Kingsway reports higher Q4 net income in 2005

Kingsway Financial Services Inc. (TSE:KFS) reported that its 2005 fourth quarter net income increased 16% over its 2004 fourth quarter results – from Cdn$36.3 million in 2004 to Cdn$42.1 million in 2005 – despite lower premium volumes in 2005.

Overall, Kingsway’s net income in 2005 increased 24% — up to a record Cdn$163.1 million, over last year’s Cdn$131 million.

The company reported its 2005 fourth quarter combined ratio improved to 97.7%, compared to 98.2% in the same period last year.

Despite these numbers, Kingsway’s 2005 fourth quarter net premiums written decreased by 7% to Cdn$473.3 million, compared with net written premiums of Cdn$506.4 million for the fourth quarter of 2004. Overall, net written premiums for 2005 amounted to Cdn$2.21 billion, compared to Cdn$2.27 billion in 2004.

Premiums ceded to reinsurers represented 8% of gross premiums written – 4% for the year – compared to 13% in the same quarter last year (13% for the year). Premiums ceded to reinsurers included Cdn$10.8 million related to Hawaii’s Zephyr Insurance, which was acquired during the fourth quarter in 2005.

“I am very pleased to again report record earnings,” Bill Star, Kingsway’s president and CEO, said. “2005 was an outstanding year in which we delivered record earnings for each quarter and for the year.

“Our disciplined underwriting approach has led to an improved combined ratio and record underwriting profits in 2005 on lower premium volume than 2004. During the year, we continued to build our book value per share and strengthen our capital position. As a result, I am pleased to announce the board has approved a 25% increase in our quarterly dividend.

“Pricing is generally stable and we continue to see growth opportunities in the extremely fragmented U.S. markets. Our diversification in the U.S. and Canada, together with our dominant niche market positions, provide us with a strong foundation as we enter 2006.”