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Kinsale Capital's (KNSL) Q3 Earnings Miss, Revenues Beat

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Kinsale Capital Group, Inc. (KNSL - Free Report) reported third-quarter 2020 net operating earnings of 42 cents per share, which missed the Zacks Consensus Estimate by 45.5%. Moreover, the bottom line declined 26.3% year over year.

The company’s results benefited from improved premiums and net investment income, offset by increased costs.

Kinsale Capital Group, Inc. Price, Consensus and EPS Surprise

  Kinsale Capital Group, Inc. Price, Consensus and EPS Surprise

Operational Update

Total revenues in the third quarter were $123 million, which grew 57.7% year over year. The upside can primarily be attributed to higher premiums and improved net investment income. The top line also beat the consensus mark by 8.8%.

Gross written premiums increased 47.8% year over year to $144.8 million, primarily driven by higher submission activity and rates on bound accounts.

Net investment income surged 33.1% year over year to nearly $7 million, courtesy of growth in investment portfolio balance generated from the investment of excess operating funds since Sep 30, 2019 and from proceeds from equity offerings.

Total expenses in the quarter under review climbed 68.5% year over year to $106.4 million owing to higher losses and loss adjustment expenses, and underwriting, acquisition and insurance expenses and other expenses.

Kinsale Capital incurred underwriting income of $2.9 million, down 69.5% year over year, largely due to higher catastrophe losses incurred, offset in part by premium growth and higher net favorable development of loss reserves in prior accident years. Combined ratio improved 1040 basis points (bps) to 97.3%.

Expense ratio improved 400 bps to 21.2% in the third quarter. However, loss ratio deteriorated 1440 bps to 76.1% in the quarter under review.

Financial Update

Kinsale Capital exited the third quarter with cash and cash equivalents of $78.7 million, down 21.6% from 2019 end. As of Sep 30, 2020, credit facility of $40.1 million surged 139.7% from 2019-end level.

In the first nine months of 2020, net cash from operating activities was $206.5 million, which soared 73.4% from the first nine months of 2019.

Annualized operating return on equity contracted 670 bps year over year to 7.8% in the quarter.

Zacks Rank & Performance of Other Insurers

Kinsale Capital currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Third-quarter earnings of Willis Towers Watson Public Limited Company , AXIS Capital Holdings Limited (AXS - Free Report) , Markel Corporation (MKL - Free Report) beat the respective Zacks Consensus Estimate.

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Kinsale Capital Group, Inc. (KNSL) - free report >>

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