Posted on 04 Jun 2009
TORONTO June 01 (BestWire) — The Pennsylvania Insurance Department has approved a run-off plan submitted by Lincoln General Insurance Co., a subsidiary of Kingsway Financial Services Inc.
In reporting its first-quarter earnings, Kingsway (NYSE: KFS) said Lincoln General submitted the plan May 7. Lincoln General is headquartered in York, Pa.
Kingsway blamed its "transformation program" and a drop in trucking insurance premiums for a first-quarter net loss of $58.3 million. First-quarter gross premiums written decreased 40% to $259 million. Premiums written were down 42% in the United States mostly due to Lincoln General (BestWire, May 8, 2009).
Kingsway said it is in the middle of several transformations to return the company to profitability and restore shareholder confidence. Kingsway outlined a plan in February to cut costs, which included consolidating operations in the United States and Canada — a move the company said is expected to save $80 million by the end of 2010. Nine companies are to become three operating units, and about 750 employees are to be laid off within two years (BestWire, Feb. 9, 2009). The company's board of directors late last year had approved freezing salaries and hiring, effective immediately, and putting the executive incentive compensation plan on hold (BestWire, Dec. 17, 2008).
In April, Kingsway replaced its former president and chief executive officer W. Shaun Jackson with Colin Simpson, effective immediately. Simpson was chief operating officer and senior vice president. After quarterly results were announced, the company said its senior vice president and chief financial officer was leaving (BestWire, May 18, 2009).
In January, A.M. Best downgraded the Best's Financial Strength Ratings of Kingsway subsidiaries Lincoln General Insurance Co. to B- (Fair) from B+ (Good); American Country Insurance Co. to B- (Fair) from B (Fair); and Kingsway General Insurance Co. to B (Fair) from B+ (Good) (BestWire, Jan. 22, 2009). Jevco Insurance Co. also has a current Best's Financial Strength Rating of B (Fair) and remains under review.
On the morning of June 1, shares of Kingsway were selling for $3.34, up about 18.9% from the previous close.
(By Chad Hemenway, associate editor, BestWeek: Chad.Hemenway@ambest.com) BN-NJ-06-01-2009 1225 ET #