Intact Financial shares fall 3.5 percent on profit miss
TORONTO (Reuters) - Intact Financial Corp's (IFC.TO: Quote) quarterly profit rose 8 percent as strong premium growth more than offset higher claims and a weaker investment performance, but the results missed analyst estimates, sending the company's shares down by 3.5 percent.
The Canadian property and casualty insurer said on Wednesday it continued to reap the benefits of last year's purchase of the Canadian arm of AXA Group (AXAF.PA: Quote) in the second quarter, which pushed up direct premiums written 46 percent to C$2.0 billion ($2.0 billion).
But net claims rose to C$948 million from C$699 million due to severe storms in Ontario and Quebec in late May.
Net income was C$133 million, or 98 Canadian cents a share, compared with C$123 million, or C$1.12 a share, a year earlier. The drop in EPS was due to an increase in shares outstanding, including shares issued to finance the AXA purchase.
Excluding integration costs, the insurer earned C$1.11 a share, falling short of analysts' expectation of a profit of C$1.41 a share, according to Thomson Reuters I/B/E/S.
At mid-afternoon on Wednesday, the company's shares were down 3.5 percent at C$62.27 on the Toronto Stock Exchange, underperforming an otherwise flat Canadian financials index.
Toronto-based Intact, Canada's largest P&C insurer, is the former Canadian insurance arm of Dutch financial group ING. It sells insurance under the Belair Direct and Grey Power Banners.
Net investment income rose 25 percent due to the AXA acquisition, but gains on investments fell due to weak stock markets and plunging bond yields.
"Declining yields have results in lower than expected investment income and we expect that to continue in the coming quarters," Chief Financial Officer Mark Tullis said on a conference call. Continued...