Net operating income per share of
$1.53with a combined ratio of 92.9%
Underlying DPW growth of 1.7% despite corrective actions in property
lines and rate reductions in
- Home improvement plan successfully rolling out; retention reflective of firm market conditions
- Challenging commercial P&C results warrant corrective actions
Strong financial position with
$657 millionof excess capital and 9.5% growth in book value per share over the past 12 months
Net operating income for the first six months of the year was
"Our operating and financial results improved significantly in the past
few months," said
The Board of Directors declared a quarterly dividend of
The Company expects that industry premiums will grow at a low single
digit rate. In personal property, the current hard market conditions
should accelerate as the magnitude of recent catastrophe losses
negatively impacts industry results. The Company expects that future
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.
In millions of dollars,
except as otherwise noted
|Q2-2014||Q2-2013||Change||YTD 2014||YTD 2013||Change|
|Direct premiums written (excluding pools)||2,173||2,182||-||3,676||3,706||(1)%|
|Underwriting income (loss)1||128||42||205%||179||125||43%|
|Net operating income2||206||123||67%||335||298||12%|
Earnings per share
Basic and diluted (dollars)
Adjusted earnings per share
Basic and diluted (dollars) 2
Net operating income
per share (dollars)2
|ROE for the last 12 months||11.1%||12.4%||(1.3) pts|
|Adjusted ROE for the last 12 months 2||11.9%||14.3%||(2.4) pts|
|Operating ROE for the last 12 months2||11.6%||14.4%||(2.8) pts|
|Combined ratio1||92.9%||97.5%||(4.6) pts||95.0%||96.3%||(1.3) pts|
|Book value per share (dollars)||36.29||33.15||9.5%|
1 Excludes market yield adjustment (MYA) which is the impact on claims
liabilities due to movements in
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 5 - Non-IFRS financial measures in the Management's Discussion and Analysis for further details.
Net operating income for the quarter was
$206 million, up $83 millionfrom the same quarter in 2013 as a result of a 205% increase in underwriting income. The operating ROE for the last twelve months was 11.6% despite incurring $446 millionin pre-tax net catastrophe losses during that period.
Net operating income for the first six months of the year was
$335 million, up 12% from the corresponding period of 2013, also reflecting an increase in underwriting income.
Direct premiums written remained constant in the quarter at
$2.2 billionbut were impacted by last year's decision to no longer offer 2-year policies in Québec. The underlying growth of 1.7% was tempered by the Company's initiatives aimed at improving the performance of the Company's property portfolio and by government-mandated auto insurance rate reductions in Ontario.
Total direct premiums written decreased by 1% during the first six months of the year to
$3.7 billion, in part due to the actions adopted by the Company to improve the quality of its home and commercial P&C insurance portfolios.
Underwriting income for the quarter was
$128 millioncompared to $42 millionduring the same period a year ago, which was severely impacted by the June 2013storms and flooding in Alberta. The increase was attributable to a $110 milliondecline in catastrophe losses, which was partly offset by an increase in the underlying current year loss ratio and a decline in favourable prior year claims development. Overall the combined ratio improved by 4.6 percentage points to 92.9%.
Personal property reported a solid performance with underwriting income of
$26 millioncompared to a loss of $49 millionin the corresponding quarter of the previous year. The combined ratio improved by nearly 20 percentage points to 93.5%. The beneficial impact of the Company's home improvement program was partially offset by the prevailing weather conditions in early spring and the losses resulting from the wind and rain storms that prevailed in June of this year.
Personal auto underwriting income declined 32% to
$72 millionas the combined ratio increased 4.3 percentage points to 91.5% from last year's exceptional performance. The decrease in underwriting income largely reflects a decline in favourable prior year claims development.
Commercial auto underwriting income increased to
$32 millionfrom $16 milliona year ago as the combined ratio improved 10.1 percentage points to 79.5%. The excellent performance reflects higher favourable claims development and improvements in the underlying current year loss ratio.
Commercial P&C recorded a disappointing underwriting loss of
$2 milliondespite a 7.7 percentage point improvement in the combined ratio, which amounted to 100.5%. The Company continued to record increased claims severity in this business, resulting in a deterioration of the underlying current year loss ratio.
For the first six months of the year, total underwriting income was
$179 million, a major improvement from $125 millionin the same period of last year, despite the harsh winter conditions that prevailed in the first months of this year.
Net investment income of
$105 millionduring the quarter was up 3% from a year ago. The increased level of investments more than offset a decline in bond yields. During the quarter, the market-based yield of 3.69% was down slightly from 3.76% in the second quarter of 2013.
For the first six months of the year, total net investment income increased 6% to
$210 millionas a result of an unusually high level of dividend income in the first quarter. Furthermore, the growth in investments more than offset declining yields.
Net investment gains excluding fair-value-through-profit-and-loss bonds
The Company's financial position remained strong at the end of the
quarter with an estimated Minimum Capital Test of 208% and
The Company has been conducting research on a number of markets over the
past few years with the objective of building a growth pipeline abroad.
During the quarter, the Company invested close to
The average estimate of earnings per share and net operating income per
share for the quarter among the analysts who follow the Company were
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.
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 beginning of the MD&A.
Vice President, Corporate Communications
1 (416) 217-7206
Vice President, Investor Relations
1 (416) 344-8004