Kingstone Companies' Q4 2024 Earnings Call: Contradictions in Expense Ratios, Pricing Strategies, and Product Focus

These are the key contradictions discussed in Kingstone Companies, Inc.'s latest 2024Q4 earnings call, specifically including: Expense Ratio Targets, Competitive Pricing Strategy, Underwriting Appetite Expansion, and Strategic Focus on Legacy Versus Select Products:



Record-breaking Financial Performance:
- Kingstone Companies reported a net income of $5.4 million or $0.40 per diluted share for Q4 2024, marking five consecutive profitable quarters.
- Full-year net income was $18.4 million, compared to a net loss of $6.2 million last year, with earnings per diluted share at $1.48 compared to a loss of $0.57.
- The growth was driven by strong direct written premiums and strategic reductions in noncore business, along with improvements in combined ratio and expense ratio.

Premium Growth and Market Dislocation:
- Direct written premiums for Q4 increased by 37%, with a 49% increase in core direct written premiums, driven by competitors' market exits.
- For the full year, direct written premiums were up 21%, with core business growth at 31%, primarily from increased market opportunity due to competitor exits.
- The exit of Adirondack and Mountain Valley led to a significant increase in market share and policy count, contributing to premium growth.

Improved Profitability and Risk Management:
- The combined ratio improved by 11 percentage points to 78.5% for Q4, with non-cat loss ratio improving by 7.7 percentage points.
- For the calendar year, the combined ratio improved by 25.3 percentage points to 80%, driven by reductions in non-cat and catastrophe loss ratios.
- Improved performance was attributed to better risk selection, increased pricing, and strategic business focus.

Debt Repayment and Financial Strengthening:
- Kingstone fully paid off $20 million of debt in just five months, reducing interest expenses by approximately $0.05 per diluted share in 2025.
- The company issued shares via the ATM to generate cash and fund expenses, contributing to its debt-free status.
- This strengthening of the financial position allows for future growth and the ability to pay dividends to the holding company.