The Desjardins Movement reports a significant improvement in its insurance activities in the second quarter of 2024, compared to those of 2023, for a third consecutive quarter.
By adding the contribution to surpluses from the wealth management and personal insurance sectors with those from property and casualty insurance, these stand at $531 million (M$) in the second quarter of 2024.
In the same quarter in 2023, these two segments had recorded a surplus of $211 million. The surpluses thus show an increase of 152% over one year.
Desjardins attributes this result “to the results of the “Property and Casualty Insurance” sector, due to the reduction in claims combined with the increase in revenues from automobile and property insurance activities.”
Damage insurance
In property and casualty insurance, surpluses are $300 million in the second quarter of 2024, compared to surpluses of $56 million reported in the same quarter of 2023.
Net income from insurance activities was $460 million in the second quarter of 2024, compared to $154 million recorded in the same quarter in 2023.
Direct premiums written in this segment reached $2.1 billion (B$) in the second quarter of 2024. This represents an increase of $172 million or 9% compared to the second quarter of the previous year.
In its management report, Desjardins notes the absence of disasters and major events in the last quarter. By comparison, the ice storm of April 2023 and the forest fires in Nova Scotia marked the second quarter of 2023.
Wealth management and personal insurance
For the “Wealth management and personal insurance” sector, surpluses stood at $231 million in the last quarter, compared to surpluses of $155 million a year earlier.
The cooperative group attributes this result to the increase in the net insurance financial result linked to the gain on the disposal of buildings and to the favorable impact of the hedging of interest rate risk. These factors were partly offset by a favorable adjustment of the parameters of the discount curve of liabilities made during the last quarter.
Desjardins also highlights the increase in other income linked to the gain on the disposal of the interest in Gestion Fiera inc. et Capital SEC Fair
Net income from insurance activities reached $147 million in the last quarter, compared with $133 million a year earlier.
Group insurance premium growth reached 7% in the second quarter of 2024, compared to the previous year.
Annuity premiums also saw spectacular growth, from $233 million in the second quarter of 2023 to $504 million in the second quarter of the current fiscal year, mainly from group retirement savings linked to the addition of two other major groups.
Losses
In property and casualty insurance, the loss ratio stood at 58.8% in the second quarter of 2024, compared to 74.1% in the same quarter in 2023. However, the loss ratio for catastrophes and major events is no longer disclosed.
The loss expense ratio decreased slightly in the last quarter to 25.6%, compared to 26% in the same period in 2023.
As a result, the updated combined ratio was 78.5% for the last three months of 2024, compared to 95.9% for the same period of 2023.
As of March 31, 2024, Desjardins’ total assets reached $444 billion. For the first six months of the year, assets are up $21 billion or 5%.
Transaction close
The closing of the transaction between Desjardins General Insurance Group (DGAG) and the Prince Edward Island Insurance Company (ICPEI) took place during the last quarter, i.e. on May 31, 2024.
Announced at the end of March 2024, the acquisition of all of the shares of this insurer allows Desjardins “to diversify the insurance offering and better meet the insurance needs of businesses” through the brokerage network. DGAG held a minority stake in this insurer since its privatization in February 2023.
In its management report, Desjardins determines the identifiable fair value of the assets acquired and liabilities assumed on a provisional basis. The accounting for the business combination is expected to be completed in the coming quarters.
The transaction notably gave rise to the recognition of an insurance contract liability of $85 million and a goodwill of 33 M$. What goodwillthat is, the difference between a financial value identified during an acquisition and its market value after a given period, is attributable to the synergies expected to result from the acquisition of ICPEI.
