Kingstone Q3 2026 net income rises to $17.6M
KICO began writing California homeowners coverage, while Kingstone purchased $495 million of catastrophe reinsurance effective July 1.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Kingstone Companies, Inc. (KINS) reported third-quarter 2026 total revenues of $67.5 million, compared with $55.7 million a year earlier, and net income of $17.6 million versus $10.9 million. Net premiums earned were $62.4 million, up from $47.9 million. For the nine months ended September 30, 2026, net income was $27.2 million versus $26.0 million, and operating cash flow was $59.3 million versus $53.1 million.
For those nine months, loss and loss adjustment expenses were $91.3 million, compared with $66.3 million. Total investments were $337.1 million at September 30, 2026, versus $309.7 million at December 31, 2025. KICO began writing homeowners coverage in California on a non-admitted basis in June 2026. Effective July 1, 2026, Kingstone purchased $495 million of catastrophe reinsurance in excess of $5 million, compared with $435 million under the expiring treaty. The share repurchase program had acquired 19,446 shares for $291,833 as of September 30, 2026.
3 points · 0 major0 major · 1 point
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter revenue was $67.5 million, versus $55.7 million a year earlier.
- Moderate pointThird-quarter net income was $17.6 million, versus $10.9 million a year earlier.
- Moderate pointNine-month operating cash flow was $59.3 million, versus $53.1 million.
Negative
- Moderate pointNine-month loss and loss adjustment expenses were $91.3 million, versus $66.3 million.
Filing Explained
KICO retains more non-California personal-lines exposure under these terms, with quota-share coverage absent January 1 through June 30, 2027 unless renewed.
Kingstone's insurance subsidiary KICO cedes
Separately, on
Key Figures
Total revenues: $67.5 million
Net income: $17.6 million
Net premiums earned: $62.4 million
+5 more
8 metrics
Total revenues
$67.5 million
Three months ended September 30, 2026; $55.7 million in 2025.
Net income
$17.6 million
Three months ended September 30, 2026; $10.9 million in 2025.
Net premiums earned
$62.4 million
Three months ended September 30, 2026; $47.9 million in 2025.
Loss and loss adjustment expenses
$91.3 million
Nine months ended September 30, 2026; $66.3 million in 2025.
Net cash provided by operating activities
$59.3 million
Nine months ended September 30, 2026; $53.1 million in 2025.
Total investments
$337.1 million
At September 30, 2026; $309.7 million at December 31, 2025.
Catastrophe reinsurance
$495 million
Effective July 1, 2026; in excess of $5 million; compared with $435 million under the expiring treaty.
Shares repurchased
19,446 shares
As of September 30, 2026; cost $291,833, inclusive of commissions.
Key Terms
quota share reinsurance treaty, catastrophe bond, ceding commission, incurred but not reported (IBNR) reserves, +1 more
5 terms
quota share reinsurance treaty financial
"a new 5% quota share reinsurance treaty"
A quota share reinsurance treaty is an agreement in which an insurance company sends a fixed percentage of the premiums it collects and the claims it pays to a reinsurer, so both parties share the same slice of each policy’s income and losses. For investors, it matters because this predictable risk-sharing reduces an insurer’s exposure to big losses, smooths earnings, and frees up capital for growth—similar to roommates agreeing to split rent and utilities so no one person faces the full bill.
catastrophe bond financial
"the $125,000,000 catastrophe bond"
A catastrophe bond is a type of bond sold by insurers or reinsurers that lets investors take on the financial risk of a specified natural disaster in exchange for higher interest payments; if the disaster happens, investors can lose part or all of their initial investment to cover insurer losses. It matters to investors because these bonds can pay attractive returns and behave differently from stocks and bonds, offering portfolio diversification—but they carry the real chance of a sudden, large loss, like collecting premium for an insurance policy that pays out if a house in a risky neighborhood burns down.
ceding commission financial
"fixed provisional ceding commissions were earned"
A ceding commission is a fee that a reinsurer pays back to the original insurer when the insurer transfers (cedes) a block of insurance risk to the reinsurer. Think of it as a reimbursement for the costs of selling and administering the policies being transferred; for investors, higher ceding commissions can boost an insurer’s short-term profitability but may affect the economics of risk transfer and long-term margins.
incurred but not reported (IBNR) reserves financial
"incurred but not reported (IBNR) reserves"
non-admitted basis regulatory
"on a non-admitted basis"
An insurance policy issued on a non-admitted basis means the insurer is not licensed or regulated in the state where the policyholder is located, so the coverage is arranged through surplus lines or out-of-state carriers that fill gaps regular insurers won’t. For investors, this matters because such policies can offer access to specialty or hard-to-find coverage but carry different regulatory protections, pricing rules, and limited access to state guaranty funds—similar to buying from an out-of-state vendor who’s not subject to the same local consumer safeguards.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were KINS' third-quarter 2026 revenue and net income?
Kingstone's total revenues were $67.5 million and net income was $17.6 million for the three months ended September 30, 2026, compared with $55.7 million and $10.9 million, respectively, for 2025.
How much catastrophe reinsurance did KINS purchase for the treaty year beginning July 2026?
Kingstone purchased $495 million of catastrophe reinsurance in excess of $5 million effective July 1, 2026, compared with $435 million under the expiring treaty.
AI-generated analysis. How Rhea-AI works. Not financial advice.
See more from StockTitan in Google Search and AI answers.
Adds StockTitan as a preferred source · opens Google
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _________to _________
Commission File Number 0-1665
| (Exact name of registrant as specified in its charter) | ||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||
(Address of principal executive offices)
(845 ) 802-7900
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | x | |||||||||
| Non-accelerated filer | o | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of November 3, 2026, there were 14,481,647 shares of the registrant’s common stock outstanding.
Table of Contents
KINGSTONE COMPANIES, INC.
INDEX
| PAGE | ||||||||||||||
PART I — FINANCIAL INFORMATION | 4 | |||||||||||||
Item 1 — | Financial Statements | 4 | ||||||||||||
Condensed Consolidated Balance Sheets at September 30, 2026 (Unaudited) and December 31, 2025 | 5 | |||||||||||||
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) for the three months and nine months ended September 30, 2026 and 2025 | 6 | |||||||||||||
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three months and nine months ended September 30, 2026 and 2025 | 9 | |||||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2026 and 2025 | 11 | |||||||||||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | 12 | |||||||||||||
Item 2 — | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 41 | ||||||||||||
Item 3 — | Quantitative and Qualitative Disclosures About Market Risk | 63 | ||||||||||||
Item 4 — | Controls and Procedures | 63 | ||||||||||||
PART II — OTHER INFORMATION | 65 | |||||||||||||
Item 1 — | Legal Proceedings | 65 | ||||||||||||
Item 1A — | Risk Factors | 65 | ||||||||||||
Item 2 — | Unregistered Sales of Equity Securities and Use of Proceeds | 65 | ||||||||||||
Item 3 — | Defaults Upon Senior Securities | 65 | ||||||||||||
Item 4 — | Mine Safety Disclosures | 65 | ||||||||||||
Item 5 — | Other Information | 65 | ||||||||||||
Item 6 — | Exhibits | 66 | ||||||||||||
Signatures | 67 | |||||||||||||
2
Table of Contents
Forward-Looking Statements
This Quarterly Report contains forward‑looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The events described in forward‑looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated results or other consequences of our plans or strategies, projected or anticipated results from acquisitions to be made by us, or projections involving anticipated revenues, earnings, costs or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions are intended to identify forward‑looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Factors which may cause actual results and outcomes to differ materially from those contained in the forward-looking statements include, but are not limited to, the risks and uncertainties discussed in Part I, Item 1A (“Risk Factors”) of our Annual Report on Form 10-K for the year ended December 31, 2025, Part I, Item 2 of this Quarterly Report and Part II, Item 1A of this Quarterly Report.
Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward‑looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward‑looking statements. We undertake no obligation to publicly update or revise any forward‑looking statements, whether from new information, future events or otherwise except as required by law.
3
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
4
Table of Contents
| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES | |||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||
| September 30, 2026 | December 31, 2025 | ||||||||||
(unaudited) | |||||||||||
| Assets | |||||||||||
Short-term investments, at fair value (cost of $ | $ | $ | |||||||||
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $ | |||||||||||
Fixed-maturity securities, available-for-sale, at fair value, net of allowance for credit loss of $ | |||||||||||
Equity securities, at fair value (cost of $ | |||||||||||
| Other investments | |||||||||||
| Total investments | |||||||||||
| Cash and cash equivalents | |||||||||||
Premiums receivable, net of allowance for credit losses of $ | |||||||||||
| Reinsurance receivables, net | |||||||||||
| Prepaid reinsurance | |||||||||||
| Deferred policy acquisition costs | |||||||||||
| Intangible assets | |||||||||||
| Property and equipment, net | |||||||||||
| Deferred income taxes, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Loss and loss adjustment expense reserves | $ | $ | |||||||||
| Unearned premiums | |||||||||||
| Advance premiums | |||||||||||
| Reinsurance balances payable | |||||||||||
| Deferred ceding commission revenue | |||||||||||
| Accounts payable, accrued expenses and other liabilities | |||||||||||
| Income taxes payable | |||||||||||
Debt, net (current $ | |||||||||||
| Total liabilities | |||||||||||
| Commitments and Contingencies (Note 11) | |||||||||||
| Stockholders' Equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Capital in excess of par | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Retained earnings | |||||||||||
Treasury stock, at cost, | ( | ( | |||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
5
Table of Contents
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Net premiums earned | $ | $ | $ | $ | |||||||||||||||||||
| Ceding commission revenue | |||||||||||||||||||||||
| Net investment income | |||||||||||||||||||||||
| Net (losses) gains on investments | ( | ( | |||||||||||||||||||||
| Realized gain on sale of real estate | |||||||||||||||||||||||
| Other income | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Loss and loss adjustment expenses | |||||||||||||||||||||||
| Commission expense | |||||||||||||||||||||||
| Other underwriting expenses | |||||||||||||||||||||||
| Other operating expenses | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Total expenses | |||||||||||||||||||||||
| Income from operations before taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive (loss) income, net of tax | |||||||||||||||||||||||
| Gross (increase) decrease in net unrealized losses on available-for-sale-securities | ( | ( | |||||||||||||||||||||
| Reclassification adjustment for net realized losses included in net income | |||||||||||||||||||||||
| Net (increase) decrease in net unrealized losses | ( | ( | |||||||||||||||||||||
| Income tax benefit (expense) related to items of other comprehensive (loss) income | ( | ( | |||||||||||||||||||||
| Other comprehensive (loss) income, net of tax | ( | ( | |||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Dividends declared and paid per common share | $ | $ | $ | $ | |||||||||||||||||||
| See accompanying notes to condensed consolidated financial statements. | ||
6
Table of Contents
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
| Condensed Consolidated Statements of Stockholders' Equity (Unaudited) | ||
| Three months ended September 30, 2026 | ||
| Preferred Stock | Common Stock | Capital in Excess of Par | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock awards | - | - | ( | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares deducted from restricted stock awards for payment of withholding taxes | - | - | ( | ( | ( | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | ( | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition of treasury stock | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends | - | - | - | - | - | - | ( | - | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Increase in net unrealized losses on available-for-sale securities, net of tax | - | - | - | - | - | ( | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| See accompanying notes to condensed consolidated financial statements. | ||
7
Table of Contents
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
| Condensed Consolidated Statements of Stockholders' Equity (Unaudited) | ||
| Three months ended September 30, 2025 | ||
| Preferred Stock | Common Stock | Capital in Excess of Par | Accumulated Other Comprehensive Loss | Accumulated (Deficit)/ Retained Earnings | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock awards | - | - | ( | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Offering costs on previously issued common stock | - | - | - | - | ( | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends | - | - | - | - | - | - | ( | - | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Decrease in net unrealized losses on available-for-sale securities, net of tax | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| See accompanying notes to condensed consolidated financial statements. | ||
8
Table of Contents
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
| Condensed Consolidated Statements of Stockholders' Equity (Unaudited) | ||
| Nine months ended September 30, 2026 | ||
| Preferred Stock | Common Stock | Capital in Excess of Par | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock awards | - | - | ( | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares deducted from restricted stock awards for payment of withholding taxes | - | - | ( | ( | ( | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition of treasury stock | - | - | - | - | - | - | - | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends | - | - | - | - | - | - | ( | - | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Increase in net unrealized losses on available-for-sale securities, net of tax | - | - | - | - | - | ( | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| See accompanying notes to condensed consolidated financial statements. | ||
9
Table of Contents
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
| Condensed Consolidated Statements of Stockholders' Equity (Unaudited) | ||
| Nine months ended September 30, 2025 | ||
| Preferred Stock | Common Stock | Capital in Excess of Par | Accumulated Other Comprehensive Loss | Accumulated (Deficit) Retained Earnings | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock awards | - | - | ( | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares deducted from restricted stock awards for payment of withholding taxes | - | - | ( | ( | ( | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of warrants | - | - | ( | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares deducted from restricted stock awards for payment of withholding taxes | - | - | ( | ( | ( | - | - | - | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, net of offering costs of $ | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends | - | - | - | - | - | - | ( | - | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Decrease in net unrealized losses on available-for-sale securities, net of tax | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| See accompanying notes to condensed consolidated financial statements. | ||
10
Table of Contents
| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES | ||||||||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||||||||
| Nine months ended September 30, | 2026 | 2025 | ||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | ||||||||||||||
| Net realized losses on investments | ||||||||||||||
| Net unrealized losses (gains) on equity investments | ( | |||||||||||||
| Net unrealized losses (gains) on other investments | ( | |||||||||||||
| Gain on sale of real estate | ( | |||||||||||||
| Depreciation and amortization | ||||||||||||||
| Credit losses | ||||||||||||||
| Accretion of bond discount, net | ( | ( | ||||||||||||
| Amortization of discount and issuance costs on debt | ||||||||||||||
| Loss on extinguishment of debt | ||||||||||||||
| Stock-based compensation | ||||||||||||||
| Deferred income tax (benefit) expense | ( | |||||||||||||
| Decrease (increase) in operating assets: | ||||||||||||||
| Premiums receivable, net | ||||||||||||||
| Reinsurance receivables, net | ||||||||||||||
| Prepaid reinsurance | ( | |||||||||||||
| Deferred policy acquisition costs | ( | |||||||||||||
| Other assets | ( | ( | ||||||||||||
| Increase (decrease) in operating liabilities: | ||||||||||||||
| Loss and loss adjustment expense reserves | ||||||||||||||
| Unearned premiums | ||||||||||||||
| Advance premiums | ||||||||||||||
| Reinsurance balances payable | ( | ( | ||||||||||||
| Deferred ceding commission revenue | ( | ( | ||||||||||||
| Accounts payable, accrued expenses and other liabilities | ||||||||||||||
| Income Taxes payable | ||||||||||||||
| Net cash flows provided by operating activities | ||||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Redemption - fixed-maturity securities held-to-maturity | ||||||||||||||
| Purchase - short-term investments | ( | |||||||||||||
| Purchase - fixed-maturity securities available-for-sale | ( | ( | ||||||||||||
| Sale and maturity - fixed-maturity securities available-for-sale | ||||||||||||||
| Purchase - equity securities | ( | ( | ||||||||||||
| Proceeds from sale of real estate | ||||||||||||||
| Acquisition of property and equipment | ( | ( | ||||||||||||
| Net cash flows used in investing activities | ( | ( | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Principal payments on equipment financing | ( | ( | ||||||||||||
| Principal payments on 2024 Notes | ( | |||||||||||||
| Proceeds from exercise of stock options | ||||||||||||||
| Withholding taxes paid on net exercise of stock options | ( | |||||||||||||
| Withholding taxes paid on vested restricted stock awards | ( | ( | ||||||||||||
| Net proceeds from issuance of common stock | ||||||||||||||
| Acquisition of treasury stock | ( | |||||||||||||
| Dividends paid | ( | ( | ||||||||||||
| Net cash flows (used in) provided by financing activities | ( | |||||||||||||
| Increase (decrease) in cash and cash equivalents | $ | $ | ( | |||||||||||
| Cash and cash equivalents, beginning of period | ||||||||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||||
| Cash paid for income taxes-federal | $ | $ | ||||||||||||
| Cash paid for income taxes-state | $ | $ | ||||||||||||
| Cash paid for interest | $ | $ | ||||||||||||
| Supplemental schedule of non-cash investing and financing activities: | ||||||||||||||
| Lease liability in exchange for right-of-use asset | $ | $ | ||||||||||||
| See accompanying notes to condensed consolidated financial statements. | ||
11
Table of Contents
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Nature of Business and Basis of Presentation
Kingstone Companies, Inc. (referred to herein as "Kingstone" or the “Company” or, on a standalone basis for the parent company only, the “Holding Company”), operates through its wholly-owned subsidiaries, Kingstone Insurance Company ("KICO") and Kingstone America Insurance Company ("KAIC"). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and livery physical damage insurance in New York, and in 2025 was the 11th largest writer of homeowners insurance in New York. Beginning in June 2026, KICO began writing homeowners coverage in California on a non-admitted basis. 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, 2026 and 2025, 98.4 % and 98.0 %, respectively, of KICO’s direct premiums written came from the New York policies. For the nine months ended September 30, 2026 and 2025, 98.5 % and 98.1 %, respectively, of KICO’s direct premiums written came from the New York policies. The Company's wholly-owned subsidiary, Cosi Agency, Inc. (“Cosi”), is a multi-state licensed general agency. In April 2026, Cosi became licensed in California, and the Company expects to expand its underwriting operations in California during the remainder of 2026 through the policies Cosi writes.
Note 2 – Accounting Policies
Basis of Presentation
See Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for further information.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Kingstone and its wholly-owned subsidiaries: (1) KICO and its wholly-owned subsidiaries, CMIC Properties, Inc. (“Properties”) and 15 Joys Lane, LLC (“15 Joys Lane”), which together, until March 2025, owned the land and building from which KICO operated (see Note 14 - Sale of Real Estate), (2) KAIC, an insurance carrier licensed by the state of Connecticut on May 1, 2026, which started writing business in September 2026, and (3) Cosi. All inter-company account balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While management believes the amounts included in the condensed consolidated financial statements reflect management's best estimates and assumptions, actual results may differ from these estimates.
Accounting Changes
In December 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. ASU 2023-09 is effective for public companies with annual periods beginning after December 15, 2024. The Company prospectively adopted ASU 2023-09 effective
12
Table of Contents
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), as amended by ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2025-01"). ASU 2025-01 clarifies the effective date for ASU 2024-03. ASU 2024-03 requires companies to disclose additional information and disaggregate expenses in the notes to the financial statements. ASU 2024-03 does not change the expense captions currently presented on the income statement; rather it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. ASU 2024-03 can be applied on a prospective basis; however, retrospective application is permitted. Early adoption is permitted. The Company is currently evaluating the effect the updated guidance will have on its financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) ("ASU 2025-06"). ASU 2025-06 updates the accounting guidance for internal-use software by eliminating references to software development project stages, thereby requiring companies to start capitalizing software costs when (i) management has authorized and committed to funding the project and (ii) it is probable the project will be completed and the software will be used as intended. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, with early adoption permitted. Amendments can be applied either (i) prospectively, (ii) through a modified transition approach based on the existing projects status and whether software costs were capitalized before the date of adoption, or (iii) retrospectively. The Company is currently evaluating the impact of ASU 2025-06 on its financial condition and results of operations.
13
Table of Contents
Note 3 - Investments
Fixed-Maturity Securities
The amortized cost, estimated fair value, allowance for credit losses and gross unrealized gains and losses on the Company’s total available-for-sale fixed-maturity securities including short-term investments, as of September 30, 2026 and December 31, 2025 are summarized as follows:
| September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| Cost or Amortized Cost | Allowance for Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Net Unrealized Losses | |||||||||||||||||||||||||||||||||||||||
| Category | Less than 12 Months | More than 12 Months | ||||||||||||||||||||||||||||||||||||||||||
| Fixed-Maturity Securities: | ||||||||||||||||||||||||||||||||||||||||||||
| Available-for-Sale | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | $ | $ | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||
Political subdivisions of States, Territories and Possessions (1) | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
Corporate and other bonds industrial and miscellaneous (1) | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Residential mortgage and other asset backed securities (1) (2) | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Total fixed-maturity securities, available-for-sale | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Short-term investments | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Total fixed-maturity securities | $ | $ | ( | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||
14
Table of Contents
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Cost or Amortized Cost | Allowance for Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Net Unrealized Losses | |||||||||||||||||||||||||||||||||||||||
| Category | Less than 12 Months | More than 12 Months | ||||||||||||||||||||||||||||||||||||||||||
| Fixed-Maturity Securities: | ||||||||||||||||||||||||||||||||||||||||||||
| Available-for-Sale | ||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies (1) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Political subdivisions of States, Territories and Possessions (1) | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Corporate and other bonds industrial and miscellaneous (1) | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Residential mortgage and other asset backed securities (1) (2) | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Total fixed-maturity securities, available-for-sale | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||
(1)KICO places certain fixed-maturity securities in a designated custodian account to fulfill the required collateral for a sale-leaseback transaction (see Note 7 - Debt - "Equipment Financing"). As of September 30, 2026 and December 31, 2025, the amount of required collateral was approximately $2,347,000 and $3,616,000 , respectively, and the estimated fair value of the eligible collateral was approximately $2,347,000 and $3,616,000 , 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, 2026 and December 31, 2025, the estimated fair value of the eligible investments was approximately $8,309,000 and $9,598,000 , respectively. KICO will retain all rights regarding all securities if pledged as collateral. As of September 30, 2026 and December 31, 2025, there was no outstanding balance on the FHLBNY credit line.
A summary of the amortized cost and estimated fair value of the Company’s investments in available-for-sale fixed-maturity securities, including short-term investments by contractual maturity as of September 30, 2026 and December 31, 2025 is shown below:
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Remaining Time to Maturity | Cost or Amortized Cost | Estimated Fair Value | Cost or Amortized Cost | Estimated Fair Value | ||||||||||||||||||||||
| Less than one year | $ | $ | $ | $ | ||||||||||||||||||||||
| One to five years | ||||||||||||||||||||||||||
| Five to ten years | ||||||||||||||||||||||||||
| More than 10 years | ||||||||||||||||||||||||||
| Residential mortgage and other asset backed securities | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
15
Table of Contents
The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.
Equity Securities
The cost and estimated fair value of, and gross unrealized gains and losses on, investments in equity securities as of September 30, 2026 and December 31, 2025 are as follows:
| September 30, 2026 | ||||||||||||||||||||||||||
| Category | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||||||
| Equity Securities: | ||||||||||||||||||||||||||
| Preferred stocks | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Fixed income exchange traded funds | ( | |||||||||||||||||||||||||
| FHLBNY common stock | ||||||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | |||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Category | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||||||
| Equity Securities: | ||||||||||||||||||||||||||
| Preferred stocks | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Fixed income exchange traded funds | ( | |||||||||||||||||||||||||
| FHLBNY common stock | ||||||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | |||||||||||||||||||||
Other Investments
The cost and estimated fair value of, and gross gains on, the Company’s other investments as of September 30, 2026 and December 31, 2025 are as follows:
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| Category | Cost | Gross Unrealized Gains | Estimated Fair Value | Cost | Gross Unrealized Gains | Estimated Fair Value | ||||||||||||||||||||||||||||||||
| Other Investments: | ||||||||||||||||||||||||||||||||||||||
| Hedge fund | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
16
Table of Contents
Held-to-Maturity Securities
The cost or amortized cost and estimated fair value of, and unrealized gross gains and losses on, investments in held-to-maturity fixed-maturity securities as of September 30, 2026 and December 31, 2025 are summarized as follows:
| September 30, 2026 | ||||||||||||||||||||||||||||||||
| Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||||||||
| Category | Less than 12 Months | More than 12 Months | ||||||||||||||||||||||||||||||
| Held-to-Maturity Securities: | ||||||||||||||||||||||||||||||||
U.S. Treasury securities1 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||
| Exchange traded debt | ( | |||||||||||||||||||||||||||||||
| Corporate and other bonds industrial and miscellaneous | ( | |||||||||||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||
1Held-to-maturity U.S. Treasury securities are all held in trust pursuant to various states’ minimum funds requirements.
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Cost or Amortized Cost | Gross Unrealized Gains | Estimated Fair Value | ||||||||||||||||||||||||||||||
Gross Unrealized Losses | ||||||||||||||||||||||||||||||||
| Category | Less than 12 Months | More than 12 Months | ||||||||||||||||||||||||||||||
| Held-to-Maturity Securities: | ||||||||||||||||||||||||||||||||
U.S. Treasury securities1 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||
| Exchange traded debt | ( | |||||||||||||||||||||||||||||||
| Corporate and other bonds industrial and miscellaneous | ( | |||||||||||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||
1All held-to-maturity U.S. Treasury securities are held in trust pursuant to various states’ minimum funds requirements.
A summary of the amortized cost and estimated fair value of the Company’s investments in held-to-maturity securities by contractual maturity as of September 30, 2026 and December 31, 2025 is shown below:
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Remaining Time to Maturity | Cost or Amortized Cost | Estimated Fair Value | Cost or Amortized Cost | Estimated Fair Value | ||||||||||||||||||||||
| Less than one year | $ | $ | $ | $ | ||||||||||||||||||||||
| One to five years | ||||||||||||||||||||||||||
| Five to ten years | ||||||||||||||||||||||||||
| More than 10 years | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.
17
Table of Contents
Major categories of the Company’s net investment income are summarized as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Income: | |||||||||||||||||||||||
| Fixed-maturity securities | $ | $ | $ | $ | |||||||||||||||||||
| Equity securities | |||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Investment expenses | |||||||||||||||||||||||
| Net investment income | $ | $ | $ | $ | |||||||||||||||||||
The proceeds and gross realized gains (losses) on the sale of fixed-maturity securities available-for-sale are as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2026 | ||||||||||||||||||||||
| Proceeds from sale | $ | $ | |||||||||||||||||||||
| Gross realized gains | |||||||||||||||||||||||
| Gross realized losses | ( | ||||||||||||||||||||||
There were no
There were no
18
Table of Contents
The Company’s net gains (losses) on investments are summarized as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Realized Gains (Losses) | |||||||||||||||||||||||
| Fixed-maturity securities: | |||||||||||||||||||||||
| Gross realized gains | $ | $ | $ | $ | |||||||||||||||||||
| Gross realized losses | ( | ( | ( | ( | |||||||||||||||||||
| Net realized losses | ( | ( | ( | ( | |||||||||||||||||||
| Unrealized Gains (Losses) | |||||||||||||||||||||||
| Equity Securities: | |||||||||||||||||||||||
| Gross gains | |||||||||||||||||||||||
| Gross losses | ( | ( | |||||||||||||||||||||
| ( | ( | ||||||||||||||||||||||
| Other Investments: | |||||||||||||||||||||||
| Gross gains | |||||||||||||||||||||||
| Gross losses | ( | ( | |||||||||||||||||||||
| ( | ( | ||||||||||||||||||||||
| Allowance for credit losses: | |||||||||||||||||||||||
| Fixed-maturity securities | ( | ( | |||||||||||||||||||||
| Net unrealized gains (losses) | ( | ( | |||||||||||||||||||||
| Net gains (losses) on investments | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Allowance for Credit Loss
The Company reviews available-for-sale fixed-maturity securities for decreases in fair value to see if the decrease is credit related. A credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis as the result of a credit event of the issuer such as a bankruptcy or missed interest payments, a decline in the issuer's credit rating or an expected future default. The allowance for credit losses related to available-for-sale fixed-maturity securities is the difference between the present value of cash flows expected to be collected and the amortized cost basis, limited by the amount that the fair value is less than the amortized cost basis. The Company considers all available evidence when determining whether an investment requires a credit loss write-down or allowance to be recorded, which is recognized in net income through an allowance for credit losses. Any remaining decline in fair value represents the noncredit portion of the impairment, which is recognized in other comprehensive (loss) income, net of tax. The Company intends to hold available-for-sale securities to maturity but if it is more likely than not that it will be required to sell the security before recovery of the unrealized loss, the Company will write down the security to fair value.
At September 30, 2026 and December 31, 2025, there were 384 and 125 fixed-maturity securities, respectively, that accounted for the gross unrealized losses. The Company determined that, except for the credit loss disclosed above, none of the other unrealized losses were deemed to be credit losses for its portfolio of investments for the nine months ended September 30, 2026 and 2025. Significant factors influencing the Company’s determination that unrealized losses were temporary included credit quality considerations, the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and interest rate environment factors, and management’s intent and ability to hold the investment to maturity or for a period of time sufficient to allow for an anticipated recovery of estimated fair value to the Company’s cost basis. Therefore, the Company concluded that these securities had not incurred a credit loss and should not have an allowance for credit loss as of September 30, 2026.
19
Table of Contents
The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at September 30, 2026 as follows:
| September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
| Category | Estimated Fair Value | Gross Unrealized Losses | No. of Positions Held | Estimated Fair Value | Gross Unrealized Losses | No. of Positions Held | Estimated Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||||||||||||||
| Available-for-Sale Securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
| Political subdivisions of States, Territories and Possessions | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Corporate and other bonds industrial and miscellaneous | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage and other asset backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Total fixed-maturity securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||
20
Table of Contents
The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at December 31, 2025 as follows:
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
| Category | Estimated Fair Value | Unrealized Losses | No. of Positions Held | Estimated Fair Value | Unrealized Losses | No. of Positions Held | Estimated Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||||||||||||
| Available-for-Sale Securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Political subdivisions of States, Territories and Possessions | $ | $ | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
| Corporate and other bonds industrial and miscellaneous | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage and other asset backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Total fixed-maturity securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||
Note 4 - Fair Value Measurements
The following table presents information about the Company’s investments that are measured at fair value on a recurring basis at September 30, 2026 and December 31, 2025 indicating the level of the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| September 30, 2026 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Fixed-maturity securities available-for-sale | |||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | $ | $ | $ | |||||||||||||||||||
| Political subdivisions of States, Territories and Possessions | |||||||||||||||||||||||
| Corporate and other bonds industrial and miscellaneous | |||||||||||||||||||||||
| Residential mortgage and other asset backed securities | |||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||
| Total fixed maturities | |||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||
| Total investments, at fair value | $ | $ | $ | $ | |||||||||||||||||||
21
Table of Contents
| December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Fixed-maturity securities available-for-sale | |||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | $ | $ | $ | |||||||||||||||||||
| Political subdivisions of States, Territories and Possessions | |||||||||||||||||||||||
| Corporate and other bonds industrial and miscellaneous | |||||||||||||||||||||||
| Residential mortgage and other asset backed securities | |||||||||||||||||||||||
| Total fixed maturities | |||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||
| Total investments, at fair value | $ | $ | $ | $ | |||||||||||||||||||
The following table sets forth the Company’s investment in a hedge fund measured at Net Asset Value (“NAV”) per share as of September 30, 2026 and December 31, 2025. The Company measures this investment at fair value on a recurring basis. Fair value using NAV per share is as follows as of the dates indicated:
| Category | September 30, 2026 | December 31, 2025 | ||||||||||||
| Other Investments | ||||||||||||||
| Hedge fund | $ | $ | ||||||||||||
The hedge fund investment is generally redeemable with at least 45 days prior written notice. There were no unfunded commitments as of September 30, 2026 and December 31, 2025 The hedge fund investment is accounted for as a limited partnership by the Company. Income is earned based upon the Company’s allocated share of the partnership's changes in unrealized gains and losses to its partners, which are recorded in the condensed consolidated statements of income and comprehensive income within net (losses) gains on investments.
Note 5 - Fair Value of Financial Instruments
The estimated fair values of the Company’s held-to-maturity financial securities and cash and cash equivalents, including their fair value level as of September 30, 2026 and December 31, 2025 are as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| Fixed-maturity securities, held-to maturity, Level 1 | $ | $ | $ | $ | |||||||||||||||||||
| Fixed-maturity securities, held-to maturity, Level 2 | $ | $ | $ | $ | |||||||||||||||||||
| Cash and cash equivalents, Level 1 | $ | $ | $ | $ | |||||||||||||||||||
22
Table of Contents
Note 6 – Property and Casualty Insurance Activity
Premiums Earned
Premiums written, ceded and earned are as follows:
Direct | Assumed | Ceded | Net | ||||||||||||||||||||
| Nine months ended September 30, 2026 | |||||||||||||||||||||||
| Premiums written | $ | $ | $ | ( | $ | ||||||||||||||||||
| Change in unearned premiums | ( | ( | ( | ||||||||||||||||||||
| Premiums earned | $ | $ | $ | ( | $ | ||||||||||||||||||
| Nine months ended September 30, 2025 | |||||||||||||||||||||||
| Premiums written | $ | $ | $ | ( | $ | ||||||||||||||||||
| Change in unearned premiums | ( | ( | ( | ||||||||||||||||||||
| Premiums earned | $ | $ | $ | ( | $ | ||||||||||||||||||
| Three months ended September 30, 2026 | |||||||||||||||||||||||
| Premiums written | $ | $ | $ | ( | $ | ||||||||||||||||||
| Change in unearned premiums | ( | ||||||||||||||||||||||
| Premiums earned | $ | $ | $ | ( | $ | ||||||||||||||||||
| Three months ended September 30, 2025 | |||||||||||||||||||||||
| Premiums written | $ | $ | $ | ( | $ | ||||||||||||||||||
| Change in unearned premiums | ( | ||||||||||||||||||||||
| Premiums earned | $ | $ | $ | ( | $ | ||||||||||||||||||
23
Table of Contents
Loss and Loss Adjustment Expense (LAE) Reserves
The following table provides a reconciliation of the beginning and ending balances for unpaid loss and LAE reserves:
| Nine months ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Balance at beginning of period | $ | $ | |||||||||
| Less reinsurance recoverables | ( | ( | |||||||||
| Net balance, beginning of period | |||||||||||
| Incurred related to: | |||||||||||
| Current year | |||||||||||
| Prior years | ( | ( | |||||||||
| Total incurred | |||||||||||
| Paid related to: | |||||||||||
| Current year | |||||||||||
| Prior years | |||||||||||
| Total paid | |||||||||||
| Net balance at end of period | |||||||||||
| Add reinsurance recoverables | |||||||||||
| Balance at end of period | $ | $ | |||||||||
Incurred losses and LAE are presented in the accompanying condensed consolidated statements of income and comprehensive income net of reinsurance recoveries under reinsurance contracts of $21,703,501 and $16,313,217 for the nine months ended September 30, 2026 and 2025, respectively.
Prior year incurred loss and LAE development is based upon estimates by line of business and accident year. During the nine months ended September 30, 2026, favorable development was driven primarily by better-than-expected loss emergence on property lines for accident year 2025 and liability lines for accident years 2022 through 2025. During the nine months ended September 30, 2025, the favorable development was attributable to better-than-expected loss emergence on property lines for accident years 2022 through 2024.
Loss and LAE Reserves
The reserving process for loss and LAE reserves provides for the Company’s best estimate at a particular point in time of the ultimate unpaid cost of all losses and LAE incurred, including settlement and administration of losses, and is based on facts and circumstances then known including losses that have occurred but that have not yet been reported. The process relies on standard actuarial reserving methodologies, judgments relative to estimates of ultimate claim severity and frequency, the length of time before losses will develop to their ultimate level (‘tail’ factors), and the likelihood of changes in the law or other external factors that are beyond the Company’s control. Several actuarial reserving methodologies are used to estimate required loss reserves. The process produces carried reserves set by management based upon the actuaries’ best estimate and is the cumulative combination of the best estimates made by line of business, accident year, and loss and LAE. The amount of loss and LAE reserves for individual reported claims (the “case reserve”) is determined by the claims department and changes over time as new information is gathered. Such information is critical to the review of appropriate incurred but not reported ("IBNR") reserves and includes a review of coverage applicability, comparative liability on the part of the insured, injury severity, property damage, replacement cost estimates, and any other information considered pertinent to estimating the exposure presented by the claim. The amounts of loss and LAE reserves for unreported claims and development on known claims (IBNR reserves) are determined using historical information aggregated by line of business as adjusted to current conditions. Since this process produces loss reserves set by management based upon the actuaries’ best estimate, there is no explicit or implicit provision for uncertainty in the carried loss reserves.
Due to the inherent uncertainty associated with the reserving process, the ultimate liability may differ, perhaps substantially, from the original estimate. Such estimates are regularly reviewed and updated and any resulting adjustments are included in the current period’s results. Reserves are closely monitored and are recomputed periodically using the most recent information on reported claims and a variety of statistical techniques. On at least a quarterly basis, the Company reviews by line of business existing reserves, new claims,
24
Table of Contents
changes to existing case reserves, and paid losses with respect to the current and prior periods. Several methods are used, varying by line of business and accident year, in order to select the estimated period-end loss reserves. These methods include the following:
Paid Loss Development – historical patterns of paid loss development are used to project future paid loss emergence in order to estimate required reserves.
Incurred Loss Development – historical patterns of incurred loss development, reflecting both paid losses and changes in case reserves, are used to project future incurred loss emergence in order to estimate required reserves.
Paid Bornhuetter-Ferguson ("BF") – an estimated loss ratio for a particular accident year is determined, and is weighted against the portion of the accident year claims that have been paid, based on historical paid loss development patterns. The estimate of required reserves assumes that the remaining unpaid portion of a particular accident year will pay out at a rate consistent with the estimated loss ratio for that year. This method can be useful for situations where an unusually high or low amount of paid losses exists at the early stages of the claims development process.
Incurred BF - an estimated loss ratio for a particular accident year is determined, and is weighted against the portion of the accident year claims that have been reported, based on historical incurred loss development patterns. The estimate of required reserves assumes that the remaining unreported portion of a particular accident year will pay out at a rate consistent with the estimated loss ratio for that year. This method can be useful for situations where an unusually high or low amount of reported losses exists at the early stages of the claims development process.
Incremental Claim-Based Methods – historical patterns of incremental incurred losses and paid LAE during various stages of development are reviewed and assumptions are made regarding average loss and LAE development applied to remaining claims inventory. Such methods more properly reflect changes in the speed of claims closure and the relative adequacy of case reserve levels at various stages of development. These methods may provide a more accurate estimate of IBNR for lines of business with relatively few remaining open claims but for which significant recent settlement activity has occurred.
Frequency / Severity Based Methods – historical measurements of claim frequency and average paid claim size (severity) are reviewed for more mature accident years where a majority of claims have been reported and/or closed. These historical averages are trended forward to more recent periods in order to estimate ultimate losses for newer accident years that are not yet fully developed. These methods are useful for lines of business with slow and/or volatile loss development patterns, such as liability lines where information pertaining to individual cases may not be completely known for many years. The claim frequency and severity information for older periods can then be used as reasonable measures for developing a range of estimates for more recent immature periods.
Management’s best estimate of required reserves is generally based on an average of the methods above, with appropriate weighting of methods based on the line of business and accident year being projected. In some cases, additional methods or historical data from industry sources are employed to supplement the projections derived from the methods listed above.
Three key assumptions that materially affect the estimate of loss reserves are the loss ratio estimate for the current accident year used in the BF methods, the loss development factor selections used in the loss development methods, and the loss severity assumptions used in the frequency / severity method described above. The loss ratio estimates used in the BF methods are selected after reviewing historical accident year loss ratios adjusted for rate changes, trend, and mix of business. The severity assumptions used in the frequency / severity method are determined by reviewing historical average claim severity for older more mature accident periods, trended forward to less mature accident periods.
The Company reviews the carried reserves levels on a regular basis as additional information becomes available and makes adjustments in the periods in which such adjustments are determined to be necessary. The Company is not aware of any claim trends that have emerged or that would cause future adverse development that have not already been contemplated in setting current carried reserves levels.
In New York State, lawsuits for negligence are subject to certain limitations and must be commenced within three years from the date of the accident or are otherwise barred. Accordingly, the Company’s exposure to unreported claims (“pure” IBNR) for accident dates of September 30, 2023 and prior is limited, although there remains the possibility of adverse development on reported claims (“case development” IBNR). In certain rare circumstances states have retroactively revised a statute of limitations. The Company is not aware of any such effort that would have a material impact on the Company’s results.
The following is information about incurred and paid claims development as of September 30, 2026, net of reinsurance, as well as the cumulative reported claims by accident year and total IBNR reserves as of September 30, 2026 included in the net incurred loss and allocated expense amounts. The historical information regarding incurred and paid claims development for the years ended December 31, 2017 to December 31, 2025 is presented as supplementary unaudited information.
25
Table of Contents
All Lines of Business
(in thousands, except reported claims data)
| Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance | As of September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accident Year | For the Years Ended December 31, | Nine Months Ended September 30, 2026 | IBNR | Cumulative Number of Reported Claims by Accident Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited 2017 - 2025) | (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All Lines of Business
(in thousands)
| Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accident Year | For the Years Ended December 31, | Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited 2017 - 2025) | (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All outstanding liabilities before 2017, net of reinsurance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities for loss and allocated loss adjustment expenses, net of reinsurance | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Components may not sum to totals due to rounding)
Reported claim counts are measured on an occurrence or per event basis. A single claim occurrence could result in more than one loss type or claimant; however, the Company counts claims at the occurrence level as a single claim regardless of the number of claimants or claim features involved.
26
Table of Contents
The reconciliation of the net incurred and paid loss development tables to the loss and LAE reserves in the condensed Consolidated Balance Sheets is as follows:
Reconciliation of the Disclosure of Incurred and Paid Loss Development
to the Liability for Loss and LAE Reserves
| (in thousands) | As of September 30, 2026 | ||||
| Liabilities for allocated loss and loss adjustment expenses, net of reinsurance | $ | ||||
| Total reinsurance recoverable on unpaid losses | |||||
| Unallocated loss adjustment expenses | |||||
| Total gross liability for loss and LAE reserves | $ | ||||
Reinsurance
On January 1, 2025, the Company entered into a 16 % quota share reinsurance treaty for its personal lines business, which primarily consisted of homeowners’ and dwelling fire policies, covering the period from January 1, 2025 through January 1, 2026 (“2025/2026 Treaty”). Upon the expiration of the 2025/2026 Treaty on January 1, 2026, the Company entered into a new 5 % quota share reinsurance treaty for its personal lines business written in all states except California covering the period from January 1, 2026 through January 1, 2027 (“2026/2027 Treaty”). For business written in California, the Company entered into a new 30 % quota share reinsurance treaty covering the period from January 1, 2026 through January 1, 2027.
The Company’s excess of loss and catastrophe reinsurance treaties expired on June 30, 2026 and the Company entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2026. The new catastrophe reinsurance treaties include the second year of the $125,000,000 catastrophe bond ("Series 2025-1 Notes") issued on July 1, 2025. The Series 2025-1 Notes were priced at 4.5 % and issued through a Bermuda-registered special purpose insurer, 1886 Re Ltd., providing KICO 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, cover four annual risk periods from July 1, 2025, through June 30, 2029.
Effective January 1, 2025, the Company renewed an underlying excess of loss reinsurance treaty ("Underlying XOL Treaty") covering the period from January 1, 2025 through June 30, 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 July 1, 2025, the Underlying XOL Treaty was renewed along with the Company's excess of loss reinsurance treaty covering the period from July 1, 2025 through June 30, 2026 ("2025/2026 XOL Treaties"). Combined, the renewed 2025/2026 XOL Treaties provided 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. Effective July 1, 2026, the Underlying XOL Treaty was renewed along with the Company's excess of loss reinsurance treaty covering the period from July 1, 2026 through June 30, 2027 ("2026/2027 XOL Treaties"). Combined, the renewed 2026/2027 XOL 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 $11,000,000 together with facultative coverage. For the period October 1, 2024 through April 30, 2025, the Company purchased catastrophe reinsurance which 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, the Company 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 . For the period July 1, 2026 through June 30, 2027, the Company purchased 70 % of all perils coverage excluding named storm losses of $5,000,000 in excess of $5,000,000 . Effective July 1, 2025, the Company purchased $435,000,000 of catastrophe reinsurance in excess of $5,000,000 .. Effective July 1, 2026, the Company purchased $495,000,000 of catastrophe reinsurance in excess of $5,000,000 , compared to $435,000,000 of catastrophe reinsurance in excess of $5,000,000 in the expiring treaty.
Material terms for reinsurance treaties in effect for the treaty years shown below are as follows:
27
Table of Contents
Treaty Period | ||||||||||||||||||||||||||||||||
| 2026/2027 Treaty | 2025/2026 Treaty | |||||||||||||||||||||||||||||||
| Line of Business | July 1, 2026 to January 1, 2027 | January 1, 2026 to June 30, 2026 | July 1, 2025 to January 1, 2026 | January 1, 2025 to June 30, 2025 | ||||||||||||||||||||||||||||
| Personal Lines: | ||||||||||||||||||||||||||||||||
| Homeowners, dwelling fire and canine legal liability | ||||||||||||||||||||||||||||||||
| Quota share treaty: | ||||||||||||||||||||||||||||||||
| Percent ceded (6) | % | % | % | % | ||||||||||||||||||||||||||||
| Risk retained on initial | ||||||||||||||||||||||||||||||||
| $1,000,000 of losses (4) (5) (6) | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Losses per occurrence | ||||||||||||||||||||||||||||||||
| subject to quota share | ||||||||||||||||||||||||||||||||
| reinsurance coverage | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Expiration date | January 1, 2027 | January 1, 2027 | January 1, 2026 | January 1, 2026 | ||||||||||||||||||||||||||||
| Excess of loss coverage and | ||||||||||||||||||||||||||||||||
| facultative facility | ||||||||||||||||||||||||||||||||
| coverage (1) (4) (5) | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| in excess of | in excess of | in excess of | in excess of | |||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Total reinsurance coverage | ||||||||||||||||||||||||||||||||
| per occurrence (4) (5) | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Losses per occurrence | ||||||||||||||||||||||||||||||||
| subject to reinsurance | ||||||||||||||||||||||||||||||||
| coverage (5) | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Expiration date | June 30, 2027 | June 30, 2026 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||||||||
| Catastrophe Reinsurance: | ||||||||||||||||||||||||||||||||
| Initial loss subject to personal | ||||||||||||||||||||||||||||||||
| lines quota share treaty (5) | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Risk retained per catastrophe | ||||||||||||||||||||||||||||||||
| occurrence (5) (6) (7) (8) | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Catastrophe loss coverage | ||||||||||||||||||||||||||||||||
| in excess of quota share | ||||||||||||||||||||||||||||||||
| coverage (2) (5) (8) | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Reinstatement premium | ||||||||||||||||||||||||||||||||
| protection (3) | ||||||||||||||||||||||||||||||||
(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, 2026. Effective July 1, 2026, homeowners single risk coverage was increased to $11,000,000 in total insured value, which covers direct losses from $3,500,000 to $11,000,000 through June 30, 2027.
28
Table of Contents
(2)Through June 30, 2026, 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. Effective July 1, 2026, catastrophe coverage is limited on an annual basis to two times the per occurrence amounts, except for one occurrence on: (i) 70 % of the first layer of $5,000,000 in excess of $5,000,000 for all perils excluding named storms, and (ii), 95 % of the first layer of $5,000,000 in excess of $5,000,000 for named storms, and one occurrence on 45 % of the layer of $275,000,000 in excess of $215,000,000 , which is covered under the catastrophe bond. Duration of 168 consecutive hours for a non-named catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone. For named storms, duration beginning on the date a watch, warning, advisory, or other bulletin is first issued, continuing for a time period thereafter during which such named storm continues, regardless of its category rating or lack thereof and regardless of whether the watch, warning, advisory or other bulletin remains in effect for such named storm, and ending on the fourth calendar day following the issuance of the last watch, warning, advisory or other bulletin.
(3)For the period July 1, 2024 through June 30, 2025 (expiration date of the catastrophe reinsurance treaty), 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 . For the period July 1, 2026 through June 30, 2027 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $50,000,000 of catastrophe coverage in excess of $10,000,000 for named storms only.
(4)For the period January 1, 2024 through June 30, 2025, the 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 quota share treaty that expired on January 1, 2025. 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. For the period July 1, 2026 through June 30, 2027, 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 $11,000,000 together with facultative coverage. Increased retention to $715,000 from $640,000 under the 2025/2026 Treaty, and increased retention to $825,000 under the 2026/2027 Treaty (see note 5 below).
(5)The personal lines quota share treaty (homeowners, dwelling fire and canine liability) will expire on January 1, 2027, with none of these coverages to be in effect during the period from January 1, 2027 through June 30, 2027. If and when this treaty is renewed on January 1, 2027, the personal lines quota share treaty, will be as provided for therein. Reinsurance coverage in effect from January 1, 2027 through June 30, 2027 is only for excess of loss, Underlying XOL, and catastrophe reinsurance treaties.
(6)For the 2025/2026 Treaty, 6 % of the 16 % total of losses ceded under this treaty were excluded from a named catastrophe event. For the 2026/2027 Treaty, there is no exclusion for catastrophe events. Quota share reinsurance under the 2026/2027 treaty is 5 % for personal lines business written in all states except California (for which the quota share rate is 30 %).
(7)Plus losses in excess of catastrophe coverage.
29
Table of Contents
| Treaty Year | |||||||||||||||||
| Line of Business | July 1, 2026 to June 30, 2027 | July 1, 2025 to June 30, 2026 | July 1, 2024 to June 30, 2025 | ||||||||||||||
| Personal Lines: | |||||||||||||||||
| Personal Umbrella | |||||||||||||||||
| Quota share treaty: | |||||||||||||||||
| Percent ceded - first $1,000,000 of coverage | % | % | % | ||||||||||||||
| Percent ceded - excess of $1,000,000 of coverage | % | % | % | ||||||||||||||
| Risk retained | $ | $ | $ | ||||||||||||||
| Total reinsurance coverage per occurrence | $ | $ | $ | ||||||||||||||
| Losses per occurrence subject to quota share reinsurance coverage | $ | $ | $ | ||||||||||||||
| Expiration date | June 30, 2027 | June 30, 2026 | June 30, 2025 | ||||||||||||||
The Company’s reinsurance program has been structured to enable the Company to grow its premium volume while maintaining regulatory capital and other financial ratios generally within or below the expected ranges used for regulatory oversight purposes. The reinsurance program also provides income as a result of ceding commissions earned pursuant to the quota share reinsurance contracts. The Company’s participation in reinsurance arrangements does not relieve the Company of its obligations to policyholders.
Ceding Commission Revenue
The Company earned ceding commission revenue under the 2025/2026 Treaty for the three and nine months ended September 30, 2025 based on: (i) a fixed provisional commission rate at which provisional ceding commissions were earned, and (ii) a sliding scale ("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 included minimum and maximum commission rates in relation to specified ultimate loss ratios. 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 Company earned ceding commission revenue under the 2026/2027 Treaty for the three and nine months ended September 30, 2026 based on only a fixed provisional commission rate at which provisional ceding commissions were earned, with no provision for Sliding Scale ceding commission.
Ceding commission revenue consists of the following:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Provisional ceding commissions earned | $ | $ | $ | $ | |||||||||||||||||||
| Contingent ceding commissions earned | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
Provisional ceding commissions are settled monthly. Balances due to or from reinsurers for contingent ceding commissions on the 2025/2026 Treaty will be settled annually based on the Loss Ratio of the treaty year that ends on January 1. Balances due to or from reinsurers for Sliding Scale contingent ceding commissions on quota share treaties are settled periodically based on the Loss Ratio of each treaty year that ends on June 30 for the expired treaties (which had June 30 expiration dates) that were subject to Sliding Scale contingent commissions. The Loss Ratios from prior years’ treaties are subject to change as incurred losses from those periods develop, resulting in an increase or decrease in the commission rate and Sliding Scale contingent ceding commissions earned. As of September 30, 2026 and December 31, 2025, contingent ceding commissions receivable from reinsurers under the 2025/2026 Treaty was $2,371,463 and $1,754,316 , respectively, which is recorded in other assets on the accompanying condensed consolidated balance sheets.
30
Table of Contents
As of September 30, 2026 and December 31, 2025, net contingent ceding commissions payable to reinsurers under all other treaties was $724,660 and $732,480 , respectively, which is recorded in reinsurance balances payable on the accompanying condensed consolidated balance sheets.
Expected Credit Losses – Uncollectible Reinsurance
Note 7 – Debt
Federal Home Loan Bank
KICO is a member of, and invested in, FHLBNY. KICO is required to maintain an investment in the capital stock of FHLBNY. Based on the redemption provisions of FHLBNY, the stock has no quoted market value and is carried at cost. At its discretion, FHLBNY may declare dividends on the stock. Management reviews the stock for impairment based on the ultimate recoverability of the cost basis in the stock. At September 30, 2026 and December 31, 2025, no five years . If KICO has sufficient available collateral (as discussed below), based on KICO’s net admitted assets, the maximum allowable advance as of September 30, 2026 and December 31, 2025 was approximately $19,604,000 and $16,873,000 , respectively. The estimated fair value of available collateral as of September 30, 2026 and December 31, 2025 was approximately $8,309,000 and $9,598,000 , respectively. 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
Debt
Debt as of September 30, 2026 and December 31, 2025 consists of the following:
| September 30, 2026 | December 31, 2025 | ||||||||||
| Equipment financing | $ | $ | |||||||||
2024 Notes
The Company issued the 2024 Notes in the aggregate principal amount of $14,950,000 pursuant to a debt exchange agreement (the “2024 Exchange Agreement”). Interest was payable semi-annually in arrears on June 30 and December 30 of each year at the rate of 13.75 % per annum. Pursuant to the 2024 Exchange Agreement, the expiration date of the then outstanding warrants to purchase 969,525 shares of Common Stock of the Company pursuant to a 2022 debt exchange agreement ("2022 Exchange Agreement") was extended from December 30, 2025 to June 30, 2026 (all such warrants were subsequently exercised as of December 31, 2025) (see Note 8 – Stockholders’ Equity).
The 2024 Notes were redeemable, at the Company’s option, in whole or in part, at any time or in part from time to time, on and after September 12, 2024, upon not less than fifteen (15 ) and not more than sixty (60 ) days’ notice, equal to 100 % of the principal amount of the 2024 Notes, plus, in each case, accrued and unpaid interest, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
The 2024 Exchange Agreement provided for mandatory and optional prepayments of principal. The Company made optional prepayments of $3,500,000 on January 28, 2025, and $2,450,000 on February 24, 2025, and, accordingly, satisfied the entire principal balance of the 2024 Notes. Unamortized debt issue costs of $174,962 related to extinguished debt were expensed at the time the 2024 Notes were extinguished and recorded as loss on extinguishment of debt in the condensed consolidated statements of income and comprehensive income within other operating expenses.
31
Table of Contents
Line of Credit
On July 1, 2026, the Company entered into a revolving credit facility (the “ Credit Facility”) that permits borrowings of up to $5,000,000 in principal. Borrowings bear interest at a floating rate based on either (i) the one-month secured overnight financing rate (“SOFR”) plus 2.5 % or (ii) the alternate base rate plus 2.5 %, as selected in accordance with the Credit Facility. The Company is required to make monthly interest payments, with all outstanding principal due at maturity on July 1, 2028. Borrowings under the Facility are unsecured. The Credit Facility includes financial and nonfinancial covenants. As of September 30, 2026, the Company was in compliance with these covenants. The Company intends to use borrowings for general corporate purposes. The Company did not borrow under the Facility during the nine months ended September 30, 2026, and no amounts were outstanding as of that date.
Interest only payments are due monthly, and payment in full is due at maturity on July 1, 2028. Advances are unsecured.
Equipment Financing
On October 27, 2022, KICO entered into a sale-leaseback transaction, whereby KICO sold $8,096,824 of fixed assets to a bank. Under GAAP, the sale-leaseback transaction is recorded as equipment financing (“Financing”). The provisions of the Financing require KICO to pay a monthly payment of principal and interest at the rate of 5.86 % per annum totaling $126,877 for a term of 60 months, which commenced on October 27, 2022. The terms of the Financing provide buyout options to KICO at the end of the 60 month term, which are as follows:
•At the end of the lease, KICO may purchase the fixed assets for a purchase price of $2,024,206 , which is 25 % of the original fixed asset cost of $8,096,824 ; or
•KICO may renew the lease for 16 months at the same rental rate, which totals $2,030,036 .
Note 8 – Stockholders’ Equity
Dividends Declared and Paid
Dividends declared and paid on Common Stock were $868,527 and $707,101 for the three months ended September 30, 2026 and 2025. respectively. Dividends declared and paid on Common Stock were $2,315,045 and $707,101 for the nine months ended September 30, 2026 and 2025, respectively. See Note 15 - Subsequent Events - "Dividend Declared."
Preferred Stock
The Board of Directors has the authority to issue shares of Preferred Stock from time to time in a series and to fix, before the issuance of each series, the number of shares in each series and the designation, liquidation preferences, conversion privileges, rights and limitations of each series. There was no
2014 Equity Participation Plan
The 2014 Equity Participation Plan (the “2014 Plan”) authorized grants of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, and stock bonuses. Through subsequent amendments, the maximum number of shares of the Company’s Common Stock authorized under the 2014 Plan was increased to 1,900,000 . Non-statutory stock options granted under the 2014 Plan expire no later than ten years from the date of grant. The Board of Directors or the Compensation Committee determined the vesting provisions for awards, subject to the terms of the 2014 Plan. The 2014 Plan terminated on August 12, 2024, and no further awards may be granted under it.
2024 Equity Participation Plan
Effective August 7, 2024, the Company's stockholders approved the 2024 Equity Participation Plan (the “2024 Plan”) pursuant to which a maximum of 1,000,000 shares of Common Stock of the Company are authorized to be issued pursuant to the grant of incentive stock options, non-statutory stock options, stock appreciation rights, and stock bonus awards. Incentive stock options granted under the 2024 Plan expire no later than ten years from the date of grant (except no later than five years for a grant to a 10% stockholder). Non-statutory stock options granted under the 2024 Plan expire no later than ten years from the date of grant. The Board of Directors or the Compensation Committee determines the vesting provisions for stock awards granted under the 2024 Plan, subject to the provisions of the 2024 Plan. The 2024 Plan terminates on May 10, 2034 and no further awards may be granted under the 2024 Plan after such date.
32
Table of Contents
As of September 30, 2026, there were 325,410 shares of Common Stock granted under the 2024 Plan pursuant to stock bonus awards, net of forfeitures.
Stock Options
The results of operations for the three months ended September 30, 2026 and 2025 include stock-based compensation expense for stock options totaling approximately $8,000 and $22,000 , respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of income and comprehensive income. The results of operations for the nine months ended September 30, 2026 and 2025 include stock-based compensation expense for stock options totaling approximately $25,000 and $67,000 , respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of income and comprehensive income. Stock-based compensation expense related to stock options for the nine months ended September 30, 2026 is net of estimated forfeitures of approximately 24 %.
There have been no stock options granted under the 2024 Plan. A summary of stock option activity under the Company’s 2014 Plan for the nine months ended September 30, 2026 is as follows:
| Stock Options | Number of Shares | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Term in Years | Aggregate Intrinsic Value | ||||||||||||||||||||||
| Outstanding at January 1, 2026 | $ | $ | ||||||||||||||||||||||||
| Granted | $ | - | $ | |||||||||||||||||||||||
| Exercised | ( | $ | - | $ | ||||||||||||||||||||||
| Expired/Forfeited | ( | $ | $ | |||||||||||||||||||||||
| Outstanding at September 30, 2026 | $ | $ | ||||||||||||||||||||||||
| Vested and Exercisable at September 30, 2026 | $ | $ | ||||||||||||||||||||||||
The aggregate intrinsic value of options outstanding and options exercisable at September 30, 2026 is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s Common Stock for the options that had exercise prices that were lower than the $17.58 closing price of the Company’s Common Stock on September 30, 2026. The total intrinsic value of options when forfeited are determined as of the date of forfeiture. The total intrinsic value of options when expired are determined as of the date of expiration.
Participants in the 2014 Plan and the 2024 Plan may exercise their outstanding vested options, in whole or in part, by having the Company reduce the number of shares otherwise issuable by a number of shares having a fair market value equal to the exercise price of the option being exercised ("Net Exercise"), or by exchanging a number of shares owned for a period of greater than one year having a fair market value equal to the exercise price of the option being exercised ("Share Exchange").
The Company received $41,250 from the exercise of 18,333 options during the nine months ended September 30, 2026. The remaining options exercised during the nine months ended September 30, 2026 were Net Exercises, resulting in the issuance of 20,828 shares of Common Stock.
As of September 30, 2026, the estimated fair value of unamortized compensation cost related to 75,388 unvested stock option awards was approximately $8,000 . Unamortized compensation cost as of September 30, 2026 is expected to be recognized over a remaining weighted-average vesting period of 0.27 years.
Restricted Stock Awards
A summary of the restricted Common Stock activity under the 2024 Plan for the nine months ended September 30, 2026 is as follows:
33
Table of Contents
| Restricted Stock Awards | Shares | Weighted Average Grant Date Fair Value per Share | Aggregate Fair Value | |||||||||||||||||
| Balance at January 1, 2026 | $ | $ | ||||||||||||||||||
| Granted | $ | $ | ||||||||||||||||||
| Vested | ( | $ | $ | ( | ||||||||||||||||
| Forfeited | ( | $ | $ | ( | ||||||||||||||||
| Balance at September 30, 2026 | $ | $ | ||||||||||||||||||
For the three months ended September 30, 2026 and 2025, stock-based compensation for these grants was approximately $645,000 and $398,000 , respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of income and comprehensive income. For the nine months ended September 30, 2026 and 2025, stock-based compensation for these grants was approximately $1,912,000 and $1,148,000 , respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of income and comprehensive income. These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be recognized by the directors, executives and employees. Unamortized compensation cost of $1,785,971 as of September 30, 2026 is expected to be recognized over a remaining weighted-average vesting period of 1.37 years.
Employee Stock Purchase Plan
On June 19, 2021, the Company’s Board of Directors adopted the Kingstone Companies, Inc. Employee Stock Purchase Plan (the “ESPP”), subject to stockholder approval. Such approval was obtained on August 10, 2021. The purpose of the ESPP is to provide eligible employees of the Company with an opportunity to use payroll deductions to purchase shares of Common Stock of the Company. The maximum number of shares of Common Stock that may be purchased under the ESPP is 750,000 , subject to adjustment as provided for in the ESPP. The ESPP was effective August 10, 2021 and expires on August 10, 2031. A maximum of 5,000 shares of Common Stock may be purchased by an employee during any offering period.
The initial offering period under the ESPP was from November 1, 2021 through October 31, 2022. There was no offering pursuant to the ESPP from November 1, 2022 through December 31, 2024. Effective January 1, 2025, the Company initiated an offering period of January 1, 2025 through December 31, 2025 under the ESPP (the "2025 Offering"). Effective January 1, 2026, the Company initiated an offering period of January 1, 2026 through December 31, 2026 under the ESPP (the "2026 Offering"). For the three months ended September 30, 2026 and 2025, stock-based compensation under the 2026 Offering and 2025 Offering was approximately $10,000 and $10,000 , respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of income and comprehensive income. For the nine months ended September 30, 2026 and 2025, stock-based compensation under the 2026 Offering and 2025 Offering was approximately $27,000 and $26,000 , respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of income and comprehensive income.
Warrants
In connection with the 2022 Exchange Agreement (see Note 7 – Debt – “2024 Notes”), as additional consideration, on December 15, 2022, the Company issued warrants (the "Warrants") to the 2022 exchanging note holders to purchase 969,525 shares of Common Stock at an exercise price of $1.00 per share, initially exercisable through December 30, 2025. Pursuant to the 2024 Exchange Agreement, the expiration date of the Warrants was extended to June 30, 2026 from December 30, 2025. As of December 31, 2025, all issued warrants were exercised. The fair value of the Warrants, using the Black-Scholes valuation formula, was $993,200 , which was capitalized as a deferred financing cost of the 2022 Notes and the 2024 Notes. The fair value of the Warrants was amortized over the life of the Warrants, which was 36.5 months through September 12, 2024 and effective as of such date, the unamortized balance was being amortized over the extended life of the Warrants, which was 21.5 months.
Holders of the Warrants were entitled to exercise their outstanding Warrants in cash, or, in whole or in part, by having the Company reduce the number of shares otherwise issuable by a number of shares having a fair market value equal to the exercise price of the Warrants being exercised.
In accordance with ASC 815 - Derivatives and Hedging – Subsequent Measurement, the effect of a modification or an exchange shall be measured as the difference between the fair value of the modified or exchanged instrument and the fair value of that instrument
34
Table of Contents
immediately before it is modified or exchanged. The Company calculated the respective fair values and determined the difference was immaterial.
At-the-Market Offering
In May 2024, the Company entered into a Sales Agreement with Janney Montgomery Scott LLC (the “Sales Agent”) under which the Company initially had the ability to issue and sell shares of its 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 referred to as an “at-the-market” (“ATM”) program. On January 7, 2025, the Company 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, 2026, the Company did not sell any shares of its Common Stock under the ATM program. As of September 30, 2026, the Company had remaining capacity to sell up to an additional $15,945,937 of Common Stock under the ATM program.
Share Repurchase Program
On May 19, 2026, the Company’s Board of Directors authorized a share repurchase program under which the Company may repurchase up to 1,000,000 shares of its outstanding Common Stock over the next two years . Repurchases under the program may be made from time to time through open market purchases, privately negotiated transactions, block transactions, and transactions effected pursuant to trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The Company intends to effect repurchases in compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and the Company’s insider trading policy. The timing and total amount of any repurchases will be determined at management’s discretion based on its evaluation of market conditions, the Company’s share price, regulatory requirements, the Company’s liquidity needs, and other factors. The program over the two year term does not obligate the Company to acquire any specific number of shares, and may be modified, suspended, or discontinued at any time without prior notice. As of September 30, 2026, the Company acquired a total of 19,446 shares under this program at a cost of $291,833 , inclusive of commissions.
Note 9 – Income Taxes
The Company files a consolidated U.S. federal income tax return that includes all wholly-owned subsidiaries. State tax returns are filed on a consolidated or separate return basis depending on applicable laws. The Company records adjustments related to prior years’ taxes during the period when they are identified, generally when the tax returns are filed. The effect of these adjustments on the current and prior periods (during which the differences originated) is evaluated based upon quantitative and qualitative factors and are considered in relation to the consolidated financial statements taken as a whole for the respective periods. The Company's effective tax rates for the three months and nine months ended September 30, 2026 and 2025 are different than the federal statutory rate of 21%, due primarily to the net effect of tax-exempt municipal bond interest income, dividends received deduction and tax adjustments related to executive and equity-based compensation.
Income Taxes Paid
For the three months ended September 30, 2026 and 2025, the Company paid federal income taxes of $4,562,000 and $4,466,000 , respectively, and state income taxes of $0 and $0 , respectively. For the nine months ended September 30, 2026 and 2025, the Company paid federal income taxes of $6,324,000 and $5,819,000 , respectively, and state income taxes of $250 and $0 , respectively.
Deferred Tax Asset
Deferred tax assets and liabilities are determined using the enacted tax rates applicable to the period the temporary differences are expected to be recovered. Accordingly, the current period income tax provision can be affected by the enactment of new tax rates. The net deferred income taxes on the balance sheets reflect temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and income tax purposes, tax effected at various rates depending on whether the temporary differences are subject to federal taxes, state taxes, or both.
35
Table of Contents
Significant components of the Company’s deferred tax assets and liabilities are as follows:
| September 30, 2026 | December 31, 2025 | |||||||||||||
| Deferred tax asset: | ||||||||||||||
| Net operating loss (1) | $ | $ | ||||||||||||
| Claims reserve discount | ||||||||||||||
| Unearned premium | ||||||||||||||
| Deferred ceding commission revenue | ||||||||||||||
| Net unrealized losses on securities | ||||||||||||||
| Other | ||||||||||||||
| Total deferred tax assets | ||||||||||||||
| Deferred tax liability: | ||||||||||||||
| Investment in KICO (2) | ||||||||||||||
| Deferred policy acquisition costs | ||||||||||||||
| Intangible assets | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Total deferred tax liabilities | ||||||||||||||
| Net deferred income tax asset | $ | $ | ||||||||||||
(1)The deferred tax assets from federal current year net operating loss ("NOL"), and state current year and prior years NOL carryovers are as follows:
| Type of NOL | September 30, 2026 | December 31, 2025 | Expiration | |||||||||||||||||
| Federal only, current year | $ | $ | None | |||||||||||||||||
| State only (A) | December 2027 - December 2045 | |||||||||||||||||||
| Valuation allowance | ( | ( | ||||||||||||||||||
| State only, net of valuation allowance | ||||||||||||||||||||
| Total deferred tax asset from net operating loss carryovers | $ | $ | ||||||||||||||||||
(A)Kingstone generates operating losses for state purposes and has prior year NOLs available. The state NOL as of September 30, 2026 and December 31, 2025 was $55,388,972 and $52,634,646 , respectively. KICO, the Company’s insurance underwriting subsidiary, is not subject to state income taxes. KICO’s state tax obligations are paid through a gross premiums tax, which is included in the condensed consolidated statements of income and comprehensive income within other underwriting expenses. Kingstone has recorded a full valuation allowance due to the uncertainty of generating enough state taxable income to utilize 100 % of the available state NOLs over their remaining lives, which expire between 2027 and 2045.
(2)Deferred tax liability – Investment in KICO
On July 1, 2009, the Company completed the acquisition of 100 % of the issued and outstanding common stock of KICO (formerly known as Commercial Mutual Insurance Company (“CMIC”)) pursuant to the conversion of CMIC from an advance premium cooperative to a stock property and casualty insurance company. Pursuant to the plan of conversion, the Company acquired a 100 % equity interest in KICO, in consideration for the exchange of $3,750,000 principal amount of surplus notes of CMIC. In addition, the Company forgave all accrued and unpaid interest on the surplus notes as of the date of conversion. As of the date of acquisition, unpaid accrued interest on the surplus notes along with the
36
Table of Contents
accretion of the discount on the original purchase of the surplus notes totaled $2,921,319 (together “Untaxed Interest”). As of the date of acquisition, the deferred tax liability on the Untaxed Interest was $1,169,000 . A temporary difference with an indefinite life exists when the parent has a lower carrying value of its subsidiary for income tax purposes. The deferred tax liability was reduced to $759,543 upon the reduction of federal income tax rates as of December 31, 2017. The Company is required to maintain its deferred tax liability of $759,543 related to this temporary difference until the stock of KICO is sold, or the assets of KICO are sold or KICO and the parent are merged.
In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. No valuation allowance against deferred tax assets has been established, except for NOL limitations, as the Company believes it is more likely than not the deferred tax assets will be realized based on the historical taxable income of KICO, or by offset to deferred tax liabilities.
The Company had no material unrecognized tax benefit and no adjustments to liabilities or operations were required. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the nine months ended September 30, 2026 and 2025. If any had been recognized these would have been reported in income tax expense.
Note 10 – Earnings Per Common Share
Basic net earnings per common share is computed by dividing net income by the weighted-average number of shares of Common Stock outstanding. Diluted earnings per common share reflects, in periods in which it has a dilutive effect, the impact of shares of Common Stock issuable upon exercise of stock options and warrants as well as non-vested restricted stock awards. The computation of diluted earnings per common share excludes those options and warrants with an exercise price in excess of the average market price of the Company’s Common Stock during the periods presented. For the three months and nine months ended September 30, 2026 and 2025, there were no options or warrants with an exercise price in excess of the average market price of the Company’s Common Stock during the periods.
The computation of diluted earnings per common share excludes outstanding options, warrants and non-vested restricted stock awards in periods where the exercise of such options and warrants or vesting of such restricted stock awards would be anti-dilutive. For the three months and nine months ended September 30, 2026 and 2025, there were no
The reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted earnings per common share follows:
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Weighted average number of shares outstanding | |||||||||||||||||||||||
| Effect of dilutive securities, common share equivalents: | |||||||||||||||||||||||
| Stock options | |||||||||||||||||||||||
| Warrants | |||||||||||||||||||||||
| Restricted stock awards | |||||||||||||||||||||||
Weighted average number of shares outstanding, used for computing diluted earnings per share | |||||||||||||||||||||||
Note 11 - Commitments and Contingencies
Litigation
From time to time, the Company is involved in various legal proceedings in the ordinary course of business. For example, to the extent a claim is asserted by a third party in a lawsuit against one of the Company’s insureds covered by a particular policy, the Company may have a duty to defend the insured party against the claim. These claims may relate to bodily injury, property damage or other compensable injuries as set forth in the policy. Such proceedings are considered in estimating the liability for loss and LAE expenses.
37
Table of Contents
Office Lease
The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease.
On February 10, 2025, KICO entered into a lease agreement for an office facility located in Kingston, New York under an operating lease. The lease commenced on March 1, 2025 (the "Commencement Date") and will expire on March 31, 2030. KICO has the option to renew the lease for an additional term of five years . KICO may terminate the lease anytime following the third anniversary of the Commencement Date if its insurance business is sold or substantially all of the Company's assets are sold. Base rent over the term of the lease is $269,777 plus a proportionate share of taxes, common area maintenance costs and insurance.
Additional information regarding the Company’s office operating leases is as follows:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
| Lease cost | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Operating lease | $ | $ | $ | $ | ||||||||||||||||||||||
| Total lease cost | $ | $ | $ | $ | ||||||||||||||||||||||
| Other information on operating leases | ||||||||||||||||||||||||||
| Cash payments included in the measurement of lease liability reported in operating cash flows | $ | $ | $ | $ | ||||||||||||||||||||||
| Discount rate | % | % | % | % | ||||||||||||||||||||||
| Remaining lease term in years | ||||||||||||||||||||||||||
Right-of-use assets, included in other assets, were $129,338 and $136,209 as of September 30, 2026 and December 31, 2025, respectively. Lease liabilities, included in accounts payable, accrued expenses and other liabilities, were $129,338 and $136,209 as of September 30, 2026 and December 31, 2025, respectively.
Rent expense for the three months ended September 30, 2026 and 2025 amounted to $13,391 and $13,391 , respectively, and is included in the accompanying condensed consolidated statements of income and comprehensive income within other underwriting expenses. Rent expense for the nine months ended September 30, 2026 and 2025 amounted to $40,174 and $31,246 , respectively, and is included in the accompanying condensed consolidated statements of income and comprehensive income within other underwriting expenses.
Employment Agreements
Meryl Golden, President and Chief Executive Officer
Employment Agreement effective as of January 1, 2025
On April 15, 2024, the Company and Ms. Golden entered into a third amended and restated employment agreement (the “Third Amended Golden Employment Agreement”). The Third Amended Golden Employment Agreement was effective as of January 1, 2025 and extends the expiration date of Ms. Golden's previous employment agreement (the "Second Amended Golden Employment Agreement") from December 31, 2024 to January 10, 2027. Pursuant to the Third Amended Golden Employment Agreement, Ms. Golden is entitled to receive an annual base salary of $550,000 (increased from $500,000 previously in effect) and an annual bonus equal to 3 % of the Company’s consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 1.25 times her base annual salary (the same as previously in effect). Pursuant to the Third Amended Golden Employment Agreement (and as was provided for in the Second Amended Golden Employment Agreement), in the event that Ms. Golden’s employment is terminated by the Company without cause or she resigns for good reason (each as defined in the Third Amended Golden Employment Agreement), Ms. Golden would be entitled to receive her base salary and the 3 % bonus for the remainder of the term. Ms. Golden would be entitled, under certain circumstances, to a payment equal to 1.5 times her then annual salary and her accrued bonus in the event of the termination of her employment following a change of control of the Company (also as is provided for in the Second Amended Golden Employment Agreement). Pursuant to the Third Amended Golden Employment Agreement, Ms. Golden received during each of January 2025 and January 2026 a grant of 40,000
Employment Agreement effective as of January 11, 2027
38
Table of Contents
On April 17, 2026, the Company and Ms. Golden entered into a Fourth Amended and Restated Employment Agreement (the “Fourth Amended Golden Employment Agreement”). The Fourth Amended Golden Employment Agreement is effective as of January 11, 2027 and expires on January 10, 2029. The Fourth Amended Golden Employment Agreement extends the expiration date of the Third Amended Golden Employment Agreement from January 10, 2027 to January 10, 2029.
Pursuant to the Fourth Amended Golden Employment Agreement, Ms. Golden is entitled to receive an annual base salary of $550,000 (the same as currently in effect) and an annual bonus equal to 3 % of the Company’s consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 1.25 times her base annual salary (the same as currently in effect). Pursuant to the Fourth Amended Golden Employment Agreement (and as provided for in the Third Amended Golden Employment Agreement), in the event that Ms. Golden’s employment is terminated by the Company without cause or she resigns for good reason (each as defined in the Fourth Amended Golden Employment Agreement), Ms. Golden would be entitled to receive her base salary and the 3 % bonus for the remainder of the term. Ms. Golden would be entitled, under certain circumstances, to a payment equal to 1.5 times her then annual salary and her accrued 3 % bonus in the event of the termination of her employment following a change of control of the Company (also as is provided for in the Third Amended Golden Employment Agreement). Pursuant to the Fourth Amended Golden Employment Agreement, Ms. Golden will be entitled to receive, under certain circumstances, a grant, during each of January 2027 and January 2028, of 40,000 40,000
Randy Patten, Chief Financial Officer, Vice President and Treasurer
On July 23, 2025, the Company and Randy Patten entered into an employment agreement (the “Patten Employment Agreement”) pursuant to which Mr. Patten serves as the Company’s Chief Financial Officer, Vice President and Treasurer. Mr. Patten also serves as KICO’s Chief Financial Officer, Vice President and Treasurer. The Patten Employment Agreement was effective as of August 25, 2025 (the "Effective Date") and will expire on August 25, 2028 (the "Expiration Date"). The term of the Patten Employment Agreement shall automatically be extended for one year periods beyond the Expiration Date unless either party provides written notice to the other party, no later than four months preceding the Expiration Date (or the end of the term, if extended), of its or his desire that the term not be extended.
Pursuant to the Patten Employment Agreement, Mr. Patten is entitled to receive an annual base salary of $400,000 and shall participate in the Company's Bonus Plan, including with respect to the senior leadership team ("SLT") RSA bonus, each as described in Note 12 – Employee Benefit Plans, Bonus Plans, Employee Bonus Plan. In accordance with the Bonus Plan, Mr. Patten's cash bonus target is 25 % of his base salary, and in no event, could the cash bonus for the calendar year ended December 31, 2025 be less than $35,000 .
On September 12, 2025, the Company paid to Mr. Patten a sign-on bonus of $200,000 (the “Sign-on Bonus”). In the event that, prior to the first anniversary of the Effective Date, Mr. Patten's employment with the Company had been terminated by the Company for cause (as defined in the Patten Employment Agreement) or by Mr. Patten without good reason (as defined in the Patten Employment Agreement), Mr. Patten would have been obligated to promptly repay the Sign-on Bonus to the Company. At its option, the Company would have had the right to offset such Sign-on Bonus repayment obligation against any and all amounts payable to Mr. Patten.
Pursuant to the Patten Employment Agreement, Mr. Patten was entitled to receive a restricted stock grant of a number of shares of Common Stock determined by dividing $600,000 by the fair market value of the Company’s Common Stock on the date of grant. On the Effective Date, Mr. Patten was granted 43,290 shares of restricted stock pursuant to this provision. Such stock grant vested with respect to 25 % of the award on the first anniversary of the grant date and will become vested with respect to 25 % of the award on the second anniversary of the grant date and 50 % of the award on the third anniversary of the grant date.
Note 12 – Employee Benefit Plans
Bonus Plans
Employee Bonus Plan
For the three months ended September 30, 2026 and 2025, the Company accrued approximately $408,518 and $1,414,952 , respectively, of cash payments related to an employee bonus plan (the "Bonus Plan"), of which $88,526 and $322,609 , respectively, is allocated and recorded in loss and LAE, $299,748 and $1,092,343 , respectively, is recorded in other underwriting expenses, and $20,244 and $0 , respectively, is recorded in other operating expenses on the accompanying condensed consolidated statements of income and comprehensive income. For the nine months ended September 30, 2026 and 2025, the Company accrued approximately $1,225,556 and $2,395,343 , respectively, of cash payments related to the Bonus Plan, of which $274,127 and $546,138 , respectively, is allocated and recorded in loss and LAE, $928,185 and $1,849,205 , respectively, is recorded in other underwriting expenses, and $23,244 and $0 , respectively, is recorded in other operating expenses on the accompanying condensed consolidated statements of income and comprehensive income. In addition to the cash payments, the Bonus Plan provides for a restricted stock award ("RSA") to the Company's
39
Table of Contents
SLT and other members of management in an amount up to their cash payments if certain performance metrics have been met. The performance metrics for the nine months ended September 30, 2026 were not met, and, accordingly, no 149,862 and $197,868 , respectively, of stock-based compensation liability has been accrued for the three months and nine months ended September 30, 2025 for the SLT RSA bonus and is recorded in other operating expenses on the accompanying condensed consolidated statements of income and comprehensive income.
Executive Bonus Plan
For the three months ended September 30, 2026 and 2025, the Company accrued approximately $497,000 and $254,000 , respectively, for a bonus pursuant to the Third Amended Golden Employment Agreement ("Executive Bonus") of which $447,000 and $229,000 , respectively, is recorded in other underwriting expenses, and $50,000 and $25,000 , respectively, is recorded in other operating expenses on the accompanying condensed consolidated statements of income and comprehensive income. For the nine months ended September 30, 2026 and 2025, the Company accrued approximately $688,000 and $625,000 , respectively, for the Executive Bonus of which $619,000 and $563,000 , respectively, is recorded in other underwriting expenses, and $69,000 and $62,000 , respectively, is recorded in other operating expenses on the accompanying condensed consolidated statements of income and comprehensive income.
401(k) Plan
The Company maintains a salary reduction plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) for its qualified employees. The Company matches 100 % of each participant’s contribution up to 4 % of the participant’s eligible contribution. The Company incurred approximately $98,000 and $86,000 , respectively, of expense for the three months ended September 30, 2026 and 2025, related to the 401(k) Plan, which is recorded in other underwriting expenses on the accompanying condensed consolidated statements of income and comprehensive income. The Company incurred approximately $325,000 and $271,000 , respectively, of expense for the nine months ended September 30, 2026 and 2025, related to the 401(k) Plan, which is recorded in other underwriting expenses on the accompanying condensed consolidated statements of income and comprehensive income.
Note 13 - Segment Information
The Company’s chief operating decision maker (“CODM”) is its President and Chief Executive Officer. The CODM uses consolidated net income, as reported in the Company’s unaudited interim condensed consolidated statements of income and comprehensive income, as the reported measure of segment profit or loss. The CODM uses this measure to assess the Company’s overall financial performance and make operating and resource allocation decisions for its property and casualty insurance business, including developing the annual budget and forecast, allocating resources in support of the Company’s overall operating objectives, and determining employee compensation.
The significant segment expense categories and amounts regularly provided to the CODM and included in consolidated net income are the same as those separately presented in the accompanying unaudited interim condensed consolidated statements of income and comprehensive income. No additional significant segment expense categories or amounts at a more disaggregated level are regularly provided to the CODM or are easily computable from the information regularly provided to the CODM. Asset information is not regularly provided to the CODM at a level or in categories different from those presented in the Company’s condensed consolidated balance sheets.
Note 14 - Sale of Real Estate
On February 5, 2025, a subsidiary of the Company entered into a contract of sale with Ulster County, New York (the “County”) for the sale to the County of the Company’s 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 . The closing of the sale was on March 19, 2025.
Note 15 – Subsequent Events
Dividend Declared
On October 21, 2026, the Company’s Board of Directors approved a quarterly dividend of $0.06 per share payable in cash on November 25, 2026 to stockholders of record as of the close of business on November 11, 2026.
40
Table of Contents
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 subsidiaries, Kingstone Insurance Company (“KICO”) and Kingstone America Insurance Company ("KAIC"). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and livery physical damage insurance in New York, and in 2025 was the 11th largest writer of homeowners insurance in New York. Beginning in June 2026, KICO began writing homeowners coverage in California on a non-admitted basis. KICO is also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. KAIC was licensed to write property and casualty insurance by the state of Connecticut on May 1, 2026. KAIC started writing business in Connecticut beginning in September 2026. For the three months ended September 30, 2026 and 2025, respectively, 98.4% and 98.0% of KICO’s direct premiums written came from the New York policies. For the nine months ended September 30, 2026 and 2025, respectively, 98.5% and 98.1% of KICO’s direct premiums written came from the New York policies.
Our wholly-owned subsidiary, Cosi Agency, Inc. (“Cosi”), is a multi-state licensed general agency. In April 2026, Cosi became licensed in California, and we expect to expand our underwriting operations in California during the remainder of 2026 through the policies Cosi writes. Cosi-related operating expenses are primarily employment costs 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 KAIC 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 of Kingstone Companies, Inc. (the "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.
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.
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, 2026 and December 31, 2025, there were no commercial liability policies in-force. As of September 30, 2026, these expired policies represented approximately 8.9% of loss and LAE reserves net of reinsurance recoverables.
Other: We write canine legal liability policies and have a small participation in mandatory state joint underwriting associations.
41
Table of Contents
Critical Accounting Policies
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 generally accepted accounting principles ("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.
Application of critical accounting estimates involve 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.
Our critical accounting policies are more fully described in our Management's Discussion and Analysis of Financial Condition and Results of Operations presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025, filed on March 16, 2026. There have been no changes in our critical accounting policies from December 31, 2025.
Net Premiums Earned, Policies In-Force and Direct Premiums Written1
Net Premiums Earned
Net premiums earned increased $14.5 million, or 30.2%, to $62.4 million in the Three Months of 2026 from $47.9 million in the Three Months of 2025. Net premiums earned increased $41.1 million, or 29.8%, to $178.7 million in the Nine Months of 2026 from $137.7 million in the Nine Months of 2025.
Policies In-Force and Direct Premiums Written
See the tables below for our policies in-force as of September 30, 2026 and 2025 and direct premiums written for the three months and nine months ended September 30, 2026 and 2025. For the nine months ended September 30, 2026, our direct premiums written increased by 17.4% compared to the nine months ended September 30, 2025, while policies in-force increased by 11.0% as of September 30, 2026 as compared to September 30, 2025.
| As of September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | Percent | |||||||||||||||||||||||
| Policies In-Force | 86,579 | 78,026 | 8,553 | 11.0 | % | |||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (000’s except percentages) | 2026 | 2025 | Change | Percent | 2026 | 2025 | Change | Percent | ||||||||||||||||||||||||||||||||||||||||||
Direct premiums written1 | $ | 86,795 | $ | 75,810 | $ | 10,985 | 14.5 | % | $ | 228,892 | $ | 195,047 | $ | 33,845 | 17.4 | % | ||||||||||||||||||||||||||||||||||
1Direct premiums written is a non-GAAP measure defined below under "Key GAAP and Non-GAAP Measures". See discussion of "Net Premiums Earned" below for a reconciliation of GAAP net premiums earned to direct premiums written.
42
Table of Contents
Change in Market Dynamics (underway), and 5-Year Growth Plan (underway)
•Change in Market Dynamics
We refer to the new business described in the next two paragraphs as a 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.
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 pivoted focus away from admitted personal lines business (the "Withdrawal Plan"). The Withdrawal Plan, which included this transaction, was approved by the New York State Department of Financial Services ("DFS"). This competitor wrote approximately $70 million in written premium. The Withdrawal Plan has enabled KICO to work with new distribution partners to further increase its 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 was handled in a similar manner to the paragraph above, except that we streamlined the process by providing a quote for eligible policyholders to our producers.
•5-Year Growth Plan
In 2025, we announced our 5-year goal of $500 million in direct written premium by 2029 (the "5-Year Growth Plan"), effectively doubling the size of our company relative to such time. We developed 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. KICO began writing business in California in June 2026 on a non-admitted basis and KAIC began writing business in Connecticut on an admitted basis in September 2026.
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:
GAAP Measures
Net loss ratio: The net loss ratio is a GAAP measure of the underwriting profitability of an insurance company’s business. Expressed as a percentage, this is the ratio of net losses and loss adjustment expenses ("LAE") incurred to net premiums earned.
Net underwriting expense ratio: The net underwriting expense ratio is a GAAP 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 combined ratio: The net combined ratio is a GAAP 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.
Non-GAAP Measures
Direct premiums written, net premiums written: Direct premiums written is a non-GAAP measure, which represent the total premiums charged on policies issued by an insurance company during the respective fiscal period. Net premiums written is a non-GAAP measure, which are direct premiums written less premiums ceded to reinsurers. Net premiums earned, the GAAP measure most comparable to direct premiums written and net premiums written, are net premiums written that are pro-rata earned during the fiscal period presented. All of our policies are written for a twelve-month period. Management uses direct premiums written and net premiums
43
Table of Contents
written, along with other measures, to gauge our performance and evaluate results. Direct premiums written and net premiums written are provided as supplemental information, not as a substitute for net premiums earned, and do not reflect our 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.
Loss and LAE excluding the effect of catastrophes: The loss and LAE excluding the effect of catastrophes is a non-GAAP expense, which is computed as the difference between GAAP loss and LAE and the effect of catastrophes on loss and LAE. Management believes that this metric 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 loss and LAE to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on loss and LAE. 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 loss and LAE. Loss and LAE excluding the effect of catastrophes should not be considered a substitute for loss and LAE and does not reflect our loss and LAE.
Underlying Losses: Underlying losses is a non-GAAP expense, which is computed as GAAP loss and LAE excluding the effect of prior year loss reserve development and catastrophes losses. Management believes that this metric 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 and LAE to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on the loss and LAE. 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 loss and LAE. The underlying losses should not be considered a substitute for the loss and LAE and does not reflect our loss and LAE.
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 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 cause our net underwriting expense 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 underwriting expense 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 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 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.
Underlying combined ratio: The underlying combined ratio is a non-GAAP ratio, which is computed as the non-GAAP underlying loss ratio defined above plus the GAAP net underwriting expense ratio. The underlying combined combined ratio excludes 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 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 underlying combined ratio should not be considered a substitute for the net combined ratio and does not reflect our net combined ratio.
44
Table of Contents
Consolidated Results of Operations
Three and Nine Months Ended September 30, 2026 Compared to Three and Nine Months Ended September 30, 2025
The following table summarizes the changes in the results of our operations (in thousands) for the three months ended September 30, 2026 (“Three Months of 2026”) and nine months ended September 30, 2026 (“Nine Months of 2026”) compared to the three months ended September 30, 2025 (“Three Months of 2025”) and nine months ended September 30, 2025 (“Nine Months of 2025"):
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | Change | Percent | 2026 | 2025 | Change | Percent | ||||||||||||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net premiums earned1 | $ | 62,412 | $ | 47,925 | $ | 14,487 | 30.2 | % | $ | 178,748 | $ | 137,663 | $ | 41,085 | 29.8 | % | ||||||||||||||||||||||||||||||||||
Ceding commission revenue1 | 1,740 | 4,900 | (3,160) | (64.5 | %) | 4,677 | 10,941 | (6,264) | (57.3) | % | ||||||||||||||||||||||||||||||||||||||||
| Net investment income | 3,756 | 2,499 | 1,257 | 50.3 | % | 10,522 | 6,848 | 3,674 | 53.7 | % | ||||||||||||||||||||||||||||||||||||||||
| Net (losses) gains on investments | (550) | 182 | (732) | NM | (1,325) | 591 | (1,916) | (324.2) | % | |||||||||||||||||||||||||||||||||||||||||
| Gain on sale of real estate | - | - | - | – | % | - | 1,966 | (1,966) | (100.0) | % | ||||||||||||||||||||||||||||||||||||||||
| Other income | 186 | 146 | 40 | 27.4 | % | 551 | 438 | 113 | 25.8 | % | ||||||||||||||||||||||||||||||||||||||||
| Total revenues | 67,544 | 55,652 | 11,892 | 21.4 | % | 193,173 | 158,446 | 34,727 | 21.9 | % | ||||||||||||||||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expenses2 | 21,802 | 21,232 | 570 | 2.7 | % | 91,307 | 66,335 | 24,972 | 37.6 | % | ||||||||||||||||||||||||||||||||||||||||
| Commission expense | 12,193 | 10,308 | 1,885 | 18.3 | % | 33,961 | 30,251 | 3,710 | 12.3 | % | ||||||||||||||||||||||||||||||||||||||||
| Other underwriting expenses | 8,898 | 8,358 | 540 | 6.5 | % | 25,915 | 23,491 | 2,424 | 10.3 | % | ||||||||||||||||||||||||||||||||||||||||
| Other operating expenses | 1,486 | 1,330 | 156 | 11.7 | % | 5,109 | 3,519 | 1,590 | 45.2 | % | ||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 806 | 645 | 161 | 25.0 | % | 2,283 | 1,882 | 401 | 21.3 | % | ||||||||||||||||||||||||||||||||||||||||
| Interest expense | 54 | 73 | (19) | (26.0 | %) | 183 | 377 | (194) | (51.5) | % | ||||||||||||||||||||||||||||||||||||||||
| Total expenses | 45,239 | 41,946 | 3,293 | 7.9 | % | 158,758 | 125,855 | 32,903 | 26.1 | % | ||||||||||||||||||||||||||||||||||||||||
| Income before taxes | 22,305 | 13,706 | 8,599 | 62.7 | % | 34,416 | 32,591 | 1,825 | 5.6 | % | ||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 4,720 | 2,834 | 1,886 | 66.5 | % | 7,169 | 6,584 | 585 | 8.9 | % | ||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 17,584 | $ | 10,872 | $ | 6,712 | 61.7 | % | $ | 27,246 | $ | 26,007 | $ | 1,239 | 4.8 | % | ||||||||||||||||||||||||||||||||||
NM = Not Meaningful
(Columns in the table above may not sum to totals due to rounding)
1For the Three Months of 2025 and Nine Months of 2025, our personal lines business was subject to a 16% quota share treaty, expiring on January 1, 2026. Effective January 1, 2026, we entered into a 5% personal lines quota share treaty, under a cutoff basis.
2For the Three Months and Nine Months of 2026 and 2025, loss and loss adjustment expenses 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.
45
Table of Contents
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Percentage Point Change | 2026 | 2025 | Percentage Point Change | |||||||||||||||||||||||||||||||||||||||||||||
| Combined ratio: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss ratio | 34.9 | % | 44.3 | % | (9.4) | 51.1 | % | 48.2 | % | 2.9 | ||||||||||||||||||||||||||||||||||||||||
| Net underwriting expense ratio | 30.7 | % | 28.4 | % | 2.3 | 30.6 | % | 30.8 | % | (0.2) | ||||||||||||||||||||||||||||||||||||||||
| Net combined ratio | 65.6 | % | 72.7 | % | (7.1) | 81.7 | % | 79.0 | % | 2.7 | ||||||||||||||||||||||||||||||||||||||||
| Additional ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss ratio | 34.9 | % | 44.3 | % | (9.4) | 51.1 | % | 48.2 | % | 2.9 | ||||||||||||||||||||||||||||||||||||||||
| Effect of catastrophes | 7.5 | % | 0.2 | % | 7.3 | 10.4 | % | 0.8 | % | 9.6 | ||||||||||||||||||||||||||||||||||||||||
Net loss ratio excluding the effect of catastrophes1 | 27.4 | % | 44.1 | % | (16.7) | 40.7 | % | 47.4 | % | (6.7) | ||||||||||||||||||||||||||||||||||||||||
| Effect of prior year (favorable) unfavorable reserve development | (6.1 | %) | — | % | (6.1) | (3.8 | %) | (0.6 | %) | (3.2) | ||||||||||||||||||||||||||||||||||||||||
Underlying loss ratio1 | 33.5 | % | 44.1 | % | (10.6) | 44.5 | % | 48.0 | % | (3.5) | ||||||||||||||||||||||||||||||||||||||||
| Net underwriting expense ratio | 30.7 | % | 28.4 | % | 2.3 | 30.6 | % | 30.8 | % | (0.2) | ||||||||||||||||||||||||||||||||||||||||
Underlying combined ratio1 | 64.2 | % | 72.5 | % | (8.3) | 75.1 | % | 78.8 | % | (3.7) | ||||||||||||||||||||||||||||||||||||||||
1Net loss ratio excluding the effect of catastrophes, underlying loss ratio and underlying combined ratios are non-GAAP measures, defined above under "Key GAAP and Non-GAAP Measures", and reconciled in the table herein to the GAAP measure.
Net Premiums Earned
The following table reconciles GAAP net premiums earned to net premiums written1 and to direct premiums written1 for the periods presented:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | Change | Percent | 2026 | 2025 | Change | Percent | ||||||||||||||||||||||||||||||||||||||||||
| GAAP net premiums earned | $ | 62,412 | $ | 47,925 | $ | 14,487 | 30.2 | % | $ | 178,748 | $ | 137,663 | $ | 41,085 | 29.8 | % | ||||||||||||||||||||||||||||||||||
| Change in unearned premiums | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct | (9,774) | (9,778) | 4 | — | % | (8,373) | (5,339) | (3,034) | (56.8 | %) | ||||||||||||||||||||||||||||||||||||||||
| Ceded to reinsurance treaties | 28,082 | 26,054 | 2,028 | 7.8 | % | (2,365) | (1,866) | (499) | (26.7 | %) | ||||||||||||||||||||||||||||||||||||||||
| Change in net unearned premiums | 18,307 | 16,276 | 2,031 | 12.5 | % | (10,739) | (7,206) | (3,533) | (49.0 | %) | ||||||||||||||||||||||||||||||||||||||||
Net premiums written1 | 44,104 | 31,649 | 12,455 | 39.4 | % | 189,487 | 144,869 | 44,618 | 30.8 | % | ||||||||||||||||||||||||||||||||||||||||
| Ceded premiums written | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Ceded to quota share treaties | 3,754 | 9,662 | (5,908) | (61.1 | %) | (3,446) | 13,205 | (16,651) | (126.1 | %) | ||||||||||||||||||||||||||||||||||||||||
| Ceded to excess of loss treaties | 2,623 | 1,355 | 1,268 | 93.6 | % | 5,854 | 4,235 | 1,619 | 38.2 | % | ||||||||||||||||||||||||||||||||||||||||
| Ceded to catastrophe treaties | 36,313 | 33,144 | 3,169 | 9.6 | % | 36,997 | 32,738 | 4,259 | 13.0 | % | ||||||||||||||||||||||||||||||||||||||||
| Total ceded premiums written | 42,691 | 44,161 | (1,470) | (3.3 | %) | 39,406 | 50,178 | (10,772) | (21.5 | %) | ||||||||||||||||||||||||||||||||||||||||
Direct premiums written1 | $ | 86,795 | $ | 75,810 | $ | 10,985 | 14.5 | % | $ | 228,892 | $ | 195,047 | $ | 33,845 | 17.4 | % | ||||||||||||||||||||||||||||||||||
(Columns in the table above may not sum to totals due to rounding)
46
Table of Contents
1Direct premiums written 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.
Direct Premiums Written
Direct premiums written increased $11.0 million, or 14.5%, to $86.8 million in the Three Months of 2026 compared to $75.8 million during the Three Months of 2025. Direct premiums written increased $33.8 million, or 17.4%, to $228.9 million in the Nine Months of 2026 compared to $195.0 million in the Nine Months of 2025. The increase in both periods was primarily due to higher average renewal premiums from higher replacement costs, an increase in policy retention and an increase in new business policies.
Net Premiums Written
Net Premiums Written
Net premiums written increased $12.5 million, or 39.4%, to $44.1 million in the Three Months of 2026 from $31.6 million in the Three Months of 2025. Net premiums written increased $44.6 million, or 30.8%, to $189.5 million in the Nine Months of 2026 from $144.9 million in the Nine Months of 2025. Net premiums written represent direct premiums written, less the amount of written premiums ceded under our reinsurance treaties (quota share, excess of loss, and catastrophe). The increase in both periods was primarily due to changes to our personal lines quota share reinsurance treaty resulting in an increase in retention, the additional premiums due to organic growth, and an increase in average renewal premiums primarily from an increase in replacement costs. See quota share reinsurance treaties discussion below.
Quota share reinsurance treaties
Effective January 1, 2025, we entered into a 16% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2025 through January 1, 2026 (“2025/2026 Treaty”). Upon expiration of the 2025/2026 Treaty on January 1, 2026, we entered into a new 5% quota share reinsurance treaty for our personal lines business written in all states except California (for which we entered into a new 30% quota share reinsurance treaty) covering the period from January 1, 2026 through January 1, 2027 (“2026/2027 Treaty”). Our personal lines business was subject to the 2026/2027 Treaty in the Three Months and Nine Months of 2026, and the 2025/2026 Treaty in the Three Months and Nine Months of 2025. In the Three Months of 2026, our premiums ceded under quota share treaties decreased by $5.9 million in comparison to premiums ceded under quota share treaties in the Three Months of 2025 (see table above). In the Nine Months of 2026, our premiums ceded under quota share treaties decreased by $16.7 million in comparison to premiums ceded under quota share treaties in the Nine Months of 2025 (see table above). The decrease in both periods was attributable to the decrease in the quota share ceding percentage rate, offset by an increase in direct written premiums subject to the 2026/2027 Treaty compared to direct premiums written subject to the 2025/2026 Treaty. The inception of the 2026/2027 Treaty was recorded as a cutoff, resulting in the return of $13.3 million from reinsurers to us of previously ceded premiums written that were unearned as of January 1, 2026. The inception of the 2025/2026 Treaty was recorded as a cutoff, resulting in the return of $11.5 million from reinsurers to us of previously ceded premiums written that were unearned as of January 1, 2025.
Excess of loss reinsurance treaties
In the Three Months of 2026, our ceded excess of loss reinsurance premiums increased $1.3 million compared to the ceded excess of loss premiums for Three Months of 2025. In the Nine Months of 2026, our ceded excess of loss reinsurance premiums increased $1.6 million compared to the ceded excess of loss premiums for the Nine Months of 2025. Effective January 1, 2025, we renewed an underlying excess of loss reinsurance treaty (the “Underlying XOL Treaty”) covering the period from January 1, 2025 through June 30, 2025. The Underlying XOL Treaty provided 50% reinsurance coverage for losses and LAE of $0.4 million in excess of $0.6 million. Losses from named storms were excluded from the Underlying XOL Treaty. 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 $0.3 million in excess of $0.8 million, and 100% reinsurance coverage for losses in excess of $1.0 million up to $9.0 million together with facultative coverage. Retention was increased to $0.8 million from $0.7 million under the 2025/2026 Treaty. Effective July 1, 2026, the Underlying XOL Treaty was renewed along with our excess of loss reinsurance treaty covering the period from July 1, 2026 through June 30, 2027 ("2026/2027 XOL Treaties"). Combined, the renewed 2026/2027 XOL Treaties provide 50% reinsurance coverage for losses of $250 thousand in excess of $750 thousand, and 100% reinsurance coverage for losses in excess of $1.0 million up to $11.0 million together with facultative coverage.
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, respectively. The 2025/2026 Catastrophe Treaty covers 80% of losses on the first layer of $5.0 million in excess of $5.0 million (catastrophe coverage of $4.0 million), and losses of $430.0 million in excess of $10.0 million (catastrophe coverage of $430.0 million), for a total catastrophe coverage of $434.0 million. The 2024/2025 Catastrophe Treaty
47
Table of Contents
covered 95% of losses on the first layer of $5.0 million in excess of $5.0 million (catastrophe coverage of $4.8 million), and losses of $270.0 million in excess of $10.0 million (catastrophe coverage of $270.0 million), for a total catastrophe coverage of $274.8 million. Catastrophe coverage under the 2025/2026 Catastrophe Treaty increased by $159.2 million compared to the 2024/2025 Catastrophe Treaty. Effective July 1, 2026, we purchased $495.0 million of catastrophe reinsurance in excess of $5.0 million, compared to $435.0 million of catastrophe reinsurance in excess of $5.0 million in the expiring treaty. As a result of recording the entire annual catastrophe premiums at the inception of the treaties, catastrophe premiums in subsequent quarters would be due to premium adjustments. In the Three Months of 2026, our premiums ceded under our catastrophe treaties was $36.3 million in comparison to $33.1 million ceded under catastrophe treaties in the Three Months of 2025 (see table above). In the Nine Months of 2026, our premiums ceded under our catastrophe treaties was $37.0 million in comparison to $32.7 million ceded under catastrophe treaties in the Nine Months of 2025 (see table above).
Net premiums earned
Net premiums earned increased $14.5 million, or 30.2%, to $62.4 million in the Three Months of 2026 from $47.9 million in the Three Months of 2025. Net premiums earned increased $41.1 million, or 29.8%, to $178.7 million in the Nine Months of 2026 from $137.7 million in the Nine Months of 2025. The increase in both periods was due an increase in retention related to the 11 percentage point reduction in quota share rates discussed above, and the increase in direct premiums written, partially offset by an increase in catastrophe premiums due to the increase in catastrophe coverage reflected in ceded catastrophe premiums earned.
Ceding Commission Revenue
The following table summarizes the changes in the components of ceding commission revenue (in thousands) for the periods indicated:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | Change | Percent | 2026 | 2025 | Change | Percent | ||||||||||||||||||||||||||||||||||||||||||
| Provisional ceding commissions earned | $ | 1,423 | $ | 3,555 | $ | (2,132) | (60.0 | %) | $ | 4,052 | $ | 10,195 | $ | (6,143) | (60.3) | % | ||||||||||||||||||||||||||||||||||
| Contingent ceding commissions earned | 317 | 1,345 | (1,028) | (76.4 | %) | 625 | 745 | (120) | (16.1) | % | ||||||||||||||||||||||||||||||||||||||||
| Total ceding commission revenue | $ | 1,740 | $ | 4,900 | $ | (3,160) | (64.5 | %) | $ | 4,677 | $ | 10,941 | $ | (6,264) | (57.3) | % | ||||||||||||||||||||||||||||||||||
Ceding commission revenue was $1.7 million in the Three Months of 2026 compared to $4.9 million in Three Months of 2025. Ceding commission revenue was $4.7 million in the Nine Months of 2026 compared to $10.9 million in the Nine Months of 2025. The decrease of $3.2 million and $6.3 million, respectively, is explained below in the discussion of provisional ceding commissions earned and contingent ceding commissions earned.
Provisional Ceding Commissions Earned
In the Three Months of 2026, we earned provisional ceding commissions of $1.4 million from personal lines earned premiums ceded under the 2026/2027 Treaty, and in the Three Months of 2025, we earned provisional ceding commissions of $3.6 million from personal lines earned premiums ceded under the 2025/2026 Treaty. In the Nine Months of 2026, we earned provisional ceding commissions of $4.1 million from personal lines earned premiums ceded under the 2026/2027 Treaty, and in the Nine Months of 2025, we earned provisional ceding commissions of $10.2 million from personal lines earned premiums ceded under the 2025/2026 Treaty. The decrease of $2.1 million and $6.1 million, respectively, in provisional ceding commissions earned was due to the decrease in premiums ceded under these treaties in the Three Months and Nine Months of 2026 and 2025, offset by an increase in ceding commission rates under the 2026/2027 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 2026/2027 Treaty calls for a fixed provisional ceding commission with no opportunity to earn additional contingent ceding commissions.
48
Table of Contents
Net Investment Income
Net investment income was $3.8 million in the Three Months of 2026 compared to $2.5 million in the Three Months of 2025, an increase of $1.3 million, or 50.3%. Net investment income was $10.5 million in the Nine Months of 2026 compared to $6.8 million in the Nine Months of 2025, an increase of $3.7 million, or 53.7%. The increase in both periods was primarily due to an increase in cash generated from operations invested in fixed-income securities and an increase in average yields on invested assets. The average yield on invested assets was 4.6% as of September 30, 2026 compared to 4.0% as of September 30, 2025.
Cash and invested assets were $357.8 million as of September 30, 2026 compared to $300.8 million as of September 30, 2025, an increase of $57.1 million, primarily driven by cash flows from operations.
Net (Losses) Gains on Investments
Net losses on investments were $0.6 million in the Three Months of 2026 compared to net gains of $0.2 million in the Three Months of 2025. Net losses on investments were $1.3 million in the Nine Months of 2026 compared to net gains on investments of $0.6 million in the Nine Months of 2025. The change from net gains to net losses on investments in both periods was driven by an increase in unrealized losses on equity securities and other investments. Unrealized losses on our equity securities and other investments in the Three Months of 2026 were $0.5 million, compared to unrealized gains of $0.2 million in the Three Months of 2025. Unrealized losses on our equity securities and other investments in the Nine Months of 2026 were $1.1 million, compared to unrealized gains on our equity securities and other investments of $0.6 million in the Nine Months of 2025. .
Gain on Sale of Real Estate
Gain on sale of real estate was $0 in the Nine Months of 2026 compared to $2.0 million in the Nine Months of 2025. 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 $3.6 million. We are now renting a smaller facility in Kingston, New York.
Other Income
Other income was $0.2 million in the Three Months of 2026 compared to $0.1 million in the Three Months of 2025, Other income was $0.6 million in the Nine Months of 2026 compared to $0.4 million in the Nine Months of 2025.
Loss and Loss Adjustment Expenses
The following table reconciles the GAAP loss and loss adjustment expense to underlying losses1 for the periods presented:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | Change | Percent | 2026 | 2025 | Change | Percent | ||||||||||||||||||||||||||||||||||||||||||
| GAAP loss and loss adjustment expenses | $ | 21,802 | $ | 21,232 | $ | 570 | 2.7 | % | $ | 91,307 | $ | 66,335 | $ | 24,972 | 37.6 | % | ||||||||||||||||||||||||||||||||||
| Net losses from catastrophes | 4,662 | 115 | 4,547 | NM | 18,668 | 1,154 | 17,514 | NM | ||||||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expenses excluding the effect of catastrophes1 | 17,140 | 21,117 | (3,977) | (18.8 | %) | 72,639 | 65,181 | 7,458 | 11.4 | % | ||||||||||||||||||||||||||||||||||||||||
| Effect or prior year (favorable) unfavorable reserve development | (3,815) | (10) | (3,805) | NM | (6,715) | (822) | (5,893) | NM | ||||||||||||||||||||||||||||||||||||||||||
Underlying losses1 | $ | 20,955 | $ | 21,127 | $ | (172) | (0.8 | %) | $ | 79,354 | $ | 66,003 | $ | 13,351 | 20.2 | % | ||||||||||||||||||||||||||||||||||
NM = Not Meaningful
(Columns in the table above may not sum to totals due to rounding)
1Loss and LAE excluding the effect of catastrophes and underlying losses are non-GAAP measures, defined above under "Key GAAP and Non-GAAP Measures", and reconciled in the table herein to the GAAP measure of loss and LAE.
Loss and LAE was $21.8 million for the Three Months of 2026 compared to $21.2 million for the Three Months of 2025. The net loss ratio was 34.9% in the Three Months of 2026 compared to 44.3% in the Three Months 2025, a decrease of 9.4 percentage points. Loss and LAE was $91.3 million for the Nine Months of 2026 compared to $66.3 million for the Nine Months of 2025. The net loss ratio
49
Table of Contents
was 51.1% in the Nine Months of 2026 compared to 48.2% in the Nine Months of 2025, an increase of 2.9 percentage points. The net loss ratio for the Three Months of 2026 was lower than for the Three Months of 2025 due to a lower underlying loss ratio and more favorable prior accident year development partially offset by a greater impact from catastrophes. The net loss ratio for the Nine Months of 2026 was higher than for the Nine Months of 2025 due to a greater impact from catastrophes but partially offset by a lower underlying loss ratio and more favorable prior accident year development.
The underlying loss ratio was 33.5% for the Three Months of 2026, a decrease of 10.6 points from the 44.1% underlying loss ratio recorded for the Three Months of 2025. The lower underlying loss ratio was mainly driven by better loss settlement due to improvements in claims operations. Overall personal lines non-catastrophe frequency for the Three Months of 2026 was also slightly lower than both for the Three Months of 2025 and the long-term average. The underlying loss ratio was 44.5% for the Nine Months of 2026, a decrease of 3.5 points from the 48.0% underlying loss ratio recorded for Nine Months of 2025. The lower underlying loss ratio was mainly driven by better loss settlement due to improvements in claims operations. Overall personal lines non-catastrophe frequency for Nine Months of 2026 was in line with the Nine Months of 2025 and lower than the long-term average.
For the Three Months of 2026, there were nine newly designated catastrophe events which had a moderate impact on the net loss ratio, and development on events from prior quarters was favorable. Of the nine events, only two had a meaningful impact, including the nor’easter at the end of September. The estimated total net catastrophe impact for the Three Months of 2026 was $4.7 million, which contributed 7.5 points to the net loss ratio. By comparison, the catastrophe impact for the Three Months of 2025 was 0.2 points. For the Nine Months of 2026, there were twenty-four newly designated catastrophe events, including several large winter storm events in January and February. The estimated total net catastrophe impact for the Nine Months of 2026 was $18.7 million, which contributed 10.4 points to the net loss ratio. By comparison, the catastrophe impact for the Nine Months of 2025 was 0.8 points.
Favorable prior accident year development decreased the net loss ratio by 6.1 points for the Three Months of 2026 as compared to decreasing the net loss ratio by less than 0.1 points for the Three Months of 2025. For the Three Months of 2026, the favorable development was driven primarily by better-than-expected loss emergence on property lines for accident year 2025 and liability lines for accident years 2021 through 2025. For the Three Months 2025, there was favorable development on property lines offset by unfavorable development on liability lines, resulting in minimal overall development. Favorable prior accident year development decreased the net loss ratio by 3.8 points for the Nine Months of 2026 as compared to decreasing the net loss ratio by 0.6 points for the Nine Months of 2025. For the Nine Months of 2026, the favorable development was driven primarily by better-than-expected loss emergence on property lines for accident year 2025 and liability lines for accident years 2022 through 2025. For the Nine Months of 2025, the favorable development was attributable to better-than-expected loss emergence on property lines for accident years 2022 through 2024.
Commission Expense
Commission expense was $12.2 million in the Three Months of 2026 compared to $10.3 million in the Three Months of 2025. The increase of $1.9 million was primarily due to an increase in direct earned premiums and an increase of $0.4 million for an accrual of estimated contingent commission based on the profitability of the business. Commission expense was $34.0 million in the Nine Months of 2026 compared to $30.3 million in the Nine Months of 2025. The increase of $3.7 million in the Nine Months of 2026 compared to the Nine Months of 2025 was primarily due to an increase in direct earned premiums, partially offset by a decrease of $0.4 million for an accrual of estimated contingent commission based on the profitability of the business.
Other Underwriting Expenses
Other underwriting expenses were $8.9 million in the Three Months of 2026 compared to $8.4 million in the Three Months of 2025. The increase of $0.5 million, or 6.5%, was primarily due to increases in salaries and employment costs, underwriting fees, premium taxes, IT expenses, and Department of Financial Services ("DFS") regulatory fees. Other underwriting expenses were $25.9 million in the Nine Months of 2026 compared to $23.5 million in the Nine Months of 2025. The increase of $2.4 million, or 10.3%, was primarily due to increases in salaries and employment costs, an increase in premium taxes, an increase in IT expenses, and an increase in DFS regulatory fees.
Our net underwriting expense ratio in the Three Months of 2026 was 30.7% compared to 28.4% in the Three Months of 2025. Our net underwriting expense ratio in the Nine Months of 2026 was 30.6%, compared with 30.8% in the Nine Months of 2025 as the Company continues to benefit from economies of scale and continued diligent expense management.
Other Operating Expenses
Other operating expenses were $1.5 million for the Three Months of 2026 compared to $1.3 million for the Three Months of 2025. The increase in the Three Months of 2026 as compared to the Three Months of 2025 was primarily due to an increase in equity compensation. Other operating expenses were $5.1 million for the Nine Months of 2026 compared to $3.5 million for the Nine Months of 2025. The increase in the Nine Months of 2026 of $1.6 million, or 45.2%, as compared to the Nine Months of 2025 was primarily due to an increase in equity compensation and professional fees, partially offset by a decrease in loss on extinguishment of debt. The increase in equity compensation in both periods was due to additional restricted stock awards granted to our senior leadership team as of December 31, 2025 pursuant to our employee bonus plan, and to our CEO and CFO pursuant to their respective employment agreements. In the Nine Months of 2026, the increase in professional fees was due to legal fees incurred related to board level projects and additional accounting expenses incurred related to our new requirement for the audit of our internal control over financial reporting. The reduction
50
Table of Contents
in loss on extinguishment of debt loss was due to writing off the balance of unamortized debt issue costs upon the prepayment of the 2024 Notes in the Nine Months of 2025 as disclosed in Note 7 to the condensed consolidated financial statements.
Depreciation and amortization was $0.8 million in the Three Months of 2026 compared to $0.6 million in the Three Months of 2025. Depreciation and amortization was $2.3 million in the Nine Months of 2026 compared to $1.9 million in the Nine Months of 2025. The increase in depreciation and amortization of $0.2 million, or 25.0%, in the Three Months of 2026 and $0.4 million, or 21.3%, in Nine Months of 2026 was primarily due to the difference between additional depreciation on software acquired compared to software being fully depreciated.
Interest Expense
Interest expense in the Three Months of 2026 was $54 thousand compared to $73 thousand in the Three Months of 2025. Interest expense from both periods is from the 2022 equipment financing. Interest expense in the Nine Months of 2026 was $183 thousand compared to $377 thousand in the Nine Months of 2025. In the Nine Months of 2025, as disclosed in Note 7 to the condensed consolidated financial statements, we incurred interest expense in connection with the 2024 Notes which were paid off in the first quarter of 2025 in addition to the interest expense incurred on the 2022 equipment financing.
Income Tax Expense
Income tax expense in the Three Months of 2026 was $4.7 million, which resulted in an effective tax rate of 21.2%. Income tax expense in the Three Months of 2025 was $2.8 million, which resulted in an effective tax rate of 20.7%. The difference in the effective tax rate is due to the effect of permanent differences in the Three Months of 2026 compared to the Three Months of 2025. Income tax expense in the Nine Months of 2026 was $7.2 million, which resulted in an effective tax rate of 20.8%. Income tax expense in the Nine Months of 2025 was $6.6 million, which resulted in an effective tax rate of 20.2%. The difference in effective tax rate is due to the effect of permanent differences in the Nine Months of 2026 compared to the Nine Months of 2025. In the Nine Months of 2026, the vesting of restricted stock awards and exercise of stock options resulted in an income tax benefit, due to the increase in the stock price on the vesting date and exercise date as compared to the grant date, which had the effect of reducing the effective tax rate. In the Nine Months of 2025, the vesting of restricted stock awards and exercise of stock options resulted in an income tax benefit, due to the increase in the stock price on the vesting date and exercise date as compared to the grant date, which had the effect of reducing the effective tax rate. In the Nine Months of 2026, the increase in stock price was not as great as the increase in the Nine Months of 2025 on the vesting of restricted stock awards, resulting in a lower tax benefit, which had the effect of increasing the effective tax rate when compared to the prior year.
Net Income
Net income was $17.6 million in the Three Months of 2026 compared to net income of $10.9 million in the Three Months of 2025. Net income was $27.2 million in the Nine Months of 2026 compared to net income of $26.0 million in the Nine Months of 2025. The increase in net income of $6.7 million in the Three Months of 2026 and the increase in net income of $1.2 million in the Nine Months of 2026 was due to the items described above.
51
Table of Contents
Investments
Portfolio Summary
Fixed-Maturity Securities
The following table presents a breakdown of the amortized cost, allowance for credit losses, estimated fair value, and gross unrealized gains and losses on our available-for-sale fixed-maturity securities, including those classified as short-term investments as of September 30, 2026 and December 31, 2025:
| September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| Cost or Amortized Cost | Allowance for Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | % of Estimated Fair Value | |||||||||||||||||||||||||||||||||||||||
| Category | Less than 12 Months | More than 12 Months | ||||||||||||||||||||||||||||||||||||||||||
| Fixed-Maturity Securities: | ||||||||||||||||||||||||||||||||||||||||||||
| Available-for-Sale | ||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 1,498,038 | $ | - | $ | - | $ | (71,963) | $ | - | $ | 1,426,075 | 0.4 | % | ||||||||||||||||||||||||||||||
| Political subdivisions of States, Territories and Possessions (1) | 24,112,087 | - | - | (319,143) | (3,416,646) | 20,376,298 | 6.4 | % | ||||||||||||||||||||||||||||||||||||
| Corporate and other bonds Industrial and miscellaneous (1) | 164,231,277 | - | 725 | (5,242,808) | (3,437,762) | 155,551,432 | 49.0 | % | ||||||||||||||||||||||||||||||||||||
| Residential mortgage and other asset backed securities (1) (2) | 149,198,040 | (7,295) | 109,882 | (4,961,717) | (5,712,203) | 138,626,707 | 43.7 | % | ||||||||||||||||||||||||||||||||||||
| Total fixed-maturity securities, available-for-sale | 339,039,442 | (7,295) | 110,607 | (10,595,631) | (12,566,611) | 315,980,512 | 99.5 | % | ||||||||||||||||||||||||||||||||||||
| Short-term investments | 1,486,371 | - | - | (3,966) | - | 1,482,405 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
| Total fixed-maturity securities | $ | 340,525,813 | $ | (7,295) | $ | 110,607 | $ | (10,599,597) | $ | (12,566,611) | $ | 317,462,917 | 100.0 | % | ||||||||||||||||||||||||||||||
52
Table of Contents
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Cost or Amortized Cost | Allowance for Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | % of Estimated Fair Value | |||||||||||||||||||||||||||||||||||||||
| Category | Less than 12 Months | More than 12 Months | ||||||||||||||||||||||||||||||||||||||||||
| Fixed-Maturity Securities: | ||||||||||||||||||||||||||||||||||||||||||||
| Available-for-Sale | ||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies (1) | $ | 997,124 | $ | - | $ | 10,066 | $ | - | $ | - | $ | 1,007,190 | 0.3 | % | ||||||||||||||||||||||||||||||
| Political subdivisions of States, Territories and Possessions (1) | 24,125,578 | - | 182,580 | - | (2,534,725) | 21,773,433 | 7.5 | % | ||||||||||||||||||||||||||||||||||||
| Corporate and other bonds Industrial and miscellaneous (1) | 131,958,643 | - | 567,410 | (118,901) | (2,540,470) | 129,866,682 | 44.9 | % | ||||||||||||||||||||||||||||||||||||
| Residential mortgage and other asset backed securities (1) (2) | 139,656,710 | - | 1,273,816 | (62,968) | (4,477,673) | 136,389,885 | 47.2 | % | ||||||||||||||||||||||||||||||||||||
| Total fixed-maturity securities | $ | 296,738,055 | $ | - | $ | 2,033,872 | $ | (181,869) | $ | (9,552,868) | $ | 289,037,190 | 100.0 | % | ||||||||||||||||||||||||||||||
(1)KICO places certain fixed-maturity securities in a designated custodian account to fulfill the required collateral for a sale-leaseback transaction (see Note 7 - Debt - "Equipment Financing"). As of September 30, 2026 and December 31, 2025, the amount of required collateral was approximately $2,347,000 and $3,616,000, respectively, and the estimated fair value of the eligible collateral was approximately $2,347,000 and $3,616,000, 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, 2026 and December 31, 2025, the estimated fair value of the eligible investments was approximately $8,309,000 and $9,598,000 , respectively. KICO will retain all rights regarding all securities if pledged as collateral. As of September 30, 2026 and December 31, 2025, 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, 2026 and December 31, 2025:
| September 30, 2026 | ||||||||||||||||||||||||||||||||
| Category | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | % of Estimated Fair Value | |||||||||||||||||||||||||||
| Equity Securities: | ||||||||||||||||||||||||||||||||
| Preferred stocks | $ | 9,750,322 | $ | - | $ | (3,441,144) | $ | 6,309,178 | 68.7 | % | ||||||||||||||||||||||
| Fixed income exchange traded funds | 3,711,232 | - | (970,432) | 2,740,800 | 29.8 | % | ||||||||||||||||||||||||||
| FHLBNY common stock | 136,900 | - | - | 136,900 | 1.5 | % | ||||||||||||||||||||||||||
| Total | $ | 13,598,454 | $ | - | $ | (4,411,576) | $ | 9,186,878 | 100.0 | % | ||||||||||||||||||||||
53
Table of Contents
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Category | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | % of Estimated Fair Value | |||||||||||||||||||||||||||
| Equity Securities: | ||||||||||||||||||||||||||||||||
| Preferred stocks | $ | 9,750,322 | $ | - | $ | (2,765,627) | $ | 6,984,695 | 69.5 | % | ||||||||||||||||||||||
| Fixed income exchange traded funds | 3,711,232 | - | (724,432) | 2,986,800 | 29.7 | % | ||||||||||||||||||||||||||
| FHLBNY common stock | 85,100 | - | - | 85,100 | 0.8 | % | ||||||||||||||||||||||||||
| Total | $ | 13,546,654 | $ | - | $ | (3,490,059) | $ | 10,056,595 | 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, 2026 and December 31, 2025:
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| Category | Cost | Gross Gains | Estimated Fair Value | Cost | Gross Gains | Estimated Fair Value | ||||||||||||||||||||||||||||||||
| Other Investments: | ||||||||||||||||||||||||||||||||||||||
| Hedge fund | $ | 1,987,040 | $ | 2,380,222 | $ | 4,367,262 | $ | 1,987,040 | $ | 2,565,338 | $ | 4,552,378 | ||||||||||||||||||||||||||
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, 2026 and December 31, 2025:
| September 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| 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 securities1 | $ | 1,229,735 | $ | - | $ | (9,846) | $ | (66,432) | $ | 1,153,457 | 24.1 | % | ||||||||||||||||||||||||||
| Exchange traded debt | 304,111 | - | - | (75,861) | 228,250 | 4.8 | % | |||||||||||||||||||||||||||||||
| Corporate and other bonds Industrial and miscellaneous | 4,504,488 | - | - | (1,096,798) | 3,407,690 | 71.2 | % | |||||||||||||||||||||||||||||||
| Total | $ | 6,038,334 | $ | - | $ | (9,846) | $ | (1,239,091) | $ | 4,789,397 | 100.0 | % | ||||||||||||||||||||||||||
54
Table of Contents
| December 31, 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 securities1 | $ | 1,229,490 | $ | - | $ | (3,070) | $ | (22,083) | $ | 1,204,337 | 23.4 | % | ||||||||||||||||||||||||||
| Exchange traded debt | 304,111 | - | - | (62,111) | 242,000 | 4.7 | % | |||||||||||||||||||||||||||||||
| Corporate and other bonds Industrial and miscellaneous | 4,508,747 | - | - | (817,817) | 3,690,930 | 71.8 | % | |||||||||||||||||||||||||||||||
| Total | $ | 6,042,348 | $ | - | $ | (3,070) | $ | (902,011) | $ | 5,137,267 | 100.0 | % | ||||||||||||||||||||||||||
1All 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, 2026 and December 31, 2025 is shown below:
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Remaining Time to Maturity | Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | ||||||||||||||||||||||
| Less than one year | $ | 622,840 | $ | 615,958 | $ | - | $ | - | ||||||||||||||||||
| One to five years | 1,450,918 | 1,368,660 | 2,063,366 | 2,029,462 | ||||||||||||||||||||||
| Five to ten years | - | - | - | - | ||||||||||||||||||||||
| More than 10 years | 3,964,576 | 2,804,779 | 3,978,982 | 3,107,805 | ||||||||||||||||||||||
| Total | $ | 6,038,334 | $ | 4,789,397 | $ | 6,042,348 | $ | 5,137,267 | ||||||||||||||||||
55
Table of Contents
Credit Rating of Fixed-Maturity Securities
The table below summarizes the credit quality of our available-for-sale fixed-maturity securities, including those classified as short-term investments, as of September 30, 2026 and December 31, 2025 as rated by Standard & Poor’s (or, if unavailable from Standard & Poor’s, then Moody’s, Fitch, or Kroll):
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Estimated Fair Value | Percentage of Estimated Fair Value | Estimated Fair Value | Percentage of Estimated Fair Value | |||||||||||||||||||||||
| Rating | ||||||||||||||||||||||||||
| U.S. Treasury securities | $ | 2,908,480 | 0.9 | % | $ | 1,007,198 | 0.3 | % | ||||||||||||||||||
| Corporate and municipal bonds | ||||||||||||||||||||||||||
| AAA | 4,240,014 | 1.3 | % | 3,388,595 | 1.2 | % | ||||||||||||||||||||
| AA | 21,434,187 | 6.8 | % | 18,728,005 | 6.5 | % | ||||||||||||||||||||
| A | 86,297,321 | 27.2 | % | 72,631,685 | 25.1 | % | ||||||||||||||||||||
| BBB+ | 36,961,687 | 11.6 | % | 29,128,976 | 10.1 | % | ||||||||||||||||||||
| BBB | 22,749,111 | 7.2 | % | 24,203,080 | 8.4 | % | ||||||||||||||||||||
| BBB- | 2,681,027 | 0.8 | % | 1,958,225 | 0.7 | % | ||||||||||||||||||||
| Total corporate and municipal bonds | 174,363,347 | 55.0 | % | 150,038,566 | 52.0 | % | ||||||||||||||||||||
| Residential mortgage backed, asset backed, and other collateralized obligations | ||||||||||||||||||||||||||
| AAA | 49,233,938 | 15.5 | % | 50,779,398 | 17.6 | % | ||||||||||||||||||||
| AA | 66,239,718 | 20.9 | % | 64,073,127 | 22.2 | % | ||||||||||||||||||||
| A | 23,355,001 | 7.4 | % | 22,403,831 | 7.8 | % | ||||||||||||||||||||
| CCC | 368,748 | 0.1 | % | 422,903 | 0.1 | % | ||||||||||||||||||||
| Non-rated | 993,685 | 0.3 | % | 312,167 | 0.1 | % | ||||||||||||||||||||
| Total residential mortgage backed, asset backed, and other collateralized obligations | 140,191,090 | 44.2 | % | 137,991,426 | 47.8 | % | ||||||||||||||||||||
| Total | $ | 317,462,917 | 100.0 | % | $ | 289,037,190 | 100.0 | % | ||||||||||||||||||
The table below summarizes the average yield by type of fixed-maturity security as of September 30, 2026 and December 31, 2025:
| Category | September 30, 2026 | December 31, 2025 | ||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | 3.58 | % | 3.84 | % | ||||||||||
| Political subdivisions of States, Territories and Possessions | 3.95 | % | 3.69 | % | ||||||||||
| Corporate and other bonds Industrial and miscellaneous | 4.45 | % | 4.19 | % | ||||||||||
| Residential mortgage backed securities | 4.86 | % | 4.44 | % | ||||||||||
| Total | 4.58 | % | 4.27 | % | ||||||||||
The table below lists the weighted average maturity and effective duration in years on our fixed-maturity securities as of September 30, 2026 and December 31, 2025:
56
Table of Contents
| September 30, 2026 | December 31, 2025 | |||||||||||||
| Weighted average effective maturity | 10.1 | 11.2 | ||||||||||||
| Weighted average final maturity | 13.8 | 15.0 | ||||||||||||
| Effective duration | 4.5 | 4.4 | ||||||||||||
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, 2026 and December 31, 2025, 4% and 47%, 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 its 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 the Holding Company are dividends and distributions received from KICO, which are subject to statutory restrictions. For the nine months ended September 30, 2026, KICO paid dividends of $2.4 million to the Holding Company. As of September 30, 2026, the maximum dividends that KICO can pay to the Holding Company is restricted to the lesser of 10% of statutory surplus as shown by its last statement on file with the DFS, or 100% of net investment income for the preceding 36 months, reduced by dividends paid during such period. As of September 30, 2026, the maximum allowable dividend that KICO may pay to the Holding Company was $9.7 million without DFS approval. In the nine months ended September 30, 2026, the Holding Company funded KAIC with an initial investment of $5.1 million. The Holding Company does not expect to receive any dividends from KAIC within the next year.
KICO is a member of 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, 2026. 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, 2026, based on the net admitted assets as of June 30, 2026, was approximately $19.6 million. Available collateral as of September 30, 2026 was approximately $8.3 million. 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 the Nine Months of 2026 or the Nine Months of 2025.
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 $16.4 million 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 $25.0 million. During the nine months ended September 30, 2026, we did not sell any shares of our Common Stock under the ATM program. As of September 30, 2026, we had remaining capacity to sell up to an additional $15.9 million of our Common Stock under the ATM program.
On July 1, 2026, we entered into a revolving credit facility (the “Credit Facility”) that permits borrowings of up to $5.0 million in principal. Borrowings bear interest at a floating rate based on either (i) the one-month secured overnight financing rate (“SOFR”) plus
57
Table of Contents
2.5% or (ii) the alternate base rate plus 2.5%, as selected in accordance with the Credit Facility. We are required to make monthly interest payments, with all outstanding principal due at maturity on July 1, 2028. Borrowings under the Facility are unsecured. The Credit Facility includes financial and nonfinancial covenants. As of September 30, 2026, we were in compliance with these covenants. We intend to use borrowings for general corporate purposes. We did not borrow under the Credit Facility during the nine months ended September 30, 2026, and no amounts were outstanding as of that date.
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, | 2026 | 2025 | ||||||||||||
| (in thousands) | ||||||||||||||
| Cash flows provided by (used in): | ||||||||||||||
| Operating activities | $ | 59,299 | $ | 53,062 | ||||||||||
| Investing activities | (46,654) | (56,363) | ||||||||||||
| Financing activities | (4,034) | 1,404 | ||||||||||||
| Net increase (decrease) in cash and cash equivalents | 8,611 | (1,897) | ||||||||||||
| Cash and cash equivalents, beginning of period | 12,179 | 28,669 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 20,790 | $ | 26,772 | ||||||||||
Net cash provided by operating activities was $59.3 million in the Nine Months of 2026 as compared to $53.1 million provided by operating activities in the Nine Months of 2025. The $6.2 million increase in cash flows provided by operating activities in the Nine Months of 2026 as compared to the Nine Months of 2025 was primarily the result of cash provided from net fluctuations in operating assets and liabilities, and an increase in net income (adjusted for non-cash items) of $5.9 million. The net fluctuations in assets and liabilities are related to operating activities of KICO as affected by growth or decline in its operations, payments on claims and other changes, which are described above.
Net cash used in investing activities was $46.7 million in the Nine Months of 2026 compared to $56.4 million used in investing activities in the Nine Months of 2025 resulting in a $9.7 million decrease in net cash used in investing activities. In the Nine Months of 2026, we had net cash invested in our investment portfolio of $44.0 million, compared to $57.9 million invested in the Nine Months of 2025. In the Nine Months of 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 used in financing activities was $4.0 million in the Nine Months of 2026 compared to $1.4 million provided by financing activities in the Nine Months of 2025 resulting in a $5.4 million increase in net cash used in financing activities. In the Nine Months of 2026, we received no proceeds from our ATM offering, compared to $9.5 million in the Nine Months of 2025. In the Nine Months of 2025, we satisfied our debt under the 2024 Notes by making principal payments of $6.0 million, with none paid in the Nine Months of 2026. In the Nine Months of 2026, shareholder dividends were $2.3 million, compared to $0.7 million in the Nine Months of 2025.
Reinsurance
On January 1, 2025, we entered into a 16% quota share reinsurance treaty for our personal lines business, which primarily consisted of homeowners’ and dwelling fire policies, covering the period from January 1, 2025 through January 1, 2026 (“2025/2026 Treaty”). Upon the expiration of the 2025/2026 Treaty on January 1, 2026, we entered into a new 5% quota share reinsurance treaty for our personal lines business written in all states except California covering the period from January 1, 2026 through January 1, 2027 (“2026/2027 Treaty”). For business written in California, we entered into a 30% quota share reinsurance treaty covering the period from January 1, 2026 through January 1, 2027.
Our excess of loss and catastrophe reinsurance treaties expired on June 30, 2026 and we entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2026. The new catastrophe reinsurance treaties include the second year of the $125.0 million catastrophe bond ("Series 2025-1 Notes") issued on July 1, 2025. The Series 2025-1 Notes were priced at 4.5% and issued through a Bermuda-registered special purpose insurer, 1886 Re Ltd., providing KICO with $125.0 million 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, 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, 2026 and we entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2026. The new catastrophe reinsurance treaties include the second year of the $125.0 million catastrophe bond ("Series 2025-1 Notes") issued on July 1, 2025. The Series 2025-1 Notes were priced at 4.5% and issued through a Bermuda-registered special purpose insurer, 1886 Re Ltd., providing KICO with $125.0 million 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, cover four annual risk periods from July 1, 2025, through June 30, 2029.
58
Table of Contents
Effective January 1, 2025, we renewed an underlying excess of loss reinsurance treaty ("Underlying XOL Treaty") covering the period from January 1, 2025 through June 30, 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 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 ("2025/2026 XOL Treaties"). Combined, the renewed 2025/2026 XOL Treaties provided 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. Effective July 1, 2026, the Underlying XOL Treaty was renewed along with our excess of loss reinsurance treaty covering the period from July 1, 2026 through June 30, 2027 ("2026/2027 XOL Treaties"). Combined, the renewed 2026/2027 XOL 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 $11,000,000 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. For the period July 1, 2026 through June 30, 2027, we purchased 70% of all perils coverage excluding named storm losses of $5,000,000 in excess of $5,000,000. Effective July 1, 2026, we purchased $495,000,000 of catastrophe reinsurance in excess of $5,000,000, compared to $435,000,000 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:
59
Table of Contents
Treaty Period | ||||||||||||||||||||||||||||||||
| 2026/2027 Treaty | 2025/2026 Treaty | |||||||||||||||||||||||||||||||
| Line of Business | July 1, 2026 to January 1, 2027 | January 1, 2026 to June 30, 2026 | July 1, 2025 to January 1, 2026 | January 1, 2025 to June 30, 2025 | ||||||||||||||||||||||||||||
| Personal Lines: | ||||||||||||||||||||||||||||||||
| Homeowners, dwelling fire and canine legal liability | ||||||||||||||||||||||||||||||||
| Quota share treaty: | ||||||||||||||||||||||||||||||||
| Percent ceded (6) | 5 | % | 5 | % | 16 | % | 16 | % | ||||||||||||||||||||||||
| Risk retained on initial | ||||||||||||||||||||||||||||||||
| $1,000,000 of losses (4) (5) (6) | $ | 950,000 | $ | 950,000 | $ | 840,000 | $ | 840,000 | ||||||||||||||||||||||||
| Losses per occurrence | ||||||||||||||||||||||||||||||||
| subject to quota share | ||||||||||||||||||||||||||||||||
| reinsurance coverage | $ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | ||||||||||||||||||||||||
| Expiration date | January 1, 2027 | January 1, 2027 | January 1, 2026 | January 1, 2026 | ||||||||||||||||||||||||||||
| Excess of loss coverage and | ||||||||||||||||||||||||||||||||
| facultative facility | ||||||||||||||||||||||||||||||||
| coverage (1) (4) (5) | $ | 10,250,000 | $ | 8,250,000 | $ | 8,250,000 | $ | 8,400,000 | ||||||||||||||||||||||||
| in excess of | in excess of | in excess of | in excess of | |||||||||||||||||||||||||||||
| $ | 750,000 | $ | 750,000 | $ | 750,000 | $ | 600,000 | |||||||||||||||||||||||||
| Total reinsurance coverage | ||||||||||||||||||||||||||||||||
| per occurrence (4) (5) | $ | 10,175,000 | $ | 8,175,000 | $ | 8,285,000 | $ | 8,360,000 | ||||||||||||||||||||||||
| Losses per occurrence | ||||||||||||||||||||||||||||||||
| subject to reinsurance | ||||||||||||||||||||||||||||||||
| coverage (5) | $ | 11,000,000 | $ | 9,000,000 | $ | 9,000,000 | $ | 9,000,000 | ||||||||||||||||||||||||
| Expiration date | June 30, 2027 | June 30, 2026 | June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||||||||
| Catastrophe Reinsurance: | ||||||||||||||||||||||||||||||||
| Initial loss subject to personal | ||||||||||||||||||||||||||||||||
| lines quota share treaty (5) | $ | 10,000,000 | $ | 10,000,000 | $ | 10,000,000 | $ | 10,000,000 | ||||||||||||||||||||||||
| Risk retained per catastrophe | ||||||||||||||||||||||||||||||||
| occurrence (5) (6) (7) (8) | $ | 4,750,000 | $ | 5,500,000 | $ | 5,000,000 | $ | 4,250,000 | ||||||||||||||||||||||||
| Catastrophe loss coverage | ||||||||||||||||||||||||||||||||
| in excess of quota share | ||||||||||||||||||||||||||||||||
| coverage (2) (5) (8) | $ | 495,250,000 | $ | 434,500,000 | $ | 435,000,000 | $ | 275,000,000 | ||||||||||||||||||||||||
| Reinstatement premium | ||||||||||||||||||||||||||||||||
| protection (3) | 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, 2026. Effective July 1, 2026, homeowners single risk coverage was increased to $11,000,000 in total insured value, which covers direct losses from $3,500,000 to $11,000,000 through June 30, 2027.
(2)Through June 30, 2026, 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. Effective July 1, 2026, catastrophe coverage is limited on an annual basis to two times the per occurrence amounts, except for one occurrence on:
60
Table of Contents
(i) 70% of the first layer of $5,000,000 in excess of $5,000,000 for all perils excluding named storms, and (ii), 95% of the first layer of $5,000,000 in excess of $5,000,000 for named storms, and one occurrence on 45% of the layer of $275,000,000 in excess of $215,000,000, which is covered under the catastrophe bond. Duration of 168 consecutive hours for a non-named catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone. For named storms, duration beginning on the date a watch, warning, advisory, or other bulletin is first issued, continuing for a time period thereafter during which such named storm continues, regardless of its category rating or lack thereof and regardless of whether the watch, warning, advisory or other bulletin remains in effect for such named storm, and ending on the fourth calendar day following the issuance of the last watch, warning, advisory or other bulletin.
(3)For the period July 1, 2024 through June 30, 2025 (expiration date of the catastrophe reinsurance treaty), 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. For the period July 1, 2026 through June 30, 2027 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $50,000,000 of catastrophe coverage in excess of $10,000,000 for named storms only.
(4)For the period January 1, 2024 through June 30, 2025, the 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 quota share treaty that expired on January 1, 2025. 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. For the period July 1, 2026 through June 30, 2027, 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 $11,000,000 together with facultative coverage. Increased retention to $715,000 from $640,000 under the 2025/2026 Treaty, and increased retention to $825,000 under the 2026/2027 Treaty (see note 5 below).
(5)The personal lines quota share treaty (homeowners, dwelling fire and canine liability) will expire on January 1, 2027, with none of these coverages to be in effect during the period from January 1, 2027 through June 30, 2027. If and when this treaty is renewed on January 1, 2027, the personal lines quota share treaty, will be as provided for therein. Reinsurance coverage in effect from January 1, 2027 through June 30, 2027 is only for excess of loss, Underlying XOL, and catastrophe reinsurance treaties.
(6)For the 2025/2026 Treaty, 6% of the 16% total of losses ceded under this treaty were excluded from a named catastrophe event. For the 2026/2027 Treaty, there is no exclusion for catastrophe events. Quota share reinsurance under the 2026/2027 treaty is 5% for personal lines business written in all states except California (for which the quota share rate is 30%).
(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, an additional catastrophe reinsurance treaty provided coverage for winter storm losses to the extent of 90% of $5,000,000 in excess of $5,000,000. Retention for winter storms was $5,200,000 under the 2025/2026 Treaty from January 1, 2025 through April 30, 2025, $3,900,000 from October 15, 2025 through January 1, 2026, the expiration date of the 2025/2026 Treaty, and $5,000,000 under the 2026/2027 Treaty through April 30, 2026. Effective July 1, 2026 through June 30, 2027, catastrophe coverage is 95% of the first layer of $5,000,000 in excess of $5,000,000 for named storms, 70% for all other catastrophe risks. The remaining coverage is at 100% of $490,000,000 in excess of $10,000,000.
61
Table of Contents
| Treaty Year | |||||||||||||||||
| Line of Business | July 1, 2026 to June 30, 2027 | July 1, 2025 to June 30, 2026 | July 1, 2024 to June 30, 2025 | ||||||||||||||
| 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 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, 2027 | June 30, 2026 | June 30, 2025 | ||||||||||||||
| 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.
In the Three and Nine Months of 2026, there was an increase in interest rates, lower public equity valuations, and significant financial market volatility. The higher interest rates reduced the value of our fixed income securities.
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 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 pivoted focus away from admitted personal lines business (the "Withdrawal Plan"). The Withdrawal Plan, which includes this transaction, was approved by the DFS. The Withdrawal Plan enabled KICO to work with new distribution partners to further increase its 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. In March 2026, we announced that we intend to expand into new markets, starting with California, which we entered in the second quarter of 2026 and Connecticut which we entered in the third quarter of 2026.
The third quarter of 2026 was the most profitable quarter in our history with $17.6 million of net income. On November 5, 2026, we updated our 2026 direct premiums written growth outlook to approximately 16%, improved our 2026 net combined ratio outlook to 79% to 83%, and raised the midpoint of our 2026 diluted earnings per share guidance to $2.80.. The updated guidance was
62
Table of Contents
issued in a press release included in our Form 8-K filed with the SEC on November 5, 2026 and is based on management’s current expectations as of this date.
See “Forward-Looking Statements” before Part I, Item 1.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
This item is not applicable to smaller reporting companies.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Management, with participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, 2026.
Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2026, because of the material weaknesses in internal control over financial reporting described below.
Material Weaknesses in Internal Control over Financial Reporting
A material weakness, as defined in Rule 12b-2 under the Exchange Act, is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The material weaknesses in internal control over financial reporting previously reported in our Annual Report on Form 10-K for the year ended December 31, 2025, remained unremediated as of September 30, 2026.
Remediation Status of Reported Material Weaknesses
Management continues to implement its plan to remediate the previously reported material weaknesses. Completed actions and ongoing remediation activities are described below.
Management has obtained a SOC 1 Type 2 report from the service provider for the Company’s insurance premium quoting platform covering the period October 1, 2025 to December 31, 2025. The service provider's opinion was unqualified. In addition, management is working with the service provider to obtain a SOC 1 Type 2 report covering the period January 1, 2026 to October 31, 2026.
In May 2026, the Company migrated its general ledger system from the service provider’s hosting environment to the Company’s premises. In connection with the migration, management implemented general information technology controls over access and change management. Management also plans to obtain a SOC 2 Type 2 report from the service provider covering the January 1, 2026 to June 30, 2026 pre-migration hosting period.
The material weaknesses will not be considered remediated until the new and redesigned controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. The Company believes the above measures will remediate the control deficiencies identified and strengthen its internal control over financial reporting. As the Company continues to work to remediate the control deficiencies that gave rise to the material weaknesses, it may determine that additional measures or time are required to address the control deficiencies or that it needs to modify or otherwise adjust the remediation measures described above. The Company will continue to assess the effectiveness of its remediation efforts in connection with its evaluation of its internal control over financial reporting.
Changes in Internal Control over Financial Reporting
Other than as described above, there were no changes to the Company’s internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) that occurred during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
63
Table of Contents
Inherent Limitation on Effectiveness of Controls
Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by the board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP including those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.
64
Table of Contents
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
For a discussion of the Company’s potential risks and uncertainties, see Part I, Item 1A— “Risk Factors” and Part II, Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report") filed with the SEC, and Part I, Item 2—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein, in each case as updated by the Company's periodic filings with the SEC. There have been no material changes to the risk factors disclosed in Part I, Item 1A of the Company’s 2025 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a)None.
(b)Not applicable.
(c)None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information
(a)The Company’s certificate of incorporation includes Article Twelfth which was part of the Company’s certificate of incorporation at the time of its incorporation in Delaware in 1961 and was proper at such time. Article Twelfth deals with contracts or transactions between the Company and its directors or entities affiliated with its directors.
Subsequent to the Company’s incorporation, Delaware adopted a new statute, Section 144, which deals with contracts and transactions with interested officers and directors. Section 144, as amended over time, is currently inconsistent with what is provided for in Article Twelfth.
Subsequent to the Company’s incorporation, Delaware also adopted an amendment to its statute to allow a company to adopt a provision in its certificate of incorporation eliminating or limiting the personal liability of, among others, a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision may not eliminate or limit the liability of a director for, among other things, any breach of the director’s duty of loyalty to the corporation or its stockholders or for any transaction from which the director derived an improper personal benefit. Following the adoption of such statute amendment, the Company amended its certificate of incorporation to adopt such provision. Article Twelfth is inconsistent with such provision to the extent it eliminates or limits the liability of a director for any breach of the director’s duty of loyalty to the Company or its stockholders or for any transaction from which the director derived an improper personal benefit.
Based on the above, the Company will be submitting to its stockholders a proposal to amend its certificate of incorporation to remove or modify Article Twelfth of its certificate of incorporation to the extent necessary to comply with Delaware law. Pending such stockholder approval, Article Twelfth will not be enforced by the Company.
(b)None.
(c)None.
65
Table of Contents
Item 6. Exhibits.
3(a) | Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3(a) to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2014 filed on May 15, 2014). | |||||||
3(b)) | By-laws, as amended (incorporated by reference to Exhibit 3(b) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed on March 16, 2026) | |||||||
31(a) | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
31(b) | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
32+ | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 101.INS | XBRL Instance Document | |||||||
| 101.SCH | 101.SCH XBRL Taxonomy Extension Schema. | |||||||
| 101.CAL | 101.CAL XBRL Taxonomy Extension Calculation Linkbase. | |||||||
| 101.DEF | 101.DEF XBRL Taxonomy Extension Definition Linkbase. | |||||||
| 101.LAB | 101.LAB XBRL Taxonomy Extension Label Linkbase. | |||||||
| 101.PRE | 101.PRE XBRL Taxonomy Extension Presentation Linkbase. | |||||||
| + | This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended, or the Securities Act of 1934, as amended. | |||||||
66
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| KINGSTONE COMPANIES, INC. | ||||||||
Dated: November 6, 2026 | By: | /s/ Meryl Golden | ||||||
| Meryl Golden | ||||||||
| Chief Executive Officer, President and Principal Executive Officer | ||||||||
Dated: November 6, 2026 | By: | /s/ Randy Patten | ||||||
| Randy Patten | ||||||||
| Vice President, Chief Financial Officer, Treasurer and Principal Financial Officer | ||||||||
67