Kingsway delivers robust earnings growth for 2002

Kingsway Financial Services (TSX: KFS) increased net earnings by 77% to $79.5 million for the 2002 financial year compared with the $44.9 million reported for the year prior. This translates to earnings of $1.61 a share for 2002 against the $1.19 a share shown for the previous year.

The company’s net income for the fourth quarter of 2002 rose by 154% year-on-year to $25.4 million (2001 4-Q: $10 million), with net earned premiums for the fourth quarter rising by 99% year-on-year to $1.74 billion (2001 4-Q: $872.8 million). Much of the insurer’s revenue growth came from U.S. operations where net earned premiums amounted to $435.1 million for the quarter and $1.32 billion for the full year. The Canadian operations produced net earned premiums of $113.6 million for the fourth quarter and $415.2 million for the full year.

The company’s combined ratio for the full year clocked in at 99.8% versus 99.1% for 2001. The company’s U.S. operations’ combined ratio came in at 97.2% with the Canadian operations showing more than a five percentage point year-on-year increase in the ratio to 108.4%. The Canadian operations produced an underwriting loss of $34.9 million for 2002 (2001: $9.8 million loss). The company ascribes this deterioration to the troubled Ontario auto market. Kingsway CEO Bill Star is confident that recent product reform changes in Ontario auto will bring about improvement. “We are…confident that we have taken the necessary actions to combat fraud problems in Ontario and are encouraged by the progress of legislative change.”