Kingstone Companies Stock Earnings Reports

Summary of Key Points from Kingstone Companies First Quarter 2025 Earnings Call for Investors

• Financial Performance:
  • Kingstone reported its sixth consecutive quarter of profitability.
  • Direct written premium growth was 18% overall, with a 23% increase in their core business.
  • Net income reached $3.9 million, translating to $0.27 per diluted share.
  • Operating income almost tripled from the previous year, up $1.6 million to $2.4 million.
• Performance Drivers:
  • Growth driven by a 68% increase in new business count and a 19% higher renewal average premium.
  • The Select homeowners program showed significant improvement, with cumulative frequency decreasing for 13 consecutive quarters. Frequency for Select homeowners was 1.6%, compared to 2.3% for legacy products.
  • The non-catastrophe loss ratio increased slightly due to large fire losses, but overall property frequency remains low.
• AmGUARD Renewal Rights Transaction:
  • A renewal rights agreement with AmGUARD, a Berkshire Hathaway subsidiary, allows Kingstone to quote new business in Downstate New York starting late third quarter.
  • Expected premium contribution from this deal is projected to be between $25 million and $35 million over 12 months.
  • This agreement is seen as a major growth opportunity and aligns with Kingstone's focus on underwriting profitability.
• Market Conditions:
  • The company plans to capitalize on ongoing hard market conditions in Downstate New York.
  • Consolidated direct written premium growth reflects strong performance and strategic positioning despite a planned reduction in non-core business.
• Debt Management:
  • Kingstone successfully sold its headquarters property, resulting in a $1.5 million after-tax gain.
  • The company has eliminated holding company debt, which will save over $800,000 in annual interest expense.
• Investment Income:
  • Net investment income increased by 36% to $2 million, benefiting from higher invested cash flow and strategic portfolio positioning.
  • Kingstone invested $16 million in fixed-income securities with higher yields.
• Future Outlook:
  • Kingstone is optimistic about continued growth and value generation for shareholders.
  • However, caution is exercised concerning the potential impacts of the AmGUARD transaction on future guidance, with updates expected in the upcoming quarters.
  • The emphasis remains on maximizing profitable growth in New York before considering expansion into other states.
• CFO Search Update:
  • The company is actively searching for a new Chief Financial Officer after the previous CFO's departure, with interim leadership provided by the Chief Accounting Officer.

Conclusion

Overall, Kingstone Companies has demonstrated strong financial performance driven by strategic growth in their core products and a significant opportunity through the AmGUARD transaction. The company is positioned well in a challenging market and remains focused on maintaining profitability while managing debt effectively. Investors should watch for continued execution of growth strategies and updates on the results of their partnership with AmGUARD.