Kingsway Financial Services Inc. (USA) under Shareholder Investigation

An investigation on behalf of investors in Kingsway Financial Services Inc. (USA) (Public, NYSE:KFS) securities over potential shareholder claims based on potential violations of the federal securities laws by Kingsway Financial Services, Inc. (NYSE: KFS; Toronto: KFS.TO), Walshire General Insurance Company, Lincoln General, and others continues.

According to the investigation by a law firm the investigation on behalf of Kingsway Financial Services Inc. (USA) (Public, NYSE:KFS) investors focuses on the following events: On October 19, 2009, Kingsway Financial Services Inc disclosed that it had disposed of its entire interest in Walshire General Insurance Company, the sole shareholder of Lincoln General, by donating 100% of the stock of Walshire General Insurance Company to a number of charity groups. In the October 19, 2009 press release Kingsway Financial Services Inc stated as follows: “ Kingsway is of the view that disposing of Lincoln General at this time will provide all stakeholders, including policyholders, shareholders and creditors with improved long-term value and is consistent with Kingsway’s prior determination that it will not continue to voluntarily fund Lincoln General’s reserve shortfalls…This disposition will also assist Kingsway in continuing to meet its regulatory and contractual obligations in respect of Lincoln General….”.

Then, so the investigation, on November 16, 2009, after the market closed, Kingsway Financial Services Inc disclosed that the Pennsylvania Insurance Department was going to take action against Kingsway Financial Services Inc and its wholly-owned subsidiary Kingsway America, Inc. to unwind certain transactions and ensure that Kingsway Financial Services Inc retains its legal obligations as the ultimate controlling entity of Lincoln General. On November 17, 2009, Kingsway Financial Services Inc’s common stock (KFS) declined by $1.23 per share, or about 42%, to close at $1.70 per share. Shares of Kingsway Financial Services Inc. (USA) (NYSE:KFS) traded recently at $1.53 per share, down from its 52weekHigh of $5.77 per share, and $8.41 per share in Sept. ’08, $14.57 per share in May ’09, and over $20 per share in 2007.

Kingsway Financial Services Inc., located in Mississauga, Canada, is a holding company, which provides insurance solutions to manage specialty risks for individuals and businesses in the United States and Canada. Its primary business is the insuring of drivers who do not qualify for standard automobile insurance coverage because of their payment history, driving record, place of residence, age, vehicle type or other factors. Other products in the Kingsway portfolio include trucking insurance, commercial automobile insurance, commercial and personal property coverages, standard automobile insurance, motorcycle insurance and other specialty lines. Kingsway Financial Services Inc. (USA) reported in 2007 Total Revenue of $1.90233billion and in 2008 Total Revenue of $1.47559billion.