EGI Financial Holdings reports 2006 Q4 profit up 70%

EGI Financial Holdings Inc. (TSX:EFH) announced a 2006 Q4 profit of $5.2 million an increase of 70% over its 2005 Q4 profit of $3.1 million.
The improvement was primarily attributable to the year-over-year improvement in the combined ratio, as well as the increase in investment income in 2006, the company reported.
The companys 2006 Q4 combined ratio (COR) was 85.6%, an improvement over its 2005 Q4 COR of 88.1%.
“EGI’s business continued to perform well in the fourth quarter of 2006,” said EGI Financial CEO Douglas McIntyre in a press release. “Despite the ongoing competitive conditions in our core automobile business, we continue to produce strong bottom-line results.
I would note further that we are accomplishing this while maintaining a very conservative reserving strategy.
The company said the benefits of its decision to develop its niche products business were reflected in the its consolidated revenue.
While competitive markets in Echelon’s traditional personal lines (formerly the automobile) division resulted in a 14% decline in direct written premiums, the company noted in a press release, the niche products division experienced a 31% increase.
Total direct written premiums in 2006 Q4 were $25.9 million, compared with $28.1 million in the corresponding period last year. Despite the decrease in direct written premiums, net earned premiums rose 21% in the 2006 fourth quarter from $20.0 million to $24.2 million, as a result of the elimination of the 2005 quota share reinsurance arrangements, the company noted.
Underwriting profit in the quarter increased 43%, from $2.5 million to $3.5 million. The strong increase was attributable primarily to the company’s non-standard automobile business, which continues to experience redundancy in its loss reserves, thus improving the auto loss ratio to 62.9% in 2006 [Q4] compared to 63.5% in [2005 Q4], the company reported.