Kingsway announces Q4 expected loss and streamlining strategy

Kingsway Financial Services Inc. announced it expects to report a 2008 Q4 loss of US$324 million.
As a result, the company says it expects to divest its non-core business lines, streamline operating units and cut roughly 750 jobs.
Net realized losses from Kingsway’s securities portfolios have contributed to the quarterly loss. These losses will result in a net realized investment loss of approximately US$114 million in 2008 Q4, the company says.
“Kingsway will re-risk its business portfolio and focus investment by exiting non-core and unprofitable lines of business at its Lincoln and Southern United subsidiaries, subject to the necessary regulatory approval,” a statement says.
“Our objective will be to maximize the value of business controlled by wholly owned subsidiaries Avalon Risk Management Inc. and its assigned risk business through RPC Insurance Agency LLC, and a select amount of profitable specialty transportation and surety business distributed by key partners,” it continues.
Kingsway anticipates these changes will reduce written premiums by approximately US$350 million in 2009.
The company will consolidate operations in both Canada and the United States. The first step will be to transition from nine currently operating units to three operating units.
These units will include:
•    Canadian business: John McGlynn, president and CEO of Kingsway General Insurance Company, will be responsible for specialty lines and Serge Lavoie, president and CEO of Jevco Insurance Company Inc., will be responsible for standard lines and Quebec-based business.
•    Commercial lines business in the United States: Scott Wollney, president and CEO Lincoln, will serve as president and CEO of this operating unit.
•    Personal lines business in the U.S.: Marc Romanz, president and CEO of Universal Casualty Company, will serve as president and CEO of this unit.
Kingsway management estimates that as a result of its strategy, approximately 750 additional positions will be eliminated over the next 18-24 months.
“Management anticipates that the plan will deliver estimated annual savings in excess of US$80 million by the end of 2010, and significantly reduce its future cost base,” the statement says.