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Reasons to Retain Kinsale Capital (KNSL) in Your Portfolio

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Kinsale Capital’s (KNSL - Free Report) continued focus on the excess and surplus lines (E&S) market, improved revenues, solid underwriting results, and effective capital deployment, along with growth estimates, make it worth retaining in one’s portfolio.

The company has a decent surprise history, having delivered an earnings beat in three of the last four reported quarters, while missing in one, with an average beat of 12.55%.

Zacks Rank & Price Performance

Kinsale Capital currently carries a Zacks Rank #3 (Hold). In the past one month, the stock has gained 2.1% compared with the industry’s increase of 0.7%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Growth Projections

The Zacks Consensus Estimate for 2021 earnings is pegged at $4.29, indicating a year-over-year increase of 35.8% on 25.1% higher revenues of $0.6 billion. The consensus estimate for 2022 earnings is pegged at $5.08, implying a year-over-year increase of 18.4% on 21.7% higher revenues of $0.7 billion.

Return on Equity

Kinsale Capital’s return on equity ("ROE") for the trailing 12 months is 15%, comparing favorably with the industry’s 5.6%, reflecting the company’s efficiency in utilizing shareholders’ funds. It targets to maintain operating ROE in the mid-teens range over a long term.

Estimate Revision

The Zacks Consensus Estimate for 2021 and 2022 bottom line has moved 7.3% and 1.6% higher in the past 30 days, reflecting analyst optimism.

Style Score

The company is well poised for progress, as is evident from its 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.

It has an impressive Growth Score of A. This style score analyzes the growth prospects of a company.  

Business Tailwinds

With focus on the E&S market across the United States, Kinsale Capital basically targets clients with small- and medium-sized accounts, which have better pricing and are less prone to competition. Thus, the insurer is poised to deliver improved margins and lower loss ratios.

The company boasts of having the best combination of high growth and low combined ratio among its peers and targets the same in mid-80s range over the long term.

Kinsale Capital has developed a proprietary technology platform, which is likely to provide it a competitive edge over other industry players and support improved expenses ratio.

Kinsale Capital remains well poised to benefit due to continued market dislocation, as it has resulted in improved submission flows and better pricing decisions.

Banking on solid cash flow, the company has increased dividend since 2017 at a four-year CAGR (2016-2020) of 15.8%.

Stocks to Consider

Some better-ranked stocks from the insurance space include Cincinnati Financial Corporation (CINF - Free Report) , HCI Group (HCI - Free Report) and Alleghany Corporation (Y - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cincinnati Financial delivered an earnings surprise of 30.48% in the last-reported quarter.

HCI Group delivered an earnings surprise of 28.33% in the last-reported quarter.

Alleghany’s earnings  beat estimates by 110.97% in the last-reported quarter.

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