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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2021
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _______ to _______

Commission File Number: 001-37848
KINSALE CAPITAL GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware
98-0664337
(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)
2035 Maywill Street
Suite 100
Richmond, Virginia 23230
(Address of principal executive offices, including zip code)
(804) 289-1300
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01KNSLNasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes       No  ☒
Number of shares of the registrant's common stock outstanding at July 23, 2021: 22,805,592


Table of Contents
KINSALE CAPITAL GROUP, INC.
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 6.
1

Table of Contents

Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statement that does not directly relate to historical or current fact. These statements may discuss, among others, our future financial performance, our business prospects and strategy, our anticipated financial position, liquidity and capital, dividends and general market and industry conditions. You can identify forward-looking statements by words such as "anticipates," "estimates," "expects," "intends," "plans," "predicts," "projects," "believes," "seeks," "outlook," "future," "will," "would," "should," "could," "may," "can have," "prospects" or similar terms. Forward-looking statements are based on management’s current expectations and assumptions about future events, which are subject to uncertainties, risks and changes in circumstances that are difficult to predict. These statements are only predictions and are not guarantees of future performance. Actual results may differ materially from those contemplated by a forward-looking statement. Factors that may cause such differences include, without limitation:
the possibility that our loss reserves may be inadequate to cover our actual losses, which could have a material adverse effect on our financial condition, results of operations and cash flows;
the inherent uncertainty of models resulting in actual losses that are materially different than our estimates;
the failure of any of the loss limitations or exclusions we employ, or change in other claims or coverage issues, having a material adverse effect on our financial condition or results of operations;
the inability to obtain reinsurance coverage at reasonable prices and on terms that adequately protect us;
the possibility that severe weather conditions and other catastrophes may result in an increase in the number and amount of claims filed against us;
adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity resulting in the sale of fewer policies than expected or an increase in frequency or severity of claims and premium defaults or both, affecting our growth and profitability;
a decline in our financial strength rating adversely affecting the amount of business we write;
the potential loss of one or more key executives or an inability to attract and retain qualified personnel adversely affecting our results of operations;
our reliance on a select group of brokers;
the changing market conditions of our excess and surplus lines ("E&S") insurance operations, as well as the cyclical nature of our business, affecting our financial performance;
our employees taking excessive risks;
the intense competition for business in our industry;
the effects of litigation having an adverse effect on our business;
the performance of our investment portfolio adversely affecting our financial results;
the ability to pay dividends being dependent on our ability to obtain cash dividends or other permitted payments from our insurance subsidiary;
being forced to sell investments to meet our liquidity requirements;
2

Table of Contents
extensive regulation adversely affecting our ability to achieve our business objectives or the failure to comply with these regulations adversely affecting our financial condition and results of operations;
the other risks and uncertainties discussed in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2020.
Forward-looking statements speak only as of the date on which they are made. Except as expressly required under federal securities laws or the rules and regulations of the Securities and Exchange Commission ("SEC"), we do not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

3

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
KINSALE CAPITAL GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
June 30,
2021
December 31,
2020
(in thousands, except share and per share data)
Assets
Investments:
Fixed-maturity securities, available for sale, at fair value (amortized cost: $1,187,603 2021; $1,031,817 2020)
$1,224,879 $1,081,800 
Equity securities, at fair value (cost: $105,322 2021; $98,758 2020)
150,882 129,662 
Total investments1,375,761 1,211,462 
Cash and cash equivalents128,005 77,093 
Investment income due and accrued7,070 6,637 
Premiums receivable, net65,727 48,641 
Reinsurance recoverables105,496 93,215 
Ceded unearned premiums29,431 24,265 
Deferred policy acquisition costs, net of ceding commissions38,801 31,912 
Intangible assets3,538 3,538 
Other assets52,448 50,133 
Total assets$1,806,277 $1,546,896 
Liabilities and Stockholders' Equity
Liabilities:
Reserves for unpaid losses and loss adjustment expenses$753,324 $636,013 
Unearned premiums317,462 260,986 
Payable to reinsurers20,229 12,672 
Accounts payable and accrued expenses11,694 13,651 
Credit facility42,633 42,570 
Deferred income tax liability, net2,559 4,648 
Other liabilities28,740 118 
Total liabilities1,176,641 970,658 
Stockholders’ equity:
Common stock, $0.01 par value, 400,000,000 shares authorized, 22,805,592 and 22,757,251 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
228 228 
Additional paid-in capital292,050 291,315 
Retained earnings306,017 243,315 
Accumulated other comprehensive income 31,341 41,380 
Total stockholders’ equity629,636 576,238 
Total liabilities and stockholders’ equity$1,806,277 $1,546,896 
See accompanying notes to condensed consolidated financial statements.
4

Table of Contents
KINSALE CAPITAL GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Income and Comprehensive Income (Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(in thousands, except per share data)
Revenues:
Gross written premiums$194,061 $134,091 $362,937 $258,127 
Ceded written premiums(26,308)(16,484)(50,886)(32,467)
Net written premiums167,753 117,607 312,051 225,660 
Change in unearned premiums(30,053)(20,650)(51,310)(38,942)
Net earned premiums137,700 96,957 260,741 186,718 
Net investment income7,429 6,645 14,371 12,605 
Change in the fair value of equity securities
7,565 13,839 14,656 (2,322)
Net realized investment gains304 253 1,502 1,029 
Other income12 13 23 23 
Total revenues153,010 117,707 291,293 198,053 
Expenses:
Losses and loss adjustment expenses79,115 58,304 149,375 112,037 
Underwriting, acquisition and insurance expenses29,889 22,961 58,025 44,544 
Other expenses398  846  
Total expenses109,402 81,265 208,246 156,581 
Income before income taxes43,608 36,442 83,047 41,472 
Total income tax expense 7,973 6,180 15,333 6,124 
Net income35,635 30,262 67,714 35,348 
Other comprehensive income:
Change in net unrealized gains on available-for-sale investments, net of taxes9,583 27,008 (10,039)17,785 
Total comprehensive income$45,218 $57,270 $57,675 $53,133 
Earnings per share:
Basic$1.57 $1.37 $2.99 $1.60 
Diluted$1.55 $1.33 $2.94 $1.56 
Weighted-average shares outstanding:
Basic22,678 22,153 22,665 22,131 
Diluted23,054 22,707 23,055 22,694 

See accompanying notes to condensed consolidated financial statements.
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KINSALE CAPITAL GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
Shares of Common StockCommon StockAdditional Paid-in CapitalRetained EarningsAccumu-
lated
 Other
Compre-
hensive
Income
Total
Stock-
holders' Equity
(in thousands, except per share data)
Balance at December 31, 202022,757 $228 $291,315 $243,315 $41,380 $576,238 
Issuance of common stock under stock-based compensation plan
55  339 — — 339 
Stock-based compensation expense
— — 1,036 — — 1,036 
Dividends declared ($0.11 per share)
— — — (2,504)— (2,504)
Other comprehensive loss, net of tax— — — — (19,622)(19,622)
Net income— — — 32,079 — 32,079 
Balance at March 31, 202122,812 228 292,690 272,890 21,758 587,566 
Issuance of common stock under stock-based compensation plan
7  163 — — 163 
Stock-based compensation expense
— — 1,279 — — 1,279 
Restricted shares withheld for taxes (13)— (2,082)— — (2,082)
Dividends declared ($0.11 per share)
— — — (2,508)— (2,508)
Other comprehensive income, net of tax
— — — — 9,583 9,583 
Net income— — — 35,635 — 35,635 
Balance at June 30, 202122,806 $228 $292,050 $306,017 $31,341 $629,636 

Balance at December 31, 201922,206 $222 $229,229 $162,911 $13,518 $405,880 
Adoption of new accounting standard for credit losses, net
— — — 78 — 78 
Issuance of common stock under stock-based compensation plan
48 1 701 — — 702 
Stock-based compensation expense
— — 812 — — 812 
Dividends declared ($0.09 per share)
— — — (2,001)— (2,001)
Other comprehensive loss, net of tax— — — — (9,223)(9,223)
Net income— — — 5,086 — 5,086 
Balance at March 31, 202022,254 223 230,742 166,074 4,295 401,334 
Issuance of common stock under stock-based compensation plan
61  395 — — 395 
Stock-based compensation expense
— — 931 — — 931 
Restricted shares withheld for taxes (12)— (1,803)— — (1,803)
Dividends declared ($0.09 per share)
— — — (2,013)— (2,013)
Other comprehensive income, net of tax
— — — — 27,008 27,008 
Net income— — — 30,262 — 30,262 
Balance at June 30, 202022,303 $223 $230,265 $194,323 $31,303 $456,114 

See accompanying notes to condensed consolidated financial statements.

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KINSALE CAPITAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30,
20212020
(in thousands)
Operating activities:
Net cash provided by operating activities$194,948 $132,587 
Investing activities:
Purchase of property and equipment(2,946)(20,113)
Sale of property and equipment 4,999 
Purchases – fixed-maturity securities(315,152)(231,112)
Purchases – equity securities(8,283)(31,985)
Sales – fixed-maturity securities87,681 54,525 
Sales – equity securities1,583  
Maturities and calls – fixed-maturity securities99,683 42,079 
Net cash used in investing activities(137,434)(181,607)
Financing activities:
Proceeds from credit facility 16,300 
Payroll taxes withheld and remitted on share-based payments(2,082)(1,803)
Proceeds from stock options exercised502 1,097 
Dividends paid(5,022)(4,006)
Net cash (used in) provided by financing activities(6,602)11,588 
Net change in cash and cash equivalents50,912 (37,432)
Cash and cash equivalents at beginning of year77,093 100,408 
Cash and cash equivalents at end of period$128,005 $62,976 
See accompanying notes to condensed consolidated financial statements.

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KINSALE CAPITAL GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

1.    Summary of significant accounting policies
Basis of presentation
The unaudited 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. As such, these unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements of Kinsale Capital Group, Inc. and its subsidiaries ("the Company") included in the Annual Report on Form 10-K for the year ended December 31, 2020. 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.
Recently adopted accounting pronouncements
Accounting Standard Update ("ASU") 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes
In December 2019, the Financial Accounting Standards Board ("FASB") issued updated guidance for the accounting for income taxes. The updated guidance is intended to simplify the accounting for income taxes by removing several exceptions contained in existing guidance and amending other existing guidance to simplify several other income tax accounting matters. Effective January 1, 2021, the Company adopted ASU 2019-12, which did not have a material impact on the Company's condensed consolidated financial statements.
There are no prospective accounting standards which, upon their effective date, would have a material impact on the Company's condensed consolidated financial statements.
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2.     Investments
Available-for-sale investments
The following tables summarize the available-for-sale investments at June 30, 2021 and December 31, 2020:
June 30, 2021
Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
(in thousands)
Fixed maturities:
Obligations of states, municipalities and political subdivisions
$211,296 $13,547 $(204)$224,639 
Corporate and other securities412,687 16,646 (1,001)428,332 
Asset-backed securities274,514 3,735 (86)278,163 
Commercial mortgage-backed securities60,119 3,414 (74)63,459 
Residential mortgage-backed securities
228,987 2,893 (1,594)230,286 
Total fixed-maturity investments$1,187,603 $40,235 $(2,959)$1,224,879 

December 31, 2020
Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
(in thousands)
Fixed maturities:
Obligations of states, municipalities and political subdivisions
$216,181 $14,792 $(67)$230,906 
Corporate and other securities294,854 21,840 (86)316,608 
Asset-backed securities236,813 4,230 (382)240,661 
Commercial mortgage-backed securities66,110 4,886 (27)70,969 
Residential mortgage-backed securities
217,859 4,938 (141)222,656 
Total fixed-maturity investments$1,031,817 $50,686 $(703)$1,081,800 
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 its 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.
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For fixed-maturity securities where a decline in fair value is below the amortized cost basis and the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, an impairment is recognized in net income based on the fair value of the security at the time of assessment. For fixed-maturity securities that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before recovery of its amortized cost, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security. 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.
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:
June 30, 2021
Less than 12 Months12 Months or LongerTotal
Estimated Fair ValueGross Unrealized LossesEstimated Fair ValueGross Unrealized LossesEstimated Fair ValueGross Unrealized Losses
(in thousands)
Fixed maturities:
Obligations of states, municipalities and political subdivisions
$13,538 $(204)$ $ $13,538 $(204)
Corporate and other securities
74,696 (1,001)  74,696 (1,001)
Asset-backed securities57,943 (62)9,403 (24)67,346 (86)
Commercial mortgage-backed securities9,659 (74)  9,659 (74)
Residential mortgage-backed securities
127,396 (1,549)4,212 (45)131,608 (1,594)
Total fixed-maturity investments$283,232 $(2,890)$13,615 $(69)$296,847 $(2,959)

At June 30, 2021, the Company held 121 fixed-maturity securities in an unrealized loss position with a total estimated fair value of $296.8 million and gross unrealized losses of $3.0 million. Of these securities, 7 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 June 30, 2021, unrealized losses were caused by interest rate changes or other market factors and were not credit-specific issues. At June 30, 2021, 80.0% 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 six months ended June 30, 2021, the Company concluded that there were no credit losses from fixed-maturity securities with unrealized losses.
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December 31, 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
$6,412 $(67)$ $ $6,412 $(67)
Corporate and other securities
3,829 (86)  3,829 (86)
Asset-backed securities57,750 (149)23,825 (233)81,575 (382)
Commercial mortgage-backed securities4,971 (27)  4,971 (27)
Residential mortgage-backed securities
46,869 (129)266 (12)47,135 (141)
Total fixed-maturity investments$119,831 $(458)$24,091 $(245)$143,922 $(703)

Contractual maturities of available-for-sale fixed-maturity securities
The amortized cost and estimated fair value of available-for-sale fixed-maturity securities at June 30, 2021 are summarized, by contractual maturity, as follows:
June 30, 2021
AmortizedEstimated
CostFair Value
(in thousands)
Due in one year or less$8,024 $8,103 
Due after one year through five years168,151 175,444 
Due after five years through ten years198,812 207,615 
Due after ten years248,996 261,809 
Asset-backed securities274,514 278,163 
Commercial mortgage-backed securities60,119 63,459 
Residential mortgage-backed securities228,987 230,286 
Total fixed-maturity securities $1,187,603 $1,224,879 

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.
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Net investment income
The following table presents the components of net investment income for the three and six months ended June 30, 2021 and 2020:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(in thousands)
Interest:
Taxable bonds$6,156 $5,259 $11,885 $9,870 
Tax exempt municipal bonds877 908 1,762 1,823 
Cash equivalents and short-term investments9 11 10 261 
Dividends on equity securities953 879 1,822 1,454 
Gross investment income7,995 7,057 15,479 13,408 
Investment expenses(566)(412)(1,108)(803)
Net investment income$7,429 $6,645 $14,371 $12,605 

Realized investment gains and losses
The following table presents realized investment gains and losses for the three and six months ended June 30, 2021 and 2020:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(in thousands)
Fixed-maturity securities:
Realized gains$442 $320 $1,641 $1,107 
Realized losses(1)(67)(2)(90)
Net realized gains from fixed-maturity securities441 253 1,639 1,017 
Equity securities:
Realized losses(137) (137) 
Net realized losses from equity securities(137) (137) 
Realized gains from the sales of short-term investments   12 
Net realized investment gains$304 $253 $1,502 $1,029 

Change in net unrealized gains (losses) on fixed-maturity securities
For the three and six months ended June 30, 2021, the changes in net unrealized gains (losses) for fixed-maturity securities were $12.1 million and $(12.7) million, respectively. For the three and six months ended June 30, 2020, the changes in net unrealized gains for fixed-maturity securities were $34.2 million and $22.5 million, respectively.
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Insurance – statutory deposits
The Company had invested assets with a carrying value of $6.8 million and $6.9 million on deposit with state regulatory authorities at June 30, 2021 and December 31, 2020, respectively.
Payable for investments purchased
The Company recorded a payable for investments purchased, not yet settled, of $28.6 million at June 30, 2021. The payable balance was included in the "other liabilities" line item of the consolidated balance sheet.
3.     Fair value measurements
Fair value is estimated for each class of financial instrument for which it was practical to estimate fair value. Fair value is defined as the price in the principal market that would be received for an asset or paid to transfer a liability to facilitate an orderly transaction between market participants on the measurement date. Market participants are assumed to be independent, knowledgeable, able and willing to transact an exchange and not acting under duress. 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 accounting vendor from nationally recognized third-party pricing services, where available. Values for exchange traded funds are generally based on Level 1 inputs, which use quoted prices in active markets for identical assets. For other fixed-maturity securities and non-redeemable preferred stock, the pricing vendors use a pricing methodology involving the market approach, including pricing models which use prices and relevant market information regarding a particular security or securities with similar characteristics to establish a valuation. The estimates of fair value of these investments are included in the amounts disclosed as Level 2. For those investments where significant inputs are unobservable, the Company's investment accounting vendor obtains valuations from pricing vendors or brokers using the market approach and income approach valuation techniques and are disclosed as Level 3.
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 accounting vendor that assess fair values from third party pricing services, 2) discussing with the Company's investment accounting vendor its process for reviewing and validating pricing obtained from third party pricing services and 3) reviewing the security pricing received from the Company's investment accounting vendor and monitoring changes in unrealized gains and losses at the individual security level. 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.
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The following tables present the balances of assets measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020, by level within the fair value hierarchy:
June 30, 2021
Level 1Level 2Level 3Total
(in thousands)
Assets
Fixed maturities:
Obligations of states, municipalities and political subdivisions
$ $224,639 $ $224,639 
Corporate and other securities 428,332  428,332 
Asset-backed securities 278,163  278,163 
Commercial mortgage-backed securities 63,459  63,459 
Residential mortgage-backed securities 230,286  230,286 
Total fixed-maturity securities 1,224,879  1,224,879 
Equity securities:
Exchange traded funds113,248   113,248 
Non-redeemable preferred stock 37,634  37,634 
Total equity securities113,248 37,634  150,882 
Total$113,248 $1,262,513 $ $1,375,761 

December 31, 2020
Level 1Level 2Level 3Total
(in thousands)
Assets
Fixed maturities:
Obligations of states, municipalities and political subdivisions
$ $230,906 $ $230,906 
Corporate and other securities 316,608  316,608 
Asset-backed securities 240,661  240,661 
Commercial mortgage-backed securities 70,969  70,969 
Residential mortgage-backed securities 222,656  222,656 
Total fixed-maturity securities 1,081,800  1,081,800 
Equity securities:
Exchange traded funds98,050   98,050 
Non-redeemable preferred stock 31,612  31,612 
Total equity securities98,050 31,612  129,662 
Total$98,050 $1,113,412 $ $1,211,462 
There were no assets or liabilities measured at fair value on a nonrecurring basis as of June 30, 2021 or December 31, 2020.

The carrying value of cash equivalents approximates its fair value at June 30, 2021 and December 31, 2020, due to the short-term maturities of these assets. In addition, the estimated fair value of the Credit Facility approximated its
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carrying value as of June 30, 2021 and December 31, 2020. See Note 12 for further information regarding the Credit Facility.

4.     Deferred policy acquisition costs
The following table presents the amounts of policy acquisition costs deferred and amortized for the three and six months ended June 30, 2021 and 2020:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(in thousands)
Balance, beginning of period$34,741 $26,005 $31,912 $23,564 
Policy acquisition costs deferred:
Direct commissions28,253 19,496 52,903 37,574 
Ceding commissions(6,990)(3,891)(13,194)(7,763)
Other underwriting and policy acquisition costs1,572 1,282 2,940 2,469 
Policy acquisition costs deferred22,835 16,887 42,649 32,280 
Amortization of net policy acquisition costs
(18,775)(13,950)(35,760)(26,902)
Balance, end of period$38,801 $28,942 $38,801 $28,942 

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.
5.     Property and equipment, net
Property and equipment are included in "other assets" in the accompanying consolidated balance sheets and consists of the following:
June 30, 2021December 31, 2020
(in thousands)
Building$31,675 $31,675 
Parking deck5,072 5,072 
Land3,068 3,068 
Equipment2,891 2,770 
Software6,052 4,815 
Furniture and fixtures2,143 1,731 
Land improvements326 317 
Construction in progress - corporate headquarters1,200  
52,427 49,448 
Accumulated depreciation(4,353)(3,262)
Total property and equipment, net$48,074 $46,186 

During the first quarter of 2020, the Company sold a portion of both its land and parking deck for approximately $6.5 million to a real estate developer for the development of an apartment building. As of June 30, 2021, the Company had received $5.0 million of the proceeds from the sale and is expected to receive the remaining
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