Episode summary
Kinsale Capital Stock Deep Dive w/ Clay Finck & Daniel Mahncke (TIP804)
We Study Billionaires
· · 1 hr 15 min · Hosts: Clay Finck · Guests: Daniel Mahncke
Summary
Kinsale Capital is presented as a specialty insurer focused exclusively on the excess and surplus market, where standard carriers decline to write unusual, hard-to-place, or higher-risk business. Clay Finck argues that Kinsale has built a real edge by targeting small policies, using proprietary technology, and keeping underwriting in-house, while Daniel Mahncke frames the company as a rare exception in a commodity-like industry that Buffett has long viewed as structurally unattractive.
The episode emphasizes that Kinsale’s model depends on disciplined underwriting rather than growth for its own sake. Clay says the company is willing to walk away from business if pricing is unattractive, and that its founder-led culture, conservative reserving, and broker-only distribution help it avoid the principal-agent problems that come with outsourced underwriting. The hosts also highlight Kinsale’s low expense structure, fast quoting, and ability to process thousands of smaller accounts efficiently with just 700 employees.
They also discuss why timing mattered: the excess and surplus market benefited from a hard market after years of inadequate pricing elsewhere, but Kinsale is still expected to prioritize margins over volume as conditions soften. The stock’s valuation has come down from prior highs, with Clay noting roughly 18x earnings and about 4.5x book value, while management ownership and relatively modest cash compensation are presented as further signs of alignment with shareholders.
Key takeaways
- Clay Finck says Kinsale has compounded at 37% per year since its July 2016 IPO, despite operating in an industry Buffett called structurally difficult.
- Clay Finck argues Kinsale’s in-house underwriting avoids the misaligned incentives of MGAs that are paid on premium volume rather than long-term profitability.
- Daniel Mahncke notes Kinsale’s management owns sizable stakes, including CEO Michael Kehoe’s roughly $350 million position, which he sees as strong alignment.
- Clay Finck says Kinsale’s 2024 combined ratio was 76%, far better than Markel’s 95% and the industry average around 91%.
- The hosts say Kinsale’s growth has been helped by a hard market, but Clay expects the company to slow growth rather than chase weak-priced business as conditions soften.
Notable quotes
“They want to pursue opportunities that will increase shareholder value”
“the company is run so efficiently, this is allowed them to generate return on equity of around 30%”
“the insurance industry is just the set of dismal economic characteristics that make for a poor long term outlook”
“one of the great things about Kinsale is that it's still a founder led company”
“So the incentives are not well aligned here”
How the episode opens
00:00:00:04 - 00:00:23:19 Clay Finck So Kinsale is not a company that is going to pursue growth just for the sake of growth. They want to pursue opportunities that will increase shareholder value. So if that means turning down insurance because a competitor is offering a better rate and they're absolutely fine with doing just that.
What's also important to understand about Kinsale is that they are intentionally targeting these smaller eons risks. 00:00:23:21 - 00:00:57:08 Clay Finck So Kinsale is average. Premium rate is around $15,000.
This premium level is pretty much just not interesting to most NS insurers, because there's just not a lot of money to be made for them. But Kinsale built the systems and these processes to be able to process thousands of these smaller policies. And since the company is run so efficiently, this is allowed them to generate return on equity of around 30%.
00:00:57:10 - 00:01:19:07 Clay Finck Before we dive into the video, if you've been enjoying the show. Be sure to click the subscribe button below so you never miss an episode. It's a free and easy way to support us, and we'd really appreciate it.
Thank you so much. Hey everybody, welcome back to the Investor's Podcast. I'm your host, Clay Fink, and today I'm joined by my new co-host, Daniel Manka, to discuss Kinsale Capital.
00:01:19:09 - 00:01:33:11 Clay Finck I don't want to spoil some of the updates that are to come, but you'll be seeing more of Daniel here on the show. Daniel, it's hard to believe you joined Tipp just a year ago. I feel like I've just learned so much from tuning into your episodes ever since.
00:01:33:12 - 00:01:50:13 Daniel Mahncke Well, I'm glad to to be here again, Clay. And, you know, I can wholeheartedly say that I've learned just as much from you since since I joined TPI.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- excess & surplus insurance market
- in-house underwriting
- insurance reserves
- expense structure
- insurance stock valuation
Companies and tickers mentioned
- KNSL
- Kinsale Capital Group
Watch the episode
Watch “Kinsale Capital Stock Deep Dive w/ Clay Finck & Daniel Mahncke (TIP804)” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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