October 7, 2009

Manitoba Public Insurance reports stable financial results

Manitoba Public Insurance has completed its first six months of fiscal 2009 in a stable financial position, despite an increase in physical damage claims.

For the six months ended August 31, 2009, Manitoba’s public auto insurer reported a net income of $25.5 million – a decrease from $40.3 million earned during the same period in 2008.

“Our six-month results are satisfactory,” said Donald Palmer, Vice-President of Corporate Finance and Chief Financial Officer. “Our revenue, claims costs and investment income are within expectations – which means we’re heading into the fall and winter months in a stable financial position.”

Typically, Manitoba Public Insurance generates a profit in the first two quarters of its fiscal year, which is offset by operating losses in the latter half of the year as claims volume and costs increase during winter months.

Overall, claims costs for the six-month period were fairly stable, increasing by $22.6 million or 5.9 per cent compared with the first six months of 2008. Physical damage costs rose 8 per cent over the same period last year, due in large part to a severe hailstorm which struck southern Manitoba on Aug. 13 and 14. This storm resulted in more than 9,000 hail claims being opened with Manitoba Public Insurance. Injury claims costs increased 4.3 per cent.

The total damage caused by the hail is estimated at $35 million, of which the net cost to the corporation will be $15 million. As per Manitoba Public Insurance business practices, the corporation’s re-insurer will pay out the remaining $20 million.

Manitoba’s immobilizer program continues to generate positive results, reflected in theft and attempted theft claims decreasing 22 per cent, or $3 million compared to the same period of ’08.

“Unfortunately, hail is a common occurrence during the summer in Manitoba,” Palmer said, “but the good news is reflected in continued downward trends in auto theft and attempted theft. Manitobans continue to benefit from this drop.”

Palmer said investment revenue showed a modest increase of $3.2 million from the previous year. This increase was attributed to higher income generated from the bond portfolio. Investment income helps to lower premiums by an average of about $103 per policy.

Building on the success of the corporation’s anti-theft efforts, Manitoba Public Insurance has requested no overall change in Basic Autopac rates for 2010/11. If approved by the Public Utilities Board, this will be the 11th year out of the last 12 in which Manitoba Public Insurance has held the line on, or decreased, the average rate paid by Manitobans for Basic auto insurance.

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