Canadian Underwriter

The business line that drove Intact’s profitability in 2020 Q2

July 31, 2020   by Greg Meckbach

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If you placed homeowner’s insurance with Intact during 2020 Q2, your business helped propel Canada’s largest P&C insurer to its most profitable second-quarter personal property result in more than 10 years.

Intact Financial Corp. reported that its combined ratio in personal property was 88.6% during the three months ending June 30, an 11-point improvement from 99.6% in 2019 Q2. In the most recent quarter, Intact had its best quarterly combined ratio in personal property in over a decade, CEO Charles Brindamour said Wednesday during a conference call with investment banking analysts.

“Personal property continues to be a solid contributor to our strong underwriting performance overall, and I am confident this will continue,” said Brindamour.

Despite a June 13 hail storm that caused major damage to tens of thousands of homes in and near northeast Calgary, Intact’s cat loss ratio was down 0.7 points, from 9.1% in 2019 Q2 to 8.4% in 2020 Q2.

Intact reported $124 million in pre-tax, weather-related catastrophe losses during the second quarter. About 95% of that loss was in Canada and about 70% in personal lines. There was no reinsurance coverage on that $124 million, a company spokesperson told Canadian Underwriter Wednesday.

It primarily reflects the impact of the June 13 hail storm and also flooding this past April in Fort McMurray, Alta. “These events drove Cat losses of $116 million, essentially in line with expectations for a second quarter,” Intact reported July 28 in a securities filing.

Intact does not report how much it paid in claims from the June 13 hail storm specifically, the spokesperson told Canadian Underwriter Wednesday.

Industry-wide, as of mid-July, more than 70,000 claims had been reported to insurers from the Calgary area storm, Rob De Pruis, IBC’s director of consumer and industry relations, western, said in a separate interview with Canadian Underwriter. The storm is estimated by Catastrophe Indices and Quantification Inc. (CatIQ) to have cost the industry nearly $1.2 billion.

For its part, intact reported July 28 a combined ratio of 84.7% in personal auto in the three months ending June 30. This is  an 14.8-point improvement over 99.5% in Q2 2019. This is due to a combination of lower driving activity due to the ongoing COVID-19 pandemic, better weather conditions in 2020 Q2 compared to the same period in 2019, and ongoing profitability actions, chief financial officer Louis Marcotte said Wednesday during the earnings call.

Intact is using data from its usage-based insurance to monitor how many kilometres clients are driving and how many trips they are taking, said Isabelle Girard, senior vice president of personal lines.

Intact observed a big drop in driving at the peak of the pandemic crisis in early April. Since then, both the number of kilometres driven and the number of trips have risen gradualy, added Girard. But it is still below the level it was at this time in 2019.

Company wide, Intact reported direct premiums written of $3.382 billion in the latest quarter, up 7% from $3.152 billion in 2019 Q2.  The combined ratio – in all lines in both Canada and the United States – improved 7.5 points, from 97% in 2019 Q2 to 89.5% in the same period this year.

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