Kinsale Capital Group, Inc.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. Before we get started, let me remind everyone that through the course of the teleconference, Kinsale's 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 2022 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 third quarter results. Kin Sales 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 the conference over to Kinsale's president and CEO, Mr. Michael Kehoe. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Brian Petrucelli, our CFO, and Brian Haney, our COO, and I will each make a few comments and then move on to any questions that you may have. In the third quarter, 2023, Kinsale's operating earnings per share increased by 103.6%, and gross written premium grew by 33% over the third quarter, 2022. For the quarter, the company posted a combined ratio of 74.8%, and it posted an operating ROE of 32.1% for nine months. The company's strategy of disciplined E&S underwriting and technology enabled low costs drive these results and allows us to generate attractive returns and take market share from competitors at the same time. We believe these advantages have real durability to them and consequently we're optimistic about future prospects for both profitability and growth. The E&S market continues to benefit from the inflow of business from standard companies and from rate increases driven by inflation and tighter underwriting conditions. Brian Haney will offer some commentary on underwriting conditions in a moment. But on the topic of top-line premium growth, I'll note that the fluctuation in our growth rate from the second to the third quarter this year was due to normal quarterly variability and also due to a change in the flow of southeastern wind-driven property accounts from the second to the third quarter. Our growth rate through nine months of almost 46% this year is largely consistent with what we've experienced for the last five years, kind of plus or minus 40% growth year over year. Our near-term view of the E&S market continues to be bullish. Of course, we also like to remind investors that extraordinary growth rates that we've experienced for the last five years are an anomaly in a mature industry like property casualty insurance. Although we are optimistic about ENS market conditions for the balance of 2023 and heading into 2024, we believe the longer term growth rate for ConSale will moderate to the 10 to 20% range as market competition returns to normal in the years ahead. This should always be a concern for investors a P&C insurance company. And as we have stated in the past, at ConSale we strive to set reserves for future claims in a conservative fashion so that we are more likely to have set aside more than enough and are likely to see a steady flow of reserve redundancy as claims are resolved over the years ahead. This focus on conservative reserving is especially important in a time of high inflation. which can stress prior year reserve adequacy, as we've experienced a bit in our 2016 to 2018 accident years on some of our longer tail lines of business. We believe Kinsale's reserves are more conservatively positioned now than at any time in our company's history, and investors should have a high level of confidence in the Kinsale balance sheet. Finally, a quick update on our real estate project. As you recall, we purchased two office buildings and vacant land adjacent to our existing headquarters building for $77.5 million in December of 2022. We closed on the sale of one of those two buildings in the third quarter for $62 million, realizing a small gain in the process. We will begin renovations on the other largely vacant building soon and expect to occupy that within two years. Additionally, we expect to sell other development sites on the adjacent property over the next several years, generating additional return on our investment. And with that, I'll turn the call over to Brian Petrucelli.

Thanks, Mike. Another solid quarter with 33% growth in written premiums, very low CAT activity, and net income and net operating earnings increasing by 130.8% and 103.6% respectively. Mike commented on the 32.1% operating return on equity for the nine months. We do have around $155 million in unrealized losses net of taxes on our fixed income portfolio generated from the higher interest rate environment, and that temporarily reduces our gap equity. Operating return on equity is 27.4% for the nine months when holding our fixed income investments at cost. Again, as we stated in the past, we intend to and have the ability to hold our fixed income investments to maturity. The 74.8% combined ratio for the quarter included 3.2 points from net favorable prior year loss reserve development compared to 5.1 points last year, with less than a half point coming from CAT losses this quarter compared to 12.2 points in the third quarter of last year, primarily from hurricane Ian. The 20.9% quarterly expense ratio continues to benefit from higher seating commissions from the company's casualty and commercial property proportional reinsurance agreements as a result in growth in both of those areas. This benefit was offset slightly by higher variable compensation accruals during the quarter. To support the continued strong top-line growth, we secured an additional $50 million in fixed-rate debt during the quarter that will be used as capital at the insurance company level. This should put us in good capital position for the remainder of 2023 and into 2024. Additionally, we use the proceeds from the real estate sale that Mike previously mentioned to pay down a good chunk of our revolving credit facility. As a result, our debt to total cap ratio decreased to approximately 17.8% from approximately 21% at the end of 2022. On the investment side, net investment income increased by 95.5% over the third quarter last year as a result of continued growth in investment portfolio and higher interest rates, with a gross return of 3.9% for the year to date so far, compared to 2.7% last year. We're continuing to invest new money in shorter duration securities, with new money yields averaging between 5.5% and 6%, and duration decreasing slightly to 2.9 years down from three and a half years at the end of 2022. And lastly, diluted operating earnings per share continues to improve. It was $3.31 per share for the quarter compared to $1.64 per share last year. And with that, I'll pass it over to Brian Haney.