Definity Financial Corporation Reports Third Quarter 2024 Results
TORONTO, Nov. 7, 2024 /CNW/ - (TSX:DFY)
(in Canadian dollars except as otherwise noted)
Highlights
Gross written premium1 growth of 9.9% in Q3 2024, on robust underlying personal auto activity driven by achieved rates and increasing unit counts, as well as continued momentum in commercial insurance. Gross written premium growth was 12.2% excluding the premiums of our exited line, Sonnet Alberta personal auto, from both periods
Combined ratio1 of 103.4% in Q3 2024 driven by core accident year improvements along with disciplined expense management, offset by a record 17.3 percentage points of catastrophe losses1 which primarily impacted personal property
Operating net income1 of $14.6 million in Q3 2024 compared to $18.0 million in Q3 2023, resulting in operating EPS1 of $0.13; trailing 12-month operating ROE1 was 10.7%
Financial position remained strong, with book value per share1 of $26.96, 17.9% higher than a year ago
Executive Messages
"Wildfires, flooding, and storms across Canada reached historic levels this summer. As impacted customers and communities work to rebuild and recover, our robust catastrophe response capabilities again delivered outstanding support. From a financial perspective, these events had a significant effect on our underwriting performance, representing a more than 17-point impact to our combined ratio, which was well above expectations. Despite this, we delivered strong premium growth and solid underlying performance across all lines of business. Our results also benefitted from ongoing expense efficiencies, healthy levels of net investment income, and strong contributions from our insurance broker platform, all of which resulted in third quarter operating net income of $14.6 million, or $0.13 per share."
– Rowan Saunders, President & CEO
"We maintained our strong financial position, with capital markets contributing to the substantial improvement in book value per share, up 17.9% compared to a year ago despite experiencing $218 million in net catastrophe losses in 2024. Our catastrophe response teams, product design, focus on accumulation management and risk selection enabled Definity to mitigate losses from the summer's events to well below what our market share would indicate. Operating net income was resilient in the quarter, benefitting from the repeatable nature of net investment income and distribution income, leading to an operating ROE of 10.7%. We remain confident in our ability to advance our strategic objectives while delivering on our financial targets."
– Philip Mather, EVP & CFO
Consolidated Results
(in millions of dollars, except as otherwise noted)
Q3 2024
Q3 2023
Change
2024 YTD
2023 YTD
Change
Insurance revenue
1,095.5
984.1
11.3 %
3,133.5
2,846.5
10.1 %
Gross written premiums1
1,143.3
1,040.0
9.9 %
3,338.6
2,972.0
12.3 %
Net underwriting revenue1
981.8
903.6
8.7 %
2,836.5
2,620.2
8.3 %
Claims ratio1
74.5 %
72.9 %
1.6 pts
65.8 %
66.5 %
(0.7) pts
Expense ratio1
28.9 %
29.6 %
(0.7) pts
30.1 %
31.3 %
(1.2) pts
Combined ratio1
103.4 %
102.5 %
0.9 pts
95.9 %
97.8 %
(1.9) pts
Insurance service result
25.6
50.4
(24.8)
315.4
276.5
38.9
Underwriting (loss) income1
(33.1)
(22.8)
(10.3)
115.4
57.9
57.5
Net investment income
49.0
46.3
2.7
147.1
130.1
17.0
Distribution income1
15.8
11.2
4.6
43.0
30.5
12.5
Net income (loss) attributable to common shareholders
104.8
(48.3)
153.1
313.8
124.2
189.6
Operating net income1
14.6
18.0
(3.4)
199.8
147.2
52.6
Q3 2024
Q3 2023
Change
2024 YTD
2023 YTD
Change
Per share measures (in dollars)
Diluted earnings (loss) per share
0.90
(0.42)
1.32
2.69
1.06
1.63
Operating earnings per share1
0.13
0.15
(0.02)
1.71
1.26
0.45
Book value per share1
26.96
22.87
4.09
Return on equity
Return on equity ("ROE")1
18.9 %
12.3 %
6.6 pts
Operating ROE1
10.7 %
8.8 %
1.9 pts
Gross written premiums ("GWP") for Q3 2024 increased by $103.3 million or 9.9% compared to Q3 2023, with growth across all our lines of business. GWP growth was 12.2% excluding the premiums of our exited line, Sonnet Alberta personal auto, from both periods. Personal lines GWP was up 8.9% (12.0% when excluding the premiums of our exited line from both periods), driven by growth in our broker channel underpinned by strong auto rate increases and unit count increases. Commercial lines GWP increased 12.6% driven by strong retention and rate achievement in a firm market environment in our core segments. Year to date, GWP increased by $366.6 million or 12.3% compared to 2023. Personal lines GWP increased 11.6% and commercial lines GWP increased 14.0%.
Underwriting loss for Q3 2024 was $33.1 million and the combined ratio was 103.4%, compared to an underwriting loss of $22.8 million and a combined ratio of 102.5% in Q3 2023. The combined ratios in both periods were impacted by significant catastrophe losses, which amounted to 17.3 percentage points in Q3 2024 compared to 13.5 percentage points in Q3 2023. The increase in catastrophe losses in Q3 2024 was partially offset by improvements in the core accident year claims ratio and the expense ratio. Year to date, our underwriting income increased by $57.5 million and led to a combined ratio of 95.9%, compared to 97.8% in 2023, despite the heightened level of catastrophe losses.
Net investment income increased $2.7 million in Q3 2024 and $17.0 million year to date, due to higher interest income driven by higher fixed income yields proactively captured within the portfolio.
Distribution income was $15.8 million in Q3 2024 and $43.0 million year to date, compared to $11.2 million in Q3 2023 and $30.5 million in 2023 year to date. The increase was driven primarily by the contributions from acquisitions combined with solid underlying organic growth.
Net Income (Loss) and Operating Net Income
Net income attributable to common shareholders was $104.8 million in Q3 2024 compared to a net loss of $48.3 million in Q3 2023. The increase was due primarily to mark-to-market gains on bonds and common stocks. Year to date, net income attributable to common shareholders was $313.8 million compared to $124.2 million in 2023 year to date.
Operating net income was $14.6 million in Q3 2024 compared to $18.0 million in Q3 2023. The decrease was due to lower underwriting income, partially offset by increases in distribution income and net investment income. Year to date, operating net income was $199.8 million compared to $147.2 million in 2023.
Operating ROE was 10.7% for the twelve-month period ended September 30, 2024 compared to 8.8% for the twelve-month period ended September 30, 2023. The increase in operating ROE was driven by strong growth in operating net income, which more than offset the growth in average adjusted equity attributable to common shareholders, excluding accumulated other comprehensive loss ("AOCI").
Line of Business Results
(in millions of dollars, except as otherwise noted)
Q3 2024
Q3 2023
Change
2024 YTD
2023 YTD
Change
Personal insurance
Gross written premiums1
Auto
486.8
441.2
10.3 %
1,428.7
1,241.1
15.1 %
Property
329.1
308.0
6.9 %
888.7
835.1
6.4 %
Total
815.9
749.2
8.9 %
2,317.4
2,076.2
11.6 %
Combined ratio1
Auto
98.3 %
98.9 %
(0.6) pts
96.9 %
99.1 %
(2.2) pts
Property
124.9 %
123.3 %
1.6 pts
101.0 %
106.1 %
(5.1) pts
Total
108.8 %
108.7 %
0.1 pts
98.5 %
101.9 %
(3.4) pts
Commercial insurance
Gross written premiums1
https://www.benzinga.com/pressreleases/24/11/n41827850/definity-financial-corporation-reports-third-quarter-2024-results