Company Quick10K Filing
Kingstone Companies
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 11 $92
10-Q 2019-11-12 Quarter: 2019-09-30
10-Q 2019-08-09 Quarter: 2019-06-30
10-Q 2019-05-10 Quarter: 2019-03-31
10-K 2019-03-18 Annual: 2018-12-31
10-Q 2018-11-08 Quarter: 2018-09-30
10-Q 2018-08-09 Quarter: 2018-06-30
10-Q 2018-05-10 Quarter: 2018-03-31
10-K 2018-03-15 Annual: 2017-12-31
10-Q 2017-11-09 Quarter: 2017-09-30
10-Q 2017-08-10 Quarter: 2017-06-30
10-Q 2017-05-11 Quarter: 2017-03-31
10-K 2017-03-16 Annual: 2016-12-31
10-Q 2016-11-10 Quarter: 2016-09-30
10-Q 2016-08-11 Quarter: 2016-06-30
10-Q 2016-05-12 Quarter: 2016-03-31
10-K 2016-03-24 Annual: 2015-12-31
10-Q 2015-11-12 Quarter: 2015-09-30
10-Q 2015-08-12 Quarter: 2015-06-30
10-Q 2015-05-13 Quarter: 2015-03-31
10-K 2015-03-25 Annual: 2014-12-31
10-Q 2014-11-13 Quarter: 2014-09-30
10-Q 2014-08-12 Quarter: 2014-06-30
10-Q 2014-05-15 Quarter: 2014-05-08
10-K 2014-03-31 Annual: 2013-12-31
10-Q 2013-11-14 Quarter: 2013-09-30
10-Q 2013-08-14 Quarter: 2013-06-30
10-Q 2013-05-15 Quarter: 2013-03-31
10-K 2013-04-01 Annual: 2012-12-31
10-Q 2012-11-14 Quarter: 2012-09-30
10-Q 2012-08-14 Quarter: 2012-06-30
10-Q 2012-05-15 Quarter: 2012-03-31
10-K 2012-03-30 Annual: 2011-12-31
10-Q 2011-11-14 Quarter: 2011-09-30
10-Q 2011-08-15 Quarter: 2011-06-30
10-Q 2011-05-20 Quarter: 2011-03-31
10-K 2011-03-31 Annual: 2010-12-31
10-Q 2010-11-15 Quarter: 2010-09-30
10-Q 2010-08-16 Quarter: 2010-06-30
10-Q 2010-05-19 Quarter: 2010-03-31
10-K 2010-04-07 Annual: 2009-12-31
8-K 2020-02-06 Regulation FD, Exhibits
8-K 2019-11-11 Earnings, Regulation FD, Exhibits
8-K 2019-10-14
8-K 2019-09-16 Officers, Regulation FD, Exhibits
8-K 2019-08-08 Earnings, Regulation FD, Exhibits
8-K 2019-08-07 Shareholder Vote
8-K 2019-07-25 Regulation FD, Exhibits
8-K 2019-07-23 Regulation FD, Exhibits
8-K 2019-07-19 Officers, Exhibits
8-K 2019-05-09 Earnings, Regulation FD, Exhibits
8-K 2019-04-29 Earnings, Regulation FD, Exhibits
8-K 2019-03-13 Earnings, Regulation FD, Exhibits
8-K 2019-02-14 Regulation FD, Exhibits
8-K 2018-10-16 Officers, Exhibits
8-K 2018-08-22 Regulation FD, Exhibits
8-K 2018-07-09 Regulation FD, Exhibits
8-K 2018-07-02 Regulation FD, Exhibits
8-K 2018-06-25 Regulation FD, Exhibits
8-K 2018-06-22 Regulation FD, Exhibits
8-K 2018-06-20 Officers, Exhibits
8-K 2018-05-09 Earnings, Exhibits
8-K 2018-05-09 Earnings, Exhibits
8-K 2018-04-03 Regulation FD, Exhibits
8-K 2018-03-22 Regulation FD, Exhibits
8-K 2018-03-14 Earnings, Exhibits
8-K 2018-02-05 Regulation FD, Exhibits
8-K 2018-01-23 Regulation FD, Exhibits
KINS 2019-09-30
Note 1 - Nature of Business and Basis of Presentation
Note 2 – Accounting Policies
Note 3 - Investments 
Note 4 - Fair Value Measurements
Note 5 - Fair Value of Financial Instruments and Real Estate
Note 6 – Property and Casualty Insurance Activity
Note 7 – Debt
Note 8 – Stockholders’ Equity
Note 9 – Income Taxes
Note 10 –Earnings/(Loss) per Common Share
Note 11 - Commitments and Contingencies
Note 12 – Deferred Compensation Plan
Note 13 – Subsequent Events
EX-31.A kins_ex31a.htm
EX-31.B kins_ex31b.htm
EX-32 kins_ex32.htm

Kingstone Companies Earnings 2019-09-30

KINS 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
AFH 121 501 399 229 0 -38 -28 72 0% -2.6 -7%
KINS 92 289 202 128 0 -4 0 102 0% 238.3 -1%
KFS 62 472 439 121 0 -15 -28 268 0% -9.5 -3%
BCRH 60 140 49 32 0 -29 -29 57 0% -2.0 -21%
MHLD 52 4,599 4,008 1,465 0 -621 -629 -149 0% 0.2 -14%
ICCH 48 163 101 55 0 1 1 42 0% 29.7 1%
CNFR 36 243 197 96 0 -12 -9 50 0% -5.5 -5%
PIH 34 179 119 48 0 -6 -6 1 0% -0.1 -3%
UNAM 32 126 70 32 0 -1 -1 27 0% -35.6 -1%
OXBR 6 10 2 3 0 -6 -6 -2 0% 0.3 -62%

10-Q 1 kins_10q.htm QUARTERLY REPORT Blueprint
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
 
(Mark one)
 
 
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
 
 
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________to _________
 
Commission File Number 0-1665
KINGSTONE COMPANIES, INC.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware(State or other jurisdiction of incorporation or organization)
 
36-2476480(I.R.S. EmployerIdentification Number)
15 Joys Lane
Kingston, NY 12401
(Address of principal executive offices)
(845) 802-7900
 
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
 
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
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
 
Accelerated filer
 
Non-accelerated filer
 
  
Smaller reporting company
 
 
 
 
Emerging growth company
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
 
As of November 12, 2019, there were 10,785,069 shares of the registrant’s common stock outstanding.
 

 
 
 
KINGSTONE COMPANIES, INC.
INDEX
 
 
 
 
 
PAGE
 
 
 
2
Financial Statements
2
 
Condensed Consolidated Balance Sheets at September 30, 2019 (Unaudited) and December 31, 2018
2
 
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months and nine months ended September 30, 2019 (Unaudited) and 2018 (Unaudited)
3
 
Condensed Consolidated Statements of Stockholders’ Equity for the three months and nine months ended September 30, 2019 (Unaudited) and 2018 (Unaudited)
4
 
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 (Unaudited) and 2018 (Unaudited)
7
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
8
Management’s Discussion and Analysis of Financial Condition and Results of Operations
37
Quantitative and Qualitative Disclosures About Market Risk
66
Controls and Procedures
66
 
 
 
67
Legal Proceedings
67
Risk Factors
67
Unregistered Sales of Equity Securities and Use of Proceeds
67
Defaults Upon Senior Securities
67
Mine Safety Disclosures
67
Other Information
67
Exhibits
67
Signatures
 
 
 
 
 
Forward-Looking Statements
 
This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The events described in forward-looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated results or other consequences of our plans or strategies, projected or anticipated results from acquisitions to be made by us, or projections involving anticipated revenues, earnings, costs or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Factors which may cause actual results and outcomes to differ materially from those contained in the forward-looking statements include, but are not limited to the risks and uncertainties discussed in Part I Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018.
 
Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise except as required by law.
 
 
 
 
PART I. FINANCIAL INFORMATION
 
Item 1.                         Financial Statements.
 
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES         
Condensed Consolidated Balance Sheets         
 
 
 September 30,
 
 
 December 31,
 
 
 
2019
 
 
2018
 
   
 
(unaudited) 
 
 
 
 
 Assets
 
 
 
 
 
 
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of
 
 
 
   $4,127,384 at September 30, 2019 and $4,426,416 at December 31, 2018)
 $3,825,505 
 $4,222,855 
 
  Fixed-maturity securities, available-for-sale, at fair value (amortized cost of
 
    
   $160,601,004 at September 30, 2019 and $155,431,261 at December 31, 2018)
  166,220,711 
  151,777,516 
 
  Equity securities, at fair value (cost of $22,070,565 at September 30, 2019 and
 
    
  $18,305,986 at December 31, 2018)
  23,499,199 
  16,572,616 
Other investments
  2,425,904 
  1,855,225 
Total investments
  195,971,319 
  174,428,212 
Cash and cash equivalents
  25,639,050 
  21,138,403 
Premiums receivable, net
  14,352,521 
  13,961,599 
Reinsurance receivables, net
  26,580,449 
  26,367,115 
Deferred policy acquisition costs
  20,491,568 
  17,907,737 
Intangible assets, net
  500,000 
  670,000 
Property and equipment, net
  7,582,210 
  6,056,929 
Deferred income taxes, net
  540,295 
  354,233 
Other assets
  6,762,909 
  5,867,850 
 Total assets
 $298,420,321 
 $266,752,078 
 
    
    
 Liabilities
    
    
Loss and loss adjustment expense reserves
 $77,409,423 
 $56,197,106 
Unearned premiums
  90,068,683 
  79,032,131 
Advance premiums
  3,737,491 
  2,107,629 
Reinsurance balances payable
  809,836 
  1,933,376 
Deferred ceding commission revenue
  1,828,872 
  2,686,677 
Accounts payable, accrued expenses and other liabilities
  8,403,012 
  6,819,231 
Income taxes payable
  - 
  15,035 
Long-term debt, net
  29,427,386 
  29,295,251 
 Total liabilities
  211,684,703 
  178,086,436 
 
    
    
 Commitments and Contingencies (Note 11)
    
    
 
    
    
 Stockholders' Equity
    
    
Preferred stock, $.01 par value; authorized 2,500,000 shares
  - 
  - 
 Common stock, $.01 par value; authorized 20,000,000 shares; issued 11,811,011 shares
 
at September 30, 2019 and 11,775,148 at December 31, 2018; outstanding
 
    
10,783,572 shares at September 30, 2019 and 10,747,709 shares at December 31, 2018
  118,110 
  117,751 
Capital in excess of par
  68,755,776 
  67,763,940 
Accumulated other comprehensive income (loss)
  4,441,716 
  (2,884,313)
Retained earnings
  16,132,568 
  26,380,816 
 
  89,448,170 
  91,378,194 
Treasury stock, at cost, 1,027,439 shares at September 30, 2019
    
    
  and at December 31, 2018
  (2,712,552)
  (2,712,552)
 Total stockholders' equity
  86,735,618 
  88,665,642 
 
    
    
 Total liabilities and stockholders' equity
 $298,420,321 
 $266,752,078 
 ____________________________________________________________________________________________________
 
See accompanying notes to condensed consolidated financial statements.
 
 
2
 
 
  
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES        
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
 
 
For the Three Months Ended
 
 
For the Nine Months Ended
 
 
 
September 30,
 
 
September 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 Net premiums earned
 $34,220,010 
 $27,533,907 
 $95,017,178 
 $74,476,138 
 Ceding commission revenue
  1,029,582 
  1,044,529 
  2,982,960 
  4,430,855 
 Net investment income
  1,856,553 
  1,602,371 
  5,200,034 
  4,543,226 
 Net gains (losses) on investments
  998,162 
  352,025 
  3,712,180 
  (277,835)
 Other income
  495,696 
  353,077 
  1,191,569 
  961,581 
 Total revenues
  38,600,003 
  30,885,909 
  108,103,921 
  84,133,965 
 
    
    
    
    
 Expenses
    
    
    
    
 Loss and loss adjustment expenses
  24,781,318 
  13,296,708 
  71,587,850 
  41,739,123 
 Commission expense
  7,779,344 
  6,594,323 
  21,931,933 
  18,411,460 
 Other underwriting expenses
  6,430,734 
  5,193,679 
  17,983,174 
  15,301,168 
 Other operating expenses
  705,710 
  683,309 
  2,774,350 
  1,773,983 
 Depreciation and amortization
  646,201 
  440,383 
  1,876,202 
  1,273,975 
 Interest expense
  456,545 
  456,545 
  1,369,635 
  1,365,052 
 Total expenses
  40,799,852 
  26,664,947 
  117,523,144 
  79,864,761 
 
    
    
    
    
 (Loss) income before taxes
  (2,199,849)
  4,220,962 
  (9,419,223)
  4,269,204 
 Income tax (benefit) expense
  (474,687)
  287,232 
  (1,998,251)
  296,111 
 Net (loss) income
  (1,725,162)
  3,933,730 
  (7,420,972)
  3,973,093 
 
    
    
    
    
 
Other comprehensive income (loss), net of tax
 
    
    
   Gross change in unrealized gains (losses)
 
    
    
    
on available-for-sale-securities
  1,323,626 
  (242,453)
  9,191,817 
  (4,591,699)
 
    
    
    
    
   Reclassification adjustment for losses
 
    
    
    
included in net income
  46,841 
  131,978 
  81,636 
  451,877 
   Net change in unrealized gains (losses)
  1,370,467 
  (110,475)
  9,273,453 
  (4,139,822)
   Income tax (expense) benefit related to items
 
    
    
of other comprehensive income (loss)
  (287,798)
  12,416 
  (1,947,424)
  858,377 
 Other comprehensive income (loss), net of tax
  1,082,669 
  (98,059)
  7,326,029 
  (3,281,445)
 
    
    
    
    
 Comprehensive (loss) income
 $(642,493)
 $3,835,671 
 $(94,943)
 $691,648 
 
    
    
    
    
 
(Loss) Earnings per common share:
 
    
    
    
Basic
 $(0.16)
 $0.37 
 $(0.69)
 $0.37 
Diluted
 $(0.16)
 $0.36 
 $(0.69)
 $0.37 
 
    
    
    
    
 
Weighted average common shares outstanding
 
    
    
Basic
  10,779,641 
  10,681,329 
  10,769,817 
  10,672,084 
Diluted
  10,779,641 
  10,791,123 
  10,769,817 
  10,780,590 
 
    
    
    
    
  Dividends declared and paid per common share
 $0.0625 
 $0.1000 
 $0.2625 
 $0.3000 
____________________________________________________________________________________________________
 
See accompanying notes to condensed consolidated financial statements.
 
 
3
 
  
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES              
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)          
 
  
Three months ended September 30, 2019 and 2018              
 
 
 
   
   
   
   
   
 Accumulated
 
   
   
   
   
 
   
   
   
   
 Capital 
 Other 
   
   
   
   
 
 Preferred Stock 
 Common Stock 
 in Excess 
 Comprehensive 
 Retained 
 Treasury Stock 
   
 
 Shares 
 Amount 
 Shares 
 Amount 
 of Par 
 Loss 
 Earnings 
 Shares 
 Amount 
 Total 
Balance, July 1, 2018
  - 
 $- 
  11,685,904 
 $116,859 
 $68,347,784 
 $(2,496,981)
 $25,471,668 
  1,024,444 
 $(2,712,522)
 $88,726,808 
Stock-based compensation
  - 
  - 
  - 
  - 
  197,335 
  - 
  - 
  - 
  - 
  197,335 
Vesting of restricted stock awards
  - 
  - 
  4,866 
  48 
  (48)
  - 
  - 
  - 
  - 
  - 
Share deducted from restricted stock awards for payment of withholding taxes
  - 
  - 
  (1,059)
  (11)
  (18,339)
  - 
  - 
  - 
  - 
  (18,350)
Exercise of stock options
  - 
  - 
  57,596 
  576 
  26,684 
  - 
  - 
  - 
  - 
  27,260 
Shares deducted from exercise of stock
  - 
  - 
  (18,141)
  (181)
  (332,702)
  - 
  - 
  - 
  - 
  (332,883)
Acquisition of treasury stock
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  2,995 
  (30)
  (30)
Dividends
  - 
  - 
  - 
  - 
  - 
  - 
  (1,070,054)
  - 
  - 
  (1,070,054)
Net income
  - 
  - 
  - 
  - 
  - 
  - 
  3,933,730 
  - 
  - 
  3,933,730 
Change in unrealized losses on available-for-sale securities, net of tax
  - 
  - 
  - 
  - 
  - 
  (98,059)
  - 
  - 
  - 
  (98,059)
Balance, September 30, 2018
  - 
 $- 
  11,729,166 
 $117,291 
 $68,220,714 
 $(2,595,040)
 $28,335,344 
  1,027,439 
 $(2,712,552)
 $91,365,757 

 
   
   
   
   
   
 Accumulated
 
   
   
   
   
 
   
   
   
   
 Capital 
 Other 
   
   
   
   
 
 Preferred Stock 
 Common Stock 
 in Excess 
 Comprehensive 
 Retained 
 Treasury Stock 
   
 
 Shares 
 Amount 
 Shares 
 Amount 
 of Par 
 Income 
 Earnings 
 Shares 
 Amount 
 Total 
Balance, July 1, 2019
  - 
 $- 
  11,802,087 
 $118,020 
 $68,373,590 
 $3,359,047 
 $18,531,657 
  1,027,439 
 $(2,712,552)
 $87,669,762 
Stock-based compensation
  - 
  - 
  - 
  - 
  407,714 
  - 
  - 
  - 
  - 
  407,714 
Vesting of restricted stock awards
  - 
  - 
  12,050 
  120 
  (120)
  - 
  - 
  - 
  - 
  - 
Shares deducted from restricted stock awards for payment of withholding taxes
  - 
  - 
  (3,126)
  (30)
  (25,408)
  - 
  - 
  - 
  - 
  (25,438)
Dividends
  - 
  - 
  - 
  - 
  - 
  - 
  (673,927)
  - 
  - 
  (673,927)
Net loss
  - 
  - 
  - 
  - 
  - 
  - 
  (1,725,162)
  - 
  - 
  (1,725,162)
Change in unrealized gains on available-for-sale securities, net of tax
  - 
  - 
  - 
  - 
  - 
  1,082,669 
  - 
  - 
  - 
  1,082,669 
Balance, September 30, 2019
  - 
 $- 
  11,811,011 
 $118,110 
 $68,755,776 
 $4,441,716 
 $16,132,568 
  1,027,439 
 $(2,712,552)
 $86,735,618 
________________________________________________________________________________________________________________________________________
 
See accompanying notes to condensed consolidated financial statements.
 
 
4
 
 
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)  Nine months ended September 30, 2019 and 2018        
 
 
 Preferred Stock 
 Common Stock 
 Capital in Excess 
 Accumulated Other Comprehensive Income
 
 Retained 
 Treasury Stock 
   
 
 Shares 
 Amount 
 Shares 
 Amount 
 of Par 
 (Loss) 
 Earnings 
 Shares 
 Amount 
 Total 
Balance, January 1, 2018, as reported
  - 
 $- 
  11,618,646 
 $116,186 
 $68,380,390 
 $1,100,647 
 $27,152,822 
  986,809 
 $(2,172,299)
 $94,577,746 
Cumulative effect of adoption of updated accounting guidance for equity financial instruments at January 1, 2018
  - 
  - 
  - 
  - 
  - 
  (414,242)
  414,242 
  - 
  - 
  - 
Balance, January 1, 2018, as adjusted
  - 
  - 
  11,618,646 
  116,186 
  68,380,390 
  686,405 
  27,567,064 
  986,809 
  (2,172,299)
  94,577,746 
Stock-based compensation
  - 
  - 
  - 
  - 
  481,812 
  - 
  - 
  - 
  - 
  481,812 
Exercise of stock options
  - 
  - 
  130,872 
  1,311 
  72,828 
  - 
  - 
  - 
  - 
  74,139 
Shares deducted from exercise of stock options for payment of withholding taxes
  - 
  - 
  (33,891)
  (337)
  (674,314)
  - 
  - 
  - 
  - 
  (674,651)
Vesting of restricted stock awards
  - 
  - 
  15,752 
  155 
  (155)
  - 
  - 
  - 
  - 
  - 
Shares deducted from restricted stock awards for payment of withholding taxes
  - 
  - 
  (2,213)
  (24)
  (39,847)
  - 
  - 
  - 
  - 
  (39,871)
Acquisition of treasury stock
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  40,630 
  (540,253)
  (540,253)
Dividends
  - 
  - 
  - 
  - 
  - 
  - 
  (3,204,813)
  - 
  - 
  (3,204,813)
Net income
  - 
  - 
  - 
  - 
  - 
  - 
  3,973,093 
  - 
  - 
  3,973,093 
Change in unrealized losses on available-for-sale securities, net of tax
  - 
  - 
  - 
  - 
  - 
  (3,281,445)
  - 
  - 
  - 
  (3,281,445)
Balance, September 30, 2018
  - 
 $- 
  11,729,166 
 $117,291 
 $68,220,714 
 $(2,595,040)
 $28,335,344 
  1,027,439 
 $(2,712,552)
 $91,365,757 
____________________________________________________________________________________________________________________________________________
 
See accompanying notes to condensed consolidated financial statements.
 
 
5
 
 KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
  
Nine months ended September 30, 2019 and 2018 Continued            
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Preferred Stock 
 Common Stock 
 Capital in Excess 
 Accumulated Other Comprehensive Income 
 Retained 
 Treasury Stock 
   
 
 Shares 
 Amount 
 Shares 
 Amount 
 of Par 
 (Loss) 
 Earnings 
 Shares 
 Amount 
 Total 
Balance, January 1, 2019
  - 
 $- 
  11,775,148 
 $117,751 
 $67,763,940 
 $(2,884,313)
 $26,380,816 
  1,027,439 
 $(2,712,552)
 $88,665,642 
Stock-based compensation
  - 
  - 
  - 
  - 
  1,116,921 
  - 
  - 
  - 
  - 
  1,116,921 
Exercise of stock options
  - 
  - 
  3,000 
  30 
  23,522 
  - 
  - 
  - 
  - 
  23,552 
Vesting of restricted stock awards
  - 
  - 
  43,596 
  434 
  (434)
  - 
  - 
  - 
  - 
  - 
Shares deducted from restricted stock awards for payment of withholding taxes
  - 
  - 
  (10,733)
  (105)
  (148,173)
  - 
  - 
  - 
  - 
  (148,278)
Dividends
  - 
  - 
  - 
  - 
  - 
  - 
  (2,827,276)
  - 
  - 
  (2,827,276)
Net loss
  - 
  - 
  - 
  - 
  - 
  - 
  (7,420,972)
  - 
  - 
  (7,420,972)
Change in unrealized gains on available-for-sale securities, net of tax
  - 
  - 
  - 
  - 
  - 
  7,326,029 
  - 
  - 
  - 
  7,326,029 
Balance, September 30, 2019
  - 
 $- 
  11,811,011 
 $118,110 
 $68,755,776 
 $4,441,716 
 $16,132,568 
  1,027,439 
 $(2,712,552)
 $86,735,618 
  _______________________________________________________________________________
 
See accompanying notes to condensed consolidated financial statements.
 
 
6
 
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES    
 
 
 
Condensed Consolidated Statements of Cash Flows (Unaudited)  
 
Nine months ended September 30,
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 Cash flows from operating activities:
 
 
 
 
 
 
 Net (loss) income
 $(7,420,972)
 $3,973,093 
Adjustments to reconcile net (loss) income to net cash flows provided by operating activities:
 Net losses on sale of investments
  54,759 
  377,303 
 Net unrealized (gains) losses of equity investments
  (3,196,260)
  141,976 
 Net unrealized gains of other investments
  (570,679)
  (241,444)
 Depreciation and amortization
  1,876,202 
  1,273,975 
 Amortization of bond premium, net
  283,620 
  284,204 
 Amortization of discount and issuance costs on long-term debt
  132,135 
  124,241 
 Stock-based compensation
  1,116,921 
  481,812 
 Deferred income tax (benefit) expense
  (2,133,486)
  136,032 
 (Increase) decrease in operating assets:
    
    
 Premiums receivable, net
  (390,922)
  (266,849)
 Reinsurance receivables, net
  (213,334)
  3,500,669 
 Deferred policy acquisition costs
  (2,583,831)
  (2,276,012)
 Other assets
  (882,320)
  (1,824,401)
 Increase (decrease) in operating liabilities:
    
    
 Loss and loss adjustment expense reserves
  21,212,317 
  5,143,335 
 Unearned premiums
  11,036,552 
  9,926,741 
 Advance premiums
  1,629,862 
  1,411,027 
 Reinsurance balances payable
  (1,123,540)
  (840,122)
 Deferred ceding commission revenue
  (857,805)
  (1,748,944)
 Accounts payable, accrued expenses and other liabilities
  1,568,746 
  (1,379,309)
 Net cash flows provided by operating activities
  19,537,965 
  18,197,327 
 
    
    
 Cash flows from investing activities:
    
    
 Purchase - fixed-maturity securities available-for-sale
  (15,373,113)
  (43,957,529)
 Purchase - equity securities
  (6,657,676)
  (10,357,210)
 Sale and redemption - fixed-maturity securities held-to-maturity
  400,000 
  624,963 
 Sale or maturity - fixed-maturity securities available-for-sale
  9,835,464 
  17,740,260 
 Sale - equity securities
  2,941,492 
  5,694,121 
 Acquisition of property and equipment
  (3,231,483)
  (2,044,440)
 Net cash flows used in investing activities
  (12,085,316)
  (32,299,835)
 
    
    
 Cash flows from financing activities:
    
    
 Proceeds from exercise of stock options
  23,552 
  74,139 
 Withholding taxes paid on net exercise of stock options
  - 
  (674,651)
 Withholding taxes paid on vested retricted stock awards
  (148,278)
  (39,871)
 Purchase of treasury stock
  - 
  (540,253)
 Dividends paid
  (2,827,276)
  (3,204,813)
 Net cash flows used in financing activities
  (2,952,002)
  (4,385,449)
 
    
    
 Increase (decrease) in cash and cash equivalents
 $4,500,647 
 $(18,487,957)
 Cash and cash equivalents, beginning of period
  21,138,403 
  48,381,633 
 Cash and cash equivalents, end of period
 $25,639,050 
 $29,893,676 
 
    
    
 Supplemental disclosures of cash flow information:
    
    
 Cash paid for income taxes
 $388,000 
 $1,250,000 
 Cash paid for interest
 $825,000 
 $875,417 
 
_____________________________________________________________________________________
See accompanying notes to condensed consolidated financial statements.
 
 
7
 
 
KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
Note 1 - Nature of Business and Basis of Presentation
 
Kingstone Companies, Inc. (referred to herein as "Kingstone" or the “Company”), through its wholly owned subsidiary, Kingstone Insurance Company (“KICO”), underwrites property and casualty insurance to small businesses and individuals exclusively through agents and brokers. KICO is a licensed insurance company in the States of New York, New Jersey, Rhode Island, Massachusetts, Pennsylvania, Connecticut, Maine and New Hampshire. KICO is currently offering its property and casualty insurance products in New York, New Jersey, Rhode Island, Massachusetts, and Connecticut. Although New Jersey, Rhode Island, Massachusetts and Connecticut continue to be growing markets for the Company, 84.0% and 86.8% of KICO’s direct written premiums for the three months and nine months ended September 30, 2019, respectively, came from the New York policies. Kingstone, through its subsidiary, Cosi Agency, Inc. (“Cosi”), a multi-state licensed general agency, accesses alternate forms of distribution outside of the independent agent and broker network, through which KICO currently distributes its various products. Kingstone (through Cosi) now has the opportunity to partner with name-brand carriers and access nationwide insurance agencies.
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The principles for condensed interim financial information do not require the inclusion of all the information and footnotes required by GAAP for complete financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2018 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 18, 2019. The accompanying condensed consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with standards of the Public Company Accounting Oversight Board (United States) but, in the opinion of management, such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Company’s financial position and results of operations. The results of operations for the nine months ended September 30, 2019 may not be indicative of the results that may be expected for the year ending December 31, 2019.
 
Note 2 – Accounting Policies
 
Use of Estimates
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions, which include the reserves for losses and loss adjustment expenses, and are subject to estimation errors due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of many years. In addition, estimates and assumptions associated with receivables under reinsurance contracts related to contingent ceding commission revenue require judgments by management. On an on-going basis, management reevaluates its assumptions and the methods for calculating these estimates. Actual results may differ significantly from the estimates and assumptions used in preparing the consolidated financial statements.
 
Principles of Consolidation
 
The accompanying condensed consolidated financial statements consist of Kingstone and its wholly owned subsidiaries, including KICO and its wholly owned subsidiaries, CMIC Properties, Inc. (“Properties”) and 15 Joys Lane, LLC (“15 Joys Lane”), which together own the land and building from which KICO operates. All significant inter-company account balances and transactions have been eliminated in consolidation.
 
Accounting Changes
 
In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule was effective on November 5, 2018. The Company adopted the provisions of this Release effective January 1, 2019, and included the required presentation of changes in stockholders’ equity for the nine months ended September 30, 2019 and 2018.
 
In February 2016, the FASB issued ASU 2016-02 – Leases (Topic 842) (“ASU 2016-02”). Under this ASU, the Company recognized a right-of-use-asset and corresponding liability on the balance sheet for all leases, except for leases covering a period of fewer than 12 months. The liability has been measured at the present value of the future minimum lease payments taking into account renewal options if applicable plus initial incremental direct costs such as commissions. The minimum payments are discounted using the Company’s incremental borrowing rate. The Company adopted ASU 2016-02 effective January 1, 2019 using the cumulative effect adjustment transition method, which applies the provision of the standard at the effective date without adjusting the comparative periods presented. The adoption of the updated guidance resulted in the Company recognizing a right-of-use asset of $855,000 as part of other assets and a lease liability of $855,000 as part of accounts payable, accrued expenses and other liabilities in the condensed consolidated balance sheet. The right-of-use asset is amortized as rent expense on a straight line basis. The adoption of this ASU did not have a material effect on the Company's results of operations or liquidity.
 
 
8
 
 
Accounting Pronouncements
 
In June 2016, the FASB issued ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The revised accounting guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses of available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective for the Company on January 1, 2020. The Company is currently evaluating the effect the updated guidance will have on its consolidated financial statements.
 
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This update modifies the existing disclosure requirements on fair value measurements in Topic 820 by changing requirements regarding Level 1, Level 2 and Level 3 investments. ASU 2018-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual periods, with early adoption permitted. Entities are permitted to early adopt any removed or modified disclosures of ASU 2018-13 immediately and delay the adoption of the additional disclosures until their effective date. The Company does not intend to early adopt the additional disclosures and are assessing the impact of retrospectively adopting the additions from this new accounting standard on the fair value disclosures herein.
 
The Company has determined that all other recently issued accounting pronouncements will not have a material impact on its consolidated financial position, results of operations and cash flows, or do not apply to its operations.
 
Note 3 - Investments 
 
Fixed-Maturity Securities
 
The amortized cost, estimated fair value, and unrealized gains and losses of investments in fixed-maturity securities classified as available-for-sale as of September 30, 2019 and December 31, 2018 are summarized as follows:
 
 
 
September 30, 2019                    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 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
 $8,243,486 
 $156,066 
 $-
 
 $-
 
 $8,399,552 
 $156,066 
 
    
    
    
    
    
    
Political subdivisions of States,
    
    
    
    
    
    
 Territories and Possessions
  5,662,999 
  187,006 
  -
 
  -
 
  5,850,005 
  187,006 
 
    
    
    
    
    
    
Corporate and other bonds
    
    
    
    
    
    
 Industrial and miscellaneous
  124,956,806 
  5,365,954 
  (33,073)
  (20,893)
  130,268,794 
  5,311,988 
 
    
    
    
    
    
    
Residential mortgage and other
    
    
    
    
    
    
 asset backed securities (1)
  21,737,713 
  297,257 
  (19,924)
  (312,685)
  21,702,361 
  (35,352)
 Total
 $160,601,004 
 $6,006,283 
 $(52,997)
 $(333,578)
 $166,220,712 
 $5,619,708 
 
(1)
In 2017, KICO 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). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of September 30, 2019, the estimated fair value of the eligible investments was approximately $5,144,000. KICO will retain all rights regarding all securities if pledged as collateral. As of September 30, 2019, there was no outstanding balance on the FHLBNY credit line.
 
 
9
 
 
 
 
December 31, 2018                    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 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
 $8,222,050 
 $26,331 
 $(28,000)
 $- 
 $8,220,381 
 $(1,669)
 
    
    
    
    
    
    
Political subdivisions of States,
    
    
    
    
    
    
 Territories and Possessions
  6,339,540 
  50,903 
  (12,327)
  (36,508)
  6,341,608 
  2,068 
 
    
    
    
    
    
    
Corporate and other bonds
    
    
    
    
    
    
 Industrial and miscellaneous
  119,078,698 
  123,740 
  (2,775,540)
  (676,605)
  115,750,293 
  (3,328,405)
 
    
    
    
    
    
    
Residential mortgage and other
    
    
    
    
    
    
 asset backed securities (1)
  21,790,973 
  236,502 
  (231,229)
  (331,012)
  21,465,234 
  (325,739)
 Total
 $155,431,261 
 $437,476 
 $(3,047,096)
 $(1,044,125)
 $151,777,516 
 $(3,653,745)
 
(1)
In 2017, KICO placed certain residential mortgage backed securities as eligible collateral in a designated custodian account related to its membership in the FHLBNY (see Note 7). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of December 31, 2018, the estimated fair value of the eligible investments was approximately $5,116,000. KICO will retain all rights regarding all securities if pledged as collateral. As of December 31, 2018, there was no outstanding balance on the FHLBNY credit line.
 
A summary of the amortized cost and estimated fair value of the Company’s investments in available-for-sale fixed-maturity securities by contractual maturity as of September 30, 2019 and December 31, 2018 is shown below:
 
 
 
September 30, 2019    
 
 
December 31, 2018  
 
 
 
Amortized
 
 
Estimated
 
 
Amortized
 
 
Estimated
 
 Remaining Time to Maturity
 
Cost
 
 
Fair Value
 
 
Cost
 
 
Fair Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Less than one year
 $12,273,128 
 $12,322,490 
 $6,742,519 
 $6,738,014 
 One to five years
  50,106,836 
  51,297,620 
  47,038,838 
  46,640,012 
 Five to ten years
  74,473,145 
  78,850,661 
  76,884,505 
  74,290,076 
 More than 10 years
  2,010,182 
  2,047,580 
  2,974,426 
  2,644,180 
 Residential mortgage and other asset backed securities
  21,737,713 
  21,702,361 
  21,790,973 
  21,465,234 
 Total
 $160,601,004 
 $166,220,712 
 $155,431,261 
 $151,777,516 
 
The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.
 
 
10
 

Equity Securities
 
The cost, estimated fair value, and gross gains and losses of investments in equity securities as of September 30, 2019 and December 31, 2018 are as follows:
 
 
 
September 30, 2019            
 
  
 
 
 
 
 Gross
 
 
 Gross
 
 
 Estimated
 
 Category
 
 Cost
 
 
 Gains
 
 
 Losses
 
 
 Fair Value