Kinsale Capital Group, Inc. (NASDAQ:KNSL) Q3 2019 Earnings Conference Call Transcript

Nov 01, 2019 • 09:00 am ET

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Kinsale Capital Group, Inc. (NASDAQ:KNSL) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

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 2018 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 third 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 President and CEO, Mr. Michael Kehoe. Please go ahead, sir.

Executive
Michael P. Kehoe

Thank you, operator, and good morning, everyone. Joining me today are Bryan Petrucelli, Kinsale's CFO; and Brian Haney, Kinsale's Chief Operating Officer.

We're going to follow a similar format today that we've had on our prior conference calls. I'll begin with some quick introductory comments and then Bryan Petrucelli will review our financial results, followed by Brian Haney who will discuss Kinsale's underwriting results and provide some market commentary. And then we're going to follow up with any questions.

As a reminder, Kinsale combines disciplined underwriting and claim handling with technology-enabled low costs to deliver attractive returns and growth. We focus on smaller and sometimes hard-to-place accounts within the excess and surplus lines market. And unlike competitors, excuse me, we maintain absolute control over the underwriting and the claim management process and we do not outsource those functions to external parties. We use proprietary technology and automation to operate at a significant expense advantage over many larger competitors. And this combination of disciplined underwriting and low costs is a winner every time.

The third quarter saw a continuation of Kinsale's profitability and growth from the first half of the year. The combined ratio for the quarter was 86.9%. Through nine months, the annualized operating return on equity was 15.9%. These numbers are consistent with our forward guidance of a mid-teens return on equity and a mid-80s combined ratio. Premium growth for the quarter, 40.9%, was up from 36% in the second quarter and 32% in the first. The growth we experienced in the third quarter was driven by Kinsale's business strategy combined with a trading environment that is not only favorable, but improving.

As we've discussed on prior calls, this improving trading environment is driven by dislocation within the broad P&C market and that includes both standard lines and E&S companies, wherein companies are reducing capacity, withdrawing from certain lines of business, canceling some delegated programs, and generally becoming more discriminating about risk in their underwriting process.

And now I'm going to turn the call over to Bryan Petrucelli for the financial report.

Executive
Bryan P. Petrucelli

Thanks, Mike. Kinsale had another strong quarter