Shares of specialty insurer Kinsale Capital Group (KNSL 0.37%) were flat as of 1 p.m. ET on Friday, according to data provided by S&P Global Market Intelligence.

Kinsale, the only publicly traded insurer focused exclusively on the excess and surplus market (coverage for hard-to-place small and mid-size business risks), reported second-quarter earnings that exceeded analysts' expectations, prompting a 7% increase in its share price.

Despite these impressive results, the company's price has dipped and is now flat, with the market worried about increasing competition in the commercial property industry.

Steady performance in a challenging environment

During the second quarter, Kinsale:

Altogether, these were exceptional results. However, the company saw its largest insurance division -- commercial property -- post a 17% decline in GWPs compared to last year due to increased competition and lower pricing. This decrease appears to be the source of the market's trepidation.

A variety of different shades of green arrows pointing up sit against a green backdrop.

Image source: Getty Images.

Yet, while Kinsale faced this headwind, the growth rates for the rest of its business increased by 14%. This performance highlights the diversification within its business, as it focuses on smaller accounts with hard-to-place risks that its mega peers have no interest in insuring.

While GWP growth dipped below management's goal of annualized increases between 10% and 20%, I don't believe it is anything more than standard cyclicality in the excess-and-surplus insurance industry.

Furthermore, during the second-quarter earnings call, CEO Michael Kehoe said that the company's "loss reserves have never been more conservatively stated than they are right now."

This safety, paired with Kinsale's top-tier underwriting prowess, keeps the company a promising option for investors willing to hold for a decade and beyond.