North Pointe Reports 1st Quarter Results; Losses from Midwest Storms
Michigan-based North Pointe Holdings Corp. recently reported financial results for the first quarter ending March 31, 2006. Net income was $1.6 million, or $0.18 per diluted share, as compared with $2.5 million, or $0.52 per diluted share, for the first quarter of 2005. This decrease was primarily driven by increases in reinsurance costs and losses experienced in the Company’s Midwest homeowners line resulting from increased storm activity.
“The cost of reinsurance has increased as our ceded premiums were up significantly in the quarter. We have been raising rates, especially for our catastrophe exposures, but there is typically a time lag before the new rates take effect,” said James Petcoff, chairman and chief executive officer for North Pointe. “Also, we experienced violent storm activity in the Midwest resulting in greater than normal losses for this time of year. During the first quarter, we were pleased with our market penetration on the commercial side of our business. As of the second quarter, we began writing coverage on roller skating centers, which represents a direct extension to the current coverage and underwriting approach we use with bowling centers. We see great potential for providing specialty coverage to a number of hospitality-related businesses. This latest customer class is a perfect example.”
First quarter 2006 highlights: Gross premiums written for the three months ended March 31, 2006, were $45.6 million compared with $45.8 million for 2005. Total revenues in the first quarter of 2006 were $21.6 million, as compared to $23.1 million in the corresponding period in 2005. Net premiums earned decreased by $1.9 million. For the first quarter of 2006, ceded premiums earned increased $2.9 million over the corresponding period in 2005. The increase in ceded premiums earned was primarily attributable to increased rates on various reinsurance programs as well as reinstatement premiums arising from losses ceded from Hurricane Wilma.
Petcoff added, “We expect our relative reinsurance costs to be higher in the near term. While we continue to increase rates to absorb these added costs, we would anticipate a lag before we begin earning the higher rates on our policies. In the meantime, we will remain selective and therefore will not pursue premium growth at the expense of future earnings.”
The Company’s loss ratio for the first quarter was 46.0 percent as compared with 40.4 percent for the corresponding period in 2005. The increase in the loss ratio was substantially attributable to a combination of an increase in ceded premiums earned and increased losses in the Midwest homeowners line, partially offset by a $770,000 increase in favorable reserve development. An expense ratio of 45.3 percent resulted in a combined ratio for the first quarter of 91.3 percent. This compares with a 44.0 percent expense ratio and an
North Pointe is a property and casualty insurance company in based in Michigan with operations into California, Illinois, Iowa, Kentucky, Ohio, Florida, Delaware, Indiana, Maryland, New Jersey, Pennsylvania, South Dakota, Tennessee, and Wisconsin.
Source: North Pointe Insurance Company