Kingstone Announces Third Consecutive Profitable Quarter as Company Turnaround Takes Hold and Schedules Second Quarter 2024 Conference Call

Rhea-AI Summary

Kingstone Companies (Nasdaq:KINS) reported preliminary Q2 2024 results, marking its third consecutive profitable quarter. Highlights include:

- 12% growth in direct written premiums
- Consolidated GAAP combined ratio of 78%, a 21 percentage point improvement
- Net loss ratio of 47%, a 20 percentage point improvement
- Operating income per basic share of $0.43 vs. loss of $(0.06) in Q2 2023
- Operating income per diluted share of $0.39 vs. loss of $(0.06) in Q2 2023

For the six months ended June 30, 2024, Kingstone reported 8% growth in direct written premiums and a consolidated GAAP combined ratio of 86%, a 25 percentage point improvement. The company will hold its Q2 2024 financial results conference call on August 13, 2024.

Positive

• Third consecutive profitable quarter, indicating successful turnaround
• 12% growth in direct written premiums for Q2 2024
• Consolidated GAAP combined ratio improved by 21 percentage points to 78% in Q2 2024
• Net loss ratio improved by 20 percentage points to 47% in Q2 2024
• Operating income per basic share of $0.43 in Q2 2024, compared to a loss in Q2 2023
• 8% growth in direct written premiums for the first half of 2024
• Consolidated GAAP combined ratio improved by 25 percentage points to 86% for the first half of 2024

Negative

• Catastrophe loss & LAE of $386k included in the Q2 2024 net loss ratio
• Catastrophe loss & LAE of $1.9M included in the net loss ratio for the first half of 2024

Insights

Financial Analyst

Kingstone's preliminary Q2 2024 results show significant improvement across key metrics, signaling a successful turnaround. The 12% growth in direct written premiums and 21% growth in core direct written premiums indicate strong market demand and effective pricing strategies. The dramatic improvement in the consolidated GAAP combined ratio to 78%, a 21 percentage point decrease, suggests much better underwriting and risk management practices.

The net loss ratio of 47%, a 20 percentage point improvement, is particularly impressive. This, combined with the modest $386,000 in catastrophe losses, indicates either favorable weather conditions or improved risk mitigation strategies. The net expense ratio of 31%, while only a 1 percentage point improvement, shows the company is maintaining operational efficiency while growing.

The shift from an operating loss to an operating income of $0.43 per basic share is a clear sign of financial health. This turnaround appears sustainable, as the six-month figures show similar improvements. The company's ability to grow premiums while significantly improving profitability metrics is a strong positive indicator for investors.

However, investors should note that these are preliminary, unaudited results. While promising, they should be verified against the final audited figures. Additionally, the insurance industry is cyclical and subject to unpredictable catastrophic events, so sustained performance over multiple quarters will be key to confirming the turnaround's stability.

Insurance Industry Expert

Kingstone's turnaround is noteworthy in the competitive Northeast property and casualty insurance market. The 21% growth in core direct written premiums suggests the company is successfully expanding its core business, likely through a combination of new policy acquisition and increased retention rates.

The dramatic improvement in the net loss ratio to 47% is particularly impressive. This level is well below the industry average, which typically hovers around 60-65% for property and casualty insurers. Such a low loss ratio could indicate either exceptionally good risk selection and pricing, or a period of unusually low claims. If sustainable, this gives Kingstone a significant competitive advantage in pricing and profitability.

The catastrophe loss of $386,000 for Q2 and $1.9 million for the half-year are relatively modest figures for a Northeast insurer, suggesting either a quiet catastrophe season or effective reinsurance strategies. However, investors should be cautious as catastrophe losses can be highly variable and significantly impact results in future quarters.

The improvement in the expense ratio to 31%, while modest, is still positive given the company's growth. This suggests Kingstone is managing to scale efficiently, which is important for long-term profitability in the insurance sector.

Overall, these results indicate a well-executed turnaround strategy, with improvements across underwriting, pricing and operational efficiency. If Kingstone can maintain these performance levels, it could position itself as a strong regional player in the Northeast insurance market.

KINGSTON, NY / ACCESSWIRE / July 29, 2024 / Kingstone Companies, Inc. (Nasdaq:KINS) (the "Company" or "Kingstone"), a Northeast regional property and casualty insurance holding company, announced today certain preliminary financial results for its second quarter and six months ended June 30, 2024, and announced that it will hold its second quarter 2024 financial results conference call on Tuesday, August 13, 2024, at 8:30 a.m. Eastern Time. The financial results news release is expected to be issued after the market closes on Monday, August 12, 2024.

Preliminary Results

(Estimated and Unaudited)

Second Quarter 2024 (all metrics are compared to Second Quarter 2023):

• Direct written premium growth¹ of 12%; Core² direct written premium growth¹ of 21%.

• Consolidated GAAP combined ratio of 78%, a 21 percentage point improvement.

  • Net loss ratio of 47%, a 20 percentage point improvement.

  • Catastrophe loss & LAE of $386k included in the net loss ratio.

  • Net expense ratio of 31%, a 1 percentage point improvement.

• Operating income per basic share¹ of $0.43 versus an operating loss per basic share¹ of $(0.06).

• Operating income per diluted share¹ of $0.39 versus an operating loss per diluted share¹ of $(0.06).

Six Months Ended June 30, 2024 (all metrics are compared to Six Months Ended June 30, 2023):

• Direct written premium growth¹ of 8%; Core² direct written premium growth¹ of 17%.

• Consolidated GAAP combined ratio of 86%, a 25 percentage point improvement.

  • Net loss ratio of 54%, a 23 percentage point improvement.

  • Catastrophe loss & LAE of $1.9M included in the net loss ratio.

  • Net expense ratio of 31%, a 2 percentage point improvement.

• Operating income per basic share¹ of $0.50 versus an operating loss per basic share of $(0.62).

• Operating income per diluted share¹ of $0.46 versus an operating loss per diluted share of $(0.62).

Conference Call Details

Tuesday, August 13, 2024, at 8:30 a.m. Eastern Time

To participate please dial:

U.S. toll free 1-877-423-9820
International 1-201-493-6749

Participants are asked to dial-in approximately 10 minutes before the conference call is scheduled to begin. The conference call can also be accessed via webcast in the "Events & Presentations" tab of the Company's website or by clicking here. The webcast will be archived and accessible for approximately 30 days.

Definitions and Non-GAAP Measures

Direct written premiums represent the total premiums charged on policies issued by the Company during the respective fiscal period. Net premiums earned, the GAAP measure most comparable to direct written premiums, are net written premiums (i.e., direct written premiums less premiums ceded to reinsurers) that are pro-rata earned during the fiscal period presented. All of the Company's policies are written for a twelve-month period. Management uses direct written premiums, along with other measures, to gauge the Company's performance and evaluate results. Direct written premiums are provided as supplemental information, not as a substitute for net premiums earned, and do not reflect the Company's net premiums earned.

The table below reconciles direct written premiums to net premiums earned for the periods presented:

		For the Three Months Ended												For the Six Months Ended
		June 30,												June 30,
										%												%
		2024				2023				Change				2024				2023				Change
(000's except percentages)
Direct Written Premiums Reconciliation:
Direct written premiums		$	53,495			$	47,647				12.3	%		$	102,820			$	95,244				8.0	%
Ceded written premiums1			(12,071	)			(11,541	)			4.6				(23,300	)			(27,647	)			(15.7	)
Net written premiums			41,425				36,106				14.7				79,520				67,598				17.6
Change in unearned premiums			(11,121	)			(6,598	)			68.6				(20,397	)			(9,835	)			107.4
Net premiums earned		$	30,304			$	29,508				2.7	%		$	59,124			$	57,763				2.4	%
	(Components may not sum due to rounding)
1Components of ceded written premiums balances from prior year periods were reclassified to conform with the current year presentation. The reclassification had no effect on the Company's previously reported financial condition, results of operations or cash flows.

Operating income (loss) per basic share is basic income (loss) per share exclusive of net gains (losses) on investments, net of tax. Net income (loss) per basic share is the GAAP measure most closely comparable to operating income (loss) per basic share.

Management uses operating income (loss) per basic share, along with other measures, to gauge the Company's performance and evaluate results, which can be skewed when including net gains (losses) on investments and may vary significantly between periods. Operating income (loss) per basic share is provided as supplemental information, not as a substitute for net income (loss) per basic share, and does not reflect the Company's overall profitability.

The following table reconciles basic income (loss) per share to basic operating income (loss) per share for the periods indicated:

		For the Three Months Ended								For the Six Months Ended
		June 30, 2024				June 30, 2023				June 30, 2024				June 30, 2023
		Basic income per common share				Basic loss per common share				Basic income per common share				Basic loss per common share
Operating Income (Loss) per Basic Common Share Reconciliation:
Net income (loss)		$	0.41			$	(0.05	)		$	0.54			$	(0.52	)
Net realized loss (gain) on investments, net of taxes		$	0.02			$	(0.01	)		$	(0.04	)		$	(0.10	)
Operating income (loss)		$	0.43			$	(0.06	)		$	0.50			$	(0.62	)

Operating income (loss) per diluted share is diluted income (loss) per share exclusive of net gains (losses) on investments, net of tax. Net income (loss) per diluted share is the GAAP measure most closely comparable to operating income (loss) per diluted share.

Management uses operating income (loss) per diluted share, along with other measures, to gauge the Company's performance and evaluate results, which can be skewed when including net gains (losses) on investments and may vary significantly between periods. Operating income (loss) per diluted share is provided as supplemental information, not as a substitute for net income (loss) per diluted share, and does not reflect the Company's overall profitability.

The following table reconciles diluted income (loss) per share to diluted operating income (loss) per share for the periods indicated:

		For the Three Months Ended								For the Six Months Ended
		June 30, 2024				June 30, 2023				June 30, 2024				June 30, 2023
		Diluted income per common share				Diluted loss per common share				Diluted income per common share				Diluted loss per common share
Operating Income (Loss) per Diluted Common Share Reconciliation:
Net income (loss)		$	0.37			$	(0.05	)		$	0.50			$	(0.52	)
Net realized loss (gain) on investments, net of taxes		$	0.02			$	(0.01	)		$	(0.03	)		$	(0.10	)
Operating income (loss)		$	0.39			$	(0.06	)		$	0.46			$	(0.62	)
	(Components may not sum due to rounding)

Disclaimer and Forward-Looking Statements

The estimated, unaudited financial results indicated above are based on information available as of July 29, 2024, remain subject to change based on management's ongoing review of the Company's second quarter results and are forward-looking statements (see below). The actual results may be materially different and are affected by the risk factors and uncertainties identified in Kingstone's annual and quarterly filings with the Securities and Exchange Commission.

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.

The risks and uncertainties include, without limitation, the following:

• the risk of significant losses from catastrophes and severe weather events;

• risks related to the lack of a financial strength rating from A.M. Best;

• risks related to our indebtedness due on December 30, 2024, including due to the need to comply with certain financial covenants and limitations on the ability of our insurance subsidiary to pay dividends to us;

• adverse capital, credit and financial market conditions;

• the unavailability of reinsurance at current levels and prices;

• the exposure to greater net insurance losses in the event of reduced reliance on reinsurance;

• the credit risk of our reinsurers;

• the inability to maintain the requisite amount of risk-based capital needed to grow our business;

• the effects of climate change on the frequency or severity of weather events and wildfires;

• risks related to the limited market area of our business;

• risks related to a concentration of business in a limited number of producers;

• legislative and regulatory changes, including changes in insurance laws and regulations and their application by our regulators;

• limitations with regard to our ability to pay dividends;

• the effects of competition in our market areas;

• our reliance on certain key personnel;

• risks related to security breaches or other attacks involving our computer systems or those of our vendors; and

• our reliance on information technology and information systems.

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.

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 15^th largest writer of homeowners insurance in New York. KICO is also licensed in New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine.

Investor Relations Contact:

Karin Daly
Vice President
The Equity Group Inc.
kdaly@equityny.com

¹These measures are not based on GAAP; definitions and reconciliations to the most directly comparable GAAP measures are below. See "Definitions and Non-GAAP Measures".

²Kingstone refers to New York business as its "core" business and the business outside of New York as its "non-core" business. The aggregate of "core" and "non-core" direct written premium growth is represented by direct written premium growth.

SOURCE: Kingstone Companies, Inc

View the original press release on accesswire.com

FAQ

What was Kingstone's (KINS) direct written premium growth in Q2 2024?

Kingstone reported a 12% growth in direct written premiums for Q2 2024 compared to Q2 2023.

How did Kingstone's (KINS) consolidated GAAP combined ratio change in Q2 2024?

Kingstone's consolidated GAAP combined ratio improved by 21 percentage points to 78% in Q2 2024 compared to Q2 2023.

What was Kingstone's (KINS) operating income per basic share in Q2 2024?

Kingstone reported an operating income per basic share of $0.43 in Q2 2024, compared to an operating loss per basic share of $(0.06) in Q2 2023.

When will Kingstone (KINS) hold its Q2 2024 financial results conference call?

Kingstone will hold its Q2 2024 financial results conference call on Tuesday, August 13, 2024, at 8:30 a.m. Eastern Time.