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  5. KNSL: How do you explain the amazing financial results of speciality insurance group lately. [Kinsale Capital Group Inc.]
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Q: How do you explain the amazing financial results of speciality insurance group lately. Can we expect a continuation, should we be aware of possible headwind in the futur?

Thanks
Asked by Daniel on February 26, 2024
5i Research Answer:

Most insurance companies are doing quite well due to a tailwind from high interest rates, helping these companies earn more from their investment portfolio due to a higher bond yield. Also, companies like KNSL, TSU, and SKWD reported healthy volume growth, decent profitability due to a good loss ratio, and high ROEs. It is hard to predict the underwriting results in the near term due to the uncertain nature of the insurance industry. A declining interest rate would be a headwind for bonds, but a tailwind for equities is holding, so we think one could balance the other and the investment side of these insurance companies would do just fine. Overall, these companies have a decent track record of consistent underwriting profit and strong premium growth in recent years which we expect they continue to do so for a while, we are okay to get some exposure here.