Shareholders of Kinsale Capital Group would probably like to forget the past six months even happened. The stock dropped 24.9% and now trades at $357.64. This may have investors wondering how to approach the situation.
Following the pullback, is now an opportune time to buy KNSL? Find out in our full research report, it’s free.
Why Is KNSL a Good Business?
Founded in 2009 during the aftermath of the financial crisis when many insurers were retreating from riskier markets, Kinsale Capital Group (NYSE: KNSL) is an insurance company that specializes in writing policies for hard-to-place, unusual, or high-risk businesses that standard insurers typically avoid.
1. Net Premiums Earned Skyrocket, Fueling Growth Opportunities
When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are therefore net of what’s ceded to reinsurers as a risk mitigation and transfer strategy.
Kinsale Capital Group’s net premiums earned has grown at a 21.2% annualized rate over the last two years, much better than the broader insurance industry.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Kinsale Capital Group’s EPS grew at 43.9% compounded annual growth rate over the last five years, higher than its 32.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Growing BVPS Reflects Strong Asset Base
In the insurance industry, book value per share (BVPS) provides a clear picture of shareholder value, as it represents the total equity backing a company’s insurance operations and growth initiatives.
Kinsale Capital Group’s BVPS increased by 27.3% annually over the last five years, and growth has recently accelerated as BVPS grew at an incredible 34.4% annual clip over the past two years (from $46.88 to $84.66 per share).
Final Judgment
These are just a few reasons why Kinsale Capital Group is one of the best insurance companies out there. After the recent drawdown, the stock trades at 3.5× forward P/B (or $357.64 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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