Intact Financial Corporation announced a 16 per cent increase in net income in 2022 to $2.4 billion from $2.1 billion in 2021.
Net income in fourth quarter 2022 was $419 million, down 40 per cent from $701 million in the same quarter of 2021.
Combined ratio
Intact’s combined ratio for the full year 2022 was 91.6 per cent, 2.8 percentage points higher than the ratio in 2021, at 88.8 per cent.
In closer detail, Intact reported that:
- In Canada, the combined ratio was 90.5 per cent in 2022, up 3.8 points from 2021;
- In the United States, the combined ratio fell by 4.7 percentage points to 88.2 per cent.
In the fourth quarter of 2022, the insurer’s combined ratio deteriorated by 3.7 percentage points to 91.5 per cent, versus 87.8 per cent in Q4 2021.
Looking at Q4 2022 in particular:
- In Canada, the combined ratio was 88.7 per cent, an increase of 4.3 percentage points over the same quarter in 2021;
- In the United States, the combined ratio was 85.1 per cent, an improvement of 7.4 points compared with Q4 2021.
Operating income
Intact’s net operating income increased by $69 million (3 per cent) to $2.1 billion at the end of 2022, compared with $2 billion in 2021.
For fourth quarter 2022, net operating income was $585 million, down from $666 million in 2021, for a decrease of 12 per cent.
Net underwriting income
Net underwriting income in 2022 was $1.6 billion, equal to a decrease of $161 million or 9 per cent from 2021.
In the fourth quarter of 2022, Intact reported net underwriting income of $427 million, down from $600 million in the same quarter of 2021. This represents a 29 per cent decline.
In closer detail, Intact reported the following results:
- In Canada, net underwriting income for the full year 2022 fell by $258 million to $1.27 billion, compared with $1.52 billion in 2021. In the fourth quarter alone, net underwriting income was $385 million, versus $513 million in Q4 2021, for a decline of $128 million;
- In the United States, net underwriting income nearly doubled in 2022 to $221 million, compared with $117 million in 2021. Results were also positive in Q4 2022, with income of $83 million, versus $36 million in Q4 2021;
- RSA (UK and International): Net underwriting income was $123 million in 2022. In 2021, over the seven-month period following the closing of the Intact/RSA transaction, net income was $152 million. The fourth quarter results for 2022 contributed to this performance, given the net loss of $42 million compared with income of $80 million for the same period in 2021;
- Corporate and other: Intact reported net underwriting income of $15 million in 2022, versus a loss of $64 million in 2021. In the fourth quarter of 2022, net underwriting income was $1 million, compared with a loss of $29 million a year ago in Q4 2021.
Premiums
Across all of its businesses, Intact’s direct premiums written (DPW) in 2022 grew 23 per cent year-over-year. They rose to $21 billion in 2022, compared with $17.3 billion in 2021.
In the fourth quarter of 2022, growth slowed to 3 per cent year-over-year. DPW were $5.1 billion in 2022, compared with $5 billion a year earlier.
The Canadian market still accounts for the largest share of this volume. DPW were $14 billion in 2022, up from $12 billion in 2021, for an increase of 17 per cent.
More specifically, in Canada Intact reported a 2 per cent increase in DPW for personal auto insurance, 5 per cent for personal property insurance and 6 per cent for commercial lines.
In the fourth quarter of 2022, DPW in Canada were $3.4 billion, an increase of $134 million or 4 per cent compared with $3.3 billion in Q4 2021.
The insurer noted that the combined ratio for personal auto insurance in Canada was 95.8 per cent in 2022, 8.3 points higher than in the previous year. This deterioration is due to inflation pressures and higher claims frequency, it says.
In Canada, the company expects personal auto insurance premiums to increase by about 5 per cent in 2023.
Impact of RSA acquisition
For the year as a whole, direct premiums written increased by 14 per cent in personal auto insurance, bolstered by the RSA acquisition.
DPW climbed 17 per cent in personal property insurance. Excluding the impact of the RSA acquisition, growth was 5 per cent, led by continued rate momentum.
Premiums climbed 20 per cent in commercial lines, propelled by the RSA acquisition. Excluding the impact of the transaction, DPW growth in this segment was 7 per cent, “reflecting continued hard market conditions and good momentum in specialty lines,” the insurer’s MD&A reads.
Investments
Intact reported net investment income of $927 million in 2022, up 31 per cent from the $706 million reported in 2021.
Investment income thus grew by $279 million in the fourth quarter of 2022, up 27 per cent from the $220 million reported in Q4 2021.
Intact attributes this progress to the higher reinvestment yield generated by rising interest rates over the past 12 months.
18 years running
In the press release issued at the end of the day on Tuesday, February 7, Intact’s President and CEO Charles Brindamour highlighted the 23 per cent premium growth that the company achieved in 2022.
“The resilience of our platform was again evident in 2022 with a mid-teens ROE despite elevated catastrophe losses and inflation pressures,” Brindamour said.
Judging by the strength of the balance sheet, the CEO believes that Intact is well positioned to deliver on its financial and strategic objectives in 2023. “We are therefore pleased to increase dividends to common shareholders for the eighteenth consecutive year,” he adds.
Outlook
For 2023, Intact expects firm-to-hard market conditions to continue in the insurance industry in most lines of business due to inflation, natural catastrophes and a hard reinsurance market.
Following the closing of the RSA transaction in June 2021, Intact projected annualized pre-tax synergies of at least $250 million. As of December 31, 2022, Intact estimated these annualized synergies at $260 million. The insurer expects these synergies to reach $350 million in 2024.
