Market Overview

Kingstone Announces 2017 Third Quarter Financial Results


Company to Host Conference Call on November 10, 2017 at 8:30 a.m. ET

Kingstone Companies, Inc. (Nasdaq: KINS) (the "Company" or
"Kingstone"), a multi-line property and casualty insurance holding
company, today announced its financial results for the quarter ended
September 30, 2017.

Financial and Operational Highlights

2017 Third Quarter
(All results are compared to prior
year period unless otherwise noted)

  • Net income increased 17.7% to $4.1 million or $0.38 per diluted share
  • Net operating income1 increased 23.0% to $4.1 million or
    $0.38 per diluted share
  • Net premiums earned increased 37.5% to $21.5 million
  • Direct written premiums1 increased 20.9%; Personal lines
    grew by 25.2%
  • Net combined ratio of 69.8% compared to 67.4%
  • Return on average common equity (annualized) of 17.7%
  • Operating return on average common equity (annualized)1 of
  • Book value per share increased to $8.83, up 23.3% over Q3 2016

Quarterly Dividend of $0.08 per share

The Company announced that its Board of Directors declared a quarterly
dividend of $0.08 per share payable on December 15, 2017 to stockholders
of record at the close of business on November 30, 2017. This is
Kingstone's 26th consecutive quarterly dividend.

Management Commentary

Kingstone's Chairman and CEO, Barry Goldstein, commented, "As hoped, the
heightened quoting and binding activity from our Select Producers,
following our A.M. Best upgrade to "A- Excellent" continues. New policy
issuance in New York is at a record level. The response from our Select
Producers validates our team's decision to pursue the rating and
justifies the capital actions taken by KINS earlier this year to bolster
the capital base of Kingstone Insurance Company ("KICO"). We are making
good use of the new equity, seen by our quarterly ROE of 17.7%
(annualized) driving back to our long stated goal of 20%. Our
conservative investment portfolio, with fixed income accounting for 90%
of our holdings, generated our first ever quarter of net investment
income exceeding $1 million.

Our goal of becoming a northeast regional underwriter focusing on
agent-only ("Never Direct") sales of our personal and small business
polices is well underway. We continue to make traction in our expansion
plan, and the offering of New Jersey Homeowners policies is now
contributing to our profitable growth. We received approval for our
Rhode Island Homeowners product in October and will begin writing
business there by year-end. In late October we were informed by The
Commonwealth of Massachusetts Division of Insurance that our license
request was preliminarily granted. Additional applications are pending
in New Hampshire and Maine. We center our distribution through small
professionally run agencies, those often overlooked or disregarded by
national carriers. We are confident that our new products will compete
effectively against carriers currently operating in these areas."

Kingstone's EVP and Chief Actuary, Ben Walden, commented on the
underwriting results for the quarter. "We are excited to report
consistently outstanding results again this quarter, as Kingstone posted
another record-high for underwriting profits. In addition, our top line
growth accelerated considerably due to the A.M. Best rating upgrade
achieved earlier this year that had a full quarter's worth of impact. In
2017, we have been able to accelerate our growth rate while continuing
to drive superior underwriting results. This is not an accident, but is
the result of a great deal of hard work put in by our dedicated team of
employees. The partnerships we have forged over the years with Select
Producers who value Kingstone's consistent prices, products, and service
continue to drive our success. Reviewing the results for the quarter
compared to 2016, consistency is the theme. Our loss ratio of 32.9% for
the quarter was almost identical to our outstanding result of 32.8% from
third quarter 2016. We were fortunate to have favorable weather patterns
and no impact from large storm events. We continue to observe favorable
trends in claim frequency compared to 2016, even as our mix of business
shifts towards new business. Our net combined ratio of 69.8% for the
quarter is not a fluke, as it is the second quarter in the last five
where we have posted a combined ratio below 70%. Our growth rate in
personal lines accelerated as we are realizing opportunities that come
along with an A- rating from A.M. Best."

Mr. Walden concluded, "Our core net loss ratio excluding severe winter
weather and prior year loss development was 33.1% for third quarter
2017, nearly identical to the 33.2% core loss ratio for third quarter
2016. Highlighting our consistency, the year-to-date core loss ratio of
42.1% is also within half a point of the 2016 core loss ratio of 42.4%
through September. Also consistent is our reserve adequacy. Prior year
loss development had a favorable impact of 0.2 points in the third
quarter, compared to a 0.4 point favorable impact in the third quarter
of 2016. For the year to date, we have recorded 0.5 points of favorable
reserve development. Through September, our year-to-date combined ratio
has improved 2.2 points to 76.8%, which continues to put us on track
towards our most profitable year ever."

(1) This measure is not based on GAAP and is defined and reconciled to
the most directly comparable GAAP measure in "Information Regarding
Non-GAAP Measures" below.


Financial Highlights Table

Financial Highlights

Three Months Ended
September 30,

Nine Months Ended
September 30,

($ in thousands except per share data)   2017       2016     % Change   2017       2016     % Change
Direct written premiums* $ 32,840 $ 27,171 20.9 % $ 89,424 $ 76,375 17.1 %
Net written premiums* $ 32,261 $ 17,232 87.2 % $ 68,723 $ 48,847 40.7 %
Net premiums earned $ 21,514 $ 15,646 37.5 % $ 54,838 $ 45,189 21.4 %
Total ceding commission revenue $ 1,718 $ 2,935 -41.5 % $ 8,208 $ 8,274 -0.8 %
Net investment income $ 1,033 $ 709 45.7 % $ 2,917 $ 2,286 27.6 %
U.S. GAAP Net income $ 4,074 $ 3,461 17.7 % $ 8,055 $ 6,844 17.7 %
U.S. GAAP Diluted EPS $ 0.38 $ 0.43 -11.6 % $ 0.77 $ 0.89 -13.5 %
Comprehensive income $ 4,389 $ 3,341
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