-
Net operating income per share of
$1.27 , leading to an operating ROE of 16.0% - Combined ratio of 95.1% was above last year's exceptional 92.3%, largely due to more seasonal weather conditions
- Premium growth of 9%, bolstered by the addition of Jevco's product suite
- Book value per share increased 12% from a year ago
- Integration of recent acquisitions remains on track
CEO's Comments
"Throughout the first months of this year, we experienced better than
expected growth as a result of our recent acquisition and its resulting
expanded product offering, which was well-received by brokers and
customers," said
"Our operating performance was sound during the quarter compared to last year's exceptional results which benefited from much more favourable weather conditions. Both our home and personal auto insurance portfolios fared well despite a significant increase in the number of snow and wind-related claims."
Dividends
The Board of Directors declared a quarterly dividend of
Current Outlook
The company expects that industry premium growth is likely to evolve at
a similar pace to that of the last 12 months. Furthermore, the
continued low interest rate environment could support firmer market
conditions. At an industry level, we do not expect improvement in
personal auto as
IFC is well-positioned to continue outperforming the P&C insurance industry due to its pricing and underwriting discipline, claims management capabilities, prudent investment and capital management practices and solid financial position. Given these attributes, the company believes that it will outperform the industry's ROE by at least 500 basis points in the next 12 months.
Consolidated Highlights
In millions of dollars, except as otherwise noted |
Q1-2013 | Q1-2012 | Change |
Direct premiums written (excluding pools) | 1,524 | 1,403 | 9% |
Underwriting income1 | 83 | 123 | (33)% |
Net operating income | 175 | 179 | (2)% |
Net income 2 | 174 | 173 | 1% |
Earnings per share Basic and diluted (dollars) 2 |
1.27 | 1.30 | (2)% |
Adjusted earnings per share Basic and diluted (dollars) 2 |
1.36 | 1.55 | (12)% |
Net operating income per share (dollars) | 1.27 | 1.34 | (5)% |
ROE for the last 12 months 2, 3 | 12.9% | 13.5% | (0.6) pts |
Adjusted ROE for the last 12 months 2, 3 | 14.9% | 17.5% | (2.6) pts |
Operating ROE for the last 12 months 3 | 16.0% | 16.2% | (0.2) pts |
Combined ratio (excluding MYA) | 95.1% | 92.3% | 2.8 pts |
Book value per share (dollars) | 34.15 | 30.40 | 12% |
1 Underwriting income is defined as underwriting income excluding market
yield adjustment (MYA). The MYA is the impact on claims liabilities due
to movement in discount rates.
2 Prior year figures have been restated to conform with the new employee
benefits accounting standard. For details, please see page 22 and 23
of the Management's Discussion & Analysis.
3 For ROE, Adjusted ROE and Operating ROE in 2013, the average equity
calculation has been adjusted on a pro rata basis to account for the
Operating Highlights
-
Net operating income for the quarter was
$175 million , down$4 million from the same quarter in 2012 which benefited from a mild winter. The decrease in underwriting income and lower investment income were partially offset by an unusually-low effective tax rate this quarter. Although we paid$284 million in taxes during the quarter, a non-recurring item related to a prior year adjustment significantly reduced our effective tax rate during the quarter. The operating ROE for the last twelve months was 16.0%.
-
Direct premiums written increased 9% in the first quarter to
$1.5 billion , reflecting the addition of Jevco and low single-digit organic growth.
-
Underwriting income in the quarter decreased by
$40 million to $83 million compared to the same period a year ago. The combined ratio of 95.1% was 2.8 percentage points higher than last year's exceptional underwriting performance. The increase was primarily due to the impact of more normal winter weather conditions in home insurance and less favourable prior year claims development in commercial lines. The underlying performance of our portfolio, which excludes catastrophes and prior year claims development, was higher by 1.9 percentage points year-over-year largely driven by an increase in the number of claims across all lines of business.
Personal auto combined ratio improved 1.1 percentage points from a year ago to 94.1%, as a significant increase in the frequency of claims due to more seasonal weather conditions offset higher favourable prior year development.
Personal property combined ratio increased 10 percentage points to 93.5% from the exceptional performance last year. The results were impacted by an 11% increase in claims frequency from more seasonal weather conditions and less favourable prior year development versus the first quarter of 2012.
Commercial auto combined ratio increased 12.1 percentage points to 97.3% from the very strong performance of 85.2% in the first quarter of 2012. The increase was primarily due to a higher number of claims compared to last year's unusually mild weather conditions and unfavourable prior year claims development. Excluding catastrophes and prior year claims development, the current year loss ratio was up by 3.5 percentage points year-over-year.
Commercial P&C combined ratio increased 0.6 percentage points from last year to 98.2% as lower favourable prior year claims development more than offset a decline in the amount of large claims losses.
-
Net investment income of
$96 million was down 4% compared to the same period of last year due to marginally lower investment income and higher expenses. The market-based yield for the quarter was 3.4%, down 30 basis points from last year due to the low-yield environment.
Investment Gains
Net investment gains, excluding fair-value-through-profit-and-loss
bonds, were
Capital Management
The company's financial position remained solid with a minimum capital
test of 214% and
Recent acquisitions
The integration of AXA Canada continues to progress very well. The
company maintains its
With respect to the Jevco integration, the company expects to
progressively reach annual expense synergies of approximately
Analysts' Estimates
The average estimate of earnings per share and net operating income per
share for the quarter among the analysts who follow the company was
Conference Call
The conference call is also available by dialling (647) 427-7450 or 1
(888) 231-8191 (toll-free in
A replay of the call will be available later today at
About
Forward Looking Statements
This document may contain forward looking statements that involve risks and uncertainties. The company's actual results could differ materially from these forward looking statements as a result of various factors, including those discussed in the company's most recently filed Annual Information Form and annual Management's Discussion & Analysis. Please read the cautionary note at the end of the MD&A.
Media Inquiries:
Gilles Gratton
Vice President, Corporate Communications
1 (416) 217-7206
gilles.gratton@intact.net
Investor Inquiries:
Dennis Westfall
Vice President, Investor Relations
1 (416) 341-1464 ext. 45122
dennis.westfall@intact.net