Property and casualty insurer Kingsway Financial Services Inc. in Toronto warned on Monday that it expects to report a “material” quarterly loss and that it will try to shore up its finances by selling non-core assets and restructuring.
Kingsway, which sells insurance to high-risk drivers, said it estimates about 750 additional jobs will be cut over the next 18 to 24 months as it overhauls its operations in Canada and the United States.
The company, which suffered a string of losses last year on poor underwriting income and the impact of the global financial crisis on its investment portfolio, warned that it expects a loss in the fourth quarter of $324 million to $344 million or $5.88 to $6.24 a share.
Analysts, on average, had expected a loss of 1 cent a share before items, according to Reuters Estimates.
At 10:31 (1531 GMT), shares of Kingsway were down 12.5 percent at C$5.47 on the Toronto Stock Exchange, after earlier plunging 22 percent to a low of C$4.85.
It said the reasons for the weaker results included underwriting losses at its subsidiary Lincoln General Insurance Co., impairments to goodwill, and losses on investments.
“Kingsway will de-risk its business portfolio and focus investment by exiting non-core and unprofitable lines of business at its Lincoln and Southern United subsidiaries, subject to the necessary regulatory approvals,” it said in a statement.
The company added it is looking at strategic alternatives and anticipates changes there will reduce written premiums by about $350 million in 2009.
“The company has also commenced the execution of a transformation program that will concentrate the organization in its core and profitable lines of business and is targeted to improve the group’s financial stability.”
Kingsway said it will consolidate operations in both the U.S. and Canada to streamline its management structure. It estimates the plan will account for annual savings of more than $80 million by the end of 2010.
($1=$1.22 Canadian) (Reporting by Jeffrey Hodgson and Jennifer Kwan)
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