- Net operating income per share of
$1.84 in Q4-2014 - Combined ratio of 88.2% in Q4-2014 driven by the Company's initiatives to improve profitability and favourable weather conditions
- Operating ROE of 16.3% with an 11% increase in book value per share over the past twelve months
- Quarterly dividend raised 10% to
$0.53 per share
Net operating income for the year was
CEO's Comments
"Our operating and financial results continued to significantly improve during the quarter, reflecting favourable weather conditions, as well as the hard work and dedication of thousands of employees from coast to coast," said
Dividend
The Board of Directors increased the quarterly dividend by 10% to
Industry Outlook
The Company expects that industry premiums will grow at a low single digit rate. In personal property, the current hard market conditions should continue as the magnitude of catastrophe losses in recent years weighs on industry results. The Company expects that future reductions in
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 strong financial position. Given these attributes, the Company believes that it will outperform the industry's ROE by at least 500 basis points over the next twelve months.
Consolidated Highlights
In millions of dollars, except as otherwise noted |
Q4-2014 |
Q4-2013 |
Change |
2014 |
2013 |
Change |
Direct premiums written (excluding pools) |
1,760 |
1,702 |
3% |
7,349 |
7,319 |
- |
Underwriting income1 |
216 |
67 |
222% |
519 |
142 |
265% |
Net operating income2 |
247 |
143 |
73% |
767 |
500 |
53% |
Net income |
205 |
107 |
92% |
782 |
431 |
81% |
Earnings per share Basic and diluted (dollars) |
1.52 |
0.77 |
97% |
5.79 |
3.10 |
87% |
Adjusted earnings per share Basic and diluted (dollars)2 |
1.58 |
0.88 |
80% |
6.01 |
3.44 |
75% |
Net operating income per share (dollars)2 |
1.84 |
1.05 |
75% |
5.67 |
3.62 |
57% |
ROE for the last 12 months |
16.1% |
9.3% |
6.8 pts |
|||
Adjusted ROE for the last 12 months2 |
16.8% |
10.3% |
6.5 pts |
|||
Operating ROE for the last 12 months2 |
16.3% |
11.2% |
5.1 pts |
|||
Combined ratio1 |
88.2% |
96.3% |
(8.1) pts |
92.8% |
98.0% |
(5.2) pts |
Book value per share (dollars) |
37.75 |
33.94 |
11% |
1 Excludes market yield adjustment (MYA) which is the impact on claims liabilities due to movements in discount rates. |
2 This is a non-IFRS financial measure, which does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures used by other companies in the industry. Please refer to Section 6 – Non-IFRS financial measures in the Management's Discussion and Analysis for further details. |
Operating Highlights
- Net operating income for the quarter was
$247 million , up$104 million from the same quarter in 2013 driven by a$149 million increase in underwriting income.
Net operating income for the year was$767 million , up 53% from 2013. The increase is attributed to a significant improvement in underwriting income, partly offset by higher taxes. The operating ROE for the last twelve months was 16.3%.
Direct premiums written increased 3% in the quarter to$1.8 billion , driven by continued firming in commercial lines. Total direct premiums written remained stable at$7.3 billion in 2014 while the underlying growth in premiums totaled 1.6%. The growth in premiums during 2014 was tempered by the Company's initiatives aimed at improving the performance of its property portfolios and by government-mandated auto insurance rate reductions inOntario .
- Underwriting income for the quarter was
$216 million compared to$67 million during the same period a year ago. The combined ratio improved 8.1 points to 88.2% compared to the same period last year, reflecting a 5.6 point improvement in the underlying loss ratio and a$45 million decline in catastrophe losses.
Personal property reported an unusually strong underwriting income of$109 million in the fourth quarter compared to$54 million a year ago. The 73.6% combined ratio for the quarter was 12.8 percentage points better than the previous year, driven by the Company's profitability initiatives and mild weather conditions.
Personal auto underwriting income increased to$53 million from$14 million in the fourth quarter of 2013 as the combined ratio improved 4.7 percentage points to 93.7%. The improvement is largely due to milder weather conditions and higher favourable prior year claims development, offset in part by a negative net impact from industry pools. The underlying loss ratio improved 3.1 percentage points, due in part to a lower frequency of claims.
Commercial P&C results were strong, with underwriting income of$53 million compared to a breakeven performance in the fourth quarter of last year. The combined ratio improved 12.9 percentage points to 87.1% primarily due to a reduction in claims frequency. The underlying loss ratio improved significantly to 52.7% from 66.1% a year ago.
Commercial auto underwriting income was$1 million in the fourth quarter of 2014 compared to a loss of$1 million a year ago, as the combined ratio improved slightly to 99.5% in the quarter.
For the year, underwriting income improved by$377 million to $519 million due to significantly lower catastrophe losses and a slight improvement in the underlying loss ratio to 64.3%.
- Net investment income of $111 million in the fourth quarter of 2014 was up 7% from a year ago. The unusually high level of income was the result of higher average investments and favourable timing of expenses in the fourth quarter, which more than offset the decline in yields.
For the year, net investment income increased 5% to$427 million as growth in investments more than offset declining yields.
Investment Gains
Net investment losses excluding fair-value-through-profit-and-loss fixed-income securities amounted to
Total investments amounted to
Capital Management
The Company's financial position remained strong at the end of the year with an estimated Minimum Capital Test of 209% and
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 were
MD&A and Consolidated Financial Statements
This Press Release, which was approved by the Company's Board of Directors on the Audit Committee's recommendation, should be read in conjunction with the 2014 Management's Discussion and Analysis as well as the Company's audited 2014 Consolidated financial statements, which are available at www.intactfc.com and later today on SEDAR at www.sedar.com.
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 beginning of the MD&A.
SOURCE