A.M. Best Downgrades Ratings of Kingsway Financial Services Inc. and Several Subsidiaries.OLDWICK, N.J. -- A.M. Best Co. has downgraded the issuer credit ratings (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) and senior debt ratings to "ccc" from "b-" of Kingsway Financial Services Inc. (KFSI) (Mississauga, Ontario) and Kingsway America Inc. (KAI) (Elk Grove Village Elk Grove Village, village (1990 pop. 33,429), Cook and Du Page counties, NE Ill., a suburb of Chicago; inc. 1956. With a population of c.100 at the time of its establishment on open farmland, the village has grown dramatically and steadily, largely because of its , IL). In addition, A.M. Best has downgraded the financial strength rating (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) to B- (Fair) from B (Fair) and the ICRs to "bb-" from "bb" of several KFSI wholly owned property/casualty subsidiaries. All ratings, with the exception of Lincoln General Insurance Company (Lincoln) (Elk Grove, IL), which is unchanged, remain under review with negative implications. (See below for a detailed listing of the companies and ratings.) The downgrading of the ratings of KFSI, KAI and selected operating subsidiaries reflects the continued deteriorating financial condition of the parent company through the first nine months of 2009. This is attributed to significant operating losses, primarily within discontinued or run-off operations. As a result, it is A.M. Best's opinion that this has contributed to a further diminution of Kingsway's business profile and that of its insurance operating companies. The ratings for all companies remain under review with negative implications. The under review status is based upon KFSI's actions to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose its indirect ownership of Lincoln. The transaction involves the donation of equal shares, which represent 5% of Lincoln's holding company, Walshire General Assurance Company, plus $20,000 to each of 20 U.S. charities. The Commonwealth of Pennsylvania Department of Insurance (PA DOI (Digital Object Identifier) A method of applying a persistent name to documents, publications and other resources on the Internet rather than using a URL, which can change over time. ) has stated that they will seek to unwind these transactions while Kingsway has filed an Action for Declaratory Judgment declaratory judgment In law, a judgment merely declaring a right or establishing the legal status or interpretation of a law or instrument. It is binding but is distinguished from other judgments or court opinions in that it includes no executive element (an order that in Pennsylvania. Lincoln is currently rated D (Poor) by A.M. Best and is in extreme financial distress. The unwinding of its disposition could ultimately lead to Kingsway being in breach of its public debt covenants should Lincoln go into liquidation while still part of Kingsway. Kingsway's public debt is material, and a breach in covenants could lead to the liquidation of the company if principal and interest payments are called before maturity. The ratings will remain under review with negative implications pending resolution of the Lincoln matter before the courts in Pennsylvania. The FSRs have been downgraded to B- (Fair) from B (Fair) and the ICRs to "bb-" from "bb" for the following subsidiaries of Kingsway Financial Services Inc. The ratings remain under review with negative implications. * American Service Insurance Company, Inc. * JEVCO Insurance Company * Mendota Insurance Company * Mendakota Insurance Company * Southern United Fire Insurance Company * U.S. Security Insurance Company, Inc. * Universal Casualty Company The FSRs of B- (Fair) and ICRs of "bb-" have been affirmed and remain under review with negative implications for American Country Insurance Company. The FSR of C++ (Marginal) and ICR of "b" have been affirmed and remain under review with negative implications for Kingsway Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Corporation. The FSRs of B (Fair) and ICRs of "bb" have been withdrawn for Kingsway General Insurance Company (Kingsway General) and Kingsway Reinsurance (Bermuda) Ltd., and an NR-5 (Not Formally Followed) has been assigned to the FSR and an "nr" to the ICR. This follows the merger of Kingsway General into JEVCO and the commutation of all reinsurance treaties with Kingsway Re. The following debt ratings have been downgraded and remain under review with negative implications: Kingsway America Inc.-- -- to "ccc" from "b-" on USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 125 million 7.5% senior unsecured notes, due 2014 -- to "ccc" from "b-" on USD 74.1 million 7.12% senior unsecured notes, due 2015 Kingsway Financial Services Inc. (issued under Kingsway General Partnership)-- -- to "ccc" from "b-" on CAD 100 million 6% senior unsecured debentures, due 2012 All senior debt is unconditionally guaranteed by KFSI and KAI. For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. |
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