Kingstone Companies, Inc · NASDAQ:KINS
Kingstone Companies — Sidoti & Company Semiannual Micro-Cap Conference (January 2014)
22 slides from Kingstone Companies's conference presentation, Jan 9, 2014
Slide 1: Presentation to Sidoti & Company Semiannual Micro-Cap Conference
KINGSTONE Kingstone Companies, Inc. NASDAQ: KINS Presentation to Sidoti & Company, LLC Semiannual Micro-Cap Conference January 13, 2014
Slide 2: Safe Harbor
Safe Harbor KINGSTONE Statements in this presentation, including the information set forth as to the future financial or operating performance of Kingstone Companies, Inc. (“Kingstone”), that are not current or historical factual statements may constitute “forward-looking” information within the mea
Slide 3: Summary of December 2013 Follow-On Public Offering
Summary of December 2013 Follow-On Public Offering = KINGSTONE Sis Kingstone Companies, Inc. (KINS - NASDAQ Capital Market) Offering Type Follow-on public offering of common stock (100% primary) Offering Size!) Approximately $20.5 million 3.45 million shares Common Shares Approximately 7.27 million
Slide 4: December Offering Rationale
Continued Strong Growth Seasoned Attractive Market Management Team fe Strong Financial Diversified Profile m@ Insurance Company * Increase statutory capital to support continued premium growth December a ¢ Reduce reliance on quota share reinsurance Offering Rationale * Position insurance company for
Slide 5: Management Team and Directors
Management Team and Directors KINGSTON + Seasoned team of executives Barry B. Goldstein .: Chairman and Chief Executive Officer since 2001 Chairman, President & . Former President of Atlantic Insurance Agency, an operator of retail insurance agencies Chief Executive Officer * 15+ years of experience
Slide 6: Company History
Company History ° * Originally formed as a retail insurance agency (DCAP Group) + Acquired ownership of Commercial Mutual in 2009 * Strategically repositioned business as an insurance underwriter 1886 Commercial Mutual Insurance Company (CMIc} formed; predecessor to Kingstone Insurance Company 2006
Slide 7: Our Business
Our Business * Multi-line P&C insurance company - Mostly short-tail personal lines - Commercial lines for small businesses - Target niche and underserved markets - Primarily in downstate New York * Selective underwriting and risk management - Local market expertise * Ratings profile B+ Good * Exclus
Slide 8: Independent Producer Relationships
Independent Producer Relationships + Long term personal relationships - CEO and senior management develop and manage relationships with agency owners - Each producer assigned a specific underwriting team * Differentiated from other carriers - Excellent, high level of personal service - Multiple prod
Slide 9: Attractive Market... With Strong Underwriting Performance
Attractive Market... RINGSTONE Historical Loss Experience by State - 15 Year Avg. Homeowners Loss & LAE Ratio pew (87.08 $8.43 $2.98 $2.28 $2.48 $6.43 $3.08 $2.48 $2.48 78% ™ i OH StDev. 14.3% 69.2% 123% 21.5% 18.4% 32.7% 17.6% 15.4% 26.2% “Source: AON Berfield ..With Strong Underwriting Performance
Slide 10: Personal Lines
Personal Lines * Homeowners, dwelling fire, 3-4 family dwelling and condo/co-op - Average insured value < $1M - Average premium of ~$1,600 71% of gross written premium + Attractive market dynamics * Selective underwriting and pricing -U Physical inspections Credit score Mandatory hurricane deductibl
Slide 11: Commercial Lines
Commercial Lines KINGSTONE * Lower risk small businesses and contractors - Artisan’s liability - Business owners policy (“BOP”) and special multi-peril (“SMP”) - Maximum liability limit: $1.0M 6 io mitions) sh “ ot - 16% of gross premiums written 2010 20 2012 Y¥1D9/30/12 YTD 9/30/13 Net Premiums Ear
Slide 12: Other Lines of Business
Other Lines of Business KINGSTONE Livery Physical Damage and Other Commercial Auto + Niche specialty products * Lighter weight vehicles - Livery physical damage only - newer livery and - Physical damage and liability coverage car service vehicles and taxi cabs - Canine legal liability policies * 9%
Slide 13: Established and Efficient Operations
Established and Efficient Operations KINGSTONE * Based in Kingston, NY - Advantageous employment location - Company owned office building with significant room for expansion + Experienced and dedicated employees - Managers average 12 years of experience with Kingstone - Extensive experience in New Y
Slide 14: Impact of Superstorm Sandy
Impact of Superstorm Sandy KINGSTONE + 3 costliest storm in U.S. insurance history“) {in thousonds) f so $aans - Estimated $18.8B in insured losses(1) Saas 4208 - Approx. 51% of claims payments made in Susans. New York ($9.68 in insured losses)(*) - Significant impact to downstate New York 51070 * R
Slide 15: Effective Utilization of Reinsurance
Effective Utilization of Reinsurance + Reinsurance strategy - Target net underwriting leverage of 1.5x or less - Single loss limit < 1.5% of surplus - Net company retention for CAT events < 5% of surplus - Excess of loss coverage up to policy limits + Attractive quota share treaties - Ceding commiss
Slide 16: Personal Lines Reinsurance Program
Personal Lines Reinsurance Program + Attractive property quota share treaty - Two year term started July 1, 2013 - Ceding 75% of premiums written - Sliding scale ceding commission rate = 40% minimum at 45% loss ratio or above = 57% maximum at 25% loss ratio - Flexibility to optimize ceding percentag
Slide 17: Financial Highlights
Financial Highlights KINGSTONE Gross Premiums Written Net Premiums Earned iS in thousands) $57,503, ene $49,276 $40,786 $33,260 2010 2014 2012 09/20/13 LT iS in thousands) $11,136 2014 $20,088 09/20/13 “TM Reported Diluted Earnings Per Share Reported Book Value Per Share Impacted by $0.64 Superstorm
Slide 18: Third Quarter Financial Update
Third Quarter Financial Update KINGSTONE * Strong growth in premium volume and profitability Reduced commercial lines quota share ceding percentage Improved terms of personal lines quota share treaty No material effects from Superstorm Sandy {$10 thousands, except ratios and per share amounts} Three
Slide 19: Investment Portfolio
Investment Portfolio KINGSTONE * Seek to generate attractive after-tax investment Credit Rating of Fixed Income Securities income while protecting capital * Portfolio composition as of September 30, 2013 - Investment grade fixed income portfolio: 70.9% - High quality preferred stocks and dividend pa
Slide 20: Driving Shareholder Value
Driving Shareholder Value KINGSTONE * Track record of strong growth and attractive shareholder returns zo) 2012 ¥105/301 Gross Premium Written Growth 22.5% 20.9% 22.6% Combined Ratio (ex. Sandy)! 74.7% 75.8% 72.3% Return on Avg. Equity (ex. Sandy} 17.7% 16.9% 22.1% + Sustainable gross written premiu
Slide 21: Appendix
Appendix
Slide 22: Net Premiums Earned
a) @) Net Premiums Earned Provisional Ceding Cammission Earned Contingent Ceding Commission Earned Total Ceding Cammissian Earned Net Investment Incame. Net Realized Gain on Sale of Investments. Other Incame Total Revenue Net Loss and Loss Adjustment Expenses, Other Underwriting Expenses ‘Operating
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