Desjardins Group’s P&C insurance sector posted a net deficit of $81 million in first quarter 2019, in stark contrast with the $26 million surplus in the corresponding period in 2018.
Gruelling weather conditions amplified claims frequency, causing net results to plunge. However, this loss was offset by higher net premiums, Desjardins explains.
Weather conditions to blame
“Difficult weather conditions this winter and spring had a major impact on the performance of our property and casualty insurer, due to a jump in home insurance claims compared to 2018," President and CEO, Guy Cormier stated. "These difficult conditions are ongoing, and Desjardins is wholeheartedly committed to those affected by the flooding. We are empathetic and attentive to our members and clients in these difficult times and are offering them relief. Despite the impact of weather conditions on our results in property and casualty insurance, Desjardins performed well in the first quarter due to its highly diversified activities and the good results posted by the other business segments. I'm also proud of the growth in member dividends. Our dividends are now more accessible and consistent, and more effectively recognize member loyalty. Starting this year, 840,000 more members will receive a dividend.”
Net premiums for P&C and life insurance combined rose by 8.3% to reach $2.3 billion, fuelled by activity growth in both sectors.
Wealth management and life insurance also slide
Net surpluses in the wealth management and life insurance sectors also declined compared with the first quarter of 2018, from $206 million to $139 million.
Desjardins pins this decrease on “gains on disposal of securities and real estate investments in 2018, offset by the decrease in provisions for the investment portfolio.”
$100 million decline
For the group as a whole, surplus earnings before member dividends decreased by $100 million compared with the corresponding quarter of 2018, to reach $401 million. The P&C sector’s performance dampened the sustained growth of the caisse network, Desjardins says.
$105 million was returned to members and the community, representing a $23 million increase.