Kingsway Financial Services Inc. reported Thursday that A.M. Best Co. has completed its annual review of the financial strength ratings of its insurance subsidiaries and has affirmed the ratings of its U.S. insurance subsidiaries.

A.M. Best has lowered the financial strength ratings of Kingsway’s Canadian insurance subsidiaries to A- (Excellent) from A (Excellent).

The rating for our largest U.S. insurance subsidiary remains under review with negative implications pending completion of our previously announced capital raising initiatives and effective management of the subsidiary’s premium growth in 2003.

Offsetting the negative rating factors, A.M. Best cited Kingsway’s lead market position as the largest provider of non-standard auto and motorcycle insurance in Canada and the prospect of improved underwriting and operating performance in 2003. It recognized that Kingsway anticipates improved results in Canada in 2003, citing Kingsway’s proactive approach to settling claims and combating fraud in Ontario, significant rate increases that were implemented in late 2002, and new regulatory legislation in Ontario.

“While we continue to take advantage of hard insurance markets, we expect that A.M. Best will look favourably on the completion of our previously announced capital raising initiatives as long as we limit our growth to a sustainable level” said Bill Star, president and CEO.