Company: KNSL
Filing Date: 2025-07-24
Form Type: 10-Q
Source: 0001669162-25-000043
Chunk: 45

Company: Kinsale Capital Group, Inc.
Filing Date: 2025-07-24
Form: 10-Q
Item: Item 1
Chunk 45
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 certain preferred stock securities in a loss position.

Net realized investment gains were $0.7 million and $6.7 million for the six months ended June 30, 2025 and 2024, respectively and were primarily related to sales of common stocks and ETFs due to opportunistic repositioning of our equity portfolio.

Income tax expense 

Our effective tax rate was 20.4% for the six months ended June 30, 2025 compared to 17.3% for the six months ended June 30, 2024. 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 from tax-exempt investment income. The effective tax rate was higher for the six months ended June 30, 2025 compared to the same period in 2024 due primarily to a lower volume of stock option exercises.

Return on equity

Our annualized return on equity was 27.9% for the six months ended June 30, 2025 compared to 32.7% for the six months ended June 30, 2024. Our annualized operating return on equity was 24.7% for the six months ended June 30, 2025 compared to 28.8% for the six months ended June 30, 2024. The decrease in annualized operating return on equity for the six months ended June 30, 2025 compared to the prior period was due primarily to higher average stockholders' equity and higher net catastrophe losses primarily related to the Palisades Fire. Average stockholders' equity increased as a result of profitable growth and an increase in the fair value of our fixed income portfolio.

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 Company, which is domiciled in Arkansas. Accordingly, we primarily receive cash through (1) loans from banks and other third parties, (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. 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