-
Operating ROE of 11.2% in 2013 despite incurring
$530 million in pre-tax catastrophe losses -
Net operating income per share of
$1.05 in Q4-2013 with a combined ratio of 96.3% -
Quarterly dividend raised 9% to
$0.48 per share - AXA Canada and Jevco integration activities now complete
2013 was marked by severe weather events, resulting in
CEO's Comments
"Throughout 2013, we continued to clearly demonstrate the quality of our
operations and the resilience of our financials, as unprecedented
weather events challenged our industry," said
Dividend
The Board of Directors increased the quarterly dividend by 9% to
Current Outlook
The Company expects that industry premiums will grow at a low single
digit rate. In personal property, the current hard market conditions
will accelerate meaningfully as the magnitude of 2013 catastrophe
losses negatively impacted industry results. The Company expects that
the
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 |
Q4-2013 | Q4-2012 | Change | 2013 | 2012 | Change |
Direct premiums written (excluding pools) | 1,702 | 1,690 | 1% | 7,319 | 6,868 | 7% |
Underwriting income (loss)1 | 67 | 138 | (51)% | 142 | 451 | (69)% |
Net operating income2 | 143 | 194 | (26)% | 500 | 675 | (26)% |
Net income | 107 | 177 | (40)% | 431 | 571 | (25)% |
Earnings per share Basic and diluted (dollars) |
0.77 | 1.29 | (40)% | 3.10 | 4.20 | (26)% |
Adjusted earnings per share Basic and diluted (dollars)2 |
0.88 | 1.49 | (41)% | 3.44 | 5.02 | (31)% |
Net operating income per share (dollars) 2 |
1.05 | 1.42 | (26)% | 3.62 | 5.00 | (28)% |
ROE for the last 12 months | 9.3% | 13.5% | (4.2) pts | |||
Adjusted ROE for the last 12 months2 | 10.3% | 16.1% | (5.8) pts | |||
Operating ROE for the last 12 months2 | 11.2% | 16.8% | (5.6) pts | |||
Combined ratio (excluding MYA) |
96.3% | 92.1% | 4.2 pts | 98.0% | 93.1% | 4.9 pts |
Book value per share (dollars) | 33.94 | 33.03 | 3% |
1 Underwriting income 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 our 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
$143 million , down$51 million from the same quarter in 2012 as a result of a$71 million decline in underwriting income. The operating ROE for the last twelve months was 11.2%.
Net operating income for the year was$500 million , down from the$675 million in 2012. The decrease is attributed mainly to the elevated level of catastrophe losses incurred during the year, which amounted to$530 million pre-tax.
-
Direct premiums written increased 1% in the quarter to
$1.7 billion but were impacted by the decision to no longer offer 2-year policies in Québec as part of the company's plans to improve the performance of its home insurance portfolio. The growth was also tempered by the final phase of re-underwriting policies following the acquisition of Jevco.
Total direct premiums written increased by 7% during the year to reach$7.3 billion , reflecting the acquisition of Jevco and its product suite as well as organic growth.
-
Underwriting income for the quarter was
$67 million compared to$138 million during the same period a year ago. The active weather season across the country resulted in catastrophe losses of$55 million and impacted the underlying current year loss ratio as driving conditions became more difficult. Favourable prior year claims development was also$19 million lower than the same period last year.
Personal property reported underwriting income of$54 million compared to$124 million in the corresponding quarter of the previous year. The 86.4% combined ratio was strong despite being higher than the exceptional performance of the previous year with a 67.1% combined ratio. Severe winter conditions and the December ice storm inOntario and Québec were the main drivers of the increase in the combined ratio.
Personal auto underwriting income increased to$14 million from the$25 million loss recorded in the last quarter of 2012 as the combined ratio improved 4.7 percentage points from last year to 98.4%. The improvement is largely due to more favourable prior year claims development. The underlying current year loss ratio which excludes catastrophe losses and prior year claims development was higher by 2.1 points as a result of the more severe winter driving conditions.
Commercial auto recorded a loss of$1 million compared to a gain of$23 million a year ago. The combined ratio increased 16.2 percentage points to 100.4%. The increase reflects the significant 14.9 percentage point deterioration of the underlying current year loss ratio resulting from severe winter driving conditions and a higher level of large losses.
The commercial P&C combined ratio was up 4.1 percentage points to 100.0% as favourable prior year claims development was$28 million less than the corresponding quarter of last year. However, the underlying current year loss ratio remained unchanged.
For the year, total underwriting income was$142 million , down from$451 million in 2012 as the catastrophe losses resulting mainly from severe weather conditions and floods inAlberta andOntario amounted to$530 million .
-
Net investment income of
$104 million during the quarter was up 2% from a year ago, as the improvement from transferring investments from the Jevco acquisition into our higher-yielding asset mix was largely offset by declining bond yields. Overall the market-based yield of 3.7% was up from 3.6% in the last quarter of 2012.
For the year, total net investment income increased 4% to$406 million due to the additional investments from the Jevco acquisition and their transfer into our investment mix. During the year the market-based yield increased by 0.1% to 3.7%.
Investment Gains
Net investment losses, excluding fair-value-through-profit-and-loss
bonds amounted to
Capital Management
The Company's financial position remained solid at the end of the
quarter with an estimated Minimum Capital Test of 203% and
AXA Canada and Jevco integration update
The integrations of AXA Canada and Jevco are now complete. The Company
maintains its
The after tax synergies run-rate resulting from the Jevco integration
amounted to
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
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 our 2013 Management's Discussion and Analysis as well as our audited 2013 Consolidated financial statements, which are available on our website 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
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) 344-8004
dennis.westfall@intact.net