KINGSWAY Corp

Previous wording

Kingsway is a Delaware holding company with operating subsidiaries located in the United States. The Company owns or controls subsidiaries primarily in the extended warranty and business services industries. Kingsway conducts its business through two reportable segments: Extended Warranty and Kingsway Search Xcelerator.

Current wording

Kingsway is a Delaware holding company with operating subsidiaries located in the United States. The Company owns or controls subsidiaries primarily in the business services and extended warranty industries. Kingsway conducts its business through two reportable segments: Extended Warranty and Kingsway Search Xcelerator.

Previous wording

IWS is a licensed motor vehicle service agreement company and is a provider of after-market vehicle protection services distributed by credit unions in 25 states and the District of Columbia to their members, with customers in all fifty states.

Current wording

IWS is a licensed motor vehicle service agreement company and is a provider of after-market vehicle protection services distributed by credit unions in 27 states and the District of Columbia to their members, with customers in all fifty states.

Previous wording

Geminus primarily sells vehicle service agreements to used car buyers across the United States, through its subsidiaries, The Penn Warranty Corporation ("Penn") and Prime Auto Care, Inc. ("Prime"). Penn and Prime distribute these products in 47 and 34 states, respectively, via independent used car dealerships and franchised car dealerships.

Current wording

Geminus primarily sells vehicle service agreements to used car buyers across the United States, through its subsidiaries, The Penn Warranty Corporation ("Penn") and Prime Auto Care, Inc. ("Prime"). Penn and Prime distribute these products in 46 and 35 states, respectively, via independent used car dealerships and franchised car dealerships. Penn also sells and administers a guaranteed asset protection product ("GAP") in states where Penn is approved.

Previous wording

PWI markets, sells and administers vehicle service agreements to used car buyers in all fifty states via independent used car and franchise network of approved automobile and motorcycle dealer partners. PWI’s business model is supported by an internal sales and operations team and partners with American Auto Shield in three states with a white label agreement. PWI also sells and administers a guaranteed asset protection product ("GAP"), under the Penn name, in states where Penn is approved.

Current wording

PWI markets, sells and administers vehicle service agreements to used car buyers in all fifty states via independent used car and franchise network of approved automobile and motorcycle dealer partners. PWI’s business model is supported by an internal sales and operations team and partners with American Auto Shield in three states with a white label agreement.

Previous wording

Kingsway Search Xcelerator includes the Company's subsidiaries, CSuite Financial Partners, LLC ("CSuite"), Ravix Group, Inc. ("Ravix"), Secure Nursing Service LLC ("SNS"), Systems Products International, Inc. ("SPI"), Digital Diagnostics Imaging, Inc. ("DDI") and Image Solutions, LLC ("Image Solutions"). Throughout Management's Discussion and Analysis, the term the term "Kingsway Search Xcelerator" is used to refer to this segment.

Current wording

Kingsway Search Xcelerator includes the following subsidiaries of the Company: CSuite Financial Partners, LLC ("CSuite"), Ravix Group, Inc. ("Ravix"), Secure Nursing Service LLC ("SNS"), Systems Products International, Inc. ("SPI"), Digital Diagnostics Inc. ("DDI"), Image Solutions, LLC ("Image Solutions") and M.L.C. Plumbing, LLC (d/b/a Bud's Plumbing Service, "Bud's Plumbing"). Throughout Management's Discussion and Analysis, the term the term "Kingsway Search Xcelerator" is used to refer to this segment.

Previous wording

DDI provides outsourced 24 hours a day and 7 days per week ("24/7") cardiac telemetry services for long-term acute care and inpatient rehabilitation hospitals. Outsourcing cardiac monitoring is intended to allow hospitals to eliminate personnel callouts and human resources issues, remove distractions from onsite operations, and free up facility staff to assist directly with patient care. DDI has been operating for over 10 years and currently has a presence in 39 states.

Current wording

DDI provides outsourced 24 hours a day and 7 days per week ("24/7") cardiac telemetry services for long-term acute care and inpatient rehabilitation hospitals. Outsourcing cardiac monitoring is intended to allow hospitals to eliminate personnel callouts and human resources issues, remove distractions from onsite operations, and free up facility staff to assist directly with patient care. DDI currently has a presence in 42 states and Puerto Rico.

Previous wording

Image Solutions provides comprehensive information technology managed services, including equipment sales, service, and helpdesk support to customers primarily in North Carolina, Kansas, Georgia, Kentucky and Tennessee. Since Image Solutions was acquired on September 26, 2024, the consolidated statement of operations for the three and nine months ended September 30, 2024, does not include any revenue, expenses or earnings of Image Solutions, as such items are immaterial.

Current wording

Image Solutions provides comprehensive information technology managed services, including equipment sales, service, and helpdesk support to customers primarily in North Carolina, Kansas, Georgia, Kentucky and Tennessee.

Previous wording

Throughout this quarterly report, we present our operations in the way we believe will be most meaningful, useful and transparent to anyone using this financial information to evaluate our performance. Our unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. In addition to the U.S. GAAP presentation of net (loss) income, we present segment operating income as a non-U.S. GAAP financial measure, which we believe is valuable in managing our business and drawing comparisons to our peers. Below is a definition of our non-U.S. GAAP measure and its relationship to U.S. GAAP.

Current wording

Throughout this quarterly report, we present our operations in the way we believe will be most meaningful, useful and transparent to anyone using this financial information to evaluate our performance. Our unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. In addition to the U.S. GAAP presentation of net loss, we present segment operating income as a non-U.S. GAAP financial measure, which we believe is valuable in managing our business and drawing comparisons to our peers. Below is a definition of our non-U.S. GAAP measure and its relationship to U.S. GAAP.

Previous wording

Segment operating income represents one measure of the pretax profitability of our segments and is derived by subtracting direct segment expenses from direct segment revenues. Revenues and expenses are presented in the unaudited consolidated statements of operations, but are not subtotaled by segment; however, this information is available in total and by segment in Note 20, "Segmented Information," to the unaudited consolidated interim financial statements, regarding reportable segment information. The nearest comparable U.S. GAAP measure to total segment operating income is (loss) income from continuing operations before income tax expense (benefit) that, in addition to segment operating income, includes net investment income, net realized gains, net gain (loss) on equity investments, gain on change in fair value of limited liability investments, at fair value, net change in unrealized gains on private company investments, impairment losses on investments, loss on change in fair value of derivative asset option contracts, interest expense, other revenue and expenses not allocated to segments, net, amortization of intangible assets, impairment of intangible assets, gain (loss) on change in fair value of debt, gain on disposal of subsidiary and (loss) gain on extinguishment of debt. A reconciliation of total segment operating income to (loss) income from continuing operations before income tax expense (benefit) for the three and nine months ended September 30, 2024 and September 30, 2023 is presented below in Table 1 of the "Results of Continuing Operations" section of Management's Discussion and Analysis.

Current wording

Segment operating income represents one measure of the pretax profitability of our segments and is derived by subtracting direct segment expenses from direct segment revenues. Revenues and expenses are presented in the unaudited consolidated interim statements of operations, but are not subtotaled by segment; however, this information is available in total and by segment in Note 19, "Segmented Information," to the unaudited consolidated interim financial statements, regarding reportable segment information. The nearest comparable U.S. GAAP measure to total segment operating income is operating (loss) income that, in addition to total segment operating income, includes corporate general and administrative expenses and excludes segment non-operating other revenue (expense).

Previous wording

The Company’s most critical accounting policies are those that are most important to the portrayal of its financial condition and results of operations, and that require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. The critical accounting policies and judgments in the accompanying unaudited consolidated interim financial statements include revenue recognition; valuation of fixed maturities and equity investments; impairment assessment of investments; valuation of limited liability investments, at fair value; valuation of deferred income taxes; accounting for business combinations; contingent consideration; valuation and impairment assessment of intangible assets; goodwill recoverability; deferred contract costs; fair value assumptions for subordinated debt obligations; fair value assumptions for subsidiary stock-based compensation awards; and fair value assumptions for derivative financial instruments. Although management believes that its estimates and assumptions are reasonable, they are based upon information available when they are made, and therefore, actual results may differ from these estimates under different assumptions or conditions.

Current wording

The Company’s most critical accounting policies are those that are most important to the portrayal of its financial condition and results of operations, and that require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. The critical accounting policies and judgments in the accompanying unaudited consolidated interim financial statements include revenue recognition; valuation of fixed maturity investments; impairment assessment of investments; valuation of limited liability investment, at fair value; valuation of deferred income taxes; accounting for business combinations; valuation and impairment assessment of intangible assets; goodwill recoverability; fair value assumptions for subordinated debt obligations; and fair value assumptions for subsidiary stock-based compensation awards. Although management believes that its estimates and assumptions are reasonable, they are based upon information available when they are made, and therefore, actual results may differ from these estimates under different assumptions or conditions.

Previous wording

A reconciliation of total segment operating income to net (loss) income for the three and nine months ended September 30, 2024 and September 30, 2023 is presented in Table 1 below:

Current wording

A reconciliation of total segment operating income to net loss for the three months ended March 31, 2025 and March 31, 2024 is presented in Table 1 below:

Previous wording

Segment Operating Income, (Loss) Income from Continuing Operations and Net (Loss) Income

Current wording

Segment Operating Income, Loss from Continuing Operations and Net Loss

Previous wording

In the third quarter of 2024, we reported loss from continuing operations of $2.2 million compared to $0.8 million in the third quarter of 2023. For the nine months ended September 30, 2024, we reported loss from continuing operations of $6.6 million compared to income from continuing operations of $25.2 million for the nine months ended September 30, 2023.

Current wording

In the first quarter of 2025, we reported loss from continuing operations of $3.1 million compared to $2.1 million in the first quarter of 2024.

Previous wording

The Kingsway Search Xcelerator revenue increased to $9.3 million for the three months ended September 30, 2024 compared to $7.5 million for the three months ended September 30, 2023 (an increase to $28.1 million year to date compared to $26.4 million prior year to date). Kingsway Search Xcelerator operating income was $1.1 million for the three months ended September 30, 2024 compared to $1.0 million for the three months ended September 30, 2023 ($3.9 million year to date compared to $4.2 million prior year to date). Revenue and operating income were primarily impacted by the following:

Current wording

The Kingsway Search Xcelerator revenue increased to $11.7 million for the three months ended March 31, 2025 compared to $9.5 million for the three months ended March 31, 2024. Kingsway Search Xcelerator operating income was $1.7 million for the three months ended March 31, 2025 compared to $1.3 million for the three months ended March 31, 2024. Revenue and operating income were primarily impacted by the following:

Previous wording

Net investment income was $0.4 million in the third quarter of 2024 and 2023 ($1.0 million year to date compared to $1.4 million prior year to date). The decrease in investment income for the nine months ended September 30, 2024 primarily relates to less income from cash equivalents, as a result of a decrease in the cash equivalents balance (in the first quarter of 2023 the Company was holding cash that was used to repurchase some of its subordinated debt) and more equity pick-up loss related to limited liability investments. These decreases were partially offset by an increase in investment income from fixed maturities and interest income related to the significant financing component for certain SPI contracts.

Current wording

Net investment income was $0.4 million in the first quarter of 2025 compared to $0.3 million in the first quarter of 2024. The increase in investment income for the three months ended March 31, 2025 primarily relates to an increase in investment income from fixed maturities, interest income related to the significant financing component for certain SPI contracts and less equity pick-up loss related to limited liability investments. These increases were partially offset by less income from cash equivalents and less interest income at Argo Holdings Fund I, LLC ("Argo Holdings").

Previous wording

Net realized gains were $1.0 million in the third quarter of 2024 compared to $0.2 million in the third quarter of 2023 ($1.4 million year to date compared to $0.5 million prior year to date). The net realized gains for the three and nine months ended September 30, 2024 primarily relate to realized gains recognized by Argo Holdings Fund I, LLC ("Argo Holdings") and a net realized gain related to the sale of one of the private company investments. The net realized gains for the three months ended September 30, 2023 primarily relate to realized gains recognized by Argo Holdings. The net realized gains for the nine months ended September 30, 2023 primarily relate to realized gains recognized by Argo Holdings and net realized gains on sales of limited liability investments.

Current wording

Net realized losses were $0.1 million in the first quarter of 2025 compared to net realized gains of $0.1 million in the first quarter of 2024. The net realized losses for the three months ended March 31, 2025 primarily relate to realized losses on sales of fixed maturity investments. The net realized gains for the three months ended March 31, 2024 primarily relate to realized gains recognized by Argo Holdings.

Previous wording

Interest expense for the third quarter of 2024 was $1.2 million compared to $1.1 million in the third quarter of 2023 ($3.5 million year to date compared to $5.1 million prior year to date). Interest expense was impacted by the following for the three and nine months ended September 30, 2024:

Current wording

Interest expense for the first quarter of 2025 was $1.2 million compared to $1.1 million in the first quarter of 2024. Interest expense was impacted by the following for the three months ended March 31, 2025:

Previous wording

See Note 11, "Debt," to the Consolidated Financial Statements for further details.

Current wording

See Note 10, "Debt," to the unaudited consolidated interim financial statements for further details.

Previous wording

Other Revenue and Expenses not Allocated to Segments, Net

Current wording

General and Administrative Expenses and Other Revenue and Expenses not Allocated to Segments, Net

Previous wording

Other revenue and expenses not allocated to segments, net was a net expense of $3.3 million in the third quarter of 2024 compared to $2.8 million in the third quarter of 2023 ($7.1 million year to date compared to $9.3 million prior year to date). Included are revenue and expenses associated with our various other investments that are accounted for on a consolidated basis and expenses associated with our corporate holding company.

Current wording

General and administrative expenses and other revenue not allocated to segments was a net expense of $2.8 million in the first quarter of 2025 compared to $1.7 million in the first quarter of 2024. Included are primarily expenses associated with our corporate holding company, as well as revenue and expenses associated with our various other investments that are accounted for on a consolidated basis.

Previous wording

The increase in net expense for the three months ended September 30, 2024 is primarily attributable to higher acquisition related expenses and stock-based compensation expenses, partially offset by a decrease in general expenses during the three months ended September 30, 2024 compared to the same period in 2023, as the corporate holding company continues to scrutinize its spending.

Current wording

The increase in net expense for the three months ended March 31, 2025 is primarily attributable to higher acquisition and compensation related expenses, partially offset by zero expense related to the Ravix contingent consideration liability during the three months ended March 31, 2025 compared to the same period in 2024.

Previous wording

Impairment of intangible assets was $0.6 million in the third quarter of 2024 compared to zero in the third quarter of 2023 ($1.8 million year to date compared to zero prior year to date). The Company's indefinite-lived intangible assets consist of trade names, which are assessed for impairment annually as of November 30, or more frequently if events or circumstances indicate that the carrying value may not be recoverable. At March 31, 2024, June 30, 2024 and September 30, 2024, the Company determined that certain of its trade name intangible assets should be further examined under a quantitative approach due to actual revenue coming in lower than previous projections. Based upon this assessment, the Company recorded an impairment charge of $0.6 million during the third quarter of 2024 related to the CSuite and Ravix indefinite-lived trade names ($1.8 million for the year to date, related to the SNS, CSuite and Ravix indefinite-lived trade names). The reduction in value is primarily due to higher discount rates and a reduction in projected revenue. The valuation of these assets is not dependent on the underlying profit or loss generated by the respective business. Therefore, even if a change in revenue does not have a significant impact on operating results, it could significantly impact the fair value of the trade name.

Current wording

Impairment of intangible assets was $0.1 million in the first quarter of 2025 compared to $0.5 million in the first quarter of 2024. The Company's indefinite-lived intangible assets consist of trade names, which are assessed for impairment annually as of November 30, or more frequently if events or circumstances indicate that the carrying value may not be recoverable. At March 31, 2025 and March 31, 2024, the Company determined that certain of its trade name intangible assets should be further examined under a quantitative approach due to actual revenue coming in lower than previous projections. Based upon this assessment, the Company recorded an impairment charge of $0.1 million during the first quarter of 2025 related to the Ravix indefinite-lived trade name and an impairment charge of $0.5 million during the first quarter of 2024 related to the SNS and CSuite indefinite-lived trade names. The reduction in value is primarily due to higher discount rates and a reduction in projected revenue. See Note 8,"Intangible Assets," to the unaudited consolidated interim financial statements, for further discussion

Previous wording

The gain or loss for the three and nine months ended September 30, 2024 and September 30, 2023 reflects changes in the fair value of the subordinated debt resulting primarily from changes in interest rates used (not related to instrument-specific credit risk). See "Debt" section below for further information.

Current wording

Gain on change in fair value of debt was less than $0.1 million in the first quarter of 2025 compared to a loss of $0.1 million in the first quarter of 2024. The gain or loss for the three months ended March 31, 2025 and March 31, 2024 reflects changes in the fair value of the subordinated debt resulting primarily from changes in interest rates used (not related to instrument-specific credit risk). See "Debt" section below for further information.

Previous wording

During the second quarter of 2024, there was a modification to the 2020 KWH Loan. For the nine months ended September 30, 2024, loss on extinguishment of debt of $0.2 million relates to the write-down of the unamortized debt discount and issuance costs from the 2020 KWH Loan at the modification date, since the original debt was fully repaid as part of the modification.

Current wording

During the first quarter of 2025, there was a modification to the 2021 Ravix Loan. For the three months ended March 31, 2025, loss on extinguishment of debt of $0.1 million relates to the write-down of the unamortized debt discount and issuance costs from the 2022 Ravix Loan at the modification date, since the original debt was fully repaid as part of the modification. See Note 10 "Debt," to the unaudited consolidated interim financial statements, for further discussion.

Previous wording

Income tax expense for the third quarter of 2024 was less than $0.1 million compared to a benefit of $0.1 million in the third quarter of 2023 (expense of $0.2 million year to date compared to expense of $0.8 million prior year to date). For the three and nine months ended September 30, 2024 and the nine months ended September 30, 2023, the Company reported income tax expense primarily due to state tax expense. For the three months ended September 30, 2023, the Company reported income tax benefit primarily due to the partial release of its valuation allowance related to deferred tax liabilities from acquisitions. See Note 14, "Income Taxes," to the unaudited consolidated interim financial statements, for additional detail of the income tax (benefit) expense recorded for the three and nine months ended September 30, 2024 and September 30, 2023.

Current wording

Income tax benefit for the first quarter of 2025 was $0.3 million compared to an expense of $0.1 million in the first quarter of 2024. For the three months ended March 31, 2025, the Company reported a tax benefit primarily due to the release of its valuation allowance associated with indefinite life business interest expense carryforwards. For the three months ended March 31, 2024, the Company reported income tax expense primarily due to state tax expense. See Note 13, "Income Taxes," to the unaudited consolidated interim financial statements, for additional detail of the income tax (benefit) expense recorded for the three months ended March 31, 2025 and March 31, 2024.

Previous wording

At September 30, 2024, we held cash and cash equivalents, restricted cash and investments with a carrying value of $56.2 million. Our U.S. operations typically invest in U.S. dollar-denominated instruments to mitigate their exposure to currency rate fluctuations.

Current wording

At March 31, 2025, we held cash and cash equivalents, restricted cash and investments with a carrying value of $55.2 million. Our operations typically invest in U.S. dollar-denominated instruments to mitigate their exposure to currency rate fluctuations.

Previous wording

The Company performs a quarterly analysis of its investments to determine if declines in fair value may result in the recognition of impairment losses in net (loss) income. Factors considered in the determination of whether or not an impairment loss is recognized in net (loss) income include a current intention or need to sell the security or an indication that a credit loss exists. See the "Significant Accounting Policies and Critical Estimates" section of Management's Discussion and Analysis of Financial Condition included in the 2023 Annual Report for further information regarding the Company's detailed analysis and factors considered in establishing an impairment loss on an investment.

Current wording

The Company performs a quarterly analysis of its investments to determine if declines in fair value may result in the recognition of impairment losses in net loss. Factors considered in the determination of whether or not an impairment loss is recognized in net loss include a current intention or need to sell the security or an indication that a credit loss exists. See the "Significant Accounting Policies and Critical Estimates" section of Management's Discussion and Analysis of Financial Condition included in the 2024 Annual Report for further information regarding the Company's detailed analysis and factors considered in establishing an impairment loss on an investment.

Previous wording

The Company's fixed maturities are subject to declines in fair value below amortized cost that may result in the recognition of impairment losses in net (loss) income. If the decline in fair value is due to credit factors and the Company does not expect to receive cash flows sufficient to support the entire amortized cost basis, the credit loss is reported in the consolidated statements of operations in the period that the declines are evaluated. Significant judgment is required in the determination of whether a credit loss has occurred for a security. The Company considers all available evidence when determining whether a security requires a credit allowance to be recorded, including the financial condition and expected near-term and long term prospects of the issuer, whether the issuer is current with interest and principal payments, credit ratings on the security or changes in ratings over time, general market conditions, industry, sector or other specific factors and whether the Company expects to receive cash flows sufficient to recover the entire amortized cost basis of the security. The Company performs a quarterly analysis of its available for-sale fixed maturity investments and other investments to determine if an impairment loss has occurred.

Current wording

The Company's fixed maturities are subject to declines in fair value below amortized cost that may result in the recognition of impairment losses in net loss. If the decline in fair value is due to credit factors and the Company does not expect to receive cash flows sufficient to support the entire amortized cost basis, the credit loss is reported in the consolidated statements of operations in the period that the declines are evaluated. Significant judgment is required in the determination of whether a credit loss has occurred for a security. The Company considers all available evidence when determining whether a security requires a credit allowance to be recorded, including the financial condition and expected near-term and long term prospects of the issuer, whether the issuer is current with interest and principal payments, credit ratings on the security or changes in ratings over time, general market conditions, industry, sector or other specific factors and whether the Company expects to receive cash flows sufficient to recover the entire amortized cost basis of the security. The Company performs a quarterly analysis of its available for-sale fixed maturity investments and other investments to determine if an impairment loss has occurred.

Previous wording

As a result of the analysis performed, the Company recorded an impairment loss related to other investments of zero for the three and nine months ended September 30, 2024 ($0.1 million and $0.2 million for the three and nine months ended September 30, 2023, respectively). There were no impairment losses recorded related to available for-sale fixed maturity investments during the three and nine months ended September 30, 2024 and September 30, 2023.

Current wording

There were no impairment losses recorded related to investments during the three months ended March 31, 2025 and March 31, 2024.

Previous wording

At September 30, 2024 and December 31, 2023, the gross unrealized losses for fixed maturities amounted to $1.0 million and $1.7 million, respectively, and there were no unrealized losses attributable to non-investment grade fixed maturities.

Current wording

At March 31, 2025 and December 31, 2024, the gross unrealized losses for fixed maturities amounted to $0.9 million and $1.2 million, respectively, and there were no unrealized losses attributable to non-investment grade fixed maturities.

Previous wording

See Note 11, "Debt," to the Consolidated Financial Statements for a detailed discussion of the Company’s debt instruments. Changes related to the Company’s debt during the nine months ended September 30, 2024 are further described below.

Current wording

See Note 10, "Debt," to the unaudited consolidated interim financial statements for a detailed discussion of the Company’s debt instruments. Changes related to the Company’s debt during the three months ended March 31, 2025 are further described below.

Previous wording

On May 24, 2024, KWH entered into a third amendment to the 2020 KWH Loan that provides for: (1) a new 2024 term loan in the principal amount of $15.0 million, with a maturity date of May 24, 2029 (the “2024 KWH Loan”); and (2) a new 2024 delayed draw term loan in a principal amount of up to $6.0 million, with a maturity date of May 24, 2029 (the “2024 KWH DDTL”). All or any portion of the 2024 KWH DDTL, subject to a $2.0 million minimum draw amount, could be requested at any time in up to three advances through May 24, 2026. In connection with the third amendment, KWH used the proceeds from the 2024 KWH Loan to repay the following outstanding balances under the 2020 KWH Loan: (1) $9.6 million related to the original 2020 term loan; (2) $1.0 million related to the KWH Revolver; and (3) $3.1 million related to the KWH DDTL.

Current wording

On February 7, 2025, Ravix, Ravix LLC and CSuite entered into a fourth amendment to the 2021 Ravix Loan that provides for: (1) a new 2025 term loan in the principal amount of $9.1 million, with a maturity date of February 7, 2031 (the "2025 Ravix Loan"); and (2) extending the maturity date of the 2022 Ravix Revolver to February 7, 2027. In connection with the fourth amendment, Ravix used a portion of the proceeds from the 2025 Ravix Loan to repay the following outstanding principal balances under the 2021 and 2022 Ravix Loans: (1) $2.2 million related to the 2021 Ravix term loan; and (2) $4.2 million related to the 2022 Ravix term loan. The Company also recorded as a discount to the carrying value of the 2025 Ravix Loan issuance costs of less than $0.1 million specifically related to the 2025 Ravix Loan.

Previous wording

The 2020 KWH Loan and the 2024 KWH Loan were not deemed to be substantially different; therefore, the 2024 KWH Loan is accounted for as a modification of the 2020 KHW Loan. The unamortized debt discount and issuance costs from the 2020 KWH Loan at the modification date of $0.2 million were recorded as loss on extinguishment of debt during the nine months ended September 30, 2024 since the original debt was fully repaid as part of the modification.

Current wording

The 2025 Ravix Loan was not deemed to be substantially different as a result of the fourth amendment; therefore, the amended 2021 Ravix Loan is accounted for as a modification of the second amended 2021 Ravix Loan. The unamortized debt discount and issuance costs from the 2022 Ravix Loan at the modification date of $0.1 million were recorded as loss on extinguishment of debt during the three months ended March 31, 2025 since the original debt related the 2021 Ravix Loan and 2022 Ravix Loan were fully repaid as part of the modification.

Previous wording

During the first quarter of 2024, the Company borrowed $0.2 million under the SNS Loan Revolver. During the second quarter of 2024, the SNS Loan Revolver of $0.2 million was repaid.

Current wording

During the first quarter of 2025, the Company borrowed $0.2 million under the SNS Revolver and less than $0.1 million under the DDI Revolver.

Previous wording

The Company's subordinated debt is measured and reported at fair value. At September 30, 2024, the carrying value of the subordinated debt is $13.7 million. The fair value of the subordinated debt is calculated using a model based on significant market observable inputs and inputs developed by a third party. For a description of the market observable inputs and inputs developed by a third party used in determining fair value of debt, see Note 21, "Fair Value of Financial Instruments," to the unaudited consolidated interim financial statements.

Current wording

The Company's subordinated debt is measured and reported at fair value. At March 31, 2025, the carrying value of the subordinated debt is $13.4 million. The fair value of the subordinated debt is calculated using a model based on significant market observable inputs and inputs developed by a third party. For a description of the market observable inputs and inputs developed by a third party used in determining fair value of debt, see Note 20, "Fair Value of Financial Instruments," to the unaudited consolidated interim financial statements.

Previous wording

During the nine months ended September 30, 2024, the Company reported $0.7 million of net cash provided by operating activities from continuing operations, primarily due to operating income from the Extended Warranty and Kingsway Search Xcelerator segments. During the nine months ended September 30, 2023, the Company reported $25.7 million of net cash used in operating activities from continuing operations, primarily due to outflows related to the payment of management fees to the managers of Net Lease and Flowers ($1.8 million), an indemnity payment to the buyer of Mendota related to loss and loss adjustment expenses ($2.0 million) and payment of deferred interest on the remaining trust preferred debt instrument; partially offset by gain on equity investments and operating income from the Extended Warranty and Kingsway Search Xcelerator segments.

Current wording

During the three months ended March 31, 2025, the Company reported $1.8 million of net cash used in operating activities from continuing operations, primarily due to cash paid to settle the Ravix contingent liability of $2.3 million that is reported as an operating activity, partially offset by operating income from the Extended Warranty and Kingsway Search Xcelerator segments. During the three months ended March 31, 2024, the Company reported $0.2 million of net cash provided by operating activities from continuing operations, primarily due to operating income from the Extended Warranty and Kingsway Search Xcelerator segments.

Previous wording

During the nine months ended September 30, 2024, the net cash used in investing activities from continuing operations was $16.4 million. This use of cash is primarily attributed to the acquisition of Image Solutions, net of cash acquired and purchases of fixed maturities in excess of proceeds from sales and maturities of fixed maturities, distributions received by Argo Holdings from three of its underlying limited liability investment companies, proceeds from the sale of a private company investment and proceeds from the sale of VA Lafayette. During the nine months ended September 30, 2023, the net cash provided by investing activities from continuing operations was $16.7 million. This source of cash is primarily attributed to distributions received by Net Lease from one of its limited liability investment companies of $13.3 million, as well as proceeds from sales and maturities of fixed maturities and sales of equity securities in excess of purchases of fixed maturities and acquisition of business, net of cash acquired.

Current wording

During the three months ended March 31, 2025, the net cash used in investing activities from continuing operations was $3.2 million. This use of cash is primarily attributed to the acquisition of Bud's Plumbing, net of cash acquired, partially offset by proceeds from sales and maturities of fixed maturities in excess of purchases of fixed maturities. During the three months ended March 31, 2024, the net cash used in investing activities from continuing operations was $0.2 million. This use of cash is primarily attributed to purchases of fixed maturities and property and equipment, net in excess of proceeds from sales and maturities of fixed maturities and sales of equity securities.

Previous wording

During the nine months ended September 30, 2024, the net cash provided by financing activities from continuing operations was $13.3 million. This source of cash was primarily attributed to principal proceeds from bank loans of $33.7 million and proceeds from the issuance of Class B preferred stock of $8.3 million, partially offset by principal repayment on bank loans of $20.0 million, taxes paid related to net share settlements of restricted stock awards of $2.2 million, cash paid for repurchases of common stock of $2.5 million, cash paid to acquire the IWS noncontrolling interest of $2.5 million and distributions to noncontrolling interest holders of $1.4 million. During the nine months ended September 30, 2023, the net cash used in financing activities from continuing operations was $39.0 million. This use of cash was primarily attributed to the repurchase of five of the TruPs for $40.3 million, principal repayment on bank loans of $6.1 million, distributions to noncontrolling interest holders of $4.0 million and cash paid for repurchase of warrants of $4.0 million, partially offset by cash proceeds from the exercise of warrants of $16.7 million.

Current wording

During the three months ended March 31, 2025, the net cash provided by financing activities from continuing operations was $5.8 million. This source of cash was primarily attributed to principal proceeds from bank loans of $9.3 million and proceeds from the issuance of Class C preferred stock of $6.0 million, partially offset by principal repayment on bank loans of $8.5 million, cash paid to settle the Ravix contingent liability of $0.4 million and cash paid for repurchases of common stock of $0.3 million. During the three months ended March 31, 2024, the net cash provided by financing activities from continuing operations was $2.5 million. This source of cash was primarily attributed to principal proceeds from bank loans of $4.2 million, partially offset by principal repayment on bank loans of $1.6 million.

Previous wording

The holding company’s liquidity, defined as the amount of cash in the bank accounts of Kingsway Financial Services Inc. and Kingsway America Inc., was $1.4 million and $4.3 million at September 30, 2024 and December 31, 2023, respectively, which excludes future actions available to the holding company that could be taken to generate liquidity. Such future actions include, but are not limited to, distributions from the Extended Warranty and Kingsway Search Xcelerator operating companies subject to certain loan covenants that may be in place at each operating company. The holding company cash amounts are reflected in the cash and cash equivalents of $6.5 million and $9.1 million reported at September 30, 2024 and December 31, 2023, respectively, on the Company’s consolidated balance sheets.

Current wording

The holding company’s liquidity, defined as the amount of cash in the bank accounts of Kingsway Financial Services Inc. and Kingsway America Inc., was $1.4 million and $0.9 million at March 31, 2025 and December 31, 2024, respectively, which excludes future actions available to the holding company that could be taken to generate liquidity. Such future actions include, but are not limited to, issuance of equity securities and distributions from the Extended Warranty and Kingsway Search Xcelerator operating companies subject to certain loan covenants that may be in place at each operating company. The holding company cash amounts are reflected in the cash and cash equivalents of $6.4 million and $5.5 million reported at March 31, 2025 and December 31, 2024, respectively, on the Company’s consolidated balance sheets.