Kinsale Capital Group, Inc.: Form 10-Q for the period ended Sep 30, 2026
Filed with the SEC on Oct 22, 2026 and accepted by EDGAR at Oct 22, 2026, 20:12 ET.
Management's discussion and analysis
As filed, 69,942 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
The discussion and analysis below include certain forward-looking statements that are subject to risks, uncertainties and other factors described in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors.
The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2026, or for any other future period. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report, and in conjunction with our audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2025.
References to the "Company," "Kinsale," "we," "us," and "our" are to Kinsale Capital Group, Inc. and its subsidiaries, unless the context otherwise requires.
Overview
Founded in 2009, Kinsale is a specialty insurance company. Kinsale focuses exclusively on the excess and surplus lines ("E&S") market in the U.S., where we use our underwriting expertise to write coverages for hard-to-place small business risks and personal lines risks. We market these insurance products in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, primarily through a network of independent insurance brokers.
We have one reportable segment, our Excess and Surplus Lines Insurance segment, which offers property and casualty ("P&C") insurance products through the E&S market. For the first nine months of 2026, the percentage breakdown of our gross written premiums was 74.7% casualty and 25.3% property. Our commercial underwriting divisions include Excess Casualty, Commercial Property, General Casualty, Small Business Casualty, Construction, Allied Health, Small Business Property, Entertainment, Products Liability, Commercial Auto, Energy, Excess Professional, Inland Marine, Environmental, Life Sciences, Professional Liability, Health Care, Public Entity, Agribusiness Property, Agribusiness Casualty, Management Liability, Aviation, and Ocean Marine. We also write homeowners' coverage in the personal lines market, which in aggregate represented 2.6% of our gross written premiums in the first nine months of 2026.
Components of Our Results of Operations
Gross written premiums
Gross written premiums are the amounts received or to be received for insurance policies written or assumed by us during a specific period of time without reduction for policy acquisition costs, reinsurance costs or other deductions. The volume of our gross written premiums in any given period is generally influenced by:
- New business submissions;
- Conversion of new business submissions into policies;
- Renewals of existing policies; and
- Average size and premium rate of bound policies.
We earn insurance premiums on a pro rata basis over the term of the policy. Our insurance policies generally have a term of one year. Net earned premiums represent the earned portion of our gross written premiums, less that portion of our gross written premiums that is ceded to third-party reinsurers under our reinsurance agreements.
Ceded written premiums
Ceded written premiums are the amount of gross written premiums ceded to reinsurers. We enter into reinsurance contracts to limit our exposure to potential large losses. Ceded written premiums are earned over the reinsurance contract period in proportion to the period of risk covered. The volume of our ceded written premiums is impacted by the level of our gross written premiums, any decision we make to increase or decrease retention levels and reinstatement premiums, if any.
Fee income
Fee income includes policy fees charged to insureds and is recognized in earnings when the related premium is written. Policy fees are a flat charge to insureds and fee income is impacted primarily by the volume of business we write.
Losses and loss adjustment expenses
Losses and loss adjustment expenses are a function of the amount and type of insurance contracts we write and the loss experience associated with the underlying coverage. In general, our losses and loss adjustment expenses are affected by:
- Frequency of claims associated with the particular types of insurance contracts that we write;
- Trends in the average size of losses incurred on a particular type of business;
- Mix of business written by us;
- Changes in the legal or regulatory environment related to the business we write;
- Trends in legal defense costs;
- Wage inflation;
- Social inflation;
- Inflation in material costs, and
- Inflation in medical costs.
Losses and loss adjustment expenses are based on an actuarial analysis of the estimated losses, including losses incurred during the period and changes in estimates from prior periods. Losses and loss adjustment expenses may be paid out over a period of years.
Underwriting, acquisition and insurance expenses
Underwriting, acquisition and insurance expenses include policy acquisition costs and other underwriting expenses. Policy acquisition costs are principally composed of the commissions we pay our brokers, net of ceding commissions we receive on business ceded under certain reinsurance contracts. Policy acquisition costs also include underwriting expenses that are directly related to the successful acquisition of those policies which are deferred. The amortization of policy acquisition costs is charged to expense in proportion to premium earned over the policy life.
Other underwriting expenses represent the general and administrative expenses of our insurance business such as employment costs, telecommunication and technology costs, and legal and auditing fees.
Net investment income
Net investment income is an important component of our results of operations. We earn investment income on our portfolio of cash and invested assets. Our cash and invested assets are primarily composed of fixed-maturity securities, and may also include cash equivalents, equity securities and short-term investments. The principal factors that influence net investment income are the size of our investment portfolio and the yield on that portfolio. As measured by amortized cost (which excludes changes in fair value), the size of our investment portfolio is mainly a function of our invested equity capital combined with premiums we receive from our insureds less payments on policyholder claims. Net investment income also includes rental income and depreciation expense from our real estate investment property, if any.
Change in fair value of equity securities
Change in fair value of equity securities represents the increase or decrease in the fair value of equity securities held at the end of the period and the reversal of fair value changes recognized in prior periods on equity securities sold during the period.
Net realized investment gains (losses)
Net realized investment gains (losses) are a function of the difference between the amount received by us on the sale of a security and the security's amortized cost.
Income tax expense
Currently, substantially all of our income tax expense relates to federal income taxes. Our insurance subsidiary, Kinsale Insurance Company, is not subject to income taxes in the states in which it operates; however, our non-insurance subsidiaries are subject to state income taxes, but have not generated any material taxable income to date. The amount of income tax expense or benefit recorded in future periods will depend on the jurisdictions in which we operate and the tax laws and regulations in effect.
Key metrics
We discuss certain key metrics, described below, which we believe provide useful information about our business and the operational factors underlying our financial performance.
Underwriting income is a non-GAAP financial measure. We define underwriting income as net income, excluding net investment income, net change in the fair value of equity securities, net realized investment gains and losses, change in allowance for credit losses on investments, interest expense, other income, other expenses and income tax expense. See "—Reconciliation of Non-GAAP Financial Measures" for a reconciliation of net income in accordance with GAAP to underwriting income.
Net operating earnings is a non-GAAP financial measure. We define net operating earnings as net income excluding the net change in the fair value of equity securities, after taxes, net realized investment gains and losses, after taxes and change in allowance for credit losses on investments, after taxes. See "—Reconciliation of Non-GAAP Financial Measures" for a reconciliation of net income in accordance with GAAP to net operating earnings.
Loss ratio, expressed as a percentage, is the ratio of losses and loss adjustment expenses to the sum of net earned premiums and fee income.
Expense ratio, expressed as a percentage, is the ratio of underwriting, acquisition and insurance expenses to the sum of net earned premiums and fee income.
Combined ratio is the sum of the loss ratio and the expense ratio. A combined ratio under 100% indicates an underwriting profit. A combined ratio over 100% indicates an underwriting loss.
Return on equity is net income expressed on an annualized basis as a percentage of average beginning and ending total stockholders’ equity during the period.
Operating return on equity is a non-GAAP financial measure. We define operating return on equity as net operating earnings expressed on an annualized basis as a percentage of average beginning and ending total stockholders’ equity during the period. See "—Reconciliation of Non-GAAP Financial Measures" for a reconciliation of net income in accordance with GAAP to net operating earnings.
Net retention ratio is the ratio of net written premiums to gross written premiums.
Gross investment return is investment income from fixed-maturity and equity securities (and short-term investments, if any), before any deductions for fees and expenses, expressed as a percentage of the average beginning and ending book values of those investments during the period.
Results of Operations
Three months ended September 30, 2026 compared to three months ended September 30, 2025
The following table summarizes our results of operations for the three months ended September 30, 2026 and 2025:
($ in thousands)
| Three Months Ended September 30, 2026 | 2025 | Change | % Change | |
|---|---|---|---|---|
| Gross written premiums | $462,868 | $486,251 | $(23,383) | (4.8)% |
| Ceded written premiums | (63,724) | (81,191) | 17,467 | (21.5)% |
| Net written premiums | $399,144 | $405,060 | $(5,916) | (1.5)% |
| Net earned premiums | $423,472 | $410,957 | $12,515 | 3.0% |
| Fee income | 11,099 | 10,300 | 799 | 7.8% |
| Losses and loss adjustment expenses | 232,079 | 227,162 | 4,917 | 2.2% |
| Underwriting, acquisition and insurance expenses | 95,429 | 88,423 | 7,006 | 7.9% |
| Underwriting income (1) | 107,063 | 105,672 | 1,391 | 1.3% |
| Net investment income | 58,265 | 49,604 | 8,661 | 17.5% |
| Change in the fair value of equity securities | (37,769) | 23,717 | (61,486) | NM |
| Net realized investment (losses) gains | (419) | 2,159 | (2,578) | NM |
| Change in allowance for credit losses on investments | 1 | 4 | (3) | NM |
| Interest expense | (3,220) | (2,569) | (651) | 25.3% |
| Other (expense) income, net | (302) | 291 | (593) | NM |
| Income before taxes | 123,619 | 178,878 | (55,259) | (30.9)% |
| Income tax expense | 25,490 | 37,232 | (11,742) | (31.5)% |
| Net income | $98,129 | $141,646 | $(43,517) | (30.7)% |
| Net operating earnings (2) | $128,297 | $121,201 | $7,096 | 5.9% |
| Loss ratio | 53.4% | 53.9% | ||
| Expense ratio | 22.0% | 21.0% | ||
| Combined ratio (3) | 75.4% | 74.9% | ||
| Annualized return on equity | 19.9% | 31.6% | ||
| Annualized operating return on equity (2) | 26.0% | 27.0% |
NM - Percentage change not meaningful.
(1) Underwriting income is a non-GAAP financial measure. See "—Reconciliation of Non-GAAP Financial Measures" for a reconciliation of net income in accordance with GAAP to underwriting income.
(2) Net operating earnings and annualized operating return on equity are non-GAAP financial measures. Net operating earnings is defined as net income excluding the net change in the fair value of equity securities, after taxes, net realized investment gains and losses, after taxes, and change in allowance for credit losses on investments, after taxes. Annualized operating return on equity is defined as net operating earnings expressed on an annualized basis as a percentage of average beginning and ending total stockholders’ equity during the period. See "—Reconciliation of Non-GAAP Financial Measures" for a reconciliation of net income in accordance with GAAP to net operating earnings.
(3) The combined ratio is the sum of the loss ratio and expense ratio as presented. Calculations of each component may not add due to rounding.
Net income was $98.1 million for the three months ended September 30, 2026 compared to $141.6 million for the three months ended September 30, 2025, a decrease of 30.7%. The decrease was primarily due to net realized and unrealized investment losses, compared to gains in the prior-year period, offset in part by higher net investment income and underwriting income.
During the third quarter of 2026, the Company repositioned a portion of its investment portfolio to improve expected long-term returns. The Company sold certain common stock holdings and reinvested the proceeds in higher conviction common stock investments. The sales reversed unrealized gains previously recognized in the change in fair value of equity securities and recognized largely corresponding realized gains. The Company simultaneously sold lower-yielding fixed-maturity securities in a loss position and reinvested the proceeds in higher-yielding fixed-maturity securities. The losses on the fixed-maturity sales, which had previously been recorded in accumulated other comprehensive loss within stockholders’ equity, were reclassified into net income upon sale and offset the realized gains on the equity sales. The repositioning reduced third quarter pre-tax earnings by $37.6 million.
Underwriting income was $107.1 million for the three months ended September 30, 2026 compared to $105.7 million for the three months ended September 30, 2025, an increase of 1.3%. The corresponding combined ratios were 75.4% for the three months ended September 30, 2026 compared to 74.9% for the three months ended September 30, 2025. The increase in underwriting income in the third quarter of 2026 compared to the third quarter of 2025 was primarily due to growth in net earned premiums and higher favorable development of loss reserves from prior accident years offset in part by lower ceding commissions as a result of increased retention on our reinsurance treaties.
Premiums
Gross written premiums were $462.9 million for the three months ended September 30, 2026 compared to $486.3 million for the three months ended September 30, 2025, a decrease of $23.4 million, or 4.8%. The decrease in gross written premiums was primarily due to a 19.3% decline in our property divisions, driven by heightened competition, including a 26.8% decline in our Commercial Property Division, one of the Company's larger divisions. Gross written premiums in our casualty business grew 0.9% due primarily to an increase in bound accounts offset in part by a change in business mix towards smaller accounts.
The average premium per policy written was approximately $11,400 in the third quarter of 2026 compared to approximately $12,900 in the third quarter of 2025. Excluding our Personal Insurance Division, which has a relatively low premium per policy written, the average premium per policy written was approximately $11,700 in the third quarter of 2026 compared to $13,500 in the third quarter of 2025. The decrease in average premium per policy for the third quarter of 2026 over the same period last year was due to an increase in competition, primarily on larger accounts and in our Commercial Property Division.
The following table provides a summary of gross premiums written by division for the three months ended September 30, 2026 and 2025:
($ in thousands)
| Commercial: | Three Months Ended September 30, 2026 | 2025 | Change | % Change |
|---|---|---|---|---|
| Excess Casualty | $72,024 | $70,574 | $1,450 | 2.1% |
| Commercial Property | 58,774 | 80,255 | (21,481) | (26.8)% |
| Small Business Casualty | 49,379 | 50,249 | (870) | (1.7)% |
| General Casualty | 43,913 | 47,126 | (3,213) | (6.8)% |
| Construction | 35,588 | 38,202 | (2,614) | (6.8)% |
| Allied Health | 25,871 | 23,623 | 2,248 | 9.5% |
| Small Business Property | 25,695 | 28,011 | (2,316) | (8.3)% |
| Entertainment | 20,207 | 17,139 | 3,068 | 17.9% |
| Products Liability | 17,921 | 16,757 | 1,164 | 6.9% |
| Commercial Auto | 14,490 | 12,096 | 2,394 | 19.8% |
| Energy | 12,219 | 11,941 | 278 | 2.3% |
| Excess Professional | 9,929 | 10,236 | (307) | (3.0)% |
| Environmental | 9,149 | 8,164 | 985 | 12.1% |
| Inland Marine | 8,810 | 8,786 | 24 | 0.3% |
| Life Sciences | 8,367 | 9,109 | (742) | (8.1)% |
| Professional Liability | 7,869 | 8,702 | (833) | (9.6)% |
| Health Care | 7,147 | 6,554 | 593 | 9.0% |
| Public Entity | 5,140 | 6,712 | (1,572) | (23.4)% |
| Agribusiness Property | 4,703 | 3,357 | 1,346 | 40.1% |
| Management Liability | 4,661 | 4,924 | (263) | (5.3)% |
| Agribusiness Casualty | 3,992 | 3,261 | 731 | 22.4% |
| Aviation | 3,053 | 2,534 | 519 | 20.5% |
| Ocean Marine | 1,132 | 1,010 | 122 | 12.1% |
| Total commercial | 450,033 | 469,322 | (19,289) | (4.1)% |
| Personal: | ||||
| High Value Homeowners | 8,369 | 10,354 | (1,985) | (19.2)% |
| Personal Insurance | 4,466 | 6,575 | (2,109) | (32.1)% |
| Total personal | 12,835 | 16,929 | (4,094) | (24.2)% |
| Total | $462,868 | $486,251 | $(23,383) | (4.8)% |
Certain prior year amounts are reclassified to conform to current year's divisions and the business underwritten within them.
Net written premiums decreased by $5.9 million, or 1.5%, to $399.1 million for the three months ended September 30, 2026 from $405.1 million for the three months ended September 30, 2025. The decrease in net written premiums for the third quarter of 2026 compared to the same period last year was primarily due to the decline in gross written premiums offset in part by lower ceded premiums as a result of an increase in retention on our reinsurance treaties.
The net retention ratio was 86.2% for the three months ended September 30, 2026 compared to 83.3% for the three months ended September 30, 2025 due to increased retention in our reinsurance treaties and change in the mix of business.
Net earned premiums increased by $12.5 million, or 3.0%, to $423.5 million for the three months ended September 30, 2026 from $411.0 million for the three months ended September 30, 2025 due primarily to higher net retention levels and continued earning of premium from prior-period growth in gross written premiums.
Loss ratio
The following table summarizes the loss ratios for the three months ended September 30, 2026 and 2025:
($ in thousands)
| Loss ratio: | Three Months Ended September 30, 2026 Losses and Loss Adjustment Expenses | % of Sum of Earned Premiums and Fee Income | 2025 Losses and Loss Adjustment Expenses | % of Sum of Earned Premiums and Fee Income |
|---|---|---|---|---|
| Current accident year before catastrophe losses | $249,570 | 57.4% | $241,704 | 57.3% |
| Current year catastrophe losses | 2,173 | 0.5% | 1,216 | 0.3% |
| Effect of prior year development | (19,664) | (4.5)% | (15,758) | (3.7)% |
| Total | $232,079 | 53.4% | $227,162 | 53.9% |
The loss ratio was 53.4% for the three months ended September 30, 2026 compared to 53.9% for the three months ended September 30, 2025. The decrease in the loss ratio in the third quarter of 2026 compared to the third quarter of 2025 was due primarily to higher relative net favorable development of prior-year loss reserves offset in part by higher catastrophe losses.
During the three months ended September 30, 2026, prior accident years developed favorably by $19.7 million, of which $23.3 million was attributable to the 2022 through 2025 accident years due to lower emergence of reported losses than expected across most lines of business, particularly in our shorter-tail lines of business. This favorable development was offset in part by adverse development primarily in the construction liability business in the 2017 and 2018 accident years.
During the three months ended September 30, 2025, prior accident years developed favorably by $15.8 million, of which $18.0 million was attributable to the 2021 through 2024 accident years due to lower emergence of reported losses than expected across most lines of business. This favorable development was offset in part by adverse development primarily in our construction liability business in the 2016 through 2019 accident years and adjustments to actuarial assumptions in the 2020 through 2024 accident years to reflect inflation uncertainty around construction defect exposures.
Expense ratio
The following table summarizes the components of the expense ratio for the three months ended September 30, 2026 and 2025:
($ in thousands)
| Three Months Ended September 30, 2026 Underwriting Expenses | % of Sum of Earned Premiums and Fee Income | 2025 Underwriting Expenses | % of Sum of Earned Premiums and Fee Income | |
|---|---|---|---|---|
| Net commissions incurred | 51,122 | 11.8% | 45,275 | 10.8% |
| Other underwriting expenses | 44,307 | 10.2% | 43,148 | 10.2% |
| Underwriting, acquisition and insurance expenses | $95,429 | 22.0% | $88,423 | 21.0% |
The expense ratio was 22.0% for the three months ended September 30, 2026 compared to 21.0% for the three months ended September 30, 2025. The increase in the expense ratio was primarily due to lower ceding commissions as a result of increased retention on our reinsurance treaties. Direct commissions paid as a percentage of gross written premiums was 14.9% and 14.8% for the three months ended September 30, 2026 and 2025, respectively.
Investing results
The following table summarizes net investment income, change in the fair value of equity securities and net realized investment gains (losses) for the three months ended September 30, 2026 and 2025:
($ in thousands)
| Three Months Ended September 30, 2026 | 2025 | Change | |
|---|---|---|---|
| Interest from fixed-maturity securities | $55,650 | $47,043 | $8,607 |
| Dividends from equity securities | 2,294 | 2,019 | 275 |
| Cash equivalents and short-term investments | 1,486 | 1,774 | (288) |
| Real estate investment income | 239 | — | 239 |
| Gross investment income | 59,669 | 50,836 | 8,833 |
| Investment expenses | (1,404) | (1,232) | (172) |
| Net investment income | 58,265 | 49,604 | 8,661 |
| Change in the fair value of equity securities | (37,769) | 23,717 | (61,486) |
| Net realized investment (losses) gains | (419) | 2,159 | (2,578) |
| Change in allowance for credit losses on investments | 1 | 4 | (3) |
| Net realized and unrealized investment (losses) gains | (38,187) | 25,880 | (64,067) |
| Total | $20,078 | $75,484 | $(55,406) |
Net investment income increased by 17.5% to $58.3 million for the three months ended September 30, 2026 from $49.6 million for the three months ended September 30, 2025. This increase was primarily due to growth in our investment portfolio generated from the investment of strong operating cash flows. Our investment portfolio, excluding cash equivalents and unrealized gains and losses, had an annualized gross investment return of 4.4% for both the three months ended September 30, 2026 and 2025.
The change in the fair value of equity securities for the three months ended September 30, 2026 primarily reflected the reversal of gains recognized in prior periods on equity securities sold during the quarter in connection with the repositioning of portions of the Company's investment portfolio.
Net realized investment losses were $0.4 million for the three months ended September 30, 2026 compared to net realized investment gains of $2.2 million for the three months ended September 30, 2025. Net realized investment losses for the three months ended September 30, 2026 consisted of net realized losses of $37.6 million on the sale of fixed-maturity securities, largely offset by net realized gains of $37.1 million on the sale of certain equity securities in connection with the repositioning of the investment portfolio.
Income tax expense
Our effective tax rate was 20.6% for the three months ended September 30, 2026 compared to 20.8% for the three months ended September 30, 2025. The effective tax rates were lower than the federal statutory rate of 21% due to the tax benefits from stock-based compensation, including stock options exercised, and from tax-exempt investment income.
Nine months ended September 30, 2026 compared to nine months ended September 30, 2025
The following table summarizes our results of operations for the nine months ended September 30, 2026 and 2025:
($ in thousands)
| Nine Months Ended September 30, 2026 | 2025 | Change | % Change | |
|---|---|---|---|---|
| Gross written premiums | $1,472,494 | $1,526,048 | $(53,554) | (3.5)% |
| Ceded written premiums | (217,605) | (280,583) | 62,978 | (22.4)% |
| Net written premiums | $1,254,889 | $1,245,465 | $9,424 | 0.8% |
| Net earned premiums | $1,247,928 | $1,160,360 | $87,568 | 7.5% |
| Fee income | 34,035 | 30,655 | 3,380 | 11.0% |
| Losses and loss adjustment expenses | 698,120 | 677,497 | 20,623 | 3.0% |
| Underwriting, acquisition and insurance expenses | 276,834 | 244,932 | 31,902 | 13.0% |
| Underwriting income (1) | 307,009 | 268,586 | 38,423 | 14.3% |
| Net investment income | 169,428 | 139,896 | 29,532 | 21.1% |
| Change in fair value of equity securities | 10,071 | 55,376 | (45,305) | NM |
| Net realized investment gains | 8,029 | 2,832 | 5,197 | NM |
| Change in allowance for credit losses on investments | (26) | (11) | (15) | NM |
| Interest expense | (9,710) | (7,664) | (2,046) | 26.7% |
| Other (expense) income, net | (1,718) | 463 | (2,181) | NM |
| Income before taxes | 483,083 | 459,478 | 23,605 | 5.1% |
| Income tax expense | 96,526 | 94,484 | 2,042 | 2.2% |
| Net income | $386,557 | $364,994 | $21,563 | 5.9% |
| Net operating earnings (2) | $372,279 | $319,019 | $53,260 | 16.7% |
| Loss ratio | 54.5% | 56.9% | ||
| Expense ratio | 21.6% | 20.6% | ||
| Combined ratio (3) | 76.1% | 77.5% | ||
| Annualized return on equity | 26.6% | 29.1% | ||
| Annualized operating return on equity (2) | 25.6% | 25.4% |
NM - Percentage change not meaningful.
(1) Underwriting income is a non-GAAP financial measure. See "—Reconciliation of Non-GAAP Financial Measures" for a reconciliation of net income in accordance with GAAP to underwriting income.
(2) Net operating earnings and annualized operating return on equity are non-GAAP financial measures. Net operating earnings is defined as net income excluding the net change in the fair value of equity securities, after taxes, net realized investment gains and losses, after taxes, and change in allowance for credit losses on investments, after taxes. Annualized operating return on equity is defined as net operating earnings expressed on an annualized basis as a percentage of average beginning and ending total stockholders’ equity during the period. See "—Reconciliation of Non-GAAP Financial Measures" for a reconciliation of net income in accordance with GAAP to net operating earnings.
(3) The combined ratio is the sum of the loss ratio and expense ratio as presented. Calculations of each component may not add due to rounding.
Overview
Net income was $386.6 million for the nine months ended September 30, 2026 compared to $365.0 million for the nine months ended September 30, 2025, an increase of 5.9%. The increase in net income for the first nine months of 2026 over the same period last year was primarily due to higher underwriting income and higher net investment income offset in part by a lower change in the fair value of equity securities.
The lower change in the fair value of equity securities primarily reflected the repositioning of a portion of the Company’s investment portfolio during the third quarter of 2026 to improve expected long-term returns. The Company sold certain common stock holdings and reinvested the proceeds in higher conviction common stock investments. The sales reversed unrealized gains previously recognized in the change in fair value of equity securities and recognized largely corresponding realized gains. The Company simultaneously sold lower-yielding fixed-maturity securities in a loss position and reinvested the proceeds in higher-yielding fixed-maturity securities. The losses on the fixed-maturity sales, which had previously been recorded in accumulated other comprehensive loss within stockholders’ equity, were reclassified into net income upon sale and offset the realized gains on the equity sales.
Underwriting income was $307.0 million for the nine months ended September 30, 2026 compared to $268.6 million for the nine months ended September 30, 2025, an increase of 14.3%. The corresponding combined ratios were 76.1% for the nine months ended September 30, 2026 compared to 77.5% for the nine months ended September 30, 2025. The increase in underwriting income for the first nine months of 2026 compared to the same period last year was primarily due to growth in net earned premiums, lower catastrophe losses and higher favorable development of loss reserves from prior accident years.
Premiums
Gross written premiums were $1,472.5 million for the nine months ended September 30, 2026 compared to $1,526.0 million for the nine months ended September 30, 2025, a decrease of $53.6 million, or 3.5%. The decrease in gross written premiums was primarily due to an 18.7% decline in our property divisions, driven by heightened competition, including a 29.8% decline in the Commercial Property Division, one of the Company's larger divisions. Gross written premiums in our casualty business grew 3.0% due primarily to an increase in bound accounts offset in part by a change in business mix towards smaller accounts.
The average premium per policy written was $12,000 in the first nine months of 2026 compared to $13,800 in the first nine months of 2025. Excluding our Personal Insurance Division, which has a relatively low premium per policy written, the average premium per policy written was $12,300 for the first nine months of 2026 and $14,400 for the first nine months of 2025. The decrease in average premium per policy for the first nine months of 2026 over the same period last year was due to an increase in competition, primarily on larger accounts and in our Commercial Property Division.
The following table provides a summary of gross premiums written by division for the nine months ended September 30, 2026 and 2025:
($ in thousands)
| Commercial: | Nine Months Ended September 30, 2026 | 2025 | Change | % Change |
|---|---|---|---|---|
| Excess Casualty | $219,871 | $208,296 | $11,575 | 5.6% |
| Commercial Property | 214,125 | 305,179 | (91,054) | (29.8)% |
| General Casualty | 160,412 | 155,145 | 5,267 | 3.4% |
| Small Business Casualty | 152,416 | 158,460 | (6,044) | (3.8)% |
| Construction | 104,044 | 115,971 | (11,927) | (10.3)% |
| Allied Health | 78,206 | 75,092 | 3,114 | 4.1% |
| Small Business Property | 76,914 | 75,933 | 981 | 1.3% |
| Entertainment | 65,285 | 54,115 | 11,170 | 20.6% |
| Products Liability | 56,960 | 53,940 | 3,020 | 5.6% |
| Commercial Auto | 43,224 | 36,483 | 6,741 | 18.5% |
| Energy | 37,828 | 34,675 | 3,153 | 9.1% |
| Excess Professional | 29,956 | 31,287 | (1,331) | (4.3)% |
| Inland Marine | 26,882 | 25,221 | 1,661 | 6.6% |
| Environmental | 26,567 | 23,966 | 2,601 | 10.9% |
| Life Sciences | 26,430 | 27,409 | (979) | (3.6)% |
| Professional Liability | 24,144 | 26,341 | (2,197) | (8.3)% |
| Health Care | 21,502 | 19,433 | 2,069 | 10.6% |
| Public Entity | 14,661 | 15,292 | (631) | (4.1)% |
| Agribusiness Property | 14,548 | 4,016 | 10,532 | 262.3% |
| Agribusiness Casualty | 13,577 | 9,686 | 3,891 | 40.2% |
| Management Liability | 12,885 | 14,181 | (1,296) | (9.1)% |
| Aviation | 10,338 | 7,617 | 2,721 | 35.7% |
| Ocean Marine | 3,516 | 2,768 | 748 | 27.0% |
| Total commercial | 1,434,291 | 1,480,506 | (46,215) | (3.1)% |
| Personal: | ||||
| High Value Homeowners | 23,223 | 27,646 | (4,423) | (16.0)% |
| Personal Insurance | 14,980 | 17,896 | (2,916) | (16.3)% |
| Total personal | 38,203 | 45,542 | (7,339) | (16.1)% |
| Total | $1,472,494 | $1,526,048 | $(53,554) | (3.5)% |
Certain prior year amounts are reclassified to conform to current year's divisions and the business underwritten within them.
Net written premiums increased by $9.4 million, or 0.8%, to $1,254.9 million for the nine months ended September 30, 2026 from $1,245.5 million for the nine months ended September 30, 2025. The net retention ratio was 85.2% for the nine months ended September 30, 2026 compared to 81.6% for the same period last year. The increases in net written premiums and the net retention ratio were primarily due to an increase in the retention on our reinsurance treaties and change in the mix of business.
Net earned premiums increased by $87.6 million, or 7.5%, to $1,247.9 million for the nine months ended September 30, 2026 from $1,160.4 million for the nine months ended September 30, 2025 due primarily to continued earning of premium from prior-period growth in gross written premiums and higher net retention levels.
Loss ratio
The following table summarizes the loss ratios for the nine months ended September 30, 2026 and 2025:
($ in thousands)
| Loss ratio: | Nine Months Ended September 30, 2026 Losses and Loss Adjustment Expenses | % of Sum of Earned Premiums and Fee Income | 2025 Losses and Loss Adjustment Expenses | % of Sum of Earned Premiums and Fee Income |
|---|---|---|---|---|
| Current accident year before catastrophe losses | $746,721 | 58.3% | $695,851 | 58.4% |
| Current year catastrophe losses | 9,162 | 0.7% | 27,499 | 2.3% |
| Effect of prior year development | (57,763) | (4.5)% | (45,853) | (3.8)% |
| Total | $698,120 | 54.5% | $677,497 | 56.9% |
The loss ratio was 54.5% for the nine months ended September 30, 2026 compared to 56.9% for the nine months ended September 30, 2025. The decrease in the loss ratio for the first nine months of 2026 compared to the first nine months of 2025 was due primarily to lower catastrophe losses incurred in the period and higher relative net favorable development of prior-year loss reserves.
During the nine months ended September 30, 2026, prior accident years developed favorably by $57.8 million, of which $66.3 million was attributable to the 2021 through 2025 accident years due to lower emergence of reported losses than expected across most lines of business, particularly in our shorter-tail lines of business. This favorable development was offset in part by adverse development primarily in our construction liability business in the 2017 through 2019 accident years.
During the nine months ended September 30, 2025, prior accident years developed favorably by $45.9 million, of which $53.8 million was attributable to the 2020 through 2024 accident years due to lower emergence of reported losses than expected across most lines of business. This favorable development was offset in part by adverse development primarily in our construction liability business in the 2016 through 2019 accident years and adjustments to actuarial assumptions in the 2020 through 2024 accident years to reflect inflation uncertainty around construction defect exposures.
Expense ratio
The following table summarizes the components of the expense ratio for the nine months ended September 30, 2026 and 2025:
($ in thousands)
| Nine Months Ended September 30, 2026 Underwriting Expenses | % of Sum of Earned Premiums and Fee Income | 2025 Underwriting Expenses | % of Sum of Earned Premiums and Fee Income | |
|---|---|---|---|---|
| Net commissions incurred | $145,234 | 11.3% | $120,682 | 10.1% |
| Other underwriting expenses | 131,600 | 10.3% | 124,250 | 10.5% |
| Total | $276,834 | 21.6% | $244,932 | 20.6% |
The expense ratio was 21.6% for the nine months ended September 30, 2026 compared to 20.6% for the nine months ended September 30, 2025. The increase in the expense ratio was primarily due to lower ceding commissions as a result of increased retention on our reinsurance treaties. Direct commissions paid as a percentage of gross written premiums was 14.9% and 14.8% for the nine months ended September 30, 2026 and 2025, respectively.
Investing results
The following table summarizes net investment income, change in the fair value of equity securities and net realized investment gains (losses) for the nine months ended September 30, 2026 and 2025:
($ in thousands)
| Nine Months Ended September 30, 2026 | 2025 | Change | |
|---|---|---|---|
| Interest from fixed-maturity securities | $161,350 | $132,733 | $28,617 |
| Dividends from equity securities | 8,065 | 5,983 | 2,082 |
| Cash equivalents and short-term investments | 4,259 | 4,800 | (541) |
| Real estate investment income | 778 | — | 778 |
| Gross investment income | 174,452 | 143,516 | 30,936 |
| Investment expenses | (5,024) | (3,620) | (1,404) |
| Net investment income | 169,428 | 139,896 | 29,532 |
| Change in fair value of equity securities | 10,071 | 55,376 | (45,305) |
| Net realized investment gains | 8,029 | 2,832 | 5,197 |
| Change in allowance for credit losses on investments | (26) | (11) | (15) |
| Net realized and unrealized investment gains | 18,074 | 58,197 | (40,123) |
| Total | $187,502 | $198,093 | $(10,591) |
Net investment income increased by 21.1% to $169.4 million for the nine months ended September 30, 2026 from $139.9 million for the nine months ended September 30, 2025. The increase in the first nine months of 2026 compared to the same period last year was primarily due to growth in our investment portfolio largely generated from the investment of strong operating cash flows. Our investment portfolio, excluding cash equivalents and unrealized gains and losses, had an annualized gross investment return of 4.4% and 4.3% for the nine months ended September 30, 2026 and 2025, respectively.
The change in the fair value of equity securities for the nine months ended September 30, 2026 primarily reflected the reversal of gains recognized in prior periods on equity securities sold during 2026, in connection with the repositioning of the equity portfolio during the period.
Net realized investment gains were $8.0 million and $2.8 million for the nine months ended September 30, 2026 and 2025, respectively. Net realized investment gains for the first nine months of 2026 consisted primarily of realized gains on opportunistic sales of equity securities and on the repositioning of the equity portfolio, partially offset by realized losses on the sale of fixed-maturity securities.
Income tax expense
Our effective tax rate was 20.0% for the nine months ended September 30, 2026 compared to 20.6% for the nine months ended September 30, 2025. 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.
Return on equity
Our annualized return on equity was 26.6% for the nine months ended September 30, 2026 compared to 29.1% for the nine months ended September 30, 2025. Our annualized operating return on equity was 25.6% for the nine months ended September 30, 2026 compared to 25.4% for the nine months ended September 30, 2025. The increase in annualized operating return on equity for the nine months ended September 30, 2026 compared to the prior period was due primarily to higher profitability compared to the prior-year period offset in part by higher average stockholders' equity.
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 business purposes.
We receive corporate service fees from Kinsale Insurance Company to reimburse us for most of the operating expenses that we incur. Reimbursement of expenses through corporate service fees is based on the actual costs that we expect to incur with no mark-up above our expected costs.
Shelf registration
In August 2025, we filed a universal shelf registration statement with the SEC that expires in 2028. We can use this shelf registration to issue an unspecified amount of common stock, preferred stock, depositary shares and warrants. The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements.
Share repurchase program
In December 2025, our Board of Directors authorized a new share repurchase program authorizing the repurchase of up to $250.0 million of our common stock. The shares may be repurchased from time to time in open market purchases, privately-negotiated transactions, block purchases, accelerated share repurchase agreements or a combination of methods and pursuant to safe harbors provided by Rule 10b-18 and Rule 10b5-1 under the Securities Exchange Act of 1934. The timing, manner, price and amount of any repurchases under the share repurchase program will be determined by us in our discretion. The share repurchase program does not require us to repurchase any specific number of shares, and may be modified, suspended or terminated at any time. In July 2026, our Board of Directors approved an additional share repurchase authorization of up to $250.0 million of our common stock.
The cost of treasury stock acquired pursuant to common share repurchases includes the 1% excise tax imposed on common share repurchase activity, net of common share issuances, as part of the Inflation Reduction Act of 2022. At September 30, 2026, the Company had $237.5 million of capacity remaining under its share repurchase program.
Debt
In July 2022, we entered into a Note Purchase and Private Shelf Agreement (the "Note Purchase Agreement"), which provides for the issuance of senior promissory notes with an aggregate principal amount of up to $150.0 million. In September 2023, we amended the Note Purchase Agreement, which increased the authorized aggregate principal amount of senior promissory notes that may be issued thereunder to $200.0 million.
Pursuant to the Note Purchase Agreement, on July 22, 2022 we issued $125.0 million aggregate principal amount of 5.15% senior promissory notes (the "Series A Notes") and on September 18, 2023 we issued a $50.0 million aggregate principal amount 6.21% senior promissory note (the "Series B Note"), the proceeds of which were used to fund surplus at Kinsale Insurance Company, refinance indebtedness and for general corporate purposes. See Note 13 for further information regarding the Note Purchase Agreement.
In July 2022, we entered into an Amended and Restated Credit Agreement, which extended the maturity date to July 22, 2027, and increased the aggregate commitment to $100.0 million, with the option to increase the aggregate commitment by $30.0 million, subject to certain conditions. Borrowings under the Amended and Restated Credit Agreement may be used for general corporate purposes (which may include, without limitation, to fund future growth, to finance working capital needs, to fund capital expenditures, and to refinance, redeem or repay indebtedness). See Note 13 for further information regarding the Amended and Restated Credit Agreement.
In December 2025, the covenants limiting restricted payments under the Note Purchase Agreement and Amended and Restated Credit Agreement were amended to allow the Company to make restricted payments so long as at the time of the declaration of such restricted payment, no event of default under the Note Purchase Agreement has occurred and is continuing or would arise after giving effect, on a pro forma basis, to such restricted payment if such restricted payment were to be made at such time of declaration.
Management believes that the Company has sufficient liquidity available both in Kinsale and in its insurance subsidiary, Kinsale Insurance Company, as well as in its other operating subsidiaries, to meet its operating cash needs and obligations and committed capital expenditures for the next 12 months.
Cash flows
Our most significant source of cash is from premiums received from our insureds, which we generally receive at the beginning of the coverage period. Our most significant cash outflow is for claims that arise when a policyholder incurs an insured loss. Because the payment of claims occurs after the receipt of the premium, often years later, we invest the cash in investment securities that earn interest and dividends. We also use cash to pay commissions to insurance brokers, as well as to pay operating expenses such as salaries, consulting services and taxes. As described under "—Reinsurance" below, we use reinsurance to help manage the risk that we take related to the issuance of our policies. We cede, or pay out, part of the premiums we receive to our reinsurers and collect cash back when losses subject to our reinsurance coverage are paid.
The timing of our cash flows from operating activities can vary among periods due to the timing by which payments are made or received. Some of our payments and receipts, including loss settlements and subsequent reinsurance receipts, can be significant, so their timing can influence cash flows from operating activities in any given period. Management believes that cash receipts from premiums, proceeds from investment sales and redemptions and investment income are sufficient to cover cash outflows in the foreseeable future.
Our cash flows for the nine months ended September 30, 2026 and 2025 were:
(in thousands)
| Cash and cash equivalents provided by (used in): | Nine Months Ended September 30, 2026 | 2025 |
|---|---|---|
| Operating activities | $754,886 | $802,344 |
| Investing activities | (472,069) | (702,851) |
| Financing activities | (285,670) | (42,544) |
| Change in cash and cash equivalents | $(2,853) | $56,949 |
Net cash provided by operating activities was approximately $754.9 million for the nine months ended September 30, 2026 compared to $802.3 million for the same period in 2025. This decrease was largely driven by higher paid losses, operating expenses, and income taxes offset in part by higher investment income received.
Net cash used in investing activities was $472.1 million for the nine months ended September 30, 2026 compared to $702.9 million for the nine months ended September 30, 2025. The decrease in net cash used in investing activities was primarily due to a greater allocation of cash to share repurchases, which reduced the amount available for investment purchases. Net cash used in investing activities during the first nine months of 2026 included purchases of fixed-maturity securities of $1.5 billion, which included primarily corporate bonds and mortgage- and asset-backed securities. During the first nine months of 2026, we received proceeds of $795.4 million from sales of fixed-maturity securities, largely corporate bonds, and, to a lesser extent, mortgage- and asset-backed securities and municipal securities and $289.0 million primarily from redemptions and maturities of mortgage- and asset-backed securities. For the nine months ended September 30, 2026, purchases of equity securities of $266.4 million consisted of common stocks and exchange-traded funds ("ETFs"). During the first nine months of 2026, we received proceeds of $169.3 million primarily from sales of common stocks, ETFs and preferred stocks. In addition, net sales of short-term investments of $3.9 million consisted of U.S. Treasuries.
Net cash used in investing activities of $702.9 million during the first nine months of 2025 included purchases of fixed-maturity securities of $1.8 billion, which included primarily corporate bonds and asset- and mortgage-backed securities. During the first nine months of 2025, we received proceeds of $677.6 million from sales of fixed-maturity securities, largely corporate bonds, asset-backed securities and, to a lesser extent, municipal securities and $554.3 million from redemptions and maturities of asset- and mortgage-backed securities and corporate bonds. For the nine months ended September 30, 2025, purchases of equity securities of $131.4 million consisted of common stocks and ETFs. During the first nine months of 2025, we received proceeds of $14.6 million from sales of common stocks. In addition, net purchases of short-term investments of $6.5 million consisted of U.S. Treasuries.
During the first nine months of 2026, cash used in financing activities reflected dividends paid of $0.75 per common share, or $17.0 million in aggregate, share repurchases and related excise tax of $263.1 million and payroll taxes withheld and remitted on restricted stock awards of $6.8 million, offset in part by proceeds received from our equity compensation plans of $1.2 million. Additionally, in connection with timing of our share repurchases, we drew down $30.0 million under our revolving credit facility during the first nine months of 2026, which we subsequently repaid in full during the period.
During the first nine months of 2025, cash used in financing activities reflected dividends paid of $0.51 per common share, or $11.9 million in aggregate, share repurchases of $40.0 million and payroll taxes withheld and remitted on restricted stock awards of $6.3 million, offset in part by proceeds received from our equity compensation plans of $0.6 million. In addition, in September 2025, we drew down $15.0 million from the Credit Facility to fund the construction of our new corporate headquarters.
Reinsurance
We enter into reinsurance contracts primarily to limit our exposure to potential large losses. Reinsurance involves an insurance company transferring ("ceding") a portion of its exposure on a risk to another insurer, the reinsurer. The reinsurer assumes the exposure in return for a portion of the premium. Our reinsurance is primarily contracted under quota share reinsurance treaties and excess of loss treaties. In quota share reinsurance, the reinsurer agrees to assume a specified percentage of the ceding company's losses arising out of a defined class of business in exchange for a corresponding percentage of premiums, net of a ceding commission. In excess of loss reinsurance, the reinsurer agrees to assume all or a portion of the ceding company's losses, in excess of a specified amount. Under excess of loss reinsurance, the premium payable to the reinsurer is negotiated by the parties based on their assessment of the amount of risk being ceded to the reinsurer because the reinsurer does not share proportionately in the ceding company's losses.
We renew our reinsurance treaties annually. During each renewal cycle, there are a number of factors we consider when determining our reinsurance coverage, including (1) plans to change the underlying insurance coverage we offer, (2) trends in loss activity, (3) the level of our capital and surplus, (4) changes in our risk appetite and (5) the cost and availability of reinsurance coverage.
To manage our natural catastrophe exposure, we use stochastic models to analyze the risk of severe losses. We measure exposure to these losses in terms of probable maximum loss ("PML"), which is an estimate of the amount of loss we would expect to meet or exceed once in a given number of years (referred to as the return period). When managing our catastrophe exposure, we generally focus on the 100-year and the 250-year return periods.
The following is a summary of our significant reinsurance programs as of September 30, 2026:
| Line of Business Covered | Company Policy Limit | Reinsurance Coverage | Company Retention |
|---|---|---|---|
| Property (1) | Up to $12.5 million per occurrence | 50% up to $295.3 million per catastrophe | 50% of property losses |
| Property – catastrophe (2) | N/A | $400.0 million excess of $100.0 million | $100.0 million per catastrophe |
| Casualty (3) | Up to $10.0 million per occurrence | Variable quota share | $3.0 million per occurrence as described in note (3) below |
(1) Our property quota share reinsurance reduces the financial impact of property losses up to a loss recovery of $147.7 million for an event. This reinsurance is not applicable to any individual policy with a limit of less than $5.0 million.
(2) Our property catastrophe reinsurance reduces the financial impact of a catastrophe event involving multiple claims and policyholders. Our property catastrophe reinsurance includes a reinstatement provision which requires us to pay reinstatement premiums after a loss has occurred in order to preserve coverage. Including the reinstatement of coverage, the maximum aggregate loss recovery limit is $800.0 million. This coverage applies after the coverage provided by the property quota share treaty.
(3) For casualty policies with a per-occurrence limit higher than $3.0 million, the ceding percentage varies such that the retention is always $3.0 million or less. For example, for a $5.0 million limit excess policy, our retention would be 60%, whereas for a $10.0 million limit excess policy, our retention would be 30%. This reinsurance is not applicable to any individual policy with a per-occurrence limit of $3.0 million or less.
Reinsurance contracts do not relieve us from our obligations to policyholders. Failure of the reinsurer to honor its obligation could result in losses to us, and therefore, we established an allowance for credit risk based on historical analysis of credit losses for highly rated companies in the insurance industry. In formulating our reinsurance programs, we are selective in our choice of reinsurers and we consider numerous factors, the most important of which are the financial stability of the reinsurer, its history of responding to claims and its overall reputation. In an effort to minimize our exposure to the insolvency of our reinsurers, we review the financial condition of each reinsurer regularly. In addition, we continually monitor for rating downgrades involving any of our reinsurers. At September 30, 2026, all reinsurance contracts that our insurance subsidiary was a party to were with companies with A.M. Best ratings of "A-" (Excellent) or better. As of September 30, 2026, we recorded an allowance for credit losses of $1.1 million related to our reinsurance balances.
Ratings
Kinsale Insurance Company has a financial strength rating of "A" (Excellent) with a stable outlook from A.M. Best. A.M. Best assigns ratings to insurance companies, which currently range from "A++" (Superior) to "F" (In Liquidation). "A" (Excellent) is the third highest rating issued by A.M. Best. The "A" (Excellent) rating is assigned to insurers that have, in A.M. Best's opinion, an excellent ability to meet their ongoing obligations to policyholders. This rating is intended to provide an independent opinion of an insurer's ability to meet its obligation to policyholders and is not an evaluation directed at investors.
The financial strength ratings assigned by A.M. Best have an impact on the ability of the insurance companies to attract and retain agents and brokers and on the risk profiles of the submissions for insurance that the insurance companies receive. The "A" (Excellent) rating obtained by Kinsale Insurance Company is consistent with our business plan and allows us to actively pursue relationships with the agents and brokers identified in our marketing plan.
Financial Condition
Stockholders' equity
Total stockholders' equity and tangible stockholders' equity were $1.9 billion at September 30, 2026 and $2.0 billion at December 31, 2025. The decreases in both total and tangible stockholders' equity over the prior year-end balances were primarily due to higher share repurchases and dividends and a decrease in the fair value of our fixed-maturity investments offset in part by profits generated during the period and net activity related to our share-based compensation plan. Tangible stockholders’ equity is a non-GAAP financial measure. See "—Reconciliation of non-GAAP financial measures" for a reconciliation of stockholders' equity in accordance with GAAP to tangible stockholders' equity.
Investment portfolio
At September 30, 2026, our cash and invested assets of $5.5 billion consisted of fixed-maturity securities, equity securities, cash and cash equivalents and real estate investments. At September 30, 2026, the majority of the investment portfolio was composed of fixed-maturity securities of $4.5 billion that were classified as available-for- sale. Available-for-sale investments are carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of accumulated other comprehensive income. At September 30, 2026, we also held $779.2 million of equity securities, which included common stocks, ETFs and non-redeemable preferred stock, $160.5 million of cash and cash equivalents and $54.6 million of real estate investments.
Our fixed-maturity securities, including cash equivalents, had a weighted average duration of 4.4 years and 4.0 years at September 30, 2026 and December 31, 2025, respectively, and an average rating of "AA-" at both September 30, 2026 and December 31, 2025.
At September 30, 2026 and December 31, 2025, the amortized cost and estimated fair value on fixed-maturity securities were as follows:
($ in thousands)
| Fixed-maturity securities: | September 30, 2026 Amortized Cost | Estimated Fair Value | % of Total Fair Value | December 31, 2025 Amortized Cost | Estimated Fair Value | % of Total Fair Value |
|---|---|---|---|---|---|---|
| U.S. Treasury securities and obligations of U.S. government agencies | $869 | $838 | —% | $861 | $874 | —% |
| Obligations of states, municipalities and political subdivisions | 101,347 | 78,752 | 1.8% | 146,222 | 127,860 | 2.9% |
| Corporate and other securities | 1,831,099 | 1,732,012 | 38.5% | 1,711,348 | 1,713,888 | 39.5% |
| Asset-backed securities | 538,114 | 531,269 | 11.8% | 582,780 | 588,519 | 13.6% |
| Residential mortgage-backed securities | 1,755,050 | 1,655,788 | 36.8% | 1,491,642 | 1,459,270 | 33.6% |
| Commercial mortgage-backed securities | 510,208 | 498,666 | 11.1% | 449,872 | 451,039 | 10.4% |
| Total fixed-maturity securities | $4,736,687 | $4,497,325 | 100.0% | $4,382,725 | $4,341,450 | 100.0% |
The table below summarizes the credit quality of our fixed-maturity securities at September 30, 2026 and December 31, 2025, as rated by Standard & Poor’s Financial Services, LLC ("Standard & Poor's"):
($ in thousands)
| Standard & Poor’s or Equivalent Designation | September 30, 2026 Estimated Fair Value | % of Total | December 31, 2025 Estimated Fair Value | % of Total |
|---|---|---|---|---|
| AAA | $1,363,617 | 30.3% | $1,194,902 | 27.5% |
| AA | 1,507,400 | 33.5% | 1,503,373 | 34.6% |
| A | 905,425 | 20.1% | 861,657 | 19.8% |
| BBB | 678,010 | 15.1% | 722,141 | 16.7% |
| Below BBB and unrated | 42,873 | 1.0% | 59,377 | 1.4% |
| Total | $4,497,325 | 100.0% | $4,341,450 | 100.0% |
49
The amortized cost and estimated fair value of our fixed-maturity securities summarized by contractual maturity as of September 30, 2026 and December 31, 2025, were as follows:
($ in thousands)
| September 30, 2026 Amortized Cost | Estimated Fair Value | % of Total Fair Value | December 31, 2025 Amortized Cost | Estimated Fair Value | % of Total Fair Value | |
|---|---|---|---|---|---|---|
| Due in one year or less | $1,850 | $1,854 | 0.1% | $14,324 | $14,392 | 0.3% |
| Due after one year through five years | 737,941 | 720,551 | 16.0% | 868,804 | 879,532 | 20.3% |
| Due after five years through ten years | 915,485 | 860,658 | 19.1% | 695,323 | 700,466 | 16.1% |
| Due after ten years | 278,039 | 228,539 | 5.1% | 279,980 | 248,232 | 5.7% |
| Asset-backed securities | 538,114 | 531,269 | 11.8% | 582,780 | 588,519 | 13.6% |
| Residential mortgage-backed securities | 1,755,050 | 1,655,788 | 36.8% | 1,491,642 | 1,459,270 | 33.6% |
| Commercial mortgage-backed securities | 510,208 | 498,666 | 11.1% | 449,872 | 451,039 | 10.4% |
| Total fixed-maturity securities | $4,736,687 | $4,497,325 | 100.0% | $4,382,725 | $4,341,450 | 100.0% |
Actual maturities may differ from contractual maturities because some borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Restricted investments
In order to conduct business in certain states, we are required to maintain letters of credit or assets on deposit to support state-mandated insurance regulatory requirements and to comply with certain third-party agreements. Assets held on deposit or in trust accounts are primarily in the form of high-grade securities. The fair value of our restricted assets was $3.7 million and $3.9 million at September 30, 2026 and December 31, 2025, respectively.
Reconciliation of Non-GAAP Financial Measures
Reconciliation of underwriting income
Underwriting income is a non-GAAP financial measure that we believe is useful in evaluating our underwriting performance without regard to investment income. Underwriting income is defined as net income excluding net investment income, the net change in the fair value of equity securities, net realized investment gains and losses, change in allowance for credit losses on investments, interest expense, other expenses, other income and income tax expense. We use underwriting income as an internal performance measure in the management of our operations because we believe it gives us and users of our financial information useful insight into our results of operations and our underlying business performance. Underwriting income should not be viewed as a substitute for net income calculated in accordance with GAAP, and other companies may define underwriting income differently.
Net income for the three and nine months ended September 30, 2026 and 2025, reconciles to underwriting income as follows:
($ in thousands)
| Three Months Ended September 30, 2026 | 2025 | Nine Months Ended September 30, 2026 | 2025 | |
|---|---|---|---|---|
| Net income | $98,129 | $141,646 | $386,557 | $364,994 |
| Income tax expense | 25,490 | 37,232 | 96,526 | 94,484 |
| Income before income taxes | 123,619 | 178,878 | 483,083 | 459,478 |
| Net investment income | (58,265) | (49,604) | (169,428) | (139,896) |
| Change in the fair value of equity securities | 37,769 | (23,717) | (10,071) | (55,376) |
| Net realized investment (gains) losses | 419 | (2,159) | (8,029) | (2,832) |
| Change in allowance for credit losses on investments | (1) | (4) | 26 | 11 |
| Interest expense | 3,220 | 2,569 | 9,710 | 7,664 |
| Other expenses (1) | 451 | 473 | 2,279 | 1,145 |
| Other income | (149) | (764) | (561) | (1,608) |
| Underwriting income | $107,063 | $105,672 | $307,009 | $268,586 |
(1) Other expenses includes primarily corporate expenses not allocated to our insurance operations.
Reconciliation of net operating earnings
Net operating earnings is defined as net income excluding the effects of the net change in the fair value of equity securities, after taxes, net realized investment gains and losses, after taxes, and the change in allowance for credit losses on investments, after taxes. We believe the exclusion of these items provides a useful comparison of our underlying business performance from period to period. Net operating earnings and percentages or calculations using net operating earnings (e.g., diluted operating earnings per share and annualized operating return on equity) are non-GAAP financial measures. Net operating earnings should not be viewed as a substitute for net income calculated in accordance with GAAP, and other companies may define net operating earnings differently.
Net income for the three and nine months ended September 30, 2026 and 2025, reconciles to net operating earnings as follows:
($ in thousands)
| Three Months Ended September 30, 2026 | 2025 | Nine Months Ended September 30, 2026 | 2025 | |
|---|---|---|---|---|
| Net income | $98,129 | $141,646 | $386,557 | $364,994 |
| Adjustments: | ||||
| Change in the fair value of equity securities, before taxes | 37,769 | (23,717) | (10,071) | (55,376) |
| Income tax expense (benefit) (1) | (7,931) | 4,981 | 2,115 | 11,629 |
| Change in the fair value of equity securities, after taxes | 29,838 | (18,736) | (7,956) | (43,747) |
| Net realized investment (gains) losses, before taxes | 419 | (2,159) | (8,029) | (2,832) |
| Income tax expense (benefit) (1) | (88) | 453 | 1,686 | 595 |
| Net realized investment (gains) losses, after taxes | 331 | (1,706) | (6,343) | (2,237) |
| Change in allowance for credit losses on investments, before taxes | (1) | (4) | 26 | 11 |
| Income tax (benefit) expense (1) | — | 1 | (5) | (2) |
| Change in allowance for credit losses on investments, after taxes | (1) | (3) | 21 | 9 |
| Net operating earnings | $128,297 | $121,201 | $372,279 | $319,019 |
| Operating return on equity: | ||||
| Average stockholders' equity (2) | $1,977,063 | $1,793,895 | $1,939,297 | $1,674,389 |
| Annualized return on equity (3) | 19.9% | 31.6% | 26.6% | 29.1% |
| Annualized operating return on equity (4) | 26.0% | 27.0% | 25.6% | 25.4% |
(1) Income taxes on adjustments to reconcile net income to net operating earnings use an effective tax rate of 21%.
(2) Average stockholders' equity is computed by adding the total stockholders' equity as of the date indicated to the prior quarter-end or year-end total, as applicable, and dividing by two.
(3) Annualized return on equity is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders' equity during the period.
(4) Annualized operating return on equity is net operating earnings expressed on an annualized basis as a percentage of average beginning and ending stockholders' equity during the period.
Reconciliation of tangible stockholders' equity
Tangible stockholders’ equity is defined as total stockholders’ equity less intangible assets, net of deferred taxes. Our definition of tangible stockholders’ equity may not be comparable to that of other companies, and it should not be viewed as a substitute for stockholders’ equity calculated in accordance with GAAP. We use tangible stockholders' equity internally to evaluate the strength of our balance sheet and to compare returns relative to this measure.
Stockholders' equity at September 30, 2026 and December 31, 2025, reconciles to tangible stockholders' equity as follows:
($ in thousands)
| September 30, 2026 | December 31, 2025 | |
|---|---|---|
| Stockholders' equity | $1,919,011 | $1,959,583 |
| Less: intangible assets, net of deferred taxes | 2,795 | 2,795 |
| Tangible stockholders' equity | $1,916,216 | $1,956,788 |
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 condensed consolidated financial statements. These judgments and estimates affect our reported amounts of assets, liabilities, revenues and expenses and the disclosure of our material contingent assets and liabilities, if any. Actual results may differ materially from the estimates and assumptions used in preparing the condensed consolidated financial statements. We evaluate our estimates regularly using information that we believe to be relevant. Our critical accounting policies and estimates are described in our annual consolidated financial statements and the related notes in our Annual Report on Form 10-K for the year ended December 31, 2025.
Market risk
As filed, 655 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument as the result of changes in interest rates, equity prices, foreign currency exchange rates and commodity prices. Our primary market risks have been equity price risk associated with investments in equity securities and interest rate risk associated with investments in fixed maturities. We do not have any material exposure to foreign currency exchange rate risk or commodity risk.
There have been no material changes in market risk from the information provided in our Annual Report on Form 10-K for the year ended December 31, 2025.
Controls and procedures
As filed, 1,823 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding required financial disclosure.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of that date.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting during the third quarter of 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
The effectiveness of any system of controls and procedures is subject to certain limitations, and, as a result, there can be no assurance that our controls and procedures will detect all errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be attained.
Risk factors
As filed, 148 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2026-09-30. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2026-07-01 to 2026-09-30 | $454.8m | us-gaap:Revenues |
| Revenue | 9 months2026-01-01 to 2026-09-30 | $1.47bn | us-gaap:Revenues |
| Income tax | 3 months2026-07-01 to 2026-09-30 | $25.5m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months2026-01-01 to 2026-09-30 | $96.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2026-07-01 to 2026-09-30 | $98.1m | us-gaap:NetIncomeLoss |
| Net income | 9 months2026-01-01 to 2026-09-30 | $386.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2026-07-01 to 2026-09-30 | $4.36 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months2026-01-01 to 2026-09-30 | $16.97 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2026-07-01 to 2026-09-30 | $4.36 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months2026-01-01 to 2026-09-30 | $17.00 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2026-07-01 to 2026-09-30 | 22,504,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months2026-01-01 to 2026-09-30 | 22,781,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months2026-01-01 to 2026-09-30 | $754.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months2026-01-01 to 2026-09-30 | $12.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months2026-01-01 to 2026-09-30 | $17.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months2026-01-01 to 2026-09-30 | $263.1m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | At period end2026-09-30 | $160.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | At period end2026-09-30 | $6.43bn | us-gaap:Assets |
| Total liabilities | At period end2026-09-30 | $4.51bn | us-gaap:Liabilities |
| Long-term debt | At period end2026-09-30 | $224.6m | us-gaap:LongTermDebt |
| Shareholders' equity | At period end2026-09-30 | $1.92bn | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0001669162-26-000050. Last ingested by Listed: Oct 24, 2026, 15:07 ET. Listed shows no prices and gives no investment advice.