Kingstone reports better reinsurance renewal conditions as it reduces retention

In a sign of the improved reinsurance buying conditions at the mid-year renewals, Kingstone Companies, Inc., a multi-line property and casualty insurance company focused on New York and surrounding northeast areas of the US, has reported a halving of its first event retention as it secured $275 million of catastrophe limit.

Kingstone Companies has renewed its catastrophe reinsurance program to provide $275 million of cover for the coming year.

That’s down on the $325 million of limit it secured a year ago, when it cited the hard reinsurance market and had a retention in place of $10 million for the first loss event.

For 2024 into 2025, the $275 million catastrophe reinsurance tower comes with a halved retention, at just $5 million, reflecting the improved conditions in the market.

Although this might also reflect the fact Kingstone’s reinsurance tower has been shrinking over time, having been as large as $603 million back in 2019.

Since then, Kingstone has added a quota share reinsurance arrangement to its program, which it renewed for 2024 at 27%.

The renewed catastrophe excess-of-loss reinsurance tower will run across the period July 1, 2024 through June 30, 2025.

Meryl Golden, Chief Executive Officer of Kingstone, highlighted an expectation that reinsurance renewal conditions would be softer.

The CEO said, “We appreciate the broad support we received from our valued reinsurance partners, with over 25 reinsurers participating in the program.

“In 2024, with the expectation of the reinsurance market softening and with confidence in our rates, we re-adjusted our underwriting guidelines to accept more new business. This has resulted in greater than 20% premium growth in our Core New York State business, which continues to accelerate, while we were also able to greatly reduce the cost of this year’s reinsurance placement.”

The quota share arrangement is helping Kingstone continue to expand, while having reduced its reliance on excess-of-loss reinsurance protection, it seems.

Jennifer Gravelle, Chief Financial Officer at Kingstone, added, “I am delighted to share that Kingstone has finalized its 2024/2025 catastrophe reinsurance placement. The Company purchased $275 million of total catastrophe limit and reduced its first event retention to $5 million. The total cost is approximately 14% of projected direct premiums earned, a significant reduction from 19% for the previous treaty period.

“Last year, we tightened our underwriting and curtailed new business writings to better manage our catastrophe exposure and reduce our probable maximum loss (“PML”). Although reinsurance pricing increased, it was not as significant as projected. As a result of these efforts, and other factors, we were able to lower our 24/25 reinsurance treaty cost by approximately $6 million, improving our projected full-year earnings by approximately $0.21 per share and better protecting the Company with a lower first event retention. The savings will be reflected in the 2024 third and fourth quarter results.”

The reduction in retention is a clear sign of improved market conditions for reinsurance buyers, although not necessarily of any meaningful softening. As ever the specifics of each company matter and the way Kingstone has adjusted its catastrophe protection using a quota share arrangement will be a factor here.