KINS - Earnings call transcript Q4 2021 | Kingstone Companies, Inc.

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Operator

Greetings. Welcome to the Kingstone Company's Fourth Quarter and Year End 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. the Officer. to turn Swartz, host, now Accounting Chief will conference your over Rich I you. Thank

may You begin.

Rich Swartz

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

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

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

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

Barry Goldstein

Thanks, good morning, and Rich everyone.

pleased are call. fourth conference quarter that this, join you XXXX for We us our can

year was But behind to was. happy are company it’s much our a and and We a it products. fanfare, very us, without what And difficult long quietly year, put doubt. XXXX it no we've rebuilt

We a driven underwriting I'll whole also loss. the The about talk major talk you. fourth previously and quarter to to discuss ended all poised but similar excel in by quarterly with about Meryl very detail. which factors, three speaking, year the are more with was of was the today had okay I'm discussed the future. significant bullish our future. loss results the and with let are I'll XXXX We prior been and our to on Relatively going results quite year

First, added to our ratio. combined points events catastrophe XX more than

almost finally, and weather you And of number liability two Again, or uptick the fires previously events. of this there of property points. the in added number the added third high cannot X claims severe a discussed in which control or was we've Second, lines points. we our an severity but business with

share events unusual, will decision think as company, and additional that's is was these into the treaty exposure XX%. a enter what our more catastrophe company frequency only case. XXXX for XX% to derisks is the cut large to we than by addition in and layer single time the But is quota treaty, in quota highly the surplus strengthen excess XXXX by tell our large up and by to of of of Kingstone's protections an our This with While catastrophe loss XXXX. risk is now made in our a it caused individual if by and losses share also, new reducing loss given XX% reinsurance to the catastrophe conjunction events decline both retention we well, from our it to

losses. bad better protected associated couldn't root are book these that losses we with in think an their We our partners at no structure, of looked cause. fire find luck. specific reinsurance XXXX The there driver was We it to thankful a dimension are for and experienced we new frequency cause. We severe specific reinsurance not is and our the in just could from support. find severe has every But

deferred a the working attributable couple more this in liability that maintenance it's and far opportunities losses and COVID-XX. structures around it of on time spending problems, in property. People home opinion of lot from more the house to go, most As with as my results and is for

increases rate are fourth the abate seen show factors up and impact quarter these quarter, in into In fourth of XXXX. beginning noticeably. taken have we've the to the We positive

profitability that For the been in what by over where X.X% widening policies The premiums fourth written increase policies full impact premiums underwriting just gap a in we a in increasing the is the a increase than force. Premiums we've prior force exposures increase but X.X% margins. grew magnified. are had year, rising quarter, working In is about X.X% in over and XX% on, in quarter. with faster

actions underwriting through work rate maintaining discipline, continue strict As the to continue. the team enhanced our will financials taken and by our profitability our

same raising factors to when the ever-widening of Again, seek date. these is We concern costs. Will their to are insured contain about always XXXX premium to a this increase just in There premium risk is play rates. an elsewhere seeing over retention out taken. shop

While increase pleased that, increase and retention in bodes increasing, are markedly, well we XXXX very future. seen and not our have instead, the decreasing. we our for fact, This average is rates

some You've heard talk X.X, modernization Kingstone time. us our effort about for

simple. since Meryl late company when was Our place XXXX, into put goal joined this our and and straightforward plan

drawing advanced risk, we've agent Select, dwelling multiple our Select for data and new since Select CEO better XX factors. who, products Select matches he this which Reiersen reinsurance to past these upon property-specific partners call called rate was and a build John homeowners, honor We began First, product to fire, naming. incorporating years, Select sources the

issuance our to streamline a Second, system our Kingstone into X.X management systems run policy sought and many company. to single

retire prong this to total increase year our will great of premium XXXX product with our benefits is, This the a as the making in year. the gone to Kingstone hope our track achieved Already, be initiatives for New than at and on financials. system as accounts these It biggest X.X Select X.X we've pivotal and for of work generation. York expenses come Kingstone be our fact, to declining dwelling you systems our milestone. is our fruition. know, homeowners efficiency We're Expenses through exciting the more staff. a time to our very reduce to We've fire second of legacy company in the single our Select which, this will and of on progress will result. our We still conversion. are greatly Kingstone begin live XX%

that are will to Select it’s enhance translate will this these It confident loss within improvement new the all profitability. completed and process to sophistication Given approval, our ratio. improvements Select segmentation we with And pricing in states significant into our to products year. granularity expect is we our bring pending products, heightened these a expanded goal in be to and regulatory

Meryl review call Let me financial results. turn now Meryl? the to to over our

Meryl Golden

due $X.XX fourth Direct were the of XX.X% QX quarter year Barry. prior XX% share same prior XX.X% Thanks, $X.X quarter period in from to were it up this a the diluted the share $X.XX million reinsurance diluted company million XXXX a and income of and high the premiums quarter. $XX.X posted share from for by a net to an good to LAE new quota so income entering $XX.X $X.X was trade million effective million per net of quarter. down per at million $XX.X decreased for relatively new year, $X year. written premiums million, company, in into net written or the year-end. period last for XX.X%, Net points loss compared The X.X increase

points we two catastrophe added to experienced the events ratio. X quarter, During our almost catastrophes quarter's loss fourth and

by past but in increased the the loss fire water in for XX.X frequency the several For that homeowners which QX of in fire signs since our the particularly year, frequency history. and declined frequency quarterly peril prior from points. third ratio to but the declined were few more some both remains is to line seeing quarter large line there non-cap, Dwelling over Liability improvement compared largest fire a are history losses, liability with elevated level we months.

We shared. continue COVID increase is expect Barry as frequency to related this in to previously

but expenses premium to a down of as quarter, For X.X net underwriting direct were current increased the by point. our expense X.X the ratio written underwriting percent point XX.X%

the due our will decline We factors, quarter. expense we expect pivotal as it retirement the ratio finally realize time many is XXXX Overall, of good in initiative. systems. start to of to was the X.X see legacy for a our a benefits to a company Kingstone This our including in

the to right the things to We have company return and to all done profitability. continue do of

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

Barry Goldstein

Great.

we bond realized our during a of gain on over million quarter, $X.X So portfolio. the just

is holds. like and XXXX average credit we've classes, bonds. reinvested rates income of The seen in many Unfortunately, these moved and mortgages have increasing rating. proceeds sales profoundly portfolio's Kingstone high-quality decline from new in portfolio adding values into the most bond Our were a maturities manager while and investments new the as others, late such diversifying considerably, XXXX the fixed shorter up in in better limited duration,

and done $X.XX During an not the in quarter, we paid we we've enhance all our to look more profitability very forward right any dividends. shares bullish things and repurchase additional Like to XXXX. the Meryl, I'm did that

so back that questions. I'll poll the Now to operator for to call I questions reply can Operator, them. turn to the please for pause

Operator

comes question of first proceed line Our Instructions] Please from Boening with question. with [Operator your Scattergood. Bob the Farnam

Robert Farnam

Hi, good morning.

like going Kingstone done is the to the XXXX? it be much is So conversion the with X.X, legacy -- process of the sounds that pretty in systems,

Barry Goldstein

This at Yes. hits Three the this. is the years Bob where rubber the working year road.

Robert Farnam

Right.

lack the ratio You the from changes. improvement benefit legacy of noted probably expense -- going the and that of the to systems is the

idea ratio? us in can that maybe the expense expecting an you're give of see the So to you magnitude

Barry Goldstein

you take to do Meryl, that? want

Meryl Golden

Sure.

of the difficult really treaty. expenses it's So our because to understand quota share

new and treaties treaties coming have on. we So off running

at they'll our And a down is are So and that expenses what think premium. right written seen you actually you've I our look percent way, is at when way to direct look underwriting our expenses expenses to. the coming continue of that

retired us $X.X example, that the from an will million annually this legacy be systems. save those retiring as So year, systems, they'll over

kind our expense We've we're expensed relative of along paying. way. the incurred also to bit development that product the quite now, right of So double been a Select has of

be those gone well. consultant expenses So will as

see many things and And XXXX expenses in reduction there's a in doing. So we're you'll beyond. nice think other I our that

Robert Farnam

Okay, great.

increases. rate switching Just to

are So rate you achieve what increases what in of did XXXX? you And for, filing for XXXX? type

Meryl Golden

Yes.

-- and in our XXXX. in annual single now had for an trajectory And XXXX, we something expect average of digits are we high So similar in we all states. on on

in X% example, our New we now. through For running book have right York,

Robert Farnam

X%. me I'll it and for leave And ask. Great. one last then for to others

increasing For storms the Is a the is rationale concern that Climate north. potential stronger of hitting the Change, part for that Kingstone? for for have that protection? was reinsurance -- farther some people there's And noted

Barry Goldstein

Bob. a mean me job my start strengthened it's easy I And factor. of to protect being our we to to and of climate change the this. balance really But we're course, sheet point yes, is why that, here. let that's with reinsurance cognizant Well, yes, realistic, as company's

Robert Farnam

Thanks great. for Okay, that.

Barry Goldstein

you. Thank

Operator

Sandler. Newsome Our from Please question proceed with the of comes next Paul with line your question. Piper

Paul Newsome

for Thanks call. the morning. Good

is mix the lot less of change? doing Is improving size underwriting how work the you change? of changing been to you us can a to you've location age composition sort any of of on the itself. of Are book talk perspective? there and type customer cost? kind it's the from rate, and about you you customer the Are a -- your Beyond Maybe could on of just point process of

Barry Goldstein

Yes.

at the And new points Meryl, our why see? you the to Select for responsible little I directly as we that to impact product. and that. a was one Meryl give what think we're try seeing expect really since color to don't

Meryl Golden

Sure.

spent first So time to mention we've I managing one a exposure. our all, catastrophe want lot of of thing is

was this even So before Select.

we next down. our is our year premium what this buy up, even go we're PML seeing is as reinsurance so into actually is our though coming And

think for well done it's things very bodes expenses. manage reinsurance that I the an example company. better think different we've of And I to the So

factors. when we're difference. terms this mix a of built projected new it's much that loaded in a by-peril reinsurance we But is seeing one we're of the not kind much that AIR our In model we territorial into thing Select, not cost did from -- we of cat the loss seeing product, early,

of And for allowed matching rate now risk. do those is has what because to confidence priced that we so have we have And a and exposures. adequately much underwriting us appetite broaden our better are we

question. anything you your happy I'm to I answered If that have. answer So hope not, else

Barry Goldstein

from more and will buy need XXXX. million. period return to what of we XX just loss, be XXXX, mean $XXX so data million limit based XXXX said, bought a will a to $XXX for to that in the renewals upon we have, limit same the each to buy of years. for for catastrophe we be Keeping And Meryl less actually to clear, the than latest little I XXX a X/X our

color. that all I control that hope of that contained have PML, actions little been our they've worked. So so. doing done it's they're not a the taken reinsurance by more gives you And but our to we've cost

Paul Newsome

No, some your then with the least environment. in love feet coming like the just folks at period We particular, had Florida Riders getting hard on sounds of the what absolutely. but where into of hear have your little And abated region that had to thoughts in your meaning a time the competitive -- ground? bit it but a may on you think you

Barry Goldstein

is take exiting. not least What new always they one the the Yes. always place Paul, been. New at had to expanded to yes, of say there's all, who takes of factor I to at as a if they a would somebody a Riders in Florida But with company comes of the factor respect place are competition, as frankly, much York,

-- others So but are manage that. there we continue to and

add little want you this? to Meryl, a more to think, I

Meryl Golden

are writing the companies our environment. and now with. plenty of historically we do strongest robust And very of Sure. And get would all on mistakes. I the there's really from just their learn companies competing we're hurts And at is that said, can mean business that they quickly as times, that I a Barry some the other it's different that some volume. aggressive more were sidelines but say just competitive hope

seen of much players are So marketplace. impact this but an has we competitive that well haven't very it in is any marketplace. really very new And positioned a we

Paul Newsome

for of the right. Best luck rest of the All year.

Barry Goldstein

[ph]. Paul Thanks,

Operator

from [Operator a Gabriel line Instructions] comes private question. with Please investor. proceed Our your question McClear next [ph], the of

Unidentified Analyst

congrats Hey, good and guys direct record. the morning written on premium

Barry Goldstein

you. Thanks

Unidentified Analyst

that's Yes, really great.

year all X% of maybe right, in when did then force, said, into the get policies I they Barry, to ask wanted portfolio in during you the in first the later. I clarifying the But on quarter? force, and fourth and by question the So grew policies hear a then you X.X%

Barry Goldstein

The was sequential quarterly yearly increase X.X%. was X.X% and change the

Unidentified Analyst

Okay, great.

Barry Goldstein

measures. part profitability what risk rate, profitability of about. more is amount we've saying inference you really that's faster two look, I the But the by you're on we're obvious me, than taking definition, spent match being of in focusing profitability about taking smarter Profitability I mean, up And that to growing dollars you're the most better on numbers what profitability. from by years, your if many if I'm those underwriting, said. then widens. the talking than by

Unidentified Analyst

credit Okay, like is the of into look that? quality just got maybe of dig look the portfolio kind bond portfolio like the it. portfolio of And And then like? the XX% to the What's stuff then what realignment. overall like, other

Barry Goldstein

Yes.

that changed So the bonds. been was The bonds in portfolio into and that's advisers order. is, fine. expansion during mortgage it’s single needed biggest they corporate bond component had corporate reduction in And felt portfolio was when XXXX, a an we

the So got that's quarter. a lot third you what and in saw underway really

take, quality overall give or I think been don't we might credit a had duration rating. It So better that. of, five average time an bonds. on of the the know. been diversified limited I And I overall maintained years. A- the last to looked, bonds. it We've rating, an the We've be A

see end curve most XX-year, varies you rate really, recently, portfolio you And first, at when anticipating Fed has markets, one as the forward interest So that happened the year. of five the lurched people with the our rate the been increases. the know, what's short the look

sure that. income either stock believe or than virtually fixed of ETF. a -- of is XX% some So as common a The I actually up and primarily of stocks you gives little of a more income. bond dividend-paying but your portfolio not higher rest the idea or of that type what -- is percent preferred we about I'm our a fixed XX-some-odd more hope own it's is percentage, income made a fixed really I than But

we to our for our unchanged. So the enhance profitability remain so. portfolio sheet balance our while It's doing protect goals but --

So hitting we for don't singles. just swing runs; happy we're

Unidentified Analyst

Thanks. lot great. That makes Okay, a of sense.

Barry Goldstein

you. Thank

Operator

from comes a [ph], question. the Please Our with Gregory next of proceed your private Fortino question line investor.

Unidentified Analyst

Hey, good How Barry. morning are you?

Barry Goldstein

calling, for Thanks Greg. Great.

Unidentified Analyst

Okay. A couple of things.

and call far you mean first along. any comments since about as looking? the I in you a So few that? the quarter fairly far it's times how we're talk mentioned as Can

Barry Goldstein

you're Yes. have I to extent I I I the it. that And alluded mean, will. Greg, right, can, to

We growing have much portfolio. rate matching fourth nicely our policy than showing burning faster we growth seen a quarter. portfolio a the very further our but count, rate at what are the saw in in continued much through Premiums

So to help that give in thought some what can you like. way, I first quarter looks the

Unidentified Analyst

And as least eye, at far term Is as it's it used, seems mild fourth that pretty my from quarter. been that... is catastrophic or that's I a forget the -- the losses, like

Barry Goldstein

Well, Yes. remember, me. you're from I If only about Greg, miles XX

in are events the Meryl, So quarter? same first PCS do. we any basically you aware the see of you things

Meryl Golden

may we mild think winter. have had you're a but event it's I small right, one

Barry Goldstein

mind, to Yes. from New in Jersey. Massachusetts Greg, that we Keep go

So takes of hear don't at metropolitan counts through. place that there's claims we the a the about lot New of or that outside area see I until look weather York come

Unidentified Analyst

Okay.

obviously, based things So on of on all stuff you've fruition. coming and a cylinders lot reporting, what to for are you're is hitting worked the all

year, the in Like based you on earnings real What catastrophic, normalized history an I it's events lot So we the and big have that in ones. are a with be? mentioned don't know call hard but expectation where we what -- about would historically. the expect? all storms a can the

went type normalized we could storm as what to So a back season, like an expect if historically, earnings we level?

Barry Goldstein

mouth And or twice in the past, my foot give we've mean found I frankly, Yes, combined guidance both to ratio as my I times. tried and whatever. to quite earnings in

year again. mid-XXs What of it, the call volatility that if results see should our can in weather results from So I comes combined is say much come that cat a I'm volatility ratio. financial in the not do typical acknowledge to so anxious into, that just non-heavy then our you

you would, digits. on and the difficult if return profitability single single But for it's me Greg, to higher a high mid- in to... equity very digits, underwriting So

Unidentified Analyst

Yes, be you the storms come, would the -- of right to would what -- you if on storm beach probably you be going now. course, know are probably wouldn't

Barry Goldstein

Actually I'd be at aqueduct.

Unidentified Analyst

All right. buying assuming buy any didn't just improve? until results reasons. back is will Last hold saw on I point, Or you At start for capital quarter. this stock I'm that's question. you stock last back? some that

Barry Goldstein

-- pronounce each however remaining Elsa any $XX didn't a that I we're I And XX% Yes, mean I good our the I to me at No, of and so it's purchases very trading feel of million considerate that's value think they then and amount think to right, be stock Yes. company. running you make storms, we two have. book capital put for those we I company, -- it the excess of trying capital. the you're or great place that's of were mean, for events about trading is a Ida,

not sure want as we to I'm have now, excess. right Just what that consider I

Unidentified Analyst

since that Okay. there door that positions that? to Well, the that, I the opened and you -- stock can -- as awards saw mean is there insider you and I was you you point far like purchases -- there as is view some from of anything elected stock. or think something I any the

Barry Goldstein

I filed year, record. now mean about think think that the that's stock at share the shares according publicly the No. of timely of vested X.XX% company. wind SEC beginning the And a I I have of And least Global, with owning up S&P at is, and to might had this on I talking be always I for award I purchases. all you restricted what my

pay same. more of So of intention that Keep in so me that the for for thousands the in the mind was cost of to dollars; to yes hundreds anything tax but privilege. and the I do vesting there's no

Unidentified Analyst

a have forward won’t much. Well, year. I Thank looking storms. And am very I too Okay. many we understand. to hopefully, you good

Barry Goldstein

Thanks, Greg.

Operator

the the closing session. and over gentlemen, I question-and-answer remarks. will to the for Goldstein end now Barry of turn reached call we Ladies have

Barry Goldstein

in Kingstone. Great. And for thanks, for joining and following everybody, thanks up with

is what we midst hopeful the of pan will that to out in really really than the working a We've happy I'm deliver that got pivotal are year. be We for. our results in team and can and and better even hard hope place

again. soon. thanks again talk We'll So Bye.

Operator

have at this a may today's This you your your day. you time. concludes for disconnect and lines Thank participation wonderful conference and

Kingstone Companies (KINS) 11 Mar 222021 Q4 Earnings call transcript