Capital markets, bad weather bite into Desjardins’ 2008 Q3 profits

Desjardins Group reported a 2008 Q3 profit of Cdn$149 million, down Cdn$99 million or 39.9% from the corresponding quarter last year.
The company’s quarterly return on equity (ROE) fell to 6.2% compared to 11.0% in 2007 Q3.
“These results reflect the sharp deterioration in capital markets during the third quarter, causing stock market gyrations and unprecedented volatility,” the company noted in a press release.
The company reported a Cdn$94-million write-down (Cdn$65 million after income taxes) for asset-backed commercial paper (ABCP) holdings, reducing 2008 Q3 earnings.
“In addition, Desjardins Group’s third quarter profitability was adversely affected by the weaker results of the general insurance subsidiary, stemming from higher loss experience in home insurance because of poor weather conditions and lower investment income due to, among other things, the stock market decline,” the company announced.
Desjardins General Insurance Group (DGIG) in 2008 Q3 contributed Cdn$25.1 million to Desjardins Group’s results, as opposed to Cdn$45 million for the same quarter in 2007. DGIG’s year-to-date contribution to the group’s financial pictures is Cdn$38.2 million, compared to $117 million in 2007.
For the first nine months of the year, income from premiums written was up 3% to Cdn$1.11 billion, “outperforming the industry,” the company observed. “Sales were ahead in all business lines but particularly in individual insurance in Ontario (7%), where products now carry the Desjardins name, an initiative backed by a major advertising campaign in the province.”