Kingsway’s Q1 net income tumbles 276%

Kingsway Financial Services Inc. has reported a US$34.4 million loss for 2008 Q1, marking a 276% drop over 2007 Q1’s profit of US$19.6 million.
The company also saw a 234% increase in its underwriting losses quarter-over-quarter, from a loss of US$20.7 million in 2007 to US$69.1 million in 2008, a Kingsway statement says.
Its combined ratio climbed 10.6% to 115.6% from 2007 Q1’s 115.6%.
“Our results for the first quarter are unacceptable and we are working expeditiously to deal with problem areas and return to profitability as soon as possible,” said Shaun Jackson, president and CEO. “Only by establishing more conservative reserving practices throughout the organization can we more quickly identify and remedy underperforming business.”
The company attributes the net loss to a US$52.8 million reserve increase for estimated net unfavourable reserve developments for prior accident years at its Lincoln General subsidiary.
“We continue to eliminate and reprice business at Lincoln and this has led to a change in its mix of business, in particular moving us away from the highly competitive commercial lines in the U.S.,” Jackson said.
“These reductions are being offset by increased premium levels from non-standard automobile through our Mendota subsidiary acquired in April 2007,” he added.