0001669162-20-000038 | 10-Q | XBRL Viewer | Kinsale Capital Group INC

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Document and Entity Information Document - shares	9 Months Ended
Document and Entity Information Document - shares	Sep. 30, 2020	Oct. 23, 2020
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2020
Entity Registrant Name	KINSALE CAPITAL GROUP, INC.
Entity File Number	001-37848
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	98-0664337
Entity Addresses [Line Items]
Entity Address, Address Line One	2035 Maywill Street
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Richmond
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	23230
Entity Current Reporting Status	Yes
City Area Code	804
Local Phone Number	289-1300
Title of 12(b) Security	Common Stock, par value $0.01
Trading Symbol	KNSL
Security Exchange Name	NASDAQ
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		22,677,083
Entity Central Index Key	0001669162
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false
Former Address [Member]
Entity Addresses [Line Items]
Entity Address, Address Line One	2221 Edward Holland Drive
Entity Address, Address Line Two	Suite 600
Entity Address, City or Town	Richmond
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	23230

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Assets
Fixed-maturity securities, available for sale, at fair value (amortized cost: $979,365 in 2020; $714,817 in 2019)	$ 1,024,889	$ 729,532
Equity securities, at fair value (cost: $98,253 in 2020 $64,245 in 2019)	116,011	78,294
Total investments	1,140,900	807,826
Cash and cash equivalents	78,696	100,408
Investment income due and accrued	6,245	4,743
Premiums receivable, net	47,646	34,483
Reinsurance recoverables	88,305	72,574
Ceded unearned premiums	22,870	16,118
Deferred policy acquisition costs, net of ceding commissions	30,293	23,564
Intangible assets	3,538	3,538
Deferred Income Tax Assets, Net	0	3,374
Other assets	50,096	23,922
Total assets	1,468,589	1,090,550
Liabilities
Reserves for unpaid losses and loss adjustment expenses	603,200	460,058
Unearned premiums	247,075	187,374
Payable to reinsurers	11,636	7,151
Accounts payable and accrued expenses	10,400	12,366
Credit facility	40,138	16,744
Deferred income tax liability, net	1,248	0
Other liabilities	20,761	977
Total liabilities	934,458	684,670
Stockholders' Equity
Common stock, $0.01 par value, 400,000,000 shares authorized, 22,661,754 and 22,205,665 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively	227	222
Additional paid-in capital	288,868	229,229
Retained earnings	207,179	162,911
Accumulated other comprehensive income	37,857	13,518
Total stockholders’ equity	534,131	405,880
Total liabilities and stockholders’ equity	$ 1,468,589	$ 1,090,550

Consolidated Balance Sheet (Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Assets [Abstract]
Fixed-maturity securities available-for-sale - amortized cost	$ 979,365	$ 714,817
Equity securities - cost	$ 98,253	$ 64,245
Stockholders' Equity
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	400,000,000	400,000,000
Common stock, shares issued (in shares)	22,661,754	22,205,665
Common stock, shares outstanding (in shares)	22,661,754	22,205,665

Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues:
Gross written premiums	$ 144,777	$ 97,984	$ 402,904	$ 277,557
Ceded written premiums	(22,529)	(11,232)	(54,996)	(35,051)
Net written premiums	122,248	86,752	347,908	242,506
Change in unearned premiums	(14,004)	(14,131)	(52,946)	(42,307)
Net earned premiums	108,244	72,621	294,962	200,199
Net investment income	7,008	5,265	19,613	14,586
Change in the fair value of equity securities	6,031	246	3,709	8,050
Net realized investment gains	647	185	1,676	230
Other income	571	10	594	19
Total revenues	122,501	78,327	320,554	223,084
Expenses:
Losses and loss adjustment expenses	82,431	44,810	194,468	118,121
Underwriting, acquisition and insurance expenses	22,927	18,324	67,471	50,377
Other expenses	1,022	0	1,022	57
Total expenses	106,380	63,134	262,961	168,555
Income before income taxes	16,121	15,193	57,593	54,529
Total income tax expense	1,231	2,217	7,355	9,066
Net income	14,890	12,976	50,238	45,463
Other comprehensive income (loss):
Change in unrealized gains on available-for-sale investments, net of taxes of $1,742 and $6,470 in 2020 and $863 and $4,407 in 2019	6,554	3,242	24,339	16,577
Total comprehensive income	$ 21,444	$ 16,218	$ 74,577	$ 62,040
Earnings per share:
Basic	$ 0.66	$ 0.60	$ 2.26	$ 2.13
Diluted	$ 0.65	$ 0.58	$ 2.21	$ 2.07
Weighted average shares outstanding:
Basic	22,398	21,660	22,220	21,348
Diluted	22,928	22,277	22,775	21,965

Consolidated Statements of Income and Comprehensive Income (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent [Abstract]
Income taxes on change in unrealized gains (losses) on available-for-sale investments	$ 1,742	$ 863	$ 6,470	$ 4,407

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]
Balance, shares at Dec. 31, 2018	21,242,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation (shares)	43,000
Balance, shares at Mar. 31, 2019	21,285,000
Balance at Dec. 31, 2018	$ 263,986	$ 212	$ 158,485	$ 106,545	$ (1,256)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock under stock-based compensation plan	598	1	597
Stock-based compensation	507		507
Dividends declared	(1,702)			(1,702)
Other comprehensive (loss) income	6,780				6,780
Net income	18,720			18,720
Balance at Mar. 31, 2019	$ 288,889	213	159,589	123,563	5,524
Balance, shares at Dec. 31, 2018	21,242,000
Balance, shares at Sep. 30, 2019	22,159,000
Balance at Dec. 31, 2018	$ 263,986	212	158,485	106,545	(1,256)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive (loss) income	16,577
Net income	45,463
Balance at Sep. 30, 2019	$ 390,036	222	227,661	146,832	15,321
Balance, shares at Mar. 31, 2019	21,285,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation (shares)	78,000
Restricted shares withheld for taxes (shares)	(7,000)
Balance, shares at Jun. 30, 2019	21,356,000
Balance at Mar. 31, 2019	$ 288,889	213	159,589	123,563	5,524
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock under stock-based compensation plan	394	1	393
Stock-based compensation	621		621
Restricted shares withheld for tax withholding obligation	(617)		(617)
Dividends declared	(1,702)			(1,702)
Other comprehensive (loss) income	6,555				6,555
Net income	13,767			13,767
Balance at Jun. 30, 2019	$ 307,907	214	159,986	135,628	12,079
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock, shares	742,000
Stock-based compensation (shares)	61,000
Balance, shares at Sep. 30, 2019	22,159,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock, net of transaction costs	$ 65,879	7	65,872
Issuance of stock under stock-based compensation plan	990	1	989
Stock-based compensation	814		814
Dividends declared	(1,772)			(1,772)
Other comprehensive (loss) income	3,242				3,242
Net income	12,976			12,976
Balance at Sep. 30, 2019	$ 390,036	222	227,661	146,832	15,321
Balance, shares at Dec. 31, 2019	22,205,665
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation (shares)	48,000
Balance, shares at Mar. 31, 2020	22,254,000
Balance at Dec. 31, 2019	$ 405,880	222	229,229	162,911	13,518
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adoption of new accounting standard for credit losses, net \| Accounting Standards Update 2016-13 [Member]	78			78
Issuance of stock under stock-based compensation plan	702	1	701
Stock-based compensation	812		812
Dividends declared	(2,001)			(2,001)
Other comprehensive (loss) income	(9,223)				(9,223)
Net income	5,086			5,086
Balance at Mar. 31, 2020	$ 401,334	223	230,742	166,074	4,295
Balance, shares at Dec. 31, 2019	22,205,665
Balance, shares at Sep. 30, 2020	22,661,754
Balance at Dec. 31, 2019	$ 405,880	222	229,229	162,911	13,518
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive (loss) income	24,339
Net income	50,238
Balance at Sep. 30, 2020	$ 534,131	227	288,868	207,179	37,857
Balance, shares at Mar. 31, 2020	22,254,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation (shares)	61,000
Restricted shares withheld for taxes (shares)	(12,000)
Balance, shares at Jun. 30, 2020	22,303,000
Balance at Mar. 31, 2020	$ 401,334	223	230,742	166,074	4,295
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock under stock-based compensation plan	395	0	395
Stock-based compensation	931		931
Restricted shares withheld for tax withholding obligation	(1,803)		(1,803)
Dividends declared	(2,013)			(2,013)
Other comprehensive (loss) income	27,008				27,008
Net income	30,262			30,262
Balance at Jun. 30, 2020	$ 456,114	223	230,265	194,323	31,303
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock, shares	311,000
Stock-based compensation (shares)	48,000
Balance, shares at Sep. 30, 2020	22,661,754
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock, net of transaction costs	$ 56,701	3	56,698
Issuance of stock under stock-based compensation plan	954	1	953
Stock-based compensation	952		952
Dividends declared	(2,034)			(2,034)
Other comprehensive (loss) income	6,554				6,554
Net income	14,890			14,890
Balance at Sep. 30, 2020	$ 534,131	$ 227	$ 288,868	$ 207,179	$ 37,857

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019
Statement of Stockholders' Equity [Abstract]
Dividends declared, per share	$ 0.09	$ 0.09	$ 0.09	$ 0.08	$ 0.08	$ 0.08

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Operating Activities
Net cash provided by operating activities	$ 206,461	$ 119,100
Investing Activities
Purchase of property and equipment	(29,088)	(12,406)
Proceeds from Sale of Property, Plant, and Equipment	4,999	0
Purchases – fixed-maturity securities	(389,713)	(245,335)
Purchases - equity securities	(33,830)	(21,139)
Sales – fixed-maturity securities	79,042	32,510
Sales - equity securities	0	20,755
Maturities and calls – fixed-maturity securities	66,204	44,481
Net cash used in investing activities	(302,386)	(181,134)
Financing Activities
Proceeds from Issuance of Common Stock	56,701	65,879
Proceeds from credit facility	23,300	11,800
Payments of Debt Issuance Costs	0	(628)
Payroll taxes withheld and remitted on share-based payments	(1,803)	(617)
Proceeds from stock options exercised	2,051	1,982
Dividends paid	(6,036)	(5,163)
Net cash provided by (used in) financing activities	74,213	73,253
Net change in cash and cash equivalents	(21,712)	11,219
Cash and cash equivalents at beginning of period	100,408	75,089
Cash and cash equivalents at end of period	$ 78,696	$ 86,308

Summary of Significant Accounting Policies	9 Months Ended
Summary of Significant Accounting Policies	Sep. 30, 2020
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of significant accounting policies Basis of presentation The accompanying condensed consolidated financial statements and notes have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and do not contain all of the information and footnotes required by U.S. GAAP for complete financial statements. For a more complete description of Kinsale Capital Group, Inc. and its wholly owned subsidiaries' (the "Company") business and accounting policies, these condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements of the Company included in the Annual Report on Form 10-K for the year ended December 31, 2019. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. All significant intercompany balances and transactions have been eliminated in consolidation. Interim results are not necessarily indicative of results of operations for the full year. Use of estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed 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. Recently adopted accounting pronouncements Accounting Standards Update ("ASU") 2016-13, Financial Instruments – Credit Losses (Topic 326) On June 16, 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)" to provide more useful information about the expected credit losses on financial instruments. 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 debt 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. The measurement of credit losses on available-for-sale securities is similar under previous GAAP, but the update requires the use of the allowance account through which amounts can be reversed, rather than through an irreversible write-down. The FASB has issued additional ASUs on Topic 326 that do not change the core principle of the guidance in ASU 2016-13 but clarify certain aspects of it. Effective January 1, 2020, the Company adopted this ASU using the modified-retrospective approach and recorded a cumulative effect adjustment to beginning retained earnings. The adoption of this ASU resulted in the recognition of an allowance for credit loss related to the Company’s reinsurance recoverables. However, since the Company enters into contracts with reinsurers that have A.M. 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. Effective January 1, 2020, the Company adopted ASU 2018-15 using a modified-retrospective approach. The adoption of ASU 2018-15 did not have a material impact on the Company’s consolidated financial statements. There are no prospective accounting standards which, upon their effective date, would have a material impact on the Company’s consolidated financial statements.

Investments

9 Months Ended

Sep. 30, 2020

Investments [Abstract]

Investments

Available-for-sale investments

The following tables summarize the available-for-sale investments at September 30, 2020 and December 31, 2019:


	September 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Fixed maturities:

Obligations of states, municipalities and political subdivisions	$	210,703	$	14,240	$	(57)	$	224,886
Corporate and other securities	317,977		19,911		(700)		337,188
Asset-backed securities	225,969		4,139		(1,328)		228,780
Commercial mortgage-backed securities	62,421		4,739		(88)		67,072
Residential mortgage-backed securities	162,295		4,719		(51)		166,963
Total fixed-maturity investments	$	979,365	$	47,748	$	(2,224)	$	1,024,889


	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	110	$	2	$	—	$	112
Obligations of states, municipalities and political subdivisions	166,312		7,542		(961)		172,893
Corporate and other securities	180,287		4,736		(255)		184,768
Asset-backed securities	141,123		1,272		(471)		141,924
Commercial mortgage-backed securities	54,627		1,658		(239)		56,046
Residential mortgage-backed securities	172,358		1,819		(388)		173,789
Total fixed-maturity investments	$	714,817	$	17,029	$	(2,314)	$	729,532

Available-for-sale securities in a loss position

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. The Company considers a number of factors in completing its review of credit losses, including the extent to which a security's fair value has been below cost and the financial condition of an issuer. In addition to specific issuer information, the Company also evaluates the current market and interest rate environment. Generally, a change in a security’s value caused by a change in the market or interest rate environment does not constitute a credit loss.

For fixed-maturity securities, the Company also considers whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before recovery and the ability to recover all amounts outstanding when contractually due. 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.

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 has the intent and ability to hold, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized cost of the security represents the credit-related portion of the impairment, which is recognized in net income through an allowance for credit losses. 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 available-for-sale investments 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.

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:


	September 30, 2020
	Less than 12 Months				12 Months or Longer				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(in thousands)
Fixed maturities:

Obligations of states, municipalities and political subdivisions	$	9,598	$	(57)	$	—	$	—	$	9,598	$	(57)
Corporate and other securities	48,288		(700)		—		—		48,288		(700)
Asset-backed securities	82,614		(852)		23,605		(476)		106,219		(1,328)
Commercial mortgage-backed securities	6,747		(88)		—		—		6,747		(88)
Residential mortgage-backed securities	24,615		(42)		279		(9)		24,894		(51)
Total fixed-maturity investments	$	171,862	$	(1,739)	$	23,884	$	(485)	$	195,746	$	(2,224)

At September 30, 2020, the Company held 106 fixed-maturity securities in an unrealized loss position with a total estimated fair value of $195.7 million and gross unrealized losses of $2.2 million. Of these securities, 12 were in a continuous unrealized loss position for greater than one year. As discussed above, the Company regularly reviews all fixed-maturity securities within its investment portfolio to determine whether a credit loss has occurred. Based on the Company's review as of September 30, 2020, unrealized losses were caused by interest rate changes or other market factors and were not credit-specific issues. At September 30, 2020, 81.6% of the Company’s fixed-maturity securities were rated "A-" or better and all of the Company’s fixed-maturity securities made expected coupon payments under the contractual terms of the securities. For the nine months ended September 30, 2020, the Company concluded that there were no credit losses from fixed-maturity securities with unrealized losses.


	December 31, 2019
	Less than 12 Months				12 Months or Longer				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(in thousands)
Fixed maturities:

Obligations of states, municipalities and political subdivisions	$	28,997	$	(961)	$	254	$	—	$	29,251	$	(961)
Corporate and other securities	22,409		(251)		1,509		(4)		23,918		(255)
Asset-backed securities	21,371		(79)		44,115		(392)		65,486		(471)
Commercial mortgage-backed securities	16,352		(224)		2,508		(15)		18,860		(239)
Residential mortgage-backed securities	36,986		(148)		24,815		(240)		61,801		(388)
Total fixed-maturity investments	$	126,115	$	(1,663)	$	73,201	$	(651)	$	199,316	$	(2,314)

Contractual maturities of available-for-sale fixed-maturity securities

The amortized cost and estimated fair value of available-for-sale fixed-maturity securities at September 30, 2020 are summarized, by contractual maturity, as follows:


	September 30, 2020
	Amortized		Estimated
	Cost		Fair Value
	(in thousands)
Due in one year or less	$	9,043	$	9,192
Due after one year through five years	112,714		120,488
Due after five years through ten years	169,530		181,209
Due after ten years	237,393		251,185
Asset-backed securities	225,969		228,780
Commercial mortgage-backed securities	62,421		67,072
Residential mortgage-backed securities	162,295		166,963
Total fixed-maturity securities	$	979,365	$	1,024,889

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, and the lenders may have the right to put the securities back to the borrower.

Net investment income

The following table presents the components of net investment income for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Interest:
Taxable bonds	$	5,383	$	4,050	$	15,253	$	10,593
Tax exempt municipal bonds	918		887		2,741		2,783
Cash equivalents and short-term investments	—		266		261		667
Dividends on equity securities	1,100		406		2,554		1,493
Gross investment income	7,401		5,609		20,809		15,536
Investment expenses	(393)		(344)		(1,196)		(950)
Net investment income	$	7,008	$	5,265	$	19,613	$	14,586

Realized investment gains and losses

The following table presents realized investment gains and losses for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Fixed-maturity securities:
Realized gains	$	719	$	61	$	1,826	$	457
Realized losses	(72)		—		(162)		(79)
Net realized gains from fixed-maturity securities	647		61		1,664		378

Equity securities:
Realized gains	—		505		—		539
Realized losses	—		(381)		—		(687)
Net realized gains (losses) from equity securities	—		124		—		(148)
Realized gains from the sales of short-term investments	—		—		12		—

Net realized investment gains	$	647	$	185	$	1,676	$	230

Change in net unrealized gains on fixed-maturity securities

For the three and nine months ended September 30, 2020, the changes in net unrealized gains for fixed-maturity securities were $8.3 million and $30.8 million, respectively. For the three and nine months ended September 30, 2019, the changes in net unrealized gains for fixed-maturity securities were $4.1 million and $21.0 million, respectively.

Insurance – statutory deposits

The Company had invested assets with a carrying value of $7.0 million and $6.9 million on deposit with state regulatory authorities at September 30, 2020 and December 31, 2019, respectively.

Payable for investments purchased

The Company recorded a payable for investments purchased, not yet settled, of $20.7 million at September 30, 2020. The payable balance was included in the "other liabilities" line item of the consolidated balance sheet and treated as a non-cash transaction for purposes of cash flow presentation.

Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair value measurementsFair value is estimated for each class of financial instrument for which it is practical to estimate fair value. Fair value is defined as the price in the principal market that would be received in exchange for an asset or 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. 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). Adjustments to transaction prices or quoted market prices may be required in illiquid or disorderly markets in order to estimate fair value.

The three levels of the fair value hierarchy are defined as follows:

Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities traded in active markets.

Level 2 - Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs.

Level 3 - Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value measurement.

Fair values of the Company's investment portfolio are estimated using unadjusted prices obtained by its investment manager from third party pricing services, where available. For securities where the Company is unable to obtain fair values from a pricing service or broker, fair values are estimated using information obtained from the Company's investment manager. Management performs several procedures to ascertain the reasonableness of investment values included in the condensed consolidated financial statements including 1) obtaining and reviewing internal control reports from the Company's investment manager that obtains fair values from third party pricing services, 2) discussing with the Company's investment manager its process for reviewing and validating pricing obtained from outside pricing services and 3) reviewing the security pricing received from the Company's investment manager and monitoring changes in unrealized gains and losses. The Company has evaluated the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs.

Given management's understanding of the investment manager's pricing methodologies and procedures, investments valued by third-party pricing services are typically classified as Level 2. While the vast majority of the Company’s fixed-maturity investments are valued by third-party pricing services, the Company purchased a residential mortgage-backed security with an estimated fair value of $1.2 million that was valued using a broker quote at September 30, 2020. Broker quotes are typically based on an income approach given the lack of available market data and are therefore classified as Level 3. In addition, in September of 2020, the Company purchased two residential mortgage-backed securities for $3.2 million that have not been valued by a third-party pricing service or broker quote as of period end. As a result, these securities are valued at the securities' transaction prices and are classified as Level 3. These securities are expected to be valued by a third-party pricing service in the fourth quarter of 2020.

The following tables present the balances of assets measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, by level within the fair value hierarchy.


	September 30, 2020
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Fixed maturities:

Obligations of states, municipalities and political subdivisions	$	—	$	224,886	$	—	$	224,886
Corporate and other securities	—		337,188		—		337,188
Asset-backed securities	—		228,780		—		228,780
Commercial mortgage-backed securities	—		67,072		—		67,072
Residential mortgage-backed securities	—		162,519		4,444		166,963
Total fixed-maturity securities	—		1,020,445		4,444		1,024,889

Equity securities:
Exchange traded funds	85,617		—		—		85,617
Nonredeemable preferred stock	—		30,394		—		30,394
Total equity securities	85,617		30,394		—		116,011

Total	$	85,617	$	1,050,839	$	4,444	$	1,140,900


	December 31, 2019
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	112	$	—	$	—	$	112
Obligations of states, municipalities and political subdivisions	—		172,893		—		172,893
Corporate and other securities	—		184,768		—		184,768
Asset-backed securities	—		141,924		—		141,924
Commercial mortgage-backed securities	—		56,046		—		56,046
Residential mortgage-backed securities	—		173,789		—		173,789
Total fixed-maturity securities	112		729,420		—		729,532

Equity securities:
Exchange traded funds	54,463		—		—		54,463
Nonredeemable preferred stock	—		23,831		—		23,831
Total equity securities	54,463		23,831		—		78,294

Total	$	54,575	$	753,251	$	—	$	807,826

The following table summarizes changes in Level 3 investments measured at fair value on a recurring basis.


	Nine Months Ended September 30,
	2020		2019

Beginning balance	$	—	$	—
Total gains (losses) included in:
Net income	—		—
Other comprehensive income	—		—
Purchases	4,444		—
Sales	—		—
Transfers into Level 3	—		—
Transfers out of Level 3	—		—

Ending balance	$	4,444	$	—

There were no assets or liabilities measured at fair value on a nonrecurring basis as of September 30, 2020 or December 31, 2019.

The carrying value of cash equivalents approximates its fair value at September 30, 2020 and December 31, 2019, due to the short-term maturities of these assets. In addition, the estimated fair value of the Credit Facility approximated its carrying value as of September 30, 2020 and December 31, 2019. See Note 12 for further information regarding the Credit Facility.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Deferred Policy Acquisition Costs

9 Months Ended

Sep. 30, 2020

Deferred Policy Acquisition Costs Disclosures [Abstract]

Deferred Policy Acquisition Costs

Deferred policy acquisition costs

The following table presents the amounts of policy acquisition costs deferred and amortized for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Balance, beginning of period	$	28,942	$	18,652	$	23,564	$	14,801
Policy acquisition costs deferred:
Direct commissions	21,214		14,358		58,788		40,601
Ceding commissions	(5,746)		(2,824)		(13,509)		(9,338)
Other underwriting and policy acquisition costs	916		989		3,385		2,803
Policy acquisition costs deferred	16,384		12,523		48,664		34,066
Amortization of net policy acquisition costs	(15,033)		(10,115)		(41,935)		(27,807)
Balance, end of period	$	30,293	$	21,060	$	30,293	$	21,060

Amortization of net policy acquisition costs is included in the line item "Underwriting, acquisition and insurance expenses" in the accompanying consolidated statements of income and comprehensive income.

Property and Equipment (Notes)

9 Months Ended

Sep. 30, 2020

Property and Equipment [Abstract]

Property and Equipment Disclosure [Text Block]

Property and equipment, net

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


	September 30, 2020		December 31, 2019
	(in thousands)
Building	$	29,749	$	—
Parking deck	4,894		—
Land	3,063		—
Equipment	2,736		2,353
Software	4,366		2,356
Furniture and fixtures	2,340		1,025
Leasehold improvements	984		984
Land improvements	276		—
Construction in progress - corporate headquarters	—		19,789
	48,408		26,507
Accumulated depreciation	(4,596)		(3,873)
Total property and equipment, net	$	43,812	$	22,634

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

During the third quarter of 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. As of September 30, 2020, the Company received $5.0 million of the proceeds from the sale and is expected to receive the remaining $1.5 million upon completion of the apartment building. This receivable is included in "other assets" on the accompanying consolidated balance sheet.

Underwriting, Acquisition and Insurance Expenses

9 Months Ended

Sep. 30, 2020

Underwriting, Acquisition and Insurance Expenses [Abstract]

Underwriting, acquisition and insurance expenses

Underwriting, acquisition and insurance expenses for the three and nine months ended September 30, 2020 and 2019 consist of the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Underwriting, acquisition and insurance expenses incurred:
Direct commissions	$	18,585	$	12,409	$	50,068	$	34,470
Ceding commissions	(4,588)		(3,150)		(11,234)		(9,202)
Other operating expenses	8,930		9,065		28,637		25,109
Total	$	22,927	$	18,324	$	67,471	$	50,377

Other operating expenses within underwriting, acquisition and insurance expenses include salaries, bonus and employee benefits expenses of $6.6 million and $7.3 million for the three months ended September 30, 2020 and 2019, respectively. Salaries, bonuses, and employee benefit expenses were $24.6 million and $21.2 million for the nine months ended September 30, 2020 and 2019, respectively.

Stock-based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-based Compensation

On July 27, 2016, the Kinsale Capital Group, Inc. 2016 Omnibus Incentive Plan (the "2016 Incentive Plan") became effective. The 2016 Incentive Plan, which is administered by the Compensation, Nominating and Corporate Governance Committee of the Company’s Board of Directors, provides for grants of stock options, restricted stock, restricted stock units and other stock-based awards to officers, employees, directors, independent contractors and consultants. The number of shares of common stock available for issuance under the 2016 Incentive Plan may not exceed 2,073,832.

The total compensation cost that has been charged against income for share-based compensation arrangements was $2.7 million and $1.9 million for the nine months ended September 30, 2020 and 2019, respectively.

Restricted Stock Awards

During the nine months ended September 30, 2020, the Company granted restricted stock awards under the 2016 Incentive Plan. The restricted stock awards were valued on the date of grant and will vest over a period of 1 to 4 years. The fair value of restricted stock awards was determined based on the closing trading price of the Company’s shares on the grant date or, if no shares were traded on the grant date, the last preceding date for which there was a sale of shares. Except for restrictions placed on the transferability of restricted stock, holders of unvested restricted stock have full stockholder’s rights, including voting rights and the right to receive dividends. Unvested shares of restricted stock awards and accrued dividends, if any, are forfeited upon the termination of service to or employment with the Company.

A summary of all restricted stock activity under the 2016 Incentive Plan for the nine months ended September 30, 2020 is as follows:


	For the Nine Months Ended September 30, 2020
	Number of Shares	Weighted Average Grant Date Fair Value per Share
Non-vested outstanding at the beginning of the period	122,723	$	67.01
Granted	41,217	$	145.46
Vested	(41,010)	$	63.86
Forfeited	(11,845)	$	81.20
Non-vested outstanding at the end of the period	111,085	$	95.76

Employees surrender shares to pay for withholding tax obligations resulting from any vesting of restricted stock awards. During the nine months ended September 30, 2020, shares withheld for taxes in connection with the vesting of restricted stock awards totaled 11,966.

The weighted average grant-date fair value of the Company's restricted stock awards granted during the nine months ended September 30, 2020 and 2019 was $145.46 and $80.59, respectively. The fair value of restricted stock awards that vested during the nine months ended September 30, 2020 and 2019 was $5.8 million and $2.1 million,

respectively. As of September 30, 2020, the Company had $9.2 million of total unrecognized stock-based compensation expense expected to be charged to earnings over a weighted-average period of 3.0 years.

Stock Options

On July 27, 2016, the Board of Directors approved, and the Company granted, 1,036,916 stock options with an exercise price equal to the Initial Public Offering price of $16.00 per share and a weighted-average grant-date fair value of $2.71 per share. The options have a maximum contractual term of 10 years and vest in 4 equal annual installments following the date of the grant.

The value of the options granted was estimated at the date of grant using the Black-Scholes pricing model using the following assumptions:


Risk-free rate of return	1.26	%
Dividend yield	1.25	%
Expected share price volatility(1)	18.50	%
Expected life in years(2)	6.3 years

(1) Expected volatility was based on the Company’s competitors within the industry.

(2) Expected life was calculated using the simplified method, which was an average of the contractual term of the option and its ordinary vesting period, as the Company did not have sufficient historical data for determining the expected term of our stock option awards.

A summary of option activity as of September 30, 2020, and changes during the period then ended is presented below:


	Number of Shares	Weighted-average exercise price		Weighted-average remaining years of contractual term	Aggregate intrinsic value (in thousands)
Outstanding at January 1, 2020	614,345	$	16.00
Granted	—	—
Forfeited	(234)	16.00
Exercised	(128,183)	16.00
Outstanding at September 30, 2020	485,928	$	16.00	5.8	$	84,639
Exercisable at September 30, 2020	485,928	$	16.00	5.8	$	84,639

The total intrinsic value of options exercised was $17.9 million and $8.3 million during the nine months ended September 30, 2020 and 2019, respectively.

Earnings Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Earnings Per Share

Earnings per share

The following represents a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations contained in the consolidated financial statements:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands, except per share data)
Net income	$	14,890	$	12,976	$	50,238	$	45,463

Weighted average common shares outstanding - basic	22,398		21,660		22,220		21,348
Effect of potential dilutive securities:
Conversion of stock options	465		572		491		581
Conversion of restricted stock	65		45		64		36
Weighted average common shares outstanding - diluted	22,928		22,277		22,775		21,965

Earnings per common share:
Basic	$	0.66	$	0.60	$	2.26	$	2.13
Diluted	$	0.65	$	0.58	$	2.21	$	2.07

There were no anti-dilutive stock awards for the three months ended September 30, 2020 and 2019. There were approximately 35 thousand and approximately 54 thousand anti-dilutive stock awards for the nine months ended September 30, 2020 and 2019, respectively.

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Income taxes The Company uses the estimated annual effective tax rate method for calculating its tax provision in interim periods, which represents the Company's best estimate of the effective tax rate expected for the full year. The estimated annual effective tax rate typically differs from the U.S. statutory tax rate primarily as a result of tax-exempt investment income and any discrete items recognized during the period. The Company's effective tax rates were 12.8% and 16.6% for the nine months ended September 30, 2020 and 2019, respectively. The effective tax rates were lower than the federal statutory rate of 21% due primarily to the tax benefits from stock-based compensation and from income generated by certain tax-advantaged investments. 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 Company does not expect that the CARES Act will have a significant impact on its consolidated financial statements.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Reserves for Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 2020

Liability for Unpaid Claims and Claims Adjustment Expense, Activity in Liability [Abstract]

Reserves for Unpaid Losses and Loss Adjustment Expenses

Reserves for unpaid losses and loss adjustment expenses

The following table presents a reconciliation of consolidated beginning and ending reserves for unpaid losses and loss adjustment expenses:


	September 30
	2020		2019
	(in thousands)
Gross reserves for unpaid losses and loss adjustment expenses, beginning of year	$	460,058	$	369,152
Less: reinsurance recoverable on unpaid losses	69,792		55,389
Adoption of new accounting standard for credit losses	(282)		—
Net reserves for unpaid losses and loss adjustment expenses, beginning of year	390,548		313,763
Incurred losses and loss adjustment expenses:
Current year	204,096		126,471
Prior years	(9,628)		(8,350)
Total net losses and loss adjustment expenses incurred	194,468		118,121

Payments:
Current year	10,256		12,258
Prior years	57,253		53,808
Total payments	67,509		66,066
Net reserves for unpaid losses and loss adjustment expenses, end of period	517,507		365,818
Reinsurance recoverable on unpaid losses	85,693		63,714
Gross reserves for unpaid losses and loss adjustment expenses, end of period	$	603,200	$	429,532

During the nine months ended September 30, 2020, the reserves for unpaid losses and loss adjustment expenses held at December 31, 2019 developed favorably by $9.6 million. The favorable development was primarily attributable to the 2019 accident year of $7.8 million, which resulted from reported losses emerging at a lower level than expected across most statutory lines of business. Current year incurred losses and loss adjustment expenses for the nine months ended September 30, 2020 included $17.1 million of catastrophe losses primarily related to Hurricane Laura, Hurricane Sally and the California wildfires.

During the nine months ended September 30, 2019, the reserves for unpaid losses and loss adjustment expenses held at December 31, 2018 developed favorably by $8.4 million. The favorable development was primarily attributable to the 2016 through 2018 accident years of $14.8 million, which mostly resulted from reported losses emerging at a lower level than expected across most statutory lines of business. This favorable development was offset in part by adverse development from the 2011 through 2015 accident years of $6.4 million, which primarily resulted from higher incurred but not yet reported ("IBNR") losses to provide for uncertainty associated with the emergence of reported losses over a longer period of time.

Reinsurance

9 Months Ended

Sep. 30, 2020

Reinsurance Disclosures [Abstract]

Reinsurance

The following table summarizes the effect of reinsurance on premiums written and earned for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Premiums written:
Direct	$	144,777	$	97,984	$	402,904	$	277,432
Assumed	—		—		—		125
Ceded	(22,529)		(11,232)		(54,996)		(35,051)
Net written	$	122,248	$	86,752	$	347,908	$	242,506

Premiums earned:
Direct	$	127,301	$	84,790	$	343,184	$	234,788
Assumed	—		16		21		89
Ceded	(19,057)		(12,185)		(48,243)		(34,678)
Net earned	$	108,244	$	72,621	$	294,962	$	200,199

The following table summarizes ceded losses and loss adjustment expenses for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Ceded incurred losses and loss adjustment expenses	$	19,297	$	4,864	$	30,202	$	18,609

The following table presents reinsurance recoverables on paid and unpaid losses as of September 30, 2020 and December 31, 2019:


	September 30, 2020		December 31, 2019
	(in thousands)
Reinsurance recoverables on paid losses	$	2,612	$	2,782
Reinsurance recoverables on unpaid losses	85,693		69,792
Reinsurance recoverables	$	88,305	$	72,574

Credit Agreement	9 Months Ended
Credit Agreement	Sep. 30, 2020
Debt Disclosure [Abstract]
Credit Agreement [Text Block]	Credit AgreementOn May 28, 2019, the Company entered into a Credit Agreement (the “Credit Agreement”) that provided the Company with a $50.0 million senior unsecured revolving credit facility (the “Credit Facility”) and an uncommitted accordion feature that permits the Company to increase the commitments by an additional $30.0 million. The Credit Facility has a maturity of May 28, 2024. Borrowings under the Credit Facility will be 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 (a) the higher of the prime rate, the New York Federal Reserve Board Rate plus 0.50% or the one-month adjusted LIBOR plus 1%, plus (b) the applicable margin of 0.75%. During the nine months ended September 30, 2020, the Company drew down $23.3 million on its Credit Facility. As of September 30, 2020, there was $40.1 million outstanding under the Credit Facility, net of debt issuance cost of $0.5 million, with a weighted average interest rate of 2.01%. 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 provisions. As of September 30, 2020, the Company was in compliance with all of its financial covenants under the Credit Facility.

Stockholders' Equity	9 Months Ended
Stockholders' Equity	Sep. 30, 2020
Equity [Abstract]
Stockholders' Equity Note Disclosure	Stockholders' EquityOn August 7, 2020, the Company completed an underwritten public offering and sold and issued 310,500 shares of its common stock at a price of $190 per share. After deducting underwriting discounts and commissions, the Company received net proceeds of $56.7 million, which will be used for general corporate purposes, including to fund organic growth.

Other Comprehensive (Loss) Income

9 Months Ended

Sep. 30, 2020

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Other Comprehensive Income

Other comprehensive income

The following table summarizes the components of other comprehensive income for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Unrealized gains on fixed-maturity securities arising during the period, before income taxes	$	8,701	$	4,166	$	32,113	$	21,362
Income taxes	(1,827)		(875)		(6,744)		(4,486)
Unrealized gains arising during the period, net of income taxes	6,874		3,291		25,369		16,876
Less reclassification adjustment:
Net realized gains on fixed-maturity securities, before income taxes	405		61		1,304		378
Income taxes	(85)		(12)		(274)		(79)
Reclassification adjustment included in net income, net of income taxes	320		49		1,030		299
Other comprehensive income	$	6,554	$	3,242	$	24,339	$	16,577

The sale of an available-for-sale fixed-maturity security results in amounts being reclassified from accumulated other comprehensive income to realized gains or losses in current period earnings. The related tax effect of the reclassification adjustment is recorded in income tax expense in current period earnings. See Note 2 for additional information.

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2020
Accounting Policies [Abstract]
Basis of Presentation	Basis of presentationThe accompanying condensed consolidated financial statements and notes have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and do not contain all of the information and footnotes required by U.S. GAAP for complete financial statements. For a more complete description of Kinsale Capital Group, Inc. and its wholly owned subsidiaries' (the "Company") business and accounting policies, these condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements of the Company included in the Annual Report on Form 10-K for the year ended December 31, 2019. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. All significant intercompany balances and transactions have been eliminated in consolidation. Interim results are not necessarily indicative of results of operations for the full year.
Use of Estimates	Use of estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed 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.
Recently adopted accounting pronouncements	Recently adopted accounting pronouncements Accounting Standards Update ("ASU") 2016-13, Financial Instruments – Credit Losses (Topic 326) On June 16, 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)" to provide more useful information about the expected credit losses on financial instruments. 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 debt 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. The measurement of credit losses on available-for-sale securities is similar under previous GAAP, but the update requires the use of the allowance account through which amounts can be reversed, rather than through an irreversible write-down. The FASB has issued additional ASUs on Topic 326 that do not change the core principle of the guidance in ASU 2016-13 but clarify certain aspects of it. Effective January 1, 2020, the Company adopted this ASU using the modified-retrospective approach and recorded a cumulative effect adjustment to beginning retained earnings. The adoption of this ASU resulted in the recognition of an allowance for credit loss related to the Company’s reinsurance recoverables. However, since the Company enters into contracts with reinsurers that have A.M. 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. Effective January 1, 2020, the Company adopted ASU 2018-15 using a modified-retrospective approach. The adoption of ASU 2018-15 did not have a material impact on the Company’s consolidated financial statements. There are no prospective accounting standards which, upon their effective date, would have a material impact on the Company’s consolidated financial statements.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Investments (Tables)

9 Months Ended

Sep. 30, 2020

Investments [Abstract]

Available-for-sale Investments

The following tables summarize the available-for-sale investments at September 30, 2020 and December 31, 2019:


	September 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Fixed maturities:

Obligations of states, municipalities and political subdivisions	$	210,703	$	14,240	$	(57)	$	224,886
Corporate and other securities	317,977		19,911		(700)		337,188
Asset-backed securities	225,969		4,139		(1,328)		228,780
Commercial mortgage-backed securities	62,421		4,739		(88)		67,072
Residential mortgage-backed securities	162,295		4,719		(51)		166,963
Total fixed-maturity investments	$	979,365	$	47,748	$	(2,224)	$	1,024,889


	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Fixed maturities:
U.S. Treasury securities and obligations of U.S. government agencies	$	110	$	2	$	—	$	112
Obligations of states, municipalities and political subdivisions	166,312		7,542		(961)		172,893
Corporate and other securities	180,287		4,736		(255)		184,768
Asset-backed securities	141,123		1,272		(471)		141,924
Commercial mortgage-backed securities	54,627		1,658		(239)		56,046
Residential mortgage-backed securities	172,358		1,819		(388)		173,789
Total fixed-maturity investments	$	714,817	$	17,029	$	(2,314)	$	729,532

Available-for-sale Securities in an Unrealized Loss Position


	September 30, 2020
	Less than 12 Months				12 Months or Longer				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(in thousands)
Fixed maturities:

Obligations of states, municipalities and political subdivisions	$	9,598	$	(57)	$	—	$	—	$	9,598	$	(57)
Corporate and other securities	48,288		(700)		—		—		48,288		(700)
Asset-backed securities	82,614		(852)		23,605		(476)		106,219		(1,328)
Commercial mortgage-backed securities	6,747		(88)		—		—		6,747		(88)
Residential mortgage-backed securities	24,615		(42)		279		(9)		24,894		(51)
Total fixed-maturity investments	$	171,862	$	(1,739)	$	23,884	$	(485)	$	195,746	$	(2,224)


	December 31, 2019
	Less than 12 Months				12 Months or Longer				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(in thousands)
Fixed maturities:

Obligations of states, municipalities and political subdivisions	$	28,997	$	(961)	$	254	$	—	$	29,251	$	(961)
Corporate and other securities	22,409		(251)		1,509		(4)		23,918		(255)
Asset-backed securities	21,371		(79)		44,115		(392)		65,486		(471)
Commercial mortgage-backed securities	16,352		(224)		2,508		(15)		18,860		(239)
Residential mortgage-backed securities	36,986		(148)		24,815		(240)		61,801		(388)
Total fixed-maturity investments	$	126,115	$	(1,663)	$	73,201	$	(651)	$	199,316	$	(2,314)

Contractual Maturities of Available-for-sale Fixed Maturity Securities

The amortized cost and estimated fair value of available-for-sale fixed-maturity securities at September 30, 2020 are summarized, by contractual maturity, as follows:


	September 30, 2020
	Amortized		Estimated
	Cost		Fair Value
	(in thousands)
Due in one year or less	$	9,043	$	9,192
Due after one year through five years	112,714		120,488
Due after five years through ten years	169,530		181,209
Due after ten years	237,393		251,185
Asset-backed securities	225,969		228,780
Commercial mortgage-backed securities	62,421		67,072
Residential mortgage-backed securities	162,295		166,963
Total fixed-maturity securities	$	979,365	$	1,024,889

Net Investment Income

The following table presents the components of net investment income for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Interest:
Taxable bonds	$	5,383	$	4,050	$	15,253	$	10,593
Tax exempt municipal bonds	918		887		2,741		2,783
Cash equivalents and short-term investments	—		266		261		667
Dividends on equity securities	1,100		406		2,554		1,493
Gross investment income	7,401		5,609		20,809		15,536
Investment expenses	(393)		(344)		(1,196)		(950)
Net investment income	$	7,008	$	5,265	$	19,613	$	14,586

Realized Gain (Loss) on Investments

The following table presents realized investment gains and losses for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
	(in thousands)
Fixed-maturity securities: