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Here's Why Investors May Consider Betting on Kinsale (KNSL)

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Kinsale Capital (KNSL - Free Report) has been gaining momentum on the back of continued rate increases, growth in the investment portfolio and higher net earned premiums.

Growth Projections

The Zacks Consensus Estimate for 2022 and 2023 earnings per share is pegged at $6.79 and $7.97, indicating year-over-year increases of 18.3% and 17.4%, respectively.

Northbound Estimate Revision

The Zacks Consensus Estimate for 2022 and 2023 has moved 2.6% and 4.6% north, respectively, in the past 30 days, reflecting analysts’ optimism.

Earnings Surprise History

Kinsale Capital has a solid track record of beating earnings estimates in six of the last seven quarters.

Zacks Rank & Price Performance

Shares of this Zacks Rank #2 (Buy) property and casualty insurer have gained 27.8% in a year against the industry’s decrease of 0.6%. We expect the company’s policy to ramp up its growth profile and capital position and drive shares higher.

Zacks Investment Research
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Return on Equity (ROE)

The company’s ROE for the trailing 12 months is 21.8%, which expanded 680 basis points year over year and was better than the industry average of 5.7%, reflecting efficiency in utilizing shareholders’ fund.

Business Tailwinds

Higher submission activity from brokers and a continued favorable pricing environment are likely to drive the premium growth of this property and casualty insurer.

Kinsale remains well poised to gain from its growing E&S market that enables the insurer to continue rate increases and grow premiums at a high level.

The insurer's unique business strategy, expert underwriting and claim handling, coupled with a technology-driven low-cost operation, poise it well to deliver profit and growth in the future.

Growth in the investment portfolio, generated from the investment of positive cash flow, is likely to result in a robust investment income.

The expense ratio is expected to gain from lower reinstatement premiums on certain property reinsurance treaties that do not have ceding commissions as well as lower other underwriting expenses due to higher net earned premiums. Kinsale, with a low expense ratio and higher margins, remains well poised to lead in the current economic situation.

Kinsale Capital’s underwriting income should gain from strong premium growth and lower relative expenses. The insurer boasts the best combination of high growth and low combined ratio among peers.

Banking on operational excellence, the insurer has increased its dividend since 2017 at a five-year CAGR (2016-2022) of 14.6%.

Other Stocks to Consider

Some other top-ranked stocks from the property and casualty insurance sector are RLI Corp. (RLI - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and American Financial Group, Inc. (AFG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

RLI has a solid track record of beating earnings estimates in each of the last seven quarters. In the past year, RLI stock has increased 11.1%.

The Zacks Consensus Estimate for RLI’s 2022 and 2023 earnings per share is pegged at $4.35 and $4.45, indicating year-over-year increases of 12.4% and 2.3%, respectively.

W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.08%. In the past year, W.R. Berkley's stock has increased 32.4%.

The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 4.9% and 4.1% north, respectively, in the past 30 days.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has gained 2.7%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 30 days.