Westaim Enters Insurance Sector through Purchase of Kingsway Unit
Kingsway is dealing off their Jevco Insurance subsidiary to Westaim Corp. to be able to pay for their debts.
Kingsway Financial Services Inc. is dealing Jevco Insurance to Westaim Corp. for the amount of around $263 million.
This selling off of Jevco is aimed at having financial constancy and to provide comfort to Jevco’s business partners.
Jevco Insurance caters for the individualized and commercialized merchandises such as cars, motorcycles, snowmobiles and ATV insurance policies. It also serves for the insurance of Canadian construction industry.
Both Kingsway and Westaim show increase in their shares value on the Toronto Stock Exchange with 22% to $1.85 and more than 17% to 51 cents, respectively. Despite of the increase in shares value, Kingsway still chose to let go of Jevco because of the latter’s issues with other companies even if it means removing 750 jobs and giving up of properties.
Kingsway is also dealing with their losses due to underwriting problems by their subordinate, Lincoln General Insurance Co., which expertly focus on providing insurance policies for truckers and motorists. This action of Kingsway led to donating their shares in Walshire General Assurance Co. which is the sole shareholder of LGI.
But this charitable act was questioned last November by the Pennsylvania Department of Insurance, and made Kingsway pull out its donations because what it did is a cover up for abandoning their subsidiaries.
Knowing Westaim’s business records, this deal is something fresh them, because Westaim is beginning its new business expedition in Canadian Insurance.
Westaim is buying Jevco from Kingsway based on the 94.5% book value of Jevco last December 31, but it can still be adjusted. In turn, Kingsway will receive a $40 million share from Jevco. Their deal will only be approved by the Minister of Finance together with the shareholders of Westaim.
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