The Company’sCanadian and United States segments include transactions with theCompany’s reinsurance subsidiaries. As the Company’s employee stockoptions have characteristics significantly different from those of tradedoptions, and because changes in the subjective input assumptions canmaterially affect the fair value estimate, in management’s opinion, theabove pro forma adjustments are not necessarily a reliable single measureof the fair value of the Company’s employee stock options.NOTE 5 Segmented InformationThe Company provides property and casualty insurance and other insurancerelated services in three reportable segments, Canada, the United Statesand corporate and other insurance related services. Prior tothe sale, York Fire was part of the Canadian reporting segment. Per share fair value of options granted during 2008 was C$2.88in February, C$2.43 in May and C$2.45 in September. The Company hasclassified York Fire as discontinued operations and the results of itsoperations are reported separately for all periods presented. There was no resulting differencenoted on adoption.NOTE 3 Discontinued OperationsOn September 30, 2008 the company completed its previously announced saleof York Fire and Casualty Insurance Company (York Fire), a primarilystandard insurance writer, for C$95 million in cash. The accounting treatment should be applied retrospectivelywithout restatement of prior periods to all financial assets andliabilities measured at fair value.
As a result of adopting the newstandard, certain software costs previously recorded as Capital assetsare now recorded as Intangible assets in the Consolidated Balance Sheet.Accordingly, $18.1 million at December 31, 2008 was reclassified fromCapital assets to Intangible assets. The related amortization expensethat was previously recorded in General and administrative expenses onthe Consolidated Statement of Operations is now recorded as Amortizationof intangibles. Accordingly, $1.6 million for three month period endedMarch 31, 2008 was reclassified from General and administrative expensesto Amortization of intangibles.Commencing January 20, 2009, the Company adopted the CICA Handbook EIC173 – Credit Risk and the Fair Value of Financial Assets and FinancialLiabilities, which clarifies the consideration of entity’s own creditrisk and the credit risk of the counterparty in determining the fairvalue of financial assets and financial liabilities, including derivativeinstruments. The results of theoperations for the interim periods are not necessarily indicative of thefull-year results.NOTE 2 Change In Accounting PolicesCommencing January 1, 2009, the Company adopted the CICA Handbook Section3064 Goodwill and Intangible Assets. The Company disclaims any intention or obligationto update or revise any forward looking statements, whether as a result of newinformation, future events or otherwise.Additional Information———————-Additional information relating to Kingsway, including Kingsway’s AnnualReport and Kingsway’s Annual Information Form is on SEDAR at FINANCIAL SERVICES INC.CONSOLIDATED STATEMENT OF OPERATIONS(In thousands of U.S. These interimconsolidated financial statements do not contain all disclosuresrequired by generally accepted accounting principles and accordinglyshould be read in conjunction with the Company’s audited consolidatedfinancial statements for the year ended December 31, 2008 as set out onpages 65 to 104 of the Company’s 2008 Annual Report. The securities filings canbe accessed on the Canadian Securities Administrators’ website at, and on the EDGAR section of the U.S.
Securities and ExchangeCommission’s website at or through the Company’s website at. A number of factors could cause actual events, performance orresults to differ materially from the events, performance and resultsdiscussed in the forward-looking statements. For information identifyingimportant factors that could cause actual results to differ materially fromthose anticipated in the forward looking statements, see Kingsway’s securitiesfilings, including its 2008 Annual Report under the heading Risk Factors inthe Management’s Discussion and Analysis section. Such forward looking statements reflect management’scurrent beliefs and are based on information currently available to managementof the Company. These statements relate to future events or future performanceand reflect management’s current expectations and assumptions. The words”anticipate”, “expect”, “believe”, “may”, “should”, “estimate”, “project”,”outlook”, “forecast” or similar words are used to identify such forwardlooking information.
