SecProbe.io

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 September 2, 2025

Kent A. Hansen
Chief Financial Officer
Kingsway Financial Services Inc.
10 S. Riverside Plaza, Suite 1520
Chicago, IL 60606

 Re: Kingsway Financial Services Inc.
 Registration Statement on Form S-1
 Filed August 26, 2025
 File No. 333-289859
Dear Kent A. Hansen:

 This is to advise you that we have not reviewed and will not review your
registration
statement.

 Please refer to Rules 460 and 461 regarding requests for acceleration.
We remind you
that the company and its management are responsible for the accuracy and
adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action
by the staff.

 Please contact Madeleine Joy Mateo at 202-551-3465 with any questions.

 Sincerely,

 Division of
Corporation Finance
 Office of Finance
cc: Daniel P. Raglan, Esq.
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 KINGSWAY FINANCIAL SERVICES INC.

 10 S. Riverside Plaza, Suite 1520

 Chicago, Illinois 60606

 (312) 766-2138

 September 2, 2025

 BY EDGAR

 U.S. Securities and Exchange Commission

 Division of Corporation Finance

 100 F Street, N.E.

 Washington, D.C. 20549

 Attn:
 Madeleine Joy Mateo, Esq.

 Division of Corporation Finance Office of Finance

 Re:
 Request for Acceleration of Effectiveness of Kingsway Financial Services Inc.'s Registration Statement on Form S-1 (File No. 333-289859) filed on August 26, 2025.

 Dear Ms. Mateo:

 Pursuant to Rule 461 promulgated
under the Securities Act of 1933, as amended, Kingsway Financial Services Inc. hereby requests that the effectiveness of the Registration
Statement on Form S-1 (File No. 333-289859) (the " Registration Statement ") be accelerated so that the Registration
Statement will become effective on September 5, 2025 at 9:00 a.m., Eastern Time, or as soon thereafter as practicable.

 Please call Daniel P. Raglan
of Cadwalader, Wickersham & Taft LLP at (212) 504-6790 if you have any questions regarding this request, and please notify him when
this request for acceleration has been granted.

 Very truly yours,

 KINGSWAY FINANCIAL SERVICES INC.

 By:
 /s/ Kent A. Hansen

 Name:
 Kent A. Hansen

 Title:
 Chief Financial Officer

 cc:
 Daniel P. Raglan, Cadwalader, Wickersham & Taft LLP

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 November 15, 2018

BY EDGAR TRANSMISSION

 Division of Corporation
Finance

 Securities and Exchange Commission

 100 F Street
N.E.

 Washington, D.C. 20549

Re:
 Kingsway Financial Services Inc.

Registration Statement on Form S-4

File No. 333-227577

 Ladies and
Gentlemen:

 In accordance with Rule 461 under the Securities Act of 1933, Kingsway Financial Services Inc. (the
“Company”) respectfully requests that the effective date for the Registration Statement on Form S-4 (File No. 333-227577), which was filed on November 15, 2018, as amended, (the
“Registration Statement”), be accelerated so that the Registration Statement will be declared effective at 4:00 p.m. Eastern Time on November 16, 2018, or as soon thereafter as is practicable.

Once the Registration Statement has been declared effective, we respectfully request that you orally confirm that event with Eric Orsic of
McDermott Will & Emery LLP, counsel to the Company, at (312) 984-7617.

 Thank you
for your attention to this matter.

 *  *  *  *  *

Very truly yours,

Kingsway Financial Services Inc.

By:

/s/ William A. Hickey, Jr.

William A. Hickey, Jr.

 Executive Vice President and Chief

 Financial
Officer

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 Boston
Brussels     Chicago     Dallas     Düsseldorf     Frankfurt     Houston     London     Los
Angeles     Miami

 Milan
Munich     New York     Orange County     Paris     San Francisco     Seoul     Silicon Valley
Washington, DC

 Strategic alliance with MWE China Law Offices
(Shanghai)

 Eric Orsic

Attorney at Law

eorsic@mwe.com

+1 312 984 7617

 November 15, 2018

Via EDGAR

 Ms. Dorrie Yale

U.S. Securities and Exchange Commission

 Division of Corporation
Finance

 100 F Street, N.E.

 Washington, D.C. 20549

Re:
 Kingsway Financial Services Inc.

 Amendment No. 1 to Registration Statement on Form S-4

 Filed November 8, 2018

 File No. 333-227577

Dear Ms. Yale:

 On behalf of Kingsway
Financial Services Inc. (the “Company”), set forth below are responses to the comments from the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) received by letter, dated
November 15, 2018 (the “Comment Letter”), regarding the Company’s Amendment No. 1 to Registration Statement on Form S-4 that was submitted on November 8, 2018 (collectively the
“Registration Statement”). The headings and numbered paragraphs of this letter correspond to the headings and paragraph numbers contained in the Comment Letter and, to facilitate the Staff’s review, we have reproduced the text of the
Staff’s comments in bold and italics below.

 Concurrently with the submission of this letter, the Company is submitting, via EDGAR, a
complete copy of Amendment No. 2 to the Registration Statement, reflecting the responses of the Company below. The Registration Statement also includes other changes that are intended to update, clarify and render more complete the information
contained therein.

 Amendment No. 1 to Registration Statement on Form S-4

Index to the Consolidated Financial Statements of Kingsway Financial Services Inc., page F-1

1.     Please revise your filing to include the interim statements of equity or comparable footnote disclosure as required by Rule 8-03(a)(5) of Regulation S-X.

 US practice conducted through McDermott
Will & Emery LLP.

 444 West Lake Street Chicago IL 60606-0029 Telephone: +1 312 372 2000 Facsimile: +1 312 984 7700 www.mwe.com

 Dorrie Yale

U.S. Securities and Exchange Commission

 November 15, 2018

 Page 2

 The Company has revised the
Registration Statement to include disclosure required by Rule 8-03(a)(5) of Regulation S-X.

*     *     *     *

Please contact me at 312-984-7617 with any questions you may
have regarding the Registration Statement or this letter. Electronic mail transmissions may be sent to me at eorsic@mwe.com and facsimile transmissions may be sent to my attention at
312-984-7700.

 Sincerely,

/s/ Eric Orsic

 Eric
Orsic

November 14, 2018
John Fitzgerald
President and Chief Executive Officer
Kingsway Financial Services Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario, Canada M4V 1K9
Re:Kingsway Financial Services Inc.
Amendment No. 1 to Registration Statement on Form S-4
Filed November 8, 2018
File No. 333-227577
Dear Mr. Fitzgerald:
            We have reviewed your amended registration statement and have the following
comment.  In some of our comments, we may ask you to provide us with information so we may
better understand your disclosure.
            Please respond to this letter by amending your registration statement and providing the
requested information.  If you do not believe our comment applies to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
            After reviewing any amendment to your registration statement and the information you
provide in response to the comment, we may have additional comments.
Amendment No. 1 to Registration Statement on Form S-4
Index to the Consolidated Financial Statements of Kingsway Financial Services Inc., page F-1
1.Please revise your filing to include the interim statements of equity or comparable
footnote disclosure as required by Rule 8-03(a)(5) of Regulation S-X.

 FirstName LastNameJohn Fitzgerald
 Comapany NameKingsway Financial Services Inc.
 November 14, 2018 Page 2
 FirstName LastName
John Fitzgerald
Kingsway Financial Services Inc.
November 14, 2018
Page 2
            You may contact Mark Brunhofer at 202-551-3638 or Jim Rosenberg at 202-551-3679 if
you have questions regarding comments on the financial statements and related matters.  Please
contact Dorrie Yale at 202-551-8776 or Joe McCann at 202-551-6262 with any other questions.
Sincerely,
Division of Corporation Finance
Office of Healthcare & Insurance
cc:       Eric Orsic

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 November 7, 2018

Via EDGAR

 Ms. Dorrie Yale

U.S. Securities and Exchange Commission

 Division of Corporation
Finance

 100 F Street, N.E.

 Washington, D.C. 20549

Re:
 Kingsway Financial Services Inc.

 Registration Statement on Form S-4

 Filed September 28, 2018

 File No. 333-227577

Dear Ms. Yale:

 On behalf of Kingsway
Financial Services Inc. (the “Company”), set forth below are responses to the comments from the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) received by letter, dated
October 15, 2018 (the “Comment Letter”), regarding the Company’sRegistration Statement on Form S-4 that was submitted on September 28, 2018 (the “Registration Statement”).
The headings and numbered paragraphs of this letter correspond to the headings and paragraph numbers contained in the Comment Letter and, to facilitate the Staff’s review, we have reproduced the text of the Staff’s comments in bold and
italics below.

 Concurrently with the submission of this letter, the Company is submitting, via EDGAR, a complete copy of Amendment
No. 1 to the Registration Statement, reflecting the responses of the Company below. The Registration Statement also includes other changes that are intended to update, clarify and render more complete the information contained therein.

Registration Statement on Form S-4

Where You Can Find More Information, page 37

 1.
    The aggregate market value of your common equity held by non-affiliates appears to be below the minimum public float requirements of General Instruction I.B.1 of Form S-3. As such, it appears you are not eligible to incorporate information by reference. Please amend your registration statement to include the required information within the filing, or alternatively, advise us why
you believe you are eligible to incorporate by reference.

 The Company has revised the Registration Statement to include all
information required by Form S-4 within the filing itself rather than incorporating certain of such information by reference.

US practice conducted through McDermott Will & Emery LLP.

444 West Lake Street, Suite 4000 I Chicago, IL 60606-0029 I Tel : +1 312 372 2000 I Fax: +1 312 984 7700 I www.mwe.com

 Dorrie Yale

U.S. Securities and Exchange Commission

 November 7, 2018

 Page 2

 2.
Please revise your filing to include the information listed below:

 • Audited financial statements covering
each of the three years in the period ended December 31, 2017 that are recast to retrospectively reflect your discontinued operations resulting from the pending sale of your Insurance segment consistent with the guidance in ASC 205-10-45-3.

• Revised selected financial data for each of the five years in the period ended December 31, 2017 that are recast to
retrospectively reflect your Insurance segment as discontinued operations.

 • Revised results of operations discussions
in Management’s Discussion and Analysis covering each of the three years in the period ended December 31, 2017 that appropriately retrospectively reflects your Insurance segment as a discontinued operation.

In addition, ensure that the disclosure and classification revisions promised in response to our previous comments in connection with our review of your
Form 10-K for the fiscal year ended December 31, 2017 and Forms 10-Q for the quarterly periods ended March 31 and June 30, 2018 are reflected in your
recasted financial statements.

 As discussed the Staff, the Company has revised the Registration Statement to include the
financial statements, financial data, and MD&A disclosures required of a “smaller reporting company” that have been recast to retrospectively reflect the discontinued operations resulting from the sale of the Insurance segment
consistent with the guidance in ASC 205-10-45-3. The Company confirms that the disclosure and classification revisions promised
in response to the Commission’s previous comment letters with respect to the 2017 10-K and subsequent filings are reflected in the recast financial information included in the Registration Statement.

General

 3.
    We note that there are outstanding comments on your Form 10-K for the fiscal year ended December 31, 2017, and your Form 10-Qs for the quarters ended March 31, 2018 and June 30, 2018. Please be advised that we will not be in a position to declare your
registration statement effective until all comments on your Exchange Act filings are resolved.

 We understand the
Staff’s review of the Company’s Exchange Act filings is now complete.

 Dorrie Yale

U.S. Securities and Exchange Commission

 November 7, 2018

 Page 3

*    *     *    *

Please contact me at 312-984-7617 with any questions you may
have regarding the Registration Statement or this letter. Electronic mail transmissions may be sent to me at eorsic@mwe.com and facsimile transmissions may be sent to my attention at
312-984-7700.

 Sincerely,

/s/ Eric Orsic

 Eric
Orsic

November 5, 2018
William A. Hickey, Jr.
Executive Vice President and Chief Financial Officer
Kingsway Financial Services Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario M4V 1K9
Canada
Re:Kingsway Financial Services Inc.
Form 10-K for the Fiscal Year Ended December 31, 2017
Filed March 16, 2018
File No. 001-15204
Dear Mr. Hickey:
            We have completed our review of your filing.  We remind you that the company and its
management are responsible for the accuracy and adequacy of their disclosures, notwithstanding
any review, comments, action or absence of action by the staff.
Sincerely,
Division of Corporation Finance
Office of Healthcare & Insurance

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KINGSWAY FINANCIAL SERVICES INC.

              45 Saint Clair Avenue West, Suite 400, Toronto, Ontario M4V1K9  (416) 848-1171  Fax: (416) 850-5439

November 2, 2018

Mr. Mark Brunhofer

Mr. Jim Rosenberg

Division of Corporation Finance

Office of Healthcare & Insurance

Securities and Exchange Commission

Washington, D.C. 20549

Re:    Kingsway Financial Services Inc.

Form 10-K for Fiscal Year Ended December 31, 2017

Filed March 16, 2018

Form 10-Q for the Quarterly Period Ended June 30, 2018

Filed August 8, 2018

File No. 001-15204

Dear Mr. Brunhofer and Mr. Rosenberg:

Kingsway Financial Services Inc. (the “Company”) has received and reviewed your letter dated November 2, 2018, regarding the Commission’s review of the above mentioned filings and has submitted its response below.

Form 10-Q for the Quarterly Period Ended June 30, 2018

Notes to Consolidated Financial Statements (Unaudited)

Note 12: Revenue from Contracts with Customers, page 21

Comment:

1. We acknowledge your response to the last bullet of our prior comment. Please represent to us that you will include the following in your disclosure addressing Item 308(c) of Regulation S-K regarding changes in internal control over financial reporting (ICFR) within Item 4 Controls and Procedures of Part I of your upcoming Form 10-Q for the quarterly period ended September 30, 2018:

•

 That your revenue recognition error caused you to reevaluate your disclosure controls and procedures (DCP) at March 31, 2018 and June 30, 2018 and that you concluded that DCP was ineffective at those dates because of a material weakness in ICFR.

•

 The nature of the material weakness in ICFR consistent with that provided in your response.

•

 The changes you made in ICFR during the third quarter of 2018 to remediate the material weakness consistent with that provided in your response in order to conclude that DCP was effective at September 30, 2018.

Company’s Response:

The Company represents that it will include the following in its disclosure addressing Item 308(c) of Regulation S-K regarding changes in internal control over financial reporting within Item 4 Controls and Procedures of Part I of the Company’s Form 10-Q for the quarterly period ended September 30, 2018:

•

 That our revenue recognition error caused us to reevaluate our disclosure controls and procedures at March 31, 2018 and June 30, 2018 and we concluded that disclosure controls and procedures were ineffective at those dates because of a material weakness in internal control over financial reporting.

•

 The nature of the material weakness in internal control over financial reporting consistent with that provided in our November 1, 2018 response.

•

 The changes we made in internal control over financial reporting during the third quarter of 2018 to remediate the material weakness consistent with that provided in our November 1, 2018 response in order to conclude that disclosure controls and procedures were effective at September 30, 2018.

Please contact me at 847-871-6416 if you have any additional questions or need further clarification.

Sincerely,

/s/ William A. Hickey, Jr.

William A. Hickey, Jr.

Executive Vice President and Chief Financial Officer

November 2, 2018
William A. Hickey, Jr.
Executive Vice President and Chief Financial Officer
Kingsway Financial Services Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario M4V 1K9
Canada
Re:Kingsway Financial Services Inc.
Form 10-K for the Fiscal Year Ended December 31, 2017
Filed March 16, 2018
Form 10-Q for the Quarterly Period Ended June 30, 2018
Filed August 8, 2018
File No. 001-15204
Dear Mr. Hickey:
            We have reviewed your November 1, 2018 response to our comment letter and have the
following comment.
            Please respond to this comment within 10 business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this comment, we may have additional comments.  Our
reference to a prior comment is to the comment in our October 26, 2018 letter.
Form 10-Q for the Quarterly Period Ended June 30, 2018
Notes to Consolidated Financial Statements (Unaudited)
Note 12: Revenue from Contracts with Customers, page 21
1.We acknowledge your response to the last bullet of our prior comment.  Please represent
to us that you will include the following in your disclosure addressing Item 308(c) of
Regulation S-K regarding changes in internal control over financial reporting (ICFR)
within Item 4 Controls and Procedures of Part I of your upcoming Form 10-Q for the
quarterly period ended September 30, 2018:
•That your revenue recognition error caused you to reevaluate your disclosure controls

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 November 2, 2018 Page 2
 FirstName LastName
William A. Hickey, Jr.
Kingsway Financial Services Inc.
November 2, 2018
Page 2
and procedures (DCP) at March 31, 2018 and June 30, 2018 and that you concluded
that DCP was ineffective at those dates because of a material weakness in ICFR.
•The nature of the material weakness in ICFR consistent with that provided in your
response.
•The changes you made in ICFR during the third quarter of 2018 to remediate the
material weakness consistent with that provided in your response in order to conclude
that DCP was effective at September 30, 2018.
            You may contact Mark Brunhofer at (202) 551-3638 or Jim Rosenberg at (202) 551-
3679 with any questions.
Sincerely,
Division of Corporation Finance
Office of Healthcare & Insurance

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KINGSWAY FINANCIAL SERVICES INC.

              45 Saint Clair Avenue West, Suite 400, Toronto, Ontario M4V1K9  (416) 848-1171  Fax: (416) 850-5439

November 1, 2018

Mr. Mark Brunhofer

Mr. Jim Rosenberg

Division of Corporation Finance

Office of Healthcare & Insurance

Securities and Exchange Commission

Washington, D.C. 20549

Re:    Kingsway Financial Services Inc.

Form 10-K for Fiscal Year Ended December 31, 2017

Filed March 16, 2018

Form 10-Q for the Quarterly Period Ended June 30, 2018

Filed August 8, 2018

File No. 001-15204

Dear Mr. Brunhofer and Mr. Rosenberg:

Kingsway Financial Services Inc. (the “Company”) has received and reviewed your letter dated October 26, 2018, regarding the Commission’s review of the above mentioned filings and has submitted its response below.

Form 10-Q for the Quarterly Period Ended June 30, 2018

Notes to Consolidated Financial Statements (Unaudited)

Note 12: Revenue from Contracts with Customers, page 21

Comment:

1. You assert in your response to the second bullet of our prior comment that "the quantitative and qualitative aspects, when considered together, support a conclusion that the adjustments do not represent a material misstatement of the previously issued interim financial statements for the three-month period ended March 31, 2018 and the three and six-month periods ended June 30, 2018." Notwithstanding your assertion, please:

•

 Represent to us that you will revise your proposed accounting and disclosure to be made in your upcoming Form 10-Q for the quarterly period ended September 30, 2018 to reflect your error correction in each of the first two quarters of 2018. In this regard, represent to us that you will disclose therein the effects of the error on and the restated amounts for revenue, loss from continuing operations, net loss and related per share amounts for each of the quarters ended March 31, and June 30, 2018 and the six months ended June 30, 2018.

•

 Represent to us that, in future filings that include these periods, you will revise the financial statements for those quarters and six month period to correct the error.

•

 Tell us how you considered the impact of the error discovery as to whether or not your disclosure controls and procedures are effective at September 30, 2018, and provide us an analysis if you conclude they are effective pursuant to Item 307 of Regulation S-K.

Company’s Response:

In response to your first comment, the Company represents that it will revise, in its upcoming Form 10-Q for the quarterly period ended September 30, 2018, its proposed accounting and disclosure to reflect the error correction in each of the first two quarters of 2018.  The Company also represents that it will disclose therein the effects of the error on and the restated amounts for revenue, loss from continuing operations, net loss and related per share amounts for each of the quarters ended March 31, and June 30, 2018 and the six months ended June 30, 2018.

In response to your second comment, the Company represents that in future filings that include the three-month period ended March 31, 2018 and the three and six-month periods ended June 30, 2018, the Company will revise its financial statements for those quarters and six-month period to correct the error.

In response to your third comment, the Company considered the impact of the error discovery on its disclosure controls and procedures.  Despite the Company’s determination pursuant to its SAB 99 analysis that the error is not material, the Company considered not only the actual error but also the potential for the error to be material.  Because of this analysis, the Company determined that the error could have been material and the Company’s existing controls might not have been designed effectively to prevent a material misstatement to the financial statements.  As a result, the Company has concluded that, as of March 31, 2018 and June 30, 2018, the Company’s disclosure controls and procedures were not effective due to a material weakness in the Company’s internal control over financial reporting related to the adoption of ASU 2014-09.  Subsequent to June 30, 2018, the Company’s management enhanced its internal control over financial reporting related to the adoption of new accounting standards by including a control to engage outside accounting expertise to assist the Company in reviewing the adoption of new accounting standards.  During the third quarter of 2018, the Company implemented and tested this enhanced internal control related to the adoption of ASU 2014-09 in order to remediate fully this material weakness.  As a result, the Company has concluded that its disclosure controls and procedures are effective at September 30, 2018.

Please contact me at 847-871-6416 if you have any additional questions or need further clarification.

Sincerely,

/s/ William A. Hickey, Jr.

William A. Hickey, Jr.

Executive Vice President and Chief Financial Officer

October 26, 2018
William A. Hickey, Jr.
Executive Vice President and Chief Financial Officer
Kingsway Financial Services Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario M4V 1K9
Canada
Re:Kingsway Financial Services Inc.
Form 10-K for the Fiscal Year Ended December 31, 2017
Filed March 16, 2018
Form 10-Q for the Quarterly Period Ended June 30, 2018
Filed August 8, 2018
File No. 001-15204
Dear Mr. Hickey:
            We have reviewed your October 19, 2018 response to our comment letter and have the
following comment.  In our comment, we ask you to provide us with information so we may
better understand your disclosure.
            Please respond to this comment within 10 business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this comment, we may have additional
comments.  Unless we note otherwise, our references to prior comments are to comments in our
October 12, 2018 letter.
Form 10-Q for the Quarterly Period Ended June 30, 2018
Notes to Consolidated Financial Statements (Unaudited)
Note 12: Revenue from Contracts with Customers, page 21
1.You assert in your response to the second bullet of our prior comment that "the
quantitative and qualitative aspects, when considered together, support a conclusion that
the adjustments do not represent a material misstatement of the previously issued interim
financial statements for the three-month period ended March 31, 2018 and the three and

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 October 26, 2018 Page 2
 FirstName LastName
William A. Hickey, Jr.
Kingsway Financial Services Inc.
October 26, 2018
Page 2
six-month periods ended June 30, 2018." Notwithstanding your assertion, please:
•Represent to us that you will revise your proposed accounting and disclosure to be
made in your upcoming Form 10-Q for the quarterly period ended September 30, 2018
to reflect your error correction in each of the first two quarters of 2018. In this regard,
represent to us that you will disclose therein the effects of the error on and the restated
amounts for revenue, loss from continuing operations, net loss and related per share
amounts for each of the quarters ended March 31, and June 30, 2018 and the six
months ended June 30, 2018.
•Represent to us that, in future filings that include these periods, you will revise the
financial statements for those quarters and six month period to correct the error.
•Tell us how you considered the impact of the error discovery as to whether or not your
disclosure controls and procedures are effective at September 30, 2018, and provide us
an analysis if you conclude they are effective pursuant to Item 307 of Regulation S-K.
            You may contact Mark Brunhofer at (202) 551-3638 or Jim Rosenberg at (202) 551-
3679 if you have any questions.
Sincerely,
Division of Corporation Finance
Office of Healthcare & Insurance

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KINGSWAY FINANCIAL SERVICES INC.

       45 Saint Clair Avenue West, Suite 400, Toronto, Ontario M4V1K9  (416) 848-1171  Fax: (416) 850-5439

October 19, 2018

Mr. Mark Brunhofer

Mr. Jim Rosenberg

Division of Corporation Finance

Office of Healthcare & Insurance

Securities and Exchange Commission

Washington, D.C. 20549

Re:    Kingsway Financial Services Inc.

Form 10-K for Fiscal Year Ended December 31, 2017

Filed March 16, 2018

Form 10-Q for the Quarterly Period Ended June 30, 2018

Filed August 8, 2018

File No. 001-15204

Dear Mr. Brunhofer and Mr. Rosenberg:

Kingsway Financial Services Inc. (the “Company”) has received and reviewed your letter dated October 12, 2018, regarding the Commission’s review of the above mentioned filings and has submitted its response below.

Form 10-Q for the Quarterly Period Ended June 30, 2018

Note 12: Revenue from Contracts with Customers, page 21

Comment:

1. We acknowledge your response to prior comment 2. Please address the following:

•

 You state that you use a cost to cost approach to allocate transaction price to each of the two distinct performance obligations in the PWSC warranty contracts. Please explain the apparent inconsistency between that statement and your proposed disclosure in response to comment 3 in which you state that you used the estimated cost plus margin approach to estimate the standalone selling price for each of the performance obligations in order to allocate the transaction price to the two separate performance obligations identified.

•

 Provide us your detailed analysis under SAB 99 substantiating why your $990,000 overstatement of revenues for the first half of 2018 is not material and does not warrant restatement. In your response, tell us the amount of the overstatement in each of the first two quarters of 2018 and why each of those quarters and the six-month period are not materially misstated especially considering that the overstatement appears significant to your pre-tax loss from continuing operations for the six months ended June 30, 2018. To the extent you can substantiate why a restatement is not required, provide us proposed disclosure to be included in your third quarter 2018 Form 10-Q describing the adjustment recorded during that quarter to correct your prior error in accounting.

Company’s Response:

In response to your first comment, the Company acknowledges that we were inconsistent within our prior response to comment 2 in that we interchangeably used the terms “cost-to-cost approach” and “cost plus margin model” to refer to the same methodology for estimating the standalone selling prices of PWSC’s two performance obligations.

Below is a revised first paragraph of our response to prior comment 2:

The Company acquired PWSC on October 12, 2017.  During the first two quarters of 2018, the Company used the residual method to estimate the standalone selling price of its warranty administrative services performance obligation.  As the Company continues to better understand this newly acquired business, and with the assistance of a nationally recognized accounting firm, the Company has applied the expected cost plus a margin approach to estimate the standalone selling price of its warranty administrative services performance obligation based upon its determination of the costs associated with fulfilling this performance obligation.  As described in our August 13, 2018 response to comment 2, the Company previously had applied the expected cost plus a margin approach to estimate the standalone selling price for its other warranty services performance obligation.  As a result, the Company has developed an expected cost plus a margin model for each of the two distinct performance obligations in the PWSC warranty contracts.  The Company is able to apply these two models to estimate the standalone selling prices of the two performance obligations.  The relative percentage of expected costs plus a margin associated with the warranty administrative services performance obligation is applied to the transaction price to determine the estimated standalone selling price of the warranty administrative services performance obligation, which PWSC recognizes as earned at the time the home is enrolled and the warranty product is delivered.  The relative percentage of expected costs plus a margin associated with the other warranty services performance obligation is applied to the transaction price to determine the estimated standalone selling price of the other warranty services performance obligation, which PWSC recognizes as earned as services are performed over the warranty coverage period.  As a result of the Company’s revised analysis, it was concluded that the application of this expected cost plus a margin approach will result in the Company recognizing revenue more slowly compared to the previously calculated revenue recognition pattern.

Below is a revised response to prior comment 3, proposing revised disclosure to be included in future periodic reports:

The Company proposes to enhance its disclosure in Note 12, Revenue from Contracts with Customers, in future periodic filings as follows, beginning with its Quarterly Report on Form 10-Q for the period ended September 30, 2018:

PWSC’s homebuilder warranty service fees include fees collected from the sale of warranties issued by new homebuilders.  PWSC receives a single warranty service fee as its transaction price at the time it enters into a written contract with each of its builder customers.  Each contract contains two separate performance obligations - warranty administrative services and other warranty services.  Warranty administrative services include enrolling each home sold by the builder into the program and the warranty administrative system and delivering the warranty product.  Other warranty services include answering builder or homeowner questions regarding the home warranty and dispute resolution services.

Standalone selling prices are not directly observable in the contract for each of the separate performance obligations.  As a result, PWSC has applied the expected cost plus a margin approach to develop models to estimate the standalone selling price for each of its performance obligations in order to allocate the transaction price to the two separate performance obligations identified.

For the model related to the warranty administrative services performance obligation, PWSC makes judgments about which of its actual costs are associated with enrolling each home sold by the builder into the program and the warranty administrative system and delivering the warranty product.  For the model related to the other warranty services performance obligation, PWSC makes judgments about which of its actual costs are associated with activities, such as answering builder or homeowner questions regarding the home warranty and dispute resolution services, which are performed over the life of the warranty coverage period.  The relative percentage of expected costs plus a margin associated with the warranty administrative services performance obligation is applied to the transaction price to determine the estimated standalone selling price of the warranty administrative services performance obligation, which PWSC recognizes as earned at the time the home is enrolled and the warranty product is delivered.  The relative percentage of expected costs plus a margin associated with the other warranty services performance obligation is applied to the transaction price to determine the estimated standalone selling price of the other warranty services

performance obligation, which PWSC recognizes as earned as services are performed over the warranty coverage period.

For the other warranty services performance obligation, PWSC applies an input method of measurement, based on the expected costs plus a margin of providing services, to determine the transfer of its services over the warranty coverage period.  PWSC uses historical data regarding the number of calls it receives and activities performed, in addition to the number of homes enrolled, to estimate the number of complaints and dispute resolution requests to be received by year until coverage expires, which allows PWSC to develop a revenue recognition pattern that it believes provides a faithful depiction of the transfer of services over time for the other warranty services performance obligation.

PWSC’s homebuilder warranty commissions include commissions from the sale of warranty contracts for those builders who have requested and receive insurance backing of their warranty obligations.  PWSC acts as an agent on behalf of the third-party insurance company that underwrites and guaranties these warranty contracts.  Homebuilder warranty commissions are earned on the certification date, which is typically the date of the closing of the sale of the home to the buyer.  The Company also earns fees to manage remediation or repair services related to claims on insurance-backed warranty obligations, which are earned when the claims are closed, and a profit-sharing bonus on eligible warranties, which is determined based on expected ultimate loss ratio targets and is earned at the time the profit-sharing bonus is received.

In response to your second comment, the Company performed a materiality assessment to determine the effect of its revised analysis of homebuilder warranty service fees and commission income on its previously issued interim consolidated financial statements for the three-month period ended March 31, 2018 and the three and six-month periods ended June 30, 2018.  As part of its materiality assessment, the Company considered both quantitative and qualitative factors as set forth in SEC Staff Accounting Bulletin No. 99 (“SAB 99”), as follows:

Quantitative Assessment:

Below is a summary of the effect of our revised assessment on homebuilder warranty service fees and commission income previously reported by the Company in Note 12, Revenue from Contracts with Customers, in its Quarterly Report on Form 10-Q for the three months ended March 31, 2018 and the three and six months ended June 30, 2018:

The Company assessed the quantitative effect of the adjustments in the table above on its consolidated financial statements as of and for the three months ended March 31, 2018 and as of and for the three and six months ended June 30, 2018, as follows:

•

 For the three months ended March 31, 2018, the adjustment of $0.5 million represents 3.6% of revenues from continuing operations, 20.4% of loss from continuing operations, 21.7% of net loss attributable to common shareholders and would have increased diluted loss per share attributable to common shareholders by $0.02, or 18.2%.  It should be noted that the Company did not report discontinued operations in its Quarterly Report on Form 10-Q for the period ended March 31, 2018; however, we have presented the adjustment for the three months ended March 31, 2018 as a percentage of revenues from continuing operations and loss from continuing operations because we believe this is more comparable to three and six month periods ended June 30, 2018 described below.

•

 For the three months ended June 30, 2018, the adjustment of $0.5 million represents 3.6% of revenues from continuing operations, 18.2% of loss from continuing operations, 5.7% of net loss attributable to common shareholders and would have increased diluted loss per share attributable to common shareholders by $0.02, or 5.0%.

•

 For the six months ended June 30, 2018, the adjustment of $1.0 million represents 3.6% of revenues from continuing operations, 19.3% of loss from continuing operations, 9.1% of net loss attributable to common shareholders and would have increased diluted loss per share attributable to common shareholders by $0.05, or 10.0%.

•

 The adjustments described above represent 1.2% and 2.4% of deferred service fees as reported in the Company’s consolidated balance sheet at March 31, 2018 and June 30, 2018, respectively.

The Company does not believe the adjustments would be viewed as material to its reported revenues or deferred service fees for the periods presented.  Despite the apparent effect of the adjustments on the Company’s reported loss from continuing operations and net loss attributable to common shareholders for the periods presented, the Company does not believe the effect of the adjustments described above is material to its overall business or to users of its consolidated financial statements.  In arriving at this conclusion, the Company relied on the following guidance found in SAB 99, which states:

•

 “Materiality concerns the significance of an item to users of a registrant's financial statements.  A matter is "material" if there is a substantial likelihood that a reasonable person would consider it important.  In its Statement of Financial Accounting Concepts No. 2, the FASB stated the essence of the concept of materiality as follows: The omission or misstatement of an item in a financial report is material if, in the light of surrounding circumstances, the magnitude of the item is such that it is probable that the judgment of a reasonable person relying upon the report would have been changed or influenced by the inclusion or correction of the item.”

•

 “Under the governing principles, an assessment of materiality requires that one views the facts in the context of the "surrounding circumstances.”

•

 “The predominant view is that materiality judgments can properly be made only by those who have all the facts.”

•

 “Consideration of potential market reaction to disclosure of a misstatement is by itself "too blunt an instrument to be depended on" in considering whether a fact is material.  When, however, management or the independent auditor expects (based, for example, on a pattern of market performance) that a known misstatement may result in a significant positive or negative market reaction, that expected reaction should be taken into account when considering whether a misstatement is material.”

The Company has always considered its non-standard automobile business to be the most material part of the Company’s consolidated financial statements, in terms of both its contribution to individual components of the consolidated financial statements as well as its disproportionate effect on the volatility of the Company’s reported net income/(loss) from continuing operations and net income/(loss) attributable to common shareholders.  The Company has noted in the past the market’s reaction to various announcements related to earnings and dispositions.  For instance, there was no negative market reaction following the July 22, 2016 announcement of the Company’s earnings for the period ended June 30, 2016, in which the Company reported an increased loss in its Extended Warranty segment.  On the other hand, there was negative market reaction following the February 20, 2018 announcement of the Company’s earnings for the period ended December 31, 2017, in which the Company reported an increased loss in its Insurance Underwriting segment.  In addition, the market reacted positively in the aftermath of both the Company’s May 10, 2018 announcement that it had entered into a letter of intent to sell its non-standard automobile businesses and its July 16, 2018 announcement that it had entered into a definitive agreement to sell its non-standard automobile businesses.  It has been the Company’s view that the most material current “fact” in the “context of the surrounding circumstances” that would influence the judgment of a reasonable person looking at information about the Company was whether regulatory approval would be granted to close the previously announced sale of the Company’s non-standard automobile business.  Regulatory approval was, in fact, granted on October 18, 2018, and the Company announced on October 18, 2018 that the

October 15, 2018
John Fitzgerald
President and Chief Executive Officer
Kingsway Financial Services Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario, Canada M4V 1K9
Re:Kingsway Financial Services Inc.
Registration Statement on Form S-4
Filed September 28, 2018
File No. 333-227577
Dear Mr. Fitzgerald:
            We have limited our review of your registration statement to those issues we have
addressed in our comments.  In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure.
            Please respond to this letter by amending your registration statement and providing the
requested information.  If you do not believe our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
            After reviewing any amendment to your registration statement and the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4
Where You Can Find More Information, page 37
1.The aggregate market value of your common equity held by non-affiliates appears to be
below the minimum public float requirements of General Instruction I.B.1 of Form S-3.
As such, it appears you are not eligible to incorporate information by reference.  Please
amend your registration statement to include the required information within the filing, or
alternatively, advise us why you believe you are eligible to incorporate by reference.
2.Please revise your filing to include the information listed below:
•Audited financial statements covering each of the three years in the period ended

 FirstName LastNameJohn Fitzgerald
 Comapany NameKingsway Financial Services Inc.
 October 15, 2018 Page 2
 FirstName LastName
John Fitzgerald
Kingsway Financial Services Inc.
October 15, 2018
Page 2
December 31, 2017 that are recast to retrospectively reflect your discontinued
operations resulting from the pending sale of your Insurance segment consistent with
the guidance in ASC 205-10-45-3.
•Revised selected financial data for each of the five years in the period ended
December 31, 2017 that are recast to retrospectively reflect your Insurance segment
as discontinued operations.
•Revised results of operations discussions in Management's Discussion and Analysis
covering each of the three years in the period ended December 31, 2017 that
appropriately retrospectively reflects your Insurance segment as a discontinued
operation.

In addition, ensure that the disclosure and classification revisions promised in response to
our previous comments in connection with our review of your Form 10-K for the fiscal
year ended December 31, 2017 and Forms 10-Q for the quarterly periods ended March 31
and June 30, 2018 are reflected in your recasted financial statements.
General
3.We note that there are outstanding comments on your Form 10-K for the fiscal year ended
December 31, 2017, and your Form 10-Qs for the quarters ended March 31, 2018 and
June 30, 2018.  Please be advised that we will not be in a position to declare
your registration statement effective until all comments on your Exchange Act filings are
resolved.
            We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
            Refer to Rules 460 and 461 regarding requests for acceleration.  Please allow adequate
time for us to review any amendment prior to the requested effective date of the registration
statement.
            You may contact Mark Brunhofer at 202-551-3638 or Jim Rosenberg at 202-551-3679 if
you have questions regarding comments on the financial statements and related matters.  Please
contact Dorrie Yale at 202-551-8776 or Joe McCann at 202-551-6262 with any other questions.
Sincerely,
Division of Corporation Finance
Office of Healthcare & Insurance
cc:       Eric Orsic

October 12, 2018
William A. Hickey, Jr.
Executive Vice President and Chief Financial Officer
Kingsway Financial Services Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario M4V 1K9
Canada
Re:Kingsway Financial Services Inc.
Form 10-K for the Fiscal Year Ended December 31, 2017
Filed March 16, 2018
Form 10-Q for the Quarterly Period Ended June 30, 2018
Filed August 8, 2018
File No. 001-15204
Dear Mr. Hickey:
            We have reviewed your October 3, 2018 response to our comment letter and have the
following comment.  In our comment, we ask you to provide us with information so we may
better understand your disclosure.
            Please respond to this comment within 10 business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this comment, we may have additional
comments.  Unless we note otherwise, our references to prior comments are to comments in our
September 5, 2018 letter.
Form 10-Q for the Quarterly Period Ended June 30, 2018
Note 12: Revenue from Contracts with Customers, page 21
1.We acknowledge your response to prior comment 2.  Please address the following:
•You state that you use a cost to cost approach to allocate transaction price to each of
the two distinct performance obligations in the PWSC warranty contracts. Please
explain the apparent inconsistency between that statement and your proposed
disclosure in response to comment 3 in which you state that you used the estimated

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 October 12, 2018 Page 2
 FirstName LastName
William A. Hickey, Jr.
Kingsway Financial Services Inc.
October 12, 2018
Page 2
cost plus margin approach to estimate the standalone selling price for each of the
performance obligations in order to allocate the transaction price to the two separate
performance obligations identified.
•Provide us your detailed analysis under SAB 99 substantiating why your $990,000
overstatement of revenues for the first half of 2018 is not material and does not
warrant restatement.  In your response, tell us the amount of the overstatement in each
of the first two quarters of 2018 and why each of those quarters and the six-month
period are not materially misstated especially considering that the overstatement
appears significant to your pre-tax loss from continuing operations for the six months
ended June 30, 2018.  To the extent you can substantiate why a restatement is not
required, provide us proposed disclosure to be included in your third quarter 2018
Form 10-Q describing the adjustment recorded during that quarter to correct your prior
error in accounting.

            You may contact Mark Brunhofer at (202) 551-3638 or Jim Rosenberg at (202) 551-3679
with any questions.
Sincerely,
Division of Corporation Finance
Office of Healthcare & Insurance

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   KINGSWAY FINANCIAL SERVICES INC.

   45 Saint Clair Avenue West, Suite 400, Toronto, Ontario M4V1K9 • (416) 848-1171 • Fax: (416) 850-5439

October 3, 2018

Mr. Mark Brunhofer

Mr. Jim Rosenberg

Division of Corporation Finance

Office of Healthcare & Insurance

Securities and Exchange Commission

Washington, D.C. 20549

Re:    Kingsway Financial Services Inc.

Form 10-K for Fiscal Year Ended December 31, 2017

Filed March 16, 2018

Form 10-Q for the Quarterly Period Ended June 30, 2018

Filed August 8, 2018

File No. 001-15204

Dear Mr. Brunhofer and Mr. Rosenberg:

Kingsway Financial Services Inc. (the “Company”) has received and reviewed your letter dated September 5, 2018, regarding the Commission’s review of the above mentioned filings and has submitted its response below.

Form 10-Q for the Quarterly Period Ended June 30, 2018

Notes to Consolidated Financial Statements (Unaudited)

Note 12: Acquisitions and Discontinued Operations

(b) Discontinued Operations, page 9

Comment:

1. Please tell us how your disposal of the Itasca Real Estate Investors, LLC business represents a strategic shift that has (or will have) a major effect on your operations or results of operations in order to be classified as discontinued operations under ASC 205-20-45-1B.

Company’s Response:

The disposal of Itasca Real Estate Investors, LLC does not represent a strategic shift as defined in ASC 205-20-45-1B because the disposal will not have a major effect on the Company’s operations and financial results, as demonstrated by the amounts below to be reclassified.  The Company will revise its presentation of Itasca Real Estate, LLC in future periodic filings, beginning with its Quarterly Report on Form 10-Q for the period ended September 30, 2018, to report the loss on disposal as part of continuing operations.  The Company will also reclassify the operations of Itasca Real Estate, LLC in its statements of operations for current and prior periods from discontinued operations to continuing operations and will reclassify the assets and liabilities of Itasca Real Estate, LLC from assets held for sale and liabilities held for sale to the appropriate asset and liability lines of the December 31, 2017 balance sheet reported in its Quarterly Report on Form 10-Q for the period ended September 30, 2018.

1

The revised presentation will reclassify the following amounts, presented in thousands of dollars, related to Itasca Real Estate Investors, LLC, from discontinued operations to continuing operations:

•

 Gain on disposal of subsidiary - 17

•

 2018 year to date loss from continuing operations – (11)

•

 2017 year to date loss from continuing operations – (16)

The revised presentation will reclassify the following amounts, presented in thousands of dollars, related to Itasca Real Estate Investors, LLC, from assets and liabilities held for sale to the following assets and liabilities at December 31, 2017:

•

 Cash and cash equivalents - 3

•

 Property and equipment - 681

•

 Accrued expenses and other liabilities - 49

Comment:

2. It is apparent from your response to prior comment 2 that you utilize the residual approach to allocate transaction price to the "warranty administrative services" by deducting the selling price of the "other warranty services" derived under the expected cost plus a margin approach from the overall transaction price. Please tell us why it is appropriate to use the residual approach when ASC 606-10-32-34c indicates that this method subtracts the sum of observable standalone selling prices or other goods or services promised in a contract from the total selling price and it does not appear that the selling price of your "other warranty services" derived under the expected cost plus a margin approach is observable.

Company’s Response:

The Company acquired PWSC on October 12, 2017.  The Company used the residual method to estimate the standalone selling price of its warranty administrative services performance obligation, believing this approach would yield an estimate reasonably consistent with a cost-to-cost approach, to allocate the transaction price to its warranty administrative services performance obligation.  As the Company continues to better understand this newly acquired business, and with the assistance of a nationally recognized accounting firm, the Company has developed a cost plus margin model to estimate the standalone selling price of its warranty administrative services performance obligation based upon its determination of the costs associated with fulfilling this performance obligation.  As described in our August 13, 2018 response to comment 2, the Company previously had developed a cost plus margin model to estimate the standalone selling price for its other warranty services performance obligation.  Now that the Company has developed a cost plus margin model for each of the two distinct performance obligations in the PWSC warranty contracts, the Company is able to apply a cost-to-cost approach to estimate the standalone selling prices of the two performance obligations.  The relative percentage of costs associated with the warranty administrative services performance obligation is applied to the transaction price to determine the estimated standalone selling price of the warranty administrative services performance obligation, which PWSC recognizes as earned at the time the home is enrolled and the warranty product is delivered.  The relative percentage of costs associated with the other warranty services performance obligation is applied to the transaction price to determine the estimated standalone selling price of the other warranty services performance obligation, which PWSC recognizes as earned as services are performed over the warranty coverage period.  As a result of the Company’s revised analysis, it was concluded that the cost-to-cost approach will result in the Company recognizing revenue more slowly compared to the previously calculated revenue recognition pattern.

2

Based on this reassessment, below is a summary of the effect on homebuilder warranty service fees and commission income previously reported by the Company in Note 12, Revenue from Contracts with Customers, in its Quarterly Report on Form 10-Q for the six months ended June 30, 2018:

The Company does not believe the impact of this adjustment is material to its consolidated financial statements for the six months ended June 30, 2018; consequently, it will record this adjustment in its consolidated financial statements for the three months ended September 30, 2018.

Our reassessment also yielded a cumulative effect adjustment to the January 1, 2018 consolidated balance sheet for those contracts that were not fully completed as of the date of adoption of ASU 2014-09.  The cumulative effect adjustment will increase the January 1, 2018 accumulated deficit and increase the January 1, 2018 deferred service fees by $0.5 million each.  The Company will record this cumulative effect adjustment in its September 30, 2018 consolidated balance sheet and will add the following disclosure to its Note 4(a), Adoption of New Accounting Standards, included in its Quarterly Report on Form 10-Q for the period ended September 30, 2018:

As a result of the adoption of ASU 2014-09, the Company recorded a cumulative effect adjustment to increase accumulated deficit by $0.5 million and increase deferred service fees by $0.5 million.  Prior periods have not been restated to conform to the current presentation.

Comment:

3. Also regarding your response to prior comment 2, please provide us proposed revised disclosure to be included in future periodic reports that addresses the following:

• Discloses the judgments, and any changes in judgments, used in determining the allocation of transaction price to the performance obligations under ASC 606-10-50- 17b and 50-20c; and

• Discloses the method and an explanation of how that method provides a faithful depiction of the transfer of services for your over time performance obligations as required by ASC 606-10-50-18.b.

Company’s Response:

The Company proposes to enhance its disclosure in Note 12, Revenue from Contracts with Customers, in future periodic filings as follows, beginning with its Quarterly Report on Form 10-Q for the period ended September 30, 2018:

PWSC’s homebuilder warranty service fees include fees collected from the sale of warranties issued by new homebuilders.  PWSC receives a single warranty service fee as its transaction price at the time it enters into a written contract with each of its builder customers.  Each contract contains two separate performance obligations - warranty administrative services and other warranty services.  Warranty administrative services include enrolling each home sold by the builder into the program and the warranty administrative system and delivering the warranty product.  Other warranty services include answering builder or homeowner questions regarding the home warranty and dispute resolution services.

3

Standalone selling prices are not directly observable in the contract for each of the separate performance obligations.  As a result, PWSC used the estimated cost plus margin approach to estimate the standalone selling price for each of its performance obligations in order to allocate the transaction price to the two separate performance obligations identified.

For the warranty administrative services performance obligation, PWSC makes judgments about which of its actual costs are associated with enrolling each home sold by the builder into the program and the warranty administrative system and delivering the warranty product.  For the other warranty services performance obligation, PWSC makes judgments about which of its actual costs are associated with activities, such as answering builder or homeowner questions regarding the home warranty and dispute resolution services, which are performed over the life of the warranty coverage period.  The relative percentage of costs associated with the warranty administrative services performance obligation is applied to the transaction price to determine the estimated standalone selling price of the warranty administrative services performance obligation, which PWSC recognizes as earned at the time the home is enrolled and the warranty product is delivered.  The relative percentage of costs associated with the other warranty services performance obligation is applied to the transaction price to determine the estimated standalone selling price of the other warranty services performance obligation, which PWSC recognizes as earned as services are performed over the warranty coverage period.

For the other warranty services performance obligation, PWSC applies an input method of measurement, based on the estimated cost plus margin of providing services, to determine the transfer of its services over the warranty coverage period.  PWSC uses historical data regarding the number of calls it receives and activities performed, in addition to the number of homes enrolled, to estimate the number of complaints and dispute resolution requests to be received by year until coverage expires, which allows PWSC to develop a revenue recognition pattern that it believes provides a faithful depiction of the transfer of services over time for the other warranty services performance obligation.

PWSC’s homebuilder warranty commissions include commissions from the sale of warranty contracts for those builders who have requested and receive insurance backing of their warranty obligations.  PWSC acts as an agent on behalf of the third-party insurance company that underwrites and guaranties these warranty contracts.  Homebuilder warranty commissions are earned on the certification date, which is typically the date of the closing of the sale of the home to the buyer.  The Company also earns fees to manage remediation or repair services related to claims on insurance-backed warranty obligations, which are earned when the claims are closed, and a profit-sharing bonus on eligible warranties, which is determined based on expected ultimate loss ratio targets and is earned at the time the profit-sharing bonus is received.

Please contact me at 847-871-6416 if you have any additional questions or need further clarification.

Sincerely,

/s/ William A. Hickey, Jr.

William A. Hickey, Jr.

Executive Vice President and Chief Financial Officer

4

September 5, 2018
William A. Hickey, Jr.
Executive Vice President and Chief Financial Officer
Kingsway Financial Services Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario M4V 1K9
Canada
Re:Kingsway Financial Services Inc.
Form 10-K for the Fiscal Year Ended December 31, 2017
Filed March 16, 2018
Form 10-Q for the Quarterly Period Ended June 30, 2018
Filed August 8, 2018
File No. 001-15204
Dear Mr. Hickey:
            We have reviewed your August 13, 2018 response to our comment letter and have the
following comments.  In some of our comments, we ask you to provide us with information so
we may better understand your disclosure.
            Please respond to these comments within 10 business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
            After reviewing your response to these comments, we may have additional
comments.  Unless we note otherwise, our references to prior comments are to comments in our
August 8, 2018 letter.
Form 10-Q for the Quarterly Period Ended June 30, 2018
Notes to Consolidated Financial Statements (Unaudited)
Note 5: Acquisitions and Discontinued Operations
(b) Discontinued Operations, page 9
1.Please tell us how your disposal of the Itasca Real Estate Investors, LLC business
represents a strategic shift that has (or will have) a major effect on your operations or
results of operations in order to be classified as discontinued operations under ASC 205-

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 September 5, 2018 Page 2
 FirstName LastName
William A. Hickey, Jr.
Kingsway Financial Services Inc.
September 5, 2018
Page 2
20-45-1B.
Note 12: Revenue from Contracts with Customers, page 21
2.It is apparent from your response to prior comment 2 that you utilize the residual approach
to allocate transaction price to the "warranty administrative services" by deducting the
selling price of the "other warranty services" derived under the expected cost plus a
margin approach from the overall transaction price.  Please tell us why it is appropriate to
use the residual approach when ASC 606-10-32-34c indicates that this method subtracts
the sum of observable standalone selling prices or other goods or services promised in a
contract from the total selling price and it does not appear that the selling price of your
"other warranty services" derived under the expected cost plus a margin approach is
observable.
3.Also regarding your response to prior comment 2, please provide us proposed revised
disclosure to be included in future periodic reports that addresses the following:
•Discloses the judgments, and any changes in judgments, used in determining the
allocation of transaction price to the performance obligations under  ASC 606-10-50-
17b and 50-20c; and
•Discloses the method and an explanation of how that method provides a faithful
depiction of the transfer of services for your over time performance obligations as
required by ASC 606-10-50-18.b.
            You may contact Mark Brunhofer at (202) 551-3638 or Jim Rosenberg at (202) 551-
3679 with any questions.
Sincerely,
Division of Corporation Finance
Office of Healthcare & Insurance

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KINGSWAY FINANCIAL SERVICES INC.

   45 Saint Clair Avenue West, Suite 400, Toronto, Ontario M4V1K9  (416) 848-1171  Fax: (416) 850-5439

August 13, 2018

Mr. Mark Brunhofer

Mr. Jim Rosenberg

Division of Corporation Finance

Office of Healthcare & Insurance

Securities and Exchange Commission

Washington, D.C. 20549

Re:    Kingsway Financial Services Inc.

Form 10-K for Fiscal Year Ended December 31, 2017

Filed March 16, 2018

Form 10-Q for the Quarterly Period Ended March 31, 2018

Filed May 14, 2018

File No. 001-15204

Dear Mr. Brunhofer and Mr. Rosenberg:

Kingsway Financial Services Inc. (the “Company”) has received and reviewed your letter dated August 8, 2018, regarding the Commission’s review of the above mentioned filings and has submitted its response below.

Form 10-Q for the Quarterly Period Ended March 31, 2018

Notes to Consolidated Financial Statements

Note 12: Revenue from Contracts with Customers, page 19

Comment:

1. We acknowledge your response to prior comment 3 and your May 23, 2018 response to comment 6 from our April 25, 2018 letter. Regarding your accounting for revenue under your IWS vehicle service agreements please address the following, referencing the authoritative literature you relied upon to support your accounting under ASC 606:

•

 Tell us how you determined that the sale of vehicle services agreements resulting in the administrative fees upon sale are separate and distinct from the performance obligation to administer future claims.

•

 Tell us how you allocate transaction price between the administrative fees from the sale of these agreements and the fees to administer future claims.

Company’s Response:

In response to your first comment, ASC 606-10-25-14 states that at contract inception, an entity shall assess the goods or services promised in a contract with a customer and shall identify as a performance obligation each promise to transfer to the customer either:

a.

 A good or service (or bundle of goods or services) that is distinct

b.

 A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer

And, as stated in ASC 606-10-25-19, a good or service that is promised to a customer is distinct if both of the following criteria are met:

a.

 The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (that is, the good or service is capable of being distinct)

b.

 The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct within the context of the contract)

The sale of a vehicle service agreement contract represents a single performance obligation on behalf of the Company to the customer that is identified in the contract.  That single performance obligation is an obligation during the life of the contract to have designated vehicle parts replaced or repaired in the event of a mechanical breakdown.  There are no separately identifiable promises or obligations in the absence of a mechanical breakdown.  And, if a claim is made under the vehicle service agreement contract

for a mechanical breakdown, the Company is obligated to administer the claim and pay for the cost of the claim.  Administration of a claim cannot occur without the submission by the customer of a mechanical breakdown claim in the first place along with the associated obligation to cover the cost of the mechanical breakdown.  The price of a vehicle service agreement contract covers both the cost of a claim for mechanical breakdown and the related administrative cost incurred by the Company to manage the claim; however, there is no separate and distinct performance obligation associated with the administration of the claim.

In the Company’s May 23, 2018 response to comment 6, we stated that IWS' vehicle service agreement fees include the administrative fees from the sale of vehicle service agreements as well as the fees to administer future claims.  Similar language to what was included in our May 23, 2018 response was also included in Note 12, Revenue from Contracts with Customers, on page 21 of our Form 10-Q for the period ended March 31, 2018.  We did not intend to imply with this language that our vehicle service agreement contracts have two separate performance obligations.  The Company believes that its description of IWS’ service fee and commission income in Note 12, Revenue from Contracts with Customers, can be improved and proposes to revise its disclosure in future periodic reports, beginning with the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2018, as follows:

IWS' vehicle service agreement contract fees include the fees collected to cover the costs of future automobile mechanical breakdown claims and the associated administration of those claims.  Vehicle service agreement contract fees are earned over the duration of the vehicle service agreement contracts as the single performance obligation is satisfied.

In response to your second comment, because the sale of a vehicle service agreement contract represents a single performance obligation, the transaction price is not allocated between more than one separate and distinct performance obligation.

Comment:

2. We acknowledge your response to prior comment 5. Regarding your response to the second bullet of that comment, your disclosure indicates that, separate from the commission, there appear to be two components of the PWSC's contracts that you treat as separate performance obligations under ASC 606; a Homebuilder warranty administrative fee and a Homebuilder warranty service fee. Please address the following, referencing the authoritative literature you relied upon to support your accounting under ASC 606:

•

  Tell us how you determined that the administrative fee is separate and distinct from the service fee.

•

  Tell us how you allocate transaction price between the administrative fee from the sale of these agreements and the fees to administer future claims.

Company’s Response:

In response to your first comment, ASC 606-10-25-14 states that at contract inception, an entity shall assess the goods or services promised in a contract with a customer and shall identify as a performance obligation each promise to transfer to the customer either:

a.    A good or service (or bundle of goods or services) that is distinct

b.    A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer

And, as stated in ASC 606-10-25-19, a good or service that is promised to a customer is distinct if both of the following criteria are met:

a.    The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (that is, the good or service is capable of being distinct)

b.    The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct within the context of the contract)

PWSC enters into a written contract with each of its builder customers describing the warranty administrative services and other warranty services to be provided by PWSC in support of the builder’s home warranty obligations to the ultimate home buyer.

As part of the Company’s warranty administrative services, the Company agrees to enroll each home sold by the builder into the program and its warranty administrative system.  When a home is enrolled in the program, the Company provides a warranty document and a validation form that includes the homeowner information and home location, the warranty coverage period and any specific terms based on the warranty, or any jurisdictional or builder requirements or limitations.  PWSC’s warranty administrative services are provided for every homeowner. The warranty administrative services are separately identifiable from other promises within the contract and, therefore, are considered a separate and distinct performance obligation.  Part of the transaction price received for entering a written contract with each of its builder customers is reported by the Company as homebuilder warranty administrative fees in recognition of these separate and distinct warranty administrative services.

In addition, under the contract with the builder customer, the Company is available to provide other warranty services throughout the warranty coverage period which generally are 10 years but can be shorter or longer based on the jurisdictional requirements of the state in which the home is sold and the builder.  These other warranty services include answering builder or homeowner questions regarding the home warranty and dispute resolution services.  The contracts state that the Company does not act as an insurer, insurance agent or broker.  Dispute resolution services include informal mediation with a homeowner or builder regarding

warranty coverage issues or the arranging and managing of the formal arbitration process.  Informal mediation services can be requested at any time throughout the warranty coverage period by either the builder or the homeowner.  The builder, not the Company, is the warrantor and under no circumstances does the Company have any obligation other than issuance of the warranty document on the builder’s behalf, coordination of builder or homeowner requested dispute resolution and responding in writing or by phone to homeowner or builder inquiries regarding the warranty.  These other warranty services are separate and distinct from the warranty administrative services described in the previous paragraph.  Unlike the warranty administrative services described above, these other warranty services are not performed for all homes enrolled, and they are performed by a separate and different department within the Company that is trained to take calls and answer questions from customers regarding their warranty and to perform dispute resolution services.  These other warranty services are separately identifiable from other promises within the contract and, therefore, are considered a separate and distinct performance obligation.  As a result, a separate part of the transaction price received for entering a written contract with each of its builder customers is reported by the Company as homebuilder warranty service fees in recognition of these separate and distinct other warranty services.

In response to your second comment, per ASC 606-10-32-28, the objective when allocating the transaction price is for an entity to allocate the transaction price to each performance obligation (or distinct good or service) in an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to the customer.  The transaction price should be allocated to each performance obligation identified in the contract based on the relative standalone selling prices of the goods or services being provided to the customer plus profit based on the historical profits margins earned.  Standalone selling price is the price an entity charges for a good or service when the entity sells it separately in similar circumstances to similar customers.

The Company receives a single warranty service fee as its transaction price at the time it enters into a written contract with each of its builder customers.  The transaction price is then allocated to the two separate performance obligations identified, specifically the warranty administrative services and the other warranty services described in the paragraphs above, based on an estimated cost-plus margin approach.

First, the Company determines how much of the transaction price should be allocated to the other warranty services pursuant to the following methodology.  Based on over 20 years of data regarding the number of calls the Company receives and activities performed related to complaints from homeowners or requests from homeowners and builders for dispute resolution services, the Company has estimated the costs related to these services.  The Company uses historical data on complaints and dispute resolution requests in addition to the number of homes enrolled to calculate the percentage of complaints and dispute resolution requests received per enrollment per year of warranty coverage.  This is then applied to all homes enrolled that are currently under warranty coverage to estimate the number of complaints and dispute resolution requests to be received by year until coverage expires.  The Company then calculates the average hourly cost of providing these ongoing services using actual payroll and other operating costs associated with those personnel performing these services, net of the additional average administrative fee the Company receives for the dispute resolution related services, along with an estimate of the actual time spent on handling a complaint or dispute resolution request.  A fully loaded cost is then calculated and applied to the estimates of complaints and dispute resolution requests over the remaining coverage period to estimate the total actual costs associated with the other warranty services performance obligation.  To this cost, an estimated margin is applied based on the average profit margin on the Company’s revenue over a four-year period.  This margin is applied to the estimated total cost to arrive at an estimated cost plus margin amount.  This cost plus margin amount is allocated to the other warranty services performance obligation and recorded as the homebuilder warranty service fee.  The remainder of the transaction price, after allocating the portion to the other warranty services obligation, is allocated to the warranty administrative services performance obligation and recorded as the homebuilder warranty administrative fee.

Please contact me at 847-871-6416 if you have any additional questions or need further clarification.

Sincerely,

/s/ William A. Hickey, Jr.

William A. Hickey, Jr.

Executive Vice President and Chief Financial Officer

August 8, 2018
William A. Hickey, Jr.
Executive Vice President and Chief Financial Officer
Kingsway Financial Services Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario M4V 1K9
Canada
Re:Kingsway Financial Services Inc.
Form 10-K for the Fiscal Year Ended December 31, 2017
Filed March 16, 2018
Form 10-Q for the Quarterly Period Ended March 31, 2018
Filed May 14, 2018
File No. 001-15204
Dear Mr. Hickey:
            We have reviewed your July 12, 2018 response to our comment letter and have the
following comments.  In our comments, we ask you to provide us with information so we may
better understand your disclosure.
            Please respond to these comments within 10 business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
            After reviewing your response to these comments, we may have additional
comments.  Unless we note otherwise, our references to prior comments are to comments in our
June 27, 2018 letter.
Form 10-Q for the Quarterly Period Ended March 31, 2018
Notes to Consolidated Financial Statements
Note 12: Revenue From Contracts with Customers, page 19
1.We acknowledge your response to prior comment 3 and your May 23, 2018 response to
comment 6 from our April 25, 2018 letter.  Regarding your accounting for revenue under
your IWS vehicle service agreements please address the following, referencing the
authoritative literature you relied upon to support your accounting under ASC 606:

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 August 8, 2018 Page 2
 FirstName LastName
William A. Hickey, Jr.
Kingsway Financial Services Inc.
August 8, 2018
Page 2
•Tell us how you determined that the sale of vehicle services agreements resulting in
the administrative fees upon sale are separate and distinct from the performance
obligation to administer future claims.
•Tell us how you allocate transaction price between the administrative fees from the
sale of these agreements and the fees to administer future claims.
2.We acknowledge your response to prior comment 5.  Regarding your response to the
second bullet of that comment, your disclosure indicates that, separate from the
commission, there appear to be two components of the PWSC's contracts that you treat as
separate performance obligations under ASC 606; a Homebuilder warranty administrative
fee and a Homebuilder warranty service fee. Please address the following, referencing the
authoritative literature you relied upon to support your accounting under ASC 606:
•Tell us how you determined that the administrative fee is separate and distinct from
the service fee.
•Tell us how you allocate transaction price between the administrative fee from the sale
of these agreements and the fees to administer future claims.
            You may contact Mark Brunhofer at (202) 551-3638 or Jim Rosenberg at (202) 551-
3679 if you have any questions.
Sincerely,
Division of Corporation Finance
Office of Healthcare & Insurance

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KINGSWAY FINANCIAL SERVICES INC.

45 Saint Clair Avenue West, Suite 400, Toronto, Ontario M4V1K9  (416) 848-1171  Fax: (416) 850-5439

July 12, 2018

Mr. Mark Brunhofer

Mr. Jim Rosenberg

Division of Corporation Finance

Office of Healthcare & Insurance

Securities and Exchange Commission

Washington, D.C. 20549

Re:    Kingsway Financial Services Inc.

Form 10-K for Fiscal Year Ended December 31, 2017

Filed March 16, 2018

Form 8-K Dated February 20, 2018

Filed February 20, 2018

File No. 001-15204

Dear Mr. Brunhofer and Mr. Rosenberg:

Kingsway Financial Services Inc. (the “Company”) has received and reviewed your letter dated June 27, 2018, regarding the Commission’s review of the above mentioned filings and has submitted its response below.

Form 10-K for the Fiscal Year Ended December 31, 2017

Notes to Consolidated Financial Statements

Note 13: Unpaid Loss and Loss Adjustment Expenses

(a) Property & Casualty, page 85

Comment:

1. Please refer to your response to our prior comment 4. The disruption within the claims staff and the closing of claims that occurred in 2016 appears to have resulted in the misuse of facts that existed at the time the December 31, 2016 financial statements were prepared, which resulted in property and casualty loss and loss adjustment expenses not being properly recorded in the year ended December 31, 2016. As such, please tell us why restatement of the your financial statements in accordance with ASC 250-10-45 is not necessary.

Company’s Response:

As described in our response of May 23, 2018, the loss of senior claim leadership and core adjusters caused a significant disruption for accident year 2016 losses; however, a new senior claim team with extensive non-standard automobile experience was hired in October 2016, after which approximately 40% of the claim staff were replaced with experienced non-standard automobile managers and claim adjusters.  We do not believe this represents a misuse of facts at the time the December 31, 2016 financial statements were prepared because the Company believes that specific facts upon which the Company estimated its provision for loss and loss adjustment expenses in its financial statements as of and at December 31, 2017 were not specifically knowable at the time the Company prepared its financial statements as of and at December 31, 2016.  The new facts developed over time as claims were adjudicated throughout 2017 by the new claim management team and staff.  Furthermore, the Company engages an external reserving actuary each year, including for the years ended December 31, 2016 and December 31, 2017, and records its provision for loss and loss adjustment expenses each period consistent with the findings of its external reserving actuary.  While

the Company acknowledges that it is ultimately responsible for what is reported in its financial statements, the changes to its provision for loss and loss adjustment expenses reported in its consolidated statement of operations for the year ended December 31, 2017 reflected the changes to estimates in the reports delivered by its external reserving actuary.

ASC 250-10-20 defines a change in accounting estimate as:

“A change that has the effect of adjusting the carrying amount of an existing asset or liability or altering the subsequent accounting for existing or future assets or liabilities. A change in accounting estimate is a necessary consequence of the assessment, in conjunction with the periodic presentation of financial statements, of the present status and expected future benefits and obligations associated with assets and liabilities. Changes in accounting estimates result from new information.”

The Company has always identified the provision for unpaid loss and loss adjustment expenses as one of its critical accounting estimates in CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS in its Management’s Discussion and Analysis.  The Company believes that the changes to its provision for unpaid loss and loss adjustment expenses resulting from new facts developed over time as claims were adjudicated throughout 2017 by the new claim management team and staff are consistent with the definition of a change in accounting estimate.  In accordance with ASC 250-10-45-17, a change in accounting estimate shall not be accounted for by restating or retrospectively adjusting amounts reported in financial statements of prior periods or by reporting pro forma amounts for prior periods.

Comment:

2. Please refer to your response to our prior comment 5. Represent to us that in your future filings, assuming disclosures pursuant to ASC 944-40-50 are applicable to you, you will include separate incurred and paid loss development tables for liability coverage versus for physical damage coverage related to non-standard automobile insurance as depicted in your response. In this regard, liability coverage appears to have significantly different characteristics than damage coverage. Refer to ASC 944-40-50-4H.

Company’s Response:

The Company represents that in future periodic filings beginning with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, the Company will include separate incurred and paid loss development tables for liability coverage versus for physical damage coverage related to non-standard automobile insurance, assuming the disclosures pursuant to ASC 944-40-50 continue to be applicable to us.

(b) Vehicle Service Agreements, page 88

Comment:

3. We acknowledge your response to prior comment 6 and have the following additional comments:

•

 Please clarify for us whether you intend to continue to characterize the table you present on page 88 and the liability account on your balance sheet as a liability for vehicle service agreement unpaid loss and loss adjustment expenses (L&LAE) when you indicate in your response that only an insignificant component relates to unpaid L&LAE. If so, please explain why.

•

 As it appears from your response that third-party insurers bear the insurance risk for your vehicle service agreement, clarify for us whether you are an agent on their behalf.  If so:

◦

 Tell us how the claims paid on the insurers behalf are presented in your statements of operations;

◦

 Explain whether you are the principal or agent for the claims payments;

◦

 Explain whether the $2,779,000 liability recorded at December 31, 2018 is essentially incremental deferred service fees; and

◦

 Provide us proposed disclosure for your Business section that clearly indicates that third-party insurers bear the risk of loss.

•

 Explain to us why the tables you provide on the 13th page of your response that present a deferred service fee liability of $40,029,000 million at December 31, 2017 is greater than the $39,741,000 amount presented on your balance sheet.

Company’s Response:

In response to your first comment, the Company does not intend to continue to characterize the table presented on page 88 and the liability account on our balance sheet as a liability for vehicle service agreement unpaid loss and loss adjustment expenses.  Since the provision for unpaid loss and loss adjustment expenses related to vehicle service agreements is immaterial, the Company intends to report this liability on the “accrued expenses and other liabilities” line of our consolidated balance sheets in future periodic filings no later than the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2018.  Had we followed this approach at December 31, 2017, a provision for unpaid loss and loss adjustment expenses related to vehicle service agreements of $263,000 would have been reported on the accrued expenses and other liabilities line of the consolidated balance sheet.

In response to your second comment, third-party insurers do not bear the insurance risk for our vehicle service agreements.  The Company is not an agent for third-party insurers on our vehicle service agreements.  The Company has responsibility for the insurance risk and meeting contractual obligations to reimburse our vehicle service agreement contract holders for covered automobile mechanical breakdown claims.  To meet statutory and regulatory requirements, the Company has a commercial liability insurance policy with a third-party insurer, which is required to perform only in the event the Company is not able to perform its contractual obligations to its contract holders.

In response to your third comment, the deferred service fee liability of $39,741,000 presented on our December 31, 2017 consolidated balance sheet represented the liability for the entire Extended Warranty segment.  Of this amount, $37,513,000 represented the deferred service fee liability for vehicle service agreements and $2,228,000 represented the deferred service fee liability for the remainder of the Extended Warranty segment.  The December 31, 2017 consolidated balance sheet also included unpaid loss and loss adjustment expenses related to vehicle service agreements of $2,779,000.  The sum of $37,513,000 and $2,779,000, or $40,292,000, which is the amount shown in the table in our response to prior comment 6, represents the total liability on our consolidated balance sheet at December 31, 2017 related to vehicle service agreements.  It is the proposed re-characterization of the $2,779,000 that explains the observation raised by you in your third comment.  Under our new approach, the Company proposes that of this total liability related to vehicle service agreements, $40,029,000 would have been presented as deferred services fees for vehicle service agreements and $263,000, representing the amount of the provision for unpaid loss and loss adjustment expenses for vehicle service agreements not re-characterized to deferred service fees, would have been presented as a component of accrued expenses and other liabilities in our consolidated balance sheet at December 31, 2017.  Using this approach, we would then have also presented $2,228,000 as other deferred service fees in our consolidated sheet at December 31, 2017.

Form 8-K Dated February 20, 2018

Exhibits

Comment:

4. We acknowledge your response to prior comment 10. Please represent to us that you will revise future earnings releases furnished on Forms 8-K to reflect the following:

•

 To present the order of the reconciliations from the most comparable GAAP amount to the non-GAAP amount consistent with the presentation in your response;

•

 To remove the double negative in your non-GAAP adjustments presented in the reconciliations in your response (i.e., additions to the GAAP amount should not be presented in brackets); and

•

 Remove the non-GAAP reconciling item that adds back your corporate expenses from your "adjusted operating loss" as they are normal, recurring, cash operating expense necessary to operate your business as stipulated in CDI 100.01 on Non-GAAP Financial Measures.

Company’s Response:

The Company represents that in future earnings releases furnished on Form 8-K beginning with the Company’s earnings release for the second quarter ended June 30, 2018, the Company will:

•

 Present the order of the reconciliations from the most comparable GAAP amount to the non-GAAP amount consistent with the presentation in our response from May 23, 2018;

•

 Remove the double negative in our non-GAAP adjustments presented in the reconciliations in our response from May 23, 2018; and

•

 Remove the non-GAAP reconciling item that adds back our corporate expenses from our "adjusted operating loss" as they are normal, recurring, cash operating expense necessary to operate our business.

Form 10-Q for the Quarterly Period Ended March 31, 2018

Notes to Consolidated Financial Statements

Note 12: Revenue From Contracts With Customers, page 19

Comment:

5. Please refer to your response to prior comment 2 and address the following:

•

 Although you represent in your response that Trinity acts as an agent on behalf of third-party insurance companies that underwrite and guaranty the relevant warranty contracts, it appears from your disclosure in the third paragraph of the Extended Warranty Products section on page 8 of your 2017 Form 10-K that the warranty contract is an agreement between Trinity and the purchaser of the relevant equipment. Please provide us proposed revised disclosure to be included in future filings that removes the implication that Trinity underwrites the warranty products.

•

 For warranty products where you earn both sales commissions and ongoing service fees, please tell us how you allocate the relevant transaction price to the underlying performance obligations under ASC Topic 606 and reference for us the authoritative literature you relied upon to support your accounting.

Company’s Response:

In response to your first comment, in future periodic filings beginning with the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2018, the Company proposes the following enhanced disclosure to what it presented in the third paragraph of the Extended Warranty Products section on page 8 of its 2017 Form 10-K in order to clarify that Trinity acts as an agent on behalf of third-party insurance companies that underwrite and guaranty the relevant warranty contracts:

Trinity sells HVAC, standby generator, commercial LED lighting and refrigeration warranty products and provides equipment breakdown and maintenance support services to companies across the United States. As a seller of warranty products, Trinity markets and administers product warranty contracts for certain new and used products in the HVAC, standby generator, commercial LED lighting and refrigeration industries throughout the United States.  Trinity acts as an agent on behalf of the third-party insurance companies that underwrite and guaranty these warranty contracts.  Trinity does not guaranty the performance underlying the warranty contracts it sells.  As a provider of equipment breakdown and maintenance support services, Trinity acts as a single point of contact to its clients for both certain equipment breakdowns and scheduled maintenance of equipment. Trinity will provide such repair and breakdown services by contracting with certain HVAC providers.

In response to your second comment, the Company notes that in its response to prior comment 2, it stated that (i) Trinity retains a commission from each warranty contract it sells.  At the time a warranty contract is sold, Trinity’s obligation with respect to earning the warranty contract commission is complete.  Trinity has no service obligation that continues beyond the completion of the sale of the warranty contract; and (ii) PWSC retains a commission from each home warranty contract it sells.  At the time a home warranty contract is sold, PWSC’s obligation with respect to earning the warranty contract commission is complete.  Any other service component that PWSC may have to either the home builder or the third-party insurance company is covered under separate contracts from the one governing the earning of agent commissions from the sale of home warranty contracts issued by a third-party insurance company.  As a result, the Company does not sell any warranty products on which it earns both sales commissions and ongoing service fees.

Note 21: Subsequent Event, page 29

Comment:

6. Regarding the letter of intent to sell your Insurance Underwriting Segment in which you expect to incur a loss of approximately $8.5 million upon its sale expected to close in the third quarter of 2018, please provide us your computation of the $8.5 million loss and tell us why it is not indicative of any asset impairments and/or any unfavorable loss reserve development associated with the Insurance Underwriting Segment before the third quarter 2018.

Company’s Response:

The estimated loss of $8.5 million disclosed in the subsequent event footnote of our Form 10-Q for the period ende

June 27, 2018
William A. Hickey, Jr.
Executive Vice President and Chief Financial Officer
Kingsway Financial Services Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario M4V 1K9
Canada
Re:Kingsway Financial Services Inc.
Form 10-K for the Fiscal Year Ended December 31, 2017
Filed March 16, 2018
Form 8-K Dated February 20, 2018
Filed February 20, 2018
Form 10-Q for the Quarterly Period Ended March 31, 2018
Filed May 14, 2018
File No. 001-15204
Dear Mr. Hickey:
            We have reviewed your response dated May 23, 2018 to our comment letter and have the
following comments.  In some of our comments, we may ask you to provide us with information
so we may better understand your disclosure.
            Please respond to these comments within 10 business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
            After reviewing your response to these comments, we may have additional
comments.  Unless we note otherwise, our references to prior comments are to comments in our
April 25, 2018 letter.
Form 10-K for the Fiscal Year Ended December 31, 2017
Notes to Consolidated Financial Statements
Note 13: Unpaid Loss and Loss Adjustment Expenses
(a) Property & Casualty, page 85
1.Please refer to your response to our prior comment 4. The disruption within the claims

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 June 27, 2018 Page 2
 FirstName LastNameWilliam A. Hickey, Jr.
Kingsway Financial Services Inc.
June 27, 2018
Page 2
staff and the closing of claims that occurred in 2016 appears to have resulted in the misuse
of facts that existed at the time the December 31, 2016 financial statements were prepared,
which resulted in property and casualty loss and loss adjustment expenses not being
properly recorded in the year ended December 31, 2016. As such, please tell us why
restatement of the your financial statements in accordance with ASC 250-10-45 is not
necessary.
2.Please refer to your response to our prior comment 5. Represent to us that in your future
filings, assuming disclosures pursuant to ASC 944-40-50 are applicable to you, you will
include separate incurred and paid loss development tables for liability coverage versus
for physical damage coverage related to non-standard automobile insurance as depicted in
your response. In this regard, liability coverage appears to have significantly different
characteristics than damage coverage. Refer to ASC 944-40-50-4H.
(b) Vehicle Service Agreements, page 88
3.We acknowledge your response to prior comment 6 and have the following additional
comments:
•Please clarify for us whether you intend to continue to characterize the table you
present on page 88 and the liability account on your balance sheet as a liability for
vehicle service agreement unpaid loss and loss adjustment expenses (L&LAE) when
you indicate in your response that only an insignificant component relates to unpaid
L&LAE.  If so, please explain why.
•As it appears from your response that third-party insurers bear the insurance risk for
your vehicle service agreement, clarify for us whether you are an agent on their behalf.
If so:
oTell us how the claims paid on the insurers behalf are presented in your statements
of operations;
oExplain whether you are the principal or agent for the claims payments;
oExplain whether the $2,779,000 liability recorded at December 31, 2018 is
essentially incremental deferred service fees; and
oProvide us proposed disclosure for your Business section that clearly indicates that
third-party insurers bear the risk of loss.
•Explain to us why the tables you provide on the 13th page of your response that
present a deferred service fee liability of $40,029,000 million at December 31, 2017 is
greater than the $39,741,000 amount presented on your balance sheet.
Form 8-K Dated February 20, 2018
Exhibits
4.We acknowledge your response to prior comment 10.  Please represent to us that you will
revise future earnings releases furnished on Forms 8-K to reflect the following:
•To present the order of the reconciliations from the most comparable GAAP amount to

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 June 27, 2018 Page 3
 FirstName LastName
William A. Hickey, Jr.
Kingsway Financial Services Inc.
June 27, 2018
Page 3
the non-GAAP amount consistent with the presentation in your response;
•To remove the double negative in your non-GAAP adjustments presented in the
reconciliations in your response (i.e., additions to the GAAP amount should not be
presented in brackets); and
•Remove the non-GAAP reconciling item that adds back your corporate expenses from
your "adjusted operating loss" as they are normal, recurring, cash operating expense
necessary to operate your business as stipulated in CDI 100.01 on Non-GAAP
Financial Measures.
Form 10-Q for the Quarterly Period Ended March 31, 2018
Notes to Consolidated Financial Statements
Note 12: Revenue From Contracts With Customers, page 19
5.Please refer to your response to prior comment 2 and address the following:
•Although you represent in your response that Trinity acts as an agent on behalf of
third-party insurance companies that underwrite and guaranty the relevant warranty
contracts, it appears from your disclosure in the third paragraph of the Extended
Warranty Products section on page 8 of your 2017 Form 10-K that the warranty
contract is an agreement between Trinity and the purchaser of the relevant equipment.
Please provide us proposed revised disclosure to be included in future filings that
removes the implication that Trinity underwrites the warranty products.
•For warranty products where you earn both sales commissions and ongoing service
fees, please tell us how you allocate the relevant transaction price to the underlying
performance obligations under ASC Topic 606 and reference for us the authoritative
literature you relied upon to support your accounting.
Note 21: Subsequent Event, page 29
6.Regarding the letter of intent to sell your Insurance Underwriting Segment  in which you
expect to incur a loss of approximately $8.5 million upon its sale expected to close in the
third quarter of 2018, please provide us your computation of the $8.5 million loss and tell
us why it is not indicative of any asset impairments and/or any unfavorable loss reserve
development associated with the Insurance Underwriting Segment before the third quarter
2018.
             You may contact Mark Brunhofer at (202) 551-3638 or Jim Rosenberg at (202) 551-
3679 with any questions.
Division of Corporation Finance
Office of Healthcare & Insurance

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KINGSWAY FINANCIAL SERVICES INC.

45 Saint Clair Avenue West, Suite 400, Toronto, Ontario M4V1K9  (416) 848-1171  Fax: (416) 850-5439

May 23, 2018

Mr. Mark Brunhofer

Mr. Jim Rosenberg

Division of Corporation Finance

Office of Healthcare & Insurance

Securities and Exchange Commission

Washington, D.C. 20549

Re:    Kingsway Financial Services Inc.

Form 10-K for Fiscal Year Ended December 31, 2017

Filed March 16, 2018

Form 8-K Dated February 20, 2018

Filed February 20, 2018

File No. 001-15204

Dear Mr. Brunhofer and Mr. Rosenberg:

Kingsway Financial Services Inc. (the “Company”) has received and reviewed your letter dated April 25, 2018, regarding the Commission’s review of the above mentioned filings and submits its response below.  The Company also attaches to this response a copy of its press release dated May 10, 2018, announcing the execution of a letter of intent to sell the Company’s non-standard automobile business, which is the subject of the Commission’s comments #1, 4, 5 and, indirectly, 8, given that almost 80% of the Company’s fixed maturities are owned by the Company subsidiaries that are intended to be sold.  As stated in the press release, the Company expects the sale of its non-standard automobile business to close during the third quarter of 2018.

Form 10-K for the Fiscal Year Ended December 31, 2017

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Estimates and Assumptions

Provision for Unpaid Loss and Loss Adjustment Expenses, page 33

Comment:

1.

 We acknowledge your statement that a significant degree of judgment is required to determine your provision for unpaid loss and loss adjustment expenses. We believe your disclosures regarding your estimation process could be improved to better explain the judgments and uncertainties surrounding this estimate and the potential impact on your financial statements. We believe in order to meet the principal objectives of Management's Discussion and Analysis (MD&A) this disclosure should enable the investor to understand:

•

 management’s method for establishing the estimate;

•

 whether and, if so, to what extent and why you have adjusted your assumptions used to determine the estimate from the assumptions used in the immediately preceding period; and

•

 the potential variability in the most recent estimate and the impact this variability may have on reported results, financial condition and liquidity.

Please keep these points in mind in providing us your responses to the bullets listed below. Please provide us proposed revised disclosure to be included in future periodic reports that:

•

 Describes the methods you used to determine your reserve for loss and loss adjustment expense. Ensure that this description:

◦

 Identifies the unique development characteristics of each material line of business or coverage.

◦

 Explains how and when you use different methods. For example we understand that differing methods may be used to estimate initial losses and to estimate losses for mature accident years.

◦

 Describes the method you use to calculate the incurred but not reported (IBNR) reserve for each material line of business. For example, we understand that some companies may calculate this reserve by estimating the ultimate unpaid liability first and then reducing that amount by cumulative paid claims and by case reserves, but there may be other methods as well.

◦

 Describes the extent of your procedures for determining the reserve for loss and loss adjustment expense on both an annual and interim reporting basis.

•

 Identifies and describes those key assumptions that materially affect the estimate of the reserve for loss and loss adjustment expenses. In addition please disclose the following:

◦

 For each of your key assumptions quantify and explain what caused them to change from the assumptions used in the immediately preceding period.

◦

 Explicitly identify and discuss key assumptions as of December 31, 2017 that are premised on future emergence that are inconsistent with historical loss reserve development patterns and explain why these assumptions are now appropriate given the inconsistency identified.

•

 Shows investors the potential variability in the most recent estimate of your loss reserve, quantifies and presents preferably in a tabular format the impact that reasonably likely changes in the key assumptions identified may have on reported results, financial position and liquidity. Explain why you believe the scenarios quantified are reasonably likely. See Release No. 33-8350; particularly Section V.

Company’s Response:

The Company proposes revised disclosure below to be included in future periodic reports.  We would appreciate your thoughts regarding revised disclosure in the context of our May 10, 2018 press release, made public subsequent to the date of your letter, of our having executed a letter of intent to sell our non-standard automobile business.  As stated in the press release, the Company expects the sale of its non-standard automobile business to close during the third quarter of 2018.

The Company notes that it has previously split its Form 10-K disclosure related to Unpaid Loss and Loss Adjustment Expenses between Part I Item 1. Business and Item 7. MD&A.  As part of its proposed revised disclosure, the Company’s proposes to move much of the current disclosure from Item 1. to become part of an expanded disclosure in Item 7.  This not only will make it easier for the reader of the Annual Report to see all of the relevant disclosure related to Unpaid Loss and Loss Adjustment Expenses in one location, but some of this disclosure may be more appropriately presented as part of the Critical Accounting Estimates and Assumptions disclosure in Item 7. than the general business overview in Item 1.

The Company proposes the following revised disclosure as part of its Critical Accounting Estimates and Assumptions to be included in future periodic reports:

Overview

The Company records a provision for unpaid losses that have occurred as of a given evaluation date as well as for its estimated liability for loss adjustment expenses.  The provision for unpaid losses includes a provision, commonly referred to as case reserves, for losses related to reported claims as well as a provision for losses related to claims incurred but not reported (“IBNR”).  The provision for loss adjustment expenses represents the cost to investigate and settle claims.

The provision for unpaid loss and loss adjustment expenses does not represent an exact calculation of the liability but instead represents management's best estimate at a given accounting date, utilizing actuarial and statistical procedures, of the undiscounted estimates of the ultimate net cost of all unpaid loss and loss adjustment expenses.  Management continually reviews its estimates and adjusts its provision as new information becomes available.  In establishing the provision for unpaid loss and loss adjustment expenses, the Company also takes into account estimated recoveries, reinsurance, salvage and subrogation.

Any adjustments to the provision for unpaid loss and loss adjustment expenses are reflected in the consolidated statements of operations in the periods in which they become known, and the adjustments are accounted for as changes in estimates.  Even after such adjustments, ultimate liability or recovery may exceed or be less than the revised provisions.  An adjustment that increases the provision for unpaid loss and loss adjustment expenses is known as unfavorable development or a deficiency and will reduce net income while an adjustment that decreases the provision is known as favorable development or a redundancy and will increase net income.

Process for Establishing the Provision for Unpaid Loss and Loss Adjustment Expenses

The process for establishing the provision for unpaid loss and loss adjustment expenses reflects the uncertainties and significant judgmental factors inherent in predicting future results of both reported and IBNR claims.  As such, the process is inherently complex and imprecise and estimates are constantly refined.  The process of establishing the provision for unpaid loss and loss

adjustment expenses relies on the judgment and opinions of a large number of individuals, including the opinions of the Company's external reserving actuaries.

Factors affecting the provision for unpaid loss and loss adjustment expenses include the continually evolving and changing regulatory and legal environment, actuarial studies, professional experience and expertise of the Company's claims department personnel and independent adjusters retained to handle individual claims, the quality of the data used for projection purposes, existing claims management practices including claim-handling and settlement practices, the effect of inflationary trends on future loss settlement costs, court decisions, economic conditions and public attitudes.

The process for establishing the provision for loss and loss adjustment expenses begins with the collection and analysis of claim data.  Data on individual reported claims, both current and historical, including paid amounts and individual claim adjuster estimates, are grouped by common characteristics and evaluated by the Company’s external reserving actuaries in their analyses to estimate ultimate claim liabilities.  Such data is occasionally supplemented with external data as available and when appropriate.

Our Company’s external reserving actuaries use the following generally accepted actuarial loss and loss adjustment expenses reserving methods in our analysis, for each coverage or segment that we analyze:

•

 Paid Loss Development - we use historical loss and loss adjustment expense payments over discrete periods of time to estimate future loss and loss adjustment expense payments.  Paid development methods assume that the patterns of paid loss and loss adjustment expenses that occurred in past periods will be similar to loss and loss adjustment expense payment patterns that will occur in future periods.

•

 Incurred Loss Development - we use historical case incurred loss and loss adjustment expenses (the sum of cumulative loss and loss adjustment expense payments plus outstanding unpaid case losses) over discrete periods of time to estimate future loss and loss adjustment expenses.  Incurred development methods assume that the case loss and loss adjustment expenses reserving practices are consistently applied over time.

•

 Frequency and Severity - we use historical claim count development over discrete periods of time to estimate future claim counts.  We divide projected ultimate claim counts by an exposure base (earned premiums or exposures), select expected claim frequencies from the results, and adjust them for trends based on internal and external information.  Concurrently, we divide projected ultimate losses by the projected ultimate claim counts to select expected loss severities.  We use internal and external information to trend the severities and combine them with the trended, projected frequencies to develop ultimate loss projections.

The methods above all calculate an estimate of total ultimate losses.  Our provision for loss and loss adjustment expenses is calculated by subtracting total paid losses from our estimate of total ultimate losses.  Our estimate for IBNR is calculated by subtracting case reserves from our provision for loss and loss adjustment expenses.

Each estimation method has its own set of assumption variables and its own advantages and disadvantages, with no single estimation method being better than the others in all situations and no one set of assumptions being meaningful for all coverages or segments.  For example, Paid Loss Development does not make use of case reserves, and can be more stable when there are changes to the case reserving process.  Frequency and Severity, by estimating the frequency separately from severity, can assist in understanding the underlying dynamics when either frequency or severity is changing substantially.

The relative strengths and weaknesses of the particular estimation methods when applied to a particular group of claims can also change over time; therefore, the actual choice of estimation method can change with each evaluation.  The estimation methods chosen are those that are believed to produce the most reliable indication at a particular evaluation date.

We monitor the actual emergence of loss and loss adjustment expenses data and compare it to the expected emergence implied by our booked estimates.  Differences in these are part of our considerations for whether it is appropriate to modify our assumptions for developing the estimated provision for unpaid loss and loss adjustment expenses.

We review the adequacy of the provision for unpaid loss and loss adjustment expenses quarterly.  For our year-end analysis, we re-estimate the ultimate losses for each coverage and state, by accident year.  This involves performing a complete update of the historical development factors used in our analysis, incorporating the experience of the most recent calendar year.  On a quarterly basis, we perform a more limited review, which can entail, for example, a comparison of the expected losses to be paid during the quarter versus actual payments, or other similar comparisons to determine the extent to which a given segment is performing as expected.  In some cases, a re-estimation (similar to the year-end analysis) may be determined to be useful as part of a quarterly analysis, and we may make adjustments to ultimate losses in response to the results of this analysis.  We adjust carried

unpaid loss and loss adjustment expenses as we learn additional information, and reflect these adjustments in the accounting periods in which they are determined.

A basic premise in most actuarial analyses is that past patterns demonstrated in the data will repeat themselves in the future, absent a material change in the associated risk factors.  Significant structural changes to the available data, product mix or organization can materially impact the provision for loss and loss adjustment expenses.  Our 2016 actuarial analysis included certain assumptions regarding improved claim-handling practices that we expected to result from new claim-handling initiatives being implemented by the new claim management team hired in the fall of 2016.  These assumptions led us to anticipate a significant reduction in the required provision for loss and loss adjustment expenses at December 31, 2016.  These improvements did not materialize as quickly as originally anticipated, in large part due to the disruptions to claim staffing during this period.  As a result, the year-end 2017 actuarial analysis removed the explicit adjustments that were made in the 2016 actuarial analysis; otherwise, the 2017 analysis was substantially reliant on historical experience.  The anticipated improvements in claim-handling practices are now emerging and are expected to be recognized in future actuarial analyses once sufficient empirical evidence exists to validate the data.

Informed judgment is applied throughout the process.  This includes the application of various individual experiences and expertise to multiple sets of data and analyses.  In addition to actuaries, experts involved with the reserving process also include underwriting and claims personnel and lawyers, as well as other company management.  As a result, management may have to consider varying individual viewpoints when establishing the provision for unpaid loss and loss adjustment expenses.

Our estimate of the provision for unpaid loss and loss adjustment expenses is proposed each quarter by our external reserving actuaries and approved by an internal management team comprised of our chief executive offic

April 25, 2018
William A. Hickey, Jr.
Executive Vice President and Chief Financial Officer
Kingsway Financial Services Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario M4V 1K9
Canada
Re:Kingsway Financial Services Inc.
Form 10-K for the Fiscal Year Ended December 31, 2017
Filed March 16, 2018
Form 8-K Dated February 20, 2018
Filed February 20, 2018
File No. 001-15204
Dear Mr. Hickey:
            We have limited our review of your filings to the financial statements and related
disclosures and have the following comments.  In some of our comments, we may ask you to
provide us with information so we may better understand your disclosure.
            Please respond to these comments within 10 business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
            After reviewing your response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2017
Management's Discussion and Analysis of Financial Condition and Results of Operations
Critical Accounting Estimates and Assumptions
Provision for Unpaid Loss and Loss Adjustment Expenses, page 33
1.We acknowledge your statement that a significant degree of judgment is required to
determine your provision for unpaid loss and loss adjustment expenses.  We believe your
disclosures regarding your estimation process could be improved to better explain the
judgments and uncertainties surrounding this estimate and the potential impact on your
financial statements.  We believe in order to meet the principal objectives of

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 June 16, 2017 Page 2
 FirstName LastNameWilliam A. Hickey, Jr.
Kingsway Financial Services Inc.
April 25, 2018
Page 2
Management's Discussion and Analysis (MD&A) this disclosure should enable the
investor to understand:
•management’s method for establishing the estimate;
•whether and, if so, to what extent and why you have adjusted your assumptions used
to determine the estimate from the assumptions used in the immediately preceding
period; and
•the potential variability in the most recent estimate and the impact this variability may
have on reported results, financial condition and liquidity.
Please keep these points in mind in providing us your responses to the bullets listed
below.  Please provide us proposed revised disclosure to be included in future periodic
reports that:
•Describes the methods you used to determine your reserve for loss and loss adjustment
expense.  Ensure that this description:
oIdentifies the unique development characteristics of each material line of business
or coverage.
oExplains how and when you use different methods.  For example we understand
that differing methods may be used to estimate initial losses and to estimate losses
for mature accident years.
oDescribes the method you use to calculate the incurred but not reported (IBNR)
reserve for each material line of business.  For example, we understand that some
companies may calculate this reserve by estimating the ultimate unpaid liability
first and then reducing that amount by cumulative paid claims and by case
reserves, but there may be other methods as well.
oDescribes the extent of your procedures for determining the reserve for loss and
loss adjustment expense on both an annual and interim reporting basis.
•Identifies and describes those key assumptions that materially affect the estimate of
the reserve for loss and loss adjustment expenses.  In addition please disclose the
following:
oFor each of your key assumptions quantify and explain what caused them to
change from the assumptions used in the immediately preceding period.
oExplicitly identify and discuss key assumptions as of December 31, 2017 that are
premised on future emergence that are inconsistent with historical loss reserve
development patterns and explain why these assumptions are now appropriate
given the inconsistency identified.
•Shows investors the potential variability in the most recent estimate of your loss
reserve, quantifies and presents preferably in a tabular format the impact that
reasonably likely changes in the key assumptions identified may have on reported
results, financial position and liquidity.  Explain why you believe the scenarios
quantified are reasonably likely.  See Release No. 33-8350; particularly Section V.

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 June 16, 2017 Page 3
 FirstName LastNameWilliam A. Hickey, Jr.
Kingsway Financial Services Inc.
April 25, 2018
Page 3

Notes to Consolidated Financial Statements
Note 2: Summary of Significant Accounting Policies
(s) Revenue recognition:
Service fee and commission income and deferred service fees, page 69
2.Please tell us why it is appropriate to recognize commissions on product and new
homebuilders warranties at the time of product sale and home certification, respectively.
Reference for us the authoritative literature you rely upon to support your accounting.  In
your response, address the following:
•Tell us who is responsible for the guarantee underlying each type of warranty.
•Tell us how the commission portion is determined separately from the service
component for each type of warranty.
•Explain how a commission is earned for the product warranties when it appears from
disclosure in Business on page 8 that each warranty is a contract between your
subsidiary, Trinity Warranty Solutions LLC, and the equipment purchaser.
•Explain to us your application of ASC 606 for these contracts such that revenue will
not be materially different from that under ASC 605 as indicated in your disclosure in
Note 3(b) on page 70.
Note 11: Intangible Assets, page 82
3.Please tell us why your $73.7 million tenant relationship intangible asset, which "relates to
a single long-term tenant relationship," is not subject to amortization.  Reference for us the
authoritative literature you rely upon to support your accounting.  In your response, tell
us specifically how you considered the assumptions that market participants would use in
determining a useful life for this asset consistent with the concept in ASC 350-30-35-3d
given that a tenant is generally free to seek other accommodations upon lease termination.
Note 13: Unpaid Loss and Loss Adjustment Expenses
(a) Property & Casualty, page 85
4.You indicate that the unfavorable development in 2017 was primarily related to the
increase in property and casualty unpaid loss and loss adjustment expenses at
Mendota. Please tell us the reasons for this development at Mendota and whether
additional premiums or return premiums have been accrued as a result. Refer to ASC 944-
40-50-3. Your response should discuss each accident year that significantly contributed to
the development, and should quantify the amount attributable to each reason by accident
year. Further, refer to your disclosure in the second paragraph following the tables on
page 49 in MD&A about significant disruptions within Mendota's claim staff during 2016
that resulted in a build-up of claim inventory that was ultimately settled in 2017 at
amounts higher than initially reserved.  Please tell us:

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 June 16, 2017 Page 4
 FirstName LastNameWilliam A. Hickey, Jr.
Kingsway Financial Services Inc.
April 25, 2018
Page 4
•How many claims were received in 2016 that were not processed until 2017 and the
historical significance of this amount in comparison to other years.
•The cause of the disruptions.
•Whether the increase in claim severity would have been identified earlier if the claims
would have been processed without disruption.
5.Please address the following about your non-standard automobile insurance claims
development table beginning on page 86:
•Tell us how the total of your IBNRplus expected development of reported losses of
$99.8 million can be greater than your $58.2 million liability for non-standard
automobile loss and loss adjustment expense, net of reinsurance at December 31,
2017.
•Tell us why the total of your IBNR plus expected development of reported losses for
each accident year from 2008 through 2016 herein is generally significantly higher
than that presented for those years in your 2016 Form 10-K. We would have expected
that these amounts would have generally decreased but for an increase due to
unfavorable development.
•Tell us why the incurred and cumulative paid loss and allocated loss adjustment
expenses, net of reinsurance amounts for accident years 2008 through 2013 in the
2013 through 2016 columns differ significantly from the respective amounts presented
in your 2016 Form 10-K.
•Tell us why you did not disaggregate liability coverage from physical damage
coverage into separate tables under ASC 944-40-50-4H as it appears that these
coverages have significantly different characteristics. Provide us the information that
would be provided in separate tables for liability and physical damage coverages for
this line of business, if available. If not available, please provide us other quantitative
and qualitative information to support aggregating these coverages in the same table.
(b) Vehicle Service Agreements, page 88
6.Please tell us how the claims incurred and claims paid information presented in your table
on page 88 is appropriate by addressing the following:
•Explain to us why you have no development on prior year reserve estimates.
•Explain to us how you can pay more claims in the current year than incurred in that
year and why you only have minor recoveries of prior year claims paid.  In this regard,
it appears from the information presented in your table that the $2,779,000 liability at
December 31, 2017 relates solely to claims incurred in 2014 or earlier.
Note 21: Class A Preferred Stock, page 96
7.It appears that the economic characteristics and risks of the embedded conversion feature
may not be clearly and closely related to the economic characteristics and risks of the
Class A Preferred Stock host and be subject to bifurcation as a derivative.  Please provide
us an analysis with reference to the authoritative literature you rely upon to support your

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 June 16, 2017 Page 5
 FirstName LastNameWilliam A. Hickey, Jr.
Kingsway Financial Services Inc.
April 25, 2018
Page 5
accounting for the conversion feature. Refer to ASC 815-15-25-1.
Note 25: Fair Value of Financial Instruments, page 102
8.On page 102 you disclose that fair values of fixed maturities for which no active market
exists are derived from quoted market prices of similar instruments or other third party
evidence. Please describe for us the "valuation technique," as that term is used in ASC
820-10-50-2bbb, and the inputs you used to value each class of your fixed maturities.
Note 28: Regulatory Capital Requirements and Ratios and Note 29: Statutory Information and Po
licies, page 106
9.Please provide us your analysis under ASC 205-40-50-1 through 50-5 as to whether the
following conditions, as well as others, may raise substantial doubt about your ability to
continue as a going concern for a period of one year after your financial statements were
issued or were available to be issued:
•Your Mendota subsidiary being at the company action level for statutory purposes;
•Your U.S. insurance subsidiaries being restricted from making any dividend payments
to you without specific regulatory approval; and
•That you had only seven months of interest payments on your debt and recurring
operating expenses on hand at the filing date of your Form 10-K as disclosed on page
52.
In addition, if substantial doubt was raised, tell us your plans to mitigate these conditions
and events as contemplated in ASC 205-40-50-6 through 50-11 and your consideration to
disclose either that substantial doubt does not exist after your plans under 50-12 or that
substantial doubt does exist after your plans under 50-13 and 50-14.

Form 8-K Dated February 20, 2018
Exhibit 99.1
Press Release titled "Kingsway Announces Fourth Quarter and Year-End 2017 Results"
10.Please provide us separate reconciliations of your non-US GAAP measures "segment
operating loss" and "adjusted operating loss."  In this regard, you state in your Form 10-K
that, for "segment operating loss," the most directly comparable financial measure
calculated and presented in accordance with GAAP is loss from continuing operations
before income tax (benefit) expense. As such, the reconciliation for "segment operating
loss" that you provide us should start with loss from continuing operations before income
tax (benefit) expense and reconcile down to "segment operating loss." Your reconciliation
for "adjusted operating loss" should start with the most directly comparable financial
measure calculated in accordance with GAAP (which currently is not clear as to what that
comparable GAAP measure is) and reconcile down to "adjusted operating loss." For each
reconciling item, tell us whether it is a normal, recurring, cash operating expense

 FirstName LastNameWilliam A. Hickey, Jr.
 Comapany NameKingsway Financial Services Inc.
 June 16, 2017 Page 6
 FirstName LastName
William A. Hickey, Jr.
Kingsway Financial Services Inc.
April 25, 2018
Page 6
necessary to operate your business. If so, tell us why it is appropriate to exclude the item
from your non-GAAP measure.  Refer to Item 10(e)(1)(i)(B) of Regulation S-K and
Compliance & Disclosure Interpretations on Non-GAAP Financial Measures 102.10 and
100.01.
            In closing, we remind you that the company and its management are responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or
absence of action by the staff.
            You may contact Mark Brunhofer at (202) 551-3638 or Jim Rosenberg at (202) 551-
3679 with any questions.
Division of Corporation Finance
Office of Healthcare & Insurance

December 6 , 2013

Via E-mail
Mr. Larry G. Swets, Jr.
President and Chief Executive  Officer
Kingsway Financial Services, Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario, Canada M4V 1K9

Re: Kingsway Financial  Services , Inc.
  Form 10-K for Fiscal Year Ended December 31, 201 2
  Filed March 22 , 2013
File No. 001-15204

Dear  Mr. Swets :

We have completed our review of your filing. We remind you that our comments
or changes to disclosure in response to our comments do not foreclose the Commission
from taking any action with respect to the company or the filing and the company may
not assert staff comments as a defense in any proceeding initiated by the Commission or
any perso n under the federal securities laws of the United States. We urge all persons
who are responsible for the accuracy and adequacy of the disclosure in the filing to be
certain that the filing includes the information the Securities Exchange Act of 1934 and
all applicable rules require.

Sincerely,

 /s/ Joel Parker

Joel Parker
Accounting Branch Chief

CORRESP
1
filename1.htm

		110713 Correspondence

November 7, 2013

Mr. Jim B. Rosenberg

Senior Assistant Chief Accountant

Securities and Exchange Commission

Washington, D.C. 20549

Re:    Kingsway Financial Services Inc.

Form 10-K for Fiscal Year Ended December 31, 2012

Filed March 22, 2013

File No. 001-15204

Dear Mr. Rosenberg:

Kingsway Financial Services Inc. (the “Company”) has received and reviewed your letter dated October 25, 2013, regarding the Commission’s review of the above mentioned filing and has submitted its response below.

Form 10-K for the fiscal year ended December 31, 2012

Notes to Consolidated Financial Statements

Note 11 Intangible Assets, page 69

Comment:

Please refer to prior comment 1. Please provide the information in your response as proposed disclosure to be included in future periodic filings, particularly your basis for concluding that the renewal rights have an indefinite useful life. Also, explain to us your basis for using undiscounted cash flows in evaluating impairment of this non-amortizing intangible asset, particularly your consideration of ASC 350-30-35-18.

Company’s Response:

With respect to the first part of the Staff’s comment, in future periodic filings beginning with the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, the Company proposes to enhance its disclosure by explaining the basis for concluding that the Company’s renewal rights intangible assets have an indefinite useful life.  See “Company’s Proposed Disclosure” below for an example of the disclosure the Company would have made if it had made such disclosure in its Annual Report on Form 10-K for the year ended December 31, 2012 (“2012 Annual Report”).

Company’s Proposed Disclosure:

If the Company had made the changes noted above in its 2012 Annual Report, the fourth paragraph following the table on page 69 of Note 11, “Intangible Assets,” would have been revised as follows:

The insurance licenses, renewal rights and trade name intangible assets have indefinite useful lives and are not amortized.  The renewal rights intangible assets, recognized related to the acquisitions of NEA and ARS, were being amortized on a straight-line basis over 10 to 15 years.  As a result of the acquisition of ARS during 2010, the Company determined that it was necessary to re-examine the useful lives assigned to the renewal

rights intangible assets due to the fact that NEA and ARS service the assigned risk business in the states of New York and New Jersey and operate in the New York voluntary markets where there is limited competition for the renewal rights.  As a result of the review performed, the Company determined that there were no legal, regulatory, contractual, competitive, economic, or other factors limiting the useful life of the renewal rights intangible assets; therefore, effective January 1, 2011, the renewal rights intangible assets were deemed to have indefinite useful lives and are no longer being amortized.

Company’s Response:

With respect to the second part of the Staff’s comment, the Company’s statement in its September 30, 2013 response regarding the use of undiscounted cash flows to evaluate impairment of the renewal rights intangible assets was improperly stated.  The second paragraph on the third page of the Company’s September 30, 2013 response should have read as follows:

ASC 350-30-35-18 requires the Company to review indefinite-lived intangible assets for impairment annually, or more frequently if events or circumstances indicate that the asset might be impaired, in accordance with the impairment indicators in ASC 360, Property, Plant and Equipment.  The impairment test shall consist of a comparison of the fair value of an intangible asset with its carrying amount.  Per ASC 360-10-35-29, “estimates of future cash flows used to test the recoverability of a long-lived asset (asset group) shall include only the future cash flows (cash inflows less associated cash outflows) that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset (asset group).”  Additionally ASC 360-10-35-30 states that “estimates of future cash flows used to test the recoverability of a long-lived asset (asset group) shall incorporate the entity’s own assumptions about its use of the asset (asset group) and shall consider all available evidence.”  For purposes of its impairment analysis, the Company estimated the future cash flows of the RPC Book, Hudson Book and JBA intangible assets over a period of ten years.  The revenue streams of the business are cyclical and fluctuate consistent with the insurance markets.  As such, the Company concluded that a ten-year period is a reasonable time frame to evaluate the cash flows associated with its assigned risk business.  For purposes of its impairment analysis at December 31, 2012, the Company used a present value technique to measure the fair value of the renewal rights intangible assets.  The estimated fair value per the Company’s analysis was estimated to be in excess of the combined carrying value of the RPC Book, Hudson Book and JBA intangible assets; therefore, the Company concluded that the intangible assets were not impaired at December 31, 2012.

Please contact me at 847-700-9154 if you have any additional questions or need further clarification.  In addition, you can also contact William A. Hickey, Jr., the Company’s Chief Financial Officer, at (847) 871-6416.

Sincerely,

/s/ Larry G. Swets, Jr.

Larry G. Swets, Jr.

President and Chief Executive Officer

October 25 , 2013

Via E-mail
Mr. Larry G. Swets, Jr.
President and Chief Executive  Officer
Kingsway Financial Services, Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario, Canada M4V 1K9

Re: Kingsway Financial  Services , Inc.
  Form 10-K for Fiscal Year Ended December 31, 201 2
  Filed March 22 , 2013
File No. 001-15204

Dear  Mr. Swets :

We have reviewed your September 30, 2013 response to our September 17 , 2013
letter  and have the following comment .

Please respond to this letter within 10 business days by providing the requested
information or by advising us when you will provide the requested r esponse. If you do
not believe the  comment applies to your facts and cir cumstances, please tell us why in
your response.  Please furnish us a letter on EDGAR under the form type label
CORRESP that keys your response to our comment .

After reviewing the information provided, we may raise additional comments
and/or request that  you amend your filing.

Notes to Consolidated Financial Statements
Note 11 Intangible Assets, page 69

1. Please refer to prior comment 1.  Please provide the information in your response
as proposed disclosure to be included in future periodic filings, part icularly your
basis for concluding that the renewal rights have an indefinite useful life. Also,
explain to us your basis for using undiscounted cash flows in evaluating
impairment of this non -amortizing intangible asset, particularly your
consideration of  ASC 350 -30-35-18.

Mr. Larry G. Swets, Jr.
Kingsway Financial Services, Inc.
October 25 , 201 3
Page 2

 Please contact Frank Wyman, Staff Accountant, at (202) 551 -3660  or Mark
Brunhofer , Senior Staff Accountant , at (202) 551 -3638, if you have any questions
regarding th e comment. In this regard, do not hesitate to contact me at (202) 551-3679.

Sincerely,

/s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief
Accountant

CORRESP
1
filename1.htm

		Correspondence 093013

September 30, 2013

Mr. Jim B. Rosenberg

Senior Assistant Chief Accountant

Securities and Exchange Commission

Washington, D.C. 20549

Re:    Kingsway Financial Services Inc.

Form 10-K for Fiscal Year Ended December 31, 2012

Filed March 22, 2013

File No. 001-15204

Dear Mr. Rosenberg:

Kingsway Financial Services Inc. (the “Company”) has received and reviewed your letter dated September 17, 2013, regarding the Commission’s review of the above mentioned filing and has submitted its response below.

Form 10-K for the fiscal year ended December 31, 2012

Notes to Consolidated Financial Statements

Note 11 Intangible Assets, page 69

Comment:

Please provide us a robust analysis supporting your conclusion that renewal rights at January 1, 2011 became indefinite-lived intangible assets and no longer subject to amortization. In addition, please explain why these rights were not impaired at December 31, 2012, given your risk factor disclosures on pages 19 and your assertions on page 75 that your operations remain challenged and as a result the company’s ability to utilize losses reflected in its deferred tax assets is uncertain.

Company’s Response:

With respect to the first part of the Staff’s comment, below is a description of useful life analysis performed by the Company to support its conclusion that the renewal rights became indefinite-lived intangible assets at January 1, 2011:

ASC 350-30-35-9 requires an entity to “evaluate the remaining useful life of an intangible asset that is being amortized each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset's remaining useful life is changed, the remaining carrying amount of the intangible asset shall be amortized prospectively over that revised remaining useful life.”

The Company evaluates the useful lives of its intangible assets annually at December 31.  For the year ended December 31, 2010, the Company concluded the following with regard to the useful lives of its intangible assets:

RPC Book & JBA Intangible Assets:

On June 14, 2006, the Company acquired, through its subsidiary, Northeast Alliance Insurance Agency LLC (NEA), the renewal rights associated with the assigned risk programs and voluntary programs (herein referred to as the RPC Book) of the Robert Plan Corporation (RPC).  The RPC Book, representing a significant share of the assigned risk and voluntary market volume generated in New York, had been administered by RPC for over fifty years.  The intangible asset recognized by the Company as a result of this acquisition was being amortized on a straight-line basis over ten years.

On June 30, 2010, the Company acquired JBA Associates, Inc. (JBA).  As a result of this acquisition, the Company recognized intangible assets related to retention of buyout customers and contract renewals.  Prior to acquisition by the Company, JBA was the main competitor of the RPC Book of business administered by NEA.  JBA had been administering the assigned risk business in New Jersey since 1995. These intangible assets were being amortized on a straight-line basis over fifteen years.

As a result of the acquisition of JBA, the Company determined that it was necessary to re-examine the useful lives assigned to both the RPC Book and JBA intangible assets.  Upon review of ASC 350-30-35-4, “if no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of an intangible asset to the reporting entity, the useful life of the asset shall be considered to be indefinite.”  NEA and JBA service the assigned risk business in the states of New York and New Jersey and operate in the New York voluntary markets where there is limited competition for the business due to the infrastructure requirements and institutional knowledge needed to perform effectively in the assigned risk and voluntary markets serviced by NEA and JBA. NEA and JBA perform policy administration, underwriting and claims handling, which provides additional fee income and control over the RPC Book and JBA business.

Based on the above analysis, and specifically as a result of the acquisition of JBA in 2010 which eliminated the majority of the competition in the assigned risk market, the Company believes that there are no factors limiting the useful lives of the RPC Book and JBA intangibles; therefore, at December 31, 2010, the Company assigned indefinite useful lives to the RPC Book and JBA intangible assets, which was applied prospectively.

Hudson Book Intangible Asset:

On January 5, 2007, the Company purchased the rights to service the book of New York PAP business (hereinafter referred to as the Hudson Book).  Since 1988, this book of business had been serviced by RPC.  This intangible asset was being amortized on a straight-line basis over ten years.

The Hudson Book of business has been and continues to be a very stable book of business, as evidenced by NEA’s 23-year relationship with various insurance providers.  NEA entered into a long-term contract effective January 1, 2009 with an insurance provider related to this book of business.  The Company reviewed the useful life for the Hudson Book intangible and determined that there are no legal, regulatory, contractual, competitive, economic, or other factors limiting the useful life of the Hudson Book intangible asset to NEA.  Given these facts, at December 31, 2010, the Company assigned an indefinite useful life to the Hudson Book intangible asset, which was applied prospectively.

With respect to the second part of the Staff’s comment, below is an explanation as to why the renewal rights were not impaired at December 31, 2012:

ASC 350-30-35-16 requires an entity to “evaluate the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events and circumstances continue to support an indefinite useful life.”

At December 31, 2012, there was no change to the legal, regulatory, contractual, competitive or economic factors surrounding the RPC Book, Hudson Book and JBA intangible assets to suggest that an indefinite useful life is no longer supported.  NEA and Assigned Risk Solutions Ltd. (ARS), formerly known as JBA, continue to operate in the New York and New Jersey assigned risk and New York voluntary markets where there is limited competition.

ASC 350-30-35-18 requires the Company to review indefinite-lived intangible assets for impairment annually, or more frequently if events or circumstances indicate that the asset might be impaired, in accordance with the impairment indicators in ASC 360, Property, Plant and Equipment.   Per ASC 360-10-35-29, “estimates of future cash flows used to test the recoverability of a long-lived asset (asset group) shall include only the future cash flows (cash inflows less

associated cash outflows) that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset (asset group).”  Additionally ASC 360-10-35-30 states that “estimates of future cash flows used to test the recoverability of a long-lived asset (asset group) shall incorporate the entity’s own assumptions about its use of the asset (asset group) and shall consider all available evidence.”  For purposes of its impairment analysis, the Company estimated the future cash flows of the RPC Book, Hudson Book and JBA intangible assets over a period of ten years.  The revenue streams of the business are cyclical and fluctuate consistent with the insurance markets.  As such, the Company concluded that a ten-year period is a reasonable time frame to evaluate the cash flows associated with its assigned risk business.  The sum of the undiscounted cash flows per the Company’s analysis was estimated to be in excess of the combined carrying value of the RPC Book, Hudson Book and JBA intangible assets; therefore, the Company concluded that the intangible assets were not impaired at December 31, 2012.

The risk factor disclosures on page 19 and the assertions on page 75 that our operations remain challenged relate to the Company as a consolidated entity.  The Company conducts its business in two reportable segments, Insurance Underwriting and Insurance Services.  The Company’s loss from continuing operations in 2012 was attributable to operating losses in Insurance Underwriting, corporate general expenses, interest expense and loss on change in fair value of debt.  The future cash flows related to the NEA and JBA intangible assets are directly associated with the Insurance Services reportable segment, which reported segment operating income for the fiscal years ended December 31, 2012 and 2011.

Form 10-K for the fiscal year ended December 31, 2012

Notes to Consolidated Financial Statements

Note 29 Statutory Balances and Accounting Practices, page 87

Comment:

Regarding your disclosure that statutory amounts for the latest period are unaudited, please represent to us that you will remove this designation in future filings as this information is required by ASC 944-505-50-1a. To the extent you intended to express that the audits of your statutory financial statements were not yet complete at the time you issued your financial statements, we do not believe that the timing of regulatory filings is relevant to disclosures required by GAAP.

Company’s Response:

In future annual reports beginning with the Company’s Annual Report on Form 10-K  for the year ended December 31, 2013 (“2013 Annual Report”), the Company represents that it will remove the “unaudited” designation related to statutory amounts reported in accordance with ASC 944-505-50-1a.

Form 10-K for the fiscal year ended December 31, 2012

Notes to Consolidated Financial Statements

Note 29 Statutory Balances and Accounting Practices, page 87

Comment:

Although you disclose in Note 28 that each of your insurance subsidiaries, with the exception of Amigo, exceeded the 200% risk-based capital ratio threshold, please provide us proposed disclosure to be included in future periodic reports of the amount of statutory capital and surplus necessary to satisfy regulatory requirements if significant in relation to actual statutory capital and surplus, as required under ASC 944-505-50-1b. If not significant, please clarify in the disclosure by providing an indication of the magnitude of the excess at your insurance subsidiaries other than Amigo.

Company’s Response:

In future annual reports beginning with the Company’s 2013 Annual Report, the Company proposes to enhance its disclosure by including the amount of statutory capital and surplus necessary to satisfy regulatory requirements as required by ASC 944-505-50-1b.  See “Company’s Proposed Disclosure” below for an example of the disclosure the Company would have made if it had made such disclosure in its 2012 Annual Report on Form 10-K.

Company’s Proposed Disclosure:

If the Company had made the changes noted above in its 2012 Annual Report on Form 10-K, the following paragraph would have been added to immediately follow the table on page 88 of Note 29, “Statutory Information and Policies.”:

The Company’s insurance subsidiaries are required to hold minimum levels of statutory capital and surplus to satisfy regulatory requirements. The minimum statutory capital and surplus, or company action level RBC, necessary to satisfy regulatory requirements for the Company's insurance subsidiaries collectively was $24.8 million at December 31, 2012. Company action level RBC is the level at which an insurance company is required to file a corrective action plan with its regulators and is equal to 200% of the authorized control level RBC.

In connection with the Company's response to your comments, the Company acknowledges that:

•

 The Company is responsible for the adequacy and accuracy of the disclosure in the filing;

•

 staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

•

 the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please contact me at 847-700-9154 if you have any additional questions or need further clarification.  In addition, you can also contact William A. Hickey, Jr., the Company’s Chief Financial Officer, at (847) 871-6416.

Sincerely,

/s/ Larry G. Swets, Jr.

Larry G. Swets, Jr.

President and Chief Executive Officer

September 17, 2013

Via E-mail
Mr. Larry G. Swets, Jr.
President and Chief Executive  Officer
Kingsway Financial Services, Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario,  Canada M4V 1K9

Re: Kingsway Financial  Services , Inc.
  Form 10-K for Fiscal Year Ended December 31, 201 2
  Filed March 22 , 2013
File No. 001-15204

Dear  Mr. Swets :

We have limited our review to only your financial statements and related
disclosures and do not intend to expand our review to other portions of your document.
In our comment s, we ask you to provide us with information so we may better understand
your disclosure.

Please respond to this letter within 10 business days by  providing the requ ested
information or by advising us when you will provide the requested response.   If you do
not believe a comment applies to your facts and circumstances, please tell us why in your
response.   Please furnish us a letter on EDGAR under the form type label CORRESP that
keys your response s to our comment s.

After reviewing the information provided, we may raise additional comments
and/or request that you amend your filing.

Notes to Consolidated Financial Statements

Note 11 Intangible Assets, page 69

1. Please provide us a robust analysis supporting your conclusion that renewal rights
at January 1, 2011 became  indefinite -lived intangible assets  and no longer subject
to amortization .  In addition, please explain why these rights were not impaired at
December  31, 2012, given your risk factor disclosures on pages 19 and your
assertions on page 75 that your operations remain challenged and as a result  the
company’s  ability to utilize losses reflected in its deferred tax assets is uncertain.

Mr. Larry G. Swets, Jr.
Kingsway Financial Services, Inc.
September 17, 201 3
Page 2

 Note 29 Statutory  Balances and Accounting Practices, page 87

2. Regarding your disclosure that statutory amounts for the latest period are
unaudited, please represent to us that you will remove this designation in future
filings as this information is required by ASC 944 -505-50-1a.  To the extent you
intended to express that the audits of your statutory financial statements were not
yet complete at the time you issued your financial statements, we do not believe
that the timing of regulatory filings is relevant to disclosures  required by GAAP.

3. Although you disclose in Note 28 that each of your insurance subsidiaries, with
the exception of Amigo, exceeded the 200% risk -based capital ratio threshold,
please provide us proposed disclos ure to be included in future periodic reports of
the amount of statutory capital and surplus necessary to satisfy regulatory
requirements if significant in relation to actual statutory capital and surplus, as
required under ASC 944 -505-50-1b.  If not signi ficant, please clarify in the
disclosure by providing an indication of the magnitude of the excess at your
insurance subsidiaries other than Amigo.

We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes the information the Securities
Exchange Act of 1934 and all applicable Exchange Act rules require.   Since the company
and its management are in possession of all facts relating to a company’s disclosure, they
are respons ible for the accuracy and adequacy of the disclosures they have made.

In responding to our comments, please provide  a written statement from the
company acknowledging that:
 the company is responsible for the adequacy and accuracy of the disclosure in t he
filing;
 staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
 the company may not assert staff comments as a defense in any proceeding
initiated by th e Commission or any person under the federal securities laws of the
United States.

Please contact Frank Wyman, Staff Accountant, at (202) 551 -3660  or Mark
Brunhofer , Senior Staff Accountant , at (202) 551 -3638 if you have any questions
regarding th e commen ts. In this regard, do not hesitate to contact me at (202) 551 -3679.

Sincerely,

/s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief
Accountant

CORRESP
1
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		Correspondence 7-22-13

Larry G. Swets, Jr.

President and Chief Executive Officer

Tel: 847.700.9154

lswets@kfscap.com

July 22, 2013

Amy Reischauer

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, DC 20549

Re:

 Kingsway Financial Services Inc.

Registration Statement on Form S-1

Filed June 17, 2013

File No. 333-188932

Ladies and Gentlemen:

Pursuant to Rule 461 under the Securities Act of 1933, as amended (the “Securities Act”), the Registrant hereby requests that the effective date for the Registration Statement be accelerated so that it will be declared effective under the Securities Act at 4:00 p.m., New York City time, on Wednesday, July 24, 2013, or as soon thereafter as reasonably practicable.

In connection with this request, the Registrant hereby acknowledges that:

1.

 should the Securities and Exchange Commission (the “Commission”) or the staff of the Commission (the “Staff”), acting pursuant to delegated authority, declare the Registration Statement effective, it does not foreclose the Commission from taking any action with respect to the Registration Statement;

2.

 the action of the Commission or the Staff, acting pursuant to delegated authority, in declaring the Registration Statement effective, does not relieve the Registrant from its full responsibility for the adequacy and accuracy of the disclosure in the Registration Statement; and

3.

 the Registrant may not assert Staff comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Very truly yours,

KINGSWAY FINANCIAL SERVICES INC.

By:   /s/ Larry G. Swets, Jr.

Larry G. Swets, Jr.

President & Chief Executive Officer

CORRESP
1
filename1.htm

		Correspondence 061713

June 17, 2013

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, DC 20549

Attn:   Jeffrey P. Riedler

           Amy Reischauer

           Daniel Greenspan

Re:

 Kingsway Financial Services Inc.

Registration Statement on Form S-3

Filed May 30, 2013

File No. 333-188932

Ladies and Gentlemen:

This letter sets forth the response on behalf of Kingsway Financial Services Inc. (the “Company”) to your letter, dated June 7, 2013, setting forth the comment of the staff of the Division of Corporation Finance of the Securities and Exchange Commission (the “Commission”) on the Company's filing listed above.  For your convenience, the comment is reproduced below before the Company's answers.

General

I.

 Please provide your analysis in support of your position that you are eligible to use Form S-3 to register this offering.  In your response, please address the analysis set forth in Question 116.20 of the Securities Act Forms Compliance and Disclosure Interpretations.  Alternatively, please file a pre- effective amendment to your registration statement to convert it from S-3 to Form S-1.

Response:  In response to the Staff's comment, the Company has filed a pre-effective amendment to Form S-3 on Form S-1, converting the aforementioned Registration Statement on Form S-3 to Form S-1.

Please feel free to call me with any questions at (312) 853-2066, or in my absence, my colleague Istvan Hajdu at (212) 839-5651.

Regards,

/s/ Brian J. Fahrney

Brian J. Fahrney

June 7, 2013

Via E -mail
Ann Brooks
General Counsel
Kingsway Financial Services, Inc.
150 Pierce Road, 6th Floor
Itasca, IL 60143

Re: Kingsway Financial Services , Inc.
  Registration Statement on Form S-3
Filed  May 30, 2013
  File No.  333-188932

Dear M s. Brooks :

We have limited our review of your registration statement to those issues we have
addressed in our comment.  Where you do not believe our comment applies to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.

After reviewing any amendment to your registration statement and the information you
provide in response to this comment , we may have  additional comments.

Please provide your analysis in support of your position that you are eligible to use For m
S-3 to register this offering.  In your response, please address the analysis set forth in
Question 116.20 of the Securities Act Forms Compliance and Disclosure Interpretations.
Alternatively, please file a pre -effective amendment to your registration s tatement to
convert it from Form S -3 to Form S -1.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Act of 193 3 and
all applicable Securities  Act rules require.   Since the company and its management are in
possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

Notwithstanding our comment, in th e event you request acceleration of the effective date
of the pending registration statement please provide a written statement from the company
acknowledging that:

 should the Commission or the staff, acting pursuant to delegated authority, declare the
filing effective, it does not foreclose the Commission from taking any action with respect
to the filing;

Ann Brooks
General Counsel
Kingsway Financial Services, Inc.
June 7, 2013
Page 2

 the action of the Commission or the staff, acting pursuant to delegated authority, in
declaring the filing effective, does not relieve the company fro m its full responsibility for
the adequacy and accuracy of the disclosure in the filing; and

 the company may not assert staff comments and the declaration of effectiveness as a
defense in any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.

Please refer to Rules 460 and 461 regarding requests for  acceleration .  We will consider a
written request for acceleration of the effective date of the registration statement as confirmation
of the fact that those requesting acceleration are aware of their respective responsibilities under
the Secu rities Act of 1933 and the Securities Exchange Act of 1934 as they relate to the proposed
public offering of the securities specified in the above registration statement.  Please allow
adequate time  for us to review any amendment prior to the requested eff ective date of the
registration statement.

Please contact Amy Reischauer at (202) 551 -3793, Daniel Greenspan at (202)  551-3623,
or me at (202) 551 -3715 with any other questions.

Sincerely,

 /s/ Daniel Greenspan for

Jeffrey P. Riedler
Assistant Director
cc: Via E -mail
 Brian J. Fahrney
Sidley Austin LLP
One South Dearborn Street
Chicago, IL 60603

April 11, 2013

Via E -mail
Mr. Larry G. Swets Jr.
President and Chief Executive Officer
Kingsway Financial Services, Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario M4V 1K9

Re: Kingsway Financial Services, Inc.
  Preliminary Proxy Statement on Schedule 14A
Filed on April 1, 2013
  File No.  001-15204

Dear Mr. Swets:

We have comple ted our review of your filing .  We remind you that our comments or
changes to disclosure in response to our comments do not foreclose the Commission from taking
any action with respect  to the company or the filing  and the company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any person under the
feder al securities laws of the United States.  We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filing  to be certain that the filing includes  the
information the Securities Exchange Act of 1934 and all applicable ru les require.

Sincerely,

 /s/ Daniel  Greenspan for

Jeffrey P. Riedler
Assistant Director

CORRESP
1
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		2012 Proxy Correspondence

April 10, 2013

Via EDGAR Submission and Federal Express

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, DC 20549

Attention: Mr. Daniel Greenspan

     Mr. Johnny Gharib

                  Mr. Jeffrey P. Riedler

Re:

 Kingsway Financial Services, Inc.

Preliminary Proxy Statement on Schedule 14A

Filed on April 1, 2013

File No. 001-15204

Ladies and Gentlemen:

On behalf of Kingsway Financial Services, Inc. (the “Company”), we are writing in response to the comment letter, dated April 8, 2013 (the “Comment Letter”), of the staff of the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) to the Company's Preliminary Proxy Statement on Schedule 14A, which was filed via the Commission's EDGAR system on April 1, 2013 (the “Proxy Statement”).

For the convenience of the Staff's review, we have set forth the comments contained in the Comment Letter in italicized font type followed by the response of the Company.  Page numbers and other similar references used in the Staff's comments below refer to the Amended Proxy Statement; page numbers and other similar references used in the Company's responses refer to the Amended Proxy Statement unless otherwise noted.  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Amended Proxy Statement.

The Company is filing a revised Preliminary Proxy Statement reflecting the updated disclosure described below and certain other changes.  For the Staff's convenience, we are also providing by separate transmittal three printed copies of the Preliminary Proxy Statement with a printed copy of this letter.

Comment:

We note proposal 6 where you are seeking approval to amend the company's Articles of Incorporation to create an unlimited number of preferred shares. We also note that you are currently considering issuing preferred shares in connection with a possible financing. Please revise your disclosure to describe any other specific plans, arrangements or understandings, whether written or oral, to issue any of the shares of preferred stock that will be newly available. If you have no other plans, arrangement or understandings, please revise your disclosure to so state.

Response:

In response to the Staff's comment, the Company has updated the disclosure for proposal 6 to clarify that the Company does not have any specific plans, arrangements or understandings in respect of the issuance of preferred stock other than as described in the proxy statement.

In connection with this response, the Company acknowledges that: (i) the Company is responsible for the adequacy and accuracy of the disclosure in the filing; (ii) Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and (iii) the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Thank you for your prompt attention to the Company's responses. If you wish to discuss the Proxy Statement or the contents of this letter, or if there is anything we can do to facilitate the Staff's processing of this submission, please feel free to contact me at (312) 853-2066.

Very truly yours,

/s/ Brian J. Fahrney

Brian J. Fahrney

Encls.

cc:

Mr. Larry G. Swets, Jr.

President and Chief Executive Officer

April 8, 2013

Via E -mail
Mr. Larry G. Swets Jr.
President and Chief Executive Officer
Kingsway Financial Services, Inc.
45 St. Clair Avenue West, Suite 400
Toronto, Ontario M4V 1K9

Re: Kingsway Financial Services, Inc.
  Preliminary Proxy Statement on Schedule 14A
Filed on April 1 , 2013
  File No.  001-15204

Dear Mr. Swets :

We have limited our review of your preliminary proxy statement  to the issue  we have
addressed in our comment .  Please respond to this letter by revising the proxy statement .  Where
you do not believe our comment applies  to your facts  and circumstances , please tell us why in
your response.

After reviewing the information you provide in response to our comment , we may have
additional comments.

1. We note proposal 6 where you are seeking approval to amend the company’s Articles
of Incorporation to create an unlimited number of preferred shares.  We also note that
you are currently considering issuing preferred shares in connection with a possible
financing.   Please revise your disclosure to describe any other specific plans,
arrangements or understandings, whether written or oral, to issue any of the shares of
preferred stock that will be newly available .  If you have no  other plans, arrangement
or understan dings, please revise your disclosure to so state.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all appl icable Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

In responding to our comme nt, please provide  a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

Larry G. Swets Jr.
Kingsway Financial Services, Inc.
April 8, 2013
Page 2

  staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

You may contac t Johnny Gharib at (202) 551 -3170 , Daniel Greenspan at (202) 551 -3623
or me at (202) 551 -3715 with any questions.

Sincerely,

 /s/ Daniel  Greenspan for

Jeffrey P. Riedler
Assistant Director

November 4, 2010

Mr. Daniel Brazier
Chief Financial Officer  Kingsway Financial Services, Inc.  7120 Hurontario Street, Suite 800 Mississauga, Ontario, Canada L5W 0A9 Canada

 Re: Kingsway Financial Services, Inc.     Form 40-F for the Year Ended December 31, 2009
Filed on April 2, 2010
 File No. 001-15204

Dear Mr. Brazier:

We have completed our review of your fili ng and do not have any further comments at
this time.
Sincerely,

        G u s  R o d r i g u e z
Accounting Branch Chief

CORRESP
1
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    corresp.htm

KINGSWAY FINANCIAL SERVICES INC.

Daniel Brazier

dbrazier@kingsway-financial.com

Direct Phone: 905.696.1259

Direct Fax: 847.264.2744

VIA FAX (202) 772-9198 & COURIER

CONFIDENTIAL

September 10, 2010

Mr. Jim B. Rosenberg

Senior Assistant Chief Accountant

Division of Corporate FinanceUnited States Securities and Exchange Commission

100 F Street N.E.

Washington, D.C.  20549

Dear Mr. Rosenberg:

Re:

Kingsway Financial Services Inc. (“KFSI” or the “Company”)

Form 40-F for the Year Ended December 31, 2009

Filed on April 2, 2010

File No. 001-15204

We are in receipt of your letter dated August 13, 2010 and are pleased to provide the following response.

Narrative Description of the Business, page 10

1.

On this page you state that your gross premiums written in 2009 totalled $291.0 million.  This is inconsistent with other statements in your document that gross premiums written in 2009 were $376.8 million.  Please explain this inconsistency.

We note that the reference to $291 million in the narrative is actually the amount of gross premiums written for the non-standard automobile line of business which represents 77% of KFSI’s total gross premiums written for 2009 of $376.8 million.  We trust this clarifies the discrepancy and apologize for the confusion.

Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 4. Discontinued Operations and related contingencies, page 44

2.

Please tell us why you believe that presenting the operations of Lincoln/Walshire in discontinued operations is appropriate under U.S. GAAP given that you appear to have continuing involvement after the disposal of Lincoln as discussed on page 46.  Include in your response how the terms of the Run-off Management Agreement including Rockwall Financial’s ceasing to perform under this agreement in March 2010 as disclosed in the press release filed as an exhibit to your May 14, 2010 Form 6-K factored into your conclusion to present Lincoln/Walshire as discontinued operations.  Please reference the U.S. GAAP authoritative guidance on which you relied.

As disclosed on October 19, 2009, KFSI disposed of its ownership of Walshire Assurance Company (“Walshire”) by donating its shares in Walshire to 20 unaffiliated charities.  The Company accrued for certain contractual and other obligations in respect of Walshire’s subsidiary, Lincoln General existing at disposition date but after the donation of the Walshire shares to the 20 charities, the 20 charities became the bona fide legal and beneficial owners of the Walshire shares.  The Company had no ownership or control of the Walshire shares.  Furthermore, the Company has no continuing powers to determine Walshire’s strategic, operating, investing and financing policies. It was also determined that Walshires’s operations and cash flows could be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity as defined in FASB Statement No. 131, Disclosures About Segments of an Enterprise and Related Information.

KFSI’s ongoing contractual obligations included the payment of the monthly fee of Rockwall Financial Advisors LLC (“Rockwall”), the run-off manager of Lincoln.  Payment of this contractual obligation did not change the decision to treat Walshire as a discontinued operation as KFS was just settling a previously agreed obligation and the payment did not give KFS any management or board responsibilities. This contractual obligation ceased when Rockwall stopped providing services in March 2010. KFSI’s obligations also included a payment of $10 million to Lincoln General which was made on November 13, 2009.  This payment arose as a result of a commitment KFSI made during the Lincoln General run-off plan approval process.

KFSI also continued to provide Lincoln with some short term computer network services and other IT support.  This concluded in early 2010. KFSI billed Lincoln and was paid  for these services on a monthly basis.  All other transactions between KFSI and Lincoln were normal intercompany insurance contracts that were at arm’s length between Lincoln and other KFSI related companies.

Taking all of the above into account and after review of FAS 144 and ASC subtopic 205-20; 360-10 and EITF 03-13: Applying the Conditions in Paragraph 42 of FASB Statement No. 144 in Determining Whether to Report Discontinued Operations - we determined that KFSI had disposed of Walshire, and that it was appropriate to treat Walshire and Lincoln as discontinued operations.

- 2 -

Note 17. Indebtedness

(d) Loans Payable, page 72

3.

You disclose that the promissory note payable issued by your subsidiary, Kingsway America, Inc., to Kingsway ROC LLC is an obligation of the consolidated entity because you are not the primary beneficiary of ROC LLC, and presumably do not consolidate it.  It is unclear why you disclose the activity of the KLROC Trust in this note.  Please revise your disclosure to clarify the relationship between KLROC Trust, Kingsway America and ROC LLC.  In this regard, please identify the affiliate from whom KLROC Trust purchased the 7.12% senior note due June 30, 2015 and whether and how this is related to the 7.37% note payable due June 30, 2015 issued by Kingsway America to ROC LLC.

The Company has noted Staff’s comments and proposes the following changes to its disclosure in future filings:

In July 2005, the following entities were formed:

•

Kingsway Linked Return of Capital Trust (“KLROC Trust”)

•

Kingsway Note Trust (“KN Trust”), an entity owned by Bank of Nova Scotia

•

KL LP, an entity owned by KLROC Trust

•

Return of Capital GP (“ROC GP”), an entity owned by KFSI

•

Return of Capital LLC (‘ROC LLC”), a wholly owned subsidiary of ROC GP

Transactions completed on Origination:

•

KLROC Trust commenced operations on July 14, 2005 by raising CAN $78,000,000 from the sales of 3,120,000 5% preferred KLROC units at CAN $25 per unit maturing on June 15, 2015 to the public.  KLROC Trust used the net proceeds to subscribe to all of the units issued by KL LP.

•

KL LP used the infused capital from KLROC Trust for the payment of a purchase obligation under a Forward Purchase Agreement with Bank of Nova Scotia (“Scotiabank” or the “counterparty”).  Under the Forward Purchase Agreement the counterparty will deliver to KL LP at the maturity on the KLROC units, securities of Canadian public companies having a value approximating the Forward Purchase Agreement.

•

The counterparty used the proceeds to subscribe to 100% of the 3,120,000 units of Kingsway Note Trust (“KN Trust”).

•

KN Trust used its capital to purchase a 7.12% note payable, maturing on July 15, 2015 issued by Return of Capital GP (“ROC GP”), a US  entity formed by KFSI.

•

ROC GP subscribed to all the class A shares and class B shares, together being all of the issued capital, of Return of Capital LLC (“ROC LLC”).

- 3 -

•

ROC LLC used its capital to purchase a 7.37% note due July 15, 2015 from Kingsway America, Inc. (“KAI”), a subsidiary of KFSI.

•

The only ongoing transactions for the above entities will be to pay distributions and on maturity, to redeem the value of the KLROC units.  The distributions are funded by the interest paid on the KAI note and the redemption will be funded by the repayment of principal.

Under Canadian and US GAAP, ROC GP and its subsidiary ROC LLP, KLROC Trust and KN Trust and KL LP are considered variable interest entities (“VIE”).  KFSI is not the primary beneficiary and does not have significant equity at risk in these entities and accordingly the financial statements of these entities were not consolidated with those of KFSI and the investment in ROC GP was accounted for under the equity method.  KFSI does not hold an equity interest in the other entities, i.e., KLROC Trust, KL LP and KN Trust.

Note 18. Variable Interest Entities, page 73

4.

You state that you have variable interest entities that you do not consolidate because you are not the primary beneficiary.  In addressing the off-balance sheet arrangements disclosure requirement from Instruction B(11) of Form 40-F, please disclose the following items, to the extent they are applicable and material, for your non-consolidated variable interest entities for which you have material exposure:

•

Categories and rating of assets the off-balance sheet entity holds;

•

Weighted-average life of assets the off-balance sheet entity holds;

•

Forms of funding and weighted-average life of the funding the off-balance sheet entity holds;

•

Any material difficulties the off-balance sheet entity has experienced in issuing its commercial paper or other financing during the period;

•

Any material write-downs or downgrades of assets the off-balance sheet entity holds;

•

Maximum limit of the losses to be borne by any first loss note holders;

•

Detailed disclosure regarding your obligations under the liquidity facilities;

•

The scenarios where you would have to consolidate the off-balance sheet entity, and your expectation of the likelihood of such consolidation; and

•

The frequency of which you reconsider, and the typical triggers which require you to reconsider, whether you are the primary beneficiary of the entity;

•

Include a discussion of any known trends or uncertainties that you may reasonably expect to have a material favourable or unfavourable impact on your income from operations, liquidity and capital resources.  In this regard, please consider, to the extent material in light of your particular facts and circumstances, disclosing the amount of any material loss you expect to realize as a result of your involvement with any material off-balance sheet entity.

- 4 -

We have reviewed the disclosure requirements under Instruction B(11) of Form 40-F and do not believe that any of the disclosures are applicable to the variable interest entities described above in question 3.  These VIEs do not have any financing or operating activities other than the transactions on origination and the distributions and ultimate redemption described above.  KFSI reviews whether it is the primary beneficiary of the entities annually. KFSI does not have any VIEs other than those described above.

We trust you will find the above satisfactory.  The Company is mindful of all of its obligations under securities laws and regulations and welcomes comments from Staff on how any disclosure could be improved. We understand that:

•

The company is responsible for the adequacy and accuracy of the disclosure in the filing;

•

Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

•

The company may not assert Staff comments as a defence in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please let us know if you have any additional questions.

Yours very truly,

Daniel Brazier

DB/

Enclosures

cc:

Larry Swets, Kingsway Financial

KPMG LLP

KFSI Audit Committee Gregory P. Hannon, Spencer L. Schneider and Joseph Stilwell

2003811

- 5 -

CORRESP
1
filename1.htm

    corresp.htm

August 13, 2010

Mr. Daniel Brazier
Chief Financial Officer  Kingsway Financial Services, Inc.  7120 Hurontario Street, Suite 800 Mississauga, Ontario, Canada L5W 0A9 Canada

 Re: Kingsway Financial Services, Inc.    Form 40-F for the Year Ended December 31, 2009
Filed on April 2, 2010
 File No. 001-15204

Dear Mr. Brazier:

We have reviewed your filing and have the following comments.  In our comments, we
ask you to provide us with information so  we may better underst and your disclosure.
 Please respond to this letter within te n business days by providing the requested
information or by advising us when you will provide the requested response.  Where a comment requests you to revise disclosu re, the information you provide s hould show us what the revised
disclosure will look like and identify the filing in which you intend to first include it.  If you do
not believe a comment applies to your facts a nd circumstances, please tell us why in your
response.  Please furnish us a letter on EDGAR under the form type label CORRESP that keys
your responses to our comments.
 After reviewing the information provided, we may raise additional comments and/or
request that you amend your filing.

Narrative Description of the Business, page 10

1. On this page you state that your gross prem iums written in 2009 totaled $291.0 million.
This is inconsistent with other statements in your document that gross premiums written in 2009 were $376.8 million. Please explain this inconsistency .

Mr. Daniel Brazier
Kingsway Financial Services, Inc.           August 13, 2010 Page 2
 Consolidated Financial Statements

Notes to Consolidated Financial Statements
Note 4. Discontinued Operations a nd related contingencies, page 44

2. Please tell us why you believe that presenti ng the operations of Li ncoln/Walshire in
discontinued operations is appropriate under U.S. GAAP given that you appear to have
continuing involvement after the disposal of Lincoln as discussed on page 46.  Include in
your response how the terms of the Run-o ff Management Agreement including  Rockwall
Financial’s ceasing to perform under this ag reement in March 2010 as disclosed in the
press release filed as an exhibit to you r May 14, 2010 Form 6-K factored into your
conclusion to present Lincoln/Walshire as discontinued operations. Please reference the
U.S. GAAP authoritative guidance on which you relied.
 Note 17. Indebtedness

(d) Loans Payable, page 72

3. You disclose that the promissory note payable issued by your subsidiary, Kingsway
America Inc., to Kingsway ROC LLC is an oblig ation of the consolidated entity because
you are not the primary beneficiary of ROC LL C, and presumably do not consolidate it.
It is unclear why you disclose th e activity of the KLROC Trust in this note.  Please revise
your disclosure to clarify the relationship  between KLROC Trust, Kingsway America and
ROC LLC.  In this regard, please identify the affiliate from whom KLROC Trust
purchased the 7.12% senior note due June 30, 2015 and whether a nd how this is related to
the 7.37% note payable due June 30, 2015 i ssued by Kingsway America to ROC LLC.
 Note 18. Variable Intere st Entities, page 73

4. You state that you have variab le interest entitie s that you do not consolidate because you
are not the primary benefici ary. In addressing the off-balance sheet arrangements
disclosure requirement from Instruction B(11) of Form 40-F, please disclose the
following items, to the extent they are appl icable and material, for your non-consolidated
variable interest en tities for which you have material exposure:
• Categories and rating of assets the off-balance sheet entity holds;
• Weighted-average life of assets th e off-balance sheet entity holds;
• Forms of funding and weighted-average lif e of the funding the off-balance sheet
entity holds;
• Any material difficulties the off-balance sh eet entity has experienced in issuing its
commercial paper or other fi nancing during the period;
• Any material write-downs or downgrades of assets the off-balance sheet entity holds;
• Maximum limit of the losses to be borne by any first loss note holders;
• Detailed disclosure regarding your oblig ations under the liq uidity facilities.
• The scenarios where you would have to cons olidate the off-balance sheet entity, and
your expectation of the likelihood of such consolidation; and

Mr. Daniel Brazier
Kingsway Financial Services, Inc.           August 13, 2010 Page 3
 • The frequency of which you reconsider, and the typical triggers which require you to
reconsider, whether you are the primary beneficiary of the entity.
• Include a discussion of any known trends or uncertainties that you may reasonably
expect to have a material favorable or  unfavorable impact on your income from
operations, liquidity and capital resources. In this regard, please consider, to the
extent material in light of your particul ar facts and circumstances, disclosing the
amount of any material loss you expect to re alize as a result of your involvement with
any material off-balance sheet entity.
  We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s all information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e.  Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.      In responding to our comments, please provi de a written statement from the company
acknowledging that:
• the company is responsible for the adequacy an d accuracy of the disclo sure in the filing;
• staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and
• the company may not assert staff comments as  a defense in any proceeding initiated by
the Commission or any person under the federa l securities laws of  the United States.

You may contact Ibolya Igna t, Staff Accountant at (202)  551-3656 or Mark Brunhofer,
Accounting Reviewer, at (202) 551- 3638 if you have questions regarding the processing of your
response as well as any questions regarding co mments on the financial statements and related
matters.  You may contact Scot Foley, Staff Attorney, at (202) 551-3383 or Suzanne Hayes,
Branch Chief at (202) 551-3675 with  questions on any of the other comments.  In this regard, do
not hesitate to contact me, at (202) 551-3679.

Sincerely,

Jim B. Rosenberg
Senior Assistant Chief Accountant