Kingsway Corporation · NYSE:KWY

Kingsway — Kingsway Financial Services — Investor Day (May 2024)

55 slides from Kingsway's investor day presentation, May 20, 2024

1. Slide 1: Investor Day Presentation

   NYSE: KFS Investor Day Presentation May 20, 2024 Efficient Operations, Thoughtful Capital Allocation

2. Slide 2: Forward-Looking Statements

   Forward-Looking Statements | 2 This presentation 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 res

3. Slide 3: Representatives

   Representatives | 3 John T. Fitzgerald Kent Hansen President, CEO, and Director Chief Financial Officer Mr. Fitzgerald has served as CEO of Kingsway since September 2018. Mr. Hansen has served as CFO of Kingsway’s subsidiary, Kingsway Mr. Fitzgerald joined Kingsway as Executive Vice President on Apr

4. Slide 4: Representatives

   Representatives | 4 Charles Joyce Peter Dausman Vice President, KSX President and CEO, Digital Diagnostics Charles Joyce joined Kingsway in April 2023 from Forest Circle LLC - Mr. Dausman joined Kingsway in the summer of 2021 as our a Search investment firm - where, as Principal and Chief Executive

5. Slide 5: Agenda

   Agenda | 5 Introduction to Kingsway – Kent Hansen Guiding Principals and Strategy for Growth – JT Fitzgerald Kingsway Search Xcelerator – Charles Joyce Digital Diagnostics Case Study – Peter Dausman Q&A Fireside Chat – Will Thorndike Appendix

6. Slide 6: Introduction to Kingsway

   | 6 Introduction to Kingsway

7. Slide 7: Company Overview

   Company Overview | 7 Ticker: KFS (NYSE) Owns or controls subsidiaries primarily in the extended warranty and business services industries Incorporation Total Employees (1) Based in Incorporated in 1989 397 Chicago, IL Financial Overview (1) Shareholder Information (2) Assets: $198.0 Million Share Pr

8. Slide 8: Investment Highlights

   Investment Highlights | 8 1 A collection of recurring revenue, high margin, asset-light, growing businesses 2 Operating company adjusted EBITDA run-rate of approximately $16 to $17 Million(1) 3 Approximately $626 Million(2) in Net Operating Losses (NOLs) for tax-advantaged cash flow 4 Disciplined M&

9. Slide 9: Our Structure

   Our Structure | 9 Decentralized operating structure with a small corporate team • A small, lean team (10 FTEs) • Makes all capital allocation decisions among OpCos • Acquisitions of new OpCos • Oversight and cadence of accountability with OpCos • Oversees Asset Management (EW Float $42.9M; Argo) • R

10. Slide 10: Strong Track Record of OpCo Adjusted EBITDA Growth

    Strong Track Record of OpCo | 10 Adjusted EBITDA Growth (1)(2)(3) (in thousands) ~$16,000 to $17,000 $15,521 $14,082 $13,586 21% CAGR 2018 to 2023 $11,440 $7,108 $5,497 $4,844 2018 2019 2020 2021 2022 2023 TTM Mar 2024 Run-rate Full Year Geminus; Sold PWSC 7/22; Claims severity; Acquired PWI Acquire

11. Slide 11: Quality Operating Companies

    Quality Operating Companies | 11 Core businesses are asset-light, generate recurring revenue and operate in growing industries Extended Warranty (TTM 3/31/24) Kingsway Search Xcelerator (“KSX”) (TTM 3/31/24) Revenue Pro forma adj EBITDA Revenue Pro forma adj EBITDA $68.2M $34.8M(1) Revenue Revenue 5

12. Slide 12: Creating Value: Activity in the Last ~18 Months

    Creating Value: Activity in the | 12 Last ~18 Months Action Cash Debt Adj EBITDA December 2022: Sale of CMC rail yard +$21.4M ($177.2M) -- February 2023: Sale of final NLIG commercial property +$6.9M -- -- March 2023: Repurchase of $75.5M of TruPs, for 60.8 cents on the dollar ($56.5M) ($96.7M) -- H

13. Slide 13: Net Debt Reduced Significantly

    Net Debt Reduced Significantly | 13 (in millions) $305.3 $274.5 $260.8 $246.9 $69.4 $35.3 $34.9 2018 2019 2020 2021 2022 2023 3/31/2024 OpCos Notes Payable TruPs: Fair Value TruPs: Def Int Class A Preferred Unrestricted Cash Refer to the Appendix for details on net debt.

14. Slide 14: On the Horizon

    On the Horizon | 14 • Under our securities repurchase program we have(1): • Repurchased 1,093,861 of our warrants, and • Repurchased 430,727 shares of our common stock • After considering both stock and warrant repurchases, $2.8 million(1) of stock repurchases could be made through March 22, 2025, u

15. Slide 15: Kingsway Guiding Principles

    | 15 Kingsway Guiding Principles

16. Slide 16: Our Guiding Principles

    Our Guiding Principles | 16 Compound Intrinsic Value Per Share Decentralization Execution Capital Allocation Talent Long-term thinking Tax efficiency

17. Slide 17: The Power of Decentralization

    Our Guiding Principles | 17 The power of Decentralization "Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity." -- Gen. George S. Patton •Allow businesses to preserve entrepreneurial independence o Own their P&L and Balance Sheets •Provide autono

18. Slide 18: Execution – Autonomy with Accountability

    Our Guiding Principles | 18 Execution – Autonomy with accountability "Vision without execution is just a hallucination." - Thomas Edison •Business leaders have high autonomy •Expect transparency and accountability o Cadence of accountability for execution and results •Incentives tied to achieving an

19. Slide 19: Capital Allocation

    Our Guiding Principles | 19 Capital Allocation “Stated simply, two companies with identical operating results and different approaches to allocating capital will derive two very different long-term outcomes for shareholders.” – William Thorndike • Organic Growth o Strategic vs. Non-strategic expense

20. Slide 20: Talent

    Our Guiding Principles | 20 Talent “Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is the one thing above all others; the ability to get and keep enough of the right people.” - Jim C

21. Slide 21: Long-Term View

    Our Guiding Principles | 21 Long-Term View “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn't … pays it.” -- Albert Einstein • We have a long-term perspective. We use a 20-year time horizon to guide our decision-making in much the same way that a s

22. Slide 22: Taxes

    Our Guiding Principles | 22 Taxes “Earnings are good. Earnings without taxes are better.” – Ian Cummings, Leucadia • Acquired companies become part of our consolidated return group • $626 million of net operating loss carryforwards (“NOLs”) • Available to reduce income taxes that might otherwise be

23. Slide 23: Strategy for Growth

    Strategy for Growth | 23 Powerful flywheel can significantly grow Adjusted EBITDA both organically and through acquisitions in a tax-advantaged structure Organic Growth Growth through Acquisitions • Grow and Improve Portfolio of • Search Xcelerator Businesses Utilizing proven framework to identify t

24. Slide 24: Strategy for Growth: Serial acquisitions at KSX

    Strategy for Growth | 24 Serial acquisitions at KSX Building a unique platform focused on long-term value creation Partner with exceptional Acquire great businesses Apply operational and Compound capital at high entrepreneurs strategic support rates of return over a long time horizon Aiming for 4 to

25. Slide 25: Kingsway Search Xcelerator

    | 25 Kingsway Search Xcelerator

26. Slide 26: Kingsway Search Xcelerator

    Kingsway Search Xcelerator | 26 Today’s Discussion 1 KSX Operating Context • Why ETA & Who We Are Frequently Asked Questions KSX Response 2 KSX Approach to M&A • Bending the curve towards How to be successful [in QUALITY success M&A]? Design Quality into the process • Kingsway Business System REPEAT

27. Slide 27: Operating Context: Why ETA & Who We Are

    Kingsway Search Xcelerator | 27 Operating Context: Why ETA & Who We Are Growing/Underserved Niche KSX Acquisitions vs. Benchmark Exceptional Talent B2B Services Healthcare Technology Number of Search Funds launched annually has Searching increased significantly in recent years as ~$4.8T Miles Mamon

28. Slide 28: Bending the Curve Towards Success

    Kingsway Search Xcelerator | 28 Bending the curve towards success by addressing key risks Stage Sample Risks Sample Controls “Designing quality into the process” means addressing the Recruiting Applicants Talent Network common causes of failure (Risks) and aligning process steps to specifically miti

29. Slide 29: Kingsway Business System

    Kingsway Search Xcelerator | 29 Kingsway Business System The Kingsway Business System is a comprehensive and integrated approach to continuous improvement and operational excellence that has been modeled from best practices at other companies such as Area KBS in Action Danaher Corp. and refined by o

30. Slide 30: How KSX Designs Quality Into M&A Process

    Kingsway Search Xcelerator Responsible System of Record How KSX designs quality into M&A process [Process] Kingsway Acquisition Process Map (Simplified) Candidate OIR Job Talent Interview Ongoing Talent Recruitment Scorecard Description Network Candidates Offer/Hiring L&D Industry Industry Industry

31. Slide 31: Bending the Curve: Talent Recruitment

    Kingsway Search Xcelerator | 31 Bending the Curve: Talent Recruitment Talent Recruitment Process Talent Network Overview KSX recruiting relies on TopGrading – a 12-step process designed KSX has consistently been able to generate target application to systematically identify high-performers. volume (

32. Slide 32: Bending the Curve: Industry Identification

    Kingsway Search Xcelerator | 32 Bending the Curve: Industry Identification Quality Industry Industry Barriers of EBITDA Capital Segment Industry OIR Score Growth Size Cyclical. Fragment to Entry Ex. Risks Revenue Margins Intensity Industry selection is often cited as B2B Services Industry1 OIR1 4.3

33. Slide 33: Bending the Curve: Outreach & Sourcing

    Kingsway Search Xcelerator | 33 Bending the Curve: Outreach & Sourcing Proprietary Outreach Intermediated Sourcing During Onboarding, OIRs set individual targets for monthly Intermediary Database & Relationships outreach within recommended bands (200 – 400 Monthly) balancing tradeoffs between Volume

34. Slide 34: Going Forward: Scaling the KSX Model

    Kingsway Search Xcelerator | 34 Going Forward: Scaling the KSX Model KSX Acquisition Model (Illustrative) Acquisition Operation Cashflow Projections YR 0 YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 Grow EBITDA organically EBITDA $2.0 $2.1 $2.2 $2.3 $2.4 $2.5 $2.7 Acquire $2M EBITDA Business • 5%/Yr CAGR with King

35. Slide 35: Digital Diagnostics

    |3 © Digital Diagnostics -——————_—

36. Slide 36: Digital Diagnostics

    Digital Diagnostics Acquired Digital Diagnostics, Inc. for $11.0M (6.1x TTM Adjusted EBITDA) Company Profile Growth Timeline Digital Diagnostics is a provider of 170 cardiac telemedicine services to hospitals 135 130 Customer 118 $1.7M 29% Count TTM 3/31/24 TTM 3/31/24 Adjusted EBITDA Revenue Growth

37. Slide 37: Agenda

    Digital Diagnostics Agenda Search Process Industry Diligence Process Deal and Acquisition Process First Six Months Next Steps 37

38. Slide 38: Search Process

    Search Process Strategy Execution Results • As Early as Possible: Develop Convictions, • Kingsway’s Proprietary Scorecard,  Deal Closed Meeting/Exceeding All Start Iterating, and Get Reps In Mentorship, Sounding Board, Tech Stack Scorecard Hurdles • Broad Industry Interest but with Particular • Riv

39. Slide 39: Search Process

    Search Process Strategy Execution Results • As Early as Possible: Develop Convictions, • Kingsway’s Proprietary Scorecard,  Deal Closed Meeting/Exceeding All Start Iterating, and Get Reps In Mentorship, Sounding Board, Tech Stack Scorecard Hurdles • Broad Industry Interest but with Particular • Riv

40. Slide 40: Search Process

    Search Process Strategy Execution Results • As Early as Possible: Develop Convictions, • Kingsway’s Proprietary Scorecard,  Deal Closed Meeting/Exceeding All Start Iterating, and Get Reps In Mentorship, Sounding Board, Tech Stack Scorecard Hurdles • Broad Industry Interest but with Particular • Riv

41. Slide 41: Search Process

    Search Process Strategy Execution Results • As Early as Possible: Develop Convictions, • Kingsway’s Proprietary Scorecard,  Deal Closed Meeting/Exceeding All Start Iterating, and Get Reps In Mentorship, Sounding Board, Tech Stack Scorecard Hurdles • Broad Industry Interest but with Particular • Riv

42. Slide 42: Search Process

    Search Process Strategy Execution Results • As Early as Possible: Develop Convictions, • Kingsway’s Proprietary Scorecard,  Deal Closed Meeting/Exceeding All Start Iterating, and Get Reps In Mentorship, Sounding Board, Tech Stack Scorecard Hurdles • Broad Industry Interest but with Particular • Riv

43. Slide 43: Search Process

    Search Process Strategy Execution Results • As Early as Possible: Develop Convictions, • Kingsway’s Proprietary Scorecard,  Deal Closed Meeting/Exceeding All Start Iterating, and Get Reps In Mentorship, Sounding Board, Tech Stack Scorecard Hurdles • Broad Industry Interest but with Particular • Riv

44. Slide 44: Due Diligence Process – Total Addressable Market

    Digital Diagnostics Due Diligence Process – Total Addressable Market Other*, 260 Addressable Market Children's, 265 Long Term Acute, 389  Large Rehabilitation, 416  Growing Psychiatric , 819  Underpenetrated Tangential Market, 4724  Growth Supported by Critical Access, 1357 Potential Customer, P

45. Slide 45: Due Diligence Process – Long-term Industry Trends

    Digital Diagnostics Due Diligence Process – Long-term Industry Trends Due Diligence Area 15-Year Impact Notes Heart Monitoring Alternative Electrocardiogram technology will continue to be the sole method for predicting and diagnosing Core Science Replacing EKG heart-related issues for core markets (

46. Slide 46: Due Diligence Process – Niche and Business Model

    Digital Diagnostics Due Diligence Process – Niche and Business Model Digital Diagnostics’ Customers Niche and Business Model Short-Term Long-Term Hospital-at-  Critical Service Need Hospital Type Rehab Acute Acute Home  Dominant Player With No Qualified Competition Emergency Complex, Moderate Reco

47. Slide 47: Deal and Acquisition Process

    Digital Diagnostics Deal and Acquisition Process Competitive Deal Metrics Kingsway Success Factors 6 Months From First Introductory Call To Deal Close • Publicly Traded Investor Credibility • Cultural Alignment With Seller and Team 163 Competitor NDAs Signed • 24/7 Deal Team Availability and Executi

48. Slide 48: First Six Months and Next Steps

    Digital Diagnostics First Six Months and Next Steps • Listening, Learning, and Engaging – Customers, Suppliers, and Digital Diagnostics Team • With Help of Our Operations Team, Began Improving Employee Training, Leadership Development, and Overall Organizational Communication for Core Monitoring Ope

49. Slide 49: Digital Diagnostics

    Digital Diagnostics Acquired Digital Diagnostics, Inc. for $11.0M (6.1x TTM Adjusted EBITDA) Company Profile Growth Timeline Digital Diagnostics is a provider of 170 cardiac telemedicine services to hospitals 135 130 Customer 118 $1.7M 29% Count TTM 3/31/24 TTM 3/31/24 Adjusted EBITDA Revenue Growth

50. Slide 50: Q&A

    res rE Q&A | 50

51. Slide 51: Fireside Chat with Will Thorndike

    | 51 Fireside Chat with Will Thorndike

52. Slide 52: Appendix

    | 52 Appendix

53. Slide 53: Reconciliation of GAAP Operating Income for Extended Warranty Segment

    Reconciliation of GAAP Operating Income for | 53 Extended Warranty Segment (in thousands) TTM Twelve Months Ended 3/31/24 2023 2022 2021 2020 2019 2018 GAAP Operating Income for Extended $6,627 $6,983 $9,879 $12,636 $6,605 $4,611 $4,215 Warranty segment (1) Non-GAAP Adjustments: Investment income, g

54. Slide 54: Reconciliation of GAAP Operating Income for KSX Segment

    Reconciliation of GAAP Operating Income for | 54 KSX Segment (in thousands) TTM Twelve Months Ended 3/31/24 2023 2022 2021 GAAP Operating Income for Extended $5,018 $5,252 $3,548 $484 Warranty segment (1) Non-GAAP Adjustments: Employee costs (2) 431 380 235 71 Depreciation 88 24 - - Total Non-GAAP A

55. Slide 55: Details of Net Debt

    Details of Net Debt | 55 (in thousands) 2018 2019 2020 2021 2022 2023 3/31/24 OpCos $ 3,917 $ 9,240 $ 25,303 $ 26,717 $ 34,281 $ 30,822 $ 33,410 Notes Payable (1) 199,316 194,634 192,057 205,025 - - - TruPs: Fair Value 50,023 54,655 50,928 60,973 67,811 13,594 13,651 TruPs: Deferred Interest 2,492 8

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