Kinsale Capital shares fall after Compass Point drops to Neutral (NYSE: KNSL)
Kinsale Capital Group (NYSE:KNSL) Share down 5.1% in late trading Tuesday morning after Compass Point analyst Casey Alexander downgraded the specialty insurer to Neutral, reflecting increased volatility in the company’s earnings stream.
The company focuses on special insurance Excess & Surplus, has experience “Fast growth and mix ratios well below industry averages have supported the company’s above-average valuation,” Alexander wrote in a note to clients. of the industry.
While the analyst believes in Kinsale (KNSL) management’s ability to manage reinsurance over the long term, “our estimates reflect greater volatility in future earnings streams, particularly resulting in higher loss ratios in phase 3Q due to a higher rate of CAT (catastrophic) activity during that particular period,” he wrote.
Given the high valuation and with the reinsurance extension in the next few months, “we believe a more Neutral stance is appropriate at the moment for KNSL,” Alexander said.
He is discounting Kinsale (KNSL) physical price/book value multiples of 8.5x (versus 9.5x) to account for potential earnings volatility due to increased asset exposure, he said.
Target price is raised to 350 USD/share from 330 USD.
Alexander’s Neutral rating agrees with SA Quant Rating and disagree with average rating of Wall Street of Buy.
See why SA Weighing Machine contributors see Kinsale (KNSL) like price beyond perfection