Kingsway Corporation · NYSE:KWY
Kingsway — Kingsway Financial Services — Investor Presentation (November 2011)
26 slides from Kingsway's investor presentation, Nov 29, 2011
Slide 1: Kingsway Financial Services Inc. Investor Meeting Presentation
Kingsway Financial Services Inc Inc. Investor Meeting Presentation | November 29 and 30, 2011
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements related to our future growth, trends in our operating companies' businesses and industries and our financial and operational results and performance that are based on managements' current expectations, forecasts and ass
Slide 3: What is Kingsway?
What is Kingsway ? Ticker: KFS / KFS.TO • Kingsway Financial Services Exchange: NYSE / TSX Inc. (KFS) is a holding company that either owns or P i (as Price ( off 11/22/11): 11/22/11) controls l stakes k ini severall $0.70 NYSE insurance Stilwell Financial Fund, L.P. industry assets Shares Out: 52.3
Slide 4: Company Timeline
Company Timeline 1989 Present 2007 KFS founded as a KFS now functions specialty provider Underwriting results begin to show as a merchant bank of personal and with focus on value commercial operational challenges h ll creation insurance in the US & Canada. Stilwell Financial Fund, L.P. 1990-2006 200
Slide 5: Redefining the Business
Redefining the Business 2009 – 2011 Ongoing . . . Transactions: Stilwell Financial Fund, L.P. York, Lincoln, Zephyr, Use Proceeds to Pay Avalon JEVCO, Avalon, JEVCO American Down Debt & Redefine Country, American KFS Service, and Amigo 5
Slide 6: What is Kingsway Today?
What is Kingsway Today ? KINGSWAY FINANCIAL SERVICES INC. KINGSWAY AMERICA INC. INSURANCE INSURANCE BUSINESS INSURANCE INSURANCE SERVICES INVESTMENTS ADVISORY UNITS BUSINESS UNIT UNITS Mendota Atlas Financial Acadia LP 1347 Partners UCC ARS KRe Barbados Advantage Auto LGIC Holdings 6
Slide 7: Insurance Business Unit: Mendota
Insurance Business Unit: Mendota Size Geography g p y Target g • $70-75mm • FL, CA, • 20% Pre- Non TX,, CO,, Tax Return Standard NV on Auto (largestFund, L.P. Statutory Stilwell Financial Premium states by Surplus volume) • New leadership is committed to write only profitable premium 7
Slide 8: Insurance Business Unit: UCC
Insurance Business Unit: UCC • Managing g g orderlyy runoff of several commercial programs p g and non-standard auto books • Actively writing only non-standard non standard auto in IL Stilwell Financial Fund, L.P. • Also writing some non-standard auto in CA, AZ only to comply with mandatory renewal
Slide 9: Insurance Business Unit: KRe Barbados
Insurance Business Unit: KRe Barbados • Existingg Barbados company p y with operating p g historyy • No premium currently running through KRe • Could be utilized for reinsurance Stilwell Financialtransactions Fund, L.P. 9
Slide 10: Insurance Services Business Unit: ARS
Insurance Services Business Unit: ARS • Manages g approximately pp y $80 $ million of commercial and personal assigned risk business through its significant market share of the assigned risk and take-out market • Partners with Berkshire Hathaway Stilwell subsidiary Financial Fund, L.P. National Liab
Slide 11: Insurance Services Business Unit: ARS
Insurance Services Business Unit: ARS “Standard” Standard Insurance Co. Standard insurance State assigned risk pools companies engage ARS Stilwell Financial Fund, L.P. assign a quota of assigned to handle their assigned risk business to standard risk pool business insurance companies ARS Assigned Ri
Slide 12: Insurance Services Business Unit: Advantage Auto
Insurance Services Business Unit: Advantage Auto Size Geograph Geography Target • $20-25mm • Metro- • 20% Non Chicago EBITDA Standard Stilwell Financial MarketFund, L.P. Auto (IL, IN) Premium • Managing general underwriter • Currently organized to begin writing on Mendakota ppaper p 12
Slide 13: Insurance Investments: Atlas & Acadia
Insurance Investments: Atlas & Acadia Atl Atlas A di Acadia • Atlas is the combination of former KFS units • Acadia Acquisition Partners, L.P. bought American Countryy and American Service former KFS sub Hamilton Risk Management g Insurance including Kingsway Amigo Insurance Company in March of 2011
Slide 14: Insurance Investment: LGIC Holdings
Insurance Investment: LGIC Holdings • KFS owns a 49% minorityy investment in a holdingg company p y which acquired Walshire Assurance Company and its wholly owned subsidiary Lincoln General • Tawa plc owns a 51% majority investment and has significant operational involvement Stilwell Financial Fund,
Slide 15: Insurance Advisory Unit: 1347 Partners
Insurance Advisory Unit: 1347 Partners 1347 Partners is the trade name KFS uses for its merchant banking activities to pursue opportunistic insurance industry-related transactions as an advisor, an investor and a financier of capital Advisor Investor Stilwell Financial Fund, L.P. Financier Example:
Slide 16: Managerial Balance Sheet
Managerial Balance Sheet Managerial Assets Debt Liabilities & Shareholders’ Equity Investment in Acadia 11,705 FMV 2012 Senior Notes, due 7/11/2012 1,608 Investment in UCC 9,821 FMV 2014 Senior Notes, due 2/1/2014 26,022 Investment in Mendota 33 366 33,366 FMV 2015 KLROCs, KLROCs due 6/30/2015 8 829
Slide 17: Cash Uses
Cash Uses As of September 30, 2011 Maturity Principal (mm) Operations (not including interest expense) Annually $6 (Estimated) 6 0% Senior Unsecured 6.0% 2012 $1 6 $1.6 7.5% Senior Notes Stilwell Financial Fund, L.P. 2014 $27.0 LROC Preferred Units 2015 $18.8 Subordinated Trust Preferred Interest (1
Slide 18: Cash Sources
Cash Sources Potential Sources of Cash from Operations Holding Company Cash A di IInvestment Acadia Stilwell Financial Fund, L.P. Atlas Investment ARS Earnings 1347 Partners – New Ventures 18
Slide 19: Shareholder List
Shareholder List Holder Percentage (%) The Stilwell Group (1) 16.8 Bruce Mitchell 10.7 Oakmont Capital (2) 67 6.7 American Physicians 2.8 Dimensional Fund 2.3 KBW Inc 1.6 Larry Swets, Jr. (3) 1.4 Di Directors &M Management as a G Group ~25.00 25 00 (1) Board Member Joseph Stilwell is affiliated with
Slide 20: Board of Directors
Board of Directors Board Member Director Since Shares Owned Gregory Hannon (1) 2009 3.5mm(1) Terence Kavanagh (1) 2009 3.5mm(1) Spencer Schneider 2009 26k Joseph Stilwell 2009 8.8mm (1) B Boardd Members M b T Terry K Kavanaghh and dGGreg H Hannon are affiliated ffili d with i h Oakmont O k Capital C
Slide 21: Looking Forward
Looking Forward • De-emphasize De emphasize capital-intensive capital intensive insurance underwriting and emphasize fee-generating services • Leverage existing core competencies and skill sets across the insurance industry Stilwell Financial Fund, L.P. • Focus on 1347 Partners activities – the “mer
Slide 22: 1347 Partners – the Merchant Banking Approach
1347 Partners – the Merchant Banking Approach • Allows KFS to leverage its existing skill set (and corresponding overhead) to projects outside of the existing balance sheet • Example: Acting as a General Partner in the acquisition of a company • Opportunity: Apply Stilwellour “solution-focused” Fina
Slide 23: Summary Points & Future Objectives
Summary Points & Future Objectives • KFS offers the opportunity to invest across a diverse pool of insurance assets and insurance-related businesses • Insurance investments and existing liquidity provide ability to meet future obligations Stilwell Financial Fund, L.P. • KFS will leverage its relatio
Slide 24: Management Bios
Management Bios Larryy G. Swets,, Jr., J , CFA President and CEO, Kingsway Financial Services Inc. Mr. Swets is the President and CEO of Kingsway Financial Services Inc. Before joining Kingsway in JJanuaryy 2010,, Larryy founded Itasca Financial LLC,, an advisoryy and investment firm specializing p
Slide 25: Management Bios
Management Bios William A. Hickey, y Jr., J CFA, CPA EVP, COO & CFO, Kingsway Financial Services Inc. Mr. Hickey is the Executive Vice President, Chief Operating Officer, and Chief Financial Officer of Kingsway Financial Services Inc. Before Joining Kingsway in August 2010, Bill was a Managing Direc
Slide 26: Contact Information
Contact Information Larry Swets William Hickey lswets@kfscap.com whickey@kfscap.com Stilwell Financial Fund, L.P. 26
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