0001669162false00016691622023-10-262023-10-26

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 26, 2023
KINSALE CAPITAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
001-3784898-0664337
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
2035 Maywill Street
Suite 100
Richmond, Virginia 23230
(Address of principal executive offices, including zip code)
(804) 289-1300
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareKNSLNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02     Results of Operations and Financial Condition.
On October 26, 2023, Kinsale Capital Group, Inc. (the “Company”) issued a press release announcing its financial results for the three and nine months ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01    Financial Statements and Exhibits.
    (d) Exhibits.
Exhibit No.Description
99.1
104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Kinsale Capital Group, Inc.
Dated: October 26, 2023
By:/s/ Bryan P. Petrucelli
Bryan P. Petrucelli
Executive Vice President, Chief Financial Officer and Treasurer


Exhibit 99.1
kinsalecapitalgrouplogoa.jpg
Kinsale Capital Group Reports Third Quarter 2023 Results
Richmond, VA, October 26, 2023 - Kinsale Capital Group, Inc. (NYSE: KNSL) reported net income of $76.1 million, $3.26 per diluted share, for the third quarter of 2023 compared to $33.0 million, $1.43 per diluted share, for the third quarter of 2022. Net income was $204.7 million, $8.79 per diluted share, for the first nine months of 2023 compared to $91.9 million, $3.98 per diluted share, for the first nine months of 2022.
Net operating earnings(1) were $77.2 million, $3.31 per diluted share, for the third quarter of 2023 compared to $37.9 million, $1.64 per diluted share, for the third quarter of 2022. Net operating earnings(1) were $201.1 million, $8.63 per diluted share, for the first nine months of 2023 compared to $120.0 million, $5.20 per diluted share, for the first nine months of 2022.
Highlights for the quarter included:
•Net income increased by 130.8% compared to the third quarter of 2022
•Net operating earnings(1) of $77.2 million increased by 103.6% compared to the third quarter of 2022
•Gross written premiums increased by 33.0% to $377.8 million compared to the third quarter of 2022
•Net investment income increased by 95.5% to $27.1 million compared to the third quarter of 2022
•Underwriting income(2) was $72.4 million in the third quarter of 2023, resulting in a combined ratio(5) of 74.8%
•Annualized operating return on equity(7) was 32.1% for the nine months ended September 30, 2023

“Our third quarter results reflect continued growth and profitability. We reported a 33.0% increase in gross written premiums and a combined ratio of 74.8% as a consequence of our differentiated strategy and favorable E&S market conditions. We remain confident that our model of disciplined underwriting and technology-enabled low costs provides an enduring competitive advantage that will lead to continued value creation over the long term,” said President and Chief Executive Officer, Michael P. Kehoe.
Results of Operations
Underwriting Results
Gross written premiums were $377.8 million for the third quarter of 2023 compared to $284.1 million for the third quarter of 2022, an increase of 33.0%. Gross written premiums were $1.2 billion for the first nine months of 2023 compared to $806.6 million for the first nine months of 2022, an increase of 45.5%. The increase in gross written premiums during the third quarter and first nine months of 2023 over the same periods last year reflected strong submission flow from brokers and a favorable pricing environment.
Underwriting income(2) was $72.4 million, resulting in a combined ratio(5) of 74.8%, for the third quarter of 2023 compared to $34.3 million and a combined ratio(5) of 84.0% for the same period last year. The increase in underwriting income(2) quarter over quarter was due to a combination of premium growth, favorable loss experience and lower net commissions. Loss(3) and expense(4) ratios were 53.9% and 20.9%, respectively, for the third quarter of 2023 compared to 62.9% and 21.1% for the third quarter of 2022. Results for the third quarters of 2023 and 2022 included net favorable development of loss reserves from prior accident years of $9.1 million, or 3.2 points, and $11.0 million, or 5.1 points, respectively.
Underwriting income(2) was $185.5 million, resulting in a combined ratio(5) of 76.7%, for the first nine months of 2023 compared to $116.0 million and a combined ratio(5) of 80.4% for the first nine months of 2022. The increase in underwriting income(2) was due to a combination of premium growth, favorable loss experience and lower net commissions. Loss(3) and expense(4) ratios were 55.5% and 21.2%, respectively, for the first nine months of 2023 compared to 58.1% and 22.3% for the first nine months of 2022. Results for the first nine






1

months of 2023 and 2022 included net favorable development of loss reserves from prior accident years of $28.6 million, or 3.6 points, and $28.9 million, or 4.9 points, respectively.
Summary of Operating Results
The Company’s operating results for the three and nine months ended September 30, 2023 and 2022 are summarized as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
($ in thousands)
Gross written premiums$377,789 $284,111 $1,173,599 $806,625 
Ceded written premiums(83,509)(48,212)(215,248)(111,885)
Net written premiums$294,280 $235,899 $958,351 $694,740 
Net earned premiums $281,502 $209,259 $775,706 $577,979 
Fee income 6,841 5,099 20,028 14,363 
Losses and loss adjustment expenses155,552 134,788 441,628 344,333 
Underwriting, acquisition and insurance expenses
60,348 45,244 168,567 132,025 
Underwriting income(2)
$72,443 $34,326 $185,539 $115,984 
Loss ratio(3)
53.9 %62.9 %55.5 %58.1 %
Expense ratio(4)
20.9 %21.1 %21.2 %22.3 %
Combined ratio(5)
74.8 %84.0 %76.7 %80.4 %
Annualized return on equity(6)
33.9 %21.1 %32.7 %18.6 %
Annualized operating return on equity(7)
34.4 %24.2 %32.1 %24.3 %
(1)     Net operating earnings is a non-GAAP financial measure. See discussion of "Non-GAAP Financial Measures" below.
(2)    Underwriting income is a non-GAAP financial measure. See discussion of "Non-GAAP Financial Measures" below.
(3)    Loss ratio, expressed as a percentage, is the ratio of losses and loss adjustment expenses to the sum of net earned premiums and fee income. Prior periods have been revised to conform to the current period's presentation.
(4)    Expense ratio, expressed as a percentage, is the ratio of underwriting, acquisition and insurance expenses to the sum of net earned premiums and fee income. Prior periods have been revised to conform to the current period's presentation.
(5)    The combined ratio is the sum of the loss ratio and expense ratio as presented. Calculations of each component may not add due to rounding. Prior periods have been revised to conform to the current period's presentation.
(6)    Annualized return on equity is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period.
(7)    Annualized operating return on equity is net operating earnings expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period.







2

The following tables summarize losses incurred for the current accident year and the development of prior accident years for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended
September 30, 2023		Three Months Ended
September 30, 2022
Losses and Loss Adjustment Expenses% of Sum of Earned Premiums and Fee IncomeLosses and Loss Adjustment Expenses% of Sum of Earned Premiums and Fee Income
Loss ratio:($ in thousands)
Current accident year$163,545 56.7 %$119,650 55.8 %
Current accident year - catastrophe losses
1,154 0.4 %26,130 12.2 %
Effect of prior accident year development(9,147)(3.2)%(10,992)(5.1)%
Total$155,552 53.9 %$134,788 62.9 %

Nine Months Ended
September 30, 2023		Nine Months Ended
September 30, 2022
Losses and Loss Adjustment Expenses% of Sum of Earned Premiums and Fee IncomeLosses and Loss Adjustment Expenses% of Sum of Earned Premiums and Fee Income
Loss ratio:($ in thousands)
Current accident year$466,056 58.6 %$346,970 58.6 %
Current accident year - catastrophe losses
4,179 0.5 %26,213 4.4 %
Effect of prior accident year development(28,607)(3.6)%(28,850)(4.9)%
Total$441,628 55.5 %$344,333 58.1 %

Investment Results
Net investment income was $27.1 million in the third quarter of 2023 compared to $13.9 million in the third quarter of 2022, an increase of 95.5%. Net investment income was $72.0 million in the first nine months of 2023 compared to $33.5 million in the first nine months of 2022, an increase of 114.5%. These increases were driven by growth in the Company's investment portfolio generated largely from the investment of strong operating cash flows and higher interest rates relative to the prior year periods. Net operating cash flows were $648.3 million in the first nine months of 2023 compared to $456.7 million in the first nine months of 2022, an increase of 42.0%. The Company’s investment portfolio had an annualized gross investment return(8) of 3.9% for the first nine months of 2023 compared to 2.7% for the same period last year. Funds are generally invested conservatively in high quality securities with an average credit quality of "AA-" and the weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 2.9 years and 3.5 years at September 30, 2023 and December 31, 2022, respectively. Cash and invested assets totaled $2.8 billion at September 30, 2023 and $2.2 billion at December 31, 2022.
(8)    Gross investment return is investment income from fixed-maturity and equity securities (and short-term investments, if any), before any deductions for fees and expenses, expressed as a percentage of average beginning and ending book values of those investments during the period.
Other
On September 18, 2023, the Company amended its Note Purchase and Private Shelf Agreement and issued a $50.0 million aggregate principal amount 6.21% senior note due 2034 primarily to fund surplus at Kinsale Insurance Company.
On August 24, 2023, the Company sold a portion of its real estate investment for net proceeds of $62.0 million in cash resulting in a gain of $4.3 million. Proceeds were primarily used to pay down a portion of the Company's credit facility.






3

The effective tax rates for the nine months ended September 30, 2023 and 2022 were 19.4% and 17.5%, respectively. In the first nine months of 2023 and 2022, the effective tax rates were lower than the federal statutory rate of 21% primarily due to the tax benefits from stock-based compensation and tax-exempt investment income.
Stockholders' equity was $923.8 million at September 30, 2023 compared to $745.4 million at December 31, 2022. Book value per share was $39.86 at September 30, 2023 compared to $32.28 at December 31, 2022. Annualized operating return on equity(7) was 32.1% for the first nine months of 2023, an increase from 24.3% for the first nine months of 2022, which was primarily due to continued profitable growth from favorable E&S market conditions and rate increases.
Beginning in the second quarter of 2023, the Company reclassified policy fees to fee income and modified the definition of the loss and expense ratios to include fee income in the denominator of each ratio. Historically, these fees were presented as a reduction to underwriting, acquisition and insurance expenses. The Company has reclassified prior periods' results to conform to the current period's presentation.
Non-GAAP Financial Measures
Net Operating Earnings
Net operating earnings is defined as net income excluding the effects of the change in the fair value of equity securities, after taxes, net realized investment gains and losses, after taxes, and change in allowance for credit losses on investments, after taxes. Management believes the exclusion of these items provides a useful comparison of the Company's underlying business performance from period to period. Net operating earnings and percentages or calculations using net operating earnings (e.g., diluted operating earnings per share and annualized operating return on equity) are non-GAAP financial measures. Net operating earnings should not be viewed as a substitute for net income calculated in accordance with GAAP, and other companies may define net operating earnings differently.






4

For the three and nine months ended September 30, 2023 and 2022, net income and diluted earnings per share reconcile to net operating earnings and diluted operating earnings per share as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
($ in thousands, except per share data)
Net operating earnings:
Net income$76,115 $32,984 $204,706 $91,865 
Adjustments:
Change in the fair value of equity securities, before taxes5,533 6,095 (3,796)37,199 
Income tax expense (benefit) (1)
(1,162)(1,280)797 (7,812)
Change in fair value of equity securities, after taxes4,371 4,815 (2,999)29,387 
Net realized investment (gains) losses, before taxes(4,274)173 (913)(1,535)
Income tax expense (benefit) (1)
898 (36)192 322 
Net realized investment (gains) losses, after taxes(3,376)137 (721)(1,213)
Change in allowance for credit losses on investments, before taxes143 — 199 — 
Income tax benefit (1)
(30)— (42)— 
Change in allowance for credit losses on investments, after taxes113 — 157 — 
Net operating earnings$77,223 $37,936 $201,143 $120,039 
Diluted operating earnings per share:
Diluted earnings per share$3.26 $1.43 $8.79 $3.98 
Change in the fair value of equity securities, after taxes, per share0.19 0.21 (0.13)1.27 
Net realized investment (gains) losses, after taxes, per share(0.14)0.01 (0.03)(0.05)
Change in allowance for credit losses on investments, after taxes, per share— — 0.01 — 
Diluted operating earnings per share(2)
$3.31 $1.64 $8.63 $5.20 
Operating return on equity:
Average equity(3)
$897,789 $626,761 $834,606 $659,395 
Annualized return on equity(4)
33.9 %21.1 %32.7 %18.6 %
Annualized operating return on equity(5)
34.4 %24.2 %32.1 %24.3 %
(1)     Income taxes on adjustments to reconcile net income to net operating earnings use a 21% effective tax rate.
(2)     Diluted operating earnings per share may not add due to rounding.
(3)    Computed by adding the total stockholders' equity as of the date indicated to the prior quarter-end or year-end total, as applicable, and dividing by two.
(4)    Annualized return on equity is net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period.






5

(5)    Annualized operating return on equity is net operating earnings expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period.
Underwriting Income
Underwriting income is defined as net income excluding net investment income, the change in the fair value of equity securities, net realized investment gains and losses, change in allowance for credit losses on investments, interest expense, other expenses, other income and income tax expense. The Company uses underwriting income as an internal performance measure in the management of its operations because the Company believes it gives management and users of the Company's financial information useful insight into the Company's results of operations and underlying business performance. Underwriting income should not be viewed as a substitute for net income calculated in accordance with GAAP, and other companies may define underwriting income differently.
For the three and nine months ended September 30, 2023 and 2022, net income reconciles to underwriting income as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in thousands)
Net income$76,115 $32,984 $204,706 $91,865 
Income tax expense 19,378 7,116 49,290 19,549 
Income before income taxes95,493 40,100 253,996 111,414 
Net investment income(27,086)(13,858)(71,953)(33,540)
Change in the fair value of equity securities
5,533 6,095 (3,796)37,199 
Net realized investment (gains) losses (4,274)173 (913)(1,535)
Change in allowance for credit losses on investments143 — 199 — 
Interest expense2,573 1,716 7,867 2,306 
Other expenses (6)
401 212 1,220 521 
Other income(340)(112)(1,081)(381)
Underwriting income$72,443 $34,326 $185,539 $115,984 
(6)    Other expenses are comprised of corporate expenses not allocated to the Company's insurance operations.

Conference Call
Kinsale Capital Group will hold a conference call to discuss this press release on Friday, October 27, 2023 at 9:00 a.m. (Eastern Time). Members of the public may access the conference call by dialing (888) 660-6493, conference ID# 3573726, or via the Internet by going to www.kinsalecapitalgroup.com and clicking on the "Investor Relations" link. A replay of the call will be available on the website until the close of business on November 24, 2023.
Forward-Looking Statements
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. In some cases, such forward-looking statements may be identified by terms such as "anticipates," "estimates," "expects," "intends," "plans," "predicts," "projects," "believes," "seeks," "outlook," "future," "will," "would," "should," "could," "may," "can have," "prospects" or similar words. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Although it is not possible to identify all of these risks and factors, they include, among others, the following: inadequate loss reserves to cover the Company's actual losses; inherent uncertainty of models resulting in actual losses that are materially different than the Company's estimates; adverse economic factors; a decline in the Company's financial strength rating; loss of one or more key executives; loss of a group of brokers that generate significant portions of the Company's business; failure of any of the loss limitations or exclusions the Company employs, or change in other claims






6

or coverage issues; adverse performance of the Company's investment portfolio; adverse market conditions that affect its excess and surplus lines insurance operations; and other risks described in the Company's filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

About Kinsale Capital Group, Inc.
Kinsale Capital Group, Inc. is a specialty insurance group headquartered in Richmond, Virginia, focusing on the excess and surplus lines market.
Contact
Kinsale Capital Group, Inc.
Bryan Petrucelli
Executive Vice President, Chief Financial Officer and Treasurer
804-289-1272
ir@kinsalecapitalgroup.com






7

KINSALE CAPITAL GROUP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Income and Comprehensive Income

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenues(in thousands, except per share data)
Gross written premiums$377,789 $284,111 $1,173,599 $806,625 
Ceded written premiums(83,509)(48,212)(215,248)(111,885)
Net written premiums294,280 235,899 958,351 694,740 
Change in unearned premiums(12,778)(26,640)(182,645)(116,761)
Net earned premiums281,502 209,259 775,706 577,979 
Fee income 6,841 5,099 20,028 14,363 
Net investment income27,086 13,858 71,953 33,540 
Change in the fair value of equity securities(5,533)(6,095)3,796 (37,199)
Net realized investment gains (losses) 4,274 (173)913 1,535 
Change in allowance for credit losses on investments(143)— (199)— 
Other income340 112 1,081 381 
Total revenues314,367 222,060 873,278 590,599 
Expenses
Losses and loss adjustment expenses155,552 134,788 441,628 344,333 
Underwriting, acquisition and insurance expenses60,348 45,244 168,567 132,025 
Interest expense2,573 1,716 7,867 2,306 
Other expenses401 212 1,220 521 
Total expenses218,874 181,960 619,282 479,185 
Income before income taxes95,493 40,100 253,996 111,414 
Total income tax expense19,378 7,116 49,290 19,549 
Net income76,115 32,984 204,706 91,865 
Other comprehensive income (loss)
Change in net unrealized losses on available-for-sale investments, net of taxes(23,511)(46,652)(20,109)(165,464)
Total comprehensive income (loss) $52,604 $(13,668)$184,597 $(73,599)
Earnings per share:
Basic$3.30 $1.45 $8.89 $4.03 
Diluted$3.26 $1.43 $8.79 $3.98 
Weighted-average shares outstanding:
Basic23,058 22,813 23,036 22,783 
Diluted23,315 23,114 23,298 23,099 






8

KINSALE CAPITAL GROUP, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets

September 30, 2023December 31, 2022
Assets(in thousands)
Investments:
Fixed-maturity securities at fair value
$2,364,759 $1,760,100 
Equity securities at fair value207,951 152,471 
Real estate investments, net14,372 76,387 
Short-term investments29,065 41,337 
Total investments2,616,147 2,030,295 
Cash and cash equivalents162,944 156,274 
Investment income due and accrued19,028 14,451 
Premiums receivable, net124,087 105,754 
Reinsurance recoverables, net240,852 220,454 
Ceded unearned premiums50,967 42,935 
Deferred policy acquisition costs, net of ceding commissions
86,181 61,594 
Intangible assets3,538 3,538 
Deferred income tax asset, net68,535 56,983 
Other assets70,257 54,844 
Total assets$3,442,536 $2,747,122 
Liabilities & Stockholders' Equity
Liabilities:
Reserves for unpaid losses and loss adjustment expenses$1,564,907 $1,238,402 
Unearned premiums690,354 499,677 
Payable to reinsurers45,853 32,024 
Accounts payable and accrued expenses32,758 31,361 
Debt183,777 195,747 
Other liabilities1,125 4,462 
Total liabilities2,518,774 2,001,673 
Stockholders' equity923,762 745,449 
Total liabilities and stockholders' equity$3,442,536 $2,747,122 







9
v3.23.3
DEI Document
Oct. 26, 2023
Document and Entity Information [Abstract]  
Document Type 8-K
Document Period End Date Oct. 26, 2023
Entity Registrant Name KINSALE CAPITAL GROUP, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-37848
Entity Tax Identification Number 98-0664337
Entity Address, Address Line One 2035 Maywill Street
Entity Address, Address Line Two Suite 100
Entity Address, City or Town Richmond
Entity Address, State or Province VA
Entity Address, Postal Zip Code 23230
City Area Code 804
Local Phone Number 289-1300
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01 per share
Trading Symbol KNSL
Security Exchange Name NYSE
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001669162
Kinsale Capital (NYSE:KNSL)
過去 株価チャート
から 4 2024 まで 5 2024 Kinsale Capitalのチャートをもっと見るにはこちらをクリック
Kinsale Capital (NYSE:KNSL)
過去 株価チャート
から 5 2023 まで 5 2024 Kinsale Capitalのチャートをもっと見るにはこちらをクリック