Kingstone Announces 2018 Third Quarter Financial Results
Company to Host Conference Call on
Financial and Operational Highlights
2018 Third Quarter
(All results are compared to prior year period unless otherwise noted)
- Net income decreased 3.4% to
$3.9 million or$0.36 per diluted share - Net operating income1 decreased 9.9% to
$3.7 million or$0.34 per diluted share - Net premiums earned increased 28.0% to
$27.5 million - Direct written premiums increased 18.1%; Personal lines grew by 21.8%
- Net combined ratio of 86.0% compared to 69.8%
- Return on average common equity (annualized) of 17.5%
- Operating return on average common equity (annualized)1 of 16.2% down from 17.6%
1 These measures are not based on GAAP and are defined and reconciled to the most directly comparable GAAP measures in Form 8-K Exhibit 99.2 “Additional Financial Information for Q3 2018”.
Quarterly Dividend of
The Company announced that its Board of Directors declared a quarterly dividend of
Management Commentary
In addition, our expense ratio this quarter inched upward reflecting our continued investment in growth. As we look at the cost of core operations exclusive of the new states, we continue to work hard on maintaining expense efficiencies, and we see the ratio of other underwriting expenses to direct written premium holding steady at 13.4%. We are working hard to build an exemplary
Financial Highlights Table
Three Months Ended |
Nine Months Ended |
||||||||||||||||||||||||||
($ in thousands except per share data) |
2018 |
2017 |
% Change |
2018 |
2017 |
% Change |
|||||||||||||||||||||
Direct written premiums | $ | 38,785 | $ | 32,840 | 18.1 | % | $ | 107,175 | $ | 89,424 | 19.9 | % | |||||||||||||||
Net written premiums | $ | 36,102 | $ | 32,261 | 11.9 | % | $ | 87,767 | $ | 68,723 | 27.7 | % | |||||||||||||||
Net premiums earned | $ | 27,534 | $ | 21,514 | 28.0 | % | $ | 74,476 | $ | 54,838 | 35.8 | % | |||||||||||||||
Total ceding commission revenue | $ | 1,045 | $ | 1,718 | -39.2 | % | $ | 4,431 | $ | 8,208 | -46.0 | % | |||||||||||||||
Net investment income | $ | 1,602 | $ | 1,033 | 55.1 | % | $ | 4,543 | $ | 2,917 | 55.7 | % | |||||||||||||||
|
$ | 3,934 | $ | 4,074 | -3.4 | % | $ | 3,973 | $ | 8,055 | -50.7 | % | |||||||||||||||
|
$ | 0.36 | $ | 0.38 | -5.3 | % | $ | 0.37 | $ | 0.77 | -51.9 | % | |||||||||||||||
Comprehensive income (loss) | $ | 3,836 | $ | 4,389 | -12.6 | % | $ | 692 | $ | 9,294 | -92.6 | % | |||||||||||||||
Net operating income* | $ | 3,656 | $ | 4,060 | -10.0 | % | $ | 4,193 | $ | 7,992 | -47.5 | % | |||||||||||||||
Net operating income diluted EPS* | $ | 0.34 | $ | 0.38 | -10.5 | % | $ | 0.39 | $ | 0.76 | -48.7 | % | |||||||||||||||
Return on average equity (annualized) | 17.5 | % | 17.7 | % | -0.2 pts | 5.7 | % | 14.3 | % | -8.6 pts | |||||||||||||||||
Net loss ratio | 48.3 | % | 32.9 | % | 15.4 pts | 56.0 | % | 41.6 | % | 14.4 pts | |||||||||||||||||
Net underwriting expense ratio | 37.7 | % | 36.9 | % | 0.8 pts | 38.1 | % | 35.2 | % | 2.9 pts | |||||||||||||||||
Net combined ratio | 86.0 | % | 69.8 | % | 16.2 pts | 94.1 | % | 76.8 | % | 17.3 pts | |||||||||||||||||
Effect of catastrophes on net combined ratio | 1.4 pts | 0 pts | 1.4 pts | 8.8 pts | 0 pts | 8.8 pts | |||||||||||||||||||||
Net combined ratio excluding the effect |
84.6 | % | 69.8 | % | 14.8 pts | 85.3 | % | 76.8 | % | 8.5 pts |
* These measures are not based on GAAP and are defined and reconciled to the most directly comparable GAAP measures in “Additional Financial Information for Q3 2018” (visit www.kingstonecompanies.com). |
2018 Third Quarter Financial Review
Net Income:
Net income decreased by 3.4% to
Earnings per share (“EPS”):
Kingstone reported EPS of
Direct Written Premiums, Net Written Premiums and Net Premiums Earned (See Definitions and Non-GAAP Measures below)
Direct written premiums for the third quarter of 2018 were
Net written premiums increased 11.9% 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 86.0% for the three month period ended
Balance Sheet / Investment Portfolio
Kingstone’s cash and investment holdings were
1 These measures are not based on GAAP and are defined and reconciled to the most directly comparable GAAP measures in “Additional Financial Information for Q3 2018” (visit www.kingstonecompanies.com).
Net investment income increased 55.1% to
Accumulated Other Comprehensive Income/Loss (AOCI), net of tax
As of
Book Value
The Company’s book value per share at
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 represents 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 exclusive of realized investment gains, net of tax. Net income 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 property and casualty insurance holding company whose principal operating subsidiary,
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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