Kingsway Financial Services Inc. today reported a 16% increase in income for the fourth quarter ended Dec. 31, 2005.

Net income for the quarter was $42.1 million compared to $36.3 million in the fourth quarter of 2004. Net income for the year increased 24% to a record $163.1 million, over the $131 million reported last year.

Return on equity (annualized) was 18.4% in the quarter compared to 18.2% in the fourth quarter of 2004, and was 18.8% for the year compared to 17.4% in 2004.

Diluted earnings per share increased 16% to 74¢, compared to 64¢ for the same quarter of 2004.

“I am very pleased to again report record earnings. 2005 was an outstanding year in which we delivered record earnings for each quarter and for the year,” said Bill Star, president & CEO.

“Our disciplined underwriting approach has led to an improved combined ratio and record underwriting profits in 2005 on lower premium volume than 2004.”

“Pricing is generally stable and we continue to see growth opportunities in the extremely fragmented U.S. markets. Our diversification in the U.S. and Canada together with our dominant niche market positions provide us with a strong foundation as we enter 2006.”

Kingsway’s board of directors approved a 25% increase in the firm’s quarterly dividend to an amount of 6.25¢ per share.

Kingsway Financial Services Inc. is the largest truck insurer in North America and the seventh largest non-standard automobile insurer in North America.