What Intact expects from personal and commercial lines

Now that pandemic restrictions have lifted, Intact expects to see muted growth in its personal auto and property lines, while commercial lines is positioned for a better performance, the CEO of Intact Financial Corporation said at Intact’s 2022 Q1 results conference.  

In Canada, Intact’s personal auto premiums grew by 37% year over year, “mostly driven by RSA and the impact pandemic relief provided last year,” CEO Charles Brindamour says.  

“The combined ratio of 93% was in line with our expectations, reflecting typical first quarter seasonality,” Brindamour says. “Overall, our personal auto business is very solid, thanks to the profitability actions we took prior to the pandemic, and I continue to expect it to deliver at the low end of our mid-90s target range this year.”  

That said, “when comparing it to last year’s combined ratio, we see a bit of an increase,” adds Isabelle Girard, senior vice president of personal lines. The company attributes its combined operating ratio of 93% in auto to normal winter weather conditions and an increase in consumer driving activity. 

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

“Looking at the industry, a gradual pickup in claims frequencies and inflation are driving insurers to slowly resume reductions as we anticipated. However, we expect premium growth to remain muted in the near term,” Brindamour says.  

In personal property, Intact’s premiums grew by 38%, again credited to RSA and “5 points of organic growth due to firm market conditions.”  

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

“We’re committed to operating personal property at a sub-95 combined ratio, even when losses are elevated,” Brindamour says.  

Intact expects firm market conditions to continue for the industry as personal property is subject to challenging weather and inflation over time. Industry premium growth is expected at a mid single-digit level over the next 12 months. 

Intact’s commercial lines premiums grew 36%, including 13 points of organic growth at 88.5%.  

“The combined ratio remains robust, reflecting strong reductions in a hard market,” Brindamour says. “Our commercial lines business is well placed to sustain low-90s or even better performance in the long run.” 

However, Intact predicts industry premium growth for commercial lines to reach upper single-digit level over the next 12 months.  

“We expect market conditions to remain favorable due to elevated cat losses, inflation pressures, and rising reinsurance costs,” Brindamour says.  

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