Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 14, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | KINGSTONE COMPANIES, INC. | |
Entity Central Index Key | 0000033992 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2022 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Entity Common Stock Shares Outstanding | 10,684,499 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 0-1665 | |
Entity Incorporation State Country Code | DE | |
Entity Tax Identification Number | 36-2476480 | |
Entity Interactive Data Current | Yes | |
Entity Address Address Line 1 | 15 Joys Lane | |
Entity Address City Or Town | Kingston | |
Entity Address State Or Province | NY | |
Entity Address Postal Zip Code | 12401 | |
City Area Code | 845 | |
Local Phone Number | 802-7900 | |
Security 12b Title | Common Stock, $0.01 par value per share | |
Trading Symbol | KINS | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Assets | ||
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $6,611,858 at September 30, 2022 and $8,753,159 at December 31, 2021) | $ 7,767,183 | $ 8,266,334 |
Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $165,534,467 at September 30, 2022 and $155,808,478 at December 31, 2021) | 145,305,707 | 158,080,110 |
Equity securities, at fair value (cost of $26,776,016 at September 30, 2022 and $37,470,669 at December 31, 2021) | 21,468,446 | 39,687,002 |
Other investments | 2,576,272 | 7,561,415 |
Total investments | 177,117,608 | 213,594,861 |
Cash and cash equivalents | 15,111,206 | 24,290,598 |
Premiums receivable, net | 12,891,464 | 12,318,336 |
Reinsurance receivables, net | 59,365,937 | 40,292,438 |
Deferred policy acquisition costs | 23,205,684 | 22,238,987 |
Intangible assets | 500,000 | 500,000 |
Property and equipment, net | 10,161,507 | 9,291,597 |
Deferred income taxes, net | 8,856,948 | 192,253 |
Other assets | 8,497,592 | 8,593,205 |
Total assets | 315,707,946 | 331,312,275 |
Liabilities | ||
Loss and loss adjustment expense reserves | 106,928,898 | 94,948,745 |
Unearned premiums | 103,789,380 | 97,759,607 |
Advance premiums | 6,627,275 | 2,693,466 |
Reinsurance balances payable | 11,475,247 | 12,961,568 |
Deferred ceding commission revenue | 10,320,370 | 9,748,508 |
Accounts payable, accrued expenses and other liabilities | 7,740,737 | 7,704,396 |
Debt, net | 29,955,926 | 29,823,791 |
Total liabilities | 276,837,833 | 255,640,081 |
Stockholders' Equity | ||
Preferred stock, $.01 par value; authorized 2,500,000 shares | 0 | 0 |
Common stock, $.01 par value; authorized 20,000,000 shares; issued 12,117,081 shares at September 30, 2022 and 11,955,660 shares at December 31, 2021; outstanding 10,645,675 shares at September 30, 2022 and 10,484,254 shares at December 31, 2021 | 121,171 | 119,557 |
Capital in excess of par | 73,290,935 | 72,467,483 |
Accumulated other comprehensive (loss) income | (15,978,570) | 1,796,739 |
(Accumulated deficit) retained earnings | (12,995,942) | 6,855,896 |
Total1 | 44,437,594 | 81,239,675 |
Treasury stock, at cost, 1,471,406 shares at September 30, 2022 and December 31, 2021 | (5,567,481) | (5,567,481) |
Total stockholders' equity | 38,870,113 | 75,672,194 |
Total liabilities and stockholders' equity | $ 315,707,946 | $ 331,312,275 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Condensed Consolidated Balance Sheets | ||
Fixed-maturity Securities, Held-to-maturity, Fair Value | $ 6,611,858 | $ 8,753,159 |
Fixed-maturity Securities, Available-for-sale, Amortized Cost | 165,534,467 | 155,808,478 |
Equity Securities, Available-for-sale, Cost | $ 26,776,016 | $ 37,470,669 |
Stockholders' Equity | ||
Preferred Stock, Par Value | $ 0.01 | $ 0.01 |
Preferred Stock, Authorized Shares | 2,500,000 | 2,500,000 |
Common Stock, Par Value | $ 0.01 | $ 0.01 |
Common Stock, Authorized Shares | 20,000,000 | 20,000,000 |
Common Stock, Issued Shares | 12,117,081 | 11,955,660 |
Common Stock, Outstanding Shares | 10,645,675 | 10,484,254 |
Treasury Stock, Shares | 1,471,406 | 1,471,406 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues | ||||
Net premiums earned | $ 29,360,976 | $ 36,803,251 | $ 83,936,424 | $ 106,828,895 |
Ceding commission revenue | 4,886,094 | (7,276) | 14,283,077 | 37,400 |
Net investment income | 1,418,521 | 1,676,596 | 3,411,946 | 5,137,867 |
Net (losses) gains on investments | (397,658) | 204,534 | (9,313,436) | 5,480,202 |
Other income | 269,702 | 280,869 | 750,169 | 577,261 |
Total revenues | 35,537,635 | 38,957,974 | 93,068,180 | 118,061,625 |
Expenses | ||||
Loss and loss adjustment expenses | 22,027,516 | 35,740,235 | 63,624,755 | 79,060,117 |
Commission expense | 8,702,190 | 8,201,935 | 25,534,307 | 24,711,115 |
Other underwriting expenses | 7,276,101 | 6,562,743 | 20,717,047 | 19,722,705 |
Other operating expenses | 809,597 | 855,499 | 2,357,367 | 3,141,077 |
Depreciation and amortization | 824,975 | 820,091 | 2,472,348 | 2,480,085 |
Interest expense | 456,545 | 456,545 | 1,369,635 | 1,369,635 |
Total expenses | 40,096,924 | 52,637,048 | 116,075,459 | 130,484,734 |
Loss from operations before taxes | (4,559,289) | (13,679,074) | (23,007,279) | (12,423,109) |
Income tax benefit | (561,668) | (3,060,809) | (4,432,507) | (2,817,108) |
Net loss | (3,997,621) | (10,618,265) | (18,574,772) | (9,606,001) |
Gross change in unrealized losses on available-for-sale-securities | (5,047,679) | (829,298) | (22,556,319) | (3,578,413) |
Reclassification adjustment for losses (gains) included in net loss | 4,247 | (335,668) | 55,927 | (1,071,439) |
Net change in unrealized losses | (5,043,432) | (1,164,966) | (22,500,392) | (4,649,852) |
Income tax benefit related to items of other comprehensive loss | 1,059,120 | 244,643 | 4,725,083 | 976,470 |
Other comprehensive loss, net of tax | (3,984,312) | (920,323) | (17,775,309) | (3,673,382) |
Comprehensive loss | $ (7,981,933) | $ (11,538,588) | $ (36,350,081) | $ (13,279,383) |
Loss per common share: | ||||
Basic | $ (0.38) | $ (1.01) | $ (1.75) | $ (0.90) |
Diluted | $ (0.38) | $ (1.01) | $ (1.75) | $ (0.90) |
Weighted average common shares outstanding | ||||
Basic | 10,645,675 | 10,523,515 | 10,640,290 | 10,622,988 |
Diluted | 10,645,675 | 10,523,515 | 10,640,290 | 10,622,988 |
Dividends declared and paid per common share | $ 0.04 | $ 0.04 | $ 0.12 | $ 0.12 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Total | Capital in Excess of Par | Accumulated other comprehensive loss | Retained Earnings (Accumulated Deficit) | Preferred Stock | Common Stock | Treasury Stock |
Balance, shares at Dec. 31, 2020 | 11,871,307 | 1,254,492 | |||||
Balance, amount at Dec. 31, 2020 | $ 92,800,402 | $ 70,769,165 | $ 9,880,062 | $ 15,928,345 | $ 0 | $ 118,713 | $ (3,895,883) |
Stock-based compensation | 1,447,725 | 1,447,725 | 0 | 0 | 0 | $ 0 | 0 |
Vesting of restricted stock awards, shares | 104,030 | ||||||
Vesting of restricted stock awards, amount | 0 | (1,040) | 0 | 0 | 0 | $ 1,040 | 0 |
Shares deducted from restricted stock awards for payment of withholding taxes, shares | (27,718) | ||||||
Shares deducted from restricted stock awards for payment of withholding taxes, amount | (191,092) | (190,815) | 0 | 0 | 0 | $ (277) | $ 0 |
Acquisition of treasury stock, shares | 216,914 | ||||||
Acquisition of treasury stock, amount | (1,671,598) | 0 | 0 | 0 | 0 | 0 | $ (1,671,598) |
Dividends | (1,274,797) | 0 | 0 | (1,274,797) | 0 | 0 | 0 |
Net loss | (9,606,001) | 0 | 0 | (9,606,001) | 0 | 0 | 0 |
Change in unrealized losses on available-for-sale securities, net of tax | (3,673,382) | 0 | (3,673,382) | 0 | 0 | $ 0 | $ 0 |
Balance, shares at Sep. 30, 2021 | 11,947,619 | 1,471,406 | |||||
Balance, amount at Sep. 30, 2021 | 77,831,257 | 72,025,035 | 6,206,680 | 5,047,547 | 0 | $ 119,476 | $ (5,567,481) |
Balance, shares at Jun. 30, 2021 | 11,944,220 | 1,383,077 | |||||
Balance, amount at Jun. 30, 2021 | 89,964,646 | 71,567,797 | 7,127,003 | 16,086,337 | 0 | $ 119,442 | $ (4,935,933) |
Stock-based compensation | 466,658 | 466,658 | 0 | 0 | 0 | $ 0 | 0 |
Vesting of restricted stock awards, shares | 4,907 | ||||||
Vesting of restricted stock awards, amount | 0 | (49) | 0 | 0 | 0 | $ 49 | 0 |
Shares deducted from restricted stock awards for payment of withholding taxes, shares | (1,508) | ||||||
Shares deducted from restricted stock awards for payment of withholding taxes, amount | (9,386) | (9,371) | 0 | 0 | 0 | $ (15) | $ 0 |
Acquisition of treasury stock, shares | 88,329 | ||||||
Acquisition of treasury stock, amount | (631,548) | 0 | 0 | 0 | 0 | 0 | $ (631,548) |
Dividends | (420,525) | 0 | 0 | (420,525) | 0 | 0 | 0 |
Net loss | (10,618,265) | 0 | 0 | (10,618,265) | 0 | 0 | 0 |
Change in unrealized losses on available-for-sale securities, net of tax | (920,323) | 0 | (920,323) | 0 | 0 | 0 | 0 |
Change in unrealized losses on available- | 0 | 0 | 0 | 0 | $ 0 | $ 0 | |
Balance, shares at Sep. 30, 2021 | 11,947,619 | 1,471,406 | |||||
Balance, amount at Sep. 30, 2021 | 77,831,257 | 72,025,035 | 6,206,680 | 5,047,547 | 0 | $ 119,476 | $ (5,567,481) |
Balance, shares at Dec. 31, 2021 | 11,955,660 | 1,471,406 | |||||
Balance, amount at Dec. 31, 2021 | 75,672,194 | 72,467,483 | 1,796,739 | 6,855,896 | 0 | $ 119,557 | $ (5,567,481) |
Stock-based compensation | 1,204,865 | 1,204,865 | 0 | 0 | 0 | $ 0 | 0 |
Vesting of restricted stock awards, shares | 234,219 | ||||||
Vesting of restricted stock awards, amount | 0 | (2,342) | 0 | 0 | 0 | $ 2,342 | 0 |
Shares deducted from restricted stock awards for payment of withholding taxes, shares | (72,798) | ||||||
Shares deducted from restricted stock awards for payment of withholding taxes, amount | (379,799) | (379,071) | 0 | 0 | 0 | $ (728) | 0 |
Dividends | (1,277,066) | 0 | 0 | (1,277,066) | 0 | 0 | 0 |
Net loss | (18,574,772) | 0 | 0 | (18,574,772) | 0 | 0 | 0 |
Change in unrealized losses on available-for-sale securities, net of tax | (17,775,309) | 0 | (17,775,309) | 0 | 0 | $ 0 | $ 0 |
Balance, shares at Sep. 30, 2022 | 12,117,081 | 1,471,406 | |||||
Balance, amount at Sep. 30, 2022 | 38,870,113 | 73,290,935 | (15,978,570) | (12,995,942) | 0 | $ 121,171 | $ (5,567,481) |
Balance, shares at Jun. 30, 2022 | 12,117,081 | 1,471,406 | |||||
Balance, amount at Jun. 30, 2022 | 47,089,424 | 73,102,513 | (11,994,258) | (8,572,521) | 0 | $ 121,171 | $ (5,567,481) |
Stock-based compensation | 188,422 | 188,422 | 0 | 0 | 0 | 0 | 0 |
Dividends | (425,800) | 0 | 0 | (425,800) | 0 | 0 | 0 |
Net loss | (3,997,621) | 0 | 0 | (3,997,621) | 0 | 0 | 0 |
Change in unrealized losses on available-for-sale securities, net of tax | (3,984,312) | 0 | (3,984,312) | 0 | 0 | 0 | 0 |
Vesting of restricted stock awards | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Shares deducted from restricted stock awards for payment of withholding taxes | 0 | 0 | 0 | 0 | 0 | $ 0 | $ 0 |
Balance, shares at Sep. 30, 2022 | 12,117,081 | 1,471,406 | |||||
Balance, amount at Sep. 30, 2022 | $ 38,870,113 | $ 73,290,935 | $ (15,978,570) | $ (12,995,942) | $ 0 | $ 121,171 | $ (5,567,481) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (18,574,772) | $ (9,606,001) |
(used in) provided by operating activities: | ||
Net gains on investments | (599,773) | (2,793,522) |
Net unrealized losses (gains) on equity investments | 7,549,640 | (592,397) |
Net unrealized losses (gains) on other investments | 2,363,568 | (2,094,283) |
Depreciation and amortization | 2,472,348 | 2,480,085 |
Bad debt expense | 43,365 | 150,024 |
Amortization of bond premium, net | 922,257 | 165,413 |
Amortization of discount and issuance costs on debt | 132,135 | 132,135 |
Stock-based compensation | 1,204,865 | 1,447,725 |
Deferred income tax benefit | (3,939,612) | (2,642,595) |
Decrease (increase) in operating assets: | ||
Premiums receivable, net | (616,493) | 360,296 |
Reinsurance receivables, net | (19,073,499) | 22,498,715 |
Deferred policy acquisition costs | (966,697) | (1,119,401) |
Other assets | 95,613 | (406,756) |
Increase (decrease) in operating liabilities: | ||
Loss and loss adjustment expense reserves | 11,980,153 | 18,242,890 |
Unearned premiums | 6,029,773 | 2,644,506 |
Advance premiums | 3,933,809 | 2,665,160 |
Reinsurance balances payable | (1,486,321) | (2,713,643) |
Deferred ceding commission revenue | 571,862 | (5,673) |
Accounts payable, accrued expenses and other liabilities | 36,341 | 267,109 |
Net cash flows (used in) provided by operating activities | (7,921,438) | 29,079,787 |
Cash flows from investing activities: | ||
Purchase - fixed-maturity securities held-to-maturity | (498,711) | (3,175,686) |
Purchase - fixed-maturity securities available-for-sale | (24,874,443) | (32,753,786) |
Purchase - equity securities | (637,897) | (17,834,076) |
Purchase - other investments | 0 | (2,000,000) |
Redemption - fixed-maturity securities held-to-maturity | 1,000,000 | 1,312,500 |
Sale and maturity - fixed-maturity securities available-for-sale | 14,213,435 | 33,335,036 |
Sale - equity securities | 11,962,513 | 14,507,384 |
Sale - real estate partnership | 0 | 233,798 |
Redemption - other investments | 2,576,272 | 0 |
Acquisition of property and equipment | (3,342,258) | (2,923,124) |
Net cash flows provided by (used in) investing activities | 398,911 | (9,297,954) |
Cash flows from financing activities: | ||
Withholding taxes paid on vested retricted stock awards | (379,799) | (191,092) |
Purchase of treasury stock | 0 | (1,671,598) |
Dividends paid | (1,277,066) | (1,274,797) |
Net cash flows used in financing activities | (1,656,865) | (3,137,487) |
(Decrease) increase in cash and cash equivalents | (9,179,392) | 16,644,346 |
Cash and cash equivalents, beginning of period | 24,290,598 | 19,463,742 |
Cash and cash equivalents, end of period | 15,111,206 | 36,108,088 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 0 | 0 |
Cash paid for interest | $ 825,000 | $ 825,000 |
Nature of Business and Basis of
Nature of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2022 | |
Nature of Business and Basis of Presentation | |
Nature of Business and Basis of Presentation | Note 1 - Nature of Business and Basis of Presentation Kingstone Companies, Inc. (referred to herein as "Kingstone"), through its wholly-owned subsidiary, Kingstone Insurance Company (“KICO”), underwrites property and casualty insurance exclusively through retail and wholesale agents and brokers. KICO is a licensed insurance company in the States of New York, New Jersey, Rhode Island, Massachusetts, Pennsylvania, Connecticut, Maine and New Hampshire. KICO is currently offering its property and casualty insurance products in New York, New Jersey, Rhode Island, Massachusetts, and Connecticut. Although New Jersey, Rhode Island, Massachusetts and Connecticut continue to be growing markets for the Company,over 80% of KICO’s direct written premiums for both the three months and nine months ended September 30, 2022, came from the New York policies. Kingstone, through its wholly-owned subsidiary, Cosi Agency, Inc. (“Cosi”), a multi-state licensed general agency, accesses alternate forms of distribution outside of the independent agent and broker network, through which KICO currently distributes its various products. Kingstone and its wholly-owned subsidiaries are collectively referred to as the “Company”. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The principles for condensed interim financial information do not require the inclusion of all the information and footnotes required by GAAP for complete financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2021 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 4, 2022. The accompanying condensed consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with standards of the Public Company Accounting Oversight Board (United States) but, in the opinion of management, such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position and results of operations. The results of operations for the nine months ended September 30, 2022 may not be indicative of the results that may be expected for the year ending December 31, 2022. Certain prior year balances were reclassified to conform with the current year presentation. The reclassification had no effect on the Company’s previously reported financial condition, results of operations or cash flows. |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies | |
Accounting Policies | Note 2 – Accounting Policies Basis of Presentation; Going Concern See Note 2 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for further information. Kingstone’s $30,000,000 5.5% Senior Unsecured Notes (the “Notes”) mature on December 30, 2022. The Company’s continuation as a going concern is dependent on its ability to obtain financing to satisfy the Notes at maturity unless agreements are entered into with the holders of a substantial principal amount of the Notes to extend the maturity date of the Notes or exchange the Notes for new debt and/or equity securities of Kingstone (see “Management’s Plan Related to Going Concern” below). Management believes that KICO’s insurance operations would be able to continue in the event that the required financing by Kingstone is not obtained and agreements with the holders of the Notes are not entered into. In accordance with Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. This evaluation requires management to perform two steps. First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern. Second, if management concludes that substantial doubt is raised, management is required to consider whether it has plans in place to alleviate that doubt. Disclosures in the notes to the consolidated financial statements are required if management concludes that substantial doubt exists and if its plans alleviate the substantial doubt that was raised. The accompanying condensed consolidated financial statements have been prepared in accordance with GAAP assuming that the Company will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. Management’s Plan Related to Going Concern In order to continue as a going concern, Kingstone will need to refinance the Notes that become due on December 30, 2022, either through (a) new debt or equity financing at Kingstone that will provide the funds necessary, together with available cash, to pay the Notes in full at maturity, (b) Kingstone entering into arrangements with holders of the Notes to exchange their Notes for new debt and/or equity securities of Kingstone or (c) a combination of (a) and (b). No assurance can be given that Kingstone will be successful in this regard. Management has been exploring and continues to explore a number of financing and other options and has engaged investment bankers to assist it in pursuing such options. Subject to regulatory requirements, Kingstone can also receive dividends and/or loans from its insurance subsidiary, KICO, that could be utilized to repay a portion of the Notes. As of September 30, 2022, the maximum distribution that KICO could pay to Kingstone without prior regulatory approval was approximately $3.0 million. Subsequent to September 30, 2022, Kingstone received a $3.0 million distribution from KICO. In addition, subsequent to September 30, 2022, Kingstone received a loan from KICO of $6.45 million without the need for prior regulatory approval and also received a Federal income tax refund of approximately $1.5 million. With the foregoing proceeds, together with liquid investments and available cash, Kingstone currently has total funds of approximately $12.0 million. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described above, which the Company believes is probable, but there can be no assurance in this regard. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions, which include the reserves for losses and LAE, which are subject to estimation errors due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of many years. In addition, estimates and assumptions associated with receivables under reinsurance contracts related to contingent ceding commission revenue require judgments by management. On an ongoing basis, management reevaluates its assumptions and the methods for calculating these estimates. Actual results may differ significantly from the estimates used in preparing the condensed consolidated financial statements. Principles of Consolidation The condensed consolidated financial statements include the accounts of Kingstone and its wholly owned subsidiaries: (1) KICO and its wholly owned subsidiaries, CMIC Properties, Inc. (“Properties”) and 15 Joys Lane, LLC (“15 Joys Lane”), which together own the land and building from which KICO operates, and (2) Cosi. All significant inter-company account balances and transactions have been eliminated in consolidation. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The revised accounting guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses of available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective for the Company on January 1, 2023. The Company is currently evaluating the effect the updated guidance will have on its condensed consolidated financial statements. The Company has determined that all other recently issued accounting pronouncements will not have a material impact on its consolidated financial position, results of operations and cash flows, or do not apply to its operations. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2022 | |
Investments | |
Investments | Note 3 - Investments Fixed-Maturity Securities The amortized cost, estimated fair value, and unrealized gains and losses on investments in fixed-maturity securities classified as available-for-sale as of September 30, 2022 and December 31, 2021 are summarized as follows: September 30, 2022 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Category Cost Gains Months Months Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 9,946,032 $ 930 $ (123 ) $ - $ 9,946,839 $ 807 Political subdivisions of States, Territories and Possessions 17,117,473 - (3,250,196 ) (590,936 ) 13,276,341 (3,841,132 ) Corporate and other bonds Industrial and miscellaneous 84,163,055 - (9,154,182 ) (269,694 ) 74,739,179 (9,423,876 ) Residential mortgage and other asset backed securities (1) 54,307,907 68,159 (4,333,707 ) (2,699,011 ) 47,343,348 (6,964,559 ) Total fixed-maturity securities $ 165,534,467 $ 69,089 $ (16,738,208 ) $ (3,559,641 ) $ 145,305,707 $ (20,228,760 ) (1) KICO has placed certain residential mortgage backed securities as eligible collateral in a designated custodian account related to its membership in the Federal Home Loan Bank of New York ("FHLBNY") (see Note 7). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of September 30, 2022, the estimated fair value of the eligible investments was approximately $12,393,000. KICO will retain all rights regarding all securities if pledged as collateral. As of September 30, 2022 there was no outstanding balance on the FHLBNY credit line. December 31, 2021 Cost or Gross Gross Unrealized Losses Net Amortized Unrealized Less than 12 More than 12 Estimated Fair Unrealized Gains/ Category Cost Gains Months Months Value (Losses) Fixed-Maturity Securities: Political subdivisions of States, Territories and Possessions $ 17,236,750 $ 246,748 $ (197,984 ) $ - $ 17,285,514 $ 48,764 Corporate and other bonds Industrial and miscellaneous 80,534,769 2,603,411 (126,926 ) - 83,011,254 2,476,485 Residential mortgage and other asset backed securities 58,036,959 355,985 (489,258 ) (120,344 ) 57,783,342 (253,617 ) Total fixed-maturity securities $ 155,808,478 $ 3,206,144 $ (814,168 ) $ (120,344 ) $ 158,080,110 $ 2,271,632 A summary of the amortized cost and estimated fair value of the Company’s investments in available-for-sale fixed-maturity securities by contractual maturity as of September 30, 2022 and December 31, 2021 is shown below: September 30, 2022 December 31, 2021 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ 14,852,441 $ 14,824,136 $ 1,153,099 $ 1,156,636 One to five years 44,959,185 42,305,309 43,007,110 44,914,759 Five to ten years 30,271,976 24,680,308 26,808,853 27,332,581 More than 10 years 21,142,958 16,152,606 26,802,457 26,892,792 Residential mortgage and other asset backed securities 54,307,907 47,343,348 58,036,959 57,783,342 Total $ 165,534,467 $ 145,305,707 $ 155,808,478 $ 158,080,110 The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties. Equity Securities The cost and estimated fair value of, and gross unrealized gains and losses on, investments in equity securities as of September 30, 2022 and December 31, 2021 are as follows: September 30, 2022 Gross Gross Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 16,047,207 $ - $ (3,488,481 ) $ 12,558,726 Common stocks, mutual funds, and exchange traded funds 10,728,809 103,902 (1,922,991 ) 8,909,720 Total $ 26,776,016 $ 103,902 $ (5,411,472 ) $ 21,468,446 December 31, 2021 Gross Gross Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 22,019,509 $ 1,007,009 $ (184,617 ) $ 22,841,901 Common stocks, mutual funds, and exchange traded funds 15,451,160 1,573,653 (179,712 ) 16,845,101 Total $ 37,470,669 $ 2,580,662 $ (364,329 ) $ 39,687,002 Other Investments The cost and estimated fair value of, and gross gains on, the Company’s other investments as of September 30, 2022 and December 31, 2021 are as follows: September 30, 2022 December 31, 2021 Gross Estimated Gross Estimated Category Cost Gains Fair Value Cost Gains Fair Value Other Investments: Hedge fund $ 1,987,040 $ 589,232 $ 2,576,272 $ 3,999,381 $ 3,562,034 $ 7,561,415 Held-to-Maturity Securities The cost or amortized cost and estimated fair value of, and unrealized gross gains and losses on, investments in held-to-maturity fixed-maturity securities as of September 30, 2022 and December 31, 2021 are summarized as follows: September 30, 2022 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Gains/ Category Cost Gains Months Months Value (Losses) Held-to-Maturity Securities: U.S. Treasury securities $ 1,228,485 $ 73,468 $ (36,802 ) $ - $ 1,265,151 $ 36,666 Political subdivisions of States, Territories and Possessions 498,508 - (1,498 ) - 497,010 (1,498 ) Exchange traded debt 304,111 - (43,361 ) - 260,750 (43,361 ) Corporate and other bonds Industrial and miscellaneous 5,736,079 35,503 (1,182,635 ) - 4,588,947 (1,147,132 ) Total $ 7,767,183 $ 108,971 $ (1,264,296 ) $ - $ 6,611,858 $ (1,155,325 ) December 31, 2021 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Gains/ Category Cost Gains Months Months Value (Losses) Held-to-Maturity Securities: U.S. Treasury securities $ 729,642 $ 209,633 $ - $ - $ 939,275 $ 209,633 Political subdivisions of States, Territories and Possessions 998,239 22,856 - - 1,021,095 22,856 Exchange traded debt 304,111 85 (13,921 ) 290,275 (13,836 ) Corporate and other bonds Industrial and miscellaneous 6,234,342 280,951 (12,779 ) - 6,502,514 268,172 Total $ 8,266,334 $ 513,525 $ (26,700 ) $ - $ 8,753,159 $ 486,825 Held-to-maturity U.S. Treasury securities are held in trust pursuant to various states’ minimum funds requirements. A summary of the amortized cost and estimated fair value of the Company’s investments in held-to-maturity securities by contractual maturity as of September 30, 2022 and December 31, 2021 is shown below: September 30, 2022 December 31, 2021 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ 708,325 $ 742,533 $ 994,712 $ 1,008,180 One to five years 1,120,315 1,082,015 1,205,829 1,290,465 Five to ten years 1,399,725 1,177,545 1,513,942 1,648,808 More than 10 years 4,538,818 3,609,765 4,551,851 4,805,706 Total $ 7,767,183 $ 6,611,858 $ 8,266,334 $ 8,753,159 The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties. Investment Income Major categories of the Company’s net investment income are summarized as follows: Three months ended Nine months ended September 30 September 30 2022 2021 2022 2021 Income: Fixed-maturity securities $ 1,243,177 $ 1,288,277 $ 2,841,307 $ 4,238,746 Equity securities 247,275 436,833 872,005 1,145,244 Cash and cash equivalents 26,630 9,636 29,796 11,194 Other investments - 42,908 - - Total 1,517,082 1,777,654 3,743,108 5,395,184 Expenses: Investment expenses 89,811 101,058 322,412 257,317 Net investment income $ 1,427,271 $ 1,676,596 $ 3,420,696 $ 5,137,867 Proceeds from the redemption of fixed-maturity securities held-to-maturity were $1,000,000 and $1,312,500 for the nine months ended September 30, 2022 and 2021, respectively. Proceeds from the sale or maturity of fixed-maturity securities available-for-sale were $14,213,435 and $33,335,036 for the nine months ended September 30, 2022 and 2021, respectively. Proceeds from the sale of equity securities were $11,962,513 and $14,507,384 for the nine months ended September 30, 2022 and 2021, respectively. The Company’s net (losses) gains on investments are summarized as follows: Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Realized Gains (Losses) Fixed-maturity securities: Gross realized gains $ 364 $ 343,773 $ 102,774 $ 1,121,068 Gross realized losses (4,620 ) (8,103 ) (158,701 ) (49,601 ) (4,256 ) 335,670 (55,927 ) 1,071,467 Equity securities: Gross realized gains 907,089 639,626 1,384,432 2,015,574 Gross realized losses (92,159 ) (26,031 ) (728,732 ) (293,519 ) 814,930 613,595 655,700 1,722,055 Other Investments: Gross realized gains 589,233 83,798 589,233 83,798 Gross realized losses - - - - 589,233 83,798 589,233 83,798 Net realized gains 1,399,907 1,033,063 1,189,006 2,877,320 Unrealized (Losses) Gains Equity Securities: Gross gains - (1,331,675 ) - 592,397 Gross losses (1,132,596 ) (7,549,640 ) - (1,132,596 ) (1,331,675 ) (7,549,640 ) 592,397 Other Investments: Gross gains - 503,146 - 2,010,485 Gross losses (664,969 ) - (2,952,802 ) - (664,969 ) 503,146 (2,952,802 ) 2,010,485 Net unrealized (losses) gains (1,797,565 ) (828,529 ) (10,502,442 ) 2,602,882 Net (losses) gains on investments $ (397,658 ) $ 204,534 $ (9,313,436 ) $ 5,480,202 Impairment Review Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. The Company regularly reviews its fixed-maturity securities to evaluate the necessity of recording impairment losses for other-than-temporary declines in the estimated fair value of investments. In evaluating potential impairment, GAAP specifies (i) if the Company does not have the intent to sell a debt security prior to recovery and (ii) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporarily impaired unless there is a credit loss. When the Company does not intend to sell the security and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other-than-temporary impairment (“OTTI”) of a debt security in earnings and the remaining portion in comprehensive income (loss). The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security based on cash flow projections. For held-to-maturity fixed-maturity securities, the amount of OTTI recorded in comprehensive income (loss) for the noncredit portion of a previous OTTI is amortized prospectively over the remaining life of the security based on timing of future estimated cash flows of the security. OTTI losses are recorded in the consolidated statements of operations and comprehensive income (loss) as net realized losses on investments and result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process and different judgments and assumptions could affect the timing of loss realization. At September 30, 2022 and December 31, 2021, there were 155 and 48 fixed-maturity securities, respectively, that accounted for the gross unrealized losses. The Company determined that none of the unrealized losses were deemed to be OTTI for its portfolio of investments as of September 30, 2022 and December 31, 2021. Significant factors influencing the Company’s determination that unrealized losses were temporary included credit quality considerations, the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and interest rate environment factors, and management’s intent and ability to hold the investment for a period of time sufficient to allow for an anticipated recovery of estimated fair value to the Company’s cost basis. The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at September 30, 2022 as follows: September 30, 2022 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 5,975,160 $ (123 ) 1 $ - $ - - $ 5,975,160 $ (123 ) Political subdivisions of States, Territories and Possessions 11,461,126 (3,250,196 ) 12 1,815,216 (590,936 ) 2 13,276,342 (3,841,132 ) Corporate and other bonds industrial and miscellaneous 73,921,209 (9,154,182 ) 93 817,970 (269,694 ) 1 74,739,179 (9,423,876 ) Residential mortgage and other asset backed securities 27,985,270 (4,333,707 ) 31 18,593,599 (2,699,011 ) 15 46,578,869 (7,032,718 ) Total fixed-maturity securities $ 119,342,765 $ (16,738,208 ) 137 $ 21,226,785 $ (3,559,641 ) 18 $ 140,569,550 $ (20,297,849 ) The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at December 31, 2021 as follows: December 31, 2021 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ - $ - - $ - $ - - $ - $ - Political subdivisions of States, Territories and Possessions 6,768,123 (197,984 ) 5 - - - 6,768,123 (197,984 ) Corporate and other bonds industrial and miscellaneous 17,593,707 (126,926 ) 15 - - - 17,593,707 (126,926 ) Residential mortgage and other asset backed securities 45,399,451 (489,258 ) 26 2,923,182 (120,344 ) 2 48,322,633 (609,602 ) Total fixed-maturity securities $ 69,761,281 $ (814,168 ) 46 $ 2,923,182 $ (120,344 ) 2 $ 72,684,463 $ (934,512 ) |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | Note 4 - Fair Value Measurements The following table presents information about the Company’s investments that are measured at fair value on a recurring basis at September 30, 2022 and December 31, 2021 indicating the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: September 30, 2022 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 9,946,839 $ - $ - $ 9,946,839 Political subdivisions of States, Territories and Possessions - 13,276,341 - 13,276,341 Corporate and other bonds industrial and miscellaneous 74,241,809 497,370 - 74,739,179 Residential mortgage and other asset backed securities - 47,343,348 - 47,343,348 Total fixed maturities 84,188,648 61,117,059 - 145,305,707 Equity securities 21,468,446 - - 21,468,446 Total investments $ 105,657,094 $ 61,117,059 $ - $ 166,774,153 December 31, 2021 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ - $ - $ - $ - Political subdivisions of States, Territories and Possessions - 17,285,514 - 17,285,514 Corporate and other bonds industrial and miscellaneous 82,500,779 510,475 - 83,011,254 Residential mortgage and other asset backed securities - 57,783,342 - 57,783,342 Total fixed maturities 82,500,779 75,579,331 - 158,080,110 Equity securities 39,687,002 - - 39,687,002 Total investments $ 122,187,781 $ 75,579,331 $ - $ 197,767,112 The following table sets forth the Company’s investment in a hedge fund measured at Net Asset Value (“NAV”) per share as of September 30, 2022 and December 31, 2021. The Company measures this investment at fair value on a recurring basis. Fair value using NAV per share is as follows as of the dates indicated: Category September 30, 2022 December 31, 2021 Other Investments Hedge fund $ 2,576,272 $ 7,561,415 The hedge fund investment is generally redeemable with at least 45 days prior written notice. The hedge fund investment is accounted for as a limited partnership by the Company. Income is earned based upon the Company’s allocated share of the partnership's changes in unrealized gains and losses to its partners. Such amounts have been recorded in the condensed consolidated statements of operations and comprehensive income (loss) within net (losses) gains on investments. As of September 30, 2022 the Company redeemed 50% of its investment in the hedge fund and recognized a realized gain of $589,233, which is recorded within net gains (losses) on investments in the condensed consolidated statements of operations and comprehensive income (loss). The estimated fair value and the level of the fair value hierarchy of the Company’s long-term debt as of September 30, 2022 and December 31, 2021 not measured at fair value is as follows: September 30, 2022 Level 1 Level 2 Level 3 Total Debt Senior Notes due 2022 $ - $ 29,601,120 $ - $ 29,601,120 December 31, 2021 Level 1 Level 2 Level 3 Total Debt Senior Notes due 2022 $ - $ 28,436,019 $ - $ 28,436,019 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments and Real Estate | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value of Financial Instruments and Real Estate | |
Fair Value of Financial Instruments and Real Estate | Note 5 - Fair Value of Financial Instruments and Real Estate The estimated fair values of the Company’s financial instruments and real estate, including their fair value level as of September 30, 2022 and December 31, 2021 are as follows: September 30, 2022 December 31, 2021 Carrying Value Fair Value Carrying Value Fair Value Fixed-maturity securities-held-to maturity, Level 1 $ 7,767,183 $ 6,611,858 $ 8,266,334 $ 8,753,159 Cash and cash equivalents, Level 1 $ 15,111,206 $ 15,111,206 $ 24,290,598 $ 24,290,598 Premiums receivable, net, Level 3 $ 12,891,464 $ 12,891,464 $ 12,318,336 $ 12,318,336 Reinsurance receivables, net, Level 3 $ 59,365,937 $ 59,365,937 $ 40,292,438 $ 40,292,438 Real estate, net of accumulated depreciation, Level 3 $ 2,089,156 $ 3,025,000 $ 2,144,464 $ 3,025,000 Reinsurance balances payable, Level 3 $ 11,475,247 $ 11,475,247 $ 12,961,568 $ 12,961,568 |
Property and Casualty Insurance
Property and Casualty Insurance Activity | 9 Months Ended |
Sep. 30, 2022 | |
Property and Casualty Insurance Activity | |
Property and Casualty Insurance Activity | Note 6 – Property and Casualty Insurance Activity Premiums Earned Premiums written, ceded and earned are as follows: Direct Assumed Ceded Net Nine months ended September 30, 2022 Premiums written $ 147,353,911 $ - $ (58,743,773 ) $ 88,610,138 Change in unearned premiums (6,029,774 ) - 1,356,060 (4,673,714 ) Premiums earned $ 141,324,137 $ - $ (57,387,713 ) $ 83,936,424 Nine months ended September 30, 2021 Premiums written $ 131,609,930 $ - $ (21,854,398 ) $ 109,755,532 Change in unearned premiums (2,911,439 ) - (15,198 ) (2,926,637 ) Premiums earned $ 128,698,491 $ - $ (21,869,596 ) $ 106,828,895 Three months ended September 30, 2022 Premiums written $ 54,591,551 $ - $ (20,925,381 ) $ 33,666,170 Change in unearned premiums (5,636,421 ) - 1,331,227 (4,305,194 ) Premiums earned $ 48,955,130 $ - $ (19,594,154 ) $ 29,360,976 Three months ended September 30, 2021 Premiums written $ 48,865,169 $ - $ (7,223,526 ) $ 41,641,643 Change in unearned premiums (4,848,145 ) - 9,753 (4,838,392 ) Premiums earned $ 44,017,024 $ - $ (7,213,773 ) $ 36,803,251 Premium receipts in advance of the policy effective date are recorded as advance premiums. The balance of advance premiums as of September 30, 2022 and December 31, 2021 was $6,627,275 and $2,693,466, respectively. Loss and Loss Adjustment Expense Reserves The following table provides a reconciliation of the beginning and ending balances for unpaid losses and loss adjustment expense (“LAE”) reserves: Nine months ended September 30, 2022 2021 Balance at beginning of period $ 94,948,745 $ 82,801,228 Less reinsurance recoverables (10,637,679 ) (20,154,251 ) Net balance, beginning of period 84,311,066 62,646,977 Incurred related to: Current year 62,910,967 79,070,646 Prior years 713,788 (10,529 ) Total incurred 63,624,755 79,060,117 Paid related to: Current year 35,774,958 35,408,412 Prior years 26,938,462 17,586,958 Total paid 62,713,420 52,995,370 Net balance at end of period 85,222,401 88,711,724 Add reinsurance recoverables 21,706,497 12,332,394 Balance at end of period $ 106,928,898 $ 101,044,118 Incurred losses and LAE are net of reinsurance recoveries under reinsurance contracts of $27,230,814 and $1,220,970 for the nine months ended September 30, 2022 and 2021, respectively. Prior year incurred loss and LAE development is based upon estimates by line of business and accident year. Prior year loss and LAE development incurred during the nine months ended September 30, 2022 and 2021 was $713,788 unfavorable and $10,529 favorable, respectively. Management, on a quarterly basis, performs a review of open liability claims to assess carried case and incurred but not reported (“IBNR”) reserve levels, giving consideration to both Company and industry trends. Loss and LAE reserves The reserving process for loss and LAE reserves provides for the Company’s best estimate at a particular point in time of the ultimate unpaid cost of all losses and LAE incurred, including settlement and administration of losses, and is based on facts and circumstances then known including losses that have occurred but that have not yet been reported. The process relies on standard actuarial reserving methodologies, judgments relative to estimates of ultimate claim severity and frequency, the length of time before losses will develop to their ultimate level (‘tail’ factors), and the likelihood of changes in the law or other external factors that are beyond the Company’s control. Several actuarial reserving methodologies are used to estimate required loss reserves. The process produces carried reserves set by management based upon the actuaries’ best estimate and is the cumulative combination of the best estimates made by line of business, accident year, and loss and LAE. The amount of loss and LAE reserves for individual reported claims (the “case reserve”) is determined by the claims department and changes over time as new information is gathered. Such information is critical to the review of appropriate IBNR reserves and includes a review of coverage applicability, comparative liability on the part of the insured, injury severity, property damage, replacement cost estimates, and any other information considered pertinent to estimating the exposure presented by the claim. The amounts of loss and LAE reserves for unreported claims and development on known claims (IBNR reserves) are determined using historical information aggregated by line of insurance as adjusted to current conditions. Since this process produces loss reserves set by management based upon the actuaries’ best estimate, there is no explicit or implicit provision for uncertainty in the carried loss reserves. Due to the inherent uncertainty associated with the reserving process, the ultimate liability may differ, perhaps substantially, from the original estimate. Such estimates are regularly reviewed and updated and any resulting adjustments are included in the current period’s results. Reserves are closely monitored and are recomputed periodically using the most recent information on reported claims and a variety of statistical techniques. On at least a quarterly basis, the Company reviews by line of business existing reserves, new claims, changes to existing case reserves, and paid losses with respect to the current and prior periods. Several methods are used, varying by line of business and accident year, in order to select the estimated period-end loss reserves. These methods include the following: Paid Loss Development Incurred Loss Development Paid Bornhuetter-Ferguson (“BF”) Incurred Bornhuetter-Ferguson (“BF”) Incremental Claim-Based Methods Frequency / Severity Based Methods Management’s best estimate of required reserves is generally based on an average of the methods above, with appropriate weighting of methods based on the line of business and accident year being projected. In some cases, additional methods or historical data from industry sources are employed to supplement the projections derived from the methods listed above. Three key assumptions that materially affect the estimate of loss reserves are the loss ratio estimate for the current accident year used in the BF methods, the loss development factor selections used in the loss development methods, and the loss severity assumptions used in the frequency / severity method described above. The loss ratio estimates used in the BF methods are selected after reviewing historical accident year loss ratios adjusted for rate changes, trend, and mix of business. The severity assumptions used in the frequency / severity method are determined by reviewing historical average claim severity for older more mature accident periods, trended forward to less mature accident periods. COVID-19 has introduced additional uncertainty to recent claim trends. The Company reviews the carried reserves levels on a regular basis as additional information becomes available and makes adjustments in the periods in which such adjustments are determined to be necessary. The Company is not aware of any other claim trends that have emerged or that would cause future adverse development that have not already been contemplated in setting current carried reserves levels. In New York State, lawsuits for negligence are subject to certain limitations and must be commenced within three years from the date of the accident or are otherwise barred. Accordingly, the Company’s exposure to unreported claims (“pure” IBNR) for accident dates of September 30, 2019 and prior is limited, although there remains the possibility of adverse development on reported claims (“case development” IBNR). In certain rare circumstances states have retroactively revised a statute of limitations. The Company is not aware of any such effort that would have a material impact on the Company’s results. The following is information about incurred and paid claims development as of September 30, 2022, net of reinsurance, as well as the cumulative reported claims by accident year and total IBNR reserves as of September 30, 2022 included in the net incurred loss and allocated expense amounts. The historical information regarding incurred and paid claims development for the years ended December 31, 2013 to December 31, 2021 is presented as supplementary unaudited information. All Lines of Business (in thousands, except reported claims data) As of Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance September 30, 2022 For the Years Ended December 31, Nine Months Ended September 30, Cumulative Number of Reported Claims by Accident Accident Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 IBNR Year (Unaudited 2013 - 2021) (Unaudited) 2013 $ 10,728 $ 9,745 $ 9,424 $ 9,621 $ 10,061 $ 10,089 $ 10,607 $ 10,495 $ 10,529 $ 10,493 $ 3 1,564 2014 14,193 14,260 14,218 14,564 15,023 16,381 16,428 16,434 16,496 34 2,138 2015 22,340 21,994 22,148 22,491 23,386 23,291 23,528 23,533 239 2,559 2016 26,062 24,941 24,789 27,887 27,966 27,417 27,411 101 2,881 2017 31,605 32,169 35,304 36,160 36,532 36,553 270 3,398 2018 54,455 56,351 58,441 59,404 60,535 446 4,229 2019 75,092 72,368 71,544 71,386 3,074 4,494 2020 63,083 62,833 62,043 3,504 5,861 2021 96,425 97,038 9,236 5,779 2022 58,735 13,837 3,236 Total $ 464,223 All Lines of Business (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, Nine Months Ended September 30, Accident Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Unaudited 2013 - 2021) (Unaudited) 2013 $ 3,405 $ 5,303 $ 6,633 $ 7,591 $ 8,407 $ 9,056 $ 9,717 $ 10,016 $ 10,392 $ 10,471 2014 5,710 9,429 10,738 11,770 13,819 14,901 15,491 15,770 16,083 2015 12,295 16,181 18,266 19,984 21,067 22,104 22,318 22,462 2016 15,364 19,001 21,106 23,974 25,234 25,750 26,244 2017 16,704 24,820 28,693 31,393 32,529 32,928 2018 32,383 44,516 50,553 52,025 53,657 2019 40,933 54,897 58,055 59,933 2020 39,045 50,719 52,632 2021 56,282 75,291 2022 32,981 Total $ 382,681 Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented $ 81,542 All outstanding liabilities before 2013, net of reinsurance 264 Liabilities for loss and allocated loss adjustment expenses, net of reinsurance $ 81,806 Reported claim counts are measured on an occurrence or per event basis. A single claim occurrence could result in more than one loss type or claimant; however, the Company counts claims at the occurrence level as a single claim regardless of the number of claimants or claim features involved. The reconciliation of the net incurred and paid loss development tables to the loss and LAE reserves in the consolidated balance sheet is as follows: Reconciliation of the Disclosure of Incurred and Paid Loss Development to the Liability for Loss and LAE Reserves As of (in thousands) September 30, 2022 Liabilities for allocated loss and loss adjustment expenses, net of reinsurance $ 81,806 Total reinsurance recoverable on unpaid losses 21,706 Unallocated loss adjustment expenses 3,416 Total gross liability for loss and LAE reserves $ 106,929 (Components may not sum to totals due to rounding) Reinsurance Effective December 31, 2021, the Company entered into a quota share reinsurance treaty for its personal lines business, which primarily consists of homeowners’ and dwelling fire policies, covering the period from December 31, 2021 through January 1, 2023 (“2021/2023 Treaty”). The Company’s excess of loss and catastrophe reinsurance treaties expired on June 30, 2022 and the Company entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2022. Effective October 20, 2021, the Company entered into a stub catastrophe reinsurance treaty covering the period from October 20, 2021 through December 31, 2021. The treaty provided reinsurance coverage for catastrophe losses of $5,000,000 in excess of $5,000,000. Effective January 1, 2022, the Company entered into an underlying excess of loss reinsurance treaty covering the period from January 1, 2022 through January 1, 2023. The treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty. Material terms for reinsurance treaties in effect for the treaty years shown below are as follows: Treaty Period (2021/2023 Treaty) January 2, July 1, December 31, July 1, December 31, 2023 2022 2021 2021 2020 to to to to to June 30, January 1, June 30, December 30, June 30, Line of Business 2023 2023 2022 2021 2021 Personal Lines: Homeowners, dwelling fire and and canine legal liability Quota share treaty: Percent ceded (9) None (8) 30 % 30 % None (5) None (5) Risk retained on intial $1,000,000 of losses (5) (7) (8) (9) $ 1,000,000 $ 700,000 $ 700,000 $ 1,000,000 $ 1,000,000 Losses per occurrence subject to quota share reinsurance coverage None (8) $ 1,000,000 $ 1,000,000 None (5) None (5) Expiration date (8) January 1, 2023 January 1, 2023 NA (5) NA (5) Excess of loss coverage and facultative facility coverage (1) (7) $ 8,000,000 $ 8,400,000 $ 8,400,000 $ 8,000,000 $ 8,000,000 in excess of in excess of in excess of in excess of in excess of $ 1,000,000 $ 600,000 $ 600,000 $ 1,000,000 $ 1,000,000 Total reinsurance coverage per occurrence (5) (7) (8) $ 8,000,000 $ 8,500,000 $ 8,500,000 $ 8,000,000 $ 8,000,000 Losses per occurrence subject to reinsurance coverage (5) (8) $ 8,000,000 $ 9,000,000 $ 9,000,000 $ 9,000,000 $ 9,000,000 Expiration date (8) June 30, 2023 June 30, 2023 June 30, 2022 June 30, 2022 June 30, 2021 Catastrophe Reinsurance: Initial loss subject to personal lines quota share treaty (8) 10,000,000 10,000,000 None (5) None (5) Risk retained per catastrophe occurrence (5) (8) (9) (10) $ 10,000,000 $ 7,400,000 $ 7,400,000 $ 10,000,000 $ 10,000,000 Catastrophe loss coverage in excess of quota share coverage (2) (5) (8) $ 335,000,000 $ 335,000,000 $ 490,000,000 $ 490,000,000 $ 475,000,000 Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 (6) NA NA NA $ 5,000,000 NA in excess of $ 5,000,000 Reinstatement premium protection (3) (4) Yes Yes Yes Yes Yes (1) For personal lines, includes the addition of an automatic facultative facility allowing KICO to obtain homeowners single risk coverage up to $9,000,000 in total insured value, which covers direct losses from $3,500,000 to $9,000,000 through June 30, 2023. (2) Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts. Duration of 168 consecutive hours for a catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone. (3) For the period July 1, 2020 through June 30, 2021, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000. For the period July 1, 2021 through June 30, 2022, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000. (4) For the period July 1, 2022 through June 30, 2023, reinstatement premium protection for $9,800,000 of catastrophe coverage in excess of $10,000,000. (5) The personal lines quota share (homeowners, dwelling fire and canine legal liability) expired on December 30, 2020; reinsurance coverage from December 31, 2020 through December 30, 2021 is only for excess of loss and catastrophe reinsurance. (6) Excludes freeze and freeze related claims. (7) For the period January 1, 2022 through January 1, 2023, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty. Excludes losses from named storms. (8) Personal lines quota share (homeowners, dwelling fire and canine liability) and underlying excess of loss reinsurance will expire on January 1, 2023; reinsurance coverage in effect from January 2, 2023 through June 30, 2023 is only for excess of loss and catastrophe reinsurance treaties. (9) For the 2021/2023 Treaty, 4% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. (10) Plus losses in excess of catastrophe coverage. Treaty Year July 1, 2022 July 1, 2021 July 1, 2020 to to to Line of Business June 30, 2023 June 30, 2022 June 30, 2021 Personal Lines: Personal Umbrella Quota share treaty: Percent ceded - first $1,000,000 of coverage 90 % 90 % 90 % Percent ceded - excess of $1,000,000 dollars of coverage 95 % 95 % 95 % Risk retained $ 300,000 $ 300,000 $ 300,000 Total reinsurance coverage per occurrence $ 4,700,000 $ 4,700,000 $ 4,700,000 Losses per occurrence subject to quota share reinsurance coverage $ 5,000,000 $ 5,000,000 $ 5,000,000 Expiration date June 30, 2023 June 30, 2022 June 30, 2021 Commercial Lines (1): General liability commercial policies Quota share treaty None Risk retained $ 750,000 Excess of loss coverage above risk retained $ 3,750,000 in excess of $ 750,000 Total reinsurance coverage per occurrence $ 3,750,000 Losses per occurrence subject to reinsurance coverage $ 4,500,000 Commercial Umbrella Quota share treaty None (1) Coverage on all commercial lines policies expired in September 2020; reinsurance coverage is based on treaties in effect on the date of loss. The Company’s reinsurance program has been structured to enable the Company to grow its premium volume while maintaining regulatory capital and other financial ratios generally within or below the expected ranges used for regulatory oversight purposes. The reinsurance program also provides income as a result of ceding commissions earned pursuant to the quota share reinsurance contracts. The Company’s participation in reinsurance arrangements does not relieve the Company of its obligations to policyholders. Ceding Commission Revenue The Company earned ceding commission revenue under the 2021/2023 Treaty for the three months and nine months ended September 30, 2022 based on a fixed provisional commission rate at which provisional ceding commissions will be earned. There was no quota share treaty in effect during the three months and nine months ended September 30, 2021. The Company earned ceding commission revenue under its expired quota share reinsurance agreements based on: (i) a fixed provisional commission rate at which provisional ceding commissions were earned, and (ii) a continuing sliding scale of commission rates and ultimate treaty year loss ratios on the policies reinsured under each of these agreements based upon which contingent ceding commissions are earned. The sliding scale includes minimum and maximum commission rates in relation to specified ultimate loss ratios. The commission rate and contingent ceding commissions earned increases when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decreases when the estimated ultimate loss ratio increases. Ceding commission revenue consists of the following: Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Provisional ceding commissions earned $ 4,881,580 $ 40,578 $ 14,116,044 $ 135,666 Contingent ceding commissions earned 4,514 (47,854 ) 167,033 (98,266 ) $ 4,886,094 $ (7,276 ) $ 14,283,077 $ 37,400 Provisional ceding commissions are settled monthly. Balances due from reinsurers for contingent ceding commissions on quota share treaties are settled periodically based on the Loss Ratio of each treaty year that ends on June 30, for the expired treaties that were subject to contingent commissions. As discussed above, the Loss Ratios from prior years’ treaties are subject to change as incurred losses from those periods develop, resulting in an increase or decrease in the commission rate and contingent ceding commissions earned. As of September 30, 2022 and December 31, 2021, net contingent ceding commissions payable to reinsurers under all treaties was approximately $2,714,000 and $2,881,000, respectively, which is recorded in reinsurance balances payable on the accompanying condensed consolidated balance sheets. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt | |
Debt | Note 7 – Debt Federal Home Loan Bank In July 2017, KICO became a member of, and invested in the Federal Home Loan Bank of New York (“FHLBNY”). KICO is required to maintain an investment in capital stock of FHLBNY. Based on redemption provisions of FHLBNY, the stock has no quoted market value and is carried at cost. At its discretion, FHLBNY may declare dividends on the stock. Management reviews for impairment based on the ultimate recoverability of the cost basis in the stock. At September 30, 2022 and December 31, 2021, no impairment has been recognized. FHLBNY members have access to a variety of flexible, low-cost funding through FHLBNY’s credit products, enabling members to customize advances, which are to be fully collateralized. Eligible collateral to pledge to FHLBNY includes residential and commercial mortgage-backed securities, along with U.S. Treasury and agency securities. See Note 3 – Investments for eligible collateral held in a designated custodian account available for future advances. Advances are limited to 5% of KICO’s net admitted assets as of the previous quarter and are due and payable within one year of borrowing. KICO is currently able to borrow on an overnight basis. The maximum allowable advance as of September 30, 2022 was approximately $12,414,000. Advances are limited to 85% of the amount of available collateral. As of September 30, 2022, the estimated fair value of available collateral was $12,393,000. Accordingly, as of September 30, 2022, advances were limited to $10,534,000. As of December 31, 2021, there was no available collateral. There have been no borrowings under this facility since KICO became a member of FHLBNY. Debt On December 19, 2017, the Company issued $30 million of its 5.50% Senior Unsecured Notes due December 30, 2022 (the “Notes”) in an underwritten public offering. Interest is payable semi-annually in arrears on June 30 and December 30 of each year, which began on June 30, 2018 at the rate of 5.50% per annum. The net proceeds of the issuance were $29,121,630, net of discount of $163,200 and transaction costs of $715,170, for an effective yield of 5.67% per annum. The balance of debt as of September 30, 2022 and December 31, 2021 is as follows: September 30, December 31, 2022 2021 5.50% Senior Unsecured Notes $ 30,000,000 $ 30,000,000 Discount (8,110 ) (32,442 ) Issuance costs (35,964 ) (143,767 ) Debt, net $ 29,955,926 $ 29,823,791 The Notes are unsecured obligations of the Company and are not the obligations of or guaranteed by any of the Company's subsidiaries. The Notes rank senior in right of payment to any of the Company's existing and future indebtedness that is by its terms expressly subordinated or junior in right of payment to the Notes. The Notes rank equally in right of payment to all of the Company's existing and future senior indebtedness, but will be effectively subordinated to any secured indebtedness to the extent of the value of the collateral securing such secured indebtedness. In addition, the Notes will be structurally subordinated to the indebtedness and other obligations of the Company's subsidiaries. The Company may redeem the Notes, at any time in whole or from time to time in part, at the redemption price equal to the greater of: (i) 100% of the principal amount of the Notes to be redeemed; and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed that would be due if the Notes matured on the applicable redemption date (exclusive of interest accrued to the applicable redemption date) discounted to the redemption date on a semi-annual basis at the Treasury Rate, plus 50 basis points (“Make Whole Call”). Due to the Make Whole Call, management intends to retire or otherwise satisfy the Notes at or close to the scheduled maturity date in December 2022. See Note 2 – Accounting Policies - Management’s Plan Related to Going Concern for a discussion of Kingstone’s plans with regard to the satisfaction of the Notes. The Company used an aggregate $28,256,335 of the net proceeds from the offering to contribute capital to KICO in order to support additional growth. The remainder of the net proceeds was used for general corporate purposes. A registration statement relating to the debt issued in the offering was filed with the SEC, which became effective on November 28, 2017. Capital Lease On October 27, 2022 KICO entered into a sale leaseback transaction, whereby KICO sold $8,096,824 of fixed assets to a bank. The provisions of the sale leaseback require KICO to pay a monthly payment of principal and interest totaling $126,877 for a term of 60 months commencing on October 27, 2022. The terms of the agreement provide buyout options at the end of the 60 month term, which are as follows: · At the end of the lease KICO may purchase the fixed assets for a purchase price of $2,024,206, which is 25% of the original fixed asset cost of $8,096,824; or · KICO may renew the lease for 16 months at the same rental rate, which totals $2,030,036 A provision of the sale leaseback agreement requires KICO to pledge collateral for the lease obligation. KICO pledged a total of $9,958,700 in United States Treasury Bills. See Note 13 - Subsequent Events. |
Stockholders Equity
Stockholders Equity | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders Equity | |
Stockholders' Equity | Note 8 – Stockholders’ Equity Dividends Declared and Paid Dividends declared and paid on Common Stock were $1,277,066 and $1,274,797 for the nine months ended September 30, 2022 and 2021, respectively. Stock Options Effective August 12, 2014, the Company adopted the 2014 Equity Participation Plan (the “2014 Plan”) pursuant to which a maximum of 700,000 shares of Common Stock of the Company were initially authorized to be issued pursuant to the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and stock bonuses. Incentive stock options granted under the 2014 Plan expire no later than ten years from the date of grant (except no later than five years for a grant to a 10% stockholder). Non-statutory stock options granted under the 2014 Plan expire no later than ten years from the date of grant. The Board of Directors or the Compensation Committee determines the vesting provisions for stock awards granted under the 2014 Plan, subject to the provisions of the 2014 Plan. On August 5, 2020, the Company’s stockholders approved amendments to the 2014 Plan, including an increase in the maximum number of shares of Common Stock of the Company that are authorized to be issued pursuant to the 2014 Plan to 1,400,000. The results of operations for the three months ended September 30, 2022 and 2021 include stock-based compensation expense for stock options totaling approximately $2,000 and $14,000, respectively. The results of operations for the nine months ended September 30, 2022 and 2021 include stock-based compensation expense for stock options totaling approximately $9,000 and $43,000, respectively. Stock-based compensation expense related to stock options for the three months and nine months ended September 30, 2022 and 2021 is net of estimated forfeitures of approximately 18% and 16%, respectively. Such amounts have been included in the condensed consolidated statements of operations and comprehensive income (loss) within other operating expenses. No options were granted during the nine months ended September 30, 2022. The fair value of stock options at the grant date are estimated using the Black-Scholes option-pricing model. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options. A summary of stock option activity under the Company’s 2014 Plan for the nine months ended September 30, 2022 is as follows: Stock Options Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 1, 2022 107,201 $ 8.31 2.92 $ - Granted - $ - - $ - Exercised - $ - - $ - Expired/Forfeited - $ - - $ - Outstanding at September 30, 2022 107,201 $ 8.31 2.18 $ - Vested and Exercisable at September 30, 2022 94,701 $ 8.26 2.46 $ - The aggregate intrinsic value of options outstanding and options exercisable at September 30, 2022 is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s Common Stock for the options that had exercise prices that were lower than the $2.66 closing price of the Company’s Common Stock on September 30, 2022. No options were exercised, forfeited or expired during the nine months ended September 30, 2022. The total intrinsic value of options when forfeited are determined as of the date of forfeiture. The total intrinsic value of options when expired are determined as of the date of expiration. Participants in the 2014 Plan may exercise their outstanding vested options, in whole or in part, by having the Company reduce the number of shares otherwise issuable by a number of shares having a fair market value equal to the exercise price of the option being exercised (“Net Exercise”), or by exchanging a number of shares owned for a period of greater than one year having a fair market value equal to the exercise price of the option being exercised (“Share Exchange”). As of September 30, 2022, there were no unvested options. As of September 30, 2022, there were 364,271 shares reserved for grants under the 2014 Plan. Restricted Stock Awards A summary of the restricted Common Stock activity under the Company’s 2014 Plan for nine months ended September 30, 2022 is as follows: Restricted Stock Awards Shares Weighted Average Grant Date Fair Value per Share Aggregate Fair Value Balance at January 1, 2022 535,410 $ 7.01 $ 3,753,224 Granted 98,456 $ 5.53 $ 544,503 Vested (234,219 ) $ 7.32 $ (1,715,220 ) Forfeited (17,605 ) $ - $ - Balance at September 30, 2022 382,042 $ 6.91 $ 2,582,506 Fair value was calculated using the closing price of the Company’s Common Stock on the grant date. For the three months ended September 30, 2022 and 2021, stock-based compensation for these grants was approximately $186,000 and $452,000, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). For the nine months ended September 30, 2022 and 2021, stock-based compensation for these grants was approximately $1,180,000 and $1,405,000, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be recognized by the directors, executives and employees. Employee Stock Purchase Plan On June 19, 2021, the Company’s Board of Directors adopted the Kingstone Companies, Inc. Employee Stock Purchase Plan (the “ESPP”), subject to stockholder approval. Such approval was obtained on August 10, 2021. The purpose of the ESPP is to provide eligible employees of the Company with an opportunity to use payroll deductions to purchase shares of Common Stock of the Company. The maximum number of shares of Common Stock that may be purchased under the ESPP is 750,000, subject to adjustment as provided for in the ESPP. The ESPP was effective August 10, 2021 and expires on August 10, 2031. A maximum of 5,000 shares of Common Stock may be purchased by an employee during any offering period. The initial offering period under the ESPP was from November 1, 2021 through October 31, 2022 (“2021/2022 Offering”). There is currently no offering pursuant to the ESPP subsequent to October 31, 2022. For the three months ended September 30, 2022 and 2021, stock-based compensation under the 2021/2022 Offering was approximately $5,000 and $-0-, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). For the nine months ended September 30, 2022 and 2021, stock-based compensation under the 2021/2022 Offering was approximately $16,000 and $-0-, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). At the end of the 2021/2022 offering period, 33,222 shares of common stock were issued at $1.82 per share to participating employees for a total purchase of $60,464. See Note 13 - Subsequent Events. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Taxes | |
Income Taxes | Note 9 – Income Taxes The Company files a consolidated U.S. federal income tax return that includes all wholly owned subsidiaries. State tax returns are filed on a consolidated or separate return basis depending on applicable laws. The Company records adjustments related to prior years’ taxes during the period when they are identified, generally when the tax returns are filed. The effect of these adjustments on the current and prior periods (during which the differences originated) is evaluated based upon quantitative and qualitative factors and are considered in relation to the consolidated financial statements taken as a whole for the respective periods. Deferred tax assets and liabilities are determined using the enacted tax rates applicable to the period the temporary differences are expected to be recovered. Accordingly, the current period income tax provision can be affected by the enactment of new tax rates. The net deferred income taxes on the balance sheets reflect temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and income tax purposes, tax effected at various rates depending on whether the temporary differences are subject to federal taxes, state taxes, or both. Significant components of the Company’s deferred tax assets and liabilities are as follows: September 30, December 31, 2022 2021 Deferred tax asset: Net operating loss carryovers (1) $ 2,099,013 $ 1,112,318 Claims reserve discount 1,164,002 1,186,789 Unearned premium 3,607,880 3,246,364 Deferred ceding commission revenue 2,167,278 2,047,187 Net unrealized losses on securities 4,215,667 - Other 1,530,488 1,220,898 Total deferred tax assets 14,784,328 8,813,556 Deferred tax liability: Investment in KICO (2) 759,543 759,543 Deferred acquisition costs 4,873,194 4,670,187 Intangibles 105,000 105,000 Depreciation and amortization 189,643 1,046,817 Net unrealized gains on securities - 2,039,756 Total deferred tax liabilities 5,927,380 8,621,303 Net deferred income tax asset $ 8,856,948 $ 192,253 (1) The deferred tax assets from net operating loss carryovers (“NOL”) are as follows: September 30, December 31, Type of NOL 2022 2021 Expiration Federal only, NOL from 2022 and 2021 $ 2,099,013 $ 1,112,318 NOL carried back - - Federal only, NOL from 2022 and 2021 2,099,013 1,112,318 None State only (A) 2,227,702 2,099,239 December 2027 - December 2042 Valuation allowance (2,227,702 ) (2,099,239 ) State only, net of valuation allowance - - Total deferred tax asset from net operating loss carryovers $ 2,099,013 $ 1,112,318 (A) Kingstone generates operating losses for state purposes and has prior year NOLs available. The state NOL as of September 30, 2022 and December 31, 2021 was approximately $34,272,000 and $32,296,000, respectively. KICO, the Company’s insurance underwriting subsidiary, is not subject to state income taxes. KICO’s state tax obligations are paid through a gross premiums tax, which is included in the condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses. Kingstone has recorded a valuation allowance due to the uncertainty of generating enough state taxable income to utilize 100% of the available state NOLs over their remaining lives, which expire between 2027 and 2042. (2) Deferred tax liability – Investment in KICO On July 1, 2009, the Company completed the acquisition of 100% of the issued and outstanding common stock of KICO (formerly known as Commercial Mutual Insurance Company (“CMIC”)) pursuant to the conversion of CMIC from an advance premium cooperative to a stock property and casualty insurance company. Pursuant to the plan of conversion, the Company acquired a 100% equity interest in KICO, in consideration for the exchange of $3,750,000 principal amount of surplus notes of CMIC. In addition, the Company forgave all accrued and unpaid interest on the surplus notes as of the date of conversion. As of the date of acquisition, unpaid accrued interest on the surplus notes along with the accretion of the discount on the original purchase of the surplus notes totaled $2,921,319 (together “Untaxed Interest”). As of the date of acquisition, the deferred tax liability on the Untaxed Interest was $1,169,000. A temporary difference with an indefinite life exists when the parent has a lower carrying value of its subsidiary for income tax purposes. The deferred tax liability was reduced to $759,543 upon the reduction of federal income tax rates as of December 31, 2017. The Company is required to maintain its deferred tax liability of $759,543 related to this temporary difference until the stock of KICO is sold, or the assets of KICO are sold or KICO and the parent are merged. In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. No valuation allowance against deferred tax assets has been established, except for NOL limitations, as the Company believes it is more likely than not the deferred tax assets will be realized based on the historical taxable income of KICO, or by offset to deferred tax liabilities. The Company had no material unrecognized tax benefit and no adjustments to liabilities or operations were required. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the nine months ended September 30, 2022 and 2021. If any had been recognized these would have been reported in income tax expense. Generally, taxing authorities may examine the Company’s tax returns for the three years from the date of filing. The Company’s tax returns for the years ended December 31, 2019 through December 31, 2021 remain subject to examination. |
Loss Earnings Per Common Share
Loss Earnings Per Common Share | 9 Months Ended |
Sep. 30, 2022 | |
Loss Earnings Per Common Share | |
(Loss) Earnings Per Common Share | Note 10 – (Loss) Earnings Per Common Share Basic net (loss) earnings per common share is computed by dividing loss available to common shareholders by the weighted-average number of shares of Common Stock outstanding. Diluted loss per common share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options as well as non-vested restricted stock awards. The computation of diluted loss per common share excludes those options with an exercise price in excess of the average market price of the Company’s Common Stock during the periods presented. The computation of diluted loss per common share excludes outstanding options in periods where the exercise of such options would be anti-dilutive. For the three months and nine months ended September 30, 2022 and 2021, no options were included in the computation of diluted loss per common share as they would have been anti-dilutive for the relevant periods and, as a result, the weighted average number of shares of Common Stock used in the calculation of diluted loss per common share has not been adjusted for the effect of such options. The reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted (loss) earnings per common share follows: Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Weighted average number of shares outstanding 10,645,675 10,523,515 10,640,290 10,622,988 Effect of dilutive securities, common share equivalents: Stock options - - - - Restricted stock awards - - - - Weighted average number of shares outstanding, used for computing diluted (loss) earnings per share 10,645,675 10,523,515 10,640,290 10,622,988 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 11 - Commitments and Contingencies Litigation From time to time, the Company is involved in various legal proceedings in the ordinary course of business. For example, to the extent a claim is asserted by a third party in a lawsuit against one of the Company’s insureds covered by a particular policy, the Company may have a duty to defend the insured party against the claim. These claims may relate to bodily injury, property damage or other compensable injuries as set forth in the policy. Such proceedings are considered in estimating the liability for loss and LAE expenses. Office Lease The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. See Note 2 - Accounting Policies for additional information regarding the accounting for leases. The Company is a party to a non-cancellable operating lease, dated March 27, 2015, for its office facility for KICO located in Valley Stream, New York expiring March 31, 2024. On July 8, 2019, the Company entered into a lease agreement for an additional office facility for Cosi located in Valley Stream, New York under a non-cancelable operating lease. The lease had a term of seven years and two months expiring December 31, 2026. During January 2022, pursuant to a mutual agreement with the landlord at a cost of $40,000, the Cosi lease was terminated effective as of January 31, 2022. Additional information regarding the Company’s office operating leases is as follows: Three months ended Nine months ended Lease cost September 30, 2022 September 30, 2022 Operating lease (1) (2) $ 41,342 $ 131,152 Other information on operating leases Cash payments included in the measurement of lease liability reported in operating cash flows $ 47,483 $ 147,969 Discount rate 5.50 % 5.50 % Remaing lease term in years KICO 1.50 years 1.50 years (1) Included in the condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses for KICO and within other operating expenses for Cosi. The following table presents the contractual maturities of the Company’s lease liabilities as of September 30, 2022: For the Year Ending December 31, Total Remainder of 2022 $ 47,483 2023 194,919 2024 49,145 Total undiscounted lease payments 291,547 Less: present value adjustment 4,191 Operating lease liability (1) $ 287,356 (1) The operating lease liability is recorded in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets. Rent expense for the three months ended September 30, 2022 and 2021 amounted to $41,342 and $57,459, respectively. Rent expense for the nine months ended September 30, 2022 and 2021 amounted to $131,152 and $172,377, respectively. Rent expense is included in the accompanying condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses. Employment Agreements Barry Goldstein, President, Chief Executive Officer and Executive Chairman of the Board Employment Agreement effective as of January 1, 2020 On October 14, 2019, the Company and Barry B. Goldstein, the Company’s President, Chief Executive Officer and Executive Chairman of the Board, entered into a Second Amended and Restated Employment Agreement (the “Second Amended Goldstein Employment Agreement”). The Second Amended Goldstein Employment Agreement became effective as of January 1, 2020 and expires on December 31, 2022. The Second Amended Goldstein Employment Agreement extends the expiration date of the employment agreement in effect for Mr. Goldstein from December 31, 2021 to December 31, 2022. Pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 6% of the Company’s consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 2.5 times his base salary. In addition, pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein was entitled to receive a long-term compensation (“LTC”) award of between $945,000 and $2,835,000 based on a specified minimum increase in the Company’s adjusted book value per share (as defined in the Second Amended Goldstein Employment Agreement) as of December 31, 2022 as compared to December 31, 2019 (with the maximum LTC payment being due if the average per annum increase is at least 14%). Pursuant to the Third Amended Goldstein Employment Agreement (discussed below), Mr. Goldstein relinquished the right to receive the LTC. Pursuant to the Second Amended Goldstein Employment Agreement, in the event that Mr. Goldstein’s employment is terminated by the Company without cause or he resigns for good reason (each as defined in the Second Amended Goldstein Employment Agreement), Mr. Goldstein would be entitled to receive his base salary and the 6% bonus for the remainder of the term. In addition, in the event of Mr. Goldstein’s death, his estate would be entitled to receive his base salary and accrued bonus through the date of death. Further, in the event that Mr. Goldstein’s employment is terminated by the Company without cause or he resigns for good reason, or, in the event of the termination of Mr. Goldstein’s employment due to disability or death, Mr. Goldstein’s granted but unvested restricted stock awards will vest. Mr. Goldstein would be entitled, under certain circumstances, to a payment equal to 3.82 times his then annual salary and his accrued 6% bonus in the event of the termination of his employment within eighteen months following a change of control of the Company. Pursuant to the Second Amended Goldstein Employment Agreement, in January 2020, Mr. Goldstein received a grant of 157,431 shares of restricted stock under the terms of the Company’s 2014 Plan determined by dividing $1,250,000 by the fair market value of the Company’s Common Stock on the date of grant. This 2020 grant vested with respect to one-third of the award on each of the first and second anniversaries of the grant date and will vest with respect to one-sixth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates. Also pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein received a grant, under the terms of the 2014 Plan, during January 2021, of 230,769 shares of restricted stock determined by dividing $1,500,000 by the fair market value of the Company’s Common Stock on the date of grant. This 2021 grant vested with respect to one-half of the award on the first anniversary of the grant date and will vest with respect to one-fourth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates. Further, pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein received in 2020, 2021, and 2022 a grant, under the terms of the 2014 Plan of a number of shares of restricted stock determined by dividing $136,500 by the fair market value of the Company’s Common Stock on the date of grant. In January 2020, Mr. Goldstein was granted 17,191 shares of restricted stock pursuant to this provision. This grant vested with respect to one-third of the award on each of the first and second anniversaries of the grant date and will vest with respect to one-sixth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates. In January 2021, Mr. Goldstein was granted 21,000 shares of restricted stock pursuant to this provision. This grant vested with respect to one-half of the award on the first anniversary of the grant date and will vest with respect to one-fourth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates. In January 2022, Mr. Goldstein was granted 27,300 shares of restricted stock pursuant to this provision. This grant will vest with respect to one-half of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates. Pursuant to the 2014 Plan, Mr. Goldstein’s unvested restricted stock awards will vest in the event of a change in control of the Company. Employment Agreement effective as of January 1, 2023 On June 27, 2022, the Company and Mr. Goldstein entered into a third amended and restated employment agreement which takes effect as of January 1, 2023, and expires on December 31, 2024 (the “Third Amended Goldstein Employment Agreement”). Pursuant to the Third Amended Goldstein Employment Agreement, Mr. Goldstein is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 3% of our consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 1.25 times his base salary. Pursuant to the Third Amended Goldstein Employment Agreement, Mr. Goldstein would be entitled to receive, under certain circumstances, a payment equal to 1.5 times his then annual base salary and his accrued bonus in the event of the termination of his employment within eighteen months following a change of control of the Company. Meryl Golden, Chief Operating Officer Employment Agreement effective as of January 1, 2021 On September 16, 2019, the Company and Meryl Golden entered into an employment agreement (the “Golden Employment Agreement”) pursuant to which Ms. Golden serves as the Company’s Chief Operating Officer. Ms. Golden also serves as KICO’s President and Chief Operating Officer. The Golden Employment Agreement became effective as of September 25, 2019 (amended on December 24, 2020) and now expires on December 31, 2022. Pursuant to the Golden Employment Agreement, Ms. Golden is entitled to receive an annual salary of $500,000. The Golden Employment Agreement also provides for the grant on the effective date of a five year option for the purchase of 50,000 shares of the Company’s Common Stock pursuant to the 2014 Plan. The options granted vest in four equal installments, with the first installment vesting on the grant date, and the remaining installments vesting on the first, second, and third anniversaries of the grant date, subject to the terms of the stock option agreement between the Company and Ms. Golden. Pursuant to the Golden Employment Agreement, as amended, in each of January 2021 and January 2022, Ms. Golden was granted 30,000 shares of restricted Common Stock pursuant to the 2014 Plan. Each such grant will vest in three equal installments on each of the first, second and third anniversaries of the grant date. Pursuant to the 2014 Plan, Ms. Golden’s outstanding stock options and restricted stock awards will vest in the event of a change in control of the Company. Employment Agreement effective as of January 1, 2023 On June 27, 2022, the Company and Ms. Golden entered into a second amended and restated employment agreement which takes effect as of January 1, 2023, and expires on December 31, 2024 (the “Second Amended Golden Employment Agreement”). Pursuant to the Second Amended Golden Employment Agreement, Ms. Golden is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 3% of the Company’s consolidated income from operations before taxes, exclusive of our consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 1.25 times her base salary. In addition, pursuant to the Second Amended Golden Employment Agreement, Ms. Golden is entitled to receive a grant, under the terms of the 2014 Plan, during each of January 2023 and January 2024, under certain circumstances, of a number of shares of restricted stock determined by dividing $136,500 by the fair market value of the Company’s common stock on the date of grant. The 2023 grant will vest with respect to one-half of the award on the first anniversary of the grant date and one-half of the award on December 31, 2024, based on the continued provision of services through such dates. The 2024 grant will vest on December 31, 2024, based on the continued provision of services through such date. In the event that we are precluded from making a grant in 2023 or 2024, then instead Ms. Golden shall be entitled to receive a cash bonus of $136,500 for such year. Further, pursuant to the Second Amended Golden Employment Agreement, Ms. Golden would be entitled to receive, under certain circumstances, a payment equal to 1.5 times her then annual base salary and her accrued bonus in the event of the termination of her employment within eighteen months following a change of control of the Company. COVID-19 The outbreak of the coronavirus, also known as "COVID-19", has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus including the emergence of new strains continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have a material adverse impact on global economic conditions as well as on the Company’s business activities. Although the impact has been manageable thus far, the extent to which COVID-19 may impact the Company's business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in the United States and other countries to contain, prevent and treat the disease. These events are highly uncertain and, as such, the Company cannot determine their financial impact at this time. No adjustments have been made to the amounts reported in these condensed consolidated financial statements as a result of this matter. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2022 | |
Employee Benefit Plans | |
Employee Benefit Plans | Note 12 – Employee Benefit Plans Employee Bonus Plan For the nine months ended September 30, 2022 and year ended December 31, 2021 the Company did not accrue for, or pay, bonuses related to the employee bonus plan. 401 (k) Plan The Company maintains a salary reduction plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) for its qualified employees. The Company matches 100% of each participant’s contribution up to 4% of the participant’s eligible contribution. The Company incurred approximately $71,000 and $58,000 of expense for the three months ended September 30, 2022 and 2021, related to the 401(k) Plan. The Company incurred approximately $207,000 and $189,000, respectively, of expense for the nine months ended September 30, 2022 and 2021, related to the 401(k) Plan, which is recorded in other operating expenses on the accompanying consolidated statements of operations and comprehensive income (loss). Deferred Compensation Plan On June 18, 2018, the Company adopted the Kingstone Companies, Inc. Deferred Compensation Plan (the "Deferred Compensation Plan"). The Deferred Compensation Plan is offered to a select group (“Participants”), consisting of management and highly compensated employees as a method of recognizing and retaining such Participants. The Deferred Compensation Plan provides for eligible Participants to elect to defer up to 75% of their base compensation and up to 100% of bonuses and other compensation and to have such deferred amounts deemed to be invested in specified investment options. In addition to the Participant deferrals, the Company may choose to make matching contributions to some or all of the Participants in the Deferred Compensation Plan to the extent the Participant did not receive the maximum matching or non-elective contributions permissible under the Company’s 401(k) Plan due to limitations under the Internal Revenue Code or the 401(k) Plan. Participants may elect to receive payment of their account balances in a single cash payment or in annual installments for a period of up to ten years. The deferred compensation liability as of September 30, 2022 and December 31, 2021 amounted to $1,093,136 and $907,914, respectively, and is recorded in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets. The Company did not make any voluntary contributions for the nine months ended September 30, 2022 and 2021. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events | |
Subsequent Events | Note 13 – Subsequent Events The Company has evaluated events that occurred subsequent to September 30, 2022 through the date these condensed consolidated financial statements were issued for matters that required disclosure or adjustment in these condensed consolidated financial statements. Griffin Highline As previously reported, on August 5, 2022, Griffin Highline Capital LLC (“Griffin Highline”) filed Amendment No. 3 to Schedule 13D with the SEC which indicates that Griffin Highline submitted a final non-binding indication of interest to the Board of Directors of the Company proposing a transaction whereby an entity formed by Griffin Highline would acquire all of the outstanding equity of the Company. Following delivery of the non-binding proposal, the Company agreed to extend the period of exclusivity with Griffin Highline under its previously executed exclusivity agreement for a limited time period to further pursue the proposal. The period of exclusivity has expired. Although Griffin Highline is not currently pursuing a transaction with regard to the acquisition of all of the outstanding equity of the Company, Griffin Highline and the Company are discussing a potential strategic transaction between them. No assurance can be given that a transaction will be consummated by the Company with Griffin Highline or any third party. Sale Leaseback and Capital Lease On October 27, 2022 KICO entered into a sale leaseback transaction, whereby KICO sold $8,096,824 of fixed assets to a bank (see Note 7 - Debt ). Employee Stock Purchase Plan On October 31, 2022, the 2021/2022 offering period ended no further offering period was initiated (see Note 8 - Stockholders’ Equity). |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies (Policies) | |
Basis Of Presentation; Going Concern | See Note 2 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for further information. Kingstone’s $30,000,000 5.5% Senior Unsecured Notes (the “Notes”) mature on December 30, 2022. The Company’s continuation as a going concern is dependent on its ability to obtain financing to satisfy the Notes at maturity unless agreements are entered into with the holders of a substantial principal amount of the Notes to extend the maturity date of the Notes or exchange the Notes for new debt and/or equity securities of Kingstone (see “Management’s Plan Related to Going Concern” below). Management believes that KICO’s insurance operations would be able to continue in the event that the required financing by Kingstone is not obtained and agreements with the holders of the Notes are not entered into. In accordance with Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. This evaluation requires management to perform two steps. First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern. Second, if management concludes that substantial doubt is raised, management is required to consider whether it has plans in place to alleviate that doubt. Disclosures in the notes to the consolidated financial statements are required if management concludes that substantial doubt exists and if its plans alleviate the substantial doubt that was raised. The accompanying condensed consolidated financial statements have been prepared in accordance with GAAP assuming that the Company will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. |
Management's Plan Related To Going Concern | In order to continue as a going concern, Kingstone will need to refinance the Notes that become due on December 30, 2022, either through (a) new debt or equity financing at Kingstone that will provide the funds necessary, together with available cash, to pay the Notes in full at maturity, (b) Kingstone entering into arrangements with holders of the Notes to exchange their Notes for new debt and/or equity securities of Kingstone or (c) a combination of (a) and (b). No assurance can be given that Kingstone will be successful in this regard. Management has been exploring and continues to explore a number of financing and other options and has engaged investment bankers to assist it in pursuing such options. Subject to regulatory requirements, Kingstone can also receive dividends and/or loans from its insurance subsidiary, KICO, that could be utilized to repay a portion of the Notes. As of September 30, 2022, the maximum distribution that KICO could pay to Kingstone without prior regulatory approval was approximately $3.0 million. Subsequent to September 30, 2022, Kingstone received a $3.0 million distribution from KICO. In addition, subsequent to September 30, 2022, Kingstone received a loan from KICO of $6.45 million without the need for prior regulatory approval and also received a Federal income tax refund of approximately $1.5 million. With the foregoing proceeds, together with liquid investments and available cash, Kingstone currently has total funds of approximately $12.0 million. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described above, which the Company believes is probable, but there can be no assurance in this regard. |
Use Of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions, which include the reserves for losses and LAE, which are subject to estimation errors due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of many years. In addition, estimates and assumptions associated with receivables under reinsurance contracts related to contingent ceding commission revenue require judgments by management. On an ongoing basis, management reevaluates its assumptions and the methods for calculating these estimates. Actual results may differ significantly from the estimates used in preparing the condensed consolidated financial statements. |
Principles Of Consolidation | The condensed consolidated financial statements include the accounts of Kingstone and its wholly owned subsidiaries: (1) KICO and its wholly owned subsidiaries, CMIC Properties, Inc. (“Properties”) and 15 Joys Lane, LLC (“15 Joys Lane”), which together own the land and building from which KICO operates, and (2) Cosi. All significant inter-company account balances and transactions have been eliminated in consolidation. |
Recent Accounting Pronouncements | In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The revised accounting guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses of available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective for the Company on January 1, 2023. The Company is currently evaluating the effect the updated guidance will have on its condensed consolidated financial statements. The Company has determined that all other recently issued accounting pronouncements will not have a material impact on its consolidated financial position, results of operations and cash flows, or do not apply to its operations. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Investments | |
Schedule Of Available For Sale Fixed Maturity Securities | September 30, 2022 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Category Cost Gains Months Months Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 9,946,032 $ 930 $ (123 ) $ - $ 9,946,839 $ 807 Political subdivisions of States, Territories and Possessions 17,117,473 - (3,250,196 ) (590,936 ) 13,276,341 (3,841,132 ) Corporate and other bonds Industrial and miscellaneous 84,163,055 - (9,154,182 ) (269,694 ) 74,739,179 (9,423,876 ) Residential mortgage and other asset backed securities (1) 54,307,907 68,159 (4,333,707 ) (2,699,011 ) 47,343,348 (6,964,559 ) Total fixed-maturity securities $ 165,534,467 $ 69,089 $ (16,738,208 ) $ (3,559,641 ) $ 145,305,707 $ (20,228,760 ) December 31, 2021 Cost or Gross Gross Unrealized Losses Net Amortized Unrealized Less than 12 More than 12 Estimated Fair Unrealized Gains/ Category Cost Gains Months Months Value (Losses) Fixed-Maturity Securities: Political subdivisions of States, Territories and Possessions $ 17,236,750 $ 246,748 $ (197,984 ) $ - $ 17,285,514 $ 48,764 Corporate and other bonds Industrial and miscellaneous 80,534,769 2,603,411 (126,926 ) - 83,011,254 2,476,485 Residential mortgage and other asset backed securities 58,036,959 355,985 (489,258 ) (120,344 ) 57,783,342 (253,617 ) Total fixed-maturity securities $ 155,808,478 $ 3,206,144 $ (814,168 ) $ (120,344 ) $ 158,080,110 $ 2,271,632 |
Schedule Of Available For Sale Securities | September 30, 2022 December 31, 2021 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ 14,852,441 $ 14,824,136 $ 1,153,099 $ 1,156,636 One to five years 44,959,185 42,305,309 43,007,110 44,914,759 Five to ten years 30,271,976 24,680,308 26,808,853 27,332,581 More than 10 years 21,142,958 16,152,606 26,802,457 26,892,792 Residential mortgage and other asset backed securities 54,307,907 47,343,348 58,036,959 57,783,342 Total $ 165,534,467 $ 145,305,707 $ 155,808,478 $ 158,080,110 |
Schedule Of Equity Securities | September 30, 2022 Gross Gross Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 16,047,207 $ - $ (3,488,481 ) $ 12,558,726 Common stocks, mutual funds, and exchange traded funds 10,728,809 103,902 (1,922,991 ) 8,909,720 Total $ 26,776,016 $ 103,902 $ (5,411,472 ) $ 21,468,446 December 31, 2021 Gross Gross Estimated Category Cost Gains Losses Fair Value Equity Securities: Preferred stocks $ 22,019,509 $ 1,007,009 $ (184,617 ) $ 22,841,901 Common stocks, mutual funds, and exchange traded funds 15,451,160 1,573,653 (179,712 ) 16,845,101 Total $ 37,470,669 $ 2,580,662 $ (364,329 ) $ 39,687,002 |
Schedule Of Other Investments | September 30, 2022 December 31, 2021 Gross Estimated Gross Estimated Category Cost Gains Fair Value Cost Gains Fair Value Other Investments: Hedge fund $ 1,987,040 $ 589,232 $ 2,576,272 $ 3,999,381 $ 3,562,034 $ 7,561,415 |
Schedule Of Held To Maturity Securities | September 30, 2022 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Gains/ Category Cost Gains Months Months Value (Losses) Held-to-Maturity Securities: U.S. Treasury securities $ 1,228,485 $ 73,468 $ (36,802 ) $ - $ 1,265,151 $ 36,666 Political subdivisions of States, Territories and Possessions 498,508 - (1,498 ) - 497,010 (1,498 ) Exchange traded debt 304,111 - (43,361 ) - 260,750 (43,361 ) Corporate and other bonds Industrial and miscellaneous 5,736,079 35,503 (1,182,635 ) - 4,588,947 (1,147,132 ) Total $ 7,767,183 $ 108,971 $ (1,264,296 ) $ - $ 6,611,858 $ (1,155,325 ) December 31, 2021 Cost or Gross Gross Unrealized Losses Estimated Net Amortized Unrealized Less than 12 More than 12 Fair Unrealized Gains/ Category Cost Gains Months Months Value (Losses) Held-to-Maturity Securities: U.S. Treasury securities $ 729,642 $ 209,633 $ - $ - $ 939,275 $ 209,633 Political subdivisions of States, Territories and Possessions 998,239 22,856 - - 1,021,095 22,856 Exchange traded debt 304,111 85 (13,921 ) 290,275 (13,836 ) Corporate and other bonds Industrial and miscellaneous 6,234,342 280,951 (12,779 ) - 6,502,514 268,172 Total $ 8,266,334 $ 513,525 $ (26,700 ) $ - $ 8,753,159 $ 486,825 |
Schedule Of Held To Maturity Securities By Contractual Maturity | September 30, 2022 December 31, 2021 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ 708,325 $ 742,533 $ 994,712 $ 1,008,180 One to five years 1,120,315 1,082,015 1,205,829 1,290,465 Five to ten years 1,399,725 1,177,545 1,513,942 1,648,808 More than 10 years 4,538,818 3,609,765 4,551,851 4,805,706 Total $ 7,767,183 $ 6,611,858 $ 8,266,334 $ 8,753,159 |
Schedule Of Investment Income | Three months ended Nine months ended September 30 September 30 2022 2021 2022 2021 Income: Fixed-maturity securities $ 1,243,177 $ 1,288,277 $ 2,841,307 $ 4,238,746 Equity securities 247,275 436,833 872,005 1,145,244 Cash and cash equivalents 26,630 9,636 29,796 11,194 Other investments - 42,908 - - Total 1,517,082 1,777,654 3,743,108 5,395,184 Expenses: Investment expenses 89,811 101,058 322,412 257,317 Net investment income $ 1,427,271 $ 1,676,596 $ 3,420,696 $ 5,137,867 |
Schedule Of Securities With Realized Gains And Losses On Investments | Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Realized Gains (Losses) Fixed-maturity securities: Gross realized gains $ 364 $ 343,773 $ 102,774 $ 1,121,068 Gross realized losses (4,620 ) (8,103 ) (158,701 ) (49,601 ) (4,256 ) 335,670 (55,927 ) 1,071,467 Equity securities: Gross realized gains 907,089 639,626 1,384,432 2,015,574 Gross realized losses (92,159 ) (26,031 ) (728,732 ) (293,519 ) 814,930 613,595 655,700 1,722,055 Other Investments: Gross realized gains 589,233 83,798 589,233 83,798 Gross realized losses - - - - 589,233 83,798 589,233 83,798 Net realized gains 1,399,907 1,033,063 1,189,006 2,877,320 Unrealized (Losses) Gains Equity Securities: Gross gains - (1,331,675 ) - 592,397 Gross losses (1,132,596 ) (7,549,640 ) - (1,132,596 ) (1,331,675 ) (7,549,640 ) 592,397 Other Investments: Gross gains - 503,146 - 2,010,485 Gross losses (664,969 ) - (2,952,802 ) - (664,969 ) 503,146 (2,952,802 ) 2,010,485 Net unrealized (losses) gains (1,797,565 ) (828,529 ) (10,502,442 ) 2,602,882 Net (losses) gains on investments $ (397,658 ) $ 204,534 $ (9,313,436 ) $ 5,480,202 |
Schedule Of Securities With Unrealized Losses | September 30, 2022 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 5,975,160 $ (123 ) 1 $ - $ - - $ 5,975,160 $ (123 ) Political subdivisions of States, Territories and Possessions 11,461,126 (3,250,196 ) 12 1,815,216 (590,936 ) 2 13,276,342 (3,841,132 ) Corporate and other bonds industrial and miscellaneous 73,921,209 (9,154,182 ) 93 817,970 (269,694 ) 1 74,739,179 (9,423,876 ) Residential mortgage and other asset backed securities 27,985,270 (4,333,707 ) 31 18,593,599 (2,699,011 ) 15 46,578,869 (7,032,718 ) Total fixed-maturity securities $ 119,342,765 $ (16,738,208 ) 137 $ 21,226,785 $ (3,559,641 ) 18 $ 140,569,550 $ (20,297,849 ) December 31, 2021 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ - $ - - $ - $ - - $ - $ - Political subdivisions of States, Territories and Possessions 6,768,123 (197,984 ) 5 - - - 6,768,123 (197,984 ) Corporate and other bonds industrial and miscellaneous 17,593,707 (126,926 ) 15 - - - 17,593,707 (126,926 ) Residential mortgage and other asset backed securities 45,399,451 (489,258 ) 26 2,923,182 (120,344 ) 2 48,322,633 (609,602 ) Total fixed-maturity securities $ 69,761,281 $ (814,168 ) 46 $ 2,923,182 $ (120,344 ) 2 $ 72,684,463 $ (934,512 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurements | |
Schedule Of Fair Value Measurements | September 30, 2022 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 9,946,839 $ - $ - $ 9,946,839 Political subdivisions of States, Territories and Possessions - 13,276,341 - 13,276,341 Corporate and other bonds industrial and miscellaneous 74,241,809 497,370 - 74,739,179 Residential mortgage and other asset backed securities - 47,343,348 - 47,343,348 Total fixed maturities 84,188,648 61,117,059 - 145,305,707 Equity securities 21,468,446 - - 21,468,446 Total investments $ 105,657,094 $ 61,117,059 $ - $ 166,774,153 December 31, 2021 Level 1 Level 2 Level 3 Total Fixed-maturity securities available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies $ - $ - $ - $ - Political subdivisions of States, Territories and Possessions - 17,285,514 - 17,285,514 Corporate and other bonds industrial and miscellaneous 82,500,779 510,475 - 83,011,254 Residential mortgage and other asset backed securities - 57,783,342 - 57,783,342 Total fixed maturities 82,500,779 75,579,331 - 158,080,110 Equity securities 39,687,002 - - 39,687,002 Total investments $ 122,187,781 $ 75,579,331 $ - $ 197,767,112 |
Schedule Of Hedge Fund Investments | Category September 30, 2022 December 31, 2021 Other Investments Hedge fund $ 2,576,272 $ 7,561,415 |
Fair Value Hierarchy Of Long-term Debt | September 30, 2022 Level 1 Level 2 Level 3 Total Debt Senior Notes due 2022 $ - $ 29,601,120 $ - $ 29,601,120 December 31, 2021 Level 1 Level 2 Level 3 Total Debt Senior Notes due 2022 $ - $ 28,436,019 $ - $ 28,436,019 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments and Real Estate (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value of Financial Instruments and Real Estate (Tables) | |
Schedule Of Fair Value Of Financial Instruments | September 30, 2022 December 31, 2021 Carrying Value Fair Value Carrying Value Fair Value Fixed-maturity securities-held-to maturity, Level 1 $ 7,767,183 $ 6,611,858 $ 8,266,334 $ 8,753,159 Cash and cash equivalents, Level 1 $ 15,111,206 $ 15,111,206 $ 24,290,598 $ 24,290,598 Premiums receivable, net, Level 3 $ 12,891,464 $ 12,891,464 $ 12,318,336 $ 12,318,336 Reinsurance receivables, net, Level 3 $ 59,365,937 $ 59,365,937 $ 40,292,438 $ 40,292,438 Real estate, net of accumulated depreciation, Level 3 $ 2,089,156 $ 3,025,000 $ 2,144,464 $ 3,025,000 Reinsurance balances payable, Level 3 $ 11,475,247 $ 11,475,247 $ 12,961,568 $ 12,961,568 |
Property and Casualty Insuran_2
Property and Casualty Insurance Activity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property and Casualty Insurance Activity | |
Schedule Of Earned Premiums | Direct Assumed Ceded Net Nine months ended September 30, 2022 Premiums written $ 147,353,911 $ - $ (58,743,773 ) $ 88,610,138 Change in unearned premiums (6,029,774 ) - 1,356,060 (4,673,714 ) Premiums earned $ 141,324,137 $ - $ (57,387,713 ) $ 83,936,424 Nine months ended September 30, 2021 Premiums written $ 131,609,930 $ - $ (21,854,398 ) $ 109,755,532 Change in unearned premiums (2,911,439 ) - (15,198 ) (2,926,637 ) Premiums earned $ 128,698,491 $ - $ (21,869,596 ) $ 106,828,895 Three months ended September 30, 2022 Premiums written $ 54,591,551 $ - $ (20,925,381 ) $ 33,666,170 Change in unearned premiums (5,636,421 ) - 1,331,227 (4,305,194 ) Premiums earned $ 48,955,130 $ - $ (19,594,154 ) $ 29,360,976 Three months ended September 30, 2021 Premiums written $ 48,865,169 $ - $ (7,223,526 ) $ 41,641,643 Change in unearned premiums (4,848,145 ) - 9,753 (4,838,392 ) Premiums earned $ 44,017,024 $ - $ (7,213,773 ) $ 36,803,251 |
Schedule Of Loss And Loss Adjustment Expenses | Nine months ended September 30, 2022 2021 Balance at beginning of period $ 94,948,745 $ 82,801,228 Less reinsurance recoverables (10,637,679 ) (20,154,251 ) Net balance, beginning of period 84,311,066 62,646,977 Incurred related to: Current year 62,910,967 79,070,646 Prior years 713,788 (10,529 ) Total incurred 63,624,755 79,060,117 Paid related to: Current year 35,774,958 35,408,412 Prior years 26,938,462 17,586,958 Total paid 62,713,420 52,995,370 Net balance at end of period 85,222,401 88,711,724 Add reinsurance recoverables 21,706,497 12,332,394 Balance at end of period $ 106,928,898 $ 101,044,118 |
Schedule Of Ceding Commission Revenue | All Lines of Business (in thousands, except reported claims data) As of Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance September 30, 2022 For the Years Ended December 31, Nine Months Ended September 30, Cumulative Number of Reported Claims by Accident Accident Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 IBNR Year (Unaudited 2013 - 2021) (Unaudited) 2013 $ 10,728 $ 9,745 $ 9,424 $ 9,621 $ 10,061 $ 10,089 $ 10,607 $ 10,495 $ 10,529 $ 10,493 $ 3 1,564 2014 14,193 14,260 14,218 14,564 15,023 16,381 16,428 16,434 16,496 34 2,138 2015 22,340 21,994 22,148 22,491 23,386 23,291 23,528 23,533 239 2,559 2016 26,062 24,941 24,789 27,887 27,966 27,417 27,411 101 2,881 2017 31,605 32,169 35,304 36,160 36,532 36,553 270 3,398 2018 54,455 56,351 58,441 59,404 60,535 446 4,229 2019 75,092 72,368 71,544 71,386 3,074 4,494 2020 63,083 62,833 62,043 3,504 5,861 2021 96,425 97,038 9,236 5,779 2022 58,735 13,837 3,236 Total $ 464,223 All Lines of Business (in thousands) Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance For the Years Ended December 31, Nine Months Ended September 30, Accident Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Unaudited 2013 - 2021) (Unaudited) 2013 $ 3,405 $ 5,303 $ 6,633 $ 7,591 $ 8,407 $ 9,056 $ 9,717 $ 10,016 $ 10,392 $ 10,471 2014 5,710 9,429 10,738 11,770 13,819 14,901 15,491 15,770 16,083 2015 12,295 16,181 18,266 19,984 21,067 22,104 22,318 22,462 2016 15,364 19,001 21,106 23,974 25,234 25,750 26,244 2017 16,704 24,820 28,693 31,393 32,529 32,928 2018 32,383 44,516 50,553 52,025 53,657 2019 40,933 54,897 58,055 59,933 2020 39,045 50,719 52,632 2021 56,282 75,291 2022 32,981 Total $ 382,681 Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented $ 81,542 All outstanding liabilities before 2013, net of reinsurance 264 Liabilities for loss and allocated loss adjustment expenses, net of reinsurance $ 81,806 |
Incurred Loss And Allocated Loss Adjustment Expenses | Reconciliation of the Disclosure of Incurred and Paid Loss Development to the Liability for Loss and LAE Reserves As of (in thousands) September 30, 2022 Liabilities for allocated loss and loss adjustment expenses, net of reinsurance $ 81,806 Total reinsurance recoverable on unpaid losses 21,706 Unallocated loss adjustment expenses 3,416 Total gross liability for loss and LAE reserves $ 106,929 |
Cumulative Paid Loss And Allocated Loss Adjustment Expenses | Treaty Period (2021/2023 Treaty) January 2, July 1, December 31, July 1, December 31, 2023 2022 2021 2021 2020 to to to to to June 30, January 1, June 30, December 30, June 30, Line of Business 2023 2023 2022 2021 2021 Personal Lines: Homeowners, dwelling fire and and canine legal liability Quota share treaty: Percent ceded (9) None (8) 30 % 30 % None (5) None (5) Risk retained on intial $1,000,000 of losses (5) (7) (8) (9) $ 1,000,000 $ 700,000 $ 700,000 $ 1,000,000 $ 1,000,000 Losses per occurrence subject to quota share reinsurance coverage None (8) $ 1,000,000 $ 1,000,000 None (5) None (5) Expiration date (8) January 1, 2023 January 1, 2023 NA (5) NA (5) Excess of loss coverage and facultative facility coverage (1) (7) $ 8,000,000 $ 8,400,000 $ 8,400,000 $ 8,000,000 $ 8,000,000 in excess of in excess of in excess of in excess of in excess of $ 1,000,000 $ 600,000 $ 600,000 $ 1,000,000 $ 1,000,000 Total reinsurance coverage per occurrence (5) (7) (8) $ 8,000,000 $ 8,500,000 $ 8,500,000 $ 8,000,000 $ 8,000,000 Losses per occurrence subject to reinsurance coverage (5) (8) $ 8,000,000 $ 9,000,000 $ 9,000,000 $ 9,000,000 $ 9,000,000 Expiration date (8) June 30, 2023 June 30, 2023 June 30, 2022 June 30, 2022 June 30, 2021 Catastrophe Reinsurance: Initial loss subject to personal lines quota share treaty (8) 10,000,000 10,000,000 None (5) None (5) Risk retained per catastrophe occurrence (5) (8) (9) (10) $ 10,000,000 $ 7,400,000 $ 7,400,000 $ 10,000,000 $ 10,000,000 Catastrophe loss coverage in excess of quota share coverage (2) (5) (8) $ 335,000,000 $ 335,000,000 $ 490,000,000 $ 490,000,000 $ 475,000,000 Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 (6) NA NA NA $ 5,000,000 NA in excess of $ 5,000,000 Reinstatement premium protection (3) (4) Yes Yes Yes Yes Yes Treaty Year July 1, 2022 July 1, 2021 July 1, 2020 to to to Line of Business June 30, 2023 June 30, 2022 June 30, 2021 Personal Lines: Personal Umbrella Quota share treaty: Percent ceded - first $1,000,000 of coverage 90 % 90 % 90 % Percent ceded - excess of $1,000,000 dollars of coverage 95 % 95 % 95 % Risk retained $ 300,000 $ 300,000 $ 300,000 Total reinsurance coverage per occurrence $ 4,700,000 $ 4,700,000 $ 4,700,000 Losses per occurrence subject to quota share reinsurance coverage $ 5,000,000 $ 5,000,000 $ 5,000,000 Expiration date June 30, 2023 June 30, 2022 June 30, 2021 Commercial Lines (1): General liability commercial policies Quota share treaty None Risk retained $ 750,000 Excess of loss coverage above risk retained $ 3,750,000 in excess of $ 750,000 Total reinsurance coverage per occurrence $ 3,750,000 Losses per occurrence subject to reinsurance coverage $ 4,500,000 Commercial Umbrella Quota share treaty None |
Reconciliation Of The Net Incurred And Paid Claims | Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Provisional ceding commissions earned $ 4,881,580 $ 40,578 $ 14,116,044 $ 135,666 Contingent ceding commissions earned 4,514 (47,854 ) 167,033 (98,266 ) $ 4,886,094 $ (7,276 ) $ 14,283,077 $ 37,400 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt | |
Long-term Debt | September 30, December 31, 2022 2021 5.50% Senior Unsecured Notes $ 30,000,000 $ 30,000,000 Discount (8,110 ) (32,442 ) Issuance costs (35,964 ) (143,767 ) Debt, net $ 29,955,926 $ 29,823,791 |
Stockholders Equity (Tables)
Stockholders Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders Equity | |
Schedule Of Stock Options Activity | Stock Options Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 1, 2022 107,201 $ 8.31 2.92 $ - Granted - $ - - $ - Exercised - $ - - $ - Expired/Forfeited - $ - - $ - Outstanding at September 30, 2022 107,201 $ 8.31 2.18 $ - Vested and Exercisable at September 30, 2022 94,701 $ 8.26 2.46 $ - |
Schedule Of The Restricted Common Stock Activity | Restricted Stock Awards Shares Weighted Average Grant Date Fair Value per Share Aggregate Fair Value Balance at January 1, 2022 535,410 $ 7.01 $ 3,753,224 Granted 98,456 $ 5.53 $ 544,503 Vested (234,219 ) $ 7.32 $ (1,715,220 ) Forfeited (17,605 ) $ - $ - Balance at September 30, 2022 382,042 $ 6.91 $ 2,582,506 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Taxes | |
Schedule Of Deferrred Tax Assets And Liabilities | September 30, December 31, 2022 2021 Deferred tax asset: Net operating loss carryovers (1) $ 2,099,013 $ 1,112,318 Claims reserve discount 1,164,002 1,186,789 Unearned premium 3,607,880 3,246,364 Deferred ceding commission revenue 2,167,278 2,047,187 Net unrealized losses on securities 4,215,667 - Other 1,530,488 1,220,898 Total deferred tax assets 14,784,328 8,813,556 Deferred tax liability: Investment in KICO (2) 759,543 759,543 Deferred acquisition costs 4,873,194 4,670,187 Intangibles 105,000 105,000 Depreciation and amortization 189,643 1,046,817 Net unrealized gains on securities - 2,039,756 Total deferred tax liabilities 5,927,380 8,621,303 Net deferred income tax asset $ 8,856,948 $ 192,253 |
Schedule Of Net Operating Loss Carryovers | September 30, December 31, Type of NOL 2022 2021 Expiration Federal only, NOL from 2022 and 2021 $ 2,099,013 $ 1,112,318 NOL carried back - - Federal only, NOL from 2022 and 2021 2,099,013 1,112,318 None State only (A) 2,227,702 2,099,239 December 2027 - December 2042 Valuation allowance (2,227,702 ) (2,099,239 ) State only, net of valuation allowance - - Total deferred tax asset from net operating loss carryovers $ 2,099,013 $ 1,112,318 |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Loss Earnings Per Common Share | |
Reconciliation Of The Weighted Average Number Of Shares Of Common Stock Used In The Calculation Of Basic And Diluted Earnings Per Common Share | Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Weighted average number of shares outstanding 10,645,675 10,523,515 10,640,290 10,622,988 Effect of dilutive securities, common share equivalents: Stock options - - - - Restricted stock awards - - - - Weighted average number of shares outstanding, used for computing diluted (loss) earnings per share 10,645,675 10,523,515 10,640,290 10,622,988 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Lease Cost | Three months ended Nine months ended Lease cost September 30, 2022 September 30, 2022 Operating lease (1) (2) $ 41,342 $ 131,152 Other information on operating leases Cash payments included in the measurement of lease liability reported in operating cash flows $ 47,483 $ 147,969 Discount rate 5.50 % 5.50 % Remaing lease term in years KICO 1.50 years 1.50 years |
Schedule Of Lease Liability Maturities | For the Year Ending December 31, Total Remainder of 2022 $ 47,483 2023 194,919 2024 49,145 Total undiscounted lease payments 291,547 Less: present value adjustment 4,191 Operating lease liability (1) $ 287,356 |
Nature of Business and Basis _2
Nature of Business and Basis of Presentation (Details Narrative) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Nature of Business and Basis of Presentation (Details Narrative) | ||
Direct written premiums, percentage | 80% | 80.30% |
Accounting Policies (Details Na
Accounting Policies (Details Narrative) - Senior Notes [Member] - USD ($) | 1 Months Ended | 9 Months Ended |
Dec. 19, 2017 | Sep. 30, 2022 | |
Debt instrument, face amount | $ 30,000,000 | $ 30,000,000 |
Debt instrument, interest rate | 5.50% | 5.50% |
Debt instrument, maturity date | Dec. 30, 2022 | Dec. 30, 2022 |
Arrangement description | As of September 30, 2022, the maximum distribution that KICO could pay to Kingstone without prior regulatory approval was approximately $3.0 million. Subsequent to September 30, 2022, Kingstone received a $3.0 million distribution from KICO. In addition, subsequent to September 30, 2022, Kingstone received a loan from KICO of $6.45 million without the need for prior regulatory approval and also received a Federal income tax refund of approximately $1.5 million. With the foregoing proceeds, together with liquid investments and available cash, Kingstone currently has total funds of approximately $12.0 million. |
Investments (Details)
Investments (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member] | ||
Cost or amortized cost | $ 17,117,473 | $ 17,236,750 |
Gross unrealized gains | 0 | 246,748 |
Gross unrealized losses - less than 12 months | (3,250,196) | (197,984) |
Gross unrealized loss - more than 12 months | (590,936) | 0 |
Estimated fair value | 13,276,341 | 17,285,514 |
Net unrealized gains | (3,841,132) | 48,764 |
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member] | ||
Cost or amortized cost | 84,163,055 | 80,534,769 |
Gross unrealized gains | 0 | 2,603,411 |
Gross unrealized losses - less than 12 months | (9,154,182) | (126,926) |
Gross unrealized loss - more than 12 months | (269,694) | 0 |
Estimated fair value | 74,739,179 | 83,011,254 |
Net unrealized gains | (9,423,876) | 2,476,485 |
Fixed Maturity Securities Residential Mortgage and other asset backed securities [Member] | ||
Cost or amortized cost | 54,307,907 | 58,036,959 |
Gross unrealized gains | 68,159 | 355,985 |
Gross unrealized losses - less than 12 months | (4,333,707) | (489,258) |
Gross unrealized loss - more than 12 months | (2,699,011) | (120,344) |
Estimated fair value | 47,343,348 | 57,783,342 |
Net unrealized gains | (6,964,559) | (253,617) |
Fixed Maturity Securities Total Fixed Maturity Securities [Member] | ||
Cost or amortized cost | 165,534,467 | 155,808,478 |
Gross unrealized gains | 69,089 | 3,206,144 |
Gross unrealized losses - less than 12 months | (16,738,208) | (814,168) |
Gross unrealized loss - more than 12 months | (3,559,641) | (120,344) |
Estimated fair value | 145,305,707 | 158,080,110 |
Net unrealized gains | (20,228,760) | $ 2,271,632 |
Fixed-Maturity Securities U.S. Treasury securities and obligations of U.S. government corporations and agencies [Member] | ||
Cost or amortized cost | 9,946,032 | |
Gross unrealized gains | 930 | |
Gross unrealized losses - less than 12 months | (123) | |
Gross unrealized loss - more than 12 months | 0 | |
Estimated fair value | 9,946,839 | |
Net unrealized gains | $ 807 |
Investments (Details 1)
Investments (Details 1) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Residential Mortgage And Other Asset Backed Securities [Member] | ||
Amortized cost | $ 54,307,907 | $ 58,036,959 |
Estimated fair value | 47,343,348 | 57,783,342 |
Less Than One Year [Member] | ||
Amortized cost | 14,852,441 | 1,153,099 |
Estimated fair value | 14,824,136 | 1,156,636 |
One To Five Years [Member] | ||
Amortized cost | 44,959,185 | 43,007,110 |
Estimated fair value | 42,305,309 | 44,914,759 |
Five To Ten Years [Member] | ||
Amortized cost | 30,271,976 | 26,808,853 |
Estimated fair value | 24,680,308 | 27,332,581 |
More Than 10 Years [Member] | ||
Amortized cost | 21,142,958 | 26,802,457 |
Estimated fair value | 16,152,606 | 26,892,792 |
Total [Member] | ||
Amortized cost | 165,534,467 | 158,080,110 |
Estimated fair value | $ 145,305,707 | $ 155,808,478 |
Investments (Details 2)
Investments (Details 2) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Cost | $ 26,776,016 | $ 37,470,669 |
Gross gains | 103,902 | 2,580,662 |
Gross losses | (5,411,472) | (364,329) |
Estimated fair value | 21,468,446 | 39,687,002 |
Equity Securities- Preferred Stocks [Member] | ||
Cost | 16,047,207 | 22,019,509 |
Gross losses | (3,488,481) | (184,617) |
Estimated fair value | 12,558,726 | 22,841,901 |
Gross gains | 0 | 1,007,009 |
Common stock, mutual fund and exchange traded funds [Member] | ||
Cost | 10,728,809 | 15,451,160 |
Gross losses | (1,922,991) | (179,712) |
Estimated fair value | 8,909,720 | 16,845,101 |
Gross gains | 103,902 | 1,573,653 |
Hedge Funds [Member] | ||
Cost | 1,987,040 | 3,999,381 |
Estimated fair value | 2,576,272 | 7,561,415 |
Gross gains | $ 589,232 | $ 3,562,034 |
Investments (Details 3)
Investments (Details 3) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Cost or amortized cost | $ 7,767,183 | $ 8,266,334 |
Gross unrealized gains | 108,971 | 513,525 |
Gross unrealized losses - less than 12 months | (1,264,296) | (26,700) |
Gross unrealized loss - more than 12 months | 0 | 0 |
Estimated fair value | 6,611,858 | 8,753,159 |
Net unrealized gains | (1,155,325) | 486,825 |
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member] | ||
Cost or amortized cost | 498,508 | 998,239 |
Gross unrealized gains | (1,498) | 22,856 |
Estimated fair value | 497,010 | 1,021,095 |
Net unrealized gains | 0 | 22,856 |
Gross unrealized losses - less than 12 months | (1,498) | 0 |
Gross unrealized loss - more than 12 months | 0 | 0 |
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member] | ||
Cost or amortized cost | 5,736,079 | 6,234,342 |
Gross unrealized gains | 35,503 | 280,951 |
Estimated fair value | 4,588,947 | 6,502,514 |
Net unrealized gains | (1,147,132) | 268,172 |
Gross unrealized losses - less than 12 months | (1,182,635) | (12,779) |
Gross unrealized loss - more than 12 months | 0 | 0 |
Held-to-Maturity Securities US Treasury Securities [Member] | ||
Cost or amortized cost | 1,228,485 | 729,642 |
Gross unrealized gains | 73,468 | 209,633 |
Estimated fair value | 1,265,151 | 939,275 |
Net unrealized gains | 36,666 | 209,633 |
Gross unrealized losses - less than 12 months | (36,802) | 0 |
Gross unrealized loss - more than 12 months | 0 | 0 |
Exchange Trade Debt [Member] | ||
Cost or amortized cost | 304,111 | 304,111 |
Gross unrealized gains | 0 | 85 |
Estimated fair value | 260,750 | 290,275 |
Net unrealized gains | (43,361) | (13,836) |
Gross unrealized losses - less than 12 months | (43,361) | $ (13,921) |
Gross unrealized loss - more than 12 months | $ 0 |
Investments (Details 4)
Investments (Details 4) - Held-to-maturity Securities [Member] - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Amortized cost | $ 7,767,183 | $ 8,266,334 |
Estimated fair value | 6,611,858 | 8,753,159 |
Less Than One Year [Member] | ||
Amortized cost | 708,325 | 994,712 |
Estimated fair value | 742,533 | 1,008,180 |
One To Five Years [Member] | ||
Amortized cost | 1,120,315 | 1,205,829 |
Estimated fair value | 1,082,015 | 1,290,465 |
Five To Ten Years [Member] | ||
Amortized cost | 1,399,725 | 1,513,942 |
Estimated fair value | 1,177,545 | 1,648,808 |
More Than 10 Years [Member] | ||
Amortized cost | 4,538,818 | 4,551,851 |
Estimated fair value | $ 3,609,765 | $ 4,805,706 |
Investments (Details 5)
Investments (Details 5) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Investments | ||||
Fixed-maturity securities | $ 1,243,177 | $ 1,288,277 | $ 2,841,307 | $ 4,238,746 |
Equity securities | 247,275 | 436,833 | 872,005 | 1,145,244 |
Cash and cash equivalents | 26,630 | 9,636 | 29,796 | 11,194 |
Other investments | 0 | 42,908 | 0 | 0 |
Total | 1,517,082 | 1,777,654 | 3,743,108 | 5,395,184 |
Investment expenses | 89,811 | 101,058 | 322,412 | 257,317 |
Net investment income | $ 1,427,271 | $ 1,676,596 | $ 3,420,696 | $ 5,137,867 |
Investments (Details 6)
Investments (Details 6) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net realized gains | $ 1,399,907 | $ 1,033,063 | $ 1,189,006 | $ 2,877,320 |
Net unrealized gains (losses) | (1,797,565) | (828,529) | (10,502,442) | 2,602,882 |
Net gains (losses) on investments | (397,658) | 204,534 | (9,313,436) | 5,480,202 |
Realized Gains Losses Fixed-maturity securities [Member] | ||||
Gross realized gains | 364 | 343,773 | 102,774 | 1,121,068 |
Gross realized losses | (4,620) | (8,103) | (158,701) | (49,601) |
Total fixed-maturity securities | (4,256) | 335,670 | (55,927) | 1,071,467 |
Realized Gains Losses Equity securities [Member] | ||||
Gross realized gains | 907,089 | 639,626 | 1,384,432 | 2,015,574 |
Gross realized losses | (92,159) | (26,031) | (728,732) | (293,519) |
Total equity securities | 814,930 | 613,595 | 655,700 | 1,722,055 |
Realized Gains Losses Other Investments [Member] | ||||
Gross realized gains | 589,233 | 83,798 | 589,233 | 83,798 |
Gross realized losses | 0 | 0 | 0 | 0 |
Total other investments | 589,233 | 83,798 | 589,233 | 83,798 |
Unrealized Losses Gains Other Investments [Member] | ||||
Gross realized gains | 0 | 503,146 | 0 | 2,010,485 |
Total other investments | (664,969) | 503,146 | (2,952,802) | 2,010,485 |
Gross losses | 664,969 | 0 | 2,952,802 | 0 |
Unrealized Losses Gains Equity securities [Member] | ||||
Gross realized gains | 0 | 1,331,675 | 0 | 592,397 |
Gross losses | 1,132,596 | 7,549,640 | 0 | |
Total equity securities | $ (1,132,596) | $ (1,331,675) | $ (7,549,640) | $ 592,397 |
Investments (Details 7)
Investments (Details 7) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
US Treasury and Government [Member] | ||
Estimated fair value - less than 12 months | $ 5,975,160 | $ 0 |
Unrealized losses - less than 12 months | (123) | 0 |
Number of positions held - less than 12 months | 1 | 0 |
Estimated fair value - 12 months or more | 0 | 0 |
Unrealized losses - 12 months or more | 0 | 0 |
Number of positions held - 12 months or more | 0 | 0 |
Estimated fair value - total | 5,975,160 | 0 |
Unrealized losses - total | (123) | 0 |
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member] | ||
Estimated fair value - less than 12 months | 11,461,126 | 6,768,123 |
Unrealized losses - less than 12 months | (3,250,196) | (197,984) |
Number of positions held - less than 12 months | 12 | 5 |
Estimated fair value - 12 months or more | 1,815,216 | 0 |
Unrealized losses - 12 months or more | (590,936) | 0 |
Number of positions held - 12 months or more | 2 | 0 |
Estimated fair value - total | 13,276,342 | 6,768,123 |
Unrealized losses - total | (3,841,132) | (197,984) |
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member] | ||
Estimated fair value - less than 12 months | 73,921,209 | 17,593,707 |
Unrealized losses - less than 12 months | (9,154,182) | (126,926) |
Number of positions held - less than 12 months | 93 | 15 |
Estimated fair value - 12 months or more | 817,970 | 0 |
Unrealized losses - 12 months or more | (269,694) | 0 |
Number of positions held - 12 months or more | 1 | 0 |
Estimated fair value - total | 74,739,179 | 17,593,707 |
Unrealized losses - total | (9,423,876) | (126,926) |
Fixed Maturity Securities Residential Mortgage and other asset backed securities [Member] | ||
Estimated fair value - less than 12 months | 27,985,270 | 45,399,451 |
Unrealized losses - less than 12 months | (4,333,707) | (489,258) |
Number of positions held - less than 12 months | 31 | 26 |
Estimated fair value - 12 months or more | 18,593,599 | 2,923,182 |
Unrealized losses - 12 months or more | (2,699,011) | (120,344) |
Number of positions held - 12 months or more | 15 | 2 |
Estimated fair value - total | 46,578,869 | 48,322,633 |
Unrealized losses - total | (7,032,718) | (609,602) |
Fixed Maturity Securities Total Fixed Maturity Securities [Member] | ||
Estimated fair value - less than 12 months | 119,342,765 | 69,761,281 |
Unrealized losses - less than 12 months | (16,738,208) | (814,168) |
Number of positions held - less than 12 months | 137 | 46 |
Estimated fair value - 12 months or more | 21,226,785 | 2,923,182 |
Unrealized losses - 12 months or more | (3,559,641) | (120,344) |
Number of positions held - 12 months or more | 18 | 2 |
Estimated fair value - total | 140,569,550 | 72,684,463 |
Unrealized losses - total | $ (20,297,849) | $ (934,512) |
Investments (Details Narrative)
Investments (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Investments | ||
Proceeds from the sale and redemption of fixed-maturity securities held-to-maturity | $ 1,000,000 | $ 1,312,500 |
Proceeds from the sale or maturity of fixed-maturity securities available-for-sale | 14,213,435 | 33,335,036 |
Sale - equity securities | 11,962,513 | $ 14,507,384 |
Fair value of the eligible investments | $ 12,393,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ 9,946,839 | $ 0 |
Political subdivisions of states, territories and possessions | 13,276,341 | 17,285,514 |
Corporate and other bonds industrial and miscellaneous | 74,739,179 | 83,011,254 |
Residential mortgage and other asset backed securities | 47,343,348 | 57,783,342 |
Total fixed maturities | 145,305,707 | 158,080,110 |
Equity securities | 21,468,446 | 39,687,002 |
Total investments | 166,774,153 | 197,767,112 |
Level 1 [Member] | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 9,946,839 | 0 |
Political subdivisions of states, territories and possessions | 0 | 0 |
Corporate and other bonds industrial and miscellaneous | 74,241,809 | 82,500,779 |
Residential mortgage and other asset backed securities | 0 | 0 |
Total fixed maturities | 84,188,648 | 82,500,779 |
Equity securities | 21,468,446 | 39,687,002 |
Total investments | 105,657,094 | 122,187,781 |
Level 2 [Member] | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Political subdivisions of states, territories and possessions | 13,276,341 | 17,285,514 |
Corporate and other bonds industrial and miscellaneous | 497,370 | 510,475 |
Residential mortgage and other asset backed securities | 47,343,348 | 57,783,342 |
Total fixed maturities | 61,117,059 | 75,579,331 |
Equity securities | 0 | 0 |
Total investments | 61,117,059 | 75,579,331 |
Level 3 [Member] | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Political subdivisions of states, territories and possessions | 0 | 0 |
Corporate and other bonds industrial and miscellaneous | 0 | 0 |
Residential mortgage and other asset backed securities | 0 | 0 |
Total fixed maturities | 0 | 0 |
Equity securities | 0 | 0 |
Total investments | $ 0 | $ 0 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 1) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Hedge Funds [Member] | ||
Hedge fund investments | $ 2,576,272 | $ 7,561,415 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details 2) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Senior Notes due 2022 | $ 29,601,120 | $ 28,436,019 |
Level 1 [Member] | ||
Senior Notes due 2022 | 0 | 0 |
Level 2 [Member] | ||
Senior Notes due 2022 | 29,601,120 | 28,436,019 |
Level 3 [Member] | ||
Senior Notes due 2022 | $ 0 | $ 0 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments and Real Estate (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Reinsurance balances payable | $ 11,475,247 | $ 12,961,568 |
Carrying Value [Member] | ||
Reinsurance balances payable | 11,475,247 | 12,961,568 |
Fixed-maturity securities held-to-maturity | 7,767,183 | 8,266,334 |
Cash and cash equivalents | 15,111,206 | 24,290,598 |
Premiums receivable, net | 12,891,464 | 12,318,336 |
Reinsurance receivables, net | 59,365,937 | 40,292,438 |
Real estate, net of accumulated depreciation | 2,089,156 | 2,144,464 |
Fair Value [Member] | ||
Reinsurance balances payable | 11,475,247 | 12,961,568 |
Fixed-maturity securities held-to-maturity | 6,611,858 | 8,753,159 |
Cash and cash equivalents | 15,111,206 | 24,290,598 |
Premiums receivable, net | 12,891,464 | 12,318,336 |
Reinsurance receivables, net | 59,365,937 | 40,292,438 |
Real estate, net of accumulated depreciation | $ 3,025,000 | $ 3,025,000 |
Property and Casualty Insuran_3
Property and Casualty Insurance Activity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Premiums Written | ||||
Direct | $ 54,591,551 | $ 48,865,169 | $ 147,353,911 | $ 131,609,930 |
Assumed | 0 | 0 | 0 | 0 |
Ceded | (20,925,381) | (7,223,526) | (58,743,773) | (21,854,398) |
Net | 33,666,170 | 41,641,643 | 88,610,138 | 109,755,532 |
Changes In Unearned Premiums | ||||
Direct | (5,636,421) | (4,848,145) | (6,029,774) | (2,911,439) |
Assumed | 0 | 0 | 0 | 0 |
Ceded | 1,331,227 | 9,753 | 1,356,060 | (15,198) |
Net | (4,305,194) | (4,838,392) | (4,673,714) | (2,926,637) |
Premiums Earned | ||||
Direct | 48,955,130 | 44,017,024 | 141,324,137 | 128,698,491 |
Assumed | 0 | 0 | 0 | 0 |
Ceded | (19,594,154) | (7,213,773) | (57,387,713) | (21,869,596) |
Net | $ 29,360,976 | $ 36,803,251 | $ 83,936,424 | $ 106,828,895 |
Property and Casualty Insuran_4
Property and Casualty Insurance Activity (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Property and Casualty Insurance Activity | ||
Balance at beginning of period | $ 94,948,745 | $ 82,801,228 |
Less reinsurance recoverables | (10,637,679) | (20,154,251) |
Net balance, beginning of period | 84,311,066 | 62,646,977 |
Current year | 62,910,967 | 79,070,646 |
Prior years | 713,788 | (10,529) |
Total incurred | 63,624,755 | 79,060,117 |
Current year | 35,774,958 | 35,408,412 |
Prior years | 26,938,462 | 17,586,958 |
Total paid | 62,713,420 | 52,995,370 |
Net balance at end of period | 85,222,401 | 88,711,724 |
Add reinsurance recoverables | 21,706,497 | 12,332,394 |
Balance at end of period | $ 106,928,898 | $ 101,044,118 |
Property and Casualty Insuran_5
Property and Casualty Insurance Activity (Details 2) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) integer | |
Total incurred claims | $ 464,223 |
2014 | |
2014 incurred claims | 14,193 |
2013 incurred claims | 9,745 |
IBNR | $ 34 |
Cumulative Number of Reported Claims | integer | 2,138 |
2015 | |
2014 incurred claims | $ 14,260 |
2013 incurred claims | 9,424 |
IBNR | $ 239 |
Cumulative Number of Reported Claims | integer | 2,559 |
2015 incurred claims | $ 22,340 |
2016 | |
2014 incurred claims | 14,218 |
2013 incurred claims | 9,621 |
IBNR | $ 101 |
Cumulative Number of Reported Claims | integer | 2,881 |
2015 incurred claims | $ 21,994 |
2016 incurred claims | 26,062 |
2017 | |
2014 incurred claims | 14,564 |
2013 incurred claims | 10,061 |
IBNR | $ 270 |
Cumulative Number of Reported Claims | integer | 3,398 |
2015 incurred claims | $ 22,148 |
2016 incurred claims | 24,941 |
2017 incurred claims | 31,605 |
2018 | |
2014 incurred claims | 15,023 |
2013 incurred claims | 10,089 |
IBNR | $ 446 |
Cumulative Number of Reported Claims | integer | 4,229 |
2015 incurred claims | $ 22,491 |
2016 incurred claims | 24,789 |
2017 incurred claims | 32,169 |
2018 incurred claims | 54,455 |
2019 | |
2014 incurred claims | 16,381 |
2013 incurred claims | 10,607 |
IBNR | $ 3,074 |
Cumulative Number of Reported Claims | integer | 4,494 |
2015 incurred claims | $ 23,386 |
2016 incurred claims | 27,887 |
2017 incurred claims | 35,304 |
2018 incurred claims | 56,351 |
2019 incurred claims | 75,092 |
2020 | |
2014 incurred claims | 16,428 |
2013 incurred claims | 10,495 |
IBNR | $ 3,504 |
Cumulative Number of Reported Claims | integer | 5,861 |
2015 incurred claims | $ 23,291 |
2016 incurred claims | 27,966 |
2017 incurred claims | 36,160 |
2018 incurred claims | 58,441 |
2019 incurred claims | 72,368 |
2020 incurred claims | 63,083 |
2021 | |
2014 incurred claims | 16,434 |
2013 incurred claims | 10,529 |
IBNR | $ 9,236 |
Cumulative Number of Reported Claims | integer | 5,779 |
2015 incurred claims | $ 23,528 |
2016 incurred claims | 27,417 |
2017 incurred claims | 36,532 |
2018 incurred claims | 59,404 |
2019 incurred claims | 71,544 |
2020 incurred claims | 62,833 |
2021 incurred claims | 96,425 |
2013 | |
2013 incurred claims | 10,728 |
IBNR | $ 3 |
Cumulative Number of Reported Claims | integer | 1,564 |
2022 | |
2014 incurred claims | $ 16,496 |
2013 incurred claims | 10,493 |
IBNR | $ 13,837 |
Cumulative Number of Reported Claims | integer | 3,236 |
2015 incurred claims | $ 23,533 |
2016 incurred claims | 27,411 |
2017 incurred claims | 36,553 |
2018 incurred claims | 60,535 |
2019 incurred claims | 71,386 |
2020 incurred claims | 62,043 |
2021 incurred claims | 97,038 |
2022 incurred claims | $ 58,735 |
Property and Casualty Insuran_6
Property and Casualty Insurance Activity (Details 3) | Sep. 30, 2022 USD ($) |
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented | $ 81,542,000 |
All outstanding liabilities before 2013, net of reinsurance | 264,000 |
Liabilities for claims and claim adjustment expenses, net of reinsurance | 81,806,000 |
Total | 382,681,000 |
2014 | |
2013 | 5,303,000 |
2014 | 5,710,000 |
2015 | |
2013 | 6,633,000 |
2014 | 9,429,000 |
2015 | 12,295,000 |
2016 | |
2013 | 7,591,000 |
2014 | 10,738,000 |
2015 | 16,181,000 |
2016 | 15,364,000 |
2017 | |
2013 | 8,407,000 |
2014 | 11,770,000 |
2015 | 18,266,000 |
2016 | 19,001,000 |
2017 | 16,704,000 |
2018 | |
2013 | 9,056,000 |
2014 | 13,819,000 |
2015 | 19,984,000 |
2016 | 21,106,000 |
2017 | 24,820,000 |
2018 | 32,383,000 |
2019 | |
2013 | 9,717,000 |
2014 | 14,901,000 |
2015 | 21,067,000 |
2016 | 23,974,000 |
2017 | 28,693,000 |
2018 | 44,516,000 |
2019 | 40,933,000 |
2020 | |
2013 | 10,016,000 |
2014 | 15,491,000 |
2015 | 22,104,000 |
2016 | 25,234,000 |
2017 | 31,393,000 |
2018 | 50,553,000 |
2019 | 54,897,000 |
2020 | 39,045,000 |
2021 | |
2013 | 10,392,000 |
2014 | 15,770,000 |
2015 | 22,318,000 |
2016 | 25,750,000 |
2017 | 32,529,000 |
2018 | 52,025,000 |
2019 | 58,055,000 |
2020 | 50,719,000 |
2021 | 56,282,000 |
2013 | |
2013 | 3,405,000 |
2022 | |
2013 | 10,471,000 |
2014 | 16,083,000 |
2015 | 22,462,000 |
2016 | 26,244,000 |
2017 | 32,928,000 |
2018 | 53,657,000 |
2019 | 59,933,000 |
2020 | 52,632,000 |
2021 | 75,291,000 |
2022 | $ 32,981 |
Property and Casualty Insuran_7
Property and Casualty Insurance Activity (Details 4) $ in Thousands | Sep. 30, 2022 USD ($) |
Property and Casualty Insurance Activity | |
Liabilities for loss and loss adjustment expenses, net of reinsurance | $ 81,806 |
Total reinsurance recoverable on unpaid losses | 21,706 |
Unallocated loss adjustment expenses | 3,416 |
Total gross liability for loss and LAE reserves | $ 106,929 |
Property and Casualty Insuran_8
Property and Casualty Insurance Activity (Details 5) - USD ($) | 6 Months Ended | ||||
Jun. 30, 2023 | Jan. 01, 2023 | Jun. 30, 2022 | Dec. 30, 2021 | Jun. 30, 2021 | |
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 | $ 5,000,000 | ||||
in excess of 1 | 5,000,000 | ||||
Catastrophe [Member] | |||||
Initial loss subject to personal lines quota share treaty | $ 10,000,000 | $ 10,000,000 | |||
Risk retained per catastrophe occurrence | $ 10,000,000 | 7,400,000 | 7,400,000 | 10,000,000 | $ 10,000,000 |
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 | 5,000,000 | ||||
in excess of 1 | 5,000,000 | ||||
Catastrophe loss coverage in excess of quota share coverage | $ 335,000,000 | $ 335,000,000 | $ 490,000,000 | $ 490,000,000 | $ 475,000,000 |
Reinstatement premium protection | Yes | Yes | Yes | Yes | Yes |
Property And Casualty Personal Insurance Product Line Member | |||||
Quota share treaty percent ceded | 30% | 30% | |||
Risk retained on initial $1,000,000 of losses | $ 1,000,000 | $ 700,000 | $ 700,000 | $ 1,000,000 | $ 1,000,000 |
Losses per occurrence subject to quota share reinsurance coverage | $ 1,000,000 | $ 1,000,000 | |||
Expiration | Jan. 01, 2023 | Jan. 01, 2023 | |||
Excess of loss coverage and facultative facility coverage | 8,000,000 | $ 8,400,000 | $ 8,400,000 | 8,000,000 | 8,000,000 |
In excess of | 1,000,000 | 600,000 | 600,000 | 1,000,000 | 1,000,000 |
Total reinsurance coverage per occurrence | 8,000,000 | 8,500,000 | 8,500,000 | 8,000,000 | 8,000,000 |
Losses per occurrence subject to reinsurance coverage | $ 8,000,000 | $ 9,000,000 | $ 9,000,000 | $ 9,000,000 | $ 9,000,000 |
Expiration Date | Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2022 | Jun. 30, 2021 |
Property and Casualty Insuran_9
Property and Casualty Insurance Activity (Details 6) - USD ($) | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Commercial Lines [Member] | |||
Total reinsurance coverage per occurrence | $ 3,750,000 | ||
Losses per occurrence subject to quota share reinsurance coverage | 4,500,000 | ||
Quota share treaty | 0 | ||
Risks retained | 750,000 | ||
Excess of loss coverage above risk retained | 3,750,000 | ||
in excess of | 750,000 | ||
Quota share treaty1 | $ 0 | ||
Personal Umbrella | |||
Percent ceded - first $1000000 of coverage | 90% | 90% | 90% |
Percent ceded - excess of $1,000,000 dollars of coverage | 95% | 95% | 95% |
Risk retained | $ 300,000 | $ 300,000 | $ 300,000 |
Total reinsurance coverage per occurrence | 4,700,000 | 4,700,000 | 4,700,000 |
Losses per occurrence subject to quota share reinsurance coverage | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 |
Expiration date | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 |
Property and Casualty Insura_10
Property and Casualty Insurance Activity (Details 7) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Fair Value of Financial Instruments and Real Estate | ||||
Provisional ceding commissions earned | $ 4,881,580 | $ 40,578 | $ 14,116,044 | $ 135,666 |
Contingent ceding commissions earned | 4,514 | (47,854) | 167,033 | (98,266) |
Total commissions earned | $ 4,886,094 | $ (7,276) | $ 14,283,077 | $ 37,400 |
Property and Casualty Insura_11
Property and Casualty Insurance Activity (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Oct. 18, 2021 | Dec. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Reinsurance description | Effective January 1, 2022, the Company entered into an underlying excess of loss reinsurance treaty covering the period from January 1, 2022 through January 1, 2023. The treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty. | |||||||
Net contingent ceding commissions payable | $ 2,714,000 | $ 2,881,000 | ||||||
Incurred losses and loss adjustment expenses are net of reinsurance recoveries under reinsurance contracts | 27,230,814 | $ 1,220,970 | ||||||
Prior year loss development | 713,788 | $ 10,529 | ||||||
Advance premiums | $ 6,627,275 | $ 2,693,466 | ||||||
in excess of 1 | $ 5,000,000 | |||||||
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 | $ 5,000,000 | |||||||
Personal Lines | ||||||||
Loss in excess coverage description | For the period January 1, 2022 through January 1, 2023, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty. | |||||||
Single risk coverage | $ 9,000,000 | |||||||
Personal Lines | Minimum [Member] | ||||||||
Direct loss | 3,500,000 | |||||||
Personal Lines | Maximum [Member] | ||||||||
Direct loss | $ 9,000,000 | |||||||
Reinstatement Premium Protection [Member] | ||||||||
Excess of catastrophe coverage | $ 9,800,000 | $ 10,000,000 | $ 10,000,000 | |||||
Reinstatement of premium protection, amount | $ 10,000,000 | $ 70,000,000 | $ 70,000,000 |
Debt (Details)
Debt (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Long-term debt, net | $ 29,955,926 | $ 29,823,791 |
Discount | ||
Long-term debt, net | 8,110 | 32,442 |
Issuance costs | ||
Long-term debt, net | 35,964 | 143,767 |
Senior Notes [Member] | ||
Long-term debt, net | $ 30,000,000 | $ 30,000,000 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | |
Oct. 27, 2022 | Dec. 19, 2017 | Sep. 30, 2022 | |
Net proceeds from the offering to contribute capital | $ 28,256,335 | ||
Advances limit, description | Advances are limited to 85% of the amount of available collateral. As of September 30, 2022, the estimated fair value of available collateral was $12,393,000. Accordingly, as of September 30, 2022, advances were limited to $10,534,000 | ||
Capital Lease [Member] | |||
Sale of fixed assets | $ 8,096,824 | ||
Description of sale leaseback | The provisions of the sale leaseback require KICO to pay a monthly payment of principal and interest totaling $126,877 for a term of 60 months commencing on October 27, 2022. | ||
Federal Home Loan Bank of New York [Member] | |||
Advances limit, description | Advances are limited to 5% of KICO’s net admitted assets as of the previous quarter and are due and payable within one year of borrowing. | ||
Maximum allowable advances | $ 12,414,000 | ||
Senior Notes [Member] | |||
Debt instrument, face amount | $ 30,000,000 | $ 30,000,000 | |
Debt instrument, maturity date | Dec. 30, 2022 | Dec. 30, 2022 | |
Debt instrument, unamortized discount | $ 163,200 | ||
Debt instrument, transaction cost | $ 715,170 | ||
Debt instrument, interest rate | 5.50% | 5.50% | |
Debt instrument, yield percentage | 5.67% | ||
Proceeds from issuance of unsecured notes | $ 29,121,630 |
Stockholders Equity (Details)
Stockholders Equity (Details) - Stock Options [Member] | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | |
Number of options outstanding, beginning | shares | 107,201 |
Granted shares | shares | 0 |
Vested shares | shares | 0 |
Forfeited shares | shares | 0 |
Number of options outstanding, ending | shares | 107,201 |
Number of options outstanding, vested and exercisable | shares | 94,701 |
Weighted average exercise price, Beginning balance | $ / shares | $ 8.31 |
Weighted average exercise price, granted | $ / shares | 0 |
Weighted average exercise price, Exercised | $ / shares | 0 |
Weighted average exercise price, Forfeited | $ / shares | 0 |
Weighted average exercise price, Ending balance | $ / shares | 8.31 |
Weighted Average Price per share outstanding, vested and exercisable | $ / shares | $ 8.26 |
Weighted Average Remaining Contractual, Beginning balance | 2 years 11 months 1 day |
Weighted Average Remaining Contractual term, Ending balance | 2 years 2 months 4 days |
Weighted Average Remaining Contractual life, vested and exercisable | 2 years 5 months 15 days |
Aggregate Intrinsic value, begining balance | $ | $ 0 |
Aggregate Intrinsic value, ending balance | $ | 0 |
Aggregate Intrinsic Value , vested and exercisable | $ | $ 0 |
Stockholders Equity (Details 1)
Stockholders Equity (Details 1) - Restricted Stock Awards [Member] | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | |
Number of options outstanding, beginning | shares | 535,410 |
Granted shares | shares | 98,456 |
Vested shares | shares | (234,219) |
Forfeited shares | shares | (17,605) |
Number of options outstanding, ending | shares | 382,042 |
Weighted Average Grant Date Fair Value per Share, beginning balance | $ / shares | $ 7.01 |
Weighted Average Grant Date Fair Value per Share, granted | $ / shares | 5.53 |
Weighted Average Grant Date Fair Value per Share, vested | $ / shares | 7.32 |
Weighted Average Grant Date Fair Value per Share, forfeited | $ / shares | 0 |
Weighted Average Grant Date Fair Value per Share, ending balance | $ / shares | $ 6.91 |
Aggregate Fair Value, beginning balance | $ | $ 3,753,224 |
Aggregate Fair Value, granted | $ | 544,503 |
Aggregate Fair Value, vested | $ | 1,715,220 |
Aggregate Fair Value, Forfeited | $ | 0 |
Aggregate Fair Value, ending balance | $ | $ 2,582,506 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Aug. 05, 2020 | |
Dividends declared | $ 1,277,066 | $ 1,274,797 | ||
Stock based compensation for stock options | 14,000 | |||
Share-based compensation under offering | 16,000 | 0 | ||
Stock based compensation for grants | 186,000 | 452,000 | ||
Stock-based compensation expense | $ 9,000 | 43,000 | ||
Shares reserved for grants | 364,271 | |||
Fair value of unamortized compensation cost | $ 2,000 | |||
Maximum share purchase under ESPP | 750,000 | |||
Maximum share purchased by employee | 5,000 | |||
Common stock shares authorized | 20,000,000 | 20,000,000 | ||
Held-to-Maturity Securities US Treasury Securities [Member] | ||||
Common stock shares authorized | 700,000 | 1,400,000 | ||
Grant [Member] | ||||
Stock-based compensation expense | $ 1,180,000 | 1,405,000 | ||
2021/2022 Offering [Member] | ||||
Stock-based compensation expense | $ 5,000 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Deferred tax asset: | ||
Net operating loss carryovers (1) | $ 2,099,013 | $ 1,112,318 |
Claims reserve discount | 1,164,002 | 1,186,789 |
Unearned premium | 3,607,880 | 3,246,364 |
Deferred ceding commission revenues | 2,167,278 | 2,047,187 |
Net unrealized lossess on securities | 4,215,667 | 0 |
Other | 1,530,488 | 1,220,898 |
Total deferred tax assets | 14,784,328 | 8,813,556 |
Deferred tax liability: | ||
Investment in KICO (2) | 759,543 | 759,543 |
Deferred acquisition costs | 4,873,194 | 4,670,187 |
Intangibles | 105,000 | 105,000 |
Depreciation and amortization | 189,643 | 1,046,817 |
Net unrealized gains on securities | 0 | 2,039,756 |
Total deferred tax liabilities | 5,927,380 | 8,621,303 |
Net deferred income tax asset | $ 8,856,948 | $ 192,253 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Federal only, NOL from 2022 and 2021 | $ 2,099,013 | $ 1,112,318 |
NOL carried back | 0 | 0 |
Federal only, NOL from 2022 and 2021, net | 2,099,013 | 1,112,318 |
State only (A) | 2,227,702 | 2,099,239 |
Valuation allowance | (2,227,702) | (2,099,239) |
State only, net of valuation allowance | 0 | 0 |
Total deferred tax asset from net operating loss carryovers | $ 2,099,013 | $ 1,112,318 |
Expiration of net operating loss carryforward | December 2027 - December 2042 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2017 |
Net operating loss carryover | $ 34,272,000 | $ 32,296,000 | |
CMIC [Member] | |||
Consideration exchange principal amount | $ 3,750,000 | ||
Acquired equity interest rate | 100% | ||
Original purchase surplus notes | $ 2,921,319 | ||
Untaxed interest | 1,169,000 | ||
Deferred tax liability reduced | $ 759,543 | ||
Deferred tax liability | $ 759,543 |
Loss Per Common Share (Details)
Loss Per Common Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Loss Earnings Per Common Share | ||||
Weighted average number of shares outstanding | 10,645,675 | 10,523,515 | 10,640,290 | 10,622,988 |
Effect of dilutive securities, common share equivalents: Stock options | $ 0 | $ 0 | $ 0 | $ 0 |
Effect of dilutive securities, common share equivalents: Restricted stock awards | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted average number of shares outstanding, used for computing diluted earnings per share | 10,645,675 | 10,523,515 | 10,640,290 | 10,622,988 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Commitments and Contingencies | ||
Operating leases | $ 41,342 | $ 131,152 |
Short-term leases | 0 | 0 |
Total lease cost | 41,342 | 131,152 |
Other information on operating leases | ||
Cash payments included in the measurement of lease liability reported in operating cash flows | $ 47,483 | $ 147,969 |
Discount rate | 5.50% | 5.50% |
Remaining lease term in years KICKO | 1 year 6 months | 1 year 6 months |
Remaining lease term in years Cosi | 0 | 0 |
Commitments and Contingencies_3
Commitments and Contingencies (Details 1) | Sep. 30, 2022 USD ($) |
Commitments and Contingencies | |
Remainder of 2022 | $ 47,483 |
2023 | 194,919 |
2024 | 49,145 |
Total undiscounted lease payments | 291,547 |
Less: present value adjustment | 4,191 |
Operating lease liability | $ 287,356 |
Commitments and Contingencies_4
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Jan. 31, 2022 | Jan. 31, 2021 | Dec. 31, 2020 | Jan. 31, 2020 | Sep. 16, 2019 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jul. 08, 2019 | |
Rent expenses | $ 41,342 | $ 57,459 | $ 131,152 | $ 172,377 | ||||||
Stock-based compensation | 1,204,865 | $ 1,447,725 | ||||||||
Employment Agreement [Member] | Barry Goldstein, President, Chief Executive Officer and Executive Chairman of the Board [Member] | ||||||||||
Restricted stock issued | 30,000 | |||||||||
Golden Emloyment Agreement [Member] | Mery Golden Chief Operating Officer [Member] | ||||||||||
Annual base salary | $ 500,000 | $ 500,000 | ||||||||
Percent of average per annum | 14% | |||||||||
Option purchase | 50,000 | |||||||||
Percent of annual bonus | 6% | |||||||||
Golden Emloyment Agreement [Member] | Mery Golden Chief Operating Officer [Member] | Maximum [Member] | ||||||||||
Restricted stock value | 136,500 | |||||||||
Annual base salary | $ 500,000 | |||||||||
Percent of average per annum | 3% | |||||||||
Stock-based compensation | $ 2,835,000 | |||||||||
Golden Emloyment Agreement [Member] | Mery Golden Chief Operating Officer [Member] | Minimum [Member] | ||||||||||
Stock-based compensation | $ 945,000 | |||||||||
Barry GoldsteinMr. Goldstein [Member] | Employment Agreement [Member] | ||||||||||
Restricted stock issued | 27,300 | 21,000 | ||||||||
Cosi Lease [Member] | ||||||||||
Lease costs | $ 40,000 | |||||||||
January 2020 [Member] | Amended Employment Agreement [Member] | ||||||||||
Restricted stock issued | 230,769 | 17,191 | 157,431 | |||||||
Restricted stock value | $ 136,500 | |||||||||
January 2023 [Member] | Amended Employment Agreement [Member] | ||||||||||
Annual base salary | $ 500,000 | |||||||||
Percent of average per annum | 3% |
Employee Benefit Plans (Details
Employee Benefit Plans (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jun. 18, 2018 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Description of deferred compensation | The Deferred Compensation Plan is offered to a select group (“Participants”), consisting of management and highly compensated employees as a method of recognizing and retaining such Participants. The Deferred Compensation Plan provides for eligible Participants to elect to defer up to 75% of their base compensation and up to 100% of bonuses and other compensation and to have such deferred amounts deemed to be invested in specified investment options. | |||||
Deferred compensation liability | $ 1,093,136 | $ 1,093,136 | $ 907,914 | |||
Employee Benefit Plan 401 [Member] | ||||||
Incurred expense | $ 207,000 | $ 189,000 | ||||
Employee benefits expenses | $ 71,000 | $ 58,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | |
Oct. 27, 2022 | Oct. 25, 2022 | |
Investments | ||
Tax Refund | $ 1,427,318 | |
Fixed Assets Sold | $ 8,096,824 |