Kinsale Capital Group, Inc. · NYSE:KNSL
Kinsale Capital — Investor Day (December 2023)
62 slides from Kinsale Capital's investor day presentation, Dec 12, 2023
Slide 1: Investor Day
INVESTOR DAY V2 as
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statement that does not directly relate to historical or current facts. These statements may discuss, a
Slide 3: Company profile and financial highlights
Kinsale Capital Group, Inc., founded in 2009, is a specialty insurance holding company focused exclusively on the excess and surplus lines market in the United States Disciplined underwriting Maintain absolute control Leverage our proprietary Employ a quantitative Well-positioned to focused on small
Slide 4: Growth
Growth Premium growth vs. P&C industry vs. surplus lines sector(1) Source: A.M. Best data, Company data 4 ¹ Represents domestic professional surplus lines (DPSL) as defined by A.M. Best.
Slide 5: Profitability
Profitability Underwriting performance (net loss and loss adjustment expense ratio) (1) vs. P&C industry vs. surplus lines sector(2) Source: A.M. Best data, Company data 1 Beginning in the period ended June 30, 2023, the Company reclassified policy fees to fee income. Historically, these fees were p
Slide 6: Wealth Creation
Wealth Creation Share appreciation(1) (1) As of September 30, 2023. Beginning with $16.00/share IPO pricing. Excludes dividends.
Slide 7: Underwriting
UNDERWRITING A KIN SALE NSURANCE
Slide 8: Agenda
AGENDA Overview of Underwriting State of E&S Market Underwriting Divisions Product Development Property Underwriting and the State of the Market Customer Service Productivity and Innovation Underwriting Training and Development
Slide 9: Underwriting
Underwriting Specialty UW Digital Casualty Property Casualty (4 Divisions) (4 Divisions) Operations Marketing (6 Divisions) Professional Transportation Lines (5 Divisions) (6 Divisions) Life Environmental Sciences
Slide 10: Underwriters
54 Underwriters 94 Underwriters 55 Underwriters 48 Underwriters 20 Underwriters
Slide 11: Our Approach
Our Approach 100% Excess & Hard-to-place Surplus Lines Risks Small-to-Medium Manage Expenses Sized Risks Carefully Individual Risk Technology Underwriting Enabled Low Cost
Slide 12: Drivers of Expense
Drivers of Expense ACQUISITION COSTS EMPLOYEE COSTS EVERYTHING ELSE
Slide 13: Differentiators
Rewarding No Delegated In Person Contrarian Tailored the Doers Underwriting Underwriting Coverage Differentiators
Slide 14: State of the Market
State of the Market Rate Flow of Business into E&S Property Casualty Professional Lines Delegated Underwriting Authority
Slide 15: Growth Rate by Year
Growth Rate by Year 70 60 Surplus Lines 50 40 30 Total P&C Market 20 10 0 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 -10 Source: AM Best
Slide 16: Surplus Lines Premium as % of Total P&C
Surplus Lines Premium as % of Total P&C 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 Source: AM Best
Slide 17: Kinsale E&S Market Share
Kinsale E&S Market Share 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 Source: AM Best
Slide 18: E&S market share ranking
Rank Group Name Share Lloyd's 15.7 1 Berkshire Hathaway Ins. 7.0 2 American International Grp. 4.6 3 Markel Corporation 3.9 4 Fairfax Financial (USA) 3.8 5 W. R. Berkley Insurance 3.3 6 Nationwide 2.8 7 Chubb INA 2.8 8 Liberty Mutual Insurance Cos. 2.3 9 XL America Cos. 2.1 10 Sompo Holdings US 1.9
Slide 19: Kinsale E&S Market Share
Kinsale E&S Market Share 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 Source: AM Best
Slide 20: Factors Influencing Market
Industry Loss Experience Reserve Development Factors Natural Catastrophes Influencing Inflation Market Bond Yields Monetary Policy Economy
Slide 21: Underwriting E&S Accounts
Underwriting E&S Accounts Underwriters are Individual Risk Subject Matter Underwriting Experts Flexibility of Utilize 3rd Party Form, Rate, and Data Limits Broad Appetite
Slide 22: Casualty
Casualty Divisions Construction Excess Casualty General Casualty Small Business
Slide 23: Professional Lines
Professional Lines Divisions Allied Healthcare Excess Professional Liability Healthcare Public Entity Management Liability Professional Liability
Slide 24: Specialty Casualty
Specialty Casualty Divisions Energy Life Sciences Entertainment Products Environmental Product Recall
Slide 25: Transportation
Transportation Divisions Aviation Commercial Auto Inland Marine Ocean Marine Railroad
Slide 26: Product Development Process
Product Development Process Which IT, Forms, Determine the Marketing of Products to Lift Needed to Actuarial, and Product Roll Bring To Create Product Underwriting Product Out Market Work
Slide 27: New Products for 2023
New Products for 2023 Aviation: Excess Quota Share, Excess Layered, Drone & Hull Ocean Marine: Blue Water Railroad: Excess Liability, Excess Railroad Protective Liability Professional Liability: Lab E&O and Miscellaneous E&O
Slide 28: New Products for 2023
New Products for 2023 Entertainment: Liquor Liability Inland Marine: Transportation High Value Homeowners: Primary and Excess
Slide 29: Property
Property Divisions Commercial Property Small Property Personal Insurance High Value Homeowners
Slide 30: State of the Property Market
State of the Property Market • Continues to be a hard market o Limited Capacity o Increased Cost of Reinsurance o Increased Building Values o Carriers exiting Wildfire and Wind Prone Markets
Slide 31: Taking Advantage of the Market
Taking Advantage of the Market • Able to Offer Smaller Limits than in a Soft Market • Tighter Coverage Provided in the Small Property division • First Quote Offered Enables us to Dictate our Terms and Pricing • Using Technology and Data to Properly Underwrite Catastrophic Prone Areas
Slide 32: Homeowners Opportunity
Homeowners Opportunity • Exodus of Admitted Carriers in CA, FL and elsewhere • Being able to write the product on E&S paper gives us the proper tools for pricing and terms • High Value Homeowner's Opportunity o Began writing this product in 2022 o Using established broker segment previously unused b
Slide 33: The Kinsale Approach
The Kinsale Approach Hiring Training & Development Customer Service Productivity
Slide 34: Hiring
Hiring Experience Us vs Them Hire the Person for the Company not the Position
Slide 35: Training and Development
Training and Development Territory & Letters of Authority Hit the Ground File Audits Running Movement
Slide 36: Customer Service
Customer Service Service Vs. Relationship 24 Hour Turn Around Time First in First out Two Hour Turn Around Time on all Emails Use the Phone
Slide 37: Productivity
Productivity Quote More Bind More Data/Production Metrics Broker Management
Slide 38: What's the Secret?
What’s the Secret? Photo Credit: Baskervill
Slide 39: Claims
KINSALE: EXPEORE [HE POTENTIAL CLAIMS
Slide 40: Organization and Talent
Organization and Talent • Construction Defect Talent Management Casualty • Energy, Environmental • Products Liability • Tenured Leaders • Optimized Span of Control • Specialized Expertise • Management Liability • High-Performance Culture Specialty • Healthcare • Public Entity Workflow Management • N
Slide 41: Claim Attributes
Claim Attributes Tailored coverage Severity driven EXCESS Litigious environment AND SURPLUS Complex multi-party litigation CLIAMS Expert focused Aggressive plaintiff bar
Slide 42: Balancing Risk
Balancing Risk Pay Only • Nuclear Verdict • Risk Aversion • Excess Judgement What We • Low Trial Appetite • Bad Faith Owe • Complacent Culture
Slide 43: Claim Examples
Claim Examples 1. Outdoor 2. Construction Activity Site 3. Construction 4. Property Defect Damage
Slide 44: Technology: Target State
KINSALE: EXPEORE [HE POTENTIAL TECHNOLOGY: TARGET STATE
Slide 45: Corporate Strategy: Be the Best E&S Company in the Business
Corporate Strategy: Be the Best E&S Company in the Business Disciplined Maintain Leverage our Employ a Well- underwriting absolute proprietary quantitative positioned to focused on control over technology to approach – generate small-account underwriting operate with using strong returns E&S market
Slide 46: From Start Up to Enterprise Scale
From Start Up to Enterprise Scale Monolith Modular
Slide 47: Target State Benefits
Target State Benefits Revenue Impact • quotes / UW • time to quote • new product speed-to- market Target Risk Mitigation State • enable scale, Cost Efficiency reliability, • manual effort performance & • accuracy and security reporting • delivery capabilities velocity
Slide 48: Example: Transit Submission Intake
Example: Transit Submission Intake
Slide 49: Target State is a Total Transformation
Target State is a Total Transformation Monolith Modular
Slide 50: Building for Scalability and Growth
Building for Scalability and Growth Taking our Dependent …and Building Independent and Scalable Services and Data Services and Data
Slide 51: Complex Multi-year Journey Requires a Coexistence Strategy
Complex Multi-year Journey Requires a Coexistence Strategy • Coexistence will be temporary, but not short term. • We have developed a plan to straddle both current and target state while reducing risk to both environments.
Slide 52: Enriching Our Data Unlocks Better Data-driven Decisions
Enriching Our Data Unlocks Better Data-driven Decisions Insured Current State Insured Target State Target State will standardize and expand the data we capture. Named Insured data is a great example. • Limited data regarding Insured • Enriched with more information • Not standardized and centrally m
Slide 53: Path to Driving Data-driven Decisions
Path to Driving Data-driven Decisions Why this matters Predicts the future - Evaluates speed-to-value Artificial Intelligence options Self-learning natural Predictive language processing - Drives fit-for-purpose Explains the past Predicts future behavior but models solutions requires human action -
Slide 54: Change is Hard at first, Messy in the middle, Gorgeous at the end
“Change is HARD at first, MESSY in the middle and GORGEOUS at the end.” ~Robin Sharma, author and leadership expert Hard Messy Gorgeous Untangling Dependencies Managing Incremental Unstoppable Deployments and Uncatchable Standardizing on Modern Coexistence Technology
Slide 55: Analytics & Actuarial
Salmaan Allibhai Analytics & Actuarial
Slide 56: Kinsale is a Quantitative Company
Kinsale is a Quantitative Company The use of data in decision-making is a key competitive advantage for us Pricing/ Claims Reserving Underwriting Handling Capital Risk Staffing/ Strategy Management Budgeting Embracing data is a fundamental part of the Kinsale culture
Slide 57: The Opportunity Ahead – Progressive is our model
The Opportunity Ahead – Progressive is our model U.S. Personal Auto Insurance Market Share - 1996 to 2022 25% 20% State Farm 15% Berkshire Progressive Market Share (%) Hathaway Allstate 10% USAA 5% 0% 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 State Farm Progressive Berksh
Slide 58: Data is a Core Part of Our Strategy
Data is a Core Part of Our Strategy We collect and analyze a lot of data • We have data on the full life-cycle of a policy from when it arrives as a submission until the last dollar of a claim is paid • Data sources include Underwriting Worksheets, Policy System, Claims, and Finance We help users th
Slide 59: We Continuously Use Data to Drive Efficiency and Profitability
We Continuously Use Data to Drive Efficiency and Profitability Product Line Reviews Reserve Reviews Capital Modeling Catastrophe Modeling Reinsurance and Risk Management Reviews Budgeting/Staffing
Slide 60: Examples of Recent Ad Hoc Analyses/Projects
Examples of Recent Ad Hoc Analyses/Projects Premium audit calculator Automated data pulls - OSHA and FDA data Utilizing text mining on Claims and UW notes to refine pricing and expand our coverage offering Marketing email “effectiveness” Correlations between bind rates and coverages requested
Slide 61: Focusing on Third-Party Data
Focusing on Third-Party Data Combined effort by Analytics & Actuarial, Underwriting, and IT to take advantage of third-party data Improve how we Automate repetitive 1 segment and price 2 tasks and capture risk valuable data There is a lot of data out there, and thanks to our focus on technology, we
Slide 62: Investor Day
INVESTOR DAY V2 as