E&S specialist Kinsale upgraded to A by AM Best

A consistently strong performance when compared with its peers in the booming E&S market has seen AM Best upgrade the ratings of Kinsale Insurance Company.

The Little Rock, Arkansas-based carrier’s financial strength rating has been upgraded to A (Excellent) from A- (Excellent), while its long-term issuer credit rating has been moved up to “a” from “a-“.

At the same time, its parent company, Richmond, Virginia-headquartered Kinsale Capital Group has seen its long-term issuer credit rating upgraded to “bbb” from “bbb-”.

The outlook on all of the ratings has been revised to stable from positive.

The upgrade to A is likely to be seen as a significant fillip for the carrier in an E&S market that is creating significant opportunities, and will broaden its access to business.

The action reflects Kinsale’s strong operating performance, AM Best said. This performance trends favourably to the overall industry and its surplus lines peers “with remarkable consistency”, AM Best noted.

“Efficiency in underwriting performance is credited to proven underwriting fundamentals, seasoned leadership, and an ERM programme aligned to the risks that distinguish the surplus lines market,” the ratings agency added.

AM Best also highlighted how Kinsale’s results are in part supported by what it termed “an advantage” in its underwriting expenses.

Kinsale’s risk-adjusted capital is also maintained through management’s proactive monitoring of its risk profile, AM Best explained.

In its most recent first quarter results, Kinsale posted net operating earnings of $17.2mn, up 24.5 percent year on year. Underwriting profit of $14.4mn for the period was an increase of $2.3mn compared with 2019’s first quarter. A combined ratio of 83.9 percent for 2020’s first quarter was an increase of 3.6 points year on year.

AM Best revised Kinsale’s outlook to positive from stable back in May 2018. At the time, AM Best highlighted Kinsale’s favourable underwriting and operating performance, citing the insurer’s ability to balance growth and profit since its founding in 2010.

In its most recent announcement, AM Best said Kinsale’s ratings also reflect its strong balance sheet strength and neutral business profile.

Further positive rating moves may be on the horizon should Kinsale, which became a public company in 2016, expand the depth and breadth of its risk-adjusted capital measurements. However, negative rating actions could occur if Kinsale suffers a deterioration in its operating performance that brings its results in line with the wider industry or surplus lines trends.