TIP806: Wise PLC w/ Kyle Grieve and Daniel Mahncke
Key Takeaways
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Kinsale targets high-risk specialty insurance niche
“Kinsale operates in the PNC industry and this is a massive, mature industry. Within the PNC industry sits the excess and surplus market, which is much more dynamic and it's oftentimes referred to as the non-standard market or the specialty market. The excess and surplus market is unique in that it's a market that standard insurance companies won't insure.”
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E&S markets provide greater pricing flexibility
“Kinsale Capital operates in the non-admitted market, which aren't as regulated as the admitted market. So since Kinsale is not as regulated as a traditional insurer, they have more flexibility in their business, so their rates and policy forms don't require prior state approval, and they can customize coverage for unique risks, and they can price policies more freely based on that risk.”
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Standard insurers avoid unique high-risk exposures
“A few examples can include insuring a construction company that's doing very dangerous work, ensuring a building in a wildfire prone area, a brand new business with no operating history, or maybe unusual liability exposure such as amusement parks, for example. Kinsale is able to step in, look at the situation and see if they can put together a policy that makes sense both for them and the insured.”
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Regulatory freedom enables faster premium adjustments
“I cannot count the number of times we would get asked why are you increasing your premiums by six percent, why not two percent, or why not zero percent, or they would just flat out reject the increase and say that premiums need to stay where they're at. The state to me sort of acts as this watchdog for the industry to ensure that consumers are being charged fair premiums.”
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Niche markets attract less competitive pressure
“E&S companies like Kinsale tend to write most of their business in states that are more litigious, meaning that there are more lawsuits that tend to occur in these states. Now, even though the risks that they are taking on are perceived to be higher risk, the important thing is that they're pricing that risk appropriately. Although these types of policies might seem like they're higher risk, they can also bring in higher margins because they tend to attract less competition.”
Episode Description
Kyle Grieve is joined by co-host Daniel Mahncke to discuss Wise PLC, a London-listed FinTech company that enables cheap and fast cross-border payments by matching local flows rather than moving money internationally through costly SWIFT networks. IN THIS EPISODE YOU’LL LEARN: 00:00:00 - Intro 00:04:45 - The clever mechanism Wise uses to move money without actually crossing borders 00:09:14 - Why two Estonians at a London party ended up disrupting global banking 00:13:44 - How Wise earns revenue from four streams 00:21:44 - Which of Wise's three competitor industries is the most threatening and why 00:26:04 - How fast payments have become at Wise 00:42:12 - Why deliberately lowering your own prices can be a sign of business strength 01:08:12 - The flywheel that makes Wise harder to beat, the larger it grows 01:10:35 - What to make of the CEO controversy 01:23:51 - How Wise's capital allocation stacks up against Buffett's ultimate litmus test 01:30:26 - What the numbers suggest investors could earn holding Wise Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community. Learn how to join us in Omaha for the Berkshire meeting here. Kyle and Daniel use Fiscal.ai for every company they research — use their referral link to get started with a 15% discount! Read about cross-border payments 101. Read more on Wise, featured in Wall Street’s Blind Spots. Listen to a conversation with Wise’s CEO, Kristo Käärmann. Follow Kyle on X and LinkedIn. Related books mentioned in the podcast. Ad-free episodes on our Premium Feed. NEW TO THE SHOW? Get smarter about valuing businesses through The Intrinsic Value Newsletter. Check out our We Study Billionaires Starter Packs. Follow our official social media accounts: X | LinkedIn | Facebook. Try our tool for picking stock winners and managing our portfolios: TIP Finance. Enjoy exclusive perks from our favorite Apps and Services. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: HardBlock Human Rights Foundation Plus500 Shopify Netsuite Vanta References to any third-party products, services, or advertisers do not constitute endorsements, and The Investor’s Podcast Network is not responsible for any claims made by them. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm