Competition in the excess and surplus property market cut into Kinsale Capital Group's premium volume in the second quarter, with commercial property division premiums down 32.7% even as overall earnings rose.
"We delivered another quarter of exceptional financial results. Our business continues to generate consistent and growing underwriting profits and investment income. We are generating significant operating cash flows resulting in excess capital and are pleased to report an additional share repurchase authorization of $250 million. Our focus remains on delivering sustainable long-term value creation for stockholders as we execute our strategy of disciplined underwriting and technology-enabled low costs," said Kinsale's chairman, president and CEO Michael P. Kehoe.
Kinsale said gross written premiums fell 5.0% to $527.6 million, and net written premiums dropped 1.4% to $452.5 million, for the quarter. First-half gross written premiums slipped 2.9% to $1,009.6 million, down from $1,039.8 million, with the property division down 30.9%.
Outside that division, gross written premiums rose 3.7% in the quarter and 4.8% for the half, tied to steady submissions and more bound accounts, offset by lower average premium per policy.
The pressure lines up with wider market data. Lockton's February 2026 update found non-habitational commercial property rates down 5% to 10% at renewal, with steeper declines on shared and layered placements, and forecast further softening through summer as catastrophe reinsurance capacity stayed abundant after a mild 2025 hurricane season.
That abundance has a source: capital. Fitch Ratings said US policyholders' surplus reached $1.2 trillion as of September 30, 2025, up 24% over three years, and projected it would grow a further 5% in 2026. Fitch analyst Chris Grimes said the buildup gives carriers a cushion against macro shocks, but the same capital is also what is chasing down property pricing across the E&S market.
Even so, the wider E&S segment kept growing overall. WSIA's year-end 2025 report put surplus lines premium across its 15 stamping-office states at $90.3 billion, up 7.8% from $83.8 billion in 2024, with item counts rising 14.1%, indicating that softer property pricing has not yet dented total market volume even as it reshapes where growth is coming from.
Risk Placement Services warned that continued rate erosion could push some E&S property business toward unprofitable pricing. New managing general agents and automated capacity have given brokers more options than most deals require, RPS said, and a further 10% to 15% pricing drop next year would leave some carriers at or below break-even.
The pattern echoes one already visible in Kinsale's first quarter: net income reached $112.6 million, or $4.88 per diluted share, up 27.4% from $89.2 million, or $3.83 per diluted share, even as the property book contracted under the same pressure now showing in Q2.
Net income reached $175.9 million, or $7.72 per diluted share, for Q2 2026, up 34.0% per share from $134.1 million, or $5.76 per diluted share.
First-half net income totaled $288.4 million, or $12.58 per diluted share, versus $223.3 million, or $9.59 per diluted share, in 2025; after-tax catastrophe losses were $4.2 million for the quarter and $5.5 million for the half, down from $2.9 million and $20.8 million.
Net operating earnings came in at $126.2 million, or $5.54 per diluted share, up 15.9%, and totaled $244.0 million, or $10.64 per diluted share, for the half, versus $197.8 million, or $8.49 per diluted share, in 2025.
That growth outside the property line fits a pattern IMA Financial Group described as a "two-speed market" in its Q2 2026 report: property and select professional lines easing, while commercial auto, umbrella and general liability keep hardening. IMA said the divide between softening property and hardening casualty lines is the defining feature of the 2026 market, which helps explain why a specialty insurer's non-property business can keep expanding even as its property book contracts.
Net earned premiums climbed 8.9% to $417.6 million, and net investment income rose 19.9% to $55.7 million for the quarter; for the half, net investment income increased 23.1% to $111.2 million.
Underwriting income totaled $105.4 million for the quarter, with a 75.5% combined ratio, versus $95.5 million and 75.8% in Q2 2025, tied to premium growth and favorable prior-year reserve development, offset by lower ceding commissions from higher treaty retention. The loss ratio was 53.8%, down from 55.1%; the expense ratio rose to 21.7% from 20.7%.
For the half, underwriting income reached $199.9 million with a 76.4% combined ratio, versus $162.9 million and 78.8%, when 3.4 points came from catastrophe losses tied to the Palisades Fire.
Kinsale is not alone in holding underwriting discipline through a softer market. Fellow specialty carrier RLI Corp. posted an 85.6 combined ratio and a 24.5% return on equity for Q2 2026, while AM Best revised its outlook on the wider E&S segment to stable from positive, citing growth that slowed to 9.7% through the first nine months of 2025, from 13.5% a year earlier.
That same underwriting stability carries through to the balance sheet. Investment holdings produced an annualized gross return of 4.5% for the half, up from 4.3%, with an average credit quality of "AA-" and fixed-maturity duration of 4.3 years at June 30, versus 4.0 years at year-end 2025; cash and invested assets totaled $5.5 billion, versus $5.2 billion.
Kinsale repurchased 321,055 shares in the quarter at an average of $311.47 each, for $100.0 million; in July, the board approved an additional $250 million authorization, bringing remaining capacity to $337.5 million, and paid a $0.25 quarterly dividend per share, totaling $5.7 million.
The effective tax rate for the half was 19.8%, down from 20.4%, tied to stock-based compensation and tax-exempt investment income.
Stockholders' equity stood at $2.0 billion at both June 30, 2026 and December 31, 2025; book value per share rose to $89.34 from $84.66. Annualized return on equity for the half was 28.9%, versus 27.9%, while operating return on equity eased to 24.4% from 24.7% as higher equity outweighed the profitability gain.
Independent analysts have flagged the same tension between margin strength and a tougher growth outlook. A June 2026 Seeking Alpha review of Kinsale's first-quarter results rated the stock a Buy rather than a Strong Buy, arguing that Kinsale remains a top-tier E&S insurer with strong underwriting and rapid growth in invested assets, but that growth is slowing and competition is increasing, resetting its valuation to a more moderate multiple of forward earnings even as its long-term compounding case stays intact.
