Canadian Underwriter

How much Intact has improved its personal property loss ratio

November 15, 2021   by Greg Meckbach

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As home insurance prices continue to climb, Intact Financial Corp. reported an underwriting profit in personal property in the latest quarter, despite higher-than-normal weather catastrophe losses.

The personal property line “should operate” with combined ratios below 95% “even with severe weather,” Intact CEO Charles Brindamour said Nov. 10 during a conference call discussing the insurance company’s most recent financial results.

In personal property in Canada, Intact reported Nov. 9 its combined ratio was 93.5% in the three months ending Sept. 30, up 9.8 points from 83.7% in Q3 2020. The personal property lines includes homeowners, tenants, condominium owners, non-owner-occupied residences and seasonal residences.

The underlying current-year loss ratio, in personal property, improved 4.4 points, from 49.2% in Q3 2020 to 44.8% in Q3 2021. For the full year, that ratio was 46.5% in 2020, 53.7% in 2019, 52% in 2018 and 49.6% in 2017.

In the most recent quarter, 17 points of Intact’s personal property combined ratio was from catastrophes. This was 10 points higher than normal, CFO Louis Marcotte said Nov. 10 during the earnings call.

Industry-wide, Canadian insurers paid out an estimated $247 million in claims arising from the July 2 Calgary storm, which included hail, wind and rain, Insurance Bureau of Canada reported earlier, quoting Catastrophe Indices and Quantification Inc. (CatIQ).

In Ontario, a Sept. 7 storm system was estimated to have cost the industry $105 million in insured damage. Later that week, Hurricane Larry made landfall in Newfoundland, causing an estimated $25 million in insured damage. Out west, severe storms in Saskatchewan and Alberta, beginning Aug. 31, caused an estimated industry-wide loss of $64 million. A July 22 series of storm – with strong wind gusts, hail and rain – caused an estimated industry-wide loss of $56 million in Alberta and Saskatchewan. In July, two British Columbia wildfires – in White Rock Lake and Lytton – cost the industry an estimated $77 million and $78 million respectively.

“The significant cat experience in this quarter acts as a reminder that our customers are facing the impact of climate change right now,” Brindamour said Nov. 10 during the earnings call.

“We must double down on adapting to the current extreme weather impacts of climate change and this requires an approach that includes government, NGOs, businesses and individuals.”

Intact reported Nov. 9 its net earned premiums, in personal property in Canada, were $965 million in the three months ending Sept. 30, up 34% from $719 million in Q3 2020. The latest quarter was the first quarter in which Intact included premiums from the former RSA operations in Intact’s results. Of the 34 points of growth, five were organic, due in part to hardening market conditions in personal lines.

On June 1, Intact and Tryg A/S closed their deal to acquire London-based RSA PLC. As a result, Intact now owns the former RSA operations in Canada, Britain, Ireland, the Middle East and some Continental European countries. Tryg owns the former RSA operation in Sweden and Norway.

Company-wide, Intact reported a combined ratio of 91.3% on net earned premiums of $4.871 billion in Q3. Of that, $3.28 billion was from Canada, $1.174 billion was from UK and International (the former RSA operation) and $415 million was from Intact’s United States commercial operation, which Intact formed when it acquired OneBeacon in 2017. Net income dropped 10%, from $334 million in Q3 2020 to $300 million in Q3 2021.


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