Kingstone Announces 2024/2025 Catastrophe Reinsurance Treaty Savings of $6 Million

Rhea-AI Summary

Kingstone has announced significant savings on its 2024/2025 catastrophe reinsurance treaty. The company secured $275 million in catastrophe coverage and lowered its first event retention to $5 million. The reinsurance cost was reduced to 14% of projected direct premiums earned, down from 19% the previous year. This reduction translates to a $6 million cost savings and an improvement in projected full-year earnings by $0.21 per share. These savings will be reflected in Q3 and Q4 2024 results. Kingstone also reported over 20% premium growth in its Core New York State business, boosted by adjusted underwriting guidelines and better-than-expected reinsurance pricing.

Positive

• Secured $275 million in catastrophe reinsurance coverage.
• First event retention lowered to $5 million.
• Reinsurance cost reduced to 14% of projected direct premiums earned.
• $6 million cost savings on the 2024/2025 reinsurance treaty.
• Projected full-year earnings to improve by $0.21 per share.
• Over 20% premium growth in Core New York State business.

Negative

• Reinsurance pricing increased, albeit less than projected.

Insights

Financial Analyst

The announcement by Kingstone regarding their 2024/2025 catastrophe reinsurance treaty savings is a notable development. The company has managed to reduce its reinsurance costs by approximately $6 million, which will positively impact their earnings by about $0.21 per share. This cost reduction is significant as it represents a decrease from 19% to 14% of projected direct premiums earned.

The reduction in cost despite higher reinsurance pricing suggests effective negotiations and strategic risk management. Lowering the first event retention to $5 million further enhances the company's financial protection against catastrophic events.

Retail investors should find this news encouraging as it highlights improved financial efficiency. In the short term, the savings will boost earnings, potentially leading to a positive reaction in the stock market. Long-term, better financial stability and enhanced protection against catastrophic losses could promote investor confidence.

However, it's important to consider industry trends. While Kingstone expects a softening reinsurance market, unforeseen adverse events could still impact future costs. Investors might want to monitor reinsurance market conditions and Kingstone's ongoing underwriting performance.

Market Research Analyst

Kingstone’s reinsurance strategy and its positive outcome are reflective of broader market dynamics. By securing support from over 25 reinsurers, Kingstone has demonstrated strong market relationships and negotiation capabilities. This broad support is important because it diversifies risk and shows confidence from the reinsurers in Kingstone’s stability and risk management practices.

The significant premium growth in their Core New York State business signifies an effective response to underwriting adjustments. However, expanding new business while maintaining controlled risk exposure will be key to sustaining these gains.

For investors, this growth combined with reduced reinsurance costs could indicate a reliable upward trajectory for Kingstone. Still, monitoring how the company manages increased business volumes and the impact on overall risk exposure remains essential.

KINGSTON, NY / ACCESSWIRE / June 20, 2024 / Kingstone Companies, Inc. (NASDAQ:KINS) (the "Company" or "Kingstone"), a Northeast regional property and casualty insurance holding company, today announced that its catastrophe reinsurance program for the period July 1, 2024 through June 30, 2025 has been finalized.

Jennifer Gravelle, Chief Financial Officer at Kingstone, stated, "I am delighted to share that Kingstone has finalized its 2024/2025 catastrophe reinsurance placement. The Company purchased $275 million of total catastrophe limit and reduced its first event retention to $5 million. The total cost is approximately 14% of projected direct premiums earned, a significant reduction from 19% for the previous treaty period.

Last year, we tightened our underwriting and curtailed new business writings to better manage our catastrophe exposure and reduce our probable maximum loss ("PML"). Although reinsurance pricing increased, it was not as significant as projected. As a result of these efforts, and other factors, we were able to lower our 24/25 reinsurance treaty cost by approximately $6 million, improving our projected full-year earnings by approximately $0.21 per share and better protecting the Company with a lower first event retention. The savings will be reflected in the 2024 third and fourth quarter results.

Meryl Golden, Chief Executive Officer of Kingstone, continued, "We appreciate the broad support we received from our valued reinsurance partners, with over 25 reinsurers participating in the program. In 2024, with the expectation of the reinsurance market softening and with confidence in our rates, we re-adjusted our underwriting guidelines to accept more new business. This has resulted in greater than 20% premium growth in our Core New York State business, which continues to accelerate, while we were also able to greatly reduce the cost of this year's reinsurance placement."

About Kingstone Companies, Inc.
Kingstone is a northeast regional property and casualty insurance holding company whose principal operating subsidiary is Kingstone Insurance Company ("KICO"). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto insurance in New York, and in 2023 was the 15th largest writer of homeowners insurance in New York. KICO is also licensed in New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine.

Forward-Looking Statements
Statements in this press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those included in forward-looking statements due to a variety of factors. For more details on factors that could affect expectations, see Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission.

Kingstone undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Investor Relations Contact:
Karin Daly
Vice President
The Equity Group Inc.
kdaly@equityny.com

SOURCE: Kingstone Companies, Inc

View the original press release on accesswire.com

FAQ

What are the details of Kingstone's 2024/2025 catastrophe reinsurance treaty?

Kingstone secured $275 million in catastrophe reinsurance coverage and lowered its first event retention to $5 million. The reinsurance cost was reduced to 14% of projected direct premiums earned, saving $6 million.

How will Kingstone's 2024/2025 reinsurance treaty affect its earnings?

The reinsurance savings are expected to improve Kingstone's projected full-year earnings by approximately $0.21 per share.

What impact did the reinsurance treaty have on Kingstone's costs?

Kingstone reduced the cost of its reinsurance treaty to 14% of projected direct premiums earned, down from 19% the previous year, resulting in $6 million in savings.

How much did Kingstone save on its 2024/2025 reinsurance treaty?

Kingstone saved approximately $6 million on its 2024/2025 reinsurance treaty.

What growth did Kingstone experience in its Core New York State business?

Kingstone experienced over 20% premium growth in its Core New York State business.