Kingstone Companies, Inc · NASDAQ:KINS
Kingstone Companies — IPO Roadshow (January 2017)
24 slides from Kingstone Companies's IPO roadshow presentation, January 2017
Slide 1: Follow-on Equity Offering
NASDAQ: KINS May 13, 2016 2016 First Quarter Conference Call Follow- Follow-on Equity Offering January 2017 Corporate Headquarters in Kingston, NY
Slide 2: Safe Harbor / KINS Snapshot
Safe Harbor / KINS Snapshot The issuer has filed a registration statement (including a prospectus and a prospectus supplement) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement, the prospectus supplemen
Slide 3: Offering Summary
Offering Summary Issuer Kingstone Companies, Inc. (KINS - NASDAQ Capital Market) Offering Type Registered public offering of common stock 2,950,000 shares, consisting of: Offering Size • 2,500,000 primary shares (85%) • 450,000 secondary shares (15%) Last Trade $12.75 close on January 23, 2017 Purch
Slide 4: Investment Highlights
Investment Highlights Consistent Profitable Growth Seasoned Attractive Market Management Team Opportunity Strong Financial Scalable for Profile Diversification • Increase capital of KICO to support expansion of profitable growth Offering • Reduce reliance on quota share reinsurance and retain more p
Slide 5: Independent Agency Focused P&C Carrier
Independent Agency Focused P&C Carrier • Personal and commercial lines property and casualty insurer – Focused primarily on Homeowners and personal lines products, Small Commercial, Livery Physical Damage, and other niche products – Personal Lines (Home and Dwelling) currently account for 77% of gro
Slide 6: Experienced Management Team
Experienced Management Team Barry B. Goldstein • Chairman and Chief Executive Officer since 2001 Chairman, President & Chief Executive Officer • 20 years of experience in the P&C insurance industry Victor Brodsky • Joined Kingstone in 2007, Chief Financial Officer since 2009 Chief Financial Officer
Slide 7: Shareholder Alignment
Shareholder Alignment • Kingstone officers and directors are significant, long-standing shareholders • Officers and directors remain meaningfully invested in Kingstone following the offering % of Common Shares Total Shares as of Shares Sold in Pro Forma Outstanding after Beneficial Owner(1) December
Slide 8: Select Agency Relationships – “Never Direct”
Select Agency Relationships – “Never Direct” • Long-term personal relationships based on loyalty and consistency - Senior executives are actively involved in managing our agency relationships - Each agency is assigned a dedicated line underwriter that they can call on any matter - Opportunities to e
Slide 9: Serving Large-Scale Markets
Serving Large- Large-Scale Markets Top Homeowners' Insurers in New York • Policyholders now located primarily in downstate As of December 31, 2015 New York 2015 2012 DPW Market Rank Rank Institution ($MM) Share - Fourth largest state in the country with estimated population of 19.7 million 1 1 State
Slide 10: Multi-State Expansion Plan
Multi- Multi-State Expansion Plan • Targeting additional Northeastern states VT where Kingstone can build out an agency- only distribution model based on the ME success achieved in the New York market • Anticipate launching in New Jersey in early NH 2017 MA NY – License to write P&C insurance in New
Slide 11: Rating Strategy
Rating Strategy Rating Upgrade Plan • Worked with rating agency consultant to develop plan to enhance financial strength ratings • We intend to take the following steps to position KICO to achieve an upgrade: − Contribution of capital to KICO − Maintain existing property catastrophe excess of loss r
Slide 12: Our Current Business
Our Current Business • Multi-line P&C insurance company GPW Mix by Lines of Business (1) - Mostly short-tailed personal lines - Commercial lines for small businesses Livery physical - Target niche risk segments damage 10% • Commitment to independent agency Commercial lines distribution 13% - 350+ se
Slide 13: Underwriting and Claims Expertise
Underwriting and Claims Expertise • Local market presence and extensive underwriting expertise • Long history of profitable underwriting results at stable premium rates • Focus on targeting preferred risks Underwriting • Underwriting procedures for new submissions support profitability - Each new ri
Slide 14: Strong Underwriting Results
Strong Underwriting Results Underwriting Income ($ in thousands) $12,000 $9,747 $9,496 $10,000 $8,000 2012 and 2013 $7,474 $7,223 adversely impacted $6,000 by Superstorm Sandy $3,749 $4,000 $2,820 $2,523 $2,000 $959 $1,054 - 2009 2010 2011 2012 2013 2014 2015 YTD 9/30/15 YTD 9/30/16 Loss and LAE Rat
Slide 15: Quota Share Reinsurance
Quota Share Reinsurance • A way for a lesser capitalized carrier to grow responsibly – results in sharing profits with reinsurers • Prudent reduction in quota share reinsurance allows us to retain more profits and keep leverage ratios within defined targets • Plans call for further reduction to pers
Slide 16: Property Catastrophe Reinsurance
Property Catastrophe Reinsurance • Current treaty effective 7/1/16 to 6/30/17 • Coverage to a 1-in-256 year loss event – consistent with requirements for an “A-” rated company • Gross retention of $5 million up to a limit of $252 million (increased from $180 million last year) • Net retention after
Slide 17: Established and Efficient Operations
Established and Efficient Operations • Primary operations center in Kingston, NY - Provides low-cost operating environment • Investment in new tools and technology - Improved efficiency and effectiveness of underwriting and claims processes - Implemented new paperless workflow management and documen
Slide 18: Return on Equity
Return on Equity Return on Average Equity 20.0% 17.7% 17.9% 18.0% 16.2% 16.0% 14.0% 14.0% 12.0% 2012 and 2013 ROAE’s adversely affected by 10.0% Superstorm Sandy 7.7% 8.0% 6.0% 4.9% 4.0% 2.0% 0.0% 2011Y 2012Y 2013Y 2014Y 2015Y YTD 9/30/16 Note: YTD 9/30/16 ROAE is annualized. 18
Slide 19: Long-Term Value Creation
Long- Long-Term Value Creation Book Value Per Share $8.00 $7.16 $6.80 $7.00 $6.32 $6.18 $6.00 $6.00 $5.73 $5.54 $5.57 $5.35 $5.18 $4.91 $4.98 $5.00 $4.00 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 Rolling LTM Earnings Per Share $1.20 $1.12 $1.00 $0.94 $0.96 $
Slide 20: Strong Balance Sheet
Strong Balance Sheet • Debt-free balance sheet • Conservative reinsurance program to protect the balance sheet ($ in millions) September 30, 2016 December 31, 2015 Cash and Investments $109.0 $90.4 Total Assets 169.5 149.1 Total Liabilities 112.8 103.9 Total Shareholders Equity 56.7 45.3 Statutory S
Slide 21: Investment Portfolio
Investment Portfolio Cash and Investments at 9/30/16 Fixed Income - Preferred Common U.S. Treasuries, Restructured Portfolio at 9/30/16 Stock, 5.6% Equity, 3.9% 0.6% Fixed Income - • Fixed income portfolio: 89.3% State and Municipal, • Preferred stock: 6.3% 9.1% • Average Effective Maturity 4.86 yea
Slide 22: 2016 Fourth Quarter Financial Developments
2016 Fourth Quarter Financial Developments • Continued Premium Growth - Direct written premiums expected to increase by 13% to $103 million in 2016 compared to 2015 - Net premiums earned expected to increase 25% to $61 million in 2016 compared to 2015 • Consistent Loss Experience - Q4 2016 net loss
Slide 23: Investment Highlights
Investment Highlights • Sustainable organic profits Consistent Profitable Growth • Multiple sources of new growth • Embedded growth opportunity from quota share treaty • Favorable underwriting trends in target markets Attractive Market Opportunity • Large untapped markets • Attractive competitive dy
Slide 24: Definitions of Non-GAAP Measures
Definitions of Non- Non-GAAP Measures We believe that investors’ understanding of Kingstone’s performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limi