July 30, 2008

Manitoba Public Insurance reports first quarter results

The combined effects of dropping auto theft rates, a larger and higher quality fleet and a significant decrease in investment income are reflected in the first quarter financial results reported by Manitoba Public Insurance.

For the three months ended May 31, 2008, the public auto insurer reported net income of $13.2 million, down from the $64.8 million in net income reported for the same period last year.

“Because of lower gains on the sale of equities, investment income for the first quarter was down by nearly $45 million compared to the same period in 2007, when investment returns were unusually strong,” said Don Palmer, Vice-President of Finance and Chief Financial Officer.

“On the positive side, the continuing drop in auto crime reduced theft and attempted theft claims by $3.4 million. We also saw a $9.8 million increase in earned revenues, mainly due to improvements in the number and value of vehicles insured in Manitoba.”

While physical damage claims incurred decreased by $4.5 million during the first quarter of 2008/09 compared to last year, overall claims costs increased by $15.5 million or 8.9 per cent.

Traditionally, the first two quarters of the corporation’s fiscal year generate a profit, which is then offset by an increase in claims during the winter months.

Based on current projections, the corporation expects to end this fiscal year with a net loss from operations of approximately $7.5 million, mainly because of rising claims costs and declining investment returns.

On June 13, 2008, the corporation released its 2009/10 Basic insurance rate application to the Public Utilities Board, requesting a 1.0 per cent overall average rate decrease from 2008/09 rates. If approved, 2009/10 will be the 10th year out of the last 11 in which Manitoba Public Insurance has held the line on, or decreased, the average rate paid by Manitobans for auto insurance.

The PUB is expected to rule on the application in the fourth quarter of the fiscal year.

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