Kingsway Financial Services Inc. entered into a letter of intent to sell its nonstandard automobile insurance companies.

The company said the sale will allow it to focus on its extended warranty business.

"The sale at statutory book value will allow us the liquidity to purchase a portfolio of investments from the insurance company so they can be utilized to fund future warranty acquisitions or merchant banking activity," CEO Larry Swets Jr. said in a news release.

The transaction remains subject to negotiation and regulatory approvals. It is expected to close during the third quarter of 2018, at which time the company would record a loss on disposal of discontinued operations that it estimates to be about C$8.5 million before actual and contingent expenses related to the transaction.