Desjardins Group first-quarter earnings increase 17.9 percent to $421 million
Desjardins Group posted net income of $421 million for the first quarter of 2012 – an increase of 17.9 percent from the same quarter in 2011.
The Quebec-based financial cooperative said its caisse network, Desjardins Card Services and, in particular, the Property and Casualty Insurance segment posted strong growth in business volumes.
The first quarter was also marked by increased other income due to a positive change in the fair value of certain investments and a more favourable claims experience than one year earlier, particularly in the Property and Casualty Insurance segment.
In the first quarter of 201, the P&C segment’s surplus earnings were $70 million, up $29 million or 70.7% compared to the same quarter of 2011. This was mainly due to increased net premiums, an improved claims experience, and a $6 million contribution from Western Financial Group.
This segment’s total income for the first quarter of 2012 stood at $533 million, an increase of $108 million or 25.4% over the same period of 2011. This performance was due to a $66 million increase in net premiums stemming from an increase in the number of policies issued. This increase resulted from growth initiatives targeting mass-market clienteles and groups, both in Quebec and across Canada; the development of white label partnerships; the development of business insurance; and an increase in the average premium in certain segments of activity. Western Financial Group also contributed $24 million to net premiums. Other income grew $38 million, due in large part to a$26 million contribution from Western Financial Group and gains realized on disposals of investments.
Expenses related to claims, benefits, annuities and changes in insurance and investment contract liabilities increased$22 million or 8.2% compared to 2011. The change was mainly due to growth in the portfolio of automobile insurance policies in Ontario and a $3 million increase attributable to the addition of the activities of Western Financial Group.
The loss ratio was 62.0% for the first quarter of 2012, down 4.7 points from 2011. This change was mostly due to fewer claims as a result of more favourable weather conditions and an increase in the average earned premium compared to the same period of 2011.
Key Financial Data
| COMBINED INCOME For the first quarter ended March 31 (unaudited, in millions of dollars and as a percentage) |
||||||
|
2012 |
2011 |
Change |
||||
| Net interest income |
$958 |
$967 |
(0.9) |
% |
||
| Net premiums |
$1,228 |
$1,159 |
6.0 |
% |
||
| Surplus earnings before member dividends |
$421 |
$357 |
17.9 |
% |
||
| Return on equity |
12.1 |
% |
12.0 |
% |
- |
|
| FINANCIAL POSITION AND KEY RATIOS (unaudited, in millions of dollars and as a percentage) |
||||
|
As at March 31, 2012 |
As at December 31, 2011 |
|||
| Assets |
$196,409 |
$190,137 |
||
| Equity |
$14,119 |
$14,027 |
||
| Tier 1 capital ratio (1) |
16.0 |
% |
17.3 |
% |
| Total capital ratio |
19.2 |
% |
19.3 |
% |
| Gross impaired loans/gross loans ratio |
0.43 |
% |
0.41 |
% |
(1) The decline resulted from the end of the application of the deferred treatment, of equity related to investments in insurance subsidiaries, prescribed by the Autorité des marchés financiers, effective in 2012.
“In this the International Year of Cooperatives, these results show that Desjardins is capable of performing at a high level both as a cooperative and financially. We also contribute in a tangible way to the sustainable prosperity of our members, clients and their communities,” said Monique F. Leroux, Chair of the Board, President and Chief Executive Officer. “Desjardins Group is in growth mode in terms of achieving sustainable development in Quebec and in the other provinces of Canada.”
Desjardins said its commitment to pursue development opportunities across Canada and the world were strengthened recently, most notably with the opening of an office in Paris as part of a cooperation agreement with Crédit Mutuel de France and its agreement with Coast Capital Savings for card services.
