- Premium growth of 46%, reflecting the strong contribution of the AXA Canada portfolio
Net operating income per share of
$1.35, up 55%, leading to an operating ROE of 17.3%
- Combined ratio of 92.3%, as strong broad-based results were partially offset by elevated catastrophe losses
- Book value per share increased 13% from a year ago
- AXA Canada integration on track
Net operating income for the first six months was
"The strength of our operating performance continued in the quarter
despite the high cost of helping our customers recover from a severe
storm system that hit a number of communities in late spring," said
"The initiatives we undertook over the last year notably in home and auto insurance continue to deliver substantially-improved operating results which reduced the financial impact of declining interest rates and the volatility of the equity markets."
"The contribution of the AXA Canada portfolio continues to enhance both our growth profile and our operating performance as customers and brokers embrace our expanded offering."
The Board of Directors declared a quarterly dividend of
Industry premiums are likely to increase in the next 12 months at a mid single digit rate. It is expected that growth in personal auto will be in the mid single digit range and growth in personal property is expected to be in the upper single digits. Commercial line premiums are expected to grow at a low single digit rate. The low interest rate environment and reinsurance market conditions should support firmer industry premium levels.
At an industry level, while the combined ratio might improve 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 more than 500 basis points in the next 12 months.
In millions of dollars,
except as otherwise noted
|Direct premiums written (excluding pools)||1,977||1,354||46%||3,380||2,297||47%|
|Net operating income||180||95||89%||359||197||82%|
Earnings per share
Basic and diluted (dollars)
Adjusted earnings per share
Basic and diluted (dollars)
Net operating income
per share (dollars)
|ROE for the last 12 months 2||12.9%||17.3%||(4.4) pts|
|Adjusted ROE for the last 12 months 2||17.1%||17.6%||(0.5) pts|
|Operating ROE for the last 12 months 2||17.3%||13.6%||3.7 pts|
|92.3%||97.0%||(4.7) pts||92.3%||95.8%||(3.5) pts|
|Book value per share (dollars)||30.30||26.89||13%|
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 Q1-2012 and Q2-2012, the average shareholders' equity calculation was adjusted on a pro rata basis to account for the
Net operating income for the quarter was
$180 million, up $85 millionfrom the same quarter in 2011. The 89% increase is attributable to the growth of our insurance portfolio, improved underwriting results and higher investment income. The operating ROE for the last twelve months improved by 3.7 percentage points to 17.3%.
Net operating income for the first six months of the year was
$359 millionup 82% from the $197 millionrecorded in 2011.
Direct premiums written increased 46% in the second quarter to
$2.0 billion, as a result of the acquisition of AXA Canada and the company's organic growth initiatives. Direct premiums written in personal insurance increased 37% from a year ago, while premium growth in commercial insurance was up 71% over the same period.
For the first two quarters of the year, total direct premiums written increased by 47% to
Underwriting income in the quarter increased by
$90 million to $123 millioncompared to the same period a year ago due to the addition of AXA Canada and a reduction in catastrophe losses from $105 million to $62 million. The combined ratio improved 4.7 percentage points to 92.3% from a year ago despite the elevated level of losses attributable to weather-related damages. The underlying performance of our portfolio, which excludes catastrophes and prior year claims development, was unchanged year-over-year.
Personal property incurred a loss of
$16 million, a $58 millionimprovement from the corresponding period last year. The 104.5% combined ratio reflects elevated catastrophe losses resulting from a severe storm system that impacted Thunder Bayand Montrealin late May. The combined ratio improved 25 percentage points from the second quarter of 2011.
Personal auto underwriting income improved to
$82 millionfrom $79 millionrecorded in the second quarter of 2011. Despite a 3.3 percentage point increase, the combined ratio remained excellent at 89.0%.
Commercial auto underwriting income results improved to
$26 millionfrom the $21 millionrecorded in the second quarter of 2011. The exceptional combined ratio of 79.6% increased 4.2 percentage points from last year as higher favourable prior year claims development did not fully offset a decline in current year results.
Commercial P&C underwriting income reached
$31 millionfrom $7 millionrecorded in the second quarter of 2011. The combined ratio in commercial P&C insurance improved 4.9 percentage points to 91.3% reflecting lower catastrophe losses and higher favourable prior year development, partially offset by less-favourable current year results due in part to an increase in the severity of claims.
For the first six months of the year, total underwriting income was up
$155 million to $246 million. The substantial growth was driven by the addition of AXA Canada and an improvement in the current year loss ratio.
Net investment income of
$95 millionwas up 25% from a year ago as a result of an increase in assets. The market-based yield declined 50 basis points to 3.7% due to the low yield environment.
For the first six months of the year, total net investment income was up 31% to
$195 millionfrom the previous period and the market-based yield was 3.7%.
Net investment losses, excluding fair-value-through-profit-or-loss
The company's financial position at the end of the quarter remained
solid with a minimum capital test of 205% and
AXA Canada Integration
The integration of AXA Canada is on track and it is anticipated to be
completed by mid-2013. The company remains confident that it will
progressively reach its
Integration expenses amounted to
The company expects that once the integration is complete the premium retention level from the acquired book of business will be in line with its experience to date. The company's strong growth reflects its improved value proposition, a broader product suite and risk appetite as well as a continued focus on small and medium-sized businesses.
JEVCO Insurance Company Acquisition
The average estimate of earnings per share and net operating income per
share for the quarter among the analysts who follow the company was
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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.Return to all Press Releases