What happened

Insurance is a tough business, and the current economic uncertainty and rising rates only complicate the situation. But Kinsale Capital Group (KNSL 0.24%) provided a fresh reminder that it is among the best-run businesses in the industry, and investors reacted by rallying into the shares.

Shares of Kinsale were up 14.5% in February, according to data provided by S&P Global Market Intelligence, after Kinsale's quarterly results came in better than expectations.

So what

Kinsale is an insurance company that specializes in writing unusual policies, covering businesses like axe-throwing venues and marijuana dispensaries that carry risks different from what is covered via normal underwriting. It is a tough business to get right, but if you do, the margins and premiums tend to be higher than with typical business policies.

The company's fourth-quarter results provided a clear indication that Kinsale is doing a good job managing risk. Kinsale earned $2.60 per share on revenue of $242.96 million in the quarter, surpassing expectations for $2.15 per share on sales of $234 million. Net investment income increased by 106.7% in the quarter, and premium growth came in at 45%.

Kinsale's combined ratio -- an insurance industry metric that measures what percentage of premiums are used to cover expenses and pay out claims -- was 72.4% in the quarter. For perspective, the average combined ratio for specialty insurance companies over the past three years was 96.9%. (A lower number is better.)

Shares of Kinsale were up as much as 20% for the week following earnings, before giving up some of those gains. Post-earnings, at least two analysts raised their price targets on the company, with RBC Capital analyst Mark Dwelle writing that there is little sign of momentum slowing for what has been a long-term growth story.

Now what

Kinsale has been a remarkable investment since going public in 2016, with the stock up 1,620% since then. But the company is still a relatively small player in a massive field, controlling less than 1% of the global market share for so-called "excess and surplus" lines of insurance.

It is a tough business, but the latest results, if nothing else, reinforced investor perception that Kinsale is an overachiever in its field.