Kinsale Capital's Third-Quarter Combined Ratio Is 75.4% Even as Net Income Falls 31% to $98.1 Million on a $37.6 Million Bond-Sale Loss and Property Premiums Drop 19%

Kinsale Capital Group reported third-quarter 2026 results that look contradictory at first glance: a combined ratio of 75.4%, one of the lowest among listed insurers, and net income down by almost a third. The numbers below come from a Reinsurance News report of the company's results. The article does not give earnings per share, book value, buybacks or guidance, so this summary does not cover them. The two halves of the story, strong underwriting and a smaller bottom line, have different causes, and separating them is the key to reading the quarter.

Why net income fell

Third-quarter net income was $98.1 million, compared with $141.6 million in the third quarter of 2025, a drop of about 31%. The report says net income included a $37.6 million pre-tax realised loss from selling fixed-maturity securities, which the company tied to a portfolio repositioning aimed at improving long-term yields. In plain terms, Kinsale sold bonds at a loss, presumably to reinvest in higher-yielding holdings. Such a loss reduces reported profit now in exchange for expected income later, and it does not reflect the cost of claims. The report does not say how much yield the company expects to gain, so the benefit cannot be measured from the article.

For the nine months, net income was $386.6 million, up from $365.0 million. That means the first half of the year was strong enough to leave the year-to-date figure higher than last year even after the weaker third quarter.

Underwriting held up

The underwriting result was steady. Underwriting income was $107.1 million against $105.7 million a year earlier. The combined ratio, which compares claims and expenses with premiums earned, was 75.4% compared with 74.9%. A ratio under 100% means an underwriting profit, so at 75.4% roughly 24.6 cents of every premium dollar earned was left after claims and expenses, a simple calculation from the reported figure. The loss ratio was 53.4% against 53.9%, and the expense ratio was 22.0% against 21.0%. The report says the quarter benefited from higher favourable prior-year reserve development, partly offset by lower ceding commissions resulting from higher treaty retentions. Favourable development means that claims from earlier years turned out cheaper than the company had reserved. Higher retention means Kinsale is passing less risk to reinsurers, which reduces the commissions it receives. The article gives no dollar figure for the reserve release.

Catastrophe losses were small: after-tax catastrophe losses were $1.7 million in the quarter, against $1.0 million a year earlier, and $7.2 million for the nine months, against $21.7 million. The report adds that the 2025 nine-month loss ratio included 2.3 points of net catastrophe losses, mainly from the Palisades Fire in California. Nine-month underwriting income was $307.0 million, up from $268.6 million, and the nine-month combined ratio improved to 76.1% from 77.5%. The nine-month loss ratio was 54.5% against 56.9%, while the expense ratio rose to 21.6% from 20.6%.

Premiums are shrinking in property

The weaker figure is premium growth. Gross written premiums, the total premium written before reinsurance, fell 4.8% to $462.9 million, and nine-month gross written premiums were $1,472.5 million, down 3.5%. Net written premiums fell 1.5% to $399.1 million. Net earned premiums, the revenue recognised in the period, rose 3.0% to $423.5 million, since earned premium lags written premium.

The decline comes from property. Property premiums fell 19.3% in the quarter and 18.7% over nine months, which the report attributes to competition. Commercial property fell 26.8% in the quarter and 29.8% over nine months. Casualty gross written premiums rose 0.9% in the quarter and 3.0% over nine months. This pattern is consistent with a softening property market, in which more insurers compete for the same business and prices fall. Kinsale's response, according to its chief executive, has been to hold its underwriting standards. Michael Kehoe said the quarter's results demonstrate discipline in a competitive market. The statement is the company's own description, but the premium numbers fit it: the company is writing less property business and still earning a very low combined ratio.

Investment income

Net investment income rose 17.5% to $58.3 million. Investment income is the interest and dividends earned on the portfolio, and it has risen as the portfolio has grown and reinvestment yields have been higher. The realised loss on bond sales sits outside this figure, so the two should be read together: income from holdings rose, while the repositioning cost reduced net profit.

What to watch

Three questions follow. First, how far will property premiums fall if competition continues? A 26.8% fall in commercial property premiums in one quarter is large, and the report does not say whether the company expects it to stabilise. Second, will casualty growth speed up? Growth of under 1% in the quarter is slow, and casualty lines are the ones where reserve adequacy is most closely watched by investors. Third, will the repositioned portfolio deliver the higher yield that justified the loss? The answer will appear in later quarters' investment income.

Limits

This article summarises a trade-press report and not the company's full release, so it omits earnings per share, book value and any outlook statements. It is general information, not investment advice.