-
Net operating income per share of
$0.89 , despite a$0.79 per share impact related to theAlberta storms and flooding - Combined ratio of 97.5% with solid underlying results in our auto businesses
- Premium growth of 10%, bolstered by the addition of Jevco's product suite and solid organic growth
- Book value per share increased 9% from a year ago
- Integration of acquisitions remains on track; our estimate of Jevco synergies increased by 50%
Net operating income for the first six months of the year was
CEO's Comments
"Our operating performance remained sound this quarter, despite
providing approximately
"The strength of our financial performance demonstrates our resilience
to the
"The devastating events of recent weeks serve as a stark reminder that weather events are becoming more extreme and frequent. An open and transparent dialogue will need to occur between governments, the industry and other stakeholders to ensure that the home insurance product is adapted to today's climate reality and remains available and affordable for consumers."
"In the quarter, customers and brokers continued to embrace our product and service offering as we continued to record impressive growth in terms of direct written premiums and written insured risks."
Dividend
The Board of Directors declared a quarterly dividend of
Current Outlook
The company expects that industry premium growth is likely to evolve at
a similar pace to that of the last 12 months. At an industry level, we
do not expect further loss ratio improvement in personal auto as the
2010
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 |
Q2-2013 | Q2-2012 | Change |
YTD 2013 |
YTD 2012 |
Change |
Direct premiums written (excluding pools) | 2,182 | 1,977 | 10% | 3,706 | 3,380 | 10% |
Underwriting income1 | 42 | 123 | (66)% | 125 | 246 | (49)% |
Net operating income | 123 | 180 | (32)% | 298 | 359 | (17)% |
Net income | 103 | 129 | (20)% | 277 | 302 | (8)% |
Earnings per share Basic and diluted (dollars) |
0.73 | 0.95 | (23)% | 2.00 | 2.25 | (11)% |
Adjusted earnings per share Basic and diluted (dollars) |
0.81 | 1.08 | (25)% | 2.17 | 2.63 | (18)% |
Net operating income per share (dollars) |
0.89 | 1.35 | (34)% | 2.16 | 2.69 | (20)% |
ROE for the last 12 months 2 | 12.4% | 12.7% | (0.3) pts | |||
Adjusted ROE for the last 12 months 2 | 14.3% | 17.0% | (2.7) pts | |||
Operating ROE for the last 12 months 2 | 14.4% | 17.3% | (2.9) pts | |||
Combined ratio (excluding MYA) | 97.5% | 92.3% | 5.2 pts | 96.3% | 92.3% | 4.0 pts |
Book value per share (dollars) | 33.15 | 30.30 | 9% |
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 ROE, Adjusted ROE and Operating ROE in 2013, the average equity calculation has been adjusted on a pro rata basis to account for the $229 million of common shares issued as at September 4, 2012. The 2012 calculation was adjusted for the $921 million of common shares issued as at September 23, 2011. |
Operating Highlights
-
Net operating income for the quarter was
$123 million , down$57 million from the same quarter in 2012 due to lower underwriting income primarily resulting from the elevated losses inAlberta , which amounted to a pre-tax loss of$143 million net of reinsurance (a loss of$105 million after tax). The operating ROE for the last twelve months was 14.4%.
Net operating income for the first six months of the year was$298 million , down from the$359 million recorded during the same period in 2012. The decrease is attributed mainly to the catastrophe losses experienced in the second quarter of 2013.
-
Direct premiums written increased 10% in the second quarter to
$2.2 billion , driven by strong personal and commercial auto results, reflecting the addition of Jevco and solid organic growth. Direct written premiums in personal insurance increased by 11% from a year ago, while commercial insurance premiums were up by 8% during the same period.
For the first two quarters of the year, total direct premiums written also increased by 10% to reach$3.7 billion .
-
Underwriting income in the quarter decreased from
$123 million to $42 million compared to the same period a year ago. TheAlberta storms and flooding accounted for a pre-tax loss of$143 million net of reinsurance, which impacted all lines of business. The underlying performance of our portfolio, which excludes catastrophes and prior year claims development, was higher by 1.6 points year-over-year in part due to higher claims severity in our personal auto and commercial P&C businesses.
Personal property incurred an underwriting loss of$49 million . The 113.3% combined ratio increased 8.8 percentage points from last year and primarily resulted from the severe flooding that impacted southernAlberta communities in June. The extended winter season also contributed to the higher combined ratio.
Personal auto underwriting income increased to$106 million from the$82 million recorded in the second quarter of 2012. The combined ratio improved 1.8 percentage points from last year to 87.2% as higher favourable prior year claims development and a reduction in the expense ratio were partly offset by an increase in catastrophe losses following the devastatingAlberta weather event.
Commercial auto underwriting income of$16 million was down from the$26 million recorded in the second quarter of 2012. The combined ratio of 89.6% increased 10 percentage points from last year's exceptional performance, primarily due to unfavourable prior year claims development and an increase in catastrophe losses.
Commercial P&C recorded an underwriting loss of$31 million . The combined ratio was up 16.9 percentage points to 108.2% mainly as a result of higher catastrophe losses and lower favourable prior year development. Excluding the impact of catastrophes and prior year claims development, the loss ratio increased 2.1 points year-over-year partly due to higher claims severity reflecting an elevated level of large losses.
For the first six months of the year, total underwriting income was$125 million , down from$246 million in the corresponding period of 2012. The decrease reflects the impact of theAlberta catastrophe losses in the second quarter of 2013 and more seasonal weather conditions in the first quarter of 2013.
-
Net investment income of
$102 million was up 7% from a year ago. The change was due to additional investments from the Jevco acquisition resulting in more dividend-paying common shares. Unrealized losses from higher bond yields and weak equity markets decreased investment values but positively impacted the market-based yield, which increased 10 basis points to 3.8%.
For the first six months of the year, total net investment income increased 2% to$198 million from the previous period and the market-based yield was 3.6%.
Investment Gains
Net investment gains, excluding fair-value-through-profit-and-loss
bonds, were
Capital Management
The company's financial position remained solid at the end of the
quarter with a minimum capital test of 197% and
During the quarter, the company acquired 1.4 million common shares under
its normal course issuer bid, launched in
AXA Canada and Jevco integration update
The integration of AXA Canada continues to progress very well. The
company maintains its
With respect to the Jevco integration, the company expects to
progressively reach initial annual expense synergies of
Subsequent events
On
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
A transcript of the call will also be available on
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.
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) 341-1464 ext. 45122
dennis.westfall@intact.net