10-Q

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, 2022

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	36-2476480
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification 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 14, 2022, there were 10,684,499 shares of the registrant’s common stock outstanding.

KINGSTONE COMPANIES, INC.

INDEX

		PAGE
PART I — FINANCIAL INFORMATION		4
Item 1 —	Financial Statements	4
	Condensed Consolidated Balance Sheets at September 30, 2022 (Unaudited) and December 31, 2021	4
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months and nine months ended September 30, 2022 (Unaudited) and 2021 (Unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three months and nine months ended September 30, 2022 (Unaudited) and 2021 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 (Unaudited) and 2021 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3 —	Quantitative and Qualitative Disclosures About Market Risk	76
Item 4 —	Controls and Procedures	76
PART II — OTHER INFORMATION		77
Item 1 —	Legal Proceedings	77
Item 1A —	Risk Factors	77
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 3 —	Defaults Upon Senior Securities	77
Item 4 —	Mine Safety Disclosures	77
Item 5 —	Other Information	77
Item 6 —	Exhibits	78
Signatures		79

2

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 (“Risk Factors”) of our Annual Report under “Factors That May Affect Future Results and Financial Condition” on Form 10-K for the year ended December 31, 2021, Part I, Item 2 of this Quarterly Report and Part II, Item 1A of this Quarterly Report. 

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.

3

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements.

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
	September 30,			December 31,
	2022			2021
	(unaudited)
Assets
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $6,611,858 at September 30, 2022 and $8,753,159 at December 31, 2021)	$	7,767,183		$	8,266,334
Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $165,534,467 at September 30, 2022 and $155,808,478 at December 31, 2021)		145,305,707			158,080,110
Equity securities, at fair value (cost of $26,776,016 at September 30, 2022 and $37,470,669 at December 31, 2021)		21,468,446			39,687,002
Other investments		2,576,272			7,561,415
Total investments		177,117,608			213,594,861
Cash and cash equivalents		15,111,206			24,290,598
Premiums receivable, net		12,891,464			12,318,336
Reinsurance receivables, net		59,365,937			40,292,438
Deferred policy acquisition costs		23,205,684			22,238,987
Intangible assets		500,000			500,000
Property and equipment, net		10,161,507			9,291,597
Deferred income taxes, net		8,856,948			192,253
Other assets		8,497,592			8,593,205
Total assets	$	315,707,946		$	331,312,275
Liabilities
Loss and loss adjustment expense reserves	$	106,928,898		$	94,948,745
Unearned premiums		103,789,380			97,759,607
Advance premiums		6,627,275			2,693,466
Reinsurance balances payable		11,475,247			12,961,568
Deferred ceding commission revenue		10,320,370			9,748,508
Accounts payable, accrued expenses and other liabilities		7,740,737			7,704,396
Debt, net		29,955,926			29,823,791
Total liabilities		276,837,833			255,640,081
Commitments and Contingencies (Note 11)
Stockholders' Equity
Preferred stock, $0.01 par value; authorized 2,500,000 shares		-			-
Common stock, $0.01 par value; authorized 20,000,000 shares; issued 12,117,081 shares at September 30, 2022 and 11,955,660 shares at December 31, 2021; outstanding 10,645,675 shares at September 30, 2022 and 10,484,254 shares at December 31, 2021		121,171			119,557
Capital in excess of par		73,290,935			72,467,483
Accumulated other comprehensive (loss) income		(15,978,570	)		1,796,739
(Accumulated deficit) retained earnings		(12,995,942	)		6,855,896
		44,437,594			81,239,675
Treasury stock, at cost, 1,471,406 shares at September 30, 2022 and December 31, 2021		(5,567,481	)		(5,567,481	)
Total stockholders' equity		38,870,113			75,672,194
Total liabilities and stockholders' equity	$	315,707,946		$	331,312,275

See accompanying notes to condensed consolidated financial statements.

4

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
Revenues
Net premiums earned	$	29,360,976		$	36,803,251		$	83,936,424		$	106,828,895
Ceding commission revenue		4,886,094			(7,276	)		14,283,077			37,400
Net investment income		1,418,521			1,676,596			3,411,946			5,137,867
Net (losses) gains on investments		(397,658	)		204,534			(9,313,436	)		5,480,202
Other income		269,702			280,869			750,169			577,261
Total revenues		35,537,635			38,957,974			93,068,180			118,061,625
Expenses
Loss and loss adjustment expenses		22,027,516			35,740,235			63,624,755			79,060,117
Commission expense		8,702,190			8,201,935			25,534,307			24,711,115
Other underwriting expenses		7,276,101			6,562,743			20,717,047			19,722,705
Other operating expenses		809,597			855,499			2,357,367			3,141,077
Depreciation and amortization		824,975			820,091			2,472,348			2,480,085
Interest expense		456,545			456,545			1,369,635			1,369,635
Total expenses		40,096,924			52,637,048			116,075,459			130,484,734
Loss from operations before taxes		(4,559,289	)		(13,679,074	)		(23,007,279	)		(12,423,109	)
Income tax benefit		(561,668	)		(3,060,809	)		(4,432,507	)		(2,817,108	)
Net loss		(3,997,621	)		(10,618,265	)		(18,574,772	)		(9,606,001	)
Other comprehensive loss, net of tax
Gross change in unrealized losses
on available-for-sale-securities		(5,047,679	)		(829,298	)		(22,556,319	)		(3,578,413	)
Reclassification adjustment for losses (gains)
included in net loss		4,247			(335,668	)		55,927			(1,071,439	)
Net change in unrealized losses		(5,043,432	)		(1,164,966	)		(22,500,392	)		(4,649,852	)
Income tax benefit related to items
of other comprehensive loss		1,059,120			244,643			4,725,083			976,470
Other comprehensive loss, net of tax		(3,984,312	)		(920,323	)		(17,775,309	)		(3,673,382	)
Comprehensive loss	$	(7,981,933	)	$	(11,538,588	)	$	(36,350,081	)	$	(13,279,383	)
Loss per common share:
Basic	$	(0.38	)	$	(1.01	)	$	(1.75	)	$	(0.90	)
Diluted	$	(0.38	)	$	(1.01	)	$	(1.75	)	$	(0.90	)
Weighted average common shares outstanding
Basic		10,645,675			10,523,515			10,640,290			10,622,988
Diluted		10,645,675			10,523,515			10,640,290			10,622,988
Dividends declared and paid per common share	$	0.04		$	0.04		$	0.12		$	0.12

See accompanying notes to condensed consolidated financial statements.

5

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
Three months ended September 30, 2022 and 2021
														Accumulated
											Capital			Other
	Preferred Stock				Common Stock						in Excess			Comprehensive			Retained			Treasury Stock
	Shares		Amount		Shares			Amount			of Par			Income (Loss)			Earnings			Shares		Amount			Total
Balance, July 1, 2021		-	$	-		11,944,220		$	119,442		$	71,567,797		$	7,127,003		$	16,086,337			1,383,077	$	(4,935,933	)	$	89,964,646
Stock-based compensation		-		-		-			-			466,658			-			-			-		-			466,658
Vesting of restricted stock awards		-		-		4,907			49			(49	)		-			-			-		-			-
Shares deducted from restricted stock awards for payment of withholding taxes		-		-		(1,508	)		(15	)		(9,371	)		-			-			-		-			(9,386	)
Acquisition of treasury stock		-		-		-			-			-			-			-			88,329		(631,548	)		(631,548	)
Dividends		-		-		-			-			-			-			(420,525	)		-		-			(420,525	)
Net loss		-		-		-			-			-			-			(10,618,265	)		-		-			(10,618,265	)
Change in unrealized losses on available-		-		-		-			-			-			-			-			-		-
for-sale securities, net of tax		-		-		-			-			-			(920,323	)		-			-		-			(920,323	)
Balance, September 30, 2021		-	$	-		11,947,619		$	119,476		$	72,025,035		$	6,206,680		$	5,047,547			1,471,406	$	(5,567,481	)	$	77,831,257

											Accumulated
									Capital		Other
	Preferred Stock				Common Stock				in Excess		Comprehensive			Accumulated			Treasury Stock
	Shares		Amount		Shares		Amount		of Par		Loss			Deficit			Shares		Amount			Total
Balance, July 1, 2022		-	$	-		12,117,081	$	121,171	$	73,102,513	$	(11,994,258	)	$	(8,572,521	)		1,471,406	$	(5,567,481	)	$	47,089,424
Stock-based compensation		-		-		-		-		188,422		-			-			-		-			188,422
Vesting of restricted stock awards		-		-		-		-		-		-			-			-		-			-
Shares deducted from restricted stock awards for payment of withholding taxes		-		-		-		-		-		-			-			-		-			-
Dividends		-		-		-		-		-		-			(425,800	)		-		-			(425,800	)
Net loss		-		-		-		-		-		-			(3,997,621	)		-		-			(3,997,621	)
Change in unrealized losses on available-for-sale securities, net of tax		-		-		-		-		-		(3,984,312	)		-			-		-			(3,984,312	)
Balance, September 30, 2022		-	$	-		12,117,081	$	121,171	$	73,290,935	$	(15,978,570	)	$	(12,995,942	)		1,471,406	$	(5,567,481	)	$	38,870,113

See accompanying notes to condensed consolidated financial statements.

6

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
Nine months ended September 30, 2022 and 2021
														Accumulated
											Capital			Other
	Preferred Stock				Common Stock						in Excess			Comprehensive			Retained			Treasury Stock
	Shares		Amount		Shares			Amount			of Par			Income (Loss)			Earnings			Shares		Amount			Total
Balance, January 1, 2021		-	$	-		11,871,307		$	118,713		$	70,769,165		$	9,880,062		$	15,928,345			1,254,492	$	(3,895,883	)	$	92,800,402
Stock-based compensation		-		-		-			-			1,447,725			-			-			-		-			1,447,725
Vesting of restricted stock awards		-		-		104,030			1,040			(1,040	)		-			-			-		-			-
Shares deducted from restricted stock awards for payment of withholding taxes		-		-		(27,718	)		(277	)		(190,815	)		-			-			-		-			(191,092	)
Acquisition of treasury stock		-		-		-			-			-			-			-			216,914		(1,671,598	)		(1,671,598	)
Dividends		-		-		-			-			-			-			(1,274,797	)		-		-			(1,274,797	)
Net loss		-		-		-			-			-			-			(9,606,001	)		-		-			(9,606,001	)
Change in unrealized losses on available-for-sale securities, net of tax		-		-		-			-			-			(3,673,382	)		-			-		-			(3,673,382	)
Balance, September 30, 2021		-	$	-		11,947,619		$	119,476		$	72,025,035		$	6,206,680		$	5,047,547			1,471,406	$	(5,567,481	)	$	77,831,257

														Accumulated			Retained
											Capital			Other			Earnings
	Preferred Stock				Common Stock						in Excess			Comprehensive			(Accumulated			Treasury Stock
	Shares		Amount		Shares			Amount			of Par			Income (Loss)			Deficit)			Shares		Amount			Total
Balance, January 1, 2022		-	$	-		11,955,660		$	119,557		$	72,467,483		$	1,796,739		$	6,855,896			1,471,406	$	(5,567,481	)	$	75,672,194
Stock-based compensation		-		-		-			-			1,204,865			-			-			-		-			1,204,865
Vesting of restricted stock awards		-		-		234,219			2,342			(2,342	)		-			-			-		-			-
Shares deducted from restricted stock awards for payment of withholding taxes		-		-		(72,798	)		(728	)		(379,071	)		-			-			-		-			(379,799	)
Dividends		-		-		-			-			-			-			(1,277,066	)		-		-			(1,277,066	)
Net loss		-		-		-			-			-			-			(18,574,772	)		-		-			(18,574,772	)
Change in unrealized losses on available-for-sale securities, net of tax		-		-		-			-			-			(17,775,309	)		-			-		-			(17,775,309	)
Balance, September 30, 2022		-	$	-		12,117,081		$	121,171		$	73,290,935		$	(15,978,570	)	$	(12,995,942	)		1,471,406	$	(5,567,481	)	$	38,870,113

See accompanying notes to condensed consolidated financial statements.

7

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine months ended September 30,	2022			2021
Cash flows from operating activities:
Net loss	$	(18,574,772	)	$	(9,606,001	)
Adjustments to reconcile net loss to net cash flows
(used in) provided by operating activities:
Net gains on investments		(599,773	)		(2,793,522	)
Net unrealized losses (gains) on equity investments		7,549,640			(592,397	)
Net unrealized losses (gains) on other investments		2,363,568			(2,094,283	)
Depreciation and amortization		2,472,348			2,480,085
Bad debt expense		43,365			150,024
Amortization of bond premium, net		922,257			165,413
Amortization of discount and issuance costs on debt		132,135			132,135
Stock-based compensation		1,204,865			1,447,725
Deferred income tax benefit		(3,939,612	)		(2,642,595	)
Decrease (increase) in operating assets:
Premiums receivable, net		(616,493	)		360,296
Reinsurance receivables, net		(19,073,499	)		22,498,715
Deferred policy acquisition costs		(966,697	)		(1,119,401	)
Other assets		95,613			(406,756	)
Increase (decrease) in operating liabilities:
Loss and loss adjustment expense reserves		11,980,153			18,242,890
Unearned premiums		6,029,773			2,644,506
Advance premiums		3,933,809			2,665,160
Reinsurance balances payable		(1,486,321	)		(2,713,643	)
Deferred ceding commission revenue		571,862			(5,673	)
Accounts payable, accrued expenses and other liabilities		36,341			267,109
Net cash flows (used in) provided by operating activities		(7,921,438	)		29,079,787
Cash flows from investing activities:
Purchase - fixed-maturity securities held-to-maturity		(498,711	)		(3,175,686	)
Purchase - fixed-maturity securities available-for-sale		(24,874,443	)		(32,753,786	)
Purchase - equity securities		(637,897	)		(17,834,076	)
Purchase - other investments		-			(2,000,000	)
Redemption - fixed-maturity securities held-to-maturity		1,000,000			1,312,500
Sale and maturity - fixed-maturity securities available-for-sale		14,213,435			33,335,036
Sale - equity securities		11,962,513			14,507,384
Sale - real estate partnership		-			233,798
Redemption - other investments		2,576,272			-
Acquisition of property and equipment		(3,342,258	)		(2,923,124	)
Net cash flows provided by (used in) investing activities		398,911			(9,297,954	)
Cash flows from financing activities:
Withholding taxes paid on vested retricted stock awards		(379,799	)		(191,092	)
Purchase of treasury stock		-			(1,671,598	)
Dividends paid		(1,277,066	)		(1,274,797	)
Net cash flows used in financing activities		(1,656,865	)		(3,137,487	)
(Decrease) increase in cash and cash equivalents	$	(9,179,392	)	$	16,644,346
Cash and cash equivalents, beginning of period		24,290,598			19,463,742
Cash and cash equivalents, end of period	$	15,111,206		$	36,108,088
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	825,000		$	825,000

See accompanying notes to condensed consolidated financial statements.

8

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"), through its wholly-owned subsidiary, Kingstone Insurance Company (“KICO”), underwrites property and casualty insurance exclusively through retail and wholesale 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,over 80% of KICO’s direct written premiums for both the three months and nine months ended September 30, 2022, came from the New York policies.  Kingstone, through its wholly-owned 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 and its wholly-owned subsidiaries are collectively referred to as the “Company”. 

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, 2021 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 4, 2022. 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 presentation of the Company’s financial position and results of operations. The results of operations for the nine months ended September 30, 2022 may not be indicative of the results that may be expected for the year ending December 31, 2022.

Certain prior year balances were reclassified to conform with the current year presentation.  The reclassification had no effect on the Company’s previously reported financial condition, results of operations or cash flows. 

Note 2 – Accounting Policies

Basis of Presentation; Going Concern

See Note 2 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for further information.

Kingstone’s $30,000,000 5.5% Senior Unsecured Notes (the “Notes”) mature on December 30, 2022. The Company’s continuation as a going concern is dependent on its ability to obtain financing to satisfy the Notes at maturity unless agreements are entered into with the holders of a substantial principal amount of the Notes to extend the maturity date of the Notes or exchange the Notes for new debt and/or equity securities of Kingstone (see “Management’s Plan Related to Going Concern” below).  Management believes that KICO’s insurance operations would be able to continue in the event that the required financing by Kingstone is not obtained and agreements with the holders of the Notes are not entered into. 

9

In accordance with Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. This evaluation requires management to perform two steps. First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern. Second, if management concludes that substantial doubt is raised, management is required to consider whether it has plans in place to alleviate that doubt. Disclosures in the notes to the consolidated financial statements are required if management concludes that substantial doubt exists and if its plans alleviate the substantial doubt that was raised.

The accompanying condensed consolidated financial statements have been prepared in accordance with GAAP assuming that the Company will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

Management’s Plan Related to Going Concern

In order to continue as a going concern, Kingstone will need to refinance the Notes that become  due on December 30, 2022, either through (a) new debt or equity financing at Kingstone that will provide the funds necessary, together with available cash, to pay the Notes in full at maturity, (b) Kingstone entering into arrangements with holders of the Notes to exchange their Notes for new debt and/or equity securities of Kingstone  or (c) a combination of (a) and (b). No assurance can be given that Kingstone will be successful in this regard.  Management has been exploring and continues to explore a number of financing and other options and has engaged investment bankers to assist it in pursuing such options.  Subject to regulatory requirements, Kingstone can also receive dividends and/or loans from its insurance subsidiary, KICO, that could be utilized to repay a portion of the Notes.  As of September 30, 2022, the maximum distribution that KICO could pay to Kingstone without prior regulatory approval was approximately $3.0 million. Subsequent to September 30, 2022, Kingstone received a $3.0 million distribution from KICO. In addition, subsequent to September 30, 2022, Kingstone received a loan from KICO of $6.45 million without the need for prior regulatory approval and also received a Federal income tax refund of approximately $1.5 million. With the foregoing proceeds, together with liquid investments and available cash, Kingstone currently has total funds of approximately $12.0 million.   

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described above, which the Company believes is probable, but there can be no assurance in this regard.   

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 LAE, which 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 ongoing basis, management reevaluates its assumptions and the methods for calculating these estimates. Actual results may differ significantly from the estimates used in preparing the condensed consolidated financial statements.

10

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Kingstone and its wholly owned subsidiaries: (1) 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, and (2) Cosi. All significant inter-company account balances and transactions have been eliminated in consolidation.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (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, 2023. The Company is currently evaluating the effect the updated guidance will have on its condensed consolidated financial statements.

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.

11

Note 3 - Investments 

Fixed-Maturity Securities

The amortized cost, estimated fair value, and unrealized gains and losses on investments in fixed-maturity securities classified as available-for-sale as of September 30, 2022 and December 31, 2021 are summarized as follows:

	September 30, 2022
	Cost or		Gross		Gross Unrealized Losses						Estimated		Net
	Amortized		Unrealized		Less than 12			More than 12			Fair		Unrealized
Category	Cost		Gains		Months			Months			Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	9,946,032	$	930	$	(123	)	$	-		$	9,946,839	$	807
Political subdivisions of States, Territories and Possessions		17,117,473		-		(3,250,196	)		(590,936	)		13,276,341		(3,841,132	)
Corporate and other bonds
Industrial and miscellaneous		84,163,055		-		(9,154,182	)		(269,694	)		74,739,179		(9,423,876	)
Residential mortgage and other asset backed securities (1)		54,307,907		68,159		(4,333,707	)		(2,699,011	)		47,343,348		(6,964,559	)
Total fixed-maturity securities	$	165,534,467	$	69,089	$	(16,738,208	)	$	(3,559,641	)	$	145,305,707	$	(20,228,760	)

(1) KICO has 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, 2022, the estimated fair value of the eligible investments was approximately $12,393,000. KICO will retain all rights regarding all securities if pledged as collateral. As of September 30, 2022 there was no outstanding balance on the FHLBNY credit line.

	December 31, 2021
	Cost or		Gross		Gross Unrealized Losses								Net
	Amortized		Unrealized		Less than 12			More than 12			Estimated Fair		Unrealized Gains/
Category	Cost		Gains		Months			Months			Value		(Losses)
Fixed-Maturity Securities:
Political subdivisions of States, Territories and Possessions	$	17,236,750	$	246,748	$	(197,984	)	$	-		$	17,285,514	$	48,764
Corporate and other bonds
Industrial and miscellaneous		80,534,769		2,603,411		(126,926	)		-			83,011,254		2,476,485
Residential mortgage and other asset backed securities		58,036,959		355,985		(489,258	)		(120,344	)		57,783,342		(253,617	)
Total fixed-maturity securities	$	155,808,478	$	3,206,144	$	(814,168	)	$	(120,344	)	$	158,080,110	$	2,271,632

12

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, 2022 and December 31, 2021 is shown below:

	September 30, 2022				December 31, 2021
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	14,852,441	$	14,824,136	$	1,153,099	$	1,156,636
One to five years		44,959,185		42,305,309		43,007,110		44,914,759
Five to ten years		30,271,976		24,680,308		26,808,853		27,332,581
More than 10 years		21,142,958		16,152,606		26,802,457		26,892,792
Residential mortgage and other asset backed securities		54,307,907		47,343,348		58,036,959		57,783,342
Total	$	165,534,467	$	145,305,707	$	155,808,478	$	158,080,110

The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.

Equity Securities

The cost and estimated fair value of, and gross unrealized gains and losses on, investments in equity securities as of September 30, 2022 and December 31, 2021 are as follows:

	September 30, 2022
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	16,047,207	$	-	$	(3,488,481	)	$	12,558,726
Common stocks, mutual funds, and exchange traded funds		10,728,809		103,902		(1,922,991	)		8,909,720
Total	$	26,776,016	$	103,902	$	(5,411,472	)	$	21,468,446

	December 31, 2021
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	22,019,509	$	1,007,009	$	(184,617	)	$	22,841,901
Common stocks, mutual funds, and exchange traded funds		15,451,160		1,573,653		(179,712	)		16,845,101
Total	$	37,470,669	$	2,580,662	$	(364,329	)	$	39,687,002

13

Other Investments

The cost and estimated fair value of, and gross gains on, the Company’s other investments as of September 30, 2022 and December 31, 2021 are as follows:

	September 30, 2022						December 31, 2021
			Gross		Estimated				Gross		Estimated
Category	Cost		Gains		Fair Value		Cost		Gains		Fair Value
Other Investments:
Hedge fund	$	1,987,040	$	589,232	$	2,576,272	$	3,999,381	$	3,562,034	$	7,561,415

Held-to-Maturity Securities

The cost or amortized cost and estimated fair value of, and unrealized gross gains and losses on, investments in held-to-maturity fixed-maturity securities as of September 30, 2022 and December 31, 2021 are summarized as follows:

	September 30, 2022
	Cost or		Gross		Gross Unrealized Losses					Estimated		Net
	Amortized		Unrealized		Less than 12			More than 12		Fair		Unrealized Gains/
Category	Cost		Gains		Months			Months		Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,485	$	73,468	$	(36,802	)	$	-	$	1,265,151	$	36,666
Political subdivisions of States, Territories and Possessions		498,508		-		(1,498	)		-		497,010		(1,498	)
Exchange traded debt		304,111		-		(43,361	)		-		260,750		(43,361	)
Corporate and other bonds
Industrial and miscellaneous		5,736,079		35,503		(1,182,635	)		-		4,588,947		(1,147,132	)
Total	$	7,767,183	$	108,971	$	(1,264,296	)	$	-	$	6,611,858	$	(1,155,325	)

	December 31, 2021
	Cost or		Gross		Gross Unrealized Losses					Estimated		Net
	Amortized		Unrealized		Less than 12			More than 12		Fair		Unrealized Gains/
Category	Cost		Gains		Months			Months		Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	729,642	$	209,633	$	-		$	-	$	939,275	$	209,633
Political subdivisions of States, Territories and Possessions		998,239		22,856		-			-		1,021,095		22,856
Exchange traded debt		304,111		85		(13,921	)				290,275		(13,836	)
Corporate and other bonds
Industrial and miscellaneous		6,234,342		280,951		(12,779	)		-		6,502,514		268,172
Total	$	8,266,334	$	513,525	$	(26,700	)	$	-	$	8,753,159	$	486,825

Held-to-maturity U.S. Treasury securities are held in trust pursuant to various states’ minimum funds requirements. 

14

A summary of the amortized cost and estimated fair value of the Company’s investments in held-to-maturity securities by contractual maturity as of September 30, 2022 and December 31, 2021 is shown below:

	September 30, 2022				December 31, 2021
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	708,325	$	742,533	$	994,712	$	1,008,180
One to five years		1,120,315		1,082,015		1,205,829		1,290,465
Five to ten years		1,399,725		1,177,545		1,513,942		1,648,808
More than 10 years		4,538,818		3,609,765		4,551,851		4,805,706
Total	$	7,767,183	$	6,611,858	$	8,266,334	$	8,753,159

The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.

Investment Income

Major categories of the Company’s net investment income are summarized as follows:

	Three months ended				Nine months ended
	September 30				September 30
	2022		2021		2022		2021
Income:
Fixed-maturity securities	$	1,243,177	$	1,288,277	$	2,841,307	$	4,238,746
Equity securities		247,275		436,833		872,005		1,145,244
Cash and cash equivalents		26,630		9,636		29,796		11,194
Other investments		-		42,908		-		-
Total		1,517,082		1,777,654		3,743,108		5,395,184
Expenses:
Investment expenses		89,811		101,058		322,412		257,317
Net investment income	$	1,427,271	$	1,676,596	$	3,420,696	$	5,137,867

Proceeds from the redemption of fixed-maturity securities held-to-maturity were $1,000,000 and $1,312,500 for the nine months ended September 30, 2022 and 2021, respectively.

Proceeds from the sale or maturity of fixed-maturity securities available-for-sale were $14,213,435 and $33,335,036 for the nine months ended September 30, 2022 and 2021, respectively.

Proceeds from the sale of equity securities were $11,962,513 and $14,507,384 for the nine months ended September 30, 2022 and 2021, respectively.

15

The Company’s net (losses) gains on investments are summarized as follows:

	Three months ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Realized Gains (Losses)
Fixed-maturity securities:
Gross realized gains	$	364		$	343,773		$	102,774		$	1,121,068
Gross realized losses		(4,620	)		(8,103	)		(158,701	)		(49,601	)
		(4,256	)		335,670			(55,927	)		1,071,467
Equity securities:
Gross realized gains		907,089			639,626			1,384,432			2,015,574
Gross realized losses		(92,159	)		(26,031	)		(728,732	)		(293,519	)
		814,930			613,595			655,700			1,722,055
Other Investments:
Gross realized gains		589,233			83,798			589,233			83,798
Gross realized losses		-			-			-			-
		589,233			83,798			589,233			83,798
Net realized gains		1,399,907			1,033,063			1,189,006			2,877,320
Unrealized (Losses) Gains
Equity Securities:
Gross gains		-			(1,331,675	)		-			592,397
Gross losses		(1,132,596	)					(7,549,640	)		-
		(1,132,596	)		(1,331,675	)		(7,549,640	)		592,397
Other Investments:
Gross gains		-			503,146			-			2,010,485
Gross losses		(664,969	)		-			(2,952,802	)		-
		(664,969	)		503,146			(2,952,802	)		2,010,485
Net unrealized (losses) gains		(1,797,565	)		(828,529	)		(10,502,442	)		2,602,882
Net (losses) gains on investments	$	(397,658	)	$	204,534		$	(9,313,436	)	$	5,480,202

Impairment Review

Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. The Company regularly reviews its fixed-maturity securities to evaluate the necessity of recording impairment losses for other-than-temporary declines in the estimated fair value of investments. In evaluating potential impairment, GAAP specifies (i) if the Company does not have the intent to sell a debt security prior to recovery and (ii) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporarily impaired unless there is a credit loss.  When the Company does not intend to sell the security and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other-than-temporary impairment (“OTTI”) of a debt security in earnings and the remaining portion in comprehensive income (loss).  The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security based on cash flow projections.  For held-to-maturity fixed-maturity securities, the amount of OTTI recorded in comprehensive income (loss) for the noncredit portion of a previous OTTI is amortized prospectively over the remaining life of the security based on timing of future estimated cash flows of the security.

16

OTTI losses are recorded in the consolidated statements of operations and comprehensive income (loss) as net realized losses on investments and result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process and different judgments and assumptions could affect the timing of loss realization. At September 30, 2022 and December 31, 2021, there were 155 and 48 fixed-maturity securities, respectively, that accounted for the gross unrealized losses.  The Company determined that none of the unrealized losses were deemed to be OTTI for its portfolio of investments as of September 30, 2022 and December 31, 2021.  Significant factors influencing the Company’s determination that unrealized losses were temporary included credit quality considerations, the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and interest rate environment factors, and management’s intent and ability to hold the investment for a period of time sufficient to allow for an anticipated recovery of estimated fair value to the Company’s cost basis.

The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at September 30, 2022 as follows: 

	September 30, 2022
	Less than 12 months							12 months or more							Total
	Estimated					No. of		Estimated					No. of		Estimated
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	5,975,160	$	(123	)		1	$	-	$	-			-	$	5,975,160	$	(123	)
Political subdivisions of States, Territories and Possessions		11,461,126		(3,250,196	)		12		1,815,216		(590,936	)		2		13,276,342		(3,841,132	)
Corporate and other bonds industrial and miscellaneous		73,921,209		(9,154,182	)		93		817,970		(269,694	)		1		74,739,179		(9,423,876	)
Residential mortgage and other asset backed securities		27,985,270		(4,333,707	)		31		18,593,599		(2,699,011	)		15		46,578,869		(7,032,718	)
Total fixed-maturity securities	$	119,342,765	$	(16,738,208	)		137	$	21,226,785	$	(3,559,641	)		18	$	140,569,550	$	(20,297,849	)

17

The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at December 31, 2021 as follows:

	December 31, 2021
	Less than 12 months							12 months or more							Total
	Estimated					No. of		Estimated					No. of		Estimated
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	-	$	-			-	$	-	$	-			-	$	-	$	-
Political subdivisions of States, Territories and Possessions		6,768,123		(197,984	)		5		-		-			-		6,768,123		(197,984	)
Corporate and other bonds industrial and miscellaneous		17,593,707		(126,926	)		15		-		-			-		17,593,707		(126,926	)
Residential mortgage and other asset backed securities		45,399,451		(489,258	)		26		2,923,182		(120,344	)		2		48,322,633		(609,602	)
Total fixed-maturity securities	$	69,761,281	$	(814,168	)		46	$	2,923,182	$	(120,344	)		2	$	72,684,463	$	(934,512	)

18

Note 4 - Fair Value Measurements

The following table presents information about the Company’s investments that are measured at fair value on a recurring basis at September 30, 2022 and December 31, 2021 indicating the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

	September 30, 2022
	Level 1		Level 2		Level 3		Total
Fixed-maturity securities available-for-sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	9,946,839	$	-	$	-	$	9,946,839
Political subdivisions of States, Territories and Possessions		-		13,276,341		-		13,276,341
Corporate and other bonds industrial and miscellaneous		74,241,809		497,370		-		74,739,179
Residential mortgage and other asset backed securities		-		47,343,348		-		47,343,348
Total fixed maturities		84,188,648		61,117,059		-		145,305,707
Equity securities		21,468,446		-		-		21,468,446
Total investments	$	105,657,094	$	61,117,059	$	-	$	166,774,153

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Fixed-maturity securities available-for-sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	-	$	-	$	-	$	-
Political subdivisions of States, Territories and Possessions		-		17,285,514		-		17,285,514
Corporate and other bonds industrial and miscellaneous		82,500,779		510,475		-		83,011,254
Residential mortgage and other asset backed securities		-		57,783,342		-		57,783,342
Total fixed maturities		82,500,779		75,579,331		-		158,080,110
Equity securities		39,687,002		-		-		39,687,002
Total investments	$	122,187,781	$	75,579,331	$	-	$	197,767,112

19

The following table sets forth the Company’s investment in a hedge fund measured at Net Asset Value (“NAV”) per share as of September 30, 2022 and December 31, 2021. The Company measures this investment at fair value on a recurring basis.  Fair value using NAV per share is as follows as of the dates indicated:

Category	September 30, 2022		December 31, 2021
Other Investments
Hedge fund	$	2,576,272	$	7,561,415

The hedge fund investment is generally redeemable with at least 45 days prior written notice.  The hedge fund investment is accounted for as a limited partnership by the Company. Income is earned based upon the Company’s allocated share of the partnership's changes in unrealized gains and losses to its partners. Such amounts have been recorded in the condensed consolidated statements of operations and comprehensive income (loss) within net (losses) gains on investments. As of September 30, 2022 the Company redeemed 50% of its investment in the hedge fund and recognized a realized gain of $589,233, which is recorded within net gains (losses) on investments in the condensed consolidated statements of operations and comprehensive income (loss).  

The estimated fair value and the level of the fair value hierarchy of the Company’s long-term debt as of September 30, 2022 and December 31, 2021 not measured at fair value is as follows:

	September 30, 2022
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2022	$	-	$	29,601,120	$	-	$	29,601,120

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2022	$	-	$	28,436,019	$	-	$	28,436,019

Note 5 - Fair Value of Financial Instruments and Real Estate

The estimated fair values of the Company’s financial instruments and real estate, including their fair value level as of September 30, 2022 and December 31, 2021 are as follows:

	September 30, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
Fixed-maturity securities-held-to maturity, Level 1	$	7,767,183	$	6,611,858	$	8,266,334	$	8,753,159
Cash and cash equivalents, Level 1	$	15,111,206	$	15,111,206	$	24,290,598	$	24,290,598
Premiums receivable, net, Level 3	$	12,891,464	$	12,891,464	$	12,318,336	$	12,318,336
Reinsurance receivables, net, Level 3	$	59,365,937	$	59,365,937	$	40,292,438	$	40,292,438
Real estate, net of accumulated depreciation, Level 3	$	2,089,156	$	3,025,000	$	2,144,464	$	3,025,000
Reinsurance balances payable, Level 3	$	11,475,247	$	11,475,247	$	12,961,568	$	12,961,568

20

Note 6 – Property and Casualty Insurance Activity

Premiums Earned

Premiums written, ceded and earned are as follows:

	Direct			Assumed		Ceded			Net
Nine months ended September 30, 2022
Premiums written	$	147,353,911		$	-	$	(58,743,773	)	$	88,610,138
Change in unearned premiums		(6,029,774	)		-		1,356,060			(4,673,714	)
Premiums earned	$	141,324,137		$	-	$	(57,387,713	)	$	83,936,424
Nine months ended September 30, 2021
Premiums written	$	131,609,930		$	-	$	(21,854,398	)	$	109,755,532
Change in unearned premiums		(2,911,439	)		-		(15,198	)		(2,926,637	)
Premiums earned	$	128,698,491		$	-	$	(21,869,596	)	$	106,828,895
Three months ended September 30, 2022
Premiums written	$	54,591,551		$	-	$	(20,925,381	)	$	33,666,170
Change in unearned premiums		(5,636,421	)		-		1,331,227			(4,305,194	)
Premiums earned	$	48,955,130		$	-	$	(19,594,154	)	$	29,360,976
Three months ended September 30, 2021
Premiums written	$	48,865,169		$	-	$	(7,223,526	)	$	41,641,643
Change in unearned premiums		(4,848,145	)		-		9,753			(4,838,392	)
Premiums earned	$	44,017,024		$	-	$	(7,213,773	)	$	36,803,251

Premium receipts in advance of the policy effective date are recorded as advance premiums.  The balance of advance premiums as of September 30, 2022 and December 31, 2021 was $6,627,275 and $2,693,466, respectively.

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Loss and Loss Adjustment Expense Reserves

The following table provides a reconciliation of the beginning and ending balances for unpaid losses and loss adjustment expense (“LAE”) reserves:

	Nine months ended
	September 30,
	2022			2021
Balance at beginning of period	$	94,948,745		$	82,801,228
Less reinsurance recoverables		(10,637,679	)		(20,154,251	)
Net balance, beginning of period		84,311,066			62,646,977
Incurred related to:
Current year		62,910,967			79,070,646
Prior years		713,788			(10,529	)
Total incurred		63,624,755			79,060,117
Paid related to:
Current year		35,774,958			35,408,412
Prior years		26,938,462			17,586,958
Total paid		62,713,420			52,995,370
Net balance at end of period		85,222,401			88,711,724
Add reinsurance recoverables		21,706,497			12,332,394
Balance at end of period	$	106,928,898		$	101,044,118

Incurred losses and LAE are net of reinsurance recoveries under reinsurance contracts of $27,230,814 and $1,220,970 for the nine months ended September 30, 2022 and 2021, respectively.

Prior year incurred loss and LAE development is based upon estimates by line of business and accident year. Prior year loss and LAE development incurred during the nine months ended September 30, 2022 and 2021 was $713,788 unfavorable and $10,529 favorable, respectively. Management, on a quarterly basis, performs a review of open liability claims to assess carried case and incurred but not reported (“IBNR”) reserve levels, giving consideration to both Company and industry trends.

Loss and LAE reserves

The reserving process for loss and LAE reserves provides for the Company’s best estimate at a particular point in time of the ultimate unpaid cost of all losses and LAE incurred, including settlement and administration of losses, and is based on facts and circumstances then known including losses that have occurred but that have not yet been reported. The process relies on standard actuarial reserving methodologies, judgments relative to estimates of ultimate claim severity and frequency, the length of time before losses will develop to their ultimate level (‘tail’ factors), and the likelihood of changes in the law or other external factors that are beyond the Company’s control. Several actuarial reserving methodologies are used to estimate required loss reserves. The process produces carried reserves set by management based upon the actuaries’ best estimate and is the cumulative combination of the best estimates made by line of business, accident year, and loss and LAE. The amount of loss and LAE reserves for individual reported claims (the “case reserve”) is determined by the claims department and changes over time as new information is gathered.  Such information is critical to the review of appropriate IBNR reserves and includes a review of coverage applicability, comparative liability on the part of the insured, injury severity, property damage, replacement cost estimates, and any other information considered pertinent to estimating the exposure presented by the claim. The amounts of loss and LAE reserves for unreported claims and development on known claims (IBNR reserves) are determined using historical information aggregated by line of insurance as adjusted to current conditions. Since this process produces loss reserves set by management based upon the actuaries’ best estimate, there is no explicit or implicit provision for uncertainty in the carried loss reserves.

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Due to the inherent uncertainty associated with the reserving process, the ultimate liability may differ, perhaps substantially, from the original estimate. Such estimates are regularly reviewed and updated and any resulting adjustments are included in the current period’s results. Reserves are closely monitored and are recomputed periodically using the most recent information on reported claims and a variety of statistical techniques. On at least a quarterly basis, the Company reviews by line of business existing reserves, new claims, changes to existing case reserves, and paid losses with respect to the current and prior periods. Several methods are used, varying by line of business and accident year, in order to select the estimated period-end loss reserves.  These methods include the following:

Paid Loss Development – historical patterns of paid loss development are used to project future paid loss emergence in order to estimate required reserves.

Incurred Loss Development – historical patterns of incurred loss development, reflecting both paid losses and changes in case reserves, are used to project future incurred loss emergence in order to estimate required reserves.

Paid Bornhuetter-Ferguson (“BF”) – an estimated loss ratio for a particular accident year is determined, and is weighted against the portion of the accident year claims that have been paid, based on historical paid loss development patterns.  The estimate of required reserves assumes that the remaining unpaid portion of a particular accident year will pay out at a rate consistent with the estimated loss ratio for that year.  This method can be useful for situations where an unusually high or low amount of paid losses exists at the early stages of the claims development process.

Incurred Bornhuetter-Ferguson (“BF”) - an estimated loss ratio for a particular accident year is determined, and is weighted against the portion of the accident year claims that have been reported, based on historical incurred loss development patterns.  The estimate of required reserves assumes that the remaining unreported portion of a particular accident year will pay out at a rate consistent with the estimated loss ratio for that year.  This method can be useful for situations where an unusually high or low amount of reported losses exists at the early stages of the claims development process.

Incremental Claim-Based Methods – historical patterns of incremental incurred losses and paid LAE during various stages of development are reviewed and assumptions are made regarding average loss and LAE development applied to remaining claims inventory.  Such methods more properly reflect changes in the speed of claims closure and the relative adequacy of case reserve levels at various stages of development.  These methods may provide a more accurate estimate of IBNR for lines of business with relatively few remaining open claims but for which significant recent settlement activity has occurred.

Frequency / Severity Based Methods – historical measurements of claim frequency and average paid claim size (severity) are reviewed for more mature accident years where a majority of claims have been reported and/or closed.  These historical averages are trended forward to more recent periods in order to estimate ultimate losses for newer accident years that are not yet fully developed.  These methods are useful for lines of business with slow and/or volatile loss development patterns, such as liability lines where information pertaining to individual cases may not be completely known for many years.  The claim frequency and severity information for older periods can then be used as reasonable measures for developing a range of estimates for more recent immature periods.

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Management’s best estimate of required reserves is generally based on an average of the methods above, with appropriate weighting of methods based on the line of business and accident year being projected. In some cases, additional methods or historical data from industry sources are employed to supplement the projections derived from the methods listed above.

Three key assumptions that materially affect the estimate of loss reserves are the loss ratio estimate for the current accident year used in the BF methods, the loss development factor selections used in the loss development methods, and the loss severity assumptions used in the frequency / severity method described above. The loss ratio estimates used in the BF methods are selected after reviewing historical accident year loss ratios adjusted for rate changes, trend, and mix of business.  The severity assumptions used in the frequency / severity method are determined by reviewing historical average claim severity for older more mature accident periods, trended forward to less mature accident periods.

COVID-19 has introduced additional uncertainty to recent claim trends. The Company reviews the carried reserves levels on a regular basis as additional information becomes available and makes adjustments in the periods in which such adjustments are determined to be necessary. The Company is not aware of any other claim trends that have emerged or that would cause future adverse development that have not already been contemplated in setting current carried reserves levels.

In New York State, lawsuits for negligence are subject to certain limitations and must be commenced within three years from the date of the accident or are otherwise barred. Accordingly, the Company’s exposure to unreported claims (“pure” IBNR) for accident dates of September 30, 2019 and prior is limited, although there remains the possibility of adverse development on reported claims (“case development” IBNR).  In certain rare circumstances states have retroactively revised a statute of limitations.  The Company is not aware of any such effort that would have a material impact on the Company’s results. 

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The following is information about incurred and paid claims development as of September 30, 2022, net of reinsurance, as well as the cumulative reported claims by accident year and total IBNR reserves as of September 30, 2022 included in the net incurred loss and allocated expense amounts. The historical information regarding incurred and paid claims development for the years ended December 31, 2013 to December 31, 2021 is presented as supplementary unaudited information.

All Lines of Business
(in thousands, except reported claims data)
																					As of
	Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance																				September 30, 2022
	For the Years Ended December 31,																		Nine Months Ended September 30,				Cumulative Number of Reported Claims by Accident
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		IBNR		Year
	(Unaudited 2013 - 2021)																		(Unaudited)
2013	$	10,728	$	9,745	$	9,424	$	9,621	$	10,061	$	10,089	$	10,607	$	10,495	$	10,529	$	10,493	$	3		1,564
2014				14,193		14,260		14,218		14,564		15,023		16,381		16,428		16,434		16,496		34		2,138
2015						22,340		21,994		22,148		22,491		23,386		23,291		23,528		23,533		239		2,559
2016								26,062		24,941		24,789		27,887		27,966		27,417		27,411		101		2,881
2017										31,605		32,169		35,304		36,160		36,532		36,553		270		3,398
2018												54,455		56,351		58,441		59,404		60,535		446		4,229
2019														75,092		72,368		71,544		71,386		3,074		4,494
2020																63,083		62,833		62,043		3,504		5,861
2021																		96,425		97,038		9,236		5,779
2022																				58,735		13,837		3,236
																	Total		$	464,223

All Lines of Business
(in thousands)
	Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,																		Nine Months Ended September 30,
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
	(Unaudited 2013 - 2021)																		(Unaudited)
2013	$	3,405	$	5,303	$	6,633	$	7,591	$	8,407	$	9,056	$	9,717	$	10,016	$	10,392	$	10,471
2014				5,710		9,429		10,738		11,770		13,819		14,901		15,491		15,770		16,083
2015						12,295		16,181		18,266		19,984		21,067		22,104		22,318		22,462
2016								15,364		19,001		21,106		23,974		25,234		25,750		26,244
2017										16,704		24,820		28,693		31,393		32,529		32,928
2018												32,383		44,516		50,553		52,025		53,657
2019														40,933		54,897		58,055		59,933
2020																39,045		50,719		52,632
2021																		56,282		75,291
2022																				32,981
																	Total		$	382,681
Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented																			$	81,542
All outstanding liabilities before 2013, net of reinsurance																				264
Liabilities for loss and allocated loss adjustment expenses, net of reinsurance																			$	81,806

(Components may not sum to totals due to rounding)

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Reported claim counts are measured on an occurrence or per event basis.  A single claim occurrence could result in more than one loss type or claimant; however, the Company counts claims at the occurrence level as a single claim regardless of the number of claimants or claim features involved.

The reconciliation of the net incurred and paid loss development tables to the loss and LAE reserves in the consolidated balance sheet is as follows:

Reconciliation of the Disclosure of Incurred and Paid Loss Development
to the Liability for Loss and LAE Reserves
	As of
(in thousands)	September 30, 2022
Liabilities for allocated loss and loss adjustment expenses, net of reinsurance	$	81,806
Total reinsurance recoverable on unpaid losses		21,706
Unallocated loss adjustment expenses		3,416
Total gross liability for loss and LAE reserves	$	106,929

(Components may not sum to totals due to rounding)

Reinsurance

Effective December 31, 2021, the Company entered into a quota share reinsurance treaty for its personal lines business, which primarily consists of homeowners’ and dwelling fire policies, covering the period from December 31, 2021 through January 1, 2023 (“2021/2023 Treaty”).

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The Company’s excess of loss and catastrophe reinsurance treaties expired on June 30, 2022 and the Company entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2022. Effective October 20, 2021, the Company entered into a stub catastrophe reinsurance treaty covering the period from October 20, 2021 through December 31, 2021. The treaty provided reinsurance coverage for catastrophe losses of $5,000,000 in excess of $5,000,000. Effective January 1, 2022, the Company entered into an underlying excess of loss reinsurance treaty covering the period from January 1, 2022 through January 1, 2023. The treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty. Material terms for reinsurance treaties in effect for the treaty years shown below are as follows:

	Treaty Period
			(2021/2023 Treaty)
	January 2,		July 1,			December 31,			July 1,		December 31,
	2023		2022			2021			2021		2020
	to		to			to			to		to
	June 30,		January 1,			June 30,			December 30,		June 30,
Line of Business	2023		2023			2022			2021		2021
Personal Lines:
Homeowners, dwelling fire and and canine legal liability
Quota share treaty:
Percent ceded (9)	None (8)			30	%		30	%	None (5)		None (5)
Risk retained on intial $1,000,000 of losses (5) (7) (8) (9)	$	1,000,000	$	700,000		$	700,000		$	1,000,000	$	1,000,000
Losses per occurrence subject to quota share reinsurance coverage	None (8)		$	1,000,000		$	1,000,000		None (5)		None (5)
Expiration date		(8)	January 1, 2023			January 1, 2023			NA (5)		NA (5)
Excess of loss coverage and facultative facility coverage (1) (7)	$	8,000,000	$	8,400,000		$	8,400,000		$	8,000,000	$	8,000,000
	in excess of		in excess of			in excess of			in excess of		in excess of
	$	1,000,000	$	600,000		$	600,000		$	1,000,000	$	1,000,000
Total reinsurance coverage per occurrence (5) (7) (8)	$	8,000,000	$	8,500,000		$	8,500,000		$	8,000,000	$	8,000,000
Losses per occurrence subject to reinsurance coverage (5) (8)	$	8,000,000	$	9,000,000		$	9,000,000		$	9,000,000	$	9,000,000
Expiration date (8)	June 30, 2023		June 30, 2023			June 30, 2022			June 30, 2022		June 30, 2021
Catastrophe Reinsurance:
Initial loss subject to personal lines quota share treaty		(8)		10,000,000			10,000,000		None (5)		None (5)
Risk retained per catastrophe occurrence (5) (8) (9) (10)	$	10,000,000	$	7,400,000		$	7,400,000		$	10,000,000	$	10,000,000
Catastrophe loss coverage in excess of quota share coverage (2) (5) (8)	$	335,000,000	$	335,000,000		$	490,000,000		$	490,000,000	$	475,000,000
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 (6)	NA		NA			NA			$	5,000,000	NA
									in excess of
									$	5,000,000
Reinstatement premium protection (3) (4)	Yes		Yes			Yes			Yes		Yes

(1)	For personal lines, includes the addition of an automatic facultative facility allowing KICO to obtain homeowners single risk coverage up to $9,000,000 in total insured value, which covers direct losses from $3,500,000 to $9,000,000 through June 30, 2023.
(2)	Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts. Duration of 168 consecutive hours for a catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone.
(3)	For the period July 1, 2020 through June 30, 2021, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000. For the period July 1, 2021 through June 30, 2022, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000.
(4)	For the period July 1, 2022 through June 30, 2023, reinstatement premium protection for $9,800,000 of catastrophe coverage in excess of $10,000,000.

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(5)	The personal lines quota share (homeowners, dwelling fire and canine legal liability) expired on December 30, 2020; reinsurance coverage from December 31, 2020 through December 30, 2021 is only for excess of loss and catastrophe reinsurance.
(6)	Excludes freeze and freeze related claims.
(7)	For the period January 1, 2022 through January 1, 2023, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty. Excludes losses from named storms.
(8)	Personal lines quota share (homeowners, dwelling fire and canine liability) and underlying excess of loss reinsurance will expire on January 1, 2023; reinsurance coverage in effect from January 2, 2023 through June 30, 2023 is only for excess of loss and catastrophe reinsurance treaties.
(9)	For the 2021/2023 Treaty, 4% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event.
(10)	Plus losses in excess of catastrophe coverage.

	Treaty Year
	July 1, 2022			July 1, 2021			July 1, 2020
	to			to			to
Line of Business	June 30, 2023			June 30, 2022			June 30, 2021
Personal Lines:
Personal Umbrella
Quota share treaty:
Percent ceded - first $1,000,000 of coverage		90	%		90	%		90	%
Percent ceded - excess of $1,000,000 dollars of coverage		95	%		95	%		95	%
Risk retained	$	300,000		$	300,000		$	300,000
Total reinsurance coverage per occurrence	$	4,700,000		$	4,700,000		$	4,700,000
Losses per occurrence subject to quota share reinsurance coverage	$	5,000,000		$	5,000,000		$	5,000,000
Expiration date	June 30, 2023			June 30, 2022			June 30, 2021
Commercial Lines (1):
General liability commercial policies
Quota share treaty							None
Risk retained							$	750,000
Excess of loss coverage above risk retained							$	3,750,000
							in excess of
							$	750,000
Total reinsurance coverage per occurrence							$	3,750,000
Losses per occurrence subject to reinsurance coverage							$	4,500,000
Commercial Umbrella
Quota share treaty							None

(1) Coverage on all commercial lines policies expired in September 2020; reinsurance coverage is based on treaties in effect on the date of loss.

The Company’s reinsurance program has been structured to enable the Company to grow its premium volume while maintaining regulatory capital and other financial ratios generally within or below the expected ranges used for regulatory oversight purposes. The reinsurance program also provides income as a result of ceding commissions earned pursuant to the quota share reinsurance contracts. The Company’s participation in reinsurance arrangements does not relieve the Company of its obligations to policyholders.

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Ceding Commission Revenue

The Company earned ceding commission revenue under the 2021/2023 Treaty for the three months and nine months ended September 30, 2022 based on a fixed provisional commission rate at which provisional ceding commissions will be earned. There was no quota share treaty in effect during the three months and nine months ended September 30, 2021. The Company earned ceding commission revenue under its expired quota share reinsurance agreements based on: (i) a fixed provisional commission rate at which provisional ceding commissions were earned, and (ii) a continuing sliding scale of commission rates and ultimate treaty year loss ratios on the policies reinsured under each of these agreements based upon which contingent ceding commissions are earned. The sliding scale includes minimum and maximum commission rates in relation to specified ultimate loss ratios.  The commission rate and contingent ceding commissions earned increases when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decreases when the estimated ultimate loss ratio increases.

Ceding commission revenue consists of the following:

	Three months ended					Nine months ended
	September 30,					September 30,
	2022		2021			2022		2021
Provisional ceding commissions earned	$	4,881,580	$	40,578		$	14,116,044	$	135,666
Contingent ceding commissions earned		4,514		(47,854	)		167,033		(98,266	)
	$	4,886,094	$	(7,276	)	$	14,283,077	$	37,400

Provisional ceding commissions are settled monthly. Balances due from reinsurers for contingent ceding commissions on quota share treaties are settled periodically based on the Loss Ratio of each treaty year that ends on June 30, for the expired treaties that were subject to contingent commissions. As discussed above, the Loss Ratios from prior years’ treaties are subject to change as incurred losses from those periods develop, resulting in an increase or decrease in the commission rate and contingent ceding commissions earned.  As of September 30, 2022 and December 31, 2021, net contingent ceding commissions payable to reinsurers under all treaties was approximately $2,714,000 and $2,881,000, respectively, which is recorded in reinsurance balances payable on the accompanying condensed consolidated balance sheets.

Note 7 – Debt

Federal Home Loan Bank

In July 2017, KICO became a member of, and invested in the Federal Home Loan Bank of New York (“FHLBNY”).  KICO is required to maintain an investment in capital stock of FHLBNY.  Based on redemption provisions of FHLBNY, the stock has no quoted market value and is carried at cost.  At its discretion, FHLBNY may declare dividends on the stock.  Management reviews for impairment based on the ultimate recoverability of the cost basis in the stock. At September 30, 2022 and December 31, 2021, no impairment has been recognized. FHLBNY members have access to a variety of flexible, low-cost funding through FHLBNY’s credit products, enabling members to customize advances, which are to be fully collateralized.  Eligible collateral to pledge to FHLBNY includes residential and commercial mortgage-backed securities, along with U.S. Treasury and agency securities. See Note 3 – Investments for eligible collateral held in a designated custodian account available for future advances.  Advances are limited to 5% of KICO’s net admitted assets as of the previous quarter and are due and payable within one year of borrowing.  KICO is currently able to borrow on an overnight basis. The maximum allowable advance as of September 30, 2022 was approximately $12,414,000. Advances are limited to 85% of the amount of available collateral. As of September 30, 2022, the estimated fair value of available collateral was $12,393,000.  Accordingly, as of September 30, 2022, advances were limited to $10,534,000. As of December 31, 2021, there was no available collateral. There have been no borrowings under this facility since KICO became a member of FHLBNY.

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Debt

On December 19, 2017, the Company issued $30 million of its 5.50% Senior Unsecured Notes due December 30, 2022 (the “Notes”) in an underwritten public offering. Interest is payable semi-annually in arrears on June 30 and December 30 of each year, which began on June 30, 2018 at the rate of 5.50% per annum. The net proceeds of the issuance were $29,121,630, net of discount of $163,200 and transaction costs of $715,170, for an effective yield of 5.67% per annum. The balance of debt as of September 30, 2022 and December 31, 2021 is as follows:

	September 30,			December 31,
	2022			2021
5.50% Senior Unsecured Notes	$	30,000,000		$	30,000,000
Discount		(8,110	)		(32,442	)
Issuance costs		(35,964	)		(143,767	)
Debt, net	$	29,955,926		$	29,823,791

The Notes are unsecured obligations of the Company and are not the obligations of or guaranteed by any of the Company's subsidiaries. The Notes rank senior in right of payment to any of the Company's existing and future indebtedness that is by its terms expressly subordinated or junior in right of payment to the Notes. The Notes rank equally in right of payment to all of the Company's existing and future senior indebtedness, but will be effectively subordinated to any secured indebtedness to the extent of the value of the collateral securing such secured indebtedness. In addition, the Notes will be structurally subordinated to the indebtedness and other obligations of the Company's subsidiaries. The Company may redeem the Notes, at any time in whole or from time to time in part, at the redemption price equal to the greater of: (i) 100% of the principal amount of the Notes to be redeemed; and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed that would be due if the Notes matured on the applicable redemption date (exclusive of interest accrued to the applicable redemption date) discounted to the redemption date on a semi-annual basis at the Treasury Rate, plus 50 basis points (“Make Whole Call”).

Due to the Make Whole Call, management intends to retire or otherwise satisfy the Notes at or close to the scheduled maturity date in December 2022. See Note 2 – Accounting Policies - Management’s Plan Related to Going Concern for a discussion of Kingstone’s plans with regard to the satisfaction of the Notes.

The Company used an aggregate $28,256,335 of the net proceeds from the offering to contribute capital to KICO in order to support additional growth. The remainder of the net proceeds was used for general corporate purposes. A registration statement relating to the debt issued in the offering was filed with the SEC, which became effective on November 28, 2017.

Capital Lease

On October 27, 2022 KICO entered into a sale leaseback transaction, whereby KICO sold $8,096,824 of fixed assets to a bank.  The provisions of the sale leaseback require KICO to pay a monthly payment of principal and interest totaling $126,877 for a term of 60 months commencing on October 27, 2022.  The terms of the agreement provide buyout options at the end of the 60 month term, which are as follows: 

· At the end of the lease KICO may purchase the fixed assets for a purchase price of $2,024,206, which is 25% of the original fixed asset cost of $8,096,824; or

· KICO may renew the lease for 16 months at the same rental rate, which totals $2,030,036

A provision of the sale leaseback agreement requires KICO to pledge collateral for the lease obligation.  KICO pledged a total of $9,958,700 in United States Treasury Bills. See Note 13 - Subsequent Events.

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Note 8 – Stockholders’ Equity

Dividends Declared and Paid

Dividends declared and paid on Common Stock were $1,277,066 and $1,274,797 for the nine months ended September 30, 2022 and 2021, respectively.

Stock Options

Effective August 12, 2014, the Company adopted the 2014 Equity Participation Plan (the “2014 Plan”) pursuant to which a maximum of 700,000 shares of Common Stock of the Company were initially authorized to be issued pursuant to the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and stock bonuses.  Incentive stock options granted under the 2014 Plan expire no later than ten years from the date of grant (except no later than five years for a grant to a 10% stockholder). Non-statutory stock options granted under the 2014 Plan expire no later than ten years from the date of grant.  The Board of Directors or the Compensation Committee determines the vesting provisions for stock awards granted under the 2014 Plan, subject to the provisions of the 2014 Plan.  On August 5, 2020, the Company’s stockholders approved amendments to the 2014 Plan, including an increase in the maximum number of shares of Common Stock of the Company that are authorized to be issued pursuant to the 2014 Plan to 1,400,000.

The results of operations for the three months ended September 30, 2022 and 2021 include stock-based compensation expense for stock options totaling approximately $2,000 and $14,000, respectively. The results of operations for the nine months ended September 30, 2022 and 2021 include stock-based compensation expense for stock options totaling approximately $9,000 and $43,000, respectively. Stock-based compensation expense related to stock options for the three months and nine months ended September 30, 2022 and 2021 is net of estimated forfeitures of approximately 18% and 16%, respectively. Such amounts have been included in the condensed consolidated statements of operations and comprehensive income (loss) within other operating expenses.  

No options were granted during the nine months ended September 30, 2022. The fair value of stock options at the grant date are estimated using the Black-Scholes option-pricing model. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options.

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A summary of stock option activity under the Company’s 2014 Plan for the nine months ended September 30, 2022 is as follows:

Stock Options	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2022		107,201	$	8.31		2.92	$	-
Granted		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Expired/Forfeited		-	$	-		-	$	-
Outstanding at September 30, 2022		107,201	$	8.31		2.18	$	-
Vested and Exercisable at September 30, 2022		94,701	$	8.26		2.46	$	-

The aggregate intrinsic value of options outstanding and options exercisable at September 30, 2022 is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s Common Stock for the options that had exercise prices that were lower than the $2.66 closing price of the Company’s Common Stock on September 30, 2022. No options were exercised, forfeited or expired during the nine months ended September 30, 2022. The total intrinsic value of options when forfeited are determined as of the date of forfeiture. The total intrinsic value of options when expired are determined as of the date of expiration.

Participants in the 2014 Plan may exercise their outstanding vested options, in whole or in part, by having the Company reduce the number of shares otherwise issuable by a number of shares having a fair market value equal to the exercise price of the option being exercised (“Net Exercise”), or by exchanging a number of shares owned for a period of greater than one year having a fair market value equal to the exercise price of the option being exercised (“Share Exchange”).

As of September 30, 2022, there were no unvested options.

As of September 30, 2022, there were 364,271 shares reserved for grants under the 2014 Plan.

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Restricted Stock Awards

A summary of the restricted Common Stock activity under the Company’s 2014 Plan for nine months ended September 30, 2022 is as follows:

Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value per Share		Aggregate Fair Value
Balance at January 1, 2022		535,410		$	7.01	$	3,753,224
Granted		98,456		$	5.53	$	544,503
Vested		(234,219	)	$	7.32	$	(1,715,220	)
Forfeited		(17,605	)	$	-	$	-
Balance at September 30, 2022		382,042		$	6.91	$	2,582,506

Fair value was calculated using the closing price of the Company’s Common Stock on the grant date. For the three months ended September 30, 2022 and 2021, stock-based compensation for these grants was approximately $186,000 and $452,000, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). For the nine months ended September 30, 2022 and 2021, stock-based compensation for these grants was approximately $1,180,000 and $1,405,000, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be recognized by the directors, executives and employees.

Employee Stock Purchase Plan

On June 19, 2021, the Company’s Board of Directors adopted the Kingstone Companies, Inc. Employee Stock Purchase Plan (the “ESPP”), subject to stockholder approval. Such approval was obtained on August 10, 2021. The purpose of the ESPP is to provide eligible employees of the Company with an opportunity to use payroll deductions to purchase shares of Common Stock of the Company. The maximum number of shares of Common Stock that may be purchased under the ESPP is 750,000, subject to adjustment as provided for in the ESPP. The ESPP was effective August 10, 2021 and expires on August 10, 2031. A maximum of 5,000 shares of Common Stock may be purchased by an employee during any offering period.

The initial offering period under the ESPP was from November 1, 2021 through October 31, 2022 (“2021/2022 Offering”).  There is currently no offering pursuant to the ESPP subsequent to October 31, 2022. For the three months ended September 30, 2022 and 2021, stock-based compensation under the 2021/2022 Offering was approximately $5,000 and $-0-, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). For the nine months ended September 30, 2022 and 2021, stock-based compensation under the 2021/2022 Offering was approximately $16,000 and $-0-, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss).

At the end of the 2021/2022 offering period, 33,222 shares of common stock were issued at $1.82 per share to participating employees for a total purchase of $60,464. See Note 13 - Subsequent Events.   

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Note 9 – Income Taxes

The Company files a consolidated U.S. federal income tax return that includes all wholly owned subsidiaries. State tax returns are filed on a consolidated or separate return basis depending on applicable laws. The Company records adjustments related to prior years’ taxes during the period when they are identified, generally when the tax returns are filed.  The effect of these adjustments on the current and prior periods (during which the differences originated) is evaluated based upon quantitative and qualitative factors and are considered in relation to the consolidated financial statements taken as a whole for the respective periods.

Deferred tax assets and liabilities are determined using the enacted tax rates applicable to the period the temporary differences are expected to be recovered. Accordingly, the current period income tax provision can be affected by the enactment of new tax rates. The net deferred income taxes on the balance sheets reflect temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and income tax purposes, tax effected at various rates depending on whether the temporary differences are subject to federal taxes, state taxes, or both.

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	September 30,		December 31,
	2022		2021
Deferred tax asset:
Net operating loss carryovers (1)	$	2,099,013	$	1,112,318
Claims reserve discount		1,164,002		1,186,789
Unearned premium		3,607,880		3,246,364
Deferred ceding commission revenue		2,167,278		2,047,187
Net unrealized losses on securities		4,215,667		-
Other		1,530,488		1,220,898
Total deferred tax assets		14,784,328		8,813,556
Deferred tax liability:
Investment in KICO (2)		759,543		759,543
Deferred acquisition costs		4,873,194		4,670,187
Intangibles		105,000		105,000
Depreciation and amortization		189,643		1,046,817
Net unrealized gains on securities		-		2,039,756
Total deferred tax liabilities		5,927,380		8,621,303
Net deferred income tax asset	$	8,856,948	$	192,253

(1) The deferred tax assets from net operating loss carryovers (“NOL”) are as follows:

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	September 30,			December 31,
Type of NOL	2022			2021			Expiration
Federal only, NOL from 2022 and 2021	$	2,099,013		$	1,112,318
NOL carried back		-			-
Federal only, NOL from 2022 and 2021		2,099,013			1,112,318		None
State only (A)		2,227,702			2,099,239		December 2027 - December 2042
Valuation allowance		(2,227,702	)		(2,099,239	)
State only, net of valuation allowance		-			-
Total deferred tax asset from net operating loss carryovers	$	2,099,013		$	1,112,318

(A) Kingstone generates operating losses for state purposes and has prior year NOLs available. The state NOL as of September 30, 2022 and December 31, 2021 was approximately $34,272,000 and $32,296,000, respectively. KICO, the Company’s insurance underwriting subsidiary, is not subject to state income taxes. KICO’s state tax obligations are paid through a gross premiums tax, which is included in the condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses. Kingstone has recorded a valuation allowance due to the uncertainty of generating enough state taxable income to utilize 100% of the available state NOLs over their remaining lives, which expire between 2027 and 2042. 

(2)    Deferred tax liability – Investment in KICO

On July 1, 2009, the Company completed the acquisition of 100% of the issued and outstanding common stock of KICO (formerly known as Commercial Mutual Insurance Company (“CMIC”)) pursuant to the conversion of CMIC from an advance premium cooperative to a stock property and casualty insurance company. Pursuant to the plan of conversion, the Company acquired a 100% equity interest in KICO, in consideration for the exchange of $3,750,000 principal amount of surplus notes of CMIC. In addition, the Company forgave all accrued and unpaid interest on the surplus notes as of the date of conversion. As of the date of acquisition, unpaid accrued interest on the surplus notes along with the accretion of the discount on the original purchase of the surplus notes totaled $2,921,319 (together “Untaxed Interest”). As of the date of acquisition, the deferred tax liability on the Untaxed Interest was $1,169,000. A temporary difference with an indefinite life exists when the parent has a lower carrying value of its subsidiary for income tax purposes. The deferred tax liability was reduced to $759,543 upon the reduction of federal income tax rates as of December 31, 2017. The Company is required to maintain its deferred tax liability of $759,543 related to this temporary difference until the stock of KICO is sold, or the assets of KICO are sold or KICO and the parent are merged.

In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. No valuation allowance against deferred tax assets has been established, except for NOL limitations, as the Company believes it is more likely than not the deferred tax assets will be realized based on the historical taxable income of KICO, or by offset to deferred tax liabilities.

The Company had no material unrecognized tax benefit and no adjustments to liabilities or operations were required. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the nine months ended September 30, 2022 and 2021. If any had been recognized these would have been reported in income tax expense.

Generally, taxing authorities may examine the Company’s tax returns for the three years from the date of filing.  The Company’s tax returns for the years ended December 31, 2019 through December 31, 2021 remain subject to examination. 

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Note 10 – (Loss) Earnings Per Common Share

Basic net (loss) earnings per common share is computed by dividing loss available to common shareholders by the weighted-average number of shares of Common Stock outstanding. Diluted loss per common share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options as well as non-vested restricted stock awards.  The computation of diluted loss per common share excludes those options with an exercise price in excess of the average market price of the Company’s Common Stock during the periods presented.

The computation of diluted loss per common share excludes outstanding options in periods where the exercise of such options would be anti-dilutive. For the three months and nine months ended September 30, 2022 and 2021, no options were included in the computation of diluted loss per common share as they would have been anti-dilutive for the relevant periods and, as a result, the weighted average number of shares of Common Stock used in the calculation of diluted loss per common share has not been adjusted for the effect of such options.

The reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted (loss) earnings per common share follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Weighted average number of shares outstanding		10,645,675		10,523,515		10,640,290		10,622,988
Effect of dilutive securities, common share equivalents:
Stock options		-		-		-		-
Restricted stock awards		-		-		-		-
Weighted average number of shares outstanding, used for computing diluted (loss) earnings per share		10,645,675		10,523,515		10,640,290		10,622,988

Note 11 - Commitments and Contingencies

Litigation

From time to time, the Company is involved in various legal proceedings in the ordinary course of business. For example, to the extent a claim is asserted by a third party in a lawsuit against one of the Company’s insureds covered by a particular policy, the Company may have a duty to defend the insured party against the claim. These claims may relate to bodily injury, property damage or other compensable injuries as set forth in the policy. Such proceedings are considered in estimating the liability for loss and LAE expenses.

Office Lease

The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. See Note 2 - Accounting Policies for additional information regarding the accounting for leases.

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The Company is a party to a non-cancellable operating lease, dated March 27, 2015, for its office facility for KICO located in Valley Stream, New York expiring March 31, 2024. 

On July 8, 2019, the Company entered into a lease agreement for an additional office facility for Cosi located in Valley Stream, New York under a non-cancelable operating lease. The lease had a term of seven years and two months expiring December 31, 2026.  During January 2022, pursuant to a mutual agreement with the landlord at a cost of $40,000, the Cosi lease was terminated effective as of January 31, 2022.

Additional information regarding the Company’s office operating leases is as follows:

	Three months ended			Nine months ended
Lease cost	September 30, 2022			September 30, 2022
Operating lease (1) (2)	$	41,342		$	131,152
Other information on operating leases
Cash payments included in the measurement of lease liability reported in operating cash flows	$	47,483		$	147,969
Discount rate		5.50	%		5.50	%
Remaing lease term in years
KICO		1.50 years		1.50 years

(1) Included in the condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses for KICO and within other operating expenses for Cosi.

The following table presents the contractual maturities of the Company’s lease liabilities as of September 30, 2022:

For the Year
Ending
December 31,	Total
Remainder of 2022	$	47,483
2023		194,919
2024		49,145
Total undiscounted lease payments		291,547
Less:  present value adjustment		4,191
Operating lease liability (1)	$	287,356

(1) The operating lease liability is recorded in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets.

Rent expense for the three months ended September 30, 2022 and 2021 amounted to $41,342 and $57,459, respectively.  Rent expense for the nine months ended September 30, 2022 and 2021 amounted to $131,152 and $172,377, respectively.  Rent expense is included in the accompanying condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses.

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Employment Agreements

Barry Goldstein, President, Chief Executive Officer and Executive Chairman of the Board

Employment Agreement effective as of January 1, 2020

On October 14, 2019, the Company and Barry B. Goldstein, the Company’s President, Chief Executive Officer and Executive Chairman of the Board, entered into a Second Amended and Restated Employment Agreement (the “Second Amended Goldstein Employment Agreement”).  The Second Amended Goldstein Employment Agreement became effective as of January 1, 2020 and expires on December 31, 2022.  The Second Amended Goldstein Employment Agreement extends the expiration date of the employment agreement in effect for Mr. Goldstein from December 31, 2021 to December 31, 2022.

Pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 6% of the Company’s consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 2.5 times his base salary.  In addition, pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein was entitled to receive a long-term compensation (“LTC”) award of between $945,000 and $2,835,000 based on a specified minimum increase in the Company’s adjusted book value per share (as defined in the Second Amended Goldstein Employment Agreement) as of December 31, 2022 as compared to December 31, 2019 (with the maximum LTC payment being due if the average per annum increase is at least 14%).  Pursuant to the Third Amended Goldstein Employment Agreement (discussed below), Mr. Goldstein relinquished the right to receive the LTC.  Pursuant to the Second Amended Goldstein Employment Agreement, in the event that Mr. Goldstein’s employment is terminated by the Company without cause or he resigns for good reason (each as defined in the Second Amended Goldstein Employment Agreement), Mr. Goldstein would be entitled to receive his base salary and the 6% bonus for the remainder of the term.  In addition, in the event of Mr. Goldstein’s death, his estate would be entitled to receive his base salary and accrued bonus through the date of death.  Further, in the event that Mr. Goldstein’s employment is terminated by the Company without cause or he resigns for good reason, or, in the event of the termination of Mr. Goldstein’s employment due to disability or death, Mr. Goldstein’s granted but unvested restricted stock awards will vest.  Mr. Goldstein would be entitled, under certain circumstances, to a payment equal to 3.82 times his then annual salary and his accrued 6% bonus in the event of the termination of his employment within eighteen months following a change of control of the Company.

Pursuant to the Second Amended Goldstein Employment Agreement, in January 2020, Mr. Goldstein received a grant of 157,431 shares of restricted stock under the terms of the Company’s 2014 Plan determined by dividing $1,250,000 by the fair market value of the Company’s Common Stock on the date of grant. This 2020 grant vested with respect to one-third of the award on each of the first and second anniversaries of the grant date and will vest with respect to one-sixth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates.  Also pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein received a grant, under the terms of the 2014 Plan, during January 2021, of 230,769 shares of restricted stock determined by dividing $1,500,000 by the fair market value of the Company’s Common Stock on the date of grant.  This 2021 grant vested with respect to one-half of the award on the first anniversary of the grant date and will vest with respect to one-fourth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates.  Further, pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein received in 2020, 2021, and 2022 a grant, under the terms of the 2014 Plan of a number of shares of restricted stock determined by dividing $136,500 by the fair market value of the Company’s Common Stock on the date of grant. In January 2020, Mr. Goldstein was granted 17,191 shares of restricted stock pursuant to this provision. This grant vested with respect to one-third of the award on each of the first and second anniversaries of the grant date and will vest with respect to one-sixth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates.  In January 2021, Mr. Goldstein was granted 21,000 shares of restricted stock pursuant to this provision.  This grant vested with respect to one-half of the award on the first anniversary of the grant date and will vest with respect to one-fourth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates.  In January 2022, Mr. Goldstein was granted 27,300 shares of restricted stock pursuant to this provision.  This grant will vest with respect to one-half of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates.  Pursuant to the 2014 Plan, Mr. Goldstein’s unvested restricted stock awards will vest in the event of a change in control of the Company.

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Employment Agreement effective as of January 1, 2023

On June 27, 2022, the Company and Mr. Goldstein entered into a third amended and restated employment agreement which takes effect as of January 1, 2023, and expires on December 31, 2024 (the “Third Amended Goldstein Employment Agreement”).

Pursuant to the Third Amended Goldstein Employment Agreement, Mr. Goldstein is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 3% of our consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 1.25 times his base salary.  Pursuant to the Third Amended Goldstein Employment Agreement, Mr. Goldstein would be entitled to receive, under certain circumstances, a payment equal to 1.5 times his then annual base salary and his accrued bonus in the event of the termination of his employment within eighteen months following a change of control of the Company.

Meryl Golden, Chief Operating Officer

Employment Agreement effective as of January 1, 2021

On September 16, 2019, the Company and Meryl Golden entered into an employment agreement (the “Golden Employment Agreement”) pursuant to which Ms. Golden serves as the Company’s Chief Operating Officer. Ms. Golden also serves as KICO’s President and Chief Operating Officer. The Golden Employment Agreement became effective as of September 25, 2019 (amended on December 24, 2020) and now expires on December 31, 2022.

Pursuant to the Golden Employment Agreement, Ms. Golden is entitled to receive an annual salary of $500,000. The Golden Employment Agreement also provides for the grant on the effective date of a five year option for the purchase of 50,000 shares of the Company’s Common Stock pursuant to the 2014 Plan. The options granted vest in four equal installments, with the first installment vesting on the grant date, and the remaining installments vesting on the first, second, and third anniversaries of the grant date, subject to the terms of the stock option agreement between the Company and Ms. Golden.   Pursuant to the Golden Employment Agreement, as amended, in each of January 2021 and January 2022, Ms. Golden was granted 30,000 shares of restricted Common Stock pursuant to the 2014 Plan.  Each such grant will vest in three equal installments on each of the first, second and third anniversaries of the grant date.  Pursuant to the 2014 Plan, Ms. Golden’s outstanding stock options and restricted stock awards will vest in the event of a change in control of the Company.

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Employment Agreement effective as of January 1, 2023

On June 27, 2022, the Company and Ms. Golden entered into a second amended and restated employment agreement which takes effect as of January 1, 2023, and expires on December 31, 2024 (the “Second Amended Golden Employment Agreement”).

Pursuant to the Second Amended Golden Employment Agreement, Ms. Golden is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 3% of the Company’s consolidated income from operations before taxes, exclusive of our consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 1.25 times her base salary. In addition, pursuant to the Second Amended Golden Employment Agreement, Ms. Golden is entitled to receive a grant, under the terms of the 2014 Plan, during each of January 2023 and January 2024, under certain circumstances, of a number of shares of restricted stock determined by dividing $136,500 by the fair market value of the Company’s common stock on the date of grant. The 2023 grant will vest with respect to one-half of the award on the first anniversary of the grant date and one-half of the award on December 31, 2024, based on the continued provision of services through such dates. The 2024 grant will vest on December 31, 2024, based on the continued provision of services through such date. In the event that we are precluded from making a grant in 2023 or 2024, then instead Ms. Golden shall be entitled to receive a cash bonus of $136,500 for such year. Further, pursuant to the Second Amended Golden Employment Agreement, Ms. Golden would be entitled to receive, under certain circumstances, a payment equal to 1.5 times her then annual base salary and her accrued bonus in the event of the termination of her employment within eighteen months following a change of control of the Company.

COVID-19

The outbreak of the coronavirus, also known as "COVID-19", has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus including the emergence of new strains continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have a material adverse impact on global economic conditions as well as on the Company’s business activities. Although the impact has been manageable thus far, the extent to which COVID-19 may impact the Company's business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in the United States and other countries to contain, prevent and treat the disease. These events are highly uncertain and, as such, the Company cannot determine their financial impact at this time.  No adjustments have been made to the amounts reported in these condensed consolidated financial statements as a result of this matter.

Note 12 – Employee Benefit Plans

Employee Bonus Plan

For the nine months ended September 30, 2022 and year ended December 31, 2021 the Company did not accrue for, or pay, bonuses related to the employee bonus plan. 

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401 (k) Plan

The Company maintains a salary reduction plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) for its qualified employees. The Company matches 100% of each participant’s contribution up to 4% of the participant’s eligible contribution.  The Company incurred approximately $71,000 and $58,000 of expense for the three months ended September 30, 2022 and 2021, related to the 401(k) Plan.  The Company incurred approximately $207,000 and $189,000, respectively, of expense for the nine months ended September 30, 2022 and 2021, related to the 401(k) Plan, which is recorded in other operating expenses on the accompanying consolidated statements of operations and comprehensive income (loss). 

Deferred Compensation Plan

On June 18, 2018, the Company adopted the Kingstone Companies, Inc. Deferred Compensation Plan (the "Deferred Compensation Plan"). The Deferred Compensation Plan is offered to a select group (“Participants”), consisting of management and highly compensated employees as a method of recognizing and retaining such Participants. The Deferred Compensation Plan provides for eligible Participants to elect to defer up to 75% of their base compensation and up to 100% of bonuses and other compensation and to have such deferred amounts deemed to be invested in specified investment options. In addition to the Participant deferrals, the Company may choose to make matching contributions to some or all of the Participants in the Deferred Compensation Plan to the extent the Participant did not receive the maximum matching or non-elective contributions permissible under the Company’s 401(k) Plan due to limitations under the Internal Revenue Code or the 401(k) Plan. Participants may elect to receive payment of their account balances in a single cash payment or in annual installments for a period of up to ten years. The deferred compensation liability as of September 30, 2022 and December 31, 2021 amounted to $1,093,136 and $907,914, respectively, and is recorded in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets. The Company did not make any voluntary contributions for the nine months ended September 30, 2022 and 2021.

Note 13 – Subsequent Events

The Company has evaluated events that occurred subsequent to September 30, 2022 through the date these condensed consolidated financial statements were issued for matters that required disclosure or adjustment in these condensed consolidated financial statements. 

Griffin Highline

As previously reported, on August 5, 2022, Griffin Highline Capital LLC (“Griffin Highline”) filed Amendment No. 3 to Schedule 13D with the SEC which indicates that Griffin Highline submitted a final non-binding indication of interest to the Board of Directors of the Company proposing a transaction whereby an entity formed by Griffin Highline would acquire all of the outstanding equity of the Company.  Following delivery of the non-binding proposal, the Company agreed to extend the period of exclusivity with Griffin Highline under its previously executed exclusivity agreement for a limited time period to further pursue the proposal.  The period of exclusivity has expired.

Although Griffin Highline is not currently pursuing a transaction with regard to the acquisition of all of the outstanding equity of the Company, Griffin Highline and the Company are discussing a potential strategic transaction between them.  No assurance can be given that a transaction will be consummated by the Company with Griffin Highline or any third party.

Sale Leaseback and Capital Lease

On October 27, 2022 KICO entered into a sale leaseback transaction, whereby KICO sold $8,096,824 of fixed assets to a bank (see Note 7 - Debt ).

Employee Stock Purchase Plan

On October 31, 2022, the 2021/2022 offering period ended no further offering period was initiated (see Note 8 - Stockholders’ Equity).  

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

We offer property and casualty insurance products to individuals through our wholly owned subsidiary, Kingstone Insurance Company (“KICO”). KICO’s insureds are located primarily in downstate New York, consisting of New York City, Long Island and Westchester County, although we are actively writing business in New Jersey, Rhode Island, Connecticut and Massachusetts. We are licensed in the States of New York, New Jersey, Rhode Island, Connecticut, Massachusetts, Pennsylvania, Maine, and New Hampshire. For the three months and nine months ended September 30, 2022, respectively, 80.5% and 80.3% of KICO’s direct written premiums came from the New York policies.

In addition, through our subsidiary, Cosi Agency, Inc. (“Cosi”), a multi-state licensed general agency, we access alternative distribution channels. Cosi receives commission revenue from KICO for the policies it places with others and pays commissions to these agencies. Cosi retains the profit between the commission revenue received and the commission expense paid (“Net Cosi Revenue”). Commission expense is reduced by Net Cosi Revenue and Cosi-related operating expenses are included in other operating expenses. Cosi-related operating expenses are not included in our stand-alone insurance underwriting business and, accordingly, Cosi’s expenses are not included in the calculation of our combined ratio as described below.

We derive substantially all of our revenue from KICO, which includes revenues from earned premiums, ceding commissions from quota share reinsurance, net investment income generated from its portfolio, and net realized gains and losses on investment securities.  All of KICO’s insurance policies are written for a one-year term. Earned premiums represent premiums received from insureds, which are recognized as revenue over the period of time that insurance coverage is provided (i.e., ratably over the one-year life of the policy). A significant period of time can elapse from the receipt of insurance premiums to the payment of insurance claims. During this time, KICO invests the premiums, earns investment income and generates net realized and unrealized investment gains and losses on investments. Our holding company earns investment income from its cash holdings and may also generate net realized and unrealized investment gains and losses on future investments.

Our expenses include the insurance underwriting expenses of KICO and other operating expenses. Insurance companies incur a significant amount of their total expenses from losses incurred by policyholders, which are referred to as claims. In settling these claims, various loss adjustment expenses (“LAE”) are incurred such as insurance adjusters’ fees and legal expenses. In addition, insurance companies incur policy acquisition costs. Policy acquisition costs include commissions paid to producers, premium taxes, and other expenses related to the underwriting process, including employees’ compensation and benefits.

Other operating expenses include our corporate expenses as a holding company and operating expenses of Cosi. These corporate expenses include legal and auditing fees, executive employment costs, and other costs directly associated with being a public company. Cosi operating expenses primarily include employment, occupancy and consulting costs.

Product Lines

Our product lines include the following:

Personal lines: Our largest line of business is personal lines, consisting of homeowners, dwelling fire, cooperative/condominium, renters, and personal umbrella policies.

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Commercial liability: Through July 2019, we offered businessowners policies, which consist primarily of small business retail, service, and office risks, with limited property exposures. We also wrote artisan’s liability policies for small independent contractors with smaller sized workforces.  In addition, we wrote special multi-peril policies for larger and more specialized businessowners risks, including those with limited residential exposures. Further, we offered commercial umbrella policies written above our supporting commercial lines policies.

In May 2019, due to the poor performance of this line we placed a moratorium on new commercial lines and new commercial umbrella submissions while we further reviewed this business.  In July 2019, due to the continuing poor performance of these lines, we made the decision to no longer underwrite commercial lines or commercial umbrella risks.  In-force policies as of July 31, 2019 for these lines were non-renewed at the end of their annual terms.  As of September 30, 2022 and December 31, 2021, there were no commercial liability policies in-force. As of September 30, 2022, these expired policies represent approximately 18.0% of loss and LAE reserves net of reinsurance recoverables. See discussion below under “Additional Financial Information”.

Livery physical damage: We write for-hire vehicle physical damage only policies for livery and car service vehicles and taxicabs. These policies insure only the physical damage portion of insurance for such vehicles, with no liability coverage included.

Other:  We write canine legal liability policies and have a small participation in mandatory state joint underwriting associations.

Key Measures

We utilize the following key measures in analyzing the results of our insurance underwriting business:

Net loss ratio: The net loss ratio is a measure of the underwriting profitability of an insurance company’s business.  Expressed as a percentage, this is the ratio of net losses and LAE incurred to net premiums earned.

Net underwriting expense ratio:  The net underwriting expense ratio is a measure of an insurance company’s operational efficiency in administering its business. Expressed as a percentage, this is the ratio of the sum of acquisition costs (the most significant being commissions paid to our producers) and other underwriting expenses less ceding commission revenue less other income to net premiums earned.

Net combined ratio:  The net combined ratio is a measure of an insurance company’s overall underwriting profit. This is the sum of the net loss and net underwriting expense ratios. If the net combined ratio is at or above 100 percent, an insurance company cannot be profitable without investment income, and may not be profitable if investment income is insufficient.

Underwriting income: Underwriting income is net pre-tax income attributable to our insurance underwriting business before investment activity. It excludes net investment income, net realized gains from investments, and depreciation and amortization (net premiums earned less expenses included in combined ratio). Underwriting income is a measure of an insurance company’s overall operating profitability before items such as investment income, depreciation and amortization, interest expense and income taxes.

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Critical Accounting Policies and Estimates

Our condensed consolidated financial statements include the accounts of Kingstone Companies, Inc. and all majority-owned and controlled subsidiaries. The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions in certain circumstances that affect amounts reported in our condensed consolidated financial statements and related notes. In preparing these condensed consolidated financial statements, our management has utilized information including our past history, industry standards, and the current economic environment, and other factors, in forming its estimates and judgments of certain amounts included in the condensed consolidated financial statements, giving due consideration to materiality. It is possible that the ultimate outcome as anticipated by our management in formulating its estimates in these financial statements may not materialize. Application of the critical accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. In addition, other companies may utilize different estimates, which may impact comparability of our results of operations to those of similar companies.  See the Critical Accounting Estimates section within Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021 for further information.

We believe that the most critical accounting policies relate to the reporting of reserves for loss and LAE, including losses that have occurred but have not been reported prior to the reporting date, amounts recoverable from third party reinsurers, deferred income taxes, the impairment of investment securities, and the valuation of stock-based compensation. See Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021.

Griffin Highline

Reference is made to Note 13 – Subsequent Events - Griffin Highline to our condensed consolidated financial statements included in this Quarterly Report with regard to discussions between our company and Griffin Highline as to a potential strategic transaction.  TigerRisk Capital Markets & Advisory has been engaged to advise our Board of Directors regarding strategic transactions.  Our Board of Directors will carefully review any proposals received by our company from Griffin Highline or others to determine the course of action that it believes is in the best interest of our company and all of our stockholders. Due to the uncertainty as to the consummation of a transaction with Griffin Highline, nothing in this Quarterly Report, including the financial statements comprising a portion hereof, include any adjustments to reflect the possible effects of the consummation of such a transaction.

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Consolidated Results of Operations

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

                The following table summarizes the changes in the results of our operations (in thousands) for the periods indicated:

	Nine months ended September 30,
($ in thousands)	2022			2021			Change			Percent
Revenues
Direct written premiums	$	147,354		$	131,610		$	15,744			12.0	%
Assumed written premiums		-			-			-		na		%
		147,354			131,610			15,744			12.0	%
Ceded written premiums
Ceded to quota share treaties (1)		34,868			374			34,494			9,223.0	%
Ceded to excess of loss treaties		2,937			2,057			880			42.8	%
Ceded to catastrophe treaties		20,939			19,423			1,516			7.8	%
Total ceded written premiums		58,744			21,854			36,890			168.8	%
Net written premiums		88,610			.,756			(21,146	)		(19.3	)%
Change in unearned premiums
Direct and assumed		(6,030	)		(2,911	)		(3,119	)		(107.1	)%
Ceded to quota share treaties (1)		1,356			(15	)		1,371		na		%
Change in net unearned premiums		(4,674	)		(2,926	)		(1,748	)		(59.7	)%
Premiums earned
Direct and assumed		141,324			128,698			12,626			9.8	%
Ceded to reinsurance treaties		(57,388	)		(21,869	)		(35,519	)		(162.4	)%
Net premiums earned		83,936			106,829			(22,893	)		(21.4	)%
Ceding commission revenue (1)		14,283			37			14,246			38,502.7	%
Net investment income		3,412			5,138			(1,726	)		(33.6	)%
Net (losses) gains on investments		(9,313	)		5,480			(14,793	)	na		%
Other income		750			577			173			30.0	%
Total revenues		93,068			118,062			(24,993	)		(21.2	)%
Expenses
Loss and loss adjustment expenses
Direct and assumed:
Loss and loss adjustment expenses excluding the effect of catastrophes		83,346			67,634			15,712			23.2	%
Losses from catastrophes (2)		7,510			12,647			(5,137	)		(40.6	)%
Total direct and assumed loss and loss adjustment expenses		90,856			80,281			10,575			13.2	%
Ceded loss and loss adjustment expenses:
Loss and loss adjustment expenses excluding the effect of catastrophes		23,187			860			22,327			2,596.2	%
Losses from catastrophes (2)		4,044			360			3,684			1,023.3	%
Total ceded loss and loss adjustment expenses		27,231			1,221			26,011			2,130.2	%
Net loss and loss adjustment expenses:
Loss and loss adjustment expenses excluding the effect of catastrophes		60,159			66,773			(6,614	)		(9.9	)%
Losses from catastrophes (2)		3,466			12,287			(8,821	)		(71.8	)%
Net loss and loss adjustment expenses		63,625			79,060			(15,435	)		(19.5	)%
Commission expense		25,534			24,711			823			3.3	%
Other underwriting expenses		20,717			19,723			994			5.0	%
Other operating expenses		2,357			3,141			(784	)		(25.0	)%
Depreciation and amortization		2,472			2,480			(8	)		(0.3	)%
Interest expense		1,370			1,370			-		-		%
Total expenses		116,075			130,485			(14,410	)		(11.0	)%
Loss before taxes		(23,007	)		(12,423	)		(10,584	)		(85.2	)%
Income tax benefit		(4,433	)		(2,817	)		(1,616	)		(57.4	)%
Net loss	$	(18,575	)	$	(9,606	)	$	(8,968	)		(93.4	)%

(Columns in the table above may not sum to totals due to rounding)

(1)

Effective December 31, 2021, we entered into a 30% personal lines quota share treaty.

(2)

The nine months ended September 30, 2022 and 2021 include catastrophe losses, which are defined as losses from an event for which a catastrophe bulletin and related serial number has been issued by the Property Claims Services (PCS) unit of the Insurance Services Office (ISO). PCS catastrophe bulletins are issued for events that cause more than $25 million in total insured losses and affect a significant number of policyholders and insurers.

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	Nine months ended September 30,
	2022			2021			Percentage Point Change			Percent Change
Key ratios:
Net loss ratio		75.8	%		74.0	%		(22.1	)		(22.8	)%
Net underwriting expense ratio		37.2	%		41.0	%		(2.4	)		(6.1	)%
Net combined ratio		113.0	%		115.0	%		(24.5	)		(18.0	)%

Direct Written Premiums

Direct written premiums during the nine months ended September 30, 2022 (“Nine Months 2022”) were $147,354,000 compared to $131,610,000 during the nine months ended September 30, 2021 (“Nine Months 2021”). The increase of $15,744,000, or 12.0%, was primarily due an increase in premiums from our personal lines business. Direct written premiums from our personal lines business for Nine Months 2022 were $138,198,000, an increase of $13,605,000, or 10.9%, from $124,593,000 in Nine Months 2021.  The increase in premiums from our personal lines business was primarily due to rate increases, and, to a lesser extent, an increase in policies in force.  Direct written premiums from our livery physical damage business for Nine Months 2022 were $9,037,000, an increase of $2,200,000, or 32.2%, from $6,837,000 in Nine Months 2021. The increase in livery physical damage direct written premiums was due to the declining effect of the COVID-19 pandemic in our geographic area. 

                Beginning in 2017 we started writing homeowners policies in New Jersey. Through 2019 we expanded to Rhode Island, Massachusetts and Connecticut. We refer to our New York business as our “Core” business and the business outside of New York as our “Expansion” business.  Direct written premiums from our Core business were $118,332,000 in Nine Months 2022 compared to $101,990,000 in Nine Months 2021.   Direct written premiums from our Expansion business were $29,022,000 in Nine Months 2022 compared to $29,620,000 in Nine Months 2021.

Net Written Premiums and Net Premiums Earned

Effective December 31, 2021, we entered into a quota share reinsurance treaty for our personal lines business covering the period from December 31, 2021 through January 1, 2023 (“2021/2023 Treaty”). There was no quota share reinsurance treaty in effect in Nine Months 2021. Net written premiums decreased $21,146,000, or 19.3%, to $88,610,000 in Nine Months 2022 from $109,756,000 in Nine Months 2021. Net written premiums include direct and assumed premiums, less the amount of written premiums ceded under our reinsurance treaties (quota share, excess of loss, and catastrophe). In Nine Months 2022, our premiums ceded under quota share treaties increased by $34,494,000 in comparison to ceded premiums in Nine Months 2021 (see table above). Our personal lines business was subject to the 2021/2023 Treaty in Nine Months 2022, compared to no personal lines quota share treaty in Nine Months 2021.

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Excess of loss reinsurance treaties

An increase in written premiums will increase the premiums ceded under our excess of loss treaties. In Nine Months 2022, our ceded excess of loss reinsurance premiums increased by $880,000 over the comparable ceded premiums for Nine Months 2021. The increase was due to an increase in subject premiums and additional coverage obtained. Effective January 1, 2022, we entered into an underlying excess of loss reinsurance treaty covering the period from January 1, 2022 through January 1, 2023. The treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty.

Catastrophe reinsurance treaties

Most of the premiums written under our personal lines policies are also subject to our catastrophe treaties. An increase in our personal lines business gives rise to more property exposure, which increases our exposure to catastrophe risk; therefore, our premiums ceded under catastrophe treaties will increase. This results in an increase in premiums ceded under our catastrophe treaties provided that reinsurance rates are stable or are increasing. In Nine Months 2022, our premiums ceded under catastrophe treaties increased by $1,516,000 over the comparable ceded premiums in Nine Months 2021. Effective July 1, 2020, and continuing through June 30, 2021, our ceded catastrophe premiums were paid based on the total insured value of our risks calculated as of August 31, 2020. Effective July 1, 2021, and continuing through June 30, 2022, our ceded catastrophe premiums were paid based on the total insured value of our risks as of August 31, 2021. Effective July 1, 2022, and continuing through June 30, 2023, our ceded catastrophe premiums will be paid based on the total insured value of our risks as of August 31, 2022.

Net premiums earned

Net premiums earned decreased $22,893,000, or 21.4%, to $83,936,000 in Nine Months 2022 from $106,829,000 in Nine Months 2021. The decrease was due to the inception of the 2021/2023 Treaty on December 31, 2021. The decrease resulting from the 2021/2023 Treaty in Nine Months 2022 was partially offset by an increase in direct written premium.

Ceding Commission Revenue

The following table summarizes the changes in the components of ceding commission revenue (in thousands) for the periods indicated:

	Nine months ended September 30,
($ in thousands)	2022		2021			Change		Percent
Provisional ceding commissions earned	$	14,116	$	136		$	13,980		10,279.4	%
Contingent ceding commissions earned		167		(99	)		266	n/a		%
Total ceding commission revenue	$	14,283	$	37		$	14,246		38,502.7	%

Ceding commission revenue was $14,283,000 in Nine Months 2022 compared to $37,000 in Nine Months 2021. The increase of $14,246,000 was due to an increase in both provisional ceding commissions earned and contingent ceding commissions earned. See below for a discussion of provisional ceding commissions earned and contingent ceding commissions earned.

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Provisional Ceding Commissions Earned

In Nine Months 2022 we earned provisional ceding commissions from personal lines earned premiums ceded under the 2021/2023 Treaty which was effective as of December 31, 2021. There was no personal lines quota share in effect in Nine Months 2021.

Contingent Ceding Commissions Earned

The structure of the 2021/2023 Treaty calls for a fixed provisional ceding commission with no opportunity to earn additional contingent ceding commissions. Under our prior years’ quota share treaties, we received a contingent ceding commission based on a sliding scale in relation to the losses incurred under our quota share treaties. The lower the ceded loss ratio, the more contingent commission we received.

Net Investment Income

Net investment income was $3,412,000 in Nine Months 2022 compared to $5,138,000 in Nine Months 2021, a decrease of $1,726,000, or 33.6%. The decrease in investment income is attributable to a $766,000 reversal of prior years’ estimated accrued interest income stemming from an error in third party investment reporting.  The decline of investment income is also attributable to the disposal of income bearing equity securities.  The average yield on invested assets was 3.48% as of September 30, 2022 compared to 3.42% as of September 30, 2021.

Cash and invested assets were $192,229,000 as of September 30, 2022 compared to $246,004,000 as of September 30, 2021. The $53,775,000 decrease in cash and invested assets was primarily attributable to cash paid to reinsurers at the inception of the 2021/2023 Treaty, losses paid in connection with catastrophe losses incurred in 2021 and 2022 and unrealized losses on our investment portfolio.

Net Gains and Losses on Investments

Net losses on investments were $9,313,000 in Nine Months 2022 compared to net gains of $5,480,000 in Nine Months 2021. Unrealized losses on our equity securities and other investments in Nine Months 2022 were $10,502,000, compared to net gains of $2,603,000 in Nine Months 2021. Realized gains on sales of investments were $1,189,000 in Nine Months 2022 compared to $2,877,000 in Nine Months 2021.

Other Income

                Other income was $750,000 in Nine Months 2022 compared to $577,000 in Nine Months 2021, an increase of $173,000, or 30.0%.

Net Loss and LAE

Net loss and LAE was $63,625,000 for Nine Months 2022 compared to $79,060,000 for Nine Months 2021. The net loss ratio was 75.8% in Nine Months 2022 compared to 74.0% in Nine Months 2021, an increase of 1.8 percentage points.

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The following graph summarizes the changes in the components of net loss ratio for the periods indicated, along with the comparable components excluding commercial lines business:

(Components may not sum to totals due to rounding)

For Nine Months 2022, the loss ratio was higher than Nine Months 2021 due to water damage property claims which were primarily driven by winter-related water damage claims resulting from freezing temperature earlier during the year and the impact from climbing inflation leading to higher severity.

The estimated net catastrophe losses were $3,466,000 for Nine Months 2022, which contributed 4.1 points to the loss ratio. This is mostly driven by two winter events in the first quarter. There were also seven other minor wind catastrophe events during Nine Months 2022, but the impact was not significant. As a comparison, catastrophe events had a loss ratio impact of 11.5 points for Nine Months 2021 due to a more active hurricane season, including the named storm Ida.

Prior years in total have unfavorable development of $714,000 for Nine Months 2022, driven by large fire losses which occurred in 2021 and the volatility of liability claim settlements from the discontinued Commercial lines.  This contributed 0.9 point to the loss ratio.

See table below under “Additional Financial Information” summarizing net loss ratios by line of business.

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Commission Expense

Commission expense was $25,534,000 in Nine Months 2022 or 18.1% of direct earned premiums. Commission expense was $24,711,000 in Nine Months 2021 or 19.2% of direct earned premiums. The increase of $823,000 was primarily due to an increase in direct earned premiums of $12,626,000 to $141,324,000 offset in part by a reduction of commission rate on our Select Products and the reduction to contingent commissions, which the producers now earn only if KICO has an operating profit. 

 Other Underwriting Expenses

Other underwriting expenses were $20,717,000, or 14.7% of direct earned premiums, in Nine Months 2022 compared to $19,723,000, or 15.3% of direct earned premiums, in Nine Months 2021. The increase of $994,000, or 5.0%, was primarily due to increases in expenses related to our growth in direct earned premiums, and the reduction as a percentage of direct earned premiums is due to our continuing initiative to reduce expenses with the use of technology.

Our largest single component of other underwriting expenses is salaries and employment costs, with costs of $8,027,000 in Nine Months 2022 compared to $7,592,000 in Nine Months 2021. The increase of $435,000, or 5.7%, compares favorably with the 12.0% increase in direct written premiums. In the periods following Nine Months 2021, we invested in the hiring of higher-level managers and staff to implement our goals of modernization and efficiency, which we refer to as Kingstone 2.0.

Our net underwriting expense ratio in Nine Months 2022 was 37.2% compared to 41.0% in Nine Months 2021. The following table shows the individual components of our net underwriting expense ratio for the periods indicated:

	Nine months ended
	September 30,						Percentage
	2022			2021			Point Change
Other underwriting expenses
Employment costs		9.6	%		7.1	%		2.5
Underwriting fees (inspections/surveys)		1.7			1.4			0.3
IT expenses		4.2			3.0			1.2
Profesional fees		1.4			1.3			0.1
Other expenses		7.7			5.7			2.0
Total other underwriting expenses		24.6			18.5			6.1
Commission expense		30.4			23.1			7.3
Ceding commission revenue
Provisional		(16.8	)		(0.1	)		(16.7	)
Contingent		(0.2	)		0.1			(0.3	)
Total ceding commission revenue		(17.0	)		-			(17.0	)
Other income		(0.9	)		(0.6	)		(0.3	)
Net underwriting expense ratio		37.2	%		41.0	%		(3.8	)

(Components may not sum to totals due to rounding)

The overall 17.0 percentage point increase in the benefit from ceding commissions in Nine Months 2022 was driven by the increase in provisional ceding commission revenue due to the inception of the 2021/2023 Treaty on December 31, 2021. The components of our net underwriting expense ratio related to other underwriting expenses and commissions increased due to a higher percentage of our direct earned premiums in Nine Months 2022 being ceded due to the inception of the 2021/2023 Treaty. 

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Other Operating Expenses

Other operating expenses, related to the expenses of our holding company and Cosi, were $2,357,000 for Nine Months 2022 compared to $3,141,000 for Nine Months 2021. The following table shows a breakdown of the significant components of other operating expenses for the periods indicated:

	Nine months ended
	September 30,
($ in thousands)	2022			2021		Change			Percent
Other operating expenses
Employement costs	$	(101	)	$	647	$	(748	)	na		%
Bonuses		-			-		-		na
Equity compensation		1,205			1,448		(243	)		(16.8	)
Professional		208			226		(18	)		(8.0	)
Griffin Highline fees		316			-		316			na
Directors fees		245			245		-			-
Insurance		115			166		(51	)		(30.7	)
Other expenses		369			409		(40	)		(9.8	)
Total other operating expenses	$	2,357		$	3,141	$	(784	)		(25.0	)%

(Components may not sum to totals due to rounding)

The decrease in Nine Months 2022 of $784,000, or 25.0%, as compared to Nine Months 2021 was primarily due to a decrease in employment costs. The decrease in employment costs was due to staff reductions and fluctuations in deferred compensation liability related to changes in the underlying invested portfolio. The decrease in employment costs was partially offset by an increase in professional fees attributable to the non-binding indication of interest from Griffin Highline, disclosed above as “Griffin Highline fees” incurred, related to a then contemplated acquisition of all of the outstanding equity of our company.

Depreciation and Amortization

Depreciation and amortization was $2,472,000 in Nine Months 2022 compared to $2,480,000 in Nine Months 2021. The decrease of $8,000, or 0.3%, in depreciation and amortization was primarily due to assets previously put into service that are currently being utilized and being fully depreciated. The decrease was partially offset by the completion of customized policy management software, now allowing us to consolidate multiple legacy systems into one efficient system.  In the last quarter of 2021, due to the extended useful life of assets related to our system platforms, Management determined that such systems, currently put into service, should be depreciated over five years reflecting their expected useful lives as compared to the previous three years.

Interest Expense

Interest expense was $1,370,000 for both Nine Months 2022 and Nine Months 2021. We incurred interest expense in connection with our $30.0 million issuance of long-term debt in December 2017.

Income Tax Benefit

Income tax benefit in Nine Months 2022 was $4,433,000, which resulted in an effective tax benefit rate of 19.3%. Income tax benefit in Nine Months 2021 was $2,817,000, which resulted in an effective tax rate of 22.7%. Loss before taxes was $23,007,000 in Nine Months 2022 compared to $12,423,000 in Nine Months 2021. The difference in effective tax rate is due to the effect of permanent differences in Nine Months 2022 compared to Nine Months 2021.

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Net Loss

Net loss was $18,575,000 in Nine Months 2022 compared to $9,606,000 in Nine Months 2021. The increase in net loss of $8,969,000 was due to the circumstances described above.

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

                The following table summarizes the changes in the results of our operations (in thousands) for the periods indicated:

	Three months ended September 30,
($ in thousands)	2022			2021			Change			Percent
Revenues
Direct written premiums	$	54,592		$	48,865		$	5,727			11.7	%
Assumed written premiums		-			-			-		na		%
		54,592			48,865			5,727			11.7	%
Ceded written premiums
Ceded to quota share treaties (1)		12,919			138			12,781			9,261.6	%
Ceded to excess of loss treaties		1,194			998			196			19.6	%
Ceded to catastrophe treaties		6,813			6,087			726			11.9	%
Total ceded written premiums		20,925			7,224			13,703			189.7	%
Net written premiums		33,666			41,642			(7,976	)		(19.2	)%
Change in unearned premiums
Direct and assumed		(5,636	)		(4,848	)		(788	)		(16.3	)%
Ceded to quota share treaties (1)		1,331			10			1,321			13,210.0	%
Change in net unearned premiums		(4,305	)		(4,838	)		533			11.0	%
Premiums earned
Direct and assumed		48,955			44,017			4,938			11.2	%
Ceded to reinsurance treaties		(19,594	)		(7,214	)		(12,380	)		(171.6	)%
Net premiums earned		29,361			36,803			(7,442	)		(20.2	)%
Ceding commission revenue (1)		4,886			(7	)		4,893		na		%
Net investment income		1,419			1,677			(258	)		(15.4	)%
Net (losses) gains on investments		(397	)		205			(602	)	na		%
Other income		270			281			(11	)		(3.9	)%
Total revenues		35,538			38,958			(3,421	)		(8.8	)%
Expenses
Loss and loss adjustment expenses
Direct and assumed:
Loss and loss adjustment expenses excluding the effect of catastrophes		30,514			23,538			6,976			29.6	%
Losses from catastrophes (2)		477			12,542			(12,065	)		(96.2	)%
Total direct and assumed loss and loss adjustment expenses		30,991			36,079			(5,089	)		(14.1	)%
Ceded loss and loss adjustment expenses:
Loss and loss adjustment expenses excluding the effect of catastrophes		8,820			(21	)		8,841		na		%
Losses from catastrophes (2)		143			360			(217	)		(60.3	)%
Total ceded loss and loss adjustment expenses		8,963			339			8,624			2,544.0	%
Net loss and loss adjustment expenses:
Loss and loss adjustment expenses excluding the effect of catastrophes		21,694			23,559			(1,865	)		(7.9	)%
Losses from catastrophes (2)		334			12,181			(11,847	)		(97.3	)%
Net loss and loss adjustment expenses		22,028			35,740			(13,712	)		(38.4	)%
Commission expense		8,702			8,202			500			6.1	%
Other underwriting expenses		7,276			6,563			713			10.9	%
Other operating expenses		810			855			(45	)		(5.3	)%
Depreciation and amortization		825			820			5			0.6	%
Interest expense		457			457			-		-		%
Total expenses		40,097			52,637			(12,539	)		(23.8	)%
Loss before taxes		(4,559	)		(13,679	)		9,118			66.7	%
Income tax benefit		(562	)		(3,061	)		2,499			81.6	%
Net loss	$	(3,998	)	$	(10,618	)	$	6,619			62.3	%

(Columns in the table above may not sum to totals due to rounding)

(1)

Effective December 31, 2021, we entered into a 30% personal lines quota share treaty.

(2)

The three months ended September 30, 2022 and 2021 include catastrophe losses, which are defined as losses from an event for which a catastrophe bulletin and related serial number has been issued by the Property Claims Services (PCS) unit of the Insurance Services Office (ISO). PCS catastrophe bulletins are issued for events that cause more than $25 million in total insured losses and affect a significant number of policyholders and insurers.

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	Three months ended September 30,
	2022			2021			Percentage Point Change			Percent Change
Key ratios:
Net loss ratio		75.0	%		97.1	%		(22.1	)		(22.8	)%
Net underwriting expense ratio		36.9	%		39.3	%		(2.4	)		(6.1	)%
Net combined ratio		111.9	%		136.4	%		(24.5	)		(18.0	)%

Direct Written Premiums

Direct written premiums during the three months ended September 30, 2022 (“Three Months 2022”) were $54,592,000 compared to $48,865,000 during the three months ended September 30, 2021 (“Three Months 2021”). The increase of $5,727,000, or 11.7%, was primarily due an increase in premiums from our personal lines business. Direct written premiums from our personal lines business for Three Months 2022 were $51,242,000, an increase of $5,258,000, or 11.4%, from $45,984,000 in Three Months 2021.  The increase in premiums from our personal lines business was primarily due to rate increases, and, to a lesser extent, an increase in policies in force.  Direct written premiums from our livery physical damage business for Three Months 2022 were $3,310,000, an increase of $496,000, or 17.6%, from $2,814,000 in Three Months 2021. The increase in livery physical damage direct written premiums was due to the declining effect of the COVID-19 pandemic in our geographic area. 

                Beginning in 2017 we started writing homeowners policies in New Jersey. Through 2019 we expanded to Rhode Island, Massachusetts and Connecticut. We refer to our New York business as our “Core” business and the business outside of New York as our “Expansion” business.  Direct written premiums from our Core business were $43,949,000 in Three Months 2022 compared to $35,459,000 in Three Months 2021.   Direct written premiums from our Expansion business were $10,642,000 in Three Months 2022 compared to $13,406,000 in Three Months 2021.

Net Written Premiums and Net Premiums Earned

Effective December 31, 2021, we entered into a quota share reinsurance treaty for our personal lines business covering the period from December 31, 2021 through January 1, 2023 (“2021/2023 Treaty”). There was no quota share reinsurance treaty in effect in Three Months 2021. Net written premiums decreased $7,976,000, or 19.2%, to $33,666,000 in Three Months 2022 from $41,642,000 in Three Months 2021. Net written premiums include direct and assumed premiums, less the amount of written premiums ceded under our reinsurance treaties (quota share, excess of loss, and catastrophe). In Three Months 2022, our premiums ceded under quota share treaties increased by $12,781,000 in comparison to ceded premiums in Three Months 2021 (see table above). Our personal lines business was subject to the 2021/2023 Treaty in Three Months 2022, compared to no personal lines quota share treaty in Three Months 2021.

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Excess of loss reinsurance treaties

An increase in written premiums will increase the premiums ceded under our excess of loss treaties. In Three Months 2022, our ceded excess of loss reinsurance premiums increased by $196,000 over the comparable ceded premiums for Three Months 2021. The increase was due to an increase in subject premiums and additional coverage obtained. Effective January 1, 2022, we entered into an underlying excess of loss reinsurance treaty covering the period from January 1, 2022 through January 1, 2023. The treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty.

Catastrophe reinsurance treaties

Most of the premiums written under our personal lines policies are also subject to our catastrophe treaties. An increase in our personal lines business gives rise to more property exposure, which increases our exposure to catastrophe risk; therefore, our premiums ceded under catastrophe treaties will increase. This results in an increase in premiums ceded under our catastrophe treaties provided that reinsurance rates are stable or are increasing. In Three Months 2022, our premiums ceded under catastrophe treaties increased by $726,000 over the comparable ceded premiums in Three Months 2021. Effective July 1, 2020, and continuing through June 30, 2021, our ceded catastrophe premiums were paid based on the total insured value of our risks calculated as of August 31, 2020. Effective July 1, 2021, and continuing through June 30, 2022, our ceded catastrophe premiums were paid based on the total insured value of our risks as of August 31, 2021. Effective July 1, 2022, and continuing through June 30, 2023, our ceded catastrophe premiums will be paid based on the total insured value of our risks as of August 31, 2022.

Net premiums earned

Net premiums earned decreased $7,442,000, or 20.2%, to $29,361,000 in Three Months 2022 from $36,803,000 in Three Months 2021. The decrease was due to the inception of the 2021/2023 Treaty on December 31, 2021. The decrease resulting from the 2021/2023 Treaty in Three Months 2022 was partially offset by an increase in direct written premium.

Ceding Commission Revenue

The following table summarizes the changes in the components of ceding commission revenue (in thousands) for the periods indicated:

	Three months ended September 30,
($ in thousands)	2022		2021			Change		Percent
Provisional ceding commissions earned	$	4,882	$	41		$	4,841		11,807.3	%
Contingent ceding commissions earned		4		(48	)		53	n/a		%
Total ceding commission revenue	$	4,886	$	(7	)	$	4,894		(61,175.0	)%

Ceding commission revenue was $4,886,000 in Three Months 2022 compared to $(7,000) in Three Months 2021. The increase of $4,893,000 was due to an increase in provisional ceding commissions earned resulting from the 2021/2023 Treaty. See below for a discussion of provisional ceding commissions earned and contingent ceding commissions earned.

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Provisional Ceding Commissions Earned

In Three Months 2022 we earned provisional ceding commissions from personal lines earned premiums ceded under the 2021/2023 Treaty which was effective as of December 31, 2021. There was no personal lines quota share in effect in Three Months 2021.

Contingent Ceding Commissions Earned

The structure of the 2021/2023 Treaty calls for a fixed provisional ceding commission with no opportunity to earn additional contingent ceding commissions. Under our prior years’ quota share treaties, we received a contingent ceding commission based on a sliding scale in relation to the losses incurred under our quota share treaties. The lower the ceded loss ratio, the more contingent commission we received.

Net Investment Income

Net investment income was $1,419,000 in Three Months 2022 compared to $1,677,000 in Three Months 2021, a decrease of $258,000, or 15.4%.  The decrease in investment income is attributable to the disposal of income bearing equity securities.  The average yield on invested assets was 3.48% as of September 30, 2022 compared to 3.42% as of September 30, 2021.

Cash and invested assets were $192,229,000 as of September 30, 2022 compared to $246,004,000 as of September 30, 2021 The $53,775,000 decrease in cash and invested assets was primarily attributable to cash paid to reinsurers at the inception of the 2021/2023 Treaty, losses paid in connection with catastrophe losses incurred in 2021 and 2022, and unrealized losses on our investment portfolio.

Net Gains and Losses on Investments

Net losses on investments were $398,000 in Three Months 2022 compared to net gains of $205,000 in Three Months 2021. Unrealized losses on our equity securities and other investments in Three Months 2022 were $1,798,000, compared to $829,000 in Three Months 2021. Realized gains on sales of investments were $1,400,000 in Three Months 2022 compared to $1,033,000 in Three Months 2021.

Other Income

                Other income was $270,000 in Three Months 2022 compared to $281,000 in Three Months 2021, a decrease of $11,000, or 3.9%.

Net Loss and LAE

Net loss and LAE was $22,028,000 for Three Months 2022 compared to $35,740,000 for Three Months 2021. The net loss ratio was 75.0% in Three Months 2022 compared to 97.1% in Three Months 2021, a decrease of 22.1 percentage points.

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The following graph summarizes the changes in the components of net loss ratio for the periods indicated, along with the comparable components excluding commercial lines business:

(Components may not sum to totals due to rounding)

For Three Months 2022, the loss ratio was lower than Three Months 2021 mainly due to a lower impact of catastrophe losses.  There were only two minor wind events classified as catastrophe for Three Months 2022. The estimated total net catastrophe losses for the calendar quarter were $334,000, which contributed 1.1 points to the loss ratio. This compares to a 33.1-point impact from catastrophe events from the corresponding period from the prior year, which had more significant named storms, including Ida.

 The underlying loss ratio (loss ratio excluding the impact of catastrophe and prior year development) was 72.4% for Three Months 2022, an increase of 8.4 points from the 64.0% underlying loss ratio recorded for Three Months 2021. The higher 2022 loss ratio was primarily due to a general increase in property claims severity, which is likely a result of recent increased inflation.

Prior years in total have unfavorable development of $443,000 for Three Months 2022, driven by the volatility of liability claim settlements from the discontinued Commercial lines.

See table below under “Additional Financial Information” summarizing net loss ratios by line of business.

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Commission Expense

Commission expense increased $500,000 to $8,702,000, or 17.8% of direct earned premiums in Three Months 2022. Commission expense was $8,202,000 in Three Months 2021 or 18.6% of direct earned premiums.  The increase was due to an increase in direct earned premiums of $5,727,000 to $54,592,000, offset in part by a reduction in the commission rate on our Select Products and the reduction in contingent commissions, which producers now earn only if KICO has an underwriting profit.

Other Underwriting Expenses

Other underwriting expenses were $7,276,000, or 14.9% of direct earned premiums, in Three Months 2022 compared to $6,563,000, or 14.9% of direct earned premiums, in Three Months 2021. The increase of $713,000, or 10.9%, was primarily due to increases in expenses related to our growth in direct earned premiums, salaries, and our continuing initiative to reduce expenses with the use of technology, partially offset by decreases in professional fees and state insurance department fees.

 Our largest single component of other underwriting expenses is salaries and employment costs, with costs of $2,961,000 in Three Months 2022 compared to $2,513,000 in Three Months 2021. The increase of $448,000, or 17.8%, is greater than the 11.7% increase in direct written premiums. In the periods following Three Months 2021, we invested in the hiring of higher-level managers and staff to implement our goals of modernization and efficiency, which we refer to as Kingstone 2.0.

Our net underwriting expense ratio in Three Months 2022 was 36.9% compared to 39.3% in Three Months 2021. The following table shows the individual components of our net underwriting expense ratio for the periods indicated:

	Three months ended September 30,						Percentage
	2022			2021			Point Change
Other underwriting expenses
Employment costs		10.1	%		6.8	%		3.3
Underwriting fees (inspections/surveys)		1.6			1.3			0.3
IT expenses		4.2			2.9			1.3
Profesional fees		1.1			1.3			(0.2	)
Other expenses		7.8			5.6			2.2
Total other underwriting expenses		24.8			17.9			6.9
Commission expense		29.6			22.3			7.3
Ceding commission revenue
Provisional		(16.6	)		(0.1	)		(16.5	)
Contingent		-			0.1			(0.1	)
Total ceding commission revenue		(16.6	)		-			(16.6	)
Other income		(0.9	)		(0.9	)		-
Net underwriting expense ratio		36.9	%		39.3	%		(2.4	)

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The overall 16.6 percentage point increase in the benefit from ceding commissions in Three Months 2022 was driven by the increase in provisional ceding commission revenue due to the inception of the 2021/2023 Treaty on December 31, 2021. The components of our net underwriting expense ratio related to other underwriting expenses and commissions increased due to a higher percentage of our direct earned premiums in Three Months 2022 being ceded due to the inception of the 2021/2023 Treaty. 

Other Operating Expenses

Other operating expenses, related to the expenses of our holding company and Cosi, were $810,000 for Three Months 2022 compared to $855,000 for Three Months 2021. The following table shows a breakdown of the significant components of other operating expenses for the periods indicated:

	Three months ended
	September 30,
($ in thousands)	2022			2021		Change			Percent
Other operating expenses
Employement costs	$	(5	)	$	50	$	(55	)	na		%
Bonuses		-			-		-		na
Equity compensation		188			467		(279	)		(59.7	)
Professional		110			69		41			59.4
Griffin Highline fees		268			-		268			na
Directors fees		82			82		-			-
Insurance		38			46		(8	)		(17.4	)
Other expenses		129			141		(12	)		(8.5	)
Total other operating expenses	$	810		$	855	$	(45	)		(5.3	)%

(Components may not sum to totals due to rounding)

The decrease in Three Months 2022 of $45,000, or 5.3%, as compared to Three Months 2021 was primarily due to a decrease in employment costs. The decrease in employment costs was due to staff reductions and fluctuations in deferred compensation liability related to changes in the underlying invested portfolio. The decrease in employment costs was partially offset by an increase in professional fees attributable to the non-binding indication of interest from Griffin Highline, disclosed above as “Griffin Highline fees” incurred, related to a then contemplated acquisition of all of the outstanding equity of our company.

Depreciation and Amortization

Depreciation and amortization was $825,000 in Three Months 2022 compared to $820,000 in Three Months 2021. The increase of $5,000, or 0.6%, in depreciation and amortization was primarily due to the completion of customized policy management software, now allowing us to consolidate multiple legacy systems into one efficient system. The increase from the assets currently placed in service in Three Months 2022 was partially offset by a decrease in depreciation and amortization from assets previously put into service that are currently being utilized and being fully depreciated. In the last quarter of 2021, due to the extended useful life of assets related to our system platforms, Management determined that such systems, currently put into service, should be depreciated over five years reflecting their expected useful lives as compared to the previous three years.

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Interest Expense

Interest expense was $457,000 for both Three Months 2022 and Three Months 2021. We incurred interest expense in connection with our $30.0 million issuance of long-term debt in December 2017.

Income Tax Benefit

Income tax benefit in Three Months 2022 was $562,000, which resulted in an effective tax benefit rate of 20.7%. Income tax expense in Three Months 2021 was $312,000, which resulted in an effective tax rate of 13.3%. Loss before taxes was $4,559,000 in Three Months 2022 compared to $13,679,000 in Three Months 2021. The difference in effective tax rate is due to the effect of permanent differences in Three Months 2022 compared to Three Months 2021.

Net Loss

Net loss was $3,998,000 in Three Months 2022 compared to $10,618,000 in Three Months 2021. The decrease in net loss of $6,619,000 was due to the circumstances described above.

Additional Financial Information

We operate our business as one segment, property and casualty insurance. Within this segment, we offer an array of property and casualty policies to our producers. The following table summarizes gross and net written premiums, net premiums earned, and net loss and loss adjustment expenses by major product type, which were determined based primarily on similar economic characteristics and risks of loss.

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	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Gross premiums written:
Personal lines(3)	$	51,242,544		$	45,984,939		$	138,197,960		$	124,593,302
Livery physical damage		3,309,845			2,813,571			9,036,713			6,836,999
Other(1)		39,162			66,659			119,238			180,485
Total without commercial lines		54,591,551			48,865,169			147,353,911			131,610,786
Commercial lines (in run-off effective July 2019)(2)		-			-			-			(856	)
Total gross premiums written	$	54,591,551		$	48,865,169		$	147,353,911		$	131,609,930
Net premiums written:
Personal lines(3)	$	30,327,951		$	38,762,235		$	79,487,201		$	102,741,368
Livery physical damage		3,309,845			2,813,571			9,036,713			6,836,999
Other(1)		28,374			65,837			86,224			178,021
Total without commercial lines		33,666,170			41,641,643			88,610,138			109,756,388
Commercial lines (in run-off effective July 2019)(2)		-			-			-			(856	)
Total net premiums written	$	33,666,170		$	41,641,643		$	88,610,138		$	109,755,532
Net premiums earned:
Personal lines(3)	$	26,407,939		$	34,715,708		$	75,747,009		$	101,054,415
Livery physical damage		2,920,335			2,028,786			8,082,173			5,598,605
Other(1)		32,702			58,757			107,242			176,731
Total without commercial lines		29,360,976			36,803,251			83,936,424			106,829,751
Commercial lines (in run-off effective July 2019)(2)		-			-			-			(856	)
Total net premiums earned	$	29,360,976		$	36,803,251		$	83,936,424		$	106,828,895
Net loss and loss adjustment expenses(4):
Personal lines	$	19,512,893		$	32,958,728		$	56,296,473		$	72,353,668
Livery physical damage		1,716,383			1,766,989			3,727,175			3,469,465
Other(1)		9,494			180,995			(14,873	)		434,816
Unallocated loss adjustment expenses		126,560			867,675			2,870,115			2,783,547
Total without commercial lines		21,365,330			35,774,387			62,878,890			79,041,496
Commercial lines (in run-off effective July 2019)(2)		662,186			(34,152	)		745,865			18,621
Total net loss and loss adjustment expenses	$	22,027,516		$	35,740,235		$	63,624,755		$	79,060,117
Net loss ratio(4):
Personal lines		73.9	%		94.9	%		74.3	%		71.6	%
Livery physical damage		58.8	%		87.1	%		46.1	%		62.0	%
Other(1)		29.0	%		308.0	%		-13.9	%		246.0	%
Total without commercial lines		72.8	%		97.2	%		74.9	%		74.0	%
Commercial lines (in run-off effective July 2019)(2)	na			na			na			na
Total		75.0	%		97.1	%		75.8	%		74.0	%

(1)	“Other” includes, among other things, premiums and loss and loss adjustment expenses from our participation in a mandatory state joint underwriting association and loss and loss adjustment expenses from commercial auto.
(2)	In July 2019, we decided that we will no longer underwrite Commercial Liability risks. See discussions above regarding the discontinuation of this line of business.
(3)	See discussion above with regard to “Net Written Premiums and Net Premiums Earned”, as to change in quota share ceding rate, effective December 31, 2021.
(4)	See discussion above with regard to “Net Loss and LAE”, as to catastrophe losses in the three months and nine months ended September 30, 2022 and 2021.

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Insurance Underwriting Business on a Standalone Basis

Our insurance underwriting business reported on a standalone basis for the periods indicated is as follows:

	Three Months ended						Nine Months ended
	September 30,						September 30,
	2022			2021			2022			2021
Revenues
Net premiums earned	$	29,360,976		$	36,803,251		$	83,936,424		$	106,828,895
Ceding commission revenue		4,886,094			(7,276	)		14,283,077			37,400
Net investment income		1,418,521			1,676,596			3,411,946			5,137,867
Net (losses) gains on investments		(366,411	)		214,085			(9,098,008	)		5,380,909
Other income		269,297			322,705			740,424			617,257
Total revenues		35,568,477			39,009,361			93,273,863			118,002,328
Expenses
Loss and loss adjustment expenses		22,027,516			35,740,235			63,624,755			79,060,117
Commission expense		8,702,190			8,201,935			25,534,307			24,711,115
Other underwriting expenses		7,276,101			6,562,743			20,717,047			19,722,705
Depreciation and amortization		803,568			780,906			2,430,769			2,374,203
Total expenses		38,809,375			51,285,819			112,306,878			125,868,140
(Loss) income from operations		(3,240,898	)		(12,276,458	)		(19,033,015	)		(7,865,812	)
Income tax (benefit) expense		(345,080	)		(2,633,026	)		(3,702,374	)		(1,812,195	)
Net (loss) income	$	(2,895,818	)	$	(9,643,432	)	$	(15,330,641	)	$	(6,053,617	)
Key Measures:
Net loss ratio		75.0	%		97.1	%		75.8	%		74.0	%
Net underwriting expense ratio		36.9	%		39.3	%		37.2	%		41.0	%
Net combined ratio		111.9	%		136.4	%		113.0	%		115.0	%
Reconciliation of net underwriting expense ratio:
Acquisition costs and other underwriting expenses	$	15,978,291		$	14,764,678		$	46,251,354		$	44,433,820
Less: Ceding commission revenue		(4,886,094	)		7,276			(14,283,077	)		(37,400	)
Less: Other income		(269,297	)		(322,705	)		(740,424	)		(617,257	)
Net underwriting expenses	$	10,822,900		$	14,449,249		$	31,227,853		$	43,779,163
Net premiums earned	$	29,360,976		$	36,803,251		$	83,936,424		$	106,828,895
Net Underwriting Expense Ratio		36.9	%		39.3	%		37.2	%		41.0	%

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                An analysis of our direct, assumed and ceded earned premiums, loss and loss adjustment expenses, and loss ratios is shown below:

	Direct			Assumed			Ceded			Net
Nine months ended September 30, 2022
Written premiums	$	147,353,911		$	-		$	(58,743,773	)	$	88,610,138
Change in unearned premiums		(6,029,774	)		-			1,356,060			(4,673,714	)
Earned premiums	$	141,324,137		$	-		$	(57,387,713	)	$	83,936,424
Loss and loss adjustment expenses excluding the effect of catastrophes	$	83,345,972		$	-		$	(23,186,898	)	$	60,159,074
Catastrophe loss		7,509,597			-			(4,043,916	)		3,465,681
Loss and loss adjustment expenses	$	90,855,569		$	-		$	(27,230,814	)	$	63,624,755
Loss ratio excluding the effect of catastrophes		59.0	%		0.0	%		40.4	%		71.7	%
Catastrophe loss		5.3	%		0.0	%		7.0	%		4.1	%
Loss ratio		64.3	%		0.0	%		47.4	%		75.8	%
Nine months ended September 30, 2021
Written premiums	$	131,609,930		$	-		$	(21,854,398	)	$	109,755,532
Change in unearned premiums		(2,911,439	)		-			(15,198	)		(2,926,637	)
Earned premiums	$	128,698,491		$	-		$	(21,869,596	)	$	106,828,895
Loss and loss adjustment expenses excluding the effect of catastrophes	$	67,633,915		$	-		$	(860,490	)	$	66,773,425
Catastrophe loss		12,647,172			-			(360,480	)		12,286,692
Loss and loss adjustment expenses	$	80,281,087		$	-		$	(1,220,970	)	$	79,060,117
Loss ratio excluding the effect of catastrophes		52.6	%		0.0	%		3.9	%		62.5	%
Catastrophe loss		9.8	%		0.0	%		1.6	%		11.5	%
Loss ratio		62.4	%		0.0	%		5.5	%		74.0	%
Three months ended September 30, 2022
Written premiums	$	54,591,551		$	-		$	(20,925,381	)	$	33,666,170
Change in unearned premiums		(5,636,421	)		-			1,331,227			(4,305,194	)
Earned premiums	$	48,955,130		$	-		$	(19,594,154	)	$	29,360,976
Loss and loss adjustment expenses excluding the effect of catastrophes	$	30,513,819		$	-		$	(8,820,270	)	$	21,693,549
Catastrophe loss		477,127			-			(143,160	)		333,967
Loss and loss adjustment expenses	$	30,990,946		$	-		$	(8,963,430	)	$	22,027,516
Loss ratio excluding the effect of catastrophes		62.3	%		0.0	%		45.0	%		73.9	%
Catastrophe loss		1.0	%		0.0	%		0.7	%		1.1	%
Loss ratio		63.3	%		0.0	%		45.7	%		75.0	%
Three months ended September 30, 2021
Written premiums	$	48,865,169		$	-		$	(7,223,526	)	$	41,641,643
Change in unearned premiums		(4,848,145	)		-			9,753			(4,838,392	)
Earned premiums	$	44,017,024		$	-		$	(7,213,773	)	$	36,803,251
Loss and loss adjustment expenses excluding the effect of catastrophes	$	23,537,875		$	-		$	21,239		$	23,559,114
Catastrophe loss		12,541,601			-			(360,480	)		12,181,121
Loss and loss adjustment expenses	$	36,079,476		$	-		$	(339,241	)	$	35,740,235
Loss ratio excluding the effect of catastrophes		53.5	%		0.0	%		-0.3	%		64.0	%
Catastrophe loss		28.5	%		0.0	%		5.0	%		33.1	%
Loss ratio		82.0	%		0.0	%		4.7	%		97.1	%

(Percent components may not sum to totals due to rounding)

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The key measures for our insurance underwriting business for the periods indicated are as follows:

	Three Months ended						Nine Months ended
	September 30,						September 30,
	2022			2021			2022			2021
Net premiums earned	$	29,360,976		$	36,803,251		$	83,936,424		$	106,828,895
Ceding commission revenue		4,886,094			(7,276	)		14,283,077			37,400
Other income		269,297			322,705			740,424			617,257
Loss and loss adjustment expenses (1)		22,027,516			35,740,235			63,624,755			79,060,117
Acquisition costs and other underwriting expenses:
Commission expense		8,702,190			8,201,935			25,534,307			24,711,115
Other underwriting expenses		7,276,101			6,562,743			20,717,047			19,722,705
Total acquisition costs and other underwriting expenses		15,978,291			14,764,678			46,251,354			44,433,820
Underwriting loss	$	(3,489,440	)	$	(13,386,233	)	$	(10,916,184	)	$	(16,010,385	)
Key Measures:
Net loss ratio excluding the effect of catastrophes		73.9	%		64.0	%		71.7	%		62.5	%
Effect of catastrophe loss on net loss ratio (1)		1.1	%		33.1	%		4.1	%		11.5	%
Net loss ratio		75.0	%		97.1	%		75.8	%		74.0	%
Net underwriting expense ratio excluding the effect of catastrophes		36.9	%		39.3	%		37.2	%		41.0	%
Effect of catastrophe loss on net underwriting expense ratio		0.0	%		0.0	%		0.0	%		0.0	%
Net underwriting expense ratio		36.9	%		39.3	%		37.2	%		41.0	%
Net combined ratio excluding the effect of catastrophes		110.8	%		103.3	%		108.9	%		103.5	%
Effect of catastrophe loss on net combined ratio (1)		1.1	%		33.1	%		4.1	%		11.5	%
Net combined ratio		111.9	%		136.4	%		113.0	%		115.0	%
Reconciliation of net underwriting expense ratio:
Acquisition costs and other underwriting expenses	$	15,978,291		$	14,764,678		$	46,251,354		$	44,433,820
Less: Ceding commission revenue		(4,886,094	)		7,276			(14,283,077	)		(37,400	)
Less: Other income		(269,297	)		(322,705	)		(740,424	)		(617,257	)
	$	10,822,900		$	14,449,249		$	31,227,853		$	43,779,163
Net earned premium	$	29,360,976		$	36,803,251		$	83,936,424		$	106,828,895
Net Underwriting Expense Ratio		36.9	%		39.3	%		37.2	%		41.0	%

(1) For the three months ended September 30, 2022 and 2021, includes the sum of net catastrophe losses and loss adjustment expenses of $333,967 and $12,181,121, respectively. For the nine months ended September 30, 2022 and 2021, includes the sum of net catastrophe losses and loss adjustment expenses of $3,465,681 and $12,286,692, respectively.

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Investments

Portfolio Summary

Fixed-Maturity Securities

The following table presents a breakdown of the amortized cost, estimated fair value, and unrealized gains and losses of our investments in fixed-maturity securities classified as available-for-sale as of September 30, 2022 and December 31, 2021:

	September 30, 2022
	Cost or		Gross		Gross Unrealized Losses						Estimated		% of
	Amortized		Unrealized		Less than 12			More than 12			Fair		Estimated
Category	Cost		Gains		Months			Months			Value		Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	9,946,032	$	930	$	(123	)	$	-		$	9,946,839		6.8	%
Political subdivisions of States, Territories and Possessions		17,117,473		-		(3,250,196	)		(590,936	)		13,276,341		9.1	%
Corporate and other bonds Industrial and miscellaneous		84,163,055		-		(9,154,182	)		(269,694	)		74,739,179		51.4	%
Residential mortgage and other asset backed securities (1)		54,307,907		68,159		(4,333,707	)		(2,699,011	)		47,343,348		32.7	%
Total fixed-maturity securities	$	165,534,467	$	69,089	$	(16,738,208	)	$	(3,559,641	)	$	145,305,707		100.0	%

(1) KICO has 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 to the condensed consolidated financial statements). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of September 30, 2022, the estimated fair value of the eligible investments was approximately $12,393,000. KICO will retain all rights regarding all securities if pledged as collateral. As of September 30, 2022, there was no outstanding balance on the FHLBNY credit line.

	December 31, 2021
	Cost or		Gross		Gross Unrealized Losses						Estimated		% of
	Amortized		Unrealized		Less than 12			More than 12			Fair		Estimated
Category	Cost		Gains		Months			Months			Value		Fair Value
Political subdivisions of States, Territories and Possessions	$	17,236,750	$	246,748	$	(197,984	)	$	-		$	17,285,514		10.9	%
Corporate and other bonds
Industrial and miscellaneous		80,534,769		2,603,411		(126,926	)		-			83,011,254		52.5	%
Residential mortgage and other asset backed securities		58,036,959		355,985		(489,258	)		(120,344	)		57,783,342		36.6	%
Total fixed-maturity securities	$	155,808,478	$	3,206,144	$	(814,168	)	$	(120,344	)	$	158,080,110		100.0	%

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Equity Securities

The following table presents a breakdown of the cost and estimated fair value of, and gross gains and losses on, investments in equity securities as of September 30, 2022 and December 31, 2021:

	September 30, 2022
										% of
			Gross		Gross			Estimated		Estimated
Category	Cost		Gains		Losses			Fair Value		Fair Value
Equity Securities:
Preferred stocks	$	16,047,207	$	-	$	(3,488,481	)	$	12,558,726		58.5	%
Common stocks and exchange traded funds		10,728,809		103,902		(1,922,991	)		8,909,720		41.5	%
Total	$	26,776,016	$	103,902	$	(5,411,472	)	$	21,468,446		100.0	%

	December 31, 2021
										% of
			Gross		Gross			Estimated		Estimated
Category	Cost		Gains		Losses			Fair Value		Fair Value
Equity Securities:
Preferred stocks	$	22,019,509	$	1,007,009	$	(184,617	)	$	22,841,901		57.6	%
Common stocks and exchange traded funds		15,451,160		1,573,653		(179,712	)		16,845,101		42.4	%
Total	$	37,470,669	$	2,580,662	$	(364,329	)	$	39,687,002		100.0	%

Other Investments

The following table presents a breakdown of the cost and estimated fair value of, and gross gains on, our other investments as of September 30, 2022 and December 31, 2021:

	September 30, 2022						December 31, 2021
			Gross		Estimated				Gross		Estimated
Category	Cost		Gains		Fair Value		Cost		Gains		Fair Value
Other Investments:
Hedge fund	$	1,987,040	$	589,232	$	2,576,272	$	3,999,381	$	3,562,034	$	7,561,415

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After providing notice, we redeemed 50% of our investment in the hedge fund as of September 30, 2022 for a realized gain of $589,000, which is recorded in the accompanying condensed consolidated statements of operations and comprehensive income (loss).  

Held-to-Maturity Securities

The following table presents a breakdown of the amortized cost and estimated fair value of, and gross unrealized gains and losses on, investments in held-to-maturity securities as of September 30, 2022 and December 31, 2021:

	September 30, 2022
	Cost or		Gross		Gross Unrealized Losses					Estimated		% of
	Amortized		Unrealized		Less than 12			More than 12		Fair		Estimated
Category	Cost		Gains		Months			Months		Value		Fair Value
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,485	$	73,468	$	(36,802	)	$	-	$	1,265,151		19.1	%
Political subdivisions of States, Territories and Possessions		498,508		-		(1,498	)		-		497,010		7.5	%
Exchange traded debt		304,111		-		(43,361	)		-		260,750		3.9	%
Corporate and other bonds
Industrial and miscellaneous		5,736,079		35,503		(1,182,635	)		-		4,588,947		69.4	%
Total	$	7,767,183	$	108,971	$	(1,264,296	)	$	-	$	6,611,858		100.0	%

	December 31, 2021
	Cost or		Gross		Gross Unrealized Losses					Estimated		% of
	Amortized		Unrealized		Less than 12			More than 12		Fair		Estimated
Category	Cost		Gains		Months			Months		Value		Fair Value
Held-to-Maturity Securities:
U.S. Treasury securities	$	729,642	$	209,633	$	-		$	-	$	939,275		10.7	%
Political subdivisions of States, Territories and Possessions		998,239		22,856		-			-		1,021,095		11.7	%
Exchange traded debt		304,111		85		(13,921	)				290,275		3.3	%
Corporate and other bonds
Industrial and miscellaneous		6,234,342		280,951		(12,779	)		-		6,502,514		74.3	%
Total	$	8,266,334	$	513,525	$	(26,700	)	$	-	$	8,753,159		100.0	%

Held-to-maturity U.S. Treasury securities are held in trust pursuant to various states’ minimum fund requirements.

66

A summary of the amortized cost and fair value of our investments in held-to-maturity securities by contractual maturity as of September 30, 2022 and December 31, 2021 is shown below:

	September 30, 2022				December 31, 2021
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	708,325	$	742,533	$	994,712	$	1,008,180
One to five years		1,120,315		1,082,015		1,205,829		1,290,465
Five to ten years		1,399,725		1,177,545		1,513,942		1,648,808
More than 10 years		4,538,818		3,609,765		4,551,851		4,805,706
Total	$	7,767,183	$	6,611,858	$	8,266,334	$	8,753,159

Credit Rating of Fixed-Maturity Securities

The table below summarizes the credit quality of our available-for-sale fixed-maturity securities as of September 30, 2022 and December 31, 2021 as rated by Standard & Poor’s (or, if unavailable from Standard & Poor’s, then Moody’s, Fitch, or Kroll):

	September 30, 2022					December 31, 2021
	Estimated		Percentage of			Estimated		Percentage of
	Fair		Estimated			Fair		Estimated
	Value		Fair Value			Value		Fair Value
Rating
U.S. Treasury securities	$	9,946,840		6.8	%	$	-		0.0	%
Corporate and municipal bonds
AAA		990,819		0.7	%		1,321,809		0.8	%
AA		16,410,900		11.3	%		11,532,572		7.3	%
A		32,163,411		22.2	%		38,272,571		24.2	%
BBB+		11,938,310		8.2	%		17,936,359		11.3	%
BBB		20,414,670		14.0	%		25,161,776		15.9	%
BBB-		4,461,056		3.1	%		4,193,401		2.7	%
Total corporate and municipal bonds		86,379,166		59.4	%		98,418,488		62.2	%
Residential mortgage backed, asset backed, and other collateralized obligations
AAA		16,860,463		11.6	%		17,350,192		11.0	%
AA		24,290,742		16.7	%		34,241,907		21.7	%
A		6,793,094		4.7	%		6,306,161		4.0	%
BBB		20,763		0.0	%		24,254		0.0	%
CCC		495,227		0.3	%		664,628		0.4	%
CC		105,761		0.1	%		125,412		0.1	%
D		42,159		0.0	%		55,306		0.0	%
Non rated		371,492		0.3	%		893,762		0.6	%
Total residential mortgage backed, asset backed, and other collateralized obligations		48,979,701		33.7	%		59,661,622		37.8	%
Total	$	145,305,707		100.0	%	$	158,080,110		100.0	%

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The table below summarizes the average yield by type of fixed-maturity security as of September 30, 2022 and December 31, 2021:

Category	September 30, 2022			December 31, 2021
U.S. Treasury securities and obligations of U.S. government corporations and agencies		2.40	%		3.06	%
Political subdivisions of States, Territories and Possessions		3.54	%		2.77	%
Corporate and other bonds
Industrial and miscellaneous		3.64	%		3.23	%
Residential mortgage backed securities		2.43	%		2.77	%
Total		3.16	%		2.92	%

The table below lists the weighted average maturity and effective duration in years on our fixed-maturity securities as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
Weighted average effective maturity		6.2		8.0
Weighted average final maturity		14.5		13.8
Effective duration		4.8		5.1

Fair Value Consideration

Fair value is the price that would be received to sell an asset or paid to transfer a liability in a transaction involving identical or comparable assets or liabilities between market participants (an “exit price”). The fair value hierarchy distinguishes between inputs based on market data from independent sources (“observable inputs”) and a reporting entity’s internal assumptions based upon the best information available when external market data is limited or unavailable (“unobservable inputs”). The fair value hierarchy prioritizes fair value measurements into three levels based on the nature of the inputs. Quoted prices in active markets for identical assets have the highest priority (“Level 1”), followed by observable inputs other than quoted prices including prices for similar but not identical assets or liabilities (“Level 2”), and unobservable inputs, including the reporting entity’s estimates of the assumption that market participants would use, having the lowest priority (“Level 3”). As of September 30, 2022 and December 31, 2021, 63% and 84%, respectively, of the investment portfolio recorded at fair value was priced based upon quoted market prices.

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The table below summarizes the gross unrealized losses of our fixed-maturity securities available-for-sale and equity securities by length of time the security has continuously been in an unrealized loss position as of September 30, 2022 and December 31, 2021:

	September 30, 2022
	Less than 12 months							12 months or more							Total
	Estimated					No. of		Estimated					No. of		Estimated
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	5,975,160	$	(123	)		1	$	-	$	-			-	$	5,975,160	$	(123	)
Political subdivisions of States, Territories and Possessions		11,461,126		(3,250,196	)		12		1,815,216		(590,936	)		2		13,276,342		(3,841,132	)
Corporate and other bonds industrial and miscellaneous		73,921,209		(9,154,182	)		93		817,970		(269,694	)		1		74,739,179		(9,423,876	)
Residential mortgage and other asset backed securities		27,985,270		(4,333,707	)		31		18,593,599		(2,699,011	)		15		46,578,869		(7,032,718	)
Total fixed-maturity securities	$	119,342,765	$	(16,738,208	)		137	$	21,226,785	$	(3,559,641	)		18	$	140,569,550	$	(20,297,849	)

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	December 31, 2021
	Less than 12 months							12 months or more							Total
	Estimated					No. of		Estimated					No. of		Estimated
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	-	$	-			-	$	-	$	-			-	$	-	$	-
Political subdivisions of States, Territories and Possessions		6,768,123		(197,984	)		5		-		-			-		6,768,123		(197,984	)
Corporate and other bonds industrial and miscellaneous		17,593,707		(126,926	)		15		-		-			-		17,593,707		(126,926	)
Residential mortgage and other asset backed securities		45,399,451		(489,258	)		26		2,923,182		(120,344	)		2		48,322,633		(609,602	)
Total fixed-maturity securities	$	69,761,281	$	(814,168	)		46	$	2,923,182	$	(120,344	)		2	$	72,684,463	$	(934,512	)

There were 155 securities at September 30, 2022 that accounted for the gross unrealized loss of our fixed-maturity securities available-for-sale, none of which were deemed by us to be other than temporarily impaired. There were 48 securities at December 31, 2021 that accounted for the gross unrealized loss, none of which were deemed by us to be other than temporarily impaired. Significant factors influencing our determination that unrealized losses were temporary included credit quality considerations, the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and interest rate environment factors, and management’s intent not to sell these securities and it being not more likely than not that we will be required to sell these investments before anticipated recovery of fair value to our cost basis.

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Liquidity and Capital Resources

Cash Flows

The primary sources of cash flow are from our insurance underwriting subsidiary, KICO, and include direct premiums written, ceding commissions from our quota share reinsurers, loss recovery payments from our reinsurers, investment income and proceeds from the sale or maturity of investments. Funds are used by KICO for ceded premium payments to reinsurers, which are paid on a net basis after subtracting losses paid on reinsured claims and reinsurance commissions. KICO also uses funds for loss payments and loss adjustment expenses on our net business, commissions to producers, salaries and other underwriting expenses as well as to purchase investments and fixed assets.

For the nine months ended September 30, 2022, the primary source of cash flow for our holding company was the dividends received from KICO, subject to statutory restrictions.  For the nine months ended September 30, 2022, KICO paid dividends of $1,500,000 to us.  On October 27, 2022, KICO entered a sale-leaseback transaction whereby KICO sold substantially all its fixed assets for approximately $8,100,000. Subsequent to the closing of the sale-leaseback transaction, KICO paid a dividend of $3,000,000 to us.  In addition, on October 17, 2022 we entered into a seven year loan agreement with KICO with regard to a loan from KICO to us in the amount of $6,450,000. 

KICO is a member of the Federal Home Loan Bank of New York (“FHLBNY”), which provides additional access to liquidity. Members have access to a variety of flexible, low cost funding through FHLBNY’s credit products, enabling members to customize advances. Advances are to be fully collateralized; eligible collateral to pledge to FHLBNY includes residential and commercial mortgage backed securities, along with U.S. Treasury and agency securities. See Note 3 to our condensed consolidated financial statements – Investments, for eligible collateral held in a designated custodian account available for future advances. Advances are limited to 5% of KICO’s net admitted assets as of the end of the previous quarter, which is June 30, 2022, and are due and payable within 90 days of borrowing. The maximum allowable advance as of September 30, 2022, based on the net admitted assets as of June 30, 2022, was approximately $12,414,000. Advances are limited to 85% of the amount of available collateral, which was approximately $10,534,000 as of September 30, 2022. There were no borrowings under this facility during the nine months ended September 30, 2022.

On December 19, 2017, we issued $30 million of our 5.50% Senior Unsecured Notes due December 30, 2022. As of September 30, 2022, invested assets and cash in our holding company was approximately $2,416,000. See Notes 2 and 7 to our condensed consolidated financial statements included in this Quarterly Report for a discussion of our plans with regard to the satisfaction of the debt.

Our reconciliation of net income to net cash provided by operations is generally influenced by the collection of premiums in advance of paid losses, the timing of reinsurance, issuing company settlements and loss payments.

71

Cash flow and liquidity are categorized into three sources: (1) operating activities; (2) investing activities; and (3) financing activities, which are shown in the following table:

Nine months ended June 30,	2022			2021
Cash flows (used in) provided by:
Operating activities	$	(7,921,438	)	$	29,079,787
Investing activities		398,911			(9,297,954	)
Financing activities		(1,656,865	)		(3,137,487	)
Net (decrease) increase in cash and cash equivalents		(9,179,392	)		16,644,346
Cash and cash equivalents, beginning of period		24,290,598			19,463,742
Cash and cash equivalents, end of period	$	15,111,206		$	36,108,088

Net cash used in operating activities was $7,921,000 in Nine Months 2022 as compared to $29,080,000 provided by operating activities in Nine Months 2021. The $37,001,000 decrease in cash flows provided by operating activities in Nine Months 2022 as compared to Nine Months 2021 was primarily the result of a decrease in cash arising from net fluctuations in operating assets and liabilities, partially offset by net loss (adjusted for non-cash items) of $4,927,000. The increase in cash used in operating activities is also attributable to the payment of $13,245,000 to reinsurers in Nine Months 2022 pursuant to the inception of our quota share reinsurance treaty, effective December 31, 2021. In addition, the increase of reinsurance recoverables by $19,073,000 also contributed to the increase in cash used during Nine Months 2022.  The net fluctuations in assets and liabilities are related to operating activities of KICO as affected by growth or declines in its operations, payments on claims and other changes, which are described above.

Net cash provided by investing activities was $399,000 in Nine Months 2022 compared to $9,298,000 used in investing activities in Nine Months 2021. In Nine Months 2022, we had net investing activity provided by our investment portfolio of $3,741,000, compared to $6,375,000 used in Nine Months 2021 resulting in a $10,116,000 increase in net cash provided by investing activities.  In addition, we increased our acquisition of fixed assets by $419,000 in Nine Months 2022 compared to Nine Months 2021.

Net cash used in financing activities was $1,657,000 in Nine Months 2022 compared to $3,137,000 used in Nine Months 2021. The $1,481,000 decrease in net cash used in financing activities was attributable to the purchase of treasury stock of $1,672,000 in Nine Months 2021 partially offset by an increase in withholding taxes paid on the vesting of restricted stock awards in Nine Months 2022 compared to Nine Months 2021.

Reinsurance

Effective December 31, 2021, we entered into a quota share reinsurance treaty for our personal lines business, which primarily consists of homeowners’ and dwelling fire policies, covering the period from December 31, 2021 through January 1, 2023 (“2021/2023 Treaty”).

72

Our excess of loss and catastrophe reinsurance treaties expired on June 30, 2022 and we entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2022. Effective October 20, 2021, we entered into a stub catastrophe reinsurance treaty covering the period from October 20, 2021 through December 31, 2021. The treaty provides reinsurance coverage for catastrophe losses of $5,000,000 in excess of $5,000,000. Effective January 1, 2022, we entered into an underlying excess of loss reinsurance treaty covering the period from January 1, 2022 through January 1, 2023. The treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty. Material terms for our reinsurance treaties in effect for the treaty years shown below are as follows:

	Treaty Period
			(2021/2023 Treaty)
	January 2,		July 1,			December 31,			July 1,		December 31,
	2023		2022			2021			2021		2020
	to		to			to			to		to
	June 30,		January 1,			June 30,			December 30,		June 30,
Line of Business	2023		2023			2022			2021		2021
Personal Lines:
Homeowners, dwelling fire and and canine legal liability
Quota share treaty:
Percent ceded (9)	None (8)			30	%		30	%	None (5)		None (5)
Risk retained on intial $1,000,000 of losses (5) (7) (8) (9)	$	1,000,000	$	700,000		$	700,000		$	1,000,000	$	1,000,000
Losses per occurrence subject to quota share reinsurance coverage	None (8)		$	1,000,000		$	1,000,000		None (5)		None (5)
Expiration date		(8)	January 1, 2023			January 1, 2023			NA (5)		NA (5)
Excess of loss coverage and facultative facility coverage (1) (7)	$	8,000,000	$	8,400,000		$	8,400,000		$	8,000,000	$	8,000,000
	in excess of		in excess of			in excess of			in excess of		in excess of
	$	1,000,000	$	600,000		$	600,000		$	1,000,000	$	1,000,000
Total reinsurance coverage per occurrence (5) (7) (8)	$	8,000,000	$	8,500,000		$	8,500,000		$	8,000,000	$	8,000,000
Losses per occurrence subject to reinsurance coverage (5) (8)	$	8,000,000	$	9,000,000		$	9,000,000		$	9,000,000	$	9,000,000
Expiration date (8)	June 30, 2023		June 30, 2023			June 30, 2022			June 30, 2022		June 30, 2021
Catastrophe Reinsurance:
Initial loss subject to personal lines quota share treaty		(8)		10,000,000			10,000,000		None (5)		None (5)
Risk retained per catastrophe occurrence (5) (8) (9) (10)	$	10,000,000	$	7,400,000		$	7,400,000		$	10,000,000	$	10,000,000
Catastrophe loss coverage in excess of quota share coverage (2) (5) (8)	$	335,000,000	$	335,000,000		$	490,000,000		$	490,000,000	$	475,000,000
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 (6)	NA		NA			NA			$	5,000,000	NA
									in excess of
									$	5,000,000
Reinstatement premium protection (3) (4)	Yes		Yes			Yes			Yes		Yes

(1)	For personal lines, includes the addition of an automatic facultative facility allowing KICO to obtain homeowners single risk coverage up to $9,000,000 in total insured value, which covers direct losses from $3,500,000 to $9,000,000 through June 30, 2023.
(2)	Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts. Duration of 168 consecutive hours for a catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone.

73

(3)	For the period July 1, 2020 through June 30, 2021, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000. For the period July 1, 2021 through June 30, 2022, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000.
(4)	For the period July 1, 2022 through June 30, 2023, reinstatement premium protection for $9,800,000 of catastrophe coverage in excess of $10,000,000.
(5)	The personal lines quota share (homeowners, dwelling fire and canine legal liability) expired on December 30, 2020; reinsurance coverage from December 31, 2020 through December 30, 2021 is only for excess of loss and catastrophe reinsurance.
(6)	Excludes freeze and freeze related claims.
(7)	For the period January 1, 2022 through January 1, 2023, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty. Excludes losses from named storms.
(8)	Personal lines quota share (homeowners, dwelling fire and canine liability) and underlying excess of loss reinsurance will expire on January 1, 2023; reinsurance coverage in effect from January 2, 2023 through June 30, 2023 is only for excess of loss and catastrophe reinsurance treaties.
(9)	For the 2021/2023 Treaty, 4% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event.
(10)	Plus losses in excess of catastrophe coverage.

	Treaty Year
	July 1, 2022			July 1, 2021			July 1, 2020
	to			to			to
Line of Business	June 30, 2023			June 30, 2022			June 30, 2021
Personal Lines:
Personal Umbrella
Quota share treaty:
Percent ceded - first $1,000,000 of coverage		90	%		90	%		90	%
Percent ceded - excess of $1,000,000 dollars of coverage		95	%		95	%		95	%
Risk retained	$	300,000		$	300,000		$	300,000
Total reinsurance coverage per occurrence	$	4,700,000		$	4,700,000		$	4,700,000
Losses per occurrence subject to quota share reinsurance coverage	$	5,000,000		$	5,000,000		$	5,000,000
Expiration date	June 30, 2023			June 30, 2022			June 30, 2021
Commercial Lines (1):
General liability commercial policies
Quota share treaty							None
Risk retained							$	750,000
Excess of loss coverage above risk retained							$	3,750,000
							in excess of
							$	750,000
Total reinsurance coverage per occurrence							$	3,750,000
Losses per occurrence subject to reinsurance coverage							$	4,500,000
Commercial Umbrella
Quota share treaty							None

(1) Coverage on all commercial lines policies expired in September 2020; reinsurance coverage is based on treaties in effect on the date of loss.

74

Inflation

Premiums are established before we know the amount of losses and loss adjustment expenses or the extent to which inflation may affect such amounts. We attempt to anticipate the potential impact of inflation in establishing our reserves, especially as it relates to medical and hospital rates where historical inflation rates have exceeded the general level of inflation. Inflation in excess of the levels we have assumed could cause loss and loss adjustment expenses to be higher than we anticipated, which would require us to increase reserves and reduce earnings.

                Fluctuations in rates of inflation also influence interest rates, which in turn impact the market value of our investment portfolio and yields on new investments. Operating expenses, including salaries and benefits, generally are impacted by inflation.

Nine Months 2022 included elevated economic inflation, which resulted in a significant increase in interest rates, a widening of credit spreads, lower public equity valuations, and significant financial market volatility. The higher interest rates and widening of credit spreads reduced the value of our fixed income securities, which lowered our stockholders’ equity materially for Nine Months 2022. The higher economic inflation impacted our loss and loss adjustment expenses as well; should these trends continue in the near-term, it would in all likelihood negatively impact our profitability.

Off-Balance Sheet Arrangements

                We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Outlook

                The COVID-19 pandemic caused significant financial market volatility, economic uncertainty, and interruptions to normal business activities. As of the date of this report, we expect the effect of the COVID-19 pandemic on claims currently under our coverages to be manageable, based on the information presently available. However, the effects of the COVID-19 pandemic, including the emergence of variant strains, continue to evolve and we cannot predict the extent to which our business, results of operations, financial condition, liquidity, capital position, the value of investments we hold in our investment portfolio, premiums and the demand for our products and our ability to collect premiums or requirement to return premiums to our policyholders will ultimately be impacted.  For additional information on the risks posed by COVID-19, see “The impact of COVID-19 and related risks could materially affect our results of operations, financial position and/or liquidity” included in Part I, Item 1A— “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC.

                Our net premiums earned may be impacted by a number of factors.  Net premiums earned are a function of net written premium volume.  Net written premiums comprise both renewal business and new business and are recognized as earned premium over the term of the underlying policies. Net written premiums from both renewal and new business are impacted by competitive market conditions as well as general economic conditions.  As a result of COVID-19, economic conditions in the United States rapidly deteriorated. The decreased levels of economic activity have negatively impacted, and may continue to negatively impact, premium volumes generated by new business. We began to experience this impact in March 2020 and it became more significant in the second and third quarters of 2020. While we are now seeing a reversal of this impact, it may resume in the future, but the degree of any new impact will depend on the extent and duration of any economic contraction and could be material. We have also made underwriting changes to emphasize profitability over growth and have culled out the type of risks that do not generate an acceptable level of return.  This action has led, and may continue to lead, to a slowdown in premium growth, particularly in new business.

75

Item  3. Quantitative and Qualitative Disclosures About Market Risk.

This item is not applicable to smaller reporting companies.

Item  4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act that are designed to assure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.  Based on this evaluation, our Chief Executive Officer and Principal Financial Officer have concluded that, as of September 30, 2022, our disclosure controls and procedures were: (i) effective in recording, processing, summarizing, and reporting information on a timely basis that we are required to disclose in the reports that we file or submit under the Exchange Act, and (ii) effective in ensuring that information that we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this Quarterly Report, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures.  Based on this evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2022.

s of the date of this report, there have been no misstatements identified. nd the g that were assessed as a material weakness

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on Effectiveness of Controls

Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Principal Financial Officer, and effected by the board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP including those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.  

                Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.  

76

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

For a discussion of the Company’s potential risks and uncertainties, see Part I, Item 1A— “Risk Factors” and Part II, Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2021 Annual Report filed with the SEC, and Part I, Item 2—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein, in each case as updated by the Company's periodic filings with the SEC.  Except as discussed under Part I, Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Preliminary Non-binding Indication of Interest” herein, there have been no material changes to the risk factors disclosed in Part I, Item 1A of the Company’s 2021 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) None.

(b) Not applicable.

(c) None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

77

Item 6. Exhibits.

3(a)	Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3(a) to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2014 filed on May 15, 2014).
3(b)	By-laws, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 9, 2009).
31(a)	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31(b)	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32+	Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	101.SCH  XBRL Taxonomy Extension Schema.
101.CAL	101.CAL   XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	101.DEF   XBRL Taxonomy Extension Definition Linkbase.
101.LAB	101.LAB   XBRL Taxonomy Extension Label Linkbase.
101.PRE	101.PRE  XBRL Taxonomy Extension Presentation Linkbase.
+	This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.  Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended, or the Securities Act of 1934, as amended.

78

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	KINGSTONE COMPANIES, INC.
Dated: November 14, 2022	By:	/s/ Barry B. Goldstein
		Barry B. Goldstein
		Chief Executive Officer
Dated: November 14, 2022	By:	/s/ Richard Swartz
		Richard Swartz
		Principal Financial Officer

79

EX-31.A

EXHIBIT 31(A)

CERTIFICATION

I, Barry B. Goldstein, certify that:
1.	I have reviewed this Quarterly Report on Form 10-Q of Kingstone Companies, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2022
	/s/ Barry B. Goldstein
	Barry B. Goldstein Chief Executive Officer

EX-31.B

EXHIBIT 31(B)

CERTIFICATION

I, Richard Swartz, certify that:
1.	I have reviewed this Quarterly Report on Form 10-Q of Kingstone Companies, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2022
	/s/ Richard Swartz
	Richard Swartz
	Principal Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certify, pursuant to, and as required by, 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Kingstone Companies, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 14, 2022	/s/ Barry B. Goldstein
	Barry B. Goldstein
	Chief Executive Officer
	/s/ Richard Swartz
	Richard Swartz
	Principal Financial Officer

XML

Cover - shares	9 Months Ended
	Sep. 30, 2022	Nov. 14, 2022
Cover [Abstract]
Entity Registrant Name	KINGSTONE COMPANIES, INC.
Entity Central Index Key	0000033992
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Sep. 30, 2022
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Entity Common Stock Shares Outstanding		10,684,499
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	0-1665
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	36-2476480
Entity Interactive Data Current	Yes
Entity Address Address Line 1	15 Joys Lane
Entity Address City Or Town	Kingston
Entity Address State Or Province	NY
Entity Address Postal Zip Code	12401
City Area Code	845
Local Phone Number	802-7900
Security 12b Title	Common Stock, $0.01 par value per share
Trading Symbol	KINS
Security Exchange Name	NASDAQ

XML

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Assets
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $6,611,858 at September 30, 2022 and $8,753,159 at December 31, 2021)	$ 7,767,183	$ 8,266,334
Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $165,534,467 at September 30, 2022 and $155,808,478 at December 31, 2021)	145,305,707	158,080,110
Equity securities, at fair value (cost of $26,776,016 at September 30, 2022 and $37,470,669 at December 31, 2021)	21,468,446	39,687,002
Other investments	2,576,272	7,561,415
Total investments	177,117,608	213,594,861
Cash and cash equivalents	15,111,206	24,290,598
Premiums receivable, net	12,891,464	12,318,336
Reinsurance receivables, net	59,365,937	40,292,438
Deferred policy acquisition costs	23,205,684	22,238,987
Intangible assets	500,000	500,000
Property and equipment, net	10,161,507	9,291,597
Deferred income taxes, net	8,856,948	192,253
Other assets	8,497,592	8,593,205
Total assets	315,707,946	331,312,275
Liabilities
Loss and loss adjustment expense reserves	106,928,898	94,948,745
Unearned premiums	103,789,380	97,759,607
Advance premiums	6,627,275	2,693,466
Reinsurance balances payable	11,475,247	12,961,568
Deferred ceding commission revenue	10,320,370	9,748,508
Accounts payable, accrued expenses and other liabilities	7,740,737	7,704,396
Debt, net	29,955,926	29,823,791
Total liabilities	276,837,833	255,640,081
Stockholders' Equity
Preferred stock, $.01 par value; authorized 2,500,000 shares	0	0
Common stock, $.01 par value; authorized 20,000,000 shares; issued 12,117,081 shares at September 30, 2022 and 11,955,660 shares at December 31, 2021; outstanding 10,645,675 shares at September 30, 2022 and 10,484,254 shares at December 31, 2021	121,171	119,557
Capital in excess of par	73,290,935	72,467,483
Accumulated other comprehensive (loss) income	(15,978,570)	1,796,739
(Accumulated deficit) retained earnings	(12,995,942)	6,855,896
Total1	44,437,594	81,239,675
Treasury stock, at cost, 1,471,406 shares at September 30, 2022 and December 31, 2021	(5,567,481)	(5,567,481)
Total stockholders' equity	38,870,113	75,672,194
Total liabilities and stockholders' equity	$ 315,707,946	$ 331,312,275

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Condensed Consolidated Balance Sheets
Fixed-maturity Securities, Held-to-maturity, Fair Value	$ 6,611,858	$ 8,753,159
Fixed-maturity Securities, Available-for-sale, Amortized Cost	165,534,467	155,808,478
Equity Securities, Available-for-sale, Cost	$ 26,776,016	$ 37,470,669
Stockholders' Equity
Preferred Stock, Par Value	$ 0.01	$ 0.01
Preferred Stock, Authorized Shares	2,500,000	2,500,000
Common Stock, Par Value	$ 0.01	$ 0.01
Common Stock, Authorized Shares	20,000,000	20,000,000
Common Stock, Issued Shares	12,117,081	11,955,660
Common Stock, Outstanding Shares	10,645,675	10,484,254
Treasury Stock, Shares	1,471,406	1,471,406

XML

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues
Net premiums earned	$ 29,360,976	$ 36,803,251	$ 83,936,424	$ 106,828,895
Ceding commission revenue	4,886,094	(7,276)	14,283,077	37,400
Net investment income	1,418,521	1,676,596	3,411,946	5,137,867
Net (losses) gains on investments	(397,658)	204,534	(9,313,436)	5,480,202
Other income	269,702	280,869	750,169	577,261
Total revenues	35,537,635	38,957,974	93,068,180	118,061,625
Expenses
Loss and loss adjustment expenses	22,027,516	35,740,235	63,624,755	79,060,117
Commission expense	8,702,190	8,201,935	25,534,307	24,711,115
Other underwriting expenses	7,276,101	6,562,743	20,717,047	19,722,705
Other operating expenses	809,597	855,499	2,357,367	3,141,077
Depreciation and amortization	824,975	820,091	2,472,348	2,480,085
Interest expense	456,545	456,545	1,369,635	1,369,635
Total expenses	40,096,924	52,637,048	116,075,459	130,484,734
Loss from operations before taxes	(4,559,289)	(13,679,074)	(23,007,279)	(12,423,109)
Income tax benefit	(561,668)	(3,060,809)	(4,432,507)	(2,817,108)
Net loss	(3,997,621)	(10,618,265)	(18,574,772)	(9,606,001)
Gross change in unrealized losses on available-for-sale-securities	(5,047,679)	(829,298)	(22,556,319)	(3,578,413)
Reclassification adjustment for losses (gains) included in net loss	4,247	(335,668)	55,927	(1,071,439)
Net change in unrealized losses	(5,043,432)	(1,164,966)	(22,500,392)	(4,649,852)
Income tax benefit related to items of other comprehensive loss	1,059,120	244,643	4,725,083	976,470
Other comprehensive loss, net of tax	(3,984,312)	(920,323)	(17,775,309)	(3,673,382)
Comprehensive loss	$ (7,981,933)	$ (11,538,588)	$ (36,350,081)	$ (13,279,383)
Loss per common share:
Basic	$ (0.38)	$ (1.01)	$ (1.75)	$ (0.90)
Diluted	$ (0.38)	$ (1.01)	$ (1.75)	$ (0.90)
Weighted average common shares outstanding
Basic	10,645,675	10,523,515	10,640,290	10,622,988
Diluted	10,645,675	10,523,515	10,640,290	10,622,988
Dividends declared and paid per common share	$ 0.04	$ 0.04	$ 0.12	$ 0.12

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Total	Capital in Excess of Par	Accumulated other comprehensive loss	Retained Earnings (Accumulated Deficit)	Preferred Stock	Common Stock	Treasury Stock
Balance, shares at Dec. 31, 2020						11,871,307	1,254,492
Balance, amount at Dec. 31, 2020	$ 92,800,402	$ 70,769,165	$ 9,880,062	$ 15,928,345	$ 0	$ 118,713	$ (3,895,883)
Stock-based compensation	1,447,725	1,447,725	0	0	0	$ 0	0
Vesting of restricted stock awards, shares						104,030
Vesting of restricted stock awards, amount	0	(1,040)	0	0	0	$ 1,040	0
Shares deducted from restricted stock awards for payment of withholding taxes, shares						(27,718)
Shares deducted from restricted stock awards for payment of withholding taxes, amount	(191,092)	(190,815)	0	0	0	$ (277)	$ 0
Acquisition of treasury stock, shares							216,914
Acquisition of treasury stock, amount	(1,671,598)	0	0	0	0	0	$ (1,671,598)
Dividends	(1,274,797)	0	0	(1,274,797)	0	0	0
Net loss	(9,606,001)	0	0	(9,606,001)	0	0	0
Change in unrealized losses on available-for-sale securities, net of tax	(3,673,382)	0	(3,673,382)	0	0	$ 0	$ 0
Balance, shares at Sep. 30, 2021						11,947,619	1,471,406
Balance, amount at Sep. 30, 2021	77,831,257	72,025,035	6,206,680	5,047,547	0	$ 119,476	$ (5,567,481)
Balance, shares at Jun. 30, 2021						11,944,220	1,383,077
Balance, amount at Jun. 30, 2021	89,964,646	71,567,797	7,127,003	16,086,337	0	$ 119,442	$ (4,935,933)
Stock-based compensation	466,658	466,658	0	0	0	$ 0	0
Vesting of restricted stock awards, shares						4,907
Vesting of restricted stock awards, amount	0	(49)	0	0	0	$ 49	0
Shares deducted from restricted stock awards for payment of withholding taxes, shares						(1,508)
Shares deducted from restricted stock awards for payment of withholding taxes, amount	(9,386)	(9,371)	0	0	0	$ (15)	$ 0
Acquisition of treasury stock, shares							88,329
Acquisition of treasury stock, amount	(631,548)	0	0	0	0	0	$ (631,548)
Dividends	(420,525)	0	0	(420,525)	0	0	0
Net loss	(10,618,265)	0	0	(10,618,265)	0	0	0
Change in unrealized losses on available-for-sale securities, net of tax	(920,323)	0	(920,323)	0	0	0	0
Change in unrealized losses on available-		0	0	0	0	$ 0	$ 0
Balance, shares at Sep. 30, 2021						11,947,619	1,471,406
Balance, amount at Sep. 30, 2021	77,831,257	72,025,035	6,206,680	5,047,547	0	$ 119,476	$ (5,567,481)
Balance, shares at Dec. 31, 2021						11,955,660	1,471,406
Balance, amount at Dec. 31, 2021	75,672,194	72,467,483	1,796,739	6,855,896	0	$ 119,557	$ (5,567,481)
Stock-based compensation	1,204,865	1,204,865	0	0	0	$ 0	0
Vesting of restricted stock awards, shares						234,219
Vesting of restricted stock awards, amount	0	(2,342)	0	0	0	$ 2,342	0
Shares deducted from restricted stock awards for payment of withholding taxes, shares						(72,798)
Shares deducted from restricted stock awards for payment of withholding taxes, amount	(379,799)	(379,071)	0	0	0	$ (728)	0
Dividends	(1,277,066)	0	0	(1,277,066)	0	0	0
Net loss	(18,574,772)	0	0	(18,574,772)	0	0	0
Change in unrealized losses on available-for-sale securities, net of tax	(17,775,309)	0	(17,775,309)	0	0	$ 0	$ 0
Balance, shares at Sep. 30, 2022						12,117,081	1,471,406
Balance, amount at Sep. 30, 2022	38,870,113	73,290,935	(15,978,570)	(12,995,942)	0	$ 121,171	$ (5,567,481)
Balance, shares at Jun. 30, 2022						12,117,081	1,471,406
Balance, amount at Jun. 30, 2022	47,089,424	73,102,513	(11,994,258)	(8,572,521)	0	$ 121,171	$ (5,567,481)
Stock-based compensation	188,422	188,422	0	0	0	0	0
Dividends	(425,800)	0	0	(425,800)	0	0	0
Net loss	(3,997,621)	0	0	(3,997,621)	0	0	0
Change in unrealized losses on available-for-sale securities, net of tax	(3,984,312)	0	(3,984,312)	0	0	0	0
Vesting of restricted stock awards	0	0	0	0	0	0	0
Shares deducted from restricted stock awards for payment of withholding taxes	0	0	0	0	0	$ 0	$ 0
Balance, shares at Sep. 30, 2022						12,117,081	1,471,406
Balance, amount at Sep. 30, 2022	$ 38,870,113	$ 73,290,935	$ (15,978,570)	$ (12,995,942)	$ 0	$ 121,171	$ (5,567,481)

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net loss	$ (18,574,772)	$ (9,606,001)
(used in) provided by operating activities:
Net gains on investments	(599,773)	(2,793,522)
Net unrealized losses (gains) on equity investments	7,549,640	(592,397)
Net unrealized losses (gains) on other investments	2,363,568	(2,094,283)
Depreciation and amortization	2,472,348	2,480,085
Bad debt expense	43,365	150,024
Amortization of bond premium, net	922,257	165,413
Amortization of discount and issuance costs on debt	132,135	132,135
Stock-based compensation	1,204,865	1,447,725
Deferred income tax benefit	(3,939,612)	(2,642,595)
Decrease (increase) in operating assets:
Premiums receivable, net	(616,493)	360,296
Reinsurance receivables, net	(19,073,499)	22,498,715
Deferred policy acquisition costs	(966,697)	(1,119,401)
Other assets	95,613	(406,756)
Increase (decrease) in operating liabilities:
Loss and loss adjustment expense reserves	11,980,153	18,242,890
Unearned premiums	6,029,773	2,644,506
Advance premiums	3,933,809	2,665,160
Reinsurance balances payable	(1,486,321)	(2,713,643)
Deferred ceding commission revenue	571,862	(5,673)
Accounts payable, accrued expenses and other liabilities	36,341	267,109
Net cash flows (used in) provided by operating activities	(7,921,438)	29,079,787
Cash flows from investing activities:
Purchase - fixed-maturity securities held-to-maturity	(498,711)	(3,175,686)
Purchase - fixed-maturity securities available-for-sale	(24,874,443)	(32,753,786)
Purchase - equity securities	(637,897)	(17,834,076)
Purchase - other investments	0	(2,000,000)
Redemption - fixed-maturity securities held-to-maturity	1,000,000	1,312,500
Sale and maturity - fixed-maturity securities available-for-sale	14,213,435	33,335,036
Sale - equity securities	11,962,513	14,507,384
Sale - real estate partnership	0	233,798
Redemption - other investments	2,576,272	0
Acquisition of property and equipment	(3,342,258)	(2,923,124)
Net cash flows provided by (used in) investing activities	398,911	(9,297,954)
Cash flows from financing activities:
Withholding taxes paid on vested retricted stock awards	(379,799)	(191,092)
Purchase of treasury stock	0	(1,671,598)
Dividends paid	(1,277,066)	(1,274,797)
Net cash flows used in financing activities	(1,656,865)	(3,137,487)
(Decrease) increase in cash and cash equivalents	(9,179,392)	16,644,346
Cash and cash equivalents, beginning of period	24,290,598	19,463,742
Cash and cash equivalents, end of period	15,111,206	36,108,088
Supplemental disclosures of cash flow information:
Cash paid for income taxes	0	0
Cash paid for interest	$ 825,000	$ 825,000

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Nature of Business and Basis of Presentation

9 Months Ended

Sep. 30, 2022

Nature of Business and Basis of Presentation

Nature of Business and Basis of Presentation

Note 1 - Nature of Business and Basis of Presentation

Kingstone Companies, Inc. (referred to herein as "Kingstone"), through its wholly-owned subsidiary, Kingstone Insurance Company (“KICO”), underwrites property and casualty insurance exclusively through retail and wholesale 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,over 80% of KICO’s direct written premiums for both the three months and nine months ended September 30, 2022, came from the New York policies.  Kingstone, through its wholly-owned 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 and its wholly-owned subsidiaries are collectively referred to as the “Company”. 

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, 2021 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 4, 2022. 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 presentation of the Company’s financial position and results of operations. The results of operations for the nine months ended September 30, 2022 may not be indicative of the results that may be expected for the year ending December 31, 2022.

Certain prior year balances were reclassified to conform with the current year presentation.  The reclassification had no effect on the Company’s previously reported financial condition, results of operations or cash flows. 

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Accounting Policies

9 Months Ended

Sep. 30, 2022

Accounting Policies

Accounting Policies

Note 2 – Accounting Policies

Basis of Presentation; Going Concern

See Note 2 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for further information.

Kingstone’s $30,000,000 5.5% Senior Unsecured Notes (the “Notes”) mature on December 30, 2022. The Company’s continuation as a going concern is dependent on its ability to obtain financing to satisfy the Notes at maturity unless agreements are entered into with the holders of a substantial principal amount of the Notes to extend the maturity date of the Notes or exchange the Notes for new debt and/or equity securities of Kingstone (see “Management’s Plan Related to Going Concern” below).  Management believes that KICO’s insurance operations would be able to continue in the event that the required financing by Kingstone is not obtained and agreements with the holders of the Notes are not entered into. 

In accordance with Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. This evaluation requires management to perform two steps. First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern. Second, if management concludes that substantial doubt is raised, management is required to consider whether it has plans in place to alleviate that doubt. Disclosures in the notes to the consolidated financial statements are required if management concludes that substantial doubt exists and if its plans alleviate the substantial doubt that was raised.

The accompanying condensed consolidated financial statements have been prepared in accordance with GAAP assuming that the Company will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

Management’s Plan Related to Going Concern

In order to continue as a going concern, Kingstone will need to refinance the Notes that become  due on December 30, 2022, either through (a) new debt or equity financing at Kingstone that will provide the funds necessary, together with available cash, to pay the Notes in full at maturity, (b) Kingstone entering into arrangements with holders of the Notes to exchange their Notes for new debt and/or equity securities of Kingstone  or (c) a combination of (a) and (b). No assurance can be given that Kingstone will be successful in this regard.  Management has been exploring and continues to explore a number of financing and other options and has engaged investment bankers to assist it in pursuing such options.  Subject to regulatory requirements, Kingstone can also receive dividends and/or loans from its insurance subsidiary, KICO, that could be utilized to repay a portion of the Notes.  As of September 30, 2022, the maximum distribution that KICO could pay to Kingstone without prior regulatory approval was approximately $3.0 million. Subsequent to September 30, 2022, Kingstone received a $3.0 million distribution from KICO. In addition, subsequent to September 30, 2022, Kingstone received a loan from KICO of $6.45 million without the need for prior regulatory approval and also received a Federal income tax refund of approximately $1.5 million. With the foregoing proceeds, together with liquid investments and available cash, Kingstone currently has total funds of approximately $12.0 million.   

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described above, which the Company believes is probable, but there can be no assurance in this regard.   

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 LAE, which 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 ongoing basis, management reevaluates its assumptions and the methods for calculating these estimates. Actual results may differ significantly from the estimates used in preparing the condensed consolidated financial statements.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Kingstone and its wholly owned subsidiaries: (1) 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, and (2) Cosi. All significant inter-company account balances and transactions have been eliminated in consolidation.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (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, 2023. The Company is currently evaluating the effect the updated guidance will have on its condensed consolidated financial statements.

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.

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Investments

9 Months Ended

Sep. 30, 2022

Investments

Investments

Note 3 - Investments 

Fixed-Maturity Securities

The amortized cost, estimated fair value, and unrealized gains and losses on investments in fixed-maturity securities classified as available-for-sale as of September 30, 2022 and December 31, 2021 are summarized as follows:

	September 30, 2022
	Cost or		Gross		Gross Unrealized Losses						Estimated		Net
	Amortized		Unrealized		Less than 12			More than 12			Fair		Unrealized
Category	Cost		Gains		Months			Months			Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	9,946,032	$	930	$	(123	)	$	-		$	9,946,839	$	807
Political subdivisions of States, Territories and Possessions		17,117,473		-		(3,250,196	)		(590,936	)		13,276,341		(3,841,132	)
Corporate and other bonds
Industrial and miscellaneous		84,163,055		-		(9,154,182	)		(269,694	)		74,739,179		(9,423,876	)
Residential mortgage and other asset backed securities (1)		54,307,907		68,159		(4,333,707	)		(2,699,011	)		47,343,348		(6,964,559	)
Total fixed-maturity securities	$	165,534,467	$	69,089	$	(16,738,208	)	$	(3,559,641	)	$	145,305,707	$	(20,228,760	)

(1) KICO has 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, 2022, the estimated fair value of the eligible investments was approximately $12,393,000. KICO will retain all rights regarding all securities if pledged as collateral. As of September 30, 2022 there was no outstanding balance on the FHLBNY credit line.

	December 31, 2021
	Cost or		Gross		Gross Unrealized Losses								Net
	Amortized		Unrealized		Less than 12			More than 12			Estimated Fair		Unrealized Gains/
Category	Cost		Gains		Months			Months			Value		(Losses)
Fixed-Maturity Securities:
Political subdivisions of States, Territories and Possessions	$	17,236,750	$	246,748	$	(197,984	)	$	-		$	17,285,514	$	48,764
Corporate and other bonds
Industrial and miscellaneous		80,534,769		2,603,411		(126,926	)		-			83,011,254		2,476,485
Residential mortgage and other asset backed securities		58,036,959		355,985		(489,258	)		(120,344	)		57,783,342		(253,617	)
Total fixed-maturity securities	$	155,808,478	$	3,206,144	$	(814,168	)	$	(120,344	)	$	158,080,110	$	2,271,632

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, 2022 and December 31, 2021 is shown below:

	September 30, 2022				December 31, 2021
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	14,852,441	$	14,824,136	$	1,153,099	$	1,156,636
One to five years		44,959,185		42,305,309		43,007,110		44,914,759
Five to ten years		30,271,976		24,680,308		26,808,853		27,332,581
More than 10 years		21,142,958		16,152,606		26,802,457		26,892,792
Residential mortgage and other asset backed securities		54,307,907		47,343,348		58,036,959		57,783,342
Total	$	165,534,467	$	145,305,707	$	155,808,478	$	158,080,110

The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.

Equity Securities

The cost and estimated fair value of, and gross unrealized gains and losses on, investments in equity securities as of September 30, 2022 and December 31, 2021 are as follows:

	September 30, 2022
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	16,047,207	$	-	$	(3,488,481	)	$	12,558,726
Common stocks, mutual funds, and exchange traded funds		10,728,809		103,902		(1,922,991	)		8,909,720
Total	$	26,776,016	$	103,902	$	(5,411,472	)	$	21,468,446

	December 31, 2021
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	22,019,509	$	1,007,009	$	(184,617	)	$	22,841,901
Common stocks, mutual funds, and exchange traded funds		15,451,160		1,573,653		(179,712	)		16,845,101
Total	$	37,470,669	$	2,580,662	$	(364,329	)	$	39,687,002

Other Investments

The cost and estimated fair value of, and gross gains on, the Company’s other investments as of September 30, 2022 and December 31, 2021 are as follows:

	September 30, 2022						December 31, 2021
			Gross		Estimated				Gross		Estimated
Category	Cost		Gains		Fair Value		Cost		Gains		Fair Value
Other Investments:
Hedge fund	$	1,987,040	$	589,232	$	2,576,272	$	3,999,381	$	3,562,034	$	7,561,415

Held-to-Maturity Securities

The cost or amortized cost and estimated fair value of, and unrealized gross gains and losses on, investments in held-to-maturity fixed-maturity securities as of September 30, 2022 and December 31, 2021 are summarized as follows:

	September 30, 2022
	Cost or		Gross		Gross Unrealized Losses					Estimated		Net
	Amortized		Unrealized		Less than 12			More than 12		Fair		Unrealized Gains/
Category	Cost		Gains		Months			Months		Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,485	$	73,468	$	(36,802	)	$	-	$	1,265,151	$	36,666
Political subdivisions of States, Territories and Possessions		498,508		-		(1,498	)		-		497,010		(1,498	)
Exchange traded debt		304,111		-		(43,361	)		-		260,750		(43,361	)
Corporate and other bonds
Industrial and miscellaneous		5,736,079		35,503		(1,182,635	)		-		4,588,947		(1,147,132	)
Total	$	7,767,183	$	108,971	$	(1,264,296	)	$	-	$	6,611,858	$	(1,155,325	)

	December 31, 2021
	Cost or		Gross		Gross Unrealized Losses					Estimated		Net
	Amortized		Unrealized		Less than 12			More than 12		Fair		Unrealized Gains/
Category	Cost		Gains		Months			Months		Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	729,642	$	209,633	$	-		$	-	$	939,275	$	209,633
Political subdivisions of States, Territories and Possessions		998,239		22,856		-			-		1,021,095		22,856
Exchange traded debt		304,111		85		(13,921	)				290,275		(13,836	)
Corporate and other bonds
Industrial and miscellaneous		6,234,342		280,951		(12,779	)		-		6,502,514		268,172
Total	$	8,266,334	$	513,525	$	(26,700	)	$	-	$	8,753,159	$	486,825

Held-to-maturity U.S. Treasury securities are held in trust pursuant to various states’ minimum funds requirements. 

A summary of the amortized cost and estimated fair value of the Company’s investments in held-to-maturity securities by contractual maturity as of September 30, 2022 and December 31, 2021 is shown below:

	September 30, 2022				December 31, 2021
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	708,325	$	742,533	$	994,712	$	1,008,180
One to five years		1,120,315		1,082,015		1,205,829		1,290,465
Five to ten years		1,399,725		1,177,545		1,513,942		1,648,808
More than 10 years		4,538,818		3,609,765		4,551,851		4,805,706
Total	$	7,767,183	$	6,611,858	$	8,266,334	$	8,753,159

The actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalties.

Investment Income

Major categories of the Company’s net investment income are summarized as follows:

	Three months ended				Nine months ended
	September 30				September 30
	2022		2021		2022		2021
Income:
Fixed-maturity securities	$	1,243,177	$	1,288,277	$	2,841,307	$	4,238,746
Equity securities		247,275		436,833		872,005		1,145,244
Cash and cash equivalents		26,630		9,636		29,796		11,194
Other investments		-		42,908		-		-
Total		1,517,082		1,777,654		3,743,108		5,395,184
Expenses:
Investment expenses		89,811		101,058		322,412		257,317
Net investment income	$	1,427,271	$	1,676,596	$	3,420,696	$	5,137,867

Proceeds from the redemption of fixed-maturity securities held-to-maturity were $1,000,000 and $1,312,500 for the nine months ended September 30, 2022 and 2021, respectively.

Proceeds from the sale or maturity of fixed-maturity securities available-for-sale were $14,213,435 and $33,335,036 for the nine months ended September 30, 2022 and 2021, respectively.

Proceeds from the sale of equity securities were $11,962,513 and $14,507,384 for the nine months ended September 30, 2022 and 2021, respectively.

The Company’s net (losses) gains on investments are summarized as follows:

	Three months ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Realized Gains (Losses)
Fixed-maturity securities:
Gross realized gains	$	364		$	343,773		$	102,774		$	1,121,068
Gross realized losses		(4,620	)		(8,103	)		(158,701	)		(49,601	)
		(4,256	)		335,670			(55,927	)		1,071,467
Equity securities:
Gross realized gains		907,089			639,626			1,384,432			2,015,574
Gross realized losses		(92,159	)		(26,031	)		(728,732	)		(293,519	)
		814,930			613,595			655,700			1,722,055
Other Investments:
Gross realized gains		589,233			83,798			589,233			83,798
Gross realized losses		-			-			-			-
		589,233			83,798			589,233			83,798
Net realized gains		1,399,907			1,033,063			1,189,006			2,877,320
Unrealized (Losses) Gains
Equity Securities:
Gross gains		-			(1,331,675	)		-			592,397
Gross losses		(1,132,596	)					(7,549,640	)		-
		(1,132,596	)		(1,331,675	)		(7,549,640	)		592,397
Other Investments:
Gross gains		-			503,146			-			2,010,485
Gross losses		(664,969	)		-			(2,952,802	)		-
		(664,969	)		503,146			(2,952,802	)		2,010,485
Net unrealized (losses) gains		(1,797,565	)		(828,529	)		(10,502,442	)		2,602,882
Net (losses) gains on investments	$	(397,658	)	$	204,534		$	(9,313,436	)	$	5,480,202

Impairment Review

Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. The Company regularly reviews its fixed-maturity securities to evaluate the necessity of recording impairment losses for other-than-temporary declines in the estimated fair value of investments. In evaluating potential impairment, GAAP specifies (i) if the Company does not have the intent to sell a debt security prior to recovery and (ii) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporarily impaired unless there is a credit loss.  When the Company does not intend to sell the security and it is more likely than not that the Company will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other-than-temporary impairment (“OTTI”) of a debt security in earnings and the remaining portion in comprehensive income (loss).  The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security based on cash flow projections.  For held-to-maturity fixed-maturity securities, the amount of OTTI recorded in comprehensive income (loss) for the noncredit portion of a previous OTTI is amortized prospectively over the remaining life of the security based on timing of future estimated cash flows of the security.

OTTI losses are recorded in the consolidated statements of operations and comprehensive income (loss) as net realized losses on investments and result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process and different judgments and assumptions could affect the timing of loss realization. At September 30, 2022 and December 31, 2021, there were 155 and 48 fixed-maturity securities, respectively, that accounted for the gross unrealized losses.  The Company determined that none of the unrealized losses were deemed to be OTTI for its portfolio of investments as of September 30, 2022 and December 31, 2021.  Significant factors influencing the Company’s determination that unrealized losses were temporary included credit quality considerations, the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and interest rate environment factors, and management’s intent and ability to hold the investment for a period of time sufficient to allow for an anticipated recovery of estimated fair value to the Company’s cost basis.

The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at September 30, 2022 as follows: 

	September 30, 2022
	Less than 12 months							12 months or more							Total
	Estimated					No. of		Estimated					No. of		Estimated
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	5,975,160	$	(123	)		1	$	-	$	-			-	$	5,975,160	$	(123	)
Political subdivisions of States, Territories and Possessions		11,461,126		(3,250,196	)		12		1,815,216		(590,936	)		2		13,276,342		(3,841,132	)
Corporate and other bonds industrial and miscellaneous		73,921,209		(9,154,182	)		93		817,970		(269,694	)		1		74,739,179		(9,423,876	)
Residential mortgage and other asset backed securities		27,985,270		(4,333,707	)		31		18,593,599		(2,699,011	)		15		46,578,869		(7,032,718	)
Total fixed-maturity securities	$	119,342,765	$	(16,738,208	)		137	$	21,226,785	$	(3,559,641	)		18	$	140,569,550	$	(20,297,849	)

The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at December 31, 2021 as follows:

	December 31, 2021
	Less than 12 months							12 months or more							Total
	Estimated					No. of		Estimated					No. of		Estimated
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	-	$	-			-	$	-	$	-			-	$	-	$	-
Political subdivisions of States, Territories and Possessions		6,768,123		(197,984	)		5		-		-			-		6,768,123		(197,984	)
Corporate and other bonds industrial and miscellaneous		17,593,707		(126,926	)		15		-		-			-		17,593,707		(126,926	)
Residential mortgage and other asset backed securities		45,399,451		(489,258	)		26		2,923,182		(120,344	)		2		48,322,633		(609,602	)
Total fixed-maturity securities	$	69,761,281	$	(814,168	)		46	$	2,923,182	$	(120,344	)		2	$	72,684,463	$	(934,512	)

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Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair Value Measurements

Fair Value Measurements

Note 4 - Fair Value Measurements

The following table presents information about the Company’s investments that are measured at fair value on a recurring basis at September 30, 2022 and December 31, 2021 indicating the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

	September 30, 2022
	Level 1		Level 2		Level 3		Total
Fixed-maturity securities available-for-sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	9,946,839	$	-	$	-	$	9,946,839
Political subdivisions of States, Territories and Possessions		-		13,276,341		-		13,276,341
Corporate and other bonds industrial and miscellaneous		74,241,809		497,370		-		74,739,179
Residential mortgage and other asset backed securities		-		47,343,348		-		47,343,348
Total fixed maturities		84,188,648		61,117,059		-		145,305,707
Equity securities		21,468,446		-		-		21,468,446
Total investments	$	105,657,094	$	61,117,059	$	-	$	166,774,153

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Fixed-maturity securities available-for-sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	-	$	-	$	-	$	-
Political subdivisions of States, Territories and Possessions		-		17,285,514		-		17,285,514
Corporate and other bonds industrial and miscellaneous		82,500,779		510,475		-		83,011,254
Residential mortgage and other asset backed securities		-		57,783,342		-		57,783,342
Total fixed maturities		82,500,779		75,579,331		-		158,080,110
Equity securities		39,687,002		-		-		39,687,002
Total investments	$	122,187,781	$	75,579,331	$	-	$	197,767,112

The following table sets forth the Company’s investment in a hedge fund measured at Net Asset Value (“NAV”) per share as of September 30, 2022 and December 31, 2021. The Company measures this investment at fair value on a recurring basis.  Fair value using NAV per share is as follows as of the dates indicated:

Category	September 30, 2022		December 31, 2021
Other Investments
Hedge fund	$	2,576,272	$	7,561,415

The hedge fund investment is generally redeemable with at least 45 days prior written notice.  The hedge fund investment is accounted for as a limited partnership by the Company. Income is earned based upon the Company’s allocated share of the partnership's changes in unrealized gains and losses to its partners. Such amounts have been recorded in the condensed consolidated statements of operations and comprehensive income (loss) within net (losses) gains on investments. As of September 30, 2022 the Company redeemed 50% of its investment in the hedge fund and recognized a realized gain of $589,233, which is recorded within net gains (losses) on investments in the condensed consolidated statements of operations and comprehensive income (loss).  

The estimated fair value and the level of the fair value hierarchy of the Company’s long-term debt as of September 30, 2022 and December 31, 2021 not measured at fair value is as follows:

	September 30, 2022
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2022	$	-	$	29,601,120	$	-	$	29,601,120

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2022	$	-	$	28,436,019	$	-	$	28,436,019

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Fair Value of Financial Instruments and Real Estate

9 Months Ended

Sep. 30, 2022

Fair Value of Financial Instruments and Real Estate

Fair Value of Financial Instruments and Real Estate

Note 5 - Fair Value of Financial Instruments and Real Estate

The estimated fair values of the Company’s financial instruments and real estate, including their fair value level as of September 30, 2022 and December 31, 2021 are as follows:

	September 30, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
Fixed-maturity securities-held-to maturity, Level 1	$	7,767,183	$	6,611,858	$	8,266,334	$	8,753,159
Cash and cash equivalents, Level 1	$	15,111,206	$	15,111,206	$	24,290,598	$	24,290,598
Premiums receivable, net, Level 3	$	12,891,464	$	12,891,464	$	12,318,336	$	12,318,336
Reinsurance receivables, net, Level 3	$	59,365,937	$	59,365,937	$	40,292,438	$	40,292,438
Real estate, net of accumulated depreciation, Level 3	$	2,089,156	$	3,025,000	$	2,144,464	$	3,025,000
Reinsurance balances payable, Level 3	$	11,475,247	$	11,475,247	$	12,961,568	$	12,961,568

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Property and Casualty Insurance Activity

9 Months Ended

Sep. 30, 2022

Property and Casualty Insurance Activity

Property and Casualty Insurance Activity

Note 6 – Property and Casualty Insurance Activity

Premiums Earned

Premiums written, ceded and earned are as follows:

	Direct			Assumed		Ceded			Net
Nine months ended September 30, 2022
Premiums written	$	147,353,911		$	-	$	(58,743,773	)	$	88,610,138
Change in unearned premiums		(6,029,774	)		-		1,356,060			(4,673,714	)
Premiums earned	$	141,324,137		$	-	$	(57,387,713	)	$	83,936,424
Nine months ended September 30, 2021
Premiums written	$	131,609,930		$	-	$	(21,854,398	)	$	109,755,532
Change in unearned premiums		(2,911,439	)		-		(15,198	)		(2,926,637	)
Premiums earned	$	128,698,491		$	-	$	(21,869,596	)	$	106,828,895
Three months ended September 30, 2022
Premiums written	$	54,591,551		$	-	$	(20,925,381	)	$	33,666,170
Change in unearned premiums		(5,636,421	)		-		1,331,227			(4,305,194	)
Premiums earned	$	48,955,130		$	-	$	(19,594,154	)	$	29,360,976
Three months ended September 30, 2021
Premiums written	$	48,865,169		$	-	$	(7,223,526	)	$	41,641,643
Change in unearned premiums		(4,848,145	)		-		9,753			(4,838,392	)
Premiums earned	$	44,017,024		$	-	$	(7,213,773	)	$	36,803,251

Premium receipts in advance of the policy effective date are recorded as advance premiums.  The balance of advance premiums as of September 30, 2022 and December 31, 2021 was $6,627,275 and $2,693,466, respectively.

Loss and Loss Adjustment Expense Reserves

The following table provides a reconciliation of the beginning and ending balances for unpaid losses and loss adjustment expense (“LAE”) reserves:

	Nine months ended
	September 30,
	2022			2021
Balance at beginning of period	$	94,948,745		$	82,801,228
Less reinsurance recoverables		(10,637,679	)		(20,154,251	)
Net balance, beginning of period		84,311,066			62,646,977
Incurred related to:
Current year		62,910,967			79,070,646
Prior years		713,788			(10,529	)
Total incurred		63,624,755			79,060,117
Paid related to:
Current year		35,774,958			35,408,412
Prior years		26,938,462			17,586,958
Total paid		62,713,420			52,995,370
Net balance at end of period		85,222,401			88,711,724
Add reinsurance recoverables		21,706,497			12,332,394
Balance at end of period	$	106,928,898		$	101,044,118

Incurred losses and LAE are net of reinsurance recoveries under reinsurance contracts of $27,230,814 and $1,220,970 for the nine months ended September 30, 2022 and 2021, respectively.

Prior year incurred loss and LAE development is based upon estimates by line of business and accident year. Prior year loss and LAE development incurred during the nine months ended September 30, 2022 and 2021 was $713,788 unfavorable and $10,529 favorable, respectively. Management, on a quarterly basis, performs a review of open liability claims to assess carried case and incurred but not reported (“IBNR”) reserve levels, giving consideration to both Company and industry trends.

Loss and LAE reserves

The reserving process for loss and LAE reserves provides for the Company’s best estimate at a particular point in time of the ultimate unpaid cost of all losses and LAE incurred, including settlement and administration of losses, and is based on facts and circumstances then known including losses that have occurred but that have not yet been reported. The process relies on standard actuarial reserving methodologies, judgments relative to estimates of ultimate claim severity and frequency, the length of time before losses will develop to their ultimate level (‘tail’ factors), and the likelihood of changes in the law or other external factors that are beyond the Company’s control. Several actuarial reserving methodologies are used to estimate required loss reserves. The process produces carried reserves set by management based upon the actuaries’ best estimate and is the cumulative combination of the best estimates made by line of business, accident year, and loss and LAE. The amount of loss and LAE reserves for individual reported claims (the “case reserve”) is determined by the claims department and changes over time as new information is gathered.  Such information is critical to the review of appropriate IBNR reserves and includes a review of coverage applicability, comparative liability on the part of the insured, injury severity, property damage, replacement cost estimates, and any other information considered pertinent to estimating the exposure presented by the claim. The amounts of loss and LAE reserves for unreported claims and development on known claims (IBNR reserves) are determined using historical information aggregated by line of insurance as adjusted to current conditions. Since this process produces loss reserves set by management based upon the actuaries’ best estimate, there is no explicit or implicit provision for uncertainty in the carried loss reserves.

Due to the inherent uncertainty associated with the reserving process, the ultimate liability may differ, perhaps substantially, from the original estimate. Such estimates are regularly reviewed and updated and any resulting adjustments are included in the current period’s results. Reserves are closely monitored and are recomputed periodically using the most recent information on reported claims and a variety of statistical techniques. On at least a quarterly basis, the Company reviews by line of business existing reserves, new claims, changes to existing case reserves, and paid losses with respect to the current and prior periods. Several methods are used, varying by line of business and accident year, in order to select the estimated period-end loss reserves.  These methods include the following:

Paid Loss Development – historical patterns of paid loss development are used to project future paid loss emergence in order to estimate required reserves.

Incurred Loss Development – historical patterns of incurred loss development, reflecting both paid losses and changes in case reserves, are used to project future incurred loss emergence in order to estimate required reserves.

Paid Bornhuetter-Ferguson (“BF”) – an estimated loss ratio for a particular accident year is determined, and is weighted against the portion of the accident year claims that have been paid, based on historical paid loss development patterns.  The estimate of required reserves assumes that the remaining unpaid portion of a particular accident year will pay out at a rate consistent with the estimated loss ratio for that year.  This method can be useful for situations where an unusually high or low amount of paid losses exists at the early stages of the claims development process.

Incurred Bornhuetter-Ferguson (“BF”) - an estimated loss ratio for a particular accident year is determined, and is weighted against the portion of the accident year claims that have been reported, based on historical incurred loss development patterns.  The estimate of required reserves assumes that the remaining unreported portion of a particular accident year will pay out at a rate consistent with the estimated loss ratio for that year.  This method can be useful for situations where an unusually high or low amount of reported losses exists at the early stages of the claims development process.

Incremental Claim-Based Methods – historical patterns of incremental incurred losses and paid LAE during various stages of development are reviewed and assumptions are made regarding average loss and LAE development applied to remaining claims inventory.  Such methods more properly reflect changes in the speed of claims closure and the relative adequacy of case reserve levels at various stages of development.  These methods may provide a more accurate estimate of IBNR for lines of business with relatively few remaining open claims but for which significant recent settlement activity has occurred.

Frequency / Severity Based Methods – historical measurements of claim frequency and average paid claim size (severity) are reviewed for more mature accident years where a majority of claims have been reported and/or closed.  These historical averages are trended forward to more recent periods in order to estimate ultimate losses for newer accident years that are not yet fully developed.  These methods are useful for lines of business with slow and/or volatile loss development patterns, such as liability lines where information pertaining to individual cases may not be completely known for many years.  The claim frequency and severity information for older periods can then be used as reasonable measures for developing a range of estimates for more recent immature periods.

Management’s best estimate of required reserves is generally based on an average of the methods above, with appropriate weighting of methods based on the line of business and accident year being projected. In some cases, additional methods or historical data from industry sources are employed to supplement the projections derived from the methods listed above.

Three key assumptions that materially affect the estimate of loss reserves are the loss ratio estimate for the current accident year used in the BF methods, the loss development factor selections used in the loss development methods, and the loss severity assumptions used in the frequency / severity method described above. The loss ratio estimates used in the BF methods are selected after reviewing historical accident year loss ratios adjusted for rate changes, trend, and mix of business.  The severity assumptions used in the frequency / severity method are determined by reviewing historical average claim severity for older more mature accident periods, trended forward to less mature accident periods.

COVID-19 has introduced additional uncertainty to recent claim trends. The Company reviews the carried reserves levels on a regular basis as additional information becomes available and makes adjustments in the periods in which such adjustments are determined to be necessary. The Company is not aware of any other claim trends that have emerged or that would cause future adverse development that have not already been contemplated in setting current carried reserves levels.

In New York State, lawsuits for negligence are subject to certain limitations and must be commenced within three years from the date of the accident or are otherwise barred. Accordingly, the Company’s exposure to unreported claims (“pure” IBNR) for accident dates of September 30, 2019 and prior is limited, although there remains the possibility of adverse development on reported claims (“case development” IBNR).  In certain rare circumstances states have retroactively revised a statute of limitations.  The Company is not aware of any such effort that would have a material impact on the Company’s results. 

The following is information about incurred and paid claims development as of September 30, 2022, net of reinsurance, as well as the cumulative reported claims by accident year and total IBNR reserves as of September 30, 2022 included in the net incurred loss and allocated expense amounts. The historical information regarding incurred and paid claims development for the years ended December 31, 2013 to December 31, 2021 is presented as supplementary unaudited information.

All Lines of Business
(in thousands, except reported claims data)
																					As of
	Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance																				September 30, 2022
	For the Years Ended December 31,																		Nine Months Ended September 30,				Cumulative Number of Reported Claims by Accident
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		IBNR		Year
	(Unaudited 2013 - 2021)																		(Unaudited)
2013	$	10,728	$	9,745	$	9,424	$	9,621	$	10,061	$	10,089	$	10,607	$	10,495	$	10,529	$	10,493	$	3		1,564
2014				14,193		14,260		14,218		14,564		15,023		16,381		16,428		16,434		16,496		34		2,138
2015						22,340		21,994		22,148		22,491		23,386		23,291		23,528		23,533		239		2,559
2016								26,062		24,941		24,789		27,887		27,966		27,417		27,411		101		2,881
2017										31,605		32,169		35,304		36,160		36,532		36,553		270		3,398
2018												54,455		56,351		58,441		59,404		60,535		446		4,229
2019														75,092		72,368		71,544		71,386		3,074		4,494
2020																63,083		62,833		62,043		3,504		5,861
2021																		96,425		97,038		9,236		5,779
2022																				58,735		13,837		3,236
																	Total		$	464,223

All Lines of Business
(in thousands)
	Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,																		Nine Months Ended September 30,
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
	(Unaudited 2013 - 2021)																		(Unaudited)
2013	$	3,405	$	5,303	$	6,633	$	7,591	$	8,407	$	9,056	$	9,717	$	10,016	$	10,392	$	10,471
2014				5,710		9,429		10,738		11,770		13,819		14,901		15,491		15,770		16,083
2015						12,295		16,181		18,266		19,984		21,067		22,104		22,318		22,462
2016								15,364		19,001		21,106		23,974		25,234		25,750		26,244
2017										16,704		24,820		28,693		31,393		32,529		32,928
2018												32,383		44,516		50,553		52,025		53,657
2019														40,933		54,897		58,055		59,933
2020																39,045		50,719		52,632
2021																		56,282		75,291
2022																				32,981
																	Total		$	382,681
Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented																			$	81,542
All outstanding liabilities before 2013, net of reinsurance																				264
Liabilities for loss and allocated loss adjustment expenses, net of reinsurance																			$	81,806

Reported claim counts are measured on an occurrence or per event basis.  A single claim occurrence could result in more than one loss type or claimant; however, the Company counts claims at the occurrence level as a single claim regardless of the number of claimants or claim features involved.

The reconciliation of the net incurred and paid loss development tables to the loss and LAE reserves in the consolidated balance sheet is as follows:

Reconciliation of the Disclosure of Incurred and Paid Loss Development
to the Liability for Loss and LAE Reserves
	As of
(in thousands)	September 30, 2022
Liabilities for allocated loss and loss adjustment expenses, net of reinsurance	$	81,806
Total reinsurance recoverable on unpaid losses		21,706
Unallocated loss adjustment expenses		3,416
Total gross liability for loss and LAE reserves	$	106,929

(Components may not sum to totals due to rounding)

Reinsurance

Effective December 31, 2021, the Company entered into a quota share reinsurance treaty for its personal lines business, which primarily consists of homeowners’ and dwelling fire policies, covering the period from December 31, 2021 through January 1, 2023 (“2021/2023 Treaty”).

The Company’s excess of loss and catastrophe reinsurance treaties expired on June 30, 2022 and the Company entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2022. Effective October 20, 2021, the Company entered into a stub catastrophe reinsurance treaty covering the period from October 20, 2021 through December 31, 2021. The treaty provided reinsurance coverage for catastrophe losses of $5,000,000 in excess of $5,000,000. Effective January 1, 2022, the Company entered into an underlying excess of loss reinsurance treaty covering the period from January 1, 2022 through January 1, 2023. The treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty. Material terms for reinsurance treaties in effect for the treaty years shown below are as follows:

	Treaty Period
			(2021/2023 Treaty)
	January 2,		July 1,			December 31,			July 1,		December 31,
	2023		2022			2021			2021		2020
	to		to			to			to		to
	June 30,		January 1,			June 30,			December 30,		June 30,
Line of Business	2023		2023			2022			2021		2021
Personal Lines:
Homeowners, dwelling fire and and canine legal liability
Quota share treaty:
Percent ceded (9)	None (8)			30	%		30	%	None (5)		None (5)
Risk retained on intial $1,000,000 of losses (5) (7) (8) (9)	$	1,000,000	$	700,000		$	700,000		$	1,000,000	$	1,000,000
Losses per occurrence subject to quota share reinsurance coverage	None (8)		$	1,000,000		$	1,000,000		None (5)		None (5)
Expiration date		(8)	January 1, 2023			January 1, 2023			NA (5)		NA (5)
Excess of loss coverage and facultative facility coverage (1) (7)	$	8,000,000	$	8,400,000		$	8,400,000		$	8,000,000	$	8,000,000
	in excess of		in excess of			in excess of			in excess of		in excess of
	$	1,000,000	$	600,000		$	600,000		$	1,000,000	$	1,000,000
Total reinsurance coverage per occurrence (5) (7) (8)	$	8,000,000	$	8,500,000		$	8,500,000		$	8,000,000	$	8,000,000
Losses per occurrence subject to reinsurance coverage (5) (8)	$	8,000,000	$	9,000,000		$	9,000,000		$	9,000,000	$	9,000,000
Expiration date (8)	June 30, 2023		June 30, 2023			June 30, 2022			June 30, 2022		June 30, 2021
Catastrophe Reinsurance:
Initial loss subject to personal lines quota share treaty		(8)		10,000,000			10,000,000		None (5)		None (5)
Risk retained per catastrophe occurrence (5) (8) (9) (10)	$	10,000,000	$	7,400,000		$	7,400,000		$	10,000,000	$	10,000,000
Catastrophe loss coverage in excess of quota share coverage (2) (5) (8)	$	335,000,000	$	335,000,000		$	490,000,000		$	490,000,000	$	475,000,000
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 (6)	NA		NA			NA			$	5,000,000	NA
									in excess of
									$	5,000,000
Reinstatement premium protection (3) (4)	Yes		Yes			Yes			Yes		Yes

(1)	For personal lines, includes the addition of an automatic facultative facility allowing KICO to obtain homeowners single risk coverage up to $9,000,000 in total insured value, which covers direct losses from $3,500,000 to $9,000,000 through June 30, 2023.
(2)	Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts. Duration of 168 consecutive hours for a catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone.
(3)	For the period July 1, 2020 through June 30, 2021, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000. For the period July 1, 2021 through June 30, 2022, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000.
(4)	For the period July 1, 2022 through June 30, 2023, reinstatement premium protection for $9,800,000 of catastrophe coverage in excess of $10,000,000.

(5)	The personal lines quota share (homeowners, dwelling fire and canine legal liability) expired on December 30, 2020; reinsurance coverage from December 31, 2020 through December 30, 2021 is only for excess of loss and catastrophe reinsurance.
(6)	Excludes freeze and freeze related claims.
(7)	For the period January 1, 2022 through January 1, 2023, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty. Excludes losses from named storms.
(8)	Personal lines quota share (homeowners, dwelling fire and canine liability) and underlying excess of loss reinsurance will expire on January 1, 2023; reinsurance coverage in effect from January 2, 2023 through June 30, 2023 is only for excess of loss and catastrophe reinsurance treaties.
(9)	For the 2021/2023 Treaty, 4% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event.
(10)	Plus losses in excess of catastrophe coverage.

	Treaty Year
	July 1, 2022			July 1, 2021			July 1, 2020
	to			to			to
Line of Business	June 30, 2023			June 30, 2022			June 30, 2021
Personal Lines:
Personal Umbrella
Quota share treaty:
Percent ceded - first $1,000,000 of coverage		90	%		90	%		90	%
Percent ceded - excess of $1,000,000 dollars of coverage		95	%		95	%		95	%
Risk retained	$	300,000		$	300,000		$	300,000
Total reinsurance coverage per occurrence	$	4,700,000		$	4,700,000		$	4,700,000
Losses per occurrence subject to quota share reinsurance coverage	$	5,000,000		$	5,000,000		$	5,000,000
Expiration date	June 30, 2023			June 30, 2022			June 30, 2021
Commercial Lines (1):
General liability commercial policies
Quota share treaty							None
Risk retained							$	750,000
Excess of loss coverage above risk retained							$	3,750,000
							in excess of
							$	750,000
Total reinsurance coverage per occurrence							$	3,750,000
Losses per occurrence subject to reinsurance coverage							$	4,500,000
Commercial Umbrella
Quota share treaty							None

(1) Coverage on all commercial lines policies expired in September 2020; reinsurance coverage is based on treaties in effect on the date of loss.

The Company’s reinsurance program has been structured to enable the Company to grow its premium volume while maintaining regulatory capital and other financial ratios generally within or below the expected ranges used for regulatory oversight purposes. The reinsurance program also provides income as a result of ceding commissions earned pursuant to the quota share reinsurance contracts. The Company’s participation in reinsurance arrangements does not relieve the Company of its obligations to policyholders.

Ceding Commission Revenue

The Company earned ceding commission revenue under the 2021/2023 Treaty for the three months and nine months ended September 30, 2022 based on a fixed provisional commission rate at which provisional ceding commissions will be earned. There was no quota share treaty in effect during the three months and nine months ended September 30, 2021. The Company earned ceding commission revenue under its expired quota share reinsurance agreements based on: (i) a fixed provisional commission rate at which provisional ceding commissions were earned, and (ii) a continuing sliding scale of commission rates and ultimate treaty year loss ratios on the policies reinsured under each of these agreements based upon which contingent ceding commissions are earned. The sliding scale includes minimum and maximum commission rates in relation to specified ultimate loss ratios.  The commission rate and contingent ceding commissions earned increases when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decreases when the estimated ultimate loss ratio increases.

Ceding commission revenue consists of the following:

	Three months ended					Nine months ended
	September 30,					September 30,
	2022		2021			2022		2021
Provisional ceding commissions earned	$	4,881,580	$	40,578		$	14,116,044	$	135,666
Contingent ceding commissions earned		4,514		(47,854	)		167,033		(98,266	)
	$	4,886,094	$	(7,276	)	$	14,283,077	$	37,400

Provisional ceding commissions are settled monthly. Balances due from reinsurers for contingent ceding commissions on quota share treaties are settled periodically based on the Loss Ratio of each treaty year that ends on June 30, for the expired treaties that were subject to contingent commissions. As discussed above, the Loss Ratios from prior years’ treaties are subject to change as incurred losses from those periods develop, resulting in an increase or decrease in the commission rate and contingent ceding commissions earned.  As of September 30, 2022 and December 31, 2021, net contingent ceding commissions payable to reinsurers under all treaties was approximately $2,714,000 and $2,881,000, respectively, which is recorded in reinsurance balances payable on the accompanying condensed consolidated balance sheets.

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Debt

9 Months Ended

Sep. 30, 2022

Debt

Debt

Note 7 – Debt

Federal Home Loan Bank

In July 2017, KICO became a member of, and invested in the Federal Home Loan Bank of New York (“FHLBNY”).  KICO is required to maintain an investment in capital stock of FHLBNY.  Based on redemption provisions of FHLBNY, the stock has no quoted market value and is carried at cost.  At its discretion, FHLBNY may declare dividends on the stock.  Management reviews for impairment based on the ultimate recoverability of the cost basis in the stock. At September 30, 2022 and December 31, 2021, no impairment has been recognized. FHLBNY members have access to a variety of flexible, low-cost funding through FHLBNY’s credit products, enabling members to customize advances, which are to be fully collateralized.  Eligible collateral to pledge to FHLBNY includes residential and commercial mortgage-backed securities, along with U.S. Treasury and agency securities. See Note 3 – Investments for eligible collateral held in a designated custodian account available for future advances.  Advances are limited to 5% of KICO’s net admitted assets as of the previous quarter and are due and payable within one year of borrowing.  KICO is currently able to borrow on an overnight basis. The maximum allowable advance as of September 30, 2022 was approximately $12,414,000. Advances are limited to 85% of the amount of available collateral. As of September 30, 2022, the estimated fair value of available collateral was $12,393,000.  Accordingly, as of September 30, 2022, advances were limited to $10,534,000. As of December 31, 2021, there was no available collateral. There have been no borrowings under this facility since KICO became a member of FHLBNY.

Debt

On December 19, 2017, the Company issued $30 million of its 5.50% Senior Unsecured Notes due December 30, 2022 (the “Notes”) in an underwritten public offering. Interest is payable semi-annually in arrears on June 30 and December 30 of each year, which began on June 30, 2018 at the rate of 5.50% per annum. The net proceeds of the issuance were $29,121,630, net of discount of $163,200 and transaction costs of $715,170, for an effective yield of 5.67% per annum. The balance of debt as of September 30, 2022 and December 31, 2021 is as follows:

	September 30,			December 31,
	2022			2021
5.50% Senior Unsecured Notes	$	30,000,000		$	30,000,000
Discount		(8,110	)		(32,442	)
Issuance costs		(35,964	)		(143,767	)
Debt, net	$	29,955,926		$	29,823,791

The Notes are unsecured obligations of the Company and are not the obligations of or guaranteed by any of the Company's subsidiaries. The Notes rank senior in right of payment to any of the Company's existing and future indebtedness that is by its terms expressly subordinated or junior in right of payment to the Notes. The Notes rank equally in right of payment to all of the Company's existing and future senior indebtedness, but will be effectively subordinated to any secured indebtedness to the extent of the value of the collateral securing such secured indebtedness. In addition, the Notes will be structurally subordinated to the indebtedness and other obligations of the Company's subsidiaries. The Company may redeem the Notes, at any time in whole or from time to time in part, at the redemption price equal to the greater of: (i) 100% of the principal amount of the Notes to be redeemed; and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed that would be due if the Notes matured on the applicable redemption date (exclusive of interest accrued to the applicable redemption date) discounted to the redemption date on a semi-annual basis at the Treasury Rate, plus 50 basis points (“Make Whole Call”).

Due to the Make Whole Call, management intends to retire or otherwise satisfy the Notes at or close to the scheduled maturity date in December 2022. See Note 2 – Accounting Policies - Management’s Plan Related to Going Concern for a discussion of Kingstone’s plans with regard to the satisfaction of the Notes.

The Company used an aggregate $28,256,335 of the net proceeds from the offering to contribute capital to KICO in order to support additional growth. The remainder of the net proceeds was used for general corporate purposes. A registration statement relating to the debt issued in the offering was filed with the SEC, which became effective on November 28, 2017.

Capital Lease

On October 27, 2022 KICO entered into a sale leaseback transaction, whereby KICO sold $8,096,824 of fixed assets to a bank.  The provisions of the sale leaseback require KICO to pay a monthly payment of principal and interest totaling $126,877 for a term of 60 months commencing on October 27, 2022.  The terms of the agreement provide buyout options at the end of the 60 month term, which are as follows: 

· At the end of the lease KICO may purchase the fixed assets for a purchase price of $2,024,206, which is 25% of the original fixed asset cost of $8,096,824; or

· KICO may renew the lease for 16 months at the same rental rate, which totals $2,030,036

A provision of the sale leaseback agreement requires KICO to pledge collateral for the lease obligation.  KICO pledged a total of $9,958,700 in United States Treasury Bills. See Note 13 - Subsequent Events.

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Stockholders Equity

9 Months Ended

Sep. 30, 2022

Stockholders Equity

Stockholders' Equity

Note 8 – Stockholders’ Equity

Dividends Declared and Paid

Dividends declared and paid on Common Stock were $1,277,066 and $1,274,797 for the nine months ended September 30, 2022 and 2021, respectively.

Stock Options

Effective August 12, 2014, the Company adopted the 2014 Equity Participation Plan (the “2014 Plan”) pursuant to which a maximum of 700,000 shares of Common Stock of the Company were initially authorized to be issued pursuant to the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and stock bonuses.  Incentive stock options granted under the 2014 Plan expire no later than ten years from the date of grant (except no later than five years for a grant to a 10% stockholder). Non-statutory stock options granted under the 2014 Plan expire no later than ten years from the date of grant.  The Board of Directors or the Compensation Committee determines the vesting provisions for stock awards granted under the 2014 Plan, subject to the provisions of the 2014 Plan.  On August 5, 2020, the Company’s stockholders approved amendments to the 2014 Plan, including an increase in the maximum number of shares of Common Stock of the Company that are authorized to be issued pursuant to the 2014 Plan to 1,400,000.

The results of operations for the three months ended September 30, 2022 and 2021 include stock-based compensation expense for stock options totaling approximately $2,000 and $14,000, respectively. The results of operations for the nine months ended September 30, 2022 and 2021 include stock-based compensation expense for stock options totaling approximately $9,000 and $43,000, respectively. Stock-based compensation expense related to stock options for the three months and nine months ended September 30, 2022 and 2021 is net of estimated forfeitures of approximately 18% and 16%, respectively. Such amounts have been included in the condensed consolidated statements of operations and comprehensive income (loss) within other operating expenses.  

No options were granted during the nine months ended September 30, 2022. The fair value of stock options at the grant date are estimated using the Black-Scholes option-pricing model. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options.

A summary of stock option activity under the Company’s 2014 Plan for the nine months ended September 30, 2022 is as follows:

Stock Options	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2022		107,201	$	8.31		2.92	$	-
Granted		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Expired/Forfeited		-	$	-		-	$	-
Outstanding at September 30, 2022		107,201	$	8.31		2.18	$	-
Vested and Exercisable at September 30, 2022		94,701	$	8.26		2.46	$	-

The aggregate intrinsic value of options outstanding and options exercisable at September 30, 2022 is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s Common Stock for the options that had exercise prices that were lower than the $2.66 closing price of the Company’s Common Stock on September 30, 2022. No options were exercised, forfeited or expired during the nine months ended September 30, 2022. The total intrinsic value of options when forfeited are determined as of the date of forfeiture. The total intrinsic value of options when expired are determined as of the date of expiration.

Participants in the 2014 Plan may exercise their outstanding vested options, in whole or in part, by having the Company reduce the number of shares otherwise issuable by a number of shares having a fair market value equal to the exercise price of the option being exercised (“Net Exercise”), or by exchanging a number of shares owned for a period of greater than one year having a fair market value equal to the exercise price of the option being exercised (“Share Exchange”).

As of September 30, 2022, there were no unvested options.

As of September 30, 2022, there were 364,271 shares reserved for grants under the 2014 Plan.

Restricted Stock Awards

A summary of the restricted Common Stock activity under the Company’s 2014 Plan for nine months ended September 30, 2022 is as follows:

Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value per Share		Aggregate Fair Value
Balance at January 1, 2022		535,410		$	7.01	$	3,753,224
Granted		98,456		$	5.53	$	544,503
Vested		(234,219	)	$	7.32	$	(1,715,220	)
Forfeited		(17,605	)	$	-	$	-
Balance at September 30, 2022		382,042		$	6.91	$	2,582,506

Fair value was calculated using the closing price of the Company’s Common Stock on the grant date. For the three months ended September 30, 2022 and 2021, stock-based compensation for these grants was approximately $186,000 and $452,000, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). For the nine months ended September 30, 2022 and 2021, stock-based compensation for these grants was approximately $1,180,000 and $1,405,000, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be recognized by the directors, executives and employees.

Employee Stock Purchase Plan

On June 19, 2021, the Company’s Board of Directors adopted the Kingstone Companies, Inc. Employee Stock Purchase Plan (the “ESPP”), subject to stockholder approval. Such approval was obtained on August 10, 2021. The purpose of the ESPP is to provide eligible employees of the Company with an opportunity to use payroll deductions to purchase shares of Common Stock of the Company. The maximum number of shares of Common Stock that may be purchased under the ESPP is 750,000, subject to adjustment as provided for in the ESPP. The ESPP was effective August 10, 2021 and expires on August 10, 2031. A maximum of 5,000 shares of Common Stock may be purchased by an employee during any offering period.

The initial offering period under the ESPP was from November 1, 2021 through October 31, 2022 (“2021/2022 Offering”).  There is currently no offering pursuant to the ESPP subsequent to October 31, 2022. For the three months ended September 30, 2022 and 2021, stock-based compensation under the 2021/2022 Offering was approximately $5,000 and $-0-, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss). For the nine months ended September 30, 2022 and 2021, stock-based compensation under the 2021/2022 Offering was approximately $16,000 and $-0-, respectively, which is included in other operating expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss).

At the end of the 2021/2022 offering period, 33,222 shares of common stock were issued at $1.82 per share to participating employees for a total purchase of $60,464. See Note 13 - Subsequent Events.   

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Income Taxes

9 Months Ended

Sep. 30, 2022

Income Taxes

Income Taxes

Note 9 – Income Taxes

The Company files a consolidated U.S. federal income tax return that includes all wholly owned subsidiaries. State tax returns are filed on a consolidated or separate return basis depending on applicable laws. The Company records adjustments related to prior years’ taxes during the period when they are identified, generally when the tax returns are filed.  The effect of these adjustments on the current and prior periods (during which the differences originated) is evaluated based upon quantitative and qualitative factors and are considered in relation to the consolidated financial statements taken as a whole for the respective periods.

Deferred tax assets and liabilities are determined using the enacted tax rates applicable to the period the temporary differences are expected to be recovered. Accordingly, the current period income tax provision can be affected by the enactment of new tax rates. The net deferred income taxes on the balance sheets reflect temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and income tax purposes, tax effected at various rates depending on whether the temporary differences are subject to federal taxes, state taxes, or both.

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	September 30,		December 31,
	2022		2021
Deferred tax asset:
Net operating loss carryovers (1)	$	2,099,013	$	1,112,318
Claims reserve discount		1,164,002		1,186,789
Unearned premium		3,607,880		3,246,364
Deferred ceding commission revenue		2,167,278		2,047,187
Net unrealized losses on securities		4,215,667		-
Other		1,530,488		1,220,898
Total deferred tax assets		14,784,328		8,813,556
Deferred tax liability:
Investment in KICO (2)		759,543		759,543
Deferred acquisition costs		4,873,194		4,670,187
Intangibles		105,000		105,000
Depreciation and amortization		189,643		1,046,817
Net unrealized gains on securities		-		2,039,756
Total deferred tax liabilities		5,927,380		8,621,303
Net deferred income tax asset	$	8,856,948	$	192,253

(1) The deferred tax assets from net operating loss carryovers (“NOL”) are as follows:

	September 30,			December 31,
Type of NOL	2022			2021			Expiration
Federal only, NOL from 2022 and 2021	$	2,099,013		$	1,112,318
NOL carried back		-			-
Federal only, NOL from 2022 and 2021		2,099,013			1,112,318		None
State only (A)		2,227,702			2,099,239		December 2027 - December 2042
Valuation allowance		(2,227,702	)		(2,099,239	)
State only, net of valuation allowance		-			-
Total deferred tax asset from net operating loss carryovers	$	2,099,013		$	1,112,318

(A) Kingstone generates operating losses for state purposes and has prior year NOLs available. The state NOL as of September 30, 2022 and December 31, 2021 was approximately $34,272,000 and $32,296,000, respectively. KICO, the Company’s insurance underwriting subsidiary, is not subject to state income taxes. KICO’s state tax obligations are paid through a gross premiums tax, which is included in the condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses. Kingstone has recorded a valuation allowance due to the uncertainty of generating enough state taxable income to utilize 100% of the available state NOLs over their remaining lives, which expire between 2027 and 2042. 

(2)    Deferred tax liability – Investment in KICO

On July 1, 2009, the Company completed the acquisition of 100% of the issued and outstanding common stock of KICO (formerly known as Commercial Mutual Insurance Company (“CMIC”)) pursuant to the conversion of CMIC from an advance premium cooperative to a stock property and casualty insurance company. Pursuant to the plan of conversion, the Company acquired a 100% equity interest in KICO, in consideration for the exchange of $3,750,000 principal amount of surplus notes of CMIC. In addition, the Company forgave all accrued and unpaid interest on the surplus notes as of the date of conversion. As of the date of acquisition, unpaid accrued interest on the surplus notes along with the accretion of the discount on the original purchase of the surplus notes totaled $2,921,319 (together “Untaxed Interest”). As of the date of acquisition, the deferred tax liability on the Untaxed Interest was $1,169,000. A temporary difference with an indefinite life exists when the parent has a lower carrying value of its subsidiary for income tax purposes. The deferred tax liability was reduced to $759,543 upon the reduction of federal income tax rates as of December 31, 2017. The Company is required to maintain its deferred tax liability of $759,543 related to this temporary difference until the stock of KICO is sold, or the assets of KICO are sold or KICO and the parent are merged.

In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. No valuation allowance against deferred tax assets has been established, except for NOL limitations, as the Company believes it is more likely than not the deferred tax assets will be realized based on the historical taxable income of KICO, or by offset to deferred tax liabilities.

The Company had no material unrecognized tax benefit and no adjustments to liabilities or operations were required. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the nine months ended September 30, 2022 and 2021. If any had been recognized these would have been reported in income tax expense.

Generally, taxing authorities may examine the Company’s tax returns for the three years from the date of filing.  The Company’s tax returns for the years ended December 31, 2019 through December 31, 2021 remain subject to examination. 

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Loss Earnings Per Common Share

9 Months Ended

Sep. 30, 2022

Loss Earnings Per Common Share

(Loss) Earnings Per Common Share

Note 10 – (Loss) Earnings Per Common Share

Basic net (loss) earnings per common share is computed by dividing loss available to common shareholders by the weighted-average number of shares of Common Stock outstanding. Diluted loss per common share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options as well as non-vested restricted stock awards.  The computation of diluted loss per common share excludes those options with an exercise price in excess of the average market price of the Company’s Common Stock during the periods presented.

The computation of diluted loss per common share excludes outstanding options in periods where the exercise of such options would be anti-dilutive. For the three months and nine months ended September 30, 2022 and 2021, no options were included in the computation of diluted loss per common share as they would have been anti-dilutive for the relevant periods and, as a result, the weighted average number of shares of Common Stock used in the calculation of diluted loss per common share has not been adjusted for the effect of such options.

The reconciliation of the weighted average number of shares of Common Stock used in the calculation of basic and diluted (loss) earnings per common share follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Weighted average number of shares outstanding		10,645,675		10,523,515		10,640,290		10,622,988
Effect of dilutive securities, common share equivalents:
Stock options		-		-		-		-
Restricted stock awards		-		-		-		-
Weighted average number of shares outstanding, used for computing diluted (loss) earnings per share		10,645,675		10,523,515		10,640,290		10,622,988

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies

Commitments and Contingencies

Note 11 - Commitments and Contingencies

Litigation

From time to time, the Company is involved in various legal proceedings in the ordinary course of business. For example, to the extent a claim is asserted by a third party in a lawsuit against one of the Company’s insureds covered by a particular policy, the Company may have a duty to defend the insured party against the claim. These claims may relate to bodily injury, property damage or other compensable injuries as set forth in the policy. Such proceedings are considered in estimating the liability for loss and LAE expenses.

Office Lease

The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. See Note 2 - Accounting Policies for additional information regarding the accounting for leases.

The Company is a party to a non-cancellable operating lease, dated March 27, 2015, for its office facility for KICO located in Valley Stream, New York expiring March 31, 2024. 

On July 8, 2019, the Company entered into a lease agreement for an additional office facility for Cosi located in Valley Stream, New York under a non-cancelable operating lease. The lease had a term of seven years and two months expiring December 31, 2026.  During January 2022, pursuant to a mutual agreement with the landlord at a cost of $40,000, the Cosi lease was terminated effective as of January 31, 2022.

Additional information regarding the Company’s office operating leases is as follows:

	Three months ended			Nine months ended
Lease cost	September 30, 2022			September 30, 2022
Operating lease (1) (2)	$	41,342		$	131,152
Other information on operating leases
Cash payments included in the measurement of lease liability reported in operating cash flows	$	47,483		$	147,969
Discount rate		5.50	%		5.50	%
Remaing lease term in years
KICO		1.50 years		1.50 years

(1) Included in the condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses for KICO and within other operating expenses for Cosi.

The following table presents the contractual maturities of the Company’s lease liabilities as of September 30, 2022:

For the Year
Ending
December 31,	Total
Remainder of 2022	$	47,483
2023		194,919
2024		49,145
Total undiscounted lease payments		291,547
Less:  present value adjustment		4,191
Operating lease liability (1)	$	287,356

(1) The operating lease liability is recorded in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets.

Rent expense for the three months ended September 30, 2022 and 2021 amounted to $41,342 and $57,459, respectively.  Rent expense for the nine months ended September 30, 2022 and 2021 amounted to $131,152 and $172,377, respectively.  Rent expense is included in the accompanying condensed consolidated statements of operations and comprehensive income (loss) within other underwriting expenses.

Employment Agreements

Barry Goldstein, President, Chief Executive Officer and Executive Chairman of the Board

Employment Agreement effective as of January 1, 2020

On October 14, 2019, the Company and Barry B. Goldstein, the Company’s President, Chief Executive Officer and Executive Chairman of the Board, entered into a Second Amended and Restated Employment Agreement (the “Second Amended Goldstein Employment Agreement”).  The Second Amended Goldstein Employment Agreement became effective as of January 1, 2020 and expires on December 31, 2022.  The Second Amended Goldstein Employment Agreement extends the expiration date of the employment agreement in effect for Mr. Goldstein from December 31, 2021 to December 31, 2022.

Pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 6% of the Company’s consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 2.5 times his base salary.  In addition, pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein was entitled to receive a long-term compensation (“LTC”) award of between $945,000 and $2,835,000 based on a specified minimum increase in the Company’s adjusted book value per share (as defined in the Second Amended Goldstein Employment Agreement) as of December 31, 2022 as compared to December 31, 2019 (with the maximum LTC payment being due if the average per annum increase is at least 14%).  Pursuant to the Third Amended Goldstein Employment Agreement (discussed below), Mr. Goldstein relinquished the right to receive the LTC.  Pursuant to the Second Amended Goldstein Employment Agreement, in the event that Mr. Goldstein’s employment is terminated by the Company without cause or he resigns for good reason (each as defined in the Second Amended Goldstein Employment Agreement), Mr. Goldstein would be entitled to receive his base salary and the 6% bonus for the remainder of the term.  In addition, in the event of Mr. Goldstein’s death, his estate would be entitled to receive his base salary and accrued bonus through the date of death.  Further, in the event that Mr. Goldstein’s employment is terminated by the Company without cause or he resigns for good reason, or, in the event of the termination of Mr. Goldstein’s employment due to disability or death, Mr. Goldstein’s granted but unvested restricted stock awards will vest.  Mr. Goldstein would be entitled, under certain circumstances, to a payment equal to 3.82 times his then annual salary and his accrued 6% bonus in the event of the termination of his employment within eighteen months following a change of control of the Company.

Pursuant to the Second Amended Goldstein Employment Agreement, in January 2020, Mr. Goldstein received a grant of 157,431 shares of restricted stock under the terms of the Company’s 2014 Plan determined by dividing $1,250,000 by the fair market value of the Company’s Common Stock on the date of grant. This 2020 grant vested with respect to one-third of the award on each of the first and second anniversaries of the grant date and will vest with respect to one-sixth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates.  Also pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein received a grant, under the terms of the 2014 Plan, during January 2021, of 230,769 shares of restricted stock determined by dividing $1,500,000 by the fair market value of the Company’s Common Stock on the date of grant.  This 2021 grant vested with respect to one-half of the award on the first anniversary of the grant date and will vest with respect to one-fourth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates.  Further, pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein received in 2020, 2021, and 2022 a grant, under the terms of the 2014 Plan of a number of shares of restricted stock determined by dividing $136,500 by the fair market value of the Company’s Common Stock on the date of grant. In January 2020, Mr. Goldstein was granted 17,191 shares of restricted stock pursuant to this provision. This grant vested with respect to one-third of the award on each of the first and second anniversaries of the grant date and will vest with respect to one-sixth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates.  In January 2021, Mr. Goldstein was granted 21,000 shares of restricted stock pursuant to this provision.  This grant vested with respect to one-half of the award on the first anniversary of the grant date and will vest with respect to one-fourth of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates.  In January 2022, Mr. Goldstein was granted 27,300 shares of restricted stock pursuant to this provision.  This grant will vest with respect to one-half of the award on each of December 29, 2023 and December 30, 2024 based on the continued provision of services through such dates.  Pursuant to the 2014 Plan, Mr. Goldstein’s unvested restricted stock awards will vest in the event of a change in control of the Company.

Employment Agreement effective as of January 1, 2023

On June 27, 2022, the Company and Mr. Goldstein entered into a third amended and restated employment agreement which takes effect as of January 1, 2023, and expires on December 31, 2024 (the “Third Amended Goldstein Employment Agreement”).

Pursuant to the Third Amended Goldstein Employment Agreement, Mr. Goldstein is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 3% of our consolidated income from operations before taxes, exclusive of the Company’s consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 1.25 times his base salary.  Pursuant to the Third Amended Goldstein Employment Agreement, Mr. Goldstein would be entitled to receive, under certain circumstances, a payment equal to 1.5 times his then annual base salary and his accrued bonus in the event of the termination of his employment within eighteen months following a change of control of the Company.

Meryl Golden, Chief Operating Officer

Employment Agreement effective as of January 1, 2021

On September 16, 2019, the Company and Meryl Golden entered into an employment agreement (the “Golden Employment Agreement”) pursuant to which Ms. Golden serves as the Company’s Chief Operating Officer. Ms. Golden also serves as KICO’s President and Chief Operating Officer. The Golden Employment Agreement became effective as of September 25, 2019 (amended on December 24, 2020) and now expires on December 31, 2022.

Pursuant to the Golden Employment Agreement, Ms. Golden is entitled to receive an annual salary of $500,000. The Golden Employment Agreement also provides for the grant on the effective date of a five year option for the purchase of 50,000 shares of the Company’s Common Stock pursuant to the 2014 Plan. The options granted vest in four equal installments, with the first installment vesting on the grant date, and the remaining installments vesting on the first, second, and third anniversaries of the grant date, subject to the terms of the stock option agreement between the Company and Ms. Golden.   Pursuant to the Golden Employment Agreement, as amended, in each of January 2021 and January 2022, Ms. Golden was granted 30,000 shares of restricted Common Stock pursuant to the 2014 Plan.  Each such grant will vest in three equal installments on each of the first, second and third anniversaries of the grant date.  Pursuant to the 2014 Plan, Ms. Golden’s outstanding stock options and restricted stock awards will vest in the event of a change in control of the Company.

Employment Agreement effective as of January 1, 2023

On June 27, 2022, the Company and Ms. Golden entered into a second amended and restated employment agreement which takes effect as of January 1, 2023, and expires on December 31, 2024 (the “Second Amended Golden Employment Agreement”).

Pursuant to the Second Amended Golden Employment Agreement, Ms. Golden is entitled to receive an annual base salary of $500,000 and an annual bonus equal to 3% of the Company’s consolidated income from operations before taxes, exclusive of our consolidated net investment income (loss), net unrealized gains (losses) on equity securities and net realized gains (losses) on investments, up to a maximum of 1.25 times her base salary. In addition, pursuant to the Second Amended Golden Employment Agreement, Ms. Golden is entitled to receive a grant, under the terms of the 2014 Plan, during each of January 2023 and January 2024, under certain circumstances, of a number of shares of restricted stock determined by dividing $136,500 by the fair market value of the Company’s common stock on the date of grant. The 2023 grant will vest with respect to one-half of the award on the first anniversary of the grant date and one-half of the award on December 31, 2024, based on the continued provision of services through such dates. The 2024 grant will vest on December 31, 2024, based on the continued provision of services through such date. In the event that we are precluded from making a grant in 2023 or 2024, then instead Ms. Golden shall be entitled to receive a cash bonus of $136,500 for such year. Further, pursuant to the Second Amended Golden Employment Agreement, Ms. Golden would be entitled to receive, under certain circumstances, a payment equal to 1.5 times her then annual base salary and her accrued bonus in the event of the termination of her employment within eighteen months following a change of control of the Company.

COVID-19

The outbreak of the coronavirus, also known as "COVID-19", has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus including the emergence of new strains continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have a material adverse impact on global economic conditions as well as on the Company’s business activities. Although the impact has been manageable thus far, the extent to which COVID-19 may impact the Company's business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in the United States and other countries to contain, prevent and treat the disease. These events are highly uncertain and, as such, the Company cannot determine their financial impact at this time.  No adjustments have been made to the amounts reported in these condensed consolidated financial statements as a result of this matter.

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Employee Benefit Plans

9 Months Ended

Sep. 30, 2022

Employee Benefit Plans

Employee Benefit Plans

Note 12 – Employee Benefit Plans

Employee Bonus Plan

For the nine months ended September 30, 2022 and year ended December 31, 2021 the Company did not accrue for, or pay, bonuses related to the employee bonus plan. 

401 (k) Plan

The Company maintains a salary reduction plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) for its qualified employees. The Company matches 100% of each participant’s contribution up to 4% of the participant’s eligible contribution.  The Company incurred approximately $71,000 and $58,000 of expense for the three months ended September 30, 2022 and 2021, related to the 401(k) Plan.  The Company incurred approximately $207,000 and $189,000, respectively, of expense for the nine months ended September 30, 2022 and 2021, related to the 401(k) Plan, which is recorded in other operating expenses on the accompanying consolidated statements of operations and comprehensive income (loss). 

Deferred Compensation Plan

On June 18, 2018, the Company adopted the Kingstone Companies, Inc. Deferred Compensation Plan (the "Deferred Compensation Plan"). The Deferred Compensation Plan is offered to a select group (“Participants”), consisting of management and highly compensated employees as a method of recognizing and retaining such Participants. The Deferred Compensation Plan provides for eligible Participants to elect to defer up to 75% of their base compensation and up to 100% of bonuses and other compensation and to have such deferred amounts deemed to be invested in specified investment options. In addition to the Participant deferrals, the Company may choose to make matching contributions to some or all of the Participants in the Deferred Compensation Plan to the extent the Participant did not receive the maximum matching or non-elective contributions permissible under the Company’s 401(k) Plan due to limitations under the Internal Revenue Code or the 401(k) Plan. Participants may elect to receive payment of their account balances in a single cash payment or in annual installments for a period of up to ten years. The deferred compensation liability as of September 30, 2022 and December 31, 2021 amounted to $1,093,136 and $907,914, respectively, and is recorded in accounts payable, accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets. The Company did not make any voluntary contributions for the nine months ended September 30, 2022 and 2021.

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Subsequent Events

9 Months Ended

Sep. 30, 2022

Subsequent Events

Subsequent Events

Note 13 – Subsequent Events

The Company has evaluated events that occurred subsequent to September 30, 2022 through the date these condensed consolidated financial statements were issued for matters that required disclosure or adjustment in these condensed consolidated financial statements. 

Griffin Highline

As previously reported, on August 5, 2022, Griffin Highline Capital LLC (“Griffin Highline”) filed Amendment No. 3 to Schedule 13D with the SEC which indicates that Griffin Highline submitted a final non-binding indication of interest to the Board of Directors of the Company proposing a transaction whereby an entity formed by Griffin Highline would acquire all of the outstanding equity of the Company.  Following delivery of the non-binding proposal, the Company agreed to extend the period of exclusivity with Griffin Highline under its previously executed exclusivity agreement for a limited time period to further pursue the proposal.  The period of exclusivity has expired.

Although Griffin Highline is not currently pursuing a transaction with regard to the acquisition of all of the outstanding equity of the Company, Griffin Highline and the Company are discussing a potential strategic transaction between them.  No assurance can be given that a transaction will be consummated by the Company with Griffin Highline or any third party.

Sale Leaseback and Capital Lease

On October 27, 2022 KICO entered into a sale leaseback transaction, whereby KICO sold $8,096,824 of fixed assets to a bank (see Note 7 - Debt ).

Employee Stock Purchase Plan

On October 31, 2022, the 2021/2022 offering period ended no further offering period was initiated (see Note 8 - Stockholders’ Equity).  

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Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies (Policies)

Basis Of Presentation; Going Concern

See Note 2 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for further information.

Kingstone’s $30,000,000 5.5% Senior Unsecured Notes (the “Notes”) mature on December 30, 2022. The Company’s continuation as a going concern is dependent on its ability to obtain financing to satisfy the Notes at maturity unless agreements are entered into with the holders of a substantial principal amount of the Notes to extend the maturity date of the Notes or exchange the Notes for new debt and/or equity securities of Kingstone (see “Management’s Plan Related to Going Concern” below).  Management believes that KICO’s insurance operations would be able to continue in the event that the required financing by Kingstone is not obtained and agreements with the holders of the Notes are not entered into. 

In accordance with Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. This evaluation requires management to perform two steps. First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern. Second, if management concludes that substantial doubt is raised, management is required to consider whether it has plans in place to alleviate that doubt. Disclosures in the notes to the consolidated financial statements are required if management concludes that substantial doubt exists and if its plans alleviate the substantial doubt that was raised.

The accompanying condensed consolidated financial statements have been prepared in accordance with GAAP assuming that the Company will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

Management's Plan Related To Going Concern

In order to continue as a going concern, Kingstone will need to refinance the Notes that become  due on December 30, 2022, either through (a) new debt or equity financing at Kingstone that will provide the funds necessary, together with available cash, to pay the Notes in full at maturity, (b) Kingstone entering into arrangements with holders of the Notes to exchange their Notes for new debt and/or equity securities of Kingstone  or (c) a combination of (a) and (b). No assurance can be given that Kingstone will be successful in this regard.  Management has been exploring and continues to explore a number of financing and other options and has engaged investment bankers to assist it in pursuing such options.  Subject to regulatory requirements, Kingstone can also receive dividends and/or loans from its insurance subsidiary, KICO, that could be utilized to repay a portion of the Notes.  As of September 30, 2022, the maximum distribution that KICO could pay to Kingstone without prior regulatory approval was approximately $3.0 million. Subsequent to September 30, 2022, Kingstone received a $3.0 million distribution from KICO. In addition, subsequent to September 30, 2022, Kingstone received a loan from KICO of $6.45 million without the need for prior regulatory approval and also received a Federal income tax refund of approximately $1.5 million. With the foregoing proceeds, together with liquid investments and available cash, Kingstone currently has total funds of approximately $12.0 million.   

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described above, which the Company believes is probable, but there can be no assurance in this regard.   

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 LAE, which 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 ongoing basis, management reevaluates its assumptions and the methods for calculating these estimates. Actual results may differ significantly from the estimates used in preparing the condensed consolidated financial statements.

Principles Of Consolidation

The condensed consolidated financial statements include the accounts of Kingstone and its wholly owned subsidiaries: (1) 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, and (2) Cosi. All significant inter-company account balances and transactions have been eliminated in consolidation.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (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, 2023. The Company is currently evaluating the effect the updated guidance will have on its condensed consolidated financial statements.

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.

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Investments (Tables)

9 Months Ended

Sep. 30, 2022

Investments

Schedule Of Available For Sale Fixed Maturity Securities

	September 30, 2022
	Cost or		Gross		Gross Unrealized Losses						Estimated		Net
	Amortized		Unrealized		Less than 12			More than 12			Fair		Unrealized
Category	Cost		Gains		Months			Months			Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	9,946,032	$	930	$	(123	)	$	-		$	9,946,839	$	807
Political subdivisions of States, Territories and Possessions		17,117,473		-		(3,250,196	)		(590,936	)		13,276,341		(3,841,132	)
Corporate and other bonds
Industrial and miscellaneous		84,163,055		-		(9,154,182	)		(269,694	)		74,739,179		(9,423,876	)
Residential mortgage and other asset backed securities (1)		54,307,907		68,159		(4,333,707	)		(2,699,011	)		47,343,348		(6,964,559	)
Total fixed-maturity securities	$	165,534,467	$	69,089	$	(16,738,208	)	$	(3,559,641	)	$	145,305,707	$	(20,228,760	)

	December 31, 2021
	Cost or		Gross		Gross Unrealized Losses								Net
	Amortized		Unrealized		Less than 12			More than 12			Estimated Fair		Unrealized Gains/
Category	Cost		Gains		Months			Months			Value		(Losses)
Fixed-Maturity Securities:
Political subdivisions of States, Territories and Possessions	$	17,236,750	$	246,748	$	(197,984	)	$	-		$	17,285,514	$	48,764
Corporate and other bonds
Industrial and miscellaneous		80,534,769		2,603,411		(126,926	)		-			83,011,254		2,476,485
Residential mortgage and other asset backed securities		58,036,959		355,985		(489,258	)		(120,344	)		57,783,342		(253,617	)
Total fixed-maturity securities	$	155,808,478	$	3,206,144	$	(814,168	)	$	(120,344	)	$	158,080,110	$	2,271,632

Schedule Of Available For Sale Securities

	September 30, 2022				December 31, 2021
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	14,852,441	$	14,824,136	$	1,153,099	$	1,156,636
One to five years		44,959,185		42,305,309		43,007,110		44,914,759
Five to ten years		30,271,976		24,680,308		26,808,853		27,332,581
More than 10 years		21,142,958		16,152,606		26,802,457		26,892,792
Residential mortgage and other asset backed securities		54,307,907		47,343,348		58,036,959		57,783,342
Total	$	165,534,467	$	145,305,707	$	155,808,478	$	158,080,110

Schedule Of Equity Securities

	September 30, 2022
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	16,047,207	$	-	$	(3,488,481	)	$	12,558,726
Common stocks, mutual funds, and exchange traded funds		10,728,809		103,902		(1,922,991	)		8,909,720
Total	$	26,776,016	$	103,902	$	(5,411,472	)	$	21,468,446

	December 31, 2021
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	22,019,509	$	1,007,009	$	(184,617	)	$	22,841,901
Common stocks, mutual funds, and exchange traded funds		15,451,160		1,573,653		(179,712	)		16,845,101
Total	$	37,470,669	$	2,580,662	$	(364,329	)	$	39,687,002

Schedule Of Other Investments

	September 30, 2022						December 31, 2021
			Gross		Estimated				Gross		Estimated
Category	Cost		Gains		Fair Value		Cost		Gains		Fair Value
Other Investments:
Hedge fund	$	1,987,040	$	589,232	$	2,576,272	$	3,999,381	$	3,562,034	$	7,561,415

Schedule Of Held To Maturity Securities

	September 30, 2022
	Cost or		Gross		Gross Unrealized Losses					Estimated		Net
	Amortized		Unrealized		Less than 12			More than 12		Fair		Unrealized Gains/
Category	Cost		Gains		Months			Months		Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,485	$	73,468	$	(36,802	)	$	-	$	1,265,151	$	36,666
Political subdivisions of States, Territories and Possessions		498,508		-		(1,498	)		-		497,010		(1,498	)
Exchange traded debt		304,111		-		(43,361	)		-		260,750		(43,361	)
Corporate and other bonds
Industrial and miscellaneous		5,736,079		35,503		(1,182,635	)		-		4,588,947		(1,147,132	)
Total	$	7,767,183	$	108,971	$	(1,264,296	)	$	-	$	6,611,858	$	(1,155,325	)

	December 31, 2021
	Cost or		Gross		Gross Unrealized Losses					Estimated		Net
	Amortized		Unrealized		Less than 12			More than 12		Fair		Unrealized Gains/
Category	Cost		Gains		Months			Months		Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	729,642	$	209,633	$	-		$	-	$	939,275	$	209,633
Political subdivisions of States, Territories and Possessions		998,239		22,856		-			-		1,021,095		22,856
Exchange traded debt		304,111		85		(13,921	)				290,275		(13,836	)
Corporate and other bonds
Industrial and miscellaneous		6,234,342		280,951		(12,779	)		-		6,502,514		268,172
Total	$	8,266,334	$	513,525	$	(26,700	)	$	-	$	8,753,159	$	486,825

Schedule Of Held To Maturity Securities By Contractual Maturity

	September 30, 2022				December 31, 2021
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	708,325	$	742,533	$	994,712	$	1,008,180
One to five years		1,120,315		1,082,015		1,205,829		1,290,465
Five to ten years		1,399,725		1,177,545		1,513,942		1,648,808
More than 10 years		4,538,818		3,609,765		4,551,851		4,805,706
Total	$	7,767,183	$	6,611,858	$	8,266,334	$	8,753,159

Schedule Of Investment Income

	Three months ended				Nine months ended
	September 30				September 30
	2022		2021		2022		2021
Income:
Fixed-maturity securities	$	1,243,177	$	1,288,277	$	2,841,307	$	4,238,746
Equity securities		247,275		436,833		872,005		1,145,244
Cash and cash equivalents		26,630		9,636		29,796		11,194
Other investments		-		42,908		-		-
Total		1,517,082		1,777,654		3,743,108		5,395,184
Expenses:
Investment expenses		89,811		101,058		322,412		257,317
Net investment income	$	1,427,271	$	1,676,596	$	3,420,696	$	5,137,867

Schedule Of Securities With Realized Gains And Losses On Investments

	Three months ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Realized Gains (Losses)
Fixed-maturity securities:
Gross realized gains	$	364		$	343,773		$	102,774		$	1,121,068
Gross realized losses		(4,620	)		(8,103	)		(158,701	)		(49,601	)
		(4,256	)		335,670			(55,927	)		1,071,467
Equity securities:
Gross realized gains		907,089			639,626			1,384,432			2,015,574
Gross realized losses		(92,159	)		(26,031	)		(728,732	)		(293,519	)
		814,930			613,595			655,700			1,722,055
Other Investments:
Gross realized gains		589,233			83,798			589,233			83,798
Gross realized losses		-			-			-			-
		589,233			83,798			589,233			83,798
Net realized gains		1,399,907			1,033,063			1,189,006			2,877,320
Unrealized (Losses) Gains
Equity Securities:
Gross gains		-			(1,331,675	)		-			592,397
Gross losses		(1,132,596	)					(7,549,640	)		-
		(1,132,596	)		(1,331,675	)		(7,549,640	)		592,397
Other Investments:
Gross gains		-			503,146			-			2,010,485
Gross losses		(664,969	)		-			(2,952,802	)		-
		(664,969	)		503,146			(2,952,802	)		2,010,485
Net unrealized (losses) gains		(1,797,565	)		(828,529	)		(10,502,442	)		2,602,882
Net (losses) gains on investments	$	(397,658	)	$	204,534		$	(9,313,436	)	$	5,480,202

Schedule Of Securities With Unrealized Losses

	September 30, 2022
	Less than 12 months							12 months or more							Total
	Estimated					No. of		Estimated					No. of		Estimated
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	5,975,160	$	(123	)		1	$	-	$	-			-	$	5,975,160	$	(123	)
Political subdivisions of States, Territories and Possessions		11,461,126		(3,250,196	)		12		1,815,216		(590,936	)		2		13,276,342		(3,841,132	)
Corporate and other bonds industrial and miscellaneous		73,921,209		(9,154,182	)		93		817,970		(269,694	)		1		74,739,179		(9,423,876	)
Residential mortgage and other asset backed securities		27,985,270		(4,333,707	)		31		18,593,599		(2,699,011	)		15		46,578,869		(7,032,718	)
Total fixed-maturity securities	$	119,342,765	$	(16,738,208	)		137	$	21,226,785	$	(3,559,641	)		18	$	140,569,550	$	(20,297,849	)

	December 31, 2021
	Less than 12 months							12 months or more							Total
	Estimated					No. of		Estimated					No. of		Estimated
	Fair		Unrealized			Positions		Fair		Unrealized			Positions		Fair		Unrealized
Category	Value		Losses			Held		Value		Losses			Held		Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	-	$	-			-	$	-	$	-			-	$	-	$	-
Political subdivisions of States, Territories and Possessions		6,768,123		(197,984	)		5		-		-			-		6,768,123		(197,984	)
Corporate and other bonds industrial and miscellaneous		17,593,707		(126,926	)		15		-		-			-		17,593,707		(126,926	)
Residential mortgage and other asset backed securities		45,399,451		(489,258	)		26		2,923,182		(120,344	)		2		48,322,633		(609,602	)
Total fixed-maturity securities	$	69,761,281	$	(814,168	)		46	$	2,923,182	$	(120,344	)		2	$	72,684,463	$	(934,512	)

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Measurements

Schedule Of Fair Value Measurements

	September 30, 2022
	Level 1		Level 2		Level 3		Total
Fixed-maturity securities available-for-sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	9,946,839	$	-	$	-	$	9,946,839
Political subdivisions of States, Territories and Possessions		-		13,276,341		-		13,276,341
Corporate and other bonds industrial and miscellaneous		74,241,809		497,370		-		74,739,179
Residential mortgage and other asset backed securities		-		47,343,348		-		47,343,348
Total fixed maturities		84,188,648		61,117,059		-		145,305,707
Equity securities		21,468,446		-		-		21,468,446
Total investments	$	105,657,094	$	61,117,059	$	-	$	166,774,153

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Fixed-maturity securities available-for-sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	-	$	-	$	-	$	-
Political subdivisions of States, Territories and Possessions		-		17,285,514		-		17,285,514
Corporate and other bonds industrial and miscellaneous		82,500,779		510,475		-		83,011,254
Residential mortgage and other asset backed securities		-		57,783,342		-		57,783,342
Total fixed maturities		82,500,779		75,579,331		-		158,080,110
Equity securities		39,687,002		-		-		39,687,002
Total investments	$	122,187,781	$	75,579,331	$	-	$	197,767,112

Schedule Of Hedge Fund Investments

Category	September 30, 2022		December 31, 2021
Other Investments
Hedge fund	$	2,576,272	$	7,561,415

Fair Value Hierarchy Of Long-term Debt

	September 30, 2022
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2022	$	-	$	29,601,120	$	-	$	29,601,120

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2022	$	-	$	28,436,019	$	-	$	28,436,019

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Fair Value of Financial Instruments and Real Estate (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value of Financial Instruments and Real Estate (Tables)

Schedule Of Fair Value Of Financial Instruments

	September 30, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
Fixed-maturity securities-held-to maturity, Level 1	$	7,767,183	$	6,611,858	$	8,266,334	$	8,753,159
Cash and cash equivalents, Level 1	$	15,111,206	$	15,111,206	$	24,290,598	$	24,290,598
Premiums receivable, net, Level 3	$	12,891,464	$	12,891,464	$	12,318,336	$	12,318,336
Reinsurance receivables, net, Level 3	$	59,365,937	$	59,365,937	$	40,292,438	$	40,292,438
Real estate, net of accumulated depreciation, Level 3	$	2,089,156	$	3,025,000	$	2,144,464	$	3,025,000
Reinsurance balances payable, Level 3	$	11,475,247	$	11,475,247	$	12,961,568	$	12,961,568

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Property and Casualty Insurance Activity (Tables)

9 Months Ended

Sep. 30, 2022

Property and Casualty Insurance Activity

Schedule Of Earned Premiums

	Direct			Assumed		Ceded			Net
Nine months ended September 30, 2022
Premiums written	$	147,353,911		$	-	$	(58,743,773	)	$	88,610,138
Change in unearned premiums		(6,029,774	)		-		1,356,060			(4,673,714	)
Premiums earned	$	141,324,137		$	-	$	(57,387,713	)	$	83,936,424
Nine months ended September 30, 2021
Premiums written	$	131,609,930		$	-	$	(21,854,398	)	$	109,755,532
Change in unearned premiums		(2,911,439	)		-		(15,198	)		(2,926,637	)
Premiums earned	$	128,698,491		$	-	$	(21,869,596	)	$	106,828,895
Three months ended September 30, 2022
Premiums written	$	54,591,551		$	-	$	(20,925,381	)	$	33,666,170
Change in unearned premiums		(5,636,421	)		-		1,331,227			(4,305,194	)
Premiums earned	$	48,955,130		$	-	$	(19,594,154	)	$	29,360,976
Three months ended September 30, 2021
Premiums written	$	48,865,169		$	-	$	(7,223,526	)	$	41,641,643
Change in unearned premiums		(4,848,145	)		-		9,753			(4,838,392	)
Premiums earned	$	44,017,024		$	-	$	(7,213,773	)	$	36,803,251

Schedule Of Loss And Loss Adjustment Expenses

	Nine months ended
	September 30,
	2022			2021
Balance at beginning of period	$	94,948,745		$	82,801,228
Less reinsurance recoverables		(10,637,679	)		(20,154,251	)
Net balance, beginning of period		84,311,066			62,646,977
Incurred related to:
Current year		62,910,967			79,070,646
Prior years		713,788			(10,529	)
Total incurred		63,624,755			79,060,117
Paid related to:
Current year		35,774,958			35,408,412
Prior years		26,938,462			17,586,958
Total paid		62,713,420			52,995,370
Net balance at end of period		85,222,401			88,711,724
Add reinsurance recoverables		21,706,497			12,332,394
Balance at end of period	$	106,928,898		$	101,044,118

Schedule Of Ceding Commission Revenue

All Lines of Business
(in thousands, except reported claims data)
																					As of
	Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance																				September 30, 2022
	For the Years Ended December 31,																		Nine Months Ended September 30,				Cumulative Number of Reported Claims by Accident
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		IBNR		Year
	(Unaudited 2013 - 2021)																		(Unaudited)
2013	$	10,728	$	9,745	$	9,424	$	9,621	$	10,061	$	10,089	$	10,607	$	10,495	$	10,529	$	10,493	$	3		1,564
2014				14,193		14,260		14,218		14,564		15,023		16,381		16,428		16,434		16,496		34		2,138
2015						22,340		21,994		22,148		22,491		23,386		23,291		23,528		23,533		239		2,559
2016								26,062		24,941		24,789		27,887		27,966		27,417		27,411		101		2,881
2017										31,605		32,169		35,304		36,160		36,532		36,553		270		3,398
2018												54,455		56,351		58,441		59,404		60,535		446		4,229
2019														75,092		72,368		71,544		71,386		3,074		4,494
2020																63,083		62,833		62,043		3,504		5,861
2021																		96,425		97,038		9,236		5,779
2022																				58,735		13,837		3,236
																	Total		$	464,223

All Lines of Business
(in thousands)
	Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,																		Nine Months Ended September 30,
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
	(Unaudited 2013 - 2021)																		(Unaudited)
2013	$	3,405	$	5,303	$	6,633	$	7,591	$	8,407	$	9,056	$	9,717	$	10,016	$	10,392	$	10,471
2014				5,710		9,429		10,738		11,770		13,819		14,901		15,491		15,770		16,083
2015						12,295		16,181		18,266		19,984		21,067		22,104		22,318		22,462
2016								15,364		19,001		21,106		23,974		25,234		25,750		26,244
2017										16,704		24,820		28,693		31,393		32,529		32,928
2018												32,383		44,516		50,553		52,025		53,657
2019														40,933		54,897		58,055		59,933
2020																39,045		50,719		52,632
2021																		56,282		75,291
2022																				32,981
																	Total		$	382,681
Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented																			$	81,542
All outstanding liabilities before 2013, net of reinsurance																				264
Liabilities for loss and allocated loss adjustment expenses, net of reinsurance																			$	81,806

Incurred Loss And Allocated Loss Adjustment Expenses

Reconciliation of the Disclosure of Incurred and Paid Loss Development
to the Liability for Loss and LAE Reserves
	As of
(in thousands)	September 30, 2022
Liabilities for allocated loss and loss adjustment expenses, net of reinsurance	$	81,806
Total reinsurance recoverable on unpaid losses		21,706
Unallocated loss adjustment expenses		3,416
Total gross liability for loss and LAE reserves	$	106,929

Cumulative Paid Loss And Allocated Loss Adjustment Expenses

	Treaty Period
			(2021/2023 Treaty)
	January 2,		July 1,			December 31,			July 1,		December 31,
	2023		2022			2021			2021		2020
	to		to			to			to		to
	June 30,		January 1,			June 30,			December 30,		June 30,
Line of Business	2023		2023			2022			2021		2021
Personal Lines:
Homeowners, dwelling fire and and canine legal liability
Quota share treaty:
Percent ceded (9)	None (8)			30	%		30	%	None (5)		None (5)
Risk retained on intial $1,000,000 of losses (5) (7) (8) (9)	$	1,000,000	$	700,000		$	700,000		$	1,000,000	$	1,000,000
Losses per occurrence subject to quota share reinsurance coverage	None (8)		$	1,000,000		$	1,000,000		None (5)		None (5)
Expiration date		(8)	January 1, 2023			January 1, 2023			NA (5)		NA (5)
Excess of loss coverage and facultative facility coverage (1) (7)	$	8,000,000	$	8,400,000		$	8,400,000		$	8,000,000	$	8,000,000
	in excess of		in excess of			in excess of			in excess of		in excess of
	$	1,000,000	$	600,000		$	600,000		$	1,000,000	$	1,000,000
Total reinsurance coverage per occurrence (5) (7) (8)	$	8,000,000	$	8,500,000		$	8,500,000		$	8,000,000	$	8,000,000
Losses per occurrence subject to reinsurance coverage (5) (8)	$	8,000,000	$	9,000,000		$	9,000,000		$	9,000,000	$	9,000,000
Expiration date (8)	June 30, 2023		June 30, 2023			June 30, 2022			June 30, 2022		June 30, 2021
Catastrophe Reinsurance:
Initial loss subject to personal lines quota share treaty		(8)		10,000,000			10,000,000		None (5)		None (5)
Risk retained per catastrophe occurrence (5) (8) (9) (10)	$	10,000,000	$	7,400,000		$	7,400,000		$	10,000,000	$	10,000,000
Catastrophe loss coverage in excess of quota share coverage (2) (5) (8)	$	335,000,000	$	335,000,000		$	490,000,000		$	490,000,000	$	475,000,000
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021 (6)	NA		NA			NA			$	5,000,000	NA
									in excess of
									$	5,000,000
Reinstatement premium protection (3) (4)	Yes		Yes			Yes			Yes		Yes

	Treaty Year
	July 1, 2022			July 1, 2021			July 1, 2020
	to			to			to
Line of Business	June 30, 2023			June 30, 2022			June 30, 2021
Personal Lines:
Personal Umbrella
Quota share treaty:
Percent ceded - first $1,000,000 of coverage		90	%		90	%		90	%
Percent ceded - excess of $1,000,000 dollars of coverage		95	%		95	%		95	%
Risk retained	$	300,000		$	300,000		$	300,000
Total reinsurance coverage per occurrence	$	4,700,000		$	4,700,000		$	4,700,000
Losses per occurrence subject to quota share reinsurance coverage	$	5,000,000		$	5,000,000		$	5,000,000
Expiration date	June 30, 2023			June 30, 2022			June 30, 2021
Commercial Lines (1):
General liability commercial policies
Quota share treaty							None
Risk retained							$	750,000
Excess of loss coverage above risk retained							$	3,750,000
							in excess of
							$	750,000
Total reinsurance coverage per occurrence							$	3,750,000
Losses per occurrence subject to reinsurance coverage							$	4,500,000
Commercial Umbrella
Quota share treaty							None

Reconciliation Of The Net Incurred And Paid Claims

	Three months ended					Nine months ended
	September 30,					September 30,
	2022		2021			2022		2021
Provisional ceding commissions earned	$	4,881,580	$	40,578		$	14,116,044	$	135,666
Contingent ceding commissions earned		4,514		(47,854	)		167,033		(98,266	)
	$	4,886,094	$	(7,276	)	$	14,283,077	$	37,400

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Debt (Tables)

9 Months Ended

Sep. 30, 2022

Debt

Long-term Debt

	September 30,			December 31,
	2022			2021
5.50% Senior Unsecured Notes	$	30,000,000		$	30,000,000
Discount		(8,110	)		(32,442	)
Issuance costs		(35,964	)		(143,767	)
Debt, net	$	29,955,926		$	29,823,791

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Stockholders Equity (Tables)

9 Months Ended

Sep. 30, 2022

Stockholders Equity

Schedule Of Stock Options Activity

Stock Options	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2022		107,201	$	8.31		2.92	$	-
Granted		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Expired/Forfeited		-	$	-		-	$	-
Outstanding at September 30, 2022		107,201	$	8.31		2.18	$	-
Vested and Exercisable at September 30, 2022		94,701	$	8.26		2.46	$	-

Schedule Of The Restricted Common Stock Activity

Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value per Share		Aggregate Fair Value
Balance at January 1, 2022		535,410		$	7.01	$	3,753,224
Granted		98,456		$	5.53	$	544,503
Vested		(234,219	)	$	7.32	$	(1,715,220	)
Forfeited		(17,605	)	$	-	$	-
Balance at September 30, 2022		382,042		$	6.91	$	2,582,506

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2022

Income Taxes

Schedule Of Deferrred Tax Assets And Liabilities

	September 30,		December 31,
	2022		2021
Deferred tax asset:
Net operating loss carryovers (1)	$	2,099,013	$	1,112,318
Claims reserve discount		1,164,002		1,186,789
Unearned premium		3,607,880		3,246,364
Deferred ceding commission revenue		2,167,278		2,047,187
Net unrealized losses on securities		4,215,667		-
Other		1,530,488		1,220,898
Total deferred tax assets		14,784,328		8,813,556
Deferred tax liability:
Investment in KICO (2)		759,543		759,543
Deferred acquisition costs		4,873,194		4,670,187
Intangibles		105,000		105,000
Depreciation and amortization		189,643		1,046,817
Net unrealized gains on securities		-		2,039,756
Total deferred tax liabilities		5,927,380		8,621,303
Net deferred income tax asset	$	8,856,948	$	192,253

Schedule Of Net Operating Loss Carryovers

	September 30,			December 31,
Type of NOL	2022			2021			Expiration
Federal only, NOL from 2022 and 2021	$	2,099,013		$	1,112,318
NOL carried back		-			-
Federal only, NOL from 2022 and 2021		2,099,013			1,112,318		None
State only (A)		2,227,702			2,099,239		December 2027 - December 2042
Valuation allowance		(2,227,702	)		(2,099,239	)
State only, net of valuation allowance		-			-
Total deferred tax asset from net operating loss carryovers	$	2,099,013		$	1,112,318

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Loss Per Common Share (Tables)

9 Months Ended

Sep. 30, 2022

Loss Earnings Per Common Share

Reconciliation Of The Weighted Average Number Of Shares Of Common Stock Used In The Calculation Of Basic And Diluted Earnings Per Common Share

	Three months ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Weighted average number of shares outstanding		10,645,675		10,523,515		10,640,290		10,622,988
Effect of dilutive securities, common share equivalents:
Stock options		-		-		-		-
Restricted stock awards		-		-		-		-
Weighted average number of shares outstanding, used for computing diluted (loss) earnings per share		10,645,675		10,523,515		10,640,290		10,622,988

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies

Lease Cost

	Three months ended			Nine months ended
Lease cost	September 30, 2022			September 30, 2022
Operating lease (1) (2)	$	41,342		$	131,152
Other information on operating leases
Cash payments included in the measurement of lease liability reported in operating cash flows	$	47,483		$	147,969
Discount rate		5.50	%		5.50	%
Remaing lease term in years
KICO		1.50 years		1.50 years

Schedule Of Lease Liability Maturities

For the Year
Ending
December 31,	Total
Remainder of 2022	$	47,483
2023		194,919
2024		49,145
Total undiscounted lease payments		291,547
Less:  present value adjustment		4,191
Operating lease liability (1)	$	287,356

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Nature of Business and Basis of Presentation (Details Narrative)	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Nature of Business and Basis of Presentation (Details Narrative)
Direct written premiums, percentage	80.00%	80.30%

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Accounting Policies (Details Narrative) - Senior Notes [Member] - USD ($)	1 Months Ended	9 Months Ended
	Dec. 19, 2017	Sep. 30, 2022
Debt instrument, face amount	$ 30,000,000	$ 30,000,000
Debt instrument, interest rate	5.50%	5.50%
Debt instrument, maturity date	Dec. 30, 2022	Dec. 30, 2022
Arrangement description		As of September 30, 2022, the maximum distribution that KICO could pay to Kingstone without prior regulatory approval was approximately $3.0 million. Subsequent to September 30, 2022, Kingstone received a $3.0 million distribution from KICO. In addition, subsequent to September 30, 2022, Kingstone received a loan from KICO of $6.45 million without the need for prior regulatory approval and also received a Federal income tax refund of approximately $1.5 million. With the foregoing proceeds, together with liquid investments and available cash, Kingstone currently has total funds of approximately $12.0 million.

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Investments (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member]
Cost or amortized cost	$ 17,117,473	$ 17,236,750
Gross unrealized gains	0	246,748
Gross unrealized losses - less than 12 months	(3,250,196)	(197,984)
Gross unrealized loss - more than 12 months	(590,936)	0
Estimated fair value	13,276,341	17,285,514
Net unrealized gains	(3,841,132)	48,764
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member]
Cost or amortized cost	84,163,055	80,534,769
Gross unrealized gains	0	2,603,411
Gross unrealized losses - less than 12 months	(9,154,182)	(126,926)
Gross unrealized loss - more than 12 months	(269,694)	0
Estimated fair value	74,739,179	83,011,254
Net unrealized gains	(9,423,876)	2,476,485
Fixed Maturity Securities Residential Mortgage and other asset backed securities [Member]
Cost or amortized cost	54,307,907	58,036,959
Gross unrealized gains	68,159	355,985
Gross unrealized losses - less than 12 months	(4,333,707)	(489,258)
Gross unrealized loss - more than 12 months	(2,699,011)	(120,344)
Estimated fair value	47,343,348	57,783,342
Net unrealized gains	(6,964,559)	(253,617)
Fixed Maturity Securities Total Fixed Maturity Securities [Member]
Cost or amortized cost	165,534,467	155,808,478
Gross unrealized gains	69,089	3,206,144
Gross unrealized losses - less than 12 months	(16,738,208)	(814,168)
Gross unrealized loss - more than 12 months	(3,559,641)	(120,344)
Estimated fair value	145,305,707	158,080,110
Net unrealized gains	(20,228,760)	$ 2,271,632
Fixed-Maturity Securities U.S. Treasury securities and obligations of U.S. government corporations and agencies [Member]
Cost or amortized cost	9,946,032
Gross unrealized gains	930
Gross unrealized losses - less than 12 months	(123)
Gross unrealized loss - more than 12 months	0
Estimated fair value	9,946,839
Net unrealized gains	$ 807

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Investments (Details 1) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Residential Mortgage And Other Asset Backed Securities [Member]
Amortized cost	$ 54,307,907	$ 58,036,959
Estimated fair value	47,343,348	57,783,342
Less Than One Year [Member]
Amortized cost	14,852,441	1,153,099
Estimated fair value	14,824,136	1,156,636
One To Five Years [Member]
Amortized cost	44,959,185	43,007,110
Estimated fair value	42,305,309	44,914,759
Five To Ten Years [Member]
Amortized cost	30,271,976	26,808,853
Estimated fair value	24,680,308	27,332,581
More Than 10 Years [Member]
Amortized cost	21,142,958	26,802,457
Estimated fair value	16,152,606	26,892,792
Total [Member]
Amortized cost	165,534,467	158,080,110
Estimated fair value	$ 145,305,707	$ 155,808,478

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Investments (Details 2) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Cost	$ 26,776,016	$ 37,470,669
Gross gains	103,902	2,580,662
Gross losses	(5,411,472)	(364,329)
Estimated fair value	21,468,446	39,687,002
Equity Securities- Preferred Stocks [Member]
Cost	16,047,207	22,019,509
Gross losses	(3,488,481)	(184,617)
Estimated fair value	12,558,726	22,841,901
Gross gains	0	1,007,009
Common stock, mutual fund and exchange traded funds [Member]
Cost	10,728,809	15,451,160
Gross losses	(1,922,991)	(179,712)
Estimated fair value	8,909,720	16,845,101
Gross gains	103,902	1,573,653
Hedge Funds [Member]
Cost	1,987,040	3,999,381
Estimated fair value	2,576,272	7,561,415
Gross gains	$ 589,232	$ 3,562,034

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Investments (Details 3) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Cost or amortized cost	$ 7,767,183	$ 8,266,334
Gross unrealized gains	108,971	513,525
Gross unrealized losses - less than 12 months	(1,264,296)	(26,700)
Gross unrealized loss - more than 12 months	0	0
Estimated fair value	6,611,858	8,753,159
Net unrealized gains	(1,155,325)	486,825
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member]
Cost or amortized cost	498,508	998,239
Gross unrealized gains	(1,498)	22,856
Estimated fair value	497,010	1,021,095
Net unrealized gains	0	22,856
Gross unrealized losses - less than 12 months	(1,498)	0
Gross unrealized loss - more than 12 months	0	0
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member]
Cost or amortized cost	5,736,079	6,234,342
Gross unrealized gains	35,503	280,951
Estimated fair value	4,588,947	6,502,514
Net unrealized gains	(1,147,132)	268,172
Gross unrealized losses - less than 12 months	(1,182,635)	(12,779)
Gross unrealized loss - more than 12 months	0	0
Held-to-Maturity Securities US Treasury Securities [Member]
Cost or amortized cost	1,228,485	729,642
Gross unrealized gains	73,468	209,633
Estimated fair value	1,265,151	939,275
Net unrealized gains	36,666	209,633
Gross unrealized losses - less than 12 months	(36,802)	0
Gross unrealized loss - more than 12 months	0	0
Exchange Trade Debt [Member]
Cost or amortized cost	304,111	304,111
Gross unrealized gains	0	85
Estimated fair value	260,750	290,275
Net unrealized gains	(43,361)	(13,836)
Gross unrealized losses - less than 12 months	(43,361)	$ (13,921)
Gross unrealized loss - more than 12 months	$ 0

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Investments (Details 4) - Held-to-maturity Securities [Member] - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Amortized cost	$ 7,767,183	$ 8,266,334
Estimated fair value	6,611,858	8,753,159
Less Than One Year [Member]
Amortized cost	708,325	994,712
Estimated fair value	742,533	1,008,180
One To Five Years [Member]
Amortized cost	1,120,315	1,205,829
Estimated fair value	1,082,015	1,290,465
Five To Ten Years [Member]
Amortized cost	1,399,725	1,513,942
Estimated fair value	1,177,545	1,648,808
More Than 10 Years [Member]
Amortized cost	4,538,818	4,551,851
Estimated fair value	$ 3,609,765	$ 4,805,706

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Investments (Details 5) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Investments
Fixed-maturity securities	$ 1,243,177	$ 1,288,277	$ 2,841,307	$ 4,238,746
Equity securities	247,275	436,833	872,005	1,145,244
Cash and cash equivalents	26,630	9,636	29,796	11,194
Other investments	0	42,908	0	0
Total	1,517,082	1,777,654	3,743,108	5,395,184
Investment expenses	89,811	101,058	322,412	257,317
Net investment income	$ 1,427,271	$ 1,676,596	$ 3,420,696	$ 5,137,867

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Investments (Details 6) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Net realized gains	$ 1,399,907	$ 1,033,063	$ 1,189,006	$ 2,877,320
Net unrealized gains (losses)	(1,797,565)	(828,529)	(10,502,442)	2,602,882
Net gains (losses) on investments	(397,658)	204,534	(9,313,436)	5,480,202
Realized Gains Losses Fixed-maturity securities [Member]
Gross realized gains	364	343,773	102,774	1,121,068
Gross realized losses	(4,620)	(8,103)	(158,701)	(49,601)
Total fixed-maturity securities	(4,256)	335,670	(55,927)	1,071,467
Realized Gains Losses Equity securities [Member]
Gross realized gains	907,089	639,626	1,384,432	2,015,574
Gross realized losses	(92,159)	(26,031)	(728,732)	(293,519)
Total equity securities	814,930	613,595	655,700	1,722,055
Realized Gains Losses Other Investments [Member]
Gross realized gains	589,233	83,798	589,233	83,798
Gross realized losses	0	0	0	0
Total other investments	589,233	83,798	589,233	83,798
Unrealized Losses Gains Other Investments [Member]
Gross realized gains	0	503,146	0	2,010,485
Total other investments	(664,969)	503,146	(2,952,802)	2,010,485
Gross losses	664,969	0	2,952,802	0
Unrealized Losses Gains Equity securities [Member]
Gross realized gains	0	1,331,675	0	592,397
Gross losses	1,132,596		7,549,640	0
Total equity securities	$ (1,132,596)	$ (1,331,675)	$ (7,549,640)	$ 592,397

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Investments (Details 7) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
US Treasury and Government [Member]
Estimated fair value - less than 12 months	$ 5,975,160	$ 0
Unrealized losses - less than 12 months	(123)	0
Number of positions held - less than 12 months	1	0
Estimated fair value - 12 months or more	0	0
Unrealized losses - 12 months or more	0	0
Number of positions held - 12 months or more	0	0
Estimated fair value - total	5,975,160	0
Unrealized losses - total	(123)	0
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member]
Estimated fair value - less than 12 months	11,461,126	6,768,123
Unrealized losses - less than 12 months	(3,250,196)	(197,984)
Number of positions held - less than 12 months	12	5
Estimated fair value - 12 months or more	1,815,216	0
Unrealized losses - 12 months or more	(590,936)	0
Number of positions held - 12 months or more	2	0
Estimated fair value - total	13,276,342	6,768,123
Unrealized losses - total	(3,841,132)	(197,984)
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member]
Estimated fair value - less than 12 months	73,921,209	17,593,707
Unrealized losses - less than 12 months	(9,154,182)	(126,926)
Number of positions held - less than 12 months	93	15
Estimated fair value - 12 months or more	817,970	0
Unrealized losses - 12 months or more	(269,694)	0
Number of positions held - 12 months or more	1	0
Estimated fair value - total	74,739,179	17,593,707
Unrealized losses - total	(9,423,876)	(126,926)
Fixed Maturity Securities Residential Mortgage and other asset backed securities [Member]
Estimated fair value - less than 12 months	27,985,270	45,399,451
Unrealized losses - less than 12 months	(4,333,707)	(489,258)
Number of positions held - less than 12 months	31	26
Estimated fair value - 12 months or more	18,593,599	2,923,182
Unrealized losses - 12 months or more	(2,699,011)	(120,344)
Number of positions held - 12 months or more	15	2
Estimated fair value - total	46,578,869	48,322,633
Unrealized losses - total	(7,032,718)	(609,602)
Fixed Maturity Securities Total Fixed Maturity Securities [Member]
Estimated fair value - less than 12 months	119,342,765	69,761,281
Unrealized losses - less than 12 months	(16,738,208)	(814,168)
Number of positions held - less than 12 months	137	46
Estimated fair value - 12 months or more	21,226,785	2,923,182
Unrealized losses - 12 months or more	(3,559,641)	(120,344)
Number of positions held - 12 months or more	18	2
Estimated fair value - total	140,569,550	72,684,463
Unrealized losses - total	$ (20,297,849)	$ (934,512)

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Investments (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Investments
Proceeds from the sale and redemption of fixed-maturity securities held-to-maturity	$ 1,000,000	$ 1,312,500
Proceeds from the sale or maturity of fixed-maturity securities available-for-sale	14,213,435	33,335,036
Sale - equity securities	11,962,513	$ 14,507,384
Fair value of the eligible investments	$ 12,393,000

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Fair Value Measurements (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$ 9,946,839	$ 0
Political subdivisions of states, territories and possessions	13,276,341	17,285,514
Corporate and other bonds industrial and miscellaneous	74,739,179	83,011,254
Residential mortgage and other asset backed securities	47,343,348	57,783,342
Total fixed maturities	145,305,707	158,080,110
Equity securities	21,468,446	39,687,002
Total investments	166,774,153	197,767,112
Level 1 [Member]
U.S. Treasury securities and obligations of U.S. government corporations and agencies	9,946,839	0
Political subdivisions of states, territories and possessions	0	0
Corporate and other bonds industrial and miscellaneous	74,241,809	82,500,779
Residential mortgage and other asset backed securities	0	0
Total fixed maturities	84,188,648	82,500,779
Equity securities	21,468,446	39,687,002
Total investments	105,657,094	122,187,781
Level 2 [Member]
U.S. Treasury securities and obligations of U.S. government corporations and agencies	0	0
Political subdivisions of states, territories and possessions	13,276,341	17,285,514
Corporate and other bonds industrial and miscellaneous	497,370	510,475
Residential mortgage and other asset backed securities	47,343,348	57,783,342
Total fixed maturities	61,117,059	75,579,331
Equity securities	0	0
Total investments	61,117,059	75,579,331
Level 3 [Member]
U.S. Treasury securities and obligations of U.S. government corporations and agencies	0	0
Political subdivisions of states, territories and possessions	0	0
Corporate and other bonds industrial and miscellaneous	0	0
Residential mortgage and other asset backed securities	0	0
Total fixed maturities	0	0
Equity securities	0	0
Total investments	$ 0	$ 0

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Fair Value Measurements (Details 1) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Hedge Funds [Member]
Hedge fund investments	$ 2,576,272	$ 7,561,415

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Fair Value Measurements (Details 2) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Senior Notes due 2022	$ 29,601,120	$ 28,436,019
Level 1 [Member]
Senior Notes due 2022	0	0
Level 2 [Member]
Senior Notes due 2022	29,601,120	28,436,019
Level 3 [Member]
Senior Notes due 2022	$ 0	$ 0

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Fair Value of Financial Instruments and Real Estate (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Reinsurance balances payable	$ 11,475,247	$ 12,961,568
Carrying Value [Member]
Reinsurance balances payable	11,475,247	12,961,568
Fixed-maturity securities held-to-maturity	7,767,183	8,266,334
Cash and cash equivalents	15,111,206	24,290,598
Premiums receivable, net	12,891,464	12,318,336
Reinsurance receivables, net	59,365,937	40,292,438
Real estate, net of accumulated depreciation	2,089,156	2,144,464
Fair Value [Member]
Reinsurance balances payable	11,475,247	12,961,568
Fixed-maturity securities held-to-maturity	6,611,858	8,753,159
Cash and cash equivalents	15,111,206	24,290,598
Premiums receivable, net	12,891,464	12,318,336
Reinsurance receivables, net	59,365,937	40,292,438
Real estate, net of accumulated depreciation	$ 3,025,000	$ 3,025,000

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Property and Casualty Insurance Activity (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Premiums Written
Direct	$ 54,591,551	$ 48,865,169	$ 147,353,911	$ 131,609,930
Assumed	0	0	0	0
Ceded	(20,925,381)	(7,223,526)	(58,743,773)	(21,854,398)
Net	33,666,170	41,641,643	88,610,138	109,755,532
Changes In Unearned Premiums
Direct	(5,636,421)	(4,848,145)	(6,029,774)	(2,911,439)
Assumed	0	0	0	0
Ceded	1,331,227	9,753	1,356,060	(15,198)
Net	(4,305,194)	(4,838,392)	(4,673,714)	(2,926,637)
Premiums Earned
Direct	48,955,130	44,017,024	141,324,137	128,698,491
Assumed	0	0	0	0
Ceded	(19,594,154)	(7,213,773)	(57,387,713)	(21,869,596)
Net	$ 29,360,976	$ 36,803,251	$ 83,936,424	$ 106,828,895

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Property and Casualty Insurance Activity (Details 1) - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Property and Casualty Insurance Activity
Balance at beginning of period	$ 94,948,745	$ 82,801,228
Less reinsurance recoverables	(10,637,679)	(20,154,251)
Net balance, beginning of period	84,311,066	62,646,977
Current year	62,910,967	79,070,646
Prior years	713,788	(10,529)
Total incurred	63,624,755	79,060,117
Current year	35,774,958	35,408,412
Prior years	26,938,462	17,586,958
Total paid	62,713,420	52,995,370
Net balance at end of period	85,222,401	88,711,724
Add reinsurance recoverables	21,706,497	12,332,394
Balance at end of period	$ 106,928,898	$ 101,044,118

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Property and Casualty Insurance Activity (Details 2) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($) integer
Total incurred claims	$ 464,223
2014
2014 incurred claims	14,193
2013 incurred claims	9,745
IBNR	$ 34
Cumulative Number of Reported Claims | integer	2,138
2015
2014 incurred claims	$ 14,260
2013 incurred claims	9,424
IBNR	$ 239
Cumulative Number of Reported Claims | integer	2,559
2015 incurred claims	$ 22,340
2016
2014 incurred claims	14,218
2013 incurred claims	9,621
IBNR	$ 101
Cumulative Number of Reported Claims | integer	2,881
2015 incurred claims	$ 21,994
2016 incurred claims	26,062
2017
2014 incurred claims	14,564
2013 incurred claims	10,061
IBNR	$ 270
Cumulative Number of Reported Claims | integer	3,398
2015 incurred claims	$ 22,148
2016 incurred claims	24,941
2017 incurred claims	31,605
2018
2014 incurred claims	15,023
2013 incurred claims	10,089
IBNR	$ 446
Cumulative Number of Reported Claims | integer	4,229
2015 incurred claims	$ 22,491
2016 incurred claims	24,789
2017 incurred claims	32,169
2018 incurred claims	54,455
2019
2014 incurred claims	16,381
2013 incurred claims	10,607
IBNR	$ 3,074
Cumulative Number of Reported Claims | integer	4,494
2015 incurred claims	$ 23,386
2016 incurred claims	27,887
2017 incurred claims	35,304
2018 incurred claims	56,351
2019 incurred claims	75,092
2020
2014 incurred claims	16,428
2013 incurred claims	10,495
IBNR	$ 3,504
Cumulative Number of Reported Claims | integer	5,861
2015 incurred claims	$ 23,291
2016 incurred claims	27,966
2017 incurred claims	36,160
2018 incurred claims	58,441
2019 incurred claims	72,368
2020 incurred claims	63,083
2021
2014 incurred claims	16,434
2013 incurred claims	10,529
IBNR	$ 9,236
Cumulative Number of Reported Claims | integer	5,779
2015 incurred claims	$ 23,528
2016 incurred claims	27,417
2017 incurred claims	36,532
2018 incurred claims	59,404
2019 incurred claims	71,544
2020 incurred claims	62,833
2021 incurred claims	96,425
2013
2013 incurred claims	10,728
IBNR	$ 3
Cumulative Number of Reported Claims | integer	1,564
2022
2014 incurred claims	$ 16,496
2013 incurred claims	10,493
IBNR	$ 13,837
Cumulative Number of Reported Claims | integer	3,236
2015 incurred claims	$ 23,533
2016 incurred claims	27,411
2017 incurred claims	36,553
2018 incurred claims	60,535
2019 incurred claims	71,386
2020 incurred claims	62,043
2021 incurred claims	97,038
2022 incurred claims	$ 58,735

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Property and Casualty Insurance Activity (Details 3)	Sep. 30, 2022 USD ($)
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented	$ 81,542,000
All outstanding liabilities before 2013, net of reinsurance	264,000
Liabilities for claims and claim adjustment expenses, net of reinsurance	81,806,000
Total	382,681,000
2014
2013	5,303,000
2014	5,710,000
2015
2013	6,633,000
2014	9,429,000
2015	12,295,000
2016
2013	7,591,000
2014	10,738,000
2015	16,181,000
2016	15,364,000
2017
2013	8,407,000
2014	11,770,000
2015	18,266,000
2016	19,001,000
2017	16,704,000
2018
2013	9,056,000
2014	13,819,000
2015	19,984,000
2016	21,106,000
2017	24,820,000
2018	32,383,000
2019
2013	9,717,000
2014	14,901,000
2015	21,067,000
2016	23,974,000
2017	28,693,000
2018	44,516,000
2019	40,933,000
2020
2013	10,016,000
2014	15,491,000
2015	22,104,000
2016	25,234,000
2017	31,393,000
2018	50,553,000
2019	54,897,000
2020	39,045,000
2021
2013	10,392,000
2014	15,770,000
2015	22,318,000
2016	25,750,000
2017	32,529,000
2018	52,025,000
2019	58,055,000
2020	50,719,000
2021	56,282,000
2013
2013	3,405,000
2022
2013	10,471,000
2014	16,083,000
2015	22,462,000
2016	26,244,000
2017	32,928,000
2018	53,657,000
2019	59,933,000
2020	52,632,000
2021	75,291,000
2022	$ 32,981

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Property and Casualty Insurance Activity (Details 4) $ in Thousands	Sep. 30, 2022 USD ($)
Property and Casualty Insurance Activity
Liabilities for loss and loss adjustment expenses, net of reinsurance	$ 81,806
Total reinsurance recoverable on unpaid losses	21,706
Unallocated loss adjustment expenses	3,416
Total gross liability for loss and LAE reserves	$ 106,929

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Property and Casualty Insurance Activity (Details 5) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jan. 01, 2023	Jun. 30, 2022	Dec. 30, 2021	Jun. 30, 2021
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021				$ 5,000,000
in excess of 1				5,000,000
Catastrophe [Member]
Initial loss subject to personal lines quota share treaty		$ 10,000,000	$ 10,000,000
Risk retained per catastrophe occurrence	$ 10,000,000	7,400,000	7,400,000	10,000,000	$ 10,000,000
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021				5,000,000
in excess of 1				5,000,000
Catastrophe loss coverage in excess of quota share coverage	$ 335,000,000	$ 335,000,000	$ 490,000,000	$ 490,000,000	$ 475,000,000
Reinstatement premium protection	Yes	Yes	Yes	Yes	Yes
Property And Casualty Personal Insurance Product Line Member
Quota share treaty percent ceded		30.00%	30.00%
Risk retained on initial $1,000,000 of losses	$ 1,000,000	$ 700,000	$ 700,000	$ 1,000,000	$ 1,000,000
Losses per occurrence subject to quota share reinsurance coverage		$ 1,000,000	$ 1,000,000
Expiration		Jan. 01, 2023	Jan. 01, 2023
Excess of loss coverage and facultative facility coverage	8,000,000	$ 8,400,000	$ 8,400,000	8,000,000	8,000,000
In excess of	1,000,000	600,000	600,000	1,000,000	1,000,000
Total reinsurance coverage per occurrence	8,000,000	8,500,000	8,500,000	8,000,000	8,000,000
Losses per occurrence subject to reinsurance coverage	$ 8,000,000	$ 9,000,000	$ 9,000,000	$ 9,000,000	$ 9,000,000
Expiration Date	Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2022	Jun. 30, 2021

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Property and Casualty Insurance Activity (Details 6) - USD ($)	12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2021
Commercial Lines [Member]
Total reinsurance coverage per occurrence			$ 3,750,000
Losses per occurrence subject to quota share reinsurance coverage			4,500,000
Quota share treaty			0
Risks retained			750,000
Excess of loss coverage above risk retained			3,750,000
in excess of			750,000
Quota share treaty1			$ 0
Personal Umbrella
Percent ceded - first $1000000 of coverage	90.00%	90.00%	90.00%
Percent ceded - excess of $1,000,000 dollars of coverage	95.00%	95.00%	95.00%
Risk retained	$ 300,000	$ 300,000	$ 300,000
Total reinsurance coverage per occurrence	4,700,000	4,700,000	4,700,000
Losses per occurrence subject to quota share reinsurance coverage	$ 5,000,000	$ 5,000,000	$ 5,000,000
Expiration date	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2021

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Property and Casualty Insurance Activity (Details 7) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Fair Value of Financial Instruments and Real Estate
Provisional ceding commissions earned	$ 4,881,580	$ 40,578	$ 14,116,044	$ 135,666
Contingent ceding commissions earned	4,514	(47,854)	167,033	(98,266)
Total commissions earned	$ 4,886,094	$ (7,276)	$ 14,283,077	$ 37,400

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Property and Casualty Insurance Activity (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended	9 Months Ended		12 Months Ended
	Oct. 18, 2021	Dec. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Reinsurance description	Effective January 1, 2022, the Company entered into an underlying excess of loss reinsurance treaty covering the period from January 1, 2022 through January 1, 2023. The treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty.
Net contingent ceding commissions payable			$ 2,714,000					$ 2,881,000
Incurred losses and loss adjustment expenses are net of reinsurance recoveries under reinsurance contracts			27,230,814	$ 1,220,970
Prior year loss development			713,788	$ 10,529
Advance premiums			$ 6,627,275					$ 2,693,466
in excess of 1		$ 5,000,000
Catastrophe stub coverage for the period from October 18, 2021 through December 31, 2021		$ 5,000,000
Personal Lines
Loss in excess coverage description			For the period January 1, 2022 through January 1, 2023, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty.
Single risk coverage			$ 9,000,000
Personal Lines | Minimum [Member]
Direct loss			3,500,000
Personal Lines | Maximum [Member]
Direct loss			$ 9,000,000
Reinstatement Premium Protection [Member]
Excess of catastrophe coverage					$ 9,800,000	$ 10,000,000	$ 10,000,000
Reinstatement of premium protection, amount					$ 10,000,000	$ 70,000,000	$ 70,000,000

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Debt (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Long-term debt, net	$ 29,955,926	$ 29,823,791
Discount
Long-term debt, net	8,110	32,442
Issuance costs
Long-term debt, net	35,964	143,767
Senior Notes [Member]
Long-term debt, net	$ 30,000,000	$ 30,000,000

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Debt (Details Narrative) - USD ($)	1 Months Ended		9 Months Ended
	Oct. 27, 2022	Dec. 19, 2017	Sep. 30, 2022
Net proceeds from the offering to contribute capital			$ 28,256,335
Advances limit, description			Advances are limited to 85% of the amount of available collateral. As of September 30, 2022, the estimated fair value of available collateral was $12,393,000.  Accordingly, as of September 30, 2022, advances were limited to $10,534,000
Capital Lease [Member]
Sale of fixed assets	$ 8,096,824
Description of sale leaseback	The provisions of the sale leaseback require KICO to pay a monthly payment of principal and interest totaling $126,877 for a term of 60 months commencing on October 27, 2022.
Federal Home Loan Bank of New York [Member]
Advances limit, description			Advances are limited to 5% of KICO’s net admitted assets as of the previous quarter and are due and payable within one year of borrowing.
Maximum allowable advances			$ 12,414,000
Senior Notes [Member]
Debt instrument, face amount		$ 30,000,000	$ 30,000,000
Debt instrument, maturity date		Dec. 30, 2022	Dec. 30, 2022
Debt instrument, unamortized discount		$ 163,200
Debt instrument, transaction cost		$ 715,170
Debt instrument, interest rate		5.50%	5.50%
Debt instrument, yield percentage		5.67%
Proceeds from issuance of unsecured notes		$ 29,121,630

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Stockholders Equity (Details) - Stock Options [Member]	9 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares
Number of options outstanding, beginning | shares	107,201
Granted shares | shares	0
Vested shares | shares	0
Forfeited shares | shares	0
Number of options outstanding, ending | shares	107,201
Number of options outstanding, vested and exercisable | shares	94,701
Weighted average exercise price, Beginning balance | $ / shares	$ 8.31
Weighted average exercise price, granted | $ / shares	0
Weighted average exercise price, Exercised | $ / shares	0
Weighted average exercise price, Forfeited | $ / shares	0
Weighted average exercise price, Ending balance | $ / shares	8.31
Weighted Average Price per share outstanding, vested and exercisable | $ / shares	$ 8.26
Weighted Average Remaining Contractual, Beginning balance	2 years 11 months 1 day
Weighted Average Remaining Contractual term, Ending balance	2 years 2 months 4 days
Weighted Average Remaining Contractual life, vested and exercisable	2 years 5 months 15 days
Aggregate Intrinsic value, begining balance | $	$ 0
Aggregate Intrinsic value, ending balance | $	0
Aggregate Intrinsic Value , vested and exercisable | $	$ 0

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Stockholders Equity (Details 1) - Restricted Stock Awards [Member]	9 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares
Number of options outstanding, beginning | shares	535,410
Granted shares | shares	98,456
Vested shares | shares	(234,219)
Forfeited shares | shares	(17,605)
Number of options outstanding, ending | shares	382,042
Weighted Average Grant Date Fair Value per Share, beginning balance | $ / shares	$ 7.01
Weighted Average Grant Date Fair Value per Share, granted | $ / shares	5.53
Weighted Average Grant Date Fair Value per Share, vested | $ / shares	7.32
Weighted Average Grant Date Fair Value per Share, forfeited | $ / shares	0
Weighted Average Grant Date Fair Value per Share, ending balance | $ / shares	$ 6.91
Aggregate Fair Value, beginning balance | $	$ 3,753,224
Aggregate Fair Value, granted | $	544,503
Aggregate Fair Value, vested | $	1,715,220
Aggregate Fair Value, Forfeited | $	0
Aggregate Fair Value, ending balance | $	$ 2,582,506

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Stockholders Equity (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Aug. 05, 2020
Dividends declared	$ 1,277,066	$ 1,274,797
Stock based compensation for stock options		14,000
Share-based compensation under offering	16,000	0
Stock based compensation for grants	186,000	452,000
Stock-based compensation expense	$ 9,000	43,000
Shares reserved for grants	364,271
Fair value of unamortized compensation cost	$ 2,000
Maximum share purchase under ESPP	750,000
Maximum share purchased by employee	5,000
Common stock shares authorized	20,000,000		20,000,000
Held-to-Maturity Securities US Treasury Securities [Member]
Common stock shares authorized	700,000			1,400,000
Grant [Member]
Stock-based compensation expense	$ 1,180,000	1,405,000
2021/2022 Offering [Member]
Stock-based compensation expense	$ 5,000	$ 0

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Income Taxes (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Deferred tax asset:
Net operating loss carryovers (1)	$ 2,099,013	$ 1,112,318
Claims reserve discount	1,164,002	1,186,789
Unearned premium	3,607,880	3,246,364
Deferred ceding commission revenues	2,167,278	2,047,187
Net unrealized lossess on securities	4,215,667	0
Other	1,530,488	1,220,898
Total deferred tax assets	14,784,328	8,813,556
Deferred tax liability:
Investment in KICO (2)	759,543	759,543
Deferred acquisition costs	4,873,194	4,670,187
Intangibles	105,000	105,000
Depreciation and amortization	189,643	1,046,817
Net unrealized gains on securities	0	2,039,756
Total deferred tax liabilities	5,927,380	8,621,303
Net deferred income tax asset	$ 8,856,948	$ 192,253

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Income Taxes (Details 1) - USD ($)	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Income Taxes
Federal only, NOL from 2022 and 2021	$ 2,099,013	$ 1,112,318
NOL carried back	0	0
Federal only, NOL from 2022 and 2021, net	2,099,013	1,112,318
State only (A)	2,227,702	2,099,239
Valuation allowance	(2,227,702)	(2,099,239)
State only, net of valuation allowance	0	0
Total deferred tax asset from net operating loss carryovers	$ 2,099,013	$ 1,112,318
Expiration of net operating loss carryforward	December 2027 - December 2042

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Income Taxes (Details Narrative) - USD ($)	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2017
Net operating loss carryover	$ 34,272,000	$ 32,296,000
CMIC [Member]
Consideration exchange principal amount	$ 3,750,000
Acquired equity interest rate	100.00%
Original purchase surplus notes	$ 2,921,319
Untaxed interest	1,169,000
Deferred tax liability reduced			$ 759,543
Deferred tax liability	$ 759,543

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Loss Per Common Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Loss Earnings Per Common Share
Weighted average number of shares outstanding	10,645,675	10,523,515	10,640,290	10,622,988
Effect of dilutive securities, common share equivalents: Stock options	$ 0	$ 0	$ 0	$ 0
Effect of dilutive securities, common share equivalents: Restricted stock awards	$ 0	$ 0	$ 0	$ 0
Weighted average number of shares outstanding, used for computing diluted earnings per share	10,645,675	10,523,515	10,640,290	10,622,988

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Commitments and Contingencies (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Commitments and Contingencies
Operating leases	$ 41,342	$ 131,152
Short-term leases	0	0
Total lease cost	41,342	131,152
Other information on operating leases
Cash payments included in the measurement of lease liability reported in operating cash flows	$ 47,483	$ 147,969
Discount rate	5.50%	5.50%
Remaining lease term in years KICKO	1 year 6 months	1 year 6 months
Remaining lease term in years Cosi	0	0

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Commitments and Contingencies (Details 1)	Sep. 30, 2022 USD ($)
Commitments and Contingencies
Remainder of 2022	$ 47,483
2023	194,919
2024	49,145
Total undiscounted lease payments	291,547
Less: present value adjustment	4,191
Operating lease liability	$ 287,356

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Commitments and Contingencies (Details Narrative) - USD ($)	1 Months Ended					3 Months Ended		9 Months Ended
	Jan. 31, 2022	Jan. 31, 2021	Dec. 31, 2020	Jan. 31, 2020	Sep. 16, 2019	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Jul. 08, 2019
Rent expenses						$ 41,342	$ 57,459	$ 131,152	$ 172,377
Stock-based compensation								1,204,865	$ 1,447,725
Employment Agreement [Member] | Barry Goldstein, President, Chief Executive Officer and Executive Chairman of the Board [Member]
Restricted stock issued				30,000
Golden Emloyment Agreement [Member] | Mery Golden Chief Operating Officer [Member]
Annual base salary		$ 500,000			$ 500,000
Percent of average per annum		14.00%
Option purchase					50,000
Percent of annual bonus		6.00%
Golden Emloyment Agreement [Member] | Mery Golden Chief Operating Officer [Member] | Maximum [Member]
Restricted stock value								136,500
Annual base salary								$ 500,000
Percent of average per annum								3.00%
Stock-based compensation		$ 2,835,000
Golden Emloyment Agreement [Member] | Mery Golden Chief Operating Officer [Member] | Minimum [Member]
Stock-based compensation		$ 945,000
Barry GoldsteinMr. Goldstein [Member] | Employment Agreement [Member]
Restricted stock issued	27,300	21,000
Cosi Lease [Member]
Lease costs										$ 40,000
January 2020 [Member] | Amended Employment Agreement [Member]
Restricted stock issued		230,769	17,191					157,431
Restricted stock value			$ 136,500
January 2023 [Member] | Amended Employment Agreement [Member]
Annual base salary								$ 500,000
Percent of average per annum								3.00%

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Employee Benefit Plans (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended
	Jun. 18, 2018	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Description of deferred compensation	The Deferred Compensation Plan is offered to a select group (“Participants”), consisting of management and highly compensated employees as a method of recognizing and retaining such Participants. The Deferred Compensation Plan provides for eligible Participants to elect to defer up to 75% of their base compensation and up to 100% of bonuses and other compensation and to have such deferred amounts deemed to be invested in specified investment options.
Deferred compensation liability		$ 1,093,136		$ 1,093,136		$ 907,914
Employee Benefit Plan 401 [Member]
Incurred expense				$ 207,000	$ 189,000
Employee benefits expenses		$ 71,000	$ 58,000

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Subsequent Events (Details Narrative) - USD ($)	1 Months Ended
	Oct. 27, 2022	Oct. 25, 2022
Investments
Tax Refund		$ 1,427,318
Fixed Assets Sold	$ 8,096,824