Kingstone(US:KINS)2023-05-12 14:29Financial Data and Key Metrics Changes - For Q1 2023, the company reported a net loss of $5.1 million, improving from a net loss of $9.2 million in the same period last year [49] - Direct written premiums increased by 10.7% to $47.6 million, up from $43 million in the prior year [49] - The net loss in LAE ratio was 88.6%, up 2.6 points from the prior year, primarily driven by catastrophe losses [31] Business Line Data and Key Metrics Changes - The company expects its overall premium in 2023 to equal that of 2022, despite a projected decline of more than 10% in total policies in force [9] - The average New York Homeowner Renewal Premium increased by 21% from $2,498 to over $3,000, largely due to rate changes and updates to replacement costs [52] - The non-New York book of business was reduced by 8.5% in Q1, with expectations to decline by more than 50% by year-end 2023 [77] Market Data and Key Metrics Changes - The company noted a consistent decline in annual inflation ratings over the past eight to nine months, indicating potential improvement in market conditions [29] - The competitive landscape in the insurance market is described as favorable, with indications that rates may have peaked [48] Company Strategy and Development Direction - The company is focused on aggressively reducing its non-New York business, which has historically had a negative impact on underwriting results [50] - A four-pillar strategy has been implemented to maximize profitability, including adjusting pricing to stay ahead of loss trends and managing reinsurance costs [67] - The company aims to stabilize operations and optimize its New York business while reducing expenses [61] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future conditions, believing that macroeconomic factors negatively impacting results may have peaked [29] - The company is committed to executing its strategic plan to return to high performance and deliver long-term value to shareholders [53] - Management acknowledged the challenges posed by adverse weather and inflation but remains focused on improving profitability [26] Other Important Information - The net underwriting expense ratio decreased by 3.7 points to 34.7%, attributed to disciplined expense reduction efforts [50] - The company successfully navigated UPC's insolvency without increasing its probable maximum loss (PML) [35] Q&A Session Summary Question: Can you characterize the loss ratio in the business you're rolling off? - The loss ratio in the non-New York book was over 100, indicating unprofitability [7] Question: What is the expected revenue walk from this quarter to next year? - Overall premium is expected to remain stable, but policies in force will decline significantly [9] Question: Should we expect the other 50% of non-New York policies to roll off in 2024? - The company is working to reduce that business quickly, with expectations for more roll-off in 2024 [11] Question: How close would New York have been to profitability with the new rates? - New York has been profitable, and profitability is expected to improve as the company exits unprofitable states [14] Question: What is the current book yield on the portfolio? - The average yield on cash invested assets was reported at 3.35% [16] Question: Are you trying to turn a profit this year or stabilize? - The focus is on stabilizing and reducing losses, with an aim to improve profitability in the future [61]