Kingsway Financial sees C$50 mln gain on York sale

TORONTO, Aug 25 (Reuters) - Specialty insurance holding company Kingsway Financial Services (KFS.TO) said it expects to record a gain of about C$50 million ($48 million) on the sale of its York Fire & Casualty Insurance Co. unit to a Quebec insurance company.

Kingsway, whose North American operating companies insure high-risk automobile drivers as well as trucking fleets, said it expects to complete the sale in 2008.

The company said gross proceeds are expected to be C$95 million.

York Fire & Casualty writes standard automobile and property insurance in Ontario and Alberta, and produced an underwriting loss in the first six months of this year, Kingsway said. York's gross premiums written in the first six months were about 5 percent of Kingsway's total.

The buyer, La Capitale General Insurance Inc, is a member of the mutual company La Capitale Financial Group, which is owned by Quebec civil servants.

"We will use the proceeds of this transaction to retire our remaining short-term debt and to support future growth opportunities in our core business lines," Kingsway President and Chief Executive Shaun Jackson said in a statement.

Kingsway said in July that it would repay much of its short-term debt, and it has been getting out of unprofitable business lines in recent months.

($1=$1.05 Canadian) (Reporting by Lynne Olver; editing by Rob Wilson)