Definity Financial Corporation reported net income attributable to common shareholders of $105.2 million for the first quarter of 2024.

This is an increase of 4.3 per cent compared with the same period in 2023, when net income attributable to common shareholders was $100.9 million.

Definity's CEO, Rowan Saunders, attributes this result to increased premiums, improved claims ratio and improving expense efficiencies, and the insurer’s “strong broker proposition.”

For his part, Definity's Executive Vice-President and CFO, Philip Mather, highlighted the 11 per cent year-over-year increase in book value per share of $25.40 as at March 31, 2024. He also underlined that the company still has financial capacity exceeding $1.3 billion to support ongoing business growth.

Underwriting results  

Underwriting results showed net income of $54.8 million for the first quarter of 2024, compared with net income of $39.5 million for the same period in 2023. This is an increase of 30 per cent over a 12-month period.

Also in the first quarter, catastrophe losses in 2024 had an impact of 3.7 percentage points on the company's combined ratio, 1.3 percentage points higher than the 2.4 per cent recorded in 2023.

Premiums  

Gross written premiums in the first quarter of 2024 totaled $956 million, up 13 per cent compared with the $847 million reported for the same period of 2023.

Gross written premiums (GWP) in personal lines reached $650 million in the first quarter of 2024, compared with $583 million for the same period in 2023. This is an increase of 11.5 per cent. Most of this increase came from personal automobile insurance, where GWPs climbed by almost $56 million year-over-year.

In terms of overall volume, personal lines accounted for 68 per cent of premiums. This compares with 69 per cent in the first quarter of last year. The volume breakdown for home insurance declined by 2 percentage points year-over-year, while personal auto and commercial lines gained slightly (up 1 percentage point).

In the first quarter of 2024, some 60 per cent of premium volume was written in Ontario, the company states in its management report. Alberta and the other two Prairie provinces account for 14 per cent of the company's premium volume, followed by British Columbia (11 per cent), Quebec (8 per cent) and the Atlantic region (7 per cent).

The broker distribution network accounts for 90 per cent of Definity's gross written premium volume for the period January 1 to March 31, 2024, compared with 10 per cent for direct insurance.

Commercial lines  

The company reported a 16 per cent increase in commercial insurance GWP which reached $306 million in the first quarter of 2024, compared with $264 million for the same period in 2023.

The company attributes this increase in GWP to strong retention rates and rising rates in a firm market environment, as well as the continued expansion of its sales to small businesses and specialized capabilities.

In commercial lines, the combined ratio was 92.1 per cent in the first quarter of 2024, compared with 90.9 per cent for the same period in 2023. This is a decline of 1.2 points. However, the improvement in the claims ratio (1.8 points) was reduced by the claims expense ratio (-0.6 points).

Combined ratio 

In terms of claims experience, the combined ratio stood at 93.9 per cent in the first quarter of 2024, compared with 95.3 per cent in the same quarter of 2023. This is an improvement of 1.4 percentage points.

The claims ratio remained the same in the first quarter of 2024 as in 2023, at 62.6 per cent. The improvement in the combined ratio is therefore entirely attributable to claims handling expenses, where the ratio was 31.3 per cent in the first quarter of 2024.

Personal auto  

On the personal auto insurance side, Definity points out that the volume of premiums written through the direct distribution network was down in the first quarter, without specifying the figure.

The number of auto insurance policies underwritten fell by 2.5 per cent over a 12-month period. Despite this, the underwriting result in this segment returned to the positive side, at $11 million in the first quarter of 2024, whereas the company recorded a $3 million loss in the same quarter of 2023.

Actions were taken on the pricing side of this segment, notably in response to the Alberta government's decision to limit the premium increases that insurers can impose.

Regarding the average cost of claims, the company notes that inflationary pressures are slowly but surely returning to the level they were at in 2019. However, the underwriting result remains under pressure due to the rise in vehicle theft.