Updating Our Current Recommendations on Kingsway Financial Services and True Energy Trust

Article Excerpt

KINGSWAY FINANCIAL SERVICES $2.90 (Toronto symbol KFS; SI Rating: Speculative) (905-629 -7888; www.kingsway-financial.com; Shares outstanding: 55.1 million; Market cap: $159.7 million) dropped recently after it announced that it expects to post a 2008 fourth-quarter loss of between $5.88 and $6.24 a share. (All figures except share price in U.S. dollars.) The expected loss is mainly the result of underwriting losses at its U.S. trucking insurance subsidiary, Lincoln General Insurance, and the weak performance of its investment portfolio. In response to its losses, Kingsway will cut 750 jobs, or 26% of its workforce, as it reduces its nine operating divisions to three (two in Canada and one in the U.S.). Kingsway hopes this will save it $80 million a year. It will also eliminate about $350 million of its annual premiums (or roughly 20%) by dropping unprofitable business from its U.S. operations. To lower the volatility of its balance sheet, Kingsway will also sell its equity portfolio. Kingsway’s initiatives are, in part, a..

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