Kinsale Capital Group (Nasdaq: KNSL) - Buy Recommendation - $21.65

The 25-day quiet period on underwriter analyses of Kinsale Capital Group will come to an end on August 22, allowing the firm's IPO underwriters to publish reports and recommendations on August 23 for the first time since the company went public on July 28.

Kinsale Capital Group provides casualty and property insurance products.

Kinsale Capital's share price will likely see a temporary increase as a result of the release of underwriter reports, opening a new buying opportunity ahead of the event.

Strong Early Market Performance Keeps Us Optimistic

Kinsale Capital Group was priced at $16, at the high end of its expected price range of $14 to $16. The stock opened at $18.30 on its first day of trading. It reached a high of $19.99 on August 15. Currently, the stock trades at $19.82 (pre-mkt 8.16).

(Nasdaq.com)

Business Overview: Provider of Property and Casualty Insurance Products

Kinsale Capital Group is a provider of excess and surplus insurance products (generally hard to place for small to medium sized businesses). The company is eligible in all 50 states and the District of Columbia. It writes a variety of casualty, property and specialty polices through its 14 underwriting divisions. The company considers a wide range of risks, including companies with new or high hazard operations, and clients that may have a poor loss history or are located in high risk environments.

Kinsale's commercial lines include offerings in small business, energy, construction, general casualty, excess casualty, life sciences, professional liability, allied health, product liability, health care, environmental, management liability, commercial property, inland marine, and homeowner's insurance. The company markets and sells its products through a network of independent insurance brokers.

Kinsale uses a proprietary technology platform that it believes is at the vanguard for the insurance industry. The platform allows Kinsale to collect and analyze data quickly and improve response times for clients. The company notes in its SEC filings that it believes this proprietary platform is a key differentiator between Kinsale and its competitors, allowing more capabilities to control expenses.

Executive Management Highlights

CEO and President Micheal Kehoe founded Kinsale Capital Group in 2009. He previously held senior executive positions at James River Management Company and Colony Management Services. Mr. Kehoe received a B.A. in Economics from Hampden Sydney College, and he holds a J.D. from the University of Richmond School of Law.

He is joined by COO and SVP Brian Haney, who has served in his current capacity since March 2015. He was previously Kinsale's Chief Actuary since 2009. Prior to joining the company, Mr. Haney held senior actuarial positions at James River Insurance Company and Colony Insurance Company. Mr. Haney is a fellow of the Casualty Actuarial Society and a member of the American Academy of Actuaries. He earned a B.A. in mathematics and economics from the University of Virginia.

Competitors: Alleghany Corporation, Argo Group International Holdings and Others

Kinsale Capital lists its top competitors as W.R. Berkley Corporation (WRB), RLI Corporation (RLI), Navigators group, Markel Corporation (MKL), James River Group Holdings (JRVR), Argo Group International Holdings (AGII), and Alleghany Corporation (Y).

Financial Overview: Healthy Top & Bottom-Line Growth

KNSL increased its 2015 revenues to $80.596 million from $63.676 million in 2014. Gross written premiums increased to $177.00 million from $158.58 million over the same time period, while net profit increased to $22.27 million from $12.97 million.

Conclusion: Powerful Underwriters Could Boost Share Price at Quiet Period Expiration - Time To Buy

With the release of (likely positive) research reports and recommendations on Kinsale Capital, its IPO underwriters could bring support for the stock price. This team includes J.P. Morgan Securities, William Blair & Co., Dowling & Partners, Moelis & Co., RBC Capital Markets, and SunTrust Robinson Humphrey.

We see this as one new chance to get a piece of KNSL's recent IPO, particularly as initial offerings are slowing mid-August. Historically the end of the quiet period has been shown to bring above-market returns as investors anticipate a flood of good news.