-
Premium growth of nearly 50% in the fourth quarter, bolstered by the
acquisition of AXA Canada and a rebound in organic growth
-
Net operating income per share up 61% to
$1.14 in the fourth quarter, leading to an operating ROE of 15.3%
-
Strong performance across all lines of business leading to a combined
ratio of 92.7% in the fourth quarter
-
Book value per share increased 12% in 2011
-
Quarterly dividend raised 8% to
$0.40 per share
- AXA Canada integration on-track
Net operating income for the year was
CEO's Comments
"Our excellent fourth quarter results rounded off a strong year for our
company as we recorded our best underwriting performance in the past
five years," said
"With the acquisition of AXA Canada now complete, we are beginning to reap the positive benefits of our enhanced leadership position. We look forward to continuing to outperform the industry and pursuing our efforts towards building one of the best P&C insurers in the world."
"As we enter 2012, our solid financial position and the quality of our operating earnings enabled us to increase our dividend, for the seventh consecutive year."
Dividends
The Board of Directors increased the company's quarterly dividend by 8%,
or
Current Outlook
Industry premiums are likely to increase in the next 12 months at a pace
similar to last year. It is expected that growth in personal auto will
be in the mid-single digit range, driven by
At an industry level, while the combined ratio might improve modestly as
a result of the better pricing environment and
The company is well-positioned to continue outperforming the P&C insurance industry in the current environment 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 strongly 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 | Q4-2011 | Q4-2010 | Change | 2011 | 2010 | Change |
Direct premiums written (excluding pools) |
1,576 | 1,060 | 49% | 5,099 | 4,498 | 13% |
Underwriting income1 | 118 | 21 | 462% | 273 | 193 | 41% |
Net operating income2 | 152 | 80 | 90% | 460 | 402 | 14% |
Net income | 84 | 107 | (21)% | 465 | 498 | (7)% |
Earnings per share Basic and diluted (dollars) |
0.62 | 0.95 | (35)% | 3.96 | 4.32 | (8)% |
Adjusted earnings per share Basic and diluted (dollars)2 |
1.14 | 0.96 | 19% | 4.82 | 4.38 | 10% |
Net operating income per share (dollars) | 1.14 | 0.71 | 61% | 3.91 | 3.49 | 12% |
ROE for the last 12 months 2,3 | 14.3% | 16.9% | (2.6) pts | |||
Adjusted ROE for the last 12 months 2,3 | 17.4% | 17.2% | 0.2 pts | |||
Operating ROE for the last 12 months 2,3 | 15.3% | 15.1% | 0.2 pts | |||
Combined ratio (excluding MYA) | 92.7% | 98.0% | (5.3) pts | 94.4% | 95.4% | (1.0) pt |
Book value per share (dollars) | 29.73 | 26.47 | 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 For key performance indicator definitions, please see pages five and
six of the Management's Discussion and Analysis for the year ended
3 For ROE, adjusted ROE and Operating ROE in Q4-2011, 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
$152 million , up$72 million from the same quarter in 2010. The 90% increase is attributable to improved underwriting results and higher investment income. The operating ROE for the last 12 months was 15.3%.
Net operating income for the year was$460 million up 14% from$402 million recorded in 2010.
-
Direct premiums written increased 49% in the fourth quarter to
$1.6 billion , as a result of the acquisition of AXA Canada and a rebound in organic growth from 2% in the third quarter to an estimated 4% in the last three months of the year. The organic growth benefited from the much improved sales performance of the company's direct auto business inOntario .
For the year, total direct premiums written increased by 13% to$5.1 billion .
-
Underwriting income in the quarter increased by
$97 million to $118 million compared to the same period a year ago. The combined ratio improved by 5.3 percentage points to 92.7% driven by a significant improvement in personal auto. The underlying performance of our portfolio, which excludes catastrophes and prior year claims development, improved 8.3 percentage points year-over-year.
Personal auto underwriting income amounted to$52 million up from a loss of$18 million recorded in the fourth quarter of 2010. The combined ratio improved 9.7 percentage points to 93.3% primarily as a result of an improvement inOntario .
Personal property underwriting income reached$41 million up from$21 million recorded in the corresponding period last year, as a result of our home improvement action plan and relatively mild winter conditions. The very strong combined ratio of 88.6% improved 3.1 percentage points from the fourth quarter of 2010. Excluding the impact of the catastrophes and prior year claims development, the loss ratio for home insurance improved by 5.3 percentage points year-over-year.
Commercial auto underwriting income results increased to$10 million from the$6 million recorded in the fourth quarter of 2010. The 93.0% combined ratio improved slightly from last year's 93.9% due to better current accident year results.
Commercial P&C underwriting income improved to$15 million from$12 million recorded in the last three months of 2010. The combined ratio in commercial P&C insurance increased by 1.9 percentage points to 95.7%, as a result of lower favourable prior year claims development and higher catastrophe losses.
For the year, total underwriting income was up 41% to$273 million despite a$113 million increase in catastrophe losses resulting from theSlave Lake wildfires, Tropical Storm Irene and a number of other severe storms.
-
Investment income of
$103 million was up 45% from the same period in 2010 as a result of an increase in assets. The market-based yield declined 20 basis points to 3.9% due to the low yield environment.
For the year, total investment income was up 11% to$326 million from the previous year and the market-based yield was 4.0%.
Investment Gains
Net investment losses, excluding fair-value-through-profit-or-loss
bonds, were
Capital Management
The company's financial position at the end of 2011 remained solid with
a minimum capital test of 197% and
AXA Canada Acquisition
The integration of AXA Canada activities is on track and it is
anticipated to be completed within 18 months of the closing of the
transaction. The company remains confident that it will progressively
reach its
Integration expenses amounted to
To ensure the company continues to offer an outstanding customer experience and top-notch service to brokers, most of AXA Canada's products and services were integrated into Intact's offering and nearly all of its front-line employees joined Intact.
On
Analysts' Estimates
Net operating income per share for the fourth quarter amounted to
Conference Call
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(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.
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