Kingsway Financial to Sell Mendota Insurance

Kingsway Financial Services Inc. said it plans to sell its wholly owned subsidiary, Mendota Insurance Co., a nonstandard insurance writer headquartered in Eagan, Minn.

So far in 2010, Kingsway (NYSE: KFS) has also sold off Jevco Insurance Co. to the Westaim Corp. for about C$264.2 million (US$256.7 million). In 2009, the company disposed of its interest in U.S. unit Lincoln General Insurance Co. and its parent, Walshire General Assurance Co. "All of the stock of Walshire has been donated to charity, and with this disposition Lincoln ceased being a member of the Kingsway group of companies," the company said in a report at the time. Kingsway had donated equal shares of Walshire stock to 20 charities, but the Pennsylvania Insurance Department challenged the action in court, arguing state approval was still needed because there was a change in control of the company (BestWire, May 17, 2010). The courts ruled in the company's favor, but the state is appealing to the Pennsylvania Supreme Court.

In 2007, Kingsway completed its acquisition of Mendota from St. Paul Travelers Co. for an undisclosed price. The purchase included Mendota and its wholly owned subsidiaries, Mendakota Insurance Co. and Mendota Insurance Agency. Kingsway said the purchase was funded through internal sources, a portion of which may have included Kingsway's existing undrawn credit facilities (BestWire, April 2, 2007).

The subsidiaries of Kingsway America Group have current Best's Financial Strength Ratings of B- (Fair). They are currently under review.

Shares of Kingsway Financial were trading in the afternoon of June 15 at $1.70, up 3.03% from the previous close.

(By Caroline Saucer, editor, BestWeek: [email protected])