Kinsale Capital Group, Inc.

Hello. Before we get started, let me remind everyone that through the course of the teleconference, Kinsales Management may make comments that reflect tensions, 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 8K with the Securities and Exchange Commission that contains the press release announcing its fourth 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 this over to Kinsale's President and CEO, Mr. Michael Kehoe. Please go ahead, sir.

Thank you, Operator, and good morning, everyone. Thank you for joining us on the call. With me today are Brian Petrucelli, Kinsale's CFO, and Brian Haney, Kinsale's COO. After comments from each of us, we'll turn to your questions. Concealed operating earnings for the fourth quarter of 2021 were $1.76 per diluted share, a 54% increase from $1.14 in the fourth quarter of 2020. Gross written premium was up 36% for the quarter. The company posted a 74.5% combined ratio for the quarter and 77.1% combined ratio for the year, and our operating ROE for 2021 was 20.8%. As we've discussed in prior calls, sales results are being driven principally by our unique business model of focusing on smaller accounts within the ENS market, controlling the underwriting and the claim handling process instead of outsourcing it, and using our advanced technology to operate at a much lower cost structure than our competitors. An additional tailwind has been the state of the overall E&S market, which grew by double digits in 2021 for the fourth year in a row. Strong growth combined with opportunistic rate increases is having a favorable impact on our margins, with our operating ROE of almost 21% in 2021. well above our mid-teens guidance. Surplus Line's stamping office tax data that was just released for January of 2022 showed the overall E&S market off to a strong start in the new year with double-digit premium growth. Likewise, there seemed to be a number of competitors struggling with adverse development from prior year loss reserves, and the combination of these two data points and the confidence we have in our own business model give us a sense of optimism about 2022, both from a growth and a profitability standpoint. Like everyone, we're seeing the impact of inflation in the economy. Most of our policies are priced using an inflation-sensitive measure like revenue or payroll. As an underlying business adjusts its pricing because of inflation, our insurance premiums adjust as well. In addition, we manage profitability of our underwriting operation carefully. and make regular adjustments to our technical pricing to stay ahead of loss trend. And finally, our rate increases have been running well ahead of inflation for several years now, putting ConSale in a strong position regarding both profitability and the strength of our loss reserves. Investors should have confidence in ConSale's reserve position and our overall balance sheet. And now I'll turn the call over to Brian Petrucelli.

Thanks, Mike. Just another solid quarter driven by strong premium growth, favorable loss experience, and disciplined expense management. As Mike said, we reported net income of $48.4 million for the fourth quarter of 2021, representing an increase of 27% when compared to $38.2 million last year, and due primarily to higher-earned premium, lower CAT losses, and lower relative expenses. Net operating earnings increased by approximately 55% up to $41 million from $26 million in the fourth quarter of last year. The company generated underwriting income of $42 million and a combined ratio of 74.5% for the quarter compared to $22 million and 81.6% last year with improvements to both the loss and expense ratios. The combined ratio for the fourth quarter of 2021 included four points from net favorable prior year loss reserve development and no CAT losses compared to 3.1 points of favorable loss reserve development and 5.1 points from CAT losses last year. The 21.4% expense ratio for this quarter continues to benefit from some economies of scale with earned premiums that are growing faster than our operating expenses. and from slightly lower relative net commissions as a result of a shift in the mix of business to lines that are subject to reinsurance and where we receive seeding commissions. Although it's possible that we'll continue to achieve a modest level of additional economies of scale with some variability from quarter to quarter, we believe an expense ratio in the low to mid-20s to be sustainable over time. Our effective income tax rate for the year was 19.1% compared to 11.9% last year, and higher primarily as a result of lower tax benefits from stock compensation activity this year. Operating return on equity was approximately 21% for the year, and again, as Mike mentioned, ahead of our mid-teens guidance. Gross written premiums were approximately $204 million for the quarter, representing a 36% increase over last year. On the investment side, net investment income increased by 32% over the fourth quarter last year, up to $8.6 million from $6.5 million last year as a result of continued growth in the investment portfolio. Analyzed gross investment returns, excluding cash and cash equivalents, was 2.5% for the year compared to 2.9% last year. And the lastly, diluted operating earnings per share was $1.76 per share for the quarter compared to $1.14 per share last year. And with that, I'll pass it over to Brian Haney. Thanks, Brian.