Net income increased to $29.0 million
Underwriting results improved by $27.2 million
Combined ratio improves 6.6 percentage points to 93.6%
Total policyholders' equity increased by $36.1 million since 2010
WATERLOO, ON, May 6 /CNW/ - The Economical Insurance Group® ("Economical" or "The Group"), one of Canada's largest property and
casualty insurance companies, today announced significant improvements
in its consolidated financial results for the three months ended March
The increase over the first quarter of last year continues the trend of
the year-over-year financial improvement reported for 2010.
The Group reported consolidated net income of $29.0 million for the
first quarter of 2011. The increase was primarily due to significantly
improved underwriting performance, with the combined ratio improving by
6.6 percentage points over 2010 to 93.6% and resulting in a return to
underwriting profits for the quarter.
The Group's total policyholders' equity was $1,246.6 million at March
31, a 3.0% increase in the first three months of 2011.
"Economical's performance has been strong this quarter, building on the
momentum generated in 2010," said Kathy Mabe, President and Chief
Executive Officer. "The significant improvement in the combined ratio
demonstrates the results of the decision last year to focus our
ongoing efforts on high-quality, profitable business. In particular,
the return to underwriting profitability and the marked improvement in
the performance of our personal automobile business are especially
gratifying. We are starting to see the benefits of the 2010 auto
reforms in Ontario, which is combining with our recent increased focus
on proactive broker management and underwriting discipline to generate
Mabe added: "Our policy volumes have also stabilized. Now that we have
executed the tough actions needed to return to profitability, the
improved quality of our insurance business, combined with our strong
capital position, will form an excellent base for sustained, profitable
growth in keeping with our long-term vision."
The Economical Insurance Group Consolidated Highlights
($ in millions, except as otherwise noted)
Gross written premiums
Underwriting income (loss)
Total policyholders' equity
(*Note: These amounts reflect the implementation of International
Financial Reporting Standards effective January 1, 2010.)
Gross written premiums declined 4.0% from the first quarter of 2010, reflecting the continued
impact of initiatives undertaken in 2010, which focus on profitability
rather than volume. Importantly, policy volumes have now begun to
stabilize in 2011, declining by only 1.2% during the first quarter.
After taking successful action in 2010 to reduce overall volumes in
unprofitable segments, The Group has restored profitability to its
insurance business and is positioned for sustainable growth in 2011 and
The Group continues to build on the efforts undertaken in 2010 to reduce
its relative exposure to the Ontario automobile business, which was the
primary driver for the reduction in premium levels this quarter.
Excluding personal automobile, The Group has generated premium growth
in the quarter.
Underwriting results improved significantly in the first quarter, continuing the momentum
achieved throughout 2010. First quarter underwriting income was $26.1
million, compared with an underwriting loss of $1.1 million in the same
quarter a year ago. Efforts undertaken to stabilize the combined ratio
in 2010 have clearly taken hold as The Group recorded a combined ratio
of 93.6% in the first quarter, reflecting a substantial 10.0 percentage
point decrease in the claims ratio. The positive impact of the Ontario
auto reforms and a lack of weather-related claims activity also
contributed to this significant improvement. As part of the Company's
continued efforts to move toward a public company reporting
environment, we have continued to refine our actuarial reserving
The Group returned its personal automobile business to profitability
during the first three months of 2011, producing an underwriting profit
of $11.0 million compared with an underwriting loss of $31.3 million
for the same period a year ago. The Group's personal property business
continued to perform well, posting a combined ratio of 97.1% during the
The commercial automobile business produced a first quarter combined
ratio of 95.4% compared with 97.4% in 2010, primarily as a result of a
reduction in large losses in 2011. Commercial property and liability
was the only segment to post an underwriting loss during the first
quarter of 2011. The segment was affected by an increase in large-loss
activity in Ontario and produced an underwriting loss of $7.6 million,
compared with an underwriting profit of $1.9 million in the first
quarter of 2010.
Investment income decreased $7.9 million compared with the first quarter of 2010 as a
result of the continued low interest rate environment and a reduction
in realized gains during the quarter compared to 2010. Investment
quality remains strong and there were no investment write-downs taken
during the quarter.
Economical's capital position continues to strengthen and total policyholders' equity increased a
further $36.1 million during the first quarter of 2011. The Group's
minimum capital test ratio also increased to 257% at March 31, 2011.
Annual and Special Meeting
Mutual policyholders are urged to vote as soon as possible on the
important resolutions to be considered at Economical's Annual and
Special Meeting. They are reminded that the deadline for submitting the
Company's BLUE proxies for voting at the Annual and Special is 1 p.m.
May 16, 2011. The BLUE proxy was included with the Management Circular
mailed on April 11, 2011. Information about voting the proxy is
available by calling the Company at 1-519-570-8500 ext. 42997.
About The Economical Insurance Group
Founded in 1871, The Economical Insurance Group is one of Canada's leading property and casualty insurers with $4.5
billion in assets and policyholders' equity of approximately $1.3
billion. Canadian owned and operated, Economical provides a wide range
of insurance products throughout North America. The Group's Member
Companies include Economical Mutual Insurance Company® (including Western General® Farm Division), Waterloo Insurance Company®, Perth Insurance Company®, The Missisquoi Insurance Company®, Federation Insurance Company of Canada™, Family Insurance Solutions and The Mattei Companies.
A mutual insurance company since it was founded, The Economical
Insurance Group announced its intention to demutualize in December,
2010, making it the first property and casualty insurer to take this
step under current Canadian legislation. It is currently developing a
demutualization plan for approval by regulators and The Group's mutual
Forward Looking Statements
This document may contain forward looking statements that involve risks
and uncertainties. The Group's actual results could differ materially
from these forward looking statements as a result of various factors.
Claims and adjustment expenses, commission expenses, operating expenses
and premium taxes during a defined period, expressed as a percentage of
net premiums earned for the same period.
Minimum Capital Test
A regulatory formula defined by The Office of the Superintendent of
Financial Institutions that is a risk-based test of capital available
relative to capital required.
SOURCE Economical Insurance Group
For further information:
Vice President, Marketing and Communications
The Economical Insurance Group
519.570.8500 ext. 48589