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KINS vs. KNSL: Which Excess & Surplus Insurer Should You Bet On?
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The U.S. Excess & Surplus (E&S) insurance market has been experiencing growth. Customized solutions for complex risk are the essence of this non-admitted insurance market. The E&S market stands to benefit from the inflow of business from standard companies and from rate increases driven by inflation and relatively tight underwriting conditions. The market share of total U.S. P&C premiums has also been on the rise. Also, some admitted insurers have reduced their exposure or exited certain markets due to profitability concerns, creating opportunities for E&S insurers to fill the void. Kingstone Companies (KINS - Free Report) and Kinsale Capital Group (KNSL - Free Report) — both notable Excess & Surplus insurers — are expected to gain from this market dislocation.
Yet, as an investment option, which stock is more attractive? Let’s closely look at the fundamentals of these stocks.
Factors to Consider for KINS
Kingstone Companies is the 12th largest homeowner insurer in New York, as accredited by the S&P, with a market share of 2.1% in 2024. The Northeastern U.S. commercial insurance market is expected to grow 12.3% through 2025. With its competing carriers exiting the personal property market countrywide in July 2024, KINS is poised to capitalize on the opportunity by expanding its operations.
KINS is reliant on a few insurance lines to generate revenues. This Northeast regional property and casualty insurer is thus exposed to geographical as well as product concentration.
Kingstone Companies is set to grow, given its heightened focus on its core business and scaling back of unprofitable non-core businesses. The insurer only writes businesses that meet its underwriting standards and profit-margin objectives.
The company has been successful in implementing a price increase ahead of inflation, matching prices to risks. KINS’ partnership with Earnix enhances its pricing capabilities and supports its strategic growth initiatives.
KINS expects direct written premiums in its core business to grow between 15% and 25% in 2025.
The company has been successfully lowering its net underwriting expense ratio by driving higher average premiums and lowering commissions and staffing. Kingstone Companies has a solid reinsurance program that safeguards its balance sheet. It now expects an improved combined ratio between 81% and 85% in 2025. KINS has strengthened its balance sheet by improving its cash balance while lowering debt.
Net margin, measuring a company's profitability, has been showing continuous improvement. The metric expanded 2910 basis points in the last two years, driven by underwriting discipline, prudent risk management as well as market dislocation. KINS was back on the profitability track in 2024 after three years. Its return on equity of 36.1% betters the industry average of 8.3%.
Factors to Consider for KNSL
Kinsale is well-positioned to generate improved premiums on the strength of its solid presence across the E&S market in the United States and high retention rates. Management noted that the E&S market has grown significantly and generated better underwriting results than the broader P&C industry. It remains poised to benefit from continued market dislocation, aiding improved submission flows and better pricing decisions.
KNSL has been successfully delivering improved margins and lower loss ratios. The insurer targets clients with small- and medium-sized accounts with better pricing and are less prone to competition. Management estimates low double-digit rate increases across the book of business. Net margin has been showing continuous improvement. The metric expanded 710 basis points in the last two years.
Kinsale Capital enjoys the best combination of high growth and low combined ratio among its peers. Over the long term, it targets a combined ratio in the mid-80s range.
Its proprietary technology platform, which is likely to provide it with a competitive edge over other industry players and scalability in business, helps it generate an improved expense ratio. The insurer drives profitability and operational efficiency using analytics.
Kinsale Capital remains concerned that continued inflation will extend hard market conditions. This, in turn, will stress insurers’ margins as they look to improve the same with increased rates. The company estimates price inflation to affect medical costs, wages, construction costs and legal costs.
Its return on equity of 28% is also better than the industry average of 8.3%.
Estimates for KINS and KNSL
The Zacks Consensus Estimate for KINS’ 2025 revenues and EPS implies a year-over-year increase of 31% and 37.9%, respectively. EPS estimates have moved northward over the past 30 days.
Image Source: Zacks Investment Research
On the other hand, the Zacks Consensus Estimate for KNSL’s 2025 revenues and EPS implies a year-over-year increase of 7.6% and 13.2%, respectively. However, EPS estimates have moved southward over the past 30 days.
Image Source: Zacks Investment Research
Are KINS and KNSL Shares Expensive?
Kingstone is trading at a price-to-book multiple of 3.53X, above its median of 0.81X over the last five years. Kinsale’s price-to-book multiple sits at 7.62X, above its median of 8.19X over the last five years.
Image Source: Zacks Investment Research
Conclusion
Kingstone Companies is poised to capitalize on the more than $200 million market opportunity. Its focus on growing its core business and strengthening its niche market position, improving pricing and combined ratio, expanding margins and delivering strong earnings bodes well for growth.
Yet, on the basis of return on equity, which reflects a company’s efficiency in generating profit from shareholders' equity as well as gives a clear picture of the company's financial health, KINS scores higher than KNSL.
KINS shares have gained 302.4% in the past year, while KNSL has gained 4.9%. While KINS carries a Zacks Rank #1 (Strong Buy), KNSL currently carries a Zacks Rank #4 (Sell). Thus, KINS is a better bet than KNSL.
Image: Bigstock
KINS vs. KNSL: Which Excess & Surplus Insurer Should You Bet On?
The U.S. Excess & Surplus (E&S) insurance market has been experiencing growth. Customized solutions for complex risk are the essence of this non-admitted insurance market. The E&S market stands to benefit from the inflow of business from standard companies and from rate increases driven by inflation and relatively tight underwriting conditions. The market share of total U.S. P&C premiums has also been on the rise. Also, some admitted insurers have reduced their exposure or exited certain markets due to profitability concerns, creating opportunities for E&S insurers to fill the void. Kingstone Companies (KINS - Free Report) and Kinsale Capital Group (KNSL - Free Report) — both notable Excess & Surplus insurers — are expected to gain from this market dislocation.
Yet, as an investment option, which stock is more attractive? Let’s closely look at the fundamentals of these stocks.
Factors to Consider for KINS
Kingstone Companies is the 12th largest homeowner insurer in New York, as accredited by the S&P, with a market share of 2.1% in 2024. The Northeastern U.S. commercial insurance market is expected to grow 12.3% through 2025. With its competing carriers exiting the personal property market countrywide in July 2024, KINS is poised to capitalize on the opportunity by expanding its operations.
KINS is reliant on a few insurance lines to generate revenues. This Northeast regional property and casualty insurer is thus exposed to geographical as well as product concentration.
Kingstone Companies is set to grow, given its heightened focus on its core business and scaling back of unprofitable non-core businesses. The insurer only writes businesses that meet its underwriting standards and profit-margin objectives.
The company has been successful in implementing a price increase ahead of inflation, matching prices to risks. KINS’ partnership with Earnix enhances its pricing capabilities and supports its strategic growth initiatives.
KINS expects direct written premiums in its core business to grow between 15% and 25% in 2025.
The company has been successfully lowering its net underwriting expense ratio by driving higher average premiums and lowering commissions and staffing.
Kingstone Companies has a solid reinsurance program that safeguards its balance sheet. It now expects an improved combined ratio between 81% and 85% in 2025. KINS has strengthened its balance sheet by improving its cash balance while lowering debt.
Net margin, measuring a company's profitability, has been showing continuous improvement. The metric expanded 2910 basis points in the last two years, driven by underwriting discipline, prudent risk management as well as market dislocation. KINS was back on the profitability track in 2024 after three years.
Its return on equity of 36.1% betters the industry average of 8.3%.
Factors to Consider for KNSL
Kinsale is well-positioned to generate improved premiums on the strength of its solid presence across the E&S market in the United States and high retention rates. Management noted that the E&S market has grown significantly and generated better underwriting results than the broader P&C industry. It remains poised to benefit from continued market dislocation, aiding improved submission flows and better pricing decisions.
KNSL has been successfully delivering improved margins and lower loss ratios. The insurer targets clients with small- and medium-sized accounts with better pricing and are less prone to competition. Management estimates low double-digit rate increases across the book of business. Net margin has been showing continuous improvement. The metric expanded 710 basis points in the last two years.
Kinsale Capital enjoys the best combination of high growth and low combined ratio among its peers. Over the long term, it targets a combined ratio in the mid-80s range.
Its proprietary technology platform, which is likely to provide it with a competitive edge over other industry players and scalability in business, helps it generate an improved expense ratio. The insurer drives profitability and operational efficiency using analytics.
Kinsale Capital remains concerned that continued inflation will extend hard market conditions. This, in turn, will stress insurers’ margins as they look to improve the same with increased rates. The company estimates price inflation to affect medical costs, wages, construction costs and legal costs.
Its return on equity of 28% is also better than the industry average of 8.3%.
Estimates for KINS and KNSL
The Zacks Consensus Estimate for KINS’ 2025 revenues and EPS implies a year-over-year increase of 31% and 37.9%, respectively. EPS estimates have moved northward over the past 30 days.
Image Source: Zacks Investment Research
On the other hand, the Zacks Consensus Estimate for KNSL’s 2025 revenues and EPS implies a year-over-year increase of 7.6% and 13.2%, respectively. However, EPS estimates have moved southward over the past 30 days.
Image Source: Zacks Investment Research
Are KINS and KNSL Shares Expensive?
Kingstone is trading at a price-to-book multiple of 3.53X, above its median of 0.81X over the last five years. Kinsale’s price-to-book multiple sits at 7.62X, above its median of 8.19X over the last five years.
Image Source: Zacks Investment Research
Conclusion
Kingstone Companies is poised to capitalize on the more than $200 million market opportunity. Its focus on growing its core business and strengthening its niche market position, improving pricing and combined ratio, expanding margins and delivering strong earnings bodes well for growth.
Yet, on the basis of return on equity, which reflects a company’s efficiency in generating profit from shareholders' equity as well as gives a clear picture of the company's financial health, KINS scores higher than KNSL.
KINS shares have gained 302.4% in the past year, while KNSL has gained 4.9%. While KINS carries a Zacks Rank #1 (Strong Buy), KNSL currently carries a Zacks Rank #4 (Sell). Thus, KINS is a better bet than KNSL.
You can see the complete list of today’s Zacks #1 Rank stocks here.