Kinsale (KNSL) Q3 2025 Earnings Call Transcript

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DATE

Friday, October 24, 2025 at 9 a.m. ET

CALL PARTICIPANTS

Chief Executive Officer — Michael Kehoe

President and Chief Operating Officer — Brian Haney

Chief Financial Officer — Bryan Petrucelli

Executive Vice President and Chief Underwriting Officer — Stuart Winston

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TAKEAWAYS

Operating Earnings Per Share -- Operating earnings per share were $5.21 in Q3 2025, increasing by 24% during the quarter.

Gross Written Premium -- Gross written premium grew by 8.4%.

Net Earned Premium -- Net earned premium grew by 17.8%, outpacing gross written premium due to increased reinsurance retention levels following the June 1 renewal.

Combined Ratio -- The combined ratio was 74.9% in Q3 2025, with 3.7 points from net favorable prior-year reserve development and less than one point from catastrophe losses.

Net Investment Income -- Increased by 25.1% over Q3 2024, This growth resulted from continued expansion of the investment portfolio generated by strong operating cash flows.

Book Value Per Share -- Increased 25.8% since year-end 2024.

Float -- Float grew to $3 billion at September 30, up from $2.5 billion at year-end 2024.

Expense Ratio -- 21%, 21%, compared to 19.6% last year, due to lower ceding commissions on casualty and commercial property reinsurance agreements.

Reinsurance Terms -- Enhanced retention effective June 1, 2025 drove higher net earned premium and reduced ceding commissions.

Commercial Property Premium -- Declined 8% in Q3 2025, compared to a 17% drop in the second quarter, suggesting the rate of decline is slowing.

Growth Excluding Commercial Property -- Growth excluding commercial property was 12.3%.

Submission Growth -- 6%, Submission growth was 6%, down from 9% in the first quarter, mainly due to commercial property slowdown.

Expense Discipline -- Management emphasized ongoing focus on efficiency as a key competitive advantage, especially under competitive industry conditions.

Technology Strategy -- Ongoing full enterprise system rewrite and increased deployment of AI in underwriting and claims to boost process automation.

Share Repurchase -- Share repurchase activity increased; management attributes this to excess capital produced by mid-teen ROEs and high single-digit growth.

Reserve Releases -- Recent reserve releases have been "disproportionately on our first party business," according to Michael Kehoe, indicating positive claims experience in short tail property lines.

Expense and Commission Guidance -- Net commission ratio was 10.7% in Q3 2025 and was cited as "as good a guide as we can give you," according to Bryan Petrucelli, for the first full quarter with the new reinsurance terms.

Key Management Changes -- Brian Haney elected to Board and retiring as President/COO, will serve as Senior Advisor; Stuart Winston promoted to EVP and CUO.

SUMMARY

Management reported that higher retention on reinsurance programs materially lifted net earned premium growth relative to gross written premium. The commercial property business showed moderated contraction as rate declines slowed to high single digits, while all other property-focused lines posted double-digit premium growth. New technology projects, including a total enterprise system overhaul and expanded AI usage, are positioned to sustain cost advantages and gradual expense ratio improvement. The leadership transition, with Brian Haney moving to the Board and advisory role and Stuart Winston assuming underwriting leadership, signals continuity in operational focus and governance. Fluctuations in both submission and premium growth were attributed directly to the commercial property segment, while core casualty and specialty businesses remained stable or grew, and reserve development was concentrated in short tail property lines.

CEO Kehoe stated, "over the cycle, we think 10% to 20% is a good conservative estimate of our growth potential," offering medium-term strategic clarity.

Brian Haney commented that commercial auto, entertainment, energy, and allied health had the most growth, while the property segment's rate environment had "hit an inflection point" on declining rates.

Management confirmed no shift in compensation model to include profit commissions for brokers, maintaining direct control over underwriting.

Expense ratio increases were explicitly linked to lower ceding commissions due to reinsurance changes, and future ratios may fluctuate with business mix.

Stuart Winston clarified Kinsale operates mostly in "lead or the first $10 million as replacements" in excess casualty, where market rates "are holding strong."

The net investment portfolio yielded a 4.3% annual gross return for the first nine months of 2025 with new money yields below 5% and an average maturity of 3.6 years as of the end of the third quarter.

Share repurchases are being opportunistically increased due to sustained excess capital accumulation.

Discussion of competitive entry in E&S—particularly from MGAs and fronting companies—supports management's view of a cyclical, competitive market where Kinsale expects to gradually gain share through cost advantages.

INDUSTRY GLOSSARY

E&S (Excess and Surplus Lines): Non-admitted insurance written for unique or higher-risk accounts outside standard admitted carrier guidelines.

Float: Investable assets composed of policyholder funds from unpaid losses and unearned premium, before claims are paid.

Combined Ratio: A key insurance profitability metric calculated as losses and expenses divided by earned premium; a ratio under 100% indicates an underwriting profit.

Net Written Premium (NWP): The portion of premium retained by an insurer after ceding to reinsurers.

Quota Share Reinsurance: A type of reinsurance in which the reinsurer assumes a set percentage of premiums and losses for a specific portfolio.

Lead Layer/Attachment Point: The lowest layer of risk in an excess insurance program, typically where primary loss coverage begins.

Full Conference Call Transcript

Michael Kehoe: Thank you, operator, and good morning, everyone. Bryan Petrucelli, our CFO, Brian Haney, our President and COO, and Stuart Winston, our EVP and COO, Chief Underwriting, 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 Advisor 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 thirty 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 seventeen 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 Advisor 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 of 2025, Kinsale's operating earnings per share increased by 24% and gross written premium grew by 8.4% over 2024. For the quarter, the company posted a combined ratio of 74.9% and a nine-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 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. Kinsale's 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 two years, Kinsale's 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, Kinsale's 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.

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 a 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 increased 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. The 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. Kinsale's float, 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 nine 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 2024. And with that, I'll pass it over to Brian Haney.

Brian Haney: Thanks, Bryan. First, let me say it's been an absolute honor and privilege to have worked at Kinsale for the last seventeen 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 Kenny, Anne Marie Morrison, and Ed Desch, who I see is on the phone call today. I'm grateful for the opportunities I've been given by Mike and the Board over the years. 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 have worked with over the years. And I'm really pleased that I will continue to be associated with this great company. And I'm 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, the intensity varies by division.

The shared and layered commercial property continues to be very competitive, but it appears we hit an inflection point sometime early in the third quarter or 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 inland marine, the book actually grew in the third quarter. 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 fronting 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. Pricing trends are similar to the AmWin's 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 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.

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

Operator: Our first question will come from Bob Huang from Morgan Stanley. Please go ahead. Your line is open.

Bob Huang: Good morning. 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 are very attractive for you? And what are the areas you think you want to pull back a little bit?

Brian Haney: 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, the agribusiness segment. But I think there's still a great opportunity in casualty. And then some of the other property-related lines, there's still a great opportunity. High-value homeowners and our personal lines, an area we're putting a lot of emphasis into. We think that's a great opportunity. So I think it's really widespread. There's a lot of different places we can grow.

Michael Kehoe: 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.

Bob Huang: Okay. Got it. No, that's very helpful. Thank you. 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?

Michael Kehoe: Well, Bob, this is Mike. When we started the business seventeen 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 built our own enterprise system over the years, took a long time. And about two 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 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 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 system specifically for our company. We don't have legacy software going back twenty, thirty, forty years. We don't have thousands of legacy applications. I think we're just in a really attractive spot.

Bob Huang: Okay. Got it. Really appreciate it. Thank you.

Operator: Our next question comes from Michael Phillips from Oppenheimer. Please go ahead. Your line is open.

Michael Phillips: Thank you. Good morning. I wanted to touch on one line of business, the construction liability line. I'm curious, was there any change in assumptions in that segment that affected your current year loss pick?

Michael Kehoe: 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, sixteenth 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.

Michael Phillips: Okay. Thank you, Mike. And then second one would be on your excess casualty segment. Maybe 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?

Stuart Winston: 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 as replacements. So there's still a good opportunity for growth, and rates are holding strong where we participate in the market.

Michael Phillips: Okay. Thank you, Stuart. Appreciate it.

Operator: Our next question comes from Mike Zaremski from BMO Capital Markets. Please go ahead. Your line is open.

Mike Zaremski: Hey, thanks. Good morning. I'm just going back to casualty, but a broader brush on all casualty property. I was kind of your core business. Alright. You know, we saw a bit of a sequential deceleration in premium growth there. Any color you can offer on this piece of the marketplace, casualty specific, you know, pricing, you know, you talked about MGAs in the past as well as at still they're still just as competitive? Thanks.

Michael Kehoe: 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.

Stuart Winston: Yeah. The long tail casualty lines, you know, you'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 are segments like excess casualty, social services, and the allied health group that are still really strong. And the market will experience some dislocation. Same with premises liabilities or general casualty. Entertainment, groups like that. It's still a very strong market there for growth.

Mike Zaremski: Okay. I mean, I guess, that's very helpful. So you know, if you look at the casualty trend out still kind of, you know, it's decelerating from a growth perspective. I'm not saying we you know, growth We want profitability, not growth. But we you know, is your view, you shared your view of that shared layer things are becoming less negative. I guess, a pricing standpoint, I'm assuming. Do you think casualty is also getting less competitive or it'll remain increasing competition will remain kind of impacting the top line?

Michael Kehoe: 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 know, the you've seen over the last two years, the Kinsale growth rate has kind of come in from you know, kind of an extraordinary 40% rate to this quarter 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. You know, I think that's probably the best commentary we can offer. I mean, it's 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 it's 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%. You know, Brian Haney highlighted the fact that if you took the commercial property out, you know, that put us in the low double digits. Know, admittedly, that was down from you know, went from 14% to 12%, but to me, that's just kinda normal variability quarter by quarter.

I wouldn't read too much into that two-point decline.

Mike Zaremski: Okay. That's That's that's And just sneak one last one in, you know, part of your I think, part of your special sauce, I believe, uniquely allows Kinsale to I guess, maybe not need to pay 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?

Michael Kehoe: 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. You know, 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 we're not considering a change in our compensation model.

Mike Zaremski: Thank you.

Operator: Next question comes from Mark Hughes from Truist. Please go ahead. Your line is open.

Mark Hughes: Congratulations, Brian. And also Stuart.

Brian Haney: Thank you.

Stuart Winston: Thanks, Mark.

Mark Hughes: 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?

Michael Kehoe: Mark, I would just kinda write that off to normal variability. You know, the overall numbers are phenomenal. You know, the reported losses are coming in below expectations. We're always trying to be cautious with our reserving. You know, you can look around the industry. There's a lot of examples of companies that are too optimistic in their loss reserving. We never wanna be in that group. So I candidly, I would look at the lost performance as good news. Admittedly, it was up a couple points, but to me, that's just normal. Kind of variability.

Mark Hughes: Yeah. Brian, Petrucelli, the seeded premium, the 17%, and then the expense ratio at twenty-one. Given the kind of the reinsurance structure at this point, the ceding commissions are those reasonable starting points? For the next few quarters?

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

Mark Hughes: Yeah. Very good. And then one final question. The state ENS data in some of the coast states Florida, Texas, New York, It looked like your growth is a little faster there. Kind of implying that maybe in other states, growth is a little slower. Is that a correct perception? Is there anything we should read into that or the noncoastal you know, states perhaps a little more competitive? Is there anything to think about there?

Brian Haney: Mark, this is Brian. I wouldn't read too much into it. We don't 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. So I think 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 that the further you look back.

Mark Hughes: Well, if we put those numbers to the side, would you say there's any sort of dynamic where noncoastal, you know, the kind of those traditional ENS states, the New York, California, Florida. Are they are you seeing more opportunity there perhaps than elsewhere? Or would you not see it that way?

Brian Haney: No. I think I think it's it's stayed relatively the same since Martha Stewart relatively the same since we've been in business with those obviously, the core United States are gonna be the largest bulk of our business. But I haven't seen a mix in that change in that.

Mark Hughes: Very good. Thank you.

Brian Haney: Thanks, Mark.

Operator: Our next question comes from Andrew Anderson from Jefferies.

Andrew Anderson: I think maybe five to seven years ago, kind of had talked about how there were certain areas you don't write, like public company DNO or trucking. May maybe just bigger picture, are there pockets that five to seven years ago you did not write and now you're kind of rethinking that and perhaps see some new opportunities for growth?

Michael Kehoe: Well, there's a there's a bunch of examples. You know, we've made a bigger push into homeowners. We started an agribusiness division. We started an aviation division. Ocean marine, We're we're always enhancing the product line.

Stuart Winston: Yeah. We're always looking at new products, and it's not that we don't write that. We wanna 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 accounts it's gonna be a little more controlled.

Andrew Anderson: Got it. And on the net commission ratio, you know, about 10 and a half in the quarter and recognizing there were 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?

Bryan Petrucelli: You know, again, I think the 10.7 is as good a guide as we can give you. If we did have change in mix of business, you could see that move around a little bit. You know, whether that goes up to 12 or 13%, you know, 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.

Andrew Anderson: Thank you.

Operator: Our next question comes from Andrew Kligerman from TD Cowen. Please go ahead. Your line is open.

Andrew Kligerman: Hey, good morning. 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, you know, short tail versus casualty. Maybe on the casualty side, vintage. Just kinda curious on the breakdown of that release.

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

Andrew Kligerman: 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 small 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, three years ago.

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

Andrew Kligerman: Got it. And the last one, in your commentary, you talked about rates improperly. I heard the word stabilizing. I heard moderating. Could you possibly put a you know, some numbers around you know, 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 that commentary.

Stuart Winston: I don't have the exact numbers in front of me. I would've said it was double digits in the quarter down. If I had to guess now, I'd say it's probably single digits down.

Andrew Kligerman: Yeah.

Bryan Petrucelli: I think high single digits.

Stuart Winston: Let's call it high single digits. Okay. I don't have it in front of me, so that's just an absolute speculative guess. Yeah. But I do get the sense that, you know, at least in the part of the market we're in, you have seen that inflection point, and I would expect to see that trend continue.

Michael Kehoe: Like, I think I think it's gonna normalize relatively quickly.

Andrew Kligerman: Thanks. Thanks for the insights.

Operator: Our next question comes from Ryan Tunis from Cantor Fitzgerald. Please go ahead. Your line is open.

Ryan Tunis: Hey there. Good morning. I guess just to follow-up on the underlying loss ratio. It sounded like you attributed kind of the two-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?

Michael Kehoe: No. We're not we're not seeing pressure on our loss ratio from property lines because we've overperformed in that area. That's why, you know, 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 that's a tailwind. I think we're we're being more cautious, and it's not because we're seeing, you know, any kind of 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, you know, all sorts of supply chain disruptions with COVID, you know, we saw some of our long tail lines develop a little bit higher and a little bit later than we would have anticipated. And, you know, starting several years ago, we've addressed that with much more conservative loss picks. And so, you know, we're we're maintaining that conservatism to make sure that we, you know, we always have more than enough. We want we want our reserves to kind of develop favorably year by year.

And when that happens, you know, it just has a very therapeutic effect on the financial performance of our business.

Ryan Tunis: Got it. That makes sense. And then I guess just a follow-up on the property. Yeah. I guess it makes sense naturally that there'd be less pricing pressure in the third quarter simply because there's there's fewer, like, Florida certain layer of renewals is I mean, to what extent is the improved pricing environment just sort of a function of seasonal mix, if you will.

Michael Kehoe: Well, I'm gonna start by just saying, we didn't say it improved. It deteriorated at a slower rate.

Stuart Winston: Yeah. I would I would characterize it more as, you know, rates were going down so fast that the faster rates go down, the quicker they're gonna normalize. Because the industry can't go around giving, you know, double-digit rate increases indefinitely. And I think we've reached that point where you're starting to you saw that, you know, second order derivative turn positive.

Ryan Tunis: So I don't I don't think it's it's I don't think it's based on the third quarter being less, you know, hurricane intensive.

Ryan Tunis: Got it. Thanks for the answers.

Operator: Our next question comes from Joe Tamayo from Bank of America. Please go ahead. Your line is open.

Joe Tamayo: Hey, good morning guys. Most of my questions have been answered, but I guess the first question is how I'm thinking about I appreciate the submission rate was decelerating a little bit to the commercial property. If we exclude commercial property, has the submission rate kind of remained steady or has that also kind of decreased along with premiums?

Stuart Winston: The x property? It's closer to around 9% excluding commercial properties.

Joe Tamayo: Okay. Great. Thank you. And the other question, just thinking about I saw you guys kind of stepped up the share repurchase this quarter. From the $10 million previous one. 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 with capital.

Michael Kehoe: I think it's the latter, Joe. You know, 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 you know, we're definitely producing a lot of excess capital. And you know, our first goal is always to grow the business. And then secondarily to that, you know, 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.

Joe Tamayo: Thank you, guys.

Operator: Our next question comes from Pablo Singzon from JPMorgan.

Pablo Singzon: Hi. Good morning all, and congrats, Brian and Stuart. So first question, with premium growth having slowed, how do you think about other underwriting expenses over the next one to two years? Right? So I think over the past several years, that's been a good story. But you know, given that growth has slowed, are you managing that line to sort of trail the growth in premiums or, you know, just opportunities might lie, there's a chance that you might see some degradation as you're building out your opportunity.

Michael Kehoe: I think we have always worked like crazy to be as efficient as we can as a business. You know, 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, etcetera. Don't think it's gonna be sudden, but it I think a gradual decline is you know, what investors should expect.

Pablo Singzon: Okay. And then I guess, second question also relates expenses. Right? So clearly, Kinsale has an expense advantage over, you know, the rest of the industry. I'd be curious to hear your thoughts about, you know, 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? Pricing and profitability in voice?

Michael Kehoe: 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 cost, become less competitive, and somehow that's gonna net, you know, a better opportunity for our company.

Pablo Singzon: Okay. And continue

Michael Kehoe: Sorry, Mike. Go ahead.

Michael Kehoe: Yep. I was just gonna say, we're gonna continue to work, you know, do everything we can to be the efficient insurance provider in the E&S space.

Pablo Singzon: Gotcha. And then just one small one. On reinsurance retention, do you think that could go up again in the next twelve years or you don't see any change from current status? Thank you.

Bryan Petrucelli: Yeah. 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.

Michael Kehoe: But our retention has changed many times over the years. It has. Yeah.

Pablo Singzon: Right. We've we've taken a bigger net position over and over again.

Michael Kehoe: And that's just consistent with our growth as a business.

Pablo Singzon: Okay. Thank you for your answers.

Operator: Our last question comes from Casey Alexander from Compass Point.

Casey Alexander: Yeah. Good morning. And congrats to Brian and Stuart. Particularly to Brian on his retirement. I'm sure that's something that we all look forward to. Not to beat a dead horse, but, Brian, I am particularly taken by your comments that property rate decline is stabilizing. Simply because in twenty years of covering property in the Southeast, particularly in the Southeast US, when you had a year like this, that has a particularly low level of cat activity, at least up to date, fingers crossed. Right? 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 it's quicker than residential. And it's irrational. And so I just wondered does that not concern you that you're that you're possibly gonna see alternative capital in 2026 enter the property market and leading with some irrational price structures.

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

Casey Alexander: Okay. Thank you.

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

Michael Kehoe: Alright. Well, we appreciate everybody joining us. And look forward to speaking with you again here in a few months. Have a great day.

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

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