A.M. Best Upgrades Credit Ratings of Kingstone Insurance Company and Kingstone Companies, Inc.
April 12 2017 - 12:50PM
Business Wire
A.M. Best has upgraded the Financial Strength Rating
(FSR) to A- (Excellent) from B++ (Good) and the Long-Term Issuer
Credit Rating (Long-Term ICR) to “a-” from “bbb” of Kingstone
Insurance Company (KICO) (Kingston, NY). Concurrently, A.M.
Best has upgraded the Long-Term ICR to “bbb-” from “bb” of
Kingstone Companies, Inc. [NASDAQ: KINS] (Delaware), the
insurance holding company of KICO. The Long-Term ICR outlooks have
been revised to stable from positive, while the outlook for the FSR
remains stable.
The rating upgrades are based on the improved risk-adjusted
capitalization of KICO, following a $23.0 million capital
contribution from KINS on March 1, 2017; improved underwriting
results and operating returns in recent years; and increased
catastrophe reinsurance coverage.
The ratings and outlooks reflect KICO’s solid risk-adjusted
capitalization, favorable five-year operating performance and local
market knowledge in New York. KICO’s risk-adjusted capitalization
has significantly improved in recent years, driven by a $15.0
million capital contribution from its parent, following an $18.8
million public offering on Dec. 13, 2013. The capital raised in
this public offering also enabled management to repay all of its
outstanding debt at KINS. Additionally, KINS completed a private
placement of $5.0 million of its common stock on April 15, 2016,
and following the approval of the New York State Department of
Financial Services, $3.0 million was contributed to the surplus of
KICO. Furthermore, following a $30.2 million public offering by
KINS in February 2017, $23.0 million of capital was contributed to
KICO’s surplus on March 1, 2017, to improve capitalization and
support future growth plans.
KICO’s favorable operating performance is reflected in the
company’s double-digit five-year pre-tax returns on revenue and
equity, generated by positive net underwriting income and
supplemented by net investment and other income. These five-year
operating returns compare favorably with the industry composite
average.
Partially offsetting KICO’s positive rating factors are its
dependence on reinsurance and its concentration of risk, primarily
in downstate New York, which exposes it to weather-related events
as well as to market, regulatory and judicial issues. Additionally,
KICO reported substantial growth in net premiums written in recent
years, driven by increased retention on its quota share reinsurance
contracts and new policy growth. However, KICO’s increased capital
position and financial flexibility are sufficient to support
management’s future growth plans. Furthermore, KICO historically
reported adverse loss reserve development in most calendar and
accident years, driven in part by historical lead paint claims.
However, loss reserve development has been modestly favorable in
recent calendar and accident years, driven by management’s
strategic initiatives.
While KICO’s single-state concentration exposes it to
weather-related events, catastrophe exposure is partially mitigated
through catastrophe reinsurance, which it has purchased at
increased limits in recent years, as well as the use of hurricane
deductibles, visual risk inspections, distance-from-shore
restrictions and surcharges. Additionally, KICO has been expanding
its operating territory to regions beyond the New York metropolitan
area.
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20170412005934/en/
A.M. BestKenneth Tappen, +1 908-439-2200, ext.
5248Senior Financial
Analystkenneth.tappen@ambest.comorJoseph Burtone, +1
908-439-2200, ext.
5125Directorjoseph.burtone@ambest.comorChristopher
Sharkey, +1 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy, +1
908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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