Intact reports 12.8-point improvement in personal property combined ratio

With “significantly lower losses from catastrophes”  in 2014 than the year before, Intact Financial Corp. release Wednesday its financial results for the final quarter of 2014, reporting a 222% increase in underwriting income and a 12.8-point drop in its fourth-quarter combined ratio in personal property.

Direct premiums written (excluding pools) were $1.76 billion in the fourth quarter of 2014, up 3% from $1.702 billion during the same period in 2013.

Toronto-based Intact Financial writes insurance through Intact Insurance, Grey Power and Belair Direct. It also owns Jevco, which provides non-standard auto in Ontario, and BrokerLink.

Intact Financial reported Wednesday that underwriting income more than tripled, from $67 million in the fourth quarter of 2013 to $216 million in Q4 2014.

“The increase was attributable to the combination of our successful profitability initiatives and favourable weather conditions, which led to lower claims frequency in all lines, resulting in a 5.6 point improvement in the underlying current year loss ratio,” Intact stated in its management discussion and analysis. “We also benefited from a $45 million decline in catastrophe losses as Q4-2013 was affected by a severe December ice storm in Ontario and Eastern Canada.”

Fourth-quarter net income increased 92%, from $105 million in 2013 to $207 million last year.

The combined ratio improved by 8.1 points, from 96.3% in Q4 2013 to 88.2% in the most recent quarter. That “was primarily driven by a 5.6 point improvement in the underlying current year loss ratio, in addition to a $45 million reduction in catastrophe losses,” Intact stated.

For the full year, Intact reported a combined ratio of 92.8%, down 5.2 points from 98% in 2013. In home insurance, the combined ratio dropped 15.4 points, from 104.5% in 2013 to 89% last year.

The combined ratio in personal lines – auto improved 4.7 points, from 98.4% in Q4 2103 to 93.7% in Q4 2014. The same ratio for personal property dropped 12.8 points, from 86.4% in the final quarter of 2013 to 73.6% in the same period last year.

Intact attributed that both to mild weather conditions and to its profitability initiatives in home insurance.

“Higher deductibles, sub-limits on sewer back-up coverage, and more transparent product pricing displaying premiums by type of peril have now been rolled out in all provinces and are being applied upon renewal,” Intact reported in its MD&A. “In Alberta, depreciated value on roofs is also being applied upon renewal for claims caused by wind and hail.”

The combined ratio for all personal lines improved from 94.6% in Q4 2013 to 87.1% in Q4 2014.

For the full year, Intact reported direct premiums written (excluding pools) in 2014 of $7.349 billion, up slightly from $7.319 billion in 2013.

Underwriting income increased 265%, from $142 million in 2013 to $519 million last year, while net income increased 81%, from $431 million in 2013 to $782 million last year. That was due in part to “significantly lower losses from catastrophes,” Intact noted.

In commercial lines, direct premiums written for the fourth quarter increased 6% from $594 million in 2013 to $631 million last year. The combined ratio for the fourth quarter dropped from 100.1% to 90.5%.