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Economical Insurance reports financial results for Q4, full year 2016

Insurer generated a net loss of $20.3 million for the year.

Economical Insurance has announced consolidated financial results for the three months and full year ended December 31, 2016.

Here are the highlights:

In Q4:
  • Increased gross written premiums by 4.8% over fourth quarter 2015
  • Reported a combined ratio of 114.4% for the quarter, heavily impacted by a deterioration in auto performance
  • Generated a net loss of $38.3 million for the quarter
Full-year:
  • Increased gross written premiums by 3.8% over 2015, driven by strong personal lines growth including the launch of Sonnet
  • Incurred net catastrophe losses of $79.9 million inclusive of reinstatement premiums and the impact of the Fort McMurray wildfire
  • Reported a combined ratio of 109.1% for the year, including an impact of 6.0 percentage points related to the replacement of our personal lines policy administration system and the launch of Sonnet
  • Generated a net loss of $20.3 million for the year
  • Increased total equity by $24.1 million since December 31, 2015 to $1.8 billion

Gross written premiums for the fourth quarter of 2016 grew by $23.8 million or 4.8% over the same quarter a year ago. Personal lines premiums grew by $28.3 million or 9.5% driven primarily by increased auto policy volumes in our broker channel and the launch of Sonnet. Commercial lines premiums declined by $4.5 million or 2.2% over the same quarter a year ago. Excluding the earlier renewal date of certain large accounts in the third quarter of 2016, commercial lines premiums increased by $7.4 million or 3.7% due to targeted rate increases for commercial property and liability, and increased fleet business. For the year, personal lines premiums grew by $68.8 million or 5.5% and commercial lines premiums grew by $6.9 million or 0.9% over the prior year.

Underwriting activity for the fourth quarter of 2016 produced a loss of $72.1 million, resulting in a combined ratio of 114.4% compared to underwriting income of $7.2 million and a combined ratio of 98.5% in the same quarter a year ago. Underwriting results were impacted by challenging auto performance, which experienced a deterioration in Ontario, British Columbia and Alberta. The quarter was also impacted by increases in claims severity and frequency due in part to poor weather conditions, compared to relatively benign weather conditions a year earlier.

“2016 was a mixed year for Economical,” said Rowan Saunders, President and CEO. “We significantly progressed key elements of our strategy including launching Sonnet, the advancement of the demutualization process, and the acquisition of Western Financial Insurance Company which closed on January 1, 2017.

“However, our fourth quarter and full year operating performance was unsatisfactory and disappointing, notwithstanding the impact of the significant investments we have made in our infrastructure and advancing our strategy. Our results were impacted by a deterioration in personal auto performance particularly in Ontario, British Columbia and Alberta,” he said. “To address the challenges in personal auto, we are implementing a number of measures including improvements in pricing, underwriting and claims actions. We are also heavily investing in the replacement of the personal lines policy administration system to support our broker distribution channel, which we expect will improve operating performance over the longer term, once implemented.”

Transcontinental Media G.P.