Optimum General Recovery Maintains Steam (April 01, 2004)

Montreal-based Optimum General Inc. (TSX: OGI.A) jumped into the black for the 2003 financial year by posting a net profit of $2 million, equal to 17 a share. This compares with a net loss of $7.4 million, or 68 a share made for 2002.

Optimum’s gross written premiums dropped moderately for 2003 to $144.5 million (2002: $145.2 million), although this shows stabilization after two years’ of business withdrawal. The brighter note to the company’s financial results for 2003 is that it knocked the claims ratio down to 58.8% from the 76.3% reported the previous year. The insurer’s expenses also fell slightly for 2003 to a 43.4% ratio compared with the 44.2% reported for 2002. The company says operating expenses continue to be challenged by increasing reinsurance rates.

Furthermore, Optimum’s investment income fell to $4.7 million for 2003 compared with the $7.5 million disclosed for 2002. This largely resulted from the low interest rate environment and reduced capital gains, the company observes. Overall, the insurer’s combined ratio clocked in at 102.2% for 2003 compared with the 120.5% reported the year prior. Commenting on the results, Optimum General president David Liddle says, “three factors have contributed to our turnaround in underwriting results: the withdrawal from unprofitable territories and programs, rate increases and savings from a streamlining of administrative functions”.