Kingstone Companies, Inc · NASDAQ:KINS
Kingstone Companies — FY2023 Earnings Presentation
26 slides from Kingstone Companies's earnings presentation, Mar 27, 2024
Slide 1: Kingstone Investor Presentation March 2024
KINGSTONE 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 a_i Te) RW AR D- management's current exp
Slide 3: Kingstone Overview
KINGSTONE OVERVIEW Mane ? Cap: Total $200 * Year-ended 12/31/2023 Written 0) Million aw Premium: tores 7 In-Force business through 700+ licensed agents and . . Financial brokers, is actively writing personal lines and Strength © Demotech: “A, Excellent” commercial auto insurance in New York. Rating:
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS Strong Po: nin Niche Markets Low-cost, Highly-efficient Provider * Focus on core business in Downstate NY + In-house underwriting, information technology, claims, puna * Core represents 86% of total policies as of December {o3 customer service and actuarial functions. 31, 2023.
Slide 5: Business Operations
BUSINESS OPERATIONS 2023 DIRECT PREMIUMS WRITTEN OF $200 MILLION 15™4 LARGEST WRITER OF HOMEOWNERS INSURANCE IN THE STATE OF NEW YORK FOUND & 92.6% ED IN 1886 = 7.3% [ Personal Lines } [ Livery Physical Damage ) Personal lines: Largest line of business; consists of homeowners and dwelling fire multi
Slide 6: Core Personal Lines Business
CORE PERSONAL LINES BUSINESS — Long Island Sound Percentage of Policies-in-force by County (as of 12/31/2023) Suffolk 43.7% Nassau 15.6% Atlantic Ocean Kings 14.5% Queens 10.1% Kingstone refers to its New York business Richmond 5.1% as its “Core Business”. Bronx 5.1% New York 0.8% Downstate New York
Slide 7: Strategic Initiatives
STRATEGIC INITIATIVES 2021 - 2022 Kingstone 2.0 100% 2022 - 2023 Kingstone 3.0 100% ¢ Astrategic decision to shrink an unprofitable book of business. ¢ Strong rate achievement to combat ongoing inflationary impacts. « Manage exposure to a hard reinsurance pricing environment. * Relentlessly drive do
Slide 8: Core vs Non-Core Personal Lines Loss Experience
CORE VS NON-CORE persona LINES LOSS EXPERIENCE Core Business refers to the Company’s New York policies. Personal Lines Net Loss+ALAE Ratio 250% 200% 150% 100% . i 1 1 1 " 0% 2021Q1 = 2021Q2 2021Q3 202104 2022Q1 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 2023Q3 202304 mPLCore mPLNon-Core Non-Core business in
Slide 9: Mix of Business by Policies-in-Force
MIX OF BUSINESS BY POLICIES-IN-FORCE Core Business refers to the Company's New York policies. Non-Core 22% Core HO = Core Homeowners Core DF = Core Dwelling Fire Non-Core = Non-core Homeowners PDO = Livery Physical Damage Other = Personal Umbrella & Canine Legal Liability Non-Core policy count down
Slide 10: Direct Premiums Written
3 DIRECT PREMIUMS WRITTEN ~— Strategically shrinking Non-core Business due to profitability concerns. Estimating Core Business Growth of +12% to +16% +69 +1% J $200M Le] Further strategic non-renewal of non-core policies in 2024 (3%) (8%) 1 (] é Gen ee eee eee eee e Core New Business Core - Other 20
Slide 11: Achieving significant price increases, ahead of inflation
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 2 2 2 2 2 2 2 2 2 2 x 2 Ry “Ry “Ry “Rey “Ra “Ba “Ra “a “
Slide 12: Managing Reinsurance Requirements
MANAGING REINSURANCE REQUIREMENTS 100YR Verisk Hurricane Probable Maximum Cost $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 Cumulative Risk Adjusted Rate Change - Catastrophe XOL 2020 2021 2022 Guy Carpenter Index 1.00 1.06 AL 7272 Kingsto
Slide 13: Expense Reduction Initiative
EXPENSE REDUCTION INITIATIVE — ¢ 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 f
Slide 14: Fourth Quarter 2023 Summary
FOURTH QUARTER 2023 SUMMARY a 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 of $
Slide 15: Key Financial Metrics - Quarter
KEY FINANCIAL METRICS Sa QUARTERS ENDED DECEMBER 31 Consolidated Financial Results ($ in thousands, except per share data) 2023 2022 RETURN TO Direct premiums written? $52,938 $53,901 PROFITABILITY Net premiums earned $28,683 $30,448 Policies-in-force 78,398 92,054 WITH NET INCOME Net investment inc
Slide 16: Key Financial Metrics - Full Year
KEY FINANCIAL METRICS — FULL YEARS ENDED DECEMBER 31 | Results ($ in thousands, except per share data) 2023 2022 COMBINED RATIO Direct premiums written? $200,17: $201,255 IMPROVED BY 8 Net premiums earned $114,384 $114,385 | Policies-in-force 78,39: 92,054 POINTS TO 105.3% | Net investment income $6
Slide 17: Balance Sheet Overview
BALANCE SHEET OVERVIEW December 31, December 31, 2023 202: 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 23,81
Slide 18: Investment Portfolio
INVESTMENT PORTFOLIO — Net Investment Income $in millions Highlights — (as of 12/31/2023) $6.0 Investment Portfolio Fixed Portfolio Average Yield aes) BBB+ 3.58% $BBB- or 3.20% LE Non Rated 2.92% Corporate Common Stock & ETFs 2% 3% Preferred Stocks 1% 2021 2022 2023
Slide 19: Executive Management Team
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
2024 GUIDANCE The Company's full year expectations are as follows: 12.0% - 16.0% Mou improved results are the Core Business direct written premium growth culmination of the initiatives that have already been — successfully executed so we are confident that the 88.0% to 92.0% benefits will become inc
Slide 21: Definitions and Non-GAAP Measures
DEFINITIONS AND NON-GAAP MEASURES 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 compara
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 DILUTED EARNINGS (LOSS) PER SHARE TO DILUTED OPERATING EARNINGS (LOSS) For the Three Months Ended December 31, 2023 December 31, 2022 For the Years Ended December 31, 2023 December 31, 2022 Diluted Diluted Diluted Diluted income per loss per loss per
Slide 25: Reconciliation of Net Income (Loss) to Operating Income and Return on Equity
RECONCILIATION OF NET INCOME (LOSS) TO OPERATING INCOME (LOSS) AND RETURN ON EQUITY TO OPERATING RETURN ON EQUITY 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 income (loss
Slide 26: Reconciliation of Net Loss Ratio Excluding the Effect of Catastrophes
RECONCILIATION OF NET LOSS RATIO EXCLUDING THE 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 Rati