Combined ratio up 3.8 points, direct written premiums up 6.6% for Desjardins

Desjardins General Insurance Group Inc. released Thursday some of its financial results for the three months ending March 31, reporting a 3.8-point increase in its combined ratio and a 6% year-over-year increase in direct written premiums, when compared to the first quarter of 2013.

When it released its Q1 report earlier this month, Levis, Quebec-based Desjardins Group reported operating income for its property and casualty segment was $592 million in the first quarter of 2014, up 6.8% from $551 million in Q1 2013.

Desjardins Group provides a variety of financial services, including personal and business banking, investment banking and insurance. Its P&C segment includes both Desjardins General Insurance Group Inc. and Western Financial Group Inc.

In a press release May 29, DGIG reported Q1 direct written premiums of $511.2 million, up 6% from $482.4 million in the same period in 2013.

Desjardins provides auto, property, pet, motorcycle and recreational vehicle coverage in Ontario, Alberta and Quebec. Its business lines in Quebec include auto, property, equipment breakdown, loss of business income and liability. High River, Alta.-based Western Financial operates a broker network in Western Canada as well as a chartered bank (Bank West), Western Life (originally the Canadian arm of Federated Mutual), direct writer Western Direct and Marlin Travel.

For its entire P&C segment, Desjardins Group reported net premiums rose 6.8%, from $518 million in Q1 2013 to $553 million in Q1 2014.

“The Property and Casualty Insurance segment’s claims totalled $406 million for the first quarter, an increase of $29 million, or 7.7%, compared to first quarter 2013 as a result of the combined effect of business growth and the drop in the discount rate, partly offset by an improved loss ratio for P&C insurers,” Desjardins Group reported in its Q1 financial report.

“If market yield adjustment is excluded, the loss ratio was 72.0% for first quarter 2014, compared to 74.0% in first quarter 2013. The improvement in the loss ratio is essentially due to property insurance as a result of the favourable weather conditions since the beginning of the year.”

On May 29, DGIG reported its combined ratio was 103.6% in Q1 2014. In May, 2013, DGIG had reported a combined ratio of 99.8% in the first quarter of 2013.

DGIG’s net income dropped 34% year-over-year, from $25.2 million in Q1 2013 to $16.7 in the most recent quarter.

“The drop in profitability was primarily due to $17.9 million in transaction and integration costs incurred as part of the acquisition by Desjardins of State Farm’s Canadian operations,” DGIG stated.

In January 2014 Desjardins Group announced it agreed to acquire the P&C, life insurance, mutual fund, loan and living benefits operations of Aurora, Ont.-based State Farm Canada. That deal is subject to regulatory approval and is expected to close in January 2015.

“With a major announcement like the State Farm Canada transaction, which will nearly double DGIG’s size to $4 billion in premium volume, it is important that the organization also remains focussed on its existing business,” stated DGIG president and chief operating officer Sylvie Paquette in a release.

“We maintained strong growth in (Q1 2014), with an increase of almost 19,000 policies in force, and we will continue to invest in and grow our existing operations while also preparing for the integration of State Farm Canada.”