Mississauga, Ont., has entered into a definitive agreement to sell York Fire & Casualty Insurance Co. to La Capitale General Insurance Inc., a member company of the mutual company, La Capitale Financial Group Inc., Quebec City, owned by members of Quebec's civil service. Completion of the transaction is expected during 2008, following the receipt of regulatory approvals.
York writes standard personal lines automobile and property insurance in Ontario and Alberta. For the first six months of 2008, York had gross premiums written of approximately C$48 million, or 5% of the premiums of the Kingsway group of companies, and produced an underwriting loss.
Kingsway anticipates receiving gross proceeds from the transaction of C$95 million, which is estimated to be approximately two times York's shareholder's equity at the closing of the transaction. At closing, Kingsway expects to record an estimated gain of approximately C$50 million, before taxes, on the transaction.
"The sale of York furthers Kingsway's strategy of focusing its resources on its core lines of business, such as non-standard automobile and trucking," says Shaun Jackson, Kingsway's president and CEO. "In doing so we are building a stronger platform for achieving growth and sustainable profitability in our leading products, where we have true competitive advantages. We will use the proceeds of this transaction to retire our remaining short-term debt, and to support future growth opportunities in our core business lines. I would like to thank all of the employees and management of York for their dedication and service to the Kingsway family over the years and I look forward to working with them through the transition period."
Source: Kingsway Financial Services Inc.
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