Kingsway produces 1st quarter recovery

Following a fourth quarter loss for the 1999 financial year, specialty listed insurer Kingsway Financial Services Inc. (TSE:KFS) brought its bottom-line figures back into the black for the first quarter of the current year.

Earnings for the first quarter of the 2000 financial year clocked in at 9 a share, half the level recorded for the comparable period in 1999. Net income amounted to $32 million (1999: $6.5 million) for the quarter on the back of net premiums of $127 million 0 which rose by 16% year-on-year. Gross premiums for the reporting period rose by 8% to a new quarterly record of $134 million (1999: 124.5 million). Canadian operations accounted for 44% of total net premiums written, reflecting a 27% increase to $56 million, for the quarter, while U.S-based premiums fell marginally to $77.9 million from $80.4 million recorded for the same period in 1999 (U.S. business now accounts for 56%. Of the company’s business in terms of net premiums).

Kingsway’s combined ratio at the end of the first quarter of this year stood at 105.8%, producing an underwriting loss of $6.3 million compared with an underwriting profit of $1.8 million achieved at the end of the first quarter of 1999. The combined ratio rose for both the Canadian and U.S. operations, with the former clocking in at 110.1% (1999: 98.9%) and the latter at 102.5% (1999: 97.8%). The Canadian operations were adversely affected by losses from the commercial auto book, which the company has since taken steps to correct with higher premium rates, the directors note.

Investment income for the first quarter remained almost static at $9.7 million compared with that achieved for the same period in 1999, while realized gains made in the latest reporting quarter jumped significantly to $1.7 million (1999: $106,000). Total assets for the first quarter grew slightly to $1.1 billion with the value of the investment portfolio showing a modest increase of 2% to $691 million (investment holdings now account for $20.30 a common share). “It is pleasing to report a profit this quarter after a loss for the first time in the previous quarter. We continue to see substantial growth in our non-standard automobile business in Canada, and improved pricing in several markets. We feel very positive that the higher level of premiums will help us reach our full potential in the next quarter and return us to an underwriting profit for the year,” says president Bill Star.