February 13, 2005 by Canadian Underwriter
Insurance giant Kingsway Financial Services (TSX, NYSE: KFS) saw its net income rise 54% to hit a record $131.0 million, or $2.32 per share, in 2004. The company had pulled in a previous record $85.3 million, or $1.63 per share, in earnings in 2003.
For the fourth quarter ending December 31, 2004, the company reports net income of $36.3 million, or $0.64 per share, compared to $18.0 million, or $0.32 for the fourth quarter of 2003.
Underwriting provided the boost to earnings, with the company posting a full-year underwriting profit of $51.3 million (combined ratio: 97.8%), compared to an underwriting loss of $33.9 million (combined ratio: 101.4%) in 2003. For the fourth quarter, Kingsway’s underwriting profit stood at $9.8 million (combined ratio: 98.2%), compared to an underwriting loss of $34.3 million (combined ratio: 105.6%) in the fourth quarter of 2003.
Gross written premiums dropped slightly to $2.61 billion in 2004 (2003: $2.64 billion), while net earned premiums were down to $2.31 billion (2003: $2.38 billion). For the fourth quarter of 2004, gross written premiums were similarly down slightly to $579.0 million (Q4 2003: $651.6 million), while net earned premiums dropped to $550.9 million (Q4 2003: $617.6 million).
But the company was also able to drag down claims costs, with 2004 producing a loss ratio of 70.8% (2003: 74.3%), with a fourth quarter loss ratio of 72.0% (Q4 2003: 78.5%).
CEO Bill Star notes the performance of the Canadian operations, where the 2004 combined ratio improved almost 14 points to 97.9% and the company reported written premium growth of 16%, despite paying out almost $16 million in policyholder refunds and Facility Association losses in Alberta. Looking forward, Star adds, "our diversified North American distribution platform and strong market positions in our core products provide us with a strong foundation as we move into 2005."
Overall, Kingsway is reporting annualized return on equity for 2004 of 17.4%, compared to 12.9% in 2003. And the company has decided to pay its first quarterly dividend of $0.05 to shareholders.