Kingstone(US:KINS)2025-11-07 14:32Financial Data and Key Metrics Changes - The company reported net income of $10.9 million and diluted earnings per share of $0.74, marking the second most profitable quarter in its history and the eighth consecutive quarter of profitability [2][9] - The GAAP combined ratio was 72.7%, with an annualized return on equity of 43% [2][9] - Direct written premium grew by 14%, and net investment income increased by 52% to $2.5 million [2][9][10] Business Line Data and Key Metrics Changes - Policies in force increased by 4.2% year-over-year and 1.4% sequentially, indicating stability in the agent and customer base [4] - The Select homeowners program now represents 54% of policies in force, with a claim frequency 31% lower than the legacy product [6] - The underlying loss ratio was 44.1%, an increase of 4.9 percentage points year-over-year, driven by higher claim severity [4][6] Market Data and Key Metrics Changes - The company experienced a month-over-month increase in new business since June, continuing into the fourth quarter [3] - The growth of 14% for the quarter was primarily driven by an average premium increase of 13% and improved retention [3] - Catastrophe losses contributed only 0.2 percentage points to the loss ratio compared to 1.7 percentage points in the prior year quarter, indicating a favorable trend [6] Company Strategy and Development Direction - The company is progressing with its state expansion initiative and plans to present a multi-year roadmap in the first half of next year [7] - Guidance for 2025 has been raised for net combined ratio, EPS, and ROE, while reaffirming direct written premium growth to range between 12% and 17% [7][8] - The company aims to maintain a disciplined posture on pricing and exposure management while seeking opportunities to enhance portfolio yield [8][10] Management's Comments on Operating Environment and Future Outlook - Management noted that hard market conditions in downstate New York have not changed materially, with strong overall volume [3] - The homeowners' market is in a crisis due to companies not making money, presenting an opportunity for the company to expand geographically [28] - Management expressed confidence in the company's competitive position despite increased competition in the market [22] Other Important Information - The company has no debt at its holding company, and shareholders' equity exceeded $107 million, an increase of 80% year-over-year [12] - Year-to-date return on equity is 39.8%, an increase of 3 percentage points from the same period last year [13] Q&A Session Summary Question: Will all accounts eventually move to the Select product? - Management confirmed that the legacy book will be maintained as it is profitable, and any conversion will occur only when it becomes small enough [16] Question: Is all new business written on the Select platform? - Yes, all new business has been written in Select since the beginning of 2022 [17] Question: How is the new E&S product being developed? - The company is deep into the development of the new product, benefiting from the experience gained with the Select product [18] Question: How has the AmGUARD book performed since writing began? - The performance is on track with expectations, writing about $1 million a month so far [21] Question: How are competitors expanding in downstate New York? - Competitors are opening up to writing more classes of business, but the company's growth remains healthy with a high conversion rate [22]