By Michael Loney

April 25 - (The Insurer) - Kinsale Capital Group’s share price fell 16% on Friday as investors reacted to 8% premium growth in Q1 coming in below expectations, while the E&S specialist’s CEO said he is “bullish on the future” despite aggressive competition.

Richmond, Virginia-based Kinsale after markets closed on Thursday reported an earnings beat for the first quarter, despite its combined ratio deteriorating 2.6 points to 82.1%.

Gross written premiums increased 7.9% in the quarter to $484.3 million, lower sequentially than the 12.2% growth in Q4 2024 and significantly lower than the 25.5% growth in last year’s first quarter.

New York-listed Kinsale’s share price closed at $419.99 on Friday, down 16.3% from the previous day’s close.

On an investor call on Friday, chairman and CEO Michael Kehoe said the Q1 premium growth was “slightly below” the company’s expectations of 10% to 20% across the cycle.

This slowing was mostly driven by an 18% decrease in the commercial property division, which was Kinsale’s largest underwriting unit last year.

Kehoe highlighted that the unit has grown twentyfold over the previous five years, and has produced “compelling” profits.

“But now we are seeing more intense competition, including from some standard companies, and rate declines from the peak of about 20%,” he said. “The margins in this business are still strong, but we do expect to write less premium compared to the prior year for the near term.”

Excluding commercial property, Kinsale's premium for the quarter grew by 16.7%.

Kehoe said that commercial property will also be a headwind to premiums in the second quarter, but “less so in the second half of 2025” because the business is disproportionately concentrated in the first half.

He added that the personal lines and small commercial property teams continue to grow at double-digit rates.

“Overall, the E&S market in the first quarter remained steady, but with a continued increase in competition,” Kehoe said.

Responding to a question from an analyst about the share price falling, Kehoe said Kinsale is confident in its business model of focusing on high-margin segment, small E&S accounts, and will continue to grow..

“We're bullish on the future,” he said.

But he continued: “We always prioritize profitability over growth. And so when you have a period of time where there's intense price competition, where there's a number of companies writing business below the burn cost, we're not going to do that.”

Kinsale president and chief operating officer Brian Haney said the property-related divisions as a whole shrank by 8% in the quarter while the rest of the company grew 15%.

He said the commercial property market is normalizing after a period of crisis.

“The rates in commercial property in this space had reached all-time highs and the margins have become very significant, which is bringing in competition, including from MGAs and admitted companies,” he said.

Haney said that casualty is still seeing growth overall, particularly commercial auto and general casualty. Professional lines remain competitive with management liability and non-medical professional business under pressure.

SOME FRONTING LOSS RATIOS ‘DIFFICULT TO BELIEVE’

Kinsale’s new business submission growth was 11% for the quarter, down from 17% in the fourth quarter.

Haney said Kinsale’s overall rates for the quarter were down 1%. While commercial property rates were down about 20%, other property lines are still seeing modest rate increases, as is Kinsale’s casualty business, driven by construction and general casualty.

The executive also commented that a lot of the more aggressive competition Kinsale is facing comes from fronting companies.

“If you look at the gross incurred loss ratios for some of these fronting companies, you see a lot of older accident years where the loss ratios are 90% or 100% or higher and continuing to develop adversely,” he said.

“While the [fronting] companies themselves don't bear those loss ratios … someone is bearing those loss ratios. And that someone can't keep doing that for long.”

Haney added that some of the same fronting companies are showing current accident year gross loss ratios in the low 60s.

“That is a remarkable, you might say incredible, improvement,” he said. “It seems difficult to believe a business that was producing 90% or 100% loss ratios with persistent and significant adverse development as recently as 2022, could be in the low 60s in 2024.”