Kingsway Financial Services Reports $8.3 Million Net Loss for Fiscal Year 2024

Kingsway Financial Services Inc. reported a net loss of $8.3 million for the fiscal year ending December 31, 2024, a significant decline from a net income of $24.0 million in 2023. The company's total revenues increased to $109.4 million, up from $103.2 million in the previous year, driven primarily by a 1.0% increase in service fee and commission revenue from its Extended Warranty segment, which reached $68.9 million. However, the overall profitability was adversely affected by higher claims expenses and increased general and administrative costs, leading to a decrease in operating income from $954,000 in 2023 to $2.2 million in 2024.

In terms of strategic developments, Kingsway completed the acquisition of Image Solutions, LLC on September 26, 2024, for $20.4 million, which is expected to enhance its Kingsway Search Xcelerator segment. This acquisition was financed through a combination of cash and a $7.75 million term loan. Additionally, the company sold its subsidiary VA Lafayette, LLC for $1.3 million in cash, netting $1.1 million after expenses. The company also raised $8.3 million through a private placement of Class B Preferred Stock, which will rank senior to common shares and is convertible into common stock.

Operationally, Kingsway's Extended Warranty segment saw a slight increase in the number of contracts sold, particularly at Geminus and IWS, which contributed to revenue growth. However, the total number of claims decreased by 4.6% year-over-year, although claims paid increased due to inflationary pressures on parts and labor. The Kingsway Search Xcelerator segment reported a revenue increase to $40.5 million, up from $35.0 million in 2023, with contributions from newly acquired companies like DDI and SPI.

Looking ahead, Kingsway's management expressed cautious optimism, indicating that the company expects to leverage its recent acquisitions to drive future growth. However, they acknowledged potential challenges, including market volatility and the impact of economic conditions on consumer demand for their services. The company also noted that it has a significant amount of net operating loss carryforwards, totaling approximately $622.3 million, which could provide tax benefits in the future if the company generates taxable income.