Kingsway Corporation · NYSE:KWY
Kingsway — Kingsway Financial Services — Investor Presentation (September 2006)
37 slides from Kingsway's investor presentation, September 2006
Slide 1: Kingsway Financial Services Inc. – Into A New Decade of Opportunity
Kingsway Financial Services Inc. Into A New Decade of Opportunity
Slide 2: 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 3: Corporate Overview
Corporate Overview Into A New Decade of Opportunity
Slide 4: Our Strategic Vision
Our Strategic Vision “To be recognized as a North American leader in non-standard auto, trucking, taxi and motorcycle insurance markets and deliver consistent earnings growth and a return on equity of 15% or more”
Slide 5: Our Strategic Vision
Our Strategic Vision We will achieve this by developing: Strong claims operations tailored to local markets Distinctive underwriting capabilities in target specialty markets Rigorous industry leading program management capabilities An extensive network of independent agents focused on spec
Slide 6: Operating Strategy
Operating Strategy Focus on good risks within specialty markets where limited competition allows for a good spread of risk and above- average returns Emphasize positive underwriting margins, conservative investment policies and low combined ratios to achieve above-average earnings Refuse to sa
Slide 7: U.S. Operations
U.S. Operations American Service Insurance Company Tom Ossmann, President & Chief Executive Officer American Country Insurance Company Roger Beck, President & Chief Executive Officer Universal Casualty Insurance Company Marc Romanz, President & Chief Executive Officer Lincoln General Insurance Compa
Slide 8: U.S. Operations
U.S. Operations Southern United Fire Insurance Company Richard Murray, President & Chief Executive Officer Hamilton Risk/U.S. Security Insurance Company Roberto Espin, Jr., President Zephyr Insurance Company Richard Toyama, President & Chief Executive Officer Avalon Risk Management Scott Wollney, Pr
Slide 9: Canadian Operations
Canadian Operations Kingsway General Insurance Company John McGlynn, President & Chief Executive Officer York Fire & Casualty Insurance Company Colin Simpson, Vice President & Chief Operating Officer Jevco Insurance Company Serge Lavoie, Vice President & General Manager
Slide 10: Market Leadership Position
Market Leadership Position Non Standard Automobile #7 in North America #1 in Canada Trucking #1 in North America #2 in U.S. #2 in Canada Source: A.M. Best data that Kingsway has compiled
Slide 11: Market Leadership Position
Market Leadership Position Taxis #1 in Chicago area #1 in Las Vegas Motorcycle #1 in Canada Source: A.M. Best data that Kingsway has compiled
Slide 12: Diversified by Product Line
Diversified by Product Line Gross Premiums Written – YTD 2006 Trucking 31% Automobile 32% Commercial Automobile 15% Property & Liability 14% Other 4% Motorcycle 4%
Slide 13: Geographic Area – Gross Premiums Written – YTD
Geographic Area – Gross Premiums Written – YTD 2005 2006 Canada Canada 31% 30% United States United States 69% 70%
Slide 14: Diversified by Geographical Area
Diversified by Geographical Area Gross Premiums Written – 2006 YTD Illinois 11% Florida 9% Alberta 4% Texas 5% Quebec 6% New York 5% New Jersey 3% Hawaii 3% Ontario 19% California 14% Other 21%
Slide 15: Historical Track Record
rical Track ecord Into A New Decade of Opportunity
Slide 16: Growth in Gross Premiums Written
Growth in Gross Premiums Written (US$ Millions) AGR 4% C $2,002 $1,895 3 $1,887 $1,353 $1,040 $688 $1,003* $433 2000 2001 2002 2003 2004 2005 2006* Years ended December 31 * To June 30
Slide 17: Growth in Net Income
Growth in Net Income (US$ Millions) $135.0 AGR 9% C $101.0 4 $69.1 $60.9 $50.6 $67.8* $29.0 $18.5 2000 2001 2002 2003 2004 2005 2006* Years ended December 31 * To June 30
Slide 18: Diluted Earnings Per Share
Diluted Earnings Per Share (US$) $2.37 $1.79 $1.15 $1.21 $1.02 $0.77 $1.19* $0.54 34% CAGR 2000 2001 2002 2003 2004 2005 2006* Years ended December 31 * To June 30
Slide 19: Book Value Per Share
Book Value Per Share (US$) * $15.54 $14.25 $11.86 $9.91 $8.01 $12.93* $6.92 $5.35 22% CAGR 2000 2001 2002 2003 2004 2005 2006 Years ended December 31 * At June 30
Slide 20: First Half Results
2006 alf Results Into A New Decade of Opportunity
Slide 21: Year-To-Date Results 2006
Year-To-Date Results 2006 (U$) 2005 2006 $1,003M 4% Gross Premiums Written $1,040M Net Premiums Earned $885M $883M Underwriting Profit $29.7M 12% $26.1M Net Income $68M 2% $69M Investment Income $46M 29% $59M
Slide 22: Year-To-Date Results 2006
Year-To-Date Results 2006 (U$) 2005 2006 Net Realized Gains $18.4M 49% $9.4M Operating Earnings $53.5M 18% $63.1M Earnings Per Share $1.19 2% $1.21 Return on Equity 19.4% 2.9% 16.5% 18% Operating Earnings Per Share $0.94 $1.11
Slide 23: Segmented Numbers – First Half 2006: Canadian Operations
Segmented Numbers – First Half 2006 Canadian Operations - (US$) 2005 2006 % change Gross Premiums Written $315M $315M N/A Net Premiums Earned 2% $278M $283M Combined Ratio 96.8% 94.3% 2.5% Loss Ratio 70.1% 64.3% 5.8% Net Income 55% $21M $32M
Slide 24: Segmented Numbers – First Half 2006: U.S. Operations
Segmented Numbers - First Half 2006 U.S. Operations - (US$) 2005 2006 % change Gross Premiums Written $688M $725M 5% 1% Net Premiums Earned $608M $601M Combined Ratio 96.6% 98.3% 1.7% Loss Ratio 68.0% 70.5% 2.5% 22% Net Income $47M $37M
Slide 25: Investment Portfolio – Q2 2006 (Fair Value)
Investment Portfolio – Q2 2006 (Fair Value) Accrued Interest & Term Deposits 12% Government Bonds 14% Cash 2% Premium Finance Receivables 3% Equities 14% Corporate Bonds 55% At June 30, 2006
Slide 26: Investment Portfolio – Maturity Profile
Investment Portfolio Maturity Profile of Fixed Income Portfolio 31/12/05 30/06/06 0 – 1 year 30% 22% 1 – 5 years 45% 48% 75% 70% Over 5 years 25% 30% 100% 100%
Slide 27: Investment Portfolio (US$)
Investment Portfolio (US$) Investment Portfolio* Investment Portfolio Cash Flow Generated At Fair Value Per Share From Operations (in millions) (in millions) 2001 $775 $15.92 $134 2002 $1,346 $27.59 $382 2003 $2,124 $38.04 $471 2004 $2,644 $47.04 $392 2005 $2,933 $51.93 $274 2006 –YTD $3,020 $53.82
Slide 28: Investment Portfolio
Investment Portfolio 30/06/05 30/06/06 9% Value Per Common Share Outstanding U$49.18 U$53.82 Yield on Fixed Income 10% 3.7% 4.1%
Slide 29: Financial Strength
Financial Strength Years ended December 31 2002 2003 2004 2005 Q2 2006 NPW to Stat. Surplus 3.1x 2.9x 2.2x 2.0x 1.7x Interest Coverage 7.6x 5.2x 6.7x 7.2x 6.5x Senior Debt to Cap 28% 22% 25% 23% 23%
Slide 30: Capital Surplus in Excess of Minimum Regulatory Requirement
Capital Surplus in Excess of Minimum Regulatory Requirement- As at June 30, 2006 (US$ millions) Minimum Capital Surplus Over Minimum Statutory Capital Required* Canadian Subs 255 168 $87 U.S. Subs 287 155 $132 Captive Reinsurers 465 124 $341 Kingsway Total $560 * OSFI and FSCO require Canadian subsi
Slide 31: Consistent Performance!
Consistent Performance! * Annualized (US $) Return on Equity Combined Ratio 1995 19.8% 1996 21.4% 95.6% 1997 16.5% 95.8% 1998 13.4% 93.9% 1999 5.5% 102.6% 2000 10.6% 101.0% 2001 13.3% 99.1% 2002 13.9% 99.8% 2003 12.9% 101.6% 2004 16.6% 97.8% 2005 18.4% 97.2% 2006 – YTD 16.5% * 97.0%
Slide 32: Our First Decade on the TSX!
Our First Decade on the TSX! (US $) 1995 2005 CAGR 46% Gross Premiums Written $44M $1.9B Net Income $2.8M $135.0M 48% Shareholders Equity $27M $805M 40%
Slide 33: NYSE Fifth Anniversary Celebration
NYSE Fifth Anniversary Celebration
Slide 34: Our First Five Years on the NYSE!
Our First Five Years on the NYSE! (US $) 2001 2005 CAGR 29% Gross Premiums Written $688M $1.9B Net Income $29.0M $135.0M 47% Shareholders Equity $337M $805M 24%
Slide 35: Outlook – Canadian Market for 2006
Outlook – Canadian Market for 2006 Personal Lines Automobile: Continued government activism in Alberta and Ontario Continued supply tightening in non-standard segment Trucking Opportunities to grow in owner-operator segment Price pressure to continue in fleet segment Motorcycle Aggre
Slide 36: Outlook – U.S. Markets
Outlook – U.S. Markets Non-standard Automobile: Competitive conditions in certain markets Growth in assigned risk markets (Robert Plan) Trucking Rates holding firm Reinsurance capacity shortage “Kingsway will maintain disciplined pricing and expand our distribution platform”
Slide 37: Kingsway Financial Services Inc. – Into A New Decade of Opportunity
Kingsway Financial Services Inc. Into A New Decade of Opportunity
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