TORONTO, Sept. 17, 2012 /CNW/ - (TSX: KFS, NYSE: KFS) Kingsway Financial
Services Inc. ("Kingsway" or the "Company") today announced that it is
restructuring its Insurance Services and Insurance Underwriting
"These restructuring changes are intended to create a new leadership
team from within the Company's ranks, bring additional talent into the
organization, grow the insurance services side of the business, and
create the foundation for returning our insurance underwriting
operations to profitability" said Larry G. Swets, Jr., Kingsway's
President and Chief Executive Officer.
As part of the Insurance Services restructuring, Bradley Diericx will be
joining the Company on September 17, 2012 as an Executive Vice
President. Mr. Diericx was most recently with Johnson Lambert LLP
("Johnson Lambert"), an insurance-focused CPA firm, where he was a
partner and leader of their Midwest practice. Prior to his role at
Johnson Lambert, Mr. Diericx held executive roles at GE Reinsurance
Corporation and the Insurance Corporation of Hannover.
Mr. Diericx will be responsible for the oversight of the Company's
Insurance Services segment, which will include the previously announced
specialty insurance business the Company intends to acquire. Kingsway
recently received approval from the Florida Office of Insurance
Regulation to acquire this specialty insurance business and is now
pursuing the remaining state approvals to close the acquisition during
the fourth quarter of 2012.
"Brad brings a wealth of insurance industry leadership and knowledge to
our team," continued Mr. Swets, "and his connections within the
insurance space will help us to enhance and grow our insurance services
businesses, including the new opportunities to be presented when we
complete the acquisition of the specialty insurance business.
Following completion of that transaction, we expect to pursue a variety
of acquisition opportunities as we implement our plans for growth."
As part of the Insurance Underwriting restructuring, Kingsway will post
$11.4 million, or $0.87 per share, in additional unpaid loss and loss
adjustment expenses. This amount includes $9.4 million related to the
Company's Kingsway Amigo Insurance Company ("Amigo") business primarily
to increase prior accident year unpaid loss and loss adjustment
expenses on Amigo's commercial automobile and personal injury
protection coverages. This amount also includes $2.0 million related
to the Company's Mendota Insurance Company ("Mendota") and Mendakota
Insurance Company ("Mendakota") business primarily to increase prior
accident year unpaid loss and loss adjustment expenses on their
personal automobile physical damage, uninsured motorist and bodily
Kingsway also intends to streamline its non-standard property and
casualty insurance business operations under one management team led by
William A. Hickey, Jr., Kingsway's EVP, CFO, and COO. After the
restructuring, the Insurance Underwriting segment principally includes
the following subsidiaries of the Company: Mendota, Mendakota,
Universal Casualty Company ("UCC"), Amigo, KAI Advantage Auto, Inc.
("Advantage Auto"), Kingsway Reinsurance Corporation and Kingsway
Reinsurance (Bermuda) Ltd.
"While we have seen improvement in our loss ratios at our Mendota and
Advantage Auto franchises," said Mr. Hickey, "we continue to see stress
at our Amigo subsidiary. In order for us to take advantage of the
improvements we have seen in the loss ratios related to our Mendota and
Advantage Auto businesses, we are reorganizing our non-standard
property and casualty insurance business operations so that they
operate as one business under one management team, operating out of
three locations - Eagan, MN; Elk Grove Village, IL; and Miami, FL.
Mendota, Mendakota, UCC, Amigo and Advantage Auto will all be operated
under one common management team."
Specific to the Insurance Underwriting segment, Kingsway has taken or
intends to pursue the following additional actions:
Kingsway has begun taking actions to significantly reduce the amount of
commercial lines business written at Amigo and to restructure and
update Amigo's personal lines product offering.
Kingsway has reacquired the interests held by United Insurance Holdings
Corp. in Acadia LP, a limited partnership formed in March, 2011 to hold
Hamilton Risk Management Company and its subsidiaries, including
Amigo. As a result, Amigo is now a 100%-owned indirect subsidiary of
Kingsway will reduce staffing levels to be consistent with decreased
premium volume at its Amigo business. Kingsway estimates that it will
incur approximately $2.0 million, or $0.15 per share, in cash severance
expenses due to reductions-in-force over the next nine months. Kingsway
will highlight actual severance expenses incurred as part of its
periodic financial reports.
Kingsway will accrue $1.3 million, or $0.10 per share, related to
abandonment of leased space at its Mendota and UCC businesses. This
amount will be paid in cash during the remaining lease terms.
"All of these actions are intended to simplify our non-standard auto
business operating strategy and move us toward the eventual turnaround
of our insurance underwriting operations," stated Mr. Swets. "We
believe these restructuring changes will present the opportunity for us
to begin to create real value for Kingsway's shareholders."
About the Company
Kingsway is a holding company functioning as a merchant bank with a
focus on long-term value-creation. The Company owns or controls stakes
in several insurance industry assets and utilizes its subsidiaries,
1347 Advisors LLC and 1347 Capital LLC, to pursue opportunities acting
as an advisor, an investor and a financier. The common shares of
Kingsway are listed on the Toronto Stock Exchange and the New York
Stock Exchange under the trading symbol "KFS."
Forward Looking Statements
This press release includes "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934 that are not historical facts, and
involve risks and uncertainties that could cause actual results to
differ materially from those expected and projected. Words such as
"expects", "believes", "anticipates", "intends", "estimates", "seeks"
and variations and similar words and expressions are intended to
identify such forward-looking statements. Such forward looking
statements relate to future events or future performance, but reflect
Kingsway management's current beliefs, based on information currently
available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and
results discussed in the forward looking statements, including, without
limitation, our potential inability to complete current or future
acquisitions successfully, our inability to successfully implement our
restructuring activities, and our inability to adequately estimate and
provide for an appropriate level of reserving at our insurance company
subsidiaries. For information identifying important factors that could
cause actual results to differ materially from those anticipated in the
forward looking statements, see Kingsway's securities filings,
including its Annual Report on Form 10-K for the year ended December
31, 2011 ("2011 Annual Report") and its Quarterly Report on Form 10-Q
for the quarter ended June 30, 2012. Except as expressly required by
applicable securities law, the Company disclaims any intention or
obligation to update or revise any forward looking statements whether
as a result of new information, future events or otherwise.
Additional information about Kingsway, including a copy of its 2011
Annual Report and its Quarterly Report on Form 10-Q for the quarter
ended June 30, 2012, can be accessed on the Canadian Securities
Administrators' website at www.sedar.com, on the EDGAR section of the U.S. Securities and Exchange Commission's
website at www.sec.gov or through the Company's website at www.kingsway-financial.com.
SOURCE: Kingsway Financial Services Inc.