KNSL Q3 Deep Dive: Growth Moderates Amid Competitive E&S Market and Leadership Transition

Specialty insurance provider Kinsale Capital Group (NYSE:KNSL) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 19% year on year to $497.5 million. Its non-GAAP profit of $5.21 per share was 8% above analysts’ consensus estimates.

Is now the time to buy KNSL? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Kinsale Capital Group reported third quarter results that exceeded Wall Street’s revenue and adjusted profit expectations, but the market reacted negatively amid concerns about moderating growth. Management pointed to steady but competitive conditions in the excess and surplus (E&S) insurance market, with CEO Michael Kehoe noting, “Kinsale’s efficiency has become a more significant competitive advantage, by allowing us to deliver competitive policy terms to our customers, without compromising our margins.” The company also highlighted the impact of its disciplined underwriting and cost control, which helped offset variability in certain business lines and a higher expense ratio tied to changes in reinsurance.

Looking ahead, management’s outlook centers on cautious optimism, underpinned by expectations that pricing pressure in commercial property will continue to stabilize and opportunities for growth exist across diversified lines. CEO Kehoe stated, “We think 10% to 20% is a good conservative estimate of our growth potential over the cycle.” While leadership anticipates continued advantages from technology investment and a low-cost structure, they remain mindful of increased competition, particularly from new entrants and alternative capital in the E&S space, which could challenge growth rates and pricing discipline in coming quarters.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to competitive E&S market dynamics, expense discipline, and a focus on underwriting quality, while addressing leadership succession and technology investment as key themes.

• Leadership transition: President and COO Brian Haney announced his retirement and election to the Board of Directors, with Stuart Winston promoted to Executive Vice President and Chief Underwriting Officer. Haney will remain as a Senior Adviser, focusing on investor communications, helping provide continuity during this transition period.
• Competitive E&S market conditions: The company observed increased competition, especially from new managing general agents (MGAs) and alternative capital providers. CEO Kehoe noted, “We have more competitors today than 3 years ago, but it’s not just insurance companies. There are hundreds and hundreds of MGAs that have started in the last several years.”
• Commercial Property stabilization: The Commercial Property division saw premium declines slow versus previous quarters, with Haney suggesting an inflection point in rate declines. He stated, “Commercial Property rates are still declining, but we feel we have reached that inflection point where rate declines are stabilizing.”
• Technology-driven cost advantage: Significant investment in proprietary enterprise systems and use of AI tools underpin Kinsale’s low expense ratio. Kehoe emphasized, “We build our own enterprise system... puts us in a position to really speed up the implementation of new technologies.”
• Expense ratio and reinsurance changes: The expense ratio increased due to lower ceding commissions under new reinsurance terms, but higher reinsurance retention is expected to drive profitability. CFO Bryan Petrucelli explained, “Higher expense ratio is attributable to lower ceding commissions... as a result of the higher reinsurance retention levels.”

Drivers of Future Performance

Kinsale’s forward guidance is shaped by competitive market dynamics, expense management, and the stabilization of property rates, with technology and new products expected to support growth.

• Stabilizing property rates: Management expects property rate declines to moderate, providing a more predictable pricing environment. Haney commented that “rates were going down so fast... we have reached that inflection point.” This stabilization could help support growth, especially in property-related lines.
• Broader growth opportunities: The company is expanding into new segments, such as Transportation, Agribusiness, and high-value homeowners, while maintaining emphasis on core Casualty lines. Haney identified these as areas with strong growth prospects, driven by controlled underwriting and tailored product offerings.
• Expense and competitive pressure risks: While technology investment and cost control remain priorities, rising competition from MGAs and alternative capital could pressure top-line growth and margins. Management acknowledged that growth rates have normalized from prior extraordinary levels and flagged the possibility of further competitive intensity impacting results.

Catalysts in Upcoming Quarters

Going forward, the StockStory team will closely watch (1) whether property rate stabilization translates into improved growth in the Commercial Property division, (2) the impact of rising competition from new MGAs and alternative capital on premium growth and margins, and (3) ongoing progress in technology-driven operational efficiency and cost management. We will also monitor execution on expansion into new product lines and any further leadership transitions that could affect strategy.

Kinsale Capital Group currently trades at $422.38, down from $453.27 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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