Echelon Financial Holdings reported Thursday net income attributable to shareholders on continued operations of $1.8 million, or $0.15 per diluted share, for the second quarter of 2016. The company also announced along with its financial report that it has entered into a definitive stock purchase agreement to sell its European insurance operations.
The company said in its quarterly report that for Q2 2016, its net operating income on continued operations was $0.24 per share, compared to an income of $0.21 per share for the same period last year.
The insurer, however, took an underwriting loss on continued operations of $0.5 million for the quarter. In the previous year quarter, Echelon saw an underwriting income of $0.3 million. The reason for Q2 2016’s loss was due to the impact of losses related to the Fort McMurray wildfires, as well as several unusually large auto claims.
Notably, the company’s Personal Lines segment generated an underwriting loss of $0.6 million, versus an underwriting income of $1.8 million in the same period last year. The loss has also been attributed to the recent wildfires and auto claims.
"The second quarter was negatively impacted by the Fort McMurray wildfires and a very unusual number of large claims in Personal Lines,” commented CEO Serge Lavoie. “Our best wishes to those who have suffered losses and we continue to support our customers to manage their losses."
"Our Canadian business has produced solid underwriting profits over time and the introduction of new products and enhanced systems will help accelerate growth through 2017 and beyond. We are building a much stronger and sustainable specialty insurance business in Canada directly aligned to the needs of our brokers and clients."
Echelon’s sale of its European subsidiaries is expected to close this fall, subject to customary closing conditions and regulatory approval.
"I am very pleased that we are executing on our strategy outlined in early 2016,” Lavoie said. We will have exited the European market expeditiously with no residual liabilities, allowing us to allocate our capital to grow the Canadian operations. At the same time we have completed the build of our surety, commercial auto and commercial property teams in order to offer our brokers a full product suite."
Board Chair Robert Purves offered commentary on the decision to sell.
"We are very pleased with the outcome of our process to divest the European operations,” Purves remarked. “We believe all stakeholders' interests have been accounted for in the best of possible outcomes in the circumstances inherent and look to an expedited closing. Our advisors, senior management team and directors involved are to be commended".
Related Stories:
Canadian insurer Echelon insurance prepares to sell its international business?
Echelon Financial CEO and director tender resignations
