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Kinsale Capital Gains 48% YTD: What's Driving the Stock?

Zacks Equity Research

Kinsale Capital Group KNSL shares have gained 48.3% year to date against the industry's decline of 19.4% and the Zacks S&P 500 composite’s decrease of 5.1%. With market capitalization of $3.4 billion, average volume of shares traded in the last three months was 0.2 million.

The company continues to benefit from dislocation within the broader property and casualty insurance industry, rate increases and premium growth. The company delivered positive earnings surprise in two of the last four reported quarters with the average beat being 3.44%.

Return on equity of 15.1% in the first quarter of 2020 was better than the industry average of 6.5%, reflecting the company’s efficiency in utilizing shareholders’ fund.  

The company has a favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.


What’s Driving It?

Kinsale Capital should benefit from not underwriting such lines of business that may have increased exposure to coronavirus-related losses. The company counts on technology to lend competitive advantage. This coupled with rate increase has enabled company to grow its premium revenues despite the impact of the pandemic.  Also, it focuses on developing products in which it has underwriting expertise.

This Zacks Rank #3 (Hold) insurer boasts the lowest combined ratio among its specialty insurer peers while achieving the highest growth. Kinsale Capital targets to deliver mid-80s combined ratios and mid-teens operating returns on equity.

The company also has various reinsurance contracts to limit its exposure to potential losses stemming from risks apart from arranging for additional capacity for growth.

The Zacks Consensus Estimate for 2020 and 2021 earnings indicates 21.6% and 8% year-over-year increase, respectively. The stock carries an impressive Growth Score of A. Growth Score analyzes a company’s growth prospects.

This primarily excess and supply insurer focusing on small to medium-sized accounts remains well poised to capitalize on attractive opportunities in its target market and prudently grow business. Kinsale Capital enjoys strong rating from credit rating agencies.

Stocks to Consider

Some better-ranked companies in the insurance industry are National General Holdings Corp NGHC, Heritage Insurance Holdings Inc. HRTG and The Allstate Corporation ALL.

National General, a specialty personal lines insurance holding company, provides various insurance products and services in the United States, Bermuda, Luxembourg and Sweden. Its earnings beat estimates in two of the last four quarters, the average positive surprise being 5.68%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Heritage Insurance provides personal and commercial residential insurance products. The company surpassed estimates in each of the last four quarters, the average positive surprise being 61.34%.The stock carries a Zacks Rank #2.

Allstate provides property and casualty, and other insurance products in the United States and Canada. The company surpassed estimates in each of the last four quarters, the average positive surprise being 18.45%.The stock carries a Zacks Rank #2.

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