TORONTO - A stormy summer season left insurer Intact Financial Corp. (TSX:IFC), the former ING Canada, with a loss in the third quarter as more people filed claims, while its chief executive said higher premiums could be developing across the industry.
A positive automobile underwriting performance was offset by severe weather events over the summer that mainly affected property insurance results, president and CEO Charles Brindamour said on a conference call Wednesday.
"Our underwriting results were disappointing with a combined ratio of 105.2 per cent, largely due to several significant storms, including hail in Alberta and heavy rain and tornadoes in Ontario and Quebec," Brindamour said.
"As a result, our net catastrophe claims were roughly four times higher than the same claims last year."
Brindamour said the company is seeing signs that insurers are being more selective, restricting volume in personal insurance lines and specific sections in business insurance.
"Let's just be clear, we're not in a hard market. We're seeing signs of change and this is progressing as we anticipated," he added.
"These conditions support a better pricing environment in the near to mid term."
Canada's largest home and auto insurer reported a net loss of $8 million or seven cents per share in the quarter ended Sept. 30, as it booked lower underwriting results and a non-cash accounting loss. The results marked a drop from profit of $57.3 million or 47 cents per share a year earlier.
Analysts had expected earnings per share of 24 cents, according to estimates compiled by Thomson Reuters. Typically, such estimates strip out the impact of one-time financial items.
Net operating income for the quarter fell 80 per cent to $21.6 million or 18 cents per share.
Intact, which changed its name from ING Canada earlier this year when it went public, said it recognized a non-cash accounting loss of $30.4 million during the quarter related to the increase in value of its preferred stock portfolio.
Brindamour said that excluding storm claims, underlying home insurance results showed improvement over last year.
Direct premiums written increased four per cent in the quarter to $1.1 million with gains in all areas of its business reflecting increases in premiums and number or risks insured.
The Toronto-based company said in its financial report that it expects insurance premiums will climb higher in all of its business lines because of deteriorating margins last year, lower returns from investment portfolios, and lower excess capital levels.
Automobile insurance rates in Ontario have risen an average of 6.3 per cent so far this year, it added.
Intact employed 6,700 people at the end of 2008 and has been looking at acquisitions in a bid to grow in the Canadian market.
"Since we've been true to our discipline in the past few years, we're in a position to grow our business faster while expanding our margins," Brindamour said, noting that the company has more than $630 million in excess capital.
"We remain well-positioned to take advantage of future growth opportunities."
Intact's shares rose 22 cents to $35.65 in Wednesday trading on the Toronto Stock Exchange.