Canadian Underwriter

Kingsway rating under review: A.M. Best

November 27, 2002   by Canadian Underwriter

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Rating agency A.M. Best has placed the financial strength and senior unsecured debt ratings of Kingsway Financial Services under review pending its annual review of the company.
A.M. Best’s concerns come from the company’s rapid growth and its “elevated underwriting leverage position”. Kingsway’s written premium growth this year has exceeded the rating agency’s expectations, with A.M. Best saying it has “concerns regarding Kingsway’s level of profitability and its ability to effectively manage and administer the underwriting and claims functions”. While noting that Kingsway has had a strong overall showing, A.M. Best points to some under-performing areas as an issue.
Kingsway is scheduled to meet with A.M. Best to discuss its strategy for managing growth moving into 2003. Kingsway is also awaiting the outcome of its current capital-raising initiative, which the company expects will help confirm its financial strength rating.
“Kingsway’s growth has been strong and it has always been Kingsway’s strategy to avail ourselves of opportunities in hard insurance markets”, says Bill Star, the company’s president and CEO. “We expect the initiatives we have taken and the completion of our previously announced capital raising program will be viewed favorably by A.M. Best and will allow us to continue to enjoy financial strength ratings which will not impact any aspect of our business.”

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