Desjardins reported surplus earnings before member dividends of $798 million ($M) for the first quarter of 2021, compared with $285 million for Q1 2020, which marked the start of the COVID-19 pandemic.

This increase of 180 per cent or $513 million is “mainly due to a decline in the provision for credit losses, good performance from the caisse network and a lower auto insurance loss experience in the Property and Casualty Insurance segment,” Desjardins says.

Property and casualty insurance

This lower loss experience, “particularly because of changes in driving habits attributable to the COVID-19 pandemic,” boosted the net surplus of the P&C insurance segment by 239.7 per cent or $175 M. 

This increase is also explained by the “mild weather conditions in first quarter 2021,” by the “increase in investment income, excluding the change in the fair value of matched bonds,” and by higher net premiums.

As a result, the surplus in this sector was $248 million in Q1 2021, compared with $73 million in Q1 2020.

The combined ratio also improved by 11.5 percentage points to 79 per cent from 90.5 per cent in the first quarter of 2020.

Wealth management and personal insurance

As in the first quarter of 2020, the P&C insurance segment’s net surplus exceeded that of the wealth management and life and health insurance segment. Desjardins reported a net surplus of $125 million in life and health insurance, compared with a net deficit of $41 million in the first quarter of 2020.

This positive change of $166 million was mainly due to “provisions recognized in travel insurance and credit balance insurance during the first quarter of 2020…It can also be attributed to the markets’ positive impact on guaranteed investment funds in the first quarter of 2021, versus their negative impact in the same quarter of 2020,” the Group explains.

As a reminder: for the first time ever in 2020, the annual net surplus of the P&C insurance sector exceeded that of the wealth management and life and health insurance sector.

One of the other two segments also prospers

The other two Desjardins segments reported contrasting results. 

For its main segment, Personal and Business Services, Desjardins reported surplus earnings before member dividends of $414 million for the first quarter of 2021, compared with $190 million in the first quarter of 2020. This represents an increase of 117.9 per cent or $224 million.

Lastly, the “Other” segment recorded a net surplus of $11 million, compared with $63 million in Q1 2020. This result is down 82.5 per cent or $52 million.

Property and casualty insurance propels premiums

Desjardins’ total net premiums were $2.6 billion for the first quarter of 2021, compared with $2.5 billion for Q1 2020. This represents an increase of 2.5 per cent or $63 million.

For property and casualty insurance, net premiums are $1.4 billion. This increase of 3.6 per cent or $50 million reflects “rate adjustments due to changes in driving habits because of the COVID-19 pandemic, which slowed down growth in the average premium,” Desjardins says.

For the Wealth Management and Life and Health Insurance segment, net premiums stood at $1.2 billion. They rose by 1 per cent or $12 million.

Looking at the results in closer detail:

  • Annuities increased by 2.4 per cent or $4 million to $167 million
  • Group insurance premiums edged up 1 per cent or $8 million to $840 million
  • Individual insurance premiums stagnated at $222 million, unchanged from Q1 2020.

Desjardins Group also reported a loss of $71 million in premium income in the “Other category” compared with a loss of $72 million in the first quarter of 2020.

Increased operating income

Desjardins’ total operating income was $4.8 billion, versus $4.6 billion in the first quarter of 2020. It rose by 3 per cent or $141 million.

More specifically:

  • The Wealth Management and Life and Health Insurance segment’s operating income was $1.6 billion, up 2.7 per cent or $42 million from the first quarter of 2020.
  • The P&C segments operating income totalled $1.4 billion, up 1.9 per cent or $26 million.
  • The Other segment sustained operating losses of $46 million, compared with losses of $133 million in Q1 2020, an improvement of $87 million.
  • The Personal and Business Services segment’s operating income was $1.9 billion, down 0.7 per cent or $14 million.

Investment losses

Desjardins Group’s operating income was offset by investment losses.

These losses amounted to $1.7 billion in the first quarter of 2021. By comparison, Desjardins reported investment income of $54 million in the first quarter of 2020. 

This decrease of $1.8 billion stems from several factors, including the “decrease in the fair value of assets backing liabilities related to life and health insurance operations.”

It is also attributable to an "unfavourable change in the fair value of matched bonds in the Property and Casualty Insurance segment, whereas there had been a positive change in the comparative quarter, chiefly because of higher market interest rates in the first quarter of 2021, which had been lower in the comparative quarter.”

Intact, iA, Manulife, Great-West Lifeco, Sun Life, Empire Life, The Co-operators and Northbridge also released their financial results for the first quarter of 2021.