Hawaii’s largest
hurricane insurer sold

A Canadian truck and auto
insurer is buying Zephyr Insurance
and its parent company

Kingsway Financial Services Inc., a Toronto-based truck and auto insurer, is buying HI Holdings Inc. and its Zephyr Insurance Co. subsidiary for an undisclosed price.

Kingsway executives said the acquisition of Hawaii's largest residential hurricane insurer will enhance the geographical and product diversity of the Canadian firm, which currently does a relatively small amount of business in Hawaii through Lincoln General Insurance Co.

Shaun Jackson, Kingsway's executive vice president and chief financial officer, said Kingsway will keep Zephyr's management in place and could increase its staff of about 15 employees as business grows.

"We're very keen to expand our business in the islands," Jackson said.

The deal would give Kingsway a large foothold and launching pad for further expansion. Zephyr has some 70,000 policyholders in Hawaii. In the first six months of this year, Zephyr generated gross premiums of $24 million and expects $50 million in gross premiums for the year.

The deal is expected to close in the fourth quarter of this year subject to regulatory approval. Hawaii Insurance Commissioner J.P. Schmidt said his office is awaiting documentation that must be examined as part of the regulatory approval process.

HI Holdings and Zephyr were formed in 2000 by an investor group that includes Everest Reinsurance Co., Guy Carpenter & Co., Hanover Ruckversicherung AG and Island Holdings Inc.

Kingsway, one of North America's largest insurers of trucks and automobiles, operates through 10 subsidiaries in the United States and Canada, including Kingsway General Insurance Co., York Fire & Casualty Insurance Co. and Jevco Insurance Co. The company also operates reinsurance companies in Barbados and Bermuda.

"This transaction is consistent with our niche business strategy and our interest in acquiring profitable businesses that provide geographic and product diversity," said Bill Star, Kingsway's president and chief executive.

Paul Picardo, chairman of HI Holdings, called the deal "a successful outcome for both parties."