P&C insurance holding company Kingstone Companies has reported a net loss of $5.1 million for the first quarter of 2023 on a combined ratio of 123.3%, which it attributes to a “difficult northeast winter.”
This compares with a net loss of $9.2 million on a combined ratio of 124.5% for the same period last year, although Kingstone says that it typically produces an underwriting loss in Q1 due to the “geographic positioning” of its policyholders.
The company’s net loss ratio was 88.6%, compared to 86.0% previously, with catastrophe losses accounting for 13.2 percentage points this year and 11.3 points in Q1 of 2022.
Looking at other metrics, Kingstone also reported a comprehensive loss of $3.1 million, which was significantly improved over last year’s loss of $17.0 million, and a net operating loss of $6.0 million, versus $5.7 million previously.
Net investment income, meanwhile, improved by 13.4% to $1.5 million, while net gains on investments totalled $1.2 million for the quarter, compared with a net loss of $4.4 million in the prior year quarter.
Direct written premiums for the first quarter increased by 10.7% to $47.6 million due to a $4.0 million increase in premiums from personal lines business and a $0.6 million increase in livery physical damage product. But net written premiums were down 3.8% to $0.9 million due to the runoff of an 8.5% portion of a 30% personal lines quota share treaty.
“We have been working diligently to strengthen and fortify our business, as we continue to navigate today’s challenging environment,” said Kingstone Chairman and CEO Barry Goldstein.
“While we are reporting an underwriting loss for the first quarter, this is not unexpected given the difficult northeast winter and reflects a reality of operating within this region,” he explained. “Looking ahead, I believe that many of the headwinds we’ve faced will begin to slow, enabling us to see increasing benefits from the strategic actions we’ve taken. Our entire team remains relentlessly focused on improving our underwriting results and returning Kingstone to profitability.”
Kingstone CFO Jennifer Gravelle also commented: “While our underwriting loss this quarter was comparable to last year due to weather-related events, our investment results improved due to the stabilization of the capital markets. Further, we’ve continued to make great progress on our disciplined expense reduction efforts, an important part of building a strong foundation for sustained growth.”
“We’ve already made inroads on Kingstone 3.0, our four-pillar strategy for 2023 and 2024, which we introduced last quarter,” added COO Meryl Golden. “We’re rapidly offloading our unprofitable non-New York book of business to enhance our bottom line, are seeing average premiums up materially due to rate changes and updated replacement costs, have kept our tight underwriting criteria in place and implemented a host of initiatives to manage our PML, and are reporting that our expense ratio is down considerably and continues to decline. I’m optimistic for Kingstone’s future and remain laser-focused on implementing our strategic plan that will restore us to profitability and deliver long term value for shareholders.”
