Kinsale Capital Group, Inc.

Previous wording

The discussion and analysis below include certain forward-looking statements that are subject to risks, uncertainties and other factors described in "Risk Factors" in this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K for the year ended December 31, 2024. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors.

Current wording

The discussion and analysis below include certain forward-looking statements that are subject to risks, uncertainties and other factors described in "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025 and in our Annual Report on Form 10-K for the year ended December 31, 2024. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors.

Previous wording

The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2025, 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, 2024.

Current wording

The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2025, 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, 2024.

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 six months of 2025, the percentage breakdown of our gross written premiums was 69.3% casualty and 30.7% property. Our commercial underwriting divisions include Commercial Property, Excess Casualty, Small Business Casualty, General Casualty, Construction, Allied Health, Small Business Property, Entertainment, Products Liability, Commercial Auto, Energy, Excess Professional, Life Sciences, Professional Liability, Inland Marine, Environmental, Health Care, Management Liability, Public Entity, Agribusiness Casualty, Aviation, Ocean Marine, Product Recall, Agribusiness Property and Railroad. We also write homeowners' coverage in the personal lines market, which in aggregate represented 2.7% of our gross written premiums in the first six months of 2025.

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 nine months of 2025, the percentage breakdown of our gross written premiums was 70.1% casualty and 29.9% property. Our commercial underwriting divisions include Commercial Property, Excess Casualty, Small Business Casualty, General Casualty, Construction, Small Business Property, Allied Health, Entertainment, Products Liability, Commercial Auto, Energy, Excess Professional, Life Sciences, Professional Liability, Inland Marine, Environmental, Health Care, Public Entity, Management Liability, Agribusiness Casualty, Aviation, Agribusiness Property, Ocean Marine, Product Recall and Railroad. We also write homeowners' coverage in the personal lines market, which in aggregate represented 3.0% of our gross written premiums in the first nine months of 2025.

Previous wording

Net income was $134.1 million for the three months ended June 30, 2025 compared to $92.6 million for the three months ended June 30, 2024, an increase of 44.9%. The increase in net income for the second quarter of 2025 from the same period last year was primarily due to higher returns on equity investments, continued profitable growth and higher investment income.

Current wording

Net income was $141.6 million for the three months ended September 30, 2025 compared to $114.2 million for the three months ended September 30, 2024, an increase of 24.0%. The increase in net income for the third quarter of 2025 from the same period last year was primarily due to continued profitable growth, higher investment income and higher returns on equity investments.

Previous wording

Underwriting income was $95.5 million for the three months ended June 30, 2025 compared to $76.1 million for the three months ended June 30, 2024, an increase of 25.5%. The corresponding combined ratios were 75.8% for the three months ended June 30, 2025 compared to 77.7% for the three months ended June 30, 2024. The increase in underwriting income in the second quarter of 2025 compared to the second quarter of 2024 was primarily due to a combination of growth in the business and higher favorable development of loss reserves from prior accident years.

Current wording

Underwriting income was $105.7 million for the three months ended September 30, 2025 compared to $86.9 million for the three months ended September 30, 2024, an increase of 21.7%. The corresponding combined ratios were 74.9% for the three months ended September 30, 2025 compared to 75.7% for the three months ended September 30, 2024. The increase in underwriting income in the third quarter of 2025 compared to the third quarter of 2024 was primarily due to a combination of growth in the business, lower catastrophe losses and higher favorable development of loss reserves from prior accident years.

Previous wording

Gross written premiums were $555.5 million for the three months ended June 30, 2025 compared to $529.8 million for the three months ended June 30, 2024, an increase of $25.8 million, or 4.9%. Gross written premiums in our Commercial Property Division, our largest division, decreased 16.8% 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 grew 14.3% due primarily to continued strong submission flow from brokers across most divisions. The average premium per policy written was approximately $14,300 in the second quarter of 2025 compared to approximately $16,300 in the second quarter of 2024. Excluding our personal lines insurance, which has a relatively low premium per policy written, the average premium per policy written was approximately $14,900 in the second quarter of 2025 compared to $17,200 in the second quarter of 2024. The decrease in average premium per policy for the second quarter of 2025 over the same period last year was due primarily to a decrease in gross written premiums in our Commercial Property Division.

Current wording

Gross written premiums were $486.3 million for the three months ended September 30, 2025 compared to $448.6 million for the three months ended September 30, 2024, an increase of $37.6 million, or 8.4%. Gross written premiums in our Commercial Property Division, our largest division, decreased 7.9% 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 grew 12.3% due primarily to continued strong submission flow from brokers across most divisions. The average premium per policy written was approximately $12,900 in the third quarter of 2025 compared to approximately $14,500 in the third quarter of 2024. Excluding our personal lines insurance, which has a relatively low premium per policy written, the average premium per policy written was approximately $13,500 in the third quarter of 2025 compared to $15,300 in the third quarter of 2024. The decrease in average premium per policy for the third quarter of 2025 over the same period last year was due primarily to a decrease in gross written premiums in our Commercial Property Division.

Previous wording

Net written premiums increased by $28.5 million, or 6.6%, to $458.7 million for the three months ended June 30, 2025 from $430.2 million for the three months ended June 30, 2024. The increase in net written premiums for the second quarter of 2025 compared to the same period last year was primarily due to higher gross written premiums. The net retention ratio was 82.6% for the three months ended June 30, 2025 compared to 81.2% for the three months ended June 30, 2024. The increase in the net retention ratio is primarily attributable to change in the mix of business and an increase in retention on our reinsurance treaties.

Current wording

Net written premiums increased by $55.1 million, or 15.8%, to $405.1 million for the three months ended September 30, 2025 from $349.9 million for the three months ended September 30, 2024. The increase in net written premiums for the third quarter of 2025 compared to the same period last year was primarily due to higher gross written premiums. The net retention ratio was 83.3% for the three months ended September 30, 2025 compared to 78.0% for the three months ended September 30, 2024. The increase in the net retention ratio is primarily attributable to an increase in retention on our reinsurance treaties and change in the mix of business.

Previous wording

Net earned premiums increased by $51.2 million, or 15.4%, to $383.6 million for the three months ended June 30, 2025 from $332.5 million for the three months ended June 30, 2024 and was primarily related to growth in gross written premiums.

Current wording

Net earned premiums increased by $62.2 million, or 17.8%, to $411.0 million for the three months ended September 30, 2025 from $348.8 million for the three months ended September 30, 2024 and was primarily related to growth in gross written premiums.

Previous wording

The loss ratio was 55.1% for the three months ended June 30, 2025 compared to 56.6% for the three months ended June 30, 2024. The decrease in the loss ratio in the second quarter of 2025 compared to the second quarter of 2024 was due primarily to higher relative net favorable development of loss reserves from prior accident years, particularly in our property lines of business.

Current wording

The loss ratio was 53.9% for the three months ended September 30, 2025 compared to 56.1% for the three months ended September 30, 2024. The decrease in the loss ratio in the third quarter of 2025 compared to the third quarter of 2024 was due primarily to lower catastrophe losses incurred and higher relative net favorable development of loss reserves from prior accident years, particularly in our property lines of business.

Previous wording

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.

Current wording

During the three months ended September 30, 2025, prior accident years developed favorably by $15.8 million, of which $18.0 million was attributable to the 2021 through 2024 accident years due to lower emergence of reported losses than expected across most lines of business. This favorable development was offset in part by adverse development primarily in our construction liability business in the 2016 through 2019 accident years and adjustments to actuarial assumptions in the 2020 through 2024 accident years to reflect inflation uncertainty around construction defect exposures.

Previous wording

During the three months ended June 30, 2024, prior accident years developed favorably by $9.5 million, of which $14.4 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 largely from the 2017 and 2018 accident years due to construction defect claims that are more exposed to inflation.

Current wording

During the three months ended September 30, 2024, prior accident years developed favorably by $10.1 million, of which $14.9 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 largely from the 2017 through 2019 accident years due to construction defect claims that are more exposed to inflation. Incurred losses and loss adjustment expenses for the three months ended September 30, 2024 included $13.6 million of net catastrophe losses primarily related to Hurricanes Helene, Francine and Beryl and tornadoes in the Midwest.

Previous wording

The expense ratio was 20.3% for the six months ended June 30, 2025 compared to 20.9% for the six months ended June 30, 2024. The decrease in the expense ratio was primarily due to routine variability in other underwriting expenses. Direct commissions paid as a percentage of gross written premiums was 14.8% and 14.7% for the six months ended June 30, 2025 and 2024, respectively.

Current wording

The expense ratio was 21.0% for the three months ended September 30, 2025 compared to 19.6% for the three months ended September 30, 2024. The increase in the expense ratio was primarily due to lower ceding commissions as a result of increased retention on our reinsurance treaties effective with the June 2025 renewal. Direct commissions paid as a percent of gross written premiums was 14.8% and 14.7% for the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Net investment income increased by 29.6% to $46.5 million for the three months ended June 30, 2025 from $35.8 million for the three months ended June 30, 2024. This increase was primarily due to growth in our investment portfolio generated from the investment of strong operating cash flows. Our investment portfolio, excluding cash equivalents and unrealized gains and losses, had an annualized gross investment return of 4.4% for both the three months ended June 30, 2025 and 2024.

Current wording

Net investment income increased by 25.1% to $49.6 million for the three months ended September 30, 2025 from $39.6 million for the three months ended September 30, 2024. This increase was primarily due to growth in our investment portfolio generated from the investment of strong operating cash flows. Our investment portfolio, excluding cash equivalents and unrealized gains and losses, had an annualized gross investment return of 4.4% for both the three months ended September 30, 2025 and 2024.

Previous wording

During the second quarter of 2025, the change in fair value of equity securities primarily reflected unrealized gains arising during the period on our exchange-traded funds ("ETFs") of $15.1 million, common stocks of $13.1 million and non-redeemable preferred stock of $0.4 million generally consistent with the broader U.S. stock market.

Current wording

During the third quarter of 2025, the change in fair value of equity securities primarily reflected unrealized gains arising during the period on our exchange-traded funds ("ETFs") of $11.8 million, common stocks of $11.8 million and non-redeemable preferred stock of $0.1 million generally consistent with the broader U.S. stock market.

Previous wording

During the second quarter of 2024, the change in fair value of equity securities included changes in unrealized gains related to common stocks of $1.7 million and ETFs of $0.4 million and unrealized gains related to non-redeemable preferred stock of $1.1 million. The change in the fair value of common stocks and ETFs during the second quarter of 2024 primarily reflected changes 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.

Current wording

During the third quarter of 2024, the change in fair value of equity securities included changes in unrealized gains related to common stocks of $13.1 million and ETFs of $6.9 million and unrealized gains related to non-redeemable preferred stock of $0.7 million. The change in the fair value of common stocks and ETFs during the third quarter of 2024 primarily reflected changes in the broader U.S. stock market.

Previous wording

Our effective tax rate was 20.3% for the three months ended June 30, 2025 compared to 20.1% for the three months ended June 30, 2024. 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.

Current wording

Our effective tax rate was 20.8% for the three months ended September 30, 2025 compared to 20.9% for the three months ended September 30, 2024. 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.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024:

Previous wording

Net income was $223.3 million for the six months ended June 30, 2025 compared to $191.5 million for the six months ended June 30, 2024, an increase of 16.6%. The increase in net income for the first six months of 2025 over the same period last year was primarily due to higher investment income and continued profitable growth.

Current wording

Net income was $365.0 million for the nine months ended September 30, 2025 compared to $305.7 million for the nine months ended September 30, 2024, an increase of 19.4%. The increase in net income for the first nine months of 2025 over the same period last year was primarily due to continued profitable growth, higher investment income and higher returns on equity investments.

Previous wording

Underwriting income was $162.9 million for the six months ended June 30, 2025 compared to $141.1 million for the six months ended June 30, 2024, an increase of 15.4%. The corresponding combined ratios were 78.8% for the six months ended June 30, 2025 compared to 78.6% for the six months ended June 30, 2024. The increase in underwriting income for the first six months of 2025 compared to the same period last year 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 incurred.

Current wording

Underwriting income was $268.6 million for the nine months ended September 30, 2025 compared to $228.0 million for the nine months ended September 30, 2024, an increase of 17.8%. The corresponding combined ratios were 77.5% for the nine months ended September 30, 2025 compared to 77.6% for the nine months ended September 30, 2024. The increase in underwriting income for the first nine months of 2025 compared to the same period last year 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 incurred.

Previous wording

Gross written premiums were $1.0 billion for the six months ended June 30, 2025 compared to $978.4 million for the six months ended June 30, 2024, an increase of $61.4 million, or 6.3%. Gross written premiums in our Commercial Property Division, our largest division, decreased 17.5% 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 grew 15.5% due primarily to continued strong submission flow from brokers across most divisions. The average premium per policy written was $14,200 in the first six months of 2025 compared to $15,800 in the first six months of 2024. Excluding our personal insurance division, which has a relatively low premium per policy written, the average premium per policy written was $14,800 for the first six months of 2025 and $16,600 for the first six months of 2024. The decrease in average premium per policy for the first six months of 2025 over the same period last year was due primarily to a decrease in gross written premiums in our Commercial Property Division.

Current wording

Gross written premiums were $1.5 billion for the nine months ended September 30, 2025 compared to $1.4 billion for the nine months ended September 30, 2024, an increase of $99.0 million, or 6.9%. Gross written premiums in our Commercial Property Division, our largest division, decreased 15.2% 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 grew 14.4% due primarily to continued strong submission flow from brokers across most divisions. The average premium per policy written was $13,800 in the first nine months of 2025 compared to $15,400 in the first nine months of 2024. Excluding our personal insurance division, which has a relatively low premium per policy written, the average premium per policy written was $14,400 for the first nine months of 2025 and $16,200 for the first nine months of 2024. The decrease in average premium per policy for the first nine months of 2025 over the same period last year was due primarily to a decrease in gross written premiums in our Commercial Property Division.

Previous wording

Net written premiums increased by $59.1 million, or 7.6%, to $840.4 million for the six months ended June 30, 2025 from $781.3 million for the six months ended June 30, 2024. The increase in net written premiums for the first six months of 2025 compared to the same period last year was primarily due to higher gross written premiums. The net retention ratio was 80.8% for the six months ended June 30, 2025 compared to 79.9% for the same period last year. The increase in the net retention ratio was primarily due to an increase in our retention on our excess casualty reinsurance treaty effective with the June 2024 renewal and change in the mix of business.

Current wording

Net written premiums increased by $114.2 million, or 10.1%, to $1.2 billion for the nine months ended September 30, 2025 from $1.1 billion for the nine months ended September 30, 2024. The increase in net written premiums for the first nine months of September 30, 2025 compared to the same period last year was primarily due to higher gross written premiums. The net retention ratio was 81.6% for the nine months ended September 30, 2025 compared to 79.3% for the same period last year. The increase in the net retention ratio was primarily due to an increase in the retention on our reinsurance treaties and change in the mix of business.

Previous wording

Net earned premiums increased by $107.4 million, or 16.7%, to $749.4 million for the six months ended June 30, 2025 from $642.0 million for the six months ended June 30, 2024 due primarily to growth in gross written premiums.

Current wording

Net earned premiums increased by $169.6 million, or 17.1%, to $1.2 billion for the nine months ended September 30, 2025 from $990.7 million for the nine months ended September 30, 2024 due primarily to growth in gross written premiums.

Previous wording

The following table summarizes the loss ratios for the six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes the loss ratios for the nine months ended September 30, 2025 and 2024:

Previous wording

The loss ratio was 58.5% for the six months ended June 30, 2025 compared to 57.7% for the six months ended June 30, 2024. The increase in the loss ratio for the first six months of 2025 compared to the first six months of 2024 was due primarily to higher catastrophe losses incurred in the period primarily related to the Palisades Fire. This increase was offset in part by higher relative net favorable development of prior-year loss reserves and a lower current accident year loss ratio both of which were the result of lower-than-expected reported losses, particularly in our property lines of business.

Current wording

The loss ratio was 56.9% for the nine months ended September 30, 2025 compared to 57.1% for the nine months ended September 30, 2024. The decrease in the loss ratio for the first nine months of 2025 compared to the first nine months of 2024 was due primarily to higher relative net favorable development of prior-year loss reserves, particularly in our property lines of business, offset in part by higher catastrophe losses incurred in the period, primarily related to the Palisades Fire.

Previous wording

During the six months ended June 30, 2025, prior accident years developed favorably by $30.1 million, of which $35.8 million was attributable to the 2020 through 2024 accident years due to lower emergence of reported losses than expected across most lines of business. This favorable development was offset in part by adverse development primarily in our construction liability business in the 2016 through 2019 accident years and adjustments to actuarial assumptions in the 2020 through 2024 accident years to reflect inflation uncertainty around construction defect exposures.

Current wording

During the nine months ended September 30, 2025, prior accident years developed favorably by $45.9 million, of which $53.8 million was attributable to the 2020 through 2024 accident years due to lower emergence of reported losses than expected across most lines of business. This favorable development was offset in part by adverse development primarily in our construction liability business in the 2016 through 2019 accident years and adjustments to actuarial assumptions in the 2020 through 2024 accident years to reflect inflation uncertainty around construction defect exposures.

Previous 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.

Current wording

During the nine months ended September 30, 2024, prior accident years developed favorably by $28.1 million, of which $45.6 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. Incurred losses and loss adjustment expenses for the nine months ended September 30, 2024 included $17.6 million of net catastrophe losses primarily related to Hurricanes Helene, Francine and Beryl and tornadoes in the Midwest.

Previous wording

The following table summarizes the components of the expense ratio for the six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes the components of the expense ratio for the nine months ended September 30, 2025 and 2024:

Previous wording

The expense ratio was 20.7% for the three months ended June 30, 2025 compared to 21.1% for the three months ended June 30, 2024. The decrease in the expense ratio was primarily due to routine variability in other underwriting expenses offset in part by lower ceding commissions due to increased retention on our reinsurance treaties. Direct commissions paid as a percent of gross written premiums was 14.8% and 14.7% for the three months ended June 30, 2025 and 2024, respectively.

Current wording

The expense ratio was 20.6% for the nine months ended September 30, 2025 compared to 20.5% for the nine months ended September 30, 2024. The increase in the expense ratio was primarily due to lower ceding commissions due to increased retention on our reinsurance treaties offset in part by routine variability in other underwriting expenses. Direct commissions paid as a percentage of gross written premiums was 14.8% and 14.7% for the nine months ended September 30, 2025 and 2024, respectively.

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 six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes net investment income, change in the fair value of equity securities and net realized investment gains (losses) for the nine months ended September 30, 2025 and 2024:

Previous wording

Net investment income increased by 31.3% to $90.3 million for the six months ended June 30, 2025 from $68.8 million for the six months ended June 30, 2024. The increase in the first six months of 2025 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 4.3% for both the six months ended June 30, 2025 and 2024.

Current wording

Net investment income increased by 29.0% to $139.9 million for the nine months ended September 30, 2025 from $108.4 million for the nine months ended September 30, 2024. The increase in the first nine months of 2025 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 4.3% for both the nine months ended September 30, 2025 and 2024.

Previous wording

During the first six months of 2025, the change in fair value of equity securities of $31.7 million primarily reflected unrealized gains arising during the period on our common stocks of $22.5 million, ETFs of $8.6 million and non-redeemable preferred stock of $0.5 million generally consistent with the broader U.S. stock market.

Current wording

During the first nine months of 2025, the change in fair value of equity securities of $55.4 million primarily reflected unrealized gains arising during the period on our common stocks of $34.3 million, ETFs of $20.5 million and non-redeemable preferred stock of $0.6 million generally consistent with the broader U.S. stock market.

Previous 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 ETFs and common stocks 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.

Current wording

During the first nine months of 2024, the change in fair value of equity securities of $41.9 million included changes in unrealized gains related to common stocks of $25.4 million and ETFs of $13.2 million and changes in unrealized gains related to non-redeemable preferred stock of $3.3 million. The change in the fair value of ETFs and common stocks during the first nine months of 2024 primarily reflected higher valuations in the broader U.S. stock market and the change in fair value of preferred stock relates primarily to the disposition of certain preferred stock securities in a loss position.

Previous wording

Net realized investment gains were $0.7 million and $6.7 million for the six months ended June 30, 2025 and 2024, respectively and were primarily related to sales of common stocks and ETFs due to opportunistic repositioning of our equity portfolio.

Current wording

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

Previous wording

Our effective tax rate was 20.4% for the six months ended June 30, 2025 compared to 17.3% for the six months ended June 30, 2024. The effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefits from stock-based compensation, including stock options exercised, and from tax-exempt investment income. The effective tax rate was higher for the six months ended June 30, 2025 compared to the same period in 2024 due primarily to a lower volume of stock option exercises.

Current wording

Our effective tax rate was 20.6% for the nine months ended September 30, 2025 compared to 18.7% for the nine months ended September 30, 2024. The effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefits from stock-based compensation, including stock options exercised, and from tax-exempt investment income. The effective tax rate was higher for the nine months ended September 30, 2025 compared to the same period in 2024 due primarily to a lower volume of stock option exercises.

Previous wording

Our annualized return on equity was 27.9% for the six months ended June 30, 2025 compared to 32.7% for the six months ended June 30, 2024. Our annualized operating return on equity was 24.7% for the six months ended June 30, 2025 compared to 28.8% for the six months ended June 30, 2024. The decrease in annualized operating return on equity for the six months ended June 30, 2025 compared to the prior period was due primarily to higher average stockholders' equity and higher net catastrophe losses primarily related to the Palisades Fire. Average stockholders' equity increased as a result of profitable growth and an increase in the fair value of our fixed income portfolio.

Current wording

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

Previous wording

In October 2024, the Company's Board of Directors authorized a share repurchase program authorizing the repurchase of up to $100.0 million of the Company's 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 the Company in its discretion. The stock repurchase program does not require the Company to repurchase any specific number of shares, and may be modified, suspended or terminated at any time. At June 30, 2025, the Company had $70.0 million of capacity remaining under its share repurchase program.

Current wording

In October 2024, the Company's Board of Directors authorized a share repurchase program authorizing the repurchase of up to $100.0 million of the Company's 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 the Company in its discretion. The stock repurchase program does not require the Company to repurchase any specific number of shares, and may be modified, suspended or terminated at any time. At September 30, 2025, the Company had $50.0 million of capacity remaining under its share repurchase program.

Previous wording

Our cash flows for thesix months ended June 30, 2025 and 2024 were:

Current wording

Our cash flows for thenine months ended September 30, 2025 and 2024 were:

Previous wording

Net cash provided by operating activities was approximately $498.9 million for the six months ended June 30, 2025 compared to $489.3 million for the same period in 2024. 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 $802.3 million for the nine months ended September 30, 2025 compared to $763.3 million for the same period in 2024. 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 $440.2 million for the six months ended June 30, 2025 compared to $432.2 million for the six months ended June 30, 2024. Net cash used in investing activities during the first six months of 2025 included purchases of fixed-maturity securities of $939.5 million, which included primarily corporate bonds and asset- and mortgage-backed securities. During the first six months of 2025, we received proceeds of $282.7 million from sales of fixed-maturity securities, largely corporate bonds, asset-backed securities and, to a lesser extent, municipal securities and $359.0 million from redemptions and maturities of asset- and mortgage-backed securities and corporate bonds. For the six months ended June 30, 2025, purchases of equity securities of$94.9 million consisted of common stocks and ETFs. During the first six months of 2025, we received proceeds of $11.6 million from sales of common stocks.

Current wording

Net cash used in investing activities was $702.9 million for the nine months ended September 30, 2025 compared to $762.1 million for the nine months ended September 30, 2024. Net cash used in investing activities during the first nine months of 2025 included purchases of fixed-maturity securities of $1.8 billion, which included primarily asset- and mortgage-backed securities and corporate bonds. During the first nine months of 2025, we received proceeds of $677.6 million from sales of fixed-maturity securities, largely corporate bonds, asset-backed securities and, to a lesser extent, municipal securities and $554.3 million primarily from redemptions and maturities of asset- and mortgage-backed securities and corporate bonds. For the nine months ended September 30, 2025, purchases of equity securities of$131.4 million consisted of common stocks and ETFs. During the first nine months of 2025, we received proceeds of $14.6 million primarily from sales of common stocks. In addition, net purchases of short-term investments of $6.5 million consisted of U.S. Treasuries.

Previous wording

Net cash used in investing activities of $432.2 million during the 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

Current wording

Net cash used in investing activities of $762.1 million during the nine months of 2024 included purchases of fixed-maturity securities of $1.3 billion, which included primarily corporate bonds, asset- and mortgage-backed securities, and to a lesser extent, U.S. Treasuries and municipal securities. During the first nine months of 2024, we received proceeds of $274.2 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 $317.4 million from redemptions and maturities of asset- and mortgage-backed securities and corporate bonds. For the nine months ended September 30, 2024, purchases of equity securities of$115.1 million consisted of common stocks and ETFs. During the first nine months of 2024, we received proceeds of $34.2 million primarily from sales of ETFs and common stocks.