Toronto-based property and casualty insurer EGI Financial Holdings Inc. reported a net loss of more than $2.3 million for the fourth quarter ended Dec. 31, 2008, down 162% from the same period a year earlier, while its net income for the year ended Dec. 31 was down 60%, to almost $6 million from almost $15.1 million in 2007.

The bulk of EGI’s losses came as a result of a deep decline in underwriting and investment income both for Q4 and for the year. For Q4, its underwriting income was down 156%, to almost -$0.5 million from about $0.9 million a year earlier, while its investment income declined by 149%, to about -$2.5 million from $5 million.

In the year ended Dec. 31, EGI’s underwriting income was down 98%, to $163,000 from more than $10.2 million in 2007 while its investment income declined by 23%, to more than $10 million from almost $13 million.

Despite its losses, net operating income — defined as net income plus/minus after-tax realized losses/gains on investments, including ‘other than temporary’ impairments — increased 35% to $3 million in Q4 compared with $2.2 million in the same period in 2007. (However, it declined by 30% for the year as a whole, to almost $9.1 million from almost $13 million.)

The significant improvement in net operating income in Q4 is primarily related to the improved results in the emergency travel health (ETH) line of business and the foreign exchange gain of $2.3 million on U.S. funds held to offset the related claims liabilities.

“After encountering unsatisfactory results earlier in 2008, in the niche products division’s emergency travel health program from the 2007/2008 travel season, we are pleased with the dramatic year-over-year improvement following our extensive reengineering of the program for the 2008/2009 season,” said Douglas McIntyre, CEO of EGI. “With a loss ratio of 58.8% generated in the ETH 2008/2009 travel season as of Dec. 31 and all other programs in the niche products division performing well, the company is positioned to perform in line with our longer-term expectations of above average industry return in 2009.”

For the year ended Dec. 31, EGI generated direct written and assumed premiums totalling almost $171 million, 8.1% above the almost $158 million in the corresponding period last year. Premium growth has been achieved in both Canadian divisions in 2008. Despite difficult market conditions in the P&C industry, direct written premiums from personal lines increased to about $108 million from more than $97 million in 2007, an increase of 10.4%.

Non-standard auto recorded growth of 6.3% and the motorcycle line achieved growth of 20.1% compared with the same period in 2007. The niche products
division recorded written premiums of $49.3 million compared with $48.1 million in 2007 for a growth rate of 2.5%.

This increase has been achieved despite a significant decrease of $7.6 million in the ETH written premiums to $11.5 million from $19.1 million in 2007. All other niche lines of business recorded significant growth in 2008 vs 2007 and management continues to view this division as a primary source of growth for EGI.