May 14, 2010 by Canadian Underwriter
Kingsway Financial Services Inc. has reported a $24.1-million profit for 2010 Q1, despite sustaining a $29.5-million underwriting loss in the same quarter.
Also, Kingsway has reported a new obstacle related to its run-off of Lincoln General, namely a dispute with the appointed run-off manager, Rockwell Financial Advisors LLC.
Financially, Kingsway returned to the black after posting a $58.3-million quarterly loss in 2009 Q1. Nonetheless, the company’s combined ratio was 136.2% for the quarter, an increase over 105.8% in 2009 Q1.
The disposal of Jevco in late March 2010 resulted in the recognition of unrealized foreign currency exchange gains of $34.1 million, the company reported.
In addition, a gain of $15.1 million was achieved through a repurchase of $84.8 million of the company’s debt.
The company reported gross premiums written of $84.3 million, a 38% decrease from the gross premiums written of $136.9 million in 2009 Q1.
The significant reduction in premium volume is a reflection of Kingsway’s strategy of discontinuing unprofitable lines of business, primarily within its commercial lines, the company reported in a press release.
Eighty-four per cent of gross premiums written were generated by the company’s core line of business: non-standard automobile.
Meanwhile, the appointed manager of the Lincoln General run-off, Rockwell Financial Advisors LLC, is taking Kingsway to arbitration to settle Rockwell’s $26-million demand for damages.
Rockwell claims it terminated the run-off agreement with Kingsway, because Kingsway failed to make certain payments, thus breaching the agreement.
Kingsway, on the other hand, says it intends to “defend the arbitration vigorously.” Kingsway accuses Rockwell of “abandoning the Lincoln run-off without cause,” among other things.