Canadian Underwriter

Kingsway continues winning streak in second quarter

August 9, 2002   by Canadian Underwriter

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Specialty insurer Kingsway Financial (TSE, NYSE: KFS) is announcing another record showing in the second quarter of 2002, with net income up 42% over the same period last year, to $16.2 million from $11.4 million. For the period ending June 30, 2002, diluted earnings per share are $0.33, on par with second-quarter 2001, but with 42% more shares outstanding in the current quarter. Gross written premiums increased 93%, to $502.6 million for the current period, and net premiums increased 105% to $399.3 million, both quarterly records. Investment income also rose, to $17.0 million in the second quarter of this year from $11.6 million for the same period in 2001.
For the first six months of the year, net income rose 58%, to $32.5 million from $20.6 million for the first half of 2001, partly affected by the discontinued amortization of goodwill. Earnings per share over the same period were up 10% to $0.66.
Total assets at June 30, 2002 are $2.4 billion, and book value per share is $11.29, up from $8.69 a year ago.
Kingsway president Bill Star notes that the current pricing environment should provide continued growth into 2003. “The hard market conditions continue to provide unprecedented opportunities for profitable growth, particularly in the United States. In Canada we continue to see strong growth and are satisfied that the recently approved rate changes will return the Ontario Automobile product to underwriting profitability.”
The company’s combined ratio was 99.9% for the quarter, resulting in underwriting profit of $0.3 million, a drop from the same period last year, which saw an underwriting profit of $3.1 million. In particular, the Canadian operation’s combined ratio rose to 108.9% from 97.7%, something the company attributes to the troubled Ontario auto market. Having received permission to increase rates and cut certain rate categories in Ontario, the company expects to see improved results there by 2003.

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