Kinsale Reports Q2 Profit Surge

Kinsale Capital Group (KNSL 0.37%), a specialty property and casualty insurer focusing on the excess and surplus (E&S) market, released its results for the quarter on July 24, 2025. The main news was a clear outperformance on key metrics: non-GAAP EPS reached $4.78 (versus estimates of $4.41). Gross written premium growth decelerated compared to the prior year due to heavy competition and rate pressure in its Commercial Property division. The quarter saw operating returns and profit margins remain well above industry averages, with operating return on equity (non-GAAP) at 27.0%, confirming the company’s cost discipline and niche market focus even as top-line growth faced headwinds.

Source: Analyst estimates for the quarter provided by FactSet.

About Kinsale Capital Group and Its Business Approach

Kinsale Capital Group is an insurer that specializes in the E&S market. This space covers unusual or hard-to-place risks that most standard insurers avoid, such as new businesses, high-risk operations, and those located in more litigious jurisdictions. Its core expertise lies in individually underwriting each account, allowing it to maintain tighter control and higher margins in a part of the insurance world that is less price competitive than the standard market.

In recent years, Kinsale has focused on three main drivers: disciplined underwriting, proprietary technology for cost efficiency, and careful catastrophe risk management. Nearly all of its premium volume comes from commercial lines, particularly smaller E&S accounts where the company maintains full control over pricing and risk selection. Its integrated technology platform helps keep operating costs among the lowest in the industry, which has supported both profitability and market expansion.

Highlights and Key Developments During the Quarter

The company delivered record net income and strong beats on both non-GAAP EPS and GAAP revenue. Net income (GAAP) rose to $134.1 million. Operating return on equity, a key measure of profitability for insurers and calculated as annualized net income or operating earnings divided by equity, remained well above industry averages at 27.0% (non-GAAP). Underwriting income, which is net earned premiums minus claims and operating expenses, rose 25.5% compared to the same period last year. The combined ratio--which measures the percentage of premiums spent on claims and overhead (with anything below 100% considered profitable)--improved from 77.7% to 75.8%.

Gross written premiums, the amount of new insurance business booked during the period, increased by 4.9%. While this was still positive, it was a step down from previous double-digit increases. The slowdown was concentrated in the Commercial Property division, where gross written premium declined by 16.8%. Management attributed this to industry-wide premium rate declines of about 20% and intensified competition earlier in the year. Excluding Commercial Property, other divisions grew gross written premiums by 14.3%, showing healthy activity in smaller property, casualty, and personal lines insurance products.

The company’s investment portfolio also contributed positively, with net investment income up 29.6% due to a larger pool of assets and steady fixed-income yields. The annualized gross investment return was 4.3% for the first half of the year, and the portfolio remained conservatively positioned with high credit quality (AA- average) and a weighted average duration of just over three years. Cash and investments rose from $4.1 billion to $4.6 billion since year end. Book value per share (GAAP) increased 15.96% from $63.75 at December 31, 2024, to $73.93 at June 30, 2025.

However, Year-to-date after-tax catastrophe losses rose sharply to $20.8 million for the first half of the year from $3.2 million for the first half of 2024, reflecting events earlier in the year. The company continued incremental stock buybacks ($10 million), and annualized operating return on equity moderated from 28.8 % to 24.7 %, with the change mainly reflecting a larger equity base and the impact of higher catastrophe claims.

Kinsale Capital Group’s Product Lines and Market Focus

Kinsale’s largest segment is Commercial Property insurance, covering physical plants and buildings for higher-risk businesses. The downturn in this division caused growth to decelerate. Competition intensified as both other E&S carriers and traditional insurers sought to write more property business in response to prior years’ gains. With rates for this line having fallen from their mid-2024 peak, management highlighted that it will focus on profitability over growth, and will not write policies at prices it considers too aggressive for the risk.

The company’s personal lines, which include products such as high-value homeowners, manufactured homes, and niche property policies, continued to expand at a double-digit pace. Management noted that new opportunities are emerging here, especially in market-disrupted states like California. Other casualty lines, such as commercial auto and general casualty, saw modest pricing and overall premium growth. Submission growth, a leading indicator for future written premium, grew 11% outside of Commercial Property lines, signaling a positive growth trend in non-property segments.

Kinsale’s proprietary technology platform underpins its efficiency.

In response to volatile catastrophe claims across the insurance market, the company deploys detailed catastrophe models and maintains a robust reinsurance program. This spreads risk across other insurers and helps limit any single event’s financial impact. Management emphasized its continued conservative approach, with book reserves for claims held at high levels, especially for long-tail lines like construction insurance. The company reported net favorable prior year reserve development, indicating that prior estimates of eventual claim payouts were generally conservative and actual costs have been lower than expected.

Looking Ahead: Management’s Perspective and Forward-Looking Themes

The company did not issue quantitative forward guidance for the coming quarter or fiscal year. However, management commented that growth headwinds in the Commercial Property division should ease in the latter half of the year, as most property renewals occur in the first half and premium comparisons get easier, but company-wide gross written premium growth is likely to remain more modest unless market pricing or competitive conditions shift.

Investors should watch the evolution of competitive intensity in the E&S market, especially as new entrants and “fronting companies” seek market share. Management is confident that current levels of competition, particularly from less efficient competitors writing business at slim or negative margins, are not sustainable long-term. Additionally, the recent spike in catastrophe losses year-to-date highlights the importance of risk management and reserving discipline. Trends in prior-year reserve development will be an ongoing signal of underwriting quality, while the company continues to perform regular, incremental share repurchases each quarter, with larger purchases expected opportunistically.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.