AM Best


A.M. Best Places Ratings of Kingsway and Its Subsidiaries Under Review With Negative Implications


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Analyst(s)

Charles Huber

(908) 439-2200, ext. 5122

charles.huber@ambest.com

Joseph Burtone

(908) 439-2200, ext. 5125

joseph.burtone@ambest.com
Public Relations

Jim Peavy

(908) 439-2200, ext. 5644

james.peavy@ambest.com

Rachelle Striegel

(908) 439-2200, ext. 5378

rachelle.striegel@ambest.com


FOR IMMEDIATE RELEASE

OLDWICK, N.J. - NOVEMBER 30, 2005 12:00 AM (EST)
A.M. Best Co. has placed the financial strength ratings (FSR) of all the Canadian, U.S. and Bermudian based property/casualty insurance/reinsurance subsidiaries of Kingsway Financial Services Inc (Kingsway) [NYSE/TSE:KFS] (Ontario) under review with negative implications. Additionally, A.M. Best has placed the issuer credit (ICR) and debt ratings of Kingsway under review with negative implications. (See below for a complete listing of companies and ratings.)

These actions are a result of a series of recent developments including: the announcements by Kingsway that it has entered into an agreement to assume the assigned risk policies serviced by The Robert Plan Corporation, its intent to make a normal course issuer bid on its common shares and its purchase of Zephyr Insurance Company in October.

A.M. Best also remains concerned about the risk-adjusted capitalization within several of Kingsway's subsidiaries, which falls far short of supporting their current ratings. Despite improvements over the last two years in the financial strength and operating performance in many of the subsidiaries and in the organization as a whole, and with the prospect of continued near-term profitability, the rating implications are negative owing to continued concerns with the need to bring capitalization in line with the current rating levels. In addition, capitalization levels could be negatively impacted by dividends to meet debt servicing requirements.

The ratings will remain under review pending Kingsway management's providing A.M. Best with its plans for 2006, which should include each company's projected statutory financial statements, cash flow, capitalization projections as well as more insight on recent acquisitions.

The FSRs of A- (Excellent) have been placed under review for the following Canadian, U.S. and Bermudian subsidiaries of Kingsway Financial Services Inc:

- JEVCO Insurance Company

- Lincoln General Insurance Company

- Universal Casualty Company

- Kingsway Reinsurance (Bermuda) Ltd
.

The FSRs of B++ (Very Good) have been placed under review for the following Canadian and U.S. subsidiaries of Kingsway Financial Services Inc:

- American Services Insurance Company, Inc.

- Kingsway General Insurance Company

- York Fire & Casualty Insurance Company


The FSRs of B+ (Very Good) have been placed under review for the following Canadian and U.S. subsidiaries of Kingsway Financial Services Inc:

- American Country Insurance Company

- Southern United Fire Insurance Company


The FSR of B (Fair) has been placed under review for U.S. Security Insurance Company, Inc., a U.S. subsidiary of Kingsway Financial Services Inc.

The ICR of "bbb-" has been placed under review for Kingsway Financial Services Inc.

The following debt rating has been placed under review:

Kingsway Financial Services Inc-

- "bbb-" on CND 78 million 8.25% senior unsecured debentures, due 2007

For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.

For current Best's Ratings, independent data and analysis on more than 3,000 individual property/casualty companies and A.M. Best groups, please visit Best's Property/Casualty Center.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.

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