8 unchanged sentences
We focus exclusively on the E&S market in the U.S., where we use our underwriting expertise to write coverages for hard-to-place, small- to medium-sized business risks and personal lines risks.
−Removed: We market and sell these insurance products in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S.
+Added: We sell these insurance products in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S.
Virgin Islands primarily through a network of independent insurance brokers.
We have an experienced and cohesive management team that has an average of over 30 years of relevant experience.
−Removed: Many of our employees and members of our management team have also worked together for decades at other E&S insurance companies.
We have one reportable segment, our Excess and Surplus Lines Insurance segment, which offers P&C insurance products through the E&S market.
In 2024, the percentage breakdown of our gross written premiums was 67.4% casualty and 32.6% property.
−Removed: Our commercial lines offerings include commercial property, excess casualty, small business casualty, construction, general casualty, allied health, products liability, small business property, life sciences, entertainment, energy, professional liability, management liability, environmental, excess professional, health care, public entity, commercial auto, inland marine, aviation, ocean marine, product recall, and railroad.
−Removed: We also write homeowners' coverage in the personal lines market, which in aggregate represented 2.5% of our gross written premiums in 2023.
+Added: Our commercial lines offerings and homeowner's coverage in the personal lines market represented 97.4% and 2.6% of our gross written premiums, respectively.
+Added: Refer to Note 15 to the consolidated financial statements for gross written premiums by underwriting division.
Our goal is to deliver long-term value for our stockholders by growing our business and generating attractive returns.
21 unchanged sentences
Policy fees are a flat charge to insureds and fee income is impacted primarily by the volume of business we write.
−Removed: In the period ended June 30, 2023, we reclassified policy fees to fee income.
−Removed: Historically, these fees were presented as a reduction to underwriting, acquisition and insurance expenses.
−Removed: We modified the definitions of the loss and expense ratios to include fee income in the denominator of each ratio.
−Removed: We have reclassified prior periods' results to conform to the current period's presentation.
−Removed: See Note 17 of the notes to the consolidated financial statements for further information regarding fee income.
Losses and loss adjustment expenses
16 unchanged sentences
Policy acquisition costs also include deferred underwriting expenses that are directly related to the successful acquisition of policies.
−Removed: The amortization of such policy acquisition costs is charged to expense in proportion to premium earned over the policy life.
+Added: The amortization of
+Added: such policy acquisition costs is charged to expense in proportion to premium earned over the policy life.
Other underwriting expenses represent the general and administrative expenses of our insurance business such as employment costs, telecommunication and technology costs, and legal and auditing fees.
18 unchanged sentences
Underwriting income is a non-GAAP financial measure.
−Removed: We define underwriting income as net income, excluding net investment income, net 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 income, other expenses and income tax
+Added: We define underwriting income as net income, excluding net investment income, net 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 income, other expenses and income tax expense.
See "—Reconciliation of Non-GAAP Financial Measures" for a reconciliation of net income in accordance with GAAP to underwriting income.
29 unchanged sentences
Change in fair value of equity securities 43,367 15,277 28,090 NM
−Removed: Net realized investment gains 6,040 1,191 4,849 407.1 %
+Added: Net realized investment gains 6,831 6,040 791 NM
Change in allowance for credit losses on investments 526 (187) 713 NM
Interest expense (10,134) (10,301) 167 (1.6) %
−Removed: Other income (expenses), net 479 (24) 503 NM
+Added: Other (expenses) income, net (2,042) 479 (2,521) NM
Income before taxes 514,716 384,017 130,699 34.0 %
20 unchanged sentences
Net income was $414.8 million for the year ended December 31, 2024 compared to $308.1 million for the year ended December 31, 2023, an increase of $106.8 million, or 34.6%.
−Removed: The increase in net income in 2023 over 2022 was primarily due to a combination of continued profitable growth, an increase in investment income driven by higher investment balances and higher interest rates and higher returns on equity investments.
+Added: The increase in net income in 2024 over 2023 was primarily due to a combination of continued profitable growth and strong investing results including higher investment income and higher unrealized gains on equity investments.
Underwriting income was $325.9 million for the year ended December 31, 2024 compared to $270.4 million for the year ended December 31, 2023, an increase of $55.5 million, or 20.5%.
−Removed: The increase in underwriting income was primarily due to a combination of premium growth, rate increases, favorable loss experience and lower net commissions.
+Added: The increase in underwriting income was primarily due to continued growth in the business offset in part by higher catastrophe losses.
The corresponding combined ratios were 76.4% for the year ended December 31, 2024 compared to 75.4% for the year ended December 31, 2023.
Gross written premiums were $1.9 billion for the year ended December 31, 2024 compared to $1.6 billion for the year ended December 31, 2023, an increase of $301.5 million, or 19.2%.
−Removed: The increase in gross written premiums for the year ended December 31, 2023 was primarily due to higher submission activity from brokers and higher rates across most lines of business, resulting from continued favorable conditions in the E&S market.
+Added: The increase in gross written premiums for the year ended December 31, 2024 was primarily due to higher submission activity from brokers and a favorable, yet increasingly competitive, pricing environment.
The average premium per policy written by us was $15,100 in 2024 compared to $15,200 in 2023.
Excluding our personal insurance division, which has relatively low premiums per policy written, the average premium per policy written was $15,900 in 2024 compared to $16,400 in 2023.
−Removed: The increase in the average premium per policy written was due to changes in the mix of business and higher rates on bound accounts during 2023 compared to the prior year.
Gross written premiums increased across substantially all of our underwriting divisions for the year ended December 31, 2024 and were most notable in the following lines of business:
−Removed: • Commercial Property, which represented approximately 26.3% of our gross written premiums in 2023, increased by $230.5 million, or 127.0%, for the year ended December 31, 2023;
• General Casualty, which represented approximately 9.0% of our gross written premiums in 2024, increased by $50.4 million, or 42.5%, for the year ended December 31, 2024;
• Excess Casualty, which represented approximately 13.1% of our gross written premiums in 2024, increased by $51.1 million, or 26.3%, for the year ended December 31, 2024;
−Removed: • Small Business Casualty, which represented approximately 11.1% of our gross written premiums in 2023, increased by $24.7 million, or 16.5%, for the year ended December 31, 2023 and
+Added: • Small Business Casualty, which represented approximately 10.5% of our gross written premiums in 2024, increased by $21.5 million, or 12.4%, for the year ended December 31, 2024;
+Added: • Commercial Property, which represented approximately 24.4% of our gross written premiums in 2024, increased by $44.2 million, or 10.7%, for the year ended December 31, 2024 and
• Construction, which represented approximately 7.8% of our gross written premiums in 2024, increased by $10.4 million, or 7.6%, for the year ended December 31, 2024.
−Removed: Net written premiums increased by $327.8 million, or 35.0%, to $1.3 billion for the year ended December 31, 2023 from $936.8 million for the year ended December 31, 2022.
+Added: Net written premiums increased by $212.7 million, or 16.8%, to $1.5 billion for the year ended December 31, 2024 from $1.3 billion for the year ended December 31, 2023.
The increase in net written premiums was largely due to higher gross written premiums for the year ended December 31, 2024.
Our net retention ratio was 79.0% for the year ended December 31, 2024 compared to 80.6% for the year ended December 31, 2023.
−Removed: The decrease in the net retention ratio was primarily due to higher premiums ceded under the commercial property quota share and excess casualty variable quota share reinsurance treaties as a result of growth in our property and excess casualty lines and a higher cession rate on the commercial property quota share effective with the June 2023 renewal.
−Removed: Net earned premiums were $1.1 billion for the year ended December 31, 2023 compared to $794.1 million for the year ended December 31, 2022, an increase of $278.4 million, or 35.1%.
+Added: The decrease in the net retention ratio was primarily due to a higher cession rate on the commercial property quota share treaty effective with the June 2023 renewal, offset in part by an increase in our retention on our casualty treaty effective with the June 2024 renewal.
+Added: Net earned premiums were $1.4 billion for the year ended December 31, 2024 compared to $1.1 billion for the year ended December 31, 2023, an increase of $277.9 million, or 25.9%.
As previously discussed, the increase was due to growth in gross written premiums in 2024 compared to 2023.
−Removed: Our loss ratio was 54.6% for the year ended December 31, 2023 compared to 56.3% for the year ended December 31, 2022.
−Removed: The decrease in the loss ratio for the year ended December 31, 2023 was due primarily to lower catastrophe losses incurred during the period, offset in part by lower relative net favorable development of loss reserves from prior accident years.
−Removed: During the year ended December 31, 2022, current year incurred losses and loss adjustment expenses included $26.6 million of net catastrophe losses primarily attributable to Hurricane Ian.
−Removed: During the year ended December 31, 2023, prior accident years developed favorably by $35.8 million, of which $49.0 million was attributable to the 2021 and 2022 accident years due to lower emergence of reported losses than expected across most lines of business.
−Removed: This favorable development was offset in part by adverse development largely from the 2017 through 2019 accident years due to long-tailed property damage claims within the construction-related primary casualty business that are more exposed to the increase in inflation.
−Removed: During the year ended December 31, 2022, loss reserves for prior accident years developed favorably by $35.9 million, of which $41.8 million was attributable to the 2020 and 2021 accident years due to lower emergence of reported losses than expected across most lines of business.
−Removed: This favorable development was offset in part by adverse development largely from the 2016 and 2018 accident years due to routine variability in reported losses and modest adjustments in actuarial assumptions.
−Removed: On an inception-to-date basis as of December 31, 2023, all accident years have developed favorably, with the exception of the 2011 accident year.
The following table summarizes the effect of the factors indicated above on the loss ratios for the years ended December 31, 2024 and 2023:
9 unchanged sentences
Total $ 772,899 55.8 % $ 600,219 54.6 %
+Added: Our loss ratio was 55.8% for the year ended December 31, 2024 compared to 54.6% for the year ended December 31, 2023.
+Added: The increase in the loss ratio for the year ended December 31, 2024 was due primarily to higher catastrophe losses incurred during the period and lower relative net favorable development of loss reserves from prior accident years.
+Added: During the year ended December 31, 2024, current year incurred losses and loss adjustment expenses included $25.5 million of net catastrophe losses primarily attributable to Hurricanes Milton, Helene and Francine and tornadoes in the Midwest.
+Added: During the year ended December 31, 2024, prior accident years developed favorably by $37.7 million, of which $57.6 million was attributable to the 2021 through 2023 accident years due to lower emergence of reported losses than expected across most lines of business.
+Added: This favorable development was offset in part by adverse development primarily from the 2017 through 2019 accident years due to construction defect claims that are more exposed to inflation, from the 2020 accident year due to a large property claim and more conservative actuarial assumptions in the 2021 through 2023 accident years for lines of business exposed to construction liability.
+Added: During the year ended December 31, 2023, prior accident years developed favorably by $35.8 million, of which $49.0 million was attributable to the 2021 and 2022 accident years due to lower emergence of reported losses than expected across most lines of business.
+Added: This favorable development was offset in part by adverse development largely from the 2017 through 2019 accident years due to construction defect claims that are more exposed to inflation.
Expense ratio
7 unchanged sentences
The expense ratio was 20.6% for the year ended December 31, 2024 compared to 20.8% for the year ended December 31, 2023.
−Removed: The decrease in the expense ratio was primarily due to lower relative net commissions due to higher ceding commissions earned under the commercial property quota share treaty as a result of commercial property premium growth and a higher cession rate on the commercial property quota share treaty effective June 2023.
+Added: The decrease in the expense ratio was primarily due to lower relative net commissions as a result of higher ceding commissions earned under the commercial property quota share treaty as a result of commercial property premium growth.
Direct commissions paid as a percent of gross written premiums was 14.7% and 14.5% for the years ended December 31, 2024 and 2023, respectively.
Investing results
−Removed: Our net investment income increased by 99.6% to $102.3 million for the year ended December 31, 2023 from $51.3 million for the year ended December 31, 2022, primarily due to growth in our investment portfolio largely generated from the investment of strong operating cash flows and higher interest rates relative to the prior year period.
The following table summarizes the components of net investment income, change in the fair value of equity securities, net realized investment gains and change in allowance for credit losses on investments for the years ended December 31, 2024 and 2023:
11 unchanged sentences
Change in allowance for credit losses on investments 526 (187) 713
−Removed: Net unrealized and realized investment gains (losses) 21,130 (26,898) 48,028
+Added: Net unrealized and realized investment gains 50,724 21,130 29,594
Total $ 201,011 $ 123,465 $ 77,546
+Added: Our net investment income increased by 46.9% to $150.3 million for the year ended December 31, 2024 from $102.3 million for the year ended December 31, 2023, primarily due to growth in our investment portfolio largely generated from the investment of strong operating cash flows and higher interest rates relative to the prior year period.
The weighted average duration of our investment portfolio, including cash equivalents, was 3.0 years and 2.8 years at December 31, 2024 and 2023, respectively.
Our investment portfolio, excluding cash equivalents and unrealized gains and losses, had a gross investment return of 4.4% as of December 31, 2024, compared to 4.0% as of December 31, 2023.
−Removed: During the year ended December 31, 2023, the increase in the fair value of equity securities of $15.3 million was comprised of unrealized gains related to ETFs and common stocks of $12.8 million and unrealized gains related to non-redeemable preferred stock of $2.5 million.
+Added: During the year ended December 31, 2024, the change in the fair value of equity securities of $43.4 million included appreciation of common stocks, ETFs and non-redeemable preferred stocks of $23.7 million, $16.1 million and $3.6 million, respectively, generally consistent with the changes in the broader U.S.
+Added: stock market.
+Added: During the year ended December 31, 2023, the change in the fair value of equity securities of $15.3 million included changes in unrealized gains related to ETFs and common stocks of $12.8 million and unrealized gains related to non-redeemable preferred stock of $2.5 million.
The change in the fair value of ETFs and common stocks during 2023 primarily reflected changes in the broader U.S.
stock market.
−Removed: During the year ended December 31, 2022, the decrease in the fair value of equity securities of $(27.7) million was comprised of higher unrealized losses related to ETF securities of $(19.6) million and higher unrealized losses related to non-redeemable preferred stock of $(8.1) million.
−Removed: The decrease in the fair value of our ETF and common stock portfolio reflected lower valuations in the broader U.S.
−Removed: stock market during the period.
−Removed: The change in unrealized losses during 2022 attributable to non-redeemable preferred stock reflected a higher interest rate environment.
We perform quarterly reviews of all available-for-sale securities within our investment portfolio to determine whether the decline in a security's fair value is deemed to be a credit loss.
−Removed: Based on our review, we recorded credit loss expense of $0.2 million and $0.4 million for the year ended December 31, 2023 and 2022, respectively.
+Added: Based on our review, we recorded a reduction to credit loss expense of $0.5 million for the year ended December 31, 2024 compared to credit loss expense of $0.2 million for the year ended December 31, 2023.
See Note 2 of the notes to the consolidated financial statements for further information regarding credit losses.
1 unchanged sentence
Our effective tax rate was approximately 19.4% for the year ended December 31, 2024 compared to 19.8% for the year ended December 31, 2023.
−Removed: The effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefits from stock-based compensation and tax-exempt investment income.
+Added: The effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefits from stock-based compensation, including stock options exercised, and tax-exempt investment income.
Return on equity
Our return on equity was 32.3% for the year ended December 31, 2024 compared to 33.6% for the year ended December 31, 2023.
−Removed: Operating return on equity was 31.8% for 2023, an increase from 25.0% for 2022.
−Removed: The increase in operating return on equity was attributable largely to continued profitable growth from continuing favorable market conditions and rate increases.
+Added: Operating return on equity was 29.2% for 2024, a decrease from 31.8% for 2023.
+Added: The decrease in operating return on equity was due primarily to higher average stockholders' equity as a result of continued profitable growth.
Liquidity and Capital Resources
1 unchanged sentence
We are organized as a Delaware holding company with our operations primarily conducted by our wholly-owned insurance subsidiary, Kinsale Insurance, which is domiciled in Arkansas.
−Removed: Accordingly, Kinsale may receive cash through (1) loans from banks, (2) issuance of equity and debt securities, (3) corporate service fees from our insurance subsidiary, (4) payments from our subsidiaries pursuant to our consolidated tax allocation agreement and other transactions and (5) dividends from our insurance subsidiary.
−Removed: We may use the proceeds from these sources to contribute funds to Kinsale Insurance in order to support premium growth, reduce our reliance on reinsurance, pay dividends and taxes and for other business purposes.
+Added: Accordingly, Kinsale primarily receives cash through (1) loans from banks, (2) issuance of equity and debt securities, (3) corporate service fees from our insurance subsidiary, (4) payments from our subsidiaries pursuant to our consolidated tax allocation agreement and other transactions and (5) dividends from our insurance subsidiary.
+Added: We may use the proceeds from these sources to contribute funds to Kinsale Insurance in order to support premium growth, reduce our reliance on reinsurance, pay dividends and taxes, repurchase shares and for other business purposes.
We receive corporate service fees from Kinsale Insurance to reimburse us for most of the operating expenses that we incur.
8 unchanged sentences
In the future, state insurance regulatory authorities that have jurisdiction over the payment of dividends by Kinsale Insurance may adopt statutory provisions more restrictive than those currently in effect.
−Removed: Kinsale Insurance did not pay dividends to us during 2023.
+Added: Kinsale Insurance paid $47.0 million of dividends to us during 2024.
See also "Risk Factors — Risks Related to Our Business and Our Industry — Because we are a holding company and substantially all of our operations are conducted by our insurance subsidiary, our ability to pay dividends depends on our ability to obtain cash dividends or other permitted payments from our insurance subsidiary."
1 unchanged sentence
Management believes there is sufficient liquidity available at the holding company and in its insurance subsidiary, Kinsale Insurance, as well as in its other operating subsidiaries, to meet its operating cash needs and obligations for the next 12 months.
−Removed: Real Estate Investment
In December of 2022, we acquired real estate property adjacent to our current headquarters for $76.6 million.
2 unchanged sentences
Upon this determination, we reclassified the carrying value of the building to property and equipment within other assets on the consolidated balance sheet.
−Removed: We have plans for future capital expenditures related to the renovation of the building that we plan to fund through draw downs on our Credit Facility.
+Added: The building is currently under development for the Company's future headquarters and is expected to be completed during the fourth quarter of 2025.
+Added: Capital expenditures related to the renovation of the building may be funded through draw downs on our Credit Facility.
The remaining $15.0 million presented on the consolidated balance sheet represents the portion of remaining real estate assets held for investment purposes.
3 unchanged sentences
See Note 11 for further information regarding the Note Purchase Agreement.
−Removed: In July 2022, we entered into an Amended and Restated Credit Agreement, which extended the maturity date to July 22, 2027, and increased the aggregate commitment to $100.0 million, with the option to increase the aggregate commitment by $30.0 million, subject to certain conditions.
+Added: In July 2022, we entered into an Amended and Restated Credit Agreement, which extended the maturity date to July 22, 2027, and increased the aggregate commitment to $100.0 million, with the option to increase the aggregate
+Added: commitment by $30.0 million, subject to certain conditions.
Borrowings under the Amended and Restated Credit Agreement may be used for general corporate purposes (which may include, without limitation, to fund future growth, to finance working capital needs, to fund capital expenditures, and to refinance, redeem or repay indebtedness).
6 unchanged sentences
We received net proceeds from the offering of $47.5 million, which was used for general corporate purposes, including to fund organic growth.
+Added: Share repurchase program
+Added: In October 2024, our Board of Directors authorized a share repurchase program authorizing the repurchase of up to $100.0 million of our common stock.
+Added: The shares may be repurchased from time to time in open market purchases, privately-negotiated transactions, block purchases, accelerated share repurchase agreements or a combination of methods and pursuant to safe harbors provided by Rule 10b-18 and Rule 10b5-1 under the Securities Exchange Act of 1934.
+Added: The timing, manner, price and amount of any repurchases under the share repurchase program will be determined by us in our discretion.
+Added: The stock repurchase program does not require us to repurchase any specific number of shares, and may be modified, suspended or terminated at any time.
+Added: At December 31, 2024, the Company had $90.0 million of capacity remaining under its share repurchase program.
Our most significant source of cash is from premiums received from our insureds, which, for most policies, we receive at the beginning of the coverage period.
19 unchanged sentences
For the year ended December 31, 2024, net cash used in investing activities of $960.1 million reflected growth in our business operations.
+Added: For the year ended December 31, 2024, funds from operations were used to purchase fixed-maturity securities, particularly corporate bonds and asset- and mortgage-backed securities of $1.6 billion, and to a lesser extent, municipal bonds of $3.7 million and sovereigns of $0.8 million.
+Added: During 2024, we received proceeds of $289.4 million from sales of fixed-maturity securities, largely corporate bonds and mortgage- and asset-backed securities and $452.4 million from redemptions of asset- and mortgage-backed securities and corporate and municipal bonds.
+Added: For the year ended December 31, 2024, purchases of equity securities of $156.5 million primarily consisted of common stocks and, to a lesser extent, ETFs.
+Added: Proceeds from sales of equity securities of $34.4 million consisted of primarily ETFs and common stocks and, to a lesser extent, calls of non-redeemable preferred stock.
+Added: For the year ended December 31, 2023 , net cash used in investing activities was $860.9 million.
For the year ended December 31, 2023, funds from operations were used to purchase fixed-maturity securities, particularly corporate bonds and asset- and mortgage-backed securities of $1.3 billion, and to a lesser extent, sovereigns and government agency bonds of $26.3 million and municipal bonds of $4.9 million.
5 unchanged sentences
Net cash used in investing activities also included proceeds of $62.0 million from the sale of a portion of our real estate investment property in the third quarter of 2023.
−Removed: For the year ended December 31, 2022 , net cash used in investing activities was $708.6 million.
−Removed: For the year ended December 31, 2022, funds from operations were used to purchase fixed-maturity securities, particularly corporate bonds and asset- and mortgage-backed securities of $713.2 million, and to a lesser extent, municipal bonds of $22.2 million and sovereigns of $16.0 million.
−Removed: During 2022, we received proceeds of $63.1 million from sales of fixed-maturity securities, largely corporate bonds and mortgage- and asset-backed securities and $110.4 million from redemptions of asset- and mortgage-backed securities and corporate bonds.
−Removed: For the year ended December 31, 2022, purchases of common stocks and ETFs were $10.0 million and $1.5 million, respectively.
−Removed: In addition, net purchases of short-term investments of $40.6 million consisted of U.S.
−Removed: Treasuries and corporate bonds.
−Removed: Net cash used in investing activities also included the purchase of a real estate investment property for $76.6 million in December of 2022 and property and equipment of $6.9 million.
+Added: For the year ended December 31, 2024, net cash used in financing activities was $29.7 million and reflected dividends of $0.60 per common share, or $13.9 million in the aggregate and share repurchases of $10.0 million.
+Added: Payroll taxes withheld and remitted on restricted stock awards were $7.0 million, offset in part by proceeds received from our equity compensation plan of $1.3 million.
For the year ended December 31, 2023 , net cash used in financing activities was $28.5 million and reflected proceeds of $50.0 million from the issuance of the Series B Note on September 18, 2023.
1 unchanged sentence
Financing activities also reflected dividends of $0.56 per common share, or $13.0 million in the aggregate.
−Removed: Payroll taxes withheld and remitted on restricted stock awards were $4.3 million, offset in part by proceeds received from our equity compensation plans of $0.9 million.
−Removed: For the year ended December 31, 2022 , net cash provided by financing activities was $186.0 million and reflected proceeds of $125.0 million from the issuance of the Series A Notes on July 22, 2022, a portion of which were used to pay off the outstanding loans of $43.0 million under the Amended and Restated Credit Agreement on July 25, 2022, and proceeds of $47.5 million from our equity offering in November 2022.
−Removed: In December 2022, we drew down $73.0 million from our revolving credit facility to finance the purchase of our real estate investment property.
−Removed: Financing activities also reflected dividends of $0.52 per common share, or $11.9 million in the aggregate.
−Removed: Proceeds received from our equity compensation plans were $1.1 million, offset by payroll taxes withheld and remitted on restricted stock awards of $3.3 million for the year ended December 31, 2022 .
+Added: Proceeds received from our equity compensation plan were $0.9 million, offset by payroll taxes withheld and remitted on restricted stock awards of $4.3 million for the year ended December 31, 2023 .
We enter into reinsurance contracts to limit our exposure to potential large losses.
48 unchanged sentences
See Note 11 to the consolidated financial statements for further details regarding our debt obligations.
+Added: Real estate construction costs
+Added: We are currently renovating an existing office building for our new corporate headquarters and have entered into an agreement under which we have incurred obligations relating to the renovation.
+Added: We expect the construction costs to be approximately $59.0 million and are currently targeting a fourth quarter 2025 completion date.
+Added: At December 31, 2024 we incurred approximately $19.5 million of construction costs toward the project.
+Added: Our contractual obligations include payments which will become due under the construction agreement and project development.
Financial Condition
Stockholders' equity
−Removed: At December 31, 2023, total stockholders' equity and tangible stockholders' equity were $1.1 billion, compared to total stockholders' equity of $745.4 million and tangible stockholders' equity of $742.7 million at December 31, 2022.
−Removed: The increase in both total stockholders' equity and tangible stockholders' equity in 2023 compared to 2022 was primarily due to profits generated during the period, a decrease in unrealized losses on available-for-sale investments, net of taxes and net activity related to stock-based compensation plans.
−Removed: These increases were offset in part by dividends declared during 2023.
+Added: At December 31, 2024, total stockholders' equity and tangible stockholders' equity were $1.5 billion, compared to total stockholders' equity and tangible equity of $1.1 billion at December 31, 2023.
+Added: The increase in both total
+Added: stockholders' equity and tangible stockholders' equity in 2024 compared to 2023 was primarily due to profits generated during the period and net activity related to stock-based compensation plans.
+Added: These increases were offset in part by dividends declared during 2024, share repurchases and an increase in unrealized losses on available-for-sale investments, net of taxes.
Tangible stockholders’ equity is a non-GAAP financial measure.
16 unchanged sentences
Available-for-sale investments are carried at fair value with unrealized gains and losses on those securities, net of applicable taxes, reported as a separate component of accumulated other comprehensive income.
−Removed: At December 31, 2023, we also held $234.8 million of equity securities, which were comprised of ETFs, common stocks and non-redeemable preferred stock, $126.7 million of cash and cash equivalents, $14.8 million of real estate investments and $5.6 million of short-term investments.
+Added: At December 31, 2024, we also held $398.4 million of equity securities, which were comprised of common stocks, ETFs and non-redeemable preferred stock, $113.2 million of cash and cash equivalents, $15.0 million of real estate investments and $3.7 million of short-term investments.
Our fixed-maturity securities, including cash equivalents, had a weighted average duration of 3.0 years and an average rating of "AA-" at December 31, 2024.
81 unchanged sentences
Change in the fair value of equity securities, before taxes (43,367) (15,277)
−Removed: Income tax expense (benefit) (1)
−Removed: 3,208 (5,822)
+Added: Income tax expense (1)
Change in the fair value of equity securities, after taxes (34,260) (12,069)
3 unchanged sentences
Change in allowance for credit losses on investments, before taxes (526) 187
−Removed: Income tax benefit (1)
+Added: Income tax expense (benefit) (1)
Change in allowance for credit losses on investments, after taxes (416) 148
31 unchanged sentences
The reserves for unpaid losses and loss adjustment expenses are the largest and most complex estimate in our consolidated balance sheet.
−Removed: The reserves for unpaid losses and loss adjustment expenses represent our estimated ultimate cost of all unreported and reported but unpaid insured claims and the cost to adjust these losses that have occurred as of or before the consolidated balance sheet date.
−Removed: As a relatively new company, our historical loss experience is limited.
+Added: The reserves for unpaid losses and loss adjustment expenses represent our estimated ultimate cost of all unreported and reported but unpaid insured claims and the cost to adjust these claims that have occurred as of or before the consolidated balance sheet date.
We estimate the reserves using individual case-basis valuations of reported claims and statistical analyses.
−Removed: Those estimates are based on our historical information, industry information and our estimates of future trends in variable factors such as loss severity, loss frequency and other factors such as inflation.
+Added: The estimates are based on our historical data, industry data, and our analysis of future trends in loss severity, loss frequency, and other factors such as inflation.
We regularly review our estimates and adjust them as necessary as experience develops or as new information becomes known to us.
Such adjustments are included in current operations.
−Removed: Additionally, during the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward.
−Removed: Even after such adjustments, ultimate liability may exceed or be less than the revised estimates.
+Added: Additionally, during the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim.
+Added: Even after such adjustments, ultimate liability may be higher or lower than the revised estimates.
Accordingly, the ultimate settlement of losses and the related loss adjustment expenses may vary significantly from the estimate included in our consolidated financial statements.
2 unchanged sentences
Our gross reserves for losses and loss adjustment expenses at December 31, 2024 were $2.3 billion, and of this amount, 90.4% related to IBNR.
−Removed: Our reserves for losses and loss adjustment expenses, net of reinsurance, at December 31, 2023 were $1.5 billion, and of this amount, 90.5% related
−Removed: A 5% change in net IBNR reserves would equate to a $65.7 million change in the reserve for losses and loss adjustment expenses at such date, as well as a $51.9 million change in net income, a 4.8% change in both stockholders' equity and tangible stockholders' equity, in each case at or for the year ended December 31, 2023.
+Added: Our reserves for losses and loss adjustment expenses, net of reinsurance, at December 31, 2024 were $2.0 billion, and of this amount, 90.0% related to IBNR.
+Added: A 5% change in net IBNR reserves would equate to a $88.4 million change in the reserve for losses and
+Added: loss adjustment expenses at such date, as well as a $69.8 million change in net income, a 4.7% change in both stockholders' equity and tangible stockholders' equity, in each case at or for the year ended December 31, 2024.
The following tables summarize our reserves for unpaid losses and loss adjustment expenses, on a gross basis and net of reinsurance, at December 31, 2024 and 2023:
18 unchanged sentences
IBNR reserves are determined using actuarial methods to estimate losses that have occurred but have not yet been reported to us.
−Removed: We principally use the incurred Bornhuetter-Ferguson actuarial method ("BF method") to arrive at our loss reserve estimates for each line of business.
−Removed: This method estimates the reserves based on our initial expected loss ratio and expected reporting patterns for losses.
−Removed: Because we have a limited number of years of loss experience compared to the period over which we expect losses to be reported, we use industry and peer-group data, in addition to our own data, as a basis for selecting our expected reporting patterns.
−Removed: Since the incurred BF method does not directly use reported losses in the estimation of IBNR, it is less sensitive to our level of reported losses than other actuarial methods.
−Removed: This method avoids some of the distortions that could result from a large loss development factor being applied to a small base of reported losses to calculate ultimate losses.
−Removed: However, this method will react more slowly than some other loss development methods if reported loss experience deviates significantly from our expected losses.
+Added: We use several actuarial methods to arrive at our IBNR reserve estimates for each line of business.
+Added: These methods estimate the reserves based on a variety of information including initial expected loss ratios, loss development patterns, paid losses, reported losses, claim counts and price indices.
+Added: We use industry and peer-group data, in addition to our own data, as a basis for selecting our loss development patterns.
We reserve for large catastrophes after an event has occurred.
4 unchanged sentences
The Reserve Committee meets quarterly to review the actuarial recommendations made by the Chief Actuary.
−Removed: In establishing the actuarial recommendation for the reserves for losses and loss adjustment expenses, our actuary estimates an initial expected ultimate loss ratio for our statutory lines of business by accident year.
+Added: In establishing the actuarial recommendation for the reserves for losses and loss adjustment expenses, our actuary estimates an initial expected ultimate loss ratio for each line of business by accident year.
Input from our underwriting and claims departments, including premium pricing assumptions and historical experience, is considered by our actuary in estimating the initial expected loss ratios.
−Removed: During each quarter, the Reserve Committee reviews the emergence of actual losses relative to expectations by line of business to assess whether the assumptions used in the reserving process continue to form a reasonable basis for the projection of liabilities for those product lines.
+Added: During each quarter, the Reserve Committee
+Added: reviews the emergence of actual losses relative to expectations by line of business to assess whether the assumptions used in the reserving process continue to form a reasonable basis for the projection of liabilities for those product lines.
Our reserving methodology uses a loss reserving model that calculates a point estimate for our ultimate losses.
Although we believe that our assumptions and methodology are reasonable, our ultimate payments may vary, potentially materially, from the estimates we have made.
−Removed: In addition, we retain an independent actuary annually to review our reserve levels.
+Added: In addition, we retain an independent actuary annually to review our estimate of reserves.
The independent actuary is not involved in the establishment and recording of our loss reserve.
−Removed: The actuarial consulting firm prepares its own estimate of our reserves for loss and loss adjustment expenses, and we compare their estimate to the reserves for losses and loss adjustment expenses reviewed and approved by the Reserve Committee in order to gain additional comfort on the adequacy of those reserves.
+Added: The actuarial consulting firm prepares its own estimate of unpaid loss and loss adjustment expenses, and we compare its estimate to the reserves for losses and loss adjustment expenses reviewed and approved by the Reserve Committee to gain additional comfort on the adequacy of those reserves.
While we believe that loss reserves at December 31, 2024 are adequate, new information, events, or circumstances may result in ultimate losses that are materially greater or less than our estimates.
3 unchanged sentences
A higher expected loss ratio results in a higher ultimate loss estimate, and vice versa.
−Removed: Assumed loss development patterns are another significant assumption in estimating loss reserves.
+Added: Estimated loss development patterns are another significant assumption in estimating loss reserves.
Accelerating a loss development pattern results in lower ultimate losses, as the estimated proportion of losses already incurred would be higher.
−Removed: The uncertainty in estimating the loss development patterns is generally greater for a company with a relatively limited operating history, therefore, we rely on industry benchmarks to a certain extent when establishing loss reserve estimates.
+Added: We utilize industry benchmarks and peer group data to supplement our own data when estimating loss development patterns.
Each of the impacts described below is estimated individually, without consideration for any correlation among key indicators or among lines of business.
−Removed: Therefore, it would be inappropriate to take each of the amounts described below and add them together in an attempt to estimate volatility for our reserves in total.
+Added: Therefore, it would be inappropriate to take each of the amounts described below and add them together to estimate volatility for our reserves in total.
For any one reserving line of business, the estimated variation in reserves due to changes in key indicators is a reasonable estimate of possible variation that may occur in the future.
60 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.