Kinsale Capital Group reported third quarter results that exceeded Wall Street’s revenue and adjusted profit expectations, but the market reacted negatively amid concerns about moderating growth. Management pointed to steady but competitive conditions in the excess and surplus (E&S) insurance market, with CEO Michael Kehoe noting, “Kinsale’s efficiency has become a more significant competitive advantage, by allowing us to deliver competitive policy terms to our customers, without compromising our margins.” The company also highlighted the impact of its disciplined underwriting and cost control, which helped offset variability in certain business lines and a higher expense ratio tied to changes in reinsurance.
Is now the time to buy KNSL? Find out in our full research report (it’s free for active Edge members).
Kinsale Capital Group (KNSL) Q3 CY2025 Highlights:
- Revenue: $497.5 million vs analyst estimates of $448.6 million (19% year-on-year growth, 10.9% beat)
- Adjusted EPS: $5.21 vs analyst estimates of $4.82 (8% beat)
- Adjusted Operating Income: $178.9 million (36% margin, 23.9% year-on-year growth)
- Operating Margin: 36%, up from 34.5% in the same quarter last year
- Market Capitalization: $9.39 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Kinsale Capital Group’s Q3 Earnings Call
- Jian Huang (Morgan Stanley): Asked which segments hold the most attractive future opportunities outside Commercial Property. President Brian Haney pointed to Transportation, Agribusiness, and Personal Lines as key areas, emphasizing the company’s ability to grow across a broad spectrum of business.
- Jian Huang (Morgan Stanley): Inquired about technology innovation and AI integration. CEO Michael Kehoe explained that proprietary enterprise systems and AI tools are used to drive automation in underwriting and claims, enhancing Kinsale’s cost advantage.
- Michael Phillips (Oppenheimer): Queried changes in construction liability assumptions and Excess Casualty segment growth. Kehoe cited normal variability in the construction line and highlighted strong growth prospects in Excess Casualty, led by disciplined underwriting.
- Michael Zaremski (BMO Capital Markets): Probed whether competition is increasing in Casualty and the company’s stance on profit commissions. Kehoe confirmed heightened competition but reiterated that Kinsale’s model prioritizes direct underwriting control and is not considering profit commissions.
- Pablo Singzon (JPMorgan): Asked if expense ratios might rise to support premium growth. Kehoe responded that efficiency and cost control remain central, stating, “I don’t see an advantageous trade where we would deliberately raise our costs.”
Catalysts in Upcoming Quarters
Going forward, the StockStory team will closely watch (1) whether property rate stabilization translates into improved growth in the Commercial Property division, (2) the impact of rising competition from new MGAs and alternative capital on premium growth and margins, and (3) ongoing progress in technology-driven operational efficiency and cost management. We will also monitor execution on expansion into new product lines and any further leadership transitions that could affect strategy.
Kinsale Capital Group currently trades at $405, down from $453.27 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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