- Net operating income per share of
$1.56 with a combined ratio of 91.6% - All business lines contributed to organic growth in DPW of 5%, or 6% including our recent acquisition of
Canadian Direct Insurance Inc. ("CDI") - Strong financial position with
$564 million of excess capital and operating ROE of 16.8% for the last 12 months
Net operating income for the first six months of the year was
CEO's Comments
"Our business continues to yield good results," said
Dividend
The Board of Directors declared a quarterly dividend of
Current 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 rate 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 12 months.
Consolidated Highlights
In millions of dollars, |
Q2-2015 |
Q2-2014 |
Change |
YTD 2015 |
YTD 2014 |
Change |
Direct premiums written |
2,346 |
2,173 |
8% |
3,918 |
3,676 |
7% |
DPW (underlying)1 |
2,344 |
2,212 |
6% |
3,919 |
3,745 |
5% |
Underwriting income 2 |
158 |
128 |
23% |
276 |
179 |
54% |
Net operating income 1 |
210 |
206 |
2% |
396 |
335 |
18% |
Net income |
199 |
215 |
(7)% |
377 |
375 |
1% |
Earnings per share |
1.47 |
1.6 |
(8)% |
2.79 |
2.77 |
1% |
Adjusted earnings per share |
1.56 |
1.65 |
(5)% |
2.94 |
2.89 |
2% |
Net operating income per share (dollars)1 |
1.56 |
1.53 |
2% |
2.93 |
2.47 |
19% |
Operating ROE for the last 12 months 1 |
16.8% |
11.6% |
5.2 pts |
|||
ROE for the last 12 months |
15.4% |
11.1% |
4.3 pts |
|||
Adjusted ROE for the last 12 months 1 |
16.1% |
11.9% |
4.2 pts |
|||
Combined ratio 2 |
91.6% |
92.9% |
(1.3) pts |
92.5% |
95.0% |
(2.5) pts |
Book value per share (dollars) |
39.23 |
36.29 |
8% |
(1) This is a non-IFRS financial measure, which does not have a standardized meaning prescribed by IFRS. Please refer to Section 5 - Non-IFRS financial measures in the Management's Discussion and Analysis for further details.
(2) Excludes market yield adjustment ("MYA") which is the impact on claims liabilities due to movements in discount rates.
Operating Highlights
- Net operating income for the quarter was
$210 million , up$4 million from the same period last year. The operating ROE for the last 12 months was 16.8%, while maintaining$564 million in excess capital at quarter end, following the all-cash acquisition of CDI in early May.
Net operating income for the first six months of the year was$396 million , compared to $335 million the corresponding period of 2014, reflecting an increase in underwriting income. - Direct premiums written grew 8% to
$2.3 billion , reflecting underlying growth of 6%. This can be attributed to organic growth across all business lines as well as the inclusion of two months of premiums from the CDI acquisition.
Underlying DPW growth was 5% in the first half of 2015, reflecting organic growth initiatives and the acquisition of CDI, which contributed 0.7 points to underlying growth. - Underwriting Income for the quarter was
$158 million , or 23% higher, than the same period last year. The improvement was primarily attributable to firming market conditions in commercial P&C and personal property, rate actions and higher favourable prior year claims development, offset by the lingering impact of a severe winter inAtlantic Canada on our property lines of business and higher claims severity in commercial auto. Overall, the combined ratio of 91.6% in the quarter was 1.3 percentage points better than the same period last year.
Personal property reported underwriting income of$31 million in Q2-2015 compared to$26 million in the corresponding quarter of 2014. The combined ratio improved slightly by 0.8 percentage points to 92.7%, helped by lower catastrophe losses of$11 million this quarter compared to Q2-2014, despite the harsh winter inAtlantic Canada that continued to be felt in the quarter.
Personal auto reported an underwriting income of$85 million in the quarter compared to $72 million for the same period a year ago. The combined ratio of 90.3% was 1.2 points better than last year which included an unusually low level of favourable prior year claims development. This was offset by an uptick in claims frequency.
Commercial P&C underwriting income improved to$33 million in the quarter. Results benefited from elevated favourable prior year claims development and rate actions under our action plan, improving our combined ratio 8.7 percentage points to 91.8%.
Commercial auto underwriting income was$9 million in the quarter compared to$32 million for the same period a year ago. The combined ratio deteriorated by 14.9 percentage points to 94.4%, related to claims severity and unfavourable prior year claims development.
Underwriting income of$276 million in the first half of 2015 was higher than the$179 million for the same period in 2014. The increase was primarily attributable to an$89 million increase in favourable prior year claims development and a$75 million decline in catastrophe losses from last year's level due to generally better weather this year. We reported a 92.5% combined ratio for the first half of 2015, 2.5 points better than the first half of 2014. - Net investment income of $104 million during the quarter was essentially flat versus a year ago, as the benefit of incremental investments was offset by a low yield environment. Net investment income of
$209 million in the first half of 2015 was consistent with the first half of 2014.
Investment Gains
Net investment gains, excluding fair-value-through-profit-and-loss fixed-income ("FVTPL") securities, amounted to
Capital Management
The Company's financial position remains strong, with an estimated Minimum Capital Test of 200% 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 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 the Management's Discussion and Analysis as well as the 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 dialing (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