Kingstone Companies Delivers a Quarter of Stunning Growth Amid Strategic Focus

Kingstone Companies (KINS) reported first-quarter 2025 results that defied expectations, with diluted earnings per share (EPS) of $0.27, a 172% surge in net income to $3.88 million, and a 51% year-over-year jump in net premiums earned. The insurer’s relentless focus on its New York-centric strategy, disciplined underwriting, and reduced exposure to non-core markets has positioned it as a standout performer in the regional property and casualty space.

A Breakdown of the Financial Surge

Kingstone’s Q1 results were driven by two critical factors:
1. Core Market Dominance: Direct premiums written for its New York-focused “Core Business” rose 22.7% to $57.2 million, fueled by strong new business writings and a favorable competitive landscape. The company now holds the 12th-largest market share in New York’s homeowners insurance sector.
2. Underwriting Discipline: The net combined ratio of 93.7%—a key profitability metric—remained below 100% for the sixth consecutive quarter, despite a slight rise from 93.3% in Q1 2024. This was achieved despite rising fire loss severity, which offset a 3.5 percentage point improvement in catastrophe losses due to milder winter weather.

The insurer also prioritized profitability over growth in non-core regions, slashing direct premiums outside New York by 63.5%, reducing risk exposure while retaining underwriting control.

Strategic Shifts and Guidance

Management’s strategic choices are paying off. By cutting reliance on quota share reinsurance and focusing on its core market, Kingstone has boosted risk retention while maintaining strong underwriting standards. CEO Meryl Golden highlighted the “favorable competitive landscape” in New York, where producers can secure high-quality business, and noted that fire severity—now a key risk—will require targeted mitigation.

For 2025, Kingstone reaffirmed aggressive growth targets:
- 15–25% growth in core direct premiums.
- A net combined ratio of 81–85%, reflecting optimism about rate adequacy and normalized loss trends.
- An EPS range of $1.90–$2.30, far exceeding the $1.15 achieved in 2024.

The company’s book value per diluted share nearly doubled year-over-year to $5.57, supported by a 36% rise in investment income to $2.0 million.

Stock Outlook and Risks

Despite the strong results, investors remain cautious ahead of the May 8 earnings release. Analysts project a potential ±6.42% swing in the stock price on May 9, with a forecasted opening price of $18.30—a modest 0.8% increase from the May 7 close of $18.15.

Technical indicators suggest a buy signal, with short-term moving averages above long-term trends and support levels around $17.00. However, risks remain:
- Fire Severity: The 0.4-point increase in the combined ratio due to fire losses could worsen if weather patterns shift.
- Market Volatility: The stock’s 5.6% weekly volatility underscores sensitivity to earnings surprises or macroeconomic shifts.

Why This Matters for Investors

Kingstone’s Q1 results underscore its transformation into a high-return insurer, with an operating ROE of 27–35%—far above the 8–12% average for regional peers. Its focus on New York, where it is capturing market share through disciplined underwriting, positions it to capitalize on a fragmented and consolidating industry.

The company’s ability to grow premiums 51% year-over-year while maintaining a sub-100% combined ratio defies the challenges plaguing many regional insurers, such as exposure to catastrophic losses or pricing wars. With a $18.30 price target and a three-month upside potential of +9.19%, Kingstone appears poised to reward investors who bet on its disciplined strategy.

Conclusion

Kingstone’s Q1 performance is a masterclass in strategic focus and execution. By narrowing its geographic scope, prioritizing underwriting quality over volume, and capitalizing on a favorable New York market, it has delivered outsized returns. The stock’s upcoming earnings reaction will test investor confidence in its ability to sustain this momentum, but the data suggests Kingstone is building a durable moat in an industry ripe for consolidation.

With a 22.7% growth in core premiums, a near-doubling of book value, and a net combined ratio below 100% for six straight quarters, Kingstone is no longer just a regional player—it’s a model of profitability in an otherwise challenged sector. For investors seeking exposure to a disciplined insurer with clear growth catalysts, Kingstone’s results warrant serious consideration.