Kinsale Capital Group (KNSL)

Specialty insurance provider Kinsale Capital Group (NYSE:KNSL) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 19% year on year to $497.5 million. Its non-GAAP profit of $5.21 per share was 8% above analysts’ consensus estimates.

Company Overview

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.

Property & Casualty (P&C) insurers protect individuals and businesses against financial loss from damage to property or from legal liability. This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. On the other hand, P&C insurers face a major secular headwind from the increasing frequency and severity of catastrophe losses due to climate change. Furthermore, the liability side of the business is pressured by 'social inflation'—the trend of rising litigation costs and larger jury awards.

Kinsale's main competitors in the excess and surplus lines market include American International Group (NYSE:AIG), W.R. Berkley Corporation (NYSE:WRB), Markel Group (NYSE:MKL), James River Group Holdings (NASDAQ:JRVR), and RLI Corp (NYSE:RLI), as well as specialty units of larger insurers like Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B).

Insurers earn revenue three ways. The core insurance business itself, often called underwriting and represented in the income statement as premiums earned, is one way. Investment income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities is the second way. Fees from various sources such as policy administration, annuities, or other value-added services is the third. Luckily, Kinsale Capital Group’s revenue grew at an incredible 34.3% compounded annual growth rate over the last five years. Its growth surpassed the average insurance company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Kinsale Capital Group’s annualized revenue growth of 27.1% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, Kinsale Capital Group reported year-on-year revenue growth of 19%, and its $497.5 million of revenue exceeded Wall Street’s estimates by 10.9%.

Net premiums earned made up 87.3% of the company’s total revenue during the last five years, meaning Kinsale Capital Group barely relies on non-insurance activities to drive its overall growth.

Net premiums earned commands greater market attention due to its reliability and consistency, whereas investment and fee income are often seen as more volatile revenue streams that fluctuate with market conditions.

Net premiums earned are net of what’s paid to reinsurers (insurance for insurance companies), which are used by insurers to protect themselves from large losses.

Kinsale Capital Group’s net premiums earned has grown at a 31.5% annualized rate over the last five years, much better than the broader insurance industry but slower than its total revenue.

When analyzing Kinsale Capital Group’s net premiums earned over the last two years, we can see that growth decelerated to 23.8% annually. Since two-year net premiums earned grew slower than total revenue over this period, it’s implied that other line items such as investment income grew at a faster rate. While these additional streams certainly contribute to the bottom line, their impact can vary. Some firms have shown greater success and long-term consistency in investing their float compared to peers. However, sharp fluctuations in the fixed income and equity markets can significantly affect short-term performance.

Kinsale Capital Group’s net premiums earned came in at $411 million this quarter, up a hearty 17.8% year on year and topping Wall Street Consensus estimates by 6%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at the combined ratio rather than the operating expenses and margins that define sectors such as consumer, tech, and industrials.

Combined ratio = (costs of underwriting + what an insurer pays out in claims) / net premiums earned. If a company boasts a combined ratio under 100%, it is underwriting profitably. If above 100%, it is losing money on its core operations.

Given the calculation, a lower expense ratio is better. Over the last five years, Kinsale Capital Group’s combined ratio has swelled by 10.7 percentage points, going from 78.3% to 77.6%. However, fixed cost leverage was muted more recently as the company’s combined ratio was flat on a two-year basis.

In Q3, Kinsale Capital Group’s combined ratio was 74.9%, beating analysts’ expectations by 108.3 basis points (100 basis points = 1 percentage point). This result was in line with the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Kinsale Capital Group’s EPS grew at an astounding 47.2% compounded annual growth rate over the last five years, higher than its 34.3% annualized revenue growth. However, we take this with a grain of salt because its combined ratio didn’t improve and it didn’t repurchase its shares, meaning the delta came from factors we consider non-core or less sustainable over the long term.

We can take a deeper look into Kinsale Capital Group’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Kinsale Capital Group’s combined ratio was flat this quarter but improved by 10.7 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Kinsale Capital Group, its two-year annual EPS growth of 27.7% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, Kinsale Capital Group reported adjusted EPS of $5.21, up from $4.20 in the same quarter last year. This print beat analysts’ estimates by 8%. Over the next 12 months, Wall Street expects Kinsale Capital Group’s full-year EPS of $18.32 to grow 10.6%.

Insurers are balance sheet businesses, collecting premiums upfront and paying out claims over time. Premiums collected but not yet paid out, often referred to as the float, are invested and create an asset base supported by a liability structure. Book value per share (BVPS) captures this dynamic by measuring these assets (investment portfolio, cash, reinsurance recoverables) less liabilities (claim reserves, debt, future policy benefits). BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality. While other (and more commonly known) per-share metrics like EPS can sometimes be lumpy due to reserve releases or one-time items and can be managed or skewed while still following accounting rules, BVPS reflects long-term capital growth and is harder to manipulate.

Kinsale Capital Group’s BVPS grew at an incredible 27.7% annual clip over the last five years. BVPS growth has also accelerated recently, growing by 41.8% annually over the last two years from $39.86 to $80.19 per share.

Over the next 12 months, Consensus estimates call for Kinsale Capital Group’s BVPS to grow by 22.7% to $80.92, elite growth rate.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Kinsale Capital Group currently has $199.3 million of debt and $1.87 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.1×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 1.0× for an insurance business. Anything below 0.5× is a bonus.

Return on equity (ROE) is a crucial yardstick for insurance companies, measuring their ability to generate returns on the capital provided by shareholders. Insurers that consistently deliver superior ROE tend to create more value for their investors over time through strategic capital allocation and shareholder-friendly policies.

Over the last five years, Kinsale Capital Group has averaged an ROE of 28.7%, exceptional for a company operating in a sector where the average shakes out around 12.5% and those putting up 20%+ are greatly admired. This shows Kinsale Capital Group has a strong competitive moat.

We were impressed by how significantly Kinsale Capital Group blew past analysts’ net premiums earned expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its book value per share slightly missed. Overall, we think this was a mixed quarter. The market seemed to be hoping for more, and the stock traded down 2.9% to $440 immediately following the results.

Updated: December 3, 2025 at 11:47 PM EST

Before deciding whether to buy Kinsale Capital Group or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Kinsale Capital Group is truly a cream-of-the-crop insurance company. For starters, its revenue growth was exceptional over the last five years. On top of that, its net premiums earned growth was exceptional over the last five years, and its astounding EPS growth over the last five years shows its profits are trickling down to shareholders.

Kinsale Capital Group’s P/B ratio based on the next 12 months is 4.4x. There’s no doubt it’s a bit of a market darling given the lofty multiple, but we don’t mind owning an elite business, even if it’s expensive. Investments like this should be held patiently for at least three to five years as they benefit from the power of long-term compounding, which more than makes up for any short-term price volatility that comes with high valuations.

Wall Street analysts have a consensus one-year price target of $465.30 on the company (compared to the current share price of $374.50).