KINGSTONE COMPANIES, INC.

Previous wording

We offer property and casualty insurance products through our wholly-owned subsidiary, Kingstone Insurance Company (“KICO”). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto insurance in New York, and in 2024 was the 12th largest writer of homeowners insurance in New York. KICO is also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. For the three months ended March 31, 2025 and 2024 respectively, 98.3% and 94.4% of KICO’s direct written premiums came from the New York policies. We refer to our New York business as our “Core” business and the business outside of New York as our “non-Core” business.

Current wording

We offer property and casualty insurance products through our wholly-owned subsidiary, Kingstone Insurance Company (“KICO”). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto insurance in New York, and in 2024 was the 12th largest writer of homeowners insurance in New York. KICO is also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. For the three months ended June 30, 2025 and 2024 respectively, 97.9% and 95.9% of KICO’s direct written premiums came from the New York policies. For the six months ended June 30, 2025 and 2024 respectively, 98.1% and 95.2% of KICO’s direct written premiums came from the New York policies. We refer to our New York business as our “Core” business and the business outside of New York as our “non-Core” business.

Previous wording

Other operating expenses include our corporate expenses as a holding company. These corporate expenses include legal and auditing fees, executive employment costs and equity compensation, and other costs directly associated with being a public company.

Current wording

Other operating expenses include our corporate expenses as a holding company. These corporate expenses include legal and auditing fees, executive employment costs and equity compensation, directors' fees, and other costs directly associated with being a public company.

Previous wording

In May 2019, due to the poor performance of these lines we placed a moratorium on new commercial lines and new commercial umbrella submissions while we further reviewed this business. In July 2019, due to the continuing poor performance of these lines, we made the decision to no longer underwrite commercial lines or commercial umbrella risks. In-force policies as of July 31, 2019 for these lines were non-renewed at the end of their annual terms. As of March 31, 2025 and December 31, 2024, there were no commercial liability policies in-force. As of March 31, 2025, these expired policies represented approximately 11.8% of loss and LAE reserves net of reinsurance recoverables. See discussion below under “Additional Financial Information”.

Current wording

In May 2019, due to the poor performance of these lines we placed a moratorium on new commercial lines and new commercial umbrella submissions while we further reviewed this business. In July 2019, due to the continuing poor performance of these lines, we made the decision to no longer underwrite commercial lines or commercial umbrella risks. In-force policies as of July 31, 2019 for these lines were non-renewed at the end of their annual terms. As of June 30, 2025 and December 31, 2024, there were no commercial liability policies in-force. As of June 30, 2025, these expired policies represented approximately 11.7% of loss and LAE reserves net of reinsurance recoverables. See discussion below under “Additional Financial Information”.

Previous wording

We utilize the following key GAAP and non-GAAP measures in analyzing the results of our insurance underwriting business. See "Non-GAAP Financial Measures" for a reconciliation of the below non-GAAP measures to the most directly comparable GAAP measure:

Current wording

We utilize the following key GAAP accounting principles generally accepted in the United States and non-GAAP measures in analyzing the results of our insurance underwriting business. See "Non-GAAP Financial Measures" for a reconciliation of the below non-GAAP measures to the most directly comparable GAAP measure:

Previous wording

Direct written premiums, net premiums written: Direct written premiums represent the total premiums charged on policies issued by an insurance company during the respective fiscal period. Net written premiums are direct written premiums less premiums ceded to reinsurers. Net premiums earned, the GAAP measure most comparable to direct written premiums and net written premiums, are net written premiums that are pro-rata earned during the fiscal period presented. All of the our policies are written for a twelve-month period. Management uses direct written premiums and net written premiums, along with other measures, to gauge our performance and evaluate results. Direct written premiums and net written premiums are provided as supplemental information, not as a substitute for net premiums earned, and do not reflect the Company’s net premiums earned.

Current wording

Direct written premiums, net premiums written: Direct written premiums represent the total premiums charged on policies issued by an insurance company during the respective fiscal period. Net written premiums are direct written premiums less premiums ceded to reinsurers. Net premiums earned, the GAAP measure most comparable to direct written premiums and net written premiums, are net written premiums that are pro-rata earned during the fiscal period presented. All of our policies are written for a twelve-month period. Management uses direct written premiums and net written premiums, along with other measures, to gauge our performance and evaluate results. Direct written premiums and net written premiums are provided as supplemental information, not as a substitute for net premiums earned, and do not reflect the Company’s net premiums earned.

Previous wording

Our condensed consolidated financial statements include the accounts of Kingstone Companies, Inc. and all majority-owned and controlled subsidiaries. The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions in certain circumstances that affect amounts reported in our condensed consolidated financial statements and related notes. In preparing these condensed consolidated financial statements, our management has utilized information including our past history, industry standards, and the current economic environment, and other factors, in forming its estimates and judgments of certain amounts included in the condensed consolidated financial statements, giving due consideration to materiality. It is possible that the ultimate outcome as anticipated by our management in formulating its estimates in these financial statements may not materialize.

Current wording

Our condensed consolidated financial statements include the accounts of Kingstone Companies, Inc. and all wholly-owned subsidiaries. The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions in certain circumstances that affect amounts reported in our condensed consolidated financial statements and related notes. In preparing these condensed consolidated financial statements, our management has utilized information including our past history, industry standards, and the current economic environment, and other factors, in forming its estimates and judgments of certain amounts included in the condensed consolidated financial statements, giving due consideration to materiality. It is possible that the ultimate outcome as anticipated by our management in formulating its estimates in these financial statements may not materialize.

Previous wording

Kingstone 2.0 (completed), Kingstone 3.0 (underway), and Change in Market Dynamics (underway)

Current wording

Kingstone 2.0 (completed), Kingstone 3.0 (completed), Change in Market Dynamics (underway), and 5-Year Growth Plan (underway)

Previous wording

Adjusted pricing to stay ahead of loss trends, including inflation, by filing the maximum annual rate change that can be supported in each state and product and ensured all policyholders were insured to value. Inflation has been a dominant headwind that is showing signs of stabilizing. We have been cognizant that inflation’s impact on loss costs places added pressure on premiums and, as such, we have been more frequent and aggressive with our rate change requests. Similarly, home replacement values reflect that same inflationary pressure. In September 2023, we completed our first cycle of valuation adjustments, making sure that all homes were insured to value. As a result, we have seen a rise in premiums attributable to the heightened replacement costs. All policies are renewed at the most current replacement cost. Overall average written premium for our Core personal lines renewal policies for the last 12 months, reflecting both rate and replacement cost changes, increased by 18.8%;

Current wording

Adjusted pricing to stay ahead of loss trends, including inflation, by filing the maximum annual rate change that can be supported in each state and product and ensured all policyholders were insured to value. Inflation has been a dominant headwind that is showing signs of stabilizing. We have been cognizant that inflation’s impact on loss costs places added pressure on premiums and, as such, we have been more frequent and aggressive with our rate change requests. Similarly, home replacement values reflect that same inflationary pressure. In September 2023, we completed our first cycle of valuation adjustments, making sure that all homes were insured to value. As a result, we have seen a rise in premiums attributable to the heightened replacement costs. All policies are renewed at the most current replacement cost. Overall average written premium for our Core personal lines renewal policies for the last 12 months, reflecting both rate and replacement cost changes, increased by 17.6%;

Previous wording

Continuing expense reduction focus with a goal of reducing the net expense ratio to 33% by year-end 2024. For the year ended December 31, 2024, we achieved our goal of 33%, with a net underwriting expense ratio of 31.3%. For the three months ended March 31, 2025, the net underwriting expense ratio remained at 31.3% as compared to the three months ended March 31, 2024.

Current wording

Continuing expense reduction focus with a goal of reducing the net expense ratio to 33% by year-end 2024. For the year ended December 31, 2024, we achieved our goal of 33%, with a net underwriting expense ratio of 32.0%. For the six months ended June 30, 2025, the net underwriting expense ratio increased 0.7 percentage points to 32.0% due to lower contingent ceding commission on our primary quota share treaty, which is on sliding scale based on loss ratio. As the year progresses, and if the loss ratio continues to improve as we expect, contingent ceding commission will increase and our net underwriting expense ratio will benefit as a result. We anticipate the net underwriting expense ratio for the full year 2025 to be in line with 2024.

Previous wording

We believe that the above actions taken resulted in our return to profitability for the last six consecutive quarters, will continue to have the intended effect, and will continue through the year ended December 31, 2025 and beyond.

Current wording

We believe that the above actions taken resulted in our return to profitability for the last seven consecutive quarters, will continue to have the intended effect, and will continue through the year ended December 31, 2025 and beyond.

Previous wording

See the tables below for our Core and non-Core business for policies in force as of March 31, 2025 and 2024 and direct written premiums for three months ended March 31, 2025 and 2024. For the three months ended March 31, 2025, our Core direct written premiums increased by 22.7% compared to the three months ended March 31, 2024, while Core policies in force increased by 10.4% as of March 31, 2025 as compared to March 31, 2024. For the same periods, our non-Core direct written premiums decreased by 63.5% and policies in force decreased by 67.6%.

Current wording

See the tables below for our Core and non-Core business for policies in force as of June 30, 2025 and 2024 and direct written premiums for three months and six months ended June 30, 2025 and 2024. For the three months ended June 30, 2025, our Core direct written premiums increased by 16.6% compared to the three months ended June 30, 2024, while Core policies in force increased by 11.4% as of June 30, 2025 as compared to June 30, 2024. For the same periods, our non-Core direct written premiums decreased by 42.5% and policies in force decreased by 67.6%. For the six months ended June 30, 2025, our Core direct written premiums increased by 19.5% compared to the six months ended June 30, 2024, while Core policies in force increased by 11.4% as of June 30, 2025 as compared to June 30, 2024.For the same periods, our non-Core direct written premiums decreased by 54.1% and policies in force decreased by 67.6%.

Previous wording

Direct written premiums from our livery physical damage business for Three Months 2025 were $3,847,000, an increase of $285,000, or 8.0%, from $3,562,000 in Three Months 2024. The increase in livery physical damage direct written premiums was due to the reversal of an underwriting restriction in place in Three Months 2024 to exclude certain electric vehicles until the approval of adequate rate for the risk was received, which happened in July 2024. The increase was also due to an increase in the values of the autos insured.

Current wording

Direct written premiums from our livery physical damage business for Six Months 2025 were $7,137,000, an increase of $237,000, or 3.4%, from $6,900,000 in Six Months 2024. The increase in livery physical damage direct written premiums was due to the reversal of an underwriting restriction in place in Six Months 2024 to exclude certain electric vehicles until the approval of adequate rate for the risk was received, which happened in July 2024. The increase was also due to an increase in the values of the autos insured.

Previous wording

Effective January 1, 2024, we entered into a 27% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”). Upon expiration of the 2024/2025 Treaty on January 1, 2025, we entered into a new 16% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2025 through January 1, 2026 (“2025/2026 Treaty”). Our personal lines business was subject to the 2025/2026 Treaty in Three Months 2025, and the 2024/2025 Treaty in Three Months 2024. In Three Months 2025, our premiums ceded under quota share treaties decreased by $14,024,000 in comparison to premiums ceded under quota share treaties in Three Months 2024 (see table above). The decrease in Three Months 2025 was attributable to the decrease in quota share ceding percentage rates, offset by an increase in direct written premiums subject to the 2025/2026 Treaty compared to direct written premiums subject to the 2024/2025 Treaty. The inception of the 2025/2026 Treaty was recorded as a cutoff, resulting in the return of $11,471,000 from reinsurers to us of previously ceded written premiums that were unearned as of January 1, 2025.

Current wording

Effective January 1, 2024, we entered into a 27% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”). Upon expiration of the 2024/2025 Treaty on January 1, 2025, we entered into a new 16% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2025 through January 1, 2026 (“2025/2026 Treaty”). Our personal lines business was subject to the 2025/2026 Treaty in Six Months 2025, and the 2024/2025 Treaty in Six Months 2024. In Six Months 2025, our premiums ceded under quota share treaties decreased by $17,498,000 in comparison to premiums ceded under quota share treaties in Six Months 2024 (see table above). The decrease in Six Months 2025 was attributable to the decrease in the quota share ceding percentage rate, offset by an increase in direct written premiums subject to the 2025/2026 Treaty compared to direct written premiums subject to the 2024/2025 Treaty. The inception of the 2025/2026 Treaty was recorded as a cutoff, resulting in the return of $11,471,000 from reinsurers to us of previously ceded written premiums that were unearned as of January 1, 2025.

Previous wording

Cash and invested assets were $263,359,000 as of March 31, 2025 compared to $189,109,000 as of March 31, 2024, an increase of $74,250,000.

Current wording

Cash and invested assets were $273,550,000 as of June 30, 2025 compared to $195,789,000 as of June 30, 2024, an increase of $77,761,000.

Previous wording

Gain on sale of real estate was $1,966,000 in Three Months 2025 compared to $— in Three Months 2024. On March 19, 2025 one of our subsidiaries closed on the sale of our headquarters building in Kingston, New York, along with an adjacent mixed-use property (collectively, the “Property”). The purchase price for the Property was $3,600,000. We are now renting a smaller facility in Kingston, New York.

Current wording

Gain on sale of real estate was $1,966,000 in Six Months 2025 compared to $— in Six Months 2024. On March 19, 2025 one of our subsidiaries closed on the sale of our headquarters building in Kingston, New York, along with an adjacent mixed-use property (collectively, the “Property”). The purchase price for the Property was $3,600,000. We are now renting a smaller facility in Kingston, New York.

Previous wording

Our net underwriting expense ratio in Three Months 2025 was 31.3%, remaining constant with the 31.3% in Three Months 2024. The following table shows the individual components of our net underwriting expense ratio for the periods indicated:

Current wording

Our net underwriting expense ratio in Six Months 2025 was 32.0%, compared with 31.3% in Six Months 2024. The following table shows the individual components of our net underwriting expense ratio for the periods indicated:

Previous wording

Other operating expenses, related to the expenses of our holding company and Cosi, were $1,036,000 for Three Months 2025 compared to $778,000 for Three Months 2024. The following table shows a breakdown of the significant components of other operating expenses for the periods indicated:

Current wording

Other operating expenses, related to the expenses of our holding company and Cosi, were $2,189,000 for Six Months 2025 compared to $1,579,000 for Six Months 2024. The following table shows a breakdown of the significant components of other operating expenses for the periods indicated:

Previous wording

The increase in Three Months 2025 of $258,000, or 33.2%, as compared to Three Months 2024 was primarily due to an increase in loss on extinguishment of debt, and equity compensation, partially offset by a decrease in employment costs. The $175,000 loss on extinguishment of debt loss is due to writing off the balance of unamortized debt issue costs upon the prepayment of the 2024 Notes in Three Months 2025 as disclosed in Note 7 to the condensed consolidated financial statements. The increase in equity compensation is due to additional restricted stock awards granted to our senior leadership team as of December 31, 2024 pursuant to our employee bonus plan. The decrease in employment costs was due to fluctuations in deferred compensation liability in Three Months 2024 related to changes in the underlying invested portfolio. The deferred compensation plan was terminated in Three Months 2024.

Current wording

The increase in Six Months 2025 of $610,000, or 38.6%, as compared to Six Months 2024 was primarily due to an increase in equity compensation and loss on extinguishment of debt, partially offset by a decrease in employment costs. The increase in equity compensation is due to additional restricted stock awards granted to our senior leadership team as of December 31, 2024 pursuant to our employee bonus plan. The $175,000 loss on extinguishment of debt loss is due to writing off the balance of unamortized debt issue costs upon the prepayment of the 2024 Notes in Six Months 2025 as disclosed in Note 7 to the condensed consolidated financial statements. The decrease in employment costs was due to fluctuations in deferred compensation liability in Six Months 2024 related to changes in the underlying invested portfolio. The deferred compensation plan was terminated in Six Months 2024. Beginning in March 2025, after the 2024 Notes were paid in full, the monthly cost of warrant amortization and the write-off of unamortized balances of warrants that were exercised have been included in other expenses. The increase in Six Months 2025 of $157,000 includes $178,000 of such warrant costs, compared to $0 in Six Months 2024.

Previous wording

Interest expense in Three Months 2025 was $227,000 compared to $994,000 in Three Months 2024, a decrease of $(767,000) or (77.2)%. In Three Months 2025 and Three Months 2024, as disclosed in Note 7 to the condensed consolidated financial statements, we incurred interest expense in connection with the 2024 Notes and 2022 Notes, respectively. The 2022 Notes provided for interest at the rate of 12% per annum. In September 2024, in accordance with the 2024 Exchange Agreement, we paid $5,000,000 of principal on the 2022 Notes, reducing the principal balance to $14,950,000 from $19,950,000. Under the 2024 Exchange Agreement, the balance of the 2022 Notes were exchanged for the 2024 Notes, which provided for interest at the rate of 13.75% per annum. Beginning in the third quarter of 2024 through Three Months 2025, we paid optional principal amounts, reducing the balance of the 2024 Notes, and completely satisfying the obligation on February 24, 2025. In addition, we also incurred interest expense on the 2022 equipment financing.

Current wording

Interest expense in Six Months 2025 was $305,000 compared to $1,984,000 in Six Months 2024, a decrease of $(1,679,000) or (84.6)%. In Six Months 2025 and Six Months 2024, as disclosed in Note 7 to the condensed consolidated financial statements, we incurred interest expense in connection with the 2024 Notes and 2022 Notes, respectively. The 2022 Notes provided for interest at the rate of 12% per annum. In September 2024, in accordance with the 2024 Exchange Agreement, we paid $5,000,000 of principal on the 2022 Notes, reducing the principal balance to $14,950,000 from $19,950,000. Under the 2024 Exchange Agreement, the balance of the 2022 Notes were exchanged for the 2024 Notes, which provided for interest at the rate of 13.75% per annum. Beginning in the third quarter of 2024 through February 2025, we paid optional principal amounts, reducing the balance of the 2024 Notes, and completely satisfying the obligation on February 24, 2025. In addition, we also incurred interest expense on the 2022 equipment financing.

Previous wording

(2)For the three months ended March 31, 2024, our personal lines business was subject to a 27% quota share treaty, expiring on January 1, 2025, which included a runoff of a 3.0% portion through the remainder of 2024. Effective January 1, 2025, we entered into a 16% personal lines quota share treaty, under a cutoff.

Current wording

(2)For the three months ended June 30, 2024, our personal lines business was subject to a 27% quota share treaty, expiring on January 1, 2025, which included a runoff of a 3.0% portion of the prior quota share reinsurance treaty through the remainder of 2024. Effective January 1, 2025, we entered into a 16% personal lines quota share treaty, under a cutoff basis.

Previous wording

Direct written premiums during the three months ended March 31, 2025 (“Three Months 2025”) were $58,175,000 compared to $49,325,000 during the three months ended March 31, 2024 (“Three Months 2024”). The increase of $8,850,000, or 17.9%, was primarily due to an increase in premiums from our personal lines business.

Current wording

Direct written premiums during the three months ended June 30, 2025 (“Three Months 2025”) were $61,062,000 compared to $53,495,000 during the three months ended June 30, 2024 (“Three Months 2024”). The increase of $7,567,000, or 14.1%, was primarily due to an increase in premiums from our personal lines business.

Previous wording

Direct written premiums from our personal lines business for Three Months 2025 were $54,313,000, an increase of $8,573,000, or 18.7%, from $45,740,000 in Three Months 2024. The 18.7% increase in premiums from our personal lines business was primarily due to the increase in premiums associated with our Core business of 22.7% offsetting a 63.5% decrease in our non-Core business. The increase in our Core business premiums and the decrease in our non-Core business premiums is in accordance with both our Kingstone 2.0 and Kingstone 3.0 strategic plans.

Current wording

Direct written premiums from our personal lines business for Three Months 2025 were $57,756,000, an increase of $7,619,000, or 15.2%, from $50,137,000 in Three Months 2024. The 15.2% increase in premiums from our personal lines business was primarily due to the increase in premiums associated with our Core business of 16.6% offsetting a 42.5% decrease in our non-Core business. The increase in our Core business premiums and the decrease in our non-Core business premiums is in accordance with both our Kingstone 3.0 strategic plan and Change in Market Dynamics.

Previous wording

Direct written premiums from our Core business were $57,175,000 in Three Months 2025 compared to $46,587,000 in Three Months 2024, an increase of $10,588,000, or 22.7%. The increase in direct written premiums from our Core business was due to rate increases and an increase in policies in force. Policies in force from our Core business increased by 10.4% in Three Months 2025 compared to Three Months 2024. Direct written premiums from our non-Core business were $1,000,000 in Three Months 2025, as compared to $2,738,000 in Three Months 2024, a decrease of $1,738,000, or 63.5%. The decrease in direct written premiums from our non-Core business is a result of our decision to aggressively reduce the book of business in these states. Policies in force from our non-Core business decreased by 67.6% as of March 31, 2025 compared to March 31, 2024. The increase in our Core business and the decrease in our non-Core business is consistent with a key pillar of our Kingstone 3.0 strategy to reduce our non-Core business due to profitability concerns.

Current wording

Direct written premiums from our Core business were $59,802,000 in Three Months 2025 compared to $51,306,000 in Three Months 2024, an increase of $8,496,000, or 16.6%. The increase in direct written premiums from our Core business was due to rate increases and an increase in policies in force. Policies in force from our Core business increased by 11.4% in Three Months 2025 compared to Three Months 2024. Direct written premiums from our non-Core business were $1,260,000 in Three Months 2025 as compared to $2,190,000 in Three Months 2024, a decrease of $930,000, or 42.5%. The decrease in direct written premiums from our non-Core business is a result of our decision to aggressively reduce the book of business in these states. Policies in force from our non-Core business decreased by 67.6% in Three Months 2025 compared to Three Months 2024. The increase in our Core business and the decrease in our non-Core business is consistent with a key pillar of our Kingstone 3.0 strategy to reduce our non-Core business due to profitability concerns as well as Change in Market Dynamics..

Previous wording

Net written premiums increased $22,914,000, or 60.1%, to $61,009,000 in Three Months 2025 from $38,095,000 in Three Months 2024. Net written premiums include direct premiums, less the amount of written premiums ceded under our reinsurance treaties (quota share, excess of loss, and catastrophe). The increase in Three Months 2025 is primarily due to the additional premiums from the Change in Market Dynamics and changes to our personal lines quota share reinsurance treaty. See quota share reinsurance treaties discussion below.

Current wording

Net written premiums increased $10,786,000, or 26.0%, to $52,211,000 in Three Months 2025 from $41,425,000 in Three Months 2024. Net written premiums include direct premiums, less the amount of written premiums ceded under our reinsurance treaties (quota share, excess of loss, and catastrophe). The increase in Three Months 2025 is primarily due to the additional premiums from the Change in Market Dynamics and changes to our personal lines quota share reinsurance treaty. See quota share reinsurance treaties discussion below.

Previous wording

In Three Months 2025, our ceded excess of loss reinsurance premiums decreased $40,000 compared to the ceded excess of loss premiums for Three Months 2024. Effective January 1, 2024, we entered into an underlying excess of loss reinsurance treaty (the “Underlying XOL Treaty”) covering the period from January 1, 2024 through January 1, 2025. The Underlying XOL Treaty provided 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms were excluded from the Underlying XOL Treaty. Effective January 1, 2025, the Underlying XOL Treaty was renewed covering the period from January 1, 2025 through June 30, 2026.

Current wording

In Three Months 2025, our ceded excess of loss reinsurance premiums increased $155,000 compared to the ceded excess of loss premiums for Three Months 2024. Effective January 1, 2024, we entered into an underlying excess of loss reinsurance treaty (the “Underlying XOL Treaty”) covering the period from January 1, 2024 through January 1, 2025. The Underlying XOL Treaty provided 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms were excluded from the Underlying XOL Treaty. Effective January 1, 2025, the Underlying XOL Treaty was renewed covering the period from January 1, 2025 through June 30, 2026.

Previous wording

Most of the premiums written under our personal lines policies are also subject to our catastrophe reinsurance treaties. An increase in our personal lines business historically gave rise to more property exposure, which increased our exposure to catastrophe risk; therefore, our premiums ceded under catastrophe treaties would increase. An increase in our personal lines business historically resulted in an increase in premiums ceded under our catastrophe treaties if reinsurance rates were stable or were increasing. Under Kingstone 2.0 and 3.0 we had a decrease in policies in force, and better catastrophe management, resulting in a decrease in catastrophe exposure, and a decrease in catastrophe premiums. On July 1, 2024 and 2023, we recorded our catastrophe premiums written for the entire treaty period covering July 1 through June 30, resulting in the entire annual premium written being recorded in the third quarter of 2024 and 2023. As a result of recording the entire annual catastrophe premiums at the inception of the treaties, there were no catastrophe premiums in Three Months 2025 or Three Months 2024.

Current wording

Most of the premiums written under our personal lines policies are also subject to our catastrophe reinsurance treaties. An increase in our personal lines business historically gave rise to more property exposure, which increased our exposure to catastrophe risk; therefore, our premiums ceded under catastrophe treaties would increase. An increase in our personal lines business historically resulted in an increase in premiums ceded under our catastrophe treaties if reinsurance rates were stable or were increasing. Under Kingstone 2.0 and 3.0 we had a decrease in policies in force, and better catastrophe management, resulting in a decrease in catastrophe exposure, and a decrease in catastrophe premiums. On July 1, 2024 and 2023, we recorded our catastrophe premiums written for the entire treaty period covering July 1 through June 30, resulting in the entire annual premium written being recorded in the third quarter of 2024 and 2023. The $406,000 and $506,000 negative catastrophe premiums in Three Months 2025 and Three Months 2024, respectively, was due to a no loss bonus from one of our reinsurers.

Previous wording

Net premiums earned increased $14,703,000, or 51.0%, to $43,523,000 in Three Months 2025 from $28,820,000 in Three Months 2024. The increase was due to the 11 percentage point reduction in quota share rates discussed above, the increase in premiums from the Change in Market Dynamics which began in the third quarter of 2024, and a decrease in catastrophe premium rates, reflected in ceded catastrophe premiums earned, which increased the amount of growth in net premiums earned.

Current wording

Net premiums earned increased $15,911,000, or 52.5%, to $46,215,000 in Three Months 2025 from $30,304,000 in Three Months 2024. The increase was due to the 11 percentage point reduction in quota share rates discussed above, the increase in premiums from the Change in Market Dynamics which began in the third quarter of 2024, and a decrease in catastrophe premium rates, reflected in ceded catastrophe premiums earned, which increased the amount of growth in net premiums earned.

Previous wording

Ceding commission revenue was $2,959,000 in Three Months 2025 compared to $4,567,000 in Three Months 2024. The decrease of $1,608,000 is explained below in the discussion of provisional ceding commissions earned and contingent ceding commissions earned.

Current wording

Ceding commission revenue was $3,081,000 in Three Months 2025 compared to $4,562,000 in Three Months 2024. The decrease of $1,481,000 is explained below in the discussion of provisional ceding commissions earned and contingent ceding commissions earned.

Previous wording

In Three Months 2025, we earned provisional ceding commissions of $3,252,000 from personal lines earned premiums ceded under the 2025/2026 Treaty, and in Three Months 2024, we earned provisional ceding commissions of $4,555,000 from personal lines earned premiums ceded under the 2024/2025 Treaty. The decrease of $1,303,000 in provisional ceding commissions earned was due to the decrease in premiums ceded under these treaties during Three Months 2025 compared to Three Months 2024, offset by an increase in ceding commission rates under the 2025/2026 Treaty.

Current wording

In Three Months 2025, we earned provisional ceding commissions of $3,388,000 from personal lines earned premiums ceded under the 2025/2026 Treaty, and in Three Months 2024, we earned provisional ceding commissions of 4,562,000 from personal lines earned premiums ceded under the 2024/2025 Treaty. The decrease of $1,174,000 in provisional ceding commissions earned was due to the decrease in premiums ceded under these treaties during Three Months 2025 compared to Three Months 2024, offset by an increase in ceding commission rates under the 2025/2026 Treaty.

Previous wording

Net investment income was $2,049,000 in Three Months 2025 compared to $1,503,000 in Three Months 2024, an increase of $546,000, or 36.3%. The average yield on non-cash invested assets was 3.70% as of March 31, 2025 compared to 3.80% as of March 31, 2024.

Current wording

Net investment income was $2,300,000 in Three Months 2025 compared to $1,765,000 in Three Months 2024, an increase of $535,000, or 30.3%. The average yield on non-cash invested assets was 4.00% as of June 30, 2025 compared to 3.80% as of June 30, 2024.

Previous wording

Net (losses) on investments were $(138,000) in Three Months 2025 compared to net gains on investments of $726,000 in Three Months 2024. Unrealized (losses) on our equity securities and other investments in Three Months 2025 were $(2,000), compared to unrealized (losses) of $(92,000) in Three Months 2024. Net realized (losses) on sales of investments were $(136,000) in Three Months 2025 compared to net realized gains of $818,000 in Three Months 2024.

Current wording

Net gains on investments were $546,000 in Three Months 2025 compared to net (losses) of $(234,000) in Three Months 2024. Unrealized gains on our equity securities and other investments in Three Months 2025 were $551,000, compared to unrealized gains of $100,000 in Three Months 2024. Net realized (losses) on sales of investments were $(4,000) in Three Months 2025 compared to net realized (losses) of $(333,000) in Three Months 2024.

Previous wording

The loss ratio for Three Months 2025 was in line with Three Months 2024. The underlying loss ratio(1) (loss ratio excluding the impact of catastrophe and prior year development) for Three Months 2025 was higher than Three Months 2024 mainly due to a larger impact from large losses, while the catastrophe impact was lower and the impact of prior year development was about the same.

Current wording

The net loss ratio for Three Months 2025 improved compared to Three Months 2024. For Three Months 2025, the underlying loss ratio (loss ratio excluding the impact of catastrophes and prior year development) was lower than for Three Months 2024, while the impact of catastrophes and prior year development was about the same.

Previous wording

The underlying loss ratio(1) was 62.1% for Three Months 2025, an increase of 3.3 points from the 58.8% underlying loss ratio recorded for Three Months 2024. Overall personal lines non-catastrophe frequency for Three Months 2025 was lower than for the same period in 2024, which is believed to be the result of our new select product as well as our active efforts to manage less profitable segments. However, overall personal lines non-catastrophe severity for Three Months 2025 was higher than for Three Months 2024, primarily driven by a greater impact from large fire losses.

Current wording

The underlying loss ratio(1) was 38.7% for Three Months 2025, a decrease of 8.4 points from the 47.1% underlying loss ratio recorded for Three Months 2024. Overall personal lines non-catastrophe frequency for Three Months 2025 was lower than the for same period in 2024, which is believed to be the result of our new Select product as well as our active efforts to reduce less profitable lines of business. Overall personal lines non-catastrophe severity for Three Months 2025 was higher than for Three Months 2024 but improved compared to the first quarter of 2025.

Previous wording

There were three newly designated catastrophe events for Three Months 2025. The estimated total net catastrophe impact for the calendar quarter was $750,000, which contributed 1.7 points to the loss ratio. By comparison, the catastrophe impact for Three Months 2024 was 5.2 points.

Current wording

There were three newly designated catastrophe events for Three Months 2025, but no major events affecting us. The estimated total net catastrophe impact for the calendar quarter was $289,000, which contributed 0.6 points to the loss ratio. By comparison, the catastrophe impact for Three Months 2024 was 1.3 points.

Previous wording

There was favorable prior year development of $599,000 for Three Months 2025, which translates to a 1.4 point decrease to the loss ratio. By comparison, the impact of prior year development for Three Months 2024 was a decrease of 2.0 points.

Current wording

There was favorable prior year development of $213,000 for Three Months 2025, which translates to a 0.5-point decrease to the loss ratio. By comparison, the impact of favorable prior year development for Three Months 2024 was a decrease of 1.4 points.

Previous wording

Commission expense was $9,313,000 in Three Months 2025 or 15.4% of direct earned premiums. Commission expense was $7,852,000 in Three Months 2024 or 15.7% of direct earned premiums. The increase of $1,461,000 was primarily due to an increase in direct earned premiums of $10,649,000.

Current wording

Commission expense was $10,630,000 in Three Months 2025 or 16.9% of direct earned premiums. Commission expense was $8,232,000 in Three Months 2024 or 16.1% of direct earned premiums. The increase of $2,398,000 was primarily due to an increase in direct earned premiums of $12,021,000, and an increase of $894,000 in Three Months 2025 compared to Three Months 2024 for an accrual of estimated contingent commission based on the profitability of the business.

Previous wording

Other underwriting expenses were $7,405,000, or 12.2% of direct earned premiums, in Three Months 2025 compared to $5,881,000, or 11.8% of direct earned premiums, in Three Months 2024. The increase of $1,524,000, or 25.9%, was primarily due to increases in salaries and employment costs as described below, an increase in underwriting fees due to growth and an increase in premium taxes due to the increase in direct earned premiums.

Current wording

Other underwriting expenses were $7,727,000, or 12.3% of direct earned premiums, in Three Months 2025 compared to $5,901,000, or 11.6% of direct earned premiums, in Three Months 2024. The increase of $1,826,000, or 30.9%, was primarily due to increases in salaries and employment costs as described below, an increase in underwriting fees due to growth and an increase in premium taxes due to the increase in direct earned premiums. In addition, we realized a $365,000 gain on the commutations of prior years’ quota share reinsurance treaties from a group of reinsurers, in Three Months 2024, with no such gain in Three Months 2025.

Previous wording

Our largest single component of other underwriting expenses is salaries and employment costs, with costs of $3,351,000 in Three Months 2025 compared to $2,601,000 in Three Months 2024. The increase of $750,000, or 28.8%, is unfavorable when compared to the 17.9% increase in direct written premiums; however, it is favorable when compared to the 51.0% increase in net premium earned. The increase in salaries and employment costs was due to hiring additional staff to handle the new business from the Change in Market Dynamics, the strengthening of our professional team by investing in the hiring of higher-level and higher compensated managers and staff needed to manage the business consistent with our Kingstone 2.0 and Kingstone 3.0 strategies, and annual employee salaries increases effective January 1, 2025.

Current wording

Our largest single component of other underwriting expenses is salaries and employment costs, with costs of $4,081,000 in Three Months 2025 compared to $3,137,000 in Three Months 2024. Salaries and employment costs were 8.8 points of the net underwriting expense ratio in Three Months 2025, a reduction of 1.6 points from 10.4 points in Three Months 2024. The dollar increase in salaries and employment costs was due to hiring additional staff to handle the new business from the Change in Market Dynamics, anticipated new business in accordance with our 5-Year Growth Plan,,the strengthening of our professional team by investing in the hiring of higher-level and higher compensated managers and staff needed to manage the business consistent with our Kingstone 2.0 and Kingstone 3.0 strategies, and annual employee salary increases effective January 1, 2025. In addition, the increase in salaries and employment costs was due to $971,000 accrued under our employee and executive bonus plans, an increase of $583,000 from Three Months 2024. The increase was due to higher profitable underwriting insurance operations in Three Months 2025 compared to Three Months 2024.

Previous wording

Depreciation and amortization was $624,000 in Three Months 2025 compared to $597,000 in Three Months 2024. The increase of $27,000, or 4.5%, in depreciation and amortization was primarily due to the difference between additional depreciation on software acquired compared to software being fully depreciated.

Current wording

Depreciation and amortization was $613,000 in Three Months 2025 compared to $620,000 in Three Months 2024. The decrease of $7,000, or 1.1%, in depreciation and amortization was primarily due to the difference between additional depreciation on software acquired compared to software being fully depreciated.

Previous wording

Income tax expense in Three Months 2025 was $836,000, which resulted in an effective tax rate of 17.7%. Income tax in Three Months 2024 was $378,000, which resulted in an effective tax rate of 20.9%. The difference in effective tax rate is due to the effect of permanent differences in Three Months 2025 compared to Three Months 2024.

Current wording

Income tax expense in Three Months 2025 was $2,914,000, which resulted in an effective tax rate of 20.6%. Income tax expense in Three Months 2024 was $1,205,000, which resulted in an effective tax rate of 21.1%. The difference in effective tax rate is due to the effect of permanent differences in Three Months 2025 compared to Three Months 2024.