Kingstone Companies (KINS) Sidoti Micro-Cap Virtual Conference summary

Company transformation and modernization

• Leadership overhaul and technology upgrades modernized operations, reducing annual system costs by $1.5 million and improving efficiency.

• Introduction of the Select product suite in January 2022, leveraging advanced data science, led to a 10% lower claim frequency compared to legacy products.

• Catastrophe exposure was better managed through new risk protocols, including hurricane deductibles and targeted reinsurance strategies.

• Exit from unprofitable non-core markets outside New York, reducing non-core premium from 20% to an expected 5% by year-end.

• Expense ratio dropped from $0.41 to $0.31 per dollar of premium, driven by staff reductions, renegotiated contracts, and lower commissions.

Financial performance and profitability

• Direct written premium reached $103 million in H1 2024, up 8% year-over-year.

• Net loss ratio improved to 54.3%, a 22.9-point gain, and net expense ratio fell to 31.3%.

• Net combined ratio dropped to 85.6%, yielding a 14.4% margin per dollar of business.

• Net income for H1 2024 was $5.9 million, an $11.5 million swing from a $5.6 million loss in the prior year.

• Annualized return on equity reached 31.6%, reversing a prior year loss of 32.7%.

Market opportunity and growth outlook

• Major competitors have exited the New York coastal market, creating a $260 million opportunity.

• New business policy count in July increased fivefold, with premium up thirteenfold year-over-year.

• The company expects 25%-35% core business growth in 2024 and 15%-25% written premium growth in 2025.

• Guidance for 2025 includes a combined ratio of 85%-89%, EPS of $1.20-$1.60, and ROE of 22%-30%.

• Growth will be selective, targeting high-margin segments, with an estimated 20%-30% capture of the available market.