ING Canada reports 22.7% drop in 2006 Q3 profit

ING Canada Inc. (TSX: IIC) has reported a 2006 Q3 profit of Cdn$156.8 million, down Cdn$46 million (or 22.7%) from the Cdn$202.8 million reported in 2005. “The decline from an exceptionally strong third quarter in 2005 reflects lower realized investment gains as well as a reduction in underwriting income driven by lower favorable prior-year claims development,” the company announced in a press release.Net income for the first nine months of 2006 was Cdn$548.7 million, down 6.2% (or Cdn$36.2 million) from the Cdn$584.9 million reported for the first nine months of 2005. The company’s combined ratio for 2006 Q3, at 89.9%, was up marginally from the 87.7% it recorded in 2005 Q3. ING Canada president and CEO Claude Dussault said: “We continue to experience solid earnings with a return on equity of 24.6%. Our insurance businesses performed very well and the various initiatives launched over the last 12 months resulted in strong organic growth, as demonstrated by the increase in direct premiums written and the number of risks insured during the quarter.”According to ING Canada, “top-line growth for the property and casualty insurance industry continues to remain below historical levels. However, we believe underwriting results should continue to exceed historical averages.”ING Canada said automobile insurance reforms adopted by various provinces “have continued to be effective at containing and stabilizing claims costs. Furthermore, automobile claims frequency remains low and we believe frequency will either increase or continued low frequency will lead to premium reductions.”Commercial insurance markets remain “highly competitive,” the company added in a press release, and “although prices are continuing to soften, returns are expected to be above historical levels.”Direct premiums written for the quarter totaled Cdn$1.038.1 billion, an increase of $49.8 million (or 4.9%) from 2005 Q3 after excluding AGR and industry pool premiums. “The number of insured risks continued to grow during the quarter, increasing by 4%, fuelled by strong growth in personal lines,” the company observed.