The Canadian Press

Kingsway Financial Services Inc. (TSX:KFS) says a court in Pennsylvania has ruled in its favour in a legal action brought against the Canadian company by the state’s Department of Insurance.

Kingsway said Thursday that the Commonwealth Court of Pennsylvania has ruled the disposition of Lincoln General Insurance by the Toronto-area company didn’t violate Pennsylvania laws and didn’t require the insurance department’s approval.

The Canadian company, which provides insurance to the U.S. trucking industry as well as other forms of specialized vehicle insurance, ran afoul of Pennsylvania authorities when it donated its stake in Lincoln to a number of charities last year.

The state argued the donations were sham transactions and asked for the regulator to unwind the deals.

Kingsway shares had plunged in November after the state said it would seek to block the deal.

On Thursday, Kingsway shares rose 55 cents to $2.15 on the Toronto Stock Exchange. They had dropped to $1.70 from $2.94 in one day of heavy trading on Nov. 17 after the Department of Insurance challenge was announced.