Intact Financial reports modest increase in 2010 Q4 profit, expects industry to increase premiums in 2011

Intact Financial Corporation (TSX: IFC) announced it is expecting industry premiums to increase in 2011 at a pace similar to last year, with increases in the mid-single digits in personal auto lines and upper-single digits in personal property lines.
“These increases will be driven by rate inadequacies in auto insurance in Ontario and the impact of water-related losses and more frequent and severe storms,” Intact said in a press release announcing its quarterly results. “Commercial lines premiums are expected to grow at a low single digit rate, with no acceleration from the pace of last year.”
Overall, Intact reported a 2010 Q4 profit of $97.5 million, a marginal increase over its $96.7 million net income in the last quarter of 2009.
Total underwriting income increased significantly in 2010, reaching $193.8 million – up from $54 million in 2009.
“The improvement in home insurance and commercial property has been most remarkable,” Intact president and CEO Charles Brindamour said in a press release. “Auto insurance results have been robust considering the impact of the continued increase in medical claims costs in Ontario on the industry performance.
“The early arrival of winter and higher losses than expected from weather events led to disappointing results in the last three months of the year, following four consecutive quarters of significant underwriting improvements. While weather patterns continue to be unpredictable and bring greater volatility to our results, our underlying performance throughout the quarter remained good.”
The company’s combined ratio in 2010 Q4 reached 98.0%, up 3.4% from the same period in 2009 Q4.
Direct premiums written in 2010 Q4 grew by 4.8% over the same quarter a year ago to reach $1.06 billion.
Personal insurance premiums grew 5.1% mainly as a result of higher rates. Home insurance premiums increased 7.3%, while the growth rate of auto premiums slowed down to 4.0% due to the cautious approach the company said it had adopted as the Ontario auto insurance reforms unfold.
Commercial auto insurance premiums were up 5.8% while commercial P&C premiums increased by 3.6% despite the cancellation of a number of commercial group accounts late in 2009. “As expected, these cancellations slowed the growth rate of commercial P&C premiums in the quarter by 2.0 percentage points,” the company announced.
The company reported holding $808.5 million in excess capital.