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Desjardins General Insurance Group reports Q3 results
Reports net income of $12.1 million and a combined ratio excluding market yield adjustment of 88.4%.
Staff on November 14, 2016
Desjardins General Insurance Group (DGIG), reported a net income of $12.1 million compared to a net loss of $32.0 million for the corresponding quarter in 2015, for the quarter ended September 30, 2016.
Return on equity (ROE) was 1.0%, mostly due to continued high auto insurance losses, mainly in Ontario, and to hail and heavy rain in Western Canada and Ontario. The ROE for the quarter exceeded the -8.6% recorded for the same period in 2015, which was negatively impacted by the decline in financial markets.
The combined ratio excluding market yield adjustment (MYA) was 88.4% in the quarter, down 4.4 pts from 92.8% in the same period last year. However, the combined ratio performance was partially offset by amounts owed to State Farm in connection with the acquisition of its Canadian operations and arising from a favorable development of the claim reserves transferred to DGIG on January 1st, 2015. Direct premiums written were $1,148.5 million, an increase of 8.0% due to the conversion of State Farm Canada policies from 6 to 12 month terms and to organic growth.
Nine month results
For the first nine months of the year, net income was $91.9 million, down from $226.5 million in the corresponding period last year, which benefited from a one-time gain and other non-recurring items related to the purchase of State Farm’s Canadian operations. Return on equity was 5.3%, with a combined ratio excluding MYA of 96.4%. Direct premiums written were $3,488.3 million, an increase of 12.3%, which reflects both, the transition of State Farm auto policies from 6 to 12 month terms and organic growth.
“Our results this quarter were impacted by higher auto physical damage losses across the country, largely due to price inflation in auto parts as a result of weakness in the Canadian dollar. In addition, the continuing high cost of accident benefits in Ontario remains a concern, despite the government’s recent reforms,” said Denis Dubois, co-chair of DGIG.
“While we recognize the Ontario reforms were a step in the right direction, they don’t fully address the key underlying cost issues. More fundamental changes are needed to ensure a sustainable auto insurance product that would provide better price stability to the benefit of consumers and the industry,” noted Mr. Dubois.
Desjardins General Insurance Group reports Q3 results
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