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Kingstone Companies Announces Third Quarter Results

Stocks in this article: KINS

Kingstone Companies, Inc. (NASDAQ:KINS) reported its results for the period ended September 30, 2013. (References are to the three months ended September 30, 2013 unless stated otherwise).

Kingstone Companies, Inc. continued to grow as direct premiums written for the quarter were $15.9 million, up 24.8% from Q3 2012. Net premiums earned were $6.1 million, up 38.7%. Policies in force increased to 34,600, up 19.8%. Net income was $1,662,000, or $.43 per diluted share, up from $448,000 and $.11 per share. Net operating income was $1,600,000 or $.44 per share compared to $405,000 and $.12 per share. (1) Book value per share was $4.47, an increase of $.38 or 9.3% from June 30, 2013.

The Company announced that its board declared a quarterly dividend of $.04 per share payable on December 13, 2013 to shareholders of record at the close of business on November 29, 2013. This marks the tenth consecutive quarter of dividend distributions.

As previously announced, the Company filed a Registration Statement with the Securities and Exchange Commission (the “SEC”) on Form S-1 on October 15, 2013 for the proposed public offering of $15 million of its common stock. The Company intends to grant the underwriter a 30-day option to purchase up to an additional 15% of the number of shares offered. The Company intends to use the net proceeds of the offering to contribute to the surplus of Kingstone Insurance Company to support growth (subject to the approval of the NYS Department of Financial Services); to repay indebtedness; and for general corporate purposes, which may include acquisitions.

A registration statement relating to these securities has been filed with the SEC but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time that the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. A copy of the registration statement can be accessed, when available, through the SEC’s website at www.sec.gov.

A copy of the preliminary prospectus related to the offering may be obtained, when available, from Sandler O'Neill + Partners, L.P., Attention: Syndicate Department, 1251 Avenue of the Americas, 6th Floor, New York, NY 10020, or by calling toll-free 1-866-805-4128 or emailing syndicate@sandleroneill.com.

____________________

1

 

This 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.”

Third Quarter 2013 Operating Highlights

  • Net income was $1,662,224, an increase of 271.8% over Q3 2012.
  • Direct premiums written were up by 24.8% over Q3 2012.
  • Net premiums written were up 28.6% and net premiums earned were up 38.7% over Q3 2012.
  • Ceding commission revenue increased by 33.2% versus Q3 2012.
  • Net investment income was $294,348, up 21.5% versus Q3 2012.
  • Net loss ratio was 39.8% as compared to 60.9% in Q3 2012.
  • Net underwriting expense ratio was 23.2% as compared to 25.3% in Q3 2012.
  • Net combined ratio was 63.0% as compared to 86.2% in Q3 2012.

Financial Highlights

             
For the Three Months Ended September 30, For the Nine Months Ended September 30,
    2013             2012         $   Change       % Change     2013             2012         $   Change       % Change
(000's except per share amounts and percentages)
Direct premiums written (1) $   15,926 $   12,765 $   3,161 24.8 % $   44,652 $   36,440 $   8,212 22.5 %
Net premiums written (1) $ 7,156 $ 5,565 $ 1,591 28.6 % $ 18,121 $ 14,762 $ 3,359 22.8 %
Net premiums earned $ 6,126 $ 4,417 $ 1,709 38.7 % $ 15,425 $ 12,554 $ 2,871 22.9 %
Ceding commission revenue $ 3,612 $ 2,711 $ 901 33.2 % $ 8,239 $ 8,526 $ (287 ) (3.4 ) %
Net investment income $ 294 $ 242 $ 52 21.5 % $ 853 $ 740 $ 113 15.3 %
Net income $ 1,662 $ 447 $ 1,215 271.8 % $ 1,921 $ 1,773 $ 148 8.3 %
Net income per diluted share $ 0.43 $ 0.11 $ 0.32 290.9 % $ 0.49 $ 0.47 $ 0.02 4.3 %
Weighted average diluted shares 3,888 3,936 (48 ) (1.2 ) % 3,903 3,884 19 0.5 %
Comprehensive income $ 1,580 $ 800 $ 780 97.5 % $ 1,302 $ 2,615 $ (1,313 ) (50.2 ) %
Net operating income (1) $ 1,600 $ 405 $ 1,195 295.1 % $ 1,625 $ 1,700 $ (75 ) (4.4 ) %
Operating income per basic share (1) $ 0.42 $ 0.11 $ 0.31 281.8 % $ 0.42 $ 0.45 $ (0.03 ) (6.7 ) %
Net loss ratio 39.8 % 60.9 % (21.1 )% 52.8 % 58.8 % (6.0 )%
Net underwriting expense ratio 23.2 % 25.3 % (2.1 )% 31.5 % 19.1 % 12.5 %
Net combined ratio 63.0 % 86.2 % (2.3 )% 84.3 % 77.9 % 6.4 %
 
 
As of September 30
    2013       2012   $   Change % Change
Book value per share $ 4.47 $ 4.60 $ (0.13 ) (2.8 )

%

Statutory surplus $ 16,572 $ 15,854 $ 718 4.5 %

____________________

1

  These 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, Chairman and CEO, stated “Our results speak for themselves. We posted a record quarter on many metrics. Revenues of $10.34 million were up 35.1% over Q3 2012, due to increases in net premiums earned of 38.7%, ceding commission revenue of 33.2% and net investment income of 21.5%. Quarterly net income was $1,662,224. This gave rise to an increase in book value of 9.3% as compared to June 30, 2013 and an annualized return on equity of over 40%.

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