EGI Financial reports third quarter loss, but increase in net earned premiums

EGI Financial Holdings Inc., whose subsidiaries’ products include non-standard auto insurance, has reported a net loss of $5.068 million  on gross written and assumed premiums of $62.7 million for the third quarter of the year.

That compares to net income of $13.879 million on gross written and assumed premiums $53.56 million in the third quarter of 2012. All figures are in Canadian dollars.

Net income from continuing operations was $2.44 million in Q3 2013, down year-to-year from $14.0 million in 2012. Net earned premiums increase 20.5% year over year, from to $42 million in Q3 2012 to $50.7 million in Q3 2013, according to its filings posted to SEDAR.

In Canada, EGI offers property and casualty insurance through Mississauga, Ont.-based Echelon General Insurance Company. Echelon General also has offices in Laval, Que. and Penticton, B.C. In addition to non-standard auto, its personal lines includes coverage for motorcycles, antique and classic vehicles, trailers, motor homes and recreational vehicles. Its specialty programs include coverage for commercial property, primary and excess liability and extended warranty.

EGI Financial also offers non-standard in the U.S. through American Colonial Insurance Company, which it acquired for US$4.6 million in 2010. However, last August, EGI Financial announced it agreed to sell its U.S. operations to White Pine Insurance Company.

That sale is undergoing regulatory approval. EGI Financial’s U.S. subsidiaries have policies in Florida and licenses in Georgia, Alabama and Louisiana.  In its financial results, EGI Financial refers to its U.S. results, and the balance sheet writedown associated with the sale of those operations, as discontinued operations.

EGI’s combined ratio from continued operations decreased to 97.7% in Q3 2013, from 98.9% in Q3 2012. For personal lines, continuing operations, the combined ratio in Q3 2013 was 89.1%, up from 88.6% in Q3 2012. Its specialty programs combined ratio was 112.1% in Q3 2013, down from 117.1% in Q3 2012.

EGI Financial’s international division underwrites motorcycle, taxi, non-standard auto and warranty insurance in Britain and Denmark through Qudos A/S. EGI Financial owns all of the preferred shares, plus 51% of common shares, of QIC Holdings ApS, which in turn owns 100% of Qudos.

For that division, which began writing business in Q1 2012, EGI Financial reported its third-quarter direct premiums written more than doubled year to year, from $9.249 million in 2012 to $19.964 million this year. Third-quarter net earned premiums in international increased from $2.12 million in 2012 to $11.772 million in 2013.

The combined ratio in international dropped from 133.8% in Q3 2012 to 99.6% in the most recent quarter.

For the first nine months of 2013, EGI Financial recorded gross written and assumed premiums of $194.067 million, compared to $156.497 million in the first nine months of 2012. Its net income, year-to-date, was $2.41 million, compared to $15.66 million in first nine months of 2012.

Net premiums earned for the first nine months were $158.6 million this year, up from $151.86 million in the first nine months of 2012.

For the first nine months, EGI Financial recorded a combined ratio of 96.7% in Ontario non-standard, compared to 91.9% in the same period of 2012.

“In 2013 the long winter in Ontario had a negative impact on the severity of claims received in the first quarter,” the company stated.