Kingstone Companies, Inc

Hello, and welcome to the Pinkstone Company's second quarter 2021 financial results conference call and webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Amanda Goldstein from Goldstein Investor Relations. Please go ahead.

Thank you very much, Kevin, and good morning, everyone. Yesterday afternoon, the company issued a press release detailing Kingston's 2021 second quarter results. On this call, Kingston may make forward-looking statements regarding itself and its business. The forward-looking events and circumstances discussed on this call may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Kingston. For more information, please refer to the section entitled Factors that May Affect Future Results and Financial Condition. In Part 1, Item 1A of the company's Form 10-K of the year ended December 31, 2020, along with a commentary on four booking statements at the end of the company's earnings release issued yesterday. In addition, our remarks today include references to non-GAAP measures. For a reconciliation of our non-GAAP measures to the GAAP figures, please see the tables in our earnings release. With that, I'd like to turn the call over to Kingstone CEO, Mr. Barry Goldstein. Please go ahead, Mr. Goldstein.

Thanks, Amanda, and good morning, everyone. We're pleased that you can join us for this, our second quarter 2021 conference call. First off, this was not a good quarter from an operating results perspective. I don't ever recall us discussing what presents itself today. That is that we've had an uptick in personal property liability claims and out of an abundance of caution, have set aside loss reserves appropriately. I will let Merrill cover the drivers of our elevated loss and combined ratios and what we have done to address the issue. Today, I want to talk about our competitive position. We are in an envious situation. I even think we're in the driver's seat. But to explain this clearly, let me remind you that beginning last July, our two largest COSI agency relationships stopped writing new business with us, effectively all but shutting down the alternative distribution channel. So when thinking of Kingstone today, think only about traditional independent agent footprint, what we call our select producers. Also, recall that we exited the commercial lines business beginning in mid-2019, and those premiums all ran off ending in late Q3 2020. So to allow for a true apples-to-apples comparison when looking at today's premium and policy generation as compared to prior years, be sure to carve out both COSI and commercial lines. At the same time, you'll recall that we've been laser-focused on increasing our profitability these past two years, understanding all the way through that growth would suffer as a result of the actions taken. Merrill and her team have refocused the company and did so by taking a significant number of actions to improve our financial results, reduce volatility, and better manage our catastrophe exposures. We have taken rate increases in every state, tightened our underwriting guidelines, introduced mandatory hurricane deductibles, employed catastrophe risk underwriting at the point of sale, and we non-renewed many policies that could not generate an appropriate return. I could go on, but I think you get the point. It was hard to take these steps, especially because we were the first company in our cohort to address and act on what was needed, starting in late 2019, again, under Merrill's guidance. Needless to say, our select producers were not very happy with us, not happy with our raising of rates, not happy with the multiple changes in how we did business. This led to our new business volumes declining materially. What we were no longer willing to write or write at a rate anywhere near what the others would, the producers placed with our competitors that had lower prices or less stringent underwriting standards. And they had these lower prices and looser guidelines for two years longer than us. So what is it that they say? If you're stuck in a hole, first stop digging, we did that two years ago. But for them, the hole has only gotten deeper and the actions required are far more painful. What we are seeing now is exactly what we expected. The tide has turned. While we remain focused on profitability and have not compromised our underwriting standards, our competitors have now started to take many of the same actions that we initiated two years ago. And because of that deeper hole, some of the actions they are taking are far more draconian. In addition to them raising rates and tightening guidelines, we are seeing some of our formerly major competitors stop writing business altogether. Some permanently, others supposedly temporarily. Many of our formerly unhappy agents have commented that they now understand and appreciate our approach as we continue to be a consistent open market for them, we never shut our doors. We are now, two years later, in an advantageous position competitively, and this is having a very positive impact on our new business production. For all states combined, we saw our personal lines quotes increase by 30% in the second quarter versus last year. Our new business policies bound by these select producers were up 16% in the second quarter. But for the month of July, new policies issued were up 30%. In our flagship product, New York State homeowners, our new business policies were up 65% in the second quarter and 90% in July. This is the most new business we've written in any month since August of 2019, When we began, our focus on profitability. We all know that it's easy to grow in the insurance business if you're priced too low. In our case, the growth in Personal Line's new business production are at rates reflecting the rate increases we've taken, up an average of 12% over the prior year for all states combined, and up 17% for New York only. Add to this two newly approved rate increases in our biggest states, which will begin to take hold in Q3, and further increase our new premium production. Again, we have not compromised. We will not give back on the hard work we put in. So this is profitable growth for us, and we are very confident that this growth will continue. Now let me turn the call to Meryl to review our results. Meryl?