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Toronto-based Kingsway reported record net income for the second quarter of the year and first six months.Net income increased by 22% to $33.3 million, compared to $27.3 million reported in the second quarter of last year. Net income for the six month period was a record $64.1 million, an increase of 24% over the $51.7 million reported last year.Income before income taxes for the quarter increased by 44% (29% year to date) to $40.4 million ($72.9 million year to date) compared to the same period last year. The income tax provision for the quarter was $7.2 million ($8.8 million year to date) or 17.7% (12.1% year to date) of income before income taxes compared with $0.8 million ($4.7 million year to date) or 2.8% (8.3% year to date) for the same period last year. Return on equity on an annualized basis was 17.2% for the quarter and 17.0% for the six months. Diluted earnings per share increased 7% to 59 cents for the quarter on 14% more shares outstanding, compared to 55 cents for the second quarter of 2003 last year. For the six month period, diluted earnings per share increased by 10% to $1.14 on 14% more shares outstanding than last year.“I am again pleased to report record net income and earnings per share for the quarter and six month periods”, said Bill Star, president & CEO. “The results of our Canadian operations are particularly pleasing with each Canadian subsidiary producing an underwriting profit in the quarter. The decisive actions that we have taken in Canada are leading to premium growth and improved underwriting results. The current maturity profile of our fixed income portfolio should also allow us to grow our investment income should interest rates rise. We are well positioned to benefit from the favourable insurance conditions in many of our markets and a rising interest rate climate.”Premium growthDuring the second quarter of 2004, gross premiums written increased 11% to $702.0 million compared with $629.9 million last year. For the year to date gross premiums written increased by 6% to $1.4 billion compared to $1.3 billion last year.For the quarter, gross premiums written from U.S. operations increased 5% to $476.4 million (U.S.$350.6 million) compared with $453.9 million (U.S.$324.4 million) last year and Canadian operations grew 28% to $225.6 million. For the six months, gross premiums written by the U.S. operations were $1.02 billion ($1.03 billion last year). In source currency gross premiums written by U.S. operations increased 8% to U.S.$764.3 million compared to the first half of last year.For the Canadian operations gross premiums written for the first half of 2004 increased by 29% to $390.2 million over $303.1 million last year. Net premiums written were $1.2 billion compared with $1.3 billion for the first six months of last year. Net premiums earned were $1.2 billion for the first six months of this year and $1.2 billion last year.During the quarter the company entered into two quota-share reinsurance arrangements in Canada and the United States. Under these treaties the company ceded $71.6 million of the unearned premiums at the beginning of the quarter and $66.1 million of net premiums written in the quarter to reinsurers rated A+ or better by A.M. Best.As a result, the rolling four quarter net premiums written to surplus ratio declined from 2.8x at March 31, 2004 to 2.5x at June 30, 2004. Under both treaties the company has the option to vary the amount of premiums ceded in any quarter, which provides flexibility in managing premium leverage. As a result of entering into these treaties, net premiums earned were reduced by $61.4 million, underwriting profit by $2.4 million, net income by $1.6 million and earnings per share by 3 cents for the quarter and year to date.Underwriting profit & combined ratioThe combined ratio of 97.7% for the second quarter produced an underwriting profit of $13.2 million, compared with 99.2% and $4.7 million of underwriting profit reported in the second quarter of 2003. The combined ratio improved to 98.0% compared with 98.1% in the first six months of 2003, which produced a record six month underwriting profit of $23.6 million compared with $22.5 million in the first half of last year. The U.S. operations combined ratio was 98.5% compared to 96.1% in the first half of last year and for the Canadian operations it improved to 96.5% compared to 105.4% for the same period last year.Kingsway’s primary business is trucking insurance and the insuring of automobile risks for drivers who do not meet the criteria for coverage by standard automobile insurers. The company currently operates through nine wholly-owned insurance subsidiaries in Canada and the U.S.