Intact’s net income down 13 per cent

By Aurélia Morvan | May 19, 2022, 9:39 a.m.

Photo: Freepik

Intact Financial Corporation reported a decrease in net income.

In the first quarter of 2022, the holding company’s net income slid by 13 per cent or $67 million. It was $447 million, compared with $514 million in Q1 2021.

However, this result still exceeds the insurer’s net income reported during the first quarters of 2011 to 2020, which ranged from $103 million to $178 million.

Combined ratio

Across all its businesses, Intact reported a combined ratio of 91.7 per cent for the first quarter of 2022, compared with 89.3 per cent for Q1 2021. This 2.4-point deterioration is “due to elevated catastrophe losses,” Intact says.

Initially estimated at $183 million, the insurer incurred $182 million in catastrophe claims costs in the first quarter of 2022. This figure is 250 per cent or $130 million more than in Q1 2021, when the cost was $52 million.

This cost took a toll of about 3.8 points on Intact’s combined ratio.

Looking at the results in closer detail:

Canada: The combined ratio deteriorated by 1.9 points. It was 90.1 per cent in the first quarter of 2022, compared with 88.2 per cent in Q1 2021. Although this result reflected “continued strength across all lines,” Intact points out, “the return to more seasonal winter conditions this year led to an increase in the claims ratio, which was offset by lower expenses.” Catastrophe claims costs in Canada were $72 million in Q1 2022, versus $21 million in Q1 2021.
U.S.: The combined ratio was 86.8 per cent in the first quarter of 2022, compared with 96.3 per cent in Q1 2021. It improved by 9.5 points, “reflecting strong underlying performance and our exit from Public Entities during the quarter.”
UK & International: The combined ratio was 98.9 per cent in Q1 2022 for this segment, which did not exist in Q1 2021 because it emerged from the acquisition of RSA in June 2021. The segment also recorded $110 million of catastrophe claims costs in Q1 2022.

Operating income

For all of its operations, Intact reported net operating income of $488 million in the first quarter of 2022, compared with $357 million in Q1 2021. This increase corresponds to 36.7 per cent or $131 million.

Underwriting income

Underwriting income for the first quarter of 2022 was $396 million, compared with $297 million in Q1 2021, for all of Intact’s operations. This represents an increase of 33.3 per cent or $99 million.

Looking at the results in closer detail:

Canada: Underwriting income was $321 million in Q1 2022, versus $282 million in Q1 2021. This represents an increase of 13.8 per cent or $39 million.

U.S.: Underwriting income was $55 million in Q1 2022, compared with $14 million in Q1 2021, for an increase of 292.9 per cent or $41 million.
UK & International: Underwriting income was $12 million in Q1 2022.
Corporate and Other: Underwriting income was $8 million in Q1 2022, compared with $1 million in Q1 2021. The corresponding increase is 700 per cent or $7 million.

Premiums

Across all of its businesses, Intact reported direct premiums written (DPW) of $4.7 billion in the first quarter of 2022, up from $2.5 billion in Q1 2021. This increase of 85.5 per cent or $2.2 billion reflects “the impact of the RSA Acquisition” as well as “relief provided in 2021” to offset the effects of the COVID-19 pandemic.

“Excluding these impacts, premium growth was 8 per cent for Q1-2022, mainly driven by strong growth in commercial and specialty lines across all segments,” Intact says.

Looking at the results in closer detail, DPW increased by 18.4 per cent or $73 million in the United States to $470 million. DPW in the U.K. and International segment were $1.3 billion.

In Canada, DPW were $2.9 billion in the first quarter of 2022, compared with $2.1 billion in the Q1 2021. Here again, the increase of 36.9 per cent or $784 million reflects the impact of the RSA Acquisition as well as relief provided in 2021.

“Excluding these impacts, operating DPW growth was 6 per cent, reflecting continued strength in personal property and commercial lines,” Intact explains.

More specifically, Canadian DPW premiums climbed 37 per cent in personal auto insurance. Personal property premiums rose by 38.2 per cent and commercial lines were up 35.9 per cent, “driven by the RSA Acquisition.”

Investments

Intact reported net investment income of $205 million in the first quarter of 2022, up from $141 million in Q1 2021. This increase of 45.4 per cent or $64 million was “mainly driven by the growth in our investment portfolio following the RSA Acquisition," Intact says, adding that “during the quarter, we also increased the turnover pace of the portfolio to capture rising yields.”