Canadian Underwriter

Non-standard auto provider Kingsway Financial reports 11.3% drop in gross written premiums in 2014

March 13, 2015   by Canadian Underwriter

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Kingsway Financial Services Inc. of Toronto, whose subsidiaries provide non-standard auto insurance in the United States, announced Friday it lost $11.2 million in 2014 on revenues of $188 million. All figures are in U.S. dollars.

Kingsway’s loss in 2014 was down 69% from a loss of $36 million in 2013, when it reported revenues of $172 million.

Kingsway’s property and casualty insurance business is conducted in 15 U.S. states, primarily through Mendota Insurance Company, Mendakota Insurance Company, Universal Casualty Company, Kingsway Amigo Insurance Company and Kingsway Reinsurance Corp. Kingsway had 536 full-time employees at the end of 2014.

 Kingsway Financial Services Inc. (NYSE: KFS) which provides non-standard auto insurance in the U.S., reported a drop in premiums in 2014

Gross written premiums in 2014 were $114 million (all in non-standard auto), down 11.3% from $128.6 million (of which $6.9 million was in allied lines) in 2013.

“The decrease in gross premiums written is primarily the result of decreased premium volumes at Amigo, reflecting the actions begun by the Company during the fourth quarter of 2012 to place Amigo into voluntary run-off,” Kingsway stated in its annual report filed Friday with the U.S. Securities and Exchange Commission.

In 2013, the allied lines premiums included those related to Amigo’s participation in the U.S. National Flood Insurance Program. Amigo withdrew from NFIP Jan. 1, 2014.

Kingsway Financial Services Inc. (NYSE: KFS) which provides non-standard auto insurance in the U.S., reported a loss of US$11.2 million in 2014

In 2014, more than 80% of Kingsway’s gross written premiums in auto were from Florida, Texas, Illinois, California, Colorado and Nevada.

Other Kingsway subsidiaries include IWS Acquisition Corp., which “markets and administers vehicle service agreements and related products for new and used automobiles” in the U.S., Kingsway stated in its annual report for 2014. “A vehicle service agreement is an agreement between IWS and the vehicle purchaser under which IWS agrees to replace or repair, for a specific term, designated vehicle parts in the event of a mechanical breakdown.”

Kingsway also operates Assigned Risk Solutions Ltd. (ARS), a managing general agent and third-party administrator which is licensed in 22 sates “but generates its revenues primarily by operating in the states of New York and New Jersey.”

Investment income was $1.616 million in 2014, down 26% from $2.186 million in 2013.

In the fourth quarter, Kingsway reported net income of $1.35 million, compared to a net loss of $10.65 million in Q4 2013.

Q4 investment income dropped 16%, from $381,000 in 2013 to $320,000 in the most recent quarter.

Last year Kingsway repaid about $14 million on 7.5% senior unsecured debentures initially issued in 2004.

Also in 2013, Kingsway completed an initial public offering of 1347 Property Insurance Holdings Inc., formerly known as Maison Insurance Holdings Inc.

“During 2014, we have repaid our senior debt, raised capital, completed the IPO of our former subsidiary and completed the redemption of our Series A Warrants,” stated Larry G. Swets, Kingsway’s president and chief executive officer, in a press release.

“Total consideration to the Company as a result of (the 1347 Property IPO) was $7.7 million, consisting of a 28.7% interest in the common shares of PIH,” Kingsway said in its annual reported. “The Company’s approximate voting percentage in PIH has been reduced to 16.9% at December 31, 2014.”