Kingstone Companies, Inc · NASDAQ:KINS
Kingstone Companies — Q1 2024 Earnings Presentation
26 slides from Kingstone Companies's earnings presentation, May 13, 2024
Slide 1: Investor Presentation May 2024
E KINGSTONE Investor Presentation May 2024 NASDAQ: KINS
Slide 2: Forward-Looking Statements
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 management's
Slide 3: Kingstone Overview
KINGSTONE OVERVIEW Sim, & _ A * y . : Sd Market © \ : Cap: Total Written Kingstone is a northeast regional property and Premium: casualty insurance holding company whose principal operating subsidiary is Kingstone Insurance Company (“KICO”). Policies- © In-Force KICO, a New York domiciled carrier wr
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS Strong Position in Niche Markets Low-cost, Highly-efficient Provider + Focuson core business in Downstate NY + In-house underwriting, information technology, claims, + Corerepresents 88% of total policies as of March 31, customer service and actuarial functions. 2024. + Enables
Slide 5: Business Operations Direct Premiums Written
BUSINESS OPERATIONS 023 DIRECT PREMIUMS WRITTEN OF $200 MILLION 15™ LARGEST WRITER OF HOMEOWNERS INSURANCE IN THE STATE OF NEW YORK FOUNDED IN 1886 Tan Tie aL ANNE HHL = 92.6% 7.3% Livery Physical Damage Personal Lines | Other ecemb Personal lines: Largest line of business; consists of homeowners an
Slide 6: Core Personal Lines Business
CORE PERSONAL LINES BUSINESS Kingstone refers to its New York business as its “Core Business”. Downstate New York refers to NYC, Long Island and Westchester County. Percentage of Polici Suffolk Nassau Kings Queens Richmond Bronx New York Westchester -force by County {as of 12/31/2023) 43.7% 15.6% 14
Slide 7: Strategic Initiatives
STRATEGIC INITIATIVES 2021 - 2022 Kingstone 2.0 100% 2022 - 2023 Kingstone 3.0 + Astrategic decision to shrink an unprofitable book of business. oO « Strong rate achievement to combat ongoing inflationary impacts. ee + Manage exposure to a hard reinsurance pricing environment. + Relentlessly drive d
Slide 8: Core vs Non-Core Personal Lines Loss Experience
CORE VS NON-CORE persowai LINES LOSS EXPERIENCE 3 Core Business refers to the Company’s New York policies. Personal Lines Net Loss+ALAE Ratio 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 202201 202202 202203 202204 202301 202302 202303 202304 202401 mPLCore = PLNon-Core Core Personal Lines Business loss rati
Slide 9: Mix of Business by Policies-in-Force
MIX OF BUSINESS By POLICIES-IN-FORCE 2 Core Business refers to the Company's New York policies. December 31, 2022 December 31, 2023 (8 pts) in non-core business +7 pts in core business Core HO = Core Homeowners Core DF = Core Dwelling Fire Non-Core = Non-core Homeowners PDO = Livery Physical Damage
Slide 10: Direct Premiums Written
DIRECT PREMIUMS WRITTEN Strategically shrinking Non-core Business due to profitability concerns. Estimating Core Business Growth of +16% +695 ue i 201M i $200M 1 = i (3%) : : (8%) 1 ! i i i i i i i i i i i i i i i i i i i i i i i i _ ‘ é ‘ ‘ Core New Business Core “Other 2023 DPW Core Renewal Busine
Slide 11: Pricing Trends: Average Core Business Renewal Premium Increase
Average Core Business Renewal Premium Increase Replacement cost was adjusted on every policy starting Q3 2.so that the entire portfolio sured to value PRICING TRENDS ificant price increases, ahead of inflation. 202101 202102 202103 202104 202201 2022Q2 202203 202204 202301 202302 202303 202304 20240
Slide 12: Managing Reinsurance Requirements
MANAGING REINSURANCE REQUIREMENTS ‘LOOYR Verisk Hurricane Probable Maximum Cost $400,000,000 $350,000,000 $30,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 so Cumulative Risk Adjusted Rate Change - Catastrophe XOL 2020 2021 2022 Guy Cary index 1.00 1.06 22: e 1.00 0.99 1.16
Slide 13: Expense Reduction Initiative
EXPENSE REDUCTION INITIATIVE 7 + Achieved a 3.1 percentage point reduction in our net expense ratio in 2023, driven primarily by decreases in commissions, staffing and other efficiency improvements to business operations along with an increase in our average premium. « Continuing expense reduction f
Slide 14: First Quarter 2024 Summary
FIRST QUARTER 2024 SUMMARY The operational changes implemented are demonstrating their positive impact. Results Summary (all metrics are compared to First Quarter 2023, unless noted otherwise) * Core Business direct written premium up 12.5%; * Core growth is accelerating in the 2024 second quarter.
Slide 15: Key Financial Metrics
KEY FINANCIAL METRICS . QUARTERS ENDED MARCH 31 Consolidated Financial Results ($ in thousands, except per share data) 2024 2023 Change Direct premiums written $49,325 $47,597 3.6% NET INCOME Net premiums earned $28,820 $28,255 2.0% Net investment income $1,503 $1,541 -2.5% EER BASIC SHARE Net gain
Slide 16: Balance Sheet Overview
BALANCE SHEET OVERVIEW March 31, December 31, 2024 2023 (Assets Total investments 185,909,331 174,632,828 Cash and cash equivalents 3,199,300 8,976,998 Premiums receivable, net 13,902,797 13,604,808 Reinsurance receivables, net 70,723,937 75,993,912 Deferred policy acquisition costs 19,427,151 19,80
Slide 17: Investment Portfolio
INVESTMENT PORTFOLIO ¢as of 12/5/2023) . Net Investment Income $in millions ——" $6.0 Highlights 2022 2023 Investment Portfolio Fixed Portfolio Average Yield —— 58% Corporate common <BBB-or 3.20% ‘Stock & ETFs — Non Rated 2.92% 2% 3% Preferred Stocks — % 2021 2022 2023
Slide 18: 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 19: Raised 2024 Guidance
RAISED 2024 GUIDANCE Previous (3/27/202 For 2024, the Company's full year expectations are as follow 16.0% - 20.0% Core Business direct written premium growth 86.0% to 90.0% Combined ratio. $0.75 to $1.10 are — 22.0% to 30.0% Retum on equity “The variance between net income per share - diluted and b
Slide 20: 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 eamed, the GAAP measure most compa
Slide 21: Reconciliation of Direct Premiums Written and Net Premiums Written to Net Premiums Earned
RECONCILIATION OF DIRECT PREMIUMS WRITTEN AND NET a PREMIUMS WRITTEN TO NET PREMIUMS EARNED For the Three Months Ended March 31, % 2024 2023 Change | (000’s except percentages) Direct and Net Premiums Written Reconciliation: Direct premiums written $ 49,325 $ 47,597 3.6 % Ceded premiums written? (11
Slide 22: Reconciliation of Net Income (Loss) to Adjusted EBITDA
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA 22 For the Three Months Ended March 31, % 2024 20238 Change (000’s except percentages) Adjusted EBITDA Reconciliation: Net income (loss) $1427 $ (5,055) ‘NM _% Interest expense 994 1,010 (1.6) Income tax expense (benefit) 378 (1,249) NM Deprecia
Slide 23: Net Income (Loss) to Operating Income (Loss) and Basic Per Share
NET INCOME (LOSS) TO OPERATING INCOME (LOSS) AND BASIC INCOME (LOSS) PER SHARE TO BASIC OPERATING INCOME (LOSS) PER SHARE For the Three Months Ended 23 March 31, 2024 March 31, 2023 | Basic Basic loss income per per common common Amount share Amount share (000’s except per common share amounts and p
Slide 24: Net Income (Loss) to Operating Income (Loss) and Diluted Per Share
NET INCOME (LOSS) TO OPERATING INCOME (LOSS) AND 24 DILUTED INCOME (LOSS) PER SHARE TO DILUTED OPERATING INCOME (LOSS) PER SHARE For the Three Months Ended March 31, 2024 March 31, 2023 | Diluted income per Diluted loss common per common Amount share Amount share | (000’s except per common share amo
Slide 25: Reconciliation of Net Income to Operating Income and Return on Equity
RECONCILIATION OF NET INCOME (LOSS) TO OPERATING INCOME (LOSS) AND RETURN ON EQUITY TO OPERATING 25 RETURN ON EQUITY For the Three Months Ended March 31, 2024 2023 % Change (000’s except percentages) Net Operating Income (Loss) Reconciliation: Net income (loss) $ 1,427 $ (5,055) NM Net gain on inves
Slide 26: Reconciliation of Underlying Loss Ratio to Net Loss Ratio
RECONCILIATION OF UNDERLYING LOSS RATIO TO NET LOSS 26 RATIO For the Three Months Ended March 31, Percentage Point 2024 2023 Change Underlying Loss Ratio Reconciliation: [Underlying loss ratio 58.8% T5A% (16.6) pts | Effect of catastrophe losses 5.2% 13.2% (8.0) pts | Effect of prior-year reserve de