Kinsale Capital Group, Inc. · NYSE:KNSL
Kinsale Capital — Investor Day (January 2025)
59 slides from Kinsale Capital's investor day presentation, Jan 16, 2025
Slide 1: Investor Day
INVESTOR DAY 1.16.25
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: Premium Growth vs. P&C Industry and Surplus Lines
Growth Source: A.M. Best data, Company data ¹ Represents domestic professional surplus lines (DPSL) as defined by A.M. Best. Premium Growth vs. P&C industry vs. Surplus Lines Sector
Slide 4: Profitability: Underwriting Performance vs. Industry
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 presented as a reduction to underwriting, acquisition and insurance expenses. The Company modified the definition of the loss and expe
Slide 5: Wealth Creation: Share Appreciation
(1) As of December 31, 2024. Beginning with $16.00/share IPO pricing. Excludes dividends. Share appreciation(1) Wealth Creation
Slide 6: State of the Market
STATE OF THE MARKET
Slide 7: P&C Premium as Percent of GDP
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 Source: Federal Reserve, AM Best P&C Premium as Percent of GDP
Slide 8: E&S Premium as Percent of P&C Premium
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 '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 E&S Premium as Percent of P&C Premium
Slide 9: E&S Market Share in Homeowners
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 $2.2 Billion Source: AM Best E&S Market Share in Homeowners
Slide 10: 2023 E&S Market Share by Line
0% 10% 20% 30% 40% 50% Med Mal Products Other Liab (Claims Made) Fire Earthquake Allied Lines Other Liability (Occurrence) HO Source: AM Best - 2023 E&S Market Share by Line
Slide 11: Kinsale E&S Market Share
0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 Source: SP Global Kinsale E&S Market Share
Slide 12: 2023 E&S Group Share Rankings
Source: SP Global - 2023 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
Slide 13: Market Cycle: Capacity and Rates
Industry Profitable Capacity Enters Market Capacity Exits Market Rate Decrease; Underwriting Loosens Industry UN-Profitable Rate Increase; Underwriting Tightens
Slide 14: Growth Rate by Year: Surplus Lines vs. Total P&C
-10.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23 Surplus Lines Total P&C Source: AM Best Growth Rate by Year
Slide 15: Average Premium Changes, Q4 1999 – Q3 2024
Source: The Council of Insurance Agents & Brokers Average Premium Changes, Q4 1999 – Q3 2024 Pr em iu m C h an g es
Slide 16: US Insured Natural Catastrophe Losses by Year
0 20 40 60 80 100 120 140 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23 US Insured Natural Catastrophe Losses by Year (nominal, in $billions) 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
-2% 0% 2% 4% 6% 8% 10% J-1 0 O -1 0 J-1 1 A- 12 J-1 3 O -1 3 J-1 4 A- 15 J-1 6 O -1 6 J-1 7 A- 18 J-1 9 O -1 9 J-2 0 A- 21 J-2 2 O -2 2 J-2 3 A- 24 CPI Inflation by Month Source: Federal Reserve
Slide 19: CPI Versus Construction Materials Inflation
-10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% J-1 0 O -1 0 J-1 1 A- 12 J-1 3 O -1 3 J-1 4 A- 15 J-1 6 O -1 6 J-1 7 A- 18 J-1 9 O -1 9 J-2 0 A- 21 J-2 2 O -2 2 J-2 3 A- 24 Construction Materials Inflation CPI CPI Versus Construction Materials Inflation Source: Federal Reserve
Slide 20: Inflation Versus Expectations
0% 1% 2% 3% 4% 5% 6% 7% '82 '85 '88 '91 '94 '97 '00 '03 '06 '09 '12 '15 '18 EXPECTED 4-YEAR INFLATION (CAGR) ACTUAL 4-YEAR INFLATION (CAGR) Inflation Versus Expectations Source: Federal Reserve
Slide 21: Accident Year Incremental Deficiency, Other Liability Occurrence
Accident Year In Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Total Adverse 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% 2014 0.9% 1.9% 0.9% 0.2% 1.4% 0.2% 0.0% 0.4% 0.9% 6.6% 2015 2.4% 0.8% 0.2% 3.0% 2.0% 0.1% 0.4% 1.2% 10.
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 Deficiency, Fronting Company Composite
Accident Year In Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Total Adverse Devt Latest 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% 5.3% 15.5% 72% 2020 3.0% 0.9% 7.3% 11.2% 68% 2021 3.0% 12.2% 15.2% 75% 2022 3.2% 3.2% 62% Accident Year Incrementa
Slide 24: Third Party Data & Analytics
ee Third Party Data & Analytics Bias Reduction [ke Time Efficiency Avoiding Self- Process Speed Reported Data Reduced Manval Objective Third-Party Tasks Dota Improved Profitability and 8 Better Customer Service Accurate Pricing Reliable Data Sources Models Minimized Manual Entry Risk Segmentation Da
Slide 25: Underwriting
UNDERWRITING
Slide 26: Underwriting E&S Accounts
Underwriting E&S Accounts “Just Quote It” Utilize 3rd Party Data and AI No Delegated Underwriting Individual Risk Underwriting Underwriters are Subject Matter Experts Flexibility of Forms and Limits
Slide 27: Division Timeline
2010 Allied Health, Commercial Property, Energy, Environmental, General Casualty, Health Care, Life Sciences, Manufacturers & Contractors, Professional Liability, Small Business, Excess Casualty 2015 Inland Marine, Management Liability 2012 Construction, Personal Insurance, Products Liability 2021 E
Slide 28: New Products in 2024
Oil & Gas Lease Property (Energy) Control of Well (Energy) Storage Tanks (Environmental) Agribusiness General Liability (Agribusiness) Excess Builders Risk (Inland Marine) New Products in 2024
Slide 29: New Products in 2024 (continued)
New Products in 2024 Primary Quota Share (Commercial Property) Impairment Liability (Entertainment, General Casualty, Excess Casualty) Package Product (Products Liability) Excess Garage Liability (Commercial Auto)
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 Directors & Officers Coverage Habitational
Slide 32: Underwriting – Technology & Data
Business Intelligence3rd Party DataUW Platform Artificial Intelligence Underwriting – Technology & Data
Slide 33: Jessica Updike, VP Property
Jessica Updike, VP Property
Slide 34: Property Underwriting Approach
Property Group Non-CAT Underwriting + CAT Underwriting = Property Underwriting Approach
Slide 35: Property – Technology & Data
• Managing Aggregates • Diversification of Occupancies • Integrated Modeling • Quick Quotes Property – Technology & Data
Slide 36: Claims
CLAIMS
Slide 37: Excess & Surplus Claims: The Difference
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 Organization Strategic Staffing Optimized Workflow High Performance Financial Driver
Slide 39: Technology & Innovation
Technology & Innovation Proprietary Claim Platform Third Party Data Kinsale Analytics Automation & Artificial Intelligence
Slide 40: Results: Pay Only What We Owe
Results Pay Only What We Owe Quantitative Results Qualitative Results • Closures are exceeding new claim notices • Claims are being resolved faster • The percentage of claims litigated to decline • Balanced risk & trial appetite • Highly competent negotiation strategies • Appropriate application of
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 Claim Underwriting Product Development Information Technology Actuary
Slide 44: Information Technology
INFORMATION TECHNOLOGY
Slide 45: IT as a Strategic Differentiator
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: IT Value Proposition
IT Value Proposition Durable Competitive Advantage Automation Operational Efficiency Better Customer Service Better Data & Analytics Data-driven approach
Slide 47: Target State
Target State Request for Quote Underwrite & Quote Policy Issuance Policy Management Financial Management Claims
Slide 48: Recent Successes
Recent Successes +2 Quotes per day Per Underwriter +24.5% Productivity -10 Hours/week non-value add work +Unlimited Rating factors
Slide 49: Analytics & Actuarial
ANALYTICS & ACTUARIAL
Slide 50: 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 Kinsale is a Quantitative Company 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
Improve how we segment & price risk Automate repetitive tasks & capture valuable data Combined effort by Analytics & Actuarial, Underwriting, & IT to take advantage of third-party data. There is a wealth of data out there, and thanks to our focus on analytics and technology, we are well-positioned t
Slide 53: Innovation Over the Years
• Per Claimant Sublimits • Distance to Active Wildfires • Crime Score Correlations • Scheduled Vehicles/Drivers • Permit & Licensing Data • Firmographics – Google API • NY Sidewalk Exclusion • Battery Coverage • FDA Data Pulls • Flat Fee Arrangements • Telematics Data Collection • Property Workflow
Slide 54: Artificial Intelligence – Goals
1 Improve how we segment and price risk Automate repetitive tasks and capture valuable data Exactly the same goals as our third-party data initiative. AI will continue to improve over time, and we are well-positioned to take advantage given our focus on analytics and technology. Artificial Intellige
Slide 55: 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 AI in Underwriting
Slide 56: 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 AI in Claims
Slide 57: 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 AI in Analytics & Actuarial
Slide 58: AI in Analytics & Actuarial (continued)
• 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 analysis of transactional dat
Slide 59: Investor Day
INVESTOR DAY 1.16.25