Economical posts 2011 Q3 profit of $1.4 million despite drag effect of Goderich, Ontario tornado losses

The Economical Insurance Group reported a consolidated net income of $1.4 million for 2011 Q3, despite incurring $31.3 million in losses due to weather-related catastrophic events.
The result also recognizes $23.2 million in investment impairments as a result of the exceptional market volatility and fall in equity markets at the end of the third quarter. Net income in the same quarter a year ago was $11.5 million.
The company’s combined ratio in the third quarter was 102%, bringing the year-to-date combined ratio to 99.8%, a decrease  from 104.4% in 2010.
“Economical registered a resilient performance this quarter, sustaining underwriting profitability and recording growth in policy volumes while absorbing significant investment impairment charges and weather-related losses stemming mostly from the Goderich-area tornado,” said president and CEO Karen Gavan. “Adjusting for these weather-related losses, the company’s underwriting results continue to be very strong.”
Economical’s total mutual policyholders’ equity was $1.26 billion as of Sept. 30, 2011, a 4.8% increase in the first nine months of 2011.
Commenting on Economical’s planned demutualization, Gavan said: “In addition to solid operating performance, we are encouraged by the Department of Finance’s clear and sustained commitment to providing a regulatory framework for demutualization. We anticipate draft regulations may be developed by year’s end, and that there may be a concluding round of public comment prior to the regulations being finalized.”