Canadian Underwriter

Why Intact beat its own expectations in recent quarters

February 9, 2022   by Jason Contant

Improved financial results

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Intact Financial Corporation expects its combined ratio to marginally improve in Canada as it continues to beat its own financial result expectations, the insurer’s chief financial officer says during an earnings call.

Canada’s largest insurer saw operating direct premiums written (DPW) increase 33% from $2.47 billion in Q4 2020 to $3.28 billion in Q4 2021 for its Canadian segment. The combined ratio changed from 84.0% in Q4 2020 to 84.4% in Q4 2021. It decreased 1.3 points last year to 86.7% from 88.0% in 2020.

Company-wide, Intact witnessed a combined operating ratio of 87.8% in Q4 2021, a 2.2% increase from 85.6% in Q4 2020. Year-over-year, the combined ratio improved 0.3 points from 89.1% in 2020 to 88.8% last year.

Intact CFO Louis Marcotte says during a conference call Wednesday that he expects the Canadian segment to “marginally improve” its combined ratio, potentially offset by a higher combined ratio in the United Kingdom.

“[So,] the overall mix is maybe not changing all that much,” Marcotte says. “You have to take into consideration the geographies we’ve added and the combined ratios that we have mixed with it. I think we will improve the combined ratios; I don’t know that’s its structurally so different that we would have it sustainable at the levels that we’re seeing in the recent quarters.”

At the beginning of June 2021, Intact and Danish insurer Tryg A/S completed their acquisition of London, U.K.-based RSA plc. As part of the transaction, Toronto-based Intact acquired RSA Canada and some of RSA’s international operations.

Marcotte adds that the actions the insurer has taken over time on profitability, including rate and product changes, have also kicked in. That, combined with “maybe a bit of milder weather and other, I will say, contextual events, have enabled us to deliver really, really strong margins,” he says.

“I will say the combined ratios structurally should improve,” Marcotte adds. “And it depends on the mix of business we acquire. So, in Canada, I think we are improving our performance, adding a big book, and applying our analytics and risk segmentation to that book.”

Intact saw operating direct premiums written (DPW) increase 33% from $2.47 billion in Q4 2020 to $3.28 billion in Q4 2021 for its Canadian segment. Year-over-year, operating DPW increased 18% from $10.21 billion in 2020 to $12.02 billion last year. Company-wide, DPWs were $5.02 billion in Q4 2021, up 75% from $2.87 billion in Q4 2020 (mainly due to RSA). Year-over-year change was 45% – from $12.04 billion in 2020 to $17.28 billion in 2021.

Underwriting income for Canada also increased to $513 million in Q4 2021, from $392 million in Q4 2020 (2021 was $1.52 billion compared to $1.15 billion in 2020).

“We’ve taken a fairly cautious stance in terms of the high volatility of the environment in which we operate from a reserving point of view that clearly contributes as well,” Intact CEO Charles Brindamour says during the conference call in regards to the insurer’s strong financial results.

RSA also delivered a 12% accretion in the seven months since Intact’s largest acquisition to date closed. “Better than what we expected,” Brindamour says. “When you put all these things together, you get very strong performance.”


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