ICBC net income up on expense reduction and real estate sale

The Insurance Corp.of B.C. (ICBC) is reporting net income of $77 million for the six months ending June 30, 2003, largely on the back of reduced expenses, rate hikes and the sale of certain real estate. This represents a significant jump over the $9.2 million net income reported for the first half of 2002.
The public auto insurer notes that since 2000, it has lowered expenses by $175 million, including a drop in its expense ratio to 15.1% from 15.4% between first-half 2003 and 2002.
Premiums were up 9.4%, to $1.38 billion for the first half of this year versus $1.27 billion in first-half 2002. This is the result of full realization of the 7.4% rate hike from 2002, and partial realization of a 4.8% rate hike made this year. The number of basic auto policies sold jumped 1.1% during the first half of the year.
The company also reports a gain of $14 million on the sale of a former claim center property.
Claims were stable, costing about $125 billion for the first half of this year, although the number of low-cost claims dropped as a result of higher minimum deductibles and favorable weather through the winter and spring. However, a 9.3% increase in the average cost of personal injury claims offset any gains the weather may have brought.
And investment losses also plagued the Crown corporation in the first half of 2003, down to $190 million, a 14.4% drop from first-half 2002. Rate of return on ICBC’s investments was 6.3% in first-half 2003, versus 8.0% for the same period a year earlier.
“Our cost reduction initiatives are paying off and we’ve been lucky with the weather so far this year,” says ICBC president Nick Geer. “The favorable results will allow us to move forward in rebuilding our reserve capital.”