Another Big Kinsale Earnings Drop... Another Big Rally To Come

It’s A Soft Market In P&C, And For Kinsale That’s Good News

Editor’s note: The Porter & Co. editorial and Customer Care offices will be closed on Monday, February 16, because of the Presidents Day holiday. Customer Care will reopen Tuesday at 9 AM ET and the Daily Journal will next publish on Wednesday, February 18.

Inside today’s Daily Journal…

• Essay: The Kinsale Anomaly Continues

• Consumer debt delinquencies

• AI fears knock down commercial real estate

• Job revisions… downward again

• Chart Of The Day… Mitsui & Co.

• Today’s Mailbag

Here we go again.

Yesterday afternoon, leading property and casualty (P&C) insurer Kinsale Capital (KNSL) once again posted outstanding quarterly results. And once again, the day after posting outstanding results, the stock is getting hammered. As I’m writing this, Kinsale shares are down about 10%.

We have documented this repeatedly over the last two years. It’s an anomaly that scares some investors. But it shouldn’t.

Let me explain why.

Let’s start with what matters: Kinsale’s an incredible business.

Kinsale has two advantages over all P&C insurance companies. It has both the lowest operating costs (in insurance measured by the expense ratio) and, in most years, the best underwriting (measured by the loss ratio).

When you combine these metrics, you get the combined ratio, the key metric investors use to judge the quality of an insurance company.

Here’s how the leading companies in the sector stack up:

Kinsale was built, from the ground up, to use technology to streamline the underwriting process, allowing it to process policies 2.6x faster than its peers. And that’s why, year after year, Kinsale trounces every other P&C business.

This fundamental advantage translates into stunning financial results, as Kinsale confirmed yesterday.

In Q4, the company produced earnings per share (“EPS”) of $5.81 versus the consensus estimate of $5.30, a 9.6% beat. Revenue in Q4 was up 17.3% year-over-year to $483.3 million, topping estimates by 2.5%. For the full year, net written premiums were $1.6 billion, up 9.4% from 2024. EPS for the full year were up 21.7% ($21.65 versus $17.78).

By minimizing its expenses and maximizing the profitability of its underwriting, Kinsale is able to convert more of its insurance premium into income to invest. That translates into an investment portfolio that’s growing far faster than that of its peers. In 2025, Kinsale’s investment income was $192.2 million, compared to $150.3 million in 2024, up 27.9%.

It’s important to understand that this growth isn’t coming from risky investments. Kinsale primarily owns AA rated fixed-income securities with a four-year duration. It isn’t taking credit risk and it isn’t taking duration risk. That’s why the yield on the portfolio is only 4.4%. The growth is coming from huge gains to the size of its portfolio. Kinsale’s cash and invested asset base grew by more than $1 billion this year, to $5.2 billion.

And these gains are compounded by the company’s continued share buybacks (119,000 shares in the quarter at $417.52 each). And the board has authorized another $250 million buyback this year. That means fewer shares own a larger and larger portfolio of an ultra-safe investment that’s growing 25%+ a year.

Over time, that is a hard combination to beat. And you see the tangible results of that in Kinsale’s cash dividend payments. The board recently announced a quarterly cash dividend of $0.25 per share, up 47.1%.

So… why is the stock down so much?