Auto reforms, mild weather drive increase in quarterly earnings for The Economical Insurance Group

The Economical Insurance Group (TEIG) increased its net income by $11.9 million in 2012 Q1, the company reported.

“Our first-quarter results show that Economical is continuing to produce strong profitable growth,” Karen Gavan, TEIG president and CEO, said in a press release. “The company registered 41% growth in net income over the same quarter of 2011, while maintaining strong growth trends in gross written premiums and mutual policyholders’ equity.

“We continue to position our business for sustained profitable growth and a successful demutualization.”

Commenting on Economical’s planned demutualization, Gavan said: “We continue to closely monitor the federal Department of Finance’s progress in establishing a regulatory framework for demutualization, and we remain actively supportive of that process.”

Economical posted a combined ratio of 96.5% for the first quarter, an improvement of 1.5 percentage points from the same quarter a year ago.

Economical’s total mutual policyholders’ equity was slightly more than $1.3 billion as of Mar. 31, a 3.1% increase in 2012 Q1.

Economical said its personal auto business continued to generate positive underwriting results during 2012 Q1, with a combined ratio of 92.1%, compared to 93.5% in the same quarter a year earlier.

“Ontario personal automobile remained profitable in the first quarter of 2012, continuing the trend established throughout 2011, as a result of management’s actions to restore profitability to this line of business through enhanced claims management, improved risk selection and the favourable impact of reforms,” the company said. “The underwriting profit in personal property improved $9.7 million compared to the first quarter of 2011, resulting in an excellent combined ratio of 85.6% compared to 97.1% a year ago. The mild weather conditions experienced during the first quarter of 2012 contributed to this performance.”