Segmented Information

9 Months Ended

Sep. 30, 2012

Segmented Information [Abstract]

Segment Reporting Disclosure [Text Block]

SEGMENTED INFORMATION

The Company is engaged, through its subsidiaries, in the non-standard property and casualty insurance business. The Company conducts its business through the following two reportable segments: Insurance Underwriting and Insurance Services.

On September 17, 2012, the Company announced that it was restructuring its Insurance Underwriting and Insurance Services segments under two separate management teams. As a result of the Company's intent to streamline its non-standard property and casualty insurance business operations under one management team, KAI Advantage Auto, Inc. ("Advantage Auto"), formerly included in Insurance Services, is now part of Insurance Underwriting. All segmented information has been restated for all periods presented to include Advantage Auto in Insurance Underwriting.

Insurance Underwriting Segment

The Company's property and casualty insurance business operations are conducted primarily through the following subsidiaries: Mendota Insurance Company, Mendakota Insurance Company, Universal Casualty Company, Amigo, Advantage Auto, Kingsway Reinsurance Corporation and Kingsway Reinsurance (Bermuda) Ltd. (collectively, "Insurance Underwriting"). Insurance Underwriting primarily provides non-standard automobile insurance to individuals and actively conducts business in 17 states.

Insurance Services Segment

Insurance Services includes the following subsidiaries of the Company: Assigned Risk Solutions Ltd. ("ARS") and Northeast Alliance Insurance Agency, LLC ("NEA") (collectively, "Insurance Services").

In 2011, ARS and NEA were organized to run as one business under the ARS name. ARS is a licensed property and casualty agent, full service managing general agent and third-party administrator focused primarily on the assigned risk market. ARS is licensed to administer business in 22 states but generates its revenues primarily by operating in the states of New York and New Jersey.

Results for the Company's reportable segments are based on the Company's internal financial reporting systems and are consistent with those followed in the preparation of the unaudited consolidated interim financial statements. The following tables provide financial data used by management. Segment assets are not allocated for management use and, therefore, are not included in the segment disclosures below.

Segment revenues for the three and nine months ended September 30, 2012 and 2011 were:

(in thousands)	Three months ended September 30,					Nine months ended September 30,
	2012			2011		2012			2011
Revenues:
Insurance Underwriting:
Net premiums earned	$	26,501		$	36,614	$	86,753		$	124,825
Other income	1,856			2,116		5,340			7,383
Total Insurance Underwriting	28,357			38,730		92,093			132,208
Insurance Services:
Service fee and commission income	7,648			7,687		25,315			24,465
Total Insurance Services	7,648			7,687		25,315			24,465
Total segment revenues	36,005			46,417		117,408			156,673
Net investment income	782			999		2,414			3,228
Net realized gains	1,109			104		1,359			102
Other-than-temporary impairment loss	—			—		(488		)	—
(Loss) gain on change in fair value of debt	(3,177		)	17,189		(9,926		)	25,821
Other income not allocated to segments	84			3,471		427			1,426
Total revenues	$	34,803		$	68,180	$	111,194		$	187,250

The operating (loss) income of each segment is before income taxes and includes revenues and direct segment costs. Segment net (loss) income for the three and nine months ended September 30, 2012 and 2011 were:

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Segment operating (loss) income
Insurance Underwriting	$	(16,812	)	$	(8,980	)	$	(23,803	)	$	(28,312	)
Insurance Services	414			520			2,897			1,901
Total segment operating loss	(16,398		)	(8,460		)	(20,906		)	(26,411		)
Net investment income	782			999			2,414			3,228
Net realized gains	1,109			104			1,359			102
Other-than-temporary impairment loss	—			—			(488		)	—
(Loss) gain on change in fair value of debt	(3,177		)	17,189			(9,926		)	25,821
Other income and expenses not allocated to segments, net	(2,110		)	637			(6,368		)	(10,459		)
Interest expense	(1,887		)	(1,874		)	(5,652		)	(5,610		)
Amortization of other intangible assets	—			(18		)	—			(54		)
Gain on buy-back of debt	500			3			500			556
Equity in net income (loss) of investee	93			145			(2,085		)	(384		)
(Loss) income from continuing operations before income tax (benefit) expense	$	(21,088	)	$	8,725		$	(41,152	)	$	(13,211	)
Income tax (benefit) expense	(1,054		)	2,433			(879		)	2,292
(Loss) income from continuing operations	$	(20,034	)	$	6,292		$	(40,273	)	$	(15,503	)

Net premiums earned by line of business for the three and nine months ended September 30, 2012 and 2011 were:

(in thousands)	Three months ended September 30,					Nine months ended September 30,
	2012			2011		2012			2011
Insurance Underwriting:
Private passenger auto liability	$	17,211		$	25,163	$	57,031		$	86,111
Auto physical damage	6,914			8,750		21,733			30,595
Total non-standard automobile	24,125			33,913		$	78,764		$	116,706
Commercial auto liability	2,378			2,701		7,991			8,118
Other	(2		)	—		(2		)	1
Total net premiums earned	$	26,501		$	36,614	$	86,753		$	124,825