Core Viewpoint - Kinsale Capital Group is a unique specialty insurance company focusing on unusual situations and hard-to-assess risks, distinguishing itself from traditional insurance providers [1] Company Overview - Kinsale is the only publicly traded pure-play specialty insurance company, specializing in excess and surplus lines (E&S) insurance, which is known for its complexity and potential profitability [2] - The company has demonstrated exceptional profitability metrics, characterized by low loss and expense ratios, attributed to its proprietary technology platform [2] Performance Metrics - Since going public in 2016, Kinsale has consistently provided positive returns to shareholders, achieving over 30% revenue growth in the past 12 months and a total return exceeding 2,300% since its IPO, significantly outperforming the S&P 500 [3] - Kinsale is currently the 13th-largest E&S company, capturing approximately 1.4% of a $116 billion market, indicating substantial growth potential in a fragmented industry [4] Market Opportunity - The E&S insurance market presents a massive opportunity for Kinsale, with the potential for significant expansion if the company maintains its growth momentum [4] Current Stock Situation - Despite strong fundamentals and impressive revenue growth, Kinsale's stock has declined by 13% over the past three months, presenting a potential buying opportunity for investors [5]

Core Insights - The logistics sector has seen significant engagement from investors, particularly in the ASEAN and US markets, highlighting a trend towards diversification in investment portfolios [1] - The popularity of insurance companies in the Philippines since 2014 indicates a growing interest in financial products beyond traditional savings [1] - The entry into the US market has been facilitated by personal connections and the use of online platforms for trading, reflecting a shift in investment strategies [1] Investment Focus - The company has diversified investments across various industries, including banking, telecommunications, logistics, and hotels, indicating a broad approach to portfolio management [1] - There is a distinction between long-term holdings for retirement and short-term trades aimed at profit, showcasing a strategic investment approach [1] Market Trends - The rise of blue-chip companies in the Philippines has attracted initial investments, suggesting a trend towards established and stable companies for new investors [1] - The use of analytical tools and comparisons between different markets, such as the US and Philippine markets, demonstrates a methodical approach to investment analysis [1]

Core Insights - Kinsale Capital Group reported a 19.4% growth in operating earnings-per-share and a 12.2% increase in gross written premiums for Q4 2024 compared to Q4 2023 [1] Group 1: Business Model and Profitability - The company maintains a durable business model focused on small excess and surplus (E&S) accounts, which contributes to strong profitability [2] - Kinsale achieved a combined ratio of 73.4% and a full-year 2024 operating return on equity (ROE) of 29%, reflecting effective underwriting and claims handling processes [3] - Management is strategically reducing pricing in high-margin segments to drive growth while sustaining industry-leading profitability [4][5] Group 2: Product Expansion Strategy - Kinsale is expanding its product offerings, recently entering the agribusiness market with a new underwriting unit focused on farm and ranch opportunities [6][7] - The company has established 26 distinct underwriting divisions, allowing for incremental growth while maintaining underwriting discipline [7] Group 3: Future Outlook - Management expresses optimism about growth prospects despite increasing competition, highlighting a durable competitive advantage as a low-cost provider in the E&S market [8][9] - The company is investing in technology, automation, and data analytics to enhance profitability and growth, aiming to improve expense ratios and customer service [9]

Company Performance - Kinsale Capital Group, Inc. (KNSL) closed at $431.85, with a +0.88% change from the previous day, underperforming the S&P 500's gain of 1.59% [1] - The stock has decreased by 2.76% over the past month, compared to the Finance sector's loss of 0.53% and the S&P 500's loss of 2.42% [1] Earnings Estimates - The upcoming earnings release is expected to show an EPS of $3.13, reflecting a 10.57% decline year-over-year [2] - Revenue is projected at $424.62 million, which is a 13.9% increase from the same quarter last year [2] - For the entire fiscal year, earnings are estimated at $17.49 per share and revenue at $1.8 billion, indicating increases of +8.9% and +13.28% respectively from the prior year [3] Analyst Estimates and Rankings - Recent changes in analyst estimates are crucial as they reflect near-term business trends, with positive revisions indicating confidence in the company's performance [4] - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently ranks Kinsale Capital Group, Inc. at 3 (Hold) [6] - The Zacks Consensus EPS estimate has decreased by 3.62% in the past month [6] Valuation Metrics - Kinsale Capital Group, Inc. has a Forward P/E ratio of 24.48, which is significantly higher than the industry average of 11.09, indicating a premium valuation [7] - The company's PEG ratio stands at 1.63, compared to the industry average PEG ratio of 1.93 [8] Industry Context - The Insurance - Property and Casualty industry, part of the Finance sector, holds a Zacks Industry Rank of 44, placing it in the top 18% of over 250 industries [9] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [9]

Core Insights - Kinsale Capital (KNSL) shares have declined by 8.2% year to date, underperforming its industry, sector, and the Zacks S&P 500 composite [1] - The stock is trading significantly below its 52-week high and below the 50-day moving average, indicating a bearish trend [1] Financial Performance - Kinsale Capital has a market capitalization of $10 billion, with an average trading volume of 0.2 million shares over the last three months [5] - The Zacks Consensus Estimate for 2025 earnings is $17.49, reflecting an 8.9% year-over-year increase, with revenues projected to rise by 13.3% to $1.8 billion [6] - For 2026, the earnings estimate is $20.91, indicating a 19.6% year-over-year increase on 14.4% higher revenues of $2.1 billion [6] - The company has a Growth Score of B, with an expected long-term earnings growth rate of 15%, surpassing the industry average of 7.9% [6] Market Position and Strategy - Kinsale Capital is well-positioned in the excess and surplus (E&S) market in the U.S., benefiting from high retention rates from contract renewals [9] - The E&S market has shown significant growth and better underwriting results compared to the broader property and casualty (P&C) industry [9] - The company targets small to medium-sized accounts, aiming for low double-digit rate increases across its business [10] Operational Efficiency - Kinsale Capital has been improving its margins and maintaining lower loss ratios, targeting a combined ratio in the mid-80s range over the long term [10] - The company utilizes a proprietary technology platform to enhance its expense ratio and operational efficiency [11] - Free cash flow conversion has remained above 85% over recent quarters, indicating solid earnings [12] Return Metrics - The return on equity (ROE) for Kinsale Capital is 28%, significantly higher than the industry average of 7.6% [13] - The return on invested capital (ROIC) for the trailing 12 months is 24.1%, compared to the industry's 5.8% [14] Valuation and Analyst Outlook - KNSL shares are trading at a premium, with a price-to-book ratio of 6.72X, compared to the industry average of 1.65X [4] - The average price target from nine analysts is $477.78 per share, suggesting an 11.6% potential upside from the last closing price [15] Growth and Shareholder Returns - Kinsale Capital has a strong dividend history, with a seven-year compound annual growth rate (CAGR) of 12.1% from 2017 to 2024 [17] - The board of directors has authorized a share repurchase program of up to $100 million of common stock [17]

Financial Performance - Gross written premiums increased by 19.2% to $1.9 billion for the year ended December 31, 2024[19]. - Return on equity was 32.3% and combined ratio was 76.4% for the year ended December 31, 2024[19]. - Total gross written premiums for 2024 were $1,870.3 million, up from $1,568.8 million in 2023[26]. - For the year ended December 31, 2024, gross written premiums totaled $1,870.3 million, a 19.2% increase from $1,568.8 million in 2023[53]. - The average premium per policy written was $15,100 in 2024, increasing to $15,900 when excluding the personal insurance division[24]. - The percentage breakdown of gross written premiums was 67.4% casualty and 32.6% property in 2024[25]. - The largest brokers contributed significantly to gross written premiums, with RSG Specialty, LLC producing $366.4 million (19.6%), AmWINS Brokerage at $325.5 million (17.4%), and CRC Commercial Solutions at $213.9 million (11.4%) for 2024[51]. - The average commission paid to brokers in 2024 was 14.7% of gross written premiums, slightly lower than competitors[52]. Underwriting and Claims Management - The loss and loss adjustment expense ratio was 55.8% for the year ended December 31, 2024[28]. - The expense ratio was 20.6% for the year ended December 31, 2024, indicating effective expense management[30]. - The claims department consisted of approximately 90 professionals with an average of 9 years of experience, managing all claims in-house without third-party delegation[57]. - Kinsale Insurance's ability to accurately underwrite risks and set competitive yet profitable rates is critical; inaccuracies could adversely affect results of operations[174]. - The company must accurately and timely evaluate and pay claims, as failures could lead to regulatory actions and adversely affect its reputation[188]. Risk Management - The company focuses on catastrophe risk management, utilizing stochastic models to analyze severe loss risks, particularly from hurricanes, with a focus on 100-year and 250-year return periods[66]. - Reinsurance contracts are primarily used to limit exposure to large losses, with significant programs in place, including a commercial lines quota-share reinsurance treaty[69]. - The company maintained reserves for specific claims incurred and reported, as well as for claims incurred but not reported, continuously monitoring and adjusting reserves as necessary[64]. - The company faces significant uncertainty regarding claims frequency and severity, which could adversely affect growth and profitability[137]. - Severe weather conditions and catastrophes can lead to increased claims and reserves, adversely affecting liquidity and financial condition[153]. - Global climate change poses a risk to the company's financial results due to potential increases in severe weather and catastrophic events[155]. Investment Portfolio - The company's cash and invested assets totaled $4.1 billion at December 31, 2024, up from $3.1 billion at December 31, 2023[81]. - The fixed-maturity securities portfolio had a fair value of $3.5 billion, representing 86.9% of the total portfolio[81]. - Corporate bonds within the fixed-maturity securities had a fair value of $2.0 billion, with 52.5% in the industrials and other sector[86]. - The average credit quality of the fixed-maturity portfolio was rated "AA-" as of December 31, 2024[82]. - The company faces risks related to the performance of its investment portfolio, which is influenced by interest rates and market conditions[192]. - The company’s investment portfolio is subject to increased valuation uncertainties in illiquid markets, affecting the fair value of its securities[194]. Regulatory Environment - Kinsale Insurance operates on an excess and surplus lines basis in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, allowing for freedom of rate and form on most business[93]. - The company is regulated by insurance authorities in Arkansas, which requires annual financial statements and adherence to capital and surplus requirements[89]. - Kinsale Insurance must maintain compliance with state laws requiring diversification of investment portfolios and limits on certain investment categories[103]. - The company is subject to extensive regulation, which may limit its operational flexibility and impose additional compliance costs[201]. - The Arkansas Insurance Department requires annual reporting by Arkansas-domiciled insurers to confirm that the minimum amount of risk-based capital necessary for operations has been met[122]. Employee and Corporate Culture - Kinsale Insurance offers a comprehensive benefits package, including a company-matched 401(k) plan and educational assistance programs[132]. - The company emphasizes a performance-based culture with variable compensation tied to equity-based incentives for executives[126]. - Kinsale Insurance had 674 employees as of December 31, 2024, with 660 being full-time employees[125]. Market Conditions and Competition - The company faces increased risks in its E&S insurance operations due to changing market conditions and cyclical nature, which may adversely affect financial performance[166]. - Competition in the insurance industry is intense, with larger companies having greater resources and market recognition, which could hinder the company's competitive position[170]. - Economic downturns could result in fewer policy sales and increased claims, negatively impacting growth and profitability[157]. - The company underwrites a significant portion of its insurance in California, Florida, and Texas, making it vulnerable to economic downturns in these states[158]. Financial Stability and Capital Management - Kinsale Insurance has an "A" (Excellent) rating from A.M. Best, indicating strong financial stability and ability to meet policyholder obligations[87]. - As of December 31, 2024, Kinsale Insurance maintained risk-based capital levels significantly in excess of amounts that would require any corrective actions[122]. - The company may require additional capital in the future, which could be unavailable or only accessible on unfavorable terms[200]. - The maximum dividend distribution from Kinsale Insurance for 2025 without regulatory approval is $351.9 million[197]. - As of December 31, 2024, the company had outstanding borrowings of $184.1 million under two bank credit agreements, subject to financial covenants[199].

Core Viewpoint - Kinsale Capital (KNSL) reported strong fourth-quarter 2024 net operating earnings of $4.62 per share, exceeding estimates and reflecting a 19.4% year-over-year increase [1][2]. Operational Update - Operating revenues rose 17.4% year over year to $412 million, although this figure fell short of consensus estimates by 1.5% [3]. - Gross written premiums increased by 12.2% year over year to $443.3 million, driven by strong broker submissions and a competitive pricing environment, but missed the estimate of $487 million [3]. - Net written premiums climbed 13% year over year to $346.1 million, below the estimate of $375.8 million [4]. - Net investment income surged 37.8% year over year to $41.9 million, surpassing the estimate of $41.5 million, attributed to a growing investment portfolio and higher interest rates [4]. - Total expenses increased 23.7% year over year to $273.5 million, primarily due to rising losses and other expenses, which was below the estimate of $288.9 million [5]. - Underwriting income grew 15.4% year over year to $97.9 million, significantly exceeding the estimate of $64.6 million, despite higher catastrophe losses [6]. - The combined ratio deteriorated by 130 basis points to 73.4, better than the Zacks Consensus Estimate of 76 [6]. - The loss ratio slightly deteriorated by 10 basis points to 52.3, compared to estimates of 55.8 [7]. Financial Update - Kinsale Capital ended 2024 with cash and cash equivalents of $113.2 million, a decrease of 10.6% from the end of 2023 [8]. - Stockholders' equity increased by 36.5% to $1.5 billion, with book value per share rising 36% to $63.75 [8]. - Net operating cash flows were $976.3 million in 2024, reflecting a 13.5% year-over-year increase [8]. - Annualized operating return on equity contracted by 260 basis points year over year to 29.2% [8]. Share Repurchase - In October 2024, the board authorized a share repurchase of up to $100 million, with $10 million repurchased in the fourth quarter [9].

Financial Data and Key Metrics Changes - In Q4 2024, the company's operating earnings per share increased by 19.4% and gross written premium grew by 12.2% compared to Q4 2023 [7] - The combined ratio for the quarter was 73.4%, with a full year 2024 operating return on equity of 29% [7][11] - Net investment income rose by 37.8% in Q4 compared to the previous year, driven by growth in the investment portfolio and higher interest rates [13] - The expense ratio for Q4 was 21.1%, up from 19.9% the previous year, while the full year expense ratio was 20.6%, slightly better than 20.8% last year [12] Business Line Data and Key Metrics Changes - Gross written premium growth was 12.2%, with casualty underwriting divisions growing at 15% and property divisions at 6% [16] - Catastrophe losses in Q4 were modest at $8 million pretax, with a significant impact from California wildfires estimated at $25 million pretax [17][19] Market Data and Key Metrics Changes - The overall E&S market in Q4 was steady but faced increased competition [10] - New business submissions growth was 17% for the quarter, down from 23% in the previous quarter [20] Company Strategy and Development Direction - The company focuses on small E&S accounts, maintaining control over underwriting and claims processes, and investing in technology and analytics to improve efficiency and profitability [8] - A new agribusiness underwriting unit was created to expand product offerings into adjacent markets [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth prospects, maintaining a guidance of 10% to 20% growth moving forward despite recent competitive pressures [39] - The company aims to balance profitability and growth, with expectations of continued strong returns and stock price appreciation [101] Other Important Information - The company repurchased $10 million in shares during Q4, with plans for modest repurchases each quarter [15] - The company is gradually increasing its allocation to common stock from 8% to 10% of cash and invested assets, with a target of 12% over the next year [14] Q&A Session Summary Question: Impact of larger shared account property on growth - Management confirmed that larger layered deals are under competitive pressure, affecting growth, but small property divisions are still growing rapidly with positive rate increases [28] Question: Sustainability of growth rates - Management believes that a growth rate of 10% to 20% is sustainable, driven by their low-cost operating model and strong customer service [37][40] Question: Capital buybacks and growth dynamics - Management indicated that the current buyback strategy is modest, with a focus on maintaining sufficient capital for operations while addressing excess capital through dividends and buybacks [46][48] Question: January results and expense ratio - Management refrained from commenting on January results but reiterated confidence in growth guidance, attributing the higher expense ratio to increased variable compensation [51][52] Question: California wildfire losses - The gross loss from the California wildfires was approximately $45 million, with a net pretax loss of $25 million expected [62] Question: Trends in loss ratios and reserves - Management stated that loss trend assumptions are in the high single digits, with a conservative approach to estimating future losses [113]

Core Insights - Kinsale Capital Group, Inc. reported a revenue of $412.12 million for the quarter ended December 2024, reflecting a year-over-year increase of 17.4% [1] - The earnings per share (EPS) for the quarter was $4.62, up from $3.87 in the same quarter last year, resulting in an EPS surprise of +6.45% against the consensus estimate of $4.34 [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $418.32 million, showing a surprise of -1.48% [1] Financial Metrics - Expense Ratio was reported at 21.1%, higher than the estimated 20.4% by six analysts [4] - Combined Ratio stood at 73.4%, better than the estimated 76.3% by six analysts [4] - Loss Ratio was 52.3%, outperforming the average estimate of 55.9% from six analysts [4] - Net investment income was $41.86 million, slightly below the average estimate of $42.79 million, but showed a significant year-over-year increase of +37.8% [4] - Net Earned Premiums were reported at $359.74 million, compared to the average estimate of $362.66 million, marking a year-over-year increase of +21.2% [4] - Fee Income reached $8.55 million, exceeding the estimated $8.33 million, with a year-over-year change of +22.1% [4] - Other income was reported at $0.35 million, surpassing the average estimate of $0.15 million, reflecting a year-over-year change of +2.7% [4] Stock Performance - Kinsale Capital Group's shares have returned +9.3% over the past month, outperforming the Zacks S&P 500 composite's +3.9% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Kinsale Capital Group, Inc. reported quarterly earnings of $4.62 per share, exceeding the Zacks Consensus Estimate of $4.34 per share, and showing an increase from $3.87 per share a year ago, indicating a strong performance in the latest quarter [1][2]. Financial Performance - The company achieved revenues of $412.12 million for the quarter ended December 2024, which was 1.48% below the Zacks Consensus Estimate, but up from $351.17 million in the same quarter last year [2]. - Over the last four quarters, Kinsale Capital has surpassed consensus EPS estimates four times and topped revenue estimates three times [2]. Stock Performance - Kinsale Capital shares have increased approximately 2.5% since the beginning of the year, compared to a 2.9% gain in the S&P 500 [3]. - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6]. Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3.97, with expected revenues of $428.67 million, and for the current fiscal year, the EPS estimate is $18.15 on revenues of $1.83 billion [7]. - The trend of estimate revisions for Kinsale Capital is mixed, which may change following the recent earnings report [6]. Industry Context - The Insurance - Property and Casualty industry, to which Kinsale Capital belongs, is currently ranked in the bottom 48% of over 250 Zacks industries, suggesting potential challenges ahead [8]. - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Kinsale Capital's stock performance [5].