Intact reports increase in Q3 net operating income despite significant storm losses
Intact Financial Corporation reported net operating income for the quarter ended September 30, 2010 of $89.0 million, up significantly from the $21.6 million recorded in the same quarter of last year.
On a per share basis, net operating income increased to $0.78 from $0.18. The increase was driven by a much improved underwriting performance with a 96.6% combined ratio, an 8.6 percentage point improvement. Direct premiums written increased 5.4% over the same quarter a year ago to reach $1,206 million. Net income for the quarter was $82.3 million, or $0.72 per share, compared to a loss of $8.0 million, or $0.07 per share, for the same period last year.
Net operating income for the first nine months of the year was $320.0 million, a 75% increase over the same period last year. Net income was up $292.3 million from the previous year to $322.3 million as a result of higher operating results and a significant improvement in investment gains. The combined ratio also improved by 5.6 percentage points over last year to 94.5% during the first nine months of the year. Direct premiums written for the first nine months of the year were $3,438 million, up 5.3% year-over-year.
“The solid growth of our premiums and our much improved underwriting performance confirm the continuation of more favourable industry conditions and the positive results of the initiatives we have launched over the last two years. These are strong results, given the impact of the severe storms of the last few months,” said Charles Brindamour, President and CEO of Intact Financial Corporation.
“Home and commercial insurance results have improved significantly since the beginning of the year. However, auto insurance results continued to be impacted by the increase in the cost of medical claims in Ontario in the months leading up to the introduction of new regulatory measures in early September. Early indications are, as we expected, positive, although the true effectiveness of the reforms will not be known for several months.”
“Our financial position remains strong with $800 million in excess capital and we are well positioned to take advantage of the opportunities that will result from improving market conditions.”
Intact says personal property premiums continue to increase across the industry to reflect the impact of more frequent or severe storms, as well as water-related losses which are the leading cause of home insurance claims. In personal auto, a new insurance regime took effect in Ontario on September 1st. The new regime is aimed at better controlling the cost of medical claims and could lead to improvements in the months to come. In other provinces, the conditions remain stable. Pricing conditions in commercial insurance continue to remain soft; however, pricing has begun to firm up in segments where we operate over the last twelve months. The Company expects that conditions will improve at a moderate pace over time.
