Investors in Kingsway Financial Services Inc. (USA) may have an investigation started into Kingsway and other insurance companies.
The action follows a move by Kingsway Financial Services last fall to unload its stocks in another insurance company by donating them to charity groups.
According to a PR Newswire release dated Nov. 16, 2009, the Pennsylvania Insurance Department planned at that time to take legal action against Kingsway Financial Services. The department wanted to “unwind certain transactions and ensure that Kingsway retains its legal obligations as the ultimate controlling entity of Lincoln General Insurance Company,” the release said.
Lincoln General is a Pennyslvania insurance company that serves the trucking industry, and had been losing money. Kingsway was the “ultimate controlling corporation for Lincoln General,” the PR release says, but tried to dump the truck insurer by giving all its stocks in the company to 20 charities. Each charity was also given $20,000 as an inducement to take the shares, the Nov. 16 release says.
According to Pennsylvania law, Kingsway should have applied for permission through the Insurance Department before dumping its holdings in Lincoln General, but did not. The Insurance Department was therefore planning to take action “to unwind this set of sham transactions,” according to the department’s commissioner, Joel Ario.
And now, stock holders may be pursuing their own investigation into this matter.
Kingsway Financial Services is headquartered in Mississauga, Ontario, and owns Jevco Insurance, a motorcycle insurer. In September, the company announced that its Kingsway General Insurance subsidiary, which provided motorcycle insurance, would be merged into Jevco.
For more on this latest development, see prlog.org.
What??? :eek :eek
Say it isn’t so!!! :upset :upset
An insurance company doing what it does to save profit margins at all costs, got caught?