Kingsway to Sell York Fire & Casualty

Kingsway Financial Services Inc. has entered into a definitive agreement to sell York Fire & Casualty Insurance Company to La Capitale General Insurance Inc., a member company of the mutual company, La Capitale Financial Group Inc., owned by members of Quebec's civil service. The transaction is expected to be completed during 2008 following the receipt of regulatory approvals.

York writes standard personal lines automobile and property insurance in Ontario and Alberta. For the first six months of 2008, York had gross premiums written of approximately C$48 million, or 5% of the premiums of the Kingsway group of companies, and produced an underwriting loss.

Kingsway anticipates receiving gross proceeds from the transaction of C$95 million, which is estimated to be approximately 2 times York's shareholder's equity at the closing of the transaction. At closing Kingsway expects to record an estimated gain before taxes on the transaction of approximately C$50 million.