August 25, 2008 by Canadian Underwriter
Kingsway Financial Services Inc. is selling York Fire & Casualty Insurance Company to La Capitale General Insurance Inc., a member company of the mutual company La Capitale Financial Group Inc., which is owned by members of Quebec’s civil service.
The transaction is expected to be completed during 2008 following the receipt of regulatory approvals.
York writes standard personal lines automobile and property insurance in Ontario and Alberta.
For the first six months of 2008, York had gross premiums written of approximately Cdn$48 million, or 5% of the premiums of the Kingsway group of companies, and produced an underwriting loss.
Kingsway said it anticipates receiving gross proceeds from the transaction of Cdn$95 million, which is estimated to be approximately two times York’s shareholder’s equity at the closing of the transaction. At closing, Kingsway expects to record an estimated gain before taxes on the transaction of approximately Cdn$50 million.
“The sale of York furthers Kingsway’s strategy of focusing its resources on its core lines of business, such as non-standard automobile and trucking,” said Kingsway president and CEO Shaun Jackson in a press release.
“In doing so we are building a stronger platform for achieving growth and sustainable profitability in our leading products, where we have true competitive advantages.”
Jackson said the company planned to use the proceeds of the transaction to retire its remaining short-term debt and support future growth opportunities in our core business lines.
“I would like to thank all of the employees and management of York for their dedication and service to the Kingsway family over the years and I look forward to working with them through the transition period,” Jackson said.
Scotia Capital Inc. is acting as financial advisor and Cassels Brock & Blackwell LLP is acting as legal counsel to Kingsway.