Kingsway Financial Services Inc. has closed the US$31.5 million sale of its Zephyr Insurance Company, Inc. subsidiary, the company said Friday.

Zephyr’s buyer is Zephyr Acquisition Company, an acquisition vehicle of Ocean Harbor Holding Inc. and MP Holdings LLC, a Hawaiian-based investor group.

Zephyr is a specialty property insurance company founded specifically to protect Hawaii homeowners and residents from catastrophic loss due to hurricanes. For the first six months of 2009, Zephyr had gross premiums written of approximately US$36 million, or 7% of the premiums of the Kingsway group of companies, and produced an underwriting profit.

Kingsway focuses on non-standard automobile insurance in North America. Since January, it has been restructuring to concentrate on its core market.

Earlier this month, Kingsway donated all of its holdings in Walshire General Assurance Co., the sole shareholder of Lincoln General Insurance, to charity. The donation removed Lincoln General from Kingsway’s stable of companies.

IE