Kinsale Capital Group, Inc.’s KNSL Long-Term Issuer Credit Rating (Long-Term ICR) has been upped to ‘bbb’ from ‘bbb-’ by AM Best. Concurrently, the rating giant upped Kinsale Insurance Company’s Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term ICR to "a" from "a-". However, the outlook of the rating has been downgraded to stable from positive.
The rating upgrade came on the back of the company’s sturdy balance sheet, solid operational performance, neutral business profile and prudent enterprise risk management (ERM). The upgrade also reflects competent underwriting performance and solid risk-adjusted capital.
This Zacks Rank #3 (Hold) excess and supply insurer boasts the lowest combined ratio among its specialty insurer peers while achieving the highest growth. 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 ratings could be further upgraded with expanded depth and breadth of risk-adjusted capital measurements while the rating could be subject to downgrade, given poor operating performance.
Rating affirmations or upgrades from credit rating agencies play an important role in retaining investor confidence as well as maintaining creditworthiness of a stock. Rating downgrades not only hamper business but also increase the cost of future debt issuances.
Shares of Kinsale Capital have rallied 49.5% year to date against the industry’s decline of 19.9%. Dislocation within the broader property and casualty insurance industry, focus on small to medium-sized accounts, rate increases and premium growth should help the stock retain the momentum. The stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked companies from the same industry are National General Holdings Corp NGHC, Palomar Holdings, Inc. PLMR 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.
Palomar Holdings provides specialty property insurance. The company surpassed estimates in two of the last four quarters, the average positive surprise being 10.93%.The stock carries a Zacks Rank #2 (Buy).
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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