Kingsway Financial Services Inc.’s net income decreased by 24% to $33.4 million in the first quarter of fiscal 2006, ended March 31, compared to C$46.8 million in the first quarter of last year due to the impact of net losses realized on investments.

Net realized investment losses were $1.2 million after taxescompared with net realized gains of $13.6 million after taxes in Q1 last year. Net operating income, however, increased 11% to $34.6 million compared to C$33.2 million last year. Net operating income information is calculated as net income excluding after-tax net realized gains and losses on investments.

The combined ratio improved to 96.2% compared to 96.3% in the same quarter last year, producing a record first quarter underwriting profit of $18.9 million.

Investment income increased by 20% to $30.7 million compared to $27.1 million in the same quarter last year.

Diluted earnings per share decreased 24% to $0.58 for the quarter, compared to $0.82 for the first quarter of 2005. Net realized investment losses after tax esreduced earnings per share by $0.02 in the quarter, whereas net investment gains after tax increased earnings per share by $0.24 in the same quarter last year. Net operating earnings per share increased 11% to $0.60 compared to $0.58.

“Each of our operating subsidiaries reported an underwriting profit which led to a record underwriting profit and an improved combined ratio for the quarter. Our investment managers repositioned their portfolios and disposed of underperforming equity investments, and as a result, the unrealized gain position in our equity portfolio increased by $15.5 million to $55.6 million from yearend. We continue to maintain our underwriting discipline inKingsway Financial’s net income drops a whopping 24% in Q1

Loss due to the impact of net losses realized on investments

Kingsway Financial Services Inc.’s net income decreased by 24% to $33.4 million in the first quarter of fiscal 2006, ended March 31, compared to C$46.8 million in the first quarter of last year due to the impact of net losses realized on investments.

Net realized investment losses were $1.2 million after taxescompared with net realized gains of $13.6 million after taxes in Q1 last year. Net operating income, however, increased 11% to $34.6 million compared to C$33.2 million last year. Net operating income information is calculated as net income excluding after-tax net realized gains and losses on investments.

The combined ratio improved to 96.2% compared to 96.3% in the same quarter last year, producing a record first quarter underwriting profit of $18.9 million.

Investment income increased by 20% to $30.7 million compared to $27.1 million in the same quarter last year.

Diluted earnings per share decreased 24% to $0.58 for the quarter, compared to $0.82 for the first quarter of 2005. Net realized investment losses after tax esreduced earnings per share by $0.02 in the quarter, whereas net investment gains after tax increased earnings per share by $0.24 in the same quarter last year. Net operating earnings per share increased 11% to $0.60 compared to $0.58.

“Each of our operating subsidiaries reported an underwriting profit which led to a record underwriting profit and an improved combined ratio for the quarter. Our investment managers repositioned their portfolios and disposed of underperforming equity investments, and as a result, the unrealized gain position in our equity portfolio increased by $15.5 million to $55.6 million from yearend. We continue to maintain our underwriting discipline in all of our markets, and anticipate that capacity constraints in reinsurance markets in the United States will provide opportunities for our growth as 2006 progresses,” said Bill Star, president and CEO.
all of our markets, and anticipate that capacity constraints in reinsurance markets in the United States will provide opportunities for our growth as 2006 progresses,” said Bill Star, president and CEO.