RBC Insurance income rises on reinsurance, Canadian ops

Royal Bank is reporting lower returns from its insurance division in the second quarter ending April 30, 2004, down to 27% from 28.6% a year earlier. However, net income from RBC Insurance was up 16% to $65 million from $56 million, largely on the back of reinsurance and Canadian insurance operations. Net earned premiums dropped to $377 million from $380 million during the same period, although this was offset by soaring investment income and fee income, which drove revenue up to $516 million from $466 million the year prior.
Growth in the reinsurance and Canadian insurance operations was dragged down by lower earnings in the U.S. insurance division. In the second quarter of this year, U.S. operations posted a net loss of $2 million, compared to net income of $7 million a year ago.
The drop in return on equity is largely the result of RBC’s acquisition of Business Men’s Assurance Co. of America, reflecting higher average common equity in the insurance division.
For the first six months of the fiscal year, RBC Insurance posted net income of $126 million, up 15% over the same period last year.