EFH : Second Quarter 2021 Consolidated Financial Statements

Unaudited Condensed Consolidated Interim Financial

Statements of

ICPEI Holdings Inc. (formerly EFH Holdings Inc.)

For the six months ended June 30, 2021 and 2020

NOTICE OF NO AUDITOR REVIEW OF

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

In accordance with National Instrument 51-102 of the Canadian Securities Administrators, the Company discloses that its external auditors have not reviewed the unaudited condensed consolidated interim financial statements for the six months ended June 30, 2021. These financial statements have been prepared by management and approved by the Audit Committee and the Board of Directors of the Company.

ICPEI HOLDINGS INC.

Consolidated Balance Sheet

(unaudited, in thousands of Canadian dollars)

	Note	June 30,	December 31,
		2021	2020
Assets
Cash and short-term deposits	7	8,183	11,859
Accounts receivable		14,780	12,039
Investments	7	52,729	44,582
Due from insurance companies		117	596
Deferred policy acquisition costs		6,253	5,110
Income taxes recoverable		577	460
Prepaid expenses and other assets		1,768	1,688
Reinsurers' share - unearned premiums		690	799
- provision for unpaid claims	8	2,847	3,683
Right of use asset		292	482
Goodwill		378	378
Deferred income taxes		324	195
Total assets		88,938	81,871
Liabilities
Accounts payable and accrued liabilities		3,474	3,549
Bank loan	15	3,000	-
Unearned premiums		27,279	22,571
Unearned commission		225	220
Income taxes payable		235	1,620
Lease liability		170	409
Provision for unpaid claims	8	30,502	29,668
Total liabilities		64,885	58,037
Equity
Share capital		4,838	2,794
Contributed surplus		1,507	1,507
Retained earnings		16,801	14,186
Accumulated other comprehensive income	12	907	616
Equity attributed to shareholders of the Company		24,053	19,103
Non-controlling interest	14	-	4,731
Total equity		24,053	23,834
Total liabilities and equity		88,938	81,871

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

ICPEI HOLDINGS INC.

Consolidated Statement of Income and Comprehensive Income

(unaudited, in thousands of Canadian dollars, except per share amounts)

		3 months ended	6 months ended
			June 30		June 30
	Note	2021	2020	2021	2020
Revenue
Gross written and assumed premiums		18,127	11,793	29,501	19,830
Less premiums ceded to reinsurers		(682)	(605)	(1,089)	(1,032)
Net written and assumed premiums		17,445	11,188	28,412	18,798
Change in gross unearned premiums		(4,562)	(2,292)	(4,708)	(1,044)
Change in unearned premiums, reinsurers' share		9	75	(109)	(324)
Change in provision for unearned premiums		(4,553)	(2,217)	(4,817)	(1,368)
Net earned premiums		12,892	8,971	23,595	17,430
Investment income	7	556	987	1,230	966
Total revenue		13,448	9,958	24,825	18,396
Expenses
Gross claims incurred		5,486	4,977	10,616	9,299
(Recoveries) Claims from reinsurers		(29)	(208)	245	(144)
Net incurred claims		5,457	4,769	10,861	9,155
Gross acquisition costs		3,186	2,210	5,782	4,117
Recoveries from reinsurers		(15)	(16)	(31)	(33)
Net acquisition costs		3,171	2,194	5,751	4,084
Operating costs	11	2,001	1,550	3,923	3,227
Total expenses		10,629	8,513	20,535	16,446
Income before taxes and discount rate impact on claims		2,819	1,445	4,290	1,930
Impact of change in discount rate on claims (1)		(5)	(131)	(10)	-
Income before income taxes		2,814	1,314	4,280	1,930
Income tax expense	10	778	442	1,155	610
Net income		2,036	872	3,125	1,320
Attributed to:
Shareholders of the Company		2,036	624	2,809	954
Non-controlling interest	14	-	248	316	366
Net income		2,036	872	3,125	1,320
Other comprehensive income (loss), net of taxes that may be
classified subsequently to net income
Available-for-sale investments:
Change in net unrealized gains		175	2,747	75	378
Reclassification of net realized losses / (gains) to net		12	(37)	47	(102)
income
Tax impact		(55)	(343)	(36)	(235)
Other comprehensive income		132	2,367	86	41

ICPEI HOLDINGS INC.

Consolidated Statement of Income and Comprehensive Income (continued)

(unaudited, in thousands of Canadian dollars, except per share amounts)

		3 months ended	6 months ended
			June 30		June 30
	Note	2021	2020	2021	2020
Attributed to:
Shareholders of the Company		132	2,170	97	(93)
Non-controlling interest	14	-	197	(11)	134
Other comprehensive income		132	2,367	86	41
Total comprehensive income		2,168	3,239	3,211	1,361
Attributed to:
Shareholders of the Company		2,168	2,794	2,906	861
Non-controlling interest	14	-	445	305	500
Total comprehensive income		2,168	3,239	3,211	1,361
Earnings per share attributable to shareholders of the	13
Company
Earnings per share - basic		$0.14	$0.05	$0.21	$0.08
Earnings per share - diluted		$0.14	$0.05	$0.21	$0.08

1. As interest rates may change each period, and have an impact to the incurred claims and therefore management believes it is beneficial to the users to see the impact of this change separately in order to understand the true movement in claims incurred.

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

ICPEI HOLDINGS INC.

Consolidated Statement of Changes in Equity (unaudited, in thousands of Canadian dollars)

			Accumulated
			Other			Non-
	Share	Contributed	Comprehensive	Retained	Shareholders'	controlling	Total
	Capital	Surplus	Income	Earnings	Equity	Interest	Equity
Balance at	2,794	1,507	616	14,186	19,103	4,731	23,834
January 1, 2021
Net income	-	-	-	2,809	2,809	316	3,125
Other comprehensive	-	-	97	-	97	(11)	86
income (loss)
Total comprehensive	-	-	97	2,809	2,906	305	3,211
income
Common Shares	3,885	-	-	-	3,885	-	3,885
issued
Purchase of Non-	(1,841)	-	194	(194)	(1,841)	(5,036)	(6,877)
Controlling Interest
Balance at	4,838	1,507	907	16,801	24,053	-	24,053
June 30, 2021
			Accumulated
			Other			Non-
	Share	Contributed	Comprehensive	Retained	Shareholders'	controlling	Total
	Capital	Surplus	Income	Earnings	Equity	Interest	Equity
Balance at	2,794	1,507	2,034	83,140	89,475	3,732	93,207
January 1, 2020
Net income	-	-	-	954	954	366	1,320
Other comprehensive	-	-	(93)	-	(93)	134	41
(loss) income
Total comprehensive	-	-	(93)	954	861	500	1,361
(loss) income
Balance at	2,794	1,507	1,941	84,094	90,336	4,232	94,568
June 30, 2020

The accompanying notes are an integral part of these condensed consolidated interim financial statements.