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What changed in KINGSTONE COMPANIES, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of KINGSTONE COMPANIES, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+373 added−320 removedSource: 10-K (2025-03-18) vs 10-K (2024-04-01)

Top changes in KINGSTONE COMPANIES, INC.'s 2024 10-K

373 paragraphs added · 320 removed · 253 edited across 2 sections

Item 1. Business

Business — how the company describes what it does

115 edited+33 added−33 removed171 unchanged
Biggest changeA deficiency means that the current estimate is higher than the original estimate. 12 Table of Contents (in thousands of $) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Reserve for loss and loss adjustment expenses, net of reinsurance recoverables 17,139 21,663 23,170 25,960 32,051 40,526 64,770 62,647 84,311 90,680 88,529 Net reserve estimated as of One year later 18,903 21,200 23,107 25,899 33,203 51,664 64,811 62,632 87,011 90,673 Two years later 18,332 21,501 24,413 26,970 42,723 55,145 65,113 65,339 88,418 Three years later 18,687 22,576 25,509 33,298 43,780 56,346 67,291 67,135 Four years later 19,386 23,243 28,638 33,342 43,973 58,048 68,612 Five years later 19,449 25,442 28,506 33,120 43,774 57,957 Six years later 20,265 25,353 28,849 32,936 43,777 Seven years later 20,069 25,445 28,734 32,617 Eight years later 20,129 25,324 28,499 Nine years later 19,963 25,200 Ten years later 19,853 Net cumulative redundancy (deficiency) (2,714 ) (3,537 ) (5,329 ) (6,657 ) (11,726 ) (17,431 ) (3,842 ) (4,488 ) (4,107 ) 7 (in thousands of $) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Cumulative amount of reserve paid, net of reinsurance recoverable through One year later 6,156 8,500 8,503 9,900 15,795 23,075 27,454 20,137 32,419 35,854 Two years later 10,629 12,853 14,456 17,187 26,168 35,924 35,142 30,262 47,547 Three years later 13,571 16,564 19,533 23,484 32,704 40,264 42,365 40,702 Four years later 16,166 19,838 22,816 27,203 35,510 45,085 49,581 Five years later 17,262 21,976 25,210 28,833 37,846 48,650 Six years later 18,265 23,280 26,298 30,141 39,596 Seven years later 18,954 24,146 26,945 30,693 Eight years later 19,511 24,633 27,013 Nine years later 19,635 24,654 Ten years later 19,640 Net reserve - December 31, 17,139 21,663 23,170 25,960 32,051 40,526 64,770 62,647 84,311 90,680 88,529 * Reinsurance Recoverable 17,364 18,250 16,707 15,777 16,749 15,671 15,728 20,154 10,638 27,660 33,289 * Gross reserves - December 31, 34,503 39,913 39,877 41,737 48,800 56,197 80,499 82,801 94,949 118,340 121,818 Net re-estimated reserve 19,853 25,200 28,499 32,617 43,777 57,957 68,612 67,135 88,418 90,673 Re-estimated reinsurance recoverable 22,135 23,289 21,143 20,390 20,504 18,535 14,944 19,105 10,524 27,209 Gross re-estimated reserve 41,988 48,489 49,642 53,007 64,281 76,492 83,556 86,240 98,942 117,882 Gross cumulative redundancy (deficiency) (7,485 ) (8,576 ) (9,765 ) (11,270 ) (15,481 ) (20,295 ) (3,057 ) (3,439 ) (3,993 ) 458 (Components may not sum to totals due to rounding) 13 Table of Contents Reinsurance We purchase reinsurance to reduce our net liability on individual risks, to protect against possible catastrophes, to remain within a target ratio of net premiums written to policyholders’ surplus, and to expand our underwriting capacity.
Biggest changeA deficiency means that the current estimate is higher than the original estimate. 10 Table of Contents (in thousands of $) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Reserve for loss and loss adjustment expenses, net of reinsurance recoverables 21,663 23,170 25,960 32,051 40,526 64,770 62,647 84,311 90,680 88,529 93,888 Net reserve estimated as of One year later 21,200 23,107 25,899 33,203 51,664 64,811 62,632 87,011 90,673 86,749 Two years later 21,501 24,413 26,970 42,723 55,145 65,113 65,339 88,418 94,245 Three years later 22,576 25,509 33,298 43,780 56,346 67,291 67,135 92,642 Four years later 23,243 28,638 33,342 43,973 58,048 68,612 70,643 Five years later 25,442 28,506 33,120 43,774 57,957 71,022 Six years later 25,353 28,849 32,936 43,777 59,187 Seven years later 25,445 28,734 32,617 44,395 Eight years later 25,324 28,499 32,739 Nine years later 25,200 28,646 Ten years later 25,233 Net cumulative redundancy (deficiency) (3,570) (5,476) (6,779) (12,344) (18,661) (6,252) (7,996) (8,331) (3,565) 1,780 (in thousands of $) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Cumulative amount of reserve paid, net of reinsurance recoverable through One year later 8,500 8,503 9,900 15,795 23,075 27,454 20,137 32,419 35,854 24,319 Two years later 12,853 14,456 17,187 26,168 35,924 35,142 30,262 47,547 48,199 Three years later 16,564 19,533 23,484 32,704 40,264 42,365 40,702 57,171 Four years later 19,838 22,816 27,203 35,510 45,085 49,581 47,113 Five years later 21,976 25,210 28,833 37,846 48,650 52,938 Six years later 23,280 26,298 30,141 39,596 49,682 Seven years later 24,146 26,945 30,693 39,570 Eight years later 24,633 27,013 30,243 Nine years later 24,654 26,609 Ten years later 24,218 Net reserve - December 31, 21,663 23,170 25,960 32,051 40,526 64,770 62,647 84,311 90,680 88,529 93,888 * Reinsurance Recoverable 18,250 16,707 15,777 16,749 15,671 15,728 20,154 10,638 27,660 33,289 32,323 * Gross reserves - December 31, 39,913 39,877 41,737 48,800 56,197 80,499 82,801 94,949 118,340 121,818 126,210 Net re-estimated reserve 25,233 28,646 32,739 44,395 59,187 71,022 70,643 92,642 94,245 86,749 Re-estimated reinsurance recoverable 23,280 21,090 20,336 20,612 18,650 15,052 20,266 11,726 26,669 29,410 Gross re-estimated reserve 48,513 49,736 53,075 65,007 77,837 86,074 90,909 104,368 120,914 116,159 Gross cumulative redundancy (deficiency) (8,600) (9,859) (11,338) (16,207) (21,640) (5,575) (8,108) (9,419) (2,574) 5,659 (Components may not sum to totals due to rounding) 11 Table of Contents Reinsurance We purchase reinsurance to reduce our net liability on individual risks, to protect against possible catastrophes, to remain within a target ratio of net premiums written to policyholders’ surplus, and to expand our underwriting capacity.
Subject to our withdrawal agreement with the state of New Jersey, we will be non-renewing our entire book in such state over a two year period starting January 1, 2024. These actions reduced the size of our policies in force outside New York by 48% in 2023.
Subject to our withdrawal agreement with the state of New Jersey, we will be non-renewing our entire book in such state over a two year period starting January 1, 2024. These actions reduced the size of our policies in force outside New York by 48% in 2023 and 65% in 2024.
Catastrophe Losses In 2023 we had catastrophe losses, which are defined as losses from an event for which a catastrophe bulletin and related serial number has been issued by the Property Claims Services (PCS) unit of the Insurance Services Office (ISO).
Catastrophe Losses In 2024 we had catastrophe losses, which are defined as losses from an event for which a catastrophe bulletin and related serial number has been issued by the Property Claims Services (PCS) unit of the Insurance Services Office (ISO).
Risks presented by the effects of pandemics like COVID-19 include, among others, the following: 22 Table of Contents Investments. Our corporate fixed income portfolio may be adversely impacted by ratings downgrades, increased bankruptcies and credit spread widening in distressed industries. In addition, in recent years, many state and local governments have been operating under deficits or projected deficits.
Risks presented by the effects of pandemics like COVID-19 include, among others, the following: Investments. Our corporate fixed income portfolio may be adversely impacted by ratings downgrades, increased bankruptcies and credit spread widening in distressed industries. In addition, in recent years, many state and local governments have been operating under deficits or projected deficits.
Since we are primarily liable to an insured for the full amount of insurance coverage, our inability to collect a material recovery from a reinsurer could have a material adverse effect on our operating results and financial condition. 25 Table of Contents Applicable insurance laws regarding the change of control of our company may impede potential acquisitions that our stockholders might consider desirable.
Since we are primarily liable to an insured for the full amount of insurance coverage, our inability to collect a material recovery from a reinsurer could have a material adverse effect on our operating results and financial condition. Applicable insurance laws regarding the change of control of our company may impede potential acquisitions that our stockholders might consider desirable.
With respect to any additional catastrophe losses of up to $315,000,000, we are 100% reinsured under our catastrophe reinsurance program. Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts.
With respect to any additional catastrophe losses of up to $275,000,000, we are 100% reinsured under our catastrophe reinsurance program. Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts.
We believe that our relationship with our employees is good. 20 Table of Contents Availability of Information Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the U.S.
We believe that our relationship with our employees is good. Availability of Information Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the U.S.
Conversely, a decline in interest rates would decrease the net unrealized loss position of our investment portfolio, which would be offset by lower rates of return on funds reinvested. 24 Table of Contents In addition, market volatility can make it difficult to value certain of our securities if trading becomes less frequent.
Conversely, a decline in interest rates would decrease the net unrealized loss position of our investment portfolio, which would be offset by lower rates of return on funds reinvested. In addition, market volatility can make it difficult to value certain of our securities if trading becomes less frequent.
The Terrorism Risk Insurance Program serves as a federal “backstop” for insurance claims related to acts of terrorism. On November 15, 2021, the DFS issued its final Guidance for New York Domestic Insurers On Managing the Financial Risks from Climate Change. On June 15, 2022, the DFS released its 2021 annual report.
The Terrorism Risk Insurance Program serves as a federal “backstop” for insurance claims related to acts of terrorism. 14 Table of Contents On November 15, 2021, the DFS issued its final Guidance for New York Domestic Insurers On Managing the Financial Risks from Climate Change. On June 15, 2022, the DFS released its 2021 annual report.
We have consistently been rated by insurance producers as above average in the important areas of underwriting, claims handling and service. 7 Table of Contents We offer our Select producers access to a variety of personal lines and specialty products, including some that are unique to us.
We have consistently been rated by insurance producers as above average in the important areas of underwriting, claims handling and service. We offer our Select producers access to a variety of personal lines and specialty products, including some that are unique to us.
We monitor and evaluate the performance of our producers through periodic reviews of volume and profitability. Our senior executives are actively involved in managing our producer relationships. 9 Table of Contents Each producer is assigned to a staff underwriter and the producer can call that underwriter directly on any matter.
We monitor and evaluate the performance of our producers through periodic reviews of volume and profitability. Our senior executives are actively involved in managing our producer relationships. Each producer is assigned to a staff underwriter and the producer can call that underwriter directly on any matter.
Therefore, stockholders have reduced liquidity and may not be able to sell their shares at the volume, prices and times that they desire. 30 Table of Contents There may be future issuances or resales of our common stock which may materially and adversely affect the market price of our common stock.
Therefore, stockholders have reduced liquidity and may not be able to sell their shares at the volume, prices and times that they desire. There may be future issuances or resales of our common stock which may materially and adversely affect the market price of our common stock.
The extensive heritage of our insurance company subsidiary and our commitment to the markets in which we operate is a competitive advantage with producers and insureds. Strong Producer Relationships Within our producers’ offices, we compete with other property and casualty insurance carriers available to those producers.
The extensive heritage of our insurance company subsidiary and our commitment to the markets in which we operate is a competitive advantage with producers and insureds. 6 Table of Contents Strong Producer Relationships Within our producers’ offices, we compete with other property and casualty insurance carriers available to those producers.
In 2023, KICO was the 15th largest writer of homeowners insurance in the State of New York, according to data compiled by S&P Capital IQ. Based on the same data, in 2023, we had a 1.6% market share for this business.
In 2024, KICO was the 12th largest writer of homeowners insurance in the State of New York, according to data compiled by S&P Capital IQ. Based on the same data, in 2023, we had a 1.6% market share for this business.
The sliding scale provided minimum and maximum ceding commission rates in relation to specified ultimate loss ratios. Under the 2021/2023 Treaty and the 2023/24 Treaty, KICO received a fixed provisional rate with no adjustment for sliding scale contingent commissions. Under the 2024/2025 Treaty, KICO will receive a fixed provisional rate with no adjustment for sliding scale contingent commissions.
The sliding scale provided minimum and maximum ceding commission rates in relation to specified ultimate loss ratios. Under the 2023/24 Treaty, KICO received a fixed provisional rate with no adjustment for sliding scale contingent commissions. Under the 2024/2025 Treaty, KICO received a fixed provisional rate with no adjustment for sliding scale contingent commissions.
Other - We write canine legal liability policies and have a small participation in mandatory state joint underwriting associations. These policies accounted for 0.1% of our gross written premiums for the year ended December 31, 2023. Our Competitive Strengths Long History of Operations KICO has been in operation in the State of New York since 1886.
Other - We write canine legal liability policies and have a small participation in mandatory state joint underwriting associations. These policies accounted for 0.03% of our gross written premiums for the year ended December 31, 2024. Our Competitive Strengths Long History of Operations KICO has been in operation in the State of New York since 1886.
We believe that the close relationship and personal service received from their underwriters is a principal reason producers place their business with us. Our producers have access to a KICO producer interface and website portal that provides them the ability to quote risks for various products and to review policy forms and underwriting guidelines for all lines of business.
We believe that the close relationship and personal service received from their underwriters is one of the reasons producers place their business with us. Our producers have access to a KICO producer interface and website portal that provides them the ability to quote risks for various products and to review policy forms and underwriting guidelines for all lines of business.
Upon the expiration of the 2021/2023 Treaty on January 1, 2023, we entered into a new 30% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2023 through January 1, 2024 (“2023/2024 Treaty”).Upon the expiration of the 2023/2024 Treaty on January 1, 2024, we entered into a new 27% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”).
Upon the expiration of the 2023/2024 Treaty on January 1, 2024, we entered into a new 27% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”).
We have also updated property replacement costs to address inflation. We manage coastal risk exposure through the use of individual catastrophe risk scoring, the inclusion of hurricane deductibles, non-renewals and the prudent use of reinsurance. We measure our risk exposure regularly and adjust our underwriting to manage growth in our probable maximum loss (PML).
We also update property replacement costs to address inflation annually. We manage coastal risk exposure through the use of individual catastrophe risk scoring, the inclusion of hurricane deductibles, non-renewals and the prudent use of reinsurance. We measure our risk exposure regularly and adjust our underwriting to manage growth in our probable maximum loss (PML).
An insurance company’s combined ratio is calculated by taking the ratio of incurred loss and LAE to earned premiums (the “loss and LAE ratio”) and adding it to the ratio of policy acquisition and other underwriting expenses to earned premiums (the “expense ratio”).
An insurance company’s combined ratio is calculated by taking the ratio of incurred loss and LAE to earned premiums (the 5 Table of Contents “loss and LAE ratio”) and adding it to the ratio of policy acquisition and other underwriting expenses to earned premiums (the “expense ratio”).
We have attempted to address these challenges and achieve profitability with a series of rate and underwriting actions, but the impact we have worked towards was largely nullified by inflation.
We have attempted to address these challenges and achieve profitability with a 8 Table of Contents series of rate and underwriting actions, but the impact we have worked towards was largely nullified by inflation.
We are a holding company incorporated in Delaware. Anti-takeover provisions in Delaware law and our restated certificate of incorporation and bylaws, as well as regulatory approvals required under state insurance laws, could make it more difficult for a third party to acquire control of us and may prevent stockholders from receiving a premium for their shares of common stock.
Anti-takeover provisions in Delaware law and our restated certificate of incorporation and bylaws, as well as regulatory approvals required under state insurance laws, could make it more difficult for a third party to acquire control of us and may prevent stockholders from receiving a premium for their shares of common stock.
Departure from the usual values on four or more of the ratios can lead to inquiries from individual state insurance commissioners as to certain aspects of an insurer’s business. As of December 31, 2023, KICO had one ratio outside the usual range. Accounting Principles Statutory accounting principles (“SAP”) are a basis of accounting developed by the NAIC.
Departure from the usual values on four or more of the ratios can lead to inquiries from individual state insurance commissioners as to certain aspects of an insurer’s business. As of December 31, 2024, KICO had three ratios outside the usual range. Accounting Principles Statutory accounting principles (“SAP”) are a basis of accounting developed by the NAIC.
Increases in claim severity can arise from unexpected events that are inherently difficult to predict, such as a change in the law or an inability to enforce exclusions and limitations contained in our policies.
Increases in claim severity can arise from unexpected events that are inherently difficult to predict, such as a change in the law or an inability to enforce exclusions and limitations contained in 17 Table of Contents our policies.
The circular letter does not have the force of law, but articulated DFS’ expectations about the use of AIS and ECDIS. In the past, the release of a circular letter has preceded the issuance of draft and eventually final regulations in the area addressed.
While this circular letter does not have the force of law, it articulated DFS’ expectations about the use of AIS and ECDIS. In the past, the release of a circular letter has preceded the issuance of draft and eventually final regulations in the area addressed.
Loss and Loss Adjustment Expenses Development The table below shows the net loss development of reserves held as of each calendar year-end from 2013 through 2023. The first section of the table reflects the changes in our loss and LAE reserves after each subsequent calendar year of development.
Loss and Loss Adjustment Expenses Development The table below shows the net loss development of reserves held as of each calendar year-end from 2014 through 2024. The first section of the table reflects the changes in our loss and LAE reserves after each subsequent calendar year of development.
KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto insurance in New York, and in 2023 was the 15th largest writer of homeowners insurance in New York.
KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto insurance in New York, and in 2024 was the 12th largest writer of homeowners insurance in New York.
Our ability to make payments on our indebtedness, including the 2022 Notes, will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.
Our ability to make payments on our indebtedness will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.
The incidence and severity of weather conditions are largely unpredictable. There is generally an increase in the frequency and severity of claims when severe weather conditions occur. 21 Table of Contents Unanticipated increases in the severity or frequency of claims may adversely affect our operating results and financial condition.
The incidence and severity of weather conditions are largely unpredictable. There is generally an increase in the frequency and severity of claims when severe weather conditions occur. Unanticipated increases in the severity or frequency of claims may adversely affect our operating results and financial condition. Changes in the severity or frequency of claims may affect our profitability.
Livery physical damage - We write for-hire vehicle physical damage only policies for livery and car service vehicles and taxicabs. These policies insure only the physical damage portion of insurance for such vehicles, with no liability coverage included. These policies accounted for 7.3% of our gross written premiums for the year ended December 31, 2023.
Livery physical damage - We write for-hire vehicle physical damage only policies for livery and car service vehicles and taxicabs. These policies insure only the physical damage portion of insurance for such vehicles, with no liability coverage included. These policies accounted for 5.9% of our gross written premiums for the year ended December 31, 2024.
KICO is also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. For the years ended December 31, 2023 and 2022, respectively, 88.3% and 80.6% of KICO’s direct written premiums came from the New York policies.
KICO is also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. For the years ended December 31, 2024 and 2023, respectively, 96.0% and 88.3% of KICO’s direct written premiums came from the New York policies.
Effective July 1, 2023 and through June 30, 2024, we have reinstatement premium protection for $12,500,000 of catastrophe coverage in excess of $10,000,000. This protects us from having to pay an additional premium to reinstate catastrophe coverage for an event up to this level.
Effective July 1, 2024 and through June 30, 2025, we had reinstatement premium protection for $10,500,000 of catastrophe coverage in excess of $10,000,000. This protects us from having to pay an additional premium to reinstate 12 Table of Contents catastrophe coverage for an event up to this level.
Legal Structure We were incorporated in 1961 and assumed the name DCAP Group, Inc. in 1999. On July 1, 2009, we changed our name to Kingstone Companies, Inc. Employees As of December 31, 2023, we had 84 employees. None of our employees are covered by a collective bargaining agreement.
Legal Structure We were incorporated in 1961 and assumed the name DCAP Group, Inc. in 1999. On July 1, 2009, we changed our name to Kingstone Companies, Inc. 16 Table of Contents Employees As of December 31, 2024, we had 99 employees. None of our employees are covered by a collective bargaining agreement.
Product Lines Our product lines include the following: Personal lines - Our largest line of business is personal lines, consisting of homeowners, dwelling fire, cooperative/condominium, renters, and personal umbrella policies. Personal lines policies accounted for 92.6% of our gross written premiums for the year ended December 31, 2023.
Product Lines Our product lines include the following: Personal lines - Our largest line of business is personal lines, consisting of homeowners, dwelling fire, cooperative/condominium, renters, and personal umbrella policies. Personal lines policies accounted for 94.1% of our gross written premiums for the year ended December 31, 2024.
We have effective registration statements on Form S-8 under the Securities Act of 1933, as amended (the “Securities Act”), covering an aggregate of 1,900,000 shares of our common stock issuable under our 2014 Equity Participation Plan (the “2014 Plan”).
We have effective registration statements on Form S-8 under the Securities Act of 1933, as amended (the “Securities Act”), covering an aggregate of 2,900,000 shares of our common stock issuable under our Amended and Restated 2014 Equity Participation Plan (the "2014 Plan") and our 2024 Equity Participation Plan (the “2024 Plan”).
The DFS commenced its examination of KICO in 2023 for the years 2019 through 2022. The examination is expected to be completed in 2024. Risk-Based Capital Regulations State regulatory authorities impose risk-based capital (“RBC”) requirements on insurance enterprises. The RBC Model serves as a benchmark for the regulation of insurance companies.
The DFS commenced its examination of KICO in 2023 for the years 2019 through 2022. The examination was completed in 2024. 15 Table of Contents Risk-Based Capital Regulations State regulatory authorities impose risk-based capital (“RBC”) requirements on insurance enterprises. The RBC Model serves as a benchmark for the regulation of insurance companies.
Furthermore, certain states prohibit an insurer from withdrawing from one or more lines of business written in the state, except pursuant to a plan that is approved by the insurance regulatory authority. The state regulator may reject a plan that may lead to market disruption.
For example, states may limit an insurer’s ability to cancel or not renew policies. Furthermore, certain states prohibit an insurer from withdrawing from one or more lines of business written in the state, except pursuant to a plan that is approved by the insurance regulatory authority. The state regulator may reject a plan that may lead to market disruption.
The shares issuable pursuant to the registration statements on Form S-8 will be freely tradable in the public market, except for shares held by our affiliates. As of December 31, 2023, there were also outstanding warrants for the purchase of 969,525 shares of our common stock.
The shares issuable pursuant to the registration statements on Form S-8 will be freely tradable in the public market, except for shares held by our affiliates. As of December 31, 2024, there were also outstanding warrants 23 Table of Contents for the purchase of 642,025 shares of our common stock.
The re-estimated ultimate reserves two years later for those claims as of December 31, 2013 had grown to $18,332,000. The “cumulative redundancy (deficiency)” represents, as of December 31, 2023, the difference between the latest re-estimated liability and the amounts as originally estimated. A redundancy means that the original estimate was higher than the current estimate.
The re-estimated ultimate reserves two years later for those claims as of December 31, 2014 had decreased to $21,501,000. The “cumulative redundancy (deficiency)” represents, as of December 31, 2024, the difference between the latest re-estimated liability and the amounts as originally estimated. A redundancy means that the original estimate was higher than the current estimate.
Approximately 88% of our revenue is currently derived from sources located in the State of New York and, accordingly, is affected by the prevailing regulatory, economic, demographic, competitive and other conditions in the state. Changes in any of these conditions could make it costlier or difficult for us to conduct our business.
Approximately 96% of our revenue during the year ended December 31, 2024 was derived from sources located in the State of New York and, accordingly, is affected by the prevailing regulatory, economic, demographic, competitive and other conditions in the state. Changes in any of these conditions could make it costlier or difficult for us to conduct our business.
In an annual presentation, the committee received a presentation from our Chief Technology Officer regarding our approach to cybersecurity, which included the following topics: the confidentiality of nonpublic information and the integrity and security of our information system, the cybersecurity policies and procedures, material cybersecurity risks to us, and the overall effectiveness of our Company’s cybersecurity program. 33 Table of Contents
In a presentation from our Chief Technology Officer, the committee received information regarding our approach to cybersecurity, which included the following topics: the confidentiality of nonpublic information and the integrity and security of our information system, the cybersecurity policies and procedures, material cybersecurity risks to us, and the overall effectiveness of our cybersecurity program. ITEM 2 . PROPERTIES .
We market our insurance products primarily through insurance brokers. A large percentage of our gross premiums written are sourced through a limited number of brokers. For the year ended December 31, 2023, 35 brokers provided a total of 40% of our total gross premiums written.
We market our insurance products primarily through insurance brokers. A large percentage of our gross premiums written are sourced through a limited number of brokers. For the year ended December 31, 2024, 50 brokers provided a total of 51.2% of our total gross premiums written.
If the amount of our capital falls below certain thresholds, we may face restrictions with respect to soliciting new business and/or keeping existing business. Similar regulations apply in other states in which we operate. Changing climate conditions may adversely affect our financial condition, profitability or cash flows. We recognize the scientific view that the world is getting warmer.
If the amount of our capital falls below certain thresholds, we may face restrictions with respect to soliciting new business and/or keeping existing business. Similar regulations apply in other states in which we operate. 20 Table of Contents Changing climate conditions may adversely affect our financial condition, profitability or cash flows.
PCS catastrophe bulletins are issued for events that cause more than $25 million in total insured losses and affect a significant number of policyholders and insurers. Our predominant market, downstate New York, was affected by several events during 2023, one of which was a named storm, and one was a major freezing event.
PCS catastrophe bulletins are issued for events that cause more than $25 million in total insured losses and affect a significant number of policyholders and insurers. Our predominant market, downstate New York, was affected by several events during 2024, one of which was a named storm, and one was a winter storm, and the remaining events were wind and thunderstorm.
Our strategy is to be the preferred multi-line property and casualty insurance company for selected producers in the geographic markets in which we operate. We believe producers place profitable business with us because we provide excellent, consistent service to insureds and claimants.
Our strategy is to be the preferred multi-line property and casualty insurance company for selected producers in the geographic markets in which we operate. We believe producers place profitable business with us because we provide excellent, consistent service to insureds and claimants. Producers also value our broad underwriting appetite coupled with competitive rate and commission structures.
We currently have catastrophe reinsurance coverage with regard to losses of up to $325,000,000 ($315,000,000 in excess of $10,000,000). Effective January 1, 2024, $10,000,000 of losses in a catastrophe are subject to a quota share reinsurance treaty, which covers 5.0% of catastrophe losses such that we retain $9,500,000 of risk per catastrophe occurrence.
We currently have catastrophe reinsurance coverage with regard to losses of up to $285,000,000 ($275,000,000 in excess of $10,000,000). Effective January 1, 2025, $5,000,000 of losses in a catastrophe are subject to a quota share reinsurance treaty, which covers 10.0% of catastrophe losses such that we retain $4,250,000 of risk per catastrophe occurrence.
Maximum allowable dividends by KICO to us are restricted to the lesser of 10% of surplus or 100% of net investment income (on a statutory accounting basis) for the trailing 36 months, less dividends paid by KICO during such period.
Maximum allowable dividends by KICO to us are restricted to the lesser of 10% of surplus or 100% of net investment income (on a statutory accounting basis) for the trailing 36 months, less dividends paid by KICO during such period. As of December 31, 2024, KICO had unassigned surplus of approximately $13.7 million.
These restrictions are related to surplus and net investment income. Dividends may be paid, without the need for DFS approval, from unassigned surplus and are restricted to the lesser of 10% of surplus or 100% of investment income (on a statutory accounting basis) for the trailing 36 months, less dividends by KICO paid during such period.
Dividends may be paid, without the need for DFS approval, from unassigned surplus and are restricted to the lesser of 10% of surplus or 100% of investment income (on a statutory accounting basis) for the trailing 36 months, less dividends by KICO paid during such period. At December 31, 2024, unassigned surplus was $13,658,183.
We believe that many national and regional carriers have chosen to limit their rate of premium growth or to decrease their presence in Northeastern states due to the relatively high coastal population and associated catastrophe risk that exists in the region.
We believe that many national and regional carriers have chosen to limit their rate of premium growth or to decrease their presence in Northeastern states due to the relatively high coastal population and associated catastrophe risk that exists in the region. Additionally, some of our largest competitors stopped writing business in New York in 2024.
Because of the competitive nature of the insurance industry, including competition for customers, agents and brokers, there can be no assurance that we will continue to effectively compete with our industry rivals, or that competitive pressures will not have a material adverse effect on our ability to grow our business and to maintain profitable operating results or financial condition. 28 Table of Contents If we lose key personnel or are unable to recruit qualified personnel, our ability to implement our business strategies could be delayed or hindered.
Because of the competitive nature of the insurance industry, including competition for customers, agents and brokers, there can be no assurance that we will continue to effectively compete with our industry rivals, or that competitive pressures will not have a material adverse effect on our ability to grow our business and to maintain profitable operating results or financial condition.
These include cybersecurity assessors, consultants, and other external cybersecurity experts to assist in the identification, verification, and validation of cybersecurity risks, as well as to support associated mitigation plans when necessary. Additionally, we require security training for all employees on a quarterly basis. The training covers a wide range of topics, including phishing, social engineering and data protection.
These include cybersecurity assessors, consultants, and other external cybersecurity experts to assist in the identification, verification, and validation of cybersecurity risks, as well as to support associated mitigation plans when necessary. 24 Table of Contents Additionally, we require security training for all employees on a quarterly basis.
We have mitigated this risk through appropriate catastrophe reinsurance and application of hurricane deductibles. We handle claims fairly while ensuring that coverage provisions and exclusions are properly applied. Our claims and underwriting expertise supports our ability to grow our profitable business. Distribution We generate business through our relationships with over 700 producers.
We handle claims fairly while ensuring that coverage provisions and exclusions are properly applied. Our claims and underwriting expertise supports our ability to grow our profitable business. Distribution We generate business through our relationships with over 700 producers.
These provisions, the control of our executive officers and directors over the election of our directors, and other factors may hinder or prevent a change in control, even if the change in control would be beneficial to, or sought by, our stockholders. We do not currently pay dividends and are restricted pursuant to our debt agreement from paying dividends.
These provisions, the control of our executive officers and directors over the election of our directors, and other factors may hinder or prevent a change in control, even if the change in control would be beneficial to, or sought by, our stockholders. We do not currently pay dividends. We have not paid cash dividends since September 2022.
Effective January 1, 2024 through January 1, 2025, losses on personal lines policies will be subject to the 2024/2025 Treaty, which will cover 5.0% of catastrophe losses and will result in a net retention by us of $9,500,000 of exposure per catastrophe occurrence.
Effective January 1, 2024 through January 1, 2025, losses on personal lines policies were subject to the 2024/2025 Treaty, which will cover 5.0% of catastrophe losses and will result in a net retention by us of $4,750,000 of exposure for the first event of a named storm catastrophe occurrence.
An example with respect to the net loss and LAE reserves of $17,139,000 as of December 31, 2013 is as follows. By December 31, 2015 (two years later), $10,629,000 had actually been paid in settlement of the claims that relate to liabilities as of December 31, 2013.
An example with respect to the net loss and LAE reserves of $21,663,000 as of December 31, 2014 is as follows. By December 31, 2016 (two years later), $12,853,000 had actually been paid in settlement of the claims that relate to liabilities as of December 31, 2014.
Producers also value our broad underwriting appetite coupled with competitive rate and commission structures. 6 Table of Contents Our principal objectives are to grow profitably while managing risk through prudent use of reinsurance in order to strengthen our capital base. We generate underwriting income through adequate pricing of insurance policies and by effectively managing our other underwriting and operating expenses.
Our principal objectives are to grow profitably while managing risk through prudent use of reinsurance in order to strengthen our capital base. We generate underwriting income through adequate pricing of insurance policies and by effectively managing our other underwriting and operating expenses.
If the insurer rejects the claim, the insurer will have to inform the claimant of all applicable policy provisions regarding the claimant's right to appeal the decision including policy information, insurer contact information and DFS complaint filing procedure information.
If the insurer rejects the claim, the insurer will have to inform the claimant of all applicable policy provisions regarding the claimant's right to appeal the decision including policy information, insurer contact information and DFS complaint filing procedure information. An insurer will be required to pay the claim not later than four business days from the settlement of the claim.
Our business is highly dependent upon the successful and uninterrupted functioning of our information technology and telecommunications systems. We rely on these systems to support our operations. The failure of these systems could interrupt our operations and result in a material adverse effect on our business.
We rely on our information technology and telecommunication systems, and the failure of these systems could materially and adversely affect our business. Our business is highly dependent upon the successful and uninterrupted functioning of our information technology and telecommunications systems. We rely on these systems to support our operations.
Risks Related to Our Common Stock Our stock price may fluctuate significantly and be highly volatile and this may make it difficult for stockholders to resell shares of our common stock at the volume, prices and times they find attractive.
The failure of these systems could interrupt our operations and result in a material adverse effect on our business. Risks Related to Our Common Stock Our stock price may fluctuate significantly and be highly volatile and this may make it difficult for stockholders to resell shares of our common stock at the volume, prices and times they find attractive.
Property insurance generally covers the financial consequences of accidental losses to the insured’s property, such as a home and the personal property in it, or a business owner’s building, inventory and equipment.
Such contracts are subject to legal interpretation by courts, sometimes involving legislative rulings and/or arbitration. Property insurance generally covers the financial consequences of accidental losses to the insured’s property, such as a home and the personal property in it, or a business owner’s building, inventory and equipment.
Changes in the severity or frequency of claims may affect our profitability. Changes in homeowners claim severity are driven by inflation in the construction industry, in building materials and home furnishings, and by other economic and environmental factors, including increased demand for services and supplies in areas affected by catastrophes.
Changes in homeowners claim severity are driven by inflation in the construction industry, in building materials and home furnishings, and by other economic and environmental factors, including increased demand for services and supplies in areas affected by catastrophes. Changes in bodily injury claim severity are driven primarily by inflation in the medical sector of the economy and by litigation costs.
KICO’s TAC is above the ACL. As of December 31, 2023, the ratio of TAC to ACL was 4.45 and is in compliance with New York’s RBC requirements. 19 Table of Contents Dividend Limitations Our ability to receive dividends from KICO is restricted by the state laws and insurance regulations of New York.
KICO’s TAC is above its ACL. As of December 31, 2024, the ratio of TAC to ACL was 5.62 and is in compliance with New York’s RBC requirements. Dividend Limitations Our ability to receive dividends from KICO is restricted by the state laws and insurance regulations of New York. These restrictions are related to surplus and net investment income.
If we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient and at prices that we consider acceptable, we will have to either accept an increase in our exposure risk, reduce our insurance writings or seek other alternatives.
If we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient and at prices that we consider acceptable, we will have to either accept an increase in our exposure risk, reduce our insurance writings or seek other alternatives. 19 Table of Contents Reinsurance subjects us to the credit risk of our reinsurers, which may have a material adverse effect on our operating results and financial condition.
Recent Developments Developments During 2023 · Catastrophe Reinsurance Coverage Effective July 1, 2023, KICO decreased the top limit of its catastrophe reinsurance coverage from $345,000,000 to $325,000,000, which, at the time, equated to more than a 1-in-100 year storm event according to the primary industry catastrophe model that we follow. · A.M. Best Rating On July 6, 2023, A.M.
Recent Developments Developments During 2024 • Catastrophe Reinsurance Coverage Effective July 1, 2024, KICO decreased the top limit of its catastrophe reinsurance coverage from $325,000,000 to $280,000,000, which, at the time, equated to more than a 1-in-100 year storm event according to the primary industry catastrophe model that we follow. • Withdrawal from New Jersey On October 2, 2023, the New Jersey Department of Banking & Insurance acknowledged KICO’s request to withdraw from the state effective January 1, 2024.
The shares issuable pursuant to an exercise of the warrants may be freely tradeable in the public market under certain circumstances. The 2014 Plan terminates in August 2024. We plan to submit to our stockholders for approval a new 2024 equity participation plan.
The shares issuable pursuant to an exercise of the warrants may be freely tradeable in the public market under certain circumstances. The 2014 Plan terminated in August 2024 and the 2024 Plan terminates in August 2034.
Consequently, we must rely on KICO for our ability to repay debts, pay expenses and pay cash dividends to our stockholders. State insurance laws limit the ability of KICO to pay dividends from unassigned surplus and require KICO to maintain specified minimum levels of statutory capital and surplus.
State insurance laws limit the ability of KICO to pay dividends from unassigned surplus and require KICO to maintain specified minimum levels of statutory capital and surplus.
For the year ended December 31, 2023, our gross written premiums totaled $200.2 million, a decrease of 0.5% from the $201.2 million in gross written premiums for the year ended December 31, 2022.
For the year ended December 31, 2024, our gross written premiums totaled $242.0 million, an increase of 20.9% from the $200.2 million in gross written premiums for the year ended December 31, 2023.
Our business could be significantly damaged by a security breach, data loss or corruption, or cyber attack. In addition to the potentially high costs of investigating and stopping such an event and implementing necessary fixes, we could incur substantial liability if confidential customer or employee information is stolen.
In addition to the potentially high costs of investigating and stopping such an event and implementing necessary fixes, we could incur substantial liability if confidential customer or employee information is stolen. In addition, such an event could cause a significant disruption of our ability to conduct our insurance operations.
These laws may discourage potential acquisition proposals and may delay, deter or prevent a change of control of Kingstone Companies, Inc., including through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be desirable.
These laws may discourage potential acquisition proposals and may delay, deter or prevent a change of control of Kingstone Companies, Inc., including through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be desirable. 13 Table of Contents State Insurance Regulation Insurance companies are subject to regulation and supervision by the department of insurance in the state in which they are domiciled and, to a lesser extent, other states in which they conduct business.
At December 31, 2023, unassigned deficit was $7,661,958, and, accordingly, dividends may not be paid without DFS approval. See Item 5 (“Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Dividends”) of this Annual Report for a further discussion as to KICO’s ability to pay dividends to us.
See Item 5 (“Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Dividends”) of this Annual Report for a further discussion as to KICO’s ability to pay dividends to us.
Kingstone 2.0 included strategic hiring, development of the Select product, investments in new systems and retirement of the legacy systems. We also adopted a framework of stronger rating, underwriting and catastrophe management disciplines. As a result, Kingstone 2.0 positioned the Company to be better able to navigate today’s challenging environment.
In 2022, we completed the implementation of Kingstone 2.0, an effort to modernize the Company. Kingstone 2.0 included strategic hiring, development of the Select product, investments in new systems and retirement of the legacy 7 Table of Contents systems. We also adopted a framework of stronger rating, underwriting and catastrophe management disciplines.
As of December 31, 2023, options to purchase 107,201 shares of our common stock, and 550,581 shares subject to unvested restricted stock grants, were outstanding under the 2014 Plan and 584,596 shares were reserved for issuance thereunder.
As of December 31, 2024, options to purchase 281,913 shares of our common stock, and 267,586 shares subject to unvested restricted stock grants, were outstanding under the 2014 Plan an d the 2024 Plan and 941.245 shares were reserved for issuance thereunder.
However, changes in the level of the severity of claims are not limited to the effects of inflation and demand surge in these various sectors of the economy.
Changes in auto physical damage claim severity are driven primarily by inflation in auto repair costs, prices of auto parts and used car prices. However, changes in the level of the severity of claims are not limited to the effects of inflation and demand surge in these various sectors of the economy.
Additionally, some of our largest competitors historically have stopped writing business this year. 10 Table of Contents Loss and Loss Adjustment Expense Reserves We are required to establish reserves for unpaid losses, including reserves for claims loss adjustment expenses (“LAE”), which represent the expenses of settling and adjusting those claims.
Loss and Loss Adjustment Expense Reserves We are required to establish reserves for unpaid losses, including reserves for claims loss adjustment expenses (“LAE”), which represent the expenses of settling and adjusting those claims.
Such attacks or actions may include attempts to: • steal, corrupt, or destroy data, including our intellectual property, financial data or the personal information of our customers or employees • misappropriate funds • disrupt or shut down our systems • deny customers, agents, brokers, or others access to our systems, or • infect our systems with viruses or malware. 29 Table of Contents While we can take defensive measures, there can be no assurance that we will be successful in preventing attacks or detecting and stopping them once they have begun.
Such attacks or actions may include attempts to: • steal, corrupt, or destroy data, including our intellectual property, financial data or the personal information of our customers or employees • misappropriate funds • disrupt or shut down our systems • deny customers, agents, brokers, or others access to our systems, or 22 Table of Contents • infect our systems with viruses or malware.
A mitigation plan is developed for each identified high risk, with progress reported to the Risk Management Committee and tracked as part of its overall risk management program overseen by the Corporate Sustainability and Risk Management Committee of our Board of Directors. 32 Table of Contents We collaborate with third parties to assess the effectiveness of our cybersecurity prevention and response systems and processes.
Risks that are considered high are incorporated into its overall risk management program. A mitigation plan is developed for each identified high risk, with progress reported to the Risk Management Committee and tracked as part of its overall risk management program overseen by the Corporate Sustainability and Risk Management Committee of our Board of Directors.
We have not paid cash dividends since September 2022. Our future dividend policy will be subject to the discretion of our Board of Directors and will be contingent upon future earnings, if any, our financial condition, capital requirements, general business conditions, and other factors.
Our future dividend policy will be subject to the discretion of our Board of Directors and will be contingent upon future earnings, if any, our financial condition, capital requirements, general business conditions, and other factors. We can give no assurance that any dividends will be paid to holders of our common stock. ITEM 1B . UNRESOLVED STAFF COMMENTS . None.
We seek to develop long-term relationships with our Select producers who understand and appreciate the path we have chosen. We carefully underwrite our business utilizing industry claims databases, insurance scoring reports, physical inspection of risks and other individual risk underwriting tools. We write homeowners and dwelling fire business in coastal markets and are cognizant of our exposure to hurricanes.
We carefully underwrite our business utilizing industry claims databases, insurance scoring reports, physical inspection of risks and other individual risk underwriting tools. We write homeowners and dwelling fire business in coastal markets and are cognizant of our exposure to hurricanes. We have mitigated this risk through appropriate catastrophe reinsurance and application of hurricane deductibles.
While the majority of our policies are written for risks in downstate New York, our Kingston, New York location provides a low-cost operating environment. 8 Table of Contents We continue to invest in improving our online application and quoting systems for our personal lines products.
While the majority of our policies are written for risks in downstate New York, our remote workforce model provides a low-cost operating environment. We continue to invest in improving our online application and quoting systems for our personal lines products. We have leveraged a paperless workflow management and document storage tool that has improved efficiency and reduced costs.
Moreover, there can be no assurance that changes will not be made to current laws, rules and regulations, or that any other laws, rules or regulations will not be adopted in the future, that could adversely affect our business and financial condition. 26 Table of Contents We may not be able to maintain the requisite amount of risk-based capital, which may adversely affect our profitability and our ability to compete in the property and casualty insurance markets.
Moreover, there can be no assurance that changes will not be made to current laws, rules and regulations, or that any other laws, rules or regulations will not be adopted in the future, that could adversely affect our business and financial condition.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

138 edited+87 added−34 removed33 unchanged
Biggest changeWe believe that the above actions taken will continue to have the intended effect and will result in a return to annual profitability. 42 Table of Contents For the Three Months Ended September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 (000’s except percentages and Policies in Force) Policies In Force, as of end of Three Month Period Core 71,705 71,359 72,081 70,132 68,498 67,575 Non-Core 22,007 20,695 18,945 16,224 13,457 10,823 Total policies in force 93,712 92,054 91,026 86,356 81,955 78,398 Direct written premiums Core $ 43,949 $ 43,923 $ 41,427 $ 42,211 $ 46,025 $ 47,027 Non-Core 10,642 9,978 6,170 5,435 5,966 5,911 Total direct written premiums $ 54,592 $ 53,901 $ 47,597 $ 47,647 $ 51,992 $ 52,938 Change from September 30, 2022 Core Policies In Force $ change na $ (346 ) $ 376 $ (1,573 ) $ (3,207 ) $ (4,130 ) % change na -0.5 % 0.5 % -2.2 % -4.5 % -5.8 % Direct written premiums $ change na $ (26 ) $ (2,522 ) $ (1,738 ) $ 2,076 $ 3,078 % change na -0.1 % -5.7 % -4.0 % 4.7 % 7.0 % Non- Core Policies In Force $ change na $ (1,312 ) $ (3,062 ) $ (5,783 ) $ (8,550 ) $ (11,184 ) % change na -6.0 % -13.9 % -26.3 % -38.9 % -50.8 % Direct written premiums $ change na $ (664 ) $ (4,472 ) $ (5,207 ) $ (4,676 ) $ (4,731 ) % change na -6.2 % -42.0 % -48.9 % -43.9 % -44.5 % (Components may not sum due to rounding) 43 Table of Contents Consolidated Results of Operations The following table summarizes the changes in the results of our operations for the periods indicated: Years ended December 31, ($ in thousands) 2023 2022 Change Percent Revenues Direct written premiums $ 200,175 $ 201,255 $ (1,080 ) (0.5 ) % Assumed written premiums - - - na % 200,175 201,255 (1,080 ) (0.5 )% Ceded written premiums Ceded to quota share treaties (1) 51,125 47,409 3,716 7.8 % Ceded to excess of loss treaties 7,122 3,880 3,242 83.6 % Ceded to catastrophe treaties 48,317 42,952 5,365 12.5 % Total ceded written premiums 106,564 94,241 12,323 13.1 % Net written premiums 93,611 107,014 (13,403 ) (12.5 )% Change in unearned premiums Direct and assumed 1,871 (9,733 ) 11,604 na % Ceded to quota share treaties (1) 18,903 17,104 1,799 10.5 % Change in net unearned premiums 20,774 7,371 13,403 181.8 % Premiums earned Direct and assumed 202,046 191,522 10,524 5.5 % Ceded to reinsurance treaties (87,661 ) (77,137 ) (10,524 ) (13.6 )% Net premiums earned 114,384 114,385 (1 ) - % Ceding commission revenue (1) 21,053 19,319 1,734 9.0 % Net investment income 6,009 4,937 1,072 21.7 % Net gains (losses) on investments 2,135 (9,392 ) 11,527 na % Other income 610 910 (300 ) (33.0 )% Total revenues 144,191 130,159 14,032 10.8 % Expenses Loss and loss adjustment expenses Direct and assumed: Loss and loss adjustment expenses excluding the effect of catastrophes 111,997 114,943 (2,946 ) (2.6 )% Losses from catastrophes (2) 11,944 13,106 (1,162 ) (8.9 )% Total direct and assumed loss and loss adjustment expenses 123,940 128,048 (4,108 ) (3.2 )% Ceded loss and loss adjustment expenses: Loss and loss adjustment expenses excluding the effect of catastrophes 37,302 34,185 3,117 9.1 % Losses from catastrophes (2) 3,789 5,474 (1,685 ) (30.8 )% Total ceded loss and loss adjustment expenses 41,091 39,658 1,432 3.6 % Net loss and loss adjustment expenses: Loss and loss adjustment expenses excluding the effect of catastrophes 74,694 80,758 (6,064 ) (7.5 )% Losses from catastrophes (2) 8,155 7,632 523 6.9 % Net loss and loss adjustment expenses 82,849 88,390 (5,541 ) (6.3 )% Commission expense 33,365 34,582 (1,217 ) (3.5 )% Other underwriting expenses 25,910 26,697 (787 ) (2.9 )% Other operating expenses 2,456 3,113 (657 ) (21.1 )% Depreciation and amortization 2,973 3,300 (327 ) (9.9 )% Interest expense 4,003 2,019 1,984 98.3 % Total expenses 151,556 158,102 (6,545 ) (4.1 )% Loss before taxes (7,365 ) (27,942 ) 20,577 73.6 % Income tax benefit (1,197 ) (5,418 ) 4,221 77.9 % Net loss $ (6,168 ) $ (22,525 ) $ 16,356 72.6 % (Columns in the table above may not sum to totals due to rounding) (1) Effective December 31, 2021, we entered into a 30% personal lines quota share treaty.
Biggest changeAs of December 31, 2024 2023 Change Percent Policies In Force, as of end of Period Core 73,857 67,575 6,282 9.3 % Non-Core 3,799 10,823 (7,024) (64.9) % Total policies in force 77,656 78,398 (742) (0.9) % Years ended December 31, (000’s except percentages) 2024 2023 Change Percent Direct written premiums Core $ 232,227 $ 176,692 $ 55,535 31.4 % Non-Core 9,754 23,482 (13,728) (58.5) % Total direct written premiums $ 241,980 $ 200,175 $ 41,805 20.9 % (Columns in the table above may not sum to totals due to rounding) 34 Table of Contents Consolidated Results of Operations The following table summarizes the changes in the results of our operations for the periods indicated: Years ended December 31, ($ in thousands) 2024 2023 Change Percent Revenues Direct written premiums $ 241,980 $ 200,175 $ 41,805 20.9 % Assumed written premiums - - - na 241,980 200,175 41,805 20.9 % Ceded written premiums Ceded to quota share treaties (1) 50,539 51,125 (586) (1.1 %) Ceded to excess of loss treaties 6,417 7,122 (705) (9.9 %) Ceded to catastrophe treaties 30,794 33,271 (2,477) (7.4 %) Total ceded written premiums 87,750 91,518 (3,768) (4.1 %) Net written premiums 154,230 108,657 45,573 41.9 % Change in unearned premiums Direct and assumed (29,080) 1,871 (30,951) na Ceded to quota share treaties (1) 3,348 3,856 (508) (13.2 %) Change in net unearned premiums (25,732) 5,727 (31,459) (549.3 %) Premiums earned Direct and assumed 212,900 202,046 10,854 5.4 % Ceded to reinsurance treaties (84,402) (87,661) 3,259 (13.6) % Net premiums earned 128,498 114,384 14,114 12.3 % Ceding commission revenue (1) 18,838 21,053 (2,215) (10.5 %) Net investment income 6,824 6,009 815 13.6 % Net gains on investments 415 2,135 (1,720) (80.6) % Other income 568 610 (42) (6.9) % Total revenues 155,142 144,191 10,951 7.6 % Expenses Loss and loss adjustment expenses Direct and assumed: Loss and loss adjustment expenses excluding the effect of catastrophes 79,472 111,997 (32,525) (29.0) % Losses from catastrophes (2) 3,389 11,944 (8,555) (71.6) % Total direct and assumed loss and loss adjustment expenses 82,861 123,940 (41,079) (33.1) % Ceded loss and loss adjustment expenses: Loss and loss adjustment expenses excluding the effect of catastrophes 19,292 37,302 (18,010) (48.3 %) Losses from catastrophes (2) 935 3,789 (2,854) (75.3) % Total ceded loss and loss adjustment expenses 20,226 41,091 (20,865) (50.8 %) Net loss and loss adjustment expenses: Loss and loss adjustment expenses excluding the effect of catastrophes 60,181 74,694 (14,513) (19.4) % Losses from catastrophes (2) 2,454 8,155 (5,701) (69.9 %) Net loss and loss adjustment expenses 62,635 82,849 (20,214) (24.4) % Commission expense 33,929 33,365 564 1.7 % Other underwriting expenses 25,693 25,910 (217) (0.8) % Other operating expenses 3,635 2,456 1,179 48.0 % Depreciation and amortization 2,449 2,973 (524) (17.6) % Interest expense 3,514 4,003 (489) (12.2 %) Total expenses 131,854 151,556 (19,702) (13.0) % Income (loss) before taxes 23,288 (7,365) 30,653 na Income tax expense (benefit) 4,930 (1,197) 6,127 na Net income (loss) $ 18,358 $ (6,168) $ 24,526 na (Columns in the table above may not sum to totals due to rounding) 35 Table of Contents (1) For the year ended December 31, 2023 , our personal lines business was subject to a 30% quota share treaty, expiring on January 1, 2024, which included a runoff of an 5.5% portion through the remainder of 2023.
(2) The years ended December 31, 2023 and 2022 include catastrophe losses, which are defined as losses from an event for which a catastrophe bulletin and related serial number has been issued by the Property Claims Services (PCS) unit of the Insurance Services Office (ISO).
(2) For the years ended December 31, 2024 and 2023 include catastrophe losses, which are defined as losses from an event for which a catastrophe bulletin and related serial number has been issued by the Property Claims Services (PCS) unit of the Insurance Services Office (ISO).
These corporate expenses include legal and auditing fees, executive employment costs, and other costs directly associated with being a public company. 36 Table of Contents Principal Revenue and Expense Items Net premiums earned: Net premiums earned is the earned portion of our written premiums, less that portion of premium that is ceded to third party reinsurers under reinsurance agreements.
These corporate expenses include legal and auditing fees, executive employment costs, and other costs directly associated with being a public company. Principal Revenue and Expense Items Net premiums earned: Net premiums earned is the earned portion of our written premiums, less that portion of premium that is ceded to third party reinsurers under reinsurance agreements.
See Note 3 – Investments to our consolidated financial statements for eligible collateral held in a designated custodian account available for future advances. Advances are limited to 5% of KICO’s net admitted assets as of the end of the previous quarter, which is September 30, 2023. On July 6, 2023, A.M.
See Note 9 – Investments to our consolidated financial statements for eligible collateral held in a designated custodian account available for future advances. Advances are limited to 5% of KICO’s net admitted assets as of the end of the previous quarter, which is September 30, 2024. On July 6, 2023, A.M.
Accordingly, for a one-year policy written on July 1, 2022, we would earn half of the premiums in 2022 and the other half in 2023.
Accordingly, for a one-year policy written on July 1, 2023, we would earn half of the premiums in 2023 and the other half in 2024.
As of December 31, 2023 and 2022, 65% of the investment portfolio recorded at fair value was priced based upon quoted market prices. 63 Table of Contents The table below summarizes the gross unrealized losses of our fixed-maturity securities available-for-sale and equity securities by length of time the security has continuously been in an unrealized loss position as of December 31, 2023 and 2022: December 31, 2023 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S.
As of December 31, 2024 and 2023, 59% and 65%, respectively, of the investment portfolio recorded at fair value was priced based upon quoted market prices. 53 Table of Contents The table below summarizes the gross unrealized losses of our fixed-maturity securities available-for-sale and equity securities by length of time the security has continuously been in an unrealized loss position as of December 31, 2024 and 2023: December 31, 2024 Less than 12 months 12 months or more Total Category Estimated Fair Value Unrealized Losses No. of Positions Held Estimated Fair Value Unrealized Losses No. of Positions Held Estimated Fair Value Unrealized Losses Fixed-Maturity Securities: U.S.
If and when these treaties are renewed on July 1, 2024, the excess of loss and facultative facility, and the catastrophe reinsurance treaty, will be as provided for therein. Reinsurance coverage in effect from July 1, 2024 through January 1, 2025 is currently only covered under the 2024/2025 Treaty and underlying excess of loss reinsurance treaty.
If and when these treaties are renewed on July 1, 2025, the excess of loss and facultative facility, and the catastrophe reinsurance treaty, will be as provided for therein. Reinsurance coverage in effect from July 1, 2025 through January 1, 2026 is currently only covered under the 2025/2026 Treaty and (underlying excess of loss reinsurance treaty through June 30, 2025).
Better manage our catastrophe exposure in order to reduce loss cost and the growth rate of our probable maximum loss (“PML”) in order to mitigate the impact of the emerging “hard market” in catastrophe reinsurance.
Better manage our catastrophe exposure in order to reduce the growth rate of our probable maximum loss (“PML”) in order to mitigate the impact of the then emerging “hard market” in catastrophe reinsurance.
There were 155 securities at December 31, 2022 that accounted for the gross unrealized loss of our fixed-maturity securities available-for-sale, none of which were deemed to be credit losses by us.
There were 140 securities at December 31, 2023 that accounted for the gross unrealized loss of our fixed-maturity securities available-for-sale, none of which were deemed to be credit losses by us.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . Market Information Our common stock is quoted on The Nasdaq Capital Market under the symbol “KINS.” Holders As of March 21, 2024, there were 229 record holders of our common stock.
ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . Market Information Our common stock is quoted on The Nasdaq Capital Market under the symbol “KINS.” Holders As of March 12, 2025, there were 210 record holders of our common stock.
Policy acquisition costs include commissions paid to producers, premium taxes, and other expenses related to the underwriting process, including employees’ compensation and benefits. Other operating expenses include our corporate expenses as a holding company.
In addition, insurance companies incur policy acquisition costs. Policy acquisition costs include commissions paid to producers, premium taxes, and other expenses related to the underwriting process, including employees’ compensation and benefits. Other operating expenses include our corporate expenses as a holding company.
Upon the expiration of the 2021/2023 Treaty on January 1, 2023, we entered into a new quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2023 through January 1, 2024 (“2023/2024 Treaty”).
Upon the expiration of the 2023/2024 Treaty on January 1, 2024, we entered into a new 27% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”).
Effective January 1, 2022, we entered into an underlying excess of loss reinsurance treaty (“Underlying XOL Treaty”) covering the period from January 1, 2022 through January 1, 2023. The Underlying XOL Treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the Underlying XOL Treaty.
Effective January 1, 2023, we entered into an underlying excess of loss reinsurance treaty (the “Underlying XOL Treaty”) covering the period from January 1, 2023 through January 1, 2024. The Underlying XOL Treaty provided 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms were excluded from the Underlying XOL Treaty.
The following table shows the individual components of our net underwriting expense ratio for the periods indicated: Years ended December 31, Percentage 2023 2022 Point Change Other underwriting expenses Employment costs 9.9 % 9.4 % 0.5 Underwriting fees (inspections/surveys) 1.6 1.7 (0.1 ) IT expenses 2.9 3.9 (1.0 ) Professional fees 1.1 1.3 (0.2 ) Other expenses 7.1 7.0 0.1 Total other underwriting expenses 22.6 23.3 (0.7 ) Commission expense 29.2 30.2 (1.0 ) Ceding commission revenue Provisional (17.8 ) (16.7 ) (1.1 ) Contingent (0.6 ) (0.2 ) (0.4 ) Total ceding commission revenue (18.4 ) (16.9 ) (1.5 ) Other income (0.5 ) (0.7 ) 0.2 Net underwriting expense ratio 32.9 % 36.0 % (3.1 ) (Components may not sum to totals due to rounding) 51 Table of Contents Other Operating Expenses Other operating expenses, related to the expenses of our holding company and Cosi, were $2,456,000 for Year Ended 2023 compared to $3,113,000 for Year Ended 2022.
The following table shows the individual components of our net underwriting expense ratio for the periods indicated: Years ended December 31, Percentage Point Change 2024 2023 Other underwriting expenses Employment costs 10.2 % 9.9 % 0.3 Underwriting fees (inspections/surveys) 1.4 1.6 (0.2) IT expenses 2.2 2.9 (0.7) Professional fees 0.8 1.1 (0.3) Other expenses 5.4 7.1 (1.7) Total other underwriting expenses 20.0 22.6 (2.6) Commission expense 26.4 29.2 (2.8) Ceding commission revenue Provisional (14.7) (17.8) 3.1 Contingent — (0.6) 0.6 Total ceding commission revenue (14.7) (18.4) 3.7 Other income (0.4) (0.5) 0.1 Net underwriting expense ratio 31.3 % 32.9 % (1.6) (Components may not sum to totals due to rounding) Other Operating Expenses Other operating expenses, related to the expenses of our holding company and Cosi, were $3,635,000 for Year Ended 2024 compared to $2,456,000 for Year Ended 2023.
We record loss and LAE related to estimates of future claim payments based on case-by-case valuations, statistical analyses and actuarial procedures. We seek to establish all reserves at the most likely ultimate liability based on our historical claims experience.
These expenses fluctuate based on the amount and types of risks we insure. We record loss and LAE related to estimates of future claim payments based on case-by-case valuations, statistical analyses and actuarial procedures. We seek to establish all reserves at the most likely ultimate liability based on our historical claims experience.
Losses from named storms are excluded from the treaty. Effective January 1, 2023, the underlying XOL treaty was renewed covering the period from January 1, 2023 through January 1, 2024. Catastrophe reinsurance treaties Most of the premiums written under our personal lines policies are also subject to our catastrophe treaties.
Effective January 1, 2024, the Underlying XOL Treaty was renewed covering the period from January 1, 2024 through January 1, 2025. Catastrophe reinsurance treaties Most of the premiums written under our personal lines policies are also subject to our catastrophe reinsurance treaties.
The decrease of $327,000, or 9.9%, in depreciation and amortization was primarily due to the completion and deployment of our customized policy management software as planned for in Kingstone 2.0, now allowing us to consolidate multiple legacy systems into one efficient system and retire those older more costly and less reliable systems.
The decrease of $524,000, or 17.6%, in depreciation and amortization was primarily due to the completion and deployment of our customized policy management software as planned for in Kingstone 2.0, which allowed us to consolidate multiple legacy systems into one efficient system and retire those older more costly and less reliable systems.
Expressed as a percentage, this is the ratio of the sum of acquisition costs (the most significant being commissions paid to our producers) and other underwriting expenses less ceding commission revenue less other income to net premiums earned. Net combined ratio: The net combined ratio is a measure of an insurance company’s overall underwriting profit.
Expressed as a percentage, this is the ratio of the sum of acquisition costs (the most significant being commissions paid to our producers) and other underwriting expenses less ceding commission revenue less other income to net premiums earned.
Material terms for our reinsurance treaties in effect for the treaty years shown below are as follows: Treaty Period 2024/2025 Treaty 2023/2024 Treaty 2021/2023 Treaty July 1, January 1, July 1, January 1, July 1, December 31, 2024 2024 2023 2023 2022 2021 to to to to to to January 1, June 30, January 1, June 30, January 1, June 30, Line of Business 2025 2024 2024 2023 2023 2022 Personal Lines: Homeowners, dwelling fire and canine legal liability Quota share treaty: Percent ceded (7) 27 % 27 % 30 % 30 % 30 % 30 % Risk retained on intial $1,000,000 of losses (5) (6) (7) $ 730,000 $ 730,000 $ 700,000 $ 700,000 $ 700,000 $ 700,000 Losses per occurrence subject to quota share reinsurance coverage $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 Expiration date January 1, 2025 January 1, 2025 January 1, 2024 January 1, 2024 January 1, 2023 January 1, 2023 Excess of loss coverage and facultative facility coverage (1) (5) (6) $ 400,000 $ 8,400,000 $ 8,400,000 $ 8,400,000 $ 8,400,000 $ 8,400,000 in excess of in excess of in excess of in excess of in excess of in excess of $ 600,000 $ 600,000 $ 600,000 $ 600,000 $ 600,000 $ 600,000 Total reinsurance coverage per occurrence (5) (6) $ 470,000 $ 8,470,000 $ 8,500,000 $ 8,500,000 $ 8,500,000 $ 8,500,000 Losses per occurrence subject to reinsurance coverage (6) $ 1,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 9,000,000 $ 9,000,000 Expiration date (6) June 30, 2024 June 30, 2024 June 30, 2023 June 30, 2023 June 30, 2022 Catastrophe Reinsurance: Initial loss subject to personal lines quota share treaty (6) $ 10,000,000 $ 10,000,000 $ 10,000,000 $ 10,000,000 $ 10,000,000 $ 10,000,000 Risk retained per catastrophe occurrence (7) (8) (6) $ 9,500,000 $ 8,750,000 $ 8,750,000 $ 7,400,000 $ 7,400,000 Catastrophe loss coverage in excess of quota share coverage (2) (6) $ 315,000,000 $ 315,000,000 $ 335,000,000 $ 335,000,000 $ 490,000,000 Reinstatement premium protection (3) (4) (6) Yes Yes Yes Yes Yes (1) For personal lines, includes the addition of an automatic facultative facility allowing KICO to obtain homeowners single risk coverage up to $9,000,000 in total insured value, which covers direct losses from $3,500,000 to $9,000,000 through June 30, 2024.
Material terms for our reinsurance treaties in effect for the treaty years shown below are as follows: 57 Table of Contents Treaty Period 2025/2026 Treaty 2024/2025 Treaty 2023/2024 Treaty Line of Business July 1, 2025 to January 1, 2026 January 2, 2025 to June 30, 2025 July 1, 2024 to January 1, 2025 January 1, 2024 to June 30, 2024 July 1, 2023 to January 1, 2024 January 1, 2023 to June 30, 2023 Personal Lines: Homeowners, dwelling fire and canine legal liability Quota share treaty: Percent ceded (7) 16 % 16 % 27 % 27 % 30 % 30 % Risk retained on initial $1,000,000 of losses (5) (6) (7) $ 840,000 $ 840,000 $ 730,000 $ 730,000 $ 700,000 $ 700,000 Losses per occurrence subject to quota share reinsurance coverage $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 Expiration date January 1, 2026 January 1, 2026 January 1, 2025 January 1, 2025 January 1, 2024 January 1, 2024 Excess of loss coverage and facultative facility coverage (1) (5) (6) $ 400,000 $ 8,400,000 $ 8,400,000 $ 8,400,000 $ 8,400,000 $ 8,400,000 in excess of in excess of in excess of in excess of in excess of in excess of $ 600,000 $ 600,000 $ 600,000 $ 600,000 $ 600,000 $ 600,000 Total reinsurance coverage per occurrence (5) (6) $ 360,000 $ 8,360,000 $ 8,470,000 $ 8,470,000 $ 8,500,000 $ 8,500,000 Losses per occurrence subject to reinsurance coverage (6) $ 1,000,000 $ 9,000,000 $ 9,000,000 $ 9,000,000 $ 9,000,000 $ 9,000,000 Expiration date (6) June 30, 2025 June 30, 2025 June 30, 2024 June 30, 2024 June 30, 2023 Catastrophe Reinsurance: Initial loss subject to personal lines quota share treaty (6) $ 10,000,000 $ 10,000,000 $ 10,000,000 $ 10,000,000 $ 10,000,000 $ 10,000,000 Risk retained per catastrophe occurrence (6) (7) (8) (9) (6) $ 4,250,000 $ 4,750,000 $ 9,500,000 $ 8,750,000 $ 8,750,000 Catastrophe loss coverage in excess of quota share coverage (2) (6) (6) $ 275,000,000 $ 275,000,000 $ 315,000,000 $ 315,000,000 $ 335,000,000 Reinstatement premium protection (3) (4) (6) Yes Yes Yes Yes Yes (1) For personal lines, includes the addition of an automatic facultative facility allowing KICO to obtain homeowners single risk coverage up to $9,000,000 in total insured value, which covers direct losses from $3,500,000 to $9,000,000 through June 30, 2025. 58 Table of Contents (2) Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts.
In Year Ended 2023, as disclosed in Note 9 to the consolidated financial statements, we incurred increased interest expense in connection with the 2022 Notes, which provide for interest at the rate of 12% per annum, and the 2022 equipment financing.
In Year Ended 2024 and Year Ended 2023, as disclosed in Note 9 to the consolidated financial statements, we incurred interest expense in connection with the 2022 Notes and 2024 Notes. The 2022 Notes provided for interest at the rate of 12% per annum.
Operating expenses, including salaries and benefits, generally are impacted by inflation. 70 Table of Contents Year Ended 2023 included continuing economic inflation, which resulted in a sustained increase in interest rates, a widening of credit spreads, lower public equity valuations, and significant financial market volatility.
Operating expenses, including salaries and benefits, generally are impacted by inflation. The Year Ended 2024 included continuing economic inflation, albeit tempered compared to 2023, which resulted in a sustained increase in interest rates, a widening of credit spreads, lower public equity valuations, and significant financial market volatility.
Aggressively reducing the non-Core book of business, which has had a disproportionately negative impact on underwriting results, by slowing new business, re-underwriting the book, culling the agent base, reducing commissions, or other means, subject to regulatory constraints. We stopped writing all new non-Core business and have been aggressively reducing policy count.
Aggressively reduced the non-Core book of business, which has had a disproportionately negative impact on underwriting results, by stopping new business, culling the agent base, reducing commissions, or other means, subject to regulatory constraints, and have aggressively reduced policy count.
Treasury securities and obligations of U.S. government corporations and agencies (1) $ 20,954,764 $ 1,799 $ (17,373 ) $ - $ 20,939,190 14.1 % Political subdivisions of States, Territories and Possessions 16,607,713 - - (3,209,161 ) 13,398,552 9.0 % Corporate and other bonds Industrial and miscellaneous 75,993,042 - - (5,885,296 ) 70,107,746 47.1 % Residential mortgage and other asset backed securities (2) 50,905,423 113,761 (2,144 ) (6,541,731 ) 44,475,309 29.9 % Total fixed-maturity securities $ 164,460,942 $ 115,560 $ (19,517 ) $ (15,636,188 ) $ 148,920,797 100.0 % December 31, 2022 Cost or Gross Gross Unrealized Losses Estimated % of Amortized Unrealized Less than More than Fair Estimated Category Cost Gains 12 Months 12 Months Value Fair Value U.S.
Treasury securities and obligations of U.S. government corporations and agencies (1) $ 20,954,764 $ 1,799 $ (17,373) $ - $ 20,939,190 14.1 % Political subdivisions of States, Territories and Possessions 16,607,713 - — (3,209,161) 13,398,552 9.0 % Corporate and other bonds Industrial and miscellaneous 75,993,042 - — (5,885,296) 70,107,746 47.1 % Residential mortgage and other asset backed securities (2) 50,905,423 113,761 (2,144) (6,541,731) 44,475,309 29.9 % Total fixed-maturity securities $ 164,460,942 $ 115,560 $ (19,517) $ (15,636,188) $ 148,920,797 100.0 % (1) In October 2022, KICO placed certain U.S.
(6) Excess of loss coverage and facultative facility and catastrophe reinsurance treaties will expire on June 30,2024, with none of these coverages to be in effect during the period from July 1 2024 through January 1, 2025.
Retention increases to $640,000 from $530,000 under the 2025/2026 Treaty. (6) Excess of loss coverage and facultative facility and catastrophe reinsurance treaties will expire on June 30,2025, with none of these coverages to be in effect during the period from July 1 2025 through January 1, 2026.
PCS catastrophe bulletins are issued for events that cause more than $25 million in total insured losses and affect a significant number of policyholders and insurers. 44 Table of Contents Years Ended December 31, 2023 2022 Percentage Point Difference Percent Change Key ratios: Net loss ratio 72.4 % 77.3 % (4.9 ) (6.3 )% Net underwriting expense ratio 32.9 % 36.0 % (3.1 ) (8.6 )% Net combined ratio 105.3 % 113.3 % (8.0 ) (7.1 )% Direct Written Premiums Direct written premiums during the year ended December 31, 2023 (“Year Ended 2023”) were $200,175,000 compared to $201,255,000 during the year ended December 31, 2022 (“Year Ended 2022”).
PCS catastrophe bulletins are issued for events that cause more than $25 million in total insured losses and affect a significant number of policyholders and insurers Years Ended December 31, 2024 2023 Percentage Point Difference Percent Change Key ratios: Net loss ratio 48.7 % 72.4 % (23.7) (32.7) % Net underwriting expense ratio 31.3 % 32.9 % (1.6) (4.9) % Net combined ratio 80.0 % 105.3 % (25.3) (24.0) % Direct Written Premiums Direct written premiums during the year ended December 31, 2024 (“Year Ended 2024”) were $241,980,000 compared to $200,175,000 during the year ended December 31, 2023 (“Year Ended 2023”).
Treasury securities $ 1,228,860 $ 15,045 $ (6,914 ) $ (18,163 ) $ 1,218,828 20.0 % Political subdivisions of States, Territories and Possessions 499,170 890 - - 500,060 8.2 % Exchange traded debt 304,111 - - (70,111 ) 234,000 3.8 % Corporate and other bonds Industrial and miscellaneous 5,020,400 - - (867,140 ) 4,153,260 68.0 % Total $ 7,052,541 $ 15,935 $ (6,914 ) $ (955,414 ) $ 6,106,148 100.0 % December 31, 2022 Cost or Gross Gross Unrealized Losses Estimated % of Amortized Unrealized Less than More than Fair Estimated Category Cost Gains 12 Months 12 Months Value Fair Value Held-to-Maturity Securities: U.S.
Treasury securities $ 1,228,860 $ 15,045 $ (6,914) $ (18,163) $ 1,218,828 20.0 % Political subdivisions of States, Territories and Possessions 499,170 890 - - 500,060 8.2 % Exchange traded debt 304,111 - — (70,111) 234,000 3.8 % Corporate and other bonds Industrial and miscellaneous 5,020,400 — — (867,140) 4,153,260 68.0 % Total $ 7,052,541 $ 15,935 $ (6,914) $ (955,414) $ 6,106,148 100.0 % Held-to-maturity U.S.
An increase in our personal lines business gives rise to more property exposure, which increases our exposure to catastrophe risk; therefore, our premiums ceded under catastrophe treaties will increase. An increase in our personal lines business results in an increase in premiums ceded under our catastrophe treaties if reinsurance rates are stable or are increasing.
An increase in our personal lines business historically gave rise to more property exposure, which increased our exposure to catastrophe risk; therefore, our premiums ceded under catastrophe treaties would increase if reinsurance rates are stable or are increasing.
The 1.4% decrease in premiums from our personal lines business was primarily due to the decrease in premiums associated with our non-Core business of 39.8% offsetting a 8.6% increase in our Core business.
The 22.8% increase in premiums from our personal lines business was primarily due to the increase in premiums associated with our Core business of 31.4% offsetting a 58.5% decrease in our non-Core business.
Provisional Ceding Commissions Earned In Year Ended 2023, we earned provisional ceding commissions of $20,397,000 from personal lines earned premiums ceded under the 2023/2024 Treaty, and in Year Ended 2022, we earned provisional ceding commissions of $19,106,000 from personal lines earned premiums ceded under the 2021/2023 Treaty.
Provisional Ceding Commissions Earned In Year Ended 2024, we earned provisional ceding commissions of $18,829,000 from personal lines earned premiums ceded under the 2024/2025 Treaty, and in Year Ended 2023, we earned provisional ceding commissions of $20,397,000 from personal lines earned premiums ceded under the 2023/2024 Treaty.
Depreciation on older assets that were retired, which had a shorter useful life, is greater than the depreciation on newly acquired assets which have a longer useful life. Interest Expense Interest expense in Year Ended 2023 was $4,003,000 compared to $2,019,000 in Year Ended 2022, an increase of $1,984,000 or 98.3%.
Depreciation on older assets that were retired, which had a shorter useful life, is greater than the depreciation on newly acquired assets which have a longer useful life. Interest Expense Interest expense in Year Ended 2024 was $3,514,000 compared to $4,003,000 in Year Ended 2023, a decrease of $489,000 or 12.2%.
Insurance companies incur a significant amount of their total expenses from losses incurred by policyholders, which are referred to as claims. In settling these claims, various loss adjustment expenses (“LAE”) are incurred such as insurance adjusters’ fees and legal expenses. In addition, insurance companies incur policy acquisition costs.
Our expenses include the insurance underwriting expenses of KICO and other operating expenses. Insurance companies incur a significant amount of their total expenses from losses incurred by policyholders, which are referred to as claims. In settling these claims, various loss adjustment expenses (“LAE”) are incurred such as insurance adjusters’ fees and legal expenses.
This is the sum of the net loss and net underwriting expense ratios. If the net combined ratio is at or above 100 percent, an insurance company cannot be profitable without investment income, and may not be profitable if investment income is insufficient. Underwriting income: Underwriting income is net pre-tax income attributable to our insurance underwriting business before investment activity.
This is the sum of the net loss and net underwriting expense ratios. If the net combined ratio is at or above 100 percent, an 30 Table of Contents insurance company cannot be profitable without investment income, and may not be profitable if investment income is insufficient.
In-force policies as of July 31, 2019 for these lines were non-renewed at the end of their annual terms. As of December 31, 2023 and 2022, there were no commercial liability policies in-force. As of December 31, 2023, these expired policies represent approximately 15.8% of loss and LAE reserves net of reinsurance recoverables.
In-force policies as of July 31, 2019 for these lines were non-renewed at the end of their annual terms. As of December 31, 2024 and 2023, there were no commercial liability policies in-force. As of December 31, 2024, these expired policies represent approximately 14.4% of loss and LAE reserves net of reinsurance recoverables. See discussion below under “Additional Financial Information”.
The 2024/2025 Treaty and underlying excess of loss reinsurance treaty will expire on January 1, 2025. (7) For the 2021/2023 Treaty, 4% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event.
The 2025/2026 Treaty will expire on January 1, 2026. (7) For the 2023/2024 Treaty, 17.5% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event.
Other Underwriting Expenses Other underwriting expenses were $25,910,000, or 12.8% of direct earned premiums, in Year Ended 2023 compared to $26,697,000, or 13.9% of direct earned premiums, in Year Ended 2022.
Other Underwriting Expenses Other underwriting expenses were $25,693,000, or 12.1% of direct earned premiums, in Year Ended 2024 compared to $25,910,000, or 12.8% of direct earned premiums, in Year Ended 2023.
Upon the expiration of the 2023/2024 Treaty on January 1, 2024, we entered into a new 27% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”). 68 Table of Contents We entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2023.
Upon expiration of the 2023/2024 Treaty on January 1, 2024 we entered into a new 27% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2024 through January 1, 2025 ("2024/2025 Treaty").
For Year Ended 2023, the continuing economic inflation impacted our loss and loss adjustment expenses as well; should these trends continue in the near-term, it would in all likelihood negatively impact our results of operations.
The higher interest rates and widening of credit spreads reduced the value of our fixed income securities. For Year Ended 2024, the continuing economic inflation impacted our loss and loss adjustment expenses as well; should these trends continue in the near-term, it would in all likelihood negatively impact our results of operations.
Treasury securities are held in trust pursuant to various states’ minimum fund requirements. 60 Table of Contents A summary of the amortized cost and estimated fair value of our investments in held-to-maturity securities by contractual maturity as of December 31, 2023 and 2022 is shown below: December 31, 2023 December 31, 2022 Amortized Estimated Amortized Estimated Remaining Time to Maturity Cost Fair Value Cost Fair Value Less than one year $ - $ - $ 708,535 $ 743,575 One to five years 1,121,288 1,097,101 1,120,507 1,088,522 Five to ten years 1,414,911 1,270,770 1,402,704 1,200,720 More than 10 years 4,516,342 3,738,277 4,534,394 3,567,571 Total $ 7,052,541 $ 6,106,148 $ 7,766,140 $ 6,600,388 61 Table of Contents Credit Rating of Fixed-Maturity Securities The table below summarizes the credit quality of our available-for-sale fixed-maturity securities as of December 31, 2023 and 2022 as rated by Standard and Poor’s (or, if unavailable from Standard and Poor’s, then Moody’s, Fitch, or Kroll): December 31, 2023 December 31, 2022 Estimated Percentage of Estimated Percentage of Fair Estimated Fair Estimated Value Fair Value Value Fair Value Rating U.S.
Treasury securities are held in trust pursuant to various states’ minimum fund requirements. 50 Table of Contents A summary of the amortized cost and estimated fair value of our investments in held-to-maturity securities by contractual maturity as of December 31, 2024 and 2023 is shown below: December 31, 2024 December 31, 2023 Remaining Time to Maturity Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Less than one year $ 499,719 $ 499,065 $ — $ — One to five years 622,375 600,288 1,121,288 1,097,101 Five to ten years 1,427,579 1,323,600 1,414,911 1,270,770 More than 10 years 4,497,669 3,536,312 4,516,342 3,738,277 Total $ 7,047,342 $ 5,959,265 $ 7,052,541 $ 6,106,148 51 Table of Contents Credit Rating of Fixed-Maturity Securities The table below summarizes the credit quality of our available-for-sale fixed-maturity securities as of December 31, 2024 and 2023 as rated by Standard and Poor’s (or, if unavailable from Standard and Poor’s, then Moody’s, Fitch, or Kroll): December 31, 2024 December 31, 2023 Estimated Fair Value Percentage of Estimated Fair Value Estimated Fair Value Percentage of Estimated Fair Value Rating U.S.
See “Business – Government Regulation”, “Risk Factors – As a holding company, we are dependent on the results of operations of our subsidiary, KICO; there are restrictions on the payment of dividends by KICO; our ability to pay the principal amount of the 2022 Notes on the due date of December 30, 2024 may be limited by these regulatory constraints” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Liquidity” in Items 1, 1A and 7, respectively, of this Annual Report.
See “Business – Government Regulation”, “Risk Factors – As a holding company, we are dependent on the results of operations of our subsidiary, KICO; there are restrictions on the payment of dividends by KICO” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Liquidity” in Items 1, 1A and 7, respectively, of this Annual Report.
Earned premiums represent premiums received from insureds, which are recognized as revenue over the period of time that insurance coverage is provided (i.e., ratably over the one-year life of the policy). A significant period of time can elapse from the receipt of insurance premiums to the payment of insurance claims.
All of KICO’s insurance policies are written for a one year term. Earned premiums represent premiums received from insureds, which are recognized as revenue over the period of time that insurance coverage is provided (i.e., ratably over the one year life of the policy).
For the period July 1, 2023 through June 30, 2024 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $12,500,000 of catastrophe coverage in excess of $10,000,000. (5) For the period January 1, 2022 through January 1, 2025, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000.
For the period July 1, 2023 through June 30, 2024, reinstatement premium protection for $50,000,000 of catastrophe coverage in excess of $10,000,000. (4) For the period July 1, 2024 through June 30, 2025 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $50,000,000 of catastrophe coverage in excess of 10,000,000.
(8) Plus losses in excess of catastrophe coverage Treaty Year July 1, 2023 July 1, 2022 July 1, 2021 to to to Line of Business June 30, 2024 June 30, 2023 June 30, 2022 Personal Lines: Personal Umbrella Quota share treaty: Percent ceded - first $1,000,000 of coverage 90 % 90 % 90 % Percent ceded - excess of $1,000,000 dollars of coverage 95 % 95 % 95 % Risk retained $ 300,000 $ 300,000 $ 300,000 Total reinsurance coverage per occurrence $ 4,700,000 $ 4,700,000 $ 4,700,000 Losses per occurrence subject to quota share reinsurance coverage $ 5,000,000 $ 5,000,000 $ 5,000,000 Expiration date June 30, 2024 June 30, 2023 June 30, 2022 Commercial Lines (1) (1) Coverage on all commercial lines policies expired in September 2020; reinsurance coverage is based on treaties in effect on the date of loss.
Treaty Year Line of Business July 1, 2024 to June 30, 2025 July 1, 2023 to June 30, 2024 July 1, 2022 to June 30, 2023 Personal Lines: Personal Umbrella Quota share treaty: Percent ceded - first $1,000,000 of coverage 90 % 90 % 90 % Percent ceded - excess of $1,000,000 dollars of coverage 95 % 95 % 95 % Risk retained $ 300,000 $ 300,000 $ 300,000 Total reinsurance coverage per occurrence $ 4,700,000 $ 4,700,000 $ 4,700,000 Losses per occurrence subject to quota share reinsurance coverage $ 5,000,000 $ 5,000,000 $ 5,000,000 Expiration date June 30, 2025 June 30, 2024 June 30, 2023 Commercial Lines (1) (1) Coverage on all commercial lines policies expired in September 2020; reinsurance coverage is based on treaties in effect on the date of loss. 59 Table of Contents Inflation Premiums are established before we know the amount of losses and loss adjustment expenses or the extent to which inflation may affect such amounts.
As of December 31, 2023 and 2022, the estimated fair value of the eligible investments was approximately $11,412,000 and $12,228,000, respectively. KICO will retain all rights regarding all securities if pledged as collateral.
As of December 31, 2024, the estimated fair value of the eligible investments was approximately $10,130,000. KICO will retain all rights regarding all securities if pledged as collateral.
Treasury securities and obligations of U.S. government corporations and agencies $ 5,974,440 $ (17,373 ) 1 $ - $ - - $ 5,974,440 $ (17,373 ) Political subdivisions of States, Territories and Possessions - - - 13,398,552 (3,209,161 ) 13 13,398,552 (3,209,161 ) Corporate and other bonds industrial and miscellaneous - - - 70,107,746 (5,885,296 ) 85 70,107,746 (5,885,296 ) Residential mortgage and other asset backed securities 88,988 (2,144 ) 4 38,675,604 (6,541,731 ) 37 38,764,592 (6,543,875 ) Total fixed-maturity securities $ 6,063,428 $ (19,517 ) 5 $ 122,181,902 $ (15,636,188 ) 135 $ 128,245,330 $ (15,655,705 ) 64 Table of Contents December 31, 2022 Less than 12 months 12 months or more Total Estimated No. of Estimated No. of Estimated Fair Unrealized Positions Fair Unrealized Positions Fair Unrealized Category Value Losses Held Value Losses Held Value Losses Fixed-Maturity Securities: U.S.
Treasury securities and obligations of U.S. government corporations and agencies $ 5,974,440 $ (17,373) 1 $ - $ - - $ 5,974,440 $ (17,373) Political subdivisions of States, Territories and Possessions — — — 13,398,552 (3,209,161) 13 13,398,552 (3,209,161) Corporate and other bonds industrial and miscellaneous — — — 70,107,746 (5,885,296) 85 70,107,746 (5,885,296) Residential mortgage and other asset backed securities 88,988 (2,144) 4 38,675,604 (6,541,731) 37 38,764,592 (6,543,875) Total fixed-maturity securities $ 6,063,428 $ (19,517) 5 $ 122,181,902 $ (15,636,188) 135 $ 128,245,330 $ (15,655,705) There were 204 securities at December 31, 2024 that accounted for the gross unrealized loss of our fixed-maturity securities available-for-sale, none of which were deemed to be credit losses by us.
During this time, KICO invests the premiums, earns investment income and generates net realized and unrealized investment gains and losses on investments. Our holding company earns investment income from its cash holdings. Our expenses include the insurance underwriting expenses of KICO and other operating expenses.
A significant period of time can elapse from the receipt of insurance premiums to the payment of insurance claims. During this time, KICO invests the premiums, earns investment income and generates net realized and unrealized investment gains and losses on investments. Our holding company earns investment income from its cash holdings.
Net cash provided by investing activities was $9,462,000 in Year Ended 2023 compared to $5,906,000 used in investing activities in Year Ended 2022 resulting in a $15,368,000 increase in net cash provided by investing activities. In Year Ended 2023, we had net cash provided by our investment portfolio of $11,289,000, compared to $1,355,000 used in Year Ended 2022.
Net cash used in investing activities was $35,261,000 in Year Ended 2024 compared to $9,462,000 provided by investing activities in Year Ended 2023 resulting in a $44,723,000 increase in net cash used in investing activities. In Year Ended 2024, we had net cash used by our investment portfolio of $32,924,000, compared to $11,289,000 provided in Year Ended 2023.
The below table provides detail of our reserves as of December 31, 2023 and 2022: As of As of December 31, 2023 December 31, 2022 ($ in thousands) Gross Ceded Net Gross Ceded Net Case loss $ 67,108 $ 19,538 $ 47,570 $ 62,745 $ 16,619 $ 46,126 Case LAE 5,726 1,121 4,605 5,543 898 4,645 IBNR loss 37,262 10,665 26,597 42,687 10,023 32,664 IBNR LAE 11,722 1,965 9,757 7,364 120 7,244 Total $ 121,818 $ 33,289 $ 88,529 $ 118,340 $ 27,660 $ 90,679 (Components may not sum due to rounding) Case Reserves – Reserves for reported losses are based on an estimate of ultimate loss costs of an individual claim derived from individual case-basis valuations, actual claims paid, pending claims, statistical analyses and various actuarial reserving methodologies.
The below table provides detail of our reserves as of December 31, 2024 and 2023: As of December 31, 2024 As of December 31, 2023 ($ in thousands) Gross Ceded Net Gross Ceded Net Case loss $ 64,087 $ 17,721 $ 46,366 $ 67,108 $ 19,538 $ 47,570 Case LAE 6,563 1,426 5,137 5,726 1,121 4,605 IBNR loss 38,681 10,661 28,020 37,262 10,665 26,597 IBNR LAE 16,879 2,514 14,365 11,722 1,965 9,757 Total $ 126,210 $ 32,322 $ 93,888 $ 121,818 $ 33,289 $ 88,529 (Components may not sum due to rounding) Case Reserves – Reserves for reported losses are based on an estimate of ultimate loss costs of an individual claim derived from individual case-basis valuations, actual claims paid, pending claims, statistical analyses and various actuarial reserving methodologies.
Cash flow and liquidity are categorized into three sources: (1) operating activities; (2) investing activities; and (3) financing activities, which are shown in the following table: Years ended December 31, 2023 2022 Cash flows (used in) provided by: Operating activities $ (11,326,850 ) $ (915,521 ) Investing activities 9,461,700 (5,905,779 ) Financing activities (1,116,080 ) (5,511,070 ) Net decrease in cash and cash equivalents (2,981,230 ) (12,332,370 ) Cash and cash equivalents, beginning of period 11,958,228 24,290,598 Cash and cash equivalents, end of period $ 8,976,998 $ 11,958,228 Net cash used in operating activities was $11,327,000 in Year Ended 2023 as compared to $916,000 used in operating activities in Year Ended 2022.
Cash flow and liquidity are categorized into three sources: (1) operating activities; (2) investing activities; and (3) financing activities, which are shown in the following table: Years ended December 31, 2024 2023 Cash flows provided by (used in): Operating activities $ 57,947,771 $ (11,326,850) Investing activities (35,261,441) 9,461,700 Financing activities (2,993,887) (1,116,080) Net increase (decrease) in cash and cash equivalents 19,692,443 (2,981,230) Cash and cash equivalents, beginning of period 8,976,998 11,958,228 Cash and cash equivalents, end of period $ 28,669,441 $ 8,976,998 Net cash provided by operating activities was $57,948,000 in the Year Ended 2024 as compared to $11,327,000 used in operating activities in Year Ended 2023.
Net premiums earned are a function of net written premium volume. Net written premiums comprise both renewal business and new business and are recognized as earned premium over the term of the underlying policies. Net written premiums from both renewal and new business are impacted by competitive market conditions as well as general economic conditions.
Outlook Our net premiums earned may be impacted by a number of factors. Net premiums earned are a function of net written premium volume. Net written premiums comprise both renewal business and new business and are recognized as earned premium over the term of the underlying policies.
As of December 31, 2023 and 2022 there was no outstanding balance on the FHLBNY credit line. 58 Table of Contents Equity Securities The following table presents a breakdown of the cost and estimated fair value of, and gross gains and losses on, investments in equity securities as of December 31, 2023 and 2022: December 31, 2023 % of Gross Gross Estimated Estimated Category Cost Gains Losses Fair Value Fair Value Equity Securities: Preferred stocks $ 13,583,942 $ - $ (2,870,027 ) $ 10,713,915 72.6 % Fixed income exchange traded funds 3,711,232 (669,232 ) 3,042,000 20.6 % Mutual funds 622,209 314,816 - 937,025 6.3 % FHLBNY common stock 69,400 - - 69,400 0.5 % Total $ 17,986,783 $ 314,816 $ (3,539,259 ) $ 14,762,340 100.0 % December 31, 2022 % of Gross Gross Estimated Estimated Category Cost Gains Losses Fair Value Fair Value Equity Securities: Preferred stocks $ 13,583,942 $ - $ (3,589,313 ) $ 9,994,629 72.2 % Fixed income exchange traded funds 3,711,232 (821,632 ) 2,889,600 20.9 % Mutual funds 716,626 158,635 - 875,261 6.3 % FHLBNY common stock 74,900 - - 74,900 0.5 % Total $ 18,086,700 $ 158,635 $ (4,410,945 ) $ 13,834,390 100.0 % Other Investments The following table presents a breakdown of the cost and estimated fair value of, and gross gains on, our other investments as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Gross Estimated Gross Estimated Category Cost Gains Fair Value Cost Gains Fair Value Other Investments: Hedge fund $ 1,987,040 $ 1,910,110 $ 3,897,150 $ 1,987,040 $ 784,612 $ 2,771,652 59 Table of Contents Held-to-Maturity Securities The following table presents a breakdown of the amortized cost and estimated fair value of, and gross unrealized gains and losses on, investments in held-to-maturity securities as of December 31, 2023 and 2022: December 31, 2023 Cost or Gross Gross Unrealized Losses Estimated % of Amortized Unrealized Less than More than Fair Estimated Category Cost Gains 12 Months 12 Months Value Fair Value Held-to-Maturity Securities: U.S.
As of December 31, 2024 and 2023 there was no outstanding balance on the FHLBNY credit line. 48 Table of Contents Equity Securities The following table presents a breakdown of the cost and estimated fair value of, and gross gains and losses on, investments in equity securities as of December 31, 2024 and 2023: December 31, 2024 Category Cost Gross Gains Gross Losses Estimated Fair Value % of Estimated Fair Value Equity Securities: Preferred stocks $ 9,750,322 $ - $ (2,422,617) $ 7,327,705 71.2 % Fixed income exchange traded funds 3,711,232 (808,432) 2,902,800 28.2 % FHLBNY common stock 66,000 - - 66,000 0.6 % Total $ 13,527,554 $ — $ (3,231,049) $ 10,296,505 100.0 % December 31, 2023 Category Cost Gross Gains Gross Losses Estimated Fair Value % of Estimated Fair Value Equity Securities: Preferred stocks $ 13,583,942 $ - $ (2,870,027) $ 10,713,915 72.6 % Fixed income exchange traded funds 3,711,232 (669,232) 3,042,000 20.6 % Mutual funds 622,209 314,816 - 937,025 6.3 % FHLBNY common stock 69,400 - - 69,400 0.5 % Total $ 17,986,783 $ 314,816 $ (3,539,259) $ 14,762,340 100.0 % Other Investments The following table presents a breakdown of the cost and estimated fair value of, and gross gains on, our other investments as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Category Cost Gross Gains Estimated Fair Value Cost Gross Gains Estimated Fair Value Other Investments: Hedge fund $ 1,987,040 $ 2,393,616 $ 4,380,656 $ 1,987,040 $ 1,910,110 $ 3,897,150 49 Table of Contents Held-to-Maturity Securities The following table presents a breakdown of the amortized cost and estimated fair value of, and gross unrealized gains and losses on, investments in held-to-maturity securities as of December 31, 2024 and 2023: December 31, 2024 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value % of Estimated Fair Value Category Less than 12 Months More than 12 Months Held-to-Maturity Securities: U.S.
We derive substantially all of our revenue from KICO, which includes revenues from earned premiums, ceding commissions from quota share reinsurance, net investment income generated from its portfolio, and net realized gains and losses on investment securities. All of KICO’s insurance policies are written for a one-year term.
Cosi-related operating expenses are minimal and are included in other operating expenses. We derive substantially all of our revenue from KICO, which includes revenues from earned premiums, ceding commissions from quota share reinsurance, net investment income generated from its portfolio, and net realized gains and losses on investment securities.
The $10,411,000 increase in cash flows used in operating activities in Year Ended 2023 as compared to Year Ended 2022 was primarily the result of an increase in cash used arising from net fluctuations in operating assets and liabilities, partially offset by a decrease in net loss (adjusted for non-cash items) of $5,029,000.
The $69,275,000 increase in cash flows provided by operating activities in Year Ended 2024 as compared to Year Ended 2023 was primarily the result of the change to net income from net loss (adjusted for non-cash items) of $69,275,000 and cash provided arising from net fluctuations in operating assets and liabilities.
Loss and Loss Adjustment Expense Reserves Property and Casualty loss and loss adjustment expense (“LAE”) reserves are established to provide for the estimated cost of settling both reported (“case”) and incurred but not reported (“IBNR”) claims and claims adjusting expenses.
Also, see Note 2 to the consolidated financial statements following Item 16 of this Annual Report. 31 Table of Contents Loss and Loss Adjustment Expense Reserves Property and casualty loss and loss adjustment expense (“LAE”) reserves are established to provide for the estimated cost of settling both reported (“case”) and incurred but not reported (“IBNR”) claims and claims adjusting expenses.
Unrealized gains on our equity securities and other investments in Year Ended 2023 were $2,153,000, compared to unrealized (losses) of $(9,252,000) in Year Ended 2022. Net realized (losses) on sales of investments were $(19,000) in Year Ended 2023 compared to net realized (losses) of $(140,000) in Year Ended 2022.
Net Gains on Investments Net gains on investments were $415,000 in Year Ended 2024 compared to net gains of $2,135,000 in Year Ended 2023. Unrealized gains on our equity securities and other investments in Year Ended 2024 were $477,000, compared to unrealized gains of $2,153,000 in Year Ended 2023.
The increase in our Core business and the decrease in our non-Core business is consistent with a key pillar of our Kingstone 3.0 strategy to reduce our non-Core business due to profitability concerns. 45 Table of Contents Net Written Premiums and Net Premiums Earned Net written premiums decreased $13,403,000, or 12.5%, to $93,611,000 in Year Ended 2023 from $107,014,000 in Year Ended 2022.
The increase in our Core business and the decrease in our non-Core business is consistent with a key pillar of our Kingstone 3.0 strategy to reduce our non-Core business due to profitability concerns. Net Written Premiums and Net Premiums Earned Net written premiums increased $45,573,000, or 41.9%, to $154,230,000 in Year Ended 2024 from $108,657,000 in Year Ended 2023.
The decrease of $1,217,000 was primarily due to a reduction of commission rates on our legacy policies in accordance with our Kingstone 3.0 strategy as well as the lower commission rate paid on Select products as compared to legacy products, but offset in part by an increase in direct earned premiums of $10,524,000 to $202,046,000.
The increase was offset by a reduction in commission rates on our legacy policies in accordance with our Kingstone 3.0 strategy as well as the lower commission rate paid on Select products as compared to legacy products.
The maturity date of the 2022 Notes is December 30, 2024. If the aforementioned sources of cash flow currently available are insufficient to cover our holding company debt service and other cash requirements, we will seek to obtain additional financing.
On February 24, 2025, we paid the balance of the 2024 Notes in full reducing the outstanding balance to $0. If the aforementioned sources of cash flow currently available are insufficient to cover our holding company debt service and other cash requirements, we will seek to obtain additional financing.
Income tax benefit in Year Ended 2022 was $5,418,000, which resulted in an effective tax rate of 19.4%. Loss before taxes was $7,365,000 in Year Ended 2023 compared to $27,942,000 in Year Ended 2022. The difference in effective tax rate is due to the effect of permanent differences in Year Ended 2023 compared to Year Ended 2022.
Income before taxes was $23,288,000 in Year Ended 2024 compared to a loss before taxes of $(7,365,000) in Year Ended 2023. The difference in effective tax rate is due to the effect of permanent differences in Year Ended 2024 compared to Year Ended 2023.
For the 2023/2024 Treaty, 17.5% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2024/2025 Treaty, 22% of the 27% total of losses ceded under this treaty are excluded from a named catastrophe event.
For the 2024/2025 Treaty, 22% of the 27% total of losses ceded under this treaty are excluded from a named catastrophe event.For the 2025/2026 Treaty, 6% of the 16% total of losses ceded under this treaty are excluded from a catastrophe event. (8) Plus losses in excess of catastrophe coverage.
Continuing expense reduction focus with a goal of reducing the net expense ratio to 33% by year-end 2024. For the year ended December 31, 2023, we achieved our goal, with a net underwriting expense ratio of 32.9%, a reduction of 3.1 points compared to the year ended December 31, 2022.
For the year ended December 31, 2023, we achieved our goal of 33%, with a net underwriting expense ratio of 32.9%.
Inflation Premiums are established before we know the amount of losses and loss adjustment expenses or the extent to which inflation may affect such amounts. We attempt to anticipate the potential impact of inflation in establishing our reserves, especially as it relates to medical and hospital rates where historical inflation rates have exceeded the general level of inflation.
We attempt to anticipate the potential impact of inflation in establishing our reserves, especially as it relates to medical and hospital rates where historical inflation rates have exceeded the general level of inflation.
The increase of $536,000, or 5.0%, is compared unfavorably to the 0.5% decrease in direct written premiums. In the periods following Year Ended 2022, we continued to strengthen our professional team by investing in the hiring of higher-level and higher compensated managers and staff needed to manage the business consistent with our Kingstone 2.0 and Kingstone 3.0 strategies.
The decrease from the reduction in staff was partially offset in the periods following Year Ended 2023, as we began to strengthen our professional team by investing in the hiring of higher-level and higher compensated managers and staff needed to manage the business consistent with our Kingstone 2.0 and Kingstone 3.0 strategies.
In addition, pursuant to the Exchange Agreement, we are not permitted to pay any cash dividends without the approval of the holders of a majority of the outstanding principal amount of the 2022 Notes. Therefore, we can give no assurance that any dividends will be paid to holders of our common stock.
In addition, pursuant to the 2022 Exchange Agreement and the 2024 Exchange Agreement, we were not permitted to pay any cash dividends without the approval of the holders of a majority of the outstanding principal amount of the 2022 Notes and the 2024 Notes.
In addition, other companies may utilize different estimates, which may impact comparability of our results of operations to those of similar companies. 39 Table of Contents See below a description of these critical accounting estimates. Also, see Note 2 to the consolidated financial statements following Item 16 of this Annual Report.
In addition, other companies may utilize different estimates, which may impact comparability of our results of operations to those of similar companies. See below a description of these critical accounting estimates.
Net premiums earned Net premiums earned remained flat at $114,384,000 in Year Ended 2023 compared to $114,385,000 in Year Ended 2022. 46 Table of Contents Ceding Commission Revenue The following table summarizes the changes in the components of ceding commission revenue (in thousands) for the periods indicated: Years ended December 31, ($ in thousands) 2023 2022 Change Percent Provisional ceding commissions earned $ 20,397 $ 19,106 $ 1,291 6.8 % Contingent ceding commissions earned 656 214 442 206.5 % Total ceding commission revenue $ 21,053 $ 19,319 $ 1,734 9.0 % (Columns in the table above may not sum to totals due to rounding) Ceding commission revenue was $21,053,000 in Year Ended 2023 compared to $19,319,000 in Year Ended 2022.
Ceding Commission Revenue The following table summarizes the changes in the components of ceding commission revenue (in thousands) for the periods indicated: Years ended December 31, ($ in thousands) 2024 2023 Change Percent Provisional ceding commissions earned $ 18,829 $ 20,397 $ (1,568) (7.7 %) Contingent ceding commissions earned 9 656 (647) (98.6 %) Total ceding commission revenue $ 18,838 $ 21,053 $ (2,215) (10.5 %) (Columns in the table above may not sum to totals due to rounding) 37 Table of Contents Ceding commission revenue was $18,838,000 in Year Ended 2024 compared to $21,053,000 in Year Ended 2023.
The following graph summarizes the changes in the components of net loss ratio for the periods indicated, along with the comparable components excluding commercial lines business: 48 Table of Contents (Percent components may not sum to totals due to rounding) For Year Ended 2023, the 4.9 point reduction in the loss ratio compared to Year Ended 2022 was mainly due to a lower underlying loss ratio (loss ratio excluding the impact of catastrophe and prior year development) and reduced impact from prior year development.
The net loss ratio was 48.7% in Year Ended 2024 compared to 72.4% in Year Ended 2023, a decrease of 23.7 percentage points. 38 Table of Contents The following graph summarizes the changes in the components of net loss ratio for the periods indicated, along with the comparable components excluding commercial lines business(1): (Percent components may not sum to totals due to rounding) The net loss ratio for Year Ended 2024 improved significantly compared to Year Ended 2023.
Significant factors influencing our determination that unrealized losses were temporary included credit quality considerations, the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and interest rate environment factors, management’s intent not to sell these securities and it being not more likely than not that we will be required to sell these investments before anticipated recovery of fair value to our cost basis.
Significant factors influencing our determination that unrealized losses were temporary included credit quality considerations, the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and interest rate environment factors, management’s intent not to sell these securities and it being not more likely than not that we will be required to sell these investments before anticipated recovery of fair value to our cost basis. 54 Table of Contents Liquidity and Capital Resources Cash Flows The primary sources of cash flow are from our insurance underwriting subsidiary, KICO, and include direct premiums written, ceding commissions from our quota share reinsurers, loss recovery payments from our reinsurers, investment income and proceeds from the sale or maturity of investments.
Net written premiums include direct premiums, less the amount of written premiums ceded under our reinsurance treaties (quota share, excess of loss, and catastrophe). The decrease in Year Ended 2023 is primarily due to a decrease in direct written premiums and an increase in catastrophe premiums rates.
Net written premiums include direct premiums, less the amount of written premiums ceded under our reinsurance treaties (quota share, excess of loss, and catastrophe).
See Notes 2 and 9 to our consolidated financial statements included in this Annual Report for a discussion of our plans in this regard. Our reconciliation of net loss to net cash used by operations is generally influenced by the collection of premiums in advance of paid losses, the timing of reinsurance, issuing company settlements and loss payments.
Our reconciliation of net income (loss) to net cash provided by (used in) by operations is generally influenced by the collection of premiums in advance of paid losses, the timing of reinsurance, issuing company settlements and loss payments.
The primary source of cash flow for our holding company are dividends and distributions received from KICO, which are subject to statutory restrictions. For the year ended December 31, 2023, KICO paid a dividend of $1,250,000 to us.
The primary source of cash flow for our holding company are dividends and distributions received from KICO, which are subject to statutory restrictions. For the year ended December 31, 2024, KICO did not pay any dividends to us. Through June 30, 2024, KICO had a negative adjusted unassigned surplus.
Other underwriting expenses represent general and administrative expenses of our insurance business and are comprised of other costs associated with our insurance activities such as regulatory fees, telecommunication and technology costs, occupancy costs, employment costs, and legal and auditing fees. 37 Table of Contents Other operating expenses: Other operating expenses include the corporate expenses of our holding company, Kingstone Companies, Inc., and operating expenses of Cosi.
Policy acquisition costs are deferred and recognized as expense as the related premiums are earned. Other underwriting expenses represent general and administrative expenses of our insurance business and are comprised of other costs associated with our insurance activities such as regulatory fees, telecommunication and technology costs, occupancy costs, employment costs, and legal and auditing fees.
See the tables below comparing the quarterly trends and changes from our Core and non-Core business for policies in force and direct written premiums from September 30, 2022 through December 31, 2023.
See the tables below for our Core and non-Core business for policies in force as of December 31, 2024 and 2023 and direct written premiums for the years ended December 31, 2024 and 2023.
Investments classified as HTM are carried at amortized cost, which requires very little judgement. Investments classified as AFS are generally carried at fair value with an unrealized gain/loss recorded in income. Actual results could vary significantly to the fair values recognized in the income statement.
Investments Bonds are classified as held-to-maturity (“HTM”) or available-for-sale (“AFS”), and stocks are generally classified as AFS. Investments classified as HTM are carried at amortized cost, which requires very little judgement. Investments classified as AFS are generally carried at fair value with an unrealized gain/loss recorded in income.
Inflation has been a dominant headwind that is showing signs of stabilizing. We have been cognizant that inflation’s impact on loss costs places added pressure on premiums and, as such, we have been more frequent and aggressive with our rate change requests. Similarly, home replacement values reflect that same inflationary pressure.
We have been cognizant that inflation’s impact on loss costs places added pressure on premiums and, as such, we have been more frequent and aggressive with our rate change requests. Similarly, home replacement values reflect that same inflationary pressure. In September 2023, we completed our first cycle of valuation adjustments, making sure that all homes were insured to value.
See discussion below under “Additional Financial Information”. 38 Table of Contents Livery physical damage: We write for-hire vehicle physical damage only policies for livery and car service vehicles and taxicabs. These policies insure only the physical damage portion of insurance for such vehicles, with no liability coverage included.
Livery physical damage: We write for-hire vehicle physical damage only policies for livery and car service vehicles and taxicabs. These policies insure only the physical damage portion of insurance for such vehicles, with no liability coverage included. 29 Table of Contents Other: We write canine legal liability policies and have a small participation in mandatory state joint underwriting associations.
Direct written premiums from our non-Core business were $23,482,000 in Year Ended 2023 down from $39,000,000 in Year Ended 2022, a decrease of $15,518,000, or 39.8%. The decrease in direct written premiums from our non-Core business is a result of our decision to aggressively reduce the book of business in these states.
The decrease in direct written premiums from our non-Core business is a result of our decision to aggressively reduce the book of business in these states. Policies in force from our non-Core business decreased by 64.9% in Year Ended 2024 compared to Year Ended 2023.
Changes in estimates used in preparing the income statement could result in significant changes to our deferred tax asset or liability. 40 Table of Contents Deferred tax assets or liabilities are recognized for estimated future tax consequences which result in differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis.
Deferred tax assets or liabilities are recognized for estimated future tax consequences which result in differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. These assets and liabilities are carried at the enacted tax rates expected to apply when the asset or liability is expected to be recovered or settled.
As of December 31, 2023, KICO had a negative unassigned surplus and currently will not be able to pay any distributions to us without prior regulatory approval. In September 2023, KICO received regulatory approval and paid us a $2,700,000 distribution from paid in capital.
Based on that, KICO was not be able to pay any distributions to us without prior regulatory approval. In December 2023, KICO received regulatory approval to pay us a $2,300,000 distribution from paid in capital. KICO paid us the $2,300,000 distribution in the second quarter of 2024.
Quota share reinsurance treaties Effective December 31, 2021, we entered into a quota share reinsurance treaty for our personal lines business covering the period from December 31, 2021 through January 1, 2023 (“2021/2023 Treaty”).
Upon the expiration of the 2024/2025 Treaty on January 1, 2025, we entered into a new 16% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2025 through January 1, 2026 (“2025/2026 Treaty”).
See Note 2 in the accompanying consolidated financial statements for a further discussion of our accounting policies following Item 16 of this Annual Report. Other income: We recognize installment fee income and fees charged to reinstate a policy after it has been cancelled for non-payment.
See Note 2 in the accompanying consolidated financial statements for a further discussion of our accounting policies following Item 16 of this Annual Report.

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