Kingstone Companies Inc (KINS) 2026 Q2 法說會逐字稿

Good morning and welcome to Kingstone Company's second quarter 2026 earnings conference call. As a reminder, this conference is being recorded. I'll now turn the call over to your host StefanNorbom,Kingstone's investor relations representative.

早安，歡迎參加 Kingstone Company 2026 年第二季財報電話會議。提醒各位，本次會議將被錄音。現在我將把電話交給本次會議主持人、Kingstone 投資人關係代表 StefanNorbom。

Stefan, you may begin.

Stefan，您可以開始了。

Thank you and good morning everyone.

謝謝，各位早安。

Joining us today are President and Chief Executive Officer Meryl Golden and Vice President and Chief Financial Officer Randy L. Patten. 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 differ materially from projected results. Forward-looking statements speak only as of the date on which they're made, and Kingstone undertakes no obligation to update the information discussed. For more information, please refer to the section entitled Risk factors in Part 1, Item 1A of the company's latest 10K.

今天與會的有總裁兼執行長 Meryl Golden，以及副總裁兼財務長 Randy L. Patten。我謹代表公司提醒，本次電話會議可能包含前瞻性陳述。此類陳述涉及已知與未知的風險、不確定性及其他因素，可能導致實際結果與預期結果出現重大差異。前瞻性陳述僅反映其作出當日的情況，Kingstone 不承擔更新所討論資訊的義務。更多資訊請參閱公司最新 10K 報告第一部分第 1A 項「風險因素」章節。

Additionally, today's remarks may include references to non-GAAP measures for definitions and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, please see the tables in our latest earnings release available at kingstonecompanies.com.

此外，今天的發言可能會提及非 GAAP 指標；關於這些非 GAAP 指標的定義，以及與最直接可比的 GAAP 指標之調節，請參閱我們最新的財報新聞稿中的表格，該新聞稿可於 kingstonecompanies.com 取得。

With that, it is my pleasure to turn the call over to Meryl Golden.

接下來，我很高興把電話交給 Meryl Golden。

Meryl.

Meryl。

Thanks, Stefan, good morning everyone, and thanks for joining our call.

謝謝，Stefan。各位早安，感謝大家參加我們的電話會議。

Kingstone delivered the most profitable quarter in our history. Net income reached a record $15.5 million net income per diluted share increased 35% to $1.05 and our GAAP net combined ratio improved 1.3 points to 70.2 points. That performance produced an annualized return on equity of 50.8%. Diluted book value per share reached $8 and $0.69, up 35% year-over-year. Reflecting the value we are creating for shareholders. The earnings contribution was broad-based, driven by premium growth, underwriting profitability, operating efficiency and higher investment income. Turning to growth, direct premiums increased 19% to $72.5 million led by continued strength in New York personal lines. Relative to the prior year quarter, new business policy count increased 35%, retention improved by 2% points and average renewal premium increased 8%. Net premiums earned grew 31% to $60.5 million as prior period growth continued to earn in and our lower quota share session allowed us to retain more premium.

Kingstone 交出公司史上最獲利的一季。淨利達到創紀錄的 1,550 萬美元；稀釋後每股淨利成長 35% 至 1.05 美元；我們的 GAAP 淨綜合比率改善 1.3 個點至 70.2 點。該表現帶來年化股東權益報酬率（ROE）50.8%。稀釋後每股帳面價值達到 8 美元與 0.69 美元，年增 35%。反映我們正在為股東創造的價值。獲利貢獻來源廣泛，主要由保費成長、承保獲利、營運效率提升以及投資收益增加所帶動。就成長而言，直接保費成長 19% 至 7,250 萬美元，主要來自紐約個人險業務持續強勁。相較去年同期，新契約保單件數增加 35%，續保率提升 2 個百分點，平均續保保費提高 8%。已賺保費淨額成長 31% 至 6,050 萬美元，因前期成長持續轉為已賺保費，且我們較低的比例分保（quota share）分出使我們得以保留更多保費。

While growth was robust this quarter, we are seeing signs of a softening market and an increasingly competitive environment. The pressure so far is most visible in the dwelling fire line. Demand across the broader franchise remains healthy as our new business and retention results show. Competition has entered and exited this market over time, while Kingstone broad and long-standing producer relationships have supported our performance throughout market cycles. Select has proven effective at-risk selection and matching rate to risk, which matters even more in this environment. We will not chase volume at the expense of underwriting discipline. As competition increases, New York growth will moderate from first half levels are 16% to 20% for your guidance growth outlook already reflects the likelihood of increased competition.

雖然本季成長強勁，但我們看到市場有轉趨疲軟的跡象，競爭環境也日益激烈。目前壓力最明顯的領域是在住宅火災（dwelling fire）險種。從我們的新契約與續保結果來看，整體業務版圖的需求仍然健康。競爭者過去曾在此市場進出，而 Kingstone 廣泛且長期的通路（producer）關係，支撐我們在不同市場循環中的表現。Select 產品在風險篩選與費率對應風險方面已證明有效，而在此環境下更為重要。我們不會以犧牲承保紀律為代價去追逐保費量。隨著競爭加劇，紐約的成長將較上半年水準放緩；我們對外提供的成長指引為 16% 至 20%，已反映競爭升溫的可能性。

Turning to underwriting, attritional claim frequency remains very low overall, flat for nonweather water losses, our largest peril, and up modestly from the prior year quarter for fire losses. Attritional severity for the non-weather, water, and fire apparels combined increased, consistent with inflation and offset by the increase in average premium. Against an exceptionally strong prior year quarter, the underlying loss ratio was 4.4 points higher. Year-to-date though, it's up only 0.2 points. The catastrophe loss ratio was negative as favorable development on 1st quarter catastrophe losses exceeded second quarter catastrophe losses. We also recognized 1.6 million or 2.7 points of favorable prior year development.

談到承保，經常性（attritional）理賠頻率整體仍維持在非常低的水準；就非天候的水損（我們最大的風險類別）而言持平；火災損失的頻率則較去年同期小幅上升。非天候、水損與火災等風險合計的經常性損失嚴重度上升，與通膨一致，並部分被平均保費上升所抵銷。在去年同期表現異常強勁的基期下，基礎損失率高出 4.4 個點。但以年初至今來看，僅上升 0.2 個點。巨災損失率為負值，因第一季巨災損失的有利發展（favorable development）超過第二季的巨災損失。我們亦認列 160 萬美元（或 2.7 個點）的前期年度有利發展。

The select product continues to perform well. On an exemption to date basis are select homeowners claim frequency is more than 34% lower than our legacy product, while select dwelling fire frequency is 19% lower, Select now represents 62% of our homeowner policies enforced and 40% of our dwelling fire policies in force, extending our runway for continued mix improvement. Our expense ratio improved by 2.1 points to 30.6, reflecting continued operating leverage as we scale. Underwriting expense dollars are growing more slowly than net earned premium. The net combined ratio for the quarter was 70.2, down 1.3 points from the prior year quarter.

Select 產品持續表現良好。以年初至今為基礎，Select 住宅險的理賠頻率較我們的傳統產品低逾 34%，而 Select 住宅火災險的頻率低 19%；目前 Select 佔我們在保住宅險保單的 62%，以及在保住宅火災險保單的 40%，延長我們持續改善產品組合的跑道。我們的費用率改善 2.1 個點至 30.6，反映隨規模擴大而持續產生的營運槓桿。承保費用金額的成長速度低於已賺保費淨額。本季淨綜合比率為 70.2，較去年同期下降 1.3 個點。

Randy will provide a more detailed review of our financial results.

Randy 將更詳細說明我們的財務結果。

We were pleased with our July 1st catastrophe reinsurance placement. We increased total catastrophe protection by 14% to $500 million. Wildfire protection and lowered the risk adjusted cost of our core catastrophe excess of loss coverage by more than 15%. We also maintained low first event retention across all perils, including wildfire. This program is built for quarters, unlike this one, it protects the balance sheet against adverse catastrophe scenarios, reduces earnings volatility and supports continued profitable growth. We entered California in the last week of the quarter through only a handful of agencies, so it's too early to draw conclusions from the initial activity. Our California business leader knows the market well and has strong producer relationships which are helping us understand how conditions are evolving.

我們對 7 月 1 日的巨災再保安排感到滿意。我們將總巨災保障提高 14% 至 5 億美元。並強化野火保障，且將核心巨災超額損失再保（excess of loss）之風險調整後成本降低超過 15%。我們也在所有風險（含野火）上維持較低的首起事故自留額（first event retention）。此一方案是為了應對不同於本季的情境而設計：它可在不利巨災情境下保護資產負債表、降低盈餘波動，並支持持續的獲利成長。我們在本季最後一週透過少數幾家代理機構進入加州，因此現在要從初期活動得出結論仍為時過早。我們的加州業務負責人對市場非常熟悉，並擁有強大的通路關係，正協助我們了解市場條件如何演變。

We expected new carriers and MGAs to enter California on an ENS basis, what has changed is that admit carriers are also beginning to selectively reopen for new business, and competition is building faster than we anticipated, that's why we started small, we're using that early feedback to refine our approach before adding meaningful volume are in a structure and platform allow us to remain nimble, adjusting pricing and appetite as market conditions evolve. We will scale only as the business needs our underwriting and return requirements. We are also on track to enter Connecticut on an admitted basis late in the 3rd quarter.

我們原本預期新的保險公司與 MGA 會以 ENS 基礎進入加州；但改變之處在於，核准（admitted）保險公司也開始選擇性地重新開放承作新業務，競爭形成的速度比我們預期更快。這也是我們從小規模開始的原因；我們正利用早期回饋在增加有意義的承作量之前精煉策略。我們的組織、架構與平台使我們能保持靈活，隨市場條件演變調整定價與承保偏好（appetite）。我們只會在符合承保與報酬要求的前提下擴大規模。我們也按計畫將於第三季末以核准（admitted）方式進入康乃狄克州。

The Department of Insurance has been moving quickly on our filings, and we are preparing to begin writing business once our approvals are received. New York remains our primary growth and earnings engine. California and Connecticut are measured steps toward a more geographically diversified company and over time a less concentrated catastrophe footprint. These initiatives support our goal of reaching $500 million in direct premiums written by year-end 2029. We'll pursue that goal at a pace consistent with our return requirements, Reinsurance protection and capital capacity.

保險監理機關（Department of Insurance）正快速處理我們的申報文件，我們也在準備於取得核准後開始承作業務。紐約仍是我們主要的成長與獲利引擎。加州與康乃狄克州是我們邁向地理分散化、並在長期降低巨災曝險集中度的審慎步伐。這些措施支持我們在 2029 年底前達成直接簽單保費（direct premiums written）5 億美元的目標。我們將以符合報酬要求、再保保障與資本承載能力的步調來推進該目標。

Turning to our outlook, we are reaffirming all elements of our full year 2026 guidance. We continue to expect direct premiums written growth of 16% to 20%. A GAAP net combined ratio of 81% to 86% and underlying combined ratio of 74% to 76% and a catastrophe loss ratio of 7% to10%. The catastrophe range reflects the elevated winter storm activity in the First Quarter. We also continue to expect diluted net income per share of $2.20 to $2.90 and return on equity of 24% to 30%. Our modeling assumptions continue to include an effective tax rate of 21% and weighted average diluted shares outstanding of $14.8 million. The operating drivers we control are on track with the most active months of hurricane season ahead and competitive conditions evolving, we believe maintaining our current ranges is appropriate. We remain confident in our full year outlook.

談到我們的展望，我們重申2026全年指引的所有要素。我們仍預期直接簽單保費（Direct Premiums Written）成長16%至20%。GAAP淨綜合比率為81%至86%，基礎綜合比率為74%至76%，以及巨災損失比率為7%至10%。巨災區間反映第一季冬季風暴活動偏高。我們也仍預期稀釋後每股淨利為2.20美元至2.90美元，股東權益報酬率為24%至30%。我們的模型假設仍包括有效稅率21%，以及加權平均稀釋流通股數為1,480萬股。在我們可控的營運驅動因素按計畫推進、颶風季最活躍月份尚在前方且競爭態勢持續演變之際，我們認為維持目前區間是適當的。我們對全年展望仍具信心。

The second quarter demonstrates the earning power of the business we have built, our New York franchise is growing, our operating platform is converting that growth into earnings, and our reinsurance and capital positions support disciplined expansion. Our second half priorities are clear. Grow New York while protecting rate adequacy. Build California deliberately, launch Connecticut on schedule and continue translating profitable growth into earning and book value per share. I remain confident in Kingston trajectory because the drivers are clear, discipline, pricing and risk selection, strong producer relationships, expense control and prudent capital management. I want to thank the entire Kingstone team for their execution and our select users for their continued partnership.

第二季展現了我們所打造之業務的獲利能力：我們的紐約特許經營業務正在成長，我們的營運平台正將該成長轉化為獲利，而我們的再保與資本部位支持有紀律的擴張。我們下半年優先事項很明確。在維持費率充足性的同時擴大紐約業務。審慎打造加州業務、按期推出康乃狄克州，並持續將獲利性成長轉化為每股盈餘與每股帳面價值。我對Kingstone的發展軌跡仍具信心，因為驅動因素很清楚：紀律、定價與風險篩選、強健的經紀/代理人關係、費用控管以及審慎的資本管理。我要感謝整個Kingstone團隊的執行力，也感謝我們的精選用戶持續的合作夥伴關係。

With that, I'll turn the call over to Randy for a more detailed review of our financial results.

接下來，我把電話交給Randy，請他更詳細地回顧我們的財務結果。

Randy.

Randy。

Thank you, Meryl, good morning again everyone.

謝謝你，Meryl，各位早安，再次向大家問好。

From a net income and ETS standpoint, the second quarter was our most profitable quarter in company history, with net income of $15.5 million and EPS of $1.05 per diluted share, compared with $11.3 million, or $0.78 for diluted air in the same quarter prior year. Operating net income increased 41% to $15.3 million and diluted operating net income per share was $1.04 in the second quarter of 2026 compared with $0.75 in the prior quarter. Annualized GAAP return on equity was 50.8% in the during the second quarter of 2026, as a reminder, the second quarter is typically our most profitable quarter.

從淨利與ETS的角度來看，第二季是公司史上最獲利的一季，淨利1,550萬美元，稀釋後每股盈餘（EPS）為1.05美元；相較去年同期淨利1,130萬美元，或稀釋後每股0.78美元。營運淨利成長41%至1,530萬美元，2026年第二季稀釋後每股營運淨利為1.04美元，對比前一季為0.75美元。2026年第二季年化GAAP股東權益報酬率為50.8%；提醒一下，第二季通常是我們最獲利的一季。

Net premiums earned increased 31% to $60.5 million in the second quarter of 2026, primarily reflecting continued growth and direct premiums written, along with the reduced quota share session, our New York quarter share session is 5% for the 2026 treaty year, a decrease of 11% points from 16% in the 2025 treaty year. Allowing us to retain more premium and underwriting profit. Direct premiums rate increased 19% to $72.5 million, and policies enforce increased 9.9% to 84,570. Net investment income increased 49% to $3.4 million in the second quarter of 2026 compared with the same quarter prior year, driven by an increase in invested assets and higher average yields that increased to 4.4%. Total investments were $334.1 million at June 30th, up $24.4 million from year end.

2026年第二季已賺保費（Net Premiums Earned）成長31%至6,050萬美元，主要反映直接簽單保費持續成長，以及分出比例（quota share）降低；我們紐約的quota share在2026承保年度為5%，較2025承保年度的16%下降11個百分點。使我們得以保留更多保費與承保利潤。直接簽單保費成長19%至7,250萬美元，在保保單數成長9.9%至84,570張。2026年第二季淨投資收益較去年同期成長49%至340萬美元，主要受投資資產增加與平均殖利率上升帶動，平均殖利率提升至4.4%。截至6月30日，投資總額為3.341億美元，較年末增加2,440萬美元。

Turning to underwriting, the GAAP net loss ratio was 39.6% compared with 38.8% in the prior year quarter. The catastrophe loss ratio was 0.8% compared with 0.6% in the prior year quarter. Favorable development on our first quarter 2026 catastrophe losses exceeded the low catastrophe losses experienced during the second quarter of 2026, producing the negative ratio. Separately, we recognize 2.7 points of favorable prior reserve development related to accident years before 2026. Excluding both cat losses and favorable prior reserve development, the underlying performance of the book was strong in the second quarter of 2026, with an underlying loss ratio of 43.1%, this compares with 38.7% underlying loss ratio in the second quarter of 2025, a quarter when the underlying performance of book was also exceptionally strong, the net underwriting expense ratio improved 2.1 points to 30.6% as net premiums earned grew faster than our expense base. So, the GAAP net combined ratio improved 1.3 points to 70.2%. The underlying combined ratio was 73.7% compared with 71.4% in the prior quarter. The absolute level of profitability remains strong, and the expense ratio improvement demonstrates the scalability of the business.

談到承保，GAAP淨損失率為39.6%，相較去年同期為38.8%。巨災損失率為0.8%，相較去年同期為0.6%。我們對2026年第一季巨災損失出現有利發展，幅度超過2026年第二季經歷的低巨災損失，因而產生負的比率。另外，我們認列2.7個點的有利以前年度準備金發展，係與2026年以前的事故年度相關。排除巨災損失與有利以前年度準備金發展後，2026年第二季保單組合的基礎表現仍然強勁，基礎損失率為43.1%；相較之下，2025年第二季基礎損失率為38.7%，當季保單組合的基礎表現亦格外強勁。隨著已賺保費成長快於費用基礎，淨承保費用率改善2.1個點至30.6%。因此，GAAP淨綜合比率改善1.3個點至70.2%。基礎綜合比率為73.7%，相較前一季為71.4%。整體獲利水準仍然強勁，而費用率的改善也展現了業務的可擴展性。

For the 1st 6 months of 2026, direct premiums in written increased 19% to $142.1 million, and net premiums earned increased 30% to $116.3 million, despite elevated winter loss, winter catastrophe activity in the first quarter of 2026, costing about $14 million in losses, we generate a net income of $9.7 million, or $0.66 per diluted share and operating net income of $10.3 million or $0.70 per diluted in the first half of 2026. The first half of 2026 GAAP that that combined ratio was 90.2% compared with 82.3% in the prior year period, and included 12 points of catastrophe losses compared with 1.2 points in the first half last year.

2026年前6個月，直接簽單保費成長19%至1.421億美元，已賺保費成長30%至1.163億美元。儘管2026年第一季冬季損失、冬季巨災活動偏高，造成約1,400萬美元損失，我們在2026年上半年仍創造淨利970萬美元，或稀釋後每股0.66美元；營運淨利為1,030萬美元，或稀釋後每股0.70美元。2026年上半年GAAP淨綜合比率為90.2%，相較去年同期為82.3%；其中包含12個點的巨災損失，而去年上半年為1.2個點。

The underlying combined ratio improved 1.3 points to 80.7, and the underwriting expense ratio improved 1.5 points to 30.5 in the first half of 2026 compared with the first half of 2025. Reflecting the strength and the performance of the underlying book of business. At June 30th, diluted book value per share was $8 and $0.69, up 30% from $6 and $0.44 a year ago diluted book value per share excluding accumulated other comprehensive income was $9.27 up 32% from $7 and $0.04 a year ago.

2026年上半年基礎綜合比率改善1.3個點至80.7，承保費用率較2025年上半年改善1.5個點至30.5。反映基礎業務組合的強勁與表現。截至6月30日，稀釋後每股帳面價值為8.69美元，較一年前的6.44美元成長30%；排除累積其他綜合損益（AOCI）後的稀釋後每股帳面價值為9.27美元，較一年前的7.04美元成長32%。

With no holding any debt, our capital position continues to be strong, supported, supporting both profitable expansion and measured shareholder returns during the quarter we purchased approximately 19,500 shares at an average price of $14.98 per share under the program our board authorized in May. One quarter end, our board increased the quarterly dividend by 20% to $0.06 per share, just 1 year after reinstating it. We will continue to allocate capital to support our strategic growth plans while maximizing long-term shareholder value.

在沒有任何債務的情況下，我們的資本部位仍然強健，支持獲利性擴張與審慎的股東回饋。本季我們依董事會於5月核准的計畫，以每股平均14.98美元回購約19,500股。在季末後，董事會將季度股利提高20%至每股0.06美元，距離恢復配息僅1年。我們將持續配置資本以支持策略性成長計畫，同時最大化長期股東價值。

With that operator, we are ready for questions.

以上，接線員，我們準備開始提問。

Thank you. We'll now be conducting a question-and-answer session.

謝謝。我們現在將進行問答環節。

(Operator Instructions) Bob Farnham, Green Capital.

(接線員指示) Bob Farnham，Green Capital。

Hi there, good morning, I've got a couple of kind of quick questions and one kind of overlooking question, so, and the quick questions, your expense ratio improved to 30.6, and you're talking about how it's going to improve as the company scales, do you have any idea of where that expense ratio could fall to when you get up to kind of full speed over the next few years?

嗨，早安，我有幾個算是很快的問題，還有一個比較宏觀的問題。先說快問的部分：你們的費用率改善到30.6，你們也提到隨著公司規模擴大還會繼續改善。你們是否有概念，在未來幾年達到大致滿載運轉時，費用率可能會降到什麼水準？

Sure, so we're thinking we could take about a point out of the expense ratioand Interim goal is something like the 29.

當然。我們認為費用率大概還可以再降約1個百分點；中期目標大概是29左右。

Okay, 29. And when you're looking to write business, you need to have, it has to meet your profitability expectations, what can you describe kind of what you're looking for when you are writing business, what your profitability targets are?

好的，29。另外，當你們承作業務時，需要符合你們的獲利預期；你能否描述一下你們在承作業務時在看什麼、你們的獲利目標是什麼？

Well, we're pricing for an 85 combined, so that's our profitability expectation.

我們的定價是以綜合率85為目標，所以那就是我們的獲利預期。

Over 85. 9 is, yeah, okay, and I guess the more encompassing one is more competition. I know you offered up quite a bit on competition, I kind of wanted to know the differences, I, I'm assuming there's a difference between the California competition and the New York competition because California's mostly ENS, New York is admitted, but it sounds like admitted are getting into California as well, is, are those admitted the same admitted that you face in New York, or are they a different cohort of admitted trying to get into California at this point.

85以上。9是——對，好。然後我想更全面的一個問題是競爭。我知道你們已經談了不少競爭情況；我想了解差異。我假設加州的競爭和紐約的競爭不同，因為加州主要是ENS（超額及剩餘線），紐約是admitted（核准承保）。但聽起來admitted也正在進入加州；這些admitted是否就是你們在紐約面對的同一批admitted，還是說是另一群admitted目前正試圖進入加州？

Sure, so California and you perhaps I, it wasn't clear what I was saying.

好的，所以加州——也許我先說，我剛才的表達可能不夠清楚。

In California, the admitted carriers had stopped writing new business to a large extent over the past couple of years. Because of the regulatory environment, and so there has been a surge in volume on the ENS side. And certainly we expected a lot of new carriers in the ENS space because we had heard about that. But what we had not anticipated in California was that the admitted carriers, the largest riders of homeowners in California to reopen for business, and we are starting to see that in the marketplace, so that is something we had not anticipated. The difference is in York, the admitted carriers to a larger, the TOP10 carriers to a large extent, avoid catastrophe exposed property. So, our competition are the companies that focus on catastrophe exposed property and in New York, there is like 1 ENS writer, but most of the companies are actually maybe 2, most of the companies are admitted.

在加州，過去幾年核准承保的保險公司在很大程度上已停止承作新業務。因為監管環境的關係，因此ENS端的業務量大幅增加。而且我們確實預期ENS市場會有很多新進業者，因為我們也聽說了。但我們在加州沒有預料到的是，核准承保的保險公司——也就是加州住宅險最大的承保者——會重新開放承作，我們開始在市場上看到這種情況，所以這是我們先前未預期的。差異在於紐約，核准承保的保險公司在更大程度上——前十大保險公司在很大程度上——會避開具巨災曝險的財產。因此，我們的競爭對手是那些專注於巨災曝險財產的公司；在紐約大概只有1家ENS承保者，但多數公司其實——也許是2家——多數公司都是核准承保。

In California, our competition is both now the admitted and the ENS carriers, does that answer your question, Bob?

在加州，我們的競爭對手現在同時包括核准承保與ENS保險公司。這有回答你的問題嗎，Bob？

Yeah, so the admitted carriers in California, you're talking the large companies like, State Farm and Farmers and whatnot, it, are they? They're not avoiding getting into the stats of exposure, and I know that the regulator was basically saying you should, these companies have to write some high risk, policies to be able to write in the state, so. They're not avoiding the wildfire exposed areas like they are avoiding the coastal areas in the, in New York, is that what you're saying is that...

有的。所以你說的加州核准承保保險公司，是指像State Farm、Farmers那種大型公司之類的嗎？他們是——？他們並沒有避開高曝險地區嗎？我知道監管機關基本上在說，這些公司必須承作一些高風險保單，才能在該州承作業務，所以……他們不像在紐約避開沿海地區那樣，去避開野火曝險區域——你是這個意思嗎？

first of all, I, it's certainly not State Farm, that I'm talking about, but, what I'm Like, there is in California something called the sustainable insurance plan and companies who file that they will write some more wildfire business, then they get access to forward looking lover models and to include reinsurance in their pricing and other things, so we're still seeing that admitted carriers have a limited appetite, particularly for a business that is exposed to wildfire, but we just had not anticipated that they would start writing business again. Because so many of them were very restrictive until recently.

首先，我談的當然不是State Farm。不過我想說的是：加州有一個叫做「可持續保險計畫」（sustainable insurance plan）的機制；公司如果申報願意承作更多野火相關業務，就能取得前瞻性的損失模型，並可在定價中納入再保成本等其他項目。因此我們仍然看到核准承保公司對野火曝險業務的胃納有限，但我們只是沒有預期他們會開始重新承作業務。因為直到最近，很多公司都還非常保守、限制很多。

Right, okay. All right, and you're talking about the growth moderating in New York in the second half of the year, you're talking about increased competition, is that new competition, or is that the same kind of similar thing you getting companies that had been there after writing now, they're slowly but surely dipping your toe back into the water.

了解，好。另外你們提到今年下半年紐約的成長會趨緩，原因是競爭加劇；那是新的競爭者，還是類似你剛說的情況——原本在那裡但之前停止承作的公司，現在又慢慢試水溫回來？

Yeah, I mean, it's really both, so look, it's not a surprise, we all knew that the soft market is coming, but what we did see in July, we saw a tick down in our new business for dwelling fire and from talking to agents, they're just talking more now about the softer market, so there have been a few new market entrants and existing competitors have loosened some of their guidelines, there is one company that is priced in a really Irrational way, so we hope they figure that out sooner rather than later, but listen, I want to reiterate that Kingston has a unique position in the downstate New York market.

對，我的意思其實兩者都有。你看，這也不意外，我們都知道軟市要來了。但我們在7月確實看到住宅火險（dwelling fire）的新業務略有下滑；跟代理人聊過後，他們現在更多在談市場轉軟。所以確實有一些新進者進入市場，而既有競爭者也放寬了一些承保指引。有一家公司定價非常不理性，我們希望他們能早點而不是晚點把這件事調整過來。不過我想重申，Kingston在紐約下州（downstate New York）市場有獨特的定位。

We have broad and deep distribution, and those agencies have stuck with us through various market cycles, we have our select product that does a great job with wrist selection and matching rate of risk, which is even more important in a soft market with low expenses, so I feel very confident we're going to continue to grow, but perhaps modestly slower than we have been, so, again, it's just a different part of the cycle and we'll, do our best.

我們的通路既廣且深，而這些代理機構在不同市場循環中一直支持我們；我們的Select產品在風險篩選以及費率與風險匹配方面做得很好——在費用低、且市場轉軟時這點更重要。所以我非常有信心我們會持續成長，但可能會比過去稍微慢一些。總之，這只是循環的不同階段，我們會盡力而為。

All righty, thanks for the color.

好的，謝謝你提供的說明。

Our pleasure.

不客氣。

(Operator Instructions) Cam Bianchi, Piper Sandler.

(接線員指示) Cam Bianchi，Piper Sandler。

Morning, this came (inaudible) on for Paul.

早安，我是Cam（聽不清）代Paul提問。

Considering the expense ratio improvement you saw in the quarter, I'm wondering if the 30% quota share in the new California book create any like near term expense ratio drag if that state ramps that would offset any New York driven efficiency gains, I know you mentioned about, 29% of the target there, but just curious that California book has any offset in there.

考量你們本季看到的費用率改善，我想問：加州新承作業務中30%的quota share（成數分保）是否會在短期內對費用率造成任何拖累？如果加州那邊放量，會不會抵消紐約帶來的效率提升？我知道你們提到目標是29%左右，但想確認加州業務是否會在其中形成抵消。

So thanks for your question.

謝謝你的問題。

So, right now, California is such a small piece of the pie, like we're, even by the end of this year it's going to be way less than 5% of our total business, and the 30% quota share was really intended just for risk aversion, we wanted to make sure that, we didn't, have a material impact on our profitability, so to answer your question, it has 0, really like no impact down the expense ratio at all.

目前加州占比非常小；即使到今年年底，也會遠低於我們總業務的5%。而30%的quota share主要是出於風險趨避，我們希望確保不會對獲利造成實質影響。所以回答你的問題：它對費用率完全沒有影響，真的幾乎沒有任何影響。

Got it, understood, and then I guess just looking forward a little bit once, the California book ramps up a little bit, and maybe just on the road to that, how are you guys prioritizing capital deployment between, California and Connecticut expansion, increasing dividend and opportunistic repurchases.

了解，明白。接著往前看：等加州業務再放量一些，或在放量的過程中，你們如何在資本部署上做優先順序安排——在加州與康乃狄克州擴張、提高股利，以及機會性庫藏股回購之間？

Randy, I'll let you take that.

Randy，我讓你來回答。

Sure, yeah, so, our capital allocation really, it remains the same even entering California and our priorities are first to fund that profitable growth, and we've rebuilt Surplus here over the last couple of years, and then we're focused on growing that quarterly dividend, and, in the past quarter, our board did increase our dividend by 20% to $0.66 per share, and then third, looking at, when the opportunities present themselves, we will repurchase shares, but really in that order.

好的。是的，我們的資本配置原則即使進入加州也維持不變；優先順序第一是支持那種具獲利性的成長。我們過去幾年已重建了盈餘（Surplus）。第二，我們專注於提高季度股利；在上一季，我們董事會將股利提高20%，至每股0.66美元。第三，當機會出現時，我們會回購股票，但基本上就是依這個順序。

Fantastic, thank you.

太棒了，謝謝。

Thank you.

謝謝。

(Operator Instructions) Greg Fortchinoff, private investor.

(接線員指示) Greg Fortchinoff，私人投資人。

Hi Greg.

嗨，Greg。

Hi, how are you?

嗨，你好嗎？

Great number, it's, the more off, but when you did your number, when you figured your numbers earlier in the year, were you considering that, or is that something that could affect what you're thinking going forward.

數字很棒，雖然有點偏離，但你們年初在做那些數字、估算時，有把這個考慮進去嗎？還是說這可能會影響你們對未來的看法？

Yeah, so if you're talking about our guidance on growth in particular, we did anticipate a softer market in the second half of the year, so, the range is 16% to 20%, and year-to-date we're at 19%, so, we'll have to see how it goes, but right now we're comfortable reaffirming our guidance.

是的，如果你指的是我們對成長的指引，特別是成長方面，我們確實預期下半年市場會比較疲弱，所以區間是16%到20%，而年初至今我們是19%。所以還要看後續發展，但目前我們有信心重申我們的指引。

Okay, is it wrong to think that assume, aside from any catastrophes that might hit that this earnings is a new run rate for us, or am I getting too far ahead of myself?

好的，那我這樣想會不會不對：假設沒有任何可能衝擊的重大災難，這次的獲利就是我們新的常態水準（run rate）？還是我想得太超前了？

Mm, are you saying for Q2?

嗯，你是指第二季嗎？

Right, I'm just saying so.

對，我就是這個意思。

Right, so is this, I know the second quarter is always the best quarter, but that being said, if you go through the third quarter with no major storms and nothing out of the ordinary on the regular claims, should this be the run rate that we're expecting?

對，所以這樣：我知道第二季通常是最好的一季，但即便如此，如果第三季沒有重大風暴，且一般理賠沒有任何異常，那這是不是我們應該預期的常態水準？

Yeah, so I would say that our underlying combined ratio, if you take out a cap loss and, the, prior favorable prior year development, that is the run rate we're expecting, so, in our guidance we split it between the underlying and which are all the things that we control, and that's a combined ratio of 74 to 76 and then the cat loss. So yes, I would say that, the run rate is consistent with the guidance that we put out in March.

是的，我會說，如果把巨災損失（cat loss）以及先前年度有利的前期年度準備金發展（prior favorable prior year development）扣除掉，我們的核心綜合比率（underlying combined ratio）就是我們預期的常態水準。因此在我們的指引中，我們把它拆成核心部分（也就是我們能控制的所有項目），核心綜合比率為74到76，然後再加上巨災損失。所以是的，我會說這個常態水準與我們3月發布的指引一致。

Okay. I understand that, except I'll just press you a little bit more to say if you make $1.05 dollars this quarter. And then you make $1.05 next quarter, you're basically at your low end and then it's just the 4th quarter to see how much you beat it by, is that. I mean, so you're being pretty conservative, is that fair or no?

好的。我理解，但我再追問一下：如果你們這季賺1.05美元。然後下季也賺1.05美元，你們基本上就已經在指引的低端了，接下來就看第四季能超出多少，是這樣嗎？我的意思是，你們其實相當保守，這樣說公平嗎？還是不對？

I mean, listen, we want our guidance to be accurate and durable, and while we feel very positive about our outlook. It is just the very beginning of the hurricane season and Q3 is typically a quarter where we see sizeable catastrophe losses, so, it's just, and then with the change in the competitive environment, I just thought it was most prudent to maintain our guidance until we had better visibility into the rest of the year. So I hope you're right, Greg. I hope we're at the very high end and we can update guidance next quarter.

我的意思是，聽著，我們希望我們的指引是準確且具持久性的，而我們對前景確實非常正面。但現在才剛進入颶風季的初期，而第三季通常是我們會看到相當可觀巨災損失的一季，所以這就是原因之一；再加上競爭環境的變化，我認為在對今年剩餘時間有更清楚能見度之前，維持既有指引是最審慎的做法。所以我希望你是對的，Greg。我希望我們能落在非常高端，並在下季更新指引。

Alright, two more quick questions, so when you talk about the, competition, obviously it takes time for policies to roll off that people can't just leave mid policy and write a new policy with someone else, so I mean, when will we see the effects of what might be some competition.

好，還有兩個快問：你提到競爭，顯然保單需要時間到期，客戶不可能在保單期間中途就離開、改跟別家投保，所以我們什麼時候會看到可能來自競爭的影響？

Yes, so typically in a soft market, like, we want to retain our renewals and consumers generally are much more price sensitive when on new business than they are on renewal business, so I think what we'll see, what we're most likely to see is a decline in new business writings rather than any any impact on the renewal rate, but, time will tell, like it really depends on how aggressive, the competition is.

是的，通常在軟市中，我們希望保住續保客戶；而消費者在新業務上通常比在續保上更在意價格。所以我認為我們最可能看到的是新業務承保量下降，而不是續保率受到影響。不過，時間會給答案，這真的取決於競爭對手有多積極。

Okay, so you're expecting more of a moderation new business versus our current book, okay, I understand, and this is my last question, in the past you've told us what our maximum loss would be in the case of like a Sandy or some major storm, has that changed since, we, wrote the new, reinsurance policy, or is that similar to, I think you had said like maybe $5 million ish or somewhere around that number.

了解，所以你們預期的是新業務增速放緩，而不是我們現有保單組合（book）受到影響，好，我明白。最後一題：過去你們曾告訴我們，若遇到像Sandy或其他重大風暴，我們的最大損失會是多少；自從我們簽了新的再保險保單後，這有改變嗎？還是差不多？我記得你們說大概是500萬美元左右或接近那個數字。

Yes, so one of the, we had this, very successful placement this year, and we were able to retain our low first event retention across all perils, so our first event retention is $3.5 million for wildfire, $4.75 million for names dorm like as Sandy, and then winter storm and severe convective storm is $6 million. And so in the past, we've talked about, let's take if Storm like Sandy hit us today with our current footprint, it would cost us roughly $5 million, $4.7 million Pre-tax, $4 million after tax and about $0.27 per diluted share, so it is certainly just an earnings event for Kingstone, not a capital event, so to your question, Greg, nothing has changed. We maintained that same very conservative first event retention to protect our surplus.

是的，我們今年的再保安排非常成功，其中一點是我們得以在所有災因（perils）上維持較低的首宗事故自留額（first event retention）。因此，我們的首宗事故自留額：野火為350萬美元；像Sandy那樣的命名風暴（named storm）為475萬美元；而冬季風暴與強對流風暴（severe convective storm）為600萬美元。過去我們也談過：如果今天發生像Sandy那樣的風暴，以我們目前的承保版圖（footprint），大約會讓我們損失500萬美元，稅前約470萬美元、稅後約400萬美元，約合每股稀釋後0.27美元。因此對Kingstone而言，這確實只是獲利事件（earnings event），不是資本事件（capital event）。所以回答你的問題，Greg，沒有任何改變。我們維持同樣非常保守的首宗事故自留額，以保護我們的盈餘（surplus）。

Yeah, I get to think if you could only lose $0.27 in a major storm, that's pretty, What's he sleeping on, I imagine.

是的，我的意思是，如果重大風暴最多只會讓你們每股少0.27美元，那真的很……我想大家會想：這還有什麼好擔心的。

Absolutely.

完全同意。

Okay, thank you very much, keep up the good work.

好的，非常感謝，請繼續保持好表現。

Thanks, Greg.

謝謝你，Greg。

Thank you very much.

非常感謝。

(Operator Instructions) Gabriel McCluret, Private Investor.

(接線員指示) Gabriel McCluret，私人投資人。

Hi Gabe.

嗨，Gabe。

Hi, good morning and congrats on another record quarter.

嗨，早安，恭喜再創一個創紀錄的季度。

Thank you.

謝謝。

So, When you were talking about the policies and force growth, you threw a number out there, I just wanted to make sure I heard you right, because on the presser, it's said that there's a 9.9% growth, what, could you repeat that again, please?

所以，當你談到保單在有效期間（in force）的成長時，你提到一個數字；我只是想確認我有沒有聽對，因為新聞稿上寫的是成長9.9%。你可以再重複一次嗎？謝謝。

I don't recall talking about policy for the growth, I said, new business for the quarter was up 35%. Retention was up 2%. And our average premium was up 8%, but we are really delighted that our policy and for growth was up almost 10%, quarter over quarter, So you're right, what's in the press release is correct.

我不記得我有用保單來談成長；我說的是，本季新業務成長35%。續保率提升2%。平均保費上升8%。但我們也非常高興，因為我們的有效保單（policies in force）成長接近10%，季對季來看。所以你說得沒錯，新聞稿上的數字是正確的。

Okay. That's all for me, thanks.

好的。我這邊就這樣，謝謝。

Okay, our pleasure.

好的，我們很樂意。

(Operator Instructions)

(接線員指示)

Thank you, at this time I'll turn the floor back to Meryl for closing comments.

謝謝，現在我把時間交回給Meryl做結語。

Terrific, thank you so much for your interest in Kingstone and thanks for joining us today.

太好了，非常感謝各位對Kingstone的關注，也謝謝今天加入我們。

Have a wonderful day.

祝各位有美好的一天。

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

今天的電話會議到此結束，感謝各位參與，現在您可以掛斷電話線。