ING Canada reports increased third-quarter income (December 01, 2005)

Buoyed by strong underwriting results and solid investment income, ING Canada Inc. (TSX: IIC.LV) has reported a net income of $202.8 million for the quarter ended September 30, 2005, which is a 24% increase over the $163.6 million for the same period last year.

“ING Canada continued to deliver impressive earnings growth in the third quarter as a result of the positive contribution of Allianz Canada, continued strength of our underwriting activities and solid investment performance,” Claude Dussault, president and CEO of ING Canada, says. “Our underwriting income remained impressive during the quarter even though it decreased compared to the corresponding period of 2004.”

“The impact of the August 19 storms in Ontario, heavy rain across Canada, rate reductions in automobile insurance and the higher cost of claims in commercial insurance was partially offset by continued positive development of prior-year reserves.”

The company reports that “barring any unexpected developments, industry returns in automobile insurance are likely to exceed historical levels in the next four quarters.”

In auto insurance, ING Canada noted sustainability of the cost containment measures adopted by governments, as well as potential rate reductions, will continue to be the key drivers in the short term. “Automobile claims frequency remains low, and we continue to believe that it will either increase or lead to further premium reductions.”

In commercial insurance, competition is increasing, according to ING, which says that “prices are softening but continue to yield returns above historical levels. Continued increases in non-residential construction costs are putting additional pressure on underwriting margins and we are encouraging our brokers to ensure that their commercial customers maintain adequate insured values.”

Overall, the company predicted the “underwriting results of the industry will not remain at the favourable levels experienced thus far in 2005,” although it adds that it’s “scale advantage, underwriting discipline and pricing” would nevertheless allow the company to outperform its competitors’ investment returns.