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A.M. Best Upgrades Ratings of Kingstone Insurance Company and Kingstone Companies Inc.

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A.M. Best has upgraded the financial strength rating to B++ (Good) from B+ (Good) and the issuer credit rating (ICR) to “bbb” from “bbb-” of Kingstone Insurance Company (Kingstone) and the ICR to “bb” from “bb-” of the publicly traded holding company of Kingstone, Kingstone Companies, Inc. (NASDAQ:KINS) . The outlook for all ratings has been revised to stable from positive. Both companies are headquartered in Kingston, NY.

The ratings upgrade reflects Kingstone’s improved risk-adjusted capitalization in recent years and continued favorable operating earnings, which have enabled it to consistently grow its policyholders’ surplus. Kingstone’s risk-adjusted capitalization significantly improved at year-end 2013, driven by a $15.0 million capital contribution from its parent, following an $18.8 million public offering on Dec. 13, 2013. The capital raised in this public offering also enabled management to repay all of its outstanding debt at Kingstone Companies, Inc.

The ratings reflect Kingstone’s solid risk-adjusted capitalization, favorable five-year operating performance and local market knowledge in its predominant operating territory of New York State. The company’s favorable operating performance is reflected in its double-digit five-year pre-tax returns on revenue and equity, generated by positive net underwriting income and supplemented by net investment and other income. Kingstone’s policyholders’ surplus growth has been solid over the past five years, increasing at a double-digit average annual rate. Additionally, the ICR for Kingstone Companies, Inc. acknowledges the standard notching off of the ICR for the operating company.

Partially offsetting Kingstone’s positive rating factors are its dependence on reinsurance and its concentration of risk, primarily in downstate New York, which exposes it to weather-related events, as well as to market, regulatory and judicial issues. Additionally, Kingstone reported substantial growth in net premiums written in 2014 and is projecting substantial growth in 2015, driven by increased retention on its quota share reinsurance contracts and new policy growth. However, Kingstone’s increased capital position and financial flexibility are sufficient to support management’s future growth plans. Furthermore, Kingstone has reported adverse loss reserve development in recent calendar and accident years, driven in part by historical lead paint claims. However, loss reserve development trends have recently shown improvement, driven by management’s strategic initiatives.

While Kingstone’s single-state concentration exposes it to weather-related events, catastrophe exposure is partially mitigated through catastrophe reinsurance, which it purchased at increased limits in recent years, as well as the use of hurricane deductibles, visual risk inspections, distance-from-shore restrictions and surcharges. Additionally, the company has been expanding its operating territory to regions beyond the New York metropolitan area.

The potential for ratings upgrades exists if Kingstone maintains the favorable operating performance that it has demonstrated in recent years and continues to strengthen its risk-adjusted capitalization. There could be negative pressure on Kingstone’s ratings going forward if its favorable operating performance should deteriorate or its risk-adjusted capitalization materially weakens.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at

Key insurance criteria reports utilized:

  • Catastrophe Analysis in A.M. Best Ratings
  • Insurance Holding Company and Debt Ratings
  • Risk Management and the Rating Process for Insurance Companies
  • Understanding BCAR for Property/Casualty Insurers

This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit

Copyright (c) 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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