What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-20 compared with 2025-02-21 · 65 added, 71 removed, 560 unchanged (20% of the section changed)

113 unchanged sentences

Interest expense (10,646) (10,134) (512) 5.1 %

Other (expenses) income, net (2,042) 479 (2,521) NM

Other income (expenses), net 365 (2,042) 2,407 NM

Income before taxes 634,302 514,716 119,586 23.2 %

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Net income was $503.6 million for the year ended December 31, 2025 compared to $414.8 million for the year ended December 31, 2024, an increase of $88.8 million, or 21.4%.

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.

The increase in net income in 2025 over 2024 was primarily due to a combination of continued profitable growth and strong investing results including higher investment income and higher returns on equity investments.

Underwriting income was $389.2 million for the year ended December 31, 2025 compared to $325.9 million for the year ended December 31, 2024, an increase of $63.3 million, or 19.4%.

The increase in underwriting income was primarily due to continued growth in the business offset in part by higher catastrophe losses.

The increase in underwriting income was primarily due to continued growth in the business and higher favorable development of loss reserves from prior accident years offset in part by higher catastrophe losses incurred.

The corresponding combined ratios were 75.9% for the year ended December 31, 2025 compared to 76.4% for the year ended December 31, 2024.

Gross written premiums were $2.0 billion for the year ended December 31, 2025 compared to $1.9 billion for the year ended December 31, 2024, an increase of $106.8 million, or 5.7%.

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.

Gross written premiums in our Commercial Property Division, our largest division, decreased 17.9% relative to the prior year period due to rate declines and an increasingly competitive environment including from standard carriers.

Excluding our Commercial Property Division, gross written premiums grew 13.3% due primarily to continued strong submission flow from brokers across most divisions.

The average premium per policy written by us was $13,400 in 2025 compared to $15,100 in 2024.

Excluding our personal insurance division, which has relatively low premiums per policy written, the average premium per policy written was $14,000 in 2025 compared to $15,900 in 2024.

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:

The decrease in average premium per policy was due primarily to a decrease in gross written premiums in our Commercial Property Division.

Gross written premiums increased across the majority of our underwriting divisions for the year ended December 31, 2025 and were most notable in the following lines of business:

• General Casualty, which represented approximately 10.5% of our gross written premiums in 2025, increased by $38.7 million, or 22.9%, for the year ended December 31, 2025;

• Excess Casualty, which represented approximately 14.0% of our gross written premiums in 2025, increased by $31.9 million, or 13.0%, for the year ended December 31, 2025;

• 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;

• 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.

• Small Business Property, which represented approximately 5.2% of our gross written premiums in 2025, increased by $25.6 million, or 33.4%, for the year ended December 31, 2025;

• Entertainment, which represented approximately 3.6% of our gross written premiums in 2025, increased by $14.9 million, or 27.0%, for the year ended December 31, 2025;

• Allied Health, which represented approximately 4.9% of our gross written premiums in 2025, increased by $13.9 million, or 16.8%, for the year ended December 31, 2025.

Net written premiums increased by $138.7 million, or 9.4%, to $1.6 billion for the year ended December 31, 2025 from $1.5 billion for the year ended December 31, 2024.

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 81.7% for the year ended December 31, 2025 compared to 79.0% for the year ended December 31, 2024.

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.

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.

The increases in net written premiums and our retention ratio were largely due to higher gross written premiums and an increase in the retention on our reinsurance treaties for the year ended December 31, 2025.

Net written premiums increased across the majority of our underwriting divisions for the year ended December 31, 2025.

Changes in net written premium were most notable in the following lines of business:

• Excess Casualty, which represented approximately 10.9% of our net written premiums in 2025, increased by $41.1 million, or 30.3%, for the year ended December 31, 2025;

• General Casualty, which represented approximately 12.9% of our net written premiums in 2025, increased by $38.7 million, or 22.9%, for the year ended December 31, 2025;

• Small Business Property, which represented approximately 4.8% of our net written premiums in 2025, increased by $18.0 million, or 29.9%, for the year ended December 31, 2025;

• Entertainment, which represented approximately 4.3% of our net written premiums in 2025, increased by $14.9 million, or 27.0%, for the year ended December 31, 2025 and

• Commercial Property, which represented approximately 11.1% of our net written premiums in 2025, decreased by $44.8 million, or 19.9%, for the year ended December 31, 2025.

Net earned premiums were $1.6 billion for the year ended December 31, 2025 compared to $1.4 billion for the year ended December 31, 2024, an increase of $225.4 million, or 16.7% due primarily to continued earning of premium from prior-period growth in gross written premiums and higher net retention levels.

The following table summarizes the effect of the factors indicated above on the loss ratios for the years ended December 31, 2025 and 2024:

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Our loss ratio was 55.1% for the year ended December 31, 2025 compared to 55.8% for the year ended December 31, 2024.

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.

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.

The decrease in the loss ratio for the year ended December 31, 2025 was due primarily to higher relative net favorable development of loss reserves from prior accident years.

During the year ended December 31, 2025, current year incurred losses and loss adjustment expenses included $30.4 million of net catastrophe losses primarily attributable to the Palisades Fire.

During the year ended December 31, 2025, prior accident years developed favorably by $62.8 million, of which $70.9 million was attributable to the 2020 through 2024 accident years due to lower emergence of reported losses than expected across most lines of business, particularly in our property lines of business.

This favorable development was offset in part by adverse development primarily in our construction liability business in the 2016 through 2019 accident years and adjustments to actuarial assumptions in the 2020 through 2024 accident years to reflect inflation uncertainty around construction defect exposures.

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.

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.

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.

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.

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.

Expense ratio

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The expense ratio was 20.8% for the year ended December 31, 2025 compared to 20.6% for the year ended December 31, 2024.

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.

The increase in the expense ratio was primarily due to lower ceding commissions due to increased retention on our reinsurance treaties offset in part by routine variability in other underwriting expenses.

Direct commissions paid as a percent of gross written premiums was 14.8% and 14.7% for the years ended December 31, 2025 and 2024, respectively.

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Total $ 255,416 $ 201,011 $ 54,405

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.

Our net investment income increased by 27.9% to $192.2 million for the year ended December 31, 2025 from $150.3 million for the year ended December 31, 2024, primarily due to growth in our investment portfolio largely generated from the investment of strong operating cash flows.

The weighted average duration of our investment portfolio, including cash equivalents, was 4.0 years and 3.0 years at December 31, 2025 and 2024, 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.

Our investment portfolio, excluding cash equivalents and unrealized gains and losses, had a gross investment return of 4.4% as of December 31, 2025 and December 31, 2024.

During the year ended December 31, 2025, the change in the fair value of equity securities of $58.8 million included appreciation of common stocks, ETFs and non-redeemable preferred stocks of $34.0 million, 24.2 million and $0.6 million, respectively, generally consistent with the changes in the broader U.S.

stock market.

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.

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.

stock market.

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.

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.

Based on our review, we recorded credit loss expense of less than $0.1 million for the year ended December 31, 2025 compared to a reduction to credit loss expense $0.5 million for the year ended December 31, 2024.

See Note 2 of the notes to the consolidated financial statements for further information regarding credit losses.

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Our effective tax rate was approximately 20.6% for the year ended December 31, 2025 compared to 19.4% for the year ended December 31, 2024.

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.

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

The effective tax rate was higher for the year ended December 31, 2025 compared to the year ended December 31, 2024 due primarily to a lower volume of stock option exercises.

Return on equity

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Operating return on equity was 26.4% for 2025, a decrease from 29.2% for 2024.

The decrease in operating return on equity was due primarily to higher average stockholders' equity as a result of continued profitable growth.

The decrease in operating return on equity was due primarily to higher average stockholders' equity as a result of profitable growth and an increase in the fair value of the Company's investment portfolio offset in part by share repurchases.

Liquidity and Capital Resources

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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.

In December of 2022, we acquired real estate property adjacent to our current headquarters for $76.6 million.

The property is comprised of two office buildings totaling over 580,000 square feet and a parking deck situated on approximately 29 acres of land.

During 2023, we sold one office building and the parking deck for approximately $62.0 million in cash, net of seller’s costs, and determined we would occupy the remaining building for future expansion of our operations.

Upon this determination, we reclassified the carrying value of the building to property and equipment within other assets on the consolidated balance sheet.

The building is currently under development for the Company's future headquarters and is expected to be completed during the fourth quarter of 2025.

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.

In July 2022, we entered into a Note Purchase and Private Shelf Agreement (the "Note Purchase Agreement"), which provides for the issuance of senior promissory notes with an aggregate principal amount of up to $150.0 million.

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See Note 11 for further information regarding the Note Purchase Agreement.

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.

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).

See Note 11 for further information regarding the Amended and Restated Credit Agreement.

In December 2025, the covenants limiting restricted payments under the Note Purchase Agreement and Amended and Restated Credit Agreement were amended to allow the Company to make restricted payments so long as at the time of the declaration of such restricted payment, no event of default under the Note Purchase Agreement has occurred and is continuing or would arise after giving effect, on a pro forma basis, to such restricted payment if such restricted payment were to be made at such time of declaration.

Shelf registration

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The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements.

In November 2022, we completed an underwritten public offering and sold and issued 155,000 shares of our common stock at a price of $308.30 per share, to the underwriter.

We received net proceeds from the offering of $47.5 million, which was used for general corporate purposes, including to fund organic growth.

Share repurchase program

Share repurchase programs

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.

This share repurchase program was exhausted in October 2025.

In December 2025, our Board of Directors authorized a new share repurchase program authorizing the repurchase of up to $250.0 million of our common stock.

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.

The timing, manner, price and amount of any repurchases under the share repurchase program will be determined by us in our discretion.

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.

At December 31, 2024, the Company had $90.0 million of capacity remaining under its share repurchase program.

The share repurchase program does not require us to repurchase any specific number of shares, and may be modified, suspended or terminated at any time.

The cost of treasury stock acquired pursuant to common share repurchases includes the 1% excise tax imposed on common share repurchase activity, net of common share issuances, as part of the Inflation Reduction Act of 2022.

At December 31, 2025, the Company had $250.0 million of capacity remaining under the current 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.

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For the year ended December 31, 2025, net cash used in investing activities of $922.2 million reflected growth in our business operations.

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.

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.

For the year ended December 31, 2025, funds from operations were used to purchase fixed-maturity securities, particularly mortgage- and asset-backed securities and corporate bonds of $2.5 billion.

During 2025, we received proceeds of $1.2 billion from sales of fixed-maturity securities, largely corporate bonds, asset- and mortgage-backed securities and, to a lesser extent, municipal bonds and U.S.

treasuries and $626.1 million from redemptions of asset- and mortgage-backed securities and corporate and municipal bonds.

For the year ended December 31, 2025, purchases of equity securities of $183.2 million primarily consisted of common stocks and, to a lesser extent, ETFs.

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.

Proceeds from sales of equity securities of $14.6 million consisted primarily of sales of common stocks.

For the year ended December 31, 2024 , net cash used in investing activities was $960.1 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.

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.

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 bonds.

For the year ended December 31, 2023, purchases of equity securities of $86.6 million primarily consisted of common stocks.

Proceeds from sales of equity securities of $30.6 million consisted of primarily ETFs and common stocks.

In addition, net sales of short-term investments of $36.7 million consisted of U.S.

Treasuries, government agency and corporate bonds.

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.

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.

Proceeds from sales of equity securities of $34.4 million consisted of common stocks and, to a lesser extent, calls of non-redeemable preferred stock.

For the year ended December 31, 2025, net cash used in financing activities was $71.4 million and reflected dividends of $0.68 per common share, or $15.8 million in the aggregate and share repurchases of $90.0 million.

Payroll taxes withheld and remitted on restricted stock awards were $6.3 million, offset in part by proceeds received from our equity compensation plan of $0.7 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.

Proceeds from the sale of our real estate investment were used to pay down $62.0 million from our Credit Facility.

Financing activities also reflected dividends of $0.56 per common share, or $13.0 million in the aggregate.

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 .

In addition, we drew down $40.0 million from our revolving credit facility primarily to fund construction of our new corporate headquarters which was completed in November 2025 and for general corporate purposes.

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.

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.

We enter into reinsurance contracts to limit our exposure to potential large losses.

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When we write property insurance, we buy reinsurance to significantly mitigate our risk to large losses.

We use sophisticated computer models to analyze the risk of severe losses from weather-related events and earthquakes.

We measure exposure to these catastrophe losses in terms of PML, which is an estimate of what level of loss we would expect to experience in a windstorm or earthquake event occurring once in every 100 or 250 years.

We use sophisticated third-party stochastic models to analyze the risk of severe losses from weather-related events and earthquakes.

We measure exposure to these catastrophe losses in terms of PML, which is an estimate of what level of loss we would expect to experience in a weather-related or earthquake event occurring once in every 100 or 250 years.

We manage this PML by purchasing catastrophe reinsurance coverage.

Effective June 1, 2025, we purchased catastrophe reinsurance coverage of $250.0 million per event in excess of our $75.0 million per event retention.

Our property catastrophe reinsurance includes a reinstatement provision which requires us to pay reinstatement premiums after a loss has occurred in order to preserve coverage.

property catastrophe reinsurance includes a reinstatement provision which requires us to pay reinstatement premiums after a loss has occurred in order to preserve coverage.

Including the reinstatement provision, the maximum aggregate loss recovery limit is $500.0 million and is in addition to the coverage provided by our other property reinsurance.

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See Note 11 to the consolidated financial statements for further details regarding our debt obligations.

Real estate construction costs

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.

We expect the construction costs to be approximately $59.0 million and are currently targeting a fourth quarter 2025 completion date.

At December 31, 2024 we incurred approximately $19.5 million of construction costs toward the project.

Our contractual obligations include payments which will become due under the construction agreement and project development.

Financial Condition

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At December 31, 2025, total stockholders' equity and tangible stockholders' equity were $2.0 billion, compared to total stockholders' equity and tangible equity of $1.5 billion at December 31, 2024.

The increase in both total

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.

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.

The increase in both total stockholders' equity and tangible stockholders' equity in 2025 compared to 2024 was primarily due to profits generated during the period, an increase in the fair value of our fixed-maturity investments, net of taxes and net activity related to stock-based compensation plans.

These increases were offset in part by share repurchases and dividends declared during 2025.

Tangible stockholders’ equity is a non-GAAP financial measure.

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Our fixed-maturity securities, including cash equivalents, had a weighted average duration of 4.0 years and an average rating of "AA-" at December 31, 2025.

Our investment portfolio, excluding cash equivalents and real estate investments, had a gross investment return of 4.4% as of December 31, 2024, compared to 4.0% as of December 31, 2023.

Our investment portfolio, excluding cash equivalents and real estate investments, had a gross investment return of 4.4% as of December 31, 2025 and December 31, 2024.

At December 31, 2025, the amortized cost and estimated fair value of our fixed-maturity, equity, and short-term investments were as follows:

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Underwriting income $ 389,167 $ 325,881

(1) Other expenses are corporate expenses not allocated to our insurance operations.

(1) Other expenses includes primarily corporate expenses not allocated to our insurance operations.

Reconciliation of net operating earnings

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Change in allowance for credit losses on investments, before taxes 2 (526)

Income tax expense (benefit) (1)

Income tax expense (1)

Change in allowance for credit losses on investments, after taxes 2 (416)

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Based on the information provided, we establish case reserves by estimating the ultimate losses from the claim, including defense costs associated with the ultimate settlement of the claim.

Our claims department personnel use their knowledge of the specific claim along with advice from internal and external experts, including underwriters and legal counsel, to estimate the expected ultimate losses.

Our claims department personnel use their knowledge of the specific claim along with advice from internal and external experts to estimate the expected ultimate losses.

During the life cycle of a particular claim, as more information becomes available, we may revise our estimate of the ultimate value of the claim either upward or downward.

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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.

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.

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.

Our reserving methodology uses a loss reserving model that calculates a point estimate for our ultimate losses.

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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.

For any single 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.

The variation discussed is not meant to be a worst-case scenario and, therefore, it is possible that future variation may be greater than the amounts shown below.

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We enter into reinsurance contracts to limit our exposure to potential large losses.

Reinsurance refers to an arrangement in which a company called a reinsurer agrees in a contract (often referred to as a treaty) to assume specified risks written by an insurance company (known as a ceding company) by paying the insurance company all or a portion of the insurance company's losses arising under specified classes of insurance policies in return for a share in premiums.

Reinsurance recoverables recorded on insurance losses ceded under reinsurance contracts are subject to judgments and uncertainties similar to those involved in estimating gross loss reserves.

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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 7. Management’s Discussion and Analysis