Company: KNSL
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0001669162-25-000010
Chunk: 109

Company: Kinsale Capital Group, Inc.
Filing Date: 2025-02-21
Form: 10-K
Item: Item 7A
Chunk 109
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Interest rate risk

Interest rate risk is the risk that we will incur economic losses due to adverse changes in interest rates. The primary market risk to the investment portfolio is interest rate risk associated with investments in fixed-maturity securities and non-redeemable preferred stock. Fluctuations in interest rates have a direct effect on the market valuation of these securities. When market interest rates rise, the fair value of our fixed-maturity securities and non-redeemable preferred stock decreases. Conversely, as interest rates fall, the fair value of our fixed-maturity securities and non-redeemable preferred stock increases. We manage this interest rate risk by investing in securities with varied maturity dates and by managing the duration of our investment portfolio to the duration of our reserves. Expressed in years, duration is the weighted average payment period of cash flows, where the weighting is based on the present value of the cash flows. We set duration targets for our fixed-maturity investment portfolios after consideration of the estimated duration of our liabilities and other factors. The effective weighted-average duration of the portfolio, including cash equivalents, was 3.0 years as of December 31, 2024.

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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. 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.

December 31, 2024December 31, 2023Estimated Fair ValueEstimated Change in Fair ValueEstimated % Increase (Decrease) in Fair ValueEstimated Fair ValueEstimated Change in Fair ValueEstimated % 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