Kingstone(US:KINS)2023-11-13 18:39Financial Data and Key Metrics Changes - For Q3 2023, the company recorded a net loss of $3.5 million or $0.33 per diluted share, an improvement from a net loss of $4 million or $0.38 per diluted share in the same period last year [13] - The net loss and LAE ratio increased by 3.5 points from the prior year to 78.5%, with catastrophe losses adding $2.2 million or 7.7 points to the net loss ratio for the quarter [14] - The net underwriting expense ratio decreased by 5.2 points to 31.7%, the lowest in the company's history, due to a reduction in most components of expenses [15] Business Line Data and Key Metrics Changes - Core premiums grew by 4.7% for the quarter, while non-core premiums declined by 43.9% [33] - The attritional loss ratio was 70.8%, 1.6 points lower than the same quarter last year, with the core attritional loss ratio at 64.7% and the non-core at 112.5% [34] - The company successfully reduced non-core policies in force by 17% from the prior quarter and 35% from year-end 2022, with an estimate of a 50% decline by the end of this year [9] Market Data and Key Metrics Changes - The company is operating in a hard market for coastal business in downstate New York, with major competitors either insolvent or on moratoriums for new business [18] - The company’s market share in New York is less than 2%, indicating significant growth opportunities [39] Company Strategy and Development Direction - The company aims to return to its roots as a premier writer of coastal property insurance in downstate New York, focusing on reducing its non-core business [25] - The strategy includes updating replacement costs on every policy annually to ensure customers are insured to value [29] - The company has set a new goal to reduce expenses below 30% by 2024, having achieved a net expense ratio of 33% this year [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and progress, anticipating a profitable 2024 as the non-core business declines further [27] - The company is addressing loss trends, including inflation, through effective pricing strategies and improved risk selection [10][42] - Management noted that frequency of claims is down, which is a leading indicator for future losses, attributed to better customer selection [42] Other Important Information - The operating EBITDA for the current quarter was a loss of $1.8 million, with ongoing efforts to achieve consistent profitability [17] - The company has seen unrealized losses on its bond portfolio due to increased interest rates, although investment income was slightly higher [35] Q&A Session Summary Question: What is the competitive environment in New York? - Management noted that the market is very challenging, with fewer companies writing business, presenting a significant opportunity for Kingstone [50] Question: Can you provide details on the capital position and RBC Capital ratio? - Management confirmed that they expect RBC ratios to remain above 300 and are maintaining that level despite some underwriting losses [40] Question: How is the company addressing the increase in claims severity? - Management indicated that they have priced for increased severity and expect improvements in the loss ratio next year due to a decline in frequency and better risk selection [43]