KNSL - Kinsale Capital Group, Inc.
Price:
--
--
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CONSENSUS:
Hold
DETAILS
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PRICE TARGET:
$433.00
DETAILS
HIGH:
$433.00
LOW:
$433.00
MEDIAN:
$433.00
CONSENSUS:
$433.00
UPSIDE:
24.03%
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Q2 2026 Earnings Call
2026-07-24Operator: And welcome to the Second Quarter 26 Kinsale Capital Group, Inc. Earnings Conference Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. Before we get started, let me remind everyone that through the course of the teleconference, Kinsale's management may make comments that reflect their intentions, beliefs, and expectations for the future. As always, these forward-looking statements are subject to certain risk factors which could cause actual results to differ materially. These risk factors are listed in the company's various SEC filings, including the 2025 annual report on Form 10 k which should be reviewed carefully. The company has furnished a Form 8-K with the Securities and Exchange Commission that contains the press release announcing its second quarter results. Kinsale's management may also reference certain non GAAP financial measures in the call today. A reconciliation of GAAP to these measures can be found in the press release, which is available at the company's website at www.kinsalecapitalgroup.com. I will now turn the conference over to Kinsale's chairman, President, and CEO, Mr. Michael Patrick Kehoe. Please go ahead, sir.
Michael Patrick Kehoe: Thank you, operator, and good morning, everyone. Today, I am joined by Bryan Paul Petrucelli, our Chief Financial Officer Stuart Winston, our Chief Underwriting Officer and Salmaan K. Allibhai, our Chief Analytics and Technology Officer. In the second quarter 26, Kinsale's diluted operating earnings per share increased by 15.9% over the second quarter 25. Generating an annualized operating return on equity of 24.4%. Gross written premium was down 5%, and net written premium was down 1.4% and net earned premium was up 8.9% for the quarter. Kinsale's combined ratio was 75.5% for the quarter. E&S market conditions in the second quarter continued to be competitive and largely consistent with conditions in the first quarter. The level of competition and our growth rate continue to vary from 1 market segment to another. And continuing the trend from the last few quarters, our commercial property division where we write larger layered property accounts, is to our competition is the most intense and where you are seeing material rate declines combined with expanding coverage. it is definitely a buyer's market. And as a consequence, we are writing a shrinking volume of business in that specific market. Excluding the commercial property division, Kinsale had growth in gross written premium of 3.7% for the quarter and 4.8% for the first half of the year. And given that 60% of the commercial property division premium was written in the first half of last year, the year over year growth comparison becomes modestly easier the next 2 quarters of 26. Just as we always do, in today's competitive market, we profitability over growth. When competition in the market is intense, it is not unusual to see some competitors underpricing risk. And that is a common occurrence in today's market. Notwithstanding the state of the market, we are working hard to grow our business through product enhancements and new products, geographic expansion of some product lines, new broker appointments, robust marketing efforts, and improved customer service. Stuart Winston will offer further detail and commentary on the market environment and our efforts to drive growth here in a moment. In addition to working harder, we are also using analytics and technology to work smarter. Kinsale has made technology a core competency of our business since our founding 17 years ago. We own our own custom built enterprise system We do not have legacy applications dating back decades in time. We are driving system enhancements and automation at the fastest pace in our company history. Additionally, analysis of our own data and data that we acquire allows us to continually refine our underwriting and pricing models thereby driving exceptional loss ratios even in a competitive market and even with a conservative approach to loss reserving. Salmaan K. Allibhai will provide some additional detail on our efforts in this area shortly. And finally, we continue to use excess capital to buy back our own stock Last night, we announced an expansion of our buyback authorization to include an additional $250 million bringing our current authorization to $337 million Given the competitive advantages of the Kinsale business model, around underwriting accuracy, data and analytics, technology combined with the enormous cost advantage we have over every single competitor, Kinsale shares represent a good value at today's price? A very good value. And with that, I will turn the call over to Bryan Paul Petrucelli.
Bryan Paul Petrucelli: Thanks, Mike. The business continues to generate strong profitability. Even in this period of heightened competitiveness that Mike just noted. Net income and net operating earnings increased by 31.1% and 13.3%, respectively, quarter over quarter. The 75.5% combined ratio for the quarter included 4.5 points from net favorable prior year loss reserve development, compared to 3.9 points last year with 1.3 points in cat losses this year compared to less than 1 point in the second quarter of last year. We produced a 21.7% expense ratio for the quarter compared to 20.7% last year. The other underwriting expense portion of this ratio which is the best measure of the operational efficiency of the business, was 10.3% for the quarter compared to 10.6% the second quarter of 25. The overall expense ratio increase attributable to a higher net commission ratio resulting from higher reinsurance retentions. The larger retention provides a positive economic trade for the company. but a higher net commission ratio is more than offset by greater underwriting and investment income On the investment side, net investment income increased by 19.9% in the second quarter over last year. A result of continued growth in the investment portfolio generated from strong operating cash flows. Kinsale's float mostly unpaid losses and unearned premium, grew to $3.4 billion at June 30, up from $3.1 billion at the end of 25. Annualized gross return was 4.5% for the first half of 26, compared to 4.3% last year. New money yields are averaging around 5.25% with an average duration of 4.5 years on the company's fixed maturity investment portfolio. And lastly, diluted operating earnings per share continues to improve and was $5.54 per share for the quarter compared to $4.78 per share for the second quarter of 25. And with that, I will pass it over to Stuart.
Stuart Winston: Thanks, Bryan. The soft E&S market continued in the second quarter, but still offers opportunities for growth. Growth driven by compromising profit margins is easy to manufacture, but costly to unwind. And because of this, our approach to soft markets like commercial property, construction, or certain professional lines is not to chase the market down but to continue to price business in a way that meets our return thresholds and to be opportunistic where it makes sense. And where favorable conditions exist, we will lean into them. Areas like excess casualty, commercial auto, entertainment, environmental, agribusiness casualty, and energy all had favorable underwriting conditions during the quarter and all saw meaningful growth. Overall, new business submission growth increased 6% in the second quarter, a similar rate to the first quarter 26. We continue to see a decline in new business submissions in the commercial property division that handles large shared and layered deals. And excluding the commercial property division, new business submissions were up 8% for the quarter, and over 1/2 of our divisions are seeing submission growth in the double digits. As I mentioned last quarter, we continue to see strong momentum across the business, especially in the small to medium enterprise segment where we are most focused. With an average premium of approximately $12 thousand our platform is built around smaller accounts. And that part of the market remained active in the quarter. Submissions, quotes, and binders all increased for the company. With the most meaningful growth coming from accounts with premiums of $25 thousand and below. We believe that consistency highlights the durability of our model across all market environments. While our lines of business are experiencing varying levels of competition and pricing pressure, the combined pricing trend for Kinsale is in line with the Amwins Pricing Index, which showed a decrease of 5.9% compared to a 3.3% decrease in Q1 of 26. While we continue to see strong rate pressure on commercial property, other lines like commercial auto, excess casualty, and entertainment present opportunities for meaningful rate increases. Distribution and product expansion remain key drivers of growth. On the product side, we have rolled out 9 new product offerings or enhancements across various underwriting groups so far this year. With 5 more set to launch imminently and another 10 in the pipeline. A pace that reflects the depth of our appetite and our ability to move quickly when we see opportunity. We have also made meaningful progress on distribution, appointing 24 new wholesale brokers to the Kinsale platform and 176 new retail brokers to Aspera. Our in house broker through which we distribute most of our personal lines products. With new offerings in our homeowners line, Aspera continues to expand both as product line and geographic footprint. Extending our reach into personal lines markets where we see a long term demand. Underpinning all of this is our ongoing focus on operational efficiency. Workflow improvements, utilizing AI and other technology upgrades across our underwriting functions have allowed us to maintain our service standards and in many areas, improve them. Ensuring that growth does not come at the expense of the execution our brokers and insurers expect from us all the while staying disciplined in managing returns. Staying disciplined on price and terms means that there will be business that we choose not to write, and we are comfortable with that. The long term health of the portfolio matters more than any individual account. That mindset is embedded in how we evaluate every risk that comes through the door. When the market softens and competitors begin to stretch on terms and conditions to hold on to accounts, we are going to stay disciplined to our underwriting standards. If we lose accounts due to competition, whether it is pricing or terms that no longer meet our profitability threshold, we view that as the model working as intended. We will not-- what we will not do is sacrifice profitability for the sake of top line growth. We will continue to leverage our low cost advantage over our competition to write profitable business in the softening market and focus on small to medium sized risk with our still strong market opportunity and be opportunistic when large deals come our way. With that, I will hand it over to Salmaan.
Salmaan K. Allibhai FCAS MAAA: Thanks, Stuart. As Mike noted earlier, we continue to use analytics and technology drive profitability and efficiency in the business. Several months ago, we brought the 2 functions together as a single team. Both have been core competencies from day 1. And now they are working more efficiently from the same strategic roadmap. In a more competitive part of the cycle, the importance of analytics and actuarial functions increased dramatically. Every day, we are working to get better at segmenting and pricing risk. By adding to our ever expanding third party data repository and utilizing more sophisticated statistical and machine learning algorithms to identify the characteristics that drive loss. We have been able to do this well over the years because we have all 17 years of our company's data in 1 database. This data driven approach gives us an advantage in balancing profitability with growth. On the technology front, we are working hard to drive efficiency and automation across our business processes. 1 of our greatest advantages is that we do not have legacy software dating back decades. This means our team is primarily focused on innovation and developing new capabilities as opposed to maintaining outdated systems. When it comes to AI, we continue to see meaningful benefits via increased productivity and new capabilities. Every associate in the company has an enterprise license for 2 of the leading frontier models. Our analytics, technology, underwriting and claims teams are all using AI daily to improve the way we work employing dozens of skills, bots, and agentic tools. We have built AI functionality into our proprietary underwriting worksheets and those efforts are accelerating. We also have a team of our analytics and technology professionals working directly with folks in the business to develop additional custom AI solutions. Artificial intelligence is changing the way we work for the better. It is improving productivity, customer service, and accuracy across our business and doing so at a rapid pace. We are confident that the technology lead Kinsale has built over our competitors is growing even larger. And with that, I will hand it back over to Mike.
Michael Patrick Kehoe: Thanks, Salmaan. Operator, we are now ready for any questions in the queue.
Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. The first question comes from the line of Pablo Singzon with JPMorgan. Your line is now open. Please go ahead.
Pablo Singzon: Thank you. Good morning, everyone. The current year accident loss ratio improved from 2Q25, which I think is a bit different from what many other commercial insurers are reporting. So I was hoping you could please talk through the key factors that drove that. Was it lower non property losses mix, changes in loss picks, and so on?
Salmaan K. Allibhai FCAS MAAA: Pablo, this is Salmaan. Yes, I would just reiterate that losses for the quarter came in below expectations. As they have for the last few quarters. there is really nothing out of the ordinary. it is just normal variability and mix of business. The loss ratio is a composite of a dozen statutory lines of business. I would just reiterate that our reserves are as conservative as they have ever been in our company's history.
Pablo Singzon: Got it. Thanks, Salmaan. And then my second question, just on the reinsurance and ceding commission rate, I think the commission rate has actually been going up for you over the past couple of years. I was wondering if you expect the same this year after the renewals. Thanks.
Bryan Paul Petrucelli: Pablo, this is Bryan. I would say if you look at what we had here in second quarter it is a pretty good indication, I think, of where we are going to be going forward. You could see a slight uptick in that going forward. We renewed our reinsurance treaties on June 1. So there is only 1 month of effect of the new treaty. But I think you are just looking at the loss ratio in general, may have a slight uptick there in commissions. We could get some efficiency gains on the operating side given the AI activities that we talked about previously. So I think if you look in aggregate, the second quarter expense ratio should be a good measure for you going forward.
Pablo Singzon: Understood. Thank you.
Operator: The second question is from Hristian Getsov with Wells Fargo. Go ahead. Your line is open.
Hristian Getsov: Hi. Good morning. My first question is on the E and casualty. Just given that segment is softening a bit, I guess, GWP, I think, was up 3% versus up 4% in the first quarter. How much are ROEs compressing in the line, assuming your views on loss trends, high single digits to low double digits have not changed?
Michael Patrick Kehoe: Well, we manage everything to a 20% ROE or greater. And I think most of our product lines are probably running ahead of that. I think we are, what, 24.4% for the quarter.
Hristian Getsov: So there is always a give and take where we are trying to balance profit and growth. Got it. And then for my second question, I guess, given the softer market, and you have been pretty protective of your commissions or ratios to brokers I guess, how are you guys thinking about broker commissions on a go forward basis Typically, brokers like to up their commissions in a softer market, and it is seems like maybe they are placing more business with the admitted side. Given the economics are a bit better on that front. How are you guys thinking about changes there Yeah.
Michael Patrick Kehoe: Hristian, this is Mike again. Would say, look, brokers are critical to our success. Obviously, they are looking to maximize their economics That makes sense. there is some tension between the wholesalers that we distribute most of our business through and their retail clients. In terms of how they split the gross commission Of course, the customer, the buyer is keenly focused on lower cost insurance. So you are always gonna have some tension across the spectrum, if you will. And of course, in a soft market, when rates have drifted down, that puts pressure on everybody. So I think it is a normal tension in the business. I would say we offer our brokers the best customer service in the industry. Do not think there is anybody even close to Kinsale's quote ratio and response time. And I think we also offer the broadest risk appetite We are a go to market for your very hard to place accounts. And so between that and just competition in the market, as Stuart Winston mentioned a few minutes ago, we continue to grow our business especially when you set aside that 1 commercial property division, which is going through kind of a unique correction. So we are confident in our model and but acknowledge the tension in the market, if you will.
Operator: Next question is from Daniel Cohen with BMO. Go ahead. Your line is open.
Dan Cohen: Morning. Thanks. Maybe just focusing on the commercial property side. Does Kinsale view this 2Q as maybe the trough there? You know, given some larger players are pulling out is the view that property pricing can maybe become less negative in 2027, or could maybe Kinsale get back on some of these larger shared placements next year? As I continue to pull back Hey, Dan.
Stuart Winston: it is Stuart Winston. Yeah. there is there is no telling where it is gonna go in 2027. We still are seeing we do hear that a lot of large competitors are pulling out, but there still is pressure from various MGAs. In London. A lot of traditional markets are still heavy in the layered shared and layered deals putting up larger limits, stretch primaries. So it is it is still squeezing and it is it is still competitive and you know, our role now is to keep our pricing as close to technical and meet our return thresholds. And if we shrink because of it, it is what it is in that division.
Dan Cohen: That makes sense. And then maybe just focusing on the 3.7% growth figure, excluding the large account property, just you know, what is driving that acceleration? Is it pricing, or are you seeing some business starting to return to the admitted market And I guess just what would need to change maybe for that number to start to inflect here in the future?
Stuart Winston: Yeah. I mean, like I said in my comments, there is still there is heavy competition from long tail lines from London is starting to creep into some other liability occurrence, long tail lines. Depressing pricing across the market for construction lines of business. We are starting to see some more competition around general casualty type business. So it is you know? But there are pockets of opportunity that we can grow and we are going to lean into this.
Dan Cohen: Are you seeing any of that business return to the admitted market at this time or no?
Stuart Winston: There are there are some. There is some flow to the admitted market, but it is not pervasive.
Dan Cohen: Thank you.
Operator: Next question is from Andrew Andersen with Jefferies. Please go ahead. Your line is now open.
Andrew Andersen: Hey. Good morning. You had mentioned in the press release that there was an increase in inbound accounts. I think that was some new language added. But maybe you could just talk about how much of that increase in inbound account is coming from some of the broker engagement that you have been working on versus more competitive pricing?
Stuart Winston: Yeah. it is a little bit of both. We are we sorry. it is Stuart still. it is a little bit of both. We are doing a good job with our idle broker initiative to reengage brokers that have slipped off over the years. We are seeing an increase of flow from them. Our hit ratios stayed roughly the same. Renewal and new business. And, with the growth in submissions, we are just seeing more, accounts bond.
Michael Patrick Kehoe: Andrew, part of why we put that in there is just to you know, explain if you will some of where our confidence in our business model comes from. Right? We wrote a ton of business in that commercial property division as that market went into a crisis. And obviously, crisis is over and rates are coming down pretty dramatically. But the underlying business although obviously we are growing at a slower clip, the business model is still working quite well.
Andrew Andersen: Yep. And some carriers have been pointing to maybe some incremental improvement in claims emergence and loss cost trends even if they are not declaring victory on social inflation by any means. But, you know, what is your current view of the inflation and casualty loss trend landscape?
Salmaan K. Allibhai FCAS MAAA: This is Salmaan. For casualty loss cost trends, we would say that probably mid single digits. It varies by line of business. Social inflation, we because we write smaller accounts and lower limits, I think we have been as exposed to social inflation as some of the other carriers. So we are just not seeing a whole lot of it.
Andrew Andersen: Okay. And maybe just a clarification. When you were explaining the accident, your loss ratio earlier, you kind of mentioned normal variability and some lower losses Was that entirely on short tail property business?
Salmaan K. Allibhai FCAS MAAA: I think I think it is it is across the board. But the short tail lines of business have been performing well for us, especially well for us.
Michael Patrick Kehoe: And Andrew, we are allowing we are being a little more conservative as we have for a couple of years. In slowing down the release of IBNR in the longer tail occurrence business. And allowing it to flow out a little bit more quickly in the short tail lines where there is a lot more certainty around ultimate loss ratios.
Andrew Andersen: Thank you.
Operator: Next question is from Mark Hughes with Truist. Please go ahead. Your line is open.
Mark Hughes: Yeah. Thanks. Good morning. I just wanted to revisit another question on a property pricing and the property cycle. Any kind of granularity you can provide around What you saw in 2Q versus 1Q? Thinking of the ENS data seem to point to Incremental softening in 2Q. I am just trying to understand when or if we can get to a point of some kind of equilibrium and that might stabilize at this lower level? Any thoughts there would be helpful.
Michael Patrick Kehoe: Hey, Mark. This is Mike. I will and then I will flip it over to Stuart for his comments. But eventually, we are going to get to some equilibrium because it is although cat catastrophe losses in particular can be intermittent and kind of unpredictable, They do happen. And I think being disciplined on how we price that business combined with just as a reminder, a very disciplined risk management protocol around concentration of business and the like. We are very confident about what we are doing in that space. But when it happens, think we do not have any insight into that. But we do have some other property oriented underwriting divisions that are seeing growth opportunity.
Stuart Winston: Yeah, Mark, if you look at specialized areas like agribusiness property, we are seeing growth there. that is more stable market. Our small business property is definitely more stable than large shared and layered deals. it is been a much more consistent market over the over the last year and a half, 2 years. Inland Marine. Inland Marine. We are starting to see a little more competition in inland marine, but that is we have 5 buckets of products in that division. So it is out. But yeah, there is no telling. If the wind blows, we will be at a position. But I think people are starting to get to the floor of their pricing for property, which is just that is there is still pressure from London.
Mark Hughes: Yeah. Okay. You touched on the current accident year. Number, which was quite good in the quarter. You know, I think you have been as I read the your results, the property has been more profitable than casualty you know, but the mix has been changing here. What do you what should we think about the underlying current accident year loss ratio given the mix shift out of property in the casualty? Should it drift up? Or is this kind of level sustainable?
Salmaan K. Allibhai FCAS MAAA: Mark, this is Salmaan. it is hard to say. It could drift up over time. But yes, like I alluded to earlier, I mean the losses are coming in below our expectations. And so we feel good about where we are booking the loss ratios right now. And we feel very good about the level of concern conservatism in the IBNR, the reserves. Which is a positive indicator for future loss ratio performance.
Mark Hughes: Then 1 final 1, if I might. The buyback, pretty meaningful number this quarter. As you think about it on a go forward basis, if you are maintaining you know, moderate top line growth, Is that gonna be something that you will continue to lean into or how do you think about the pacing there?
Michael Patrick Kehoe: Yeah. Mark, this is Mike. We are gonna continue to lean into it. You recall, I guess about a year and a little over a year ago, we had our first buyback authorization of $100 million that we exhausted. We did a $250 million authorization after that, that we are I think we have $80 million or so left on. And then this new $250 million authorization. So that is our principal capital allocation strategy. Obviously, we pay a small dividend But as growth accelerates in the future, we will obviously lean back into growth. That would be our first priority. But in this interim phase where growth is a little bit more limited, we think this is a wise use of capital given our confidence in the business model and future profitability and price appreciation.
Mark Hughes: Alright. Thank you.
Operator: Next question is from Daniel Cohen with BMO. Please go ahead. Your line is open.
Dan Cohen: Alright. Thanks for showing me back in. Maybe just on the product expansion that you mentioned in your prepared remarks, just you know, how has that contributed to growth over the past year or so and maybe the potential growth uplift going forward on those new products and whatnot? Thanks.
Stuart Winston: Yeah, Dan. it is Stuart Winston. Yeah. So when we roll out new products and new enhancements, we never want to be in the market that jumps in feet first and to a market and grows like a weed. it is always gonna be a crawl, walk, run pace to grow. So it they are the new products are creating growth. They are driving, submissions. They are driving, new premium. But it is but it is gonna be it will be a slow growth. And as the market turns, we will ramp up and go from there.
Michael Patrick Kehoe: Operator, it looks like that is the end of the questions.
Operator: Yes. There are no further questions at this time. We have reached the end of our Q&A. I will now turn the call back to Michael Patrick Kehoe.
Michael Patrick Kehoe: Okay. Well, thanks, everybody, for participating. I wanna thank all the Kinsale employees for their tremendous effort in driving these good results and we look forward to speaking with everybody again at the end of the next quarter. Have a great day.
Michael Patrick Kehoe: Thank you, operator, and good morning, everyone. Today, I am joined by Bryan Paul Petrucelli, our Chief Financial Officer Stuart Winston, our Chief Underwriting Officer and Salmaan K. Allibhai, our Chief Analytics and Technology Officer. In the second quarter 26, Kinsale's diluted operating earnings per share increased by 15.9% over the second quarter 25. Generating an annualized operating return on equity of 24.4%. Gross written premium was down 5%, and net written premium was down 1.4% and net earned premium was up 8.9% for the quarter. Kinsale's combined ratio was 75.5% for the quarter. E&S market conditions in the second quarter continued to be competitive and largely consistent with conditions in the first quarter. The level of competition and our growth rate continue to vary from 1 market segment to another. And continuing the trend from the last few quarters, our commercial property division where we write larger layered property accounts, is to our competition is the most intense and where you are seeing material rate declines combined with expanding coverage. it is definitely a buyer's market. And as a consequence, we are writing a shrinking volume of business in that specific market. Excluding the commercial property division, Kinsale had growth in gross written premium of 3.7% for the quarter and 4.8% for the first half of the year. And given that 60% of the commercial property division premium was written in the first half of last year, the year over year growth comparison becomes modestly easier the next 2 quarters of 26. Just as we always do, in today's competitive market, we profitability over growth. When competition in the market is intense, it is not unusual to see some competitors underpricing risk. And that is a common occurrence in today's market. Notwithstanding the state of the market, we are working hard to grow our business through product enhancements and new products, geographic expansion of some product lines, new broker appointments, robust marketing efforts, and improved customer service. Stuart Winston will offer further detail and commentary on the market environment and our efforts to drive growth here in a moment. In addition to working harder, we are also using analytics and technology to work smarter. Kinsale has made technology a core competency of our business since our founding 17 years ago. We own our own custom built enterprise system We do not have legacy applications dating back decades in time. We are driving system enhancements and automation at the fastest pace in our company history. Additionally, analysis of our own data and data that we acquire allows us to continually refine our underwriting and pricing models thereby driving exceptional loss ratios even in a competitive market and even with a conservative approach to loss reserving. Salmaan K. Allibhai will provide some additional detail on our efforts in this area shortly. And finally, we continue to use excess capital to buy back our own stock Last night, we announced an expansion of our buyback authorization to include an additional $250 million bringing our current authorization to $337 million Given the competitive advantages of the Kinsale business model, around underwriting accuracy, data and analytics, technology combined with the enormous cost advantage we have over every single competitor, Kinsale shares represent a good value at today's price? A very good value. And with that, I will turn the call over to Bryan Paul Petrucelli.
Bryan Paul Petrucelli: Thanks, Mike. The business continues to generate strong profitability. Even in this period of heightened competitiveness that Mike just noted. Net income and net operating earnings increased by 31.1% and 13.3%, respectively, quarter over quarter. The 75.5% combined ratio for the quarter included 4.5 points from net favorable prior year loss reserve development, compared to 3.9 points last year with 1.3 points in cat losses this year compared to less than 1 point in the second quarter of last year. We produced a 21.7% expense ratio for the quarter compared to 20.7% last year. The other underwriting expense portion of this ratio which is the best measure of the operational efficiency of the business, was 10.3% for the quarter compared to 10.6% the second quarter of 25. The overall expense ratio increase attributable to a higher net commission ratio resulting from higher reinsurance retentions. The larger retention provides a positive economic trade for the company. but a higher net commission ratio is more than offset by greater underwriting and investment income On the investment side, net investment income increased by 19.9% in the second quarter over last year. A result of continued growth in the investment portfolio generated from strong operating cash flows. Kinsale's float mostly unpaid losses and unearned premium, grew to $3.4 billion at June 30, up from $3.1 billion at the end of 25. Annualized gross return was 4.5% for the first half of 26, compared to 4.3% last year. New money yields are averaging around 5.25% with an average duration of 4.5 years on the company's fixed maturity investment portfolio. And lastly, diluted operating earnings per share continues to improve and was $5.54 per share for the quarter compared to $4.78 per share for the second quarter of 25. And with that, I will pass it over to Stuart.
Stuart Winston: Thanks, Bryan. The soft E&S market continued in the second quarter, but still offers opportunities for growth. Growth driven by compromising profit margins is easy to manufacture, but costly to unwind. And because of this, our approach to soft markets like commercial property, construction, or certain professional lines is not to chase the market down but to continue to price business in a way that meets our return thresholds and to be opportunistic where it makes sense. And where favorable conditions exist, we will lean into them. Areas like excess casualty, commercial auto, entertainment, environmental, agribusiness casualty, and energy all had favorable underwriting conditions during the quarter and all saw meaningful growth. Overall, new business submission growth increased 6% in the second quarter, a similar rate to the first quarter 26. We continue to see a decline in new business submissions in the commercial property division that handles large shared and layered deals. And excluding the commercial property division, new business submissions were up 8% for the quarter, and over 1/2 of our divisions are seeing submission growth in the double digits. As I mentioned last quarter, we continue to see strong momentum across the business, especially in the small to medium enterprise segment where we are most focused. With an average premium of approximately $12 thousand our platform is built around smaller accounts. And that part of the market remained active in the quarter. Submissions, quotes, and binders all increased for the company. With the most meaningful growth coming from accounts with premiums of $25 thousand and below. We believe that consistency highlights the durability of our model across all market environments. While our lines of business are experiencing varying levels of competition and pricing pressure, the combined pricing trend for Kinsale is in line with the Amwins Pricing Index, which showed a decrease of 5.9% compared to a 3.3% decrease in Q1 of 26. While we continue to see strong rate pressure on commercial property, other lines like commercial auto, excess casualty, and entertainment present opportunities for meaningful rate increases. Distribution and product expansion remain key drivers of growth. On the product side, we have rolled out 9 new product offerings or enhancements across various underwriting groups so far this year. With 5 more set to launch imminently and another 10 in the pipeline. A pace that reflects the depth of our appetite and our ability to move quickly when we see opportunity. We have also made meaningful progress on distribution, appointing 24 new wholesale brokers to the Kinsale platform and 176 new retail brokers to Aspera. Our in house broker through which we distribute most of our personal lines products. With new offerings in our homeowners line, Aspera continues to expand both as product line and geographic footprint. Extending our reach into personal lines markets where we see a long term demand. Underpinning all of this is our ongoing focus on operational efficiency. Workflow improvements, utilizing AI and other technology upgrades across our underwriting functions have allowed us to maintain our service standards and in many areas, improve them. Ensuring that growth does not come at the expense of the execution our brokers and insurers expect from us all the while staying disciplined in managing returns. Staying disciplined on price and terms means that there will be business that we choose not to write, and we are comfortable with that. The long term health of the portfolio matters more than any individual account. That mindset is embedded in how we evaluate every risk that comes through the door. When the market softens and competitors begin to stretch on terms and conditions to hold on to accounts, we are going to stay disciplined to our underwriting standards. If we lose accounts due to competition, whether it is pricing or terms that no longer meet our profitability threshold, we view that as the model working as intended. We will not-- what we will not do is sacrifice profitability for the sake of top line growth. We will continue to leverage our low cost advantage over our competition to write profitable business in the softening market and focus on small to medium sized risk with our still strong market opportunity and be opportunistic when large deals come our way. With that, I will hand it over to Salmaan.
Salmaan K. Allibhai FCAS MAAA: Thanks, Stuart. As Mike noted earlier, we continue to use analytics and technology drive profitability and efficiency in the business. Several months ago, we brought the 2 functions together as a single team. Both have been core competencies from day 1. And now they are working more efficiently from the same strategic roadmap. In a more competitive part of the cycle, the importance of analytics and actuarial functions increased dramatically. Every day, we are working to get better at segmenting and pricing risk. By adding to our ever expanding third party data repository and utilizing more sophisticated statistical and machine learning algorithms to identify the characteristics that drive loss. We have been able to do this well over the years because we have all 17 years of our company's data in 1 database. This data driven approach gives us an advantage in balancing profitability with growth. On the technology front, we are working hard to drive efficiency and automation across our business processes. 1 of our greatest advantages is that we do not have legacy software dating back decades. This means our team is primarily focused on innovation and developing new capabilities as opposed to maintaining outdated systems. When it comes to AI, we continue to see meaningful benefits via increased productivity and new capabilities. Every associate in the company has an enterprise license for 2 of the leading frontier models. Our analytics, technology, underwriting and claims teams are all using AI daily to improve the way we work employing dozens of skills, bots, and agentic tools. We have built AI functionality into our proprietary underwriting worksheets and those efforts are accelerating. We also have a team of our analytics and technology professionals working directly with folks in the business to develop additional custom AI solutions. Artificial intelligence is changing the way we work for the better. It is improving productivity, customer service, and accuracy across our business and doing so at a rapid pace. We are confident that the technology lead Kinsale has built over our competitors is growing even larger. And with that, I will hand it back over to Mike.
Michael Patrick Kehoe: Thanks, Salmaan. Operator, we are now ready for any questions in the queue.
Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. The first question comes from the line of Pablo Singzon with JPMorgan. Your line is now open. Please go ahead.
Pablo Singzon: Thank you. Good morning, everyone. The current year accident loss ratio improved from 2Q25, which I think is a bit different from what many other commercial insurers are reporting. So I was hoping you could please talk through the key factors that drove that. Was it lower non property losses mix, changes in loss picks, and so on?
Salmaan K. Allibhai FCAS MAAA: Pablo, this is Salmaan. Yes, I would just reiterate that losses for the quarter came in below expectations. As they have for the last few quarters. there is really nothing out of the ordinary. it is just normal variability and mix of business. The loss ratio is a composite of a dozen statutory lines of business. I would just reiterate that our reserves are as conservative as they have ever been in our company's history.
Pablo Singzon: Got it. Thanks, Salmaan. And then my second question, just on the reinsurance and ceding commission rate, I think the commission rate has actually been going up for you over the past couple of years. I was wondering if you expect the same this year after the renewals. Thanks.
Bryan Paul Petrucelli: Pablo, this is Bryan. I would say if you look at what we had here in second quarter it is a pretty good indication, I think, of where we are going to be going forward. You could see a slight uptick in that going forward. We renewed our reinsurance treaties on June 1. So there is only 1 month of effect of the new treaty. But I think you are just looking at the loss ratio in general, may have a slight uptick there in commissions. We could get some efficiency gains on the operating side given the AI activities that we talked about previously. So I think if you look in aggregate, the second quarter expense ratio should be a good measure for you going forward.
Pablo Singzon: Understood. Thank you.
Operator: The second question is from Hristian Getsov with Wells Fargo. Go ahead. Your line is open.
Hristian Getsov: Hi. Good morning. My first question is on the E and casualty. Just given that segment is softening a bit, I guess, GWP, I think, was up 3% versus up 4% in the first quarter. How much are ROEs compressing in the line, assuming your views on loss trends, high single digits to low double digits have not changed?
Michael Patrick Kehoe: Well, we manage everything to a 20% ROE or greater. And I think most of our product lines are probably running ahead of that. I think we are, what, 24.4% for the quarter.
Hristian Getsov: So there is always a give and take where we are trying to balance profit and growth. Got it. And then for my second question, I guess, given the softer market, and you have been pretty protective of your commissions or ratios to brokers I guess, how are you guys thinking about broker commissions on a go forward basis Typically, brokers like to up their commissions in a softer market, and it is seems like maybe they are placing more business with the admitted side. Given the economics are a bit better on that front. How are you guys thinking about changes there Yeah.
Michael Patrick Kehoe: Hristian, this is Mike again. Would say, look, brokers are critical to our success. Obviously, they are looking to maximize their economics That makes sense. there is some tension between the wholesalers that we distribute most of our business through and their retail clients. In terms of how they split the gross commission Of course, the customer, the buyer is keenly focused on lower cost insurance. So you are always gonna have some tension across the spectrum, if you will. And of course, in a soft market, when rates have drifted down, that puts pressure on everybody. So I think it is a normal tension in the business. I would say we offer our brokers the best customer service in the industry. Do not think there is anybody even close to Kinsale's quote ratio and response time. And I think we also offer the broadest risk appetite We are a go to market for your very hard to place accounts. And so between that and just competition in the market, as Stuart Winston mentioned a few minutes ago, we continue to grow our business especially when you set aside that 1 commercial property division, which is going through kind of a unique correction. So we are confident in our model and but acknowledge the tension in the market, if you will.
Operator: Next question is from Daniel Cohen with BMO. Go ahead. Your line is open.
Dan Cohen: Morning. Thanks. Maybe just focusing on the commercial property side. Does Kinsale view this 2Q as maybe the trough there? You know, given some larger players are pulling out is the view that property pricing can maybe become less negative in 2027, or could maybe Kinsale get back on some of these larger shared placements next year? As I continue to pull back Hey, Dan.
Stuart Winston: it is Stuart Winston. Yeah. there is there is no telling where it is gonna go in 2027. We still are seeing we do hear that a lot of large competitors are pulling out, but there still is pressure from various MGAs. In London. A lot of traditional markets are still heavy in the layered shared and layered deals putting up larger limits, stretch primaries. So it is it is still squeezing and it is it is still competitive and you know, our role now is to keep our pricing as close to technical and meet our return thresholds. And if we shrink because of it, it is what it is in that division.
Dan Cohen: That makes sense. And then maybe just focusing on the 3.7% growth figure, excluding the large account property, just you know, what is driving that acceleration? Is it pricing, or are you seeing some business starting to return to the admitted market And I guess just what would need to change maybe for that number to start to inflect here in the future?
Stuart Winston: Yeah. I mean, like I said in my comments, there is still there is heavy competition from long tail lines from London is starting to creep into some other liability occurrence, long tail lines. Depressing pricing across the market for construction lines of business. We are starting to see some more competition around general casualty type business. So it is you know? But there are pockets of opportunity that we can grow and we are going to lean into this.
Dan Cohen: Are you seeing any of that business return to the admitted market at this time or no?
Stuart Winston: There are there are some. There is some flow to the admitted market, but it is not pervasive.
Dan Cohen: Thank you.
Operator: Next question is from Andrew Andersen with Jefferies. Please go ahead. Your line is now open.
Andrew Andersen: Hey. Good morning. You had mentioned in the press release that there was an increase in inbound accounts. I think that was some new language added. But maybe you could just talk about how much of that increase in inbound account is coming from some of the broker engagement that you have been working on versus more competitive pricing?
Stuart Winston: Yeah. it is a little bit of both. We are we sorry. it is Stuart still. it is a little bit of both. We are doing a good job with our idle broker initiative to reengage brokers that have slipped off over the years. We are seeing an increase of flow from them. Our hit ratios stayed roughly the same. Renewal and new business. And, with the growth in submissions, we are just seeing more, accounts bond.
Michael Patrick Kehoe: Andrew, part of why we put that in there is just to you know, explain if you will some of where our confidence in our business model comes from. Right? We wrote a ton of business in that commercial property division as that market went into a crisis. And obviously, crisis is over and rates are coming down pretty dramatically. But the underlying business although obviously we are growing at a slower clip, the business model is still working quite well.
Andrew Andersen: Yep. And some carriers have been pointing to maybe some incremental improvement in claims emergence and loss cost trends even if they are not declaring victory on social inflation by any means. But, you know, what is your current view of the inflation and casualty loss trend landscape?
Salmaan K. Allibhai FCAS MAAA: This is Salmaan. For casualty loss cost trends, we would say that probably mid single digits. It varies by line of business. Social inflation, we because we write smaller accounts and lower limits, I think we have been as exposed to social inflation as some of the other carriers. So we are just not seeing a whole lot of it.
Andrew Andersen: Okay. And maybe just a clarification. When you were explaining the accident, your loss ratio earlier, you kind of mentioned normal variability and some lower losses Was that entirely on short tail property business?
Salmaan K. Allibhai FCAS MAAA: I think I think it is it is across the board. But the short tail lines of business have been performing well for us, especially well for us.
Michael Patrick Kehoe: And Andrew, we are allowing we are being a little more conservative as we have for a couple of years. In slowing down the release of IBNR in the longer tail occurrence business. And allowing it to flow out a little bit more quickly in the short tail lines where there is a lot more certainty around ultimate loss ratios.
Andrew Andersen: Thank you.
Operator: Next question is from Mark Hughes with Truist. Please go ahead. Your line is open.
Mark Hughes: Yeah. Thanks. Good morning. I just wanted to revisit another question on a property pricing and the property cycle. Any kind of granularity you can provide around What you saw in 2Q versus 1Q? Thinking of the ENS data seem to point to Incremental softening in 2Q. I am just trying to understand when or if we can get to a point of some kind of equilibrium and that might stabilize at this lower level? Any thoughts there would be helpful.
Michael Patrick Kehoe: Hey, Mark. This is Mike. I will and then I will flip it over to Stuart for his comments. But eventually, we are going to get to some equilibrium because it is although cat catastrophe losses in particular can be intermittent and kind of unpredictable, They do happen. And I think being disciplined on how we price that business combined with just as a reminder, a very disciplined risk management protocol around concentration of business and the like. We are very confident about what we are doing in that space. But when it happens, think we do not have any insight into that. But we do have some other property oriented underwriting divisions that are seeing growth opportunity.
Stuart Winston: Yeah, Mark, if you look at specialized areas like agribusiness property, we are seeing growth there. that is more stable market. Our small business property is definitely more stable than large shared and layered deals. it is been a much more consistent market over the over the last year and a half, 2 years. Inland Marine. Inland Marine. We are starting to see a little more competition in inland marine, but that is we have 5 buckets of products in that division. So it is out. But yeah, there is no telling. If the wind blows, we will be at a position. But I think people are starting to get to the floor of their pricing for property, which is just that is there is still pressure from London.
Mark Hughes: Yeah. Okay. You touched on the current accident year. Number, which was quite good in the quarter. You know, I think you have been as I read the your results, the property has been more profitable than casualty you know, but the mix has been changing here. What do you what should we think about the underlying current accident year loss ratio given the mix shift out of property in the casualty? Should it drift up? Or is this kind of level sustainable?
Salmaan K. Allibhai FCAS MAAA: Mark, this is Salmaan. it is hard to say. It could drift up over time. But yes, like I alluded to earlier, I mean the losses are coming in below our expectations. And so we feel good about where we are booking the loss ratios right now. And we feel very good about the level of concern conservatism in the IBNR, the reserves. Which is a positive indicator for future loss ratio performance.
Mark Hughes: Then 1 final 1, if I might. The buyback, pretty meaningful number this quarter. As you think about it on a go forward basis, if you are maintaining you know, moderate top line growth, Is that gonna be something that you will continue to lean into or how do you think about the pacing there?
Michael Patrick Kehoe: Yeah. Mark, this is Mike. We are gonna continue to lean into it. You recall, I guess about a year and a little over a year ago, we had our first buyback authorization of $100 million that we exhausted. We did a $250 million authorization after that, that we are I think we have $80 million or so left on. And then this new $250 million authorization. So that is our principal capital allocation strategy. Obviously, we pay a small dividend But as growth accelerates in the future, we will obviously lean back into growth. That would be our first priority. But in this interim phase where growth is a little bit more limited, we think this is a wise use of capital given our confidence in the business model and future profitability and price appreciation.
Mark Hughes: Alright. Thank you.
Operator: Next question is from Daniel Cohen with BMO. Please go ahead. Your line is open.
Dan Cohen: Alright. Thanks for showing me back in. Maybe just on the product expansion that you mentioned in your prepared remarks, just you know, how has that contributed to growth over the past year or so and maybe the potential growth uplift going forward on those new products and whatnot? Thanks.
Stuart Winston: Yeah, Dan. it is Stuart Winston. Yeah. So when we roll out new products and new enhancements, we never want to be in the market that jumps in feet first and to a market and grows like a weed. it is always gonna be a crawl, walk, run pace to grow. So it they are the new products are creating growth. They are driving, submissions. They are driving, new premium. But it is but it is gonna be it will be a slow growth. And as the market turns, we will ramp up and go from there.
Michael Patrick Kehoe: Operator, it looks like that is the end of the questions.
Operator: Yes. There are no further questions at this time. We have reached the end of our Q&A. I will now turn the call back to Michael Patrick Kehoe.
Michael Patrick Kehoe: Okay. Well, thanks, everybody, for participating. I wanna thank all the Kinsale employees for their tremendous effort in driving these good results and we look forward to speaking with everybody again at the end of the next quarter. Have a great day.