Kinsale Capital Group, Inc. (KNSL) Q1 2025 Earnings Summary

Executive Summary

Q1 2025 delivered strong profitability despite wildfire losses: combined ratio at 82.1% with 3.9 points of favorable prior-year development and 6.0 points of catastrophe losses; diluted operating EPS rose 6% year over year to $3.71 even as GAAP EPS fell to $3.83 on higher cat losses .
Against S&P Global consensus, operating EPS materially beat (+13.6%) while total revenue was a modest miss (-0.4%); estimates coverage was broad (10 EPS, 6 revenue) [Values retrieved from S&P Global]*.
Gross written premiums grew 7.9% to $484.3M; Commercial Property division declined 18.4% YoY on intensified competition and ~20% price declines, while excluding Commercial Property, premiums grew 16.7% YoY .
Investment income surged 33.1% YoY to $43.8M on portfolio growth and low-5% new money yields; book value per share increased to $67.92; cash and invested assets reached $4.3B .
Management flagged a near-term growth headwind in Q2 from Commercial Property seasonality (first-half weighted) but reiterated confidence in sustained best-in-class underwriting returns and low-cost advantage; shares were down >10% premarket on top-line deceleration concerns, making margin resilience a key stock reaction catalyst .

What Went Well and What Went Wrong

What Went Well

Operating EPS increased 6% YoY to $3.71; combined ratio of 82.1% with 3.9 points favorable prior-year development supports underwriting discipline: “strong profitability…even with the significant catastrophe event” .
Investment income rose 33.1% YoY to $43.8M; annualized gross return 4.3% with new money yields in low-5% and book yields ~4.5%, signaling continued tailwind from rates .
Technology-enabled low-cost model remains a durable moat: “We are the low-cost leader…profit comes first, growth second…best-in-class returns” .

What Went Wrong

GAAP diluted EPS fell 9.7% YoY to $3.83 due to higher catastrophe losses (6.0 points in the loss ratio; Palisades wildfire ~$41M gross, ~$22M net pretax) .
Commercial Property division contracted 18.4% YoY with ~20% rate declines and increased competition from standard carriers and MGAs; overall rates down ~1% .
Expense ratio stable at 20.0% but combined ratio worsened vs Q4 2024 (73.4% → 82.1%) as cat losses rose (2.2 points → 6.0 points) and mix effects impacted the loss ratio .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Total Revenues ($USD)	$372,791,000	$412,123,000	$423,397,000
Net Earned Premiums ($USD)	$309,518,000	$359,739,000	$365,790,000
Net Investment Income ($USD)	$32,933,000	$41,863,000	$43,819,000
Underwriting Income ($USD)	$65,071,000	$97,889,000	$67,461,000
Loss Ratio (%)	58.8%	52.3%	62.1%
Expense Ratio (%)	20.7%	21.1%	20.0%
Combined Ratio (%)	79.5%	73.4%	82.1%
Diluted EPS ($)	$4.24	$4.68	$3.83
Diluted Operating EPS ($)	$3.50	$4.62	$3.71

Segment/Division Indicators

Metric	Q1 2024	Q1 2025
Gross Written Premiums ($USD)	$448,644,000	$484,275,000
YoY Growth (%)	—	+7.9%
Commercial Property Division YoY Growth (%)	—	-18.4%
Ex-Commercial Property YoY Growth (%)	—	+16.7%

KPIs

KPI	Q1 2024	Q4 2024	Q1 2025
Favorable Prior-Year Reserve Development ($USD)	$8,446,000	$9,583,000	$14,649,000
Favorable PY Development (points)	2.7 pts	2.6 pts	3.9 pts
Catastrophe Losses (points)	0.2 pts	2.2 pts	6.0 pts
Annualized Operating ROE (%)	28.9%	29.6%	22.5%
Net Operating Cash Flows ($USD)	$210,400,000	—	$229,800,000
Book Value Per Share ($)	—	$63.75	$67.92
Cash & Invested Assets ($USD)	—	$4.1B	$4.3B
Share Repurchases ($USD)	—	$10.0M in Q4 2024	$10.0M in Q1 2025

Results vs S&P Global Consensus (Q1 2025)

Metric	Consensus	Actual	Surprise
Operating EPS (diluted) ($)	3.26476*	3.71	+0.45, +13.6% (Beat)*
Total Revenues ($USD)	424,935,830*	423,397,000	-$1.54M, -0.4% (Miss)*
EPS Estimates Count	10*	—	—
Revenue Estimates Count	6*	—	—

Note: Primary EPS Consensus Mean reflects S&P Global’s “Primary EPS”; the “actual” recorded by S&P Global aligns with diluted operating EPS in company reporting for Q1 2025. Values retrieved from S&P Global*.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Gross Written Premium Growth	Q2 2025	None	Expect headwind from Commercial Property seasonality; 2024 CP was disproportionately first-half; Q2 ~35% of CP last year	Qualitative lowered near term
Commercial Property Pricing	2025	None	Average rates down ~20%; intensified competition (standard carriers, MGAs, E&S)	Lower pricing, increased competition
Reinsurance Retention	Mid-2025	None	May modestly increase net retention as scale grows (casualty treaties renew in June)	Potentially raised retention
Share Repurchases	Ongoing	$100M authorization (Oct 2024)	Routine modest quarterly repurchases (~$10M), opportunistic larger buys possible	Maintained with opportunistic flexibility
Dividend	Q1 2025	Prior $0.15 (implied)	Declared $0.17 per share; payable Mar 13, 2025	Raised dividend level

No formal numerical guidance for revenue, margins, OpEx, OI&E, or tax rate; effective tax rate was 20.6% (higher YoY on lower option exercises) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
Pricing & Competition in Commercial Property	Favorable yet increasingly competitive pricing environment; strong submission flow	Rates down ~20% in Commercial Property; competition from standard carriers/MGAs; property divisions -8% while rest +15%	Normalizing from peak pricing; competition rising
Catastrophe Exposure & Risk Management	Q3: 3.8 points cat; Q4: 2.2 points cat; combined ratios 75.7%/73.4%	6.0 points cat (Palisades fire); disciplined underwriting, robust reinsurance, strict limits	Higher cat impact in Q1; model proved resilient
Casualty Loss Trends & Reserves	Combined ratios strong; reserve releases supporting results	More conservative assumptions in construction liability; booking mid-80s for 2020–2024 accident years	Increased reserve conservatism
Personal Lines Expansion (California)	Not highlighted in Q3/Q4 press releases	High-value homeowners growth opportunity, especially in California	Expanding personal lines footprint
Investment Income Tailwind	Net investment income +46% YoY in Q3; +38% YoY in Q4	+33% YoY; new money yields low-5%, book ~4.5%	Continued strength, supportive rates
Macro/Tariffs	Not a focus in press releases	Insurance demand resilient in downturn; tariffs could lift building costs but margins/reserves/low-cost model mitigate impact	Monitoring; company positioning confident
Reinsurance Strategy	Not detailed in press releases	Possible higher net retention with June casualty renewals	Incrementally higher net over time

Management Commentary

“Our business continues to produce exceptional profitability through the market cycle…disciplined underwriting and technology-enabled expense management” — Michael P. Kehoe, CEO .
“Operating earnings per share increased by 6%…combined ratio of 82%…even with the significant catastrophe event” — Michael Kehoe .
“Net investment income increased by 33.1%…new money yields…low 5% range with book yields around 4.5%” — Bryan Petrucelli, CFO .
“Property-related divisions shrank by 8% while the rest of the company grew 15%…Commercial Property rates down about 20%…new business submissions up 11%” — Brian Haney, President & COO .
“We are the low-cost leader…reserves conservatively stated…profit comes first, growth second” — Michael Kehoe .

Q&A Highlights

Top-line deceleration vs margin durability: Investors focused on growth headwinds; management emphasized low-cost, disciplined underwriting and conservative reserves to sustain best-in-class returns despite competition; shares down >10% premarket .
Macro/tariff resilience: Insurance demand is compulsory; KNSL expects to grow through downturns; tariffs could raise costs, but strong margins, conservative reserves, and underwriting controls mitigate impact .
Capital deployment: Routine modest buybacks (~$10M/qtr) with opportunistic flexibility; dividend maintained and gradually increased .
Loss ratio dynamics: Underlying loss ratio strength driven by lower reported losses and mix (short-tail property vs long-tail casualty) .
Reinsurance retention: Potential to take “a little bit more net” with scale; balancing profitability and volatility ahead of June casualty treaty renewals .
Pricing/competition: Large commercial property pricing down ~20% on average; submissions and hit rates stable; appetite unchanged but pricing discipline maintained .

Estimates Context

EPS: Diluted operating EPS of $3.71 materially beat S&P Global Primary EPS consensus of $3.26476 (+13.6%); 10 EPS estimates contributed to consensus [Values retrieved from S&P Global]*.
Revenue: Total revenues of $423.4M modestly missed consensus $424.9M (-0.4%); 6 revenue estimates contributed [Values retrieved from S&P Global]*.
Implications: Expect upward revisions to EPS and underwriting profitability assumptions; revenue trajectory likely tempered near term by Commercial Property normalization and seasonality.

Key Takeaways for Investors

Margin resilience outweighs near-term growth headwinds: Favorable prior-year development (3.9 pts) and disciplined underwriting offset cat volatility; combined ratio remains best-in-class despite 6 pts cat .
Near-term growth pressure concentrated in Commercial Property: ~20% rate decline and competition drive -18.4% division growth; Q2 likely a headwind due to first-half weighting; ex-Commercial Property growth remains solid (+16.7%) .
Investment income tailwind persists: 33.1% YoY increase; low-5% new money yields and 3.0-year duration support continued contribution to ROE and book value accretion .
Reserve conservatism in casualty: Construction liability booked in mid-80s for recent accident years; reduces downside risk and supports sustainable ROE targets .
Capital returns steady: Ongoing modest buybacks (~$10M) and higher dividend ($0.17) provide return of capital while preserving capacity for opportunistic deployment .
Trading lens (short term): Shares reacted negatively to slower premium growth; upside catalysts include continued EPS beats from underwriting/investment income and signs of competition normalizing in Commercial Property .
Medium-term thesis: Low-cost model, data-driven underwriting, conservative balance sheet, and expanding personal lines (e.g., California high-value homeowners) underpin durable growth and superior profitability through cycles .

S&P Global disclaimer: All figures marked with an asterisk (*) are values retrieved from S&P Global.