Kingstone(US:KINS)2023-08-11 20:42Financial Data and Key Metrics Changes - For Q2 2023, the company reported a net loss of $0.5 million, or $0.05 per diluted share, compared to a net loss of $5.4 million, or $0.51 per diluted share for the same period last year [12] - Direct written premiums decreased by 4.3% to $47.6 million, down $2.1 million from $49.8 million in the prior year [12] - The attritional loss ratio improved to 61.7%, 3.8 points lower than the same quarter last year, driven by lower frequency and better risk selection [13] - Operating EBITDA for the current quarter was $1.02 million, or $0.10 per share [15] Business Line Data and Key Metrics Changes - In New York, direct written premiums increased by 5% while premiums outside New York declined by 46% [10] - Policies in force outside New York were reduced by 27% through Q2, with an anticipated 50% reduction by year-end [9] - The net loss ratio for personal lines outside New York was 108.9%, while it was 64.7% for New York [28] Market Data and Key Metrics Changes - Kingstone's market share in New York homeowners is less than 2%, indicating significant growth potential [8] - The company has received approval for a 6.3% increase in New York homeowners and an 18.2% increase in Massachusetts [29] Company Strategy and Development Direction - The company is focusing on returning to its roots as a premier writer of coastal property insurance in Downstate New York and reducing its footprint outside of New York [8] - The strategy includes replacing unprofitable policies outside New York with profitable ones in New York [28] Management's Comments on Operating Environment and Future Outlook - Management believes the worst is behind the company and is optimistic about future growth opportunities in New York [6][24] - The company is confident that continued execution of its strategic plan will lead to consistent profitability [30] Other Important Information - The company has tightened expenses, leading to a reduction in headcount, now at the lowest level since 2017 [14] - The company is experiencing elevated large losses primarily driven by inflation, but is actively managing these risks [11] Q&A Session Summary Question: How does the company view rate versus underlying claims inflation on the core New York book? - Management noted a decline in frequency for both water and fire claims, indicating positive signs, but acknowledged a double-digit increase in severity [17] Question: What is the competitive environment in New York? - The market is described as very tight, with many competitors tightening guidelines and reducing business, presenting a significant opportunity for Kingstone [62] Question: What combined ratio is needed to break even in the future? - Management indicated that a combined ratio below 100% is typically expected to be profitable, but additional adjustments may be needed to cover other operational costs [46][47] Question: What is the current book yield of the investment portfolio? - The book yield is currently at 3.63% [49] Question: When will the non-New York business no longer impact the company? - Management anticipates that the non-New York business will continue to be a drag on results through the end of next year, but it will decrease significantly as policies are non-renewed [51][52]