Kingstone Companies Inc.
11/12/2025 | Press release | Distributed by Public on 11/12/2025 12:11
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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 September 30, 2025 and 2024 respectively, 98.0% and 96.3% of KICO's direct written premiums came from the New York policies. For the nine months ended September 30, 2025 and 2024 respectively, 98.1% and 95.6% of KICO's direct written premiums came from the New York policies.
In addition, our subsidiary, Cosi Agency, Inc. ("Cosi"), a multi-state licensed general agency, receives commission revenue from KICO for the policies it places with others and pays commissions to these agencies. Cosi retains the profit between the commission revenue received and the commission expense paid ("Net Cosi Revenue"). Commission expense is reduced by Net Cosi Revenue. Cosi-related operating expenses are minimal and are included in other operating expenses.
We derive substantially all of our revenue from KICO, which includes revenues from earned premiums, ceding commissions from quota share reinsurance, net investment income generated from its portfolio, and net realized gains and losses on investment securities. All of KICO's insurance policies are written for a one year term. Earned premiums represent premiums received from insureds, which are recognized as revenue over the period of time that insurance coverage is provided (i.e., ratably over the one year life of the policy). A significant period of time can elapse from the receipt of insurance premiums to the payment of insurance claims. During this time, KICO invests the premiums, earns investment income and generates net realized and unrealized investment gains and losses on investments. Our holding company earns investment income from its cash holdings.
Our expenses include the insurance underwriting expenses of KICO and other operating expenses. Insurance companies incur a significant amount of their total expenses from losses incurred by policyholders, which are referred to as claims. In settling these claims, various loss adjustment expenses ("LAE") are incurred such as insurance adjusters' fees and legal expenses. In addition, insurance companies incur policy acquisition costs. Policy acquisition costs include commissions paid to producers, premium taxes, and other expenses related to the underwriting process, including employees' compensation and benefits.
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.
Product Lines
Our product lines include the following:
Personal lines: Our largest line of business is personal lines, consisting of homeowners, dwelling fire, cooperative/condominium, renters, and personal umbrella policies.
Commercial liability: Through July 2019, we offered businessowners policies, which consist primarily of small business retail, service, and office risks, with limited property exposures. We also wrote artisan's liability policies for small independent contractors with smaller sized workforces. In addition, we wrote special multi-peril policies for larger and more specialized businessowners risks, including those with limited residential exposures. Further, we offered commercial umbrella policies written above our supporting commercial lines policies.
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 September 30, 2025 and December 31, 2024, there were no commercial liability policies in-force. As of September 30, 2025, these expired policies represented approximately 11.3%of loss and LAE reserves net of reinsurance recoverables. See discussion below under "Additional Financial Information".
Livery physical damage: We write for-hire vehicle physical damage only policies for livery and car service vehicles and taxicabs. These policies insure only the physical damage portion of insurance for such vehicles, with no liability coverage included.
Other: We write canine legal liability policies and have a small participation in mandatory state joint underwriting associations.
Key GAAP and Non-GAAP Measures
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:
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.
Net loss ratio: The net loss ratio is a measure of the underwriting profitability of an insurance company's business. Expressed as a percentage, this is the ratio of net losses and LAE incurred to net premiums earned.
Underlying loss ratio: The underlying loss ratio is a non-GAAP ratio, which is computed as the GAAP net loss ratio excluding the effect of prior year loss reserve development and catastrophes losses. Management believes that this ratio is useful to investors, and it is used by management to reveal the trends in our business that may be obscured by prior year loss reserve development and catastrophe losses. Catastrophe losses cause our loss ratios to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on the net loss ratio. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is the net loss ratio. The underlying loss ratio should not be considered a substitute for the net loss ratio and does not reflect our net loss ratio.
Net loss ratio excluding the effect of catastrophes: The net loss ratio excluding the effect of catastrophes is a non-GAAP ratio, which is computed as the difference between the GAAP net loss ratio and the effect of catastrophes on the net loss ratio. Management believes that this ratio is useful to investors, and it is used by management to reveal the trends in our business that may be obscured by catastrophe losses. Catastrophe losses cause our net loss ratios to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on the net loss ratio. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is the net loss ratio. The net loss ratio excluding the effect of catastrophes should not be considered a substitute for the net loss ratio and does not reflect our net loss ratio.
Net loss ratio excluding commercial lines business: The net loss ratio excluding commercial lines business is a non-GAAP ratio, which is computed as the difference between the GAAP net loss ratio and the effect of commercial lines on the net loss ratio. Management believes that this ratio is useful to investors, and it is used by management to reveal the trends in our business that may be obscured by losses from commercial lines business. Our commercial lines business has been in run-off since July 2019. Commercial lines losses cause our net loss ratios to vary between periods as a result of changes to their loss reserves during the run-off period and have an impact on the net loss ratio. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is the net loss ratio. The net loss ratio excluding commercial lines business should not be considered a substitute for the net loss ratio and does not reflect our net loss ratio.
Net underwriting expense ratio:The net underwriting expense ratio is a measure of an insurance company's operational efficiency in administering its business. Expressed as a percentage, this is the ratio of the sum of acquisition costs (the most significant being commissions paid to our producers) and other underwriting expenses less ceding commission revenue less other income to net premiums earned.
Net underwriting expense ratio excluding the effect of catastrophes: The net underwriting expense ratio excluding the effect of catastrophes is a non-GAAP ratio, which is computed as the difference between the GAAP net underwriting expense ratio and the effect of catastrophes on the net underwriting expense ratio. Management believes that this ratio is useful to investors, and it is used by management to reveal the trends in our business that may be obscured by catastrophe losses. Catastrophe losses may cause our net underwriting expense ratios to vary significantly between periods as a result of their incidence of occurrence and magnitude and may, but currently do not, have any significant impact on the underwriting expense ratio. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance if there should be a catastrophe effect on the net underwriting expense ratio. The most directly comparable GAAP measure is the net underwriting expense ratio. The net underwriting expense ratio excluding the effect of catastrophes should not be considered a substitute for the net underwriting expense ratio and does not reflect our net underwriting expense ratio.
Net combined ratio:The net combined ratio is a measure of an insurance company's overall underwriting profit. This is the sum of the net loss and net underwriting expense ratios. If the net combined ratio is at or above 100 percent, an insurance company cannot be profitable without investment income, and may not be profitable if investment income is insufficient.
Net combined ratio excluding the effect of catastrophes: The net combined ratio excluding the effect of catastrophes is a non-GAAP ratio, which is computed as the difference between the GAAP combined ratio and the effect of catastrophes on the net combined ratio. Management believes that this ratio is useful to investors, and it is used by management to reveal the trends in our business that
may be obscured by catastrophe losses. Catastrophe losses cause our net combined ratios to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on the net combined ratio. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is the net combined ratio. The net combined ratio excluding the effect of catastrophes should not be considered a substitute for the net combined ratio and does not reflect our net combined ratio.
Underwriting income:Underwriting income is net pre-tax income attributable to our insurance underwriting business before investment activity. It excludes net investment income, net realized gains from investments, gain on sale of real estate, depreciation and amortization, and interest expense (net premiums earned less expenses included in combined ratio). Underwriting income is a measure of an insurance company's overall operating profitability before items such as investment income, depreciation and amortization, interest expense and income taxes.
Net income from insurance underwriting business on a standalone basis: Net income from insurance underwriting business on a standalone basis is a non-GAAP measure, which is computed as GAAP net income without the effect of holding company operations on GAAP net income. Management believes that this measure is useful to investors, and it is used by management to reveal the trends in our insurance underwriting business that may be obscured by holding company operations. Holding company operations cause our GAAP net income to vary significantly between periods as a result of their magnitude and can have a significant impact on GAAP net income. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is GAAP net income. Net income from insurance underwriting business on a standalone basis should not be considered a substitute for GAAP net income and does not reflect our GAAP net income.
Critical Accounting Estimates
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.
Application of the critical accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. In addition, other companies may utilize different estimates, which may impact comparability of our results of operations to those of similar companies.
See below a description of these critical accounting estimates. Also see Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024.
Loss and Loss Adjustment Expense Reserves
Property and casualty loss and loss adjustment expense ("LAE") reserves are established to provide for the estimated cost of settling both reported ("case") and incurred but not reported ("IBNR") claims and claims adjusting expenses. The liability for these reserves is estimated on an undiscounted basis, using individual case-basis valuations and paid claims, pending claims, statistical analyses and various actuarial reserving methodologies. Due to the inherent uncertainty of the reserve process, actual loss costs could vary significantly compared to estimated loss costs. The below table provides detail of our reserves as of September 30, 2025 and December 31, 2024:
|
As of September 30, 2025 |
As of December 31, 2024 |
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| ($ in thousands) | Gross | Ceded | Net | Gross | Ceded | Net | ||||||||||||||||||||||||||||||||
| Case loss | $ | 72,628 | $ | 21,024 | $ | 51,604 | $ | 64,087 | $ | 17,721 | $ | 46,366 | ||||||||||||||||||||||||||
| Case LAE | 7,025 | 1,669 | 5,357 | 6,563 | 1,426 | 5,137 | ||||||||||||||||||||||||||||||||
| IBNR loss | 43,469 | 9,813 | 33,656 | 38,681 | 10,661 | 28,020 | ||||||||||||||||||||||||||||||||
| IBNR LAE | 18,072 | 2,311 | 15,761 | 16,879 | 2,514 | 14,365 | ||||||||||||||||||||||||||||||||
| Total | $ | 141,194 | $ | 34,817 | $ | 106,378 | $ | 126,210 | $ | 32,322 | $ | 93,888 | ||||||||||||||||||||||||||
(Components may not sum due to rounding)
Case Reserves - Reserves for reported losses are based on an estimate of ultimate loss costs of an individual claim derived from individual case-basis valuations, actual claims paid, pending claims, statistical analyses and various actuarial reserving methodologies.
IBNR Reserves - IBNR reserves are estimates of claims that have occurred but as to which we have not yet been notified to establish the case reserve. IBNR also accounts for loss development on claims that have been reported. IBNR is determined using historical information aggregated by line of insurance and adjusted to current conditions.
Reinsurance
We purchase reinsurance to manage our underwriting risk on certain policies. Reinsurance receivables represent management's best estimate of loss and LAE recoverable from reinsurers. Reinsurance receivables are estimated using the same methodologies as loss and LAE reserves. Changes in the methods and assumptions used could result in significant variances between actual and estimated losses.
Deferred Income Taxes
Our effective tax rate is based on GAAP income at statutory tax rates, adjusted for non-taxable and non-deductible items, and tax credits. Changes in estimates used in preparing the condensed consolidated statements of income and comprehensive income could result in significant changes to our deferred tax asset or liability.
Deferred tax assets or liabilities are recognized for estimated future tax consequences which result in differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. These assets and liabilities are carried at the enacted tax rates expected to apply when the asset or liability is expected to be recovered or settled. Changes in estimates and assumptions in the condensed consolidated statements of income and comprehensive income, or changes in the enacted tax rate, could result in significant variances between our carried deferred tax and tax recognized on the recovery or settlement of the asset or liability.
Investments
Bonds are classified as held-to-maturity ("HTM") or available-for-sale ("AFS"), and stocks are generally classified as AFS. Investments classified as HTM are carried at amortized cost, which requires very little judgement. Investments in stocks classified as AFS are generally carried at fair value with an unrealized gain/loss recorded in net income. Investments in bonds classified as AFS are generally carried at fair value with an unrealized gain/loss recorded in accumulated other comprehensive income. Actual results could vary significantly from the fair values recognized in the condensed consolidated statements of income and comprehensive income.
Policies in Force and Direct Written Premiums
See the tables below for our policies in force as of September 30, 2025 and 2024 and direct written premiums for the three months and nine months ended September 30, 2025 and 2024. For the three months ended September 30, 2025, our direct written premiums increased by 13.8% compared to the three months ended September 30, 2024, while policies in force increased by 4.2% as of September 30, 2025 as compared to September 30, 2024. For the nine months ended September 30, 2025, our direct written premiums increased by 15.1% compared to the nine months ended September 30, 2024, while policies in force increased by 4.2% as of September 30, 2025 as compared to September 30, 2024.
| As of September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 |
Change
|
Percent | |||||||||||||||||||||||
| Policies In Force | 78,026 | 74,887 | 3,139 | 4.2 | % | |||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (000's except percentages) | 2025 | 2024 |
Change
|
Percent
|
2025 | 2024 |
Change
|
Percent
|
||||||||||||||||||||||||||||||||||||||||||
|
Direct written premiums1
|
$ | 75,810 | $ | 66,627 | $ | 9,183 | 13.8 | % | $ | 195,047 | $ | 169,447 | $ | 25,600 | 15.1 | % | ||||||||||||||||||||||||||||||||||
Change in Market Dynamics (underway), and 5-Year Growth Plan (underway)
•Change in Market Dynamics
On August 2, 2024, two large competitors announced a plan to wind down their personal lines operations in New York State and to non-renew or mid-term cancel their entire book of business before year end 2024. The policyholders of such competitors needed to find alternative coverage. Beginning in the quarter ended September 30, 2024, we began seeing a sizable increase in our policies in force and direct written premiums from these non-renewed and cancelled policies. We refer to this new business as a Change in Market Dynamics.
On April 14, 2025, KICO entered into an agreement to offer a quote for a replacement policy to selected homeowners policyholders in Downstate New York as one of our competitors pivots focus away from admitted personal lines business (the "Withdrawal Plan"). The Withdrawal Plan, which includes this transaction, has been approved by the New York Department of Financial Services. This competitor wrote approximately $70 million in written premium. The Withdrawal Plan will enable KICO to work with new distribution partners to further increase our footprint in Downstate New York by offering an alternative policy to selected homeowners policyholders with effective dates that started in late third quarter of 2025. This transaction is being handled in a similar manner to the Change in Market Dynamics, except that we are streamlining the process by providing a quote for eligible policyholders to our producers.
•5-Year Growth Plan
We recently announced our 5-year goal of $500 million in direct written premium (the "5-Year Growth Plan"), effectively doubling the size of our company relative to today. We are diligently working on a strategic plan that outlines how we will achieve this goal through a combination of organic initiatives and strategic inorganic opportunities in our core state of New York along with measured geographic expansion into new states. We intend to maintain our focus on our core-expertise of insuring catastrophe-exposed properties.
Relative to geographic expansion, we have conducted a thorough study of selected geographies and states with the help of industry-leading third-party advisors and overlaid important lessons learned from our past challenges to ensure that we do not face such challenges again. We plan to pursue prudent growth at a measured pace in our chosen new states, testing and validating rate adequacy commensurate with risk factors in the new geographies. Our current plan is to go live in two states in 2026, and two additional states in 2027.
Consolidated Results of Operations
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
The following table summarizes the changes in the results of our operations (in thousands) for the periods indicated:
| Nine months ended September 30, | ||||||||||||||||||||||||||
| ($ in thousands) | 2025 | 2024 |
Change
|
Percent | ||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||
| Direct written premiums (1) | $ | 195,047 | $ | 169,447 | $ | 25,600 | 15.1 | % | ||||||||||||||||||
| Ceded written premiums | ||||||||||||||||||||||||||
| Ceded to quota share treaties (2) | 13,205 | 35,209 | (22,004) | (62.5) | % | |||||||||||||||||||||
| Ceded to excess of loss treaties | 4,235 | 4,491 | (256) | (5.7 | %) | |||||||||||||||||||||
| Ceded to catastrophe treaties | 32,738 | 29,682 | 3,056 | 10.3 | % | |||||||||||||||||||||
| Total ceded written premiums | 50,178 | 69,381 | (19,203) | (27.7) | % | |||||||||||||||||||||
| Net written premiums (1) | 144,869 | 100,065 | 44,804 | 44.8 | % | |||||||||||||||||||||
| Change in unearned premiums | ||||||||||||||||||||||||||
| Direct | (5,339) | (14,353) | 9,014 | 62.8 | % | |||||||||||||||||||||
| Ceded to reinsurance treaties (2) | (1,866) | 6,819 | (8,685) | na | ||||||||||||||||||||||
| Change in net unearned premiums | (7,206) | (7,535) | 329 | 4.4 | % | |||||||||||||||||||||
| Premiums earned | ||||||||||||||||||||||||||
| Direct | 189,708 | 155,093 | 34,615 | 22.3 | % | |||||||||||||||||||||
| Ceded to reinsurance treaties | (52,044) | (62,563) | 10,519 | 16.8 | % | |||||||||||||||||||||
| Net premiums earned | 137,663 | 92,531 | 45,132 | 48.8 | % | |||||||||||||||||||||
| Ceding commission revenue (2) | 10,941 | 13,871 | (2,930) | (21.1) | % | |||||||||||||||||||||
| Net investment income | 6,848 | 4,917 | 1,931 | 39.3 | % | |||||||||||||||||||||
| Net gains on investments | 591 | 1,319 | (728) | (55.2) | % | |||||||||||||||||||||
| Gain on sale of real estate | 1,966 | - | 1,966 | na | ||||||||||||||||||||||
| Other income | 438 | 401 | 37 | 9.2 | % | |||||||||||||||||||||
| Total revenues | 158,446 | 113,039 | 45,407 | 40.2 | % | |||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||
| Loss and loss adjustment expenses | ||||||||||||||||||||||||||
| Direct and assumed: | ||||||||||||||||||||||||||
| Loss and loss adjustment expenses excluding the effect of catastrophes | 81,275 | 55,481 | 25,794 | 46.5 | % | |||||||||||||||||||||
| Losses from catastrophes (3) | 1,373 | 3,389 | (2,016) | (59.5) | % | |||||||||||||||||||||
| Total direct and assumed loss and loss adjustment expenses | 82,648 | 58,870 | 23,778 | 40.4 | % | |||||||||||||||||||||
| Ceded loss and loss adjustment expenses: | ||||||||||||||||||||||||||
| Loss and loss adjustment expenses excluding the effect of catastrophes | 16,093 | 12,809 | 3,284 | 25.6 | % | |||||||||||||||||||||
| Losses from catastrophes (3) | 220 | 935 | (715) | (76.5) | % | |||||||||||||||||||||
| Total ceded loss and loss adjustment expenses | 16,313 | 13,744 | 2,569 | 18.7 | % | |||||||||||||||||||||
| Net loss and loss adjustment expenses: | ||||||||||||||||||||||||||
| Loss and loss adjustment expenses excluding the effect of catastrophes | 65,181 | 42,672 | 22,509 | 52.7 | % | |||||||||||||||||||||
| Losses from catastrophes (3) | 1,154 | 2,454 | (1,300) | (53.0) | % | |||||||||||||||||||||
| Net loss and loss adjustment expenses | 66,335 | 45,125 | 21,210 | 47.0 | % | |||||||||||||||||||||
| Commission expense | 30,251 | 25,089 | 5,162 | 20.6 | % | |||||||||||||||||||||
| Other underwriting expenses | 23,491 | 18,676 | 4,815 | 25.8 | % | |||||||||||||||||||||
| Other operating expenses | 3,519 | 2,821 | 698 | 24.7 | % | |||||||||||||||||||||
| Depreciation and amortization | 1,882 | 1,836 | 46 | 2.5 | % | |||||||||||||||||||||
| Interest expense | 377 | 2,884 | (2,507) | (86.9) | % | |||||||||||||||||||||
| Total expenses | 125,855 | 96,430 | 29,425 | 30.5 | % | |||||||||||||||||||||
| Income before taxes | 32,591 | 16,609 | 15,982 | 96.2 | % | |||||||||||||||||||||
| Income tax expense | 6,584 | 3,689 | 2,895 | 78.5 | % | |||||||||||||||||||||
| Net income | $ | 26,007 | $ | 12,920 | $ | 13,087 | 101.3 | % | ||||||||||||||||||
(Columns in the table above may not sum to totals due to rounding)
(1)Direct written premiums and net premiums written are non-GAAP measures, defined above under "Key GAAP and Non-GAAP Measures", and reconciled in the table herein to the GAAP measure of net premiums earned.
(2)For the nine months ended September 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.
(3)The nine months ended September 30, 2025 and 2024 include catastrophe losses, which are defined as losses from an event for which a catastrophe bulletin and related serial number has been issued by the Property Claims Services (PCS) unit of the Insurance Services Office (ISO). PCS catastrophe bulletins are issued for events that cause more than $25 million in total insured losses and affect a significant number of policyholders and insurers.
| Nine months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 |
Percentage Point Change |
Percent Change |
||||||||||||||||||||
| Key ratios: | |||||||||||||||||||||||
| Net loss ratio | 48.2 | % | 48.8 | % | (0.6) | (1.2) | % | ||||||||||||||||
| Net underwriting expense ratio | 30.8 | % | 31.9 | % | (1.1) | (3.4) | % | ||||||||||||||||
| Net combined ratio | 79.0 | % | 80.7 | % | (1.7) | (2.1) | % | ||||||||||||||||
Direct Written Premiums(1)
Direct written premiums during the nine months ended September 30, 2025 ("Nine Months 2025") were $195,047,000 compared to $169,447,000 during the nine months ended September 30, 2024 ("Nine Months 2024"). The increase of $25,600,000, or 15.1%, was primarily due to an increase in premiums from our personal lines business. Direct written premiums from our personal lines business for Nine Months 2025 were $184,276,000, an increase of $25,063,000, or 15.7%, from $159,213,000 in Nine Months 2024. The 15.7% increase in premiums from our personal lines business was primarily due to the increases in both rate and enhanced utilization of replacement cost (together "Policy Price Increases"), and premiums associated with the change in Market Dynamics.
Direct written premiums from our livery physical damage business for Nine Months 2025 were $10,722,000, an increase of $556,000, or 5.5%, from $10,166,000 in Nine Months 2024. The increase in livery physical damage direct written premiums was due to the loosening of an underwriting restriction in place in Nine 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.
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(1) Direct written premiums is a non-GAAP measure, defined above under "Key GAAP and Non-GAAP Measures", and reconciled in the table above to the GAAP measure of net premiums earned.
Net Written Premiums(1) and Net Premiums Earned
Net written premiums increased $44,804,000, or 44.8%, to $144,869,000 in Nine Months 2025 from $100,065,000 in Nine 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 Nine Months 2025 is primarily due to the additional premiums from Policy Price Increases, the Change in Market Dynamics, and changes to our personal lines quota share reinsurance treaty. See quota share reinsurance treaties discussion below.
Quota share reinsurance treaties
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 Nine Months 2025, and the 2024/2025 Treaty in Nine Months 2024. In Nine Months 2025, our premiums ceded under quota share treaties decreased by $22,004,000 in comparison to premiums ceded under quota share treaties in Nine Months 2024 (see table above). The decrease in Nine 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.
Excess of loss reinsurance treaties
In Nine Months 2025, our ceded excess of loss reinsurance premiums decreased $256,000 compared to the ceded excess of loss premiums for Nine 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. The Underlying XOL Treaty combined with the excess of loss treaty provide 50% reinsurance coverage for losses of $250,000 in excess of $750,000, and 100% reinsurance coverage for losses in excess of $1,000,000 up to $9,000,000 together with facultative coverage. Retention was increased to $715,000 from $640,000 under the 2025/2026 Treaty
Catastrophe reinsurance treaties
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. With regard to treaties entered into on July 1, 2025 ("2025/2026 Catastrophe Treaty") and 2024 ("2024/2025 Catastrophe Treaty"), 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 2025 and 2024. The 2025/2026 Catastrophe Treaty covers 80% of losses on the first layer of $5,000,000 in excess of $5,000,000 (Catastrophe coverage of $4,000,000), and losses of $435,000,000 in excess of $5,000,000 (Catastrophe coverage of $430,000,000), for a total catastrophe coverage of $434,000,000. The 2024/2025 Catastrophe Treaty covered 80% of losses on the first layer of $5,000,000 in excess of $5,000,000 (Catastrophe coverage of $4,000,000), and losses of $275,000,000 in excess of $10,000,000 (Catastrophe coverage of $265,000,000), for a total catastrophe coverage of $269,000,000. Catastrophe coverage under the 2025/2026 Catastrophe Treaty increased by $165,000,000 compared to the 2024/2025 Catastrophe Treaty. In Nine Months 2025, our premiums ceded under our catastrophe treaties increased by $3,056,000 in comparison to premiums ceded under catastrophe treaties in Nine Months 2024 (see table above). The increase in Nine Months 2025 was primarily attributable to the $169,000,000 increase in catastrophe coverage discussed above.
Net premiums earned
Net premiums earned increased $45,132,000, or 48.8%, to $137,663,000 in Nine Months 2025 from 92,531,000 in Nine Months 2024. The increase was due to the 11 percentage point reduction in quota share rates discussed above, and the increase in premiums from the Change in Market Dynamics which began in the third quarter of 2024, partially offset by an increase in catastrophe premiums due to the increase in catastrophe coverage reflected in ceded catastrophe premiums earned, which increased the amount of growth in net premiums earned.
___________________
(1) Net written premiums is a non-GAAP measure, defined above under "Key GAAP and Non-GAAP Measures", and reconciled in the table above to the GAAP measure of net premiums earned.
Ceding Commission Revenue
The following table summarizes the changes in the components of ceding commission revenue (in thousands) for the periods indicated:
| Nine months ended September 30, | ||||||||||||||||||||||||||
| ($ in thousands) | 2025 | 2024 |
Change
|
Percent | ||||||||||||||||||||||
| Provisional ceding commissions earned | $ | 10,195 | $ | 13,860 | $ | (3,665) | (26.4) | % | ||||||||||||||||||
| Contingent ceding commissions earned | 745 | 11 | 734 | na | ||||||||||||||||||||||
| Total ceding commission revenue | $ | 10,941 | $ | 13,871 | $ | (2,930) | (21.1) | % | ||||||||||||||||||
Ceding commission revenue was $10,941,000 in Nine Months 2025 compared to $13,871,000 in Nine Months 2024. The decrease of $2,930,000 is explained below in the discussion of provisional ceding commissions earned and contingent ceding commissions earned.
Provisional Ceding Commissions Earned
In Nine Months 2025, we earned provisional ceding commissions of $10,195,000 from personal lines earned premiums ceded under the 2025/2026 Treaty, and in Nine Months 2024, we earned provisional ceding commissions of $13,860,000 from personal lines earned premiums ceded under the 2024/2025 Treaty. The decrease of $3,665,000 in provisional ceding commissions earned was due to the decrease in premiums ceded under these treaties during Nine Months 2025 compared to Nine Months 2024, offset by an increase in ceding commission rates under the 2025/2026 Treaty.
Contingent Ceding Commissions Earned
Under our 2025/2026 Treaty and prior years' quota share treaties before July 1, 2017, we received a contingent ceding commission based on a Sliding Scale of commission rates and ultimate treaty year loss ratio on the policies reinsured under this agreement based upon which contingent ceding commissions are earned. The Sliding Scale includes minimum and maximum commission rates in relation to specified ultimate loss ratio. The commission rate and contingent ceding commissions earned increase when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decrease when the estimated ultimate loss ratio increases. The lower the ceded loss ratio, the more contingent commission we received.
The structure of the 2024/2025 Treaty called for a fixed provisional ceding commission with no opportunity to earn additional contingent ceding commissions.
Net Investment Income
Net investment income was $6,848,000 in Nine Months 2025 compared to $4,917,000 in Nine Months 2024, an increase of $1,931,000, or 39.3%, primarily due to an increase in invested assets and average yield on non-cash invested assets. The average yield on non-cash invested assets was 4.0% as of September 30, 2025 compared to 3.5% as of September 30, 2024.
Cash and invested assets were $300,755,000 as of September 30, 2025 compared to $221,847,000 as of September 30, 2024, an increase of $78,908,000, primarily driven by cash flows from operations.
Net Gains on Investments
Net gains on investments were $591,000 in Nine Months 2025 compared to net gains on investments of $1,319,000 in Nine Months 2024. Unrealized gains on our equity securities and other investments in Nine Months 2025 were $603,000, compared to unrealized gains of $1,379,000 in Nine Months 2024. Net realized (losses) on sales of investments were $(12,000) in Nine Months 2025 compared to net realized (losses) of $(60,000) in Nine Months 2024.
Gain on Sale of Real Estate
Gain on sale of real estate was $1,966,000 in Nine Months 2025 compared to $0 in Nine 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.
Other Income
Other income was $438,000 in Nine Months 2025 compared to $401,000 in Nine Months 2024, an increase of $37,000, or 9.2%.
Net Loss and LAE
Net loss and LAE was $66,335,000 for Nine Months 2025 compared to $45,125,000 for Nine Months 2024. The net loss ratio was 48.2% in Nine Months 2025 compared to 48.8% in Nine Months 2024, a decrease of 0.6 percentage points.
The net loss ratio for Nine Months 2025 improved compared to Nine Months 2024. For Nine Months 2025, the improvement was primarily due to a lower catastrophe impact.
The underlying loss ratio(1) (loss ratio excluding the impact of catastrophes and prior year development) was 48.0% for Nine Months 2025, an increase of 0.1 points from the 47.9% underlying loss ratio recorded for Nine Months 2024. Overall personal lines non-catastrophe frequency for Nine Months 2025 was lower than for the same period in 2024, which is believed to be the result of our Select product as well as our active efforts to manage less profitable lines of business. The favorable frequency for Nine Months 2025 was offset by higher overall personal lines non-catastrophe severity, primarily driven by a greater impact from large losses.
There were eight newly designated catastrophe events for Nine Months 2025 but no major events affecting us. The estimated total net catastrophe impact for the calendar year was $1,154,000, which contributed 0.8 points to the loss ratio. By comparison, the catastrophe impact for Nine Months 2024 was 2.7 points.
There was favorable prior year development of $822,000 for Nine Months 2025, which translates to a 0.6 point decrease to the loss ratio. By comparison, the impact of prior year development for Nine Months 2024 was a decrease of 1.8 points.
___________________
(1) Underlying loss ratio is a non-GAAP ratio, which is computed as the GAAP net loss ratio excluding the effect of prior year loss reserve development and catastrophe losses. Net loss ratio excluding commercial lines business is a non-GAAP ratio, which is computed as the difference between the GAAP net loss ratio and the effect of commercial lines business. See "Non-GAAP Financial Measures" for the reconciliation of underlying loss ratio and net loss ratio excluding commercial lines business to the GAAP measure of net loss ratio.
See table below under "Additional Financial Information" summarizing net loss ratios by line of business.
Commission Expense
Commission expense was $30,251,000 in Nine Months 2025 or 15.9% of direct earned premiums. Commission expense was $25,089,000 in Nine Months 2024 or 16.2% of direct earned premiums The increase of $5,162,000 in the Nine Months 2025 compared to the Nine Months 2024 was primarily due to an increase in direct earned premiums of $34,615,000 and an increase of $417,000 for an accrual of estimated contingent commission based on the profitability of the business.
Other Underwriting Expenses
Other underwriting expenses were $23,491,000, or 12.4% of direct earned premiums, in Nine Months 2025 compared to $18,676,000, or 12.0% of direct earned premiums, in Nine Months 2024. The increase of $4,815,000, or 25.8%, 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 Nine Months 2024, with no such gain in Nine Months 2025.
Our largest single component of other underwriting expenses is salaries and employment costs, with costs of $12,175,000 in Nine Months 2025 compared to $9,595,000 in Nine Months 2024. Salaries and employment costs were 8.8 points of the net underwriting expense ratio in Nine Months 2025, a reduction of 1.6 points from 10.4 points in Nine 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 annual employee salary increases effective January 1, 2025. In addition, the increase in salaries and employment costs was due to $2,412,000 accrued under our employee and executive bonus plans, an increase of $997,000 from Nine Months 2024. The increase was due to higher higher profitability in our insurance operations in Nine Months 2025 compared to Nine Months 2024.
Our net underwriting expense ratio in Nine Months 2025 was 30.8%, compared with 31.9% in Nine Months 2024. The following table shows the individual components of our net underwriting expense ratio for the periods indicated:
|
Nine months ended September 30, |
Percentage Point Change |
||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Other underwriting expenses | |||||||||||||||||
| Employment costs | 8.8 | % | 10.4 | % | (1.6) | ||||||||||||
| Underwriting fees (inspections/surveys) | 1.3 | 1.4 | (0.1) | ||||||||||||||
| IT expenses | 1.5 | 2.2 | (0.7) | ||||||||||||||
| Professional fees | 0.8 | 1.1 | (0.3) | ||||||||||||||
| Other expenses | 4.8 | 5.4 | (0.6) | ||||||||||||||
| Total other underwriting expenses | 17.0 | 20.2 | (3.2) | ||||||||||||||
| Commission expense | 22.0 | 27.1 | (5.1) | ||||||||||||||
| Ceding commission revenue | |||||||||||||||||
| Provisional | (7.4) | (15.0) | 7.6 | ||||||||||||||
| Contingent | (0.5) | - | (0.5) | ||||||||||||||
| Total ceding commission revenue | (7.9) | (15.0) | 7.1 | ||||||||||||||
| Other income | (0.3) | (0.3) | - | ||||||||||||||
| Net underwriting expense ratio | 30.8 | % | 31.9 | % | (1.1) | ||||||||||||
(Components may not sum to totals due to rounding)
Other Operating Expenses
Other operating expenses, related to the expenses of our holding company and Cosi, were $3,519,000 for Nine Months 2025 compared to $2,821,000 for Nine Months 2024. The following table shows a breakdown of the significant components of other operating expenses for the periods indicated:
|
Nine months ended September 30, |
||||||||||||||||||||||||||
| ($ in thousands) | 2025 | 2024 |
Change
|
Percent
|
||||||||||||||||||||||
| Other operating expenses | ||||||||||||||||||||||||||
| Employment costs | $ | 185 | $ | 285 | $ | (100) | (35.1 | %) | ||||||||||||||||||
| Executive bonus | 63 | 32 | 31 | 96.9 | ||||||||||||||||||||||
| Equity compensation | 1,241 | 906 | 335 | 37.0 | ||||||||||||||||||||||
| Equity compensation - liability | 198 | 150 | 48 | na | ||||||||||||||||||||||
| Professional | 510 | 287 | 223 | 77.7 | ||||||||||||||||||||||
| Directors fees | 371 | 251 | 120 | 47.8 | ||||||||||||||||||||||
| Insurance | 123 | 149 | (26) | (17.4) | ||||||||||||||||||||||
| Loss on extinguishment of debt | 175 | 297 | (122) | na | ||||||||||||||||||||||
| Other expenses | 653 | 464 | 189 | 40.7 | ||||||||||||||||||||||
| Total other operating expenses | $ | 3,519 | $ | 2,821 | $ | 698 | 24.7 | % | ||||||||||||||||||
(Components may not sum to totals due to rounding)
The increase in Nine Months 2025 of $698,000, or 24.7%, as compared to Nine Months 2024 was primarily due to an increase in equity compensation and professional fees, partially offset by a decrease in employment costs and loss on extinguishment of debt. 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 increase in professional fees is due to incurring additional expenses related to our upcoming requirement for the audit of our internal controls over financial reporting. The 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 Nine Months 2025 and 2024 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 Nine Months 2024 related to changes in the underlying invested portfolio. The deferred compensation plan was terminated in Nine 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 Nine Months 2025 of $189,000 represents $189,000 of such warrant costs, compared to $0 in Nine Months 2024.
Depreciation and Amortization
Depreciation and amortization was $1,882,000 in Nine Months 2025 compared to $1,836,000 in Nine Months 2024. The increase of $46,000, or 2.5%, in depreciation and amortization was primarily due to the difference between additional depreciation on software acquired compared to software being fully depreciated.
Interest Expense
Interest expense in Nine Months 2025 was $377,000 compared to $2,884,000 in Nine Months 2024, a decrease of $2,507,000 or 86.9%. In Nine Months 2025 and Nine 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.
Income Tax Expense
Income tax expense in Nine Months 2025 was $6,584,000, which resulted in an effective tax rate of 20.2%. Income tax expense in Nine Months 2024 was $3,689,000, which resulted in an effective tax rate of 22.2%. The difference in effective tax rate is due to the effect of permanent differences in Nine Months 2025 compared to Nine Months 2024. In Nine Months 2025, the vesting of restricted stock awards resulted in an income tax benefit, due to the increase in the stock price on the vesting date as compared to the grant date, which had the effect of reducing the effective tax rate. In Nine Months 2024, the vesting of restricted stock awards resulted in additional income tax, due to the decrease in the stock price on the vesting date as compared to the grant date, which had the effect of increasing the effective tax rate.
Net Income
Net income was $26,007,000 in Nine Months 2025 compared to $12,920,000 in Nine Months 2024. The increase in net income of $13,087,000 was due to the items described above.
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
The following table summarizes the changes in the results of our operations (in thousands) for the periods indicated:
| Three months ended September 30, | ||||||||||||||||||||||||||
| ($ in thousands) | 2025 | 2024 |
Change
|
Percent | ||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||
| Direct written premiums (1) | $ | 75,810 | $ | 66,627 | $ | 9,183 | 13.8 | % | ||||||||||||||||||
| Assumed written premiums | - | - | - | na | ||||||||||||||||||||||
| 75,810 | 66,627 | 9,183 | 13.8 | % | ||||||||||||||||||||||
| Ceded written premiums | ||||||||||||||||||||||||||
| Ceded to quota share treaties (2) | 9,662 | 14,168 | (4,506) | (31.8) | % | |||||||||||||||||||||
| Ceded to excess of loss treaties | 1,355 | 1,726 | (371) | (21.5) | % | |||||||||||||||||||||
| Ceded to catastrophe treaties | 33,144 | 30,188 | 2,956 | 9.8 | % | |||||||||||||||||||||
| Total ceded written premiums | 44,161 | 46,081 | (1,922) | (4.2) | % | |||||||||||||||||||||
| Net written premiums (1) | 31,649 | 20,545 | 11,104 | 54.0 | % | |||||||||||||||||||||
| Change in unearned premiums | ||||||||||||||||||||||||||
| Direct and assumed | (9,778) | (12,540) | 2,762 | 22 | % | |||||||||||||||||||||
| Ceded to reinsurance treaties (2) | 26,054 | 25,402 | 652 | 2.6 | % | |||||||||||||||||||||
| Change in net unearned premiums | 16,276 | 12,862 | 3,414 | 26.5 | % | |||||||||||||||||||||
| Premiums earned | ||||||||||||||||||||||||||
| Direct and assumed | 66,032 | 54,087 | 11,945 | 22.1 | % | |||||||||||||||||||||
| Ceded to reinsurance treaties | (18,107) | (20,679) | 2,572 | 12.4 | % | |||||||||||||||||||||
| Net premiums earned | 47,925 | 33,407 | 14,518 | 43.5 | % | |||||||||||||||||||||
| Ceding commission revenue (2) | 4,901 | 4,742 | 159 | 3.4 | % | |||||||||||||||||||||
| Net investment income | 2,499 | 1,650 | 849 | 51.5 | % | |||||||||||||||||||||
| Net gains on investments | 182 | 827 | (645) | (78.0) | % | |||||||||||||||||||||
| Other income | 146 | 147 | (1) | (0.7) | % | |||||||||||||||||||||
| Total revenues | 55,652 | 40,772 | 14,880 | 36.5 | % | |||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||
| Loss and loss adjustment expenses | ||||||||||||||||||||||||||
| Direct and assumed: | ||||||||||||||||||||||||||
| Loss and loss adjustment expenses excluding the effect of catastrophes | 26,764 | 16,212 | 10,552 | 65.1 | % | |||||||||||||||||||||
| Losses from catastrophes (3) | 136 | 740 | (604) | (81.6) | % | |||||||||||||||||||||
| Total direct and assumed loss and loss adjustment expenses | 26,900 | 16,952 | 9,948 | 58.7 | % | |||||||||||||||||||||
| Ceded loss and loss adjustment expenses: | ||||||||||||||||||||||||||
| Loss and loss adjustment expenses excluding the effect of catastrophes | 5,646 | 3,766 | 1,880 | 49.9 | % | |||||||||||||||||||||
| Losses from catastrophes (3) | 22 | 158 | (136) | (86.1) | % | |||||||||||||||||||||
| Total ceded loss and loss adjustment expenses | 5,668 | 3,924 | 1,744 | 44.4 | % | |||||||||||||||||||||
| Net loss and loss adjustment expenses: | ||||||||||||||||||||||||||
| Loss and loss adjustment expenses excluding the effect of catastrophes | 21,118 | 12,445 | 8,673 | 69.7 | % | |||||||||||||||||||||
| Losses from catastrophes (3) | 115 | 582 | (467) | (80.2) | % | |||||||||||||||||||||
| Net loss and loss adjustment expenses | 21,232 | 13,028 | 8,204 | 63.0 | % | |||||||||||||||||||||
| Commission expense | 10,308 | 9,004 | 1,304 | 14.5 | % | |||||||||||||||||||||
| Other underwriting expenses | 8,358 | 6,895 | 1,463 | 21.2 | % | |||||||||||||||||||||
| Other operating expenses | 1,330 | 1,242 | 88 | 7.1 | % | |||||||||||||||||||||
| Depreciation and amortization | 646 | 619 | 27 | 4.4 | % | |||||||||||||||||||||
| Interest expense | 73 | 901 | (828) | (91.9) | % | |||||||||||||||||||||
| Total expenses | 41,946 | 31,688 | 10,258 | 32.4 | % | |||||||||||||||||||||
| Income before taxes | 13,706 | 9,084 | 4,622 | 50.9 | % | |||||||||||||||||||||
| Income tax expense | 2,834 | 2,106 | 728 | 34.6 | % | |||||||||||||||||||||
| Net income | $ | 10,872 | $ | 6,978 | $ | 3,894 | 55.8 | % | ||||||||||||||||||
(1)Direct written premiums and net premiums written are non-GAAP measures, defined above under "Key GAAP and Non-GAAP Measures", and reconciled in the table herein to the GAAP measure of net premiums earned.
(2)For the three months ended September 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.
(3)The three months ended September 30, 2025 and 2024 include catastrophe losses, which are defined as losses from an event for which a catastrophe bulletin and related serial number has been issued by the Property Claims Services (PCS) unit of the Insurance Services Office (ISO). PCS catastrophe bulletins are issued for events that cause more than $25 million in total insured losses and affect a significant number of policyholders and insurers.
| Three months ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 |
Percentage Point Change |
Percent Change | ||||||||||||||||||||
| Key ratios: | |||||||||||||||||||||||
| Net loss ratio | 44.3 | % | 39.0 | % | 5.3 | 13.6 | % | ||||||||||||||||
| Net underwriting expense ratio | 28.4 | % | 33.0 | % | (4.6) | (13.9) | % | ||||||||||||||||
| Net combined ratio | 72.7 | % | 72.0 | % | 0.7 | 1.0 | % | ||||||||||||||||
Direct Written Premiums(1)
Direct written premiums during the three months ended September 30, 2025 ("Three Months 2025") were $75,810,000 compared to $66,627,000 during the three months ended September 30, 2024 ("Three Months 2024"). The increase of $9,183,000, or 13.8%, was primarily due to an increase in premiums from our personal lines business. Direct written premiums from our personal lines business for Three Months 2025 were $72,207,000, an increase of $8,871,000, or 14.0%, from $63,336,000 in Three Months 2024. The 14.0% increase in premiums from our personal lines business was primarily due to the increases in both rate and enhanced utilization of replacement cost (together "Policy Price Increases") as well as an increase in retention, and premiums associated with the Change in Market Dynamics.
Direct written premiums from our livery physical damage business for Three Months 2025 were $3,585,000, an increase of $319,000, or 9.8%, from $3,266,000 in Three Months 2024. The increase in livery physical damage direct written premiums was due to an increase in the values of the autos insured.
_______________________
(1) Direct written premiums is a non-GAAP measure, defined above under "Key GAAP and Non-GAAP Measures", and reconciled in the table above to the GAAP measure of net premiums earned.
Net Written Premiums(1) and Net Premiums Earned
Net written premiums increased $11,104,000, or 54.0%, to $31,649,000 in Three Months 2025 from $20,545,000 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 Policy Price Increases, the Change in Market Dynamics, and changes to our personal lines quota share reinsurance treaty. See quota share reinsurance treaties discussion below.
Quota share reinsurance treaties
On January 1, 2024, we entered into a new 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 $4,506,000 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 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.
Excess of loss reinsurance treaties
In Three Months 2025, our ceded excess of loss reinsurance premiums increased $371,000 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. The Underlying XOL Treaty combined with the excess of loss treaty provide 50% reinsurance coverage for losses of $250,000 in excess of $750,000, and 100% reinsurance coverage for losses in excess of $1,000,000 up to $9,000,000 together with facultative coverage. Retention was increased to $715,000 from $640,000 under the 2025/2026 Treaty
Catastrophe reinsurance treaties
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. With regard to treaties entered into on July 1, 2025 ("2025/2026 Catastrophe Treaty") and 2024 ("2024/2025 Catastrophe Treaty"), 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 2025 and 2024. 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. The 2025/2026 Catastrophe Treaty covers 80% of losses on the first layer of $5,000,000 in excess of $5,000,000 (Catastrophe coverage of $4,000,000), and losses of $435,000,000 in excess of $5,000,000 (Catastrophe coverage of $430,000,000), for a total catastrophe coverage of $434,000,000. The 2024/2025 Catastrophe Treaty covered 80% of losses on the first layer of $5,000,000 in excess of $5,000,000 (Catastrophe coverage of $4,000,000), and losses of $275,000,000 in excess of $10,000,000 (Catastrophe coverage of $265,000,000), for a total catastrophe coverage of $269,000,000. Catastrophe coverage under the 2025/2026 Catastrophe Treaty increased by $165,000,000 compared to the 2024/2025 Catastrophe Treaty. In Three Months 2025, our premiums ceded under our catastrophe treaties increased by $2,956,000 in comparison to premiums ceded under catastrophe treaties in Three Months 2024 (see table above). The increase in Three Months 2025 was primarily attributable to the $169,000,000 increase in catastrophe coverage discussed above.
Net premiums earned
Net premiums earned increased $14,518,000, or 43.5%, to $47,925,000 in Three Months 2025 from $33,407,000 in Three Months 2024. The increase was due to the 11 percentage point reduction in quota share rates discussed above, and the increase in premiums from the Change in Market Dynamics which began in the third quarter of 2024, partially offset by an increase in catastrophe premiums due to the increase in catastrophe coverage reflected in ceded catastrophe premiums earned, which increased the amount of growth in net premiums earned.
___________________
(1) Net written premiums is a non-GAAP measure, defined above under "Key GAAP and Non-GAAP Measures", and reconciled in the table above to the GAAP measure of net premiums earned.
Ceding Commission Revenue
The following table summarizes the changes in the components of ceding commission revenue (in thousands) for the periods indicated:
| Three months ended September 30, | ||||||||||||||||||||||||||
| ($ in thousands) | 2025 | 2024 |
Change
|
Percent | ||||||||||||||||||||||
| Provisional ceding commissions earned | $ | 3,555 | $ | 4,743 | $ | (1,188) | (25.0) | % | ||||||||||||||||||
| Contingent ceding commissions earned | 1,345 | (1) | 1,346 | na | ||||||||||||||||||||||
| Total ceding commission revenue | $ | 4,901 | $ | 4,742 | $ | 159 | 3.4 | % | ||||||||||||||||||
Ceding commission revenue was $4,901,000 in Three Months 2025 compared to $4,742,000 in Three Months 2024. The increase of $159,000 is explained below in the discussion of provisional ceding commissions earned and contingent ceding commissions earned.
Provisional Ceding Commissions Earned
In Three Months 2025, we earned provisional ceding commissions of $3,555,000 from personal lines earned premiums ceded under the 2025/2026 Treaty, and in Three Months 2024, we earned provisional ceding commissions of $4,743,000 from personal lines earned premiums ceded under the 2024/2025 Treaty. The decrease of $1,188,000 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.
Contingent Ceding Commissions Earned
Under our 2025/2026 Treaty and prior years' quota share treaties before July 1, 2017, we received a contingent ceding commission based on a Sliding Scale of commission rates and ultimate treaty year loss ratio on the policies reinsured under this agreement based upon which contingent ceding commissions are earned. The Sliding Scale includes minimum and maximum commission rates in relation to specified ultimate loss ratio. The commission rate and contingent ceding commissions earned increase when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decrease when the estimated ultimate loss ratio increases. The lower the ceded loss ratio, the more contingent commission we receive. During Three Months 2025, we recognized $1,400,000 in sliding scale ceding commission under 2025/2026 Treaty, reflecting low catastrophe losses. While sliding scale ceding commission for the attritional loss ratio is booked quarterly, sliding scale ceding commission for the catastrophe loss ratio could not be reasonably estimated until after the peak of the hurricane season, so it was recognized this quarter.
The structure of the 2024/2025 Treaty called for a fixed provisional ceding commission with no opportunity to earn additional contingent ceding commissions.
Net Investment Income
Net investment income was $2,499,000 in Three Months 2025 compared to $1,650,000 in Three Months 2024, an increase of $849,000, or 51.5%, primarily due to an increase in invested assets and average yield on non-cash invested assets. The average yield on non-cash invested assets was 4.0% as of September 30, 2025 compared to 3.5% as of September 30, 2024.
Cash and invested assets were $300,755,000 as of September 30, 2025 compared to $221,847,000 as of September 30, 2024, an increase of $78,908,000 primarily driven by cash flows from operations.
Net Gains (Losses) on Investments
Net gains on investments were $182,000 in Three Months 2025 compared to net gains of $827,000 in Three Months 2024. Unrealized gains on our equity securities and other investments in Three Months 2025 were $188,000, compared to unrealized gains of $461,000 in Three Months 2024. Net realized (losses) on sales of investments were $(6,000) in Three Months 2025 compared to net realized gains of $366,000 in Three Months 2024.
Other Income
Other income was $146,000 in Three Months 2025 compared to $147,000 in Three Months 2024, a decrease of $1,000, or 0.6%.
Net Loss and LAE
Net loss and LAE was $21,232,000 for Three Months 2025 compared to $13,028,000 for Three Months 2024. The net loss ratio was 44.3% in Three Months 2025 compared to 39.0% in Three Months 2024, an increase of 5.3 percentage points.
The net loss ratio for Three Months 2025 was higher than for Three Months 2024 primarily driven by an increase in the severity of non-catastrophe losses and less favorable prior year reserve development, partially offset by a decrease in the frequency of losses and a decrease in catastrophe losses.
For the Three Months 2025, the underlying loss ratio (loss ratio excluding the impact of catastrophes and prior year development) was higher than for the Three Months 2024. The underlying loss ratio(1)was 44.1% for Three Months 2025, an increase of 4.9 points from the 39.2% for Three Months 2024. Overall personal lines non-catastrophe severity for Three Months 2025 was higher than the same period in 2024 primarily due to a greater impact from large fire losses. The higher severity was partially offset by lower personal lines non-catastrophe frequency, which is believed to be the result of a mix shift to more preferred risks in our Select product rollout as well as our active efforts to manage less profitable segments.
There were two 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 $115,000, which contributed 0.2 points to the loss ratio. By comparison, the impact to the loss ratio from catastrophes for Three Months 2024 was 1.7 points.
There was favorable prior year development of $10,000 for Three Months 2025, which had a minimal impact on the loss ratio. By comparison, the impact of favorable prior year development for Three Months 2024 was a decrease of 1.9 points to the loss ratio.
____________________
(1) Underlying loss ratio is a non-GAAP ratio, which is computed as the GAAP net loss ratio excluding the effect of prior year loss reserve development and catastrophe losses.Net loss ratio excluding commercial lines business is a non-GAAP ratio, which is computed as the difference between the GAAP net loss ratio and the effect of commercial lines business. See "Non-GAAP Financial Measures" for the reconciliation of underlying loss ratio and net loss ratio excluding commercial lines business to the GAAP measure of net loss ratio.
See table below under "Additional Financial Information" summarizing net loss ratios by line of business.
Commission Expense
Commission expense was $10,308,000 in Three Months 2025 or 15.6% of direct earned premiums. Commission expense was $9,004,000 in Three Months 2024 or 16.6% of direct earned premiums. The increase of $1,304,000 was primarily due to an increase in direct earned premiums of $11,945,000, offset by a decrease of $450,000 in Three Months 2025 compared to Three Months 2024 for an accrual of estimated contingent commission based on the profitability of the business.
Other Underwriting Expenses
Other underwriting expenses were $8,358,000, or 12.7% of direct earned premiums, in Three Months 2025 compared to $6,895,000, or 12.7% of direct earned premiums, in Three Months 2024. The increase of $1,463,000, or 21.2%, 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.
Our largest single component of other underwriting expenses is salaries and employment costs, with costs of $4,743,000 in Three Months 2025 compared to $3,857,000 in Three Months 2024. Salaries and employment costs were 9.9 points of the net underwriting expense ratio in Three Months 2025, a reduction of 1.6 points from 11.5 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 annual employee salary increases effective January 1, 2025. In addition, the increase in salaries and employment costs was due to $1,321,000 accrued under our employee and executive bonus plans, an increase of $357,000 from Three Months 2024. The increase was due to higher profitability in our insurance operations in Three Months 2025 compared to Three Months 2024.
Our net underwriting expense ratio in Three Months 2025 was 28.4% compared to 33.0% in Three Months 2024. The following table shows the individual components of our net underwriting expense ratio for the periods indicated:
|
Three months ended September 30, |
Percentage
Point Change
|
||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Other underwriting expenses | |||||||||||||||||
| Employment costs | 9.9 | % | 11.5 | % | (1.6) | ||||||||||||
| Underwriting fees (inspections/surveys) | 1.3 | 1.3 | - | ||||||||||||||
| IT expenses | 1.5 | 2.2 | (0.7) | ||||||||||||||
| Professional fees | 0.3 | 0.6 | (0.3) | ||||||||||||||
| Other expenses | 4.4 | 5.0 | (0.6) | ||||||||||||||
| Total other underwriting expenses | 17.4 | 20.6 | (3.2) | ||||||||||||||
| Commission expense | 21.5 | 27.0 | (5.5) | ||||||||||||||
| Ceding commission revenue | |||||||||||||||||
| Provisional | (7.4) | (14.2) | 6.8 | ||||||||||||||
| Contingent | (2.8) | - | (2.8) | ||||||||||||||
| Total ceding commission revenue | (10.2) | (14.2) | 4.0 | ||||||||||||||
| Other income | (0.3) | (0.4) | 0.1 | ||||||||||||||
| Net underwriting expense ratio | 28.4 | % | 33.0 | % | (4.6) | ||||||||||||
(Components may not sum to totals due to rounding)
Other Operating Expenses
Other operating expenses, related to the expenses of our holding company and Cosi, were $1,330,000 for Three Month 2025 compared to $1,242,000 for Three Month 2024. The following table shows a breakdown of the significant components of other operating expenses for the periods indicated:
|
Three months ended September 30, |
||||||||||||||||||||||||||
| ($ in thousands) | 2025 | 2024 | Change |
Percent
|
||||||||||||||||||||||
| Other operating expenses | ||||||||||||||||||||||||||
| Employment costs | $ | 105 | $ | 61 | $ | 44 | 72.1 | % | ||||||||||||||||||
| Executive bonus | 26 | (85) | 111 | (130.6) | ||||||||||||||||||||||
| Equity compensation | 430 | 359 | 71 | 19.8 | ||||||||||||||||||||||
| Equity compensation - liability | 150 | 150 | - | - | ||||||||||||||||||||||
| Professional | 257 | 132 | 125 | 94.7 | ||||||||||||||||||||||
| Directors fees | 120 | 100 | 20 | 20.0 | ||||||||||||||||||||||
| Insurance | 29 | 47 | (18) | (38.3) | ||||||||||||||||||||||
| Loss on extinguishment of debt | - | 297 | (297) | (100.0) | ||||||||||||||||||||||
| Other expenses | 213 | 181 | 32 | 17.7 | ||||||||||||||||||||||
| Total other operating expenses | $ | 1,330 | $ | 1,242 | $ | 88 | 7.1 | % | ||||||||||||||||||
(Components may not sum to totals due to rounding)
The increase in Three Months 2025 of $88,000, or 7.1%, as compared to Three Months 2024 was primarily due to increases in equity compensation, executive bonus and professional fees, partially offset by a decrease in loss on extinguishment of debt. 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 increase in professional fees is due to incurring additional expenses related to our
upcoming requirement for the audit of our internal controls over financial reporting. The increase in executive bonus of $111,000 is due to a reallocation of the bonus to other underwriting expenses after June 30, 2024, with the amount in Three Months 2025 representing 10% of the accrued bonus, compared to a reallocation adjustment to equal 10% of the accrued bonus for Three Months 2024. In Three Months 2024 we recorded a $297,000 loss on extinguishment of debt loss due to writing off the balance of unamortized debt issue costs from the 2022 Notes at the time of the 2024 Exchange Agreement as disclosed in Note 7 to the condensed consolidated financial statements. In Three Months 2025 there was no such loss.
Depreciation and Amortization
Depreciation and amortization was $645,000 in Three Months 2025 compared to $619,000 in Three Months 2024. The increase of $26,000, or 4.2%, in depreciation and amortization was primarily due to the difference between additional depreciation on software acquired compared to software being fully depreciated.
Interest Expense
Interest expense in Three Months 2025 was $73,000 compared to $901,000 in Three Months 2024, a decrease of $828,000 or 91.9%. In Three Months 2024, as disclosed in Note 7 to the condensed consolidated financial statements, we incurred interest expense in connection with the 2022 Notes. 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 the first quarter of 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.
Income Tax Expense
Income tax expense in Three Months 2025 was $2,834,000, which resulted in an effective tax rate of 20.7%. Income tax expense in Three Months 2024 was $2,106,000, which resulted in an effective tax rate of 23.2%. The difference in effective tax rate is due to the effect of permanent differences in Three Months 2025 compared to Three Months 2024. In Three Months 2025, the vesting of restricted stock awards resulted in an income tax benefit, due to the increase in the stock price on the vesting date as compared to the grant date, which had the effect of reducing the effective tax rate. In Three Months 2024, the vesting of restricted stock awards resulted in additional income tax, due to the decrease in the stock price on the vesting date as compared to the grant date, which had the effect of increasing the effective tax rate.
Net Income
Net income was $10,872,000 in Three Months 2025 compared to a net income of $6,978,000 in Three Months 2024. The increase in net income of $3,894,000 was due to the circumstances described above.
Additional Financial Information
We operate our business as one segment, property and casualty insurance. Within this segment, we offer an array of property and casualty policies to our producers. The following table summarizes gross and net written premiums, net premiums earned, and net loss and loss adjustment expenses by major product type, which were determined based primarily on similar economic characteristics and risks of loss.
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Direct premiums written(1): | |||||||||||||||||||||||
| Personal lines | $ | 72,207,410 | $ | 63,336,355 | $ | 184,275,889 | $ | 159,213,386 | |||||||||||||||
| Livery physical damage | 3,584,810 | 3,265,709 | 10,722,055 | 10,165,891 | |||||||||||||||||||
| Other(1) | 17,643 | 24,600 | 49,324 | 67,326 | |||||||||||||||||||
| Total gross premiums written | $ | 75,809,863 | $ | 66,626,664 | $ | 195,047,268 | $ | 169,446,603 | |||||||||||||||
| Net premiums written(1): | |||||||||||||||||||||||
| Personal lines | $ | 28,049,114 | $ | 17,261,087 | $ | 134,101,008 | $ | 89,848,898 | |||||||||||||||
| Livery physical damage | 3,584,810 | 3,265,709 | 10,722,055 | 10,165,891 | |||||||||||||||||||
| Other(2) | 14,976 | 18,395 | 45,918 | 50,478 | |||||||||||||||||||
| Total net premiums written | $ | 31,648,900 | $ | 20,545,191 | $ | 144,868,981 | $ | 100,065,267 | |||||||||||||||
| Net premiums earned: | |||||||||||||||||||||||
| Personal lines | $ | 44,202,199 | $ | 29,801,629 | $ | 126,720,128 | $ | 81,558,589 | |||||||||||||||
| Livery physical damage | 3,707,416 | 3,587,808 | 10,893,432 | 10,916,903 | |||||||||||||||||||
| Other(2) | 15,438 | 17,757 | 49,816 | 55,216 | |||||||||||||||||||
| Total net premiums earned | $ | 47,925,053 | $ | 33,407,194 | $ | 137,663,376 | $ | 92,530,708 | |||||||||||||||
| Net loss and loss adjustment expenses(4): | |||||||||||||||||||||||
| Personal lines | $ | 17,533,308 | $ | 9,806,057 | $ | 57,085,068 | $ | 35,548,883 | |||||||||||||||
| Livery physical damage | 1,394,720 | 1,546,732 | 4,166,889 | 4,715,035 | |||||||||||||||||||
| Other(2) | 19,469 | (10,938) | (3,257) | (40,133) | |||||||||||||||||||
| Unallocated loss adjustment expenses | 1,741,242 | 1,396,211 | 4,556,307 | 3,858,810 | |||||||||||||||||||
| Total without commercial lines in run-off | 20,688,739 | 12,738,062 | 65,805,007 | 44,082,595 | |||||||||||||||||||
| Commercial lines (in run-off effective July 2019)(2) | 543,585 | 289,535 | 529,557 | 1,042,897 | |||||||||||||||||||
| Total net loss and loss adjustment expenses | $ | 21,232,324 | $ | 13,027,597 | $ | 66,334,564 | $ | 45,125,492 | |||||||||||||||
| Net loss ratio(4): | |||||||||||||||||||||||
| Personal lines | 39.7 | % | 32.9 | % | 45.0 | % | 43.6 | % | |||||||||||||||
| Livery physical damage | 37.6 | % | 43.1 | % | 38.3 | % | 43.2 | % | |||||||||||||||
| Other(2) | 126.1 | % | (61.6 | %) | (6.5 | %) | (72.7 | %) | |||||||||||||||
| Total without commercial lines in run-off | 43.2 | % | 38.1 | % | 47.8 | % | 47.6 | % | |||||||||||||||
| Commercial lines (in run-off effective July 2019)(3) | na | na | na | na | |||||||||||||||||||
| Total | 44.3 | % | 39.0 | % | 48.2 | % | 48.8 | % | |||||||||||||||
(1)Direct written premiums and net written premiums are non-GAAP measures, defined above under "Key GAAP and Non-GAAP Measures". See "Non-GAAP Financial Measures" below for the reconciliation of direct written premiums, and net written premiums to the GAAP measure of net premiums earned.
(2)"Other" includes, among other things, premiums and loss and loss adjustment expenses from our participation in a mandatory state joint underwriting association and loss and loss adjustment expenses from commercial auto.
(3)In July 2019, we decided that we will no longer underwrite Commercial Liability risks. See discussions above regarding the discontinuation of this line of business.
(4)See discussion above with regard to "Net Loss and LAE", as to catastrophe losses in the three months and nine months ended September 30, 2025 and 2024.
Insurance Underwriting Business on a Standalone Basis(1)
Our insurance underwriting business reported on a standalone basis(1)for the periods indicated is as follows:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Net premiums earned | $ | 47,925,053 | $ | 33,407,194 | $ | 137,663,376 | $ | 92,530,708 | |||||||||||||||
| Ceding commission revenue | 4,900,401 | 4,741,676 | 10,940,648 | 13,870,748 | |||||||||||||||||||
| Net investment income | 2,499,071 | 1,649,673 | 6,847,934 | 4,917,129 | |||||||||||||||||||
| Net gains on investments | 182,122 | 855,778 | 590,594 | 1,264,246 | |||||||||||||||||||
| Gain on sale of real estate | - | - | 1,965,989 | - | |||||||||||||||||||
| Other income | 145,779 | 139,490 | 436,906 | 392,468 | |||||||||||||||||||
| Total revenues | 55,652,426 | 40,793,811 | 158,445,447 | 112,975,299 | |||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Loss and loss adjustment expenses | 21,232,324 | 13,027,597 | 66,334,564 | 45,125,492 | |||||||||||||||||||
| Commission expense | 10,308,092 | 9,004,254 | 30,250,601 | 25,088,546 | |||||||||||||||||||
| Other underwriting expenses | 8,358,432 | 6,894,590 | 23,491,221 | 18,675,720 | |||||||||||||||||||
| Depreciation and amortization | 644,653 | 619,056 | 1,881,880 | 1,835,503 | |||||||||||||||||||
| Interest expense | 72,608 | 90,090 | 231,159 | 282,849 | |||||||||||||||||||
| Total expenses | 40,616,109 | 29,635,587 | 122,189,425 | 91,008,110 | |||||||||||||||||||
| Income from operations | 15,036,317 | 11,158,224 | 36,256,022 | 21,967,189 | |||||||||||||||||||
| Income tax expense | 3,132,454 | 2,322,229 | 7,566,806 | 4,602,922 | |||||||||||||||||||
| Net income from insurance underwriting business on a standalone basis(1) | $ | 11,903,863 | $ | 8,835,995 | $ | 28,689,216 | $ | 17,364,267 | |||||||||||||||
| Key Measures: | |||||||||||||||||||||||
| Net loss ratio | 44.3 | % | 39.0 | % | 48.2 | % | 48.8 | % | |||||||||||||||
| Net underwriting expense ratio | 28.4 | % | 33.0 | % | 30.8 | % | 31.9 | % | |||||||||||||||
| Net combined ratio | 72.7 | % | 72.0 | % | 79.0 | % | 80.7 | % | |||||||||||||||
| Reconciliation of net underwriting expense ratio: | |||||||||||||||||||||||
| Acquisition costs and other | |||||||||||||||||||||||
| underwriting expenses | $ | 18,666,524 | $ | 15,898,844 | $ | 53,741,822 | $ | 43,764,266 | |||||||||||||||
| Less: Ceding commission revenue | (4,900,401) | (4,741,676) | (10,940,648) | (13,870,748) | |||||||||||||||||||
| Less: Other income | (145,779) | (139,490) | (436,906) | (392,468) | |||||||||||||||||||
| Net underwriting expenses | $ | 13,620,344 | $ | 11,017,678 | $ | 42,364,268 | $ | 29,501,050 | |||||||||||||||
| Net premiums earned | $ | 47,925,053 | $ | 33,407,194 | $ | 137,663,376 | $ | 92,530,708 | |||||||||||||||
| Net Underwriting Expense Ratio | 28.4 | % | 33.0 | % | 30.8 | % | 31.9 | % | |||||||||||||||
(1) Net income from insurance underwriting business on a standalone basis is a non-GAAP measure, which is computed as GAAP net income without the effect of holding company operations on GAAP net income. See "Non-GAAP Financial Measures" for the reconciliation of net income from insurance underwriting business on a standalone basis to the GAAP measure of net income.
An analysis of our direct, assumed and ceded earned premiums, loss and loss adjustment expenses, and loss ratios is shown below:
|
Direct
|
Ceded
|
Net
|
||||||||||||||||||
| Nine months ended September 30, 2025 | ||||||||||||||||||||
| Written premiums | $ | 195,047,268 | $ | (50,178,287) | $ | 144,868,981 | ||||||||||||||
| Change in unearned premiums | (5,339,407) | (1,866,198) | (7,205,605) | |||||||||||||||||
| Earned premiums | $ | 189,707,861 | $ | (52,044,485) | $ | 137,663,376 | ||||||||||||||
| Loss and loss adjustment expenses excluding | ||||||||||||||||||||
| the effect of catastrophes | $ | 81,274,528 | $ | (16,093,496) | $ | 65,181,032 | ||||||||||||||
| Catastrophe loss | 1,373,253 | (219,721) | 1,153,532 | |||||||||||||||||
| Loss and loss adjustment expenses | $ | 82,647,781 | $ | (16,313,217) | $ | 66,334,564 | ||||||||||||||
| Loss ratio excluding the effect of catastrophes(2) | 42.8 | % | 30.9 | % | 47.4 | % | ||||||||||||||
| Catastrophe loss | 0.7 | % | 0.4 | % | 0.8 | % | ||||||||||||||
| Loss ratio | 43.6 | % | 31.3 | % | 48.2 | % | ||||||||||||||
| Nine months ended September 30, 2024 | ||||||||||||||||||||
| Written premiums | $ | 169,446,603 | $ | (69,381,336) | $ | 100,065,267 | ||||||||||||||
| Change in unearned premiums | (14,353,242) | 6,818,683 | (7,534,559) | |||||||||||||||||
| Earned premiums | $ | 155,093,361 | $ | (62,562,653) | $ | 92,530,708 | ||||||||||||||
| Loss and loss adjustment expenses excluding | ||||||||||||||||||||
| the effect of catastrophes | $ | 55,480,785 | $ | (12,809,452) | $ | 42,671,333 | ||||||||||||||
| Catastrophe loss | 3,388,937 | (934,778) | 2,454,159 | |||||||||||||||||
| Loss and loss adjustment expenses | $ | 58,869,722 | $ | (13,744,230) | $ | 45,125,492 | ||||||||||||||
| Loss ratio excluding the effect of catastrophes(2) | 35.8 | % | 20.5 | % | 46.1 | % | ||||||||||||||
| Catastrophe loss | 2.2 | % | 1.5 | % | 2.7 | % | ||||||||||||||
| Loss ratio | 38.0 | % | 22.0 | % | 48.8 | % | ||||||||||||||
| Three months ended September 30, 2025 | ||||||||||||||||||||
| Written premiums | $ | 75,809,863 | $ | (44,160,963) | $ | 31,648,900 | ||||||||||||||
| Change in unearned premiums | (9,778,044) | 26,054,197 | 16,276,153 | |||||||||||||||||
| Earned premiums | $ | 66,031,819 | $ | (18,106,766) | $ | 47,925,053 | ||||||||||||||
| Loss and loss adjustment expenses excluding | ||||||||||||||||||||
| the effect of catastrophes | $ | 26,763,724 | $ | (5,646,047) | $ | 21,117,677 | ||||||||||||||
| Catastrophe loss | 136,485 | (21,838) | 114,647 | |||||||||||||||||
| Loss and loss adjustment expenses | $ | 26,900,209 | $ | (5,667,885) | $ | 21,232,324 | ||||||||||||||
| Loss ratio excluding the effect of catastrophes(2) | 40.5 | % | 31.2 | % | 44.1 | % | ||||||||||||||
| Catastrophe loss | 0.2 | % | 0.1 | % | 0.2 | % | ||||||||||||||
| Loss ratio | 40.7 | % | 31.3 | % | 44.3 | % | ||||||||||||||
| Three months ended September 30, 2024 | ||||||||||||||||||||
| Written premiums | $ | 66,626,664 | $ | (46,081,473) | $ | 20,545,191 | ||||||||||||||
| Change in unearned premiums | (12,540,101) | 25,402,104 | 12,862,003 | |||||||||||||||||
| Earned premiums | $ | 54,086,563 | $ | (20,679,369) | $ | 33,407,194 | ||||||||||||||
| Loss and loss adjustment expenses excluding | ||||||||||||||||||||
| the effect of catastrophes | $ | 16,211,617 | $ | (3,766,144) | $ | 12,445,473 | ||||||||||||||
| Catastrophe loss | 740,127 | (158,003) | 582,124 | |||||||||||||||||
| Loss and loss adjustment expenses | $ | 16,951,744 | $ | (3,924,147) | $ | 13,027,597 | ||||||||||||||
| Loss ratio excluding the effect of catastrophes(2) | 30.0 | % | 18.2 | % | 37.3 | % | ||||||||||||||
| Catastrophe loss | 1.4 | % | 0.8 | % | 1.7 | % | ||||||||||||||
| Loss ratio | 31.3 | % | 19.0 | % | 39.0 | % | ||||||||||||||
The key measures for our insurance underwriting business for the periods indicated are as follows:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net premiums earned | $ | 47,925,053 | $ | 33,407,194 | $ | 137,663,376 | $ | 92,530,708 | |||||||||||||||
| Ceding commission revenue | 4,900,401 | 4,741,676 | 10,940,648 | 13,870,748 | |||||||||||||||||||
| Other income | 145,779 | 139,490 | 436,906 | 392,468 | |||||||||||||||||||
| Loss and loss adjustment expenses(1) | 21,232,324 | 13,027,597 | 66,334,564 | 45,125,492 | |||||||||||||||||||
| Acquisition costs and other underwriting expenses: | |||||||||||||||||||||||
| Commission expense | 10,308,092 | 9,004,254 | 30,250,601 | 25,088,546 | |||||||||||||||||||
| Other underwriting expenses | 8,358,432 | 6,894,590 | 23,491,221 | 18,675,720 | |||||||||||||||||||
| Total acquisition costs and other underwriting expenses | 18,666,524 | 15,898,844 | 53,741,822 | 43,764,266 | |||||||||||||||||||
| Underwriting income | $ | 13,072,385 | $ | 9,361,919 | $ | 28,964,544 | $ | 17,904,166 | |||||||||||||||
| Key Measures: | |||||||||||||||||||||||
| Net loss ratio excluding the effect of catastrophes(2) | 44.1 | % | 37.3 | % | 47.4 | % | 46.1 | % | |||||||||||||||
| Effect of catastrophe loss on net loss ratio(1)(2) | 0.2 | % | 1.7 | % | 0.8 | % | 2.7 | % | |||||||||||||||
| Net loss ratio | 44.3 | % | 39.0 | % | 48.2 | % | 48.8 | % | |||||||||||||||
| Net underwriting expense ratio excluding the effect of catastrophes(2) | 28.4 | % | 33.0 | % | 30.8 | % | 31.9 | % | |||||||||||||||
| Effect of catastrophe loss on net underwriting expense ratio(2) | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | |||||||||||||||
| Net underwriting expense ratio | 28.4 | % | 33.0 | % | 30.8 | % | 31.9 | % | |||||||||||||||
| Net combined ratio excluding the effect of catastrophes(2) | 72.5 | % | 70.3 | % | 78.2 | % | 78.0 | % | |||||||||||||||
| Effect of catastrophe loss on net combined ratio(1)(2) | 0.2 | % | 1.7 | % | 0.8 | % | 2.7 | % | |||||||||||||||
| Net combined ratio | 72.7 | % | 72.0 | % | 79.0 | % | 80.7 | % | |||||||||||||||
(1)For the three months ended September 30, 2025 and 2024, includes the sum of net catastrophe losses and loss adjustment expenses of $114,647 and $582,124, respectively. For the nine months ended September 30, 2025 and 2024, includes the sum of net catastrophe losses and loss adjustment expenses of $1,153,532 and $2,454,159, respectively.
(2)Net loss ratio excluding the effect of catastrophes is a non-GAAP ratio, which is computed as the difference between the GAAP net loss ratio and the effect of catastrophes on the net loss ratio. See "Non-GAAP Financial Measures" for the reconciliation of net loss ratio excluding the effect of catastrophes to the GAAP measure of net loss ratio. Net underwriting expense ratio excluding the effect of catastrophes is also a non-GAAP ratio, which is computed as the difference between the GAAP net underwriting expense ratio and the effect of catastrophes on the net underwriting expense ratio. See "Non-GAAP Financial Measures" for the reconciliation of net underwriting expense ratio excluding the effect of catastrophes to the GAAP measure of net underwriting expense ratio. Net combined ratio excluding the effect of catastrophes is also a non-GAAP ratio, which is computed as the difference between the GAAP net combined ratio and the effect of catastrophes on the net combined ratio. See "Non-GAAP Financial Measures" for the reconciliation of net combined ratio excluding the effect of catastrophes to the GAAP measure of net combined ratio.
Investments
Portfolio Summary
Fixed-Maturity Securities
The following table presents a breakdown of the amortized cost, estimated fair value, and gross unrealized gains and losses of our investments in fixed-maturity securities classified as available-for-sale for which an allowance for credit loss has not been recorded, as of September 30, 2025 and December 31, 2024:
| September 30, 2025 | ||||||||||||||||||||||||||||||||||||||
|
Cost or Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses
|
Estimated Fair Value |
% of
Estimated
Fair Value
|
||||||||||||||||||||||||||||||||||
| Category |
Less than 12
Months
|
More than 12
Months
|
||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies (1) | $ | 997,057 | $ | 11,073 | $ | - | $ | - | $ | 1,008,130 | 0.4 | % | ||||||||||||||||||||||||||
| Political subdivisions of States, Territories and Possessions | 24,258,552 | 190,585 | - | (2,551,987) | 21,897,150 | 8.7 | % | |||||||||||||||||||||||||||||||
| Corporate and other bonds Industrial and miscellaneous | 123,065,335 | 481,632 | (41,640) | (2,890,680) | 120,614,647 | 47.7 | % | |||||||||||||||||||||||||||||||
| Residential mortgage and other asset backed securities (1) (2) | 112,859,590 | 1,085,476 | (38,253) | (4,786,312) | 109,120,501 | 43.2 | % | |||||||||||||||||||||||||||||||
| Total fixed-maturity securities | $ | 261,180,534 | $ | 1,768,766 | $ | (79,893) | $ | (10,228,979) | $ | 252,640,428 | 100.0 | % | ||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||
|
Cost or Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses
|
Estimated Fair Value |
% of
Estimated
Fair Value
|
||||||||||||||||||||||||||||||||||
| Category |
Less than 12
Months
|
More than 12
Months
|
||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies (1) | $ | - | $ | - | $ | - | $ | - | $ | - | - | % | ||||||||||||||||||||||||||
| Political subdivisions of States, Territories and Possessions | 24,271,177 | - | (73,589) | (3,324,491) | 20,873,097 | 11.2 | % | |||||||||||||||||||||||||||||||
| Corporate and other bonds Industrial and miscellaneous | 112,507,436 | - | (1,024,461) | (4,690,597) | 106,792,378 | 57.1 | % | |||||||||||||||||||||||||||||||
| Residential mortgage and other asset backed securities (1) (2) | 65,529,545 | 119,647 | (209,890) | (6,211,339) | 59,227,963 | 31.7 | % | |||||||||||||||||||||||||||||||
| Total fixed-maturity securities | $ | 202,308,158 | $ | 119,647 | $ | (1,307,940) | $ | (14,226,427) | $ | 186,893,438 | 100.0 | % | ||||||||||||||||||||||||||
(1)In October 2022, KICO placed certain U.S. Treasury securities to fulfill the required collateral for a sale leaseback transaction in a designated custodian account (see Note 7 - Debt - "Equipment Financing"). As of December 31, 2024. KICO had sold its U.S. Treasury securities and replaced a portion of its other fixed-maturity securities in the designated custodian account. As of September 30, 2025 and December 31, 2024, the amount of required collateral was approximately $4,039,000 and $5,308,000, respectively. As of September 30, 2025 and December 31, 2024, the estimated fair value of the eligible collateral was approximately $4,039,000 and $5,308,000, respectively.
(2)KICO has placed certain residential mortgage backed securities as eligible collateral in a designated custodian account related to its membership in the Federal Home Loan Bank of New York ("FHLBNY") (see Note 7 - Debt - "Federal Home Loan Bank"). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of September 30, 2025, the estimated fair value of the eligible investments was approximately $9,779,000. KICO will retain all rights regarding all securities if pledged as collateral. As of September 30, 2025 and December 31, 2024 there was no outstanding balance on the FHLBNY credit line.
Equity Securities
The following table presents a breakdown of the cost and estimated fair value of, and gross gains and losses on, investments in equity securities as of September 30, 2025 and December 31, 2024:
| September 30, 2025 | ||||||||||||||||||||||||||||||||
| Category | Cost |
Gross Unrealized Gains |
Gross
Unrealized
Losses
|
Estimated Fair Value |
% of
Estimated
Fair Value
|
|||||||||||||||||||||||||||
| Equity Securities: | ||||||||||||||||||||||||||||||||
| Preferred stocks | $ | 9,750,322 | $ | - | $ | (2,450,189) | $ | 7,300,133 | 70.1 | % | ||||||||||||||||||||||
| Fixed income exchange traded funds | 3,711,232 | - | (686,632) | 3,024,600 | 29.1 | % | ||||||||||||||||||||||||||
| FHLBNY common stock | 85,100 | - | - | 85,100 | 0.8 | % | ||||||||||||||||||||||||||
| Total | $ | 13,546,654 | $ | - | $ | (3,136,821) | $ | 10,409,833 | 100.0 | % | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Category | Cost |
Gross Unrealized Gains |
Gross
Unrealized
Losses
|
Estimated Fair Value |
% of
Estimated
Fair Value
|
|||||||||||||||||||||||||||
| Equity Securities: | ||||||||||||||||||||||||||||||||
| Preferred stocks | $ | 9,750,322 | $ | - | $ | (2,422,617) | $ | 7,327,705 | 71.2 | % | ||||||||||||||||||||||
| Fixed income exchange traded funds | 3,711,232 | - | (808,432) | 2,902,800 | 28.2 | % | ||||||||||||||||||||||||||
| FHLBNY common stock | 66,000 | - | - | 66,000 | 0.6 | % | ||||||||||||||||||||||||||
| Total | $ | 13,527,554 | $ | - | $ | (3,231,049) | $ | 10,296,505 | 100.0 | % | ||||||||||||||||||||||
Other Investments
The following table presents a breakdown of the cost and estimated fair value of, and gross gains on our other investments as of September 30, 2025 and December 31, 2024:
| September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Category | Cost |
Gross Gains |
Estimated Fair Value |
Cost |
Gross Gains |
Estimated Fair Value |
||||||||||||||||||||||||||||||||
| Other Investments: | ||||||||||||||||||||||||||||||||||||||
| Hedge fund | $ | 1,987,040 | $ | 2,902,108 | $ | 4,889,148 | $ | 1,987,040 | $ | 2,393,616 | $ | 4,380,656 | ||||||||||||||||||||||||||
Held-to-Maturity Securities
The following table presents a breakdown of the amortized cost and estimated fair value of, and gross unrealized gains and losses on, investments in held-to-maturity securities as of September 30, 2025 and December 31, 2024:
| September 30, 2025 | ||||||||||||||||||||||||||||||||||||||
|
Cost or Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses
|
Estimated Fair Value |
% of
Estimated
Fair Value
|
||||||||||||||||||||||||||||||||||
| Category |
Less than 12
Months
|
More than 12
Months
|
||||||||||||||||||||||||||||||||||||
| Held-to-Maturity Securities: | ||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities | $ | 1,229,408 | $ | 40 | $ | (17,232) | $ | (6,466) | $ | 1,205,750 | 23.3 | % | ||||||||||||||||||||||||||
| Political subdivisions of States, Territories and Possessions | - | - | - | - | - | - | % | |||||||||||||||||||||||||||||||
| Exchange traded debt | 304,111 | - | - | (54,111) | 250,000 | 4.8 | % | |||||||||||||||||||||||||||||||
| Corporate and other bonds Industrial and miscellaneous | 4,510,189 | - | - | (791,264) | 3,718,925 | 71.9 | % | |||||||||||||||||||||||||||||||
| Total | $ | 6,043,708 | $ | 40 | $ | (17,232) | $ | (851,841) | $ | 5,174,675 | 100.0 | % | ||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||
|
Cost or Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses
|
Estimated Fair Value |
% of
Estimated
Fair Value
|
||||||||||||||||||||||||||||||||||
| Category |
Less than 12
Months
|
More than 12
Months
|
||||||||||||||||||||||||||||||||||||
| Held-to-Maturity Securities: | ||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities | $ | 1,229,170 | $ | - | $ | (39,630) | $ | (15,990) | $ | 1,173,550 | 19.7 | % | ||||||||||||||||||||||||||
| Political subdivisions of States, Territories and Possessions | 499,719 | - | (654) | - | 499,065 | 8.4 | % | |||||||||||||||||||||||||||||||
| Exchange traded debt | 304,111 | - | - | (55,611) | 248,500 | 4.2 | % | |||||||||||||||||||||||||||||||
| Corporate and other bonds Industrial and miscellaneous | 5,014,342 | - | - | (976,192) | 4,038,150 | 67.8 | % | |||||||||||||||||||||||||||||||
| Total | $ | 7,047,342 | $ | - | $ | (40,284) | $ | (1,047,793) | $ | 5,959,265 | 100.0 | % | ||||||||||||||||||||||||||
Held-to-maturity U.S. Treasury securities are held in trust pursuant to various states' minimum fund requirements.
A summary of the amortized cost and fair value of our investments in held-to-maturity securities by contractual maturity as of September 30, 2025 and December 31, 2024 is shown below:
| September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| Remaining Time to Maturity |
Amortized Cost |
Estimated Fair Value |
Amortized Cost |
Estimated Fair Value |
||||||||||||||||||||||
| Less than one year | $ | - | $ | - | $ | 499,719 | $ | 499,065 | ||||||||||||||||||
| One to five years | 2,059,969 | 2,018,138 | 622,375 | 600,288 | ||||||||||||||||||||||
| Five to ten years | - | - | 1,427,579 | 1,323,600 | ||||||||||||||||||||||
| More than 10 years | 3,983,739 | 3,156,537 | 4,497,669 | 3,536,312 | ||||||||||||||||||||||
| Total | $ | 6,043,708 | $ | 5,174,675 | $ | 7,047,342 | $ | 5,959,265 | ||||||||||||||||||
Credit Rating of Fixed-Maturity Securities
The table below summarizes the credit quality of our available-for-sale fixed-maturity securities as of September 30, 2025 and December 31, 2024 as rated by Standard & Poor's (or, if unavailable from Standard & Poor's, then Moody's, Fitch, or Kroll):
| September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||
|
Estimated Fair Value |
Percentage of
Estimated
Fair Value
|
Estimated Fair Value |
Percentage of Estimated Fair Value |
|||||||||||||||||||||||
| Rating | ||||||||||||||||||||||||||
| U.S. Treasury securities | $ | 1,008,130 | 0.4 | % | $ | - | - | % | ||||||||||||||||||
| Corporate and municipal bonds | ||||||||||||||||||||||||||
| AAA | 3,392,668 | 1.3 | % | 3,232,352 | 1.7 | % | ||||||||||||||||||||
| AA | 23,288,077 | 9.2 | % | 22,844,557 | 12.2 | % | ||||||||||||||||||||
| A | 70,039,460 | 27.7 | % | 61,528,377 | 32.9 | % | ||||||||||||||||||||
| BBB+ | 23,604,031 | 9.3 | % | 20,827,660 | 11.1 | % | ||||||||||||||||||||
| BBB | 18,392,953 | 7.3 | % | 13,933,733 | 7.5 | % | ||||||||||||||||||||
| BBB- | 974,845 | 0.4 | % | 1,953,596 | 1.0 | % | ||||||||||||||||||||
| BB | - | - | % | 991,550 | 0.5 | % | ||||||||||||||||||||
| Total corporate and municipal bonds | 139,692,034 | 55.2 | % | 125,311,825 | 66.9 | % | ||||||||||||||||||||
| Residential mortgage backed, asset backed, and other collateralized obligations | ||||||||||||||||||||||||||
| AAA | 38,456,140 | 15.2 | % | 15,961,257 | 8.5 | % | ||||||||||||||||||||
| AA | 53,280,375 | 21.1 | % | 34,893,057 | 18.7 | % | ||||||||||||||||||||
| A | 19,454,477 | 7.7 | % | 9,927,371 | 5.3 | % | ||||||||||||||||||||
| CCC | 427,746 | 0.2 | % | 372,787 | 0.2 | % | ||||||||||||||||||||
| CC | - | - | % | 82,696 | - | % | ||||||||||||||||||||
| Non rated | 321,526 | 0.1 | % | 344,445 | 0.2 | % | ||||||||||||||||||||
| Total residential mortgage backed, asset backed, and other collateralized obligations | 111,940,264 | 44.3 | % | 61,581,613 | 32.9 | % | ||||||||||||||||||||
| Total | $ | 252,640,428 | 100.0 | % | $ | 186,893,438 | 100.0 | % | ||||||||||||||||||
The table below summarizes the average yield by type of fixed-maturity security as of September 30, 2025 and December 31, 2024:
| Category |
September 30, 2025 |
December 31, 2024 |
||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | 3.84 | % | 3.62 | % | ||||||||||
| Political subdivisions of States, Territories and Possessions | 3.70 | % | 3.85 | % | ||||||||||
| Corporate and other bonds Industrial and miscellaneous | 3.95 | % | 3.86 | % | ||||||||||
| Residential mortgage backed securities | 4.18 | % | 3.31 | % | ||||||||||
| Total | 4.03 | % | 3.68 | % | ||||||||||
The table below lists the weighted average maturity and effective duration in years on our fixed-maturity securities as of September 30, 2025 and December 31, 2024:
|
September 30, 2025 |
December 31, 2024 |
|||||||||||||
| Weighted average effective maturity | 10.6 | 7.6 | ||||||||||||
| Weighted average final maturity | 13.7 | 11.0 | ||||||||||||
| Effective duration | 4.4 | 3.9 | ||||||||||||
Fair Value Consideration
Fair value is the price that would be received to sell an asset or paid to transfer a liability in a transaction involving identical or comparable assets or liabilities between market participants (an "exit price"). The fair value hierarchy distinguishes between inputs based on market data from independent sources ("observable inputs") and a reporting entity's internal assumptions based upon the best information available when external market data is limited or unavailable ("unobservable inputs"). The fair value hierarchy prioritizes fair value measurements into three levels based on the nature of the inputs. Quoted prices in active markets for identical assets have the highest priority ("Level 1"), followed by observable inputs other than quoted prices including prices for similar but not identical assets or liabilities ("Level 2"), and unobservable inputs, including the reporting entity's estimates of the assumption that market participants would use, having the lowest priority ("Level 3"). As of September 30, 2025 and December 31, 2024, 59% and 53%, respectively, of the investment portfolio recorded at fair value was priced based upon quoted market prices.
Liquidity and Capital Resources
Cash Flows
The primary sources of cash flow are from our insurance underwriting subsidiary, KICO, and include direct premiums written, ceding commissions from our quota share reinsurers, loss recovery payments from our reinsurers, investment income and proceeds from the sale or maturity of investments. Funds are used by KICO for ceded premium payments to reinsurers, which are paid on a net basis after subtracting losses paid on reinsured claims and reinsurance commissions. KICO also uses funds for loss payments and loss adjustment expenses on our net business, commissions to producers, salaries and other underwriting expenses as well as to purchase investments and fixed assets.
The primary source of cash flow for our holding company are dividends and distributions received from KICO, which are subject to statutory restrictions. For the nine months ended September 30, 2025, KICO paid dividends of $7,950,000 to the Holding Company. As of September 30, 2025, KICO had eligible unassigned surplus of $23,298,187 and may continue to pay dividends; however.
KICO is a member of the FHLBNY, which provides additional access to liquidity. Members have access to a variety of flexible, low-cost funding through FHLBNY's credit products, enabling members to customize advances. Advances are to be fully collateralized; eligible collateral to pledge to FHLBNY includes residential and commercial mortgage-backed securities, along with U.S. Treasury and agency securities. See Note 3 - Investments to our condensed consolidated financial statements for eligible collateral held in a designated custodian account available for future advances. Advances are limited to 5% of KICO's net admitted assets as of the end of the previous quarter, which is June 30, 2025. On July 6, 2023, A.M. Best withdrew KICO's ratings as KICO requested to no longer participate in A.M. Best's interactive rating process. As a result of the withdrawal of A.M. Best ratings, prior to April 15, 2025, KICO was only able to borrow on an overnight basis. Effective April 15, 2025, based on KICO's credit rating from FHLBNY, KICO can now borrow for a term of up to five years. The maximum allowable advance as of September 30, 2025, based on the net admitted assets as of June 30, 2025, was approximately $15,801,000. Available collateral as of September 30, 2025 was approximately $9,779,000. Effective April 15, 2025, advances are limited to 91% of the amount of available collateral. Prior to April 15, 2025, advances were limited to 85% of the amount of available collateral. There were no borrowings under this facility during Nine Months 2025.
On April 5, 2024, we filed a shelf registration (the "Shelf Registration") statement on Form S-3 with the SEC under the Securities Act of 1933, as amended, with regard to the registration of $50,000,000 of our equity and debt securities (the "Shelf Registration Statement"). The Shelf Registration Statement was declared effective by the SEC on April 22, 2024. Any offering made pursuant to the Shelf Registration Statement may only be made by means of a prospectus, including a prospectus supplement, forming a part of the effective Shelf Registration Statement, relating to the offering.
In May 2024, we entered into a Sales Agreement with Janney Montgomery Scott LLC (the "Sales Agent") under which we initially had the ability to issue and sell shares of our Common Stock, from time to time, through the Sales Agent, pursuant to the Shelf Registration Statement, up to an aggregate offering price of approximately $16,400,000 in what is commonly referred to as an "at-the-
market" ("ATM") program. On January 7, 2025, we filed a prospectus supplement providing for a going forward aggregate offering price for the ATM program of $25,000,000. During the nine months ended September 30, 2025, we sold 612,999 shares of our Common Stock at a weighted average price of $16.00 per share and raised $9,464,323 in net proceeds under the ATM program. As of September 30, 2025, we had remaining capacity to sell up to an additional $15,945,937 of our Common Stock under the ATM program.
On September 12, 2024, we issued the 2024 Notes in the aggregate principal amount of $14,950,000 pursuant to the 2024 Exchange Agreement. Beginning in the third quarter of 2024 through the first quarter of 2025, we paid optional principal amounts, reducing the balance of the 2024 Notes, and completely satisfying the obligation on February 24, 2025.
If the aforementioned sources of cash flow currently available are insufficient to cover our holding company cash requirements, we will seek to obtain additional financing.
Cash flow and liquidity are categorized into three sources: (1) operating activities; (2) investing activities; and (3) financing activities, which are shown in the following table:
| Nine Months ended September 30, | 2025 | 2024 | ||||||||||||
| Cash flows provided by (used in): | ||||||||||||||
| Operating activities | $ | 53,061,543 | $ | 34,959,578 | ||||||||||
| Investing activities | (56,363,084) | (9,218,359) | ||||||||||||
| Financing activities | 1,404,402 | (957,419) | ||||||||||||
| Net (decrease) increase in cash and cash equivalents | (1,897,139) | 24,783,800 | ||||||||||||
| Cash and cash equivalents, beginning of period | 28,669,441 | 8,976,998 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 26,772,302 | $ | 33,760,798 | ||||||||||
Net cash provided by operating activities was $53,062,000 in Nine Months 2025 as compared to $34,960,000 provided by operating activities in Nine Months 2024. The $18,102,000 increase in cash flows provided by operating activities in Nine Months 2025 as compared to Nine Months 2024 was primarily the result of an increase in net income (adjusted for non-cash items) of $8,224,000 and cash provided from net fluctuations in operating assets and liabilities. The net fluctuations in assets and liabilities are related to operating activities of KICO as affected by growth or declines in its operations, payments on claims and other changes, which are described above.
Net cash used in investing activities was $56,363,000 in Nine Months 2025 compared to $9,218,000 used in investing activities in Nine Months 2024 resulting in a $47,145,000 increase in net cash used in investing activities. In Nine Months 2025, we had net cash used by our investment portfolio of $57,870,000, compared to $7,479,000 used in Nine Months 2024. In Nine Months 2025 one of our subsidiaries received gross proceeds of $3,600,000 from the sale of real estate that was used as our headquarters building.
Net cash provided by financing activities was $1,404,000 in Nine Months 2025 compared to $957,000 used in Nine Months 2024. In Nine Months 2025, we received net proceeds of $9,470,000 from our ATM offering. This amount was offset primarily by principal payments of $5,950,000 on our 2024 Notes, $911,000 on our equipment financing debt in connection with KICO's sale-leaseback transaction, $549,000 for withholding taxes paid on vested restricted stock awards and the exercise of stock options, and a dividend payment of $707,000. The principal payments on the 2024 Notes were made by using a portion of the net proceeds from our ATM offering. Net cash used in financing activities in Nine Months 2024 was primarily principal payments on our equipment financing debt.
Reinsurance
On January 1, 2024, we entered into a 27% quota share reinsurance treaty for our personal lines business, which primarily consisted of homeowners' and dwelling fire policies, covering the period from January 1, 2024 through January 1, 2025 ("2024/2025 Treaty"). Upon the 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 excess of loss and catastrophe reinsurance treaties expired on June 30, 2025 and we entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2025 (as discussed below).The new catastrophe reinsurance treaties includes the issuance of a $125,000,000 catastrophe bond ("Series 2025-1 Notes"). The Series 2025-1 Notes were priced at 4.5% and issued through a Bermuda-registered special purpose insurer, 1886 Re Ltd., providing us with $125,000,000 of collateralized reinsurance protection. The Series 2025-1 Notes offer multi-year protection against named storm events across New York, New Jersey, Connecticut, Massachusetts and Rhode Island on an indemnity trigger and per-occurrence basis. The Series 2025-1 Notes, which were structured and placed by Aon Securities LLC, will cover four annual risk periods from July 1, 2025, through June 30, 2029.
Our excess of loss and catastrophe reinsurance treaties expired on June 30, 2025 and we entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2025 (as discussed below).The new catastrophe reinsurance treaties includes the issuance of a $125,000,000 catastrophe bond ("Series 2025-1 Notes"). The Series 2025-1 Notes were priced at 4.5% and issued through a Bermuda-registered special purpose insurer, 1886 Re Ltd., providing us with $125,000,000 of collateralized reinsurance protection. The Series 2025-1 Notes offer multi-year protection against named storm events across New York, New Jersey, Connecticut, Massachusetts and Rhode Island on an indemnity trigger and per-occurrence basis. The Series 2025-1 Notes, which were structured and placed by Aon Securities LLC, will cover four annual risk periods from July 1, 2025, through June 30, 2029.
Effective January 1, 2024, we renewed an underlying excess of loss treaty ("Underlying XOL Treaty") covering the period from January 1, 2024 through January 1, 2025. The treaty provided 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms were excluded from the treaty. Effective January 1, 2025, the Underlying XOL Treaty was renewed covering the period from January 1, 2025 through June 30, 2025. Effective July 1, 2025, the Underlying XOL Treaty was renewed along with our excess of loss reinsurance treaty covering the period from July 1, 2025 through June 30, 2026. Combined, the renewed treaties provide 50% reinsurance coverage for losses of $250,000 in excess of $750,000, and 100% reinsurance coverage for losses in excess of $1,000,000 up to $9,000,000 together with facultative coverage. For the period October 1, 2024 through April 30, 2025, we purchased catastrophe reinsurance which provides coverage for winter storm losses to the extent of 71% of $4,500,000 in excess of $5,500,000. For the period October 15, 2025 through April 30, 2026, we purchased catastrophe reinsurance which provides coverage for winter storm losses to the extent of 90% of $5,000,000 in excess of $5,000,000. Effective July 1, 2025, we purchased $435,000,000 of catastrophe reinsurance in excess of $5,000,000, compared to $275,000,000 of catastrophe reinsurance in excess of $5,000,000 in the expiring treaty. Material terms for our reinsurance treaties in effect for the treaty years shown below are as follows:
|
Treaty Period
|
|||||||||||||||||||||||||||||||||||
| 2025/2026 Treaty | 2024/2025 Treaty | ||||||||||||||||||||||||||||||||||
| Line of Business |
January 2, 2026 to June 30, 2026 |
July 1, 2025 to January 1, 2026 |
January 2, 2025 to June 30, 2025 |
July 1, 2024 to January 1, 2025 |
January 1, 2024 to June 30, 2024 |
||||||||||||||||||||||||||||||
| Personal Lines: | |||||||||||||||||||||||||||||||||||
| Homeowners, dwelling fire and canine legal liability | |||||||||||||||||||||||||||||||||||
| Quota share treaty: | |||||||||||||||||||||||||||||||||||
| Percent ceded (6) | (5) | 16 | % | 16 | % | 27 | % | 27 | % | ||||||||||||||||||||||||||
| Risk retained on initial | |||||||||||||||||||||||||||||||||||
| $1,000,000 of losses (4) (5) (6) | (5) | $ | 840,000 | $ | 840,000 | $ | 730,000 | $ | 730,000 | ||||||||||||||||||||||||||
| Losses per occurrence | |||||||||||||||||||||||||||||||||||
| subject to quota share | |||||||||||||||||||||||||||||||||||
| reinsurance coverage | (5) | $ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | ||||||||||||||||||||||||||
| Expiration date | (5) | January 1, 2026 | January 1, 2026 | January 1, 2025 | January 1, 2025 | ||||||||||||||||||||||||||||||
| Excess of loss coverage and | |||||||||||||||||||||||||||||||||||
| facultative facility | |||||||||||||||||||||||||||||||||||
| coverage (1) (4) (5) | $ | 8,250,000 | $ | 8,250,000 | $ | 8,400,000 | $ | 8,400,000 | $ | 8,400,000 | |||||||||||||||||||||||||
| in excess of | in excess of | in excess of | in excess of | in excess of | |||||||||||||||||||||||||||||||
| $ | 750,000 | $ | 750,000 | $ | 600,000 | $ | 600,000 | $ | 600,000 | ||||||||||||||||||||||||||
| Total reinsurance coverage | |||||||||||||||||||||||||||||||||||
| per occurrence (4) (5) | $ | 8,125,000 | $ | 8,285,000 | $ | 8,360,000 | $ | 8,470,000 | $ | 8,470,000 | |||||||||||||||||||||||||
| Losses per occurrence | |||||||||||||||||||||||||||||||||||
| subject to reinsurance | |||||||||||||||||||||||||||||||||||
| coverage (5) | $ | 9,000,000 | $ | 9,000,000 | $ | 9,000,000 | $ | 9,000,000 | $ | 9,000,000 | |||||||||||||||||||||||||
| Expiration date | June 30, 2026 | June 30, 2026 | June 30, 2025 | June 30, 2025 | June 30, 2024 | ||||||||||||||||||||||||||||||
| Catastrophe Reinsurance: | |||||||||||||||||||||||||||||||||||
| Initial loss subject to personal | |||||||||||||||||||||||||||||||||||
| lines quota share treaty (5) | (5) | $ | 10,000,000 | $ | 10,000,000 | $ | 10,000,000 | $ | 10,000,000 | ||||||||||||||||||||||||||
| Risk retained per catastrophe | |||||||||||||||||||||||||||||||||||
| occurrence (5) (6) (7) (8) | $ | 6,000,000 | $ | 5,000,000 | $ | 4,250,000 | $ | 4,750,000 | $ | 9,500,000 | |||||||||||||||||||||||||
| Catastrophe loss | |||||||||||||||||||||||||||||||||||
| coverage (2) (5) (8) | $ | 434,000,000 | $ | 435,000,000 | $ | 275,000,000 | $ | 275,000,000 | $ | 315,000,000 | |||||||||||||||||||||||||
| Reinstatement premium | |||||||||||||||||||||||||||||||||||
| protection (3) | Yes | Yes | Yes | Yes | Yes | ||||||||||||||||||||||||||||||
(1)For personal lines, includes the addition of an automatic facultative facility allowing KICO to obtain homeowners single risk coverage up to $9,000,000 in total insured value, which covers direct losses from $3,500,000 to $9,000,000 through June 30, 2025.
(2)Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts, except for one occurrence on 80% of the first layer of $5,000,000 in excess of $5,000,000, and one occurrence on 52% of the top layer of $240,000,000 in excess of $200,000,000, which is covered under the catastrophe bond. Duration of 168 consecutive hours for a catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone.
(3)For the period July 1, 2024 through June 30, 2025, reinstatement premium protection for $50,000,000 of catastrophe coverage in excess of $10,000,000. For the period July 1, 2025 through June 30, 2026 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $50,000,000 of catastrophe coverage in excess of $10,000,000.
(4)For the period January 1, 2024 through June 30, 2025, Underlying XOL Treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Excludes losses from named storms. Reduces retention to $530,000 from $730,000 under the 2024/2025 Treaty. Retention increases to $640,000 from $530,000 under the 2025/2026 Treaty. For the period July 1, 2025 through June 30, 2026, the Underlying XOL Treaty combined with the excess of loss treaty provide 50% reinsurance coverage for losses of $250,000 in excess of $750,000, and 100% reinsurance coverage for losses in excess of $1,000,000 up to $9,000,000 together with facultative coverage. Increased retention to $715,000 from $640,000 under the 2025/2026 Treaty (see note 5 below).
(5)The personal lines quota share treaty (homeowners, dwelling fire and canine liability) will expire on January 1, 2026, with none of these coverages to be in effect during the period from January 2, 2026 through June 30, 2026. If and when this treaty is renewed on January 2, 2026, the personal lines quota share treaty, will be as provided for therein. Reinsurance coverage in effect from January 2, 2026 through June 30, 2026 is only for excess of loss, Underlying XOL, and catastrophe reinsurance treaties.
(6)For the 2024/2025 Treaty, 22% of the 27% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2025/2026 Treaty, 6% of the 16% total of losses ceded under this treaty are excluded from a named catastrophe event.
(7)Plus losses in excess of catastrophe coverage
(8)Effective July 1, 2025 through June 30, 2026, catastrophe coverage is 80% of the first layer of $5,000,000 in excess of $5,000,000. The remaining coverage is at 100% of $430,000,000 in excess of $10,000,000. For the period October 1, 2024 through April 30, 2025, additional catastrophe reinsurance treaty provided coverage for winter storm losses to the extent of 71% of $4,500,000 in excess of $5,500,000. For the period October 15, 2025 through April 30, 2026, additional catastrophe reinsurance treaty will provide coverage for winter storm losses to the extent of 90% of $5,000,000 in excess of $5,000,000. Retention for winter storms under this treaty is $4,800,000 under the 2024/2025 Treaty, $5,200,000 under the 2025/2026 Treaty from January 1, 2025 through April 30, 2025, and $3,900,000 from October 15, 2025 through January 1, 2026, the expiration date of the 2025/2026 Treaty.
|
Treaty Year
|
||||||||||||||||||||
| Line of Business |
July 1, 2025 to June 30, 2026 |
July 1, 2024 to June 30, 2025 |
July 1, 2023 to June 30, 2024 |
|||||||||||||||||
| Personal Lines: | ||||||||||||||||||||
| Personal Umbrella | ||||||||||||||||||||
| Quota share treaty: | ||||||||||||||||||||
| Percent ceded - first $1,000,000 of coverage | 90 | % | 90 | % | 90 | % | ||||||||||||||
| Percent ceded - excess of $1,000,000 dollars of coverage | 95 | % | 95 | % | 95 | % | ||||||||||||||
| Risk retained | $ | 300,000 | $ | 300,000 | $ | 300,000 | ||||||||||||||
| Total reinsurance coverage per occurrence | $ | 4,700,000 | $ | 4,700,000 | $ | 4,700,000 | ||||||||||||||
| Losses per occurrence subject to quota share reinsurance coverage | $ | 5,000,000 | $ | 5,000,000 | $ | 5,000,000 | ||||||||||||||
| Expiration date | June 30, 2026 | June 30, 2025 | June 30, 2024 | |||||||||||||||||
| Commercial Lines (1) | ||||||||||||||||||||
(1)Coverage on all commercial lines policies expired in September 2020; reinsurance coverage is based on treaties in effect on the date of loss.
Inflation
Premiums are established before we know the amount of losses and loss adjustment expenses or the extent to which inflation may affect such amounts. We attempt to anticipate the potential impact of inflation in establishing our reserves, especially as it relates to medical and hospital rates where historical inflation rates have exceeded the general level of inflation. Inflation in excess of the levels we
have assumed could cause loss and loss adjustment expenses to be higher than we anticipated, which would require us to increase reserves and reduce earnings.
Fluctuations in rates of inflation also influence interest rates, which in turn impact the market value of our investment portfolio and yields on new investments. Operating expenses, including salaries and benefits, generally are impacted by inflation.
Nine Months 2025 included continuing economic inflation, albeit tempered compared to previous years, which resulted in a sustained increase in interest rates, a widening of credit spreads, lower public equity valuations, and significant financial market volatility. The higher interest rates and widening of credit spreads reduced the value of our fixed income securities, and in Nine Months 2025, we experienced a significant recovery of these losses. For Nine Months 2025, the continuing economic inflation impacted our loss and loss adjustment expenses as well; should these trends continue in the near-term, it would in all likelihood negatively impact our results of operations.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Outlook
Our net premiums earned may be impacted by a number of factors. Net premiums earned are a function of net written premium volume. Net written premiums comprise both renewal business and new business and are recognized as earned premium over the term of the underlying policies. Net written premiums from both renewal and new business are impacted by competitive market conditions as well as general economic conditions. We have made underwriting changes to emphasize profitability over growth and have culled out the type of risks that do not generate an acceptable level of return.
On August 2, 2024, two large competitors announced a plan to wind down their personal lines operations in New York State and to non-renew or mid-term cancel their entire book of business by December 31, 2024. Our producers placed a sizable number of these policies with KICO.
On April 14, 2025, KICO entered into an agreement to offer a quote for a replacement policy to selected Homeowners policyholders in Downstate New York as one of our competitors pivots focus away from admitted personal lines business (the "Withdrawal Plan"). The Withdrawal Plan, which includes this transaction, was approved by the New York Department of Financial Services. This competitor wrote approximately $70 million in written premium. The Withdrawal Plan will enable KICO to work with new distribution partners to further increase our footprint in Downstate New York by offering an alternative policy to selected Homeowners policyholders with effective dates that started in the third quarter of 2025.
See "Forward-Looking Statements" before Part I, Item 1.
Non-GAAP Financial Measures
Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures presented in accordance with GAAP.
The following table reconciles direct written premiums and net written premiums to GAAP net premiums earned for the periods presented:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Direct written premiums | $ | 75,809,863 | $ | 66,626,664 | $ | 195,047,268 | $ | 169,446,603 | |||||||||||||||
| Ceded written premiums | (44,160,963) | (46,081,473) | (50,178,287) | (69,381,336) | |||||||||||||||||||
| Net written premiums | 31,648,900 | 20,545,191 | 144,868,981 | 100,065,267 | |||||||||||||||||||
| Change in unearned premiums | 16,276,153 | 12,862,003 | (7,205,605) | (7,534,559) | |||||||||||||||||||
|
GAAP net premiums earned
|
$ | 47,925,053 | $ | 33,407,194 | $ | 137,663,376 | $ | 92,530,708 | |||||||||||||||
The following table reconciles the underlying loss ratio, the net loss ratio excluding the effect of catastrophes and the catastrophe loss ratio to the GAAP net loss ratio for the periods presented:
| Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Underlying Loss Ratio | 44.1 | % | 39.2 | % | 48.0 | % | 47.9 | % | |||||||||||||||
| Effect of prior year reserve development | - | % | (1.9 | %) | (0.6 | %) | (1.8 | %) | |||||||||||||||
| Net loss ratio excluding the effect of catastrophes | 44.1 | % | 37.3 | % | 47.4 | % | 46.1 | % | |||||||||||||||
| Effect of catastrophes | 0.2 | % | 1.7 | % | 0.8 | % | 2.7 | % | |||||||||||||||
| GAAP net loss ratio | 44.3 | % | 39.0 | % | 48.2 | % | 48.8 | % | |||||||||||||||
The following table reconciles the net loss ratio excluding commercial lines business to the GAAP net loss ratio for the periods presented:
| Three months ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net loss ratio excluding the effect of commercial lines business | 43.2 | % | 38.1 | % | 47.8 | % | 47.6 | % | |||||||||||||||
| Effect of commercial lines business | 1.1 | % | 0.9 | % | 0.4 | % | 1.2 | % | |||||||||||||||
| GAAP net loss ratio | 44.3 | % | 39.0 | % | 48.2 | % | 48.8 | % | |||||||||||||||
The following table reconciles net income from insurance underwriting business on a standalone basis to GAAP net income for the periods presented:
| Three months ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income from insurance underwriting business on a standalone basis | $ | 11,903,863 | $ | 8,835,995 | $ | 28,689,216 | $ | 17,364,267 | |||||||||||||||
| Holding company operations | (1,031,388) | (1,857,850) | (2,681,749) | (4,444,506) | |||||||||||||||||||
| GAAP net income | $ | 10,872,475 | $ | 6,978,145 | $ | 26,007,467 | $ | 12,919,761 | |||||||||||||||
The following table reconciles the net loss ratio excluding the effect of catastrophes, net underwriting expense ratio excluding the effect of catastrophes, and net combined ratio excluding the effect of catastrophes to GAAP net loss ratio, GAAP net underwriting expense ratio, and GAAP net combined ratio for the periods presented:
| Three months ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net loss ratio excluding the effect of catastrophes | 44.1 | % | 37.3 | % | 47.4 | % | 46.1 | % | |||||||||||||||
| Effect of catastrophes | 0.2 | % | 1.7 | % | 0.8 | % | 2.7 | % | |||||||||||||||
| GAAP net loss ratio | 44.3 | % | 39.0 | % | 48.2 | % | 48.8 | % | |||||||||||||||
| Net underwriting expense ratio excluding the effect of catastrophes | 28.4 | % | 33.0 | % | 30.8 | % | 31.9 | % | |||||||||||||||
| Effect of catastrophes | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | |||||||||||||||
| GAAP net underwriting expense ratio | 28.4 | % | 33.0 | % | 30.8 | % | 31.9 | % | |||||||||||||||
| Net combined ratio excluding the effect of catastrophes | 72.5 | % | 70.3 | % | 78.2 | % | 78.0 | % | |||||||||||||||
| Effect of catastrophes | 0.2 | % | 1.7 | % | 0.8 | % | 2.7 | % | |||||||||||||||
| GAAP net combined ratio | 72.7 | % | 72.0 | % | 79.0 | % | 80.7 | % | |||||||||||||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
This item is not applicable to smaller reporting companies.
Kingstone Companies Inc. published this content on November 12, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 12, 2025 at 18:12 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]