Intact Financial reports ‘elevated’ losses driven by weather events

The total catastrophe losses for the quarter were approximately $416 million on a pre-tax basis and net of reinsurance, reported Intact. Photo by Peter J Thompson/Postmedia

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Property and casualty insurance provider Intact Financial Corp. reported what it described were “unusually high level” of catastrophe losses and large losses in the second quarter, which were higher than anticipated.

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Intact released the figures ahead of its quarterly earnings results at the end of July, estimating “elevated” losses at a combined $247 million above expectations on a pre-tax basis and net of reinsurance, or $1.08 per diluted common share after-tax.

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Catastrophe losses in Canada were driven by weather events, including torrential storms causing flooding, water and wind damage across several regions, it said. The total catastrophe losses for the quarter were approximately $416 million on a pre-tax basis and net of reinsurance.

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“At an industry level, these events reinforce firm market conditions,” chief executive Charles Brindamour said in a news release. “Our claims teams and extensive supply chain network are mobilized to provide our customers fast, local support.”

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The catastrophe losses miss was mainly driven by United Kingdom and Ireland operations, which were primarily due to commercial fires. This was offset by United States catastrophe losses which were null and better than expected. The Canadian loss ratio was only 10 basis points above the U.S.

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In addition, the insurer saw “unusually high level” of large losses, with the impact above expectations in the quarter on the underlying current year loss ratio of three points overall.

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It said the losses included a higher frequency of fire claims and other property losses across various geographies and risk segments, but no discernable patterns identified.

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In a note, Jeffries analyst John Aiken said he anticipates the market will shrug off the impact of the higher than anticipated catastrophe losses, with the second quarter a seasonally higher quarter. However, he said the additional large losses will likely give investors a pause.

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He noted that the losses were more likely a factor of bad timing than a degradation of the operating environment.

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“While near term profitability is impeded, we suspect that this will further the hard domestic pricing and, ironically, can be viewed positively,” Aiken wrote.

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