Kingstone Companies (KINS) 11 Aug 232023 Q2 Earnings call transcript

Greetings. Welcome to Kingstone Companies Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

the Investor to Relations. turn and Gravelle, now of Head will conference Jen over CFO I Thank you.

begin. may You

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

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

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

reconciliation For our non-GAAP please in GAAP to tables a the of see our release. figures, earnings measures

I'd Mr. over With that, the Chairman Goldstein. ahead, Barry and call Barry. Kingstone's to Go like to turn CEO,

next I morning, and serve company and the August Wednesday, effective Chairman second Kingstone's earnings be quarter XXXX. I you, for the the joining through X. to Annual of everyone. in On of Thank announced become company's will which next be October will stepping call. that Meryl will would back Meeting, continue company Thanks the CEO as good Shareholders

and how we products, we modernizing told now is the about new years tell She her gain time cut needed I've been rates by right you needed believe efficiencies multiple four to been costs. thinking about build to some the It's how laid since retiring old almost I stepping back do out and She let why. Kingstone it. them for told plans them increase to Meryl the Board And systems. me to time company.

since, to do these accomplished overwhelmed team. absent we to contain items. needed also the each saw most her planning what of We've more has rates. need us. leadership headwinds She experienced execution worst to feeling the She better spiking is skilled have reinsurance was us. and plagued a and It's And my that our build with importantly, forces diverse, that severe behind exposure now been would

moving amounting receded increases X% heading for allowing for is has rates back We consecutive towards our Inflation The rates in XX% decline. with for year of two increases, economy reinsurance saw heightened to Fed's with address increase being together soft the recent target. inadequate rates the costs. a cumulative that to loss most our rendered inflation almost to the likely interest sixth years total double-digit a landing, spiking

outside New that led in outside the business being to she not taking cutting began impact reduce in in and efforts a XXXX our industry-wide, new us as the this few and decision York, costs. big or adjusted we the to York of geographic discuss taking resulting efforts to rate recognize difficult attempted and fixed stop were on company's New felt also to that the writing taking book by by We losses had is rate we for underwriting the early actions made do. be company expansion underwriting quickly started Meryl's will minutes. While that could

as we again of insurance more XX homeowners of number York end now knowing Kingstone are business market by grow share where in year. last a and we New great only are enjoy for writing is to a the But the already of turning opportunity the expand corner, X.X% there but further writer

Together, had in as to they being a year Florida at catastrophe-exposed team. part January her work is an impact As put team, this of gained Jen experience in great property has key Meryl's of with Kingstone. us in dealing joined underwriting are and a immediate

behind is perfect there step to worst move the And for to is time done, much allow the back path. on me believe us. I teams capable and and it company this to be the the them leave is forward. again, left And right Jen Meryl and their to we're while So to

now go call the over Let to turn ahead. me Meryl, Meryl.

Thanks, will profitability an build selected results the I the done made impact more everything our the profit am in have Jen to have Barry's taken since great for honor his XXXX. report and support. loss hold. and exciting I'm to this an improve We clearly that Kingstone numerous next talented of quarter lead underwriting Barry. Kingstone It's overall, to leadership year team and and to our materially privilege the for And had first chapter. for company he's but been delighted thankful small prior it's time financial the actions take and a improved still from this cover quarter. results see our to we to

Kingstone in corner. the turning transformation. the midst is are We of a

premier writer York of New working Downstate, Our is footprint have insurance roots property our of strategy near to for reduce and York. the coastal the New to term been hard as to in our return we outside

New less market Barry than As is Kingstone's in York share homeowners X%. mentioned,

market tremendous in profitable write state have business best. and We a the opportunity to conditions capitalize that we on to know

York the had the for Results outside a states huge drain New have on company.

ratio reduce you and policies states are lines making to we understand force versus York in so states. share will needed personal this separated why I can time, our first frankly, New our book progress the and business loss these we in for the by on other the For net transformation

press have our We release metrics in included this quarter. also these

return we made much there. were possible profitability, underwrite and effort in. it's reduce book our and in situation business the of decision late to Sometimes to not York book back profitability, outside a 'XX, to to aggressively rate to New that's the states After the we

by regulators additional working we actions results. Through these before, policies reduction New by year-end the to force, outside take on great those we to mentioned second book impact As quarter, negative disproportionate have had can close reduced to policies faster. even we've states in policies and XX% That reduce we're reducing made year. anticipate in in progress. next a the another XX% on our with and the decline Relative XX% York force said, underwriting a

to profitability, been have Relative the to abysmal results outside least. say New York our

lines, quarter, was New personal second in York For ratio loss while outside XX.X%. XXX.X% York the the was New net

net off will ratio million. year the York XXX%, profit it's outside 'XX, New Kingstone's as clear $XX book For reducing greatly hope loss financial the over getting I was full as our quickly now underwriting why by improve results. possible this

unprofitable New the replace to New policies. is profitable intention outside York with York policies Our

costs. decline intentionally new our of For quarter, a we in the New down had business the policies slowed pace to force manage reinsurance as we in York writings

just and for segments to profitable York, the New up so underwriting loosen the we will We our of in started start rest to year. have grow faster

premiums increased quarter our in personal New while declined For by X% direct our New lines York premiums this written XX%. by outside York,

an Our due average change quarter to of renewal and in premium the combination in New was to cost. up a rate York replacement update XX%

we New During X.X% that in much and be approval have increase York pending in the larger homeowners still a New the quarter, received Jersey York in quarter. on increases for New and will fourth effective

We in also Massachusetts. an approval got XX.X% increase on

year-to-date, in fire. homeowners a we're and both quarter and decline in the frequency water claims For seeing for

primarily driven the is other both by inflation. for hand, on markedly Severity, perils, up

third-party losses all number year detected. that However, thing losses of they claims large seasonal our confirmed similar knew to was consultant many which see to nothing at we unusual an the properties. could this One were be large of pattern we water any for and if Otherwise, is we quarter, large states, of seeing elevated to look across last had trying understand. are are many a We identified.

corner. end There's want to the execution of I outside by work New how to will that by us to a reiterating profitability. turned still of especially lot business York am delighted our lead plan, I'm do, that but has how I the strategic confident back consistent -- Kingstone reducing continued

value We are plan shareholders. the for will our long-term deliver that confident future our to optimistic and

the pass quarter With our that, to Jen? Jen review results. to second I'll over call now

Thank you, Meryl.

period. X.X% were million million, the declined to by a For written of quarter loss compared share premiums million, year to quarter. force per X.X% per Direct net decrease million 'XX, second the reported loss our is for in $X.XX million year. or diluted the $XX.X last which just prior And from a $XX.X from $X.X the in diluted Kingstone previous of the period share down same of $X.X a $X.X net policies of $X.XX

declined all premiums from in combined, And XX.X%, by lines premiums force year. York declined of XX.X%, prior loss the York X For XX%. declined X.X%. points LAE outside down New New in in by in were force X.X%, ratio was while The policies policies up and

Second quarter losses for the period. ratio the to million over losses on an X.X catastrophe or the points of catastrophe year net X.X points quarter, loss increase prior added the $X.X

last company's of the frequency, to believed improvement efforts year. a in XX.X%, was by X.X profitable or losses large in attritional The risk driven loss the products the active be quarter points manage discussed. loss -- elevated which of than the ratio Select just by less non-cat that better number segments second an result was lower selection lower Meryl offset to well as as was ratio The

For expense reduction X.X XX.X%. the second quarter, expense points done in fantastic decreased a to the efforts. underwriting net ratio We've job our

to due compensation. producer This is reduction expense ratio to changes quarter's primarily

see with XXXX commission expire policies to the in the commission are policies throughout agent improvement will We replaced lower agent of continue commission by as the higher remainder and percentage. expense

since headcount. great areas, all but at a We're tightened about expenditures in lowest which, our feel further, level efforts to to even an expenses in date. XXXX. expenses We're to to reduce continuing have effort We led all review unfortunately, our in staffing now reduction

quarter 'XX, to an of income. through correction this of investment was second Our a In was second income higher accounting the the accrued quarter investment error much year. made

rates also interest on higher from We balances. cash benefited

from transaction. in a sale due of from an service change vastly the debt stabilization the help to of to the current where year metric, portfolio capital markets. In EBITDA, our in had our new operating different, removes $XXX,XXX gains $X.X which share impact compare million investment and prior decided coming versus with from the periods, a we we quarter, our loss effort notes a so the leaseback prior in to the This payable indebtedness is

to do on on unrealized this as an operating investments basis We're realized the remove impact to well. gains and operating going of --

of for included of provides It a operating Our the with press underlying part last you earnings business. the release shows five quarters. had the of picture new material that EBITDA the trend

was EBITDA per operating For our million the $X.XX quarter, or share. current $X.XX

to of renewal. wrap I today with loss of comments this up want excess highlights year's some catastrophe reinsurance my

our to First, we retention were as maintain expiring. able

was Second, expected. the increased, increase the lower our amount had we costs than while of materially

our Fortunately, adjustment rates X% our an were proactively market treaty we Due managed online when were year. additional lower we'll we exposures, is likely able limit. conjecture. trued than to And this to up premium see is it lower the buy how return later

premiums 'XX XX, basis, total force, point risk-adjusted the prior in costs. XX% for a of March year accounted the On than just cost X the higher

given you, the good a always, my confidence environment, is that we to corner. reiterate support. it's want as the for Thank your So feel really result. turning I Kingstone

we'll with questions. And open that, up it Operator? to

Thank proceed. Newsome you. [Operator is with from first Paul Instructions] Our Piper Sandler. Please question

call. Good Barry. to morning. and Thanks the Congratulations for Meryl

you. Thank

can sort give or claims expansion how versus New ask like continuously the might business. looking about prospectively? at York book how we're isolated any Do business that you we in of the rest to if on the much wanted at margin that you the be I sense core core just inflation us of view looking we're of from think underlying rate book you

Sure.

X.X% -- filed that mentioned increasing just policies So rate forget a reinsurance another all to But that maximum very rate the in New don't we cover in our increase approved, be fourth replacement we in effective significant which is we about which in -- And increase York support I quarter. X% York. in really reflect including York was New an our increase to roughly are in costs. the also states have can annually. we we will the increase a New had taking costs,

So we've been a rate. taking of lot

seen -- the other we both hand, water It's have fire. in decline for a on and our frequency

our largest peril. that is So

have in as increase the Like losses industry, seeing I the So we and a sign. we some rest in mentioned. are elevated large had increase severity, a really an severity, great double-digit that's of

doing claims to inflation. can are we ahead So everything keep the we rates of

rates? is York? And you Could New maybe and pushback on in separately the give a And growing Great. one big slower sense York companies and last they're then cite, three a was just on and back states on the like regulatory my or backlog Understanding normal. Progressive us in rate. of any then thoughts faster York the there question, competitive pushing are Allstate environment New New than of that

not. your don't know or experience that's So I if been

Yeah.

general, in follow there. I would it's start New me In But -- we we going filing a has and than say, then are up repeatedly. it's slower earlier normally Let it York, bit gone.

approved. our And so we rate get

outside but I York, regulators to with So additional New slower. working to would it bit to we've I working non-renewals a New because faster is turnaround and can we is with rate true, see hard doing so the reduce very you I'm York, been get the can to as think and agreement unprofitable. that has our business sure closely our book do New of block other trying say they're been York things key outside really that because

with It's has continue that different X.X guidelines, think, writing competed would to Relative open a company I couple different day producers year we business, ago companies competitors, ago. seen. really I general, the our anyone like than to very compensation. be for competitors I feel a our we this about say, who been difficult. market in for a or reducing those is, every years tightening are hardest but than business, have of learning stop

year. really and comfortable opportunity really, think introduced Select that our a segmentation. again, new tight great last the we with We're products for market, I and We our very with So comfortable pricing feel us.

advantage up we so on hoping we're we renewal, take reinsurance our conditions. And opening certainty and now these that market have to are of

you. the Thank Appreciate Okay. answers.

My pleasure.

from question McClure Please proceed. McClure is Gabriel next Our Management. with

and Meryl Yeah. Barry. Congrats,

you. Thank

Yeah. Had a few questions.

to did we my to even of get ratio good or question what ratio guys combined do the is, you in combined know combined ratio. future? So But we're need kind going a profitable break

I saying relative where function as you are well? mean, investment of So isn't breakeven, confused are of I'm -- when returns say kind a question. you that Well, your our by

I've guys -- can of make had I property and that ratio them with fact combined if on going that the it company that loop. you Well, kind -- is we're a always kind we investment model didn't -- a there Yeah. this model for through XXX%, confused, we so of they could or had even you at I little combined I'm if because was positive number, breaking because be rough number hit other of guess, says, we had yes, casualty a to they've had too, if every me money below a money make XX% count a any better

difference the It's operation. between the Gabe, underwriting difference, book is and what the here we're at the entire looking

$X.X X.X to to So point make would we need probably another other cover that million.

know is? you. right do Jennier. what And then And market you of think the Thank portfolio Thanks, do book the you Okay. investment Jennifer, yield yield now? is what then also, the

but book I don't market handy, at have the yield yield sitting is the X.XX%.

Okay. question of the disclosing of and I thank down frustration want brings first had lot to Meryl non-New Jennifer a I guess, get and the and And all, you I And once that that then, York angst clarity. for last and Barry, business. we all, that

doing I is this what So to thank that when But know going going point guess of for to and be are you're not rapidly, to get think your best out York at there, do on guys just you you is an us. everything be this but going that. not issue non-New -- because impacting business disclosing you you can

just talking we non-renewals, reducing as we're to do back already we as we to New Gabe. a block Like same. further focus and this So with And Island fast about Rhode approval I yesterday, and are as had Connecticut non-renewals. in for Jersey the gotten now conversation mentioned, block both can, we, have hoping them we

lot producers We've but the business. much cut nonrenewing -- we move base, to to of as commission have we the as we been agent encourage can. business pruned a So the the

as of think this I be year, will off next quickly. of said, half. I I'm half. faster By falling it's the in cut it then go even the year, by and to -- And hoping another than so end end So that,

smaller a So drag with smaller the I be of through think going and continue operating it to but us to be results. will our it's on year, end next

Okay.

The were policies that for of policies were greatest to that those company's Add was to first and drag the listed analysis financials determine, little which on done non-renewals. bit. those were a the the

So it be more should beneficial.

Okay. Thank you. All right.

Thank you.

and the to like our closing have to question end Meryl over for I conference comments. We session. back answer reached of the would turn

Excellent. appreciated. today. calling you as thank to Well, Much I thank your Have for a always, in just you, day. would like support. And for great

Thank you. This today's conclude will conference.

You may disconnect and your participation. you lines thank at this for time your