Mr. Larry Swets reports

KINGSWAY ANNOUNCES ACQUISITION OF SPECIALTY INSURANCE BUSINESS

Kingsway Financial Services Inc. has signed a definitive agreement to acquire the tangible and intangible assets as well as liabilities of a profitable specialty insurance business in a highly structured transaction for total consideration consisting of cash at closing, future contingent payments and common equity in the newly formed entity. Kingsway expects the business to be immediately accretive to operating earnings and cash flow.

"This acquisition represents the type of opportunity we expect to pursue more frequently as we continue to focus on rebuilding shareholder value at Kingsway," said Larry G. Swets Jr., Kingsway's president and chief executive officer. "We will be acquiring an interesting business at an attractive price using a creative structure which is intended to significantly shield the company from downside risk while allowing it to participate in the value that can be generated under Kingsway's leadership." The company will release more details about the acquisition following the closing of the transaction, which is expected to occur during the second quarter, subject to customary closing conditions including regulatory approval.

Sandler O'Neill + Partners LP acted as exclusive financial adviser to Kingsway, and Updike, Kelly & Spellacy PC acted as legal counsel to Kingsway.

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