Net operating income per share of
$0.89, despite $1.02per share in net losses from weather-related events
- Combined ratio of 95.9%, driven by strong results in commercial lines
- Premium growth of 47%, reflecting the additions of AXA Canada and JEVCO
- Book value per share increased 10% with an operating ROE of 16.4% in the last 12 months
- AXA Canada integration remains on track and JEVCO integration is now well underway
Net operating income for the first nine months was
"Our operating results remained sound this past summer, despite the
significant financial impact of helping our customers recover from
severe hail, wind and rain storms in
"As the prevalence of severe weather events puts pressure on the operating performance of our home insurance business, we remain committed to ensure its profitability and sustainability."
"Our consistent growth and solid financial performance since the beginning of the year reflect the success of our strategic initiatives which have strengthened our position in the industry."
The Board of Directors declared a quarterly dividend of
The company expects that industry premiums are likely to increase in the next 12 months at a mid single digit rate, with low single digit growth in personal auto and commercial lines, and upper single digit growth in personal property. The continuing low interest rate environment could support firmer industry premium levels.
At an industry level, the loss ratio is expected to improve in personal
auto as a result of previous rate increases and the effectiveness of
As a result, the industry's combined ratio is expected to improve in 2012. However, reduced investment income will partially offset that improvement. Overall, the industry's ROE is likely to improve to the upper single digits, bolstered by the performance of the first six months of the year but somewhat dampened by the impact of the summer storms.
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 likely outperform the industry's ROE by more than 500 basis points in the next 12 months.
|In millions of dollars, except as otherwise noted||Q3-2012||Q3-2011||Change||
|Direct premiums written (excluding pools)||1,798||1,226||47%||5,178||3,523||47%|
|Net operating income||122||111||10%||481||308||56%|
Earnings per share
Basic and diluted (dollars)
Adjusted earnings per share
Basic and diluted (dollars)
|Net operating income per share (dollars)||0.89||0.97||(8)%||3.58||2.75||30%|
ROE for the last 12
|Adjusted ROE for the last 12 months2||15.9%||17.8%||(1.9) pts|
|Operating ROE for the last 12 months2||16.4%||14.0%||2.4 pts|
|Combined ratio (excluding MYA)||95.9%||94.2%||1.7 pts||93.5%||95.2%||(1.7) pts|
|Book value per share (dollars)||31.81||28.97||10%|
|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 Q3-2012, the average shareholders' equity calculation was adjusted on a pro rata basis to account for the $229 million of common shares issued as at September 4, 2012. Q3-2011 was adjusted for the $921 million of common shares issued as at September 23, 2011.|
Net operating income for the quarter was
$122 million, up $11 millionfrom the same quarter in 2011. The 10% increase is largely attributable to higher investment income. The operating ROE for the last 12 months improved by 2.4 percentage points to reach 16.4%.
Net operating income for the first nine months of the year was
$481 million, up 56% from the $308 millionrecorded in 2011. The increase reflects the contribution of AXA Canada and an improvement in the combined ratio.
Direct premiums written increased 47% in the third quarter to
$1.8 billion, as a result of the acquisition of AXA Canada and one month of JEVCO premiums. Direct premiums written in personal insurance increased 37% from a year ago, while premium growth in commercial insurance was up 78% over the same period.
For the first three quarters of the year, total direct premiums written increased by 47% to
Underwriting income in the quarter increased by
$2 million to $67 millioncompared to the same period a year ago despite recording $142 millionin catastrophic losses resulting from severe storms in Alberta, Ontarioand Quebec. The combined ratio increased by 1.7 percentage points to 95.9% from a year ago as strong results in commercial lines partially offset the losses from weather-related events in personal lines.
Personal auto underwriting performance declined with a 94.9% combined ratio, up 8.5 percentage points from the corresponding period last year. Severe hail storms in
Calgaryand Ottawaaccounted for most of the increase in the combined ratio.
Personal property combined ratio was also up 9.5 percentage points from last year to 119.8%, as a result of severe weather events. However, the current year loss ratio excluding catastrophic losses improved slightly.
Commercial auto combined ratio improved 5.8 percentage points from a year ago to an exceptional 77.0%, driven by strong current year results.
Commercial P&C combined ratio improved 18.6 percentage points to 81.4% from the third quarter of 2011, reflecting higher favourable prior year claims development, improved current year results and fewer large losses.
For the first nine months of the year, total underwriting income was up
$158 million to $313 million. The substantial growth was driven by the contribution of AXA Canada and an improvement in the current year loss ratio.
Net investment income of
$92 millionwas up 24% from a year ago, as a result of additional assets. The market-based yield declined 20 basis points to 3.6% due to lower interest rates.
For the first nine months of the year, total net investment income increased 29% to
$287 millionfrom the previous period due to additional assets. The market-based yield for the period was 3.7%.
Net investment gains, excluding fair-value-through-profit-or-loss bonds,
Since the beginning of the year, the company has had investment gains of
The company's financial position remained solid with a minimum capital
test of 201% and
AXA Canada Acquisition
The company expects that once the integration is completed the retention level of the acquired book of business will be in line with the current experience.
The company maintains its
JEVCO Insurance Company Acquisition
The company expects to progressively reach annual expense synergies of
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.
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