November 3, 2016 by Canadian Underwriter
Echelon Financial Holdings Inc. has posted a net income of about $1.4 million in 2016 Q3 compared to a $1.3 million loss in 2015 Q3, although net operating income for the most recent quarter decreased markedly as a result of an underwriting loss.
Year to date, the company’s net income was up year over year, increasing 31% to $4.5 million in 2016 from about $3.5 million in 2015, notes a statement issued Wednesday by Echelon Financial Holdings.
Net operating income for the company – which operates in Canada and Europe, primarily focusing on non-standard automobile insurance and other specialty property and casualty insurance products – was down.
Echelon Financial Holdings posted net operating income of about $1.6 million in the third quarter of 2016 compared to $3.6 million in the same quarter of 2015. “The decrease was due to an underwriting loss of $0.4 million compared to underwriting income of $1.4 million for the same period in 2015,” the company reports.
For the first three quarters of 2016, however, net operating income was up over 2015. For 2016, it had increased 5% to about $5.5 million compared to $5.2 million.
The underwriting loss was $429,000 in 2016 Q3 compared to underwriting income of $1.4 million in 2015 Q3. Year to date, the company still had a loss, although at just shy of $3.0 million in 2016, it was 19% less than the $3.6 million in 2015.
Primarily as a result of weaker performance than prior-year quarter in Ontario Auto, Personal Lines generated underwriting income of $179,000 in 2016 Q3 compared to $1.9 million in 2015 Q3, Echelon Financial Holdings reports.
For year to date, underwriting income for the segment was $353,000 in 2016 compared to 6,000 in 2015.
“Commercial Lines generated an underwriting income of $1.3 million compared to $2.0 million underwriting income in the same period last year primarily due to expenses incurred in launching new lines of business in surety and commercial auto,” notes the company statement.
For year to date, underwriting income for the segment was about $2.1 million in 2016, down from $2.7 million in 2015.
“The company continues to focus on growing the Canadian business through product expansion, technology investments and strong broker relationships.”
With regard to combined ratios, it was 99.5% for Personal Lines in 2016 Q3 compared to 94.5% in 2015 Q3; for Commercial Lines, it was 87.2% compared to 84.6%.
Net earned premiums (NEP) were comparable for the third quarters of 2016 and 2015, reaching about $46.5 million this year, 1% lower than the $46.9 million last year.
For the first nine months of the year, though, NEP was up 2% to $135.0 million in 2016 compared to $132.6 million in 2015.
Net written premiums (NWP) were up considerably more, increasing 14% to $52.9 million in the third quarter of 2016, “primarily due to additional new products in Personal Lines and Commercial Lines across Canada.”
Investment income also increased in 2016 Q3, reaching $4.5 million compared to a loss of $2.6 million “due to improved results on the Canadian preferred shares portfolio,” the company statement notes.
And operating expenses increased by $400,000, or 5%, to $7.5 million in 2016 Q3 compared to $7.1 million in 2015 Q3 “primarily due to increased hiring costs for the launches of the new Surety and Commercial Auto Lines,” the company adds.
“We continue to execute on our strategy outlined earlier in the year and have successfully launched our Surety and Commercial Auto products during the quarter,” says Serge Lavoie (pictured right), CEO of Echelon Financial Holdings Inc.
Lavoie notes he is pleased with 2016 Q3 results, especially the Commercial Lines segment.
“Although Personal Lines was negatively impacted by an increase in claims frequency in Ontario auto, the results were offset by strong investment performance,” he points out.
“We have a strong balance sheet that will provide us with a solid launching pad for 2017 and beyond,” Lavoie goes on to say.