An anonymous director reports

ECHELON FINANCIAL HOLDINGS INC. REPORTS FOURTH QUARTER 2019 RESULTS

Echelon Financial Holdings Inc. had direct written premium of $8.6-million in the fourth quarter of 2019, which represents a $1.2-million increase over the same period in 2018. For the financial year ended Dec. 31, 2019, direct written premium increased by $2.9-million over the financial year ended Dec. 31, 2018, from $33.9-million to $36.8-million. These increases were largely due to increased rates in 2019 over 2018. The company's investment income increased by $800,000 in the fourth quarter of 2019 over the same period in 2018 and increased by $1.5-million in the financial year ended Dec. 31, 2019, over the financial year ended Dec. 31, 2018. The increases were mostly due to interest earned on its increased cash position over last year as a result of the sale of Echelon Insurance and improvement in the performance of preferred shares.

In the fourth quarter of 2019, the company had an underwriting loss of $800,000 compared with an underwriting income of $1.8-million for the same period in 2018. For the financial year ended Dec. 31, 2019, the company had an underwriting loss of $1.6-million compared with an underwriting loss of $1.1-million in the financial year ended Dec. 31, 2018. The underwriting loss in the financial year ended Dec. 31, 2019, was largely due to hurricane Dorian ($900,000) and unfavourable developments in prior-year unpaid claims ($2.4-million). Without these events, the company would have an underwriting income of $1.7-million.

The company is pleased with The Insurance Company of Prince Edward Island's successful transition to become fully operational on its own after the sale of Echelon Insurance and with its implemented rate increases and support from brokers.

Fourth quarter 2019 highlights:

• Net loss of $500,000 in fourth quarter 2019 compared with net loss of $7.4-million in the fourth quarter of 2018;
• Net income of one cent per diluted share on continued operations compared with net income of six cents per diluted share on continued operations in the fourth quarter of 2018;
• Closing book value per share of $7.45 is comparable with $7.46 at end of third quarter of 2019.

                                        FINANCIAL SUMMARY
                          (in thousands of dollars except per-share amounts) 
  
                                                         Three months ended Dec. 31,    12 months ended Dec. 31,
                                                                 2019          2018          2019          2018

Direct written and assumed premiums                            $8,629        $7,469       $36,829       $33,937
Net earned premiums                                             8,573         7,660        32,397        29,937
Net claims incurred                                             6,971         3,529        22,898        19,803
Net acquisition costs                                           1,737         1,362         6,969         7,063
Operating expenses                                                674           961         4,094         4,217
Corporate expense                                                 448           462         1,675         3,683
Underwriting income (loss)                                       (811)        1,808        (1,564)       (1,146)
Investment income                                               1,083           282         2,942         1,463
Impact of change in discount rate on claims                       (71)          142          (457)          360
Net (loss) income before income taxes                            (245)        1,772          (754)       (3,004)
Income tax expense (recovery)                                    (213)          790          (449)         (603)
Net income (loss) on continued operations                         (32)          982          (305)       (2,401)
Net income (loss) on discontinued operations                     (498)       (8,408)       45,722         4,776
Net income (loss)                                                (530)       (7,426)       45,417         2,375
Net (loss) income attributed to
Shareholders of the company -- continued operations               157           628          (127)       (2,419)
Shareholders of the company -- discontinued operations           (498)       (8,408)       45,722         4,776
Non-controlling interest -- continued operations                 (189)          354          (178)           18
Earnings per share
Continued operations
Basic                                                            0.01          0.06         (0.01)        (0.20)
Diluted                                                          0.01          0.06         (0.01)        (0.20)
Discontinued operations
Basic                                                           (0.04)        (0.71)         3.82          0.40
Diluted                                                         (0.02)        (0.69)         3.78          0.39
                                                            ---------     ---------     ---------     ---------

About Echelon Financial Holdings Inc.

Founded in 1998, Echelon Financial Holdings operates in the property and casualty insurance industry in Canada, providing personal and commercial line insurance exclusively through the broker channel. The company distributes insurance products through The Insurance Company of Prince Edward Island.