May 16, 2016 by Net Income
Despite an increase in direct premiums written, Desjardins General Insurance Group (DGIG) saw net income for the first quarter of 2016 drop to about $31.5 million compared to the prior-year quarter.
At $31.5 million, net income for 2016 Q1 was 57.3% lower than the $73.7 million recorded in 2015 Q1, notes a statement from DGIG, a subsidiary of Desjardins Group and one of the country’s largest providers of property and casualty insurance.
“Return on equity was 5.6% compared to the previous year’s 16.0%,” the statement notes. “These variations are primarily due to the one-time gain recorded in 2015 Q1 following the acquisition of State Farm’s Canadian operations,” Desjardins reports.
Direct premiums written (DPWs) for the quarter ending Mar. 31, 2016 measured $1,042.9 million, a 14.8% increase over the $908.7 million for the same quarter of 2015. “This organic growth is mainly attributable to the renewal of auto policies acquired from State Farm, whose terms are transitioning from six to 12 months, as well as growth initiatives and new features like the Ajusto app.”
That said, DGIG reports that it is keeping a close eye on the auto insurance markets in both Ontario and Alberta:
Although there was an increase in DPWs, DGIG’s underwriting income (excluding market yield adjustment, MYA) was -$12.3 million in 2016 Q1 compared to -$9.3 million in 2015 Q1.
Last week, Desjardins Group announced records surplus earnings of $382 million for the first quarter of 2016; total assets of $255.1 billion, up $7.0 billion; and assets under management and under administration up $5.7 billion to $409.0 billion. At $382 million, surplus earnings before member dividends in 2016 Q1 represented a decline of $82 million compared to the same quarter of 2015.
“The decrease was due to two events related to the first quarter of 2015: the gain realized on the acquisition of State Farm’s Canadian activities and the favourable change in the fair value of derivative financial instruments used to hedge foreign currency deposits for all of Desjardins Group,” the company notes.