KNSL - NYSE

Good morning, and welcome to the Kinsale Capital Group's Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Before we get started, let me remind everyone that through the course of the teleconference, Kinsale's 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 8-K with the Securities and Exchange Commission that contains the press release announcing its fourth quarter results. Kinsale's management may also reference certain 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, Bryan Petrucelli, our CFO; and Brian Haney, our President and COO, are joining me this morning for the call. In the fourth quarter 2024, Kinsale's operating earnings per share increased by 19.4% and gross written premium grew by 12.2% over the fourth quarter of 2023. For the quarter, the company posted a combined ratio of 73.4% and a full year 2024 operating return on equity of 29%. Also of note, the appreciation of Kinsale's stock price over the course of 2024 exceeded that of the S&P 500 Index for the eighth time in the last 9 years since our IPO back in 2016. These results largely flow from the Kinsale business strategy of small E&S account focus, absolute control over our underwriting and claim handling processes best-in-class service levels and risk appetite that we provide our brokers and technology-driven low cost. As we've said in the past, these advantages have real durability to them. Likewise, we are investing heavily in technology, automation, data and analytics to drive further gains in the years ahead. Progress in these areas should allow us to gradually and continually improve our expense ratio, our customer service and the accuracy and competitiveness of our underwriting, all to the benefit of our profitability and growth. The Southern California wildfires that occurred in January created considerable insured loss for the P&C industry with estimates mostly in the $30 billion to $50 billion range. For Kinsale, we expect our pretax losses net of reinsurance to be approximately $25 million. These losses arise from a mix of personal lines and commercial property business. The overall E&S market in the fourth quarter was generally steady, but with a continued increase in competition. And with that, I'm going to turn the call over to Bryan Petrucelli.

Thanks, Mike. Another solid quarter with net operating earnings increasing by 19.4%. The 73.4% combined ratio for the quarter included 2.6 points from net favorable prior year loss reserve development compared to 2.3 points last year, with 2 points in cat losses this year, primarily from Hurricane Milton compared to less than 0.5 point in Q4 of last year. We produced a 21.1% expense ratio in the fourth quarter compared to 19.9% last year. The expense ratio will fluctuate from quarter-to-quarter, and I'd point you to the full year expense ratio as a better measure. You can see that our 20.6% expense ratio for the full year compares favorably with the 20.8% last year. That being said, the higher Q4 expense ratio is due primarily to higher variable compensation, offset by higher ceding commissions. On the investment side, net investment income increased by 37.8% in the fourth 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 4.4% for the year so far compared to 4% last year. New money yields are averaging in the low 5% range and with book yields around 4.5%, so we should see some continued investment income benefit from those higher rates as we move forward. Additionally, we're gradually increasing our allocation to common stock from 8% to 10% of cash and invested assets and will eventually increase allocation to 12% over the next year or so. Diluted operating earnings per share continues to improve and was $4.62 per share for the quarter compared to $3.87 per share for the fourth quarter of 2023. Just a couple of comments regarding capital management. We repurchased $10 million in shares during the fourth quarter. We'd expect similar modest levels of repurchases each quarter on a routine basis with larger purchases made opportunistically from time to time. And with that, I'll pass it over to Brian Haney.

Thanks, Brian. The fourth quarter saw growth in our gross written premium of 12.2%, consistent with our expectation of 10% to 20% growth over the long term. Our casualty underwriting divisions grew at 15% for the quarter, while property divisions grew at 6%. Rate declines on larger layered property transactions, in particular, had a dampening effect on the growth rate in the quarter as that market has normalized after a period of crisis pricing conditions in the prior years. Casualty is still seeing steady growth overall with excess casualty, commercial auto and general liability among the fastest-growing divisions and management and professional liability among the most competitive. Catastrophe losses in the fourth quarter were a modest $8 million pretax. And as Mike mentioned, our California wildfire estimate is $25 million pretax. As a reminder, we write catastrophe-exposed property business, including wildfire, hurricane and earthquake and some flood. But in doing so, we always seek to balance the margin in that business with the potential for excessive volatility. In addition to a careful underwriting approach, we employ a sophisticated risk management strategy and a robust reinsurance program to limit volatility, and we've been successful with that approach for many years now. We don't expect recent catastrophe events in the industry will be enough to change the overall market, but it may create more opportunities in personal insurance, which we are already leaning into. Part of Kinsale's growth over the years has been due to a regular expansion of our product lines into adjacent markets. Most recently, we created a new agribusiness underwriting unit that focuses on opportunities in the farm, ranch and related spaces. This is part of our ongoing effort to gradually expand our product line so that we can offer solutions for all tough-to-place E&S accounts across the U.S., no matter what coverage or sector of the economy. New business submission growth was 17% for the quarter, down from 23% in the third quarter. This number is subject to some volatility, but we, in general, view submissions as a leading indicator of growth. And so we see that submission growth rate as a positive signal. Overall rates for the quarter were about flat. Excess casualty, commercial auto and construction were up high single digits, while larger layered property accounts were down mid- to high teens. All of our other lines were somewhere in between. We are being more aggressive in pricing in some select areas because the margins are so high that the trade-off between a lower rate and more growth is worthwhile. Keep in mind, our 29% operating ROE would imply that half of our book is producing margins above that. So by trading away some of that excess profitability on some specific lines of business, we can drive better growth and maximize wealth creation for our stockholders over time. Overall, we remain optimistic. The results are good, our growth prospects are good. And as the low-cost provider in our space, we have a durable competitive advantage that should allow us to continually gradually take market share from our higher-expense competitors while continuing to deliver strong returns and build wealth for our investors. And with that, I'll hand it back over to Mike.

Thanks, Brian. Operator, we're ready for questions now.

Our first question comes from Michael

Back to the commentary on the market environment. I think it sounds like larger shared account property had one of the more meaningful impacts on growth this quarter. If you can kind of confirm that or I don't know, I think we have to wait for the 10-K to see the mix of Casualty versus Property if you were able to preview it. And then just along those lines too, how is pricing looking in kind of small commercial casualty?

Mike, this is Mike. I think our mix of business generally is 1/3, 2/3; 1/3 Property, 2/3 Casualty. The larger layered deals, as Brian indicated, are under some competitive pressure after just seeing a tremendous inflation in rates over the prior several years. So we think that's a normal evolution of that market. The returns have been extraordinary, and it makes sense. A lot of capital has flowed back into that space. Our small property divisions are still growing very rapidly, and we're getting positive rate increases there. So we're upbeat on property. Small casualty, I think as Brian said, it kind of varies by product line. So on construction, commercial auto, excess, very healthy rate increases. Other lines like management liability, professional liability, where we've seen some extraordinary levels of profitability, we're trying to be incrementally more aggressive.

Got it. Okay. And that's helpful. Maybe switching gears to the point of excellent profit margins, so you're saying on this call and in the past, too, that you're willing to trade off less excellent profits for what sounds like more growth. Is that actually -- are we actually seeing -- because I know there's an overlaying impact maybe from large property having a negative impact on overall growth. But would you say that we might be reaching a trough in terms of the ability for -- to drop price enough to kind of reaccelerate certain elements of growth on the Casualty front?

I would say, keep in mind that the margins on some of our highest margin business is extraordinary. When you lower rates in certain select areas, the effect is not immediate on the profitability and the growth. It takes a little while for it to -- so I don't think we've hit the point where -- we haven't exhausted our ability to pull that lever, let's just put it that way.

And then in terms of the market, Mike, you've got to remember how diverse it is, right? It doesn't move monolithically. Large accounts, small, some states versus others, cat exposed versus non-cat exposed, clean accounts versus accounts with loss problems, the market is all over the place. But we're -- we feel very comfortable with the guidance around 10% to 20% growth.

Our next question comes from Bill Carcache from Wolfe Research.

Mike, following up on your growth comment. After seeing Kinsale grow at roughly 40% clip since 2019 and hearing you talk about it seemed like that entire time frame, that growth wasn't sustainable. We've indeed now seen your growth rate decelerate much more sharply. Is the sort of low teens growth rate something that you think is now at a level that you would view as sustainable going forward from here? I understand you don't provide specific growth guidance, but I think your investors would really appreciate just hearing your thoughts, particularly those who weren't able to attend the Investor Day on whether you see further deceleration from here versus the idea that at some point, growth should plateau. And how close are we to that point? And sort of with that as a backdrop then, could you also frame whatever that top line view is? As you move down the P&L, is it reasonable for your investors to expect that the business model is capable of generating mid- to high teens EPS growth sustainably through the cycle?

Yes, Bill, I think that 10% to 20% growth is a conservative and good faith estimate as to where we go from here. I think if you look back over 5 years when we were growing at a 40% clip, that was driven in large part by our business model. We're the low-cost operator. We've got the best customer service in the industry, bar none. I think we've got the broadest risk appetite that we offer our brokers. We've got a handle on technology that -- I'm not familiar with any company that's in a similar position that we are in terms of low cost, but also data and analytics. So we're very confident in what we're doing will allow us to continue to grow at that 10% to 20% clip. The 40% growth was driven in part by a level of dislocation around the industry, and some of that's abated. We've seen billions and billions of dollars of new capital coming into the industry. And so it's -- things are more competitive now than they were, but we're bullish.

And just to be crystal clear, your 10% to 20% growth is in reference to top line?

Correct.

Because you also, in your opening comments, made some comments around expecting to make continued investments that are going to improve the efficiency ratio. And so we should see the rate of revenue growth exceed expense growth. With positive operating leverage, you're doing buybacks, so the rate of earnings growth would certainly be much stronger than that.

I think it would be, yes, because of productivity gains, Brian talked about our new money in the investment portfolios being invested at higher rates than the current book yield of the portfolio. Yes, absolutely.

Okay. That's very helpful. And then separately, if I may, for Bryan Petrucelli and Brian Haney on capital buybacks. I think investors appreciate that Kinsale operates a highly capital accretive business model that's capable of supporting faster growth environments, but it seems like when growth slows, your buyback capacity increases. So I think following up on that thought, how much capital does Kinsale need to operate the business if growth -- written premium growth -- gross-written premium growth remains to their current levels? Is the 23,000 sort of shares that you repurchased this quarter a reasonable run rate for investors to expect like sort of steady state and then you would be adding additional buyback on top of that if you wanted to be opportunistic? Maybe if you could just frame how to think about those dynamics.

Yes, Bill, this is Mike. If you look at our current buyback strategy, it's similar to our dividend strategy in that it's very modest. And as Bryan said in his comments at the beginning of the call, we expect to make modest buybacks each quarter. I think the fourth quarter is a good indicator of what we mean by that. And then, hey, we're always prepared to move opportunistically if something arises where that makes sense. But the dividend that we have is very modest. It's grown incrementally over the years. I think the share buybacks is also kind of a modest capital allocation strategy. And there's -- the capital model that we use to manage the business has a fair degree of complexity to it that I don't think it would be prudent to get into that on the call. But in general, we're going to always make sure we have enough capital to maintain our rating and satisfy the regulators, but we don't want to have a super abundance of capital beyond what's required for that. And so we think of the dividend and the buybacks as a way to address excess capital over the years ahead.

Our next question comes from Mark Hughes from Truist Securities.

Anything on January results given that we're midway through February? Anything on January that you'd call out?

Well, I don't think we want to comment on January. But Mark, we've reiterated our confidence in the 20 -- the 10% to 20% growth. And we've talked about the cat loss on the wildfires in Los Angeles. So that's probably where we want to go at this point.

The expense ratio was a little bit higher this quarter. Bryan Petrucelli, anything unusual in that?

As I commented in my notes, it's largely driven by an increase in variable compensation. But as we've talked in the past, that ratio is going to jump around quarter-to-quarter. So as you're sort of trying to model things out, I think looking at that 12-month ratio is probably what you should be -- that's where I'm going to direct you.

Yes. How about the cash flow in an environment where, say, you're in the 10% to 20% range? If you were to parallel kind of the low double-digit quarter, how does cash from operations look? That's been obviously quite strong. That's been helping to support your net investment income. What does it look like in a more modest growth environment? Does that flatten out? Does it go down? How do we think about that?

Pretty steady. It should grow at the premium, I think.

Very good. And then you talked about leaning into personal lines. I know it's pretty small, but what can that mean for the top line if you do lean into personal lines?

Yes, this is Brian Haney. I mean, if you look at it, the homeowner space is larger by itself than the E&S space in the U.S. And an increasing percentage of it, even though it's small, is moving into the E&S space. So I think there's a huge opportunity for it, especially given like -- things like high-value homeowners in California, it's like -- it's a very concentrated market that's just suffered a giant loss among a small number of players. So I think there's an opportunity there. I think there's an opportunity to expand what we do in the manufactured housing space. I think there's an opportunity to expand into sort of adjacent type of businesses like stick-built homes or nonmanufactured housing homes. All again, these are hard-to-place catastrophe-exposed high-margin business, but there's just a lot of it. And right now, I think there's -- it's probably one of the harder areas in the overall P&C industry.

Yes. And it will be kind of a gradual expansion over time. So I think it was like 2% of our book last year. But we're optimistic that will continue to grow quite a bit in the years ahead.

Our next question comes from Andrew Andersen from Jefferies.

Just thinking about the California loss, maybe a little bit bigger than I would have thought just given exposures in the state as of year-end '23. Could you maybe talk about maybe the size of the gross loss there, where the losses are coming from and kind of how growth has trended over the last year and maybe how you see it into '25 for California specifically?

The gross was about $45 million and the net pretax $20 million. It's a mix of commercial, inland marine, personal lines. I can't really speak to the specific growth rate in California or that area but, Andrew, I would look at it this way. We've always written cat business because the margins are pretty compelling. And we've always written it with some degree of conservatism around risk management and making sure that we control for the volatility, whether it's wildfire or coastal wind or what have you. And so I think actually, this is a result that's kind of right in the strike zone for us. It's a very manageable loss on business that throws off pretty attractive margins in general.

And then on the 17% submission growth, kind of the slowest in a little bit here. But as we turn to '25, and maybe you could just talk about the mix within that 17%, if it's more casualty going forward. But I'd also be interested to hear if you're perhaps thinking about kind of increasing your quote-to-submission ratio or your bound-policy-to-submission ratio to be more competitive to a certain degree?

We are definitely seeing a higher quote-to-submit ratio. On one of the upsides of lower growth is it makes it easier for us to hit our customer service targets, including our quote ratio standards. So yes, we are quoting more and we are binding more. And then keep in mind, that 17%, that number does jump around.

Is it starting to be a bit more casualty rather than property compared to maybe the last 12 to 18 months?

Yes. I mean it depends on what -- I mean, without getting too much into the weeds, it depends on what specific product you're talking about. We are seeing a lot more personal insurance submissions. We're seeing maybe fewer of the shared and layered submissions. But we're still seeing more inland marine submissions. It varies across the book.

Yes. And just -- I think, Brian, you meant we're seeing a lower growth rate in the shared and layered, but it's still growing.

Right.

Our next question comes from Scott Heleniak from RBC Capital Markets.

I think we lost Scott. Scott?

Yes, just wondering if you could comment on the Q4 -- the core accident year loss ratio there. You saw -- there was improvement year-over-year. Anything worth calling out the tick down year-over-year? I know you kind of commented before as it sort of improves year-end if loss trends come in better than expected, but anything notable to call out there?

Scott, I would characterize it as general success across the portfolio. But the impact on that quarter was probably a little bit driven by some pretty exceptional results in the property area. That's shorter tail business, so you tend to see those positive results more quickly.

Okay. That makes sense. And then I wonder if you could expand on -- you referenced the agribusiness, the new product line there. If you can expand on the kind of the exposure and geographies you might be planning to go to there. And then also, any other new products that you want to call out for 2025? I know there was a lot in the previous 2 years, but anything else to call out there, too?

I'll answer that last question first. Most of the new products we're thinking about for 2025 aren't nearly as significant as, let's say, the personal insurance push we're making in the last 2 years or the agribusiness. The agribusiness would be virtually everywhere in the United States, agricultural -- the agricultural economy is basically present in every state. And it's going to be a mix of casualty and property exposures and then some sort of unique exposures relative to farming and ranch. Yes. So I wouldn't expect any like dramatic new product in 2025, just gradual incremental -- moving into adjacent lines very gradually and slowly so that we don't take excessive risk.

Got it. That makes sense. Just the last one, too, on the -- moving up the equity exposure, which you expect to take to 10% and eventually 12%. Is that a similar strategy with using the -- basically stock ETFs? Is that the way you're going to do that, just upping your exposure to the existing investments you have in equities? Or anything different there?

Yes, Scott, this is Mike. We have a portfolio that we manage internally. It's kind of a value-oriented large cap, mostly dividend paying kind of a buy-and-hold strategy there. And then we've got the 2 ETFs with the passive strategy. So it's a mix.

Our next question comes from Michael Phillips from Oppenheimer.

I'm curious if you'd provide any updated thoughts on what you're seeing in your GL book loss trend. And then, I mean, I think your commercial umbrella in excess book isn't that small relative to your overall book. So maybe if you could even go deeper into, say what the trends you're seeing in the umbrella piece as well.

I don't think we've got a lot of specifics. There's a lot of industry data out there. I think our loss trends would probably conform to what you're hearing. I didn't bring that information.

I would say, just on an absolute basis, the margins in our umbrella book and our GL book are really strong. And unlike -- I saw an interesting chart the other day, our development has been consistently better than the industry's reserve development. So I think we are doing a better job staying on top of those loss trends in the reserving process. I do think it's going to be maybe a problem for the industry going forward.

Okay. And maybe one more on California. I mean, given the news that we're kind of hearing about the Eaton side of the losses there, any chance you'd take your $25 million and split it, Eaton versus Palisades?

It's 100 and 0. It's all Palisades.

Our next question comes from Pablo Singzon from JPMorgan.

As you're lowering prices in exchange for growth, is the trade-off confined within a specific line? Or are you going to cross-subsidize across lines, right, like using more profitable lines to support less profitable lines? Or maybe you're looking at dollar profitability more holistically on an account level basis instead. So just some perspective on how you're carrying out the strategy would be helpful.

Well, I would say we don't cross-subsidize anything because we don't have loss leaders. Every division, every product is supposed -- it has to be able to hit our profitability targets. It is a calculation we are kind of doing at the individual division level. Obviously, some divisions -- all of our divisions are doing well. Some of our divisions are doing remarkably well from a margin perspective. And those are the ones where we're looking at sharpening our pencil and getting a little more aggressive in places.

Got you. That makes sense. And then second question, I was hoping you could comment on prior year development this quarter. So favorable overall, but would be curious about the breakdown of positives and negatives. Are you still adding to construction defect reserves from over the years? And where are you getting the releases?

Well, we talked about property. As a short-tail line of business, you see those results more quickly. And we've pushed our construction-related book-to-loss ratios. They're well into the 80% range. And that's largely because if you go back to accident years, I forget where it starts, maybe either '15 or '16, '17, '18, '19, we did see the impact of inflation, in particular, on those lines where the cost of repair, labor costs, et cetera, jumped pretty dramatically in a couple of year period. So we've raised rates dramatically. Our coverage is a little bit tighter than it used to be. We made a lot of adjustments on the underwriting that gives us confidence that the results for the, say, '20 through '24 are going to be quite a bit better. But we don't know definitively. It's a long tail line, and so we -- just like we do across the whole book, we set aside what we think are very conservative loss reserves. And if there's good news in the future, that will be great. If not, we're prepared with our current reserves to absorb that.

Got you. And then sneaking just last one. As a follow-up on the question about the attritional loss ratio, would it be reasonable to assume flat to higher attritional loss ratios just given the more competitive pricing environment and your strategy of trading off pricing and growth going forward?

Well, it's a broad product line with a lot of different component pieces. But in general, as Brian, I think, said earlier, rates are flat for the quarter. So I would make some assumptions based on that.

Our next question comes from Andrew Kligerman from TD Securities.

Just a little nuance on some of the prior questions. I guess tacking on to the loss ratio question, I mean, you came in at an exceptional 73.4% combined. I mean any other company, I would have thought it was their loss ratio, not their combined. But -- and if I look at a chart and I go back 10 years, I see that you've kind of -- maybe closer to 10 years ago, you were in the low 70s, 1 year, you were at 60%, maybe in the middle years, you were in the low to lower mid-80s. So given that the environment is getting a lot more competitive in various areas, any sense of the cadence of what could happen going forward? Could we see kind of a gradual drift into the low 80s over the next few years?

I think that's certainly possible. We want to maximize wealth building for our stockholders. And I think you do that by balancing profitability and growth. And I think that's what Brian was trying to address earlier with his comments around fine-tuning our pricing on certain ultra-high-margin lines. But in general, I think what we're going to maintain is best-in-class profitability, very strong growth rates. And we expect Kinsale stock price to appreciate in value in the years ahead.

Okay. And maybe on the verticals, could you remind me of how many segments that you have right now similar to the ag segment? And I know you mentioned in an earlier question that this year is going to be big in personal lines and ag for growth. Maybe thinking out to '26 or '27, how many of these verticals would you like to add each year? And then -- and again, how many do you have right now?

Yes. Look, we have 26 now. I would look at these verticals as a judgmental way to divide and organize our underwriting teams around industry segments and coverage, right? So we want experts at the desk level. And so you have to have some degree of focus to really be an expert at the underwriting and understanding the businesses we're insuring and all the characteristics of those business that drive loss exposure and trends on the legal side and who are our competitors and how do they segment and price risk. So there's no magic number. It certainly may incrementally grow over time. And then just a quick correction on the new business lines. I think Brian said earlier, we don't expect extraordinary growth from our new business. We expand the product line over and over again over the years, and we get incremental growth. It's part of our strategy to roll out new products in a methodical fashion to really increase the probability that we're getting things right.

I see. And when you say when you say, Mike, expanding incrementally, that would mean within a vertical, maybe adding a new product line?

Yes, incremental expansion of the product. But if we roll out a new underwriting division, we might write several million dollars. We're not going to go corner the market the first year we're in business. And that's been a good strategy for us over the -- this is our 16th year in business. So it's -- I think it's worked well for us over time.

Our next question comes from Michael

Great. Just a couple of follow-ups. In terms of employee growth, I know the 10-K is not out, but would you just say kind of high level as the company gets larger, the employee growth rate has been decelerating a little bit? Or any color there?

I think we've gotten incremental gains in productivity every year, if you measure that by gross written premium per full-time employee. I think it's gone up every year. And with the work we're doing in the technology area, we certainly would expect that to continue.

Okay. Got it. And lastly, going back to kind of loss cost trend and reserves. Tell me if I'm crazy, but given how robust your reserve releases have been relative to the kind of the pricing stats you all give out, it kind of implies that your loss cost trend is closer to 0 than to the high single digits lots of companies talk about on the casualty side. Any comments?

Yes. Our loss trend assumptions would definitely not be 0, it would be somewhere in the high single digits. There's some variability by line of business, but we're definitely conservative on estimating future losses.

Okay. I tried just to -- pretty steady reserve releases, so it implies you're being a little too conservative.

Our last question will come from Casey Alexander from Compass Point.

Most of my questions have been asked and answered, but I have a couple for you. First of all, when you talk about the wildfires with $45 million, of which $25 million is your end of it, is that top of limit without much slack to that number? Or because the losses are kind of across personal and commercial property is, as you adjudicate those losses, is there some opportunity to drive that $25 million number down some?

Yes. I mean it's an estimate, Casey. I mean, we're working through quickly. I mean, property claims typically are resolved much more quickly than they are on the casualty side. So -- but I think it's a good safe estimate, and it's certainly possible it could move up or down, but I wouldn't expect it to be dramatically different.

Okay. Secondly, I'm just kind of curious, and I'm not trying to irritate you because I know you guys don't like to be measured on a price-to-book basis. You don't think that's appropriate. But the fact of the matter is that there's a lot of investors who look at the price-to-book value, and it just slows them down in terms of whether or not to invest in the company based upon the valuation. So I'm curious why the share repurchase program is sort of an on-the-run thing that actually is dilutive to your book value when you could easily take some of that capital and better devote it to the dividend, which wouldn't have necessarily the same level of impact on your book value and would still be a positive way of returning capital to shareholders and thus leaving the share repurchase program for periods where there was really excess volatility in the market. I'm just curious.

Yes. So number one, the share repurchase program is very modest, right? We bought $10 million worth of stock on a market cap of somewhere north of $10 billion. The second point I'd make is we respect the fact that a lot of people look at price to book. It's just that you have to remember, we are a very capital-efficient company. So we have enough capital to operate our business. And then we have some extra, because there's some variability in our business, and we have to be able to absorb that. But we have competitors that have tremendous amounts of redundant capital beyond what they need to operate the business. So someone that has a very bloated capital base and Kinsale that has a very efficient capital base, and if you're comparing our respective price-to-book multiples, you're comparing apples and oranges. Whereas if you look at forward earnings or last 12 months earnings, I think it's more of an apples-to-apples comparison. And then the last point I'd make is we think our stock price is really driven by expectations around future earnings. And we think most investors don't value us on our assets or our assets minus liabilities or our book value. So that's the rationale basically.

We have no further questions. I'd like to turn the call back over to Michael Kehoe for closing remarks.

Okay. Well, we appreciate everybody's time this morning. We're optimistic about the future and look forward to talking again here in a couple of months. Have a great day.