Kingsway Announces Approval of Ontario Private Passenger Rate Increases

Toronto, Ontario (July 12, 2002)–Kingsway Financial
Services Inc. today announced that it has obtained approval from the Financial Services
Commission of Ontario (‘FSCO’) to implement increased rates and to eliminate certain rating
classes for Private Passenger Automobile Business offered by Kingsway General in Ontario.

“I am pleased to report that we have obtained approval
for an overall rate increase as well as the elimination of certain classes of
business”, said Bill Star, President and Chief Executive Officer. “The
implementation of these changes should enable us to return this product to underwriting
profitability and to continue to provide availability of this much needed product in the
Ontario market. We would like to thank the FSCO for their cooperation and assistance in
completing this process in a timely manner.”

Under the revised rate filing, certain classes of business
are eliminated on July 1, 2002 for new business and for renewal business on August 1,
2002. In addition, approval has been obtained for an average base rate increase of
approximately 8.5% across all classes of business which will be effective September 1,
2002 for new business and October 1, 2002 for renewal business. Kingsway General does not
currently offer policy terms of greater than six months for this product. In the first quarter of
2002, gross premiums written from this product were $12.6 million, or 3% of the total of the Kingsway Group.

About Kingsway

Kingsway’s primary business is the insuring of automobile risks for drivers who do
not meet the criteria for coverage by standard automobile insurers. The Company currently
operates through nine wholly-owned subsidiaries in Canada and the U.S. Canadian
subsidiaries include Kingsway General Insurance Company, York Fire & Casualty
Insurance Company and Jevco Insurance Company. U.S. subsidiaries include Universal
Casualty Company, American Service Insurance Company, Southern United Fire Insurance
Company, Lincoln General Insurance Company, U.S. Security Insurance Company, American
Country Insurance Company and Avalon Risk Management, Inc. The Company also operates
reinsurance subsidiaries in Barbados and Bermuda. Kingsway Financial, Kingsway General,
York Fire, Jevco and Kingsway Reinsurance (Bermuda) are all rated “A” Excellent
by A.M. Best. The Company’s senior debt is rated ‘BBB’ (investment grade)
by Standard and Poor’s and Dominion Bond Rating Service. The common shares of
Kingsway Financial Services Inc. are listed on the Toronto Stock Exchange and the New York
Stock Exchange, under the trading symbol “KFS”.