Desjardins Group reported surplus earnings before member dividends of $816 million in the third quarter of 2021, compared with $729 million in Q3 2020.
This increase of 11.9 per cent or $87 million is “mainly due to a lower loss experience in the Property and Casualty insurance segment, strong performance from the caisse network, and a decline in the provision for credit losses,” says the financial institution.
Property and casualty insurance
The decrease in the cost of property and casualty insurance claims is mainly due to “favourable developments in prior year claims, primarily in auto insurance.”
This lower loss experience is one of the factors that spurred growth of 86.5 per cent or $134 million in net surplus earnings in P&C insurance. Net surplus earnings surged to $289 million in the third quarter of 2021, from $155 million in Q3 2020.
The increase in surpluses is also explained by “higher net premiums.” “However, the third quarter of 2021 was marked by a natural disaster, a hailstorm in Alberta, whereas the third quarter of 2020 was marked by a major event that was smaller in scope,” Desjardins explains.
The combined ratio improved by 7.2 points. It was 75.6 per cent in the third quarter of 2021, down from 82.8 per cent in Q3 2020.
The “Other” category also posted vigorous performance. It recorded net earnings of $17 million in Q3 2021, compared with a net deficit of $11 million in Q3 2020, equal to growth of $28 million.
The other two Desjardins segments faltered. The main segment, Personal and Business Services, posted surplus earnings before member dividends of $401 million, down 9.9 per cent or $44 million.
Wealth management and life and health insurance
The Wealth Management and Life and Health Insurance segment reported net surplus earnings of $109 million in the third quarter of 2021, compared with $140 million in Q3 2020.
The corresponding decrease of 22.1 per cent or $31 million is “mainly due to the markets' less favourable impact on guaranteed investment funds compared to the third quarter of 2020 as well as a downward revision, also in the third quarter of 2020, of provisions recognized for travel insurance in the first quarter of 2020.”
Premiums: Up 26.4 per cent in life and health...
Desjardins’ total net premiums were $2.9 billion in the third quarter of 2021, versus $2.5 billion in the third quarter of 2020. They were up 14.6 per cent or $371 million.
Net premiums in the wealth management and life and health insurance segment totalled $1.5 billion. They grew by 26.4 per cent or $308 million due to higher premiums in the three sub-sectors:
- Annuities: Premiums up 187.3 per cent or $251 million, mainly due to “business growth”
- Group insurance: premiums up 5.5 per cent or $45 million to $857 million
- Individual insurance: premiums up 5.4 per cent or $12 million to $233 million
...and 4.8 per cent higher in property and casualty
In P&C insurance, net premiums were $1.5 billion. They were up 4.8 per cent or $69 million due to “growth in average premium for property insurance and automobile insurance” and “business growth.”
Desjardins Group also reported a loss of premium income of $75 million under “Other” in the third quarter of 2021, compared with a loss of $69 million in Q3 2020.
Operating income
Consisting of net interest income, net premiums and other operating income, Desjardins reported total operating income of $5.2 billion in the third quarter of 2021. It climbed 13.1 per cent or $607 million versus Q3 2020.
A look at the results in detail shows that:
- In wealth management and life and health insurance, operating income totalled $1.9 billion, up 24.4 per cent or $364 million
- In P&C insurance, operating income totalled $1.5 billion, up 9 per cent or $122 million
- In Personal and Business Services, operating income totalled $2 billion, up 8.3 per cent or $151 million
- In the Other segment, operating losses were $42 million, down $30 million.
Investments
Desjardins reported investment losses of $114 million in the third quarter of 2021, compared with investment income of $161 million in Q3 2020.
This decline of $275 million is due to several factors, including the “decrease in the fair value of assets backing liabilities related to life and health insurance operations” and the “decrease in the fair value of matched bonds in the Property and Casualty Insurance segment as opposed to an increase in the comparative quarter of 2020.”
