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TD's insurance earnings increase by 22 per cent

By Aurélia Morvan | March 01 2021 02:04PM

Photo: Freepik | Vectorarte

The Toronto-Dominion Bank (TD) reported net income of $3.3 billion for first quarter 2021, which ran from Nov. 1, 2020 to Jan. 31, 2021. This is an increase of 9.6 per cent or $288 million from the $3 billion in net income reported in Q1 2020.  

Insurance and wealth management improve 

For its Canadian Retail division alone, which includes life and P&C insurance, TD reported net income of $2 billion in the first quarter of 2021, versus $1.8 billion in Q1 2020. This increase of 13.9 per cent or $248 million reflects “lower provisions for credit losses (PCL) and higher revenue,” TD says.  

All three components of this segment gained ground:  

  • TD reported net income of $1.4 billion for its Canadian Personal and Small Business banking operations, up 4 per cent or $54 million from Q1 2020.  
  • Net income from wealth management businesses totalled $464 million, up from $300 million in Q1 2020. It thus surged ahead by 54.7 per cent or $164 million.  

  • Finally, for its insurance business, TD reported net income of $164 million, versus $134 million in Q1 2020. This amounts to growth of 22.4 per cent or $30 million.  

Income increases 

Total non-interest income for the Canadian retail division was $3.4 billion in the first quarter of 2021 versus $3.1 billion in Q1 2020. The increase of 9 per cent, or $279 million, reflects “higher transaction and fee-based revenue in the wealth business and higher insurance revenue, partially offset by lower fees in the banking businesses,” TD points out. 

Non-interest income in the insurance segment alone was $1.2 billion, compared with $1.1 billion in Q1 2020. The increase amounts to 8.6 per cent or $97 million.  

Premiums climb 

Canadian retail services business was “very good” in the first quarter of 2021, reflecting “strong mortgage originations and chequing account growth in the Personal Bank, record retail net asset growth across our Wealth franchise, and solid Insurance premium growth.” 

Gross insurance premiums rose to $1.1 billion in the first quarter of 2021. They were up 2.8 per cent or $29 million.  

Compensation stable  

Insurance claims and related expenses were $780 million in the first quarter of 2021, unchanged from the corresponding quarter of 2020.  

Higher current year claims were offset by more favourable prior years’ claims development and fewer severe weather-related events in the current quarter, as well as a decrease in the fair value of investments supporting claims liabilities which resulted in a similar decrease in non-interest income, TD explains.  

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