Kingstone Companies, Inc. (KICO), the multi-line regional property and casualty insurance holding company, has estimated its Q1 catastrophe losses at $5 million, pre-tax, and announced a number of reforms to help its ailing Claims Department, which include strengthening its claims case and IBNR reserves.
Catastrophe losses were attributed to multiple winter catastrophe events and resulted in a 17 point impact to KICO’s quarterly combined ratio.
However, the insurer does not expect any catastrophe reinsurance recovery as no single event reached the KICO retention of $5 million.
Net losses from the winter cat events were higher than those recorded over the first quarter of 2018 due to the reduction in the quota share rate from 20% to 10% in July 2018, the company explained.
Additionally, following multiple quarters of disappointing results from its Claims Department, KICO engaged a consultant to conduct a comprehensive review of its claims operations.
“The final report concluded that there was much room for improvement in claims handling through adopting and implementing a number of industry best practices including the need to acquire more skilled and experienced staff,” said Dale Thatcher, Chief Executive Officer at Kingstone.
As part of this process, KICO announced the appointment of Bill O’Brien as its new Chief Claims Officer earlier this month.
The company has also strengthened its claims reserves by approximately $2.5 million and its IBNR reserves by an additional $2.5 million, for a total reserve charge of $5.0 million.
“The overall impact of this reserve strengthening is 17 points on the quarterly combined ratio,” O’Brien explained.
“Although this will reduce our quarterly earnings and book value per share by approximately $0.37, it will substantially strengthen our balance sheet and position us well for the future.”
