These 2 Niche Insurers Offer Value

Article Excerpt

KINGSWAY FINANCIAL SERVICES $24.55 (Toronto symbol KFS; SI Rating: Speculative) (905- 629-7888; www.kingsway-financial.com; Shares outstanding: 55.9 million; Market cap: $1.4 billion) offers automobile insurance for drivers considered too risky by standard auto insurers. Major insurers may also reject them due to their poor payment history, driving record, place of residence, age or vehicle type. The company’s other niche markets include long haul trucking, taxi, rental car and motorcycle insurance. Kingsway does three-quarters of its business in the U.S. Kingsway reported 19.4% higher earnings in the three months ended September 30, 2006, to $37.4 million, or $0.67 a share, from $31.3 million or $0.55. (All figures except share price in U.S. dollars.) The increase came from stronger operating results, especially in Canada, and increased investment income. Many insurers use investment gains on their bond and stock holdings to cover future claims and to make up underwriting losses. So Kingsway (like Northbridge) stands to gain when the value of those securities rises along with recovering…

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