Kingstone buys $603m catastrophe reinsurance treaty at renewal

P&C insurance firm Kingstone Companies, Inc. has renewed its reinsurance treaties, including a cornerstone $603 million catastrophe excess of loss reinsurance arrangement that is backed by 53 reinsurers and 35% larger than the prior year treaty.

The reinsurance coverage is to protect the portfolios of Kingstone Insurance Company and the insurer has needed to acquire increased coverage as its own book of business has grown.

At its 2019 reinsurance renewal Kingstone purchased $603 million of catastrophe excess of loss coverage from a panel of 53 individual reinsurers.

The insurer said that each participating reinsurer was rated “A- Excellent” or better by A.M. Best, but we’re told that some insurance-linked securities (ILS) capital sits behind a number of the rated entities.

The 35% increase from the $445 million of catastrophe cover purchased in the prior year is a result of Kingstone’s growth the company explained, as well as its desire to secure coverage for more than a 1 in 250 year event.

Kingstone has a $7.5 million per-event retention before the coverage kicks in, meaning its catastrophe reinsurance tower now extends to cover a $610 million ground-up loss for the insurer.

In terms of pricing, Kingstone said it only had to pay a low-single digit exposure-adjusted rate change compared to the prior year.

In addition, while the treaty provides increased coverage its terms are said to be consistent with previous treaties purchased by the insurer.

Reinstatement premium protection up to the 100 year return period has been purchased, which Kingstone says now represents $292.5 million of coverage, but the treaty actually provides coverage up to the 1-in-263 year event level.

Kingstone also discontinued a 10% quota share reinsurance arrangement on its personal lines business that it had in place at July 1st.

Commenting on the renewal Barry Goldstein, Chairman of Kingstone Companies, said, “This was a challenging year in the reinsurance market, but we are satisfied with the success of our renewal. We were able to secure another substantial increase in coverage limit, in line with our continued growth, and were able to retain all incumbent markets and some additional new markets. Reinsurance markets continue to be more favorable for high quality buyers like Kingstone. We were able to achieve consistent terms at fair and relatively favorable pricing levels compared with other similar buyers.

“Our strong and diverse panel of 53 reinsurers include many of the most highly-respected and financially stable carriers in the marketplace. The fact that not a single incumbent left our program while we achieved stable pricing levels highlights the strong relationships that Kingstone and its long-term broker Aon have built with our reinsurers.”