on january 1 , 2014 , we increased the ceding percentage under the mlqs from 45 % to 50 % and the provisional ceding commission rate from 35 % to 40 % . effective december 31 , 2014 , 45 % of the contract covering the period july 1 , 2012 to december 31 , 2013 ( the `` 2012 mlqs `` ) was commuted , and the remaining 55 % of this contract was commuted effective january 1 , 2015. effective january 1 , 2015 , the ceding percentage under the mlqs was 50 % and the provisional ceding commission rate was 41 % . the ceding percentage remained at 50 % until october 1 , 2015 , at which time we decreased the percentage to 40 % , while the provisional ceding commission rate remained at 41 % . a lower ceding percentage generally results in higher net earned premiums and a reduction in ceding commissions in future periods . effective january 1 , 2016 , we further reduced the ceding percentage from 40 % to 15 % while maintaining the provisional ceding commission rate at 41 % , and we commuted the mlqs covering the 2014 calendar year . we reduced the ceding percentage due to kinsale insurance 's capital position growing more strongly as a result of the profitability of the business relative to the growth rate of gross written premiums . as a result of the successful completion of our ipo in august 2016 , we terminated and commuted the mlqs contract on october 1 , 2016 , which covered the period january 1 , 2016 through september 30 , 2016 , and the mlqs was not renewed for the 2017 calendar year . effective january 1 , 2017 , the remaining mlqs was commuted covering the 2015 calendar year , and there are no remaining mlqs contracts outstanding . the effect of the mlqs on our results of operations is primarily reflected in our ceded written premiums , losses and loss adjustment expenses , as well as our underwriting , acquisition and insurance expenses . the following tables summarize the effect of the mlqs on our underwriting income for the years ended december 31 , 2017 , 2016 and 2015 : year ended december 31 , 2017 year ended december 31 , 2016 year ended december 31 , 2015 ( $ in thousands ) including quota share effect of quota share excluding quota share including quota share effect of quota share excluding quota share including quota share effect of quota share excluding quota share gross written premiums $ 223,191 $ — $ 223,191 $ 188,478 $ — $ 188,478 $ 177,009 $ — $ 177,009 ceded written premiums ( 33,719 ) — ( 33,719 ) ( 21,214 ) 10,269 ( 31,483 ) ( 92,991 ) ( 63,991 ) ( 29,000 ) net written premiums $ 189,472 $ — $ 189,472 $ 167,264 $ 10,269 $ 156,995 $ 84,018 $ ( 63,991 ) $ 148,009 net retention ( 1 ) 84.9 % 84.9 % 88.7 % 83.3 % 47.5 % 83.6 % net earned premiums $ 176,053 $ — $ 176,053 $ 133,816 $ ( 16,996 ) $ 150,812 $ 74,322 $ ( 67,950 ) $ 142,272 losses and loss adjustment expenses ( 103,680 ) — ( 103,680 ) ( 70,961 ) 4,380 ( 75,341 ) ( 42,238 ) 30,978 ( 73,216 ) underwriting , acquisition and insurance expenses ( 44,146 ) — ( 44,146 ) ( 28,551 ) 11,936 ( 40,487 ) ( 2,809 ) 34,254 ( 37,063 ) underwriting income ( 2 ) $ 28,227 $ — $ 28,227 $ 34,304 $ ( 680 ) $ 34,984 $ 29,275 $ ( 2,718 ) $ 31,993 loss ratio 58.9 % — % — 53.0 % 25.8 % — 56.8 % 45.6 % — expense ratio 25.1 % — % — 21.3 % 70.2 % — 3.8 % 50.4 % — combined ratio 84.0 % — % — 74.3 % 96.0 % — 60.6 % 96.0 % — adjusted loss ratio ( 3 ) — — 58.9 % — — 50.0 % — — 51.5 % adjusted expense ratio ( 3 ) — — 25.1 % — — 26.8 % — — 26.0 % adjusted combined ratio ( 3 ) — — 84.0 % — — 76.8 % — — 77.5 % ( 1 ) the ratio of net written premiums to gross written premiums . ( 2 ) underwriting income is a non-gaap financial measure . see `` — reconciliation of non-gaap financial measures `` for a reconciliation of net income to underwriting income in accordance with gaap . 44 ( 3 ) our adjusted loss ratio , adjusted expense ratio and adjusted combined ratio are non-gaap financial measures . we define our adjusted loss ratio , adjusted expense ratio and adjusted combined ratio as each of our loss ratio , expense ratio and combined ratio , respectively , excluding the effects of the mlqs . we use these adjusted ratios as an internal performance measure in the management of our operations because we believe they give our management and other users of our financial information useful insight into our results of operations and our underlying business performance . our adjusted loss ratio , adjusted expense ratio and adjusted combined ratio should not be viewed as substitutes for our loss ratio , expense ratio and combined ratio , respectively , which are presented in accordance with gaap . our results of operations may be difficult to compare from year to year as we made periodic adjustments to the amount of business we ceded under the terms of the mlqs , may have changed the negotiated terms of the mlqs upon renewal , and may have increased or decreased the ceding commission under the mlqs based on the loss experience of the business ceded . story_separator_special_tag deferred tax balances to reflect the lower rate as required by applicable accounting standards . the re-measurement resulted in an increase to our tax expense of $ 1.9 million for the year ended december 31 , 2017. in addition , the effective tax rate for the year ended december 31 , 2017 reflected tax benefits related to tax-exempt interest income from municipal bonds and the recognition of tax benefits from share-based compensation . our income tax expense for periods beginning in 2018 will be based on the new rate , and we expect our 2018 annual effective tax rate to be significantly lower than our current year effective tax rate , as a result of the reduction of the federal corporate income tax rate in the tcja . in 2016 , our effective tax rate differed from the statutory tax rate of 35 % primarily as a result favorable tax treatment on certain municipal bond interest income and dividends received from our equity investments . return on equity our return on equity was 11.1 % for the year ended december 31 , 2017 compared to 16.2 % for the year ended december 31 , 2016. the decrease is primarily the result of higher average equity attributable to the additional equity raised in the ipo and lower net income . 51 year ended december 31 , 2016 compared to year ended december 31 , 2015 the following table summarizes our results of operations for the years ended december 31 , 2016 and 2015 : replace_table_token_22_th ( 1 ) underwriting income is a non-gaap financial measure . see `` —reconciliation of non-gaap financial measures `` for a reconciliation of net income to underwriting income in accordance with gaap . our net income was $ 26.2 million for the year ended december 31 , 2016 compared to $ 22.3 million for the year ended december 31 , 2015 , an increase of $ 3.9 million , or 17.5 % . our underwriting income increased by $ 5.0 million , or 17.2 % , to $ 34.3 million for the year ended december 31 , 2016 compared to $ 29.3 million for the year ended december 31 , 2015. the increase in our underwriting income reflected an increase in number of policies written and higher favorable prior year loss development during 2016 compared to 2015. underwriting income excluding the effects of the mlqs , was $ 35.0 million for the year ended december 31 , 2016 compared to $ 32.0 million for the year ended december 31 , 2015 , an increase of $ 3.0 million , or 9.3 % . the corresponding adjusted combined ratio was 76.8 % for the year ended december 31 , 2016 compared to 77.5 % for the year ended december 31 , 2015. the decrease in the adjusted combined ratio was attributable to improvement in the adjusted loss ratio of 50.0 % in 2016 compared to 51.5 % in 2015 , primarily from favorable prior year loss development . the adjusted expense ratio was 26.8 % in 2016 compared to 26.0 % in 2015 , which reflected higher employee compensation and public company costs for 2016 compared to 2015 . 52 premiums gross written premiums were $ 188.5 million for the year ended december 31 , 2016 compared to $ 177.0 million for the year ended december 31 , 2015 , an increase of $ 11.5 million , or 6.5 % . premium growth in 2016 was due to an increase in the number of policies written , offset in part by a decrease in the average premium per policy . the average premium on a policy written by us was $ 8,800 in 2016 compared to $ 10,400 in 2015. the changes in gross written premiums were most notable in the following lines of business : small business , which represented approximately 14.5 % of our gross written premiums in 2016 , increased by $ 5.9 million , or 27.3 % , for the year ended december 31 , 2016 over the prior year ; construction , which represented approximately 22.4 % of our gross written premiums in 2016 , increased by $ 5.3 million , or 14.4 % , for the year ended december 31 , 2016 over the prior year , and general casualty , which represented approximately 8.6 % of our gross written premiums in 2016 , decreased by $ 4.3 million , or 21.2 % , for the year ended december 31 , 2016 over the prior year . net written premiums increased by $ 83.2 million , or 99.1 % , to $ 167.3 million for the year ended december 31 , 2016 from $ 84.0 million for the year ended december 31 , 2015. this increase in net written premiums was primarily due to higher retention resulting from changes in the ceding percentages under the mlqs and higher gross written premiums in 2016. effective january 1 , 2016 , the ceding percentage was 15 % . as a result of the successful completion of our ipo in august 2016 , we terminated and commuted the 2016 mlqs contract on october 1 , 2016 , which resulted in a net retention ratio of 88.7 % for the year ending december 31 , 2016. effective january 1 , 2015 , the ceding percentage on the mlqs was 50 % . on october 1 , 2015 , we decreased the ceding percentage on the mlqs to 40 % , which resulted in a net retention ratio of 47.5 % for the year ending december 31 , 2015. excluding the effects of the mlqs , our net retention ratio was 83.3 % for the year ended december 31 , 2016 compared to 83.6 % for the year ended december 31 , 2015. net earned premiums increased by $ 59.5 million , or 80.0 % , to $ 133.8 million for the year ended december 31 , 2016 from $ 74.3 million for the year ended

cash flows our most significant source of cash is from premiums received from our insureds , which , for most policies , we receive at the beginning of the coverage period . our most significant cash outflow is for claims that arise when a policyholder incurs an insured loss . because the payment of claims occurs after the receipt of the premium , often years later , we invest the cash in various investment securities that earn interest and dividends . we also use cash to pay commissions to brokers , as well as to pay for ongoing operating expenses such as salaries , rent and taxes . as described under `` —reinsurance '' below , we use reinsurance to manage the risk that we take on our policies . we 57 cede , or pay out , part of the premiums we receive to our reinsurers and collect cash back when losses subject to our reinsurance coverage are paid . the timing of our cash flows from operating activities can vary among periods due to the timing by which payments are made or received . some of our payments and receipts , including loss settlements and subsequent reinsurance receipts , can be significant , so their timing can influence cash flows from operating activities in any given period . management believes that cash receipts from premiums , proceeds from investment sales and redemptions and investment income are sufficient to cover cash outflows in the foreseeable future . our cash flows for the years ended december 31 , 2017 , 2016 and 2015 were : replace_table_token_27_th we have posted positive operating cash flow in each of the last three years . the fluctuation of cash provided by operating activities in 2017 , 2016 and 2015 was due primarily to the timing of premium received , claim payments and reinsurance balances .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```cash flows our most significant source of cash is from premiums received from our insureds , which , for most policies , we receive at the beginning of the coverage period . our most significant cash outflow is for claims that arise when a policyholder incurs an insured loss . because the payment of claims occurs after the receipt of the premium , often years later , we invest the cash in various investment securities that earn interest and dividends . we also use cash to pay commissions to brokers , as well as to pay for ongoing operating expenses such as salaries , rent and taxes . as described under `` —reinsurance '' below , we use reinsurance to manage the risk that we take on our policies . we 57 cede , or pay out , part of the premiums we receive to our reinsurers and collect cash back when losses subject to our reinsurance coverage are paid . the timing of our cash flows from operating activities can vary among periods due to the timing by which payments are made or received . some of our payments and receipts , including loss settlements and subsequent reinsurance receipts , can be significant , so their timing can influence cash flows from operating activities in any given period . management believes that cash receipts from premiums , proceeds from investment sales and redemptions and investment income are sufficient to cover cash outflows in the foreseeable future . our cash flows for the years ended december 31 , 2017 , 2016 and 2015 were : replace_table_token_27_th we have posted positive operating cash flow in each of the last three years . the fluctuation of cash provided by operating activities in 2017 , 2016 and 2015 was due primarily to the timing of premium received , claim payments and reinsurance balances .
```    
 Suspicious Activity Report : on january 1 , 2014 , we increased the ceding percentage under the mlqs from 45 % to 50 % and the provisional ceding commission rate from 35 % to 40 % . effective december 31 , 2014 , 45 % of the contract covering the period july 1 , 2012 to december 31 , 2013 ( the `` 2012 mlqs `` ) was commuted , and the remaining 55 % of this contract was commuted effective january 1 , 2015. effective january 1 , 2015 , the ceding percentage under the mlqs was 50 % and the provisional ceding commission rate was 41 % . the ceding percentage remained at 50 % until october 1 , 2015 , at which time we decreased the percentage to 40 % , while the provisional ceding commission rate remained at 41 % . a lower ceding percentage generally results in higher net earned premiums and a reduction in ceding commissions in future periods . effective january 1 , 2016 , we further reduced the ceding percentage from 40 % to 15 % while maintaining the provisional ceding commission rate at 41 % , and we commuted the mlqs covering the 2014 calendar year . we reduced the ceding percentage due to kinsale insurance 's capital position growing more strongly as a result of the profitability of the business relative to the growth rate of gross written premiums . as a result of the successful completion of our ipo in august 2016 , we terminated and commuted the mlqs contract on october 1 , 2016 , which covered the period january 1 , 2016 through september 30 , 2016 , and the mlqs was not renewed for the 2017 calendar year . effective january 1 , 2017 , the remaining mlqs was commuted covering the 2015 calendar year , and there are no remaining mlqs contracts outstanding . the effect of the mlqs on our results of operations is primarily reflected in our ceded written premiums , losses and loss adjustment expenses , as well as our underwriting , acquisition and insurance expenses . the following tables summarize the effect of the mlqs on our underwriting income for the years ended december 31 , 2017 , 2016 and 2015 : year ended december 31 , 2017 year ended december 31 , 2016 year ended december 31 , 2015 ( $ in thousands ) including quota share effect of quota share excluding quota share including quota share effect of quota share excluding quota share including quota share effect of quota share excluding quota share gross written premiums $ 223,191 $ — $ 223,191 $ 188,478 $ — $ 188,478 $ 177,009 $ — $ 177,009 ceded written premiums ( 33,719 ) — ( 33,719 ) ( 21,214 ) 10,269 ( 31,483 ) ( 92,991 ) ( 63,991 ) ( 29,000 ) net written premiums $ 189,472 $ — $ 189,472 $ 167,264 $ 10,269 $ 156,995 $ 84,018 $ ( 63,991 ) $ 148,009 net retention ( 1 ) 84.9 % 84.9 % 88.7 % 83.3 % 47.5 % 83.6 % net earned premiums $ 176,053 $ — $ 176,053 $ 133,816 $ ( 16,996 ) $ 150,812 $ 74,322 $ ( 67,950 ) $ 142,272 losses and loss adjustment expenses ( 103,680 ) — ( 103,680 ) ( 70,961 ) 4,380 ( 75,341 ) ( 42,238 ) 30,978 ( 73,216 ) underwriting , acquisition and insurance expenses ( 44,146 ) — ( 44,146 ) ( 28,551 ) 11,936 ( 40,487 ) ( 2,809 ) 34,254 ( 37,063 ) underwriting income ( 2 ) $ 28,227 $ — $ 28,227 $ 34,304 $ ( 680 ) $ 34,984 $ 29,275 $ ( 2,718 ) $ 31,993 loss ratio 58.9 % — % — 53.0 % 25.8 % — 56.8 % 45.6 % — expense ratio 25.1 % — % — 21.3 % 70.2 % — 3.8 % 50.4 % — combined ratio 84.0 % — % — 74.3 % 96.0 % — 60.6 % 96.0 % — adjusted loss ratio ( 3 ) — — 58.9 % — — 50.0 % — — 51.5 % adjusted expense ratio ( 3 ) — — 25.1 % — — 26.8 % — — 26.0 % adjusted combined ratio ( 3 ) — — 84.0 % — — 76.8 % — — 77.5 % ( 1 ) the ratio of net written premiums to gross written premiums . ( 2 ) underwriting income is a non-gaap financial measure . see `` — reconciliation of non-gaap financial measures `` for a reconciliation of net income to underwriting income in accordance with gaap . 44 ( 3 ) our adjusted loss ratio , adjusted expense ratio and adjusted combined ratio are non-gaap financial measures . we define our adjusted loss ratio , adjusted expense ratio and adjusted combined ratio as each of our loss ratio , expense ratio and combined ratio , respectively , excluding the effects of the mlqs . we use these adjusted ratios as an internal performance measure in the management of our operations because we believe they give our management and other users of our financial information useful insight into our results of operations and our underlying business performance . our adjusted loss ratio , adjusted expense ratio and adjusted combined ratio should not be viewed as substitutes for our loss ratio , expense ratio and combined ratio , respectively , which are presented in accordance with gaap . our results of operations may be difficult to compare from year to year as we made periodic adjustments to the amount of business we ceded under the terms of the mlqs , may have changed the negotiated terms of the mlqs upon renewal , and may have increased or decreased the ceding commission under the mlqs based on the loss experience of the business ceded . story_separator_special_tag deferred tax balances to reflect the lower rate as required by applicable accounting standards . the re-measurement resulted in an increase to our tax expense of $ 1.9 million for the year ended december 31 , 2017. in addition , the effective tax rate for the year ended december 31 , 2017 reflected tax benefits related to tax-exempt interest income from municipal bonds and the recognition of tax benefits from share-based compensation . our income tax expense for periods beginning in 2018 will be based on the new rate , and we expect our 2018 annual effective tax rate to be significantly lower than our current year effective tax rate , as a result of the reduction of the federal corporate income tax rate in the tcja . in 2016 , our effective tax rate differed from the statutory tax rate of 35 % primarily as a result favorable tax treatment on certain municipal bond interest income and dividends received from our equity investments . return on equity our return on equity was 11.1 % for the year ended december 31 , 2017 compared to 16.2 % for the year ended december 31 , 2016. the decrease is primarily the result of higher average equity attributable to the additional equity raised in the ipo and lower net income . 51 year ended december 31 , 2016 compared to year ended december 31 , 2015 the following table summarizes our results of operations for the years ended december 31 , 2016 and 2015 : replace_table_token_22_th ( 1 ) underwriting income is a non-gaap financial measure . see `` —reconciliation of non-gaap financial measures `` for a reconciliation of net income to underwriting income in accordance with gaap . our net income was $ 26.2 million for the year ended december 31 , 2016 compared to $ 22.3 million for the year ended december 31 , 2015 , an increase of $ 3.9 million , or 17.5 % . our underwriting income increased by $ 5.0 million , or 17.2 % , to $ 34.3 million for the year ended december 31 , 2016 compared to $ 29.3 million for the year ended december 31 , 2015. the increase in our underwriting income reflected an increase in number of policies written and higher favorable prior year loss development during 2016 compared to 2015. underwriting income excluding the effects of the mlqs , was $ 35.0 million for the year ended december 31 , 2016 compared to $ 32.0 million for the year ended december 31 , 2015 , an increase of $ 3.0 million , or 9.3 % . the corresponding adjusted combined ratio was 76.8 % for the year ended december 31 , 2016 compared to 77.5 % for the year ended december 31 , 2015. the decrease in the adjusted combined ratio was attributable to improvement in the adjusted loss ratio of 50.0 % in 2016 compared to 51.5 % in 2015 , primarily from favorable prior year loss development . the adjusted expense ratio was 26.8 % in 2016 compared to 26.0 % in 2015 , which reflected higher employee compensation and public company costs for 2016 compared to 2015 . 52 premiums gross written premiums were $ 188.5 million for the year ended december 31 , 2016 compared to $ 177.0 million for the year ended december 31 , 2015 , an increase of $ 11.5 million , or 6.5 % . premium growth in 2016 was due to an increase in the number of policies written , offset in part by a decrease in the average premium per policy . the average premium on a policy written by us was $ 8,800 in 2016 compared to $ 10,400 in 2015. the changes in gross written premiums were most notable in the following lines of business : small business , which represented approximately 14.5 % of our gross written premiums in 2016 , increased by $ 5.9 million , or 27.3 % , for the year ended december 31 , 2016 over the prior year ; construction , which represented approximately 22.4 % of our gross written premiums in 2016 , increased by $ 5.3 million , or 14.4 % , for the year ended december 31 , 2016 over the prior year , and general casualty , which represented approximately 8.6 % of our gross written premiums in 2016 , decreased by $ 4.3 million , or 21.2 % , for the year ended december 31 , 2016 over the prior year . net written premiums increased by $ 83.2 million , or 99.1 % , to $ 167.3 million for the year ended december 31 , 2016 from $ 84.0 million for the year ended december 31 , 2015. this increase in net written premiums was primarily due to higher retention resulting from changes in the ceding percentages under the mlqs and higher gross written premiums in 2016. effective january 1 , 2016 , the ceding percentage was 15 % . as a result of the successful completion of our ipo in august 2016 , we terminated and commuted the 2016 mlqs contract on october 1 , 2016 , which resulted in a net retention ratio of 88.7 % for the year ending december 31 , 2016. effective january 1 , 2015 , the ceding percentage on the mlqs was 50 % . on october 1 , 2015 , we decreased the ceding percentage on the mlqs to 40 % , which resulted in a net retention ratio of 47.5 % for the year ending december 31 , 2015. excluding the effects of the mlqs , our net retention ratio was 83.3 % for the year ended december 31 , 2016 compared to 83.6 % for the year ended december 31 , 2015. net earned premiums increased by $ 59.5 million , or 80.0 % , to $ 133.8 million for the year ended december 31 , 2016 from $ 74.3 million for the year ended

