Kinsale Capital Group, Inc.

Thank you for standing by. My name is Brianna and I will be your conference operator today. At this time, I'd like to welcome everyone to the Kinsale Capital Group, Inc. Third Quarter 2024 Earnings Conference Call. Please note that this call is being recorded. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, press star one a second time. Before we get started, let me remind everyone that through the course of the teleconference, KinSales 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 2023 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 a press release announcing its third quarter results. Kinsale's management may also reference 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 Chairman and CEO, Mr. Michael Kehoe. Please go ahead, sir.

Thank you, Operator, and good morning, everyone. As usual, Brian Petrucelli, our CFO, and Brian Haney, our President and COO, are joining me on the call this morning. In the third quarter, 2024, Kinsale's operating earnings per share increased 27%, and gross written premium grew by 19%. over the third quarter of 2023. For the quarter, the company posted a combined ratio of 75.7% and a nine-month annualized operating return on equity of 28.2%. Kinsale's business strategy is the principal driver of these results, and we believe this strategy materially differentiates us from our competitors. We control our own underwriting, absolutely. driving a more accurate process. We provide the best customer service and the broadest risk appetite in the E&S marketplace. We operate at an enormous expense advantage in a business where our customers care intensely about price. Our expertise in technology not only results in lower costs, but it also allows Kinsale to drive a highly quantitative approach to managing the business. These advantages, we believe, have real durability to them, and they inspire confidence about our ability to generate strong returns and continue to grow the business in all market environments. The overall ENS market in the third quarter was generally steady, but with a continued increase in competition. As usual, there is not one overall ENS market, but instead a series of smaller submarkets, each with its own unique level of competition. As a consequence, rate changes and growth rates and intensity of competition for ConSale varies by quite a bit by underwriting division. Generally, we continue to see strong growth in new business submission activity, slightly positive overall rate changes across the book of business, and rational but increasing levels of competition. Brian Haney will have some additional commentary on this topic here in a moment. Consale's natural catastrophe losses in the quarter were modest. Quarterly loss activity includes both hurricanes Francine and Helene, as well as a variety of smaller events. As a reminder, we target cat exposed property because the margins on that business are generally attractive, but we are also mindful of the potential volatility and use a cautious risk management strategy to keep that volatility under control. Hurricane Milton struck the west coast of Florida early in the fourth quarter as a category three storm. Although it is still early in the loss adjustment process, we estimate our total after-tax Milton losses to be under $10 million. In our press release last night, we announced that our board of directors had approved a $100 million share buyback program. We are mindful that Kinsale's shares trade at a relatively high price to earnings multiple, but we are also confident in our business strategy and our ability to drive best-in-class results and take market share in the years ahead. Accordingly, we believe modest repurchases each quarter with the possibility of larger, more opportunistic purchases from time to time, are in the best interest of our stockholders, who, like us, expect to hold the shares for the long term.

And with that, I'm going to turn the call over to Brian Petrucelli. Thanks, Mike. Another strong quarter from a profitability perspective, with net income and net operating earnings increasing by 50.1% and 26.8% respectively. The 75.7% combined ratio for the quarter included 2.8 points from net favorable prior year loss reserve development compared to 3.2 points last year, with 3.8 points in CAT losses this year compared to less than a half point in Q3 last year. We produced a 19.6% expense ratio in the third quarter compared to 20.9% last year. The expense ratio continues to benefit from seeding commissions generated on the company's casualty and commercial property quota share reinsurance agreements and from the company's intense focus on managing expenses on a daily basis. On the investment side, net investment income increased by 46.4% in the third quarter over last year as a result of continued growth in the investment portfolio generated from strong operating cash flows and higher interest rates. The annualized gross return was 4.3% for the year so far compared to 3.9% last year. New money yields are averaging in the mid to high 4% range and average duration slightly over three years. Diluted operating earnings per share continues to improve and was $4.20 per share for the quarter compared to $3.31 per share for the third quarter of 2023. A couple comments regarding the share buyback program that Mike just touched on. We view the repurchase program as an addition to our capital allocation strategy, along with our quarterly dividends. As a reminder, we really have no interest in M&A and no plans for extraordinary dividends in the near term. Additionally, the plan will have no expiration, and we would expect routine modest buybacks each quarter, in part to minimize the dilutive effect of share-based awards. and larger purchases to be made opportunistically from time to time. With that, I'll pass it over to Brian Haney.