Kinsale Capital Group, Inc.KNSL
Kinsale Capital Group, Inc. Fair Value Disclosure
Fair value measurements
Fair value is estimated for each class of financial instrument based on the framework established in the fair value accounting guidance. Fair value is defined as the price in the principal market that would be received for an asset or paid to transfer a liability to facilitate an orderly transaction between market participants on the measurement date. Market participants are assumed to be independent, knowledgeable, able and willing to transact an exchange and not acting under duress. 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 U.S. Treasuries, exchange traded funds and common stocks 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 consolidated financial statements at December 31, 2025 and 2024, 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.
The following tables present the balances of assets measured at fair value on a recurring basis as of December 31, 2025 and 2024, by level within the fair value hierarchy:
| December 31, 2025 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Fixed maturities: | ||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 874 | $ | — | $ | — | $ | 874 | ||||||||||||||||||
Obligations of states, municipalities and political subdivisions | — | 127,860 | — | 127,860 | ||||||||||||||||||||||
| Corporate and other securities | — | 1,713,888 | — | 1,713,888 | ||||||||||||||||||||||
| Asset-backed securities | — | 588,519 | — | 588,519 | ||||||||||||||||||||||
| Residential mortgage-backed securities | — | 1,459,270 | — | 1,459,270 | ||||||||||||||||||||||
| Commercial mortgage-backed securities | — | 451,039 | — | 451,039 | ||||||||||||||||||||||
| Total fixed maturities | 874 | 4,340,576 | — | 4,341,450 | ||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Exchange traded funds | 185,523 | — | — | 185,523 | ||||||||||||||||||||||
| Non-redeemable preferred stock | — | 24,100 | — | 24,100 | ||||||||||||||||||||||
| Common stocks | 416,776 | — | — | 416,776 | ||||||||||||||||||||||
| Total equity securities | 602,299 | 24,100 | — | 626,399 | ||||||||||||||||||||||
| Short-term investments | 3,864 | — | — | 3,864 | ||||||||||||||||||||||
| Total | $ | 607,037 | $ | 4,364,676 | $ | — | $ | 4,971,713 | ||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Fixed maturities: | ||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 15,048 | $ | — | $ | — | $ | 15,048 | ||||||||||||||||||
Obligations of states, municipalities and political subdivisions | — | 146,304 | — | 146,304 | ||||||||||||||||||||||
| Corporate and other securities | — | 1,989,490 | — | 1,989,490 | ||||||||||||||||||||||
| Asset-backed securities | — | 732,742 | — | 732,742 | ||||||||||||||||||||||
| Residential mortgage-backed securities | — | 448,874 | — | 448,874 | ||||||||||||||||||||||
| Commercial mortgage-backed securities | — | 205,105 | — | 205,105 | ||||||||||||||||||||||
| Total fixed maturities | 15,048 | 3,522,515 | — | 3,537,563 | ||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Exchange traded funds | 129,731 | — | — | 129,731 | ||||||||||||||||||||||
| Non-redeemable preferred stock | — | 26,433 | — | 26,433 | ||||||||||||||||||||||
| Common stocks | 242,195 | — | — | 242,195 | ||||||||||||||||||||||
| Total equity securities | 371,926 | 26,433 | — | 398,359 | ||||||||||||||||||||||
| Short-term investments | 3,714 | — | — | 3,714 | ||||||||||||||||||||||
| Total | $ | 390,688 | $ | 3,548,948 | $ | — | $ | 3,939,636 | ||||||||||||||||||
There were no assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2025 or 2024.
The carrying amount of the Company's fixed-rate senior notes was $175.0 million, less debt issuance cost, and the corresponding estimated fair value was $173.8 million and $168.6 million at December 31, 2025 and 2024, respectively. The fair value measurement was determined using a discounted cash flow analysis that factors in current market yields for comparable borrowing arrangements under the Company's credit profile. Since this methodology is based upon market yields for comparable arrangements, the measurement is categorized as Level 2. The estimated fair value of outstanding borrowings under the Company's revolving Credit Facility approximated its carrying value at December 31, 2025 and 2024. See Note 11 for further information regarding the Company's debt arrangements.
The Company holds cash equivalents that are managed as part of its investment portfolio and, due to the short-term maturities of these assets, the carrying value of these investments approximates fair value. The Company held cash equivalents of $45.3 million and $16.1 million at December 31, 2025 and 2024, respectively.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 16, 2017 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.