RBC Insurance division produces higher net income on home & auto

Home and auto insurance performance is the key factor in increased net income, says Royal Bank of its RBC Insurance division, along with Canadian life and reinsurance progress. The division reports that for the third quarter ending July 31, 2003, net income was $57 million, a 16% jump over third quarter 2002, which produced net income of $49 million.For the last three quarters, net income was $167 million, a 20% increase over the same period a year prior.The company’s U.S. subsidiary of RBC Liberty Insurance produced no net income during the quarter, as a result of the purchase of Business Men’s Assurance Company of America in May of this year.While premiums were up in most lines of insurance business, a drop in European life reinsurance business caused earned premiums to drag by $51 million for the quarter. Earned premiums came in at $372 million versus $423 million for third-quarter 2002.However, domestic earned premiums were up 2% for the quarter, on the back of home and auto premium growth, and despite a drop in premiums from RBC’s travel insurance operation.Costs were up due to the purchase of Business Men’s Assurance, as well as the expense of higher business volume. And return on equity declined 220 basis points to 24.4% from 26.6% from a year previous, due to higher average common equity attributed to the insurance division.The company notes that while last year’s results for the insurance division led to reserve strengthening, third-quarter results show increasing stability for the segment.