Kingsway Financial Services Inc. yesterday announced the closing of the previously announced acquisition of HI Holdings, Inc. for approximately US$25 million.

The transaction includes HI’s wholly owned Zephyr Insurance Company Inc. (Zephyr). HI and Zephyr were formed in 2000 by its current shareholders that include Everest Reinsurance Co., Guy Carpenter & Co., Inc., Hannover Ruckversicherung AG, and Island Holdings, Inc. Philo Smith & Co. acted as financial advisor to HI.

“Zephyr’s operating niche complements a core Kingsway business strategy of providing products and services to specific, defined segments of the insurance marketplace” said Bill Star, president and CEO of Kingsway, in a release.

“This transaction is also consistent with our interest in acquiring profitable businesses that provide geographic and product diversification. Zephyr is a well run organization and we look forward to the company’s continued success as part of Kingsway.”

Zephyr is the leading provider of residential hurricane insurance coverage in the State of Hawaii. For the first nine months of 2005, Zephyr generated gross premiums written of US$40 million and is projected to write approximately US$50 million in gross premiums written for 2005.

Kingsway currently operates in Hawaii through Lincoln General Insurance Co., and American Service Insurance Co. is also licensed to transact business in the state.