Kingsway Q1 success driven by U.S. operations

At its AGM in Toronto today, Kingsway Financial Services (TSE, NYSE: KFS) marked yet another record quarter, with net income rising 77% year-on-year for the first three months of 2002. Net income is at $16.3 million versus $9.2 million for the first quarter 2001.The result is earnings per share of $0.33 for the quarter, compared to $0.27 last year. The jump is largely the result of the performance of U.S. operations, which now account for about 75% of Kingsway’s business, says CEO Bill Star.Gross written premiums (GWP) increased 118% for U.S. operations, and 37% for Canadian operations. Overall GWP grew by 93% for the quarter, to $416.4 million, versus $216.0 million in Q1 2001. Non-standard auto premiums grew 57%, while trucking and commercial auto premiums grew 211%, the result of “favorable rate increases and contraction of competitive markets”.Net premiums written also rose 93% in the quarter, to $400.3 million, from $207.0 million in 2001. Net earned premiums were up 91%, to $310.4 million, from $162.2 million last year for the same quarter. Earned premiums for U.S. operations grew 133%, while Canadian operations grew 29%. Unearned premiums were $516.7 million at the end of March, 2002, versus $424.1 million at 2001 yearend.The company’s combined ratio improved to 99.3%, producing an underwriting profit of $2.2 million, a substantial jump over Q1 2001’s profit of $0.5 million. However, Ontario auto results dragged the Canadian operations’ combined ratio up to 107.6%, versus the U.S. ratio of 96.2%.Kingsway’s investment income rose slightly during the quarter, to $13.7 million, from $13.5 million last year, with realized gains of $3.7 million this year versus $1.9 million in 2001.The company’s book value per share also increased 34%, to $11.37 from $8.47 last year at this time.