Kinsale Capital Group, Inc.

Kinsale Capital Group, Inc. is a property and casualty insurance company that focuses exclusively on the excess and surplus lines (E&S) market in the U.S., where it uses its underwriting expertise to write coverages for hard-to-place risks. The company sells these insurance products in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S. Virgin Islands primarily through a network of independent insurance brokers. According to A.M. Best, the total E&S market was approximately $129.8 billion of direct written premiums in 2024. Based on the company's 2025 gross written premiums of $2.0 billion, its current market share is approximately 1.5% ¹. From 2001 to 2024, A.M. Best's domestic professional surplus lines composite produced an average net loss and loss adjustment expense ratio of 68.7% and grew direct premiums written by 10.0% annually, versus 73.6% and 4.7%, respectively for the property and casualty industry.

The company's primary competitors in the E&S sector include American International Group, Inc., Berkshire Hathaway Inc., Chubb Limited, Fairfax Financial Holdings Limited, Lloyds of London, Markel Group Inc., RLI Corp. and W. R. Berkley Corporation. Kinsale believes it has differentiated itself from competitors by effectively leveraging technology, vigilantly controlling expenses and maintaining control over its underwriting and claims operations. The company's competitive strengths include an exclusive focus on the E&S market, underwriting expertise across a broad spectrum of hard-to-place risks, technology as a core competency, a significantly lower expense ratio than competitors, fully integrated claims management, and an entrepreneurial management team with a track record of success. For the year ended December 31, 2025, the company's expense ratio was 20.8% ² and its loss and loss adjustment expense ratio was 55.1% ³.

Kinsale generates revenue primarily through the collection of premiums from insurance policies written in the E&S market, which are recognized as revenue ratably over the term of the insurance contracts, net of ceded reinsurance. Fee income includes policy fees charged to insureds and is recognized in earnings when the related premium is written. The company also earns net investment income on its portfolio of cash and invested assets, which is an important component of its results of operations. The company's core client focus is small- to medium-sized accounts, which it believes are subject to less competition and have better pricing. The average premium per policy written by the company in 2025 was $13,400 ⁴. Excluding the personal insurance division, the average premium per policy written was $14,000 ⁵ in 2025. The company distributes the majority of its products through a select group of brokerage firms, and does not grant its independent brokers any underwriting or claims authority.

The company writes a broad array of insurance coverages for risks that are unusual or hard to place in the standard insurance market. In 2025, the percentage breakdown of gross written premiums was 70.7% casualty and 29.3% property ⁶. Commercial lines offerings and homeowner's coverage in the personal lines market represented 97.0% and 3.0% of gross written premiums, respectively ⁷. The company's commercial lines divisions include Commercial Property, Excess Casualty, General Casualty, Small Business Casualty, Construction, Small Business Property, Allied Health, Entertainment, Products Liability, Commercial Auto, and all other commercial lines. The personal lines divisions include High Value Homeowners and Personal Insurance. For the year ended December 31, 2025, gross written premiums for Commercial Property were $374,451 thousand ⁸, Excess Casualty were $276,998 thousand ⁹, General Casualty were $207,888 thousand ¹⁰, Small Business Casualty were $202,412 thousand ¹¹, Construction were $147,601 thousand ¹², Small Business Property were $102,413 thousand ¹³, Allied Health were $96,982 thousand ¹⁴, Entertainment were $70,049 thousand ¹⁵, Products Liability were $67,883 thousand ¹⁶, Commercial Auto were $48,721 thousand ¹⁷, all other commercial lines were $321,984 thousand ¹⁸, High Value Homeowners were $36,062 thousand ¹⁹, and Personal Insurance were $23,727 thousand ²⁰.

The company's underwriting department consisted of approximately 340 employees as of December 31, 2025 ²¹. For the year ended December 31, 2025, the company processed approximately 988,000 new business submissions ²², issued approximately 711,000 quotes for a new business quote ratio of 72.0% ²³, and bound 75,000 policies for a new policy to new submission ratio of 7.6% ²⁴. Excluding unsolicited submissions, the company processed approximately 751,000 new business submissions ²⁵, issued approximately 563,000 quotes for a new business quote ratio of 75.0% ²⁶, and bound 72,000 policies for a new policy to new submission ratio of 9.6% ²⁷. The claims department consisted of approximately 90 claims professionals who had an average of 9 years of claims experience in the industry as of December 31, 2025 ²⁸. The information technology department consisted of approximately 140 employees and contractors as of December 31, 2025 ²⁹. As of December 31, 2025, the company had 720 employees, of which 711 were full-time employees ³⁰, all located at the headquarters in Richmond, Virginia.

In January 2025, a series of wildfires began in Southern California. The company is evaluating the impact of such wildfires and currently estimates pre-tax catastrophe losses of approximately $25.0 million, net of reinsurance, to be reflected in the first quarter of 2025 ³¹. In October 2024, the Board of Directors authorized a share repurchase program authorizing the repurchase of up to $100.0 million of the company's common stock ³², which was exhausted in October 2025. In December 2025, the Board of Directors authorized a new share repurchase program authorizing the repurchase of up to $250.0 million of its common stock ³³. During the year ended December 31, 2025, the company repurchased 212,036 shares of treasury stock at a cost of $90,585 thousand ³⁴. In August 2025, the company filed a universal shelf registration statement with the SEC that expires in 2028. On February 4, 2026, the Board of Directors declared a cash dividend of $0.25 per share of common stock ³⁵, payable on March 12, 2026 to stockholders of record on February 26, 2026.

For the year ended December 31, 2025, gross written premiums increased by 5.7% to $2.0 billion ³⁶. Net income was $503.6 million ³⁷ for the year ended December 31, 2025 compared to $414.8 million ³⁸ for the year ended December 31, 2024, an increase of 21.4%. The company's return on equity was 29.3% ³⁹ and its combined ratio was 75.9% ⁴⁰ for the year ended December 31, 2025. Operating return on equity, a non-GAAP financial measure, was 26.4% ⁴¹ for the year ended December 31, 2025. Net operating earnings, a non-GAAP financial measure, were $453.7 million ⁴² for the year ended December 31, 2025 compared to $374.8 million ⁴³ for the year ended December 31, 2024, an increase of 21.1%. Cash and invested assets totaled $5.2 billion ⁴⁴ at December 31, 2025 compared to $4.1 billion ⁴⁵ at December 31, 2024.

The company's strategy includes expanding its presence in the E&S market. According to A.M. Best, the total E&S market was approximately $129.8 billion of direct written premiums in 2024 ⁴⁶. Based on the company's 2025 gross written premiums of $2.0 billion, its current market share is approximately 1.5% ⁴⁷. The company believes its exclusive focus on the E&S market and its high levels of service, including its ability to quote, underwrite and bind insurance policies in a timely manner through its efficient systems, allow it to better serve its brokers and position it to profitably increase its market share. The company also aims to leverage its investment in technology to drive efficiencies, using a proprietary technology platform to drive a high level of efficiency, accuracy and speed in its underwriting and quoting process. In 2025, the company initiated a company-wide effort to introduce AI-enabled tools, including providing each employee an enterprise license for an AI tool, to assist with research, analysis and certain routine business processes.

The company's strategy includes generating underwriting profits regardless of market cycles, focusing on hard-to-place risks and maintaining adequate rate levels for the risks it underwrites. The company maintains control over its underwriting process to ensure consistent quality of work, underwriting each account individually and never delegating authority to any outside agents or brokers. The company believes that its technology approach is scalable and will allow it to maintain a low expense ratio as it continues to organically grow its business. For the year ended December 31, 2025, the expense ratio was 20.8% ⁴⁸, compared to 20.6% ⁴⁹ for the year ended December 31, 2024. The increase in the expense ratio was primarily due to lower ceding commissions due to increased retention on its reinsurance treaties offset in part by routine variability in other underwriting expenses.

The company's information technology department consisted of approximately 140 employees and contractors as of December 31, 2025 ⁵⁰. The company uses a proprietary technology platform that encompasses multiple applications and services which comprise an integrated system, with key applications and services supporting the core business developed and improved in-house. The company designed the architecture for its information systems to reduce administrative costs and quickly provide useful information. The company's insurance company subsidiary operates in a digital environment, which reduces the costs of printing, storing and handling thousands of documents each week. The company continues to dedicate resources to maintain, improve and, if necessary, replace its technology. As of December 31, 2025, the company had 720 employees, all located at its headquarters in Richmond, Virginia ⁵¹.

The company's capital allocation strategy includes maintaining a strong balance sheet. In December 2025, the Board of Directors authorized a new share repurchase program authorizing the repurchase of up to $250.0 million of its common stock ⁵². The company currently expects to pay quarterly cash dividends in the future, though the declaration, payment and amount of future dividends is subject to the discretion of the Board of Directors. On February 4, 2026, the Board of Directors declared a cash dividend of $0.25 per share of common stock ⁵³. During the year ended December 31, 2025, the company paid dividends of $0.68 per common share, or $15.8 million in the aggregate ⁵⁴. The company had outstanding borrowings of $224.4 million, net of debt issuance costs, as of December 31, 2025 ⁵⁵ under its two bank credit agreements. In August 2025, the company filed a universal shelf registration statement with the SEC that expires in 2028, which can be used to issue an unspecified amount of common stock, preferred stock, depositary shares and warrants.

The company faces structural headwinds from the cyclical nature of the property and casualty insurance industry, which has historically fluctuated in periods of price competition and excess capacity (soft market) followed by periods of high premium rates and shortages of underwriting capacity (hard market). This cyclical market pattern can be more pronounced in the E&S market than in the standard insurance market. The company also faces risks from severe weather conditions and catastrophes, which can cause losses in its property lines and generally result in both an increase in the number of claims incurred and an increase in the dollar amount of each claim asserted. The company's main catastrophe risk arises from hurricanes. The company manages catastrophe exposure through careful and disciplined underwriting, purchasing extensive reinsurance protection from financially strong counterparties, analyzing results of catastrophe modeling on a monthly basis, and limiting the concentration of property business by geographic area.

The company faces constraints from adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity, which could result in the sale of fewer policies than expected or an increase in frequency or severity of claims and premium defaults or both. The company underwrites a significant portion of its insurance in California, Florida and Texas, and any economic downturn in any such state could have an adverse effect on its business. The company also faces risks related to the potential loss of one or more key executives or an inability to attract and retain qualified personnel. The company's reliance on a select group of brokers is a constraint, as of its 2025 gross written premiums, 60.6%, or $1.2 billion, were distributed through five of its approximately 227 brokers ⁵⁶, three of which accounted for 47.6%, or $941.4 million, of its 2025 gross written premiums ⁵⁷.

The company's loss reserves may be inadequate to cover actual losses, which could have a material adverse effect on financial condition, results of operations and cash flows. As of December 31, 2025, gross reserves for losses and loss adjustment expenses were $2.9 billion ⁵⁸, of which 91.6% related to IBNR ⁵⁹. A 5% change in net IBNR reserves would equate to a $114.4 million change in the reserve for losses and loss adjustment expenses ⁶⁰, as well as a $90.4 million change in net income ⁶¹. The company is exposed to severe weather conditions and catastrophes, and in January 2025 estimated pre-tax catastrophe losses of approximately $25.0 million, net of reinsurance, from Southern California wildfires ⁶². The company relies on a select group of brokers; of 2025 gross written premiums, 60.6% were distributed through five brokers ⁶³, and three brokers accounted for 47.6% of gross written premiums ⁶⁴. The company's insurance subsidiary is subject to extensive regulation, and the maximum amount of dividends Kinsale Insurance can pay during 2026 without regulatory approval is $444.3 million ⁶⁵. A decline in the A.M. Best financial strength rating of 'A' (Excellent) for Kinsale Insurance could adversely affect the amount of business the company writes.

Management's message emphasizes the company's goal to deliver long-term value for stockholders by growing the business and generating attractive returns, accomplished by generating consistent and attractive underwriting profits while managing capital prudently. Management believes the company has differentiated itself from competitors by effectively leveraging technology, vigilantly controlling expenses and maintaining control over underwriting and claims operations. Key strategic priorities emphasized for the period ahead include expanding the company's presence in the E&S market, generating underwriting profits regardless of market cycles, maintaining a contrarian risk appetite, leveraging investment in technology to drive efficiencies, and maintaining a strong balance sheet. Management states that during 2025, gross written premiums increased by 5.7% to $2.0 billion ⁶⁶, return on equity was 29.3% ⁶⁷, and the combined ratio was 75.9% ⁶⁸. Management also states that operating return on equity was 26.4% ⁶⁹ for the year ended December 31, 2025. Management believes the company is well positioned to continue to capitalize on attractive opportunities in its target market and to prudently grow its business.