Greetings. Welcome to Kingstone Companies' First Quarter 2022 Financial Results Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Rich Swartz, Chief Accounting Officer. Mr. Swartz, you may begin. Thank you very much, Rob, and good morning, everyone. Yesterday afternoon, the company issued a press release detailing Kingstone's 2022 first quarter results. On this call, Kingstone may make forward-looking statements regarding itself and its business. The forward-looking events and circumstances discussed on this call may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Kingstone. For more information, please refer to the section entitled Factors that May Affect Future Results and Financial Condition in Part I, Item 1A of the company's Form 10-K for the year ended December 31, 2021, along with the commentary on forward-looking statements at the end of the company's earnings release issued yesterday. In addition, our remarks today include references to non-GAAP measures. For a reconciliation of our non-GAAP measures to the GAAP figures, please see the tables in our earnings release. With that, I'd like to turn the call over to Kingstone CEO, Mr. Barry Goldstein. Please go ahead, Mr. Goldstein. Thanks, Rich, and good morning, everyone. We're pleased that you can join us for this, our first quarter 2022 conference call. To begin, let me address the elephant in the room. Last Friday, we issued a press release acknowledging that our board received a preliminary, non-binding indication of interest from a sophisticated private equity firm as to a potential acquisition of our company. What I can tell you is that our board is fully engaged, as it always has been. In that regard, we have retained TigerRisk Capital Markets & Advisory as our financial advisor to assist us in exploring strategic alternatives. Our board is working to fulfill its obligations on behalf of the company's shareholders. I've received many emails from shareholders, some of whom I've known for many years. All had questions. I could not then, and I cannot at this time reply to these questions. While I take great pride in being forthright and transparent, I cannot comment at this time. We do not intend to disclose further developments unless and until we determine that further disclosure is appropriate or necessary. At the end of this call, I will take a limited number of questions, and only from the analysts that follow Kingstone Companies. I've said it many times in the past that a company and its stock price did not necessarily go hand in hand. For many years, we put up excellent numbers with double-digit growth, double-digit returns on equity, and our share price reflected those positive attributes. Company and stock were in alignment. Our results declined. Our share price followed suit. In my opinion, this was due in large part to a loss of earnings power. Shareholders have been frustrated. Our board demanded that we become hyper-focused on profitability and restore the earnings power to its historic norms. We set out with a plan to become a more modern company and needed to invest in our future to restore that profitability. The ultimate goal is to drive these profitability changes, increasing them, and allow the numbers to speak for themselves. Showing increasing profits and higher returns with the expectation that doing so will encourage investors to become more interested in Kingstone and lead to stock price improvement. Yes, there are macro issues to contend with, no doubt, but we must focus only on what we can change and not going around moaning about things outside of our control. That's what we're doing, and that's what we have been doing. Right now, there is this big disconnect. As we've done so much to improve the profitability of our company already, you just don't see it yet. We started Kingstone 2.0 to focus on profitability about 2.5 years ago. It began in July 2019 when I returned as CEO. We first exited the struggling commercial multi-peril line of business to focus on homeowners' coverages. This cost us greatly, both in terms of dollars and reputation, but we needed to stop that bleeding. At the same time, our premium rates hadn't kept pace with loss costs, and we took rate for the first time in many years. We hired Meryl to prepare and execute on a plan to modernize our company. To put that plan in place, she rebuilt our management team. She addressed the problems and corrected where needed. She stopped our ever-increasing need for more and more catastrophe reinsurance. While our business in New York has been in good shape, she needed to take great actions and tighten underwriting outside of New York. While doing this, she has instilled a culture of profitability, collaboration, and responsiveness throughout the company. We've spent these last two-plus years acting on that plan. We've built a new suite of products, which we call Kingstone Select, products that take advantage of modern analytics, products that allow us to match rate with risk on an individual property-by-property basis, and products designed to lead us to greater efficiency, a reduction to our costs, and a decline in our expense ratio. We are now seeing that. We began selling Select in New York during the first quarter, and just last week, we began the expansion of Select to Connecticut. Through the rest of the year, we will, with the approval of the various state regulators, bring Select to all of the states in which we operate. One product across all of our states with a producer experience second to none. Know this, I'm aware that there hasn't been a positive market reaction to the work we've put in. This is a business where profitability results lag well after the time actions are taken. I do understand it is a matter of show me, and we are working as hard as we can to do just that. The first quarter was a typical first quarter for Kingstone. Our Northeast business is seasonal, and we again posted an underwriting loss due to winter weather. This winter was worse than the prior year, with four catastrophe events and high winter weather losses. I'll let Meryl discuss the quarterly results in detail. I've already told you about many of the things we're doing to return Kingstone to profitability. Now, I want to share some of the results that we're starting to see from these initiatives. Let's talk about margin expansion. In the first quarter we continued to see the impact of the rate increases we've taken to keep up with trend. During the quarter, our written premium increased by 12.7%, while our policies in force grew by only 3.5%. Please consider that we've added premium at almost 4x the rate that we added risk. We expect this premium growth to continue and the delta between premium revenues and expected losses to widen throughout the year. With our focus on expenses, keeping costs in check while increasing revenue will further help increase our profits. Again, not so easy to see what we've already accomplished. During the quarter, our quote activity increased materially for personal lines. In spite of the higher premium prices and strict underwriting standards, new business production was up by 15% overall. What we've seen as rates have increased is kind of counterintuitive, but we've also seen our retention increase. Retention is up in every major line of business that we write. This, along with the increased quote activity, gives you a sense of the favorable competitive environment we are operating in. Some of the drivers of last year's unprofitability seem to have abated, at least for this quarter. The number of severe fires in the first quarter was lower than in prior years. Liability loss frequency declined. If only we can control the weather. Now, let me talk a bit about our expense ratio, which, as you'll be able to see, is down 3.5 points from the prior year. This is driven in part by the quota share and the corresponding ceding commission, but also by multiple expense reduction initiatives we have taken. As the quota share makes our expenses very difficult to understand, let me share some interesting facts with you. I said we're starting to see the benefit of our actions. Take a look at these underwriting expenses, but look at the dollars. Underwriting expenses were up over last year by $349,000, an increase of 5.4%. Commission expense too, take a look at that. In the first quarter, it was up $127,000. It's just a 1.5 point increase over the prior year. Now compare that to the increase in our direct earned premiums, which were up $3,459,000. Look at it this way. We spent less than $0.15 of every incremental dollar of earned premium on expenses. Make no mistake, our expense ratio is coming down. With our catastrophe reinsurance renewal coming up very shortly, we are pleased to report there is not a need to increase the amount of coverage we ought to purchase. In fact, it will be down by about 5% from last year. Excluding changes in rate, none of these incremental premium dollars that I just referred to will be spent on catastrophe coverage. Let me turn the call over to Meryl now to review our first quarter financial results. Meryl? Thanks, Barry. The company posted a first quarter net loss of $9.2 million and $0.87 per diluted share, compared to a net loss of $300,000 and $0.03 per diluted share for the same period last year. Our operating loss per share was $0.54 compared to $0.25 last year. Direct written premiums for the quarter were up 12.7% to $42.9 million, an increase of $4.8 million from the prior year period. This growth in premiums is due to rate increases, and we expect the premium growth rate to accelerate later in the year. Due to entering into a new 30% quota share effective at year-end, net written premiums decreased by $5.9 million, or 19.1% this quarter. The net loss and LAE ratio was 86, up 20.8 points from the prior year. This increase from the prior year was attributable to two main items. First, we experienced four catastrophe events, and catastrophes added 11.3 points to our quarter's loss ratio. Last year's CAT losses were only 0.7 points. Second, the increase was driven by winter-related water losses, like pipe freezes, that added 12.5 points to the attritional loss ratio for this quarter versus just 5.5 points for Q1 2021. The two main drivers of our attritional loss ratios throughout 2021 were not factors in this quarter. Last year, we spoke frequently about heightened liability losses. Liability frequency in Q1 was flat for our largest line homeowners and a level that is more in line with history. Dwelling fire liability frequency declined versus the prior year. Additionally, while the frequency of fires was similar to prior years, the number of large fire losses declined materially from Q1 in the prior years. We thought the increase in the number of large fire losses last year was random, and fortunately, fires, and large fires in particular, had far less impact on our Q1 results. We are working hard to stay ahead of inflation and loss costs. In addition to inflation guarding rate increases, we are also adjusting replacement costs on policies at renewal. For the current quarter, the net underwriting expense ratio decreased by 3.5 points to 38.5%. The benefit of our expense reduction initiatives will be increasingly reflected in our results throughout the year. The first quarter is always unprofitable for Kingstone due to the winter in the Northeast. The increase in our loss ratio this quarter was in great part due to the fact that last year was a much more mild winter. Otherwise, we are starting to realize the benefits of our Kingstone 2.0 initiatives, as Barry shared earlier. I want to take this opportunity to thank the many employees of Kingstone whose hard work is making 2.0 a reality, along with our valued partners insured.io, Water Street, and Milliman. We have done and continue to do all of the right things to return the company to profitability. Now let me turn the call back over to Barry to discuss our investment results. Barry? That's what you call being on mute. Sorry about that, everyone. Let me catch up to where we are here. So I need to address our investment portfolio. As you know, we've always invested primarily in highly rated, limited duration, fixed income securities. We, like many others, have seen the dramatic rise in interest rates over the past four months result in a serious decline in bond values, felt most profoundly in the shorter maturities that Kingstone holds. A realignment in our portfolio during the third and fourth quarters of last year led us to holding better quality bonds and a more diversified portfolio, albeit at lower rates than previous. While bond prices are down across the board, along with a decline in prices of the fixed income ETFs, preferred stocks, and other assets that we hold, we're required to reduce their values on our income statement and balance sheet and flow the changes through. We've always invested with the intent of holding and generating income to support our underwriting efforts. We are not traders. We fully expect that our A+ rated portfolio will pay off at par upon maturity, and the decline in other comprehensive income will be restored as that time approaches. Like Meryl, I continue to believe that we've done all the right things to return the company to consistent profitability and look forward to sharing the results of our efforts with you in future quarters. Now I'll turn the call back to the operator. Operator, please pause for questions. Thank you, Mr. Goldstein. We'll now be conducting a question-and-answer session. If you'd like to ask a question today, please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Paul Newsome with Piper Sandler. Please proceed with your question. Good morning. Thanks for the call. I was hoping you could give us a little bit more help, and color on how we should think about the first quarter as a run rate respectively. And not necessarily for the remainder of the year. I obviously understand the seasonality, but you know, last year was a very light year for weather. This year, at least nationwide, is relatively light. For you, should we see this as sort of a normal level as the beginning base? Or are there a number of things that we should pull out, you know, particularly some of those weather losses that you think don't reflect kind of a normal quarter? I think we're just sort of trying to figure out, in general, kind of what's the right CAT load and what's the right non-CAT weather kind of load for Kingstone, given its many changes. Yeah. Thank you for the question, Paul. I do think if I was able to accurately answer that question, I'd be much better off going to Belmont this afternoon and betting the horses. You're asking me to predict the weather patterns of the future. I can tell you, and Meryl can embellish upon this as she likes. We had a very mild winter in 2021. By comparison, this winter was worse. You know, our business expanded mostly north. We did go to New Jersey, but we also went to Connecticut and Rhode Island and Massachusetts. We're more exposed to winter weather by definition, but also less exposed to wind losses from catastrophes as a result. Where we're located is really in about as good a geography as you could expect. You know, I read the same things as everyone else does about the threat of hurricanes, the number of hurricanes and whatnot. For me to espouse on what I think the likelihood of an event would be, I think it would be foolhardy for me to do that. All I could say is that the first quarter was worse than the year before. If you heard what Meryl said, Paul, absent that winter weather, that heightened winter weather, our attritional loss ratio in the first quarter was below what it was last year. I think that's the driver here. If you're thinking about what to look forward to for the balance of the year, I think what you'll see is that loss costs are being contained by a lot of things. What I'm hoping to see is that attritional loss ratio will continue to contract. Meryl, is there anything you'd want to add to that? Yeah, the only thing I'd add, Paul, is that the two items that really plagued us throughout last year, this increase in liability frequency as well as a higher frequency of severe fires. Fortunately, we saw neither of those driving the first quarter results, so we're feeling really good. Maybe thinking about this slightly differently, more on an annual basis. If your P&L is down, which it sounds like it probably maximum loss is down in general, which means you don't need as much reinsurance and all the other good things. You know, is it possible that the shift in the geographic alignment is also shifting the seasonality, so first quarter is worse because you're up more north and away from the coasts? 'Cause I would've thought that, you know, if the P&L is down, the CAT load expectation would also be down, at least overall for the year. I'm just trying to kind of reconcile that with what we saw in the first quarter. Yeah. I mean, the P&L represents quite a number of different issues that we have to contend with. Winter weather is included, but as is wind. You know, I can't profess to be an expert as to how the models weigh each of these items, but I think the expansion does make us more exposed to winter weather than, say, the company we were when we were just in New York and almost exclusively in Downstate New York. But again, what goes along with that exposure, heightened exposure to winter weather is effectively a reduced exposure to wind events because the further north you go, the less likely it is for a landfall hurricane, frankly. It's very hard to answer the question. Again, I hope we've given you enough color, give you something to go by. No, thank you. I appreciate the help. Thanks for answering my questions. My pleasure. Thank you. The next question is from the line of Bob Farnam with Boenning & Scattergood. Please proceed with your questions. Yeah. Hi there, and good morning. Similar questions to Paul. I think where we're getting at is you said that there was 12.5 points of the water losses this year versus 0.5 point last year. Last year seems like it's pretty low. You know, is it normal, as a normal year, you know, quote-unquote, "a normal year," a few percentage points? You know, what did it look like in 2019 or 2018 in terms of water losses? We're trying to figure out how much of this is out of the norm. Just because, you know, we're taking a look at the first quarter, you know, ex-CAT loss ratio. It's still, you know, a good 10 points higher than where it has been in prior years. It's just trying to figure out where that delta's coming from. You know, it's interesting, and we started to have this conversation just recently. There's a lot of other homeowner-only type companies that report their results differently than we do. We limit our reporting to separating out PCS or catastrophe events. That's all we do. Others have another block of information about severe weather, bad weather, unusually bad weather. I don't want to play that game, and try to make nothing into something, frankly. I think we're gonna be having to address that going forward, because that's really the question you're asking. How unusual was this heightened level of winter water losses, and how does that compare to prior years? I think it's a question we'll have to take. You know, in terms of reporting, we'll have to take it under advisement. Meryl, is there anything you'd want to add to that? I would just add that looking back over the past five years, 2022 was the worst CATs and winter weather losses other than, I think, going back higher than 2021, 2019. I think 2018 was higher, but the others were lower. This was a bad year. Looking at, if we look at our results, ex-CAT and ex-winter claims, both our frequency and severity is down versus those same three-year periods. I hope that helps, Bob. Yeah. No, you're doing as best as you can, I'm sure. It's just, you know, we talked about fire losses, for example, and I thought, you know, maybe the first quarter had extra 10 points or something like that of fire losses in a typical first quarter. We're just, again, we're trying to figure out what the water losses, the pipe freezing would be as well. Am I to assume that a lot of these claims came from outside of New York? I mean, I know we're talking about the expansion northward, but, you know, where was the location of the pipes bursting and whatnot? Our results are very much driven by New York still, so I don't have the exact answer, Paul, but I'm pretty confident that it's driven by New York. No, I also know that we had a couple of big ones in Connecticut, so if that helps you at all. Yeah. I mean, obviously, over the past several years, you've been expanding outside of New York. Is this, I understand the benefits from the P&L perspective, perhaps the penalty from higher winter losses. Is the performance of the kind of the outside of New York book going according to your expectations, or is that still something you're trying to address with pricing? Let me try to get back to what you just said. What Meryl said was that this season in total was worse than last year and worse than what we've seen in quite a while. I don't want to draw you to a conclusion that it's coming from an expansion northward. What she'd said was that effectively four out of every five policies we still underwrite come from New York, and there wasn't a very wide disparity in the weather among the states we write, albeit it's worse as you get north in terms of temperature. I wouldn't draw that conclusion. In terms of the expansion outside New York, Meryl had a lot of work to do when she joined the company to fix the expansion efforts that were undertaken, mostly while I was sidelined and wasn't the CEO. Effectively, she's fixed that. We've run off the vast majority of the problem homes that we underwrote, maybe incorrectly at first. We've increased rates to put us back to a position where we can generate an underwriting profit. And, you know, the things that we've done to further improve that, whether it's non-renewing high-valued homes or making sure that the new product incorporates the actual costs of reinsurance when trying to take on a new risk. There's so many things that have been done, but the benefit, I think, of all those things will be seen very, very clearly in our efforts outside New York. Meryl, do you wanna add anything to that? Yeah, I mean, I would just say that. Well, first of all, I want to thank our producers outside of New York for sticking with us because we have made a disproportionate number of changes in those states in terms of, you know, tightening our underwriting and raising rates, non-renewing business, you know, really trying to manage our catastrophe exposure more than and our rate level. We feel good about where we are, but the real fix is our new Select product that we just introduced in Connecticut this week and will be rolling out through the rest of the year because it's priced in a much more sophisticated way and better matches rate to risk. It's by-peril rated, so it's finer segmentation, and it includes the AIR CAT Model and our territory factors, so it includes the cost of reinsurance and the rate. Really, that product is going to greatly improve our profitability in all states, but particularly in those expansion states for Kingstone. Again, we've you know made a lot of changes to become more profitable in those states, but the real answer is to have a different product, and Select is the one, and that will allow us to grow much faster and more profitably everywhere. Great. Thanks for that color. I guess the last question I had is actually going back to the weather losses. Was there an inflationary impact on these? Was there, you know, delays in contractors being able to get to the house and an impact, the supply and the materials, construction materials? You know, how much was that driven by inflation, maybe relative to prior years? You know, I think your question really is our loss costs up? Like, as we've been saying for this quarter, when both our frequency and severity were up due to the catastrophes and the winter losses. But if you take out those catastrophes and winter losses, you'll see that we had a reduction in both frequency and severity. If you look at severity and, you know, what really drove this quarter's attritional severity down was the lack of severe fire claims, as we've discussed. At a company our size, Bob, we're really too small to be able to determine the exact amount of inflation that drives our loss costs. While inflation is definitely in our numbers, it's just hard to detect the exact amount, and we have to rely on outside sources to determine how much inflation is. For us, it's more about the mix of perils, and that's what drives our severity. As I mentioned, we had more water losses and CAT losses versus fire. That's really what drove our severity this quarter, and it's hard to detect how much of the increase is due to inflation itself. Does that answer your question? Yeah. Let me put a bit more color on that. You know, talking about inflation and the statement I made previously that actions we take, it takes a long time till you see it go through the numbers. Well, specifically for inflation, we take rate each and every year in each and every product and each and every state. One of the factors that determines how much rate we need to take is inflation. We don't have our own independently determined amount of inflation. We rely on the same types of local statistics that you and everybody else can see. The fact is that, you know, the next time we take rate in any given state, this heightened amount of inflation we're currently experiencing will lead to us raising rates. I hope that gives you a little more color. That, yes, loss costs certainly reflect some inflation, but that translates into higher premium going forward. Right. Okay. I think, Meryl, you've mentioned before that you're trying to change rates a lot more frequently than you have in the past. Rates probably change annually. Yes. We have instituted an annual cadence of rate change. We have indication meetings every quarter to look at how much rate is needed in each state and whether we need to take any action sooner. Yes. As I mentioned, we are also this year pulling replacement costs, updating replacement costs on our in-force books. That will also drive rate. I hope that covers everything, Bob. Yeah. That covers just about everything. Thanks for bearing with me. Yeah, I'll leave it there and let you guys off the hook. Great. Thank you. Thank you. We've reached the end of our question and answer session. I'll now turn the call back to Mr. Goldstein for closing comments. Well, very short. Thank you all for listening in, taking the time to hear our story about the first quarter, and we look forward to reporting on the second quarter this summer. Have a great day, everyone. Bye. This will conclude today's conference. Thank you for your participation. You may now disconnect your lines at this time.