Intact Financial Corporation is soaring at an eleven-year high.

The company reported net income of $514 million for the first quarter of 2021, compared with $107 million in Q1 2020. This amounts to growth of 380.4 per cent or $407 million.

It is also the highest quarterly result recorded by Intact since at least 2011. This is the company's fourth consecutive record-breaking quarter, following record performance in the second, third and fourth quarters of 2020, when Intact surpassed $1 billion in income for the first time.

Combined ratio improved

Intact reported a combined ratio of 89.3 per cent for the first quarter of 2021, down from 94.3 per cent in Q1 2020.

This five-point improvement stems from with strong favourable prior year claims development and lower catastrophe losses compared with Q1-2020, “where we recorded 3 points of COVID-19 CAT losses,” says Intact.

Looking at the results in closer detail:

• In Canada the combined ratio fell to 88.2 per cent in the first quarter of 2021. It improved by 5.1 points compared with Q1 2020 “mainly driven by the absence of COVID-19 catastrophe losses, lower weather-related catastrophe losses and higher favourable prior year claims development.”
• In the U.S. the combined ratio improved by 3.8 points in the first quarter of 2021, to 96.3 per cent. It included 7.6 percentage points of weather-related catastrophe losses “well above expectations.”

Increase in operating income...

Intact's net operating income was $357 million in the first quarter of 2021, up from $243 million in Q1 2020. This result equals an increase of 46.9 per cent or $114 million, which reflected “strong growth in underwriting and distribution performances.”

... and net underwriting income

As a result, net underwriting income reached $297 million, compared with $159 million in Q1 2020. This represents an increase of 86.8 per cent or $138 million, “after reflecting an estimated $157 million of relief measures.”

More specifically, net underwriting income decreased by $1 million to $1 million in the Corporate and Other segment.

However, this result has improved:

• By 78.5 per cent or $124 million in Canada, from net underwriting income of $158 million in Q1 2020 to $282 million in Q1 2021
• By $15 million in the U.S., from a net underwriting loss of $1 million in Q1 2020 to net underwriting income of $14 million in the first quarter of 2021.

Stable premiums

Intact reports $2.5 billion in direct premiums written across all of its businesses.

This result was up $1 million from the first quarter of 2020 and was “impacted by an additional $75 million of COVID-19 related relief for personal auto customers,” the insurer notes.

More specifically, the $1 million increase was posted in the U.S., where direct written premiums increased from $396 million in the first quarter of 2020 to $397 million in Q1 2021.

A look at premiums in Canada

Canada did not see growth in direct written premiums. They stood at $2.1 billion, the same as last year for the same period.

However, there are variations within this consolidated result. Two lines of business saw a premium increase, while one saw a decrease:

• Personal auto had direct written premiums of $814 million compared with $882 million in Q1 2020. They fell by 7.7 per cent or $68 million from Q1 2020 “after reflecting 9 points ($75 million) of additional relief and 2 points due to the B.C. auto exit.”
• Personal property premiums totalled $518 million, up from $491 million in the first quarter of 2020. This growth of 5.5 per cent or $27 million was “driven by firm market conditions and unit growth.”
• Commercial lines garnered premiums of $793 million, versus $752 million in Q1 2020. This increase of 5.4 per cent or $41 million is attributable to “hard market conditions and strong new business in both regular and specialty lines, tempered by lower volumes in sharing economy products in commercial auto.”

Declining investments

Intact reported net investment income of $141 million in the first quarter of 2021, down from $150 million in the first quarter of 2020. The decrease of 6 per cent or $9 million was “due to the impact of lower reinvestment yields and a weaker U.S. dollar, partly offset by the benefit of higher invested assets,” the company explains.

RSA acquisition: Funding is “completed”

When it disclosed these results, Intact said the financing for the RSA acquisition “is now completed.” The transaction could close on June 1.

“We have made great progress collaborating with the RSA teams as we prepare for integration and transition following closing,” said Intact CEO Charles Brindamour.

iA, Manulife, Great-West Lifeco, Sun Life, Empire Life, The Co-operators and Northbridge also released their financial results for the first quarter of 2021.