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What changed in Kinsale Capital Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Kinsale Capital Group, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+276 added−280 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-23)

Top changes in Kinsale Capital Group, Inc.'s 2024 10-K

276 paragraphs added · 280 removed · 243 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

82 edited+6 added−15 removed153 unchanged
Biggest changeYear Ended December 31, 2023 2022 2021 ($ in thousands) Commercial: Commercial Property $ 411,956 26.3 % $ 181,505 16.5 % $ 72,392 9.5 % Excess Casualty 194,049 12.4 % 147,485 13.4 % 108,487 14.2 % Small Business Casualty 174,080 11.1 % 149,366 13.6 % 112,553 14.7 % Construction 137,887 8.8 % 122,524 11.1 % 101,441 13.3 % General Casualty 118,745 7.5 % 69,784 6.3 % 36,037 4.7 % Allied Health 67,808 4.3 % 58,839 5.4 % 51,945 6.8 % Products Liability 61,786 3.9 % 60,374 5.5 % 55,070 7.2 % Small Business Property 43,893 2.8 % 21,002 1.9 % 6,160 0.8 % Life Sciences 41,379 2.6 % 41,346 3.7 % 40,487 5.3 % Entertainment 39,218 2.5 % 22,268 2.0 % 12,401 1.6 % All other commercial lines 239,537 15.3 % 193,049 17.5 % 140,277 18.4 % Total commercial 1,530,338 97.5 % 1,067,542 96.9 % 737,250 96.5 % Personal: Personal Insurance 24,182 1.5 % 31,289 2.8 % 27,002 3.5 % High Value Homeowners 14,295 1.0 % 3,261 0.3 % 121 — % Total personal $ 38,477 2.5 % $ 34,550 3.1 % $ 27,123 3.5 % Total gross written premiums $ 1,568,815 100.0 % $ 1,102,092 100.0 % $ 764,373 100.0 % Our Competitive Strengths We believe that our competitive strengths include: Exclusive focus on the E&S market.
Biggest changeYear Ended December 31, 2024 2023 2022 ($ in thousands) Commercial: Commercial Property $ 456,170 24.4 % $ 411,956 26.3 % $ 181,505 16.5 % Excess Casualty 245,137 13.1 % 194,049 12.4 % 147,485 13.4 % Small Business Casualty 195,593 10.5 % 174,080 11.1 % 149,366 13.6 % General Casualty 169,162 9.0 % 118,745 7.6 % 69,784 6.3 % Construction 148,333 7.9 % 137,887 8.8 % 122,524 11.1 % Allied Health 83,058 4.5 % 67,808 4.3 % 58,839 5.4 % Small Business Property 76,800 4.1 % 43,893 2.8 % 21,002 1.9 % Products Liability 67,035 3.6 % 61,786 3.9 % 60,374 5.5 % Entertainment 58,506 3.1 % 39,218 2.5 % 22,268 2.0 % Energy 42,710 2.3 % 38,637 2.5 % 32,217 2.9 % All other commercial lines 278,903 14.9 % 242,279 15.4 % 202,178 18.3 % Total commercial 1,821,407 97.4 % 1,530,338 97.6 % 1,067,542 96.9 % Personal: High Value Homeowners 26,844 1.4 % 14,295 0.9 % 3,261 0.3 % Personal Insurance 22,090 1.2 % 24,182 1.5 % 31,289 2.8 % Total personal $ 48,934 2.6 % $ 38,477 2.4 % $ 34,550 3.1 % Total gross written premiums $ 1,870,341 100.0 % $ 1,568,815 100.0 % $ 1,102,092 100.0 % Our Competitive Strengths We believe that our competitive strengths include: Exclusive focus on the E&S market.
As previously discussed, when managing our catastrophe exposure, we focus on the 100-year and the 250-year return periods. We mitigate our risk associated with natural catastrophes with respect to our property insurance business primarily by purchasing reinsurance from only highly-rated reinsurers.
As previously discussed, when managing our catastrophe exposure, we generally focus on the 100-year and the 250-year return periods. We mitigate our risk associated with natural catastrophes with respect to our property insurance business primarily by purchasing reinsurance from only highly-rated reinsurers.
Moreover, by maintaining electronic files on each account, we have been able to facilitate clear communication among personnel responsible for handling matters related to underwriting, servicing and claims as each has access to the necessary information regarding an account. We use a browser-based platform approach to develop applications.
Moreover, by maintaining electronic files on each account, we have been able to facilitate clear communication among personnel responsible for handling matters related to underwriting, servicing and claims as each has access to the necessary information regarding an account. We use a web-based platform approach to develop applications.
In an effort to minimize our exposure to the insolvency of our reinsurers, we review the financial condition of each reinsurer annually. In addition, we continually monitor for rating downgrades involving any of our reinsurers. At December 31, 2023, all reinsurance contracts that our insurance subsidiary was party to were with companies with A.M.
In an effort to minimize our exposure to the insolvency of our reinsurers, we review the financial condition of each reinsurer annually. In addition, we continually monitor for rating downgrades involving any of our reinsurers. At December 31, 2024, all reinsurance contracts that our insurance subsidiary was party to were with companies with A.M.
Including the reinstatement of coverage, the maximum aggregate loss recovery limit is $255.0 million. This coverage applies after the coverage provided by the commercial property quota-share treaty. (3) This reinsurance is not applicable to any individual policy with a per-occurrence limit of $2.0 million or less.
Including the reinstatement of coverage, the maximum aggregate loss recovery limit is $350.0 million. This coverage applies after the coverage provided by the commercial property quota-share treaty. (3) This reinsurance is not applicable to any individual policy with a per-occurrence limit of $2.0 million or less.
The nature and extent of state regulation varies by jurisdiction, and state insurance regulators generally have broad administrative power relating to, among other matters, setting capital and surplus requirements, licensing of insurers and agents, establishing standards for reserve adequacy, prescribing statutory accounting methods, determining the form and content of statutory financial reports, regulating certain transactions with affiliates and prescribing types and amounts of investments insurers may hold.
The nature and extent of state regulation varies by jurisdiction, and state insurance regulators generally have broad administrative power relating to, among other matters, setting capital and surplus requirements, licensing of insurers and agents, establishing standards for reserve adequacy, prescribing statutory 13 Table of Contents accounting methods, determining the form and content of statutory financial reports, regulating certain transactions with affiliates and prescribing types and amounts of investments insurers may hold.
Additionally, we do not contract out our underwriting to program managers or general agents which typically requires a higher commission level to compensate the third party for its work on behalf of the carrier. We sell policies in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S. Virgin Islands.
Additionally, we do not contract out our underwriting to program managers or general agents which typically requires a higher commission level to compensate the third party for its work on behalf of the carrier. 5 Table of Contents We sell policies in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S. Virgin Islands.
No other broker accounted for more than 10% of our gross written premiums in the year ended December 31, 2023. It is important to us that we maintain excellent relationships with our brokers.
No other broker accounted for more than 10% of our gross written premiums in the year ended December 31, 2024. It is important to us that we maintain excellent relationships with our brokers.
Catastrophe Risk Management We use sophisticated computer models to analyze the risk of severe losses from natural catastrophes. We measure exposure to these losses in terms of probable maximum loss ("PML"), which is an estimate of the amount of loss we would expect to meet or exceed once in a given number of years (referred to as the return period).
Catastrophe Risk Management We use stochastic models to analyze the risk of severe losses from natural catastrophes. We measure exposure to these losses in terms of probable maximum loss ("PML"), which is an estimate of the amount of loss we would expect to meet or exceed once in a given number of years (referred to as the return period).
("Kinsale Real Estate"), as a wholly-owned subsidiary domiciled in Delaware, in order to acquire and hold real estate. On December 3, 2018, we incorporated 2001 Maywill, LLC, as a wholly-owned subsidiary of Kinsale Real Estate, domiciled in Delaware, in order to hold our corporate headquarters.
("Kinsale Real Estate"), as a wholly-owned subsidiary domiciled in Delaware, in order to acquire and hold real estate. On December 3, 2018, we formed 2001 Maywill, LLC, as a wholly-owned subsidiary of Kinsale Real Estate, domiciled in Delaware, in order to hold our corporate headquarters.
In addition to our aggregate risk management guidelines, we write policies using limits tactically in order to minimize exposure to large losses. While specific limits change over time as our risk appetite changes due to growth, the majority of our business is concentrated to property coverages with policy limits of $5.0 million and lower.
In addition to our aggregate risk management guidelines, we tactically write policies using limits in order to minimize exposure to large losses. While specific limits change over time as our risk appetite changes due to growth, the majority of our property business is written with policy limits of $5.0 million and lower.
We manage catastrophe exposure through: • careful and disciplined underwriting, • purchasing extensive reinsurance protection from financially strong counterparties, • analyzing results of catastrophe modeling for our business portfolio on monthly basis, and • limiting the concentration of property business by geographic area to reduce loss exposure from extreme events.
We manage catastrophe exposure through: 7 Table of Contents • careful and disciplined underwriting, • purchasing extensive reinsurance protection from financially strong counterparties, • analyzing results of catastrophe modeling for our business portfolio on monthly basis, and • limiting the concentration of property business by geographic area to reduce loss exposure from extreme events.
Collectively, our board members bring decades of experience from their prior roles operating and working in insurance and other financial services companies. 3 Table of Contents Our Strategy We believe that our approach to our business will allow us to achieve our goals of both growing our business and generating attractive returns.
Collectively, our board members bring decades of experience from their prior roles operating and working in insurance and other financial services companies. Our Strategy We believe that our approach to our business will allow us to achieve our goals of both growing our business and generating attractive returns.
R. Berkley Corporation. Regulation Insurance regulation We are regulated by insurance regulatory authorities in the states in which we conduct business. State insurance laws and regulations generally are designed to protect the interests of policyholders, consumers and claimants rather than 13 Table of Contents stockholders or other investors.
R. Berkley Corporation. Regulation Insurance regulation We are regulated by insurance regulatory authorities in the states in which we conduct business. State insurance laws and regulations generally are designed to protect the interests of policyholders, consumers and claimants rather than stockholders or other investors.
Our underwriters specialize in individual lines of business which allows them to develop in-depth knowledge and experience of the risks they underwrite. Our core client focus is small- to medium-sized accounts, which we believe are subject to less competition and have better pricing. The average premium per policy written by us in 2023 was $15,200.
Our underwriters specialize in individual lines of business which allows them to develop in-depth knowledge and experience of the risks they underwrite. Our core client focus is small- to medium-sized accounts, which we believe are subject to less competition and have better pricing. The average premium per policy written by us in 2024 was $15,100.
(Delaware corporation; real estate holding company) 2001 Maywill, LLC (Delaware limited liability company; real estate entity) 2000 Maywill, LLC (Delaware limited liability company; real estate entity) Kinsale Capital Group, Inc., a Delaware domiciled insurance holding company, was formed on June 3, 2009 for the purpose of acquiring and managing insurance entities.
(Delaware corporation; real estate holding company) 2001 Maywill, LLC (Delaware limited liability company; real estate entity) 2000 Maywill, LLC (Delaware limited liability company; real estate entity) 4 Table of Contents Kinsale Capital Group, Inc., a Delaware domiciled insurance holding company, was formed on June 3, 2009 for the purpose of acquiring and managing insurance entities.
(4) For casualty policies with a per-occurrence limit higher than $2.0 million, the ceding percentage varies such that the retention is always $2.0 million or less. For example, for a $4.0 million limit excess policy, our retention would be 50%, whereas for a $10.0 million limit excess policy, our retention would be 20%.
(4) For excess casualty policies with a per-occurrence limit higher than $2.5 million, the ceding percentage varies such that the retention is always $2.5 million or less. For example, for a $5.0 million limit excess policy, our retention would be 50%, whereas for a $10.0 million limit excess policy, our retention would be 25%.
As an insurance company that was founded in 2009, we have the benefit of having built a proprietary technology platform that reflects the best practices our management team has learned from its extensive experience. We operate on an integrated digital platform with a data warehouse that collects an array of statistical data.
As an insurance company that was founded in 2009, we have the benefit of having built, and continuing to enhance, a proprietary technology platform that reflects the best practices our management team has learned from its extensive experience. We operate on an integrated digital platform with a data warehouse that collects an array of statistical data.
In particular, our efficient platform allows us to provide a higher level of service to our brokers and to target smaller accounts which we believe are generally subject to less competition. For the year ended December 31, 2023, our expense ratio was 20.8%. Fully integrated claims management.
In particular, our efficient platform allows us to provide a higher level of service to our brokers and to target smaller accounts which we believe are generally subject to less competition. For the year ended December 31, 2024, our expense ratio was 20.6%. Fully integrated claims management.
Commissions are an important part of that relationship, but brokers will also typically consider the ultimate price to the insured, and the service and expertise offered by the carrier when determining where to place their business. In 2023, we paid an average commission to our brokers of 14.5% of gross written premiums.
Commissions are an important part of that relationship, but brokers will also typically consider the ultimate price to the insured, and the service and expertise offered by the carrier when determining where to place their business. In 2024, we paid an average commission to our brokers of 14.7% of gross written premiums.
However, as of December 31, 2023, Kinsale Insurance maintained RBC levels significantly in excess of amounts that would require any corrective actions.
However, as of December 31, 2024, Kinsale Insurance maintained RBC levels significantly in excess of amounts that would require any corrective actions.
We refer to this repository as our data warehouse. The design of our data warehouse permits us to capture an array of statistical data, collected by the policy management systems at Kinsale. The data warehouse is easily searchable, collects and labels information in a consistent format and contains key underwriting and claims information we collect at every level.
The design of our data warehouse permits us to capture an array of statistical data, collected by the policy management systems at Kinsale. The data warehouse is easily searchable, collects and labels information in a consistent format and contains key underwriting and claims information we collect at every level.
The following tables show our gross written premiums by state for the years ended December 31, 2023, 2022 and 2021.
The following tables show our gross written premiums by state for the years ended December 31, 2024, 2023 and 2022.
The New York State Department of Financial Services ("DFS") issued regulations governing cybersecurity requirements for financial services companies, which became effective on March 1, 2017, and requires insurance companies, among others, regulated in New York to assess their specific cyber risk profiles and design cyber security programs to address such risks.
The New York State Department of Financial Services ("DFS") issued regulations governing cybersecurity requirements for financial services companies, which became effective on March 1, 2017, and, as currently amended, require insurance companies, among others, regulated in New York to assess their specific cyber risk profiles and design cyber security programs to address such risks.
Excluding our personal insurance division, which has a relatively low premium per policy written, the average premium per policy written was $16,400 in 2023. We believe that our strategy, experience and expertise allow us to compete effectively in the E&S market and will enable us to generate attractive long-term stockholder value.
Excluding our personal insurance division, which has a relatively low premium per policy written, the average premium per policy written was $15,900 in 2024. We believe that our strategy, experience and expertise allow us to compete effectively in the E&S market and will enable us to generate attractive long-term stockholder value.
Human Capital As of December 31, 2023, we had 574 employees, of which 561 were full-time employees, and all of whom were located at our headquarters in Richmond, Virginia. Compensation and Benefits We believe that our employees are our most valuable asset and paying our employees well is the foundation of our performance-based culture.
Human Capital As of December 31, 2024, we had 674 employees, of which 660 were full-time employees, and all of whom were located at our headquarters in Richmond, Virginia. Compensation and Benefits We believe that our employees are our most valuable asset and paying our employees well is the foundation of our performance-based culture.
In excess of loss reinsurance, the reinsurer agrees to assume all or a 8 Table of Contents portion of the ceding company's losses, in excess of a specified amount.
In excess of loss reinsurance, the reinsurer agrees to assume all or a portion of the ceding company's losses, in excess of a specified amount.
As of December 31, 2023, our fixed-maturity portfolio, including cash equivalents, had an average duration of 2.8 years and had an average rating of "AA-." 11 Table of Contents The following table sets forth the composition of our portfolio of fixed-maturity securities by rating as of December 31, 2023: AAA AA A BBB Below BBB Total ($ in thousands) U.S.
As of December 31, 2024, our fixed-maturity portfolio, including cash equivalents, had an average duration of 3.0 years and had an average rating of "AA-." 11 Table of Contents The following table sets forth the composition of our portfolio of fixed-maturity securities by rating as of December 31, 2024: AAA AA A BBB Below BBB Total ($ in thousands) U.S.
Our investment policy does not permit us to own any interest only, principal only or residual tranches of RMBS. 12 Table of Contents At December 31, 2023 , our portfolio of fixed-maturity securities contained corporate bonds with a fair value of $1.4 billion.
Our investment policy does not permit us to own any interest only, principal only or residual tranches of RMBS. 12 Table of Contents At December 31, 2024 , our portfolio of fixed-maturity securities contained corporate bonds with a fair value of $2.0 billion.
Unlike many of our competitors, we do not extend underwriting authority to brokers, agents or other third parties. For the year ended December 31, 2023, our loss and loss adjustment expense ratio was 54.6%. Technology is a core competency.
Unlike many of our competitors, we do not extend underwriting authority to brokers, agents or other third parties. For the year ended December 31, 2024, our loss and loss adjustment expense ratio was 55.8%. Technology is a core competency.
Best") domestic professional surplus lines composite produced an average net loss and loss adjustment expense ratio of 69.3% and grew direct premiums written by 9.6% annually, versus 73.6% and 4.2%, respectively for the property and casualty ("P&C") industry. Underwriting expertise across a broad spectrum of hard-to-place risks.
Best") domestic professional surplus lines composite produced an average net loss and loss adjustment expense ratio of 69.0% and grew direct premiums written by 9.8% annually, versus 73.7% and 4.5%, respectively for the property and casualty ("P&C") industry. 2 Table of Contents Underwriting expertise across a broad spectrum of hard-to-place risks.
We believe that we have differentiated ourselves from our competitors by effectively leveraging technology, vigilantly controlling expenses and maintaining control over our underwriting and claims operations. We have significantly grown our business and have generated strong returns. During 2023, our gross written premiums increased by 42.3%, to $1.6 billion for the year ended December 31, 2023.
We believe that we have differentiated ourselves from our competitors by effectively leveraging technology, vigilantly controlling expenses and maintaining control over our underwriting and claims operations. We have significantly grown our business and have generated strong returns. During 2024, our gross written premiums increased by 19.2%, to $1.9 billion for the year ended December 31, 2024.
The E&S, or non-admitted, market has historically operated at lower loss ratios and higher margins, and has grown direct premiums written more quickly than the standard, or admitted, market. From 2001 2 Table of Contents to 2022, A.M. Best Company's ("A.M.
The E&S, or non-admitted, market has historically operated at lower loss ratios and higher margins, and has grown direct premiums written more quickly than the standard, or admitted, market. From 2001 to 2023, A.M. Best Company's ("A.M.
The remaining $14.8 million represents the portion of such assets we held at December 31, 2023 for investment purposes. 10 Table of Contents Our cash and invested assets totaled $3.1 billion at December 31, 2023 and $2.2 billion at December 31, 2022, and are summarized as follows: December 31, 2023 December 31, 2022 Carrying Value % of Portfolio Carrying Value % of Portfolio ($ in thousands) Fixed maturities - at fair value: U.S.
The remaining $15.0 million represents the portion of such assets we held at December 31, 2024 for investment purposes. 10 Table of Contents Our cash and invested assets totaled $4.1 billion at December 31, 2024 and $3.1 billion at December 31, 2023, and are summarized as follows: December 31, 2024 December 31, 2023 Carrying Value % of Portfolio Carrying Value % of Portfolio ($ in thousands) Fixed maturities - at fair value: U.S.
In particular, the NRRA gives regulators in the home state of an insured exclusive authority to regulate and tax surplus lines insurance 16 Table of Contents transactions, and regulators in a ceding insurer’s state of domicile the sole responsibility for regulating the balance sheet credit that the ceding insurer may take for reinsurance recoverables.
In particular, the NRRA gives regulators in the home state of an insured exclusive authority to regulate and tax surplus lines insurance transactions, and regulators in a ceding insurer’s state of domicile the sole responsibility for regulating the balance sheet credit that the ceding insurer may take for reinsurance recoverables. 16 Table of Contents The Dodd-Frank Act also established the FIO in the U.S.
In addition, the FIO has the ability to recommend to the Financial Stability Oversight Council the designation of an insurer as "systemically significant" and therefore subject to regulation by the Federal Reserve as a bank holding company.
In addition, the FIO has the ability to recommend to the Financial Stability Oversight Council the designation of an insurer as "systemically important" and therefore subject to regulation and oversight by the Federal Reserve Board in a manner similar to a bank holding company also subject to designation.
Kinsale's Performance vs. the S&P 500 Annual Percentage Change (1) Year Kinsale (2) S&P 500 2016 113.5 4.2 2017 33.2 21.8 2018 24.1 (4.4) 2019 83.7 31.5 2020 97.3 18.4 2021 19.2 28.7 2022 10.2 (18.1) 2023 28.3 26.3 Compounded Annual Gain ─ 2016-2023 51.2 % 13.2 % Overall Gain ─ 2016-2023 2,052.6 % 151.4 % (1) Data for 2016 begins with Kinsale's initial public offering date of July 28, 2016 and assumes reinvestment of dividends.
Kinsale's Performance vs. the S&P 500 Annual Percentage Change (1) Year Kinsale (2) S&P 500 2016 113.5 4.2 2017 33.2 21.8 2018 24.1 (4.4) 2019 83.7 31.5 2020 97.3 18.4 2021 19.2 28.7 2022 10.2 (18.1) 2023 28.3 26.3 2024 39.1 25.0 Compounded Annual Gain ─ 2016-2024 49.7 % 14.6 % Overall Gain ─ 2016-2024 2,893.5 % 214.3 % (1) Data for 2016 begins with Kinsale's initial public offering date of July 28, 2016 and assumes reinvestment of dividends.
We currently average 93 open claims per claims adjuster (92 open claims per claims adjuster excluding catastrophe claims), which we believe is lower than industry average. As of December 31, 2023, our reserves for claims incurred but not reported were approximately 90.5% of our total net loss reserves.
We currently average 90 open claims per claims adjuster (88 open claims per claims adjuster excluding catastrophe claims), which we believe is lower than industry average. As of December 31, 2024, our reserves for claims incurred but not reported were approximately 90.0% of our total net loss reserves.
Our approach involves: Expand our presence in the E&S market . According to A.M. Best, the total E&S market was approximately $98.5 billion of direct written premiums in 2022. Based on our 2023 gross written premiums of $1.6 billion, our current market share is approximately 1.6%.
Our approach involves: 3 Table of Contents Expand our presence in the E&S market . According to A.M. Best, the total E&S market was approximately $115.6 billion of direct written premiums in 2023. Based on our 2024 gross written premiums of $1.9 billion, our current market share is approximately 1.6%.
The following is a summary of our significant reinsurance programs as of December 31, 2023: Line of Business Covered Company Policy Limit Reinsurance Coverage Company Retention Property - commercial insurance (1) Up to $10.0 million per occurrence 50% up to $247.3 million per catastrophe 50% of commercial property losses Property - catastrophe (2) N/A $127.5 million excess of $47.5 million $47.5 million per catastrophe Primary casualty (3) Up to $10.0 million per occurrence $8.0 million excess of $2.0 million $2.0 million per occurrence Excess casualty (4) Up to $10.0 million per occurrence Variable quota share $2.0 million per occurrence as described in note (4) below (1) Our commercial property quota-share reinsurance reduces the financial impact of property losses on our commercial property, small business property and inland marine policies up to a loss recovery of $123.7 million for an event.
The following is a summary of our significant reinsurance programs as of December 31, 2024: Line of Business Covered Company Policy Limit Reinsurance Coverage Company Retention Property (1) Up to $10.0 million per occurrence 50% up to $379.8 million per catastrophe 50% of commercial property losses Property - catastrophe (2) N/A $175.0 million excess of $60.0 million $60.0 million per catastrophe Primary casualty (3) Up to $10.0 million per occurrence $8.0 million excess of $2.0 million $2.0 million per occurrence Excess casualty (4) Up to $10.0 million per occurrence Variable quota share $2.5 million per occurrence as described in note (4) below 8 Table of Contents (1) Our property quota-share reinsurance reduces the financial impact of property losses on our commercial property, small business property, high value homeowners and inland marine policies up to a loss recovery of $189.9 million for an event.
Key applications and services supporting the core business were developed in-house. We designed the architecture for our information systems in a fashion that would allow us to reduce our administrative costs and quickly provide us with useful information.
Our platform is comprised of multiple applications and services which comprise an integrated system. Key applications and services supporting the core business were developed in-house. We designed the architecture for our information systems in a fashion that would allow us to reduce our administrative costs and quickly provide us with useful information.
We also sell policies through our wholly-owned broker, Aspera. In 2023, Aspera distributed 5 Table of Contents 1.9% of Kinsale’s premiums, primarily manufactured housing risks within our personal insurance division. Kinsale does not grant its independent brokers any underwriting or claims authority. We select our brokers based on management's review of the experience, knowledge and business plan of each broker.
In 2024, Aspera distributed 1.3% of Kinsale’s premiums, primarily manufactured housing risks within our personal insurance division. Kinsale does not grant its independent brokers any underwriting or claims authority. We select our brokers based on management's review of the experience, knowledge and business plan of each broker.
As of December 31, 2023, our fixed-maturity security portfolio contained $417.1 million (15.4%) of residential mortgage-backed securities ("RMBS"). RMBS, including collateralized mortgage obligations, are subject to prepayment risks that vary with, among other things, interest rates.
As of December 31, 2024, our fixed-maturity security portfolio contained $448.9 million (12.7%) of residential mortgage-backed securities ("RMBS"). RMBS, including collateralized mortgage obligations, are subject to prepayment risks that vary with, among other things, interest rates.
Of the total open claims as of December 31, 2023, 16.1% were open for accident years 2019 and prior. Entrepreneurial management team with a track record of success.
Of the total open claims as of December 31, 2024, 17.2% were open for accident years 2020 and prior. Entrepreneurial management team with a track record of success.
Item 1. Business Kinsale is a property and casualty insurance company that focuses exclusively on the excess and surplus lines ("E&S") market in the U.S., where we can use our underwriting expertise to write coverages for hard-to-place, small business risks and personal lines risks.
Item 1. Business Kinsale is a property and casualty insurance company that focuses exclusively on the excess and surplus lines ("E&S") market in the U.S., where we can use our underwriting expertise to write coverages for hard-to-place risks. We sell these insurance products in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S.
We also believe that our digital environment allows us to engage fewer employees in policy administration. 6 Table of Contents We aim to issue quotes for the majority of new business submissions we receive. For certain submissions, we preemptively offer additional quotes for additional coverage.
We also believe that our digital environment allows us to engage fewer employees in policy administration. We aim to issue quotes for the majority of new business submissions we receive. For certain submissions, we preemptively offer additional quotes for additional coverage. For example, if we receive a submission requesting primary coverage, we may also issue a quote for excess coverage.
Our information technology staff utilizes an agile methodology and cloud strategy to develop best-in-class software solutions and to attract and retain quality staff. We have built a proprietary technology platform that reflects the best practices our management team has learned from its extensive experience. Our platform is comprised of multiple applications and services which comprise an integrated system.
Our Chief Information Officer has over 30 years of experience in the technology field. Our information technology staff utilizes an agile methodology and cloud strategy to develop best-in-class software solutions and to attract and retain quality staff. We have built a proprietary technology platform that reflects the best practices our management team has learned from its extensive experience.
We seek to maximize investment returns using investment guidelines that stress prudent allocation among cash and cash equivalents, fixed-maturity securities and, to a lesser extent, equity securities.
Our cash and invested assets generally consist of fixed-maturity securities, equity securities, short-term investments and cash equivalents. We seek to maximize investment returns using investment guidelines that stress prudent allocation among cash and cash equivalents, fixed-maturity securities and, to a lesser extent, equity securities.
For policies for which we also write an underlying primary limit, the retention on the primary and excess policy combined would not exceed $2.0 million. Reinsurance contracts do not relieve us from our obligations to policyholders.
For policies for which we also write an underlying primary limit, the combined retention on the primary and excess policies would not exceed $2.5 million. This reinsurance is not applicable to any individual policy with a per-occurrence limit of $2.5 million or less. Reinsurance contracts do not relieve us from our obligations to policyholders.
Some states prohibit an insurer from withdrawing from one or more lines of business in the state except pursuant to a plan approved by the state insurance regulator, which may disapprove a plan that may lead to market disruption. Some state statutes may explicitly or by interpretation apply these restrictions to insurers operating on a surplus lines basis.
Some states prohibit an insurer from withdrawing from one or more lines of business in the state except pursuant 15 Table of Contents to a plan approved by the state insurance regulator, which may disapprove a plan that may lead to market disruption.
On September 8, 2022, we incorporated 2000 Maywill, LLC, as a wholly-owned subsidiary of Kinsale Real Estate, domiciled in Delaware, in order to acquire and hold real estate investment property. Marketing and Distribution We market our products through a broad group of independent insurance brokers that we believe can produce reasonable volumes of business for us.
On September 8, 2022, we formed 2000 Maywill, LLC, as a wholly-owned subsidiary of Kinsale Real Estate, domiciled in Delaware, in order to acquire and hold real estate investment property. Marketing and Distribution We market our products through a broad group of independent brokers. We also sell policies through our wholly-owned broker, Aspera.
Our return on equity and combined ratios were 33.6% and 75.4%, respectively, for the year ended December 31, 2023. Our operating return on equity, a non-GAAP financial measure, was 31.8% for the year ended December 31, 2023.
Our return on equity and combined ratios were 32.3% and 76.4%, respectively, for the year ended December 31, 2024. Our operating return on equity, a non-GAAP financial measure, was 29.2% for the year ended December 31, 2024.
This method ensures that two or more members of the department participate in the decision-making process when appropriate; our claim examiners recognize and address key issues; and reserves are adjusted to the appropriate amount as necessary. We seek to manage the number of claims per claims examiner to allow our claim examiners sufficient time to review and investigate claims submitted.
This method ensures that two or more members of the department participate in the decision-making process when 6 Table of Contents appropriate; our claim examiners recognize and address key issues; and reserves are adjusted to the appropriate amount, as necessary.
A summary of these securities by industry segment is shown below as of December 31, 2023 : December 31, 2023 Industry Fair Value % of Total ($ in thousands) Financial $ 31,782 95.8 % Industrials and other 755 2.3 % Utilities 636 1.9 % Total $ 33,173 100.0 % Competition The P&C insurance industry is highly competitive.
A summary of these securities by industry segment is shown below as of December 31, 2024 : December 31, 2024 Industry Fair Value % of Total ($ in thousands) Financial $ 25,582 96.8 % Industrials and other 851 3.2 % Total $ 26,433 100.0 % Competition The P&C insurance industry is highly competitive.
Year Ended December 31, 2023 % of Total 2022 % of Total 2021 % of Total ($ in thousands) Gross written premiums by state: California $ 295,242 18.8 % $ 221,994 20.1 % $ 168,694 22.1 % Florida 266,153 17.0 % 186,891 17.0 % 118,736 15.5 % Texas 198,758 12.7 % 136,309 12.4 % 88,679 11.6 % New York 66,489 4.2 % 42,427 3.9 % 31,495 4.1 % Louisiana 49,970 3.2 % 30,981 2.8 % 14,507 1.9 % Washington 46,507 3.0 % 40,546 3.7 % 31,167 4.1 % Colorado 43,852 2.8 % 32,406 2.9 % 26,250 3.4 % New Jersey 42,061 2.7 % 30,425 2.8 % 22,125 2.9 % Georgia 36,585 2.3 % 23,539 2.1 % 14,920 1.9 % Pennsylvania 33,333 2.1 % 23,396 2.1 % 16,518 2.2 % All other states 489,865 31.2 % 333,178 30.2 % 231,282 30.3 % $ 1,568,815 100.0 % $ 1,102,092 100.0 % $ 764,373 100.0 % Underwriting Our underwriting department consisted of approximately 280 employees as of December 31, 2023.
Year Ended December 31, 2024 % of Total 2023 % of Total 2022 % of Total ($ in thousands) Gross written premiums by state: California $ 352,082 18.8 % $ 295,242 18.8 % $ 221,994 20.1 % Florida 291,849 15.6 % 266,153 17.0 % 186,891 17.0 % Texas 250,200 13.4 % 198,758 12.7 % 136,309 12.4 % New York 80,144 4.3 % 66,489 4.2 % 42,427 3.9 % Louisiana 56,819 3.0 % 49,970 3.2 % 30,981 2.8 % Washington 51,588 2.8 % 46,507 3.0 % 40,546 3.7 % Colorado 50,734 2.7 % 43,852 2.8 % 32,406 2.9 % New Jersey 47,057 2.5 % 42,061 2.7 % 30,425 2.8 % Georgia 43,478 2.3 % 36,585 2.3 % 23,539 2.1 % Pennsylvania 41,494 2.2 % 33,333 2.1 % 23,396 2.1 % All other states 604,896 32.4 % 489,865 31.2 % 333,178 30.2 % $ 1,870,341 100.0 % $ 1,568,815 100.0 % $ 1,102,092 100.0 % Underwriting Our underwriting department consisted of approximately 330 employees as of December 31, 2024.
Treasury securities and obligations of U.S. government agencies $ 27,254 0.9 % $ 16,741 0.8 % Obligations of states, municipalities and political subdivisions 171,044 5.5 % 204,632 9.4 % Corporate and other securities 1,387,693 44.9 % 832,892 38.1 % Asset-backed securities 641,760 20.7 % 353,006 16.1 % Residential mortgage-backed securities 417,106 13.5 % 293,962 13.4 % Commercial mortgage-backed securities 66,902 2.1 % 58,867 2.7 % Total fixed maturities 2,711,759 87.6 % 1,760,100 80.5 % Equity securities - at fair value: Exchange traded funds 106,300 3.4 % 104,202 4.8 % Non-redeemable preferred stock 33,173 1.1 % 38,162 1.7 % Common stock 95,340 3.1 % 10,107 0.5 % Total equity securities 234,813 7.6 % 152,471 7.0 % Short-term investments, at amortized cost 5,589 0.2 % 41,337 1.9 % Real estate investment, net 14,791 0.5 % 76,387 3.5 % Cash and cash equivalents 126,694 4.1 % 156,274 7.1 % Total $ 3,093,646 100.0 % $ 2,186,569 100.0 % Our policy is to invest primarily in high-quality fixed-maturity securities with a primary focus on preservation of capital and a secondary focus on maximizing our risk-adjusted investment returns.
Treasury securities and obligations of U.S. government agencies $ 15,048 0.4 % $ 27,254 0.9 % Obligations of states, municipalities and political subdivisions 146,304 3.6 % 171,044 5.5 % Corporate and other securities 1,989,490 48.9 % 1,387,693 44.9 % Asset-backed securities 732,742 18.0 % 641,760 20.7 % Residential mortgage-backed securities 448,874 11.0 % 417,106 13.5 % Commercial mortgage-backed securities 205,105 5.0 % 66,902 2.1 % Total fixed maturities 3,537,563 86.9 % 2,711,759 87.6 % Equity securities - at fair value: Exchange traded funds 129,731 3.2 % 106,300 3.4 % Non-redeemable preferred stock 26,433 0.6 % 33,173 1.1 % Common stock 242,195 6.0 % 95,340 3.1 % Total equity securities 398,359 9.8 % 234,813 7.6 % Short-term investments, at amortized cost 3,714 0.1 % 5,589 0.2 % Real estate investment, net 15,045 0.4 % 14,791 0.5 % Cash and cash equivalents 113,213 2.8 % 126,694 4.1 % Total $ 4,067,894 100.0 % $ 3,093,646 100.0 % Our policy is to invest primarily in high-quality fixed-maturity securities with a primary focus on preservation of capital and a secondary focus on maximizing our risk-adjusted investment returns.
Using our proprietary technology platform and leveraging the expertise of our highly-experienced employees in our daily operations, we have built a company that is entrepreneurial and highly efficient.
We seek to accomplish this by generating consistent and attractive underwriting profits while managing our capital prudently. Using our proprietary technology platform and leveraging the expertise of our highly-experienced employees in our daily operations, we have built a company that is entrepreneurial and highly efficient.
Failure to comply with these laws and regulations would cause non-conforming investments to be treated as non-admitted assets in the states in which we are licensed to sell insurance policies for purposes of measuring statutory surplus and, in some instances, would require us to sell those investments. 15 Table of Contents Restrictions on cancellation, non-renewal or withdrawal Many states have laws and regulations that limit the ability of an insurance company licensed by that state to exit a market.
Failure to comply with these laws and regulations would cause non-conforming investments to be treated as non-admitted assets in the states in which we are licensed to sell insurance policies for purposes of measuring statutory surplus and, in some instances, would require us to dispose of those investments.
Transactions between insurance 14 Table of Contents subsidiaries and their parents and affiliates generally must be disclosed to the state regulators, and notice to or prior approval of the applicable state insurance regulator generally is required for any material or extraordinary transaction.
These laws also provide that all transactions among members of a holding company system must be fair and reasonable. Transactions between insurance subsidiaries and their parents and affiliates generally must be disclosed to the state regulators, and notice to or prior approval of the applicable state insurance regulator generally is required for any material or extraordinary transaction.
Best ratings of "A-" (Excellent) or better. At December 31, 2023, we recorded an allowance for credit losses of $0.7 million related to our reinsurance balances.
Best ratings of "A-" (Excellent) or better. At December 31, 2024, we recorded an allowance for credit losses of $0.9 million related to our reinsurance balances. We had reinsurance recoverables on unpaid losses of $323.1 million at December 31, 2024, and recoverables on paid losses of $14.8 million at December 31, 2024.
(Delaware corporation; management services company) Kinsale Insurance Company (Arkansas corporation; stock insurance company) Aspera Insurance Services, Inc. (Virginia corporation; insurance broker) Kinsale Real Estate, Inc.
Our Structure The chart below displays our corporate structure: Kinsale Capital Group, Inc. (Delaware corporation) Kinsale Management, Inc. (Delaware corporation; management services company) Kinsale Insurance Company (Arkansas corporation; stock insurance company) Aspera Insurance Services, Inc. (Virginia corporation; insurance broker) Kinsale Real Estate, Inc.
For the year ended December 31, 2023, our largest brokers were RSG Specialty, LLC, which produced $316.5 million, or 20.2%, of our gross written premiums, AmWINS Brokerage, which produced $286.8 million, or 18.3% of our gross written premiums and CRC Commercial Solutions, which produced $178.7 million, or 11.4%, of our gross written premiums.
For the year ended December 31, 2024, our largest brokers were RSG Specialty, LLC, which produced $366.4 million, or 19.6%, of our gross written premiums, AmWINS Brokerage, which produced $325.5 million, or 17.4% of our gross written premiums and CRC Commercial Solutions, which produced $213.9 million, or 11.4%, of our gross written premiums.
A summary of these securities by industry segment is shown below as of December 31, 2023 : December 31, 2023 Industry Fair Value % of Total ($ in thousands) Industrials and other $ 745,128 53.7 % Financial 559,075 40.3 % Utilities 83,490 6.0 % Total $ 1,387,693 100.0 % Approximately 6.5% of our total cash and investments were invested in certain common stocks and exchange traded funds ("ETFs").
A summary of these securities by industry segment is shown below as of December 31, 2024 : December 31, 2024 Industry Fair Value % of Total ($ in thousands) Industrials and other $ 1,045,232 52.5 % Financial 777,136 39.1 % Utilities 167,122 8.4 % Total $ 1,989,490 100.0 % Approximately 9.2% of our total cash and investments were invested in certain common stocks and exchange traded funds ("ETFs").
On December 9, 2020, the NAIC initially adopted the Group Capital Calculation ("GCC") template and instructions, as well as corresponding amendments to NAIC model insurance holding company system laws. The amendments require, subject to certain exemptions, that the ultimate controlling person of each insurance group file a GCC on an annual basis with such insurance group’s lead state commissioner.
The amendments require, 14 Table of Contents subject to certain exemptions, that the ultimate controlling person of each insurance group file a GCC on an annual basis with such insurance group’s lead state commissioner. In May of 2022, the Group Capital Calculation (E) Working Group subsequently adopted the 2022 GCC Instructions and Template.
For the year ended December 31, 2023, we processed approximately 735,000 new business submissions, and of those submissions, we issued approximately 489,000 quotes for a new quote ratio of 66.5% and bound 53,000 policies for a new policy to new submission ratio of 7.2%.
These quotes are included in new business submissions. For the year ended December 31, 2024, we processed approximately 881,000 new business submissions, and of those submissions, we issued approximately 590,000 quotes for a new quote ratio of 67.0% and bound 64,000 policies for a new policy to new submission ratio of 7.3%.
Vendor management is also important, and our claim examiners work closely with our vendors to manage expenses and costs. Information Technology Our information technology department consisted of approximately 120 employees and contractors as of December 31, 2023. Our Chief Information Officer has over 30 years of experience in the technology field.
In addition, our claim examiners work closely with members of the underwriting staff to keep them apprised of claim trends. Vendor management is also important, and our claim examiners work closely with our vendors to manage expenses and costs. Information Technology Our information technology department consisted of approximately 130 employees and contractors as of December 31, 2024.
The following table provides a summary of our top ten reinsurers, based on the amount recoverable, at December 31, 2023: Reinsurers A.M. Best Rating Reinsurance Recoverable ($ in thousands) Munich Reinsurance America, Inc. A+ $ 64,128 Swiss Reinsurance America Corp. A+ 31,046 SCOR Reinsurance Co. A 27,254 General Reinsurance Corporation A++ 23,417 Odyssey Reinsurance Co.
The following table provides a summary of our top ten reinsurers, based on the amount recoverable, at December 31, 2024: Reinsurers A.M. Best Rating Reinsurance Recoverable ($ in thousands) Munich Reinsurance America, Inc. A+ $ 83,828 General Reinsurance Corporation A++ 37,561 Swiss Reinsurance America Corp. A+ 34,262 SCOR Reinsurance Co. A 29,975 Hannover Rück SE A+ 20,476 Odyssey Reinsurance Co.
This eliminates costly data-entry steps in our underwriting process and permits the underwriter to focus on underwriting the account accurately and rapidly. 7 Table of Contents Since inception, we have been intent on capturing and analyzing our data and building, over time, a robust repository of information that we can use to improve our decision making.
Since inception, we have been intent on capturing and analyzing our data and building, over time, a robust repository of information that we can use to improve our decision making. We refer to this repository as our data warehouse.
Unfair claims practices Generally, insurance companies, adjusting companies and individual claims adjusters are prohibited by state statutes from engaging in unfair claims practices on a flagrant basis or with such frequency to indicate a general business practice.
Unfair claims practices Generally, insurance companies, adjusting companies and individual claims adjusters are prohibited by state statutes from engaging in unfair claims practices.
While many of our brokers have more than one office, we evaluate each office as if it were a separate brokerage and may appoint some but not all offices owned by a broker for specialized lines of business. We seek brokers with business plans that are consistent with our strategy and underwriting objectives.
Many of our brokers have more than one office, and we may appoint some but not all offices owned by a broker. We seek brokers with business plans that are consistent with our strategy and underwriting objectives. Our underwriters regularly visit with brokers in their offices in order to market and discuss the products we offer.
As of October 5, 2023, twenty-seven (27) states have adopted the 2020 revisions to the Insurance Holding Company Act pertaining to Group Capital Calculation and Liquidity Stress Testing. Arkansas has not yet adopted these revisions. We are currently evaluating the potential impacts.
The GCC uses a risk-based capital aggregation approach intended to provide regulators with an additional group supervisory tool. As of October 31, 2024, thirty-five (35) states have adopted the 2020 revisions to the Insurance Holding Company Act pertaining to Group Capital Calculation and Liquidity Stress Testing. Arkansas has not yet adopted these revisions. We are currently evaluating the potential impacts.
Enterprise risk and other developments The NAIC, as part of its solvency modernization initiative, has engaged in a concerted effort to strengthen the ability of U.S. state insurance regulators to monitor U.S. insurance holding company groups. Recent efforts by the NAIC to establish group capital standards are consistent with this initiative.
Some state statutes may explicitly or by interpretation apply these restrictions to insurers operating on a surplus lines basis. Enterprise risk and other developments The NAIC, as part of its solvency modernization initiative, has engaged in a concerted effort to strengthen the ability of U.S. state insurance regulators to monitor U.S. insurance holding company groups.
At December 31, 2023, our equity securities included the following: December 31, 2023 Equity securities Fair Value % of Total ($ in thousands) Common stocks $ 95,340 47.3 % Domestic stock market fund 86,144 42.7 % Dividend yield equity fund 20,156 10.0 % Total $ 201,640 100.0 % Approximately 1.1% of our total cash and investments were invested in nonredeemable preferr ed stock.
At December 31, 2024, our equity securities included the following: December 31, 2024 Equity securities Fair Value % of Total ($ in thousands) Common stocks $ 242,195 65.1 % Domestic stock market fund 129,731 34.9 % Total $ 371,926 100.0 % Approximately 0.6% of our total cash and investments were invested in nonredeemable preferr ed stock.
We also write homeowners' coverage in the personal lines market, which in aggregate represented 2.5% of our gross written premiums in 2023. The following table provides a summary of gross premiums written by division for the years ended December 31, 2023, 2022 and 2021.
In 2024, the percentage breakdown of our gross written premiums was 67.4% casualty and 32.6% property. Our commercial lines offerings and homeowner's coverage in the personal lines market represented 97.4% and 2.6% of our gross written premiums, respectively. The following table provides a summary of gross premiums written by division for the years ended December 31, 2024, 2023 and 2022.
Moreover, prior to any scheduled mediation or trial, claims personnel conduct further peer review to ensure that issues and exposures have been adequately analyzed. In addition, our claim examiners work closely with members of the underwriting staff to keep them apprised of claim trends.
We seek to manage the number of claims per claims examiner to allow our claim examiners sufficient time to review and investigate claims submitted. Moreover, prior to any scheduled mediation or trial, claims personnel conduct further peer review to ensure that issues and exposures have been adequately analyzed.
Our Chief Claims Officer has over 30 years of litigation and claims experience in large commercial insurance claims departments. Our claims department is fully integrated with our other functional departments. We manage all of our claims in-house and do not delegate claims management authority to third parties. We focus on the effective management of the claims adjusting process.
We manage all of our claims in-house and do not delegate claims management authority to third parties. We focus on the effective management of the claims adjusting process.
We have a robust process for setting our loss reserves and regularly reviewing our estimates. In addition, we maintain a conservative investment portfolio.
We have a robust process for setting our loss reserves and regularly reviewing our estimates. In addition, we maintain a conservative investment portfolio. Our strong balance sheet allows us to maintain the confidence of our investors and other constituencies, and thereby position ourselves to better achieve our goals.
A+ 10,525 Total for top ten reinsurers 233,739 All others, net of allowance for credit losses 14,097 Total reinsurance recoverable $ 247,836 We did not have reinsurance recoverables greater than $4.6 million at December 31, 2023 from any individual reinsurer other than the ten listed above.
A+ 17,603 Total for top ten reinsurers 299,744 All others, net of allowance for credit losses 38,147 Total reinsurance recoverable $ 337,891 We did not have reinsurance recoverables greater than $14.2 million at December 31, 2024 from any individual reinsurer other than the ten listed above. 9 Table of Contents To reduce credit exposure to reinsurance recoverable balances, we obtain letters of credit from certain reinsurers that are not authorized as reinsurers under U.S. state insurance regulations.
Investments Investment income is an important component of our earnings. We collect premiums from our insureds and invest a portion of these funds until claims are paid. Our cash and invested assets generally consist of fixed-maturity securities, equity securities, short-term investments and cash equivalents.
In addition, under the terms of our reinsurance contracts discussed above, we may retain funds due from reinsurers as security for those recoverable balances. Investments Investment income is an important component of our earnings. We collect premiums from our insureds and invest a portion of these funds until claims are paid.
We market and sell these insurance products in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S. Virgin Islands primarily through a network of independent insurance brokers. Our experienced and cohesive management team has an average of over 30 years of relevant experience.
Virgin Islands primarily through a network of independent insurance brokers. Our experienced and cohesive management team has an average of over 30 years of relevant experience. Our goal is to deliver long-term value for our stockholders by growing our business and generating attractive returns.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeHowever, assessing the risk of loss 24 Table of Contents and damage and the range of approaches to address the adverse effects of climate change, including impacts related to extreme weather events and slow onset events, remains a challenge and may materially adversely impact our business, financial condition and results of operations.
Biggest changeWe attempt to manage this exposure through careful and disciplined underwriting, using sophisticated computer models to help assess our exposure to catastrophic events, purchasing extensive reinsurance protection from financially strong counterparties and limiting the concentration of property business by geographic area. 24 Table of Contents However, assessing the risk of loss and damage and the range of approaches to address the adverse effects of climate change, including impacts related to extreme weather events and slow onset events, remains a challenge and may materially adversely impact our business, financial condition and results of operations.
See also "—Adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity could result in the sale of fewer policies than expected or an increase in frequency or severity of claims and premium defaults or both, which, in turn, could affect our growth and profitability." 21 Table of Contents • If claims were to become more frequent, even if we had no liability for those claims, the cost of evaluating such potential claims could escalate beyond the amount of the reserves we have established.
See also "—Adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity could result in the sale of fewer policies than expected or an increase 21 Table of Contents in frequency or severity of claims and premium defaults or both, which, in turn, could affect our growth and profitability." • If claims were to become more frequent, even if we had no liability for those claims, the cost of evaluating such potential claims could escalate beyond the amount of the reserves we have established.
Future loss experience substantially in excess of established reserves could also have a material adverse effect on our future earnings and liquidity and our financial rating.
Future loss experience substantially in excess of established reserves could also have a material adverse effect on our future earnings, liquidity and our financial rating.
These uncertainties can include, but are not limited to, the following: • The models do not address all the possible hazard characteristics of a catastrophe peril (e.g. the precise path and wind speed of a hurricane); • The models may not accurately reflect the true frequency of events; • The models may not accurately reflect a risk's vulnerability or susceptibility to damage for a given event characteristic; • The models may not accurately represent loss potential to insurance or reinsurance contract coverage limits, terms 22 Table of Contents and conditions; and • The models may not accurately reflect the impact on the economy of the area affected or the financial, judicial, political, or regulatory impact on insurance claim payments during or following a catastrophe event.
These uncertainties can include, but are not limited to, the following: • The models do not address all the possible hazard characteristics of a catastrophe peril (e.g. the precise path and wind speed of a hurricane); • The models may not accurately reflect the true frequency of events; • The models may not accurately reflect a risk's vulnerability or susceptibility to damage for a given event 22 Table of Contents characteristic; • The models may not accurately represent loss potential to insurance or reinsurance contract coverage limits, terms and conditions; and • The models may not accurately reflect the impact on the economy of the area affected or the financial, judicial, political, or regulatory impact on insurance claim payments during or following a catastrophe event.
Establishing adequate premium rates is necessary, together with investment income, to generate sufficient revenue to offset losses, loss adjustment expenses and other underwriting costs and to earn a profit.
Establishing adequate premium rates is necessary, together with investment income, to generate sufficient revenue to offset losses, loss adjustment expenses and other underwriting costs to earn a profit.
Approximately 79.6% of our net casualty loss reserves were associated with "occurrence" policies as of December 31, 2023. • Even when a claim is received (irrespective of whether the policy is a "claims made" or "occurrence" basis form), it may take considerable time to fully recognize the extent of the covered loss suffered by the insured and, consequently, estimates of loss associated with specific claims can increase over time. • New theories of liability are enforced retroactively from time to time by courts.
Approximately 83.6% of our net casualty loss reserves were associated with "occurrence" policies as of December 31, 2024. • Even when a claim is received (irrespective of whether the policy is a "claims made" or "occurrence" basis form), it may take considerable time to fully recognize the extent of the covered loss suffered by the insured and, consequently, estimates of loss associated with specific claims can increase over time. • New theories of liability are enforced retroactively from time to time by courts.
As a result, the full extent of liability under our insurance contracts may not be known for many years after a contract is issued. 23 Table of Contents We may be unable to obtain reinsurance coverage at reasonable prices or on terms that adequately protect us. We use reinsurance to help manage our exposure to insurance risks.
As a result, the full extent of liability under our insurance contracts may not be known for many years after a contract is issued. We may be unable to obtain reinsurance coverage at reasonable prices or on terms that adequately protect us. We use reinsurance to help manage our exposure to insurance risks.
In addition, some of these systems include or rely on third-party systems not located on our premises or under our direct control. Events such as natural catastrophes, terrorist attacks, industrial accidents, third-party system or network outages or computer malware may cause our systems to fail or be inaccessible for extended periods of time.
In addition, some of these systems include or rely on third-party systems under our direct control. Events such as natural catastrophes, terrorist attacks, industrial accidents, third-party system or network outages or computer malware may cause our systems to fail or be inaccessible for extended periods of time.
These issues may adversely affect our business by either broadening coverage beyond our underwriting intent or by increasing the number or size of claims. In some instances, these changes may not become apparent until sometime after we have issued insurance contracts that are affected by the changes.
These issues may adversely affect our business by either broadening coverage beyond our underwriting intent or by increasing the number or size of claims. In some instances, these changes may not become apparent until sometime after 23 Table of Contents we have issued insurance contracts that are affected by the changes.
For example, catastrophe models that simulate loss estimates based on a set of assumptions are important tools used by us to estimate our PMLs.
For example, catastrophe models that simulate loss estimates based on a set of assumptions are important tools used to estimate our PMLs.
As of December 31, 2023, we had $300.4 million of aggregate reinsurance balances on paid and unpaid losses and ceded unearned premiums. These risks could cause us to incur increased net losses, and, therefore, adversely affect our financial condition. We may act based on inaccurate or incomplete information regarding the accounts we underwrite.
As of December 31, 2024, we had $390.6 million of aggregate reinsurance balances on paid and unpaid losses and ceded unearned premiums. These risks could cause us to incur increased net losses, and, therefore, adversely affect our financial condition. We may act based on inaccurate or incomplete information regarding the accounts we underwrite.
Our business depends on our information technology and telecommunications systems, including our browser-based underwriting system.
Our business depends on our information technology and telecommunications systems, including our web-based underwriting system.
Many reinsurance companies have begun to exclude certain coverages from, or alter terms in, the reinsurance contracts we enter into with them. Some exclusions are with respect to risks that we cannot exclude in policies we write due to business or regulatory constraints.
Many reinsurance companies have begun to exclude certain coverages from, or alter terms in, the reinsurance contracts we enter into with them. Some exclusions relate to risks that we cannot exclude due to business or regulatory constraints.
Dividend payments are further limited to that part of available policyholder surplus which is derived from net profits on our business. The maximum amount of dividends Kinsale Insurance could pay us during 2023 without regulatory approval is $257.3 million.
Dividend payments are further limited to that part of available policyholder surplus which is derived from net profits on our business. The maximum amount of dividends Kinsale Insurance could pay us during 2025 without regulatory approval is $351.9 million.
Our business relies on certain third-party software obtained under licenses from other companies. We anticipate that we will continue to rely on such third-party software in the future. Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, this may not always be the case, or it may be difficult or costly to replace.
Our business relies on certain third-party software obtained under licenses from other companies. Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, this may not always be the case, or it may be difficult or costly to replace.
These securities are carried on the consolidated balance sheet at fair value and are subject to potential losses and declines in value, which may never recover. Our equity investments totaled $234.8 million as of December 31, 2023.
These securities are carried on the consolidated balance sheet at fair value and are subject to potential losses and declines in value, which may never recover. Our equity investments totaled $398.4 million as of December 31, 2024.
As part of the reserving process, we review historical data and consider the impact of such factors as: • claims inflation, which is the sustained increase in cost of raw materials, labor, medical services and other components of claims cost; • claims development patterns by line of business and by "claims made" versus "occurrence" policies; • legislative activity; • social and economic patterns; and • litigation, judicial and regulatory trends.
As part of the reserving process, we review historical data and consider the impact of such factors as: • claims inflation, which is the sustained increase in cost of raw materials, labor, medical services and other components of claims cost; • claims development patterns by line of business and by "claims made" versus "occurrence" policies; • legislative activity; • social and economic patterns; and • litigation, judicial and regulatory trends (e.g., increased litigation, higher jury awards and third-party litigation funding, among others).
We use third-party vendor analytic and modeling capabilities to provide us with objective risk assessment relating to other risks in our reinsurance portfolio.
We use third-party vendor models to provide us with objective risk assessment relating to other risks in our reinsurance portfolio.
As of December 31, 2023, we had outstanding borrowings of $183.8 million, net of debt issuance costs, in the aggregate under our two bank credit agreements.
As of December 31, 2024, we had outstanding borrowings of $184.1 million, net of debt issuance costs, in the aggregate under our two bank credit agreements.
Three examples of unanticipated risks that have adversely affected the insurance industry are: • Asbestos liability applied to manufacturers of products and contractors who installed those products. • Apportionment of liability arising from subsidence claims assigned to subcontractors who may have been involved in mundane tasks (such as installing sheetrock in a home). • Court decisions, such as the 1995 Montrose decision in California, that read policy exclusions narrowly so as to expand coverage, thereby requiring insurers to create and write new exclusions.
Examples of unanticipated risks that have adversely affected the insurance industry are: • Asbestos liability applied to manufacturers of products and contractors who installed those products. • Apportionment of liability arising from subsidence claims assigned to subcontractors who may have been involved in mundane tasks (such as installing sheetrock in a home). • Court decisions, such as the 1995 Montrose decision in California, that read policy exclusions narrowly so as to expand coverage, thereby requiring insurers to create and write new exclusions. • An increase in class action lawsuits and cases assigned to Multi-District Litigation (MDL), which often lengthens claim duration and increases legal expenses.
While policy terms and conditions in the lines of business we write preclude coverage for virus-related claims, court decisions and governmental actions may challenge the validity of any exclusions or our interpretation of how such terms and conditions operate.
While policy terms and conditions in the lines of business we write preclude coverage for virus-related claims, court decisions and governmental actions may challenge the validity of any exclusions or our interpretation of how such terms and conditions operate. Global climate change may have a material adverse effect on our financial results.
Of our 2023 gross written premiums, 63.4%, or $994.6 million, were distributed through five of our approximately 187 brokers, three of which accounted for 49.8%, or $781.9 million, of our 2023 gross written premiums. Our relationship with any of these brokers may be discontinued at any time.
Of our 2024 gross written premiums, 62.3%, or $1.2 billion, were distributed through five of our approximately 197 brokers, three of which accounted for 48.4%, or $905.8 million, of our 2024 gross written premiums. Our relationship with any of these brokers may be discontinued at any time.
Our results of operations depend, in part, on the performance of our investment portfolio. We seek to hold a high-quality, diversified portfolio of investments that is largely managed by professional investment advisory management firms in accordance with our investment policy and routinely reviewed by our Investment Committee.
We seek to hold a high-quality, diversified portfolio of investments that is largely managed by professional investment advisory management firms in accordance with our investment policy and routinely reviewed by our Investment Committee. However, our investments are subject to general economic conditions and market risks as well as risks inherent to particular securities.
Cloud provider service failure or control weakness could adversely affect our business. We employ cloud-based services to host the majority of our applications and intend to continue and expand our use.
We will continue to look for opportunities to deploy these tools to aid in decision making processes but cannot guarantee that the risks will be completely eliminated. Cloud provider service failure or control weakness could adversely affect our business. We employ cloud-based services to host the majority of our applications and intend to continue and expand our use.
We could become involved in litigation with our customers, or become the target of class action lawsuits and other types of litigation, some of which involve claims for substantial or indeterminate amounts, and the outcomes of which are unpredictable. This litigation may be based on a variety of issues, including insurance and claim settlement practices.
We could become involved in litigation with our customers, or become the target of class action lawsuits and other types of litigation, some of which involve claims for substantial or indeterminate amounts. The outcomes of litigation are inherently uncertain and can be influenced by evolving legal trends, including third-party litigation funding.
While we conduct due diligence on these cloud providers with respect to their security and business controls, we may not have the visibility to effectively monitor the implementation and efficacy of these controls. Outside parties may be able to circumvent controls or exploit vulnerabilities, resulting in operational disruption, data loss, defects or a security event.
While we conduct due diligence on these cloud providers with respect to their security and business controls, these are point-in-time assessments, and we may not have the visibility to effectively monitor the continuous implementation and efficacy of these controls.
Global climate change may have a material adverse effect on our financial results. Climate change could have a significant impact on longer-term natural weather trends, including increases in severe weather and catastrophic events. The incidence and severity of catastrophes are inherently unpredictable.
Climate change could have a significant impact on longer-term natural weather trends, including increases in severe weather and catastrophic events.
We cannot predict with any certainty whether we will be involved in such litigation in the future or what impact such litigation would have on our business. Risks Related to Our Investment Portfolio Performance of our investment portfolio is subject to a variety of investment risks that may adversely affect our financial results.
This litigation may be based on a variety of issues, including insurance and claim settlement practices. We cannot predict with any certainty whether we will be involved in such litigation in the future or what impact such litigation would have on our business.
However, our investments are subject to general economic conditions and market risks as well as risks inherent to particular securities. Our primary market risk exposures are to changes in interest rates and equity prices.
Our primary market risk exposures are to changes in interest rates and equity prices.
Migrating to the cloud increases the risk of operational disruption should internet service be interrupted.
Outside parties may be able to circumvent controls or exploit vulnerabilities, resulting in operational disruption, data loss, defects or a security event. Operating in the cloud increases the risk of operational disruption should internet service be interrupted.
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We are closely monitoring the impact of the COVID-19 pandemic and the related economic impact on all aspects of our business, including its impact on premium volume, the fair value of our investment portfolio and loss reserves, as well as the potential for delayed reporting and settlement of claims.
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We are aware that generative AI tools may respond with inaccurate or fabricated information, introduce bias or fail to provide traceability of source information and have taken steps to train employees on these issues as well to avoid using these tools as primary decision processes.
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We attempt to manage this exposure through careful and disciplined underwriting, using sophisticated computer models to help assess our exposure to catastrophic events, purchasing extensive reinsurance protection from financially strong counterparties and limiting the concentration of property business by geographic area.
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Risks Related to Our Investment Portfolio Performance of our investment portfolio is subject to a variety of investment risks that may adversely affect our financial results. Our results of operations depend, in part, on the performance of our investment portfolio.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeManagement informs the Audit Committee about prevention, detection, mitigation and remediation of cybersecurity incidents at least annually and monitors such matters continuously.
Biggest changeManagement informs the Audit Committee about prevention, detection, mitigation and remediation of cybersecurity incidents at least semi-annually and monitors such matters continuously. In 2025, the oversight over the Company's cybersecurity risk will transition from the Audit Committee to the Board of Directors ("the Board") to align with the Board's oversight of operational risks.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeEffective January 3, 2022, the Company transferred its common stock listing from the Nasdaq to the New York Stock Exchange ("NYSE") and continued to trade under its current symbol "KNSL." As of February 16, 2024, we had 120 stockholders of record of our common stock.
Biggest changeEffective January 3, 2022, the Company transferred its common stock listing from the Nasdaq to the New York Stock Exchange ("NYSE") and continued to trade under its current symbol "KNSL." As of February 14, 2025, we had 137 stockholders of record of our common stock.
See "Risk Factors – Risks Related to Our Business and Our Industry – Because we are a holding company and substantially all of our operations are conducted by our insurance subsidiary, our ability to pay dividends and service our debt obligations depends on our ability to obtain cash dividends or other permitted payments from our insurance subsidiary" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources." 37 Table of Contents Performance Graph The performance graph compares the cumulative total shareholder return of an investment in (1) our common stock, (2) the cumulative total returns to S&P 500 and (3) the cumulative total returns to the S&P 500 P&C Index for the period from December 31, 2018 through December 31, 2023.
See "Risk Factors – Risks Related to Our Business and Our Industry – Because we are a holding company and substantially all of our operations are conducted by our insurance subsidiary, our ability to pay dividends and service our debt obligations depends on our ability to obtain cash dividends or other permitted payments from our insurance subsidiary" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources." 37 Table of Contents Performance Graph The performance graph compares the cumulative total shareholder return of an investment in (1) our common stock, (2) the cumulative total returns to S&P 500 and (3) the cumulative total returns to the S&P 500 P&C Index for the period from December 31, 2019 through December 31, 2024.
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December 31, 2018 2019 2020 2021 2022 2023 Kinsale Capital Group, Inc. $ 100.00 $ 183.67 $ 362.33 $ 431.74 $ 475.64 $ 610.12 S&P 500 $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 S&P 500 P&C Index $ 100.00 $ 125.87 $ 134.63 $ 160.58 $ 190.89 $ 211.53 38 Table of Contents Item 6.
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December 31, 2019 2020 2021 2022 2023 2024 Kinsale Capital Group, Inc. $ 100.00 $ 197.28 $ 235.07 $ 258.97 $ 332.19 $ 461.94 S&P 500 $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 S&P 500 P&C Index $ 100.00 $ 106.96 $ 127.58 $ 151.65 $ 168.05 $ 227.67 38 Table of Contents Issuer Purchases of Equity Securities The table below sets forth information regarding repurchases by the Company of its common stock during the periods indicated.
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Period Beginning Period Ending Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (1) Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) October 1, 2024 October 31, 2024 22,626 $ 441.95 22,626 $ 90.0 November 1, 2024 November 30, 2024 — $ — — $ 90.0 December 1, 2024 December 31, 2024 — $ — — $ 90.0 Total 22,626 $ 441.95 22,626 $ 90.0 (1) In October 2024, the Company's Board of Directors authorized a share repurchase program authorizing the repurchase of up to $100.0 million of the Company's common stock.
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The shares may be repurchased from time to time in open market purchases, privately-negotiated transactions, block purchases, accelerated share repurchase agreements or a combination of methods and pursuant to safe harbors provided by Rule 10b-18 and Rule 10b5-1 under the Securities Exchange Act of 1934.
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The timing, manner, price and amount of any repurchases under the share repurchase program will be determined by the Company in its discretion. The stock repurchase program does not require the Company to repurchase any specific number of shares and may be modified, suspended or terminated at any time. 39 Table of Contents Item 6. Reserved

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table summarizes the effect of the factors indicated above on the loss ratios for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 ($ in thousands) Losses and Loss Adjustment Expenses % of Sum of Earned Premiums and Fee Income Losses and Loss Adjustment Expenses % of Sum of Earned Premiums and Fee Income Loss ratio: Current accident year $ 631,407 57.4 % $ 467,182 57.4 % Current accident year - catastrophe losses 4,586 0.4 % 26,618 3.3 % Effect of prior year development (35,774) (3.2) % (35,887) (4.4) % Total $ 600,219 54.6 % $ 457,913 56.3 % 45 Table of Contents Expense ratio The following table summarizes the components of the expense ratio for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 ($ in thousands) Underwriting Expenses % of Sum of Earned Premiums and Fee Income Underwriting Expenses % of Sum of Earned Premiums and Fee Income Net commissions incurred 113,717 10.3 % 93,756 11.5 % Other underwriting expenses 115,253 10.5 % 86,566 10.7 % Underwriting, acquisition, and insurance expenses $ 228,970 20.8 % $ 180,322 22.2 % The expense ratio was 20.8% for the year ended December 31, 2023 compared to 22.2% for the year ended December 31, 2022.
Biggest changeAs previously discussed, the increase was due to growth in gross written premiums in 2024 compared to 2023. 45 Table of Contents Loss ratio The following table summarizes the effect of the factors indicated above on the loss ratios for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 ($ in thousands) Losses and Loss Adjustment Expenses % of Sum of Earned Premiums and Fee Income Losses and Loss Adjustment Expenses % of Sum of Earned Premiums and Fee Income Loss ratio: Current accident year $ 785,036 56.7 % $ 631,407 57.4 % Current accident year - catastrophe losses 25,518 1.8 % 4,586 0.4 % Effect of prior year development (37,655) (2.7) % (35,774) (3.2) % Total $ 772,899 55.8 % $ 600,219 54.6 % Our loss ratio was 55.8% for the year ended December 31, 2024 compared to 54.6% for the year ended December 31, 2023.
We focus exclusively on the E&S market in the U.S., where we use our underwriting expertise to write coverages for hard-to-place, small- to medium-sized business risks and personal lines risks. We market and sell these insurance products in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S.
We focus exclusively on the E&S market in the U.S., where we use our underwriting expertise to write coverages for hard-to-place, small- to medium-sized business risks and personal lines risks. We sell these insurance products in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S.
Management believes there is sufficient liquidity available at the holding company and in its insurance subsidiary, Kinsale Insurance, as well as in its other operating subsidiaries, to meet its operating cash needs and obligations for the next 12 months. Real Estate Investment In December of 2022, we acquired real estate property adjacent to our current headquarters for $76.6 million.
Management believes there is sufficient liquidity available at the holding company and in its insurance subsidiary, Kinsale Insurance, as well as in its other operating subsidiaries, to meet its operating cash needs and obligations for the next 12 months. Real Estate In December of 2022, we acquired real estate property adjacent to our current headquarters for $76.6 million.
We perform several procedures to ascertain the reasonableness of investment values included in the consolidated financial statements at December 31, 2023, including (1) obtaining and reviewing the internal control report from our investment accounting vendor that obtains fair values from third party pricing services, (2) discussing with our investment accounting vendor its process for reviewing and validating pricing obtained from outside pricing services and (3) reviewing the security pricing received from our investment accounting vendor and monitoring changes in unrealized gains and losses at the individual security level.
We perform several procedures to ascertain the reasonableness of investment values included in the consolidated financial statements at December 31, 2024, including (1) obtaining and reviewing the internal control report from our investment accounting vendor that obtains fair values from third party pricing services, (2) discussing with our investment accounting vendor its process for reviewing and validating pricing obtained from outside pricing services and (3) reviewing the security pricing received from our investment accounting vendor and monitoring changes in unrealized gains and losses at the individual security level.
See Note 8 to the consolidated financial statements and "—Critical Accounting Estimates" for a discussion of reinsurance recoverables. Debt As of December 31, 2023, we had $125.0 million of 5.15% Series A Senior Notes outstanding. Principal payments are required annually beginning on July 22, 2030 in equal installments of $25.0 million through July 22, 2034, the maturity date.
See Note 8 to the consolidated financial statements and "—Critical Accounting Estimates" for a discussion of reinsurance recoverables. Debt As of December 31, 2024, we had $125.0 million of 5.15% Series A Senior Notes outstanding. Principal payments are required annually beginning on July 22, 2030 in equal installments of $25.0 million through July 22, 2034, the maturity date.
While we believe that loss reserves at December 31, 2023 are adequate, new information, events, or circumstances may result in ultimate losses that are materially greater or less than our estimates. As previously noted, there are many factors that may cause reserves to increase or decrease, particularly those related to catastrophe losses and long-tailed lines of business.
While we believe that loss reserves at December 31, 2024 are adequate, new information, events, or circumstances may result in ultimate losses that are materially greater or less than our estimates. As previously noted, there are many factors that may cause reserves to increase or decrease, particularly those related to catastrophe losses and long-tailed lines of business.
See Note 11 for further information regarding the Note Purchase Agreement. 48 Table of Contents In July 2022, we entered into an Amended and Restated Credit Agreement, which extended the maturity date to July 22, 2027, and increased the aggregate commitment to $100.0 million, with the option to increase the aggregate commitment by $30.0 million, subject to certain conditions.
See Note 11 for further information regarding the Note Purchase Agreement. In July 2022, we entered into an Amended and Restated Credit Agreement, which extended the maturity date to July 22, 2027, and increased the aggregate commitment to $100.0 million, with the option to increase the aggregate 49 Table of Contents commitment by $30.0 million, subject to certain conditions.
As of December 31, 2023, we had $11.0 million outstanding under the Amended and Restated Credit Agreement, which has a maturity of July 22, 2027. Interest on the outstanding amounts is based on 3-month Adjusted Term SOFR plus a margin of 1.625%. Interest accrues over the term of the interest rate and is payable in arrears.
As of December 31, 2024, we had $11.0 million outstanding under the Amended and Restated Credit Agreement, which has a maturity of July 22, 2027. Interest on the outstanding amounts is based on 3-month Adjusted Term SOFR plus a margin of 1.625%. Interest accrues over the term of the interest rate and is payable in arrears.
We may use the proceeds from these sources to contribute funds to Kinsale Insurance in order to support premium growth, reduce our reliance on reinsurance, pay dividends and taxes and for other business purposes. We receive corporate service fees from Kinsale Insurance to reimburse us for most of the operating expenses that we incur.
We may use the proceeds from these sources to contribute funds to Kinsale Insurance in order to support premium growth, reduce our reliance on reinsurance, pay dividends and taxes, repurchase shares and for other business purposes. We receive corporate service fees from Kinsale Insurance to reimburse us for most of the operating expenses that we incur.
Interest accrues quarterly and is payable in arrears. As of December 31, 2023, we had $50.0 million of the 6.21% Series B Senior Note outstanding. Principal payments are required annually beginning on July 22, 2030 in equal installments of $10.0 million through July 22, 2034, the maturity date. Interest accrues quarterly and is payable in arrears.
Interest accrues quarterly and is payable in arrears. As of December 31, 2024, we had $50.0 million of the 6.21% Series B Senior Note outstanding. Principal payments are required annually beginning on July 22, 2030 in equal installments of $10.0 million through July 22, 2034, the maturity date. Interest accrues quarterly and is payable in arrears.
Level 2 - Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs. 60 Table of Contents Level 3 - Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value measurement.
Level 2 - Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs. 62 Table of Contents Level 3 - Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value measurement.
See "—Reconciliation of Non-GAAP Financial Measures" for a reconciliation of net income in accordance with GAAP to net operating earnings. 43 Table of Contents (3) The combined ratio is the sum of the loss ratio and expense ratio as presented. Calculations of each component may not add due to rounding.
See "—Reconciliation of Non-GAAP Financial Measures" for a reconciliation of net income in accordance with GAAP to net operating earnings. 44 Table of Contents (3) The combined ratio is the sum of the loss ratio and expense ratio as presented. Calculations of each component may not add due to rounding.
Each of the impacts described below is estimated individually, without consideration for any correlation among key indicators or among lines of business. Therefore, it would be inappropriate to take each of the amounts described below and add them together in an attempt to estimate volatility for our reserves in total.
Each of the impacts described below is estimated individually, without consideration for any correlation among key indicators or among lines of business. Therefore, it would be inappropriate to take each of the amounts described below and add them together to estimate volatility for our reserves in total.
(4) Operating return on equity is net operating earnings expressed as a percentage of average beginning and ending stockholders’ equity during the period. 56 Table of Contents Reconciliation of tangible stockholders' equity Tangible stockholders’ equity is a non-GAAP financial measure. We define tangible stockholders’ equity as stockholders’ equity less intangible assets, net of deferred taxes.
(4) Operating return on equity is net operating earnings expressed as a percentage of average beginning and ending stockholders’ equity during the period. 58 Table of Contents Reconciliation of tangible stockholders' equity Tangible stockholders’ equity is a non-GAAP financial measure. We define tangible stockholders’ equity as stockholders’ equity less intangible assets, net of deferred taxes.
Refer to Note 7 to the consolidated financial statements for discussion on our reserve development for the years ended December 31, 2023 and 2022. Fair value measurements Like other accounting estimates, fair value measurements may be based on subjective information and generally involve uncertainty and judgment.
Refer to Note 7 to the consolidated financial statements for discussion on our reserve development for the years ended December 31, 2024 and 2023. Fair value measurements Like other accounting estimates, fair value measurements may be based on subjective information and generally involve uncertainty and judgment.
Key assumptions Expected loss ratios are a key assumption in estimates of ultimate losses for business at an early stage of development. A higher expected loss ratio results in a higher ultimate loss estimate, and vice versa. Assumed loss development patterns are another significant assumption in estimating loss reserves.
Key assumptions Expected loss ratios are a key assumption in estimates of ultimate losses for business at an early stage of development. A higher expected loss ratio results in a higher ultimate loss estimate, and vice versa. Estimated loss development patterns are another significant assumption in estimating loss reserves.
Including the reinstatement provision, the maximum aggregate loss recovery limit is $255.0 million and is in addition to the coverage provided by our other property reinsurance. Reinsurance contracts do not relieve us from our obligations to policyholders.
Including the reinstatement provision, the maximum aggregate loss recovery limit is $350.0 million and is in addition to the coverage provided by our other property reinsurance. Reinsurance contracts do not relieve us from our obligations to policyholders.
It is difficult to fully evaluate the impact of major catastrophic events on the financial stability of reinsurers, as well as the access to capital that reinsurers may have when such 61 Table of Contents events occur.
It is difficult to fully evaluate the impact of major catastrophic events on the financial stability of reinsurers, as well as the access to capital that reinsurers may have when such 63 Table of Contents events occur.
Underwriting income is a non-GAAP financial measure. We define underwriting income as net income, excluding net investment income, net change in the fair value of equity securities, net realized investment gains and losses, change in allowance for credit losses on investments, interest expense, other income, other expenses and income tax 41 Table of Contents expense.
Underwriting income is a non-GAAP financial measure. We define underwriting income as net income, excluding net investment income, net change in the fair value of equity securities, net realized investment gains and losses, change in allowance for credit losses on investments, interest expense, other income, other expenses and income tax expense.
During each quarter, the Reserve Committee reviews the emergence of actual losses relative to expectations by line of business to assess whether the assumptions used in the reserving process continue to form a reasonable basis for the projection of liabilities for those product lines.
During each quarter, the Reserve Committee 60 Table of Contents reviews the emergence of actual losses relative to expectations by line of business to assess whether the assumptions used in the reserving process continue to form a reasonable basis for the projection of liabilities for those product lines.
At December 31, 2023, we recorded an allowance for credit losses of $0.7 million related to our reinsurance balances. Ratings Kinsale Insurance has a financial strength rating of "A" (Excellent) from A.M. Best. A.M. Best assigns ratings to insurance companies, which currently range from "A++" (Superior) to "F" (In Liquidation). "A" (Excellent) is the third highest rating issued by A.M.
At December 31, 2024, we recorded an allowance for credit losses of $0.9 million related to our reinsurance balances. Ratings Kinsale Insurance has a financial strength rating of "A" (Excellent) from A.M. Best. A.M. Best assigns ratings to insurance companies, which currently range from "A++" (Superior) to "F" (In Liquidation). "A" (Excellent) is the third highest rating issued by A.M.
See "Forward-Looking Statements." Year ended December 31, 2022 compared to year ended December 31, 2021 For a comparison of years ended December 31, 2022 and December 2021, see “Part II, Item 7.
See "Forward-Looking Statements." Year ended December 31, 2023 compared to year ended December 31, 2022 For a comparison of years ended December 31, 2023 and December 2022, see “Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on February 24, 2023. Overview Founded in 2009, we are an established and growing specialty insurance company.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 23, 2024. Overview Founded in 2009, we are an established and growing specialty insurance company.
Recent Accounting Pronouncements Refer to Note 1 – "Summary of significant accounting policies" of the Notes to Consolidated Financial Statements for further discussion. 62 Table of Contents
Recent Accounting Pronouncements Refer to Note 1 – "Summary of significant accounting policies" of the Notes to Consolidated Financial Statements for further discussion. 64 Table of Contents
Our reserving methodology uses a loss reserving model that calculates a point estimate for our ultimate losses. Although we believe that our assumptions and methodology are reasonable, our ultimate payments may vary, potentially materially, from the estimates we have made. In addition, we retain an independent actuary annually to review our reserve levels.
Our reserving methodology uses a loss reserving model that calculates a point estimate for our ultimate losses. Although we believe that our assumptions and methodology are reasonable, our ultimate payments may vary, potentially materially, from the estimates we have made. In addition, we retain an independent actuary annually to review our estimate of reserves.
Accordingly, Kinsale may receive cash through (1) loans from banks, (2) issuance of equity and debt securities, (3) corporate service fees from our insurance subsidiary, (4) payments from our subsidiaries pursuant to our consolidated tax allocation agreement and other transactions and (5) dividends from our insurance subsidiary.
Accordingly, Kinsale primarily receives cash through (1) loans from banks, (2) issuance of equity and debt securities, (3) corporate service fees from our insurance subsidiary, (4) payments from our subsidiaries pursuant to our consolidated tax allocation agreement and other transactions and (5) dividends from our insurance subsidiary.
Best financial strength ratings of "A-" (Excellen t) or better. Based on our evaluation of the factors discussed above, the allowance for credit losses related to reinsuran ce balances was $0.7 million at December 31, 2023.
Best financial strength ratings of "A-" (Excellen t) or better. Based on our evaluation of the factors discussed above, the allowance for credit losses related to reinsuran ce balances was $0.9 million at December 31, 2024.
Loss ratio , expressed as a percentage, is the ratio of losses and loss adjustment expenses to the sum of net earned premiums and fee income. Expense ratio , expressed as a percentage, is the ratio of underwriting, acquisition and insurance expenses to the sum of net earned premiums and fee income.
Loss ratio , expressed as a percentage, is the ratio of losses and loss adjustment expenses to the sum of net earned premiums and fee income. 42 Table of Contents Expense ratio , expressed as a percentage, is the ratio of underwriting, acquisition and insurance expenses to the sum of net earned premiums and fee income.
See also "Risk Factors — Risks Related to Our Business and Our Industry — Because we are a holding company and substantially all of our operations are conducted by our insurance subsidiary, our ability to pay dividends depends on our ability to obtain cash dividends or other permitted payments from our insurance subsidiary." As of December 31, 2023, our holding company had $17.1 million in cash and investments, compared to $34.8 million as of December 31, 2022 .
See also "Risk Factors — Risks Related to Our Business and Our Industry — Because we are a holding company and substantially all of our operations are conducted by our insurance subsidiary, our ability to pay dividends depends on our ability to obtain cash dividends or other permitted payments from our insurance subsidiary." As of December 31, 2024, our holding company had $12.3 million in cash and investments, compared to $17.1 million as of December 31, 2023 .
Our investment portfolio, excluding cash equivalents and unrealized gains and losses, had a gross investment return of 4.0% as of December 31, 2023, compared to 3.0% as of December 31, 2022.
Our investment portfolio, excluding cash equivalents and unrealized gains and losses, had a gross investment return of 4.4% as of December 31, 2024, compared to 4.0% as of December 31, 2023.
As of December 31, 2023 , Kinsale Insurance has only contracted with reinsurers with A.M. Best financial strength rati ngs of "A-" (Ex cellent) or better. At December 31, 2023, the net reinsurance receivable, defined as the sum of paid and unpaid reinsurance recoverables, ceded unearned premiums less reinsurance payables, from five reinsurers represented 67.7% of the total balance.
As of December 31, 2024 , Kinsale Insurance has only contracted with reinsurers with A.M. Best financial strength rati ngs of "A-" (Ex cellent) or better. At December 31, 2024, the net reinsurance receivable, defined as the sum of paid and unpaid reinsurance recoverables, ceded unearned premiums less reinsurance payables, from five reinsurers represented 62.2% of the total balance.
Investment portfolio At December 31, 2023, o ur cash and invested assets of $3.1 billion consisted of fixed-maturity securities, cash and cash equivalents, equity securities, short-term investments and real estate investments. At December 31, 2023, the majority of the investment portfolio was comprised of fixed-maturity securities of $2.7 billion that were classified as available-for-sale.
Investment portfolio At December 31, 2024, o ur cash and invested assets of $4.1 billion consisted of fixed-maturity securities, cash and cash equivalents, equity securities, short-term investments and real estate investments. At December 31, 2024, the majority of the investment portfolio was comprised of fixed-maturity securities of $3.5 billion that were classified as available-for-sale.
In excess of loss reinsurance, the premium payable to the reinsurer is negotiated by the parties based on their assessment of the amount of risk being ceded to the reinsurer because the reinsurer does not share proportionately in the ceding company's losses. 50 Table of Contents For the year ended December 31, 2023, property insurance represented 32.7% of our gross written premiums.
In excess of loss reinsurance, the premium payable to the reinsurer is negotiated by the parties based on their assessment of the amount of risk being ceded to the reinsurer because the reinsurer does not share proportionately in the ceding company's losses. For the year ended December 31, 2024, property insurance represented 32.6% of our gross written premiums.
The actuarial consulting firm prepares its own estimate of our reserves for loss and loss adjustment expenses, and we compare their estimate to the reserves for losses and loss adjustment expenses reviewed and approved by the Reserve Committee in order to gain additional comfort on the adequacy of those reserves.
The actuarial consulting firm prepares its own estimate of unpaid loss and loss adjustment expenses, and we compare its estimate to the reserves for losses and loss adjustment expenses reviewed and approved by the Reserve Committee to gain additional comfort on the adequacy of those reserves.
The fair value of our restricted assets was $5.8 million and $5.9 million at December 31, 2023 and 2022, respectively. 54 Table of Contents Reconciliation of Non-GAAP Financial Measures Reconciliation of underwriting income Underwriting income is a non-GAAP financial measure that we believe is useful in evaluating our underwriting performance without regard to investment income.
The fair value of our restricted assets was $3.7 million and $5.8 million at December 31, 2024 and 2023, respectively. 56 Table of Contents Reconciliation of Non-GAAP Financial Measures Reconciliation of underwriting income Underwriting income is a non-GAAP financial measure that we believe is useful in evaluating our underwriting performance without regard to investment income.
Direct commissions paid as a percent of gross written premiums was 14.5% and 14.6% for the years ended December 31, 2023 and 2022, respectively.
Direct commissions paid as a percent of gross written premiums was 14.7% and 14.5% for the years ended December 31, 2024 and 2023, respectively.
We categorize our reserves for unpaid losses and loss adjustment expenses into two types: case reserves and reserves for incurred but not reported losses ("IBNR"). Our gross reserves for losses and loss adjustment expenses at December 31, 2023 were $1.7 billion, and of this amount, 90.4% related to IBNR.
We categorize our reserves for unpaid losses and loss adjustment expenses into two types: case reserves and reserves for incurred but not reported losses ("IBNR"). Our gross reserves for losses and loss adjustment expenses at December 31, 2024 were $2.3 billion, and of this amount, 90.4% related to IBNR.
The amount of the individual claim reserve is based on the most recent information available. Methodology IBNR reserves are determined using actuarial methods to estimate losses that have occurred but have not yet been reported to us. We principally use the incurred Bornhuetter-Ferguson actuarial method ("BF method") to arrive at our loss reserve estimates for each line of business.
The amount of the individual claim reserve is based on the most recent information available. Methodology IBNR reserves are determined using actuarial methods to estimate losses that have occurred but have not yet been reported to us. We use several actuarial methods to arrive at our IBNR reserve estimates for each line of business.
During the year ended December 31, 2023, the increase in the fair value of equity securities of $15.3 million was comprised of unrealized gains related to ETFs and common stocks of $12.8 million and unrealized gains related to non-redeemable preferred stock of $2.5 million.
During the year ended December 31, 2023, the change in the fair value of equity securities of $15.3 million included changes in unrealized gains related to ETFs and common stocks of $12.8 million and unrealized gains related to non-redeemable preferred stock of $2.5 million.
The Arkansas statute also requires that dividends and other distributions be paid out of positive unassigned surplus without prior approval. The maximum amount of dividends Kinsale Insurance can pay us during 2024 without regulatory approval is $257.3 million.
The Arkansas statute also requires that dividends and other distributions be paid out of positive unassigned surplus without prior approval. The maximum amount of dividends Kinsale Insurance can pay us during 2025 without regulatory approval is $351.9 million.
Our net retention ratio was 80.6% for the year ended December 31, 2023 compared to 85.0% for the year ended December 31, 2022.
Our net retention ratio was 79.0% for the year ended December 31, 2024 compared to 80.6% for the year ended December 31, 2023.
Stockholders' equity at December 31, 2023 and 2022 reconciles to tangible stockholders' equity as follows: December 31, ($ in thousands) 2023 2022 Stockholders' equity $ 1,086,832 $ 745,449 Less: Intangible assets, net of deferred taxes 2,795 2,795 Tangible stockholders' equity $ 1,084,037 $ 742,654 Critical Accounting Estimates We identified the accounting estimates which are critical to the understanding of our financial position and results of operations.
Stockholders' equity at December 31, 2024 and 2023 reconciles to tangible stockholders' equity as follows: December 31, ($ in thousands) 2024 2023 Stockholders' equity $ 1,483,561 $ 1,086,832 Less: Intangible assets, net of deferred taxes 2,795 2,795 Tangible stockholders' equity $ 1,480,766 $ 1,084,037 Critical Accounting Estimates We identified the accounting estimates which are critical to the understanding of our financial position and results of operations.
Effective June 1, 2023, we purchased catastrophe reinsurance coverage of $127.5 million per event in excess of our $47.5 million per event retention. Our property catastrophe reinsurance includes a reinstatement provision which requires us to pay reinstatement premiums after a loss has occurred in order to preserve coverage.
Effective June 1, 2024, we purchased catastrophe reinsurance coverage of $175.0 million per event in excess of our $60.0 million per event retention. Our property catastrophe reinsurance includes a reinstatement provision which requires us to pay reinstatement premiums after a loss has occurred in order to preserve coverage.
The decrease in the expense ratio was primarily due to lower relative net commissions due to higher ceding commissions earned under the commercial property quota share treaty as a result of commercial property premium growth and a higher cession rate on the commercial property quota share treaty effective June 2023.
The decrease in the expense ratio was primarily due to lower relative net commissions as a result of higher ceding commissions earned under the commercial property quota share treaty as a result of commercial property premium growth.
This dividend was paid on June 13, 2023 to all stockholders of record on May 31, 2023. On August 16, 2023, the Company’s Board of Directors declared a cash dividend of $0.14 per share of common stock. This dividend was paid on September 12, 2023 to all stockholders of record on August 29, 2023.
On May 15, 2024, the Company’s Board of Directors declared a cash dividend of $0.15 per share of common stock. This dividend was paid on June 13, 2024 to all stockholders of record on May 31, 2024. On August 14, 2024, the Company’s Board of Directors declared a cash dividend of $0.15 per share of common stock.
The increase in cash provided by operating activities in 2023 compared to 2022 was due primarily to growth in business and the timing of claim payments and reinsurance recoveries. 49 Table of Contents For the year ended December 31, 2023, net cash used in investing activities of $860.9 million reflected growth in our business operations.
The increase in cash provided by operating activities in 2024 compared to 2023 was due primarily to growth in business and the timing of claim payments and reinsurance recoveries. For the year ended December 31, 2024, net cash used in investing activities of $960.1 million reflected growth in our business operations.
A 5% change in net IBNR reserves would equate to a $65.7 million change in the reserve for losses and loss adjustment expenses at such date, as well as a $51.9 million change in net income, a 4.8% change in both stockholders' equity and tangible stockholders' equity, in each case at or for the year ended December 31, 2023.
A 5% change in net IBNR reserves would equate to a $88.4 million change in the reserve for losses and 59 Table of Contents loss adjustment expenses at such date, as well as a $69.8 million change in net income, a 4.7% change in both stockholders' equity and tangible stockholders' equity, in each case at or for the year ended December 31, 2024.
In general, our losses and loss adjustment expenses are affected by: • Frequency of claims associated with the particular types of insurance contracts that we write; • Trends in the average size of losses incurred on a particular type of business; • Mix of business written by us; • Changes in the legal or regulatory environment related to the business we write; • Trends in legal defense costs; • Wage inflation; • Social inflation; • Inflation in material costs, and • Inflation in medical costs. 40 Table of Contents Losses and loss adjustment expenses are based on an actuarial analysis of the estimated losses, including losses incurred during the period and changes in estimates from prior periods.
In general, our losses and loss adjustment expenses are affected by: • Frequency of claims associated with the particular types of insurance contracts that we write; • Trends in the average size of losses incurred on a particular type of business; • Mix of business written by us; • Changes in the legal or regulatory environment related to the business we write; • Trends in legal defense costs; • Wage inflation; • Social inflation; • Inflation in material costs, and • Inflation in medical costs.
The decrease in the loss ratio for the year ended December 31, 2023 was due primarily to lower catastrophe losses incurred during the period, offset in part by lower relative net favorable development of loss reserves from prior accident years.
The increase in the loss ratio for the year ended December 31, 2024 was due primarily to higher catastrophe losses incurred during the period and lower relative net favorable development of loss reserves from prior accident years.
In the future, state insurance regulatory authorities that have jurisdiction over the payment of dividends by Kinsale Insurance may adopt statutory provisions more restrictive than those currently in effect. Kinsale Insurance did not pay dividends to us during 2023.
In the future, state insurance regulatory authorities that have jurisdiction over the payment of dividends by Kinsale Insurance may adopt statutory provisions more restrictive than those currently in effect. Kinsale Insurance paid $47.0 million of dividends to us during 2024.
The variation discussed is not meant to be a worst-case scenario and, therefore, it is possible that future variation may be greater than the amounts shown below. 59 Table of Contents The impact of reasonably likely changes in the two key assumptions used to estimate net loss reserves at December 31, 2023 is as follows: Development Pattern Expected Loss Ratio Property 10% lower Unchanged 10% higher ($ in millions) 2 months slower $ 20.1 $ 31.5 $ 42.9 Unchanged (7.5) — 7.5 2 months faster (22.8) (17.5) (12.2) Casualty Occurrence 5% lower Unchanged 5% higher 6 months slower $ 36.2 $ 109.7 $ 183.1 Unchanged (66.2) — 66.2 6 months faster (168.5) (109.6) (50.8) Casualty Claims-Made 5% lower Unchanged 5% higher 6 months slower $ 30.6 $ 55.8 $ 81.1 Unchanged (20.8) — 20.8 6 months faster (65.9) (49.1) (32.3) Reserve development The amount by which estimated losses differ from those originally reported for a period is known as "development." Development is unfavorable when the losses ultimately settle for more than the amount reserved or subsequent estimates indicate a basis for reserve increases on unresolved claims.
The variation discussed is not meant to be a worst-case scenario and, therefore, it is possible that future variation may be greater than the amounts shown below. 61 Table of Contents The impact of reasonably likely changes in the two key assumptions used to estimate net loss reserves at December 31, 2024 is as follows: Development Pattern Expected Loss Ratio Property 10% lower Unchanged 10% higher ($ in millions) 2 months slower $ 21.0 $ 38.4 $ 55.9 Unchanged (12.5) — 12.5 2 months faster (30.8) (21.1) (11.3) Casualty Occurrence 5% lower Unchanged 5% higher 6 months slower $ 35.5 $ 136.4 $ 237.3 Unchanged (91.6) — 91.6 6 months faster (221.7) (139.5) (57.3) Casualty Claims-Made 5% lower Unchanged 5% higher 6 months slower $ 29.7 $ 59.3 $ 88.9 Unchanged (24.2) — 24.2 6 months faster (71.3) (51.8) (32.2) Reserve development The amount by which estimated losses differ from those originally reported for a period is known as "development." Development is unfavorable when the losses ultimately settle for more than the amount reserved or subsequent estimates indicate a basis for reserve increases on unresolved claims.
In quota-share reinsurance, the reinsurer agrees to assume a specified percentage of the ceding company's losses arising out of a defined class of business in exchange for a corresponding percentage of premiums, net of a ceding commission.
Our reinsurance is primarily contracted under quota-share reinsurance treaties and excess of loss treaties. In quota-share reinsurance, the reinsurer agrees to assume a specified percentage of the ceding company's losses arising out of a defined class of business in exchange for a corresponding percentage of premiums, net of a ceding commission.
Our insurance policies generally have a term of one year. Net earned premiums represent the earned portion of our gross written premiums, less that portion of our gross written premiums that is ceded to third-party reinsurers under our reinsurance agreements. Ceded written premiums Ceded written premiums are the amount of gross written premiums ceded to reinsurers.
We earn insurance premiums on a pro rata basis over the term of the policy. Our insurance policies generally have a term of one year. Net earned premiums represent the earned portion of our gross written premiums, less that portion of our gross written premiums that is ceded to third-party reinsurers under our reinsurance agreements.
Net cash used in investing activities also included proceeds of $62.0 million from the sale of a portion of our real estate investment property in the third quarter of 2023. For the year ended December 31, 2022 , net cash used in investing activities was $708.6 million.
Net cash used in investing activities also included proceeds of $62.0 million from the sale of a portion of our real estate investment property in the third quarter of 2023.
Gross written premiums increased across substantially all of our underwriting divisions for the year ended December 31, 2023 and were most notable in the following lines of business: • Commercial Property, which represented approximately 26.3% of our gross written premiums in 2023, increased by $230.5 million, or 127.0%, for the year ended December 31, 2023; • General Casualty, which represented approximately 7.5% of our gross written premiums in 2023, increased by $49.0 million, or 70.2%, for the year ended December 31, 2023; • Excess Casualty, which represented approximately 12.4% of our gross written premiums in 2023, increased by $46.6 million, or 31.6%, for the year ended December 31, 2023; • Small Business Casualty, which represented approximately 11.1% of our gross written premiums in 2023, increased by $24.7 million, or 16.5%, for the year ended December 31, 2023 and • Construction, which represented approximately 8.8% of our gross written premiums in 2023, increased by $15.4 million, or 12.5%, for the year ended December 31, 2023.
Gross written premiums increased across substantially all of our underwriting divisions for the year ended December 31, 2024 and were most notable in the following lines of business: • General Casualty, which represented approximately 9.0% of our gross written premiums in 2024, increased by $50.4 million, or 42.5%, for the year ended December 31, 2024; • Excess Casualty, which represented approximately 13.1% of our gross written premiums in 2024, increased by $51.1 million, or 26.3%, for the year ended December 31, 2024; • Small Business Casualty, which represented approximately 10.5% of our gross written premiums in 2024, increased by $21.5 million, or 12.4%, for the year ended December 31, 2024; • Commercial Property, which represented approximately 24.4% of our gross written premiums in 2024, increased by $44.2 million, or 10.7%, for the year ended December 31, 2024 and • Construction, which represented approximately 7.8% of our gross written premiums in 2024, increased by $10.4 million, or 7.6%, for the year ended December 31, 2024.
Net written premiums increased by $327.8 million, or 35.0%, to $1.3 billion for the year ended December 31, 2023 from $936.8 million for the year ended December 31, 2022. The increase in net written premiums was largely due to higher gross written premiums for the year ended December 31, 2023.
Net written premiums increased by $212.7 million, or 16.8%, to $1.5 billion for the year ended December 31, 2024 from $1.3 billion for the year ended December 31, 2023. The increase in net written premiums was largely due to higher gross written premiums for the year ended December 31, 2024.
This dividend was paid on December 13, 2023 to all stockholders of record on November 29, 2023. 52 Table of Contents On February 12, 2024, the Company’s Board of Directors declared a cash dividend of $0.15 per share of common stock. This dividend is payable on March 13, 2024 to all stockholders of record on February 27, 2024.
This dividend was paid on September 12, 2024 to all stockholders of record on August 29, 2024. On November 13, 2024, the Company’s Board of Directors declared a cash dividend of $0.15 per share of common stock. This dividend was paid on December 13, 2024 to all stockholders of record on November 29, 2024.
For the year ended December 31, 2022, funds from operations were used to purchase fixed-maturity securities, particularly corporate bonds and asset- and mortgage-backed securities of $713.2 million, and to a lesser extent, municipal bonds of $22.2 million and sovereigns of $16.0 million.
For the year ended December 31, 2024, funds from operations were used to purchase fixed-maturity securities, particularly corporate bonds and asset- and mortgage-backed securities of $1.6 billion, and to a lesser extent, municipal bonds of $3.7 million and sovereigns of $0.8 million.
Our reserves for losses and loss adjustment expenses, net of reinsurance, at December 31, 2023 were $1.5 billion, and of this amount, 90.5% related 57 Table of Contents to IBNR.
Our reserves for losses and loss adjustment expenses, net of reinsurance, at December 31, 2024 were $2.0 billion, and of this amount, 90.0% related to IBNR.
The corresponding combined ratios were 75.4% for the year ended December 31, 2023 compared to 78.5% for the year ended December 31, 2022. Premiums Gross written premiums were $1.6 billion for the year ended December 31, 2023 compared to $1.1 billion for the year ended December 31, 2022, an increase of $466.7 million, or 42.3%.
The corresponding combined ratios were 76.4% for the year ended December 31, 2024 compared to 75.4% for the year ended December 31, 2023. Premiums Gross written premiums were $1.9 billion for the year ended December 31, 2024 compared to $1.6 billion for the year ended December 31, 2023, an increase of $301.5 million, or 19.2%.
The timing of our cash flows from operating activities can vary among periods due to the timing by which payments are made or received. Some of our payments and receipts, including loss settlements and subsequent reinsurance receipts, can be significant, so their timing can influence cash flows from operating activities in any given period.
Some of our payments and receipts, including loss settlements and subsequent reinsurance receipts, can be significant, so their timing can influence cash flows from operating activities in any given period.
The volume of our gross written premiums in any given period is generally influenced by: • New business submissions; • Conversion of new business submissions into policies; • Renewals of existing policies; and • Average size and premium rate of bound policies. We earn insurance premiums on a pro rata basis over the term of the policy.
The volume of our gross written premiums in any given period is generally influenced by: • New business submissions; 40 Table of Contents • Conversion of new business submissions into policies; • Renewals of existing policies; and • Average size and premium rate of bound policies.
The remaining $14.8 million presented on the consolidated balance sheet represents the portion of remaining real estate assets held for investment purposes. Debt In July 2022, we entered into a Note Purchase and Private Shelf Agreement (the "Note Purchase Agreement"), which provides for the issuance of senior promissory notes with an aggregate principal amount of up to $150.0 million.
Debt In July 2022, we entered into a Note Purchase and Private Shelf Agreement (the "Note Purchase Agreement"), which provides for the issuance of senior promissory notes with an aggregate principal amount of up to $150.0 million.
Net income was $308.1 million for the year ended December 31, 2023 compared to $159.1 million for the year ended December 31, 2022, an increase of $149.0 million, or 93.6%.
Net income was $414.8 million for the year ended December 31, 2024 compared to $308.1 million for the year ended December 31, 2023, an increase of $106.8 million, or 34.6%.
Liquidity and Capital Resources Sources and uses of funds We are organized as a Delaware holding company with our operations primarily conducted by our wholly-owned insurance subsidiary, Kinsale Insurance, which is domiciled in Arkansas.
The decrease in operating return on equity was due primarily to higher average stockholders' equity as a result of continued profitable growth. Liquidity and Capital Resources Sources and uses of funds We are organized as a Delaware holding company with our operations primarily conducted by our wholly-owned insurance subsidiary, Kinsale Insurance, which is domiciled in Arkansas.
The reserves for unpaid losses and loss adjustment expenses represent our estimated ultimate cost of all unreported and reported but unpaid insured claims and the cost to adjust these losses that have occurred as of or before the consolidated balance sheet date. As a relatively new company, our historical loss experience is limited.
The reserves for unpaid losses and loss adjustment expenses represent our estimated ultimate cost of all unreported and reported but unpaid insured claims and the cost to adjust these claims that have occurred as of or before the consolidated balance sheet date. We estimate the reserves using individual case-basis valuations of reported claims and statistical analyses.
See Note 7 of the notes to the consolidated financial statements and "—Critical Accounting Estimates" for a discussion of estimates and assumptions related to the reserves for unpaid losses and loss adjustment expenses. 51 Table of Contents Reinsurance balances recoverable on reserves for losses and loss adjustment expenses are reported separately as assets, instead of being netted with the related liabilities, since reinsurance does not discharge us of our liability to policyholders.
Reinsurance balances recoverable on reserves for losses and loss adjustment expenses are reported separately as assets, instead of being netted with the related liabilities, since reinsurance does not discharge us of our liability to policyholders.
Actual losses and settlement expenses paid may deviate, perhaps substantially, from the reserve estimates reflected in our consolidated financial statements. Similarly, the timing for payment of our estimated losses is not fixed and is not determinable on an individual or aggregate basis due to the uncertainty inherent in the process of estimating such payments.
Similarly, the timing for payment of our estimated losses is not fixed and is not determinable on an individual or aggregate basis due to the uncertainty inherent in the process of estimating such payments.
At December 31, 2023, we also held $234.8 million of equity securities, which were comprised of ETFs, common stocks and non-redeemable preferred stock, $126.7 million of cash and cash equivalents, $14.8 million of real estate investments and $5.6 million of short-term investments.
At December 31, 2024, we also held $398.4 million of equity securities, which were comprised of common stocks, ETFs and non-redeemable preferred stock, $113.2 million of cash and cash equivalents, $15.0 million of real estate investments and $3.7 million of short-term investments.
Proceeds received from our equity compensation plans were $1.1 million, offset by payroll taxes withheld and remitted on restricted stock awards of $3.3 million for the year ended December 31, 2022 . Reinsurance We enter into reinsurance contracts to limit our exposure to potential large losses. Our reinsurance is primarily contracted under quota-share reinsurance treaties and excess of loss treaties.
Proceeds received from our equity compensation plan were $0.9 million, offset by payroll taxes withheld and remitted on restricted stock awards of $4.3 million for the year ended December 31, 2023 . 51 Table of Contents Reinsurance We enter into reinsurance contracts to limit our exposure to potential large losses.
Net income for the years ended December 31, 2023 and 2022 reconciles to underwriting income as follows: Year Ended December 31, ($ in thousands) 2023 2022 Net income $ 308,093 $ 159,114 Income tax expense 75,924 36,450 Income before taxes 384,017 195,564 Net investment income (102,335) (51,282) Change in the fair value of equity securities (15,277) 27,723 Net realized investment gains (6,040) (1,191) Change in allowance for credit losses on investments 187 366 Interest expense 10,301 4,284 Other expenses (1) 942 721 Other income (1,421) (697) Underwriting income $ 270,374 $ 175,488 (1) Other expenses are corporate expenses not allocated to our insurance operations. 55 Table of Contents Reconciliation of net operating earnings Net operating earnings is defined as net income excluding the effects of the net change in the fair value of equity securities, after taxes, net realized investment gains and losses, after taxes, and the change in allowance for credit losses on investments, after taxes.
Net income for the years ended December 31, 2024 and 2023 reconciles to underwriting income as follows: Year Ended December 31, ($ in thousands) 2024 2023 Net income $ 414,843 $ 308,093 Income tax expense 99,873 75,924 Income before taxes 514,716 384,017 Net investment income (150,287) (102,335) Change in the fair value of equity securities (43,367) (15,277) Net realized investment gains (6,831) (6,040) Change in allowance for credit losses on investments (526) 187 Interest expense 10,134 10,301 Other expenses (1) 3,968 942 Other income (1,926) (1,421) Underwriting income $ 325,881 $ 270,374 (1) Other expenses are corporate expenses not allocated to our insurance operations. 57 Table of Contents Reconciliation of net operating earnings Net operating earnings is defined as net income excluding the effects of the net change in the fair value of equity securities, after taxes, net realized investment gains and losses, after taxes, and the change in allowance for credit losses on investments, after taxes.
Even after such adjustments, ultimate liability may exceed or be less than the revised estimates. Accordingly, the ultimate settlement of losses and the related loss adjustment expenses may vary significantly from the estimate included in our consolidated financial statements.
Additionally, during the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim. Even after such adjustments, ultimate liability may be higher or lower than the revised estimates. Accordingly, the ultimate settlement of losses and the related loss adjustment expenses may vary significantly from the estimate included in our consolidated financial statements.
The following tables summarize our reserves for unpaid losses and loss adjustment expenses, on a gross basis and net of reinsurance, at December 31, 2023 and 2022: December 31, 2023 Gross % of Total Net % of Total ($ in thousands) Case reserves $ 162,679 9.6 % $ 137,581 9.5 % IBNR 1,530,196 90.4 % 1,313,937 90.5 % Total $ 1,692,875 100.0 % $ 1,451,518 100.0 % December 31, 2022 Gross % of Total Net % of Total ($ in thousands) Case reserves $ 178,216 14.4 % $ 138,486 13.0 % IBNR 1,060,186 85.6 % 922,877 87.0 % Total $ 1,238,402 100.0 % $ 1,061,363 100.0 % Case reserves are established for individual claims that have been reported to us.
The following tables summarize our reserves for unpaid losses and loss adjustment expenses, on a gross basis and net of reinsurance, at December 31, 2024 and 2023: December 31, 2024 Gross % of Total Net % of Total ($ in thousands) Case reserves $ 220,243 9.6 % $ 195,513 10.0 % IBNR 2,065,425 90.4 % 1,767,095 90.0 % Total $ 2,285,668 100.0 % $ 1,962,608 100.0 % December 31, 2023 Gross % of Total Net % of Total ($ in thousands) Case reserves $ 162,679 9.6 % $ 137,581 9.5 % IBNR 1,530,196 90.4 % 1,313,937 90.5 % Total $ 1,692,875 100.0 % $ 1,451,518 100.0 % Case reserves are established for individual claims that have been reported to us.
The effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefits from stock-based compensation and tax-exempt investment income. Return on equity Our return on equity was 33.6% for the year ended December 31, 2023 compared to 22.0% for the year ended December 31, 2022.
Income tax expense Our effective tax rate was approximately 19.4% for the year ended December 31, 2024 compared to 19.8% for the year ended December 31, 2023. The effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefits from stock-based compensation, including stock options exercised, and tax-exempt investment income.
Net income for the years ended December 31, 2023 and 2022 reconciles to net operating earnings as follows: Year Ended December 31, ($ in thousands) 2023 2022 Net income $ 308,093 $ 159,114 Adjustments: Change in the fair value of equity securities, before taxes (15,277) 27,723 Income tax expense (benefit) (1) 3,208 (5,822) Change in the fair value of equity securities, after taxes (12,069) 21,901 Net realized investment gains, before taxes (6,040) (1,191) Income tax expense (1) 1,268 250 Net realized investment gains, after taxes (4,772) (941) Change in allowance for credit losses on investments, before taxes 187 366 Income tax benefit (1) (39) (77) Change in allowance for credit losses on investments, after taxes 148 289 Net operating earnings $ 291,400 $ 180,363 Operating return on equity: Average equity (2) $ 916,141 $ 722,392 Return on equity (3) 33.6 % 22.0 % Operating return on equity (4) 31.8 % 25.0 % (1) Income taxes on adjustments to reconcile net income to net operating earnings use an effective tax rate of 21%.
Net income for the years ended December 31, 2024 and 2023 reconciles to net operating earnings as follows: Year Ended December 31, ($ in thousands) 2024 2023 Net income $ 414,843 $ 308,093 Adjustments: Change in the fair value of equity securities, before taxes (43,367) (15,277) Income tax expense (1) 9,107 3,208 Change in the fair value of equity securities, after taxes (34,260) (12,069) Net realized investment gains, before taxes (6,831) (6,040) Income tax expense (1) 1,435 1,268 Net realized investment gains, after taxes (5,396) (4,772) Change in allowance for credit losses on investments, before taxes (526) 187 Income tax expense (benefit) (1) 110 (39) Change in allowance for credit losses on investments, after taxes (416) 148 Net operating earnings $ 374,771 $ 291,400 Operating return on equity: Average equity (2) $ 1,285,197 $ 916,141 Return on equity (3) 32.3 % 33.6 % Operating return on equity (4) 29.2 % 31.8 % (1) Income taxes on adjustments to reconcile net income to net operating earnings use an effective tax rate of 21%.
During the year ended December 31, 2022, loss reserves for prior accident years developed favorably by $35.9 million, of which $41.8 million was attributable to the 2020 and 2021 accident years due to lower emergence of reported losses than expected across most lines of business.
During the year ended December 31, 2024, prior accident years developed favorably by $37.7 million, of which $57.6 million was attributable to the 2021 through 2023 accident years due to lower emergence of reported losses than expected across most lines of business.
Our cash and invested assets are primarily comprised of fixed-maturity securities, and may also include equity securities, investments in real estate, cash equivalents, and short-term investments. The principal factors that influence the level of net investment income are the size of our investment portfolio and the yield on that portfolio.
Net investment income Net investment income is an important component of our results of operations. We earn investment income on our portfolio of cash and invested assets. Our cash and invested assets are primarily comprised of fixed-maturity securities, and may also include equity securities, investments in real estate, cash equivalents, and short-term investments.
We enter into reinsurance contracts to limit our exposure to potential large losses. Ceded written premiums are earned over the reinsurance contract period in proportion to the period of risk covered. The volume of our ceded written premiums is impacted by the level of our gross written premiums and any decision we make to increase or decrease retention levels.
Ceded written premiums Ceded written premiums are the amount of gross written premiums ceded to reinsurers. We enter into reinsurance contracts to limit our exposure to potential large losses. Ceded written premiums are earned over the reinsurance contract period in proportion to the period of risk covered.
Dividend declarations On February 15, 2023, the Company’s Board of Directors declared a cash dividend of $0.14 per share of common stock. This dividend was paid on March 13, 2023 to all stockholders of record on February 28, 2023. On May 15, 2023, the Company’s Board of Directors declared a cash dividend of $0.14 per share of common stock.
On February 10, 2025, the Company’s Board of Directors declared a cash dividend of $0.17 per share of common stock. This dividend is payable on March 13, 2025 to all stockholders of record on February 27, 2025.
The increase in net income in 2023 over 2022 was primarily due to a combination of continued profitable growth, an increase in investment income driven by higher investment balances and higher interest rates and higher returns on equity investments.
The increase in net income in 2024 over 2023 was primarily due to a combination of continued profitable growth and strong investing results including higher investment income and higher unrealized gains on equity investments.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDecember 31, 2023 December 31, 2022 Estimated Fair Value Estimated Change in Fair Value Estimated % Increase (Decrease) in Fair Value Estimated Fair Value Estimated Change in Fair Value Estimated % Increase (Decrease) in Fair Value ($ in thousands) 200 basis points increase $ 2,596,163 $ (148,769) (5.4) % $ 1,674,481 $ (123,781) (6.9) % 100 basis points increase $ 2,668,387 $ (76,545) (2.8) % $ 1,734,021 $ (64,241) (3.6) % No change $ 2,744,932 $ — — % $ 1,798,262 $ — — % 100 basis points decrease $ 2,824,874 $ 79,942 2.9 % $ 1,867,189 $ 68,927 3.8 % 200 basis points decrease $ 2,907,181 $ 162,249 5.9 % $ 1,940,279 $ 142,017 7.9 % Changes in interest rates will have an immediate effect on comprehensive income and stockholders’ equity but will not ordinarily have an immediate effect on net income.
Biggest changeDecember 31, 2024 December 31, 2023 Estimated Fair Value Estimated Change in Fair Value Estimated % Increase (Decrease) in Fair Value Estimated Fair Value Estimated Change in Fair Value Estimated % Increase (Decrease) in Fair Value ($ in thousands) 200 basis points increase $ 3,359,066 $ (204,930) (5.8) % $ 2,596,163 $ (148,769) (5.4) % 100 basis points increase $ 3,458,502 $ (105,494) (3.0) % $ 2,668,387 $ (76,545) (2.8) % No change $ 3,563,996 $ — — % $ 2,744,932 $ — — % 100 basis points decrease $ 3,674,836 $ 110,840 3.1 % $ 2,824,874 $ 79,942 2.9 % 200 basis points decrease $ 3,789,241 $ 225,245 6.3 % $ 2,907,181 $ 162,249 5.9 % Changes in interest rates will have an immediate effect on comprehensive income and stockholders’ equity but will not ordinarily have an immediate effect on net income.
The table below illustrates the sensitivity of the fair value of our fixed-maturity securities and non-redeemable preferred stock to selected hypothetical changes in interest rates as of December 31, 2023 and 2022.
The table below illustrates the sensitivity of the fair value of our fixed-maturity securities and non-redeemable preferred stock to selected hypothetical changes in interest rates as of December 31, 2024 and 2023.
We manage equity price risk of our equity portfolio primarily through asset allocation techniques. 64 Table of Contents
We manage equity price risk of our equity portfolio primarily through asset allocation techniques. 66 Table of Contents
A portion of our portfolio is invested in ETF securities and common stock, which have historically produced higher long-term returns relative to fixed-maturity investments. As of December 31, 2023, approximately 6.5% of the fair value of our investment portfolio (including cash and cash equivalents) was invested in ETFs and common stocks.
A portion of our portfolio is invested in ETF securities and common stock, which have historically produced higher long-term returns relative to fixed-maturity investments. As of December 31, 2024, approximately 9.2% of the fair value of our investment portfolio (including cash and cash equivalents) was invested in common stocks and ETFs.
Our policy is to invest in investment grade securities and to minimize investments in fixed maturities that are unrated or rated below investment grade. At December 31, 2023, approximately 2.5% of our fixed-maturity portfolio, excluding cash equivalents, was unrated or rated below investment grade. We monitor the financial condition of all of the issuers of fixed-maturity securities in our portfolio.
Our policy is to invest in investment grade securities and to minimize investments in fixed maturities that are unrated or rated below investment grade. At December 31, 2024, approximately 1.8% of our fixed-maturity portfolio, excluding cash equivalents, was unrated or rated below investment grade. We monitor the financial condition of all of the issuers of fixed-maturity securities in our portfolio.
At December 31, 2023, our fixed-maturity portfolio, including cash equivalents, had an average rating of "AA-." Additionally, at December 31, 2023, approximately 83.3% of our fixed-maturity portfolio, excluding cash equivalents, was rated "A-" or better by at least one nationally recognized rating organization.
At December 31, 2024, our fixed-maturity portfolio, including cash equivalents, had an average rating of "AA-." Additionally, at December 31, 2024, approximately 79.8% of our fixed-maturity portfolio, excluding cash equivalents, was rated "A-" or better by at least one nationally recognized rating organization.
The effective weighted-average duration of the portfolio, including cash equivalents, was 2.8 years as of December 31, 2023. 63 Table of Contents We had fixed-maturity securities and non-redeemable preferred stock with a fair value of $2.7 billion at December 31, 2023 and $1.8 billion at December 31, 2022 that were subject to interest rate risk.
The effective weighted-average duration of the portfolio, including cash equivalents, was 3.0 years as of December 31, 2024. 65 Table of Contents We had fixed-maturity securities and non-redeemable preferred stock with a fair value of $3.6 billion at December 31, 2024 and $2.7 billion at December 31, 2023 that were subject to interest rate risk.

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