EFH Holdings Inc. Reports First Quarter 2021 Results

TORONTO, May 20, 2021 /CNW/ - EFH Holdings Inc. ("EFH" or the "Company") (TSXV: EFH) which operates in the property and casualty insurance industry in Canada, today reported net income of $1.1 million for the quarter ended March 31, 2021 compared to $0.4 million in the same period of 2020.

Highlights

• Net income per share of $0.06 per share this quarter compared to $0.03 per share in the first quarter of 2020.
  
  
• Direct Written Premiums of $11.4 million in this quarter represents a 42% increase over the same period in 2020. Personal lines increased by 9% and commercial lines increased by 104% in this period when compared to the same period last year. The increase in Commercial Lines was largely due to $2.4 million new business written in Quebec that started operating in the fourth quarter last year.
  
  
• Investment income was $0.7 million higher in this quarter compared to same period in 2020, largely due to the positive change in Fair Value of Preferred Shares compared to the same period last year.
  
  
• Closing book value per share of $1.65 compared to $1.59 at the end of 2020. The increase from the last quarter is the result of $0.06 from earnings per share in the first quarter of 2021.

Subsequent Event

On April 1, 2021, the Company made further investment in ICPEI by purchasing the remaining 25% ownership of ICPEI that it did not already own. The Company paid cash of $6.3 million plus assumption of $0.5 million liabilities. This represents 4.9 times ICPEI's trailing twelve months earnings before interest, taxes, depreciation and amortization (EBITDA). The transaction was financed partly by issuing 2,735,600 common shares of the Company through a non-brokered private placement at a price of $1.42 per Share for $3.9 million. The Company also entered into a credit facility with National Bank consisting of $3 million Term Loan and $2 million revolving credit and drew on the $3 million Term Loan on April 1, 2021.

As a result of this investment, non-controlling interest will be eliminated and the excess of the cash paid plus the assumption of certain liabilities and expenses will be charged to shareholders' equity. The book value per share is estimated to be $1.48 per share after taking effect of this investment.

The Company believes this investment will be accretive to shareholders' value as it further expands into Quebec and Ontario.

	3 months ended March 31
($ THOUSANDS except per share amounts)	2021	2020
Direct written and assumed premiums	11,374	8,037
Net earned premiums	10,703	8,459
Net claims incurred	5,404	4,386
Net acquisition costs	2,580	1,890
Operating expenses	1,686	1,337
Corporate expense	236	340
Underwriting income (1)	1,033	846
Investment income	674	(21)
Impact of change in discount rate on claims	(5)	131
Net income before income taxes	1,466	616
Income tax expense	377	168
Net income	1,089	448
Net income attributed to:
Shareholders of the Company	773	331
Non-controlling interest	316	117
Earnings per share
Basic	$0.06	$0.03
Diluted	$0.06	$0.03

(1)	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.

Underwriting Results:

Underwriting Income (loss) $000s	3 Months ended March 31, 2021	3 Months ended March 31, 2020
Personal Lines	208	945
Commercial Lines	825	(99)
Key Ratios
Loss Ratio	50.5%	51.9%
Expense Ratio	39.9%	38.1%
Combined Ratio	90.4%	90.0 %
Loss Ratios
Personal Lines	57.0%	47.7%
Commercial Lines	39.2%	61.8%

Capital Management

The Minimum Capital Test ("MCT") ratio of EFH's subsidiary, Insurance Company of Prince Edward Island (ICPEI) as at March 31, 2021 was 327%, which comfortably exceeds the supervisory target of 150%.

COVID-19 Pandemic Update

ICPEI continues to implement its emergency operational plan, which included transitioning most employees to work from home and only a small number of staff in the office to perform functions which could not be performed remotely.

ICPEI continued to provide a number of accommodations to its policyholders if they experienced hardship because of COVID-19 and adjusted their auto premiums due to reduction of use. ICPEI has only experienced a minor increase in the number of customer defaults and very few requests to lower monthly premiums based on lower usage of vehicles. These did not have a significant impact on the results of the Company.

Non-IFRS Financial Measures

EFH 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. EFH 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.

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 EFH. 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 EFH'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 EFH Holdings Inc.

Founded in 1998, EFH Holdings Inc. operates in the property and casualty insurance industry in Canada, providing personal and commercial lines insurance exclusively through the broker channel. The Company distributes insurance products through The Insurance Company of Prince Edward Island. The Company's name was changed from Echelon Financial Holdings Inc. to EFH Holdings Inc. after receiving approval from shareholders on December 11, 2020. It trades on the TSX Venture Exchange under the symbol EFH 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.efh.ca

SOURCE EFH Holdings Inc.

Copyright 2021 Canada NewsWire