EMBARGOED FOR RELEASE UNTIL FEBRUARY 23 AT 8:30 A.M.
(EST)
TSE Symbol: KFS
KINGSWAY REPORTS
RECORD EARNINGS AND
REVENUES FOR 1997
Toronto, Ontario (February 23, 1998) – Kingsway Financial Services Inc. today announced its results for the fourth quarter and year ended December 31, 1997. Earnings for the fourth quarter and for the year exceeded prior year earnings by 30% and 98% respectively.
For the fourth quarter, consolidated net income was $5,048,000, compared to $3,893,000 for the same period last year. Consolidated net income for 1997 was a record $22,151,000, exceeding the $11,162,000 reported for 1996.
Despite an increase of over 41% in the weighted average number of outstanding shares, earnings per common share (basic) for the fourth quarter were 28 cents, as compared to 31 cents for the same quarter of 1996. For 1997, earnings per common share (basic) increased 42% to $1.48, compared to $1.04 for 1996, despite a 40% increase in the weighted average number of outstanding shares.
Fully diluted earnings per share was 28 cents for the quarter, compared to 31 cents for the fourth quarter of 1996. The decline was due to a 36% increase in the weighted average number of outstanding shares. For 1997, fully diluted earnings per common share increased 46% to $1.46, compared to $1.00 for 1996.
"We are very pleased to report record earnings for 1997," said Bill Star, President and Chief Executive Officer. "We continued to experience strong internal growth from Kingsway General, with premiums increasing by over 32% from 1996. Our Return on Equity and earnings per share for the fourth quarter were diluted by the impact of the additional capital we raised in August of 1997. This capital was necessary to continue our acquisition strategy in the United States, and we should begin to see the benefit of deploying the excess capital in the first quarter of 1998, as these transactions close."
Return on equity (based on weighted average capital) was 16.5% for 1997, compared to 21.6% reported for 1996. The return on equity for the year was reduced by the impact of the share offering completed in August 1997, whereby the company raised additional net capital of $103,167,000. Without the dilution from this additional capital, return on equity would have been 21.2% for 1997. Book value per share increased to $11.90 at December 31, 1997, representing an increase of 81% from the previous year end.
Gross premiums written increased 27% for the quarter and 50% for 1997, compared to the same periods last year. Net earned premiums for the fourth quarter were $42,610,000 ($174,462,000 for the year), which exceeded the $33,642,000 reported for the fourth quarter ($107,679,000 for the year) in 1996 by 27% (62% increase for the year).
The company reported an underwriting profit for the eighth consecutive year. In 1997, this profit was a record $6,504,000, exceeding the underwriting profit of $4,707,000 reported in 1996. The company also reported a redundancy in the loss reserves recorded at December 31, 1996 of approximately $3,100,000, or 4.8% of net unpaid claims reserves at that date.
Investment and premium finance income was $7,458,000 during the quarter ($21,836,000 for the year), which was an increase of 45% (98% for the year) over the $5,159,000 earned in the fourth quarter of 1996 ($11,049,000 for the year).
Kingsway’s primary business is the insuring of automobile risks for drivers who do not meet the criteria for coverage by standard automobile insurers. The company operates through five wholly owned insurance subsidiaries: Kingsway General Insurance Company, York Fire & Casualty Insurance Company, Jevco Insurance Company, Universal Casualty Company and Southern United Fire Insurance Company.
Kingsway General Insurance is licensed and operates in every province of Canada. York is licensed in Ontario and Alberta, and offers traditional property and casualty insurance products, including specialty programs such as seniors and Abstainers programs. A.M. Best rates both Kingsway General Insurance and York "A" Excellent. Jevco is a federally licensed insurer and is the largest writer of motorcycle risks in Canada. Universal is incorporated and licensed to carry on business in Illinois, and is the fifth largest underwriter of non-standard automobile insurance in the metropolitan Chicago market. Southern United is a non-standard automobile insurance company, incorporated in Alabama, and licensed to carry on business in Alabama, Louisiana, Georgia, Mississippi and Texas.
Kingsway Financial Services Inc.’s shares are listed on the Toronto Stock Exchange, under the trading symbol "KFS’.
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For further information, please contact:
Shaun Jackson
Executive Vice President and Chief Financial Officer
Kingsway Financial Services Inc.
Tel: (905)
629 7888
Fax: (905)
629 5008
Web Site: www.kingsway-financial.com