TD Bank sees insurance business growth despite COVID-19By Aurélia Morvan | June 02 2020 03:30PM
For all operations, Toronto-Dominion Bank (TD) reported net income of $1.51 billion for Q2 2020, a period covering February 1 to April 30. This was a decline of 52% compared with the net income of $3.17 billion reported in the second quarter of 2019 – this plunge is attributed to the economic disruption caused by COVID-19.
Net insurance income rises
For its Canadian Retail division, a sector that includes life and health and P&C insurance, TD reported net income of $1.17 million in Q2 2020, versus $1.85 billion in the same quarter of 2019. This decrease of 36.6% “primarily reflects higher provisions for credit losses,” TD points out.
Looking more closely at the three components in the sector, TD reported net income of $642 million for its personal and business banking operations in Canada, a 54.1% drop from the same quarter of 2019. The bank reported net earnings of $341 million for its wealth management and insurance services, for a 24.4% decline compared with the same quarter of 2019.
Lastly, it reported net income of $189 million for insurance business. This equals growth of 7.4% or $13 million compared with the same quarter of 2019, when net insurance income was $176 million.
Increase in insurance revenue
Non-interest income in the Canadian Retail division totalled $3.02 billion in Q2 2020. It gained 2% or $72 million versus the second quarter of 2019.
Insurance revenue advanced to $1.13 billion, for an increase of 8.9% or $92 million versus the same quarter of 2019, when they were $1.03 billion.
TD explained this trend by “strong premiums growth in the insurance business.”
Premiums progress as well
Gross insurance premiums rose to $1.1 billion, from $1.05 billion in Q2 2019, for an increase of 4.7% or $49 million.
“TD Insurance grew premiums through traditional channels and through fully digital sales capabilities available with the new General Insurance Platform launched in the second quarter,” the report to shareholders reads.
Insurance expenses stable
Insurance claims and related expenses edged up 0.5%. They were $671 million in Q2 2020 versus $668 million in the same quarter of 2019.
“Higher current year claims reflecting business growth and higher provisions recognized for trip cancellation and balance protection claims were largely offset by better claims experience, changes in the fair value of investments supporting claims liabilities, and less severe weather-related events,” TD explains.
TD Insurance is among the many companies offering life insurance that put in place measures to ease the effects of the COVID-19 pandemic. It has offered reductions and deferrals of insurance premiums to over 125,000 customers in the second quarter of 2020, TD confirms.