JEVCO-owner Westaim posts Q1 profit of $4.4 million

The Westaim Corporation announced net income of $4.4 million, or $0.01 per share, for the quarter ending March 31, 2012. This is down from a net income of $5.7 million, or $0.01 per share, for the same quarter in 2011.

Westaim’s wholly-owned subsidiary, JEVCO Insurance Company is a Canadian specialty insurer offering products through two divisions.  The Personal Lines Division provides insurance in the non-standard automobile, standard automobile, motorcycle and recreational vehicles product lines.  The Commercial Lines Division offers property and liability, niche commercial automobile and surety product lines. Earlier this month, Westaim announced it had agreed to sell JEVCO to Intact Financial for $520 million in cash. The transaction is expected to close in the fall of 2012.  Adjusting for a $30 million cash dividend paid by JEVCO to Westaim during the first quarter of fiscal 2012, the purchase price is approximately 1.38 times the net book value of JEVCO as at December 31, 2011.

In the first quarter of 2012, direct premiums written were $79.3 million and net premiums written were $75.8 million, compared to $66.3 million in direct premiums written and $62.9 million in net premiums written in the same quarter of 2011.  In the three months ended March 31, 2012, net premiums earned were $77.0 million, producing a Combined Ratio of 93.3%.  In the comparable quarter in 2011, net premiums earned were $70.5 million, producing a Combined Ratio of 99.9%.

Total assets of Westaim were $1.3 billion at March 31, 2012 and December 31, 2011.  At March 31, 2012, the Company’s investment portfolio of $1.0 billion was invested predominantly in corporate and government bonds. In the three months ended March 31, 2012, net investment income and net realized investment gains, net of foreign exchange loss, of $9.3 million were included in net income; and net unrealized investment gains, net of income taxes, of $2.4 million were included in other comprehensive income.  In the comparable period in 2011, net investment income and net realized investment gains, net of foreign exchange loss, of $8.7 million were included in net income; and net unrealized investment losses, net of income taxes, of $2.6 million were included in other comprehensive loss.

“Westaim completed a positive first quarter in 2012.  Our non-standard automobile line of business, in line with our industry peers, continues to reflect profitable results and we expect this to continue in the remainder of 2012.  Increases in motorcycle premium rates will be in effect earlier in 2012 than 2011.  We believe that the impact of the rate increases, along with certain product changes planned to be implemented in 2012, will further enhance the performance of this line of business going forward,” said Cameron MacDonald, Chief Executive Officer of Westaim.

THE WESTAIM CORPORATION
Financial Highlights
(unaudited)
(thousands of Canadian dollars except percentage, share and per share data)

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