Echelon Insurance reports combined operating ratio of 105.1% for Q1 2015, up from 99.1% in Q1 2014

Echelon Insurance – a Mississauga, Ont.-based company that has operated in the property and casualty insurance industry in Canada since 1997, primarily focusing on non-standard auto insurance and other niche and specialty general insurance products – reported a combined operating ratio of 105.1% for Q1 2015, compared to 99.1% in the first quarter of 2014.

Echelon’s holding company, EGI Financial Holdings Inc., reported in its first quarter 2015 results on Wednesday an underwriting loss of $3.5 million for the quarter compared to an underwriting profit of $0.5 million in Q1 2014. There was also a 14% increase in direct written premiums over the same period in 2014 to $91 million. [click image below to enlarge]

“It was a quarter of mixed results for our company,” commented Steve Dobronyi, Echelon’s CEO, in a media release. “Our Personal Lines underwriting results are off to a slow start to the year, caused primarily by harsh winter conditions, especially in the Maritime provinces. On the other hand, underwriting profits were on target in our International and Commercial segments and, coupled with strong investment performance, allowed us to generate an increase in book value of $0.27 per share.” He added that results outside of Personal Lines were strong, with Commercial & Specialty producing a 95% combined ratio and International a 93% combined ratio.”

Net operating income of $2.1 million was recorded in the quarter, compared to $3.7 million in the first quarter of 2014. “Personal Lines generated underwriting loss of $3.7 million,” the release said. “Severe winter weather conditions in the Maritimes impacted the frequency of claims in auto and personal property resulting in an underwriting loss of $2.0 million in Maritimes Personal Lines. In addition, 5 large losses in Ontario auto had a total adverse net impact of approximately $4.6 million.” [click image below to enlarge]

Commercial Lines recorded a $0.4 million underwriting income, driven by strong performance in creditor insurance and improved results in commercial property & liability in Ontario, Echelon reported. The International division produced underwriting income of $1.8 million for the quarter, driven by improved results in UK auto, primarily due to management actions to amend underwriting conditions and to cancel unprofitable programs.

In the quarter, direct written premiums increased by 14%, attributable primarily to a $5.8 million or 14% growth in the International division and the inclusion of premiums written by The Insurance Company of Prince Edward Island (ICPEI), the release said.

Operating expenses incurred in the first quarter of 2014 increased by 10% over the prior year, in line with the 11% increase in net earned premiums.