EGI’s Q2 results falter on new lines of business

EGI Financial Holdings Inc. (TSX: EFH) reported a profit of Cdn$2.7 million for Q2, marking a 38.1% decrease over the same period last year (Cdn$4.3 million).
The combined ratio for 2008 Q2 jumped nearly 20% when compared to last year, increasing from 84.8% in 2007 to 101.3% this year.
The company’s underwriting income dropped 110% quarter-over-quarter, from a profit of Cdn$4.5 million to a loss of Cdn$465,000, an EGI statement says.
The company points to its two newest sources of business as contributing factors to the underwriting loss. Its emergency travel health business incurred a loss of Cdn$4.5 million and the international division business incurred a loss of Cdn$800,000 for the quarter, the release says.
The company reported a quarterly loss ratio of 238% for the Emergency Travel Health line of business, based on loss development and some late reporting related to claims incurred prior to Mar. 31, 2008.
“With the most recent travel season behind us and concrete steps being taken to redesign the company’s travel health product offering for the 2008-09 travel season, we anticipate stronger results over the remainder of 2008,” said EGI CEO Douglas McIntyre in a press release.
The loss ratio in 2008 Q2 was 67.7%, while the expense ratio was 33.6%. This compares with 53.2% and 31.6% respectively in the same period of 2007, the statement says.
“Despite the initial growing pains of the niche products division’s new emergency travel health book of business and start-up costs associated with the international division, we are satisfied with the second quarter result, driven by the strong performance of our mature business lines,” McIntyre said.
“Excluding losses from these two developing businesses, the remaining business lines are exceeding expectations, despite a lower amount of favourable loss development in the first half of 2008.”