Canadian Business Boosts Kingsway’s 1-Q

Kingsway Financial Services Inc. (TSX: KFS) boosted net income by 26% to $30.8 million for the first quarter of this year compared with the $24.4 million reported for the same period a year ago. As a result, earnings on a per share basis rose by 12% to 55 a share from the 49 a share posted for the first quarter of 2003. The company’s annual return on equity (ROE) for the latest reporting period amounts to 16.9%, showing moderate improvement on the 16.0% gain made over the same period the previous year.

Kingsway’s net written premiums rose by 3% year-on-year to $684.1 million for the latest reporting period (2003 1-Q: $666.7 million) while net earned premiums grew by 6% year-on-year to $584.8 million (2003 1-Q: $551.3 million). U.S. net earned premiums decreased over the latest quarter, while Canadian premiums grew by a substantial 38% to $155.1 million versus the $112.2 million reported for the first quarter of 2003.

The insurer’s combined ratio climbed slightly over the same comparative period to 98.2% from last year’s 96.8%, but the company managed to maintain a strong underwriting profit of $10.4 million. Both Canadian and U.S. operations produced solid combined ratios at 98.4% and 98.2% respectively.

Kingsway also benefited on the investment income side for the first quarter of this year, with income soaring by 42% year-on-year to $22.3 million (2003 1-Q: $15.8 million). Net realized gains grew significantly in first quarter 2004 to $6.8 million versus a loss of $700,000 disclosed for the first quarter of last year. Kingsway CEO Bill Star says he is particularly encouraged by growth in the company’s Canadian operations. “We are particularly encouraged by the strong improvement in results from our Canadian operations as a result of rate increases and claims fraud initiative we have implemented.” He adds, “we are well positioned to take advantage of the prevailing insurance market conditions, and see no softening of rates in any of our business lines”