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 12.12.23
INVESTOR DAY 12.12.23
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 focused on small-account, E&S market Maintain absolute control over underwriting and claims management proce
Slide 4: Growth
Growth Source: A.M. Best data, Company data ¹ Represents domestic professional surplus lines (DPSL) as defined by A.M. Best. 4 Premium growth vs. P&C industry vs. surplus lines sector(1)
Slide 5: Profitability
5 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
Slide 6: Wealth Creation
Wealth Creation (1) As of September 30, 2023. Beginning with $16.00/share IPO pricing. Excludes dividends. Share appreciation(1)
Slide 7: Underwriting
UNDERWRITING
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 divisions overview
Life Sciences Environmental Underwriting Casualty (4 Divisions) Specialty Casualty (6 Divisions) Professional Lines (6 Divisions) UW Operations Digital Marketing Transportation (5 Divisions) Property (4 Divisions)
Slide 10: 20 Underwriters
94 Underwriters 54 Underwriters 55 Underwriters 48 Underwriters 20 Underwriters
Slide 11: Our Approach
Our Approach 100% Excess & Surplus Lines Small-to-Medium Sized Risks Individual Risk Underwriting Technology Enabled Low Cost Manage Expenses Carefully Hard-to-place Risks
Slide 12: Drivers of Expense
Drivers of Expense ACQUISITION COSTS EMPLOYEE COSTS EVERYTHING ELSE
Slide 13: Differentiators
Differentiators Rewarding the Doers No Delegated Underwriting In Person Contrarian Underwriting Tailored Coverage
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 -10 0 10 20 30 40 50 60 70 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 Surplus Lines Total P&C Market Source: AM Best
Slide 16: Surplus Lines Premium as % of Total P&C
Surplus Lines Premium as % of Total P&C Source: AM Best 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22
Slide 17: Kinsale E&S Market Share
Kinsale E&S Market Share 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 Source: AM Best
Slide 18: E&S market share rankings
Source: AM Best 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
Slide 19: Kinsale E&S Market Share
Kinsale E&S Market Share 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 Source: AM Best
Slide 20: Factors Influencing Market
Factors Influencing Market Industry Loss Experience Reserve Development Natural Catastrophes Inflation Bond Yields Monetary Policy Economy
Slide 21: Underwriting E&S Accounts
Underwriting E&S Accounts Individual Risk Underwriting Utilize 3rd Party Data Underwriters are Subject Matter Experts Flexibility of Form, Rate, and Limits Broad Appetite
Slide 22: Casualty Divisions
Casualty Divisions Small Business General Casualty Excess Casualty Construction
Slide 23: Professional Lines Divisions
Professional Lines Divisions Public Entity Professional Liability Management Liability Healthcare Allied Healthcare Excess Professional Liability
Slide 24: Specialty Casualty Divisions
Specialty Casualty Divisions Environmental Entertainment Energy Life Sciences Products Product Recall
Slide 25: Transportation Divisions
Transportation Divisions Ocean Marine Inland Marine Commercial Auto Aviation Railroad
Slide 26: Which Products to Bring To Market
Which Products to Bring To Market Determine the Lift Needed to Create Product IT, Forms, Actuarial, and Underwriting Work Marketing of Product Product Roll Out Product Development Process
Slide 27: New Products for 2023
New Products for 2023 Railroad: Excess Liability, Excess Railroad Protective Liability Ocean Marine: Blue Water Aviation: Excess Quota Share, Excess Layered, Drone & Hull Professional Liability: Lab E&O and Miscellaneous E&O
Slide 28: New Products for 2023
New Products for 2023 High Value Homeowners: Primary and Excess Inland Marine: Transportation Entertainment: Liquor Liability
Slide 29: Property Divisions
Property Divisions Small Property Commercial 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
Productivity Customer Service Training & Development Hiring The Kinsale Approach
Slide 34: Hiring
Hiring Hire the Person for the Company not the Position Us vs Them Experience
Slide 35: Training and Development
Training and Development Hit the Ground Running Movement Territory & Letters of Authority File Audits
Slide 36: Customer Service
Customer Service Use the Phone Two Hour Turn Around Time on all Emails First in First out 24 Hour Turn Around Time Service Vs. Relationship
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’ EXPLORE THE POTENTIAL CLAIMS
Slide 40: Organization and Talent
Organization and Talent • Construction Defect • Energy, Environmental • Products Liability • Management Liability • Healthcare • Public Entity • Commercial • Aspera – Personal • Inland Marine Casualty Property Specialty Talent Management • Tenured Leaders • Optimized Span of Control • Specialized Ex
Slide 41: Claim Attributes
Claim Attributes Severity driven Complex multi-party litigation Litigious environment Tailored coverage Aggressive plaintiff bar Expert focused EXCESS AND SURPLUS CLIAMS
Slide 42: Balancing Risk
Balancing Risk • Nuclear Verdict • Excess Judgement • Bad Faith • Risk Aversion • Low Trial Appetite • Complacent Culture Pay Only What We Owe
Slide 43: Claim Examples
Claim Examples 1. Outdoor Activity 3. Construction Defect 2. Construction Site 4. Property Damage
Slide 44: Technology: Target State
A KINSALE’ EXPLORE THE POTENTIAL TECHNOLOGY: TARGET STATE
Slide 45: Corporate Strategy: Be the Best E&S Company in the Business
Disciplined underwriting focused on small-account E&S market Maintain absolute control over underwriting and claims management processes Leverage our proprietary technology to operate with a substantial cost advantage over competitors Employ a quantitative approach – using analytics to drive profita
Slide 46: From Start Up to Enterprise Scale
From Start Up to Enterprise Scale Monolith Modular
Slide 47: Target State Benefits
Target State Benefits Target State Revenue Impact • quotes / UW • time to quote • new product speed-to- market Cost Efficiency • manual effort • accuracy and reporting capabilities Risk Mitigation • enable scale, reliability, performance & security • delivery 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 Independent and Scalable Services and Data
…and Building Independent and Scalable Services and Data Taking our Dependent Services and Data Building for Scalability and Growth
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: Insured Current State and Target State
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 • Not standardized and centrally managed • Enriched with more information • Centralized and standardized data accessible ac
Slide 53: Path to Driving Data-driven Decisions
Path to Driving Data-driven Decisions Prescriptive Predicts future behavior and automatically takes actions Predictive Predicts future behavior but requires human action Diagnostic Describes what happened and why Descriptive Measures what happened – i.e., counts Foundational Data Operational Effic
Slide 54: Change is Hard at first, Messy in the middle
“Change is HARD at first, MESSY in the middle and GORGEOUS at the end.” ~Robin Sharma, author and leadership expert Untangling Dependencies Standardizing on Modern Technology Managing Incremental Deployments and Coexistence Unstoppable Uncatchable Hard Messy Gorgeous
Slide 55: Analytics & Actuarial
Analytics & Actuarial Salmaan Allibhai
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 Embracing data is a fundamental part of the Kinsale culture Pricing/ Underwriting Reserving Claims Handling Capital Strategy Risk Management Staffing/ Budgeting
Slide 57: The Opportunity Ahead – Progressive is our model
The Opportunity Ahead – Progressive is our model 0% 5% 10% 15% 20% 25% 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 M ar ke t S ha re (% ) U.S. Personal Auto Insurance Market Share - 1996 to 2022 State Farm Progressive Berkshire Hathaway Allstate USAA State Farm USAA Progres
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 There is a lot of data out there, and thanks to our focus on technology, we are well-positioned to utilize that data to drive profitability and efficiency Improve how we
Slide 62: Investor Day 12.12.23
INVESTOR DAY 12.12.23