ING 2008 Q4 loss reflects prolonged drop in value of Canadian equities

ING Canada has reported a 2008 Q4 net loss of Cdn$64.1 million, compared to a gain of Cdn$95.8 million over the same period last year.
The decline in net income reflects the impairment of Cdn$185.8 million of common equities as a result of the deep and prolonged drop in value of Canadian common equities, ING Canada says in a press release announcing its quarterly results.
The combined ratio for 2008 Q4 was 98.9%, up 5.7% from 2007 Q4.
Net income for the entire year of 2008 was Cdn$128.2 million, down 74.8% from 2007. The combined ratio for 2008 was 97.1%.
“Our business insurance continued to perform extremely well in the current pricing environment,” Charles Brindamour, president and CEO of ING Canada, said in the release. “However, the severe storms that prevailed during the year impacted the results of our home insurance portfolio. Current accident year results in auto insurance were relatively stable.
“Given the deep and prolonged decline of the Canadian stock market and the level of uncertainty about its recovery, we took a significant impairment on our common equity portfolio.
“We also continued to reduce the impact of the volatility of the capital markets on our balance sheet. Our financial position is strong with significant excess capital and no debt, which allows us to pursue our growth strategy and to capitalize on the acquisition opportunities that may arise as a result of the current market conditions. 
“The increased cost of claims in automobile insurance and the changing weather patterns are likely to drive up the price of home and auto insurance products in 2009. In commercial insurance, there are indications that the pricing may be firming up.”
Underwriting income for 2008 Q4 dropped 83.9% — down from Cdn$68.2 million in 2007 Q4 to Cdn$11 million during this year’s fourth quarter.
Direct premiums written totalled Cdn$968.2 million in 2008 Q4; they were Cdn$961.3 million over the same period last year.