Kinsale Capital Group, Inc. · NYSE:KNSL
Kinsale Capital — Investor Presentation (March 2022)
23 slides from Kinsale Capital's investor presentation, March 2022
Slide 1: Kinsale Capital Group March 2022
KINSALE —me CAPITAL GROUP March 2022
Slide 2: Disclaimer
Disclaimer This presentation contains or incorporates by reference 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
Slide 3: Introduction to Kinsale
INTRODUCTION TO KINSALE | | i, Wn E a a > L| ‘
Slide 4: Overview
Overview Kinsale Capital Group, Inc., founded in 2009, is a specialty insurance group focused exclusively on the excess and surplus lines market in the United States. Utilize our Focus on smaller Maintain Leveraging our Well-positioned underwriting accounts, which absolute control proprietary to gen
Slide 5: Highly Experienced Management Team
Highly Experienced Management Team Name Exp. Prior experience Michael Kehoe Founder, President and President and CEO at James River from 2002 to 25+ years CEO 2008 Brian Haney EVP, Chief Operating 25+ years Chief Actuary of James River from 2002 to 2009 Officer Bryan Petrucelli EVP, Chief Financial
Slide 6: Select Market Information
Select Market Information As of December 31, 2021 Ticker KNSL Exchange New York Stock Exchange Stock Price $237.89 per share Market Capitalization $5.43 Billion Book Value $30.63 per share Debt to Total Capitalization Ratio 5.8% Employees 364 6
Slide 7: Our Approach
Our Approach • Exclusive focus on the small-account E&S market • Disciplined underwriting expertise across a broad spectrum of hard-to-place risks; no delegated underwriting authority • Technology is a core competency, driving best-in-class expense ratio • Entrepreneurial business culture with a clo
Slide 8: Kinsale is the only publicly-traded, pure-play E&S investment opportunity
Kinsale is the only publicly-traded, pure-play E&S investment opportunity Leading public E&S players Our differentiating factors 2020 Surplus lines DWP as % of total direct and assumed written premiums¹ 100% Rewarding the doers JRVR 59% 52% No delegated underwriting GLBI RLI 34% ARGO 31% One locatio
Slide 9: E&S Market
E&S Market The E&S market has seen significant growth and generated better underwriting results than the broader P&C industry U.S. surplus lines direct written premiums ($bn) $66.1 $56.3 $49.9 $41.3 $42.4 $44.9 $38.7 $36.6 $37.7 $40.2 $32.8 $33.0 $33.3 $34.4 $33.0 $31.7 $31.1 $34.8 $25.6 $15.8 2001
Slide 10: Dislocation in the E&S market creates additional opportunities
Dislocation in the E&S market creates additional opportunities 2020 E&S market share by DPW1 US composite insurance pricing change2 20% Company DPW ($mm) Market Share 18% 18% 17% Lloyd’s 12,821 19.4% BRK 3,559 5.4% 15% 14% 14% 14% 14% AIG 3,550 5.4% MKL 2,791 4.2% 12% 10% 10% WRB 2,261 3.4% Nationwi
Slide 11: Our underwriting expertise across a broad spectrum of hard-to-place risks
Our underwriting expertise across a broad spectrum of hard-to-place risks Personal Insurance Broad appetite to underwrite a diverse set of risks 3.5% Small Business across the E&S market, including some difficult risks Other Commercial 1 14.7% where we believe pricing may be attractive 14.2% Hig
Slide 12: Product Portfolio
Product Portfolio We target classes of business where our underwriters have extensive experience allowing us to compete effectively and earn attractive returns Gross written premium by Year ended December 31, 2019-2021 division ($000’s) 2019 2020 2021 CAGR Commercial: Small Business $63,181 $83,289
Slide 13: Technology is a core competency
Technology is a core competency Key highlights Proprietary technology Proprietary platform design reflects the best practices our management platform team has learned from extensive prior experience Single digital platform allows for the integration of various functions throughout the organizati
Slide 14: Our combined ratio is one of the lowest amongst our specialty insurer peers
Our combined ratio is one of the lowest amongst our specialty insurer peers while achieving leading growth among peers 2018-2020 NPW CAGR 42.5% (7.5%) 17.9% 4.1% 6.2% 11.3% (7.8%) 12.1% 9.8% 1.3% 1 Loss ratio Expense ratio 2 105.3% 104.4% 2018 – 2020 101.6% 101.1% Average peer 96.6% combined ratio:
Slide 15: We believe Kinsale is well-positioned for continued profitable growth
We believe Kinsale is well-positioned for continued profitable growth Growth drivers Gross premiums written ($mm) $764.4 Expand our presence in the E&S market, particularly with $552.8 smaller accounts which we believe are subject to less $389.7 competition $223.2 $275.5 Maintain a contrarian ri
Slide 16: Investment Portfolio
Investment Portfolio $1.6 Billion Investment Portfolio as of December 31, 2021 Credit Quality – Fixed-Maturity Portfolio Asset Allocation – Total Investment Portfolio Below BBB Equities U.S. Treasuries 4.4% 11.0% 0.4% Municipals 14.6% BBB AAA 14.1% 27.0% CMBS 3.8% Corporates 29.3% A 16.9% RMBS 21.6%
Slide 17: Financial Results
FINANCIAL RESULTS | | i, Wn E a a > L| ‘
Slide 18: Operating Return on Equity
Operating Return on Equity 20.8% 15.4% 15.9% 14.7% 11.9% 2017 2018 2019 2020 2021 Operating return on equity is net operating earnings expressed as a percentage of average beginning and ending stockholders’ equity during the period. Net operating earnings is a non-GAAP financial measure, please see
Slide 19: Q4 2021 Financial Update
Q4 2021 Financial Update Three months ended Net income increased by 26.6% compared to the fourth December 31, quarter of 2020 ($mm) 2020 2021 Net operating earnings(1) of $40.7 million increased by 54.7% compared to the fourth quarter of 2020 Gross written premiums $ 149.9 $ 203.8 Net earned pre
Slide 20: Selected Financial Data
Selected Financial Data Year ended December 31, ($000) 2017 2018 2019 2020 2021 Operating Results: Gross written premiums $ 223,191 $ 275,538 $ 389,694 $ 552,814 $ 764,373 Underwriting income (1) 28,227 31,222 43,201 54,656 133,564 Net operating earnings (2) 26,718 38,743 53,245 72,313 132,404 Retur
Slide 21: Appendix
APPENDIX 21
Slide 22: Non-GAAP reconciliation – Underwriting Income
Non-GAAP reconciliation – Underwriting Income Year ended December 31, ($000) 2017 2018 2019 2020 2021 Net income $ 24,901 $ 33,787 $ 63,316 $ 88,419 $ 152,659 Income tax expense 13,620 6,693 12,735 11,994 36,142 Income before income taxes 38,521 40,480 76,051 100,413 188,801 Other expenses 429 168 5
Slide 23: Non-GAAP reconciliation – Net Operating Earnings
Non-GAAP reconciliation – Net Operating Earnings Year ended December 31, ($000) 2017 2018 2019 2020 2021 Net income $ 24,901 $ 33,787 $ 63,316 $ 88,419 $ 152,659 Adjustments: Change in the fair value of equity securities, before taxes (1) - 6,555 (12,389) (16,855) (22,812) Income tax expense (benefi
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