Optimum General Inc. is reporting reduced net income for the first quarter ended March 31.

Gross written premiums rose to $40.4 million, up 9.3% from $36.9 million in the year-earlier quarter. Growth was mainly due to increased premium volume in Quebec and Texas. Net earned premiums totalled $27.2 million in the first quarter compared to $32.6 million a year earlier, due to the new reinsurance treaties concluded to support the company’s growth.

An especially harsh winter in Eastern Canada and a large number of fires resulted in a higher claims ratio, which stood at 72.5% compared to 63.6% for the same period in 2000. The expense ratio improved from 41.0% to 37.7% for the quarter.

Commissions and taxes decreased from $6.5 million in 2000 to $3.4 million in 2001, reflecting the higher reinsurance commissions earned (including reimbursement by reinsurers of their quota-share of the general expenses).

Despite the higher volume, general expenses declined slightly to $6.8 million from $6.9 million in the year-earlier quarter. The combined ratio (claims and expenses) rose to 110.2% from 104.6% in 2000.

Optimum General reported an underwriting loss of $2.8 million for the first quarter of 2001, compared to a loss of $1.5 million in the year-earlier quarter. Investment income rose slightly from $2.3 million to $2.6 million.

Net income was $121,000 or 1¢ per share, compared to $555,000 or 5¢ per share in the first quarter of 2000. Rate increases introduced last year and at the beginning of 2001 will be felt progressively in our results.

“Additional turnaround measures were introduced in the first quarter, including a general 5% rate increase across all business lines,” said Jean-Claude Pagé, president and COO of Optimum General. “In addition, we continued the cancellation of certain unprofitable business programs and stopped issuing policies in territories where the loss ratio is too high. These measures should enable us to progressively improve our results.”