Company: KNSL
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0001669162-25-000010
Chunk: 100

Company: Kinsale Capital Group, Inc.
Filing Date: 2025-02-21
Form: 10-K
Item: Item 7
Chunk 100
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 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%.

(2) Average equity is computed by adding the total stockholders' equity as of the date indicated to the prior year-end total and dividing by two. 

(3) Return on equity is net income expressed as a percentage of average beginning and ending stockholders’ equity during the period.

(4) Operating return on equity is net operating earnings expressed as a percentage of average beginning and ending stockholders’ equity during the period.

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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. Our definition of tangible stockholders’ equity may not be comparable to that of other companies, and it should not be viewed as a substitute for stockholders’ equity calculated in accordance with GAAP. We use tangible stockholders' equity internally to evaluate the strength of our balance sheet and to compare returns relative to this measure.

Stockholders' equity at December 31, 2024 and 2023 reconciles to tangible stockholders' equity as follows:

December 31,($ in thousands)20242023Stockholders' equity$1,483,561 $1,086,832 Less: Intangible assets, net of deferred taxes2,795 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. Critical accounting estimates are defined as those estimates that are both important to the portrayal of our financial condition and results of operations and require us to exercise significant judgment. We use significant judgment concerning future results and developments in applying these critical accounting estimates and in preparing our consolidated financial statements. These judgments and estimates affect our reported