We Look Forward To The Kinsale Capital IPO

| About: Kinsale Insurance (KNSL)

Summary

Based in Richmond, Virginia, KNSL offers property and casualty insurance products.

KNSL is set to price its NASDAQ IPO this Wed. night, 7.26; lead underwriters are J.P. Morgan Securities and William Blair & Co.

KNSL has experienced significant growth in premiums and is well positioned financially.

The deal is already highly popular and oversubscribed.

Investors should consider an allocation.

Kinsale Capital Group Inc., (NASDAQ: KNSL) expects to raise $110.4 million in its upcoming IPO. Based in Richmond, Virginia, Kinsale Capital Group is a company that offers property and casualty insurance products.

We previewed the deal on our IPO Insights platform last week.

Kinsale Capital Group will offer 6.0 million shares at an expected price range of $14 to $16.

KNSL filed for the IPO on July 1, 2016.

Lead Underwriters: J.P. Morgan Securities and William Blair & Co.

Underwriters: Dowling and Partners Securities, Moelis & Company, RBC Capital Markets, and SunTrust Robinson Humphrey

Business Summary: Company that Provides Property and Casualty Insurance Products

Kinsale Capital Group was founded in 2009 and offers excess and surplus insurance (E&S). E&S is a segment of the insurance market that provides property and casualty insurance for consumers with either poor loss history or unique risks. KNSL is eligible in all states in the US and markets its products through a network of independent insurance brokers. The company provides property, casualty, and specialty lines across fourteen underwriting divisions.

KNSL markets itself as being highly efficient, due to its proprietary technology platform. In its filing with the SEC, the company states that their systems and technology allow them to quickly collect and analyze data on hard-to-place small business risks. This improves their response times with customers, processes, and controls expenses, and enables them to maintain control over underwriting and claims operations.

Use of Proceeds: Towards Insurance Subsidiary

KNSL intends to use the net proceeds of the IPO to make contributions their insurance subsidiary and for other general corporate purposes.

Executive Management Overview

According to company filings, CEO and President Michael Kehoe founded Kinsale Capital Group in 2009. His previous experience includes positions at Colony Management Services and James River Group. He holds a J.D. from the University of Richmond School of Law and a B.A. in Economics from Hampden Sydney College.

CFO and SVP Bryan Petrucelli has served in his position since March 2015. He joined KNSL in 2009 as Vice President of Finance. He previously worked at Ernst & Young within the audit practice. Mr. Petrucelli earned a B. B. A. in finance from James Madison University and has a post baccalaureate certificate in accounting from Virginia Commonwealth University. He is a certified public accountant and a member of the American Institute of Certified Public Accountants.

Potential Competition: Alleghany Corporation, RLI Corporation and Others

KNSL faces competition from other specialty insurance companies, standard insurance companies, and underwriting agencies, as well as from diversified financial services companies. Its primary competitors include: Alleghany Corporation, W.R. Berkley Corporation, Argo Group International Holdings, James River Group Holdings, Markel Corporation, RLI Corporation, and Navigators Group Inc.

Financial highlights and additional risks

KNSL has shown significant growth since 2009. Between 2014 and 2015, KNSL increased its gross written premiums by 11.6% from $158.58 million to $177.00 million. Its net profit for year 2015 was $22.27 million, an increase of 71.7% from $12.97 million in 2014.

Among its risks, the company indicated that as an insurance provider it is highly susceptible to adverse economic factors that could reduce the sale of policies or increase the frequency or severity of claims. Also, the company's reliance on a select group of brokers for distributing their products poses a threat due to lack of diversification.

Conclusion: Consider Buying In

KNSL has experienced significant growth, it is well positioned financially, and the deal is backed by a strong team of underwriters. We suggest investors consider a modest allocation, particularly following the successes of PI and PTHN deals last week. We hear the KNSL deal is already highly popular. The books are oversubscribed.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in KNSL over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.