Kingsway Shares Climb 5% on Positive Update

Kingsway Financial Services Ltd.'s (KFS) call for calm following its recent $125-million reserve increase seems to have gained traction with investors, who drove shares as much as 5% higher, on Thursday.

On Wednesday, Kingsway said that it does not have to raise new equity, nor does it expect to lose much business because of the recent credit rating downgrade that resulted from the upward revision to claims at U.S. subsidiary Lincoln General. Kingsway previously said that the revision could cost upwards of C$105-million in fourth quarter profit, and saw shares tumble more than 20% before Thursday's step upward.

CIBC analyst Stephen Boland maintained his "sector performer" rating and C$19 price target.

"Despite management's positive comments during the call, we believe that the company's shares will remain under pressure until 1 or 2 solid quarters of earnings are reported," he said in a note to clients.