Kingsway cites underwriting and investment losses for poor Q3 results

Kingsway Financial Services Inc. (TSX: KFS, NYSE: KFS) reported a net loss of US$17.4 million in 2008 Q3, a 174% drop from 2007 Q3’s profit of US$23.6 million.
The combined ratio was 113.6% in Q3 compared to 102.1% in the same quarter last year.
Canadian operations reported a combined ratio of 103.4% and U.S. operations a combined ratio of 118.5%, a company release says.
Gross written premiums in the quarter dropped 26% from US$477.5 million in 2007 Q3, to US$354 million. The company’s underwriting loss increased 444% to US$50.6 million, compared to US$9.3 million quarter-over-quarter.
Kingsway’s losses reflect “disappointing underwriting results and net realized losses, including the write-down of investments, which were partially offset by the gain on the sale of York Fire and Casualty Insurance Company,” the statement says.
“The weak underwriting results and substantial impairment of investment portfolios at many leading insurers and reinsurers throughout the world will lead to a reduction of available capital at a time when premium rates need to be increased,” said Shaun Jackson, president and CEO of Kingsway. “These are predictable preconditions for much firmer pricing in insurance markets.”