Kingstone(KINS) - 2018 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the year 2018, Kingstone recorded direct written premium of $146.7 million, an increase of almost 21% compared to the previous year [6] - The strongest growth occurred in Q4 2018, with direct written premium of $39.5 million, up 23% [6] - The overall combined ratio for the year was 94.8%, which included six points of catastrophe losses and 1.1 points of adverse development related to unfavorable liability settlements from 2014 and 2015 [10] Business Line Data and Key Metrics Changes - The core business in New York showed healthy growth of 15% for the year [6] - Premiums in expansion states increased from just under $2 million in 2017 to over $9 million in 2018, with New Jersey contributing $7.7 million of that total [7] Market Data and Key Metrics Changes - The expansion states delivered a loss ratio of 49%, which was better than expected and aligned with the overall loss ratio for the company [10] - The industry has experienced some deterioration in property losses, impacting Kingstone's performance [11] Company Strategy and Development Direction - Kingstone plans to expand into Connecticut and Maine in 2019 and may restart operations in Pennsylvania [7] - The company focuses on servicing smaller agents who may not meet the minimum premium requirements of larger competitors, thereby building strong relationships [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that financial performance lagged in 2018 but expressed optimism about the company's accomplishments [6] - The company expects to end 2019 with a combined ratio excluding catastrophe losses between 82% and 84% [22] Other Important Information - Changes to the investment portfolio were made to focus on short-term rates and reduce duration risk [14] - The company has seen a return to pre-fourth quarter values in 2019, indicating recovery in the investment portfolio [17] Q&A Session Summary Question: Expense ratio trends related to new business - Management confirmed that expenses related to new states are included in the overall projections for the year [25] Question: Impact on expense ratio from new business efforts - Management indicated that the expense ratio may see some upward pressure but not significantly [28] Question: Guidance on combined ratio improvement - Management explained that adverse development on contingent commissions and conservative expectations for underwriting changes are factored into the guidance [33]