Intact Financial hit by flood costs in Q2

By Staff | July 31, 2013 | Last updated on July 31, 2013
2 min read

Intact Financial reported $123 million of net operating income for Q2 2013.

That’s down $57 million over its earnings last year. And on a per share basis, its net operating income decreased by $0.46 to $0.89.

The company says this drop reflects a pre-tax loss of $143 million net of reinsurance, or an after-tax loss of $105 million or $0.79 per share. It adds the storms and flooding in Alberta weighed on profits.

Net income for Q2 2013 was $103 million, compared to $129 million for the same period in 2012. Also, solid underlying results in Intact’s auto division were outweighed by higher catastrophe losses, along with less favourable current-year results.

CEO Charles Brindamour says, “Our operating performance remained sound this quarter, despite providing approximately $300 million to help our customers in Alberta.”

Read: How to protect property from floods

Intact’s board of directors declared a quarterly dividend of 44 cents per share on its outstanding common shares. It also declared a quarterly dividend of 26.25 cents per share on the company’s Class A Series 1 and Class A Series 3 preferred shares. The dividends are payable on September 30, 2013.

Investment gains

Net investment gains, excluding fair-value-through-profit-and-loss bonds, were $7 million in Q2 2013. That compares to a loss of $27 million a year ago.

Since the beginning of the year, the company has recorded investment gains of $41 million, compared to $27 million for the same period in 2012. Total investments amounted to $12.3 billion at the end of the quarter, up $0.6 billion from one year ago.

Capital management

The company’s financial position remained solid at the end of the quarter, with a minimum capital test of 197% and $486 million in excess capital. The company’s book value per share was $33.15 at the end of the quarter, 9% higher compared to a year ago.

Business outlook

The company says the industry’s premium growth is likely to evolve at a similar pace to that of the last 12 months. It expects the current hard market conditions in personal property to accelerate as the active summer catastrophe season negatively impacts industry results.

What’s more, Brindamour says “the devastating events of recent weeks [remind us] that weather events are becoming more extreme and frequent. So, open and transparent dialogue will need to occur between governments, the industry and other stakeholders to ensure…the home insurance product is adapted to today’s climate reality.”

Read: Regulation top concern for insurance industry

However, Intact says it’s positioned to outperform the faltering P&C insurance industry due to its pricing and underwriting discipline, claims management capabilities, prudent investment and capital management practices and solid financial position.


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