Kingstone raises 2025 EPS and ROE guidance following strong Q3 performance while advancing state expansion

Earnings Call Insights: Kingstone Companies, Inc. (KINS) Q3 2025

MANAGEMENT VIEW

* Meryl Golden, President and CEO, highlighted that the company delivered one of its strongest quarters in history, reporting net income of $10.9 million, diluted earnings per share of $0.74, a GAAP combined ratio of 72.7%, and an annualized return on equity of 43%. Golden stated, "Direct written premium grew 14% and net investment income increased 52%. This was our second most profitable quarter in history and our eighth consecutive quarter of profitability, underscoring the consistency and enduring competitive advantages we have created."
* Golden emphasized the performance of the Select product, noting that it now represents 54% of policies in force, and attributed lower claim frequency to improvements in risk selection and preferred risk mix. She also announced the beginning of policy issuance under the renewal rights agreement with GUARD, which is expected to "meaningfully add to new business policy counts going forward."
* The CEO reported ongoing new business growth since June, with growth driven primarily by a 13% average premium increase and improved retention. Golden shared, "Net earned premium growth continues to be a powerful tailwind, exceeding 40% for the third consecutive quarter."
* Golden provided an update on the state expansion initiative, indicating progress and plans to present Kingstone’s multiyear road map in the first half of next year.
* Randy Patten, Chief Financial Officer, stated, "Q3 was our most profitable third quarter on record and our eighth consecutive quarter of profitability. We generated net income of $10.9 million, diluted earnings per share of $0.74, a 72.7% combined ratio and an annualized return on equity of 43%."
* Patten detailed investment gains, capital strength, and the reinstatement of the quarterly dividend, explaining, "Our capital position remains strong. We have no debt at our holding company, KINS, and shareholders' equity exceeded $107 million, an increase of 80% year-over-year."

OUTLOOK

* Kingstone raised its 2025 guidance. Golden shared, “We are raising guidance for our net combined ratio, EPS and ROE, while reaffirming direct-written premium growth for all states to range between 12% and 17%. With anticipated net earned premiums of $187 million, we expect a GAAP net combined ratio between 78% and 82%, basic earnings per share between $2.30 and $2.70, diluted earnings per share between $2.20 and $2.60 and return on equity between 35% and 39%.”
* The CEO noted improvements over prior guidance, stating, “We have improved our GAAP combined ratio range by 100 basis points at the midpoint, raised both basic and diluted EPS ranges by 9% and 12%, respectively, and increased our ROE target range by roughly 300 basis points at the midpoint.”
* For fiscal 2026, Golden stated that guidance assumes normal seasonality and catastrophe activity, with refinements to be provided in March alongside Q4 results.

FINANCIAL RESULTS

* The company reported net income of $10.9 million, diluted EPS of $0.74, a combined ratio of 72.7%, and annualized ROE of 43% for Q3.
* Direct written premium increased by 14%, and net investment income rose 52% to $2.5 million for the quarter. Policies in force grew 4.2% year-over-year and 1.4% sequentially.
* The underlying loss ratio was 44.1%, up 4.9 percentage points from the prior year quarter, attributed to higher claim severity. Catastrophe losses contributed 0.2 percentage points to the loss ratio, compared with 1.7 percentage points in the prior year quarter.
* The expense ratio for the quarter decreased by 4.6 percentage points, and year-to-date expense ratio dropped 1.1 percentage points to 30.8%.
* Shareholders’ equity exceeded $107 million, up 80% year-over-year. Year-to-date return on equity reached 39.8%.

Q&A

* Robert Farnam, Janney Montgomery Scott LLC: Asked if all accounts would eventually move to the Select product or if some would remain on the legacy product indefinitely. Golden responded that profitable legacy policies would remain, with eventual conversion considered only when the book becomes small.
* Farnam: Inquired if all new business is written on the Select platform. Golden confirmed, "Yes, all new business has been written in Select since the beginning of 2022."
* Farnam: Asked about product differences for new state expansion on an E&S basis. Golden explained development is underway, incorporating experience from Select, and collaborating with the same actuarial firm.
* Farnam: Asked about regulatory approval for the new E&S carrier in Connecticut. Golden noted the application was filed but not yet approved.
* Farnam: Asked about initial performance of the AmGUARD book. Golden said early results are in line with expectations, with about $1 million per month written and a mix similar to Select, including more business in the boroughs.
* Farnam: Asked for more color on competition in downstate New York. Golden said, "...our growth is very healthy. And as I mentioned, every month since June, we've seen a sequential increase in our new business."
* Gabriel McClure, private investor: Asked if market conditions for E&S expansion remain favorable. Golden responded that the market for catastrophe-exposed homeowners remains tight, with opportunities persisting for expansion.

SENTIMENT ANALYSIS

* Analysts’ tone focused on the sustainability of product migration, competitive landscape, and state expansion, using a neutral to slightly positive approach, with questions probing execution and initial results rather than expressing skepticism.
* Management maintained a confident and optimistic tone throughout the call, reinforcing positive trends and raising guidance. Golden reiterated, "We will continue to execute with discipline, advance our measured expansion road map and allocate capital prudently to support profitable growth."
* Compared to the previous quarter, analyst sentiment remained constructive, while management’s confidence was even more pronounced with upgraded guidance and focus on continued momentum.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for 2025 was raised with improved EPS, ROE, and combined ratio targets, reflecting stronger underwriting and investment performance versus last quarter’s already elevated expectations.
* The focus on Select product growth and state expansion remained, but management outlined more tangible progress on policy growth and new business momentum.
* Management tone was confident in both quarters, but the current quarter featured more explicit upward revisions and positive commentary on capital strength and dividend reinstatement.
* Analysts’ focus shifted slightly more towards near-term execution and early state expansion outcomes, rather than reinsurance and capital allocation topics of the prior quarter.

RISKS AND CONCERNS

* Management cited higher claim severity impacting the underlying loss ratio, though claim frequency declined.
* Catastrophe losses were light but recognized as inherently unpredictable, with future guidance assuming normalization.
* Golden noted that some competitors have broadened underwriting appetite in New York, but Kingstone’s growth remained solid.
* Analysts raised questions about the pace of policy conversion, approval and structure of new E&S products, and initial AmGUARD book performance, but management expressed confidence in current strategies and outcomes.

FINAL TAKEAWAY

Kingstone Companies delivered one of its strongest quarters ever, highlighted by robust premium growth, increased investment income, and improved profitability. Management raised 2025 guidance for EPS, combined ratio, and ROE, citing continued strength in the Select product and disciplined expansion into new markets. The company’s capital position is strong, with no holding company debt and dividend reinstated, positioning Kingstone for sustained growth and long-term shareholder value.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/kins/earnings/transcripts]

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