ICPEI HOLDINGS INC. ANNOUNCES ANNUAL FINANCIAL RESULTS

TORONTO, Feb. 24, 2023 /CNW/ - ICPEI Holdings Inc. (the "Company") (TSXV: ICPH) today announced net income of $1.6 million for the year ended December 31, 2022, and a net loss of $1.7 million in the fourth quarter of 2022.

Serge Lavoie, Chief Executive Officer, commented "We had an impressive premium growth of 54% over last year and managed to generate an underwriting income of $3.1 million for the year despite the impact of Hurricane Fiona in the Maritimes provinces. Our previously announced plan of arrangement is proceeding well and subject to the satisfaction or waiver of customary closing conditions, we look forward to completing the arrangement shortly."

Highlights

• In 2022, total premiums written of $102.4 million is an increase of 54% over last year and $29.4 million in the fourth quarter represent a 57% growth over the same period in 2021, driven by the growth of business in Quebec and Ontario.
  
  
• The business mix for 2022 is Commercial Lines of 52% and Personal Lines 48% compared to Commercial Lines of 46% and Personal Lines 54% in the same period last year. The growth is in line with our strategy to expand our business in commercial lines.
  
  
• A Combined ratio of 96.1% for the year resulting in an underwriting income of $3.1 million. Hurricane Fiona and adverse development in claims related to accident years prior to 2020 had a significant impact on the results in the year.
  
  
• Adverse development in claims related to prior years in the amount of $2.4 million and expenses of the Company's going private transaction of $1.5 million negatively impacted the results in the fourth quarter of 2022.
  
  
• For 2022, investment income was $1.0 million compared to $2.6 million last year and in the fourth quarter of 2022, investment income was $0.7 million compared to $0.8 million in the same period last year. With increasing interest rates during the year, the valuation of the investment portfolio decreased as a majority of the portfolio is in fixed income securities and is marked to market. On the positive side, the expected yield in our investment portfolio has increased to 4.90% at the end of 2022 from 2.09% at the end of 2021.

	3 months ended    December 31		12 months ended    December 31
($ THOUSANDS except per share amounts)	2022	2021	2022	2021
Direct written and assumed premiums	29,416	18,753	102,388	66,676
Net earned premiums	23,403	15,891	78,855	53,448
Net claims incurred	14,895	6,826	43,728	24,281
Net acquisition costs	5,646	4,114	21,071	13,790
Operating expenses^(1)	3,836	2,204	10,970	7,724
Corporate expense^(1)	1,880	298	2,964	1,096
Underwriting income  ^(2)	(974)	2,747	3,086	7,653
Investment income	692	798	985	2,561
Impact of change in discount rate on claims	224	121	1,757	186
Net (loss) income before interest and income taxes	(1,938)	3,368	2,864	9,304
Interest expense	61	23	194	71
Net (loss) income before income taxes	(1,999)	3,345	2,670	9,233
Income tax (recovery) expense	(267)	928	1,042	2,558
Net (loss) income	(1,732)	2,417	1,628	6,675
Net income attributed to:
Shareholders of the Company	(1,732)	2,417	1,628	6,359
Non-controlling interest	-	-	-	316
Earnings per share (EPS) – Basic and Diluted	$(0.11)	$0.16	$0.11	$0.45
Book value per share (BVPS)^(3)			$1.82	$1.84
Return on Equity (ROE)^(4)			5.9 %	27.5 %

^(1)	Sum of Operating expenses and Corporate expense equal Operating Costs on Consolidated Statements of Income and Comprehensive Income.
^(2)	Underwriting income is defined as net earned premiums less net claims incurred, net acquisition costs, operating expenses, and excludes any impact of change in discount rate on claims and corporate expenses.
^(3)	Book value per share is calculated by dividing shareholder's equity by the number of common shares outstanding.
^(4)	Return on Equity is twelve months rolling net income attributable to shareholders on continued operations divided by average shareholder's equity.

Underwriting Results

	3 months ended    December 31		12 months ended    December 31
Underwriting Income (loss) $000s	2022	2021	2022	2021
Personal Lines	(2,729)	1,460	(2,439)	2,581
Commercial Lines	1,755	1,287	5,525	5,072
Key Ratios
Loss Ratio	63.6 %	43.0 %	55.5 %	45.4 %
Expense Ratio	40.5 %	39.8 %	40.6 %	40.3 %
Combined Ratio	104.1 %	82.8 %	96.1 %	85.7 %
Loss Ratios
Personal Lines	85.6 %	45.2 %	69.1 %	50.0 %
Commercial Lines	40.3 %	40.0 %	40.6 %	39.2 %

Capital Management

The Minimum Capital Test ("MCT") ratio of the Company's subsidiary, The Insurance Company of Prince Edward Island as of December 31, 2022 was 258%, which comfortably exceeds the supervisory target of 150%.

Non-IFRS Financial Measures

The financial results are derived from unaudited consolidated financial statements prepared using the recognition and measurement requirements of International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"), except as otherwise noted. 

The Company uses both IFRS and certain non-IFRS measures to assess performance. Securities regulators require that companies caution readers about non-IFRS measures that do not have a standardized meaning under IFRS and are unlikely to be comparable to similar measures used by other companies. The Company analyzes performance based on underwriting income and underwriting ratios such as combined, expense and loss ratios, which are non-IFRS measures. Underwriting income is defined as net earned premiums less net claims incurred, net acquisition costs, operating expenses, and excludes any impact of changes in discount rates on claims and corporate expenses. Loss ratio is net claims incurred divided by net earned premiums. Expense ratio is net acquisition costs plus operating expenses divided by net earned premiums. Combined ratio is the sum of loss ratio and expense ratio. Return on Equity ("ROE") is based on trailing twelve months net income attributable to shareholders on continued operations divided by average total equity. Book value per share ("BVPS") is calculated by dividing total equity by the number of common shares outstanding.

Forward-looking statements

Certain statements made herein, including statements relating to matters that are not historical facts and statements of the Company's beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information relates to future events or future performance, reflect current expectations or beliefs regarding future events and is typically identified by words such as "anticipate", "believe", "could", "estimate", "expect", "intend", "likely", "may", "plan", "seek", "should", "will" and similar expressions suggesting future outcomes or statements regarding an outlook. 

Forward-looking information is based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such information. There can be no assurance that such information will prove to be accurate. Such information is based on numerous assumptions, including assumptions regarding present and future business strategies, local and global economic conditions, and the environment in which the Company operates.

Although the Company believes that the forward-looking information in this news release is based on information and assumptions that are current, reasonable and complete, this information is by its nature subject to a number of factors, many of which are beyond the Company's control, that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information, including, without limitation, the risks inherent to the Company's business and/or factors beyond its control which could have a material adverse effect on the Company. The Company cautions that the foregoing list is not exhaustive of all possible factors that could impact the Company's results.

Investors and others should carefully consider the foregoing factors and other uncertainties and potential events and should not rely on the Company's forward-looking information to make decisions with respect to the Company. Furthermore, the forward-looking information contained herein are made as of the date of this document and the Company does not undertake any obligation to update or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable law. All forward-looking information contained herein is expressly qualified by this cautionary statement.

About ICPEI Holdings Inc.

Founded in 1998, ICPEI Holdings Inc. operates in the Canadian property and casualty insurance industry through its wholly owned subsidiary The Insurance Company of Prince Edward Island (ICPEI). ICPEI provides commercial and personal lines of insurance products exclusively through the broker channel.

The Company's name was changed from EFH Holdings Inc. to ICPEI Holdings Inc. after receiving approval from shareholders on July 15, 2021. It trades on the TSX Venture Exchange under the symbol ICPH effective August 20, 2021, and prior to December 23, 2020, it traded on the Toronto Stock Exchange.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE ICPEI Holdings Inc.

Ken Coulson, General Counsel of ICPEI Holdings Inc., at 905-602-2150, [email protected] or visit our website at www.icpeiholdings.ca.