Desjardins Group has reported significant improvement in its insurance operations’ results for the second quarter of 2024 compared to Q2 2023. This marks the third consecutive quarter of growth.
The combined surplus earnings from the wealth management, life and health insurance, and property and casualty insurance segments totaled $531 million in Q2 2024. This is a 152 per cent increase from the $211 million surplus reported in the same quarter last year.
Desjardins attributes this strong performance to the property and casualty insurance segment, where fewer claims and higher revenues from auto and property insurance played a key role.
Property and casualty insurance
In the property and casualty insurance sector, surpluses reached $300 million in Q2 2024, up significantly from $56 million in Q2 2023.
Net surplus earnings from insurance activities in this segment amounted to $460 million for the quarter, compared to $154 million in the same period last year. Direct written premiums in this segment rose to $2.1 billion, an increase of $172 million or 9 per cent year-over-year.
Desjardins’ management report noted the lack of major catastrophes in the last quarter, contrasting with the April 2023 ice storm in Ontario and Quebec, and wildfires in Nova Scotia, which impacted results in Q2 2023.
Wealth management and life and health insurance
The wealth management and life and health insurance sector posted net surplus earnings of $231 million in Q2 2024, compared to $155 million a year earlier.
Desjardins attributes this growth to a higher net finance result from insurance, driven by gains on the disposal of buildings and the favorable impact of hedging the interest rate risk. These gains were partially offset by a favorable adjustment to the liability discount curve parameters made in the second quarter of 2023.
The financial cooperative also highlighted growth in other income related to the sale of its stake in Fiera Holdings Inc. and Fiera Capital L.P.
Net income from insurance activities in this sector was $147 million in Q2 2024, up from $133 million in Q2 2023. Group insurance premiums grew by 7 per cent during the quarter, and annuity premiums saw a marked increase, rising from $233 million in Q2 2023 to $504 million in Q2 2024, largely due to the addition of two major new groups in group retirement savings.
Claims ratios
In the property and casualty insurance sector, the loss ratio stood at 58.8 per cent in Q2 2024, down from 74.1 per cent in Q2 2023. However, the ratio for catastrophe and major event claims is no longer disclosed.
The expense ratio for claims also saw a slight decrease, coming in at 25.6 per cent for the quarter, compared to 26 per cent in the same period last year.
As a result, the adjusted combined ratio was 78.5 per cent for the last three months of 2024, down from 95.9 per cent for the same period in 2023.
As of March 31, 2024, Desjardins' total assets reached $444 billion, an increase of $21 billion or 5 per cent over the first six months of the year.
Transaction closed
The acquisition of the Insurance Company of Prince Edward Island (ICPEI) by Desjardins General Insurance Group (DGIG) was finalized on May 31, 2024. Announced in late March 2024, the acquisition of all shares in this insurer allows Desjardins to “diversify its insurance offer and better meet the needs of small and medium-sized businesses" through its brokerage network. DGIG had held a minority stake in the insurer since its privatization in February 2023.
In its management report, Desjardins has provisionally determined the fair value of the acquired assets and assumed liabilities. The accounting for the business combination is expected to be completed in the coming quarters.
The transaction resulted in the recognition of insurance contract liabilities of $85 million and goodwill of $33 million. This goodwill, representing the difference between an identified financial value during an acquisition and its market value after a certain period, is attributable to the synergies expected from the acquisition of ICPEI.
