One of Canada's biggest auto insurers will acquire Hawai'i's largest hurricane insurer, Zephyr Insurance Co., and its parent company.

Toronto-based Kingsway Financial Services Inc. said it has signed an agreement to acquire HI Holdings Inc. and its Zephyr Insurance subsidiary.

Terms of the deal were not disclosed.

Kingsway said it expects to complete its purchase in the fourth quarter, pending approval from the state Insurance Division.

"Zephyr is a well-run organization and we look forward to the company's continued success as part of Kingsway," said Bill Starr, Kingsway's president and chief executive officer.

"This transaction is consistent with our niche business strategy and our interest in acquiring profitable businesses that provide geographic and product diversification."

Founded in 2000, Zephyr is the state's largest hurricane insurer with about 70,000 policies and 15 employees. Through June, the company collected about $24 million in premiums this year and expects to generate about $50 million in premiums for the full 12-month period.

Zephyr's current investors include Island Holdings Inc., Everest Reinsurance Co., Guy Carpenter & Co. and Hannover Rucksversicherung AG.

Kingsway Financial is a leading insurer of trucks in North America and the sixth-largest auto insurer. The company also operates property and casualty insurance subsidiaries in Canada and the U.S.

Kingsway operates in Hawai'i through its Lincoln General Insurance Co. unit.

"Kingsway's specialty business focus and long-term commitment to the insurance business align Zephyr with excellent owners," said Paul Picardo, chairman of HI Holdings.