SWOT analysis is a critical tool in unveiling the true potential of a brand and getting insights regarding the opportunities in the market and threats to strategically position a brand for more growth.
Kinsale Capital Group, Inc. is a specialty insurance company that focuses and operates through the excessive surplus lines market segment in approximately 50 states of the US and in the district of Columbia through independent insurance brokers. Here is the brand’s SWOT analysis.
Kinsale Capital Group, Inc. – At a Glance
| Name | Kinsale Group Inc. |
| Website | www.kinsalecapitalgroup.com |
| Founders | Michael P. Kehoe |
| Chief Executive Officer (C.E.O.) | Michael P. Kehoe |
| Headquarters | Richmond, VA. |
| Type of Corporation | Public |
| Year Founded | 2009 |
| Revenues (2019) | $460 Million |
| Key Products/Services | E&S Insurance products |
| Key Competitors | Lloyd’s Marke, James River Insurance Company, Great American Insurance, Mid-continent Group, GEICO, The Hanover, Lancer Insurance Company, Ohio Casualty, North Alabama Insurance, Inc., Argenia. |
Kinsale’s Strengths
Specialization
Kinsale Group Inc.’s main competitive advantage is specialization. It is the only company that is publicly traded that deals in Excess and Surplus lines pure-play. The company, as a result, maintains the second-best combined ratio among its peers.
Strong Financial Performance
The brand has registered growth rates of 36% in revenues and 46% in EPS for 5 years in a row. It has a net income margin of 19% with an 18% return on equity. Kinsale Group Inc. reported a net income of $35.6 million that translates to $1.55 per diluted share for the second quarter of 2021. This was an increase of 17.8% from $30.3 million, $1.33 per diluted share for a similar quarter in 2020.
The company registered a net income of $67.7 million, $2.94 per diluted share in the first half of 2021, a huge increase from $35.3 million, $1.56 per diluted share, for a similar period in 2020. Net operating earnings also increased by 53.8% in the second quarter of 2021 as compared to a similar quarter in 2020, and investment income went up by 11.8%. Its Return on Equity stands at 15.62% compared to 7.96% for the industry. Strong financial performance is critical to gaining investor confidence, financing the company’s expansion activities, and ensuring efficiency in operations.
Growth in Underwriting of Premiums
The company realized an increase of 44.7% and 40.6% in gross written premiums for the second quarter and the first half of 2021, respectively. This increase in volume means increased revenues, increased membership, and with it comes the benefits of network effects that add value to the brand’s network for more growth.
Strong Product
The company has a strong insurance product; it focuses on business risks that are smaller and hard to assess, thereby curving for itself a highly profitable business niche. It has a wide scope of services to ensure wider coverage of the different niches in the insurance market.
Its commercial lines include small business, construction, general casualty, excess casualty, energy, life sciences, professional liability, allied health, product liability, commercial property, healthcare, environmental, management liability, inland marine, public entity, and commercial insurance. This nets in more business for the company.
Kinsale’s Weaknesses
Limited Portfolio in Equity Securities
Of the company’s total $1.1 billion investment portfolio, only 10% has been tied up in equity securities. This is significantly conservative. This is not necessarily bad, but an increase in equity within the securities drives compounding returns for the brand’s future.
Small Market Share Holding
Kinsale Group Inc. only has a 1% share in the Excesses and Surplus market. This calls for more effort to gain more control of the market. The company is at risk of takeover from giant firms in the larger insurance industry.
Slowed Growth in Financial Performance
The brand’s stock experienced a weakening in the past few months and analysts predict more slowed activity in the near future. While its profitability stands at 19%, the industry average is 23%. This could easily scare away investors who are sensitive to price movements.
And while the company is performing strongly in the Property & Casualty Insurance industry, it does appear to have slow growth in the financial sector. As a result, the company needs to strengthen its performance across the board to ensure increased revenues and more market shares.
High Dependence on US Markets
The brand largely depends on its operations in the US market and the Columbian market. This not only limits geographical revenues but in the event of an unfavorable occurrence in the US market, the company may be adversely affected. Additionally, the US market is reaching its maturity and therefore offers limited growth opportunities, which may eventually lead to a downward shift in growth.
Kinsale’s Opportunities
Geographical Expansion
The company is currently operating in the US; a vast globe offers the brand unlimited opportunities for exploration and growth. New and developing markets like China, Asia, and Africa offer more growth opportunities for a company with huge experience in the industry. The brand should consider prioritizing potentially more profitable geographical destinations and consider an expansion plan.
More Market Expansion
Kinsale currently only has a 1% share of the overall Excess and Surplus market. This market has an estimated growth rate of 6% annually and is incredibly fragmented. Kinsale has a huge opportunity for growth in this market niche. Give the brand’s strategy is pure specialization in the E&S markets, it has the ability to gain more expertise for this particular niche and then offer better services than the rest of the competition.
Improving Economies
The advent of the COVID pandemic only added more strain to already strained economies, which heavily impacted the performance of the insurance industry among other industries globally. But with the increased opening of many economies and more trade resuming, more and more opportunities are now open for Kinsale Group Inc. Therefore, the group should consider strategically positioning itself takes advantage of the new opportunities for growth.
Innovation and Technology
Technology and innovations are giving businesses new competitive advantages with every passing day. The insurance industry stands to benefit immensely from existing technologies and even from novel technologies. Technologies are driving more innovations to offer more personalized products for the evolving consumer needs and even to suit the paradigm shift that has come with the advent of COVID.
Kinsale’s Threats
Fierce Competition
The company is encompassed with numerous and fierce competitors, both old and new entrants into the market. The company needs to invest more in innovation and technology to bring efficiency and ensure more unique products that meet the customer’s needs for a better competitive edge.
Conclusion
Kinsale has great opportunities for growth in the particular E&S niche. However, the company has a lot of work to do in catching up with peers in the industry and curves for itself a larger share of the market.
