Kingsway buys HI Holdings (September 12, 2005)

Kingsway Financial Services Inc. (TSE:KFS,NYSE:KFS) has announced that it has reached a definitive agreement to acquire HI Holdings, Inc. (HI), including HI’s wholly owned Zephyr Insurance Company Inc.
HI and Zephyr were formed in 2000 by its current shareholders, including Everest Reinsurance Company, Guy Carpenter & Company, Inc., Hannover Ruckversicherung AG, and Island Holdings, Inc.
Subject to regulatory approval, HI and Kingsway expect the sale to close in the fourth quarter of this year. Philo Smith & Co. acted as financial advisor to HI.
“We are extremely pleased with the acquisition of Zephyr Insurance Company,” said Bill Star, president and CEO of Kingsway Financial Services, Inc. “This transaction is consistent with our niche business strategy and our interest in acquiring profitable businesses that provide geographic and product diversification. Zephyr is a well run organization and we look forward to the company’s continued success as part of Kingsway.”
HI Chairman Paul Picardo said: “This is a successful outcome for all parties. Zephyr has developed into the market leader in its business, while serving the needs of the Hawaii community.
“Kingsway’s specialty business focus and long term commitment to the insurance business align Zephyr with excellent owners. We wish Zephyr’s President Richard Toyama and his team success as they transition to Kingsway.”
According to A.M. Best, Kingsway is the largest truck insurer in North America and the sixth largest non-standard automobile insurer in North America. It currently operates in the State of Hawaii through Lincoln General Insurance Company, and American Service Insurance Company is also licenced to transact business in the State.
Zephyr is the leading provider of residential hurricane insurance
coverage in the State of Hawaii. For the first six months of 2005, Zephyr
generated Gross Premiums Written of U$24 million and is projected to write
approximately U$50 million in Gross Premiums Written for 2005.