KINGSTONE COMPANIES INC
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
KINS$20.46+7.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001654954-24-010605
Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001628280-24-047833
Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 206 previous paragraphs and 245 current paragraphs.
116 unchanged; 76 reworded; 51 added; 14 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 45 previous and 38 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (51)
Current report
Key GAAP and Non-GAAP Measures
Current report
Underlying loss ratio: The underlying loss ratio is a non-GAAP ratio, which is computed as the difference between GAAP net loss ratio and the effect of prior year loss reserve development and catastrophes losses. Management believes that this ratio is useful to investors, and it is used by management to reveal the trends in our business that may be obscured by prior year loss reserve development and catastrophe losses. Catastrophe losses cause our loss ratios to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on the net loss ratio. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is the net loss ratio. The underlying loss ratio should not be considered a substitute for the net loss ratio and does not reflect our net loss ratio.
Current report
Net loss ratio excluding the effect of catastrophes: Net loss ratio excluding the effect of catastrophes is a non-GAAP ratio, which is computed as the difference between GAAP net loss ratio and the effect of catastrophes on the net loss ratio. Management believes that this ratio is useful to investors, and it is used by management to reveal the trends in our business that may be obscured by catastrophe losses. Catastrophe losses cause our net loss ratios to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on the net loss ratio. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is the net loss ratio. The net loss ratio excluding the effect of catastrophes should not be considered a substitute for the net loss ratio and does not reflect our net loss ratio.
Current report
Net underwriting expense ratio excluding the effect of catastrophes: Net underwriting expense ratio excluding the effect of catastrophes is a non-GAAP ratio, which is computed as the difference between GAAP net underwriting expense ratio and the effect of catastrophes on the net underwriting expense ratio. Management believes that this ratio is useful to investors, and it is used by management to reveal the trends in our business that may be obscured by catastrophe losses. Catastrophe losses cause our net underwriting expense ratios to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on the underwriting expense ratio. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is the net underwriting expense ratio. The net underwriting expense ratio excluding the effect of catastrophes should not be considered a substitute for the net underwriting expense ratio and does not reflect our net underwriting expense ratio.
Current report
Net combined ratio excluding the effect of catastrophes: Net combined ratio excluding the effect of catastrophes is a non-GAAP ratio, which is computed as the difference between GAAP combined ratio and the effect of catastrophes on the net combined ratio. Management believes that this ratio is useful to investors, and it is used by management to reveal the trends in our business that may be obscured by catastrophe losses. Catastrophe losses cause our net combined ratios to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on the net combined ratio. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is the net combined ratio. The net combined ratio excluding the effect of catastrophes should not be considered a substitute for the net combined ratio and does not reflect our net combined ratio.
Current report
Net income (loss) from insurance underwriting business on a standalone basis: Net income (loss) from insurance underwriting business on a standalone basis is a non-GAAP measure, which is computed as GAAP net income (loss) without the effect of holding company operations on GAAP net income (loss). Management believes that this measure is useful to investors, and it is used by management to reveal the trends in our insurance underwriting business that may be obscured by holding company operations. Holding company operations cause our GAAP net income (loss) to vary significantly between periods as a result of their magnitude and can have a significant impact on GAAP net income (loss). Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is GAAP net income (loss). Net income (loss) from insurance underwriting business on a standalone basis should not be considered a substitute for GAAP net income (loss) and does not reflect our GAAP net income (loss).
Current report
Strengthened the management team by adding highly qualified professionals with deep domain experience and diverse backgrounds;
Current report
Reduced expenses and increased 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;
Current report
Developed and implemented a new, more highly segmented product suite (Kingstone Select) which better matches rate to risk using advanced analytics and an abundance of data; and
Current report
Better managed 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 then emerging “hard market” in catastrophe reinsurance.
Current report
Aggressively reducing 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. We have been aggressively reducing policy count. Our request to withdraw from the state of New Jersey was acknowledged in October 2023 and all remaining policies will be non-renewed over a two year period starting January 1, 2024. As of September 30, 2024, our non-Core policy count was down by 58.8% compared to September 30, 2023;
Current report
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. 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. In September 2023, we completed our first cycle of valuation adjustments, making sure that all homes were insured to value. As a result, we have seen a rise in premiums attributable to the heightened replacement costs. All policies are renewed at the most current replacement cost. Overall average written premium for our legacy Core homeowners policies for the last 12 months, reflecting both rate and replacement cost changes, increased by 24.5%;
Current report
Tightly managing reinsurance requirements and costs, using risk selection and other underwriting capabilities to manage the growth rate of our PML. We needed to contain our exposure to spiking reinsurance pricing. We did so and were able to reduce the required limit to be purchased while maintaining our same risk tolerance. We used all the tools available to us to limit new business that was deemed to be too expensive and at the same time re-underwrote the book to cull those risks which presented the greatest risk; and
Current report
Continuing expense reduction focus with a goal of reducing the net underwriting expense ratio to 29% by year-end 2024. For the year ended December 31, 2023, we achieved our goal of 33%, with a net underwriting expense ratio of 32.9%. For the nine months ended September 30, 2024, the net underwriting expense ratio was 31.9%, a reduction of 1.1 points compared to the nine months ended September 30, 2023 but higher than our goal due to a higher accrual for employee bonuses and contingent commissions for producers to reflect greater profitability than originally projected.
Current report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
(1)For the nine months ended September 30, 2023, our personal lines business was subject to a 30% quota share treaty, expiring on January 1, 2024, which included a runoff of an 8.5% portion through the remainder of 2023. Effective January 1, 2024, we entered into a 27% personal lines quota share treaty, which includes a runoff of a 3.0% portion through the end of 2024.
Current report
(2)The nine months ended September 30, 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). 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.
Current report
Direct written premiums during the nine months ended September 30, 2024 (“Nine Months 2024”) were $169,447,000 compared to $147,237,000 during the nine months ended September 30, 2023 (“Nine Months 2023”). The increase of $22,210,000, or 15.1%, was primarily due to an increase in premiums from our personal lines business.
Current report
Other income was $401,000 in Nine Months 2024 compared to $454,000 in Nine Months 2023, a decrease of $53,000, or 11.7%.
Current report
Net loss and LAE was $45,125,000 for Nine Months 2024 compared to $66,553,000 for Nine Months 2023. The net loss ratio was 48.8% in Nine Months 2024 compared to 77.7% in Nine Months 2023, a decrease of 28.9 percentage points.
Current report
(1) Underlying loss ratio is a non-GAAP ratio, which is computed as the difference between GAAP net loss ratio and the effect of prior year loss reserve development and catastrophes losses. See "Non-GAAP Financial Measures" for the reconciliation of underlying loss ratio to the GAAP measure of net loss ratio.
Current report
The increase in Nine Months 2024 of $953,000, or 51.0%, as compared to Nine Months 2023 was primarily due to an increase in equity compensation and loss on extinguishment of debt. The increase in equity compensation is due to accelerated vesting in September 2024 as a result of the retirement of our executive chairman, and an equity compensation liability accrual for our senior leadership team pursuant to our employee bonus plan. The $297,000 loss on extinguishment of debt loss is due to writing off the balance of unamortized debt issue costs from the 2022 Notes at the time of the 2024 Exchange Agreement as disclosed in Note 7 to the condensed consolidated financial statements.
Current report
(1)For the three months ended September 30, 2023, our personal lines business was subject to a 30% quota share treaty, expiring on January 1, 2024, which included a runoff of an 8.5% portion through the remainder of 2023. Effective January 1, 2024, we entered into a 27% personal lines quota share treaty, which includes a runoff of a 3.0% portion through the end of 2024.
Current report
(2)The three months ended September 30, 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). 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.
Current report
Other income was $147,000 in Three Months 2024 compared to $142,000 in Three Months 2023, a decrease of $5,000, or 3.5%.
Current report
Net loss and LAE was $13,028,000 for Three Months 2024 compared to $21,932,000 for Three Months 2023. The net loss ratio was 39.0% in Three Months 2024 compared to 78.5% in Three Months 2023, a decrease of 39.5 percentage points.
Current report
(1) Underlying loss ratio is a non-GAAP ratio, which is computed as the difference between GAAP net loss ratio and the effect of prior year loss reserve development and catastrophes losses. See "Non-GAAP Financial Measures" for the reconciliation of underlying loss ratio to the GAAP measure of net loss ratio.
Current report
The increase in Three Months 2024 of $800,000, or 181.0%, as compared to Three Months 2023 was primarily due to an increase in equity compensation and loss on extinguishment of debt. The increase in equity compensation is due to accelerated vesting in September 2024 as a result of the retirement of our executive chairman, and an equity compensation liability accrual for our senior leadership team pursuant to our employee bonus plan. The $297,000 loss on extinguishment of debt loss is due to writing off the balance of unamortized debt issue costs from the 2022 Notes at the time of the 2024 Exchange Agreement as disclosed in Note 7 to the condensed consolidated financial statements. These increases were partially offset by a decrease in executive bonus. A bonus is accrued pursuant to the employment agreement of our Chief Executive Officer. The negative executive bonus of $85,000 is due to a $117,000 reallocation of the bonus to other underwriting expenses accrued through June 30, 2024. The net accrual of $32,000 is a result of the profitable operations before taxes in Three Months 2024 compared to a loss in Three Months 2023.
Current report
(1)“Other” includes, among other things, premiums and loss and loss adjustment expenses from our participation in a mandatory state joint underwriting association and loss and loss adjustment expenses from commercial auto.
Current report
(2)In July 2019, we decided that we will no longer underwrite Commercial Liability risks. See discussions above regarding the discontinuation of this line of business.
Current report
(3)See discussion above with regard to “Net Loss and LAE”, as to catastrophe losses in the three months and nine months ended September 30, 2024 and 2023.
Current report
(1) Net income (loss) from insurance underwriting business on a standalone basis is a non-GAAP measure, which is computed as GAAP net income (loss) without the effect of holding company operations on GAAP net income (loss). See "Non-GAAP Financial Measures" for the reconciliation of net income (loss) from insurance underwriting business on a standalone basis to the GAAP measure of net income (loss).
Current report
(1)For the three months ended September 30, 2024 and 2023, includes the sum of net catastrophe losses and loss adjustment expenses of $582,124 and $2,159,455, respectively. For the nine months ended September 30, 2024 and 2023, includes the sum of net catastrophe losses and loss adjustment expenses of $2,454,159 and $7,284,917, respectively.
Current report
(2)Net loss ratio excluding the effect of catastrophes is a non-GAAP ratio, which is computed as the difference between GAAP net loss ratio and the effect of catastrophes on the net loss ratio. See "Non-GAAP Financial Measures" for the reconciliation of net loss ratio excluding the effect of catastrophes to the GAAP measure of net loss ratio. Net underwriting expense ratio excluding the effect of catastrophes is a non-GAAP ratio, which is computed as the difference between GAAP net underwriting expense ratio and the effect of catastrophes on the net underwriting expense ratio. See "Non-GAAP Financial Measures" for the reconciliation of net underwriting expense ratio excluding the effect of catastrophes to the GAAP measure of net underwriting expense ratio. Net combined ratio excluding the effect of catastrophes is a non-GAAP ratio, which is computed as the difference between GAAP net combined ratio and the effect of catastrophes on the net combined ratio. See "Non-GAAP Financial Measures" for the reconciliation of net combined ratio excluding the effect of catastrophes to the GAAP measure of net combined ratio.
Current report
(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 9 – Debt - “Equipment Financing”). As of September 30, 2024 and December 31, 2023, the amount of required collateral was approximately $5,731,000 and $6,999,000, respectively. As of September 30, 2024 and December 31, 2023, the estimated fair value of the U.S. Treasury securities used as eligible collateral was approximately $5,997,000 and $11,960,000, respectively.
Current report
(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 September 30, 2024, the estimated fair value of the eligible investments was approximately $10,944,000. KICO will retain all rights regarding all securities if pledged as collateral. As of September 30, 2024 and December 31, 2023 there was no outstanding balance on the FHLBNY credit line.
Current report
(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.
Current report
(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.
Current report
(3)For the period July 1, 2022 through June 30, 2023, reinstatement premium protection for $12,500,000 of catastrophe coverage in excess of $10,000,000. 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.
Current report
(4)For the period July 1, 2024 through June 30, 2025 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $10,500,000 of catastrophe coverage in excess of $10,000,000.
Showing the first 40 of 51 passages. Open the source sections for the rest.
Removed paragraphs (14)
Previous report
Key Measures
Previous report
Reinsurance
Previous report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
Direct written premiums during the six months ended June 30, 2024 (“Six Months 2024”) were $102,820,000 compared to $95,244,000 during the six months ended June 30, 2023 (“Six Months 2023”). The increase of $7,576,000, or 8.0%, was primarily due to an increase in premiums from our personal lines business.
Previous report
Ceding Commission Revenue
Previous report
Other income was $254,000 in Six Months 2024 compared to $312,000 in Six Months 2023, a decrease of $58,000, or 18.6%.
Previous report
Net loss and LAE was $32,098,000 for Six Months 2024 compared to $44,620,000 for Six Months 2023. The net loss ratio was 54.3% in Six Months 2024 compared to 77.2% in Six Months 2023, a decrease of 22.9 percentage points.
Previous report
The increase in Six Months 2024 of $153,000, or 10.7%, as compared to Six Months 2023 was primarily due to increases in executive bonus, employment costs, and equity compensation. The executive bonus is due to a $117,000 accrual pursuant to the employment agreement of our Chief Executive Officer. The accrual is a result of the profitable operations before taxes in Six Months 2024 compared to a loss in Six Months 2023.The increase in employment costs was due to fluctuations in deferred compensation liability related to changes in the underlying invested portfolio.
Previous report
Ceding Commission Revenue
Previous report
Other income was $106,000 in Three Months 2024 compared to $151,000 in Three Months 2023, a decrease of $45,000, or 29.8%.
Previous report
Net loss and LAE was $14,238,000 for Three Months 2024 compared to $19,581,000 for Three Months 2023. The net loss ratio was 47.0% in Three Months 2024 compared to 66.4% in Three Months 2023, a decrease of 19.4 percentage points.
Previous report
Other underwriting expenses were $5,901,000, or 11.6% of direct earned premiums, in Three Months 2024 compared to $6,684,000, or 13.1% of direct earned premiums, in Three Months 2023. The decrease of $783,000, or 11.7%, was primarily due to a $365,000 gain on the commutations of prior years’ quota share reinsurance treaties from a group of reinsurers, decreases in salaries and employment costs excluding employee bonuses as described below, policy management system fees as result of the completion of our policy management system conversion, allowing us to eliminate multiple legacy systems, and other IT costs as a result of the completion of these projects. The decreases were partially offset by the impact of high inflation.
Previous report
The increase in Three Months 2024 of $38,000, or 5.0%, as compared to Three Months 2023 was primarily due to increases in executive bonus, and equity compensation’ partially offset by a decrease in employment costs. The executive bonus is due to a $117,000 accrual pursuant to the employment agreement of our Chief Executive Officer. The accrual is a result of the profitable operations before taxes in Three Months 2024 compared to a loss in Three Months 2023.The decrease in employment costs was due to fluctuations in deferred compensation liability related to changes in the underlying invested portfolio.
Reworded paragraphs (76)
Previous wording
We offer property and casualty insurance products through our wholly-owned subsidiary, Kingstone Insurance Company (“KICO”). 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 also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. For the three months ended June 30, 2024 and 2023, respectively, 95.9% and 88.6% of KICO’s direct written premiums came from the New York policies. For the six months ended June 30, 2024 and 2023, respectively, 95.2% and 87.8% of KICO’s direct written premiums came from the New York policies. We refer to our New York business as our “Core” business and the business outside of New York as our “non-Core” business.
Current wording
We offer property and casualty insurance products through our wholly-owned subsidiary, Kingstone Insurance Company (“KICO”). 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 also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. For the three months ended September 30, 2024 and 2023 respectively, 96.3% and 88.5% of KICO’s direct written premiums came from the New York policies. For the nine months ended September 30, 2024 and 2023 respectively, 95.6% and 88.1% of KICO’s direct written premiums came from the New York policies. We refer to our New York business as our “Core” business and the business outside of New York as our “non-Core” business.
Previous wording
In May 2019, due to the poor performance of this line we placed a moratorium on new commercial lines and new commercial umbrella submissions while we further reviewed this business. In July 2019, due to the continuing poor performance of these lines, we made the decision to no longer underwrite commercial lines or commercial umbrella risks. In-force policies as of July 31, 2019 for these lines were non-renewed at the end of their annual terms. As of June 30, 2024 and December 31, 2023, there were no commercial liability policies in-force. As of June 30, 2024, these expired policies represent approximately 15.2% of loss and LAE reserves net of reinsurance recoverables. See discussion below under “Additional Financial Information”.
Current wording
In May 2019, due to the poor performance of these lines we placed a moratorium on new commercial lines and new commercial umbrella submissions while we further reviewed this business. In July 2019, due to the continuing poor performance of these lines, we made the decision to no longer underwrite commercial lines or commercial umbrella risks. In-force policies as of July 31, 2019 for these lines were non-renewed at the end of their annual terms. As of September 30, 2024 and December 31, 2023, there were no commercial liability policies in-force. As of September 30, 2024, these expired policies represent approximately 14.9% of loss and LAE reserves net of reinsurance recoverables. See discussion below under “Additional Financial Information”.
Previous wording
We utilize the following key measures in analyzing the results of our insurance underwriting business:
Current wording
We utilize the following key GAAP and non-GAAP measures in analyzing the results of our insurance underwriting business. See "Non-GAAP Financial Measures" for a reconciliation of the below non-GAAP measures to the most directly comparable GAAP measure:
Previous wording
(Columns in the table above may not sum to totals due to rounding)
Current wording
(Components may not sum due to rounding)
Previous wording
Kingstone 2.0 (completed) and Kingstone 3.0 (underway)
Current wording
Kingstone 2.0 (completed), Kingstone 3.0 (underway), and Change in Market Dynamics (underway)
Previous wording
We announced the substantive completion of Kingstone 2.0 in late 2022 and embarked on a new strategy to optimize our in-force business, which we coined as “Kingstone 3.0”. The four pillars of this new strategy entail:
Current wording
We announced the substantive completion of Kingstone 2.0 in late 2022 and embarked on a new strategy to optimize our in-force business, which we coined as “Kingstone 3.0”. The four pillars of this strategy entail:
Previous wording
We believe that the above actions taken resulted in our return to profitability for the three months and six months ended June 30, 2024, will continue to have the intended effect and will continue through the remainder 2024 to result in a return to annual profitability.
Current wording
We believe that the above actions taken resulted in our return to profitability for the three months and nine months ended September 30, 2024, will continue to have the intended effect and will continue through the remainder 2024 to result in a return to annual profitability.
Previous wording
See the tables below for our Core and non-Core business for policies in force as of June 30, 2024 and 2023 and direct written premiums for the three months and six months ended June 30, 2024 and 2023. For the three months ended June 30, 2024, our Core direct written premiums increased by 21.5% compared to the three months ended June 30, 2023, while Core policies in force decreased by 4.6% as of June 30, 2024 as compared to June 30, 2023. For the same periods, our non-Core policies in force decreased by 55.0% and non-Core direct written premiums decreased by 59.7%.
Current wording
See the tables below for our Core and non-Core business for policies in force as of September 30, 2024 and 2023 and direct written premiums for the three months and nine months ended September 30, 2024 and 2023. For the three months ended September 30, 2024, our Core direct written premiums increased by 39.4% compared to the three months ended September 30, 2023, while Core policies in force increased by 1.2% as of September 30, 2024 as compared to September 30, 2023. For the same periods, our non-Core policies in force decreased by 58.8% and non-Core direct written premiums also decreased by 58.8%.
Previous wording
For the six months ended June 30, 2024, our Core direct written premiums increased by 17.0% compared to the six months ended June 30, 2023, while Core policies in force decreased by 4.6% as of June 30, 2024 as compared to June 30, 2023. For the same periods, our non-Core policies in force decreased by 55.0% and non-Core direct written premiums decreased by 57.5%.
Current wording
For the nine months ended September 30, 2024, our Core direct written premiums increased by 25.0% compared to the nine months ended September 30, 2023, while Core policies in force increased by 1.2% as of September 30, 2024 as compared to September 30, 2023. For the same periods, our non-Core policies in force decreased by 58.8% and non-Core direct written premiums decreased by 58.0%.
Previous wording
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 December 31, 2023 through June 30, 2024. For the three months ended June 30, 2024, our Core direct written premiums increased by 10.1% compared to the three months ended March 31, 2024, while Core policies in force decreased by 0.1% as of June 30, 2024. For the same period, our non-Core direct written premiums decreased by 20.0% compared to the three months ended March 31, 2024, while non-Core policies in force decreased by 19.5% as of June 30, 2024.
Current wording
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 December 31, 2023 through September 30, 2024. For the three months ended September 30, 2024, our Core direct written premiums increased by 25.1% compared to the three months ended June 30, 2024, while Core policies in force increased by 3.6% as of September 30, 2024. For the same period, our non-Core direct written premiums increased by 12.2% compared to the three months ended June 30, 2024, while non-Core policies in force decreased by 24.2% as of September 30, 2024.
Previous wording
Direct written premiums from our personal lines business for Six Months 2024 were $95,877,000, an increase of $7,695,000, or 8.7%, from $88,182,000 in Six Months 2023. The 8.7% increase in premiums from our personal lines business was primarily due to the increase in premiums associated with our Core business of 18.8% offsetting a 57.5% decrease in our non-Core business. The increase in our Core business premiums and the decrease in our non-Core business premiums is in accordance with both our Kingstone 2.0 and Kingstone 3.0 strategic plans.
Current wording
Direct written premiums from our personal lines business for Nine Months 2024 were $159,213,000, an increase of $22,612,000, or 16.6%, from $136,601,000 in Nine Months 2023. The 16.6% increase in premiums from our personal lines business was primarily due to the increase in premiums associated with our Core business of 25.0% offsetting a 58.0% decrease in our non-Core business. The increase in our Core business premiums and the decrease in our non-Core business premiums is in accordance with both our Kingstone 2.0 and Kingstone 3.0 strategic plans. Beginning in the quarter ended September 30, 2024, the Change in Market Dynamics became a major factor to the increase in direct written premiums from our personal line business.
Previous wording
Direct written premiums from our livery physical damage business for Six Months 2024 were $6,900,000, a decrease of $116,000, or 1.7%, from $7,016,000 in Six Months 2023. The decrease in livery physical damage direct written premiums was due to an underwriting restriction in place to exclude certain electric vehicles until the approval of adequate rate for the risk was received, which happened in July 2024. The decrease was offset by an increase in the values of the autos insured.
Current wording
Direct written premiums from our livery physical damage business for Nine Months 2024 were $10,166,000, a decrease of $393,000, or 3.7%, from $10,559,000 in Nine Months 2023. The decrease in livery physical damage direct written premiums was due to an underwriting restriction in place to exclude certain electric vehicles until the approval of adequate rate for the risk was received, which happened in July 2024. The decrease was offset by an increase in the values of the autos insured.
Previous wording
Direct written premiums from our Core business were $97,893,000 in Six Months 2024 compared to $83,639,000 in Six Months 2023, an increase of $14,254,000, or 17.0%. The increase in direct written premiums from our Core business was due to rate increases, offset by a decrease in policies in force. Policies in force from our Core business decreased by 4.6% in Six Months 2024 compared to Six Months 2023. Direct written premiums from our non-Core business were $4,927,000 in Six Months 2024 down from $11,605,000 in Six Months 2023, a decrease of $6,678,000, or 57.5%. 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 55.0% in Six Months 2024 compared to Six Months 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.
Current wording
Direct written premiums from our Core business were $162,063,000 in Nine Months 2024 compared to $129,665,000 in Nine Months 2023, an increase of $32,398,000, or 25.0%. The increase in direct written premiums from our Core business was due to rate increases and an increase in policies in force. Policies in force from our Core business increased by 1.2% in Nine Months 2024 compared to Nine Months 2023. Direct written premiums from our non-Core business were $7,384,000 in Nine Months 2024, as compared to $17,572,000 in Nine Months 2023, a decrease of $10,188,000, or 58.0%. 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 58.8% in Nine Months 2024 compared to Nine Months 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.
Previous wording
Net written premiums increased $11,923,000, or 17.6%, to $79,520,000 in Six Months 2024 from $67,597,000 in Six Months 2023. 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 increase in Six Months 2024 is primarily due to changes to our personal lines quota share reinsurance treaty. See quota share reinsurance treaties discussion below.
Current wording
Net written premiums increased $28,792,000, or 40.4%, to $100,065,000 in Nine Months 2024 from $71,273,000 in Nine Months 2023. 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 increase in Nine Months 2024 is primarily due to the additional premiums from the Change in Market Dynamics, changes to our personal lines quota share reinsurance treaty, and a decrease in catastrophe reinsurance premiums. See quota share reinsurance treaties discussion below.
Previous wording
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 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”). Our personal lines business was subject to the 2024/2025 Treaty in Six Months 2024, and the 2023/2024 Treaty in Six Months 2023. In Six Months 2024, our premiums ceded under quota share treaties decreased by $5,581,000 in comparison to premiums ceded under quota share treaties in Six Months 2023 (see table above). The decrease in Six Months 2024 was attributable to the decrease in quota share ceding percentage rates, offset by an increase in direct written premiums subject to the 2024/2025 Treaty compared to direct written premiums subject to the 2023/2024 Treaty.
Current wording
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 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”). Our personal lines business was subject to the 2024/2025 Treaty in Nine Months 2024, and the 2023/2024 Treaty in Nine Months 2023. In Nine Months 2024, our premiums ceded under quota share treaties decreased by $3,623,000 in comparison to premiums ceded under quota share treaties in Nine Months 2023 (see table above). The decrease in Nine Months 2024 was attributable to the decrease in quota share ceding percentage rates, offset by an increase in direct written premiums subject to the 2024/2025 Treaty compared to direct written premiums subject to the 2023/2024 Treaty.
Previous wording
An increase in written premiums will increase the premiums ceded under our excess of loss treaties. In Six Months 2024, our ceded excess of loss reinsurance premiums increased by $630,000 over the comparable ceded excess of loss premiums for Six Months 2023. The increase was due to an increase in subject premiums and the heightened cost of coverage obtained. 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. Effective January 1, 2024, the Underlying XOL Treaty was renewed covering the period from January 1, 2024 through January 1, 2025.
Current wording
An increase in written premiums will increase the premiums ceded under our excess of loss treaties. In Nine Months 2024, our ceded excess of loss reinsurance premiums increased by $630,000 over the comparable ceded excess of loss premiums for Nine Months 2023. The increase was due to an increase in subject premiums and the heightened cost of coverage obtained. 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. Effective January 1, 2024, the Underlying XOL Treaty was renewed covering the period from January 1, 2024 through January 1, 2025.
Previous wording
Most of the premiums written under our personal lines policies are also subject to our catastrophe reinsurance treaties. 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. On July 1, 2023 and 2022, we recorded our catastrophe premiums written for the entire treaty period covering July 1 through June 30, resulting in the entire annual premium written being recorded in the third quarter. The $506,000 negative catastrophe premium in Six Months 2024 was due to a no loss bonus from one of our reinsurers. The $1,110,000 negative catastrophe premium in Six Months 2023 was due to a true-up of premiums originally recorded on July 1, 2022.
Current wording
Most of the premiums written under our personal lines policies are also subject to our catastrophe reinsurance treaties. 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. An increase in our personal lines business historically resulted in an increase in premiums ceded under our catastrophe treaties if reinsurance rates are stable or are increasing. Under Kingstone 2.0 and 3.0 we had a decrease in policies in force, resulting in a decrease in catastrophe exposure, and a decrease in catastrophe premiums. On July 1, 2024 and 2023, we recorded our catastrophe premiums written for the entire treaty period covering July 1 through June 30, resulting in the entire annual premium written being recorded in the third quarter. Our catastrophe premiums were $29,682,000 in Nine Months 2024, compared to $33,271,000 in Nine Months 2023, a decrease of $3,589,000, or 10.8%.
Previous wording
Net premiums earned increased $1,361,000, or 2.4%, to $59,124,000 in Six Months 2024 from $57,763,000 in Six Months 2023. The increase was due to the three percentage point reduction in quota share rates discussed above, the run-off of a portion of the 2021-2023 Treaty, which increased the premiums ceded and reduced the net premiums earned in Six Months 2023, offset by an increase in catastrophe premium rates, reflected in ceded catastrophe premiums earned, which reduced the amount of growth in net premiums earned.
Current wording
Net premiums earned increased $6,830,000, or 8.0%, to $92,531,000 in Nine Months 2024 from $85,701,000 in Nine Months 2023. The increase was due to the three percentage point reduction in quota share rates discussed above, the run-off of a portion of the 2021-2023 Treaty, which increased the premiums ceded and reduced the net premiums earned in Nine Months 2023, the increase in premiums from the Change in Market Dynamics in Nine Months 2024, and a decrease in catastrophe premium rates after June 30, 2024 reflected in ceded catastrophe premiums earned, which increased the amount of growth in net premiums earned. offset by an increase in catastrophe premium rates through June 30, 2024, reflected in ceded catastrophe premiums earned, which reduced the amount of growth in net premiums earned during the first six months of 2024.
Previous wording
Ceding commission revenue was $9,129,000 in Six Months 2024 compared to $10,858,000 in Six Months 2023. The decrease of $1,729,000 is explained below in the discussion of provisional ceding commissions earned and contingent ceding commissions earned.
Current wording
Ceding commission revenue was $13,871,000 in Nine Months 2024 compared to $16,394,000 in Nine Months 2023. The decrease of $2,523,000 is explained below in the discussion of provisional ceding commissions earned and contingent ceding commissions earned.
Previous wording
In Six Months 2024, we earned provisional ceding commissions of $9,117,000 from personal lines earned premiums ceded under the 2024/2025 Treaty, and in Six Months 2023, we earned provisional ceding commissions of $10,741,000 from personal lines earned premiums ceded under the 2023/2024 Treaty. The decrease of $1,624,000 in provisional ceding commissions earned was due to the decrease in premiums ceded under these treaties during Six Months 2024 compared to Six Months 2023, offset by an increase in ceding commission rates under the 2024/2025 Treaty.
Current wording
In Nine Months 2024, we earned provisional ceding commissions of $13,860,000 from personal lines earned premiums ceded under the 2024/2025 Treaty, and in Nine Months 2023, we earned provisional ceding commissions of $15,733,000 from personal lines earned premiums ceded under the 2023/2024 Treaty. The decrease of $1,873,000 in provisional ceding commissions earned was due to the decrease in premiums ceded under these treaties during Nine Months 2024 compared to Nine Months 2023, offset by an increase in ceding commission rates under the 2024/2025 Treaty.
Previous wording
Net investment income was $3,267,000 in Six Months 2024 compared to $2,993,000 in Six Months 2023, an increase of $274,000, or 9.2%. The average yield on non-cash invested assets was 3.81% as of June 30, 2024 compared to 3.63% as of June 30, 2023.
Current wording
Net investment income was $4,917,000 in Nine Months 2024 compared to $4,437,000 in Nine Months 2023, an increase of $480,000, or 10.8%. The average yield on non-cash invested assets was 3.50% as of September 30, 2024 compared to 3.73% as of September 30, 2023.
Previous wording
Cash and invested assets were $195,789,000 as of June 30, 2024 compared to $175,407,000 as of June 30, 2023, an increase of $20,382,000.
Current wording
Cash and invested assets were $221,847,000 as of September 30, 2024 compared to $172,095,000 as of September 30, 2023, an increase of $49,752,000.
Previous wording
Net gains on investments were $493,000 in Six Months 2024 compared to net gains of $1,422,000 in Six Months 2023. Unrealized gains on our equity securities and other investments in Six Months 2024 were $919,000, compared to unrealized gains of $1,435,000 in Six Months 2023. Net realized (losses) on sales of investments were $(426,000) in Six Months 2024 compared to net realized (losses) of $(13,000) in Six Months 2023.
Current wording
Net gains on investments were $1,319,000 in Nine Months 2024 compared to net gains of $598,000 in Nine Months 2023. Unrealized gains on our equity securities and other investments in Nine Months 2024 were $1,379,000, compared to unrealized gains of $615,000 in Nine Months 2023. Net realized (losses) on sales of investments were $(60,000) in Nine Months 2024 compared to net realized (losses) of $(17,000) in Nine Months 2023.
Previous wording
The net loss ratio for Six Months 2024 improved significantly compared to Six Months 2023. For Six Months 2024, the catastrophe impact, prior year development, and underlying loss ratio (loss ratio excluding the impact of catastrophe and prior year development) were all lower than for Six Months 2023.
Current wording
The net loss ratio for Nine Months 2024 improved significantly compared to Nine Months 2023. For Nine Months 2024, the catastrophe impact, prior year development, and underlying loss ratio(1) (loss ratio excluding the impact of catastrophe and prior year development) were all lower than for Nine Months 2023.
Previous wording
There were ten newly designated catastrophe events for Six Months 2024. The estimated total net catastrophe impact for Six Months 2024 was $1,872,000, which contributed 3.2 points to the loss ratio. By comparison, the catastrophe impact for Six Months 2023 was 8.9 points. Losses from winter-related catastrophe claims were minimal during Six Months 2024, whereas the previous year was impacted by a major winter event in February 2023.
Current wording
There were sixteen newly designated catastrophe events for Nine Months 2024. The estimated total net catastrophe impact for Nine Months 2024 was $2,454,000, which contributed 2.7 points to the loss ratio. By comparison, the catastrophe impact for Nine Months 2023 was 8.5 points. Losses from winter-related catastrophe claims were minimal during Nine Months 2024, whereas the previous year was impacted by a major winter event in February 2023.
Previous wording
The underlying loss ratio was 52.8% for Six Months 2024, a decrease of 15.6 points from the 68.4% underlying loss ratio recorded for Six Months 2023. Overall personal lines non-catastrophe frequency for Six Months 2024 was lower than for the same period in 2023, which is believed to be the result of the Company’s new Select product as well as the Company’s active efforts to manage less profitable segments. Overall non-catastrophe severity for Six Months 2024 was also improved compared to Six Months 2023, primarily driven by water claims and a reduced impact from large losses.
Current wording
The underlying loss ratio(1) was 47.9% for Nine Months 2024, a decrease of 21.3 points from the 69.2% underlying loss ratio(1) recorded for Nine Months 2023. Overall personal lines non-catastrophe frequency for Nine Months 2024 was lower than the same period in 2023, which is believed to be the result of better risk selection in the Company’s Select product as well as the Company’s active efforts to manage less profitable segments. Overall non-catastrophe severity for Nine Months 2024 also improved compared to Nine Months 2023, primarily driven by the reduction in the non-Core business and a reduced impact from large losses.
Previous wording
There was favorable prior year development of $996,000 during Six Months 2024, which translates to a 1.7-point decrease to the loss ratio. By comparison, the impact of prior year development for Six Months 2023 was a decrease of less than 0.1 points.
Current wording
There was favorable prior year development of $1,637,000 during Nine Months 2024, which translates to a 1.8 point decrease to the net loss ratio. By comparison, the impact of prior year development for Nine Months 2023 was a decrease of less than 0.1 points.
Previous wording
Commission expense was $16,084,000 in Six Months 2024 or 15.9% of direct earned premiums. Commission expense was $17,011,000 in Six Months 2023 or 16.9% of direct earned premiums. The decrease of $927,000 was primarily due to 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 decrease was offset by an accrual of $848,000 for an estimated contingent commission to be recalculated quarterly if we continue to be profitable for the remainder of the year.
Current wording
Commission expense was $25,089,000 in Nine Months 2024 or 16.2% of direct earned premiums. Commission expense was $25,221,000 in Nine Months 2023 or 16.6% of direct earned premiums. The decrease of $132,000 was primarily due to 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 decrease was offset by an accrual of $2,126,000 for estimated contingent commissions based on the profitability of the business.
Previous wording
Other underwriting expenses were $11,781,000, or 11.7% of direct earned premiums, in Six Months 2024 compared to $13,555,000, or 13.4% of direct earned premiums, in Six Months 2023. The decrease of $1,774,000, or 13.1%, was primarily due to a $365,000 gain on the commutations of prior years’ quota share reinsurance treaties from a group of reinsurers, decreases in salaries and employment costs as described below, policy management system fees as result of the completion of our policy management system conversion, allowing us to eliminate multiple legacy systems, and other IT costs as a result of the completion of these projects. The decreases were partially offset by the impact of high inflation.
Current wording
Other underwriting expenses were $18,676,000, or 12.0% of direct earned premiums, in Nine Months 2024 compared to $19,874,000, or 13.1% of direct earned premiums, in Nine Months 2023. The decrease of $1,198,000, or 6.0%, was primarily due to a $365,000 gain on the commutations of prior years’ quota share reinsurance treaties from a group of reinsurers, decreases in salaries and employment costs as described below, and a decrease in policy management system fees. The decreases were partially offset by the impact of high inflation.
Previous wording
Our largest single component of other underwriting expenses is salaries and employment costs, with costs of $5,738,000 in Six Months 2024 compared to $5,875,000 in Six Months Ended 2023. The decrease of $137,000, or 2.3%, is favorable when compared to the 8.0% increase in direct written premiums. The decrease in salaries and employment costs was due to a reduction in our staff in June and July of 2023 as we have been reducing our non-Core business. The decrease from the reduction in staff was partially offset in the periods following Six Months 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, the decrease in salaries and employment costs was offset by $451,000 accrued under our employee bonus plan due to the profitable underwriting insurance operations in Six Months 2024 compared to a loss in Six Months 2023.
Current wording
Our largest single component of other underwriting expenses is salaries and employment costs, with costs of $9,595,000 in Nine Months 2024 compared to $8,692,000 in Nine Months 2023. The increase of $903,000, or 10.4%, is favorable when compared to the 15.1% increase in direct written premiums. The increase in salaries and employment costs was due to $1,125,000 accrued under our employee bonus plans due to the profitable underwriting insurance operations in Nine Months 2024 compared to a loss in Nine Months 2023, and $290,000 accrued under our executive bonus plan pursuant to the employment agreement of our Chief Executive Officer. The increases related to bonuses were offset by a reduction in our staff in June and July of 2023 as we have been reducing our non-Core business. The decrease from the reduction in staff was partially offset in the periods following Nine Months 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, we are now hiring additional staff to handle the new business from the Change in Market Dynamics.
Previous wording
Our net underwriting expense ratio in Six Months 2024 was 31.3% compared to 33.6% in Six Months 2023. The following table shows the individual components of our net underwriting expense ratio for the periods indicated:
Current wording
Our net underwriting expense ratio in Nine Months 2024 was 31.9% compared to 33.0% in Nine Months 2023. The following table shows the individual components of our net underwriting expense ratio for the periods indicated:
Previous wording
Other operating expenses, related to the expenses of our holding company and Cosi, were $1,579,000 for Six Months 2024 compared to $1,426,000 for Six Months 2023. The following table shows a breakdown of the significant components of other operating expenses for the periods indicated:
Current wording
Other operating expenses, related to the expenses of our holding company and Cosi, were $2,821,000 for Nine Months 2024 compared to $1,868,000 for Nine Months 2023. The following table shows a breakdown of the significant components of other operating expenses for the periods indicated:
Previous wording
Depreciation and amortization was $1,216,000 in Six Months 2024 compared to $1,587,000 in Six Months 2023. The decrease of $371,000, or 23.4%, 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. 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.
Current wording
Depreciation and amortization was $1,836,000 in Nine Months 2024 compared to $2,328,000 in Nine Months 2023. The decrease of $492,000, or 21.1%, 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. 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.
Previous wording
Interest expense in Six Months 2024 was $1,984,000 compared to $2,016,000 in Six Months 2023, a decrease of $32,000 or 1.6%. In Six Months 2024 and Six Months 2023, as disclosed in Note 7 to the condensed consolidated financial statements, we incurred interest expense in connection with the 2022 Notes, which provide for interest at the rate of 12% per annum, and the 2022 equipment financing.
Current wording
Interest expense in Nine Months 2024 was $2,884,000 compared to $3,005,000 in Nine Months 2023, a decrease of $121,000 or 4.0%. In Nine Months 2024 and Nine Months 2023, as disclosed in Note 7 to the condensed 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. In September 2024, in accordance with the 2024 Exchange Agreement, we paid $5,000,000 of principal on the 2022 Notes, reducing the principal balance to $14,950,000 from $19,950,000. Under the 2024 Exchange Agreement, the balance of the 2022 Notes were exchanged for the 2024 Notes, which provide for interest at the rate of 13.75% per annum. In September 2024 we paid an additional principal amount of $3,000,000 reducing the balance of the 2024 Notes to $11,950,000 at September 30, 2024. On November 13, 2024, we made an optional prepayment of $2,000,000 on the 2024 Notes, further reducing the balance to $9,950,000. In addition, we also incur interest expense on the 2022 equipment financing.
Previous wording
Income tax expense in Six Months 2024 was $1,583,000, which resulted in an effective tax rate of 21.0%. Income tax (benefit) in Six Months 2023 was $(1,290,000), which resulted in an effective tax rate of 18.8%. Income before taxes was $7,525,000 in Six Months 2024 compared to a loss before taxes of $6,867,000 in Six Months 2023. The difference in effective tax rate is due to the effect of permanent differences in Six Months 2024 compared to Six Months 2023.
Current wording
Income tax expense in Nine Months 2024 was $3,689,000, which resulted in an effective tax rate of 22.2%. Income tax (benefit) in Nine Months 2023 was $(2,149,000), which resulted in an effective tax rate of 19.1%. Income before taxes was $16,609,000 in Nine Months 2024 compared to a (loss) before taxes of $(11,264,000) in Nine Months 2023. The difference in effective tax rate is due to the effect of permanent differences in Nine Months 2024 compared to Nine Months 2023.
Previous wording
Net income was $5,942,000 in Six Months 2024 compared to a net loss of $5,577,000 in Six Months 2023. The increase from net loss to net income of $11,519,000 was due to the circumstances described above.
Current wording
Net income was $12,920,000 in Nine Months 2024 compared to a net (loss) of $(9,114,000) in Nine Months 2023. The increase from net loss to net income of $23,034,000 was due to the circumstances described above.
Previous wording
Direct written premiums during the three months ended June 30, 2024 (“Three Months 2024”) were $53,495,000 compared to $47,647,000 during the three months ended June 30, 2023 (“Three Months 2023”). The increase of $5,848,000, or 12.3%, was primarily due to an increase in premiums from our personal lines business.
Current wording
Direct written premiums during the three months ended September 30, 2024 (“Three Months 2024”) were $66,627,000 compared to $51,992,000 during the three months ended September 30, 2023 (“Three Months 2023”). The increase of $14,635,000, or 28.1%, was primarily due to an increase in premiums from our personal lines business.
Previous wording
Direct written premiums from our personal lines business for Three Months 2024 were $50,137,000, an increase of $6,126,000, or 13.9%, from $44,011,000 in Three Months 2023. The 13.9% increase in premiums from our personal lines business was primarily due to the increase in premiums associated with our Core business of 24.3% offsetting a 59.7% decrease in our non-Core business. The increase in our Core business premiums and the decrease in our non-Core business premiums is in accordance with both our Kingstone 2.0 and Kingstone 3.0 strategic plans.
Current wording
Direct written premiums from our personal lines business for Three Months 2024 were $63,336,000, an increase of $14,917,000, or 30.8%, from $48,419,000 in Three Months 2023. The 30.8% increase in premiums from our personal lines business was primarily due to the increase in premiums associated with our Core business of 39.4% offsetting a 58.8% decrease in our non-Core business. The increase in our Core business premiums and the decrease in our non-Core business premiums is in accordance with both our Kingstone 2.0 and Kingstone 3.0 strategic plans. Beginning in Three Months 2024, the Change in Market Dynamics became a major factor to the increase in direct written premiums from our personal line business.
Previous wording
Direct written premiums from our livery physical damage business for Three Months 2024 were $3,338,000, a decrease of $272,000, or 7.5%, from $3,610,000 in Three Months 2023. The decrease in livery physical damage direct written premiums was due to an underwriting restriction in place to exclude certain electric vehicles until the approval of adequate rate for the risk was received, which happened in July 2024. The decrease was offset by an increase in the values of the autos insured.
Current wording
Direct written premiums from our livery physical damage business for Three Months 2024 were $3,266,000, a decrease of $278,000, or 7.8%, from $3,544,000 in Three Months 2023. The decrease in livery physical damage direct written premiums was due to an underwriting restriction in place to exclude certain electric vehicles until the approval of adequate rate for the risk was received, which happened in July 2024. The decrease was offset by an increase in the values of the autos insured.
Previous wording
Direct written premiums from our Core business were $51,306,000 in Three Months 2024 compared to $42,212,000 in Three Months 2023, an increase of $9,094,000, or 21.5%. The increase in direct written premiums from our Core business was due to rate increases, offset by a decrease in policies in force. Policies in force from our Core business decreased by 4.6% in Three Months 2024 compared to Three Months 2023. Direct written premiums from our non-Core business were $2,190,000 in Three Months 2024 down from $5,435,000 in Three Months 2023, a decrease of $3,245,000, or 59.7%. 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 55.0% in Three Months 2024 compared to Three Months 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.
Current wording
Direct written premiums from our Core business were $64,170,000 in Three Months 2024 compared to $46,026,000 in Three Months 2023, an increase of $18,144,000, or 39.4%. The increase in direct written premiums from our Core business was due to rate increases and an increase in policies in force. Policies in force from our Core business increased by 1.2% in Three Months 2024 compared to Three Months 2023. Direct written premiums from our non-Core business were $2,457,000 in Three Months 2024 as compared to $5,966,000 in Three Months 2023, a decrease of $3,509,000, or 58.8%. 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. Policies in force from our non-Core business decreased by 58.8% in Three Months 2024 compared to Three Months 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.
Showing the first 40 of 76 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
On August 2, 2024, two large competitors announced a plan to wind down their personal lines operations in New York State and to non-renew or mid-term cancel their entire book of business before year end 2024. The policyholders of such competitors will need to find alternative coverage. In the quarter ended September 30, 2024, we are seeing a sizable increase in our policies in force and direct written premiums from these non-renewed and cancelled policies. We refer to this new business as a Change in Market Dynamics.
Current report — wording carried from elsewhere
There were 142 securities at September 30, 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. There were 140 securities at