Kinsale Capital Group, Inc. · NYSE:KNSL
Kinsale Capital — Investor Day (January 2025)
59 slides from Kinsale Capital's investor day presentation, January 2025
Slide 1: Investor Day
INVESTOR DAY eye
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: Growth
Growth Premium Growth vs. P&C industry vs. Surplus Lines Sector Source: A.M. Best data, Company data ¹ Represents domestic professional surplus lines (DPSL) as defined by A.M. Best.
Slide 4: Profitability
Profitability Underwriting Performance (net loss & 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 pres
Slide 5: Wealth Creation
Wealth Creation Share appreciation(1) (1) As of December 31, 2024. Beginning with $16.00/share IPO pricing. Excludes dividends.
Slide 6: State of the Market
STATE OF THE MARKET
Slide 7: P&C Premium as Percent of GDP
P&C Premium as Percent of GDP 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 Source: Federal Reserve, AM Best
Slide 8: E&S Premium as Percent of P&C Premium
E&S Premium as Percent of P&C Premium 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 Source: AM Best
Slide 9: E&S Market Share in Homeowners
E&S Market Share in Homeowners 1.6 1.4 1.2 $2.2 Billion 1.0 0.8 0.6 0.4 0.2 0.0 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 Source: AM Best
Slide 10: E&S Market Share by Line
E&S Market Share by Line HO Other Liability (Occurrence) Allied Lines Earthquake Fire Other Liab (Claims Made) Products Med Mal 0% 10% 20% 30% 40% 50% Source: AM Best - 2023
Slide 11: Kinsale E&S Market Share
Kinsale E&S Market Share 1.6% 1.4% 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 '23 Source: SP Global
Slide 12: Rank Group Share
Rank Group Share Lloyd's 17.2 1 Berkshire Hathaway 7.2 2 AIG 4.3 3 Fairfax 3.5 4 Markel 3.2 5 WR Berkley 3.1 6 Chubb 2.8 7 Nationwide 2.5 8 Starr 2.3 9 Liberty Mutual 2.0 10 Axa/XL 1.7 11 Axis 1.7 12 Sompo 1.7 13 Kinsale 1.4 Source: SP Global - 2023
Slide 13: Underwriting Cycle
Industry Profitable Rate Increase; Capacity Enters Market Underwriting Tightens Rate Decrease; Capacity Exits Market Underwriting Loosens Industry UN-Profitable
Slide 14: Growth Rate by Year
Growth Rate by Year 70.0 60.0 50.0 Surplus Lines 40.0 30.0 Total P&C 20.0 10.0 0.0 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23 -10.0 Source: AM Best
Slide 15: Premium Changes
Average Premium Changes, Q4 1999 – Q3 2024 Premium Changes Source: The Council of Insurance Agents & Brokers
Slide 16: US Insured Natural Catastrophe Losses by Year
US Insured Natural Catastrophe Losses by Year (nominal, in $billions) 140 120 100 80 60 40 20 0 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23 Source: iii
Slide 17: US Property Catastrophe Rate on Line Index
US Property Catastrophe Rate on Line Index 1990 – January 1, 2025
Slide 18: CPI Inflation by Month
0% 2% 4% 6% 8% 10% -2% J-10 O-10 J-11 A-12 J-13 O-13 J-14 A-15 J-16 CPI Inflation by Month O-16 J-17 A-18 J-19 O-19 J-20 A-21 J-22 O-22 J-23 A-24 Source: Federal Reserve
Slide 19: CPI Versus Construction Materials Inflation
CPI Versus Construction Materials Inflation 40% 35% 30% Construction Materials 25% Inflation 20% 15% 10% CPI 5% 0% J-10 J-11 A-12 J-13 J-14 A-15 J-16 J-17 A-18 J-19 J-20 A-21 J-22 J-23 A-24 O-10 O-13 O-16 O-19 O-22 -5% -10% Source: Federal Reserve
Slide 20: Inflation Versus Expectations
Inflation Versus Expectations 7% EXPECTED 4-YEAR INFLATION (CAGR) 6% 5% ACTUAL 4-YEAR INFLATION (CAGR) 4% 3% 2% 1% 0% '82 '85 '88 '91 '94 '97 '00 '03 '06 '09 '12 '15 '18 Source: Federal Reserve
Slide 21: Accident Year Incremental Deficiency as % of EP
Accident Year Incremental Deficiency as % of EP PC Industry, Gross Basis, Other Liability Occurrence Total Accident Adverse Year In Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Devt 2012 -0.2% -0.8% 0.7% 0.6% 2.0% -1.1% 0.4% 0.0% 0.1% 1.9% 2013 0.0% 2.1% 1.0% 1.8% -0.8% 0.7% 0.1% -0.4% 0.0% 4.4% 20
Slide 22: Fronting Premium in US by Year
Fronting Premium in US by Year Source: S&P Capital IQ, Insurance Insider US
Slide 23: Accident Year Incremental Deficiency as % of EP
Accident Year Incremental Deficiency as % of EP Fronting Company Composite, Gross Basis, Other Liability Occurrence Total Accident Adverse Latest Year In Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Devt L/R 2017 0.0% -4.1% 0.8% 2.9% 5.9% 11.8% 17.3% 76% 2018 -2.3% 0.5% 2.8% 3.8% 11.1% 15.9% 78% 2019 1.6% 2.4% 6.2
Slide 24: Third Party Data & Analytics
Fn Third Party Data & Analytics Time Efficiency =h Bias Reduction le Avoiding Self- Process Speed Reported Data Reduced Manual Objective Third-Party Tasks Data Improved =| Profitability and re Better Customer Service Accurate Pricing Reliable Data Sources Models Minimized Manual Entry Risk Segmentat
Slide 25: Underwriting
UNDERWRITING
Slide 26: Underwriting E&S Accounts
Underwriting E&S Accounts Individual Risk Underwriters are Subject Matter Flexibility of Forms and Limits Underwriting Experts “Just Quote It” No Delegated Utilize 3rd Party Data and Underwriting AI
Slide 27: Division Timeline
Division Timeline 2010 Allied Health, Commercial Property, Energy, Environmental, General Casualty, Health Care, 2015 2021 2023 Life Sciences, Manufacturers & Inland Marine, Entertainment High Value Homeowners, Contractors, Professional Liability, Management Liability Railroad, Small Business, Exces
Slide 28: New Products in 2024
New Products in 2024 Excess Builders Risk Agribusiness General Liability (Inland Marine) (Agribusiness) Storage Tanks Control of Well Oil & Gas Lease Property (Environmental) (Energy) (Energy)
Slide 29: New Products in 2024
New Products in 2024 Excess Garage Liability Package Product (Commercial Auto) (Products Liability) Impairment Liability Primary Quota Share (Entertainment, General Casualty, Excess Casualty) (Commercial Property)
Slide 30: Jason Hoover, SVP Professional Lines
Jason Hoover, SVP Professional Lines
Slide 31: Underwriting – Managing the Cycle
Underwriting – Managing the Cycle Long Term Care Social Services Habitational Directors & Officers Coverage
Slide 32: Underwriting – Technology & Data
Underwriting – Technology & Data UW Platform 3rd Party Data Artificial Intelligence Business Intelligence
Slide 33: Jessica Updike, VP Property
Jessica Updike, VP Property
Slide 34: Property Group
Property Group + = Property Non-CAT CAT Underwriting Underwriting Underwriting Approach
Slide 35: Property – Technology & Data
Property – Technology & Data • Managing Aggregates • Diversification of Occupancies • Integrated Modeling • Quick Quotes
Slide 36: Claims
CLAIMS
Slide 37: Excess & Surplus Claims
Excess & Surplus Claims The Difference Standard Excess & Surplus Forms Standard/Few Endorsements Manuscript/More Endorsements Severity Low-Moderate High Litigation Low-Moderate High Complexity Two-Party Multi-Party Experts Limited Reliance Heavy Reliance Plaintiff Bar General Expertise Specialized E
Slide 38: High Performing Operating Model
High Performing Operating Model Specialized Strategic Organization Staffing Financial Driver High Optimized Performance Workflow
Slide 39: Technology & Innovation
Technology & Innovation Proprietary Claim Platform Third Party Data Kinsale Analytics Automation & Artificial Intelligence
Slide 40: Results
Results Pay Only What We Owe Quantitative Results Qualitative Results • Closures are exceeding new claim notices • Balanced risk & trial appetite • Claims are being resolved faster • Highly competent negotiation strategies • The percentage of claims litigated to • Appropriate application of coverage
Slide 41: Claim Example – Construction Defect
Claim Example – Construction Defect
Slide 42: Claim Example – Oil & Gas Bodily Injury
Claim Example – Oil & Gas Bodily Injury
Slide 43: The Information Advantage
The Information Advantage Underwriting Product Development Claim Actuary Information Technology
Slide 44: Information Technology
INFORMATION TECHNOLOGY
Slide 45: IT as a Strategic Differentiator
IT as a Strategic Differentiator Disciplined Maintain Leverage our Employ a Well-positioned underwriting absolute control proprietary quantitative to generate focused on over technology to approach – strong returns small-account underwriting operate with a using analytics and robust E&S market and c
Slide 46: IT Value Proposition
IT Value Proposition Automation Data-driven Operational approach Efficiency Durable Competitive Advantage Better Better Data Customer & Analytics Service
Slide 47: Target State
Target State Request Underwrite Policy Policy Financial for Claims & Quote Issuance Management Management Quote
Slide 48: Recent Successes
Recent Successes +2 +24.5% Quotes per day Per Underwriter Productivity -10 +Unlimited Hours/week non-value add work Rating factors
Slide 49: Analytics & Actuarial
ANALYTICS & ACTUARIAL
Slide 50: Kinsale is a Quantitative Company
Kinsale is a Quantitative Company We have a data-driven approach to managing the business. Pricing/Underwriting Reserving Claims Handling Capital Strategy Risk Management Staffing/Budgeting Embracing data is a fundamental part of the Kinsale culture.
Slide 51: Profitability is the Priority
Profitability is the Priority Customer Service Innovation Robust Monitoring
Slide 52: Focus on Third-Party Data
Focus on Third-Party Data Combined effort by Analytics & Actuarial, Underwriting, & IT to take advantage of third-party data. 1 2 Improve how we Automate repetitive tasks segment & price risk & capture valuable data There is a wealth of data out there, and thanks to our focus on analytics and techno
Slide 53: Innovation Over the Years
Innovation Over the Years • NY Sidewalk Exclusion • Per Claimant Sublimits • Battery Coverage • Distance to Active Wildfires • FDA Data Pulls • Crime Score Correlations • Flat Fee Arrangements • Scheduled Vehicles/Drivers • Telematics Data Collection • Permit & Licensing Data • Property Workflow Con
Slide 54: Artificial Intelligence – Goals
Artificial Intelligence – Goals Exactly the same goals as our third-party data initiative. 1 2 Improve how we Automate repetitive tasks segment and price risk and capture valuable data AI will continue to improve over time, and we are well-positioned to take advantage given our focus on analytics an
Slide 55: AI in Underwriting
AI in Underwriting • Liability research, claims scenarios • Education & Training • Form Development • Future Use Cases: • Automating data entry (e.g. loss runs) • Data Prefill • Underwriting insights
Slide 56: AI in Claims
AI in Claims • Gradient AI • Management tool used by claims supervisors to stay on top of claims with high loss potential • Regulatory research • Future Use Cases: • Automating data entry • Extracting data from PDFs or notes • Assistance with claims correspondence
Slide 57: AI in Analytics & Actuarial
AI in Analytics & Actuarial • Generative AI • Entity Resolution • Claims disclaimer analysis • Form classification exercise • Assisted programming • Distance to active wildfires • County mapping • New programming languages
Slide 58: AI in Analytics & Actuarial
AI in Analytics & Actuarial • AI Algorithms/Modeling • OSHA data • Personal Insurance hurricane pricing • Aggregated personal credit data • Commercial credit analyses • Future Use Cases: • Workflow automation • Advanced assisted coding • Pricing • Analyzing unstructured data (e.g. text) • Advanced a
Slide 59: Investor Day
INVESTOR DAY eye