Severe wind events drive up Intact’s Q1 loss ratio

Intact Financial Corp. said Tuesday it is “confident” that the Ontario government will “implement material changes” in auto insurance, while reporting a combined ratio of 98.2% during the first three months of year, up 5.7 points from 92.5% during the first quarter of 2016.

Despite a 6.2-point deterioration in its personal auto combined ratio, Toronto-based Intact said Tuesday it is “encouraged” by some recommendations released April 11 by a special advisor on auto insurance to Ontario Finance Minister Charles Sousa.

Intact’s higher combined ratio was “mainly due to an increase in weather related claims” and also lower favourable prior-year development, Intact said in its management discussion and analysis, released Tuesday.

Catastrophe losses of $88 million “were significantly higher than the historical average for a first quarter,” Intact said in its management discussion and analysis. “There were four severe wind events in Central and Atlantic Canada, mainly impacting personal lines, and two commercial fires.”

Separately, Intact reported Wednesday that Sylvie Paquette, former president and chief operating officer of Desjardins General Insurance Group, has been elected to Intact’s board of directors. Intact’s annual shareholders’ meeting was held Wednesday in Halifax.

Intact reported direct premiums written of $1.997 billion during Q1 2017, up 3% from 1.93 billion in Q1 2016.

Broken down by segment, Intact reported a combined ratio of 102.6% in personal auto (up 6.2 points from 96.4% in Q1 2016), 92.8% in personal property (up 9.9 points from 82.9% in Q1 2016), 95.8% in commercial P&C (up 2.4 points from 92.4% in Q1 2016) and 96.2% in personal auto (a 1.3-point improvement from 97.5% in Q1 2016).

The cat loss ratio including reinstatement premiums was 11.5% in personal property, up 9.4 points from 2.1% in Q1 2016. This was a result of severe wind events in Central and Atlantic Canada, Intact said.

Direct premiums written in commercial P&C dropped 2%, from $377 million in Q1 2016 to $370 million in the latest quarter. Direct premiums written were up in all other lines.

During the latest quarter, Intact reported direct premiums written of $803 million in personal auto, $414 million in personal property and $157 million in commercial auto.

Intact said its direct premiums written in commercial auto were up 9% from $144 million in Q1 2016 “on the back of strong growth initiatives in specialty lines including new products for the sharing economy.”

Net investment income was essentially unchanged, at $105 million in the latest quarter and $104 million in Q1 2016.

Net income was $146 million in Q1 2017, down 4% from $152 million during Q1 2016.

In its MD&A, Intact referred to Fair Benefits Fairly Delivered: A Review of the Auto Insurance System in Ontario, a report released April 11. Written by David Marshall, former president of the Workplace Safety and Insurance Board (WSIB), the report contains 35 recommendations.

Marshall was appointed in 2015 to review and make recommendations on Ontario auto.

In its budget document released April 27, the ruling Liberals say they are “reviewing” Marshall’s report “and will be hosting consultations in the coming months.”

Marshall recommended in his report that a new regulator be established, which in turn should establish a roster of hospital-based independent examination centres. Those IECs, unlike the designated assessment centres that existed until 2006, would not be “concerned in any way with approving or denying a claim,” Marshall wrote.

In its MD&A, Intact also noted Marshall recommends “evidence based programs of care to effectively treat common types of traffic injuries” and to create a “regulatory structure that allows quick response to current market conditions or to rapidly accommodate technology driven change.”

Intact officials are “confident that the Government understands the serious impact of the current inflationary trends and will continue to work quickly, with the support of Mr. Marshall, to consult, develop and implement material changes that will serve to benefit Ontario drivers,” the firm said in its MD&A.