Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| Our pricing team has done a fantastic job with rate filing to manage our overall rate level in the face of loss trends that we and the industry have been seeing |
| Kingstone is poised for a profitable 2024 |
| I am so proud of the company that we've become |
| I am delighted that we have made such great progress in this area |
| So we have a huge opportunity to increase our growth in downstate New York, and we hope to do that going forward |
| That makes me confident that 2024 will be a great year for the company and its shareholders |
| We did an excellent job managing our catastrophe reinsurance renewal, which resulted in a much lower increase than anticipated |
| As the quarters progress and the benefits of what we've done are reflected, I'm confident that you'll continue to see the progress we've made reflected in our financial results |
| Core margins are expanding as average premiums are increasing and cost savings and efficiencies are taking hold |
| Please take your time going through the details contained in the press release and the 10-Q as you will see that the underlying core business is profitable, with a combined ratio of 96.4% for the quarter |
| Core premiums are growing, up just under 10% year-to-date |
| The improvement in our attritional loss ratio was driven by lower frequency, which is believed to be the result of better risk selection in our select product |
| But at the end of the day, we have now priced for this increased severity in our product, and so that, along with the decline in frequency, will result in a better loss ratio next year |
| Let me point out that, for the trailing 12 months, we've realized a 25.5% increase in average premiums for our legacy homeowner product in New York as a result of the combination of rate and replacement cost updates |
| We all recognize the benefits of having low expenses, and we will have a new stretch goal through 2024 to reduce expenses below 30% |
| While I'll never say we are done, we have accomplished an incredible amount |
| We have achieved our goal for the year, a net expense ratio of 33, a 4.2 percentage point reduction from the prior year |
| So I view this as a huge opportunity for Kingstone |
| Unidentified Participant Want to congratulate you for hitting your expense ratio? Very, very good |
| We have done and continue to do everything we can to bring Kingstone to a consistent and sustainable level of profitability |
| Thanks for joining us bright and early on Monday morning and have a fantastic day |
| In Q3, we were successful in reducing our non-core policies in force by 17% from the prior quarter and non-core policies in force are now down 35% from year-end 2022 |
| This strategy was successful, and this allowed us to buy to a lower limit while maintaining the same risk tolerance, and as such, the increase to ceded premiums was minimized |
| I also want to mention our relentless focus on improving our cost structure |
| Our strategy for the near term is to return to our roots as the premier writer of coastal property insurance in downstate New York, our core business, and we have been working hard to reduce our footprint outside of New York, our non-core business |
| Our investment income was slightly higher in the third quarter |
| We were fortunate that Jen joined us earlier in the year and brought with her the reinsurance experience she's gained from her time in Florida |
| For the third quarter of 2023, Kingstone recorded a net loss of $3.5 million or $0.33 per diluted share, improving from a net loss of $4 million or $0.38 per diluted share for the same period last year |
| The net loss and LAE ratio was up 3.5 points from the prior year to 78.5% |
| We are smaller, highly efficient, nimble and focus on expanding the benefits that Kingstone 2.0 and Kingstone 3.0 have enabled |
| Statement |
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| From the macroeconomic perspective, the increased interest rates continue to apply pressure on our bond portfolio, resulting in unrealized losses on those investments |
| We do have a little bit of an underwriting loss for the quarter going into the statutory numbers as well |
| The net written premiums were down 4.8% to $52 million, a decrease of $2.6 million from $54.6 million in the prior year period |
| For the current quarter, our operating EBITDA was a loss of $1.8 million |
| The large multi-line competitors have pulled back even further due to reinsurance costs and other factors |
| Most of the catastrophe losses were from a rain event that hit downstate New York particularly hard the last few days of September |
| And in addition to that, as Jen mentioned, we have had an increase in the number of large losses this year |
| One is insolvent and the other has a moratorium on new business for about two years |
| You increased a few losses along the way |
| So what I can tell you for the quarter is that our frequency is down, which is really the leading indicator for what losses will be |
| Our estimate is that the non-core book will decline by close to 50% by the end of this year and by more than 80% by the end of next year |
| And the brokers will tell you that it's the hardest market they've ever seen |
| We have seen two years of dramatic pricing increases in catastrophe reinsurance costs and expected this year to be even worse |
| So then your question about losses |
| The attritional or non-cat loss ratio was 70.8%, 1.6 points lower than the loss ratio in the third quarter last year |
| One strategy we deployed to reduce cost was to slow core new business writings of the highest cost policies, those contributing the most to our P&L |
| So, our frequency is down, we believe, because we're writing a higher, a more responsible customer in our select program |
| These actions have been offset by a higher severity due to inflation as well as elevated number of large losses |
| For the third quarter, the net underwriting expense ratio decreased 5.2 points to 31.7%, the lowest in the company's history |
| Non-core is shrinking, and by this time next year, the drag on our financials will be immaterial, if not gone |
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