Here's Why You Should Consider Investing in Kinsale (KNSL)
Kinsale Capital’s KNSL focus on the excess and supply (E&S) market, prudent underwriting, lower expense ratio, growth in the investment portfolio, effective capital deployment and optimistic growth estimate make it worth adding to one’s portfolio.
The insurer’s earnings have increased 44.1% in the past five years, outpacing the industry’s average of 17.1%. KNSL has a solid surprise history, beating earnings estimates in the last 11 reported quarters.
Zacks Rank and Price Performance
Kinsale sports a Zacks Rank #1 (Strong Buy). Shares have jumped 65% year to date, outperforming the industry’s growth of 7.8%. The Finance sector has risen 1.8% and the Zacks S&P 500 index has gained 13.5% in the same time frame.
Image Source: Zacks Investment Research
Return on Equity
Kinsale’s ROE for the trailing 12 months is 29.1%, which compares favorably with the industry’s 6.7%, reflecting the company’s efficiency in utilizing shareholders’ funds. This insurer targets mid-teens ROE over the long term
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 earnings has moved 0.6% and 1.1% north in the last seven days reflecting analysts’ optimisms.
Growth Projections
The Zacks Consensus Estimate for 2023 earnings indicates an improvement of 49.3% from the year-ago reported figure on 48.3% higher revenues. The consensus estimate for 2024 earnings suggests a rise of 22.7% from the prior-year reported figure on 26.8% higher revenues.
We expect 2025 bottom line to witness a three-year CAGR of 22.4%.
It has a Growth Score of B. Back-tested results have shown that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer better returns.
Growth Drivers
Kinsale’s premium should continue to benefit from its established presence across the E&S market of the United States, improved submission flows and high retention rates arising from contract renewals. We predict 2025 net written premiums to witness a three-year CAGR of 19.7%. KNSL anticipates 2023 to be the sixth calendar year in a row with double-digit industry-wide E&S premium growth.
The insurer targets clients with small-sized and medium-sized accounts with better pricing and less prone to competition, and estimates low double-digit rate increases across the book of business.
Given an improving rate environment, investment of the excess operating funds should help it build a robust investment portfolio.
Kinsale enjoys the best combination of high growth and low combined ratio among its peers. KNSL targets a combined ratio in the mid-80s range over the long term. Notably, KNSL noted the E&S market has witnessed significant growth and generated better underwriting results than the broader P&C industry.
A proprietary technology platform, which is likely to provide it with a competitive edge over other industry players and scalability in business, should help KNSL generate an improved expense ratio.
Impressive Dividend History
Banking on operational excellence, the insurer has increased dividends since 2017 at a seven-year CAGR (2016-2023) of 13.7%.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are ProAssurance PRA, Axis Capital Holdings Limited AXS and Chubb Limited CB. ProAssurance currently flaunts a Zacks Rank #1, while Axis Capital and Chubb carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
ProAssurance has a decent record of beating earnings estimates in two of the last four quarters and missing twice. PRA has gained 2% so far this year.
The Zacks Consensus Estimate for PRA’s 2024 earnings per share is pegged at 83 cents, indicating a year-over-year jump of 143.5%.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing once, the average beat being 9.75%. Year to date, AXS has risen 4.7%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $8.41 and $9.31, suggesting year-over-year growth of 44.7% and 10.7%, respectively.
Chubb has a solid record of beating earnings estimates in three of the last four quarters and missing in one, the average beat being 3.36%. Year to date, CB has lost 4.7%.
The Zacks Consensus Estimate for CB’s 2023 and 2024 earnings per share is pegged at $18.18 and $19.86, implying year-over-year increases of 19.3% and 9.2%, respectively.p
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Chubb Limited (CB) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
ProAssurance Corporation (PRA) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
