KINGSTON, NY / ACCESSWIRE / March 10, 2022 / Kingstone Companies, Inc. (NASDAQ:KINS) (the "Company" or "Kingstone"), a Northeast regional property and casualty insurance holding company, today announced its financial results for the quarter and year ended December 31, 2021. The Company will host a conference call for analysts and investors on March 11, 2022, at 8:30 a.m. Eastern Time, as previously announced on January 12, 2022.
Financial and Operational Highlights
2021 Fourth Quarter
(All results are compared to prior year quarterly period unless otherwise noted)
- Earnings per share of $0.21 compared to $0.28; Operating loss per share1 of ($0.11) compared to earnings per share of $0.05
- Book value per share of $7.22 down 2.8% from the prior quarter
- Direct written premiums1 grew by 13.2% to $50.1 million
- Net premiums earned increased 37.3% to $37.1 million
- Net combined ratio decreased to 101.3% from 102.3% driven by a decrease in the net loss ratio to 61.8% from 63.4%.
- Net investment income decreased 14.4% to $1.5 million
- Portfolio realignment increases credit quality and maintains limited duration profile
- No shares repurchased during Q4.
2021 Full Year
(All results are compared to prior year period unless otherwise noted)
- Loss per share of $(0.70) compared to earnings per share of $0.09; Operating loss per share1 of $(1.43) compared to $(0.03)
- Book value per share of $7.22 down 17.4% from the prior year
- Direct written premiums1 grew by 7.3% to $181.7 million
- Net premiums earned increased 33.1% to $143.9 million
- Net combined ratio increased to 111.5% from 100.4% driven by an increase in the net loss ratio to 70.9% from 61.5%.
- Net investment income increased 1.8% to $6.6 million
- 216,914 shares were repurchased during 2021 at a cost of $1.7 million. Total return to shareholders during 2021 including dividends paid of $1.7 million, amounts to $3.4 million or 3.6% of the prior year's shareholders' equity.
1 These measures are not based on accounting principles generally accepted in the United States ("GAAP") and are defined and reconciled below to the most directly comparable GAAP measures.
Management Commentary
Barry Goldstein, Kingstone's Chief Executive Officer, elaborated on the Company's results:
"There are two items in the fourth quarter that I want to call your attention to. First, we materially strengthened our reinsurance program and reduced our exposure to large losses. We suffered a $10 million loss from Hurricane Ida in 2021, which, like Hurricane Isaias in 2020, was a balance sheet event, reducing our capital and surplus. To protect our balance sheet going forward, and allow us to continue growing in 2022, we entered into a new quota share treaty. This will reduce our catastrophe loss retention from the previous year amount of $10 million to $7.4 million. In addition, we added a layer to our single risk excess of loss treaty, which, when coupled with the new quota share, effectively reduces our maximum exposure from an individual loss from $1 million in 2021 to $500,000 in 2022.
Second, our premium writings increased to $50 million, a quarterly record. While our premium writings grew 7% for the full year, led by a heightened rate of 13% in Q4, the rate of growth in exposures was but 2.9% year over year. This shows the vast majority of our premium growth is coming from rate increases."
Meryl Golden, Kingstone's Chief Operating Officer, continued:
"2021 was a difficult financial year for our company, driven by numerous catastrophe events. While we did not deliver on our financial objectives for 2021, the team made huge progress on our Kingstone 2.0 goals that were mapped out in 2019. We spent a lot of time and money designing, building and testing our new Kingstone "Select" products. With the help and support of our Select producers, we began 2022 with the rollout of both Select Home and Dwelling Fire products in New York."
See "Forward-Looking Statements"
Financial Highlights Table
| Three Months Ended | Years Ended | |||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||
($ in thousands except per share data) | 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||
Direct written premiums1 | $ | 50,055 | $ | 44,228 | 13.2 | % | $ | 181,665 | $ | 169,318 | 7.3 | % | ||||||||||||
Net written premiums1 | $ | 19,000 | $ | 45,787 | -58.5 | % | $ | 128,755 | $ | 127,063 | 1.3 | % | ||||||||||||
Net premiums earned | $ | 37,053 | $ | 26,981 | 37.3 | % | $ | 143,882 | $ | 108,081 | 33.1 | % | ||||||||||||
Total ceding commission revenue | $ | 52 | $ | 3,442 | -98.5 | % | $ | 90 | $ | 14,202 | -99.4 | % | ||||||||||||
Net investment income | $ | 1,484 | $ | 1,734 | -14.4 | % | $ | 6,621 | $ | 6,506 | 1.8 | % | ||||||||||||
Net gains on investments | $ | 4,307 | $ | 3,229 | 33.4 | % | $ | 9,787 | $ | 1,591 | 515.1 | % | ||||||||||||
| U.S. GAAP Net income (loss) | $ | 2,228 | $ | 3,036 | -26.6 | % | $ | (7,378 | ) | $ | 972 | na | ||||||||||||
| U.S. GAAP Diluted earnings (loss) per share | $ | 0.21 | $ | 0.28 | -25.0 | % | $ | (0.70 | ) | $ | 0.09 | na | ||||||||||||
| Comprehensive (loss) income | $ | (2,182 | ) | $ | 3,899 | na | $ | (15,462 | ) | $ | 6,084 | na | ||||||||||||
| Net operating (loss) income1 | $ | (1,175 | ) | $ | 485 | na | $ | (15,110 | ) | $ | (284 | ) | 5220.4 | % | ||||||||||
| Net operating (loss) earnings1 per share | $ | (0.11 | ) | $ | 0.05 | na | $ | (1.43 | ) | $ | (0.03 | ) | 4666.7 | % | ||||||||||
| Return on average equity (annualized) | 11.6 | % | 13.3 | % | -1.7 pts | -8.8 | % | 1.1 | % | na | ||||||||||||||
| Net loss ratio | 61.8 | % | 63.4 | % | -1.6 pts | 70.9 | % | 61.5 | % | 9.4 pts | ||||||||||||||
| Net underwriting expense ratio | 39.5 | % | 38.9 | % | 0.6 pts | 40.6 | % | 38.9 | % | 1.7 pts | ||||||||||||||
| Net combined ratio | 101.3 | % | 102.3 | % | -1.0 pts | 111.5 | % | 100.4 | % | 11.1 pts | ||||||||||||||
| Effect of catastrophes and prior year loss development on net combined ratio1 | 6.8 pts | 5.7 pts | 1.1 pts | 10.3 pts | 10.7 pts | -0.4 pts | ||||||||||||||||||
| Net combined ratio excluding effect of catastrophes and prior year loss development1 | 94.5 | % | 96.6 | % | -2.1 pts | 101.2 | % | 89.7 | % | 11.5 pts | ||||||||||||||
1 These measures are not based on GAAP and are defined and reconciled below to the most directly comparable GAAP measures.
2021 Fourth Quarter and Year End Financial Review
Net income:
Net income was $2.2 million during the three-month period ended December 31, 2021, compared to net income of $3.0 million in the prior year period. The decrease in net income in the latest three-month period can be attributed to the tax benefit received in the prior year period under the CARES Act allowing for the carrying back of 2020 net operating losses to 2015 at a 13% higher tax rate.
For the year ended December 31, 2021, the net loss was $7.4 million, down from net income of $0.97 million in the prior year. The decrease in net income can be attributed to an 11.6 point increase in net loss ratio driven by increased liability claims frequency for the dwelling fire line of business as well as an increase in the number of severe fire and water damage claims in the homeowner line, a decrease in ceding commissions due to the 25% personal lines quota share that was in effect during 2020, offset by the related increase in net premiums earned. In addition, there was a $2.0 million tax benefit received in the prior year period under the CARES Act allowing for the carrying back of 2019 and 2020 net operating losses to 2014 and 2015 at a 13% higher tax rate. The decrease in net income was tempered by the increase in realized gains as economic conditions improved financial markets through 2021.
Earnings (Loss) per share ("EPS"):
Kingstone reported EPS of $0.21 per diluted share for the three months ended December 31, 2021, compared to EPS of $0.28 per diluted share for the three months ended December 31, 2020. For the year ended December 31, 2021, EPS was $(0.70) per diluted share compared to EPS of $0.09 per diluted share for the year ended December 31, 2020. EPS for the three-month periods ended December 31, 2021 and 2020 was based on 10.8 million and 10.7 million weighted average diluted shares outstanding, respectively. EPS for the years ended December 31, 2021 and 2020 was based on 10.6 million and 10.7 million weighted average diluted shares outstanding, respectively.
Direct Written Premiums,1 Net Written Premiums1 and Net Premiums Earned
Direct written premiums1 for the fourth quarter of 2021 were $50.1 million, an increase of $5.8 million or 13.2% from $44.2 million in the prior year period. The increase is primarily attributable to a $4.5 million increase in premiums from our personal lines business and a $1.3 million increase in livery physical damage as the economy continues to reopen and more drivers return to work. For the year ended December 31, 2021, direct written premiums increased 7.3% to $181.7 million, compared to $169.3 million in the prior year. Direct written premiums from our personal lines business for the year ended December 31, 2021 were $171.7 million, an increase of $9.5 million, or 5.9%, from $162.2 million in the prior year period.
Net written premiums1 decreased $26.8 million, or 58.5% to $19.0 million during the three-month period ended December 31, 2021 from $45.8 million in the prior year period. For the year ended December 31, 2021, net written premiums increased 1.3% to $128.1 million, compared to $127.1 million in the prior year. The decrease in the fourth quarter and the relatively small increase for the year was attributable to the inception of a 30% personal lines quota share treaty on a cut-off basis on December 30, 2021 and exit from the 25% personal lines quota share treaty on a cut-off basis on December 30, 2020. The inception cut-off on December 30, 2021 resulted in the ceding of $22.9 million of unearned premiums to our reinsurers. The termination cut-off on December 30, 2020 resulted in the return $17.4 million of previously ceded unearned premiums from our reinsurers. The decrease in net written premiums in Q4 and modest increase in 2021 as a result the quota share cut-offs was offset by growth in direct written premiums.
Net premiums earned for the quarter ended December 31, 2021 increased 37.3% to $37.1 million, compared to $27.0 million for the quarter ended December 31, 2020. For the year ended December 31, 2021, net premiums earned increased 33.1% to $143.9 million, compared to $108.0 million in the prior year. The increase in the fourth quarter and for the year was attributable to the exit from the 25% personal lines quota share treaty on December 30, 2020.
Net Loss Ratio:
For the quarter ended December 31, 2021, the Company's net loss ratio was 61.8%, compared to 63.4% in the prior year period. The loss ratio improved from the prior year period mainly due to a decrease in property claim frequency, offset by higher severity in fire and water damage claims. The impact of catastrophe losses was 6.8 points for the quarter compared to 4.5 points in the prior year period. There was no prior year development during the quarter compared to 1.2 points in the prior year period.
For the year ended December 31, 2021, the net loss ratio was 70.9%, compared to 61.5% in the prior year period. The loss ratio was higher than the prior year period mainly due to a continuation of increased liability claims frequency for the dwelling fire line of business as well as an increase in the number of severe fire claims in the homeowner line. The impact of catastrophe losses was 10.3 points for 2021 compared to 10.7 points in the prior year period. Prior year development was stable in 2021 and favorable by less than one point in the prior year period.
Net Underwriting Expense Ratio:
For the quarter ended December 31, 2021, the net underwriting expense ratio was 39.5% as compared to 38.9% in the prior year period, an increase of 0.6 percentage points. For the year ended December 31, 2021, the Company's net underwriting expense ratio increased to 40.6% from 38.9% in the prior year, an increase of 1.7 percentage points. The increase in the fourth quarter and for the full year was primarily attributable to the exit from the 25% personal lines quota share treaty and the decrease in provisional ceding commissions from the prior year quota share. In addition, there was an increase in IT in the fourth quarter and full year, and professional services expenses in the full year, both related to Kingstone 2.0 initiatives. Under the Kingstone 2.0 initiative, the increase in expenses was partially offset by a decrease in the inspection costs in the fourth quarter and full year.
1 These measures are not based on GAAP and are defined and reconciled below to the most directly comparable GAAP measures.
Balance Sheet / Investment Portfolio
Kingstone's cash and investment holdings were $237.9 million at December 31, 2021 compared to $222.3 million at December 31, 2020. The Company's investment holdings are comprised primarily of investment grade corporate, mortgage-backed and municipal securities, with fixed income investments representing approximately 77.7% of total investments at December 31, 2021 and 81.3% at December 31, 2020. The Company's effective duration on its fixed-income portfolio is 5.1 years.
Net investment income decreased 14.4% to $1.5 million for the fourth quarter of 2021 from $1.7 million in the prior year period. Net investment income increased 1.8% to $6.6 million for the year ended December 31, 2021 from $6.5 million in the prior year.
Accumulated Other Comprehensive Income/Loss (AOCI), net of tax
As of December 31, 2021, AOCI was $1.8 million compared to $9.9 million at December 31, 2020. The decrease in AOCI at December 31, 2021 of $8.1 million is attributable to the increase in realized gains from investments previously included in AOCI and the increase in interest rates since December 31, 2020.
Share Repurchase Program
Pursuant to the Company's share repurchase program announced in March 2021, during the year ended December 31, 2021, the Company repurchased 216,914 shares at a purchase price of $1,667,109, or an average of $7.69 per share.
Book Value
The Company's book value per share at December 31, 2021 was $7.22, a decline of 17.4% compared to $8.74 at December 31, 2020.
| 31-Dec-21 | 30-Sep-21 | 30-Jun-21 | 31-Mar-21 | 31-Dec-20 | ||||||||||||
Book Value Per Share | $ | 7.22 | $ | 7.43 | $ | 8.52 | $ | 8.34 | $ | 8.74 | ||||||
% Increase from specified period to 12/31/21 | -2.8 | % | -15.3 | % | -13.4 | % | -17.4 | % | ||||||||
FOR ADDITIONAL INFORMATION PLEASE VISIT OUR WEBSITE AT WWW.KINGSTONECOMPANIES.COM.
Conference Call Details
Management will discuss the Company's operations and financial results in a conference call on Friday, March 11, 2022, at 8:30 a.m. ET.
The dial-in numbers are:
(877) 407-3105 (U.S.)
(201) 493-6794 (International)
Accompanying Webcast
The call will be simultaneously webcast over the Internet via the Kingstone website or by clicking on the conference call link:
Kingstone Companies Q4 2021 and Full Year Earnings Call Webcast
The webcast will be archived and accessible for approximately 30 days.
Definitions and Non-GAAP Measures
Direct written premiums represent the total premiums charged on policies issued by the Company during the respective fiscal period. Net premiums written are direct written premiums less premiums ceded to reinsurers. Net premiums earned, the GAAP measure most comparable to direct written premiums and net premiums written, are net premiums written that are pro-rata earned during the fiscal period presented. All of the Company's policies are written for a twelve-month period. Management uses direct written premiums and net premiums written, along with other measures, to gauge the Company's performance and evaluate results.
Net operating income (loss)- is net income (loss) exclusive of realized investment gains (losses), net of tax. Net income (loss) is the GAAP measure most closely comparable to net operating income (loss).
Management uses net operating income (loss) along with other measures to gauge the Company's performance and evaluate results, which can be skewed when including realized investment gains (losses), and may vary significantly between periods. Net operating income (loss) is provided as supplemental information, not as a substitute for net income (loss) and does not reflect the Company's overall profitability.
Net combined ratio excluding effect of catastrophes and prior year loss development - is a non-GAAP ratio, which is computed as the difference between GAAP net combined ratio and the effect of catastrophes and prior year loss development on the net combined ratio.
We believe that these ratios are useful to investors and they are used by management to reveal the trends in our business that may be obscured by catastrophe losses and prior year loss development. Catastrophe losses cause our loss ratios to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the net loss ratio and net combined ratio. Prior year loss development can cause our loss ratio to vary significantly between periods and separating this information allows us to better compare the results for the current accident period over time. We believe these measures are useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. We also provide them to facilitate a comparison to our outlook on the net combined ratio excluding the effect of catastrophes and prior year loss development. The most directly comparable GAAP measure is the net combined ratio. The net combined ratio excluding the effect of catastrophes and prior year loss development should not be considered a substitute for the net combined ratio and does not reflect the Company's net combined ratio.
The table below reconciles direct written premiums and net written premiums to net premiums earned for the periods presented:
| For the Three Months Ended | For the Years Ended | |||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||
| 2021 | 2020 | $ Change | % Change | 2021 | 2020 | $ Change | % Change | |||||||||||||||||||||||||
(000's except percentages) | ||||||||||||||||||||||||||||||||
Direct and Net Written Premiums Reconciliation: | ||||||||||||||||||||||||||||||||
Direct written premiums | $ | 50,055 | $ | 44,228 | $ | 5,827 | 13.2 | % | $ | 181,665 | $ | 169,318 | $ | 12,347 | 7.3 | % | ||||||||||||||||
| Ceded written premiums | (31,055 | ) | 1,559 | (32,614 | ) | na | (52,910 | ) | (42,255 | ) | (10,655 | ) | 25.2 | % | ||||||||||||||||||
Net written premiums | 19,000 | 45,787 | (26,787 | ) | (58.5 | )% | 128,755 | 127,063 | 1,692 | 1.3 | % | |||||||||||||||||||||
| Change in unearned premiums | 18,053 | (18,806 | ) | 36,859 | na | 15,127 | (18,982 | ) | 34,109 | na | ||||||||||||||||||||||
Net premiums earned | $ | 37,053 | $ | 26,981 | $ | 10,072 | 37.3 | % | $ | 143,882 | $ | 108,081 | $ | 35,801 | 33.1 | % | ||||||||||||||||
The following table reconciles net operating (loss) income to net income (loss) for the periods indicated:
| Amount | Diluted earnings (loss) per common share | Amount | Diluted earnings per common share | Amount | Diluted loss) per common share | Amount | Diluted earnings (loss) per common share | |||||||||||||||||||||||||
(000's except per common share amounts and percentages) | ||||||||||||||||||||||||||||||||
Net Income (Loss) and Diluted Earnings (Loss) per Common Share Reconciliation: | ||||||||||||||||||||||||||||||||
Net income (loss) | $ | 2,228 | $ | 0.21 | $ | 3,036 | $ | 0.28 | $ | (7,378 | ) | $ | (0.70 | ) | $ | 972 | $ | 0.09 | ||||||||||||||
Net realized gain on investments | (4,307 | ) | (3,229 | ) | (9,787 | ) | (1,591 | ) | ||||||||||||||||||||||||
Less tax expense on net realized gain | (904 | ) | (678 | ) | (2,055 | ) | (335 | ) | ||||||||||||||||||||||||
Net realized gain on investments, net of taxes | (3,403 | ) | $ | (0.31 | ) | (2,551 | ) | $ | (0.24 | ) | (7,732 | ) | $ | (0.73 | ) | (1,256 | ) | $ | (0.12 | ) | ||||||||||||
Net operating (loss) income | $ | (1,175 | ) | $ | (0.11 | ) | $ | 485 | $ | 0.05 | $ | (15,110 | ) | $ | (1.43 | ) | $ | (284 | ) | $ | (0.03 | ) | ||||||||||
Weighted average diluted shares outstanding | 10,828,313 | 10,686,145 | 10,587,912 | 10,730,737 | ||||||||||||||||||||||||||||
(Components may not sum due to rounding)
The following table reconciles the net combined ratio excluding catastrophes and prior year loss development to the net combined ratio for the periods presented:
| For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||||
| 2021 | 2020 | Percentage Point Change | 2021 | 2020 | Percentage Point Change | ||||||||||||||||||||||
Net Combined Ratio Excluding Catastrophes and Prior Year Development Reconciliation: | |||||||||||||||||||||||||||
Net Combined Ratio Excluding Catastrophes and Prior Year Development | 94.5 | % | 96.6 | % | (2.1 | ) | pts | 101.2 | % | 89.7 | % | 11.5 | pts | ||||||||||||||
Effect of catastrophe losses and prior year development | |||||||||||||||||||||||||||
Catastrophe losses | 6.8 | % | 4.5 | % | 2.3 | pts | 10.3 | % | 10.7 | % | (0.4 | ) | pts | ||||||||||||||
Prior year development | 0.0 | % | 1.2 | % | (1.2 | ) | pts | 0.0 | % | 0.0 | % | - | pts | ||||||||||||||
Effect of catastrophe losses and prior year development on net loss and loss adjustment expenses | 6.8 | % | 5.7 | % | 1.1 | pts | 10.3 | % | 10.7 | % | (0.4 | ) | pts | ||||||||||||||
Net underwriting expense ratio | 0.0 | % | 0.0 | % | - | pts | 0.0 | % | 0.0 | % | - | pts | |||||||||||||||
Total effect of catastrophe losses and prior year development | 6.8 | % | 5.7 | % | 1.1 | pts | 10.3 | % | 10.7 | % | (0.4 | ) | pts | ||||||||||||||
Net combined ratio | 101.3 | % | 102.3 | % | (1.0 | ) | pts | 111.5 | % | 100.4 | % | 11.1 | pts | ||||||||||||||
The following table reconciles the net combined ratio excluding catastrophes to the net combined ratio for the periods presented:
| For the Three Months Ended | For the Years Ended | ||||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||||
| 2021 | 2020 | Percentage Point Change | 2021 | 2020 | Percentage Point Change | ||||||||||||||||||||||
Net Combined Ratio Excluding Catastrophes Reconciliation: | |||||||||||||||||||||||||||
Net Combined Ratio Excluding Catastrophes | 94.5 | % | 97.8 | % | (3.3 | ) | pts | 101.2 | % | 89.7 | % | 11.5 | pts | ||||||||||||||
Catastrophe losses | 6.8 | % | 4.5 | % | 2.3 | pts | 10.3 | % | 10.7 | % | (0.4 | ) | pts | ||||||||||||||
Net combined ratio | 101.3 | % | 102.3 | % | (1.0 | ) | pts | 111.5 | % | 100.4 | % | 11.1 | pts | ||||||||||||||
The following table summarizes gross and net written premiums, net premiums earned, net loss and loss adjustment expenses and net loss ratio by major product type, which were determined based primarily on similar economic characteristics and risks of loss.
| For the Three Months Ended | For the Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
Gross premiums written: | ||||||||||||||||
Personal lines(3) | $ | 47,126,691 | $ | 42,586,230 | $ | 171,719,993 | $ | 162,184,437 | ||||||||
Livery physical damage | 2,879,659 | 1,589,116 | 9,716,658 | 7,055,668 | ||||||||||||
Other(1) | 48,898 | 53,447 | 229,383 | 245,842 | ||||||||||||
Total without commercial lines | 50,055,248 | 44,228,793 | 181,666,034 | 169,485,947 | ||||||||||||
Commercial lines (in run-off effective July 2019)(2) | - | (460 | ) | (856 | ) | (168,043 | ) | |||||||||
Total gross premiums written | $ | 50,055,248 | $ | 44,228,333 | $ | 181,665,178 | $ | 169,317,904 | ||||||||
Net premiums written: | ||||||||||||||||
Personal lines(3) | $ | 16,101,502 | $ | 44,130,692 | $ | 118,842,870 | $ | 120,362,688 | ||||||||
Livery physical damage | 1,879,659 | 1,589,116 | 9,716,658 | 7,055,668 | ||||||||||||
Other(1) | 18,791 | 67,070 | 196,812 | 218,853 | ||||||||||||
Total without commercial lines | 17,999,952 | 45,786,878 | 128,756,340 | 127,637,209 | ||||||||||||
Commercial lines (in run-off effective July 2019)(2) | - | (460 | ) | (856 | ) | (574,688 | ) | |||||||||
Total net premiums written | $ | 17,999,952 | $ | 45,786,418 | $ | 128,755,484 | $ | 127,062,521 | ||||||||
Net premiums earned: | ||||||||||||||||
Personal lines(3) | $ | 34,684,069 | $ | 25,028,427 | $ | 135,738,484 | $ | 96,463,184 | ||||||||
Livery physical damage | 2,311,186 | 1,903,509 | 7,909,791 | 8,706,984 | ||||||||||||
Other(1) | 57,569 | 49,766 | 234,300 | 198,853 | ||||||||||||
Total without commercial lines | 37,052,824 | 26,981,702 | 143,882,575 | 105,369,021 | ||||||||||||
Commercial lines (in run-off effective July 2019)(2) | - | (460 | ) | (856 | ) | 2,711,608 | ||||||||||
Total net premiums earned | $ | 37,052,824 | $ | 26,981,242 | $ | 143,881,719 | $ | 108,080,629 | ||||||||
Net loss and loss adjustment expenses(4): | ||||||||||||||||
Personal lines | $ | 20,122,182 | $ | 14,501,752 | $ | 92,475,850 | $ | 56,312,702 | ||||||||
Livery physical damage | 765,790 | 843,591 | 4,235,255 | 2,641,801 | ||||||||||||
Other(1) | 933,527 | 21,960 | 1,368,343 | 27,425 | ||||||||||||
Unallocated loss adjustment expenses | 912,833 | 1,464,736 | 3,696,380 | 4,304,095 | ||||||||||||
Total without commercial lines | 22,734,332 | 16,832,039 | 101,775,828 | 63,286,023 | ||||||||||||
Commercial lines (in run-off effective July 2019)(2) | 174,147 | 281,606 | 196,768 | 3,145,049 | ||||||||||||
Total net loss and loss adjustment expenses | $ | 22,908,479 | $ | 17,113,645 | $ | 101,972,596 | $ | 66,431,072 | ||||||||
Net loss ratio(4): | ||||||||||||||||
Personal lines | 58.0 | % | 57.9 | % | 68.1 | % | 58.4 | % | ||||||||
Livery physical damage | 33.1 | % | 44.3 | % | 53.5 | % | 30.3 | % | ||||||||
Other(1) | 1621.6 | % | 44.1 | % | 584.0 | % | 13.8 | % | ||||||||
Total without commercial lines | 61.4 | % | 62.4 | % | 70.7 | % | 60.1 | % | ||||||||
Commercial lines (in run-off effective July 2019)(2) | na | -61218.7 | % | -22986.9 | % | 116.0 | % | |||||||||
Total | 61.8 | % | 63.4 | % | 70.9 | % | 61.5 | % | ||||||||
- "Other" includes, among other things, premiums and loss and loss adjustment expenses from our participation in a mandatory state joint underwriting association and loss and loss adjustment expenses from commercial auto.
- In July 2019, the Company decided that it will no longer underwrite Commercial Liability risks. See discussions above regarding the discontinuation of this line of business.
- See discussion with regard to "Direct Written Premiums, Net Written Premiums and Net Premiums Earned" above.
- See discussions above with regard to "Net Loss Ratio".
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive (Loss) Income
| For the Three Months Ended | For the Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
| Revenues | ||||||||||||||||
Net premiums earned | $ | 37,052,824 | $ | 26,981,242 | $ | 143,881,719 | $ | 108,080,629 | ||||||||
Ceding commission revenue | 52,281 | 3,442,266 | 89,681 | 14,202,353 | ||||||||||||
Net investment income | 1,483,525 | 1,733,667 | 6,621,392 | 6,505,603 | ||||||||||||
Net gains on investments | 4,306,753 | 3,229,290 | 9,786,955 | 1,590,616 | ||||||||||||
Other income | 274,233 | 217,878 | 851,494 | 990,550 | ||||||||||||
Total revenues | 43,169,616 | 35,604,343 | 161,231,241 | 131,369,751 | ||||||||||||
Expenses | ||||||||||||||||
Loss and loss adjustment expenses | 22,912,479 | 17,113,645 | 101,972,596 | 66,431,072 | ||||||||||||
Commission expense | 8,402,988 | 8,175,409 | 33,114,103 | 31,828,174 | ||||||||||||
Other underwriting expenses | 6,531,438 | 5,990,669 | 26,254,143 | 25,424,779 | ||||||||||||
Other operating expenses | 1,042,134 | 918,290 | 4,183,211 | 4,282,773 | ||||||||||||
Depreciation and amortization | 810,360 | 794,148 | 3,290,445 | 2,864,583 | ||||||||||||
Interest expense | 456,545 | 456,545 | 1,826,180 | 1,826,180 | ||||||||||||
Total expenses | 40,155,944 | 33,448,706 | 170,640,678 | 132,657,561 | ||||||||||||
Income (loss) from operations before taxes | 3,013,672 | 2,155,637 | (9,409,437 | ) | (1,287,810 | ) | ||||||||||
Income tax (benefit) expense | 785,972 | (880,622 | ) | (2,031,136 | ) | (2,260,200 | ) | |||||||||
Net income (loss) | 2,227,700 | 3,036,259 | (7,378,301 | ) | 972,390 | |||||||||||
Other comprehensive (loss) income, net of tax | ||||||||||||||||
Gross change in unrealized (losses) gains on available-for-sale-securities | (1,532,821 | ) | 1,209,605 | (5,111,234 | ) | 7,148,205 | ||||||||||
Reclassification adjustment for gains included in net income | (4,049,383 | ) | (117,647 | ) | (5,120,822 | ) | (678,343 | ) | ||||||||
Net change in unrealized (losses) gains | (5,582,204 | ) | 1,091,958 | (10,232,056 | ) | 6,469,862 | ||||||||||
Income tax benefit (expense) related to items of other comprehensive (loss) income | 1,172,263 | (229,311 | ) | 2,148,733 | (1,358,670 | ) | ||||||||||
Other comprehensive (loss) income, net of tax | (4,409,941 | ) | 862,647 | (8,083,323 | ) | 5,111,192 | ||||||||||
Comprehensive (loss) income | $ | (2,182,241 | ) | $ | 3,898,906 | $ | (15,461,624 | ) | $ | 6,083,582 | ||||||
Earnings (loss) per common share: | ||||||||||||||||
Basic | $ | 0.21 | $ | 0.28 | $ | (0.70 | ) | $ | 0.09 | |||||||
Diluted | $ | 0.21 | $ | 0.28 | $ | (0.70 | ) | $ | 0.09 | |||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic | 10,483,894 | 10,673,077 | 10,587,912 | 10,721,342 | ||||||||||||
Diluted | 10,828,313 | 10,673,077 | 10,587,912 | 10,730,737 | ||||||||||||
Dividends declared and paid per common share | $ | 0.0400 | $ | 0.1825 | $ | 0.1600 | $ | 0.1825 | ||||||||
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (unaudited) | ||||||||
Assets | ||||||||
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $8,753,159 at December 31, 2021 and $8,194,824 at December 31, 2020) | $ | 8,266,334 | $ | 7,368,815 | ||||
Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $155,808,478 at December 31, 2021 and $145,045,584 at December 31, 2020) | 158,080,110 | 157,549,272 | ||||||
Equity securities, at fair value (cost of $37,470,669 at December 31, 2021 and $32,571,166 at December 31, 2020) | 39,687,002 | 34,413,313 | ||||||
Other investments | 7,561,415 | 3,518,626 | ||||||
Total investments | 213,594,861 | 202,850,026 | ||||||
Cash and cash equivalents | 24,290,598 | 19,463,742 | ||||||
Premiums receivable, net | 12,318,336 | 11,819,639 | ||||||
Reinsurance receivables, net | 40,292,438 | 45,460,729 | ||||||
Deferred policy acquisition costs | 22,238,987 | 20,142,515 | ||||||
Intangible assets | 500,000 | 500,000 | ||||||
Property and equipment, net | 9,291,597 | 8,083,123 | ||||||
Deferred income taxes, net | 192,253 | - | ||||||
Other assets | 8,593,205 | 9,262,493 | ||||||
Total assets | $ | 331,312,275 | $ | 317,582,267 | ||||
Liabilities | ||||||||
Loss and loss adjustment expense reserves | $ | 94,948,745 | $ | 82,801,228 | ||||
Unearned premiums | 97,759,607 | 90,009,272 | ||||||
Advance premiums | 2,693,466 | 2,660,354 | ||||||
Reinsurance balances payable | 12,961,568 | 6,979,735 | ||||||
Deferred ceding commission revenue | 9,748,508 | 93,519 | ||||||
Accounts payable, accrued expenses and other liabilities | 7,704,396 | 8,433,233 | ||||||
Deferred income taxes, net | - | 4,156,913 | ||||||
Long-term debt, net | 29,823,791 | 29,647,611 | ||||||
Total liabilities | 255,640,081 | 224,781,865 | ||||||
Commitments and Contingencies | ||||||||
Stockholders' Equity | ||||||||
Preferred stock, $.01 par value; authorized 2,500,000 shares | - | - | ||||||
Common stock, $.01 par value; authorized 20,000,000 shares; issued 11,955,660 shares at December 31, 2021 and 11,871,307 shares at December 31, 2020; outstanding 10,484,254 shares at December 31, 2021 and 10,616,815 shares at December 31, 2020 | 119,557 | 118,713 | ||||||
Capital in excess of par | 72,467,483 | 70,769,165 | ||||||
Accumulated other comprehensive income | 1,796,739 | 9,880,062 | ||||||
Retained earnings | 6,855,896 | 15,928,345 | ||||||
| 81,239,675 | 96,696,285 | |||||||
Treasury stock, at cost, 1,471,406 shares at December 31, 2021 and 1,196,109 shares at December 31, 2020 | (5,567,481 | ) | (3,895,883 | ) | ||||
Total stockholders' equity | 75,672,194 | 92,800,402 | ||||||
Total liabilities and stockholders' equity | $ | 331,312,275 | $ | 317,582,267 | ||||
About Kingstone Companies, Inc.
Kingstone is a northeast regional property and casualty insurance holding company whose principal operating subsidiary is Kingstone Insurance Company ("KICO"). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO offers primarily personal lines insurance products in New York, New Jersey, Rhode Island, Massachusetts, and Connecticut. Kingstone is also licensed in Pennsylvania, New Hampshire and Maine.
Forward-Looking Statements
Statements in this press release 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 current expectations and are subject to uncertainty and changes in circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those included in forward-looking statements due to a variety of factors. For more details on factors that could affect expectations, see Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 to be filed with the Securities and Exchange Commission under "Factors That May Affect Future Results and Financial Condition" and Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 under "Factors That May Affect Future Results and Financial Condition" and Part II, Item 1A of our Quarterly Report on Form 10-Q for the period ended September 30, 2021, filed with the Securities and Exchange Commission. These risks and uncertainties include, without limitation, the following:
- As a property and casualty insurer, we may face significant losses from catastrophes and severe weather events.
- Unanticipated increases in the severity or frequency of claims may adversely affect our operating results and financial condition.
- We are exposed to significant financial and capital markets risk which may adversely affect our results of operations, financial condition and liquidity, and our net investment income can vary from period to period.
- The insurance industry is subject to extensive regulation that may affect our operating costs and limit the growth of our business, and changes within this regulatory environment may adversely affect our operating costs and limit the growth of our business.
- Changing climate conditions may adversely affect our financial condition, profitability or cash flows.
- Because a significant portion of our revenue is currently derived from sources located in New York, our business may be adversely affected by conditions in such state.
- We are highly dependent on a relatively small number of insurance brokers for a large portion of our revenues.
- Actual claims incurred may exceed current reserves established for claims, which may adversely affect our operating results and financial condition.
- We rely on our information technology and telecommunication systems, and the failure of these systems could materially and adversely affect our business.
Kingstone undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
CONTACT:
Kingstone Companies, Inc.
Amanda M. Goldstein
Investor Relations Director
(516) 960-1319
SOURCE: Kingstone Companies, Inc.
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