Kinsale Capital Group, Inc. KNSL delivered second-quarter 2021 net operating earnings of $1.28 per share, which outpaced the Zacks Consensus Estimate by 17.4%. Further, the bottom line improved 52.4% year over year.

The company’s results gained momentum on the back of steadily improving economy, favorable E&S market conditions, focus on disciplined underwriting and cost management.

Operational Update

Total revenues in the second quarter rose 29.7% year over year to $153 million. The growth can primarily be attributed to rise in premiums and higher net investment income. Also, the top line surpassed the Zacks Consensus Estimate by 9.9%.

Gross written premiums of $194.1 million rose 44.7% year over year driven by higher submission activity from brokers and rate increases on bound accounts. Net written premiums climbed 42.6% year over year to $167.8 million in the quarter.

Net investment income advanced 11.8% year over year to $7.4 million in the quarter. The upside came on the back of growth in investment portfolio generated from the investment of positive operating cash flow since Jun 30, 2020 and from proceeds from equity offering in the third quarter of 2020.

In the second quarter, the company’s total expenses increased 34.6% year over year to $109.4 million due to rise in losses and loss adjustment expenses, underwriting, acquisition and insurance expenses, and other expenses.

Kinsale Capital reported underwriting income of $28.7 million, which soared 82.8% year over year largely due to premium growth from a strong underwriting environment, continued rate increases and higher net favorable development of loss reserves from prior accident years. Combined ratio improved 460 basis points (bps) to 79.2 in the quarter under review.

While expense ratio improved 200 bps to 21.7 in the second quarter, loss ratio improved 260 bps to 57.5.

Financial Update

Kinsale Capital exited the second quarter with cash and cash equivalents of $128 million, which surged 66% from the 2020-end level. As of Jun 30, 2021, credit facility of $42.6 million inched up 0.1% from the level at 2020 end.

As of Jun 30, 2021, stockholders’ equity grew 9.3% to $629.6 million from 2020-end level.

Annualized operating return on equity expanded 150 bps year over year to 19.3% in the quarter under review.

Zacks Rank

Kinsale Capital currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other insurers that have already reported their second-quarter results, the bottom line at The Progressive Corporation PGR, The Travelers Companies TRV and RLI Corp. RLI beat the respective Zacks Consensus Estimate.

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