Canada-based Kingsway Financial Services Inc. announced financial results for the second quarter and six months ended June 30, 2005 (Canadian dollars except where indicated).
Q2 2005 Highlights:
* Diluted earnings per share increased 10% to $0.65 (U$0.52)
* Income before income taxes increased 11% to $44.8 million (U$36.1 million)
* Net income increased 10% to $36.7 million (U$29.6 million)
* Net operating income increased 29% to $32.8 million (U$26.5 million)
* Combined ratio improved to 97.0% from 97.7%
* Underwriting profit increased 34% to $17.7 million (U$14.3 million)
* Annualized return on equity of 16.8%
* Book value per share increased 11% to $15.84 (U$12.93) from Q2 2004.
Net income increased 10% to $36.7 million (U$29.6 million), compared to $33.3 million (U$24.5 million) in the second quarter of 2004. Net income for the six months ended June 30, 2005 was a record $83.5 million (U$67.8 million), an increase of 30% over the $64.1 million (U$47.8 million) reported last year.
Return on equity (annualized) was 16.8% in the quarter compared to 17.2% in the same quarter of 2004, and 19.7% for the year to date compared to 17.0% for the same period last year. Diluted earnings per share increased 10% to $0.65 (U$0.52), compared to $0.59 (U$0.43) for the second quarter of 2004. For the six month period, diluted earnings per share increased by 29% to a record $1.47 (U$1.19) over the $1.14 (U$0.84) for the same period last year.
“We are extremely pleased with the record results for the second quarter and the first half of 2005,” said Bill Star, president & CEO. “Our determination to not sacrifice underwriting profitability has led to a decline in premiums written from our U.S. non-standard automobile business in 2005 however, it has helped protect our overall profitability. As we face more competitive conditions in certain markets we believe that Kingsway will benefit from its geographic and product diversification, and we remain committed to maintaining adequate pricing levels for our specialty products.”
The company reported net unfavourable development in the provision for unpaid claims occurring prior to Dec. 31, 2004 of approximately $13.2 million (U$10.6 million) during the second quarter of 2005 which was primarily attributable to a terminated U.S. trucking program, Alberta personal automobile and Canadian trucking.
During the first six months of 2005 net unfavourable reserve development was $8.2 million (U$6.5 million) or 0.4% of unpaid claims at the beginning of the year. Provisions for unpaid claims have been increased by 4% to $2,120.6 million (U$1,730.5 million) compared to $2,030.4 million (U$1,689.2 million) at the end of 2004.
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