Kingstone Companies, Inc

Hello, and welcome to the Kingstone Companies Incorporated fourth quarter and full year 2023 earnings conference call. If anyone should require operator assistance, please press star zero on your telephone keypad. A brief question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. At this time, I'd like to turn the call over to Karen Daly, Vice President of the Equity Group and Kingstone's Investor Relations Representative. Karen, you may begin.

Thank you, Kevin. Good morning, everyone. Joining us on the call today will be Chief Executive Officer Merrill Golden and Chief Financial Officer Jennifer Gravel. On behalf of the company, I would like to note that this conference call may include forward-looking statements which involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from projected results. Forward-looking statements speak only as of the date on which they are made, and Kingston undertakes no obligation to update the information discussed. 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 latest Form 10-K. Additionally, today's remarks may include references to non-GAAP measures. For reconciliation of our non-GAAP measures to GAAP figures, Please see the tables in the latest earnings release. With that, it's my pleasure to turn the call over to Meryl Golden. Meryl, you may begin.

Thanks, Karen, and good morning, everyone. As I reflect on my first six months serving as CEO of Kingston, it has been a journey of immense learning, and I am truly honored to have been entrusted to lead this great company. I want to thank our investors for your feedback leading to enhanced transparency and to inform you that we now have an investor presentation on our website with additional data that might be of interest. It has certainly taken longer than we had hoped to get it right, but I can proudly say that we have completed the turnaround and Kingston has returned to profitability. We are thrilled to again be positioned for consistent profitability and growth. Our products are priced right. Our policyholders are insured to value. Business written in the select product is producing a materially lower frequency than our legacy product, indicating our advanced segmentation is working. And the reduction in our expense ratio gives us a competitive advantage at a time when there are few active competitors in the market. I could not be more enthusiastic about our future. Returning to profitability is not just a financial milestone. It's a reflection of our commitment to sound financial management and operational efficiency that has been unwavering. Our return to profitability is a product of the hard work, dedication, and perseverance of every member of the Kingston team. Our transformation journey has been marked by bold decisions and an intense focus on execution. The past few years have been a period of profound change, growth, and adaptation. The benefits of Kingston 2.0 and Kingston 3.0 are now flowing through to our income statement and doing so at an accelerating rate. Our numbers now speak for themselves. You can see this in the fourth quarter results, and it will become even more apparent in our overall results as the non-core business continues to run off. I'm extremely optimistic about the results that Kingstone can deliver in 2024 and beyond. We have successfully taken a series of actions since year end 2022 that resulted in the rapid reduction in our non-core business. At December 31st, our non-core premium declined by 40% and policies enforced by 48% year over year. In the fourth quarter, we obtained regulatory approval to withdraw from New Jersey in line with our strategy and feel confident that we will reduce our non-core policies by 80% by the end of 2024, two years after starting this initiative. We continue to take rate to stay ahead of loss trends and inflation. During the quarter, we increased rates 20% in both our New York legacy and New Jersey homeowners products, in addition to rate changes in other states, as well as increased replacement costs, so our policyholders continue to be insured to value. Our core legacy homeowner rate change was 24% for the full year. Our strategy to focus on our core business will allow us to continue deepening our producer relationships and to operate more profitably over time. To further strengthen our product offering and underwriting, this week we announced a partnership with Zojax, an InsurTech firm that specializes in flood prevention, which will help mitigate the risk of water damage for our policyholders. We managed our exposure to catastrophe reinsurance very conservatively by slowing our core new business, particularly those risks contributing most to our PML. And since the rates for catastrophe reinsurance did not spike as high as feared, the increase in catastrophe premiums was less than we planned for. During the quarter, we began lifting these new business restrictions. resulting in a higher new business growth rate on our core business, which is accelerating even faster in 2024. We also successfully completed the placement of our 2024 quota share treaty with improved terms. For 2024, we will see 27% of adjusted personal lines written premium down from 30% in the prior year and will receive a higher seating commission rate than last year as our reinsurance partners recognize the positive changes that we have made to our business. Before I turn the call over to Jen, I am pleased to share that for the first time in several years, we are sharing our expectations and providing initial guidance for full year 2024. I want to remind you that our results are very weather dependent, and we have assumed no major catastrophe events in this guidance. We also assume the same level of quota share and seating commission as we currently have and that our reinsurance costs would stay flat at our July 1st renewal. With those assumptions, our guidance is as follows. We believe our core business direct written premium will grow between 12 and 16% year over year and will achieve a gap combined ratio between 88 and 92 earnings per diluted share between 50 cents and 90 cents, and return on equity between 15% and 22%. Our improved results are the culmination of the initiative that have already been successfully executed, so we are confident that the benefits will become increasingly apparent in our quarterly results going forward. Our margins are increasing. due to our efforts to increase premiums. At the same time, the reduction in the non-core business is improving our loss ratio, and the company's expenses have been reduced materially. With that, I'll turn the call over to Jen to review our financial results. Take it away, Jen.