This Fast-Growing Stock Plummeted 20% in 1 Day -- Should Investors Be Concerned?
Kinsale Capital (NYSE: KNSL), the fast-growing specialty insurance company, recently saw its stock price plummet 20% in the day following its earnings announcement. By all measures, the company had a solid quarterly performance. However, management comments about its future growth prospects worried investors and weighed on the stock price. Here's what Kinsale Capital investors need to know.
Kinsale Capital writes insurance policies on things traditional property and casualty insurers don't touch. It covers things above and beyond standard automotive or property coverage, also known as excess and surplus (E) insurance. Its policy lines include small business casualty, construction, professional liability, marine, aviation, and product recalls, to name a few.
What makes E insurers appealing is that they have more flexibility compared to traditional insurers. Standard automotive or property insurance policies are highly regulated regarding what they must cover and how much they can charge. As a result, insurers end up competing more on price. Kinsale, on the other hand, can underwrite unique policies covering risks it has a deep expertise in. It also has more flexibility in pricing those policies, which can lead to healthy profit margins.
Source Fool.com
