Company: KNSL
Filing Date: 2025-04-24
Form Type: 10-Q
Source: 0001669162-25-000027
Chunk: 113

Company: Kinsale Capital Group, Inc.
Filing Date: 2025-04-24
Form: 10-Q
Item: Item 2
Chunk 113
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5 and 2024.

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Table of Contents

During the first three months of 2025, the change in fair value of equity securities of $3.0 million reflected primarily unrealized gains arising during the period on our common stock holdings of $9.4 million offset in part by a decline in the fair value of our exchange traded funds ("ETFs") of $(6.5) million.

During the first quarter of 2024, the change in fair value of equity securities of $18.1 million included changes in unrealized gains related to ETFs and common stocks of $16.6 million and changes in unrealized gains related to non-redeemable preferred stock of $1.5 million. The change in the fair value of ETFs and common stocks during the first three months of 2024 primarily reflected higher valuations in the broader U.S. stock market.

Net realized investment gains were $0.5 million and $3.9 million for the three months ended March 31, 2025 and 2024, respectively and were primarily related to sales of common stocks and ETFs due to opportunistic repositioning of our equity portfolio.

We perform quarterly reviews of all available-for-sale securities within our investment portfolio to determine whether the decline in a security's fair value is deemed to be a credit loss. Based on our review, we recorded credit loss expense of less than $0.1 million for the three months ended March 31, 2025. See Note 2 of the notes to the consolidated financial statements for further information regarding credit losses.

Income tax expense 

Our effective tax rate was 20.6% for the three months ended March 31, 2025 compared to 14.6% for the three months ended March 31, 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 three months ended March 31, 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 23.3% for the three months ended March 31, 2025 compared to 35.1% for the three months ended March 31, 2024. Our annualized operating return on equity was 22.5% for the three months ended