May 5, 2010 / 11:30 AM / in 7 years

UPDATE 3-Intact Financial Q1 profit beats; shares hit yr-high

* Q1 oper income C$0.94/shr vs. est C$0.77/shr

* Underwriting income up more than eight-fold

* Shares up 5 percent (Adds conference call details, updates share movement)

May 5 (Reuters) - Canadian home and auto insurer Intact Financial Corp IFC.TO posted a first-quarter profit that handily beat market estimates, driven partly by strong underwriting performance across all lines of its business, sending its shares up 5 percent to a new 52-week high.

Intact’s commercial property and casualty (P&C) results were favorable, with a combined ratio of 89.2 percent. In commercial automobile, the company’s combined ratio remained strong at 95 percent, despite higher claims costs during the quarter.

Combined ratio is the percentage of premiums an insurer has to pay out in claims and expenses. A figure over 100 indicates that underwriting was unprofitable.

“Results in commercial lines are quite encouraging with both increased growth and improved underwriting performance overall,” Chief Executive Charles Brindamour said on a conference call with analysts.

While pricing conditions in business insurance remain soft, Intact said there are clear signs that pricing is firming up, particularly in Ontario, in the segments where it operates.

The company said it expects similar conditions to develop across the country over time.

“While the market is still soft and very competitive, we continue to see improvements in the small-to-medium size segments as evidenced by the increases both in rates and in our number of risks ensured,” CEO Brindamour added.

Q1 BEATS STREET

Net income for the quarter was C$119.7 million, or C$1.01 a share, compared with a loss of C$36.3 million, or 30 Canadian cents a share, in the year-ago quarter.

The company’s net operating income rose about 63 percent to C$112.3 million, or 94 Canadian cents a share.

Analysts on average had estimated net operating income of 77 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Underwriting income rose more than eight-fold to C$69 million in the quarter. The company also said direct premiums written rose 5 percent to C$914.3 million.

Intact’s net gains on invested assets, excluding held-for-trading bonds, amounted to C$9.9 million, compared with a loss of $135.3 million last year.

The company said its underwriting performance benefited from mild weather conditions in the quarter.

CEO Brindamour warned, however, that unpredictability of weather patterns coupled with increasing costs of medical claims in Ontario, pending the implementation of auto insurance reforms in the province later this year, may impact the industry’s short-term performance.

Shares of the company were up C$3.15 at C$46.81 in Wednesday morning on the Toronto Stock Exchange. They touched a high of C$45.99 earlier in the session. (Reporting by Isheeta Sanghi in Bangalore; Editing by Unnikrishnan Nair) ((isheeta.sanghi@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: isheeta.sanghi.thomsonreuters.com@reuters.net))

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