Kingstone Announces Agreement to Sell Headquarters Building with Pre-tax Gain of $1.9 Million

Rhea-AI Summary

Kingstone Companies (NASDAQ:KINS) has announced an agreement to sell its headquarters building and adjacent mixed-use property to Ulster County, NY. The transaction is expected to generate a pre-tax gain of $1.9 million ($1.5 million after-tax) in Q1 2025, subject to closing.

The sale aligns with Kingstone's transition to a remote workforce model and will reduce annual operating costs by $300,000. The company plans to maintain its presence in Kingston, NY by leasing a smaller space more suitable for its current needs.

Positive

• Pre-tax gain of $1.9 million ($1.5 million after-tax) from property sale
• Annual operating cost reduction of $300,000
• Operational efficiency improvement through transition to smaller leased space

Negative

• None.

Insights

Financial Analyst

The headquarters sale agreement marks a significant financial optimization move for Kingstone Companies, yielding both immediate and long-term benefits. The $1.9 million pre-tax gain ($1.5 million after-tax) will provide a notable boost to Q1 2025 earnings, while the $300,000 annual operating cost reduction represents approximately 0.14% of the company's market capitalization in perpetual savings.

The transition from property ownership to a leased facility reflects a strategic pivot in asset management that will enhance financial flexibility. By monetizing real estate assets and reducing fixed costs, Kingstone improves its capital efficiency and operational agility. The decision to maintain a smaller leased space while embracing a remote workforce model demonstrates management's commitment to cost optimization without sacrificing operational effectiveness.

The timing of this transaction is particularly advantageous given the current commercial real estate market conditions and the established success of remote work models in the insurance industry. The sale to Ulster County as a government entity provides transaction certainty and potentially expedited closing processes. The $300,000 annual cost reduction, when capitalized at a conservative 8% rate, suggests the move creates approximately $3.75 million in theoretical value, exceeding the immediate gain from the sale.

KINGSTON, NY / ACCESS Newswire / February 5, 2025 / Kingstone Companies, Inc. (Nasdaq:KINS) (the "Company" or "Kingstone"), a Northeast regional property and casualty insurance holding company, today announced that it has signed an agreement to sell its headquarters building along with an adjacent mixed-use property to Ulster County, NY. The transaction will result in an approximate pre-tax gain of $1.9 million ($1.5 million after-tax) and is expected to be recognized in the first quarter of 2025, subject to closing of the sale. Additionally, this transaction will reduce Kingstone's annual operating costs by approximately $300,000.

Meryl Golden, Chief Executive Officer of Kingstone, stated, "Kingstone has owned and occupied its headquarters building since acquiring control of Kingstone Insurance Company in 2009. We decided to market our properties last year after making the decision to continue as a remote workforce model. We are delighted that Ulster County found these properties ideal for their needs. Kingstone will maintain its presence in the Kingston, NY area by leasing a smaller space more suitable for our needs."

Disclaimer and Forward-Looking Statements

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those included in forward-looking statements due to a variety of factors. For more details on factors that could affect expectations, see Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

The risks and uncertainties include, without limitation, the following:

• the risk of significant losses from catastrophes and severe weather events;

• risks related to the lack of a financial strength rating from A.M. Best;

• risks related to our indebtedness due on June 30, 2026, including due to the need to comply with certain financial covenants and limitations on the ability of our insurance subsidiary to pay dividends to us;

• adverse capital, credit and financial market conditions;

• the unavailability of reinsurance at current levels and prices;

• the exposure to greater net insurance losses in the event of reduced reliance on reinsurance;

• the credit risk of our reinsurers;

• the inability to maintain the requisite amount of risk-based capital needed to grow our business;

• the effects of climate change on the frequency or severity of weather events and wildfires;

• risks related to the limited market area of our business;

• risks related to a concentration of business in a limited number of producers;

• legislative and regulatory changes, including changes in insurance laws and regulations and their application by our regulators;

• limitations with regard to our ability to pay dividends;

• the effects of competition in our market areas;

• our reliance on certain key personnel;

• risks related to security breaches or other attacks involving our computer systems or those of our vendors; and

• our reliance on information technology and information systems.

Kingstone undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Kingstone Companies, Inc.

Kingstone is a northeast regional property and casualty insurance holding company whose principal operating subsidiary is 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 15^th largest writer of homeowners insurance in New York. KICO is also licensed in New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine.

Investor Relations Contact:

Karin Daly
Vice President
The Equity Group Inc.
kdaly@equityny.com

SOURCE: Kingstone Companies, Inc.

View the original press release on ACCESS Newswire

FAQ

How much will Kingstone (KINS) gain from selling its headquarters in 2025?

Kingstone will realize a pre-tax gain of $1.9 million ($1.5 million after-tax) from the sale of its headquarters building and adjacent mixed-use property to Ulster County, NY.

How much will Kingstone (KINS) save annually after selling its headquarters?

Kingstone will reduce its annual operating costs by approximately $300,000 following the sale of its headquarters building.

When will Kingstone (KINS) recognize the gain from its headquarters sale?

The gain from the headquarters sale is expected to be recognized in the first quarter of 2025, subject to closing of the sale.

What are Kingstone's (KINS) plans after selling its headquarters building?

After selling its headquarters, Kingstone will maintain its presence in Kingston, NY by leasing a smaller space more suitable for its needs while continuing with a remote workforce model.