Kingstone Companies, Inc., the multi-line regional property and casualty insurance holding company, has announced that its subsidiary, Kingstone Insurance Company (KICO), will no longer underwrite commercial liability risks.
A complete exit from commercial liability is expected to take at least 15 months, with KICO set to pull out from lines including business owners, artisans (CraftPak), special multi-peril, and commercial umbrella policies.
Chief Executive Officer (CEO) Barry Goldstein said that the company would be actively exploring alternative reinsurance arrangements to either wall off or eliminate the associated liabilities from its balance sheet.
By September 30, KICO will also have made a decision on any alternative handling of these liabilities.
Goldstein reassumed his position as CEO of Kingstone last week, less than seven months after he handed the reins over to Dale Thatcher. He returned at the request of the Board after Thatcher retired for personal reasons.
“Following our Q1 reserve strengthening for Commercial Lines, we placed a moratorium on new business, seeking to cap our exposure to these types of risks,” Goldstein explained.
“While they accounted for about 12% our total earned premiums, the associated reserves were 40% of the Company’s total,” he continued. “After a two month review, I concluded yesterday that it would be in the Company’s and shareholders’ best interest to exit these lines of business, and do so as soon as possible.”
KICO has already informed the New York State Department of Financial Services (NYS DFS) of its decision, and advised its producers. Going forward, KICO will continue to underwrite its physical damage only product.
Goldstein further stated: “These commercial liability lines are the most volatile and carry the longest claim development “tail” of any of Kingstone’s offerings.”
“They accounted for most of the adverse loss development we experienced in Q1,” he added, “and our conclusion was that based on a required capital allocation, we could not deliver acceptable returns for our shareholders.”
