Toronto-based truck and non-standard auto insurer Kingsway Financial Services Inc. announced its financial results (in U.S. dollars) for the first quarter ended March 31, 2006.
Although net operating income increased by 11 percent to $30 million in Q1 2006, compared to $27 million in the same period of 2005, the Company’s net income fell from $38.1 million in Q1 2005 to $28.9 million in Q1 2006. Diluted earnings per share for the period were 51 cents, compared with 67 cents in Q1 2005. Net realized investment losses after tax were 2 cents per share compared to gains of 20 cents per share in Q1 2005. Net realized investment losses were $1.1 million (C$1.2 million) after tax, compared with net realized gains of $11.1 million (C$13.6 million) after tax in Q1 last year.
Kingsway said its “combined ratio improved to 96.2 percent compared to 96.3 percent in the same quarter last year, producing a record first quarter underwriting profit of $16.4 million (C$18.9 million). Investment income increased by 20 percent to $26.6 million (C$30.7 million) compared to $22.1 million (C$27.1 million) in the same quarter last year.”
“We are pleased with the positive start that we have made to 2006,” stated President and CEO Bill Star. “Each of our operating subsidiaries reported an underwriting profit which led to a record underwriting profit and an improved combined ratio for the quarter. Our investment managers repositioned their portfolios and disposed of underperforming equity investments, and as a result, the unrealized gain position in our equity portfolio increased by $15.5 million to $55.6 million from year end. We continue to maintain our underwriting discipline in all of our markets, and anticipate that capacity constraints in reinsurance markets in the United States will provide opportunities for our growth as 2006 progresses.”
Kingsway also noted premium growth during the first quarter with gross premiums written of $507.2 million (C$585.7 million), compared to $524.6 million (C$643.6 million) in the first quarter last year. The bulletin noted: “In the quarter, U.S. operations represented 75 percent of gross premiums written, compared with 74 percent in the first quarter last year. Trucking, non-standard automobile and commercial automobile premiums represented 28 percent, 28 percent and 19 percent, respectively, of gross premiums written in the first quarter compared with 27 percent, 31 percent and 20 percent, respectively, last year.”
However, the announcement also stated: “Gross premiums written from U.S. operations decreased 3 percent to $380.2 million (C$439.0 million) compared with $390.3 million (C$479.0 million) last year. During the first quarter of 2006 gross premiums written from the Robert Plan Corporation (‘RPC’) were $24.1 million (C$27.9 million). The RPC provides underwriting and claims administration services to insurance companies in the United States who seek to transfer their assigned risk premiums and obligations to Kingsway for a fee. The contract with RPC was previously announced on November 23, 2005 and business commenced on January 1, 2006. Gross premiums written from Canadian operations were $127.0 million (C$146.7 million) for the quarter, compared to $134.3 million (C$164.6 million) in Q1 last year.”
The full report may be obtained on the Company’s Website at: http://www.kingsway-financial.com.