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Date
Friday, July 25, 2025 at 1:00 p.m. ET
Call participants
Chairman and Chief Executive Officer — Michael P. Kehoe
President and Chief Operating Officer — Brian D. Haney
Senior Vice President and Chief Financial Officer — Brian P. Petrucelli
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Takeaways
Operating Earnings Per Share-- $4.78 in operating earnings per share for Q2 2025, up 27.5% from Q2 2024.
Net Income Growth-- Net income rose 44.9% year over year in Q2 2025.
Gross Written Premium-- Increased 4.9% in Q2 2025 over Q2 2024; excluding commercial property, premium grew 14.3% in Q2 2025.
Combined Ratio-- Combined ratio of 75.8% for Q2 2025, including 3.9 points of net favorable prior-year loss reserve development.
Commercial Property Premium-- Division premium declined 16.8% in Q2 2025 due to heightened competition and rate decreases.
Expense Ratio-- Expense ratio of 20.7% in the second quarter, compared to 21.1% last year.
Net Investment Income-- Net investment income rose 29.6% in Q2 2025 compared to Q2 2024.
Book Value Per Share-- Book value per share rose 16% since year-end 2024.
Annualized Gross Investment Return-- Annualized gross return of 4.3% for the first half of 2025.
Float-- Float totaled $2.9 billion at June 2025 quarter-end, up from $2.5 billion at the end of 2024.
Reinsurance Program Changes-- Casualty treaty retention increased to $3 million from $2.5 million upon renewal of the reinsurance program on June 1, 2025. Commercial property quota share retention increased to 60% from 50%, with a higher ceding commission, effective with the June 1, 2025 reinsurance renewal. Catastrophe excess of loss retention increased to $75 million from $60 million upon renewal of the reinsurance program in Q2 2025, and additional limit was purchased.
Submission Growth-- Submission growth reached 9% for the quarter, slightly below the first quarter's 10%, due to a decline in commercial property submissions.
Pricing Trend-- The AmWINS index reported an overall rate decrease of 2.4%. Commercial property pricing, particularly in southeastern wind zones, declined 20% in Q2 2025.
Product Launches-- Newly expanded agribusiness vertical includes property coverage; new homeowners product launched in Texas, Louisiana, Colorado, and California, with plans for further state expansion.
Operating Return on Equity-- Operating return on equity of 24.7% for the six-month period ended Q2 2025.
Expense Management-- Ceding commissions and a focus on daily expense discipline contributed to the reduced expense ratio.
Homeowners Premium-- Homeowners premium accounted for 2.7% of total premium year to date, identified as a source of future growth opportunity.
Segment Growth-- Small business property, high-value homeowners, commercial auto, entertainment, and general casualty saw robust premium growth.
Long-Tail Casualty Conservatism-- Management stated increased reserve conservatism and slower releases for long-tail casualty lines.
Short-Tail Business Performance-- Positive reserve development and claims experience in Q2 2025 were disproportionately driven by short-tail property lines.
Industry Commentary-- Fronting carriers in the E&S market are "posting unsustainable gross loss ratios of 100% or higher" for 2024, potentially signaling under-reserving.
Summary
Kinsale Capital Group(KNSL -1.05%) reported substantial year-over-year gains in operating earnings per share (non-GAAP) and net income for the second quarter of 2025, coupled with significant book value expansion. The quarter's combined ratio reflected favorable reserve development and strong underwriting results, despite a notable 16.8% premium decline in the commercial property division in Q2 2025 due to competitive pressure. Notably, management cited specific reinsurance renewal adjustments, including higher retention in both casualty and property quota share agreements and increased catastrophe retention, supporting a marginally more favorable program structure for Kinsale. The company launched new products, particularly in agribusiness and homeowners insurance, targeting geographic and segment expansion to drive future growth. Management stressed heightened competitive dynamics in select segments—especially commercial property—while highlighting conservative reserving practices and ongoing expense management as critical to sustaining profitability.
Management explained that "Pricing trends align with the AmWINS index," with commercial property rate decreases clustered in specific high-exposure zones.
CEO Michael Kehoe stated, Excluding the commercial property division, Kinsale's premium grew 14.3% in Q2 2025. underscoring growth resilience in other divisions.
New business was the main driver of premium growth for Q2 2025.
The operating team described the insurance market as "clearly more competitive than a year ago," with variance based on business segment, and highlighted unsustainable loss ratios at some fronting carriers as an industry-specific risk factor.
The CFO said, New money yields are in the low- to mid-5% range, with an average duration of 3.1 years. providing investors with detail on investment mix and reinvestment yields.
Kinsale maintained a stable buy-submit ratio for most divisions, except commercial property, indicating consistent conversion rates outside challenged segments, as confirmed for this year.
Industry glossary
E&S (Excess and Surplus Lines): Insurance coverage for risks that standard admitted insurers will not accept, typically requiring specialized underwriting and flexibility in pricing and terms.
MGA (Managing General Agent): A specialized insurance intermediary with underwriting authority from an insurer, often acting as a program administrator within the E&S market.
Fronting Company: An insurer that issues policies on behalf of third parties such as MGAs, often assuming little risk, while the third party assumes most of the risk via reinsurance or other arrangements.
Ceding Commission: A fee paid by a reinsurer to a primary insurer to cover acquisition and servicing costs on ceded (reinsured) premiums.
Quota Share Contract: A reinsurance agreement where the reinsurer assumes a fixed percentage of all premiums and losses for a particular block of business.
Catastrophe Excess of Loss Treaty: A reinsurance contract in which the reinsurer covers losses from catastrophic events above a specified threshold or retention.
Full Conference Call Transcript
Michael Kehoe: Thank you, operator, and good morning, everyone. Brian Petrucelli, our CFO, and Brian Haney, our President and COO, are both joining me on the call this morning. In the second quarter of 2025, Kinsale's operating earnings per share increased by 27.5% and gross written premium grew by 4.9% over the second quarter of 2024. For the quarter, the company posted a combined ratio of 75.8% and a six-month operating return on equity of 24.7%. Our book value per share increased by 16% since the year-end 2024. In both hard markets and soft, Kinsale's differentiated strategy and execution allow us to drive both profit and growth. We focus on small E&S accounts. We maintain absolute control over our underwriting.
We provide exceptional customer service and offer the broadest risk appetite in the business. We have advanced technology and no legacy software, a strong emphasis on data and analytics, and by far, we have the lowest costs in the industry. This strategy and the skill and experience of our almost 700 full-time employees give us confidence in our prospects for both profitability and growth in the years ahead in all types of market environments. The E&S market in the second quarter was consistent with the first quarter. Overall, it is a competitive market with the level of competition varying quite a bit from one industry segment to another.
Our commercial property division saw premium drop by 16.8% in the second quarter due to high levels of competition and rate declines. Absent this division, Kinsale's premium grew by 14.3% in the second quarter. Brian Haney will offer some more in-depth commentary on the market here in a moment. We renewed our reinsurance program on June 1. Given the strong returns we have generated for our reinsurers over many years, the overall program was slightly more favorable for Kinsale upon renewal. Some of the modest changes in the program include a $3 million retention on our casualty treaty, up from a $2.5 million retention on the expiring program.
On our commercial property quota share contract, the ceding commission we received from reinsurers increased slightly, reflecting favorable historical results. And our retention increased to 60% from 50% on the expiring program. On the catastrophe excess of loss treaty, we increased our retention from $60 million to $75 million and purchased some additional limit at the top of the tower. As we have stated many times over the years, we endeavor to post loss reserves with some measure of conservatism so that they are more likely to develop favorably than unfavorably over time. Our sixteen-year track record bears out our commitment to cautious reserving and building a strong balance sheet.
At a time when there are substantial questions around the reserve adequacy of the broader P&C industry, it's important for investors in Kinsale to know that our loss reserves have never been more conservatively stated than they are right now. And with that, I'll turn the call over to Brian Petrucelli.
Brian Petrucelli: Thanks, Mike. Again, just another strong quarter with net income and net operating earnings increasing by 44.9% and 27.4%, respectively. The 75.8% combined ratio for the quarter included 3.9 points from net favorable prior year loss reserve development compared to 2.8 points last year, with less than a point in cat losses this year compared to one point in Q2 of 2024. As Mike mentioned, we continue to take a cautious approach to releasing reserves. We produced a 20.7% expense ratio in the second quarter, compared to 21.1% last year.
The expense ratio continues to benefit from ceding commissions generated on the company's casualty and commercial property quota share range agreements, and from the company's intense focus on managing expenses on a daily basis. On the investment side, net investment income increased by 29.6% in the second quarter over last year, a result of continued growth in the investment portfolio generated from strong operating cash flows. Kinsale's float, mostly unpaid losses and unearned premium, grew to $2.9 billion at June, up from $2.5 billion at the end of 2024. Annualized gross return was 4.3% for the first half of the year and consistent with last year.
Other than the modest increase in the allocation to common stock that we mentioned last quarter, we haven't made any significant changes to our investment strategy and continue to monitor inflation, interest rates, related Fed policy commentary, and we'll adjust as circumstances change. New money yields are in the low to mid 5% range, with an average duration of 3.1 years. And lastly, diluted operating earnings per share continues to improve and was $4.78 per share for the quarter, compared to $3.75 per share for the second quarter of 2024. And with that, I'll pass it over to Brian Haney.
Brian Haney: Thanks, Brian. The E&S market remains competitive, so the intensity varies by division. We're seeing robust premium growth in small business property, high-value homeowners, commercial auto, entertainment, and general casualty. Meanwhile, commercial property, construction, life sciences, and management liability are facing tougher competition and, in some cases, declining premiums. The market is clearly more competitive than a year ago. However, much of the aggressive pricing is coming from MGAs and fronting companies. While there are some highly regarded MGAs out there with long track records of success, the model as a whole is challenged by a misalignment of interests. Some fronting companies are posting unsustainable gross loss ratios of 100% or higher, signaling capital destruction.
Notably, our largest reserve line, other liability occurrence, the top six E&S fronting carriers are projecting 2024 gross loss ratios well below ours despite consistently worse experience in older exit years and consistently worse loss development. Either they, as a group, have experienced a miraculous turnaround or they are under-reserving. Eventually, loss reserves turn into paid claims and posting inadequate reserves only pushes the problem down the road for a time. The situation is reminiscent on a smaller scale of the mortgage crisis of 2008 where you had a misalignment between the originators and bearers of risk, which resulted in a fundamental mispricing of that risk.
Given the size of the problem, this will not be as significant for the economy as the mortgage crisis but it will be very significant for the insurance industry and for some players in it in particular. It's encouraging to us because, ultimately, under-reserving is a self-correcting problem. We continue expanding our product suite to capture market opportunity. In Q2, we broadened our agribusiness vertical to include property coverage, launched a new homeowners product in Texas, Louisiana, Colorado, and California with more states on the way. Submission growth was 9% for the quarter, which is down slightly from the 10% in the first quarter.
Our Commercial Property Division experienced a decline in submissions, which depressed the company's overall submission growth rate. Without that, the submission growth rate would have been in the low double digits. Pricing trends align with the AmWINS index, which reported a 2.4% overall decrease. Commercial property, especially in southeastern wind zones, was down 20%. Casualty pricing was mixed but modestly positive, some professional and management liabilities lines were slightly negative. Finally, we continue to be cautious around loss cost trends. Headline inflation is above the Fed's 2% target. With various governmental policy changes, it's not clear where things go from here. Which is even more reason to be cautious and conservative with our reserves. Overall, we remain optimistic.
Our loss results are good. Our growth prospects are good. And as the low-cost provider in our space, we have a durable competitive advantage. And with that, I'll hand it back over to Mike.
Michael Kehoe: Thanks, Brian. Operator, we're ready for Q&A.
Operator: Thank you. Our first question comes from Andrew Kligerman from TD Cowen. Please go ahead. Your line is open.
Andrew Kligerman: Andrew, this is Mike. We've got a very poor connection, so we weren't able to understand your question. Do you want to try one more time? Operator, let's drop that call and let's go to the next one.
Operator: Certainly. Our next question comes from Michael Zaremski from BMO Capital Markets. Please go ahead. Your line is open.
Daniel Cohen: Hey, good morning. It's Dan on for Mike. Maybe first just on your longer-term growth target. One of your peers recently lowered their near-term growth target due to the heightened pricing environment. Competition? With two quarters below 10 to 20 that you've guided to, is there any thought to recalibrating the near-term number or is there still belief in that 10 to 20 number? Thanks.
Michael Kehoe: Yeah. We don't offer a growth prospect because, ultimately, we don't really know what that number is going to be. I think 10 to 20% over the course of the cycle is a good faith estimate and it's actually, I think, a conservative one. I think one of the challenges of estimating the near-term growth is that there is going to be a fair amount of variability over the years. Right now, we're in a period of heightened competition. That's most pronounced in our commercial property division, especially some of that business that's concentrated in, you know, larger Southeastern wind accounts. That's where we're seeing, you know, kind of a big market correction.
So, you know, we did report the fact that if you take the commercial property division out of it, we grew in the mid-teens. You know, we think that's a really healthy number. That showcases the competitiveness of our model, the accuracy of our underwriting, the market segment we focus on, the fact that we operate at an enormous expense advantage over our competitors. So, you know, we're quite optimistic, but we're also realistic that near-term, you know, we've got some headwinds with competition.
And maybe the last comment I'd make is that the year-over-year comparison in our commercial property division will be a little bit easier the second half of the year than it was the first because we wrote a disproportionate amount of that business in the first half of, you know, last year. So we'll get a little bit of, you know, less of a headwind, if you will, on the, I don't know what you call it, correction in the commercial property division.
Daniel Cohen: That's helpful. Thank you. And then switching gears to the underlying margin. Just with rates being negative in the first half of '25 and, you know, higher casualty mix. Could you help us reconcile the source of the underlying margin improvement year over year?
Michael Kehoe: Well, I mean, there's we lay it all out in the release, right? It's the current accident year. I think the cat losses were down. Maybe...
Daniel Cohen: Sorry. I meant I just meant the underlying. Current accident year. Yeah.
Michael Kehoe: The current accident year is a composite of a variety of lines of business. I think, you know, if kind of the general movement within that number would be we continue to be very cautious around long-tail casualty. Brian Haney mentioned the fact that inflation is still higher than the Fed's target. I think longer-tail casualty lines are a little bit more exposed to that. So we're being conservative on the longer-tail casualty and to the extent that we're over-performing, it's probably disproportionately due to our shorter-tail lines like property. Where the experience has been really quite compelling.
Operator: Next question comes from Our next question comes from Pablo Singzon from JPMorgan.
Pablo Singzon: Hi. Good morning. First question I have is about the commercial property business. I was curious to get your sense of the positive gap between expected profitability and technical pricing today. Or put another way, right, how much further do you think prices can drop before the markets are throws up in hands and says, you know, this is as far as we'll go? Any sort of sense you had around that?
Michael Kehoe: Yep. Pablo, this is Mike. I would just remind you that we write property coverage in a whole variety of different underwriting divisions or verticals within our company. The commercial property division specifically is where we're seeing the most intense competition. And it's not just rates dropping, although that's happening. It's also terms and conditions, line sizes, and the like. So it's a whole mix of things. We also have a small property division. We write in the marine coverage. We write high-value homeowners. We have a regular homeowners book. So, you know, the other areas are much more attractive to us than, you know, in particular, the larger Southeastern wind accounts. So it's a mix.
But in terms of the, you know, where the market goes from here, you know, we don't really have any kind of insight into that.
Pablo Singzon: Okay. And then just switching to, I guess, capital, right, and capital return. So with premium growth going from recent levels, right, I think even if you assume some pickup from the recent trend, your ROE will just naturally decline. Right? You're just going off, like, pretty high growth years. And you're gonna accumulate capital. Is there some ROE level where you might consider leaning more into capital return here? Thanks.
Michael Kehoe: Yes. You know, I think we expect our ROEs in the low to mid-twenties or better. You know, the returns are always a function of the pricing we get. It's loss cost trends. It's the amount of conservatism in our IBNR that drifts out over time. Right? So there's a lot of things that go into the returns. In terms of, you know, returning capital, it's something we look at every year and we'll continue to adjust. But we want to maintain a healthy capital position, but we don't ever want to hold an excessive amount of redundant capital either. So right now, we address that in a very small way through the dividend and the share buybacks.
And we'll continue to evaluate that on a go-forward basis.
Pablo Singzon: Thank you.
Operator: Our next question comes from Michael Phillips from Oppenheimer. Please go ahead. Your line is open.
Michael Phillips: Yes, thanks. Good morning. I wanted to get a little more color on, I think it was Brian's comments on the pricing. And the casualty side, I think you said mixed but positive. Can you provide a little more color on where you're seeing the mix? What you meant by that? And then maybe specifically, if you can drill down into the excess casualty book and, specifically, what you're seeing in pricing there. Thank you.
Brian Haney: Yeah. I think some of the you look at the casualty lines, some of the higher return, lower growing lines like, let's say, products liability would be experiencing, you know, rate increases on the lower end or rate decreases and then some of the more longer-tail lines, let's say, like, excess casualty would be at the higher end.
Michael Phillips: Oh, okay. And then I guess sticking with construction, it's not the first time you've mentioned some adjustments, actual adjustments on the reserves for construction defect and liability. I guess, you say what you're seeing for trends there, loss trends there? And any certain geographies that are more conducive to kind of those adjustments you made?
Brian Haney: I think a lot of the California used to be a very big state for us in construction and we've kind of pivoted away from that. So I would say to the extent that we were seeing, you know, abnormally high loss development that required some sort of adjustment. That's where we were seeing it. And so when we adjusted the loss development patterns, we also adjusted our rates. And it resulted in us growing outside of California, which is good.
Michael Phillips: Okay. So your adjustments, I'm sorry, adjustments you made were because of the California bill? But you're seeing positive...
Brian Haney: I was just making I was just giving you some color detail about what was going on within the construction book. Generally speaking, it was worse in California where we were a little over-concentrated.
Michael Phillips: Okay. And are no longer over-concentrated.
Brian Haney: Okay. Thank you.
Operator: Our next question comes from Bob Huang from Morgan Stanley. Please go ahead. Your line is open.
Bob Huang: Good morning. My question is on growth and specifically new business. Not sure if you've touched this already, so apologies. Just curious how much of the premium growth for the quarter was driven by new business growth? And broadly speaking, I understand that we're facing challenges in property, but is there a way to think about the new business and the renewal business dynamics going forward? Are there lines of business that are more exciting than others? Just curious of your view on that.
Michael Kehoe: I think we have the stats in front of us to kind of bifurcate the, you know, the growth between the renewal book and the new business book. But I would say, generally, it would probably be driven mostly by new business because the pricing environment we're in today, we're not seeing dramatic changes. And then what was the second part of the question?
Bob Huang: Oh, yeah. Just in terms of, like, if we think about just the growth going forward, is there any specific line of business where you think new business would be more exciting?
Michael Kehoe: Well, Brian Haney mentioned a whole series of underwriting divisions where we're still seeing very robust top-line growth. And that typically correlates to a better pricing environment and, you know, maybe a little more dislocation within the industry, etcetera. So, you know, entertainment, high-value homeowners. We're rolling out a new homeowners product in a variety of states. Our small business property unit is still growing at a really good clip. I think the pricing there is favorable. You know, we have a, as a, you know, I guess we're still a boutique insurance company, but we've got a relatively broad product line, and we participate in a whole range of different industry segments. And it's just a good reminder.
They don't all move in tandem. And, you know, in general, we feel generally positive about the market.
Bob Huang: Okay. No. Really appreciate that. Thank you. Maybe just, like, one follow-up on that comment. Specifically homeowner. Right? 2.7% of your total premium year to date is homeowner. You talked about the excitement of that going forward. Is that purely just driven by what's going on in California that's resulting in homeowner now growing? Like, I'm guessing that business should be growing exponentially from here. Does that change your seventy-thirty split, casualty and property going forward? Like, how should I think about the growth trajectory there?
Michael Kehoe: Yeah. Look. Homeowners is a volatile line of business where the broader P&C industry is, I think, underwritten that business to a loss for like five or seven years in a row. Historically, it's been mostly standard markets. I think there's now a shift where more of that business is coming into the E&S market. And so Kinsale is working hard to address the opportunity there. It's partly California, but it's partly in the Southeast, Southeastern states, Texas around to the Mid-Atlantic. Driven by coastal wind. But as we as Brian, I think, mentioned earlier in his comments, we've also rolled out a new homeowners product in, you know, Colorado, for instance.
So, yeah, I think we see that as a growing opportunity for the company. In a whole range of different states. And I wouldn't expect any kind of near-term shift in the 70-30 split. Between casualty and property, but depending on how successful we are over the years ahead, you know, it could shift a little bit.
Bob Huang: Great. Really appreciate the color. Thank you very much.
Operator: Our next question comes from Andrew Anderson from Jefferies. Please go ahead. Your line is open.
Andrew Anderson: Hey, good morning. Just looking at the OpEx ratio, looks like it's been about 8% year to date. And I think you were doing some technology investments that I think have ended. So is that 8% kind of a good run rate for the near term?
Brian Petrucelli: Yeah. I think that is.
Andrew Anderson: Okay. And, you know, if we look at the session ratio, it came in this quarter. And if we go back a few years, it was kind of in a mid-teens territory. Now that was before you were, you know, more writing more property business, so perhaps it's not gonna go back towards the mid-teens. But should we be thinking about 17% kinda near term?
Michael Kehoe: I mean, it's gonna, Andrew, this is Mike, it's gonna depend on the mix of business, of course. You know, when we renewed our reinsurance program, we took a little bit bigger net on the casualty and on the property. A little bit bigger cat retention. So the reinsurance program will result in a little bit of a shift to a lower seating ratio and then the rest of it's gonna be mix of business over time. So I, to be honest, I don't have a number to give you. But you can just judgmentally expect it maybe go down a bit.
Andrew Anderson: Thank you.
Operator: Our next question comes from Joe Tamayo from Bank of America.
Joe Tamayo: Hey. Good morning, everyone, and thanks for taking my questions. My first question is regarding the buying submit ratio. Believe, historically, this has ranged from, like, nine to 11, 12%. So I was just curious to see where we are on that today and generally, this year, has that ratio remained relatively steady for most divisions excluding commercial property?
Michael Kehoe: Yes. It's been relatively stable.
Joe Tamayo: Okay. Alright. Great. Thank you. And then the other question kind of just kind of furthering on the conversation regarding the competition MGAs. It seems like some of your competitors have also joined that competition. Even one mentioning being approached by acquisitions. I'm kinda curious to see where you guys think we are in the cycle with MGAs given kind of the loss ratios and the history they've been putting up. Like, is this something that we kind of expect coming to a head in the near term? I know it's really no way to predict it, but just kinda curious on your thoughts on this.
Michael Kehoe: Joe, this is Mike. We don't really have an opinion on that. You guys are in the business of analyzing companies and prognosticating. So we'll leave that in your capable hands.
Joe Tamayo: Okay. Great. Thanks for the talk.
Operator: Our next question comes from Mark Hughes from Truist. Please go ahead. Your line is open.
Mark Hughes: Yes. Thanks. Good morning. The commercial property pricing, how would you describe it sequentially? I think last quarter and this quarter, you said down 20. Does that mean stable sequentially?
Michael Kehoe: Yeah. Yeah. I'm sorry. That's fair. Very good.
Mark Hughes: How about the current accident year trajectory? I think, historically, you've started out the year, I think, being a little more conservative, a little higher current accident year loss picks. Anything that you have seen through the six months that might interfere with that historical pattern of improvement in the back half?
Michael Kehoe: No. I don't think so. You know, I mentioned earlier that, you know, we're obviously, we evaluate and analyze our loss development every quarter. And it was in response to a prior question, Mark, we continue to be cautious around the long-tail casualty. And to the extent that, you know, there's any shift in the good news coming out, it's largely driven by the short-tail business like property.
Mark Hughes: Mike, any more thoughts on this dynamic in Florida where it seems like more business is going into the E&S market? Even as the pricing is softening up. Why that would be? You know, how long that might last? Is that something you've seen in prior cycles?
Michael Kehoe: You know, I don't think we know. We don't have anything definitive to offer. I'll just maybe comment that E&S is reaching all-time highs not just in Florida, but all over the country in terms of, you know, its share of the overall premium dollar being placed. And so I think as people become more comfortable with E&S markets, I think the acceptance of the E&S paper is just increased. And it's just becoming more and more common. So it's a healthier way to manage an insurance company, especially when we have, you know, as dynamic a tort system as we do in the United States. Certainly, Florida has seen a lot of shifts in tort law over the years.
And then, of course, on the property side with, you know, reacting to natural catastrophes, there's been a significant uptick in cat activity the last five or seven years. And E&S companies with Freedom of Right and Form can react to that much more quickly than the standard companies can. So it just seems like it's a positive trend all the way around.
Mark Hughes: Very good. And then one more, if I can. Brian Petrucelli, the cash flow is up a little bit through six months. What kind of top-line growth do you need in order to keep the cash flow in positive? Well, it's obviously in positive territory, but increasing year over year. You know, if you get 5% growth, will cash from operations still move up, or is there some point at which just payout and losses starts to dampen that? Any general thoughts would be helpful.
Brian Petrucelli: I think that's a fair assumption, Mark. And I think one thing that's probably depressed it a little bit is, you know, paying out all the cat losses from the Palisades wildfire. These are short-term, short-tail claims that get resolved quickly, especially when you have a limits loss. I think that's probably depressed the growth rate there on a temporary basis.
Mark Hughes: So as long as top line is moving up, then cash from operations should likewise move up?
Brian Petrucelli: Yeah. But it's always a function of your loss experience. And, I think we're good underwriters. We're establishing very conservative loss reserves. So I'd be optimistic.
Mark Hughes: Thank you very much.
Michael Kehoe: Thanks, Mark.
Operator: Our next question comes from Andrew Kligerman from TD Cowen. Please go ahead. Your line is open.
Andrew Kligerman: Hi. Hi. Can you hear me this time? So sorry for the bad line before.
Michael Kehoe: You're crystal clear.
Andrew Kligerman: Oh, good. Good. Good. Thank you. And, again, so I've been hearing so much about a lot of these start-ups in kind of small, mid E&S. What are you seeing in terms of that competition? Are you seeing a big pickup in how is that affecting pricing?
Michael Kehoe: I think I would say that the small start-up balance sheet businesses are not having a lot of effect. Just because they're dwarfed by what the MGAs are doing. Those six E&S front-end companies I mentioned write something like $6 billion in gross written premium. So, you know, it would take a long time for the newer balance sheet businesses to make a dent in that.
Andrew Kligerman: Interesting. And then following up on an earlier question about sessions and, you know, seeding off, I think the number is, like, 17%. And this quarter, I noticed that, you know, gross written was up five, but net written was up close to seven. So over time, like, let's look out maybe five, ten years from now. Do you see that session declining to as low as 10%? Do you need to see that much over time?
Michael Kehoe: We seed more premium on the property side where we have significant natural catastrophe exposure, and where the limits are higher. So, you know, what the seating ratio looks like down the road is really gonna be a function of the mix of business more than anything. I think on a homeowner's policy, the seating ratio would be modest. If it's, you know, a hotel on the beach in Florida, it's gonna be more significant.
Andrew Kligerman: Thanks a lot.
Operator: Our next question comes from Pablo Singzon from JPMorgan. Please go ahead. Your line is open.
Pablo Singzon: Hi. Thanks for taking my follow-up. So you go through this in the Q, but I was wondering if you could provide more commentary in the reserve releases you booked this quarter. I think the 10/2020, 2024. But was more curious about the balance of releases between casualty and property. I think in one key, you highlighted property more. I'm wondering if that's still the case or if there's any material change this quarter. Thank you.
Michael Kehoe: Pablo, you're asking for some commentary on the reserve movements in 2020 to 2024?
Pablo Singzon: No. No. No. No. What you booked this quarter. Right? I think it was from accident years 2020 to 2024. But I was just curious about any color on the lines of business where you released the reserves. Right? I think in one Q, you highlighted property a bit more, you know, but, anyway, any sort of commentary on the releases you booked this quarter? Thank you.
Michael Kehoe: Yeah. I would say this, that, you know, we have, I think it's about a dozen statutory lines of business we write. This is our sixteenth year in business. I don't think we have any open claims for the first couple years we're in business, but in general, there is a lot going on in our reserves every quarter. And so I don't think we want to get into any kind of granularity on a conference call because it's just too technical. But in broad strokes, I think it's important for the investors to understand, one, that we're being very conservative in setting aside reserves today to pay claims in the future, especially in an era of heightened inflation, etcetera.
And then the second thing is in terms of broad movement in our reserves, we're being more conservative, so slower to release on the long-tail casualty lines where we think there's the greatest degree of uncertainty. And then to the extent that there's good news coming out of our results, it's disproportionately on the short-tail business, which is property for us. You know, 30% of our business is property. Those claims tend to be reported and resolved relatively quickly compared to the casualty business. So again, it's just reinforcing we're trying to be cautious in building a rock-solid balance sheet.
Pablo Singzon: Okay, Mike. Thank you.
Operator: Our last question comes from Andrew from Jefferies. Please go ahead. Your line is open.
Andrew Anderson: Just wanted to go back to the pricing commentary on casualty and modestly positive. I guess that sounds a little low. It could be partly that you're in small commercial, but it could also be interpreted that you're just competing more to win business. So I guess is that the case? And do you feel that you're more competitive pricing between the competition and the spread there is growing in your favor?
Michael Kehoe: Andrew, I think we said we saw in our book something similar to the AmWin's index, which I think was pricing rate and exposure down about 2.4%. Our large commercial property deals, Southeastern wind accounts, were down about 20. Everything else is a little bit of a mix. Up or down slightly. I would say getting back to my comment about the MGA fronting business, I think it's true that our casualty experience has been better than the industry. So I think there's more of an opportunity for us, or there's less of a need for us to increase rates than there is for the industry.
Andrew Anderson: Thank you.
Operator: We have no further questions at this time. I'd like to turn the call back to Michael Kehoe for any closing remarks.
Michael Kehoe: Okay. Well, thank you, everybody, for listening, and we look forward to speaking with you again, down the road a little bit.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.