Intact sees insurance-rate hikes as Canada floods hit profit
By Cameron French
TORONTO (Reuters) - Canadian insurer Intact Financial Corp (IFC.TO: Quote) reported a stronger-than-expected profit on Wednesday, driving its shares as much as 5 percent higher, while its CEO said home insurance rates would have to rise after a series of costly disasters.
Intact's net profit in the second quarter was cut by a C$105 million ($102 million) charge due to floods that hit Alberta in June. The company has warned that a flood in Toronto and a deadly train derailment in Quebec earlier this month would carve an additional C$134 million from profit in the third quarter.
"We're seeing catastrophes come in different forms, in greater quantity, in greater intensity across the nation," Intact Chief Executive Charles Brindamour told Reuters in an interview.
The Alberta flood last month shut down the oil industry capital of Calgary, displacing more than 100,000 people and cutting off power for days.
In Toronto, a severe rainstorm in early July caused flooding, power cuts and transit chaos across the city.
In Lac-Mégantic, Quebec, 47 people were killed when a runaway train hauling 72 oil tanker cars derailed and exploded in the heart of the small town.
Brindamour said the company was targeting a 10 percent reduction in its combined ratio - a measure of a company's claims versus its premiums - and would accomplish this by advising clients on how to reduce risks from floods and other disasters, while pushing rates higher.
"Clearly, rates going forward will have to take into account the fact that these extreme weather events are happening at a pace that is greater than what we anticipated in the past few years," he said. Continued...