Optimum General still waiting for turnaround

Tough times continue for Montreal-based Optimum General (TSX: OGI.A), which posted a net loss of $2.3 million for the quarter ending June 30, 2002. This compares with a net loss of $709,000 for the second quarter of 2001. The resulting net loss per share is $0.21 for this quarter, compared to $0.06 for the same period last year.
Gross written premiums were down, to $41.9 million from $51.5 million in second quarter 2001, partly the result of the company’s decision to stop writing new business in the troubled Atlantic market earlier this year. Net earned premiums were also down for the second quarter, to $23.6 million from $26.8 million last year. The company says that a new stricter underwriting process also contributed to the decrease.
The company has temporarily suspended writing business in Texas, but says it plans to resume again when reinsurance conditions improve. It have also reduced its number of policies in the troubled Ontario auto market by 33% and increased rates by 24% there.
Auto claims in Ontario and Alberta, as well as leftover Atlantic claims, were also partly to blame for the company’s soaring claims ratio in the second quarter of this year, which hit 87.9%, versus 73.7% in 2001. The combined ratio sits at 129.2% for the most recent period, well above the 110.8% ratio in second quarter 2001.
The result is an underwriting loss for the quarter of $6.9 million, compared to a loss of $2.9 million in 2001’s second quarter.
On a bright note, investment income was up for the quarter, to $2.8 million, versus $1.5 million in the second quarter last year.
The company remains hopeful that changes, such as reducing its auto exposures, will pay off in the future. “Over the last year, we have adopted key strategies aimed at returning the company to profitability” says David B. Liddle, Optimum’s president and COO. “As these measures take effect, we should see an improvement in performance”