New York-based money management firm The Stilwell Group has offered to rescind its requisition for a special shareholder meeting and have Michael Walsh, chairman remain on the Kingsway board if Stilwell’s nominees were promptly added to the board, although the removal of Shaun Jackson, Kingsway president and CEO, remains non-negotiable.

Stilwell made the offer at a meeting with Kingsway on Saturday, Nov. 22 in Toronto, the company said. Kingsway is one of the largest non-standard automobile insurers and truck insurers in North America.

Stilwell “disagreed with assertions that Kingsway is moving at an appropriate pace to address its problems, pointed out that the price of Kingsway’s public securities indicates that its owners do not have confidence in the board and management, and that actions need to be taken quickly to address that lack of confidence,” the company said in a release.

Steilwell also expressed displeasure with Kingsway’s expense reductions to date, saying “Kingsway should immediately reduce overhead expenses in the range of $50 million.”

Stillwell also informed the Kingsway board and management representatives that the board’s current practice of not requiring timetables for management to reduce expense levels by definite amounts is unacceptable.

Stilwell believes that “Kingsway should sell and/or run off non-core lines of business as quickly as possible and use excess capital to retire its debt at a discount and repurchase shares of common stock.”

It also demanded that a certain date be set to achieve a combined ratio below 100 and that date be communicated to shareholders.

Stilwell currently owns 4,613,456, or 8.37%, of Kingsway’s outstanding shares of common stock.

On Friday, Kingsway announced that it will be working with both Houlihan Lokey and Scotia Capital as co-financial advisors.

Kingsway said that company management has been working on certain matters with Houlihan Lokey for a number of months.

Scotia Capital has been a long-term advisor to Kingsway and its board and was advisor to the company in connection with the disposition of York Fire & Casualty Insurance Co. in September 2008.

“Management continues to focus each day on enhancing shareholder value and we believe that working with both Scotia Capital and Houlihan Lokey can provide another important element to that continued effort,” said Michael Walsh, chairman, in a release.

Kingsway shares slipped 8¢ to $5.54 in afternoon trade on the Toronto Stock Exchange, well below their 52-week high of $16.20.

IE