Optimum General 2-Q Benefits From Underwriting

Montreal-based Optimum General Inc. (TSX: OGI.A) saw net income for the second quarter of this year more than double to $2.21 million (19 a share) compared with the $783,000 (7 a share) reported for the period a year ago.

Much of the insurer’s financial gains resulted from stringent underwriting discipline, with the company’s combined ratio plummeting to 90.6% for the latest reporting period against the 99.9% ratio shown for the same period last year. For the second quarter of this year, Optimum produced an underwriting profit of $2.3 million versus just $15,000 reflected 12 months ago. This helped offset a marginal drop in the insurer’s investment income for the second quarter of this year to $974,000 versus the $1.1 million reported for the same period the year prior.

The company’s gross written premiums for the second quarter of this year eased back to $37.6 million from the $38 million declared the year prior, however, over the same period net earned premiums rose to $24.6 million versus the $22.7 million reported a year ago. Optimum also managed to reduce its expenses to $22.3 million for the second quarter of this year against the $22.7 million shown for the same period in 2003. Notably, the insurer’s claims ratio dropped to 44.8% for the latest reporting period from the 55.5% ratio shown for the same period last year.

For the first half of 2004, Optimum produced net income of $2.47 million (21 a share) compared with the $492,000 (4 a share) disclosed for the first half of last year. Over the same period, the insurer’s combined ratio fell to 96.8% (first half 2003: 103.1%) with its underwriting profit clocking in at $1.6 million compared with the first-half of last year’s underwriting loss of $1.5 million. “These good results confirm the soundness of the strategy implemented over the past few years and encourage us to continue our efforts to improve them,” says president David Liddle.