Kingsway reports a 2009 Q3 loss, but says it has turned a corner financially

Kingsway Financial Services Inc. believes it has turned a corner despite reporting a 2009 Q3 net loss of US$118.1 million.
The 2009 Q3 loss represents a loss of US$128.8 million from run-off and discontinued businesses, including a loss of US$95.5 million from Lincoln General Insurance Company.
“It’s important to put these results in context since the losses we’re reporting for the quarter have come from businesses that are not part of our ongoing operations,” Kingsway president and CEO Colin Simpson said. “I believe we reached an important turning point this quarter and we are now beginning to see the evidence that our transformation plan was the right one.”
Since 2009 Q2, the company has been following a strategy to exit unprofitable businesses, shed non-core assets and free up liquidity in the group. To this end, it has completed the consolidation of Kingsway General Insurance Company and JEVCO Insurance Company operations in Canada under a single “JEVCO Insurance Company” marketing brand.
The company reported that 87% of its gross premiums written were generated from core lines of business, including non-standard auto/motorcycle, commercial auto and surety.
The company shed 240 staff positions in 2009 Q3.
It has eliminated a total of 850 staff positions in the past year to date (27% of those reductions occurred in Canada). Its target is to eliminate 1,000 staff positions by the end of 2010.
Kingsway reported its investment income in 2009 Q3 was US$5.8 million, a decrease of 82% compared to the same period a year ago.
The decrease was “largely due to the impact of a stronger Canadian dollar on the Company’s unhedged Canadian dollar debt, as well as lower interest income from a smaller fixed-income securities portfolio,” the company said.