EGI Financial Holdings sees signs of hardening market in 2008

EGI Financial Holdings Inc. (TSX:EFH) says it is poised to take advantage of the hardening market conditions now developing in 2008.
“With competitive conditions persisting within the non-standard auto line of business, we have remained focused on continued diversification efforts and profitably growing our niche products division,” EGI Financial CEO Douglas McIntyre said in a press release announcing the company’s 2008 Q1 results. “The erosion of underwriting margins in the property and casualty industry in 2007 and continuing in 2008 will likely cause the standard insurers to reverse their earlier actions taken to gain market share.
“While it is too early to make a call as to the exact timing for the return of a hard market phase, we have begun to see early signs that a shift in marketplace dynamics is occurring.
“With margins at standard insurers continuing to erode on this higher risk business, EGI management believes that the eventual retrenchment into their standard risk markets is imminent and will create an opportunity for non-standard auto insurers such as EGI.”
Overall, the company reported a 2.3% increase in its 2008 Q1 profits, which went from Cdn$2.5 million in 2007 Q1 to Cdn$2.6 million for the three months ended Mar. 31, 2008.
The company’s 2008 Q1 combined ratio stood at 100.8%, compared to 94.7% for the same period last year.
In the first quarter of 2008, EGI Financial generated direct written and assumed premiums totalling Cdn$34.9 million, 15.7% above the Cdn$30.2 million for 2007 Q1.
“The increase was attributable to an increase in premiums in each of its Canadian business segments,” EGI reported.
Personal lines premium increased Cdn$2.2 million in 2008 Q1, while direct written premiums in the niche products division increased 57.1% (from Cdn$5.6 million in 2007 Q1 to Cdn$8.8 million in 2008 Q1).