NU Online News Service, June 17, 10:30 a.m. EDT
Kingsway Financial Services Inc. said it is looking to dispose of non-standard automobile insurance subsidiary, Mendota Insurance Company.
Kingsway, which for more than a year has been looking to cut costs and consolidate operations, acquired Mendota in April 2007. At the time the Eagan, Minn.-based insurer was owned by The Travelers Companies.
The company's last disposition has not gone smoothly. Late in 2009 Kingsway got rid of its interest in Lincoln General Insurance Co. by equally donating stock in the company to charities without regulatory approval from Pennsylvania, where Lincoln General is domiciled. State regulators called the transaction unlawful.
The Pennsylvania Insurance Department filed a complaint with the Commonwealth Court of Pennsylvania, which dismissed the department's legal action. The Pennsylvania Insurance Department is appealing.
The Minnesota Department of Commerce, which houses the insurance commissioner's office, said it is aware of Kingsway's intentions with Mendota and "as of yet, we have no concerns," said spokeswoman Rochelle Barnhart.
In March, Rockwall Financial, hired to be the run-off manager for Lincoln General, stopped providing services because the firm said Kingsway was not paying it.
Rockwall Financial has demanded arbitration and is seeking more than $26 million. Kingsway intends to defend the arbitration vigorously, it said in its first quarter filing.
The Toronto-based nonstandard auto insurance provider for the United States has been undergoing a transformation since shareholders The Stilwell Group of New York began to demand that the company sell unprofitable businesses in order to return to a combined ratio under 100.
Stilwell, a money management firm, also demanded changes to the company's leadership.
Colin Simpson in April said he was stepping down as Kingsway's chief executive about a year after he took over for W. Shaun Jackson. Larry Swets is now the company's CEO.
Kingsway reported improved results for the first quarter. Net income was $24.1 million compared to a loss of $58.3 million during the same time last year.
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