Solid investment income helped Manitoba Public Insurance offset a significant rise in claims costs for the first quarter of 2006.

For the three months ended May 31, 2006, claims costs were up $17.1 million or 11.5 per cent over the same period a year earlier. The corporation’s investment income grew almost as quickly, increasing by $14.9 million compared to the first quarter of the previous year.

As a result, the company reported net income from operations of $56.3 million – an increase of 6.4 per cent over the $52.9 million earned during the same period in 2005.

“We’re pleased with the first-quarter results,” said Barry Galenzoski, Vice-President of Corporate Finance and Chief Financial Officer. “But we can’t ignore the rise in claims costs with respect to bodily injury and physical damage.

“Every Manitoban can directly influence these results, and how much they pay for auto insurance, through their driving behaviour,” said Galenzoski. “It’s not very complicated – fewer claims mean fewer payouts and ultimately lower auto insurance rates.”

Galenzoski noted that physical damage claims incurred during the quarter increased by $6.2 million as the number of claims reported increased 8.6 per cent to 63,613.  The cost of bodily injury claims also increased by 12.3 per cent over the quarter to $55.2 million. 

Contributing to the rise in claims costs was a $3 million increase in costs related to the Immobilizer Incentive Strategy as thousands of Manitobans respond to the program. The theft-proofing program, introduced in June 2005, is expected to lead to a long-term reduction in claims costs. In response to the recent expansion of the no-cost element of the program into rural Manitoba, the corporation transferred an additional $10 million into the Immobilizer Incentive Fund from the Basic Rate Stabilization Reserve, effective March 1, 2006.

The results of the quarter also reflected the payment of a $57.7 million premium rebate, which was returned to Basic policyholders during the first three months of the fiscal year.

Traditionally, Manitoba Public Insurance generates a profit in the first two quarters of its fiscal year, which is offset by the typical increase in claims during the winter months. Independent research shows Manitobans continue to pay among the lowest rates in the country for comprehensive coverage, including personal injury protection that is unmatched in Canada.

Last month Manitoba Public Insurance requested a 2.6 per cent reduction in overall revenue in its 2007-08 Basic Autopac rate application filed with the Public Utilities Board. If approved, three out of four Autopac customers will pay less for auto insurance next year. It will also mark the eighth year in nine that Manitoba Public Insurance has held the line on or decreased the average premium paid by Manitobans for auto insurance.

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Contact:
Media Relations, Manitoba Public Insurance
(204) 985-7300 or 1-888-554-9549 (toll-free in Manitoba)