Kingstone(US:KINS)2021-08-13 17:01Financial Data and Key Metrics Changes - The company reported a net income of $1.3 million for Q2 2021, down from $4.6 million in the same period last year, primarily due to worse operating results [19] - Operating loss for the latest three months was $0.5 million, compared to an operating income of $2.5 million in the prior-year quarter [20] - Direct written premiums increased to $44.6 million, a rise of $2 million or 4.6% from $42.6 million in the prior-year period [21] Business Line Data and Key Metrics Changes - The increase in direct written premiums was attributed to a $1 million rise in personal lines and a $1 million increase in livery physical damage business as the economy reopened [21] - The company experienced a 32.8% increase in net written premiums and a 33% increase in net earned premiums, mainly due to the exit from a 25% personal lines quota share [21] Market Data and Key Metrics Changes - Personal lines quotes increased by 30% in Q2 2021 compared to the previous year, with new business policies bound by select producers up 16% [15] - In New York State Homeowners, new business policies surged by 65% in Q2 and 90% in July, marking the highest monthly new business since August 2019 [16] Company Strategy and Development Direction - The company has focused on profitability over growth, implementing rate increases, tightening underwriting guidelines, and introducing mandatory hurricane deductibles [10][12] - Management believes they are now in a competitive position as competitors begin to take similar actions, leading to a positive impact on new business production [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the uptick in liability claims frequency, attributing it to COVID-related factors, but expects a return to normal levels as people return to work [24][38] - The company remains committed to maintaining underwriting standards and believes the recent competitive landscape changes will favor their growth strategy [29][34] Other Important Information - The company repurchased over 120,000 shares for just under $1 million at an average price of $8.09 and paid $427,000 in dividends [33] - Investment income increased by 4.1% in Q2, with realized gains up $700,000 compared to the previous year [31] Q&A Session Summary Question: What types of claims are causing the increase in personal lines liability claims? - Management noted that the majority of claims are typical falls, with an increase in dog bites likely due to more people adopting dogs during COVID [36][37] Question: Is there any concern about the profitability of new business? - Management expressed confidence in the profitability of new business due to higher rate levels and tighter underwriting standards [41][42] Question: Are former accounts returning due to competitors raising rates? - Management suggested that while some former accounts may return, the increase is more likely due to new home purchases and shopping for better rates [43][44] Question: When will the increase in new business reflect in reporting? - Management indicated that new business accounts for 15% to 20% of total business, and benefits will be seen in Q4 alongside rate increases [48][52]