Intact Financial Corporation reported net operating income for the quarter ended September 30, 2012 of $122 million, up $11 million compared to the corresponding quarter of last year. On a per share basis, net operating income decreased 8% to $0.89 as a result of elevated losses from severe weather. Net income was $96 million, compared to $101 million for the same period last year on lower investment gains. Adjusted earnings per share, which excludes integration-related costs, was $0.93 compared to $1.11. The combined ratio increased 1.7 percentage points to 95.9%. Direct premiums written increased 47% to reach $1.8 billion, reflecting the continued retention of the AXA Canada business and the inclusion of one month of JEVCO.
Net operating income for the first nine months was $481 million, up $173 million from the previous year, due to the contribution of AXA Canada and improved underwriting results. On a per share basis, net operating income increased 30% to $3.58. Net income was $406 million compared to $381 million for the first nine months of 2011 and adjusted earnings per share was $3.63 compared to $3.69. The combined ratio improved by 1.7 percentage points to 93.5%, while direct premiums written for the same period increased 47% to reach $5.2 billion. The book value per share increased 10% to $31.81 over the last twelve months.
“Our operating results remained sound this past summer, despite the significant financial impact of helping our customers recover from severe hail, wind, and rain storms in Alberta, Ontario, and Quebec,” says Charles Brindamour, CEO of Intact. “As the prevalence of severe weather events puts pressure on the operating performance of our home insurance business, we remain committed to ensure its profitability and sustainability. Our consistent growth and solid financial performance since the beginning of the year reflect the success of our strategic initiatives which have strengthened our position in the industry."
The company expects that industry premiums are likely to increase in the next 12 months at a mid-single-digit rate, with low single-digit growth in personal auto and commercial lines, and upper single-digit growth in personal property. The continuing low interest rate environment could support firmer industry premium levels. At an industry level, the loss ratio is expected to improve in personal auto as a result of previous rate increases and the effectiveness of reforms in Ontario. Results in personal property may benefit from continued premium increases but will be impacted by the storms of last summer. The company does not anticipate loss ratio improvements in commercial lines, but pricing conditions could improve at a moderate pace over time.