Release Date: May 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kingstone Companies Inc reported a second consecutive profitable quarter with a net income of $1.4 million, marking the highest first quarter profitability in seven years.
- The company achieved double-digit growth in its core business, with core direct written premiums increasing by 12.5% to $47 million.
- Kingstone Companies Inc successfully implemented strategic initiatives such as Kingstone 2.0 and 3.0, which have significantly improved operational efficiency and profitability.
- The company has effectively managed its expenses, achieving a substantial reduction and moving towards a 29% expense ratio goal for the full year of 2024.
- Kingstone Companies Inc has raised its 2024 guidance based on the outperformance in the first quarter, expecting a GAAP combined ratio between 86% and 90%, and an EPS between $0.75 and $1.10.
Negative Points
- Despite the overall positive performance, the company's net investment income slightly decreased from $1.6 million in 2023 to $1.5 million in 2024.
- Kingstone Companies Inc continues to carry non-core business, which, although reduced, still impacts the consolidated earnings negatively.
- The company's book value has experienced a decline over the last few years, raising concerns about its net worth and capacity to support desired growth levels.
- There are ongoing challenges with the legacy product line, which requires careful management to avoid significant policyholder dislocation.
- The competitive environment remains tough, especially in coastal areas, with significant market withdrawals and moratoriums from other insurers.
Q & A Highlights
Q: Given the decline in book value over the last few years, do you have enough net worth to grow at the desired rate?
A: Meryl Golden, CEO of Kingstone Companies Inc, responded that the company does not view its capital as a constraint to growth. She mentioned the possibility of increasing their quota share to support growth if needed, but currently, it does not see it as an impediment.
Q: Can you explain why net investment income decreased despite an increase in investable assets and expected higher yields?
A: Jennifer Gravelle, CFO of Kingstone Companies Inc, explained that the decrease was minor, about $70,000 year-over-year, primarily due to changes in interest and dividends on the portfolio. She committed to further investigate and provide a detailed response.
Q: Are you planning to transition all policies to the Select platform, and if so, how soon?
A: Meryl Golden clarified that they are not planning to move all policies to the Select platform. The legacy book is profitable and will continue to renew those policies. The transition is not seen as necessary at this time.
Q: Will you completely exit the non-core book, or will it continue indefinitely?
A: Meryl Golden stated that they are not planning to exit the non-core book completely but are working to minimize its negative impact on earnings. She mentioned regulatory constraints and ongoing rate adjustments to manage the non-core business effectively.
Q: What is the competitive environment like in your market, especially in coastal areas like New York?
A: Meryl Golden described the market as very competitive, with fewer choices for brokers due to the withdrawal of several large competitors. She expressed confidence in taking advantage of the current market conditions to accelerate growth.
Q: Is there a market of last resort for policyholders who can't find reasonably priced coverage?
A: Meryl Golden mentioned that there is a FAIR plan, but it is small and not significantly growing. She noted that the market still has availability, albeit at high prices, primarily through MGAs and new E&S markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
