Kinsale Capital (KNSL) - 2024 Q3 - Quarterly Results

Kinsale Capital Group Third Quarter 2024 Results Kinsale Capital Group reported strong Q3 2024 financial performance with significant growth in earnings, premiums, and investment income Financial Highlights Kinsale Capital Group achieved substantial Q3 2024 growth in diluted EPS, premiums, and investment income despite higher catastrophe losses Q3 2024 vs Q3 2023 Performance Summary | Metric | Q3 2024 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | Diluted EPS | $4.90 | $3.26 | +50.3% | | Diluted Operating EPS | $4.20 | $3.31 | +26.9% | | Gross Written Premiums | $448.6 million | $377.8 million | +18.8% | | Net Investment Income | $39.6 million | $27.1 million | +46.4% | | Underwriting Income | $86.9 million | $72.4 million | +20.0% | | Combined Ratio | 75.7% | 74.8% | +0.9 pts | Net Income and Catastrophe Losses (After-Tax) | Period | Net Income | Catastrophe Losses | | :--- | :--- | :--- | | Q3 2024 | $114.2 million | $10.8 million | | Q3 2023 | $76.1 million | $0.9 million | | Nine Months 2024 | $305.7 million | $13.9 million | | Nine Months 2023 | $204.7 million | $3.3 million | - The company's strategy focuses on disciplined underwriting and technology-enabled low costs, contributing to a strong combined ratio of 75.7% despite 3.8 points of net catastrophe losses in the quarter[2] Results of Operations Operational results demonstrated strong underwriting, significant investment income growth, and improved financial metrics Underwriting Results Underwriting results showed strong premium growth and an improved expense ratio, with a combined ratio of 75.7% impacted by catastrophe losses Gross Written Premiums Growth | Period | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Third Quarter | $448.6 million | $377.8 million | +18.8% | | First Nine Months | $1.4 billion | $1.2 billion | +21.6% | Underwriting Ratios (Q3) | Ratio | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Loss Ratio | 56.1% | 53.9% | | Expense Ratio | 19.6% | 20.9% | | Combined Ratio | 75.7% | 74.8% | - The Q3 2024 loss ratio included 3.8 points of net catastrophe losses, primarily from Hurricanes Helene, Francine, and Beryl, and Midwest tornadoes, compared to negligible catastrophe losses in Q3 2023[5] - Results for Q3 2024 included $10.1 million (2.8 points) of net favorable development of loss reserves from prior accident years, compared to $9.1 million (3.2 points) in Q3 2023[5][10] Investment Results Investment results significantly improved in Q3 2024, with net investment income growing 46.4% due to strong cash flows and higher rates Net Investment Income Growth | Period | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Third Quarter | $39.6 million | $27.1 million | +46.4% | | First Nine Months | $108.4 million | $72.0 million | +50.7% | - The investment portfolio grew to $4.0 billion as of September 30, 2024, up from $3.1 billion at year-end 2023, fueled by a 17.7% increase in net operating cash flows for the first nine months of 2024[13] - The annualized gross investment return for the first nine months of 2024 was 4.3%, compared to 3.9% for the same period in 2023[13] Other Financial Information The effective tax rate decreased, while stockholders' equity grew to $1.4 billion and book value per share increased to $61.62 Stockholders' Equity and Book Value | Metric | Sept 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Stockholders' Equity | $1.4 billion | $1.1 billion | | Book Value Per Share | $61.62 | $46.88 | - The annualized operating return on equity was 28.2% for the first nine months of 2024, a decrease from 32.1% in the prior year period, mainly due to higher average stockholders' equity[14] Corporate Developments The Board of Directors authorized a new share repurchase program of up to $100.0 million of common stock in October 2024 - The company's Board of Directors authorized a share repurchase program for up to $100.0 million of its common stock[15] Non-GAAP Financial Measures The company uses non-GAAP measures like Net Operating Earnings and Underwriting Income to clarify business performance, with detailed reconciliations Reconciliation of Net Income to Net Operating Earnings (Q3) | (in thousands) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Income | $114,229 | $76,115 | | Adjustments, after taxes | ($16,318) | $1,108 | | Net Operating Earnings | $97,911 | $77,223 | Reconciliation of Net Income to Underwriting Income (Q3) | (in thousands) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Income | $114,229 | $76,115 | | Less: Investment results, taxes, other | ($27,367) | ($3,672) | | Underwriting Income | $86,862 | $72,443 | Financial Statements The financial statements provide detailed unaudited consolidated income statements and balance sheets, reflecting the company's financial position Consolidated Statements of Income The unaudited consolidated income statement details Q3 2024 revenues and expenses, showing total revenues of $418.1 million and net income of $114.2 million Q3 2024 Income Statement Highlights (in thousands) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Earned Premiums | $348,752 | $281,502 | | Total Revenues | $418,058 | $314,367 | | Total Expenses | $273,660 | $218,874 | | Income Before Taxes | $144,398 | $95,493 | | Net Income | $114,229 | $76,115 | | Diluted EPS | $4.90 | $3.26 | Consolidated Balance Sheets The unaudited consolidated balance sheet shows significant growth in total assets to $4.73 billion and stockholders' equity to $1.43 billion Balance Sheet Highlights (in thousands) | Line Item | Sept 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Investments | $3,847,709 | $2,966,952 | | Total Assets | $4,732,243 | $3,772,974 | | Total Liabilities | $3,297,294 | $2,686,142 | | Total Stockholders' Equity | $1,434,949 | $1,086,832 |