KINS - Earnings call transcript Q1 2021 | Kingstone Companies, Inc.

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Operator

Greetings, and welcome to Kingstone Companies’ Q1 2021 Financial Results and Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Amanda Goldstein, Investor Relations, Director. ahead. go Please

Amanda Goldstein

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

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

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

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

Barry Goldstein

Yes. good and morning, Thanks, everyone. Amanda,

few first thing of their clients of to that insurance a can continue my And to are an thankful I our can be during last two charging the and the policyholders who of share enabled of I put and company you all want all to the to can much I position, this time. premiums for our was running join only underwriting, this difficult those of that I on needs really claims It’s times. going these it’s say most we first quarter this pleased in this appreciation of In of in XXXX call, are U.S. now that about producers I the be We covered. again reminded how to so was love to am what preparing that One year is our and at businesses. a conference so place. employees on that call. business better us

business operations. a premiums the on the we about investing two underwriting is the deliver here equity, to get our and by at generated shots those return target. of think Second We ability

a of This that. perfect example are results quarter’s

property results Today, quarter is to the Meryl and us solid results. overall almost investment our that. okay, too season, returns bad, focus uncertainty It my let Northeast the a I’ll our here. and We okay. remarks investment $X.XX offset small and a the first $X.XX Scott talk in share. But of – loss, per when I’d almost sorry, per never with when especially prior quarter, writer, I’ll leaving first underwriting of the As operating – share contrasted terrific losing I’m winter markets all like year my in a quarter underwriting place sorry. overall reflects our profitable to financial had the losing on the a a I’m due share about first COVID. investment EPS. results with wasn’t And and fell loss

interest of investment in formally which Investment was to an quarterly up I’d all-time an is, provision $X.X incorporated dividends that income, less ESG our Committee high call investment to QX Our to to attention like our expenses your million. X% guidelines.

In of quarter two the the make XXXX. addition, agreed second committee since changes significant to

rating. we after-tax mutual preferred less higher common volatile funds rise stocks, primarily was This investment to returns, bearing as first and The an to grade than equities and exited. being was seen gave those the an increased allocation

termination, name the with treaty received – since we have unrealized one invested that to we work equity invested first of allocation realized almost At This of the the we profits while end, a million is long premium in decline all expect million be share portfolio yet sometime and to growth adding investments during gains have added to I operations. not our a hold triggered other decided in managed might intention increase but the equity $X it we portfolios our Second, a believe our But $X quota our is pre-tax XXXX. mid-XXXX, under and Realized put real old million. had in investments result and each COVID to quarterly to last QX. risk results great quarter’s return time. as also, and with I fully bit fashioned, gains money is unrealized alternative our in we results. understand $X.X investments partnership the taking a since to that year. hedge our and underwriting I’ve of that that compared investments for one bought quarter buying to real other of our interest limited estate gains fund to just Note I

are are their with sell just As some ended of in the we the continue investments, as equity. for to at them to this investments to can Florida-based portfolios and on conservative equity leaves over than and if on group want that the achieve mention their gains I the added This who compliance. peer returns, improve quarter, part targets. their dollar now fund $XXX this be we periodically to portions $X.XX had with considered more one We cash investment for In less million about their like to potential further of shot large little contrasted is another our our Kingstone. and competitors puts off invest, And for those investment with them maintain Last have target. prudent such, regulatory cash I competitors. are and of compelled and pressure first operations of each been of essence, return Many quarter they quarter investment differentiator certainly our Company to practices harvested. to have by results, underwriting to to we

shots a two hope exploit is having competitive advantage us going we one demonstrates, quarter this and As forward. to

our over ahead, call review the Go Scott. to turn financial me Scott results. to let Now,

Scott Pelt

The last is period dramatic just Barry the Barry. decline year. for $X.X of investments net $XXX,XXX attributable our posted improvement to quarter as financial first million a net year the in the Thanks, the gain year last this through. went markets compared and The a same company loss loss on to primarily

the $X.X three last after-tax months, the For an offset company operating an $X.X had million of of on by investments loss gain million.

million water increase damage XXXX. of of of physical ended pandemic. loss attributable premiums in the ratio from share or water and premiums triggered by by the personal for frequency great For premiums XX.X% both million, Relative share in quarter important X.X a operating It’s million. which investments prior share XXXX. posted $X.XX had more to a diluted year quarter, offset on added higher December $X.X to compared the in ratio. on well frequency net was the points typical is note in the approximately how exit was written written XXXX lines first XX.X% loss to XX.X% was non-cat from to the loss the It’s business, to compared X The fire about due claims in personal story just a COVID-XX history. prior loss winter diluted was ratio as increase was the losses from ratio first non-weather comparison, $XX.X which $X.XX an the XXXX $X.X XXXX. the $X.X in was net loss for X.X% to increase year the after-tax quarter period. non-weather an good. reported earned X.X two XX.X% loss quota points million loss the is losses winter the that of XXXX, in of The March increase Catastrophe loss in per a for increase the the that $XX.X added The Direct with for in increase the the quarters. premiums a three or loss company really to quarter Kingstone from perspective. of XX, than XX, of of a $X.X lines decrease quarter which XX% March $X.X also more months The XX, points were to ratio net our million the livery primarily severe the line premium per as attributable were million loss of a the the a an to higher for that were quarter quarter ended low the XXXX three the months million points and primarily X approximately

and percentage underwriting attributable prior with ceding from along period, year For increase share the expense The in to commissions that. XX.X% personal quarter, of points. was the percentage as that exit net point the XX% X.X the the both lines quota to treaty decrease increase ratio compared in XX%, current an primarily provisional the X.X was went

from In addition, contingent a had treaties. prior XXXX quota commissions year’s share

were on our quarter. the under ratio year increase make coupled please the increased net last the than good position a less go. an the in this in quarters expenses due years. results returns, I’ll year expected year’s commission These for parts as average year. thinking Meryl. it X than X.X% of quarter profitability reflect to put This other first the was contingent our be to up first Overall, investment points the of terrific More by important call about million the results our combined turn in us to good winter lines be earned projected lower Northeast over a prior with underwriting $X.X quarterly producers book. personal moving was the Finally, five that quarter the expense mindful ratio, that writing

Meryl Golden

Great. in modernize efforts transform Thanks, coined the continue earnest. Scott. that Kingstone to to company, report I’m happy and our X.X,

have While this filings, underway faster, track the of to by everything are reality end That take new product I XXXX. a just still is long that move system on the complete core like time. initiatives to would like said, conversion and the we phase we

these profitability. reported squarely have have been in As improving calls, on we we focused previously

we our your We taken competitiveness, constantly of rate competitors the are always sales has raise you situation well. to starting you and when you profitability raise that two that companies rates share And have It’s tighten one needed as almost passes their increases This then and ago. are underwriting now even and slowed examples hit growth. start producers the time rate That’s first though in. rates know increase to of targets. that lack to hard many actions force and years demonstrate guidelines their the to and

will expect tick results We improve making It’s we’ve start quarter winter guidance, to should a confident. while the gave profitability in our a well. growth our up but been show as bit and earnings Kingstone to been changes this since feeling our that we’re post

projections share you. with to some wanted I So

we year written in As communicated X% the X% direct previously, full expect growth for range. the to premium

that some we has reiterate to tightening priced to want to previous on return, focus While competitors their have achieve our rates acknowledged and by them change I course that a of growth guidelines. raising led

the does anticipate landscape. combined year Further, ratio as Actions estimate competitive growth already the taken in change the for we to a the be equity should absent needed allow achieve XXXX we XX% expect will the range on perceived This favorable XX% range us that XXXX if are Our adjust to full return not producing plays storm. results. landfall out. to XX%. major of the of year And anticipated a XX% to to

good place. We a are in

turn pull the Operator, operator reply questions. for questions please to pause to to and the the have. you I’ll may back Now, over call for

Operator

question question-and-answer conducting first session. Thank Scattergood. of comes time, Please question. [Operator from today with Instructions] Bob your you. At a proceed Our this & Farnam be Boenning we’ll

Bob Farnam

there. Yes, morning. Good hi

So farther into go the landscape. Meryl, just wanted I to competitive

these competitors one your sounds is I it things what always as raising happens rates, But well. you’re may So your consider to ratios. be rates raising like retention when of

So have improvement you started to yet? in retention see any

Meryl Golden

morning, your Bob. Good for Thanks question.

retention last flat year. pretty our is much So versus

competitors the that we our have are started. So from changes seeing just

wouldn’t those rates retention It’s our that So, affect impact our really anyway. retention. but

look – and it new will forward what that. growth So impacted as to business our be we

Barry Goldstein

didn’t change if don’t Let – we was when Kingstone time, to a – see marketplace, previous with keep me, mean understood remember, me to we any us but that and mentioned I just the retention. raised in a rate, add calls was to long know taking in that stayed going the us. customers. rates forward great we Bob, take I started appreciable we rate, because, color gave you reputation hadn’t there because a to weren’t and little the losing and people impetus has in they the that we

Bob Farnam

Great.

Okay.

increases from So to on than you your you’re you’re new it it’s – if year go sounds rather rate the business more X% to going come like to expect going going if than retained and this X%, between grow business?

Barry Goldstein

Yes.

I correct. that’s think

Bob Farnam

Okay.

comments income, million and terms Is the appreciate forward, as higher rate this I alternatives. the a so expected going this – use this and $X.X more than we In the the Barry, should preferreds of run investment about the was level?

Barry Goldstein

I Yes. us bit that trying cutting that increased have the by the to of off over the was and we powder, I we dry quota to allude fact cash to premium still already reinsurers the quite paid mean, to earned. share. was yet The them, after had return but received to it hadn’t we had they a

that money needs to be So to work. put

are in be guidance you there invested, So should the that but a I give that. increase any of couldn’t moderate other more amount assets than

forward. current to it’s look the at very anticipate think fair pretty and similar I quarter moving something

Bob Farnam

ratio I to have this – is of commissions the And coming question based point last in back? the the from off fact good actually that run rate have you on similar ceding a the something expense work don’t a that go XX%, is Okay. basis,

Barry Goldstein

to you going that? handle handle that? want to Meryl, who’s So,

Meryl Golden

Sure. I can handle it.

think see down do expense ratio I that come as you’ll our goes So on. time

– Of of of the be X.X – making efficiency. these ceding gaining we’re course, efforts and to but the on we impact all more will the more we’re commission Kingstone reduced feel the throughout year, that going

you’ll see coming And do down so, the think throughout expense I our ratio year.

Bob Farnam

– Coming of at this XX% the point? kind from down level the

Meryl Golden

Correct.

Bob Farnam

I to – that’s So confirm just that. wanted

you. thank Okay,

Meryl Golden

Okay.

Operator

[ph]. of Instructions] question. [Operator question next your from The proceed Candy Andrew with is Balcom Capital Please

Unidentified Analyst

and on next how of I at all announced or how if – Hey, last year expect well. on you guidance good expected or over plan, ambitious updates you so. the you that out to the doing – wondering an morning. buyback what hope any to I I was you play quarter, are end had you know that that

Barry Goldstein

How Hey, Sure. Andrew. you are doing?

Unidentified Analyst

I’m fine.

Barry Goldstein

during we process less filed see anticipation did question. and a first and yet bought place shares. and stock, you’ll as quarter, Been is on in buyback the Q, we’ll that forward. that but haven’t each of of Hope so as that go But back XX,XXX that announce a Yes, your than a while. we in plan we something amount that be answers reporting we buybacks the there quarter modest two-year

Unidentified Analyst

something look I’ll for I be Yes, that’ll think out sure. Thanks.

Barry Goldstein

My pleasure.

Operator

is from your of question Newsome Piper with next Please The Paul Sandler. question. proceed

Paul Newsome

us the of of Good an years. several next over milestones that should just that the Kingstone I we update there thanks call. the morning, X.X and quarters? hoping was are to or refresher can on that take two take for And maybe you over couple be we steps note give see will the process any next expecting in that should

Meryl Golden

Thanks Sure, it. no Paul. one felt for Kingstone of I X.X, like ask ever asking about kind about

what So to about live I’m every I it, that because that’s delighted talk day.

two in years. next So of the terms

to that first adding of all, we’re X.X was there So, senior multiple really One of things doing. is a Kingstone a lot leadership company. new the

So that’s in place.

a off able we year. get need conversion as continue and next reduction. we to that And those throughout legacy second called to this into December, company of systems Last have we that our started. started is, and has greater and we’re will retire year expense will system, that a to The legacy WaterStreet,

next will the be converted our our product this so year. and that is fire umbrella And product then later dwelling product

sophisticated that And goes from to So be states products our I products, of and and continues analytics all it is hopefully is rollout piece are year. it hoping year and end as fire before slower on dwelling our is York as reconfigure to later into And in of is would where but said there year, our more to this then it launch regulation a third want new then systems. we all of that than introducing my introduce to to next major perspective plan homeowners And those New on schedule this just all of I products the go. depends next remarks, we’re well, year.

the states. So renter and in all condo, it’s fire, new products homeowners, dwelling

your Paul? calls, there growth. we’ll these we are the I those think you our that for result as on company that will profitable so, milestones in answer posted And question, have Did key and more keep progress

Paul Newsome

there in achieve – think post kind of It Is that after all the ratio of long-term, X.X did. place? the of target you can are you expense a benefits XXXX

Meryl Golden

Well, point this estimate us will least point you, X.X – Kingstone X.X. expenses an from can that, that course, recent save next than of more Kingstone at benefits year, I aiming tell additional the most we’re year that’s maybe think a I our and I of our lower to but

Paul Newsome

A [indiscernible] quarter. rest it. of luck couple points Got thank good it. the the Appreciate is you. of for And

Meryl Golden

you. Thank pleasure. My

Operator

proceed next Please is The with Capital. of from your question. Adelman Adelman question David

David Adelman

you Barry. and if that just Do and about in to Meryl this obviously year, in into the what do weather, XX% you’re average, a going that cost hope of, would the X.X have based incidents the that Kingstone ROE goal higher or it the think you are wonder that question products fluctuates you Hi, or I the talking for? you. that’s new time cuts than could et My ROE you’re direction, over good, implementing. be Thank that in is shooting XX% cetera, depending upon given you kind right

Barry Goldstein

you question, for thank talking and good with you. the Yes, David

the writer. company what past we us realign so our gone yes, to Those that to allowed exclusively now. measures profitability think, to the and things the through almost very being take crimped had are a property much I and we’ve in

that goal than anticipate happening. of and as or X% before, XX% I doesn’t more of growth to XX% target attainable, very think short-term alluded we short-term a much to – is or X%

that future. a so But XX% we that growing the actions on to it. in XX% I took our our to hate up that the put target improve now to are I’d upon being, guess forward can point can, profitability we we numbers if to So in the showing look

ago happen but you invest I’d with long our consistent I out Kingstone XX% deliver that’s competitive that. think You was changed to to a a and I’m high XX% ROEs hate that teens remember, consistently, the saying couldn’t hope I may talking we’re goal not what able when put put again landscape to a now. that in favor, thinking. about the were beyond there you

David Adelman

Right. you. Absolutely. Thank

Barry Goldstein

Great, you. thank

Operator

no to time, call remarks. would to at turn Goldstein closing for I the additional Barry are like questions There back this

Barry Goldstein

had in. is the a But the of Great. of that through walk our There you come you fun. this a for blast. lot of that I I fun listening having can job years desert, everybody we’re be if on and only lot like Thanks was again. a getting was to couple out we’ve tell a other side would.

So stay Operator. please you, tuned stay in until to the and Thank healthy these calls then. future,

Operator

This today’s concludes conference.

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

Kingstone Companies (KINS) 14 May 212021 Q1 Earnings call transcript