Kinsale Capital Group Inc

Previous wording

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2024, 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, 2023.

Current wording

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2024, 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, 2023.

Previous wording

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 three months of 2024, the percentage breakdown of our gross written premiums was 68.4% casualty and 31.6% property. Our commercial underwriting divisions include commercial property, excess casualty, small business casualty, construction, general casualty, allied health, products liability, small business property, entertainment, energy, professional liability, life sciences, commercial auto, environmental, health care, excess professional, management liability, inland marine, public entity, aviation, product recall, ocean marine and railroad. We also write homeowners' coverage in the personal lines market, which in aggregate represented 1.9% of our gross written premiums in the first three months of 2024.

Current wording

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 six months of 2024, the percentage breakdown of our gross written premiums was 65.2% casualty and 34.8% property. Our commercial underwriting divisions include commercial property, excess casualty, small business casualty, general casualty, construction, allied health, products liability, small business property, entertainment, energy, professional liability, life sciences, commercial auto, environmental, excess professional, inland marine, health care, management liability, public entity, aviation, product recall, ocean marine and railroad. We also write homeowners' coverage in the personal lines market, which in aggregate represented 2.1% of our gross written premiums in the first six months of 2024.

Previous wording

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. Beginning in the second quarter of 2023, we reclassified policy fees to fee income. Historically, these fees were presented as a reduction to underwriting, acquisition and insurance expenses. We modified the definition of the loss and expense ratios to include fee income in the denominator of each ratio. We have reclassified prior periods' results to conform to the current period's presentation. See Note 15 of the notes to the condensed consolidated financial statements for further information regarding fee income.

Current wording

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.

Previous wording

During the three months ended March 31, 2023, prior accident years developed favorably by $9.0 million, of which $12.6 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 and 2019 accident years due primarily to construction defect claims within the primary casualty business that is more exposed to the recent increase in inflation.

Current wording

During the three months ended June 30, 2023, prior accident years developed favorably by $10.4 million, of which $14.4 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 primarily to construction defect claims that are more exposed to inflation.

Previous wording

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 March 31, 2024 and 2023:

Current wording

The following table summarizes net investment income, change in the fair value of equity securities and net realized investment gains for the three months ended June 30, 2024 and 2023:

Previous wording

Net income was $98.9 million for the three months ended March 31, 2024 compared to $55.8 million for the three months ended March 31, 2023, an increase of 77.3%. The increase in net income for the first three months of 2024 over the same period last year was primarily due to a combination of continued profitable growth, higher returns on equity investments and an increase in investment income driven by higher investment balances and higher interest rates.

Current wording

Net income was $191.5 million for the six months ended June 30, 2024 compared to $128.6 million for the six months ended June 30, 2023, an increase of 48.9%. The increase in net income for the first six months of 2024 over the same period last year was primarily due to a combination of continued profitable growth, an increase in investment income driven by both higher investment balances and higher interest rates and higher returns on equity investments.

Previous wording

Underwriting income was $65.1 million for the three months ended March 31, 2024 compared to $51.6 million for the three months ended March 31, 2023, an increase of 26.2%. The corresponding combined ratios were 79.5% for the three months ended March 31, 2024 compared to 78.8% for the three months ended March 31, 2023. The increase in underwriting income for the first three months of 2024 compared to the same period last year was primarily due to a combination of premium growth and lower net commissions.

Current wording

Underwriting income was $141.1 million for the six months ended June 30, 2024 compared to $113.1 million for the six months ended June 30, 2023, an increase of 24.8%. The corresponding combined ratios were 78.6% for the six months ended June 30, 2024 compared to 77.7% for the six months ended June 30, 2023. The increase in underwriting income for the first six months of 2024 compared to the same period last year was primarily due to a combination of premium growth and lower relative net commissions.

Previous wording

Our gross written premiums were $448.6 million for the three months ended March 31, 2024 compared to $357.6 million for the three months ended March 31, 2023, an increase of $91.1 million, or 25.5%. The increase in gross written premiums for the first three months of 2024 over the same period last year was due to higher submission activity from brokers and a favorable pricing environment. The average premium per policy written was $15,300 in the first three months of 2024 compared to $14,900 in the first three months of 2023. Excluding our personal insurance division, which has a relatively low premium per policy written, the average premium per policy written was $16,000 for the first three months of 2024 and $16,200 for the first three months of 2023.

Current wording

Gross written premiums were $978.4 million for the six months ended June 30, 2024 compared to $795.8 million for the six months ended June 30, 2023, an increase of $182.6 million, or 22.9%. The increase in gross written premiums for the first six months of 2024 over the same period last year was due to higher submission activity from brokers and a favorable pricing environment. The average premium per policy written was $15,800 in the first six months of 2024 compared to $15,700 in the first six months of 2023. Excluding our personal insurance division, which has a relatively low premium per policy written, the average premium per policy written was $16,600 for the first six months of 2024 and $17,100 for the first six months of 2023.

Previous wording

Net written premiums increased by $52.0 million, or 17.4%, to $351.1 million for the three months ended March 31, 2024 from $299.0 million for the three months ended March 31, 2023. The increase in net written premiums for the first three months of 2024 compared to the same period last year was primarily due to higher gross written premiums. The net retention ratio was 78.2% for the three months ended March 31, 2024 compared to 83.6% for the same period last year. The decrease in the net retention ratio was primarily due to higher premiums ceded under the commercial property quota share and excess casualty variable quota share reinsurance treaties as a result of growth in our property and excess casualty lines and a higher cession rate on the commercial property quota share effective with the June 2023 renewal.

Current wording

Net written premiums increased by $117.2 million, or 17.7%, to $781.3 million for the six months ended June 30, 2024 from $664.1 million for the six months ended June 30, 2023. The increase in net written premiums for the first six months of 2024 compared to the same period last year was primarily due to higher gross written premiums. The net retention ratio was 79.9% for the six months ended June 30, 2024 compared to 83.4% for the same period last year. 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.

Previous wording

Net earned premiums increased by $72.4 million, or 30.5%, to $309.5 million for the three months ended March 31, 2024 from $237.2 million for the three months ended March 31, 2023 due to growth in gross written premiums.

Current wording

Net earned premiums increased by $147.8 million, or 29.9%, to $642.0 million for the six months ended June 30, 2024 from $494.2 million for the six months ended June 30, 2023 due to growth in gross written premiums.

Previous wording

The loss ratio was 58.8% for the three months ended March 31, 2024 compared to 57.1% for the three months ended March 31, 2023. The increase in the loss ratio in the first three months of 2024 compared to the first three months of 2023 was due to higher loss selections in the current accident year primarily to account for inflationary trends and lower net favorable development of loss reserves from prior accident years, offset in part by lower catastrophe losses.

Current wording

The loss ratio was 57.7% for the six months ended June 30, 2024 compared to 56.4% for the six months ended June 30, 2023. The increase in the loss ratio in the first six months of 2024 compared to the first six months of 2023 was due primarily to lower net favorable development of loss reserves from prior accident years.

Previous wording

During the three months ended March 31, 2024, prior accident years developed favorably by $8.4 million, of which $16.3 million was attributable to the 2021 through 2023 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 from the 2018 and 2019 accident years due to construction defect claims and from the 2020 accident year due to a large property claim.

Current wording

During the six months ended June 30, 2024, prior accident years developed favorably by $17.9 million, of which $30.7 million was attributable to the 2021 through 2023 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 from the 2017 through 2019 accident years due to construction defect claims that are more exposed to inflation and from the 2020 accident year due to a large property claim.

Previous wording

The expense ratio was 20.7% for the three months ended March 31, 2024 compared to 21.7% for the three months ended March 31, 2023. The decrease in the expense ratio was primarily due to lower relative net commissions due primarily to higher ceding commissions earned under the commercial property quota share treaty as a result of commercial property premium growth. Direct commissions paid as a percentage of gross written premiums was 14.7% and 14.4% for the three months ended March 31, 2024 and 2023, respectively.

Current wording

The expense ratio was 20.9% for the six months ended June 30, 2024 compared to 21.3% for the six months ended June 30, 2023. The decrease in the expense ratio was primarily due to lower relative net commissions due to higher ceding commissions earned under the commercial property quota share treaty as a result of commercial property premium growth offset in part by variability in other underwriting expenses. Direct commissions paid as a percentage of gross written premiums was 14.7% and 14.4% for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Our net investment income increased by 59.1% to $32.9 million for the three months ended March 31, 2024 from $20.7 million for the three months ended March 31, 2023. The increase in the first three months of 2024 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 and higher interest rates relative to the prior year period. Our investment portfolio, excluding cash equivalents and unrealized gains and losses, had an annualized gross investment return of 4.3% and 3.7% for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Net investment income increased by 53.3% to $68.8 million for the six months ended June 30, 2024 from $44.9 million for the six months ended June 30, 2023. The increase in the first six months of 2024 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 and higher interest rates relative to the prior year period. Our investment portfolio, excluding cash equivalents and unrealized gains and losses, had an annualized gross investment return of 4.3% and 3.8% for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

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

Current wording

During the first six months of 2024, the change in fair value of equity securities of $21.2 million included changes in unrealized gains related to common stocks of $12.3 million and ETFs of $6.3 million and changes in unrealized gains related to non-redeemable preferred stock of $2.6 million. The change in the fair value of common stocks and ETFs during the first six months of 2024 primarily reflected higher valuations in the broader U.S. stock market and the change in fair value of preferred stock relates primarily to the disposition of certain preferred stock securities in a loss position.

Previous wording

During the first three months of 2023, the change in fair value of equity securities of $3.5 million included changes in unrealized gains related to ETFs of $2.7 million and changes in unrealized gains related to non-redeemable preferred stock of $0.8 million. The change in unrealized gains during the first three months of 2023 attributable to ETFs reflected higher valuations in the broader U.S. stock market during the period.

Current wording

During the first six months of 2023, the change in fair value of equity securities included changes in unrealized gains related to common stocks of $1.4 million and ETFs of $7.0 million and unrealized gains related to non-redeemable preferred stock of $0.9 million. The change in unrealized gains during the first six months of 2023 attributable to ETFs and common stocks reflected higher valuations in the broader U.S. stock market during the period.

Previous wording

During the first three months of 2024, net realized investment gains of $3.9 million were primarily related to sales of ETFs due to opportunistic repositioning of our equity portfolio. During the first three months of 2023, net realized investment losses of $(4.7) million were related to disposing of equity securities issued by certain banking and financial institutions.

Current wording

During the first six months of 2024, net realized investment gains of $6.7 million were primarily related to sales of ETFs due to opportunistic repositioning of our equity portfolio. During the first six months of 2023, net realized investment losses of $(3.4) million were related to disposing of equity securities issued by certain banking and financial institutions.

Previous wording

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 a reduction to the allowance for credit losses at March 31, 2024 of less than $0.1 million. See Note 2 of the notes to the consolidated financial statements for further information regarding credit losses.

Current wording

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 a reduction to the allowance for credit losses at June 30, 2024 of $0.5 million. See Note 2 of the notes to the consolidated financial statements for further information regarding credit losses.

Previous wording

Our effective tax rate was 14.6% for the three months ended March 31, 2024 compared to 18.4% for the three months ended March 31, 2023. The effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefits from stock options exercised, stock-based compensation and tax-exempt investment income.

Current wording

Our effective tax rate was 17.3% for the six months ended June 30, 2024 compared to 18.9% for the six months ended June 30, 2023. 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.

Previous wording

Our annualized return on equity was 35.1% for the three months ended March 31, 2024 compared to 28.6% for the three months ended March 31, 2023. Our annualized operating return on equity was 28.9% for the three months ended March 31, 2024 compared to 29.1% for the three months ended March 31, 2023. The decrease in annualized operating return on equity for the three months ended March 31, 2024 compared to the prior period was due primarily to higher average stockholders' equity as a result of profitable growth offset in part by higher net operating earnings.

Current wording

Our annualized return on equity was 32.7% for the six months ended June 30, 2024 compared to 31.8% for the six months ended June 30, 2023. Our annualized operating return on equity was 28.8% for the six months ended June 30, 2024 compared to 30.6% for the six months ended June 30, 2023. The decrease in annualized operating return on equity for the six months ended June 30, 2024 compared to the prior period was due primarily to higher average stockholders' equity as a result of profitable growth offset in part by higher net operating earnings.

Previous wording

Our cash flows for thethree months ended March 31, 2024 and 2023 were:

Current wording

Our cash flows for thesix months ended June 30, 2024 and 2023 were:

Previous wording

Net cash provided by operating activities was approximately $210.4 million for the three months ended March 31, 2024 compared to $197.6 million for the same period in 2023. This increase was largely driven by higher premium volume and the timing of claim payments and reinsurance recoveries.

Current wording

Net cash provided by operating activities was approximately $489.3 million for the six months ended June 30, 2024 compared to $423.6 million for the same period in 2023. This increase was largely driven by higher premium volume and the timing of claim payments and reinsurance recoveries.

Previous wording

Net cash used in investing activities was $192.5 million for the three months ended March 31, 2024 compared to $190.2 million for the three months ended March 31, 2023. Net cash used in investing activities during the first three months of 2024 included purchases of fixed-maturity securities of $297.4 million, which included primarily corporate bonds, asset- and mortgage-backed securities, and to a lesser extent, U.S. Treasuries and municipal securities. During the first three months of 2024, we received proceeds of $67.8 million from sales of fixed-maturity securities, largely corporate bonds, municipal securities, U.S. Treasuries and government agency bonds and $80.5 million from redemptions and maturities of asset- and mortgage-backed securities and corporate bonds. For the three months ended March 31, 2024, purchases of equity securities of$49.8 million consisted of common stocks and ETFs. During the first three months of 2024, we received proceeds of $10.1 million from sales of ETFs.

Current wording

Net cash used in investing activities was $432.2 million for the six months ended June 30, 2024 compared to $444.6 million for the six months ended June 30, 2023. Net cash used in investing activities during the first six months of 2024 included purchases of fixed-maturity securities of $759.8 million, which included primarily corporate bonds, asset- and mortgage-backed securities, and to a lesser extent, U.S. Treasuries and municipal securities. During the first six months of 2024, we received proceeds of $189.3 million from sales of fixed-maturity securities, largely corporate bonds, mortgage- and asset-backed securities, municipal securities, U.S. Treasuries and government agency bonds and $200.6 million from redemptions and maturities of asset- and mortgage-backed securities and corporate bonds. For the six months ended June 30, 2024, purchases of equity securities of$84.2 million consisted of common stocks and ETFs. During the first six months of 2024, we received proceeds of $30.9 million primarily from sales of ETFs and common stocks.

Previous wording

Net cash used in investing activities of $190.2 million during the first three months of 2023 included purchases of fixed-maturity securities of $258.2 million, which included primarily asset-backed securities, corporate bonds, and to a lesser extent, municipal securities. During the first three months of 2023, we received proceeds of $49.2 million from sales of fixed-maturity securities, largely municipal securities and corporate bonds, and $26.1 million from redemptions and maturities of mortgage- and asset-backed securities and corporate bonds. For the three months ended March 31, 2023, purchases of equity securities of$20.3 million consisted of common stocks. In addition, net sales of short-term investments of $15.1 million consisted of U.S. Treasuries and corporate bonds.

Current wording

Net cash used in investing activities of $444.6 million for the six months ended June 30, 2023 included purchases of fixed-maturity securities of $667.8 million, which were comprised largely of corporate bonds, asset- and mortgage-backed securities, and to a lesser extent, U.S. Treasuries and municipal securities. During the first six months of 2023, we received proceeds of $187.4 million from sales of fixed-maturity securities, largely corporate bonds, asset-backed securities and municipal securities and $62.3 million from redemptions and maturities of asset- and mortgage-backed securities and corporate bonds. For the six months ended June 30, 2023, purchases of equity securities of$40.5 million consisted of common stocks. During the first six months of 2023, we received proceeds of $6.3 million from sales of equity securities, primarily ETFs and common stocks. In addition, net sales of short-term investments of $13.1 million consisted of U.S. Treasuries and corporate bonds.

Previous wording

During the first three months of 2024, cash used in financing reflected dividends paid of $0.15 per common share, or $3.5 million in aggregate. In addition, for the three months ended March 31, 2024, payroll taxes withheld and remitted on restricted stock awards were $5.8 million, offset in part by proceeds received from our equity compensation plans of $0.9 million.

Current wording

During the first six months of 2024, cash used in financing reflected dividends paid of $0.30 per common share, or $7.0 million in aggregate. In addition, for the six months ended June 30, 2024, payroll taxes withheld and remitted on restricted stock awards were $7.0 million, offset in part by proceeds received from our equity compensation plans of $1.2 million.

Previous wording

During the first three months of 2023, cash used in financing activities reflected dividends paid of $0.14 per common share, or $3.2 million in aggregate. In addition, for the three months ended March 31, 2023, payroll taxes withheld and remitted on restricted stock awards were $2.1 million, offset in part by proceeds received from our equity compensation plans of $0.3 million.

Current wording

During the first six months of 2023, cash used in financing activities reflected dividends paid of $0.28 per common share, or $6.5 million in aggregate. In addition, for the six months ended June 30, 2023, payroll taxes withheld and remitted on restricted stock awards were $4.2 million, offset in part by proceeds received from our equity compensation plans of $0.6 million.

Previous wording

To manage our natural catastrophe exposure, we use computer 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 focus on the 100-year and the 250-year return periods.

Current wording

To manage our natural catastrophe exposure, we use computer 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.

Previous wording

(1) Our commercial property quota-share reinsurance reduces the financial impact of property losses on our commercial property, small business property, high value homeowners and inland marine policies up to a loss recovery of $123.7 million for an event. This reinsurance is not applicable to any individual policy with a limit of $2.0 million or less.

Current wording

(1) Our property quota-share reinsurance reduces the financial impact of property losses on our commercial property, small business property, high value homeowners and inland marine policies up to a loss recovery of $189.9 million for an event. This reinsurance is not applicable to any individual policy with a limit of $2.0 million or less.

Previous wording

(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 $255.0 million. This coverage applies after the coverage provided by the commercial property quota-share treaty.

Current wording

(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 $350.0 million. This coverage applies after the coverage provided by the commercial property quota-share treaty.

Previous wording

(4) For casualty policies with a per-occurrence limit higher than $2.0 million, the ceding percentage varies such that the retention is always $2.0 million or less. For example, for a $4.0 million limit excess policy, our retention would be 50%, whereas for a $10.0 million limit excess policy, our retention would be 20%. For policies for which we also write an underlying primary limit, the retention on the primary and excess policy combined would not exceed $2.0 million.

Current wording

(4) For excess casualty policies with a per-occurrence limit higher than $2.5 million, the ceding percentage varies such that the retention is always $2.5 million or less. For example, for a $5.0 million limit excess policy, our retention would be 50%, whereas for a $10.0 million limit excess policy, our retention would be 25%. For policies for which we also write an underlying primary limit, the combined retention on the primary and excess policies would not exceed $2.5 million. This reinsurance is not applicable to any individual policy with a per-occurrence limit of $2.5 million or less.

Previous wording

At March 31, 2024, total stockholders' equity and tangible stockholders' equity were $1.2 billion compared to total stockholders' equity and tangible stockholders' equity of $1.1 billion at December 31, 2023. The increases in both total and tangible stockholders' equity over the prior year-end balances were due to profits generated during the period, offset in part by a decrease in the fair value of our fixed-maturity investments, payment of dividends and net activity related to stock-based compensation plans. 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.

Current wording

At June 30, 2024, total stockholders' equity and tangible stockholders' equity were $1.3 billion compared to total stockholders' equity and tangible stockholders' equity of $1.1 billion at December 31, 2023. The increases in both total and tangible stockholders' equity over the prior year-end balances were due to profits generated during the period and net activity related to stock-based compensation plans, offset in part by a decrease in the fair value of our fixed-maturity investments and payment of dividends. 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.

Previous wording

At March 31, 2024, our cash and invested assetsof $3.3 billion consisted of fixed-maturity securities, equity securities, cash and cash equivalents, real estate investments and short-term investments. At March 31, 2024, the majority of the investment portfolio was composed of fixed-maturity securities of $2.9 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 March 31, 2024, we also held $287.7 million of equity securities, which included ETFs, common stocks and non-redeemable preferred stock, $136.1 million of cash and cash equivalents, $15.0 million of real estate investments and $5.6 million of short-term investments.

Current wording

At June 30, 2024, our cash and invested assetsof $3.6 billion consisted of fixed-maturity securities, equity securities, cash and cash equivalents, real estate investments and short-term investments. At June 30, 2024, the majority of the investment portfolio was composed of fixed-maturity securities of $3.1 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 June 30, 2024, we also held $317.5 million of equity securities, which included ETFs, common stocks and non-redeemable preferred stock, $171.0 million of cash and cash equivalents, $15.0 million of real estate investments and $6.9 million of short-term investments.

Previous wording

Ourfixed-maturity securities, including cash equivalents, had a weighted average duration of 2.8 years at both March 31, 2024 and December 31, 2023 and an average rating of "AA-" at both March 31, 2024 and December 31, 2023.

Current wording

Ourfixed-maturity securities, including cash equivalents, had a weighted average duration of 3.0 years and 2.8 years at June 30, 2024 and December 31, 2023, respectively and an average rating of "AA-" at both June 30, 2024 and December 31, 2023.

Previous wording

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 $5.3 million and $5.8 million at March 31, 2024 and December 31, 2023, respectively.

Current wording

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 $3.5 million and $5.8 million at June 30, 2024 and December 31, 2023, respectively.

Previous wording

Net income for the three months ended March 31, 2024 and 2023, reconciles to underwriting income as follows:

Current wording

Net income for the three and six months ended June 30, 2024 and 2023, reconciles to underwriting income as follows:

Previous wording

Net income for the three months ended March 31, 2024 and 2023, reconciles to net operating earnings as follows:

Current wording

Net income for the three and six months ended June 30, 2024 and 2023, reconciles to net operating earnings as follows: