KNSL 10-K & 10-Q changes, risk factors and insider trading
Kinsale Capital Group, Inc. · NYSE · Fire, Marine & Casualty Insurance · CIK 1669162 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We could suffer security breaches, loss of data or proprietary information, cyberattacks, and other information technology failures, and are subject to laws and regulations concerning data privacy and security that are continually evolving. Actual or suspected information technology failures or failures to comply with applicable law could disrupt our operations, damage our reputation, and adversely affect our business, financial condition, or results of operations.”
Removed heading “The failure of our information technology and telecommunications systems could materially adversely affect our business.”
Removed heading “Cloud provider service failure or control weakness could adversely affect our business.”
Largest changes
“As part of our normal business activities, we collect, store, and process personal information regarding employees, claimants, brokers, agents, and vendors. As a result, we are subject to numerous federal, state, and local laws and regulations governing data privacy, security, breach notification, and the use of personal information. These requirements continue to evolve, often becoming more stringent. …”see in full comparison
“We could suffer security breaches, loss of data or proprietary information, cyberattacks, and other information technology failures, and are subject to laws and regulations concerning data privacy and security that are continually evolving. Actual or suspected information technology failures or failures to comply with applicable law could disrupt our operations, damage our reputation, and adversely affect our business, financial condition, or results of operations.”see in full comparison
“We and our service providers face numerous and evolving cybersecurity and operational risks that threaten the confidentiality, integrity, and availability of systems and data. These risks include vulnerabilities in commercial software integrated into our systems or into the products and services of our suppliers, as well as increasingly sophisticated cyberattack techniques that frequently change and may originate from less regulated or remote areas of the world. …”see in full comparison
see in full comparisonWhile we have implemented security measures designed to protect against breaches of security and other interference with our systems and networks, our systems and networks may be subject to significant breaches or interference.Any such event previously discussed may result inmaterialoperational disruptions as well as unauthorized accessto or theto, disclosure of, or loss ofourproprietary information orourcustomerscustomers’data.dataSuchand information, which in turnoccurrences mayresultleadinto legal claims, regulatory scrutinyandor liability,thereputationalincurrencedamage,ofsignificant costs to eliminate or mitigate further exposure, and the potential loss of customers oraffiliatedvendors.advisors,Increasingreputationalrequirements for public disclosure of cybersecurity incidents may also increase the harmor other damageto ourbusiness.business, financial condition, and results of operations. We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploitvulnerabilitiesweaknesses in oursystems,systemsdataorthefts,those of our vendors, physicalsystem or network break-ins or inappropriate access,break-ins, or other developments will not compromise orbreachdefeatthe technology or otherour securitymeasures protecting the networks and systems used in connection with our business.measures.
Factors, such as business revenue, economic conditions, the volatility and strength of the capital markets and inflation can affect the business and economic environment. These same factors affect our ability to generate revenue and profits. It is possible that, among other things, changes in international trade regulation, including tariffs, could lead to higher than anticipated inflation. In an economic downturn that is characterized by higher unemployment, declining spending and reduced corporate revenues, the demand for insurance products is generally adversely affected, which directly affects our premium levels and profitability. Negative economic factors may also affect our ability to receive the appropriate rate for the risk we insure with our policyholders and may adversely affect the number of policies we can write, including with respect to our opportunities to underwrite profitable business. In an economic downturn, our customers may have less need for insurance coverage, cancel existing insurance policies, modify their coverage or not renew the policies they hold with us. Existing policyholders may exaggerate or even falsify claims to obtain higher claims payments. These outcomes would reduce our underwriting profit to the extent these factors are not reflected in the rates we charge.see in full comparison
“Our operations depend on the reliable and secure processing, storage and transmission of confidential and other data and information in our computer systems and networks. Computer malware, hackers, employee misconduct and other external hazards could expose our systems to security breaches, cyber attacks or other disruptions. In addition, we routinely transmit and receive personal, personally identifiable, sensitive, confidential and proprietary data by electronic means and are subject to data privacy laws and regulations enacted in the jurisdictions in which we do business.”see in full comparison
Full comparison: every changed paragraph (23)
Our approach to risk management relies on subjective variables that entail significant uncertainties. For example, we rely heavily on estimates of PMLs for certain events that are generated by computer-runthird-party stochastic models. In addition, we rely on historical data and scenarios in managing credit and interest rate risks in our investment portfolio. These estimates, models, data and scenarios may not produce accurate predictions and consequently, we could incur losses both in the risks we underwrite and to the value of our investment portfolio.
Factors, such as business revenue, economic conditions, the volatility and strength of the capital markets and inflation can affect the business and economic environment. These same factors affect our ability to generate revenue and profits. It is possible that, among other things, changes in international trade regulation, including tariffs, could lead to higher than anticipated inflation. In an economic downturn that is characterized by higher unemployment, declining spending and reduced corporate revenues, the demand for insurance products is generally adversely affected, which directly affects our premium levels and profitability. Negative economic factors may also affect our ability to receive the appropriate rate for the risk we insure with our policyholders and may adversely affect the number of policies we can write, including with respect to our opportunities to underwrite profitable business. In an economic downturn, our customers may have less need for insurance coverage, cancel existing insurance policies, modify their coverage or not renew the policies they hold with us. Existing policyholders may exaggerate or even falsify claims to obtain higher claims payments. These outcomes would reduce our underwriting profit to the extent these factors are not reflected in the rates we charge.
We distribute the majority of our products through a select group of brokers.brokerage firms. Of our 20242025 gross written premiums, 62.3%,60.6%, or $1.2 billion, were distributed through five of our approximately 197227 brokers, three of which accounted for 48.4%,47.6%, or $905.8$941.4 million, of our 20242025 gross written premiums.
Our relationship with any of these brokersfirms may be discontinued at any time. Even if the relationships do continue, they may not be on terms that are profitable for us. The termination of a relationship with one or more significant brokers could result in lower gross written premiums and could have a material adverse effect on our results of operations or business prospects.
•regulatory constraints on rate increases;
We could suffer security breaches, loss of data or proprietary information, cyberattacks, and other information technology failures, and are subject to laws and regulations concerning data privacy and security that are continually evolving. Actual or suspected information technology failures or failures to comply with applicable law could disrupt our operations, damage our reputation, and adversely affect our business, financial condition, or results of operations.
The failure of our information technology and telecommunications systems could materially adversely affect our business.
Our business dependsis highly dependent on our information technology and telecommunications systems, including our web-based underwriting system. Among other things, we rely on these systems to interact with brokers and insureds, to underwrite business, to prepare policies and process premiums, to perform actuarial and other modeling functions, to process claims and make claims payments and to prepare internal and external financial statements and information. In addition, someMany of these systems includeand orprocesses rely on third-party systemsservice providers or cloud-based solutions that are not located on our premises or fully under our direct control. Events such as natural catastrophes, terrorist attacks, industrial accidents, third-party system or network outages or computer malware may cause our systems to fail or be inaccessible for extended periods of time. While we have implemented business contingency and other plans to protect our systems, sustained or repeated system failures or service denials could severely limit our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or otherwise operate in the ordinary course of business.
We and our service providers face numerous and evolving cybersecurity and operational risks that threaten the confidentiality, integrity, and availability of systems and data. These risks include vulnerabilities in commercial software integrated into our systems or into the products and services of our suppliers, as well as increasingly sophisticated cyberattack techniques that frequently change and may originate from less regulated or remote areas of the world. Events such as natural catastrophes, industrial accidents, terrorist attacks, power failures, computer viruses, ransomware, extortion attempts, business email compromise, or security breaches by unauthorized persons, including hackers or other threat actors, may cause our systems to fail or be inaccessible for extended periods. These events may also result in fraudulent fund transfers, unauthorized access to or exfiltration of sensitive or proprietary information, or other material operational impacts.
We have implemented a variety of security measures, business contingency plans, and disaster recovery procedures designed to protect systems housed internally and through third-party cloud services. However, we cannot guarantee the effectiveness of these measures. We also monitor vendor and third-party risk, but we may fail to appropriately assess or understand the risks associated with these relationships, including the adequacy of their security and control environments. Sustained or repeated system failures, service interruptions, or successful cyberattacks could severely limit our ability to write and process new and renewal business, provide customer service, pay claims, or otherwise operate in the ordinary course of business. In addition, when vulnerabilities are discovered, we may be unable to remedy them promptly because attackers increasingly use tools and techniques designed to evade detection or remove forensic evidence.
Our operations also depend on the continuous availability of our physical facilities. Disruption, damage, or loss of these facilities, for example due to natural catastrophes, utility failures, or other events, could impair our ability to maintain business functions that cannot be performed offsite or remotely. This could compound the effects of system interruptions or cyber events.
Our operations depend on the reliable and secure processing, storage and transmission of confidential and other data and information in our computer systems and networks. Computer malware, hackers, employee misconduct and other external hazards could expose our systems to security breaches, cyber attacks or other disruptions. In addition, we routinely transmit and receive personal, personally identifiable, sensitive, confidential and proprietary data by electronic means and are subject to data privacy laws and regulations enacted in the jurisdictions in which we do business.
While we have implemented security measures designed to protect against breaches of security and other interference with our systems and networks, our systems and networks may be subject to significant breaches or interference. Any such event previously discussed may result in material operational disruptions as well as unauthorized access to or theto, disclosure of, or loss of our proprietary information or ourcustomers customers’data. dataSuch and information, which in turnoccurrences may resultlead into legal claims, regulatory scrutiny andor liability, thereputational incurrencedamage, ofsignificant costs to eliminate or mitigate further exposure, and the potential loss of customers or affiliatedvendors. advisors,Increasing reputationalrequirements for public disclosure of cybersecurity incidents may also increase the harm or other damage to our business.business, financial condition, and results of operations. We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilitiesweaknesses in our systems,systems dataor thefts,those of our vendors, physical system or network break-ins or inappropriate access,break-ins, or other developments will not compromise or breachdefeat the technology or otherour security measures protecting the networks and systems used in connection with our business.measures.
As part of our normal business activities, we collect, store, and process personal information regarding employees, claimants, brokers, agents, and vendors. As a result, we are subject to numerous federal, state, and local laws and regulations governing data privacy, security, breach notification, and the use of personal information. These requirements continue to evolve, often becoming more stringent. Any failure or perceived failure to comply with applicable laws, regulations, policies, or regulatory guidance could result in investigations, enforcement actions, litigation, fines, penalties, or adverse publicity. These outcomes could erode trust in our company and adversely affect our business, financial condition, and results of operations.
We employ third-party and open-source licensed software for use in our business, and the inability to maintain these licenses, errorsdefects or vulnerabilities in thesuch software we licensesoftware, or the termsinterruption or enforcement of open-source licenses could result in increased costs, or reduced service levels, or operational disruptions, which wouldcould adversely affect our business.
Our business relies on certain third-party software obtained under licenses from other companies. Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, thissuch alternatives may not always be theavailable case,on acceptable terms, or itat mayall, and replacement could be difficultdifficult, costly, or costlytime consuming to replace. In addition, integration of new third-party software may require significant workdevelopment effort and require substantial investment of our time and resources.resources and may introduce additional operational or security risks. Our use of additional or alternative third-party software wouldtypically requirerequires us to enter into license agreements with third parties, which may increase complexity and may not be available on commercially reasonable terms or at all, and add complexity to the environment.all. Many of the risks associated with the use of third-party softwaresoftware, including cybersecurity, operational resilience, vendor concentration, and service continuity risks, cannot be fully eliminated, and these risks could negatively affect our business.
Additionally, the software powering our technology systems incorporates software coveredcomponents bysubject to open-source licenses. The terms of many open-source licenses have not been definitively interpreted by U.S. courtscourts, creating uncertainty regarding the scope of the obligations they may impose and there is a risk that the licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to operate or modify our systems.software. In the event that portions of our proprietary software are determined to be subject to an open-source license, we could be required to publicly release thedisclose affected portions of our source code orcode, re-engineer all or a portionportions of our technology systems, or discontinue certain uses, each of which could reduce or eliminate the value of our technology systems. Such risk could be difficult or impossible to eliminate,fully mitigate, and such an event could adversely affect our business, financial condition and results of operations.
Artificial intelligence is an evolving and rapidly growingdeveloping technology.technology, and its adoption presents additional risks.
The rapid evolution and increasing adoption of artificial intelligence ("AI") could exacerbate the information technology and cybersecurity related risks described above, as well as alter the competitive landscape. While we anticipate that we will continue to research and selectively implement AI-based technology solutions to bothenhance mitigateautomation, efficiency and risk and increase automationmanagement in our environment, it is possible that bad actors and/or competitors will leverage AI solutions more effectively to either exploit vulnerabilities or take market share. Either outcome could negatively impact our business. We are aware that generative AI tools may respond with inaccurateinaccurate, incomplete or fabricated information, introduce bias or fail to provide traceability of source information and have taken steps to train employees on these issues as welland to avoidinform on the risks of using theseAI tools as primary decisiondecision-making processes.mechanisms. We will continue to look for opportunities to deploy these tools to aid in decision making processes but cannot guarantee that the risks associated with AI use will be completelyfully eliminated.mitigated. Any failure to manage these risks could negatively impact our business.
Cloud provider service failure or control weakness could adversely affect our business.
We employ cloud-based services to host the majority of our applications and intend to continue and expand our use. As we use cloud-based services, we will rely on third-party cloud providers to maintain appropriate controls and safeguards to protect confidential information we receive, including personal, personally identifiable, sensitive, confidential or proprietary data, and the integrity and continuous operation of our proprietary technology platform. While we conduct due diligence on these cloud providers with respect to their security and business controls, these are point-in-time assessments, and we may not have the visibility to effectively monitor the continuous implementation and efficacy of these controls. Outside parties may be able to circumvent controls or exploit vulnerabilities, resulting in operational disruption, data loss, defects or a security event. Operating in the cloud increases the risk of operational disruption should internet service be interrupted. While we have implemented business contingency and other plans to facilitate continuous internet access, sustained or concurrent service denials or similar failures could limit our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or otherwise operate our business. Any such event or failure could have a material adverse effect on our business, financial condition and results of operations.
ManyMost of our contracts are written for a one-year term. In our financial forecasting process, we make assumptions about the rates of renewal of our prior year’s contracts. The insurance and reinsurance industries have historically been cyclical businesses with intense competition, often based on price. If actual renewals do not meet expectations or if we choose not to write a renewal because of pricing conditions, our written premiums in future years and our future operations would be materially adversely affected.
As is typical in our industry, we continually face risks associated with litigation of various types, including disputes relating to insurance claims under our policies as well as other general commercial and corporate litigation. We could become involved in litigation with our customers, or become the target of class action lawsuits and other types of litigation, some of which involve claims for substantial or indeterminate amounts. The outcomes of litigation are inherently uncertain and can be influenced by evolving legal trends, including third-party litigation funding.funding and social inflation. This litigation may be based on a variety of issues, including insurance and claim settlement practices. We cannot predict with any certainty whether we will be involved in such litigation in the future or what impact such litigation would have on our business.
Management's Discussion & Analysis (MD&A)
Removed heading “Real estate construction costs”
Largest changes
“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.”see in full comparison
“During the year ended December 31, 2025, prior accident years developed favorably by $62.8 million, of which $70.9 million was attributable to the 2020 through 2024 accident years due to lower emergence of reported losses than expected across most lines of business, particularly in our property lines of business. …”see in full comparison
“During the year ended December 31, 2023, prior accident years developed favorably by $35.8 million, of which $49.0 million was attributable to the 2021 and 2022 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 largely from the 2017 through 2019 accident years due to construction defect claims that are more exposed to inflation.”see in full comparison
“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 December 31, 2025, the Company had $250.0 million of capacity remaining under the current share repurchase program.”see in full comparison
Our net investment income increased bysee in full comparison46.9%27.9% to $192.2 million for the year ended December 31, 2025 from $150.3 million for the year ended December 31,2024 from $102.3 million for the year ended December 31, 2023,2024, primarily due to growth in our investment portfolio largely generated from the investment of strong operating cashflows and higher interest rates relative to the prior year period.flows.
Full comparison: every changed paragraph (60)
For a comparison of years ended December 31, 20232024 and December 2022,31, 2023, see “"Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”" of our annual report on Form 10-K for the fiscal year ended December 31, 2023,2024, which was filed with the SEC on February 23,21, 2024.2025.
Net income was $503.6 million for the year ended December 31, 2025 compared to $414.8 million for the year ended December 31, 2024 compared to $308.1 million for the year ended December 31, 2023,2024, an increase of $106.8$88.8 million, or 34.6%.21.4%. The increase in net income in 20242025 over 20232024 was primarily due to a combination of continued profitable growth and strong investing results including higher investment income and higher unrealized gainsreturns on equity investments.
Underwriting income was $389.2 million for the year ended December 31, 2025 compared to $325.9 million for the year ended December 31, 2024 compared to $270.4 million for the year ended December 31, 2023,2024, an increase of $55.5$63.3 million, or 20.5%.19.4%. The increase in underwriting income was primarily due to continued growth in the business and higher favorable development of loss reserves from prior accident years offset in part by higher catastrophe losses.losses incurred. The corresponding combined ratios were 75.9% for the year ended December 31, 2025 compared to 76.4% for the year ended December 31, 2024 compared to 75.4% for the year ended December 31, 2023.2024.
Gross written premiums were $2.0 billion for the year ended December 31, 2025 compared to $1.9 billion for the year ended December 31, 2024 compared to $1.6 billion for the year ended December 31, 2023,2024, an increase of $301.5$106.8 million, or 19.2%.5.7%. TheGross increasewritten premiums in our Commercial Property Division, our largest division, decreased 17.9% relative to the prior year period due to rate declines and an increasingly competitive environment including from standard carriers. Excluding our Commercial Property Division, gross written premiums forgrew the13.3% year ended December 31, 2024 wasdue primarily due to highercontinued strong submission activityflow from brokers andacross amost favorable, yet increasingly competitive, pricing environment.divisions. The average premium per policy written by us was $15,100$13,400 in 20242025 compared to $15,200$15,100 in 2023.2024. Excluding our personal insurance division, which has relatively low premiums per policy written, the average premium per policy written was $15,900$14,000 in 20242025 compared to $16,400$15,900 in 2023.2024. GrossThe decrease in average premium per policy was due primarily to a decrease in gross written premiums increased across substantially all ofin our underwritingCommercial divisionsProperty for the year ended December 31, 2024 and were most notable in the following lines of business:Division.
Gross written premiums increased across the majority of our underwriting divisions for the year ended December 31, 2025 and were most notable in the following lines of business:
•Small Business Casualty,Property, which represented approximately 10.5%5.2% of our gross written premiums in 2024,2025, increased by $21.5$25.6 million, or 12.4%,33.4%, for the year ended December 31, 20242025;
•Commercial Property, which represented approximately 24.4% of our gross written premiums in 2024, increased by $44.2 million, or 10.7%, for the year ended December 31, 2024 and
•Construction,Entertainment, which represented approximately 7.8%3.6% of our gross written premiums in 2024,2025, increased by $10.4$14.9 million, or 7.6%,27.0%, for the year ended December 31, 2024.2025; and
•Allied Health, which represented approximately 4.9% of our gross written premiums in 2025, increased by $13.9 million, or 16.8%, for the year ended December 31, 2025.
Net written premiums increased by $138.7 million, or 9.4%, to $1.6 billion for the year ended December 31, 2025 from $1.5 billion for the year ended December 31, 2024. Our net retention ratio was 81.7% for the year ended December 31, 2025 compared to 79.0% for the year ended December 31, 2024. The increases in net written premiums and our retention ratio were largely due to higher gross written premiums and an increase in the retention on our reinsurance treaties for the year ended December 31, 2025.
Net written premiums increased across the majority of our underwriting divisions for the year ended December 31, 2025. Changes in net written premium were most notable in the following lines of business:
•Excess Casualty, which represented approximately 10.9% of our net written premiums in 2025, increased by $41.1 million, or 30.3%, for the year ended December 31, 2025;
•General Casualty, which represented approximately 12.9% of our net written premiums in 2025, increased by $38.7 million, or 22.9%, for the year ended December 31, 2025;
•Small Business Property, which represented approximately 4.8% of our net written premiums in 2025, increased by $18.0 million, or 29.9%, for the year ended December 31, 2025;
•Entertainment, which represented approximately 4.3% of our net written premiums in 2025, increased by $14.9 million, or 27.0%, for the year ended December 31, 2025 and
•Commercial Property, which represented approximately 11.1% of our net written premiums in 2025, decreased by $44.8 million, or 19.9%, for the year ended December 31, 2025.
Net written premiums increased by $212.7 million, or 16.8%, to $1.5 billion for the year ended December 31, 2024 from $1.3 billion for the year ended December 31, 2023. The increase in net written premiums was largely due to higher gross written premiums for the year ended December 31, 2024. Our net retention ratio was 79.0% for the year ended December 31, 2024 compared to 80.6% for the year ended December 31, 2023. The decrease in the net retention ratio was primarily due to a higher cession rate on the commercial property quota share treaty effective with the June 2023 renewal, offset in part by an increase in our retention on our casualty treaty effective with the June 2024 renewal.
Net earned premiums were $1.6 billion for the year ended December 31, 2025 compared to $1.4 billion for the year ended December 31, 2024 compared to $1.1 billion for the year ended December 31, 2023,2024, an increase of $277.9$225.4 million, or 25.9%. As previously discussed, the increase was16.7% due primarily to continued earning of premium from prior-period growth in gross written premiums inand 2024higher comparednet toretention 2023.levels.
Our loss ratio was 55.1% for the year ended December 31, 2025 compared to 55.8% for the year ended December 31, 2024 compared to 54.6% for the year ended December 31, 2023.2024. The increasedecrease in the loss ratio for the year ended December 31, 20242025 was due primarily to higher catastrophe losses incurred during the period and lower relative net favorable development of loss reserves from prior accident years. During the year ended December 31, 2024,2025, current year incurred losses and loss adjustment expenses included $25.5$30.4 million of net catastrophe losses primarily attributable to Hurricanes Milton, Helene and Francine and tornadoes in the Midwest.Palisades Fire.
During the year ended December 31, 2025, prior accident years developed favorably by $62.8 million, of which $70.9 million was attributable to the 2020 through 2024 accident years due to lower emergence of reported losses than expected across most lines of business, particularly in our property 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.
During the year ended December 31, 2024, current year incurred losses and loss adjustment expenses included $25.5 million of net catastrophe losses primarily attributable to Hurricanes Milton, Helene and Francine and tornadoes in the Midwest.
During the year ended December 31, 2023, prior accident years developed favorably by $35.8 million, of which $49.0 million was attributable to the 2021 and 2022 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 largely from the 2017 through 2019 accident years due to construction defect claims that are more exposed to inflation.
The expense ratio was 20.8% for the year ended December 31, 2025 compared to 20.6% for the year ended December 31, 2024 compared to 20.8% for the year ended December 31, 2023.2024. The decreaseincrease in the expense ratio was primarily due to lower relative net commissions as a result of higher ceding commissions earneddue underto theincreased commercialretention propertyon quotaour sharereinsurance treatytreaties asoffset ain resultpart ofby commercialroutine propertyvariability premiumin growth.other underwriting expenses. Direct commissions paid as a percent of gross written premiums was 14.7%14.8% and 14.5%14.7% for the years ended December 31, 20242025 and 2023,2024, respectively.
Our net investment income increased by 46.9%27.9% to $192.2 million for the year ended December 31, 2025 from $150.3 million for the year ended December 31, 2024 from $102.3 million for the year ended December 31, 2023,2024, primarily due to growth in our investment portfolio largely generated from the investment of strong operating cash flows and higher interest rates relative to the prior year period.flows.
The weighted average duration of our investment portfolio, including cash equivalents, was 3.04.0 years and 2.83.0 years at December 31, 20242025 and 2023,2024, respectively. Our investment portfolio, excluding cash equivalents and unrealized gains and losses, had a gross investment return of 4.4% as of December 31, 2024,2025 compared to 4.0% as ofand December 31, 2023.2024.
During the year ended December 31, 2025, the change in the fair value of equity securities of $58.8 million included appreciation of common stocks, ETFs and non-redeemable preferred stocks of $34.0 million, 24.2 million and $0.6 million, respectively, generally consistent with the changes in the broader U.S. stock market.
During the year ended December 31, 2023, the change in the fair value of equity securities of $15.3 million included changes in unrealized gains related to ETFs and common stocks of $12.8 million and unrealized gains related to non-redeemable preferred stock of $2.5 million. The change in the fair value of ETFs and common stocks during 2023 primarily reflected changes in the broader U.S. stock market.
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 year ended December 31, 2025 compared to a reduction to credit loss expense of $0.5 million for the year ended December 31, 2024 compared to credit loss expense of $0.2 million for the year ended December 31, 2023.2024. See Note 2 of the notes to the consolidated financial statements for further information regarding credit losses.
Our effective tax rate was approximately 20.6% for the year ended December 31, 2025 compared to 19.4% for the year ended December 31, 2024 compared to 19.8% for the year ended December 31, 2023.2024. 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 tax-exempt investment income. The effective tax rate was higher for the year ended December 31, 2025 compared to the year ended December 31, 2024 due primarily to a lower volume of stock option exercises.
Our return on equity was 29.3% for the year ended December 31, 2025 compared to 32.3% for the year ended December 31, 2024 compared to 33.6% for the year ended December 31, 2023.2024. Operating return on equity was 29.2%26.4% for 2024,2025, a decrease from 31.8%29.2% for 2023.2024. The decrease in operating return on equity was due primarily to higher average stockholders' equity as a result of continued profitable growth.growth and an increase in the fair value of the Company's investment portfolio offset in part by share repurchases.
Real Estate
In December of 2022, we acquired real estate property adjacent to our current headquarters for $76.6 million. The property is comprised of two office buildings totaling over 580,000 square feet and a parking deck situated on approximately 29 acres of land. During 2023, we sold one office building and the parking deck for approximately $62.0 million in cash, net of seller’s costs, and determined we would occupy the remaining building for future expansion of our operations. Upon this determination, we reclassified the carrying value of the building to property and equipment within other assets on the consolidated balance sheet. The building is currently under development for the Company's future headquarters and is expected to be completed during the fourth quarter of 2025. Capital expenditures related to the renovation of the building may be funded through draw downs on our Credit Facility. The remaining $15.0 million presented on the consolidated balance sheet represents the portion of remaining real estate assets held for investment purposes.
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.
In November 2022, we completed an underwritten public offering and sold and issued 155,000 shares of our common stock at a price of $308.30 per share, to the underwriter. We received net proceeds from the offering of $47.5 million, which was used for general corporate purposes, including to fund organic growth.
Share repurchase programprograms
In October 2024, our Board of Directors authorized a share repurchase program authorizing the repurchase of up to $100.0 million of our common stock. This share repurchase program was exhausted in October 2025.
In OctoberDecember 2024,2025, our Board of Directors authorized a new share repurchase program authorizing the repurchase of up to $100.0$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 stockshare repurchase program does not require us to repurchase any specific number of shares, and may be modified, suspended or terminated at any time. At December 31, 2024, the Company had $90.0 million of capacity remaining under its share repurchase program.
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 December 31, 2025, the Company had $250.0 million of capacity remaining under the current share repurchase program.
For the year ended December 31, 2024,2025, net cash used in investing activities of $960.1$922.2 million reflected growth in our business operations. For the year ended December 31, 2024,2025, funds from operations were used to purchase fixed-maturity securities, particularly corporate bondsmortgage- and asset-asset-backed securities and mortgage-backed securities of $1.6 billion, and to a lesser extent, municipalcorporate bonds of $3.7$2.5 million and sovereigns of $0.8 million.billion. During 2024,2025, we received proceeds of $289.4$1.2 millionbillion from sales of fixed-maturity securities, largely corporate bonds, asset- and mortgage-backed securities and, to a lesser extent, municipal bonds and mortgage-U.S. treasuries and asset-backed securities and $452.4$626.1 million from redemptions of asset- and mortgage-backed securities and corporate and municipal bonds. For the year ended December 31, 2024,2025, purchases of equity securities of $156.5$183.2 million primarily consisted of common stocks and, to a lesser extent, ETFs. Proceeds from sales of equity securities of $34.4$14.6 million consisted primarily of primarilysales ETFs andof common stocks and, to a lesser extent, calls of non-redeemable preferred stock.stocks.
For the year ended December 31, 2023,2024, net cash used in investing activities was $860.9$960.1 million. For the year ended December 31, 2023,2024, funds from operations were used to purchase fixed-maturity securities, particularly corporate bonds and asset- and mortgage-backed securities of $1.3$1.6 billion, and to a lesser extent, sovereigns and government agency bonds of $26.3 million and municipal bonds of $4.9$3.7 million and sovereigns of $0.8 million. During 2023,2024, we received proceeds of $245.6$289.4 million from sales of fixed-maturity securities, largely corporate bonds and mortgage- and asset-backed securities and $176.5$452.4 million from redemptions of asset- and mortgage-backed securities and corporate bonds. For the year ended December 31, 2023,2024, purchases of equity securities of $86.6$156.5 million primarily consisted of common stocks.stocks and, to a lesser extent, ETFs. Proceeds from sales of equity securities of $30.6$34.4 million consisted of primarily ETFs and common stocks.stocks Inand, addition,to neta saleslesser extent, calls of short-termnon-redeemable investmentspreferred of $36.7 million consisted of U.S. Treasuries, government agency and corporate bonds. Net cash used in investing activities also included proceeds of $62.0 million from the sale of a portion of our real estate investment property in the third quarter of 2023.stock.
For the year ended December 31, 2025, net cash used in financing activities was $71.4 million and reflected dividends of $0.68 per common share, or $15.8 million in the aggregate and share repurchases of $90.0 million. Payroll taxes withheld and remitted on restricted stock awards were $6.3 million, offset in part by proceeds received from our equity compensation plan of $0.7 million. In addition, we drew down $40.0 million from our revolving credit facility primarily to fund construction of our new corporate headquarters which was completed in November 2025 and for general corporate purposes.
For the year ended December 31, 2023, net cash used in financing activities was $28.5 million and reflected proceeds of $50.0 million from the issuance of the Series B Note on September 18, 2023. Proceeds from the sale of our real estate investment were used to pay down $62.0 million from our Credit Facility. Financing activities also reflected dividends of $0.56 per common share, or $13.0 million in the aggregate. Proceeds received from our equity compensation plan were $0.9 million, offset by payroll taxes withheld and remitted on restricted stock awards of $4.3 million for the year ended December 31, 2023.
For the year ended December 31, 2024,2025, property insurance represented 32.6%29.3% of our gross written premiums. When we write property insurance, we buy reinsurance to significantly mitigate our risk to large losses. We use sophisticated computerthird-party stochastic models to analyze the risk of severe losses from weather-related events and earthquakes. We measure exposure to these catastrophe losses in terms of PML, which is an estimate of what level of loss we would expect to experience in a windstormweather-related or earthquake event occurring once in every 100 or 250 years. We manage this PML by purchasing catastrophe reinsurance coverage. Effective June 1, 2024,2025, we purchased catastrophe reinsurance coverage of $175.0$250.0 million per event in excess of our $60.0$75.0 million per event retention. 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 provision, the maximum aggregate loss recovery limit is $350.0$500.0 million and is in addition to the coverage provided by our other property reinsurance.
Real estate construction costs
We are currently renovating an existing office building for our new corporate headquarters and have entered into an agreement under which we have incurred obligations relating to the renovation. We expect the construction costs to be approximately $59.0 million and are currently targeting a fourth quarter 2025 completion date. At December 31, 2024 we incurred approximately $19.5 million of construction costs toward the project. Our contractual obligations include payments which will become due under the construction agreement and project development.
At December 31, 2024,2025, total stockholders' equity and tangible stockholders' equity were $1.5$2.0 billion, compared to total stockholders' equity and tangible equity of $1.1$1.5 billion at December 31, 2023.2024. The increase in both total stockholders' equity and tangible stockholders' equity in 20242025 compared to 20232024 was primarily due to profits generated during the periodperiod, an increase in the fair value of our fixed-maturity investments, net of taxes and net activity related to stock-based compensation plans. These increases were offset in part by share repurchases and dividends declared during 2024, share repurchases and an increase in unrealized losses on available-for-sale investments, net of taxes.2025. 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.
On February 12, 2024, the Company’s Board of Directors declared a cash dividend of $0.15 per share of common stock. This dividend was paid on March 13, 2024 to all stockholders of record on February 27, 2024.
On May 15, 2024, the Company’s Board of Directors declared a cash dividend of $0.15 per share of common stock. This dividend was paid on June 13, 2024 to all stockholders of record on May 31, 2024.
On August 14, 2024, the Company’s Board of Directors declared a cash dividend of $0.15 per share of common stock. This dividend was paid on September 12, 2024 to all stockholders of record on August 29, 2024.
On November 13, 2024, the Company’s Board of Directors declared a cash dividend of $0.15 per share of common stock. This dividend was paid on December 13, 2024 to all stockholders of record on November 29, 2024.
On February 10, 2025, the Company’s Board of Directors declared a cash dividend of $0.17 per share of common stock. This dividend iswas payablepaid on March 13, 2025 to all stockholders of record on February 27, 2025.
On May 13, 2025, the Company’s Board of Directors declared a cash dividend of $0.17 per share of common stock. This dividend was paid on June 12, 2025 to all stockholders of record on May 29, 2025.
On August 15, 2025, the Company’s Board of Directors declared a cash dividend of $0.17 per share of common stock. This dividend was paid on September 11, 2025 to all stockholders of record on August 29, 2025.
On November 12, 2025, the Company’s Board of Directors declared a cash dividend of $0.17 per share of common stock. This dividend was paid on December 11, 2025 to all stockholders of record on November 28, 2025.
On February 4, 2026, the Company’s Board of Directors declared a cash dividend of $0.25 per share of common stock. This dividend is payable on March 12, 2026 to all stockholders of record on February 26, 2026.
At December 31, 2024,2025, our cash and invested assets of $4.1$5.2 billion consisted of fixed-maturity securities, cash and cash equivalents, equity securities, short-term investments and real estate investments. At December 31, 2024,2025, the majority of the investment portfolio was comprised of fixed-maturity securities of $3.5$4.3 billion that were classified as available-for-sale. Available-for-sale investments are carried at fair value with unrealized gains and losses on those securities, net of applicable taxes, reported as a separate component of accumulated other comprehensive income. At December 31, 2024,2025, we also held $398.4$626.4 million of equity securities, which were comprised of common stocks, ETFs and non-redeemable preferred stock, $113.2$163.4 million of cash and cash equivalents, $15.0$55.2 million of real estate investments and $3.7$3.9 million of short-term investments. Our fixed-maturity securities, including cash equivalents, had a weighted average duration of 3.04.0 years and an average rating of "AA-" at December 31, 2024.2025. Our investment portfolio, excluding cash equivalents and real estate investments, had a gross investment return of 4.4% as of December 31, 2024,2025 compared to 4.0% as ofand December 31, 2023.2024.
(1) Other expenses areincludes primarily corporate expenses not allocated to our insurance operations.
Case reserves are established for individual claims that have been reported to us. We are notified of losses by our insureds or their brokers. Based on the information provided, we establish case reserves by estimating the ultimate losses from the claim, including defense costs associated with the ultimate settlement of the claim. Our claims department personnel use their knowledge of the specific claim along with advice from internal and external experts, including underwriters and legal counsel,experts to estimate the expected ultimate losses. During the life cycle of a particular claim, as more information becomes available, we may revise our estimate of the ultimate value of the claim either upward or downward. The amount of the individual claim reserve is based on the most recent information available.
Each of the impacts described below is estimated individually, without consideration for any correlation among key indicators or among lines of business. Therefore, it would be inappropriate to take each of the amounts described below and add them together to estimate volatility for our reserves in total. For any onesingle reserving line of business, the estimated variation in reserves due to changes in key indicators is a reasonable estimate of possible variation that may occur in the future. The variation discussed is not meant to be a worst-case scenario and, therefore, it is possible that future variation may be greater than the amounts shown below.
We enter into reinsurance contracts to limit our exposure to potential large losses. Reinsurance refers to an arrangement in which a company called a reinsurer agrees in a contract (often referred to as a treaty) to assume specified risks written by an insurance company (known as a ceding company) by paying the insurance company all or a portion of the insurance company's losses arising under specified classes of insurance policies in return for a share inof premiums.
What changed in the latest 10-Q
Risk Factors
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.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Investing results”
New heading “Income tax expense”
New heading “Six months ended June 30, 2026 compared to six months ended June 30, 2025”
Largest changes
“Six months ended June 30, 2026 compared to six months ended June 30, 2025”see in full comparison
“(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 in full comparison
“Gross written premiums were $527.6 million for the three months ended June 30, 2026 compared to $555.5 million for the three months ended June 30, 2025, a decrease of $27.9 million, or 5.0%. The decrease in gross written premiums was primarily due to a 32.7% decline in the Commercial Property Division, one of the Company's larger divisions, driven by heightened competition. …”see in full comparison
“The average premium per policy written was approximately $12,300 in the second quarter of 2026 compared to approximately $14,300 in the second quarter of 2025. Excluding our personal lines insurance, which has a relatively low premium per policy written, the average premium per policy written was approximately $12,700 in the second quarter of 2026 compared to $14,900 in the second quarter of 2025. …”see in full comparison
Full comparison: every changed paragraph (79)
The results of operations for the three and six months ended MarchJune 31,30, 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.
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 threesix months of 2026, the percentage breakdown of our gross written premiums was 76.0%74.1% casualty and 24.0%25.9% property. Our commercial underwriting divisions include Commercial Property, Excess Casualty, Commercial Property, General Casualty, Small Business Casualty, Construction, Allied Health, Small Business Property, Entertainment, Products Liability, Entertainment, Commercial Auto, Energy, Excess Professional, Inland Marine, Life Sciences, Environmental, Professional Liability, Health Care, Agribusiness Property, Public Entity, Agribusiness Property,Casualty, Management Liability, Agribusiness Casualty, Aviation, Ocean Marine, and Product Recall. We also write homeowners' coverage in the personal lines market, which in aggregate represented 2.5% of our gross written premiums in the first threesix months of 2026.
Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025
The following table summarizes our results of operations for the three months ended MarchJune 31,30, 2026 and 2025:
(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 $175.9 million for the three months ended June 30, 2026 compared to $134.1 million for the three months ended June 30, 2025, an increase of 31.1%. The increase in net income for the second quarter of 2026 from the same period last year was primarily due to continued underwriting profitability and strong investing results, including higher investment income and higher returns on equity investments.
Underwriting income was $105.4 million for the three months ended June 30, 2026 compared to $95.5 million for the three months ended June 30, 2025, an increase of 10.5%. The corresponding combined ratios were 75.5% for the three months ended June 30, 2026 compared to 75.8% for the three months ended June 30, 2025. The increase in underwriting income in the second quarter of 2026 compared to the second 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 $527.6 million for the three months ended June 30, 2026 compared to $555.5 million for the three months ended June 30, 2025, a decrease of $27.9 million, or 5.0%. The decrease in gross written premiums was primarily due to a 32.7% decline in the Commercial Property Division, one of the Company's larger divisions, driven by heightened competition. Excluding our Commercial Property Division, gross written premiums grew 3.7% due to continued strong submission flow across most divisions and an increase in bound accounts offset in part by lower average premium per policy as a result of heightened competition.
The average premium per policy written was approximately $12,300 in the second quarter of 2026 compared to approximately $14,300 in the second quarter of 2025. Excluding our personal lines insurance, which has a relatively low premium per policy written, the average premium per policy written was approximately $12,700 in the second quarter of 2026 compared to $14,900 in the second quarter of 2025. The decrease in average premium per policy for the second 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 June 30, 2026 and 2025:
Net written premiums decreased by $6.2 million, or 1.4%, to $452.5 million for the three months ended June 30, 2026 from $458.7 million for the three months ended June 30, 2025. The decrease in net written premiums for the second 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 85.8% for the three months ended June 30, 2026 compared to 82.6% for the three months ended June 30, 2025 due to increased retention in our reinsurance treaties and change in the mix of business.
Net earned premiums increased by $34.0 million, or 8.9%, to $417.6 million for the three months ended June 30, 2026 from $383.6 million for the three months ended June 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 three months ended June 30, 2026 and 2025:
The loss ratio was 53.8% for the three months ended June 30, 2026 compared to 55.1% for the three months ended June 30, 2025. The decrease in the loss ratio in the second quarter of 2026 compared to the second quarter of 2025 was due primarily to a lower current accident year loss ratio and higher relative net favorable development of prior-year loss reserves.
During the three months ended June 30, 2026, prior accident years developed favorably by $19.4 million, of which $22.6 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 the construction liability business in the 2017 through 2019 accident years.
During the three months ended June 30, 2025, prior accident years developed favorably by $15.4 million, of which $19.1 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 three months ended June 30, 2026 and 2025:
The expense ratio was 21.7% for the three months ended June 30, 2026 compared to 20.7% for the three months ended June 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 June 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 June 30, 2026 and 2025:
Net investment income increased by 19.9% to $55.7 million for the three months ended June 30, 2026 from $46.5 million for the three months ended June 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 4.6% and 4.4% for the three months ended June 30, 2026 and 2025, respectively.
The change in the fair value of equity securities consisted of the following:
The change in the fair value of equity securities for both the three months ended June 30, 2026 and 2025 were generally consistent with the changes in the broader U.S. stock market.
Net realized investment gains were $6.7 million and $0.1 million for the three months ended June 30, 2026 and 2025, respectively, primarily as a result of opportunistic sales of equity securities.
Income tax expense
Our effective tax rate was 20.0% for the three months ended June 30, 2026 compared to 20.3% for the three months ended June 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.
Six months ended June 30, 2026 compared to six months ended June 30, 2025
The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025:
NM - Percentage change not meaningful.
Net income was $112.6$288.4 million for the threesix months ended MarchJune 31,30, 2026 compared to $89.2$223.3 million for the threesix months ended MarchJune 31,30, 2025, an increase of 26.1%.29.1%. The increase in net income for the first threesix months of 2026 over the same period last year was primarily due to lower catastrophe losses and strong investing results, including higher investment income offsetand inhigher partreturns by a decrease in the fair value of ouron equity portfolio.investments.
Underwriting income was $94.5$199.9 million for the threesix months ended MarchJune 31,30, 2026 compared to $67.5$162.9 million for the threesix months ended MarchJune 31,30, 2025, an increase of 40.1%.22.7%. The corresponding combined ratios were 77.4%76.4% for the threesix months ended MarchJune 31,30, 2026 compared to 82.1%78.8% for the threesix months ended MarchJune 31,30, 2025. The increase in underwriting income for the first threesix 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.
Gross written premiums were $482.0$1,009.6 million for the threesix months ended MarchJune 31,30, 2026 compared to $484.3$1,039.8 million for the threesix months ended MarchJune 31,30, 2025, a decrease of $2.3$30.2 million, or 0.5%.2.9%. The decrease in gross written premiums was primarily due to a 28.3%30.9% decline in the Commercial Property Division, one of the Company's largestlarger divisions, driven by continued rate decreases from heightened competition, including from standard carriers.competition. Excluding our Commercial Property Division, gross written premiums grew 6.0%4.8% due primarily to continued strong submission flow from brokers across most divisions.divisions and an increase in bound accounts offset in part by lower average premium per policy as a result of heightened competition.
The average premium per policy written was $12,200 in the first threesix months of 2026 compared to $14,200 in the first threesix months of 2025. Excluding our Personal Insurance Division, which has a relatively low premium per policy written, the average premium per policy written was $12,600 for the first threesix months of 2026 and $14,700$14,800 for the first threesix months of 2025. The decrease in average premium per policy for the first threesix months of 2026 over the same period last year was due to an increase in competitioncompetition, primarily on larger accounts,accounts primarilyand in our Commercial Property Division.
The following table provides a summary of gross premiums written by division for the threesix months ended MarchJune 31,30, 2026 and 2025:
NM - Percentage change not meaningful.
Net written premiums increased by $21.6$15.3 million, or 5.6%,1.8%, to $403.3$855.7 million for the threesix months ended MarchJune 31,30, 2026 from $381.7$840.4 million for the threesix months ended MarchJune 31,30, 2025. The net retention ratio was 83.7%84.8% for the threesix months ended MarchJune 31,30, 2026 compared to 78.8%80.8% 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 $41.1$75.1 million, or 11.2%,10.0%, to $406.9$824.5 million for the threesix months ended MarchJune 31,30, 2026 from $365.8$749.4 million for the threesix months ended MarchJune 31,30, 2025 due primarily to continued earning of premium from prior-period growth in gross written premiums and higher net retention levels.
The following table summarizes the loss ratios for the threesix months ended MarchJune 31,30, 2026 and 2025:
The loss ratio was 56.3%55.0% for the threesix months ended MarchJune 31,30, 2026 compared to 62.1%58.5% for the threesix months ended MarchJune 31,30, 2025. The decrease in the loss ratio for the first threesix months of 2026 compared to the first threesix 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, particularly in our property lines of business.reserves.
During the threesix months ended MarchJune 31,30, 2026, prior accident years developed favorably by $18.7$38.1 million, of which $20.6$43.1 million was attributable to the 2020 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 20182017 andthrough 2019 accident years.
During the threesix months ended MarchJune 31,30, 2025, prior accident years developed favorably by $14.6$30.1 million, of which $16.7$35.8 million was attributable to the 20212020 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 fromin our construction liability business in the 20172016 through 2019 accident years and moreadjustments conservativeto actuarial assumptions in the 20212020 through 20232024 accident years forto linesreflect ofinflation businessuncertainty exposed toaround construction liability.defect Incurred losses and loss adjustment expenses for the three months ended March 31, 2025 included $22.6 million of net catastrophe losses primarily related to the Palisades Fire.exposures.
The following table summarizes the components of the expense ratio for the threesix months ended MarchJune 31,30, 2026 and 2025:
The expense ratio was 21.1%21.4% for the threesix months ended MarchJune 31,30, 2026 compared to 20.0%20.3% for the threesix months ended MarchJune 31,30, 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 threesix months ended MarchJune 31,30, 2026 and 2025, respectively.
The following table summarizes net investment income, change in the fair value of equity securities and net realized investment gains (losses) for the threesix months ended MarchJune 31,30, 2026 and 2025:
Net investment income increased by 26.5%23.1% to $55.4$111.2 million for the threesix months ended MarchJune 31,30, 2026 from $43.8$90.3 million for the threesix months ended MarchJune 31,30, 2025. The increase in the first threesix 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 4.5% and 4.3% for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.
The change in the fair value of equity securities for both the threesix months ended MarchJune 31,30, 2026 and 2025 were generally consistent with the changes in the broader U.S. stock market.
Net realized investment gains were $1.7$8.4 million and $0.5$0.7 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, primarily as a result of opportunistic sales of equity securities.
Our effective tax rate was 19.4%19.8% for the threesix months ended MarchJune 31,30, 2026 compared to 20.6%20.4% for the threesix months ended MarchJune 31,30, 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.
Our annualized return on equity was 22.9%28.9% for the threesix months ended MarchJune 31,30, 2026 compared to 23.3%27.9% for the threesix months ended MarchJune 31,30, 2025. Our annualized operating return on equity was 24.0%24.4% for the threesix months ended MarchJune 31,30, 2026 compared to 22.5%24.7% for the threesix months ended MarchJune 31,30, 2025. The increasedecrease in annualized operating return on equity for the threesix months ended MarchJune 31,30, 2026 compared to the prior period was due primarily to higher profitabilityaverage comparedstockholders' to the prior-year periodequity offset in part by higher averageprofitability stockholders'compared equity.to the prior-year period.
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 MarchJune 31,30, 2026, the Company had $187.5$87.5 million of capacity remaining under its share repurchase program.
In July 2026, our Board of Directors approved an additional share repurchase authorization of up to $250.0 million of our common stock, bringing the remaining capacity to $337.5 million under the share repurchase program.
Our cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025 were:
Net cash provided by operating activities was approximately $248.9$490.8 million for the threesix months ended MarchJune 31,30, 2026 compared to $229.8$498.9 million for the same period in 2025. This increasedecrease was largely driven by higher investmentpaid income received and the timing of reinsurance recoverieslosses offset in part by timingthe net effect of claimincreased paymentsretention on our reinsurance treaties and ahigher declineinvestment inincome premium volume.received.
Net cash used in investing activities was $114.4$263.5 million for the threesix months ended MarchJune 31,30, 2026 compared to $181.0$440.2 million for the threesix months ended MarchJune 31,30, 2025. Net cash used in investing activities during the first threesix months of 2026 included purchases of fixed-maturity securities of $361.8$729.5 million, which included primarily mortgage- and asset-backed securities and corporate bonds. During the first threesix months of 2026, we received proceeds of $182.7$367.1 million from sales of fixed-maturity securities, largely corporate bonds, and, to a lesser extent, asset- and mortgage-backed securities and municipal securities and $92.8$195.7 million primarily from redemptions and maturities of asset-mortgage- and mortgage-backedasset-backed securities. For the threesix months ended MarchJune 31,30, 2026, purchases of equity securities of $33.1$148.9 million consisted of common stocks and ETFs. During the first threesix months of 2026, we received proceeds of $8.6$58.5 million primarily from sales of common stocks and preferred stocks. In addition, net sales of short-term investments of $3.9 million consisted of U.S. Treasuries.
KNSL insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 330 shares, about $100.3K) and open-market sales in 2 filings (2 insiders, 2 trade dates, 22,826 shares, about $6.9M). Net open-market shares: -22,496 (purchases minus sales); net value about -$6.8M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-08 | Tangard Christopher R. |
Open-market purchase | 330 | $304.00 | $100.3K |
| 2026-05-26 | Allibhai Salmaan K. |
Open-market sale | 250 | $311.17 | $77.8K |
| 2026-05-26 | Allibhai Salmaan K. |
Option exercise | 600 | $16.00 | $9.6K |
| 2026-05-21 | Petrucelli Bryan P. |
Gift | 26,108 | — | — |
| 2026-05-21 | Petrucelli Bryan P. |
Gift | 26,108 | — | — |
| 2026-05-08 | Petrucelli Bryan P. |
Gift | 1,757 | — | — |
| 2026-05-08 | Petrucelli Bryan P. |
Gift | 1,757 | — | — |
| 2026-05-05 | Kehoe Michael P |
Open-market sale | 5,357 | $301.88 | $1.6M |
| 2026-05-05 | Kehoe Michael P |
Open-market sale | 5,028 | $303.53 | $1.5M |
| 2026-05-05 | Kehoe Michael P |
Option exercise | 22,576 | $16.00 | $361.2K |
| 2026-05-05 | Kehoe Michael P |
Open-market sale | 160 | $306.06 | $49.0K |
| 2026-05-05 | Kehoe Michael P |
Open-market sale | 638 | $304.63 | $194.4K |
| 2026-05-05 | Kehoe Michael P |
Open-market sale | 1,720 | $300.76 | $517.3K |
| 2026-05-05 | Kehoe Michael P |
Open-market sale | 9,673 | $302.79 | $2.9M |
| 2026-05-04 | Petrucelli Bryan P. |
Gift | 1,442 | — | — |
| 2026-05-04 | Petrucelli Bryan P. |
Gift | 1,442 | — | — |
Well-known investors holding KNSL (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 240,872 | $79.4M | 0.05% | Added 9% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 170,778 | $56.3M | 0.03% | New position |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 136,579 | $45.0M | 0.02% | Added 221% |
| D. E. Shaw & Co. | 2026-06-30 | 29,101 | $9.6M | 0.01% | Added 268% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 12,182 | $4.0M | 0.01% | Added 306% |
| Renaissance Technologies | 2026-06-30 | 5,600 | $1.8M | 0.0% | New position |