Kingstone Companies, Inc

Greetings and welcome to the Kingstone Company's fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Karen Daly, Vice President, the Equity Group, and Kingstone's Investor Relations Representative. Thank you. You may begin.

Thank you, Melissa, and good morning, everyone. Joining us on the call today will be President and Chief Executive Officer Merrill Golden and Chief Financial Officer Jennifer Gravel. On behalf of the company, I would like to note that this conference call may contain forward-looking statements which involve known and unknown risks uncertainties, and other factors that may cause actual results to be materially different from projected results. Forward-looking statements speak only as of the date on which they are made, and Kingston undertakes no obligation to update the information discussed. For more information, please refer to the section entitled Risk Factors in Part 1, Item 1A of the company's latest Form 10-K. Additionally, today's remarks may include references to non-GAAP measures. For reconciliation of these non-GAAP measures, To get figures, please see the tables in the latest earnings release. With that, it's my pleasure to turn the call over to Meryl Golden.

Meryl? Thanks, Karen. Good morning, everyone, and thanks for joining our call. I am delighted to share the results of another record-breaking quarter and the most remarkable year in Kingstone's history. In 2024, the hard work to transform and turn around the company was that started over five years ago was fully reflected in our financial results. During the year, we saw improvement in virtually every aspect of our business. I want to thank my great leadership team and our employees who work tirelessly to make these results possible and our select producers for their commitment to the company. I am proud of what we've been able to accomplish and excited to build on this foundation to achieve even better results. in 2025. Let me start by highlighting the phenomenal growth we achieved in the fourth quarter and for the full year. We finished the year with 21% growth overall and 31% growth in our core business. In the third and fourth quarters, core business growth was driven by the exit of two competitors, Adirondack and Mountain Valley, who reached an agreement with the New York Department of Financial Services to non-renew or cancel their entire book by the end of 2024. In the fourth quarter, our core direct written premium grew by 49% as a result of the increased market opportunity from their exit. With homeowners' new business policies up four times the prior year quarter, overall policy count up 44%, an average premium of 15%. In the back half of 2024, we wrote $23 million in direct written premium and over 6,000 policies from customers previously insured with these two carriers. For additional visibility, in January, we wrote an additional couple of million of dollars of premiums from this competitive displacement, but otherwise, all of these policies have moved. The hard market conditions in downstate New York footprint have not changed materially. Growth in written premium in 2025 to date has moderated from what we experienced in the second half of 2024 as to be expected, but is still materially higher than the prior year quarter, driven by both higher new business counts and higher average premium. For 2025, our plan is to continue our focus on our core state of New York and capitalize on the hard market condition. We are also investing considerable resources to learn more about other catastrophe exposed geographies and strategically developing a plan to expand our footprint beyond downstate New York. We will share our expansion plans later in the year when they are finalized. From a profitability perspective, our select product continues to outperform our expectations with a 29% reduction in frequency for the year compared to our legacy product, a phenomenon that we have experienced since the introduction of the select product three years ago. Typically, the legacy renewal book would have lower frequency than select since it's all renewals, and Select includes 47% new business. Our Select pricing and underwriting has shifted our mix to more preferred risk with more well-maintained homes, better insurance scores, and higher deductibles, which is driving our frequency improvement. We've also been closely monitoring the business from Adirondack and Mountain Valley, and that book is running even better than our well-performing Select books. Despite our high growth rate in 2024, only 41% of our policies enforced have been written in the select product as of year-end, which bodes extremely well for the future. Before I cover guidance, I want to share an update on our debt and the at-the-market offering. I had previously shared that a $4 million prepayment had been made in December, reducing our debt to $6 million at year-end 24. Today, I am pleased to share that we made three additional prepayments in January and February, and our debt has been fully paid off, which will save us roughly $800,000 in interest expense in 2025, contributing another five cents to earnings per diluted share. It's an incredible accomplishment that we were able to pay off $20 million of debt in just five months. I am delighted that Kingstone is now debt free. To enable this, during the fourth quarter of 24, we issued 302,000 shares via the ATM and an average share price of $15.41. And through yesterday, we have issued an additional 613,000 shares and an average share price of $16.00. The ATM has been used as a vehicle to generate cash at the holding company level, to fund expenses, and to pay off the debt. You may recall that the magnitude of prior year underwriting losses precluded the insurance company from paying dividends to the holding company until last November. So the ATM played a critical role in sustaining the company. Kingstone is in great financial condition again. with a healthy balance sheet. We are generating substantial income and cash and have sufficient statutory surplus to support our growth even after a material reduction in quota share. And we have the ability to pay dividends to the holding company from the insurance company again if additional capital is needed. As such, we have put a pause on share issuance via the ATM for the foreseeable future. And finally, turning to guidance. There were a few material items that are now reflected in our RAISE guidance for 2025. First, the updated guidance considers increased premiums written in the fourth quarter of 24 that will be earned in 25. Second, the reduction in our quota share for 25 to 16% from 27% in 24 and the higher seating commission received had a material positive impact. Third, the reduction of interest expense from the elimination of our debt. And last, the gain on the sale of our headquarters building, which should close next week. With that, for 2025, we are reaffirming core business direct written premium growth between 15 and 25%. And based on approximately 184 million of net premiums earned, we expect to achieve a gap combined ratio between 81 and 85, basic earnings per share between $1.90 and 230, diluted earnings per share between $1.75 and 215, and return on equity between 27% and 35%. While 2024 was a monumental year for the company, it has only increased our desire to achieve even better results in 2025. The Kingston team is working hard every day to build on our success and keep the momentum going. We have a winning formula, the right team, a great product, and a competitive expense structure as our foundation. that we believe will drive increased value to our shareholders for years to come. With that, I'll turn the call over to Jen for a more detailed review of our quarterly results. Jen?