Economical Insurance has posted a solid set of financials for 2020, registering fourth quarter net income of $66.7 million, up from $6.8 million in 2019, with the full-year figure reaching $153.9 million, a $136.5 million rise from $17.4 million in the previous year.
The insurer’s total equity also increased by $207 million to $1.8 billion from $1.6 billion, while minimum capital test (MCT) improved 29 percentage points to 268% from 239%.
Gross written premiums (GWP) exceeded $2.8 billion in 2020, with year-on-year numbers increasing 13.3% for the fourth quarter and 12.1% for the full year, driven by growth in the company’s personal property and commercial businesses.
Personal lines premiums were up 9.7% to $540.3 million over the same quarter in 2019, while commercial lines premiums increased 23.6% to $215.6 million. For the year, personal lines premiums rose $191.9 million, or 10.1%, to $2.1 billion and commercial lines premiums jumped $111.8 million, or 18.1%, to $728.6 million.
Fourth quarter underwriting activity also improved substantially, generating $72.7 million in income and posting a combined ratio of 89.1%. In 2019, the underwriting loss was $20.9 million while the combined ratio was 103.6%. The underwriting improvements of $93.6 million for the quarter and $254.7 million for the year were primarily attributed to reduced auto claims frequency and benign weather.
“We reported a historically strong $136 million in underwriting income in 2020,” said Rowan Saunders, president and chief executive officer of Economical Insurance. “This is a clear indication that the substantial work we have put into transforming our business has been successful.”
“Our performance marked the tenth consecutive quarter of improvement over the prior year and puts us on a confident footing as we approach our planned demutualization and IPO later this year.”
The insurer also announced more than $70 million spent in customer relief actions last year, adding that support efforts to assist customers with managing the challenges of the pandemic are ongoing.
“Looking ahead, we are continuing to provide relief across the business to support customers in need,” Saunders said. “While our profitability in 2020 was strong, the impact of our customer relief actions will take time to fully earn into our results and will serve as a headwind going forward.”
“As we move into 2021, we maintain our focus on prioritizing the health and safety of our employees, actively managing the evolving human and financial impact this pandemic continues to have and meeting the needs of our customers and broker partners.”
The company’s net investment income declined by $5 million in 2020, a headwind to performance that is expected to persist this year given low fixed-income yields.
