Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Kingstone Announces 2023 Second Quarter Financial Results By: ACCESSWIRE August 10, 2023 at 16:15 PM EDT KINGSTON, NY / ACCESSWIRE / August 10, 2023 / Kingstone Companies, Inc. (NASDAQ:KINS) (the "Company" or "Kingstone"), a Northeast regional property and casualty insurance holding company, today announced its financial results for the quarter ended June 30, 2023. The Company will host a conference call for analysts and investors on August 11, 2023, at 8:30 a.m. Eastern Time, as previously announced on July 13, 2023. 2023 Second Quarter Financial and Operational Highlights (All results are compared to prior year quarterly period unless otherwise noted) Direct written premiums 1 were $47.6 million, down 4.3% from $49.8 million; New York direct written premiums 1 were up 6.2% and the other states' direct written premiums 1 were down (45.9)% Net premiums earned were $29.5 million, up 5.8% from $27.9 million; New York net premiums earned were up 10.2% and the other states' net premiums earned were down (15.3)% Net loss ratio was 66.4%, down slightly from 66.9% for the same period last year; underlying loss ratio 1 (i.e, excluding the impact of catastrophes and prior year loss development) improved to 61.7%, down from 65.5% in 2022 Net underwriting expense ratio decreased to 32.5% from 36.4% Net combined ratio decreased to 98.9% from 103.3% Net combined ratio excluding catastrophes and prior year loss development 1 was 94.3% compared to 101.9% Operating EBITDA 1 increased to $1.02 million from $(5.71) million from the quarter ended March 31, 2023 Loss per share of $(0.05) compared to loss per share of $(0.51); net operating loss per share 1 of $(0.06) compared to $(0.17). Losses attributable to catastrophes were $(0.10) per share compared to $(0.01) Book value per share of $2.98, down 32.6% from the prior quarter book value per share of $4.42. Book value per share excluding Accumulated Other Comprehensive (Loss) 1 was $4.36 Personal Lines Policies-In-Force declined by 8.6%; decreased by 2.3% in New York and by 27.0% in the other states. 1 These measures are not based on accounting principles generally accepted in the United States ("GAAP") and are defined and reconciled below to the most directly comparable GAAP measures. Management Commentary Meryl Golden, Kingstone's Chief Operating Officer, commented, "We are delighted to have achieved an underwriting profit this quarter and with the material improvement in our financial results. Our attritional losses and expenses were lower than last year and our portfolio has stabilized. We believe the headwinds are abating and while we have more work to do to improve our business and return to consistent profitability, we feel confident that we are turning the corner." Jennifer Gravelle, Kingstone's Chief Financial Offer, continued, "Starting this quarter we will be sharing the net loss ratio and policies-in-force for our New York personal lines business separated from the other states so you can more clearly see the progress we are making in transforming the company and returning to our roots as the premier writer of coastal property insurance in Downstate NY. We will also be sharing Operating EBITDA as we believe it better illustrates the strength of our business. We are confident that we are doing all of the right things to deliver long-term value to our shareholders." See "Forward-Looking Statements" Financial Highlights Table Three Months Ended Six Months Ended June 30, June 30, ($ in thousands except per share data) 2023 2022 % Change 2023 2022 % Change Direct written premiums 1 $ 47,647 $ 49,778 -4.3% $ 95,244 $ 92,762 2.7% Net written premiums 1 $ 28,583 $ 30,026 -4.8% $ 52,551 $ 54,944 -4.4% Net premiums earned $ 29,508 $ 27,902 5.8% $ 57,763 $ 54,575 5.8% Total ceding commission revenue $ 5,412 $ 4,716 14.8% $ 10,858 $ 9,397 15.5% Net investment income $ 1,451 $ 634 128.9% $ 2,993 $ 1,993 50.2% Net gains (losses) on investments $ 197 $ (4,517) na $ 1,422 $ (8,916) na U.S. GAAP loss $ (522) $ (5,380) -90.3% $ (5,577) $ (14,577) -61.7% U.S. GAAP Diluted loss per share $ (0.05) $ (0.51) -90.2% $ (0.52) $ (1.37) -62.0% Comprehensive loss $ (1,409) $ (11,409) -87.7% $ (4,512) $ (28,368) -84.1% Net operating loss 1 $ (678) $ (1,811) -62.6% $ (6,700) $ (7,534) -11.1% Net operating loss 1 per share $ (0.06) $ (0.17) -64.7% $ (0.62) $ (0.71) -12.7% Return on average equity (annualized) -6.4% -40.8% -84.3% -32.7% -47.5% -31.2% Net loss ratio 66.4% 66.9% -0.5 pts 77.2% 76.2% 1 pts Net underwriting expense ratio 32.5% 36.4% -3.9 pts 33.6% 37.4% -3.8 pts Net combined ratio 98.9% 103.3% -4.4 pts 110.8% 113.6% -2.8 pts Effect of catastrophes and prior year loss development on net combined ratio 1 4.6 pts 1.4 pts 3.2 pts 8.9 pts 6.2 pts 2.7 pts Net combined ratio excluding effect of catastrophes and prior year loss development 1 94.3% 101.9% -7.6 pts 102.0% 107.4% -5.4 pts (Components may not sum due to rounding) 1 These measures are not based on GAAP and are defined and reconciled below to the most directly comparable GAAP measures. The following tables contain policies in force, direct written premiums 1 , net premiums earned, loss and loss adjustment expenses, and net loss ratio for our New York and non-New York business: For the Three Months Ended June 30, September 30, December 31, March 31, June 30, 2022 2022 2022 2023 2023 (000's except percentages and Policies in Force) New York and Non-New York Reconciliation Policies In Force, as of end of Three Month Period New York Personal lines 64,848 65,176 64,646 65,422 63,326 Other Lines 6,420 6,529 6,713 6,659 6,806 Total New York 71,268 71,705 71,359 72,081 70,132 Non-New York 22,230 22,007 20,695 18,945 16,224 Total policies in force 93,498 93,712 92,054 91,026 86,356 Direct written premiums New York Personal lines $ 36,680 $ 40,529 $ 39,877 $ 37,931 $ 38,515 Other Lines 3,054 3,420 4,046 3,496 3,696 Total New York 39,734 43,949 43,923 41,427 42,211 Non-New York 10,044 10,642 9,978 6,170 5,435 Total direct written premiums $ 49,778 $ 54,590 $ 53,901 $ 47,597 $ 47,647 Net premiums earned New York Personal lines $ 20,354 $ 20,931 $ 22,014 $ 20,548 $ 21,994 Other Lines 2,732 2,960 3,180 3,240 3,437 Total New York 23,086 23,890 25,194 23,788 25,430 Non-New York 4,816 5,471 5,254 4,467 4,078 Total premiums earned $ 27,902 $ 29,361 $ 30,448 $ 28,255 $ 29,508 Loss and loss adjustment expenses New York Personal lines $ 12,182 $ 13,332 $ 14,791 $ 16,977 $ 14,227 Other Lines 1,400 1,697 3,452 1,675 914 Total New York 13,582 15,028 18,243 18,651 15,141 Non-New York 5,074 6,999 6,522 6,388 4,439 Total loss and loss adjustment expenses $ 18,656 $ 22,028 $ 24,765 $ 25,039 $ 19,581 Net loss ratio New York Personal lines 59.9% 63.7% 67.2% 82.6% 64.7% Other Lines 51.2% 57.3% 108.6% 51.7% 26.6% Total New York 58.8% 62.9% 72.4% 78.4% 59.5% Non-New York 105.4% 127.9% 124.1% 143.0% 108.9% Total net loss ratio 66.9% 75.0% 81.3% 88.6% 66.4% (Components may not sum due to rounding) 1 These measures are not based on accounting principles generally accepted in the United States ("GAAP") and are defined and reconciled below to the most directly comparable GAAP measures. 2022 Second Quarter Financial Review Net loss: Net loss during the three-month period ended June 30, 2023 was $0.5 million as compared to a net loss of $5.4 million in the prior year period. The $4.9 million decrease in net loss in the latest three-month period is primarily attributable to an increase in gains on investments of $4.7 million. Earnings (Loss) per share ("EPS"): Kingstone reported a loss of $(0.05) per diluted share for the three months ended June 30, 2023, compared to a loss of $(0.51) per diluted share for the three months ended June 30, 2022. EPS for the three-month periods ended June 30, 2023 and 2022 were based on 10.8 million and 10.7 million weighted average diluted shares outstanding, respectively. Direct Written Premiums, 1 Net Written Premiums 1 and Net Premiums Earned Direct written premiums 1 for the second quarter of 2023 were $47.6 million, a decrease of $2.1 million, or 4.3%, from $49.8 million in the prior year period. Most of the decrease was in Personal Lines, which decreased $2.8 million, or 5.9%. Net written premiums 1 decreased $1.4 million, or 4.8%, to $28.6 million during the three-month period ended June 30, 2023 from $30.0 million in the prior year period. The decrease was primarily in Personal Lines, which decreased $2.1 million, or 7.7%. Net premiums earned for the quarter ended June 30, 2023 increased 5.8% to $29.5 million, compared to $27.9 million for the quarter ended June 30, 2022. The $1.6 million increase was primarily attributable to an increase in Personal Lines of $0.9 million and Livery Physical Damage of $0.7 million. Net Loss Ratio : For the quarter ended June 30, 2023, the Company's net loss ratio was 66.4%, compared to 66.9% in the prior year period. While the underlying loss ratio (i.e., net loss ratio excluding the impact of catastrophes and prior year loss development) was improved for the three months ended June 30, 2023 compared to the three months ended June 30, 2022, the catastrophe loss had a bigger impact for the 2023 period. There were three wind events classified as catastrophes for the three months ended June 30, 2023. The total net catastrophe losses for the calendar quarter were $1.4 million, which contributed 4.7 points to the net loss ratio. This compares to a 0.4-point impact from catastrophe events for the three months ended June 30, 2022. The underlying loss ratio was 61.7% for the three months ended June 30, 2023, a decrease of 3.8 points from the 65.5% underlying loss ratio recorded for the three months ended June 30, 2022. The loss experience for the 2023 period was improved due to lower frequency, which is believed to be the result of the Company's new Select products as well as the Company's active efforts to manage less profitable segments. Such improvement in loss experience was offset by an elevated number of large losses, similar to what was observed in the first three months of 2023. Prior year development was stable for the three months ended June 30, 2023. There was an overall favorable development of $16,000, which had a marginal impact on the net loss ratio. 1 These measures are not based on GAAP and are defined and reconciled below to the most directly comparable GAAP measures. Net Underwriting Expense Ratio : For the quarter ended June 30, 2023, the net underwriting expense ratio was 32.5% as compared to 36.4% in the prior year period, a decrease of 3.9 percentage points. The decrease in the quarter was primarily attributable to a reduction in commission and underwriting expenses as a percentage of net earned premium. Balance Sheet / Investment Portfolio Kingstone's cash and investment holdings were $175.4 million at June 30, 2023 compared to $193.8 million at June 30, 2022. The Company's investment holdings are comprised primarily of investment grade corporate, mortgage-backed and municipal securities, with fixed income investments representing approximately 89.0% of total investments at June 30, 2023 and 82.7% at June 30, 2022. The Company's effective duration on its fixed-income portfolio is 4.6 years. Net investment income increased to $1.5 million for the second quarter of 2023 from $0.6 million in the prior year period. Last year's net investment income was understated due to the reversal of a prior year accrued interest income error in third party investment reporting. Higher interest rates on cash balances also factored into the increase. Accumulated Other Comprehensive Income/Loss (AOCI), net of tax As of June 30, 2023, AOCI was a loss of $(14.9) million compared to a loss of $(12.0) million at June 30, 2022. The decrease in AOCI at June 30, 2023 of $2.9 million as compared to June 30, 2022 is attributable to the increase in interest rates most notably occurring in Q1 and Q2 2022. Share Repurchase Program The Company did not repurchase any shares during the quarter. Book Value The Company's book value per share at June 30, 2023 was $2.98, a decline of 32.6% compared to $4.42 at June 30, 2022. 30-Jun-23 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 Book Value Per Share $ 2.98 $ 3.09 $ 3.38 $ 3.65 $ 4.42 % Increase from specified period to 6/30/23 -3.6% -11.8% -18.4% -32.6% FOR ADDITIONAL INFORMATION PLEASE VISIT OUR WEBSITE AT WWW.KINGSTONECOMPANIES.COM. Conference Call Details Management will discuss the Company's operations and financial results in a conference call on Friday, August 11, 2022, at 8:30 a.m. ET. The dial-in numbers are:(877) 407-3105 (U.S.)(201) 493-6794 (International) Accompanying Webcast The call will be simultaneously webcast over the Internet via the Kingstone website or by clicking on the conference call link: Kingstone Companies Second Quarter 2023 Financial Results Webcast 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 written are direct written premiums less premiums ceded to reinsurers. Net premiums earned, the GAAP measure most comparable to direct written premiums and net premiums written, are net premiums written 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 and net premiums written, along with other measures, to gauge the Company's performance and evaluate results. Net operating income (loss) - is net income (loss) exclusive of realized investment gains (losses), net of tax. Net income (loss) is the GAAP measure most closely comparable to net operating income (loss). Management uses net operating income (loss) along with other measures to gauge the Company's performance and evaluate results, which can be skewed when including realized investment gains (losses), and may vary significantly between periods. Net operating income (loss) is provided as supplemental information, not as a substitute for net income (loss) and does not reflect the Company's overall profitability. Operating EBITDA - is net income (loss) exclusive of interest expense, income tax expense (benefit), depreciation and amortization, and realized investment gains (losses). Net income (loss) is the GAAP measure most closely comparable to operating EBITDA. Management uses operating EBITDA along with other measures to gauge the Company's performance and evaluate results, which can be skewed when including interest expense, income tax expense (benefit), depreciation and amortization, and realized investment gains (losses), and may vary significantly between periods. Operating EBITDA is provided as supplemental information, not as a substitute for net income (loss) and does not reflect the Company's overall profitability. Book value per share excluding accumulated other comprehensive (loss) income - is book value per share excluding the impact of accumulated other comprehensive (loss) income or AOCI. Management uses book value per share excluding accumulated other comprehensive (loss) income to evaluate the results to exclude the impact of interest rate changes on our fixed income portfolio. Net combined ratio excluding effect of catastrophes and prior year loss development - is a non-GAAP ratio, which is computed as the difference between GAAP net combined ratio and the effect of catastrophes and prior year loss development on the net combined ratio. We believe that these ratios are useful to investors and they are used by management to reveal the trends in our business that may be obscured by catastrophe losses and prior year loss development. 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 and net combined ratio. Prior year loss development can cause our loss ratio to vary significantly between periods and separating this information allows us to better compare the results for the current accident period over time. We believe these measures are useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. We also provide them to facilitate a comparison to our outlook on the net combined ratio excluding the effect of catastrophes and prior year loss development. The most directly comparable GAAP measure is the net combined ratio. The net combined ratio excluding the effect of catastrophes and prior year loss development should not be considered a substitute for the net combined ratio and does not reflect the Company's net combined ratio. The table below reconciles direct written premiums and net written premiums to net premiums earned for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 $ Change % Change 2023 2022 $ Change % Change (000's except percentages) Direct and Net Written Premiums Reconciliation: Direct written premiums $ 47,647 $ 49,778 $ (2,131) (4.3)% $ 95,244 $ 92,762 $ 2,482 2.7% Ceded written premiums (19,064) (19,753) 689 (3.5) (42,693) (37,818) (4,875) 12.9 Net written premiums 28,583 30,026 (1,442) (4.8) 52,551 54,944 (2,393) (4.4) Change in unearned premiums 925 (2,124) 3,049 na 5,212 (369) 5,581 na Net premiums earned $ 29,508 $ 27,902 $ 1,607 5.8% $ 57,763 $ 54,575 $ 3,188 5.8% (Components may not sum due to rounding) The following table reconciles net operating loss to net loss for the periods indicated: For the Three Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Amount Diluted loss per common share Amount Diluted loss per common share Amount Diluted loss per common share Amount Diluted loss per common share (000's except per common share amounts and percentages) Net Operating Loss and Diluted Operating Loss per Common Share Reconciliation: Net loss $ (522) $ (0.05) $ (5,380) $ (0.51) $ (5,577) $ (0.52) $ (14,577) $ (1.37) Net realized (gain) loss on investments (197) 4,517 (1,422) 8,916 Less tax (expense) benefit on net realized (gain) loss (41) 949 (299) 1,872 Net realized (gain) loss on investments, net of taxes (156) $ (0.01) 3,568 $ 0.34 (1,123) $ (0.10) 7,044 $ 0.66 Net operating loss $ (678) $ (0.06) $ (1,811) $ (0.17) $ (6,700) $ (0.62) $ (7,534) $ (0.71) Weighted average diluted shares outstanding 10,755,848 10,644,578 10,753,974 10,637,553 (Components may not sum due to rounding) The following table reconciles operating EBITDA to net loss for the periods indicated: For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 (000's) Operating EBITDA Reconciliation: Net loss $ (522) $ (5,055) $ (3,950) $ (3,998) $ (5,380) Interest expense 1,006 1,010 649 457 457 Income tax benefit (41) (1,249) (985) (562) (1,403) Depreciation and amortization 779 808 828 825 877 EBITDA 1,221 (4,486) (3,458) (3,278) (5,449) Net realized (gain) loss on investments (197) (1,225) 78 398 4,517 Operating EBITDA $ 1,024 $ (5,711) $ (3,379) $ (2,880) $ (931) (Components may not sum due to rounding) The following table reconciles book value per share excluding accumulated other comprehensive loss to book value per share as of the dates indicated: 30-Jun-23 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 Book Value Per Share $ 2.98 $ 3.09 $ 3.38 $ 3.65 $ 4.42 Acccumulated other comprehensive loss $ (14,893,752) $ (14,007,076) $ (15,958,428) $ (15,978,570) $ (11,994,258) Shares outstanding 10,756,156 10,760,559 10,700,106 10,645,675 10,645,675 Accumulated other comprehensive loss per common share $ (1.38) $ (1.30) $ (1.49) $ (1.50) $ (1.13) Book value per share excluding acccumulated other comprehensive loss $ 4.36 $ 4.39 $ 4.87 $ 5.15 $ 5.55 (Components may not sum due to rounding) The following table reconciles the net combined ratio excluding catastrophes and prior year loss development to the net combined ratio for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 Percentage Point Change 2023 2022 Percentage Point Change Net Combined Ratio Excluding Catastrophes and Prior Year Loss Development Reconciliation: Net Combined Ratio Excluding Catastrophes and Prior Year Loss Development 94.3% 101.9% (7.6) pts 102.0% 107.4% (5.4) pts Effect of catastrophe losses and prior year loss development Catastrophe losses 4.7% 0.4% 4.3 pts 8.9% 5.7% 3.2 pts Prior year loss development -0.1% 1.0% (1.1) pts 0.0% 0.5% (0.5) pts Effect of catastrophe losses and prior year loss development on net loss and loss adjustment expenses 4.6% 1.4% 3.2 pts 8.9% 6.2% 2.7 pts Net underwriting expense ratio 0.0% 0.0% - pts 0.0% 0.0% - pts Total effect of catastrophe losses and prior year loss development 4.6% 1.4% 3.2 pts 8.9% 6.2% 2.7 pts Net combined ratio 98.9% 103.3% (4.4) pts 110.8% 113.6% (2.7) pts (Components may not sum due to rounding) The following table reconciles the net combined ratio excluding catastrophes to the net combined ratio for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 Percentage Point Change 2023 2022 Percentage Point Change Net Combined Ratio Excluding Catastrophes Reconciliation: Net Combined Ratio Excluding Catastrophes 94.2% 102.9% (8.7) pts 102.0% 107.9% (5.9) pts Catastrophe losses 4.7% 0.4% 4.3 pts 8.9% 5.7% 3.2 pts Net combined ratio 98.9% 103.3% (4.4) pts 110.8% 113.6% (2.7) pts (Components may not sum due to rounding) The following table reconciles the net loss ratio excluding catastrophes and prior year loss development to the net loss ratio for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 Percentage Point Change 2023 2022 Percentage Point Change Net Loss Ratio Excluding Catastrophes and Prior Year Loss Development Reconciliation: Net Loss Ratio Excluding Catastrophes and Prior Year Loss Development 61.7% 65.5% (3.8) pts 68.4% 70.0% (1.6) pts Effect of catastrophe losses and prior year loss development Catastrophe losses 4.7% 0.4% 4.3 pts 8.9% 5.7% 3.2 pts Prior year loss development -0.1% 1.0% (1.1) pts 0.0% 0.5% (0.5) pts Effect of catastrophe losses and prior year loss development on net loss and loss adjustment expenses 4.6% 1.4% 3.2 pts 8.9% 6.2% 2.7 pts Net loss ratio 66.4% 66.9% (0.6) pts 77.2% 76.2% 1.1 pts (Components may not sum due to rounding) The following table summarizes gross and net written premiums, net premiums earned, net loss and loss adjustment expenses and net loss ratio by major product type, which were determined based primarily on similar economic characteristics and risks of loss. For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 2023 2022 Gross premiums written: Personal lines(3) $ 44,011,176 $ 46,792,267 $ 88,182,114 $ 86,955,416 Livery physical damage 3,609,832 2,953,588 7,015,500 5,726,868 Other(1) 25,936 32,608 46,776 80,076 Total gross premiums written $ 47,646,944 $ 49,778,463 $ 95,244,390 $ 92,762,360 Net premiums written: Personal lines(3) $ 24,954,271 $ 27,048,585 $ 45,505,958 $ 49,159,250 Livery physical damage 3,609,832 2,953,588 7,015,500 5,726,868 Other(1) 18,625 23,607 30,017 57,850 Total net premiums written $ 28,582,728 $ 30,025,780 $ 52,551,475 $ 54,943,968 Net premiums earned: Personal lines(3) $ 26,075,876 $ 25,178,854 $ 51,094,961 $ 49,339,070 Livery physical damage 3,409,779 2,687,273 6,621,613 5,161,838 Other(1) 22,541 35,941 46,575 74,540 Total net premiums earned $ 29,508,196 $ 27,902,068 $ 57,763,149 $ 54,575,448 Net loss and loss adjustment expenses(4): Personal lines $ 17,925,971 $ 16,540,604 $ 40,495,580 $ 37,576,758 Livery physical damage 894,026 1,180,223 2,279,167 2,010,792 Other(1) 36 (967) 151,643 (24,367) Unallocated loss adjustment expenses 828,963 980,984 1,720,053 1,950,377 Total without commercial lines 19,648,996 18,700,844 44,646,443 41,513,560 Commercial lines (in run-off effective July 2019)(2) (68,294) (44,803) (26,331) 83,679 Total net loss and loss adjustment expenses $ 19,580,702 $ 18,656,041 $ 44,620,112 $ 41,597,239 Net loss ratio(4): Personal lines 68.7% 65.7% 79.3% 76.2% Livery physical damage 26.2% 43.9% 34.4% 39.0% Other(1) 0.2% -2.7% 325.6% -32.7% Total without commercial lines 66.6% 67.0% 77.3% 76.1% Commercial lines (in run-off effective July 2019)(2) na na na na Total 66.4% 66.9% 77.2% 76.2% "Other" includes, among other things, premiums and loss and loss adjustment expenses from our participation in a mandatory state joint underwriting association and loss and loss adjustment expenses from commercial auto. In July 2019, the Company decided that it will no longer underwrite Commercial Liability risks. See discussions above regarding the discontinuation of this line of business. See discussion with regard to "Direct Written Premiums, Net Written Premiums and Net Premiums Earned" above. See discussions above with regard to "Net Loss Ratio". KINGSTONE COMPANIES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues Net premiums earned $ 29,508,196 $ 27,902,068 $ 57,763,149 $ 54,575,448 Ceding commission revenue 5,412,210 4,715,587 10,857,617 9,396,983 Net investment income 1,451,356 634,325 2,992,848 1,993,425 Net gains (losses) on investments 197,142 (4,517,373) 1,422,013 (8,915,778) Other income 151,084 244,643 312,124 480,467 Total revenues 36,719,988 28,979,250 73,347,751 57,530,545 Expenses Loss and loss adjustment expenses 19,580,702 18,656,041 44,620,112 41,597,239 Commission expense 8,471,182 8,481,031 17,010,944 16,832,117 Other underwriting expenses 6,683,638 6,624,997 13,555,257 13,440,946 Other operating expenses 763,414 665,815 1,426,048 1,547,770 Depreciation and amortization 778,502 877,263 1,586,632 1,647,373 Interest expense 1,005,974 456,545 2,015,865 913,090 Total expenses 37,283,412 35,761,692 80,214,858 75,978,535 Loss from operations before taxes (563,424) (6,782,442) (6,867,107) (18,447,990) Income tax benefit (41,407) (1,402,823) (1,290,380) (3,870,839) Net loss (522,017) (5,379,619) (5,576,727) (14,577,151) Other comprehensive (loss) income, net of tax Gross change in unrealized (losses) gains on available-for-sale-securities (1,132,528) (7,642,863) 1,334,898 (17,508,640) Reclassification adjustment for losses included in net loss 10,381 10,356 13,020 51,680 Net change in unrealized (losses) gains, on available-for-sale-securities (1,122,147) (7,632,507) 1,347,918 (17,456,960) Income tax benefit (expense) related to items of other comprehensive (loss) income 235,651 1,602,827 (283,062) 3,665,963 Other comprehensive (loss) income, net of tax (886,496) (6,029,680) 1,064,856 (13,790,997) Comprehensive loss $ (1,408,513) $ (11,409,299) $ (4,511,871) $ (28,368,148) Loss per common share: Basic $ (0.05) $ (0.51) $ (0.52) $ (1.37) Diluted $ (0.05) $ (0.51) $ (0.52) $ (1.37) Weighted average common shares outstanding Basic 10,755,848 10,644,578 10,753,974 10,637,553 Diluted 10,755,848 10,644,578 10,753,974 10,637,553 Dividends declared and paid per common share $ - $ 0.04 $ - $ 0.08 KINGSTONE COMPANIES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets June 30, December 31, 2023 2022 (unaudited) Assets Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $6,266,115 at June 30, 2023 and $6,600,388 at December 31, 2022) $ 7,305,031 $ 7,766,140 Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $156,710,463 at June 30, 2023 and $174,918,427 at December 31, 2022) 137,855,117 154,715,163 Equity securities, at fair value (cost of $17,986,783 at June 30, 2023 and $18,086,700 at December 31, 2022) 14,410,482 13,834,390 Other investments 3,549,540 2,771,652 Total investments 163,120,170 179,087,345 Cash and cash equivalents 12,286,424 11,958,228 Premiums receivable, net 12,572,834 13,880,504 Reinsurance receivables, net 76,579,488 66,465,061 Deferred policy acquisition costs 21,440,158 23,819,453 Intangible assets 500,000 500,000 Property and equipment, net 9,853,831 10,541,935 Deferred income taxes, net 11,338,476 10,331,158 Other assets 3,657,664 3,748,847 Total assets $ 311,349,045 $ 320,332,531 Liabilities Loss and loss adjustment expense reserves $ 117,561,610 $ 118,339,513 Unearned premiums 101,914,895 107,492,777 Advance premiums 6,511,181 2,839,028 Reinsurance balances payable 13,684,595 13,061,966 Deferred ceding commission revenue 9,690,160 10,619,569 Accounts payable, accrued expenses and other liabilities 4,699,562 6,651,723 Debt, net 25,201,826 25,158,523 Total liabilities 279,263,829 284,163,099 Commitments and Contingencies Stockholders' Equity Preferred stock, $.01 par value; authorized 2,500,000 shares - - Common stock, $.01 par value; authorized 20,000,000 shares; issued 12,227,562 shares at June 30, 2023 and 12,171,512 shares at December 31, 2022; outstanding 10,756,156 shares at June 30, 2023 and 10,700,106 shares at December 31, 2022 122,275 121,715 Capital in excess of par 74,946,685 74,519,590 Accumulated other comprehensive loss (14,893,572) (15,958,428) Accumulated deficit (22,522,691) (16,945,964) 37,652,697 41,736,913 Treasury stock, at cost, 1,471,406 shares at June 30, 2023 and December 31, 2022 (5,567,481) (5,567,481) Total stockholders' equity 32,085,216 36,169,432 Total liabilities and stockholders' equity $ 311,349,045 $ 320,332,531 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 offers primarily personal lines insurance products in New York, New Jersey, Rhode Island, Massachusetts, and Connecticut. Kingstone is also licensed in 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 ("Risk Factors") of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission and Part I, Item 2 of our Quarterly Report on Form 10-Q for the period ended March 31, 2023 to be filed with the Securities and Exchange Commission. These risks and uncertainties include, without limitation, the following: As a property and casualty insurer, we may face significant losses from catastrophes and severe weather events. Unanticipated increases in the severity or frequency of claims may adversely affect our operating results and financial condition. We are exposed to significant financial and capital markets risk which may adversely affect our results of operations, financial condition and liquidity, and our net investment income can vary from period to period. The insurance industry is subject to extensive regulation that may affect our operating costs and limit the growth of our business, and changes within this regulatory environment may adversely affect our operating costs and limit the growth of our business. Changing climate conditions may adversely affect our financial condition, profitability or cash flows. Because a significant portion of our revenue is currently derived from sources located in New York, our business may be adversely affected by conditions in such state. We are highly dependent on a relatively small number of insurance brokers for a large portion of our revenues. Actual claims incurred may exceed current reserves established for claims, which may adversely affect our operating results and financial condition. We rely on our information technology and telecommunication systems, and the failure of these systems could materially and adversely affect our business. 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. CONTACT: Kingstone Companies, Inc. Jennifer GravelleChief Financial Officer(845) 768-1970 SOURCE: Kingstone Companies, Inc. View source version on accesswire.com: https://www.accesswire.com/773534/Kingstone-Announces-2023-Second-Quarter-Financial-Results Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Kingstone Announces 2023 Second Quarter Financial Results By: ACCESSWIRE August 10, 2023 at 16:15 PM EDT KINGSTON, NY / ACCESSWIRE / August 10, 2023 / Kingstone Companies, Inc. (NASDAQ:KINS) (the "Company" or "Kingstone"), a Northeast regional property and casualty insurance holding company, today announced its financial results for the quarter ended June 30, 2023. The Company will host a conference call for analysts and investors on August 11, 2023, at 8:30 a.m. Eastern Time, as previously announced on July 13, 2023. 2023 Second Quarter Financial and Operational Highlights (All results are compared to prior year quarterly period unless otherwise noted) Direct written premiums 1 were $47.6 million, down 4.3% from $49.8 million; New York direct written premiums 1 were up 6.2% and the other states' direct written premiums 1 were down (45.9)% Net premiums earned were $29.5 million, up 5.8% from $27.9 million; New York net premiums earned were up 10.2% and the other states' net premiums earned were down (15.3)% Net loss ratio was 66.4%, down slightly from 66.9% for the same period last year; underlying loss ratio 1 (i.e, excluding the impact of catastrophes and prior year loss development) improved to 61.7%, down from 65.5% in 2022 Net underwriting expense ratio decreased to 32.5% from 36.4% Net combined ratio decreased to 98.9% from 103.3% Net combined ratio excluding catastrophes and prior year loss development 1 was 94.3% compared to 101.9% Operating EBITDA 1 increased to $1.02 million from $(5.71) million from the quarter ended March 31, 2023 Loss per share of $(0.05) compared to loss per share of $(0.51); net operating loss per share 1 of $(0.06) compared to $(0.17). Losses attributable to catastrophes were $(0.10) per share compared to $(0.01) Book value per share of $2.98, down 32.6% from the prior quarter book value per share of $4.42. Book value per share excluding Accumulated Other Comprehensive (Loss) 1 was $4.36 Personal Lines Policies-In-Force declined by 8.6%; decreased by 2.3% in New York and by 27.0% in the other states. 1 These measures are not based on accounting principles generally accepted in the United States ("GAAP") and are defined and reconciled below to the most directly comparable GAAP measures. Management Commentary Meryl Golden, Kingstone's Chief Operating Officer, commented, "We are delighted to have achieved an underwriting profit this quarter and with the material improvement in our financial results. Our attritional losses and expenses were lower than last year and our portfolio has stabilized. We believe the headwinds are abating and while we have more work to do to improve our business and return to consistent profitability, we feel confident that we are turning the corner." Jennifer Gravelle, Kingstone's Chief Financial Offer, continued, "Starting this quarter we will be sharing the net loss ratio and policies-in-force for our New York personal lines business separated from the other states so you can more clearly see the progress we are making in transforming the company and returning to our roots as the premier writer of coastal property insurance in Downstate NY. We will also be sharing Operating EBITDA as we believe it better illustrates the strength of our business. We are confident that we are doing all of the right things to deliver long-term value to our shareholders." See "Forward-Looking Statements" Financial Highlights Table Three Months Ended Six Months Ended June 30, June 30, ($ in thousands except per share data) 2023 2022 % Change 2023 2022 % Change Direct written premiums 1 $ 47,647 $ 49,778 -4.3% $ 95,244 $ 92,762 2.7% Net written premiums 1 $ 28,583 $ 30,026 -4.8% $ 52,551 $ 54,944 -4.4% Net premiums earned $ 29,508 $ 27,902 5.8% $ 57,763 $ 54,575 5.8% Total ceding commission revenue $ 5,412 $ 4,716 14.8% $ 10,858 $ 9,397 15.5% Net investment income $ 1,451 $ 634 128.9% $ 2,993 $ 1,993 50.2% Net gains (losses) on investments $ 197 $ (4,517) na $ 1,422 $ (8,916) na U.S. GAAP loss $ (522) $ (5,380) -90.3% $ (5,577) $ (14,577) -61.7% U.S. GAAP Diluted loss per share $ (0.05) $ (0.51) -90.2% $ (0.52) $ (1.37) -62.0% Comprehensive loss $ (1,409) $ (11,409) -87.7% $ (4,512) $ (28,368) -84.1% Net operating loss 1 $ (678) $ (1,811) -62.6% $ (6,700) $ (7,534) -11.1% Net operating loss 1 per share $ (0.06) $ (0.17) -64.7% $ (0.62) $ (0.71) -12.7% Return on average equity (annualized) -6.4% -40.8% -84.3% -32.7% -47.5% -31.2% Net loss ratio 66.4% 66.9% -0.5 pts 77.2% 76.2% 1 pts Net underwriting expense ratio 32.5% 36.4% -3.9 pts 33.6% 37.4% -3.8 pts Net combined ratio 98.9% 103.3% -4.4 pts 110.8% 113.6% -2.8 pts Effect of catastrophes and prior year loss development on net combined ratio 1 4.6 pts 1.4 pts 3.2 pts 8.9 pts 6.2 pts 2.7 pts Net combined ratio excluding effect of catastrophes and prior year loss development 1 94.3% 101.9% -7.6 pts 102.0% 107.4% -5.4 pts (Components may not sum due to rounding) 1 These measures are not based on GAAP and are defined and reconciled below to the most directly comparable GAAP measures. The following tables contain policies in force, direct written premiums 1 , net premiums earned, loss and loss adjustment expenses, and net loss ratio for our New York and non-New York business: For the Three Months Ended June 30, September 30, December 31, March 31, June 30, 2022 2022 2022 2023 2023 (000's except percentages and Policies in Force) New York and Non-New York Reconciliation Policies In Force, as of end of Three Month Period New York Personal lines 64,848 65,176 64,646 65,422 63,326 Other Lines 6,420 6,529 6,713 6,659 6,806 Total New York 71,268 71,705 71,359 72,081 70,132 Non-New York 22,230 22,007 20,695 18,945 16,224 Total policies in force 93,498 93,712 92,054 91,026 86,356 Direct written premiums New York Personal lines $ 36,680 $ 40,529 $ 39,877 $ 37,931 $ 38,515 Other Lines 3,054 3,420 4,046 3,496 3,696 Total New York 39,734 43,949 43,923 41,427 42,211 Non-New York 10,044 10,642 9,978 6,170 5,435 Total direct written premiums $ 49,778 $ 54,590 $ 53,901 $ 47,597 $ 47,647 Net premiums earned New York Personal lines $ 20,354 $ 20,931 $ 22,014 $ 20,548 $ 21,994 Other Lines 2,732 2,960 3,180 3,240 3,437 Total New York 23,086 23,890 25,194 23,788 25,430 Non-New York 4,816 5,471 5,254 4,467 4,078 Total premiums earned $ 27,902 $ 29,361 $ 30,448 $ 28,255 $ 29,508 Loss and loss adjustment expenses New York Personal lines $ 12,182 $ 13,332 $ 14,791 $ 16,977 $ 14,227 Other Lines 1,400 1,697 3,452 1,675 914 Total New York 13,582 15,028 18,243 18,651 15,141 Non-New York 5,074 6,999 6,522 6,388 4,439 Total loss and loss adjustment expenses $ 18,656 $ 22,028 $ 24,765 $ 25,039 $ 19,581 Net loss ratio New York Personal lines 59.9% 63.7% 67.2% 82.6% 64.7% Other Lines 51.2% 57.3% 108.6% 51.7% 26.6% Total New York 58.8% 62.9% 72.4% 78.4% 59.5% Non-New York 105.4% 127.9% 124.1% 143.0% 108.9% Total net loss ratio 66.9% 75.0% 81.3% 88.6% 66.4% (Components may not sum due to rounding) 1 These measures are not based on accounting principles generally accepted in the United States ("GAAP") and are defined and reconciled below to the most directly comparable GAAP measures. 2022 Second Quarter Financial Review Net loss: Net loss during the three-month period ended June 30, 2023 was $0.5 million as compared to a net loss of $5.4 million in the prior year period. The $4.9 million decrease in net loss in the latest three-month period is primarily attributable to an increase in gains on investments of $4.7 million. Earnings (Loss) per share ("EPS"): Kingstone reported a loss of $(0.05) per diluted share for the three months ended June 30, 2023, compared to a loss of $(0.51) per diluted share for the three months ended June 30, 2022. EPS for the three-month periods ended June 30, 2023 and 2022 were based on 10.8 million and 10.7 million weighted average diluted shares outstanding, respectively. Direct Written Premiums, 1 Net Written Premiums 1 and Net Premiums Earned Direct written premiums 1 for the second quarter of 2023 were $47.6 million, a decrease of $2.1 million, or 4.3%, from $49.8 million in the prior year period. Most of the decrease was in Personal Lines, which decreased $2.8 million, or 5.9%. Net written premiums 1 decreased $1.4 million, or 4.8%, to $28.6 million during the three-month period ended June 30, 2023 from $30.0 million in the prior year period. The decrease was primarily in Personal Lines, which decreased $2.1 million, or 7.7%. Net premiums earned for the quarter ended June 30, 2023 increased 5.8% to $29.5 million, compared to $27.9 million for the quarter ended June 30, 2022. The $1.6 million increase was primarily attributable to an increase in Personal Lines of $0.9 million and Livery Physical Damage of $0.7 million. Net Loss Ratio : For the quarter ended June 30, 2023, the Company's net loss ratio was 66.4%, compared to 66.9% in the prior year period. While the underlying loss ratio (i.e., net loss ratio excluding the impact of catastrophes and prior year loss development) was improved for the three months ended June 30, 2023 compared to the three months ended June 30, 2022, the catastrophe loss had a bigger impact for the 2023 period. There were three wind events classified as catastrophes for the three months ended June 30, 2023. The total net catastrophe losses for the calendar quarter were $1.4 million, which contributed 4.7 points to the net loss ratio. This compares to a 0.4-point impact from catastrophe events for the three months ended June 30, 2022. The underlying loss ratio was 61.7% for the three months ended June 30, 2023, a decrease of 3.8 points from the 65.5% underlying loss ratio recorded for the three months ended June 30, 2022. The loss experience for the 2023 period was improved due to lower frequency, which is believed to be the result of the Company's new Select products as well as the Company's active efforts to manage less profitable segments. Such improvement in loss experience was offset by an elevated number of large losses, similar to what was observed in the first three months of 2023. Prior year development was stable for the three months ended June 30, 2023. There was an overall favorable development of $16,000, which had a marginal impact on the net loss ratio. 1 These measures are not based on GAAP and are defined and reconciled below to the most directly comparable GAAP measures. Net Underwriting Expense Ratio : For the quarter ended June 30, 2023, the net underwriting expense ratio was 32.5% as compared to 36.4% in the prior year period, a decrease of 3.9 percentage points. The decrease in the quarter was primarily attributable to a reduction in commission and underwriting expenses as a percentage of net earned premium. Balance Sheet / Investment Portfolio Kingstone's cash and investment holdings were $175.4 million at June 30, 2023 compared to $193.8 million at June 30, 2022. The Company's investment holdings are comprised primarily of investment grade corporate, mortgage-backed and municipal securities, with fixed income investments representing approximately 89.0% of total investments at June 30, 2023 and 82.7% at June 30, 2022. The Company's effective duration on its fixed-income portfolio is 4.6 years. Net investment income increased to $1.5 million for the second quarter of 2023 from $0.6 million in the prior year period. Last year's net investment income was understated due to the reversal of a prior year accrued interest income error in third party investment reporting. Higher interest rates on cash balances also factored into the increase. Accumulated Other Comprehensive Income/Loss (AOCI), net of tax As of June 30, 2023, AOCI was a loss of $(14.9) million compared to a loss of $(12.0) million at June 30, 2022. The decrease in AOCI at June 30, 2023 of $2.9 million as compared to June 30, 2022 is attributable to the increase in interest rates most notably occurring in Q1 and Q2 2022. Share Repurchase Program The Company did not repurchase any shares during the quarter. Book Value The Company's book value per share at June 30, 2023 was $2.98, a decline of 32.6% compared to $4.42 at June 30, 2022. 30-Jun-23 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 Book Value Per Share $ 2.98 $ 3.09 $ 3.38 $ 3.65 $ 4.42 % Increase from specified period to 6/30/23 -3.6% -11.8% -18.4% -32.6% FOR ADDITIONAL INFORMATION PLEASE VISIT OUR WEBSITE AT WWW.KINGSTONECOMPANIES.COM. Conference Call Details Management will discuss the Company's operations and financial results in a conference call on Friday, August 11, 2022, at 8:30 a.m. ET. The dial-in numbers are:(877) 407-3105 (U.S.)(201) 493-6794 (International) Accompanying Webcast The call will be simultaneously webcast over the Internet via the Kingstone website or by clicking on the conference call link: Kingstone Companies Second Quarter 2023 Financial Results Webcast 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 written are direct written premiums less premiums ceded to reinsurers. Net premiums earned, the GAAP measure most comparable to direct written premiums and net premiums written, are net premiums written 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 and net premiums written, along with other measures, to gauge the Company's performance and evaluate results. Net operating income (loss) - is net income (loss) exclusive of realized investment gains (losses), net of tax. Net income (loss) is the GAAP measure most closely comparable to net operating income (loss). Management uses net operating income (loss) along with other measures to gauge the Company's performance and evaluate results, which can be skewed when including realized investment gains (losses), and may vary significantly between periods. Net operating income (loss) is provided as supplemental information, not as a substitute for net income (loss) and does not reflect the Company's overall profitability. Operating EBITDA - is net income (loss) exclusive of interest expense, income tax expense (benefit), depreciation and amortization, and realized investment gains (losses). Net income (loss) is the GAAP measure most closely comparable to operating EBITDA. Management uses operating EBITDA along with other measures to gauge the Company's performance and evaluate results, which can be skewed when including interest expense, income tax expense (benefit), depreciation and amortization, and realized investment gains (losses), and may vary significantly between periods. Operating EBITDA is provided as supplemental information, not as a substitute for net income (loss) and does not reflect the Company's overall profitability. Book value per share excluding accumulated other comprehensive (loss) income - is book value per share excluding the impact of accumulated other comprehensive (loss) income or AOCI. Management uses book value per share excluding accumulated other comprehensive (loss) income to evaluate the results to exclude the impact of interest rate changes on our fixed income portfolio. Net combined ratio excluding effect of catastrophes and prior year loss development - is a non-GAAP ratio, which is computed as the difference between GAAP net combined ratio and the effect of catastrophes and prior year loss development on the net combined ratio. We believe that these ratios are useful to investors and they are used by management to reveal the trends in our business that may be obscured by catastrophe losses and prior year loss development. 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 and net combined ratio. Prior year loss development can cause our loss ratio to vary significantly between periods and separating this information allows us to better compare the results for the current accident period over time. We believe these measures are useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. We also provide them to facilitate a comparison to our outlook on the net combined ratio excluding the effect of catastrophes and prior year loss development. The most directly comparable GAAP measure is the net combined ratio. The net combined ratio excluding the effect of catastrophes and prior year loss development should not be considered a substitute for the net combined ratio and does not reflect the Company's net combined ratio. The table below reconciles direct written premiums and net written premiums to net premiums earned for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 $ Change % Change 2023 2022 $ Change % Change (000's except percentages) Direct and Net Written Premiums Reconciliation: Direct written premiums $ 47,647 $ 49,778 $ (2,131) (4.3)% $ 95,244 $ 92,762 $ 2,482 2.7% Ceded written premiums (19,064) (19,753) 689 (3.5) (42,693) (37,818) (4,875) 12.9 Net written premiums 28,583 30,026 (1,442) (4.8) 52,551 54,944 (2,393) (4.4) Change in unearned premiums 925 (2,124) 3,049 na 5,212 (369) 5,581 na Net premiums earned $ 29,508 $ 27,902 $ 1,607 5.8% $ 57,763 $ 54,575 $ 3,188 5.8% (Components may not sum due to rounding) The following table reconciles net operating loss to net loss for the periods indicated: For the Three Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Amount Diluted loss per common share Amount Diluted loss per common share Amount Diluted loss per common share Amount Diluted loss per common share (000's except per common share amounts and percentages) Net Operating Loss and Diluted Operating Loss per Common Share Reconciliation: Net loss $ (522) $ (0.05) $ (5,380) $ (0.51) $ (5,577) $ (0.52) $ (14,577) $ (1.37) Net realized (gain) loss on investments (197) 4,517 (1,422) 8,916 Less tax (expense) benefit on net realized (gain) loss (41) 949 (299) 1,872 Net realized (gain) loss on investments, net of taxes (156) $ (0.01) 3,568 $ 0.34 (1,123) $ (0.10) 7,044 $ 0.66 Net operating loss $ (678) $ (0.06) $ (1,811) $ (0.17) $ (6,700) $ (0.62) $ (7,534) $ (0.71) Weighted average diluted shares outstanding 10,755,848 10,644,578 10,753,974 10,637,553 (Components may not sum due to rounding) The following table reconciles operating EBITDA to net loss for the periods indicated: For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 (000's) Operating EBITDA Reconciliation: Net loss $ (522) $ (5,055) $ (3,950) $ (3,998) $ (5,380) Interest expense 1,006 1,010 649 457 457 Income tax benefit (41) (1,249) (985) (562) (1,403) Depreciation and amortization 779 808 828 825 877 EBITDA 1,221 (4,486) (3,458) (3,278) (5,449) Net realized (gain) loss on investments (197) (1,225) 78 398 4,517 Operating EBITDA $ 1,024 $ (5,711) $ (3,379) $ (2,880) $ (931) (Components may not sum due to rounding) The following table reconciles book value per share excluding accumulated other comprehensive loss to book value per share as of the dates indicated: 30-Jun-23 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 Book Value Per Share $ 2.98 $ 3.09 $ 3.38 $ 3.65 $ 4.42 Acccumulated other comprehensive loss $ (14,893,752) $ (14,007,076) $ (15,958,428) $ (15,978,570) $ (11,994,258) Shares outstanding 10,756,156 10,760,559 10,700,106 10,645,675 10,645,675 Accumulated other comprehensive loss per common share $ (1.38) $ (1.30) $ (1.49) $ (1.50) $ (1.13) Book value per share excluding acccumulated other comprehensive loss $ 4.36 $ 4.39 $ 4.87 $ 5.15 $ 5.55 (Components may not sum due to rounding) The following table reconciles the net combined ratio excluding catastrophes and prior year loss development to the net combined ratio for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 Percentage Point Change 2023 2022 Percentage Point Change Net Combined Ratio Excluding Catastrophes and Prior Year Loss Development Reconciliation: Net Combined Ratio Excluding Catastrophes and Prior Year Loss Development 94.3% 101.9% (7.6) pts 102.0% 107.4% (5.4) pts Effect of catastrophe losses and prior year loss development Catastrophe losses 4.7% 0.4% 4.3 pts 8.9% 5.7% 3.2 pts Prior year loss development -0.1% 1.0% (1.1) pts 0.0% 0.5% (0.5) pts Effect of catastrophe losses and prior year loss development on net loss and loss adjustment expenses 4.6% 1.4% 3.2 pts 8.9% 6.2% 2.7 pts Net underwriting expense ratio 0.0% 0.0% - pts 0.0% 0.0% - pts Total effect of catastrophe losses and prior year loss development 4.6% 1.4% 3.2 pts 8.9% 6.2% 2.7 pts Net combined ratio 98.9% 103.3% (4.4) pts 110.8% 113.6% (2.7) pts (Components may not sum due to rounding) The following table reconciles the net combined ratio excluding catastrophes to the net combined ratio for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 Percentage Point Change 2023 2022 Percentage Point Change Net Combined Ratio Excluding Catastrophes Reconciliation: Net Combined Ratio Excluding Catastrophes 94.2% 102.9% (8.7) pts 102.0% 107.9% (5.9) pts Catastrophe losses 4.7% 0.4% 4.3 pts 8.9% 5.7% 3.2 pts Net combined ratio 98.9% 103.3% (4.4) pts 110.8% 113.6% (2.7) pts (Components may not sum due to rounding) The following table reconciles the net loss ratio excluding catastrophes and prior year loss development to the net loss ratio for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 Percentage Point Change 2023 2022 Percentage Point Change Net Loss Ratio Excluding Catastrophes and Prior Year Loss Development Reconciliation: Net Loss Ratio Excluding Catastrophes and Prior Year Loss Development 61.7% 65.5% (3.8) pts 68.4% 70.0% (1.6) pts Effect of catastrophe losses and prior year loss development Catastrophe losses 4.7% 0.4% 4.3 pts 8.9% 5.7% 3.2 pts Prior year loss development -0.1% 1.0% (1.1) pts 0.0% 0.5% (0.5) pts Effect of catastrophe losses and prior year loss development on net loss and loss adjustment expenses 4.6% 1.4% 3.2 pts 8.9% 6.2% 2.7 pts Net loss ratio 66.4% 66.9% (0.6) pts 77.2% 76.2% 1.1 pts (Components may not sum due to rounding) The following table summarizes gross and net written premiums, net premiums earned, net loss and loss adjustment expenses and net loss ratio by major product type, which were determined based primarily on similar economic characteristics and risks of loss. For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 2023 2022 Gross premiums written: Personal lines(3) $ 44,011,176 $ 46,792,267 $ 88,182,114 $ 86,955,416 Livery physical damage 3,609,832 2,953,588 7,015,500 5,726,868 Other(1) 25,936 32,608 46,776 80,076 Total gross premiums written $ 47,646,944 $ 49,778,463 $ 95,244,390 $ 92,762,360 Net premiums written: Personal lines(3) $ 24,954,271 $ 27,048,585 $ 45,505,958 $ 49,159,250 Livery physical damage 3,609,832 2,953,588 7,015,500 5,726,868 Other(1) 18,625 23,607 30,017 57,850 Total net premiums written $ 28,582,728 $ 30,025,780 $ 52,551,475 $ 54,943,968 Net premiums earned: Personal lines(3) $ 26,075,876 $ 25,178,854 $ 51,094,961 $ 49,339,070 Livery physical damage 3,409,779 2,687,273 6,621,613 5,161,838 Other(1) 22,541 35,941 46,575 74,540 Total net premiums earned $ 29,508,196 $ 27,902,068 $ 57,763,149 $ 54,575,448 Net loss and loss adjustment expenses(4): Personal lines $ 17,925,971 $ 16,540,604 $ 40,495,580 $ 37,576,758 Livery physical damage 894,026 1,180,223 2,279,167 2,010,792 Other(1) 36 (967) 151,643 (24,367) Unallocated loss adjustment expenses 828,963 980,984 1,720,053 1,950,377 Total without commercial lines 19,648,996 18,700,844 44,646,443 41,513,560 Commercial lines (in run-off effective July 2019)(2) (68,294) (44,803) (26,331) 83,679 Total net loss and loss adjustment expenses $ 19,580,702 $ 18,656,041 $ 44,620,112 $ 41,597,239 Net loss ratio(4): Personal lines 68.7% 65.7% 79.3% 76.2% Livery physical damage 26.2% 43.9% 34.4% 39.0% Other(1) 0.2% -2.7% 325.6% -32.7% Total without commercial lines 66.6% 67.0% 77.3% 76.1% Commercial lines (in run-off effective July 2019)(2) na na na na Total 66.4% 66.9% 77.2% 76.2% "Other" includes, among other things, premiums and loss and loss adjustment expenses from our participation in a mandatory state joint underwriting association and loss and loss adjustment expenses from commercial auto. In July 2019, the Company decided that it will no longer underwrite Commercial Liability risks. See discussions above regarding the discontinuation of this line of business. See discussion with regard to "Direct Written Premiums, Net Written Premiums and Net Premiums Earned" above. See discussions above with regard to "Net Loss Ratio". KINGSTONE COMPANIES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues Net premiums earned $ 29,508,196 $ 27,902,068 $ 57,763,149 $ 54,575,448 Ceding commission revenue 5,412,210 4,715,587 10,857,617 9,396,983 Net investment income 1,451,356 634,325 2,992,848 1,993,425 Net gains (losses) on investments 197,142 (4,517,373) 1,422,013 (8,915,778) Other income 151,084 244,643 312,124 480,467 Total revenues 36,719,988 28,979,250 73,347,751 57,530,545 Expenses Loss and loss adjustment expenses 19,580,702 18,656,041 44,620,112 41,597,239 Commission expense 8,471,182 8,481,031 17,010,944 16,832,117 Other underwriting expenses 6,683,638 6,624,997 13,555,257 13,440,946 Other operating expenses 763,414 665,815 1,426,048 1,547,770 Depreciation and amortization 778,502 877,263 1,586,632 1,647,373 Interest expense 1,005,974 456,545 2,015,865 913,090 Total expenses 37,283,412 35,761,692 80,214,858 75,978,535 Loss from operations before taxes (563,424) (6,782,442) (6,867,107) (18,447,990) Income tax benefit (41,407) (1,402,823) (1,290,380) (3,870,839) Net loss (522,017) (5,379,619) (5,576,727) (14,577,151) Other comprehensive (loss) income, net of tax Gross change in unrealized (losses) gains on available-for-sale-securities (1,132,528) (7,642,863) 1,334,898 (17,508,640) Reclassification adjustment for losses included in net loss 10,381 10,356 13,020 51,680 Net change in unrealized (losses) gains, on available-for-sale-securities (1,122,147) (7,632,507) 1,347,918 (17,456,960) Income tax benefit (expense) related to items of other comprehensive (loss) income 235,651 1,602,827 (283,062) 3,665,963 Other comprehensive (loss) income, net of tax (886,496) (6,029,680) 1,064,856 (13,790,997) Comprehensive loss $ (1,408,513) $ (11,409,299) $ (4,511,871) $ (28,368,148) Loss per common share: Basic $ (0.05) $ (0.51) $ (0.52) $ (1.37) Diluted $ (0.05) $ (0.51) $ (0.52) $ (1.37) Weighted average common shares outstanding Basic 10,755,848 10,644,578 10,753,974 10,637,553 Diluted 10,755,848 10,644,578 10,753,974 10,637,553 Dividends declared and paid per common share $ - $ 0.04 $ - $ 0.08 KINGSTONE COMPANIES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets June 30, December 31, 2023 2022 (unaudited) Assets Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $6,266,115 at June 30, 2023 and $6,600,388 at December 31, 2022) $ 7,305,031 $ 7,766,140 Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $156,710,463 at June 30, 2023 and $174,918,427 at December 31, 2022) 137,855,117 154,715,163 Equity securities, at fair value (cost of $17,986,783 at June 30, 2023 and $18,086,700 at December 31, 2022) 14,410,482 13,834,390 Other investments 3,549,540 2,771,652 Total investments 163,120,170 179,087,345 Cash and cash equivalents 12,286,424 11,958,228 Premiums receivable, net 12,572,834 13,880,504 Reinsurance receivables, net 76,579,488 66,465,061 Deferred policy acquisition costs 21,440,158 23,819,453 Intangible assets 500,000 500,000 Property and equipment, net 9,853,831 10,541,935 Deferred income taxes, net 11,338,476 10,331,158 Other assets 3,657,664 3,748,847 Total assets $ 311,349,045 $ 320,332,531 Liabilities Loss and loss adjustment expense reserves $ 117,561,610 $ 118,339,513 Unearned premiums 101,914,895 107,492,777 Advance premiums 6,511,181 2,839,028 Reinsurance balances payable 13,684,595 13,061,966 Deferred ceding commission revenue 9,690,160 10,619,569 Accounts payable, accrued expenses and other liabilities 4,699,562 6,651,723 Debt, net 25,201,826 25,158,523 Total liabilities 279,263,829 284,163,099 Commitments and Contingencies Stockholders' Equity Preferred stock, $.01 par value; authorized 2,500,000 shares - - Common stock, $.01 par value; authorized 20,000,000 shares; issued 12,227,562 shares at June 30, 2023 and 12,171,512 shares at December 31, 2022; outstanding 10,756,156 shares at June 30, 2023 and 10,700,106 shares at December 31, 2022 122,275 121,715 Capital in excess of par 74,946,685 74,519,590 Accumulated other comprehensive loss (14,893,572) (15,958,428) Accumulated deficit (22,522,691) (16,945,964) 37,652,697 41,736,913 Treasury stock, at cost, 1,471,406 shares at June 30, 2023 and December 31, 2022 (5,567,481) (5,567,481) Total stockholders' equity 32,085,216 36,169,432 Total liabilities and stockholders' equity $ 311,349,045 $ 320,332,531 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 offers primarily personal lines insurance products in New York, New Jersey, Rhode Island, Massachusetts, and Connecticut. Kingstone is also licensed in 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 ("Risk Factors") of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission and Part I, Item 2 of our Quarterly Report on Form 10-Q for the period ended March 31, 2023 to be filed with the Securities and Exchange Commission. These risks and uncertainties include, without limitation, the following: As a property and casualty insurer, we may face significant losses from catastrophes and severe weather events. Unanticipated increases in the severity or frequency of claims may adversely affect our operating results and financial condition. We are exposed to significant financial and capital markets risk which may adversely affect our results of operations, financial condition and liquidity, and our net investment income can vary from period to period. The insurance industry is subject to extensive regulation that may affect our operating costs and limit the growth of our business, and changes within this regulatory environment may adversely affect our operating costs and limit the growth of our business. Changing climate conditions may adversely affect our financial condition, profitability or cash flows. Because a significant portion of our revenue is currently derived from sources located in New York, our business may be adversely affected by conditions in such state. We are highly dependent on a relatively small number of insurance brokers for a large portion of our revenues. Actual claims incurred may exceed current reserves established for claims, which may adversely affect our operating results and financial condition. We rely on our information technology and telecommunication systems, and the failure of these systems could materially and adversely affect our business. 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. CONTACT: Kingstone Companies, Inc. Jennifer GravelleChief Financial Officer(845) 768-1970 SOURCE: Kingstone Companies, Inc. View source version on accesswire.com: https://www.accesswire.com/773534/Kingstone-Announces-2023-Second-Quarter-Financial-Results
KINGSTON, NY / ACCESSWIRE / August 10, 2023 / Kingstone Companies, Inc. (NASDAQ:KINS) (the "Company" or "Kingstone"), a Northeast regional property and casualty insurance holding company, today announced its financial results for the quarter ended June 30, 2023. The Company will host a conference call for analysts and investors on August 11, 2023, at 8:30 a.m. Eastern Time, as previously announced on July 13, 2023. 2023 Second Quarter Financial and Operational Highlights (All results are compared to prior year quarterly period unless otherwise noted) Direct written premiums 1 were $47.6 million, down 4.3% from $49.8 million; New York direct written premiums 1 were up 6.2% and the other states' direct written premiums 1 were down (45.9)% Net premiums earned were $29.5 million, up 5.8% from $27.9 million; New York net premiums earned were up 10.2% and the other states' net premiums earned were down (15.3)% Net loss ratio was 66.4%, down slightly from 66.9% for the same period last year; underlying loss ratio 1 (i.e, excluding the impact of catastrophes and prior year loss development) improved to 61.7%, down from 65.5% in 2022 Net underwriting expense ratio decreased to 32.5% from 36.4% Net combined ratio decreased to 98.9% from 103.3% Net combined ratio excluding catastrophes and prior year loss development 1 was 94.3% compared to 101.9% Operating EBITDA 1 increased to $1.02 million from $(5.71) million from the quarter ended March 31, 2023 Loss per share of $(0.05) compared to loss per share of $(0.51); net operating loss per share 1 of $(0.06) compared to $(0.17). Losses attributable to catastrophes were $(0.10) per share compared to $(0.01) Book value per share of $2.98, down 32.6% from the prior quarter book value per share of $4.42. Book value per share excluding Accumulated Other Comprehensive (Loss) 1 was $4.36 Personal Lines Policies-In-Force declined by 8.6%; decreased by 2.3% in New York and by 27.0% in the other states. 1 These measures are not based on accounting principles generally accepted in the United States ("GAAP") and are defined and reconciled below to the most directly comparable GAAP measures. Management Commentary Meryl Golden, Kingstone's Chief Operating Officer, commented, "We are delighted to have achieved an underwriting profit this quarter and with the material improvement in our financial results. Our attritional losses and expenses were lower than last year and our portfolio has stabilized. We believe the headwinds are abating and while we have more work to do to improve our business and return to consistent profitability, we feel confident that we are turning the corner." Jennifer Gravelle, Kingstone's Chief Financial Offer, continued, "Starting this quarter we will be sharing the net loss ratio and policies-in-force for our New York personal lines business separated from the other states so you can more clearly see the progress we are making in transforming the company and returning to our roots as the premier writer of coastal property insurance in Downstate NY. We will also be sharing Operating EBITDA as we believe it better illustrates the strength of our business. We are confident that we are doing all of the right things to deliver long-term value to our shareholders." See "Forward-Looking Statements" Financial Highlights Table Three Months Ended Six Months Ended June 30, June 30, ($ in thousands except per share data) 2023 2022 % Change 2023 2022 % Change Direct written premiums 1 $ 47,647 $ 49,778 -4.3% $ 95,244 $ 92,762 2.7% Net written premiums 1 $ 28,583 $ 30,026 -4.8% $ 52,551 $ 54,944 -4.4% Net premiums earned $ 29,508 $ 27,902 5.8% $ 57,763 $ 54,575 5.8% Total ceding commission revenue $ 5,412 $ 4,716 14.8% $ 10,858 $ 9,397 15.5% Net investment income $ 1,451 $ 634 128.9% $ 2,993 $ 1,993 50.2% Net gains (losses) on investments $ 197 $ (4,517) na $ 1,422 $ (8,916) na U.S. GAAP loss $ (522) $ (5,380) -90.3% $ (5,577) $ (14,577) -61.7% U.S. GAAP Diluted loss per share $ (0.05) $ (0.51) -90.2% $ (0.52) $ (1.37) -62.0% Comprehensive loss $ (1,409) $ (11,409) -87.7% $ (4,512) $ (28,368) -84.1% Net operating loss 1 $ (678) $ (1,811) -62.6% $ (6,700) $ (7,534) -11.1% Net operating loss 1 per share $ (0.06) $ (0.17) -64.7% $ (0.62) $ (0.71) -12.7% Return on average equity (annualized) -6.4% -40.8% -84.3% -32.7% -47.5% -31.2% Net loss ratio 66.4% 66.9% -0.5 pts 77.2% 76.2% 1 pts Net underwriting expense ratio 32.5% 36.4% -3.9 pts 33.6% 37.4% -3.8 pts Net combined ratio 98.9% 103.3% -4.4 pts 110.8% 113.6% -2.8 pts Effect of catastrophes and prior year loss development on net combined ratio 1 4.6 pts 1.4 pts 3.2 pts 8.9 pts 6.2 pts 2.7 pts Net combined ratio excluding effect of catastrophes and prior year loss development 1 94.3% 101.9% -7.6 pts 102.0% 107.4% -5.4 pts (Components may not sum due to rounding) 1 These measures are not based on GAAP and are defined and reconciled below to the most directly comparable GAAP measures. The following tables contain policies in force, direct written premiums 1 , net premiums earned, loss and loss adjustment expenses, and net loss ratio for our New York and non-New York business: For the Three Months Ended June 30, September 30, December 31, March 31, June 30, 2022 2022 2022 2023 2023 (000's except percentages and Policies in Force) New York and Non-New York Reconciliation Policies In Force, as of end of Three Month Period New York Personal lines 64,848 65,176 64,646 65,422 63,326 Other Lines 6,420 6,529 6,713 6,659 6,806 Total New York 71,268 71,705 71,359 72,081 70,132 Non-New York 22,230 22,007 20,695 18,945 16,224 Total policies in force 93,498 93,712 92,054 91,026 86,356 Direct written premiums New York Personal lines $ 36,680 $ 40,529 $ 39,877 $ 37,931 $ 38,515 Other Lines 3,054 3,420 4,046 3,496 3,696 Total New York 39,734 43,949 43,923 41,427 42,211 Non-New York 10,044 10,642 9,978 6,170 5,435 Total direct written premiums $ 49,778 $ 54,590 $ 53,901 $ 47,597 $ 47,647 Net premiums earned New York Personal lines $ 20,354 $ 20,931 $ 22,014 $ 20,548 $ 21,994 Other Lines 2,732 2,960 3,180 3,240 3,437 Total New York 23,086 23,890 25,194 23,788 25,430 Non-New York 4,816 5,471 5,254 4,467 4,078 Total premiums earned $ 27,902 $ 29,361 $ 30,448 $ 28,255 $ 29,508 Loss and loss adjustment expenses New York Personal lines $ 12,182 $ 13,332 $ 14,791 $ 16,977 $ 14,227 Other Lines 1,400 1,697 3,452 1,675 914 Total New York 13,582 15,028 18,243 18,651 15,141 Non-New York 5,074 6,999 6,522 6,388 4,439 Total loss and loss adjustment expenses $ 18,656 $ 22,028 $ 24,765 $ 25,039 $ 19,581 Net loss ratio New York Personal lines 59.9% 63.7% 67.2% 82.6% 64.7% Other Lines 51.2% 57.3% 108.6% 51.7% 26.6% Total New York 58.8% 62.9% 72.4% 78.4% 59.5% Non-New York 105.4% 127.9% 124.1% 143.0% 108.9% Total net loss ratio 66.9% 75.0% 81.3% 88.6% 66.4% (Components may not sum due to rounding) 1 These measures are not based on accounting principles generally accepted in the United States ("GAAP") and are defined and reconciled below to the most directly comparable GAAP measures. 2022 Second Quarter Financial Review Net loss: Net loss during the three-month period ended June 30, 2023 was $0.5 million as compared to a net loss of $5.4 million in the prior year period. The $4.9 million decrease in net loss in the latest three-month period is primarily attributable to an increase in gains on investments of $4.7 million. Earnings (Loss) per share ("EPS"): Kingstone reported a loss of $(0.05) per diluted share for the three months ended June 30, 2023, compared to a loss of $(0.51) per diluted share for the three months ended June 30, 2022. EPS for the three-month periods ended June 30, 2023 and 2022 were based on 10.8 million and 10.7 million weighted average diluted shares outstanding, respectively. Direct Written Premiums, 1 Net Written Premiums 1 and Net Premiums Earned Direct written premiums 1 for the second quarter of 2023 were $47.6 million, a decrease of $2.1 million, or 4.3%, from $49.8 million in the prior year period. Most of the decrease was in Personal Lines, which decreased $2.8 million, or 5.9%. Net written premiums 1 decreased $1.4 million, or 4.8%, to $28.6 million during the three-month period ended June 30, 2023 from $30.0 million in the prior year period. The decrease was primarily in Personal Lines, which decreased $2.1 million, or 7.7%. Net premiums earned for the quarter ended June 30, 2023 increased 5.8% to $29.5 million, compared to $27.9 million for the quarter ended June 30, 2022. The $1.6 million increase was primarily attributable to an increase in Personal Lines of $0.9 million and Livery Physical Damage of $0.7 million. Net Loss Ratio : For the quarter ended June 30, 2023, the Company's net loss ratio was 66.4%, compared to 66.9% in the prior year period. While the underlying loss ratio (i.e., net loss ratio excluding the impact of catastrophes and prior year loss development) was improved for the three months ended June 30, 2023 compared to the three months ended June 30, 2022, the catastrophe loss had a bigger impact for the 2023 period. There were three wind events classified as catastrophes for the three months ended June 30, 2023. The total net catastrophe losses for the calendar quarter were $1.4 million, which contributed 4.7 points to the net loss ratio. This compares to a 0.4-point impact from catastrophe events for the three months ended June 30, 2022. The underlying loss ratio was 61.7% for the three months ended June 30, 2023, a decrease of 3.8 points from the 65.5% underlying loss ratio recorded for the three months ended June 30, 2022. The loss experience for the 2023 period was improved due to lower frequency, which is believed to be the result of the Company's new Select products as well as the Company's active efforts to manage less profitable segments. Such improvement in loss experience was offset by an elevated number of large losses, similar to what was observed in the first three months of 2023. Prior year development was stable for the three months ended June 30, 2023. There was an overall favorable development of $16,000, which had a marginal impact on the net loss ratio. 1 These measures are not based on GAAP and are defined and reconciled below to the most directly comparable GAAP measures. Net Underwriting Expense Ratio : For the quarter ended June 30, 2023, the net underwriting expense ratio was 32.5% as compared to 36.4% in the prior year period, a decrease of 3.9 percentage points. The decrease in the quarter was primarily attributable to a reduction in commission and underwriting expenses as a percentage of net earned premium. Balance Sheet / Investment Portfolio Kingstone's cash and investment holdings were $175.4 million at June 30, 2023 compared to $193.8 million at June 30, 2022. The Company's investment holdings are comprised primarily of investment grade corporate, mortgage-backed and municipal securities, with fixed income investments representing approximately 89.0% of total investments at June 30, 2023 and 82.7% at June 30, 2022. The Company's effective duration on its fixed-income portfolio is 4.6 years. Net investment income increased to $1.5 million for the second quarter of 2023 from $0.6 million in the prior year period. Last year's net investment income was understated due to the reversal of a prior year accrued interest income error in third party investment reporting. Higher interest rates on cash balances also factored into the increase. Accumulated Other Comprehensive Income/Loss (AOCI), net of tax As of June 30, 2023, AOCI was a loss of $(14.9) million compared to a loss of $(12.0) million at June 30, 2022. The decrease in AOCI at June 30, 2023 of $2.9 million as compared to June 30, 2022 is attributable to the increase in interest rates most notably occurring in Q1 and Q2 2022. Share Repurchase Program The Company did not repurchase any shares during the quarter. Book Value The Company's book value per share at June 30, 2023 was $2.98, a decline of 32.6% compared to $4.42 at June 30, 2022. 30-Jun-23 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 Book Value Per Share $ 2.98 $ 3.09 $ 3.38 $ 3.65 $ 4.42 % Increase from specified period to 6/30/23 -3.6% -11.8% -18.4% -32.6% FOR ADDITIONAL INFORMATION PLEASE VISIT OUR WEBSITE AT WWW.KINGSTONECOMPANIES.COM. Conference Call Details Management will discuss the Company's operations and financial results in a conference call on Friday, August 11, 2022, at 8:30 a.m. ET. The dial-in numbers are:(877) 407-3105 (U.S.)(201) 493-6794 (International) Accompanying Webcast The call will be simultaneously webcast over the Internet via the Kingstone website or by clicking on the conference call link: Kingstone Companies Second Quarter 2023 Financial Results Webcast 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 written are direct written premiums less premiums ceded to reinsurers. Net premiums earned, the GAAP measure most comparable to direct written premiums and net premiums written, are net premiums written 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 and net premiums written, along with other measures, to gauge the Company's performance and evaluate results. Net operating income (loss) - is net income (loss) exclusive of realized investment gains (losses), net of tax. Net income (loss) is the GAAP measure most closely comparable to net operating income (loss). Management uses net operating income (loss) along with other measures to gauge the Company's performance and evaluate results, which can be skewed when including realized investment gains (losses), and may vary significantly between periods. Net operating income (loss) is provided as supplemental information, not as a substitute for net income (loss) and does not reflect the Company's overall profitability. Operating EBITDA - is net income (loss) exclusive of interest expense, income tax expense (benefit), depreciation and amortization, and realized investment gains (losses). Net income (loss) is the GAAP measure most closely comparable to operating EBITDA. Management uses operating EBITDA along with other measures to gauge the Company's performance and evaluate results, which can be skewed when including interest expense, income tax expense (benefit), depreciation and amortization, and realized investment gains (losses), and may vary significantly between periods. Operating EBITDA is provided as supplemental information, not as a substitute for net income (loss) and does not reflect the Company's overall profitability. Book value per share excluding accumulated other comprehensive (loss) income - is book value per share excluding the impact of accumulated other comprehensive (loss) income or AOCI. Management uses book value per share excluding accumulated other comprehensive (loss) income to evaluate the results to exclude the impact of interest rate changes on our fixed income portfolio. Net combined ratio excluding effect of catastrophes and prior year loss development - is a non-GAAP ratio, which is computed as the difference between GAAP net combined ratio and the effect of catastrophes and prior year loss development on the net combined ratio. We believe that these ratios are useful to investors and they are used by management to reveal the trends in our business that may be obscured by catastrophe losses and prior year loss development. 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 and net combined ratio. Prior year loss development can cause our loss ratio to vary significantly between periods and separating this information allows us to better compare the results for the current accident period over time. We believe these measures are useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. We also provide them to facilitate a comparison to our outlook on the net combined ratio excluding the effect of catastrophes and prior year loss development. The most directly comparable GAAP measure is the net combined ratio. The net combined ratio excluding the effect of catastrophes and prior year loss development should not be considered a substitute for the net combined ratio and does not reflect the Company's net combined ratio. The table below reconciles direct written premiums and net written premiums to net premiums earned for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 $ Change % Change 2023 2022 $ Change % Change (000's except percentages) Direct and Net Written Premiums Reconciliation: Direct written premiums $ 47,647 $ 49,778 $ (2,131) (4.3)% $ 95,244 $ 92,762 $ 2,482 2.7% Ceded written premiums (19,064) (19,753) 689 (3.5) (42,693) (37,818) (4,875) 12.9 Net written premiums 28,583 30,026 (1,442) (4.8) 52,551 54,944 (2,393) (4.4) Change in unearned premiums 925 (2,124) 3,049 na 5,212 (369) 5,581 na Net premiums earned $ 29,508 $ 27,902 $ 1,607 5.8% $ 57,763 $ 54,575 $ 3,188 5.8% (Components may not sum due to rounding) The following table reconciles net operating loss to net loss for the periods indicated: For the Three Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Amount Diluted loss per common share Amount Diluted loss per common share Amount Diluted loss per common share Amount Diluted loss per common share (000's except per common share amounts and percentages) Net Operating Loss and Diluted Operating Loss per Common Share Reconciliation: Net loss $ (522) $ (0.05) $ (5,380) $ (0.51) $ (5,577) $ (0.52) $ (14,577) $ (1.37) Net realized (gain) loss on investments (197) 4,517 (1,422) 8,916 Less tax (expense) benefit on net realized (gain) loss (41) 949 (299) 1,872 Net realized (gain) loss on investments, net of taxes (156) $ (0.01) 3,568 $ 0.34 (1,123) $ (0.10) 7,044 $ 0.66 Net operating loss $ (678) $ (0.06) $ (1,811) $ (0.17) $ (6,700) $ (0.62) $ (7,534) $ (0.71) Weighted average diluted shares outstanding 10,755,848 10,644,578 10,753,974 10,637,553 (Components may not sum due to rounding) The following table reconciles operating EBITDA to net loss for the periods indicated: For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 (000's) Operating EBITDA Reconciliation: Net loss $ (522) $ (5,055) $ (3,950) $ (3,998) $ (5,380) Interest expense 1,006 1,010 649 457 457 Income tax benefit (41) (1,249) (985) (562) (1,403) Depreciation and amortization 779 808 828 825 877 EBITDA 1,221 (4,486) (3,458) (3,278) (5,449) Net realized (gain) loss on investments (197) (1,225) 78 398 4,517 Operating EBITDA $ 1,024 $ (5,711) $ (3,379) $ (2,880) $ (931) (Components may not sum due to rounding) The following table reconciles book value per share excluding accumulated other comprehensive loss to book value per share as of the dates indicated: 30-Jun-23 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 Book Value Per Share $ 2.98 $ 3.09 $ 3.38 $ 3.65 $ 4.42 Acccumulated other comprehensive loss $ (14,893,752) $ (14,007,076) $ (15,958,428) $ (15,978,570) $ (11,994,258) Shares outstanding 10,756,156 10,760,559 10,700,106 10,645,675 10,645,675 Accumulated other comprehensive loss per common share $ (1.38) $ (1.30) $ (1.49) $ (1.50) $ (1.13) Book value per share excluding acccumulated other comprehensive loss $ 4.36 $ 4.39 $ 4.87 $ 5.15 $ 5.55 (Components may not sum due to rounding) The following table reconciles the net combined ratio excluding catastrophes and prior year loss development to the net combined ratio for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 Percentage Point Change 2023 2022 Percentage Point Change Net Combined Ratio Excluding Catastrophes and Prior Year Loss Development Reconciliation: Net Combined Ratio Excluding Catastrophes and Prior Year Loss Development 94.3% 101.9% (7.6) pts 102.0% 107.4% (5.4) pts Effect of catastrophe losses and prior year loss development Catastrophe losses 4.7% 0.4% 4.3 pts 8.9% 5.7% 3.2 pts Prior year loss development -0.1% 1.0% (1.1) pts 0.0% 0.5% (0.5) pts Effect of catastrophe losses and prior year loss development on net loss and loss adjustment expenses 4.6% 1.4% 3.2 pts 8.9% 6.2% 2.7 pts Net underwriting expense ratio 0.0% 0.0% - pts 0.0% 0.0% - pts Total effect of catastrophe losses and prior year loss development 4.6% 1.4% 3.2 pts 8.9% 6.2% 2.7 pts Net combined ratio 98.9% 103.3% (4.4) pts 110.8% 113.6% (2.7) pts (Components may not sum due to rounding) The following table reconciles the net combined ratio excluding catastrophes to the net combined ratio for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 Percentage Point Change 2023 2022 Percentage Point Change Net Combined Ratio Excluding Catastrophes Reconciliation: Net Combined Ratio Excluding Catastrophes 94.2% 102.9% (8.7) pts 102.0% 107.9% (5.9) pts Catastrophe losses 4.7% 0.4% 4.3 pts 8.9% 5.7% 3.2 pts Net combined ratio 98.9% 103.3% (4.4) pts 110.8% 113.6% (2.7) pts (Components may not sum due to rounding) The following table reconciles the net loss ratio excluding catastrophes and prior year loss development to the net loss ratio for the periods presented: For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 Percentage Point Change 2023 2022 Percentage Point Change Net Loss Ratio Excluding Catastrophes and Prior Year Loss Development Reconciliation: Net Loss Ratio Excluding Catastrophes and Prior Year Loss Development 61.7% 65.5% (3.8) pts 68.4% 70.0% (1.6) pts Effect of catastrophe losses and prior year loss development Catastrophe losses 4.7% 0.4% 4.3 pts 8.9% 5.7% 3.2 pts Prior year loss development -0.1% 1.0% (1.1) pts 0.0% 0.5% (0.5) pts Effect of catastrophe losses and prior year loss development on net loss and loss adjustment expenses 4.6% 1.4% 3.2 pts 8.9% 6.2% 2.7 pts Net loss ratio 66.4% 66.9% (0.6) pts 77.2% 76.2% 1.1 pts (Components may not sum due to rounding) The following table summarizes gross and net written premiums, net premiums earned, net loss and loss adjustment expenses and net loss ratio by major product type, which were determined based primarily on similar economic characteristics and risks of loss. For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 2023 2022 Gross premiums written: Personal lines(3) $ 44,011,176 $ 46,792,267 $ 88,182,114 $ 86,955,416 Livery physical damage 3,609,832 2,953,588 7,015,500 5,726,868 Other(1) 25,936 32,608 46,776 80,076 Total gross premiums written $ 47,646,944 $ 49,778,463 $ 95,244,390 $ 92,762,360 Net premiums written: Personal lines(3) $ 24,954,271 $ 27,048,585 $ 45,505,958 $ 49,159,250 Livery physical damage 3,609,832 2,953,588 7,015,500 5,726,868 Other(1) 18,625 23,607 30,017 57,850 Total net premiums written $ 28,582,728 $ 30,025,780 $ 52,551,475 $ 54,943,968 Net premiums earned: Personal lines(3) $ 26,075,876 $ 25,178,854 $ 51,094,961 $ 49,339,070 Livery physical damage 3,409,779 2,687,273 6,621,613 5,161,838 Other(1) 22,541 35,941 46,575 74,540 Total net premiums earned $ 29,508,196 $ 27,902,068 $ 57,763,149 $ 54,575,448 Net loss and loss adjustment expenses(4): Personal lines $ 17,925,971 $ 16,540,604 $ 40,495,580 $ 37,576,758 Livery physical damage 894,026 1,180,223 2,279,167 2,010,792 Other(1) 36 (967) 151,643 (24,367) Unallocated loss adjustment expenses 828,963 980,984 1,720,053 1,950,377 Total without commercial lines 19,648,996 18,700,844 44,646,443 41,513,560 Commercial lines (in run-off effective July 2019)(2) (68,294) (44,803) (26,331) 83,679 Total net loss and loss adjustment expenses $ 19,580,702 $ 18,656,041 $ 44,620,112 $ 41,597,239 Net loss ratio(4): Personal lines 68.7% 65.7% 79.3% 76.2% Livery physical damage 26.2% 43.9% 34.4% 39.0% Other(1) 0.2% -2.7% 325.6% -32.7% Total without commercial lines 66.6% 67.0% 77.3% 76.1% Commercial lines (in run-off effective July 2019)(2) na na na na Total 66.4% 66.9% 77.2% 76.2% "Other" includes, among other things, premiums and loss and loss adjustment expenses from our participation in a mandatory state joint underwriting association and loss and loss adjustment expenses from commercial auto. In July 2019, the Company decided that it will no longer underwrite Commercial Liability risks. See discussions above regarding the discontinuation of this line of business. See discussion with regard to "Direct Written Premiums, Net Written Premiums and Net Premiums Earned" above. See discussions above with regard to "Net Loss Ratio". KINGSTONE COMPANIES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues Net premiums earned $ 29,508,196 $ 27,902,068 $ 57,763,149 $ 54,575,448 Ceding commission revenue 5,412,210 4,715,587 10,857,617 9,396,983 Net investment income 1,451,356 634,325 2,992,848 1,993,425 Net gains (losses) on investments 197,142 (4,517,373) 1,422,013 (8,915,778) Other income 151,084 244,643 312,124 480,467 Total revenues 36,719,988 28,979,250 73,347,751 57,530,545 Expenses Loss and loss adjustment expenses 19,580,702 18,656,041 44,620,112 41,597,239 Commission expense 8,471,182 8,481,031 17,010,944 16,832,117 Other underwriting expenses 6,683,638 6,624,997 13,555,257 13,440,946 Other operating expenses 763,414 665,815 1,426,048 1,547,770 Depreciation and amortization 778,502 877,263 1,586,632 1,647,373 Interest expense 1,005,974 456,545 2,015,865 913,090 Total expenses 37,283,412 35,761,692 80,214,858 75,978,535 Loss from operations before taxes (563,424) (6,782,442) (6,867,107) (18,447,990) Income tax benefit (41,407) (1,402,823) (1,290,380) (3,870,839) Net loss (522,017) (5,379,619) (5,576,727) (14,577,151) Other comprehensive (loss) income, net of tax Gross change in unrealized (losses) gains on available-for-sale-securities (1,132,528) (7,642,863) 1,334,898 (17,508,640) Reclassification adjustment for losses included in net loss 10,381 10,356 13,020 51,680 Net change in unrealized (losses) gains, on available-for-sale-securities (1,122,147) (7,632,507) 1,347,918 (17,456,960) Income tax benefit (expense) related to items of other comprehensive (loss) income 235,651 1,602,827 (283,062) 3,665,963 Other comprehensive (loss) income, net of tax (886,496) (6,029,680) 1,064,856 (13,790,997) Comprehensive loss $ (1,408,513) $ (11,409,299) $ (4,511,871) $ (28,368,148) Loss per common share: Basic $ (0.05) $ (0.51) $ (0.52) $ (1.37) Diluted $ (0.05) $ (0.51) $ (0.52) $ (1.37) Weighted average common shares outstanding Basic 10,755,848 10,644,578 10,753,974 10,637,553 Diluted 10,755,848 10,644,578 10,753,974 10,637,553 Dividends declared and paid per common share $ - $ 0.04 $ - $ 0.08 KINGSTONE COMPANIES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets June 30, December 31, 2023 2022 (unaudited) Assets Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $6,266,115 at June 30, 2023 and $6,600,388 at December 31, 2022) $ 7,305,031 $ 7,766,140 Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $156,710,463 at June 30, 2023 and $174,918,427 at December 31, 2022) 137,855,117 154,715,163 Equity securities, at fair value (cost of $17,986,783 at June 30, 2023 and $18,086,700 at December 31, 2022) 14,410,482 13,834,390 Other investments 3,549,540 2,771,652 Total investments 163,120,170 179,087,345 Cash and cash equivalents 12,286,424 11,958,228 Premiums receivable, net 12,572,834 13,880,504 Reinsurance receivables, net 76,579,488 66,465,061 Deferred policy acquisition costs 21,440,158 23,819,453 Intangible assets 500,000 500,000 Property and equipment, net 9,853,831 10,541,935 Deferred income taxes, net 11,338,476 10,331,158 Other assets 3,657,664 3,748,847 Total assets $ 311,349,045 $ 320,332,531 Liabilities Loss and loss adjustment expense reserves $ 117,561,610 $ 118,339,513 Unearned premiums 101,914,895 107,492,777 Advance premiums 6,511,181 2,839,028 Reinsurance balances payable 13,684,595 13,061,966 Deferred ceding commission revenue 9,690,160 10,619,569 Accounts payable, accrued expenses and other liabilities 4,699,562 6,651,723 Debt, net 25,201,826 25,158,523 Total liabilities 279,263,829 284,163,099 Commitments and Contingencies Stockholders' Equity Preferred stock, $.01 par value; authorized 2,500,000 shares - - Common stock, $.01 par value; authorized 20,000,000 shares; issued 12,227,562 shares at June 30, 2023 and 12,171,512 shares at December 31, 2022; outstanding 10,756,156 shares at June 30, 2023 and 10,700,106 shares at December 31, 2022 122,275 121,715 Capital in excess of par 74,946,685 74,519,590 Accumulated other comprehensive loss (14,893,572) (15,958,428) Accumulated deficit (22,522,691) (16,945,964) 37,652,697 41,736,913 Treasury stock, at cost, 1,471,406 shares at June 30, 2023 and December 31, 2022 (5,567,481) (5,567,481) Total stockholders' equity 32,085,216 36,169,432 Total liabilities and stockholders' equity $ 311,349,045 $ 320,332,531 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 offers primarily personal lines insurance products in New York, New Jersey, Rhode Island, Massachusetts, and Connecticut. Kingstone is also licensed in 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 ("Risk Factors") of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission and Part I, Item 2 of our Quarterly Report on Form 10-Q for the period ended March 31, 2023 to be filed with the Securities and Exchange Commission. These risks and uncertainties include, without limitation, the following: As a property and casualty insurer, we may face significant losses from catastrophes and severe weather events. Unanticipated increases in the severity or frequency of claims may adversely affect our operating results and financial condition. We are exposed to significant financial and capital markets risk which may adversely affect our results of operations, financial condition and liquidity, and our net investment income can vary from period to period. The insurance industry is subject to extensive regulation that may affect our operating costs and limit the growth of our business, and changes within this regulatory environment may adversely affect our operating costs and limit the growth of our business. Changing climate conditions may adversely affect our financial condition, profitability or cash flows. Because a significant portion of our revenue is currently derived from sources located in New York, our business may be adversely affected by conditions in such state. We are highly dependent on a relatively small number of insurance brokers for a large portion of our revenues. Actual claims incurred may exceed current reserves established for claims, which may adversely affect our operating results and financial condition. We rely on our information technology and telecommunication systems, and the failure of these systems could materially and adversely affect our business. 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. CONTACT: Kingstone Companies, Inc. Jennifer GravelleChief Financial Officer(845) 768-1970 SOURCE: Kingstone Companies, Inc. View source version on accesswire.com: https://www.accesswire.com/773534/Kingstone-Announces-2023-Second-Quarter-Financial-Results