Kingsway Financial Services Inc. today reported a net loss for the fourth quarter and year ended Dec. 31, 2007.

The non-standard automobile and truck insurerance company reported a net loss of US$103.5 million, or US$1.84 per share, for the fourth quarter, and a net loss of US$18.5 million, US33¢ per share, for the year.

Kingsway says the net loss was primarily attributable to the reserve increase for estimated unfavourable reserve development for prior accident years at its Lincoln General subsidiary previously announced on Dec. 18, 2007.

“Overall, 2007 was an extremely disappointing year for the company due to the significant reserve increases which were necessary at our largest subsidiary, Lincoln”, says Shaun Jackson, president and CEO. “The reserve increase of US$124.8 million in the quarter significantly reduced earnings, however, it now places the company on a sound footing for future growth in profitability.

“During 2007, we implemented many improvements and corrective actions at Lincoln, which we expect will result in much improved performance. Not only have reserves been greatly increased, but we are also eliminating or repricing underperforming insurance programs and have enhanced several operational procedures,” Jackson adds.

Kingsway says it expects that industry combined ratios will continue to deteriorate throughout 2008. However, it believes the deteriorating performance together with low interest rates, weak equity markets and potential impairments of assets will lead to firmer pricing in many of its markets before the end of 2008.