Net operating income per share up 25% to
$1.42in the fourth quarter, reflecting a combined ratio of 92.1%
- Premium growth of 7% in the fourth quarter, bolstered by the addition of JEVCO
- Operating ROE of 16.8% with an 11% increase in book value per share in 2012
Quarterly dividend raised 10% to
- AXA Canada and JEVCO integrations on track
Net operating income for the year was
"Our excellent fourth quarter underwriting performance is indicative of
the progress that we achieved in 2012," said
"Given our solid financial position and strong operating earnings, we are increasing our dividend for the eighth consecutive year. As we begin another year, we are confident that we will outperform the industry and continue to build a world-class P&C insurer."
The Board of Directors increased the company's quarterly dividend by
The company expects that industry premium growth is likely to evolve at a similar pace to that of the last 12 months. Furthermore, the continued low interest rate environment could support firmer market conditions.
At an industry level, we do not expect a significant improvement in
personal auto as
Overall, the industry's ROE is likely to progress at the same upper single digit rate that it recorded in the first nine months of 2012, and will likely remain slightly below its long-term average of 10% in 2013.
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.
|In millions of dollars, except as otherwise noted||Q4-2012||Q4-2011||Change||2012||2011||Change|
|Direct premiums written (excluding pools)||1,690||1,576||7%||6,868||5,099||35%|
|Net operating income||194||152||28%||675||460||47%|
|Earnings per share Basic and diluted (dollars)||1.32||0.62||113%||4.33||3.96||9%|
|Adjusted earnings per share Basic and diluted (dollars)||1.51||1.14||32%||5.15||4.82||7%|
|Net operating income per share (dollars)||1.42||1.14||25%||5.00||3.91||28%|
|ROE for the last 12 months 2||13.8%||14.3%||(0.5) pts|
|Adjusted ROE for the last 12 months 2||16.5%||17.4%||(0.9) pts|
|Operating ROE for the last 12 months 2||16.8%||15.3%||1.5 pts|
|Combined ratio (excluding MYA)||92.1%||92.7%||(0.6) pts||93.1%||94.4%||(1.3) pts|
|Book value per share (dollars)||33.03||29.73||11%|
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 2012, the average equity calculation has been adjusted on a pro rata basis to account for the
Net operating income for the quarter was
$194 million, up $42 millionfrom the equivalent quarter in 2011. The 28% increase is attributable to improved underwriting income driven by an exceptional performance in home insurance. The operating ROE for the last twelve months improved by 1.5 percentage points to 16.8%.
Net operating income for the year was
$675 million, up 47% from $460 millionrecorded in 2011. The increase reflects the contribution of AXA Canada to both underwriting and investment income as well as an improvement in the combined ratio.
Direct premiums written increased 7% in the fourth quarter to
$1.7 billion, as a result of the addition of JEVCO and organic growth.
For the year, total direct premiums written increased by
$1.8 billion to $6.9 billion. The increase is mainly attributable to the additions of AXA Canada and JEVCO.
Underwriting income in the quarter increased by
$20 million to $138 millioncompared to the same period a year ago, led by unusually strong results in home insurance. Overall, the combined ratio improved by 0.6 percentage points to 92.1%.
Personal property combined ratio improved 21.5 percentage points to an exceptional 67.1% from the very strong underwriting performance recorded in the fourth quarter of 2011. The improvement was the result of unusually high favourable prior year claims development, a decline in catastrophe losses, our continued actions to improve profitability and benign weather. Excluding the impact of the catastrophes and prior year claims development, the loss ratio improved by 5.8 percentage points year-over-year.
Personal auto combined ratio increased by 9.8 percentage points to 103.1% compared to the same period last year, primarily due to unfavourable prior year claims development related to actions that we took to protect against early signs of deterioration in bodily injury claims in
Albertaand uncertainty in Ontario.
Commercial auto combined ratio improved 8.8 percentage points from a year ago to 84.2%, reflecting higher favourable prior year claims development.
Commercial P&C combined ratio of 95.9% was largely unchanged from the corresponding quarter of last year. Improvements in the claims ratio were offset by an increase in the expense ratio due to higher variable commissions related to improved profitability.
Despite catastrophe losses that reached
$245 million, total underwriting income for the year was up $178 million to $451 million, largely reflecting the addition of AXA Canada. Overall, the combined ratio improved 1.3 percentage points during the year to 93.1%.
Investment income of
$102 millionremains relatively flat from the corresponding period in 2011 as an increase in investments resulting from the acquisition of JEVCO was offset by the impact of declining yields. For the year, total investment income was up 19% to $389 million, as a result of increased investments. The market-based yield was 3.6% for both the quarter and the year, down from the comparable periods.
Net investment gains, excluding fair-value-through-profit-or-loss bonds,
The company's financial position at the end of 2012 remained solid with
a minimum capital test of 205% and
AXA Canada Acquisition
After completing the renewal of all one-year policies in personal lines
and non-specialty commercial lines, the company is now in the process
of converting commercial specialty lines and two-year policies. Once
all policies have been converted, the company expects to decommission
AXA systems in the first part of 2014. As such, the company maintains
The average estimate of earnings per share and net operating income per
share for the quarter among the analysts who follow the company was
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
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.
Vice President, Corporate Communications
1 (416) 217-7206
Vice President, Investor Relations
1 (416) 341-1464 ext. 45122