Optimum falls into net loss despite underwriting action (April 01, 2002)

Montreal-based insurer Optimum General Inc. (TSE: OGI.A) posted a net loss of $2.7 million for the 2001 financial year ended December compared with earnings of $168,000 reported for the previous year. This translates to a loss of 25 a share for the latest full year reporting period against the 2 a share in earnings made for 2000.

Revenue clocked in at $176.4 million compared with the $189.4 million made a year earlier. Net premiums for 2001 amounted to $104.5 million, a 19% decline on the previous year’s $129.8 million. The company ascribes the decline in revenue to a “more stringent underwriting policy” introduced in the beginning of the 2001 financial year.

Optimum’s claims ratio for 2001 rose by 13.5% to 75.9% compared with the previous year’s 66.9% ratio. This equals an underwriting loss of $15.9 million against 2000’s underwriting loss of $10.4 million. Auto claims largely accounted for this increase, says the company’s CEO, Jean-Claude Page “The whole insurance industry faces a difficult situation regarding automobile coverage in many provinces. Our own disappointing results also reflect this, but our proactive stance on rate adjustments that began in 2000 and continued throughout 2001 should help us come back to a profitable situation.”