Kingsway Financial Services Inc. reported a net loss for third quarter on disappointing underwriting results and the writedown of investments.
The Mississauga, Ont.-based insurance holding company said Wednesday the net loss for the quarter ended Sept. 30 was US$17.4 million, or 32¢ a share diluted.
That compared with a net profit of US$23.6 million, or 42¢ a share for the same period last year.
Revenue from insurance premiums fell 26% to US$354.5 million from US$477.5 million, Kingsway said.
Investment income fell 8% to US$33.1 million in the quarter, primarily due to lower short-term interest rates in Canada and the United States and a reduction in the size of its investment portfolio.
Kingsway, which has been selling non-core businesses and getting out of unprofitable insurance lines, had an underwriting loss of US$50.6 million for the third quarter, more than five times the loss from the same 2007 period.
On Sept. 30, Kingsway completed the previously announced sale of York Fire for $95 million ($Cdn). York Fire was considered non-core and produced a loss of US$11.4 million for the year to date. Kingsway realized an estimated initial gain on the sale of US$35 million after tax.
“Our results need to be viewed in the context of turbulent credit and securities markets, and economic weakness affecting some business lines, notably trucking, at a time when we are fundamentally changing our business to achieve improved and consistent future performance,” said Shaun Jackson, president and CEO, in a release.
Jackson said Kingsway has cut debt, eliminated unprofitable lines of business and strengthened core operations since the beginning of this year — moves that “should position us to improve performance throughout the cycle, particularly when markets harden.”
Kingsway is one of the largest non-standard automobile insurers and truck insurers in North America, operating through subisidiaries such as Kingsway General, Jevco, Universal Casualty, American Service, Southern United Fire and Lincoln General.