A.M. Best downgrades Kingsway Financial

A.M. Best Co. has downgraded the issuer credit ratings (ICR) of Kingsway Financial Services Inc. (to “b” from “bb-”) and Kingsway General Insurance Company (to “bb” from “bbb-”).
The financial strength rating of Kingsway General Insurance Company was also downgraded from B+ (good) to B (fair).
“The downgrading of KFSI’s rating is a direct reflection of the reduced financial strength of the underlying insurance companies, poor operating performance and diminished financial flexibility,” an A.M. Best release says.
“Kingsway General’s ratings were downgraded due to its weakened capitalization from negative earnings as a result of adverse reserve development on prior accident year claims and ongoing challenges in the volatile Ontario automobile market,” it adds.
Coinciding with the downgrades, Kingsway Financial announced that it will focus its efforts to cut costs and exit non-core lines of business, as well as appoint Colin Simpson as senior vice president and chief strategy officer.
In this new role, Simpson will lead a company-wide effort to simplify the organization, eliminate operational inefficiencies and identify and implement cost cuts, the company release says.
“We are disappointed with this A.M. Best decision,” said Shaun Jackson, president and CEO of Kingsway Financial Services Inc. “However, we anticipate that there will be little impact to the majority of our operating companies, particularly for those companies in the non-standard automobile business.”