Kinsale Capital Group (NYSE: KNSL — $7.00 billion) is a specialty property-and-casualty insurer focused on “insurance coverages for risks that are unusual or hard to place in the standard insurance market,” known as the excess and surplus lines market.
Kinsale takes on risks that standard/regulated insurers often decline, such as unusual businesses, hazardous operations, companies with poor loss histories, or accounts in difficult legal venues, including bars, contractors, demolition firms, cannabis dispensaries, and jet ski rental companies, among others. Investors believe Kinsale’s industry-leading margins are durable and stem from superior underwriting, proprietary technology, lower expenses, and strong management, all of which have propelled the stock up ~1,560% since its July 2016 IPO.
The Bear Cave believes Kinsale is not a business with a durable moat and instead is powered by overpriced and exclusion-heavy insurance policies enabled by minimal regulatory oversight and a less sophisticated customer base. Through public record requests, The Bear Cave has obtained complaints from Kinsale customers to insurance regulators that allege overcharges and improper billing, as well as insurance so ineffective that one customer claims to have been “defrauded.” The Bear Cave concludes that Kinsale’s business is unsustainable and of low quality.
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