|By PR Newswire||
|November 9, 2012 05:15 PM EST||
TORONTO, Nov. 9, 2012 /PRNewswire/ - (TSX: KFS, NYSE: KFS) Kingsway Financial Services Inc. ("Kingsway" or the "Company") today announced its financial results for the third quarter and nine months ended September 30, 2012. All amounts are in U.S. dollars unless indicated otherwise.
The Company reported a third quarter net loss of $20.0 million ($40.3 million year to date), or a loss of $1.52 ($3.07 year to date) per diluted share. The book value has decreased from $8.90 per share at December 31, 2011 to $5.88 per share at September 30, 2012. The Company also carries a valuation allowance, in the amount of $20.48 per share at September 30, 2012, against the deferred tax asset, primarily related to its loss carryforwards. All per share amounts have been adjusted for all periods to reflect the share consolidation implemented as of July 3, 2012, whereby every four of the Company's common shares that were issued and outstanding were automatically combined into one issued and outstanding common share, without any change in the par value of such shares.
The following are the highlights of the third quarter of 2012:
- Net operating loss of $16.8 million was recorded in the Insurance Underwriting segment for the third quarter ($23.8 million year to date). This third quarter 2012 result reflects $13.4 million of charges, including $11.4 million added to the Company's provision for unpaid loss and loss adjustment expenses; $1.3 million for abandoned leases; and $0.7 million of the total $2.0 million estimated for severance expense, described in the Company's September 17, 2012 press release.
- Net operating income of $0.4 million was recorded in the Insurance Services segment for the third quarter ($2.9 million year to date).
- Net investment income and realized gains of $1.9 million were recorded for the third quarter ($3.8 million year to date).
- The Company recorded no other-than-temporary impairment loss for the third quarter ($0.5 million year to date).
- Net loss of $5.5 million not allocated to any segment was recorded in the third quarter ($22.7 million year to date). This includes loss on change in fair value of debt of $3.2 million ($9.9 million year to date); equity in net income of investee of $0.1 million (loss of $2.1 million year to date); and interest expense of $1.1 million ($3.3 million year to date) related to the Company's subordinated debt and currently being deferred. None of these three items impacted the Company's cash flows during the third quarter and nine months ended September 30, 2012.
On September 17, 2012, the Company announced that it was restructuring its Insurance Underwriting and Insurance Services segments. As part of the restructuring, the Company intends to streamline its non-standard property and casualty insurance business operations. Specific to Insurance Underwriting, during the third quarter the Company began taking actions to significantly reduce the amount of commercial lines business written at Kingsway Amigo Insurance Company ("Amigo") and to update Amigo's personal lines product offering. As part of the restructuring, the Company will reduce staffing levels to be consistent with decreased premium volume at its Amigo business.
About the Company
Kingsway is a holding company functioning as a merchant bank with a focus on long-term value-creation. The Company owns or controls stakes in several insurance industry assets and utilizes its subsidiaries, 1347 Advisors LLC and 1347 Capital LLC, to pursue opportunities acting as an advisor, an investor and a financier. The common shares of Kingsway are listed on the Toronto Stock Exchange and the New York Stock Exchange under the trading symbol "KFS."
Consolidated Statements of Operations
(in thousands, except per share data)
|Three months ended September 30,||Nine months ended September 30,|
|Net premiums earned||$||26,501||$||36,614||$||86,753||$||124,825|
|Service fee and commission income||7,648||7,687||25,315||24,465|
|Net investment income||782||999||2,414||3,228|
|Net realized gains||1,109||104||1,359||102|
|Other-than-temporary impairment loss||—||—||(488||)||—|
|(Loss) gain on change in fair value of debt||(3,177||)||17,189||(9,926||)||25,821|
|Loss and loss adjustment expenses||33,348||34,304||78,739||112,895|
|Commissions and premiums taxes||2,458||5,421||11,624||19,707|
|General and administrative expenses||16,819||17,986||52,774||62,367|
|Amortization of other intangible assets||—||18||—||54|
(Loss) income before gain on buy-back of debt,
equity in net income (loss) of investee and income
tax (benefit) expense
|Gain on buy-back of debt||500||3||500||556|
|Equity in net income (loss) of investee||93||145||(2,085||)||(384||)|
|(Loss) income from continuing operations before income tax (benefit) expense||(21,088||)||8,725||(41,152||)||(13,211||)|
|Income tax (benefit) expense||(1,054||)||2,433||(879||)||2,292|
|(Loss) income from continuing operations||(20,034||)||6,292||(40,273||)||(15,503||)|
Loss on disposal of discontinued operations, net of
|Net (loss) income||(20,034||)||6,292||(40,273||)||(16,796||)|
Less: net loss attributable to noncontrolling
interests in consolidated subsidiaries
Net (loss) income attributable to common
|(Loss) income per share - continuing operations:|
|(Loss) income per share - net (loss) income:|
|Weighted average shares outstanding (in '000s):|
(Loss) Income from Continuing Operations, Net (Loss) Income and Diluted (Loss) Income Per Share
In the third quarter of 2012, we incurred a loss from continuing operations of $20.0 million ($1.52 per diluted share) compared to income of $6.3 million (income of $0.48 per diluted share) in the third quarter of 2011. For the nine months ended September 30, 2012, we incurred a loss from continuing operations of $40.3 million ($3.07 per diluted share) compared to $15.5 million ($1.19 per diluted share) for the same period in 2011. The loss from continuing operations for the three and nine months ended September 30, 2012 is attributable to operating losses in Insurance Underwriting, corporate general expenses, interest expense and loss on the change in fair value of debt. The income from continuing operations for the three months ended September 30, 2011 is due to gain on the change in fair value of debt, offset by Insurance Underwriting operating losses, corporate general expenses and interest expense. The loss from continuing operations for the nine months ended September 30, 2011 is due to operating losses in Insurance Underwriting, corporate general expenses and interest expense, offset by gain on the change in fair value of debt.
In the third quarter of 2012, we incurred a net loss of $20.0 million ($40.3 million year to date) compared to income of $6.3 million in the third quarter of 2011 (loss of $16.8 million prior year to date). The diluted loss per share was $1.52 for the third quarter of 2012 ($3.07 year to date) compared to a diluted income per share of $0.48 for the third quarter of 2011 (loss of $1.28 prior year to date).
Loss on Disposal of Discontinued Operations
For the third quarter and nine months ended September 30, 2012, the Company reported no loss on disposal of discontinued operations, compared to a loss of zero and $1.3 million for the three and nine months ended September 30, 2011, respectively.
Net (Loss) Income and (Loss) Income Per Share - Net (Loss) Income
In the third quarter of 2012, the Company reported net loss of $20.0 million ($40.3 million year to date) compared to net income of $6.3 million in the third quarter of 2011 (net loss of $16.8 million prior year to date). Diluted loss per share was $1.52 for the quarter ($3.07 year to date) compared to diluted income per share of $0.48 for the third quarter of 2011 (diluted loss per share of $1.28 prior year to date).
Consolidated Balance Sheets
(in thousands, except per share data)
|September 30, 2012||December 31, 2011|
|Fixed maturities, at fair value (amortized cost of $88,054 and $91,344, respectively)||$||90,168||$||93,651|
|Equity investments, at fair value (cost of $2,303 and $2,689, respectively)||2,350||2,960|
|Limited liability investments||2,413||97|
|Other investments, at cost which approximates fair value||—||488|
|Short-term investments, at cost which approximates fair value||335||20,334|
|Investment in investee||47,173||48,592|
|Cash and cash equivalents||60,871||85,486|
|Accrued investment income||2,999||1,999|
|Premiums receivable, net of allowance for doubtful accounts of 3,665 and 3,653, respectively||33,922||28,732|
|Service fee receivable||15,683||12,947|
|Other receivables, net of allowance for doubtful accounts of $806 and $806, respectively||5,579||6,322|
|Prepaid reinsurance premiums||7,891||2,024|
|Deferred policy acquisition costs, net||8,039||8,116|
|Income taxes recoverable||—||8,134|
|Property and equipment, net of accumulated depreciation of $19,331 and $27,736||3,323||13,040|
|Asset held for sale||8,737||—|
|LIABILITIES AND EQUITY|
|Unpaid loss and loss adjustment expenses||$||104,953||$||120,258|
|LROC preferred units||13,987||8,845|
|Senior unsecured debentures||22,921||28,337|
|Deferred income tax liability||2,772||2,653|
|Accrued expenses and other liabilities||27,432||26,269|
Common stock, no par value; unlimited number authorized; 13,148,971 and
issued and outstanding at September 30, 2012 and December 31, 2011, respectively
|Additional paid-in capital||15,631||15,403|
|Accumulated other comprehensive income||13,752||12,749|
|Shareholders' equity attributable to common shareholders||77,635||123,433|
|Noncontrolling interests in consolidated subsidiaries||(341||)||(7,028||)|
|TOTAL LIABILITIES AND EQUITY||$||341,509||$||374,081|
Forward Looking Statements
This press release includes "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. Words such as "expects", "believes", "anticipates", "intends", "estimates", "seeks" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward looking statements relate to future events or future performance, but reflect Kingsway management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward looking statements, including, without limitation, our potential inability to complete current or future acquisitions successfully, our inability to successfully implement our restructuring activities, and our inability to adequately estimate and provide for an appropriate level of reserving at our insurance company subsidiaries. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, see Kingsway's securities filings, including its Annual Report on Form 10-K for the year ended December 31, 2011 ("2011 Annual Report") and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2012. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward looking statements whether as a result of new information, future events or otherwise.
Non-U.S. GAAP Financial Measures
This press release contains certain non-U.S. GAAP financial measures. Please refer to the section entitled "Non-U.S. GAAP Financial Measures" in the Management's Discussion and Analysis section of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.
Additional information about Kingsway, including a copy of its 2011 Annual Report and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, can be accessed on the Canadian Securities Administrators' website at www.sedar.com, on the EDGAR section of the U.S. Securities and Exchange Commission's website at www.sec.gov or through the Company's website at www.kingsway-financial.com.
SOURCE Kingsway Financial Services Inc.
SYS-CON Events announced today that StorageCraft Technology Corp, a global leader in backup and disaster, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. The StorageCraft family of companies, founded in 2003, provides award-winning backup, disaster recovery, system migration and data protection solutions for servers, desktops and laptops in addition to powerful data analytics.
Mar. 30, 2017 06:45 PM EDT Reads: 308
MongoDB Atlas leverages VPC peering for AWS, a service that allows multiple VPC networks to interact. This includes VPCs that belong to other AWS account holders. By performing cross account VPC peering, users ensure networks that host and communicate their data are secure. In his session at 20th Cloud Expo, Jay Gordon, a Developer Advocate at MongoDB, will explain how to properly architect your VPC using existing AWS tools and then peer with your MongoDB Atlas cluster. He'll discuss the secur...
Mar. 30, 2017 05:30 PM EDT Reads: 1,245
Deep learning has been very successful in social sciences and specially areas where there is a lot of data. Trading is another field that can be viewed as social science with a lot of data. With the advent of Deep Learning and Big Data technologies for efficient computation, we are finally able to use the same methods in investment management as we would in face recognition or in making chat-bots. In his session at 20th Cloud Expo, Gaurav Chakravorty, co-founder and Head of Strategy Development ...
Mar. 30, 2017 05:30 PM EDT Reads: 4,041
SYS-CON Events announced today that HTBase will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. HTBase (Gartner 2016 Cool Vendor) delivers a Composable IT infrastructure solution architected for agility and increased efficiency. It turns compute, storage, and fabric into fluid pools of resources that are easily composed and re-composed to meet each application’s needs. With HTBase, companies can quickly prov...
Mar. 30, 2017 04:30 PM EDT Reads: 3,524
SYS-CON Events announced today that Linux Academy, the foremost online Linux and cloud training platform and community, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Linux Academy was founded on the belief that providing high-quality, in-depth training should be available at an affordable price. Industry leaders in quality training, provided services, and student certification passes, its goal is to c...
Mar. 30, 2017 04:15 PM EDT Reads: 4,399
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In his Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, will explore t...
Mar. 30, 2017 04:15 PM EDT Reads: 3,425
Providing the needed data for application development and testing is a huge headache for most organizations. The problems are often the same across companies - speed, quality, cost, and control. Provisioning data can take days or weeks, every time a refresh is required. Using dummy data leads to quality problems. Creating physical copies of large data sets and sending them to distributed teams of developers eats up expensive storage and bandwidth resources. And, all of these copies proliferating...
Mar. 30, 2017 03:45 PM EDT Reads: 6,771
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
Mar. 30, 2017 03:30 PM EDT Reads: 2,434
In his session at @ThingsExpo, Eric Lachapelle, CEO of the Professional Evaluation and Certification Board (PECB), will provide an overview of various initiatives to certifiy the security of connected devices and future trends in ensuring public trust of IoT. Eric Lachapelle is the Chief Executive Officer of the Professional Evaluation and Certification Board (PECB), an international certification body. His role is to help companies and individuals to achieve professional, accredited and worldw...
Mar. 30, 2017 03:15 PM EDT Reads: 1,107
SYS-CON Events announced today that Auditwerx will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Auditwerx specializes in SOC 1, SOC 2, and SOC 3 attestation services throughout the U.S. and Canada. As a division of Carr, Riggs & Ingram (CRI), one of the top 20 largest CPA firms nationally, you can expect the resources, skills, and experience of a much larger firm combined with the accessibility and attent...
Mar. 30, 2017 02:45 PM EDT Reads: 1,058
SYS-CON Events announced today that Technologic Systems Inc., an embedded systems solutions company, will exhibit at SYS-CON's @ThingsExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Technologic Systems is an embedded systems company with headquarters in Fountain Hills, Arizona. They have been in business for 32 years, helping more than 8,000 OEM customers and building over a hundred COTS products that have never been discontinued. Technologic Systems’ pr...
Mar. 30, 2017 02:45 PM EDT Reads: 4,041
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From ...
Mar. 30, 2017 02:45 PM EDT Reads: 2,510
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
Mar. 30, 2017 02:00 PM EDT Reads: 9,049
HyperConvergence came to market with the objective of being simple, flexible and to help drive down operating expenses. It reduced the footprint by bundling the compute/storage/network into one box. This brought a new set of challenges as the HyperConverged vendors are very focused on their own proprietary building blocks. If you want to scale in a certain way, let’s say you identified a need for more storage and want to add a device that is not sold by the HyperConverged vendor, forget about it...
Mar. 30, 2017 01:58 PM EDT Reads: 284
What if you could build a web application that could support true web-scale traffic without having to ever provision or manage a single server? Sounds magical, and it is! In his session at 20th Cloud Expo, Chris Munns, Senior Developer Advocate for Serverless Applications at Amazon Web Services, will show how to build a serverless website that scales automatically using services like AWS Lambda, Amazon API Gateway, and Amazon S3. We will review several frameworks that can help you build serverle...
Mar. 30, 2017 01:45 PM EDT Reads: 2,458