Capital Group’s Chairman, President and CEO, Mr. Michael Keogh. Please go ahead sir.
Michael Keogh (Chairman, President and CEO)
Thank you Operator and good morning everyone. Today I’m joined by Brian Petrocelli, our Chief Financial Officer, Stuart Winston, our Chief Underwriting Officer and Salman Alabay, our Chief Actuary and head of our data and analytics team. In the first quarter 2026 Kinsale Capital Group’s diluted operating earnings per share increased by 37.7% over the first quarter of 2025, generating an annualized operating return on equity of 24%. Gross written premium was down half of 1% but net written premium grew by 5.6% for the quarter as our business lines with the least reinsurance participation continue to show positive top line growth. Sales combined ratio was 77.4%. E&S market conditions in the first quarter continued to be competitive with the level of competition and our growth rate varying from one market segment to another. We added additional disclosure to our 10Q 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 10k 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, Kinsale’s growth in Gross written premium was 6% for the first quarter. The investment thesis in Kinsale has always started with our disciplined underwriting and low cost business model. By maintaining control over our underwriting operation and never outsourcing it to third parties. We drive a more accurate and more profitable underwriting process while offering our brokers the best customer service and the broadest risk Appetite in the E&S market. Likewise, our 17 year commitment to making technology and analytics a core competency allows us to operate a smarter business with a tremendous cost advantage over every competitor in the market. No exceptions. And in this competitive period of the insurance cycle, the model continues to succeed. In the first quarter, new business submissions were up 6%, new business quotes were up 8% and new business bind orders were up 9%. We are seeing the largest headwind to growth among larger accounts, particularly within our commercial property division. It’s on the larger premium accounts where the competition is most intense, hence our continued focus on smaller transactions where margins continue to be robust. You can see this smaller account trend in our average policy premium for the quarter. It was $12,200 per policy, down from 14,200 in the first quarter of 2025. Finally, we continue to work on technology innovation, including extensive use of AI models to drive automation in our business process, especially underwriting and claim handling, and throughout our software development and analytics teams. This innovation is improving efficiency, customer service, accuracy and data collection across our business and we have begun incorporating various AI agents into our enterprise system. With the talent of our technology professionals and our bespoke enterprise system and the lack of any legacy software, we are well positioned to expand our tech lead to the benefit of both profitability and growth. And with that, I’ll turn the call over to Brian Petrucelli.
Brian Petrocelli (Chief Financial Officer)
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 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 a point in cat losses this year compared to six points in Q1 last year. Gross written premium decreased by a half 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 Capital Group’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 four 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 2025. And with that I’ll pass it over to Stuart.
Stuart Winston (Chief Underwriting Officer)
Thanks Brian. There’s plenty of competition in the E&S market, but there’s also opportunity and it’s also a market in constant transition areas like large shared and layered placements in commercial property, certain professional lines, management, liability and public entity all continue to experience strong competition and headwinds to growth. Recently we have noticed more aggressive competition in some long tail lines like construction over the last quarter as well. There are also strong areas of opportunity with favorable growth prospects within the E&S market. Within the overall property market, our small business property, inland 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 2020. 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 and a third percent compared to a 2.7% decrease in the fourth quarter of 2025. Although large …
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