Weather-related losses dampen ING’s profit in 2008 Q2

ING Canada Inc. (TSX: IIC) reported its profits declined to Cdn$112 million in 2008 Q2, down from the Cdn$194.3-million net income it reported last year.The company said the decline was due in part to severe winter weather storms, as well as weakness in the equity markets, resulting in a reduction in investment gains.The company’s return on equity (ROE) went from 18.3% in 2007 Q2 down to 10.3% in 2008 Q2.Direct premiums written increased marginally in the quarter to Cdn$1.2 billion, up about 0.6% over the same period last year. The consolidated combined ratio (excluding a market yield adjustment) was 95.6% in 2008 Q2, up 1% from the COR recorded in the same period last year.At the same time, ING Canada’s president and CEO Charles Brindamour observed in a press release that three out of four of ING’s lines of business (excluding personal property) achieved combined ratios of below 90%.”The June 10 hail storm that hit the Montreal South Shore alone resulted in [Cdn]$26 million in damages, bringing total claims losses for the three most severe storms during the quarter to more than [Cdn]$40 million,” Brindamour said. “Our home insurance operation incurred a significant loss in the quarter as it continued to be seriously impacted by the severe weather conditions, including hail, rain, heavier precipitation and more intense windstorms.”The company said increases in water-related damages caused by weather conditions and construction costs inflation would “likely drive increases in industry premiums in personal property insurance.”In commercial lines, the company said its portfolio had “shifted towards large and medium-sized commercial accounts that tend to be less price-sensitive in the current, highly-competitive environment.”