Kingstone Announces 2018 Fourth Quarter Financial Results
Company to Host Conference Call on
Financial and Operational Highlights
2018 Fourth Quarter
(All results are compared to prior year period unless otherwise noted)
- Direct written premiums1 increased 23.0%; Personal lines grew by 23.6%
- Net premiums earned increased 28.5% to
$28.9 million - Net loss of
$0.9 million or$0.08 per diluted share including an unrealized decline in value of equity securities of$2.1 million or$.16 per diluted share, net of tax - Net operating income1 decreased 55.1% to
$0.9 million or$0.08 per diluted share - Net combined ratio of 96.4% compared to 89.9%
- Return on average common equity (annualized) of -3.9%
- Operating return on average common equity (annualized)1 of 3.9% down from 8.2%
2018 Full Year
(All results are compared to prior year)
- Direct written premiums1 increased 20.7%; Personal lines grew by 25.0%
- Net premiums earned increased 33.7% to
$103.4 million - Net investment income increased 49.7% to
$6.2 million - 2018 net catastrophe losses, including associated loss adjustment expenses and impact on contingent ceding commissions, are estimated at
$5.8 million - Net loss ratio of 56.4% compared to 44.2%. Net loss ratio, excluding Q4 2018 catastrophe losses1, of 50.4% compared to 44.2%
- Net income of
$3.1 million or$0.29 per diluted share including an unrealized decline in value of equity securities of$1.8 million or$.17 per diluted share, net of tax - Net operating income1 decreased 49.0% to
$5.1 million or$0.47 per diluted share - Net combined ratio of 94.8% compared to 80.6%
- Return on average common equity of 3.4%
- Operating return on average common equity1 of 5.5% down from 13.1%
Quarterly Dividend of
The Company previously announced that its Board of Directors declared a quarterly dividend of
________________
1 These measures are not based on accounting principles generally accepted in
Management Commentary
Our net underwriting expense ratio remained flat for the quarter while our net written premiums grew 32.6% compared to the fourth quarter 2017. As we look at the cost of core operations exclusive of the new states, we continue to work hard on maintaining expense efficiencies, and we see the ratio of other underwriting expenses to direct written premium1 holding steady at 14.3%. We are working hard to build an exemplary
For 2019 we expect a combined ratio excluding catastrophes between 82% and 84%, and catastrophe losses of approximately 4 points.
Financial Highlights Table |
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Three Months Ended | Years Ended | |||||||||||||||||
|
|
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($ in thousands except per share data) |
2018 |
2017 |
% Change |
2018 |
2017 |
% Change |
||||||||||||
Direct written premiums1 | $ | 39,541 | $ | 32,151 | 23.0% | $ | 146,716 | $ | 121,575 | 20.7% | ||||||||
Net written premiums1 | $ | 32,027 | $ | 24,146 | 32.6% | $ | 119,794 | $ | 92,869 | 29.0% | ||||||||
Net premiums earned | $ | 28,939 | $ | 22,513 | 28.5% | $ | 103,415 | $ | 77,351 | 33.7% | ||||||||
Total ceding commission revenue | $ | 902 | $ | 1,725 | -47.7% | $ | 5,333 | $ | 9,933 | -46.3% | ||||||||
Net investment income | $ | 1,643 | $ | 1,215 | 35.2% | $ | 6,186 | $ | 4,133 | 49.7% | ||||||||
|
$ | (880) | $ | 1,932 | n/a | $ | 3,093 | $ | 9,986 | -69.0% | ||||||||
|
$ | (0.08) | $ | 0.18 | n/a | $ | 0.29 | $ | 0.94 | -69.1% | ||||||||
Comprehensive income (loss) | $ | (1,169) | $ | 1,537 | n/a | $ | (477) | $ | 10,831 | n/a | ||||||||
Net operating income1 | $ | 872 | $ | 1,941 | -55.1% | $ | 5,065 | $ | 9,932 | -49.0% | ||||||||
Net operating income diluted earnings1 | ||||||||||||||||||
per share | $ | 0.08 | $ | 0.18 | -55.6% | $ | 0.47 | $ | 0.94 | -50.0% | ||||||||
Return on average equity (annualized) | -3.9% | 8.2% | -12.1 pts | 3.4% | 13.2% | -9.8 pts | ||||||||||||
Net loss ratio | 57.2% | 50.5% | 6.7 pts | 56.4% | 44.2% | 12.2 pts | ||||||||||||
Net underwriting expense ratio | 39.2% | 39.4% | -0.2 pts | 38.4% | 36.4% | 2 pts | ||||||||||||
Net combined ratio | 96.4% | 89.9% | 6.5 pts | 94.8% | 80.6% | 14.2 pts | ||||||||||||
Effect of catastrophes on net combined ratio | 0.4 pts | 0 pts | 0.4 pts | 6.5 pts | 0 pts | 6.5 pts | ||||||||||||
Net combined ratio excluding the effect | ||||||||||||||||||
of catastrophes1 | 96.0% | 89.9% |
6.1 pts |
88.3% | 80.6% |
7.7 pts |
||||||||||||
1 |
These measures are not based on GAAP and are defined and reconciled to the most directly comparable GAAP measures in Form 8-K Exhibit 99.2 “Additional Financial Information for Q4 2018” (also available at www.kingstonecompanies.com). |
|
2018 Fourth Quarter and Year End Financial Review
Net Income (Loss):
There was a net loss of
Earnings per share (“EPS”):
Kingstone reported a (loss) of
Direct Written Premiums, Net Written Premiums and Net Premiums Earned (See Definitions and Non-GAAP Measures below):
Direct written premiums for the fourth quarter of 2018 were
Net written premiums increased 32.6% to
Net premiums earned for the quarter ended
Net Loss Ratio:
For the quarter ended
Net Other Underwriting Expense Ratio:
For the quarter ended
We refer to our
Net Combined Ratio:
Kingstone’s net combined ratio was 96.4% for the three-month period ended
Balance Sheet / Investment Portfolio
Kingstone’s cash and investment holdings were
Net investment income increased 35.2% to
Accumulated Other Comprehensive Income/Loss (AOCI), net of tax
As of
Book Value
The Company’s book value per share at
________________
1 These measures are not based on GAAP and are defined and reconciled to the most directly comparable GAAP measures in Form 8-K Exhibit 99.2 “Additional Financial Information for Q4 2018 and Year Ended 2018” (also available at www.kingstonecompanies.com).
FOR ADDITIONAL INFORMATION PLEASE VISIT OUR WEBSITE AT WWW.KINGSTONECOMPANIES.COM.
Conference Call Details
Management will discuss the Company’s operations and financial results in a conference call on
The dial-in numbers are:
(877) 407-3105 (
(201) 493-6794 (International)
Accompanying Webcast
The call will be simultaneously webcast over the Internet via the Kingstone website or by clicking on the conference call link:
The webcast will be archived and accessible for approximately 30 days.
Definitions and Non-GAAP Measures
Direct written premiums represent the total premiums charged on policies issued by the Company during the respective fiscal period. Net premiums written are direct written premiums less premiums ceded to reinsurers. Net premiums earned are net premiums written that are pro-rata earned during the fiscal period presented. All of the Company’s policies are written for a twelve-month period. Management uses direct written premiums and net written premiums, along with other measures, to gauge the Company’s performance and evaluate results.
Core direct written premiums - represents the total premiums charged on policies issued by the Company during the respective fiscal period from its business located in
Expansion direct written premiums - represents the total premiums charged on policies issued by the Company during the respective fiscal period from its business located in newly licensed states (i.e., outside
Core other underwriting expenses - represents the total other underwriting expenses incurred by the Company during the respective fiscal period from its business located in
Expansion other underwriting expenses - represents the total other underwriting expenses incurred by the Company during the respective fiscal period from its business located in newly licensed states (i.e., outside
Net operating income - is net income (loss) exclusive of realized investment gains, net of tax. Net income (loss) is the GAAP measure most closely comparable to net operating income.
Operating return on average common equity - is net operating income divided by average common equity. Return on average common equity is the GAAP measure most closely comparable to operating return on average common equity.
Management uses net operating income and operating return on average common equity, along with other measures, to gauge the Company’s performance and evaluate results, which can be skewed when including realized investment gains, which may vary significantly between periods. Net operating income and operating return on average common equity are provided as supplemental information, are not a substitute for net income or return on average common equity and do not reflect the Company’s overall profitability or return on average common equity.
Net combined ratio excluding the effect of catastrophes - is a non-GAAP ratio, which is computed as the difference between GAAP net combined ratio and the effect of catastrophes on the net combined ratio. We believe that this ratio is useful to investors and it is used by management to reveal the trends in our business that may be obscured by catastrophe losses. Catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the net combined ratio. We believe it is useful for investors to evaluate this component separately and in the aggregate when reviewing our underwriting performance. We also provide it to facilitate a comparison to our outlook on the net combined ratio excluding the effect of catastrophes. The most directly comparable GAAP measure is the net combined ratio. The net combined ratio excluding the effect of catastrophes should not be considered a substitute for the net combined ratio and does not reflect the Company’s net combined ratio.
About
Kingstone is a northeast regional property and casualty insurance holding company whose principal operating subsidiary is
Forward-Looking Statement
Statements in this press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those included in forward-looking statements due to a variety of factors. For more details on factors that could affect expectations, see Part II, Item 7 of our Annual Report on Form 10-K for the year ended
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