Kingstone Companies (KINS) Delivers Strong Q1 2025 Results Amid Strategic Focus on New York Market

Kingstone Companies, Inc. (NASDAQ: KINS) reported robust first-quarter 2025 results, driven by disciplined underwriting, premium growth in its core New York market, and strategic initiatives. The insurer’s net income surged 172% year-over-year to $3.88 million, while diluted earnings per share (EPS) reached $0.27—marking its sixth consecutive profitable quarter. These results underscore Kingstone’s success in executing its geographic specialization strategy, even as it navigates evolving risks like rising fire loss severity.

Financial Highlights: A Quarter of Momentum

• Premium Growth: Core business direct premiums written in New York rose 22.7% to $57.2 million, fueled by strong producer partnerships and favorable market conditions. Net premiums earned increased 51% to $43.5 million, reflecting reduced reinsurance and higher risk retention.
• Investment Income: Grew 36.3% to $2.0 million, contributing to a nearly 100% year-over-year jump in book value per diluted share to $5.57.
• Combined Ratio: Held steady at 93.7%, slightly higher than Q1 2024 due to elevated fire losses, but offset by lower catastrophe costs from milder winter weather.

Strategic Initiatives Driving Long-Term Growth

1. Amgard Renewal Rights Transaction:
   Approved by New York regulators, this deal positions Kingstone to replace Berkshire Hathaway’s Amgard as the carrier for its exiting homeowners business. Expected to begin in late Q3 2025, the transaction could generate $25–35 million in premiums over 12 months. The business will be underwritten through Kingstone’s high-margin “Select” homeowners product, which now accounts for 48% of policies in force.

2. Select Homeowners Program:
   This initiative continues to outperform legacy products, with cumulative frequency declining to 1.6% in Q1 2025—35% lower than a year earlier. The program’s disciplined underwriting (e.g., targeting homes with higher deductibles and better insurance scores) has reduced claims while boosting market share. Management aims to grow Select policies to 60% of total policies by year-end.

3. Geographic Focus:
   Kingstone remains laser-focused on its core New York market, where it ranks as the 12th largest homeowners insurer. Non-core operations (outside New York) saw premiums drop 63.5%, reflecting a strategic pivot to higher-margin opportunities.

Operational Resilience and Risks

• Underwriting Discipline: The net combined ratio of 93.7% reflects tight cost controls, even as fire loss severity rose. Management noted this was due to a few large claims in legacy policies, which they expect to normalize.
• Balance Sheet Strength: The company fully repaid $800,000 in holding company debt and bolstered its investment portfolio with $16 million in high-rated securities, yielding 5.41%.
• Key Risks:
• Fire Loss Severity: Elevated fire claims remain a near-term concern, though management believes they are non-recurring.
• GuruFocus Warnings: The firm flagged five undisclosed “warning signs,” including potential valuation risks, though analysts remain bullish.

Full-Year Outlook and Analyst Views

Kingstone reaffirmed its 2025 guidance:
- Premium Growth: 15–25% for core New York business.
- Combined Ratio: 81–85%, targeting improvement as rate adequacy and loss patterns normalize.
- EPS: $1.90–$2.30, supported by its 27–35% projected return on equity (ROE), far exceeding the 8–12% industry average.

Analysts maintain a “Buy” consensus, with an average 12-month price target of $19.00—a 2.6% upside from its May 2025 price of $18.52. However, GuruFocus’s GF Value estimate of $4.37 suggests potential downside risks, likely tied to valuation multiples or hidden liabilities.

Conclusion: A Story of Focus and Discipline

Kingstone’s Q1 2025 results highlight its ability to capitalize on its New York-centric strategy, with premium growth, strong investment returns, and a disciplined underwriting approach driving profitability. The Amgard transaction and Select program’s expansion position the company to sustain momentum, even as it navigates risks like fire loss severity.

While GuruFocus’s warnings warrant caution, the stock’s fundamentals—robust book value growth, high ROE, and analyst optimism—suggest the company is well-positioned for long-term success. Investors should monitor execution of the Amgard deal and progress toward its 2025 targets, as well as any shifts in New York’s insurance market dynamics. For now, Kingstone’s focus on its core market and underwriting excellence make it a compelling play in a sector primed for growth.

Data as of Q1 2025. Past performance is not indicative of future results.