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Kingstone Reports 2013 Results Direct Premiums Written Increase 23% To $60.4 Million

Kingstone Companies, Inc. (NASDAQ:KINS) reported its results of operations for the year ended December 31, 2013. Net income was $2.012 million, or $.50 per share, up from the $0.767 million, or $.20 per share, earned for the year ended December 31, 2012. Net operating income 1 for 2013 was $1.632 million, or $.40 per diluted share, as compared to $.577 million, or $.15 per diluted share, generated in 2012. Book value per share was $4.91, up 15.8% from year end 2012. Policies in force at December 31, 2013 totaled 36,596, up 21.1% over year end 2012.

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.”

       

Financial Highlights

For the Years Ended December 31,
  2013       2012     $ Change % Change

(000's except per share amounts andpercentages)

Direct premiums written (1)

$  

60,449

$  

49,252

$  

11,197 22.7 %
Net premiums written (1) $ 24,839 $ 19,559 $ 5,280 27.0 %
Net premiums earned $ 22,225 $ 17,217 $ 5,008 29.1 %
Ceding commission revenue $ 11,673 $ 9,690 $ 1,983 20.5 %
Net investment income $ 1,170 $ 1,015 $ 155 15.3 %
Net income $ 2,012 $ 767 $ 1,245 162.3 %
Net income per diluted share $ 0.50 $ 0.20 $ 0.30 150.0 %
Weighted average diluted shares 4,060 3,872 188 4.9 %
Comprehensive income $ 1,294 $ 1,420 $ (126 ) (8.9 ) %
Net operating income (1) $ 1,632 $ 577 $ 1,055 182.8 %
Operating income per diluted share (1) $ 0.40 $ 0.15 $ 0.25 166.7 %
Net loss ratio 61.1 % 65.3 % (6.4 ) %
Net underwriting expense ratio 27.5 % 28.6 % (3.9 ) %
Net combined ratio 88.6 % 94.0 % (5.7 ) %
 
 
As of December 31, 2013
  2013     2012   $ Change % Change
Book value per share $ 4.91 $ 4.24 $ 0.67 15.8 %
Statutory surplus $ 31,830 $ 14,346 $ 17,484 121.9 %
 

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.”

Selected income and other data for the four years ended December 31, 2013 is shown below (we acquired Kingstone Insurance Company on July 1, 2009; therefore, comparative data prior to 2010 is not meaningful):

         
For the Years Ended
December 31,
2013   2012 2011 2010
(in thousands, except per share data and ratios)
Revenue:
Gross premiums written:
Personal lines $ 43,669 $ 33,778 $ 26,894 $ 21,691
Commercial lines 9,129 8,003 5,786 3,030
Commercial auto 4,839 5,691 6,316 6,881
Livery physical damage and other   2,858     1,804     1,750     1,658  
Total gross premiums written $ 60,495   $ 49,276   $ 40,746   $ 33,260  
Net premiums written $ 24,839   $ 19,560   $ 16,296   $ 13,735  
Net premiums earned $ 22,225 $ 17,217 $ 14,869 $ 11,136
Ceding commission revenue 11,673 9,690 10,625 8,583
Net investment income 1,170 1,015 754 617
Net realized gain (loss) on sale of investments 576 288 524 349
Other income   922     868     921     911  
Total revenue   36,566     29,078     27,693     21,596  
Expenses:
Loss and loss adjustment expenses 13,587 11,235 8,571 6,426
Other underwriting expenses 18,382 15,095 13,603 10,836
Other operating expenses 1,099 1,000 1,203 1,610
Depreciation and amortization 646 596 603 615
Interest expense   76     82     121     260  
Total expenses   33,790     28,008     24,101     19,747  
Income from continuing operations before taxes 2,776 1,070 3,592 1,849
Income tax expense   764     303     1,089     767  
Net income from continuing operations 2,012 767 2,503 1,082
Loss from discontinued operations, net of taxes   -     -     -     (99 )
Net income 2,012 767 2,503 983
Other comprehensive income (loss) net of tax $ (718 ) $ 653   $ 225   $ (71 )
Comprehensive income $ 1,294   $ 1,420   $ 2,728   $ 912  
 
Earnings per share:
Basic $ 0.51   $ 0.20   $ 0.65   $ 0.29  
Diluted $ 0.50   $ 0.20   $ 0.64   $ 0.29  
Book value per share $ 4.91   $ 4.24   $ 4.07   $ 3.37  
Ratios to net premiums earned:
Net loss and loss adjustment expense ratio 61.1 % 65.3 % 57.6 % 57.7 %
Net underwriting expense ratio (1)   27.5 %   28.6 %   17.1 %   17.0 %
Combined ratio   88.6 %   93.9 %   74.7 %   74.7 %
 
Best Financial Strength Rating of
Kingstone Insurance Company (2) B+ B+ B+ B
Best Issuer Credit Rating of
Kingstone Companies, Inc. (2) bb- bb- bb- b+
Demotech Financial Stability Rating ® of A, A, A, A,
Kingstone Insurance Company Exceptional Exceptional Exceptional Exceptional
 

(1) Net underwriting expense ratio is calculated by dividing (a) other underwriting expenses less ceding commission revenue plus insurance underwriting business other income by (b) net premiums earned.

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