Kinsale Capital Stock Analysis (KNSL) – Insurance? IT Company!

On

Kinsale Capital stock (KNSL) fundamentals, overview

Kinsale Capital is an American specialty Property & Casualty (P&C) insurer operating exclusively in the Excess & Surplus (E&S) market.The company was founded in 2009 in Virginia (headquartered in Richmond), specifically built on the recognition that traditional insurers are increasingly rejecting unique, difficult-to-model risks. Kinsale offers coverage for these missing risks as a full-fledged insurer: He concludes the contract, bears the risk and pays for the damage. Its product range is primarily based on business liability insurance (general and professional liability) and property insurance, with a strong specialty focus, in all 50 states of the United States and the District of Columbia.

Kinsale went public in 2016 (NYSE: KNSL) and has since become one of the fastest-growing, most profitable players in the E&S market. The company employs 707 people, a quarter of whom are IT professionals, which is an extremely low headcount compared to its written premium volume; this efficiency comes from its fully digital, underwriter-driven operation. Kinsale's specialty is quick yes/no decisions, disciplined risk-taking and low cost levels, resulting in a consistently outstandingly low combined ratio and high ROE. From the investor's perspective, the company is not a general insurer, but a high-quality underwriting machine optimized for a narrow market, whose competitive advantage is structural, not cyclical.

Market capitalization: 9.3 billion USD
Investor relations: https://ir.kinsalecapitalgroup.com/overview/default.aspx
iO Charts share subpage: https://iocharts.io/stocks/KNSL

KNSL quotes by TradingView

📒Table of Contents📒

I have created a table of contents to make it easier for you to navigate the longer articles:

〽️Market segment analysis〽️

In this section, I examine the dynamics of the market segment, how it operates, who the main players are, and what tailwinds or headwinds the players in the given market have to deal with. I will not analyze companies in depth, but I will touch on the market share of individual companies.

The insurance market is a fairly specialized segment with a lot of unique rules. The best explanation I read was on the Rock and Turner Substack, so I've summarized it for you in broad strokes.

To understand insurance companies, you first need to understand how banks work. A bank, to put it simply, does nothing more than lend money borrowed from accounts opened by customers to those who need it. The bank's income will come from the interest rate difference between bank depositors and borrowers, but of course other fixed costs will also be imposed on customers. This is a very good model because the capital is not provided by the bank, but by the customers, In return, the state government regulates all financial institutions with banking licenses quite strictly.

The other very interesting business model is gambling, which is often a state or territorial monopoly, such as casinos on tribal lands, which I explained in more detail in my company analysis of Evolution (EVO): Novo Nordisk Stock Analysis (NVO) – Sell and consume quickly. In the case of casinos, due to mathematical rules, the outcome of the games always favors the house, so the more players risk, the more money the casino will have in proportion. Insurance companies are often said to have a business model that combines the advantages of banks and casinos!

What does an insurance company do? Essentially nothing more than:

  • 💰 charges a fee from the insured depending on the level of risk (this is the premium)
  • 🛠️ pays the insured the amount of the damage coverage, but delayed in time (this is the claim)

Float, according to Warren Buffett, is money temporarily held by an insurer, consisting of premiums collected in advance and reserves for claims not yet paid. This amount is not owned by the insurer, but can be temporarily freely invested. Therefore, the insurer does not provide the capital for its own operations, but rather the clients, so its cost of capital is negative, This will be important later. Since the conclusion of the insurance contract, also known as the policy, the payment of the premium and the payment of the insurance premium due after subsequent damage events do not coincide in time, it is in the interest of the insurer to:

  • 📊 collect more money than you pay out (this is the combined ratio),
  • 📈 and invest the remaining money somewhere in exchange for a return.

📌In practice: I'll give you a very real-life example of the above. I've had a car in my name for 10 years, I pay about 150-170 USD per year to the insurance company for compulsory liability insurance, which is 1500-1700 USD, This is premium. I've never had an accident, this would be the claim, Despite this, even though the insurance company moves me to a more favorable category, I still pay more and more to the company. Since the float has been with them for 10 years, they earn 5% on it every year, for example, while the premium also increases by 2% annually, starting from the second year. As you can see, the 2% increase and the 5% interest on the float generate a pretty brutal compound interest effect in the long run.

EvAwardPremium increaseTotal AmountPremiumFloating rateFloat
1,0150,00,00150,0150,00,05157,5
2,0150,00,02153,0303,00,05326,0
3,0153,00,02156,1459,10,05506,2
4,0156,10,02159,2618,20,05698,6
5,0159,20,02162,4780,60,05904,1
6,0162,40,02165,6946,20,051123,1
7,0165,60,02168,91115,10,051356,7
8,0168,90,02172,31287,40,051605,4
9,0172,30,02175,71463,20,051870,2
10,0175,70,02179,31642,50,052152,0
Altogether1613,21642,58765,410699,9
💡The combined ratio is the difference between premium and claim. If it is positive, the insurer supports itself. If it is negative, the investment return earned on the float must support the company.

Of course, every insurer strives to ensure that the former case is the case, but you should not forget that insurers also have other costs: they have to pay employees, maintain offices, take out cross-insurance, develop IT systems, and so on.

💯How big is the insurance market?

There are 1100 insurance companies in the US, of which less than 100 are listed on the stock exchange. The most typical insurers fall into the P&C, or property and casualty, category, and thus deal largely with property and liability insurance. The size of the total market, according to Statista:

  • ????one of the largest in the world, It was USD 7060 billion in 2025 (defined as the total premium amount), of which the life insurance part is 3650 billion USD, while the rest is the P&C market,
  • 🇺🇸 the US insurance market was 2650 billion USD, roughly half of this is P&C insurance (this also includes the E&S segment),
  • 📈 the total insurance market will grow to 8120 billion USD by 2030, which represents a CAGR of 2,84% per year, but the consensus is that 3–4% per year is realistic,
  • 🚀 the E&S insurance segment is roughly 85–90 billion USD, of which it may grow by 9-10% per year in the coming years, which shows that its growth is roughly three times that of the traditional insurance market,
  • 👤 annual spending per capita was 903,88 USD in 2025,
  • 🌐 The USA accounts for roughly 40% of the global market, 30% of the P&C market and 90% of the E&S market (this form is not popular elsewhere, but in the USA, due to the characteristics of the continent, a lot of it is concluded),
  • ⚖️ In Europe/USA, i.e. the Anglo-Saxon regulatory environment, completely different rules apply than in Asia, for example, and accordingly there is no unified E&S market.

A newer and more nuanced version of the above Statista report is the December 2025 GIMAR (Global Insurance Market Report) report published by the IAIS, in which you can find similar numbers, only they are even more recent. The image below shows what the difference between premiums and liabilities would be, if they were in equilibrium at 100%. As you can see, there are negative years where the values ​​are higher and lower than 100%, where insurers make a profit. Note the value: the industry average falls somewhere between 90-100%, it will be important later.

IAIS, combined ratio, broken down into 6 years
source: IAIS, combined ratio, broken down into 6 years

The image below shows the same as before, only in categories not related to life insurance. It is clear that in some years there were years above 100%, i.e. years that produced losses, including the costs of the insurers, this is the green column. Why were 2005, 2011, 2017 and 2022 the outliers? Because these are so-called CAT (catastrophic events) years, where some kind of disaster caused great damage, such as major hurricanes. So, profitability is also influenced by external circumstances.

IAIS, combined ratio, broken down into 21 years
source: IAIS, combined ratio, broken down into 21 years

In the image below you can see how the return on assets for insurance companies, this is ROA, which as you can see, ranges between 0,5-2%, which is extremely low. This is because the ratio of bonds, cash, and float on the balance sheet is extremely high, so insurance companies cannot achieve a really high ROA value. Note this number for later.

IAIS, ROA, broken down into 6 years
source: IAIS, ROA, broken down into 6 years

🤹🏼What does an insurance broker do?

An insurance broker is a representative of the client. In this sense, it can be not only a person, but also an intermediary site that lists the brokers' products and selects the right one for the client. The main task of a broker is to

  • 🔍 assess the client's risks,
  • 📨 request quotes from multiple insurance companies,
  • ⚖️ compare coverages and prices,
  • 🤝 and help the client conclude the contract.

The broker does not take any risks, does not pay any damages, and does not make any final decisions on pricing. His income is typically a commission paid to him by the insurance company after the contract is concluded. If there is a problem, the damage is settled not by the broker, but by the insurance company. In fact, an insurance broker is a simple intermediary who acquires clients for insurers, almost everyone uses them.

🧑🏼‍🍼What is MGA, or Magaging General Agent?

There is another special player in the insurance market besides insurers, the insurance broker, or also known as the MGA. The MGA (Managing General Agent) is an authorized insurance broker in the insurance industry, which performs underwriting and administration on behalf of the insurer, but he does not bear the risk. Underwriting is nothing more than:

  • 🧠 risk assessment,
  • ✍️ risk-taking decision,
  • 💵 joint process of risk pricing.

So the question is not only whether it is risky, but also whether:

  • ✅ does the insurer agree to conclude the contract,
  • 📋 under what conditions,
  • 💲 for what fee,
  • 🚧 with what limits and exclusions.

This is what insurers outsource to MGAs, who receive a commission based on the volume of premiums. 

👆🏼The problem with this model is that the MGA is interested in generating as much volume as possible for the insurer, so it tends to reject fewer customers, even if they are risky, because their income depends on the level of premium, so the MGAs and insurers are actually opposing parties.

That's why we distinguish between insurers that use MGAs and perform their underwriting activities in-house, such as GEICO, Progressive, and Kinsale Capital Group (KNSL).

How does this happen? The insured wants to take out insurance, so they either go to an insurance company or become a client of an MGA, who directs them to an insurance company. This is where underwriting takes place, i.e. the screening of the insured, as a result of which the insured is either rejected or receives an offer from the insured. And here comes the trick, because it really does matter what someone wants to insure, but for this you need to familiarize yourself with the types of insurance.

🏢What insurances are available?

Everyone has probably taken out insurance at some point in their lives, as most people have car, property or health insurance, but there are a lot of forms that you might not even think of at first. I tried to list the big ones, but one of the interesting things about the insurance industry is that you can take out insurance for almost anything, it's really just a question of risk management and pricing:

  • 🚗Vehicle insurance: compulsory motor vehicle liability insurance (auto liability), casco-type coverages, collision and other damages (collision, comprehensive), uninsured / underinsured motorist coverage, personal injury protection, commercial auto insurance, rideshare driver insurance (Uber, Lyft), vintage and collector car insurance, motorcycle insurance, RV insurance, boat and watercraft insurance.
  • 🏠Real estate and property insurance: homeowners insurance, renters insurance, landlord insurance, condo insurance, commercial property insurance, vacant property insurance, builder's risk insurance, earthquake insurance, flood insurance, special coverage for areas with high fire or disaster risk.
  • 🇧🇷Liability insurance (casualty): general liability, professional liability (E&O), medical malpractice, product liability, employers' liability, directors and officers' liability (D&O), fiduciary liability, employment law liability (EPLI), cyber liability, media liability, umbrella/excess liability.
  • 👲🏼Personal insurance: health insurance, accident insurance, disability insurance, life insurance – risk and mixed forms (term, whole life, universal life), long-term care insurance, critical illness insurance, dental insurance, vision insurance, travel insurance.
  • 👷🏼‍♂️Employee and corporate insurance: workers' compensation (mandatory), business interruption insurance, business owners policy (BOP), key person insurance, employee benefit insurance packages, crime insurance, fidelity bond.
  • 🚚Shipping and logistics: cargo insurance, inland marine insurance, ocean marine insurance, aviation insurance, railway liability insurance, liability insurance for logistics service providers.
  • 🎗️Other, special insurances: pet insurance, wedding insurance, identity theft insurance, legal expense insurance, tuition insurance, weather insurance, parametric insurance, political risk insurance, terrorism insurance, kidnapping & ransom insurance.

As you can see, there are many types of insurance, the above are usually considered traditional, to be referred to as regulated or admitted. These are characterized by:

  • 🏛️ State-regulated operation: The insurance company can only operate with a license from the given state, and each state has a separate licensing system.
  • 📝 Product and fee approval obligation: Insurance terms and conditions, and often premiums, must be approved in advance by the authorities, which results in slow product development. The system is based on a tariff plan.
  • 🛡️ Participation in the guarantee fund: In the event of bankruptcy, clients are protected by state insurance guarantee funds.
  • 📦 Standardized products: bulk contracts tailored to well-modelable risks, with few unique conditions.
  • 💸 High price competition: Due to uniform products and transparent fees, price is one of the main competitive factors, ebecause of this, insurers go for quantity.
  • 📐 Narrow underwriting margin: Underwriters typically apply rules, not make individual decisions.
  • 📊 Volume-driven business model: Profits often come from economies of scale and large inventories.
  • 📉 Lower average margins: Regulation and price competition squeeze profits.
  • ⚖️ Stable, predictable operation: Extreme results are rarer, volatility is lower.
  • 🚫 Limited applicability to special risks: new, unique or rapidly changing risks often fall out of this market.
💡Insurance is a commodity business, where customers are primarily driven by price and have little loyalty to individual companies. To succeed in this market environment, an insurer must deviate from its usual operating models and develop a cost, specialization or technological advantage.

In other words, insurers do not have much of a price advantage over their other competitors, This is essentially a no moat business, where consumers are most interested in price. That's why they need to acquire high volume, which is why they outsource customer acquisition to MGAs, and they basically have to compete on price, which in turn squeezes margins. Moreover, the state also regulates the market, as many insurance policies are simply mandatory for customer protection reasons, making it very difficult to stand out from the competition and customers are not loyal to insurance companies. For example, in the case of mandatory car insurance, which the insurance company will pay to someone else after the damage you cause, why would anyone be loyal to their insurance company? Whoever provides the same service cheaper will attract the masses.

What happens when an insurer gets into trouble because there are too many claims? Insurers operate under capital and reserve requirements set by regulators. When a claim occurs, claimants turn to the insurer to:

  • 💥 a claim has arisen under the insurance policies,
  • 🏦 the insurer pays from its own capital, up to the deductible (retention),
  • 🤝 Above the deductible, reinsurers enter the picture according to the contracts concluded between the insurers,
  • 🚨 if the damages exceed the sum of retention + reinsurance + equity, a solvency problem arises,
  • 🌐The state often intervenes and bails out the victims (this is what does not happen in the E&S market).
👆🏼In summary: the strength of admitted insurance is stability and customer protection, its weakness is the lack of flexibility and lower profit potential.

There is one exception to this, a sub-segment of the P&C market, Excess & Surplus Line insurance, what are called the special risk insurance market. The essence of these is that the risk is either very high or difficult to define, for example a cyber attack, and therefore either cannot be regulated or can be done within very broad limits. This is often because it is a completely special thing or the risk of damage can even destroy the entire asset, such as a forest fire or a tornado. Let's see what these are!

Special and E&S insurances

  • 🏂 extreme sports and events,
  • 🎤 festivals, concerts,
  • 🎬 film and media productions,
  • 🚁 drone insurance,
  • 🔫 weapons production and distribution,
  • 🛡️ cybersecurity companies,
  • ⛏️ crypto mining,
  • ☣️ hazardous waste management,
  • 💥 explosive demolition,
  • 🚢 marine and air special insurance,
  • 🏗️ high-risk construction,
  • 🌿 cannabis industry insurance,
  • 🤲 special coverage for non-profit organizations.

E&S insurance volume is not evenly distributed across the United States. Some states structurally generate much more E&S business, for geographic, legal, economic, and risk reasons. E&S business is concentrated where:

  • ⚠️ high disaster or legal risk,
  • 📜 The admission regulations are strict,
  • 🏢 high real estate or corporate value density,
  • 🌪️ or the risk environment is changing rapidly.
S&P Global, Market Intelligence, E&S ratio within the total insurance industry and premium ratio
source: S&P Global, Market Intelligence, E&S ratio within the total insurance industry and premium ratio

I think it's not too difficult to guess that in a country where there are a lot of tornadoes, forest fires, and the occasional earthquake or tsunami, there are a lot of E&S insurance policies. Such states are California, Florida, Texas, New York, Louisiana, which are most exposed to the above phenomena, but for example, Texas' energy industry also has a lot of accidents. There is also a lot of E&S insurance in Georgia, Illinois, New Jersey, Arizona and Colorado, but of course this type of insurance is not uncommon in other states in the USA. E&S is almost a mirror image of admitted or traditional insurance:

  • 🧩 No fee or product approval required: Insurance terms and conditions and premiums do not need to be submitted for prior state approval, which provides a high degree of flexibility.
  • 🪪 Separate E&S license: The insurer and broker must have a special E&S license, but this is different from the traditional admitted system.
  • ❌ No state guarantee fund: There is no automatic customer protection in the event of bankruptcy, so the financial strength and reputation of the insurer are of paramount importance.
  • 🧬 Insurance of unique, non-standard risks: customers, activities, events and properties that the normal market does not undertake.
  • 💸 Free pricing: The price depends entirely on the assessment of the risk, there is no tariff limit.
  • 🎯 Underwriter-driven decision-making: Underwriting is a real business decision, not a rule application; quick yes/no decisions are typical.
  • 📈 Lower price competition, higher margin potential: fewer players, less transparent pricing environment.
  • 💰 Higher fees for customers: The price is typically higher due to the extra risk and less protection.
  • ⚡ Quick product and condition creation: responds quickly to new risks and new industries.
  • 🔄 Highly cyclical but opportunistic market: It expands in a hard market, shrinks in a soft market, discipline is the key.
  • 🧨 Greater underwriting responsibility: Bad decisions quickly and dramatically worsen the outcome.
  • 🧠 The natural field of specialty and casualty insurance: Legal, technological and complex risks dominate.
S&P Global, Market Intelligence, E&S ratio broken down by US state
source: S&P Global, Market Intelligence, E&S ratio broken down by US state

It follows from the above that most insurers simply refuse E&S insurance and do not assume the risk. The reason for this is that it is very difficult to price, and since there is no state guarantee fund to protect customers, the insurer must bear the entire risk of loss of property. Of course, E&S insurers can also take out reinsurance, but the key is not this, but:

  • 🎯 developing the appropriate risk profile (e.g. not taking catastrophe-centric risks),
  • 🧩 It contracts many small, independent contracts (e.g. a tsunami can take away half a city, it does not contract such a thing because it is not independent damage events that occur, but one large one),
  • 🪜 contracts structured, multi-layered reinsurance, so it does not keep the entire risk in-house,
  • 🧠 They do not outsource underwriting (because they focus on quality, not volume, so if risk management is poor, it drags the insurers down with it).

How can you tell if an insurance company is a traditional or E&S insurer? It's on their website 😃, and you can also tell by looking at their metrics. Check them out:

  • 📥 Incoming submissions: those inquiries that reach the insurance company and for which they have to provide a quote.
  • 📊 Quote ratio: Number of quotes issued/number of quote requests received. How selective you are among the quotes, the percentage shows how many of the insurance options were accepted.
  • 📝 Hit ratio (v. bind ratio): What proportion of the offers issued will actually result in a policy. This differs from the quote ratio metric because the client can also say no, for example, if the offer is inappropriate or too expensive.
S&P Global, Market Intelligence, automotive E&S ratio by US state
source: S&P Global, Market Intelligence, automotive E&S ratio broken down by US state

E&S insurers do not go for volume, so their number of offers will necessarily be lower, for them the quality of the opportunity, not the number, will be decisive. The better the risk/premium ratio, the more it is worth it for the insurer to conclude a contract. Their offer-making ratio will necessarily be worse, since these are not mandatory insurances, so the pricing is higher than in the case of traditional insurers. In return, if you remember, the combined indicator will be much higher, since the insurer assumes almost the entire risk for the liability arising from each policy.

S&P Global, Market Intelligence, 4 E&S areas
source: S&P Global, Market Intelligence, 4 E&S areas

So admitted and excess & surplus line insurance appear to be very similar, but in reality they operate under completely different rules. It's a bit like the truckload and less than truckload markets: both are trucking, but in reality they are two completely different industries. I wrote about this in the context of my analysis of the Old Dominion Freight Line stock, it's worth reading, the analogy is similar: Old Dominion Freight Line (ODFL) Stock Analysis – I'll Unload, I'll Load.

🎲What is short-tail and long-tail risk?

In terms of insurance companies, insurance categories and their associated policies are usually divided into two sets, according to how quickly claims payments can be completed:

  • 🐇quickly closing damages (short-tail): The damage occurs quickly, the injured party reports it quickly, and the insurance company pays out within a short time.
    • ⏳time period: typically within 1 year.
    • 🪧examples: property insurance against fire damage, storms and other events; car insurance; travel insurance; home insurance, etc.
  • ????slowly closing damages (long-tail): the damage occurs slowly or is not discovered for years, the case remains open for a long time, for example due to litigation, it is not paid in one installment and may not be paid out of court, but by court order.
    • ⏳time period: years from now, even 5-30 years.
    • 🪧examples: liability insurance (e.g. professional liability); medical malpractice; environmental pollution damages; damages related to toxic substances; pharmaceutical lawsuits, etc.

📌In practice: the problem usually occurs with long-tail risk cases, as their timing and outcome are very unpredictable. Pharmaceutical lawsuits are very typical of this kind, for example, the Vioxx painkiller case, where the damages amounted to 5 billion USD, but also the DuPont lawsuits, for example, ended up at around 1 billion USD. Anyone who has seen the Julia Roberts movie, Erin Brockovich, knows that the PG&E company paid out 333 million USD in damages to the affected parties in 1996. So the point is: these are protracted, large-claim lawsuits that you don't know when they will occur, which is why insurers have a hard time accounting for them.

🛒Where is the insurance market now?

The insurance market is partly cyclical, but not entirely. There are products that are simply mandatory, primarily liability insurance for certain jobs, mandatory car insurance, and I could list more. In the post-COVID period, insurance premiums increased significantly, prices went up, margins increased, real risks were ignored, this is called a tough marketThis reversed at the end of 2024 and we are now moving towards a soft market, moving to the right side of the pie chart.

Steadfast Eastern, the insurance cycle
source: Steadfast Eastern, the insurance cycle

If you want to express the acceleration or deceleration of the industry in an exact way, it is best to monitor the size of the premiums. What is a premium? It is the fee that the insurer earns on its contracts, from which losses and costs must be deducted. The difference between the two is the combined ratio, if it is positive, the insurers are profitable, if it is negative, they are losing money, this can be seen in the picture below. You can track the pricing power of each quarter of the insurers here: WTW index.

WTW report, changes in average insurance prices
Source: WTW report, change in average insurance prices

It is important that not only the quarterly size of the price change, but also the previous values ​​are important, so always look at the numbers in relation to the reference point. So if it was higher before, as you can see in the picture, then the market is in a downward trend, that is, it is soft, which is roughly what is happening now. Pricing fell from 7% to 4% on an annual basis, quarterly, but this is still nowhere near a collapse like what happened in, say, 2007 or 2015.

Deloitte, non-life insurance premiums
source: Deloitte, non-life insurance premiums

There is also another effect: the rising US interest rate environment, which insurers also profited from, as the float can be placed in various financial instruments. If the interest rate environment is high, then you can earn more nominally than if it is lower, which also supports insurers. Since the interest rate cuts have arrived, competition in the market has increased, the market began to soften. Deloitte has a pretty good article about the above phenomenon, from which I copied an image that shows that insurance margins are narrowing in most areas.

Artemis, Guy Carpenter Property Catastrophe Insurance Pricing
source: Artemis, Guy Carpenter property catastrophe insurance pricing

It is also worth looking at the pricing of reinsurance, which is nothing more than the amount for which insurers place the risk with other similar companies. The Rate-on-Line value on the side shows how much the reinsurer charges for one unit of coverage. In the image above you can see the price of reinsurance, which is also on a downward trend, falling by 12% by the first quarter of 2026, which also indicates a softening insurance market. You can view the index here: Guy Carpenter Global Property Catastrophe Rate-on-Line Index.

REGISTRATION AND FREE ACCOUNT OPENING: TRANSFER UP TO 450 USD

🙋‍♂️Kinsal Capital (KNSL) Specialties🙋‍♂️

In this section, I examine what specialties the analyzed company has, what its position is in the market, and whether it does anything differently than its competitors. If so, what and how, and what impact does this have on their operations.

Kinsale Capital (KNSL) was founded in 2008 by Michael P. Kehoe, who is the current CEO and Chairman of the Board of Directors of Kinsale Capital. Kinsale Capital is an excess and surplus line insurer, meaning it operates in the segment where most specialty insurance is written, and therefore does not compete in the general, regulated, insurance segment. This sector is not well served by traditional insurance companies, so Michael Kehoe knew there was room for growth in this subset.

Kinsale Capital (KNSL) presentation, E&S market growth
source: Kinsale Capital (KNSL) presentation, E&S market growth

Michael holds a degree in Economics and a J.D. who joined Colony, an E&S insurer, in 1994, which was acquired by Argo Group. Kehoe held senior underwriting and operational roles, and was specifically involved in building an E&S platform. Colony:

  • 🎯 Working for the E&S market,
  • 🧨 special liability and real estate risks,
  • 🤝 MGA and wholesale-driven business acquisition,
  • 🏛️ but with a larger, more cumbersome, more traditional insurance structure.

Since he designed the E&S platform, he knew that MGA salespeople get their own income based on volume, so it's really in our interest to have a looser rating and provide a lot of not necessarily reliable customers for whom they get a commission.

In 2002, Kehoe joined James River, another specialty Property & Casualty insurer, as President and CEO. Kehoe worked at a senior management level and:

  • 📈 Participated in scaling E&S and specialty businesses,
  • 🧩 saw program and delegated underwriting structures from the inside (part of the customer acquisition was outsourced here too),
  • ⚠️ experienced how an insurance company can slip if complex structures mask real risk, if risk management grows too quickly or is not disciplined enough.

Michael learned several lessons from the above:

  • 🎯 the operating model is important: If an insurer deals with all kinds of insurance at the same time, the focus is diluted. You have to concentrate on the area where you can collect higher margins, there is less government regulation and you have to focus not on volume, but on higher quality, and this is the E&S insurance market. Moreover, its growth is much higher than the traditional market.
  • 🏠 risk management should be kept in-house: If risk management and underwriting are not done in-house, conflicts of interest arise between the insurer and the agent. In-house underwriting is more expensive, but it can achieve much higher quality and higher margins.
  • 🧑‍💼 it doesn't matter who the clients are: Kinsale Capital (KNSL) only contracts with small and medium-sized clients with unrelated risks. The smaller the client, the less competition for it, and therefore the weaker the competition.
  • 🧠 the risk management model must be based on other foundations: One key to risk management is how policyholders are assessed. In fact, Kinsale Capital (KNSL) is a technology company that works with a lot of data, and it also deals with insurance. About a quarter of its employees are IT specialists and they have developed a unique IT system for assessing risks.

Kinsale Capital (KNSL) has been a listed company since 2016 and primarily uses data analysis based on big data models to manage risk and accept or reject clients. 

🤔It's very interesting that there are a total of 707 people working for the company, they keep a very small staff, they have automated everything possible. For a company with a market capitalization of nearly 10 billion USD, this is an extremely low number, and I think the profit per employee is record-breaking.

The structure is quite loose, managers are relatively close to employees, and the system is decentralized. The company deals exclusively with E&S insurance, and to my knowledge is the only publicly listed company that has no other insurance leg, the closest to them being Global Indemnity Group (GBLI) 85% and the already mentioned James River Group (JRVR) has an E&S ratio of 76%. In the case of large insurers such as Markel (MKL), that's only 25%.

💹Kinsale Capital (KNSL) market share

I have read several reports about the market share of Kinsale Capital (KNSL). The problem is that the exact size of the E&S market is very difficult to estimate. The most plausible data for me was found in Kinsale's own presentation. They refer to DPW, i.e. the amount of premium from direct E&S contracts, based on which Kinsale Capital (KNSL) is the 14th largest player in the market with a 1,4% share and USD 1870 million DPW, while the total market is estimated at ~USD 130 billion DPW. What's more exciting is that in 2012 it was only 0,2%, and in 2021 it was 1%, so the company is growing rapidly.

But Kinsale Capital (KNSL) can never be really big, because then they would have to sign contracts with clients who would not otherwise pass their very strict filter. So, it's not quantity, it's quality, so I don't think they will ever be as big as Lloyd's, but they don't want to be. But can they reach, say, 5%? I think so, and their quality won't change even then.

Kinsale Capital (KNSL) presentation, E&S market share
source: Kinsale Capital (KNSL) presentation, E&S market share

The above image also shows that this is a very fragmented market, with the remaining companies having a 53% share, and Kinsale Capital (KNSL) being small enough to grow for years to come. The figure below shows exactly how Kinsale’s insurance portfolio is structured, with the largest segment being commercial property insurance, but also significant segments of liability insurance and other business insurance.

Kinsale Capital (KNSL) presentation, Kinsale's portfolio
source: Kinsale Capital (KNSL) presentation, Kinsale portfolio

Kinsale Capital (KNSL) has an outstanding combined ratio due to the company's specialized rating system and data and technology advantages. Remember, the combined ratio is nothing more than the difference between premiums and claims, i.e. how much the insurer earns on contracts. The industry average is somewhere between 0-10%, but it is not uncommon for it to be negative, especially if there are many catastrophe events in a given year, when many insurers exit the market. In contrast, Kinsale Capital's ratio was 25,6%! over the past 3 years. I would like to make a small criticism regarding the chart below: this is a fairly narrow period, but the company has performed well above the industry average in the past. How much was James River Group (JRVR), where Michael previously worked? -6,6%, meaning the company made a loss, which is also a direct competitor of Kinslae Capital (KNSL).

Kinsale Capital (KNSL) presentation, combined ratio of Kinsale and its competitors
source: Kinsale Capital (KNSL) presentation, combined ratio of Kinsale and its competitors

Insurers, being a relatively well-regulated industry, are rated by the three major credit rating agencies, S&P Global Ratings, Moody's and Fitch Ratings, while AM ​​Best is a specialized rating company specializing in insurance companies. But also banks, governments and many others, so many of you may be familiar with it. However, the list of ratings is not coincidentally the same, you can see them in the table below:

CategoryAM Best (FSR/ICR)S&PMoody'sFitchReport
OutstandingA++ / aaaAAAAaaAAAExtremely strong, minimal risk
Very strongA+ / aaAA+ – AA–Aa1–Aa3AA+ – AA–Extremely strong solvency
Strong / ExcellentA / a+ – a–A+ – A–A1 - A3A+ – A–Strong, stable fuse
Good (below Investment Grade)B++ / bbb+ – bbb–BBB+ – BBB–Baa1 – Baa3BBB+ – BBB–Still investment quality
SpeculativeB+ / bb+ – bb–BB+ – BB–Ba1 – Ba3BB+ – BB–Higher risk
WeakB/bBBBSignificant risk
Very weakC/cCCClookCCCClaims settlement risk
InsolventDDDDNot performing

It is important to note that AM Best A (Excellent) is the gold standard for insurance companies; anything below this represents a competitive disadvantage in terms of the broker network and obtaining larger risks, which is why AM Best's rating is most often the authoritative one. Kinsale Capital (KNSL) is rated A, that is, it does not belong to the top two categories, but this is not a weakness, but a structural feature, AM Best simply typically expects this for A+ / A++ levels:

  • 🏢 very large size (a track record spanning several decades, which obviously cannot be achieved by a company that went public in 2016),
  • 🌍 extreme diversification geographically and between insurance products (this is something Kinsale does not even want to achieve),
  • 🐢 conservative growth profile,
  • 📉 low volatility in the long term,
  • 🌐 often global presence (Kinsale is mainly present in the US market).

A+/A++ ratings are typically given to insurers like Chubb, Berkshire, Allianz, etc. Does the rating matter? Since the companies pay for it, I don't think so, and anyone who has seen the movie The Big Short knows that ratings are very slow to follow changes. Despite this, the market still pays attention to them, but I don't think they are very relevant from an analytical perspective.

Interactive Brokers Account opening: $200 bonus

💰How does Kinsale Capital (KNSL) make money and what market advantages does it have?💰

In this section, we examine what exactly the company does to generate revenue, what products and services it has, how indispensable they are. Does it have any competitive advantage (economic moat), how defensible is it, and whether the trend is decreasing or increasing, and what is likely to happen in the long term.

Kinsale Capital (KNSL) has a relatively simple operating model: it only writes E&S insurance, but the range of insurance it writes within the E&S segment is expanding every year. You can see these listed on the left side of the table below.

Kinsale Capital (KNSL) annual report, insurance item income
source: Kinsale Capital (KNSL) annual report, insurance item income

It is worth looking at the CAGR growth, 30% per year, if you look at the overall category, you rarely see that. The two main categories are business/corporate, this is commercial, and related to individuals, this is the personal category. From the above, it is clear that Kinsale Capital (KNSL) mainly contracts with small-business or maximum medium-sized companies. Kinsale on average writes low-premium, but complex E&S risks.

A typical annual bond fee for Kinsale Capital (KNSL) is $15,000, while for larger players it is ten times this. These are not large corporate mega-deals, but rather specialized, unique risks that:

  • 🧠 they are not trivial from an underwriting perspective,
  • 🏗️ but they are not economically viable for large, bureaucratic insurers.

The problem for large players in this case is that their fixed costs are too high. For a Chubb, AIG or Liberty Mutual, the legal, compliance, IT and admin costs are the same for a $20,000 policy as for a $500,000 policy, so the average size starts at around $150,000 and the bigger the better. This is much higher than the average deal size for Kinsale Capital (KNSL). As a result, lower-fee E&S deals are not actively sought or are priced slowly, expensively and with poor terms. In contrast, Kinsale Capital (KNSL):

  • ⚡ does extremely fast underwriting (often offers within hours),
  • 🧑‍⚖️ with an underwriter who decides on a specific risk basis,
  • 🖥️ with proprietary technology that reduces the cost per policy,
  • 🚫 they do not delegate underwriting to MGAs or brokers.

With the above, they practically avoid the intersection with larger competitors, which is why they can grow so quickly. What does this model remind you of and which company have we seen it with? Constellation Software, which deliberately buys up small VMS companies en masse so they don't have to compete with the larger players, I wrote more about this here: Constellation Software Stock Analysis (CSU) – In Series.

Kinsale Capital (KNSL) Annual Report, Insurance Item Timeline
source: Kinsale Capital (KNSL) annual report, insurance item timeline

Why don't they provide all categories to their clients right away? Because they haven't developed the model yet or they don't have enough data to build the model on. For Kinsale's system, new and new areas of coverage can be added as modules to the IT system. You can see how Kinsale Capital (KNSL) has expanded its portfolio in the timeline above.

Kinsale Capital (KNSL) annual report, data-driven decision making

source: Kinsale Capital (KNSL) annual report, data-driven decision

As you can probably guess from this, Kinsale Capital (KNSL) relies on two things:

  • 📊 a lot of data that
  • 🧠 they analyze with a custom, self-developed software that creates underwriting conditions and accepts or rejects insurance applications.

But how did Kinsale Capital (KNSL) know in 2008 that this model could work? On the one hand, the CEO had already built a risk management system at his previous job, and on the other hand, there was already a company in the insurance industry that had done this: Progressive Corp (PGR).

💡Warren Buffett said this about Progressive: “GEICO is a well-run company, Progressive is a very well-run company.” It is no coincidence that his philosophy was also copied by Kinsale Capital (KNSL).

(I.e.What do you need to know about Progressive?

Progressive was the first major American insurer to:

  • 📐 based pricing on statistical models, not agent intuition (we usually call this big data),
  • 🔬 micro-segmented the risk (not good or bad, but thousands of factors), into unrelated cases,
  • 📡 used real behavioral data (Snapshot telematics),
  • ⚙️ built a fast, automated quote → bind process, so no human had to deal with these.

In essence, Progressive was the first to realize that insurance was not a simple product to sell, but a data optimization problem. This was revolutionary in auto insurance, but Progressive doesn’t really deal with the E&S stack. These principles were adopted by Kinsale Capital (KNSL) when it built its own system, as follows:

  • 🧠 insurance is not a product, but a decision-making process,
  • 📊 underwriting is not paperwork, but real-time data processing,
  • ⚡ speed = pricing power,
  • 💎 high margins come from information advantage, not bargaining, so quantity is not the point.
Kinsale Capital (KNSL) annual report, rise of car insurers
source: Kinsale Capital (KNSL) annual report, rise of car insurers

In other words, Kinsale Capital (KNSL)'s biggest economic advantage is that it has the necessary data, the modeling system, and based on this, it makes much more advantageous decisions than its competitors. All this is embedded in a single system, rather than through many fragmented, Methuselah systems. This is illustrated excellently in the table below, and this is also one of the biggest problems of large, old-fashioned insurers.

Operational dimensionKinsale CAPITAL (KNSL)Typical E&S competitorWhy is it important economically?
Bidding lead time13 nap13 weeksFaster trading increases broker productivity and win rates
WorkflowCentralized, automated platformPDFs, emails, manual reviewFewer touch points → lower underwriting costs
Broker commissionabout 5 percentage points lowerHigher commissionSpeed ​​compensates brokers for lower commissions
Expense ratioStructurally lowerStructurally higherThe cost advantage persists across cycles
Underwriter productivitymagesLowerIncreasing size improves margins, not complexity
🅰️ℹ️Do you know what else helps with insurance modeling? Artificial intelligence, because if there is enough data, it can relatively well infer the occurrence of certain events. So, for those who want to play the AI ​​card, Kinsale Capital (KNSL) is a pretty good option.

The result of the above is what you can see in the image below:

  • 💵 Direct written premium (DWP): the total gross premium of insurance contracts concluded during a given period, at the moment the policy is issued.
  • ⏳ Total net premium (TNP): the premium that the insurer actually earned pro rata temporis during the given period, after reinsurance.
  • 📊 Combined ratio: the total of losses and costs, relative to the total premium.
Kinsale Capital (KNSL) insurance metrics
source: Fiscal.ai, Kinsale Capital (KNSL) insurance metrics

A broker works well, as I mentioned earlier, when the combined ratio is low. The industry average is 90-100%, in the case of Kinsale Capital (KNSL) it is 75.4%, that is concludes contracts much more efficiently than competitors. The insurance industry's expense ratio is also much higher, somewhere between 30-40%, while Kinsale Capital (KNSL) has a similar figure of 20.6%. And if you look at the loss rate as an inverse gross margin, which in this case would be ~45%, then you can see very clearly why Kinsale is a much better company than its competitors. By almost any metric you look at, KNSL beats the market because of its technological advantage.

👆🏼There is also another important benefit of the highly efficient operation: the company has not been at a loss in any year since 2008, although this is not an extremely rare event for insurers when a serious catastrophe occurs, such as Hurricane Harvey in 2017.

🤔Why don't all insurers do what Kinsale Capital (KNSL) does?

In episode 266 of the Stock Club podcast, we have a very interesting conversation with a high-ranking employee of Markel Group (MKL) regarding Kingsale Capital (KNSL). One of the things that I think is very instructive is that Several Markel Group members have significant equity positions in Kinsale Capital, a competing company. The other is, if Kinsale Capital (KNSL)'s system is so good, why doesn't Markel or any insurance company do the same as them? In short: because they can't. The entire operation of such large companies is tied to old software, usually everything can be accessed through enterprise management systems. As you can see from the conversation below, usually everything is connected to everything, but at least it is complicated and bad, it can't be thrown out overnight, and even then.

Excerpt from the above conversation:

"On Saturday, Tom Gaynor, the CEO of Markel, hosted a private dinner. I was there and I spoke with someone who is in a fairly high-ranking position at Markel. I won't name names, but I asked him two questions.

One was that a key advantage of Kinsale Capital is that everything is managed on a single platform. Markel is a much larger company than Kinsale Capital, so the question arises: why doesn’t Markel do something similar? They currently use several different systems, which is a disadvantage because an employee has to log into each platform separately, collect data from multiple sources, which takes much more time and makes the work much more complicated. He said that everything is so deeply embedded in their existing operations that it is practically impossible. The only way would be to start everything from scratch or create a new company that builds everything from scratch. But that – as Markel – is not an option. In fact, that high-ranking Markeles leader even admitted that that he has a significant stake in Kinsale, which is a competitor of his own company."

🏰Economic moat🏰

In this segment, I examined whether the company has any economic competitive advantage, which Warren Buffett referred to as the “economic moat,” which deters competitors from besieging the company’s fortress, i.e. its business, and taking its market. In this case, these could be the following:

  1. 🫸Cost/scale advantage: van, as it is a company with a negative cost of capital, it is very similar to some software companies and in fact is one. Because of this, software development and other costs do not increase proportionally with size. Although Kinsale Capital (KNSL) is a tiny company compared to large insurance companies, it is already very efficient and its numbers are slowly improving.
  2. 🫸Switching cost: there are some, but I don't think that would be decisive. Kinsale Capital (KNSL) also gives customers information about the current status of their policy, but I don't think that would be the most important thing for a customer. It's more about whether they've received an acceptable offer from someone in the E&S segment at all, so they're likely to go back to their previous insurer, unlike, say, a traditional compulsory motor third party liability insurance policy.
  3. 🫸Network effect: There is none and I don't think there will be, because every contract is unique, it cannot be generalized, and it is not possible to generate very large volumes in the E&S sector.
  4. 🫸Intangible assets, know-how, trademark: yes, this is the company's main economic competitive advantage. They have a lot of data that others don't have, they have a completely unique system developed by themselves, and a modulation recommendation system that no one has been able to reproduce yet.
  5. 🫸Brand strength: there is none, in the case of insurance companies, it is not so much, but in the clothing or luxury industries, for example, it is. I think this is a rather weak economic competitive advantage, but Kinsale Capital (KNSL) does not have one anyway.
  6. 🫸Company culture: there are some, is also called a hidden economic advantage, the best examples of which are Constellation Software or Berkshire Hathaway. In the case of Kinsale Capital (KNSL), its presence is difficult to determine specifically, but their operation suggests a very focused operation, small in number, but otherwise a decentralized team of experts with high decision-making authority. They think quite differently than other insurers.
  7. 🫸Barriers to entry: very difficult, and is not a capital-limited market, but a competence- and time-limited one. In the USA, you have to obtain a license from each state's regulatory authority to operate, and then you have to meet capital requirements, since you have to create a separate cash pool due to losses. After that, you have to conclude reinsurance, recruit customers, and even obtain ratings from rating organizations. Entering the E&S market is easier on paper than the traditional market, but in practice it is much more difficult to operate profitably in the long term. Here, the lack of underwriting knowledge is the biggest obstacle, and it is no coincidence that many large insurers do not focus on this either. There is no standard product, no statistical safety net, every risk is unique, so a company can quickly go bankrupt if it prices its contracts incorrectly.

Kinsale Capital (KNSL)'s economic competitive advantage is evident in the numbers, practically beating the entire market for years. However, I also think that this is not a global insurer, it is only present in the US market, and one major mistake is enough to ruin the metrics, because this is a risky industry. So I can easily grant him a narrow moat, but for a wider one I think better market diversification and a larger market size are necessary. Fortunately, everything is in place for this, and Kinsale can continue to grow like a bush for years to come.

REGISTRATION AND FREE ACCOUNT OPENING: TRANSFER UP TO 450 USD

🎢Kinsale Capital (KNSL) metrics🎢

In this section, I examined what metrics characterize the company, how it stands on the revenue side, what margins it operates with, whether it has debt, what the balance sheet shows. I look for items that are extreme – too high debt, high goodwill, etc. - what return on capital the company works with, what its cost of capital is, how the revenue and cost sides are structured. I also examine trends, owner value creation, and how the company uses the cash generated.

📈What is the S&P 500 yield?📉

Compared to previous analyses, I have introduced a new section to compare the metrics below. Since many people use the US stock market index as a benchmark and also buy S&P 500 ETFs, it is worth looking at what companies are doing in aggregate (obviously, you should be happy if the company you are analyzing outperforms these values).

S&P 500 2024 data:

  • 📈 SP&500 revenue growth: + 7 %
  • 💹 SP&500 Profit Growth: + 10 %
  • 📊 SP&500 gross margin: 45%
  • 💼 SP&500 net margin: 13%
  • 🔁 SP&500 ROE: 15%
  • 🏗️ SP&500 ROIC: 12%
  • ⚙️ SP&500 ROCE: 11%

The E&S insurance market is growing by 9-10% annually according to industry research, However, the other metrics that can be written for the S&P500 are quite difficult to use for insurance companies. Equity-based indicators such as ROE, ROIC, ROCE are quite distorted, while gross margin is also difficult to interpret without a manufactured product. Therefore, unlike the usual metrics, I will use special numbers, where necessary, I will explain why. Fortunately, revenue indicators are the usual ones, let's see how Kinsale Capital (KNSL) has performed so far.

Kinsale generated revenue of 1800 million USD in 2025, however, this value is deceptive in the sense that underneath it there is a net premiums earned, which the insurer actually received and did not pass on to reinsurers. What is spectacular is the revenue growth that has fallen in the last 2 years, so in 2025 it will be “only” 18%, but this is mostly a sectoral, cyclical effect, not that Kinsale Capital (KNSL) is doing something wrong, at least Deloitte claims that the cycle has now reached its bottom. I also wrote about Copart that they also reported a slowdown, in the USA this year ~3 million cars will be repossessed, obviously some of these will not even have mandatory liability insurance, and countless more examples could be listed. But, as you can see, the numbers have been rising continuously for 10 years, so everything is fine on the execution side.

Kinsale Capital (KNSL) revenue
source: Fiscal.ai, Kinsale Capital (KNSL) revenue

Another idea for income: Kinsale Capital (KNSL) only generates its revenue from the USA, but from all states there. This does not mean that the company is not diversified, but that they have implemented the US market into their strict models and the quality of the insurance is what matters, not the quantity. I have not read about expansion outside the US, but it is unnecessary for now, because it is a small company and the E&S market is primarily a US invention. The company should collect its revenues from high-quality contracts containing risks that cannot be interconnected, and this will be fully realized in the US as well.

Now, let's look at margins, which are tricky for an insurance company. If you look at a traditionally analyzed company, the margins are relatively easy to interpret:

  • Gross margin: revenue – cost of goods/services (COGS)
margins of Kinsale Capital (KNSL).
source: Fiscal.ai, Kinsale Capital (KNSL) margins

The problem is that insurance companies don't produce products, so gross margin is difficult to interpret. But if there was one metric, it would be the inverse loss ratio. The loss rate is nothing more than the value that the insurer must pay out for contracts. So, if you subtract this value from 100%, you get a gross margin-like indicator, which in the case of Kinsale Capital (KNSL) is ~45%. This is a fairly high rate among insurers, meaning the loss rate is low. The expense ratio is the insurer's operating costs, which are added to the losses. So, if I break it down into its components, this is how the story looks:

  • 💯 all premiums: 100%
  • 💰 the insurer's profit: 100 − 76.4% = 23.6%
  • 📊 combined indicator: 55.8 + 20.6 = 76.4% (total losses and costs, industry average is between 90–100%)
  • 🔥 loss indicator: 55.8%
  • ⚙️ cost indicator: 20.6%

These are incredibly good indicators from an industry perspective, there is no problem here either, Kinsale Capital (KNSL) is beating the entire industry.

Kinsale Capital (KNSL) loss and expense ratio
source: Fiscal.ai, Kinsale Capital (KNSL) loss and expense ratio

Let's see what the situation is with debt in light of revenue and profit:

  • 💰income: ~1803 million USD
  • 🤑profit: ~474 million USD
  • 🫰🏼cash: ~170 million USD
  • 💸net debt: $29 million (~2% of revenue, ~6% of profit)
  • 💶Debt/Equity: 0.1 (essentially zero)
  • 👛interest coverage, EBIT/interest: 59.5 (this practically means infinity)

So far, there have been approximately 20 stock analyses on the site: iO Charts stock analyses. I have not highlighted in an analysis that if a company has high net debt, it is a burden that must be paid with interest, and revenue is a presumption that a company either collects or not. Not so much that the fashion and sports industry has been pretty well grounded in the last few years, think of Estée Lauder, Nike, Burberry or Kering. Fortunately, Kinsale Capital (KNSL) only has debt in the index, which you can pay out from 6% of your profits if you want, so it's pretty much as if it doesn't exist, essentially there's nothing to look at in the numbers.

🧮What do ROIC and ROCE metrics show?🧮

ROIC – Return on Invested Capital – shows how efficiently the company uses its total invested capital to generate profit. Read more here.

  • It shows the company's fundamental value creation capability.
  • It filters out the impact of the financing structure.
  • If ROIC exceeds the cost of capital (WACC), the company is creating value.

ROCE – Return on Capital Employed – shows how efficiently the company uses its long-term financing sources. Read more here.

  • It measures the profitability of business activities.
  • It does not take into account tax effects.
  • A good basis for comparison between different industry players.
IndicatorWhat does it measure?Who is it useful for?When is it considered good?
ROCETotal return on capitalLong-term investorsIf higher than the industry average
ROICReturn on invested capitalEquity investorsIf higher than WACC
ROEReturn on equityShareholdersIf stable and sustainably high

Kinsale Capital (KNSL) Ownership Value Creation

On the owner value side, I usually look at what the company uses the free cash generated. Basically, a company can do the following things with cash:

  1. 🔄 puts it back into business
  2. 📉 reduced debt
  3. 💵 pays dividends
  4. 📊 buys back shares
  5. 🏢 acquires other companies
💡Kinsale Capital (KNSL) is a company with a negative cost of capital, so they essentially only have to invest money in their unique IT system, such as research & development, but there is no such line in the books, instead they use an overall cost indicator, which is ~20%, part of which will be IT development.

In fact, the return on the money reinvested in the business is reflected in the combined ratio and the fact that the float is constantly growing. The company has no debt, does not acquire other companies, and relatively rarely repurchases shares, and the share compensation rate is also low, below 1%, which is $18 million. However, they bought back 100 million USD in 2024, Then in December they announced a $250 million share buyback program, which is roughly 2,5% of the shares. I wouldn't call it opportunistic, but they simply don't know what to do with the cash they're generating and this is still the best way to spend it.

Kinsale Capital (KNSL) share count and compensation
source: Fiscal.ai, Kinsale Capital (KNSL) share count and compensation

Kinsale Capital (KNSL) pays a dividend, which I think makes absolutely no sense for such a fast-growing, relatively small company. It's a bit like this, there's no dividend, $1 per share, which is 0,17%, with a payout ratio of 3,2%. I'd be happier if they bought back more shares instead, no need for dividend leakage.

Kinsale Capital (KNSL) dividend payment
source: Fiscal.ai, Kinsale Capital (KNSL) dividend payout

One of the problems with insurers and banks is that it is incredibly difficult to determine their value creation and valuation, as Aswath Damodaran mentions in his book: The Little Book of Valuation. Why is ROIC, ROCE and similar indicators difficult to interpret correctly? Because the premium value is included in the balance sheet of insurers, which is the fee paid by customers after contracts and at some point in the future a part of it will be paid out for claims. Until then, it sits there on the balance sheet and distorts indicators that contain capital. After all, normally, if we take a traditional business as a basis, the invested capital will be permanently tied up capital that can be amortized. Examples include:

  • 🏭 factories,
  • ⚙️ machines,
  • 🏢 buildings, and so on.
Kinsale Capital (KNSL) ROIC and ROCE values ​​compared to competitors
source: Fiscal.ai, Kinsale Capital (KNSL) ROIC and ROCE values ​​compared to competitors

In other words, capital works in the form of investments in the company, but the only thing that happens at the insurance company is that the capital temporarily parked with it, the float, is paid out later or not, which depends on whether or not future claims occur. Can ROIC, ROCE, and other indicators distinguish between the two situations? Obviously not.

Kinsale Capital (KNSL) ROE is comparable to its peers
source: Fiscal.ai, Kinsale Capital (KNSL) ROE value is comparable to its competitors

What about the ROE indicator? ROE is based on equity, since it is nothing more than the ratio of net profit to average equity. Net profit is the difference between profit and loss, plus what the insurer earns on it. Equity, on the other hand, depends on the float, since unpaid premiums turn into profit in the long run, which sooner or later becomes equity. The problem occurs when the insurer shows as profit in the float what it later pays out as a loss event, thus this cost appears shifted and later worsens the numbers. So ROE alone is not enough, but you also need to look at:

  • underwriting result, i.e. the combined indicator: the difference between premiums and payouts in percentage, the lower the better (in 2025 it was 76,4% at Kinsale, the industry average is between 90-100%). If this deteriorates drastically or goes above 100%, the company is in big trouble.
  • the quality and growth of the float (the bigger it is and the better the quality).
  • the increase in book value per share, or book value per share growth (also used by Berkshire Hathaway and Buffet).

📖What is book value?

Book value is the net assets of the company in accounting terms, and from a shareholder's perspective it is the same as equity.

  • 🧮Formula: Book value = Assets − Liabilities.

This is the amount that would theoretically belong to the owners if:

  • 📚 everything would be sold at book value,
  • 💸 They would pay off all obligations.

Let's say a company goes out of business tomorrow and sells everything it owns, paying off all its creditors, suppliers, reserves, and everything else. The assets/cash/investments/debts/land/real estate/trademarks, etc. sold cover the claims against them, leaving a positive number at the end, which is the book value. If we divide this by the number of shares outstanding, we get the book value per share. The image below shows that Kinsale Capital (KNSL) is brutally increasing its book value and value per share as it grows in size, which tells us two things: the float size is increasing and the number of shares is not being diluted. Spoiler: they are also ruining the other players in the E&S market.

Book value and book value per share of Kinsale Capital (KNSL)
Fiscal.ai, Kinsale Capital (KNSL) book value and book value per share

Why didn't I use this metric for other companies? Because book value is a bit of an old-school metric, it's basically for companies that tie up a lot of capital in physical things, like a railroad, a steel mill, or a heavy equipment manufacturer. Modern growth companies, on the other hand, tend to operate in the IT or service sectors, where there are few such items, and instead have to value intellectual property, brand power, goodwill, and the like, so book value doesn't really reflect their operations well.

Interactive Brokers Account opening: $200 bonus

💵Kinsale Capital (KNSL) Acquisitions💵

In this section, I examine how acquisitive the nature of the company is and what impact each acquisition had on the life of the company, if any.

Kinsale Capital (KNSL) has no acquisitions and its growth is entirely organic. Because it is able to use the cash it generates efficiently, its capital allocation generally consists of reinvesting it back into the business, buying back shares, or paying dividends.

🤵Kinsale Capital (KNSL) Management🤵

In this section, I examine who runs the company and how. What is the bonus system, how much risk – skin in the game – do the managers take on while running the company? Is there a family connection, or perhaps a special “heritage” factor?

Kinsale Capital (KNSL) is a founder-led company, with Michael P. Kehoe, a prominent member of the management team, serving as founder, chairman, and chief executive officer. The management team is relatively small, the company employs very few people, and I can't think of a company with a market cap of $10 billion that only has 707 employees.

Kinsale Capital (KNSL) annual report, members of management
source: Kinsale Capital (KNSL) annual report, members of management

The picture above shows that the management team consists of 7 people:

👨🏼‍⚖️Michael Patrik Kehoe

  • 👔 Position: founder, CEO, chairman of the board of directors.
  • 🧠 Experience: 30 years of experience in the insurance industry, coming from direct competitor JRVR, where he held a senior position, putting together the underwriting system. He has been with Kinsale Capital (KNSL) since its founding, and he also managed the IPO. He is 58 years old, so he will be able to reign as CEO for a long time, which is good news.
  • 💼 Remuneration: Base salary of $350,000, total benefits of $6,7 million (which is okay considering the size of the company and growth numbers).
  • 💎 Property: owns 3,8% of the company, worth about USD 353 million, which is a very strong skin-in-the-game exposure, and is the 5th largest position, including fund managers.

📌In practice: Michael Kehoe is the founder of Kinsale Capital (KNSL) and has been running the company as CEO ever since. He owns a brutally large number of shares, He has a vested interest in the long-term success of the company. It is important that he worked with other leaders at James River Insurance, so there is great synergy, the leaders have known each other for decades.

👨🏼‍⚖️Brian Donald Haney

  • 👔Position: former founder, board member, former COO, will retire in 2026 and become a senior advisor to the company.
  • 🧠Experience: He also has 25-30 years of experience in the industry, previously worked with Michael Kehoe at Colony and James River Insurance, as head of accountants, he continued this activity at Kinsale Capital (KNSL) between 2009-2015, then COO and Deputy Chairman of the Board between 2015-2020, Chairman and COO since 2020. He is 55 years old, and like the CEO, he can reign for many more years.
  • 💼Remuneration: Base salary of USD 125000, total benefits of USD 2,9 million.
  • 💎Property: owns 06,8% of the company, worth about $69 million, which is a strong skin-in-the-game exposure.

📌In practice: I think it's a very important element when two top executives have previous experience, because on the one hand they can take over each other's roles, and on the other hand they don't have to hone in on each other. Brian has a lot of industry experience, he actually grew up with the CEO. He also has a significant shareholder package in the company.

👨🏼‍⚖️Bryan P. Petucelli

  • 👔Position: CFO, Deputy Executive President, Treasurer, has been with the company since its founding.
  • 🧠Experience: He was previously a senior manager at Ernst & Young, where he audited insurance companies for 13 years. He holds a degree in financial and tax consulting. He is 59 years old.
  • 💼Remuneration: Base salary of USD 100000, total benefits of USD 2,9 million.
  • 💎Property: owns 0,27% of the company, worth about $27 million, which is a strong skin-in-the-game exposure.

📌In practice: also has extensive industry experience and also has a significant stake in the company.

👨🏼‍⚖️Mark J. Beachy

  • 👔Position: claims director, deputy executive chairman.
  • 🧠Experience: He has held this position since 2020, having previously served as the General Counsel of The Travelers Indemnity Company, leading a team of over 1000 legal professionals. He served as the company's General Counsel from 2006-2018, having previously been a trial attorney. Earlier in his career, he held positions of increasing responsibility in the claims areas of Travelers and Aetna Casualty and Surety Company. He is 57 years old.
  • 💼Remuneration: Base salary of USD 65000, total benefits of USD 2,2 million.
  • 💎Property: owns 0,32% of the company, worth about $3,3 million, which is a strong skin-in-the-game exposure.

📌In practice: The claims manager is responsible for claims made against insurance companies, which are called claims. Since one of the most important goals of an insurance company is to have as few claims as possible against the company, Mark has a key role within the company.

👨🏼‍⚖️Daniel D. Schnupp

  • 👔Position: CIO, Executive Vice President.
  • 🧠Experience: He has been a member of Kinsale Capital (KNSL) since 2019, and was previously a senior management and technology expert at Impact Makers Inc., and was previously the CIO and Vice Chairman of the Board of Capital Center LLC., a mortgage and real estate brokerage. Prior to that, he worked at Genworth Financial Inc., a Fortune 500 insurance company. He holds a degree in electrical engineering and technology management. He is 58 years old.
  • 💼Remuneration: Base salary of USD 95000, total benefits of USD 2,2 million.
  • 💎Property: owns 0,028% of the company, worth about $3 million, which is a strong skin-in-the-game exposure.

📌In practice: is basically responsible for technology, overseeing Kinsale Capital's (KNSL) special underwriting system, which is a key element of the company, providing a significant part of the economic advantage.

👨🏼‍⚖️Stuart Winston

  • 👔Position: Chief Underwriter, Deputy Executive Chairman.
  • 🧠Experience: Stuart P. Winston has served as the company's Executive Vice President and Chief Underwriter since October 2025. He joined the company in 2010, where he held positions of increasing responsibility before being appointed Senior Vice President, Underwriting in 2022. Prior to joining the company, he held various underwriting positions at James River Insurance Company. Stuart P. Winston holds a BA in Management Economics from Hampden–Sydney College and holds the Associate in Reinsurance (ARe) and Chartered Property Casualty Underwriter (CPCU) professional certifications from The Institutes.
  • 💼Remuneration: does not qualify as a NEO and is therefore not disclosed separately.
  • 💎Property: does not have a significant stake in Kinsale Capital (KNSL).

📌In practice: the underwriter is the person who manages the risk, based on which the company writes the insurance policies. The underwriter ensures that there are few claims with high premiums, so Stuart Winston is actually a statistical economist, the first line of defense, while Mark Beachy is a lawyer, the second line of defense. Both have a key role in the proper functioning of Kinsale Capital (KNSL). He also gained experience at James River, so he worked with the CEO and COO.

Kinsale Capital (KNSL) proxy document, Kinsale board members
source: Kinsale Capital (KNSL) proxy document, Kinsale board members

The board of directors consists of 10 people, of which 2 people, the CEO and the COO, participate in the board of directors, and they are assisted by 8 independent directors. Another important piece of information is that management and board members have a total stake of USD 464,2 million in the company, 4 of these directors have multi-million USD stakes, and 3 have over 10 million USD. I went through the board members, there are a lot of accountants, auditors, almost everyone has insurance industry experience, for example PricewaterhouseCoppers, AIG, Allstate, Towers Perrin Reinsurance, JP Morgan, AXA, etc.

I generally don't like it when the chairman of the board is also the CEO, because then he exercises control over himself, However, there is quite a counterpoint here, as many board members counterpoint the 2 management members. Since the CEO is also the founder, he has a very large financial exposure to the company, so I find it hard to imagine that his interests would not point in the same direction as the company's, and since he does not have a decisive majority in terms of votes, but can be replaced, I feel this is a pretty strong guarantee.

🫰🏼Kinsale Capital's remuneration

Board members receive a small amount of stock compensation, which is locked in for 1 year from the issuance. This is around 150000 USD, which is negligible compared to the size of the company, and their salaries are also similar, so they earn 250-300000 USD per year. This is roughly standard compensation for companies of similar size, but by no means outrageous.

Kinsale Capital (KNSL) proxy document, Kinsale management remuneration
source: Kinsale Capital (KNSL) proxy document, Kinsale management remuneration

Management compensation consists of fairly typical elements:

  • 💼 basic salary
  • 💵 cash-based bonus
  • 🎁 other benefits: e.g. housing, electronic devices, etc.
  • 📈 with the help of stock awards, options and specific stock packages

In the chart below you can see the total compensation of the most important managers, which, while not very high, is not low either, roughly similar to that of companies of this size. But since Kinsale Capital (KNSL) is a very prosperous company, I can't really get into it, but it does dilute the owners' stake somewhat, which the company compensates with share buybacks.

Kinsale Capital (KNSL) proxy document, Kinsale's management remuneration in light of the company's performance
source: Kinsale Capital (KNSL) proxy document, Kinsale management remuneration in light of the company's performance

The logic of remuneration is as follows:

💰 Short-term bonus (annual cash bonus)

The cash bonus is tied to annual performance and is not based on a single indicator, but on a combination of several insurance KPIs.

Typical key metrics:

  • 📊 Operating income / operating EPS
  • 🧮 Combined ratio (critical, with absolute thresholds)
  • 📈 Net written / earned premium growth, but only in conjunction with profitability
  • 📘 ROE / book value growth (with lower weight)

📌In practice: as you can see, 2 out of the 4 criteria are industry metrics, as insurers only use the combined ratio and net written premiums. I think this is fine, as Kinsale Capital (KNSL)'s profitability, along with a few other metrics, is heavily influenced by these two figures.

Kinsal Capital (KNSL) proxy document, Kinsale management remuneration compared to shareholder returns
source: Kinsal Capital (KNSL) proxy document, Kinsale management remuneration compared to shareholder return

In the chart above, the acronym TSR stands for Total Shareholder Return. I think it's a very fair approach on the part of Kinsale Capital (KNSL) to tie key executive compensation to shareholder value growth.

📈 Long-term incentives (LTI – share-based payments)

Long-term remuneration is predominantly stock-based and not option-based, instead consisting of time-based stock units (RSUs) and performance-based stock units (PSUs).

1️⃣ Performance-based share package (PSU)

Fulfillment conditions:

  • 📊 Operating ROE
  • 📘 Book value per share growth (also an industry metric, as I wrote above)
  • 📈 Relative performance (compared to peer group, e.g. specialty P&C, more information about this can be found in the quarterly report)

📌In practice: similar to short-term incentives, there are industry metrics to ensure that the interests of the company and management are aligned. There is a great chart in the quarterly report on relative performance that shows who the focus group members are, but it is essentially almost exclusively made up of insurers. It is true that not all of them generate a significant amount of their revenue from the E&S segment, but that is because there are relatively few insurers in the market whose main revenue comes from the not admitted category.

2️⃣ Time-based stock package (RSU)

  • 🚫 no performance requirements
  • ⏳ time-based restriction (3–4 year period)

📌In practice: the time-based stock package means nothing more than tying the management members to the company in the long term. I have only one problem with this: it is not tied to any metric and those capital allocators who really take shareholder value creation seriously do not usually give time-based stock packages. For me, the model remuneration at the management level is the system of Contesllation Software (CSU), you can read about it here: Constellation Software Stock Analysis (CSU) – In Series.

Overall, I think this remuneration system is not bad at all, even if it is not the best, like in the case of CSU or Kelly Partners Group (ASX:PSG), but they really represent the top solutions. You can read the full remuneration structure of Kinsale Capitel (KNSL) here: Annual meeting of stockholders.

👆🏼The above amounts should be understood as the company has been incredibly prosperous so far, growing by about 30% per year, all its metrics have improved, so the remuneration of key executives is close to the maximum. In a worse period, they would receive significantly less, so as long as they create so much additional value for shareholders, why wouldn't Kinsale Capital (KNSL) pay them well?
REGISTRATION AND FREE ACCOUNT OPENING: TRANSFER UP TO 450 USD

🆚Competitors: Kinsale Capital (KNSL) opponents🆚

In this section, I examine who the competitors of the analyzed company are, what is their market position, whether they are in a subordinate, secondary or superior role. What is their market share and what is their specialty? Are they losing or gaining market share to their competitors?

Kinsale Capital (KNSL) competes in the insurance market, which is a very fragmented market. Of all the players, we need to exclude insurance companies that:

  • 🏗️ they are too large compared to Kinsale Capital and therefore do not target the same clients, or
  • 🚫 they do not compete in the E&S market, perhaps most of their revenue does not come from there, but from the admitted segment.

The following names stand out: Berkshire Hathaway (GEICO, Alleghany), AIG, Arch, Markel, WR Berkley Corp, Fairfax, Allstate, Global Indemnity, James River Group and RLI Corp. The image below shows the proportion of DWP, the direct written premium, coming from the E&S segment:

Kinsale Capital (KNSL) Annual Report, KNSL's Competitors
source: Kinsale Capital (KNSL) annual report, KNSL's competitors

Kinsale CapitaL (KNSL)'s three biggest rivals are Global Indemnity Group (GBLI), James River Group (JRVR) and RLI (RLI). Of the three companies, James River is interesting because Michael P. Kehoe worked there for years, so he is aware of the quality of its competitors. One of the most telling numbers for E&S insurers is the combined ratio, which has been discussed several times, as it best shows how efficiently each company operates.

Kinsale Capital (KNSL) presentation, combined ratio of Kinsale and its competitors
source: Kinsale Capital (KNSL) presentation, combined ratio of Kinsale and its competitors

As can be seen, the

  • 📊 Kinsale Capital has a combined ratio of 76.8%,
  • 📉 RLI has a score of 85.8%, which is 9% worse than KNSL,
  • ⚠️ GBLI has a score of 98%, which is 21.2% worse than KNSL,
  • 🚨 JRVR has a score of 101.7%, which is 24.9% worse than KNSL.

How can JRVR be higher than 100%? So that the company fails overall on its insurance, but compensates for the loss from the profit made on the capital it has, but it is clear that these companies operate significantly worse. Of course, a three-year period could be a coincidence, so I looked for a 2020-2024 picture that includes the COVID period, which does cast a bit of a shadow over the picture. It seems that Kinsale Capital (KNSL)'s numbers have improved since then, but COVID generated the bulk of the insurance losses in the first year.

Kinsale Capital (KNSL) presentation, combined ratio of Kinsale and its competitors over a 5-year period
source: Kinsale Capital (KNSL) presentation, combined ratio of Kinsale and its competitors over a 5-year period

If we take the previously mentioned book value per share as a basis, the picture looks even worse from the perspective of competitors, as Kinsale Capital (KNSL) is also destroying the entire industry here.

source: Kinsale Capital (KNSL) presentation, book value per share of Kinsale and its competitors

Let's take the 3 competitors mentioned earlier from the sample group above and then put their book value and book value per share on one picture. It is clear that Kinsale is also producing the fastest growing numbers here, GBLI is second, but its efficiency is light years behind KNSL.

Book value and book value per share of Kinsale Capital (KNSL) and its competitors
source: Fiscal.ai, book value and book value per share of Kinsale Capital (KNSL) and its competitors

In relation to the above, only one question remains: how does Kinsale Capital (KNSL)'s valuation differ from its competitors. It is clear that JRVR is not profitable, which is when insurers tend to exit certain markets, while GBLI's high P/FCF value shows that it does not generate too much cash from the activities it does. RLI is the healthiest, but it is not growing and is not much cheaper than Kinsale Capital (KNSL), so KNSL can pocket another victory.

CompanyP / EEV / EBITDAP/FCF
KNSL19.615.29.7
GBLI14.69.1241.4
RLI17.013.110.3
JRVR-3.5-21.828.2
Interactive Brokers Account opening: $200 bonus

⚡What are the risks of Kinsale Capital (KNSL)?⚡

In this section, I examine all the risks that could affect the company's long-term future. Currency, regulatory, market disruption, and so on.

Kinsale Capital's risk profile is not binary ("fail/not fail"), but rather layered and time-extending. It is not the classic insurance risks that threaten it most, but those that arise from the strengths of the model. That is, concentration, a small number of high-quality contracts, and a relatively cyclical industry,

🔥 Underwriting risk

Kinsale takes risk on its own book, not MGA. If its pricing is wrong:

  • 💥 the damage is done to them,
  • ⏳ delayed (long-tail casualty),
  • ⚖️ often through litigation.

There are few statistical safeguards in the E&S segment; a poorly managed contract can ruin the loss ratio for years.

📌In practice: The disciplined combined ratio, rapid repricing and cross-insurance significantly reduce risks, as their entire operating model is designed around this. Since the insurance contracts are separated from each other and are worth an average of 15,000 USD, I think that Kinsale runs a significantly lower underwriting risk than its competitors. However, it is worth considering which business line has the highest risk, which could even lead to years of legal litigation. For example, in the Vioxx painkiller lawsuit, Merck and its insurer had to pay 5 billion USD, which I wrote about here: Merck & Co. (MRK) Stock Analysis – Heads or Tails?.

️ Legal environment

  • ⚖️ Jury verdicts and litigation costs are increasing in the USA.
  • 🔥 This is especially painful for liability-heavy E&S portfolios, where Kinsale is strong.

📌In practice: Kinsale has no influence on the legal environment, but since it is present in all US states, if the regulations change, they will also have to change their contracts. Fortunately, the E&S segment is where the regulations are lax, and they don't really interfere with the content of the contracts. I don't consider this to be too much of a risk either, especially since the states can modify this individually, so I find it hard to imagine that some drastic rule change would occur in 50+ states at the same time.

However, a legal ruling can also distort the value of contracts retroactively. Let’s say a precedent-setting court ruling is made in a liability insurance case, for example, someone was injured in a dangerous job and needs to be compensated. This case affects all contracts that contain similar clauses, so Kinsale Capital (KNSL) has to reprice them, otherwise the profit/risk ratio will change. We’ve seen this before in history, when 3M was sued for $6 billion over its defective noise-canceling earplugs.

🚀 Growth risk (over-acceleration)

The danger is not that dealflow will run out, but that:

  • ⚡ growth precedes the construction of appropriate risk models,
  • 🧨 the IT system receives bad input or new contracts are not implemented well.

📌In practice: In insurance, errors are revealed with a delay, this is one of the most dangerous asymmetries. If there are suddenly several claims, it will not be revealed immediately, but it may be years later. Most insurers go for high volume, but it is also true for other companies that revenue growth often runs ahead, we have seen this before with fashion companies, such as Kering. However, based on what management has said so far, it turns out that they are not chasing growth, instead the main focus is on quality, but I can still imagine that they will implement a new form of insurance too quickly, for which there is not enough data yet, and because of this, an error will be introduced into the risk management process.

💻 Technology and key people risk

The economic competitive advantage in the case of Kinsale Capital (KNSL) is a combination of internal systems and company culture.

  • 🧑‍💻 loss of key developers,
  • 📉 partial catching up of competitors.

📌In practice: Currently, 707 people work for the company, about a quarter of whom are IT specialists, meaning that the company is very interested in retaining highly skilled IT specialists. I don't believe in the partial catching up of competitors, as the exact opposite is happening, but new, not yet existing startups can try to develop something similar with sufficient money, as Kinsale Capital (KNSL) is beating the market to the punch. But this is still to come, currently the exact opposite is happening.

However, it is worth considering what happens if the founder leaves the company, becomes permanently ill, or dies. Based on the management of KNSL, another industry expert could probably take over the CEO's position, even if it would not be easy to replace him. On the other hand, it is positive that 2 other management members have worked with him before, so they could learn from him about company management.

(I.e. Cyclicality and price competition

The E&S market is not immune to cycles either:

  • 🌧️ Competition is increasing in the soft market,
  • 💸 the price decreases,
  • ⚠️ Discipline is deteriorating.

📌In practice: Kinsale Capital (KNSL) actually entered the market at the bottom of a cycle, as in 2008 there was a huge crisis going on, where not only banks failed. In theory, the cycle is now turning into its soft period, meaning prices are falling, competitors are leaving the market, which will necessarily push Kinsale Capital (KNSL)'s numbers down. It doesn't matter how much, because in many cases prices fall together for companies in all sectors, but the metrics do not deteriorate to the same extent. In recent years, KNSL has been able to demonstrate excellent efficiency, so I think that the decreasing competition may even be beneficial for Kinsale.

But what happens if reinsurance options are cut in a weak market? This would be a problem because Kinsale Capital (KNSL) is an E&S insurer, where there is no government risk, everything has to be paid for by the company and the cross-insurers. So one of the two legs could weaken or even fall out.

(I.e. Concentration risk

  • 🇺🇸 USA focus,
  • 🧨 Predominance of specialty casualty insurance products,

📌In practice: concentration is a conscious strategy, but Kinsale is not a diversified conglomerate; a legal or regulatory shock could affect it more than others. But it cannot diversify like the big insurers, because then the very essence, efficiency, would be lost. So this is not necessarily a risk, but rather an advantage, because this is the essence of Kinsale. As its size increases, the company will offer more and more different types of contracts, so the insurance policies will differ from each other. As I explained in the case of economic competitive advantage, large size can strengthen the moat, so I expect this risk to decrease over the years.

I made a self-check list that confirms the thesis about the company:

  1. low or zero debt: YES/PARTLY/NO
  2. significant economic advantage that can be protected in the long term: YES/PARTLY/NO
  3. excellent management: YES/PARTLY/NO
  4. excellent indicators, significant owner value creation: YES/PARTLY/NO
  5. The majority of the total return comes from reinvesting the cash generated, not from dividends: YES/PARTLY/NO
  6. appropriate company valuation: YES/PARTLY/NO

As I recall, Kinsale Capital (KNSL) is the first company to tick all the items on the self-check list. Constellation Software was the closest to this, but even there it was only PARTIALLY rated: Constellation Software Stock Analysis (CSU) – In SeriesI think I don't really need to explain after this how Kinsale Capital (KNSL) is a quality company and even its valuation is okay.

REGISTRATION AND FREE ACCOUNT OPENING: TRANSFER UP TO 450 USD

👛Kinsale Capital (KNSL) Valuation👛

In this section, I will examine the company's current valuation compared to historical values ​​and consensus fair values.

Rating metrics

In the two rows below you can see valuation metrics. The first row shows the current valuation, the second row shows the historical valuation. Although I don't think these metrics are particularly good - they hide a lot - they can be used as a benchmark.

  • Share price (2025-04-01) 395.26 USD; P/E: 19.41; EV/EBITDA: 15.16; P/FCF: 9.61; B/P: 4,88 (Based on Finchat.io)
  • Historical median valuation (10-year average): P/E: 35.63; EV/EBITDA: 29.39 ; P/FCF: 12.31; B/P: 6,33 (Based on Gurufocus)

Why don't you see a DCF model in this segment? Because each input data produces a huge variance in the output, and most of the data is an estimated value. Therefore, the valuation will never actually be a single exact number, but rather a range can be defined where the current valuation falls.

You should apply a margin of safety to this price range, according to your risk appetite.

So don't expect an exact price, no one can say this for a stock. However, there are fair value prediction services, almost every major stock screening site has one, I've aggregated them below. However, if you want a good stock support service, subscribe to The Falcon Method (The Falcon Method), entry prices are given for the stocks analyzed there.

Rating (KNSL)

  • Wall street estimates: 273.34-574.71=424 USD (I took into account the Alphaspread, the average of the two extreme values:)
  • Peter Lynch Median P/E: $747
  • Morningstar: not followed
  • Gurufocus: $610.23
  • AlphaSpread: 363.28 USD (8% overvaluation compared to the base case)
  • SimplyWallst: $548.42
  • Valueinvesting.io: 509.55 USD
  • Stock analysis: 483.78 USD
  • Compound and Fire: $558

Average (based on 8 reviews): $530.5 (25% underrated)

Gurufocus, Peter Lynch Chart
source: Gurufocus, Peter Lynch Chart

How to interpret the numbers? The above "margin of safety" rule should be applied according to your convictions, so if you really believe in the company, you can buy it at fair value, but if you proceed in 10% increments (whose convictions are strong), the math would look like this:

  • 10% margin of safety: 530.5*0.9=477.45 USD
  • 20% margin of safety: 530.5*0.8=424.4 USD (the exchange rate is below this)
  • 30% margin of safety: 530.5*0.7=371.3 USD
  • 40% margin of safety: 530.5*0.6=318.3 USD
  • 50% margin of safety: 530.5*0.5=265.2 USD

Of course, the list could go on and on, but the point is that the right purchase price for you is determined by your level of conviction. In the above list, I have included B/Pt, or book value, in addition to the usual 3 metrics, because it is more of an industry metric that is worth looking at.

Let's continue with NOPAT, but first, an interesting fact. The previous high was 533 USD, from where the exchange rate fell to around 395 USD. The question regarding NOPAT is always whether the price decline is followed by a fundamental deterioration or whether the underlying value remains unchanged. The image shows that the 6,7% NOPAT yield was last this high in 2017, around the time of the IPO. This is typically the case when the company's fundamentals catch up with the price, and then when it breaks down, the ideal situation arises: the stock becomes cheap.

Fiscal.ai, NOPAT yield and price for Kinsale Capital (KNSL)
source: Fiscal.ai, NOPAT yield and price for Kinsale Capital (KNSL)

Unfortunately, the EVA numbers are old, more than six months old, but they tell a lot. First of all, the cost of capital is negative, which is about the best thing that can happen to you when you look at a company, these are the little blue bars on the left below the zero line. Above is the brutal current value creation, while the gray is the future priced-in expectations. There were, at a price of 477 USD, so obviously the picture would be even better now. On the right side of the FGR chart, the blue line is not much higher than 0%, so the market does not believe that there will be huge growth here in the future. I do not usually give examples with EVA margin numbers, but the value above 30% is quite telling, so that half of the S&P500 can show about 0%, that is, it does not generate much owner value. I think Kinsale belongs to the top 1-2% with its current value of 35,7%, which indicates brutally good quality.

Kinsale Capital (KNSL) EVA analysis
source: IBKR, Kinsale Capital (KNSL) EVA analysis

Finally, one more interesting thing: although I don't give much thought to the different forecasts, you can look at aggregated charts of what analysts think about individual companies on the Stock Analysis page. When all the target prices are below the current one, it is almost always a very good sign, even the "worst case" price is 415 USD. I rarely see this, in 20 analyses, maybe only the Lululemon stock analysis had something similar, but even that wasn't that good: Lululemon Stock Analysis (LULU) – The Power of Yoga Pants.

Kinsale Capital (KNSL) price prediction
source: Stock Analysis, Kinsale Capital (KNSL) price forecast

I can't say too much about the above, Kinsale Capital (KNSL) is a high-quality company, and I think it is currently trading below its fair value, so there is no question in this section either.

Interactive Brokers Account opening: $200 bonus

🌗Significant news and the last quarter🌗

In this section, I will examine what happened in the last quarter, whether there were any significant news/events. If the company reports semi-annually, we examined this period.

Kinsale Capital (KNSL) reported its Q3 report on October 24, 2025, in which you won't find any major changes.

Main financial indicators

  • 📈 Operating profit per share: $5,21, up 24% year-on-year.
  • 💼 Gross written premium (GWP) growth: total 8,4%; excluding the commercial real estate business 12,3%.
  • 📊 Combined ratio: 74,9%, which includes 3,7 percentage points of net, favorable reserve release from the previous year.
  • (I.e. Nine-month operating return on equity (ROE): 25,4%.
  • ???? Increase in book value per share: 25,8%, since the end of 2024.
  • 🌊 Floats: It grew by 20% to 3 billion USD, in 2024 it was still 2,5 billion USD, the interest earned afterwards was 4,3% (~70 million USD).
  • 💰 Net investment income growth: 25,1%.
  • 🧾 Net Earned Premium (NEP) Increase: 17,8%, exceeding the increase in GWP due to higher reinsurance retention (i.e., the insurer retained a larger share of the risk, ceding less to reinsurers).
  • ⚙️ Expense ratio: 21%, which was impacted by lower ceding commissions due to higher reinsurance retention.
  • ⏪Share buyback: Although not part of Q3, the company announced a $250 million share buyback package on December 11, which represents 2,7% of the company at current value.

📌In practice: The numbers above look really good, I can't really get into much of it, but I would like to highlight a few things. The combined ratio is lower than last year, which means it has improved, but this is because an amount previously set aside for an event that did not occur was returned to the result, which naturally improves the numbers. Why is Kinsale Capital (KNSL) able to do this? For example, because:

  • 🎯 Better underwriting than past estimates assumed (improving business)
  • ⚖️ More favorable claims outcome (fewer lawsuits, lower verdicts, faster closure)
  • 🧱 Overly conservative past provisioning
  • 📊 Strong data and model-driven pricing that outperforms the industry average, but we already knew this, this is Kinsale's specialty.

In any case, this is a very good sign for the future, that's exactly what I like to see. The increasing float shows that the level of premiums increased this quarter, but we do not know when a major loss event will occur that could depress this, so this may still change. It is also worth examining the GWP-NEP combination. If the NEP is higher than the GWP, the insurer transfers less insurance risk to the reinsurer. There could be many reasons for this, for example, renewal would be more expensive, risks have decreased, because according to internal models, Kinsale Capital (KNSL) can handle this too, because its capital position is strong.

Amwins, catastrophic events for the first half of 2025
source: Amwins, disaster events for the first half of 2025

Finally, an interesting fact: Kinsale Capital (KNSL) refers to the Amwins index, they even have a 2026 forecast for the insurance market, for those who want to do further research: Amwins 2026.

There was also a significant insider purchase on December 15th, with one of the directors buying around $1 million worth of Kinsale Capital (KNSL) shares for $391:

Kinsale Capital (KNSL) insider trading
source: Finviz, Kinsale Capital (KNSL) insider trading

Management comments:

  • "Brian and I have worked together for almost 30 years at three different E&S companies. He was one of the original founders of Kinsale and has made tremendous contributions to our success over the almost 17 years we have been in business." — Michael Kehoe, referring to Brian Petrucelli, CFO
  • "We announced some management changes last night, the most significant of which is Brian Haney's recent election to the Board of Directors and the announcement of his retirement and new role as Senior Advisor beginning next year.” – Michael Kehoe
  • "We've been making ample use of the new AI tools that have come out, both in our IT department as well as underwriting and claims, trying to drive automation in our business process." - Michael Kehoe
  • "I think you've seen over the last two years, the Kinsale growth rate has kind of come in from an extraordinary 40% rate to, this quarter, high single digits. I think we've reiterated many times that, over the cycle, we think 10%-20% is a good conservative estimate of our growth potential.” – Michael Kehoe
  • "Our pricing trends are similar to the Amwins index, which reported an overall 0.4% decrease. Commercial property rates are still declining, but we feel we've reached that inflection point, as I mentioned, where the rate declines are stabilizing.” – Brian Haney
  • "I would say some of our newer areas that we've developed recently would be the transportation segment and the agribusiness segment, but I think there's still a great opportunity in casualty." – Brian Haney

Next quarterly report: 2026.02.12.

REGISTRATION AND FREE ACCOUNT OPENING: TRANSFER UP TO 450 USD

Kinsale Capital (KNSL) Summary

Summary of the analysis, drawing lessons.

Kinsale Capital (KNSL) is one of the few companies I can barely get involved with. I found some minor flaws, such as the dividend payment, which is negligible, but I think it is unnecessary, and the fact that the executives receive quite a lot of extra stock compensation during the executive compensation, but fortunately this does not even reach 1% of the income. However, the company has prospered incredibly well in recent years, so I would have a hard time justifying why they should not pay the management well.

The excellent results are the result of the vast amount of data they collect and the specialized IT infrastructure they have developed in-house and which competitors have not been able to replicate. As Kinsale Capital (KNSL) is an Excess & Surplus insurer, they do not have to compete with larger companies such as GEICO, AIG or Lloyd's, while they beat their smaller rivals in every respect. It can do this by having much better risk management processes because they run a lot of models in-house that provide excellent risk-reward ratios for insurance policies. Moreover, the insurance market is entering a soft phase, or a period of decline, which is depressing the valuation of all companies, so the prices of most insurers are falling. An ideal entry point into the market for a high-quality company like Kinsale Capital (KNSL), However, this is not an easy position to maintain due to the risk of loss, so it is worth choosing the position size accordingly.

Interactive Brokers Account opening: $200 bonus

Frequently Asked Questions (FAQ)

What kind of company is Kinsale Capital (KNSL)?

Kinsale Capital is a US-based, publicly traded specialty insurer focused on the Excess and Surplus (E&S) segment of the Property and Casualty (P&C) market. Its business model is to provide coverage for hard-to-insure, atypical, or fast-acting risks, typically to small and medium-sized corporate clients.

The company optimizes for profitability, not volume: it operates with low costs, fast underwriting decisions, and strict risk-taking, which has resulted in consistently superior profitability compared to the industry average.

Can you call Kinsale Capital (KNSL) an IT company?

Not formally, but in its operation, a highly technology-driven insurer. Kinsale Capital (KNSL) uses a proprietary, internal underwriting and decision support system that enables automated data processing, fast pricing and short turnaround times.

This technology platform is not an IT project for its own sake, but the core of the business model: a significant part of the cost advantage, speed and underwriter productivity come from it, which is why many analysts refer to it as a “tech-enabled insurer”.

What competitive advantage do they have over their competitors?

Kinsale Capital (KNSL)'s key competitive advantages are structurally low costs, fast decision-making and disciplined underwriting. Kinsale operates on a centralized platform, without a fragmented system stack, allowing it to handle more business with fewer people.

Additionally, it does not delegate underwriting authority to brokers or MGAs, keeping all risk in-house. This reduces agency risk and helps maintain an exceptional combined ratio even during cyclical downturns.

What do we call the Property and Casualty, or P&C market?

The P&C market is the non-life insurance segment that provides coverage for property damage and liability risks. This includes, among others, property insurance, liability insurance, motor insurance and various business risks.

This market is fundamentally cyclical, highly dependent on the economic environment, legal precedents, inflation and reinsurance capacity.

What does Excess and Surplus line insurance, such as Kinsale Capital, mean?

E&S insurers undertake risks that are not covered or only to a limited extent by traditional, regulated, also known as admitted or specialty insurers. These may be particularly dangerous, specialized or requiring quick decisions.

The E&S market is more flexible: no government rate approvals, faster pricing, but higher underwriting responsibility. Kinsale Capital (KNSL) can leverage its speed and data advantage in this environment.

Who are Kinsale Capital (KNSL)'s competitors in the market?

The main competitors are other E&S and specialty P&C insurers, such as Markel, WR Berkley, Fairfax Financial, James River, or certain Berkshire interests. These are typically larger, more diversified players.

The difference is that Kinsale, as a smaller organization with a more concentrated focus, often achieves better margins and faster growth.

What is the premium, the claim, the combined ratio?

The premium is the insurance fee that the customer pays for the coverage. The claim is the amount of damage paid when the insured event occurs.

The combined ratio is the most important insurance profitability indicator: the sum of the loss ratio and the expense ratio. Below 100%, the insurer is profitable at the underwriting level.

What is the average combined ratio in the industry and what is it for Kinsale Capital (KNSL)?

At the industry level, the combined ratio typically fluctuates around 95–100% over the long term, depending on cycles. Many insurers only become truly profitable when combined with investment returns.

Kinsale Capital consistently operates well below this, often with a combined ratio of 75–80%, indicating outstanding underwriting discipline and cost advantage.

What is bind or hit ratio?

The bind (or hit) ratio shows what percentage of quotes from a given insurer actually become contracts. It reflects the accuracy of pricing and market competitiveness.

A high bind ratio generally indicates that the underwriting is fast, relevant, and well-priced, not too aggressive or too expensive.

What does the underwriter do? Why is this process important?

The underwriter analyzes the risk, determines the premium, the terms and conditions, and decides whether the insurer will assume the risk. This is the central process of insurance value creation.

In the case of poor underwriting, problems only appear years later, in the form of claims, so this role is crucial for long-term profitability. Unlike other insurers, Kinsale Capital (KNSL) always handles the underwriting process in-house, there is no outsourcing.

Is the insurance market, where Kinsale Capital (KNSL) is listed, cyclical?

Yes, it is highly cyclical. There are hard market periods when capacity is tight and prices are rising, and soft market phases when there is too much capital and pricing discipline is waning. Kinsale's goal is not to ride the cycle, but to remain profitable through the cycles, which is a rare trait in the industry.

Who is the CEO of Kinsale Capital (KNSL) and what should you know about him?

Kinsale Capital is headed by Michael P. Kehoe, the company's founder and CEO. He has worked in specialty and E&S insurance throughout his career, with a strong underwriting background. His management philosophy is one of discipline, technology support and control, rather than aggressive growth or acquisitions. This has contributed significantly to Kinsale's current position.

What is float? How does Kinsale Capital (KNSL) make money from it?

Float is the money temporarily held by the insurer between the premiums collected and the claims to be paid later. This is not the insurer's own capital, but a temporarily managed resource over which it has control until the claims payments are actually made.

Kinsale Capital (KNSL) generates investment returns on this float. The essence of the model is twofold. On the one hand, Kinsale Capital (KNSL) is profitable at the underwriting level, meaning that the combined ratio is well below 100%. This means that acquiring the float itself does not cost money, and in fact, it generates profit. On the other hand, the float that accumulates in this way is invested conservatively, typically in high-quality bonds and liquid assets, which generates stable investment income, dependent on the interest rate environment.

The real strength here is that Kinsale Caoital (KNSL) is using a cheap or negative cost float. Many insurers only gain float by underpricing risk and then underwriting at a loss in the hope of a return on investment. Kinsale, on the other hand, uses disciplined risk-taking, low costs and fast decision-making to increase float while maintaining a profitable core business.

Legal and liability statement (aka. disclaimer): My articles contain personal opinions and are written solely for my own entertainment and that of my readers. iO ChartsThe articles published on do NOT in any way exhaust the topic of investment advice. I have never wanted, do not want and am unlikely to provide such in the future. What is described here is for informational purposes only and should NOT be construed as an offer. The expression of opinion is NOT in any way considered a guarantee to sell or buy financial instruments. You are SOLELY responsible for the decisions you make, and no one else, including me, assumes the risk.

About the Author:

Marton J. Bulla

Márton J. Bulla is also a fundamental analyst and a committed long-term investor. Instead of forecasting macroeconomic trends, he dives deep into individual companies, focusing on capital allocation, value creation, and sustainable growth. His primary interest lies in the world of serial acquirers, and he increasingly focuses on a concentrated portfolio. Márton believes in transparency and authenticity: he manages his entire wealth according to the strategy he publishes on the iO Charts blog. 95% of his assets are invested in individual stocks, while the remaining 5% make up his startup portfolio, a journey he has been documenting since 2021. He holds a degree from IBS, complemented by a background in IT, SEO, and marketing, which allows him to evaluate a company's technological edge and market position with a unique perspective. When he isn't analyzing financial statements, he is a passionate table soccer player.

If you found the content useful, subscribe to be notified of new articles

Opinion, comment?

We will not publish your email address. Required fields * marked with a character


The reCAPTCHA verification period has expired. Please reload the page.