(in Canadian dollars except as otherwise noted)
Highlights
- Net operating income per share of
$2.87 driven by strong underwriting performance and an accretive contribution from RSA - Premiums grew 68%, reflecting the first full quarter of RSA in our results and continued strength in commercial lines
- Combined ratio of 91.3%, driven by strength in all business segments despite an elevated 7.5 pts of catastrophe losses
- OROE of 18.3% with a total capital margin of
$2.7 billion - EPS of
$1.60 reflects strong operating results tempered by an investment loss and integration costs - Quarterly dividend increased by 10% to
$0.91 per common share
"The strength of our business was again evident this quarter, with robust operating performance across the platform, despite an elevated level of catastrophes. Our people have worked hard to get customers back on track following many severe weather events. We are making great progress on the integration of RSA, with synergies being realized as expected. The acquisition is already delivering high single-digit accretion to NOIPS since closing on
Consolidated Highlights1 | ||||||
(in millions of Canadian dollars except as otherwise noted) | Q3-2021 | Q3-2020 | Change | YTD 2021 | YTD 2020 | Change |
Direct premiums written1 | 5,447 | 3,264 | 68% | 12,266 | 9,167 | 35% |
Combined ratio | 91.3% | 87.1% | 4.2 pts | 89.3% | 90.3% | (1.0) pts |
Underwriting income | 426 | 369 | 15% | 1,187 | 812 | 46% |
Net investment income | 191 | 143 | 34% | 486 | 434 | 12% |
Distribution EBITA and Other | 105 | 81 | 30% | 285 | 203 | 40% |
Net operating income | 519 | 411 | 26% | 1,391 | 1,004 | 39% |
Net income | 300 | 334 | (10)% | 1,387 | 704 | 97% |
Per share measures (in dollars) | ||||||
Net operating income per share (NOIPS) | 3% | 27% | ||||
Earnings per share (EPS) | (29)% | 82% | ||||
Return on equity for the last 12 months | ||||||
Operating ROE | 18.3% | 16.9% | 1.4 pts | |||
ROE | 16.5% | 11.5% | 5.0 pts | |||
Book value per share (in dollars) | 41% | |||||
Total capital margin2 | 2,693 | 1,871 | 822 | |||
Adjusted debt-to-total capital ratio | 23.9% | 21.2% | 2.7 pts |
__________ |
1 This press release contains non-IFRS financial measures. Refer to Section 23 – Non-IFRS financial measures in the Q3-2021 Management's Discussion and Analysis for further details. DPW change (growth) is presented in constant currency. |
2 Refer to Section 18 – Capital management in the Q3-2021 Management's Discussion and Analysis for further details. |
Common Share Dividend
- The Board of Directors approved a
$0.08 per share increase in the quarterly dividend to$0.91 per share on the Company's outstanding common shares. This represents a 10% increase and marks the sixteenth consecutive annual increase in our dividend since our IPO in 2004.
Industry Outlook
- Canadian industry profitability improved in the twelve months to
June 30, 2021 , helped in part by benign weather, favourable PYD and reduced driving activity. However, high pre-pandemic combined ratios, potential inflation, and a relatively low interest rate environment support continuation of favourable market conditions. - In personal lines in
Canada , we expect firm market conditions to continue in personal property, while personal auto rates remain tempered in the current environment. - In commercial lines in both the US and
Canada , hard market conditions are expected to continue. - In the
UK , hard market conditions are also prevailing across commercial lines, whileUK personal lines growth remains muted pending new pricing regulations effective from Q1-2022.
Segment Results
(in millions of Canadian dollars except as otherwise noted) | Q3-2021 | Q3-2020 | Change | YTD 2021 | YTD 2020 | Change |
Direct premiums written | ||||||
3,564 | 2,724 | 31% | 8,740 | 7,745 | 13% | |
UK&I | 1,264 | n/a | nm | 1,264 | n/a | nm |
619 | 540 | 21% | 1,528 | 1,422 | 16% | |
Corporate (RSA for | n/a | n/a | nm | 734 | n/a | nm |
Total | 5,447 | 3,264 | 68% | 12,266 | 9,167 | 35% |
Combined ratio | ||||||
89.2% | 86.0% | 3.2 pts | 87.6% | 89.4% | (1.8) pts | |
UK&I | 93.9% | n/a | nm | 93.9% | n/a | nm |
92.8% | 94.5% | (1.7) pts | 93.0% | 96.0% | (3.0) pts | |
Corporate (RSA for | n/a | n/a | nm | 90.7% | n/a | nm |
Total | 91.3% | 87.1% | 4.2 pts | 89.3% | 90.3% | (1.0) pts |
Underwriting income | ||||||
356 | 347 | 9 | 1,012 | 762 | 250 | |
UK&I | 72 | n/a | 72 | 72 | n/a | 72 |
30 | 21 | 9 | 81 | 46 | 35 | |
RSA – | n/a | n/a | nm | 57 | n/a | 57 |
Group Reinsurance, Corporate and Other | (32) | 1 | (33) | (35) | 4 | (39) |
Total | 426 | 369 | 57 | 1,187 | 812 | 375 |
Insurance Business Performance.
- Premium growth of 68% in constant currency mainly reflected the RSA acquisition which contributed 61 points of growth. Commercial lines organic growth was robust across all segments.
- Combined ratio of 91.3% was solid and included
$365 million (7.5 points) of catastrophe losses, well above expectations and impacting all segments. The combined ratio inCanada was a strong 89.2%, driven by improved underlying performance. In the UK&I, the combined ratio was a solid 93.9%, despite including 10.3 points of CAT losses. In theU.S. , the combined ratio was 92.8%, also reflecting strong underlying performance.
Lines of Business
P&C Canada (includes RSA Canada results)
- Personal auto premiums grew by 27%, driven by RSA while we continue to operate in a muted rate environment. The combined ratio was similar to last year at 85.1%, with strong underlying performance and healthy favourable prior year development.
- Personal property premiums grew by 34%, mainly driven by RSA and continued firm market conditions. The combined ratio of 93.5% was 9.8 points higher than last year while reflecting 15.3 points of higher CAT losses. Underlying performance improved 4.4 points from a year ago.
- Commercial lines (P&C and auto) premium growth of 33% was mainly driven by RSA and continued hard market conditions. The combined ratio of 91.2% was 1.8 points higher than a year ago, as improved underlying performance was offset by higher commission expenses and a 2.7 point increase in catastrophe losses.
- Distribution EBITA and Other grew by 30%, driven by higher variable commission revenues, as well as accretive acquisitions and continuing expense management.
P&C UK&I
- Personal lines premiums were
$582 million with competitive market conditions in auto. The combined ratio of 97.9% included an elevated 4.4 points of catastrophe losses. - Commercial lines premiums were
$682 million with hard market conditions continuing. The combined ratio was a strong 90.5% despite including 15.3 points of catastrophe losses, significantly above expectations.
P&C
- US Commercial premium growth was very strong at 21% on a constant currency basis, driven by hard market conditions and strong new business in most lines. The combined ratio improved 1.7 points to 92.8%, despite including 3.9 points of CAT losses mainly driven by Hurricane Ida, reflecting the benefit of our profitability actions.
Investments
- Net investment income of $191 million for the quarter increased 34% year-over-year, mainly driven by the RSA acquisition. Excluding the impact of RSA, net investment income was flat reflecting the impact of lower reinvestment yields and a weaker
U.S. dollar, partly offset by the benefit of higher invested assets. - Net losses excluding FVTPL bonds of
$45 million for the quarter included a loss of$183 million on a venture investment, for which in Q1-2021 we recorded a$273 million gain following its IPO.
Net Income and ROE
- Net operating income of
$519 million is up 26% from a year ago, reflecting the contribution of RSA, strong growth in underwriting, investment and distribution earnings. - Earnings per share of
$1.60 in Q3-2021 was driven by strong operating results, tempered by a venture investment loss and integration costs. - Operating ROE improved 1.4 points year-over-year to 18.3% for the 12 months to
September 30, 2021 . This is better than our historical average and reflects strong performance across the business.
Balance Sheet
- The Company ended the quarter in a strong financial position, with a total capital margin of
$2.7 billion . - IFC's book value per share (BVPS) of
$79.21 as atSeptember 30, 2021 , increased 41% sinceSeptember 30, 2020 , driven by strong earnings and the financing of RSA. - The adjusted debt-to-total capital ratio of 23.9% as at
September 30, 2021 reflects the financing and closing of the RSA acquisition. With proceeds from the sale of Codan Denmark expected in H1-2022, we expect the adjusted debt-to-total-capital ratio to return to 20% well within our objective of 36 months following closing.
RSA Acquisition Update
- RSA contributed 8% accretion to Q3-2021 NOIPS, bringing accretion to 9% for the four-month period since closing. Given the overall strength of Intact's results, immediate high single-digit accretion is evidence of the quality of the acquired portfolio. We have increased confidence in achieving our target of high single-digit accretion in the first 12 months and upper teens within 36 months of closing.
- We remain on track to realize at least
$250 million of pre-tax annual run-rate synergies within 36 months of closing. - Integration activities are progressing as planned. In
Canada , policy conversion to Intact systems is already well underway. Customer retention is ahead of expectations and engagement with brokers and affinity partners is very strong. - In the
UK , we are continuing RSA's improvement plan and mobilizing workstreams to leverage Intact expertise in areas of opportunity includingUK auto pricing, underwriting processes and Commercial lines. - Planning for the integration of RSA's capabilities into our now global specialty lines platform is well underway across geographies.
- Closing of the announced sale of
Codan Forsikring A/S's P&C business to Alm. brand A/S Group is on track for H1-2022. This represents proceeds ofDKK 6.3 billion (~$1.26 billion ) for Intact's 50% stake. - The reinsurance agreement entered into on
July 27 to provide protection for adverse development on UK&I claims liabilities for 2020 and prior years was approved by regulators and will be recorded in the 4th quarter, effective as ofOctober 6, 2021 .
Preferred Share Dividends
- The Board of Directors also approved a quarterly dividend of
21.225 cents per share on the Company's Class A Series 1 preferred shares,21.60625 cents per share on the Class A Series 3 preferred shares,32.5 cents per share on the Class A Series 5 preferred shares,33.125 cents per share on the Class A Series 6 preferred shares,30.625 cents per share on the Class A Series 7 preferred shares and33.75 cents per share on the Class A Series 9 preferred shares. The dividends are payable onDecember 31, 2021 , to shareholders of record onDecember 15, 2021 .
Analysts' Estimates
- The average estimate of earnings per share and net operating income per share for the quarter among the analysts who follow the Company was
$1.04 and$1.75 , respectively.
Management's Discussion and Analysis (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 Q3-2021 MD&A as well as the Q3-2021 Consolidated Financial Statements, which are available on the Company's website at www.intactfc.com and later today on SEDAR at www.sedar.com.
For the definitions of measures and other insurance-related terms used in this Press Release, please refer to the MD&A and to the glossary available in the "Investors" section of the Company's website at www.intactfc.com.
Conference Call Details
About
In
In the
Forward Looking Statements
Certain statements made in this news release are forward-looking statements. These statements include, without limitation, statements relating to the outlook for the property and casualty insurance industry in
Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements as a result of various factors, including those discussed in the Company's most recently filed Annual Information Form dated
SOURCE
© Canada Newswire, source