Fuelled by reduced claims costs, Manitoba Public Insurance reported net income of $102.9 million for the first quarter of 2010.
For the three months ended May 31, 2010, earned revenues increased by $5.2 million over the same period last year, as the number and value of vehicles insured increased. Net income from operations increased from the previous year by $90.7 million due to improved underwriting results of $92.6 million offset by a $1.9 million decrease in investment income.
Claims costs for the first three months decreased by $85.2 million to $105.4 million, explained Don Palmer, vice-president of corporate finance and chief financial officer. The significant decrease is largely attributable to a $78.2 million decrease in bodily injury claims. In addition, physical damage claims costs also decreased, attributed to winter ending earlier than normal.
“This one-time decrease was due to an unusual release in claims reserves caused by a rise in interest rates,” said Palmer, in a release. “This decrease in claims costs is not expected to be sustained throughout the year. “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,” said Palmer.
Last month the corporation submitted its 2011/12 Basic insurance rate application to the Public Utilities Board, requesting an overall Basic insurance rate decrease of 4.0 per cent and a proposed premium rebate of $92.2 million. If approved by the PUB, policy holders can expect to receive a cheque in the spring of 2011 of about $115 on average.
If approved, this will be the 12th year out of the last 13 in which Manitoba Public Insurance had either held the line on, or decreased, the average rate paid by Manitobans for Basic auto insurance. The PUB is expected to rule on the application in late fall.
“This will be the fifth rebate in 11 years,” said Palmer. “In total, more than $350 million has been given back to Manitobans. The public auto insurance model continues to achieve its founding objective ─ to provide the most comprehensive auto insurance at the most affordable cost.”