Strong financial results help keep ICBC rates low and stable



    VANCOUVER, Aug. 8 /CNW/ - ICBC has reported net income of $256 million
for the first half of 2007, which compares to $110 million for the same period
in 2006.
    "The strong B.C. economy means there are more vehicles being insured and
our customers are opting for better levels of coverage," said Paul Taylor,
ICBC's president and CEO. "As well, ICBC's investment income is strong and our
operating costs continue to be lower than industry benchmarks."
    With the pricing changes in May, rates are going down or staying roughly
the same for half of B.C. motorists who buy both their basic and optional
coverage from ICBC. Current positive results in managing claims cost and
reducing the impact of crashes could result in future rewards for our safest
drivers.
    Insurance premiums earned in the first six months of 2007 increased to
$1.70 billion from $1.57 billion for the first six months of 2006. The growth
in earned premiums is the result of a 3.4 per cent increase in the number of
insured vehicles on B.C. roadways and strong sales of optional coverage.
Premium revenue also reflects the 3.8 per cent average decrease in rates for
optional coverage and the interim 3.3 per cent basic rate increase, both
effective in May 2007. Rates for basic, compulsory insurance are regulated by
the BCUC.
    Net claims costs for the six months ended June 30, 2007 were $1.31
billion, which is consistent with the $1.33 billion reported for the same
period in 2006. Claims costs for the current year have trended upward. The
change in the cost of prior years' claims had increased in 2006 but stabilized
in 2007.
    Operating expenses for the first half of 2007 were $241 million, which
compares to $240 million for the first half of 2006. Staffing levels at the
company's 24-hour call centres and in driver licensing services have increased
to improve customer service. ICBC's operating costs continue to be
well-managed and include ongoing investments in road safety and fraud and auto
crime prevention.
    Investment income in the first six months of this year increased to
$276 million, from $269 million in the same period last year. The majority of
ICBC's investments are in bonds which have been negatively affected by rising
interest rates, however, so far this year, gains on equities have contributed
to strong investment income.

    
                           Statement of Operations

                       For the Six Months Ended June 30

    ($ Millions)

                                                              2007     2006
                                                             Actual   Actual
                                                            -------- --------
      Premiums written                                      $ 1,783  $ 1,670
                                                            -------- --------
                                                            -------- --------

      Premiums earned                                         1,697    1,574
      Service fees                                               32       18
                                                            -------- --------
    TOTAL EARNED REVENUES                                     1,729    1,592
                                                            -------- --------

      Net claims costs incurred during the year               1,307    1,275
      Prior years' claims adjustments                            (2)      59
                                                            -------- --------
      Net claims incurred                                     1,305    1,334
      Operating expenses (claims services, road safety
       and administrative)                                      207      200
      Premium taxes and commissions                             198      184
      Deferred premium acquisition cost adjustment               (5)     (16)
                                                            -------- --------
      Total expenses                                          1,705    1,702
                                                            -------- --------

    UNDERWRITING INCOME/(LOSS)                                   24     (110)

      Investment income                                         276      269
                                                            -------- --------

    INCOME - INSURANCE OPERATIONS                               300      159
                                                            -------- --------
                                                            -------- --------


    PROVINCIAL LICENCES AND FINES                               247      238
                                                            -------- --------
    LESS:
      Licences and fines transferable to the Province           247      238
      Non-insurance operating expenses                           34       40
      Commissions                                                10        9
                                                            -------- --------
      Total non-insurance expenses                              291      287
                                                            -------- --------
    LOSS - NON-INSURANCE OPERATIONS                             (44)     (49)
                                                            -------- --------
                                                            -------- --------
    NET INCOME                                              $   256  $   110
                                                            -------- --------
                                                            -------- --------


    Minimum Capital Test                                     162%(1)  148%(2)


    (1) The Minimum Capital Test (MCT) results at June 30, 2007 increased
    over December 31, 2006 mainly due to net income for the first half of
    2007 and a change in the MCT guidelines as defined by the Office of the
    Superintendent of Financial Institutions Canada to incorporate the new
    Financial Instrument accounting standards which were effective January 1,
    2007. MCT on an unadjusted basis under the old rules would have been
    157%.
    (2) As at December 31, 2006.
    





For further information:

For further information: Doug McClelland, (604) 982-2476

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