KINGSWAY FINANCIAL SERVICES INC. (TSE:KFS) Files An 8-K Entry into a Material Definitive Agreement
ITEM 1.01 Entry into a Material Definitive Agreement.

On July 16, 2018, Kingsway Financial Services Inc. (the “Company”) and its subsidiary Kingsway America Inc. (“Seller”) entered into a Stock Purchase Agreement (the “Agreement”) By and Among Premier Holdings, LLC, a Tennessee limited liability company (“Premier”), Advantage Auto MGA, LLC, a Tennessee limited liability company (“Advantage” and together with Premier, “Purchasers”), Mendota Insurance Company (“Mendota”), the Company and Seller, Dated as of July 16, 2018, to which Purchasers will acquire all of the outstanding capital stock of Mendota and its subsidiaries Mendakota Casualty Company, an Illinois domiciled property and casualty company (“MCC”), MIC Insurance Agency, Inc., a Texas corporation (“MIC”), Mendakota Insurance Company, a Minnesota domiciled property and casualty company (“Mendakota”), Congress General Agency, Inc., a Texas corporation (“CGA”), and Mendota Insurance Agency, Inc., a Texas corporation (“MIA”, and, together with Mendota, MCC, MIC, Mendakota and CGA, the “Acquired Companies”). The Acquired Companies provide non-standard automobile insurance to individuals who do not meet the criteria for coverage by standard automobile insurers and comprise most of the Company’s Insurance Underwriting segment. Kingsway Amigo Insurance Company, a Florida domiciled property and casualty company that the Company placed into voluntary run-off in 2012 and which is also part of the Company’s Insurance Underwriting segment, will be retained by the Company.

The purchase price equals the June 30, 2018 statutory surplus of the Acquired Companies, as adjusted to the Agreement. Statutory surplus of the Acquired Companies at March 31, 2018 was $25.4 million. The Company will redeploy the proceeds from the sale to acquire limited liability investments, equity investments and other investments owned by the Acquired Companies at the time of the closing. The statutory carrying values at March 31, 2018 of the limited liability investments, equity investments and other investments to be acquired by the Company was $25.2 million. to the Agreement, the Company is also required to fund $5 million into an escrow account to be used to satisfy potential indemnity obligations under the Agreement. The transaction is subject to the satisfaction by the parties of certain conditions, including insurance regulatory approvals in Florida, Illinois and Minnesota, and is expected to close by the end of the third quarter of 2018.

The Agreement contains customary representations and warranties of Purchasers, Seller, the Company and Mendota, including, among others, with respect to corporate organization, capitalization, corporate authority, financial statements, reserves for loss and loss adjustment expenses and compliance with applicable laws. The representations and warranties of each party set forth in the Agreement were made solely for the benefit of the other parties to the Agreement, and investors are not third- party beneficiaries of the Agreement. In addition, such representations and warranties (a) are subject to materiality and other qualifications contained in the Agreement, which may differ from what may be viewed as material by investors; (b) were made only as of the date of the Agreement or such other date as is specified in the Agreement; and (c) may have been included in the Agreement for the purpose of allocating risk between the parties rather than establishing matters as facts. Accordingly, the Agreement is included with this filing only to provide investors with information regarding the terms of the Agreement and not to provide investors with any other factual information regarding any of the parties or their respective businesses.

The foregoing description of the Agreement is not complete and is qualified in its entirety by reference to the text of such document, which is filed as Exhibit 2.1 hereto and which is incorporated herein by reference.

ITEM 7.01 Regulation FD Disclosure.

On July 16, 2018, the Company issued a press release announcing the sale of the Acquired Companies to the Agreement. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

The information contained in Item 1.01, Exhibit 2.1 and Item 7.01 to this Current Report on Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

KINGSWAY FINANCIAL SERVICES INC Exhibit
EX-2.1 2 stockpurch.htm EXHIBIT 2.1 Exhibit Exhibit 2.1EXECUTION VERSIONSTOCK PURCHASE AGREEMENTBy and AmongPREMIER HOLDINGS,…
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About KINGSWAY FINANCIAL SERVICES INC. (TSE:KFS)

Kingsway Financial Services Inc. is a holding company. The Company operates as a merchant bank primarily engaged, through its subsidiaries, in the property and casualty insurance business. The Company operates through Insurance Underwriting segment. Its Insurance Underwriting segment provides non-standard automobile insurance to individuals who do not meet the criteria for coverage by standard automobile insurers. The Insurance Underwriting segment markets automobile insurance products that provide coverage in three areas: liability, accident benefits and physical damage. The Insurance Underwriting’s products and services are marketed through over 3,700 independent agencies. The Company’s property and casualty insurance business operations are conducted through its subsidiaries, such as Mendota Insurance Company (Mendota), Mendakota Insurance Company (Mendakota), Mendakota Casualty Company (MCC), Kingsway Amigo Insurance Company (Amigo) and Kingsway Reinsurance Corporation.