Kinsale Capital Group, Inc.

Before we get started, let me remind everyone that through the course of this teleconference, Kin Sales 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 2020 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 third quarter results. Kinsale Management may also reference a 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 call over to Kinsale's President and CEO, Michael Kehoe. Please go ahead, sir.

Thank you, Operator, and good morning, everyone. We appreciate your joining us on the call today. We will follow our usual format with a brief introduction from me, then Brian Petrucelli, Kinsale's Chief Financial Officer and Brian Haney, Kinsale's Chief Operating Officer, will each provide some additional commentary, and then we'll move on to any questions from any of you. Kinsale's operating earnings for the third quarter of 2021 were $1.59 per diluted share, a significant increase from the third quarter of 2020. Gross written premiums, the gross written premium, rather, was up 36.5 percent for the quarter. The company posted a 75.7% combined ratio for the quarter and 78.1% combined ratio for the nine months. Our operating return on equity for nine months was 19.8%. Multiple years of significant rate increases combined with our disciplined underwriting and low-cost model is allowing for meaningful margin expansion over our long-term guidance of a 15% operating return on equity. And we expect to continue to run well ahead of that 15% goal. Our catastrophe loss from Hurricane Ida was $4.6 million net of tax. This relatively modest loss in light of the severity of the storm is consistent with our CAT experience over the last 10 years. We do rate CAT exposed property business through our personal lines and our commercial property books, and we think the margins in that business are compelling. But we also seek to limit the volatility of the business through a combination of good underwriting, strict limits on the concentration of business, and a comprehensive reinsurance program. The relatively higher CAT loss figure from the third quarter of 2020 compared to the third quarter of 2021 was mostly due to the occurrence of multiple events last year. We continue to be optimistic about market trends and prospects for our business. Our own numbers remain strong and our reserves are conservatively stated. In contrast, there was lots of commentary at a recent industry conference about casualty reserve issues among some weaker competitors and the lack of returns on property business really for the whole P&C industry over the last three to five years. Both of these examples were cited as reasons, among other things, for the robust pricing cycle to continue. Brian Haney will provide some additional commentary on our own experience here in a moment. As we mentioned last quarter, we expect to consider borrowing some additional money next year in 2022 should we need any capital to fund our growth. Our debt-to-total capital ratio is about 6 percent today, And the longer-term goal is for that to approach 20%. Additional financial leverage should be helpful to our returns. I'll now turn the call over to Brian Petruzzelli. Brian.

Thanks, Mike. Just another nice quarter with strong operating results continuing to be driven by solid premium growth, favorable loss experience, and disciplined expense management. We reported net income of $36.6 million for the third quarter of 2021. representing an increase of 146% compared to $14.9 million last year due primarily to higher earned premium, lower CAT losses, and net favorable loss reserve development. Net operating earnings increased by 282% up to $36.7 million from $9.6 million in the third quarter of last year. The company generated underwriting income 38.1 million and a combined ratio of 75.7% for the quarter, compared to 2.9 million and 97.3% last year, with improvements to both the loss and expense ratios. The combined ratio for the third quarter of 2021 included 5.9 points from net favorable prior year loss reserve development and 3.8 points from CAT losses, primarily from Hurricane Ida. compared to 2.8 points of favorable loss reserve development and 15.4 points of CAT losses last year. Our current accident-year loss ratio, exclusive of CAT losses, decreased in recognition of ongoing favorable pricing trends that Mike previously touched on. The 20% expense ratio for this quarter continues to benefit from some economies at scale, given that our earned premiums are growing faster than our operating expenses. and from slightly lower relative net commissions as a result of a shift in the business, shift of the mix of business, to lines that are subject to reinsurance and where we receive seating commissions. Although it is possible that we'll continue to achieve a modest level of additional economies of scale with some variability from quarter to quarter, we believe that an expense ratio in the low to mid-20s to be sustainable over time. Our effective income tax rate for the first nine months of 2021 was 18.9% compared to 12.8% last year, and higher primarily as a result of lower tax benefits from stock compensation activity this year. A&R Life operating return on equity was 19.8% for the first nine months of the year, and again, as Mike mentioned, ahead of our mid-teens guidance. Gross written premiums were approximately $198 million for the quarter, representing a 36.5% increase over last year due to the continuing favorable market conditions and our superior service standards. On the investment side, net investment income increased by 15.5% over the third quarter last year, up to $8.1 million from $7 million last year. Annualized gross investment returns excluding cash and cash equivalents was 2.5% for the year so far compared to 3% last year. Diluted operating earnings per share was $1.59 per share for the quarter compared to 42 cents per share last year. And with that, I'll pass it over to Brian Haney. Thanks, Brian. As mentioned earlier, premium grew 36.5% in the third quarter, down from 45% in the second quarter, but roughly consistent with the growth rates in the first quarter and the fourth quarter of last year. The increase is generally driven by increasing submissions, rate increases, as well as economic growth, which drives up exposure bases. Every one of our divisions was up for the quarter, led by our general casualty division, which had been particularly hard hit by the lockdowns in 2020. Reopening up the economy and the robust economic growth is still providing us a significant boost. Submission growth was in the low teens in the third quarter. As for rates, we continue to push them up in response to market conditions. As a reminder, we have a very heterogeneous book of business, which complicates reducing all the rate movement to one single number. But that all being said, we see rates being up in the low teens and the aggregate during the third quarter, generally consistent with the past several quarters. The conditions that have driven the market hardening still exist, so we do not expect a change to the market in the near term. We are paying close attention to inflation. At this point, we feel that the rate increases we are achieving are an excess of lost cost trend, and therefore we should be building additional margin. At our recent investor conference, I touched on several advantages Kinsale has over its competitors. Our sole focus on E&S, our superior technology, and our meaningful expense ratio advantage. Another advantage has emerged during COVID. We are one of the few, maybe the only, surplus lines insurer that has been fully in the office in person five days a week. We came back to the office in person last October. We have to hire and train a lot of people to keep up with the growth, and we find that teaching and learning is just better in person. Also, we feel like you can only absorb the company culture if you actually see your coworkers face-to-face. Our competitors are now going on their second year of attempting to recruit and train people via Zoom. It's just not a good way to train people, period. People don't learn as well remotely, and they don't pick up the company culture remotely. By being in person, we've avoided the learning loss that you are seeing in academics and in business that goes hand in hand with remote learning. This is a significant advantage for us in terms of our ability to train new staff and execute our plan. In summary, we continue to be optimistic. We are producing truly extraordinary results, and the market conditions continue to favor us. Our business model works well in any market, hard or soft or in between, but the current market conditions are really excellent, and we are working hard to make the most of them. And with that, I'll turn it back over to Mike.