KINGSTONE COMPANIES, INC. Q4 FY2024 earnings call

• 2024 was a record-breaking year with remarkable growth in nearly all business aspects, including 21% overall growth and 31% core business growth, fueled by the exit of competitors Adirondack and Mountain Valley. - The Select product outperformed expectations, with a 29% lower frequency than the legacy product since its introduction 3 years ago. - Debt was fully paid off in January and February 2025, saving approximately $800,000 in interest expense. - In 2025, the plan is to focus on the core state of New York and strategically develop expansion into other catastrophe-exposed geographies. - In the fourth quarter, core direct written premium grew 49% with homeowners' new business policies up 4 times the prior year quarter, overall policy count up 44%, and average premium up 15%.

In the fourth quarter, core direct written premium grew by 49%. For the full year 2024, overall revenue grew by 21% and core business revenue grew by 31%. Direct written premiums for the fourth quarter increased by 37%, with core direct written premiums surging 49% due to the market dislocation from the exit of competitors Adirondack and Mountain Valley. For the year, direct written premiums rose 21%, with core business seeing a 31% increase, driven by a 12% rise in core personal lines policies written and a 21% increase in average premium. The combined ratio improved to 78.5% in the fourth quarter and 80% for the full year. The Select product exhibited a 29% reduction in frequency compared to the legacy product throughout 2024.

• Reaffirms core business direct written premium growth between 15% and 25% for 2025. - Anticipates a GAAP combined ratio between 81 and 85. - Expects basic earnings per share to be between $1.90 and $2.30, diluted earnings per share between $1.75 and $2.15, and return on equity between 27% and 35%. - Growth in 2025 to date has moderated from the second half of 2024 but remains materially higher than the prior-year quarter.

• Hard market conditions in the Downstate New York footprint could change materially. - There is potential market competition from new entrants. - Weather-related catastrophe events may impact financial results.

Q: On the growth expectations for 2025, especially considering the exit of Adirondack and Mountain Valley, where is the growth coming from and what's the competitive environment like?

A: The hard market conditions in the Downstate New York footprint persist. There are a few companies writing coastal properties, mostly MGAs and E&S writers, with no real new market entrants yet. We continue to see growth in new business counts and average premium with strong pricing.

Q: Could you elaborate on the potential expansion plans? Which areas are you considering?

A: We are considering expanding both in New England and other states around the country. We are committing significant resources to learning about catastrophe-exposed states, being thoughtful and strategic about our expansion.

Q: What's your goal for the expense ratio in the future?

A: It's part of our culture to focus on low expenses. My goal for 2025 is to reduce the expense ratio by another point. Due to the large amount of business written in the second half of 2024 that will earn in 2025 and the reduction in our quota share, we are confident we can achieve this.

Q: How would you characterize the first quarter weather impact?

A: Last year was extremely mild winter, this year has more snow and is colder, but there have been no material catastrophe events. Q1 is looking good for a winter quarter.

Q: Regarding the guidance, how does the sequential acceleration in growth in the latter part of 2024 square with the 15%-25% full year guidance for 2025?

A: I'm still very confident in the 15%-25% core written premium growth. We are expanding our producer base, updating underwriting appetite where there's market need and we're priced adequately. We also anticipate better retention due to more moderate rate changes this year.

Q: What's the book yield on the portfolio currently?

A: The book yield on the portfolio is 3.86.