ING Canada Inc. (TSX: IIC) reported a 2007 Q2 net income of Cdn$194.3 million, down 5.7% from the Cdn$206 million it reported in 2006 Q2.
The company said its growth in direct premiums written “remained strong during the quarter despite overall rate reductions,” amounting to Cdn$1.205 million (a 3.7% increase over the same period last year, excluding industry pools).
For the first six months of the year, net income amounted to Cdn$320.5 million compared to Cdn$391.8 million over the same period in 2006.
ING Canada president and CEO Claude Dussault said the “strong performance” of the company’s investment activities “softened the impact of a reduced contribution of our underwriting activities to our overall profitability”
Dussault noted underwriting income declined in 2007 Q2 “as a result of an increase in the severity of property losses and higher damages resulting from seasonal storm activities in some regions.”
A share buyback completed earlier this year allowed the company to post a return on equity (ROE) of 18.3% over the last twelve months.
ING Canada’s combined operating ratio (COR) in 2007 Q2 was 90.6%, a 7.9-point increase over its 2006 Q2 COR of 82.7%
The company issued a “current outlook” in a press release, in which it stated its expectation that top-line growth and underwriting ratios for the property and casualty insurance industry will “trend back towards historical levels.” Also, auto reforms would figure prominently in the future, the company noted.
“The cost containment measures in automobile insurance adopted over the years will continue to be a key performance driver,” the company said. “While automobile claims frequency continues to remain low, increases in frequency or severity of claims may lead to rate increases.”
Also, the company noted, commercial insurance markets “remain competitive and prices continue to soften.” Non-residential construction cost increases, it added, “are also exerting pressure on commercial insurance underwriting margins.”