Kingstone Cos. Publish Q1 2023 Results: Another Tough Quarter

On May 11, 2023,  Kingstone Companies, Inc. (Nasdaq: KINS-May 15 share price: $1.22), a Northeast regional property and casualty insurance holding company currently operating in New York, New Jersey, Rhode Island, Massachusetts, Connecticut, and Pennsylvania, announced its financial results for the first quarter ending March 31, 2023.

Key Financial and Operational Highlights:

The Company reported a loss per share of $(0.47), a significant improvement, in the Company’s opinion, compared to $(0.87) for the same period last year.

The book value per share stood at $3.09, down by 8.6% from the prior quarter. However, excluding Accumulated Other Comprehensive (Loss), the book value per share was $4.39.

Direct written premiums grew by 10.7% to $47.6 million.

Net premiums earned increased by 5.9% to $28.3 million.

Kingstone reported a decrease in the net combined ratio to 123.3% from 124.5%.

The net loss ratio was up from 86.0% to 88.6%, including an increase in catastrophe losses from 11.3% to 13.2%.

The net underwriting expense ratio fell to 34.7% from 38.5%.

Comments by management on Q1 results

Barry Goldstein, Kingstone’s Chairman and CEO, acknowledged the challenging environment they continue to operate in, particularly due to the difficult northeast winter. However, he expressed optimism for the future and commended the team’s efforts in improving their underwriting results and working towards returning Kingstone to profitability.

Kingstone’s CFO, Jennifer Gravelle, noted that the comparable underwriting loss to the previous year was due to weather-related events. She also highlighted their progress in expense reduction efforts as a crucial part of building a robust foundation for sustained growth.

Meryl Golden, Kingstone’s COO, shared updates on Kingstone 3.0 and their strategic plan for 2023 and 2024. She mentioned offloading their unprofitable non-New York book of business and implementing initiatives to manage their PML. She expressed optimism for Kingstone’s future and reiterated the team’s focus on restoring profitability and delivering long-term shareholder value.

A Closer Look at the Financials:

Kingstone’s net loss for Q1 2023 was $5.1 million, a decrease from the net loss of $9.2 million in the prior year period. The Company attributed this to the geographical positioning of its policyholders, as the first quarter typically results in an underwriting loss.

The Company’s direct written premiums for Q1 2023 stood at $47.6 million, a 10.7% increase from the previous year. This increase was primarily due to an uptick in premiums from their personal lines business and their livery physical damage product.

For the quarter ending March 31, 2023, the Company’s net loss ratio increased to 88.6% from 86.0% the previous year, primarily due to an increase in catastrophe losses.

Balance sheet and investment portfolio

As of the first quarter of 2023, Kingstone’s cash and investment assets stood at $190.6 million, a slight decrease from the $191.0 million recorded at the end of the first quarter 2022. Most of the Company’s investment holdings are invested in investment-grade corporate bonds, mortgage-backed securities, and municipal bonds. Fixed income investments accounted for roughly 90.1% of the total investments as of the end of the first quarter of 2023, a minor decrease from 90.7% at the close of 2022. The effective duration of the fixed-income portfolio remains at 4.3 years.

In terms of net investment income, the Company saw a 13.4% increase in the first quarter of 2023, reaching $1.54 million. This marked an upturn from the $1.36 million reported during the same period in 2022.

Non-GAAP Financial Measures

The Company’s Q1 announcement notes that in presenting the Company’s results, management has included financial measures which are not calculated or presented in accordance with generally accepted accounting principles (“GAAP”).

These non-GAAP measures are identified and explained in the Company’s press release. According to the Company, these non-GAAP measures are supplemental in nature and may not be directly comparable to other similarly titled measures of other companies.