Economical reports $40.6 million weather-related cat losses for Q3

Economical Insurance reported a net income of $13.8 million for the third quarter of the year on Wednesday, down $14.7 million from the prior year quarter.

The Waterloo, Ont.-based insurer recorded $40.6 million of weather-related catastrophe losses (net of tax and reinsurance) for the quarter, mainly in Ontario and the Greater Toronto Area in particular. That compares with only $12million of weather-related catastrophe costs for the third quarter results in 2012.

The company did report that it increased gross written premiums  by 6.1% in the quarter (from $462.5 million to $490.5 million).

Its combined ratio for Q3 was 103.7%, a 4.6 percentage point deterioration over the same quarter of 2012.

Net income for the first nine months of 2013 was $56.5 million, compared to $108.3 million for the same period in 2012, with a combined ratio of 99.8% compared to 96.5% in 2012. Excluding the impact of weather-related catastrophe losses, the year-to-date combined ratio was 92.8% versus 95.2% for 2012.

The company’s personal auto business generated a combined ratio of 90.8% for the first nine months of the year, while personal property’s combined ratio was at 124.4%.

Commercial auto produced a third quarter combined ratio of 82.6%, compared to 94.1% in the same quarter of 2012, primarily due to a large decrease in the severity of claims, the company said.

Overall the commercial lines business posted a combined ratio of 107.5% during the third quarter of 2013, compared to 102.5% for the prior year quarter.

“Our third quarter results serve as another reminder of the increasing impact of climate change and that weather-related events are becoming more extreme and prevalent,” Karen Gavan, president and CEO of Economical noted in a statement on the earnings.

“After promptly responding to the Calgary floods, we rapidly deployed claims staff to respond to catastrophic weather-related losses in the Greater Toronto Area to serve our policyholders when they needed us most,” she added.

“Our third quarter and year-to-date results demonstrate the resilience of our insurance operations in the face of such devastating natural catastrophes, as well as the strong underlying performance of our insurance book of business.”