Catastrophic losses in the summer of 2024 took their toll on insurance results and its loss ratio, confirms Intact Financial Corporation. Still, the company posted net earnings of $212 million in the third quarter of 2024, up 30% over the $163 million reported a year earlier.
Of the approximately 50,000 claims received by the company's various insurance subsidiaries in Canada, nearly 60% have already been settled,” stated Charles Brindamour, the company's President and CEO.
“The devastating effects from severe weather events in the quarter have impacted the lives of tens of thousands of customers. Our employees were on the ground within the first hours of these events providing immediate assistance to affected communities. We are leveraging our competitive advantages, which include On Side Restoration and Intact Service Centres, to minimize losses for our customers.,” stated Brindamour.
During a conference call with financial analysts on November 6, attended by the Insurance Portal, Brindamour reported that three-quarters of customers were able to open their claims file within seconds.
In Alberta, some five service centres were temporarily set up to deal with damage caused by the hailstorm that hit Calgary, and almost 11,000 vehicles were restored.
All in all, the bill for catastrophic claims over the summer, including storm Boris in Europe and hurricane Helene in Florida, reached $1.4 billion in the last quarter, stated Louis Marcotte, Chief Financial Officer. Of the four major losses in Canada, which cost the insurer $1.2 billion, three hit major urban areas, he pointed out.
Premiums
For the company as a whole, operating direct premiums written (DPW) amounted to $6.2 billion in the third quarter of 2024, compared with $5.9 billion in the same period of 2023. This represents an increase of $282 million or 4%.
In Canada, operating DPW was up 8% to $4.3 billion in the third quarter of 2024, compared with $3.9 billion in the third quarter of 2023. This represents an additional volume of $318 million.
In personal auto insurance, operating DPW growth even reached 12% year-on-year, points out Charles Brindamour. Operating DPW growth in Canada was 8% in personal property and 2% in commercial lines.
With regard to this segment in Canada, the company notes that progress has been made with small and medium-sized businesses, but that competition is increasingly fierce with large commercial accounts.
In the UK and International market, the company reported a 28% increase in operating direct premiums written, mainly due to the acquisition of the commercial brokerage business of Direct Line Group (DLG). This is a pro forma result, taking into account the discontinuation of the UK personal lines business. The acquisition of DLG closed on October 23, 2023.
Premium volume in the United States was up 4% year-on-year in constant currencies. As was the case in the second quarter, the company reports that the impact of rate increases was offset by the effect of corrective measures taken in certain business segments.
Combined ratio
The company's combined ratio climbed by 5.6 percentage points in the third quarter of 2024 to 103.9%, including 22 points attributable to catastrophe losses. This exceeded the forecast percentage for catastrophe losses by 17 points.
The hailstorm that hit Calgary had a notable impact on claims in the personal auto insurance segment. The combined ratio was 97.6%, including seven percentage points for catastrophic losses, the company points out.
In Canadian home insurance, the combined ratio reached 147.5% in the third quarter, including 72 percentage points from catastrophe losses.
The undiscounted combined ratio developed as follows in the various markets between the third quarter of 2024 and the same period in 2023:
- In Canada, the combined ratio reached 109.5% in 2024, compared with 101.8% in 2023, a difference of 7.7 points;
- For RSA (UK and International), the pro forma combined ratio, i.e. comparing 2024 results based on the discontinuation of personal lines business in the UK, was 91.9% in 2024, compared with 92.5% last year, a difference of 0.6 points;
- In the United States, the combined ratio slipped by 1.1 points to 87.4% in 2024, compared with 88.5% in 2023.
Underwriting income
In terms of underwriting results, the company reported a net loss of $215 million in the third quarter, compared with net income of $88 million for the same period in 2023.
Intact reported the following results for the third quarter of 2024 in its various markets compared with the same period in 2023:
- In Canada, the underwriting result was a net loss of $368 million in 2024, compared with a net loss of $66 million in 2023. In personal property insurance, the net loss was $478 million in 2023, compared with a net loss of $218 million in 2024;
- In the United States, net underwriting income reached $72 million in 2024, compared with $62 million last year;
- For RSA (UK and International), net underwriting income was $86 million in 2024, compared with $82 million a year earlier.
Investments
Net investment income amounted to $394 million in the third quarter of 2024, compared with $359 million a year earlier. This represents an increase of 13%.
After the first nine months of 2024, investment income totaled $1.2 billion, up 16.5% year-on-year.
Other highlights
The company reported a 14% increase in distribution revenues to $132 million in the third quarter of 2024. This result is attributable to the merger and acquisition activities carried out by its BrokerLink subsidiary, which also improved its margins.
The company points out that revenues from On Side Restoration operations are included in this result.
During the conference call, Charles Brindamour reported that direct written premiums from the online sales reached $327 million for the first nine months of the current financial year.
Over a 12-month period, the number of quotes made online is up 83%, he added. Referring to the 50,000 claims arising from the four major losses in the summer of 2024, he adds that 40% were made via the insurer’s web or mobile application.
Given the impact of these major weather-related losses in 2023 and 2024, Brindamour predicts that home insurance market conditions will remain difficult for the next 12 months, with a rate increase of at least 10%.
Louis Marcotte confirms that, over the last five years, the company has very rarely reached the retention limits beyond which it must cede premiums to reinsurers. This happened last summer.
Intact has to use reinsurance for extreme risks and never does so to cover seasonal variations. This enables the insurer to obtain advantageous conditions that have little impact on pricing, explained Marcotte.
Of the three major losses in major Canadian cities, two events forced the insurer to resort to reinsurance, explained Guillaume Lamy, Senior Vice-President, Personal Lines.
Intact’s historical combined ratio has been 90% in personal property insurance, over the last 5 or even 10 years, added Lamy.
Even in the worst-case scenario of global warming, the company estimates that climate-change-related losses will rise from 40% today to 50% in 2040. Pricing will be adjusted accordingly, he added.
