KINS - Earnings call transcript Q1 2022 | Kingstone Companies, Inc.

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Operator

Greetings. Welcome to Kingstone Companies First Quarter 2022 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll turn the conference over to Rich Schwartz, Chief Accounting Officer. Mr. begin. may you Schwartz,

Rich Swartz

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

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

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

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

Barry Goldstein

alternatives our us on retained Advisory regard, fulfill is In has Capital TigerRisk you Markets Friday, in acknowledging and that financial been. from a working Board equity to as tell indication release, good obligations always firm What to adviser our Board first potential company. engaged a it morning, have our our its assist you that questions. of to exploring shareholders. strategic issued as join this Board could as e-mails elephant and that can I've reply I everyone. fully acquisition time, at address years, To of the whom pleased of not press these that let had We're for all received some questions. many the behalf known in is and our a preliminary room.Last can and nonbinding I to been, cannot, conference received a me is for the I XXXX us many begin, I've interest and sophisticated quarter private Rich, shareholders, from of our call. we we Thanks, company's

call, take We determine I did it analysts hand. end of to I many appropriate do and limited follow forthright will further take number being unless and we and At or until disclosure I past this questions intend company not time. at from a necessary. disclose is hand the of this While in cannot further go and that in great I've that necessarily Companies. in comment stock only a price said times developments pride not its the Kingstone transparent, the that

up positive equity, put In our Shareholders results have we Company been double-digit was my loss large this growth, years, price many a For declined, double-digit price of earnings excellent attributes. reflected share our frustrated. followed those in were alignment. on stock in opinion, part numbers due share and to with suit. But our and returns power.

our plan. we to a about we The management collaboration She Board that And take has built York. profitability. we doing, and of needed. ultimate these spent years is acting risk business only with and do our And we to we of last began outside that's Kingstone Select for I must it a on allow profitability that. and there struggling outside right to higher analytics Our of ever-increasing increasing plus already, But disconnect are This themselves, that's designed X.X where around hyper and we this, New going our both stock company. selling multi-peril focused loss instilled work second and while us costs it our we returns problems and you of York lead to decline took the products to property contend the and are place, expansion just issues and cost are producer started seeing what Kingstone regulators been that to you on hasn't homeowners well in don't we with price now are year, market our this our just And in been of we've that to need in. in I'm in interested profitability which after to aware allow lag pardon the can our will ago. the no products, me, which This changes, of premium the efficiency, rest to as just improve company profitability of of our And see to on stopped a and execute to macro matter the focus results rebuilt with doubt, and first a a that and more show to Yes, goal of become so them in us change to prepare Kingstone good for out hired Select, first At the a all control. reduction future New become But doing. been coverages. and what historic We individual we with on that Meryl. me, put things more know none. more are pace call in the in a tightened our expectation New states actions to investors as that week, profits two addressed power operate. responsiveness We We numbers big with team. catastrophe with our rate and increasing company to greater hadn't and our modern to to in and earnings And in time profitability, there rate when time us plan many returned more just encourage states doing new that July plan business do we advantage drive to invest the We've of so Connecticut. we've Select Select about various shape, as there Meryl but business speak the modernize the And expense last done approval terms same began what She not experience a the she commercial we product focus is for Through now, can where have improvement. to costs, lead of moaning culture the restore of to we ratio, showing positive York doing to quarter. to a first yet. profitability We've has set during the much actions by dollars years. exited the its and will plan We all suite in line of on to and products but she CEO. of restore One put take in demanded X.X focus the rate I It with across time, reinsurance. a years understand while become throughout norms. to began needed as she rates that products a reaction bleeding. bring we basis. that we to on on stop and company. an modern property match state profitability XXXX kept we working needed hard these the to needed greatly this, taken. reputation, is the underwriting is that. corrected

a was quarter typical quarter first Kingstone. first The for

is four many high an due you already let water Our quarterly catastrophe we in are doing was events detail. prior and told things to and underwriting winter But business losses. Northeast weather. again I'll return with we winter seasonal, discuss I've profitability. posted the This to year the than of to Kingstone Meryl about worse the loss results winter

Now from I initiatives. starting want share these the we're results to see of to some that

up the first to with In increases talk about we we've margin expansion. keep trend. of quarter, the continued Let's taken rate the see to impact

our the quarter, that added increased During only risk. force by consider added premium that XX.X%, we've in by policies rate while X.X%. premium we Please Xx almost the written our grew at

expect premium delta widen between check to focus losses profits. while revenue increasing And the further continue see with throughout our growth easy Again, costs premium and to the our revenues to will and already increase what accomplished. expected year. We help on in this expenses, we've so not keeping

with of by increased, XX% and spite quarter, is lines. overall. materially was production rates in premium standards, prices as kind seen New up And strict activity along a in for the the business what of And our During we've write. our higher have the quote increased the of personal underwriting retention gives counterintuitive, environment operating activity, business line that quote competitive but every in. major sense increase up we we This, we've seen is increased are of favorable also you Retention

drivers Some control PFIs to of frequency weather. loss number the quarter. if year's The in for was of seem this of the years. the lower Liability abated, we quarter have in at first declined unprofitability last prior than only can least

Now our from down year. able X.X to is ratio, the about let as points prior see, me expense talk a bit which be you'll

said too, our some in expenses quota In to reduction quarter, by me expense increase Commission that. starting prior actions. to we're but increase up expense over expenses, commission, a very with the Take of driven by X.X the look just a of it difficult see the share benefit Now we the you. also our by over share this last dollars. first facts have mix at interesting part let was look expense were Underwriting I year. quota point seating $XXX,XXX, an underwriting taken.As up these correspondent the $XXX,XXX is look share a but multiple year initiatives the X.X%. is and the at at take understand,

the to direct up our increase XXX,XXX. premiums, were that compare $X, Now which earned in

coming we purchase. very report than this every reinsurance to ought less earned it the We way. Make mistake, down. at spent are expenses. to to need no incremental expense pleased coverage our premium of is is up there of our catastrophe Looking we dollar amount renewal on of shortly, not increase ratio coming With $X.XX a

will fact, down by year. about In it last from be X%

of changes that So in rate, these on be catastrophe none to coverage. spent excluding will premium dollars just I incremental referred

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

Meryl Golden

million same to year. net and company last quarter The $XXX,XXX share share for per net a first $X.X of compared Barry. a Thanks, $X.XX diluted XX loss per loss diluted period of posted the

Direct written attributable operating $X.X net the were million was premium $X.XX year-end, This compared entering in the period. to loss written $XX.X to points growth rate to was of growth expect from in XX% quarter. loss share due this year. the quarter from LAE net from quota year into increase the an XX.X% million increases, $X.XX share rate for at decreased prior The prior Due the to prior by in later year XX.X new million, was to to is premiums premiums items. $X.X year. This Our XX.X% premiums we last the main per year. and up up two a effective ratio increase XX%, accelerate or

First, points catastrophe cat our we loss four year's catastrophes events X.X losses added were Last to XX.X and ratio. only experienced quarter's points.

was year, fires materially is bought to of years, QX fires in had while the number prior water for were not our just fire that driven year the flat the fortunately, the declined this loss far more was similar our with particular, of liability fire this X.X like and Second, frequency that frequency winter-related losses we of QX prior main at dwelling points about versus for Last line throughout level points Liability last quarter. lair year. results. fires added QX homeowners declined in in in quarter frequency drivers Additionally, to number two of in XXXX the less history, liability heightened XX.X year, large attritional We random. QX the the in largest for versus loss reasons large line prior by losses. losses was XXXX. frequently was attritional spoke And our The the a impact on freezes increase increase and ratio from pipe losses factors

stay hard loss and We of to ahead are working costs. inflation

we In addition garden replacement to adjusting at are inflation rate costs also on increases, policy renewal.

underwriting and increasingly will expense results X.X net current XX.X%. to the reflected year. initiatives benefit the quarter, of our reduction by points The decreased our throughout be expense ratio the For

this this the much unprofitable for to in is in part take Otherwise, our initiatives, Water two the as to loss Northeast. fact of Street [indiscernible] want to employees opportunity of the last quarter work a winter. I Kingstone ratio The with we is earlier. always first in winter that to Kingstone and whose great realize reality, Barry making more along increase our value partners starting The was the mild due shared a are Kingstone thank year benefits to in many our the hard quarter to Milliman. was due

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

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

Barry Goldstein

being call you what on That's mute.

about Sorry that, everyone.

catch up are where me to here. Let we

I So need investment our portfolio. address to

portfolio, fourth to the albeit in A in holds. profoundly invested the many holding we, third shorter dramatic income months maturities portfolio rates year quality like As highly than and a the Kingstone interest rated at previous. duration have of you led Felt result realignment values. better bonds securities know, in always and most our bond seen fixed diversified during in a us primarily and that in rise past rates lower over the more quarters four last we've others, serious decline in limited

fully prices of and and down board, assets we with along prices ETFs our We income we reduce the will decline and across in in are hold, maturity profitability Like our efforts time required continue will company that the the to bond in rated pay believe to and efforts, their to other we future I to with intent the upon preferred on of flow of our off the all holding fixed the decline A+ income While stocks are not support traders. Meryl, the income at underwriting that to comprehensive the things balance be you sharing other we've that values and income results done changes generating are return that portfolio with as always restored sheet to forward We've our approaches. look par right consistent expect quarters. through. invested and statement the

for the turn questions. pause the back call Operator, to I'll please Now operator.

Operator

with Sandler. comes the question. state Newsome [Operator Please line Piper Instructions] our first And from your question of Paul

Paul Newsome

for more Good the respectively. Not us color a for morning. particularly I non-weather about give of kind number as little call. help for you on of Thanks think should think could beginning this right the in right that of year, relatively pull quarter.And losses changes. of given just last rate, for how the base? light we're Or think figure a there load we are many right to bit I reflect remainder the Is some the Kingstone weather nationwide, sort of a quarter sort understand year first you run we was very low level? out of cat what's trying was light the hoping you, the the and non-cap a normal it kind general, should lease necessarily it obviously kind that things - but a a normal for out, was of of year, should those weather. see seasonality, as don't I This year we what's its and

Barry Goldstein

answer much the better that Yes. betting going to accurately horses. Thank to the Belmont and I if do I'd I question, off Paul. able for was afternoon And this you think question, be

to tell Meryl upon patterns as can the me asking can she this embellish you, in the weather and I likes. You're future. predict

winter very By a had this was comparison, we XXXX. winter mild worse. So in

north. Our went Island did go Jersey to but business Rhode Connecticut we expanded - and to New mostly also and We went Massachusetts. we

result. a definition, more catastrophes weather by exposed wind exposed to to losses we're as from So but also winter less

hurricanes a number it is would winter me year. is about what geography, So same threat could what to think an of foolhardy we for everyone winter if before. But say said, was spouse tightened I first what in loss be likelihood me that than where - the event was I was the as in first on quarter ratio would and that. heard whatnot. the the as the of All do does were expect. attritional that below quarter else it things about be, for of our last I that Paul, the read year Meryl worse about think really I But we're you located weather, weather, could hurricanes, as good to you the absent

here. think the I driver that's

to the of contract. is look Meryl, continue loss is to of is you attritional thinking what the that, that to you're to see what being forward by to are a if things. what ratio But will I year, loss add think lot about that? see hoping I'm for you'd costs So contained there anything that to will balance want

Meryl Golden

throughout as in The as I'd last year, liability add, only two thing the Paul, severe increase plagued fires. really that us frequency items higher well a frequency of that this is

results. driving Fortunately, saw the those of first quarter we neither

feeling really So good. we're

Paul Newsome

P&L sounds annual to need alignment So don't that good geographic loss is seasonality. all slightly an you shift it down, means probably it basis, your reinsurance But through is things. shifting more much general, maybe other is the maximal thinking on in and the if in down - this about possible it is which differently like also as which the the

So is the because first least with is be load north I all we at of for also from cat in if first year. the I'm thought coast. that the would reconcile worse up kind just what to away quarter. Because trying more over would you're PML the down the have that down saw expectation And quarter

Barry Goldstein

the with. is we that weather of have different contend a Yes. issues represents as And quite to is I wind. mean number winter included, PML but

these York the exposed say, we think So in exclusively New us than, can't I I downstate York. winter in expert when an we the as But models weather just were make New to weight expansion be almost profess more to company of and does the each items. how north to were

to winter you wind go, exposure likely a a So exposure because flow the weather hurricane, frankly. less - to exposure but for with is the events land again, that north along it is what reduced heightened further - effectively goes

answer hard we've color - go enough question. very to give you by. we'd I Again, it's to So given hope something the you

Paul Newsome

No, thank questions. appreciate the you the guys for help. Thanks

Barry Goldstein

My pleasure. Thank you.

Operator

the Farnam of Scattergood. your question. with Boening Bob and is question next from The proceed with line Please

Bob Farnam

Hi, morning. questions Paul. everyone. Good Similar to

So this seems of year versus there I we're said is points X.X last that was you it's XX.X low. year. think at losses getting the pretty like water year point where Last

is norm, - what percentage or - happened terms figure look a points? water it trying it does in of XXXX cat like than out normal look is is much is the it's taking in in it XX XXXX how of - quarter You're good years. out ratio, still points year loss of the it this normal because - ex first at just What been - a So to has where it losses? few we're higher prior

that So is to just trying delta coming out from? where figure

Barry Goldstein

It's type other do. this report companies than There's results only of interesting, their started to and just we have recently. differently homeowner we conversation lot a that

our severe out to have into address heightened So this reporting How we prior we don't another asking. because to does bad we're PCS bad as going But unusual about limit you're really want to of was play try weather having something, to forward that weather, level of block That's events. to think years. question separating do.Others and nothing to that how be that's compare information game make I that weather. I the water unusually catastrophe all frankly. going losses and winter

a there to have anything it is to it's to Meryl, question under have think advisement. add we'll you'd take terms want take in of reporting, that? I we'll to So

Meryl Golden

the that cat worst add back winter looking just than other, years, I XXXX and 'XX, over would weather the think, five back going losses was higher I XXXX. past

So the lower. others think but were 'XX was higher, I

at down ex our if and winter X-year our both frequency So - And a those versus results, severity this - year. and looking same is we our ex again, at period. cat look claims, bad was

Bob Farnam

of as doing can. you're typical fire best I It's for a the - we in as about losses, has talked just XX first sure. No, I'm losses that points example. extra quarter like quarter. thought or maybe And Yes. you first something fire

outside as know expansion the again, trying what was you the I you're to were claims that whatnot? pipe water losses from So York. to these well.Am of out bursting location a the we're lot figure came New be talking assume freezing of northward, would - - just and about where I of mean, but the I the pipes

Meryl Golden

pretty it's Paul, answer, I have the driven So don't that I'm by but confident New York. exact

Barry Goldstein

big know ones also a I of had that that No, all. helps we couple at

Bob Farnam

the York. of obviously, New I over several been Yes. outside mean, past you've years, expanding

York is to but from the something book perspective, penalty understand Or losses, the to pricing? according is trying still benefits expectations? is that you're of performance the address with PML I So higher the kind outside from the this the of New perhaps your going winter of

Barry Goldstein

to an was in come worse in said weather to expansion you get out that and Well, you than worse what wide total very albeit don't York, from we've every last northward. policies you five you'd said. worse this said let we it's me of effectively coming as to to New in draw amongst All get a a that from four north and it's what while. the seen underwrite just year try was season back disparity than we in states conclusion temperature. Meryl that was What a of I terms want still wasn't the there write, quite

So draw I that wouldn't conclusion.

the outside off make undertaken expansion when mostly wasn't efforts back profit while that. add been fixed maybe that? New Meryl, incorrectly of the you seen those she's things CEO. to benefit be I benefit expansion many a we to that at new to can the rates of things our outside trying effectively, there's efforts put the risk, incorporates fix when work the sidelined sure actual think so but that, done, will where We've nonrenewing that of - But a of generate homes that to a want - and reinsurance the and us an terms do anything the homes costs - or that York. first. majority the further the product of company have to take problem the done were very, do underwriting very that it's I to she to the all run vast York, Meryl to we things position underwrote, on in We've we've lot joined to increased improve New had high-valued whether making was new In clearly

Meryl Golden

Yes. York I changes producers nonrenewing made have thank for with our tightening to our of say of and really our catastrophe sticking manage just disproportionate than rate would and more rates, that. a level. those first all, us of in states outside trying in we business number I terms raising I mean Well, want New because exposure of to our underwriting

so we new the real segmentation, rolling feel year so to territory Connecticut And better good our in sophisticated through fix because includes it's in vector. of priced cat we introduced the week about will where matches the and It's is we rated, much more AIR it the just rate this are, risk. but by-peril model and and that a out way product our select definer be and rest

So it rate. includes the cost of reinsurance and the

expansion states, So particularly Kingstone. in really, those profitability states our greatly all that improve for going in product is but to

that a But we've grow become real changes product lot is Select to more in allow and the a everywhere. to So states. different us and made one, answer profitable again, the faster those to of profitably much will more and is have

Bob Farnam

How being delays I the to weather driven to I construction the relative the in the actually inflation And years? was was and impact guess that there an contractors in able to materials? prior much there going these? impact question inflationary on had materials, is by to Was it Was the back get maybe - house Great. losses. last supply

Meryl Golden

were is, - question been winter is frequency you'll for And winter out losses. this loss think And in I the had those we both if saying, due our we've catastrophes you severity that both really costs your and like the when up reduction and take see and catastrophes quarter, but severity. losses, our frequency So a up. and as to

down and so discussed. of at really quarter's And severe claims, this severity, lack if severity look attritional fire was as the drove what you we've

size, our inflation exact is Bob, costs. company our to small determine able of loss we're drives that to a amount at really So too be the

how our is it's have definitely exact in numbers, And to so amount, to inflation sources just on much is. hard and while the to outside inflation determine detect rely we

that's severity. us, of the drives mix more For it's what perils our about and

losses So as losses I cat mentioned, and we fire. versus water more had

that's how your increase so inflation and detect hard drove And the is Does of due quarter question? severity to much really what to itself. that this it's our answer

Barry Goldstein

Yes.

for actions take you Let through on inflation, Well, rate inflation. every much product a specifically about to each and inflation, we statement more numbers. takes see the And a is and that made and long bit we it need and time go me the give I previously color factors how Talking each each state. in every rate to take the determines year of we and one that every that.

this So we're determined everybody heightened rates. raising to will in take We any have given amount our and inflation statistics we rely local currently amount we types see. same lead of you inflation. own don't of us state, of But else independently time is can that the next on the experiencing fact that rate the

forward. that that into loss color some hope inflation you that, going yes, higher I more gives costs translates certainly So reflect but a little premium

Bob Farnam

change frequently than Meryl, the Yes, you lot mentioned in more I think and trying - you're that have before past. to you've rates I think,

So probably annually. changed rates

Meryl Golden

Yes.

cadence rate We an of change. have annual instituted

how have and to rate We quarter look in much indication any take meetings sooner. whether each every is needed state actions we to at need

and And this year I as so replacement costs in-force replacement our pulling costs, we book. mentioned, are updating yes. And also

will So also that drive rate.

Bob Farnam

with there. Thanks leave for me. bearing it I'll

Operator

reached closing We've the call back for Goldstein session. turn Mr. you. of now the our to comments. Thank I'll question-and-answer end

Barry Goldstein

this story in, to time second all taking we for our listening Very the first on hear summer. quarter, you Thank the about and look the short. forward quarter reporting to

Bye. great everyone. a day, So have

Operator

This will your today's Thank conclude conference. you participation. for

time. your this at disconnect lines now may You

Kingstone Companies (KINS) 13 May 222022 Q1 Earnings call transcript