The Loyalist Insurance Group Ltd. today reported a small loss for the ended Dec. 31, 2004.

The insurance brokerage holding company said the net loss for the year was $56,000, or 0¢ a share, compared with a profit of $185,000, or 1¢ a share, for 2003.

Revenue for 2004 was $1.8 million, down from $3.7 million in 2003.

The company made structural changes to its investments in subsidiary companies during the period. It says the the changes allow Loyalist Insurance to focus completely on its core operations and to reduce the burden of excessive regulatory requirements.

In making the changes, the company has attempted to eliminate operations that have to date had negative cash flow or are capital intensive with a historic low return on equity.


In September 2003, a subsidiary of firm, Loyalist Insurance Brokers Ltd. (LIB), sold its assets pertaining to the St. Catharine’s operation for proceeds of $325,000 including a note receivable for $100,000, due October 15, 2006, resulting in a gain on sale of $167,850.

Revenues at LIB declined to $1.8 million from $2.3 million in 2003, due to the sale of the Hagersville and St. Catharines portion of the brokerage operations.

Expenses also declined to $1.8 million from $2.3 million. Loss from operations was $41,288 versus an income of $61,899 in the prior year.

After including a gain on disposal of assets of $94,249 and the effect of income taxes, this entity had a net income for the year of $72,261 versus $158,749 in the prior year. Salaries and benefits increased due to the addition of new key sales personnel. Commission expenses reduced from $834,901 to $563,178.

Pursuant to an agreement dated March 10, 2003, another subsidiary of the company, The Loyalist Group Limited (LGL) issued additional common shares for $1.4 million which reduced the company’s ownership in LGL to 44% from 87%. The proceeds were then invested into its wholly owned subsidiary, The Loyalist Insurance Company. This transaction resulted in a dilution loss of $318,468.

Effective August 31, 2004, 2,867,830 multiple voting common shares of LGL were exchanged in return for the redemption and retraction of 1,000,000 Series “A” Second Preferred Shares of the Company. As a result of this share transaction, the company’s ownership in LGL was reduced from 44% to 19%. This transaction resulted in a loss of $95,572.

In addition, the company disposed of its majority interest in All-Canadian Management Inc., at the end of 2004. On March 7, 2003, an agreement to issue additional common shares of All-Canadian, was completed in exchange for consideration of $112,531 to a third party. As a result, the company’s ownership decreased from 75% to 60.0%. The change in ownership resulted in a dilution gain of $8,611 and a decrease in goodwill of $53,967.

On Aug. 13, 2003, The Loyalist Insurance Group Ltdl purchased 2000 shares of All Canadian Investor Services Inc. for $20,000 in exchange for 16% ownership. On November 30, 2003, the company sold its share of All-Canadian Resources Corp. to All-Canadian Management Inc. for proceeds of $40,000. The disposition resulted in a loss of $23,789. Effective December 31, 2004, The Loyalist Insurance Group Ltd., sold 26,250 shares of its investments in All-Canadian Management, for $275,625 cash. The sale resulted in a net loss of $72,128.