Company: KNSL
Filing Date: 2025-10-23
Form Type: 10-Q
Source: 0001669162-25-000058
Chunk: 137

Company: Kinsale Capital Group, Inc.
Filing Date: 2025-10-23
Form: 10-Q
Item: Item 2
Chunk 137
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 value of ETFs and common stocks during the first nine months of 2024 primarily reflected higher valuations in the broader U.S. stock market and the change in fair value of preferred stock relates primarily to the disposition of certain preferred stock securities in a loss position.

Net realized investment gains were $2.8 million and $6.7 million for the nine months ended September 30, 2025 and 2024, respectively. The prior year period reflected higher gains primarily from sales of common stocks and ETFs due to opportunistic repositioning of our equity portfolio.

Income tax expense 

Our effective tax rate was 20.6% for the nine months ended September 30, 2025 compared to 18.7% for the nine months ended September 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 nine months ended September 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 29.1% for the nine months ended September 30, 2025 compared to 32.3% for the nine months ended September 30, 2024. Our annualized operating return on equity was 25.4% for the nine months ended September 30, 2025 compared to 28.2% for the nine months ended September 30, 2024. The decrease in annualized operating return on equity for the nine months ended September 30, 2025 compared to the prior period was due primarily to higher average stockholders' equity. Average stockholders' equity increased primarily as a result of profitable growth and an increase in the fair value of our fixed income and equity securities offset in part by share repurchases.

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