A.M. Best Affirms Ratings of Kingsway's U.S. Subsidiaries; Lowers Rating of Canadian Subsidiaries.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Feb. 28, 2003

A.M. Best Co. has affirmed the financial strength ratings of the U.S. subsidiaries of Kingsway Financial Services Inc. (Mississauga, ON) (TSX, NYSE: KFS).

In addition, A.M. Best has lowered the financial strength rating to A- (Excellent) from A (Excellent) for the Canadian subsidiaries of Kingsway Financial Services Inc. (Please see attached listing of subsidiaries and ratings.)

The lowering of the rating for the Canadian group is a result of deterioration in its capitalization due to strong premium growth and poor underwriting performance driven by adverse loss development in its Ontario auto book of business. The rating will remain under pressure pending the ability of the group to improve its capital position and meet its underwriting and operating objectives for 2003.

Offsetting these negative rating factors are Kingsway's lead market position as the largest provider of non-standard auto and motorcycle insurance in Canada and the prospect of improved underwriting and operating performance in 2003. Kingsway has taken a proactive approach to settling claims and combating fraud in Ontario. Along with significant rate increases implemented in late 2002 and new regulatory legislation, Kingsway anticipates significant improvement in its Canadian operations for 2003.

The financial strength rating for Lincoln General Insurance Company (York, PA), a U.S. subsidiary, remains under review with negative implications pending the group's completion of several capital raising initiatives and effective management of its premium growth in 2003. A.M. Best has concerns regarding the group's ability to secure significant amounts of new capital both to support the current book of business and sustain future growth plans. Kingsway anticipates that it will raise sufficient capital in 2003 as it monitors its growth and has filed a registration statement in the United States to raise additional capital through the issuance of redeemable trust preferred securities. There are also concerns as to Lincoln General's ability to maintain profitability and effectively manage and administer the underwriting and claims functions associated with its substantial amount of new business.

Additionally, A.M. Best has assigned a rating of "bbb-" to Kingsway Financial Services, Inc.'s C$78 million 8.25% senior debentures due December 31, 2007, and a rating of "bb" to Kingsway America's US$15,464,000 floating rate maturing December 31, 2032.

For a complete listing of Kingsway's U.S. and Canadian subsidiaries and financial strength ratings, visit http://www.ambest.com/press/kingsway1022703.pdf.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.