Replies to post #113006 on Savvy Trades and Investments

[nelson1234]

KINS I own her. Quarter was about where I expected, I mean a bit better than the guide they gave just a couple of weeks ago, but thats b/c they had some prior year positive development. But their guidance is more than solid, upped quite a bit from what they gave last quarter.. around 50% increase on the low end, and 22% on the high end. The March quarter is seasonally their worst quarter, December second worst, but note that they have had very bad June and Sept qtrs in recent years. If they can make their mid guidance of .92/share which I think is very attainable, then that would mean about .80/share in earnings over the next three quarters, of which in general the following two are seasonally stronger. And it would take too many things going right to make the higher part of their guidance. So could be some pretty big numbers coming up.

KINS was a mess for a while.. the newish CEO and team came in and has done a pretty good job... I mean some of it is luck in the Inusrance biz.. but they modernized the company, got it heading forward, cutting costs etc. Then they gave some focus to the company, particularly geographically, exiting non-core areas.. most notably NJ where they were losing a ton (and still are, but very little left).... now mostly NY only. They also raised rates.

One thing to note is they filed an S-3 last month. Not they hadn't had one effective for a while... maybe since '20 or '21. And most every insurance company has one out there just in case. So I'm not sure whether they intend to do anything short term. You'd hope with their guide that they'd wait for higher prices (all P&C Insurers raise cash from time to time), but who knows. I don't think they actually need a lot more cash unless they want to expand, and thats not what they want now. They just want to increase market share.

I don't think she deserves a big multiple. But .92/share at a seven multiple gets you to $6.40. Although thats is more of a stretch looking at it from a price the price to book side.

Anyway, I am not sure where she goes tomorrow, we'll see where she settles. But barring some wacky weather or other negative (or stock sale cash).. seems like they will have some real nice eps quarters coming up.

best.

[nelson1234]

KINS pretty good conf call. In response to a question, they said that they felt their balance sheet was strong enuf to carry their growth initiatives, and if it was necessary they could always reduce their quota share. Now thats not a guarantee that they don't raise cash.. I've seen others say similar shite only to announce an offering a month later..... but it does lower the short term risk of that happening.

I mean everything seems positive right now.. but note that the qtr reported was a bit of a lucky one weather wise.

They also stated (this is probably baked in their guidance) that they have a bunch of debt instruments coming due soon that were paying lower rates, and can now be reinvested in higher rate bonds.

And finally, their new reinsurance begins on July 31 (I think they said January .. if so that was a mistake). Their guidance assumes reinsurance costs will be flat year over year. But in early discussions with the reinsurers, they feel its possible that these costs will go down a small amount. I doubt its a huge number, but Reinsurance is their biggest expense so thats is nice, and perhaps could lead to a small bit of guidance upside.

best.