ICPEI Holdings Inc. Reports Third Quarter 2022 Results

TORONTO, Nov. 16, 2022 /CNW/ - ICPEI Holdings Inc. (the "Company") (TSXV: ICPH) which operates in the property and casualty insurance industry in Canada, today reported net income of $0.8 million for the quarter ended September 30, 2022.

Serge Lavoie, Chief Executive Officer, commented "Despite the significant impact of Hurricane Fiona in the Maritimes provinces, we managed to generate an underwriting income of $1 million in the third quarter".

Highlights

• Premiums written of $24.3 million in this quarter represent a 32% growth over the same period in 2021. Personal Lines increased by 25% and Commercial Lines increased by 43% in this period when compared to the same period last year.
• The business mix at the end of the third quarter of 2022 is Commercial Lines of 49% and Personal Lines 51% compared to Commercial Lines of 43% and Personal Lines 57% in the same period last year. The growth is in line with our strategy to expand our business in commercial line.
• A Combined ratio of 95.2% resulting in an underwriting income of $1.0 million. Hurricane Fiona had a significant impact on the results in the quarter. Loss before reinsurance was estimated at $6.4 million and $1.2 million after recovery from reinsurance. Without Fiona, combined ratio would be 89.5% compared to 89.7% in the same period last year.
• Investment income of $0.3 million in the quarter compared $0.5 million in the same period last year. The higher interest environment increased our interest income in this quarter compared to the same period last year but also caused losses in our fixed income investments and preferred shares. Changes in preferred share fair value are charged to income. On the positive side, the expected yield in our investment portfolio has increased from 4.04% at the end of the last quarter to 4.62% in the quarter.
• The book value per share was increased by $0.05 to $1.92 from EPS in the quarter. Due to rapidly increasing interest rate environment, market value of our fixed income investment decreased and we recorded unrealized losses in Other Comprehensive Income that decreased the book value per share by $0.01. As a result, closing book value per share increased by $0.04 from end of last quarter.

	3 months ended September 30		9 months ended September 30
($ THOUSANDS except per share amounts)	2022	2021	2022	2021
Direct written and assumed premiums	24,283	18,422	72,972	47,923
Net earned premiums	20,468	13,962	55,452	37,557
Net claims incurred	11,193	6,594	28,833	17,455
Net acquisition costs	5,670	3,925	15,425	9,676
Operating expenses^(1)	2,623	2,004	7,175	5,533
Corporate expense^(1)	541	439	1,176	833
Underwriting  income  ^(2)	982	1,439	4,019	4,893
Investment  income	257	533	292	1,763
Impact of change in discount rate on claims	431	75	1,533	65
Net  income before income taxes	1,129	1,608	4,668	5,888
Income tax expense	330	475	1,309	1,630
Net income	799	1,133	3,359	4,258
Net  income attributed to:
Shareholders of the Company	799	1,133	3,359	3,942
Non-controlling interest	-	-	-	316
Earnings per share (EPS) – Basic and Diluted	$0.05	$0.08	$0.22	$0.28
Book value per share (BVPS)^(3)			$1.92	$1.71
Return on Equity (ROE)^(4)			21.3 %	19.2 %

^(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         September 30		9 months ended         September 30
Underwriting Income (loss) $000s	2022	2021	2022	2021
Personal Lines	(254)	(6)	268	1,113
Commercial Lines	1,236	1,445	3,751	3,780
Key Ratios
Loss Ratio	54.7 %	47.2 %	52.0 %	46.5 %
Expense Ratio	40.5 %	42.5 %	40.8 %	40.5 %
Combined Ratio	95.2 %	89.7 %	92.8 %	87.0 %
Loss Ratios
Personal Lines	66.4 %	55.9 %	62.2 %	51.9 %
Commercial Lines	41.2 %	35.8 %	40.7 %	38.8 %

Capital Management

The Minimum Capital Test ("MCT") ratio of ICPH's subsidiary, The Insurance Company of Prince Edward Island (ICPEI) as at September 30, 2022 was 284%, which comfortably exceeds the supervisory target of 150%.

COVID-19 Pandemic Update

Currently, COVID-19 did not have any significant impact on the premiums, collections, investments or other operational activities of the Company, but the impact remains uncertain as the pandemic continues to evolve.

Non-IFRS Financial Measures

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 change in discount rate 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 Information

This news release contains forward-looking information based on current expectations. This information includes, but is not limited to, statements about the operations, business, financial condition, priorities, targets, ongoing objectives, strategies, litigation outcomes and outlook of the Company. These statements, which appear in this press release generally can be identified by the use of forward-looking words such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "plan", "would", "should", "could", "trend", "predict", "likely", "potential" or "continue" or the negative thereof and similar variations.

This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a projection as reflected in the forward-looking information. By its nature, this information is subject to inherent risks and uncertainties that may be general or specific. A variety of material factors, many of which are beyond the Company's control, affect the operations, performance and results of its business and could cause actual results to differ materially from the expectations expressed in any of this forward-looking information.

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.

For more information, please visit www.icpeiholdings.ca

SOURCE ICPEI Holdings Inc.

Investor Relations, 905-602-2150, [email protected]