Kingstone (KINS) Q3 2026 Earnings Call Transcript

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DATE

Friday, Nov. 6, 2026

CALL PARTICIPANTS

• Investor Relations representative - Stefan Norbom
• President and Chief Executive Officer - Meryl Golden
• Vice President and Chief Financial Officer - Randy L. Patten

TAKEAWAYS

• Net Income -- $17.6 million, or $1.19 per diluted share, representing a 61.7% increase driven by record quarterly underwriting performance and improved loss ratios.
• GAAP Net Combined Ratio -- 65.6%, improving by 7.1 percentage points due to strong underlying performance that offset higher catastrophe losses.
• Return on Equity -- 52.9% on an annualized basis, an improvement of 10.0 percentage points compared to the prior year quarter.
• Diluted Book Value per Share -- $9.21, increasing 26.5% year over year despite recording $9.7 million in after-tax net unrealized bond losses.
• Underlying Loss Ratio -- 33.5%, improving 10.6 percentage points primarily due to lower noncatastrophe claim frequency and operational improvements in the claims organization.
• Favorable Prior Year Reserve Development -- $3.8 million, or 6.1 percentage points, driven by property lines and improved claims cycle times.
• Catastrophe Loss Ratio -- 7.5%, increasing from 0.2% in the prior year quarter due to nine PCS-designated events, including a late September nor'easter.
• Direct Premiums Written -- $86.8 million, growing 14.5% behind higher average renewal premiums and improved customer retention.
• New Business Policy Count -- Increased 10% during the quarter, reflecting continued growth in the core New York market.
• Policy Retention -- Improved 2.9 percentage points, which management expects will serve as a tailwind for both future growth and profitability.
• Average Renewal Premium -- Increased 5% during the quarter, contributing to total premium growth.
• Policies in Force -- 86,579, an increase of 11% over the prior year as the company added more than 8,000 customers.
• Select Program Mix -- 65% of homeowner policies, up from 54% a year ago, which management attributes to better risk selection and lower loss frequency.
• Net Premiums Earned -- $62.4 million, rising 30.2% due to growth in direct premiums written and a reduction in the New York personal lines quota share.
• Net Investment Income -- $3.8 million, increasing 50.3% driven by a 9% growth in invested assets since year-end and a higher average yield of 4.6%.
• Total Investments -- $337 million at Sept. 30, 2026, compared to $309.7 million at year-end 2025.
• New York Personal Lines Quota Share -- Reduced to 5% for the 2026 year from 16% for the 2025 treaty year, allowing for higher retention of underwriting profit.
• 2026 Diluted EPS Guidance -- Raised and narrowed to $2.70 to $2.90, from the previous range of $2.20 to $2.90.
• 2026 Return on Equity Guidance -- Updated to 29% to 30%, up from the previous range of 24% to 30%.
• 2026 GAAP Net Combined Ratio Guidance -- Improved to 79% to 83%, compared to the previous outlook of 81% to 86%.
• 2026 Direct Premiums Written Growth Guidance -- Approximately 16%, narrowing from the previous range of 16% to 20%.
• 2029 Direct Premiums Written Target -- $500 million, supported by core growth in New York and measured expansion in Connecticut and California.
• After-Tax Net Unrealized Bond Losses -- $9.7 million for the quarter, reflecting rising treasury yields rather than credit quality deterioration.

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RISKS

• Golden stated, "The New York market has more competitive," noting that some carriers have broadened their underwriting appetite and increased producer compensation.
• Golden warned that the company chose not to write many risks quoted in California because they had "higher wildfire exposure than we are comfortable with."
• Patten noted that treasury yields rose during the quarter, leading to unrealized losses on the bond portfolio that impacted book value.

SUMMARY

Kingstone Companies, Inc. (NASDAQ:KINS) reported record quarterly profitability driven by a significant improvement in underlying loss ratios and strategic premium growth. Management reported that the company achieved a 52.9% annualized return on equity while raising full-year earnings and combined ratio guidance based on performance through the first nine months of the year. The company stated that the expansion of its Select homeowner product and substantial enhancements to claims operations contributed to improved visibility and lower ultimate property loss costs. Management indicated that while it is expanding into California and Connecticut, New York remains the primary growth driver toward a long-term target of $500 million in direct premiums written by 2029.

• Golden noted that the rebuild of the claims organization over the last three years has led to material cycle time improvements, giving the company earlier visibility into ultimate property claims costs.
• Golden stated, "We expect to continue to deliver top tier growth and profitability even with increased competition," citing the company's segmentation power through the Select product.
• Management indicated it will intentionally stay small in California, scaling only where pricing and risk quality meet internal underwriting and return requirements.
• The company began writing business in Connecticut in late September with a small number of producers and is now focused on expanding distribution in that state.
• Patten indicated that Kingstone maintains its strongest historical capital position with $137 million in stockholders' equity and no debt at the holding company level.
• Management reported that the current catastrophe reinsurance program provides $500 million of total limit, up 14% from the previous year's program.

INDUSTRY GLOSSARY

• Select: Kingstone's specialized homeowner insurance product suite designed for improved risk segmentation and underwriting.
• Quota Share: A form of proportional reinsurance where the insurer cedes a percentage of premiums and losses to a reinsurer.
• Combined Ratio: A measure of insurance profitability calculated by dividing the sum of incurred losses and expenses by earned premium; a ratio below 100% indicates an underwriting profit.
• Policies in Force (PIF): The total number of insurance policies that are active and for which the company is providing coverage.
• Direct Premiums Written (DPW): The total premium amount charged for policies issued during a specific period before ceding any portion to reinsurers.
• Accumulated Other Comprehensive Income (AOCI): A component of stockholders' equity that includes unrealized gains and losses on certain investments.
• Underlying Loss Ratio: The loss ratio excluding the impacts of catastrophe losses and prior year reserve development.

Full Conference Call Transcript

Operator: Good morning, and welcome to the Kingstone Companies Third Quarter 26 Earnings Conference Call. As a reminder, today's conference is being recorded. I will now turn the call over to your host, Stefan Norbom, Kingstone's Investor Relations representative. Stefan, you may begin.

Stefan Norbom: Thank you and good morning everyone. Joining us today are President and Chief Executive Officer, Meryl Golden and Vice President and Chief Financial Officer, Randy L. Patten. On behalf of the company, I would like to note that this conference call may contain forward-looking statements, which involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from projected results. Forward looking statements speak only as of the date on which they are made and Kingstone undertakes no obligation to update the information discussed whether as a result of new information, future events, or otherwise, except as required by law.

For more information, please refer to the section entitled Risk Factors in Part 1 Item 1A of the company's latest Form 10-Ks. Additionally, today's remarks may include references to non GAAP measures. For definitions and reconciliations of these non GAAP measures, to the most directly comparable GAAP measures, please see the tables in our latest earnings release dated 11/05/2026, available at kingstonecompanies.com. With that, it is my pleasure to turn the call over to Meryl. Meryl?

Meryl S. Golden: Thanks, Stefan. Good morning, everyone, and thanks for joining our call. I am really excited about our third quarter results, which topped the record we set just last quarter. Net income rose 62% to 17.6 million or $1.19 per diluted share. Our GAAP net combined ratio improved 7.1 points to 65.6 and our annualized return on equity was 52.9%. Diluted book value per share grew 26.5% over the prior year to $9.21. I am proud of the improvement in our underlying business. Our underlying loss ratio, which excludes both catastrophe losses and prior year reserve development, improved 10.6 points to 33.5.

That improvement alone more than offset higher catastrophe losses of 7.5 points which increased from 0.2 points for the benign storm season we experienced a year ago. We also recognized 3.8 million or 6.1 points of favorable prior year development reserve development. The low underlying loss ratio was mainly driven by better loss settlements due to improvements in our claims operations. We rebuilt our claims organization over the last 3 years hiring very experienced adjusters and leaders and we are seeing the benefits in material cycle time improvements leading to earlier visibility into ultimate property claims costs. In addition, overall personal lines non catastrophe frequency for the quarter was lower than in the prior year quarter.

We attribute the frequency improvement primarily to our select program which now accounts for 65% of our homeowner policies, up from 54% a year ago. Turning to growth. Direct premiums written grew 14.5%, to 86.8 million. Relative to the prior year quarter, new business policy count increased 10% retention improved 2.9 points, average renewal premium increased 5%, and policies in force increased 11% to more than 86 thousand. We added more than 8 thousand customers over the past year. I am particularly pleased that more of our policyholders are staying with us longer as growth in retention will be a tailwind for both growth and profitability improvement in the future.

As I mentioned on our last call, the New York market has more competitive. We have seen some carriers broaden their underwriting appetite and others raise producer compensation as well as price more aggressively. As proven this quarter, we expect to continue to deliver top tier growth and profitability even with increased competition. Kingstone is a leader in the coastal New York market, as we have demonstrated our consistent appetite stability, and commitment to our producers over many years. With broad and deep producer relationships, the segmentation power that Select provides, and an expense advantage we are confident that we can continue to grow profitably across all market cycles. We wrote little business in California this quarter.

We entered the state to write risks with lower wildfire exposure at high returns given the capacity constraints in the market. Many admitted carriers have reopened to new business since we launched and there is a lot of capacity through an surplus lines entrance who have been reducing rates significantly. Many of the risks producers are quoting with us have higher wildfire exposure than we are comfortable with. Or do not meet our margin requirements. So we chose not to write them. We are going to intentionally stay small in California scaling only where pricing and risk quality meet our underwriting and return requirements. In Connecticut, we began writing business in late September.

As planned, with a small number of producers. While it is still very early and Connecticut's contribution to our results will be modest this year, reception to our reentry has been strong, and we are now focused on expanding distribution. These initiatives support our goal of 500 million of direct premiums written by year end 2029. New York is our core franchise and the main source of our growth with measured expansion scaling over time. We are committed to diversifying our footprint and while we recognize that it will take time for these new states to drive material volume, We are confident that diversification will result in more earnings durability.

Turning to our outlook, with 9 months behind us, we are raising and narrowing our 26 diluted earnings per share guidance to $2.70 to $2.90 from $2.20 to $2.90. We now expect full year return on equity of 29% to 30% compared with 24% to 30% previously, And we have improved our GAAP net combined ratio outlook to 79% to 83 from 81 to 86. We are also updating our outlook for 2026 direct-premiums-written growth to approximately 16% from our previous range of 16 to 20%. Which keeps us on pace toward our 500 million goal. The higher earnings outlook reflects the results we have already delivered this year including the favorable reserve development recognized through September.

We will continue to execute with discipline, and grow where the returns justify it. You can see that discipline in this quarter's underlying results. Net income grew 60 per. 2% and diluted book value per share increased 26.5% even with 4.5 million more in catastrophe losses than in the prior year quarter. I remain extremely confident in Kingstone's trajectory. I want to thank the entire Kingstone team for their execution, especially members of our claims organization who have provided exceptional service to policyholders with catastrophe claims this quarter, and our select producers for their continued partnership With that, I will turn the call over to Randy for a more detailed review of our results. Randy?

Randy L. Patten: Thank you, Meryl, and good morning again, everyone. From a net income and EPS standpoint, the third quarter was our second consecutive record quarter with net income of $17.6 million or $1.19 per diluted share compared with $10.9 million or $0.74 per diluted share in the third quarter of 2025. Operating net income increased 68% to 18 million and diluted operating net income per share was $1.22 in the third quarter of 26. Compared with $0.73 in the same quarter last year. Annualized GAAP return on equity was 52.9% during the third quarter of 26.

Net premiums earned grew 30.2% to $62.4 million in the third quarter of 26, driven by growth in direct premiums written and reduced quarter share session in 2026. As a reminder, we reduced our New York personal lines quota share to 5% for the 2023 year compared with 16% for the 2025 treaty year, allowing us to retain more premium and underwriting profit. Net investment income rose 50.3% to 3.8 million in the third quarter of 26 driven by growth in invested assets in a higher average yield of 4.6%. Total investments were 337 million at September 30, up 9% from year end. Turning to underwriting.

The GAAP net loss ratio was 34.9% compared with 44.3% in the prior year quarter. And our GAAP net combined ratio was 65.6% compared with 72.7%. Excluding both catastrophe losses, added 7.5 points, and favorable prior year reserve development, reduced the net loss ratio by 6.1 points, the underlying performance of the book was strong in the third quarter of 26 with an underlying combined ratio of 64.2% which is an improvement of 8.3 points compared to the same quarter last year. This has been an above average catastrophe year.

Third quarter catastrophe losses came from 9 of the 24 events so far and 2 of those 9 events accounted for most of the losses with 1 of those 2 events being as a late in September nor'easter which contributed 1.7 million of losses. The 3.8 million of favorable development in the quarter came primarily from our property lines with a smaller favorable impact from our casualty book. During the first 9 months, favorable development totaled approximately 6.7 million or 3.8% of 9 month net premiums earned. On expenses, our net underwriting expense ratio improved to 30.6% for the first 9 months of 2026, from 30.8% last year.

In the first quarter, the ratio was 30.7% compared with 28.4% in the prior year quarter. Last year's quarter benefited from a $1.4 million favorable adjustment to the sliding scale seating commissions, which lowered the third quarter of 2025's expense ratio by approximately 2.9 points. Excluding this adjustment, the third quarter of 26 expense ratio would have improved 0.6 points versus the same prior year quarter. For the 9 months of 2026, direct premiums written increased 17.4% to $229 million net premiums earned increased 29.8% to 179 million.

Despite elevated winter catastrophe activity in the first quarter of 26, costing approximately 13 million in losses, we generated net income of 27.2 million or $1.86 per diluted share operating net income of 28.3 million or $1.93 per diluted share. The 9 month GAAP net combined ratio was 81.7% compared with 79% in the prior year period. And included 10.4 points of catastrophe losses compared with 0.8 points last year. The underlying combined ratio improved 3.7 points to 75.1 I will conclude my portion of the call today. Discussing our capital position.

GAAP diluted book value per share was $9.21 at September 30, up 26.5% from $7.28 a year ago and 6% from June 30, even after 9.7 million of after tax net unrealized losses on our bond portfolio this quarter. Which are recorded in other comprehensive income rather than net income. Those losses reflect the rise in treasury yields during the quarter, and not a weakening in the credit quality or credit risk of the underlying portfolio. Excluding accumulated other comprehensive income, diluted book value per share was $10.43 up 34.9% from $7.74 a year ago and 12.5% from June 30. Our capital position is the strongest in our history, Stockholders' equity grew 11% this year to

Operator: Standby ladies and gentlemen. We will resume in 1 moment.

Randy L. Patten: I am back. Sorry about that. I think I lost connection. We are ready. Please continue. Okay. Our capital position is the strongest in our history. Stockholders' equity grew 11% this year to 137 million at September 30, As a reminder, we have no debt at the holding company. Our current catastrophe reinsurance program provides 500 million of total limit, up 14% from last year's program. With first event retentions at 3.5 million for wildfire, 5 million for name storm, and 6 million for winter storm. In California, a 30% quota share also limits our net exposures while the book is small.

Our capital priorities remain funding profitable growth first followed by dividend growth and then share repurchases in that order. Our quarterly dividend is $0.06 per share, following the 20% increase in July. And we have authorization to repurchase up to 1 million shares through May 2028. We will continue to allocate capital to support our strategic growth plans while maximizing long term shareholder value. With that, operator, we are ready for questions.

Operator: Thank you. We will now be conducting a question and answer session. 1 moment please while we poll for questions. Thank you. Thank you. Your first question is from the line of Bob Farnam with Breen Capital. Proceed with your questions.

Robert Edward Farnam: Hi, there. Good morning.

Meryl S. Golden: Hi, Bob.

Robert Edward Farnam: I would like to talk about the 500 million direct written premium goal. Now I understand that the goal is not guidance. But when you are talking about, you know, competition in California being a lot more than maybe expected, competition in New York picking up, I just. I am-- I want to know what your thoughts are of actually keeping up to that number because it may be much more difficult than you thought when you laid that out a year or 2 ago.

Meryl S. Golden: Sure. Thanks for your question, Bob. So, you know, we are in the second year of this 5 year plan to achieve $500 million And so far we are on track. This year's guidance of 16% keeps us on track to hit 15 million, need to grow approximately 15% each year. And this is the second year where we have achieved that. New York is our core franchise and the main source of our growth. And with the measured expansion outside of New York's scaling over time. And we do recognize it is going to take time for these states to drive material volume, but we are confident that the diversification benefit is worth it.

And at this point, we are still confident we can achieve the 500 million Okay.

Robert Edward Farnam: So with your California expansion, can you give us an idea of the growth that you are seeing in California relative to the growth that maybe you thought you would see in the first year?

Meryl S. Golden: Sure. The growth we are seeing in California is very low. And, you know, what we had planned for the first year was 10 million. And we will be a fraction of that. Intentionally, because, as I said, what we are getting quoted on is not within our appetite, our wildfire appetite, or our return appetite. So we are continuing to focus on California. We have various strategies because we are very supportive of the diversification benefit it will provide to the company. But so far, it is a very small fraction of what we had anticipated.

Robert Edward Farnam: Right. Okay. In terms of the reserve development, I hear it is from property. For the most part. I am assuming that from accident year 2025, mostly, you know, given the shorter tail nature of the claims. And that and is it. Is not it because the claims process improvements you had? Is that what is kind of driving the improvement there?

Meryl S. Golden: Yep. So we had, as you mentioned, $3.8 million of favorable development in the quarter, and most of it was from property. But this is the first quarter where we have also had favorable development from casualties. So we are really happy about that. Certainly, the short tail nature of property, most of the favorable development was for 2025. But I wanna point out, like, I have not really talked about the rebuild of our claims organization and what they really have done a great job with reserving the claim. Very quickly to its ultimate claims cost, and so we are seeing much less development and that is really what is driving the favorable development this quarter. And this year.

Robert Edward Farnam: Okay. Great and it sounds. I. You know, 1 of my typical questions I ask is kind of pricing versus loss trends. With pricing,, it sounds like it is still going up. And loss trend, you are talking about claims frequency improving and claim severity improving. I am going to assume that pricing is still ahead of loss trends at this point. Is that accurate?

Meryl S. Golden: Yes. So right now. You know, there is 2 ways to get rate. 1 is the increase in replacement costs that really reflects inflation, and the other is, you know, filed rate changes with the department that would affect other trends. Right now, we have no rate in the department. All of our rate change is from the increase in replacement cost. And it is slightly ahead of what we are seeing in terms of our loss trends, so we feel very comfortable that our guidance of, 74 to 75 in terms of our underlying combined ratio, that we can continue to achieve that even without needing to file a rate in New York.

Robert Edward Farnam: Okay. Good. And last question I have is just more of a detailed question. Just so for the fourth quarter, what-- Do you have-- Is your underlying loss ratio higher than in other quarters? I am trying to think about what goes on in fourth quarter. And I do not know if you have increased fire losses or something like water losses going on in the fourth quarter heading into the New Year. So I am just kind of curious in the fourth quarter, what should we expect in terms of the underlying loss ratio?

Meryl S. Golden: Yes. So we have given guidance for the whole year that you can, I guess, figure out what we have planned for Q4? But we do not have any favorable developments planned for Q4. We do not forecast that at all. And in general, the fourth quarter is an average cat quarter. So we will see what this year's weather brings.

Robert Edward Farnam: Yeah. It was just. It was probably more of a question of seasonality in terms of what the loss ratio is. Obviously, you have first quarter is a big quarter for your underlying, but did not know if there was something similar in the fourth quarter.

Meryl S. Golden: Alright. Depends on the future. It depends on the winter. Okay.

Robert Edward Farnam: that is it for me. Thanks.

Meryl S. Golden: Okay. Thanks, Bob.

Operator: Our next questions are from the line of Paul Newsome with Piper Sandler. Please proceed with your question.

Paul Newsome: Initially 1 quick follow-up question for Bob. Conversation on the California business. Is it just increased competition for like the E and S products that is changing? Or is this also a sign that we are seeing some movement back into the admitted markets? In California? in your opinion.

Meryl S. Golden: Yes. So it is really both. Again, our the premise for Kingstone entering California was we thought we could write lower wildfire business at high margins because the admitted market was so capacity constrained. But we have seen, particularly in the last quarter, many of the admitted writers open up for new business again, and in addition to that, there has been, you know, many companies entering the E and S space and a lot of rate decreases in that space. So it is really a combination. I think the market has changed rapidly, and it is pretty volatile. Like, we will see what the results of this insurance commissioner election bring. That could potentially change the market.

But in general, for us, it is been that the admitted market has reopened. So the type of risk that we are getting quoted on is not within our risk appetite. Right. That makes sense. Thank you. Appreciate that help.

Paul Newsome: Thank you. My pleasure.

Operator: Thank you. The next question comes from the line of Gabriel McClure, a private investor. Please proceed with your question, sir.

Gabriel McClure: Good morning, Meryl, and congrats on a great quarter again.

Meryl S. Golden: Hi, Gabe.

Gabriel McClure: Hi. I wanted to just dig into kind of what Bob was asking about. With the favorable development. You said that a lot of the property development was from the year 2025. What was the other casualty development from? Can you tell me, like, what period that was from?

Meryl S. Golden: I honestly do not know the years offhand, but, you know, I guess, our casualty lines are longer tailed than property. So there is probably some favorable development from each of the years. I do not know specifically. I can follow-up with you after the call and let you know that.

Gabriel McClure: Okay. Thank you. That would be great. And then I wanted to ask about the underlying loss ratio, it moved down pretty dramatically. I mean, it was already low, and it is going lower. So I did not think it could go any lower, but is it more-- is it that you think it is going lower because more of the book is transitioning to the select product or is it because of what you are kind of talking about with your whole claims process, your whole claims division just being a better engine.

Meryl S. Golden: Yeah. I think it is both. So attritional frequency continues to be very low overall, and that we attribute to risk selection in the select product for sure. But, you know, in addition to that, this rebuild of our claims organization and their focus on reducing cycle time is really leading to both better visibility and lower ultimate claims cost. So the claims organization is they are really focused on providing timely and excellent service and ensuring that we are paying the right amount on every claim. So it is absolutely a game changer for the company. Okay. Okay. Great.

Gabriel McClure: Then I had 1 for Randy if I could.

Meryl S. Golden: Sure. Sure.

Randy L. Patten: Hi, Gabe.

Gabriel McClure: Hi, Randy. Hi. Was this-- hi.

Randy L. Patten: Looking at those unrealized bond losses, Yes.

Gabriel McClure: I am not sure I am factoring this in the right way. So I think you said that in the. In your remarks that you want to-- you want to segregate those into OCI. So I guess you know, 9.7 million would be about $0.67. If interest rates had stayed the same, But is that the right way to think about if interest rates would have stayed the same, you would add the $67 back to the $1.19 and come up with around $1.8.85, or is that not the right way to think about it?

Randy L. Patten: Yeah. Not quite the right way to think about it. So those are unrealized losses on our bond portfolio. So that 9.7 goes through other comprehensive income, which does not go through the income statement because they are unrealized. And so what it really does is we provide you, the book value-- the book value without the adjustment for ex-AOCI and then the adjustment for ex-OCI. The delta between those 2 is really that. Majority of that is those unrealized losses. So that is how to think of that. And it really is interest rate driven. For the spike that we saw in September.

Gabriel McClure: Right. Okay. Very good. Thank you. that is all for me.

Operator: Thank you. Thank you. At this time, I will turn the floor back to management for closing remarks.

Meryl S. Golden: Great. Well, thank you so much for joining our call. Have a great day.

Operator: Ladies and gentlemen, thank you for your participation. This will conclude today's teleconference. May disconnect your lines at this time. Thank you for your participation.

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