Kingsway reports record quarter

Specialty insurer Kingsway (TSE: KFS) reported record earnings and revenue for the third quarter 2001. Unlike many insurers who have seen abysmal results due to September 11 losses, Kingsway posted net income of $14.3 million, a 47% increase over the $9.7 million reported for third quarter 2000. This translates to record quarterly earnings of 36c a share.

The company’s gross written premiums rose 82% to $297.5 million, from $163.2 million for the same period last year. Canadian premiums grew 35%, while U.S. premiums rose 120%. The company attributes premium growth to success in its core non-standard auto and trucking lines, as well as recent partnerships with Access and Reliant in the U.S.

The company also achieved a combined ratio of 96.4%, and an annualized return on equity of 17%. At the same time, Standard and Poor’s upgraded Kingsway’s senior debt rating to BBB from BBB-, to reflect the company’s strong operating performance. “It is particularly gratifying to see the benefit of maintaining our disciplined operating strategy during the soft market conditions in 1999 and 2000 is now starting to come through in our results”, says Kingsway president and CEO Bill Star. “Increased pricing levels as well as a contraction of underwriting capacity in North American markets are creating unprecedented opportunities for us.”

Kingsway is also planning a public offering of 7.5 million common shares, and up to an additional 1.125 million common shares for over-allotments. The shares will be offered in both the U.S. and Canada, led by HSBC Securities and CIBC World Markets. Kingsway shares are currently trading at around $16.50 on the TSE.