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Shares of Kinsale Capital Group, Inc. KNSL have soared 49.9% year to date (YTD), outperforming the industry’s 28.2% growth. The insurer also outperformed the Zacks S&P 500 composite and the Finance sector’s return of 27.8% and 21%, respectively, YTD. With a market capitalization of $11.69 billion, the average volume of shares traded in the last three months was 0.1 million.
KNSL Outperforms Industry, Sector, S&P YTD
Image Source: Zacks Investment Research
The rally was largely driven by a focus on the excess and supply (E&S) market, prudent underwriting, lower expense ratio, growth in the investment portfolio, solid growth projections and effective capital deployment.
This property and casualty insurer has a solid track record of beating earnings estimates in each of the last four quarters, the average being 9.41%.
KNSL Trading Above 50-Day and 200-Day Moving Average
This Zacks Rank #3 (Hold) insurance broker closed at $502.07 on Monday, above its 50-day and 200-day simple moving average (SMA) of $473.73 and $447.09, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Northbound Estimate Revision for KNSL
The Zacks Consensus Estimate for 2024 and 2025 moved 0.5% and 0.9% north, respectively, in the last 30 days, reflecting analyst optimism.
Growth Projection for KNSL
The Zacks Consensus Estimate for Kinsale Capital’s 2024 earnings per share indicates an increase of 24.8% from the year-ago reported number. The consensus estimate for revenues is pegged at $1.59 billion, implying a year-over-year improvement of 30.6%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 17.5% and 16.6%, respectively, from the corresponding 2024 estimates.
Earnings have grown 45.7% in the past five years, better than the industry average of 11.4%. The expected long-term earnings growth rate is 15%, outperforming the industry average of 11.2%. KNSL has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.
Can the Stock Retain the Momentum?
Premiums should continue to improve, given the company’s strong presence across the E&S market in the United States and high retention rates stemming from contract renewals. Management noted that the E&S market has witnessed significant growth and generated better underwriting results than the broader P&C industry. It remains well-poised to benefit from continued market dislocation, aiding improved submission flows and better pricing decisions.
KNSL’s solid market presence helped it deliver improved margins and lower loss ratios. The insurer targets clients with small-sized and medium-sized accounts with better pricing and less prone to competition. Management estimates low double-digit rate increases across the book of business.
Kinsale Capital enjoys the best combination of high growth and low combined ratio among its peers. It targets a combined ratio in the mid-80s range over the long term. Also, KNSL is well-poised to generate an improved expense ratio given its proprietary technology platform, which is likely to provide it with a competitive edge over other industry players and scalability in business.
Investment of excess operating funds at higher rates in an improved rate environment should drive investment results. Notably, its free cash flow conversion has remained more than 85% over the last many quarters, reflecting its solid earnings.
The insurer has increased dividends since 2017 at a seven-year (2017-2024) CAGR of 12%, riding on the strength of operational excellence that supports a solid capital position.
KNSL has a VGM Score of B. The VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.