A tow truck operator responds to submerged vehicles at an underpass at Parkside Drive and Lake Shore Blvd. in Toronto on July 16.Christopher Katsarov/The Canadian Press
Canada’s largest property and casualty insurer Intact Financial Corp. IFC-T saw a major jump in profit as the industry continues to raise the cost of home and auto insurance premiums as a result of rising natural disaster claims.
Intact reported net income in its second quarter climbed to $758-million or $4.04 a share, compared with $260-million or $1.30 a share in the second quarter of 2023.
Chief executive Charles Brindamour said the positive results were predominately owing to “excellent underlying performance” across all lines of business, as well as solid growth in its distribution channel and investment income.
Intact’s share price closed at $250.90 on Wednesday, up $6.22 from the previous day.
Intact also attributed the growth to strong increases in premiums for both personal auto and personal property insurance, which grew by 11 per cent and 9 per cent, respectively.
The rise in premiums for home and auto policyholders is an industry-wide phenomenon, as Canadian insurers are faced with disaster claims that have more than quadrupled over the past 15 years, accounting for $3.1-billion of insured losses in 2023, up from just $400-million in 2008, according to the Insurance Bureau of Canada.
Mr. Brindamour said during an analyst call on Wednesday that the recent climate events across the country have shown that “we need to double down on our climate adaptation.”
In an interview with The Globe, Intact chief financial officer Louis Marcotte said climate adaptation is one of the company’s key areas of focus. Since 2010, the company has provided more than $25-million to more than 100 climate adaption projects.
“This is where we think we can have the most impact really – in helping communities adapt to climate change and therefore doubling down on it to make sure that both consumers and businesses are better prepared to adapt,” Mr. Marcotte added.
During the company’s fiscal second quarter ended April 30, Intact saw a lower level of catastrophe claims compared to similar quarters in past years. The “limited” levels contributed to stronger growth numbers for the company, and an operating return on equity of 17 per cent, compared to 12.9 per cent the year prior.
“It is worth noting that this return still includes the impact of the $600-million of catastrophe losses from the third quarter last year,” Mr. Marcotte told analysts.
Catastrophe losses totalled $96-million for the quarter and reached $193-million for the first half of 2024.
“While this is below expectations, we still have six months to go into 2024,” he added.
In recent weeks, Canadians have seen wildfires rip through the Alberta town of Jasper, while the city of Toronto was hit with a severe storm that saw 98 millimetres of rain hit the downtown core in one day.
Cars are partially submerged in flood waters in the Don Valley in Toronto.Arlyn McAdorey/The Canadian Press
Mr. Marcotte said the company is still monitoring the damages in each area but expects to see “significant losses” from the two events. He remains “comfortable” with the company’s estimate of about $900-million of catastrophe losses for the full year.
Intact’s chief operating officer Patrick Barbeau said during Wednesday’s call that the Toronto flood was really the first significant weather event for the insurer this year, and Intact’s claims operations and on-site teams were quick to respond.
“We now have a pretty good view on the volume of claims and a lot of the emergency work is done,” he added. “But we are at the early stage of the rebuild process.”
For the Jasper wildfires, Mr. Barbeau said the company’s adjusters have not yet had direct access to the site and the company is focused on contacting clients from the area to offer help in their temporary relocation process. The company insures about 700 families and businesses in the area that has been evacuated, and Intact estimates around 250 clients have suffered “significant damage.”
Mr. Brindamour acknowledged the extreme weather events in recent weeks, saying the company’s maintenance teams, on-site restoration team and Wildfire Defense Systems – a U.S private firefighting organization that has partnered with Intact – have been quick to respond and be present on the ground where possible to begin rebuilding efforts.
The company also addressed concerns on the global IT Crowdstrike outage that disrupted computer systems across multiple industries for hours July 19.
“This kind of outage from a system is not covered [in business interruption insurance],” Mr. Barbeau said. “Similar to the COVID business interruption, it requires a physical damage to trigger business interruption. Clearly in this case, it is not the case.”
For those with cyber insurance policies, Intact does not expect any significant costs as most policyholders were back online in a “short period of time.”