Kinsale Capital Group, Inc.KNSL
Kinsale Capital Group, Inc. Income Taxes Disclosure
Income taxes
The Company’s subsidiaries file a consolidated U.S. federal income tax return. Under a tax sharing agreement, Kinsale collects from or refunds to its subsidiaries the amount of taxes determined as if Kinsale and the subsidiaries filed separate returns. The Company is no longer subject to income tax examination by tax authorities for the years ended before January 1, 2022. The Company’s insurance subsidiary, Kinsale Insurance, is not subject to state income taxes in the states in which it operates and is instead subject to premium taxes. The Company’s non-insurance subsidiaries are subject to state income taxes; however, they have generated state net operating loss carryforwards, for which a full valuation allowance is established.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA extends or makes permanent various tax provisions that were originally enacted in the 2017 Tax Cuts and Jobs Act and were set to expire at the end of 2025. The tax provisions in the OBBBA did not have a material impact on the Company's consolidated financial statements.
Components of Income Tax Expense
The Company operates exclusively within the United States and, as such, has no foreign operations or foreign income. For the years ending December 31, 2025, 2024 and 2023, income before income tax expense includes the following components:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Income from continuing operations before income tax expense | ||||||||||||||||||||
| U.S. | $ | 634,302 | $ | 514,716 | $ | 384,017 | ||||||||||||||
| Total | $ | 634,302 | $ | 514,716 | $ | 384,017 | ||||||||||||||
For the years ending December 31, 2025, 2024 and 2023, income tax expense (benefit) from continuing operations consisted of:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Income tax expense (benefit) from continuing operations | ||||||||||||||||||||
| Current tax expense | ||||||||||||||||||||
| U.S. federal | $ | 130,345 | $ | 103,701 | $ | 85,353 | ||||||||||||||
| U.S. state and local | — | — | — | |||||||||||||||||
| Total current tax expense | 130,345 | 103,701 | 85,353 | |||||||||||||||||
| Deferred tax expense (benefit) | ||||||||||||||||||||
| U.S. federal | 343 | (3,828) | (9,429) | |||||||||||||||||
| U.S. state and local | — | — | — | |||||||||||||||||
| Total deferred tax expense (benefit) | 343 | (3,828) | (9,429) | |||||||||||||||||
| Total income tax expense | $ | 130,688 | $ | 99,873 | $ | 75,924 | ||||||||||||||
Income taxes paid
The Company paid total income taxes (net of refunds received) of $129.6 million, $104.1 million, and $84.6 million for the years ending December 31, 2025, 2024 and 2023, respectively, all of which related to federal income taxes.
Current income taxes payable were $3.6 million and $2.8 million at December 31, 2025 and 2024, respectively, and are included in other liabilities in the accompanying consolidated balance sheets.
Rate reconciliation
The prevailing federal income tax rate was 21% for the years ending December 31, 2025, 2024 and 2023. The reconciliation of the statutory U.S. federal income tax rate to the Company’s effective tax rate for the years ending December 31, 2025, 2024 and 2023 is as follows:
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||||||||||||||
| U.S. federal statutory income tax rate | $ | 133,203 | 21.0 | % | $ | 108,090 | 21.0 | % | $ | 80,644 | 21.0 | % | ||||||||||||||||||||||||||
| U.S. federal | ||||||||||||||||||||||||||||||||||||||
| Tax credits | (500) | (0.1) | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| Nontaxable and nondeductible items | 2,885 | 0.5 | % | 1,902 | 0.4 | % | 212 | 0.1 | % | |||||||||||||||||||||||||||||
| Excess tax benefits on share-based payments | (4,900) | (0.8) | % | (10,119) | (2.0) | % | (4,932) | (1.3) | % | |||||||||||||||||||||||||||||
| Total | $ | 130,688 | 20.6 | % | $ | 99,873 | 19.4 | % | $ | 75,924 | 19.8 | % | ||||||||||||||||||||||||||
The Company's effective tax rate for the years ended December 31, 2025, 2024 and 2023, were 20.6%, 19.4% and 19.8% compared to the statutory federal rate of 21%. The difference primarily resulted from tax benefits from stock-based compensation, including stock options exercised, and from income generated by certain tax-exempt investments.
The significant components of the net deferred tax asset are summarized as follows:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in thousands) | ||||||||||||||
| Deferred tax assets: | ||||||||||||||
| Unrealized losses on fixed-maturity securities | $ | 8,662 | $ | 26,343 | ||||||||||
| Unpaid losses and loss adjustment expenses | 49,288 | 36,491 | ||||||||||||
| Unearned premiums | 34,267 | 32,580 | ||||||||||||
| State operating loss carryforwards | 10,216 | 8,859 | ||||||||||||
| Stock compensation | 3,158 | 3,276 | ||||||||||||
| Allowance for credit losses | 5,742 | 5,210 | ||||||||||||
| Other | 2,145 | 1,939 | ||||||||||||
| Deferred tax assets before allowance | 113,478 | 114,698 | ||||||||||||
| Less: valuation allowance | (10,119) | (9,066) | ||||||||||||
| Total deferred tax assets | 103,359 | 105,632 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Unrealized gains on equity securities | 30,129 | 17,774 | ||||||||||||
| Deferred policy acquisition costs, net of ceding commissions | 24,935 | 22,945 | ||||||||||||
| Property and equipment | 4,894 | 3,263 | ||||||||||||
| Other | 1,210 | 1,435 | ||||||||||||
| Total deferred tax liabilities | 61,168 | 45,417 | ||||||||||||
| Net deferred tax asset | $ | 42,191 | $ | 60,215 | ||||||||||
At December 31, 2025 and 2024, the Company had state net operating losses ("NOLs") of $215.5 million and $186.9 million, respectively. The state NOLs are available to offset future taxable income or reduce taxes payable and begin expiring in 2029.
Management evaluates the need for a valuation allowance related to its deferred tax assets. At December 31, 2025 and 2024, the Company recorded a tax valuation allowance equal to the state NOLs and the deferred tax assets, net of existing deferred tax liabilities that were expected to reverse in future periods, related to certain state jurisdictions. No other valuation allowances were established against the Company’s deferred tax assets at December 31, 2025 and 2024, as the Company believes that it is more likely than not that the remaining deferred tax assets will be realized given the carry back availability, reversal of existing temporary differences and future taxable income. With respect to deferred tax assets associated with unrealized losses on fixed-maturity securities, management has the ability and intent to execute a tax planning strategy to hold those securities to recovery or maturity to the extent not matched with realized capital gains or available carry back to ensure recognition of the deferred tax asset. After consideration of all available evidence, we concluded that it is more likely than not that these deferred tax assets will be realized.
The Company did not have any material uncertain tax positions in 2025 or 2024. Management is not aware of any events that would give rise to any material uncertain tax positions.
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 Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.