Kinsale Capital Group (KNSL -0.15%), a specialist in excess and surplus (ES) insurance, reported stellar financial results for the third quarter of 2024 on October 24. Its earnings per share (EPS) of $4.90 significantly outpaced analyst forecasts of $3.60. The company's revenue of $418.1 million also exceeded the anticipated $359.4 million. These figures are attributed to strong underwriting and increased investment income, despite facing higher catastrophe losses. The quarter demonstrated Kinsale's strategic effectiveness but highlighted the need to manage external risks and maintain valuation prudently.
| Metric | Q3 2024 | Analyst Estimate | Q3 2023 | % Change from Q3 2023 |
|---|---|---|---|---|
| Earnings Per Share (EPS) | $4.90 | $3.60 | $3.26 | 50.1% |
| Total Revenue | $418.1 million | $359.4 million | $339.4 million | 23.2% |
| Gross Written Premiums | $448.6 million | N/A | $377.8 million | 18.8% |
| Net Investment Income | $39.6 million | N/A | $27 million | 46.4% |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview
Kinsale Capital Group specializes in the ES insurance market, targeting high-risk insurance profiles often overlooked by the standard market. By focusing exclusively on the ES market, Kinsale leverages its underwriting expertise to offer coverage with potentially higher margins. Its business operations are supported by a proprietary technology platform that enhances underwriting efficiency.
In recent years, Kinsale's business strategy has centered around growth and operational efficiency, especially in underwriting. The company's ability to maintain robust profitability in a challenging insurance landscape reflects its strategic focus on efficient processes and risk management. Success in these areas is crucial, given the ES market's inherently volatile nature compared to the standard insurance market.
Quarterly Highlights
Kinsale's third-quarter performance was marked by significant financial achievements and challenges. The reported EPS of $4.90, surpassing estimates, illustrates the efficacy of disciplined underwriting practices and an increase in net investment income by 46.4%, reaching $39.6 million. This growth was primarily driven by higher interest rates and its investment portfolio.
Underwriting income stood at $86.9 million, resulting in a strong, albeit increased, combined ratio of 75.7% compared to the prior year’s 74.8%. Gross written premiums saw a notable 18.8% increase to $448.6 million, attributed to increased broker submissions amid competitive pricing.
Despite these positives, the company faced increased catastrophe losses, with after-tax losses rising to $10.8 million from $0.9 million the previous year.
No changes were declared regarding dividends.
Looking Ahead
Kinsale Capital Group projects a favorable outlook, emphasizing a strategy of profitable growth within the ES market. The company remains committed to maintaining strong underwriting discipline and employing technological advancement to enhance its operational efficiencies.
Investors should monitor the company’s balance in managing growth and risk, especially concerning the impact of further catastrophe losses and competitive pressures on underwriting margins.
