Kingsway Grows Net Income by 52%

Toronto-based Kingsway Financial Services Inc. announced financial results in Canadian dollars for the first quarter ended March 31, 2005. The company has decided to defer its change to U.S. dollar reporting until the end of 2005.

Q1 2005 compared to Q1 2004

– Diluted earnings per share increased 49% to a quarterly record
82 cents (U.S. $0.67)
– Income before income taxes increased 72% to $55.6 million
(U.S. $45.4 million)
– Net income increased 52% to $46.8 million (U.S. $38.1 million)
– Combined ratio improved to 96.3%
– Underwriting profit increased 82% to a record $18.9 million
(U.S.$15.4 million)
– Annualized return on equity of 22.6%
– Book value per share increased 13% to $15.09 (U.S.$12.47) from Q1 2004

Net income increased by 52% to $46.8 million (U.S. $38.1 million), compared to $30.8 million (U.S. $23.4 million) in the first quarter of last year. Return on equity (annualized) was 22.6% in the quarter compared to 16.9% in the same quarter last year.

The combined ratio improved to 96.3% compared to 98.2% in the same quarter last year, producing a record quarterly underwriting profit
of $18.9 million (U.S. $15.4 million). Diluted earnings per share increased 49% to a quarterly record of 82 cents (U.S. $0.67) for the quarter, compared to 55 cents (U.S. $0.41) for the first quarter of 2004.

“We are extremely pleased with the positive start that we have made to 2005,” said Bill Star, president & CEO. “Each of our
operating subsidiaries produced an underwriting profit for the quarter which, together with increased investment income, led to our record quarterly earnings. During the quarter we were pleased with the favourable development on our year-end unpaid claims, but nevertheless continued to increase our balance sheet provisions for unpaid claims. We continue to hold firm on our premium rate levels which have led to reduced volume of business in certain of our markets. Our rate levels remain adequate to generate targeted underwriting margins and competition in most of our markets is rational, which bodes well for our financial results for the foreseeable future.”

During the first quarter of 2005, gross premiums written were
$643.6 million (U.S. $524.6 million), compared with $710.4 million
(U.S. $538.4 million) in the first quarter last year.

In the quarter, U.S. operations represented 74% of gross premiums written, compared with 77% in the first quarter last year. Trucking, non-standard automobile and commercial automobile premiums represented 27%, 31% and 20%, respectively, of gross premiums written in the first quarter compared with 28%, 36% and 17%,
respectively, last year.

Gross premiums written from U.S. operations decreased 12% to
$479.0 million (U$390.3 million) compared with $545.8 million
(U.S. $413.7 million) last year. Gross premiums written from Canadian operations were $164.6 million (U$134.3 million) for the quarter, compared to $164.6 million (U.S. $124.7 million) in Q1 last year.

The combined ratio of 96.3% for the first quarter produced a record
quarterly underwriting profit of $18.9 million (U.S. $15.4 million). For the quarter, the U.S. operations combined ratio was 96.0% (98.2% Q1 last year) which produced an underwriting profit of $14.1 million ($7.9 million Q1 last year) and the Canadian operations also improved to 96.9% (98.4% Q1 last year) which produced an underwriting profit of $4.8 million ($2.5 million Q1 last year).

Topics USA Profit Loss Underwriting Canada