What Intact expects from personal and commercial insurance

Now that pandemic-related restrictions have been lifted, Intact expects to see moderate growth in its auto and personal property lines, while commercial lines are positioned for better performance, the CEO said. ‘Intact Financial Corporation at Intact’s First Quarter 2022 Earnings Conference.

In Canada, Intact’s personal auto premiums increased 37% year-over-year,mainly driven by RSA and the impact of pandemic relief provided last year,” said CEO Charles Brindamour.

“The combined ratio of 93% was in line with our expectations, reflecting typical first quarter seasonality,” Brindamour said. “Overall, our personal auto business is very strong, thanks to the profitability measures we took before the pandemic, and I continue to expect it to be in the lower end of our mid-range target range. 90s this year.”

That said, “by comparing it to the combined ratio of last year, we see a slight increase,” adds Isabelle Girard, senior vice-president of personal lines insurance. The company attributes its 93% automotive combined operating ratio to normal winter weather and increased consumer driving activity.

But Intact expects overall industry premium growth to be suppressed, returning to low to mid-single digit growth, attributing this to driving patterns returning to pre-pandemic norms.

“In terms of the industry, a gradual recovery in claims frequency and inflation are pushing insurers to slowly resume reductions as we had anticipated. However, we expect premium growth to remain moderate in the short term,” Brindamour said.

In personal property, Intact’s premiums increased by 38%, again to the credit of the RSA and “5 points of organic growth thanks to firm market conditions”.

The combined operating ratio remained strong at 87.6%, but was 10.2 points higher than last year, reflecting a 6.1 point increase in catastrophe losses.

“We are committed to operating our personal assets at a combined ratio of less than 95, even when losses are high,” Brindamour says.

Intact expects firm market conditions to continue for the industry as personal property is subject to harsh weather conditions and inflation over time. Industry premium growth is expected to reach mid single digits over the next 12 months.

Intact commercial insurance premiums increased 36%, including 13 points of organic growth to 88.5%.

“The combined ratio remains robust, reflecting strong reductions in a challenging market,” Brindamour said. “Our commercial insurance business is well positioned to maintain performance low at 90 or even better over the long term.”

However, Intact expects industry premium growth for commercial lines to reach above single digits over the next 12 months.

“We expect market conditions to remain favorable due to elevated catastrophic losses, inflationary pressures and rising reinsurance costs,” Brindamour said.

Featured image by iStock.com/Farknot_Architect

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