Mr. Larry Swets Jr. reports
KINGSWAY REPORTS FIRST QUARTER RESULTS
Kingsway Financial
Services Inc. has released its
financial results for the first quarter ended March 31, 2012. All
amounts are in U.S. dollars unless indicated otherwise.
The company reported a first quarter net loss of $12.5-million, or a
loss of 24 cents per diluted share. The book value has decreased from
$2.22 per share at Dec. 31, 2011, to $2.01 per share at March 31,
2012. The company also carries a valuation allowance, in the amount of
$5.05 per share at March 31, 2012, against the deferred tax asset,
primarily related to its loss carryforwards.
The following are the highlights of the first quarter of 2012:
Operational results
- Net operating loss of $3.2-million was recorded in the insurance
underwriting segment for the first quarter.
- Net operating income of $1.7-million was recorded in the insurance
services segment for the first quarter.
- Net investment income and realized gains of $1.1-million were recorded
for the first quarter.
- Net loss of $12.1-million not allocated to any segment was recorded in
the first quarter. This includes loss on change in fair value of debt
of $4.3-million; equity in net loss of investees of $2.3-million; and
interest expense of $1.1-million related to the company's subordinated
debt and currently being deferred. None of these three items impacted
the company's cash flows during the first quarter.
Dividend
The board of directors declared no dividend for the first quarter of
2012.
Subsequent events
Effective April 2, 2012, the company and United Insurance Holdings Corp.
mutually agreed to terminate their management services
agreement which had been entered into between the company and United in
August of 2011.
During April of 2012, Larry Swets Jr., the company's president and
chief executive officer, adopted an automatic stock purchase plan in
accordance with Canadian securities regulations and the guidelines
specified under Rule 10b5-1 of the Securities Exchange Act of 1934.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share)
Three months ended March 31,
2012 2011
Revenue
Net premiums earned $ 29,267 $ 45,636
Service fee and commission income 9,529 8,972
Net investment income 830 1,077
Net realized gains 273 1
(Loss) on change in fair value of debt (4,331) (2,605)
Other income 1,083 1,911
Total revenues 36,651 54,992
Expenses
Loss and loss adjustment expenses 21,775 41,577
Commissions and premiums taxes 4,419 7,378
General and administrative expenses 18,801 21,571
Interest expense 1,849 1,903
Amortization of other intangible assets - 18
Total expenses 46,844 72,447
Loss before equity in net loss of investees and income tax expense (benefit) (10,193) (17,455)
Equity in net (loss) of investees (2,270) -
Loss from continuing operations before income tax expense (benefit) (12,463) (17,455)
Income tax expense (benefit) 59 (408)
(Loss) from continuing operations (12,522) (17,047)
(Loss) on disposal of discontinued operations, net of taxes - (1,293)
Net (loss) (12,522) (18,340)
Less net (loss) attributable to non-controlling interests in consolidated subsidiaries (1,514) (534)
Net (loss) attributable to common shareholders $ (11,008) $ (17,806)
(Loss) per share -- continuing operations
Basic and diluted $ (0.24) $ (0.33)
(Loss) per share -- net (loss)
Basic and diluted $ (0.24) $ (0.35)
Loss from continuing operations and loss per share -- continuing
operations
In the first quarter of 2012, the company reported a loss from
continuing operations of $12.5-million compared with a loss from
continuing operations of $17.0-million in the first quarter of last
year. Diluted loss per share was 24 cents for the quarter compared with
diluted loss per share of 33 cents for the first quarter of 2011. The
current quarter's loss is primarily due to operating losses generated
in the insurance underwriting segment, corporate general expenses,
interest expense, loss on change in fair value of debt and equity in
net loss of investees.
Loss on disposal of discontinued operations
For the first quarter ended March 31, 2012, the company reported no loss
on disposal of discontinued operations, compared with a loss of $1.3-million in the first quarter of 2011.
Net loss and loss per share -- net loss
In the first quarter of 2012, the company reported net loss of $12.5-million compared with net loss of $18.3-million in the first quarter of
2011. Diluted loss per share was 24 cents for the quarter compared with
diluted loss per share of 35 cents for the first quarter of 2011.
We seek Safe Harbor.
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