Kingstone Companies (KINS) 12 Aug 222022 Q2 Earnings call transcript

Greetings, and welcome to the Kingstone Companies Second Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ms. Director. Relations Investor Goldstein, Amanda Thank you, go ahead. please

business. may you afternoon, the much, XXXX quarter call, known and and circumstances regarding The Kingstone. factors uncertainties release Donna and Yesterday may unknown this everyone. second Kingstone this On morning, good results. discussed forward-looking company as materially events could Kingstone's affecting statements and itself Thank detailing very make risk occur issued differ forward-looking a press its on a call and not result of and

please more earnings statements Factors XX, XA December for For the at issued Part financial the that XX-K may refer the ended forward-looking yesterday. Item information, to condition XXXX, end of section along affect of X, release and Form year entitled the with company's future company's the results the on in commentary

addition, measures. to remarks today In include references non-GAAP our

measures of to Please that, the Mr. earnings in reconciliation our our a Goldstein. go turn For call the to non-GAAP see please Barry GAAP Goldstein. tables CEO, Mr. like the With figures, release. ahead, to I'd Kingstone's over

analysts agreement. the as state of hour from prior the an and hope will let cover you We're the Thanks, end our as an that accept me understand call, that But what can first questions I I and remarks, the prior will in everyone. Today, about present conference for pleased per quarter the existing call, say is morning, good us our you can call still elephants this Kingstone. share what with limited room. nondisclosure talk as only this second At stock. Amanda, we in that join XXXX I of

been changes to an I'd to key Kingstone made, Our order reviewing but has and focus begin we is underway. not improve on much much and on our we've focused It's in remains overnight the done, by squarely process, which have like to profitability. returning already profitability.

a combination states. in replacement garden inflation costs. of coverage and increases, through achieving to rate to take increased and We're been this have we reflect rate adjustments filings, continue all First, properly to

introduction matches rate to is new quarter. our Select the our product and this risk more through targeting than suite, will profiles. of to select which and increase Second, footprint, next our of goes XX% which risk, over are profitable more now live XX% we which state when live better later

bear Third, we numerous And I'm pleased currently us that standards. this to to a insured enable not model to operating effort, of risks Meryl Kingstone do and do begun obligated developed reduce we've fruit that But last, that I have one implemented I'm last before not our as changes of better what note And point and expenses. out already to identify you risk meet be made which to a our has our but many X.X, Meryl. by know. results, feel sure to thing proprietary result need to, profitability that'll and I fourth discussed reviews

do operate not that they insurance premium many like are the next remain our and We as change. level costs businesses the Our approved approved until departments flow can. occur, and state by each in we which at cannot other of through increased rates so

are longer. make makes Our repairs processes more issues, inflation, repair the chain and to adjustment subject loss take loss supply expenses difficult

seen So footprint. yes, the reflect we the to current priced And X% Northeast that results throughout is our our in, rate inflation impact but deferred. XX%

to me second to it let our Meryl the go review results over turn with for Meryl, ahead. that, please So quarter. operating

the per diluted net year. share $X.X quarter and The posted a period Great of share million of and last $X.X per company loss $X.XX same million to net thanks, diluted for compared second Barry. income $X.XX

I Barry year quarter prior increases. most the value of will $XX.X from were will share up spike tackle the market the of $X.X other investments, million in go a decline interest investment portion decline and million to equities for rate of over rates due While and the operations to this to approximately the attributable premiums and in $X.XX and per Direct this was our portfolio. rejoin growth was

quarter During premium by written adding policies first we force times shared our adding we to X.X%. while in Similar rate only our are more in than the increased three exposures. XX.X% the the we are quarter, what that at grew premium

the We remainder delta premium between year. expected to widen expect the to continue premiums and of growth this and losses the throughout

prior seen operating increase, line This quota in. we major competitive written main items. environment XX.X%, of XX% policyholder write. you up X.X are to increase seen sense retention premiums points share rates along attributable we in as lines interesting The our entering year have new year we result into personal our period. with we a year gives from have versus was two of in a the a increase of business XX% treaty. up was retention loss Net last our a every increase While declined our the LAE the in also net is quota ratio This prior activity favorable from

increase fire claims, of the as to experienced impact an due well we inflation. severity in as First, fire some large

historical losses QX that experience averages. in loss elevated, point want is While year-to-date line were out I our to fire with

an number water relative the who I of claims approximately the a ratio to carriers in quarter's this claims that year. loss there noted were to non-weather added as quarter. increase well mentioned large water Second, prior points four

by peril accurately. new peril the Select prices more includes rating water which product Our

inflation working We - of loss are costs. to hard ahead stay and

I to high year our In inflation garden cost of We we claim one for that not at fire want to we has this and driver been COVID. driver liability main ratio replacement XXXX XXXX. frequency adjusting levels. particular, And rate dwelling in accident attributed which loss addition to a are in increases, mention renewal. policies also historical to for on are high back frequency trending increase in was now fortunately, also

XX.X%. current quarter to expense the underwriting ratio points For decreased the net X.X

see initiatives X.X strategy down to year, And quota driven the corresponding starting that also multiple are the is captions you'll by from or reduction prior has expense but Kingstone share far each commission, slower take a hold. seating Our of at look versus is written our premium. our than direct and press expenses the that Please grown take expense reduction release. by

expenses share the understand. As makes to quota difficult our

share with Let you. some facts me interesting

Our prior expense is direct compared now for direct premium to XX% underwriting XX.X% period, from of in down down expense XX.X% our year of commission prior to XX.X% earned the to the period. earned total premium and is

forward. our results so system make reality. all to to worked do the our our as initiative profitability. as to I goal the seeing thank want reduction of be and have Our one an even continue hard of in legacy right who conversion, schedule this done we will to benefit I employees move of ahead lead company work expense have of Kingstone will key and completed in greater QX, X.X to a of things the return to look hard all Kingstone incredibly to financial forward we

call Barry let back over results. to Now, investment discuss the our me to turn

late the profile. Meryl. that led holds. address felt in securities, profoundly most in invested to thanks, interest more bond to We year A maturities bonds, rise lower and items with the result the I seen income our while others risk in to available today. rated income also rates lower than duration realignment quality Kingstone holding during previous limiting of similar you albeit quarters and in than first always diversified a that Great, the portfolio portfolio last better need and and second portfolio decline values are dramatic a us like all rates as meant have limited shorter fixed provide highly us primarily know, in we've and in at

are these as through values, comprehensive our While market balance sheet mark are other income. and bond flow to the and their down, we required reduce prices to change them

to with Also back were very suffering fixed stocks behave the rated QX to and both at are fully We early that preferred invested value the decline changes declines of as have already in holding quarter to suffered our trading share upon in and similar income restored will way return rates levels, the the $X.XX off and that bonds. always in now surrogates portfolio be bond book second not in year-to-date. other maturity, by begun A+ and income rates. will expect being have time, our par $X.XX comprehensive ETFs, intent at We per and pay a

six income per As those our changes these changes this statement, month earnings. equities for and our for period. Realized earnings quarter second share in in reduced and unrealized reducing $X.XX have the we decline, record equity $X.XX portfolio by our

briefly yesterday afternoon. I'd our release address business the late earnings in provided to like we update, Finally,

- this completion with Management that XXXX driving value it quarter with of the to an a preliminary and in the range announced for to enhanced Last with shared operating equity environment review, operational have we of Board was then company. And that shareholder so with the We previously financial Kingstone who Kingstone disclosed we the of do engaged with all regard in and the of indication received Board strategic, May, a acquisition the might of exclusivity pursue indication interest in agreement agreed review to diligence, current third of of of executed of objective final third-party the proposal. aid Kingstone further non-binding following substantial forward. its context the value that priorities. independent that Consistent due advisor and extend received and regularly Our financial team potential to our then options week, interest the shareholder non-binding the creation. an operational of and outstanding exploration engaged the following

can do agreement committed consummated, in to continue interest acting topic assurances and and disclosure or required. reached, its We unless until is transaction the of the consistent not that of with actions no to a Kingstone objective. becomes take be we'll be and will stockholders, intend While further company Board this comment the to an given Directors is on that the best

questions. keep today With operator, financial such, I the pull results and your you ask that focused that for our performance. on analyst please As questions

Sandler. ahead. Instructions] you. from Piper Thank [Operator go is Please Newsome first coming Paul of question Our today

at you you what profitability PIF were morning. or here. doing, of I least And to there you force essentially call. other are I what the would about I couple improve three a the book like into for want things in details guess about doing I and do. can you're got Good and tie retention. the comments I ask these more to to questions know Thanks that. on thoughts the growth

looking right? the I know, nature? improved. you're retention to not and surprised want value You PIF - of improve insured in to books your little - was retention, that Because don't [indiscernible] a at usually things shrink. that growth And you You earned profitable,

could state, besides profitable product? work to it what to of So the maybe - into that more just you you're a new book doing kind rolling talk existing into

to unprofitable. bad that it because competitors handle and eliminate I But we've know what as let market. try book. I continue Paul. that profitable. retention requirements our book, first. we're to so - that valued tell we're a is or our me I'll longer to is, value have And correct I'm you retention, we'll from parts specific matter to though thing, to homes, not this few secret We a time, you And meet are in I what we the most going a the fact at embellish sections and them, have I'll I risks over of write call. the exposure minimum, of high sounds we statement your upon eliminated Yes, mean, that there's those high to our think is say It's proven not question. that listening our areas Meryl our mean, targeting. when sauce those no

of about. I'm the talking kind thing that's So

algorithm built. We have lot pieces can't to you. share again, I that that a we've But with of other

you terms Meryl, want of here? anything pick In up would to

rate, taking we're we're segments. unprofitable Paul, Sure non-renewing

updated We some value. making our to our of and are books pulling business - unprofitable their working elsewhere. book with is sure producers that are costs We're to move insured replacement

factors it's of a combination those So others. and all

business But our comes selling business. XX% new York. thing from - new here of Paul, I think I operative is still We're are mean, selling business we the New

York there New while in business PIF we're new eliminating and selling adding risks. these unprofitable account we're So

priced think single-digit, PIF that those the X% and was small net elimination of targeting, I it the in the targeting, away business we're this getting you and better that new ads underwritten, we're from. of quarter So risks know, account far that is growth are

that you I color what hope hope gives that to - doing. a So we're little

little Is net quarter losses, the mentioned? and does. absolutely unrealized It straight ask level. which was excluding want I bit you The think It the up then expected. And about a items that that the to of I investment than for pretty investment is was ETFs insurers. lower I other the net normal the income - income this impact

in not are we because that. No,

Between stock market?

due say afternoon, or processor. going I you'll and an I their I in upon handle Fannie interest out Having north to And we basis, a see of but I our software and pre-tax them, result of we we accrued then, that we'll SOX-X something filing, on It's shouldn't publish that frankly, XX-Q. to Mae report, have third-party a make In Yes rely accrual, it write-off had take to reduce our handful rely of segment quarter, one-time don't a bonds. upon mean, our $XXX,XXX. needed we're an a overall - we receivable know that of adjustment timely. a think Monday on on was the

you in charge, add footnotes. investment to is income an if as item were expect So quarter's I But where this it you're to you'd be. see that going pretty that think disclosed back to the much

so - you should that back? Thank snap

Yes.

levels? To

It all. with had XXXX to do nothing at

there comments make, Right you rest capital can of could about I [indiscernible]? finally, getting of I'm there know some debt, and but structure, got then obviously, some and questions the is add lot a limited you anything this refinancing be may you've the

those minor sure the and not and actively We XX those effectively we with are are, expect of And December December that have on while terms able be and would you on could to but we're share basis, wanted But expensive, them progress early, because we making, when bonds you still through working an I this timely XX. you prohibitively a bonds pay-off it if fully I we're we'll to that. of do we'd due have the opportunity pay early. cognizant else, makes come pay at cognizant pay assure the it, but as with of I'm them discount. that refinancing will everybody is hope it, bonds we point, on done have to off a off to the interest just those

it. So question it. on of We're lot working to your at time. the I the guess same answer aware major we're activities on got a going is, of We've

one And confidence which talking that what's for but I fail. without investors obligations I to the one. Frankly, I've up. at hope think there's more over and, but timely than years, our least we've and about would that's happen have going been that bringing our the elephant, you had that discharged again thank

folks ask to your Thank Thank help. for questions. you. other I'll let you

you. Thank

of like Mr. Thank you at the this turn and time, I'd President Executive closing Goldstein, to floor to Officer back comments. Companies for Chief Kingstone over

That Well, thank soon. and thank all to Bye-bye. all today much you speak you, with in. for operator for very listening Hope you and call appreciated. concludes our

interest Ladies and and gentlemen, thank you in Kingstone participation for Companies. your

enjoy webcast may at your or You off lines disconnect the and of your time this the day. log rest