Kingsway Net Jumps 96% on Underwriting Gains

Kingsway Financial Services Inc. (TSX, NYSE: KFS) saw its net income jump an impressive 96% to $30.6 million (54 per share) for the quarter ending September 30, 2004, up from $15.6 million (28 per share) for the third quarter of 2003. For the most recent quarter, the company saw gross written premiums fall to $618.7 million from $652.8 million a year ago, but net earned premiums were up slightly to $592.5 million from $591.8 million. Claims costs dropped to $411.4 million, (Q3 2003: $455.3 million) and the claims ratio for the most recent quarter fell to 69.4% (Q3 2003: 76.9%). Overall, the company posted an underwriting profit of $17.9 million (combined ratio: 97.0%) for the third quarter of 2004, compared to an underwriting loss of $22.1 million (combined ratio: 103.7%) a year earlier. Investment income was up 10% for the quarter to $24.9 million from $22.7 million.

For the first nine months of 2004, the company produced net income of $94.7 million ($1.68 per share), up from $67.3 million ($1.31 per share) the year prior. Year-to-date gross written premiums were up to $2.03 billion (2003 YTD: $1.99 billion), and net earned premiums held steady at $1.76 billion. The claims ratio in the first nine months of 2004 dropped to 70.4% from 72.9% the year before. And the company produced an underwriting profit of $41.5 million (combined ratio: 97.6%) compared to an underwriting profit of just $406,000 (combined ratio: 100.0%) at the same point in 2003. Canadian operations improved their combined ratio to 95.5% from 109.9% in 2003, while for U.S. operations, the combined ratio crawled up to 98.5% from 97.0%. Investment income jumped to $71.3 million in the first nine months of 2004, from $57.6 million last year. The company’s annualized return on equity at the end of September, 2004 stood at 16.8%, up from 13.9% a year earlier.