ICBC Earns $102 Million In First Quarter

ICBC has reported strong financial results for the first three months of 2008.

Net income for the first quarter of 2008 is reported at $102 million, down slightly from $111 million for same period in 2007.

"ICBC's strong financial results this quarter are the result of better-than-expected investment income and continued attention to operating costs," said Geri Prior, ICBC's interim president and CEO. "As the provincial economy continues to grow, there are more insured cars on the road, and our customers are increasing their coverage with us."

"For ICBC and its customers, 2007 was an exceptionally strong year financially, and 2008 is getting off to a good start."

Claims and related costs for the three months ending March 31, 2008 were $761 million, three per cent higher than for the same period in 2007.

"The moderating increase in claims costs has continued into the new year, which is good news for customers," said Prior. "Trends in claims costs are the primary factor in determining rates."

Strong financial management

• Investment income continues to drive net income. Net income for the quarter was $102 million, including investment income of $125 million. ICBC's insurance operations ended the quarter on a more-or-less breakeven basis.
• In line with market trends, ICBC's investment income of $125 million for the first three months of 2008 was lower than the $154 million investment income for the same period last year. Results saw lower gains on equities and higher gains on bonds compared to the same quarter in 2007. ICBC maintains a conservative investment policy with the majority of assets invested in high-quality, investment-grade bonds.
• ICBC continues to lead the industry in low operating costs. The expense ratio - operating costs, broker commissions and premium taxes as a percentage of earned premiums - is 18.3 per cent for the first three months of 2008, compared to 18.0 per cent for the first quarter of 2007.

Moderating trend on claims costs continues

• Net claims costs incurred for the first quarter were $689 million, representing an increase of 3.1 per cent from the first quarter of the previous year, despite unusually dry weather so far this year.
• Longer term trends show ongoing increases in the costs associated with injury claims. This predominantly affects rates for basic insurance, because more than 80 per cent of all payouts for injury claims are under basic coverage.
• The increased claims costs are partially due to higher estimates for the costs of all unpaid claims due to lower prevailing interest rates. Lower interest rates mean relatively higher amounts need to be set aside for claims that have occurred but not yet been fully paid out.

Ongoing decrease in auto crime costs

• There have been significant decreases in the number of stolen vehicles in BC for each of the last five years. This trend is continuing into 2008.
• The reasons for the dropping auto theft rate are the success of the Bait Car program and other enforcement efforts, as well as the growing prevalence of immobilizers in vehicles.

High customer satisfaction scores

• High levels of customer satisfaction continue, as confirmed by an independent third-party organization (NRG Research Group).
• Levels of customer satisfaction for:
• Insurance services 94.7%
• Claims services 82.0%
• Drivers licensing services 92.0%

Low and stable rates

• ICBC has held the line on rates. Rates for optional insurance are decreasing by 3.0 per cent on average, effective July 1, 2008, partly due to declining costs for auto theft claims. Furthermore, ICBC will not be proposing an increase in rates for basic insurance this year.
• Customers who have purchased the same Basic and Optional coverages from ICBC over the last five years have seen only a $2 increase on average in their premium over this five year period.

Ongoing investments in road safety

• ICBC continues to invest in road safety programs to reduce the number and severity of crashes, and to help lower claims costs. Examples include support for enhanced traffic enforcement by police, road improvements at high-crash locations, and public awareness campaigns.
• Drivers can do their part by driving safely. Bad driving habits affect everyone's insurance rates.