Canadian Underwriter

Kingsway minority shareholder seeks ouster of board members

November 13, 2008   by Canadian Underwriter

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After buying up shares in Kingsway Financial Services, a New York-based money management firm, The Stilwell Group, has served a requisition for a special shareholders meeting to replace two of Kingsway’s current board of directors, president and CEO Shaun W. Jackson and F. Michael Walsh, with two of its own chosen board members.
As of press time, no date for a special shareholders meeting has been scheduled.
Jackson said he had been approached on Nov. 5 by Joseph Stilwell, the manager and sole member of Stilwell Value LLC, one of the member organizations of The Stilwell Group. At that time, Stilwell advised Jackson of his intention to file a 13D form with the U.S. Securities and Exchange Commission, disclosing its acquisition of 7.85% of Kingsway Financial Services common stock.
In that 13D form, Stilwell indicated he had “requested a meeting with the issuer’s executive management and board chairman to discuss ways to maximize shareholder value and minimize both operational and balance sheet risks.”
The group also said in its filing on Nov. 7 that it intended “to seek at least two board seats.”
Jackson noted in an Investor Day speech (available online) that he was attempting to arrange the meeting requested on Nov. 5, whereupon he learned in a press release about The Stilwell Group’s intention to remove both himself and Walsh.
The Stilwell Group’s nominees to replace Jackson and Walsh are Spencer L. Schneider and Larry G. Swets, Jr.
Schneider has been engaged in the private practice of law in New York City since 1986. Swets has been an insurance company executive and advisor, including serving as director of investments for Kemper Insurance from June 1997 to May 2005.
In press statements, Stilwell centered out Kingsway’s existing board for failing to, in the words of his 13D filing, “maximize shareholder value and minimize both operational and balance sheet risks.”
Jackson, who remains president and CEO of Kingsway, said in his Investor Day remarks that “the board of directors of Kingsway are aware of the [Stilwell] requisition and is considering it within the context of their duties and responsibilities to the shareholders.”
Jackson goes on to say: “In Mr. Stilwell’s filings and in his subsequent press comments, he indicated his intent is to increase shareholder value. To that end, he states, he wanted to decrease the company’s expense ratio and underwriting profit.
“Of course, this is already our corporate strategy. And since I took over as president and CEO I have been actively working with the board and management team to effect both those changes and many more. We are and have been working diligently and decisively to increase shareholder value this year.”

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