Greetings, and welcome to the Kingstone Company's Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Karin Daly, Vice President, The Equity Group and Kingstone's Investor Relations representative. Thank you. You may begin.

Thank you, Melissa, and good morning, everyone. Joining us on the call today will be President and Chief Executive Officer, Meryl Golden; and Chief Financial Officer, Jennifer Gravelle. On behalf of the company, I would like to note that this conference call may contain forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from projected results. Forward-looking statements speak only as of the date on which they are made, and Kingstone undertakes no obligation to update the information discussed. For more information, please refer to the section entitled Risk Factors in Part 1 Item 1A of the company's latest Form 10-K. Additionally, today's remarks may include references to non-GAAP measures. For a reconciliation of these non-GAAP measures to GAAP figures, please see the tables in the latest earnings release. With that, it's my pleasure to turn the call over to Meryl Golden. Meryl?

Thanks, Karin. Good morning, everyone, and thanks for joining our call. I am delighted to share the results of another record-breaking quarter and the most remarkable year in Kingstone's history. In 2024, the hard work to transform and turn around the company that started over 5 years ago was fully reflected in our financial results. During the year, we saw improvement in virtually every aspect of our business. I want to thank my great leadership team and our employees who worked tirelessly to make these results possible, and our select producers for their commitment to the company. I am proud of what we've been able to accomplish and excited to build on this foundation to achieve even better results in 2025. Let me start by highlighting the phenomenal growth we achieved in the fourth quarter and for the full year. We finished the year with 21% growth overall and 31% growth in our core business. In the third and fourth quarters, core business growth was driven by the exit of 2 competitors, Adirondack and Mountain Valley, who reached an agreement with the New York Department of Financial Services to nonrenew or cancel their entire book by the end of 2024. In the fourth quarter, our direct -- our core direct written premium grew by 49% as a result of the increased market opportunity from their exit, with homeowners' new business policies up 4x the prior year quarter, overall policy count up 44% and average premium up 15%. In the back half of 2024, we wrote $23 million in direct written premiums and over 6,000 policies from customers previously insured with these 2 carriers. For additional visibility, in January, we wrote an additional couple of million of dollars of premiums from this competitive displacement, but otherwise, all of these policies have…

Thanks, Meryl, and good morning, everyone. We could not be more pleased to share with you our record-breaking fourth quarter and full year 2024 results. As Meryl previously mentioned, this now marks our fifth consecutive quarter of profitability with net income of $5.4 million or $0.40 per diluted share for the quarter. For the year, our net income was $18.4 million, compared to a net loss of $6.2 million last year, and earnings per diluted share of $1.48 compared to a loss of $0.57 last year. Direct written premiums for the fourth quarter increased 37%, inclusive of a 49% increase in core direct written premiums from the market dislocation that Meryl had been discussing, was partially offset by the continued strategic reduction of our core -- of our noncore business, which decreased another 60% in direct written premiums and 65% in policies-in-force compared to the same period last year. Besides the high new business yield, the growth in our core business also reflects strong pricing action with average premiums for personal lines up almost 20% in the quarter versus the same quarter in 2023. For the year, direct written premiums were up 21%, with growth of 31% in the core business, driven by a 12% increase in core personal lines policies written and a 21% increase in the average premium for the year. Our combined ratio improved by 11 percentage points to 78.5% for the quarter. Our current quarter loss ratio improved by 7.7 percentage points, comprised of a 4.7 percentage point improvement in the non-cat losses and a 3 percentage point reduction in catastrophe losses. We also had a small $144,000 favorable prior-year development, reducing the loss ratio by 0.4 percentage points. Our expense ratio was 29.8%, 2.9 percentage points lower than the fourth quarter of 2023. For the…

[Operator Instructions] Thank you. Our first question comes from the line of Bob Farnam with Janney Montgomery Scott.

A couple of questions here. On the growth expectations for 2025, obviously, with Adirondack and Mountain Valley, kind of that opportunity going away. I'm just trying to get an idea of where that growth is coming from and maybe kind of get into what the competitive environment is like to be able to do that growth.

Sure. So Bob, the hard market conditions in our Downstate New York footprint still persists. And there are a few companies writing coastal properties. And of those still open, most are MGAs and E&S writers, as we've talked about in the past. There have been rumors of new market entrants, but it's just rumors. So nothing has really happened to date. So again, we are continuing to see growth in our new business counts and our average premium and we feel super confident with our pricing. So we intend to take advantage of these hard market conditions.

Do you have a sense of the new business, where they're coming from, like what the incumbent carrier -- who the incumbent carriers are?

I don't really know who the carriers are, but our mix is like essentially the same as it has been. So I mean, more and more you hear about the standard and preferred carriers who are not interested in coastal business in Downstate New York. So it's a mix of carriers. And again, it's the same mix of business that we've been writing in Downstate New York.

Okay. All right. And when you talk about your potential expansion plans, are you talking about New England, or are you thinking of other states around the country?

Yes. So actually, both. So what I want to say is this is the perfect time for Kingstone to expand geographically, for 2 reasons. First, we are in a great place. Our Select products is proven to match rate to risk. We have an incredible team. We have a low expense ratio. And our balance sheet is strong. And at the same time, as I'm sure you know, the homeowners market around the country, there are so many states that need capacity. And so we've committed significant resource to learning about many of these catastrophe-exposed states, trying to understand the market, the market potential, the regulatory environment, so we can better prioritize among them. And we're not in a hurry. We're going to be super thoughtful about our expansion. So thanks for asking that question, Bob.

Okay. You're talking about the improvement in the expense ratio. Do you have like an idea of where your -- where that expense ratio is going to get to over time? Is there -- do you have a goal for kind of an expense ratio?

Well, I'd like to say that it's now part of our culture to be very focused on having low expenses, because having low expenses allows us to have either more competitive rates or higher margins. So it's something that we continue to work at. My goal for this year is to take another point out of our expense ratio. And again, because we wrote so much business in the second half of last year, that's going to earn in 2025, plus the reduction in our quota share, our earned premium should be higher. So I'm pretty sure we can achieve that.

Right, right. Okay. And last question, kind of getting into the realm of forward-looking, but how would you characterize first quarter weather? Has this been kind of a regular winter season for you guys, or better or worse?

Sure. So last year was an incredibly mild winter. And this year, we have definitely had more snow than last year and it's been colder, but there have not been any material catastrophe events. And in fact, the frequency of catastrophe events has been pretty low. So Q1 is looking good for a winter quarter.

Our next question comes from the line of Gabriel McClear, Private Investor.

Meryl, congratulations on the fourth quarter. And also, I'd like to say thank you for all you do.

Thank you.

Yes. I think Bob just stole my first question about the first quarter, so that was good. I guess my second question, I got one for you and then one for Jennifer, but the one for you is maybe getting a little deeper into the guidance. When I go back and I look at your June, quarter ending June, quarter ending September and then the last quarter, the growth has accelerated sequentially by quite a bit, with the 49% in core. And then we're guiding for 15% to 25% growth in core for the year. And I know it's -- we've got about 2.5 months into this year. So how are you thinking about that? Or what are you seeing out there, Meryl? How is that square?

Yes. So I still feel very good that we can achieve core growth between 15% and 25%. So I've mentioned there are a few active writers and we really have not heard of -- well, there's no reality of other companies entering the market yet, just rumors. And so we have, because we've been a broad open market, there's lots of new producers that are knocking on our door looking for appointments. So we are expanding our producer base. And then we're always out in the field talking to our producers about their needs. And so we have updated our underwriting appetite where there's a market need, and we're priced adequately. For example, we're now writing up to $3.5 million in replacement cost. And also, we anticipate seeing an improvement in retention because our rate changes this year will be less -- it'll certainly be more moderate than they were in the last few years. So a combination of all those things, Gabe, I feel very confident with our guidance on core written premium.

Okay. Very good. And then I've got a question for Jennifer. Jennifer, I think you might have said it, but kind of -- I don't think I caught it, but what is our book yield on the portfolio right now?

3.86.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Ms. Golden for any final comments.

Thank you. It continues to be an exciting time for Kingstone. We could not be more optimistic about the trajectory of our business and our ability to generate long-term value for our shareholders. Thank you for joining the call today and for your continued support.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.