|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.
In today's enterprise, digital transformation represents organizational change even more so than technology change, as customer preferences and behavior drive end-to-end transformation across lines of business as well as IT. To capitalize on the ubiquitous disruption driving this transformation, companies must be able to innovate at an increasingly rapid pace. Traditional approaches for driving innovation are now woefully inadequate for keeping up with the breadth of disruption and change facin...
Nov. 30, 2015 03:00 AM EST Reads: 506
Today air travel is a minefield of delays, hassles and customer disappointment. Airlines struggle to revitalize the experience. GE and M2Mi will demonstrate practical examples of how IoT solutions are helping airlines bring back personalization, reduce trip time and improve reliability. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Dr. Sarah Cooper, M2Mi’s VP Business Development and Engineering, explored the IoT cloud-based platform technologies driving t...
Nov. 30, 2015 02:00 AM EST Reads: 446
I recently attended and was a speaker at the 4th International Internet of @ThingsExpo at the Santa Clara Convention Center. I also had the opportunity to attend this event last year and I wrote a blog from that show talking about how the “Enterprise Impact of IoT” was a key theme of last year’s show. I was curious to see if the same theme would still resonate 365 days later and what, if any, changes I would see in the content presented.
Nov. 30, 2015 02:00 AM EST Reads: 447
Cloud computing delivers on-demand resources that provide businesses with flexibility and cost-savings. The challenge in moving workloads to the cloud has been the cost and complexity of ensuring the initial and ongoing security and regulatory (PCI, HIPAA, FFIEC) compliance across private and public clouds. Manual security compliance is slow, prone to human error, and represents over 50% of the cost of managing cloud applications. Determining how to automate cloud security compliance is critical...
Nov. 30, 2015 12:00 AM EST Reads: 449
Culture is the most important ingredient of DevOps. The challenge for most organizations is defining and communicating a vision of beneficial DevOps culture for their organizations, and then facilitating the changes needed to achieve that. Often this comes down to an ability to provide true leadership. As a CIO, are your direct reports IT managers or are they IT leaders? The hard truth is that many IT managers have risen through the ranks based on their technical skills, not their leadership ab...
Nov. 30, 2015 12:00 AM EST Reads: 418
As organizations shift towards IT-as-a-service models, the need for managing & protecting data residing across physical, virtual, and now cloud environments grows with it. CommVault can ensure protection & E-Discovery of your data - whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise.
Nov. 29, 2015 06:00 PM EST Reads: 237
In his General Session at DevOps Summit, Asaf Yigal, Co-Founder & VP of Product at Logz.io, explored the value of Kibana 4 for log analysis and provided a hands-on tutorial on how to set up Kibana 4 and get the most out of Apache log files. He examined three use cases: IT operations, business intelligence, and security and compliance. Asaf Yigal is co-founder and VP of Product at log analytics software company Logz.io. In the past, he was co-founder of social-trading platform Currensee, which...
Nov. 29, 2015 04:00 PM EST Reads: 255
The Internet of Things (IoT) is growing rapidly by extending current technologies, products and networks. By 2020, Cisco estimates there will be 50 billion connected devices. Gartner has forecast revenues of over $300 billion, just to IoT suppliers. Now is the time to figure out how you’ll make money – not just create innovative products. With hundreds of new products and companies jumping into the IoT fray every month, there’s no shortage of innovation. Despite this, McKinsey/VisionMobile data...
Nov. 29, 2015 02:00 PM EST Reads: 487
Just over a week ago I received a long and loud sustained applause for a presentation I delivered at this year’s Cloud Expo in Santa Clara. I was extremely pleased with the turnout and had some very good conversations with many of the attendees. Over the next few days I had many more meaningful conversations and was not only happy with the results but also learned a few new things. Here is everything I learned in those three days distilled into three short points.
Nov. 29, 2015 01:00 PM EST Reads: 358
DevOps is about increasing efficiency, but nothing is more inefficient than building the same application twice. However, this is a routine occurrence with enterprise applications that need both a rich desktop web interface and strong mobile support. With recent technological advances from Isomorphic Software and others, rich desktop and tuned mobile experiences can now be created with a single codebase – without compromising functionality, performance or usability. In his session at DevOps Su...
Nov. 29, 2015 12:45 PM EST Reads: 423
As organizations realize the scope of the Internet of Things, gaining key insights from Big Data, through the use of advanced analytics, becomes crucial. However, IoT also creates the need for petabyte scale storage of data from millions of devices. A new type of Storage is required which seamlessly integrates robust data analytics with massive scale. These storage systems will act as “smart systems” provide in-place analytics that speed discovery and enable businesses to quickly derive meaningf...
Nov. 29, 2015 12:30 PM EST Reads: 427
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
Nov. 29, 2015 12:00 PM EST Reads: 529
In his General Session at 17th Cloud Expo, Bruce Swann, Senior Product Marketing Manager for Adobe Campaign, explored the key ingredients of cross-channel marketing in a digital world. Learn how the Adobe Marketing Cloud can help marketers embrace opportunities for personalized, relevant and real-time customer engagement across offline (direct mail, point of sale, call center) and digital (email, website, SMS, mobile apps, social networks, connected objects).
Nov. 29, 2015 11:45 AM EST Reads: 333
The buzz continues for cloud, data analytics and the Internet of Things (IoT) and their collective impact across all industries. But a new conversation is emerging - how do companies use industry disruption and technology enablers to lead in markets undergoing change, uncertainty and ambiguity? Organizations of all sizes need to evolve and transform, often under massive pressure, as industry lines blur and merge and traditional business models are assaulted and turned upside down. In this new da...
Nov. 29, 2015 11:30 AM EST Reads: 276
In recent years, at least 40% of companies using cloud applications have experienced data loss. One of the best prevention against cloud data loss is backing up your cloud data. In his General Session at 17th Cloud Expo, Sam McIntyre, Partner Enablement Specialist at eFolder, presented how organizations can use eFolder Cloudfinder to automate backups of cloud application data. He also demonstrated how easy it is to search and restore cloud application data using Cloudfinder.
Nov. 29, 2015 10:00 AM EST Reads: 206