January 26, 2009 / 1:07 PM / 9 years ago

REFILE-UPDATE 3-ING Canada posts loss on impairment charge

(Refiles to indicate story is Update 3)

* Q4 loss per share C$0.53 vs. year-ago profit C$0.77

* Impairment C$1.06 per share

* Canada not affected by 7,000 job cuts by parent

* Result released early due to ING Groep move (Adds details and stock movement)

TORONTO, Jan 26 (Reuters) - ING Canada IIC.TO said its workforce would not be affected by deep job cuts announced by its parent company, as the Canadian insurer reported a steep fourth-quarter loss on Monday, hurt by a large impairment charge from equity market weakness.

ING Canada said it would not be part of the 7,000 job losses announced by Dutch financial giant ING Groep ING.AS, which owns 70 percent of the Canadian firm.

“There is no (job) impact for us,” said Gilles Gratton, a spokesman for ING Canada. He said the return on profitability of the company’s property and casualty business is not related to economic cycles.

“We have our own economic cycle. This is not the time to scale back.”

ING Canada said it had lost C$64.1 million ($52.5 million), or 53 Canadian cents a share, compared with a year-earlier profit of C$95.8 million, or 77 Canadian cents a share.

The company said the decline reflected an impairment of C$185.8 million, or C$1.06 per share, resulting from “the deep and prolonged drop in value of Canadian common equities.” ING Canada said it invests in a variety of large dividend-paying companies.

The Toronto Stock Exchange dropped 23 percent in the fourth quarter, partly from collapsing commodity prices and concern about the global financial system.

“To be clear, the size of the impairment does not reflect upon the overall quality of our common share portfolio,” Charles Brindamour, ING Canada’s president and chief executive, said in a conference call with analysts.

“We felt that it would be prudent to recognize these losses because it was not clear to us when the market value of these securities will recover.”

It also said it had reduced its common stock portfolio by C$249 million, redirecting the money, as well as dividend and interest income received in the fourth quarter, into Canadian T-bills.

ING Canada, like other domestic insurers, has been careful to monitor its key capital ratio as big swings in financial markets raised the prospect that some insurance companies might have to bolster capital to keep up reserves.

But the company said it was in good shape, with C$427.5 million in excess capital, a minimum capital test ratio of 205 percent, no debt, and an untapped C$150 million unsecured committed credit facility.

The company’s combined ratio, a measure of how much money was spent on claims and expenses compared with how much was earned in premiums, increased to 98.9 percent from 93.2 percent a year earlier.

Direct written premiums — premiums collected from policyholders before deducting reinsurance premiums — rose 0.7 percent to C$968.2 million.

Return on equity for the past 12 months fell to 4.4 percent from 15.4 percent.

ING Canada was not scheduled to release its results until mid-February, but pushed up the date after its parent company said earlier on Monday that it would take a 2008 loss of 1 billion euros ($1.3 billion), tap into 22 billion euros of Dutch state loan guarantees and cut 5.4 percent of its global work force. Its chief executive will also step down. [ID:nLQ108896]

ING Canada said it opted to release its results to display its “strong financial position.” However, it said: “Unprecedented volatility and instability of the capital markets could result in additional investment losses for the industry.”

Looking ahead, ING Canada said the higher cost of claims in auto insurance and changing weather patterns may drive up the price of premiums this year.

ING Canada fell 0.4 percent to C$31.22 on the Toronto Stock Exchange at midafternoon. ING Canada operates under the ING Insurance, Belair Direct and Grey Power banners. ($1=$1.22 Canadian) (Reporting by Scott Anderson and Ka Yan Ng)

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