Baron Generational Growth Fund on Kinsale Capital Group, Inc.
Thesis
The Fund believes weakness in Kinsale's valuation primarily reflects a temporary softening in the property and casualty insurance cycle. Even as pricing in certain insurance lines has flattened or declined, Kinsale continues to grow written premiums and book value per share through strong returns on equity, market share gains, underwriting discipline, and capital allocation. The Fund views the influx of capital into attractive insurance markets as a normal cyclical development rather than a deterioration in Kinsale's competitive position. It expects premium growth and the company's valuation multiple to improve when the cycle turns.
“Despite the softening market, both Arch and Kinsale are growing their written premium and book value per share”
Key risks
- A prolonged soft insurance pricing environment could constrain premium growth.
- Greater competition and industry capital could pressure underwriting economics.