TORONTO (Reuters) - Intact Financial Corp (IFC.TO) said on Wednesday its first-quarter profit was essentially unchanged from the year-before period, missing expectations, as a rise in winter-related insurance claims offset stronger premiums.
Shares of Canada's largest property and casualty insurer hit a 14-month low following the release of its results. By mid-morning the stock was down 2 percent at C$58.99, the weakest performance among Toronto-listed financial companies.
Net profit for the quarter ended March 31 was C$174 million ($173.15 million), or C$1.27 a share. That compared with a profit of C$173 million, or C$1.30 a share, in the year-before period.
On an operating basis, the Toronto-based company earned C$1.27 a share, shy of the profit of C$1.32 a share expected by analysts, according to Thomson Reuters I/B/E/S.
Direct premiums written rose 9.2 percent to C$1.5 billion, but net claims incurred climbed 19.3 percent to C$1.1 billion as winter conditions in the first quarter were more severe than they were the year before.
"(That) led to an increase in claims frequency across all lines of business," Intact Chief Executive Charles Brindamour said on a conference call.
All told, underwriting income slid to C$83 million from C$123 million.
Intact, which was formerly the Canadian insurance arm of ING Groep, has built itself up with acquisitions over the past few years. It purchased recreational insurer Jevco for C$530 million in September and bought the Canadian operations of French insurer AXA for C$2.6 billion in 2011.
Unlike Canada's life insurance industry, which is dominated by four players, the country's property and casualty sector is fragmented. Acquisition targets have emerged as foreign-based players have sold off their Canadian subsidiaries to boost capital levels.
Intact's shares have been under pressure this year due to rising pressure in Ontario to cut auto insurance rates, which have soared in recent years.
The Ontario provincial government's budget, which was unveiled last week but has not been ratified in the legislature, vows to cut auto insurance rates by 15 percent, although the budget gave few details on how that might be done.
Intact said that while such a development could hurt premium growth, the company expects it would be accompanied by cost reductions.
"As such, we do not foresee material margin deterioration," the company said in a statement.
In a separate release, Intact said it had authorized a normal course issuer bid to buy back up to 5 percent of its common stock over the next 12 months.
Editing by Peter Galloway