Economical Insurance’s 2012 Q2 results support positioning for demutualization

Economical Insurance’s financial numbers for the second quarter of 2012 show that the company is continuing to deliver strong profitable results and is well-positioned for a successful demutualization, suggests Karen Gavan, president and CEO of the company.

Economical has maintained strong growth trends in gross written premiums and mutual policyholders’ equity in 2012 Q2, Gavan reports in a company statement. “While favourable weather conditions in 2012 have supported our performance, we continue to position our business for sustained profitable growth and a successful demutalization.”

Economical reported consolidated net income of $39.7 million during 2012 Q2, a 71% increase over the $23.2 million in 2011 Q2, notes the company statement.

Comparing the second quarters of 2012 and 2011, gross written premiums were $513.8 million, up from $498.4 million (growth continues in both personal and commercial lines, particularly in the Western Region); claims ratio improved by 7 percentage points to 58% from 65% (driven by relatively benign weather conditions and the absence of weather-related catastrophic losses); combined ratio improved by 6 percentage points to 93.6% from 99.6%, and underwriting income of $26.2 million was up $24.7 million from $1.5 million.

With regard to half-year results for 2012, net income increased $28.5 million to $80.6 million over the same period in 2011, while combined ratio was 95.1% compared to 98.8%.

Economical reports total mutual policyholders’ equity was $1,381.7 million in the first six months of 2012, a 6.3% increase over $1,300.1 million during the first half of 2011. 

“We continue to have confidence in the progress being made by the federal Department of Finance towards establishing a regulatory framework for demutualization,” Gavan says. “In the meantime, we continue to prepare internally to ensure we are ready to proceed with demutualization as soon as the regulations are available.”