0001669162false00016691622023-07-272023-07-27

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): July 27, 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 July 27, 2023, Kinsale Capital Group, Inc. (the “Company”) issued a press release announcing its financial results for the three and six months ended June 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: July 27, 2023
By:/s/ Bryan P. Petrucelli
Bryan P. Petrucelli
Executive Vice President, Chief Financial Officer and Treasurer


Exhibit 99.1
kinsalecapitalgrouplogo.jpg
Kinsale Capital Group Reports Second Quarter 2023 Results
Richmond, VA, July 27, 2023 - Kinsale Capital Group, Inc. (NYSE: KNSL) reported net income of $72.8 million, $3.12 per diluted share, for the second quarter of 2023 compared to $27.1 million, $1.17 per diluted share, for the second quarter of 2022. Net income was $128.6 million, $5.52 per diluted share, for the first half of 2023 compared to $58.9 million, $2.55 per diluted share, for the first half of 2022.
Net operating earnings(1) were $67.2 million, $2.88 per diluted share, for the second quarter of 2023 compared to $44.4 million, $1.92 per diluted share, for the second quarter of 2022. Net operating earnings(1) were $123.9 million, $5.32 per diluted share, for the first half of 2023 compared to $82.1 million, $3.56 per diluted share, for the first half of 2022.
Highlights for the quarter included:
•Net income increased by 168.7% compared to the second quarter of 2022
•Net operating earnings(1) of $67.2 million increased by 51.2% compared to the second quarter of 2022
•Gross written premiums increased by 58.2% to $438.2 million compared to the second quarter of 2022
•Net investment income increased by 128.2% to $24.2 million compared to the second quarter of 2022
•Underwriting income(2) was $61.5 million in the second quarter of 2023, resulting in a combined ratio of 76.7%
•Annualized operating return on equity(7) was 30.6% for the six months ended June 30, 2023

“Our second quarter performance reflects the continued focus on disciplined underwriting, technology-enabled expense management and operational excellence which allows us to capitalize on favorable market conditions. The combination of gross written premium growth of 58.2%, a combined ratio of 76.7% and annualized operating return on equity of 30.6% demonstrates our ability to take market share and generate attractive returns over the long term,” said President and Chief Executive Officer, Michael P. Kehoe.
Results of Operations
Underwriting Results
Gross written premiums were $438.2 million for the second quarter of 2023 compared to $277.0 million for the second quarter of 2022, an increase of 58.2%. Gross written premiums were $795.8 million for the first half of 2023 compared to $522.5 million for the first half of 2022, an increase of 52.3%. The increase in gross written premiums during the second quarter and first half of 2023 over the same periods last year reflected strong submission flow from brokers and a favorable pricing environment.
Underwriting income(2) was $61.5 million, resulting in a combined ratio of 76.7%, for the second quarter of 2023, compared to $44.1 million and a combined ratio of 77.4% 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 55.7% and 21.0%, respectively, for the second quarter of 2023 compared to 54.9% and 22.5% for the second quarter of 2022. Results for the second quarters of 2023 and 2022 included net favorable development of loss reserves from prior accident years of $10.4 million, or 3.9 points, and $9.5 million, or 4.9 points, respectively.
Underwriting income(2) was $113.1 million, resulting in a combined ratio of 77.7%, for the first half of 2023, compared to $81.7 million and a combined ratio of 78.4% for the first half of 2022. The increase in underwriting income(2) was due to a combination of premium growth, favorable loss experience, lower net commissions and scale. Loss(3) and expense(4) ratios were 56.4% and 21.3%, respectively, for the first half of 2023 compared to 55.4% and 23.0% for the first half of 2022. Results for the first half of 2023 and 2022






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included net favorable development of loss reserves from prior accident years of $19.5 million, or 3.8 points, and $17.9 million, or 4.7 points, respectively.
Summary of Operating Results
The Company’s operating results for the three and six months ended June 30, 2023 and 2022 are summarized as follows:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
($ in thousands)
Gross written premiums$438,222 $277,001 $795,810 $522,514 
Ceded written premiums(73,181)(34,658)(131,739)(63,673)
Net written premiums$365,041 $242,343 $664,071 $458,841 
Net earned premiums $257,046 $190,158 $494,204 $368,720 
Fee income 6,986 4,919 13,187 9,264 
Losses and loss adjustment expenses147,042 107,040 286,076 209,545 
Underwriting, acquisition and insurance expenses
55,473 43,891 108,219 86,781 
Underwriting income(2)
$61,517 $44,146 $113,096 $81,658 
Loss ratio(3)
55.7 %54.9 %56.4 %55.4 %
Expense ratio(4)
21.0 %22.5 %21.3 %23.0 %
Combined ratio(5)
76.7 %77.4 %77.7 %78.4 %
Annualized return on equity(6)
34.5 %16.7 %31.8 %17.7 %
Annualized operating return on equity(7)
31.8 %27.3 %30.6 %24.6 %
(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.







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

Three Months Ended
June 30, 2023		Three Months Ended
June 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$156,008 59.1 %$116,531 59.8 %
Current accident year - catastrophe losses
1,451 0.5 %21 — %
Effect of prior accident year development(10,417)(3.9)%(9,512)(4.9)%
Total$147,042 55.7 %$107,040 54.9 %

Six Months Ended
June 30, 2023		Six Months Ended
June 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$302,511 59.6 %$227,320 60.1 %
Current accident year - catastrophe losses
3,025 0.6 %83 — %
Effect of prior accident year development(19,460)(3.8)%(17,858)(4.7)%
Total$286,076 56.4 %$209,545 55.4 %

Investment Results
Net investment income was $24.2 million in the second quarter of 2023 compared to $10.6 million in the second quarter of 2022, an increase of 128.2%. Net investment income was $44.9 million in the first half of 2023 compared to $19.7 million in the first half of 2022, an increase of 128.0%. 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 $423.6 million in the first half of 2023 compared to $278.7 million in the first half of 2022, an increase of 52.0%. The Company’s investment portfolio had an annualized gross investment return(8) of 3.8% for the first half of 2023 compared to 2.6% 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 3.1 years and 3.5 years at June 30, 2023 and December 31, 2022, respectively. Cash and invested assets totaled $2.6 billion at June 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
The effective tax rates for the six months ended June 30, 2023 and 2022 were 18.9% and 17.4%, respectively. In the first half 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 $871.8 million at June 30, 2023 compared to $745.4 million at December 31, 2022. Book value per share was $37.64 at June 30, 2023 compared to $32.28 at December 31, 2022. Annualized






3

operating return on equity(7) was 30.6% for the first half of 2023, an increase from 24.6% for the first half of 2022, which was primarily due to continued profitable growth from favorable E&S market conditions and rate increases.
In the periods ending June 30, 2023, the Company reclassified policy fees to fee income. Historically, these fees were presented as a reduction to underwriting, acquisition and insurance expenses. The Company modified the definition of the loss and expense ratios to include fee income in the denominator of each ratio. 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 six months ended June 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 June 30,Six Months Ended June 30,
2023202220232022
($ in thousands, except per share data)
Net operating earnings:
Net income$72,791 $27,090 $128,591 $58,881 
Adjustments:
Change in the fair value of equity securities, before taxes(5,811)23,353 (9,329)31,104 
Income tax expense (benefit) (1)
1,220 (4,904)1,959 (6,532)
Change in fair value of equity securities, after taxes(4,591)18,449 (7,370)24,572 
Net realized investment losses (gains), before taxes(1,291)(1,413)3,361 (1,708)
Income tax (benefit) expense (1)
271 297 (706)359 
Net realized investment losses (gains), after taxes(1,020)(1,116)2,655 (1,349)
Change in allowance for credit losses on investments, before taxes(25)— 56 — 
Income tax (benefit) expense (1)
5 — (12)— 
Change in allowance for credit losses on investments, after taxes(20)— 44 — 
Net operating earnings$67,160 $44,423 $123,920 $82,104 
Diluted operating earnings per share:
Diluted earnings per share$3.12 $1.17 $5.52 $2.55 
Change in the fair value of equity securities, after taxes, per share(0.20)0.80 (0.32)1.06 
Net realized investment losses (gains), after taxes, per share(0.04)(0.05)0.11 (0.06)
Diluted operating earnings per share(2)
$2.88 $1.92 $5.32 $3.56 
Operating return on equity:
Average equity(3)
$843,773 $649,818 $808,632 $666,701 
Annualized return on equity(4)
34.5 %16.7 %31.8 %17.7 %
Annualized operating return on equity(5)
31.8 %27.3 %30.6 %24.6 %
(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)    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.






5

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 six months ended June 30, 2023 and 2022, net income reconciles to underwriting income as follows:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
(in thousands)
Net income$72,791 $27,090 $128,591 $58,881 
Income tax expense 17,319 5,352 29,912 12,433 
Income before income taxes90,110 32,442 158,503 71,314 
Net investment income(24,172)(10,594)(44,867)(19,682)
Change in the fair value of equity securities
(5,811)23,353 (9,329)31,104 
Net realized investment losses (gains)(1,291)(1,413)3,361 (1,708)
Change in allowance for credit losses on investments(25)— 56 — 
Interest expense2,724 337 5,294 590 
Other expenses (6)
417 166 819 309 
Other income(435)(145)(741)(269)
Underwriting income$61,517 $44,146 $113,096 $81,658 
(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, July 28, 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 August 25, 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 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






6

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 June 30,Six Months Ended June 30,
2023202220232022
Revenues(in thousands, except per share data)
Gross written premiums$438,222 $277,001 $795,810 $522,514 
Ceded written premiums(73,181)(34,658)(131,739)(63,673)
Net written premiums365,041 242,343 664,071 458,841 
Change in unearned premiums(107,995)(52,185)(169,867)(90,121)
Net earned premiums257,046 190,158 494,204 368,720 
Fee income 6,986 4,919 13,187 9,264 
Net investment income24,172 10,594 44,867 19,682 
Change in the fair value of equity securities5,811 (23,353)9,329 (31,104)
Net realized investment (losses) gains 1,291 1,413 (3,361)1,708 
Change in allowance for credit losses on investments25 — (56)— 
Other income435 145 741 269 
Total revenues295,766 183,876 558,911 368,539 
Expenses
Losses and loss adjustment expenses147,042 107,040 286,076 209,545 
Underwriting, acquisition and insurance expenses55,473 43,891 108,219 86,781 
Interest expense2,724 337 5,294 590 
Other expenses417 166 819 309 
Total expenses205,656 151,434 400,408 297,225 
Income before income taxes90,110 32,442 158,503 71,314 
Total income tax expense17,319 5,352 29,912 12,433 
Net income72,791 27,090 128,591 58,881 
Other comprehensive income (loss)
Change in net unrealized gains (losses) on available-for-sale investments, net of taxes(14,107)(54,882)3,402 (118,812)
Total comprehensive income (loss) $58,684 $(27,792)$131,993 $(59,931)
Earnings per share:
Basic$3.16 $1.19 $5.59 $2.59 
Diluted$3.12 $1.17 $5.52 $2.55 
Weighted-average shares outstanding:
Basic23,040 22,781 23,024 22,767 
Diluted23,301 23,103 23,293 23,095 






8

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

June 30, 2023December 31, 2022
Assets(in thousands)
Investments:
Fixed-maturity securities at fair value
$2,183,686 $1,760,100 
Equity securities at fair value196,848 152,471 
Assets held for sale57,526 — 
Real estate investments, net19,482 76,387 
Short-term investments28,778 41,337 
Total investments2,486,320 2,030,295 
Cash and cash equivalents125,057 156,274 
Investment income due and accrued17,696 14,451 
Premiums receivable, net147,092 105,754 
Reinsurance recoverables, net229,903 220,454 
Ceded unearned premiums48,645 42,935 
Deferred policy acquisition costs, net of ceding commissions
85,326 61,594 
Intangible assets3,538 3,538 
Deferred income tax asset, net58,047 56,983 
Other assets68,578 54,844 
Total assets$3,270,202 $2,747,122 
Liabilities & Stockholders' Equity
Liabilities:
Reserves for unpaid losses and loss adjustment expenses$1,455,734 $1,238,402 
Unearned premiums675,254 499,677 
Payable to reinsurers42,143 32,024 
Accounts payable and accrued expenses22,457 31,361 
Debt195,876 195,747 
Other liabilities6,923 4,462 
Total liabilities2,398,387 2,001,673 
Stockholders' equity871,815 745,449 
Total liabilities and stockholders' equity$3,270,202 $2,747,122 







9
v3.23.2
DEI Document
Jul. 27, 2023
Document and Entity Information [Abstract]  
Document Type 8-K
Document Period End Date Jul. 27, 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
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