Kingstone Companies, Inc · NASDAQ:KINS
Kingstone Companies — Investor Presentation (March 2024)
26 slides from Kingstone Companies's investor presentation, March 2024
Slide 1: Investor Presentation March 2024
Investor Presentation March 2024 NASDAQ: KINS
Slide 2: Forward-Looking Statements
This presentation 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 2 FORWARD- management’s current expectati
Slide 3: Kingstone Overview
3 KINGSTONE OVERVIEW Market $43 Stock Price as of 3/22/2024: $3.90 Cap: Million Total $200 cccc Year-ended 12/31/2023 Written Million Kingstone is a northeast regional property and Premium: casualty insurance holding company whose principal operating subsidiary is Kingstone Insurance Company (“KICO”
Slide 4: Investment Highlights
4 INVESTMENT HIGHLIGHTS Strong Position in Niche Markets Low-cost, Highly-efficient Provider • Focus on core business in Downstate NY • In-house underwriting, information technology, claims, • Core represents 86% of total policies as of December customer service and actuarial functions. 31, 2023. •
Slide 5: Business Operations
5 BUSINESS OPERATIONS 2023 DIRECT PREMIUMS WRITTEN OF $200 MILLION 15TH LARGEST WRITER OF HOMEOWNERS INSURANCE IN THE STATE OF NEW YORK FOUNDED IN 1886 Personal lines: Largest line of business; consists of homeowners and dwelling fire multi- peril, cooperative/condominiums, renters, and personal umb
Slide 6: Core Personal Lines Business
CORE PERSONAL LINES BUSINESS 6 Westchester Long Island Sound Percentage of Policies-in-force by County (as of 12/31/2023) Suffolk 43.7% Nassau 15.6% (Richmond) Atlantic Ocean (Kings) Kings 14.5% Queens 10.1% Kingstone refers to its New York business Richmond 5.1% as its “Core Business”. Bronx 5.1% N
Slide 7: Strategic Initiatives
STRATEGIC INITIATIVES 7 2021 – 2022 Kingstone 2.0 100% 2022 – 2023 Kingstone 3.0 100% Aggressively Reduce Non-Core Business • A strategic decision to shrink an unprofitable book of business. Adjust Pricing to Stay Ahead of Trends • Strong rate achievement to combat ongoing inflationary impacts. Tigh
Slide 8: Core vs Non-Core Personal Lines Loss Experience
CORE VS NON-CORE PERSONAL LINES LOSS EXPERIENCE 8 Core Business refers to the Company’s New York policies. Personal Lines Net Loss+ALAE Ratio 250% 200% 150% 100% 50% 0% 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 2023Q4 PL Core PL Non-Core Non-Core business increased
Slide 9: Mix of Business by Policies-in-Force
MIX OF BUSINESS BY POLICIES-IN-FORCE 9 Core Business refers to the Company’s New York policies. Non-Core Non-Core Other Other 22% 14% 1% 1% PDO PDO 8% 7% (8 pts) in non-core business 2022 +7 pts in core business 2023 Core HO 54% Core HO 48% Core DF Core DF 22% 23% Core HO = Core Homeowners Core DF =
Slide 10: Direct Premiums Written
DIRECT PREMIUMS WRITTEN 10 Strategically shrinking Non-core Business due to profitability concerns. Estimating Core Business Growth of +12% to +16% +1% +6% $201M $200M Further strategic (3%) (8%) non-renewal of non-core policies in 2024 Slowed Core new business in 2023 to manage reinsurance costs; i
Slide 11: Pricing Trends
PRICING TRENDS 11 Achieving significant price increases, ahead of inflation. Average Core Business Renewal Premium Increase of +18% in 2023 vs. 2022 Replacement cost was adjusted on every policy starting Q3 2022 so that the entire portfolio is insured to value Average Written Premium Core - Renewal
Slide 12: Managing Reinsurance Requirements
MANAGING REINSURANCE REQUIREMENTS 12 Cumulative Risk Adjusted Rate Change - Catastrophe XOL 2020 2021 2022 2023 Guy Carpenter Index 1.00 1.06 1.22 1.65 100YR Verisk Hurricane Probable Maximum Cost Kingstone 1.00 0.99 1.16 1.37 $400,000,000 $80,000,000,000 $350,000,000 $70,000,000,000 Total Insurance
Slide 13: Expense Reduction Initiative
EXPENSE REDUCTION INITIATIVE 13 • Achieved a 3.1 percentage point reduction in our net expense ratio in 2023, driven primarily by decreases in commissions, staffing and other efficiency improvements to business operations along with an increase in our average premium. • Continuing expense reduction
Slide 14: Fourth Quarter 2023 Summary
FOURTH QUARTER 2023 SUMMARY 14 The operational changes implemented are beginning to demonstrate their positive impact. Results Summary • Return to profitability driven by rate and non-rate actions, and cost structure initiatives; • Net income of $2.9M or $0.26 per diluted share, up $6.9M from a loss
Slide 15: Key Financial Metrics (Quarter)
KEY FINANCIAL METRICS 15 QUARTERS ENDED DECEMBER 31 Consolidated Financial Results ($ in thousands, except per share data) 2023 2022 Change RETURN TO Direct premiums written1 $52,938 $53,901 -1.8% PROFITABILITY Net premiums earned $28,683 $30,448 -5.8% Policies-in-force 78,398 92,054 -14.8% WITH NET
Slide 16: Key Financial Metrics (Full Year)
KEY FINANCIAL METRICS 16 FULL YEARS ENDED DECEMBER 31 Consolidated Financial Results ($ in thousands, except per share data) 2023 2022 Change COMBINED RATIO Direct premiums written1 $200,175 $201,255 -0.5% IMPROVED BY 8 Net premiums earned $114,384 $114,385 0.0% Policies-in-force 78,398 92,054 -14.8
Slide 17: Balance Sheet Overview
BALANCE SHEET OVERVIEW 17 December 31, December 31, 2023 2022 Total investments 174,632,828 179,087,345 Cash and cash equivalents 8,976,998 11,958,228 Premiums receivable, net 13,604,808 13,880,504 Reinsurance receivables, net 75,593,912 66,465,061 Deferred policy acquisition costs 19,802,564 23,819
Slide 18: Investment Portfolio
INVESTMENT PORTFOLIO 18 Net Investment Income $ in millions Highlights (as of 12/31/2023) $6.0 $4.9 • Outsourced portfolio management • High-quality portfolio provides consistent net investment income; 72% of fixed income portfolio rated A, or higher, or held as U.S. Treasuries. • Equity holdings, i
Slide 19: Executive Management Team
19 EXECUTIVE MANAGEMENT TEAM Barry B. Goldstein - Executive Chairman Meryl S. Golden - Chief Executive Officer Jennifer Gravelle - Chief Financial Officer Sarah Chen - Chief Actuary Investor Relations Contact: Karin Daly Vice President The Equity Group Inc. kdaly@equityny.com
Slide 20: 2024 Guidance
20 2024 GUIDANCE The Company’s full year expectations are as follows: 12.0% - 16.0% Core Business direct written premium growth “ Our improved results are the culmination of the initiatives that have already been successfully executed so we are confident that the 88.0% to 92.0% benefits will become
Slide 21: Definitions and Non-GAAP Measures
DEFINITIONS AND NON-GAAP MEASURES 21 Direct premiums written represent the total premiums charged on policies issued by the Company during the respective fiscal period. Net premiums written are direct premiums written less premiums ceded to reinsurers. Net premiums earned, the GAAP measure most comp
Slide 22: Reconciliation of Direct Premiums Written and Net Premiums Written to Net Premiums Earned
RECONCILIATION OF DIRECT PREMIUMS WRITTEN AND NET 22 PREMIUMS WRITTEN TO NET PREMIUMS EARNED For the Three Months Ended For the Years Ended December 31, December 31, 2023 2022 % Change 2023 2022 % Change (000’s except percentages) Direct and Net Premiums Written Reconciliation: Direct premiums writt
Slide 23: Reconciliation of Net Income (Loss) to Adjusted EBITDA
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA 23 For the Three Months Ended For the Years Ended December 31, December 31, % % 2023 2022 Change 2023 2022 Change (000’s except percentages) Adjusted EBITDA Reconciliation: Net income (loss) $2,946 ($3,950) NM ($6,168) ($22,525) 72.6% Interest e
Slide 24: Net Income (Loss) to Operating Income (Loss) and Diluted EPS
NET INCOME (LOSS) TO OPERATING INCOME (LOSS) AND 24 DILUTED EARNINGS (LOSS) PER SHARE TO DILUTED OPERATING EARNINGS (LOSS) For the Three Months Ended For the Years Ended December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Diluted Diluted Diluted Diluted income per loss per loss p
Slide 25: Reconciliation of Net Income (Loss) to Operating Income and Return on Equity
RECONCILIATION OF NET INCOME (LOSS) TO OPERATING 25 INCOME (LOSS) AND RETURN ON EQUITY TO OPERATING RETURN ON EQUITY For the Three Months Ended For the Years Ended December 31, December 31, % % 2023 2022 Change 2023 2022 Change (000’s except percentages) Operating Income (Loss) Reconciliation: Net i
Slide 26: Reconciliation of Net Loss Ratio Excluding Catastrophes
RECONCILIATION OF NET LOSS RATIO EXCLUDING THE 26 EFFECT OF CATASTROPHES TO THE NET LOSS RATIO For the Three Months Ended For the years Ended December 31, December 31, Percentage Point Percentage Point 2023 2022 Change 2023 2022 Change Net Loss Ratio Excluding Catastrophes Reconciliation: Net Loss R
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