Kingstone Q2 2026 earnings: Record profit despite a higher underlying combined ratio

Kingstone Companies, Inc. (Nasdaq: KINS) reported Q2 2026 total revenue of $65.9 million, up about 25.9% from $52.3 million, while diluted EPS increased 34.6% to $1.05 from $0.78. Net premiums earned rose 30.8% to $60.5 million, and net income reached a company-record $15.5 million. The GAAP net combined ratio improved to 70.2%, although favorable reserve development and catastrophe estimate revisions helped the headline underwriting result.

Core financial results

For the quarter ended June 30, premium growth reflected an 18.7% increase in direct premiums written and the continuing effect of lower quota-share cessions. The net underwriting expense ratio declined 2.1 percentage points to 30.6%, more than offsetting a 0.8-point increase in the net loss ratio.

Profit measures also increased, with net income up 37.5% and adjusted EBITDA up 40.3%. However, the underlying combined ratio, which excludes catastrophe losses and prior-year reserve development, moved higher year over year.

Direct premiums written and adjusted EBITDA are non-GAAP measures. The underlying combined ratio excludes catastrophe losses and prior-year reserve development.

Premium growth and investment income

Direct premiums written increased 18.7%, led by continued strength in New York personal lines. Policies in force reached 84,570 at quarter-end, up 9.9% from 76,925 a year earlier.

Net premiums earned grew faster than direct premiums written because premiums retained following reduced quota-share cessions continued to earn into results. This increased the amount of premium recognized net of reinsurance during the quarter.

Net investment income rose 49.1% to $3.4 million. Management attributed the increase to a larger investment portfolio and higher yields.

Favorable reserve development improved the headline ratio, while underlying losses worsened

Kingstone’s 70.2% GAAP net combined ratio was supported by two favorable items. Prior-year reserve development reduced the loss ratio by 2.7 percentage points, compared with a 0.5-point benefit a year earlier. The catastrophe loss ratio was negative 0.8%, because favorable development on the first-quarter catastrophe estimate exceeded second-quarter catastrophe losses.

Excluding catastrophes and reserve development, the underlying loss ratio rose 4.4 points to 43.1%. The 2.1-point improvement in the underwriting expense ratio partially offset that deterioration, resulting in a 2.3-point increase in the underlying combined ratio to 73.7%.

The six-month figures provide important context. For the first half of 2026, the GAAP net combined ratio worsened to 90.2% from 82.3%, while net income declined 36.2% to $9.7 million. The six-month catastrophe loss ratio rose to 12.0% from 1.2%, reflecting the heavier first-quarter catastrophe burden. In contrast, the six-month underlying combined ratio improved 1.3 points to 80.7%.

Balance sheet and capital actions

Cash and cash equivalents increased to $16.9 million at June 30 from $12.2 million at December 31, 2025. Total investments rose to $334.1 million from $309.7 million, while debt declined to $3.8 million from $4.4 million. Stockholders’ equity increased to $129.2 million from $122.7 million.

Diluted book value per share reached $8.69, up 34.9% from $6.44 a year earlier. Excluding accumulated other comprehensive income, diluted book value per share increased 31.7% to $9.27. Annualized Q2 return on equity remained 50.8%.

Kingstone authorized a share repurchase program during the quarter. After quarter-end, it increased its quarterly dividend by 20% to $0.06 per share.

Reinsurance protection

Management said the completed catastrophe reinsurance placement increased total coverage to $500 million and added wildfire protection. Kingstone maintained low first-event retentions while reducing the risk-adjusted cost of its core catastrophe excess-of-loss coverage by more than 15%.

These changes are relevant because catastrophe losses drove the weaker first-half GAAP underwriting result, even though the second quarter benefited from revisions to earlier catastrophe estimates.

Full-year 2026 guidance

Kingstone reaffirmed the full-year guidance originally issued on March 5 and previously affirmed on May 7. The unchanged outlook continues to incorporate elevated winter storm activity during the first quarter and assumes a full-year catastrophe loss ratio of 7% to 10%.

The outlook assumes no prior-year reserve development, a 21% effective tax rate and 14.8 million weighted-average diluted shares. Kingstone did not provide a GAAP net-premiums-earned forecast because quota-share cession rates and premium earning patterns are among the variables affecting that measure.

Recent insider transactions

During the reported six-month period, insiders purchased 77,626 shares and sold 13,500, producing net purchases of 64,126 shares. Total insider holdings were reported at approximately 3.1 million shares.

The most recent reported purchases and sale involved two company directors. These records describe the transactions but do not establish the insiders’ motives.

Risks investors should monitor

• Catastrophe volatility: The first-half catastrophe loss ratio rose to 12.0%, demonstrating how severe weather can materially change Kingstone’s underwriting results even when an individual quarter benefits from favorable estimate revisions.
• Underlying loss pressure: The Q2 underlying loss ratio increased 4.4 points. If that trend persists, operating leverage from the lower expense ratio may not fully offset higher loss costs.
• Reinsurance and retained exposure: Reduced quota-share cessions helped net premiums earned grow, but greater premium retention can also increase exposure to net insurance losses. Reinsurance pricing, availability and counterparty performance remain important.
• Geographic concentration and expansion: Q2 growth was led by New York personal lines, while the company is also pursuing homeowners coverage in California on a non-admitted basis. Concentration in limited markets and uncertainty around geographic diversification could affect growth and loss volatility.

Summary

Kingstone delivered record quarterly net income as premium growth, expense leverage and higher investment income supported Q2 results. The headline combined ratio also improved, but favorable reserve development and catastrophe estimate revisions obscured a higher underlying loss ratio. The main follow-up points are whether underlying loss trends stabilize, catastrophe costs remain within the full-year range and premium growth continues without weakening underwriting profitability.