November 7, 2002 by Canadian Underwriter
The downward spiral shows little sign of abating for Montreal-based Optimum General Inc. (TSX: OGI.A). Third quarter results see losses deepen, including a big dip in underwriting results.
Overall, the company saw a net loss of $743,000, or $0.07 per share for the quarter ending September 30, 2002, as compared to net profit of $475,000, or $0.04 per share, for the same period last year. This brings net losses for the first nine months of this year to $2.7 million, or $0.25 per share, from a loss of $113,000, or $0.01 per share, at the same point in 2001.
Optimum’s underwriting loss for the quarter is $2.7 million, versus $1.3 million for Q3 2001. For the first nine months the underwriting loss is $11.1 million, a slide of more than $4 million compared to last year.
Investment income dipped slightly, down to $1.4 million this quarter from $1.8 million a year earlier.
The company reported a rise in expenses, which stood at 46% in the third quarter 2002, compared to 39.7% in third quarter 2001. However, just after the quarter’s conclusion a restructuring was announced that saw more than 45 staff let go, a move expected to improve expenses in the coming months.
And although the company’s claims ratio dropped slightly for the quarter, to 65.2% from 65.4% in Q3 2001, its overall combined ratio ballooned to 111.2% from 105.1% a year earlier.
Net written premiums were down for the quarter, to $37.4 million from $45.3 million, a not unexpected finding given the company’s withdrawal from Atlantic Canada, suspension of underwriting in Texas and cutback in business in other provinces. Net earned premiums were down to $24.3 million for the quarter, from $26.0 million a year earlier.
“There is no doubt that our decision to improve our portfolio and to withdraw from unprofitable territories and programs has reduced our volume of business,” says David B. Liddle, Optimum’s president and COO. “However, the insurance business is cyclical and I believe that we are very close to the bottom of the cycle and poised to improve.