Shares of Kinsale Capital Group, Inc. KNSL have lost 36% in the past year compared with the industry’s decline of 6.8%.
The insurer has a market capitalization of $7 billion. The average volume of shares traded in the last three months was 0.2 million.
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KNSL Shares are Overvalued
Kinsale Capital shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 3.56X is higher than the industry average of 1.34X.
American Financial Group, Inc. AFG and Arch Capital Group Ltd. ACGL shares are also trading at premiums of 2.28 and 1.35, respectively. However, shares of CNA Financial Corporation CNA are trading at a multiple lower than the industry average. CNA Financial is trading at 1.04.
KNSL’s Growth Projection Encourages
The Zacks Consensus Estimate for Kinsale Capital’s 2026 earnings per share indicates a year-over-year increase of 5.2%. The consensus estimate for revenues is pegged at $1.92 billion, implying a year-over-year improvement of 2.4%.
The consensus estimate for 2027 earnings per share and revenues indicates an increase of 6.5% and 6.2%, respectively, from the corresponding 2026 estimates.
Earnings have grown 38% in the past five years, better than the industry average of 22.7%. The expected long-term earnings growth rate is 15%, outperforming the industry average of 7.2%.
Kinsale Capital has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.
Earnings Surprise History
Kinsale Capital surpassed earnings estimates in each of the last four quarters, the average being 8.88%.
KNSL’s Favorable Return on Capital
Kinsale Capital’s return on equity (ROE) of 25.8% for the trailing 12 months compared favorably with the industry’s 7.4%, reflecting the company’s efficiency in utilizing shareholders’ funds. This insurer targets mid-teens ROE over the long term.
Also, return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting KNSL’s efficiency in utilizing funds to generate income. KNSL’s ROIC of 22.7% for the trailing 12 months compared favorably with the industry’s 5.7%.
Average Target Price for KNSL Suggests Upside
Based on short-term price targets offered by nine analysts, the Zacks average price target is $358 per share. The average suggests a potential 17.4% upside from the last closing price.
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What’s Driving KNSL Stock
A strong presence across the excess and supply (E&S) market in the United States and high retention rates stemming from contract renewals should drive improved premiums. Management noted that the E&S market has grown significantly and generated better underwriting results than the broader P&C industry. It remains well-positioned 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 is less prone to competition. Management estimates low double-digit rate increases across the book of business.
Kinsale Capital enjoys the best combination of high growth and low combined ratio among its peers. It targets a combined ratio in the mid-80s range over the long term.
KNSL is well-positioned to generate an improved expense ratio, given its proprietary technology platform, which is likely to provide it with a competitive edge over other industry players and scalability in business. The insurer drives profitability and operational efficiency using analytics.
Despite a low-interest-rate environment, investment income should benefit from the investment of excess operating funds.
Notably, its free cash flow conversion has remained more than 85% over the last few quarters, reflecting its solid earnings.
Conclusion
Kinsale Capital is poised to gain from its focus on the E&S market, prudent underwriting, lower expense ratio, growth in the investment portfolio and effective capital deployment.
The insurer has an impressive dividend history, increasing dividends since 2017 at an eight-year CAGR of 33%, riding on the strength of operational excellence that supports a solid capital position. As part of wealth distribution, Kinsale Capital repurchased $62.5 million worth of shares during the first quarter of 2026 and had $187.5 million remaining under its repurchase authorization as of March 31, 2026, supporting ongoing capital return alongside organic growth. All these shareholder-friendly moves make the stock an attractive investment pick.
However, given its expensive valuation, it is better to wait for some more time before taking a call on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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CNA Financial Corporation (CNA): Free Stock Analysis Report
American Financial Group, Inc. (AFG): Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL): Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).