Q1 premiums up 77.8% for Desjardins General Insurance after State Farm Canada acquisition

Desjardins General Insurance Group Inc. released Thursday its financial results for the three months ending March 31, reporting a 7.3-point deterioration in its loss ratio, a 343% increase in net income and organic growth in net premiums written of 7%.

Levis, Quebec-based DGIG said its direct written premiums in the most recent quarter were $908.7 million, up 77.8% from $511.2 million during the first three months of in 2014.

DGIG reported an underwriting loss of $9.3 million in the latest quarter, compared to $6 million in Q1 2014.

DGIG attributed the increase in premiums to the acquisition of the Aurora, Ont.-based Canadian operations of State Farm, originally announced in January, 2014. The transaction closed Jan. 1, 2015.

Desjardins is using the State Farm brand in Ontario, Alberta and New Brunswick. The State Farm-branded home and auto insurance is now written by Certas Home and Auto Insurance Company, a subsidiary of Desjardins.

DGIG reported organic growth – from Q1 2014 to the latest quarter – of 7% in direct premiums written.

The loss ratio, excluding market yield adjustment, increased 7.3 points, from 72.4% in Q1 2014 to 79.7% in the latest quarter. Over the same period, DGIG’s combined ratio excluding MYA increased 0.3 points, from 101% in Q1 2014 to 101.3% in the most recent quarter.

Q1 net income more than quadrupled, from $16.7 million in Q1 2014 to $73.7 million this year.

DGIG is a subsidiary of Desjardins Group, whose services include personal and business banking, investment banking and insurance. Desjardins’ property & casualty insurance segment includes both DGIG and Western Financial Group Inc. of High River, Alta., whose operations include a network of more than 160 brokerages in Western Canada. The home and auto insurance sold by the Canadian Imperial Bank of Commerce and the Bank of Nova Scotia are written by Desjardins subsidiaries.

In Ontario, Alberta and Quebec, DGIG writes auto, property, pet, motorcycle and recreational vehicle coverage. DGIG also writes business insurance – including property, liability, equipment breakdown and business interruption – in Quebec.

DGIG uses telematics – under the Ajusto and Intelauto brands – to monitor behaviour of its auto policyholders, who can get discounts for good driving behaviour. With Ajusto, DGIG monitors sharp acceleration, braking, cornering, speed, time of day and distance travelled.

Ajusto is available both as an on-board device and as a mobile app for devices running Apple Inc. iOS and Google Inc.’s Android operating systems.

With the State Farm acquisition, Desjardins is essentially tied with Aviva Canada as the Number 2 P&C insurer in Canada, behind Intact Financial Corp.

The State Farm Canada acquisition included State Farm’s P&C, life insurance, mutual fund, loan and living benefits operations.