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Kingsway takes initiatives to cut costs by $20 million


December 17, 2008   by Canadian Underwriter


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Kingsway Financial Services Inc. (TSX: KFS) has announced a number of initiatives in an effort to reduce costs by approximately $20 million.
The actions include reducing staff, freezing salaries, eliminating bonuses (except for exceptional performance) and reducing corporate overhead, according to a Kingsway statement.
The company is merging the operations of four of its U.S. subsidiaries. These mergers, in addition to consolidation of the company’s two offices in Montreal and rationalization of its assigned risk agency, RPCIA, will reduce head count by 162, resulting in savings of approximately $8 million.
“Management is continuing to review all aspects of Kingsway’s organizational structure, with a view to reducing expenses,” says Shaun Jackson, president and CEO of Kingsway. “In early January, we expect to finalize our next round of expense reduction initiatives. These initiatives combined with firmer pricing should result in improved underwriting ratios.”
Kingsway hired Oliver Wyman, international management consultants, in early 2008 to assist Kingsway management in its efforts to return the company to profitability and enhance performance predictability.
Cost-cutting initiatives are a core part of the company’s strategic plan that has been developed, the release says.
“While taking decisive action to reduce our expense and claims ratios and terminate unprofitable non-core business, we will continue to implement, as appropriate, further rate increases on all lines of business as we have in 2008 and expect hardening markets to make this possible,” Jackson added.


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