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].

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].

Core Insights - Kinsale Capital Group reported strong fourth-quarter 2024 earnings, surpassing both EPS and revenue estimates, driven by strategic focus and technology investments [2][6] Financial Performance - Adjusted EPS for Q4 2024 was $4.62, exceeding the expected $4.34, and showing a year-over-year increase of 19.4% from $3.87 [3] - Net earned premiums reached $359.7 million, above projections of $355 million, reflecting a 21.2% increase from $296.8 million in Q4 2023 [3] - Net investment income grew to $41.9 million, a 38% increase from $30.4 million in the previous year [3] - Gross written premiums rose to $443.3 million, marking a 12.2% increase from $395.2 million [3] Strategic Focus - Kinsale operates in the excess and surplus (E&S) lines insurance market, which offers higher margins and fewer regulatory constraints, allowing the company to address underserved areas with tailored solutions [4] - The company emphasizes technological enhancements to improve operational efficiency and maintain competitive expense ratios [4][11] - Kinsale's disciplined underwriting and investment in innovative technology contribute to a robust combined ratio of 73.4% for Q4, indicating strong underwriting efficiency [5][7] Growth Drivers - The company's gross written premiums increased by 19.2% year-over-year to $1.9 billion, driven by its exclusive focus on the E&S market [5] - Kinsale's effective claims management practices have helped mitigate the impacts of natural disasters, maintaining reserve accuracy and enhancing risk management [7][9] Capital Management - During the quarter, Kinsale repurchased $100 million of its stock, reflecting confidence in its financial stability and part of a broader capital management strategy [8] Future Outlook - Management remains optimistic about leveraging strengths in underwriting and technology investments, although no specific forward guidance was provided [10][11] - The company will continue to focus on technological advancements to enhance efficiency and underwriting precision while controlling operational costs [11]

Core Insights - Kinsale Capital Group's fourth-quarter results showed mixed performance, with earnings per share exceeding expectations while revenue fell short [3][6]. - The company's gross written premiums increased by 12% year over year, indicating growth in its insurance business [3][4]. Financial Metrics - Revenue for Q4 2023 was $351.17 million, compared to $412.12 million in Q4 2024, reflecting a 17% increase but missing analyst expectations [2]. - Earnings per share rose to $4.43 in Q4 2023, a 6% increase from the previous year, beating expectations [2]. - Gross written premiums were $395.2 million in Q4 2023, up from $443.3 million in Q4 2024, marking a 12% increase [2]. - The combined ratio for Kinsale was 73.4% in Q4 2024, slightly worse than the 72.1% in the previous year, attributed to higher catastrophe losses [2][4]. Investment Performance - Kinsale's net investment income saw a significant increase of about 38% year over year, driven by more capital available for investment and higher yields [5]. Market Reaction - Following the earnings report, Kinsale's stock experienced a mild decline of approximately 3.5% [6]. - The trading volume post-earnings was low, with only about 5,000 shares changing hands shortly after the report [7]. Future Considerations - Underwriting profitability will be crucial to monitor throughout 2025, especially with uncertainties surrounding hurricane season [8]. - The growth rate of gross written premiums and investment income will also be key areas to watch, particularly if interest rates decline [8].

Financial Performance - Net income for Q4 2024 was $109.1 million, or $4.68 per diluted share, up from $103.4 million, or $4.43 per diluted share in Q4 2023, representing a 5.6% increase[1] - Full year net income for 2024 reached $414.8 million, or $17.78 per diluted share, compared to $308.1 million, or $13.22 per diluted share in 2023, marking a 34.5% increase[1] - Net operating earnings for the year ended December 31, 2024, were $374.8 million, compared to $291.4 million in 2023, reflecting a year-over-year increase of 28.5%[15] - Diluted operating earnings per share for the year ended December 31, 2024, were $16.06, up from $12.50 in 2023, representing a 28.5% increase[15] - Total revenues for Q4 2024 were $412,123,000, a 17.3% increase compared to $351,171,000 in Q4 2023[23] - The company reported a total comprehensive income of $412,254,000 for the year ended December 31, 2024, compared to $348,394,000 in 2023, reflecting a 18.3% increase[23] Premiums and Underwriting - Gross written premiums for Q4 2024 were $443.3 million, a 12.2% increase from $395.2 million in Q4 2023; for the full year, gross written premiums were $1.9 billion, up 19.2% from $1.6 billion in 2023[4] - Net earned premiums for the year ended December 31, 2024, were $1,350,470,000, up 25.9% from $1,072,537,000 in 2023[23] - Underwriting income for the year ended December 31, 2024, was $325.9 million, compared to $270.4 million in 2023, indicating a 20.5% increase[17] Investment Performance - Net investment income increased by 37.8% to $41.9 million in Q4 2024, and by 46.9% to $150.3 million for the full year 2024 compared to 2023[8] - The company's investment portfolio had a gross investment return of 4.4% for the year ended December 31, 2024, compared to 4.0% in 2023[8] - Net investment income for Q4 2024 was $41,863,000, a 37.8% increase from $30,382,000 in Q4 2023[23] Cash Flow and Assets - Net operating cash flows for 2024 were $976.3 million, an increase of 13.5% from $859.8 million in 2023[8] - Cash and invested assets totaled $4.1 billion at December 31, 2024, up from $3.1 billion at December 31, 2023[8] - Total assets increased to $4,886,704,000 in 2024, up 29.5% from $3,772,974,000 in 2023[25] Equity and Reserves - Stockholders' equity increased to $1.5 billion as of December 31, 2024, up from $1.1 billion a year earlier, with book value per share rising to $63.75 from $46.88[12] - Stockholders' equity increased to $1,483,561,000 in 2024, up 36.5% from $1,086,832,000 in 2023[25] - Reserves for unpaid losses and loss adjustment expenses rose to $2,285,668,000, a 35% increase from $1,692,875,000 in 2023[25] Ratios and Tax - The combined ratio for Q4 2024 was 73.4%, slightly up from 72.1% in Q4 2023; for the full year, the combined ratio was 76.4%, compared to 75.4% in 2023[5] - Operating return on equity was 29.2% for the year ended December 31, 2024, compared to 33.6% for the previous year[6] - The operating return on equity for the full year of 2024 was 29.2%, down from 31.8% in 2023, primarily due to higher average stockholders' equity[12] - The effective tax rate for the year ended December 31, 2024 was 19.4%, lower than the federal statutory rate due to tax benefits from stock-based compensation and tax-exempt investment income[10] - The effective tax rate used for adjustments to reconcile net income to net operating earnings was 21%[15] Future Outlook - The company estimates pre-tax catastrophe losses of approximately $25 million due to wildfires in Southern California, expected to impact Q1 2025 results[11] - Forward-looking statements indicate potential risks including inadequate loss reserves and adverse market conditions that could impact future performance[19] - The company plans to hold a conference call on February 14, 2025, to discuss the financial results and outlook[18] Share Repurchase - The company repurchased 22,626 shares at an average price of $441.95 per share for a total cost of $10 million during Q4 2024[13]

Kinsale Capital (KNSL) is expected to register an improvement in its top and bottom lines when it reports fourth-quarter 2024 results on Feb. 13, after the closing bell.See the Zacks Earnings Calendar to stay ahead of market-making news.The Zacks Consensus Estimate for KNSL’s fourth-quarter revenues is pegged at $418.3 billion, indicating 19.1% growth from the year-ago reported figure.The consensus estimate for earnings is pegged at $4.34 per share. The Zacks Consensus Estimate for KNSL’s fourth-quarter ear ...

Labutes IR is a Fund Manager/Analyst specialized in the financial sector, with more than 18 years of experience in the financial markets. I have worked at several type of institutions in the industry, always at the buy side and related to portfolio management. Associated with the existing author The Outsider.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the pur ...