Kingstone(US:KINS)2024-03-28 14:14Financial Data and Key Metrics Changes - The company reported a net income of $2.9 million or $0.26 per diluted share for the fourth quarter, a significant improvement from a net loss of $4 million or a loss of $0.37 per share in the same period last year [49] - The combined ratio improved by 24.4 points to 89.5% in the fourth quarter, driven by strong underwriting results and lower catastrophe losses [11] - For the full year, net income increased by 21.7%, attributed to higher interest rates earned on cash balances and a reversal of accrued interest income due to an accounting error in 2022 [12] Business Line Data and Key Metrics Changes - Core direct written premiums increased by 7.1% to $47 million, while non-core business premiums declined by 40.8% during the quarter [31] - The attritional loss ratio improved by 2.9 points to 65.3% for the full year, with catastrophe losses being 0.4 points lower than in 2022 [50] - The expense ratio improved by 3.1 points to 32.9%, with expectations for further improvement to a 29% net expense ratio in 2024 [32] Market Data and Key Metrics Changes - The company expects core business direct written premium growth between 12% and 16% year-over-year for 2024 [29] - The effective duration of fixed maturity securities is 4.1 years, with an average yield of 3.58% [33] Company Strategy and Development Direction - The company is focused on returning to profitability and operational efficiency, with a strategy to reduce non-core policies by 80% by the end of 2024 [45] - A partnership with Zojacks, an insure tech firm specializing in flood prevention, was announced to enhance product offerings and underwriting [46] - The company plans to continue increasing rates to stay ahead of loss trends and inflation, with a 20% rate increase in both New York and New Jersey homeowners products during the quarter [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's future, highlighting the successful turnaround and return to profitability [43] - The company anticipates that the benefits of its strategic initiatives will become increasingly apparent in quarterly results going forward [9] - Management noted that the guidance for 2024 assumes no major catastrophe events and stable reinsurance costs [47] Other Important Information - The company has completed the placement of its 2024 quota share treaties with improved terms, expecting a higher ceding commission rate than last year [8] - Book value at December 31, 2023, was reported at $2.81 per diluted share and $3.80 excluding AOCI [33] Q&A Session Summary Question: What level of general catastrophe amount is assumed in 2024? - The company included 7 points of catastrophe in the plan for 2024 based on historical data of normal catastrophe events [59] Question: How is the company thinking about capital allocation priorities now that it is starting to make some money? - The top priority is managing $20 million of debt maturing at the end of the year [38] Question: What caused the gap between diluted and basic shares? - The warrants have not yet been exercised, but per GAAP, profits lead to a formula that includes some warrants in the share count, causing the difference [61]