Kinsale Capital Group, Inc.

Previous wording

The results of operations for the three months ended March 31, 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.

Current wording

The results of operations for the three and six months ended June 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.

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 2026, the percentage breakdown of our gross written premiums was 76.0% casualty and 24.0% property. Our commercial underwriting divisions include Excess Casualty, Commercial Property, General Casualty, Small Business Casualty, Construction, Allied Health, Small Business Property, Products Liability, Entertainment, Commercial Auto, Energy, Excess Professional, Inland Marine, Life Sciences, Environmental, Professional Liability, Health Care, Public Entity, Agribusiness Property, 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 three months of 2026.

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 2026, the percentage breakdown of our gross written premiums was 74.1% casualty and 25.9% property. Our commercial underwriting divisions include Commercial Property, Excess Casualty, General Casualty, Small Business Casualty, Construction, Allied Health, Small Business Property, Entertainment, Products Liability, Commercial Auto, Energy, Excess Professional, Inland Marine, Life Sciences, Environmental, Professional Liability, Health Care, Agribusiness Property, Public Entity, Agribusiness Casualty, Management Liability, 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 six months of 2026.

Previous wording

Gross written premiums were $482.0 million for the three months ended March 31, 2026 compared to $484.3 million for the three months ended March 31, 2025, a decrease of $2.3 million, or 0.5%. The decrease in gross written premiums was primarily due to a 28.3% decline in the Commercial Property Division, one of the Company's largest divisions, driven by continued rate decreases from heightened competition, including from standard carriers. Excluding our Commercial Property Division, gross written premiums grew 6.0% due primarily to continued strong submission flow from brokers across most divisions.

Current wording

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.

Previous wording

Net earned premiums increased by $41.1 million, or 11.2%, to $406.9 million for the three months ended March 31, 2026 from $365.8 million for the three months ended March 31, 2025 due primarily to continued earning of premium from prior-period growth in gross written premiums and higher net retention levels.

Current wording

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.

Previous wording

During the three months ended March 31, 2025, prior accident years developed favorably by $14.6 million, of which $16.7 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 from the 2017 through 2019 accident years and more conservative actuarial assumptions in the 2021 through 2023 accident years for lines of business exposed to construction liability. 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.

Current 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.

Previous wording

The expense ratio was 21.1% for the three months ended March 31, 2026 compared to 20.0% for the three months ended March 31, 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 March 31, 2026 and 2025, respectively.

Current wording

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.

Previous wording

Net realized investment gains were $1.7 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively, primarily as a result of opportunistic sales of equity securities.

Current wording

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.

Previous wording

Net income was $112.6 million for the three months ended March 31, 2026 compared to $89.2 million for the three months ended March 31, 2025, an increase of 26.1%. The increase in net income for the first three months of 2026 over the same period last year was primarily due to lower catastrophe losses and higher investment income offset in part by a decrease in the fair value of our equity portfolio.

Current wording

Net income was $288.4 million for the six months ended June 30, 2026 compared to $223.3 million for the six months ended June 30, 2025, an increase of 29.1%. The increase in net income for the first six months of 2026 over the same period last year was primarily due to lower catastrophe losses and strong investing results, including higher investment income and higher returns on equity investments.

Previous wording

Underwriting income was $94.5 million for the three months ended March 31, 2026 compared to $67.5 million for the three months ended March 31, 2025, an increase of 40.1%. The corresponding combined ratios were 77.4% for the three months ended March 31, 2026 compared to 82.1% for the three months ended March 31, 2025. The increase in underwriting income for the first three 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.

Current wording

Underwriting income was $199.9 million for the six months ended June 30, 2026 compared to $162.9 million for the six months ended June 30, 2025, an increase of 22.7%. The corresponding combined ratios were 76.4% for the six months ended June 30, 2026 compared to 78.8% for the six months ended June 30, 2025. The increase in underwriting income for the first six 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.

Previous wording

The average premium per policy written was $12,200 in the first three months of 2026 compared to $14,200 in the first three 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 three months of 2026 and $14,700 for the first three months of 2025. The decrease in average premium per policy for the first three months of 2026 over the same period last year was due to an increase in competition on larger accounts, primarily in our Commercial Property Division.

Current wording

The average premium per policy written was $12,200 in the first six months of 2026 compared to $14,200 in the first six 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 six months of 2026 and $14,800 for the first six months of 2025. The decrease in average premium per policy for the first six months of 2026 over the same period last year was due to an increase in competition, primarily on larger accounts and in our Commercial Property Division.

Previous wording

Net written premiums increased by $21.6 million, or 5.6%, to $403.3 million for the three months ended March 31, 2026 from $381.7 million for the three months ended March 31, 2025. The net retention ratio was 83.7% for the three months ended March 31, 2026 compared to 78.8% 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.

Current wording

Net written premiums increased by $15.3 million, or 1.8%, to $855.7 million for the six months ended June 30, 2026 from $840.4 million for the six months ended June 30, 2025. The net retention ratio was 84.8% for the six months ended June 30, 2026 compared to 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.

Previous wording

The loss ratio was 56.3% for the three months ended March 31, 2026 compared to 62.1% for the three months ended March 31, 2025. The decrease in the loss ratio for the first three months of 2026 compared to the first three 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.

Current wording

The loss ratio was 55.0% for the six months ended June 30, 2026 compared to 58.5% for the six months ended June 30, 2025. The decrease in the loss ratio for the first six months of 2026 compared to the first six 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.

Previous wording

Net investment income increased by 26.5% to $55.4 million for the three months ended March 31, 2026 from $43.8 million for the three months ended March 31, 2025. The increase in the first three 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 three months ended March 31, 2026 and 2025, respectively.

Current wording

Net investment income increased by 23.1% to $111.2 million for the six months ended June 30, 2026 from $90.3 million for the six months ended June 30, 2025. The increase in the first six 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 six months ended June 30, 2026 and 2025, respectively.

Previous wording

Our effective tax rate was 19.4% for the three months ended March 31, 2026 compared to 20.6% for the three months ended March 31, 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.

Current wording

Our effective tax rate was 19.8% for the six months ended June 30, 2026 compared to 20.4% for the six months ended June 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.

Previous wording

Our annualized return on equity was 22.9% for the three months ended March 31, 2026 compared to 23.3% for the three months ended March 31, 2025. Our annualized operating return on equity was 24.0% for the three months ended March 31, 2026 compared to 22.5% for the three months ended March 31, 2025. The increase in annualized operating return on equity for the three months ended March 31, 2026 compared to the prior period was due primarily to higher profitability compared to the prior-year period offset in part by higher average stockholders' equity.

Current wording

Our annualized return on equity was 28.9% for the six months ended June 30, 2026 compared to 27.9% for the six months ended June 30, 2025. Our annualized operating return on equity was 24.4% for the six months ended June 30, 2026 compared to 24.7% for the six months ended June 30, 2025. The decrease in annualized operating return on equity for the six months ended June 30, 2026 compared to the prior period was due primarily to higher average stockholders' equity offset in part by higher profitability compared to the prior-year period.

Previous wording

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 March 31, 2026, the Company had $187.5 million of capacity remaining under its share repurchase program.

Current wording

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 June 30, 2026, the Company had $87.5 million of capacity remaining under its share repurchase program.

Previous wording

Our cash flows for thethree months ended March 31, 2026 and 2025 were:

Current wording

Our cash flows for thesix months ended June 30, 2026 and 2025 were:

Previous wording

Net cash provided by operating activities was approximately $248.9 million for the three months ended March 31, 2026 compared to $229.8 million for the same period in 2025. This increase was largely driven by higher investment income received and the timing of reinsurance recoveries offset in part by timing of claim payments and a decline in premium volume.

Current wording

Net cash provided by operating activities was approximately $490.8 million for the six months ended June 30, 2026 compared to $498.9 million for the same period in 2025. This decrease was largely driven by higher paid losses offset in part by the net effect of increased retention on our reinsurance treaties and higher investment income received.

Previous wording

Net cash used in investing activities was $114.4 million for the three months ended March 31, 2026 compared to $181.0 million for the three months ended March 31, 2025. Net cash used in investing activities during the first three months of 2026 included purchases of fixed-maturity securities of $361.8 million, which included primarily mortgage- and asset-backed securities and corporate bonds. During the first three months of 2026, we received proceeds of $182.7 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 million primarily from redemptions and maturities of asset- and mortgage-backed securities. For the three months ended March 31, 2026, purchases of equity securities of$33.1 million consisted of common stocks and ETFs. During the first three months of 2026, we received proceeds of $8.6 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.

Current wording

Net cash used in investing activities was $263.5 million for the six months ended June 30, 2026 compared to $440.2 million for the six months ended June 30, 2025. Net cash used in investing activities during the first six months of 2026 included purchases of fixed-maturity securities of $729.5 million, which included primarily mortgage- and asset-backed securities and corporate bonds. During the first six months of 2026, we received proceeds of $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 $195.7 million primarily from redemptions and maturities of mortgage- and asset-backed securities. For the six months ended June 30, 2026, purchases of equity securities of$148.9 million consisted of common stocks and ETFs. During the first six months of 2026, we received proceeds of $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.

Previous wording

Net cash used in investing activities of $181.0 million during the first three months of 2025 included purchases of fixed-maturity securities of $369.5 million, which included primarily corporate bonds and asset- and mortgage-backed securities. During the first three months of 2025, we received proceeds of $107.0 million from sales of fixed-maturity securities, largely corporate bonds, mortgage- and asset-backed securities, and, to a lesser extent, municipal securities and $144.7 million from redemptions and maturities of asset- and mortgage-backed securities and corporate bonds. For the three months ended March 31, 2025, purchases of equity securities of$42.7 million consisted primarily of common stocks. During the first three months of 2025, we received proceeds of $11.6 million primarily from sales of common stocks. Cash used in investing activities was partially offset by unsettled purchases of cash equivalents totaling $15.0 million as of March 31, 2025.

Current wording

Net cash used in investing activities of $440.2 million 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.

Previous wording

During the first three months of 2025, cash used in financing reflected dividends paid of $0.17 per common share, or $4.0 million in aggregate, share repurchases of $10.0 million and payroll taxes withheld and remitted on restricted stock awards of $6.2 million, offset in part by proceeds received from our equity compensation plans of $0.2 million.

Current wording

During the first six months of 2026, cash used in financing activities reflected dividends paid of $0.50 per common share, or $11.5 million in aggregate, share repurchases and related excise tax of $163.1 million and payroll taxes withheld and remitted on restricted stock awards of $6.8 million, offset in part by proceeds received from our equity compensation plans of $1.2 million. Additionally, in connection with timing of our share repurchases, we drew down $30.0 million under our revolving credit facility during the first six months of 2026, which we subsequently repaid in full during the period.

Previous wording

During the first three months of 2026, cash used in financing activities reflected dividends paid of $0.25 per common share, or $5.8 million in aggregate, share repurchases of $62.5 million and payroll taxes withheld and remitted on restricted stock awards of $6.7 million, offset in part by proceeds received from our equity compensation plans of $0.5 million.

Current wording

During the first six months of 2025, cash used in financing activities reflected dividends paid of $0.34 per common share, or $7.9 million in aggregate, share repurchases of $20.0 million and payroll taxes withheld and remitted on restricted stock awards of $6.3 million, offset in part by proceeds received from our equity compensation plans of $0.5 million.

Previous wording

(1) Our property quota share reinsurance reduces the financial impact of property losses up to a loss recovery of $177.2 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 up to a loss recovery of $147.7 million for an event. This reinsurance is not applicable to any individual policy with a limit of less than $5.0 million.

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 $500.0 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 $800.0 million. This coverage applies after the coverage provided by the property quota share treaty.

Previous wording

(4) For excess casualty policies with a per-occurrence limit higher than $3.0 million, the ceding percentage varies such that the retention is always $3.0 million or less. For example, for a $5.0 million limit excess policy, our retention would be 60%, whereas for a $10.0 million limit excess policy, our retention would be 30%. For policies for which we also write an underlying primary limit, the combined retention on the primary and excess policies would not exceed $3.0 million. This reinsurance is not applicable to any individual policy with a per-occurrence limit of $3.0 million or less.

Current wording

(3) For casualty policies with a per-occurrence limit higher than $3.0 million, the ceding percentage varies such that the retention is always $3.0 million or less. For example, for a $5.0 million limit excess policy, our retention would be 60%, whereas for a $10.0 million limit excess policy, our retention would be 30%. This reinsurance is not applicable to any individual policy with a per-occurrence limit of $3.0 million or less.

Previous wording

Reinsurance contracts do not relieve us from our obligations to policyholders. Failure of the reinsurer to honor its obligation could result in losses to us, and therefore, we established an allowance for credit risk based on historical analysis of credit losses for highly rated companies in the insurance industry. In formulating our reinsurance programs, we are selective in our choice of reinsurers and we consider numerous factors, the most important of which are the financial stability of the reinsurer, its history of responding to claims and its overall reputation. In an effort to minimize our exposure to the insolvency of our reinsurers, we review the financial condition of each reinsurer regularly. In addition, we continually monitor for rating downgrades involving any of our reinsurers. At March 31, 2026, all reinsurance contracts that our insurance subsidiary was a party to were with companies with A.M. Best ratings of "A-" (Excellent) or better. As of March 31, 2026, we recorded an allowance for credit losses of $1.0 million related to our reinsurance balances.

Current wording

Reinsurance contracts do not relieve us from our obligations to policyholders. Failure of the reinsurer to honor its obligation could result in losses to us, and therefore, we established an allowance for credit risk based on historical analysis of credit losses for highly rated companies in the insurance industry. In formulating our reinsurance programs, we are selective in our choice of reinsurers and we consider numerous factors, the most important of which are the financial stability of the reinsurer, its history of responding to claims and its overall reputation. In an effort to minimize our exposure to the insolvency of our reinsurers, we review the financial condition of each reinsurer regularly. In addition, we continually monitor for rating downgrades involving any of our reinsurers. At June 30, 2026, all reinsurance contracts that our insurance subsidiary was a party to were with companies with A.M. Best ratings of "A-" (Excellent) or better. As of June 30, 2026, we recorded an allowance for credit losses of $1.1 million related to our reinsurance balances.

Previous wording

At March 31, 2026, our cash and invested assetsof $5.3 billion consisted of fixed-maturity securities, equity securities, cash and cash equivalents and real estate investments. At March 31, 2026, the majority of the investment portfolio was composed of fixed-maturity securities of $4.4 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, 2026, we also held $644.5 million of equity securities, which included common stocks, ETFs and non-redeemable preferred stock, $223.3 million of cash and cash equivalents and $55.0 million of real estate investments.

Current wording

At June 30, 2026, our cash and invested assetsof $5.5 billion consisted of fixed-maturity securities, equity securities, cash and cash equivalents and real estate investments. At June 30, 2026, the majority of the investment portfolio was composed of fixed-maturity securities of $4.5 billion that were classified as available-for-sale. Available-for-sale investments are carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of accumulated other comprehensive income. At June 30, 2026, we also held $773.1 million of equity securities, which included common stocks, ETFs and non-redeemable preferred stock, $210.5 million of cash and cash equivalents and $54.7 million of real estate investments.

Previous wording

Ourfixed-maturity securities, including cash equivalents, had a weighted average duration of 4.1 years and 4.0 years at March 31, 2026 and December 31, 2025, respectively, and an average rating of "AA-" at both March 31, 2026 and December 31, 2025.

Current wording

Ourfixed-maturity securities, including cash equivalents, had a weighted average duration of 4.3 years and 4.0 years at June 30, 2026 and December 31, 2025, respectively, and an average rating of "AA-" at both June 30, 2026 and December 31, 2025.

Previous wording

Net income for the three months ended March 31, 2026 and 2025, reconciles to underwriting income as follows:

Current wording

Net income for the three and six months ended June 30, 2026 and 2025, reconciles to underwriting income as follows:

Previous wording

Net income for the three months ended March 31, 2026 and 2025, reconciles to net operating earnings as follows:

Current wording

Net income for the three and six months ended June 30, 2026 and 2025, reconciles to net operating earnings as follows: