Kinsale reports 74.5% combined ratio and 36% GWP growth in Q4
E&S carrier Kinsale has reported an earnings beat for the fourth quarter, with results that included a 7.1 point improvement in the combined ratio to 74.5 percent and 36 percent growth in gross written premiums to $203.8mn.
- $1.76 operating EPS beats analyst consensus of $1.38
- 36% Q4 GWP growth driven by higher submission activity and rate increases
- Underwriting income increases to $42.2mn from $21.6mn in Q4 2020
- CEO Kehoe confident “favourable market momentum will persist in 2022”
Richmond, Virginia-based Kinsale reported net operating earnings of $40.7mn in the fourth quarter, up from $26.3mn in the prior period.
The $1.76 operating earnings per diluted share beat the consensus estimate of $1.38 of six analysts compiled by S&P Capital IQ, and was up from $1.14 per diluted share in Q4 2020.
Gross written premiums were $203.8mn for the fourth quarter of 2021, up 36 percent on the $149.9mn in the prior period. The growth was driven by higher submission activity from brokers and rate increases on bound accounts, Kinsale said.
Underwriting income was $42.2mn for Q4, up from $21.6mn in the prior period. This resulted in a combined ratio of 74.5 percent, an improvement on the 81.6 percent in Q4 2020.
Kinsale said the underwriting income increase was due primarily to premium growth and continued rate increases from a “strong’ underwriting environment, lower catastrophe activity and higher net favourable development of loss reserves from prior accident years.
The loss ratio improved to 53.1 percent in Q4 2021 from 58.8 percent in the prior period, while the expense ratio improved to 21.4 percent from 22.8 percent.
The impact related to catastrophes during the fourth quarter of 2021 was negligible, while the Q4 2020 loss ratio included current accident year catastrophe losses of $6.1mn, or 5.1 points.
Favourable development on reserves from prior accident years was $6.6mn, or 4.0 points, for the fourth quarter of 2021, and $3.7mn, or 3.1 points, for the fourth quarter of 2020.
“We concluded 2021 with another strong quarter, highlighted by growth in gross written premiums of 36 percent and a combined ratio under 75 percent,” said Kinsale president and CEO Michael Kehoe.
He added: “We are confident the favourable market momentum will persist in 2022, and combined with the strength of our business model we will deliver another successful year.”
For the full year 2021, net operating earnings were $132.4mn, up from $72.3mn in 2020.
Gross written premiums increased 38.3 percent in 2021 to $764.4mn.
Underwriting income of $133.6mn in 2021 was up from $54.7mn in 2020, while the combined ratio improved to 77.1 percent from 86.7 percent.
The loss ratio included catastrophe losses of $8.6mn, or 1.5 points, for 2021 and $23.2mn, or 5.6 points, for 2020.
The cat activity in 2021 primarily related to Hurricane Ida and winter storms in Texas.