February 19, 2018 13:30
Echelon has recorded a net loss of 4.82 million dollars ($M) in the fourth quarter of 2017, a fall of 286 % compared to net income of$ 2.6 Million in the fourth quarter of 2016. The combined ratio worsened by almost 25 percentage points up to 115.2 % for the period.
The deficit is deepened in the underwriting results in personal insurance, with a loss amounting to$ 12.3 Million compared to a loss of$ 3.5 Million in the same period last year. That dip is explained by an increase in the severity of claims in the Atlantic provinces and a growth rate in Ontario compared to the fourth quarter of 2016.
On the other hand, the insurance companies recorded fee income of$ 2.4 Million, down from $ 7,86 M$ in the fourth quarter of 2016.
“Despite the unsatisfactory results for the fourth quarter of 2017, we have made significant progress in the achievement of our strategic objectives established at the beginning of the year. 2017 marked the launch of new products and our management system fonts, and Echelon has received a strong support from our broker partners, ” says Serge Lavoie, chief executive officer of Echelon.
For the year, Step has, however, recorded a net profit of 6,64 M$, a decrease compared to net income of 7,12 M$ of the previous year. The combined ratio has increased from 96.2% in 2016 to 102.3 % in 2017.
Direct premiums written increased by 31 % to reach 285,7 M$ with the natural growth in individual insurance and the new products in the insurance business launched in 2016.
The forest fires in British Columbia have cost$ 2 Million
The results of the subscriptions of Step showed a loss of$ 9.2 Million, compared to a loss of$ 3.2 Million in 2016. In addition to an increase in the severity of claims in automobile insurance in the Atlantic provinces and Ontario, the net impact of the forest fires in British Columbia amounted to$2 Million.
Business insurance, fee income declined$ 6 Million from$ 10 Million in 2016 to$ 4 Million in 2017, due to lower results in motor insurance and warranty, in addition to a reduction of the redundancies of the previous claims.
Rate hikes to come
“Notwithstanding these achievements, our results for the most recent quarter were affected by the increase in the severity of claims in our industry personal auto insurance, more specifically in the Atlantic, and an increase in the frequency of claims in Ontario. We are confident that we see the effects of our measures of refinement of rates since taken in the summer of 2016 in the coming quarters. In addition, we have recently applied for other rate increases across the country, and we are committed to review our products and rates to ensure the profitability of our business, ” adds Mr. Lavoie.