A.M. Best Takes Various Rating Actions on Kingsway Financial Services' Subsidiaries and Assigns Senior Unsecured Debt Rating.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 13, 2001

A.M. Best Co. has affirmed the financial strength rating of A (Excellent) for the following insurance subsidiaries of Kingsway Financial Services Inc. (TSE, NYSE: KFS), which generates its business from Canada: Kingsway General Insurance Company, Ontario, Jevco Insurance Company, Quebec, York Fire & Casualty Insurance Company, Ontario and Kingsway Reinsurance (Bermuda) Ltd., Hamilton, Bermuda.

Additionally, A.M. Best has upgraded or raised the financial strength rating for the following U.S. subsidiaries of Kingsway: Universal Casualty Insurance Company, Niles, Illinois, to A- (Excellent) from B++ (Very Good); American Service Insurance Company, Rosemont, Illinois, to B++ (Very Good) from B+ (Very Good) and Southern United Fire Insurance Company, Mobile, Alabama, to B+ (Very Good) from B (Fair). A.M. Best has also affirmed the A- (Excellent) rating of Lincoln General Insurance Company, York, Pennsylvania and the B (Fair) rating of U.S. Security Insurance Company, Miami.

The A (Excellent) Canadian group rating reflects Kingsway's leading market position as the largest provider of non-standard auto and motorcycle insurance in Canada, its strong management team and the effective use of reinsurance among the group members. The Canadian operations of Kingsway have historically recorded favorable underwriting and operating profits while maintaining excellent liquidity.

In the United States, the rating upgrade for Universal Casualty reflects its favorable underwriting and operating results, sound capitalization and conservative underwriting leverage. The raised rating for American Service considers its strengthened balance sheet, improved operating results and loss control management. Both companies are well-established in the Chicago area as providers of low limit non-standard auto insurance. The rating upgrade for Southern United Fire recognizes its sound risk diversification strategy across several states, recent actions taken to improve underwriting results and the financial support provided by its ultimate parent.

The financial flexibility at the holding company, Kingsway Financial Services Inc., is evidenced by its ability to sell common shares in the capital markets and draw down on a $100 million credit facility for which A.M. Best has assigned a senior unsecured debt rating of "bbb." The debt rating acknowledges Kingsway's strong operating performance, consistently profitable growth, good fixed coverage and excellent financial flexibility. Kingsway's financial leverage is moderate with strong earnings producing ample interest coverage for its rating category. However, A.M. Best will continue to monitor the company's appetite for further acquisitions in the United States, along with its ability to support its growth strategy with adequate levels of capital.

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.