Kingsway Corporation · NYSE:KWY
Kingsway — Kingsway Financial Services — Scotia Capital Financial Summit 2004
34 slides from Kingsway's conference presentation, Sep 15, 2004
Slide 1: Kingsway Financial Services Inc.
Kingsway Financial Services Inc.
Slide 2: Scotia Capital Financial Summit September 15, 2004
Scotia Capital Financial Summit September 15, 2004
Slide 3: Shaun Jackson, Executive Vice President & CFO
Shaun Jackson Executive Vice President & CFO
Slide 4: Forward Looking Statements
Forward Looking Statements Certain information included in this presentation and statements made by the Company are not historical facts but are forward-looking statements relating to such matters as anticipated financial performance, business prospects, market conditions, legislative and regulatory
Slide 5: Corporate Overview
I< Corporate Overview Kincsway Financiat Services Inc. Building Shareholder Value
Slide 6: Kingsway Financial
Kingsway Financial Building Shareholder Value One of the fastest growing property and casualty insurance companies in North America with a proven track record of profitability Focused on building operating excellence through nine wholly-owned insurance company subsidiaries, one agency Discipli
Slide 7: Kingsway Financial Subsidiaries in U.S. and Canada
Kingsway Financial 10 Subsidiaries in U.S. and Canada Kingsway York Fire Jevco Avalon Risk General & Casualty Management American American Hamilton/ Lincoln Southern Universal Country Service U.S. Security General United Casualty
Slide 8: Kingsway Financial
Kingsway Financial Trucking Non-standard auto insurance Motorcycle Standard auto & homes Taxis Property and liability Other specialty insurance
Slide 9: Kingsway Financial
Kingsway Financial Creation of Company Obtaining capital Building infrastructure Moving on opportunities Maintaining discipline Developing key people
Slide 10: Growth in Gross Premiums Written
Growth in Gross Premiums Written (C$ Millions) $2,636.8 GR CA $2,124.7 52% $1,065.3 $643.0 $409.2 $508.6 $140.6 $210.8 1996 1997 1998 1999 2000 2001 2002 2003 Years ended December 31
Slide 11: Growth in Net Premiums Earned
Growth in Net Premiums Earned (C$ Millions) $2,382.0 GR CA 56% $1,737.8 $872.8 $445.6 $540.0 $314.7 $107.7 $174.5 1996 1997 1998 1999 2000 2001 2002 2003 Years ended December 31
Slide 12: Growth in Net Income
Growth in Net Income (C$ Millions) $85.3 $79.5 GR CA 34% $44.9 $31.0 $27.5 $22.2 $11.2 $13.6 1996 1997 1998 1999 2000 2001 2002 2003 Years ended December 31
Slide 13: Financial Review: Book Value Per Share
Financial Review Book Value Per Share (C$) $12.56 $12.63 $11.03 $8.01 $6.96 $7.12 $5.95 $3.26 $1.90 27% CAGR 1995 1996 1997 1998 1999 2000 2001 2002 2003 Years ended December 31
Slide 14: Financial Review: Diluted Earnings Per Share
Financial Review Diluted Earnings Per Share (C$) $1.61 $1.62 $1.19 $0.86 $0.80 $0.73 $0.49 $0.38 $0.30 23% CAGR 1995 1996 1997 1998 1999 2000 2001 2002 2003 Years ended December 31
Slide 15: Recent Financial Results
I< Recent Financial Results Kincsway Financiat Services Inc. Building Shareholder Value
Slide 16: Financial Review: Record Results 2003
Financial Review Record Results –2003 (In C$) 2002 2003 Chg Net income $79.5M $85.3M 7% EPS (diluted) $1.61 $1.62 1% Return on Equity 13.8% 12.9% (0.9%) Combined Ratio 99.8% 101.4% (1.6%) Gross Premiums Written $2,125M $2,637M 24% Book Value Per Share $12.56 $12.63 1% Book Value (per share*) $12.56
Slide 17: Impact of Currency Fluctuation - 2003
Impact of Currency Fluctuation - 2003 Balance Sheet Shareholders equity $105.4M Book value per share $1.88 Income Statement: Gross Premiums Written $234.8M Net Premiums Earned $226.1M Underwriting Profit $2.0M Investment Income $10.8M Net Income $10.5M Earnings Per Share 20 ¢ * Using same US:Cdn dol
Slide 18: First Six Months 2004 (C$)
First Six Months 2004 (C$) 2003 2004 Gross Premiums Written $1,332M 6% $1,412M 0% Net Premiums Earned $1,173M $1,171M 29% Income before income taxes $56M $73M 22% Net Income $52M $64M Earnings Per Share $1.04 10% $1.14 .2% Return on Equity 17.2% 17.0% 18% Book Value Per Share $12.09 $14.21
Slide 19: Impact of Currency Fluctuation First Half Q2 2004
Impact of Currency Fluctuation First Half Q2 2004 Balance Sheet QTR YTR Shareholders equity - increase $12.3M $25.7M Book value per share $0.22 $0.45 Income Statement: Gross Premiums Written $14.4M $91.7M Net Premiums Earned $13.3M $72.7M Underwriting Profit ($0.1M) $1.4M Investment Income $0.5M $2.
Slide 20: First Half Results 2004 – U.S. $
First Half Results 2004 – U.S. $ 2003 2004 Gross Premiums Written $914M 18% $1,081M Net Premiums Earned $804M 11% $896M Net Income $35M 38% $49M Earnings Per Share (diluted) 72¢ 21% 87¢ Underwriting Profit $15M 17% $18M Book Value Per Share $8.97 18% $10.60
Slide 21: Geographic Area – Gross Premiums Written
Geographic Area – Gross Premiums Written First Half 2003 2004 Canada Canada 23% 28% United States United States 77% 72%
Slide 22: Business Lines
Business Lines Gross Premiums Written – First Half 2004 Trucking 29% Automobile 41% Commercial Automobile 12% Other 4% Property & Liability Motorcycle 3% 11%
Slide 23: Diversified by Geographical Area – First Half 2004
Kingsway Financial Diversified by Geographical Area – First Half 2004 Other 23% Ontario 15% Quebec California 5% 13% Alberta 6% New Jersey 3% Alabama 2% Illinois 12% South Carolina 2% Texas 8% Florida 11%
Slide 24: Combined Ratio
Combined Ratio First Half 2004 2003 2004 Commission ratio 21.8% 19.3% General Expense ratio 5.5% 7.7% Loss ratio 70.8% 71.0% Combined ratio 98.1% 98.0%
Slide 25: Segmented Numbers: Canadian Operations
Segmented Numbers Canadian Operations - First Half 2004 – in Canadian Dollars ($ Millions) 2003 2004 % change Gross premiums written $303M $390M 29% Net premiums earned $249M $316M 27% Combined ratio 105.4% 96.5% 8.9% Loss ratio 77.3% 71.0% 6.3%
Slide 26: Segmented Numbers: U.S. Operations
Segmented Numbers U.S. Operations - First Half 2004 (in U.S. $) ($ Millions) 2003 2004 % change Gross premiums written $705M $764M 8% Net premiums earned $638M $638M - Combined ratio 96.1% 98.5% (2.4%) Loss ratio 69.0% 71.0% (2.0%)
Slide 27: Investment Portfolio
Investment Portfolio At June 30, 2004 Accrued Interest & Term Deposits Government Bonds 12% 29% Cash 3% Premium Finance Receivables 3% Equities 10% Corporate Bonds 43%
Slide 28: Financial Review – Investment Portfolio (C$)
Financial Review – Investment Portfolio (C$) Investment Portfolio Investment Portfolio Cash Flow Generated (in $ millions) Per Share From Operations (in $’s) (in $ millions) 1996 $188 $7.08 $45 1997 $354 $9.87 $48 1998 $634 $17.65 $63 1999 $693 $20.38 $34 2000 $787 $23.12 $93 2001 $1,235 $25.39 $207
Slide 29: Investment Portfolio: Maturity Profile
Investment Portfolio Maturity Profile of Fixed Income at June 30, 2004 0 – 1 year 24% 1 – 5 years 63% 87% Over 5 years 13% 100%
Slide 30: Significant Reserve Strength
Significant Reserve Strength Case Reserves IBNR Increase in: 6 months to June 30, 2004 23% 10% Year ended December 31, 2003 30% 52%
Slide 31: Significant Reserve Strength
Significant Reserve Strength IBNR: Total Reserves June 30, 2004 42% December 31, 2003 45% December 31, 2002 41%
Slide 32: Financial Position - since 31/12/03
Financial Position - since 31/12/03 Total assets 17% $4.2B Investment portfolio 15% $3.1B Unearned premiums 21% $936M Unpaid claims 17% $2.0B Book value/share 13% $14.21
Slide 33: Key Objectives
Key Objectives Building Shareholder Value Increase in Return on Equity Combined Ratio Net Premiums Earned 1995 19.8% 96.6% 9% 1996 21.4% 95.6% 134% 1997 16.5% 95.8% 62% 1998 13.4% 93.9% 80% 1999 5.5% 102.6% 42% 2000 10.7% 101.0% 21% 2001 13.3% 99.1% 62% 2002 13.8% 99.8% 99% 2003 12.9% 101.4% 37% 200
Slide 34: Kingsway Financial Services Inc.
Kingsway Financial Services Inc.
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