Manitoba Public Insurance reports strong first six months despite severe summer weather
Manitoba Public Insurance has reported that its net income from operations increased from the previous year by $47.3 million due to improved underwriting results of $30.8 million and a $16.5 million rise in investment income.
The Corporation reported a net loss of $35.5 million for the second quarter of 2010. This net loss reflects an increase in severe weather, including hail related claims, explained Don Palmer, Vice-President of Finance & Chief Financial Officer with Manitoba Public Insurance.
As reported at the end of the first quarter, net income of $102.9 million was not expected to be sustained throughout the year. This has now been reduced to $67 million and is expected to be $42 million by year end.
“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, who explained that the $67 million will decrease by year end.
Net income is projected to be approximately $42 million at year end, up from the initial forecast of $5.6 million. This increase is due to the positive corporate wide overall financial performance in the first six months of the year.
Due to overall corporate financial strength to date, and reasonable expectation of continued positive results, the Corporation continues to demonstrate financial stability for the benefit of all Manitobans.
The overall financial strength of the competitive lines continues to show strong, positive results. As stated in the last Annual Report, both competitive lines are expected to be profitable again this year.
MPI filed its rate application with the Public Utilities Board in June. Basic Autopac is now in a better financial position than it was at that time. Palmer explained that the Basic Autopac line is projected to make about $30 million at year end, which is $16 million more than when the rate application was filed.
MPI has proposed a $92 million rebate to ratepayers, which if approved will ensure that the Rate Stabilization Reserve will be somewhat above the PUB’s target of $154 million at year end. Additionally, MPI has requested an overall Basic insurance rate decrease of 4.0 per cent.
MPI has presented approximately 8,000 pages of detailed information and responses to questions to the PUB in support of its application. The PUB is expected to rule on the application in early December.
“The public auto insurance model continues to achieve its founding objective ─ to provide the most comprehensive auto insurance at the most affordable cost,” said Palmer.
