Key insights
- Kingstone Insurance (KINS) exhibits strong EPS growth and a low PE ratio, driven by favorable industry trends and effective risk management. An activist investor's involvement, pushing for a strategic review and potential sale, could unlock further value. While the company's small market cap may contribute to its undervaluation, positive catalysts suggest potential upside for US equity markets.
Has anyone else looked into them? ~100% YoY EPS growth and trades around 5 PE. Their combined ratio, which basically measures how much money they make from writing policies, is truly elite, it was .76 or so last year. For context, a combined ratio below .95 is considered good, and below .9 is considered incredible.
Right now, there is a trend of national insurers being overly risk avoidant and withdrawing from coastal areas which has been a huge tailwind for them. In the event of a big hurricane, their reinsurance coverage means they would only take a 5 million dollar loss, so they are massively profiting off of that tailwind while also hedging the downside.
With a market cap of only 220m, I think there is a decent chance it's just being overlooked by the market. NY did have unseasonably good weather, but even if you normalize last years results with average weather, their EPS growth still would have been incredible.
An activist investor with a history of this, recently took a large stake in them and is calling for a strategic review. He is saying that the stock is trading below its intrinsic value and the board needs to do something about it, including potentially selling the company. Any sale would almost certainly be at a higher multiple than what the stock is currently priced at.