EGI Financial Holdings Inc. today announced its results for the first quarter ended March 31. The quarter featured continued strong growth in underwriting income.

For the 2007 period, EGI Financial generated direct written and assumed premiums totaling $30.2 million, compared with $26.1 million in the corresponding period last year, an increase of 15.7%. This strong increase reflected the impact of EGI’s efforts in new business development. Specifically, the company benefited from the contributions of its assumed reinsurance treaty with AssuranceAmerica, growth in motorcycle premiums and the continued expansion of its Niche Products business. This growth offset a decline in premiums from the Ontario non-standard automobile business.

Net written and assumed premiums rose 20.6% in 2007 from $23.5 million to $28.3 million. This increase reflects the growth in gross written premiums and EGI’s reduced reliance on (ceded) reinsurance, resulting in more business retained for EGI’s net account and enhanced utilization of the company’s capital.

Net earned premiums for the three months ended March 31, 2007, were $24.8 million, a 1.1% decline from $25.1 million in the first three months of 2006. The decline reflects the fact that the new business initiatives, which generated a 15.7% increase in written premiums in the quarter, have altered the company’s business mix but have not yet significantly impacted earned premiums. However, these premiums are expected to earn over the term of the new policies — primarily six and 12 months — throughout the remainder of 2007.

Underwriting income in the quarter increased 40.2% to $1.3 million compared with $0.9 million last year. The increase was attributable to an improvement in the loss ratio of the Niche Products division, partially offset by a decline in earned premiums in the Personal Lines division.

The loss ratio in the 2007 period was 61.0%, while the expense ratio was 33.7%. This compares with 66.1% and 30.2% respectively in the same period of 2006. The improvement in the loss ratio was the result of consistent underwriting and an improved claims experience in Niche Products, while the higher expense ratio was attributable to higher proportion of niche business which carries a higher acquisition cost.

The combined ratio for the first quarter of 2007 was 94.7% compared with 96.3% for the same period last year.

Investment income in the first quarter of 2007 was essentially level with last year at $2.6 million. This was accomplished despite the fact that lower capital gains were realized in the first quarter of 2007 than last year. Realized gains in the 2007 period were $0.4 million compared to $0.9 million in the first three months of 2006. EGI’s investment portfolio has experienced a $37.5 million, or 21%, increase in fair value as at March 31, 2007, compared to March 31, 2006, due to investment returns and positive cash flows from operations during the period.

Net income in the 2007 first quarter was $2.5 million compared with $2.4 million last year, an increase of 3.8%. Net income per share, on a fully-diluted basis, was level with 2006 at $0.24 per share. This represents an annualized return on equity, on a last-twelve-months basis, of 20.6%.

“These financial results reflect our focus on profitability,” said Douglas McIntyre, CEO of EGI Financial. “Through strategic diversification, we were able to achieve a 3.8% year-over-year net income increase, despite the competitive conditions in our core business and the fact that last year’s results included larger realized investment gains.”

Founded in 1997, EGI Financial operates in the property and casualty insurance industry in Canada, primarily focusing on non-standard automobile insurance and other niche and specialty general insurance products.