Canada’s record-breaking catastrophe year has taken a steep toll on the country’s largest insurer, which reported a personal property combined ratio of 147.5% for Canada in the third quarter of 2024.
“The combined ratio of 147.5% included 72 points of Cat losses in the quarter,” Intact Financial Corporation CEO Charles Brindamour said during a 2024 Q3 financial results conference call on Wednesday. “We expect the impact of the catastrophes over the last few years will sustain hard market conditions for at least the next 12 months.”
To date, Canadian P&C insurers have paid out more than $8 billion in insured losses, the costliest year on record. Four major Cats this summer constituted the lion’s share — $7.1 billion — of the total: Calgary’s hailstorm ($2.8 billion), flooding in Quebec ($2.5 billion), Toronto flooding ($940 million) and the Jasper, Alta. wildfire ($880 million). With almost two months left in 2024, this year’s losses are more than double all of last year’s (about $3.1 billion).
Louis Marcotte, Intact’s executive vice president and chief financial officer, said during the earnings call the insurer recorded $1.2 billion of NatCat losses, or $1.7 billion on a gross basis.
“This was mainly due to the unusually severe weather events impacting three of the four most densely populated areas in Canada,” Marcotte says. “Year to date, we have incurred $1.4 billion of Cat losses, which is above our annual guidance of $900 million.”
Marcotte says the insurer will release its Cat loss guidance for 2025 along with its Q4 results, “which will take into account our science-based climate modelling, change in exposures, inflation and, obviously, recent experience.”
Business line has shown ‘long-term resiliency’
While acknowledging Q3 was a challenging quarter, Brindamour said the insurer’s “personal property business has shown long-term resiliency, with a five- and 10-year average combined ratio of 90%, including in this year. We aim to deliver a sub 95 combined ratio, even with severe weather, and we expect to end the year close to this goal.”
Guillaume Lamy, Intact’s senior vice president of personal lines, echoed the strength of Intact’s personal property business, which increased 8% in operating direct premiums written (DPW) in the third quarter due to rates and customer growth.
“Our track record is really strong in personal property,” Lamy says. “From a pricing perspective, what that means is rates are already in the double digits, and we’ll be scaling that up slightly, reflecting the recent Cat emergence.”
Brindamour says Intact has closed nearly 60% of approximately 50,000 claims related to the four summer Cats.
In personal auto, Intact’s P&C Canada segment combined ratio of 97.6% included seven points of Cat losses, more than four points above expectations, the insurer says in a press release. The four points of excess Cat losses were mainly due to the Calgary hailstorm, Brindamour adds in the conference call. He added Canadian personal auto premiums were up 12% year-over-year, driven by rates and customer growth.
Intact’s combined ratio for the Canadian commercial lines segment was 94.4%, reflecting “elevated Cat losses, largely offset by strong favourable [prior-year development] and very robust underlying performance,” the insurer says. Operating direct premiums written (DPW) were up 2%, “reflecting rate increases, offset by continued competition in large accounts.”
Canadian operating DPW totalled $4.26 billion in 2024 Q3, up 8% from $3.94 billion in 2023 Q3.
For Intact’s business as a whole, the combined ratio was 103.9% in the quarter, up 5.6% from last year. This reflected “22 points of Cat losses, offsetting otherwise strong underlying performance across all geographies.”
Feature image: Cars drive slowly through flooded streets in Sainte-Anne-de-Bellevue on the island of Montreal after heavy rains hit the area on Friday, August 9, 2024. THE CANADIAN PRESS/Peter McCabe
