Desjardins Group continues to make inroads in the P&C insurance market.
For all of its operations, the financial institution reported surplus earnings before member dividends of $2.9 billion in 2021, up from $2.4 billion in 2020. This increase of 21.6 per cent or $523 million is attributable to “a decrease in the provision for credit losses, and growth in both net interest income and other operating income,” coupled with lower loss experience in the P&C Insurance segment.
Property and Casualty insurance
In P&C insurance, Desjardins has passed the $1 billion mark for the first time. This segment recorded net surplus earnings of $1.2 billion in 2021, compared with $622 million in 2020. This increase of 92.4 per cent or $575 million “was due to a lower cost of claims mostly because of a positive change in claims experience primarily in auto insurance in previous years and higher net premiums.”
For the fourth quarter of 2021 alone, this segment posted net surpluses of $330 million, down from $378 million in Q4 2020. This decrease of 12.7 per cent or $48 million was “due to lower investment income,” Desjardins points out, adding that the result was “partly offset by business growth, which results in higher net premiums and a lower loss experience, due, in particular, to favourable developments in claims primarily in auto insurance in previous years that were higher than in the fourth quarter of 2020.”
Wealth Management and Life and Health insurance
For its Wealth Management and Life and Health Insurance segment, Desjardins reported a net surplus of $463 million in 2021, compared with $609 million in 2020. This decline of 24 per cent or $146 million is “primarily due to generally unfavourable changes in actuarial assumptions made in the normal course of business and to gains on the sale of securities and real estate investments that were lower than those realized in 2020,” Desjardins says. The downturn was partly offset by “the markets’ positive impact on guaranteed investment funds and the effect of the travel insurance provisions recognized in 2020.”
For the fourth quarter of 2021 alone, Desjardins reports a net deficit of $6 million, down from a net surplus of $249 million in Q4 2020. This decline of $255 million “was mainly due to the unfavourable impacts of changes in actuarial assumptions made in the normal course of business, compared to a favourable impact in fourth quarter 2020 and to additional administrative costs to improve services to caisse members and clients.”
Desjardins' total operating income was $20.4 billion in 2021, versus $18.4 billion in 2020. It thus grew by 10.9 per cent or $2 billion.
The Wealth Management and Life and Health Insurance segment reported operating income of $7.1 billion in 2021, up from $6 billion in 2020. This increase of 19.1 per cent or $1.1 billion was mainly “due to higher net premiums as well as revenue growth tied to an increase in assets under management.”
The Property and Casualty Insurance segment reported operating income of $5.7 billion in 2021, compared with $5.3 billion in 2020. This increase of 7.6 per cent or $407 million is attributable “to higher net premiums, due, in particular, to business growth and the impact of $155 million in auto insurance premium refunds granted in 2020 to members and clients as a relief measure to support them during the COVID-19 pandemic.”
Desjardins’ total net premiums were $11.3 billion in 2021, compared with $9.9 billion in 2020. They were up 13.7 per cent or $1.4 billion.
The Wealth Management and Life and Health Insurance segment garnered $5.7 billion in net premiums in 2021, compared with $4.7 billion in 2020. The corresponding increase is 20.3 per cent or $956 million.
In P&C insurance, net premiums were $5.9 billion in 2021, versus $5.5 billion in 2020, for an increase of 7.8 per cent or $425 million.
Desjardins reported investment losses of $85 million in 2021, compared with investment income of $3.1 billion in 2020. Investments thus declined by $3.2 billion.
The Wealth Management and Life and Health Insurance segment reported investment losses of $55 million, versus investment income of $2.4 billion in 2020. Investments thus plunged by $2.5 billion “primarily due to a unfavourable change in the fair value of assets related to life and health insurance operations and backing liabilities,” Desjardins explains, adding that “the decrease in investment income was also due to gains on the disposal of securities and real estate investments that were more modest than those realized in 2020.”
The Property and Casualty insurance segment reported investment income of $120 million in 2021, compared with $497 million in 2020. The 75.9 per cent or $377 million decline in income is “basically due to the negative change in the fair value of matched bonds compared to an increase in 2020.”
Desjardins explains that in both life and health and P&C insurance, the change is “mainly due to higher market interest rates in 2021, while a decrease had occurred in 2020.” The company notes that, in both cases, “this change in fair value was offset by the change in the cost of claims because of a matching strategy.”