Kingstone Companies, Inc 10-Q for FY2023 Q1

Kingstone Companies, Inc. (KINS)

10-Q 2023-05-15 For: 2023-03-31

Added on April 06, 2026

About this 10-Q

Kingstone Companies, Inc filed this 10-Q on May 15, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $36.63M; up 28.3% from $28.55M a year earlier
Net loss: $5.05M; compared with a net loss of $9.2M a year earlier
Diluted EPS: -$0.47; compared with -$0.87 a year earlier

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	KINS	Nasdaq Capital Market

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

		PAGE

PART I — FINANCIAL INFORMATION			4
Item 1 —	Financial Statements		4
	Condensed Consolidated Balance Sheets at March 31, 2023 (Unaudited) and December 31, 2022		4
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2023 (Unaudited) and 2022 (Unaudited)		5
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2023 (Unaudited) and 2022 (Unaudited)		6
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 (Unaudited) and 2022 (Unaudited)		7
	Notes to Condensed Consolidated Financial Statements (Unaudited)		9
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations		42
Item 3 —	Quantitative and Qualitative Disclosures About Market Risk		69
Item 4 —	Controls and Procedures		70

PART II — OTHER INFORMATION			71
Item 1 —	Legal Proceedings		71
Item 1A —	Risk Factors		71
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds		71
Item 3 —	Defaults Upon Senior Securities		71
Item 4 —	Mine Safety Disclosures		71
Item 5 —	Other Information		71
Item 6 —	Exhibits		72
Signatures			73

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
	March 31,			December 31,
	2023			2022
	(unaudited)
Assets
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $6,825,609 at March 31, 2023 and $6,600,388 at December 31, 2022)	$	7,765,096		$	7,766,140
Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $172,374,518 at March 31, 2023 and $174,918,427 at December 31, 2022)		154,641,319			154,715,163
Equity securities, at fair value (cost of $18,011,146 at March 31, 2023 and $18,086,700 at December 31, 2022)		14,622,549			13,834,390
Other investments		3,135,449			2,771,652
Total investments		180,164,413			179,087,345
Cash and cash equivalents		10,500,753			11,958,228
Premiums receivable, net		13,339,037			13,880,504
Reinsurance receivables, net		78,018,606			66,465,061
Deferred policy acquisition costs		22,692,044			23,819,453
Intangible assets		500,000			500,000
Property and equipment, net		10,199,878			10,541,935
Deferred income taxes, net		11,061,418			10,331,158
Other assets		3,921,334			3,748,847
Total assets	$	330,397,483		$	320,332,531

Liabilities
Loss and loss adjustment expense reserves	$	124,121,818		$	118,339,513
Unearned premiums		105,159,893			107,492,777
Advance premiums		5,660,391			2,839,028
Reinsurance balances payable		20,110,212			13,061,966
Deferred ceding commission revenue		10,739,429			10,619,569
Accounts payable, accrued expenses and other liabilities		6,147,717			6,651,723
Debt, net		25,176,019			25,158,523
Total liabilities		297,115,479			284,163,099

Commitments and Contingencies (Note 11)

Stockholders' Equity
Preferred stock, $0.01 par value; authorized 2,500,000 shares		-			-
Common stock, $0.01 par value; authorized 20,000,000 shares; issued 12,231,965 shares at March 31, 2023 and 12,171,512 shares at December 31, 2022; outstanding 10,760,559 shares at March 31, 2023 and 10,700,106 shares at December 31, 2022		122,320			121,715
Capital in excess of par		74,734,915			74,519,590
Accumulated other comprehensive loss		(14,007,076	)		(15,958,428	)
Accumulated deficit		(22,000,674	)		(16,945,964	)
		38,849,485			41,736,913
Treasury stock, at cost, 1,471,406 shares at March 31, 2023 and December 31, 2022		(5,567,481	)		(5,567,481	)
Total stockholders' equity		33,282,004			36,169,432

Total liabilities and stockholders' equity	$	330,397,483		$	320,332,531

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
	For the Three Months Ended
	March 31,
	2023			2022
Revenues
Net premiums earned	$	28,254,953		$	26,673,380
Ceding commission revenue		5,445,407			4,681,396
Net investment income		1,541,492			1,359,100
Net gains (losses) on investments		1,224,871			(4,398,405	)
Other income		161,040			235,824
Total revenues		36,627,763			28,551,295

Expenses
Loss and loss adjustment expenses		25,039,410			22,941,198
Commission expense		8,539,762			8,351,086
Other underwriting expenses		6,871,619			6,815,949
Other operating expenses		662,634			881,955
Depreciation and amortization		808,130			770,110
Interest expense		1,009,891			456,545
Total expenses		42,931,446			40,216,843

Loss from operations before taxes		(6,303,683	)		(11,665,548	)
Income tax benefit		(1,248,973	)		(2,468,016	)
Net loss		(5,054,710	)		(9,197,532	)

Other comprehensive income (loss), net of tax
Gross change in unrealized gains (losses) on available-for-sale-securities		2,467,426			(9,865,777	)

Reclassification adjustment for losses included in net loss		2,639			41,324
Net change in unrealized gains (losses), on available-for-sale-securities		2,470,065			(9,824,453	)
Income tax (expense) benefit related to items of other comprehensive income (loss)		(518,713	)		2,063,136
Other comprehensive income (loss), net of tax		1,951,352			(7,761,317	)

Comprehensive loss	$	(3,103,358	)	$	(16,958,849	)

Loss per common share:
Basic	$	(0.47	)	$	(0.87	)
Diluted	$	(0.47	)	$	(0.87	)

Weighted average common shares outstanding
Basic		10,756,913			10,630,450
Diluted		10,756,913			10,630,450

Dividends declared and paid per common share	$	-		$	0.04

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
Three months ended March 31, 2023 and 2022

														Accumulated			Retained
											Capital			Other			Earnings
	Preferred Stock				Common Stock						in Excess			Comprehensive			(Accumulated			Treasury Stock
	Shares		Amount		Shares			Amount			of Par			Income (Loss)			Deficit)			Shares		Amount			Total
Balance, January 1, 2022		-	$	-		11,955,660		$	119,557		$	72,467,483		$	1,796,739		$	6,855,896			1,471,406	$	(5,567,481	)	$	75,672,194
Stock-based compensation		-		-		-			-			530,414			-			-			-		-			530,414
Vesting of restricted stock awards		-		-		222,070			2,221			(2,221	)		-			-			-		-			-
Shares deducted from restricted stock
awards for payment of withholding taxes		-		-		(68,423	)		(685	)		(357,390	)		-			-			-		-			(358,075	)
Dividends		-		-		-			-			-			-			(425,490	)		-		-			(425,490	)
Net loss		-		-		-			-			-			-			(9,197,532	)		-		-			(9,197,532	)
Change in unrealized losses on available-
for-sale securities, net of tax		-		-		-			-			-			(7,761,317	)		-			-		-			(7,761,317	)
Balance, March 31, 2022		-	$	-		12,109,307		$	121,093		$	72,638,286		$	(5,964,578	)	$	(2,767,126	)		1,471,406	$	(5,567,481	)	$	58,460,194

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months ended March 31,	2023			2022

Cash flows from operating activities:
Net loss	$	(5,054,710	)	$	(9,197,532	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Net losses (gains) on investments		2,639			(77,761	)
Net unrealized (gains) losses on equity investments		(863,713	)		3,560,634
Net unrealized (gains) losses on other investments		(363,797	)		915,532
Depreciation and amortization		808,130			770,110
Bad debt expense		19,504			38,817
Amortization of bond premium, net		(37,795	)		46,777
Amortization of discount and issuance costs on debt		296,919			44,045
Stock-based compensation		216,767			530,414
Deferred income tax benefit		(1,248,973	)		(2,112,244	)
Decrease (increase) in operating assets:
Premiums receivable, net		521,963			1,250,311
Reinsurance receivables, net		(11,553,545	)		(9,049,252	)
Deferred policy acquisition costs		1,127,409			582,406
Other assets		(172,487	)		1,555,843
Increase (decrease) in operating liabilities:
Loss and loss adjustment expense reserves		5,782,305			3,968,253
Unearned premiums		(2,332,884	)		(2,392,728	)
Advance premiums		2,821,363			2,539,061
Reinsurance balances payable		7,048,246			(7,870,498	)
Deferred ceding commission revenue		119,860			(268,996	)
Accounts payable, accrued expenses and other liabilities		(504,006	)		(2,221,270	)
Net cash flows used in operating activities		(3,366,805	)		(17,388,078	)

Cash flows from investing activities:
Purchase - fixed-maturity securities available-for-sale		(10,974,819	)		(13,890,402	)
Purchase - equity securities		-			(506,081	)
Redemption - fixed-maturity securities held-to-maturity		-			500,000
Sale and maturity - fixed-maturity securities available-for-sale		13,554,928			10,181,658
Sale - equity securities		75,554			4,994,884
Acquisition of property and equipment		(466,073	)		(1,565,128	)
Net cash flows provided by (used in) investing activities		2,189,590			(285,069	)

Cash flows from financing activities:
Principal payments on equipment financing		(266,160	)		-
Issue costs on 2022 Notes		(13,263	)		-
Withholding taxes paid on vested retricted stock awards		(837	)		(358,075	)
Dividends paid		-			(425,490	)
Net cash flows used in financing activities		(280,260	)		(783,565	)

	March 31, 2023
													Net
	Cost or		Gross		Gross Unrealized Losses						Estimated		Unrealized
	Amortized		Unrealized		Less than 12			More than 12			Fair		Gains
Category	Cost		Gains		Months			Months			Value		(Losses)

Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies (1)	$	21,988,099	$	36,038	$	(674	)	$	-		$	22,023,463	$	35,364

Political subdivisions of States, Territories and Possessions		17,098,969		-		(5,153	)		(3,338,913	)		13,754,903		(3,344,066	)

Corporate and other bonds Industrial and miscellaneous		80,264,856		-		(777,717	)		(6,479,111	)		73,008,028		(7,256,828	)

Residential mortgage and other asset backed securities (2)		53,022,594		67,556		(496,219	)		(6,739,006	)		45,854,925		(7,167,669	)
Total fixed-maturity securities	$	172,374,518	$	103,594	$	(1,279,763	)	$	(16,557,030	)	$	154,641,319	$	(17,733,199	)

	December 31, 2022
	Cost or		Gross		Gross Unrealized Losses						Estimated		Net
	Amortized		Unrealized		Less than 12			More than 12			Fair		Unrealized
Category	Cost		Gains		Months			Months			Value		Losses

Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies (1)	$	23,874,545	$	1,479	$	(6,928	)	$	-		$	23,869,096	$	(5,449	)

Political subdivisions of States, Territories and Possessions		17,108,154		-		(2,195,273	)		(1,771,494	)		13,141,387		(3,966,767	)

Corporate and other bonds Industrial and miscellaneous		80,338,464		-		(5,796,994	)		(2,458,985	)		72,082,485		(8,255,979	)

Residential mortgage and other asset backed securities (2)		53,597,264		58,398		(882,664	)		(7,150,803	)		45,622,195		(7,975,069	)
Total fixed-maturity securities	$	174,918,427	$	59,877	$	(8,881,859	)	$	(11,381,282	)	$	154,715,163	$	(20,203,264	)

	(1)	In October 2022, KICO placed certain U.S. Treasury securities to fulfill the required collateral for a sale leaseback transaction in a designated custodian account (see Note 7 – Debt - “Equipment Financing”). As of March 31, 2023 and December 31, 2022, the amount of required collateral was approximately $8,268,000 and $8,691,000, respectively. As of March 31, 2023 and December 31, 2022, the estimated fair value of the eligible collateral was approximately $11,475,000 and $8,691,000, respectively.
	(2)	KICO has placed certain residential mortgage backed securities as eligible collateral in a designated custodian account related to its membership in the Federal Home Loan Bank of New York (“FHLBNY”) (see Note 7 – Debt – “Federal Home Loan Bank”). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of December 31, 2022, the estimated fair value of the eligible investments was approximately $12,199,000. KICO will retain all rights regarding all securities if pledged as collateral. As of March 31, 2023 and December 31, 2022 there was no outstanding balance on the FHLBNY credit line.

	Three months ended
	March 31,
	2023		2022

Income:
Fixed-maturity securities	$	1,417,709	$	1,140,189
Equity securities		176,877		345,168
Cash and cash equivalents		32,858		183
Total		1,627,444		1,485,540
Expenses:
Investment expenses		85,952		126,440
Net investment income	$	1,541,492	$	1,359,100

	March 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. Treasury securities and obligations of U.S. government corporations and agencies	$	5,542,768	$	(674	)		1	$	-		-			-	$	5,542,768	$	(674	)

Political subdivisions of States, Territories and Possessions		549,276		(5,153	)		2		13,205,628		(3,338,913	)		12		13,754,904		(3,344,066	)

Corporate and other bonds industrial and miscellaneous		24,592,198		(777,717	)		33		48,415,831		(6,479,111	)		57		73,008,029		(7,256,828	)

Residential mortgage and other asset backed securities		8,454,568		(496,219	)		15		36,667,595		(6,739,006	)		32		45,122,163		(7,235,225	)

Total fixed-maturity securities	$	39,138,810	$	(1,279,763	)		51	$	98,289,054	$	(16,557,030	)		101	$	137,427,864	$	(17,836,793	)

	March 31, 2023
	Level 1		Level 2		Level 3		Total

Fixed-maturity securities available-for-sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	22,023,463	$	-	$	-	$	22,023,463

Political subdivisions of States, Territories and Possessions		-		13,754,903		-		13,754,903

Corporate and other bonds industrial and miscellaneous		73,008,028		-		-		73,008,028

Residential mortgage and other asset backed securities		-		45,854,925		-		45,854,925
Total fixed maturities		95,031,491		59,609,828		-		154,641,319
Equity securities		14,622,549		-		-		14,622,549
Total investments	$	109,654,040	$	59,609,828	$	-	$	169,263,868

	March 31, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value

Fixed-maturity securities-held-to maturity, Level 1	$	7,765,096	$	6,825,609	$	7,766,140	$	6,600,388
Cash and cash equivalents, Level 1	$	10,500,753	$	10,500,753	$	11,958,228	$	11,958,228
Premiums receivable, net, Level 1	$	13,339,037	$	13,339,037	$	13,880,504	$	13,880,504
Reinsurance receivables, net, Level 3	$	78,018,606	$	78,018,606	$	66,465,061	$	66,465,061
Real estate, net of accumulated depreciation, Level 3	$	2,052,283	$	2,800,000	$	2,050,644	$	2,800,000
Reinsurance balances payable, Level 3	$	20,110,212	$	20,110,212	$	13,061,966	$	13,061,966

	Direct		Assumed		Ceded			Net

Three months ended March 31, 2023
Premiums written	$	47,597,446	$	-	$	(23,628,699	)	$	23,968,747
Change in unearned premiums		2,332,884		-		1,953,322			4,286,206
Premiums earned	$	49,930,330	$	-	$	(21,675,377	)	$	28,254,953

Three months ended March 31, 2022
Premiums written	$	42,983,897	$	-	$	(18,065,709	)	$	24,918,188
Change in unearned premiums		2,392,727		-		(637,535	)		1,755,192
Premiums earned	$	45,376,624	$	-	$	(18,703,244	)	$	26,673,380

	March 31, 2023				December 31, 2022
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value

Less than one year	$	708,744	$	747,483	$	708,535	$	743,575
One to five years		1,120,700		1,098,253		1,120,507		1,088,522
Five to ten years		1,405,680		1,215,945		1,402,704		1,200,720
More than 10 years		4,529,972		3,763,928		4,534,394		3,567,571
Total	$	7,765,096	$	6,825,609	$	7,766,140	$	6,600,388

																					As of
	Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance																				March 31, 2023
																							Cumulative
																			Three				Number of
																			Months				Reported
																			Ended				Claims by
Accident	For the Years Ended December 31,																		March 31,				Accident
Year	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023		IBNR		Year
	(Unaudited 2014 - 2022)																		(Unaudited)

2014	$	14,193	$	14,260	$	14,218	$	14,564	$	15,023	$	16,381	$	16,428	$	16,434	$	16,486	$	16,486	$	24	2,138
2015				22,340		21,994		22,148		22,491		23,386		23,291		23,528		23,533		23,553		240	2,559
2016						26,062		24,941		24,789		27,887		27,966		27,417		27,352		27,246		183	2,881
2017								31,605		32,169		35,304		36,160		36,532		36,502		36,456		301	3,399
2018										54,455		56,351		58,441		59,404		61,237		61,231		1,247	4,231
2019												75,092		72,368		71,544		71,964		72,295		2,180	4,499
2020														63,083		62,833		63,217		63,266		2,074	5,873
2021																96,425		96,673		96,305		6,733	5,794
2022																		79,835		79,966		11,460	4,606
2023																				23,738		8,184	876
																	Total		$	500,541

	Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident	For the Years Ended December 31,																		Three Months Ended March 31,
Year	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023
	(Unaudited 2014 - 2022)																		(Unaudited)

2014	$	5,710	$	9,429	$	10,738	$	11,770	$	13,819	$	14,901	$	15,491	$	15,770	$	16,120	$	16,127
2015				12,295		16,181		18,266		19,984		21,067		22,104		22,318		22,473		22,487
2016						15,364		19,001		21,106		23,974		25,234		25,750		26,382		26,557
2017								16,704		24,820		28,693		31,393		32,529		33,522		33,911
2018										32,383		44,516		50,553		52,025		54,424		54,906
2019												40,933		54,897		58,055		60,374		60,993
2020														39,045		50,719		53,432		54,379
2021																56,282		77,756		78,247
2022																		45,856		58,175
2023																				5,301
																	Total		$	411,083

Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented																			$	89,459
All outstanding liabilities before 2014, net of reinsurance																				273
Liabilities for loss and allocated loss adjustment expenses, net of reinsurance																			$	89,731

	As of
(in thousands)	March 31, 2023
Liabilities for allocated loss and loss adjustment expenses, net of reinsurance	$	89,731
Total reinsurance recoverable on unpaid losses		30,405
Unallocated loss adjustment expenses		3,985
Total gross liability for loss and LAE reserves	$	124,122

	Treaty Period
	2023/2024 Treaty						2021/2023 Treaty
	July 1,			January 1,			July 1,			December 31,
	2023			2023			2022			2021
	to			to			to			to
	January 1,			June 30,			January 1,			June 30,
Line of Business	2024			2023			2023			2022

Personal Lines:
Homeowners, dwelling fire and and canine legal liability
Quota share treaty:
Percent ceded (8)		30	%		30	%		30	%		30	%
Risk retained on intial $1,000,000 of losses (6) (7) (8)	$	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
Expiration date		January 1, 2024			January 1, 2024			January 1, 2023			January 1, 2023
Excess of loss coverage and facultative facility coverage (1) (6)		(7	)	$	8,400,000		$	8,400,000		$	8,400,000
					in excess of			in excess of			in excess of
				$	600,000		$	600,000		$	600,000
Total reinsurance coverage per occurrence (6) (7)	$	500,000		$	8,500,000		$	8,500,000		$	8,500,000
Losses per occurrence subject to reinsurance coverage		(7	)	$	8,000,000		$	9,000,000		$	9,000,000
Expiration date		(7	)		June 30, 2023			June 30, 2023			June 30, 2022

Catastrophe Reinsurance:
Initial loss subject to personal lines quota share treaty (7)	$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000
Risk retained per catastrophe occurrence (8) (9)		(7	)	$	8,750,000		$	7,400,000		$	7,400,000
Catastrophe loss coverage in excess of quota share coverage (2)		(7	)	$	335,000,000		$	335,000,000		$	490,000,000
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 (5)		NA			NA			NA			NA

Reinstatement premium protection (3) (4)		(7	)		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, 2023.
(2)	Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts. Duration of 168 consecutive hours for a catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone.
(3)	For the period December 31, 2021 through June 30, 2022, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000.
(4)	For the period July 1, 2022 through June 30, 2023, reinstatement premium protection for $9,800,000 of catastrophe coverage in excess of $10,000,000.

(5)	Excludes freeze and freeze related claims.
(6)	For the period January 1, 2022 through January 1, 2024, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty and 2022/2023 Treaty. Excludes losses from named storms.
(7)	Excess of loss and facultative facility, and catastrophe treaties will expire on June 30, 2023; reinsurance coverage in effect from July 1, 2023 through January 1, 2024 is only for Personal lines quota share (homeowners, dwelling fire and canine liability) and underlying excess of loss reinsurance.
(8)	For the 2021/2023 Treaty, 4% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2023/2024 Treaty, 17.5% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event.
(9)	Plus losses in excess of catastrophe coverage

	Treaty Year
	July 1, 2022			July 1, 2021
	to			to
Line of Business	June 30, 2023			June 30, 2022

Personal Lines:
Personal Umbrella
Quota share treaty:
Percent ceded - first $1,000,000 of coverage		90	%		90	%
Percent ceded - excess of $1,000,000 dollars of coverage		95	%		95	%
Risk retained	$	300,000		$	300,000
Total reinsurance coverage per occurrence	$	4,700,000		$	4,700,000
Losses per occurrence subject to quota share reinsurance coverage	$	5,000,000		$	5,000,000
Expiration date		June 30, 2023			June 30, 2022

Commercial Lines (1)

Period:	Percentage

December 30, 2022 to December 29, 2023		102.00	%
December 30, 2023 to September 29, 2024		101.00	%
September 30, 2024 to December 29, 2024		100.00	%

	·	At the end of the lease, KICO may purchase the fixed assets for a purchase price of $2,024,206, which is 25% of the original fixed asset cost of $8,096,824; or

	·	KICO may renew the lease for 16 months at the same rental rate, which totals $2,030,036.

For the Year Ending December 31,	Total
Remainder of 2023	$	822,212
2024		1,153,862
2025		1,223,293
2026		1,296,901
2027		1,119,021
		5,615,289
2027 purchase price		2,024,206
Total	$	7,639,495

Stock Options	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value

Outstanding at January 1, 2023		107,201	$	8.31		1.92	$	-

Granted		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Expired/Forfeited		-	$	-		-	$	-

Outstanding at March 31, 2023		107,201	$	8.31		1.66	$	-

Vested and Exercisable at March 31, 2023		107,201	$	8.31		1.66	$	-

Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value per Share		Aggregate Fair Value

Balance at January 1, 2023		366,597		$	6.97	$	2,555,181

Granted		272,682		$	1.37	$	373,499
Vested		(60,951	)	$	6.51	$	(396,868	)
Forfeited		(600	)	$	1.52	$	(912	)

Balance at March 31, 2023		577,728		$	3.77	$	2,178,035

	March 31,			December 31,
Type of NOL	2023			2022			Expiration

Federal only, NOL from 2021 - 2023	$	5,284,865		$	3,828,947		None

State only (A)		2,375,669			2,276,595		December 2027 - December 2043
Valuation allowance		(2,375,669	)		(2,276,595	)
State only, net of valuation allowance		-			-

Total deferred tax asset from net operating loss carryovers	$	5,284,865		$	3,828,947

	Three months ended			Three months ended
Lease cost	March 31, 2023			March 31, 2022
Operating lease (1) (2)	$	40,815		$	46,938

Other information on operating leases
Cash payments included in the measurement of lease liability reported in operating cash flows	$	47,483		$	53,003
Discount rate		5.50	%		5.50	%
Remaining lease term in years
KICO		1.00			2.00

	(1)	KICO rent expense is included in the condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses.
	(2)	Cosi rent expense is included in the condensed consolidated statements of operations and comprehensive income (loss) within other operating expenses.

For the Three Months Ending March 31,	Total
Remainder of 2023	$	147,436
2024		49,145
Total undiscounted lease payments		196,581
Less: present value adjustment		15,595
Operating lease liability (1)	$	180,986

	1.	Strengthen the management team by adding highly qualified professionals with deep domain experience and diverse backgrounds;

	2.	Reduce expenses and increase efficiency by embracing technology including converting to a new policy management system, retiring multiple legacy systems and starting up a new claims system, among other technology initiatives;

	3.	Develop and implement a new, more highly segmented product suite (Kingstone Select) which better matches rate to risk using advanced analytics and an abundance of data; and

	4.	Better manage the Company’s 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.

	1.	Aggressively reducing the book of business in non-New York states, 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;

	2.	Adjusting pricing to stay ahead of loss trends, including inflation, by filing the maximum annual rate change that can be supported in each state and product and ensuring all policyholders are insured to value;

	3.	Tightly managing reinsurance requirements and costs, using risk selection and other underwriting capabilities to manage the growth rate of our PML; and

	4.	Continuing expense reduction focus with a goal of reducing the net expense ratio to 33% by year-end 2024.

	Three months ended March 31,
($ in thousands)	2023			2022			Change			Percent
Revenues
Direct written premiums	$	47,597		$	42,984		$	4,613			10.7	%
Assumed written premiums		-			-			-			na	%
		47,597			42,984			4,613			10.7	%
Ceded written premiums
Ceded to quota share treaties (1)		15,588			10,146			5,442			53.6	%
Ceded to excess of loss treaties		1,073			857			216			25.2	%
Ceded to catastrophe treaties		6,967			7,063			(96	)		(1.4	)%
Total ceded written premiums		23,628			18,066			5,562			30.8	%

Net written premiums		23,969			24,918			(949	)		(3.8	)%

Change in unearned premiums
Direct and assumed		2,333			2,393			(60	)		(2.5	)%
Ceded to quota share treaties (1)		1,953			(638	)		2,591			na	%
Change in net unearned premiums		4,286			1,755			2,531			144.2	%

Premiums earned
Direct and assumed		49,930			45,376			4,554			10.0	%
Ceded to reinsurance treaties		(21,675	)		(18,703	)		(2,972	)		(15.9	)%
Net premiums earned		28,255			26,673			1,582			5.9	%

Ceding commission revenue (1)		5,445			4,681			764			16.3	%
Net investment income		1,541			1,359			182			13.4	%
Net gains (losses) on investments		1,225			(4,398	)		5,623			na	%
Other income		161			236			(75	)		(31.8	)%
Total revenues		36,628			28,551			8,076			28.3	%
Expenses
Loss and loss adjustment expenses
Direct and assumed:
Loss and loss adjustment expenses excluding the effect of catastrophes		31,910			26,509			5,401			20.4	%
Losses from catastrophes (2)		5,386			6,837			(1,451	)		(21.2	)%
Total direct and assumed loss and loss adjustment expenses		37,296			33,346			3,950			11.8	%

Ceded loss and loss adjustment expenses:
Loss and loss adjustment expenses excluding the effect of catastrophes		10,614			6,587			4,027			61.1	%
Losses from catastrophes (2)		1,643			3,818			(2,175	)		(57.0	)%
Total ceded loss and loss adjustment expenses		12,257			10,405			1,852			17.8	%

Net loss and loss adjustment expenses:
Loss and loss adjustment expenses excluding the effect of catastrophes		21,296			19,922			1,374			6.9	%
Losses from catastrophes (2)		3,743			3,019			724			24.0	%
Net loss and loss adjustment expenses		25,039			22,941			2,098			9.1	%

Commission expense		8,540			8,351			189			2.3	%
Other underwriting expenses		6,872			6,816			56			0.8	%
Other operating expenses		663			882			(219	)		(24.8	)%
Depreciation and amortization		808			770			38			4.9	%
Interest expense		1,010			457			553			121.0	%
Total expenses		42,931			40,217			2,715			6.7	%

Loss before taxes		(6,304	)		(11,666	)		5,362			46.0	%
Income tax benefit		(1,249	)		(2,468	)		1,219			49.4	%
Net loss	$	(5,055	)	$	(9,198	)	$	4,142			45.0	%

	(1)	Effective December 31, 2021, we entered into a 30% personal lines quota share treaty.
	(2)	The three months ended March 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). 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.