Kingsway maintains strong profit margin

Specialty risk insurer Kingsway Financial Services (TSX: KFS) saw net income for 2004 rise 54% to hit a record $131.0 million, or $2.32 per share. This equates to a return on equity (ROE) of 17.4% for last year versus the 12.9% posted for 2003. For the fourth quarter ending December 2004, the company produced net income of $36.3 million, or 64 a share, compared with $18.0 million, or 32 a share reported for the same period the previous year.

Underwriting mainly boosted the insurer’s net earnings, with the company posting a full-year underwriting profit of $51.3 million (combined ratio: 97.8%), compared to an underwriting loss of $33.9 million (combined ratio: 101.4%) for 2003. For the fourth quarter, Kingsway’s underwriting profit stood at $9.8 million (combined ratio: 98.2%), compared with an underwriting loss of $34.3 million (combined ratio: 105.6%) for the fourth quarter of 2003.

Kingsway’s net earned premiums for 2004 were moderately lower at $2.31 billion versus the $2.38 billion reported for 2003. For the fourth quarter of 2004, net earned premiums dropped to $550.9 million (Q4 2003: $617.6 million). However, the insurer was able to reduce its claims costs, resulting in 2004 producing a loss ratio of 70.8% (2003: 74.3%) and with the fourth quarter showing a loss ratio of 72.0% (Q4 2003: 78.5%). Company CEO Bill Star says “our diversified North American distribution platform and strong market positions in our core products provide us with a strong foundation as we move into 2005”.