Promutuel Insurance released excellent year-end results at its annual general meeting. Its 2021 insurance earnings climbed to $206 million.
Premium volume was $993 million in 2021; it passed the billion mark in early 2022. Promutuel CEO Geneviève Fortier reiterated the goal of doubling the insurer’s size within five to seven years, an objective she had shared with Insurance Journal in late 2021.
Growth will be achieved not only organically, but also through partnerships and acquisitions of mutuals outside Quebec, Fortier told Insurance Portal in a recent exclusive interview.
Assets were up 10 per cent, at $2.033 billion. Members’ equity was $923 million at December 31, 2021. Return on equity climbed 28 per cent.
Claims ratio
Comprehensive income was $229 million due to improved investment performance and a low claims ratio. The net claims ratio was 42.7 per cent, representing a 6.9 point improvement over 2020. The combined ratio was 78 per cent.
The absence of natural disasters in Quebec and the mild weather reined in claims due to wind, water or heavy snow. Claims were also limited in automobile insurance due to the reduction in travel as a result of working from home.
What’s more, Geneviève Fortier points out that Promutuel Assurance began reframing its portfolio in 2017. “That means tightening up underwriting activities, pricing, and risk assessment. We did it gradually,” she says.
The insurer was aiming to build a cycle-proof portfolio. “Even before the March 2020 lockdown, we already had the first results surfacing on that side, as early as the last quarter of 2019 and the first quarter of 2020,” she continues.
The insurer is taking advantage of the fact that almost all of its premium volume is concentrated in Quebec, which has been spared major natural disasters in 2020 and 2021. “This does not mean that we are safe for the future. We are very concerned about climate change,” Fortier says.
She is optimistic about Promutuel’s typically good claims ratio. “Compared with other insurers, we generally do well. We think that will continue. 2022 is already off to a fine start on the claims side. Our first four [months] are extremely favourable,” she says.
Expansion outside Quebec
In its press release that announced the annual activity report, Promutuel Insurance restated its intention to double its size within five to seven years. Two areas of growth are targeted.
“The first will be organic growth around our mutual companies. We will continue to increase our presence where we are represented in Quebec, and we will attack the places where we are under-represented, to get our share of the pie,” Geneviève Fortier explains.
The second area of development envisioned is outside Quebec. Fortier declined to name the provinces or companies that could be targeted by these acquisitions. She also wants to see what firms are up for grabs.
“We are in the process of finalizing our strategic choices here. We’re not in the business of trying to gain market share by going in one policy at a time. We’ll make strategic partnerships or through acquisitions, and they won’t be small,” she continues.
The group’s solvency ratio, at 397 per cent, signals “a very good position,” she says. The financing strategy for this expansion will not rely solely on internal capital. “The strategy will be a hybrid, a mix of internal and external capital. For now I won’t put numbers on the table, because we’re still finalizing our targets,” she says.
Shared ambitions
Geneviève Fortier refuses to take sole credit for the ambitions expressed by Promutuel Insurance. “An organization like ours, after 170 years, is not the result of one person alone. No leader can achieve this success single-handedly. By the time I became CEO in 2019, the organization had already demonstrated its ability to grow. A small mutual founded 170 years ago became a company with $1 billion by 2022,” she says.
The group’s board of directors, its management team and the mutual companies support this ambition to double the group’s size. “To maintain our position, in terms of competitiveness, we are fourth in Quebec. We are the largest among the medium-sized players, or the smallest among the largest, and if we want to strengthen our competitive position, we must maintain and even accelerate our growth. To do so, we must achieve profitable growth,” Fortier explains.
Brokerage
In 2021, the brokerage network will provide about 25 per cent of Promutuel Insurance’s premium volume. Fortier says that to achieve organic growth, the insurer expects to keep similar proportions in the distribution of its sales between its agent network, brokers and direct digital.
“The proportions might move a little bit, but we don’t have a targeted strategy to change those proportions significantly,” she says.
As for the planned growth outside Quebec, she stops short of confirming whether the expansion would go through the brokerage network. She repeats that everything is open in that area, and that this expansion will not necessarily centre on the neighbouring provinces of Ontario and New Brunswick.
The group advantage
Among its 16 mutual companies, Promutuel has members of very different sizes, with premium volumes ranging from $26.7 million for the Montmagny-L’Islet mutual to nearly $118 million for the Chaudière-Appalaches mutual. In fact, membership in the group has declined.
Are more mergers in the cards? “These 16 mutual companies are autonomous and independent. Merger decisions are up to them. The group lets each mutual decide on its own what to do to ensure its sustainability and growth,” Fortier says.
The network benefits members through its services, expertise, and resources. “We make sure we support the smaller mutual companies, because they can’t do it alone. Owing to the cost of technological services today and the cost of digitization, minimum volumes are required to make these investments profitable. With the strength of our group, we can do this,” she says.
Business insurance
Fortier points out that despite the hardening of the commercial insurance market, which represents about 21 per cent of Promutuel Insurance’s premium volume, not counting the agricultural sector, the group “has always been a responsible player, and the industry is responsible too. We plan to continue to retain and attract clients.”
“We have remained loyal to the segments we serve. The average premium and pricing is done correctly, without taking advantage of anyone, always progressively. So far, this approach is serving us well and our clients are extremely loyal,” she continues.
Promutuel continues to help agricultural producers address some of the issues they face, including fire prevention. Premiums in this market amounted to $71 million in 2021.
“We are built on an extremely solid foundation, in terms of longevity and financial results. Promutuel has a clear game plan and ambitions and is giving itself the means it needs to succeed,” she says.
