Kingstone Companies Inc (KINS) 2024 Q3 法說會逐字稿

Greetings. Welcome to Kingstone Companies third quarter 2024 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

問候。歡迎參加金石公司 2024 年第三季財報電話會議。（操作員指示）謹此提醒，本次會議正在錄製中。

It is now my pleasure to introduce Karin Daly, Vice President of The Equity Group and Kingstone's Investor Relations representative. Karin, you may begin.

現在我很高興向您介紹 The Equity Group 副總裁兼金士頓投資者關係代表 Karin Daly。卡琳，你可以開始了。

Thank you, Sherri. Good morning, everyone. Joining us on the call today will be Chief Executive Officer, Meryl Golden; and Chief Financial Officer, Jennifer Gravelle.

謝謝你，雪莉。大家早安。今天加入我們電話會議的是執行長 Meryl Golden；和財務長珍妮佛·格拉維爾。

On behalf of the company, I would like to note that this conference call may contain forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from projected results. Forward-looking statements speak only as of the date on which they are made, and Kingstone undertakes no obligation to update the information discussed. For more information, please refer to the section entitled Factors That May Affect Future Results and Financial Condition in Part I, Item 1A of the company's latest Form 10-K.

我謹代表本公司指出，本次電話會議可能包含前瞻性陳述，其中涉及已知和未知的風險、不確定性以及其他可能導致實際結果與預測結果有重大差異的因素。前瞻性陳述僅代表發布當日的情況，金士頓不承擔更新所討論資訊的義務。欲了解更多信息，請參閱公司最新 10-K 表格第一部分第 1A 項標題為“可能影響未來業績和財務狀況的因素”的部分。

Additionally, today's remarks may include references to non-GAAP measures. For a reconciliation of these non-GAAP measures to GAAP figures, please see the tables in the latest earnings release.

此外，今天的言論可能會提到非公認會計原則措施。有關這些非 GAAP 指標與 GAAP 數據的對照表，請參閱最新收益報告中的表格。

With that, it's my pleasure to turn the call over to Meryl Golden. Meryl?

至此，我很高興將電話轉給梅莉爾‧戈爾登。梅麗爾？

Thanks, Karin. Good morning, everyone, and thanks for joining our call. This quarter, we had the highest income we have ever had in any quarter since Kingstone Insurance Company was acquired by Kingstone Companies in 2009.

謝謝，卡琳。大家早安，感謝您加入我們的通話。本季度，我們的收入是自 2009 年金石保險公司被金石公司收購以來任何季度最高的收入。

We also achieved record-setting premiums written. It's a huge feat to achieve the operating margins we realized this quarter. And it's another significant accomplishment to attain a 40% growth rate as we're experiencing in our core personal lines business, but to do them simultaneously is nothing short of remarkable. This is undisputedly the best quarter that Kingstone has ever had. I want to thank my great team and all of our employees, who work so hard to make these results possible. I could not be prouder of what we've been able to accomplish.

我們也創下了創紀錄的承保保費。實現我們本季實現的營業利潤率是一項巨大的壯舉。正如我們在核心個人險業務中所經歷的那樣，實現 40% 的成長率是另一項重大成就，但同時實現這些成就無疑是了不起的。毫無疑問，這是金士頓有史以來最好的季度。我要感謝我偉大的團隊和所有員工，是他們辛勤工作才使這些成果成為可能。我對我們所取得的成就感到非常自豪。

Let me start by talking about our growth. As discussed last quarter, our current growth is being driven by the exit of two competitors, who reached an agreement with the New York Department of Financial Services to non-renew or cancel their entire books by the end of this year. Their combined policies in force in Downstate New York are roughly the size that Kingstone is today. There's also a third company that's exiting the homeowners market nationally and has more than 20,000 policies in our New York footprint and is expected to be a growth opportunity in 2025. Our objective is profitable growth, not growth for growth's sake. And we have been thoughtful about how we are taking advantage of this opportunity so as not to compromise our profitability.

首先我要談談我們的成長。正如上個季度所討論的，我們目前的成長是由兩家競爭對手的退出所推動的，這兩家競爭對手與紐約金融服務部達成協議，在今年年底前不再更新或取消其全部帳簿。他們在紐約州南部實施的綜合政策的規模大致相當於金士頓今天的規模。還有第三家公司正在退出全國房主市場，我們在紐約的業務範圍內擁有超過 20,000 份保單，預計將在 2025 年成為成長機會。我們的目標是獲利成長，而不是為了成長而成長。我們一直在深思熟慮如何利用這個機會，以免損害我們的獲利能力。

Let me remind you that carriers typically lose money on new business and only make a profit over the policy's lifetime as margins expand when business renews. However, we feel confident that we're making an underwriting profit on the new business that we're writing from this market dislocation, which bodes extremely well for the future.

讓我提醒您，承運人通常會在新業務上虧損，並且只有在保單有效期內才能盈利，因為業務更新時利潤會增加。然而，我們相信，我們正在從這種市場混亂中承保的新業務中獲得承保利潤，這對未來來說是一個非常好的兆頭。

There are many reasons for this confidence. First, we're priced right. Second, we're only quoting and writing those risks that meet our underwriting standards and profit margin objectives. We've also tightened our hurricane deductible requirements to better manage our catastrophe exposure. Third, we're growing in the segments that have historically been the most profitable for us. We've been monitoring our business mix closely, and the new business we are writing is almost identical to our in-force book in Downstate New York.

這種信心有很多原因。首先，我們的價格合適。其次，我們只引用和記錄那些符合我們承保標準和利潤率目標的風險。我們也收緊了颶風免賠額要求，以便更好地管理我們的災難風險。第三，我們在史上最賺錢的領域中取得成長。我們一直在密切關注我們的業務組合，我們正在撰寫的新業務與我們在紐約州南部的有效書籍幾乎相同。

Finally, and most importantly, the Select product continues to outperform our expectations. Our reported frequency in Select for the quarter and for each quarter this year has been more than 20% lower than the reported frequency in our legacy product.

最後，也是最重要的是，精選產品的表現持續超出我們的預期。我們報告的本季和今年每季的 Select 頻率比我們傳統產品報告的頻率低 20% 以上。

As the business has grown, the frequency difference with legacy has increased. This gives us great confidence in our risk selection as the legacy product is a 100% renewal business while 43% of Select exposures are new business, which typically has a higher frequency. Select only represents 34% of our in-force personal lines policies today, which makes us super optimistic about the outlook for our business in 2025 and beyond. Jen will share more about our Select product and our financial results this quarter.

隨著業務的成長，與傳統業務的頻率差異也越來越大。這讓我們對風險選擇充滿信心，因為傳統產品是 100% 的續約業務，而 43% 的精選風險敞口是新業務，通常具有更高的頻率。Select 僅占我們目前有效的個人保險保單的 34%，這使我們對 2025 年及以後的業務前景非常樂觀。Jen 將分享更多有關我們的精選產品和本季財務表現的資訊。

Core personal lines direct written premium was up 43% this quarter versus the prior year quarter, driven by an increase in average premium of 23% and a surge in new business policy count up almost 4x the new business counts in the prior year quarter.

本季核心個人險種直接承保保費較上年同期增長 43%，原因是平均保費增長 23%，而且新業務保單數量激增，幾乎是上年同期新業務數量的 4 倍。

New business premium was 27% of total core personal lines direct written premium this quarter and 20% for year-to-date. We expect a similar dynamic in Q4 with an acceleration of new business as the cancellations from this market dislocation will be sent to policyholders in December. Our current estimate is that we will write between $25 million and $30 million in incremental premium in 2024 from this market opportunity and write approximately 8,000 to 10,000 new policies from these two carriers.

本季新業務保費佔核心個人險種直接承保保費總額的 27%，今年迄今為 20%。我們預計第四季度會出現類似的動態，新業務將加速成長，因為市場混亂導致的取消訂單將於 12 月發送給保單持有人。我們目前的估計是，到 2024 年，我們將利用這一市場機會增加 2,500 萬至 3,000 萬美元的增量保費，並為這兩家保險公司承保約 8,000 至 10,000 份新保單。

Before I touch on guidance, I want to share an update on the at-the-market offering. For those that don't know, an at-the-market offering or ATM is a way for a public company to raise capital by selling shares of its common stock into the secondary market at the current market price.

在談及指導之前，我想先分享一下市場產品的最新情況。對於不知道的人來說，市場發行或 ATM 是上市公司以當前市場價格向二級市場出售普通股來籌集資金的一種方式。

We sold almost 1.1 million shares via the ATM this quarter at an average share price of $8.48. We used the ATM as a vehicle to build a cash balance at the holding company and used most -- excuse me, used part of the proceeds to make an additional principal payment of $3 million on the debt at the end of September and fund upcoming interest payments and other holding company expenses. We made an additional $2 million principal payment this week, so we now have $10 million of debt outstanding.

本季我們透過 ATM 出售了近 110 萬股股票，平均股價為 8.48 美元。我們使用 ATM 作為在控股公司建立現金餘額的工具，並且使用了大部分收益——對不起，使用部分收益在 9 月底額外支付了 300 萬美元的債務本金，並為即將到來的利息提供資金付款和其他控股公司費用。本週我們額外支付了 200 萬美元本金，因此現在我們有 1000 萬美元的未償債務。

As a reminder, the holding company does not have an independent source of income and has historically relied on dividends from the insurance company for liquidity. We learned over the past few years that we cannot rely just on dividends from the insurance company as the ability to pay dividends is subject to regulation. And we were restricted until this quarter from paying dividends due to losses over the last few years.

需要提醒的是，控股公司沒有獨立的收入來源，歷來依賴保險公司的股利來取得流動性。過去幾年我們了解到，我們不能只依賴保險公司的股息，因為支付股息的能力受到監管。由於過去幾年的虧損，我們在本季之前一直無法支付股息。

We didn't appreciate just how much of a threat having debt at the holding company could be to Kingstone until we did not have the cash to service our debt or pay other expenses. To clarify, I am not opposed to the company carrying debt. However, I believe it should be managed in a more strategic and thoughtful manner.

直到我們沒有現金來償還債務或支付其他費用之前，我們才意識到控股公司的債務可能對金士頓造成多大的威脅。澄清一下，我並不反對公司承擔債務。然而，我認為應該以更具策略性和深思熟慮的方式對其進行管理。

It's incredibly important not to repeat the mistakes of the past, and we're focused on paying off the debt as quickly as possible. The balance of debt will be repaid partially with intercompany dividends and partially -- sorry about that, through the additional sale of stock via the ATM.

不重複過去的錯誤非常重要，我們致力於盡快還清債務。債務餘額將部分透過公司間股息償還，部分——抱歉，透過 ATM 額外出售股票。

Given the need for a statutory surplus to support our growth, we will be judicious in the use of our surplus so we can continue to grow at an accelerated pace. We also intend to reduce the amount of our quota share for 2025 to retain more of our premiums and profit, which reduces surplus as well.

鑑於需要法定盈餘來支持我們的成長，我們將明智地使用盈餘，以便我們能夠繼續加速成長。我們還打算減少 2025 年的配額份額，以保留更多的保費和利潤，從而減少盈餘。

We are in the market now for next year's quota share, and the amount of the quota share will largely be determined based on the ceding commission that is offered. Our objective is to find the right balance between quota share, stock issuance and the use of dividend to pay down our debt as expeditiously as possible while maximizing earnings. When the debt is fully retired, hopefully by the end of 2025, and we no longer have high interest costs, we can then focus on the most rational capital and reinsurance structure for the benefit of our shareholders.

我們現在正在市場上爭取明年的配額份額，配額份額的數額很大程度上將根據所提供的讓出佣金來確定。我們的目標是在配額份額、股票發行和股息使用之間找到適當的平衡，以盡快償還債務，同時最大化收益。當債務完全清償時（希望在2025年底），我們不再有高額利息成本，我們就可以專注於最合理的資本和再保險結構，以造福股東。

And finally, turning to guidance. We've updated our guidance for both '24 and '25. For 2024, we are reaffirming core business direct premiums written growth between 25% and 35%. And based on approximately $128 million of net premiums earned, we're raising our guidance and expect to achieve a GAAP combined ratio between 79% and 83%, earnings per share between $1.40 and $1.70 and return on equity between 32% and 36%.

最後，轉向指導。我們更新了 '24 和 '25 的指南。對於 2024 年，我們重申核心業務直接保費保費成長在 25% 至 35% 之間。基於約1.28 億美元的淨保費收入，我們正在提高指導，預計GAAP 綜合成本率將達到79% 至83%，每股收益在1.40 美元至1.70 美元之間，股本回報率在32% 至36% 之間。

For 2025, we're reaffirming core business direct written premium growth between 15% and 25%. And based on approximately $165 million of net premiums earned, we are raising our guidance and expect to achieve a GAAP combined ratio between 82% and 86%, earnings per share between $1.60 and $2 and return on equity between 24% and 32%.

2025 年，我們重申核心業務直接承保保費成長在 15% 至 25% 之間。基於約1.65 億美元的淨保費收入，我們正在提高指導，預計GAAP 綜合成本率將達到82% 至86%，每股收益在1.60 美元至2 美元之間，股本回報率在24% 至32% 之間。

Our guidance now reflects the competitive changes in the New York marketplace, another exceptional quarter, an expected increase to the cost for catastrophe reinsurance for the '25-'26 treaty year driven by exposure growth and a hardening market for catastrophe reinsurance generally, an increase in reinsurance costs from the recent purchase of winter storm coverage, which reduces our first event retention to approximately $5 million and lower interest expense, among other changes. Don't forget that 2024 was an exceptionally light year for catastrophes, and we have assumed an average year for 2025.

我們的指引現在反映了紐約市場的競爭變化，這是另一個特殊的季度，由於風險敞口增長和巨災再保險市場普遍硬化，預計「25-26」條約年巨災再保險成本將增加。的冬季風暴保險減少了再保險成本，這將我們的首次事件保留額減少到約500 萬美元，並降低了利息費用等變化。不要忘記，2024 年是災難極少的一年，我們假設 2025 年是平年。

Before I turn the call over to Jen, I want to emphasize what a great position the company is in, perhaps the best position it's ever been in. The drag from the noncore states is all but behind us.

在將電話轉給 Jen 之前，我想強調公司目前所處的有利地位，也許是有史以來最好的地位。來自非核心國家的拖累幾乎已經成為過去。

We now have the right team, a great product and a competitive expense structure as our foundation. We already fixed what is broken. And now we are solely focused on the future, improving our processes and products, adopting new technologies and refining our strategy to continue delivering spectacular results and increased value to our shareholders for years to come.

我們現在擁有合適的團隊、出色的產品和具有競爭力的費用結構作為我們的基礎。我們已經修復了損壞的部分。現在，我們只專注於未來，改進我們的流程和產品，採用新技術並完善我們的策略，以便在未來幾年繼續為我們的股東帶來驚人的成果和增加的價值。

With that, I'd like to turn the call over to Jen for a more detailed review of our quarterly financial results. Jen?

因此，我想將電話轉給 Jen，以便更詳細地審查我們的季度財務表現。珍？

Thank you, Meryl, and good morning, everyone. We could not be more pleased with our 2024 third quarter and year-to-date results. This now marks our fourth consecutive quarter of profitability with net income of $7 million or $0.61 per basic share for the quarter.

謝謝你，梅莉爾，大家早安。我們對 2024 年第三季和年初至今的業績感到非常滿意。這標誌著我們連續第四個季度實現盈利，本季淨利潤為 700 萬美元，即每股基本股 0.61 美元。

For the year-to-date, our net income was $12.9 million compared to a net loss last year of $9.1 million and an earnings per basic share of $1.16 this year compared to a loss of $0.85 last year. On a consolidated basis, direct written premiums for the current third quarter increased 28.1%, inclusive of a 39.4% increase in core direct written premiums from the market dislocation that Meryl was just discussing, partially offset by our continued reduction of our noncore business, which decreased another 60% in both the written premium and policies in force compared to the same period last year. The increase in our core business reflects the strong pricing action with an average premium for personal lines up more than 23% in the quarter versus the prior year quarter.

今年迄今為止，我們的淨利潤為 1,290 萬美元，而去年的淨虧損為 910 萬美元，今年每股基本收益為 1.16 美元，而去年的虧損為 0.85 美元。綜合來看，當前第三季度的直接承保保費增長了 28.1%，其中包括 Meryl 剛才討論的市場混亂導致的核心直接承保保費增長了 39.4%，但部分被我們不斷削減的非核心業務所抵消。保費和有效保單均較去年同期下降60%。我們核心業務的成長反映了強勁的定價行動，本季個人險種的平均保費比去年同期成長了 23% 以上。

Our combined ratio improved by 38.2 points to a 72% for the quarter. Our current accident year loss ratio improved by 37.6 points with a 31.6-point improvement in noncat losses and a 6-point reduction in catastrophe losses. We also had a $641,000 favorable prior year development, reducing loss ratio by 1.9 points.

本季我們的綜合成本率提高了 38.2 個百分點，達到 72%。我們目前的事故年損失率改善了 37.6 個百分點，其中非重大損失改善了 31.6 個百分點，災難損失減少了 6 個百分點。上一年我們還獲得了 641,000 美元的有利發展，使損失率降低了 1.9 個百分點。

Our expense ratio was 33%, 1.2 points higher than our prior year quarter. Consistent with last quarter, our expense ratio was higher than target primarily due to increased employee bonus and contingent commission for our producers, both of which are triggered off our better-than-expected underwriting results. Our noncat loss ratio improvement was driven primarily by homeowners, our main line of business. And we experienced a decrease in both frequency and severity for personal lines as compared to the prior year.

我們的費用率為 33%，比去年同期高 1.2 個百分點。與上季一致，我們的費用率高於目標，主要是由於員工獎金和生產商的或有佣金增加，這兩者都是由我們好於預期的承保業績引發的。我們的非貓損失率的改善主要是由房主推動的，這是我們的主要業務。與前一年相比，我們的個人熱線頻率和嚴重程度均有所下降。

We have seen a decline in reported frequency every quarter this year. For the third quarter of 2024, our ex cat reported frequency for personal lines was 2.3% versus 3.5% for the same period in 2023. We attribute this improvement to better risk selection in our Select products and to a reduction in our noncore business, which has had a much higher frequency than core.

我們發現今年每季的報告頻率都在下降。2024 年第三季度，我們的前貓報告的個人線路頻率為 2.3%，而 2023 年同期為 3.5%。我們將這項改進歸因於精選產品中更好的風險選擇以及非核心業務的減少，非核心業務的頻率比核心業務高得多。

Severity has also declined in every quarter this year. Ex cat severity was down 27% during the current quarter when compared to the same period last year. In addition to better risk selection in our Select product and then the reduction of our noncore business, just as mentioned, we also have experienced fewer large losses this quarter compared to the prior year and the 3-year average for the quarter. As of September 30, we saw positive trends in our investment portfolio with some significant shifts this quarter.

今年每季的嚴重程度也有所下降。與去年同期相比，本季的前貓嚴重程度下降了 27%。如同前面所提到的，除了我們的精選產品中更好的風險選擇以及非核心業務的減少之外，與上一年和本季度三年平均水平相比，本季度我們經歷的大額損失也有所減少。截至 9 月 30 日，我們的投資組合呈現出正面的趨勢，本季出現了一些重大變化。

Walking you through these key highlights to our performance, let's start with investment income for the quarter, which increased 14% to $1.7 million, up from $1.4 million in the same period last year. Until recently, we have been investing excess cash generated from operations as well as proceeds from maturing bonds and the sale of preferred stocks into treasuries to take advantage of the high risk-free rates they offered.

讓我們從本季的投資收入開始，帶您了解我們業績的這些關鍵亮點，投資收入成長 14%，達到 170 萬美元，高於去年同期的 140 萬美元。直到最近，我們一直將營運產生的多餘現金以及到期債券和出售優先股的收益投資於國債，以利用它們提供的高無風險利率。

However, given the speculation during the quarter of Federal Reserve's rate cuts, we made a strategic decision late in the quarter to shift most of our short-term positions to highly rated 2- to 5-year corporate bonds. This move reduces our portfolio's exposure to short-term rates and lets us lock in attractive book yields for the upcoming years. These corporate bonds have an average book yield of 4.21% and an average -- and an effective duration of three years.

然而，考慮到本季聯準會降息的猜測，我們在本季末做出了策略決定，將大部分短期部位轉向高評等的2至5年期公司債。此舉減少了我們投資組合的短期利率風險，讓我們能夠鎖定未來幾年有吸引力的帳面收益率。這些公司債的平均帳面收益率為 4.21%，平均有效期限為三年。

Our noncash invested assets yield an average of 3.39% with an effective duration of 3.7 years and a weighted average maturity of 6.9 years. This balance between duration and maturity allows us to generate steady returns while managing sensitivity to rate changes. On the operations side, we're generating consistent cash flow with an EBITDA close to $11 million for the quarter. This cash flow is instrumental for fueling our portfolio's growth, giving us an additional capital to invest in higher-yielding assets.

我們的非現金投資資產平均收益率為3.39%，有效期限為3.7年，加權平均期間為6.9年。久期和期限之間的這種平衡使我們能夠產生穩定的回報，同時管理對利率變化的敏感度。在營運方面，我們產生了穩定的現金流，本季 EBITDA 接近 1,100 萬美元。這種現金流有助於推動我們投資組合的成長，為我們提供額外的資本來投資高收益資產。

By aligning our investments with the yield curve, we have positioned ourselves to further increase investment income over time. Approximately 13% of our fixed income portfolio will mature by the end of 2025 with relatively low book yields of 2.8% and 3.18%. This is an excellent reinvestment opportunity. As these assets mature, we can reinvest them at higher market rates, which will enhance our future investment income.

透過使我們的投資與殖利率曲線保持一致，我們已做好準備，隨著時間的推移，進一步增加投資收益。我們的固定收益投資組合中約有 13% 將於 2025 年底到期，帳面收益率相對較低，分別為 2.8% 和 3.18%。這是一個絕佳的再投資機會。隨著這些資產的成熟，我們可以以更高的市場利率進行再投資，這將提高我們未來的投資收益。

With the drop in interest rates at the end of the quarter, we saw a $3.6 million net increase in the value of our bond portfolio and $3.2 million over the first nine months. This gain is reflected in our balance sheet as an increase in other comprehensive income, adding to our overall financial strength. Overall, we had an incredible quarter with a 28% growth in direct written premiums, a combined ratio of 72%, net income per share of $0.61 and an annualized return on equity of 55.6%.

隨著季末利率下降，我們的債券投資組合價值淨增加了 360 萬美元，前 9 個月淨增加了 320 萬美元。這項收益反映在我們的資產負債表中，表現為其他綜合收入的增加，增強了我們的整體財務實力。總體而言，我們度過了一個令人難以置信的季度，直接承保保費增長了 28%，綜合成本率為 72%，每股淨利潤為 0.61 美元，年化股本回報率為 55.6%。

With that, we'll open it up to questions. Operator?

至此，我們將開放提問。操作員？

(Operator Instructions) Bob Farnam, Janney Montgomery Scott.

（操作員說明）Bob Farnam、Janney Montgomery Scott。

I've got a few quick questions and maybe some broader questions. So on the guidance, are you still assuming maybe a 6% cat load in that combined ratio guidance? And do you have an expectation for an expense ratio target in that combined ratio?

我有幾個簡單的問題，也許還有一些更廣泛的問題。那麼，在指導中，您是否仍然假設綜合比率指導中可能有 6% 的巨災負荷？您對該綜合比率中的費用比率目標有預期嗎？

So to answer your question, yes, we are assuming for next year a roughly 6% cat load because as I said, 2024 was exceptionally light for catastrophes. And for next year, we've assumed the long-term average. In terms of our expense ratio, we are expecting a decrease in our expense ratio because our earned premium will be up quite substantially. And what we have assumed is roughly a 28% expense ratio for next year.

因此，為了回答你的問題，是的，我們假設明年的貓負載量約為 6%，因為正如我所說，2024 年發生災難的情況非常少。對於明年，我們假設了長期平均值。就我們的費用比率而言，我們預期費用比率會下降，因為我們賺取的保費將大幅上升。我們假設明年的費用比率約為 28%。

Okay. Great. And then I'll have questions on the growth potentially you have ahead of you. I'm sure I'm going to have questions every quarter. But for right now, I want to know how has the business gone? According to plan, short, more in advance of plan?

好的。偉大的。然後我會問一些關於你們未來的潛在成長的問題。我確信每季我都會有問題。但現在我想知道生意進展如何？按照計劃，短，還是提前計劃？

Just kind of curious, so the (inaudible), are they going as you expected? Is the pricing for the new customers, is it sticker shock? What type of pricing increases do you suspect you're getting over your competitors at that point when they renew with you?

只是有點好奇，所以（聽不清楚），他們會按照你的預期進行嗎？新客戶的定價是否令人震驚？當競爭對手與您續訂時，您認為您可以透過哪種類型的價格上漲來超越競爭對手？

So it's kind of hard to say that our growth is going according to plan because who's ever been through something like this before, honestly. So I would say I'm particularly proud of the way we've handled our growth while maintaining our service standards and our underwriting standards.

所以很難說我們的成長是按計劃進行的，因為說實話，以前誰經歷過這樣的事情。因此，我想說，我對我們在保持服務標準和承保標準的同時處理成長的方式感到特別自豪。

And then relative to the price that customers are experiencing, I don't really know because I don't have visibility into what the customer was paying previously. But certainly, we're having a very high conversion rate on the business that is coming from these two companies that are out of business. So I assume our pricing is competitive.

然後，相對於客戶體驗的價格，我真的不知道，因為我無法了解客戶之前支付的費用。但可以肯定的是，我們的業務轉換率非常高，而這兩家公司已經倒閉了。所以我認為我們的定價具有競爭力。

Okay. And the third company that's pulling out of the market, you said there was a pretty good amount of policies. Do you know what size, premium size that is?

好的。第三家退出市場的公司，你說有相當多的政策。你知道高級尺寸是什麼尺寸嗎？

So that company is AmGUARD. It's a Berkshire Hathaway company, and they announced that they were withdrawing from the homeowners market nationally. So they entered New York a couple of years ago and grew fast and furiously. And so we'll have to see what the market delivers. We're confident in our pricing. And hopefully, the customer will find our pricing competitive.

那家公司就是 AmGUARD。這是波克夏海瑟威的一家公司，他們宣布退出全國房主市場。因此，他們幾年前進入了紐約，並快速而猛烈地發展。因此，我們必須看看市場會提供什麼。我們對我們的定價充滿信心。希望客戶會發現我們的定價具有競爭力。

Okay. And probably the last question for me. So it sounds like the Select product is -- obviously, the frequency is much better under Select than it is the legacy. What are the primary differences between the Select book and your legacy book?

好的。這可能是我的最後一個問題。所以聽起來 Select 產品是——顯然，Select 下的頻率比傳統產品好得多。Select 書和您的舊書之間的主要區別是什麼？

Sure. So just to reiterate how great Select is doing, for the quarter, our Select reported frequency for personal lines was 1.6%, and legacy was 2.2%. And we've seen this difference every quarter.

當然。因此，重申 Select 的表現有多出色，在本季度，我們的 Select 報告的個人線路頻率為 1.6%，傳統線路頻率為 2.2%。我們每季都會看到這種差異。

So the products are completely different. Select, if you recall, is a by-peril rated product. It's using years of Kingstone data and industry data in order to price the -- to properly match rate to risk. So I would say one of the primary differences besides the fact that it's by-peril ratings from our legacy product is the use of insurance score in the pricing and underwriting.

所以產品是完全不同的。如果你還記得的話，Select 是一款具有副危險等級的產品。它使用多年的金士頓數據和行業數據來定價——以正確地將利率與風險相匹配。因此，我想說，除了我們傳統產品的附加風險評級之外，主要區別之一是在定價和承保中使用保險評分。

[Gabriel McClare], private investor.

[加布里埃爾·麥克萊爾]，私人投資者。

Congratulations on a quarter that's so good. I don't really have a word for it. I have a couple of questions. I think you answered the one about the opportunity in 2025 with the third company. But could you talk about pricing? If memory serves, this is the time of year where we go up on pricing to do the rate changes. How much are we going up? And did Hurricane Helene and/or Milton factor into those decisions at all? I've got another question after that.

恭喜這個季度的表現非常好。我真的無話可說。我有幾個問題。我想你回答了關於 2025 年與第三家公司的機會的問題。但可以談談定價嗎？如果沒記錯的話，每年這個時候我們都會提高價格來進行利率調整。我們要漲多少？颶風海倫和/或米爾頓是否影響了這些決定？之後我還有另一個問題。

Okay. So we, fortunately, had no impact at all from Hurricane Helene or Milton. However, it will probably impact us through reinsurance rates for next year because we had heard earlier in the year a lot of -- maybe that the reinsurance market is softening. And now what we're hearing is not so much so. So that's the only potential impact from those storms.

好的。因此，幸運的是，我們沒有受到颶風海倫或米爾頓的影響。然而，它可能會透過明年的再保險費率影響我們，因為我們在今年早些時候聽到了很多消息——也許再保險市場正在疲軟。而現在我們聽到的情況卻並非如此。所以這是這些風暴唯一的潛在影響。

In terms of our pricing, we did, in the quarter, raise rates for our Select homeowners product 5% and our dwelling fire product by 10%. Typically, around this time, we do a legacy rate change. And I don't remember the exact effective date, and it was in the low single digits.

就我們的定價而言，本季我們確實將精選房主產品的費率提高了 5%，將住宅消防產品的費率提高了 10%。通常，大約在這個時候，我們會進行舊費率變更。我不記得確切的生效日期，而且是低個位數。

So we are pretty confident that we are -- well, actually very confident that we're priced adequately at this time. And don't forget that in addition to the rate change, we now update replacement cost on every policy annually so that we are insured to value. So while that's an increase in coverage, it is also an increase in price for the policyholder.

因此，我們非常有信心——嗯，實際上非常有信心，我們目前的定價是足夠的。不要忘記，除了費率變化之外，我們現在每年更新每份保單的重置成本，以便我們確保價值。因此，雖然承保範圍增加了，但保單持有人的價格也增加了。

Okay. Great. Got it. And then the capital allocation front, I know we talked about the debt, and we got the announcement about the share sale. So I understand what we're trying to do is get rid of the debt. Do you have any projections or range because this is kind of a curveball for some of the shareholders that have been around about the share -- the dilution to the shareholders. Do you have a range of like how much we could experience an increase in shares or how much dilution we could get by the end of 2025?

好的。偉大的。知道了。然後是資本配置方面，我知道我們討論了債務，我們收到了有關股票出售的公告。所以我明白我們正在努力做的是擺脫債務。您是否有任何預測或範圍，因為這對於一些一直關注股票的股東來說是一種曲線球——對股東的稀釋。您是否知道到 2025 年底我們的股票可能會增加多少，或者我們可能會稀釋多少？

So unfortunately, I really don't. I just want to say that we -- I very much view this debt as like a news -- like having lived through '22, I just don't want to deal with the debt. I want to pay it off as quickly as possible. So we're really trying to find the right balance between the quota share, the stock issuance and the use of dividends to pay down the debt as expeditiously as possible and to maximize earnings. But I cannot give you an exact number of shares that we plan to sell at this time.

所以不幸的是，我真的不知道。我只是想說，我們——我非常認為這筆債務就像一個新聞——就像經歷了22年一樣，我只是不想處理債務。我想盡快還清。因此，我們確實在努力在配額份額、股票發行和股息使用之間找到適當的平衡，以盡快償還債務並最大化收益。但我無法向您提供我們目前計劃出售的確切股票數量。

(Operator Instructions) [Brad Nelson], private investor.

（操作員說明）[Brad Nelson]，私人投資者。

I appreciate the work that you've done and going through over the last few years, the phases that you mentioned and stabilization and now growth. I just have a quick question on -- can you tell me what the reason is that you're switching guidance from a diluted share count to a basic share count? I think it's something that's a little bit out of the ordinary. Maybe this has to do with the ATM, but what is the reason?

我感謝您在過去幾年中所做的工作和經歷，您提到的各個階段以及穩定和現在的成長。我只是有一個簡單的問題 - 您能告訴我您將指導從稀釋股數改為基本股數的原因是什麼嗎？我認為這有點不尋常。也許這與ATM機有關，但原因是什麼？

So we don't really have -- like, we changed it earlier in the year where there really wasn't a difference between basic and diluted. So it's just what we have out there now. There's no rationale behind it, honestly. If it makes more sense to do diluted, we can certainly change our guidance to include diluted.

所以我們實際上並沒有——例如，我們在今年早些時候改變了它，基本和稀釋之間確實沒有區別。所以這就是我們現在所擁有的。老實說，這背後沒有任何理由。如果稀釋更有意義，我們當然可以改變我們的指導以包括稀釋。

Okay. I just wanted to know if there was any particular reason, but it just sounds like you -- yes, you've made a quick decision on this, and that's fine. I mean right now, the share count difference is like about 10% or something like that. And obviously, if it's only -- if you're only going to use the ATM, then eventually, they may get a bit closer. But anyway, okay.

好的。我只是想知道是否有什麼特殊原因，但這聽起來就像你一樣——是的，你對此做出了快速決定，這很好。我的意思是，現在的股份數差異約為 10% 左右。顯然，如果只是——如果你只想使用自動櫃員機，那麼最終，他們可能會更接近一些。但無論如何，好吧。

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Meryl for closing remarks.

我們的問答環節已經結束。我想將會議轉回梅莉爾致閉幕詞。

It's an incredibly exciting time at Kingstone. And we could not be more optimistic about the trajectory for our business. Thank you to our shareholders for your continued trust and support as we work together -- sorry, as we work towards delivering long-term value, and thank you for joining our call today.

這是金士頓令人難以置信的激動人心的時刻。我們對我們業務的發展軌跡非常樂觀。感謝我們的股東在我們共同努力的過程中一直以來的信任和支持——抱歉，我們致力於創造長期價值，並感謝您今天加入我們的電話會議。

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

謝謝。今天的會議到此結束。此時您可以斷開線路，感謝您的參與。