Kingsway Financial Services Inc. of Toronto, which owns several auto insurance firms in the U.S., released Friday its financial results for the three months ending Sept. 30.
During the latest quarter, the firm lost $20 million, compared to net income of $6.29 million during the same period in 2011. All figures are in U.S. currency.
Year-to-date, Kingsway has lost $40.27 million on continuing operations on revenue of $111.2 million.
In September, Kingsway announced the restructuring of its underwriting and services subsidiaries under two separate management teams and its intent to reduce staff at its Amigo subsidiary, based in Miami.
The underwriting group offers mainly auto insurance to American drivers do who not meet the criteria for coverage by standard insurers.
In September, Chicago-based KAI Advantage Auto Inc. was put into the underwriting group, which also includes Mendota Insurance Co. and Mendakota Insurance Co., both of which are based in Irvine, Calif. The group also includes Kingsway Amigo, Elk Grove Village, Illinois-based Universal Casualty Company, Advantage Auto, Kingsway Reinsurance Corp. and Kingsway Reinsurance (Bermuda) Ltd.
Insurance Services includes Assigned Risk Solutions Ltd. and Northeast Alliance Insurance Agency LLC.
For the entire firm, revenue as of Sept. 30 was $34.8 million, down from $68.18 million during the same period in 2011. Net premiums earned for the latest quarter were $26.5 million, down from $36.6 million during the third quarter of 2011.
The firm reported its operating loss in underwriting was $16.8 million in the latest quarter, compared to $9.0 million for the same period in 2011.
In its management discussion and analysis posted to SEDAR, Kingsway said the increase in operating loss for the latest quarter "is primarily attributed to the increase in unpaid loss and loss adjustment expenses, severance expense and lease abandonment expense."
The loss ratio in underwriting was 125.8% during the third quarter of 2012, compared to 93.7% for the third quarter of 2011.
"The increase in the loss ratio for the three months ended September 30, 2012 is primarily due to the increase in unpaid loss and loss adjustment expenses of $11.4 million as a result of the Insurance Underwriting restructuring announced during the third quarter of 2012," Kingsway stated.
"This amount includes $9.4 million primarily to increase prior accident year unpaid loss and loss adjustment expenses on Amigo's commercial automobile and personal injury protection coverages and $2.0 million to increase prior accident year unpaid loss and loss adjustment expenses on Mendota and Mendakota's personal automobile physical damage, uninsured motorist and bodily injury coverages."
Kingsway said the increase in expense ratio during the third quarter "is primarily due to severance expense of $0.7 million and lease abandonment expense of $1.3 million recorded as a result of the Insurance Underwriting restructuring announced during the third quarter of 2012."
On its balance sheet, Kingsway Total assets were $341.5 million, down from $374 million as of Dec. 31, 2011. Assets as of Sept. 30 included $95.3 million in investments, $60.87 million in cash and cash equivalents and $39 million in intangible assets.
Total liabilities as of Sept. 30 were $264.2 million, up from $257.7 million as of Dec. 31, 2011.