Kingsway Net Income Jumps 22% for 2-Q

Kingsway Financial Services (TSX: KFS) saw net income for the second quarter of this year rise by 22% to $33.3 million compared with the $27.3 million reported for the same period a year ago. This translates to earnings of 59 a share, reflecting a 7% year-on-year gain (with approximately 14% more outstanding common shares in issue).

The insurer’s investment income provided the big boost, up 26% for the most recent quarter to $24.1 million from $19.2 million a year earlier. Kingsway saw premium growth in both its U.S. and Canadian operations, with U.S. gross written premiums rising 5% year-on-year to $476.4 million (2-Q 2003: $453.9 million) while Canadian GWP was up 28% to $225.6 million. With the two markets combined, the company’s GWP rose 11% year-on-year to $702.0 million compared with the $629.9 million shown for the same period in 2003.

For the second quarter of this year, the company posted an underwriting profit of $13.2 million on a combined ratio of 97.7%, a sharp increase over the profit of $4.7 million and the combined ratio of 99.2% posted a year earlier. On an annualized basis, return on equity was 17.2% for the second quarter and 17.0% for the first six months of 2004. “The results of our Canadian operations are particularly pleasing with each Canadian subsidiary producing an underwriting profit in the quarter. The decisive actions that we have taken in Canada are leading to premium growth and improved underwriting results,” says Kingsway CEO Bill Star. “The current maturity profile of our fixed income portfolio should also allow us to grow our investment income should interest rates rise.”

For the first six months of 2004, Kingsway’s net income came in at a quarterly record of $64.1 million (showing a 24% gain over the $51.7 million reported a year ago). Earnings for the first half of this year rose 10% to $1.14 a share. Over the same period, the insurer posted a record underwriting profit of $23.6 million on a combined ratio of 98.0%. As of January next year, Kingsway will report all financial results in U.S. dollars.