KINGSTONE COMPANIES, INC. Q1 FY2025 earnings call

• Renewal rights transaction with AmGUARD approved by NY regulators; expect to start quoting business in late third quarter, gaining access to data, higher conversion rate, and expanding footprint.
• Sixth consecutive quarter of profitability with 18% direct written premium growth, net income $3.9 million. Mild winter contributed to good results.
• Core business premium growth driven by 68% new business count and 19% higher renewal average premium. Net earned premium growth over 50% due to premium return and 2024 growth earning.
• Non-cat loss ratio up 0.4 points due to property frequency reduction but severity increase from large fires. Homeowners all perils frequency down over 35%, water losses frequency low, fire frequency up. Severity up due to fire losses, but cat losses down. Favorable prior year development of $600k.
• Finalized sale of headquarters building ($1.5M after-tax gain), paid off remaining holding company debt (saving $800k annually), net investment income up 36% to $2M.

Kingstone Companies achieved 18% direct written premium growth overall, including 23% growth in the first quarter. Net income was $3.9 million or $0.27 per diluted share. Select homeowners' programs represent 48% of policies in force today and are expected to grow to close to 60% by year-end. Core business had 23% direct written premium growth, with non-core down 64%. Homeowners, the largest product, saw a 19% increase in policies in force, while dwelling fire had declines but rate segmentation changes were implemented in April.

• Reaffirmed calendar year 2025 guidance. Uncertainty with AmGUARD transaction benefit, will include in updated guidance next quarter.

• Uncertainty regarding the impact of the AmGUARD transaction.
• Tariff-related inflation could require rate increases to account for building material cost increases.
• Random events like fire losses can impact the loss ratio.

Q: How do fire losses relate to combined ratio guidance?

A: Fire losses were random, cat losses offset them, so no need to update combined ratio guidance.

Q: What about capital management, including dividends and share repurchases?

A: Board discusses returning capital to shareholders, no near-term share buybacks, focus on growth to support capital needs.

Q: Price differential with AmGUARD on policies?

A: AmGUARD wasn't making money, pricing is higher, uncertainty remains on how policies will fit into Kingstone's pricing.

Q: Status of CFO search?

A: In process, retained search firm, interim covered by Chief Accounting Officer and CEO.

Q: What's the reason for increased investment income?

A: Cash from operations, growing investment portfolio, and moving duration to take advantage of higher fixed income yields.

Q: Thoughts on Kingstone's intrinsic value?

A: Don't have specific info to share on intrinsic value relative to market/book value.

Q: Expansion to other states?

A: Focus on downstate NY in 2025, potential expansion in 2026+, slow and thoughtful approach to avoid past mistakes.