KINS Q3 2026 earnings call transcript, November 6, 2026

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 86,000. We added more than 8,000 customers over the past year. I'm 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 gotten 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 excess and 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 don't 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 contribution to our results will be modest this year, reception to our re-entry 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

percent compared with 24 to 30 percent previously, and we have improved our gap 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 percent. from our previous range of 16 to 20 percent, 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.

Even with four and a half 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'll turn the call over to Randy for a more detailed review of our financial results. Randy?

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 2026, compared with $0.73 in the same quarter last year. In-line's gap return on equity was 52.9% during the third quarter of 2026. Net premiums earned grew 30.9% to $62.4 million in the third quarter of 2026, driven by growth in direct premiums written and reduced quarter share session in 2026. As a reminder, we reduced our New York personal line's quarter share to 5% for the 2026 treaty year, compared with 16% for the 2025 treaty year, allowing us to retain more premium and underwriting profit. That investment income rose 50.3% to 3.8 million in the third quarter of 2026, driven by growth and invested assets in a higher average yield of 4.6%. Total investments were 337.1 million at September 30th, up 9% from year end. Turning to underwriting, the gap net loss ratio was 34.9% compared with 44.3% in the prior year quarter. And our gap net combined ratio was 65.6% compared with 72.7%, excluding both catastrophe losses, which added 7.3%. And favorable prior year reserve development, which reduced the net loss ratio by 6.1 points, the underlying performance of the book was strong in the third quarter of 2026, 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 nine of the 24 events so far, and two of those nine events accounted for most of the losses, with one of those two events being this late September nor'easter, which contributed 1.7 million of losses. The $3.8 million in a favorable development in a quarter came primarily from our property lines, with a smaller favorable impact from our casualty book. Through the first nine months, favorable development totaled approximately $6.7 million, or 3.8% of nine-month net premiums earned. On expenses, our net underwriting expenses ratio improved to 30.6% for the first nine months of 2026, from 30.8% last year. In the third 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 seeding commission. which lowered the third quarter of 2025's expense ratio by approximately 2.9 points. Excluding this adjustment, the third quarter of 2026 expense ratio would have improved 0.6 points versus the same prior year quarter. For the nine months of 2026, direct premium is written. Increased 17.4% to $228.9 million, and net premiums earned increased 29.8% to $178.7 million. Despite elevated winter catastrophe activity in the first quarter of 2026, costing approximately $13 million in losses, we generated net income of $27.2 million, or $1.

and 86 cents per diluted share, and operating net income of $28.3 million, or $1.93 per diluted share. The nine-month net combined ratio was 81.7% compared with 79% in the prior year period, and included 10.4 points of catastrophe losses compared with zero. 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. Gap diluted book value per share was $9.21 at September 30th, up 26.5%. from $7.28 a year ago and 6% from June 30th, 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. 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 30th. Our capital position is the strongest in our stockholders to equity grew 11% this year. Uh-oh. Standby, ladies and gentlemen. We'll resume in one moment.

I'm back. Sorry about that. I think I lost connection.

We're ready. Please continue. Okay. Our capital position is the strongest in our history. Stockholders' equity grew 11% this year at $136.7 million at September 30th. 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 retention. at $3.5 million for Wildfire, $5 million for Namestorm, and $6 million for Winterstorm. 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 plan. while maximizing long-term shareholder value. With that, operator, we are ready for questions.

The next question comes from the line of Gabriel McClure, the private investor. Please proceed with your question, sir.

Thank you. At this time, I'll turn the floor back to management for closing remarks. Great. Well, thank you so much for joining our call. Have a great day. Ladies and gentlemen, thank you for your participation. This will conclude today's teleconference. You may disconnect your lines at this time.