- Net operating income per share of
- Operating ROE of 14.8% with an 11% increase in book value in the last twelve months
- Healthy premium growth in all lines of business except in
Net income for the first three months of 2011 increased to
CEO's Comments
"The strong performance we delivered throughout 2010 prevailed again during the early months of this year. We continue to reap the benefits of the action plans we have adopted over the past two years while winter weather conditions remained generally favourable," said
"The strong results of our home and commercial insurance activities during the quarter confirmed the sustainability of these action plans. The performance of our auto insurance portfolio remains robust as we maintain a prudent approach to managing our growth in
"Given the quality of our operational platforms and the flexibility provided by our strong financial position, we believe that we will continue to outperform the industry and strengthen our leadership position," said
Dividend
The Board of Directors declared a quarterly dividend of
Current Outlook
Industry premiums are likely to increase in the next twelve months at a pace similar to last year with percentage growth in the mid single digits in personal auto and upper single digits in personal property. These increases will be driven by rate inadequacies in auto insurance in
At an industry level, loss ratios are expected to improve in personal auto assuming that the reforms adopted in
The company is well-positioned to continue outperforming the P&C insurance industry in the current environment due to its significant scale, pricing and underwriting discipline, prudent investment and capital management practices, and strong 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
<<
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In millions of dollars,
except as otherwise noted Q1-2011 Q1-2010 Change
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Direct premiums written (excluding pools) 943 914 3%
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Underwriting income(1) 58 69 (16%)
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Net operating income(2) 101 113 (11%)
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Net income 157 141 11%
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Net operating income per share (dollars) 0.91 0.95 (4%)
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Earnings per share Basic and diluted (dollars) 1.42 1.19 19%
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Operating ROE(3) 14.8% n/a
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ROE(4) 17.8% n/a
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Combined ratio (excluding MYA) 94.6% 93.2% 1.4 pts
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Weighted average number of shares
outstanding (millions) 111 119 (7%)
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(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) Net operating income is defined as the sum of underwriting income,
interest and dividend income and other income, after tax.
(3) Operating ROE is defined as net operating income for the last twelve
months divided by the average shareholders' equity (excluding
accumulated other comprehensive income) for the same twelve-month
period. The average shareholders' equity is calculated by adding the
beginning balance and the ending balance and dividing by two. Q1-2010
comparative ratio has been omitted as 2009 results were not restated
to IFRS.
(4) ROE is defined as IFRS net income for the last twelve months divided
by the average shareholders' equity for the same twelve-month period.
The average shareholders' equity is calculated by adding the
beginning balance and the ending balance and dividing by two. Q1-2010
comparative ratio has been omitted as 2009 results were not restated
to IFRS.
Operating Highlights
- Net operating income for the quarter remained strong at $101 million ,
despite a $12 million decline from the remarkable performance of the
first quarter of last year, which benefited from unusually mild
weather conditions. The operating ROE for the last twelve months was
14.8%.
- Direct premiums written increased 3% in the quarter to $943 million .
Home insurance premiums grew by 5% as a result of increases in both
rates and amounts insured. The growth rate of personal auto premiums
slowed to 1% during the quarter as a result of our disciplined
approach in Ontario as the regulatory reforms unfold. Commercial auto
and P&C insurance premiums were up 7% and 4% respectively as a result
of an increase in the number of risks insured and higher rates.
- Underwriting income for the quarter also remained strong at $58
million , with a 94.6% combined ratio. Underwriting income was down
$11 million from the particularly strong performance of the first
quarter of last year largely due to a number of storms that occurred
in early March in Quebec and Ontario .
Underwriting income in personal insurance amounted to $32 million .
The underwriting performance of the company's home insurance
activities remained robust with a combined ratio of 92.3%. In
personal auto, the combined ratio increased slightly to 97.7% as a
result of more normal weather.
Commercial insurance continued to deliver strong underwriting
results, which reached $26 million , up 8% from the first quarter of
2010. The increase was driven by improved results in auto insurance
while the performance of the P&C insurance portfolio remained
unchanged. The combined ratio for commercial auto and P&C were
respectively 91.7% and 89.9%.
- Net Investment income remained unchanged at $73 million compared to
the same period of last year. The market-based yield for the quarter
was 4.0%, down slightly from last year as a result of a different
asset mix.
>>
Investment Gains
Gains on investments, excluding Fair Value Through Profit or Loss (FVTPL) debt securities, increased significantly to
Capital Management
The company's book value per share reached
During the quarter, the company acquired three million shares under its normal course issuer bids at an average price of
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
Annual and Special Meeting of Shareholders
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.
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