Optimum General Inc. is reporting a net loss for the second quarter ended June 30.

The property and casualty insurer says the net loss for the quarter was $709,000 or 6¢ per share compared to net income of $595,000 or 5¢ per share for the same period last year. For the first half of 2001, the net loss amounted to $588,000 or 5¢ per share compared to a net income for the first half of fiscal 2000 of $1.2 million or 11¢ per share.

While gross written premiums totalled $51.5 million in the second quarter compared to $54.3 million for the same period last year, they rose to $91.9 million for the first half compared to $91.2 million a year earlier.

Net earned premiums for the quarter were $26.8 million compared to $32.9 million a year earlier and totalled $54 million for the first half compared to $65.6 million for the same period last year. The drop is largely due to Optimum’s policy, which came into force on January 1, 2001, to increase the percentage of premiums ceded to reinsurers, thus reducing the company’s exposure to risk.

“Our reinsurance policy has been adopted to solidify the company’s capital base,” said Jean-Claude Page, president and COO. “To help ensure future profitability, we have also introduced during the first half of the year, an average rate increase of nearly 10% on all product lines across Canada,” he added. “We have taken administrative measures to control the decrease in underwriting revenue and to ensure that our Texas subsidiary will concentrate its efforts for the second half on automobile insurance,” he concluded.

The Company’s claims ratio in the second quarter rose to 73.7% from 59.5% a year earlier. For the first half, the claims ratio was 73.1% compared to 61.5% for the same period last year. The high claims ratio was due to a general inadequacy in the level of rates in Canada for both the company and the industry as a whole, and an unfavorable development of reserves for claims related to a liability portfolio that has been discontinued.

Optimum’s expense ratio, consisting of commissions, taxes on premiums and general expenses, continued to improve in the second quarter, from 42.1% to 37.1% this year. For the first half, the ratio was 37.4% compared to 41.5% for the same period last year. This drop is due to efforts by management to reduce general expenses and to reinsurance commissions on ceded premiums including the reimbursement by reinsurers of their share of general expenses.

The combined ratio (claims and expenses) rose to 110.8% in the second quarter from 101.6% for the same period last year. For the first half, the combined ratio was 110.5% compared to 103.0% a year earlier.