95 unchanged sentences
Some exclusions are with respect to risks that we cannot exclude in policies we write due to business or regulatory constraints.
−Removed: In addition, reinsurers are imposing terms, such as lower per-occurrence and aggregate limits, on direct insurers that do not wholly cover the risks written by these direct insurers.
+Added: In addition, reinsurers often impose terms, such as lower per-occurrence and aggregate limits, on direct insurers that do not wholly cover the risks written by these direct insurers.
As a result, we, like other direct insurance companies, write insurance policies which to some extent do not have the benefit of reinsurance protection.
8 unchanged sentences
The incidence and severity of catastrophes and severe weather conditions are inherently unpredictable.
−Removed: The extent of losses from catastrophes is a function of the total amount of losses incurred, the number of insureds affected, the frequency and severity of the events, the effectiveness of our catastrophe risk management program and the adequacy of our reinsurance coverage.
+Added: The extent of losses from catastrophes is a function of the total amount of insured value, the number of insureds affected, the frequency and severity of the events, the effectiveness of our catastrophe risk management program and the adequacy of our reinsurance coverage.
Insurance companies are not permitted to reserve for a catastrophe until it has occurred.
2 unchanged sentences
Our business is also exposed to the risk of pandemics, outbreaks, public health crises, and geopolitical and social events, and their related effects.
−Removed: On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic.
−Removed: In response, governmental authorities (including the U.S.
−Removed: federal government, states and localities) have mandated, and continue to introduce, measures to slow the transmission of the virus, including shelter-in-place orders, significant restrictions on travel, limits on gatherings, quarantines and business shutdowns.
−Removed: While to date we have not seen a decrease in the growth rate of our gross written premiums since the beginning of the COVID-19 pandemic and related economic downturn, the COVID-19 situation remains fluid and continues to evolve, and at this time we are unable to determine the ultimate impact of COVID-19 and related economic downturn on our business, financial condition, results of operations and cash flows.
−Removed: While policy terms and conditions in the lines of business written by Kinsale would be expected to preclude coverage for virus-related claims, court decisions and governmental actions may challenge the validity of any exclusions or our interpretation of how such terms and conditions operate.
−Removed: In addition, in response to COVID-19, legislative, regulatory and judicial actions may include, but are not limited to, actions prohibiting us from cancelling insurance policies in accordance with our policy terms, ordering us to provide premiums refunds, granting extended grace periods for payment of premiums and providing for extended periods of time to pay past due premiums.
−Removed: We are closely monitoring the impact of the COVID-19 pandemic and related economic downturn on all aspects of our business,
−Removed: including how it will impact premium volume, losses and the fair value of our investment portfolio as well as how it may result in other effects such as the potential for delayed reporting and settlement of claims due to limited access to business locations.
−Removed: During the first quarter of 2020, we experienced a significant decline in the fair value of our investment portfolio due to disruption in the global financial markets associated with COVID-19, which adversely affected our total comprehensive income (loss) for the quarter.
−Removed: Subsequent to the first quarter of 2020, the fair values of our investment portfolio rebounded sharply, gaining back all of the decline in fair value.
−Removed: If the COVID-19 pandemic continues for a significant length of time and measures put in place to stabilize the economy are not effective, or pandemics, outbreaks and other events occur or re-occur, our business, financial condition, results of operations and cash flows may be materially adversely affected.
−Removed: Global climate change may have an adverse effect on our financial results.
−Removed: Our insurance policies are generally written for one year and repriced annually to reflect changing exposures.
−Removed: However, assessing the risk of loss and damage associated with the adverse effects of climate change and the range of approaches to address loss and damage associated with the adverse effects of climate change, including impacts related to extreme weather events and slow onset events, remains a challenge and may adversely impact our business, financial condition and results of operations.
+Added: While policy terms and conditions in the lines of business we write preclude coverage for virus-related claims, court decisions and governmental actions may challenge the validity of any exclusions or our interpretation of how such terms and conditions operate.
+Added: We are closely monitoring the impact of the COVID-19 pandemic and the related economic impact on all aspects of our business, including its impact on premium volume, the fair value of our investment portfolio and loss reserves, as well as the potential for delayed reporting and settlement of claims.
+Added: If pandemics, outbreaks and other events occur or re-occur for a significant length of time, and measures that are put into place by various governmental authorities to stabilize the economy are not effective, our business, financial condition, results of operations and cash flows may be materially adversely affected.
+Added: Global climate change may have a material adverse effect on our financial results.
+Added: Climate change could have a significant impact on longer-term natural weather trends, including increases in severe weather and catastrophic events.
+Added: The incidence and severity of catastrophes are inherently unpredictable.
+Added: While most catastrophes are restricted to fairly specific geographic areas, the extent of loss and damage for insurance purposes is a function of both the total amount of insured value in the area affected by the event and the severity of the event.
+Added: attempt to manage this exposure by using sophisticated computer models to help assess our exposure to catastrophic events, purchasing extensive reinsurance protection from financially strong counterparties and limiting the concentration of property business by geographic area.
+Added: However, assessing the risk of loss and damage and the range of approaches to address the adverse effects of climate change, including impacts related to extreme weather events and slow onset events, remains a challenge and may materially adversely impact our business, financial condition and results of operations.
Risks Related to Market Conditions
7 unchanged sentences
These outcomes would reduce our underwriting profit to the extent these factors are not reflected in the rates we charge.
−Removed: We underwrite a significant portion of our insurance in California, Texas and Florida.
+Added: We underwrite a significant portion of our insurance in California, Florida and Texas.
Any economic downturn in any such state could have an adverse effect on our business, financial condition and results of operations.
35 unchanged sentences
We distribute the majority of our products through a select group of brokers.
−Removed: Of our 2020 gross written premiums, 46.1%, or $255.0 million, were distributed through five of our approximately 167 brokers, three of which accounting for 34.8%, or $192.3 million, of our 2020 gross written premiums.
+Added: Of our 2021 gross written premiums, 56.3%, or $430.3 million, were distributed through five of our approximately 159 brokers, two of which accounted for 33.5%, or $255.7 million, of our 2021 gross written premiums.
Our relationship with any of these brokers may be discontinued at any time.
4 unchanged sentences
As a result, E&S risks do not often fit the underwriting criteria of standard insurance carriers, and are generally considered higher risk than those covered in the standard market.
−Removed: If our underwriting staff inadequately
−Removed: judges and prices the risks associated with the business underwritten in the E&S market, our financial results could be adversely impacted.
+Added: If our underwriting staff inadequately judges and prices the risks associated with the business underwritten in the E&S market, our financial results could be adversely impacted.
Historically, the financial performance of the P&C insurance industry has tended to fluctuate in cyclical periods of price competition and excess capacity (known as a soft market) followed by periods of high premium rates and shortages of underwriting capacity (known as a hard market).
1 unchanged sentence
When this occurs, insurance prices tend to decline and policy terms and conditions become more favorable to the insureds.
−Removed: Conversely, hard markets occur when there is not enough insurance capital capacity in the market to meet the needs of potential insureds, causing insurance prices to generally rise and policy terms and conditions to become more favorable to the insurers.
+Added: Conversely, hard markets occur when there is not enough insurance capital capacity in the market to meet the
+Added: needs of potential insureds, causing insurance prices to generally rise and policy terms and conditions to become more favorable to the insurers.
Although an individual insurance company's financial performance depends on its own specific business characteristics, the profitability of most P&C insurance companies tends to follow this cyclical market pattern.
Further, this cyclical market pattern can be more pronounced in the E&S market than in the standard insurance market.
−Removed: When the standard insurance market hardens, the E&S market hardens, and growth in the E&S market can be significantly more rapid than growth in the standard insurance market.
+Added: When the standard insurance market hardens, the E&S market typically hardens, and growth in the E&S market can be significantly more rapid than growth in the standard insurance market.
Similarly, when conditions begin to soften, many customers that were previously driven into the E&S market may return to the admitted market, exacerbating the effects of rate decreases.
51 unchanged sentences
Consequently, we assume a degree of credit risk associated with the brokers with whom we work.
−Removed: Where necessary, we review the financial condition of potential new brokers before
−Removed: we agree to transact business with them.
+Added: Where necessary, we review the financial condition of potential new brokers before we agree to transact business with them.
Although the failure by any of our brokers to remit premiums to us has not been material to date, there may be instances where our brokers collect premiums but do not remit them to us and we may be required under applicable law to provide the coverage set forth in the policy despite the absence of related premiums being paid to us.
−Removed: Because the possibility of these events occurring depends in large part on the financial condition and internal operations of our brokers, we monitor broker behavior and review financial information on an as-needed basis.
+Added: The possibility of these events occurring depends in large part on the financial condition and internal operations of our brokers.
If we are unable to collect premiums from our brokers in the future, our underwriting profits may decline and our financial condition and results of operations could be materially and adversely affected.
11 unchanged sentences
It is possible that we will misunderstand the nature or extent of the activities or facilities and the corresponding extent of the risks that we insure because of our reliance on inadequate or inaccurate information.
−Removed: The failure of our information technology and telecommunications systems could adversely affect our business.
+Added: The failure of our information technology and telecommunications systems could materially adversely affect our business.
Our business depends on our information technology and telecommunications systems, including our browser-based underwriting system.
6 unchanged sentences
In addition, we routinely transmit and receive personal, personally identifiable, sensitive, confidential and proprietary data by electronic means and are subject to data privacy laws and regulations enacted in the jurisdictions in which we do business.
−Removed: While we have implemented security measures designed to protect against breaches of security and other interference with our systems and networks, our systems and networks may be subject to breaches or interference.
−Removed: Any such event may result in operational disruptions as well as unauthorized access to or the disclosure or loss of our proprietary information or our customers’ data and information, which in turn may result in legal claims, regulatory scrutiny and liability, the incurrence of costs to eliminate or mitigate further exposure, the loss of customers or affiliated advisors, reputational harm
−Removed: or other damage to our business.
+Added: While we have implemented security measures designed to protect against breaches of security and other interference with our systems and networks, our systems and networks may be subject to significant breaches or interference.
+Added: Any such event may result in material operational disruptions as well as unauthorized access to or the disclosure or loss of our proprietary information or our customers’ data and information, which in turn may result in legal claims, regulatory scrutiny and liability, the incurrence of costs to eliminate or mitigate further exposure, the loss of customers or affiliated advisors, reputational harm or other damage to our business.
In addition, the trend toward general public notification of such incidents could exacerbate the harm to our business, financial condition and results of operations.
Even if we successfully protect our technology infrastructure and the confidentiality of sensitive data, we could suffer harm to our business and reputation if attempted security breaches are publicized.
−Removed: We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities in our systems, data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or breach the technology or other security measures protecting the networks and systems used in connection with our business.
+Added: We cannot be certain that advances in criminal
+Added: capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities in our systems, data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or breach the technology or other security measures protecting the networks and systems used in connection with our business.
We employ third-party and open source licensed software for use in our business, and the inability to maintain these licenses, errors in the software we license or the terms of open source licenses could result in increased costs, or reduced service levels, which would adversely affect our business.
9 unchanged sentences
In the event that portions of our proprietary software are determined to be subject to an open source license, we could be required to publicly release the affected portions of our source code or re-engineer all or a portion of our technology systems, each of which could reduce or eliminate the value of our technology systems.
−Removed: Such risk could be difficult or impossible to eliminate and could adversely affect our business, financial condition and results of operations.
−Removed: Any cloud provider service failure or control weakness could adversely affect our business.
−Removed: We employ cloud-based services to host our applications and intend to expand our use.
+Added: Such risk could be difficult or impossible to eliminate, and such an event could adversely affect our business, financial condition and results of operations.
+Added: Cloud provider service failure or control weakness could adversely affect our business.
+Added: We employ cloud-based services to host many of our applications and intend to expand our use.
As we expand our use of cloud-based services, we will increasingly rely on third-party cloud providers to maintain appropriate controls and safeguards to protect confidential information we receive, including personal, personally identifiable, sensitive, confidential or proprietary data, and the integrity and continuous operation of our proprietary technology platform.
11 unchanged sentences
The insurance and reinsurance industries have historically been cyclical businesses with intense competition, often based on price.
−Removed: If actual renewals do not meet expectations or if we choose not to write a renewal because of pricing conditions, our written premiums in future years and our future operations would be materially adversely affected.
+Added: If actual renewals do not meet expectations or if we choose not
+Added: to write a renewal because of pricing conditions, our written premiums in future years and our future operations would be materially adversely affected.
Our failure to accurately and timely pay claims could materially and adversely affect our business, financial condition, results of operations and prospects.
We must accurately and timely evaluate and pay claims that are made under our policies.
−Removed: Many factors affect our ability to pay claims accurately and timely, including the training and experience of our claims representatives, our claims organization’s culture and the effectiveness of our management, our ability to develop or select and implement appropriate procedures and systems to support our claims functions and other factors.
+Added: Many factors affect our ability to pay claims accurately and timely, including the training and experience of our claims examiners, our claims organization’s culture and the effectiveness of our management, our ability to develop or select and implement appropriate procedures and systems to support our claims functions and other factors.
Our failure to pay claims accurately and timely could lead to regulatory and administrative actions or material litigation, undermine our reputation in the marketplace and materially and adversely affect our business, financial condition, results of operations and prospects.
13 unchanged sentences
See "Management's Discussion and Analysis of Financial Condition and Results of Operation — Quantitative and Qualitative Disclosures About Market Risk." In recent years, interest rates have been at or near historic lows.
−Removed: A protracted low interest rate environment would continue to place pressure on our net investment income, particularly as it relates to fixed-maturity securities and short-term investments, which, in turn, may adversely affect our operating results.
+Added: The protracted low interest rate environment continues to place pressure on our net investment income, particularly as it relates to fixed-maturity securities and short-term investments, which, in turn, may adversely affect our operating results.
Future increases in interest rates could cause the values of our fixed-maturity securities portfolios to decline, with the magnitude of the decline depending on the duration of securities included in our portfolio and the amount by which interest rates increase.
5 unchanged sentences
Our investment portfolio is subject to increased valuation uncertainties when investment markets are illiquid.
−Removed: The valuation of investments is more subjective when markets are illiquid, thereby increasing the risk that the estimated fair value (i.e., the carrying amount) of the securities we hold in our portfolio does not reflect prices at which actual transactions would occur.
+Added: The valuation of investments is more
+Added: subjective when markets are illiquid, thereby increasing the risk that the estimated fair value (i.e., the carrying amount) of the securities we hold in our portfolio does not reflect prices at which actual transactions would occur.
We also invest in marketable equity securities.
1 unchanged sentence
Our equity investments totaled $172.6 million as of December 31, 2021.
−Removed: Risks for all types of securities are managed through the application of our investment policy, which establishes investment parameters that include but are not limited to, maximum percentages of investment in certain types of securities and minimum levels of credit quality, which we believe are within applicable guidelines established by the NAIC and the Arkansas State Insurance Department.
Although we seek to preserve our capital, we cannot be certain that our investment objectives will be achieved, and results may vary substantially over time.
25 unchanged sentences
In any case, such securities may have rights, preferences and privileges that are senior to those of the shares of common stock currently outstanding.
−Removed: If we cannot obtain adequate capital on favorable terms or at all, we may not have sufficient funds to implement our operating plans and our business, financial condition or results of operations could be materially adversely affected.
+Added: If we cannot obtain adequate capital on favorable
+Added: terms or at all, we may not have sufficient funds to implement our operating plans and our business, financial condition or results of operations could be materially adversely affected.
Risks Related to Regulation
19 unchanged sentences
We may become subject to additional government or market regulation.
−Removed: Our business could be adversely affected by changes in state laws, including those relating to asset and reserve valuation requirements, surplus requirements, limitations on investments and dividends, enterprise risk and risk-based capital requirements and, at the federal level, by laws and regulations that may affect certain aspects of the insurance industry,
−Removed: including proposals for preemptive federal regulation.
+Added: Our business could be adversely affected by changes in state laws, including those relating to asset and reserve valuation requirements, surplus requirements, limitations on investments and dividends, enterprise risk and risk-based capital requirements and, at the federal level, by laws and regulations that may affect certain aspects of the insurance industry, including proposals for preemptive federal regulation.
federal government generally has not directly regulated the insurance industry except for certain areas of the market, such as insurance for flood, nuclear and terrorism risks.
3 unchanged sentences
Any additional regulations established as a result of the Dodd-Frank Act could increase our costs of compliance or lead to disciplinary action.
−Removed: In addition, legislation has been introduced from time to time that, if enacted, could result in the federal government assuming a more direct role in the regulation of the insurance industry, including federal licensing in addition to or in lieu of state licensing and requiring reinsurance for natural catastrophes.
+Added: In addition, legislation has been introduced from
+Added: time to time that, if enacted, could result in the federal government assuming a more direct role in the regulation of the insurance industry, including federal licensing in addition to or in lieu of state licensing and requiring reinsurance for natural catastrophes.
We are unable to predict whether any legislation will be enacted or any regulations will be adopted, or the effect any such developments could have on our business, financial condition or results of operations.
3 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.