Kingstone Companies (KINS) Q1 2025 Earnings Call May 09, 2025 08:30 AM ET Speaker0 Greetings, and welcome to the Kingstone Companies First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to introduce Karen Daly, Vice President, The Equity Group and Kingstone's Investor Relations representative. Karen, yo ...

P&C Insurance Company Capitalizing on Unique Niche Market Opportunity to Achieve Profitable Growth Investor Presentation May 2025 NASDAQ: KINS DISCLAIMER & FORWARD- LOOKING STATEMENTS This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and ...

Conference Call and Financial Results - Kingstone Companies, Inc. will hold a conference call on May 9, 2025, at 8:30 A.M. ET to discuss its business operations and first quarter results[3] - The financial results news release is scheduled to be issued on May 8, 2025, after the stock markets close[3] Press Release Information - The press release regarding the financial results will not be deemed "filed" under the Securities Exchange Act of 1934[4] - The information in the press release will not be incorporated by reference into any registration statement unless specifically identified[6] Company Leadership - Meryl Golden serves as the President and CEO of Kingstone Companies, Inc.[11]

Kingstone Companies (NASDAQ: KINS ) is a small, regional insurance company operating in the New York area. I wrote my first article on the company back in January. The stock had been performing spectacularly until the tariffL/S Equity Research. Mostly micro and small caps. I use this platform to bounce ideas around and try to get different point of views. Contact me at theredkraken7@gmail.com, it's always nice to make new friends =)Analyst’s Disclosure: I/we have a beneficial long position in the shares of ...

The U.S. Excess & Surplus (E&S) insurance market has been experiencing growth. Customized solutions for complex risk are the essence of this non-admitted insurance market. The E&S market stands to benefit from the inflow of business from standard companies and from rate increases driven by inflation and relatively tight underwriting conditions. The market share of total U.S. P&C premiums has also been on the rise. Also, some admitted insurers have reduced their exposure or exited certain markets due to prof ...

Company Overview - Kingstone Companies is the 12th largest homeowner insurer in New York with a market share of 2.1% in 2024, positioned to capitalize on a market opportunity exceeding $200 million as competitors exit the personal property market in July 2024 [3]. Price Performance - Shares of Kingstone Companies (KINS) have gained 9.1% year to date, outperforming the Finance sector's return of 2.3% and the S&P 500 composite's decline of 5.1%, although underperforming the industry's growth of 15.7% [4]. Valuation Metrics - KINS is trading at a price-to-book value of 3.07X, which is higher than the industry average of 1.65X, indicating a premium valuation [10]. - Despite its expensive valuation, KINS has a Value Score of A, suggesting that stocks with a solid Value Score and favorable Zacks Rank tend to yield better returns [10][21]. Growth Projections - The Zacks Consensus Estimate for KINS suggests a 31% and 29% year-over-year increase in earnings for 2025 and 2026, respectively, with expected earnings per share for 2025 between $1.75 and $2.15, up from previous guidance [12][20]. - Kingstone Companies anticipates direct written premiums in its core business to grow between 15% and 25% in 2025 [14]. Financial Health - The company has successfully lowered its net underwriting expense ratio and improved its cash balance while reducing debt, expecting a combined ratio between 81% and 85% in 2025 [16]. - Kingstone Companies has a return on equity of 36.1%, significantly higher than the industry average of 8.3%, indicating effective utilization of shareholder funds [17]. Strategic Focus - Kingstone Companies is focusing on its core business and scaling back unprofitable non-core operations, only writing businesses that meet its underwriting standards and profit-margin objectives [13]. - The company has implemented price increases ahead of inflation, enhancing its pricing capabilities through a partnership with Earnix [14].

Core Viewpoint - Kingstone Companies, Inc (KINS) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][4]. Earnings Estimates and Revisions - The Zacks Consensus Estimate for Kingstone Companies for the fiscal year ending December 2025 is projected at $1.80 per share, reflecting a 24.1% increase from the previous year [9]. - Over the past three months, the Zacks Consensus Estimate for Kingstone Companies has risen by 16.1%, indicating a trend of increasing earnings estimates [9]. Zacks Rating System - The Zacks rating system is based solely on a company's changing earnings picture, making it a reliable tool for investors to gauge stock performance [2][3]. - The Zacks Rank system categorizes stocks into five groups, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [8]. - Kingstone Companies' upgrade to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting a strong potential for price appreciation in the near term [11].

Group 1 - Kingstone Companies is a New York-based insurance company that provides personal lines and auto insurance through its main subsidiary, Kingstone Insurance Company [1] - The company was founded in 1886 and operates with more than 700 licensed agents [1]

Strategy and Business Optimization - In 2023, the company initiated a new strategy called "Kingstone 3.0" to optimize its in-force business, following the previous "Kingstone 2.0" framework[48]. - The company reduced its non-Core book of business by 48% in 2023 and plans a further reduction of 65% in 2024 due to profitability concerns[56]. - The company aims to lower its net expense ratio to 33% by the end of 2024 through continued expense reduction efforts[55]. Financial Performance and Reserves - The company incurred $64.41 million in losses related to the current year in 2024, compared to $82.86 million in 2023[64]. - The net balance of loss and loss adjustment expenses at the end of 2024 was $93.89 million, an increase from $88.53 million at the end of 2023[64]. - The company has established reserves for unpaid losses, including $126.21 million in total reserves at the end of 2024[64]. - The net reserve for loss and loss adjustment expenses as of December 31, 2023, is $88,529,000, showing a slight decrease from $90,680,000 in 2022[68]. - The cumulative amount of reserve paid, net of reinsurance recoverable, one year later is $24,319,000 for 2023, down from $35,854,000 in 2022[68]. - The gross reserves as of December 31, 2023, are $121,818,000, an increase from $118,340,000 in 2022[68]. - The net cumulative redundancy (deficiency) for 2023 is $1,780,000, indicating a positive shift from a deficiency of $3,565,000 in 2022[68]. Reinsurance and Catastrophe Management - The company entered into a 30% quota share reinsurance treaty for personal lines business effective January 1, 2023, which will be followed by a 27% treaty starting January 1, 2024[71]. - The maximum net retention for any one personal lines occurrence increased from $700,000 to $730,000 effective January 1, 2024[72]. - In 2024, the company purchased catastrophe reinsurance providing coverage of up to $280,000,000 for losses associated with a single event[75]. - The net retention for the first event of a named storm catastrophe occurrence under the 2024/2025 Treaty is $4,750,000, with a second event retention of $9,500,000[75]. - The company has implemented a new reinsurance structure that is on a "net" of catastrophe reinsurance basis, differing from previous "gross" arrangements[74]. - In 2024, catastrophe losses increased the net loss ratio by 1.9 percentage points, while in 2023, it increased by 7.1 percentage points[79]. Regulatory Compliance and Legislative Changes - KICO's total adjusted capital (TAC) to authorized control level (ACL) ratio was 5.62, indicating compliance with New York's risk-based capital requirements[99]. - KICO's unassigned surplus was $13,658,183 as of December 31, 2024, with a maximum dividend payout of $12 million allowed without prior approval[100]. - KICO had three ratios outside the usual range as per the Insurance Regulatory Information System (IRIS) as of December 31, 2024[101]. - The New York State legislature passed a bill in 2024 requiring regulations for hurricane windstorm deductibles to be adopted by August 19, 2025[95]. - The DFS adopted amendments to cybersecurity regulations on November 1, 2023, requiring enhanced reporting and management of cybersecurity risks[86]. - KICO is subject to insurance holding company laws in New York, requiring fair and reasonable transactions among companies in the holding company system[80]. - The DFS commenced its examination of KICO for the years 2019 through 2022 in 2023, which was completed in 2024[97]. - The Terrorism Risk Insurance Program is scheduled to expire on December 31, 2027, serving as a federal backstop for terrorism-related insurance claims[89]. - KICO's ability to withdraw from unprofitable markets is restricted by state laws, which did not affect its exit from the commercial liability market in 2019[84]. Employee Relations and Corporate Governance - As of December 31, 2024, the company had 99 employees, with no employees covered by a collective bargaining agreement[106]. - The company maintains a good relationship with its employees[106]. - The company files its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K with the SEC, which are available free of charge on its investor relations website[107]. - The SEC maintains a website that contains reports and information regarding issuers that file electronically[107]. - The item regarding quantitative and qualitative disclosures about market risk is not applicable to smaller reporting companies[320]. Market Position - In 2024, the company was the 12th largest writer of homeowners insurance in New York, holding a 1.6% market share[57]. - The company has a strong focus on underwriting and claims management, utilizing detailed expertise and industry claims databases[50]. - The company has a network of over 700 producers, emphasizing long-term relationships and careful selection based on various performance metrics[51].

Core Insights - Kingstone Companies, Inc. (KINS) shares increased by 21% following the release of its fourth-quarter 2024 earnings, which met the Zacks Consensus Estimate for operating income and exceeded revenue expectations [1][2] Financial Performance - KINS reported fourth-quarter 2024 operating income of $0.46 per share, reflecting a more than threefold year-over-year improvement [2] - Total operating revenues reached $42 million, which was 2.8% below the Zacks Consensus Estimate but represented a 13.5% increase year over year [3] - Direct premiums written surged by 37% year over year to $72.5 million, with core business premiums increasing by 49.2% to $70.2 million, driven by market dislocation [3] Operational Metrics - Policies in force totaled 73,857 as of December 31, 2024 [4] - Net premiums earned improved by 25.4% year over year to $36 million [4] - Net investment income rose by 21.3% year over year to $1.9 million [4] - The underlying loss ratio improved by 470 basis points year over year to 49.1%, while the net loss ratio improved by 810 basis points to 48.7% [4] Expense and Profitability Metrics - Total expenses increased by 8.3% year over year to $35.4 million, with loss and loss adjustment expenses rising by 7.4% to $17.5 million [4] - The net combined ratio improved by 1,100 basis points year over year to 48.7%, attributed to a lower frequency of large losses and a reduced expense ratio [5] - Adjusted EBITDA more than doubled year over year to $9.3 million [5] Financial Position - KINS ended 2024 with total investments of $208.6 million, a 19.4% increase from the end of 2023 [6] - Cash and cash equivalents rose to $28.7 million, more than tripling from the end of 2023 [6] - The debt balance decreased by 25% to $11.1 million [6] - The annualized operating return on average common equity was 36.3% in 2024, compared to negative 17.5% in 2023 [6] Future Guidance - KINS anticipates core business direct premiums to grow between 15% and 25% in 2025 [7] - The combined ratio is expected to range between 81% and 85% [7] - Net income is projected to be between $1.75 and $2.15 per share, with return on equity estimated between 25% and 35% [7] Market Position - KINS currently holds a Zacks Rank 1 (Strong Buy), indicating strong market confidence [9]