10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

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

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of each class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐     No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐     No ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Persons who respond to the collection of information contained in this form are not

required to respond unless the form displays a currently valid OMB control number.

SEC 1673 (04-20)

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to the previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10-D1(b). ☐

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 June 30, 2023, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $11,334,362 based on the closing sale price as reported on the Nasdaq Capital Market. 

Note.—If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in this Form.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐     No ☐

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of March 21, 2024, there were 11,007,824 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

INDEX

		Page No.
Forward-Looking Statements		3
PART I
Item 1.	Business.	4
Item 1A.	Risk Factors.	21
Item 1B.	Unresolved Staff Comments.	32
Item 1C.	Cybersecurity.	32
Item 2.	Properties.	34
Item 3.	Legal Proceedings.	34
Item 4.	Mine Safety Disclosures.	34
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	35
Item 6.	Reserved.	36
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	36
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	71
Item 8.	Financial Statements and Supplementary Data.	71
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	71
Item 9A.	Controls and Procedures.	72
Item 9B.	Other Information.	72
Item 9C.	Disclosures Regarding Foreign Jurisdictions that Prevent Inspections.	72
PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	73
Item 11.	Executive Compensation.	78
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	83
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	85
Item 14.	Principal Accountant Fees and Services.	86
PART IV
Item 15.	Exhibits and Financial Statement Schedules.	87
Item 16.	Form 10-K Summary.	89
Signatures		90

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PART I

Forward-Looking Statements

This Annual Report on Form 10-K (the “Annual 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 Annual 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 this Annual 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.

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ITEM 1. BUSINESS.

(a) Business Development

General

As used in this Annual Report, references to the “Company,” “we,” “us,” or “our” refer to Kingstone Companies, Inc. (“Kingstone”) and its subsidiaries.

We offer property and casualty insurance products through our wholly-owned subsidiary, Kingstone Insurance Company (“KICO”). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto insurance in New York, and in 2023 was the 15th largest writer of homeowners insurance in New York. KICO is also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. For the years ended December 31, 2023 and 2022, respectively, 88.3% and 80.6% of KICO’s direct written premiums came from the New York policies. We refer to our New York business as our “Core” business and the business outside of New York as our “non-Core” business.

In addition, through our subsidiary, Cosi Agency, Inc. (“Cosi”), a multi-state licensed general agency, we access alternative distribution channels. See “Distribution” below for a discussion of our 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 is deducted against commission expense and Cosi-related expenses are included in other operating expenses. Cosi-related operating expenses are not included in our stand-alone insurance underwriting business and, accordingly, its expenses are not included in the calculation of our combined ratio as described below.

Recent Developments

Developments During 2023
·	Catastrophe Reinsurance Coverage

Effective July 1, 2023, KICO decreased the top limit of its catastrophe reinsurance coverage from $345,000,000 to $325,000,000, which, at the time, equated to more than a 1-in-100 year storm event according to the primary industry catastrophe model that we follow.

· A.M. Best Rating

On July 6, 2023, A.M. Best withdrew KICO’s ratings as KICO requested to no longer participate in A.M. Best’s interactive rating process.

· Withdrawal from New Jersey

On October 2, 2023, the New Jersey Department of Banking & Insurance acknowledged KICO’s request to withdraw from the state effective January 1, 2024. The Department requested that KICO complete the withdrawal over a two year period.

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Developments During 2022
·	Debt Exchange

On December 9, 2022, we entered into a Note and Warrant Exchange Agreement (the “Exchange Agreement”) with several holders (the “Exchanging Noteholders”) of our outstanding 5.50% Senior Notes due 2022 (the “2017 Notes”). On the date of the Exchange Agreement, the Exchanging Noteholders held 2017 Notes in the aggregate principal amount of $21,545,000 of the $30,000,000 aggregate principal amount of 2017 Notes then outstanding.

At the closing of the Exchange Agreement, the Exchanging Noteholders exchanged their respective 2017 Notes for, among other things, new 12.0% Senior Notes due December 30, 2024 in the aggregate principal amount of $19,950,000 (the “2022 Notes”).

· Catastrophe Reinsurance Coverage

Effective July 1, 2022, KICO decreased the top limit of its catastrophe reinsurance coverage from $500,000,000 to $345,000,000, which, at the time, equated to more than a 1-in-100 year storm event according to the primary industry catastrophe model that we follow.

· A.M. Best Rating

In July 2022, A.M. Best downgraded KICO’s financial strength rating from B+ (Good) to B (Fair) and Long-Term Issuer Credit Rating (ICR) from “bbb-” (Good) to “bb” (Fair) due to a significant deterioration in KICO’s risk-adjusted capitalization. Such deterioration was driven by a sizeable increase in KICO’s net probable maximum loss (“PML”) as a result of its latest reinsurance renewal and a decline in surplus from weather-related losses and dividend payments by KICO in 2022. The outlook for each of these credit ratings was revised to “negative” from “stable”. Concurrently, A.M. Best’s public rating for Kingstone Companies, Inc. was withdrawn.

(b) Business

Property and Casualty Insurance

Overview

Property and casualty insurance companies provide policies in exchange for premiums paid by their customers (the “insureds”). An insurance policy is a contract between the insurance company and its insureds where the insurance company agrees to pay for losses that are covered under the contract. Such contracts are subject to legal interpretation by courts, sometimes involving legislative rulings and/or arbitration. Property insurance generally covers the financial consequences of accidental losses to the insured’s property, such as a home and the personal property in it, or a business owner’s building, inventory and equipment. Casualty insurance (also referred to as liability insurance) generally covers the financial consequences related to the legal liability of an individual or an organization resulting from negligent acts and omissions that cause bodily injury and/or property damage to a third party. Claims for property coverage generally are reported and settled in a relatively short period of time, whereas those for casualty coverage may take many years to settle.

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We derive substantially all of our revenue from KICO, including revenues from earned premiums, ceding commissions from quota share reinsurance, net investment income generated from our investment portfolio, and net realized gains and losses on investment securities. We also collect a variety of policy fees including installment fees, reinstatement fees, and non-sufficient fund fees related to situations involving extended premium payment plans. Earned premiums represent premiums received from insureds, which are recognized as revenue over the period of time that coverage is provided (i.e., ratably over the life of the policy). All of our policies are 12 month policies; therefore, a significant period of time can elapse between the receipt of insurance premiums and the payment of insurance claims. During this time, KICO invests the premiums, earning investment income and generating net realized and unrealized gains and losses on associated investments. Our holding company earns investment income from its cash holdings.

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. These corporate expenses include legal and auditing fees, executive employment costs, and other costs directly associated with being a public company.

The key measure of relative underwriting performance for an insurance company is the combined ratio. An insurance company’s combined ratio is calculated by taking the ratio of incurred loss and LAE to earned premiums (the “loss and LAE ratio”) and adding it to the ratio of policy acquisition and other underwriting expenses to earned premiums (the “expense ratio”). A combined ratio under 100% indicates that an insurance company is generating an underwriting profit prior to the impact of investment income. After considering investment income and investment gains or losses, insurance companies operating at a combined ratio of greater than 100% can also be profitable.

Business; Strategy

We are a multi-line regional property and casualty insurance company writing business exclusively through retail and wholesale agents and brokers (“producers”) appointed by our wholly-owned subsidiary, KICO. We are licensed to write insurance policies in New York, New Jersey, Connecticut, Maine, Massachusetts, New Hampshire, Pennsylvania and Rhode Island. KICO is actively writing its property and casualty insurance products in New York. Additionally, our subsidiary, Cosi, a multi-state licensed general agency, receives commission revenue from KICO for the policies it places with others and pays commissions to these agencies.

We seek to deliver an attractive return on capital and to provide consistent earnings growth through underwriting profits and income from our investment portfolio. Our goal is to allocate capital efficiently to those lines of business that generate sustainable underwriting profits and to avoid lines of business for which an underwriting profit is not likely. Our strategy is to be the preferred multi-line property and casualty insurance company for selected producers in the geographic markets in which we operate. We believe producers place profitable business with us because we provide excellent, consistent service to insureds and claimants. Producers also value our broad underwriting appetite coupled with competitive rate and commission structures.

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Our principal objectives are to grow profitably while managing risk through prudent use of reinsurance in order to strengthen our capital base. We generate underwriting income through adequate pricing of insurance policies and by effectively managing our other underwriting and operating expenses. We are pursuing profitable growth through existing producers in existing markets, by developing new geographic markets and producer relationships, and by introducing niche products that are relevant to our producers and insureds.

For the year ended December 31, 2023, our gross written premiums totaled $200.2 million, a decrease of 0.5% from the $201.2 million in gross written premiums for the year ended December 31, 2022.

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. Personal lines policies accounted for 92.6% of our gross written premiums for the year ended December 31, 2023.

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. These policies accounted for 7.3% of our gross written premiums for the year ended December 31, 2023.

Other - We write canine legal liability policies and have a small participation in mandatory state joint underwriting associations. These policies accounted for 0.1% of our gross written premiums for the year ended December 31, 2023.

Our Competitive Strengths

Long History of Operations

KICO has been in operation in the State of New York since 1886. We have consistently sought to grow the amount of profitable business that we write by introducing new products, increasing volume written with our Select producers in existing markets, and developing new producer relationships and markets. The extensive heritage of our insurance company subsidiary and our commitment to the markets in which we operate is a competitive advantage with producers and insureds.

Strong Producer Relationships

Within our producers’ offices, we compete with other property and casualty insurance carriers available to those producers. We carefully select the producers that distribute our insurance policies and continuously monitor and evaluate their performance. We believe our insurance producers value their relationships with us because we provide excellent, consistent personal service coupled with competitive rates and commission levels. We have consistently been rated by insurance producers as above average in the important areas of underwriting, claims handling and service.

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We offer our Select producers access to a variety of personal lines and specialty products, including some that are unique to us. We provide a multi-policy discount on homeowners policies in order to attract and retain more of this multi-line business. We have had a consistent presence in the New York market and our producers value the longevity of the relationship. We believe that the excellent service provided to our Select producers, our broad product offerings, and our competitive prices provide a strong foundation for profitable growth.

Sophisticated Pricing, Underwriting and Risk Management Practices

We believe that a significant underwriting advantage exists due to our local market presence and expertise. Our underwriting process evaluates and screens out certain risks based on their prior loss experience, cost of reinsurance, property condition, insurance scoring and driving record, and then is augmented by information collected from physical property inspections. We maintain certain policy exclusions that reduce our exposure to risks that can create severe losses. We target a preferred risk profile in order to reduce adverse selection from risks seeking the lowest premiums and minimal coverage levels.

Our underwriting procedures, premiums and policy terms support the goal of underwriting profitability of our personal lines policies. We adhere to a quarterly indication process and perform a rate review in each state and for each product at least annually. In 2022, we introduced our new Select homeowners, condo/tenant and dwelling fire programs in New York. This product incorporates by-peril rating and a host of new data sources to better match rate to risk. We have also updated property replacement costs to address inflation.

We manage coastal risk exposure through the use of individual catastrophe risk scoring, the inclusion of hurricane deductibles, non-renewals and the prudent use of reinsurance. We measure our risk exposure regularly and adjust our underwriting to manage growth in our probable maximum loss (PML).

Effective Utilization of Reinsurance

Our reinsurance treaties allow us to limit our exposure to the financial impact of catastrophe losses and to reduce our net liability on individual risks. Our reinsurance program is structured to enable us to grow our premium volume while maintaining regulatory capital and other financial ratios within thresholds used for regulatory oversight purposes.

Our reinsurance program also provides income from ceding commissions earned pursuant to quota share reinsurance contracts. The income we earn from ceding commissions subsidizes our fixed operating costs, which consist of other underwriting expenses. Quota share reinsurance treaties transfer a portion of the profit (or loss) associated with the subject insurance policies to the reinsurers.

Scalable, Low-Cost Operations

We focus on efficiently managing our expenses and invest in tools and processes that improve the effectiveness of underwriting risks and processing claims. We evaluate the costs and benefits of each new tool or process in order to achieve optimal results. While the majority of our policies are written for risks in downstate New York, our Kingston, New York location provides a low-cost operating environment.

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We continue to invest in improving our online application and quoting systems for our personal lines products. We have leveraged a paperless workflow management and document storage tool that has improved efficiency and reduced costs. We provide an online payment portal that allows producers and insureds to make payments and to view policy information for all of our products in one location. Our ability to control the growth of operating and other expenses while expanding our operations and growing revenue is a key component of our business model and is important to our financial success.

In 2022, we completed the implementation of Kingstone 2.0, an effort to modernize the Company.  Kingstone 2.0 included strategic hiring, development of the Select product, investments in new systems and retirement of the legacy systems.  We also adopted a framework of stronger rating, underwriting and catastrophe management disciplines.  As a result, Kingstone 2.0 positioned the Company to be better able to navigate today’s challenging environment. In 2023, we embarked on a new strategy to optimize our in-force business, which we coined as “Kingstone 3.0”.  The four pillars of this new strategy entail:

1.	Aggressively reducing the non-Core book of business, which has had a disproportionately negative impact on underwriting results.
2.	Adjusting pricing to stay ahead of loss trends, including inflation.
3.	Tightly managing reinsurance requirements and costs, using risk selection and other underwriting capabilities to manage the growth rate of our PML.
4.	Continuing expense reduction focus with a goal of reducing the net expense ratio to 33% by year-end 2024.

See detailed description of Kingstone 2.0 and Kingstone 3.0 in Part II, Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) in this Annual Report.

Underwriting and Claims Management Philosophy

Our underwriting philosophy is to target niche segments for which we have detailed expertise and can take advantage of market conditions. We monitor results on a regular basis and our Select producers are reviewed by management on at least a semi-annual basis.

We believe that our rates are appropriately competitive with other carriers in our target markets. We do not seek to grow by competing based solely upon price. We seek to develop long-term relationships with our Select producers who understand and appreciate the path we have chosen. We carefully underwrite our business utilizing industry claims databases, insurance scoring reports, physical inspection of risks and other individual risk underwriting tools. We write homeowners and dwelling fire business in coastal markets and are cognizant of our exposure to hurricanes. We have mitigated this risk through appropriate catastrophe reinsurance and application of hurricane deductibles. We handle claims fairly while ensuring that coverage provisions and exclusions are properly applied. Our claims and underwriting expertise supports our ability to grow our profitable business.

Distribution

We generate business through our relationships with over 700 producers. We carefully select our producers by evaluating numerous factors such as their need for our products, premium production potential, loss history with other insurance companies that they represent, product and market knowledge, and agency size. We only distribute through agents and have never sought to distribute our products direct to the consumer. We monitor and evaluate the performance of our producers through periodic reviews of volume and profitability. Our senior executives are actively involved in managing our producer relationships.

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Each producer is assigned to a staff underwriter and the producer can call that underwriter directly on any matter. We believe that the close relationship and personal service received from their underwriters is a principal reason producers place their business with us. Our producers have access to a KICO producer interface and website portal that provides them the ability to quote risks for various products and to review policy forms and underwriting guidelines for all lines of business. We send out frequent “Producer Grams” in order to inform our producers of updates at KICO.

Competition; Market

The insurance industry is highly competitive. We constantly assess and make projections of market conditions and appropriate prices for our products, but we cannot fully know our profitability until all claims have been reported and settled.

Our active policyholders are located primarily in the downstate regions of New York State, our Core business. Under Kingstone 3.0, we are reducing our non-Core Northeast markets, which include New Jersey, Rhode Island, Massachusetts and Connecticut. In addition, we are licensed to write insurance policies in Maine, New Hampshire and Pennsylvania.

In 2022, we made the decision to reduce our footprint outside New York due to profitability concerns. We entered these states to diversify Kingstone’s footprint starting in 2017, and they have had a disproportionate impact on our underwriting results, especially in 2022.  We have attempted to address these challenges and achieve profitability with a series of rate and underwriting actions, but the impact we have worked towards was largely nullified by inflation. In addition to a new business moratorium in our non-Core states of Connecticut, Massachusetts, New Jersey and Rhode Island, we have been actively non-renewing policies subject to regulatory constraints and have materially lowered commission rates to our producers.  Subject to our withdrawal agreement with the state of New Jersey, we will be non-renewing our entire book in such state over a two year period starting January 1, 2024.  These actions reduced the size of our policies in force outside New York by 48% in 2023.

In 2023, KICO was the 15th largest writer of homeowners insurance in the State of New York, according to data compiled by S&P Capital IQ. Based on the same data, in 2023, we had a 1.6% market share for this business. We compete with large national carriers as well as regional and local carriers in the property and casualty marketplace in New York and other states. We believe that many national and regional carriers have chosen to limit their rate of premium growth or to decrease their presence in Northeastern states due to the relatively high coastal population and associated catastrophe risk that exists in the region. Additionally, some of our largest competitors historically have stopped writing business this year.

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Loss and Loss Adjustment Expense Reserves

We are required to establish reserves for unpaid losses, including reserves for claims loss adjustment expenses (“LAE”), which represent the expenses of settling and adjusting those claims. These reserves are balance sheet liabilities representing estimates of future amounts required to pay losses and loss expenses for claims that have occurred at or before the balance sheet date, whether already known to us or not yet reported. We establish these reserves after considering all information known to us as of the date they are recorded.

Loss reserves fall into two categories: case reserves for reported losses and LAE associated with specific reported claims, and reserves for losses and LAE that are incurred but not reported. We establish these two categories of loss reserves as follows:

Reserves for reported losses - When a claim is received, we establish a case reserve for the estimated amount of its ultimate settlement and its estimated loss expenses. We establish case reserves based upon the known facts about each claim at the time it is received and we may subsequently adjust case reserves as additional facts and information about the claim develops.

IBNR reserves - We also estimate reserves for loss and LAE amounts incurred but not reported (“IBNR”). IBNR reserves are calculated in bulk as an estimate of ultimate losses and LAE less reported losses and LAE. There are two types of IBNR; the first is a provision for claims that have occurred but are not yet reported or known. We refer to this as ‘Pure’ IBNR, and due to the fact that we write primarily quickly reported property lines of business, this type of IBNR does not make up a large portion of KICO’s total IBNR. The second type of IBNR is a provision for expected future development on known claims, from the evaluation date until the time claims are settled and closed. We refer to this as ‘Case Development’ IBNR and it makes up the majority of the IBNR that KICO records. Ultimate losses driving the determination of appropriate IBNR levels are projected by using generally accepted actuarial techniques.

The liability for loss and LAE represents our best estimate of the ultimate cost of all reported and unreported losses that are unpaid as of the balance sheet evaluation date. The liability for loss and LAE is estimated on an undiscounted basis, using individual case-based valuations, statistical analyses, and various actuarial procedures. The projection of future claim payments and reporting patterns is based on an analysis of our historical experience, supplemented by analyses of industry loss data. We believe that the reserves for loss and LAE are adequate to cover the ultimate cost of losses and claims to date. However, because of uncertainty from various sources, including changes in claims settlement patterns and handling procedures, litigation trends, judicial decisions, and economic conditions, actual loss experience may not conform to the assumptions used in determining the estimated amounts for such liabilities at the balance sheet date. As adjustments to these estimates become necessary, they are reflected in the period in which the estimates are changed. Because of the nature of the business historically written, we believe that we have limited exposure to asbestos and environmental claim liabilities.

We engage an independent external actuarial specialist (the “Appointed Actuary”) to opine on our recorded statutory reserves. The Appointed Actuary estimates a range of ultimate losses, along with a range and recommended central estimate of IBNR reserve amounts. Our carried IBNR reserves are based on an internal actuarial analysis and reflect management’s best estimate of unpaid loss and LAE liabilities, and fall within the range of those determined as reasonable by the Appointed Actuary.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Principal Revenue and Expense Items” in Item 7 of this Annual Report and Note 2 and Note 11 in the accompanying consolidated financial statements for additional information and details regarding loss and LAE reserves.

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Reconciliation of Loss and Loss Adjustment Expenses

The table below shows the reconciliation of loss and LAE on a gross and net basis, reflecting changes in losses incurred and paid losses:

	Years ended
	December 31,
	2023			2022
Balance at beginning of period	$	118,339,513		$	94,948,745
Less reinsurance recoverables		(27,659,500	)		(10,637,679	)
Net balance, beginning of period		90,680,013			84,311,066
Incurred related to:
Current year		82,856,483			85,690,180
Prior years		(7,273	)		2,699,862
Total incurred		82,849,210			88,390,042
Paid related to:
Current year		49,146,173			49,602,585
Prior years		35,853,838			32,418,510
Total paid		85,000,011			82,021,095
Net balance at end of period		88,529,212			90,680,013
Add reinsurance recoverables		33,288,650			27,659,500
Balance at end of period	$	121,817,862		$	118,339,513

Our claims reserving practices are designed to set reserves that, in the aggregate, are adequate to pay all claims at their ultimate settlement value.

Loss and Loss Adjustment Expenses Development

The table below shows the net loss development of reserves held as of each calendar year-end from 2013 through 2023.

The first section of the table reflects the changes in our loss and LAE reserves after each subsequent calendar year of development. The table displays the re-estimated values of incurred losses and LAE at each succeeding calendar year-end, including payments made during the years indicated. The second section of the table shows by year the cumulative amounts of loss and LAE payments, net of amounts recoverable from reinsurers, as of the end of each succeeding year. An example with respect to the net loss and LAE reserves of $17,139,000 as of December 31, 2013 is as follows. By December 31, 2015 (two years later), $10,629,000 had actually been paid in settlement of the claims that relate to liabilities as of December 31, 2013. The re-estimated ultimate reserves two years later for those claims as of December 31, 2013 had grown to $18,332,000.

The “cumulative redundancy (deficiency)” represents, as of December 31, 2023, the difference between the latest re-estimated liability and the amounts as originally estimated. A redundancy means that the original estimate was higher than the current estimate. A deficiency means that the current estimate is higher than the original estimate.

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(in thousands of $)	2013			2014			2015			2016			2017			2018			2019			2020			2021			2022		2023
Reserve for loss and loss adjustment expenses, net of reinsurance recoverables		17,139			21,663			23,170			25,960			32,051			40,526			64,770			62,647			84,311			90,680		88,529
Net reserve estimated as of One year later		18,903			21,200			23,107			25,899			33,203			51,664			64,811			62,632			87,011			90,673
Two years later		18,332			21,501			24,413			26,970			42,723			55,145			65,113			65,339			88,418
Three years later		18,687			22,576			25,509			33,298			43,780			56,346			67,291			67,135
Four years later		19,386			23,243			28,638			33,342			43,973			58,048			68,612
Five years later		19,449			25,442			28,506			33,120			43,774			57,957
Six years later		20,265			25,353			28,849			32,936			43,777
Seven years later		20,069			25,445			28,734			32,617
Eight years later		20,129			25,324			28,499
Nine years later		19,963			25,200
Ten years later		19,853
Net cumulative redundancy (deficiency)		(2,714	)		(3,537	)		(5,329	)		(6,657	)		(11,726	)		(17,431	)		(3,842	)		(4,488	)		(4,107	)		7

(in thousands of $)	2013			2014			2015			2016			2017			2018			2019			2020			2021			2022		2023
Cumulative amount of reserve paid, net of reinsurance recoverable through
One year later		6,156			8,500			8,503			9,900			15,795			23,075			27,454			20,137			32,419			35,854
Two years later		10,629			12,853			14,456			17,187			26,168			35,924			35,142			30,262			47,547
Three years later		13,571			16,564			19,533			23,484			32,704			40,264			42,365			40,702
Four years later		16,166			19,838			22,816			27,203			35,510			45,085			49,581
Five years later		17,262			21,976			25,210			28,833			37,846			48,650
Six years later		18,265			23,280			26,298			30,141			39,596
Seven years later		18,954			24,146			26,945			30,693
Eight years later		19,511			24,633			27,013
Nine years later		19,635			24,654
Ten years later		19,640
Net reserve -
December 31,		17,139			21,663			23,170			25,960			32,051			40,526			64,770			62,647			84,311			90,680		88,529
* Reinsurance Recoverable		17,364			18,250			16,707			15,777			16,749			15,671			15,728			20,154			10,638			27,660		33,289
* Gross reserves -
December 31,		34,503			39,913			39,877			41,737			48,800			56,197			80,499			82,801			94,949			118,340		121,818
Net re-estimated reserve		19,853			25,200			28,499			32,617			43,777			57,957			68,612			67,135			88,418			90,673
Re-estimated reinsurance recoverable		22,135			23,289			21,143			20,390			20,504			18,535			14,944			19,105			10,524			27,209
Gross re-estimated reserve		41,988			48,489			49,642			53,007			64,281			76,492			83,556			86,240			98,942			117,882
Gross cumulative redundancy (deficiency)		(7,485	)		(8,576	)		(9,765	)		(11,270	)		(15,481	)		(20,295	)		(3,057	)		(3,439	)		(3,993	)		458

(Components may not sum to totals due to rounding)

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Reinsurance

We purchase reinsurance to reduce our net liability on individual risks, to protect against possible catastrophes, to remain within a target ratio of net premiums written to policyholders’ surplus, and to expand our underwriting capacity. Participation in reinsurance arrangements does not relieve us from our obligations to policyholders. Our reinsurance program is structured to reflect our obligations and goals.

Reinsurance via quota share allows a carrier to write business without increasing its underwriting leverage above a level determined by management. The business written under a quota share reinsurance structure obligates a reinsurer to assume some portion of the risks involved, and gives the reinsurer the profit (or loss) associated with such in exchange for a ceding commission.

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”). Upon the expiration of the 2021/2023 Treaty on January 1, 2023, we entered into a new 30% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2023 through January 1, 2024 (“2023/2024 Treaty”).Upon the expiration of the 2023/2024 Treaty on January 1, 2024, we entered into a new 27% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”).

Excess of loss contracts provide coverage for individual loss occurrences exceeding a certain threshold. The quota share reinsurance treaties inure to the benefit of our excess of loss treaties, as the maximum net retention on any single risk occurrence is first limited through the excess of loss treaty, and then that loss is shared again through the quota share reinsurance treaty. Our maximum net retention under the 2021/2023 Treaty and excess of loss treaties for any one personal lines occurrence for dates of loss on or after December 31, 2021 through January 1, 2024 was $700,000. Effective January 1, 2024 through January 1, 2025, our maximum net retention under the 2024/2025 Treaty increased to $730,000. Effective January 1, 2022, we entered into an underlying excess of loss reinsurance treaty (“Underlying XOL Treaty”) covering the period from January 1, 2022 through January 1, 2023. The Underlying XOL Treaty provides 50% reinsurance coverage for losses, other than from a named storm, of $400,000 in excess of $600,000. Effective January 1, 2023, the Underlying XOL Treaty was renewed covering the period from January 1, 2023 through January 1, 2024. From January 1, 2022 through January 1, 2024, under the Underlying XOL Treaty, our maximum net retention for any one personal lines occurrence was further reduced from the retention of $700,000 under the 2021/2023 Treaty and the 2023/2024 Treaty to $500,000. From January 1, 2024 through January 1, 2025, under the Underlying XOL Treaty, our maximum net retention for any one personal lines occurrence was reduced from the retention of $730,000 under 2024/2025 Treaty to $530,000.

We previously earned ceding commission revenue under the quota share reinsurance treaties based on a provisional commission rate on all premiums ceded to the reinsurers as adjusted by a sliding scale based on the ultimate treaty year loss ratios on the policies reinsured under each agreement. The sliding scale provided minimum and maximum ceding commission rates in relation to specified ultimate loss ratios. Under the 2021/2023 Treaty and the 2023/24 Treaty, KICO received a fixed provisional rate with no adjustment for sliding scale contingent commissions. Under the 2024/2025 Treaty, KICO will receive a fixed provisional rate with no adjustment for sliding scale contingent commissions.

The 2021/2023 Treaty, 2023/2024 Treaty and 2024/2025 Treaty are on a “net” of catastrophe reinsurance basis, as opposed to the “gross” arrangement that existed in prior treaties. Under a “net” arrangement, all catastrophe reinsurance coverage is purchased directly by us. Since we pay for all of the catastrophe coverage, none of the losses covered under a catastrophic event will be included in the quota share ceded amounts.

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In 2023, we purchased catastrophe reinsurance to provide coverage of up to $325,000,000 for losses associated with a single event. One of the most commonly used catastrophe forecasting models prepared for us indicates that the catastrophe reinsurance treaties provide coverage in excess of our estimated probable maximum loss associated with a single more than one-in-100 year storm event. Effective December 31, 2021 through January 1, 2023, losses on personal lines policies are subject to the 2021/2023 Treaty, which covered 26% of catastrophe losses and resulted in a net retention by us of $7,400,000 of exposure per catastrophe occurrence. Effective January 1, 2023 through January 1, 2024, losses on personal lines policies were subject to the 2023/2024 Treaty, which covered 12.5% of catastrophe losses and resulted in a net retention by us of $8,750,000 of exposure per catastrophe occurrence. Effective January 1, 2024 through January 1, 2025, losses on personal lines policies will be subject to the 2024/2025 Treaty, which will cover 5.0% of catastrophe losses and will result in a net retention by us of $9,500,000 of exposure per catastrophe occurrence. From July 1, 2020 through June 30, 2022, we had reinstatement premium protection on the first $70,000,000 layer of catastrophe coverage in excess of $10,000,000. Effective July 1, 2022 and through June 30, 2023, we had reinstatement premium protection for $9,800,000 of catastrophe coverage in excess of $10,000,000. Effective July 1, 2023 and through June 30, 2024, we have reinstatement premium protection for $12,500,000 of catastrophe coverage in excess of $10,000,000. This protects us from having to pay an additional premium to reinstate catastrophe coverage for an event up to this level.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Principal Revenue and Expense Items” in Item 7 of this Annual Report and Note 2 and Note 11 in the accompanying consolidated financial statements for additional information.

Ratings

Many insurance buyers, agents, brokers and secured lenders use the ratings assigned by ratings agencies to assist them in assessing the financial strength and overall quality of the companies with which they do business and from which they are considering purchasing insurance or in determining the financial strength of the company that provides insurance with respect to the collateral they hold.  Financial strength ratings are intended to provide an independent opinion of an insurer’s ability to meet its obligations to policyholders and are not an evaluation directed at investors. We currently have a Demotech rating of A (Excellent) which qualifies our policies for banks and finance companies. Demotech is the rating agency most commonly used by carriers focused on coastal property risks. The previous ratings from A.M. Best and Kroll Rating Agency for KICO and Kingstone Companies, Inc. were withdrawn at our request.

Catastrophe Losses

In 2023 we had 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. Our predominant market, downstate New York, was affected by several events during 2023, one of which was a named storm, and one was a major freezing event. The effects of catastrophes during 2023 increased our net loss ratio by 7.1 percentage points. We were affected by several events during 2022, including the remnants of Hurricane Ida, as one of the named storms. The effects of catastrophes during 2022 increased our net loss ratio by 6.7 percentage points.

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Government Regulation

Holding Company Regulation

We, as the parent of KICO, are subject to the insurance holding company laws of the state of New York. These laws generally require an insurance company to register with the New York State Department of Financial Services (the “DFS”) and to furnish annually financial and other information about the operations of companies within our holding company system. Generally, under these laws, all material transactions among companies in the holding company system to which KICO is a party must be fair and reasonable and, if material or of a specified category, require prior notice and approval or acknowledgement (absence of disapproval) by the DFS.

Change of Control

The insurance holding company laws of the state of New York require approval by the DFS for any change of control of an insurer. “Control” is generally defined as the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the company, whether through the ownership of voting securities, by contract or otherwise. Control is generally presumed to exist through the direct or indirect ownership of 10% or more of the voting securities of a domestic insurance company or any entity that controls a domestic insurance company; however, the ownership of less than 10% of such voting securities could constitute control under certain circumstances. Any future transactions that would constitute a change of control of KICO, including a change of control of Kingstone Companies, Inc., would generally require the party acquiring control to obtain the approval of the DFS (and in any other state in which KICO may operate). Obtaining these approvals may result in the material delay of, or deter, any such transaction. These laws may discourage potential acquisition proposals and may delay, deter or prevent a change of control of Kingstone Companies, Inc., including through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be desirable.

State Insurance Regulation

Insurance companies are subject to regulation and supervision by the department of insurance in the state in which they are domiciled and, to a lesser extent, other states in which they conduct business. The primary purpose of such regulatory powers is to protect individual policyholders. State insurance authorities have broad regulatory, supervisory and administrative powers, including, among other things, the power to grant and revoke licenses to transact business, set the standards of solvency to be met and maintained, determine the nature of, and limitations on, investments and dividends, approve policy forms and rates, and in some instances to regulate unfair trade and claims practices.

KICO is required to file detailed financial statements and other reports with the insurance regulatory authorities in the states in which it is licensed to transact business. These financial statements are subject to periodic examination by the insurance regulators.

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In addition, many states have laws and regulations that limit an insurer’s ability to withdraw from a particular market. For example, states may limit an insurer’s ability to cancel or not renew policies. Furthermore, certain states prohibit an insurer from withdrawing from one or more lines of business written in the state, except pursuant to a plan that is approved by the insurance regulatory authority. The state regulator may reject a plan that may lead to market disruption. Laws and regulations, including those in New York, that limit cancellation and non-renewal and that subject program withdrawals to prior approval requirements may restrict the ability of KICO to exit unprofitable markets. Such laws did not affect KICO’s ability to withdraw from the commercial liability market in New York State in 2019 and the commercial auto market in New York State in 2015.

Federal and State Legislative and Regulatory Changes

From time to time, various regulatory and legislative changes have been proposed in the insurance industry. Among the proposals that either have been or are being considered are the possible introduction of Federal regulation in addition to, or in lieu of, the current system of state regulation of insurers, and proposals in various state legislatures. Some of these proposals have been enacted to conform portions of their insurance laws and regulations to various model acts adopted by the National Association of Insurance Commissioners (the “NAIC”).

In 2017, the DFS implemented new comprehensive cybersecurity regulations, which became effective on March 1, 2017, with transitional implementation periods.   On November 1, 2023, the DFS adopted substantive amendments updating the 2017 cybersecurity regulations. The adopted regulations require that a covered entity’s chief information security officer (“CISO”) have sufficient authority to ensure that cybersecurity risks are appropriately managed and require the CISO to report material cybersecurity issues. Covered entities are further required under the amendments to implement asset inventory management, develop and implement a business continuity and disaster recovery plan, and maintain backups protected from unauthorized alterations or destruction. The regulations update certain cybersecurity event reporting requirements, including notice and explanation of extortion payments, and amends the April 15 annual reporting requirement to include a written acknowledgment of any areas of material noncompliance and remediation plans signed by the entity’s highest-ranking executive and the CISO. Finally, the regulations update the factors the Superintendent may consider in assessing violations.

The newly-adopted regulations also apply newly enhanced requirements around periodic system testing, record keeping and maintenance of written incident and recovery plans. They further mandate specific technical approaches such as blocking common passwords and the use of multifactor authentication in certain instances.

In 2010 the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) became law. It established a Federal Insurance Office (the “FIO”) within the U.S. Department of the Treasury. The FIO is initially charged with monitoring all aspects of the insurance industry (other than health insurance, certain long-term care insurance and crop insurance), gathering data, and conducting a study on methods to modernize and improve the insurance regulatory system in the United States. In December 2013, the FIO issued a report (as required under the Dodd-Frank Act) entitled “How to Modernize and Improve the System of Insurance Regulation in the United States”, which stated that, given the “uneven” progress the states have made with several near-term state reforms, should the states fail to accomplish the necessary modernization reforms in the near term, “Congress should strongly consider direct federal involvement.” The FIO continues to support the current state-based regulatory regime, but will consider federal regulation should the states fail to take steps to greater uniformity (e.g., federal licensing of insurers.) In its September 2022 Annual Report on the Insurance Industry (the “Report”), the FIO provided an overview of its statutory responsibilities and its role. The Report then summarized the FIO’s key activities since those described in its prior Annual Report on the Insurance Industry. The Report observed that, in 2021, the property/casualty sector direct premium written was $798 billion, a 9% growth over 2020 levels, the highest annual growth in the past decade. In September 2021, the FIO issued a Preemption Report. This document noted “that during the fiscal year ending September 30, 2021, FIO did not take any action regarding the preemption of any state insurance measures that were inconsistent with a covered agreement.” In addition to reviewing the financial status of the property/casualty industry, the Report includes Topical Updates and FIO activities, climate change, mitigation and resilience and Cyber Risks, Ransomware, and Cyber Insurance. The FIO’s September 2023 annual report made similar observations as prior years, including noting in the preceding year’s Preemption Report a lack of “any action regarding the preemption of any state insurance measures that were inconsistent with a covered agreement.” The 2023 report further noted that, since the 2022 report, the FIO issued a proposal for the collection of data from insurers to assess climate-related risks across the United States. The request for comment explained that the FIO proposes to collect data from property and casualty insurers regarding current and historical underwriting data on homeowners’ insurance at the zip code level, in order to “assist FIO’s assessment of climate-related exposures and their effects on insurance availability for policyholders, including whether climate change may create the potential for any major disruptions of private insurance coverage in regions of the country that are particularly vulnerable to climate change impacts.”

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On December 20, 2020, the Terrorism Risk Insurance Program Reauthorization Act of 2019 was enacted and is now scheduled to expire on December 31, 2027. The Terrorism Risk Insurance Program serves as a federal “backstop” for insurance claims related to acts of terrorism.

On November 15, 2021, the DFS issued its final Guidance for New York Domestic Insurers On Managing the Financial Risks from Climate Change. On June 15, 2022, the DFS released its 2021 annual report. The report references the creation of a standalone Climate Division, which was the source of the aforementioned guidance.

In 2021, the Governor of the State of New York signed into law, effective January 28, 2022 and subsequently clarified by law taking effect March 15, 2023, legislation that seeks to prevent homeowner insurers from discriminating solely on the basis of breed of dog.

In 2021, the Comprehensive Insurance Disclosure Act was enacted in New York State. This law, as amended by a subsequent chapter amendment, requires any defendant to provide to the plaintiff, within a limited timeframe, proof of existence and the contents of any insurance agreement under which any person or entity may be liable to satisfy part or all of a judgment and details what the information and documentation includes. The new law applies to actions commenced on or after December 31, 2021.

In 2022, the New York legislature passed legislation to greatly expand wrongful death actions. This bill sought to expand the categories of claimants and scope of losses for which a wrongful death lawsuit could be brought. The bill was vetoed in January 2023. It was again passed in identical form in 2023 and again vetoed in December 2023.The bill was reintroduced in identical form in February 2024.

In 2023, two related bills were chaptered amending the time periods available to an insurer for the investigation and settlement of claims arising out of states of emergency and disasters. This bill codified elements of existing regulations but shortened certain time periods and added additional reporting requirements. Specifically, the law requires that, within fifteen business days after receiving all the items, statements, and forms that the insurer required from the claimant for a non-commercial claim not suspected to be related to arson, the insurer advise the claimant in writing whether the insurer has accepted or rejected the claim. An insurer would be allowed two extensions of fifteen additional business days to continue its investigation, provided that the insurer notifies the claimant of the reasons additional time is needed for the investigation, with the second extension being available if the property is inaccessible. Commercial claims are granted a one-time thirty-day extension to determine whether the claim should be accepted or rejected, and additional thirty-day extensions are available if certain written notifications are made. If the insurer has accepted the claim, the claimant will have to be notified of the amount the insurer is offering to settle the claim and of all applicable policy provisions regarding the claimant's right to reject and appeal the insurer's offer. If the insurer rejects the claim, the insurer will have to inform the claimant of all applicable policy provisions regarding the claimant's right to appeal the decision including policy information, insurer contact information and DFS complaint filing procedure information. An insurer will be required to pay the claim not later than four business days from the settlement of the claim.

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The DFS released a proposed circular letter regarding the use of “external consumer data and information sources (“ECDIS”) and artificial intelligence systems (“AIS”) by insurers. In broad strokes it reiterates the need to make sure that AI processes do not lead to outcomes that run afoul of the extensive body of existing anti-discrimination laws, including use of credit as governed by Insurance Law Article 28 credit usage. The circular letter does not have the force of law, but articulated DFS’ expectations about the use of AIS and ECDIS. In the past, the release of a circular letter has preceded the issuance of draft and eventually final regulations in the area addressed.

State Regulatory Examinations

As part of their regulatory oversight process, state regulatory authorities conduct periodic detailed examinations of the financial reporting of insurance companies domiciled in their states, generally once every three to five years. Examinations are generally carried out in cooperation with the insurance regulators of other states under guidelines promulgated by the NAIC. The DFS commenced its examination of KICO in 2023 for the years 2019 through 2022. The examination is expected to be completed in 2024.

Risk-Based Capital Regulations

State regulatory authorities impose risk-based capital (“RBC”) requirements on insurance enterprises. The RBC Model serves as a benchmark for the regulation of insurance companies. RBC provides for targeted surplus levels based on formulas, which specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk, and are set forth in the RBC requirements. Such formulas focus on four general types of risk: (a) the risk with respect to the company’s assets (asset or default risk); (b) the risk of default on amounts due from reinsurers, policyholders, or other creditors (credit risk); (c) the risk of underestimating liabilities from business already written or inadequately pricing business to be written in the coming year (underwriting risk); and (d) the risk associated with items such as excessive premium growth, contingent liabilities, and other items not reflected on the balance sheet (off-balance sheet risk). The amount determined under such formulas is called the authorized control level RBC (“ACL”).

The RBC guidelines define specific capital levels based on a company’s ACL that are determined by the ratio of the company’s total adjusted capital (“TAC”) to its ACL. TAC is equal to statutory capital, plus or minus certain other specified adjustments. KICO’s TAC is above the ACL. As of December 31, 2023, the ratio of TAC to ACL was 4.45 and is in compliance with New York’s RBC requirements.

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Dividend Limitations

Our ability to receive dividends from KICO is restricted by the state laws and insurance regulations of New York. These restrictions are related to surplus and net investment income. Dividends may be paid, without the need for DFS approval, from unassigned surplus and are restricted to the lesser of 10% of surplus or 100% of investment income (on a statutory accounting basis) for the trailing 36 months, less dividends by KICO paid during such period. At December 31, 2023, unassigned deficit was $7,661,958, and, accordingly, dividends may not be paid without DFS approval. See Item 5 (“Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Dividends”) of this Annual Report for a further discussion as to KICO’s ability to pay dividends to us.

Insurance Regulatory Information System Ratios

The Insurance Regulatory Information System (“IRIS”) was developed by the NAIC and is intended primarily to assist state insurance regulators in meeting their statutory mandates to oversee the financial condition of insurance companies operating in their respective states. IRIS identifies thirteen industry ratios and specifies “usual values” for each ratio. Departure from the usual values on four or more of the ratios can lead to inquiries from individual state insurance commissioners as to certain aspects of an insurer’s business. As of December 31, 2023, KICO had one ratio outside the usual range.

Accounting Principles

Statutory accounting principles (“SAP”) are a basis of accounting developed by the NAIC. They are used to prepare the statutory financial statements of insurance companies and to assist insurance regulators in monitoring and regulating the solvency of insurance companies. SAP is primarily concerned with measuring an insurer’s policyholder surplus. Accordingly, statutory accounting focuses on valuing assets and liabilities of insurers at financial reporting dates in accordance with appropriate insurance law and regulatory provisions applicable in each insurer’s domiciliary state.

Generally accepted accounting principles (“GAAP”) are concerned with a company’s solvency, but are also concerned with other financial measurements, principally results of operations and cash flows. Accordingly, GAAP gives more consideration to appropriate matching of revenue and expenses and accounting for management’s stewardship of assets than does SAP. As a direct result, different types and amounts of assets and liabilities will be reflected in financial statements prepared in accordance with GAAP as compared to SAP.

Statutory accounting practices established by the NAIC and adopted in part by New York insurance regulators determine, among other things, the amount of statutory surplus and statutory net income of KICO and thus determine, in part, the amount of funds that are available for KICO to pay dividends to Kingstone Companies, Inc.

Legal Structure

We were incorporated in 1961 and assumed the name DCAP Group, Inc. in 1999. On July 1, 2009, we changed our name to Kingstone Companies, Inc.

Employees

As of December 31, 2023, we had 84 employees. None of our employees are covered by a collective bargaining agreement. We believe that our relationship with our employees is good.

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Availability of Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the U.S. Securities and Exchange Commission (the “SEC”). Such reports and other information filed by us with the SEC are available free of charge at the investor relations section of our website at www.kingstonecompanies.com as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. Copies are also available, without charge, by writing to Kingstone Companies, Inc., Investor Relations, 15 Joys Lane, Kingstone, New York 12401. The SEC also maintains a website, www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The inclusion of our website address in this Annual Report does not include or incorporate by reference the information on our website into this Annual Report.

ITEM 1A. RISK FACTORS.

Based upon the following factors, as well as other factors affecting our operating results and financial condition, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. These factors, among others, may affect the accuracy of certain forward-looking statements contained in this Annual Report.

Risks Related to Our Business

As a property and casualty insurer, we may face significant losses from catastrophes and severe weather events.

Because of the exposure of our property and casualty business to catastrophic events and other severe weather events, our operating results and financial condition may vary significantly from one period to the next. Catastrophes can be caused by various natural and man-made disasters, including earthquakes, wildfires, tornadoes, hurricanes, severe winter weather, storms and certain types of terrorism. We currently have catastrophe reinsurance coverage with regard to losses of up to $325,000,000 ($315,000,000 in excess of $10,000,000). Effective January 1, 2024, $10,000,000 of losses in a catastrophe are subject to a quota share reinsurance treaty, which covers 5.0% of catastrophe losses such that we retain $9,500,000 of risk per catastrophe occurrence. With respect to any additional catastrophe losses of up to $315,000,000, we are 100% reinsured under our catastrophe reinsurance program. Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts. We may incur catastrophe losses in excess of: (i) those that we project would be incurred, (ii) those that external modeling firms estimate would be incurred, (iii) the average expected level used in pricing or (iv) our current reinsurance coverage limits. Despite our catastrophe management programs, we are exposed to catastrophes that could have a material adverse effect on our operating results and financial condition. Our liquidity could be constrained by a catastrophe, or multiple catastrophes, which may result in extraordinary losses or a downgrade of our financial strength ratings. In addition, the reinsurance losses that are incurred in connection with a catastrophe could have an adverse impact on the terms and conditions of future reinsurance treaties.

In addition, we are subject to claims arising from non-catastrophic weather events such as hurricanes, tropical storms, severe winter weather, rain, hail and high winds. The incidence and severity of weather conditions are largely unpredictable. There is generally an increase in the frequency and severity of claims when severe weather conditions occur.

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Unanticipated increases in the severity or frequency of claims may adversely affect our operating results and financial condition.

Changes in the severity or frequency of claims may affect our profitability. Changes in homeowners claim severity are driven by inflation in the construction industry, in building materials and home furnishings, and by other economic and environmental factors, including increased demand for services and supplies in areas affected by catastrophes. Changes in bodily injury claim severity are driven primarily by inflation in the medical sector of the economy and by litigation costs. Changes in auto physical damage claim severity are driven primarily by inflation in auto repair costs, prices of auto parts and used car prices. However, changes in the level of the severity of claims are not limited to the effects of inflation and demand surge in these various sectors of the economy. Increases in claim severity can arise from unexpected events that are inherently difficult to predict, such as a change in the law or an inability to enforce exclusions and limitations contained in our policies. Although we pursue various loss management initiatives to mitigate future increases in claim severity, there can be no assurances that these initiatives will successfully identify or reduce the effect of future increases in claim severity, and a significant increase in claim frequency could have an adverse effect on our operating results and financial condition.

A financial strength rating assigned to our insurance subsidiary was withdrawn at its request; this may impact our revenues and earnings.

Financial strength ratings are an important factor influencing the competitive position of insurance companies. The objective of the rating agencies’ rating systems is to provide an opinion as to an insurer’s financial strength and ability to meet ongoing obligations to its policyholders. The ratings of Kingstone Insurance Company (“KICO”), our insurance subsidiary, reflect the rating agencies’ opinion as to its financial strength and are not evaluations directed to investors in our securities, nor are they recommendations to buy, sell or hold our securities.

In July 2023, A.M. Best withdrew the financial strength rating and long-term issuer credit rating of KICO at KICO’s request. Previously, A.M. Best’s public rating for Kingstone Companies, Inc. was withdrawn.

Management believes that A.M. Best’s financial strength rating is more significant with regard to commercial liability insurance, as opposed to personal lines business. Since we have discontinued our commercial lines business, we believe that the withdrawal of A.M. Best’s ratings will not result in a material decrease in the amount of business that KICO will be able to write. Also, KICO has a Demotech financial stability rating of A (Exceptional) which generally makes its policies acceptable to mortgage lenders that require homeowners to purchase insurance from highly-rated carriers.

However, a prior A.M Best ratings downgrade resulted in a material decrease in the business of our subsidiary, Cosi, a multi-state licensed general agency that had partnered with name-brand carriers which require an A.M. Best “A-” rating from its partners.

The impact of pandemics and other public health issues (like COVID-19) and related risks could materially affect our results of operations, financial position and/or liquidity.

Beginning in March 2020, the global pandemic related to COVID-19 began to impact the global economy and our results of operations. Risks presented by the effects of pandemics like COVID-19 include, among others, the following:

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Investments. Our corporate fixed income portfolio may be adversely impacted by ratings downgrades, increased bankruptcies and credit spread widening in distressed industries. In addition, in recent years, many state and local governments have been operating under deficits or projected deficits. The severity and duration of these deficits could have an adverse impact on the collectability and valuation of our municipal bond portfolio. Our investment portfolio also includes mortgage-backed securities which could be adversely impacted by declines in real estate valuations and/or financial market disruption. Further disruptions in global financial markets could adversely impact our net investment income in future periods.

Adverse Legislative and/or Regulatory Action. Federal, state and local government actions to address and contain the impact of pandemic and other public health issues (like COVID-19) may adversely affect us. For example, we may be subject to legislative and/or regulatory action that seeks to retroactively mandate coverage for losses which our insurance policies were not designed or priced to cover. Currently, in some states there is proposed legislation to require insurers to cover business interruption claims irrespective of terms, exclusions or other conditions included in the policies that would otherwise preclude coverage. Regulatory restrictions or requirements could also impact pricing, risk selection and our rights and obligations with respect to our policies and insureds, including our ability to cancel or non-renew policies and our right to collect premiums.

Operational Disruptions and Heightened Cybersecurity Risks. Our operations could be disrupted if key members of our senior management or a significant percentage of our workforce or the workforce of our producers are unable to continue to work because of illness, government directives or otherwise. In addition, the interruption of our or their system capabilities could result in a deterioration of our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions. Having shifted to remote working arrangements, we also face a heightened risk of cybersecurity attacks or data security incidents and are more dependent on internet and telecommunications access and capabilities.

The failure to comply with certain financial covenants could result in a default with regard to our debt due on December 30, 2024.

On December 9, 2022, we entered into a Note and Warrant Exchange Agreement (the “Exchange Agreement”) with several holders (the “Exchanging Noteholders”) of our outstanding 5.50% Senior Notes due 2022 (the “2017 Notes”). On the date of the Exchange Agreement, the Exchanging Noteholders held 2017 Notes in the aggregate principal amount of $21,545,000 of the $30,000,000 aggregate principal amount of 2017 Notes then outstanding.

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At the closing of the Exchange Agreement, the Exchanging Noteholders exchanged their respective 2017 Notes for, among other things, new 12.0% Senior Notes due December 30, 2024 in the aggregate principal amount of $19,950,000 (the “2022 Notes”). Pursuant to the Exchange Agreement, we are required to satisfy certain financial covenants, among other covenants, related to our performance. In the event we do not satisfy such covenants, the holders of the 2022 Notes could declare a default and seek to accelerate the due date for payment, among other remedies. We were not in compliance with one of such covenants as of September 30, 2023; however, we received a waiver from the required holders of the 2022 Notes with regard to such failure to comply. We were in compliance with such covenant as of December 31, 2023.

We may not be able to generate sufficient cash to service our debt obligations, including the 2022 Notes, which may affect our ability to continue as a going concern.

Our ability to make payments on our indebtedness, including the 2022 Notes, will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may be unable to maintain a sufficient level of cash flows from operating activities to permit us to pay the principal, premium, if any, and interest on our indebtedness. If we are unable to service the debt obligation under the 2022 Notes, we may not have the ability to continue as a going concern.

Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, including with regard to our indebtedness due on December 30, 2024, or our ability to obtain credit on acceptable terms.

As indicated above, our $19,950,000 in aggregate principal amount of 12.0% Senior Notes are due on December 30, 2024. The capital and credit markets can experience periods of volatility and disruption. In some cases, markets have exerted downward pressure on the availability of liquidity and credit capacity. In the event that we need access to additional capital to support our operating expenses, make payments on our outstanding and any future indebtedness, pay for capital expenditures, or increase the amount of insurance that we seek to underwrite or to otherwise grow our business, our ability to obtain such capital may be limited and the cost of any such capital may be significant. Our access to additional financing will depend on a variety of factors, such as market conditions, the general availability of credit, the overall availability of credit to our industry, our credit ratings and credit capacity as well as lenders’ perception of our long or short-term financial prospects. Similarly, our access to funds may be impaired if regulatory authorities or rating agencies take negative actions against us. If a combination of these factors occurs, our internal sources of liquidity may prove to be insufficient and, in such case, we may not be able to successfully obtain additional financing on favorable terms.

We are exposed to significant financial and capital markets risk which may adversely affect our results of operations, financial condition and liquidity, and our net investment income can vary from period to period.

We are exposed to significant financial and capital markets risk, including changes in interest rates, equity prices, market volatility, general economic conditions, the performance of the economy in general, the performance of the specific obligors included in our portfolio, and other factors outside our control. Our exposure to interest rate risk relates primarily to the market price and cash flow variability associated with changes in interest rates. Our investment portfolio contains interest rate sensitive instruments, such as fixed income securities, which may be adversely affected by changes in interest rates from governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. A rise in interest rates would increase the net unrealized loss position of our investment portfolio, which would be offset by our ability to earn higher rates of return on funds reinvested. Conversely, a decline in interest rates would decrease the net unrealized loss position of our investment portfolio, which would be offset by lower rates of return on funds reinvested.

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In addition, market volatility can make it difficult to value certain of our securities if trading becomes less frequent. As such, valuations may include assumptions or estimates that may have significant period to period changes which could have a material adverse effect on our consolidated results of operations or financial condition. If significant, continued volatility, changes in interest rates, changes in defaults, a lack of pricing transparency, market liquidity and declines in equity prices, individually or in tandem, could have a material adverse effect on our results of operations, financial condition or cash flows through realized losses, impairments, and changes in unrealized positions.

Reinsurance may be unavailable at current levels and prices, which may limit our ability to write new business.

We purchase reinsurance to reduce our net liability on individual risks, to protect against possible catastrophes, to remain within a target ratio of net premiums written to policyholders’ surplus and to expand our underwriting capacity. Participation in reinsurance arrangements does not relieve us from our obligations to policyholders. Our personal lines catastrophe reinsurance program was designed, utilizing our risk management methodology, to address our exposure to catastrophes. Market conditions beyond our control impact the availability and cost of the reinsurance we purchase. No assurances can be given that reinsurance will remain continuously available to us on terms and rates that are commercially reasonable. For example, our ability to afford reinsurance to reduce our catastrophe risk may be dependent upon our ability to adjust premium rates for its cost, and there are no assurances that the terms and rates for our current reinsurance program will continue to be available in the future. If we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient and at prices that we consider acceptable, we will have to either accept an increase in our exposure risk, reduce our insurance writings or seek other alternatives.

Reinsurance subjects us to the credit risk of our reinsurers, which may have a material adverse effect on our operating results and financial condition.

The collectability of reinsurance recoverables is subject to uncertainty arising from a number of factors, including changes in market conditions, whether insured losses meet the qualifying conditions of the reinsurance contract and whether reinsurers, or their affiliates, have the financial capacity and willingness to make payments under the terms of a reinsurance treaty or contract. Since we are primarily liable to an insured for the full amount of insurance coverage, our inability to collect a material recovery from a reinsurer could have a material adverse effect on our operating results and financial condition.

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Applicable insurance laws regarding the change of control of our company may impede potential acquisitions that our stockholders might consider desirable.

We are subject to statutes and regulations of the state of New York which generally require that any person or entity desiring to acquire direct or indirect control of KICO, our insurance company subsidiary, obtain prior regulatory approval. In addition, a change of control of Kingstone Companies, Inc. would require such approval. These laws may discourage potential acquisition proposals and may delay, deter or prevent a change of control of our company, including through transactions, and in particular unsolicited transactions. Some of our stockholders might consider such transactions to be desirable. Similar regulations may apply in other states in which we may operate.

The insurance industry is subject to extensive regulation that may affect our operating costs and limit the growth of our business, and changes within this regulatory environment may adversely affect our operating costs and limit the growth of our business.

We are subject to extensive laws and regulations. State insurance regulators are charged with protecting policyholders and have broad regulatory, supervisory and administrative powers over our business practices. These include, among other things, the power to grant and revoke licenses to transact business and the power to regulate and approve underwriting practices and rate changes, which may delay the implementation of premium rate changes, prevent us from making changes we believe are necessary to match rate to risk or delay or prevent our entry into new states. In addition, many states have laws and regulations that limit an insurer’s ability to cancel or not renew policies and that prohibit an insurer from withdrawing from one or more lines of business written in the state, except pursuant to a plan that is approved by state regulatory authorities. Laws and regulations that limit cancellation and non-renewal and that subject program withdrawals to prior approval requirements may restrict our ability to exit unprofitable markets.

Because the laws and regulations under which we operate are administered and enforced by a number of different governmental authorities, including state insurance regulators, state securities administrators and the SEC, each of which exercises a degree of interpretive latitude, we are subject to the risk that compliance with any particular regulator's or enforcement authority's interpretation of a legal issue may not result in compliance with another's interpretation of the same issue, particularly when compliance is judged in hindsight. In addition, there is risk that any particular regulator's or enforcement authority's interpretation of a legal issue may change over time to our detriment, or that changes in the overall legal and regulatory environment may, even in the absence of any change to a particular regulator's or enforcement authority's interpretation of a legal issue changing, cause us to change our views regarding the actions we need to take from a legal risk management perspective, thereby necessitating changes to our practices that may, in some cases, limit our ability to grow and/or to improve the profitability of our business.

While the United States federal government does not directly regulate the insurance industry, federal legislation and administrative policies can affect us. Congress and various federal agencies periodically discuss proposals that would provide for a federal charter for insurance companies. We cannot predict whether any such laws will be enacted or the effect that such laws would have on our business. Moreover, there can be no assurance that changes will not be made to current laws, rules and regulations, or that any other laws, rules or regulations will not be adopted in the future, that could adversely affect our business and financial condition.

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We may not be able to maintain the requisite amount of risk-based capital, which may adversely affect our profitability and our ability to compete in the property and casualty insurance markets.

The DFS imposes risk-based capital requirements on insurance companies to ensure that insurance companies maintain appropriate levels of surplus to support their overall business operations and to protect customers against adverse developments, after taking into account default, credit, underwriting and off-balance sheet risks. If the amount of our capital falls below certain thresholds, we may face restrictions with respect to soliciting new business and/or keeping existing business. Similar regulations apply in other states in which we operate.

Changing climate conditions may adversely affect our financial condition, profitability or cash flows.

We recognize the scientific view that the world is getting warmer. Climate change, to the extent it produces rising temperatures and changes in weather patterns, could impact the frequency and/or severity of weather events and affect the affordability and availability of homeowners insurance.

Our operating results and financial condition may be adversely affected by the cyclical nature of the property and casualty business.

The property and casualty market is cyclical and has experienced periods characterized by relatively high levels of price competition, less restrictive underwriting standards and relatively low premium rates, followed by periods of relatively lower levels of competition, more selective underwriting standards and relatively high premium rates. A downturn in the profitability cycle of the property and casualty business could have a material adverse effect on our operating results and financial condition.

Because substantially all of our revenue is currently derived from sources located in New York, our business may be adversely affected by conditions in such state.

Approximately 88% of our revenue is currently derived from sources located in the State of New York and, accordingly, is affected by the prevailing regulatory, economic, demographic, competitive and other conditions in the state. Changes in any of these conditions could make it costlier or difficult for us to conduct our business. Adverse regulatory developments in New York, which could include fundamental changes to the design or implementation of the insurance regulatory framework, could have a material adverse effect on our results of operations and financial condition.

We are highly dependent on a relatively small number of insurance brokers for a large portion of our revenues.

We market our insurance products primarily through insurance brokers. A large percentage of our gross premiums written are sourced through a limited number of brokers. For the year ended December 31, 2023, 35 brokers provided a total of 40% of our total gross premiums written. The nature of our dependency on these brokers relates to the high volume of business they consistently refer to us. Our relationship with these brokers is based on the quality of the underwriting and claims services we provide to our clients and on our financial strength ratings. Any deterioration in these factors could result in these brokers advising clients to place their risks with other insurers rather than with us. A loss of all or a substantial portion of the business provided by one or more of these brokers could have a material adverse effect on our financial condition and results of operations.

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Actual claims incurred may exceed current reserves established for claims, which may adversely affect our operating results and financial condition.

Recorded claim reserves for our business are based on our best estimates of losses after considering known facts and interpretations of circumstances. Internal and external factors are considered. Internal factors include, but are not limited to, actual claims paid, pending levels of unpaid claims, product mix and contractual terms. External factors include, but are not limited to, changes in the law, court decisions, changes in regulatory requirements and economic conditions. Because reserves are estimates of the unpaid portion of losses that have occurred, the establishment of appropriate reserves, including reserves for catastrophes, is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded reserves, and such variance may adversely affect our operating results and financial condition.

As a holding company, we are dependent on the results of operations of our subsidiary, KICO; there are restrictions on the payment of dividends by KICO; our ability to pay the principal of the 2022 Notes on the due date of December 30, 2024 may be limited by these restrictions.

We are a holding company and a legal entity separate and distinct from our operating subsidiary, KICO. As a holding company with limited operations of our own, currently the principal sources of our funds are dividends and other payments from KICO. Consequently, we must rely on KICO for our ability to repay debts, pay expenses and pay cash dividends to our stockholders.

State insurance laws limit the ability of KICO to pay dividends from unassigned surplus and require KICO to maintain specified minimum levels of statutory capital and surplus. Maximum allowable dividends by KICO to us are restricted to the lesser of 10% of surplus or 100% of net investment income (on a statutory accounting basis) for the trailing 36 months, less dividends paid by KICO during such period. As of December 31, 2023, KICO could not pay any dividends to us without prior regulatory approval due to negative unassigned surplus of approximately $7,662,000. The aggregate maximum amount of dividends permitted by law to be paid by an insurance company does not necessarily define an insurance company’s actual ability to pay dividends. The actual ability to pay dividends may be further constrained by business and regulatory considerations, such as the impact of dividends on surplus, by our competitive position and by the amount of premiums that we can write. State insurance regulators have broad discretion to limit the payment of dividends by insurance companies. Our ability to pay the principal amount of the 2022 Notes on December 30, 2024 may be limited by these regulatory constraints.

Our future results are dependent in part on our ability to successfully operate in an insurance industry that is highly competitive.

The insurance industry is highly competitive. Many of our competitors have well-established national reputations, substantially more capital and significantly greater marketing and management resources. Because of the competitive nature of the insurance industry, including competition for customers, agents and brokers, there can be no assurance that we will continue to effectively compete with our industry rivals, or that competitive pressures will not have a material adverse effect on our ability to grow our business and to maintain profitable operating results or financial condition.

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If we lose key personnel or are unable to recruit qualified personnel, our ability to implement our business strategies could be delayed or hindered.

Our future success will depend, in part, upon the efforts of Meryl Golden, our President and Chief Executive Officer, and Barry Goldstein, our Executive Chairman. The loss of Ms. Golden or Mr. Goldstein or other key personnel could prevent us from fully implementing our business strategies and could materially and adversely affect our business, financial condition and results of operations. As we continue to grow, we will need to recruit and retain additional qualified management personnel, but we may not be able to do so. Our ability to recruit and retain such personnel will depend upon a number of factors, such as our results of operations and prospects and the level of competition prevailing in the market for qualified personnel. Ms. Golden and we are parties to an employment agreement which expires on December 31, 2024. Mr. Goldstein and we are parties to an employment agreement which expires on the earlier of December 31, 2024 or at the time of our 2024 annual meeting of stockholders if he is not re-elected Chairman of the Board at such time.

Difficult conditions in the economy generally could adversely affect our business and operating results.

As with most businesses, we believe that difficult conditions in the economy could have an adverse effect on our business and operating results. General economic conditions also could adversely affect us in the form of consumer behavior, which may include decreased demand for our products. As consumers become more cost conscious, they may choose to purchase lower levels of insurance.

Changes in accounting standards issued by the Financial Accounting Standards Board or other standard-setting bodies may adversely affect our reported results of operations and financial condition.

Our financial statements are subject to the application of generally accepted accounting principles, which are periodically revised, interpreted and/or expanded. Accordingly, we are required to adopt new guidance or interpretations, which may have a material adverse effect on our results of operations and financial condition that is either unexpected or has a greater impact than expected.

Our business could be adversely affected by a security breach or other attack involving our computer systems or those of one or more of our vendors.

Our business requires that we develop and maintain computer systems to run our operations and to store a significant volume of confidential data. Some of these systems rely on third-party vendors, through either a connection to, or an integration with, those third-parties’ systems. In the course of our operations, we acquire the personal confidential information of our customers and employees. We also store our intellectual property, trade secrets, and other sensitive business and financial information.

All of these systems are subject to “cyber attacks” by sophisticated third parties with substantial computing resources and capabilities, and to unauthorized or illegitimate actions by employees, consultants, agents and other persons with legitimate access to our systems. Such attacks or actions may include attempts to:

• steal, corrupt, or destroy data, including our intellectual property, financial data or the personal information of our customers or employees

• misappropriate funds

• disrupt or shut down our systems

• deny customers, agents, brokers, or others access to our systems, or

• infect our systems with viruses or malware.

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While we can take defensive measures, there can be no assurance that we will be successful in preventing attacks or detecting and stopping them once they have begun. Our business could be significantly damaged by a security breach, data loss or corruption, or cyber attack. In addition to the potentially high costs of investigating and stopping such an event and implementing necessary fixes, we could incur substantial liability if confidential customer or employee information is stolen. In addition, such an event could cause a significant disruption of our ability to conduct our insurance operations. We have a cyber insurance policy to protect against the monetary impact of some of these risks. However, the occurrence of a security breach, data loss or corruption, or cyber-attack, if sufficiently severe, could have a material adverse effect on our business results.

We rely on our information technology and telecommunication systems, and the failure of these systems could materially and adversely affect our business.

Our business is highly dependent upon the successful and uninterrupted functioning of our information technology and telecommunications systems. We rely on these systems to support our operations. The failure of these systems could interrupt our operations and result in a material adverse effect on our business.

Risks Related to Our Common Stock

Our stock price may fluctuate significantly and be highly volatile and this may make it difficult for stockholders to resell shares of our common stock at the volume, prices and times they find attractive.

The market price of our common stock could be subject to significant fluctuations and be highly volatile, which may make it difficult for stockholders to resell shares of our common stock at the volume, prices and times they find attractive. There are many factors that will impact our stock price and trading volume, including, but not limited to, the factors listed above under “Risks Related to Our Business.”

Stock markets, in general, have experienced in recent years, and continue to experience, significant price and volume volatility, and the market price of our common stock may continue to be subject to similar market fluctuations that may be unrelated to our operating performance and prospects. Increased market volatility and fluctuations could result in a substantial decline in the market price of our common stock.

The trading volume in our common stock has been limited. As a result, stockholders may not experience liquidity in their investment in our common stock, thereby potentially limiting their ability to resell their shares at the volume, times and prices they find attractive.

Our common stock is currently traded on The Nasdaq Capital Market (“Nasdaq”). Our common stock has substantially less liquidity than the average trading market for many other publicly traded insurance and other companies. An active trading market for our common stock may not develop or, if developed, may not be sustained. Such stocks can be more volatile than stocks trading in an active public market. Therefore, stockholders have reduced liquidity and may not be able to sell their shares at the volume, prices and times that they desire.

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There may be future issuances or resales of our common stock which may materially and adversely affect the market price of our common stock.

Subject to any required state insurance regulatory approvals, we are not restricted from issuing additional shares of our common stock in the future, including securities convertible into, or exchangeable or exercisable for, shares of our common stock. Our issuance of additional shares of common stock in the future will dilute the ownership interests of our then existing stockholders.

We have effective registration statements on Form S-8 under the Securities Act of 1933, as amended (the “Securities Act”), covering an aggregate of 1,900,000 shares of our common stock issuable under our 2014 Equity Participation Plan (the “2014 Plan”).

As of December 31, 2023, options to purchase 107,201 shares of our common stock, and 550,581 shares subject to unvested restricted stock grants, were outstanding under the 2014 Plan and 584,596 shares were reserved for issuance thereunder. The shares issuable pursuant to the registration statements on Form S-8 will be freely tradable in the public market, except for shares held by our affiliates. As of December 31, 2023, there were also outstanding warrants for the purchase of 969,525 shares of our common stock. The shares issuable pursuant to an exercise of the warrants may be freely tradeable in the public market under certain circumstances.

The 2014 Plan terminates in August 2024. We plan to submit to our stockholders for approval a new 2024 equity participation plan.

The sale of a substantial number of shares of our common stock or securities convertible into, or exchangeable or exercisable for, shares of our common stock, whether directly by us, by selling stockholders in future offerings or by our existing stockholders in the secondary market, the perception that such issuances or resales could occur or the availability for future issuances or resale of shares of our common stock or securities convertible into, or exchangeable or exercisable for, shares of our common stock could materially and adversely affect the market price of our common stock and our ability to raise capital through future offerings of equity or equity-related securities on attractive terms or at all.

In addition, our board of directors is authorized to designate and issue preferred stock without further stockholder approval, and we may issue other equity and equity-related securities that are senior to our common stock in the future for a number of reasons, including, without limitation, to repay our indebtedness, support operations and growth, maintain our capital ratios, and comply with any future changes in regulatory standards.

Our executive officers and directors own a substantial number of shares of our common stock. This will enable them to significantly influence the vote on all matters submitted to a vote of our stockholders.

As of March 21, 2024, our executive officers and directors beneficially owned 1,349,810 shares of our common stock, representing 12.2% of the outstanding shares of our common stock.

Accordingly, our executive officers and directors, through their beneficial ownership of our common stock, will be able to significantly influence the vote on all matters submitted to a vote of our stockholders, including the election of directors, amendments to our restated certificate of incorporation or amended and restated bylaws, mergers or other business combination transactions and certain sales of assets outside the usual and regular course of business. The interests of our executive officers and directors may not coincide with the interests of our other stockholders, and they could take actions that advance their own interests to the detriment of our other stockholders.

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Anti-takeover provisions and the regulations to which we may be subject may make it more difficult for a third party to acquire control of us, even if the change in control would be beneficial to our stockholders.

We are a holding company incorporated in Delaware. Anti-takeover provisions in Delaware law and our restated certificate of incorporation and bylaws, as well as regulatory approvals required under state insurance laws, could make it more difficult for a third party to acquire control of us and may prevent stockholders from receiving a premium for their shares of common stock. Our certificate of incorporation provides that our board of directors may issue up to 2,500,000 shares of preferred stock, in one or more series, without stockholder approval and with such terms, preferences, rights and privileges as the board of directors may deem appropriate. These provisions, the control of our executive officers and directors over the election of our directors, and other factors may hinder or prevent a change in control, even if the change in control would be beneficial to, or sought by, our stockholders.

We do not currently pay dividends and are restricted pursuant to our debt agreement from paying dividends.

We have not paid cash dividends since September 2022. Our future dividend policy will be subject to the discretion of our Board of Directors and will be contingent upon future earnings, if any, our financial condition, capital requirements, general business conditions, and other factors. In addition, pursuant to the Exchange Agreement, we are not permitted to pay any cash dividends without the approval of the holders of a majority of the outstanding principal amount of the 2022 Notes. Therefore, we can give no assurance that any dividends will be paid to holders of our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 1C. CYBERSECURITY.

Risk Management and Strategy

We regularly assess risks from cybersecurity threats; monitor our information systems for potential vulnerabilities; and test those systems pursuant to our cybersecurity policies, processes, and practices, which are integrated into our overall risk management program. To protect our information systems from cybersecurity threats, we use various security tools that are designed to help identify, escalate, investigate, resolve, and recover from security incidents in a timely manner.

KICO’s Risk Management Committee, which is comprised of representatives of its technology team, assesses risks based on probability and potential impact on key business systems and processes. Risks that are considered high are incorporated into its overall risk management program. A mitigation plan is developed for each identified high risk, with progress reported to the Risk Management Committee and tracked as part of its overall risk management program overseen by the Corporate Sustainability and Risk Management Committee of our Board of Directors.

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We collaborate with third parties to assess the effectiveness of our cybersecurity prevention and response systems and processes. These include cybersecurity assessors, consultants, and other external cybersecurity experts to assist in the identification, verification, and validation of cybersecurity risks, as well as to support associated mitigation plans when necessary.

Additionally, we require security training for all employees on a quarterly basis. The training covers a wide range of topics, including phishing, social engineering and data protection.

Risk Management

We assess and identify security risk to the organization by:

· conducting assessments of risk, including likelihood and magnitude, from unauthorized access, use, disclosure, disruption, modification or destruction of information systems and the related information processes, stored or transmitted;

· performing risk assessments and producing security assessment reports that document the results of the assessment for use and review by information technology senior leadership, including the Chief Technology Officer;

· ensuring security controls are assessed for effectiveness, are implemented correctly, operating as intended and producing the desired outcome; and

· continuously scanning for vulnerabilities and remedying all vulnerabilities in accordance with the associated risk.

We have not experienced a material cybersecurity breach in the past five years and, as a result, there have been no charges related to a breach in the past five years. Moreover, no risks from cybersecurity threats have materially affected our business strategy, results of operations, or financial condition. While we have implemented processes and procedures that we believe are tailored to address and mitigate the cybersecurity threats that we face, there can be no assurances that such an incident will not occur despite our efforts, as more fully described in Item 1A (“Risk Factors – Our business could be adversely affected by a security breach or other attack involving our computer systems or those of one or more of our vendors.”) in this Annual Report.

Monitoring

We have established a continuous monitoring strategy and program, which includes:

· a set of defined security metrics to be monitored;

· performance of security control assessments on an ongoing basis;

· addressing results of analysis and reporting security status to the executive team;

· monitoring information systems to detect attacks and indicators of potential attacks;

· identification of unauthorized use of the information system resources; and

· deployment of monitoring devices strategically within the information system environment.

Governance

Our Corporate Sustainability and Risk Management Committee of the Board of Directors has been delegated the power and authority to oversee and make recommendations to the Board with regard to our overall approach to risks relating to business operations, including with regard to information technology and cybersecurity. In an annual presentation, the committee received a presentation from our Chief Technology Officer regarding our approach to cybersecurity, which included the following topics: the confidentiality of nonpublic information and the integrity and security of our information system, the cybersecurity policies and procedures, material cybersecurity risks to us, and the overall effectiveness of our Company’s cybersecurity program.

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ITEM 2. PROPERTIES.

Our principal executive offices are currently located at 15 Joys Lane, Kingston, New York 12401. Our insurance underwriting business is located principally at 15 Joys Lane, Kingston, New York 12401. Until March 2024, our insurance underwriting business also maintained an executive office located at 70 East Sunrise Highway, Valley Stream, New York 11581, at which we leased 4,985 square feet of space. In March 2024, the lease expired and was not renewed.

We own the building and the surrounding property at which our insurance underwriting business principally operates, free of mortgage. The property consists of a complex which includes the office building discussed above, a house and vacant land located in Kingston, New York. In late 2023, the property was rezoned to allow for residential development.

ITEM 3. LEGAL PROCEEDINGS.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock is quoted on The Nasdaq Capital Market under the symbol “KINS.”

Holders

As of March 21, 2024, there were 229 record holders of our common stock.

Dividends

Holders of our common stock are entitled to dividends when, as and if declared by our Board of Directors out of funds legally available. We paid a cash dividend in each quarter from September 2011 through September 2022. On November 11, 2022, our Board of Directors determined to suspend regular quarterly dividends in connection with the 2017 Notes refinancing and the need to retain cash to pay a portion of 2017 Notes due on December 30, 2022.

Future dividend policy will be subject to the discretion of our Board of Directors and will be contingent upon future earnings, if any, our financial condition, capital requirements, general business conditions, and other factors. Therefore, we can give no assurance that future dividends of any kind will be paid to holders of our common stock.

Our ability to pay dividends depends, in part, on the ability of KICO to pay dividends to us. KICO, as an insurance subsidiary, is subject to significant regulatory restrictions limiting its ability to declare and pay dividends. In addition, there are restrictions related to surplus and net investment income. Without the prior approval of the DFS, dividends may be paid by insurance carriers from unassigned surplus and are restricted to the lesser of 10% of surplus or 100% of investment income (on a statutory accounting basis) for the trailing 36 months, less dividends paid by KICO during such period. As of December 31, 2023, KICO could not pay any dividends to us without prior regulatory approval due to negative unassigned surplus of approximately $7,662,000. KICO has agreed with the DFS that when KICO satisfies the regulatory requirements that allow for the payment of dividends, KICO must receive approval from the DFS to pay dividends. See “Business – Government Regulation”, “Risk Factors – As a holding company, we are dependent on the results of operations of our subsidiary, KICO; there are restrictions on the payment of dividends by KICO; our ability to pay the principal amount of the 2022 Notes on the due date of December 30, 2024 may be limited by these regulatory constraints”  and “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Liquidity” in Items 1, 1A and 7, respectively, of this Annual Report.

In addition, pursuant to the Exchange Agreement, we are not permitted to pay any cash dividends without the approval of the holders of a majority of the outstanding principal amount of the 2022 Notes. Therefore, we can give no assurance that any dividends will be paid to holders of our common stock.

Recent Sales of Unregistered Securities

None.

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Issuer Purchases of Equity Securities

None.

ITEM 6. RESERVED.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

We offer property and casualty insurance products through our wholly-owned subsidiary, Kingstone Insurance Company (“KICO”). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto insurance in New York, and in 2023 was the 15th largest writer of homeowners insurance in New York. KICO is also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. For the years ended December 31, 2023 and 2022, respectively, 88.3% and 80.6% of KICO’s direct written premiums came from the New York policies. We refer to our New York business as our “Core” business and the business outside of New York as our “non-Core” business.

In addition, our subsidiary, Cosi Agency, Inc. (“Cosi”), a multi-state licensed general agency, 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. Cosi-related operating expenses are minimal and 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.

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. These corporate expenses include legal and auditing fees, executive employment costs, and other costs directly associated with being a public company.

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Principal Revenue and Expense Items

Net premiums earned: Net premiums earned is the earned portion of our written premiums, less that portion of premium that is ceded to third party reinsurers under reinsurance agreements. The amount ceded under these reinsurance agreements is based on a contractual formula contained in the individual reinsurance agreement. Insurance premiums are earned on a pro rata basis over the term of the policy. At the end of each reporting period, premiums written that are not earned are classified as unearned premiums and are earned in subsequent periods over the remaining term of the policy. Our insurance policies have a term of one year. Accordingly, for a one-year policy written on July 1, 2022, we would earn half of the premiums in 2022 and the other half in 2023.

Ceding commission revenue: Commissions on reinsurance premiums ceded to quota share treaties are earned in a manner consistent with the recognition of the direct acquisition costs of the underlying insurance policies, generally on a pro-rata basis over the terms of the policies reinsured.

Net investment income and net gains (losses) on investments: We invest in cash and cash equivalents, short-term investments, fixed-maturity and equity securities, and other investments. Our net investment income includes interest and dividends earned on our invested assets, less investment expenses. Net realized gains and losses on our investments are reported separately from our net investment income. Net realized gains occur when our investment securities are sold for more than their costs or amortized costs, as applicable. Net realized losses occur when our investment securities are sold for less than their costs or amortized costs, as applicable, or are written down as a result of other-than-temporary impairment. We classify our fixed-maturity securities as either available-for-sale or held-to-maturity. Net unrealized gains (losses) on those securities classified as available-for-sale are reported separately within accumulated other comprehensive (loss) income on our balance sheet while our equity securities and other investments report changes in fair value through earnings. See Note 2 in the accompanying consolidated financial statements for a further discussion of our accounting policies following Item 16 of this Annual Report.

Other income: We recognize installment fee income and fees charged to reinstate a policy after it has been cancelled for non-payment.

Loss and loss adjustment expenses incurred: Loss and LAE incurred represent our largest expense item, and for any given reporting period include estimates of future claim payments, changes in those estimates from prior reporting periods and costs associated with investigating, defending and servicing claims. These expenses fluctuate based on the amount and types of risks we insure. We record loss and LAE related to estimates of future claim payments based on case-by-case valuations, statistical analyses and actuarial procedures. We seek to establish all reserves at the most likely ultimate liability based on our historical claims experience. It is typical for certain claims to take several years to settle and we revise our estimates as we receive additional information on such claims. Our ability to estimate loss and LAE accurately at the time of pricing our insurance policies is a critical factor affecting our profitability.

Commission expenses and other underwriting expenses: Other underwriting expenses include policy acquisition costs and other expenses related to the underwriting of policies. Policy acquisition costs represent the costs of originating new insurance policies that vary with, and are primarily related to, the production of insurance policies (principally commissions, premium taxes and certain underwriting salaries). Policy acquisition costs are deferred and recognized as expense as the related premiums are earned. Other underwriting expenses represent general and administrative expenses of our insurance business and are comprised of other costs associated with our insurance activities such as regulatory fees, telecommunication and technology costs, occupancy costs, employment costs, and legal and auditing fees.

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

Stock-based compensation: Non-cash equity compensation includes the fair value of stock grants issued to our directors, officers and employees, and amortization of stock options issued to the same.

Depreciation and amortization: Depreciation and amortization includes the amortization of intangibles related to the acquisition of KICO, depreciation of the real estate used in KICO’s operations, as well as depreciation of capital expenditures for information technology projects, office equipment and furniture.

Interest expense: Interest expense represents amounts we incur on our outstanding indebtedness at the applicable interest rates. Interest expense also includes amortization of debt discount and issuance costs.

Income tax expense: We incur federal income tax expense on our consolidated statement of operations as well as state income tax expense for our non-insurance underwriting subsidiaries.

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.

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 December 31, 2023 and 2022, there were no commercial liability policies in-force. As of December 31, 2023, these expired policies represent approximately 15.8% of loss and LAE reserves net of reinsurance recoverables. See discussion below under “Additional Financial Information”.

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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.

Critical Accounting Estimates

Our 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 consolidated financial statements and related notes. In preparing these 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 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.

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See below a description of these critical accounting estimates. Also, see Note 2 to the consolidated financial statements following Item 16 of this Annual Report.

Loss and Loss Adjustment Expense Reserves

Property and Casualty loss and loss adjustment expense (“LAE”) reserves are established to provide for the estimated cost of settling both reported (“case”) and incurred but not reported (“IBNR”) claims and claims adjusting expenses.  The liability for these reserves is estimated on an undiscounted basis, using individual case-basis valuations and paid claims, pending claims, statistical analyses and various actuarial reserving methodologies.  Due to the inherent uncertainty of the reserve process, actual loss costs could vary significantly compared to estimated loss costs.  The below table provides detail of our reserves as of December 31, 2023 and 2022:

	As of						As of
	December 31, 2023						December 31, 2022
($ in thousands)	Gross		Ceded		Net		Gross		Ceded		Net
Case loss	$	67,108	$	19,538	$	47,570	$	62,745	$	16,619	$	46,126
Case LAE		5,726		1,121		4,605		5,543		898		4,645
IBNR loss		37,262		10,665		26,597		42,687		10,023		32,664
IBNR LAE		11,722		1,965		9,757		7,364		120		7,244
Total	$	121,818	$	33,289	$	88,529	$	118,340	$	27,660	$	90,679

(Components may not sum due to rounding)

Case Reserves – Reserves for reported losses are based on an estimate of ultimate loss costs of an individual claim derived from individual case-basis valuations, actual claims paid, pending claims, statistical analyses and various actuarial reserving methodologies.

IBNR Reserves – IBNR reserves are estimates of claims that have occurred but as to which we have not yet been notified to establish the case reserve.  IBNR is determined using historical information aggregated by line of insurance and adjusted to current conditions. 

Reinsurance

We purchase reinsurance to manage our underwriting risk on certain policies.  Reinsurance receivables represent management’s best estimate of loss and LAE recoverable from reinsurers.  Reinsurance receivables are estimated using the same methodologies as loss and LAE reserves.  Changes in the methods and assumptions used could result in significant variances between actual and estimated losses.

Deferred Income Taxes

Our effective tax rate is based on GAAP income at statutory tax rates, adjusted for non-taxable and non-deductible items, and tax credits. Changes in estimates used in preparing the income statement could result in significant changes to our deferred tax asset or liability.

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Deferred tax assets or liabilities are recognized for estimated future tax consequences which result in differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. These assets and liabilities are carried at the enacted tax rates expected to apply when the asset or liability is expected to be recovered or settled. Changes in estimates and assumptions in the income statement, or changes in the enacted tax rate, could result in significant variances between our carried deferred tax and tax recognized on the recovery or settlement of the asset or liability.

Investments

Bonds are classified as held-to-maturity (“HTM”) or available-for-sale (“AFS”), and stocks are generally classified as AFS. Investments classified as HTM are carried at amortized cost, which requires very little judgement. Investments classified as AFS are generally carried at fair value with an unrealized gain/loss recorded in income.  Actual results could vary significantly to the fair values recognized in the income statement.

Kingstone 2.0 (completed) and Kingstone 3.0 (underway)

Beginning in the fourth quarter of 2019, a series of strategic initiatives, coined “Kingstone 2.0”, were commenced to modernize our company. The pillars of the new strategy were as follows:

1.	Strengthen the management team by adding highly qualified professionals with deep domain experience and diverse backgrounds;
2.	Reduce expenses and increase efficiency by embracing technology, including converting to a new policy management system, retiring multiple legacy systems and starting up a new claims system, among other technology initiatives;
3.	Develop and implement a new, more highly segmented product suite (Kingstone Select) which better matches rate to risk using advanced analytics and an abundance of data; and
4.	Better manage our catastrophe exposure in order to reduce loss cost and the growth rate of our probable maximum loss (“PML”) in order to mitigate the impact of the emerging “hard market” in catastrophe reinsurance.

We announced the substantive completion of Kingstone 2.0 in late 2022 and embarked on a new strategy to optimize our in-force business, which we coined as “Kingstone 3.0”. The four pillars of this new strategy entail:

1. Aggressively reducing the non-Core book of business, which has had a disproportionately negative impact on underwriting results, by slowing new business, re-underwriting the book, culling the agent base, reducing commissions, or other means, subject to regulatory constraints. We stopped writing all new non-Core business and have been aggressively reducing policy count. As of December 31, 2023, our non-Core policy count was down by 48% compared to December 31, 2022;

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2.	Adjusting pricing to stay ahead of loss trends, including inflation, by filing the maximum annual rate change that can be supported in each state and product and ensuring all policyholders are insured to value. Inflation has been a dominant headwind that is showing signs of stabilizing. We have been cognizant that inflation’s impact on loss costs places added pressure on premiums and, as such, we have been more frequent and aggressive with our rate change requests. Similarly, home replacement values reflect that same inflationary pressure. In September 2023, we completed our first cycle of valuation adjustments, making sure that all homes were insured to value. As a result, we have seen a rise in premiums attributable to the heightened replacement costs. Overall average written premium for our legacy Core homeowners policies for the last 12 months, reflecting both rate and replacement cost changes, increased by 24.4%;
3.	Tightly managing reinsurance requirements and costs, using risk selection and other underwriting capabilities to manage the growth rate of our PML. We needed to contain our exposure to spiking reinsurance pricing. We did so and were able to reduce the required limit to be purchased while maintaining our same risk tolerance. We used all the tools available to us to limit new business that was deemed to be too expensive and at the same time re-underwrote the book to cull those risks which presented the greatest risk. The combination of stricter new business underwriting and increased non-renewals gave rise to the 5.8% decline in policy count for our Core business. We have now reverted most of our new business underwriting standards back to what they were previously so Core new business growth should increase going forward; and
4.	Continuing expense reduction focus with a goal of reducing the net expense ratio to 33% by year-end 2024. For the year ended December 31, 2023, we achieved our goal, with a net underwriting expense ratio of 32.9%, a reduction of 3.1 points compared to the year ended December 31, 2022.

See the tables below comparing the quarterly trends and changes from our Core and non-Core business for policies in force and direct written premiums from September 30, 2022 through December 31, 2023. For the three months ended December 31, 2023, our Core direct written premiums increased by 7.0% compared to the three months ended September 30, 2022, while Core policies in force decreased by 5.8% as of December 31, 2023. For the same periods, our non-Core policies in force decreased by 50.8% and non-Core direct written premiums decreased by 44.5%. We believe that the above actions taken will continue to have the intended effect and will result in a return to annual profitability.

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	For the Three Months Ended
	September 30, 2022		December 31, 2022			March 31, 2023			June 30, 2023			September 30, 2023			December 31, 2023
(000’s except percentages and Policies in Force)
Policies In Force, as of end of Three Month Period
Core		71,705		71,359			72,081			70,132			68,498			67,575
Non-Core		22,007		20,695			18,945			16,224			13,457			10,823
Total policies in force		93,712		92,054			91,026			86,356			81,955			78,398
Direct written premiums
Core	$	43,949	$	43,923		$	41,427		$	42,211		$	46,025		$	47,027
Non-Core		10,642		9,978			6,170			5,435			5,966			5,911
Total direct written premiums	$	54,592	$	53,901		$	47,597		$	47,647		$	51,992		$	52,938
Change from September 30, 2022
Core
Policies In Force
$ change	na		$	(346	)	$	376		$	(1,573	)	$	(3,207	)	$	(4,130	)
% change	na			-0.5	%		0.5	%		-2.2	%		-4.5	%		-5.8	%
Direct written premiums
$ change	na		$	(26	)	$	(2,522	)	$	(1,738	)	$	2,076		$	3,078
% change	na			-0.1	%		-5.7	%		-4.0	%		4.7	%		7.0	%
Non- Core
Policies In Force
$ change	na		$	(1,312	)	$	(3,062	)	$	(5,783	)	$	(8,550	)	$	(11,184	)
% change	na			-6.0	%		-13.9	%		-26.3	%		-38.9	%		-50.8	%
Direct written premiums
$ change	na		$	(664	)	$	(4,472	)	$	(5,207	)	$	(4,676	)	$	(4,731	)
% change	na			-6.2	%		-42.0	%		-48.9	%		-43.9	%		-44.5	%
(Components may not sum due to rounding)

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Consolidated Results of Operations

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

	Years ended December 31,
($ in thousands)	2023			2022			Change			Percent
Revenues
Direct written premiums	$	200,175		$	201,255		$	(1,080	)		(0.5	) %
Assumed written premiums		-			-			-		na		%
		200,175			201,255			(1,080	)		(0.5	)%
Ceded written premiums
Ceded to quota share treaties (1)		51,125			47,409			3,716			7.8	%
Ceded to excess of loss treaties		7,122			3,880			3,242			83.6	%
Ceded to catastrophe treaties		48,317			42,952			5,365			12.5	%
Total ceded written premiums		106,564			94,241			12,323			13.1	%
Net written premiums		93,611			107,014			(13,403	)		(12.5	)%
Change in unearned premiums
Direct and assumed		1,871			(9,733	)		11,604		na		%
Ceded to quota share treaties (1)		18,903			17,104			1,799			10.5	%
Change in net unearned premiums		20,774			7,371			13,403			181.8	%
Premiums earned
Direct and assumed		202,046			191,522			10,524			5.5	%
Ceded to reinsurance treaties		(87,661	)		(77,137	)		(10,524	)		(13.6	)%
Net premiums earned		114,384			114,385			(1	)	-		%
Ceding commission revenue (1)		21,053			19,319			1,734			9.0	%
Net investment income		6,009			4,937			1,072			21.7	%
Net gains (losses) on investments		2,135			(9,392	)		11,527		na		%
Other income		610			910			(300	)		(33.0	)%
Total revenues		144,191			130,159			14,032			10.8	%
Expenses
Loss and loss adjustment expenses
Direct and assumed:
Loss and loss adjustment expenses excluding the effect of catastrophes		111,997			114,943			(2,946	)		(2.6	)%
Losses from catastrophes (2)		11,944			13,106			(1,162	)		(8.9	)%
Total direct and assumed loss and loss adjustment expenses		123,940			128,048			(4,108	)		(3.2	)%
Ceded loss and loss adjustment expenses:
Loss and loss adjustment expenses excluding the effect of catastrophes		37,302			34,185			3,117			9.1	%
Losses from catastrophes (2)		3,789			5,474			(1,685	)		(30.8	)%
Total ceded loss and loss adjustment expenses		41,091			39,658			1,432			3.6	%
Net loss and loss adjustment expenses:
Loss and loss adjustment expenses excluding the effect of catastrophes		74,694			80,758			(6,064	)		(7.5	)%
Losses from catastrophes (2)		8,155			7,632			523			6.9	%
Net loss and loss adjustment expenses		82,849			88,390			(5,541	)		(6.3	)%
Commission expense		33,365			34,582			(1,217	)		(3.5	)%
Other underwriting expenses		25,910			26,697			(787	)		(2.9	)%
Other operating expenses		2,456			3,113			(657	)		(21.1	)%
Depreciation and amortization		2,973			3,300			(327	)		(9.9	)%
Interest expense		4,003			2,019			1,984			98.3	%
Total expenses		151,556			158,102			(6,545	)		(4.1	)%
Loss before taxes		(7,365	)		(27,942	)		20,577			73.6	%
Income tax benefit		(1,197	)		(5,418	)		4,221			77.9	%
Net loss	$	(6,168	)	$	(22,525	)	$	16,356			72.6	%
(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 years ended December 31, 2023 and 2022 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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	Years Ended December 31,
	2023			2022			Percentage Point Difference			Percent Change
Key ratios:
Net loss ratio		72.4	%		77.3	%		(4.9	)		(6.3	)%
Net underwriting expense ratio		32.9	%		36.0	%		(3.1	)		(8.6	)%
Net combined ratio		105.3	%		113.3	%		(8.0	)		(7.1	)%

Direct Written Premiums

Direct written premiums during the year ended December 31, 2023 (“Year Ended 2023”) were $200,175,000 compared to $201,255,000 during the year ended December 31, 2022 (“Year Ended 2022”). The decrease of $1,080,000, or 0.5%, was primarily due to a decrease in premiums from our personal lines business.

Direct written premiums from our personal lines business for Year Ended 2023 were $185,426,000, a decrease of $2,679,000, or 1.4%, from $188,105,000 in Year Ended 2022. The 1.4% decrease in premiums from our personal lines business was primarily due to the decrease in premiums associated with our non-Core business of 39.8% offsetting a 8.6% increase in our Core business. The decrease in our non-Core business premiums and the increase in our Core business premiums is in accordance with both our Kingstone 2.0 and Kingstone 3.0 strategic plans. 

Direct written premiums from our livery physical damage business for Year Ended 2023 were $14,648,000, an increase of $1,655,000, or 12.7%, from $12,993,000 in Year Ended 2022. The increase in livery physical damage direct written premiums was due to an increasing number of policies and an increase in the values of the autos insured.

Direct written premiums from our Core business were $176,692,000 in Year Ended 2023 compared to $162,255,000 in Year Ended 2022, an increase of $14,437,000, or 8.9%. Policies in force from our Core business decreased by 5.3% in Year Ended 2023 compared to Year Ended 2022. Beginning in 2017, we commenced our non-Core business and started writing personal lines policies in New Jersey. Through 2019 we expanded our non-Core business to Rhode Island, Massachusetts and Connecticut. Direct written premiums from our non-Core business were $23,482,000 in Year Ended 2023 down from $39,000,000 in Year Ended 2022, a decrease of $15,518,000, or 39.8%. The decrease in direct written premiums from our non-Core business is a result of our decision to aggressively reduce the book of business in these states. Policies in force from our non-Core business decreased by 47.7% in Year Ended 2023 compared to Year Ended 2022. The increase in our Core business and the decrease in our non-Core business is consistent with a key pillar of our Kingstone 3.0 strategy to reduce our non-Core business due to profitability concerns.

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Net Written Premiums and Net Premiums Earned

Net written premiums decreased $13,403,000, or 12.5%, to $93,611,000 in Year Ended 2023 from $107,014,000 in Year Ended 2022. Net written premiums include direct premiums, less the amount of written premiums ceded under our reinsurance treaties (quota share, excess of loss, and catastrophe). The decrease in Year Ended 2023 is primarily due to a decrease in direct written premiums and an increase in catastrophe premiums rates.

Quota share reinsurance treaties

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”). Upon the expiration of the 2021/2023 Treaty on January 1, 2023, we entered into a new 30% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2023 through January 1, 2024 (“2023/2024 Treaty”). In Year Ended 2023, our premiums ceded under quota share treaties increased by $3,716,000 in comparison to ceded premiums in Year Ended 2022 (see table above). The increase in Year Ended 2023 was attributable to the runoff of an 8.5% portion of the 30% 2021/2023 Treaty. The remainder of the 2021/2023 Treaty was on a cutoff basis and the new 2023/2024 Treaty was placed for 30% on January 1, 2023. Our personal lines business was subject to the 2023/2024 Treaty in Year Ended 2023, and the 2021-2023 Treaty in Year Ended 2022.

Excess of loss reinsurance treaties

An increase in written premiums will increase the premiums ceded under our excess of loss treaties. In Year Ended 2023, our ceded excess of loss (“XOL”) reinsurance premiums increased by $3,242,000 over the comparable ceded premiums for Year Ended 2022. The increase was due to an increase in subject premiums and the heightened cost of coverage obtained. Effective January 1, 2022, we entered into an underlying XOL 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. Effective January 1, 2023, the underlying XOL treaty was renewed covering the period from January 1, 2023 through January 1, 2024.

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. An increase in our personal lines business results in an increase in premiums ceded under our catastrophe treaties if reinsurance rates are stable or are increasing. Catastrophe premiums increased $5,365,000, or 12.5%, to $48,317,000 in Year Ended 2023 from $42,952,000 in Year Ended 2022. The increase was primarily due to an increase in catastrophe reinsurance rates. In accordance with our Kingstone 2.0 and Kingstone 3.0 goals, we have reduced our PML in Year Ended 2023, which partially offset the increase in premiums effective July 1, 2023.

Net premiums earned

Net premiums earned remained flat at $114,384,000 in Year Ended 2023 compared to $114,385,000 in Year Ended 2022.

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Ceding Commission Revenue

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

	Years ended December 31,
($ in thousands)	2023		2022		Change		Percent
Provisional ceding commissions earned	$	20,397	$	19,106	$	1,291		6.8	%
Contingent ceding commissions earned		656		214		442		206.5	%
Total ceding commission revenue	$	21,053	$	19,319	$	1,734		9.0	%
(Columns in the table above may not sum to totals due to rounding)

Ceding commission revenue was $21,053,000 in Year Ended 2023 compared to $19,319,000 in Year Ended 2022. The increase of $1,734,000 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.

Provisional Ceding Commissions Earned

In Year Ended 2023, we earned provisional ceding commissions of $20,397,000 from personal lines earned premiums ceded under the 2023/2024 Treaty, and in Year Ended 2022, we earned provisional ceding commissions of $19,106,000 from personal lines earned premiums ceded under the 2021/2023 Treaty. The increase of $1,291,000 in provisional ceding commissions earned was due to the increase in premiums ceded under these treaties during Year Ended 2023 compared to Year Ended 2022.

Contingent Ceding Commissions Earned

The structure of the 2023/2024 Treaty and 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. The increase in Year Ended 2023 was primarily attributable to a one time true up from a prior year treaty.

Net Investment Income

Net investment income was $6,009,000 in Year Ended 2023 compared to $4,937,000 in Year Ended 2022, an increase of $1,072,000, or 21.7%. The increase in investment income was attributable to a $766,000 reversal in Year Ended 2022 of prior years’ estimated accrued interest income stemming from an error in third party investment reporting. The increase was also due to higher interest rates earned on cash balances. The average yield on non-cash invested assets was 3.75% as of December 31, 2023 compared to 3.42% as of December 31, 2022.

47

Cash and invested assets were $183,610,000 as of December 31, 2023 compared to $191,046,000 as of December 31, 2022. The $7,436,000 decrease in cash and invested assets was primarily attributable to the cash used to fund disbursements of claims resulting from higher severity losses and inflation’s impact on losses, along with catastrophe losses incurred in Year Ended 2023 and prior periods. The increase in disbursement of losses was partially offset by an increase in unrealized gains on our investment portfolio.

Net Gains (Losses) on Investments

Net gains on investments were $2,135,000 in Year Ended 2023 compared to net (losses) of $(9,392,000) in Year Ended 2022. Unrealized gains on our equity securities and other investments in Year Ended 2023 were $2,153,000, compared to unrealized (losses) of $(9,252,000) in Year Ended 2022. Net realized (losses) on sales of investments were $(19,000) in Year Ended 2023 compared to net realized (losses) of $(140,000) in Year Ended 2022.

Other Income

Other income was $610,000 in Year Ended 2023 compared to $910,000 in Year Ended 2022, a decrease of $300,000, or 33.0%.

Net Loss and LAE

Net loss and LAE was $82,849,000 for Year Ended 2023 compared to $88,390,000 for Year Ended 2022. The net loss ratio was 72.4% in Year Ended 2023 compared to 77.3% in Year Ended 2022, a decrease of 4.9 percentage points.

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:

48

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

For Year Ended 2023, the 4.9 point reduction in the loss ratio compared to Year Ended 2022 was mainly due to a lower underlying loss ratio (loss ratio excluding the impact of catastrophe and prior year development) and reduced impact from prior year development.

The estimated net catastrophe losses were $8,155,000 for Year Ended 2023, which contributed 7.1 points to the loss ratio. There were two winter storm events including a major freezing event at the beginning of February, ten wind and thunderstorm events, and one tropical storm classified as catastrophe for Year Ended 2023. By comparison, catastrophe events had a loss ratio impact of 6.7 points for Year Ended 2022.

The underlying loss ratio was 65.3% for Year Ended 2023, a decrease of 2.9 points from the 68.2% underlying loss ratio recorded for Year Ended 2022. The loss experience in Year Ended 2023 was improved due to lower frequency but was offset by increasing severity resulting from inflation and an elevated number of large losses.

Prior year development was stable for Year Ended 2023. There was an overall favorable development of $7,000, which had minimal impact on the loss ratio.

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

49

Commission Expense

Commission expense was $33,365,000 in Year Ended 2023 or 16.5% of direct earned premiums. Commission expense was $34,582,000 in Year Ended 2022 or 18.1% of direct earned premiums. The decrease of $1,217,000 was primarily due to a reduction of commission rates on our legacy policies in accordance with our Kingstone 3.0 strategy as well as the lower commission rate paid on Select products as compared to legacy products, but offset in part by an increase in direct earned premiums of $10,524,000 to $202,046,000.

Other Underwriting Expenses

Other underwriting expenses were $25,910,000, or 12.8% of direct earned premiums, in Year Ended 2023 compared to $26,697,000, or 13.9% of direct earned premiums, in Year Ended 2022. The decrease of $787,000, or 2.9%, was primarily due to decreases in professional fees, credit card fees and policy management system fees as result of the completion of our policy management system conversion, allowing us to eliminate multiple legacy systems. The decreases were partially offset by a net increase in salaries and employment costs as described below, an increase in insurance department fees, and the impact from high inflation.

Our largest single component of other underwriting expenses is salaries and employment costs, with costs of $11,335,000 in Year Ended 2023 compared to $10,799,000 in Year Ended 2022. The increase of $536,000, or 5.0%, is compared unfavorably to the 0.5% decrease in direct written premiums. In the periods following Year Ended 2022, we continued to strengthen our professional team by investing in the hiring of higher-level and higher compensated managers and staff needed to manage the business consistent with our Kingstone 2.0 and Kingstone 3.0 strategies. The increase in salaries was partially offset by a reduction in our staff in June and July 2023 as we have been reducing our non-Core business.

50

Our net underwriting expense ratio in Year Ended 2023 was 32.9% compared to 36.0% in Year Ended 2022. The following table shows the individual components of our net underwriting expense ratio for the periods indicated:

	Years ended December 31,						Percentage
	2023			2022			Point Change
Other underwriting expenses
Employment costs		9.9	%		9.4	%		0.5
Underwriting fees (inspections/surveys)		1.6			1.7			(0.1	)
IT expenses		2.9			3.9			(1.0	)
Professional fees		1.1			1.3			(0.2	)
Other expenses		7.1			7.0			0.1
Total other underwriting expenses		22.6			23.3			(0.7	)
Commission expense		29.2			30.2			(1.0	)
Ceding commission revenue
Provisional		(17.8	)		(16.7	)		(1.1	)
Contingent		(0.6	)		(0.2	)		(0.4	)
Total ceding commission revenue		(18.4	)		(16.9	)		(1.5	)
Other income		(0.5	)		(0.7	)		0.2
Net underwriting expense ratio		32.9	%		36.0	%		(3.1	)

(Components may not sum to totals due to rounding)

51

Other Operating Expenses

Other operating expenses, related to the expenses of our holding company and Cosi, were $2,456,000 for Year Ended 2023 compared to $3,113,000 for Year Ended 2022. The following table shows a breakdown of the significant components of other operating expenses for the periods indicated:

	Years ended
	December 31,
($ in thousands)	2023		2022			Change			Percent
Other operating expenses
Employement costs	$	376	$	(24	)	$	400		na		%
Equity compensation		833		1,393			(560	)		(40.2	)
Professional		276		765			(489	)		(63.9	)
Directors fees		275		327			(52	)		(15.9	)
Insurance		194		154			40			26.0
Other expenses		502		498			4			0.8
Total other operating expenses	$	2,456	$	3,113		$	(657	)		(21.1	)%

(Components may not sum to totals due to rounding)

The decrease in Year Ended 2023 of $657,000, or 21.1%, as compared to Year Ended 2022 was primarily due to a decrease in equity compensation and professional fees, partially offset by an increase in employment costs. The increase in employment costs was due to the hiring of our new Chief Financial Officer in Year Ended 2023 and fluctuations in deferred compensation liability related to changes in the underlying invested portfolio. The decrease in professional fees is due to $354,000 incurred in Year Ended 2022 related to a then contemplated transaction that would have resulted in a third party acquiring all of the outstanding equity of our company.

Depreciation and Amortization

Depreciation and amortization was $2,973,000 in Year Ended 2023 compared to $3,300,000 in Year Ended 2022. The decrease of $327,000, or 9.9%, in depreciation and amortization was primarily due to the completion and deployment of our customized policy management software as planned for in Kingstone 2.0, now allowing us to consolidate multiple legacy systems into one efficient system and retire those older more costly and less reliable systems. Depreciation on older assets that were retired, which had a shorter useful life, is greater than the depreciation on newly acquired assets which have a longer useful life.

Interest Expense

Interest expense in Year Ended 2023 was $4,003,000 compared to $2,019,000 in Year Ended 2022, an increase of $1,984,000 or 98.3%. In Year Ended 2023, as disclosed in Note 9 to the consolidated financial statements, we incurred increased interest expense in connection with the 2022 Notes, which provide for interest at the rate of 12% per annum, and the 2022 equipment financing. In Year 2022, we incurred interest expense in connection with the 2017 Notes, our $30.0 million issuance of long-term debt in December 2017, which provided for interest at the rate of 5.5% per annum, and the equipment financing incurred in the fourth quarter of 2022.

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Income Tax Benefit

Income tax benefit in Year Ended 2023 was $1,197,000, which resulted in an effective tax benefit rate of 16.3%. Income tax benefit in Year Ended 2022 was $5,418,000, which resulted in an effective tax rate of 19.4%. Loss before taxes was $7,365,000 in Year Ended 2023 compared to $27,942,000 in Year Ended 2022. The difference in effective tax rate is due to the effect of permanent differences in Year Ended 2023 compared to Year Ended 2022.

Net Loss

Net loss was $6,168,000 in Year Ended 2023 compared to $22,525,000 in Year Ended 2022. The significant decrease in net loss of $16,356,000, or 72.6%, was primarily attributable to net gains on investments of $2,135,000 in Year Ended 2023 versus net losses on investments of $9,392,000 in Year Ended 2022 and a decrease in loss and loss adjustment expenses of $5,541,000.

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 premiums written, net premiums earned, and loss and loss adjustment expenses by major product type, which were determined based primarily on similar economic characteristics and risks of loss.

53

	Years Ended
	December 31,
	2023			2022
Gross premiums written:
Personal lines	$	185,425,960		$	188,104,883
Livery physical damage		14,648,333			12,992,905
Other(1)		100,209			157,049
Total gross premiums written	$	200,174,502		$	201,254,837
Net premiums written:
Personal lines	$	78,895,126		$	93,907,121
Livery physical damage		14,648,333			12,992,905
Other(1)		67,058			113,503
Total net premiums written	$	93,610,517		$	107,013,529
Net premiums earned:
Personal lines	$	100,391,726		$	103,019,573
Livery physical damage		13,905,368			11,226,975
Other(1)		87,169			137,983
Total net premiums earned	$	114,384,263		$	114,384,531
Net loss and loss adjustment expenses(3):
Personal lines	$	72,580,057		$	76,906,768
Livery physical damage		5,388,954			5,056,461
Other(1)		146,286			18,083
Unallocated loss adjustment expenses		3,128,614			3,701,131
Total without commercial lines		81,243,911			85,682,443
Commercial lines (in run-off effective July 2019)(2)		1,605,299			2,707,599
Total net loss and loss adjustment expenses	$	82,849,210		$	88,390,042
Net loss ratio(3):
Personal lines		72.3	%		74.7	%
Livery physical damage		38.8	%		45.0	%
Other(1)		167.8	%		13.1	%
Total without commercial lines		71.0	%		74.9	%
Commercial lines (in run-off effective July 2019)(2)	na			na
Total		72.4	%		77.3	%

(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 discussions above with regard to “Net Loss and LAE”, as to catastrophe losses in the years ended December 31, 2023 and 2022.

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Insurance Underwriting Business on a Standalone Basis

Our insurance underwriting business reported on a standalone basis for the years ended December 31, 2023 and 2022 follows:

	Years ended
	December 31,
	2023			2022
Revenues
Net premiums earned	$	114,384,263		$	114,384,531
Ceding commission revenue		21,053,494			19,319,391
Net investment income		6,008,682			4,936,778
Net gains (losses) on investments		1,978,373			(9,231,170	)
Other income		600,993			815,952
Total revenues		144,025,805			130,225,482
Expenses
Loss and loss adjustment expenses		82,849,210			88,390,042
Commission expense		33,364,629			34,581,617
Other underwriting expenses		25,909,962			26,697,006
Depreciation and amortization		2,973,440			3,252,134
Interest expense		434,155			83,732
Total expenses		145,531,396			153,004,531
Loss from operations		(1,505,591	)		(22,779,049	)
Income tax benefit		(17,681	)		(4,588,283	)
Net loss	$	(1,487,910	)	$	(18,190,766	)
Key Measures:
Net loss ratio		72.4	%		77.3	%
Net underwriting expense ratio		32.9	%		36.0	%
Net combined ratio		105.3	%		113.3	%
Reconciliation of net underwriting expense ratio:
Acquisition costs and other
underwriting expenses	$	59,274,591		$	61,278,623
Less: Ceding commission revenue		(21,053,494	)		(19,319,391	)
Less: Other income		(600,993	)		(815,952	)
Net underwriting expenses	$	37,620,104		$	41,143,280
Net premiums earned	$	114,384,263		$	114,384,531
Net Underwriting Expense Ratio		32.9	%		36.0	%

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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
Year ended ended December 31, 2023
Written premiums	$	200,174,502		$	-		$	(106,563,985	)	$	93,610,517
Change in unearned premiums		1,871,239			-			18,902,507			20,773,746
Earned premiums	$	202,045,741		$	-		$	(87,661,478	)	$	114,384,263
Loss and loss adjustment expenses excluding
the effect of catastrophes	$	111,996,791		$	-		$	(37,302,450	)	$	74,694,341
Catastrophe loss		11,943,624			-			(3,788,755	)		8,154,869
Loss and loss adjustment expenses	$	123,940,415		$	-		$	(41,091,205	)	$	82,849,210
Loss ratio excluding the effect of catastrophes		55.4	%		0.0	%		42.6	%		65.3	%
Catastrophe loss		5.9	%		0.0	%		4.3	%		7.1	%
Loss ratio		61.3	%		0.0	%		47.0	%		72.4	%
Year ended ended December 31, 2022
Written premiums	$	201,254,837		$	-		$	(79,195,016	)	$	122,059,821
Change in unearned premiums		(9,733,170	)		-			2,057,880			(7,675,290	)
Earned premiums	$	191,521,667		$	-		$	(77,137,136	)	$	114,384,531
Loss and loss adjustment expenses excluding
the effect of catastrophes	$	114,942,807		$	-		$	(34,184,616	)	$	80,758,191
Catastrophe loss		13,105,600			-			(5,473,749	)		7,631,851
Loss and loss adjustment expenses	$	128,048,407		$	-		$	(39,658,365	)	$	88,390,042
Loss ratio excluding the effect of catastrophes		60.0	%		0.0	%		44.3	%		70.6	%
Catastrophe loss		6.8	%		0.0	%		7.1	%		6.7	%
Loss ratio		66.9	%		0.0	%		51.4	%		77.3	%

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

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The key measures for our insurance underwriting business for the years ended December 31, 2023 and 2022 are as follows:

	Years ended
	December 31,
	2023			2022
Net premiums earned	$	114,384,263		$	114,384,531
Ceding commission revenue		21,053,494			19,319,391
Other income		600,993			815,952
Loss and loss adjustment expenses (1)		82,849,210			88,390,042
Acquisition costs and other underwriting expenses:
Commission expense		33,364,629			34,581,617
Other underwriting expenses		25,909,962			26,697,006
Total acquisition costs and other
underwriting expenses		59,274,591			61,278,623
Underwriting loss	$	(6,085,051	)	$	(15,148,791	)
Key Measures:
Net loss ratio excluding the effect of catastrophes		65.3	%		70.6	%
Effect of catastrophe loss on net loss ratio (1)		7.1	%		6.7	%
Net loss ratio		72.4	%		77.3	%
Net underwriting expense ratio excluding the
effect of catastrophes		32.9	%		36.0	%
Effect of catastrophe loss on net underwriting
expense ratio		0.0	%		0.0	%
Net underwriting expense ratio		32.9	%		36.0	%
Net combined ratio excluding the effect
of catastrophes		98.2	%		106.6	%
Effect of catastrophe loss on net combined
ratio (1)		7.1	%		6.8	%
Net combined ratio		105.3	%		113.3	%
Reconciliation of net underwriting expense ratio:
Acquisition costs and other
underwriting expenses	$	59,274,591		$	61,278,623
Less: Ceding commission revenue		(21,053,494	)		(19,319,391	)
Less: Other income		(600,993	)		(815,952	)
	$	37,620,104		$	41,143,280
Net earned premium	$	114,384,263		$	114,384,531
Net Underwriting Expense Ratio		32.9	%		36.0	%

(1) For the years ended December 31, 2023 and 2022, includes the sum of net catastrophe losses and loss adjustment expenses of $8,154,869 and $7,631,851, respectively.

57

Investments

Portfolio Summary

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 December 31, 2023 and 2022:

Available-for-Sale Securities

	December 31, 2023
	Cost or		Gross		Gross Unrealized Losses						Estimated		% of
	Amortized		Unrealized		Less than			More than			Fair		Estimated
Category	Cost		Gains		12 Months			12 Months			Value		Fair Value
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies (1)	$	20,954,764	$	1,799	$	(17,373	)	$	-		$	20,939,190		14.1	%
Political subdivisions of States,
Territories and Possessions		16,607,713		-		-			(3,209,161	)		13,398,552		9.0	%
Corporate and other bonds
Industrial and miscellaneous		75,993,042		-		-			(5,885,296	)		70,107,746		47.1	%
Residential mortgage and other
asset backed securities (2)		50,905,423		113,761		(2,144	)		(6,541,731	)		44,475,309		29.9	%
Total fixed-maturity securities	$	164,460,942	$	115,560	$	(19,517	)	$	(15,636,188	)	$	148,920,797		100.0	%

	December 31, 2022
	Cost or		Gross		Gross Unrealized Losses						Estimated		% of
	Amortized		Unrealized		Less than			More than			Fair		Estimated
Category	Cost		Gains		12 Months			12 Months			Value		Fair Value
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies (1)	$	23,874,545	$	1,479	$	(6,928	)	$	-		$	23,869,096		15.4	%
Political subdivisions of States,
Territories and Possessions		17,108,154		-		(2,195,273	)		(1,771,494	)		13,141,387		8.5	%
Corporate and other bonds
Industrial and miscellaneous		80,338,464		-		(5,796,994	)		(2,458,985	)		72,082,485		46.6	%
Residential mortgage and other
asset backed securities (2)		53,597,264		58,398		(882,664	)		(7,150,803	)		45,622,195		29.5	%
Total fixed-maturity securities	$	174,918,427	$	59,877	$	(8,881,859	)	$	(11,381,282	)	$	154,715,163		100.0	%

(1)

In October 2022, KICO placed certain U.S. Treasury Bills as required collateral for a sale leaseback transaction in a designated custodian account (see Note 9 - Debt - “Equipment Financing”). As of December 31, 2023 and 2022, the estimated fair value of the eligible collateral was approximately $6,999,000 and $8,691,000, respectively.

(2)

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 9 – Debt - “Federal Home Loan Bank”). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of December 31, 2023 and 2022, the estimated fair value of the eligible investments was approximately $11,412,000 and $12,228,000, respectively. KICO will retain all rights regarding all securities if pledged as collateral. As of December 31, 2023 and 2022 there was no outstanding balance on the FHLBNY credit line.

58

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 December 31, 2023 and 2022:

	December 31, 2023
										% of
			Gross		Gross			Estimated		Estimated
Category	Cost		Gains		Losses			Fair Value		Fair Value
Equity Securities:
Preferred stocks	$	13,583,942	$	-	$	(2,870,027	)	$	10,713,915		72.6	%
Fixed income exchange traded funds		3,711,232				(669,232	)		3,042,000		20.6	%
Mutual funds		622,209		314,816		-			937,025		6.3	%
FHLBNY common stock		69,400		-		-			69,400		0.5	%
Total	$	17,986,783	$	314,816	$	(3,539,259	)	$	14,762,340		100.0	%

	December 31, 2022
										% of
			Gross		Gross			Estimated		Estimated
Category	Cost		Gains		Losses			Fair Value		Fair Value
Equity Securities:
Preferred stocks	$	13,583,942	$	-	$	(3,589,313	)	$	9,994,629		72.2	%
Fixed income exchange traded funds		3,711,232				(821,632	)		2,889,600		20.9	%
Mutual funds		716,626		158,635		-			875,261		6.3	%
FHLBNY common stock		74,900		-		-			74,900		0.5	%
Total	$	18,086,700	$	158,635	$	(4,410,945	)	$	13,834,390		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 December 31, 2023 and 2022:

	December 31, 2023						December 31, 2022
			Gross		Estimated				Gross		Estimated
Category	Cost		Gains		Fair Value		Cost		Gains		Fair Value
Other Investments:
Hedge fund	$	1,987,040	$	1,910,110	$	3,897,150	$	1,987,040	$	784,612	$	2,771,652

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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 December 31, 2023 and 2022:

	December 31, 2023
	Cost or		Gross		Gross Unrealized Losses						Estimated		% of
	Amortized		Unrealized		Less than			More than			Fair		Estimated
Category	Cost		Gains		12 Months			12 Months			Value		Fair Value
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,860	$	15,045	$	(6,914	)	$	(18,163	)	$	1,218,828		20.0	%
Political subdivisions of States,
Territories and Possessions		499,170		890		-			-			500,060		8.2	%
Exchange traded debt		304,111		-		-			(70,111	)		234,000		3.8	%
Corporate and other bonds
Industrial and miscellaneous		5,020,400		-		-			(867,140	)		4,153,260		68.0	%
Total	$	7,052,541	$	15,935	$	(6,914	)	$	(955,414	)	$	6,106,148		100.0	%

	December 31, 2022
	Cost or		Gross		Gross Unrealized Losses						Estimated		% of
	Amortized		Unrealized		Less than			More than			Fair		Estimated
Category	Cost		Gains		12 Months			12 Months			Value		Fair Value
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,560	$	28,400	$	(34,077	)	$	-		$	1,222,883		18.5	%
Political subdivisions of States,
Territories and Possessions		498,638		2,092		-			-			500,730		7.6	%
Exchange traded debt		304,111		-		(29,111	)		-			275,000		4.2	%
Corporate and other bonds
Industrial and miscellaneous		5,734,831		36,968		(809,746	)		(360,278	)		4,601,775		69.7	%
Total	$	7,766,140	$	67,460	$	(872,934	)	$	(360,278	)	$	6,600,388		100.0	%

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

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A summary of the amortized cost and estimated fair value of our investments in held-to-maturity securities by contractual maturity as of December 31, 2023 and 2022 is shown below:

	December 31, 2023				December 31, 2022
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	-	$	-	$	708,535	$	743,575
One to five years		1,121,288		1,097,101		1,120,507		1,088,522
Five to ten years		1,414,911		1,270,770		1,402,704		1,200,720
More than 10 years		4,516,342		3,738,277		4,534,394		3,567,571
Total	$	7,052,541	$	6,106,148	$	7,766,140	$	6,600,388

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Credit Rating of Fixed-Maturity Securities

The table below summarizes the credit quality of our available-for-sale fixed-maturity securities as of December 31, 2023 and 2022 as rated by Standard and Poor’s (or, if unavailable from Standard and Poor’s, then Moody’s, Fitch, or Kroll):

	December 31, 2023					December 31, 2022
	Estimated		Percentage of			Estimated		Percentage of
	Fair		Estimated			Fair		Estimated
	Value		Fair Value			Value		Fair Value
Rating
U.S. Treasury securities	$	20,939,190		14.1	%	$	23,869,096		15.4	%
Corporate and municipal bonds
AAA		1,836,736		1.2	%		1,824,478		1.2	%
AA		9,872,346		6.6	%		9,785,908		6.3	%
A		33,228,327		22.4	%		31,099,075		20.2	%
BBB+		15,042,200		10.1	%		16,682,159		10.8	%
BBB		21,826,125		14.7	%		19,664,051		12.7	%
BBB-		-		0.0	%		4,516,713		2.9	%
Total corporate and municipal bonds		81,805,734		54.9	%		83,572,384		54.1	%
Residential mortgage backed, asset backed, and other collateralized obligations
AAA		12,766,471		8.6	%		16,497,621		10.7	%
AA		22,102,169		14.8	%		23,062,233		14.9	%
A		6,390,752		4.3	%		6,722,902		4.3	%
BBB+		15,168		0.0	%		-		0.0	%
BBB		-		0.0	%		20,067		0.0	%
CCC		413,601		0.3	%		457,683		0.3	%
CC		91,390		0.1	%		99,600		0.1	%
D		-		0.0	%		40,474		0.0	%
Non rated		4,396,322		3.0	%		373,103		0.2	%
Total residential mortgage backed, asset backed,
and other collateralized obligations		46,175,873		31.0	%		47,273,683		30.5	%
Total	$	148,920,797		100.0	%	$	154,715,163		100.0	%

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The table below details the average yield by type of fixed-maturity security as of December 31, 2023 and 2022:

Category	December 31, 2023			December 31, 2022
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies		4.95	%		2.58	%
Political subdivisions of States,
Territories and Possessions		3.35	%		3.58	%
Corporate and other bonds
Industrial and miscellaneous		3.62	%		3.68	%
Residential mortgage backed securities		2.90	%		2.70	%
Total		3.58	%		3.20	%

The table below lists the weighted average maturity and effective duration in years on our fixed-maturity securities as of December 31, 2023 and 2022:

	December 31, 2023		December 31, 2022
Weighted average effective maturity (1)		7.8		5.8
Weighted average final maturity		11.9		13.5
Effective duration		4.1		4.5

(1) In 2023, we changed the methodology for calculating weighted average effective maturity for prepaying and non-prepaying securities. The previous method used in 2022 was weighted average life (“WAL”) converted to effective maturity. The new method used in 2023 is final cash flow date prior to maturity. The new methodology aims to more accurately reflect the effective maturity of prepaying securities by considering the final cash flow date instead of relying solely on the WAL conversion

Fair Value Consideration

As disclosed in Note 4 to the consolidated financial statements, with respect to “Fair Value Measurements,” we define fair value as 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 December 31, 2023 and 2022, 65% 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 December 31, 2023 and 2022:

	December 31, 2023
	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	$	5,974,440	$	(17,373	)		1	$	-	$	-			-	$	5,974,440	$	(17,373	)
Political subdivisions of
States, Territories and
Possessions		-		-			-		13,398,552		(3,209,161	)		13		13,398,552		(3,209,161	)
Corporate and other
bonds industrial and
miscellaneous		-		-			-		70,107,746		(5,885,296	)		85		70,107,746		(5,885,296	)
Residential mortgage and
other asset backed securities		88,988		(2,144	)		4		38,675,604		(6,541,731	)		37		38,764,592		(6,543,875	)
Total fixed-maturity
securities	$	6,063,428	$	(19,517	)		5	$	122,181,902	$	(15,636,188	)		135	$	128,245,330	$	(15,655,705	)

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	December 31, 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	$	18,918,196	$	(6,928	)		3	$	-	$	-			-	$	18,918,196	$	(6,928	)
Political subdivisions of
States, Territories and
Possessions		7,970,633		(2,195,273	)		9		5,170,753		(1,771,494	)		5		13,141,386		(3,966,767	)
Corporate and other
bonds industrial and
miscellaneous		56,910,104		(5,796,994	)		75		15,172,381		(2,458,985	)		15		72,082,485		(8,255,979	)
Residential mortgage and
other asset backed securities		10,145,880		(882,664	)		22		34,753,178		(7,150,803	)		26		44,899,058		(8,033,467	)
Total fixed-maturity
securities	$	93,944,813	$	(8,881,859	)		109	$	55,096,312	$	(11,381,282	)		46	$	149,041,125	$	(20,263,141	)

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There were 140 securities at December 31, 2023 that accounted for the gross unrealized loss of our fixed-maturity securities available-for-sale, none of which were deemed to be credit losses by us. There were 155 securities at December 31, 2022 that accounted for the gross unrealized loss of our fixed-maturity securities available-for-sale, none of which were deemed to be credit losses by us. 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, 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.

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.

The primary source of cash flow for our holding company are dividends and distributions received from KICO, which are subject to statutory restrictions. For the year ended December 31, 2023, KICO paid a dividend of $1,250,000 to us. As of December 31, 2023, KICO had a negative unassigned surplus and currently will not be able to pay any distributions to us without prior regulatory approval. In September 2023, KICO received regulatory approval and paid us a $2,700,000 distribution from paid in capital. In December 2023, KICO received regulatory approval to pay us an additional $2,300,000 distribution from paid in capital. KICO intends to pay us the $2,300,000 distribution in 2024.

KICO is a member of the 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 – Investments to our consolidated financial statements 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 September 30, 2023. On July 6, 2023, A.M. Best withdrew KICO’s ratings as KICO requested to no longer participate in A.M. Best’s interactive rating process. As a result of the withdrawal of A.M. Best ratings, KICO is currently only able to borrow on an overnight basis. The maximum allowable advance as of December 31, 2023, based on the net admitted assets as of September 30, 2023, was approximately $12,813,000. Available collateral as of December 31, 2023 was approximately $11,412,000. As a result of the withdrawal of A.M. Best ratings, KICO is currently only able to borrow on an overnight basis. Advances are limited to 85% of the amount of available collateral. There were no borrowings under this facility during Year Ended 2023.  

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On December 15, 2022, we issued $19,950,000 of our 2022 Notes pursuant to the Exchange Agreement. The Exchange Agreement provided for a mandatory redemption payment with regard to the 2022 Notes on December 30, 2023 in an amount discussed in Note 9 – Debt of the consolidated financial statements included in this Annual Report. The mandatory redemption payment was based on the maximum Ordinary Dividend Paying Capacity of KICO as discussed in Note 9, which was a negative amount and, accordingly, the Company was not required to make a mandatory redemption of the 2022 Notes on December 30, 2023.We are also required to make semi-annual interest payments in arrears on June 30 and December 30 of each year. The maturity date of the 2022 Notes is December 30, 2024.

If the aforementioned sources of cash flow currently available are insufficient to cover our holding company debt service and other cash requirements, we will seek to obtain additional financing. See Notes 2 and 9 to our consolidated financial statements included in this Annual Report for a discussion of our plans in this regard.

Our reconciliation of net loss to net cash used 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.

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:

Years ended December 31,	2023			2022
Cash flows (used in) provided by:
Operating activities	$	(11,326,850	)	$	(915,521	)
Investing activities		9,461,700			(5,905,779	)
Financing activities		(1,116,080	)		(5,511,070	)
Net decrease in cash and cash equivalents		(2,981,230	)		(12,332,370	)
Cash and cash equivalents, beginning of period		11,958,228			24,290,598
Cash and cash equivalents, end of period	$	8,976,998		$	11,958,228

Net cash used in operating activities was $11,327,000 in Year Ended 2023 as compared to $916,000 used in operating activities in Year Ended 2022. The $10,411,000 increase in cash flows used in operating activities in Year Ended 2023 as compared to Year Ended 2022 was primarily the result of an increase in cash used arising from net fluctuations in operating assets and liabilities, partially offset by a decrease in net loss (adjusted for non-cash items) of $5,029,000. The increase in cash used in operating activities is also partially offset by the payment of $13,245,000 to reinsurers in Year Ended 2022 pursuant to the inception of our quota share reinsurance treaty, effective December 31, 2021. 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 $9,462,000 in Year Ended 2023 compared to $5,906,000 used in investing activities in Year Ended 2022 resulting in a $15,368,000 increase in net cash provided by investing activities. In Year Ended 2023, we had net cash provided by our investment portfolio of $11,289,000, compared to $1,355,000 used in Year Ended 2022. In addition, we decreased our acquisition of fixed assets by $2,724,000 in Year Ended 2023 compared to Year Ended 2022.

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Net cash used in financing activities was $1,116,000 in Year Ended 2023 compared to $5,511,000 used in Year Ended 2022. The $4,395,000 decrease in net cash used in financing activities was attributable to a $10,050,000 principal payment on the 2017 Notes in 2022 and $1,758,000 of bond issue costs, both paid in connection with the Exchange Agreement with no similar payments in 2023. In addition, no dividends were paid to shareholders in Year Ended 2023 compared to $1,277,000 being paid in Year Ended 2022 and a $378,000 decrease in withholding taxes paid on the vesting of restricted stock awards. The decreases in cash used in financing activities were partially offset by $8,097,000 of proceeds in Year Ended 2022 from equipment financing in connection with KICO’s sale-leaseback transaction and the related $897,000 increase in debt repayments in Year Ended 2023.

Reinsurance

The following table provides summary information with respect to each reinsurer that accounted for more than 10% of our reinsurance recoverables on paid and unpaid losses and loss adjustment expenses as of December 31, 2023:

		Amount
		Recoverable
	A.M.	as of
($ in thousands)	Best Rating	December 31, 2023		%
Swiss Reinsurance America Corporation	A+	$	17,587		36.1	%
Hanover Rueck SE	A+		8,661		17.8	%
Allied World Insurance Company (1)	A		6,914		14.2	%
Ace Property and Casualty Insurance Company	A++		5,045		10.4	%
			38,207		78.5	%
Others (2)			10,459		21.5	%
Total		$	48,666		100.0	%

(1)	Represents $4,000 guaranteed by irrevocable letters of credit.
(2)	Of the $5,673,000 reinsurance recoverables included in Others at December 31, 2023, $2,236,000 was secured pursuant to a collateralized trust agreement and $426,000 guaranteed by irrevocable letters of credit. Assets held in the trust are not included in our invested assets, and investment income earned on this asset is credited to the reinsurer.

Effective December 31, 2021, we entered into a quota share reinsurance treaty for our personal lines business, which primarily consisted of homeowners’ and dwelling fire policies, covering the period from December 31, 2021 through January 1, 2023 (“2021/2023 Treaty”). Upon the expiration of the 2021/2023 Treaty on January 1, 2023, we entered into a new quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2023 through January 1, 2024 (“2023/2024 Treaty”). Upon the expiration of the 2023/2024 Treaty on January 1, 2024, we entered into a new 27% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”).

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We entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2023. Effective January 1, 2022, we entered into an underlying excess of loss reinsurance treaty (“Underlying XOL Treaty”) covering the period from January 1, 2022 through January 1, 2023. The Underlying XOL Treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the Underlying XOL Treaty. Effective January 1, 2023, the Underlying XOL Treaty was renewed covering the period from January 1, 2023 through January 1, 2024. Effective January 1, 2024, the Underlying XOL Treaty was renewed covering the period from January 1, 2024 through January 1, 2025. Material terms for our reinsurance treaties in effect for the treaty years shown below are as follows:

	Treaty Period
	2024/2025 Treaty						2023/2024 Treaty						2021/2023 Treaty
	July 1,			January 1,			July 1,			January 1,			July 1,			December 31,
	2024			2024			2023			2023			2022			2021
	to			to			to			to			to			to
	January 1,			June 30,			January 1,			June 30,			January 1,			June 30,
Line of Business	2025			2024			2024			2023			2023			2022
Personal Lines:
Homeowners, dwelling fire and canine legal liability
Quota share treaty:
Percent ceded (7)		27	%		27	%		30	%		30	%		30	%		30	%
Risk retained on intial
$1,000,000 of losses (5) (6) (7)	$	730,000		$	730,000		$	700,000		$	700,000		$	700,000		$	700,000
Losses per occurrence
subject to quota share
reinsurance coverage	$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000
Expiration date	January 1, 2025			January 1, 2025			January 1, 2024			January 1, 2024			January 1, 2023			January 1, 2023
Excess of loss coverage and
facultative facility
coverage (1) (5) (6)	$	400,000		$	8,400,000		$	8,400,000		$	8,400,000		$	8,400,000		$	8,400,000
	in excess of			in excess of			in excess of			in excess of			in excess of			in excess of
	$	600,000		$	600,000		$	600,000		$	600,000		$	600,000		$	600,000
Total reinsurance coverage
per occurrence (5) (6)	$	470,000		$	8,470,000		$	8,500,000		$	8,500,000		$	8,500,000		$	8,500,000
Losses per occurrence
subject to reinsurance
coverage (6)	$	1,000,000		$	8,000,000		$	8,000,000		$	8,000,000		$	9,000,000		$	9,000,000
Expiration date		(6)		June 30, 2024			June 30, 2024			June 30, 2023			June 30, 2023			June 30, 2022
Catastrophe Reinsurance:
Initial loss subject to personal
lines quota share treaty (6)	$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000
Risk retained per catastrophe
occurrence (7) (8)		(6)		$	9,500,000		$	8,750,000		$	8,750,000		$	7,400,000		$	7,400,000
Catastrophe loss coverage
in excess of quota share
coverage (2)		(6)		$	315,000,000		$	315,000,000		$	335,000,000		$	335,000,000		$	490,000,000
Reinstatement premium
protection (3) (4)		(6)		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, 2024.
(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 December 31, 2021 through June 30, 2022, reinstatement premium protection for $70,000,000 of catastrophe coverage in excess of $10,000,000.

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(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. For the period July 1, 2023 through June 30, 2024 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $12,500,000 of catastrophe coverage in excess of $10,000,000.
(5)	For the period January 1, 2022 through January 1, 2025, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Excludes losses from named storms. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty and 2023/2024 Treaty. Reduces retention to $530,000 from $730,000 under the 2024/2025 Treaty.
(6)	Excess of loss coverage and facultative facility and catastrophe reinsurance treaties will expire on June 30,2024, with none of these coverages to be in effect during the period from July 1 2024 through January 1, 2025. If and when these treaties are renewed on July 1, 2024, the excess of loss and facultative facility, and the catastrophe reinsurance treaty, will be as provided for therein. Reinsurance coverage in effect from July 1, 2024 through January 1, 2025 is currently only covered under the 2024/2025 Treaty and underlying excess of loss reinsurance treaty.  The 2024/2025 Treaty and underlying excess of loss reinsurance treaty will expire on January 1, 2025.
(7)	For the 2021/2023 Treaty, 4% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2023/2024 Treaty, 17.5% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2024/2025 Treaty, 22% of the 27% total of losses ceded under this treaty are excluded from a named catastrophe event.
(8)	Plus losses in excess of catastrophe coverage

	Treaty Year
	July 1, 2023			July 1, 2022			July 1, 2021
	to			to			to
Line of Business	June 30, 2024			June 30, 2023			June 30, 2022
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, 2024			June 30, 2023			June 30, 2022

Commercial Lines (1)

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

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.

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Year Ended 2023 included continuing economic inflation, which resulted in a sustained 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 previously reduced the value of our fixed income securities, saw a reversal which had previously lowered our stockholders’ equity materially in prior quarters. For Year Ended 2023, the continuing 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 results of operations.

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

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. We have 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

This item is not applicable to smaller reporting companies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements required by this Item 8 are included in this Annual Report following Item 16 hereof. As a smaller reporting company, we are not required to provide supplementary financial information.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

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ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

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 the fourth fiscal quarter to which this Annual Report relates that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2023.

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 Chief 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.

ITEM 9B. OTHER INFORMATION.

None.

ITEM 9C. DISCLOSURES REGARDING FOREIGN JURISDITIONS THAT PREVENT INSPECTIONS.

Not applicable.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Executive Officers and Directors

The following table sets forth the positions and offices presently held by each of our current directors and executive officers and their ages:

Name:	Age:	Positions and Offices Held:
Meryl S. Golden	64	Chief Executive Officer, President and Director
Barry B. Goldstein	71	Executive Chairman of the Board and Director
Jennifer L. Gravelle	52	Vice President, Chief Financial Officer and Treasurer
Sarah (Minlei) Chen	41	Senior Vice President, Chief Actuary and Head of Product Management, Kingstone Insurance Company
Floyd R. Tupper	69	Secretary and Director
Timothy P. McFadden	61	Director (Lead Independent Director)
William L. Yankus	64	Director
Carla A. D’Andre	68	Director

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Meryl S. Golden

Ms. Golden has served as our Chief Executive Officer and President since October 2023 and as one of our directors since March 2020. She has also served as a director and a member of the Executive Committee of Kingstone Insurance Company, our wholly-owned New York property and casualty insurer (“KICO”), since September 2019 and as its President since October 2021. Ms. Golden served as our and KICO’s Chief Operating Officer from September 2019 to September 2023. Ms. Golden has over 25 years of experience in the insurance industry. She served as Northeast General Manager of Progressive Insurance from 2000 to 2004 (having served as Connecticut General Manager at Progressive from 1996 to 2000). Ms. Golden was Senior Vice President/General Manager at Liberty Mutual from 2005 to 2007. From 2007 to 2009, she was a Management Committee advisor to Bridgewater Associates, a hedge fund. Ms. Golden served as General Manager of North America for Earnix, a banking and insurance software company, from 2010 to 2018 and was Sales Manager, Insurance Solutions for Arity, a mobility and data analytics company founded by Allstate, from 2018 until September 2019. Ms. Golden received her B.S. degree in Accounting from the Wharton School of the University of Pennsylvania and her M.B.A. in Marketing and Finance from the University of Chicago. We believe that Ms. Golden’s executive level experience in the insurance industry gives her the qualifications and skills to serve as one of our directors.

Barry B. Goldstein

Mr. Goldstein has served as our Executive Chairman of the Board since January 2019 and served as our Chief Executive Officer and President, as well as Chief Executive Officer of KICO, from July 2019 to September 2023. He previously served as our Chief Executive Officer, President and Chairman of the Board from March 2001 through December 2018, as Chief Executive Officer of KICO from January 2012 through December 2018 and as President of KICO from January 2012 through December 2018 and from July 2019 through September 2021. Mr. Goldstein has served as one of our directors since March 2001. He served as our Chief Financial Officer from March 2001 to November 2007 and as our Treasurer from May 2001 to August 2013. Since January 2006, Mr. Goldstein has served as Chairman of the Board of KICO. He has served as Chairman of its Executive Committee since October 2019 (having previously served in such capacity from 2006 to 2018). Mr. Goldstein has served as Chief Investment Officer of KICO from August 2008 through September 2023. He was Treasurer of KICO from March 2010 through September 2010. Effective July 1, 2009, we acquired a 100% equity interest in KICO. Mr. Goldstein is a certified public accountant (inactive). Mr. Goldstein received his B.A. degree and M.B.A. from State University of New York at Buffalo. We believe that Mr. Goldstein’s extensive experience in the insurance industry, including his executive-level service with KICO since 2006, give him the qualifications and skills to serve as one of our directors.

Jennifer L. Gravelle

Ms. Gravelle has served as our Vice President, Chief Financial Officer and Treasurer since January 2023. Ms. Gravelle has over 20 years of leadership experience in the property and casualty insurance industry. From October 2021 to January 2023, she served as Chief Financial Officer at Slide Insurance Holdings, Inc., a full-stack insurtech organization. From June 2019 to October 2021, Ms. Gravelle was Chief Financial Officer at Allied Trust Insurance Company, a personal property insurance organization. She served as Chief Financial Officer at Olympus Insurance Company, also a personal property insurance organization, from July 2013 to June 2019. Ms. Gravelle received a B.A. degree in Accounting from Champlain College.

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Sarah (Minlei) Chen

Ms. Chen has served as KICO’s Chief Actuary since November 2020 and as its Senior Vice President and Head of Product Management since August 2022. From January 2018 to October 2020, she was Actuarial Manager/Senior Pricing Manager and Actuary for Homesite Insurance, a property and casualty insurance company. Ms. Chen served as Actuarial Manager of Plymouth Rock Assurance, an auto and home insurer, from November 2013 to January 2018. Ms. Chen received a B.S. degree in Mathematics from Tsinghua University and an M.S. degree in Applied Mathematics from Brown University.

Floyd R. Tupper

Mr. Tupper is a certified public accountant in New York City. For over 30 years, Mr. Tupper has counseled high-net worth individuals by creating tax planning strategies to achieve their goals as well as those of their families. He has also helped small businesses by developing business strategies to meet their current and future needs. He began his career in public accounting with Ernst & Young LLP prior to becoming self-employed. Mr. Tupper holds an M.B.A. in Taxation from the New York University Stern School of Business and a B.S. degree from New York University. Mr. Tupper served as a director of KICO from 2006 to 2018 and has served as Chairman of its Audit Committee since 2006. From 1990 until 2010, Mr. Tupper served as a Trustee of The Acorn School in New York City. He was also a member of the school’s Executive Committee and served as its Treasurer from 1990 to 2010. Mr. Tupper is a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants. He has served as one of our directors and Chair of our Audit Committee since June 2014 and as our Secretary since June 2015. We believe that Mr. Tupper’s accounting experience, as well as his service on the Board of KICO (including his service as Chair of its Audit Committee), give him the qualifications and skills to serve as one of our directors.

Timothy P. McFadden

Mr. McFadden has more than 30 years of experience in the insurance industry. From 2012 to July 2018, Mr. McFadden served as CEO and President of State Farm Indemnity Auto Insurance Company and Senior Vice President of State Farm Insurance, Eastern Market Area. From 2015 to July 2018, he also served as CEO and President of State Farm Florida Fire Company. Mr. McFadden served as Senior Vice President of State Farm Insurance Companies, Southern Zone from 2008 to 2011 and Senior Vice President of State Farm Insurance Companies, Southern & Mid Atlantic Zones from 2011 to 2013. Prior to joining the insurance industry, he was a Captain in the United States Army. Mr. McFadden is a member of Stetson University’s College of Law Board of Overseers. He formerly served as a member of the Board of State Farm Indemnity Auto Insurance Company, Local Initiatives Support Corporation, American College Ethics Board, State Farm Florida Fire Company, Top Layer Reinsurance and Florida Council of 100. Mr. McFadden received his B.S. degree from the United States Military Academy at West Point and his J.D. from Stetson College of Law. He also completed the General Management Program at Harvard Business School and received his Chartered Life Underwriter Designation from The American College of Financial Services. Mr. McFadden has served as one of our directors since August 2018, served as Chair of our Nominating and Corporate Governance Committee from August 2018 to March 2023 and has served as Lead Independent Director and Chair of our Corporate Sustainability and Risk Management Committee since March 2023. We believe that Mr. McFadden’s executive level experience in the insurance industry gives him the qualifications and skills to serve as one of our directors.

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William L. Yankus

Mr. Yankus brings to the Board over 30 years’ experience in the insurance industry. Since September 2015, Mr. Yankus has provided insurance-related consulting services through Pheasant Hill Advisors, LLC. From 2011 to 2015, he was Managing Director – Investment Banking at Stern Agee where he focused on small and mid-sized insurers. Mr. Yankus served as Managing Director-Insurance Research at Fox-Pitt, Kelton from 1993 to 2009 and then as Head of Insurance Research at its successor, Macquerie, from 2009 to 2010. Mr. Yankus served as Vice President, Insurance Research at Conning & Company from 1985 to 1993. He completed the CFA program in 1989 and passed the CT uniform CPA exam in 1984. Mr. Yankus serves as a member of the Board of Directors of Jet.AI, Inc. (Nasdaq: JTAI), an innovative private aviation and artificial intelligence company. He has served as one of our directors since March 2016, served as Chair of our Compensation Committee from April 2017 to March 2023, has served as Chair of our Compensation and Finance Committee since March 2023 and served as Chair of our Investment Committee from February 2020 to August 2021.  Mr. Yankus received his B.A. degree in Economics and Accounting from The College of the Holy Cross. We believe that Mr. Yankus’ executive level experience in the insurance industry gives him the qualifications and skills to serve as one of our directors.

Carla A. D’Andre

Ms. D’Andre has more than 45 years of experience in the insurance industry. Since 2009, Ms. D’Andre has been Chairman, CEO and President of D’Andre Insurance Group, Inc., which she co-founded. D’Andre Insurance Group, Inc. is the parent of two independent insurance agencies. She also serves as a consulting and testifying expert on insurance matters.  Prior to co-founding D’Andre Insurance Group, Ms. D’Andre held executive-level roles at several companies in the insurance industry, including Executive Vice President, Head – Global Corporate Practice and Member – Partner’s Council at Willis Group Holdings plc, a multinational risk advisor, insurance brokerage and reinsurance brokerage company; Managing Director and Strategic Account Manager at AON Risk Services, a global provider of risk management solutions; Chief Operating Officer at XL Capital’s insurance and technology start-up firm, Inquis Logic Inc.; Member of Senior Management and Managing Director of Swiss Re New Markets and Director of Alternative Markets at Swiss ReAmerica, affiliates of Swiss Reinsurance Company Ltd, a global reinsurance company; Senior Vice President of Sedgwick North America, an insurance brokerage firm; and Vice President of Johnson & Higgins, an insurance brokerage firm. Ms. D’Andre serves in senior capacities in several insurance industry groups. In January 2019 she was elected by her peers to a three-year term as a member of The Institutes’ CPCU Society Leadership Council. She also serves as a member of the Executive Advisory Council of St. John’s University School of Risk Management, Insurance and Actuarial Science. She has served as one of our directors since May 2017, served as Chair of our Finance Committee from August 2017 to March 2023 and has served as Chair of our Nominating and Corporate Governance Committee since March 2023. Ms. D’Andre has an M.B.A. from Pace University’s Lubin School of Business, with a concentration in Financial Management, and a B.B.A. degree from St. John’s University’s School of Risk Management, Insurance and Actuarial Science. We believe that Ms. D’Andre’s extensive experience in multiple capacities in the insurance industry gives her the qualifications and skills to serve as one of our directors.

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Family Relationships

There are no family relationships among any of our executive officers and directors.

Term of Office

Each director will hold office until the next annual meeting of stockholders and until his or her successor is elected and qualified or until his or her earlier resignation or removal. Each executive officer will hold office until the initial meeting of the Board of Directors following the next annual meeting of stockholders and until his or her successor is elected and qualified or until his or her earlier resignation or removal.

Audit Committee

The Audit Committee of the Board of Directors is responsible for overseeing our accounting and financial reporting processes and the audits of our financial statements. The members of the Audit Committee are Messrs. Tupper, (Chair) Yankus, and McFadden.

Audit Committee Financial Expert

Our Board of Directors has determined that Mr. Tupper qualifies as an “audit committee financial expert,” as that term is defined in Item 407(d)(5) of Regulation S-K. Mr. Tupper is an “independent director” based on the definition of independence in Listing Rule 5605(a)(2) of The Nasdaq Stock Market.

Delinquent Section 16(a) Reports

Section 16 of the Exchange Act requires that reports of beneficial ownership of common stock and changes in such ownership be filed with the SEC by Section 16 “reporting persons,” including directors, certain officers, holders of more than 10% of the outstanding common stock and certain trusts of which reporting persons are trustees. We are required to disclose in this Annual Report each reporting person whom we know to have failed to file any required reports under Section 16 on a timely basis during the fiscal year ended December 31, 2023. To our knowledge, based solely on a review of copies of Forms 3, 4 and 5 filed with the SEC and written representations that no other reports were required, during the fiscal year ended December 31, 2023, our officers, directors and 10% stockholders complied with all Section 16(a) filing requirements applicable to them, except that Ms. Golden filed two Forms 4 late (each reporting one transaction), Mr. Goldstein filed one Form 4 late (reporting one transaction), Ms. Chen filed one Form 4 late (reporting one transaction), Michelle Gage, our Chief Accounting Officer, filed her Form 3 late and Ms. D’Andre filed one Form 4 late (reporting four transactions).

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Code of Ethics; Officer and Director Trading Restrictions Policy

Our Board of Directors has adopted a Code of Ethics for our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our Board of Directors has also adopted an Officer and Director Trading Restrictions Policy for our officers and directors as well as the officers and directors of KICO. Copies of the Code of Ethics and Officer and Director Trading Restrictions Policy are posted on our website, www.kingstonecompanies.com. We intend to satisfy the disclosure requirement under Item 5.05(c) of Form 8-K regarding an amendment to, or a waiver from, our Code of Ethics or Officer and Director Trading Restrictions Policy by posting such information on our website, www.kingstonecompanies.com.

ITEM 11. EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table sets forth certain information concerning the compensation for the fiscal years ended December 31, 2023 and 2022 for certain executive officers, including our Chief Executive Officer (collectively, the “Named Executive Officers”): 

Name and Principal Position	Year	Salary		Bonus		Stock Awards(1)			Option Awards(1)		Non-Equity Incentive Plan Compensation		All Other Compensation			Total
Meryl S. Golden	2023	$	500,000	$	-	$	136,500	(2)	$	-	$	-	$	25,200	(5)	$	661,700
Chief Executive Officer and President	2022	$	500,000	$	-	$	150,000	(3)	$	-	$	-	$	24,200	(6)	$	674,200
Barry B. Goldstein	2023	$	450,000	$	-	$	-		$	-	$	-	$	22,200	(7)	$	472,200
Executive Chairman of the Board; formerly Chief Executive Officer	2022	$	500,000	$	-	$	136,500	(4)	$	-	$	-	$	24,200	(8)	$	660,700
Sarah (Minlei) Chen	2023	$	347,750	$	-	$	-		$	-	$	-	$	7,588	(9)	$	355,338
Chief Actuary; Senior Vice President, Kingstone Insurance Company	2022	$	306,620	$	-	$	-		$	-	$	-	$	6,994	(9)	$	313,614

(1) Amounts reflect the aggregate grant date fair value of grants made in each respective fiscal year computed in accordance with stock-based accounting rules (FASB ASC Topic 718-Stock Compensation), excluding the effect of estimated forfeitures. Assumptions used in the calculations of these amounts are included in Note 12 to our consolidated financial statements included in this Annual Report.

(2) In January 2023, Ms. Golden was granted 101,111 shares of restricted common stock under our Amended and Restated 2014 Equity Participation Plan (the “2014 Plan”). Such grant vested to the extent of 50,556 shares on the first anniversary of the date of grant and vests to the extent of 50,555 shares on the second anniversary of the date of grant. See “Termination of Employment and Change-in-Control Arrangements – Meryl Golden” below for a discussion of certain provisions relating to the restricted stock granted to Ms. Golden.

(3) In January 2022, Ms. Golden was granted 30,000 shares of restricted common stock under the 2014 Plan. Such grant vested to the extent of 10,000 shares on each of the first and second anniversaries of the date of grant and vests to the extent of 10,000 shares on the third anniversary of the date of grant. See “Termination of Employment and Change-in-Control Arrangements – Meryl Golden” below for a discussion of certain provisions relating to the restricted stock granted to Ms. Golden.

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(4) In January 2022, Mr. Goldstein was granted 27,300 shares of restricted common stock under the 2014 Plan. Such grant vests on December 30, 2024. See “Termination of Employment and Change-in-Control Arrangements – Barry B. Goldstein” below for a discussion of certain provisions relating to the restricted stock granted to Mr. Goldstein.

(5) Represents employer matching contributions under our defined contribution plan of $13,200 and a car allowance of $12,000.

(6) Represents employer matching contributions under our defined contribution plan of $12,200 and a car allowance of $12,000.

(7) Represents employer matching contributions under our defined contribution plan of $13,200 and a car allowance of $9,000.

(8) Represents employer matching contributions under our defined contribution plan of $12,200 and a car allowance of $12,000.

(9) Represents employer matching contributions under our defined contribution plan

Employment Contracts

Meryl S. Golden

Employment Agreement effective as of January 1, 2021

We and Ms. Golden were parties to an amended and restated employment agreement dated as of December 24, 2020 (the “Amended Golden Employment Agreement”). Pursuant to the Amended Golden Employment Agreement, which expired on December 31, 2022, Ms. Golden was entitled to receive an annual base salary of $500,000. In addition, pursuant to the Amended Golden Employment Agreement and the 2014 Plan, in September 2019, Ms. Golden was granted an option to purchase 50,000 shares of common stock which has vested to the extent of 12,500 shares on each of the date of grant and each of the first, second and third anniversaries of the date of grant. Further, pursuant to the Amended Golden Employment Agreement and the 2014 Plan, in each of January 2021 and January 2022, Ms. Golden was granted 30,000 shares of restricted stock. The 2021 grant vested to the extent of 10,000 on each of the first, second and third anniversaries of the date of grant.  The 2022 grant vested to the extent of 10,000 shares on each of the first and second  anniversaries of the date of grant and will vest to the extent of 10,000 shares on the third anniversary of the date of grant, subject to the continued provision of services through such date.

Employment Agreement effective as of January 1, 2023

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

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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 our 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 received, under the terms of the 2014 Plan, a grant in each of January 2023 and January 2024 of a number of shares of restricted stock determined by dividing $136,500 by the fair market value of our common stock on the date of grant. The 2023 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-half of the award on December 31, 2024, subject to the continued provision of services through such date. The 2024 grant will vest on December 31, 2024, subject to the continued provision of services through such date. 

See “Termination of Employment and Change-in-Control Arrangements – Meryl S. Golden” below for a discussion of the provisions of the Amended Golden Employment Agreement and the Second Amended Golden Employment Agreement with regard to payments due and the acceleration of stock awards in the event of the termination of Ms. Golden’s employment under certain circumstances and/or in the event of a change in control.

Barry B. Goldstein

Employment Agreement effective as of January 1, 2020

On October 14, 2019, we entered into a second amended and restated employment agreement with Mr. Goldstein which took effect as of January 1, 2020 and expired on December 31, 2022 (the “Second Amended Goldstein Employment Agreement”).

Pursuant to the Second Amended Goldstein Employment Agreement, Mr. Goldstein was entitled to receive an annual base salary of $500,000 and an annual bonus equal to 6% of our 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 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”) payment of between $945,000 and $2,835,000 based on a specified minimum increase in our 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, Mr. Goldstein received a grant, under the terms of the 2014 Plan, during January 2020, of a number of shares of restricted stock determined by dividing $1,250,000 by the fair market value of our common stock on the date of grant. The January 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-third of the award on December 30, 2024. 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 a number of shares of restricted stock determined by dividing $1,500,000 by the fair market value of our common stock on the date of grant. The January 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-half of the award on December 30, 2024. 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 our common stock on the date of grant. The 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-third of the award on December 30, 2024. The 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-half of the award on December 30, 2024. The 2022 grant will vest on December 30, 2024.

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See “Termination of Employment and Change-in-Control Arrangements – Barry B. Goldstein” below for a discussion of the provisions of the Second Amended Goldstein Employment Agreement and the Third Amended Goldstein Employment Agreement with regard to payments due and the acceleration of stock grants in the event of the termination of Mr. Goldstein’s employment and/or in the event of a change in control.

Employment Agreement effective as of January 1, 2023

On June 27, 2022, we entered into a third amended and restated employment agreement with Mr. Goldstein which took effect as of January 1, 2023, and was scheduled to expire on December 31, 2024 (the “Third Amended Goldstein Employment Agreement”).  On August 9, 2023, we and Mr. Goldstein entered into an amendment to the Third Amended Goldstein Employment Agreement which provides that, effective as of October 1, 2023, Mr. Goldstein would no longer be serving as our President and Chief Executive Officer.  In addition, the amendment provides that the Third Amended Goldstein Employment Agreement will expire on the earlier of December 31, 2024 or, in the event Mr. Goldstein is not re-elected as Chairman of the Board following the 2024 annual meeting of stockholders, then the date of such meeting.

Pursuant to the Third Amended Goldstein Employment Agreement, as amended, Mr. Goldstein is currently entitled to receive an annual base salary of $300,000.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth certain information concerning exercisable and unexercisable stock options and unvested stock grants held by the above Named Executive Officers as of December 31, 2023:

	Option Awards								Stock Awards
Name	Number of Securities Underlying Unexercised Options Exercisable		Number of Securities Underlying Unexercised Options Unexercisable		Option Exercise Price		Option Expiration Date		Number of Shares of Stock That Have Not Vested			Market  Value of Shares of Stock That Have Not Vested	Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares That Have Not Vested
Meryl S. Golden		50,000		-	$	8.72	9/25/24			131,911	(1)		$	-	$	-
Barry B. Goldstein		-		-		-		-		211,391	(2)		$	-	$	-
Sarah (Minlei) Chen		-		-		-		-		1,990	(3)		$	-	$	-

________________________ 

(1)	Such shares vested to the extent of 60,556 shares on January 3, 2024 and 10,000 shares on January 4, 2024 and will vest to the extent of 800 shares on December 13, 2024, 50,555 shares on December 31, 2024 and 10,000 shares on January 3, 2025.
(2)	Such shares will vest on December 30, 2024.
(3)	Such shares vested to the extent of 1,190 shares on January 28, 2024 and will vest to the extent of 800 shares on December 13, 2024.

Termination of Employment and Change-in-Control Arrangements

Meryl S. Golden

Pursuant to the Second Amended Golden Employment Agreement, in the event that Ms. Golden’s employment is terminated by us without cause, or she resigns for good reason (each as defined in the Second Amended Golden Employment Agreement), Ms. Golden would be entitled to receive her annual base salary for the remainder of the term or for twelve months, whichever is later. In addition, pursuant to the 2014 Plan, in the event of a termination of employment due to the death or disability of Ms. Golden, the stock grants scheduled to vest on the next vesting date following such event shall vest under certain circumstances notwithstanding such event. Further, in the event that Ms. Golden’s employment is terminated by us without cause, or she resigns for good reason, Ms. Golden’s granted but unvested restricted stock awards will vest.

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 in control of our company. In addition, pursuant to the 2014 Plan, Ms. Golden’s outstanding restricted stock awards will vest in the event of a change of control of our company.

Barry B. Goldstein

Pursuant to the Third Amended Goldstein Employment Agreement as amended, in the event that Mr. Goldstein’s employment is terminated by us without cause, or he resigns for good reason (each as defined in each such employment agreement), Mr. Goldstein would be entitled to receive his annual base salary for the remainder of the term. In addition, in the event that Mr. Goldstein’s employment is terminated by us for any reason, or he resigns for any 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.

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 in the event of the termination of his employment within eighteen months following a change of control of our company. In addition, pursuant to the 2014 Plan, Mr. Goldstein’s unvested restricted stock awards will vest in the event of a change of control of our company.

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Sarah (Minlei) Chen

Pursuant to the 2014 Plan, in the event of a termination of employment due to the death or disability of Ms. Chen, the stock grants scheduled to vest on the next vesting date following such event shall vest under certain circumstances notwithstanding such event.  In addition, pursuant to the 2014 Plan, Ms. Chen’s outstanding restricted stock awards will vest in the event of a change of control of our company.

Compensation of Directors

The following table sets forth certain information concerning the compensation of our non-employee directors for the fiscal year ended December 31, 2023:

DIRECTOR COMPENSATION

Name	Fees Earned or Paid in Cash		Stock Awards(1)		Option Awards		Total
Timothy P. McFadden	$	65,000	$	53,000	$	-	$	118,000
Floyd R. Tupper	$	75,000	$	53,000	$	-	$	128,000
William L. Yankus	$	70,000	$	53,000	$	-	$	123,000
Carla A. D’Andre	$	65,000	$	53,000	$	-	$	118,000

(1) Amounts reflect the aggregate grant date fair value of grants made in the fiscal year computed in accordance with stock-based accounting rules (FASB ASC Topic 718-Stock Compensation), excluding the effect of estimated forfeitures. Assumptions used in the calculations of these amounts are included in Note 12 to our consolidated financial statements included in this Annual Report.

The aggregate number of unvested restricted stock awards outstanding as of fiscal year end for each non-employee director is as follows:

Name	Unvested Restricted Stock Awards (#)
Timothy P. McFadden	39,259
Floyd R. Tupper	39,259
William L. Yankus	39,259
Carla A. D’Andre	39,259

Our non-employee directors are entitled to receive annual compensation for their services as directors as follows:

● $50,000;

● an additional $25,000 for service as audit committee chair, an additional $20,000 for service as compensation and finance committee chair, an additional $10,000 for service as investment committee chair, and an additional $15,000 for service as chair of other committees; and

● $53,000 of our common stock determined by the closing stock price on the first business day of the year, which vest on the first anniversary of the grant date.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Security Ownership

The following table sets forth certain information as of March 21, 2024, regarding the beneficial ownership of our shares of common stock by (i) each person who we believe to be the beneficial owner of more than 5% of our outstanding shares of common stock, (ii) each present director, (iii) each Named Executive Officer and (iv) all of our present executive officers and directors as a group.

Name and Address of Beneficial Owner	Number of Shares Beneficially Owned			Approximate Percent of Class
Barry B. Goldstein 15 Joys Lane Kingston, New York		814,076	(1)		7.4	%
Meryl S. Golden		176,604	(2)		1.6	%
Floyd R. Tupper		126,835	(3)		1.2	%
Timothy P. McFadden		77,999		*
William L. Yankus		77,204		*
Carla A. D’Andre		65,354	(4)	*
Sarah (Minlei) Chen		6,893		*
Gregory Fortunoff 49 West 37th Street New York, New York 10018		813,905	(5)		7.4	%
Michael Doak Griffin Highline Capital LLC 4514 Cole Avenue Dallas, Texas		595,238	(6)		5.4	%
All executive officers and directors as a group (8 persons)		1,349,810	(1)(2)(3)(4)		12.2	%

* Less than 1%.

(1) The information regarding Mr. Goldstein is based solely on publicly available information filed with the SEC. Includes (i) 73,168 shares of common stock owned by Mr. Goldstein’s wife and (ii) 15,000 shares held in a retirement trust for the benefit of Mr. Goldstein. Mr. Goldstein has sole voting and dispositive power over 740,908 shares of common stock and shared voting and dispositive power over 73,168 shares of common stock. The inclusion of the shares owned by Mr. Goldstein’s wife and the retirement trust shall not be construed as an admission that Mr. Goldstein is, for purposes of Section 13(d) or 13(g) of the Exchange Act, the beneficial owner of such shares.

83

(2)	Includes (i) 20,000 shares held in a retirement trust for the benefit of Ms. Golden and (ii) 50,000 shares issuable upon the exercise of options that are exercisable currently.  The inclusion of the shares owned by the retirement trust shall not be continued as an admission that Ms. Golden is, for purposes of Section 13(d) or 13(g) of the Exchange Act, the beneficial owner of such shares.
(3)	Includes (i) 32,395 shares owned by Mr. Tupper’s wife, (ii) 6,675 shares held in a retirement trust for the benefit of Mr. Tupper and (iii) 810 shares held in a retirement trust for the benefit of Mr. Tupper’s wife. Mr. Tupper has sole voting and dispositive power over 93,630 shares of common stock and shared voting and dispositive power over 33,205 shares of common stock. The inclusion of the shares owned by Mr. Tupper’s wife and the retirement trusts for the benefit of Mr. Tupper and his wife shall not be construed as an admission that Mr. Tupper is, for purposes of Section 13(d) or 13(g) of the Exchange Act, the beneficial owner of such shares.
(4)	Represents (i) 63,954 shares owned by a limited liability company controlled by Ms. D’Andre and (ii) 1,400 shares held in a retirement trust for the benefit of Ms. D’Andre. The inclusion of the shares owned by the limited liability company and the retirement trust shall not be construed as an admission that Ms. D’Andre is, for purposes of Section 13(d) or 13(g) of the Exchange Act, the beneficial owner of such shares.
(5)	The information regarding Gregory Fortunoff is based solely on Amendment No. 2 to Schedule 13G filed by him with the SEC on May 22, 2023 (the “Fortunoff 13G/A”). According to the Fortunoff 13G/A, Mr. Fortunoff has sole voting and dispositive power over 618,905 shares of common stock and shared voting and dispositive power over 195,000 shares of common stock.  The Fortunoff 13G/A also indicates that Scott Fortunoff has sole voting and dispositive power over 244,500 shares of common stock and shared voting and dispositive power over 195,000 shares of common stock.
(6)	The information regarding Michael Doak (“Doak”) and Griffin Highline Capital LLC (“Griffin”) is based solely on Amendment No. 4 to Schedule 13D filed by such reporting persons with the SEC on November 15, 2022 (the “Doak/Griffin 13D/A”). According to the Doak/Griffin 13D/A, each of Doak and Griffin has shared voting and dispositive power over the 595,238 shares of common stock.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information as of December 31, 2023, with respect to compensation plans (including individual compensation arrangements) under which our common stock is authorized for issuance, aggregated as follows:

● All compensation plans previously approved by security holders; and

● All compensation plans not previously approved by security holders.

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EQUITY COMPENSATION PLAN INFORMATION

	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders		107,201	$	8.31		1,242,378	(1)
Equity compensation plans not approved by security holders		-		-		-
Total		107,201	$	8.31		1,242,378	(1)

(1) Includes 550,581 shares reserved for issuance pursuant to unvested restricted stock grants.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Director Independence

Board of Directors

Our Board of Directors is currently comprised of Barry B. Goldstein, Floyd R. Tupper, William L. Yankus, Carla A. D’Andre, Timothy P. McFadden and Meryl S. Golden. Our board of directors has determined that each of Messrs. Tupper, Yankus and McFadden and Ms. D’Andre is independent under applicable Nasdaq listing standards and federal securities rules and regulations.

Audit Committee

The members of our Board’s Audit Committee currently are Messrs. Tupper (Chair), Yankus and McFadden, each of whom is independent under applicable Nasdaq listing standards and federal securities rules and regulations on independence of Audit Committee members.

Nominating and Corporate Governance Committee

The members of our Board’s Nominating and Corporate Governance Committee currently are Ms. D’Andre (Chair) and Messrs. McFadden and Tupper, each of whom is independent under applicable Nasdaq listing standards and federal securities rules and regulations on independence.

Compensation and Finance Committee

The members of our Board’s Compensation and Finance Committee currently are Messrs. Yankus (Chair) and Tupper and Ms. D’Andre, each of whom is independent under applicable Nasdaq listing standards and federal securities rules and regulations on independence.

Related Party Transactions

Due to the infrequency of related party transactions, we have not formally adopted procedures for the review of, or standards for approval of, such transactions; however, our Board of Directors (or a designated committee thereof) will review related party transactions on a case-by-case basis.

85

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following is a summary of the fees billed to us by Marcum LLP, our independent auditors, for professional services rendered for the fiscal years ended December 31, 2023 and 2022.

Fee Category	Fiscal 2023 Fees		Fiscal 2022 Fees
Audit Fees(1)	$	326,035	$	275,010
Tax Fees(2)	$	-	$	-
Audit-Related Fees(3)	$	-	$	-
All Other Fees(4)	$	-	$	-
	$	326,035	$	275,010

(1)	Audit Fees consist of fees billed for services rendered for the audit of our consolidated financial statements and review of our condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q, services rendered in connection with the filing of Form S-8, additional services rendered in connection with the filing of the September 30, 2023 Quarterly Report on Form 10-Q, services rendered in response to due diligence requests in connection with the refinancing of the 2017 Notes, responses in connection with a DFS examination of KICO, and services provided in connection with other statutory or regulatory filings.
(2)	Marcum did not provide any tax services during the fiscal year.
(3)	Marcum did not provide any “Audit-Related” services during the fiscal year.
(4)	Marcum did not provide any other services during the fiscal year.

The Audit Committee is responsible for the appointment, compensation and oversight of the work of the independent auditors and approves in advance any services to be performed by the independent auditors, whether audit-related or not. The Audit Committee reviews each proposed engagement to determine whether the provision of services is compatible with maintaining the independence of the independent auditors. Substantially all of the fees shown above were pre-approved by the Audit Committee.

86

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Exhibit Number	Description of Exhibit
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).
4(a)	Note and Warrant Exchange Agreement, dated as of December 9, 2022, between Kingstone Companies, Inc. and the several holders of Existing Notes party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 12, 2022).
4(b)	Form of 12.0% Note due 2024 issued by the Company representing $19,950,000 aggregate principal amount of notes (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 12, 2022 (included as Exhibit 1 to the Note and Warrant Exchange Agreement filed as Exhibit 10.1 thereto)).
4(c)	Form of Warrant Certificate issued by the Company for the purchase of an aggregate of 969,525 shares of common stock (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on December 12, 2022 (included as Exhibit 2 to the Note and Warrant Exchange Agreement filed as Exhibit 10.1 thereto)).
10(a)	Amended and Restated 2014 Equity Participation Plan.*
10(b)	Third Amended and Restated Employment Agreement, dated as of June 27, 2022, by and between Kingstone Companies, Inc. and Barry B. Goldstein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 28, 2022).
10(c)	Amendment No. 1, dated as of August 9, 2023, to Third Amended and Restated Employment Agreement, dated as of June 27, 2022, by and between Kingstone Companies, Inc. and Barry B. Goldstein (incorporated by reference to Exhibit 10.A to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2023, filed on August 14, 2023).
10(d)	Stock Grant Agreement, dated as of January 3, 2020, between Kingstone Companies, Inc. and Barry B. Goldstein (157,431 shares) (incorporated by reference to Exhibit 10(c) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 16, 2020).
10(e)	Stock Grant Agreement, dated as of January 3, 2020, between Kingstone Companies, Inc. and Barry B. Goldstein (17,191 shares) (incorporated by reference to Exhibit 10(d) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 16, 2020).
10(f)	Stock Grant Agreement, dated as of January 4, 2021, between Kingstone Companies, Inc. and Barry B. Goldstein (230,769 shares) (incorporated by reference to Exhibit 10(e) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed on April 4, 2022).

87

10(g)	Stock Grant Agreement, dated as of January 4, 2021, between Kingstone Companies, Inc. and Barry B. Goldstein (21,000 shares) (incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed on April 4, 2022).
10(h)	Stock Grant Agreement, dated as of January 3, 2022, between Kingstone Companies, Inc. and Barry B. Goldstein (incorporated by reference to Exhibit 10(g) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed on April 4, 2022).
10(i)	Letter agreement, dated as of June 27, 2022, between Kingstone Companies, Inc. and Barry B. Goldstein with respect to outstanding restricted stock grants (incorporated by reference to Exhibit 10(h) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 31, 2023).
10(j)	Letter agreement, dated as of September 18, 2023, between Kingstone Companies, Inc. and Barry B. Goldstein with respect to outstanding restricted stock grants.*
10(k)	Second Amended and Restated Employment Agreement, dated as of June 27, 2022, by and between Kingstone Companies, Inc. and Meryl S. Golden (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 28, 2022).
10(l)	Stock Grant Agreement, dated as of January 3, 2022, between Kingstone Companies, Inc. and Meryl S. Golden (incorporated by reference to Exhibit 10(j) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed on April 4, 2022).
10(m)	Stock Grant Agreement, dated as of January 3, 2023, between Kingstone Companies, Inc. and Meryl S. Golden (incorporated by reference to Exhibit 10(q) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 31, 2023).
10(n)	Deferred Compensation Plan, dated as of June 18, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 20, 2018).
10(o)	Stock Grant Agreement, dated as of January 2, 2024, between Kingstone Companies, Inc. and Floyd R. Tupper.*
10(p)	Stock Grant Agreement, dated as of January 2, 2024, between Kingstone Companies, Inc. and Carla D’Andre.*
10(q)	Stock Grant Agreement, dated as of January 2, 2024, between Kingstone Companies, Inc. and William L. Yankus.*

88

10(r)	Stock Grant Agreement, dated as of January 2, 2024, between Kingstone Companies, Inc. and Timothy P. McFadden.*
10(s)	Stock Grant Agreement, dated as of January 2, 2024, between Kingstone Companies, Inc. and Meryl S. Golden.*
21	Subsidiaries (incorporated by reference to Exhibit 21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 16, 2017).
23	Consent of Marcum LLP.*
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.**
97	Clawback Policy.*
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.*

*Filed herewith

**Furnished herewith

ITEM 16. FORM 10-K SUMMARY.

Not applicable.

89

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there-unto duly authorized.

	KINGSTONE COMPANIES, INC.
Dated:  April 1, 2024	By:	/s/ Meryl S. Golden
		Meryl S. Golden Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Capacity	Date
/s/ Meryl S. Golden	Chief Executive Officer, President and Director (Principal Executive Officer)	April 1, 2024
Meryl S. Golden
/s/ Barry B. Goldstein	Executive Chairman of the Board and Director	April 1, 2024
Barry B. Goldstein
/s/ Jennifer L. Gravelle	Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)	April 1, 2024
Jennifer L. Gravelle
/s/ Floyd R. Tupper	Secretary and Director	April 1, 2024
Floyd R. Tupper
/s/ Timothy P. McFadden	Director (Lead Independent Director)	April 1, 2024
Timothy P. McFadden
/s/ William L. Yankus	Director	April 1, 2024
William L. Yankus
/s/ Carla A. D’Andre	Director	April 1, 2024
Carla A. D’Andre

90

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-4
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022	F-5
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023 and 2022	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022	F-7 – F-8
Notes to Consolidated Financial Statements	F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Kingstone Companies, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Kingstone Companies, Inc. and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).  In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on the Company's financial statements based on our audits.  We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.  Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.  We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.  The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

Evaluation of the Estimate of Loss and Loss Adjustment Expense (“LAE”) Reserves

As discussed in Notes 2 and 11 to the financial statements, the loss and LAE reserves represent the Company’s estimate of the ultimate liability for unpaid losses. These reserves are based on facts and circumstances then known and include provisions for claims that have been reported and claims that have been incurred but not reported (“IBNR”).  The projection of future claim payments and reporting is based on analyses of the Company’s historical experience, supplemented by analyses of industry loss data.  At December 31, 2023, the Company’s loss and LAE reserves balance was approximately $121.8 million.

The principal considerations that led us to conclude the estimate of loss and LAE reserves was a critical audit matter include the significance of the reserves to the Company’s financial statements, the inherent judgment necessary to estimate the reserves, and the degree of variability involved in determining the estimate. Therefore, we determined that the liability for loss and LAE reserves was a critical audit matter, which required significant auditor judgment and specialized skill and knowledge including the involvement of actuarial specialists.

How the Critical Audit Matter Was Addressed in the Audit

The primary procedures we performed to address the Company’s loss and LAE reserves included, but were not limited to, testing the Company’s reserving process, including the actuarial analyses and the determination of the Company’s estimate of the loss and LAE reserves as follows:

· Utilizing consulting actuarial professionals with specialized skills and knowledge to analyze the appropriateness of the methodologies utilized by the Company to estimate reserves and to determine the reasonableness of the gross and net loss and LAE reserves recorded by the Company as of December 31, 2023.

· Having consulting actuarial professionals also analyze the approach, methodology, assumptions, and ultimate losses and LAE documented in the actuarial reports prepared by the independent actuarial firm engaged by the Company.

· Analyzing the consistency of the Company’s recorded reserves relative to the actuarial central estimates of the reserve range determined by the Company’s independent actuarial firm at December 31, 2023 in comparison to December 31, 2022.

· Performing hindsight analysis to determine the completeness and accuracy of reserves recorded in the prior year and performing analytical procedures on current year reserves.

· Analyzing the 2023 quarterly actuarial reports prepared by the Company’s Chief Actuary.

· Testing the claims handling process, including the establishment of individual case reserves and the settlement of claims.

· Verifying the accuracy and completeness of the underlying data, including historical claims data, provided to the independent actuarial firm engaged by the Company for the purpose of preparing the actuarial analysis at December 31, 2023.

/s/ Marcum LLP

We have served as the Company’s auditor since 2012.

Marcum LLP

Hartford, CT

April 1, 2024

PCAOB ID Number 688

F-3

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
	December 31,			December 31,
	2023			2022
Assets
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of
$6,106,148 at December 31, 2023 and $6,600,388 at December 31, 2022)	$	7,052,541		$	7,766,140
Fixed-maturity securities, available-for-sale, at fair value (amortized cost of
$164,460,942 at December 31, 2023 and $174,918,427 at December 31, 2022)		148,920,797			154,715,163
Equity securities, at fair value (cost of $17,986,783 at December 31, 2023 and
$18,086,700 at December 31, 2022)		14,762,340			13,834,390
Other investments		3,897,150			2,771,652
Total investments		174,632,828			179,087,345
Cash and cash equivalents		8,976,998			11,958,228
Premiums receivable, net		13,604,808			13,880,504
Reinsurance receivables, net		75,593,912			66,465,061
Deferred policy acquisition costs		19,802,564			23,819,453
Intangible assets		500,000			500,000
Property and equipment, net		9,395,697			10,541,935
Deferred income taxes, net		10,551,819			10,331,158
Other assets		4,574,584			3,748,847
Total assets	$	317,633,210		$	320,332,531
Liabilities
Loss and loss adjustment expense reserves	$	121,817,862		$	118,339,513
Unearned premiums		105,621,538			107,492,777
Advance premiums		3,797,590			2,839,028
Reinsurance balances payable		12,837,140			13,061,966
Deferred ceding commission revenue		9,460,865			10,619,569
Accounts payable, accrued expenses and other liabilities		4,350,546			6,651,723
Debt, net		25,243,530			25,158,523
Total liabilities		283,129,071			284,163,099
Commitments and Contingencies (Note 17)
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 12,248,313 shares
at December 31, 2023 and 12,171,512 shares at December 31, 2022; outstanding
10,776,907 shares at December 31, 2023 and 10,700,106 shares at December 31, 2022		122,483			121,715
Capital in excess of par		75,338,010			74,519,590
Accumulated other comprehensive loss		(12,274,563	)		(15,958,428	)
Accumulated deficit		(23,114,310	)		(16,945,964	)
		40,071,620			41,736,913
Treasury stock, at cost, 1,471,406 shares at December 31, 2023
and December 31, 2022		(5,567,481	)		(5,567,481	)
Total stockholders' equity		34,504,139			36,169,432
Total liabilities and stockholders' equity	$	317,633,210		$	320,332,531

See accompanying notes to these consolidated financial statements.

F-4

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Loss
Years ended December 31,	2023			2022
Revenues
Net premiums earned	$	114,384,263		$	114,384,531
Ceding commission revenue		21,053,494			19,319,391
Net investment income		6,008,682			4,936,778
Net gains (losses) on investments		2,134,554			(9,391,865	)
Other income		609,721			910,455
Total revenues		144,190,714			130,159,290
Expenses
Loss and loss adjustment expenses		82,849,210			88,390,042
Commission expense		33,364,629			34,581,617
Other underwriting expenses		25,909,962			26,697,006
Other operating expenses		2,456,473			3,113,473
Depreciation and amortization		2,973,440			3,300,445
Interest expense		4,002,531			2,019,047
Total expenses		151,556,245			158,101,630
Loss from operations before taxes		(7,365,531	)		(27,942,340	)
Income tax benefit		(1,197,185	)		(5,417,546	)
Net loss		(6,168,346	)		(22,524,794	)
Other comprehensive income (loss), net of tax
Gross change in unrealized gains (losses)
on available-for-sale-securities		4,644,308			(22,540,229	)
Reclassification adjustment for losses (gains)
included in net loss		18,811			65,333
Net change in unrealized gains (losses)		4,663,119			(22,474,896	)
Income tax (expense) benefit related to items
of other comprehensive income (loss)		(979,254	)		4,719,729
Other comprehensive income (loss), net of tax		3,683,865			(17,755,167	)
Comprehensive loss	$	(2,484,481	)	$	(40,279,961	)
Loss per common share:
Basic	$	(0.57	)	$	(2.12	)
Diluted	$	(0.57	)	$	(2.12	)
Weighted average common shares outstanding
Basic		10,756,487			10,645,365
Diluted		10,756,487			10,645,365
Dividends declared and paid per common share	$	-		$	0.12

See accompanying notes to these consolidated financial statements.

F-5

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended December 31, 2023 and 2022
														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		-		-		-			-			1,392,612			-			-			-		-			1,392,612
Vesting of restricted stock awards		-		-		262,490			2,625			(2,625	)		-			-			-		-			-
Issuance of common stock - employee
stock purchase plan		-		-		33,222			332			60,132			-			-			-		-			60,464
Shares deducted from restricted stock																										-
awards for payment of withholding taxes		-		-		(79,860	)		(799	)		(391,212	)		-			-			-		-			(392,011	)
Warrants issued with exchange of debt		-		-		-			-			993,200			-			-			-		-			993,200
Dividends		-		-		-			-			-			-			(1,277,066	)		-		-			(1,277,066	)
Net loss		-		-		-			-			-			-			(22,524,794	)		-		-			(22,524,794	)
Change in unrealized losses on available-
for-sale securities, net of tax		-		-		-			-			-			(17,755,167	)		-			-		-			(17,755,167	)
Balance, December 31, 2022		-		-		12,171,512			121,715			74,519,590			(15,958,428	)		(16,945,964	)		1,471,406		(5,567,481	)		36,169,432
Stock-based compensation		-		-		-			-			832,597			-			-			-		-			832,597
Vesting of restricted stock awards		-		-		82,865			828			(828	)		-			-			-		-			-
Shares deducted from restricted stock
awards for payment of withholding taxes		-		-		(6,064	)		(60	)		(13,349	)		-			-			-		-			(13,409	)
Net loss		-		-		-			-			-			-			(6,168,346	)		-		-			(6,168,346	)
Change in unrealized gains on available-
for-sale securities, net of tax		-		-		-			-			-			3,683,865			-			-		-			3,683,865
Balance, December 31, 2023		-	$	-		12,248,313		$	122,483		$	75,338,010		$	(12,274,563	)	$	(23,114,310	)		1,471,406	$	(5,567,481	)	$	34,504,139

See accompanying notes to these consolidated financial statements.

F-6

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31,	2023			2022
Cash flows from operating activities:
Net loss	$	(6,168,346	)	$	(22,524,794	)
Adjustments to reconcile net loss to net cash flows
used in operating activities:
Net losses (gains) on investments		18,811			140,063
Net unrealized (gains) losses on equity investments		(1,027,867	)		6,494,380
Net unrealized (gains) losses on other investments		(1,125,498	)		2,757,422
Depreciation and amortization		2,973,440			3,300,445
Bad debt expense		75,215			132,577
(Accretion of bond discount) amortization of bond premium, net		(36,712	)		3,995,751
Amortization of discount and issuance costs on debt		1,187,678			230,389
Stock-based compensation		832,597			1,392,612
Deferred income tax benefit		(1,199,915	)		(5,419,176	)
Decrease (increase) in operating assets:
Premiums receivable, net		200,481			(1,694,745	)
Reinsurance receivables, net		(9,128,851	)		(26,172,623	)
Deferred policy acquisition costs		4,016,889			(1,580,466	)
Other assets		(825,737	)		4,844,358
Increase (decrease) in operating liabilities:
Loss and loss adjustment expense reserves		3,478,349			23,390,768
Unearned premiums		(1,871,239	)		9,733,170
Advance premiums		958,562			145,562
Reinsurance balances payable		(224,826	)		100,398
Deferred ceding commission revenue		(1,158,704	)		871,061
Accounts payable, accrued expenses and other liabilities		(2,301,177	)		(1,052,673	)
Net cash flows used in operating activities		(11,326,850	)		(915,521	)
Cash flows from investing activities:
Purchase - fixed-maturity securities held-to-maturity		-			(498,711	)
Purchase - fixed-maturity securities available-for-sale		(51,496,673	)		(48,733,416	)
Purchase - equity securities		-			(684,778	)
Redemption - fixed-maturity securities held-to-maturity		750,000			1,000,000
Sale and maturity - fixed-maturity securities available-for-sale		61,935,658			25,606,590
Sale - equity securities		99,917			19,379,047
Redemption - other investments		-			2,576,272
Acquisition of property and equipment		(1,827,202	)		(4,550,783	)
Net cash flows provided by (used in) investing activities		9,461,700			(5,905,779	)
Cash flows from financing activities:
Proceeds from equipment financing		-			8,096,824
Principal payments on equipment financing		(1,088,372	)		(191,169	)
Principal payment on 2017 Notes refinancing		-			(10,050,000	)
Bond issue costs on 2022 Notes		(14,299	)		(1,758,112	)
Withholding taxes paid on vested retricted stock awards		(13,409	)		(392,011	)
Net proceeds from issuance of common stock - employee stock purchase plan		-			60,464
Dividends paid		-			(1,277,066	)
Net cash flows used in financing activities		(1,116,080	)		(5,511,070	)
Decrease in cash and cash equivalents	$	(2,981,230	)	$	(12,332,370	)

See accompanying notes to these consolidated financial statements.

F-7

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
Years ended December 31,	2023			2022
Decrease in cash and cash equivalents	$	(2,981,230	)	$	(12,332,370	)
Cash and cash equivalents, beginning of period		11,958,228			24,290,598
Cash and cash equivalents, end of period	$	8,976,998		$	11,958,228
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	2,927,905		$	1,600,626
Supplemental schedule of non-cash investing and financing activities:
Other comprehensive income (loss), net of tax	$	3,683,865		$	(17,755,167	)
Warrants issued under the Exchange Agreement	$	-		$	993,200

See accompanying notes to these consolidated financial statements.

F-8

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2022 AND 2021

Note 1 - Nature of Business

Kingstone Companies, Inc. (referred to herein as "Kingstone" or the “Company” or, on a standalone basis for the parent company only, the “Holding Company”), through its wholly-owned subsidiary, Kingstone Insurance Company (“KICO”). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto insurance in New York, and in 2023 was the 15th largest writer of homeowners insurance in New York.  KICO is also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. For the years ended December 31, 2023 and 2022, 88.3% and 80.6%, respectively, of KICO’s direct written premiums came from the New York policies. Kingstone, through its wholly owned subsidiary, Cosi Agency, Inc. (“Cosi”), a multi-state licensed general agency, receives commission revenue from KICO for the policies it places with others and pays commissions to these agencies.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

Going Concern

The accompanying consolidated financial statements have been prepared in accordance with GAAP assuming that the Company will continue as a going concern for a period of one year from the issuance date of the financial statements. The Company’s $30,000,000 5.5% Senior Unsecured Notes (the “2017 Notes”) were due on December 30, 2022. The Company’s continuation as a going concern was dependent on its ability to obtain financing and/or other funds to satisfy such obligation. The 2017 Notes were refinanced on December 15, 2022 under a note and warrant exchange agreement with a refinanced balance of $19,950,000 (the “2022 Notes”) as of December 31, 2022 and a maturity date of December 30, 2024 (see Note 9 - Debt).

The Company’s continuation as a going concern is dependent on its ability to obtain financing and/or other funds to satisfy the maturity obligation of the 2022 Notes on December 31, 2024.  Management believes that KICO’s insurance operations would be able to continue in the unlikely event that financing is not obtained. 

In accordance with Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 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 or that its plans alleviate the substantial doubt that was raised.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“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.

F-9

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Management’s Plan Related to Going Concern

In order to continue as a going concern, the Company will need to obtain financing and/or other funds to satisfy its debt obligation on December 30, 2024. Management plans to refinance the 2022 Notes with a new issue of equity securities and/or investment grade debt securities of similar or longer maturity that would result in net proceeds equal to or greater than the principal amount of the 2022 Notes.  In connection therewith, the Company will be utilizing investment bankers to serve as placement agents for proposed offerings by the Company of its securities (including debt, equity and/or preferred securities). The offerings would be of such size as to generate proceeds to the Company of no less than $19,950,000.  The Company, subject to regulatory approval, may receive distributions paid to it by KICO, its insurance subsidiary, that could be utilized to repay the 2022 Notes. Further, the Company may also use available invested assets and cash to repay the 2022 Notes.  As of December 31, 2023, invested assets and cash was approximately $2,042,000.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described above.  The Company believes that its plan is probable of being implemented and that such plan would alleviate any adverse conditions.

Reclassification of Balances from Prior Year Disclosure

Components of ceded premiums written within prior year net earned premiums in Note 11 were reclassified to conform with an elected change in the current year presentation by recording ceded written premiums for the 12 months of the contract term at inception, rather than monthly over the contract term, providing a full disclosure of the premiums ceded. The reclassification had no effect on the Company’s previously reported financial condition, results of operations or cash flows.

Principles of Consolidation

The consolidated financial statements include the accounts of Kingstone and its wholly owned subsidiaries: (1) KICO and its wholly owned subsidiaries, CMIC Properties, Inc. and 15 Joys Lane, LLC, 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.

Revenue Recognition

Net Premiums Earned

Insurance policies issued by the Company are short-duration contracts. Accordingly, premium revenues, net of premiums ceded to reinsurers, are recognized as earned in proportion to the amount of insurance protection provided, on a pro-rata basis over the terms of the underlying policies. Unearned premiums represent premiums applicable to the unexpired portions of in-force insurance contracts at the end of each year.

F-10

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Ceding Commission Revenue

Commissions on reinsurance premiums ceded are earned in a manner consistent with the recognition of the costs of the reinsurance, generally on a pro-rata basis over the terms of the policies reinsured. Unearned amounts are recorded as deferred ceding commission revenue. Certain reinsurance agreements contain provisions whereby the ceding commission rates vary based on the loss experience under the agreements. The Company records ceding commission revenue based on its current estimate of subject losses. The Company records adjustments to ceding commission revenue in the period that changes in the estimated losses are determined.

Loss and Loss Adjustment Expenses (“LAE”) Reserves

The liability for loss and LAE represents management’s best estimate of the ultimate cost of all reported and unreported losses that are unpaid as of the balance sheet date. The liability for loss and LAE is estimated on an undiscounted basis, using individual case-basis valuations, statistical analyses and various actuarial reserving methodologies. The projection of future claim payment and reporting is based on an analysis of the Company’s historical experience, supplemented by analyses of industry loss data. Management believes that the reserves for loss and LAE are adequate to cover the ultimate cost of losses and claims to date; however, because of the uncertainty from various sources, including changes in reporting patterns, claims settlement patterns, judicial decisions, legislation, and economic conditions, actual loss experience may not conform to the assumptions used in determining the estimated amounts for such liability at the balance sheet date. Adjustments to these estimates are reflected in expense for the period in which the estimates are changed. Because of the nature of the business historically written, management believes that the Company has limited exposure to environmental claim liabilities.

Reinsurance

In the normal course of business, the Company seeks to reduce the loss that may arise from catastrophes or other events that cause unfavorable underwriting results.  This is done by reinsuring certain levels of risk in various areas of exposure with a panel of financially secure reinsurance carriers.

Reinsurance receivables represents management’s best estimate of paid and unpaid loss and LAE recoverable from reinsurers, and ceded losses receivable and unearned ceded premiums under reinsurance agreements. Ceded losses receivable are estimated using techniques and assumptions consistent with those used in estimating the liability for loss and LAE. Management believes that reinsurance receivables as recorded represent its best estimate of such amounts; however, as changes in the estimated ultimate liability for loss and LAE are determined, the estimated ultimate amount receivable from the reinsurers will also change. Accordingly, the ultimate receivable could be significantly in excess of or less than the amount recorded in the consolidated financial statements. Adjustments to these estimates are reflected in the period in which the estimates are changed. Loss and LAE incurred as presented in the consolidated statements of operations and comprehensive income (loss) are net of reinsurance recoveries.

Management has evaluated its reinsurance arrangements and determined that significant insurance risk is transferred to the reinsurers. Reinsurance agreements have been determined to be short-duration prospective contracts and, accordingly, the costs of the reinsurance are recognized over the life of the contract in a manner consistent with the earning of premiums on the underlying policies subject to the reinsurance contract.

F-11

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Management estimates uncollectible amounts receivable from reinsurers based on an assessment of factors including the creditworthiness of the reinsurers and the adequacy of collateral obtained, where applicable. There was no allowance for uncollectible reinsurance as of December 31, 2023 and 2022. The Company did not expense any uncollectible reinsurance for the years ended December 31, 2023 and 2022. Significant uncertainties are inherent in the assessment of the creditworthiness of reinsurers and estimates of any uncollectible amounts due from reinsurers. Any change in the ability of the Company’s reinsurers to meet their contractual obligations could have a material adverse effect on the consolidated financial statements as well as KICO’s ability to meet its regulatory capital and surplus requirements.

The Company presents its net reinsurance receivables separately from its reinsurance balances payable in accordance with ASU 2011-11 Balance Sheet (Topic 210). Additionally, prepaid premiums for excess of loss and catastrophe reinsurance treaties are presented net in reinsurance balances payable as a reduction to reinsurance premiums payable as they meet the net accounting criteria of Topic 210.

Credit Losses

Current Expected Credit Losses (ASU 2016-13) added an asset impairment model that is based on expected losses rather than incurred losses.  The purpose of this ASU was to reduce complexity by decreasing the number of impairment models that entities use to account for debt instruments, allows for more timely recognition of credit losses by using an expected, rather than incurred loss, model, requires recognition of lifetime expected credit losses, and doesn’t require a specific method for estimating expected credit losses.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company maintains its cash balances at several financial institutions.

Investments

The Company classifies its fixed-maturity securities as either held-to-maturity or available-for-sale.  Fixed-maturity securities that the Company has the specific intent and ability to hold until maturity are classified as such and carried at amortized cost. Available-for-sale securities are reported at their estimated fair values based on quoted market prices from recognized pricing services, adjusted for allowance for expected credit losses, with unrealized gains and losses, net of tax effects, reported as a separate component of accumulated other comprehensive income. Realized gains and losses are determined on the specific identification method and reported in net loss in the consolidated statements of operations and comprehensive income (loss).

Equity securities are reported at their estimated fair values based on quoted market prices from recognized pricing services, adjusted for allowance for expected credit losses, with unrealized gains and losses reported in net gains (losses) on investments in the consolidated statements of operations and comprehensive income (loss). Other investments are reported at their estimated fair values using the net asset value (“NAV”) per share (or its equivalent) of the instrument with unrealized gains and losses reported in net gains (losses) on investments in the consolidated statements of operations and comprehensive income (loss). See Note - 3, Investments for additional discussion.  

The Company reviews all securities with unrealized losses on a quarterly basis to assess whether the decline in the securities’ fair value necessitates the recognition of an allowance for credit losses. Factors considered in the review include the extent to which the fair value has been less than amortized cost, current market interest rates and whether the unrealized loss is credit-driven or a result of changes in market interest rates. The Company also considers factors specific to the issuer including the general financial condition of the issuer, the issuers’ industry and future business prospects, any past failure of the issuer to make scheduled interest or principal payments, the payment structure of the investment and the issuers’ ability to make contractual payments on the investment.

The Company may sell its available-for-sale securities, equity securities, and other investments in response to changes in interest rates, risk/reward characteristics, liquidity needs or other factors. Investment income is accrued to the balance sheet dates of the consolidated financial statements and includes amortization of premium and accretion of discount on fixed-maturity securities. Interest is recognized when earned, while dividends are recognized when declared. Due and accrued investment income totaled approximately $1,262,000 and $1,299,000 as of December 31, 2023 and 2022, respectively, and is included in other assets on the accompanying consolidated balance sheets.

For fixed-maturity securities where a decline in fair value is below the amortized cost basis and the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, a credit-loss charge is recognized in net loss based on the fair value of the security at the time of assessment.

For available-for-sale fixed maturity securities, a credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis. The allowance for credit loss related to available-for-sale fixed maturity securities is the difference between the present value of cash flows expected to be collected and the amortized cost basis, limited by the amount that the fair value is less than the amortized cost basis. The Company considers all available evidence when determining whether an investment requires a credit loss write-down or allowance to be recorded, which is recognized in net loss through an allowance for credit losses. Any remaining decline in fair value represents the noncredit portion of the impairment, which is recognized in other comprehensive income (loss).

The Company did not identify any available-for-sale securities as of December 31, 2023 which presented a risk of loss due to credit deterioration of the security.

Premiums Receivable

Premiums receivable include balances due currently or in the future and are presented net of an allowance for doubtful accounts of approximately $269,000 and $39,000 as of December 31, 2023 and 2022, respectively. The allowance for uncollectible amounts is based on an analysis of amounts receivable giving consideration to historical loss experience and current economic conditions and reflects an amount that, in management’s judgment, is adequate. Uncollectible premiums receivable balances of approximately $75,000 and $133,000 were written off for the years ended December 31, 2023 and 2022, respectively. The Company evaluates cancellations after the balance sheet date and has determined that the cancellations are not material, therefore no additional cancellation reserve is recognized as of December 31, 2023 and 2022.

F-12

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Deferred Policy Acquisition Costs

Policy acquisition costs represent the costs of writing business that vary with, and are primarily related to, the successful production of insurance business (principally commissions, premium taxes and certain underwriting salaries). Policy acquisition costs are deferred and recognized as expense as the related premiums are earned.

Intangible Assets

The Company has recorded acquired identifiable intangible assets. The cost of a group of assets acquired in a transaction is allocated to the individual assets including identifiable intangible assets based on their fair values. Identifiable intangible assets with a finite useful life are amortized over the period that the asset is expected to contribute directly or indirectly to the future cash flows of the Company. Intangible assets with an indefinite life are not amortized, but are subject to impairment testing if events or changes in circumstances indicate that it is more likely than not the asset is impaired. All identifiable intangible assets are tested for recoverability whenever events or changes in circumstances indicate that a carrying amount may not be recoverable. No impairment losses from intangible assets were recognized for the years ended December 31, 2023 and 2022.

Property and Equipment

Building and building improvements, automobiles, furniture, computer equipment, and computer software are reported at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. The Company estimates the useful life for computer equipment, automobiles, furniture and other equipment is three years, computer software is three to five years, and building and building improvements is 39 years.

The Company reviews its real estate assets used as its headquarters to evaluate the necessity of recording impairment losses for market changes due to declines in the estimated fair value of the property. In evaluating potential impairment, management considers the current estimated fair value compared to the carrying value of the asset. At December 31, 2023 and 2022, the fair value of the real estate assets is estimated to be in excess of the carrying value.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income (loss) in the period that includes the enactment date. The Company files a consolidated tax return with its subsidiaries. At December 31, 2023 and 2022, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required.

F-13

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Concentration, Credit Risk and Market Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, investments, and premium and reinsurance receivables. At times, cash may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation (“FDIC”) insurance limits.  The Company has not experienced any losses on such accounts and management believes the Company is not exposed to any significant credit risk.

Stressed conditions, volatility and disruptions in capital markets or financial asset classes can have an adverse effect on the Company, in part because the Company has a large investment portfolio supporting the Company’s insurance liabilities, which are sensitive to changing market factors. These market factors, which include interest rates, credit spread, equity prices, and the volatility and strength of the capital markets, all affect the business and economic environment and, ultimately, the profitability of the Company’s business. The Company manages its investments to limit credit and other market risks by diversifying its portfolio among various security types and industry sectors based on KICO’s investment committee guidelines, which employ a variety of investment strategies.

As of December 31, 2023 and 2022, the Company’s cash equivalents were as follows:

	December 31,		December 31,
	2023		2022
Collateralized bank repurchase agreement (1)	$	899,646	$	159,596
Money market funds		2,430,317		2,458,223
Total	$	3,329,963	$	2,617,819

(1) The Company has a security interest in certain of the bank's holdings of direct obligations of the United States or one or more agencies thereof. The collateral is held in a hold-in-custody arrangement with a third party who maintains physical possession of the collateral on behalf of the bank.

At December 31, 2023, the outstanding premiums receivable balance is generally diversified due to the large number of individual insureds comprising the Company’s customer base. 

The Company also has receivables from its reinsurers. Reinsurance contracts do not relieve the Company of its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company periodically evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. See Note 7- Reinsurance for reinsurance recoverables on unpaid and paid losses by reinsurer. Management’s policy is to review all outstanding receivables quarterly as well as the bad debt write-offs experienced in the past and establish an allowance for doubtful accounts, if deemed necessary.

F-14

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Direct premiums earned from lines of business in excess of 10% of the total subject the Company to concentration risk for the years ended December 31, 2023 and 2022 is as follows:

	Years ended December 31,
	2023			2022
Personal Lines		93.1	%		94.0	%
Premiums earned not subject to concentration		6.9	%		6.0	%
Total premiums earned		100.0	%		100.0	%

(1) For the years ended December 31, 2023 and 2022, premiums earned not subject to concentration are comprised primarily of one line of business.

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, and includes 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 consolidated financial statements.

Earnings (Loss) per share

Basic earnings (loss) per common share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per common share reflects, in periods in which they have a dilutive effect, the impact of common shares issuable upon the exercise of stock options and warrants as well as non-vested restricted stock awards.  The computation of diluted earnings (loss) per share excludes those options and warrants with an exercise price in excess of the average market price of the Company’s common shares during the periods presented.  Additionally, the computation of diluted earnings (loss) per share excludes unvested restricted stock awards as calculated using the treasury stock method. 

Advertising Costs

Advertising costs are charged to operations as incurred. Advertising costs are included in other underwriting expenses in the accompanying consolidated statements of operations and comprehensive income (loss) and were approximately $86,000 and $114,000 for the years ended December 31, 2023 and 2022, respectively.

Stock-based Compensation

Stock-based compensation expense in 2023 and 2022 is the estimated fair value of restricted stock awards and options granted, amortized on a straight-line basis over the requisite service period for the entire portion of the award less an estimate for anticipated forfeitures. The Company uses the “simplified” method to estimate the expected term of the options because the Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term.

F-15

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Warrants

The Company’s outstanding issued warrants are accounted for as equity in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. The Company’s warrants are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date.

Compensated Absences

Employees of the Company are entitled to paid vacations, sick days, and other time off depending on job classification, length of service and other factors.  The Company has determined it is impracticable to estimate the amount of compensation of future absences and, accordingly, no liability has been recorded in the accompanying consolidated financial statements.  The Company’s policy is to recognize the cost of compensated absences when paid to employees. 

Leases

The Company records operating leases in accordance with ASU 2016-02 – Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, the Company recognized a right-of-use-asset and corresponding liability on the balance sheet for all leases, except for leases covering a period of fewer than 12 months. The liability has been measured at the present value of the future minimum lease payments taking into account renewal options if applicable plus initial incremental direct costs such as commissions. The minimum payments are discounted using the Company’s incremental borrowing rate. The right-of-use asset is amortized as rent expense on a straight-line basis.

Comprehensive Income (Loss)

Comprehensive income (loss) refers to revenues, expenses, gains and losses that are included in comprehensive income (loss) but are excluded from net income (loss) as these amounts are recorded directly as an adjustment to stockholders' equity, primarily from changes in unrealized gains and losses on available-for-sale securities, net of the related income taxes.

Accounting Changes

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”). This guidance applies to reinsurance and insurance receivables and other financing receivables. For available-for-sale fixed maturity securities carried at fair value, estimated credit losses will continue to be measured at the present value of expected cash flows; however, the other than temporary impairment (“OTTI”) concept has been eliminated. Under the previous guidance, estimated credit impairments resulted in a write-down of amortized cost. Under the new guidance, estimated credit losses are recognized through an allowance and reversals of the allowance are permitted if the estimate of credit losses declines. For available-for-sale fixed maturity securities where the Company has an intent to sell, impairment will continue to result in a write-down of amortized cost. ASU 2016-13 was effective for the Company on January 1, 2023. The Company determined as of the date of adoption that the updated guidance did not have an impact on its consolidated financial statements. Below is a summary of the significant accounting policies impacted by the adoption of ASU 2016-13.

The allowance for credit losses is a valuation account that is reported as a reduction of a financial asset’s cost basis and is measured on a pool basis when similar risk characteristics exist. Management estimates the allowance using relevant available information from both internal and external sources. Historical credit loss experience provides the basis for the estimation of expected credit losses and adjustments may be made to reflect current conditions and reasonable and supportable forecasts. Adjustments to historical loss information are made for any additional factors that come to the Company’s attention. This could include significant shifts in counterparty financial strength ratings, aging of past due receivables, amounts sent to collection agencies, or other underlying portfolio changes. Amounts are considered past due when payments have not been received according to contractual terms. The Company also considers current and forecasted economic conditions, using a variety of economic metrics and forecast indices. The sensitivity of expected credit losses relative to changes to these forecasted economic conditions can vary by financial asset class. The Company considers a reasonable and supportable forecast period to be up to 24 months from the balance sheet date. After the forecast period, the Company reverts to historical credit experience. The Company uses collateral arrangements such as letters of credit and amounts held in beneficiary trusts to mitigate credit risk, which are considered in the estimate of net amount expected to be collected.

The Company has determined that it was not subject to any other new accounting pronouncements that became effective during the year ended December 31, 2023. 

F-16

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. ASU-2023-09 is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of ASU 2023-09 on its disclosures. 

F-17

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

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 December 31, 2023 and 2022 are summarized as follows:

	December 31, 2023
	Cost or		Gross		Gross Unrealized Losses						Estimated		Net
	Amortized		Unrealized		Less than			More than			Fair		Unrealized
Category	Cost		Gains		12 Months			12 Months			Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies (1)	$	20,954,764	$	1,799	$	(17,373	)	$	-		$	20,939,190	$	(15,574	)
Political subdivisions of States,
Territories and Possessions		16,607,713		-		-			(3,209,161	)		13,398,552		(3,209,161	)
Corporate and other bonds
Industrial and miscellaneous		75,993,042		-		-			(5,885,296	)		70,107,746		(5,885,296	)
Residential mortgage and other asset
backed securities (2)		50,905,423		113,761		(2,144	)		(6,541,731	)		44,475,309		(6,430,114	)
Total fixed-maturity securities	$	164,460,942	$	115,560	$	(19,517	)	$	(15,636,188	)	$	148,920,797	$	(15,540,145	)

F-18

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

	December 31, 2022
	Cost or		Gross		Gross Unrealized Losses						Estimated		Net
	Amortized		Unrealized		Less than			More than			Fair		Unrealized
Category	Cost		Gains		12 Months			12 Months			Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies (1)	$	23,874,545	$	1,479	$	(6,928	)	$	-		$	23,869,096	$	(5,449	)
Political subdivisions of States,
Territories and Possessions		17,108,154		-		(2,195,273	)		(1,771,494	)		13,141,387		(3,966,767	)
Corporate and other bonds
Industrial and miscellaneous		80,338,464		-		(5,796,994	)		(2,458,985	)		72,082,485		(8,255,979	)
Residential mortgage and other asset
backed securities (2)		53,597,264		58,398		(882,664	)		(7,150,803	)		45,622,195		(7,975,069	)
Total fixed-maturity securities	$	174,918,427	$	59,877	$	(8,881,859	)	$	(11,381,282	)	$	154,715,163	$	(20,203,264	)

(1)

In October 2022, KICO placed certain U.S. Treasury securities to fulfill the required collateral for a sale leaseback transaction in a designated custodian account (see Note 9 – Debt - “Equipment Financing”). As of December 31, 2023 and 2022, the amount of required collateral was approximately $6,999,000 and $8,691,000, respectively. As of December 31, 2023 and 2022, the estimated fair value of the eligible collateral was approximately $6,999,000 and $8,691,000, respectively.

(2)

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 9 – Debt – “Federal Home Loan Bank”). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of December 31, 2023, the estimated fair value of the eligible investments was approximately $11,412,000. KICO will retain all rights regarding all securities if pledged as collateral. As of December 31, 2023 and 2022 there was no outstanding balance on the FHLBNY credit line.

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 December 31, 2023 and 2022 is shown below:

	December 31, 2023				December 31, 2022
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	34,729,120	$	34,461,172	$	16,359,100	$	16,307,991
One to five years		31,803,338		30,416,618		18,605,987		14,085,113
Five to ten years		31,596,410		27,330,377		54,559,158		52,230,283
More than 10 years		15,426,651		12,237,321		31,796,918		26,469,581
Residential mortgage and other asset backed securities		50,905,423		44,475,309		53,597,264		45,622,195
Total	$	164,460,942	$	148,920,797	$	174,918,427	$	154,715,163

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

F-19

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Equity Securities

The cost and estimated fair value of, and gross unrealized gains and losses on, investments in equity securities as of December 31, 2023 and 2022 are as follows:

	December 31, 2023
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	13,583,942	$	-	$	(2,870,027	)	$	10,713,915
Fixed income exchange traded funds		3,711,232				(669,232	)		3,042,000
Mutual Funds		622,209		314,816		-			937,025
FHLBNY common stock		69,400		-		-			69,400
Total	$	17,986,783	$	314,816	$	(3,539,259	)	$	14,762,340

	December 31, 2022
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	13,583,942	$	-	$	(3,589,313	)	$	9,994,629
Fixed income exchange traded funds,		3,711,232				(821,632	)		2,889,600
Mutual funds		716,626		158,635		-			875,261
FHLBNY common stock		74,900		-		-			74,900
Total	$	18,086,700	$	158,635	$	(4,410,945	)	$	13,834,390

F-20

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Other Investments

The cost and estimated fair value of, and gross unrealized gains on, the Company’s other investments as of December 31, 2023 and 2022 are as follows:

	December 31, 2023						December 31, 2022
			Gross		Estimated				Gross		Estimated
Category	Cost		Gains		Fair Value		Cost		Gains		Fair Value
Other Investments:
Hedge fund	$	1,987,040	$	1,910,110	$	3,897,150	$	1,987,040	$	784,612	$	2,771,652

Held-to-Maturity Securities

The cost or amortized cost and estimated fair value of, and gross unrealized gains and losses on, investments in held-to-maturity fixed-maturity securities as of December 31, 2023 and 2022 are summarized as follows:

	December 31, 2023
													Net
	Cost or		Gross		Gross Unrealized Losses						Estimated		Unrealized
	Amortized		Unrealized		Less than			More than			Fair		Gains/
Category	Cost		Gains		12 Months			12 Months			Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,860	$	15,045	$	(6,914	)	$	(18,163	)	$	1,218,828	$	(10,032	)
Political subdivisions of States,
Territories and Possessions		499,170		890		-			-			500,060		890
Exchange traded debt		304,111		-		-			(70,111	)		234,000		(70,111	)
Corporate and other bonds
Industrial and miscellaneous		5,020,400		-		-			(867,140	)		4,153,260		(867,140	)
Total	$	7,052,541	$	15,935	$	(6,914	)	$	(955,414	)	$	6,106,148	$	(946,393	)

F-21

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

	December 31, 2022
													Net
	Cost or		Gross		Gross Unrealized Losses						Estimated		Unrealized
	Amortized		Unrealized		Less than			More than			Fair		Gains/
Category	Cost		Gains		12 Months			12 Months			Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,560	$	28,400	$	(34,077	)	$	-		$	1,222,883	$	(5,677	)
Political subdivisions of States,
Territories and Possessions		498,638		2,092		-			-			500,730		2,092
Exchange traded debt		304,111		-		(29,111	)		-			275,000		(29,111	)
Corporate and other bonds
Industrial and miscellaneous		5,734,831		36,968		(809,746	)		(360,278	)		4,601,775		(1,133,056	)
Total	$	7,766,140	$	67,460	$	(872,934	)	$	(360,278	)	$	6,600,388	$	(1,165,752	)

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

A summary of the amortized cost and the estimated fair value of the Company’s investments in held-to-maturity securities by contractual maturity as of December 31, 2023 and 2022 is shown below:

	December 31, 2023				December 31, 2022
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	-	$	-	$	708,535	$	743,575
One to five years		1,121,288		1,097,101		1,120,507		1,088,522
Five to ten years		1,414,911		1,270,770		1,402,704		1,200,720
More than 10 years		4,516,342		3,738,277		4,534,394		3,567,571
Total	$	7,052,541	$	6,106,148	$	7,766,140	$	6,600,388

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

F-22

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Investment Income

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

	Years ended
	December 31,
	2023		2022
Income:
Fixed-maturity securities	$	5,352,304	$	4,211,229
Equity securities		707,835		1,058,351
Cash and cash equivalents		255,905		63,683
Total		6,316,044		5,333,263
Expenses:
Investment expenses		307,362		396,485
Net investment income	$	6,008,682	$	4,936,778

Proceeds from the redemption of fixed-maturity securities held-to-maturity were $750,000 and $1,000,000 for the years ended December 31, 2023 and 2022, respectively.

Proceeds from the sale and maturity of fixed-maturity securities available-for-sale were $61,935,658 and $25,606,590 for the years ended December 31, 2023 and 2022, respectively.

Proceeds from the sale of equity securities were $99,917 and $19,379,047 for the years ended December 31, 2023 and 2022, respectively.

F-23

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

The Company’s net gains (losses) on investments for the years ended December 31, 2023 and 2022 are summarized as follows:

	Years ended
	December 31,
	2023			2022
Realized Gains (Losses)
Fixed-maturity securities:
Gross realized gains	$	2,428		$	143,622
Gross realized losses		(21,239	)		(208,955	)
		(18,811	)		(65,333	)
Equity securities:
Gross realized gains		-			1,384,432
Gross realized losses		-			(2,048,395	)
		-			(663,963	)
Other Investments:
Gross realized gains		-			589,233
Gross realized losses		-			-
		-			589,233
Net realized losses		(18,811	)		(140,063	)
Unrealized (Losses) Gains
Equity Securities:
Gross gains		1,027,867			-
Gross losses		-			(6,494,380	)
		1,027,867			(6,494,380	)
Other Investments:
Gross gains		1,125,498			-
Gross losses		-			(2,757,422	)
		1,125,498			(2,757,422	)
Net unrealized gains (losses)		2,153,365			(9,251,802	)
Net gains (losses) on investments	$	2,134,554		$	(9,391,865	)

Allowance for Credit Losses

At December 31, 2023 and 2022, there were 140 and 155 fixed-maturity securities, respectively, that accounted for the gross unrealized losses. The Company determined that none of the unrealized losses were deemed to be credit losses for its portfolio of investments for the years ended December 31, 2023 and 2022. 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.

F-24

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

The Company held available-for-sale securities with unrealized losses representing declines that were considered temporary at December 31, 2023 and 2022 as follows:

	December 31, 2023
	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	$	5,974,440	$	(17,373	)		1	$	-		-			-	$	5,974,440	$	(17,373	)
Political subdivisions of
States, Territories and
Possessions		-		-			-		13,398,552		(3,209,161	)		13		13,398,552		(3,209,161	)
Corporate and other
bonds industrial and
miscellaneous		-		-			-		70,107,746		(5,885,296	)		85		70,107,746		(5,885,296	)
Residential mortgage and
other asset backed securities		88,988		(2,144	)		4		38,675,604		(6,541,731	)		37		38,764,592		(6,543,875	)
Total fixed-maturity
securities	$	6,063,428	$	(19,517	)		5	$	122,181,902	$	(15,636,188	)		135	$	128,245,330	$	(15,655,705	)

F-25

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

	December 31, 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	$	18,918,196	$	(6,928	)		3	$	-		-			-	$	18,918,196	$	(6,928	)
Political subdivisions of
States, Territories and
Possessions		7,970,633		(2,195,273	)		9		5,170,753		(1,771,494	)		5		13,141,386		(3,966,767	)
Corporate and other
bonds industrial and
miscellaneous		56,910,104		(5,796,994	)		75		15,172,381		(2,458,985	)		15		72,082,485		(8,255,979	)
Residential mortgage and
other asset backed securities		10,145,880		(882,664	)		22		34,753,178		(7,150,803	)		26		44,899,058		(8,033,467	)
Total fixed-maturity
securities	$	93,944,813	$	(8,881,859	)		109	$	55,096,312	$	(11,381,282	)		46	$	149,041,125	$	(20,263,141	)

F-26

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022

Note 4 - Fair Value Measurements

Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation technique used by the Company to estimate the fair value of its financial instruments is the market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets.

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets or liabilities fall within different levels of the hierarchy, the classification is based on the lowest level input that is significant to the fair value measurement of the asset or liability. Classification of assets and liabilities within the hierarchy considers the markets in which the assets and liabilities are traded, including during periods of market disruption, and the reliability and transparency of the assumptions used to determine fair value. The hierarchy requires the use of observable market data when available. The levels of the hierarchy and those investments included in each are as follows:

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities traded in active markets. Included are those investments traded on an active exchange, such as the Nasdaq Global Select Market, U.S. Treasury securities and obligations of U.S. government agencies, together with corporate debt securities that are generally investment grade.

Level 2—Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs.  Municipal and corporate bonds, and residential mortgage-backed securities, that are traded in less active markets are classified as Level 2.  These securities are valued using market price quotations for recently executed transactions.

Level 3—Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value measurement. Material assumptions and factors considered in pricing investment securities and other assets may include appraisals, projected cash flows, market clearing activity or liquidity circumstances in the security or similar securities that may have occurred since the prior pricing period.

The availability of observable inputs varies and is affected by a wide variety of factors. When the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment. The degree of judgment exercised by management in determining fair value is greatest for investments categorized as Level 3. For investments in this category, the Company considers prices and inputs that are current as of the measurement date. In periods of market dislocation, as characterized by current market conditions, the ability to observe prices and inputs may be reduced for many instruments. This condition could cause a security to be reclassified between levels.

F-27

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

The following table presents information about the Company’s investments that are measured at fair value on a recurring basis at December 31, 2023 and 2022 indicating the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

	December 31, 2023
	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	$	20,939,190	$	-	$	-	$	20,939,190
Political subdivisions of
States, Territories and
Possessions		-		13,398,552		-		13,398,552
Corporate and other
bonds industrial and
miscellaneous		70,107,746		-		-		70,107,746
Residential mortgage and other asset backed securities		-		44,475,309		-		44,475,309
Total fixed maturities		91,046,936		57,873,861		-		148,920,797
Equity securities		14,762,340		-		-		14,762,340
Total investments	$	105,809,276	$	57,873,861	$	-	$	163,683,137

	December 31, 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	$	23,869,096	$	-	$	-	$	23,869,096
Political subdivisions of
States, Territories and
Possessions		-		13,141,387		-		13,141,387
Corporate and other
bonds industrial and
miscellaneous		71,585,115		497,370		-		72,082,485
Residential mortgage and other asset backed securities		-		45,622,195		-		45,622,195
Total fixed maturities		95,454,211		59,260,952		-		154,715,163
Equity securities		13,834,390		-		-		13,834,390
Total investments	$	109,288,601	$	59,260,952	$	-	$	168,549,553

F-28

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

The following table sets forth the Company’s investment in a hedge fund measured at Net Asset Value (“NAV”) per share as of December 31, 2023 and 2022. 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	December 31, 2023		December 31, 2022
Other Investments
Hedge fund	$	3,897,150	$	2,771,652

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 accompanying consolidated statements of operations and comprehensive loss within net gains (losses) on investments.

The estimated fair value and the level of the fair value hierarchy of the Company’s debt as of December 31, 2023 and 2022, which is not measured at fair value, is as follows:

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2024	$	-	$	17,812,500	$	-	$	17,812,500
	December 31, 2022
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2022	$	-	$	15,829,096	$	-	$	15,829,096

The fair value of debt is estimated based on observable market prices when available. When observable market prices are not available, the fair values of debt are based on observable market prices of comparable instruments adjusted for differences between the observed instruments and the instruments being valued or is estimated using discounted cash flow analyses, based on current incremental borrowing rates for similar types of borrowing arrangements.

F-29

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022  

Note 5 - Fair Value of Financial Instruments and Real Estate

The Company uses the following methods and assumptions in estimating the fair value of financial instruments and real estate:

Equity securities, available-for-sale fixed income securities, and other investments:  Fair value disclosures for these investments are included in Note 3 - Investments and Note 4 – Fair Value Measurements.  

Cash and cash equivalents: The carrying values of cash and cash equivalents approximate their fair values because of the short-term nature of these instruments.

Premiums receivable and reinsurance receivables:  The carrying values reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values due to the short-term nature of the assets.

Real estate: The estimated fair value was based on an appraisal prepared using the sales comparison approach, and accordingly the real estate is a Level 3 asset under the fair value hierarchy.

Reinsurance balances payable:  The carrying value reported in the consolidated balance sheets for these financial instruments approximates fair value.

The estimated fair values of the Company’s financial instruments and real estate as of December 31, 2023 and 2022 are as follows:

	December 31, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
Fixed-maturity securities-held-to maturity, Level 1	$	7,052,541	$	6,106,148	$	7,766,140	$	6,600,388
Cash and cash equivalents, Level 1	$	8,976,998	$	8,976,998	$	11,958,228	$	11,958,228
Premiums receivable, net, Level 1	$	13,604,808	$	13,604,808	$	13,880,504	$	13,880,504
Reinsurance receivables, net, Level 3	$	75,593,912	$	75,593,912	$	66,465,061	$	66,465,061
Real estate, net of accumulated depreciation, Level 3 (1)	$	1,992,529	$	3,540,000	$	2,050,644	$	2,800,000
Reinsurance balances payable, Level 3	$	12,837,140	$	12,837,140	$	13,061,966	$	13,061,966

(1) Real estate consists of a complex which includes an office building, a house and vacant land located in Kingston, New York. The $740,000 increase in fair value of real estate is due to favorable rezoning of the properties in late 2023.

Note 6 - Intangible Assets

Intangible assets consist of finite and indefinite life assets. Finite life intangible assets include customer and producer relationships and other identifiable intangibles. KICO’s insurance company license is considered an indefinite life intangible asset subject to annual impairment testing. All identified intangible assets of finite useful life were fully amortized as of December 31, 2023 and 2022.

F-30

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

The components of intangible assets and their useful lives, accumulated amortization, and net carrying value as of December 31, 2023 and 2022 are summarized as follows:

	Useful		Gross				Net
	Life		Carrying		Accumulated		Carrying
	(in yrs)		Value		Amortization		Amount
Insurance license		-	$	500,000	$	-	$	500,000
Customer relationships		10		3,400,000		3,400,000		-
Other identifiable
intangibles		7		950,000		950,000		-
Total			$	4,850,000	$	4,350,000	$	500,000

Intangible asset impairment testing and amortization

The Company performs an analysis annually as of December 31, or sooner if there are indicators that the asset may be impaired, to identify potential impairment of intangible assets and measures the amount of any impairment loss that may need to be recognized. Intangible asset impairment testing requires an evaluation of the estimated fair value of each identified intangible asset to its carrying value. An impairment charge would be recorded if the estimated fair value is less than the carrying amount of the intangible asset. No impairments have been identified for the years ended December 31, 2023 and 2022.

The Company recorded no amortization expense related to intangible assets for the years ended December 31, 2023 and 2022.

Note 7 - 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”). Upon the expiration of the 2021/2023 Treaty on January 1, 2023, the Company entered into a new 30% quota share reinsurance treaty for its personal lines business, covering the period from January 1, 2023 through January 1, 2024 (“2023/2024 Treaty”). Upon the expiration of the 2023/2024 Treaty on January 1, 2024, the Company entered into a new 27% quota share reinsurance treaty for its personal lines business, covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”).

The Company’s excess of loss and catastrophe reinsurance treaties expired on June 30, 2023 and the Company entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2023. Effective January 1, 2022, the Company entered into an underlying excess of loss reinsurance treaty (“Underlying XOL 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. Effective January 1, 2023, the Underlying XOL Treaty was renewed covering the period from January 1, 2023 through January 1, 2024. Effective January 1, 2024, the Underlying XOL Treaty was renewed covering the period from January 1, 2024 through January 1, 2025. Material terms for reinsurance treaties in effect for the treaty years shown below are as follows:

F-31

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022

	Treaty Period
	2024/2025 Treaty						2023/2024 Treaty						2021/2023 Treaty
	July 1,			January 1,			July 1,			January 1,			July 1,			December 31,
	2024			2024			2023			2023			2022			2021
	to			to			to			to			to			to
	January 1,			June 30,			January 1,			June 30,			January 1,			June 30,
Line of Business	2025			2024			2024			2023			2023			2022
Personal Lines:
Homeowners, dwelling fire and canine legal liability
Quota share treaty:
Percent ceded (7)		27	%		27	%		30	%		30	%		30	%		30	%
Risk retained on intial
$1,000,000 of losses (5) (6) (7)	$	730,000		$	730,000		$	700,000		$	700,000		$	700,000		$	700,000
Losses per occurrence
subject to quota share
reinsurance coverage	$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000
Expiration date	January 1, 2025			January 1, 2025			January 1, 2024			January 1, 2024			January 1, 2023			January 1, 2023
Excess of loss coverage and
facultative facility
coverage (1) (5) (6)	$	400,000		$	8,400,000		$	8,400,000		$	8,400,000		$	8,400,000		$	8,400,000
	in excess of			in excess of			in excess of			in excess of			in excess of			in excess of
	$	600,000		$	600,000		$	600,000		$	600,000		$	600,000		$	600,000
Total reinsurance coverage
per occurrence (5) (6)	$	470,000		$	8,470,000		$	8,500,000		$	8,500,000		$	8,500,000		$	8,500,000
Losses per occurrence
subject to reinsurance
coverage (6)	$	1,000,000		$	8,000,000		$	8,000,000		$	8,000,000		$	9,000,000		$	9,000,000
Expiration date		(6	)	June 30, 2024			June 30, 2024			June 30, 2023			June 30, 2023			June 30, 2022
Catastrophe Reinsurance:
Initial loss subject to personal
lines quota share treaty (6)	$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000
Risk retained per catastrophe
occurrence (7) (8)		(6	)	$	9,500,000		$	8,750,000		$	8,750,000		$	7,400,000		$	7,400,000
Catastrophe loss coverage
in excess of quota share
coverage (2)		(6	)	$	315,000,000		$	315,000,000		$	335,000,000		$	335,000,000		$	490,000,000
Reinstatement premium
protection (3) (4)		(6	)	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, 2024.
(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 December 31, 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. For the period July 1, 2023 through June 30, 2024 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $12,500,000 of catastrophe coverage in excess of $10,000,000.

F-32

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022

(5)	For the period January 1, 2022 through January 1, 2025, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Excludes losses from named storms. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty and 2023/2024 Treaty. Reduces retention to $530,000 from $730,000 under the 2024/2025 Treaty.
(6)	Excess of loss coverage and facultative facility and catastrophe reinsurance treaties will expire on June 30,2024, with none of these coverages to be in effect during the period from July 1 2024 through January 1, 2025. If and when these treaties are renewed on July 1, 2024, the excess of loss and facultative facility, and the catastrophe reinsurance treaty, will be as provided for therein. Reinsurance coverage in effect from July 1, 2024 through January 1, 2025 is currently only covered under the 2024/2025 Treaty and underlying excess of loss reinsurance treaty. The 2024/2025 Treaty and underlying excess of loss reinsurance treaty will expire on January 1, 2025.
(7)	For the 2021/2023 Treaty, 4% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2023/2024 Treaty, 17.5% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2024/2025 Treaty, 22% of the 27% total of losses ceded under this treaty are excluded from a named catastrophe event.
(8)	Plus losses in excess of catastrophe coverage

	Treaty Year
	July 1, 2023			July 1, 2022			July 1, 2021
	to			to			to
Line of Business	June 30, 2024			June 30, 2023			June 30, 2022
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, 2024			June 30, 2023			June 30, 2022

Commercial Lines (1)

(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.

F-33

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Approximate reinsurance recoverables on unpaid and paid losses by reinsurer at December 31, 2023 and 2022 are as follows:

	Unpaid		Paid
($ in thousands)	Losses		Losses			Total		Security
December 31, 2023
Swiss Reinsurance America Corporation		11,027		6,560			17,587		-
Hannover Rueck SE		8,753		(92	)		8,661		-
Allied World Insurance Company		4,724		2,190			6,914		4	(1)
Ace Property and Casualty Insurance Company		3,205		1,840			5,045		-
Lancashire Insurance Company Limited		3,203		1,583			4,786		-
Others		2,377		3,296			5,673		2,662	(2)
Total	$	33,289	$	15,377		$	48,666	$	2,666
December 31, 2022
Swiss Reinsurance America Corporation		9,469		4,823		$	14,292	$	-
Hanover Rueck SE		8,681		2,698			11,379		-
Others		9,510		6,067			15,577		2,399	(3)
Total	$	27,660	$	13,588		$	41,248	$	2,399

(1) As of December 31, 2023, represents $4,000 guaranteed by irrevocable letters of credit.

(2) As of December 31, 2023, represents $2,236,000 secured pursuant to collateralized trust agreement and $426,000 guaranteed by irrevocable letters of credit.

(3) As of December 31, 2022, represents $1,918,000 secured pursuant to collateralized trust agreement and $481,000 guaranteed by irrevocable letters of credit.

Assets held in the trusts referred to in footnotes (2) and (3) in the table above are not included in the Company’s invested assets, and investment income earned on these assets is credited to the reinsurers respectively. In addition to reinsurance recoverables on unpaid and paid losses, reinsurance receivables in the accompanying consolidated balance sheets as of December 31, 2023 and 2022 include unearned ceded premiums of approximately $26,928,000 and $25,217,000, respectively.

Ceding Commission Revenue

The Company earned ceding commission revenue under the 2023/2024 Treaty for the year ended December 31, 2023, and under the 2021/2023 Treaty for the year ended December 31, 2022, based on a fixed provisional commission rate at which provisional ceding commissions are earned. The Company earned ceding commission revenue under its quota share reinsurance agreements that expired prior to the 2021/2023 Treaty based on: (i) a fixed provisional commission rate at which provisional ceding commissions were earned, and (ii) under certain of the quota share reinsurance agreements, 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 increase when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decrease when the estimated ultimate loss ratio increases.

F-34

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Ceding commission revenue consists of the following:

	Year ended
	December 31,
	2023		2022
Provisional ceding commissions earned	$	20,397,454	$	19,105,779
Contingent ceding commissions earned		656,040		213,612
	$	21,053,494	$	19,319,391

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 December 31, 2023 and 2022, net contingent ceding commissions payable to reinsurers under all treaties was approximately $3,302,000 and $2,667,000, respectively, which is recorded in reinsurance balances payable on the accompanying consolidated balance sheets.

Expected Credit Losses – Uncollectible Reinsurance

The Company reviews reinsurance receivables which relate to both amounts already billed on ceded paid losses as well as ceded reserves that will be billed when losses are paid in the future. The Company has not recorded an allowance for uncollectible reinsurance as there is no perceived credit risk. The principal credit quality indicator used in the valuation of the allowance on reinsurance receivables is the financial strength rating of the reinsurer sourced from major rating agencies. Changes in the allowance are presented as a component of other underwriting expenses on the condensed consolidated statements of operations and comprehensive loss.

F-35

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Note 8 - Deferred Policy Acquisition Costs and Deferred Ceding Commission Revenue

Deferred policy acquisition costs incurred and policy-related ceding commission revenue are deferred and amortized to income on property and casualty insurance business as follows:

	Years ended
	December 31,
	2023			2022
Net deferred policy acquisition costs, net of deferred ceding
commission revenue, beginning of year	$	13,199,884		$	12,490,479
Cost incurred and deferred:
Commissions and brokerage		29,926,493			36,354,386
Other underwriting and policy acquisition costs		8,866,395			9,154,706
Ceding commission revenue		(7,209,248	)		(7,236,720	)
Net deferred policy acquisition costs		31,583,640			38,272,372
Amortization		(34,441,825	)		(37,562,967	)
		(2,858,185	)		709,405
Net deferred policy acquisition costs, net of deferred ceding
commission revenue, end of year	$	10,341,699		$	13,199,884

Deferred policy acquisition costs and deferred ceding commission revenue as of December 31, 2023 and 2022 are as follows:

	December 31,
	2023			2022
Deferred policy acquisition costs	$	19,802,564		$	23,819,453
Deferred ceding commission revenue		(9,460,865	)		(10,619,569	)
Balance at end of period	$	10,341,699		$	13,199,884

F-36

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Note 9 – Debt

Federal Home Loan Bank

In July 2017, KICO became a member of, and invested in, the 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 December 31, 2023 and 2022, 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. On July 6, 2023, A.M. Best withdrew KICO’s ratings as KICO requested to no longer participate in A.M. Best’s interactive rating process. As a result of the withdrawal of A.M. Best ratings, KICO is currently only able to borrow on an overnight basis. If KICO has collateral, based on KICO’s net admitted assets, the maximum allowable advance as of December 31, 2023 and 2022 was approximately $12,813,000 and $13,192,000, respectively. Available collateral as of December 31, 2023 and 2022 was approximately $11,412,000 and $12,228,000, respectively. Advances are limited to 85% of the amount of available collateral. There were no borrowings under this facility during the years ended December 31, 2023 and 2022.

Debt

Debt as of December 31, 2023 and 2022 consists of the following:

	December 31,
	2023		2022
2022 Notes, net	$	18,426,247	$	17,252,868
Equipment financing		6,817,283		7,905,655
Balance at end of period	$	25,243,530	$	25,158,523

Note and Warrant Exchange

On December 9, 2022, the Company entered into a Note and Warrant Exchange Agreement (the “Exchange Agreement”) with several holders (the “Exchanging Noteholders”) of the Company’s outstanding 5.50% Senior Notes due 2022 (the “2017 Notes”). On the date of the Exchange Agreement, the Exchanging Noteholders held 2017 Notes in the aggregate principal amount of $21,545,000 of the $30,000,000 aggregate principal amount of the 2017 Notes then outstanding. Pursuant to the Exchange Agreement, on December 15, 2022, the Exchanging Noteholders exchanged their respective 2017 Notes for the following: (i) new 12.0% Senior Notes due December 30, 2024 of the Company in the aggregate approximate principal amount of $19,950,000 (the “2022 Notes”); (ii) cash in the aggregate approximate amount of $1,595,000, together with accrued interest on the 2017 Notes; and (iii) three-year warrants for the purchase of an aggregate of 969,525 shares of Common Stock of the Company, exercisable at an exercise price of $1.00 per share (the “Warrants”). The remaining $8,455,000 principal amount of the 2017 Notes, together with accrued interest thereon, was paid on the maturity date of the 2017 Notes of December 30, 2022.

F-37

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

2022 Notes

On December 15, 2022, the Company issued $19,950,000 of its 2022 Notes pursuant to the Exchange Agreement. Interest is payable semi-annually in arrears on June 30 and December 30 of each year, which commenced on June 30, 2023 at the rate of 12.0% per annum. Warrants were issued with a fair value of $993,200 (see Note 12 – Stockholders’ Equity) and transaction costs were $1,758,112, for an effective yield of 13.92% per annum. The balance of the 2022 Notes as of December 31, 2023 and 2022 is as follows:

	December 31,			December 31,
	2023			2022
12.0% Senior Unsecured Notes	$	19,950,000		$	19,950,000
Warrants		(653,123	)		(979,684	)
Issuance costs		(870,630	)		(1,717,448	)
2022 Notes, net	$	18,426,247		$	17,252,868

The Exchange Agreement provided for a mandatory redemption of the 2022 Notes on December 30, 2023, in an amount such that the aggregate principal amount of the 2022 Notes to be redeemed plus accrued and unpaid interest thereon was to be equal to the amount by which the maximum Ordinary Dividend Paying Capacity of KICO (as defined below) measured as of December 15, 2023 exceeded the Company’s Holding Company Expenses (as defined below) for the calendar year ended December 31, 2023. “Ordinary Dividend Paying Capacity” means the sum, as measured on December 15, 2023, of (i) the maximum allowable amount of dividends that KICO is permitted to pay without seeking any regulatory approval in accordance with New York insurance regulations based on its statutory annual and quarterly financial statements filed with the National Association of Insurance Commissioners as of and for the thirty-six (36) month period ended September 30, 2023 plus (ii) any dividends paid by KICO to the Company during the period beginning January 1, 2023 and ending September 30, 2023. “Holding Company Expenses” means the sum of (i) cash interest expense paid during the calendar year ended December 31, 2023 on the 2022 Notes, intercompany loans and any other indebtedness of the holding company on a stand-alone basis and (ii) other cash operating expenses, including taxes, paid by the holding company during the calendar year ended December 31, 2023. The amount of other operating expenses paid in cash in the preceding clause (ii) shall not exceed $2.5 million. Holding Company Expenses was determined based on the actual Holding Company Expenses for the nine months ending September 30, 2023, and an estimate of Holding Company Expenses for the three months ending December 30, 2023. The Ordinary Dividend Paying Capacity of KICO as defined above was zero and, accordingly, the Company was not required to make a mandatory redemption of the 2022 Notes on December 30, 2023.

The 2022 Notes are unsecured obligations of the Company and are not the obligations of or guaranteed by any of the Company’s subsidiaries. The 2022 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 2022 Notes. The Notes rank equally in right of payment to all of the Company’s existing and future senior indebtedness, but are effectively subordinated to any secured indebtedness to the extent of the value of the collateral securing such secured indebtedness. In addition, the 2022 Notes are structurally subordinated to the indebtedness and other obligations of the Company’s subsidiaries.

The 2022 Notes will be redeemable, at the Company’s option, in whole or in part, at any time or in part from time to time, on and after December 30, 2022, upon not less than fifteen (15) nor more than sixty (60) days’ notice, at the following redemption prices (“Redemption Prices” ) (expressed as percentages of the principal amount thereof) if redeemed during the respective period set forth below, plus, in each case, accrued and unpaid interest, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date):

Period:	Percentage
December 30, 2022 to December 29, 2023		102.00	%
December 30, 2023 to September 29, 2024		101.00	%
September 30, 2024 to December 29, 2024		100.00	%

F-38

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Due to the Redemption Prices, management intends to retire the 2022 Notes after September 29, 2024 and before the scheduled maturity date of December 30, 2024. Management plans to refinance the 2022 Notes with a new issue of equity securities and/or debt of similar or longer maturity that would result in net proceeds equal to or greater than the principal amount of the current issue. In connection therewith, the Company will be utilizing investment bankers to serve as placement agents for proposed offerings by the Company of its securities (including debt, equity and/or preferred securities).   The offerings would be of such size as to generate proceeds to the Company of no less than $19,500,000. The Company, subject to regulatory approval, may receive distributions paid to it by KICO, its insurance subsidiary, that could be utilized to repay the 2022 Notes. Further, the Company may also use available invested assets and cash to repay the 2022 Notes. As of December 31, 2023, invested assets and cash was approximately $2,042,000.

As of the end of each calendar quarter, commencing with the calendar quarter ending December 31, 2022, the Company is subject to a leverage maintenance test (“Leverage Maintenance Test”), which requires that the Total Consolidated Indebtedness (as defined below) of the Company not be greater than 30% of Total Consolidated Capitalization (as defined below). As of December 31, 2023 and 2022, the ratio as defined under the Leverage Maintenance Test was 29.9% and 26.7%, respectively. As of September 30, 2023, the ratio as defined under the Leverage Maintenance Test was 31.4%. On November 7, 2023, a majority of the holders of the outstanding 2022 Notes (on behalf of all holders of the 2022 Notes) agreed to a waiver regarding the satisfaction of the Leverage Maintenance Test as of September 30, 2023.  “Total Consolidated Indebtedness” is the aggregate principal amount (or accreted value in the case of any Indebtedness issued with more than de minimis original issue discount) of all outstanding long-term of the Company except for the sale leaseback transaction described below under “Equipment Financing”, any refinancing or any future sale leaseback transaction. “Total Consolidated Capitalization” is the amount equal to the sum of (x) Total Consolidated Indebtedness outstanding as of such date and (y) the total consolidated shareholders’ equity of the Company, excluding accumulated other comprehensive (loss) income, as recorded on the Company’s consolidated balance sheet.

Equipment Financing

On October 27, 2022, KICO entered into a sale leaseback transaction, whereby KICO sold $8,096,824 of fixed assets to a bank. Under GAAP, the sale leaseback transaction is recorded as equipment financing (“Financing”). The provisions of the Financing require KICO to pay a monthly payment of principal and interest at the rate of 5.86% per annum totaling $126,877 for a term of 60 months, which commenced on October 27, 2022.  The terms of the Financing provide buyout options to KICO 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 Financing requires KICO to pledge collateral for the lease obligation. As of December 31, 2023 and 2022, the amount of required collateral was approximately $6,999,000 and $8,691,000, respectively. As of December 31, 2023 and 2022, the fair value of KICO’s pledged collateral was approximately $11,960,000 and $8,691,000, respectively, in United States Treasury securities.

F-39

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Future contractual payment obligations under the Financing as of December 31, 2023 are as follows:

For the Year
Ending
December 31,	Total
2024		1,153,862
2025		1,223,293
2026		1,296,901
2027		1,119,021
		4,793,077
2027 purchase price		2,024,206
Total	$	6,817,283

Note 10 - Property and Equipment

The components of property and equipment are summarized as follows:

			Accumulated
	Cost		Depreciation			Net
December 31, 2023
Building	$	2,344,188	$	(1,004,096	)	$	1,340,092
Land		652,437		-			652,437
Furniture and office equipment		828,011		(828,011	)		0
Leasehold improvements		-		-			-
Computer equipment and software		25,022,986		(17,641,982	)		7,381,004
Automobile		134,034		(111,871	)		22,163
Total	$	28,981,656	$	(19,585,959	)	$	9,395,697
December 31, 2022
Building	$	2,344,188	$	(945,981	)	$	1,398,207
Land		652,437		-			652,437
Furniture and office equipment		828,011		(828,011	)		-
Leasehold improvements		-		-			-
Computer equipment and software		23,195,784		(14,738,212	)		8,457,572
Automobile		134,034		(100,315	)		33,719
Total	$	27,154,454	$	(16,612,519	)	$	10,541,935

Depreciation expense for the years ended December 31, 2023 and 2022 was $2,973,440 and $3,300,445, respectively.

F-40

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Note 11 - Property and Casualty Insurance Activity

Premiums written, ceded and earned are as follows:

	Direct			Assumed		Ceded			Net
Year ended December 31, 2023
Premiums written	$	200,174,502		$	-	$	(106,563,985	)	$	93,610,517
Change in unearned premiums		1,871,239			-		18,902,507			20,773,746
Premiums earned	$	202,045,741		$	-	$	(87,661,478	)	$	114,384,263
Year ended December 31, 2022
Premiums written	$	201,254,837		$	-	$	(79,195,016	)	$	122,059,821
Change in unearned premiums		(9,733,170	)		-		2,057,880			(7,675,290	)
Premiums earned	$	191,521,667		$	-	$	(77,137,136	)	$	114,384,531

Premium receipts in advance of the policy effective date are recorded as advance premiums.  The balance of advance premiums as of December 31, 2023 and 2022 was $3,797,590 and $2,839,028, respectively.

F-41

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

The components of the liability for loss and LAE expenses and related reinsurance receivables as of December 31, 2023 and 2022 are as follows:

	Gross		Reinsurance
	Liability		Receivables
December 31, 2023
Case-basis reserves	$	67,108,131	$	19,537,988
Loss adjustment expenses		17,448,218		3,085,429
IBNR reserves		37,261,513		10,665,233
Recoverable on unpaid losses				33,288,650
Recoverable on paid losses		-		15,376,899
Total loss and loss adjustment expenses	$	121,817,862		48,665,549
Unearned premiums				26,928,363
Receivables - reinsurance contracts				-
Total reinsurance receivables			$	75,593,912
December 31, 2022
Case-basis reserves	$	62,745,588	$	16,618,887
Loss adjustment expenses		16,847,618		2,364,053
IBNR reserves		38,746,307		8,676,560
Recoverable on unpaid losses				27,659,500
Recoverable on paid losses		-		13,588,981
Total loss and loss adjustment expenses	$	118,339,513		41,248,481
Unearned premiums				25,216,580
Receivables - reinsurance contracts				-
Total reinsurance receivables			$	66,465,061

The following table provides a reconciliation of the beginning and ending balances for unpaid losses and LAE:

	Years ended
	December 31,
	2023			2022
Balance at beginning of period	$	118,339,513		$	94,948,745
Less reinsurance recoverables		(27,659,500	)		(10,637,679	)
Net balance, beginning of period		90,680,013			84,311,066
Incurred related to:
Current year		82,856,483			85,690,180
Prior years		(7,273	)		2,699,862
Total incurred		82,849,210			88,390,042
Paid related to:
Current year		49,146,173			49,602,585
Prior years		35,853,838			32,418,510
Total paid		85,000,011			82,021,095
Net balance at end of period		88,529,212			90,680,013
Add reinsurance recoverables		33,288,650			27,659,500
Balance at end of period	$	121,817,862		$	118,339,513

F-42

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Incurred losses and LAE are net of reinsurance recoveries under reinsurance contracts of $41,091,205 and $39,658,365 for the years ended December 31, 2023 and 2022, 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 years ended December 31, 2023 and 2022 was $7,273 favorable and $2,699,862 unfavorable, respectively.

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.

F-43

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

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.

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 claim trends that have emerged or that would cause future adverse development that have not already been contemplated in setting current carried reserves levels.

F-44

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

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 December 31, 2020 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 December 31, 2023, net of reinsurance, as well as the cumulative reported claims by accident year and total IBNR reserves as of December 31, 2023 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, 2014 to December 31, 2022 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																				December 31, 2023
	For the Years Ended December 31,																						Cumulative Number of Reported Claims by
Accident Year	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023		IBNR		Accident Year
	(Unaudited 2014 - 2022)
2014	$	14,193	$	14,260	$	14,218	$	14,564	$	15,023	$	16,381	$	16,428	$	16,434	$	16,486	$	16,472	$	-		2,138
2015				22,340		21,994		22,148		22,491		23,386		23,291		23,528		23,533		23,428		274		2,559
2016						26,062		24,941		24,789		27,887		27,966		27,417		27,352		27,271		90		2,881
2017								31,605		32,169		35,304		36,160		36,532		36,502		36,819		319		3,400
2018										54,455		56,351		58,441		59,404		61,237		61,145		598		4,234
2019												75,092		72,368		71,544		71,964		73,310		1,182		4,503
2020														63,083		62,833		63,217		63,562		1,310		5,886
2021																96,425		96,673		96,134		3,598		5,813
2022																		79,835		78,759		6,332		4,683
2023																				78,978		18,994		3,881
																	Total		$	555,877

F-45

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

All Lines of Business
(in thousands)
	Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,
Accident Year	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023
	(Unaudited 2014 - 2022)
2014	$	5,710	$	9,429	$	10,738	$	11,770	$	13,819	$	14,901	$	15,491	$	15,770	$	16,120	$	16,136
2015				12,295		16,181		18,266		19,984		21,067		22,104		22,318		22,473		22,519
2016						15,364		19,001		21,106		23,974		25,234		25,750		26,382		26,854
2017								16,704		24,820		28,693		31,393		32,529		33,522		34,683
2018										32,383		44,516		50,553		52,025		54,424		56,199
2019												40,933		54,897		58,055		60,374		63,932
2020														39,045		50,719		53,432		56,523
2021																56,282		77,756		82,317
2022																		45,856		65,732
2023																				46,280
																	Total		$	471,174
Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented																			$	84,703
All outstanding liabilities before 2014, net of reinsurance																				170
Liabilities for loss and allocated loss adjustment expenses, net of reinsurance																			$	84,872

(Components may not sum to totals due to rounding)

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.

F-46

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

The reconciliation of the net incurred and paid claims development tables to the liability for 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)	December 31, 2023
Liabilities for allocated loss and loss adjustment expenses, net of reinsurance	$	84,872
Total reinsurance recoverable on unpaid losses		33,289
Unallocated loss adjustment expenses		3,657
Total gross liability for loss and LAE reserves	$	121,818
(Components may not sum to totals due to rounding)

The following is supplementary unaudited information about average historical claims duration as of December 31, 2023:

Average Annual Percentage Payout of Incurred Loss and Allocated Loss Adjustment Expenses by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7		8		9		10
All Lines of Business	53.4	%	19.9	%	7.3	%	6.0	%	5.6	%	3.7	%	2.5	%	1.4	%	1.2	%	0.1	%

The percentages in the above table do not add up to 100 because the percentages represent averages across all accident years at each development stage.

Note 12 – Stockholders’ Equity

Dividends Declared

Dividends declared and paid on Common Stock were $-0- and $1,277,066 for the years ended December 31, 2023 and 2022, respectively. On November 11, 2022, the Company’s Board of Directors determined to suspend regular quarterly dividends. Future dividend policy will be subject to the discretion of the Company’s Board of Directors.

2014 Equity Participation Plan

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. On August 9, 2023, the Company’s stockholders approved an amendment to the 2014 Plan to increase the maximum number of shares of Common Stock of the Company that are authorized to be issued pursuant to the 2014 Plan to 1,900,000. The 2014 Plan terminates on August 12, 2024 and no further awards may be granted under the 2014 Plan after such date.

As of December 31, 2023, there were 584,596 shares reserved for grants under the 2014 Plan.

F-47

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Stock Options

The results of operations for the years ended December 31, 2023 and 2022 include stock-based compensation expense for stock options totaling approximately $-0- and $9,000, respectively. Stock-based compensation expense related to stock options for the year ended December 31, 2022 is net of estimated forfeitures of approximately 18%. Such amounts have been included in the consolidated statements of operations and comprehensive loss within other operating expenses.  

No options were granted during the years ended December 31, 2023 and 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 year ended December 31, 2023 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, 2023		107,201	$	8.31		1.92	$	-
Granted		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Expired/Forfeited		-	$	-		-	$	-
Outstanding at December 31, 2023		107,201	$	8.31		0.94	$	-
Vested and Exercisable at December 31, 2023		107,201	$	8.31		0.94	$	-

The aggregate intrinsic value of options outstanding and options exercisable at December 31, 2023 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 $2.13 closing price of the Company’s Common Stock on December 31, 2023. No options were exercised, forfeited or expired during the year ended December 31, 2023. 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.

F-48

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

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, 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.

As of December 31, 2023, there were no unvested options.

Restricted Stock Awards

A summary of the restricted Common Stock activity under the Company’s 2014 Plan for the year ended December 31, 2023 is as follows:

Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value per Share		Aggregate Fair Value
Balance at January 1, 2023		366,597		$	6.97	$	2,555,181
Granted		280,669		$	1.42	$	398,338
Vested		(82,865	)	$	3.84	$	(318,202	)
Forfeited		(13,820	)	$	4.17	$	(57,686	)
Balance at December 31, 2023		550,581		$	3.82	$	2,103,219

Fair value was calculated using the closing price of the Company’s Common Stock on the grant date. For the years ended December 31, 2023 and 2022, stock-based compensation for these grants was approximately $833,000 and $1,369,000, respectively, which is included in other operating expenses on the accompanying consolidated statements of operations and comprehensive 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.

F-49

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

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 years ended December 31, 2023 and 2022, stock-based compensation under the 2021/2022 Offering was approximately $-0- and $15,000, respectively, which is included in other operating expenses on the accompanying consolidated statements of operations and comprehensive 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 price of $60,464.

Warrants

In connection with the Exchange Agreement (see Note 9 – Debt – “Note and Warrant Exchange”), as additional consideration, on December 15, 2022, the Company issued warrants to the Exchanging Noteholders to purchase 969,525 shares of Common Stock. The fair value of the warrants, using the Black-Scholes valuation formula, was $993,200, which has been capitalized as a deferred financing cost of the 2022 Notes. The fair value of the warrants is being amortized over the life of the warrants, which is 36.5 months.

The warrants are exercisable through December 30, 2025 at an exercise price of $1.00 per share. Holders of the warrants may exercise their outstanding warrants in cash, or, 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 warrants being exercised.

As of December 31, 2023, all warrants for the purchase of an aggregate of 969,525 shares of Common Stock were outstanding.

No warrants were granted during the year ended December 31, 2023.

The following weighted average assumptions were used for grants during the following periods:

	Years ended
	December 31,
	2023		2022
Dividend Yield		n/a		0.00%
Volatility		n/a		57.45%
Risk-Free Interest Rate		n/a		4.00%
Expected Life		n/a	3 years

F-50

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Note 13 - Statutory Financial Information and Accounting Policies

For regulatory purposes, KICO prepares its statutory basis financial statements based on statutory accounting principles prescribed or permitted by the New York State Department of Financial Services (the “DFS”). The DFS requires insurance companies domiciled in New York State to prepare their statutory financial statements in accordance with Statements of Statutory Accounting Principles as promulgated by the National Association of Insurance Commissioners (the “NAIC”), subject to any deviations prescribed or permitted by the DFS. These statutory accounting practices differ substantially from GAAP used by most business entities. The more significant variances from GAAP are as follows:

•   Policy acquisition costs are charged to operations in the year such costs are incurred, rather than being deferred and amortized as premiums are earned over the terms of the policies.

•   Ceding commission revenues are earned when ceded premiums are written except for ceding commission revenues in excess of anticipated acquisition costs, which are deferred and amortized as ceded premiums are earned. GAAP requires that all ceding commission revenues be earned as the underlying ceded premiums are earned over the term of the reinsurance agreements.

•   Certain assets including certain receivables, a portion of the net deferred tax asset, prepaid expenses and furniture and equipment are not admitted.

•   Investments in fixed-maturity securities are valued at NAIC value for statutory financial purposes, which is primarily amortized cost. GAAP requires certain investments in fixed-maturity securities classified as available-for-sale, to be reported at fair value.

•   Certain amounts related to ceded reinsurance are reported on a net basis within the statutory basis financial statements. GAAP requires these amounts to be shown gross.  

• For SAP purposes, changes in deferred income taxes relating to temporary differences between net income for financial reporting purposes and taxable income are recognized as a separate component of gains and losses in surplus rather than included in income tax expense or benefit as required under GAAP.

State insurance laws restrict the ability of KICO to declare dividends. These restrictions are related to surplus and net investment income. Dividends are restricted to the lesser of 10% of surplus or 100% of investment income (on a statutory accounting basis) for the trailing 36 months, net of dividends paid by KICO during such period. State insurance regulators require insurance companies to maintain specified levels of statutory capital and surplus. Generally, dividends may be paid without the need for DFS approval from unassigned surplus, and the amount of an insurer’s unassigned surplus following payment of any dividends must be reasonable in relation to the insurer’s outstanding liabilities and adequate to meet its financial needs.

At December 31, 2023 and 2022, unassigned deficit was $7,661,958 and $5,069,593, respectively, and accordingly, dividends may not be paid without DFS approval. For the years ended December 31, 2023 and 2022, KICO paid dividends to Kingstone of $1,250,000 and $5,250,000, respectively. For the years ended December 31, 2023 and 2022, KICO recorded statutory basis net income (loss) of $1,343,111 and $(14,498,676), respectively. At December 31, 2023 and 2022, KICO reported statutory basis surplus as regards policyholders of $62,683,974 and $67,976,439, respectively, as filed with the DFS.

F-51

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Note 14 - Risk Based Capital

State insurance departments impose risk-based capital (“RBC”) requirements on insurance enterprises. The RBC Model serves as a benchmark for the regulation of insurance companies by state insurance regulators.  RBC provides for targeted surplus levels based on formulas, which specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk, and are set forth in the RBC requirements. Such formulas focus on four general types of risk: (a) the risk with respect to the company’s assets (asset or default risk); (b) the risk of default on amounts due from reinsurers, policyholders, or other creditors (credit risk); (c) the risk of underestimating liabilities from business already written or inadequately pricing business to be written in the coming year (underwriting risk); and (d) the risk associated with items such as excessive premium growth, contingent liabilities, and other items not reflected on the balance sheet (off-balance sheet risk). The amount determined under such formulas is called the authorized control level RBC (“ACL”).

The RBC guidelines define specific capital levels based on a company’s ACL that are determined by the ratio of the company’s total adjusted capital (“TAC”) to its ACL. TAC is equal to statutory capital, plus or minus certain other specified adjustments. The Company’s TAC was above the ACL for each of the last two years and is in compliance with RBC requirements as of December 31, 2023 and 2022.

Note 15 – 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.

The provision for income taxes is comprised of the following:

Years ended ended December 31,	2023			2022
Current federal income tax expense	$	-		$	-
Current state income tax expense		2,730			1,630
Deferred federal and state income benefit		(1,199,915	)		(5,419,176	)
Income tax benefit	$	(1,197,185	)	$	(5,417,546	)

A reconciliation of the federal statutory rate to the Company’s effective tax rate is as follows:

Years ended December 31,	2023					2022
Computed expected tax benefit	$	(1,546,925	)	21.0	%	$	(5,867,891	)	21.0	%
State taxes, net of Federal benefit		(271,543	)	3.7			(190,894	)	0.7
State valuation allowance		282,864		(3.8	)		198,217		(0.7	)
Permanent differences
Dividends received deduction		(74,323	)	1.0			(122,331	)	0.4
Non-taxable investment income		(98,767	)	1.3			(95,763	)	0.3
Stock-based compensation		62,801		(0.9	)		117,700		(0.4	)
Sale leaseback transaction		315,894		(4.3	)		385,634		(1.4	)
Other permanent differences		96,789		(1.3	)		152,601		(0.5	)
Prior year tax matters		27,460		(0.4	)		(24,116	)	0.1
Other		8,565		(0.1	)		29,297		(0.1	)
Income tax benefit, as reported	$	(1,197,185	)	16.3	%	$	(5,417,546	)	19.4	%

F-52

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

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:

	December 31,		December 31,
	2023		2022
Deferred tax asset:
Net operating loss carryovers (1)	$	5,283,016	$	3,828,947
Claims reserve discount		1,204,334		1,238,544
Unearned premium		2,742,603		3,574,840
Deferred ceding commission revenue		1,986,782		2,230,109
Net unrealized losses on securities		3,357,463		4,920,837
Other		1,153,903		503,692
Total deferred tax assets		15,728,101		16,296,969
Deferred tax liability:
Investment in KICO (2)		759,543		759,543
Deferred acquisition costs		4,158,538		5,002,085
Intangibles		105,000		105,000
Depreciation and amortization		153,201		99,183
Total deferred tax liabilities		5,176,282		5,965,811
Net deferred income tax asset	$	10,551,819	$	10,331,158

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

	December 31,			December 31,
Type of NOL	2023			2022			Expiration
Federal only, NOL from 2023 and 2022	$	5,283,016		$	3,828,947		None
State only (A)		2,560,372			2,276,595		December 2027 - December 2043
Valuation allowance		(2,560,372	)		(2,276,595	)
State only, net of valuation allowance		-			-
Total deferred tax asset from net operating loss carryovers	$	5,283,016		$	3,828,947

(A) Kingstone generates operating losses for state purposes and has prior year NOLs available. The state NOL as of December 31, 2023 and 2022 was approximately $39,390,000 and $35,025,000, 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 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 2043. 

F-53

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

(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 insurance company 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 (collectively the “Untaxed Interest”). As of the date of acquisition, the deferred tax liability on the Untaxed Interest was $1,169,000. Under GAAP guidance for business combinations, a temporary difference with an indefinite life exists when the parent company 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.

The table below reconciles the changes in net deferred income tax assets (liabilities) to the deferred income tax benefit for the year ended December 31, 2023:

Increase in net deferred income tax assets	$	(220,661	)
Less: Deferred tax expense allocated to other comprehensive income		979,254
Deferred income tax benefit	$	(1,199,915	)

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 years ended December 31, 2023 and 2022. 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, 2020 through December 31, 2022 remain subject to examination.

F-54

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Note 16 - Employee Benefit Plans

Employee Bonus Plan

For the years ended December 31, 2023 and 2022 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 $292,000 and $264,000, respectively, of expense for the years ended December 31, 2023 and 2022, related to the 401(k) Plan, which is recorded in other underwriting expenses on the accompanying consolidated statements of operations and comprehensive loss. 

Deferred Compensation Plan

On June 18, 2018, the Company adopted the Kingstone Companies, Inc. Deferred Compensation Plan (the "Deferred Compensation Plan"). Effective December 22, 2022, the Company terminated the Deferred Compensation Plan. The assets of the Deferred Compensation Plan will be liquidated by making payments to Participants in full satisfaction of their interest in the Deferred Compensation Plan (“Termination Payments”), which Termination Payments will be made no earlier than December 22, 2023 and will be completed no later than December 22, 2024.

The deferred compensation liability as of December 31, 2023 and 2022 amounted to $937,025 and $1,155,860, respectively, and is recorded in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets.

Note 17 - 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 Leases

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. The lease was not renewed.

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.

F-55

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

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

	Year ended			Year ended
Lease cost	December 31, 2023			December 31, 2022
Operating lease (1) (2)	$	165,368		$	172,494
Total lease cost (1) (2)	$	165,368		$	172,494
Other information on operating leases
Cash payments included in the measurement of lease
liability reported in operating cash flows	$	191,919		$	195,453
Discount rate		5.50	%		5.50	%
Remaining lease term in years		0.25			1.25

(1)	KICO rent expense is included in the consolidated statements of operations and comprehensive loss within other underwriting expenses.
(2)	Cosi rent expense is included in the consolidated statements of operations and comprehensive loss within other operating expenses.

Operating lease right-of-use assets, included in other assets, were $47,722 and $225,278 as of December 31, 2023 and 2022, respectively. Operating lease right-of-use liabilities, included in accounts payable, accrued expenses and other liabilities, were $47,722 and $225,278 as of December 31, 2023 and 2022, respectively.

The following table presents the contractual maturities of the Company’s lease liabilities as of December 31, 2023:

For the Year
Ending
December 31,	Total
2024	$	49,145
Total undiscounted lease payments		49,145
Less: present value adjustment		1,423
Operating lease liability (1)	$	47,722

Rent expense for the years ended December 31, 2023 and 2022 amounted to $165,368 and $172,494, respectively, and is included in the accompanying consolidated statements of operations and comprehensive loss within other underwriting expenses.

F-56

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Employment Agreements

Meryl Golden, President and Chief Executive Officer; formerly 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 served as the Company’s Chief Operating Officer. Ms. Golden also served 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 expired on December 31, 2022.

Pursuant to the Golden Employment Agreement, Ms. Golden was entitled to receive an annual salary of $500,000. The Golden Employment Agreement also provided 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 vested 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.   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 took 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 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 her base salary. In addition, pursuant to the Second Amended Golden Employment Agreement, Ms. Golden was granted, under the terms of the 2014 Plan, during each of January 2023 and January 2024, 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 2023, Ms. Golden was granted 101,111 shares of restricted stock pursuant to this provision. 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. In January 2024, Ms. Golden was granted 64,085 shares of restricted stock pursuant to this provision. The 2024 grant will vest on December 31, 2024, based on the continued provision of services through such date. 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.

F-57

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Effective as of October 1, 2023, Ms. Golden was appointed to the position of President and Chief Executive Officer of the Company to succeed Mr. Goldstein.

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

Employment Agreement effective as of January 1, 2020

On October 14, 2019, the Company and Barry B. Goldstein, the Company’s then 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 expired on December 31, 2022. The Second Amended Goldstein Employment Agreement extended 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 was 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 was 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 was terminated by the Company without cause or he resigned for good reason (each as defined in the Second Amended Goldstein Employment Agreement), Mr. Goldstein would have been 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 have been entitled to receive his base salary and accrued bonus through the date of death. Further, in the event that Mr. Goldstein’s employment was terminated by the Company without cause or he resigned 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 would have vested.  Mr. Goldstein would have been 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.

F-58

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022

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 was scheduled to 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. On September 18, 2023, Mr. Goldstein and the Company agreed to extend the vesting date of the one-sixth of the award that was scheduled to vest on December 29, 2023 to December 30, 2024.  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 was scheduled to 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. On September 18, 2023, Mr. Goldstein and the Company agreed to extend the vesting date of the one-fourth of the award that was scheduled to vest on December 29, 2023 to December 30, 2024.  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 was scheduled to 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.  On September 18, 2023, Mr. Goldstein and the Company agreed to extend the vesting date for the one-sixth of the award that was scheduled to vest on December 29, 2023 to December 30, 2024. 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 was scheduled to 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.  On September 18, 2023, Mr. Goldstein and the Company agreed to extend the vesting date for the one-fourth of the award that was scheduled to vest on December 29, 2023 to December 30, 2024. In January 2022, Mr. Goldstein was granted 27,300 shares of restricted stock pursuant to this provision.  This grant was scheduled to 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. On September 18, 2023, Mr. Goldstein and the Company agreed to extend the vesting date for the one-half of the award that was scheduled to vest on December 29, 2023 to December 30, 2024. 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. In addition, in the event of the termination of Mr. Goldstein’s employment with the Company for any reason, his unvested restricted stock will vest.

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 took 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 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 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.

Employment Agreement effective as of October 1, 2023

On August 9, 2023, the Company and Mr. Goldstein entered into an amendment to the Third Amended Goldstein Employment Agreement which took effect as of October 1, 2023. Pursuant to the amendment, effective as of October 1, 2023, Mr. Goldstein is no longer serving as President and Chief Executive Officer of the Company, the expiration date of the Third Amended Goldstein Employment Agreement shall be the earlier of (a) December 31, 2024 or (b) in the event Mr. Goldstein is not re-elected as Chairman of the Board of the Company following its 2024 annual meeting of stockholders, then the date of such annual meeting, Mr. Goldstein’s  salary was reduced to $300,000 per annum, and Mr. Goldstein is no longer entitled to receive a bonus based upon the Company’s net income.

F-59

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Note 18 - Loss Per Common Share

Basic net loss per common share is computed by dividing net loss by the weighted-average number of shares of Common Stock outstanding. Diluted loss per common share reflects, in periods in which it has a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants as well as non-vested restricted stock awards.  The computation of diluted loss per common share excludes those options and warrants 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, warrants and non-vested restricted stock awards in periods where the exercise of such options and warrants or the vesting of such restricted stock awards would be anti-dilutive. For the years ended December 31, 2023 and 2022, no options, warrants or restricted stock awards 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, warrants and non-vested restricted stock awards.

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

	Years ended
	December 31,
	2023		2022
Weighted average number of shares outstanding		10,756,487		10,645,365
Effect of dilutive securities, common share equivalents:
Stock options		-		-
Warrants		-		-
Restricted stock awards		-		-
Weighted average number of shares outstanding,
used for computing diluted loss per share		10,756,487		10,645,365

Note 19 - Subsequent Events

The Company has evaluated events that occurred subsequent to December 31, 2023 through April 1, 2024, the date these consolidated financial statements were issued, for matters that required disclosure or adjustment in these consolidated financial statements.

Reinsurance

Effective January 1, 2024, the Company entered into a new quota share reinsurance treaty for its personal lines business and a new underlying excess of loss treaty (see Note 7 – Reinsurance).

F-60

KINGSTONE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022 

Note 20 – Quarterly Financial Data (Unaudited)

The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2023 and 2022:

	2023
	March 31,			June 30,			September 30,			December 31,		Total
Net premiums earned	$	28,254,953		$	29,508,196		$	27,938,318		$	28,682,796	$	114,384,263
Ceding commission revenue		5,445,407			5,412,210			5,536,327			4,659,550		21,053,494
Net investment income		1,541,492			1,451,356			1,444,360			1,571,474		6,008,682
Net gains (losses) on investments		1,224,871			197,142			(824,370	)		1,536,911		2,134,554
Total revenues		36,627,763			36,719,988			34,236,671			36,606,292		144,190,714
Loss and loss adjustment expenses		25,039,410			19,580,702			21,932,453			16,296,645		82,849,210
Commission expense and
other underwriting expenses		15,411,381			15,154,820			14,529,055			14,179,335		59,274,591
Net (loss) income		(5,054,710	)		(522,017	)		(3,537,571	)		2,945,952		(6,168,346	)
Basic (loss) earnings per share	$	(0.47	)	$	(0.05	)	$	(0.33	)	$	0.27	$	(0.57	)
Diluted (loss) earnings per share	$	(0.47	)	$	(0.05	)	$	(0.33	)	$	0.26	$	(0.57	)

	2022
	March 31,			June 30,			September 30,			December 31,			Total
Net premiums earned	$	26,673,380		$	27,902,068		$	29,360,976		$	30,448,107		$	114,384,531
Ceding commission revenue		4,681,396			4,715,587			4,886,094			5,036,314			19,319,391
Net investment income		1,359,100			634,325			1,418,521			1,524,832			4,936,778
Net losses on investments		(4,398,405	)		(4,517,373	)		(397,658	)		(78,429	)		(9,391,865	)
Total revenues		28,551,295			28,979,250			35,537,635			37,091,110			130,159,290
Loss and loss adjustment expenses		22,941,198			18,656,041			22,027,516			24,765,287			88,390,042
Commission expense and
other underwriting expenses		15,167,035			15,106,028			15,978,291			15,027,269			61,278,623
Net loss		(9,197,532	)		(5,379,619	)		(3,997,621	)		(3,950,022	)		(22,524,794	)
Basic loss per share	$	(0.87	)	$	(0.51	)	$	(0.38	)	$	(0.37	)	$	(2.12	)
Diluted loss per share	$	(0.87	)	$	(0.51	)	$	(0.38	)	$	(0.37	)	$	(2.12	)

Due to changes in number of shares outstanding from quarter to quarter, the total earnings per share of the four quarters may not necessarily equal the total earnings per share for the year.

F-61

EX-10.A

EXHIBIT 10(A)

Approved on August 9, 2023

KINGSTONE COMPANIES, INC.

AMENDED AND RESTATED

2014 EQUITY PARTICIPATION PLAN

Kingstone Companies, Inc. (the “Company”) originally adopted the Kingstone Companies, Inc. 2014 Equity Participation Plan (the “Original Plan”) effective as of August 12, 2014 and hereby amends and restates the Original Plan in the form of this Kingstone Companies, Inc. Amended and Restated 2014 Equity Participation Plan (the “Plan”).

1. Purpose. The Plan is intended to advance the interests of the Company by inducing individuals or entities of outstanding ability and potential to join and remain with, or provide consulting or advisory services to, the Company or a parent or subsidiary of the Company, by encouraging and enabling eligible employees, non-employee directors, consultants and advisors to acquire proprietary interests in the Company, and by providing the participating employees, non-employee directors, consultants and advisors with an additional incentive to promote the success of the Company. This is accomplished by providing for the granting of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, and Stock Bonuses, as such terms are defined in Section 2 hereof, to employees, non-employee directors, consultants and advisors. As used herein, the term “parent” or “subsidiary” shall mean any present or future entity which is or would be a “parent corporation” or “subsidiary corporation” of the Company as the term is defined in Section 424 of the Code (as hereinafter defined) (determined as if the Company were the employer corporation).

2. Definitions. Capitalized terms not otherwise defined in the Plan shall have the following meanings:

(a) “Award Agreement” shall mean a written agreement, as amended, in such form as the Committee shall determine, that evidences the terms and conditions of a Stock Award granted under the Plan.

(b) “Board” shall mean the Board of Directors of the Company.

(c) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(d) “Committee” shall mean a committee or subcommittee of the Board to whom authority has been granted by the Board to make determinations with regard to the Plan, which committee or subcommittee shall consist of at least two persons, each of whom is intended to be an “outside independent director” to the extent required by the rules and regulations of any established stock exchange or a national market system, including, without limitation, The Nasdaq Stock Market (“Nasdaq”).

(e) “Common Stock” shall mean the common stock, $.01 par value, of the Company.

(f) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

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(g) “Fair Market Value” on a specified date means the value of a share of Common Stock, determined as follows:

(i) if the Common Stock is listed on any established stock exchange or a national market system, including, without limitation, Nasdaq, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day immediately preceding the day of determination (or, if the determination is made after the close of business for trading, then on the day of determination) as reported in The Wall Street Journal or such other source as the Committee deems reliable;

(ii) if the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the day immediately preceding the day of determination (or, if the determination is made after the close of business for trading, then on the day of determination), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

(iii) in the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Committee under a method that complies with Code Sections 422 and 409A, if applicable.

(h) “Incentive Stock Option” shall mean an Option that is an “incentive stock option” within the meaning of Section 422 of the Code and that is identified as an Incentive Stock Option in the Award Agreement by which it is evidenced.

(i) “Nonstatutory Stock Option” shall mean an Option that is not an Incentive Stock Option within the meaning of Section 422 of the Code.

(j) “Option” shall mean an Incentive Stock Option or a Nonstatutory Stock Option.

(k) “Section 409A of the Code” means the nonqualified deferred compensation rules under Section 409A of the Code and any applicable Treasury regulations thereunder.

(l) “Securities Act” shall mean the Securities Act of 1933, as amended.

(m) “Stock Appreciation Right” or “SAR” shall mean a right to receive payment of the appreciated value of shares of Common Stock as provided for in Section 10 hereof.

(n) “Stock Award” shall mean an Incentive Stock Option, a Nonstatutory Stock Option, a Stock Appreciation Right or a Stock Bonus award.

(o) “Stock Bonus” shall mean a bonus award payable in shares of Common Stock as provided for in Section 16 hereof.

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3. Administration. The Plan shall be administered by the Board or the Committee. All references in the Plan to the “Committee” shall be deemed to refer to the “Board” if no committee is established for the purpose of making determinations with respect to the Plan. Except as herein specifically provided, the interpretation and construction by the Committee of any provision of the Plan or of any Stock Award granted under it shall be final and conclusive. The Committee may, in its sole discretion, adopt special guidelines and provisions for persons who are residing in or employed in, or subject to the taxes of, any domestic or foreign jurisdictions to comply with applicable tax and securities laws of such domestic or foreign jurisdictions. The receipt of a Stock Award by any members of the Committee shall not preclude their vote on any matters in connection with the administration or interpretation of the Plan.

4. Shares Subject to the Plan. The shares subject to Stock Awards granted under the Plan shall be the Common Stock, whether authorized but unissued or held in the Company’s treasury, or shares purchased from stockholders expressly for use under the Plan. The maximum number of shares of Common Stock which may be issued pursuant to Stock Awards granted under the Plan shall not exceed in the aggregate one million nine hundred thousand (1,900,000) shares. The Company shall at all times while the Plan is in force reserve such number of shares of Common Stock as will be sufficient to satisfy the requirements of all outstanding Stock Awards granted under the Plan. In the event any Option or SAR granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the unpurchased shares subject thereto shall again be available for Stock Awards under the Plan. In the event the right to receive any Stock Bonus is terminated for any reason, the shares forfeited shall again be available for Stock Awards under the Plan. In the event shares of Common Stock are delivered to, or withheld by, the Company pursuant to Section 13(b) or 31 hereof, such delivered or withheld shares shall be considered to have been issued pursuant to the Plan and shall not be available for Stock Awards under the Plan.

5. Participation. The class of individuals and entities that shall be eligible to receive Stock Awards (“Grantees”) under the Plan shall be (a) with respect to Incentive Stock Options, all employees of either the Company or any parent or subsidiary of the Company, and (b) with respect to all other Stock Awards, all employees and non-employee directors of, and consultants and advisors to, either the Company or any parent or subsidiary of the Company; provided, however, no Stock Award shall be granted to any such consultant or advisor unless (i) the consultant or advisor is a natural person (or an entity wholly-owned, directly or indirectly, by a natural person), (ii) bona fide services have been or are to be rendered by such consultant or advisor and (iii) such services are not in connection with the offer or sale of securities in a capital raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities. The Committee, in its sole discretion, but subject to the provisions of the Plan, shall determine the employees and non-employee directors of, and the consultants and advisors to, the Company and its parents and subsidiaries to whom Stock Awards shall be granted, and the number of shares to be covered by each Stock Award grant, taking into account the nature of the employment or services rendered by the individuals or entities being considered, their annual compensation, their present and potential contributions to the success of the Company, and such other factors as the Committee may deem relevant. For purposes hereof, a non-employee to whom an offer of employment has been extended shall be considered an employee, provided that the Stock Award granted to such individual shall not be exercisable or vest, in whole or in part, for a period of at least one year from the date of grant and, in the event the individual does not commence employment with the Company, the Stock Award granted shall be considered null and void.

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6. Award Agreement. Each Stock Award granted under the Plan shall be authorized by the Committee and shall be evidenced by an Award Agreement which shall be executed by the Company and, in the discretion of the Committee, by the individual or entity to whom such Stock Award is granted. The Award Agreement shall specify the number of shares of Common Stock as to which the Stock Award is granted, the period during which any Option or SAR is exercisable and the option or base price per share thereof, the vesting periods for any Stock Bonus, any performance-based vesting criteria (the “Performance Goals”) and such other terms and provisions as the Committee may deem necessary or appropriate; provided, however, that, no more than one-third of any Stock Award may vest before the first anniversary of the date of grant of such Stock Award. The terms of an Award Agreement, including the option or base price per share for an Option or SAR, may be amended from time to time upon the mutual written agreement of the Company (as authorized by the Committee) and the Grantee; provided, however, that an Award Agreement may not be amended to accelerate the vesting period(s) of a Stock Award (except in the event of the death or termination of employment of a Grantee due to Permanent Disability (as hereinafter defined)).

7. Incentive Stock Options. The Committee may grant Incentive Stock Options under the Plan which are subject to the following terms and conditions and any other terms and conditions as may at any time be required by Section 422 of the Code:

(a) No Incentive Stock Option shall be granted to individuals other than employees of the Company or of a parent or subsidiary of the Company.

(b) Each Incentive Stock Option under the Plan must be granted prior to August 12, 2024, which is within ten years from the date the Original Plan was adopted by the Board.

(c) The option price of the shares subject to any Incentive Stock Option shall not be less than the Fair Market Value of the Common Stock at the time such Incentive Stock Option is granted; provided, however, if an Incentive Stock Option is granted to an individual who owns, at the time the Incentive Stock Option is granted, more than 10% of the total combined voting power of all classes of stock of the Company or of a parent or subsidiary of the Company (a “10% Stockholder”), the option price of the shares subject to the Incentive Stock Option shall be at least 110% of the Fair Market Value of the Common Stock at the time such Incentive Stock Option is granted.

(d) No Incentive Stock Option granted under the Plan shall be exercisable after the expiration of ten years from the date of its grant; provided, however, if an Incentive Stock Option is granted to a 10% Stockholder, such Incentive Stock Option shall not be exercisable after the expiration of five years from the date of its grant. Every Incentive Stock Option granted under the Plan shall be subject to earlier termination as expressly provided in Section 12 hereof.

(e) For purposes of determining stock ownership under this Section 7, the attribution rules of Section 424(d) of the Code shall apply.

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8. Nonstatutory Stock Options. The Committee may grant Nonstatutory Stock Options under the Plan. Nonstatutory Stock Options shall be subject to the following terms and conditions:

(a) A Nonstatutory Stock Option may be granted to any individual or entity eligible to receive an Option under the Plan pursuant to clause (b) of Section 5 hereof.

(b) The option price of the shares subject to a Nonstatutory Stock Option shall not be less than the Fair Market Value of the Common Stock at the time such Nonstatutory Stock Option is granted.

(c) No Nonstatutory Stock Option granted under the Plan shall be exercisable after the expiration of ten years from the date of its grant.

9. [Intentionally Omitted]

10. Stock Appreciation Rights.

(a) The Committee may grant Stock Appreciation Rights to such persons eligible under the Plan as the Committee may select from time to time. SARs shall be granted at such times, in such amounts and under such other terms and conditions as the Committee shall determine, which terms and conditions shall be evidenced under an Award Agreement, subject to the terms of the Plan. Subject to the terms and conditions of the Award Agreement, an SAR shall entitle the Grantee to exercise the SAR, in whole or in part, in exchange for a payment of shares of Common Stock, cash or a combination thereof, as determined by the Committee and provided for in the Award Agreement, equal in value to the excess of the Fair Market Value of the shares of Common Stock underlying the SAR, determined on the date of exercise, over the base amount set forth in the Award Agreement for the shares of Common Stock underlying the SAR, which base amount shall not be less than the Fair Market Value of such Common Stock, determined as of the date the SAR is granted. The Company may, in its sole discretion, withhold from any such cash payment any amount necessary to satisfy the Company’s obligation for withholding taxes with respect to such payment.

(b) No SAR granted under the Plan shall be exercisable after the expiration of ten years from the date of its grant.

(c) All references in the Plan to “Options” shall be deemed to include “SARs” where applicable.

11. Transferability.

(a) No Option granted under the Plan shall be transferable by the individual or entity to whom it was granted other than by will or the laws of descent and distribution, and, during the lifetime of an individual, shall not be exercisable by any other person, but only by him. Rights with respect to Stock Bonuses may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of except by will or the laws of descent and distribution (subject to the provisions of the Plan).

5

(b) Notwithstanding Section 11(a) above, a Nonstatutory Stock Option granted under the Plan may be transferred in whole or in part during a Grantee’s lifetime, upon the approval of the Committee, to a Grantee’s “family members” (as such term is defined in Rule 701(c)(3) of the Securities Act and General Instruction A(1)(a)(5) to Form S-8) through a gift or domestic relations order. The transferred portion of a Nonstatutory Stock Option may only be exercised by the person or entity who acquires a proprietary interest in such Option pursuant to the transfer. The terms applicable to the transferred portion shall be the same as those in effect for the Option immediately prior to such transfer and shall be set forth in such documents issued to the transferee as the Committee may deem appropriate. As used in the Plan, the terms “Grantee” (when referring to an Option recipient) and “holder of an Option” shall refer to the grantee of the Option and not any transferee thereof.

12. Effect of Termination of Employment or Death on Options.

(a) Unless otherwise provided in the Award Agreement and except as provided in subsections (b) and (c) of this Section 12 and Section 19 hereof, if the employment of an employee by, or the services of a non-employee director for, or consultant or advisor to, the Company or a parent or subsidiary of the Company, shall terminate for any reason, then his Option may be exercised at any time within three months after such termination, subject to the provisions of subsection (d) of this Sections 12. For purposes of this subsection (a), an employee, non-employee director, consultant or advisor who leaves the employ or services of the Company to become an employee or non-employee director of, or a consultant or advisor to, a parent or subsidiary of the Company or a corporation (or subsidiary or parent of the corporation) which has assumed the Option of the Company as a result of a corporate reorganization or like event shall not be considered to have terminated his employment or services.

(b) Unless otherwise provided in the Award Agreement, if the holder of an Option under the Plan dies (i) while employed by, or while serving as a non-employee director for or a consultant or advisor to, the Company or a parent or subsidiary of the Company, or (ii) within three months after the termination of his employment or services for any reason, then such Option may, subject to the provisions of subsection (d) of this Section 12, be exercised by the estate of the employee or non-employee director, consultant or advisor, or by a person who acquired the right to exercise such Option by bequest or inheritance or by reason of the death of such employee or non-employee director, consultant or advisor, at any time within one year after such death.

(c) Unless otherwise provided in the Award Agreement, if the holder of an Option under the Plan ceases employment or services because of permanent and total disability (within the meaning of Section 23(e)(3) of the Code) (“Permanent Disability”) while employed by, or while serving as a non-employee director for or consultant or advisor to, the Company or a parent or subsidiary of the Company, then such Option may, subject to the provisions of subsection (d) of this Section 12, be exercised at any time within one year after his termination of employment, termination of directorship or termination of consulting or advisory services, as the case may be, due to the disability. Notwithstanding the foregoing, in the event the Company is a party to an employment, consulting or advisory agreement with a Grantee and such agreement provides for termination of employment or engagement based upon a disability or other incapacity, then, for such Grantee, a termination of employment or engagement for disability or other incapacity pursuant to the provisions thereof shall be considered to be a termination based upon Permanent Disability for purposes hereof. Furthermore, notwithstanding the foregoing, with respect to Stock Awards that are subject to Section 409A of the Code, Permanent Disability shall mean that a Grantee is disabled under Section 409A(a)(2)(c)(i) or (ii) of the Code.

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(d) Subject to Sections 6 and 19 hereof and this Section 12, an Option may not be exercised pursuant to this Section 12 except to the extent that the holder was entitled to exercise the Option at the time of termination of employment, termination of directorship, termination of consulting or advisory services, or death, and in any event may not be exercised after the expiration of the Option.

(e) For purposes of this Section 12, the employment relationship of an employee of the Company or of a parent or subsidiary of the Company will be treated as continuing intact while he is on military or sick leave or other bona fide leave of absence (such as temporary employment by the Government) if such leave does not exceed 90 days, or, if longer, so long as his right to reemployment is guaranteed either by statute or by contract.

13. Exercise of Options.

(a) Unless otherwise provided in the Award Agreement, any Option granted under the Plan shall be exercisable, subject to vesting, in whole at any time, or in part from time to time, prior to expiration. The Committee, in its absolute discretion, may provide in any Award Agreement that the exercise of any Options granted under the Plan shall be subject (i) to such condition or conditions as it may impose, including, but not limited to, a condition that the holder thereof remain in the employ or service of, or continue to provide consulting or advisory services to, the Company or a parent or subsidiary of the Company for such period or periods from the date of grant of the Option as the Committee, in its absolute discretion, shall determine; and (ii) to such limitations as it may impose, including, but not limited to, a limitation that the aggregate Fair Market Value (determined at the time the Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any employee during any calendar year (under all plans of the Company and its parents and subsidiaries) shall not exceed $100,000. In addition, in the event that under any Award Agreement the aggregate Fair Market Value (determined at the time the Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any employee during any calendar year (under all plans of the Company and its parents and subsidiaries corporations) exceeds $100,000, the Committee may, when shares are transferred upon exercise of such Options, designate those shares which shall be treated as transferred upon exercise of an Incentive Stock Option and those shares which shall be treated as transferred upon exercise of a Nonstatutory Stock Option.

(b) An Option granted under the Plan shall be exercised by the delivery by the holder thereof to the Company at its principal office (attention of the Secretary) of written notice of the number of shares with respect to which the Option is being exercised. Such notice shall be accompanied, or followed within ten days of delivery thereof, by payment of the full option price of such shares, and payment of such option price shall be made by the holder’s delivery of (i) his check payable to the order of the Company, or (ii) previously acquired Common Stock, the Fair Market Value of which shall be determined as of the date of exercise (provided that the shares delivered pursuant hereto are acceptable to the Committee in its sole discretion) or (iii) if provided for in the Award Agreement, and subject to the provisions of applicable law, his check payable to the order of the Company in an amount at least equal to the par value of the Common Stock being acquired, together with a promissory note, in form and upon such terms as are acceptable to the Committee, made payable to the order of the Company in an amount equal to the balance of the exercise price, or (iv) by the holder’s delivery of any combination of the foregoing (i), (ii) and (iii). Alternatively, if provided for in the Award Agreement, the holder may elect to have 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.

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14. Further Conditions of Exercise of Options.

(a) Unless prior to the exercise of the Option the shares issuable upon such exercise have been registered with the Securities and Exchange Commission pursuant to the Securities Act, the notice of exercise shall be accompanied by a representation or agreement of the person or estate exercising the Option to the Company to the effect that such shares are being acquired for investment purposes and not with a view to the distribution thereof, and such other documentation as may be required by the Company, unless in the opinion of counsel to the Company such representation, agreement or documentation is not necessary to comply with the Securities Act.

(b) If the Common Stock is listed on any securities exchange, including, without limitation, Nasdaq, the Company shall not be obligated to deliver any Common Stock pursuant to this Plan until it has been listed on each such exchange. In addition, the Company shall not be obligated to deliver any Common Stock pursuant to this Plan until there has been qualification under or compliance with such federal or state laws, rules or regulations as the Company may deem applicable. The Company shall use reasonable efforts to obtain such listing, qualification and compliance.

15. [Intentionally Omitted]

16. Stock Bonus Grants.

(a) The Committee may grant Stock Bonus awards to such persons eligible under the Plan as the Committee may select from time to time. Stock Bonus awards shall be granted at such times, in such amounts and under such other terms and conditions as the Committee shall determine, which terms and conditions shall be evidenced under an Award Agreement, subject to the terms of the Plan. Upon satisfaction of any conditions, limitations and restrictions set forth in the Award Agreement, a Stock Bonus award shall entitle the recipient to receive payment of a bonus described under the Stock Bonus award in the form of shares of Common Stock. Prior to the date on which a Stock Bonus award is required to be paid under an Award Agreement, the Stock Bonus award shall constitute an unfunded, unsecured promise by the Company to distribute Common Stock in the future.

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(b) The Committee may condition the grant or vesting of Stock Bonus Awards upon the attainment of specified Performance Goals set forth on Exhibit A as the Committee may determine, in its sole discretion. Such Performance Goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. The applicable Performance Goals shall be based on one or more of the performance criteria set forth in Exhibit A hereto.

(c) Shares granted pursuant to a Stock Bonus shall vest as determined by the Committee, as provided for in the Award Agreement. The foregoing notwithstanding (but subject to the discretion of the Committee and Section 19 hereof and except as otherwise provided in the Award Agreement), a Grantee shall forfeit the right to receive all shares not previously vested, if any, at such time as the Grantee is no longer employed by, or serving as a director of, or rendering consulting or advisory services to, the Company or a parent or subsidiary of the Company for any reason.

17. Adjustment Upon Change in Capitalization.

(a) In the event that the outstanding Common Stock is hereafter changed by reason of reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, reverse split, stock dividend or the like, an appropriate adjustment shall be made by the Committee in (i) the aggregate number of shares available under the Plan, (ii) the number of shares and option price per share subject to outstanding Options, (iii) the number of shares issuable pursuant to outstanding Stock Bonus grants, and (iv) any limitation on exercisability referred to in Section 13(a)(ii) hereof which is set forth in outstanding Incentive Stock Options. If the Company shall be reorganized, consolidated, or merged with another corporation, subject to the provisions of Section 22 hereof, the holder of an Option shall be entitled to receive upon the exercise of his Option, and the Grantee of a Stock Bonus shall be entitled to receive upon satisfaction of any conditions, limitations and restrictions set forth in the Award Agreement with respect to the Stock Bonus, the same number and kind of shares of stock or the same amount of property, cash or securities as he would have been entitled to receive upon the happening of any such corporate event as if he had been, immediately prior to such event, the holder of the number of shares covered by his Option or subject to the Stock Bonus; provided, however, that, in such event, the Committee shall have the discretionary power to take any action necessary or appropriate to prevent any Incentive Stock Option granted hereunder which is intended to be an “incentive stock option” from being disqualified as such under the then existing provisions of the Code or any law amendatory thereof or supplemental thereto; and provided, further, that in such event the Committee shall have the discretionary power to take any action necessary or appropriate to prevent such adjustment from being deemed or considered as the adoption of a new plan requiring shareholder approval under Section 422 of the Code and the regulations promulgated thereunder.

(b) Any adjustment in the number of shares shall apply proportionately to only the unexercised portion of the Option, or the unissued shares subject to an outstanding Stock Bonus, granted hereunder. If fractions of a share would result from any such adjustment, the adjustment shall be revised to the next lower whole number of shares.

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18. Rights of Grantees. The holder of an Option granted under the Plan shall have none of the rights of a stockholder with respect to the Common Stock covered by his Option until such Common Stock shall be transferred to him upon the exercise of his Option. The recipient of a Stock Bonus under the Plan shall have none of the rights of a stockholder with respect to the Common Stock covered by the Stock Bonus until the date on which the Grantee is entitled to receive the Common Stock pursuant to the Award Agreement.

19. Special Provisions as to Vesting.

(a) Notwithstanding anything hereinabove to the contrary, in the event a Grantee is not an employee or non-employee director of, or a consultant or advisor to, the Company as of a particular vesting date for a Stock Award due to death or termination of employment, termination of directorship, or termination of consulting or advisory services due to Permanent Disability, then, for purposes of the Plan and the Stock Award, the Grantee shall be deemed to have remained an employee or non-employee director of, or a consultant or advisor to, the Company through the vesting date next following the Grantee’s death or termination of employment, termination of directorship, or termination of consulting or advisory services due to Permanent Disability.

(b) Notwithstanding anything to the contrary, in the event a Change of Control (as hereinafter defined) occurs, then, immediately prior to the Change of Control, all outstanding Stock Awards granted pursuant to Section 16 hereof shall become fully vested.

(c) For purposes hereof, a “Change of Control” shall be deemed to have occurred if:

(i) any “person” or “group of persons” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) (other than the Grantee or any “group of persons” that includes the Grantee), becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing more than thirty-three and one-third percent (33-1/3%) of the Company’s then outstanding securities having the right to vote on the election of directors (“Voting Securities”), except that there shall be excluded from the calculation any Voting Securities acquired from the Company with respect to which the Grantee, if a director, gave his approval as a member of the Board;

(ii) individuals who, as of the date on which the Plan is adopted by the Board, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to such date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board; or

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(iii) the Company consummates (A) a reorganization, merger or consolidation of the Company, with respect to which in each case all or substantially all of the persons who were the beneficial owners of the Voting Securities of the Company immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly and indirectly, more than 50% of the then combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other person resulting from such reorganization, merger of consolidation, or (B) the sale or other disposition of all or substantially all of the assets of the Company.

(d) For purposes hereof, “Cause” shall mean (i) the Grantee’s conviction by a court of competent jurisdiction of the commission of any act in the performance of the Grantee’s duties constituting common law fraud or a felony, (ii) the Grantee’s commission of any act involving moral turpitude which the Board reasonably believes may have a material adverse effect on the Company and its subsidiaries taken as a whole (“Material Adverse Effect”), or (iii) the Grantee’s engagement in gross negligence or willful misconduct which the Board reasonably believes will have a Material Adverse Effect. The term “Material Adverse Effect” includes the loss or suspension of any license for the Company to operate or any disqualification or suspension for the Grantee to serve as an officer or director of the Company under applicable law. No act or failure to act by the Grantee shall be considered “Cause” if the Grantee’s act or failure to act was based on authority or express direction given by the Chief Executive Officer of the Company or the advice of counsel for the Company.

(e) Notwithstanding the provisions of Section 12 hereof, in the event a Grantee is deemed to have remained an employee or non-employee director of, or a consultant or advisor to, the Company through the vesting date next following the Grantee’s death or termination of employment, termination of directorship, or termination of consulting or advisory services due to Permanent Disability, as provided for above, then, with respect to any Option that is subject thereto, such Option, with respect to such next vesting, shall remain exercisable until the later of (A) three months following such next vesting date or (B) one year following the date of death or date of termination of employment, termination of directorship, or termination of consulting or advisory services due to Permanent Disability, as the case may be, subject to the provisions of paragraph (d) of Section 12 hereof.

20. Restrictions Upon Shares; Right of First Refusal.

(a) No Grantee shall, for value or otherwise, sell, assign, transfer or otherwise dispose of all or any part of the shares issued pursuant to the exercise of an Option or pursuant to a Stock Bonus (collectively, the “Shares”), or of any beneficial interest therein (collectively a “Disposition”), except as permitted by and in accordance with the provisions of the Plan. The Company shall not recognize as valid or give effect to any Disposition of any Shares or interest therein upon the books of the Company unless and until the Grantee desiring to make such Disposition shall have complied with the provisions of the Plan.

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(b) No Grantee shall, without the written consent of the Company, pledge, encumber, create a security interest in or lien on, or in any way attempt to otherwise impose or suffer to exist any lien, attachment, levy, execution or encumbrance on the Shares.

(c) If, at any time, a Grantee desires to make a Disposition of any of the Shares (the “Offered Shares”) to any third-party individual or entity pursuant to a bona fide offer (the “Offer”), he shall give written notice of his intention to do so (“Notice of Intent to Sell”) to the Company, which notice shall specify the name(s) of the offeror(s) (the “Proposed Offeror(s)”), the price per share offered for the Offered Shares and all other terms and conditions of the proposed transaction. Thereupon, the Company shall have the option to purchase from the Grantee all, but not less than all, the Offered Shares upon the same terms and conditions as set forth in the Offer.

(d) If the Company desires to purchase all of the Offered Shares, it must send a written notice to such effect to the Grantee within 30 days following receipt of the Notice of Intent to Sell.

(e) The closing of any purchase and sale of the Offered Shares shall take place 60 days following receipt by the Company of the Notice of Intent to Sell.

(f) If the Company does not elect to purchase all of the Offered Shares within the period set forth in paragraph (d) hereof, no Shares may be purchased by the Company, and the Grantee shall thereupon be free to dispose of such Shares to the Proposed Offeror(s) strictly in accordance with the terms of the Offer. If the Offered Shares are not disposed of strictly in accordance with the terms of the Offer within a period of 120 days after the Grantee gives a Notice of Intent to Sell, such Shares may not thereafter be sold without compliance with the provisions hereof.

(g) All certificates representing the Shares shall bear on the face or reverse side thereof the following legend:

“The shares represented by this certificate are subject to the provisions of the Kingstone Companies, Inc. Amended and Restated 2014 Equity Participation Plan, a copy of which is on file at the offices of the Company.”

(h) The provisions of this Section 20 shall only take effect if expressly provided for in the particular Award Agreement, shall be of no force or effect during such time that the Company is subject to the reporting requirements of the Exchange Act pursuant to Section 13 or 15(d) thereof and shall be subject to the provisions of any and all agreements hereafter entered into to which both the Company and any Grantee are parties that provide for a right of first refusal with respect to the Disposition of Shares.

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21. Transactions Requiring Stockholder Approval. Each of the following shall require approval by the affirmative vote of the holders of a majority of the votes of the shares of Common Stock present in person or represented by proxy at a meeting of stockholders and entitled to vote thereon (or in the case of action by written consent in lieu of a meeting of stockholders, the number of votes required by applicable law to act in lieu of a meeting) (“Stockholder Approval”):

(a) the amendment of an outstanding Option to reduce the exercise price thereof;

(b) the cancellation of an outstanding Option in exchange for either the grant of an Option that has an exercise price that is less than the exercise price of the cancelled Option or the grant of another Stock Award;

(c) the cancellation of an Option whose exercise price is greater than the then Fair Market Value of the Common Stock (“Underwater Option”) in exchange for a Stock Award;

(d) a cash buyout of an Underwater Option; and

(e) the transfer of an Option to a third-party financial intuition.

22. Liquidation, Merger or Consolidation. Notwithstanding Section 13(a) hereof, if the Board approves a plan of complete liquidation or a merger or consolidation (other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), at least 50% of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger or consolidation), the Committee may, in its sole discretion, upon written notice to the holder of an Option, provide that the Option must be exercised within 20 days following the date of such notice or it will be terminated. In the event such notice is given, the Option shall become immediately exercisable in full. With regard to a merger or consolidation, any such Option exercise shall take effect immediately prior to the closing of such transaction. In the event such merger or consolidation is not consummated within six (6) months of the date of the notice given to the holder of the Option, such notice and any such exercise shall be deemed null and void.

23. “Market Stand‑off”. No Grantee may, without the prior written consent of the managing underwriter, do any of the following during the period commencing on the date of the final prospectus relating to any underwritten public offering of the Company’s Common Stock under the Securities Act (the “Public Offering”) and ending on the date specified by the Company and the managing underwriter (such period not to exceed 180 days; provided, however, that, if (a) during the last 17 days of the initial lock-up period, the Company releases earnings results or announces material news or a material event or (b) prior to the expiration of the initial lock-up period, the Company announces that it will release earnings results during the 15-day period following the last day of the initial lock-up period, then in each case the lock-up period will be automatically extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the announcement of the material news or material event, as applicable): (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any of the Shares held immediately before the effective date of the registration statement for such offering or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The foregoing provisions of this Section 23 shall be applicable to the Grantees only if all officers, directors, and stockholders individually owning more than 5% of the Company’s outstanding Common Stock are subject to the same restrictions. The underwriters in connection with such registration are intended third‑party beneficiaries of this Section 23 and shall have the right, power, and authority to enforce the provisions hereof as though they were a party to the Award Agreement executed pursuant hereto. Each Grantee shall execute such agreements as may be reasonably requested by the Company in connection with such registration that are consistent with this Section 23 or that are necessary to give further effect thereto.

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24. Effectiveness of the Plan. The Original Plan was adopted by the Board on August 12, 2014 (the “Adoption Date”), and by the stockholders of the Company on August 11, 2015. The Plan was adopted in this amended and restated form by the Board on June __, 2022.

25. Termination, Modification and Amendment.

(a) The Plan (but not Options previously granted under the Original Plan or the Plan) shall terminate on August 12, 2024 (the “Termination Date”), which is within ten years from the Adoption Date, or sooner as hereinafter provided, and no Stock Award shall be granted after termination of the Plan. The foregoing shall not be deemed to limit the vesting period for Options, SARs, or Stock Bonuses granted pursuant to the Plan.

(b) The Plan may from time to time be terminated, modified, or amended if Stockholder Approval of the termination, modification or amendment is obtained.

(c) Notwithstanding paragraph (b) hereof, the Board may at any time, on or before the Termination Date, without Stockholder Approval, terminate the Plan, or from time to time make such modifications or amendments to the Plan as it may deem advisable; provided, however, that the Board shall not, without Stockholder Approval, (i) increase (except as otherwise provided by Section 17 hereof) the maximum number of shares as to which Incentive Stock Options may be granted hereunder, change the designation of the employees or class of employees eligible to receive Incentive Stock Options, or make any other change which would prevent any Incentive Stock Option granted hereunder which is intended to be an “incentive stock option” from qualifying as such under the then existing provisions of the Code or any law amendatory thereof or supplemental thereto or (ii) make any other modifications or amendments that require Stockholder Approval pursuant to applicable law, regulation or exchange requirements. In the event Stockholder Approval is not received within one year of adoption by the Board of the change provided for in (i) or (ii) above, then, unless otherwise provided in the Award Agreement (but subject to applicable law), the change and all Stock Awards that may have been granted pursuant thereto shall be null and void.

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(d) No termination, modification, or amendment of the Plan may, without the consent of the Grantee to whom any Stock Award shall have been granted, adversely affect the rights conferred by such Stock Award.

26. Not a Contract of Employment. Nothing contained in the Plan or in any Award Agreement executed pursuant hereto shall be deemed to confer upon any individual or entity to whom a Stock Award is or may be granted hereunder any right to remain in the employ or service of the Company or a parent or subsidiary of the Company or any entitlement to any remuneration or other benefit pursuant to any consulting or advisory arrangement.

27. Use of Proceeds. The proceeds from the sale of shares pursuant to Stock Awards granted under the Plan shall constitute general funds of the Company.

28. Indemnification of Board of Directors or Committee. In addition to such other rights of indemnification as they may have, the members of the Board or the Committee, as the case may be, shall be indemnified by the Company to the extent permitted under applicable law against all costs and expenses reasonably incurred by them in connection with any action, suit, or proceeding to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any rights granted thereunder and against all amounts paid by them in settlement thereof or paid by them in satisfaction of a judgment of any such action, suit or proceeding, except a judgment based upon a finding of bad faith. Upon the institution of any such action, suit, or proceeding, the member or members of the Board or the Committee, as the case may be, shall notify the Company in writing, giving the Company an opportunity at its own cost to defend the same before such member or members undertake to defend the same on his or their own behalf.

29. Captions. The use of captions in the Plan is for convenience. The captions are not intended to provide substantive rights.

30. Disqualifying Dispositions. If Common Stock acquired upon exercise of an Incentive Stock Option granted under the Plan is disposed of within two years following the date of grant of the Incentive Stock Option or one year following the issuance of the Common Stock to the Grantee, or is otherwise disposed of in a manner that results in the Grantee being required to recognize ordinary income, rather than capital gain, from the disposition (a “Disqualifying Disposition”), the holder of the Common Stock shall, immediately prior to such Disqualifying Disposition, notify the Company in writing of the date and terms of such Disqualifying Disposition and provide such other information regarding the Disqualifying Disposition as the Company may reasonably require.

31. Withholding Taxes.

(a) Whenever under the Plan shares of Common Stock or cash are to be delivered to a Grantee upon exercise of a Nonstatutory Stock Option or to a Grantee of a Stock Bonus, the Company shall be entitled to require as a condition of delivery that the Grantee remit or, at the discretion of the Committee, agree to remit when due, an amount sufficient to satisfy all current or estimated future Federal, state and local income tax withholding requirements, including, without limitation, the employee’s portion of any employment tax requirements relating thereto. At the time of a Disqualifying Disposition, the Grantee shall remit to the Company in cash the amount of any applicable Federal, state and local income tax withholding and the employee’s portion of any employment taxes.

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(b) The Committee may, in its discretion, provide any or all holders of Nonstatutory Stock Options or Grantees of Stock Bonus with the right to use shares of Common Stock in satisfaction of all or part of the withholding taxes to which such holders may become subject in connection with the exercise of their Options or their receipt of a Stock Bonus. Such right may be provided to any such holder in either or both of the following formats:

(i) The election to have the Company withhold, from the shares of Common Stock otherwise issuable upon the exercise of such Nonstatutory Stock Option or the satisfaction of the conditions, limitations and restrictions with respect to a Stock Bonus, a portion of those shares with an aggregate fair market value equal to the percentage of the withholding taxes (not to exceed 100%) designated by the holder.

(ii) The election to deliver to the Company, at the time the Nonstatutory Stock Option is exercised or the conditions, limitations and restrictions are satisfied for a Stock Bonus, one or more shares of Common Stock previously acquired by such holder (other than in connection with the Option exercise or Stock Bonus grant triggering the withholding taxes) with an aggregate Fair Market Value equal to the percentage of the withholding taxes (not to exceed 100%) designated by the holder.

(c) Notwithstanding the foregoing, the Committee may, in its discretion, permit the use of shares of Common Stock, as provided for in paragraph (b) hereof, to satisfy income tax liabilities of the Grantee in excess of withholding tax requirements provided that such additional income tax liabilities are reasonably likely to be incurred by the Grantee.

32. Excise Tax. In the event any Stock Award hereunder shall become subject to the excise tax imposed under Section 4999 of the Code, or any similar or successor provision of federal, state or local law, the Grantee shall not be paid any amounts to offset the tax effect of such excise tax or taxes.

33. Section 409A of the Code. Although the Company does not guarantee the particular tax treatment of Stock Awards granted under the Plan, Stock Awards made under the Plan are intended to comply with, or be exempt from, the applicable requirements of Section 409A of the Code and the Plan and any Award Agreement hereunder shall be limited, construed and interpreted in accordance with such intent. To the extent that any Stock Award is subject to Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. In no event whatsoever shall the Company or any of its affiliates be liable for any additional tax, interest or penalties that may be imposed on a Grantee by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code or this Section 33. Notwithstanding anything in the Plan or in a Stock Award to the contrary, the following provisions shall apply to any Stock Award granted under the Plan that constitutes "non-qualified deferred compensation" pursuant to Section 409A of the Code (a “409A Covered Award”):

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(a) A termination of employment shall not be deemed to have occurred for purposes of any provision of a 409A Covered Award providing for payment upon or following a termination of the Grantee’s employment unless such termination is also a "Separation from Service" within the meaning of Code Section 409A and, for purposes of any such provision of a 409A Covered Award, references to a “termination,” “termination of employment” or like terms shall mean Separation from Service. Notwithstanding any provision to the contrary in the Plan or the Stock Award, if the Grantee is deemed on the date of the Grantee’s termination of service to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B) and using the identification methodology selected by the Company from time to time, or if none, the default methodology set forth in Code Section 409A, then with regard to any such payment under a 409A Covered Award, to the extent required to be delayed in compliance with Code Section 409A(a)(2)(B), such payment shall not be made prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of the Grantee’s Separation from Service, and (ii) the date of the Grantee’s death. All payments delayed pursuant to this Section 33 shall be paid to the Grantee on the first day of the seventh month following the date of the Grantee’s Separation from Service or, if earlier, on the date of the Grantee’s death.

(b) Whenever a payment under a 409A Covered Award specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

(c) If under a 409A Covered Award an amount is to be paid in two or more installments, for purposes of Code Section 409A, each installment shall be treated as a separate payment.

34. Other Provisions. Each Stock Award under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion. Notwithstanding the foregoing, each Incentive Stock Option granted under the Plan shall include those terms and conditions which are necessary to qualify the Incentive Stock Option as an “incentive stock option” within the meaning of Section 422 of the Code and the regulations thereunder and shall not include any terms and conditions which are inconsistent therewith.

35. Governing Law. The Plan shall be governed by, and all questions arising hereunder shall be determined in accordance with, the laws of the State of Delaware, excluding choice of law principles thereof.

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Exhibit A

PERFORMANCE GOALS

Performance Goals for the purposes of the vesting of performance-based Stock Awards shall be based upon one or more of the following business criteria (which may be determined for these purposes by reference to (i) the Company as a whole, (ii) any of the Company’s subsidiaries, operating divisions, regional business units or other operating units, or (iii) any combination thereof): profit before taxes, stock price, market share, gross revenue, net revenue, pre-tax income, operating income, cash flow, earnings per share, return on equity, return on invested capital or assets, cost reductions and savings, return on revenues or productivity, or any other business criteria the Committee deems appropriate, which may be modified at the discretion of the Committee to take into account significant nonrecurring items, or an event or events either not directly relating to the operations of the Company or not within the reasonable control of the Company’s management, or a change in accounting standards required by generally accepted accounting principles, or which may be adjusted to reflect such costs or expenses as the Committee deems appropriate.

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EX-10.J

EXHIBIT 10(J)

KINGSTONE COMPANIES, INC.

15 Joys Lane

Kingston, New York 12401

September 18, 2023

Barry B. Goldstein

c/o Kingstone Companies, Inc.

15 Joys Lane

Kingston, New York 12401

Dear Mr. Goldstein:

Reference is made to the following Stock Grant Agreements, dated as of the dates set forth below, by and between Kingstone Companies, Inc. (the “Company”) and Barry B. Goldstein (the “Grantee”) with respect to the number of shares of Common Stock (the “Shares”) granted pursuant thereto, as amended by the letter agreement, dated June 27, 2022, between the Company and the Grantee (collectively, the “Stock Grant Agreements”):

Date	Number of Shares Subject to Agreement		Number of Unvested Shares
January 3, 2020		157,431		52,477
January 3, 2020		17,191		5,730
January 4, 2021		230,769		115,384
January 4, 2021		21,000		10,500
January 3, 2022		27,300		27,300

The parties agree that, effective as of the date hereof, Section 3 of each of the Stock Grant Agreements is amended to provide that all of the unvested shares of Common Stock shall vest on December 30, 2024 (the “Vesting Date”).

The parties acknowledge and agree that the Company’s Amended and Restated 2014 Equity Participation Plan (the “Plan”) provides, among other things, that, in the event of a Change of Control (as such term is defined in the Plan), the shares of Common Stock subject to the Stock Grant Agreements shall become fully vested and that, in the event that the Plan is further amended to provide otherwise or such Plan provision is determined to be ineffective for any reason, thereupon the shares of Common Stock subject to the Stock Grant Agreements shall become fully vested.

Except as amended hereby, each of the Stock Grant Agreements shall continue in full force and effect in accordance with their respective terms. Without limiting the generality of the foregoing, as provided for in the Stock Grant Agreements, in the event that, prior to the Vesting Date (i) the Grantee’s employment with the Company is terminated other than for Cause, (ii) the Grantee’s employment with the Company is terminated as a result of the Grantee having become Disabled, (iii) the Grantee dies while an employee of the Company, or (iv) the Grantee resigns his employment with the Company for Good Reason, the Shares that were scheduled to vest on the Vesting Date shall instead vest on the date of termination of employment, the date of death or the date of resignation of employment, as the case may be. In addition, as provided for in the letter agreement, dated June 27, 2022, between the Company and the Grantee, as amended and restated, in the event that, prior to the Vesting Date, the Grantee’s employment with the Company is terminated for Cause or the Grantee resigns his employment for any reason, the Shares that were scheduled to vest on the Vesting Date shall instead vest on the date of termination of employment.

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This letter agreement constitutes the entire agreement between the parties with regard to the subject matter hereof. This letter agreement supersedes all prior negotiations, understandings and agreements between the parties hereto with respect to the subject matter hereof, and each party acknowledges and agrees that it has not relied on any representations or promises in connection with this letter agreement not contained herein.

This letter agreement may not be amended, modified, waived or canceled, in part or in full, except in a writing signed by the parties.

This letter agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

This letter agreement shall be governed by, and construed in accordance with, the laws of the State of New York, excluding choice of law principles thereof.

Very truly yours, KINGSTONE COMPANIES, INC.
By:
	Meryl S. Golden
	Chief Operating Officer

Agreed:

Barry B. Goldstein

William L. Yankus

Chair, Compensation Committee

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EX-10.O

EXHIBIT 10(O)

STOCK GRANT AGREEMENT made as of the 2^nd day of January, 2024 between KINGSTONE COMPANIES, Inc., a Delaware corporation (the “Company”), and FLOYD R. TUPPER (the “Grantee”).

WHEREAS, the Grantee is a non-employee member of the Board of Directors of the Company;

WHEREAS, the Compensation Committee of the Board of Directors of the Company has approved the grant to the Grantee of common stock of the Company (“Common Stock”) pursuant to the Company’s Amended and Restated 2014 Equity Participation Plan (the “Plan”).

NOW, THEREFORE, in consideration of the foregoing, the Company hereby grants to the Grantee an award of shares of Common Stock upon the following terms and conditions:

1. DEFINED Terms. All terms used, but not otherwise defined, herein shall have the meanings ascribed to them in the Plan.

2. GRANT. Subject to the terms and conditions of the Plan and the provisions hereof, the Company hereby agrees to grant to the Grantee, pursuant to Section 16 of the Plan, an award of twenty-four thousand eight hundred eighty-three (24,883) shares of Common Stock (the “Shares”), such Shares being issuable on the Vesting Date (as hereinafter defined) set forth in, and subject to the provisions of, Section 3 hereof.

3. VESTING OF SHARES. (a) The Shares shall vest on January 2, 2025 (the “Vesting Date”) provided that the Grantee continues to serve as a member of the Board of Directors of the Company (the “Board”) through the Vesting Date, subject to the provisions of the Plan. Notwithstanding the foregoing, in the event that the Grantee resigns from the Board prior to the Vesting Date or is not re-elected as a director at the Company’s next annual meeting of stockholders, then, the Shares shall thereupon vest on a pro rata basis based on the number of days between the date hereof and the date of resignation or the date of the annual meeting of stockholders, as the case may be, in relation to three hundred sixty-five (365); provided, however, that the foregoing shall not be deemed to limit the Grantee’s right to receive all of the Shares in the event of the death or Permanent Disability of the Grantee or a Change of Control prior to the Vesting Date, as provided for in the Plan.

(b) In the event that the Shares vest on the Vesting Date (or earlier as provided for in Section 3(a)), the certificate representing the Shares shall be issued by the Company as soon as reasonably practicable thereafter. In the event that the Grantee does not continue to serve as a member of the Board through the Vesting Date, then, except as set forth in the Plan or as provided for in Section 3(a), the Grantee shall not be entitled to receive the Shares issuable on the Vesting Date, and this Agreement shall terminate and be of no further force or effect.

(c) The number of Shares issuable to the Grantee is subject to adjustment for any stock splits, reverse stock splits and other recapitalizations that take effect prior to the Vesting Date.

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4. INCORPORATION BY REFERENCE. The terms and conditions of the Plan are hereby incorporated by reference and made a part hereof.

5. NOTICES. Any notice or other communication given hereunder shall be deemed sufficient if in writing and hand delivered or sent by registered or certified mail, return receipt requested, addressed to the addressed to the Company, 15 Joys Lane, Kingston, New York 12401, Attention: CEO and to the Grantee at the address indicated below, or, in each case, at such other address notice of which is given in accordance with the foregoing provisions. Notices shall be deemed to have been given on the date of hand delivery or mailing as provided for above, except notices of change of address, which shall be deemed to have been given when received.

6. BINDING EFFECT. This Stock Grant Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns.

7. ENTIRE AGREEMENT. This Stock Grant Agreement, together with the Plan, contains the entire understanding of the parties hereto with respect to the subject matter hereof and may be modified only by an instrument executed by the party sought to be charged.

8. GOVERNING LAW. This Stock Grant Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, excluding choice of law rules thereof.

9. EXECUTION IN COUNTERPARTS. This Stock Grant Agreement may be executed in counterparts, each of which shall be deemed to be an original, but both of which together shall constitute one and the same instrument.

10. FACSIMILE SIGNATURES. Signatures hereon which are transmitted via facsimile, or other electronic image, shall be deemed original signatures.

11. INTERPRETATION; HEADINGS. The provisions of this Stock Grant Agreement shall be interpreted in a reasonable manner to give effect to the intent of the parties hereto. The headings and captions under sections and paragraphs of this Stock Grant Agreement are for convenience of reference only and do not in any way modify, interpret or construe the intent of the parties or affect any of the provisions of this Stock Grant Agreement.

[Remainder of page intentionally left blank; signature page follows]

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IN WITNESS WHEREOF, the parties have executed this Stock Grant Agreement as of the day and year first above written.

KINGSTONE COMPANIES, Inc.
By:
	Meryl S. Golden
	Chief Executive Officer
Signature of Grantee
Floyd R. Tupper
Name of Grantee
Address of Grantee

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EX-10.P

EXHIBIT 10(P)

STOCK GRANT AGREEMENT made as of the 2^nd day of January, 2024 between KINGSTONE COMPANIES, Inc., a Delaware corporation (the “Company”), and CARLA D’ANDRE (the “Grantee”).

WHEREAS, the Grantee is a non-employee member of the Board of Directors of the Company;

WHEREAS, the Compensation Committee of the Board of Directors of the Company has approved the grant to the Grantee of common stock of the Company (“Common Stock”) pursuant to the Company’s Amended and Restated 2014 Equity Participation Plan (the “Plan”).

NOW, THEREFORE, in consideration of the foregoing, the Company hereby grants to the Grantee an award of shares of Common Stock upon the following terms and conditions:

1. DEFINED Terms. All terms used, but not otherwise defined, herein shall have the meanings ascribed to them in the Plan.

2. GRANT. Subject to the terms and conditions of the Plan and the provisions hereof, the Company hereby agrees to grant to the Grantee, pursuant to Section 16 of the Plan, an award of twenty-four thousand eight hundred eighty-three (24,883) shares of Common Stock (the “Shares”), such Shares being issuable on the Vesting Date (as hereinafter defined) set forth in, and subject to the provisions of, Section 3 hereof.

3. VESTING OF SHARES. (a) The Shares shall vest on January 2, 2025 (the “Vesting Date”) provided that the Grantee continues to serve as a member of the Board of Directors of the Company (the “Board”) through the Vesting Date, subject to the provisions of the Plan. Notwithstanding the foregoing, in the event that the Grantee resigns from the Board prior to the Vesting Date or is not re-elected as a director at the Company’s next annual meeting of stockholders, then, the Shares shall thereupon vest on a pro rata basis based on the number of days between the date hereof and the date of resignation or the date of the annual meeting of stockholders, as the case may be, in relation to three hundred sixty-five (365); provided, however, that the foregoing shall not be deemed to limit the Grantee’s right to receive all of the Shares in the event of the death or Permanent Disability of the Grantee or a Change of Control prior to the Vesting Date, as provided for in the Plan.

(b) In the event that the Shares vest on the Vesting Date (or earlier as provided for in Section 3(a)), the certificate representing the Shares shall be issued by the Company as soon as reasonably practicable thereafter. In the event that the Grantee does not continue to serve as a member of the Board through the Vesting Date, then, except as set forth in the Plan or as provided for in Section 3(a), the Grantee shall not be entitled to receive the Shares issuable on the Vesting Date, and this Agreement shall terminate and be of no further force or effect.

(c) The number of Shares issuable to the Grantee is subject to adjustment for any stock splits, reverse stock splits and other recapitalizations that take effect prior to the Vesting Date.

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4. INCORPORATION BY REFERENCE. The terms and conditions of the Plan are hereby incorporated by reference and made a part hereof.

5. NOTICES. Any notice or other communication given hereunder shall be deemed sufficient if in writing and hand delivered or sent by registered or certified mail, return receipt requested, addressed to the addressed to the Company, 15 Joys Lane, Kingston, New York 12401, Attention: CEO and to the Grantee at the address indicated below, or, in each case, at such other address notice of which is given in accordance with the foregoing provisions. Notices shall be deemed to have been given on the date of hand delivery or mailing as provided for above, except notices of change of address, which shall be deemed to have been given when received.

6. BINDING EFFECT. This Stock Grant Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns.

7. ENTIRE AGREEMENT. This Stock Grant Agreement, together with the Plan, contains the entire understanding of the parties hereto with respect to the subject matter hereof and may be modified only by an instrument executed by the party sought to be charged.

8. GOVERNING LAW. This Stock Grant Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, excluding choice of law rules thereof.

9. EXECUTION IN COUNTERPARTS. This Stock Grant Agreement may be executed in counterparts, each of which shall be deemed to be an original, but both of which together shall constitute one and the same instrument.

10. FACSIMILE SIGNATURES. Signatures hereon which are transmitted via facsimile, or other electronic image, shall be deemed original signatures.

11. INTERPRETATION; HEADINGS. The provisions of this Stock Grant Agreement shall be interpreted in a reasonable manner to give effect to the intent of the parties hereto. The headings and captions under sections and paragraphs of this Stock Grant Agreement are for convenience of reference only and do not in any way modify, interpret or construe the intent of the parties or affect any of the provisions of this Stock Grant Agreement.

[Remainder of page intentionally left blank; signature page follows]

2

IN WITNESS WHEREOF, the parties have executed this Stock Grant Agreement as of the day and year first above written.

KINGSTONE COMPANIES, Inc.
By:
	Meryl S. Golden
	Chief Executive Officer
Signature of Grantee
Carla D’Andre
Name of Grantee
Address of Grantee

3

EX-10.Q

EXHIBIT 10(Q)

STOCK GRANT AGREEMENT made as of the 2^nd day of January, 2024 between KINGSTONE COMPANIES, Inc., a Delaware corporation (the “Company”), and WILLIAM L. YANKUS (the “Grantee”).

WHEREAS, the Grantee is a non-employee member of the Board of Directors of the Company;

WHEREAS, the Compensation Committee of the Board of Directors of the Company has approved the grant to the Grantee of common stock of the Company (“Common Stock”) pursuant to the Company’s Amended and Restated 2014 Equity Participation Plan (the “Plan”).

NOW, THEREFORE, in consideration of the foregoing, the Company hereby grants to the Grantee an award of shares of Common Stock upon the following terms and conditions:

1. DEFINED Terms. All terms used, but not otherwise defined, herein shall have the meanings ascribed to them in the Plan.

2. GRANT. Subject to the terms and conditions of the Plan and the provisions hereof, the Company hereby agrees to grant to the Grantee, pursuant to Section 16 of the Plan, an award of twenty-four thousand eight hundred eighty-three (24,883) shares of Common Stock (the “Shares”), such Shares being issuable on the Vesting Date (as hereinafter defined) set forth in, and subject to the provisions of, Section 3 hereof.

3. VESTING OF SHARES. (a) The Shares shall vest on January 2, 2025 (the “Vesting Date”) provided that the Grantee continues to serve as a member of the Board of Directors of the Company (the “Board”) through the Vesting Date, subject to the provisions of the Plan. Notwithstanding the foregoing, in the event that the Grantee resigns from the Board prior to the Vesting Date or is not re-elected as a director at the Company’s next annual meeting of stockholders, then, the Shares shall thereupon vest on a pro rata basis based on the number of days between the date hereof and the date of resignation or the date of the annual meeting of stockholders, as the case may be, in relation to three hundred sixty-five (365); provided, however, that the foregoing shall not be deemed to limit the Grantee’s right to receive all of the Shares in the event of the death or Permanent Disability of the Grantee or a Change of Control prior to the Vesting Date, as provided for in the Plan.

(b) In the event that the Shares vest on the Vesting Date (or earlier as provided for in Section 3(a)), the certificate representing the Shares shall be issued by the Company as soon as reasonably practicable thereafter. In the event that the Grantee does not continue to serve as a member of the Board through the Vesting Date, then, except as set forth in the Plan or as provided for in Section 3(a), the Grantee shall not be entitled to receive the Shares issuable on the Vesting Date, and this Agreement shall terminate and be of no further force or effect.

(c) The number of Shares issuable to the Grantee is subject to adjustment for any stock splits, reverse stock splits and other recapitalizations that take effect prior to the Vesting Date.

1

4. INCORPORATION BY REFERENCE. The terms and conditions of the Plan are hereby incorporated by reference and made a part hereof.

5. NOTICES. Any notice or other communication given hereunder shall be deemed sufficient if in writing and hand delivered or sent by registered or certified mail, return receipt requested, addressed to the addressed to the Company, 15 Joys Lane, Kingston, New York 12401, Attention: CEO and to the Grantee at the address indicated below, or, in each case, at such other address notice of which is given in accordance with the foregoing provisions. Notices shall be deemed to have been given on the date of hand delivery or mailing as provided for above, except notices of change of address, which shall be deemed to have been given when received.

6. BINDING EFFECT. This Stock Grant Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns.

7. ENTIRE AGREEMENT. This Stock Grant Agreement, together with the Plan, contains the entire understanding of the parties hereto with respect to the subject matter hereof and may be modified only by an instrument executed by the party sought to be charged.

8. GOVERNING LAW. This Stock Grant Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, excluding choice of law rules thereof.

9. EXECUTION IN COUNTERPARTS. This Stock Grant Agreement may be executed in counterparts, each of which shall be deemed to be an original, but both of which together shall constitute one and the same instrument.

10. FACSIMILE SIGNATURES. Signatures hereon which are transmitted via facsimile, or other electronic image, shall be deemed original signatures.

11. INTERPRETATION; HEADINGS. The provisions of this Stock Grant Agreement shall be interpreted in a reasonable manner to give effect to the intent of the parties hereto. The headings and captions under sections and paragraphs of this Stock Grant Agreement are for convenience of reference only and do not in any way modify, interpret or construe the intent of the parties or affect any of the provisions of this Stock Grant Agreement.

[Remainder of page intentionally left blank; signature page follows]

2

IN WITNESS WHEREOF, the parties have executed this Stock Grant Agreement as of the day and year first above written.

KINGSTONE COMPANIES, Inc.
By:
	Meryl S. Golden
	Chief Executive Officer
Signature of Grantee
William L. Yankus
Name of Grantee
Address of Grantee

3

EX-10.R

EXHIBIT 10(R)

STOCK GRANT AGREEMENT made as of the 2^nd day of January, 2024 between KINGSTONE COMPANIES, Inc., a Delaware corporation (the “Company”), and TIMOTHY P. MCFADDEN (the “Grantee”).

WHEREAS, the Grantee is a non-employee member of the Board of Directors of the Company;

WHEREAS, the Compensation Committee of the Board of Directors of the Company has approved the grant to the Grantee of common stock of the Company (“Common Stock”) pursuant to the Company’s Amended and Restated 2014 Equity Participation Plan (the “Plan”).

NOW, THEREFORE, in consideration of the foregoing, the Company hereby grants to the Grantee an award of shares of Common Stock upon the following terms and conditions:

1. DEFINED Terms. All terms used, but not otherwise defined, herein shall have the meanings ascribed to them in the Plan.

2. GRANT. Subject to the terms and conditions of the Plan and the provisions hereof, the Company hereby agrees to grant to the Grantee, pursuant to Section 16 of the Plan, an award of twenty-four thousand eight hundred eighty-three (24,883) shares of Common Stock (the “Shares”), such Shares being issuable on the Vesting Date (as hereinafter defined) set forth in, and subject to the provisions of, Section 3 hereof.

3. VESTING OF SHARES. (a) The Shares shall vest on January 2, 2025 (the “Vesting Date”) provided that the Grantee continues to serve as a member of the Board of Directors of the Company (the “Board”) through the Vesting Date, subject to the provisions of the Plan. Notwithstanding the foregoing, in the event that the Grantee resigns from the Board prior to the Vesting Date or is not re-elected as a director at the Company’s next annual meeting of stockholders, then, the Shares shall thereupon vest on a pro rata basis based on the number of days between the date hereof and the date of resignation or the date of the annual meeting of stockholders, as the case may be, in relation to three hundred sixty-five (365); provided, however, that the foregoing shall not be deemed to limit the Grantee’s right to receive all of the Shares in the event of the death or Permanent Disability of the Grantee or a Change of Control prior to the Vesting Date, as provided for in the Plan.

(b) In the event that the Shares vest on the Vesting Date (or earlier as provided for in Section 3(a)), the certificate representing the Shares shall be issued by the Company as soon as reasonably practicable thereafter. In the event that the Grantee does not continue to serve as a member of the Board through the Vesting Date, then, except as set forth in the Plan or as provided for in Section 3(a), the Grantee shall not be entitled to receive the Shares issuable on the Vesting Date, and this Agreement shall terminate and be of no further force or effect.

(c) The number of Shares issuable to the Grantee is subject to adjustment for any stock splits, reverse stock splits and other recapitalizations that take effect prior to the Vesting Date.

1

4. INCORPORATION BY REFERENCE. The terms and conditions of the Plan are hereby incorporated by reference and made a part hereof.

5. NOTICES. Any notice or other communication given hereunder shall be deemed sufficient if in writing and hand delivered or sent by registered or certified mail, return receipt requested, addressed to the addressed to the Company, 15 Joys Lane, Kingston, New York 12401, Attention: CEO and to the Grantee at the address indicated below, or, in each case, at such other address notice of which is given in accordance with the foregoing provisions. Notices shall be deemed to have been given on the date of hand delivery or mailing as provided for above, except notices of change of address, which shall be deemed to have been given when received.

6. BINDING EFFECT. This Stock Grant Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns.

7. ENTIRE AGREEMENT. This Stock Grant Agreement, together with the Plan, contains the entire understanding of the parties hereto with respect to the subject matter hereof and may be modified only by an instrument executed by the party sought to be charged.

8. GOVERNING LAW. This Stock Grant Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, excluding choice of law rules thereof.

9. EXECUTION IN COUNTERPARTS. This Stock Grant Agreement may be executed in counterparts, each of which shall be deemed to be an original, but both of which together shall constitute one and the same instrument.

10. FACSIMILE SIGNATURES. Signatures hereon which are transmitted via facsimile, or other electronic image, shall be deemed original signatures.

11. INTERPRETATION; HEADINGS. The provisions of this Stock Grant Agreement shall be interpreted in a reasonable manner to give effect to the intent of the parties hereto. The headings and captions under sections and paragraphs of this Stock Grant Agreement are for convenience of reference only and do not in any way modify, interpret or construe the intent of the parties or affect any of the provisions of this Stock Grant Agreement.

[Remainder of page intentionally left blank; signature page follows]

2

IN WITNESS WHEREOF, the parties have executed this Stock Grant Agreement as of the day and year first above written.

KINGSTONE COMPANIES, Inc.
By:
	Meryl S. Golden
	Chief Executive Officer
Signature of Grantee
Timothy P. McFadden
Name of Grantee
Address of Grantee

3

EX-10.S

EXHIBIT 10(S)

STOCK GRANT AGREEMENT made as of the 2^nd day of January, 2024 between KINGSTONE COMPANIES, Inc., a Delaware corporation (the “Company”), and MERYL S. GOLDEN (the “Grantee”).

WHEREAS, the Grantee is an employee of the Company or a subsidiary thereof;

WHEREAS, the Company and the Grantee are parties to a Second Amended and Restated Employment Agreement dated as of June 27, 2022 (the “Employment Agreement”);

WHEREAS, pursuant to the Employment Agreement, the Compensation Committee of the Board of Directors of the Company has approved the grant to the Grantee of common stock of the Company (“Common Stock”) pursuant to the Company’s Amended and Restated 2014 Equity Participation Plan (the “Plan”).

NOW, THEREFORE, in consideration of the foregoing, the Company hereby grants to the Grantee an award of shares of Common Stock upon the following terms and conditions:

1. DEFINED Terms. All terms used, but not otherwise defined, herein shall have the meanings ascribed to them in the Plan or the Employment Agreement.

2. GRANT. Subject to the terms and conditions of the Plan and the provisions hereof, the Company hereby agrees to grant to the Grantee, pursuant to Section 16 of the Plan, an award of sixty-four thousand eighty-give (64,085) shares of Common Stock (the “Shares”), such Shares being issuable on the Vesting Date (as hereinafter defined) set forth in, and subject to the provisions of, Section 3 hereof.

3. VESTING OF SHARES. (a) The Shares shall vest on December 31, 2024 (the “Vesting Date”), provided that the Grantee continues to serve as an employee of the Company or a subsidiary thereof as of the Vesting Date (or sooner as provided for in paragraph (c) hereof), subject to the provisions of the Plan.

(b) Subject to the provisions of the Plan, in the event that the Grantee does not continue to serve as an employee of the Company or a subsidiary thereof as of the Vesting Date as a result of the termination of the Grantee’s employment for Cause or the Grantee’s resignation (other than for Good Reason), the Grantee shall not be entitled to receive any of the Shares issuable on the Vesting Date, and this Agreement shall terminate and be of no further force or effect.

(c) In the event that, prior to the Vesting Date (i) the Grantee’s employment with the Company is terminated other than for Cause or (ii) the Grantee resigns her employment with the Company for Good Reason, the Shares that were scheduled to vest on Vesting Date shall instead vest on the date of termination of employment or the date of resignation of employment, as the case may be (the “Termination Date”).

(d) In the event that the Shares vest on the Vesting Date or the Termination Date, as the case may be, the certificate representing the Shares shall be issued by the Company as soon as reasonably practicable thereafter.

(e) The number of Shares issuable to the Grantee is subject to adjustment for any stock splits, reverse stock splits and other recapitalizations that take effect prior to the Vesting Date or the Termination Date, as the case may be.

1

4. INCORPORATION BY REFERENCE. The terms and conditions of the Plan are hereby incorporated by reference and made a part hereof.

5. NOTICES. Any notice or other communication given hereunder shall be deemed sufficient if in writing and hand delivered or sent by registered or certified mail, return receipt requested, addressed to the Company, 15 Joys Lane, Kingston, New York 12401, Attention: President and to the Grantee at the address indicated below, or, in each case, at such other address notice of which is given in accordance with the foregoing provisions. Notices shall be deemed to have been given on the date of hand delivery or mailing as provided for above, except notices of change of address, which shall be deemed to have been given when received.

6. BINDING EFFECT. This Stock Grant Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns.

7. ENTIRE AGREEMENT. This Stock Grant Agreement, together with the Plan, contains the entire understanding of the parties hereto with respect to the subject matter hereof and may be modified only by an instrument executed by the party sought to be charged.

8. GOVERNING LAW. This Stock Grant Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, excluding choice of law rules thereof.

9. EXECUTION IN COUNTERPARTS. This Stock Grant Agreement may be executed in counterparts, each of which shall be deemed to be an original, but both of which together shall constitute one and the same instrument.

10. FACSIMILE SIGNATURES. Signatures hereon which are transmitted via facsimile, or other electronic image, shall be deemed original signatures.

11. INTERPRETATION; HEADINGS. The provisions of this Stock Grant Agreement shall be interpreted in a reasonable manner to give effect to the intent of the parties hereto. The headings and captions under sections and paragraphs of this Stock Grant Agreement are for convenience of reference only and do not in any way modify, interpret or construe the intent of the parties or affect any of the provisions of this Stock Grant Agreement.

[Remainder of page intentionally left blank. Signature page follows.]

2

IN WITNESS WHEREOF, the parties have executed this Stock Grant Agreement as of the day and year first above written.

KINGSTONE COMPANIES, Inc.
By:
	Barry B. Goldstein
	Chairman of the Board
Signature of Grantee
Meryl S. Golden
Name of Grantee
Address of Grantee

3

EX-23

EXHIBIT 23

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT

We consent to the incorporation by reference in the Registration Statements of Kingstone Companies, Inc. on Form S-8 (No. 333-207986, No. 333-245013, No. 333-258877 and No. 333-274008) of our report dated April 1, 2024, with respect to our audits of the consolidated financial statements of Kingstone Companies, Inc. and Subsidiaries as of December 31, 2023 and 2022 and for the years then ended, which report is included in this Annual Report on Form 10-K of Kingstone Companies, Inc. for the year ended December 31, 2023.

/s/ Marcum LLP

Marcum LLP

Hartford, CT

April 1, 2024

EX-31.A

EXHIBIT 31(a)

CERTIFICATION

I, Meryl S. Golden, certify that:
1.	I have reviewed this Annual Report on Form 10-K 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: April 1, 2024
	/s/ Meryl S. Golden
	Meryl S. Golden Chief Executive Officer

EX-31.B

EXHIBIT 31(b)

CERTIFICATION

I, Jennifer L. Gravelle, certify that:
1.	I have reviewed this Annual Report on Form 10-K 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(s) 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(s) 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: April 1, 2024
	/s/ Jennifer L. Gravelle
	Jennifer L. Gravelle Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

AND CHIEF 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 Annual Report of Kingstone Companies, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2023 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 Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 1, 2024	/s/ Meryl S. Golden
	Meryl S. Golden Chief Executive Officer
	/s/ Jennifer L. Gravelle
	Jennifer L. Gravelle Chief Financial Officer

EX-97

EXHIBIT 97

KINGSTONE COMPANIES, INC.

CLAWBACK POLICY

1. Purpose. The Board of Directors (the “Board”) of Kingstone Companies, Inc. (the “Company”) has adopted this clawback policy, as amended (the “Clawback Policy”), which describes the circumstances in which Covered Individuals will be required to repay or return Erroneously Awarded Compensation to the Company in the event of an Accounting Restatement in accordance with Clawback Rules issued by the United States Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Nasdaq Stock Market LLC (the “Exchange”). Capitalized terms used and not otherwise defined herein shall have the meanings given in Section 2 or 4 below.

2. Covered Persons. A “Covered Individual” under this Clawback Policy shall mean (i) each individual who served as an Executive Officer at any time during the performance period applicable to the Incentive Compensation, whether or not still employed by the Company (and regardless of whether such Incentive Compensation was received during or after such person’s service as an Executive Officer) and (ii) such other current or former employees of the Company who may from time to time be deemed subject to this Clawback Policy by the Administrator. Each Covered Individual shall be required to sign and return to the Company a Clawback Policy Acknowledgement and Acceptance Form pursuant to which, among other things, such Covered Individual will acknowledge that he or she is bound by the terms of this Clawback Policy; provided, however, that this Clawback Policy shall apply to, and be enforceable against, any Covered Individual and his or her successors (as specified in Section 9 of this Clawback Policy) regardless of whether or not such Covered Individual properly signs and returns to the Company such Clawback Policy Acknowledgement and Acceptance Form and regardless of whether or not such Covered Individual is aware of his or her status as such.

3. Administration. Except as specifically set forth herein, this Clawback Policy shall be administered by the Administrator. Any determinations made by the Administrator shall be final and binding on all affected Covered Individuals and need not be uniform with respect to each Covered Individual. Subject to any limitation under applicable law, the Administrator may authorize and empower any officer or employee of the Company to take any and all actions necessary or appropriate to carry out the purpose and intent of this Clawback Policy (other than with respect to any recovery under this Clawback Policy involving such officer or employee).

4. Definitions. For purposes of this Clawback Policy, the following capitalized terms shall have the meanings set forth below:

a. “Accounting Restatement” shall mean an accounting restatement: (i) due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements (a “Big R” restatement); or (ii) that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a “little r” restatement).

b.	“Administrator” shall mean the Committee.
c.	“Clawback Period” shall mean, with respect to any Accounting Restatement, the three completed fiscal years of the Company immediately preceding the Restatement Date and any transition period (that results from a change in the Company’s fiscal year) of less than nine months within or immediately following those three completed fiscal years.
d.	“Clawback Rules” shall mean Section 10D of the Exchange Act and any applicable rules or standards adopted by the SEC thereunder (including Rule 10D-1 under the Exchange Act) or the Exchange pursuant to Rule 10D-1 under the Exchange Act (including Nasdaq Stock Market Listing Rule 5608), in each case as may be in effect from time to time.
e.	“Committee” shall mean the Compensation and Finance Committee of the Board or any of the other committee designated by the Board to administer this Clawback Policy.
f.	“Erroneously Awarded Compensation” means, with respect to any Covered Individual, the excess of (i) the Covered Individual’s actual Incentive Compensation over (ii) the Incentive Compensation the Covered Individual otherwise would have earned, become vested in or been granted during the Clawback Period if the Company’s financial statements had reflected the restated amounts in an Accounting Restatement. Erroneously Awarded Compensation will be computed without regard to taxes paid. Erroneously Awarded Compensation shall not include any Incentive Compensation received by a Covered Individual prior to a Covered Individual’s service as an Executive Officer. Calculation of Erroneously Awarded Compensation with respect to Incentive Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement, shall be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive Compensation was received, and the Company shall maintain documentation of the determination of such reasonable estimate and provide such documentation to the Exchange in accordance with the Clawback Rules. Incentive Compensation is deemed received, earned or vested when the Financial Reporting Measure is attained, not when the actual payment, grant or vesting occurs. Incentive Compensation received by a Covered Individual prior to the Effective Date shall be subject to the terms of this Clawback Policy as if in effect prior to the Effective Date.
g.	“Effective Date” shall mean March __, 2024.
h.	“Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person who performs similar policymaking functions for the Company. Executive officers of the Company’s parent(s) or subsidiaries are deemed executive officers of the Company if they perform such policy making functions for the Company.

i.	“Financial Reporting Measures” shall mean measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from such measures. Stock price and total shareholder return shall for purposes of this Clawback Policy be considered Financial Reporting Measures. For the avoidance of doubt, a Financial Reporting Measure need not be presented within the Company’s financial statements or included in a filing with the SEC.
j.	“Incentive Compensation” means any compensation that is granted, earned or vested based wholly or in part upon the attainment, during the Clawback Period, of any Financial Reporting Measure.
k.	“Impracticable” shall mean, in accordance with the good faith determination of the Administrator, or if the Administrator does not consist of independent directors, a majority of the independent directors serving on the Board, that either: (i) the direct expenses paid to a third party to assist in enforcing the Clawback Policy against a Covered Individual would exceed the amount to be recovered, after the Company has made a reasonable attempt to recover the applicable Erroneously Awarded Compensation, documented such reasonable attempt(s) and provided such documentation to the Exchange; or (ii) recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
l.	“Restatement Date” shall mean the earlier to occur of: (i) the date the Board, a committee of the Board or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement; or (ii) the date a court, regulator or other legally authorized body directs the Company to prepare an Accounting Restatement.

5. Recoupment; Method of Recoupment.

a. In the event the Company is required to prepare an Accounting Restatement, the Administrator shall reasonably promptly, in accordance with the applicable Clawback Rules, determine the amount of any Erroneously Awarded Compensation for each Covered Individual in connection with such Accounting Restatement, and shall reasonably promptly thereafter provide each Covered Individual with written notice containing the amount of Erroneously Awarded Compensation and a demand for repayment or return, as applicable.

b.

The method of recovery of Erroneously Awarded Compensation shall be determined by the Administrator and shall include, without limitation: (i) recoupment of cash or shares of Company stock; (ii) forfeiture of unvested awards; (iii) cancellation of outstanding vested awards; (iv) offset of other amounts owed to the Covered Individual; (v) reduction of future compensation; and (vi) any other remedial or recovery action permitted by law. If the Erroneously Awarded Compensation includes shares of Company stock (or derivatives thereof), the Administrator may seek to require that the Covered Individual repay to the Company any dividends or dividend equivalents paid with respect to those securities, and any profits realized, directly or indirectly, from the sale or other disposition of those securities. For the avoidance of doubt, except to the extent permitted pursuant to the Clawback Rules, in no event may the Company accept an amount that is less than the amount of Erroneously Awarded Compensation in satisfaction of a Covered Individual’s obligations hereunder. Notwithstanding anything herein to the contrary, the Company shall not be required to take the actions contemplated in this Section 5(b) if recovery would be Impracticable. In implementing the actions contemplated in this Section 5(b), the Administrator will act in accordance with the listing standards and requirements of the Exchange and with the applicable Clawback Rules.

c.

Subject to the discretion of the Administrator, an applicable Covered Individual may be required to reimburse the Company for any and all expenses reasonably incurred (including legal fees) by the Company in recovering Erroneously Awarded Compensation in accordance with this Section 5.

6. Indemnification Prohibition. No member of the Company shall be permitted to indemnify any Covered Individual against the loss of any Erroneously Awarded Compensation that is repaid, returned or recovered pursuant to the terms of this Clawback Policy and/or pursuant to the Clawback Rules, including any payment or reimbursement for the cost of third-party insurance purchased by any Covered Individual to cover any such loss under this Clawback Policy and/or pursuant to the Clawback Rules. Further, the Company shall not enter into any agreement that exempts any Incentive Compensation from the application of this Clawback Policy or that waives the Company’s right to recovery of any Erroneously Awarded Compensation, and this Clawback Policy shall supersede any such agreement, whether entered into before, on or after the Effective Date). Any such purported indemnification, whether oral or in writing, shall be null and void.

7. Interpretation. The Administrator is authorized to interpret and construe this Clawback Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Clawback Policy. It is intended that this Clawback Policy be interpreted in a manner that is consistent with the requirements of the Clawback Rules. The terms of this Clawback Policy shall also be construed and enforced in such a manner as to comply with applicable law, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and any other law or regulation that the Administrator determines is applicable. In the event any provision of this Clawback Policy is determined to be unenforceable or invalid under applicable law, such provision shall be applied to the maximum extent permitted by applicable law and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required by applicable law.

8. Amendment; Termination. The Administrator may modify or amend this Clawback Policy, in whole or in part, from time to time, in its discretion and shall amend any or all of the provisions of this Clawback Policy as it deems appropriate and necessary, including as and when it determines that it is legally required by the Clawback Rules, any federal securities laws, state blue-sky laws, SEC rule or Exchange rule. The Administrator may terminate this Clawback Policy at any time, and this Clawback Policy shall remain in effect only so long as the Clawback Rules apply to the Company. Unless otherwise determined by the Administrator or as otherwise amended, this Clawback Policy shall automatically be deemed amended in a manner necessary to comply with any change in the Clawback Rules.

9. Successors. This Clawback Policy shall be binding and enforceable against all Covered Individuals and their beneficiaries, estates, heirs, executors, administrators or other legal representatives to the extent required by the Clawback Rules or as otherwise determined by the Administrator.

10. Tax Considerations. To the extent that, pursuant to this Clawback Policy, the Company is entitled to recover any Erroneously Awarded Compensation that is received by a Covered Individual, the gross amount received (i.e., the amount the Covered Individual received, or was entitled to receive, before any deductions for tax withholding or other payments) shall be returned by the Covered Individual.

CLAWBACK POLICY ACKNOWLEDGEMENT AND ACCEPTANCE FORM

The Board of Directors of Kingstone Companies, Inc. has adopted a Clawback Policy which is applicable to the Company’s Covered Individuals.

I, the undersigned, acknowledge that I have received a copy of the Clawback Policy, as it may be amended, restated, supplemented or modified from time to time, and that I have read it, understand it, and acknowledge that I am fully bound by, and subject to, all of the terms and conditions thereof.

In the event of any inconsistency between the terms of the Clawback Policy and the terms of any employment agreement to which I am a party, or the terms of any compensation plan, program, or arrangement under which Incentive Compensation has been granted, awarded, earned, or paid to me, whether or not deferred, the terms of the Clawback Policy shall govern.

If the Board of Directors or a committee of the Board of Directors determines that any Incentive Compensation I have received must be forfeited, repaid, or otherwise recovered by the Company, I shall promptly take whatever action is necessary to effectuate such forfeiture, repayment, or recovery.

I acknowledge that I am not entitled to indemnification in connection with the Company’s enforcement of the Clawback Policy.

I understand that any delay or failure by the Company to enforce any requirement contained in the Clawback Policy will not constitute a waiver of the Company’s right to do so in the future. Any capitalized terms used in this Clawback Policy Acknowledgment and Acceptance Form that are not otherwise defined shall have the meanings ascribed to them in the Clawback Policy.

[Name]

[Date]

XML

Cover - USD ($)	12 Months Ended
	Dec. 31, 2023	Mar. 21, 2024	Jun. 30, 2023
Cover [Abstract]
Entity Registrant Name	KINGSTONE COMPANIES, INC.
Entity Central Index Key	0000033992
Document Type	10-K
Amendment Flag	false
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Well Known Seasoned Issuer	No
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Dec. 31, 2023
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2023
Entity Common Stock Shares Outstanding		11,007,824
Entity Public Float			$ 11,334,362
Document Annual Report	true
Document Transition Report	false
Document Fin Stmt Error Correction Flag	false
Entity File Number	0-1665
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	36-2476480
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
Icfr Auditor Attestation Flag	false
Auditor Name	Marcum LLP
Auditor Location	Hartford, CT
Local Phone Number	802-7900
Security 12b Title	Common Stock, $0.01 par value per share
Trading Symbol	KINS
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes
Auditor Firm Id	688

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Assets
Fixed-maturity securities, held-to-maturity, at amortized cost (fair value of $6,106,148 at December 31, 2023 and $6,600,388 at December 31, 2022)	$ 7,052,541	$ 7,766,140
Fixed-maturity securities, available-for-sale, at fair value (amortized cost of $164,460,942 at December 31, 2023 and $a174,918,427 at December 31, 2022)	148,920,797	154,715,163
Equity securities, at fair value (cost of $17,986,783 at December 31, 2023 and $18,086,700 at December 31, 2022)	14,762,340	13,834,390
Other investments	3,897,150	2,771,652
Total investments	174,632,828	179,087,345
Cash and cash equivalents	8,976,998	11,958,228
Premiums receivable, net	13,604,808	13,880,504
Reinsurance receivables, net	75,593,912	66,465,061
Deferred policy acquisition costs	19,802,564	23,819,453
Intangible assets	500,000	500,000
Property and equipment, net	9,395,697	10,541,935
Deferred income taxes, net	10,551,819	10,331,158
Other assets	4,574,584	3,748,847
Total assets	317,633,210	320,332,531
Liabilities
Loss and loss adjustment expense reserves	121,817,862	118,339,513
Unearned premiums	105,621,538	107,492,777
Advance premiums	3,797,590	2,839,028
Reinsurance balances payable	12,837,140	13,061,966
Deferred ceding commission revenue	9,460,865	10,619,569
Accounts payable, accrued expenses and other liabilities	4,350,546	6,651,723
Debt, net	25,243,530	25,158,523
Total liabilities	283,129,071	284,163,099
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 12,248,313 shares at December 31, 2023 and 12,171,512 shares at December 31, 2022; outstanding 10,776,907 shares at December 31, 2023 and 10,700,106 shares at December 31, 2022	122,483	121,715
Capital in excess of par	75,338,010	74,519,590
Accumulated other comprehensive loss	(12,274,563)	(15,958,428)
Accumulated deficit	(23,114,310)	(16,945,964)
Treasury stock, at cost, 1,471,406 shares at December 31, 2023 and December 31, 2022	(5,567,481)	(5,567,481)
Total stockholders' equity	34,504,139	36,169,432
Total liabilities and stockholders' equity	$ 317,633,210	$ 320,332,531

XML

Consolidated Balance Sheets (Parenthetical) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Consolidated Balance Sheets
Fixed-maturity securities, held-to-maturity, at amortized cost	$ 6,106,148	$ 6,600,388
Fixed-maturity securities, available-for-sale, at fair value	164,460,942	174,918,427
Equity Securities, at fair value	$ 17,986,783	$ 18,086,700
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	12,248,313	12,171,512
Common Stock, Outstanding Shares	10,776,907	10,700,106
Treasury Stock, Shares	1,471,406	1,471,406

XML

Consolidated Statements of Stockholders' Equity - USD ($)	Total	Preferred Stock	Common Stock	Treasury Stock	Capital in Excess of Par	Accumulated other comprehensive loss	Retained Earnings (Accumulated Deficit)
Balance, shares at Dec. 31, 2021			11,955,660	1,471,406
Balance, amount at Dec. 31, 2021	$ 75,672,194	$ 0	$ 119,557	$ (5,567,481)	$ 72,467,483	$ 1,796,739	$ 6,855,896
Stock-based compensation	1,392,612	0	$ 0	0	1,392,612	0	0
Vesting of restricted stock awards, shares			262,490
Vesting of restricted stock awards, amount	0	0	$ 2,625	0	(2,625)	0	0
Issuance of common stock - employee stock purchase plan, shares			33,222
Issuance of common stock - employee stock purchase plan, amount	60,464	0	$ 332	0	60,132	0	0
Shares deducted from restricted stock awards for payment of withholding taxes, shares			(79,860)
Shares deducted from restricted stock awards for payment of withholding taxes, amount	(392,011)	0	$ (799)	0	(391,212)	0	0
Warrants issued with exchange of debt	993,200	0	0	0	993,200	0	0
Dividends	(1,277,066)	0	0	0	0	0	(1,277,066)
Net loss	(22,524,794)	0	0	0	0	0	(22,524,794)
Change in unrealized losses on available- for-sale securities, net of tax	(17,755,167)	0	$ 0	$ 0	0	(17,755,167)	0
Balance, shares at Dec. 31, 2022			12,171,512	1,471,406
Balance, amount at Dec. 31, 2022	36,169,432	0	$ 121,715	$ (5,567,481)	74,519,590	(15,958,428)	(16,945,964)
Stock-based compensation	832,597	0	$ 0	0	832,597	0	0
Vesting of restricted stock awards, shares			82,865
Vesting of restricted stock awards, amount	0	0	$ 828	0	(828)	0	0
Shares deducted from restricted stock awards for payment of withholding taxes, shares			(6,064)
Shares deducted from restricted stock awards for payment of withholding taxes, amount	(13,409)	0	$ (60)	0	(13,349)	0	0
Dividends	0
Net loss	(6,168,346)	0	0	0	0	0	(6,168,346)
Change in unrealized gains on available- for-sale securities, net of tax	3,683,865	0	$ 0	$ 0	0	3,683,865	0
Balance, shares at Dec. 31, 2023			12,248,313	1,471,406
Balance, amount at Dec. 31, 2023	$ 34,504,139	$ 0	$ 122,483	$ (5,567,481)	$ 75,338,010	$ (12,274,563)	$ (23,114,310)

XML

Consolidated Statements of Operations and Comprehensive Loss - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Revenues
Net premiums earned	$ 114,384,263	$ 114,384,531
Ceding commission revenue	21,053,494	19,319,391
Net investment income	6,008,682	4,936,778
Net gains (losses) on investments	2,134,554	(9,391,865)
Other income	609,721	910,455
Total revenues	144,190,714	130,159,290
Expenses
Loss and loss adjustment expenses	82,849,210	88,390,042
Commission expense	33,364,629	34,581,617
Other underwriting expenses	25,909,962	26,697,006
Other operating expenses	2,456,473	3,113,473
Depreciation and amortization	2,973,440	3,300,445
Interest expense	4,002,531	2,019,047
Total expenses	151,556,245	158,101,630
Loss from operations before taxes	(7,365,531)	(27,942,340)
Income tax benefit	(1,197,185)	(5,417,546)
Net loss	(6,168,346)	(22,524,794)
Other comprehensive income (loss), net of tax
Gross change in unrealized gains (losses) on available-for-sale-securities	4,644,308	(22,540,229)
Reclassification adjustment for losses (gains) included in net loss	18,811	65,333
Net change in unrealized gains (losses)	4,663,119	(22,474,896)
Income tax (expense) benefit related to items of other comprehensive income (loss)	(979,254)	4,719,729
Other comprehensive income (loss), net of tax	3,683,865	(17,755,167)
Comprehensive loss	$ (2,484,481)	$ (40,279,961)
Loss per common share:
Basic	$ (0.57)	$ (2.12)
Diluted	$ (0.57)	$ (2.12)
Weighted average common shares outstanding
Weighted average common shares outstanding- Basic	10,756,487	10,645,365
Weighted average common shares outstanding- Diluted	10,756,487	10,645,365
Dividends declared and paid per common share	$ 0	$ 0.12

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Cash flows from operating activities:
Net loss	$ (6,168,346)	$ (22,524,794)
used in operating activities:
Net losses (gains) on investments	18,811	140,063
Net unrealized (gains) losses on equity investments	(1,027,867)	6,494,380
Net unrealized (gains) losses on other investments	(1,125,498)	2,757,422
Depreciation and amortization	2,973,440	3,300,445
Bad debt expense	75,215	132,577
(Accretion of bond discount) amortization of bond premium, net	(36,712)	3,995,751
Amortization of discount and issuance costs on debt	1,187,678	230,389
Stock-based compensation	832,597	1,392,612
Deferred income tax benefit	(1,199,915)	(5,419,176)
Decrease (increase) in operating assets:
Premiums receivable, net	200,481	(1,694,745)
Reinsurance receivables, net	(9,128,851)	(26,172,623)
Deferred policy acquisition costs	4,016,889	(1,580,466)
Other assets	(825,737)	4,844,358
Increase (decrease) in operating liabilities:
Loss and loss adjustment expense reserves	3,478,349	23,390,768
Unearned premiums	(1,871,239)	9,733,170
Advance premiums	958,562	145,562
Reinsurance balances payable	(224,826)	100,398
Deferred ceding commission revenue	(1,158,704)	871,061
Accounts payable, accrued expenses and other liabilities	(2,301,177)	(1,052,673)
Net cash flows used in operating activities	(11,326,850)	(915,521)
Cash flows from investing activities:
Purchase - fixed-maturity securities held-to-maturity	0	(498,711)
Purchase - fixed-maturity securities available-for-sale	(51,496,673)	(48,733,416)
Purchase - equity securities	0	(684,778)
Redemption - fixed-maturity securities held-to-maturity	750,000	1,000,000
Sale and maturity - fixed-maturity securities available-for-sale	61,935,658	25,606,590
Sale - equity securities	99,917	19,379,047
Redemption - other investments	0	2,576,272
Acquisition of property and equipment	(1,827,202)	(4,550,783)
Net cash flows provided by (used in) investing activities	9,461,700	(5,905,779)
Cash flows from financing activities:
Proceeds from equipment financing	0	8,096,824
Principal payments on equipment financing	(1,088,372)	(191,169)
Principal payment on 2017 Notes refinancing		(10,050,000)
Bond issue costs on 2022 Notes	(14,299)	(1,758,112)
Withholding taxes paid on vested retricted stock awards	(13,409)	(392,011)
Net proceeds from issuance of common stock - employee stock purchase plan	0	60,464
Dividends	0	(1,277,066)
Net cash flows used in financing activities	(1,116,080)	(5,511,070)
Decrease in cash and cash equivalents	(2,981,230)	(12,332,370)
Decrease in cash and cash equivalents	(2,981,230)	(12,332,370)
Cash and cash equivalents, beginning of period	11,958,228	24,290,598
Cash and cash equivalents, end of period	8,976,998	11,958,228
Supplemental disclosures of cash flow information:
Cash paid for income taxes	0	0
Cash paid for interest	2,927,905	1,600,626
Supplemental schedule of non-cash investing and financing activities:
Other comprehensive income (loss), net of tax	3,683,865	(17,755,167)
Warrants issued under the Exchange Agreement	$ 0	$ 993,200

XML

Nature of Business

12 Months Ended

Dec. 31, 2023

Nature of Business

Nature of Business

Note 1 - Nature of Business

Kingstone Companies, Inc. (referred to herein as "Kingstone" or the “Company” or, on a standalone basis for the parent company only, the “Holding Company”), through its wholly-owned subsidiary, Kingstone Insurance Company (“KICO”). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto insurance in New York, and in 2023 was the 15th largest writer of homeowners insurance in New York.  KICO is also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. For the years ended December 31, 2023 and 2022, 88.3% and 80.6%, respectively, of KICO’s direct written premiums came from the New York policies. Kingstone, through its wholly owned subsidiary, Cosi Agency, Inc. (“Cosi”), a multi-state licensed general agency, receives commission revenue from KICO for the policies it places with others and pays commissions to these agencies.

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2023

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

Going Concern

The accompanying consolidated financial statements have been prepared in accordance with GAAP assuming that the Company will continue as a going concern for a period of one year from the issuance date of the financial statements. The Company’s $30,000,000 5.5% Senior Unsecured Notes (the “2017 Notes”) were due on December 30, 2022. The Company’s continuation as a going concern was dependent on its ability to obtain financing and/or other funds to satisfy such obligation. The 2017 Notes were refinanced on December 15, 2022 under a note and warrant exchange agreement with a refinanced balance of $19,950,000 (the “2022 Notes”) as of December 31, 2022 and a maturity date of December 30, 2024 (see Note 9 - Debt).

The Company’s continuation as a going concern is dependent on its ability to obtain financing and/or other funds to satisfy the maturity obligation of the 2022 Notes on December 31, 2024.  Management believes that KICO’s insurance operations would be able to continue in the unlikely event that financing is not obtained. 

In accordance with Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 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 or that its plans alleviate the substantial doubt that was raised.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“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, the Company will need to obtain financing and/or other funds to satisfy its debt obligation on December 30, 2024. Management plans to refinance the 2022 Notes with a new issue of equity securities and/or investment grade debt securities of similar or longer maturity that would result in net proceeds equal to or greater than the principal amount of the 2022 Notes.  In connection therewith, the Company will be utilizing investment bankers to serve as placement agents for proposed offerings by the Company of its securities (including debt, equity and/or preferred securities). The offerings would be of such size as to generate proceeds to the Company of no less than $19,950,000.  The Company, subject to regulatory approval, may receive distributions paid to it by KICO, its insurance subsidiary, that could be utilized to repay the 2022 Notes. Further, the Company may also use available invested assets and cash to repay the 2022 Notes.  As of December 31, 2023, invested assets and cash was approximately $2,042,000.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described above.  The Company believes that its plan is probable of being implemented and that such plan would alleviate any adverse conditions.

Reclassification of Balances from Prior Year Disclosure

Components of ceded premiums written within prior year net earned premiums in Note 11 were reclassified to conform with an elected change in the current year presentation by recording ceded written premiums for the 12 months of the contract term at inception, rather than monthly over the contract term, providing a full disclosure of the premiums ceded. The reclassification had no effect on the Company’s previously reported financial condition, results of operations or cash flows.

Principles of Consolidation

The consolidated financial statements include the accounts of Kingstone and its wholly owned subsidiaries: (1) KICO and its wholly owned subsidiaries, CMIC Properties, Inc. and 15 Joys Lane, LLC, 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.

Revenue Recognition

Net Premiums Earned

Insurance policies issued by the Company are short-duration contracts. Accordingly, premium revenues, net of premiums ceded to reinsurers, are recognized as earned in proportion to the amount of insurance protection provided, on a pro-rata basis over the terms of the underlying policies. Unearned premiums represent premiums applicable to the unexpired portions of in-force insurance contracts at the end of each year.

Ceding Commission Revenue

Commissions on reinsurance premiums ceded are earned in a manner consistent with the recognition of the costs of the reinsurance, generally on a pro-rata basis over the terms of the policies reinsured. Unearned amounts are recorded as deferred ceding commission revenue. Certain reinsurance agreements contain provisions whereby the ceding commission rates vary based on the loss experience under the agreements. The Company records ceding commission revenue based on its current estimate of subject losses. The Company records adjustments to ceding commission revenue in the period that changes in the estimated losses are determined.

Loss and Loss Adjustment Expenses (“LAE”) Reserves

The liability for loss and LAE represents management’s best estimate of the ultimate cost of all reported and unreported losses that are unpaid as of the balance sheet date. The liability for loss and LAE is estimated on an undiscounted basis, using individual case-basis valuations, statistical analyses and various actuarial reserving methodologies. The projection of future claim payment and reporting is based on an analysis of the Company’s historical experience, supplemented by analyses of industry loss data. Management believes that the reserves for loss and LAE are adequate to cover the ultimate cost of losses and claims to date; however, because of the uncertainty from various sources, including changes in reporting patterns, claims settlement patterns, judicial decisions, legislation, and economic conditions, actual loss experience may not conform to the assumptions used in determining the estimated amounts for such liability at the balance sheet date. Adjustments to these estimates are reflected in expense for the period in which the estimates are changed. Because of the nature of the business historically written, management believes that the Company has limited exposure to environmental claim liabilities.

Reinsurance

In the normal course of business, the Company seeks to reduce the loss that may arise from catastrophes or other events that cause unfavorable underwriting results.  This is done by reinsuring certain levels of risk in various areas of exposure with a panel of financially secure reinsurance carriers.

Reinsurance receivables represents management’s best estimate of paid and unpaid loss and LAE recoverable from reinsurers, and ceded losses receivable and unearned ceded premiums under reinsurance agreements. Ceded losses receivable are estimated using techniques and assumptions consistent with those used in estimating the liability for loss and LAE. Management believes that reinsurance receivables as recorded represent its best estimate of such amounts; however, as changes in the estimated ultimate liability for loss and LAE are determined, the estimated ultimate amount receivable from the reinsurers will also change. Accordingly, the ultimate receivable could be significantly in excess of or less than the amount recorded in the consolidated financial statements. Adjustments to these estimates are reflected in the period in which the estimates are changed. Loss and LAE incurred as presented in the consolidated statements of operations and comprehensive income (loss) are net of reinsurance recoveries.

Management has evaluated its reinsurance arrangements and determined that significant insurance risk is transferred to the reinsurers. Reinsurance agreements have been determined to be short-duration prospective contracts and, accordingly, the costs of the reinsurance are recognized over the life of the contract in a manner consistent with the earning of premiums on the underlying policies subject to the reinsurance contract.

Management estimates uncollectible amounts receivable from reinsurers based on an assessment of factors including the creditworthiness of the reinsurers and the adequacy of collateral obtained, where applicable. There was no allowance for uncollectible reinsurance as of December 31, 2023 and 2022. The Company did not expense any uncollectible reinsurance for the years ended December 31, 2023 and 2022. Significant uncertainties are inherent in the assessment of the creditworthiness of reinsurers and estimates of any uncollectible amounts due from reinsurers. Any change in the ability of the Company’s reinsurers to meet their contractual obligations could have a material adverse effect on the consolidated financial statements as well as KICO’s ability to meet its regulatory capital and surplus requirements.

The Company presents its net reinsurance receivables separately from its reinsurance balances payable in accordance with ASU 2011-11 Balance Sheet (Topic 210). Additionally, prepaid premiums for excess of loss and catastrophe reinsurance treaties are presented net in reinsurance balances payable as a reduction to reinsurance premiums payable as they meet the net accounting criteria of Topic 210.

Credit Losses

Current Expected Credit Losses (ASU 2016-13) added an asset impairment model that is based on expected losses rather than incurred losses.  The purpose of this ASU was to reduce complexity by decreasing the number of impairment models that entities use to account for debt instruments, allows for more timely recognition of credit losses by using an expected, rather than incurred loss, model, requires recognition of lifetime expected credit losses, and doesn’t require a specific method for estimating expected credit losses.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company maintains its cash balances at several financial institutions.

Investments

The Company classifies its fixed-maturity securities as either held-to-maturity or available-for-sale.  Fixed-maturity securities that the Company has the specific intent and ability to hold until maturity are classified as such and carried at amortized cost. Available-for-sale securities are reported at their estimated fair values based on quoted market prices from recognized pricing services, adjusted for allowance for expected credit losses, with unrealized gains and losses, net of tax effects, reported as a separate component of accumulated other comprehensive income. Realized gains and losses are determined on the specific identification method and reported in net loss in the consolidated statements of operations and comprehensive income (loss).

Equity securities are reported at their estimated fair values based on quoted market prices from recognized pricing services, adjusted for allowance for expected credit losses, with unrealized gains and losses reported in net gains (losses) on investments in the consolidated statements of operations and comprehensive income (loss). Other investments are reported at their estimated fair values using the net asset value (“NAV”) per share (or its equivalent) of the instrument with unrealized gains and losses reported in net gains (losses) on investments in the consolidated statements of operations and comprehensive income (loss). See Note - 3, Investments for additional discussion.  

The Company reviews all securities with unrealized losses on a quarterly basis to assess whether the decline in the securities’ fair value necessitates the recognition of an allowance for credit losses. Factors considered in the review include the extent to which the fair value has been less than amortized cost, current market interest rates and whether the unrealized loss is credit-driven or a result of changes in market interest rates. The Company also considers factors specific to the issuer including the general financial condition of the issuer, the issuers’ industry and future business prospects, any past failure of the issuer to make scheduled interest or principal payments, the payment structure of the investment and the issuers’ ability to make contractual payments on the investment.

The Company may sell its available-for-sale securities, equity securities, and other investments in response to changes in interest rates, risk/reward characteristics, liquidity needs or other factors. Investment income is accrued to the balance sheet dates of the consolidated financial statements and includes amortization of premium and accretion of discount on fixed-maturity securities. Interest is recognized when earned, while dividends are recognized when declared. Due and accrued investment income totaled approximately $1,262,000 and $1,299,000 as of December 31, 2023 and 2022, respectively, and is included in other assets on the accompanying consolidated balance sheets.

For fixed-maturity securities where a decline in fair value is below the amortized cost basis and the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, a credit-loss charge is recognized in net loss based on the fair value of the security at the time of assessment.

For available-for-sale fixed maturity securities, a credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis. The allowance for credit loss related to available-for-sale fixed maturity securities is the difference between the present value of cash flows expected to be collected and the amortized cost basis, limited by the amount that the fair value is less than the amortized cost basis. The Company considers all available evidence when determining whether an investment requires a credit loss write-down or allowance to be recorded, which is recognized in net loss through an allowance for credit losses. Any remaining decline in fair value represents the noncredit portion of the impairment, which is recognized in other comprehensive income (loss).

The Company did not identify any available-for-sale securities as of December 31, 2023 which presented a risk of loss due to credit deterioration of the security.

Premiums Receivable

Premiums receivable include balances due currently or in the future and are presented net of an allowance for doubtful accounts of approximately $269,000 and $39,000 as of December 31, 2023 and 2022, respectively. The allowance for uncollectible amounts is based on an analysis of amounts receivable giving consideration to historical loss experience and current economic conditions and reflects an amount that, in management’s judgment, is adequate. Uncollectible premiums receivable balances of approximately $75,000 and $133,000 were written off for the years ended December 31, 2023 and 2022, respectively. The Company evaluates cancellations after the balance sheet date and has determined that the cancellations are not material, therefore no additional cancellation reserve is recognized as of December 31, 2023 and 2022.

Deferred Policy Acquisition Costs

Policy acquisition costs represent the costs of writing business that vary with, and are primarily related to, the successful production of insurance business (principally commissions, premium taxes and certain underwriting salaries). Policy acquisition costs are deferred and recognized as expense as the related premiums are earned.

Intangible Assets

The Company has recorded acquired identifiable intangible assets. The cost of a group of assets acquired in a transaction is allocated to the individual assets including identifiable intangible assets based on their fair values. Identifiable intangible assets with a finite useful life are amortized over the period that the asset is expected to contribute directly or indirectly to the future cash flows of the Company. Intangible assets with an indefinite life are not amortized, but are subject to impairment testing if events or changes in circumstances indicate that it is more likely than not the asset is impaired. All identifiable intangible assets are tested for recoverability whenever events or changes in circumstances indicate that a carrying amount may not be recoverable. No impairment losses from intangible assets were recognized for the years ended December 31, 2023 and 2022.

Property and Equipment

Building and building improvements, automobiles, furniture, computer equipment, and computer software are reported at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. The Company estimates the useful life for computer equipment, automobiles, furniture and other equipment is three years, computer software is three to five years, and building and building improvements is 39 years.

The Company reviews its real estate assets used as its headquarters to evaluate the necessity of recording impairment losses for market changes due to declines in the estimated fair value of the property. In evaluating potential impairment, management considers the current estimated fair value compared to the carrying value of the asset. At December 31, 2023 and 2022, the fair value of the real estate assets is estimated to be in excess of the carrying value.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income (loss) in the period that includes the enactment date. The Company files a consolidated tax return with its subsidiaries. At December 31, 2023 and 2022, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required.

Concentration, Credit Risk and Market Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, investments, and premium and reinsurance receivables. At times, cash may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation (“FDIC”) insurance limits.  The Company has not experienced any losses on such accounts and management believes the Company is not exposed to any significant credit risk.

Stressed conditions, volatility and disruptions in capital markets or financial asset classes can have an adverse effect on the Company, in part because the Company has a large investment portfolio supporting the Company’s insurance liabilities, which are sensitive to changing market factors. These market factors, which include interest rates, credit spread, equity prices, and the volatility and strength of the capital markets, all affect the business and economic environment and, ultimately, the profitability of the Company’s business. The Company manages its investments to limit credit and other market risks by diversifying its portfolio among various security types and industry sectors based on KICO’s investment committee guidelines, which employ a variety of investment strategies.

As of December 31, 2023 and 2022, the Company’s cash equivalents were as follows:

	December 31,		December 31,
	2023		2022
Collateralized bank repurchase agreement (1)	$	899,646	$	159,596
Money market funds		2,430,317		2,458,223
Total	$	3,329,963	$	2,617,819

(1) The Company has a security interest in certain of the bank's holdings of direct obligations of the United States or one or more agencies thereof. The collateral is held in a hold-in-custody arrangement with a third party who maintains physical possession of the collateral on behalf of the bank.

At December 31, 2023, the outstanding premiums receivable balance is generally diversified due to the large number of individual insureds comprising the Company’s customer base. 

The Company also has receivables from its reinsurers. Reinsurance contracts do not relieve the Company of its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company periodically evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. See Note 7- Reinsurance for reinsurance recoverables on unpaid and paid losses by reinsurer. Management’s policy is to review all outstanding receivables quarterly as well as the bad debt write-offs experienced in the past and establish an allowance for doubtful accounts, if deemed necessary.

Direct premiums earned from lines of business in excess of 10% of the total subject the Company to concentration risk for the years ended December 31, 2023 and 2022 is as follows:

	Years ended December 31,
	2023			2022
Personal Lines		93.1	%		94.0	%
Premiums earned not subject to concentration		6.9	%		6.0	%
Total premiums earned		100.0	%		100.0	%

(1) For the years ended December 31, 2023 and 2022, premiums earned not subject to concentration are comprised primarily of one line of business.

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, and includes 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 consolidated financial statements.

Earnings (Loss) per share

Basic earnings (loss) per common share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per common share reflects, in periods in which they have a dilutive effect, the impact of common shares issuable upon the exercise of stock options and warrants as well as non-vested restricted stock awards.  The computation of diluted earnings (loss) per share excludes those options and warrants with an exercise price in excess of the average market price of the Company’s common shares during the periods presented.  Additionally, the computation of diluted earnings (loss) per share excludes unvested restricted stock awards as calculated using the treasury stock method. 

Advertising Costs

Advertising costs are charged to operations as incurred. Advertising costs are included in other underwriting expenses in the accompanying consolidated statements of operations and comprehensive income (loss) and were approximately $86,000 and $114,000 for the years ended December 31, 2023 and 2022, respectively.

Stock-based Compensation

Stock-based compensation expense in 2023 and 2022 is the estimated fair value of restricted stock awards and options granted, amortized on a straight-line basis over the requisite service period for the entire portion of the award less an estimate for anticipated forfeitures. The Company uses the “simplified” method to estimate the expected term of the options because the Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term.

Warrants

The Company’s outstanding issued warrants are accounted for as equity in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. The Company’s warrants are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date.

Compensated Absences

Employees of the Company are entitled to paid vacations, sick days, and other time off depending on job classification, length of service and other factors.  The Company has determined it is impracticable to estimate the amount of compensation of future absences and, accordingly, no liability has been recorded in the accompanying consolidated financial statements.  The Company’s policy is to recognize the cost of compensated absences when paid to employees. 

Leases

The Company records operating leases in accordance with ASU 2016-02 – Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, the Company recognized a right-of-use-asset and corresponding liability on the balance sheet for all leases, except for leases covering a period of fewer than 12 months. The liability has been measured at the present value of the future minimum lease payments taking into account renewal options if applicable plus initial incremental direct costs such as commissions. The minimum payments are discounted using the Company’s incremental borrowing rate. The right-of-use asset is amortized as rent expense on a straight-line basis.

Comprehensive Income (Loss)

Comprehensive income (loss) refers to revenues, expenses, gains and losses that are included in comprehensive income (loss) but are excluded from net income (loss) as these amounts are recorded directly as an adjustment to stockholders' equity, primarily from changes in unrealized gains and losses on available-for-sale securities, net of the related income taxes.

Accounting Changes

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”). This guidance applies to reinsurance and insurance receivables and other financing receivables. For available-for-sale fixed maturity securities carried at fair value, estimated credit losses will continue to be measured at the present value of expected cash flows; however, the other than temporary impairment (“OTTI”) concept has been eliminated. Under the previous guidance, estimated credit impairments resulted in a write-down of amortized cost. Under the new guidance, estimated credit losses are recognized through an allowance and reversals of the allowance are permitted if the estimate of credit losses declines. For available-for-sale fixed maturity securities where the Company has an intent to sell, impairment will continue to result in a write-down of amortized cost. ASU 2016-13 was effective for the Company on January 1, 2023. The Company determined as of the date of adoption that the updated guidance did not have an impact on its consolidated financial statements. Below is a summary of the significant accounting policies impacted by the adoption of ASU 2016-13.

The allowance for credit losses is a valuation account that is reported as a reduction of a financial asset’s cost basis and is measured on a pool basis when similar risk characteristics exist. Management estimates the allowance using relevant available information from both internal and external sources. Historical credit loss experience provides the basis for the estimation of expected credit losses and adjustments may be made to reflect current conditions and reasonable and supportable forecasts. Adjustments to historical loss information are made for any additional factors that come to the Company’s attention. This could include significant shifts in counterparty financial strength ratings, aging of past due receivables, amounts sent to collection agencies, or other underlying portfolio changes. Amounts are considered past due when payments have not been received according to contractual terms. The Company also considers current and forecasted economic conditions, using a variety of economic metrics and forecast indices. The sensitivity of expected credit losses relative to changes to these forecasted economic conditions can vary by financial asset class. The Company considers a reasonable and supportable forecast period to be up to 24 months from the balance sheet date. After the forecast period, the Company reverts to historical credit experience. The Company uses collateral arrangements such as letters of credit and amounts held in beneficiary trusts to mitigate credit risk, which are considered in the estimate of net amount expected to be collected.

The Company has determined that it was not subject to any other new accounting pronouncements that became effective during the year ended December 31, 2023. 

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. ASU-2023-09 is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of ASU 2023-09 on its disclosures. 

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Investments

12 Months Ended

Dec. 31, 2023

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 December 31, 2023 and 2022 are summarized as follows:

	December 31, 2023
	Cost or		Gross		Gross Unrealized Losses						Estimated		Net
	Amortized		Unrealized		Less than			More than			Fair		Unrealized
Category	Cost		Gains		12 Months			12 Months			Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies (1)	$	20,954,764	$	1,799	$	(17,373	)	$	-		$	20,939,190	$	(15,574	)
Political subdivisions of States,
Territories and Possessions		16,607,713		-		-			(3,209,161	)		13,398,552		(3,209,161	)
Corporate and other bonds
Industrial and miscellaneous		75,993,042		-		-			(5,885,296	)		70,107,746		(5,885,296	)
Residential mortgage and other asset
backed securities (2)		50,905,423		113,761		(2,144	)		(6,541,731	)		44,475,309		(6,430,114	)
Total fixed-maturity securities	$	164,460,942	$	115,560	$	(19,517	)	$	(15,636,188	)	$	148,920,797	$	(15,540,145	)

	December 31, 2022
	Cost or		Gross		Gross Unrealized Losses						Estimated		Net
	Amortized		Unrealized		Less than			More than			Fair		Unrealized
Category	Cost		Gains		12 Months			12 Months			Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies (1)	$	23,874,545	$	1,479	$	(6,928	)	$	-		$	23,869,096	$	(5,449	)
Political subdivisions of States,
Territories and Possessions		17,108,154		-		(2,195,273	)		(1,771,494	)		13,141,387		(3,966,767	)
Corporate and other bonds
Industrial and miscellaneous		80,338,464		-		(5,796,994	)		(2,458,985	)		72,082,485		(8,255,979	)
Residential mortgage and other asset
backed securities (2)		53,597,264		58,398		(882,664	)		(7,150,803	)		45,622,195		(7,975,069	)
Total fixed-maturity securities	$	174,918,427	$	59,877	$	(8,881,859	)	$	(11,381,282	)	$	154,715,163	$	(20,203,264	)

(1)

In October 2022, KICO placed certain U.S. Treasury securities to fulfill the required collateral for a sale leaseback transaction in a designated custodian account (see Note 9 – Debt - “Equipment Financing”). As of December 31, 2023 and 2022, the amount of required collateral was approximately $6,999,000 and $8,691,000, respectively. As of December 31, 2023 and 2022, the estimated fair value of the eligible collateral was approximately $6,999,000 and $8,691,000, respectively.

(2)

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 9 – Debt – “Federal Home Loan Bank”). The eligible collateral would be pledged to FHLBNY if KICO draws an advance from the FHLBNY credit line. As of December 31, 2023, the estimated fair value of the eligible investments was approximately $11,412,000. KICO will retain all rights regarding all securities if pledged as collateral. As of December 31, 2023 and 2022 there was no outstanding balance on the FHLBNY credit line.

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 December 31, 2023 and 2022 is shown below:

	December 31, 2023				December 31, 2022
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	34,729,120	$	34,461,172	$	16,359,100	$	16,307,991
One to five years		31,803,338		30,416,618		18,605,987		14,085,113
Five to ten years		31,596,410		27,330,377		54,559,158		52,230,283
More than 10 years		15,426,651		12,237,321		31,796,918		26,469,581
Residential mortgage and other asset backed securities		50,905,423		44,475,309		53,597,264		45,622,195
Total	$	164,460,942	$	148,920,797	$	174,918,427	$	154,715,163

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 December 31, 2023 and 2022 are as follows:

	December 31, 2023
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	13,583,942	$	-	$	(2,870,027	)	$	10,713,915
Fixed income exchange traded funds		3,711,232				(669,232	)		3,042,000
Mutual Funds		622,209		314,816		-			937,025
FHLBNY common stock		69,400		-		-			69,400
Total	$	17,986,783	$	314,816	$	(3,539,259	)	$	14,762,340

	December 31, 2022
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	13,583,942	$	-	$	(3,589,313	)	$	9,994,629
Fixed income exchange traded funds,		3,711,232				(821,632	)		2,889,600
Mutual funds		716,626		158,635		-			875,261
FHLBNY common stock		74,900		-		-			74,900
Total	$	18,086,700	$	158,635	$	(4,410,945	)	$	13,834,390

Other Investments

The cost and estimated fair value of, and gross unrealized gains on, the Company’s other investments as of December 31, 2023 and 2022 are as follows:

	December 31, 2023						December 31, 2022
			Gross		Estimated				Gross		Estimated
Category	Cost		Gains		Fair Value		Cost		Gains		Fair Value
Other Investments:
Hedge fund	$	1,987,040	$	1,910,110	$	3,897,150	$	1,987,040	$	784,612	$	2,771,652

Held-to-Maturity Securities

The cost or amortized cost and estimated fair value of, and gross unrealized gains and losses on, investments in held-to-maturity fixed-maturity securities as of December 31, 2023 and 2022 are summarized as follows:

	December 31, 2023
													Net
	Cost or		Gross		Gross Unrealized Losses						Estimated		Unrealized
	Amortized		Unrealized		Less than			More than			Fair		Gains/
Category	Cost		Gains		12 Months			12 Months			Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,860	$	15,045	$	(6,914	)	$	(18,163	)	$	1,218,828	$	(10,032	)
Political subdivisions of States,
Territories and Possessions		499,170		890		-			-			500,060		890
Exchange traded debt		304,111		-		-			(70,111	)		234,000		(70,111	)
Corporate and other bonds
Industrial and miscellaneous		5,020,400		-		-			(867,140	)		4,153,260		(867,140	)
Total	$	7,052,541	$	15,935	$	(6,914	)	$	(955,414	)	$	6,106,148	$	(946,393	)

	December 31, 2022
													Net
	Cost or		Gross		Gross Unrealized Losses						Estimated		Unrealized
	Amortized		Unrealized		Less than			More than			Fair		Gains/
Category	Cost		Gains		12 Months			12 Months			Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,560	$	28,400	$	(34,077	)	$	-		$	1,222,883	$	(5,677	)
Political subdivisions of States,
Territories and Possessions		498,638		2,092		-			-			500,730		2,092
Exchange traded debt		304,111		-		(29,111	)		-			275,000		(29,111	)
Corporate and other bonds
Industrial and miscellaneous		5,734,831		36,968		(809,746	)		(360,278	)		4,601,775		(1,133,056	)
Total	$	7,766,140	$	67,460	$	(872,934	)	$	(360,278	)	$	6,600,388	$	(1,165,752	)

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

A summary of the amortized cost and the estimated fair value of the Company’s investments in held-to-maturity securities by contractual maturity as of December 31, 2023 and 2022 is shown below:

	December 31, 2023				December 31, 2022
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	-	$	-	$	708,535	$	743,575
One to five years		1,121,288		1,097,101		1,120,507		1,088,522
Five to ten years		1,414,911		1,270,770		1,402,704		1,200,720
More than 10 years		4,516,342		3,738,277		4,534,394		3,567,571
Total	$	7,052,541	$	6,106,148	$	7,766,140	$	6,600,388

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:

	Years ended
	December 31,
	2023		2022
Income:
Fixed-maturity securities	$	5,352,304	$	4,211,229
Equity securities		707,835		1,058,351
Cash and cash equivalents		255,905		63,683
Total		6,316,044		5,333,263
Expenses:
Investment expenses		307,362		396,485
Net investment income	$	6,008,682	$	4,936,778

Proceeds from the redemption of fixed-maturity securities held-to-maturity were $750,000 and $1,000,000 for the years ended December 31, 2023 and 2022, respectively.

Proceeds from the sale and maturity of fixed-maturity securities available-for-sale were $61,935,658 and $25,606,590 for the years ended December 31, 2023 and 2022, respectively.

Proceeds from the sale of equity securities were $99,917 and $19,379,047 for the years ended December 31, 2023 and 2022, respectively.

The Company’s net gains (losses) on investments for the years ended December 31, 2023 and 2022 are summarized as follows:

	Years ended
	December 31,
	2023			2022
Realized Gains (Losses)
Fixed-maturity securities:
Gross realized gains	$	2,428		$	143,622
Gross realized losses		(21,239	)		(208,955	)
		(18,811	)		(65,333	)
Equity securities:
Gross realized gains		-			1,384,432
Gross realized losses		-			(2,048,395	)
		-			(663,963	)
Other Investments:
Gross realized gains		-			589,233
Gross realized losses		-			-
		-			589,233
Net realized losses		(18,811	)		(140,063	)
Unrealized (Losses) Gains
Equity Securities:
Gross gains		1,027,867			-
Gross losses		-			(6,494,380	)
		1,027,867			(6,494,380	)
Other Investments:
Gross gains		1,125,498			-
Gross losses		-			(2,757,422	)
		1,125,498			(2,757,422	)
Net unrealized gains (losses)		2,153,365			(9,251,802	)
Net gains (losses) on investments	$	2,134,554		$	(9,391,865	)

Allowance for Credit Losses

At December 31, 2023 and 2022, there were 140 and 155 fixed-maturity securities, respectively, that accounted for the gross unrealized losses. The Company determined that none of the unrealized losses were deemed to be credit losses for its portfolio of investments for the years ended December 31, 2023 and 2022. 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 December 31, 2023 and 2022 as follows:

	December 31, 2023
	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	$	5,974,440	$	(17,373	)		1	$	-		-			-	$	5,974,440	$	(17,373	)
Political subdivisions of
States, Territories and
Possessions		-		-			-		13,398,552		(3,209,161	)		13		13,398,552		(3,209,161	)
Corporate and other
bonds industrial and
miscellaneous		-		-			-		70,107,746		(5,885,296	)		85		70,107,746		(5,885,296	)
Residential mortgage and
other asset backed securities		88,988		(2,144	)		4		38,675,604		(6,541,731	)		37		38,764,592		(6,543,875	)
Total fixed-maturity
securities	$	6,063,428	$	(19,517	)		5	$	122,181,902	$	(15,636,188	)		135	$	128,245,330	$	(15,655,705	)

	December 31, 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	$	18,918,196	$	(6,928	)		3	$	-		-			-	$	18,918,196	$	(6,928	)
Political subdivisions of
States, Territories and
Possessions		7,970,633		(2,195,273	)		9		5,170,753		(1,771,494	)		5		13,141,386		(3,966,767	)
Corporate and other
bonds industrial and
miscellaneous		56,910,104		(5,796,994	)		75		15,172,381		(2,458,985	)		15		72,082,485		(8,255,979	)
Residential mortgage and
other asset backed securities		10,145,880		(882,664	)		22		34,753,178		(7,150,803	)		26		44,899,058		(8,033,467	)
Total fixed-maturity
securities	$	93,944,813	$	(8,881,859	)		109	$	55,096,312	$	(11,381,282	)		46	$	149,041,125	$	(20,263,141	)

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Fair Value Measurements

12 Months Ended

Dec. 31, 2023

Fair Value Measurements

Fair Value Measurements

Note 4 - Fair Value Measurements

Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation technique used by the Company to estimate the fair value of its financial instruments is the market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets.

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets or liabilities fall within different levels of the hierarchy, the classification is based on the lowest level input that is significant to the fair value measurement of the asset or liability. Classification of assets and liabilities within the hierarchy considers the markets in which the assets and liabilities are traded, including during periods of market disruption, and the reliability and transparency of the assumptions used to determine fair value. The hierarchy requires the use of observable market data when available. The levels of the hierarchy and those investments included in each are as follows:

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities traded in active markets. Included are those investments traded on an active exchange, such as the Nasdaq Global Select Market, U.S. Treasury securities and obligations of U.S. government agencies, together with corporate debt securities that are generally investment grade.

Level 2—Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs.  Municipal and corporate bonds, and residential mortgage-backed securities, that are traded in less active markets are classified as Level 2.  These securities are valued using market price quotations for recently executed transactions.

Level 3—Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value measurement. Material assumptions and factors considered in pricing investment securities and other assets may include appraisals, projected cash flows, market clearing activity or liquidity circumstances in the security or similar securities that may have occurred since the prior pricing period.

The availability of observable inputs varies and is affected by a wide variety of factors. When the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment. The degree of judgment exercised by management in determining fair value is greatest for investments categorized as Level 3. For investments in this category, the Company considers prices and inputs that are current as of the measurement date. In periods of market dislocation, as characterized by current market conditions, the ability to observe prices and inputs may be reduced for many instruments. This condition could cause a security to be reclassified between levels.

The following table presents information about the Company’s investments that are measured at fair value on a recurring basis at December 31, 2023 and 2022 indicating the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

	December 31, 2023
	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	$	20,939,190	$	-	$	-	$	20,939,190
Political subdivisions of
States, Territories and
Possessions		-		13,398,552		-		13,398,552
Corporate and other
bonds industrial and
miscellaneous		70,107,746		-		-		70,107,746
Residential mortgage and other asset backed securities		-		44,475,309		-		44,475,309
Total fixed maturities		91,046,936		57,873,861		-		148,920,797
Equity securities		14,762,340		-		-		14,762,340
Total investments	$	105,809,276	$	57,873,861	$	-	$	163,683,137

	December 31, 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	$	23,869,096	$	-	$	-	$	23,869,096
Political subdivisions of
States, Territories and
Possessions		-		13,141,387		-		13,141,387
Corporate and other
bonds industrial and
miscellaneous		71,585,115		497,370		-		72,082,485
Residential mortgage and other asset backed securities		-		45,622,195		-		45,622,195
Total fixed maturities		95,454,211		59,260,952		-		154,715,163
Equity securities		13,834,390		-		-		13,834,390
Total investments	$	109,288,601	$	59,260,952	$	-	$	168,549,553

The following table sets forth the Company’s investment in a hedge fund measured at Net Asset Value (“NAV”) per share as of December 31, 2023 and 2022. 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	December 31, 2023		December 31, 2022
Other Investments
Hedge fund	$	3,897,150	$	2,771,652

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 accompanying consolidated statements of operations and comprehensive loss within net gains (losses) on investments.

The estimated fair value and the level of the fair value hierarchy of the Company’s debt as of December 31, 2023 and 2022, which is not measured at fair value, is as follows:

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2024	$	-	$	17,812,500	$	-	$	17,812,500
	December 31, 2022
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2022	$	-	$	15,829,096	$	-	$	15,829,096

The fair value of debt is estimated based on observable market prices when available. When observable market prices are not available, the fair values of debt are based on observable market prices of comparable instruments adjusted for differences between the observed instruments and the instruments being valued or is estimated using discounted cash flow analyses, based on current incremental borrowing rates for similar types of borrowing arrangements.

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Fair Value of Financial Instruments and Real Estate

12 Months Ended

Dec. 31, 2023

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 Company uses the following methods and assumptions in estimating the fair value of financial instruments and real estate:

Equity securities, available-for-sale fixed income securities, and other investments:  Fair value disclosures for these investments are included in Note 3 - Investments and Note 4 – Fair Value Measurements.  

Cash and cash equivalents: The carrying values of cash and cash equivalents approximate their fair values because of the short-term nature of these instruments.

Premiums receivable and reinsurance receivables:  The carrying values reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values due to the short-term nature of the assets.

Real estate: The estimated fair value was based on an appraisal prepared using the sales comparison approach, and accordingly the real estate is a Level 3 asset under the fair value hierarchy.

Reinsurance balances payable:  The carrying value reported in the consolidated balance sheets for these financial instruments approximates fair value.

The estimated fair values of the Company’s financial instruments and real estate as of December 31, 2023 and 2022 are as follows:

	December 31, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
Fixed-maturity securities-held-to maturity, Level 1	$	7,052,541	$	6,106,148	$	7,766,140	$	6,600,388
Cash and cash equivalents, Level 1	$	8,976,998	$	8,976,998	$	11,958,228	$	11,958,228
Premiums receivable, net, Level 1	$	13,604,808	$	13,604,808	$	13,880,504	$	13,880,504
Reinsurance receivables, net, Level 3	$	75,593,912	$	75,593,912	$	66,465,061	$	66,465,061
Real estate, net of accumulated depreciation, Level 3 (1)	$	1,992,529	$	3,540,000	$	2,050,644	$	2,800,000
Reinsurance balances payable, Level 3	$	12,837,140	$	12,837,140	$	13,061,966	$	13,061,966

(1) Real estate consists of a complex which includes an office building, a house and vacant land located in Kingston, New York. The $740,000 increase in fair value of real estate is due to favorable rezoning of the properties in late 2023.

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Intangible Assets

12 Months Ended

Dec. 31, 2023

Intangible Assets

Intangible Assets

Note 6 - Intangible Assets

Intangible assets consist of finite and indefinite life assets. Finite life intangible assets include customer and producer relationships and other identifiable intangibles. KICO’s insurance company license is considered an indefinite life intangible asset subject to annual impairment testing. All identified intangible assets of finite useful life were fully amortized as of December 31, 2023 and 2022.

The components of intangible assets and their useful lives, accumulated amortization, and net carrying value as of December 31, 2023 and 2022 are summarized as follows:

	Useful		Gross				Net
	Life		Carrying		Accumulated		Carrying
	(in yrs)		Value		Amortization		Amount
Insurance license		-	$	500,000	$	-	$	500,000
Customer relationships		10		3,400,000		3,400,000		-
Other identifiable
intangibles		7		950,000		950,000		-
Total			$	4,850,000	$	4,350,000	$	500,000

Intangible asset impairment testing and amortization

The Company performs an analysis annually as of December 31, or sooner if there are indicators that the asset may be impaired, to identify potential impairment of intangible assets and measures the amount of any impairment loss that may need to be recognized. Intangible asset impairment testing requires an evaluation of the estimated fair value of each identified intangible asset to its carrying value. An impairment charge would be recorded if the estimated fair value is less than the carrying amount of the intangible asset. No impairments have been identified for the years ended December 31, 2023 and 2022.

The Company recorded no amortization expense related to intangible assets for the years ended December 31, 2023 and 2022.

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Reinsurance

12 Months Ended

Dec. 31, 2023

Reinsurance

Reinsurance

Note 7 - 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”). Upon the expiration of the 2021/2023 Treaty on January 1, 2023, the Company entered into a new 30% quota share reinsurance treaty for its personal lines business, covering the period from January 1, 2023 through January 1, 2024 (“2023/2024 Treaty”). Upon the expiration of the 2023/2024 Treaty on January 1, 2024, the Company entered into a new 27% quota share reinsurance treaty for its personal lines business, covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”).

The Company’s excess of loss and catastrophe reinsurance treaties expired on June 30, 2023 and the Company entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2023. Effective January 1, 2022, the Company entered into an underlying excess of loss reinsurance treaty (“Underlying XOL 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. Effective January 1, 2023, the Underlying XOL Treaty was renewed covering the period from January 1, 2023 through January 1, 2024. Effective January 1, 2024, the Underlying XOL Treaty was renewed covering the period from January 1, 2024 through January 1, 2025. Material terms for reinsurance treaties in effect for the treaty years shown below are as follows:

	Treaty Period
	2024/2025 Treaty						2023/2024 Treaty						2021/2023 Treaty
	July 1,			January 1,			July 1,			January 1,			July 1,			December 31,
	2024			2024			2023			2023			2022			2021
	to			to			to			to			to			to
	January 1,			June 30,			January 1,			June 30,			January 1,			June 30,
Line of Business	2025			2024			2024			2023			2023			2022
Personal Lines:
Homeowners, dwelling fire and canine legal liability
Quota share treaty:
Percent ceded (7)		27	%		27	%		30	%		30	%		30	%		30	%
Risk retained on intial
$1,000,000 of losses (5) (6) (7)	$	730,000		$	730,000		$	700,000		$	700,000		$	700,000		$	700,000
Losses per occurrence
subject to quota share
reinsurance coverage	$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000
Expiration date	January 1, 2025			January 1, 2025			January 1, 2024			January 1, 2024			January 1, 2023			January 1, 2023
Excess of loss coverage and
facultative facility
coverage (1) (5) (6)	$	400,000		$	8,400,000		$	8,400,000		$	8,400,000		$	8,400,000		$	8,400,000
	in excess of			in excess of			in excess of			in excess of			in excess of			in excess of
	$	600,000		$	600,000		$	600,000		$	600,000		$	600,000		$	600,000
Total reinsurance coverage
per occurrence (5) (6)	$	470,000		$	8,470,000		$	8,500,000		$	8,500,000		$	8,500,000		$	8,500,000
Losses per occurrence
subject to reinsurance
coverage (6)	$	1,000,000		$	8,000,000		$	8,000,000		$	8,000,000		$	9,000,000		$	9,000,000
Expiration date		(6	)	June 30, 2024			June 30, 2024			June 30, 2023			June 30, 2023			June 30, 2022
Catastrophe Reinsurance:
Initial loss subject to personal
lines quota share treaty (6)	$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000
Risk retained per catastrophe
occurrence (7) (8)		(6	)	$	9,500,000		$	8,750,000		$	8,750,000		$	7,400,000		$	7,400,000
Catastrophe loss coverage
in excess of quota share
coverage (2)		(6	)	$	315,000,000		$	315,000,000		$	335,000,000		$	335,000,000		$	490,000,000
Reinstatement premium
protection (3) (4)		(6	)	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, 2024.
(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 December 31, 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. For the period July 1, 2023 through June 30, 2024 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $12,500,000 of catastrophe coverage in excess of $10,000,000.

(5)	For the period January 1, 2022 through January 1, 2025, underlying excess of loss treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Excludes losses from named storms. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty and 2023/2024 Treaty. Reduces retention to $530,000 from $730,000 under the 2024/2025 Treaty.
(6)	Excess of loss coverage and facultative facility and catastrophe reinsurance treaties will expire on June 30,2024, with none of these coverages to be in effect during the period from July 1 2024 through January 1, 2025. If and when these treaties are renewed on July 1, 2024, the excess of loss and facultative facility, and the catastrophe reinsurance treaty, will be as provided for therein. Reinsurance coverage in effect from July 1, 2024 through January 1, 2025 is currently only covered under the 2024/2025 Treaty and underlying excess of loss reinsurance treaty. The 2024/2025 Treaty and underlying excess of loss reinsurance treaty will expire on January 1, 2025.
(7)	For the 2021/2023 Treaty, 4% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2023/2024 Treaty, 17.5% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2024/2025 Treaty, 22% of the 27% total of losses ceded under this treaty are excluded from a named catastrophe event.
(8)	Plus losses in excess of catastrophe coverage

	Treaty Year
	July 1, 2023			July 1, 2022			July 1, 2021
	to			to			to
Line of Business	June 30, 2024			June 30, 2023			June 30, 2022
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, 2024			June 30, 2023			June 30, 2022

Commercial Lines (1)

(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.

Approximate reinsurance recoverables on unpaid and paid losses by reinsurer at December 31, 2023 and 2022 are as follows:

	Unpaid		Paid
($ in thousands)	Losses		Losses			Total		Security
December 31, 2023
Swiss Reinsurance America Corporation		11,027		6,560			17,587		-
Hannover Rueck SE		8,753		(92	)		8,661		-
Allied World Insurance Company		4,724		2,190			6,914		4	(1)
Ace Property and Casualty Insurance Company		3,205		1,840			5,045		-
Lancashire Insurance Company Limited		3,203		1,583			4,786		-
Others		2,377		3,296			5,673		2,662	(2)
Total	$	33,289	$	15,377		$	48,666	$	2,666
December 31, 2022
Swiss Reinsurance America Corporation		9,469		4,823		$	14,292	$	-
Hanover Rueck SE		8,681		2,698			11,379		-
Others		9,510		6,067			15,577		2,399	(3)
Total	$	27,660	$	13,588		$	41,248	$	2,399

(1) As of December 31, 2023, represents $4,000 guaranteed by irrevocable letters of credit.

(2) As of December 31, 2023, represents $2,236,000 secured pursuant to collateralized trust agreement and $426,000 guaranteed by irrevocable letters of credit.

(3) As of December 31, 2022, represents $1,918,000 secured pursuant to collateralized trust agreement and $481,000 guaranteed by irrevocable letters of credit.

Assets held in the trusts referred to in footnotes (2) and (3) in the table above are not included in the Company’s invested assets, and investment income earned on these assets is credited to the reinsurers respectively. In addition to reinsurance recoverables on unpaid and paid losses, reinsurance receivables in the accompanying consolidated balance sheets as of December 31, 2023 and 2022 include unearned ceded premiums of approximately $26,928,000 and $25,217,000, respectively.

Ceding Commission Revenue

The Company earned ceding commission revenue under the 2023/2024 Treaty for the year ended December 31, 2023, and under the 2021/2023 Treaty for the year ended December 31, 2022, based on a fixed provisional commission rate at which provisional ceding commissions are earned. The Company earned ceding commission revenue under its quota share reinsurance agreements that expired prior to the 2021/2023 Treaty based on: (i) a fixed provisional commission rate at which provisional ceding commissions were earned, and (ii) under certain of the quota share reinsurance agreements, 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 increase when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decrease when the estimated ultimate loss ratio increases.

Ceding commission revenue consists of the following:

	Year ended
	December 31,
	2023		2022
Provisional ceding commissions earned	$	20,397,454	$	19,105,779
Contingent ceding commissions earned		656,040		213,612
	$	21,053,494	$	19,319,391

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 December 31, 2023 and 2022, net contingent ceding commissions payable to reinsurers under all treaties was approximately $3,302,000 and $2,667,000, respectively, which is recorded in reinsurance balances payable on the accompanying consolidated balance sheets.

Expected Credit Losses – Uncollectible Reinsurance

The Company reviews reinsurance receivables which relate to both amounts already billed on ceded paid losses as well as ceded reserves that will be billed when losses are paid in the future. The Company has not recorded an allowance for uncollectible reinsurance as there is no perceived credit risk. The principal credit quality indicator used in the valuation of the allowance on reinsurance receivables is the financial strength rating of the reinsurer sourced from major rating agencies. Changes in the allowance are presented as a component of other underwriting expenses on the condensed consolidated statements of operations and comprehensive loss.

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Deferred Policy Acquisition Costs and Deferred Ceding Commission Revenue

12 Months Ended

Dec. 31, 2023

Deferred Policy Acquisition Costs and Deferred Ceding Commission Revenue

Deferred Policy Acquisition Costs and Deferred Ceding Commission Revenue

Note 8 - Deferred Policy Acquisition Costs and Deferred Ceding Commission Revenue

Deferred policy acquisition costs incurred and policy-related ceding commission revenue are deferred and amortized to income on property and casualty insurance business as follows:

	Years ended
	December 31,
	2023			2022
Net deferred policy acquisition costs, net of deferred ceding
commission revenue, beginning of year	$	13,199,884		$	12,490,479
Cost incurred and deferred:
Commissions and brokerage		29,926,493			36,354,386
Other underwriting and policy acquisition costs		8,866,395			9,154,706
Ceding commission revenue		(7,209,248	)		(7,236,720	)
Net deferred policy acquisition costs		31,583,640			38,272,372
Amortization		(34,441,825	)		(37,562,967	)
		(2,858,185	)		709,405
Net deferred policy acquisition costs, net of deferred ceding
commission revenue, end of year	$	10,341,699		$	13,199,884

Deferred policy acquisition costs and deferred ceding commission revenue as of December 31, 2023 and 2022 are as follows:

	December 31,
	2023			2022
Deferred policy acquisition costs	$	19,802,564		$	23,819,453
Deferred ceding commission revenue		(9,460,865	)		(10,619,569	)
Balance at end of period	$	10,341,699		$	13,199,884

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Debt

12 Months Ended

Dec. 31, 2023

Debt

Debt

Note 9 – Debt

Federal Home Loan Bank

In July 2017, KICO became a member of, and invested in, the 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 December 31, 2023 and 2022, 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. On July 6, 2023, A.M. Best withdrew KICO’s ratings as KICO requested to no longer participate in A.M. Best’s interactive rating process. As a result of the withdrawal of A.M. Best ratings, KICO is currently only able to borrow on an overnight basis. If KICO has collateral, based on KICO’s net admitted assets, the maximum allowable advance as of December 31, 2023 and 2022 was approximately $12,813,000 and $13,192,000, respectively. Available collateral as of December 31, 2023 and 2022 was approximately $11,412,000 and $12,228,000, respectively. Advances are limited to 85% of the amount of available collateral. There were no borrowings under this facility during the years ended December 31, 2023 and 2022.

Debt

Debt as of December 31, 2023 and 2022 consists of the following:

	December 31,
	2023		2022
2022 Notes, net	$	18,426,247	$	17,252,868
Equipment financing		6,817,283		7,905,655
Balance at end of period	$	25,243,530	$	25,158,523

Note and Warrant Exchange

On December 9, 2022, the Company entered into a Note and Warrant Exchange Agreement (the “Exchange Agreement”) with several holders (the “Exchanging Noteholders”) of the Company’s outstanding 5.50% Senior Notes due 2022 (the “2017 Notes”). On the date of the Exchange Agreement, the Exchanging Noteholders held 2017 Notes in the aggregate principal amount of $21,545,000 of the $30,000,000 aggregate principal amount of the 2017 Notes then outstanding. Pursuant to the Exchange Agreement, on December 15, 2022, the Exchanging Noteholders exchanged their respective 2017 Notes for the following: (i) new 12.0% Senior Notes due December 30, 2024 of the Company in the aggregate approximate principal amount of $19,950,000 (the “2022 Notes”); (ii) cash in the aggregate approximate amount of $1,595,000, together with accrued interest on the 2017 Notes; and (iii) three-year warrants for the purchase of an aggregate of 969,525 shares of Common Stock of the Company, exercisable at an exercise price of $1.00 per share (the “Warrants”). The remaining $8,455,000 principal amount of the 2017 Notes, together with accrued interest thereon, was paid on the maturity date of the 2017 Notes of December 30, 2022.

2022 Notes

On December 15, 2022, the Company issued $19,950,000 of its 2022 Notes pursuant to the Exchange Agreement. Interest is payable semi-annually in arrears on June 30 and December 30 of each year, which commenced on June 30, 2023 at the rate of 12.0% per annum. Warrants were issued with a fair value of $993,200 (see Note 12 – Stockholders’ Equity) and transaction costs were $1,758,112, for an effective yield of 13.92% per annum. The balance of the 2022 Notes as of December 31, 2023 and 2022 is as follows:

	December 31,			December 31,
	2023			2022
12.0% Senior Unsecured Notes	$	19,950,000		$	19,950,000
Warrants		(653,123	)		(979,684	)
Issuance costs		(870,630	)		(1,717,448	)
2022 Notes, net	$	18,426,247		$	17,252,868

The Exchange Agreement provided for a mandatory redemption of the 2022 Notes on December 30, 2023, in an amount such that the aggregate principal amount of the 2022 Notes to be redeemed plus accrued and unpaid interest thereon was to be equal to the amount by which the maximum Ordinary Dividend Paying Capacity of KICO (as defined below) measured as of December 15, 2023 exceeded the Company’s Holding Company Expenses (as defined below) for the calendar year ended December 31, 2023. “Ordinary Dividend Paying Capacity” means the sum, as measured on December 15, 2023, of (i) the maximum allowable amount of dividends that KICO is permitted to pay without seeking any regulatory approval in accordance with New York insurance regulations based on its statutory annual and quarterly financial statements filed with the National Association of Insurance Commissioners as of and for the thirty-six (36) month period ended September 30, 2023 plus (ii) any dividends paid by KICO to the Company during the period beginning January 1, 2023 and ending September 30, 2023. “Holding Company Expenses” means the sum of (i) cash interest expense paid during the calendar year ended December 31, 2023 on the 2022 Notes, intercompany loans and any other indebtedness of the holding company on a stand-alone basis and (ii) other cash operating expenses, including taxes, paid by the holding company during the calendar year ended December 31, 2023. The amount of other operating expenses paid in cash in the preceding clause (ii) shall not exceed $2.5 million. Holding Company Expenses was determined based on the actual Holding Company Expenses for the nine months ending September 30, 2023, and an estimate of Holding Company Expenses for the three months ending December 30, 2023. The Ordinary Dividend Paying Capacity of KICO as defined above was zero and, accordingly, the Company was not required to make a mandatory redemption of the 2022 Notes on December 30, 2023.

The 2022 Notes are unsecured obligations of the Company and are not the obligations of or guaranteed by any of the Company’s subsidiaries. The 2022 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 2022 Notes. The Notes rank equally in right of payment to all of the Company’s existing and future senior indebtedness, but are effectively subordinated to any secured indebtedness to the extent of the value of the collateral securing such secured indebtedness. In addition, the 2022 Notes are structurally subordinated to the indebtedness and other obligations of the Company’s subsidiaries.

The 2022 Notes will be redeemable, at the Company’s option, in whole or in part, at any time or in part from time to time, on and after December 30, 2022, upon not less than fifteen (15) nor more than sixty (60) days’ notice, at the following redemption prices (“Redemption Prices” ) (expressed as percentages of the principal amount thereof) if redeemed during the respective period set forth below, plus, in each case, accrued and unpaid interest, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date):

Period:	Percentage
December 30, 2022 to December 29, 2023		102.00	%
December 30, 2023 to September 29, 2024		101.00	%
September 30, 2024 to December 29, 2024		100.00	%

Due to the Redemption Prices, management intends to retire the 2022 Notes after September 29, 2024 and before the scheduled maturity date of December 30, 2024. Management plans to refinance the 2022 Notes with a new issue of equity securities and/or debt of similar or longer maturity that would result in net proceeds equal to or greater than the principal amount of the current issue. In connection therewith, the Company will be utilizing investment bankers to serve as placement agents for proposed offerings by the Company of its securities (including debt, equity and/or preferred securities).   The offerings would be of such size as to generate proceeds to the Company of no less than $19,500,000. The Company, subject to regulatory approval, may receive distributions paid to it by KICO, its insurance subsidiary, that could be utilized to repay the 2022 Notes. Further, the Company may also use available invested assets and cash to repay the 2022 Notes. As of December 31, 2023, invested assets and cash was approximately $2,042,000.

As of the end of each calendar quarter, commencing with the calendar quarter ending December 31, 2022, the Company is subject to a leverage maintenance test (“Leverage Maintenance Test”), which requires that the Total Consolidated Indebtedness (as defined below) of the Company not be greater than 30% of Total Consolidated Capitalization (as defined below). As of December 31, 2023 and 2022, the ratio as defined under the Leverage Maintenance Test was 29.9% and 26.7%, respectively. As of September 30, 2023, the ratio as defined under the Leverage Maintenance Test was 31.4%. On November 7, 2023, a majority of the holders of the outstanding 2022 Notes (on behalf of all holders of the 2022 Notes) agreed to a waiver regarding the satisfaction of the Leverage Maintenance Test as of September 30, 2023.  “Total Consolidated Indebtedness” is the aggregate principal amount (or accreted value in the case of any Indebtedness issued with more than de minimis original issue discount) of all outstanding long-term of the Company except for the sale leaseback transaction described below under “Equipment Financing”, any refinancing or any future sale leaseback transaction. “Total Consolidated Capitalization” is the amount equal to the sum of (x) Total Consolidated Indebtedness outstanding as of such date and (y) the total consolidated shareholders’ equity of the Company, excluding accumulated other comprehensive (loss) income, as recorded on the Company’s consolidated balance sheet.

Equipment Financing

On October 27, 2022, KICO entered into a sale leaseback transaction, whereby KICO sold $8,096,824 of fixed assets to a bank. Under GAAP, the sale leaseback transaction is recorded as equipment financing (“Financing”). The provisions of the Financing require KICO to pay a monthly payment of principal and interest at the rate of 5.86% per annum totaling $126,877 for a term of 60 months, which commenced on October 27, 2022.  The terms of the Financing provide buyout options to KICO 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 Financing requires KICO to pledge collateral for the lease obligation. As of December 31, 2023 and 2022, the amount of required collateral was approximately $6,999,000 and $8,691,000, respectively. As of December 31, 2023 and 2022, the fair value of KICO’s pledged collateral was approximately $11,960,000 and $8,691,000, respectively, in United States Treasury securities.

Future contractual payment obligations under the Financing as of December 31, 2023 are as follows:

For the Year
Ending
December 31,	Total
2024		1,153,862
2025		1,223,293
2026		1,296,901
2027		1,119,021
		4,793,077
2027 purchase price		2,024,206
Total	$	6,817,283

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Property and Equipment

12 Months Ended

Dec. 31, 2023

Property and Equipment

Property and Equipment

Note 10 - Property and Equipment

The components of property and equipment are summarized as follows:

			Accumulated
	Cost		Depreciation			Net
December 31, 2023
Building	$	2,344,188	$	(1,004,096	)	$	1,340,092
Land		652,437		-			652,437
Furniture and office equipment		828,011		(828,011	)		0
Leasehold improvements		-		-			-
Computer equipment and software		25,022,986		(17,641,982	)		7,381,004
Automobile		134,034		(111,871	)		22,163
Total	$	28,981,656	$	(19,585,959	)	$	9,395,697
December 31, 2022
Building	$	2,344,188	$	(945,981	)	$	1,398,207
Land		652,437		-			652,437
Furniture and office equipment		828,011		(828,011	)		-
Leasehold improvements		-		-			-
Computer equipment and software		23,195,784		(14,738,212	)		8,457,572
Automobile		134,034		(100,315	)		33,719
Total	$	27,154,454	$	(16,612,519	)	$	10,541,935

Depreciation expense for the years ended December 31, 2023 and 2022 was $2,973,440 and $3,300,445, respectively.

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Property and Casualty Insurance Activity

12 Months Ended

Dec. 31, 2023

Property and Casualty Insurance Activity

Property and Casualty Insurance Activity

Note 11 - Property and Casualty Insurance Activity

Premiums written, ceded and earned are as follows:

	Direct			Assumed		Ceded			Net
Year ended December 31, 2023
Premiums written	$	200,174,502		$	-	$	(106,563,985	)	$	93,610,517
Change in unearned premiums		1,871,239			-		18,902,507			20,773,746
Premiums earned	$	202,045,741		$	-	$	(87,661,478	)	$	114,384,263
Year ended December 31, 2022
Premiums written	$	201,254,837		$	-	$	(79,195,016	)	$	122,059,821
Change in unearned premiums		(9,733,170	)		-		2,057,880			(7,675,290	)
Premiums earned	$	191,521,667		$	-	$	(77,137,136	)	$	114,384,531

Premium receipts in advance of the policy effective date are recorded as advance premiums.  The balance of advance premiums as of December 31, 2023 and 2022 was $3,797,590 and $2,839,028, respectively.

The components of the liability for loss and LAE expenses and related reinsurance receivables as of December 31, 2023 and 2022 are as follows:

	Gross		Reinsurance
	Liability		Receivables
December 31, 2023
Case-basis reserves	$	67,108,131	$	19,537,988
Loss adjustment expenses		17,448,218		3,085,429
IBNR reserves		37,261,513		10,665,233
Recoverable on unpaid losses				33,288,650
Recoverable on paid losses		-		15,376,899
Total loss and loss adjustment expenses	$	121,817,862		48,665,549
Unearned premiums				26,928,363
Receivables - reinsurance contracts				-
Total reinsurance receivables			$	75,593,912
December 31, 2022
Case-basis reserves	$	62,745,588	$	16,618,887
Loss adjustment expenses		16,847,618		2,364,053
IBNR reserves		38,746,307		8,676,560
Recoverable on unpaid losses				27,659,500
Recoverable on paid losses		-		13,588,981
Total loss and loss adjustment expenses	$	118,339,513		41,248,481
Unearned premiums				25,216,580
Receivables - reinsurance contracts				-
Total reinsurance receivables			$	66,465,061

The following table provides a reconciliation of the beginning and ending balances for unpaid losses and LAE:

	Years ended
	December 31,
	2023			2022
Balance at beginning of period	$	118,339,513		$	94,948,745
Less reinsurance recoverables		(27,659,500	)		(10,637,679	)
Net balance, beginning of period		90,680,013			84,311,066
Incurred related to:
Current year		82,856,483			85,690,180
Prior years		(7,273	)		2,699,862
Total incurred		82,849,210			88,390,042
Paid related to:
Current year		49,146,173			49,602,585
Prior years		35,853,838			32,418,510
Total paid		85,000,011			82,021,095
Net balance at end of period		88,529,212			90,680,013
Add reinsurance recoverables		33,288,650			27,659,500
Balance at end of period	$	121,817,862		$	118,339,513

Incurred losses and LAE are net of reinsurance recoveries under reinsurance contracts of $41,091,205 and $39,658,365 for the years ended December 31, 2023 and 2022, 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 years ended December 31, 2023 and 2022 was $7,273 favorable and $2,699,862 unfavorable, respectively.

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.

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 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 December 31, 2020 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 December 31, 2023, net of reinsurance, as well as the cumulative reported claims by accident year and total IBNR reserves as of December 31, 2023 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, 2014 to December 31, 2022 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																				December 31, 2023
	For the Years Ended December 31,																						Cumulative Number of Reported Claims by
Accident Year	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023		IBNR		Accident Year
	(Unaudited 2014 - 2022)
2014	$	14,193	$	14,260	$	14,218	$	14,564	$	15,023	$	16,381	$	16,428	$	16,434	$	16,486	$	16,472	$	-		2,138
2015				22,340		21,994		22,148		22,491		23,386		23,291		23,528		23,533		23,428		274		2,559
2016						26,062		24,941		24,789		27,887		27,966		27,417		27,352		27,271		90		2,881
2017								31,605		32,169		35,304		36,160		36,532		36,502		36,819		319		3,400
2018										54,455		56,351		58,441		59,404		61,237		61,145		598		4,234
2019												75,092		72,368		71,544		71,964		73,310		1,182		4,503
2020														63,083		62,833		63,217		63,562		1,310		5,886
2021																96,425		96,673		96,134		3,598		5,813
2022																		79,835		78,759		6,332		4,683
2023																				78,978		18,994		3,881
																	Total		$	555,877

All Lines of Business
(in thousands)
	Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,
Accident Year	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023
	(Unaudited 2014 - 2022)
2014	$	5,710	$	9,429	$	10,738	$	11,770	$	13,819	$	14,901	$	15,491	$	15,770	$	16,120	$	16,136
2015				12,295		16,181		18,266		19,984		21,067		22,104		22,318		22,473		22,519
2016						15,364		19,001		21,106		23,974		25,234		25,750		26,382		26,854
2017								16,704		24,820		28,693		31,393		32,529		33,522		34,683
2018										32,383		44,516		50,553		52,025		54,424		56,199
2019												40,933		54,897		58,055		60,374		63,932
2020														39,045		50,719		53,432		56,523
2021																56,282		77,756		82,317
2022																		45,856		65,732
2023																				46,280
																	Total		$	471,174
Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented																			$	84,703
All outstanding liabilities before 2014, net of reinsurance																				170
Liabilities for loss and allocated loss adjustment expenses, net of reinsurance																			$	84,872

(Components may not sum to totals due to rounding)

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 claims development tables to the liability for 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)	December 31, 2023
Liabilities for allocated loss and loss adjustment expenses, net of reinsurance	$	84,872
Total reinsurance recoverable on unpaid losses		33,289
Unallocated loss adjustment expenses		3,657
Total gross liability for loss and LAE reserves	$	121,818
(Components may not sum to totals due to rounding)

The following is supplementary unaudited information about average historical claims duration as of December 31, 2023:

Average Annual Percentage Payout of Incurred Loss and Allocated Loss Adjustment Expenses by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7		8		9		10
All Lines of Business	53.4	%	19.9	%	7.3	%	6.0	%	5.6	%	3.7	%	2.5	%	1.4	%	1.2	%	0.1	%

The percentages in the above table do not add up to 100 because the percentages represent averages across all accident years at each development stage.

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Stockholders Equity

12 Months Ended

Dec. 31, 2023

Stockholders Equity

Stockholders' Equity

Note 12 – Stockholders’ Equity

Dividends Declared

Dividends declared and paid on Common Stock were $-0- and $1,277,066 for the years ended December 31, 2023 and 2022, respectively. On November 11, 2022, the Company’s Board of Directors determined to suspend regular quarterly dividends. Future dividend policy will be subject to the discretion of the Company’s Board of Directors.

2014 Equity Participation Plan

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. On August 9, 2023, the Company’s stockholders approved an amendment to the 2014 Plan to increase the maximum number of shares of Common Stock of the Company that are authorized to be issued pursuant to the 2014 Plan to 1,900,000. The 2014 Plan terminates on August 12, 2024 and no further awards may be granted under the 2014 Plan after such date.

As of December 31, 2023, there were 584,596 shares reserved for grants under the 2014 Plan.

Stock Options

The results of operations for the years ended December 31, 2023 and 2022 include stock-based compensation expense for stock options totaling approximately $-0- and $9,000, respectively. Stock-based compensation expense related to stock options for the year ended December 31, 2022 is net of estimated forfeitures of approximately 18%. Such amounts have been included in the consolidated statements of operations and comprehensive loss within other operating expenses.  

No options were granted during the years ended December 31, 2023 and 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 year ended December 31, 2023 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, 2023		107,201	$	8.31		1.92	$	-
Granted		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Expired/Forfeited		-	$	-		-	$	-
Outstanding at December 31, 2023		107,201	$	8.31		0.94	$	-
Vested and Exercisable at December 31, 2023		107,201	$	8.31		0.94	$	-

The aggregate intrinsic value of options outstanding and options exercisable at December 31, 2023 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 $2.13 closing price of the Company’s Common Stock on December 31, 2023. No options were exercised, forfeited or expired during the year ended December 31, 2023. 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, 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.

As of December 31, 2023, there were no unvested options.

Restricted Stock Awards

A summary of the restricted Common Stock activity under the Company’s 2014 Plan for the year ended December 31, 2023 is as follows:

Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value per Share		Aggregate Fair Value
Balance at January 1, 2023		366,597		$	6.97	$	2,555,181
Granted		280,669		$	1.42	$	398,338
Vested		(82,865	)	$	3.84	$	(318,202	)
Forfeited		(13,820	)	$	4.17	$	(57,686	)
Balance at December 31, 2023		550,581		$	3.82	$	2,103,219

Fair value was calculated using the closing price of the Company’s Common Stock on the grant date. For the years ended December 31, 2023 and 2022, stock-based compensation for these grants was approximately $833,000 and $1,369,000, respectively, which is included in other operating expenses on the accompanying consolidated statements of operations and comprehensive 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 years ended December 31, 2023 and 2022, stock-based compensation under the 2021/2022 Offering was approximately $-0- and $15,000, respectively, which is included in other operating expenses on the accompanying consolidated statements of operations and comprehensive 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 price of $60,464.

Warrants

In connection with the Exchange Agreement (see Note 9 – Debt – “Note and Warrant Exchange”), as additional consideration, on December 15, 2022, the Company issued warrants to the Exchanging Noteholders to purchase 969,525 shares of Common Stock. The fair value of the warrants, using the Black-Scholes valuation formula, was $993,200, which has been capitalized as a deferred financing cost of the 2022 Notes. The fair value of the warrants is being amortized over the life of the warrants, which is 36.5 months.

The warrants are exercisable through December 30, 2025 at an exercise price of $1.00 per share. Holders of the warrants may exercise their outstanding warrants in cash, or, 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 warrants being exercised.

As of December 31, 2023, all warrants for the purchase of an aggregate of 969,525 shares of Common Stock were outstanding.

No warrants were granted during the year ended December 31, 2023.

The following weighted average assumptions were used for grants during the following periods:

	Years ended
	December 31,
	2023		2022
Dividend Yield		n/a		0.00%
Volatility		n/a		57.45%
Risk-Free Interest Rate		n/a		4.00%
Expected Life		n/a	3 years

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Statutory Financial Information and Accounting Policies

12 Months Ended

Dec. 31, 2023

Statutory Financial Information and Accounting Policies

Statutory Financial Information and Accounting Policies

Note 13 - Statutory Financial Information and Accounting Policies

For regulatory purposes, KICO prepares its statutory basis financial statements based on statutory accounting principles prescribed or permitted by the New York State Department of Financial Services (the “DFS”). The DFS requires insurance companies domiciled in New York State to prepare their statutory financial statements in accordance with Statements of Statutory Accounting Principles as promulgated by the National Association of Insurance Commissioners (the “NAIC”), subject to any deviations prescribed or permitted by the DFS. These statutory accounting practices differ substantially from GAAP used by most business entities. The more significant variances from GAAP are as follows:

•   Policy acquisition costs are charged to operations in the year such costs are incurred, rather than being deferred and amortized as premiums are earned over the terms of the policies.

•   Ceding commission revenues are earned when ceded premiums are written except for ceding commission revenues in excess of anticipated acquisition costs, which are deferred and amortized as ceded premiums are earned. GAAP requires that all ceding commission revenues be earned as the underlying ceded premiums are earned over the term of the reinsurance agreements.

•   Certain assets including certain receivables, a portion of the net deferred tax asset, prepaid expenses and furniture and equipment are not admitted.

•   Investments in fixed-maturity securities are valued at NAIC value for statutory financial purposes, which is primarily amortized cost. GAAP requires certain investments in fixed-maturity securities classified as available-for-sale, to be reported at fair value.

•   Certain amounts related to ceded reinsurance are reported on a net basis within the statutory basis financial statements. GAAP requires these amounts to be shown gross.  

• For SAP purposes, changes in deferred income taxes relating to temporary differences between net income for financial reporting purposes and taxable income are recognized as a separate component of gains and losses in surplus rather than included in income tax expense or benefit as required under GAAP.

State insurance laws restrict the ability of KICO to declare dividends. These restrictions are related to surplus and net investment income. Dividends are restricted to the lesser of 10% of surplus or 100% of investment income (on a statutory accounting basis) for the trailing 36 months, net of dividends paid by KICO during such period. State insurance regulators require insurance companies to maintain specified levels of statutory capital and surplus. Generally, dividends may be paid without the need for DFS approval from unassigned surplus, and the amount of an insurer’s unassigned surplus following payment of any dividends must be reasonable in relation to the insurer’s outstanding liabilities and adequate to meet its financial needs.

At December 31, 2023 and 2022, unassigned deficit was $7,661,958 and $5,069,593, respectively, and accordingly, dividends may not be paid without DFS approval. For the years ended December 31, 2023 and 2022, KICO paid dividends to Kingstone of $1,250,000 and $5,250,000, respectively. For the years ended December 31, 2023 and 2022, KICO recorded statutory basis net income (loss) of $1,343,111 and $(14,498,676), respectively. At December 31, 2023 and 2022, KICO reported statutory basis surplus as regards policyholders of $62,683,974 and $67,976,439, respectively, as filed with the DFS.

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Risk Based Capital

12 Months Ended

Dec. 31, 2023

Risk Based Capital

Risk Based Capital

Note 14 - Risk Based Capital

State insurance departments impose risk-based capital (“RBC”) requirements on insurance enterprises. The RBC Model serves as a benchmark for the regulation of insurance companies by state insurance regulators.  RBC provides for targeted surplus levels based on formulas, which specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk, and are set forth in the RBC requirements. Such formulas focus on four general types of risk: (a) the risk with respect to the company’s assets (asset or default risk); (b) the risk of default on amounts due from reinsurers, policyholders, or other creditors (credit risk); (c) the risk of underestimating liabilities from business already written or inadequately pricing business to be written in the coming year (underwriting risk); and (d) the risk associated with items such as excessive premium growth, contingent liabilities, and other items not reflected on the balance sheet (off-balance sheet risk). The amount determined under such formulas is called the authorized control level RBC (“ACL”).

The RBC guidelines define specific capital levels based on a company’s ACL that are determined by the ratio of the company’s total adjusted capital (“TAC”) to its ACL. TAC is equal to statutory capital, plus or minus certain other specified adjustments. The Company’s TAC was above the ACL for each of the last two years and is in compliance with RBC requirements as of December 31, 2023 and 2022.

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Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

Income Taxes

Note 15 – 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.

The provision for income taxes is comprised of the following:

Years ended ended December 31,	2023			2022
Current federal income tax expense	$	-		$	-
Current state income tax expense		2,730			1,630
Deferred federal and state income benefit		(1,199,915	)		(5,419,176	)
Income tax benefit	$	(1,197,185	)	$	(5,417,546	)

A reconciliation of the federal statutory rate to the Company’s effective tax rate is as follows:

Years ended December 31,	2023					2022
Computed expected tax benefit	$	(1,546,925	)	21.0	%	$	(5,867,891	)	21.0	%
State taxes, net of Federal benefit		(271,543	)	3.7			(190,894	)	0.7
State valuation allowance		282,864		(3.8	)		198,217		(0.7	)
Permanent differences
Dividends received deduction		(74,323	)	1.0			(122,331	)	0.4
Non-taxable investment income		(98,767	)	1.3			(95,763	)	0.3
Stock-based compensation		62,801		(0.9	)		117,700		(0.4	)
Sale leaseback transaction		315,894		(4.3	)		385,634		(1.4	)
Other permanent differences		96,789		(1.3	)		152,601		(0.5	)
Prior year tax matters		27,460		(0.4	)		(24,116	)	0.1
Other		8,565		(0.1	)		29,297		(0.1	)
Income tax benefit, as reported	$	(1,197,185	)	16.3	%	$	(5,417,546	)	19.4	%

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:

	December 31,		December 31,
	2023		2022
Deferred tax asset:
Net operating loss carryovers (1)	$	5,283,016	$	3,828,947
Claims reserve discount		1,204,334		1,238,544
Unearned premium		2,742,603		3,574,840
Deferred ceding commission revenue		1,986,782		2,230,109
Net unrealized losses on securities		3,357,463		4,920,837
Other		1,153,903		503,692
Total deferred tax assets		15,728,101		16,296,969
Deferred tax liability:
Investment in KICO (2)		759,543		759,543
Deferred acquisition costs		4,158,538		5,002,085
Intangibles		105,000		105,000
Depreciation and amortization		153,201		99,183
Total deferred tax liabilities		5,176,282		5,965,811
Net deferred income tax asset	$	10,551,819	$	10,331,158

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

	December 31,			December 31,
Type of NOL	2023			2022			Expiration
Federal only, NOL from 2023 and 2022	$	5,283,016		$	3,828,947		None
State only (A)		2,560,372			2,276,595		December 2027 - December 2043
Valuation allowance		(2,560,372	)		(2,276,595	)
State only, net of valuation allowance		-			-
Total deferred tax asset from net operating loss carryovers	$	5,283,016		$	3,828,947

(A) Kingstone generates operating losses for state purposes and has prior year NOLs available. The state NOL as of December 31, 2023 and 2022 was approximately $39,390,000 and $35,025,000, 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 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 2043. 

(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 insurance company 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 (collectively the “Untaxed Interest”). As of the date of acquisition, the deferred tax liability on the Untaxed Interest was $1,169,000. Under GAAP guidance for business combinations, a temporary difference with an indefinite life exists when the parent company 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.

The table below reconciles the changes in net deferred income tax assets (liabilities) to the deferred income tax benefit for the year ended December 31, 2023:

Increase in net deferred income tax assets	$	(220,661	)
Less: Deferred tax expense allocated to other comprehensive income		979,254
Deferred income tax benefit	$	(1,199,915	)

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 years ended December 31, 2023 and 2022. 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, 2020 through December 31, 2022 remain subject to examination.

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2023

Employee Benefit Plans

Employee Benefit Plans

Note 16 - Employee Benefit Plans

Employee Bonus Plan

For the years ended December 31, 2023 and 2022 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 $292,000 and $264,000, respectively, of expense for the years ended December 31, 2023 and 2022, related to the 401(k) Plan, which is recorded in other underwriting expenses on the accompanying consolidated statements of operations and comprehensive loss. 

Deferred Compensation Plan

On June 18, 2018, the Company adopted the Kingstone Companies, Inc. Deferred Compensation Plan (the "Deferred Compensation Plan"). Effective December 22, 2022, the Company terminated the Deferred Compensation Plan. The assets of the Deferred Compensation Plan will be liquidated by making payments to Participants in full satisfaction of their interest in the Deferred Compensation Plan (“Termination Payments”), which Termination Payments will be made no earlier than December 22, 2023 and will be completed no later than December 22, 2024.

The deferred compensation liability as of December 31, 2023 and 2022 amounted to $937,025 and $1,155,860, respectively, and is recorded in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies

Commitments and Contingencies

Note 17 - 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 Leases

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. The lease was not renewed.

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:

	Year ended			Year ended
Lease cost	December 31, 2023			December 31, 2022
Operating lease (1) (2)	$	165,368		$	172,494
Total lease cost (1) (2)	$	165,368		$	172,494
Other information on operating leases
Cash payments included in the measurement of lease
liability reported in operating cash flows	$	191,919		$	195,453
Discount rate		5.50	%		5.50	%
Remaining lease term in years		0.25			1.25

(1)	KICO rent expense is included in the consolidated statements of operations and comprehensive loss within other underwriting expenses.
(2)	Cosi rent expense is included in the consolidated statements of operations and comprehensive loss within other operating expenses.

Operating lease right-of-use assets, included in other assets, were $47,722 and $225,278 as of December 31, 2023 and 2022, respectively. Operating lease right-of-use liabilities, included in accounts payable, accrued expenses and other liabilities, were $47,722 and $225,278 as of December 31, 2023 and 2022, respectively.

The following table presents the contractual maturities of the Company’s lease liabilities as of December 31, 2023:

For the Year
Ending
December 31,	Total
2024	$	49,145
Total undiscounted lease payments		49,145
Less: present value adjustment		1,423
Operating lease liability (1)	$	47,722

Rent expense for the years ended December 31, 2023 and 2022 amounted to $165,368 and $172,494, respectively, and is included in the accompanying consolidated statements of operations and comprehensive loss within other underwriting expenses.

Employment Agreements

Meryl Golden, President and Chief Executive Officer; formerly 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 served as the Company’s Chief Operating Officer. Ms. Golden also served 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 expired on December 31, 2022.

Pursuant to the Golden Employment Agreement, Ms. Golden was entitled to receive an annual salary of $500,000. The Golden Employment Agreement also provided 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 vested 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.   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 took 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 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 her base salary. In addition, pursuant to the Second Amended Golden Employment Agreement, Ms. Golden was granted, under the terms of the 2014 Plan, during each of January 2023 and January 2024, 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 2023, Ms. Golden was granted 101,111 shares of restricted stock pursuant to this provision. 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. In January 2024, Ms. Golden was granted 64,085 shares of restricted stock pursuant to this provision. The 2024 grant will vest on December 31, 2024, based on the continued provision of services through such date. 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.

Effective as of October 1, 2023, Ms. Golden was appointed to the position of President and Chief Executive Officer of the Company to succeed Mr. Goldstein.

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

Employment Agreement effective as of January 1, 2020

On October 14, 2019, the Company and Barry B. Goldstein, the Company’s then 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 expired on December 31, 2022. The Second Amended Goldstein Employment Agreement extended 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 was 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 was 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 was terminated by the Company without cause or he resigned for good reason (each as defined in the Second Amended Goldstein Employment Agreement), Mr. Goldstein would have been 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 have been entitled to receive his base salary and accrued bonus through the date of death. Further, in the event that Mr. Goldstein’s employment was terminated by the Company without cause or he resigned 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 would have vested.  Mr. Goldstein would have been 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 was scheduled to 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. On September 18, 2023, Mr. Goldstein and the Company agreed to extend the vesting date of the one-sixth of the award that was scheduled to vest on December 29, 2023 to December 30, 2024.  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 was scheduled to 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. On September 18, 2023, Mr. Goldstein and the Company agreed to extend the vesting date of the one-fourth of the award that was scheduled to vest on December 29, 2023 to December 30, 2024.  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 was scheduled to 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.  On September 18, 2023, Mr. Goldstein and the Company agreed to extend the vesting date for the one-sixth of the award that was scheduled to vest on December 29, 2023 to December 30, 2024. 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 was scheduled to 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.  On September 18, 2023, Mr. Goldstein and the Company agreed to extend the vesting date for the one-fourth of the award that was scheduled to vest on December 29, 2023 to December 30, 2024. In January 2022, Mr. Goldstein was granted 27,300 shares of restricted stock pursuant to this provision.  This grant was scheduled to 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. On September 18, 2023, Mr. Goldstein and the Company agreed to extend the vesting date for the one-half of the award that was scheduled to vest on December 29, 2023 to December 30, 2024. 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. In addition, in the event of the termination of Mr. Goldstein’s employment with the Company for any reason, his unvested restricted stock will vest.

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 took 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 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 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.

Employment Agreement effective as of October 1, 2023

On August 9, 2023, the Company and Mr. Goldstein entered into an amendment to the Third Amended Goldstein Employment Agreement which took effect as of October 1, 2023. Pursuant to the amendment, effective as of October 1, 2023, Mr. Goldstein is no longer serving as President and Chief Executive Officer of the Company, the expiration date of the Third Amended Goldstein Employment Agreement shall be the earlier of (a) December 31, 2024 or (b) in the event Mr. Goldstein is not re-elected as Chairman of the Board of the Company following its 2024 annual meeting of stockholders, then the date of such annual meeting, Mr. Goldstein’s  salary was reduced to $300,000 per annum, and Mr. Goldstein is no longer entitled to receive a bonus based upon the Company’s net income.

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Loss Per Common Share

12 Months Ended

Dec. 31, 2023

Loss Per Common Share

Loss Per Common Share

Note 18 - Loss Per Common Share

Basic net loss per common share is computed by dividing net loss by the weighted-average number of shares of Common Stock outstanding. Diluted loss per common share reflects, in periods in which it has a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants as well as non-vested restricted stock awards.  The computation of diluted loss per common share excludes those options and warrants 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, warrants and non-vested restricted stock awards in periods where the exercise of such options and warrants or the vesting of such restricted stock awards would be anti-dilutive. For the years ended December 31, 2023 and 2022, no options, warrants or restricted stock awards 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, warrants and non-vested restricted stock awards.

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

	Years ended
	December 31,
	2023		2022
Weighted average number of shares outstanding		10,756,487		10,645,365
Effect of dilutive securities, common share equivalents:
Stock options		-		-
Warrants		-		-
Restricted stock awards		-		-
Weighted average number of shares outstanding,
used for computing diluted loss per share		10,756,487		10,645,365

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Subsequent Events

12 Months Ended

Dec. 31, 2023

Subsequent Events

Subsequent Events

Note 19 - Subsequent Events

The Company has evaluated events that occurred subsequent to December 31, 2023 through April 1, 2024, the date these consolidated financial statements were issued, for matters that required disclosure or adjustment in these consolidated financial statements.

Reinsurance

Effective January 1, 2024, the Company entered into a new quota share reinsurance treaty for its personal lines business and a new underlying excess of loss treaty (see Note 7 – Reinsurance).

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2023

Quarterly Financial Data (Unaudited)

Quarterly Financial Data (Unaudited)

Note 20 – Quarterly Financial Data (Unaudited)

The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2023 and 2022:

	2023
	March 31,			June 30,			September 30,			December 31,		Total
Net premiums earned	$	28,254,953		$	29,508,196		$	27,938,318		$	28,682,796	$	114,384,263
Ceding commission revenue		5,445,407			5,412,210			5,536,327			4,659,550		21,053,494
Net investment income		1,541,492			1,451,356			1,444,360			1,571,474		6,008,682
Net gains (losses) on investments		1,224,871			197,142			(824,370	)		1,536,911		2,134,554
Total revenues		36,627,763			36,719,988			34,236,671			36,606,292		144,190,714
Loss and loss adjustment expenses		25,039,410			19,580,702			21,932,453			16,296,645		82,849,210
Commission expense and
other underwriting expenses		15,411,381			15,154,820			14,529,055			14,179,335		59,274,591
Net (loss) income		(5,054,710	)		(522,017	)		(3,537,571	)		2,945,952		(6,168,346	)
Basic (loss) earnings per share	$	(0.47	)	$	(0.05	)	$	(0.33	)	$	0.27	$	(0.57	)
Diluted (loss) earnings per share	$	(0.47	)	$	(0.05	)	$	(0.33	)	$	0.26	$	(0.57	)

	2022
	March 31,			June 30,			September 30,			December 31,			Total
Net premiums earned	$	26,673,380		$	27,902,068		$	29,360,976		$	30,448,107		$	114,384,531
Ceding commission revenue		4,681,396			4,715,587			4,886,094			5,036,314			19,319,391
Net investment income		1,359,100			634,325			1,418,521			1,524,832			4,936,778
Net losses on investments		(4,398,405	)		(4,517,373	)		(397,658	)		(78,429	)		(9,391,865	)
Total revenues		28,551,295			28,979,250			35,537,635			37,091,110			130,159,290
Loss and loss adjustment expenses		22,941,198			18,656,041			22,027,516			24,765,287			88,390,042
Commission expense and
other underwriting expenses		15,167,035			15,106,028			15,978,291			15,027,269			61,278,623
Net loss		(9,197,532	)		(5,379,619	)		(3,997,621	)		(3,950,022	)		(22,524,794	)
Basic loss per share	$	(0.87	)	$	(0.51	)	$	(0.38	)	$	(0.37	)	$	(2.12	)
Diluted loss per share	$	(0.87	)	$	(0.51	)	$	(0.38	)	$	(0.37	)	$	(2.12	)

Due to changes in number of shares outstanding from quarter to quarter, the total earnings per share of the four quarters may not necessarily equal the total earnings per share for the year.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2023

Summary of Significant Accounting Policies

Basis Of Presentation; Going Concern

The accompanying consolidated financial statements have been prepared in accordance with GAAP assuming that the Company will continue as a going concern for a period of one year from the issuance date of the financial statements. The Company’s $30,000,000 5.5% Senior Unsecured Notes (the “2017 Notes”) were due on December 30, 2022. The Company’s continuation as a going concern was dependent on its ability to obtain financing and/or other funds to satisfy such obligation. The 2017 Notes were refinanced on December 15, 2022 under a note and warrant exchange agreement with a refinanced balance of $19,950,000 (the “2022 Notes”) as of December 31, 2022 and a maturity date of December 30, 2024 (see Note 9 - Debt).

The Company’s continuation as a going concern is dependent on its ability to obtain financing and/or other funds to satisfy the maturity obligation of the 2022 Notes on December 31, 2024.  Management believes that KICO’s insurance operations would be able to continue in the unlikely event that financing is not obtained. 

In accordance with Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 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 or that its plans alleviate the substantial doubt that was raised.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“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, the Company will need to obtain financing and/or other funds to satisfy its debt obligation on December 30, 2024. Management plans to refinance the 2022 Notes with a new issue of equity securities and/or investment grade debt securities of similar or longer maturity that would result in net proceeds equal to or greater than the principal amount of the 2022 Notes.  In connection therewith, the Company will be utilizing investment bankers to serve as placement agents for proposed offerings by the Company of its securities (including debt, equity and/or preferred securities). The offerings would be of such size as to generate proceeds to the Company of no less than $19,950,000.  The Company, subject to regulatory approval, may receive distributions paid to it by KICO, its insurance subsidiary, that could be utilized to repay the 2022 Notes. Further, the Company may also use available invested assets and cash to repay the 2022 Notes.  As of December 31, 2023, invested assets and cash was approximately $2,042,000.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described above.  The Company believes that its plan is probable of being implemented and that such plan would alleviate any adverse conditions.

Reclassification of Balances from Prior Year Disclosure

Components of ceded premiums written within prior year net earned premiums in Note 11 were reclassified to conform with an elected change in the current year presentation by recording ceded written premiums for the 12 months of the contract term at inception, rather than monthly over the contract term, providing a full disclosure of the premiums ceded. The reclassification had no effect on the Company’s previously reported financial condition, results of operations or cash flows.

Principles of Consolidation

The consolidated financial statements include the accounts of Kingstone and its wholly owned subsidiaries: (1) KICO and its wholly owned subsidiaries, CMIC Properties, Inc. and 15 Joys Lane, LLC, 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.

Revenue Recognition

Net Premiums Earned

Insurance policies issued by the Company are short-duration contracts. Accordingly, premium revenues, net of premiums ceded to reinsurers, are recognized as earned in proportion to the amount of insurance protection provided, on a pro-rata basis over the terms of the underlying policies. Unearned premiums represent premiums applicable to the unexpired portions of in-force insurance contracts at the end of each year.

Ceding Commission Revenue

Commissions on reinsurance premiums ceded are earned in a manner consistent with the recognition of the costs of the reinsurance, generally on a pro-rata basis over the terms of the policies reinsured. Unearned amounts are recorded as deferred ceding commission revenue. Certain reinsurance agreements contain provisions whereby the ceding commission rates vary based on the loss experience under the agreements. The Company records ceding commission revenue based on its current estimate of subject losses. The Company records adjustments to ceding commission revenue in the period that changes in the estimated losses are determined.

Loss and Loss Adjustment Expenses ("LAE") Reserves

The liability for loss and LAE represents management’s best estimate of the ultimate cost of all reported and unreported losses that are unpaid as of the balance sheet date. The liability for loss and LAE is estimated on an undiscounted basis, using individual case-basis valuations, statistical analyses and various actuarial reserving methodologies. The projection of future claim payment and reporting is based on an analysis of the Company’s historical experience, supplemented by analyses of industry loss data. Management believes that the reserves for loss and LAE are adequate to cover the ultimate cost of losses and claims to date; however, because of the uncertainty from various sources, including changes in reporting patterns, claims settlement patterns, judicial decisions, legislation, and economic conditions, actual loss experience may not conform to the assumptions used in determining the estimated amounts for such liability at the balance sheet date. Adjustments to these estimates are reflected in expense for the period in which the estimates are changed. Because of the nature of the business historically written, management believes that the Company has limited exposure to environmental claim liabilities.

Reinsurance

In the normal course of business, the Company seeks to reduce the loss that may arise from catastrophes or other events that cause unfavorable underwriting results.  This is done by reinsuring certain levels of risk in various areas of exposure with a panel of financially secure reinsurance carriers.

Reinsurance receivables represents management’s best estimate of paid and unpaid loss and LAE recoverable from reinsurers, and ceded losses receivable and unearned ceded premiums under reinsurance agreements. Ceded losses receivable are estimated using techniques and assumptions consistent with those used in estimating the liability for loss and LAE. Management believes that reinsurance receivables as recorded represent its best estimate of such amounts; however, as changes in the estimated ultimate liability for loss and LAE are determined, the estimated ultimate amount receivable from the reinsurers will also change. Accordingly, the ultimate receivable could be significantly in excess of or less than the amount recorded in the consolidated financial statements. Adjustments to these estimates are reflected in the period in which the estimates are changed. Loss and LAE incurred as presented in the consolidated statements of operations and comprehensive income (loss) are net of reinsurance recoveries.

Management has evaluated its reinsurance arrangements and determined that significant insurance risk is transferred to the reinsurers. Reinsurance agreements have been determined to be short-duration prospective contracts and, accordingly, the costs of the reinsurance are recognized over the life of the contract in a manner consistent with the earning of premiums on the underlying policies subject to the reinsurance contract.

Management estimates uncollectible amounts receivable from reinsurers based on an assessment of factors including the creditworthiness of the reinsurers and the adequacy of collateral obtained, where applicable. There was no allowance for uncollectible reinsurance as of December 31, 2023 and 2022. The Company did not expense any uncollectible reinsurance for the years ended December 31, 2023 and 2022. Significant uncertainties are inherent in the assessment of the creditworthiness of reinsurers and estimates of any uncollectible amounts due from reinsurers. Any change in the ability of the Company’s reinsurers to meet their contractual obligations could have a material adverse effect on the consolidated financial statements as well as KICO’s ability to meet its regulatory capital and surplus requirements.

The Company presents its net reinsurance receivables separately from its reinsurance balances payable in accordance with ASU 2011-11 Balance Sheet (Topic 210). Additionally, prepaid premiums for excess of loss and catastrophe reinsurance treaties are presented net in reinsurance balances payable as a reduction to reinsurance premiums payable as they meet the net accounting criteria of Topic 210.

Credit Losses

Current Expected Credit Losses (ASU 2016-13) added an asset impairment model that is based on expected losses rather than incurred losses.  The purpose of this ASU was to reduce complexity by decreasing the number of impairment models that entities use to account for debt instruments, allows for more timely recognition of credit losses by using an expected, rather than incurred loss, model, requires recognition of lifetime expected credit losses, and doesn’t require a specific method for estimating expected credit losses.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company maintains its cash balances at several financial institutions.

Investments

The Company classifies its fixed-maturity securities as either held-to-maturity or available-for-sale.  Fixed-maturity securities that the Company has the specific intent and ability to hold until maturity are classified as such and carried at amortized cost. Available-for-sale securities are reported at their estimated fair values based on quoted market prices from recognized pricing services, adjusted for allowance for expected credit losses, with unrealized gains and losses, net of tax effects, reported as a separate component of accumulated other comprehensive income. Realized gains and losses are determined on the specific identification method and reported in net loss in the consolidated statements of operations and comprehensive income (loss).

Equity securities are reported at their estimated fair values based on quoted market prices from recognized pricing services, adjusted for allowance for expected credit losses, with unrealized gains and losses reported in net gains (losses) on investments in the consolidated statements of operations and comprehensive income (loss). Other investments are reported at their estimated fair values using the net asset value (“NAV”) per share (or its equivalent) of the instrument with unrealized gains and losses reported in net gains (losses) on investments in the consolidated statements of operations and comprehensive income (loss). See Note - 3, Investments for additional discussion.  

The Company reviews all securities with unrealized losses on a quarterly basis to assess whether the decline in the securities’ fair value necessitates the recognition of an allowance for credit losses. Factors considered in the review include the extent to which the fair value has been less than amortized cost, current market interest rates and whether the unrealized loss is credit-driven or a result of changes in market interest rates. The Company also considers factors specific to the issuer including the general financial condition of the issuer, the issuers’ industry and future business prospects, any past failure of the issuer to make scheduled interest or principal payments, the payment structure of the investment and the issuers’ ability to make contractual payments on the investment.

The Company may sell its available-for-sale securities, equity securities, and other investments in response to changes in interest rates, risk/reward characteristics, liquidity needs or other factors. Investment income is accrued to the balance sheet dates of the consolidated financial statements and includes amortization of premium and accretion of discount on fixed-maturity securities. Interest is recognized when earned, while dividends are recognized when declared. Due and accrued investment income totaled approximately $1,262,000 and $1,299,000 as of December 31, 2023 and 2022, respectively, and is included in other assets on the accompanying consolidated balance sheets.

For fixed-maturity securities where a decline in fair value is below the amortized cost basis and the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, a credit-loss charge is recognized in net loss based on the fair value of the security at the time of assessment.

For available-for-sale fixed maturity securities, a credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis. The allowance for credit loss related to available-for-sale fixed maturity securities is the difference between the present value of cash flows expected to be collected and the amortized cost basis, limited by the amount that the fair value is less than the amortized cost basis. The Company considers all available evidence when determining whether an investment requires a credit loss write-down or allowance to be recorded, which is recognized in net loss through an allowance for credit losses. Any remaining decline in fair value represents the noncredit portion of the impairment, which is recognized in other comprehensive income (loss).

The Company did not identify any available-for-sale securities as of December 31, 2023 which presented a risk of loss due to credit deterioration of the security.

Premiums Receivable

Premiums receivable include balances due currently or in the future and are presented net of an allowance for doubtful accounts of approximately $269,000 and $39,000 as of December 31, 2023 and 2022, respectively. The allowance for uncollectible amounts is based on an analysis of amounts receivable giving consideration to historical loss experience and current economic conditions and reflects an amount that, in management’s judgment, is adequate. Uncollectible premiums receivable balances of approximately $75,000 and $133,000 were written off for the years ended December 31, 2023 and 2022, respectively. The Company evaluates cancellations after the balance sheet date and has determined that the cancellations are not material, therefore no additional cancellation reserve is recognized as of December 31, 2023 and 2022.

Deferred Policy Acquisition Costs

Policy acquisition costs represent the costs of writing business that vary with, and are primarily related to, the successful production of insurance business (principally commissions, premium taxes and certain underwriting salaries). Policy acquisition costs are deferred and recognized as expense as the related premiums are earned.

Intangible Assets

The Company has recorded acquired identifiable intangible assets. The cost of a group of assets acquired in a transaction is allocated to the individual assets including identifiable intangible assets based on their fair values. Identifiable intangible assets with a finite useful life are amortized over the period that the asset is expected to contribute directly or indirectly to the future cash flows of the Company. Intangible assets with an indefinite life are not amortized, but are subject to impairment testing if events or changes in circumstances indicate that it is more likely than not the asset is impaired. All identifiable intangible assets are tested for recoverability whenever events or changes in circumstances indicate that a carrying amount may not be recoverable. No impairment losses from intangible assets were recognized for the years ended December 31, 2023 and 2022.

Property and Equipment

Building and building improvements, automobiles, furniture, computer equipment, and computer software are reported at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. The Company estimates the useful life for computer equipment, automobiles, furniture and other equipment is three years, computer software is three to five years, and building and building improvements is 39 years.

The Company reviews its real estate assets used as its headquarters to evaluate the necessity of recording impairment losses for market changes due to declines in the estimated fair value of the property. In evaluating potential impairment, management considers the current estimated fair value compared to the carrying value of the asset. At December 31, 2023 and 2022, the fair value of the real estate assets is estimated to be in excess of the carrying value.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income (loss) in the period that includes the enactment date. The Company files a consolidated tax return with its subsidiaries. At December 31, 2023 and 2022, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required.

Concentration, Credit Risk and Market Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, investments, and premium and reinsurance receivables. At times, cash may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation (“FDIC”) insurance limits.  The Company has not experienced any losses on such accounts and management believes the Company is not exposed to any significant credit risk.

Stressed conditions, volatility and disruptions in capital markets or financial asset classes can have an adverse effect on the Company, in part because the Company has a large investment portfolio supporting the Company’s insurance liabilities, which are sensitive to changing market factors. These market factors, which include interest rates, credit spread, equity prices, and the volatility and strength of the capital markets, all affect the business and economic environment and, ultimately, the profitability of the Company’s business. The Company manages its investments to limit credit and other market risks by diversifying its portfolio among various security types and industry sectors based on KICO’s investment committee guidelines, which employ a variety of investment strategies.

As of December 31, 2023 and 2022, the Company’s cash equivalents were as follows:

	December 31,		December 31,
	2023		2022
Collateralized bank repurchase agreement (1)	$	899,646	$	159,596
Money market funds		2,430,317		2,458,223
Total	$	3,329,963	$	2,617,819

(1) The Company has a security interest in certain of the bank's holdings of direct obligations of the United States or one or more agencies thereof. The collateral is held in a hold-in-custody arrangement with a third party who maintains physical possession of the collateral on behalf of the bank.

At December 31, 2023, the outstanding premiums receivable balance is generally diversified due to the large number of individual insureds comprising the Company’s customer base. 

The Company also has receivables from its reinsurers. Reinsurance contracts do not relieve the Company of its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company periodically evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. See Note 7- Reinsurance for reinsurance recoverables on unpaid and paid losses by reinsurer. Management’s policy is to review all outstanding receivables quarterly as well as the bad debt write-offs experienced in the past and establish an allowance for doubtful accounts, if deemed necessary.

Direct premiums earned from lines of business in excess of 10% of the total subject the Company to concentration risk for the years ended December 31, 2023 and 2022 is as follows:

	Years ended December 31,
	2023			2022
Personal Lines		93.1	%		94.0	%
Premiums earned not subject to concentration		6.9	%		6.0	%
Total premiums earned		100.0	%		100.0	%

(1) For the years ended December 31, 2023 and 2022, premiums earned not subject to concentration are comprised primarily of one line of business.

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, and includes 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 consolidated financial statements.

Earnings (Loss) per share

Basic earnings (loss) per common share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per common share reflects, in periods in which they have a dilutive effect, the impact of common shares issuable upon the exercise of stock options and warrants as well as non-vested restricted stock awards.  The computation of diluted earnings (loss) per share excludes those options and warrants with an exercise price in excess of the average market price of the Company’s common shares during the periods presented.  Additionally, the computation of diluted earnings (loss) per share excludes unvested restricted stock awards as calculated using the treasury stock method. 

Advertising Costs

Advertising costs are charged to operations as incurred. Advertising costs are included in other underwriting expenses in the accompanying consolidated statements of operations and comprehensive income (loss) and were approximately $86,000 and $114,000 for the years ended December 31, 2023 and 2022, respectively.

Stock-based Compensation

Stock-based compensation expense in 2023 and 2022 is the estimated fair value of restricted stock awards and options granted, amortized on a straight-line basis over the requisite service period for the entire portion of the award less an estimate for anticipated forfeitures. The Company uses the “simplified” method to estimate the expected term of the options because the Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term.

Warrants

The Company’s outstanding issued warrants are accounted for as equity in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. The Company’s warrants are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date.

Compensated Absences

Employees of the Company are entitled to paid vacations, sick days, and other time off depending on job classification, length of service and other factors.  The Company has determined it is impracticable to estimate the amount of compensation of future absences and, accordingly, no liability has been recorded in the accompanying consolidated financial statements.  The Company’s policy is to recognize the cost of compensated absences when paid to employees. 

Leases

The Company records operating leases in accordance with ASU 2016-02 – Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, the Company recognized a right-of-use-asset and corresponding liability on the balance sheet for all leases, except for leases covering a period of fewer than 12 months. The liability has been measured at the present value of the future minimum lease payments taking into account renewal options if applicable plus initial incremental direct costs such as commissions. The minimum payments are discounted using the Company’s incremental borrowing rate. The right-of-use asset is amortized as rent expense on a straight-line basis.

Comprehensive Income (Loss)

Comprehensive income (loss) refers to revenues, expenses, gains and losses that are included in comprehensive income (loss) but are excluded from net income (loss) as these amounts are recorded directly as an adjustment to stockholders' equity, primarily from changes in unrealized gains and losses on available-for-sale securities, net of the related income taxes.

Accounting Changes

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”). This guidance applies to reinsurance and insurance receivables and other financing receivables. For available-for-sale fixed maturity securities carried at fair value, estimated credit losses will continue to be measured at the present value of expected cash flows; however, the other than temporary impairment (“OTTI”) concept has been eliminated. Under the previous guidance, estimated credit impairments resulted in a write-down of amortized cost. Under the new guidance, estimated credit losses are recognized through an allowance and reversals of the allowance are permitted if the estimate of credit losses declines. For available-for-sale fixed maturity securities where the Company has an intent to sell, impairment will continue to result in a write-down of amortized cost. ASU 2016-13 was effective for the Company on January 1, 2023. The Company determined as of the date of adoption that the updated guidance did not have an impact on its consolidated financial statements. Below is a summary of the significant accounting policies impacted by the adoption of ASU 2016-13.

The allowance for credit losses is a valuation account that is reported as a reduction of a financial asset’s cost basis and is measured on a pool basis when similar risk characteristics exist. Management estimates the allowance using relevant available information from both internal and external sources. Historical credit loss experience provides the basis for the estimation of expected credit losses and adjustments may be made to reflect current conditions and reasonable and supportable forecasts. Adjustments to historical loss information are made for any additional factors that come to the Company’s attention. This could include significant shifts in counterparty financial strength ratings, aging of past due receivables, amounts sent to collection agencies, or other underlying portfolio changes. Amounts are considered past due when payments have not been received according to contractual terms. The Company also considers current and forecasted economic conditions, using a variety of economic metrics and forecast indices. The sensitivity of expected credit losses relative to changes to these forecasted economic conditions can vary by financial asset class. The Company considers a reasonable and supportable forecast period to be up to 24 months from the balance sheet date. After the forecast period, the Company reverts to historical credit experience. The Company uses collateral arrangements such as letters of credit and amounts held in beneficiary trusts to mitigate credit risk, which are considered in the estimate of net amount expected to be collected.

The Company has determined that it was not subject to any other new accounting pronouncements that became effective during the year ended December 31, 2023. 

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. ASU-2023-09 is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of ASU 2023-09 on its disclosures. 

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2023

Summary of Significant Accounting Policies

Summary of deposits of cash equivalents

	December 31,		December 31,
	2023		2022
Collateralized bank repurchase agreement (1)	$	899,646	$	159,596
Money market funds		2,430,317		2,458,223
Total	$	3,329,963	$	2,617,819

Schedule of Concentration Risk

	Years ended December 31,
	2023			2022
Personal Lines		93.1	%		94.0	%
Premiums earned not subject to concentration		6.9	%		6.0	%
Total premiums earned		100.0	%		100.0	%

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Investments (Tables)

12 Months Ended

Dec. 31, 2023

Investments

Schedule of Available for Sale Securities

	December 31, 2023
	Cost or		Gross		Gross Unrealized Losses						Estimated		Net
	Amortized		Unrealized		Less than			More than			Fair		Unrealized
Category	Cost		Gains		12 Months			12 Months			Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies (1)	$	20,954,764	$	1,799	$	(17,373	)	$	-		$	20,939,190	$	(15,574	)
Political subdivisions of States,
Territories and Possessions		16,607,713		-		-			(3,209,161	)		13,398,552		(3,209,161	)
Corporate and other bonds
Industrial and miscellaneous		75,993,042		-		-			(5,885,296	)		70,107,746		(5,885,296	)
Residential mortgage and other asset
backed securities (2)		50,905,423		113,761		(2,144	)		(6,541,731	)		44,475,309		(6,430,114	)
Total fixed-maturity securities	$	164,460,942	$	115,560	$	(19,517	)	$	(15,636,188	)	$	148,920,797	$	(15,540,145	)

	December 31, 2022
	Cost or		Gross		Gross Unrealized Losses						Estimated		Net
	Amortized		Unrealized		Less than			More than			Fair		Unrealized
Category	Cost		Gains		12 Months			12 Months			Value		Losses
Fixed-Maturity Securities:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies (1)	$	23,874,545	$	1,479	$	(6,928	)	$	-		$	23,869,096	$	(5,449	)
Political subdivisions of States,
Territories and Possessions		17,108,154		-		(2,195,273	)		(1,771,494	)		13,141,387		(3,966,767	)
Corporate and other bonds
Industrial and miscellaneous		80,338,464		-		(5,796,994	)		(2,458,985	)		72,082,485		(8,255,979	)
Residential mortgage and other asset
backed securities (2)		53,597,264		58,398		(882,664	)		(7,150,803	)		45,622,195		(7,975,069	)
Total fixed-maturity securities	$	174,918,427	$	59,877	$	(8,881,859	)	$	(11,381,282	)	$	154,715,163	$	(20,203,264	)

Schedule of available for sale fixed maturity securities contractual maturity

	December 31, 2023				December 31, 2022
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	34,729,120	$	34,461,172	$	16,359,100	$	16,307,991
One to five years		31,803,338		30,416,618		18,605,987		14,085,113
Five to ten years		31,596,410		27,330,377		54,559,158		52,230,283
More than 10 years		15,426,651		12,237,321		31,796,918		26,469,581
Residential mortgage and other asset backed securities		50,905,423		44,475,309		53,597,264		45,622,195
Total	$	164,460,942	$	148,920,797	$	174,918,427	$	154,715,163

Schedule of equity securities

	December 31, 2023
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	13,583,942	$	-	$	(2,870,027	)	$	10,713,915
Fixed income exchange traded funds		3,711,232				(669,232	)		3,042,000
Mutual Funds		622,209		314,816		-			937,025
FHLBNY common stock		69,400		-		-			69,400
Total	$	17,986,783	$	314,816	$	(3,539,259	)	$	14,762,340

	December 31, 2022
			Gross		Gross			Estimated
Category	Cost		Gains		Losses			Fair Value
Equity Securities:
Preferred stocks	$	13,583,942	$	-	$	(3,589,313	)	$	9,994,629
Fixed income exchange traded funds,		3,711,232				(821,632	)		2,889,600
Mutual funds		716,626		158,635		-			875,261
FHLBNY common stock		74,900		-		-			74,900
Total	$	18,086,700	$	158,635	$	(4,410,945	)	$	13,834,390

Schedule of Other Investments

	December 31, 2023						December 31, 2022
			Gross		Estimated				Gross		Estimated
Category	Cost		Gains		Fair Value		Cost		Gains		Fair Value
Other Investments:
Hedge fund	$	1,987,040	$	1,910,110	$	3,897,150	$	1,987,040	$	784,612	$	2,771,652

Schedule of Held to Maturity Securities

	December 31, 2023
													Net
	Cost or		Gross		Gross Unrealized Losses						Estimated		Unrealized
	Amortized		Unrealized		Less than			More than			Fair		Gains/
Category	Cost		Gains		12 Months			12 Months			Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,860	$	15,045	$	(6,914	)	$	(18,163	)	$	1,218,828	$	(10,032	)
Political subdivisions of States,
Territories and Possessions		499,170		890		-			-			500,060		890
Exchange traded debt		304,111		-		-			(70,111	)		234,000		(70,111	)
Corporate and other bonds
Industrial and miscellaneous		5,020,400		-		-			(867,140	)		4,153,260		(867,140	)
Total	$	7,052,541	$	15,935	$	(6,914	)	$	(955,414	)	$	6,106,148	$	(946,393	)

	December 31, 2022
													Net
	Cost or		Gross		Gross Unrealized Losses						Estimated		Unrealized
	Amortized		Unrealized		Less than			More than			Fair		Gains/
Category	Cost		Gains		12 Months			12 Months			Value		(Losses)
Held-to-Maturity Securities:
U.S. Treasury securities	$	1,228,560	$	28,400	$	(34,077	)	$	-		$	1,222,883	$	(5,677	)
Political subdivisions of States,
Territories and Possessions		498,638		2,092		-			-			500,730		2,092
Exchange traded debt		304,111		-		(29,111	)		-			275,000		(29,111	)
Corporate and other bonds
Industrial and miscellaneous		5,734,831		36,968		(809,746	)		(360,278	)		4,601,775		(1,133,056	)
Total	$	7,766,140	$	67,460	$	(872,934	)	$	(360,278	)	$	6,600,388	$	(1,165,752	)

Schedule of Held to Maturity Securities by contractual maturity

	December 31, 2023				December 31, 2022
	Amortized		Estimated		Amortized		Estimated
Remaining Time to Maturity	Cost		Fair Value		Cost		Fair Value
Less than one year	$	-	$	-	$	708,535	$	743,575
One to five years		1,121,288		1,097,101		1,120,507		1,088,522
Five to ten years		1,414,911		1,270,770		1,402,704		1,200,720
More than 10 years		4,516,342		3,738,277		4,534,394		3,567,571
Total	$	7,052,541	$	6,106,148	$	7,766,140	$	6,600,388

Schedule of Investment Income

	Years ended
	December 31,
	2023		2022
Income:
Fixed-maturity securities	$	5,352,304	$	4,211,229
Equity securities		707,835		1,058,351
Cash and cash equivalents		255,905		63,683
Total		6,316,044		5,333,263
Expenses:
Investment expenses		307,362		396,485
Net investment income	$	6,008,682	$	4,936,778

Schedule of Securities with realized gains and losses on investments

	Years ended
	December 31,
	2023			2022
Realized Gains (Losses)
Fixed-maturity securities:
Gross realized gains	$	2,428		$	143,622
Gross realized losses		(21,239	)		(208,955	)
		(18,811	)		(65,333	)
Equity securities:
Gross realized gains		-			1,384,432
Gross realized losses		-			(2,048,395	)
		-			(663,963	)
Other Investments:
Gross realized gains		-			589,233
Gross realized losses		-			-
		-			589,233
Net realized losses		(18,811	)		(140,063	)
Unrealized (Losses) Gains
Equity Securities:
Gross gains		1,027,867			-
Gross losses		-			(6,494,380	)
		1,027,867			(6,494,380	)
Other Investments:
Gross gains		1,125,498			-
Gross losses		-			(2,757,422	)
		1,125,498			(2,757,422	)
Net unrealized gains (losses)		2,153,365			(9,251,802	)
Net gains (losses) on investments	$	2,134,554		$	(9,391,865	)

Schedule of Securities with Unrealized Losses

	December 31, 2023
	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	$	5,974,440	$	(17,373	)		1	$	-		-			-	$	5,974,440	$	(17,373	)
Political subdivisions of
States, Territories and
Possessions		-		-			-		13,398,552		(3,209,161	)		13		13,398,552		(3,209,161	)
Corporate and other
bonds industrial and
miscellaneous		-		-			-		70,107,746		(5,885,296	)		85		70,107,746		(5,885,296	)
Residential mortgage and
other asset backed securities		88,988		(2,144	)		4		38,675,604		(6,541,731	)		37		38,764,592		(6,543,875	)
Total fixed-maturity
securities	$	6,063,428	$	(19,517	)		5	$	122,181,902	$	(15,636,188	)		135	$	128,245,330	$	(15,655,705	)

	December 31, 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	$	18,918,196	$	(6,928	)		3	$	-		-			-	$	18,918,196	$	(6,928	)
Political subdivisions of
States, Territories and
Possessions		7,970,633		(2,195,273	)		9		5,170,753		(1,771,494	)		5		13,141,386		(3,966,767	)
Corporate and other
bonds industrial and
miscellaneous		56,910,104		(5,796,994	)		75		15,172,381		(2,458,985	)		15		72,082,485		(8,255,979	)
Residential mortgage and
other asset backed securities		10,145,880		(882,664	)		22		34,753,178		(7,150,803	)		26		44,899,058		(8,033,467	)
Total fixed-maturity
securities	$	93,944,813	$	(8,881,859	)		109	$	55,096,312	$	(11,381,282	)		46	$	149,041,125	$	(20,263,141	)

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2023

Fair Value Measurements

Schedule of Fair Value Measurements

	December 31, 2023
	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	$	20,939,190	$	-	$	-	$	20,939,190
Political subdivisions of
States, Territories and
Possessions		-		13,398,552		-		13,398,552
Corporate and other
bonds industrial and
miscellaneous		70,107,746		-		-		70,107,746
Residential mortgage and other asset backed securities		-		44,475,309		-		44,475,309
Total fixed maturities		91,046,936		57,873,861		-		148,920,797
Equity securities		14,762,340		-		-		14,762,340
Total investments	$	105,809,276	$	57,873,861	$	-	$	163,683,137

	December 31, 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	$	23,869,096	$	-	$	-	$	23,869,096
Political subdivisions of
States, Territories and
Possessions		-		13,141,387		-		13,141,387
Corporate and other
bonds industrial and
miscellaneous		71,585,115		497,370		-		72,082,485
Residential mortgage and other asset backed securities		-		45,622,195		-		45,622,195
Total fixed maturities		95,454,211		59,260,952		-		154,715,163
Equity securities		13,834,390		-		-		13,834,390
Total investments	$	109,288,601	$	59,260,952	$	-	$	168,549,553

Schedule of Hedge Fund Investments

Category	December 31, 2023		December 31, 2022
Other Investments
Hedge fund	$	3,897,150	$	2,771,652

Fair value hierarchy of long-term debt

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2024	$	-	$	17,812,500	$	-	$	17,812,500
	December 31, 2022
	Level 1		Level 2		Level 3		Total
Debt
Senior Notes due 2022	$	-	$	15,829,096	$	-	$	15,829,096

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Fair Value of Financial Instruments and Real Estate (Tables)

12 Months Ended

Dec. 31, 2023

Fair Value of Financial Instruments and Real Estate

Schedule of Fair Value of Financial Instruments

	December 31, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
Fixed-maturity securities-held-to maturity, Level 1	$	7,052,541	$	6,106,148	$	7,766,140	$	6,600,388
Cash and cash equivalents, Level 1	$	8,976,998	$	8,976,998	$	11,958,228	$	11,958,228
Premiums receivable, net, Level 1	$	13,604,808	$	13,604,808	$	13,880,504	$	13,880,504
Reinsurance receivables, net, Level 3	$	75,593,912	$	75,593,912	$	66,465,061	$	66,465,061
Real estate, net of accumulated depreciation, Level 3 (1)	$	1,992,529	$	3,540,000	$	2,050,644	$	2,800,000
Reinsurance balances payable, Level 3	$	12,837,140	$	12,837,140	$	13,061,966	$	13,061,966

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Intangibles Assets (Tables)

12 Months Ended

Dec. 31, 2023

Intangible Assets

Schedule of components of intangible assets and their useful lives, accumulated amortization, and net carrying value

	Useful		Gross				Net
	Life		Carrying		Accumulated		Carrying
	(in yrs)		Value		Amortization		Amount
Insurance license		-	$	500,000	$	-	$	500,000
Customer relationships		10		3,400,000		3,400,000		-
Other identifiable
intangibles		7		950,000		950,000		-
Total			$	4,850,000	$	4,350,000	$	500,000

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Reinsurance (Tables)

12 Months Ended

Dec. 31, 2023

Reinsurance

Line of Business

	Treaty Period
	2024/2025 Treaty						2023/2024 Treaty						2021/2023 Treaty
	July 1,			January 1,			July 1,			January 1,			July 1,			December 31,
	2024			2024			2023			2023			2022			2021
	to			to			to			to			to			to
	January 1,			June 30,			January 1,			June 30,			January 1,			June 30,
Line of Business	2025			2024			2024			2023			2023			2022
Personal Lines:
Homeowners, dwelling fire and canine legal liability
Quota share treaty:
Percent ceded (7)		27	%		27	%		30	%		30	%		30	%		30	%
Risk retained on intial
$1,000,000 of losses (5) (6) (7)	$	730,000		$	730,000		$	700,000		$	700,000		$	700,000		$	700,000
Losses per occurrence
subject to quota share
reinsurance coverage	$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000
Expiration date	January 1, 2025			January 1, 2025			January 1, 2024			January 1, 2024			January 1, 2023			January 1, 2023
Excess of loss coverage and
facultative facility
coverage (1) (5) (6)	$	400,000		$	8,400,000		$	8,400,000		$	8,400,000		$	8,400,000		$	8,400,000
	in excess of			in excess of			in excess of			in excess of			in excess of			in excess of
	$	600,000		$	600,000		$	600,000		$	600,000		$	600,000		$	600,000
Total reinsurance coverage
per occurrence (5) (6)	$	470,000		$	8,470,000		$	8,500,000		$	8,500,000		$	8,500,000		$	8,500,000
Losses per occurrence
subject to reinsurance
coverage (6)	$	1,000,000		$	8,000,000		$	8,000,000		$	8,000,000		$	9,000,000		$	9,000,000
Expiration date		(6	)	June 30, 2024			June 30, 2024			June 30, 2023			June 30, 2023			June 30, 2022
Catastrophe Reinsurance:
Initial loss subject to personal
lines quota share treaty (6)	$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000
Risk retained per catastrophe
occurrence (7) (8)		(6	)	$	9,500,000		$	8,750,000		$	8,750,000		$	7,400,000		$	7,400,000
Catastrophe loss coverage
in excess of quota share
coverage (2)		(6	)	$	315,000,000		$	315,000,000		$	335,000,000		$	335,000,000		$	490,000,000
Reinstatement premium
protection (3) (4)		(6	)	Yes			Yes			Yes			Yes			Yes

	Treaty Year
	July 1, 2023			July 1, 2022			July 1, 2021
	to			to			to
Line of Business	June 30, 2024			June 30, 2023			June 30, 2022
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, 2024			June 30, 2023			June 30, 2022

Schedule of approximate reinsurance recoverables

	Unpaid		Paid
($ in thousands)	Losses		Losses			Total		Security
December 31, 2023
Swiss Reinsurance America Corporation		11,027		6,560			17,587		-
Hannover Rueck SE		8,753		(92	)		8,661		-
Allied World Insurance Company		4,724		2,190			6,914		4	(1)
Ace Property and Casualty Insurance Company		3,205		1,840			5,045		-
Lancashire Insurance Company Limited		3,203		1,583			4,786		-
Others		2,377		3,296			5,673		2,662	(2)
Total	$	33,289	$	15,377		$	48,666	$	2,666
December 31, 2022
Swiss Reinsurance America Corporation		9,469		4,823		$	14,292	$	-
Hanover Rueck SE		8,681		2,698			11,379		-
Others		9,510		6,067			15,577		2,399	(3)
Total	$	27,660	$	13,588		$	41,248	$	2,399

Schedule of Ceding commissions earned

	Year ended
	December 31,
	2023		2022
Provisional ceding commissions earned	$	20,397,454	$	19,105,779
Contingent ceding commissions earned		656,040		213,612
	$	21,053,494	$	19,319,391

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Deferred Policy Acquisition Costs and Deferred Ceding Commission Revenue (Tables)

12 Months Ended

Dec. 31, 2023

Deferred Policy Acquisition Costs and Deferred Ceding Commission Revenue

Schedule of acquisition costs incurred

	Years ended
	December 31,
	2023			2022
Net deferred policy acquisition costs, net of deferred ceding
commission revenue, beginning of year	$	13,199,884		$	12,490,479
Cost incurred and deferred:
Commissions and brokerage		29,926,493			36,354,386
Other underwriting and policy acquisition costs		8,866,395			9,154,706
Ceding commission revenue		(7,209,248	)		(7,236,720	)
Net deferred policy acquisition costs		31,583,640			38,272,372
Amortization		(34,441,825	)		(37,562,967	)
		(2,858,185	)		709,405
Net deferred policy acquisition costs, net of deferred ceding
commission revenue, end of year	$	10,341,699		$	13,199,884

Schedule of Ending balances for deferred acquisition costs and deferred ceding commission revenue

	December 31,
	2023			2022
Deferred policy acquisition costs	$	19,802,564		$	23,819,453
Deferred ceding commission revenue		(9,460,865	)		(10,619,569	)
Balance at end of period	$	10,341,699		$	13,199,884

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Debt (Tables)

12 Months Ended

Dec. 31, 2023

Debt

Long-term debt

	December 31,
	2023		2022
2022 Notes, net	$	18,426,247	$	17,252,868
Equipment financing		6,817,283		7,905,655
Balance at end of period	$	25,243,530	$	25,158,523

Schedule of Note and Warrant Exchange

	December 31,			December 31,
	2023			2022
12.0% Senior Unsecured Notes	$	19,950,000		$	19,950,000
Warrants		(653,123	)		(979,684	)
Issuance costs		(870,630	)		(1,717,448	)
2022 Notes, net	$	18,426,247		$	17,252,868

Schedule of percentages of the principal amount

Period:	Percentage
December 30, 2022 to December 29, 2023		102.00	%
December 30, 2023 to September 29, 2024		101.00	%
September 30, 2024 to December 29, 2024		100.00	%

Schedule of Future contractual payment obligations

For the Year
Ending
December 31,	Total
2024		1,153,862
2025		1,223,293
2026		1,296,901
2027		1,119,021
		4,793,077
2027 purchase price		2,024,206
Total	$	6,817,283

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Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2023

Property and Equipment

Schedule of components of property and equipment

			Accumulated
	Cost		Depreciation			Net
December 31, 2023
Building	$	2,344,188	$	(1,004,096	)	$	1,340,092
Land		652,437		-			652,437
Furniture and office equipment		828,011		(828,011	)		0
Leasehold improvements		-		-			-
Computer equipment and software		25,022,986		(17,641,982	)		7,381,004
Automobile		134,034		(111,871	)		22,163
Total	$	28,981,656	$	(19,585,959	)	$	9,395,697
December 31, 2022
Building	$	2,344,188	$	(945,981	)	$	1,398,207
Land		652,437		-			652,437
Furniture and office equipment		828,011		(828,011	)		-
Leasehold improvements		-		-			-
Computer equipment and software		23,195,784		(14,738,212	)		8,457,572
Automobile		134,034		(100,315	)		33,719
Total	$	27,154,454	$	(16,612,519	)	$	10,541,935

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Property and Casualty Insurance Activity (Tables)

12 Months Ended

Dec. 31, 2023

Property and Casualty Insurance Activity

Schedule of Earned Premiums

	Direct			Assumed		Ceded			Net
Year ended December 31, 2023
Premiums written	$	200,174,502		$	-	$	(106,563,985	)	$	93,610,517
Change in unearned premiums		1,871,239			-		18,902,507			20,773,746
Premiums earned	$	202,045,741		$	-	$	(87,661,478	)	$	114,384,263
Year ended December 31, 2022
Premiums written	$	201,254,837		$	-	$	(79,195,016	)	$	122,059,821
Change in unearned premiums		(9,733,170	)		-		2,057,880			(7,675,290	)
Premiums earned	$	191,521,667		$	-	$	(77,137,136	)	$	114,384,531

Schedule of liability for loss and LAE expenses

	Gross		Reinsurance
	Liability		Receivables
December 31, 2023
Case-basis reserves	$	67,108,131	$	19,537,988
Loss adjustment expenses		17,448,218		3,085,429
IBNR reserves		37,261,513		10,665,233
Recoverable on unpaid losses				33,288,650
Recoverable on paid losses		-		15,376,899
Total loss and loss adjustment expenses	$	121,817,862		48,665,549
Unearned premiums				26,928,363
Receivables - reinsurance contracts				-
Total reinsurance receivables			$	75,593,912
December 31, 2022
Case-basis reserves	$	62,745,588	$	16,618,887
Loss adjustment expenses		16,847,618		2,364,053
IBNR reserves		38,746,307		8,676,560
Recoverable on unpaid losses				27,659,500
Recoverable on paid losses		-		13,588,981
Total loss and loss adjustment expenses	$	118,339,513		41,248,481
Unearned premiums				25,216,580
Receivables - reinsurance contracts				-
Total reinsurance receivables			$	66,465,061

Schedule of unpaid losses and LAE

	Years ended
	December 31,
	2023			2022
Balance at beginning of period	$	118,339,513		$	94,948,745
Less reinsurance recoverables		(27,659,500	)		(10,637,679	)
Net balance, beginning of period		90,680,013			84,311,066
Incurred related to:
Current year		82,856,483			85,690,180
Prior years		(7,273	)		2,699,862
Total incurred		82,849,210			88,390,042
Paid related to:
Current year		49,146,173			49,602,585
Prior years		35,853,838			32,418,510
Total paid		85,000,011			82,021,095
Net balance at end of period		88,529,212			90,680,013
Add reinsurance recoverables		33,288,650			27,659,500
Balance at end of period	$	121,817,862		$	118,339,513

Incurred Claims and Allocated Claim Adjustment Expenses

All Lines of Business
(in thousands, except reported claims data)
																					As of
	Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance																				December 31, 2023
	For the Years Ended December 31,																						Cumulative Number of Reported Claims by
Accident Year	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023		IBNR		Accident Year
	(Unaudited 2014 - 2022)
2014	$	14,193	$	14,260	$	14,218	$	14,564	$	15,023	$	16,381	$	16,428	$	16,434	$	16,486	$	16,472	$	-		2,138
2015				22,340		21,994		22,148		22,491		23,386		23,291		23,528		23,533		23,428		274		2,559
2016						26,062		24,941		24,789		27,887		27,966		27,417		27,352		27,271		90		2,881
2017								31,605		32,169		35,304		36,160		36,532		36,502		36,819		319		3,400
2018										54,455		56,351		58,441		59,404		61,237		61,145		598		4,234
2019												75,092		72,368		71,544		71,964		73,310		1,182		4,503
2020														63,083		62,833		63,217		63,562		1,310		5,886
2021																96,425		96,673		96,134		3,598		5,813
2022																		79,835		78,759		6,332		4,683
2023																				78,978		18,994		3,881
																	Total		$	555,877

Cumulative Paid Claims and Allocated Claim Adjustment Expenses

All Lines of Business
(in thousands)
	Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,
Accident Year	2014		2015		2016		2017		2018		2019		2020		2021		2022		2023
	(Unaudited 2014 - 2022)
2014	$	5,710	$	9,429	$	10,738	$	11,770	$	13,819	$	14,901	$	15,491	$	15,770	$	16,120	$	16,136
2015				12,295		16,181		18,266		19,984		21,067		22,104		22,318		22,473		22,519
2016						15,364		19,001		21,106		23,974		25,234		25,750		26,382		26,854
2017								16,704		24,820		28,693		31,393		32,529		33,522		34,683
2018										32,383		44,516		50,553		52,025		54,424		56,199
2019												40,933		54,897		58,055		60,374		63,932
2020														39,045		50,719		53,432		56,523
2021																56,282		77,756		82,317
2022																		45,856		65,732
2023																				46,280
																	Total		$	471,174
Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented																			$	84,703
All outstanding liabilities before 2014, net of reinsurance																				170
Liabilities for loss and allocated loss adjustment expenses, net of reinsurance																			$	84,872

Reconciliation of the net incurred and paid claims

Reconciliation of the Disclosure of Incurred and Paid Loss Development
to the Liability for Loss and LAE Reserves
	As of
(in thousands)	December 31, 2023
Liabilities for allocated loss and loss adjustment expenses, net of reinsurance	$	84,872
Total reinsurance recoverable on unpaid losses		33,289
Unallocated loss adjustment expenses		3,657
Total gross liability for loss and LAE reserves	$	121,818
(Components may not sum to totals due to rounding)

Supplementary unaudited information about average historical claims duration

Average Annual Percentage Payout of Incurred Loss and Allocated Loss Adjustment Expenses by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7		8		9		10
All Lines of Business	53.4	%	19.9	%	7.3	%	6.0	%	5.6	%	3.7	%	2.5	%	1.4	%	1.2	%	0.1	%

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Stockholders Equity (Tables)

12 Months Ended

Dec. 31, 2023

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, 2023		107,201	$	8.31		1.92	$	-
Granted		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Expired/Forfeited		-	$	-		-	$	-
Outstanding at December 31, 2023		107,201	$	8.31		0.94	$	-
Vested and Exercisable at December 31, 2023		107,201	$	8.31		0.94	$	-

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, 2023		366,597		$	6.97	$	2,555,181
Granted		280,669		$	1.42	$	398,338
Vested		(82,865	)	$	3.84	$	(318,202	)
Forfeited		(13,820	)	$	4.17	$	(57,686	)
Balance at December 31, 2023		550,581		$	3.82	$	2,103,219

Weighted average assumptions

	Years ended
	December 31,
	2023		2022
Dividend Yield		n/a		0.00%
Volatility		n/a		57.45%
Risk-Free Interest Rate		n/a		4.00%
Expected Life		n/a	3 years

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income Taxes

Schedule of provision for income taxes from continuing operations

Years ended ended December 31,	2023			2022
Current federal income tax expense	$	-		$	-
Current state income tax expense		2,730			1,630
Deferred federal and state income benefit		(1,199,915	)		(5,419,176	)
Income tax benefit	$	(1,197,185	)	$	(5,417,546	)

Schedule of a reconciliation of the federal statutory rate

Years ended December 31,	2023					2022
Computed expected tax benefit	$	(1,546,925	)	21.0	%	$	(5,867,891	)	21.0	%
State taxes, net of Federal benefit		(271,543	)	3.7			(190,894	)	0.7
State valuation allowance		282,864		(3.8	)		198,217		(0.7	)
Permanent differences
Dividends received deduction		(74,323	)	1.0			(122,331	)	0.4
Non-taxable investment income		(98,767	)	1.3			(95,763	)	0.3
Stock-based compensation		62,801		(0.9	)		117,700		(0.4	)
Sale leaseback transaction		315,894		(4.3	)		385,634		(1.4	)
Other permanent differences		96,789		(1.3	)		152,601		(0.5	)
Prior year tax matters		27,460		(0.4	)		(24,116	)	0.1
Other		8,565		(0.1	)		29,297		(0.1	)
Income tax benefit, as reported	$	(1,197,185	)	16.3	%	$	(5,417,546	)	19.4	%

Schedule of Deferrred Tax Assets and Liabilities

	December 31,		December 31,
	2023		2022
Deferred tax asset:
Net operating loss carryovers (1)	$	5,283,016	$	3,828,947
Claims reserve discount		1,204,334		1,238,544
Unearned premium		2,742,603		3,574,840
Deferred ceding commission revenue		1,986,782		2,230,109
Net unrealized losses on securities		3,357,463		4,920,837
Other		1,153,903		503,692
Total deferred tax assets		15,728,101		16,296,969
Deferred tax liability:
Investment in KICO (2)		759,543		759,543
Deferred acquisition costs		4,158,538		5,002,085
Intangibles		105,000		105,000
Depreciation and amortization		153,201		99,183
Total deferred tax liabilities		5,176,282		5,965,811
Net deferred income tax asset	$	10,551,819	$	10,331,158

Schedule of net operating loss carryovers

	December 31,			December 31,
Type of NOL	2023			2022			Expiration
Federal only, NOL from 2023 and 2022	$	5,283,016		$	3,828,947		None
State only (A)		2,560,372			2,276,595		December 2027 - December 2043
Valuation allowance		(2,560,372	)		(2,276,595	)
State only, net of valuation allowance		-			-
Total deferred tax asset from net operating loss carryovers	$	5,283,016		$	3,828,947

Schedule of changes in net deferred income tax liability to the deferred income tax provision

Increase in net deferred income tax assets	$	(220,661	)
Less: Deferred tax expense allocated to other comprehensive income		979,254
Deferred income tax benefit	$	(1,199,915	)

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies

Lease cost

	Year ended			Year ended
Lease cost	December 31, 2023			December 31, 2022
Operating lease (1) (2)	$	165,368		$	172,494
Total lease cost (1) (2)	$	165,368		$	172,494
Other information on operating leases
Cash payments included in the measurement of lease
liability reported in operating cash flows	$	191,919		$	195,453
Discount rate		5.50	%		5.50	%
Remaining lease term in years		0.25			1.25

Schedule of lease liability maturities

For the Year
Ending
December 31,	Total
2024	$	49,145
Total undiscounted lease payments		49,145
Less: present value adjustment		1,423
Operating lease liability (1)	$	47,722

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Loss Per Common Share (Tables)

12 Months Ended

Dec. 31, 2023

Loss 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

	Years ended
	December 31,
	2023		2022
Weighted average number of shares outstanding		10,756,487		10,645,365
Effect of dilutive securities, common share equivalents:
Stock options		-		-
Warrants		-		-
Restricted stock awards		-		-
Weighted average number of shares outstanding,
used for computing diluted loss per share		10,756,487		10,645,365

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2023

Quarterly Financial Data (Unaudited)

Schedule of Quarterly Financial Data

	2023
	March 31,			June 30,			September 30,			December 31,		Total
Net premiums earned	$	28,254,953		$	29,508,196		$	27,938,318		$	28,682,796	$	114,384,263
Ceding commission revenue		5,445,407			5,412,210			5,536,327			4,659,550		21,053,494
Net investment income		1,541,492			1,451,356			1,444,360			1,571,474		6,008,682
Net gains (losses) on investments		1,224,871			197,142			(824,370	)		1,536,911		2,134,554
Total revenues		36,627,763			36,719,988			34,236,671			36,606,292		144,190,714
Loss and loss adjustment expenses		25,039,410			19,580,702			21,932,453			16,296,645		82,849,210
Commission expense and
other underwriting expenses		15,411,381			15,154,820			14,529,055			14,179,335		59,274,591
Net (loss) income		(5,054,710	)		(522,017	)		(3,537,571	)		2,945,952		(6,168,346	)
Basic (loss) earnings per share	$	(0.47	)	$	(0.05	)	$	(0.33	)	$	0.27	$	(0.57	)
Diluted (loss) earnings per share	$	(0.47	)	$	(0.05	)	$	(0.33	)	$	0.26	$	(0.57	)

	2022
	March 31,			June 30,			September 30,			December 31,			Total
Net premiums earned	$	26,673,380		$	27,902,068		$	29,360,976		$	30,448,107		$	114,384,531
Ceding commission revenue		4,681,396			4,715,587			4,886,094			5,036,314			19,319,391
Net investment income		1,359,100			634,325			1,418,521			1,524,832			4,936,778
Net losses on investments		(4,398,405	)		(4,517,373	)		(397,658	)		(78,429	)		(9,391,865	)
Total revenues		28,551,295			28,979,250			35,537,635			37,091,110			130,159,290
Loss and loss adjustment expenses		22,941,198			18,656,041			22,027,516			24,765,287			88,390,042
Commission expense and
other underwriting expenses		15,167,035			15,106,028			15,978,291			15,027,269			61,278,623
Net loss		(9,197,532	)		(5,379,619	)		(3,997,621	)		(3,950,022	)		(22,524,794	)
Basic loss per share	$	(0.87	)	$	(0.51	)	$	(0.38	)	$	(0.37	)	$	(2.12	)
Diluted loss per share	$	(0.87	)	$	(0.51	)	$	(0.38	)	$	(0.37	)	$	(2.12	)

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Nature of Business (Details Narrative)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Nature of Business
Direct written premiums, percentage	88.30%	80.60%

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Summary of Significant Accounting Policies (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Summary of Significant Accounting Policies
Collateralized bank repurchase agreement (1)	$ 899,646	$ 159,596
Money market funds	2,430,317	2,458,223
Total	$ 3,329,963	$ 2,617,819

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Summary of Significant Accounting Policies (Details 1)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Total premiums earned	100.00%	100.00%
Personal Lines [Member] [Member] [Member] [Member]
Total premiums earned subject to concentration	6.90%	6.00%
Premiums earned not subject to concentration [Member]
Total premiums earned subject to concentration	93.10%	94.00%

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Summary of Significant Accounting Policies (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Invested assets and cash	$ 2,042,000
Allowance for doubtful accounts	269,000	$ 39,000
Uncollectible premiums receivable balances written off	75,000	133,000
Advertising costs	86,000	114,000
Gross proceeds	19,950,000
Accured Investment income	$ 1,262,000	$ 1,299,000
Preferred Stock
Estimates useful lifes	39 years
Senior Notes [Member]
Invested assets and cash	$ 19,950,000
Debt instrument, face amount	$ 30,000,000
Debt instrument, interest rate	5.50%

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Investments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Cost or amortized cost	$ 6,106,148	$ 6,600,388
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member]
Cost or amortized cost	16,607,713	17,108,154
Gross unrealized gains	0	0
Gross unrealized losses - less than 12 months	0	(2,195,273)
Gross unrealized loss - more than 12 months	(3,209,161)	(1,771,494)
Estimated fair value	13,398,552	13,141,387
Net unrealized gains	(3,209,161)	(3,966,767)
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member]
Cost or amortized cost	75,993,042	80,338,464
Gross unrealized gains	0	0
Gross unrealized losses - less than 12 months	0	(5,796,994)
Gross unrealized loss - more than 12 months	(5,885,296)	(2,458,985)
Estimated fair value	70,107,746	72,082,485
Net unrealized gains	(5,885,296)	(8,255,979)
Fixed Maturity Securities Residential Mortgage and other asset backed securities [Member]
Cost or amortized cost	50,905,423	53,597,264
Gross unrealized gains	113,761	58,398
Gross unrealized losses - less than 12 months	(2,144)	(882,664)
Gross unrealized loss - more than 12 months	(6,541,731)	(7,150,803)
Estimated fair value	44,475,309	45,622,195
Net unrealized gains	(6,430,114)	(7,975,069)
Fixed Maturity Securities Total Fixed Maturity Securities [Member]
Cost or amortized cost	164,460,942	174,918,427
Gross unrealized gains	115,560	59,877
Gross unrealized losses - less than 12 months	(19,517)	(8,881,859)
Gross unrealized loss - more than 12 months	(15,636,188)	(11,381,282)
Estimated fair value	148,920,797	154,715,163
Net unrealized gains	(15,540,145)	(20,203,264)
US Treasury and Government [Member]
Cost or amortized cost	20,954,764	23,874,545
Gross unrealized gains	1,799	1,479
Gross unrealized losses - less than 12 months	(17,373)	(6,928)
Gross unrealized loss - more than 12 months	0	0
Estimated fair value	20,939,190	23,869,096
Net unrealized gains	$ (15,574)	$ (5,449)

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Investments (Details 1) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Amortized cost	$ 164,460,942	$ 174,918,427
Estimated fair value	148,920,797	154,715,163
Residential mortgage and other asset backed securities [Member]
Amortized cost	50,905,423	53,597,264
Estimated fair value	44,475,309	45,622,195
Less Than One Year [Member]
Amortized cost	34,729,120	16,359,100
Estimated fair value	34,461,172	16,307,991
One To Five Years [Member]
Amortized cost	31,803,338	18,605,987
Estimated fair value	30,416,618	14,085,113
Five To Ten Years [Member]
Amortized cost	31,596,410	54,559,158
Estimated fair value	27,330,377	52,230,283
More Than 10 Years [Member]
Amortized cost	15,426,651	31,796,918
Estimated fair value	$ 12,237,321	$ 26,469,581

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Investments (Details 2) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Gross gains	$ 1,027,867	$ 0
Estimated fair value	3,897,150	2,771,652
Fixed Income Exchange Traded Funds [Member]
Cost	3,711,232	3,711,232
Gross losses	(669,232)	(821,632)
Estimated fair value	3,042,000	2,889,600
Mutual Funds [Member]
Cost	622,209	716,626
Gross gains	314,816	158,635
Gross losses	0	0
Estimated fair value	937,025	875,261
Other Investment Fixed Income Exchange Traded Funds [Member]
Cost	1,987,040	1,987,040
Gross gains	1,910,110	784,612
Estimated fair value	3,897,150	2,771,652
Equity Securities [Member]
Cost	17,986,783	18,086,700
Gross gains	314,816	158,635
Gross losses	(3,539,259)	(4,410,945)
Estimated fair value	14,762,340	13,834,390
Preferred Stock [Member]
Cost	13,583,942	13,583,942
Gross gains	0	0
Gross losses	(2,870,027)	(3,589,313)
Estimated fair value	10,713,915	9,994,629
FHLBNY common stock [Member]
Cost	69,400	74,900
Estimated fair value	$ 69,400	$ 74,900

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Investments (Details 3) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Net unrealized gains	$ (1,165,752)	$ (946,393)
Estimated fair value	6,600,388	6,106,148
Gross unrealized loss - more than 12 months	(955,414)	(360,278)
Gross unrealized losses - less than 12 months	(6,914)	(872,934)
Gross unrealized gains	15,935	67,460
Cost or amortized cost	7,052,541	7,766,140
Exchange Traded Debt [Member]
Net unrealized gains	(70,111)	(29,111)
Estimated fair value	234,000	275,000
Gross unrealized loss - more than 12 months	(70,111)	0
Gross unrealized losses - less than 12 months	0	(29,111)
Gross unrealized gains	85	0
Cost or amortized cost	304,111	304,111
Held-to-Maturity Securities US Treasury Securities [Member]
Net unrealized gains	(10,032)	(5,677)
Estimated fair value	1,218,828	1,222,883
Gross unrealized loss - more than 12 months	(18,163)	0
Gross unrealized losses - less than 12 months	(6,914)	(34,077)
Gross unrealized gains	15,045	28,400
Cost or amortized cost	1,228,860	1,228,560
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member]
Net unrealized gains	890	2,092
Estimated fair value	500,060	500,730
Gross unrealized loss - more than 12 months	0	0
Gross unrealized losses - less than 12 months	0	0
Gross unrealized gains	890	2,092
Cost or amortized cost	499,170	498,638
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member]
Net unrealized gains	(867,140)	(1,133,056)
Estimated fair value	4,153,260	4,601,775
Gross unrealized loss - more than 12 months	(867,140)	(360,278)
Gross unrealized losses - less than 12 months	0	(809,746)
Gross unrealized gains	0	36,968
Cost or amortized cost	$ 5,020,400	$ 5,734,831

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Investments (Details 4) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Amortized cost	$ 7,052,541	$ 7,766,140
Estimated fair value	6,106,148	6,600,388
Less Than One Year [Member]
Amortized cost	0	708,535
Estimated fair value	0	743,575
One To Five Years [Member]
Amortized cost	1,121,288	1,120,507
Estimated fair value	1,097,101	1,088,522
Five To Ten Years [Member]
Amortized cost	1,414,911	1,402,704
Estimated fair value	1,270,770	1,200,720
More Than 10 Years [Member]
Amortized cost	4,516,342	4,534,394
Estimated fair value	$ 3,738,277	$ 3,567,571

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Investments (Details 5) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Investments
Fixed-maturity securities	$ 5,352,304	$ 4,211,229
Equity securities	707,835	1,058,351
Cash and cash equivalents	255,905	63,683
Total	6,316,044	5,333,263
Investment expenses	307,362	396,485
Net investment income	$ 6,008,682	$ 4,936,778

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Investments (Details 6) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Investments
Gross realized gains	$ 2,428	$ 143,622
Gross realized losses	(21,239)	(208,955)
Total fixed-maturity securities	(18,811)	(65,333)
Gross realized gains	0	1,384,432
Gross realized losses	0	(2,048,395)
Total equity securities	0	(663,963)
Gross realized gains other	0	589,233
Gross realized losses other	0	0
Total Other investments	0	589,233
Net realized gains	(18,811)	(140,063)
Gross gains	1,027,867	0
Gross losses	0	(6,494,380)
Total equity securities	1,027,867	(6,494,380)
Gross gains	1,125,498	0
Gross losses	0	(2,757,422)
Total other investments	1,125,498	(2,757,422)
Net unrealized gains (losses)	2,153,365	(9,251,802)
Net gains (losses) on investments	$ 2,134,554	$ (9,391,865)

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Investments (Details 7) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Fixed-Maturity Securities Political Subdivisions Of States Territories And Possessions [Member]
Estimated fair value - less than 12 months	$ 0	$ 7,970,633
Unrealized losses - less than 12 months	0	(2,195,273)
Number of positions held - less than 12 months	0	9
Estimated fair value - 12 months or more	13,398,552	5,170,753
Unrealized losses - 12 months or more	(3,209,161)	(1,771,494)
Number of positions held - 12 months or more	13	5
Estimated fair value - total	13,398,552	13,141,386
Unrealized losses - total	(3,209,161)	(3,966,767)
Fixed-Maturity Securities Corporate And Other Bonds Industrial And Miscellaneous [Member]
Estimated fair value - less than 12 months	0	56,910,104
Unrealized losses - less than 12 months	0	(5,796,994)
Number of positions held - less than 12 months	0	75
Estimated fair value - 12 months or more	70,107,746	15,172,381
Unrealized losses - 12 months or more	(5,885,296)	(2,458,985)
Number of positions held - 12 months or more	85	15
Estimated fair value - total	70,107,746	72,082,485
Unrealized losses - total	(5,885,296)	(8,255,979)
Fixed Maturity Securities Residential Mortgage and other asset backed securities [Member]
Estimated fair value - less than 12 months	88,988	10,145,880
Unrealized losses - less than 12 months	(2,144)	(882,664)
Number of positions held - less than 12 months	4	22
Estimated fair value - 12 months or more	38,675,604	34,753,178
Unrealized losses - 12 months or more	(6,541,731)	(7,150,803)
Number of positions held - 12 months or more	37	26
Estimated fair value - total	38,764,592	44,899,058
Unrealized losses - total	(6,543,875)	(8,033,467)
Fixed Maturity Securities Total Fixed Maturity Securities [Member]
Estimated fair value - less than 12 months	6,063,428	93,944,813
Unrealized losses - less than 12 months	(19,517)	(8,881,859)
Number of positions held - less than 12 months	5	109
Estimated fair value - 12 months or more	122,181,902	55,096,312
Unrealized losses - 12 months or more	(15,636,188)	(11,381,282)
Number of positions held - 12 months or more	135	46
Estimated fair value - total	128,245,330	149,041,125
Unrealized losses - total	(15,655,705)	(20,263,141)
US Treasury and Government [Member]
Estimated fair value - less than 12 months	5,974,440	18,918,196
Unrealized losses - less than 12 months	(17,373)	(6,928)
Number of positions held - less than 12 months	1	3
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	5,974,440	18,918,196
Unrealized losses - total	$ (17,373)	$ (6,928)

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Investments (Details Narrativee) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Investments
Proceeds from the sale and redemption of fixed-maturity securities held-to-maturity	$ 750,000	$ 1,000,000
Proceeds from the sale or maturity of fixed-maturity securities available-for-sale	61,935,658	25,606,590
Sale - equity securities	99,917	19,379,047
Fair value of the eligible investments		11,412,000
Estimated fair value	6,999,000	8,691,000
Amount of required collateral	$ 6,999,000	$ 8,691,000

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Fair Value Measurements (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$ 20,939,190	$ 23,869,096
Political subdivisions of states, territories and possessions	13,398,552	13,141,387
Corporate and other bonds industrial and miscellaneous	70,107,746	72,082,485
Residential mortgage and other asset backed securities	44,475,309	45,622,195
Total fixed maturities	148,920,797	154,715,163
Equity securities	14,762,340	13,834,390
Total investments	163,683,137	168,549,553
Level 1 [Member]
U.S. Treasury securities and obligations of U.S. government corporations and agencies	20,939,190	23,869,096
Political subdivisions of states, territories and possessions	0	0
Corporate and other bonds industrial and miscellaneous	70,107,746	71,585,115
Residential mortgage and other asset backed securities	0	0
Total fixed maturities	91,046,936	95,454,211
Equity securities	14,762,340	13,834,390
Total investments	105,809,276	109,288,601
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	13,398,552	13,141,387
Corporate and other bonds industrial and miscellaneous	497,370	497,370
Residential mortgage and other asset backed securities	44,475,309	45,622,195
Total fixed maturities	57,873,861	59,260,952
Equity securities	0	0
Total investments	57,873,861	59,260,952
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 ($)	Dec. 31, 2023	Dec. 31, 2022
Hedge Funds [Member]
Hedge fund investments	$ 3,897,150	$ 2,771,652

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Fair Value Measurements (Details 2) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Senior Notes due 2022	$ 17,812,500	$ 15,829,096
Level 1 [Member]
Senior Notes due 2022	0	0
Level 2 [Member]
Senior Notes due 2022	17,812,500	15,829,096
Level 3 [Member]
Senior Notes due 2022	$ 0	$ 0

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Fair Value of Financial Instruments and Real Estate (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Reinsurance balances payable	$ 12,837,140	$ 13,061,966
Carrying Value [Member]
Fixed-maturity securities held-to-maturity	7,052,541	7,766,140
Cash and cash equivalents	8,976,998	11,958,228
Reinsurance receivables, net	75,593,912	66,465,061
Premiums receivable, net	13,604,808	13,880,504
Real estate, net of accumulated depreciation	1,992,529	2,050,644
Reinsurance balances payable	12,837,140	13,061,966
Fair Value [Member]
Fixed-maturity securities held-to-maturity	6,106,148	6,600,388
Cash and cash equivalents	8,976,998	11,958,228
Reinsurance receivables, net	75,593,912	66,465,061
Premiums receivable, net	13,604,808	13,880,504
Real estate, net of accumulated depreciation	3,540,000	2,800,000
Reinsurance balances payable	$ 12,837,140	$ 13,061,966

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Intangible Assets (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Gross Carrying Value	$ 4,850,000	$ 4,850,000
Accumulated Amortization	4,350,000	4,350,000
Net Carrying Amount	500,000	500,000
Insurance license [Member]
Gross Carrying Value	500,000	500,000
Accumulated Amortization	0	0
Net Carrying Amount	0	500,000
Customer relationships [Member]
Gross Carrying Value	3,400,000	3,400,000
Accumulated Amortization	3,400,000	3,400,000
Net Carrying Amount	$ 0	$ 0
Useful Life (in yrs)	10 years	10 years
Other identifiable intangibles [Member]
Gross Carrying Value	$ 950,000	$ 950,000
Accumulated Amortization	950,000	950,000
Net Carrying Amount	$ 0	$ 0
Useful Life (in yrs)	7 years	7 years

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Intangible Assets (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Intangible Assets
Amortization expense, related to intangibles	$ 0	$ 0

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Reinsurance (Details) - USD ($)	6 Months Ended					12 Months Ended
	Dec. 31, 2024	Jun. 30, 2024	Dec. 31, 2023	Jun. 30, 2023	Jun. 30, 2022	Jul. 01, 2024	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2022
Catastrophe [Member]
Initial loss subject to personal lines quota share treaty	$ 10,000,000	$ 10,000,000	$ 10,000,000	$ 10,000,000	$ 10,000,000	$ 10,000,000
Risk retained per catastrophe occurrence	(6)	9,500,000	7,400,000	8,750,000	7,400,000	8,750,000
Catastrophe loss coverage in excess of quota share coverage	$ (6)	$ 315,000,000	$ 335,000,000	$ 335,000,000	$ 490,000,000	$ 315,000,000
Reinstatement premium protection	6	Yes	Yes	Yes	Yes	Yes
Personal Lines [Member] [Member] [Member] [Member]
Percent ceded	27.00%	27.00%	30.00%	30.00%	30.00%	30.00%
Risk retained on initial $1,000,000 of losses (7)	$ 730,000	$ 730,000	$ 700,000	$ 700,000	$ 700,000	$ 700,000
Losses per occurrence subject to quota share reinsurance coverage	1,000,000	1,000,000	1,000,000	1,000,000	1,000,000	1,000,000
Excess of loss coverage and facultative facility coverage	400,000	8,400,000	8,400,000	8,400,000	8,400,000	8,400,000
In excess of	600,000	600,000	600,000	600,000	600,000	600,000
Total reinsurance coverage per occurrence	470,000	8,470,000	8,500,000	8,500,000	8,500,000	8,500,000
Losses per occurrence subject to reinsurance coverage	$ 1,000,000	$ 8,000,000	$ 9,000,000	$ 8,000,000	$ 9,000,000	$ 8,000,000
Expiration date	Jan. 01, 2025	Jan. 01, 2025	Jan. 01, 2023	Jan. 01, 2024	Jan. 01, 2023	Jan. 01, 2024
Expiration date- personal lines		Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2024
Personal Umbrella
Risk retained on initial $1,000,000 of losses (7)							$ 300,000	$ 300,000	$ 300,000
Losses per occurrence subject to quota share reinsurance coverage							5,000,000	5,000,000	5,000,000
Total reinsurance coverage per occurrence							$ 4,700,000	$ 4,700,000	$ 4,700,000
Expiration date							Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2022
Percent ceded - first million dollars of coverage							90.00%	90.00%	90.00%
Percent ceded - excess of one million dollars of coverage							95.00%	95.00%	95.00%

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Reinsurance (Details 1) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Swiss Reinsurance America Corporation
Unpaid Losses	$ 11,027,000	$ 9,469,000
Paid Losses	6,560,000	4,823,000
Total	17,587,000	14,292,000
Security	0	0
Hanover Rueck SE
Unpaid Losses	8,753,000	8,681,000
Paid Losses	(92,000)	2,698,000
Total	8,661,000	11,379,000
Security	0	0
Others
Unpaid Losses	2,377,000	9,510,000
Paid Losses	3,296,000	6,067,000
Total	5,673,000	15,577,000
Security	2,662,000	2,399,000
SCOR Reinsurance Company
Unpaid Losses	33,289,000	27,660,000
Paid Losses	15,377,000	13,588,000
Total	48,666,000	41,248,000
Security	2,666,000	$ 2,399,000
Allied World Assurance Company
Unpaid Losses	4,724,000
Paid Losses	2,190,000
Total	6,914,000
Security	4
Ace Property And Casualty Insurance Company [Member]
Unpaid Losses	3,205,000
Paid Losses	1,840,000
Total	5,045,000
Security	0
Lancashire Insurance Company Limited [Member]
Unpaid Losses	3,203,000
Paid Losses	1,583,000
Total	4,786,000
Security	$ 0

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Reinsurance (Details 2) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Reinsurance
Provisional ceding commissions earned	$ 20,397,454	$ 19,105,779
Contingent ceding commissions earned	656,040	213,612
Ceding commission revenue	$ 21,053,494	$ 19,319,391

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Reinsurance (Details Narrative) - USD ($)		12 Months Ended
	Jan. 02, 2022	Jun. 30, 2024	Dec. 31, 2023	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Reinsurance receivables			$ 26,928,000			$ 25,217,000
Reinsurance balances payable			$ 3,302,000			2,667,000
Description Of Reinsurance Losses			Treaty, 4% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2023/2024 Treaty, 17.5% of the 30% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2024/2025 Treaty, 22% of the 27% total of losses
Reinsurance description	Effective January 1, 2022, the Company entered into an underlying excess of loss reinsurance treaty (“Underlying XOL 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
Catastrophe loss coverage in excess of quota share coverage, descriptions			treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Excludes losses from named storms. Reduces retention to $500,000 from $700,000 under the 2021/2023 Treaty and 2023/2024 Treaty. Reduces retention to $530,000 from $730,000 under the 2024/2025 Treaty
Collateralized trust agreement			$ 2,236,000			1,918,000
Guaranteed irrevocable letter of credit			426,000			$ 481,000
Irrevocable letter of credit			4,000
Catastrophe [Member]
Reinstatement of premium protection, amount		$ 12,500,000		$ 9,800,000	$ 70,000,000
Excess of catastrophe coverage		10,000,000		$ 10,000,000	$ 10,000,000
Personal Lines [Member] [Member] [Member] [Member]
Single risk coverage			$ 9,000,000
Personal Lines [Member] [Member] [Member] [Member] | Minimum [Member]
Direct loss		3,500,000
Personal Lines [Member] [Member] [Member] [Member] | Maximum [Member]
Direct loss		$ 9,000,000

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Deferred Policy Acquisition Costs and Deferred Ceding Commission Revenue (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Deferred Policy Acquisition Costs and Deferred Ceding Commission Revenue
Net deferred policy acquisition costs, net of ceding commission revenue, beginning of year	$ 13,199,884	$ 12,490,479
Cost incurred and deferred:
Commission and brokerage	29,926,493	36,354,386
Other underwriting and policy acquisition costs	8,866,395	9,154,706
Ceding commission revenue	(7,209,248)	(7,236,720)
Net deferred policy acquisition costs	31,583,640	38,272,372
Amortization	(34,441,825)	(37,562,967)
Deferred acquisition costs	(2,858,185)	709,405
Net deferred policy acquisition costs, net of ceding commission revenue, ending of year	$ 10,341,699	$ 13,199,884

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Deferred Policy Acquisition Costs and Deferred Ceding Commission Revenue (Details 1) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Deferred Policy Acquisition Costs and Deferred Ceding Commission Revenue
Deferred policy acquisition costs	$ 19,802,564	$ 23,819,453
Deferred ceding commission revenue	(9,460,865)	(10,619,569)
Balance at end of period	$ 10,341,699	$ 13,199,884

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Debt (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Debt	$ 25,243,530	$ 25,158,523
2022 [Member]
Debt	18,426,247	17,252,868
Equipment Financing [Member]
Debt	$ 6,817,283	$ 7,905,655

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Debt (Details 1) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Long-term debt, net	$ 18,426,247	$ 17,252,868
2022 | Issuance costs
Long-term debt, net	870,630	1,717,448
2020 [Member | Warrant [Member]
Long-term debt, net	653,123	979,684
2020 [Member | Senior Unsecured Notes [Member]
Long-term debt, net	$ 19,950,000	$ 19,950,000

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Debt (Details 3)	12 Months Ended
	Dec. 31, 2023
December 30, 2022 to December 29, 2023
Accrued and unpaid interest	102.00%
December 30, 2023 to September 29, 2024
Accrued and unpaid interest	101.00%
September 30, 2024 to December 29, 2024
Accrued and unpaid interest	100.00%

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Debt (Details 4)	Dec. 31, 2023 USD ($)
Debt
2024	$ 1,153,862
2025	1,223,293
2026	1,296,901
2027	1,119,021
Gross total	4,793,077
2027 purchase price	2,024,206
Total	$ 6,817,283

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Debt (Details Narrative) - USD ($)		1 Months Ended	12 Months Ended
	Dec. 15, 2022	Oct. 27, 2022	Dec. 31, 2023	Dec. 31, 2022
Advances limit, description			new 12.0% Senior Notes due December 30, 2024 of the Company in the aggregate approximate principal amount of $19,950,000 (the “2022 Notes”); (ii) cash in the aggregate approximate amount of $1,595,000, together with accrued interest on the 2017 Notes; and (iii) three-year warrants for the purchase of an aggregate of 969,525 shares of Common Stock of the Company, exercisable at an exercise price of $1.00 per share (the “Warrants”). The remaining $8,455,000 principal amount of the 2017 Notes, together with accrued interest thereon, was paid on the maturity date of the 2017 Notes of December 30, 2022
Invested assets and cash			$ 2,042,000
Operating expenses			151,556,245	$ 158,101,630
Gross proceeds			19,950,000
Collateral amount			$ 11,412,000	12,228,000
Description of noteholder exchange			new 12.0% Senior Notes due December 30, 2024 of the Company in the aggregate approximate principal amount of $19,950,000 (the “2022 Notes”); (ii) cash in the aggregate approximate amount of $1,595,000, together with accrued interest on the 2017 Notes; and (iii) three-year warrants for the purchase of an aggregate of 969,525 shares of Common Stock of the Company, exercisable at an exercise price of $1.00 per share (the “Warrants”). The remaining $8,455,000 principal amount of the 2017 Notes, together with accrued interest thereon, was paid on the maturity date of the 2017 Notes of December 30, 2022
Treasury bill			$ 5,567,481	$ 5,567,481
2022 Notes [Member]
Issue of notes	$ 19,950,000
Issue rate	12.00%
Warrant fair value	$ 993,200
Transaction cost	$ 1,758,112
Debt instrument, yield percentage	13.92%		29.90%	26.70%
Operating expenses	$ 250,000
Equipment [Financing]
Total Treasury Bills			$ 6,999,000	$ 8,691,026
Total Rental Rate				2,030,036
Sale of fixed assets		$ 8,096,824
Fair value of pledged collateral			$ 11,960,000	8,691,000
Interest rate		5.86%
Finance amount principal		$ 126,877
Purchase of fixed assets		$ 2,024,206
Treasury bill				8,096,824
Federal Home Loan Bank of New York [Member]
Description of Advance Limits			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			$ 12,813,000	$ 13,192,000

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Property and Equipment (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Cost	$ 28,981,656	$ 27,154,454
Accumulated Depreciation	(19,585,959)	(16,612,519)
Net	9,395,697	10,541,935
Land [Member]
Cost	652,437	652,437
Accumulated Depreciation	0	0
Net	652,437	652,437
Automobiles [Member]
Cost	134,034	134,034
Accumulated Depreciation	(111,871)	(100,315)
Net	22,163	33,719
Computer Equipment [Member]
Cost	25,022,986	23,195,784
Accumulated Depreciation	(17,641,982)	(14,738,212)
Net	7,381,004	8,457,572
Furniture and Fixtures [Member]
Cost	828,011	828,011
Accumulated Depreciation	(828,011)	(828,011)
Net	0	0
Building [Member]
Cost	2,344,188	2,344,188
Accumulated Depreciation	(1,004,096)	(945,981)
Net	1,340,092	1,398,207
Leasehold Improvements [Member]
Cost	0	0
Accumulated Depreciation	0	0
Net	$ 0	$ 0

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Property and Equipment (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Property and Equipment
Depreciation expense	$ 2,973,440	$ 3,300,445

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Property and Casualty Insurance Activity (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Change in unearned premiums [Member]
Assumed	$ 0	$ 0
Ceeded	18,902,507	2,057,880
Net	20,773,746	(7,675,290)
Direct	1,871,239	(9,733,170)
Premiums earned [Member]
Assumed	0	0
Ceeded	(87,661,478)	(77,137,136)
Net	114,384,263	114,384,531
Direct	202,045,741	191,521,667
Premiums written Member
Assumed	0	0
Ceeded	(106,563,985)	(79,195,016)
Net	93,610,517	122,059,821
Direct	$ 200,174,502	$ 201,254,837

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Property and Casualty Insurance Activity (Details 1) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Gross Liability [Member]
Case-basis reserves	$ 67,108,131	$ 62,745,588
Loss adjustment expenses	17,448,218	16,847,618
IBNR reserves	37,261,513	38,746,307
Recoverable on paid losses	0	0
Total loss and loss adjustment expenses	121,817,862	118,339,513
Reinsurance Receivables [Member]
Case-basis reserves	19,537,988	16,618,887
Loss adjustment expenses	3,085,429	2,364,053
IBNR reserves	10,665,233	8,676,560
Recoverable on paid losses	15,376,899	13,588,981
Total loss and loss adjustment expenses	48,665,549	41,248,481
Recoverable on unpaid losses	33,288,650	27,659,500
Unearned premiums	26,928,363	25,216,580
Receivables - reinsurance contracts	0	0
Total reinsurance receivables	$ 75,593,912	$ 66,465,061

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Property and Casualty Insurance Activity (Details 2) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Property and Casualty Insurance Activity
Balance at beginning of period	$ 118,339,513	$ 94,948,745
Less reinsurance recoverables	(27,659,500)	(10,637,679)
Net balance, beginning of period	90,680,013	84,311,066
Incurred related to:
Current year	82,856,483	85,690,180
Prior years	(7,273)	2,699,862
Total incurred	82,849,210	88,390,042
Paid related to:
Current year	49,146,173	49,602,585
Prior years	35,853,838	32,418,510
Total paid	85,000,011	82,021,095
Net balance at end of period	88,529,212	90,680,013
Add reinsurance recoverables	33,288,650	27,659,500
Balance at end of period	$ 121,817,862	$ 118,339,513

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Property and Casualty Insurance Activity (Details 3)	12 Months Ended
	Dec. 31, 2023 USD ($) integer
Total incurred claims	$ 555,877,000
2014
2014 incurred claims	14,193,000
IBNR	$ 0
Cumulative Number of Reported Claims | integer	2,138
2015
2014 incurred claims	$ 14,260,000
IBNR	$ 274,000
Cumulative Number of Reported Claims | integer	2,559
2015 incurred claims	$ 22,340,000
2016
2014 incurred claims	14,218,000
IBNR	$ 90,000
Cumulative Number of Reported Claims | integer	2,881
2015 incurred claims	$ 21,994,000
2016 incurred claims	26,062,000
2018
2014 incurred claims	15,023,000
IBNR	$ 598,000
Cumulative Number of Reported Claims | integer	4,234
2015 incurred claims	$ 22,491,000
2016 incurred claims	24,789,000
2017 incurred claims	32,169,000
2018 incurred claims	54,455,000
2019
2014 incurred claims	16,381,000
IBNR	$ 1,182,000
Cumulative Number of Reported Claims | integer	4,503
2015 incurred claims	$ 23,386,000
2016 incurred claims	27,887,000
2017 incurred claims	35,304,000
2018 incurred claims	56,351,000
2019 incurred claims	75,092,000
2020
2014 incurred claims	16,428,000
IBNR	$ 1,310,000
Cumulative Number of Reported Claims | integer	5,886
2015 incurred claims	$ 23,291,000
2016 incurred claims	27,966,000
2017 incurred claims	36,160,000
2018 incurred claims	58,441,000
2019 incurred claims	72,368,000
2020 incurred claims	63,083,000
2021
2014 incurred claims	16,434,000
IBNR	$ 3,598,000
Cumulative Number of Reported Claims | integer	5,813
2015 incurred claims	$ 23,528,000
2016 incurred claims	27,417,000
2017 incurred claims	36,532,000
2018 incurred claims	59,404,000
2019 incurred claims	71,544,000
2020 incurred claims	62,833,000
2021 incurred claims	96,425,000
2020 [Member
2014 incurred claims	16,486,000
IBNR	$ 6,332,000
Cumulative Number of Reported Claims | integer	4,683
2015 incurred claims	$ 23,533,000
2016 incurred claims	27,352,000
2017 incurred claims	36,502,000
2018 incurred claims	61,237,000
2019 incurred claims	71,964,000
2020 incurred claims	63,217,000
2021 incurred claims	96,673,000
2022 incurred claims	79,835,000
2023
2014 incurred claims	16,472,000
IBNR	$ 18,994,000
Cumulative Number of Reported Claims | integer	3,881
2015 incurred claims	$ 23,428,000
2016 incurred claims	27,271,000
2017 incurred claims	36,819,000
2018 incurred claims	61,145,000
2019 incurred claims	73,310,000
2020 incurred claims	63,562,000
2021 incurred claims	96,134,000
2022 incurred claims	78,759,000
2023 incurred claims	78,978,000
2017
2014 incurred claims	14,564,000
IBNR	$ 319,000
Cumulative Number of Reported Claims | integer	3,400
2015 incurred claims	$ 22,148,000
2016 incurred claims	24,941,000
2017 incurred claims	$ 31,605,000

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Property and Casualty Insurance Activity (Details 4)	Dec. 31, 2023 USD ($)
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented	$ 84,703,000
All outstanding liabilities before 2014, net of reinsurance	170,000
Liabilities for claims and claim adjustment expenses, net of reinsurance	84,872,000
Total	471,174,000
2014
2014	5,710,000
2015
2014	9,429,000
2015	12,295,000
2016
2014	10,738,000
2015	16,181,000
2016	15,364,000
2018
2014	13,819,000
2015	19,984,000
2016	21,106,000
2017	24,820,000
2018	32,383,000
2019
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
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
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
2020 [Member
2014	16,120,000
2015	22,473,000
2016	26,382,000
2017	33,522,000
2018	54,424,000
2019	60,374,000
2020	53,432,000
2021	77,756,000
2022	45,856
2023
2014	16,136,000
2015	22,519,000
2016	26,854,000
2017	34,683,000
2018	56,199,000
2019	63,932,000
2020	56,523,000
2021	82,317,000
2022	65,732
2023	46,280
2017
2014	11,770,000
2015	18,266,000
2016	19,001,000
2017	$ 16,704,000

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Property and Casualty Insurance Activity (Details 5) $ in Thousands	Dec. 31, 2023 USD ($)
Property and Casualty Insurance Activity
Liabilities for loss and loss adjustment expenses, net of reinsurance	$ 84,872
Total reinsurance recoverable on unpaid losses	33,289
Unallocated loss adjustment expenses	3,657
Total gross liability for loss and LAE reserves	$ 121,818

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Property and Casualty Insurance Activity (Details 6)	Dec. 31, 2023
Property and Casualty Insurance Activity
Year One	53.40%
Year Two	19.90%
Year Three	7.30%
Year Four	6.00%
Year Five	5.60%
Year Six	3.70%
Year Seven	2.50%
Year Eight	1.40%
Year Nine	1.20%
Year Ten	0.10%

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Property and Casualty Insurance Activity (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Property and Casualty Insurance Activity
Advance premiums	$ 3,797,590	$ 2,839,028
Incurred losses and loss adjustment expenses are net of reinsurance recoveries under reinsurance contracts	41,091,205	39,658,365
Prior year loss development	$ 7,273	$ 2,699,862

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Stockholders Equity (Details)	12 Months Ended
	Dec. 31, 2023 USD ($) $ / shares shares
Aggregate Intrinsic Value , Exercised	$ 969,525
Exchange Traded Debt [Member]
Number of options outstanding, beginning | shares	107,201
Number of options outstanding, ending | shares	107,201
Number of options outstanding, vested and exercisable | shares	107,201
Weighted Average Remaining Contractual, Beginning balance	1 year 11 months 1 day
Weighted Average Remaining Contractual term, Ending balance	11 months 8 days
Weighted Average Remaining Contractual life, vested and exercisable	11 months 8 days
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	$ 8.31
Aggregate Intrinsic Value , begeining	$ 0
Aggregate Intrinsic Value , granted	0
Aggregate Intrinsic Value , Exercised	0
Aggregate Intrinsic Value , Expired/Forfeited	0
Aggregate Intrinsic Value ,ending	0
Aggregate Intrinsic Value , vested and exercisable	$ 0

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Stockholders Equity (Details 1) - Hedge Funds [Member]	12 Months Ended
	Dec. 31, 2023 USD ($) $ / shares shares
Number of options outstanding, beginning | shares	366,597
Granted shares | shares	280,669
Vested shares | shares	(82,865)
Forfeited shares | shares	(13,820)
Number of options outstanding, ending | shares	550,581
Weighted Average Grant Date Fair Value per Share, beginning balance | $ / shares	$ 6.97
Weighted Average Grant Date Fair Value per Share, granted | $ / shares	1.42
Weighted Average Grant Date Fair Value per Share, vested | $ / shares	3.84
Weighted Average Grant Date Fair Value per Share, forfeited | $ / shares	4.17
Weighted Average Grant Date Fair Value per Share, ending balance | $ / shares	$ 3.82
Aggregate Intrinsic Value , begeining | $	$ 2,555,181
Aggregate Fair Value, granted | $	398,338
Aggregate Fair Value, vested | $	(318,202)
Aggregate Fair Value, Forfeited | $	(57,686)
Aggregate Intrinsic Value ,ending | $	$ 2,103,219

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Stockholders Equity (Details 2)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Stockholders Equity
Dividend Yield	0.00%	0.00%
Volatility	0.00%	57.45%
Risk-Free Interest Rate	0.00%	4.00%
Expected Life		3 years

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Stockholders Equity (Details Narrative) - USD ($)	1 Months Ended	12 Months Ended
	Jun. 19, 2021	Dec. 31, 2023	Dec. 31, 2022	Dec. 30, 2025	Aug. 05, 2020
Dividends declared		$ 0	$ 1,277,066
Stock based compensation for stock options		0	$ 9,000
Net of estimated forfeitures of approximately			18.00%
Share-based compensation under offering		0	$ 15,000
Stock based compensation for grants		$ 833,000	$ 1,369,000
Weighted-average vesting period			36 years 6 months
Exercise price				$ 1.00
Closing price of common stock		$ 2.13
Stock option net forfeited		$ 969,525
Fair value of unamortized compensation cost			$ 993,200
Maximum share purchase under ESPP	750,000
Maximum share purchased by employee	5,000
Price per share		$ 1.82
Total purchase		$ 60,464
Purchase Of Warrants		969,525
Common stock shares authorized		33,222
Common stock shares authorized		20,000,000	20,000,000
10 May 2023 [Member]
Common stock shares authorized		1,900,000
Held-to-Maturity Securities US Treasury Securities [Member]
Common stock shares authorized		700,000			1,400,000
Shares reserved		584,596

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Statutory Financial Information and Accounting Policies (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Statutory Financial Information and Accounting Policies
Unassigned deficit	$ (7,661,958)	$ (5,069,593)
Dividends paid	1,250,000	5,250,000
Statutory basis net income (loss)	1,343,111	(14,498,676)
Statutory basis surplus	$ 62,683,974	$ 67,976,439
Dividend description	Dividends are restricted to the lesser of 10% of surplus or 100% of investment income (on a statutory accounting basis) for the trailing 36 months, net of dividends paid by KICO during such period

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Income Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Taxes
Current federal income tax expense (benefit)	$ 0	$ 0
Current state income tax expense (benefit)	2,730	1,630
Deferred federal and state income tax expense (benefit)	(1,199,915)	(5,419,176)
Income tax benefit	$ (1,197,185)	$ (5,417,546)

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Income Taxes (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Taxes
Computed expected tax expense	$ (1,546,925)	$ (5,867,891)
State taxes, net of Federal benefit	(271,543)	(190,894)
State valuation allowance	282,864	198,217
Permanent differences
Dividends received deduction	(74,323)	(122,331)
Non-taxable investment income	(98,767)	(95,763)
Stock-based compensation	62,801	117,700
Sale leaseback transaction	315,894	385,634
Other permanent differences	96,789	152,601
Prior year tax matters	27,460	(24,116)
Other	8,565	29,297
Income tax benefit, as reported	$ (1,197,185)	$ (5,417,546)
Computed expected tax expense	21.00%	21.00%
State taxes, net of Federal benefit	3.70%	0.70%
State valuation allowance	(3.80%)	(0.70%)
Dividends received deduction	1.00%	0.40%
Non-taxable investment income	1.30%	0.30%
Stock-based compensation	(0.90%)	(0.40%)
Sale leaseback transaction	(4.30%)	(1.40%)
Other permanent differences	(1.30%)	(0.50%)
Prior year tax matters	(0.40%)	0.10%
Other	(0.10%)	(0.10%)
Income tax benefit, as reported, percentage	16.30%	19.40%

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Income Taxes (Details 2) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Deferred tax asset:
Net operating loss carryovers (1)	$ 5,283,016	$ 3,828,947
Claims reserve discount	1,204,334	1,238,544
Unearned premium	2,742,603	3,574,840
Deferred ceding commission revenues	1,986,782	2,230,109
Net unrealized losses on securities	3,357,463	4,920,837
Other	1,153,903	503,692
Total deferred tax assets	15,728,101	16,296,969
Deferred tax liability:
Investment in KICO (2)	759,543	759,543
Deferred acquisition costs	4,158,538	5,002,085
Intangibles	105,000	105,000
Depreciation and amortization	153,201	99,183
Total deferred tax liabilities	5,176,282	5,965,811
Net deferred income tax (liability) asset	$ 10,551,819	$ 10,331,158

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Income Taxes (Details 3) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Taxes
Federal only, NOL	$ 5,283,016	$ 3,828,947
State only (A)	$ 2,560,372	2,276,595
State only A	December 2027 - December 2043
Valuation allowance	$ (2,560,372)	(2,276,595)
State only, net of valuation allowance	0	0
Total deferred tax asset from net operating loss carryovers	$ 5,283,016	$ 3,828,947

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Income Taxes (Details 4) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Taxes
Increase in net deferred income tax assets	$ (220,661)
Deferred tax expense allocated to other comprehensive income	979,254
Deferred income tax expense	$ (1,199,915)	$ (5,419,176)

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Income Taxes (Details Narrative) - USD ($)	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2017
Net operating loss carryover	$ 39,390,000	$ 35,025,000
Computer Equipment [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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Employee Benefit Plans (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Employee Benefit Plans
Contribution expense	$ 292,000	$ 264,000
Deferred compensation liability	$ 937,025	$ 1,155,860

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Commitments and Contingencies (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Commitments and Contingencies
Operating leases	$ 165,368	$ 172,494
Total lease cost	165,368	172,494
Cash payments included in the measurement of lease liability in operating cash flows	$ 191,919	$ 195,453
Discount rate	5.50%	5.50%
Remaining lease term in years in KICO	3 months	1 year 3 months

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Commitments and Contingencies (Details 1)	Dec. 31, 2023 USD ($)
Commitments and Contingencies
2024	$ 49,145
Total undiscounted lease payments	49,145
Less: present value adjustment	1,423
Operating lease liability	$ 47,722

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Commitments and Contingencies (Details Narrative) - USD ($)	1 Months Ended				12 Months Ended
	Jan. 31, 2021	Dec. 31, 2020	Jan. 31, 2020	Sep. 16, 2019	Dec. 31, 2023	Dec. 31, 2022	Jul. 08, 2019
Operating lease right-of-use assets					$ 47,722	$ 225,278
Operating lease right-of-use liabilities					47,722	225,278
Rent expenses					165,368	172,494
Stock-based compensation					$ 832,597	$ 1,392,612
Amended Employment Agreement [Member] | January 2020 [Member]
Restricted stock issued	230,769	17,191			157,431
Restricted stock value	$ 1,500,000	$ 136,500			$ 1,250,000
Golden Emloyment Agreement [Member] | Mery Golden Chief Operating Officer [Member]
Annual base salary	$ 500,000		$ 500,000	$ 500,000
Percent of average per annum	14.00%		3.00%
Option purchase				50,000
Percent of annual bonus	6.00%
Golden Emloyment Agreement [Member] | Mery Golden Chief Operating Officer [Member] | Minimum [Member]
Stock-based compensation	$ 945,000
Golden Emloyment Agreement [Member] | Mery Golden Chief Operating Officer [Member] | Maximum [Member]
Stock-based compensation	$ 2,835,000
Cosi Lease [Member]
Lease costs							$ 40,000
Employment Agreement [Member] | Barry GoldsteinMr. Goldstein [Member]
Restricted stock issued	21,000
January 2023 [Member] | Amended Employment Agreement [Member]
Restricted stock issued					101,111
Restricted stock value					$ 136,500
Annual base salary					$ 500,000
Percent of average per annum					3.00%
January 2024 [Member] | Amended Employment Agreement [Member]
Restricted stock issued					64,085

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Loss Per Common Share (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Loss Per Common Share
Weighted average number of shares outstanding	10,756,487	10,645,365
Effect of dilutive securities, common share equivalents: Stock options	$ 0	$ 0
Effect of dilutive securities, common share equivalents: Warrants	0	0
Effect of dilutive securities, common share equivalents: Restricted stock awards	$ 0	$ 0
Weighted average number of shares outstanding, used for computing diluted loss per share	10,756,487	10,645,365

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Quarterly Financial Data (Unaudited) (Details) - USD ($)	3 Months Ended		6 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2023	Dec. 31, 2022
Net premiums earned							$ 114,384,263	$ 114,384,531
Ceding commission revenue							21,053,494	19,319,391
Net investment income							6,008,682	4,936,778
Net gains (losses) on investments							2,134,554	(9,391,865)
Total revenues							144,190,714	130,159,290
Loss and loss adjustment expenses							82,849,210	88,390,042
Commission expense and other underwriting expenses							59,274,591	61,278,623
Net (loss) income							$ (6,168,346)	$ (22,524,794)
Basic earnings (loss) per share							$ (0.57)	$ (2.12)
Diluted earnings (loss) per share							$ (0.57)	$ (2.12)
Premium earned not subject to concentration [Member]
Net premiums earned	$ 28,254,953	$ 26,673,380	$ 29,508,196	$ 15,106,028	$ 27,938,318	$ 29,360,976	$ 28,682,796	$ 30,448,107
Ceding commission revenue	5,445,407	4,681,396	5,412,210	4,715,587	5,536,327	4,886,094	4,659,550	5,036,314
Net investment income	1,541,492	1,359,100	1,451,356	634,325	1,444,360	1,418,521	1,571,474	1,524,832
Net gains (losses) on investments	1,224,871	(4,398,405)	197,142	(4,517,373)	(824,370)	(397,658)	1,536,911	(78,429)
Total revenues	36,627,763	28,551,295	36,719,988	28,979,250	34,236,671	35,537,635	36,606,292	37,091,110
Loss and loss adjustment expenses	25,039,410	22,941,198	19,580,702	18,656,041	21,932,453	22,027,516	16,296,645	24,765,287
Commission expense and other underwriting expenses	15,411,381	15,167,035	15,154,820	27,902,068	14,529,055	15,978,291	14,179,335	15,027,269
Net (loss) income	$ (5,054,710)	$ (9,197,532)	$ (522,017)	$ (5,379,619)	$ (3,537,571)	$ (3,997,621)	$ 2,945,952	$ (3,950,022)
Basic earnings (loss) per share	$ (0.47)	$ (0.87)	$ (0.05)	$ (0.51)	$ (0.33)	$ (0.38)	$ 0.27	$ (0.37)
Diluted earnings (loss) per share	$ (0.47)	$ (0.87)	$ (0.05)	$ (0.51)	$ (0.33)	$ (0.38)	$ 0.26	$ (0.37)