A.M. Best downgrades Kingsway Financial and its subsidiaries

A.M. Best Co. has downgraded the issuer credit rating and senior debt rating to “ccc” from “b-“ of Kingsway Financial Services Inc. (KFS) and Kingsway America Inc. (KAI).
In addition, A.M. Best has downgraded the financial strength rating (FSR) to B- (Fair) from B (Fair) and the ICRs to “bb-“ from “bb” of several KFSI wholly owned property and casualty subsidiaries, including JEVCO Insurance Company.
“The downgrading of the ratings of KFSI, KAI and selected operating subsidiaries reflects the continued deteriorating financial condition of the parent company through the first nine months of 2009,” an A.M. Best release says.
“This is attributed to significant operating losses, primarily within discontinued or run-off operations. As a result, it is A.M. Best’s opinion that this has contributed to a further diminution of Kingsway’s business profile and that of its insurance operating companies.”
Kingsway issued a statement in response to the downgrading.
“Kingsway is disappointed by the decision of A.M. Best and will continue to work with them to improve the ratings of the group.”
All ratings, with the exception of Lincoln General Insurance Company, which is unchanged, remain under review with negative implications pending resolution of the Lincoln matter before the courts in Pennsylvania.
In September 2009, A.M. Best downgraded Lincoln’s FSR to D (Poor) from B- (Fair).
In October 2009, KFS announced it disposed of its ownership of Lincoln by giving the stock to charity.
In November 2009, Pennsylvania’s insurance regulator took legal action to unwind the donation, alleging that KFS had illegally disposed of its ownership.
KFS quickly disputed the regulator’s allegations, insists that the donations of its shares were legal and has asked a Pennsylvania court to affirm this.
Less than a week later, on Nov. 23, 2009 KFS announced it was relinquishing its control of JEVCO.