Kingstone Companies, Inc.
- Company Name
- Kingstone Companies, Inc.
- Stock Symbol
- Class Period
- March 14, 2018 to April 29, 2019
- Motion Deadline
- August 11, 2019
- Southern District of New York
The complaint charges Kingstone and certain of its officers with violations of the Securities Exchange Act of 1934. Kingstone offers property and casualty insurance products through its wholly-owned subsidiary, Kingstone Insurance Company.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, defendants failed to disclose that the Company lacked adequate internal control over financial reporting and did not adequately follow industry best practices related to claims handling, which resulted in the Company failing to record sufficient claims reserves. As a result of this information being withheld from the market, Kingstone securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $21 per share.
Then on April 29, 2019, the Company reduced its full year 2019 guidance due to a $2.5 million charge to its claims case reserves and a $2.5 million charge to its incurred but not reported, or IBNR, reserves. According to the Company, the guidance reduction was based on a “comprehensive review of [the Company’s] claims operations.” As a result of the charges, the Company “expect[ed] to end the full year with a combined ratio excluding catastrophe losses of 88% to 91% and catastrophe losses of 4 to 5 points.” On this news, the Company’s share price fell $2.07 per share, or more than 15%, to close at $11.61 per share on April 30, 2019.