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Kingstone Companies Announces Second Quarter Results

Stocks in this article: KINS

Kingstone Companies, Inc. (NASDAQ: KINS) reported its results for the period ended June 30, 2013. Book value per share was $4.09, a decline of $.24 from the previous quarter. Net income was $68,000, or $.02 per share, down from $560,000 and $.15 per share earned during the comparable period in 2012. Net operating (loss) income 1 for the three months ended June 30, 2013 was ($97,000), or ($.03) per share, as compared to $556,000 and $.14 per share generated during the comparable period in 2012.

Direct premiums written for the quarter were $15.9 million, 27.7% greater than for Q2 2012. Net premiums earned in the quarter were up 12.3%. Policies in force increased to 32,800 at June 30, 2013, up 21% from the prior year amount.

The Company announced that its board declared a quarterly dividend of $.04 per share payable on September 13, 2013 to shareholders of record at the close of business on August 30, 2013. This marks the ninth consecutive quarter of dividend distributions.

The Company also announced that, at its annual meeting of shareholders held on August 13, 2013, its shareholders approved increases to the number of common and preferred shares authorized to be issued along with an increase to the number of shares available for issuance under its equity participation plan. All directors were re-elected and the shareholders approved the compensation paid to the Company's executive officers.

_____________

1This measure is not based on U.S. generally accepted accounting principles (“GAAP”) and is defined and reconciled to the most directly comparable GAAP measure in “Information Regarding Non-GAAP Measures.”

Operating Highlights

  • Direct premiums written in the second quarter of 2013 were up by 27.7% over the second quarter of 2012.
  • Net premiums written in the second quarter were up 24.4% over 2012.
  • Net premiums earned in the second quarter were up by 12.3% over 2012.
  • Ceding commission revenue in the first quarter decreased by 19.8% versus 2012.
  • Q2 net loss ratio was 69.3% as compared to 57.8% in Q2 2012.
  • Q2 combined ratio was 101.9% as compared to 76.2% in Q2 2012.

Financial Highlights

 
  For the Three Months Ended June 30,   For the Six Months Ended June 30,
2013   2012  

$ Change

  % Change 2013   2012  

$ Change

  % Change
(000's except per share amounts and percentages)
Direct premiums written (1) $ 15,881 $ 12,439 $ 3,442 27.7 % $ 28,726 $ 23,675 $ 5,051   21.3 %
Net premiums written (1) $ 5,994 $ 4,817 $ 1,177 24.4 % $ 10,965 $ 9,197 $ 1,768 19.2 %
Net premiums earned $ 4,676 $ 4,165 $ 511 12.3 % $ 9,299 $ 8,137 $ 1,162 14.3 %
Ceding commission revenue $ 2,334 $ 2,911 $ (577 ) (19.8 ) % $ 4,628 $ 5,815 $ (1,187 ) (20.4 ) %
Net investment income $ 275 $ 230 $ 45 19.6 % $ 558 $ 497 $ 61 12.3 %
Interest expense $ 18 $ 20 $ (2 ) (10.0 ) % $ 39 $ 41 $ (2 ) (4.9 ) %
Net income $ 68 $ 560 $ (492 ) (87.9 ) % $ 259 $ 1,326 $ (1,067 ) (80.5 ) %
Net income per diluted share $ 0.02 $ 0.15 $ (0.13 ) (86.7 ) % $ 0.07 $ 0.35 $ (0.28 ) (80.0 ) %
Comprehensive (loss) income $ (764 ) $ 755 $ (1,519 ) (201.2 ) % $ (279 ) $ 1,815 $ (2,094 ) (115.4 ) %
Net operating (loss) income (1) $ (97 ) $ 556 $ (653 ) (117.4 ) % $ 25 $ 1,295 $ (1,270 ) (98.1 ) %
Operating (loss) income per diluted share (1) $ (0.02 ) $ 0.14 $ (0.16 ) (114.0 ) % $ 0.01 $ 0.34 $ (0.33 ) (97.1 ) %

____________________

1These measures are not based on GAAP and are defined and reconciled to the most directly comparable GAAP measures in “Information Regarding Non-GAAP Measures.”

Management Commentary

Barry Goldstein, Kingstone’s Chairman and CEO, stated, “Similar to the first quarter of 2013, our business was adversely affected by the continuing financial accounting impact of Superstorm Sandy which occurred on October 29, 2012. Due to the terms of the now expired (June 30, 2013) reinsurance treaty, no contingent commissions were earned in Q2, in spite of our excellent loss and loss adjustment expense ratio for Personal Lines in 2013. The computation for contingent commissions earned, through our Personal Lines quota share treaty, included a significant portion of the catastrophe losses incurred last year, elevating our loss ratio and eliminating the contingent commissions. Through June 30, 2013, our Personal Lines direct premium writings are up 26% over the first six months of 2012.

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