Kinsale Capital Group Inc.

Company Overview

Business Model: Kinsale Capital Group, Inc. is a property and casualty insurance company exclusively focused on the excess and surplus lines ("E&S") market in the U.S. The Company leverages its underwriting expertise to provide coverage for hard-to-place risks, selling insurance products across all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, and the U.S. Virgin Islands. Distribution primarily occurs through a network of independent insurance brokers, with a core client focus on small- to medium-sized accounts.

Market Position: The Company maintains an exclusive focus on the E&S market, which has historically demonstrated lower loss ratios, higher margins, and faster direct premium growth compared to the standard property and casualty industry. Kinsale Capital Group, Inc. reported a market share of approximately 1.5% of the total E&S market, which was estimated at $129.8 billion in direct written premiums in 2024. Key differentiators include effective leveraging of proprietary technology, vigilant expense control, and integrated underwriting and claims operations, resulting in a significantly lower expense ratio compared to competitors. The Company's insurance subsidiary, Kinsale Insurance Company, holds an "A" (Excellent) financial strength rating from A.M. Best.

Recent Strategic Developments: In the fourth quarter of 2025, the Company substantially completed construction of its new corporate headquarters, which was subsequently placed into service. The former headquarters and related assets were reclassified to real estate investments. Kinsale Capital Group, Inc. also initiated a company-wide effort to introduce AI-enabled tools to assist with research, analysis, and routine business processes, with a focus on integrating AI-enabled functionality into its proprietary technology platform and data warehouse to enhance efficiency and underwriting discipline.

Geographic Footprint: The Company sells policies in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, and the U.S. Virgin Islands. In 2025, the primary states by gross written premiums were California (19.7%), Florida (15.3%), and Texas (14.0%).

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 44.9%
• Operating Margin: 24.1%
• Net Margin: 26.9%

Investment in Growth:

• Capital Expenditures: $53,685k
• Strategic Investments: The Company utilized funds from operations to purchase $2.5 billion in fixed-maturity securities, primarily mortgage- and asset-backed securities and corporate bonds. Additionally, $183.2 million was invested in equity securities, mainly common stocks and exchange-traded funds.

Business Segment Analysis

Excess and Surplus Lines Insurance Segment

Financial Performance:

• Gross Written Premiums: $1,977,171k (+5.7% YoY)
• Key Growth Drivers: The increase in gross written premiums was primarily driven by strong submission flow from brokers across most divisions, excluding the Commercial Property Division.

Product Portfolio:

• The Company writes a broad array of insurance coverages for unusual or hard-to-place risks, with a core client focus on small- to medium-sized accounts.
• The average premium per policy written in 2025 was $13,400, or $14,000 excluding the personal insurance division.
• In 2025, gross written premiums were composed of 70.7% casualty and 29.3% property. Commercial lines represented 97.0% and personal lines 3.0% of gross written premiums.

Market Dynamics:

• The Company maintains a contrarian risk appetite, willing to offer terms on risks requiring more extensive underwriting that some competitors may decline, often leading to better returns due to reduced competition.
• The E&S market's regulatory freedom of rate and form allows for flexibility in restricting coverage and charging higher rates, enabling better management of volatility associated with catastrophe risk.

Sub-segment Breakdown (Gross Written Premiums for 2025):

• Commercial Property: $374,451k (-17.9% YoY). Underwrites first-party coverage for manufacturing facilities, government and municipal buildings, professional buildings, offices, general commercial properties, vacant properties, and entertainment and retail facilities.
• Excess Casualty: $276,998k (+13.0% YoY). Underwrites excess liability over risks in general casualty, construction, products liability, and small business casualty divisions, including over the Company's primary policies and those of other insurers.
• General Casualty: $207,888k (+22.9% YoY). Underwrites general liability and liquor liability for hospitality, habitational, and retail risks with similar premises liability loss exposures.
• Small Business Casualty: $202,412k (+3.5% YoY). Underwrites commercial general liability for smaller risks, typically businesses with revenues not exceeding $2.5 million, focusing on artisan contractors and premises-related exposures.
• Construction: $147,601k (-0.6% YoY). Underwrites commercial general liability coverage for contractors involved in new residential construction, residential remodeling and renovation, and commercial construction.
• Small Business Property: $102,413k (+33.4% YoY). Underwrites Commercial Property coverage for smaller properties, generally with total insured values not exceeding $5.0 million, including banks, daycare centers, strip malls, and greenhouses.
• Allied Health: $96,982k (+16.8% YoY). Underwrites commercial general liability, professional liability, and excess liability for allied health and social service risks such as assisted living facilities, home health care agencies, and outpatient medical facilities.
• Entertainment: $70,049k (+27.0% YoY). Underwrites commercial general liability for small-to-medium sized entertainment classes, including bowling alleys, campgrounds, escape rooms, fitness centers, museums, and paintball facilities.
• Products Liability: $67,883k (+1.3% YoY). Underwrites commercial general liability for manufacturers, distributors, and importers of a wide array of consumer, commercial, and industrial products.
• Commercial Auto: $48,721k (+39.0% YoY). Underwrites garage liability and excess auto coverages.
• All other commercial lines: $321,984k (+11.2% YoY).
• High Value Homeowners: $36,062k (+34.3% YoY). Underwrites first-party homeowners' coverage on homes valued above $1.0 million on a primary and excess basis.
• Personal Insurance: $23,727k (+7.4% YoY). Writes homeowners' coverage on manufactured homes with catastrophe exposure due to coastal location.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $90.0 million, representing 212,036 shares, were repurchased in 2025.
• Dividend Payments: $15.8 million was paid in dividends in 2025, equating to $0.68 per common share.
• Future Capital Return Commitments: In December 2025, the Board of Directors authorized a new share repurchase program for up to $250.0 million of common stock.

Balance Sheet Position:

• Cash and Equivalents: $163,361k
• Total Debt: $224,397k
• Net Cash Position: -$61,036k (Net Debt)
• Credit Rating: Kinsale Insurance Company holds an "A" (Excellent) financial strength rating from A.M. Best.
• Debt Maturity Profile:
  • Credit Facility: $51.0 million outstanding, maturing July 22, 2027. Interest is based on 3-month Adjusted Term SOFR plus a margin of 1.625%, with a weighted-average annual interest rate of 5.83% in 2025.
  • 5.15% Series A Senior Notes: $125.0 million outstanding, maturing July 22, 2034. Annual principal payments of $25.0 million commence on July 22, 2030.
  • 6.21% Series B Senior Note: $50.0 million outstanding, maturing July 22, 2034. Annual principal payments of $10.0 million commence on July 22, 2030.
  • The Company was in compliance with all financial covenants as of December 31, 2025.

Cash Flow Generation:

• Operating Cash Flow: $1,043,738k
• Free Cash Flow: $990,053k

Operational Excellence

Production & Service Model: The Company operates on a proprietary technology platform designed for high efficiency, accuracy, and speed in underwriting and quoting. This digital environment minimizes administrative costs and enables underwriters to respond to many submissions within 24 hours. Kinsale Capital Group, Inc. maintains full control over its underwriting process, individually assessing each account and never delegating authority to external agents or brokers.

Supply Chain Architecture: Key Suppliers & Partners:

• Reinsurers: The Company partners with highly-rated reinsurers, all holding A.M. Best ratings of "A-" (Excellent) or better. Top reinsurers by recoverable amounts at December 31, 2025, include Munich Reinsurance America, Inc. ($46,276k), General Reinsurance Corporation ($37,875k), and Swiss Reinsurance America Corp. ($30,785k).
• Investment Advisory Firm: An external firm manages the Company's fixed-maturity portfolio and preferred stocks.
• Technology Partners: Third-party vendors are engaged to support various aspects of the cybersecurity program, including continuous threat detection, endpoint detection, anti-malware, penetration testing, and suspicious activity alerting.
• Catastrophe Modeling: Third-party stochastic models are utilized to analyze severe loss risks from natural catastrophes.

Facility Network:

• Corporate Headquarters: The Company owns its executive and insurance offices in Richmond, Virginia, occupying approximately 199,000 square feet of the 262,000 square feet of available office space.
• Research & Development: R&D activities are integrated within the Company, supported by a growing team of actuaries and data scientists, and a company-wide initiative to introduce AI-enabled tools.
• Distribution: The Company's distribution network primarily consists of independent insurance brokers, supplemented by its wholly-owned broker, Aspera Insurance Services, Inc.

Operational Metrics:

• New Business Submissions Processed: Approximately 988,000 in 2025.
• New Business Quote Ratio: 72.0% (711,000 quotes issued from 988,000 submissions) in 2025.
• New Policy to New Submission Ratio: 7.6% (75,000 policies bound from 988,000 submissions) in 2025.
• Claims Adjusters: Approximately 90 claims professionals as of December 31, 2025.
• Open Claims per Claims Adjuster: 100 (excluding catastrophe claims).
• IBNR Reserves: 91.2% of total net loss reserves as of December 31, 2025.
• Long-Term Open Claims: 15.9% of total open claims as of December 31, 2025, were for accident years 2021 and prior.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Channel Partners: The Company primarily distributes its products through a broad network of independent insurance brokers. Its wholly-owned broker, Aspera Insurance Services, Inc., distributed 1.2% of Kinsale Capital Group, Inc.'s premiums in 2025, primarily manufactured housing risks within the personal insurance division.
• Digital Platforms: The Company utilizes a web-based platform approach for application development, including web-based intake and underwriting systems, to streamline broker interactions.

Customer Portfolio: Enterprise Customers: The Company's core client focus is on small- to medium-sized accounts. Customer Concentration: In 2025, the top three brokers accounted for 47.6% of gross written premiums: RSG Specialty, LLC (18.8%), AmWINS Brokerage (17.1%), and CRC Commercial Solutions (11.7%). The top five brokers collectively accounted for 60.6% of gross written premiums.

Geographic Revenue Distribution (2025 Gross Written Premiums):

• California: 19.7% of total revenue
• Florida: 15.3% of total revenue
• Texas: 14.0% of total revenue
• New York: 4.5% of total revenue
• Louisiana: 3.0% of total revenue
• Colorado: 2.6% of total revenue
• New Jersey: 2.6% of total revenue
• Washington: 2.5% of total revenue
• Pennsylvania: 2.1% of total revenue
• Illinois: 2.1% of total revenue
• All other states: 31.6% of total revenue

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The E&S market, where Kinsale Capital Group, Inc. exclusively operates, has historically outperformed the standard property and casualty industry. From 2001 to 2024, the A.M. Best domestic professional surplus lines composite recorded an average net loss and loss adjustment expense ratio of 68.7% and an annual direct premiums written growth of 10.0%, compared to 73.6% and 4.7% for the broader property and casualty industry, respectively. The total E&S market was approximately $129.8 billion in direct written premiums in 2024.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: American International Group, Inc., Berkshire Hathaway Inc., Chubb Limited, Fairfax Financial Holdings Limited, Lloyds of London, Markel Group Inc., RLI Corp., and W. R. Berkley Corporation.

Competitive Response Strategy: Kinsale Capital Group, Inc. aims to expand its presence in the E&S market by leveraging its exclusive focus and high service levels. The Company prioritizes underwriting profitability across market cycles, maintains a contrarian risk appetite by offering terms on complex risks, and continuously invests in technology to drive efficiencies and maintain a low expense ratio.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The Company operates in a cyclical property and casualty insurance industry, with the E&S market experiencing more pronounced fluctuations between soft (price competition, excess capacity) and hard (high premium rates, capacity shortages) markets. Adverse economic factors, including recession, inflation, or high unemployment, could reduce demand for insurance, impact premium levels, and increase claims frequency or severity. Technology Disruption: The Company faces cybersecurity and operational risks, including potential security breaches, data loss, cyberattacks, and IT failures, particularly given its reliance on information technology and third-party service providers. The evolving nature of AI technology also presents risks, including the potential for inaccurate information, bias, or exploitation by malicious actors. Customer Concentration: A significant portion of the Company's gross written premiums is generated through a select group of brokers, with the top three accounting for 47.6% in 2025. The discontinuation of relationships with these key brokers could materially impact gross written premiums.

Operational & Execution Risks

Supply Chain Vulnerabilities: The Company is exposed to reinsurance counterparty credit risk, as reinsurers may fail to honor their obligations due to insolvency, liquidity issues, or disputes, despite not relieving Kinsale Capital Group, Inc. of its primary liability to policyholders. Geographic Concentration: A substantial portion of the Company's insurance business is concentrated in California (19.7% of GWP), Florida (15.3% of GWP), and Texas (14.0% of GWP). Economic downturns or severe weather events in these states could disproportionately affect the Company's financial condition. Capacity Constraints: The Company's ability to underwrite business and manage risk is dependent on obtaining reinsurance coverage at reasonable prices and on adequate terms. An inability to secure such coverage could lead to increased net exposures or a reduction in underwriting commitments.

Financial & Regulatory Risks

Market & Financial Risks: The investment portfolio is subject to interest rate risk, affecting the fair value of fixed-maturity securities and non-redeemable preferred stock, and equity price risk, impacting common stocks and exchange-traded funds. Credit risk is also present in fixed-maturity investments and reinsurance recoverables. Credit & Liquidity: As a holding company, Kinsale Capital Group, Inc.'s ability to pay dividends is largely dependent on distributions from its insurance subsidiary, Kinsale Insurance Company, which are restricted by state insurance laws (maximum $444.3 million in 2026 without regulatory approval). The Company's credit agreements contain financial covenants, and a breach could accelerate debt repayment. Regulatory & Compliance Risks: Kinsale Insurance Company is extensively regulated by state insurance authorities, particularly in Arkansas, its state of domicile. This includes requirements for capital and surplus, licensing, investments, affiliate transactions, and solvency. Federal initiatives, such as the Dodd-Frank Act, NAIC Group Capital Calculation, and ORSA Model Act, also impose compliance burdens. Non-compliance could result in penalties, fines, or operational restrictions.

Geopolitical & External Risks

Geopolitical Exposure: The Company is exposed to severe weather conditions and catastrophes, including hurricanes, tornadoes, earthquakes, and fires. Climate change is identified as a factor that could increase the frequency and severity of such events. Sanctions & Export Controls: The Company is subject to economic and trade sanctions enforced by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury, which prohibits certain transactions with sanctioned entities or countries.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: The Company's core technology areas include a proprietary technology platform, an integrated digital platform, a data warehouse, and web-based systems for underwriting and quoting. It employs an agile methodology and a cloud-first strategy for software development. Innovation Pipeline: Kinsale Capital Group, Inc. continuously invests in maintaining and improving its technology, with a long-standing commitment to developing analytics capabilities through a team of actuaries and data scientists. The Company has expanded its use of artificial intelligence (AI) to enhance automation, efficiency, and risk management, including providing enterprise AI tools to employees and evaluating further integration into its proprietary platform.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Brian D. Haney, the President and Chief Operating Officer, will retire effective March 2, 2026, and will serve as a Senior Advisor to the Company for a one-year term, focusing on investor relations.

Board Composition: The Board of Directors is composed of experienced industry veterans with decades of experience in insurance and financial services.

Human Capital Strategy

Workforce Composition:

• Total Employees: 720 employees as of December 31, 2025, with 711 being full-time.
• Geographic Distribution: All employees are located at the Company's headquarters in Richmond, Virginia.
• Skill Mix: The underwriting department comprises approximately 340 employees, the claims department has about 90 claims professionals with an average of 9 years of industry experience, and the information technology department consists of approximately 140 employees and contractors.

Talent Management: Acquisition & Retention: The Company offers market-competitive compensation and benefit programs, including base salary, performance-based bonuses, and equity grants, to attract and retain high-performing talent within its performance-based culture. Employee Value Proposition: Comprehensive benefits include a company-matched 401(k) plan, educational assistance, medical insurance, company-paid insurance benefits, health savings accounts with employer contributions, flexible spending accounts, paid time off, family leave, and employee assistance programs.

Diversity & Development:

• Development Programs: Employees have access to an Educational Assistance Program, internal courses tailored to specific career paths (e.g., underwriting, claims, IT, reinsurance), and sponsored on-site education courses such as the Chartered Property Casualty Underwriter (CPCU) program.
• Culture & Engagement: The Company implements an annual performance evaluation process for all employees to set goals, plan development, and assess progress. It is committed to fostering a merit-based work environment free from discrimination and has an anti-nepotism policy.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Most of the Company's insurance contracts are written for a one-year term and are repriced annually to reflect changing exposures.
• Economic Sensitivity: The Company's growth and profitability are sensitive to adverse economic factors such as recession, inflation, high unemployment, or lower economic activity, which can lead to fewer policy sales or an increase in claims frequency and severity.
• Industry Cycles: The property and casualty insurance industry is cyclical, characterized by alternating periods of price competition and excess capacity (soft markets) and high premium rates and underwriting capacity shortages (hard markets). The E&S market's cyclicality can be more pronounced, with customers potentially returning to the admitted market during softening conditions.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: Kinsale Insurance Company, domiciled in Arkansas, is subject to extensive state-level regulation in all states where it operates. This includes regulations concerning capital and surplus requirements, licensing, reserve adequacy, statutory accounting, affiliate transactions, dividend limitations, and changes in control. As an E&S insurer, it generally has freedom of rate and form for most of its business. The Company will be subject to the NAIC's Group Capital Calculation (GCC) requirements beginning in 2026 and is subject to the ORSA Model Act as adopted in Arkansas. Trade & Export Controls:

• Export Restrictions: The Company is subject to economic and trade sanctions enforced by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury.
• Sanctions Compliance: Compliance with OFAC's sanctions programs is required, which prohibits certain transactions with sanctioned foreign countries, groups, persons, or entities.

Legal Proceedings: The Company is involved in a material legal proceeding related to a wrongful death claim against Venetian Hills Apartments, LLC, a policyholder of a $1 million general liability policy issued by Kinsale Insurance Company. A jury awarded $140 million in December 2023, but the Georgia Court of Appeals vacated the judgment and ordered a retrial in October 2025. The plaintiff has petitioned the Georgia Supreme Court for review. The Company believes policy exclusions apply and does not expect a material adverse effect on its results or business, having made adequate provision in its existing reserves.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The Company's effective tax rate was 20.6% in 2025, compared to 19.4% in 2024. This rate is lower than the federal statutory rate of 21% primarily due to tax benefits from stock-based compensation and tax-exempt investment income.
• Geographic Tax Planning: Kinsale Capital Group, Inc. files a consolidated U.S. federal income tax return. Kinsale Insurance Company is subject to premium taxes rather than state income taxes. Non-insurance subsidiaries are subject to state income taxes and have generated state net operating loss carryforwards of $215.5 million in 2025, for which a full valuation allowance is established.
• Tax Reform Impact: The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, extended or made permanent various tax provisions from the 2017 Tax Cuts and Jobs Act, but did not have a material impact on the Company's consolidated financial statements.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Kinsale Capital Group, Inc. utilizes reinsurance contracts to manage its exposure to potential large losses.
• Risk Transfer Mechanisms: The Company primarily uses quota-share and excess of loss treaties. Effective June 1, 2025, it purchased catastrophe reinsurance coverage of $250.0 million per event in excess of its $75.0 million per event retention. Including a reinstatement provision, the maximum aggregate loss recovery limit is $500.0 million.
• Catastrophe Risk Management: The Company employs stochastic models to analyze severe loss risks from natural catastrophes, measuring exposure in terms of probable maximum loss (PML) for 100-year and 250-year return periods. Risk mitigation strategies include disciplined underwriting, extensive reinsurance from financially strong counterparties, monthly catastrophe modeling analysis, and limiting geographic concentration of property business.