Kinsale Capital Group, Inc. (NYSE:KNSL) is well-positioned for growth thanks to a strong Excess & Surplus (E&S) market, significant premium growth, a low expense ratio, better profits, and careful capital allocation.

Growth Prospects

The Consensus Estimate for Kinsale Capital’s earnings in 2023 is $10.32, representing a 32.3% increase over the previous year’s reported 35.8% higher revenues of $1.11 billion. The consensus estimate for 2024 earnings is $12.41, representing a 20.2% increase over the previous year’s reported amount on 20.4% higher revenues of $1.34 billion.

Revision of the Northbound Estimate

In the last 30 days, the Consensus Estimate for 2023 and 2024 has risen 4% and 3.9%, respectively, demonstrating analysts’ optimism.

History of Earnings Surprises

Kinsale Capital has an excellent track record of earnings surprises. It outperformed expectations in each of the previous four quarters, with an average margin of 14.77%.

Price Performance 

This property and casualty insurer’s stock has gained 60.6% in a year, beating the industry’s 4.2% growth. We anticipate that the company’s policy will increase its growth profile and capital position, driving shares higher.

Kinsale Capital’s operating ROE of 28.3% increased 650 basis points year over year in the first quarter of 2023. In the long run, KNSL hopes to maintain an operating ROE in the mid-teens.

Kinsale Capital’s premium income is likely to increase in the short term as a consequence of increased broker submission activity and higher rates across most lines of business as a result of the E&S market’s ongoing favorable conditions.

Kinsale Capital’s profitability and growth are driven by a combination of highly controlled underwriting, innovative technology-driven low costs, and a focus on the Excess and Surplus Lines Insurance market.

Due to market disruption in the general property and liability market, the Excess and Surplus Lines insurance industry has continued to grow rapidly.

The insurer’s underwriting revenue is expected to be driven by a combination of premium growth and favorable rate increases from a solid underwriting environment, lower levels of operational expenditures relative to premium growth, and management’s cost-cutting efforts.

Lower net commissions and lower other underwriting expenditures as a percentage of paid premiums are expected to benefit the expense ratio, as are economies of scale from premium expansion and management’s sustained focus on cost control.

Kinsale Capital’s strong cash flows allow them to make shareholder-friendly decisions such as dividend increases. KNSL has boosted dividends since 2017 at a CAGR of 13.7% during an eight-year period (2016-2023).

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