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Echelon Financial Holdings Inc.’s net income balloons to $5.1 million in 2015 Q2 from loss in 2014 Q2


August 7, 2015   by Canadian Underwriter


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Echelon Financial Holdings Inc. reported net income of $5.1 million for the three months ended June 30, 2015 from the $603,000 loss for the same quarter of 2014, the company announced Thursday.

Net income for Echelon increased 73% to about $8.3 million

Net income was also way up for the first half of 2015, an increase of 73% to about $8.3 million compared to $4.8 million for the first six months of 2014, notes a statement from Echelon Financial Holdings, which operates in the property and casualty insurance industry in Canada and Europe, primarily focused on non-standard automobile insurance and other niche and specialty insurance.

The company’s net operating income was almost $5.1 million in the second quarter of 2015 compared to $263,000 in the second quarter of 2014. For half-year results, Echelon Financial’s net operating income was $7.1 million in 2015 compared to $3.9 million in 2014.

The company also saw solid performance in 2015 Q2 with regard to underwriting income, posting $1.7 million compared to a loss of $3.3 million in 2014 Q2. Half-year results continued to show a loss, but it improved to a loss of $1.8 million in 2015 compared to a loss of $2.8 million in 2014.

The results were driven by direct written premiums (DWP) of $137.8 million in the second quarter of 2015, up 36% from $101.4 million in 2014 Q2. The increase was “attributable primarily to the continued growth of the International division and the inclusion of premiums written by The Insurance Company of Prince Edward Island,” notes the Echelon Financial statement. For the first half, the company reports DWP was $228.6 million, up 26% from $181.2 million in 2014.

“Personal Lines generated underwriting income of $1.8 million compared to $3.3 million in the same period last year due to slightly weaker performance in Ontario auto that was partially offset by strong performance in Atlantic Canada, particularly in Auto,” notes the company statement.

Commercial Lines, for their part, generated underwriting income of $0.3 million compared to a $0.3 million underwriting loss in the same period of 2014 as a result of strong performance in Atlantic and Western Canada, it adds.

And for the International division, it produced underwriting income of $1.4 million for 2015 Q2 compared to a loss of $5.4 million for the same three months of 2014 – primarily attributed to rate increases and strong renewals of the company’s Irish Motor program that began writing business in 2013 Q2.

International division growth was also the result of improved results in the United Kingdom Auto “that were negatively impacted in the second quarter of 2014 by adverse weather conditions. Warranty, Commercial Property and Accident & Sickness progress written in Scandinavia continue to perform strongly,” Echelon Financial points out.

“It was another quarter of strong underwriting results for the company, with all major segments making a contribution,” company CEO Steve Dobronyi notes in the statement. “Personal Lines, which is the core of our company, has recovered well from the slow start of the year, especially in Ontario and the Maritimes. Personal Lines has now delivered an underwriting profit in 17 of the past 19 quarters,” Dobronyi says.

“These underwriting results have put us back on track to meet our planned goals for the year,” he reports. “We’re looking forward to the remainder of the year as we invest further in our infrastructure and, at the same time, deliver attractive returns to our shareholders.”

Other company results for 2015 Q2 compared with 2014 Q2 include the following:

• net operating income of $0.42 per share compared to $0.02 per share;

• combined ratio of 97.8% compared to 105.3%;

• investment income of $4.0 million compared to $5.5 million (among other things, preferred share portfolio continued to perform poorly due to negative market sentiment, and fixed income portfolio performed weakly due to increasing bond yields in Canada and Europe); and

• the Minimum Capital Test ratio of the company’s Canadian subsidiary, Echelon Insurance, as of June 30, 2015 was 220%.


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