Source: The Canadian Press

Kingsway Financial Services Inc. (TSX:KFS) returned to profitability in the third quarter with US$2.5 million of net income or five cents per share, the company said Friday.

The Toronto-area insurance company, which reports in U.S. currency, took in less revenue from premiums but did better on underwriting losses, investments and continuing operations.

It also recorded a $17.8 million gain from its consolidation of KLROC Trust, which it now controls.

Kingsway has been reorganizing and narrowing its business. The drop in revenue reflects the company’s strategy of discontinuing unprofitable lines of business.

The company is now focused on providing non-standard automobile insurance in the United States to drivers who don’t qualify for conventional insurance. It formerly also offered similar non-standard auto policies in Ontario as well as insurance for commercial truckers in the United States.

In the third quarter of 2009, Kingsway posted a loss of $118.1 million or $2.19 per share, including $28.7 million (53 cents per share) in losses from its continuing operations.

The company also posted a loss in the second quarter of 2010 but was profitable in the first quarter.

Gross premiums written in the third quarter declined 24% from a year earlier to $62.8 million from $82.8 million. Underwriting losses were reduced by 34% to $24 million from $36.7 million.

There was $300,000 from investment income and $6.4 million from realized investment gains. A year ago it did better on investment gains, with $12 million, but that was largely offset by $8.6 million of investment income losses.