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July 16, 2001 MPI
Reports Net Income of $4.7 million Higher claims costs and weaker investment performance have had a negative impact on first quarter bottom line of Manitoba Public Insurance. For the three months ending May 31, 2001, Manitoba Public Insurance reported net income of $4.7 million - $31 million less than it earned during the same time last year. The current results include a net income of $6.0 million from the Basic Insurance line of business. The Corporation's financial position has been eroded by a 25 per cent increase in claims costs over the previous year. The higher costs are impacted by the volume and severity of collisions and comprehensive physical damage claims. There were 54,306 claims filed in the first three months of the current year - 8,362 more than were filed last year during the same period of time. The higher claims costs are in addition to a 6.7 per cent jump in costs last year. Manitobans reported 226,968 claims last year, an increase of 19,766. Investment income for the period was $17.4 million. Changes in the equities market in recent months have resulted in lower equity gains during the first quarter compared to the previous year. MPI reported investment of income of $17.4 million for the first three months of 2001 - about $8.6 million less than last year at this time. Investment income is an important source of revenue that reduces insurance premiums for all Manitoba motorists. "Our financial results reflect trends that we are seeing throughout Canada,'' said Barry Galenzoski, Vice President of Corporate Finance and Chief Financial Officer. "Throughout the country, insurance companies are reporting significant increases in claims." Manitoba Public Insurance is currently providing premium payers with a one-time 16.6 per cent discount on all basic compulsory 2001/02 policies purchased before February 28, 2002. The discount will leave about $77 million in the pockets of Manitoba premium payers. In June, the Corporation submitted an application to the Public Utilities Board that would reduce base insurance revenue in 2002/03 by 1.2 per cent.
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