Poor weather drives up claims rate at Industrial Alliance Auto and Home

Industrial Alliance Insurance and Financial Services Inc. released Thursday its financial results for the quarter ending Dec. 31, 2013 reporting a 15% increase in net income attributed to shareholders, while the combined ratio in its auto and home subsidiary was 101.9%.

The Quebec City-based carrier owns Industrial Alliance Auto and Home Insurance Inc., though most of the firm’s overall revenue is from other financial products, such as life and health insurance and mutual funds.

In its general insurance business, premiums were up 17% year over year, from $220 million in 2012 to $258.4 million in 2013.

Industrial Alliance Auto and Home Insurance sells coverage directly through agents. Its direct premiums written in home and auto were $216.6 million in 2013, up from $195.1 million in 2012. Its combined ratio was 101.9% in 2013, up from 95.7% in 2012. The claims ratio increased from 64.3% in 2012 to 70.6% last year.

“Profitability was impacted by a deterioration in the claims rate compared to 2012, primarily due to poor weather conditions throughout the year,” Industrial Alliance stated in its management discussion and analysis. “In fact, each of the four quarters of 2013 was plagued by a catastrophic event, and these four events alone drove the claims rate up by nearly 4 percentage points.”

Its expense ratio was down from 31.4% in 2012 to 31.3% in 2013.

“In April 2012, IAAH launched Mobiliz, an innovative auto insurance program supported by telematic technology,” the company noted in its MD&A. “The Mobiliz program, the first of its kind in Canada, is a social initiative introduced by IAAH to help save lives by promoting safe driving behaviour and discouraging speeding, primarily among drivers aged 16 to 24.

IAAH noted at the end of 2013 it had “signed a partnership agreement with Tecnic Driving Schools, which will be installing the Mobiliz product on all their driving school vehicles.”

For Industrial Alliance Insurance and Financial Services as a whole, total premiums and deposits were $7.43 billion in 2013, of which $258.4 million was from general insurance.

By comparison, in 2012, total premiums and deposits were $6.9 billion in 2013, of which $220 million was from general insurance.

Net income attributed to shareholders was $384.5 million in 2013, up 15% from $333.7 million in 2012.

For the fourth quarter, the net income attributed to shareholders increased 24% year over year, from $80.7 million in 2012 to $99.8 million last year.

Total revenues were $1.85 billion in the fourth quarter of 2013, compared to 1.76 billion in Q4 2012. Net premiums in the latest quarter were $1.256 billion, up from $1.21 billion during the same period in 2012.

Net investment income was $341.5 million in Q4 2013, compared to $335 million in Q4 2012.