What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-25 compared with 2021-02-25 · 147 added, 196 removed, 1111 unchanged (24% of the section changed)

74 unchanged sentences

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment.

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

13 unchanged sentences

• comparing the actuarial methodology the Company used to determine the reserves to generally accepted actuarial standards and practices

• comparing certain assumptions about future claim reporting amounts and payment patterns to the Company’s underlying historical claims data and industry data, such as loss development trends of similar insurance products

• assessing the Company’s internal actuarial analysis for all lines of business by reviewing the assumptions and actuarial method used, which included the selection of loss development factors and the actuarial method, considering internal and external factors

• performing independent estimates of reserves for each line of business, using a combination of the Company’s underlying historical claims data and industry data

9 unchanged sentences

Fixed-maturity securities available-for-sale, at fair value (amortized cost:

$1,031,817 at 2020;

$714,817 at 2019) $ 1,081,800 $ 729,532

$ 1,371,519 – 2021;

$ 1,031,817 – 2020)

$ 1,392,066 $ 1,081,800

Equity securities, at fair value (cost:

$98,758 in 2020;

$64,245 in 2019) 129,662 78,294

$ 118,895 – 2021;

$ 98,758 – 2020)

172,611 129,662

Total investments 1,564,677 1,211,462

2 unchanged sentences

Premiums receivable, net 71,004 48,641

Reinsurance recoverables 93,215 72,574

Reinsurance recoverables, net 122,970 93,215

Ceded unearned premiums 33,679 24,265

48 unchanged sentences

Net income 152,659 88,419 63,316

Other comprehensive income (loss):

Change in unrealized gains (losses) on available-for-sale investments, net of taxes 27,862 14,774 ( 5,469 )

Other comprehensive (loss) income:

Change in unrealized (losses) gains on available-for-sale investments, net of taxes ( 23,255 ) 27,862 14,774

Total comprehensive income $ 129,404 $ 116,281 $ 78,090

13 unchanged sentences

Balance at December 31, 2018 21,242 $ 212 $ 158,485 $ 106,545 $ ( 1,256 ) $ 263,986

Cumulative effect adjustment - unrealized gains on equity securities, net of tax

— — — 6,490 ( 6,490 ) —

Balance at December 31, 2017, as adjusted

21,036 210 155,082 79,992 2,905 238,189

Reclassification of tax effect of TCJA

Issuance of common stock, net of issuance costs

742 8 65,871 — — 65,879

2 unchanged sentences

Stock-based compensation expense — — 2,742 — — 2,742

Restricted shares withheld for taxes ( 7 ) — ( 617 ) — — ( 617 )

Dividends declared ($ 0.32 per share)

Other comprehensive loss, net of income taxes

— — — ( 6,950 ) — ( 6,950 )

Other comprehensive income, net of income taxes — — — — 14,774 14,774

Net income — — — 63,316 — 63,316

Balance at December 31, 2019 22,206 222 229,229 162,911 13,518 405,880

Adoption of new accounting standard for credit losses, net

— — — 78 — 78

Issuance of common stock, net of issuance costs

5 unchanged sentences

Dividends declared ($ 0.36 per share)

— — — ( 8,093 ) — ( 8,093 )

Other comprehensive income, net of income taxes

2 unchanged sentences

Balance at December 31, 2020 22,757 228 291,315 243,315 41,380 576,238

Adoption of new accounting standard for credit losses, net

— — — 78 — 78

Issuance of common stock, net of issuance costs

311 3 56,695 — — 56,698

Issuance of common stock under stock-based compensation plan

3 unchanged sentences

Dividends declared ($ 0.44 per share)

Other comprehensive income, net of income taxes

— — — ( 10,032 ) — ( 10,032 )

Other comprehensive loss, net of income taxes — — — — ( 23,255 ) ( 23,255 )

Net income — — — 152,659 — 152,659

10 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Net unrealized (gains) losses on equity securities ( 16,855 ) ( 12,389 ) 6,555

Net unrealized gains on equity securities ( 22,812 ) ( 16,855 ) ( 12,389 )

Net realized investment gains ( 2,828 ) ( 3,533 ) ( 359 )

Deferred tax expense (benefit) 616 ( 125 ) ( 3,230 )

Deferred tax (benefit) expense ( 576 ) 616 ( 125 )

Depreciation and amortization 2,308 1,574 682

27 unchanged sentences

Dividends paid ( 10,021 ) ( 8,073 ) ( 6,929 )

Net cash provided by (used in) financing activities 76,144 77,755 ( 4,098 )

Net cash (used in) provided by financing activities ( 11,140 ) 76,144 77,755

Net change in cash and cash equivalents 43,947 ( 23,315 ) 25,319

6 unchanged sentences

Description of business

Kinsale Capital Group, Inc., an insurance holding company, is a Delaware corporation that was formed in 2009 and conducts its operations through its wholly-owned subsidiaries ("KCGI" and together with its subsidiaries, the "Company").

Kinsale Capital Group, Inc., an insurance holding company, is a Delaware corporation that was formed in 2009 and conducts its operations through its wholly-owned subsidiaries (referred to as "Kinsale" or, with its subsidiaries, the "Company").

Kinsale Capital Group, Inc.

7 unchanged sentences

The accompanying consolidated financial statements include the accounts of Kinsale Capital Group, Inc.

and its wholly-owned subsidiaries (referred to as "Kinsale" or, with its subsidiaries, the "Company").

and its wholly-owned subsidiaries.

All significant intercompany balances and transactions have been eliminated in consolidation.

3 unchanged sentences

generally accepted accounting principles ("U.S.

GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, if any, at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Management periodically reviews its estimates and assumptions.

These reviews include evaluating the adequacy of reserves for unpaid losses and loss adjustment expenses, allowance for doubtful accounts and uncollectible reinsurance, fair value of investments, as well as evaluating the investment portfolio for credit impairments.

These reviews include evaluating the adequacy of reserves for unpaid losses and loss adjustment expenses, allowance for credit losses and uncollectible reinsurance, fair value of investments, as well as evaluating the investment portfolio for credit impairments.

Cash and cash equivalents

6 unchanged sentences

Fixed-maturity securities are classified as available-for-sale and reported at fair value.

Unrealized gains and losses on these securities are excluded from net earnings but are recorded as a separate component of other comprehensive income and stockholders' equity, net of deferred income taxes.

Unrealized gains and losses on these securities are excluded from earnings but are recorded as a separate component of other comprehensive income and stockholders' equity, net of deferred income taxes.

Equity securities are reported at fair value.

1 unchanged sentence

The Company regularly reviews all its available-for-sale investments with unrealized losses to assess whether the decline in the fair value is deemed to be a credit loss.

See Note 2 for further discussion of credit losses.

See Note 2 for further discussion regarding the determination of credit losses.

Interest on fixed-maturity securities is credited to earnings as it accrues.

Premiums and discounts are amortized or accreted using the effective interest method over the lives of the related fixed maturities, or to the earliest call date for securities purchased at a premium.

This method includes an adjustment for estimated principal prepayments, if any, on asset- and mortgage-backed securities.

To the extent that the estimated lives of such securities change as a result of changes in estimated prepayment rates, the adjustments are included in net investment income using the retrospective method.

Dividends on equity securities are included in earnings on the ex-dividend date.

8 unchanged sentences

Premiums receivable, net

Premiums receivable balances are carried at face value, net of any allowance for doubtful accounts.

The allowance for doubtful accounts represents an estimate of amounts considered uncollectible based on the Company’s assessment of the collectability of receivables that are past due.

The Company recorded an allowance for doubtful accounts of $ 3.1 million and $ 2.7 million at December 31, 2020 and 2019, respectively, and believes that all other amounts due are collectible.

Premiums receivable balances are carried at face value, net of any allowance for credit losses.

The allowance for credit losses represents an estimate of amounts considered uncollectible based on the Company’s assessment of the collectability of receivables that are past due.

The Company recorded an allowance for credit losses of $ 3.4 million and $ 3.1 million at December 31, 2021 and 2020, respectively, and believes that all other amounts due are collectible.

Deferred policy acquisition costs, net of ceding commissions

6 unchanged sentences

Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets.

The estimated useful lives range from 39 years for the parking deck and building, 15 to 20 years for land improvements, 7 to 10 years for furniture and equipment, 3 to 7 years for electronic data processing hardware and software, and from 2 to 5 years for leasehold improvements, which is the shorter of the estimated useful life or the lease term.

The estimated useful lives range from 39 years for the building and parking deck, 15 to 20 years for land improvements, 7 to 10 years for furniture and equipment, and 3 to 7 years for electronic data processing hardware and software.

Property and equipment are included in "other assets" in the accompanying consolidated balance sheets and consists of the following:

2 unchanged sentences

Parking deck 5,072 5,072

Land 3,068 3,068

Equipment 3,143 2,770

1 unchanged sentence

Furniture and fixtures 2,158 1,731

Leasehold improvements — 984

Land improvements 474 317

Construction in progress - corporate headquarters — 19,789

54,865 49,448

1 unchanged sentence

Total property and equipment, net $ 49,295 $ 46,186

At December 31, 2019, construction in progress includes the purchased land and capitalized expenses related to the construction of the new corporate headquarters' building and parking deck.

During 2020, the construction of the headquarters and parking deck was substantially completed and the related fixed assets were placed into service.

During 2020, the Company sold a portion of both the land and parking deck for approximately $ 6.5 million to a real estate developer for the development of an apartment building.

17 unchanged sentences

Furthermore, management may determine that recorded reserves are more than adequate to cover expected losses which will result in a reduction to the reserves.

Company believes that the reserves for unpaid losses and loss adjustment expenses at December 31, 2020 and 2019 are adequate and represent a reasonable estimate of the Company's future obligations.

The Company believes that the reserves for unpaid losses and loss adjustment expenses at December 31, 2021 and 2020 are adequate and represent a reasonable estimate of the Company's future obligations.

See Note 7 for a further discussion of reserves for unpaid losses and loss adjustment expenses.

2 unchanged sentences

Unearned premiums are calculated on a daily pro rata basis.

Deferred income tax assets and liabilities are determined based on the difference between the recorded amounts and the tax bases of assets and liabilities, using enacted tax rates expected to be in effect during the year in which the basis differences reverse.

The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

Valuation allowances are recorded when it is more likely than not that some portion, or all, of the deferred tax assets will not be realizable.

Management evaluates the realizability of the deferred tax assets and assesses the need for any valuation allowance adjustment.

Deferred income tax assets and liabilities are determined based on the differences between the recorded amounts and the tax bases of assets and liabilities, using enacted tax rates expected to be in effect during the year in which the basis differences reverse.

The effect on deferred taxes of a change in tax rates is recognized in income in the period in which such change was enacted.

Valuation allowances on deferred tax assets are estimated based on the Company's assessment of the realizability of such amounts.

Valuation allowances are recorded when it is more likely than not that some portion, or all, of the deferred tax assets will not be realizable.

The Company provides for uncertain tax positions, and the related interest and penalties, based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities.

7 unchanged sentences

Fair value of financial instruments

The fair values of certain financial instruments are determined based on the fair value hierarchy.

GAAP guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The guidance also describes three levels of inputs that may be used to measure fair value.

The following was considered in the estimation of fair value for each class of financial instruments for which it was practicable to estimate that value.

The Company’s investment accounting vendor uses independent pricing vendors to estimate the fair value of fixed-maturity securities and the Company’s management reviews these prices for reasonableness.

Treasury securities that have quoted prices in active markets are included in the amounts disclosed as Level 1.

For other fixed-maturity securities, the pricing vendors use a pricing methodology involving the market approach, including pricing models which use prices and relevant market information regarding a particular security or securities with similar characteristics to establish a valuation.

The estimates of fair value of these fixed-maturity securities are included in the amounts disclosed as Level 2.

For those fixed-maturity securities where significant inputs are unobservable, Level 3 inputs, the Company's investment accounting vendor obtains valuations from pricing vendors using the market approach and income approach valuation techniques.

For equity securities, the Company’s investment accounting vendor uses prices from independent pricing vendors to estimate fair value.

The fair value estimates of exchange traded funds are based on quoted prices in an active market and

are disclosed as Level 1.

The fair value estimates of preferred stock are based on observable market data and, as a result, are disclosed as Level 2.

Fair value disclosures for investments are included in Notes 2 and 3.

Fair value is estimated for each class of financial instrument based on the framework established in the fair value accounting guidance.

This guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Fair value hierarchy disclosures are based on the quality of inputs used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

See Note 3 for further details regarding fair value disclosures.

Stock-based compensation

7 unchanged sentences

The update requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income.

Credit losses relating to available-for-sale fixed-maturity securities must also be recorded through an allowance for credit losses.

However, the amendments limit the amount of the allowance to the amount by which fair value is below amortized cost.

Credit losses relating to available-for-sale fixed-

maturity securities must also be recorded through an allowance for credit losses, which is limited to the amount by which fair value is below amortized cost.

The measurement of credit losses on available-for-sale securities is similar under previous U.S.

5 unchanged sentences

Best ratings of “A” (Excellent) or better, the allowance was not material to the Company’s consolidated financial statements.

ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

On August 29, 2018, the FASB issued new guidance on a customer's accounting for implementation, set-up and other up-front costs incurred in a cloud computing arrangement hosted by the vendor.

The new guidance requires an entity to determine the stage of a project that the implementation activity relates to and the nature of the associated costs in order to determine whether those costs should be expensed as incurred or capitalized.

The new guidance also requires the entity to amortize the capitalized implementation costs as an expense over the term of the hosting arrangement.

ASU 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued updated guidance for the accounting for income taxes.

The updated guidance is intended to simplify the accounting for income taxes by removing several exceptions contained in existing guidance and amending other existing guidance to simplify several income tax accounting matters.

Effective January 1, 2021, the Company adopted ASU 2019-12 using a modified-retrospective approach.

1 unchanged sentence

Prospective accounting pronouncements

ASU 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued updated guidance for the accounting for income taxes.

The updated guidance is effective for annual reporting periods beginning after December 15, 2020.

Early adoption is permitted.

The adoption of the guidance will not have a material effect on the Company’s consolidated financial statements.

There are no other prospective accounting standards which, upon their effective date, would have a material impact on the Company's consolidated financial statements.

5 unchanged sentences

Fixed maturities:

Treasury securities and obligations of U.S.

government agencies

$ 6,936 $ — $ ( 89 ) $ 6,847

Obligations of states, municipalities and political subdivisions

2 unchanged sentences

Asset-backed securities 299,810 2,217 ( 252 ) 301,775

Commercial mortgage-backed securities 66,110 4,886 ( 27 ) 70,969

Residential mortgage-backed securities 340,804 1,804 ( 4,923 ) 337,685

217,859 4,938 ( 141 ) 222,656

Commercial mortgage-backed securities 57,000 2,433 ( 206 ) 59,227

Total fixed-maturity investments $ 1,371,519 $ 30,307 $ ( 9,760 ) $ 1,392,066

3 unchanged sentences

Fixed maturities:

Treasury securities and obligations of U.S.

government agencies

$ 110 $ 2 $ — $ 112

Obligations of states, municipalities and political subdivisions

2 unchanged sentences

Asset-backed securities 236,813 4,230 ( 382 ) 240,661

Commercial mortgage-backed securities 54,627 1,658 ( 239 ) 56,046

Residential mortgage-backed securities

217,859 4,938 ( 141 ) 222,656

Commercial mortgage-backed securities 66,110 4,886 ( 27 ) 70,969

Total fixed-maturity investments $ 1,031,817 $ 50,686 $ ( 703 ) $ 1,081,800

6 unchanged sentences

When assessing whether it intends to sell a fixed-maturity security or if it is likely to be required to sell a fixed-maturity security before recovery of its amortized cost, the Company evaluates facts and circumstances including, but not limited to, decisions to reposition the investment portfolio, potential sales of investments to meet cash flow needs and potential sales of investments to capitalize on favorable pricing.

amortized cost, an impairment is recognized in net income based on the fair value of the security at the time of assessment.

For fixed-maturity securities where a decline in fair value is below the amortized cost basis and the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, an impairment is recognized in net income based on the fair value of the security at the time of assessment.

For fixed-maturity securities that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before recovery of its amortized cost, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security.

1 unchanged sentence

Any remaining decline in fair value represents the noncredit portion of the impairment, which is recognized in other comprehensive income.

Beginning on January 1, 2020, credit losses are recognized through an allowance account.

See Note 1 - Recently adopted accounting pronouncements - ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) for additional information.

The Company reports investment income due and accrued separately from fixed-maturity securities, available for sale, and has elected not to measure an allowance for credit losses for investment income due and accrued.

Investment income due and accrued is written off through net realized gains (losses) on investments at the time the issuer of the bond defaults or is expected to default on payments.

Investment income due and accrued is written off through earnings at the time the issuer of the bond defaults or is expected to default on payments.

The following tables summarize gross unrealized losses and estimated fair value for available-for-sale investments by length of time that the securities have continuously been in an unrealized loss position:

4 unchanged sentences

Fixed maturities:

Treasury securities and obligations of U.S.

government agencies

$ 6,847 $ ( 89 ) $ — $ — $ 6,847 $ ( 89 )

Obligations of states, municipalities and political subdivisions

2 unchanged sentences

Asset-backed securities 136,669 ( 204 ) 4,452 ( 48 ) 141,121 ( 252 )

Commercial mortgage-backed securities 4,971 ( 27 ) — — 4,971 ( 27 )

Residential mortgage-backed securities

260,251 ( 4,329 ) 17,968 ( 594 ) 278,219 ( 4,923 )

Commercial mortgage-backed securities 10,773 ( 206 ) — — 10,773 ( 206 )

Total fixed-maturity investments $ 626,932 $ ( 9,015 ) $ 23,512 $ ( 745 ) $ 650,444 $ ( 9,760 )

14 unchanged sentences

Asset-backed securities 57,750 ( 149 ) 23,825 ( 233 ) 81,575 ( 382 )

Commercial mortgage-backed securities 16,352 ( 224 ) 2,508 ( 15 ) 18,860 ( 239 )

Residential mortgage-backed securities

46,869 ( 129 ) 266 ( 12 ) 47,135 ( 141 )

Commercial mortgage-backed securities 4,971 ( 27 ) — — 4,971 ( 27 )

Total fixed-maturity investments $ 119,831 $ ( 458 ) $ 24,091 $ ( 245 ) $ 143,922 $ ( 703 )

9 unchanged sentences

Asset-backed securities 299,810 301,775

Commercial mortgage-backed securities 66,110 70,969

Residential mortgage-backed securities 340,804 337,685

Commercial mortgage-backed securities 57,000 59,227

Total fixed maturities $ 1,371,519 $ 1,392,066

8 unchanged sentences

Cash equivalents and short-term investments

262 842 1,017

Dividends on equity securities 3,962 3,512 2,136

14 unchanged sentences

Realized losses ( 210 ) ( 119 ) ( 688 )

Net realized (losses) gains from equity securities ( 119 ) ( 132 ) 35

Net realized losses from equity securities ( 113 ) ( 119 ) ( 132 )

Short-term securities - realized gains — 13 3

Net realized investment gains $ 2,828 $ 3,533 $ 359

Change in net unrealized gains (losses) on investments

The change in net unrealized gains for fixed-maturity securities was $ 35.3 million and $ 18.7 million for the years ended December 31, 2020 and 2019, respectively.

The change in net unrealized losses for fixed-maturity securities was $ 6.9 million for the year ended December 31, 2018.

Change in net unrealized (losses) gains on fixed-maturity securities

The change in net unrealized (losses) gains for fixed-maturity securities was $( 29.4 ) million, $ 35.3 million, and $ 18.7 million for the years ended December 31, 2021, 2020, and 2019 respectively.

Insurance – statutory deposits

The Company had invested assets with a carrying value of $ 6.9 million on deposit with state regulatory authorities at both December 31, 2020 and 2019.

The Company had invested assets with a carrying value of $ 6.7 million and $ 6.9 million on deposit with state regulatory authorities at December 31, 2021 and 2020, respectively.

Payable for investments purchased

The Company recorded a payable for investments purchased, not yet settled, of $ 15.0 million at December 31, 2021.

The payable balance was included in the "other liabilities" line item of the consolidated balance sheet.

Fair value measurements

Fair value is estimated for each class of financial instrument for which it was practical to estimate fair value.

Fair value is estimated for each class of financial instrument based on the framework established in the fair value accounting guidance.

Fair value is defined as the price in the principal market that would be received for an asset or paid to transfer a liability to facilitate an orderly transaction between market participants on the measurement date.

Market participants are assumed to be

independent, knowledgeable, able and willing to transact an exchange and not acting under duress.

Market participants are assumed to be independent, knowledgeable, able and willing to transact an exchange and not acting under duress.

Fair value hierarchy disclosures are based on the quality of inputs used to measure fair value.

7 unchanged sentences

Values for U.S.

Treasury and exchange traded funds are generally based on Level 1 inputs which use quoted prices in active markets for identical assets.

For other fixed-maturity securities and preferred stock, the pricing vendors use a pricing methodology involving the market approach, including pricing models which use prices and relevant market information regarding a particular security or securities with similar characteristics to establish a valuation.

Treasuries and exchange traded funds are generally based on Level 1 inputs which use quoted prices in active markets for identical assets.

For other fixed-maturity securities and non-redeemable preferred stock, the pricing vendors use a pricing methodology involving the market approach, including pricing models which use prices and relevant market information regarding a particular security or securities with similar characteristics to establish a valuation.

The estimates of fair value of these investments are included in the amounts disclosed as Level 2.

7 unchanged sentences

Fixed maturities:

Treasury securities and obligations of U.S.

government agencies

$ 6,847 $ — $ — $ 6,847

Obligations of states, municipalities and political subdivisions

2 unchanged sentences

Asset-backed securities — 301,775 — 301,775

Commercial mortgage-backed securities — 70,969 — 70,969

Residential mortgage-backed securities — 337,685 — 337,685

Commercial mortgage-backed securities — 59,227 — 59,227

Total fixed maturities 6,847 1,385,219 — 1,392,066

1 unchanged sentence

Exchange traded funds 123,389 — — 123,389

Nonredeemable preferred stock — 31,612 — 31,612

Non-redeemable preferred stock — 49,222 — 49,222

Total equity securities 123,389 49,222 — 172,611

4 unchanged sentences

Fixed maturities:

Treasury securities and obligations of U.S.

government agencies

$ 112 $ — $ — $ 112

Obligations of states, municipalities and political subdivisions

2 unchanged sentences

Asset-backed securities — 240,661 — 240,661

Commercial mortgage-backed securities — 56,046 — 56,046

Residential mortgage-backed securities — 222,656 — 222,656

Commercial mortgage-backed securities — 70,969 — 70,969

Total fixed maturities — 1,081,800 — 1,081,800

1 unchanged sentence

Exchange traded funds 98,050 — — 98,050

Nonredeemable preferred stock — 23,831 — 23,831

Non-redeemable preferred stock — 31,612 — 31,612

Total equity securities 98,050 31,612 — 129,662

1 unchanged sentence

There were no assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2021 or 2020.

The carrying value of cash equivalents approximates its fair value at December 31, 2020 and 2019, due to the short-term maturities of these assets.

The Company holds cash equivalents that are managed as part of its investment portfolio and, due to the short-term maturities of these assets, the carrying value of these investments approximates fair value.

The Company held cash equivalents of $ 44.7 million and $ 13.7 million at December 31, 2021 and 2020, respectively.

In addition, the estimated fair value of the Credit Facility approximated its carrying value as of December 31, 2021 and 2020.

28 unchanged sentences

federal income tax return.

Under a tax sharing agreement, KCGI collects from or refunds to its subsidiaries the amount of taxes determined as if KCGI and the subsidiaries filed separate returns.

Under a tax sharing agreement, Kinsale collects from or refunds to its subsidiaries the amount of taxes determined as if Kinsale and the subsidiaries filed separate returns.

The Company is no longer subject to income tax examination by tax authorities for the years ended before January 1, 2018.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted on March 27, 2020.

The purpose of the CARES Act is to provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 coronavirus pandemic.

The CARES Act builds on and clarifies a number of changes in corporate tax law implemented by the Tax Cuts and Jobs Act.

The CARES Act will not have a significant impact on the Company's consolidated financial statements.

Income tax expense includes the following components for the years ending December 31, 2021, 2020 and 2019:

6 unchanged sentences

The Company paid $ 40.6 million, $ 13.0 million and $ 11.6 million in federal income taxes during the years ended December 31, 2021, 2020 and 2019, respectively.

Current income taxes recoverable was $ 1.2 million at December 31, 2020, and included in "other assets" in the accompanying consolidated balance sheets.

Current income taxes payable was $ 0.4 million at December 31, 2019, and included in "other liabilities" in the accompanying consolidated balance sheets.

Current income taxes recoverable was $ 5.1 million and $ 1.2 million at December 31, 2021 and 2020, respectively and included in "other assets" in the accompanying consolidated balance sheets.

The prevailing federal income tax rate was 21 % in 2021, 2020 and 2019.

6 unchanged sentences

Stock options exercised ( 2,148 ) ( 7,634 ) ( 2,411 )

Tax-exempt investment income ( 565 ) ( 577 ) ( 672 )

Restricted stock award vesting ( 677 ) ( 658 ) ( 153 )

Tax-exempt investment income ( 546 ) ( 565 ) ( 577 )

Other ( 135 ) ( 236 ) ( 95 )

Total $ 36,142 $ 11,994 $ 12,735

The significant components of the net deferred tax (liability) asset are summarized as follows:

The significant components of the net deferred tax asset (liability) are summarized as follows:

(in thousands)

2 unchanged sentences

Unearned premiums 13,190 9,942

Organizational costs 128 162

Stock compensation 865 765

State operating loss carryforwards 4,554 3,833

Allowance for doubtful accounts 649 570

Stock compensation 1,140 865

Allowance for credit losses 712 649

Other 278 254

7 unchanged sentences

Property and equipment 2,741 2,433

Intangible assets 743 743

Transition adjustment for loss reserve discount 1,025 1,281

Intangible assets 743 743

Other 324 229

Total deferred tax liabilities 29,329 28,436

Net deferred tax (liability) asset $ ( 4,648 ) $ 3,374

Net deferred tax asset (liability) $ 2,109 $ ( 4,648 )

At December 31, 2021 and 2020, the Company had state net operating losses ("NOLs") of $ 96.1 million and $ 80.9 million, respectively.

41 unchanged sentences

$ 881,344 $ 636,013 $ 460,058

During the year ended December 31, 2021, prior accident years developed favorably by $ 32.0 million, of which $ 33.7 million was attributable to the 2020 accident year and was related to a lower-than-expected level of reported losses.

Although the Company does not have any significant direct COVID-19 exposure, the related disruption in the court system and the general economy

created additional uncertainty in estimating loss reserves in 2020.

As a result, 2020 accident year actuarial assumptions were adjusted in 2020 to increase IBNR to account for this additional uncertainty.

The Company's current outlook is more favorable than in the prior year and, based on observed trends, the Company reevaluated and adjusted certain assumptions for accident year 2020 in 2021 to reflect the favorable experience.

In addition, $ 3.8 million of favorable development was attributable to accident year 2019 due to reported losses emerging at lower levels than expected.

This favorable development was offset in part by adverse development, mostly attributable to the 2016 and 2018 accident years due to modest adjustments in actuarial assumptions.

Current accident year incurred losses and loss adjustment expenses for the year ended December 31, 2021 included $ 8.6 million of catastrophe losses primarily related to Hurricane Ida and winter storms Uri and Viola in Texas.

During the year ended December 31, 2020, our net incurred losses for accident years 2019 and prior developed favorably by $ 13.3 million.

This favorable development included $ 10.5 million for the 2019 accident year and $ 1.8 million for accident year 2018.

This favorable development was primarily due to reported losses emerging at a lower level than expected, largely across the

other liability and excess lines of business.

This favorable development included $ 10.5 million for the 2019 accident year and $ 1.8 million for the 2018 accident year.

This favorable development was primarily due to reported losses emerging at a lower level than expected, largely across the other liability and excess lines of business.

Current year incurred losses and loss adjustment expenses for the year ended December 31, 2020 included $ 23.2 million of catastrophe losses primarily related to Hurricane Laura, Hurricane Sally and the California wildfires.

During the year ended December 31, 2019, our net incurred losses for accident years 2018 and prior developed favorably by $ 9.4 million.

This favorable development included $ 13.0 million for the 2018 accident year and $ 1.6 million for the 2017 accident year.

This favorable development included $ 13.0 million for the 2018 accident year, $ 1.6 million for the 2017 accident year.

This favorable development was primarily due to reported losses emerging at a lower level than expected, on the other liability and products liability lines of business.

2 unchanged sentences

This adverse development largely resulted from management’s decision to lengthen the actuarial loss development factors to provide for emergence of reported losses over a longer period of time based on trends observed in loss experience, which added a modest amount of conservatism to the Company’s IBNR reserves.

During the year ended December 31, 2018, our net incurred losses for accident years 2017 and prior developed favorably by $ 7.0 million.

This favorable development included $ 6.8 million for the 2017 accident year, $ 3.8 million for the 2016 accident year.

This favorable development was primarily due to reported losses emerging at a lower level than expected, across most lines of business.

The favorable development was offset in part by adverse development of $ 3.6 million for the 2011 through 2015 accident years.

The unfavorable development was primarily attributable to the other liability occurrence line of business.

Incurred and Paid Claims Development

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Unaudited 2013

Unaudited 2014 Unaudited 2015

2 unchanged sentences

Unaudited 2018

Unaudited 2019 Unaudited 2020 Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims

Unaudited 2019 Unaudited 2020 Unaudited 2021 Total of IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims

2012 $ 7,913 $ 5,749 $ 4,205 $ 3,102 $ 2,845 $ 2,477 $ 2,314 $ 2,207 $ 2,136 $ 1,867 $ 136 138

127 unchanged sentences

The Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk arising from its exposure to individual reinsurers.

All reinsurance receivables are from companies with A.M.

All reinsurance recoverables are from companies with A.M.

Best ratings of "A" (Excellent) or better.

1 unchanged sentence

state insurance regulations.

After adoption of ASU 2016-13, the Company recorded an allowance for doubtful accounts of $ 0.3 million related to its reinsurance balances at December 31, 2020;

The Company recorded an allowance for credit losses of $ 0.4 million and $ 0.3 million related to its reinsurance balances at December 31, 2021 and 2020, respectively;

however, the deterioration in the credit quality of existing reinsurers or disputes over reinsurance agreements could result in future charges.

See Note 1 - Recently adopted accounting pronouncements - ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) for additional information.

The Company did not record an allowance for doubtful accounts related to its reinsurance balances at December 31, 2019 and believed this was appropriate after consideration of all currently available information.

At December 31, 2021, reinsurance recoverables on paid and unpaid losses from the Company’s five largest reinsurers were $ 28.0 million, $ 27.4 million, $ 16.3 million, $ 10.2 million and $ 9.5 million, representing 74.3 % of the total balance.

At December 31, 2020, prepaid reinsurance premiums ceded to five reinsurers were $ 6.1 million, $ 4.0 million, $ 2.7 million, $ 2.4 million and $ 2.3 million, representing 71.8 % of the total balance.

At December 31, 2021, unearned premiums ceded to five reinsurers were $ 8.4 million, $ 5.5 million, $ 3.5 million, $ 3.3 million and $ 3.3 million, representing 71.6 % of the total balance.

Stockholders’ equity

5 unchanged sentences

After deducting underwriting discounts and commissions and offering expenses, the Company received net proceeds of $ 56.7 million.

The proceeds from the public offering were used for general corporate purposes, including to fund organic growth.

On August 12, 2019, the Company completed an underwritten public offering and sold and issued 741,750 shares of its common stock at a price of $ 93.00 per share.

41 unchanged sentences

During the year ended December 31, 2021, restricted stock awards withheld for taxes in connection with the vesting of those awards totaled 12,958 .

The weighted average grant-date fair value of the Company's restricted stock awards granted during the years ended December 31, 2020, 2019, and 2018 was $ 147.45 , $ 80.59 and $ 52.99 , respectively.

The fair value of restricted stock awards that vested during the year ended December 31, 2020 and 2019 was $ 5.8 million and $ 2.1 million, respectively.

There were no restricted stock awards that vested during the year ended December 31, 2018.

The per share weighted average grant-date fair value of the Company's restricted stock awards granted during the years ended December 31, 2021, 2020, and 2019 was $ 185.00 , $ 147.45 and $ 80.59 , respectively.

The fair value of restricted stock awards that vested during the year ended December 31, 2021, 2020 and 2019 was $ 6.8 million, $ 5.8 million and $ 2.1 million respectively.

As of December 31, 2021, the Company had $ 9.1 million of total unrecognized stock-based compensation expense expected to be charged to earnings over a weighted-average period of 2.6 years.

1 unchanged sentence

The Board of Directors granted 3,528 restricted stock awards on January 1, 2022 under the 2016 Incentive Plan to the Company’s non-employee directors.

The restricted stock awards had a fair value on the date of grant of $ 200.13 per share and will vest on a straight-line basis over a 1 year period.

The restricted stock awards had a fair value on the date of grant of $ 237.89 per share and will vest on the first anniversary date of the grant.

On February 14, 2022 , the Company’s Board of Directors declared a cash dividend of $ 0.13 per share of common stock.

This dividend is payable on March 12, 2021 to all stockholders of record on February 26, 2021 .

This dividend is payable on March 14, 2022 to all stockholders of record on March 2, 2022 .

Earnings per share

19 unchanged sentences

The Credit Facility has a maturity of May 28, 2024 .

Borrowings under the Credit Facility were used to fund construction of the Company’s new headquarters but may also be used for working capital and general corporate purposes.

Borrowings under the Credit Facility were used to fund construction of the Company’s new headquarters and may also be used for working capital and general corporate purposes.

Loans under the Credit Facility may be subject to varying rates of interest depending on whether the loan is a Eurodollar loan or an alternate base rate (ABR) loan, at the Company's election.

Eurodollar loans bear an interest rate per annum equal to adjusted LIBOR for the applicable interest period plus a margin of 1.75%.

ABR loans bear an interest rate per annum equal to the higher of the prime rate, the New York Federal Reserve Board Rate or the one-month adjusted LIBOR, plus the applicable margin of

0.75% to 1.75%, depending on which interest option was applicable for the particular ABR loan.

During the year ended December 31, 2020, the Company drew down $ 25.7 million on its Credit Facility.

As of December 31, 2020, there was $ 42.6 million outstanding under the Credit Facility, net of debt issuance cost of $ 0.4 million, with a weighted average interest rate of 1.98 %.

For the year ended December 31, 2020, total interest expense under the Credit Facility was $ 1.0 million, of which $ 0.8 million was capitalized as part of the real estate project under construction.

See Note 1 for further details.

Interest paid was $ 0.8 million and $ 0.1 million for the years ended December 31, 2020 and 2019, respectively.

There were no credit agreements outstanding at December 31, 2018.

ABR loans bear an interest rate per annum equal to the higher of the prime rate, the New York Federal Reserve Board Rate or the one-month adjusted LIBOR, plus the applicable margin of 0.75% to 1.75%, depending on which interest option was applicable for the particular ABR loan.

At December 31, 2021, there was $ 42.7 million outstanding under the Credit Facility, net of debt issuance cost of $ 0.3 million, with a weighted average interest rate of 1.92 %.

For the years ended December 31, 2021, 2020 and 2019, total interest expense under the Credit Facility was $ 1.0 million, $ 1.0 million and $ 0.2 million, respectively.

For the years ended December 31, 2020 and 2019, $ 0.8 million and $ 0.2 million of interest expense was capitalized as part of the real estate project under construction, respectively.

Interest paid was $ 0.9 million, $ 0.8 million and $ 0.1 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The Credit Agreement also contains representations and warranties and affirmative and negative covenants customary for financings of this type, as well as customary events of default.

6 unchanged sentences

Expenses related to the Plan were $ 2.2 million, $ 1.7 million and $ 1.3 million in 2021, 2020 and 2019, respectively.

Other comprehensive income (loss)

The following table summarizes the components of other comprehensive income (loss):

Other comprehensive (loss) income

The following table summarizes the components of other comprehensive (loss) income:

Year Ending December 31,

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(in thousands)

Unrealized gains (losses) on fixed-maturity securities arising during the period, before income taxes:

$ 37,387 $ 19,190 $ ( 6,664 )

Income tax (expense) benefit ( 7,851 ) ( 4,029 ) 1,399

Unrealized gains (losses) arising during the period, net of income taxes

Unrealized (losses) gains on fixed-maturity securities arising during the period, before income taxes:

$ ( 26,792 ) $ 37,387 $ 19,190

Income tax benefit (expense) 5,626 ( 7,851 ) ( 4,029 )

Unrealized (losses) gains arising during the period, net of income taxes ( 21,166 ) 29,536 15,161

Less reclassification adjustment:

3 unchanged sentences

Reclassification adjustment included in net income 2,089 1,674 387

Other comprehensive income (loss) $ 27,862 $ 14,774 $ ( 5,469 )

Other comprehensive (loss) income $ ( 23,255 ) $ 27,862 $ 14,774

The sale of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive income to realized gains or losses in current period earnings.

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(in thousands)

Construction $ 87,206 $ 71,035 $ 50,879

Small Business $ 112,142 $ 83,289 $ 63,181

Excess Casualty 109,464 76,715 51,225

Construction 103,540 87,206 71,035

Commercial Property 78,722 51,789 29,115

Product liability 38,306 26,333 20,049

Allied Health 59,208 37,562 23,962

Products Liability 55,070 38,306 26,333

Life Sciences 41,297 31,027 17,821

4 unchanged sentences

Environmental 13,584 8,568 5,179

Entertainment 12,396 4,614 2,348

Health Care 11,271 7,666 5,963

5 unchanged sentences

Total $ 764,373 $ 552,814 $ 389,694

Construction underwrites commercial general liability coverage on contractors focusing on new residential construction, residential remodeling and renovation and commercial construction.

Small Business underwrites commercial general liability on smaller risks with an emphasis on artisan contractors and premises related exposures.

2 unchanged sentences

This division also writes excess liability over primary commercial auto liability policies written by other carriers.

Construction underwrites commercial general liability coverage on contractors focusing on new residential construction, residential remodeling and renovation and commercial construction.

Commercial Property underwrites first-party coverage on manufacturing facilities, government and municipal buildings, professional buildings, offices and general commercial properties, vacant properties, as well as entertainment and retail facilities.

Products liability underwrites commercial general liability on manufacturers, distributors and importers of a wide array of consumer, commercial and industrial products.

Allied Health underwrites commercial general liability, professional liability and excess liability on allied health and social service risks including assisted living facilities, home health care agencies and outpatient medical facilities.

Products Liability underwrites commercial general liability on manufacturers, distributors and importers of a wide array of consumer, commercial and industrial products.

Life Sciences underwrites general liability, products liability and professional liability coverage for manufacturers, distributors and developers of dietary supplements, medical devices, pharmaceuticals, biologics, health and beauty products, durable medical equipment and clinical trials.

General Casualty underwrites general liability and liquor liability on hospitality, habitational and retail risks, among others, with similar premises liability loss exposures.

During 2021, certain business previously underwritten by this division is now underwritten by the Entertainment division and prior year amounts have been reclassified to conform to the current year's presentation.

Professional Liability underwrites small-to-medium sized non-medical professional liability risks.

3 unchanged sentences

Environmental underwrites commercial general liability, pollution liability and professional liability on a wide range of commercial risks where environmental exposures exist that are operational in nature or related to the premises.

Entertainment underwrites commercial general liability for small-to-medium sized entertainment classes, including such classes as bowling alleys, campgrounds, escape rooms, fitness centers, museums and paintball facilities, among others.

As previously discussed, during 2021, certain business previously underwritten by the General Casualty division is now underwritten by this division and prior year amounts have been reclassified to conform to the current year's presentation.

Health Care underwrites medical professional liability for physicians, surgeons, dentists, chiropractors and podiatrists.

3 unchanged sentences

Commercial Insurance underwrites commercial general liability on small accounts, through the Company's wholly-owned broker, Aspera.

Personal insurance writes homeowners coverage on manufactured homes with a catastrophe exposure due to coastal location.

The Company does business with three unaffiliated insurance brokers that generated $ 72.1 million, $ 63.8 million and $ 56.5 million of gross written premiums for the year ended December 31, 2020, representing 13.0 %, 11.5 % and 10.2 % of gross written premiums, respectively.

Personal Insurance writes homeowners coverage on manufactured homes with catastrophe exposure due to coastal location.

The Company does business with two unaffiliated insurance brokers that generated $ 137.0 million and $ 118.8 million of gross written premiums for the year ended December 31, 2021, representing 17.9 % and 15.5 % of gross written premiums, respectively.

No other broker generated 10.0% or more of the gross written premiums for the year ended December 31, 2021.

2 unchanged sentences

In converting from statutory accounting principles to U.S.

GAAP, typical adjustments include deferral of policy acquisition costs, the inclusion of statutory nonadmitted assets and the inclusion of net unrealized gains or losses relating to fixed maturities in stockholders’ equity.

GAAP, typical adjustments include deferral of policy acquisition costs, the inclusion of statutory non-admitted assets and the inclusion of net unrealized gains or losses relating to fixed maturities in stockholders’ equity.

The Company does not use any permitted practices that are different from prescribed statutory accounting practices.

15 unchanged sentences

The maximum dividend distribution that can be paid by Kinsale Insurance during 2022 without prior approval is $ 114.0 million.

Unaudited selected quarterly financial data

The following is a summary of the unaudited quarterly results of operations:

(in thousands, except per share data) First Second Third Fourth

Gross written premiums $ 124,036 $ 134,091 $ 144,777 $ 149,910

Total revenues 80,346 117,707 122,501 139,332

Net income 5,086 30,262 14,890 38,181

Comprehensive (loss) income ( 4,137 ) 57,270 21,444 41,704

Earnings per share - basic $ 0.23 $ 1.37 $ 0.66 $ 1.69

Earnings per share - diluted $ 0.22 $ 1.33 $ 0.65 $ 1.65

(in thousands, except per share data) First Second Third Fourth

Gross written premiums $ 84,626 $ 94,947 $ 97,984 $ 112,137

Total revenues 72,185 72,572 78,327 92,804

Net income 18,720 13,767 12,976 17,853

Comprehensive income 25,500 20,322 16,218 16,050

Earnings per share - basic $ 0.88 $ 0.65 $ 0.60 $ 0.81

Earnings per share - diluted $ 0.86 $ 0.63 $ 0.58 $ 0.79

Due to differences in weighted average common shares outstanding, quarterly earnings per share may not add up to the totals reported for the full year.

KINSALE CAPITAL GROUP, INC.

4 unchanged sentences

Fixed maturities:

Treasury securities and obligations of U.S.

government agencies

$ 6,936 $ 6,847 $ 6,847

Obligations of states, municipalities and political subdivisions

2 unchanged sentences

Asset-backed securities 299,810 301,775 301,775

Commercial mortgage-backed securities 66,110 70,969 70,969

Residential mortgage-backed securities

340,804 337,685 337,685

Commercial mortgage-backed securities 57,000 59,227 59,227

Total fixed maturities 1,371,519 1,392,066 1,392,066

1 unchanged sentence

Exchange traded funds 70,151 123,389 123,389

Nonredeemable preferred stock 30,726 31,612 31,612

Non-redeemable preferred stock 48,744 49,222 49,222

Total equity securities 118,895 172,611 172,611

15 unchanged sentences

Accounts payable and accrued expenses $ 121 $ 302

Income taxes payable — 434

Due to subsidiaries 47 —

Credit facility 42,696 42,570

19 unchanged sentences

Total revenues 7,002 5,709 4,502

Other operating expenses 6,624 5,215 4,055

Operating expenses 7,972 6,624 5,215

Other expenses 994 1,332 —

1 unchanged sentence

Loss before income taxes ( 1,964 ) ( 2,247 ) ( 713 )

( 2,247 ) ( 713 ) ( 840 )

Income tax benefit ( 3,424 ) ( 8,779 ) ( 2,714 )

2 unchanged sentences

Net income 152,659 88,419 63,316

Other comprehensive income (loss):

Equity in other comprehensive earnings (losses) of subsidiaries

27,862 14,774 ( 5,469 )

Other comprehensive (loss) income:

Equity in other comprehensive (losses) earnings of subsidiaries ( 23,255 ) 27,862 14,774

Total comprehensive income $ 129,404 $ 116,281 $ 78,090

28 unchanged sentences

Debt issuance costs

Net cash provided by (used in) financing activities

76,144 77,755 ( 4,098 )

Net cash (used in) provided by financing activities ( 11,140 ) 76,144 77,755

Net change in cash and cash equivalents 6,201 ( 6,331 ) 4,710

15 unchanged sentences

These condensed financial statements should be read in conjunction with the Company’s consolidated financial statements.

Certain prior year amounts have been reclassified to conform to the current year's presentation.

Estimates and assumptions

5 unchanged sentences

The Credit Facility has a maturity of May 28, 2024 .

Borrowings under the Credit Facility were used to fund construction of the Company’s new headquarters but may also be used for working capital and general corporate purposes.

Borrowings under the Credit Facility were used to fund construction of the Company’s new headquarters and may also be used for working capital and general corporate purposes.

Loans under the Credit Facility may be subject to varying rates of interest depending on whether the loan is a Eurodollar loan or an alternate base rate (ABR) loan, at the Company's election.

1 unchanged sentence

During the year ended December 31, 2020, the Company drew down $ 25.7 million on its Credit Facility.

As of December 31, 2020, there was $ 42.6 million outstanding under the Credit Facility, net of debt issuance cost of $ 0.4 million, with a weighted average interest rate of 1.98 %.

For the year ended December 31, 2020, total interest expense under the Credit Facility was $ 1.0 million, of which $ 0.8 million was capitalized as part of the real estate project under construction.

Interest paid was $ 0.8 million and $ 0.1 million for the years ending December 31, 2020 and 2019, respectively.

There were no credit agreements outstanding at December 31, 2018.

At December 31, 2021, there was $ 42.7 million outstanding under the Credit Facility, net of debt issuance cost of $ 0.3 million, with a weighted average interest rate of 1.92 %.

For the years ended December 31, 2021, 2020 and 2019, total interest expense under the Credit Facility was $ 1.0 million, $ 1.0 million and $ 0.2 million, respectively.

For the years ended December 31, 2020 and 2019, $ 0.8 million and $ 0.2 million of interest expense was capitalized as part of the real estate project under construction, respectively.

Interest paid was $ 0.9 million, $ 0.8 million and $ 0.1 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The Credit Agreement also contains representations and warranties and affirmative and negative covenants customary for financings of this type, as well as customary events of default.

5 unchanged sentences

Commitments and contingencies

Liabilities for loss contingencies, arising from noninsurance policy claims, assessments, litigation, fines, and penalties and other sources, are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.

Liabilities for loss contingencies, arising from non-insurance policy claims, assessments, litigation, fines, and penalties and other sources, are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.

Legal costs incurred in connection with loss contingencies are expensed as incurred.

14 unchanged sentences

Valuation allowance for deferred tax assets 1,592 1,899 — 3,491

Allowance for reinsurance recoverables 282 — — 282

Year Ended December 31, 2019:

6 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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data