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KC

KINGSTONE COMPANIES, INC. (KINS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered one of Kingstone’s strongest quarters: net income $10.9M, diluted EPS $0.74, GAAP combined ratio 72.7%, annualized ROE ~42.9%; total revenues were $55.65M, up ~36.6% YoY .
  • Guidance raised for FY2025: combined ratio improved to 78–82% (from 79–83%), basic EPS to $2.30–$2.70 (from $2.10–$2.50), diluted EPS to $2.20–$2.60 (from $1.95–$2.35), ROE to 35–39% (from 30–38%); direct premiums written (DPW) growth affirmed at 12–17% .
  • Beat vs S&P consensus in Q3: EPS $0.73–$0.74 actual vs $0.71 estimate; revenue $55.65M actual vs $47.20M estimate; the beats were driven by low catastrophe losses, strong earned premium tailwinds from reduced quota share, and higher sliding-scale ceding commissions lowering the expense ratio .
  • Stock catalysts: sustained margin durability (low-80s combined ratio even under normalization), accelerating investment income (new money yields ~5.2%, duration extending), and measured E&S expansion roadmap with AmGuard renewal rights conversion ramping through 2026 .

What Went Well and What Went Wrong

What Went Well

  • Net earned premium growth exceeded 40% for the third consecutive quarter, reflecting reduced quota share and prior new business earning in .
  • Expense ratio fell 4.6 pts YoY to 28.4% in Q3, aided by $1.4M increase in sliding-scale ceding commissions; combined ratio held at 72.7% despite modestly higher large losses .
  • Management tone: “we again delivered one of the strongest quarters in our history… combined ratio of 72.7%… ROE of 42.9%,” underscoring durable economics and disciplined capital allocation .

What Went Wrong

  • Underlying loss ratio rose 4.9 pts YoY to 44.1% on higher severity (large losses modestly higher than prior year’s unusually favorable level), though frequency trends improved across non‑weather water and fire perils .
  • YoY combined ratio up 0.7 pts (72.7% vs 72.0%), reflecting the higher underlying loss ratio even as ceding commissions mitigated expenses .
  • Select program mix shift is positive, but legacy product still houses more of the random large losses; management explicitly cited higher severity this quarter and will continue to monitor .

Financial Results

Quarterly Performance vs Prior Periods and Estimates

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($USD)$48.53M*$52.29M*$55.65M
Net Income ($USD)$3.90M $11.30M $10.87M
Diluted EPS ($)$0.27 $0.78 $0.74
GAAP Combined Ratio (%)93.7% 71.5% 72.7%
Revenue Consensus ($USD)$41.70M*$44.60M*$47.20M*
EPS Consensus ($)$0.00*$0.55*$0.71*
Actual vs Consensus (Revenue)+$6.83M (Beat)*+$7.69M (Beat)*+$8.45M (Beat) *
Actual vs Consensus (EPS)+$0.27 (Beat)*+$0.23 (Beat)*+$0.02 (Beat) *

Values marked with * retrieved from S&P Global.

Margins and Loss Components

MetricQ3 2024Q3 2025
Net Loss Ratio (%)39.0% 44.3%
Catastrophe Loss Ratio (%)1.7% 0.2%
Net Underwriting Expense Ratio (%)33.0% 28.4%
GAAP Combined Ratio (%)72.0% 72.7%
Underlying Loss Ratio (%)39.2% 44.1%

KPIs and Balance Sheet

KPIQ3 2024Q3 2025
Direct Premiums Written (DPW) ($USD)$66.63M $75.81M
Net Premiums Earned ($USD)$33.41M $47.93M
Policies in Force (end of period)74,887 78,026
Net Investment Income ($USD)$1.65M $2.50M
Adjusted EBITDA ($USD)$10.43M $14.67M
ROE (annualized)55.6% 42.9%
Book Value/Share (diluted) ($)$4.32 $7.28
Shareholders’ Equity ($USD)—$107.65M

Investment Portfolio and Yield

MetricQ3 2024Q3 2025
Fixed Income Portfolio Yield (%)3.39% 4.03%
Effective Duration (years)3.7 4.4
New Money Yield in Q3 (%)—5.2%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Direct Premiums Written Growth (%)FY202512–17% 12–17% Maintained
GAAP Net Combined Ratio (%)FY202579–83% 78–82% Raised (improved)
Basic EPS ($)FY2025$2.10–$2.50 $2.30–$2.70 Raised
Diluted EPS ($)FY2025$1.95–$2.35 $2.20–$2.60 Raised
ROE (%)FY202530–38% 35–39% Raised
Baseline Net Premiums Earned ($USD)FY2025~$187M ~$187M Unchanged
FY2026 Guidance (DPW Growth, CR, EPS, ROE)FY2026—DPW +15–20%; CR 79–83%; Basic EPS $2.15–$2.85; Diluted EPS $2.10–$2.80; ROE 26–36% New/Affirmed

Management noted FY2026 assumes normalization in weather/cat seasonality vs unusually mild winters in 2024–2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 2025)Current Period (Q3 2025)Trend
Hard market in Downstate NYConditions remained hard; competitors selectively re‑opened; focus on core profitable growth Hard market unchanged; volume strong; sequential increases in new business since June Stable hard market; supportive of growth
Select homeowners programCumulative frequency down; shift to preferred risks; Select ~48% of PIF in Q1 Select ~54% of PIF; inception‑to‑date frequency 31% lower vs legacy Positive mix shift continues
AmGuard renewal rights$25–35M expected over 12 months; timing uncertain; rate differentials noted Writing since Sept 1; ~<$1M/month; $25–35M over 3 years (more proportionate) On track; spread over 3 years
Cat reinsurance & cat bond57% limit increase; <10% price increase; first cat bond; first event retention $5M Cat loss ratio only 0.2%; FY26 guidance assumes normalized cats Robust protection; low cat impact in Q3
Expense ratio & ceding commissionsSliding‑scale ceding commissions could improve expense ratio as year progresses +$1.4M sliding‑scale contingent commissions recognized; Q3 expense ratio down 4.6 pts YoY Favorable expense tailwind
Investment income & durationPortfolio growth; new investments at 5.4–5.6% yields; duration extension New money yield 5.2%; portfolio yield 4.03%; duration 4.4 years Rising yield/income momentum
Geographic expansion (E&S)Strategy for 2026+; measured pace; not same company as 2017; product built on data science Filing in CT for new company; E&S writing via KICO in select states; market demand remains > supply Progressing; roadmap in 1H 2026

Management Commentary

  • “Building on the momentum from our record second quarter 2025 performance, we again delivered one of the strongest quarters in our history… GAAP combined ratio of 72.7%, and an annualized return on equity of 42.9%.” — CEO Meryl Golden .
  • “Net earned premium growth continues to be a powerful tailwind, exceeding 40% for the third consecutive quarter of 2025, primarily due to our reduced quota share.” — CEO .
  • “We are raising guidance… reaffirming direct written premium growth of 12–17%… GAAP net combined ratio between 78–82%, basic EPS $2.30–$2.70, diluted EPS $2.20–$2.60, ROE 35–39%.” — CEO .
  • “We capitalized on attractive new money yields of 5.2%… fixed income yield is 4.03%, with an effective duration of 4.4 years… sliding‑scale ceding commissions recognized this quarter contributed to the 4.6 pt decrease in the quarter’s expense ratio.” — CFO Randy Patton .
  • “Even with typical third quarter catastrophe losses, our combined ratio would have been in the low eighties, reflecting the differentiated platform.” — CEO .

Q&A Highlights

  • Select vs legacy: Legacy remains profitable and will not be forcibly converted in near term; all new business written on Select since 2022 .
  • E&S expansion: Filing for a new company in CT; will also write E&S via KICO; product will leverage Select design with state‑specific perils/variables; market demand remains strong .
  • AmGuard conversion: Started Sept 1; tracking to $25–35M over three years; ~<$1M/month early pace; similar mix to Select with added borough diversification .
  • Reinsurance: Second event retention ~$9M pre‑tax; reinstatement premium applicable on first layer .
  • Capital allocation: Dividend reinstated; no buyback plans currently; holding company debt repaid; ample capital to fund disciplined growth .

Estimates Context

  • Q3 2025: Revenue $55.65M vs consensus $47.20M (Beat); EPS $0.73–$0.74 vs consensus $0.71 (Beat). Coverage depth was limited (1 estimate) across Q1–Q3, but the trend shows consistent beats on both metrics. Values marked with * retrieved from S&P Global.
  • With FY2025 guidance raised on combined ratio, EPS, and ROE, we expect upward revisions to FY2025/2026 profitability assumptions and potentially higher revenue trajectories given continued earned premium tailwinds and E&S ramp in 2026 .

Estimates vs Actual

MetricQ1 2025Q2 2025Q3 2025
Revenue Estimate ($USD)$41.70M*$44.60M*$47.20M*
Revenue Actual ($USD)$48.53M*$52.29M*$55.65M
EPS Estimate ($)$0.00*$0.55*$0.71*
EPS Actual ($)$0.27 $0.78 $0.74
Beat/Miss (Rev)+$6.83M (Beat)*+$7.69M (Beat)*+$8.45M (Beat)*
Beat/Miss (EPS)+$0.27 (Beat)*+$0.23 (Beat)*+$0.02 (Beat)*

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Margin durability remains the key narrative: combined ratio in the low‑80s even under normalized Q3 cat assumptions; sliding‑scale ceding commission supports lower expenses into year‑end .
  • Earned premium tailwinds are multi‑quarter: reduced quota share and 2H‑2024 growth continue to earn in, aiding underwriting profits .
  • Investment income is accelerating with duration extension and higher new money yields, offering a secondary earnings lever as cash generation persists .
  • Guidance raised for FY2025 on all profitability metrics; expect consensus upward revisions despite limited coverage depth (one estimate per quarter) .
  • E&S expansion and AmGuard conversion provide measured top‑line optionality into 2026 with discipline on rate adequacy and risk selection; watch for regulatory approvals and roadmap in 1H 2026 .
  • Capital position strengthened (equity >$107M; no holdco debt) enabling dividend reinstatement and growth funding without buybacks; conservative stance maintained .
  • Near‑term trading setup: continued beats on revenue/EPS, guidance raises, and visible catalysts (E&S roadmap, conversion progress) should support sentiment; risk is severity/large losses and weather normalization lifting loss ratios .