Q1 2025 Kinsale Capital Group Inc Earnings Call

Operator: and others 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.

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 can change the press release announcing its first quarter results and sales management may also reference certain non-GAAP.

Operator: The company has furnished a Form 8-K with the Securities and Exchange Commission that contains the press release announcing its first quarter results.

Operator: 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.

Natural 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 Dot Kinsale capital group Dotcom I.

Michael Kehoe: 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.

I will now turn the conference over to Ken's sales Chairman and CEO, Mr. Michael Kehoe. Please go ahead Sir.

Thank you operator, and good morning, everyone.

Michael Kehoe: Bryan Petrucelli, our CFO, and Brian Haney, our president and COO are both joining me this morning for the call. We will each make a few comments and then take any questions you may have. In the first quarter of 2025, Kinsale's operating earnings per share increased by 6% and gross rate and premium grew by 8% over the first quarter of 2024. For the quarter, the company posted a combined ratio of 82% and an annualized operating return on equity of 22.5%. These results reflect strong profitability in our business, generated from our disciplined underwriting and low-cost model, even with the significant catastrophe event occurring in the quarter.

Speaker Change: Bryan Petrucelli, our CFO and Brian Haney <unk>.

<unk> and <unk> are both joining me this morning for the call.

Speaker Change: We will each make a few comments and then take any questions you may have.

Speaker Change: In the first quarter 2025 can sales operating earnings per share increased by 6% and.

Speaker Change: Gross written premium grew by 8% over the first quarter of 2024.

Speaker Change: For the quarter the company posted a combined ratio of 82%.

Speaker Change: And an annualized operating return on equity of 22, 5%.

Speaker Change: These results reflect strong profitability in our business generated from our disciplined underwriting and low cost model, even with the significant catastrophe event occurring in the quarter.

Michael Kehoe: The Palisades wildfire loss that we estimated in February at $45 million is now estimated to be about $41 million gross and $22 million net of reinsurance. All these numbers are pre-tax. As a reminder, Kinsale has a considerable presence in the natural catastrophe market, but we operate with a conservative risk management approach to balance the margin in the business with its inherent volatility. We use a disciplined underwriting model, a robust reinsurance program, regular CAD modeling, and strict limits on concentration of business. to limit the volatility of our financial results. We view the outcome of the Palisades wildfire as consistent with this strategy.

Speaker Change: Palisades wildfire loss that we estimated in.

Speaker Change: In February at $45 million is now estimated to be about 41 million gross and $22 million net of reinsurance all these numbers are pretax.

Speaker Change: As a reminder, kinsale has a considerable presence in the natural catastrophe market, but we operate with a conservative risk management approach to balance the margin in the business with its inherent volatility.

Speaker Change: We use a disciplined underwriting model a robust reinsurance program regular cat modeling and strict limits on concentration of business.

Speaker Change: To limit the volatility.

Of our financial results.

Speaker Change: We view the outcome of the Palisades Wild fire as consistent with this strategy.

Michael Kehoe: Growth in premium in the quarter was 8%, slightly below our expectations of 10% to 20% across the cycle. This growth rate was mostly driven by the 18% decrease in our commercial property division, which was our largest underwriting unit last year. Note this underwriting division grew 20-fold over the prior five years and has produced compelling profits, but now we are seeing more intense competition, including from some standard companies, and rate declines from the peak of about 20 percent. The margins in this business are still strong, but we do expect to write less premium compared to the prior year for the near term.

Speaker Change: Growth in premium in the quarter was 8% slightly below our expectations of 10% to 20% across the cycle.

Speaker Change: This growth rate was mostly driven by the 18% increase in our commercial property Division, which was our largest underwriting unit last year.

Speaker Change: Note. This underwriting division grew 20 fold over the prior five years and has produced compelling process and now we are seeing more intense competition, including from some standard companies.

Speaker Change: And rate declines from the peak of about 20%.

Speaker Change: The margins in this business are still strong, but we do expect to write less premium compared to the prior year for the near term if.

Michael Kehoe: If you exclude the Commercial Property Division from the calculation, Kinsale's direct written premium for the quarter grew by 16.7%. Also, since the Commercial Property Division premium in 2024 is disproportionately concentrated in the first half of the calendar year, we expect this to be a headwind to overall growth in the second quarter as well, but less so in the second half of 2025. It's also worth mentioning that our personal lines and small commercial property teams continue to grow at double digit rates. Overall, the E&S market in the first quarter remained steady, but with a continued increase in competition.

Speaker Change: If you exclude the commercial property division from the calculation can sales direct written premium for the quarter grew by 16, 7%.

Speaker Change: Also since the commercial property division premium in 2024 is disproportionately concentrated in the first half of the calendar year. We expect this to be a headwind to overall growth in the second quarter as well, but less so in the second half of 2025.

Speaker Change: It's also worth mentioning that our personal lines and small commercial property teams.

Speaker Change: Continue to grow at double digit rates.

Speaker Change: Overall, the E&S market in the first quarter remained steady, but with a continued increase in competition.

Bryan Petrucelli: And with that, I'm going to turn the call over to Bryan Petrucelli. Thanks, Mike. Another nice quarter with net operating earnings increasing by 6%, even with the impact of the California wildfires. The 82.1% combined ratio for the quarter included 3.9 points from net favorable prior year loss reserve development compared to 2.7 points last year, with 6 points in cat losses this year, primarily again from the California wildfires, compared to less than a half point in the first quarter last year. We produced a 20% expense ratio in the first quarter, and comparable to the 20.7% last year.

Speaker Change: I'm going to turn the call over to Bryan Petrucelli.

Bryan Petrucelli: Thanks, Mike.

Speaker Change: Another nice quarter with net operating earnings increasing by 6%, even with the impact of the California wildfires.

Bryan Petrucelli: 82, 1% combined ratio for the quarter.

Bryan Petrucelli: Included three nine points from net favorable prior year loss reserve development compared to two seven points last year was six points in cat losses. This year, primarily again from the California wildfires compared to less than a half 0.1st quarter last year.

Bryan Petrucelli: Produced a 20% expense ratio in the first quarter.

Bryan Petrucelli: Comparable to the 27% last year.

Bryan Petrucelli: As we've noted in previous quarters, the expense ratio will fluctuate from quarter to quarter, and we'll just continue to point you to the full year expense ratio as a good measure. On the investment side, net investment income increased by 33.1 percent this quarter over last year as a result of continued growth in the investment portfolio generated from strong operating cash flows. The annualized gross return was 4.3% and consistent with last year. New money yields continue to average in the low 5% range, with book yields around 4.5%. So we should see some continued investment income benefit from these higher rates as we move forward.

Bryan Petrucelli: As we've noticed noted in previous quarters, the expense ratio will fluctuate from quarter to quarter and it will just continue to point you to the full year expense ratio is a good measure.

Bryan Petrucelli: On the investment side net investment income increased by 33, 1% this quarter over last year as a result of continued growth in the investment portfolio generated from strong operating cash flows.

Bryan Petrucelli: The annualized gross return.

Bryan Petrucelli: It was four 3% and consistent with last year.

Bryan Petrucelli: Yields continue to average in the low 5% range with book yields around four 5% so.

Bryan Petrucelli: So we should see some continued investment income benefit from.

Bryan Petrucelli: From these higher rates as we move forward.

Bryan Petrucelli: Diluted operating earnings per share continues to improve and was $3.71 per share for the quarter, compared to $3.50 per share for the first quarter of 2024. As respects to capital management, we repurchased $10 million in shares during the first quarter. I would expect similar modest levels of repurchases each quarter on a routine basis, with larger purchases made opportunistically from time to time.

Bryan Petrucelli: Diluted operating earnings per share continues to improve and was $3 71.

Bryan Petrucelli: Per share for the quarter compared to $3 five $3 50 per share for the first quarter of 2024.

As respects to capital management, we repurchased $10 million in shares during the first quarter I would expect similar modest levels of repurchases each quarter on a routine basis with larger purchases made opportunistically from time to time.

Brian Haney: With that, I'll pass it over to Brian Haney. Thanks, Brian. The first quarter saw a growth in our gross written premium of 8%. Our property-related divisions, as a whole, shrank by 8%, while the rest of the company grew 15%. The decrease in the property premiums was driven entirely by our commercial property division. All the other property divisions were up for the quarter, as Mike mentioned. The rates in commercial property in this space had reached all-time highs, and the margins have become very significant, which is bringing in competition, including from MGAs and admitted companies. That market is now normalizing after a period of crisis pricing conditions in past years.

Speaker Change: With that I'll pass it over to Brian Haney, Thanks, Brian first quarter solid growth in our gross written premium of 8% our property related divisions as a whole strike by 8% while the rest of the company grew 15.

Speaker Change: The decrease in the property premiums was driven entirely by our commercial property Division all the other property divisions were up for the quarter as Mike mentioned.

Speaker Change: The rates in commercial property in this space.

Speaker Change: Reached all time highs and the margins have become very significant which is bringing in competition, including from MJ as an admitted companies.

Speaker Change: That market is now normalizing after a period of crisis.

Speaker Change: Pricing conditions in past years.

Brian Haney: Casualty is still seeing growth overall, particularly commercial auto and general casualty. Professional lines remain competitive with management liability and are non-medical professional under pressure, but our professional lines group as a whole is still group of the quarter and we are seeing positive signs in the allied health and excess professional areas. We are also seeing growth opportunities in our personalized space, whether it be through our high-value homeowners division, or in manufactured homes, or in traditional site-built homes, which are all products we are looking to expand and should provide a nice growth opportunity going forward. New business submission growth was 11 percent for the quarter, down from 17 in the fourth quarter.

Speaker Change: Casualty is still seeing growth overall, particularly commercial auto and general casualty and professional lines remained competitive with management liability and our non medical professional under pressure, but our professional lines group.

Speaker Change: As a whole is still grew for the quarter and we are seeing positive signs in the allied health and excess professional areas.

Speaker Change: We are also seeing growth opportunities in our personal lines space, whether it be through our high value homeowners division or manufactured homes or traditional site built homes, which are all products. We are looking to expand and should provide a nice growth opportunity going forward.

Speaker Change: Business submission growth was 11% for the quarter down from 17 in the fourth quarter. This number is subject to some variability but in general we view submissions as a leading indicator of growth and so we see the submission growth rate is a positive signal.

Brian Haney: This number is subject to some variability, but in general we view submissions as a leading indicator of growth, and so we see the submission growth rate as a positive signal. Overall rates for the quarter were down 1 percent. As mentioned earlier, our commercial property division is seeing rates down about 20 percent, but our other property lines are still seeing modest rate increases. Casualty rates overall were up modestly, driven by construction and general casualty and there were modest rate declines in professional and some specialty casualty lines where profitability has been exceptional. We are believers in the model of disciplined underwriting and technology driven low cost.

Speaker Change: While rates were for the quarter were down 1% as mentioned earlier, our commercial property division as saying rates down about 20%, but our other commercial or other property lines are still seeing modest rate increases.

Speaker Change: Rates overall were up modestly driven by construction and general casualty and there were modest.

Speaker Change: Rate declines in professional and some specialty casualty lines, where profitability has been exceptional.

Speaker Change: We are believers in the model of disciplined underwriting and technology, driven low cost and over the long term our business model has and will continue to add.

Brian Haney: And over the long term, our business model has and will continue to have continue to drive business. Our advantages, particularly in lower costs and greater efficiency are tough to replicate. And we feel these give us a durable note.

Speaker Change: Continue to drive business, our advantages, particularly in lower costs and greater efficiency are tough to replicate.

We feel these give us a durable.

Brian Haney: Beyond that, though, there's some recent data points that give us additional calls for optimism. A lot of the more aggressive competition we are facing, and that is producing some headwinds at the moment, comes from phoning companies. If you look at the gross incurred loss ratios for some of these fronting companies, you see a lot of older exit years where the loss ratios are 90 or 100% or higher, and continuing to develop adversely. No risk bearer is making money at 100% loss ratio, period. And while the front-end companies themselves don't bear those loss ratios because they're ceding away the premium, someone is bearing those loss ratios.

Speaker Change: Beyond that though there are some recent data points that give us additional cause for optimism.

A lot of the more aggressive competition Wayne are facing and that is producing some headwinds at the moment comes from funding companies.

Speaker Change: If you look at the gross incurred loss ratios for some of these primary companies you see a lot of older accident years, where the loss ratios are 90, or 100% or higher and continuing to develop adversely.

Speaker Change: No risk there is making money at a 100% loss ratio period.

Speaker Change: And while the product companies themselves don't bear those loss ratios because theyre seeing the light of premium someone is bearing those loss ratios and thats someone can't keep doing that for long.

Brian Haney: And that someone can't keep doing that for long. Kinsale couldn't make money at 100% loss ratio even with our expense ratio advantage. So you know a risk bearer that has an expense ratio of 35 or 40 or higher can't. It's just not sustainable. And beyond that, some of the same fronting companies show current accident-year gross loss ratios in the low 60s. That is a remarkable, you might say, incredible improvement. It seems difficult to believe that business that was producing 90 or 100 percent loss ratios with persistent and significant adverse development as recently as 2022 could be in the low 60s in 2024.

Speaker Change: <unk> sale Couldnt make money at a 100% loss ratio, even with our expense ratio advantage. So you know a risk there that has an expense ratio of 35 or 40 or higher can it's just not sustainable.

Speaker Change: And beyond that some of the same front end company. So current accident year gross loss ratios in the last six years that is a remarkable you might say incredible improvement it seems difficult to believe that business that was producing 90 or 100% loss ratios with persistent and significant adverse development as recently as 2022.

Speaker Change: In the last six years in 2024 all of this data is published by the way sorry invite the listeners to look it up for themselves.

Brian Haney: All this data is public, by the way, so I invite the listeners to look it up for themselves. It's eye-opening.

Brian Haney: And so, for all these reasons, we remain optimistic. Our results are good. Our growth prospects are good. And as a low-cost provider in our space, we have a durable competitive advantage that should allow us to continually, gradually take market share from our higher-expense competitors while delivering strong results and build wealth for our investors.

And so for all these reasons we remain optimistic 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 continually.

Speaker Change: Gradually take market share from our higher expense competitors, while delivering strong results and build wealth for our investors and with that I'll hand, it back over.

Brian Haney: And with that, I'll hand it back over. Thanks, Brian.

Speaker Change: Thanks, Brian operator.

Operator: Operator, we're ready for any questions in the queue.

Speaker Change: Operator, we're ready for any questions in the queue.

Operator: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.

Michael Zaremski: Your first question comes from the line of Michael Zaremski from BMO Capital Markets. Your line is open. Hey, good morning. It's Dan on for Mike. First, I can just start with the 11% submission rate that you gave us. Could you maybe parse out how that's trending between property and casualty lines for us? The commercial property is experiencing the biggest decline in growth rate and then I would say the rest of properties submission growth continues to be strong. Consistent with cash? Yeah. Okay, thank you. So, small properties in line with casualty and the large account. and others.

Speaker Change: Our first question comes from the line of Michael Zaremski from BMO capital markets. Your line is open.

Speaker Change: Hey, good morning, Dan on for Mike first I can just start with the 11% submission rate that you gave us could you maybe parse out how those how that's trending between property and casualty lines for us.

Speaker Change: The commercial property is.

Speaker Change: His experience in the biggest decline.

Speaker Change: And growth rate.

Speaker Change: And then I would say the rest of our properties submission growth continues to be strong consistent with CASM.

Speaker Change: Sure.

Speaker Change: Okay. Thank you. So small small property is in line with casualty unit in the large account.

Speaker Change: Please materially.

Speaker Change: Declining correct.

Speaker Change: Yes.

Michael Zaremski: Okay, thanks. And then on.

Speaker Change: Okay. Thanks, and then.

Speaker Change: On.

Michael Zaremski: More back to the property slowdown this quarter, you're mentioning the increasingly competitive environment. Does that comment mean, you know, E&S business is falling back to the standard market or are those standard line carriers writing more business on E&S? I think it's, in general, a lot more competition in the large property account space, including standard companies, MGAs, E&S companies, etc. The returns there have been dramatically good, and it makes sense, right? It's attracting a lot more capital, and, you know, as a consequence, the opportunity is slightly more limited. Thank you.

Speaker Change: More back to the property slowdown this quarter, you're matching increased competitive environment does that comment mean E&S business is flowing back to the standard market or those standard line carriers, writing more business on an E&S basis.

Speaker Change: I think it's.

Speaker Change: In general a lot more competition in the large property accounts space, including standard company's MGA E&S companies et cetera. The returns that are have been dramatically good.

Speaker Change: And then it makes sense right, it's attracting a lot more capital and as a consequence the op.

Speaker Change: Opportunities slightly more limited.

Speaker Change: Okay. Thank you.

Bill Carcache: Your next question comes from a line of Bill Carache from Wolfe Research. Your line is open. Thank you.

Speaker Change: Your next question comes from the line of Bill <unk> from Wolfe Research. Your line is open.

Speaker Change: Thank you good morning.

Bill Carcache: Good morning. Your stock is down over 10% pre-market, it seems largely on a continuation of the decelerating top line growth theme, which feels like it's been under scrutiny for a long time. But it looks like the top line growth comparisons are going to get easier as we progress through the year, as you pointed out, and that should help mitigate the growth headwinds. But what I think is notable that, you know, many investors have called attention to is your ability to more than offset top line weakness with a lower combined ratio. Can you give a little bit more color on your confidence level and being able to sustain that kind of underwriting performance?

Speaker Change: The stock is down over 10% pre market. It seems largely on a continuation of the decelerating top line growth theme, which.

Speaker Change: It feels like it's been under scrutiny for a long time, but it looks like the topline growth comparisons are going to get easier as we progress through the year as you pointed out and that should help mitigate the growth headwinds, but what I think is notable is that many investors.

Speaker Change: Called attention to is your ability to more than offset top line weakness with a lower combined ratio can you give a little bit more color on your confidence level in being able to sustain that kind of underwriting performance. There has been some concern that potential degradation in underwriting quality would exacerbate that sort of top line deceleration concern.

Bill Carcache: There's been some concern that potential degradation and underwriting quality would exacerbate the sort of top line deceleration concerns and it would be just helpful to get your thoughts.

Speaker Change: And it would be just helpful to get your thoughts.

Michael Kehoe: Yeah, Bill is Mike. We're very confident in our business model as Brian was just commenting on his prepared remarks. Kinsale focuses on a high margin segment, small E&S accounts. We control our own underwriting. We don't outsource that to other parties. We think that drives meaningfully better accuracy. We are the low-cost leader in our space. Insurance is a good or a service where our customers care intensely about the price. I think we have built a very conservative balance sheet. I think our reserves, we are very confident, are conservatively stated, so they're much more likely to develop favorably than unfavorably.

Speaker Change: Yes, Bill this is Mike.

Speaker Change: We're very.

Speaker Change: Constant in our business model as Brian was just.

Speaker Change: Commenting on in his prepared remarks.

Speaker Change: Kinsale focuses on a high margin segment small E&S accounts.

Speaker Change: We control our own underwriting we don't outsource that to other parties, we think that drives meaningful lead better accuracy.

Speaker Change: <unk>.

Speaker Change: We are the low cost leader in our space insurance is.

Speaker Change: A good or service, where our customers care intensely about the price.

Speaker Change: I think we have.

Speaker Change: <unk> built a very conservative balance sheet I think our reserves we are very confident.

Speaker Change: Our conservatively stated so they're much more likely to develop favorably than unfavorably.

Michael Kehoe: So we're bullish on the future. I think we've got advantages that are compelling and dramatic.

Speaker Change: So we're bullish on the future.

Speaker Change: I think we've got advantages that.

Speaker Change: R.

Speaker Change: Our compelling and dramatic.

Michael Kehoe: That being said, we always prioritize profitability over growth. And so when you have a period of time where there's intense... Price Competition. Bryan just detailed where there's a number of companies. writing business below the burn cost. Okay, we're not going to do that. But, you know, the market ebbs and flows, and I think we're very confident we're going to continue to grow, take market share, and deliver best-in-class returns. Thanks, Mike. That's helpful.

Speaker Change: That being said, we always prioritize profitability over growth and so when you have a period of time, where there is intense.

Price competition.

Brian just detailed where theres a number of companies.

Speaker Change: Writing business below the burn cost, okay, we're not going to do that.

Speaker Change: But.

Speaker Change: The market ebbs and flows and I think we're very confident.

Speaker Change: We're going to continue to grow and take market share and deliver best in class returns.

Mike: Thanks, Mike Thats helpful separately.

Michael Kehoe: Separately, Kinsale has established a strong track record since since the time of your founding, but you haven't faced a severe macro downturn outside of COVID. Could you speak to what Kinsale's playbook is if, say, tariff policy were to push the US economy into recession? Any color on maybe where you'd expect to adjust, what you'd expect to stay the same, where you'd expect to see the greatest opportunity?

Speaker Change: Sales established a strong track record since since the time, maybe youre founding but you haven't faced severe macro downturn outside of Covid could you speak to what can sales playbook is C tariff policy where to push the U S economy into recession any color on maybe where you would expect to adjust what you would.

Mike: To stay the same where you would expect to see the greatest opportunities.

Michael Kehoe: Yeah, you know, insurance is a compulsory product in a modern economy. So we, you know, the if the economy were to contract, the PNC industry might contract along with it, that tends to be, you know, a couple percentage points, I think we would continue to grow right through that. You know, we're operating with a 20% expense ratio, most of our competitors that like us focus on the small account space. tend to be well into the 30s or even above 40. I think we're well positioned to continue to grow and take market share in all markets.

Mike: Yes.

Mike: Insurance is a a compulsory product in a modern economy. So if.

Mike: If the economy were to contract the P&C industry might contract along with it that tends to be.

Mike: A couple percentage points I think we would continue to grow right through that.

Mike: We are operating with a 20% expense ratio most of our competitors that like us focus on the small account space tend to be well into the thirty's or even above 40.

I think we're well positioned to continue to grow and take market share in all markets I just think in a competitive market hey, it's going to be a little bit more slowly than in a less competitive market.

Michael Kehoe: I just think in a competitive market, hey, it's gonna be a little bit more slowly than in a less competitive market.

Michael Kehoe: Thanks, Mike.

Bill Carcache: If I may squeeze in one last one, sort of against the backdrop that you've laid out, where you expect to write less premium, it seems like, and to the extent that we do see volatility in your stock under pressure, maybe if you could just speak to what it takes for you to consider more aggressively increasing repurchases, perhaps even above that modest amount that you've mentioned, particularly if the growth environment remained weak and volatility intensified. Thanks. Yeah, we expect to have incremental purchases, you know, we always leave the door open to do things opportunistically, but in general, we kind of view the incremental repurchase as the best strategy for us, and it's consistent, if you will, in the fact that we pay a small dividend as well, and we've incrementally increased that a little bit each year.

Speaker Change: Thanks, Mike if I may squeeze in one last one sort of against the backdrop that that you've laid out.

Mike: Where you expect to write less premium.

Mike: It seems like and to the extent that we do see volatility in your stock under pressure, maybe if you could just speak to.

Like what it takes for you to consider more aggressively.

Mike: Increasing repurchases.

Mike: Perhaps even above that modest amount that that you've mentioned.

Speaker Change: Particularly if the growth environment remained weak and volatility intensified. Thanks.

Speaker Change: Yes, we expect to have incremental purchases.

Speaker Change: We always leave the door open to do things Opportunistically.

Speaker Change: But in general we kind of view the incremental repurchase as the best strategy for us and it's consistent if you will in the fact that we pay a small dividend as well and we've incrementally increased that a little bit each year.

Speaker Change: <unk>.

Bill Carcache: You know, that's the way we kind of view it, at least at this Thanks, Mike. I appreciate it. I appreciate you taking my questions.

Speaker Change: Thats the way, we kind of view at least at this time.

Speaker Change: Yeah.

Mike: Thanks, Mike I appreciate it.

Speaker Change: I appreciate you taking my questions.

Bill Carcache: Thanks, Bill.

Bill: Thanks Bill.

Andrew Andersen: Your next question comes from a line of Andrew Andersen from Jeffreys. Your line is open. Hey, good morning. The 60.0 underlying loss ratio is pretty strong in the quarter. I think you called out some better results on property. But was there any change in loss trend on either the property or the casualty lines? Andrew, I think it was basically a decrease in reported losses. and then a little bit of it is driven by the mix of business. The property obviously is short tail business. So. You know, those losses are resolved much more quickly than our long tail casualty book.

Speaker Change: Your next question comes from the line of Andrew Anderson from Jefferies. Your line is open.

Andrew Anderson: Hey, good morning.

Andrew Anderson: 60.0 underlying loss ratio was pretty strong in the quarter I think you called out some better results on property, but was there any change in loss trend on either the property or the casualty lines.

Andrew I think it was basically.

Andrew Anderson: A decrease in reported losses.

Andrew Anderson: And then a little bit of it is driven by the mix of business. The property, obviously its short tail business.

Andrew Anderson: So.

Andrew Anderson: Those losses are resolved much more quickly than our long tail casualty book.

Andrew Andersen: So it's, it's basically those two things. Okay. And then maybe just kind of back on macro, I guess I typically think of Kinsale as riding a lot in the small commercial end of the market. You know, if we are to get into a tougher macro backdrop, is there an intention to move more into middle market? Or do you still find the small commercial runway pretty plentiful? We like the small space. Our average premium since we launched the company back in 2010 has been in that mid-teens space. You know, we're always willing to consider larger deals.

Andrew Anderson: It's basically those two things.

Andrew Anderson: Okay.

Speaker Change: And then maybe just kind of back on macro I guess I typically think of Ken sale is writing a lot in the small commercial end of the market.

Speaker Change: If we are to get into a tougher macro backdrop is there an intention to move more into middle market or do you still find the small commercial runway pretty plentiful.

Speaker Change: We like the small space.

Speaker Change: Our average premium since we launched the company back in 2010 has been in that mid mid teen space.

Speaker Change: We're always willing to consider larger deals, there's nothing inherently wrong with them interested.

Andrew Andersen: There's nothing inherently wrong with them. It's just that they tend to be priced much more aggressively from the perspective of the risk bearer. I think the margins are not quite as good. But no, I think we're, we're very comfortable with where we have been. And that's where we expect to be.

Speaker Change: Tend to be priced much more aggressively from the perspective of the risk there I think the margins are not quite as.

Speaker Change: Is good.

Speaker Change: But no I think we're very comfortable with where we have been and that's where we expect to be in fact as Brian Haney mentioned, we're expanding our personal lines book.

Andrew Andersen: In fact, as Brian Haney mentioned, you know, we're expanding our personal lines book, you know, in effect, going lower, not higher. Thank you.

Speaker Change: In effect.

Speaker Change: Going lower not higher.

Speaker Change: Thank you.

Michael Phillips: Your next question comes from the line of Michael Phillips from Oppenheimer. Your line is open. Thank you. Good morning. I wanted to touch on your comments on the more conservative actual assumptions for construction liability. The question is, what are you seeing for severity there? Has that changed from, say, the last quarter? And then maybe was that what you did there, was that a result of what you're actually seeing in the data, or is that more of a proactive stance given the impact tariffs may have on construction defect claims? Thank you.

Speaker Change: Your next question comes from the line of Michael Phillips from Oppenheimer. Your line is open.

Thank you and good morning, I wanted to touch on your comments on the more conservative extra assumptions for construction liability.

Speaker Change: It is.

Speaker Change: What are you seeing for severity there has that changed from say the last quarter and then maybe.

Was that was that what you did there was that a result of what youre actually seeing in the data or is that more of a proactive stance given the impact tariffs may have on construction defect claims.

Speaker Change: Yes.

Michael Kehoe: Yeah, this is Mike again, we have seen a We've seen development on the long tail casualty business, in particular the construction. In certain accident years where it's developed a little bit higher and a little bit later than we originally anticipated. And so we've pushed the book loss ratios for construction specifically, but probably picks up some other long tail lines as well, you know, up over the last several years. And we've done a lot of things to drive better margins going forward. higher prices. We've adjusted the mix of coverage that we offer, et cetera. But we've also, just as a precaution, booked the 2020, 21, 22, 23, 24 construction lines in the mid-'80s as well.

Mike: Yeah. This is Mike again.

Speaker Change: We.

<unk> seen a.

Speaker Change: We've seen development on the long tail casualty business in particular the construction.

Speaker Change: In certain accident years, where it's developed a little bit higher and a little bit later than we originally anticipated.

Speaker Change: So we've pushed the booked loss ratios for <unk>.

Speaker Change: Construction, specifically, that's probably picks up some other long tail lines as well.

Speaker Change: Up over the last several years.

Speaker Change: And we've done a lot of things to drive better margins going forward.

Speaker Change: Higher prices.

Speaker Change: We have adjusted the mix of coverage that we offer.

Speaker Change: Et cetera, but we've also just as a precaution book.

Speaker Change: The 2020, 'twenty, one 'twenty two 'twenty three 'twenty four construction lines in the mid eighties as well. So we're very conservatively positioned there, but it has nothing to do with tariffs. It really just has to deal with the fact that thats long tail business and.

Michael Phillips: So we're very conservatively positioned there, but it has nothing to do with tariffs. It really just has to do with the fact that that's long-tail business. And... It can be a very litigious line. And I think there was a significant impact from the spike in inflation a few years ago. But it really has nothing to do with tariff. Okay, yeah, thanks. So it's more of what you're seeing than proactive on tariffs. Okay, thank you.

Speaker Change: It can be a very litigious line and I think there was a significant impact from the spike in inflation a few years ago.

Speaker Change: But it really has nothing to do with tariffs.

Speaker Change: Okay. Yeah. Thanks, So it's more of what Youre seeing in the.

Speaker Change: Proactive on tariffs.

Speaker Change: Okay. Thank you.

Michael Phillips: I guess, second question on your casualty treaties, I think comes up in June. I think it's a big piece of your CEDA premium. Anything that you can share that we would expect on changes in retention levels or anything else that might affect the growth that may also help top line?

Speaker Change: I guess.

Speaker Change: The second question on your casualty Treaty I think it comes up in June.

Speaker Change: A big piece of your seeded premium.

Speaker Change: Anything.

Speaker Change: That you can share that we would expect on changes in retention levels or anything else that might affect the growth that may also help topline.

Michael Phillips: That's a tough one. Look, we've adjusted the retentions, you know, many, many times over the years, so that would not be unprecedented that we would take a little bit more net. You know, you're always balancing profitability with the business with volatility. And as we've gotten larger, we've continued to take a larger net. So that. You know, that might be a safe assumption. Okay, okay.

Speaker Change: That's helpful.

Speaker Change: We've adjusted our Retentions.

Speaker Change: Many many times over the year, so that would not be unprecedented that we would take a little bit more net.

Speaker Change: You are always balancing.

Speaker Change: Profitability with the business with volatility.

Speaker Change: And as we've gotten larger we've continued to take a larger net so that.

Speaker Change: That might be a safe assumption.

Speaker Change: Okay, Okay, and then if I could sneak it in.

Michael Phillips: And if I could, again, any chance you'd share the commercial property combined ratio this quarter versus last quarter? And it's one of the benefits, I think, of our underwriting model is driving a very positive result and combining that with a low-cost approach to the business, again, we think it gives us a very interesting advantage long-term. Okay.

Speaker Change: <unk> share of the commercial property combined ratio this quarter versus last quarter.

Speaker Change: No, but I mean.

Speaker Change: No.

Speaker Change: We're not going to get into that it gets very complex when you start to disaggregate losses between reported case reserves paid.

Speaker Change: And then by accident year, I'm not sure that would be productive, but I would just tell you that.

Speaker Change: As you can tell from the 80%, 82% combined business is very profitable and that profitability is even in the face of a very conservative approach.

Speaker Change: To reserving for future claims.

Speaker Change: And it's one of the one of the benefits I think of our underwriting model is driving a very positive result, and combining that with a low cost.

Speaker Change: Our approach to the business.

Speaker Change: Again, we think it gives us a very interesting advantage long term.

Michael Phillips: Thank you, Mike. Appreciate it.

Okay. Thank you Mike appreciate it.

Pablo Singzon: Your next question comes from a line of Pablo Singzon from J.P. Morgan. Your line is open. Hi, good morning. First question is about the large commercial property. I'm curious find out if the price declines there have reached a point where you're at. are delivered. So it sounds like you're getting less submissions, but I was curious. and many more. Thank you. are engaging. Yeah, I think part of it, we are we haven't changed our appetite. Our idea is that there's a price for everything. And It's our job to know the right price and terms that are going to give us our best chance at making money, but it's mostly a function of rates are down and submissions are down.

Speaker Change: Your next question comes from the lineup of Pablo <unk> from Jpmorgan. Your line is open.

Speaker Change: Okay.

Speaker Change: Hi, good morning.

Speaker Change: First question is about the large commercial property Im curious.

Speaker Change: And out of the price declines there have reached a point, where your appetite is reduced or our deliberate previously referenced purely a function of lower prices right. So it sounds like youre getting less admissions, but.

Was curious if for those submissions that do come in if youre still actively.

Speaker Change: <unk>, writing those cases.

Speaker Change: Yes, I think part of it.

Speaker Change: We haven't changed our appetite.

Speaker Change: Our idea.

Speaker Change: Price for everything.

Speaker Change: It's our job to take the right price and terms that are going to give us our best chance of making money but.

Speaker Change: It's mostly a function of.

Speaker Change: Start out in as much in Japan.

Speaker Change: Okay.

Pablo Singzon: And then. provided qualitative commentary about competition in large commercial. I was wondering Well, I suppose the context is that price declines there are not near right. They didn't happen just this quarter. But so therefore, I was curious if the price declines there are stable, continue to accelerate, slow. I just want to get a sense of the shape of, you know, pricing and how it's going. Well, we said they're down 20% on average, right? We're looking at thousands of transactions. So there's a range of what's going on with those individual transactions. But, you know, for the three month period, that's what we saw.

Speaker Change: And then.

Speaker Change: You provided qualitative commentary about competition in large commercial.

Speaker Change: I was wondering.

Speaker Change: Well I suppose to get the context that price declines there are not youre right. It didn't happen just this quarter.

Speaker Change: So therefore I was curious if the price declines they are stable continue to accelerate slowing from surface.

Speaker Change: Peak pricing I, just wanted to get a sense of the shape of <unk>.

Speaker Change: Pricing and how that's developing.

Speaker Change: Well, we said they are down 20% on average right. We're looking at thousands of transactions. So there's a range of what's complaint Mohan with those individual transactions, but.

Speaker Change: For the three months period and Thats, what we saw.

Pablo Singzon: You know, the results have been very positive. You know, we saw Property CAD pricing in particular go up year after year after year. I think we're kind of, we're at about a 20-year high. And so, you know, that kind of high pricing combined with positive results, it's attracted a lot more capital. And so I think the business is still very high margin. It's just you know, incrementally lower than it was this time a year ago. Yep, yep. Understood.

Speaker Change: The results have been.

Speaker Change: Very positive.

Speaker Change: We saw.

Speaker Change: Property cat pricing in particular go up year after year after year.

Speaker Change: We're kind of we're at about a 20 year high and so.

Speaker Change: That kind of high pricing combined with positive result, fix attracted a lot more capital.

Speaker Change: So I think the business is still very high margin.

Speaker Change: Incrementally lower than it was this time a year ago.

Speaker Change: Yep Yep understood and then lastly, just shifting to the casualty side.

Pablo Singzon: And then last. The Casualty side. Curious if you're seeing, I guess, more positive signals there, right? Like if you go by what other companies are saying, especially in excess. I know you had called out a decline in the nominal rate, but I suspect a lot of that has to do with large property commercial. So sort of. to provide more context of what's happening. I think Casualty is still favorable for us. I think, you know, I think Excess Casualty looks good. And I think the MGAs we were talking about earlier seem to write a lot of that business.

Speaker Change: Curious, if you're seeing I guess more positive signals there right like if you go by what other companies are saying, especially in excess.

I know you had called out a decline in the nominal rate, but I suspect a lot of that has to do with large property commercial.

Speaker Change: Those are you know if you could provide more context on what's happening on the casualty side that'd be helpful. Thank you.

Speaker Change: Casualty is still favorable for us I think.

Speaker Change: I think excess gasoline looks good.

Speaker Change: And I think the MGA is when were talking about earlier.

Speaker Change: To write a lot of that business and so I don't expect that business to get like.

Operator: And so I don't expect that business to get like It would not shock me if and when there's a correction in the fronting world that you would see it further. positive movement in the housing market. Again, if you'd like to ask a question, press star 1 on your telephone keypad.

Speaker Change: It would not shock me if and when.

Speaker Change: There was a correction in the fronting world.

Speaker Change: That you would save further.

Speaker Change: Positive movement in the casualty market.

Speaker Change: Thank you.

Speaker Change: Again, if you would like to ask a question press Star one on your telephone Keypad. Your next question comes from the line of Bob Wang from Morgan Stanley. Your line is open.

Bob Huang: Your next question comes from a line of Bob Huang from Morgan Stanley. Your line is open. Hi, good morning. Maybe just like a follow up and some clarification. In terms of competition, you know, talked about several times on this call that there are funding companies that have high loss ratios and that what they're doing is unsustainable. But if we can just think from their perspective, how long do you think they can sustain an elevated loss environment, kind of erode the competitive environment, so to speak? Do you think this is more of a next 12-month thing, or do you think they can last a lot longer than that?

Bob Wang: Hi, good morning.

Speaker Change: Maybe just like a follow up on some clarification side.

Bob Wang: In terms of competition.

Speaker Change: <unk> talked about several times on this call that there are funding companies that have high loss ratios.

Speaker Change: What theyre doing is unsustainable, but if we can just think from their perspective, how long do you think they can.

Speaker Change: Sustain and elevated loss environment.

Speaker Change: Kind of erode or the competitive environment. So to speak do think business more of a next 12 month thing or do you think they can last a lot longer than that just curious to your thoughts.

Bob Huang: Just curious to your thoughts. Yeah, we don't know. I mean, it's just it's it's tough. It will be tough for us to know. All we do know is that it will change. The math is brutal. Yeah, the math doesn't work out.

Speaker Change: Yes, we don't know.

Speaker Change: It's tough.

Speaker Change: It would be tough for us today.

Speaker Change: All we do know is that it.

Speaker Change: Will change to manifest.

Speaker Change: <unk> doesn't work out.

Bob Huang: Okay, no, that's fair.

Okay.

Speaker Change: That's fair.

Bob Huang: The second question. If we think about your core loss ratio, which is incredibly strong, it actually improved year on year, right? If I remember correctly, in the past, you've mentioned that you're willing to sacrifice some of this margin for growth. Just given the strong core loss ratio today, how much and how willing are you to sacrifice that margin for additional growth, given that it sounds like the broader market is a lot riskier than the previous time that you mentioned? Bob, maybe a better way to describe it is we're always managing profitability at a granular level.

Speaker Change: The second question.

Speaker Change: If we think about your core loss ratio was incredibly strong and actually improved year on year right.

Speaker Change: If I remember correctly in the past you've mentioned that you are willing to sacrifice some of this margin for growth.

Speaker Change: Given the strong core loss ratio today.

Speaker Change: How much and how willing are you and sacrifice that margin for additional growth given that it sounds like though.

Speaker Change: The broader market is a lot riskier than the previous time that you mentioned this.

Speaker Change: Bob maybe a better way to describe it is we're always managing profitability at a granular level.

Michael Kehoe: Kinsale collects a tremendous amount of statistical information at the transaction level. It's another consequence of having very modern, up-to-date systems. And we pour through that data on a regular basis to analyze profitability, not just by product line, but by class of business within the product line. by state, by territory, by account size, all sorts of different ways, and we're adjusting the pricing in order to make sure we're generating, you know, low 20s ROEs or better. Okay, so that's just a normal part of managing an insurance company. I wouldn't really look into that as anything extraordinary.

Speaker Change: Sale of collects a tremendous amount of statistical information at the transaction level.

Speaker Change: It's another consequence of having very.

Speaker Change: Modern up to date systems.

Speaker Change: And we pour through that data on a regular basis to analyze profitability not just by product line, but by class of business within the product line.

Speaker Change: By state by territory by account size, all sorts of different ways and we're adjusting the pricing in order to make sure we're generating.

Speaker Change: Low twenties ROA or better.

Speaker Change: So thats just a normal part of managing an insurance company I wouldn't really look into that is anything extraordinary we're always managing profitability prop.

Michael Kehoe: We're always managing profitability. Profit comes first, growth second. But given our model, we think even in a competitive market, we can deliver the best-in-class returns, but at the same time, we can take share away from less efficient competitors. Got it. No, that's incredibly helpful.

Speaker Change: Profit comes first.

Speaker Change: Second, but given our model, we think even in a competitive market. We can deliver the best in class returns, but at the same time, we can take share away from less efficient competitors.

Speaker Change: Got it no that's incredibly helpful. Thank you very much for that.

Bob Huang: Thank you very much for that.

Mark Hughes: Your next question comes from a line of Mark Hughes from Truist Securities. Your line is open. Yeah, thanks. Good morning. Good morning, Mark. How do we think about the competition in property, the commercial property, kind of as it progressed through the quarter? You talked about 2Q, which has a lot, you know, seasonally strong in terms of property renewals and so we ought to consider that in thinking about the growth rates. Is the property market more competitive now than it was at the start of the first quarter? And so maybe you see a little bit of incremental pressure or would you describe it as relatively steady compared to what you experienced in, you know, throughout the first quarter?

Mark Hughes: Your next question comes from the line of Mark Hughes from <unk> Securities. Your line is open.

Mark Hughes: Yes, thanks, good morning.

Speaker Change: Good morning, Mark.

Speaker Change: How do we think about the competition.

Speaker Change: Property and commercial property kind of is that.

Speaker Change: <unk> progressed through the quarter, you talked about <unk>, which has the lot.

Speaker Change: Seasonally strong in terms of property renewals and so we.

Speaker Change: We ought to consider that and thinking about the growth rates is.

Speaker Change: That property market more competitive now than it was at the start of the first quarter and so maybe you see a little bit of incremental pressure or we do describe it as relatively steady compared to what you experienced in <unk>.

Speaker Change: Throughout the first quarter.

Mark Hughes: I think it's scary. You know, it's hard to put too fine a point on it, Mark, right? I mean, again, we're looking at, you know, I think we wrote about $450 million of premium in that division last year. So it's a big division, there are thousands and thousands of transactions. and it's attracted a lot more capital. So yeah, I would agree with that. I think it's tough. to, as Mike said, put too fine a point on it, but I would say it's pretty stable. So what do you think about hit rates, that sort of thing?

Kennedy: I think it's Kennedy.

Mark Hughes: It's hard to put too fine a point on it Mark right I mean again, we're looking at.

Mark Hughes: I think we wrote about $450 million of premium in that division last year.

Mark Hughes: So it's a big division there are thousands and thousands of transactions.

Mark Hughes: Some of it's fire exposed business some of its wind right.

Mark Hughes: We write a little bit of clay Kal.

Mark Hughes: There's a lot going on there but in general.

Mark Hughes: The results certainly for can sale have been incredible I think they've been quite positive for the industry.

Mark Hughes: And it's attracted a lot more more capital so yes.

Mark Hughes: I would agree with that I think it's tough.

Speaker Change: As Mike said put too fine a point on it but I would say it's pretty stable.

Mark Hughes: So when you think about the hit rates.

Mark Hughes: Thing.

Mark Hughes: You're at some sort of equilibrium, is that fair? Yeah, actually, that's a good way of looking at it. The hit rates haven't changed much. Okay.

Mark Hughes: You had some sort of equilibrium is that fair.

Speaker Change: Yes, absolutely.

Speaker Change: That's a good way of looking at it that the hit rates haven't changed much.

Speaker Change: Okay.

Mark Hughes: And then the When you look at your mix of property versus casualty... You're a lot heavier in property now than you were, you know, two years ago, four years ago. Is there some reason to think there's a normal equilibrium? You know, if you think about the... of Long-Term E&S Market, how much should be property, how much should be casualty. Are there any rules of thumb? Do you have any sense of or is there any reason to think it normally would return to a certain mix between the two? That's a big question, but I wonder if you have any thoughts on it.

Speaker Change: And then the.

Speaker Change: <unk>.

Speaker Change: When you look at your mix of property versus casualty.

Speaker Change: Youre a lot heavier in property or property now than you were.

Speaker Change: Two years ago four years ago is there some reason to think there is.

Speaker Change: Normal equilibrium.

Speaker Change: Think about the.

Speaker Change: Long term E&S market, how much should be property and how much should be casualty.

Speaker Change: Are there any rules of thumb do you have any sense of or is there any reason to think that.

Speaker Change: Normally you would return to <unk>.

Speaker Change: Certain matters.

Speaker Change: Between the two.

Speaker Change: Yes.

Speaker Change: Big question, but I wonder if you have any thoughts on them.

Michael Kehoe: I think the E&S market is one-third, two-thirds, Mark. So that's probably a good benchmark. You know, Bryan indicated, you know, we're doing a lot of work to expand into the homeowner's business. That's been a sore point for the industry. with some of the volatility in that line over the last five years. So we see an opportunity as an E&S company to build a more meaningfully sized homeowner's book. And of course, that's predominantly, it's a multi-parallel line, but it's predominantly property. So, you know, that could drive it up a little bit, but in general, I think one-third, two-thirds.

Speaker Change: I think the E&S market is one third two thirds mark so that's probably a good benchmark Brian indicated.

Speaker Change: We're doing a lot of work to expand into the homeowners business.

Speaker Change: Thats been us.

Speaker Change: A sore point for the industry.

Speaker Change: With some of the volatility in that line over the last five years. So we see an opportunity as an E&S company.

Speaker Change: To build a more meaningfully.

Speaker Change: <unk> homeowners book.

Speaker Change: And of course, Thats predominantly up it's a multi peril line, but it's predominantly property so.

Speaker Change: That could that could drive it up a little bit but in general I think one third two thirds.

Pablo Singzon: Thank you.

Speaker Change: Thank you.

Pablo Singzon: Your next question comes from a line of Pablo Singzon from J.P. Morgan. Your line is open. Hi, thanks for the follow-up. Mike, you had mentioned that large commercial properties... staff.

Speaker Change: Your next question comes from the line of Pablo <unk> from Jpmorgan. Your line is open.

Speaker Change: Hi, Thanks for the follow up Mike you had mentioned that large commercial property density concentrated in the first half.

Pablo Singzon: I was wondering if you could provide some sense of the split there. Yeah, I think it was 64 to... 64. And I think it was 35% in the second quarter.

Speaker Change: I was wondering if you could provide some sense of the split there between first half and second half is it like 60, 40 70 30.

Speaker Change: I think it was 60, Florida.

Speaker Change: Okay.

Speaker Change: And I think it was 35% in the second quarter.

Pablo Singzon: All right, thank you. All right, Pablo.

Speaker Change: Alright. Thank you. Thank you alright.

Casey Alexander: Your next question comes from a line of Casey Alexander from Compass Point. Your line is open. Hi, good morning, and forgive me if these seem a little naive, but first of all, it seems like California, despite the fact that you had the loss in California this quarter, has started to exhibit a lot of the characteristics of what Florida had when you made a concerted move to grow in that market with a lack of capacity and carriers leaving the market. Is there a similar opportunity building in California? Is it too early to look at it or how do you see that market as an opportunity to shift the property book and continue to grow?

Speaker Change: Our next question comes from the line of Casey Alexander from Compass Point. Your line is open.

Casey Alexander: Hi, Good morning, and forgive me if these seem a little naive, but first of all it seems like California. Despite the fact that you have the.

Speaker Change: Loss of California this quarter.

Speaker Change: Has is starting to exhibit a lot of the characteristics of what Florida had win when you have made a concerted move to grow in that market with a lack of capacity and carriers are leaving the market is there a similar opportunity building in California is it too early to look at it.

Speaker Change: Or how do you see that market as as an opportunity to.

Speaker Change: <unk> the property book and continue to grow it.

Casey Alexander: I think you're absolutely right. I think the biggest opportunity there is going to be in personal, but probably some of the smaller commercial, but we are taking advantage of that. I mean, high value homes division, we're growing, we're growing nicely in that and a lot of it is in California, and there is a huge opportunity.

Speaker Change: I think youre, absolutely right I think the.

Speaker Change: Biggest opportunity there is going to be in personal but.

Speaker Change: But probably some of the smaller commercial but we are taking advantage of that I mean, the high value homes Division, we're growing we're growing nicely in that in a lot of it is in California, and there is a huge opportunity.

Speaker Change: Okay, great. Thank you secondly.

Casey Alexander: Secondly, if the tariffs do create, one of the areas that we kind of see vulnerability in tariffs is that it could significantly increase the building materials cost. If that were to take place, would that have some impact on your ability to release reserves, particularly against construction, things like that?

Speaker Change: If if the tariffs do create one of the areas that we kind of see vulnerability in the tariffs is that it could significantly increase the.

Speaker Change: Building materials cost with that have if that were to take place with that have some impact on your ability to release reserves, particularly against construction things like that.

Michael Kehoe: Casey, it's Mike. I would say this, I agree, you know, tariffs... I mean, look, that's a that's a work in progress, right? Nobody really knows where that policy ends up. But assuming the worst. Assuming the worst, it could drive up the cost of building supplies and certainly that would flow through to an insurance company. What I would say is Kinsale's margins are really, really strong. We're in a great spot. Very conservative reserves, very low cost. operating model. very strict controls over our underwriting. And so I think we're very well positioned to absorb any kind of incremental movement in prices, you know, whether it's building supplies or whether it's medical inflation or anything else.

Mike: Casey, It's Mike I would say that I agree.

Speaker Change: Chris.

Speaker Change: I mean look that's a work in progress right and nobody really knows where that policy ends up.

Speaker Change: But assuming the worst.

Speaker Change: Assuming the worst it could drive up the cost of building supplies.

Speaker Change: And certainly that would flow through to an insurance company.

Speaker Change: I'd say as can sales margins are really really strong.

Speaker Change: We are in a great spot.

Speaker Change: Conservative reserves very low cost.

Speaker Change: Operating model.

Speaker Change: Very strict controls over our underwriting and so I think we're very well positioned to absorb any kind of incremental movement in prices.

Speaker Change: Whether it's building supplies or whether it's medical inflation or anything else.

Michael Kehoe: I think we're in a great spot to handle that. I wouldn't really see that as being a material exposure for us.

Speaker Change: I think we're in a great in a great spot to handle that I wouldn't really see that as being a material exposure for us.

Casey Alexander: Great. And then lastly, I was impressed by the fact that you were able to squeeze out a profit from the equity portfolio during a quarter where there was A pretty decent negative return for the overall market. Is there some unique characteristic to the equity portfolio that permitted it to outperform the general market by such an extent? Well, our equity portfolio is a third passively managed through indexes that are very close to the S&P and two thirds active. You know, the active portfolio is very much a value orientation. You know, larger cap, dividend paying, kind of buy and hold, so.

Speaker Change: Okay, Great and then lastly.

Speaker Change: I was impressed by the fact that you are able to squeeze out a profit from the equity portfolio during a quarter, where there was a.

Speaker Change: And a pretty decent negative return for the overall market is there some unique characteristic to the equity portfolio that prevented it to outperform the general market by such an extent.

Speaker Change: Well, our equity portfolio as a third passively managed through indexes that are very close to the S&P and two thirds active.

Speaker Change: The active portfolio is very much a value orientation.

Speaker Change: Larger cap dividend paying kind of buy and hold so.

Casey Alexander: You could either. You know, I think that's that's essentially it. I mean, we're underweight tech. All right.

Speaker Change: You could either.

Speaker Change: I think that's.

Speaker Change: Centrally yet I mean, we're underweight Tac.

Speaker Change: Yes, that's correct alright, thank you for taking my questions I appreciate it.

Casey Alexander: Thank you for taking my questions. I appreciate it.

Speaker Change: Thanks Joseph.

Operator: And we've reached the end of our question and answer session.

Speaker Change: And we have reached the end of our question and answer session I will now turn the call back over to Mike for closing remarks.

Michael Kehoe: I will now turn the call back over to Mike for closing remarks. Okay, well thank you everybody for joining us and we look forward to speaking with you again here in three short months. Have a great day.

Mike Casey: Okay, well. Thank you everybody for joining us and we look forward to speaking with you again here in <unk>.

Speaker Change: Three short months and have a great day.

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

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

Speaker Change: [music].

Speaker Change: Yes.

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Speaker Change: [music].

Speaker Change: Okay.