Kinsale Capital Group Inc (NYSE:KNSL) stock fell 1.71% (As on September 17, 11:15:59 AM UTC-4, Source: Google Finance) after Wolfe Research adjusted its stance on the company, downgrading the stock from Outperform to Peerperform. The research firm cited concerns about the company’s growth prospects and the potential for stock price appreciation. Kinsale Capital, an insurer specializing in the excess and surplus lines market, has seen a deceleration in growth, which influenced the firm’s reassessment. The downgrade comes despite Wolfe Research’s confidence in Kinsale’s ability to meet or exceed earnings per share (EPS) estimates for the years 2025 and 2026. The projected EPS figures are $17.83 and $21.42, respectively, which are slightly above the consensus estimates of $17.71 and $20.98. However, the firm believes that the current growth environment does not leave much room for positive surprises.

Wolfe Research also revised its price target for Kinsale Capital, moving from a previous Street-high of $514 to a new fair value range of $493 to $535. This adjustment reflects a multiple of 23 to 25 times the estimated 2026 earnings. The rationale behind this change is the expectation that significant share price increases would require multiple expansions, which is seen as unlikely in the current slowing growth climate.

The report also notes a significant slowdown in total excess and surplus (E&S) premiums growth for Kinsale in its top three states. At the beginning of 2024, this growth was around 40%, but by August, it had decelerated to 17%. This reduction in premium growth rates is a key factor in Wolfe Research’s tempered outlook for the company.

Meanwhile, Gross written premiums were $529.8 million for the second quarter of 2024 compared to $438.2 million for the second quarter of 2023, an increase of 20.9%. Underwriting income was $76.1 million, resulting in a combined ratio of 77.7% for the second quarter of 2024, compared to $61.5 million and a combined ratio of 76.7% for the same period last year. The increase in underwriting income quarter over quarter was largely due to combination of premium growth and lower relative net commissions. Loss and expense ratios were 56.6% and 21.1%, respectively, for the second quarter of 2024 compared to 55.7% and 21.0% for the second quarter of 2023. Net investment income was $35.8 million in the second quarter of 2024 compared to $24.2 million in the second quarter of 2023, an increase of 48.3%