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Despite an unusually high number of weather-related claims this summer, Manitoba Public Insurance finished its second quarter in a strong financial position stabilized by increases in investment income and premium revenue.
For the six months ended August 31, 2007, corporate net income was $80.3 million – up from the $65.7 million earned during the same period in 2006. These results include net income of $56.9 million from the Basic Autopac line of business.
“This was the worst summer for weather-related claims in a decade, largely because of a single massive hailstorm, but our underlying financial strength carried us through,” said Don Palmer, Vice President of Finance and Chief Financial Officer.
The hailstorm that struck Dauphin and other communities on August 9 and 10 was one of the single largest catastrophic events in the corporation’s history. The Dauphin storm resulted in about 13,000 claims with an estimated value of $50 million. Palmer said that because the corporation purchases reinsurance protection to guard against events like this, the real exposure to premium-payers is limited to $10 million.
"Despite this hail storm and an increase in claims and bodily injury costs, a strong investment environment continues to put Manitoba Public Insurance in strong financial position,” he said.
Investment income for the six months increased by $27.0 million compared to the same period last year, primarily the result of higher gains on the sale of equities. Written premiums also increased $13.5 million over last year to $439.5 million as Manitobans purchased more and newer vehicles. This gain, however, was more than offset by higher claims costs, which increased by $23.8 million or 6.8 per cent over last year. Physical damage claims incurred increased by $16.4 million.
Palmer warned that the financial performance of the province’s public auto insurer remains closely tied to claims costs. Traditionally, Manitoba Public Insurance generates profits in the first two quarters of the year that are offset in winter months when claims volume increases.
“These results provide us with some cautious optimism as we head into winter,” Palmer said. “As we do so, I remind Manitobans that every one of us can directly influence these results, and how much we all pay for auto insurance, by taking care on the road.”
Manitobans continue to enjoy the benefits of the public auto insurance system. On June 13, 2007 the corporation released its 2008/09 Basic Insurance rate application to the Public Utilities Board (PUB), proposing no overall average rate change from 2007/08 rates and a 7.75 per cent premium rebate estimated to be $49.1 million. The PUB is expected to make a ruling later this year.
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Contact:
Manitoba Public Insurance
(204) 985-7000 or 1-888-554-9549
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