The Canadian Press

Discontinued businesses continued to plague Kingsway Financial Services Inc., (TSX:KFS) as the truck and auto insurance company widened its loss in the third quarter amid aggressive restructuring efforts.

The Toronto-area company, which keeps its books in U.S. dollars, reported a net loss of US$118.1 million or US$2.19 per share for the quarter ended Sept. 30.

That compared to a smaller year-ago loss of US$17.4 million or 76¢ per share.

Quarterly revenue totalled US$273.1 million, down from US$373.7 million last year.

However Kingsway pointed out that the quarter’s figures incorporated a loss of US$128.8 million from run-off and discontinued business, including a loss of US$95.5 million from Lincoln General Insurance Co.

In mid-October, Kingsway donated all its holdings in Walshire General Assurance Co.– the sole shareholder of Lincoln General — to an unidentified charity.

The move, which removed Lincoln General from Kingsway’s stable of companies, marked another step in the troubled company’s attempts to cut annualized costs by US$80 million.

Kingsway’s president and chief executive officer said it was vital to put the quarter’s results into perspective.

“The losses we’re reporting for the quarter have come from businesses that are not part of our ongoing operations,” said Colin Simpson. “I believe we reached an important turning point this quarter and we are now beginning to see the evidence that our transformation plan was the right one.”

Kingsway is currently focused on consolidating its U.S. and Canadian operations by exiting unprofitable businesses, shedding non-core assets, and freeing up liquidity.

It incurred restructuring costs of US$5.9 million in the quarter as a result of implementing its transformation plan.

Kingsway said, however, that general and administrative expenses went down 17% to $47.7 million in the quarter primarily due to the company’s transformation program which included workforce reductions.

“I believe we have turned the corner and we are on track to return the group to profitability in 2010,” said Simpson.

“We have spent most of this year looking behind us and addressing the legacy problems that were holding us back. Now we can begin to look forward and start building the Kingsway of the future,” Simpson added.

Kingsway, headquartered in Mississauga, Ont., deals principally in non-standard insurance for individual and businesses in Canada and the United States.

In Canada, they provide insurance to car drivers who do not meet the criteria for coverage by standard automobile insurers.

The company also operates reinsurance subsidiaries in Barbados and Bermuda.

In January, it announced it would cut 750 jobs, or about 28% of its North American workforce of about 2,640, over the next two years and that it would quit some businesses and sell assets.

The moves followed a revolt by a dissident shareholder group headed by New York-based Joseph Stilwell, which won two seats on the Kingsway board and nudged out then-CEO Shaun Jackson out as a director. Jackson was replaced as CEO in April by Colin Simpson.

Kingsway’s shares closed at $4.11 Thursday on the Toronto Stock Exchange.