In its results published on May 7, Intact Financial Corporation reported net earnings of $673 million for the first quarter of 2024. In the same quarter of 2023, net income was $377 million. This is a year-over-year increase of 79 per cent.
“We continued to make good progress on the integration of DLG (Direct Line Group), closed the sale of our UK direct Personal Lines operations and advanced on all other aspects of our strategic roadmap,” stated Charles Brindamour, the company's CEO.
Outlook
In its outlook for the next 12 months, Intact expects favorable market conditions to continue, driven by inflation and catastrophe losses.
The company expects premium growth in Canada to be between 10 per cent and 13 per cent for the personal property and personal auto insurance segments.
In commercial lines and specialty risks for all geographic regions, the company expects premium growth of 5 to 9 per cent.
Combined ratio
The undiscounted combined ratio fell by 0.7 points to 91.2 per cent at March 31, 2024, compared with 91.9 per cent a year earlier.
By business segment, the undiscounted combined ratio changed as follows between the first quarter of 2024 and the same period of 2023:
- Canada: down one point to 90.7 per cent in 2024, compared with 91.7 per cent in 2023. The Personal Lines segment posted a combined ratio of 82.5 per cent in Canada, reflecting the absence of catastrophic claims in the first quarter;
- RSA (UK and International): the combined ratio remained unchanged in the first quarter of 2024, at 94.6 per cent, compared with the same period of 2023;
- United States: down 1.1 points to 88.0 per cent in 2023, from 89.1 per cent in 2023.
When updated, the overall combined ratio stood at 86.8 per cent at March 31, 2024, an improvement of 0.6 points over the same quarter in 2023.
Underwriting
Net underwriting income also rose by 12 in per cent in the first quarter of 2024, to $697 million compared with the $613 million reported in the same quarter of 2023.
In more detail, the company reported the following results for the first quarter of 2024 compared with the same period of 2023:
- Canada: net underwriting income was $337 million in 2024, compared with $279 million in 2023;
- United States: net underwriting income was $65 million in 2024, compared with $54 million in 2023;
- RSA (UK and International): net underwriting income reached $54 million in 2024, compared with $55 million in 2023. Last year's result has been adjusted, however, to take account of discontinued operations in personal insurance in 2023;
- Corporate and other: net underwriting income was $230 million in 2024, compared with $226 million in 2023.
Premiums
Direct written premiums increased by 6 per cent in the first quarter of 2024, to $5.1 billion, compared with $4.8 billion in the same period of 2023.
In Canada, direct written premiums were up 9 per cent year-on-year to $3.3 billion at March 31, 2024.
Personal automobile insurance premiums rose by 11 per cent. In personal property insurance in Canada, direct premiums written rose by 9 per cent.
In commercial lines in Canada, direct premiums written rose by 5 per cent. Rate increases and high retention were offset by increased competition for large accounts, explains the company.
Direct premiums written rose by 32 per cent in the UK and international markets to $1.24 billion. In constant currency, the increase was 29 per cent. However, this increase was achieved by comparing continuing operations. The company’s RSA subsidiary exited certain personal lines segments in the UK market during 2023.
In the United States, direct premiums written rose by 6 per cent to $613 million. The company attributes this result to satisfactory rate increases.
Intact's net operating income amounted to $648 million in the first quarter of 2024, compared the $537 million reported in the same period of 2023. On a per-share basis, net operating earnings per share rose by 19 per cent to $3.63 per share.
Distribution income
In its Management Discussion and Analysis, Intact reports that distribution revenue fell by 5 per cent to $100 million at March 31, 2024, compared with $105 million for the same quarter of 2023.
In its Review of Performance accompanying the presentation to analysts on May 8, Intact explains that this decrease is attributable to the lower contribution from On Side Restoration due to milder winter weather conditions, as well as a reduction in variable commissions compared with the previous year's high level.
During the discussion with analysts, Intact’s CEO Charles Brindamour reiterated BrokerLink's objective of reaching $5 billion in premiums by 2025.
Investments
The company reported net investment income of $380 million for the first quarter of 2024, up 29 per cent on the $295 million reported in the same quarter of 2023.
The company attributes this result to higher reinvestment yields and increased turnover of its portfolio over the past 12 months.
Discussion with analysts
During the discussion with financial analysts held on May 8, Brindamour underlined that commercial lines and specialty risks now account for 55 per cent of Intact's direct written premium volume. By 2023, 85 per cent of the $22.1 billion in premium volume came from the broker distribution network.
For his part, Executive Vice-President and CFO Louis Marcotte noted that the catastrophe loss ratio of 1.9 per cent in the first quarter was due to mild winter weather conditions in Canada.
The main claims were in the UK, and not all of these were weather-related, he added. The company is maintaining its forecast of $900 million a year in catastrophe claims.
The expense ratio, which reached 34.4 per cent in the first quarter of 2024, is up over last year's ratio of 34 per cent. Marcotte attributes this to higher incentive compensation for employees in Canada.
Book value per share, at $84.76 as at March 31, 2024, is 9 per cent higher than a year ago.
Wildfires
Also on May 7, Intact announced its partnership with Wildfire Defense Systems (WDS) to launch a pilot project targeting customers in Alberta and British Columbia. WDS is headquartered in Bozeman, Montana.
The company has entered into an agreement with WDS to deploy prevention and mitigation services for customers whose property is threatened by a wildfire within 5 km of it.
According to Guillaume Lamy, Senior Vice President, Personal Lines, the agreement enables the insurer to reduce the frequency and severity of losses associated with forest fires, in addition to helping communities better withstand these catastrophic events.
Charles Brindamour pointed out that 70 per cent of claims requiring restoration work are carried out by Intact's post-disaster restoration partners. Half of this work is entrusted to the company’s On Side subsidiary.
