KNSL - This Pure-Play Insurer Could Help You Outperform the Market
Virginia-based Kinsale Capital (NASDAQ: KNSL) operates entirely within the excess and surplus (E&S) insurance industry, a property and casualty market segment. Excess and surplus insurance is a specialty market of hard-to-place risks often not covered by traditional insurance carriers. Interested in this niche's profitability, CEO Michael Kehoe left James River Group (NASDAQ: JRVR) and founded Kinsale in 2009. By focusing exclusively on this specific area, Kinsale can leverage its talent and technology to produce outsized returns, as it is the only pure-play insurer in the space. Since its IPO in 2016, Kinsale is up over 800%, averaging a 17% profit margin and 17% return on equity (ROE) over that time.
With this run-up in share price, many investors consider Kinsale too expensive, trading at a price-to-earnings (P/E) ratio of 46 and a price-to-book (P/B) ratio of seven. However, Kinsale's unique focus on the E&S market and massive remaining market share opportunity make it impossible to value using traditional insurance standards.
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This Pure-Play Insurer Could Help You Outperform the Market