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Kinsale Capital (KNSL) Q2 Earnings Beat, Premiums Rise Y/Y
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Kinsale Capital Group (KNSL - Free Report) delivered second-quarter 2023 net operating earnings of $2.88 per share, which outpaced the Zacks Consensus Estimate by 14.7%. The bottom line improved 50% year over year.
The results benefited from an improved pricing environment, premium growth, favorable loss experience and higher net investment income.
Kinsale Capital Group, Inc. Price, Consensus and EPS Surprise
Total revenues rose about 60.8% year over year to about $295.7 million. The growth can primarily be attributed to a rise in premiums, fee income and higher net investment income.
Gross written premiums of $438.2 million rose 58.2% year over year, driven by strong submission flow from brokers and a favorable pricing environment. Our estimate was $343.2 million. Net written premiums climbed 41% year over year to $242.3 million in the quarter. Our estimate for net written premiums was pegged at a loss of $282.2 million.
Net investment income more than doubled year over year to $24.2 million in the quarter and beat our estimate of $14.9 million. The increase was driven by growth in the company's investment portfolio, which was generated largely from the investment of strong operating cash flows and higher interest rates relative to the prior-year periods. The Zacks Consensus Estimate was pegged at $20.7 million.
Total expenses increased 35.8% year over year to $205.6 million due to a rise in losses and loss adjustment expenses, underwriting, acquisition and insurance expenses, interest expenses and other expenses. Our estimate was pinned at $197.9 million.
Kinsale Capital’s underwriting income of $61.5 million soared 39.3% year over year. The increase in underwriting income was due to a combination of premium growth, favorable loss experience and lower net commissions. Our estimate was $50.8 million. The combined ratio improved 70 basis points (bps) to 76.7 in the quarter under review.
While the expense ratio improved 150 bps to 21 in the quarter, the loss ratio deteriorated 80 bps to 55.7.
Financial Update
Kinsale Capital exited the second quarter with cash and cash equivalents of $125 million, which decreased 20% from the 2022-end level.
As of Jun 30, 2023, stockholders’ equity increased 16.9% to $871.8 million from the 2022-end level.
Annualized operating return on equity expanded 450 bps year over year to 31.8% in the reported quarter.
W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2023 operating income of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 1.8% year over year. Operating revenues came in at $2.9 billion, down 57.4% year over year. The top line missed the consensus estimate by 1.2%.
W.R. Berkley’s net premiums written were a record $2.8 billion, up 8.7% year over year, as market conditions remained favorable for most lines of business. Our estimate for the same was $2.7 billion. Catastrophe losses totaled $53.5 million in the quarter. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 100 basis points to 89.6, which is in line with the Zacks Consensus Estimate. Our estimate for the combined ratio was 91.3.
Arch Capital Group Ltd. (ACGL - Free Report) reported a second-quarter 2023 operating income of $1.92 per share, beating the Zacks Consensus Estimate by 16.4%. The bottom line increased 43.3% year over year. Gross premiums written improved 25.2% year over year to $4.8 billion. Net premiums written climbed 27.7% year over year to $3.4 billion on higher premiums written across its Insurance and Reinsurance segments and beat our estimate of $3.1 billion. Net investment income increased 128.3% year over year to $242 million and beat our estimate of $115.3 million. The Zacks Consensus Estimate was pegged at $185 million. Operating revenues of $3.2 billion rose 32.6% year over year, driven by higher net premiums earned and net investment income. It beat the Zacks Consensus Estimate by 2.3%.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, were $119 million. Arch Capital’s underwriting income increased 13.1% year over year to $606 million. Our estimate was $686.8 million.
Cincinnati Financial Corporation (CINF - Free Report) reported a second-quarter 2023 operating income of $1.21 per share, which surpassed the Zacks Consensus Estimate by 68%. The bottom line doubled year over year. Total operating revenues in the quarter under review were $2.1 billion, which improved 9.9% year over year. This improvement was driven by higher earned premiums, investment income and other revenues. Also, the top line missed the consensus mark by 0.7%.
Net written premiums climbed 9% year over year to $2.1 billion and matched our estimate. Investment income, net of expenses, increased 13% year over year to $220 million and beat our estimate of $209.6 million. It was driven by an increase in interest income from fixed-maturity securities and a decrease in equity portfolio dividends. The Zacks Consensus Estimate was pegged at $213 million. Total benefits and expenses of Cincinnati Financial increased 3.5% year over year to $1.9 billion. Our estimate was $2.1 billion.
In its P&C insurance business, Cincinnati Financial witnessed an underwriting income of $47 million against an underwriting loss of $52 million in the year-earlier period. Our estimate was pegged at a loss of $67.4 million. The combined ratio — a measure of underwriting profitability — improved 560 bps year over year to 97.6. Our estimate was 103.7. The Zacks Consensus Estimate was pegged at 101.
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Kinsale Capital (KNSL) Q2 Earnings Beat, Premiums Rise Y/Y
Kinsale Capital Group (KNSL - Free Report) delivered second-quarter 2023 net operating earnings of $2.88 per share, which outpaced the Zacks Consensus Estimate by 14.7%. The bottom line improved 50% year over year.
The results benefited from an improved pricing environment, premium growth, favorable loss experience and higher net investment income.
Kinsale Capital Group, Inc. Price, Consensus and EPS Surprise
Kinsale Capital Group, Inc. price-consensus-eps-surprise-chart | Kinsale Capital Group, Inc. Quote
Operational Update
Total revenues rose about 60.8% year over year to about $295.7 million. The growth can primarily be attributed to a rise in premiums, fee income and higher net investment income.
Gross written premiums of $438.2 million rose 58.2% year over year, driven by strong submission flow from brokers and a favorable pricing environment. Our estimate was $343.2 million. Net written premiums climbed 41% year over year to $242.3 million in the quarter. Our estimate for net written premiums was pegged at a loss of $282.2 million.
Net investment income more than doubled year over year to $24.2 million in the quarter and beat our estimate of $14.9 million. The increase was driven by growth in the company's investment portfolio, which was generated largely from the investment of strong operating cash flows and higher interest rates relative to the prior-year periods. The Zacks Consensus Estimate was pegged at $20.7 million.
Total expenses increased 35.8% year over year to $205.6 million due to a rise in losses and loss adjustment expenses, underwriting, acquisition and insurance expenses, interest expenses and other expenses. Our estimate was pinned at $197.9 million.
Kinsale Capital’s underwriting income of $61.5 million soared 39.3% year over year. The increase in underwriting income was due to a combination of premium growth, favorable loss experience and lower net commissions. Our estimate was $50.8 million. The combined ratio improved 70 basis points (bps) to 76.7 in the quarter under review.
While the expense ratio improved 150 bps to 21 in the quarter, the loss ratio deteriorated 80 bps to 55.7.
Financial Update
Kinsale Capital exited the second quarter with cash and cash equivalents of $125 million, which decreased 20% from the 2022-end level.
As of Jun 30, 2023, stockholders’ equity increased 16.9% to $871.8 million from the 2022-end level.
Annualized operating return on equity expanded 450 bps year over year to 31.8% in the reported quarter.
Zacks Rank
Kinsale Capital currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other P&C Insurers
W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2023 operating income of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 1.8% year over year. Operating revenues came in at $2.9 billion, down 57.4% year over year. The top line missed the consensus estimate by 1.2%.
W.R. Berkley’s net premiums written were a record $2.8 billion, up 8.7% year over year, as market conditions remained favorable for most lines of business. Our estimate for the same was $2.7 billion. Catastrophe losses totaled $53.5 million in the quarter. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 100 basis points to 89.6, which is in line with the Zacks Consensus Estimate. Our estimate for the combined ratio was 91.3.
Arch Capital Group Ltd. (ACGL - Free Report) reported a second-quarter 2023 operating income of $1.92 per share, beating the Zacks Consensus Estimate by 16.4%. The bottom line increased 43.3% year over year. Gross premiums written improved 25.2% year over year to $4.8 billion. Net premiums written climbed 27.7% year over year to $3.4 billion on higher premiums written across its Insurance and Reinsurance segments and beat our estimate of $3.1 billion.
Net investment income increased 128.3% year over year to $242 million and beat our estimate of $115.3 million. The Zacks Consensus Estimate was pegged at $185 million. Operating revenues of $3.2 billion rose 32.6% year over year, driven by higher net premiums earned and net investment income. It beat the Zacks Consensus Estimate by 2.3%.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, were $119 million. Arch Capital’s underwriting income increased 13.1% year over year to $606 million. Our estimate was $686.8 million.
Cincinnati Financial Corporation (CINF - Free Report) reported a second-quarter 2023 operating income of $1.21 per share, which surpassed the Zacks Consensus Estimate by 68%. The bottom line doubled year over year. Total operating revenues in the quarter under review were $2.1 billion, which improved 9.9% year over year. This improvement was driven by higher earned premiums, investment income and other revenues. Also, the top line missed the consensus mark by 0.7%.
Net written premiums climbed 9% year over year to $2.1 billion and matched our estimate. Investment income, net of expenses, increased 13% year over year to $220 million and beat our estimate of $209.6 million. It was driven by an increase in interest income from fixed-maturity securities and a decrease in equity portfolio dividends. The Zacks Consensus Estimate was pegged at $213 million. Total benefits and expenses of Cincinnati Financial increased 3.5% year over year to $1.9 billion. Our estimate was $2.1 billion.
In its P&C insurance business, Cincinnati Financial witnessed an underwriting income of $47 million against an underwriting loss of $52 million in the year-earlier period. Our estimate was pegged at a loss of $67.4 million. The combined ratio — a measure of underwriting profitability — improved 560 bps year over year to 97.6. Our estimate was 103.7. The Zacks Consensus Estimate was pegged at 101.