TORONTO, Aug. 1, 2024
/CNW/ - (TSX: DFY)
(in Canadian dollars except as otherwise noted)
Highlights
- Gross written premium1 growth of 14.2% in Q2 2024,
on robust personal auto activity driven by achieved rates and
improving unit counts, as well as continued momentum in commercial
insurance
- Combined ratio1 of 90.1% in Q2 2024 reflecting
strong performance across all lines, bolstered by a low level of
catastrophe losses and ongoing operational expense
efficiencies
- Operating net income1 of $109.1 million in Q2 2024 compared to
$65.1 million in Q2 2023, resulting
in a 68% increase in operating EPS1 to $0.94; trailing 12-month operating
ROE1 was 10.8%
- Financial position remained strong, with book value per
share1 of $26.17, 11.7%
higher than a year ago
- During the quarter, we announced that Sonnet will discontinue
its auto insurance business in Alberta; these results will be reported as an
exited line prospectively beginning in Q3 2024
Executive Messages
"Our second quarter performance was well ahead of our key
financial targets from both top- and bottom-line perspectives.
Premiums increased to nearly $1.25
billion while our combined ratio of 90.1% benefitted from
strong performance across the business, as well as favourable
weather conditions. This resulted in a substantial underwriting
income of $93.7 million which
combined with healthy levels of net investment income and
distribution income to generate operating earnings of $0.94 per share – significantly higher than a
year ago. At the mid-point of the year, we are in an excellent
position to continue building on our profitable growth
momentum."
– Rowan Saunders, President &
CEO
"The robust results we reported in the second quarter
strengthened our operating ROE, reaching 10.8% over the past 12
months. Of note, the seasonally strong second quarter contribution
from our broker distribution platform completes the first half of
2024 on track to deliver on our full year expectations for this
business. Our performance also contributed to strong book value per
share growth of 11.7% from a year ago. With financial capacity
approaching $1.4 billion, we remain
confident in our ability to advance our strategic objectives while
delivering on our financial targets."
– Philip Mather, EVP &
CFO
Consolidated Results
(in millions of
dollars, except as otherwise noted)
|
Q2
2024
|
Q2
2023
|
Change
|
2024
YTD
|
2023
YTD
|
Change
|
|
|
|
|
|
|
|
Insurance
revenue
|
1,046.1
|
954.9
|
9.6 %
|
2,038.0
|
1,862.4
|
9.4 %
|
Gross written
premiums1
|
1,239.7
|
1,085.1
|
14.2 %
|
2,195.3
|
1,932.0
|
13.6 %
|
Net underwriting
revenue1
|
949.4
|
877.5
|
8.2 %
|
1,854.7
|
1,716.6
|
8.0 %
|
|
|
|
|
|
|
|
Claims
ratio1
|
60.0 %
|
63.7 %
|
(3.7)
pts
|
61.2 %
|
63.2 %
|
(2.0)
pts
|
Expense
ratio1
|
30.1 %
|
31.6 %
|
(1.5)
pts
|
30.8 %
|
32.1 %
|
(1.3)
pts
|
Combined
ratio1
|
90.1 %
|
95.3 %
|
(5.2)
pts
|
92.0 %
|
95.3 %
|
(3.3)
pts
|
|
|
|
|
|
|
|
Insurance service
result
|
166.2
|
132.2
|
34.0
|
289.8
|
226.1
|
63.7
|
Underwriting
income1
|
93.7
|
41.2
|
52.5
|
148.5
|
80.7
|
67.8
|
Net investment
income
|
49.9
|
42.8
|
7.1
|
98.1
|
83.8
|
14.3
|
Distribution
income1
|
17.2
|
9.8
|
7.4
|
27.2
|
19.3
|
7.9
|
|
|
|
|
|
|
|
Net income
attributable to common shareholders
|
103.8
|
71.6
|
32.2
|
209.0
|
172.5
|
36.5
|
Operating net
income1
|
109.1
|
65.1
|
44.0
|
185.2
|
129.2
|
56.0
|
1
|
This is a supplementary
financial measure, non-GAAP financial measure, or a non-GAAP ratio.
Refer to Supplementary financial measures and non-GAAP financial
measures and ratios in this news release, and Section 11 –
Supplementary financial measures and non-GAAP financial measures
and ratios in the Q2 2024 Management's Discussion and Analysis
dated August 1, 2024 for further details, which is hereby
incorporated by reference and is available on the Company's website
at www.definityfinancial.com and on SEDAR+ at
www.sedarplus.ca.
|
|
Q2
2024
|
Q2
2023
|
Change
|
2024
YTD
|
2023
YTD
|
Change
|
|
|
|
|
|
|
|
Per share measures
(in dollars)
|
|
|
|
|
|
|
Diluted earnings per
share
|
0.89
|
0.61
|
0.28
|
1.79
|
1.48
|
0.31
|
Operating earnings per
share1
|
0.94
|
0.56
|
0.38
|
1.59
|
1.11
|
0.48
|
Book value per
share1
|
|
|
|
26.17
|
23.42
|
2.75
|
|
|
|
|
|
|
|
Return on
equity
|
|
|
|
|
|
|
Return on equity
("ROE")1
|
|
|
|
13.6 %
|
15.5 %
|
(1.9)
pts
|
Operating
ROE1
|
|
|
|
10.8 %
|
9.9 %
|
0.9
pts
|
- Gross written premiums ("GWP") for Q2 2024 increased by
$154.6 million or 14.2% compared to
Q2 2023, with growth across all of our lines of business. Personal
lines GWP was up 14.5%, driven by growth in our broker channel
underpinned by strong auto rate increases and a return to unit
count growth. Commercial lines GWP increased 13.8% as we continued
to drive significant profitable growth in this line of business.
Year to date, GWP increased by $263.3
million or 13.6% compared to 2023. Personal lines GWP
increased 13.1% and commercial lines GWP increased 14.7%.
- Underwriting income for Q2 2024 was $93.7 million and the combined ratio was 90.1%,
compared to underwriting income of $41.2
million and a combined ratio of 95.3% in Q2 2023. The
combined ratio benefitted from a decrease in catastrophe losses,
and improvements in the expense ratio and the core accident year
claims ratio, partially offset by a decrease in favourable claims
development. Year to date, our underwriting income increased by
$67.8 million and led to a combined
ratio of 92.0%, compared to 95.3% in 2023.
- Net investment income increased $7.1 million in Q2 2024 and $14.3 million year to date, due primarily to
higher interest income driven by higher fixed income yields
captured within the portfolio.
- Distribution income was $17.2
million in Q2 2024 and $27.2
million year to date, compared to $9.8 million in Q2 2023 and $19.3 million in 2023 year to date driven
primarily by the contributions from acquisitions over the past
year.
Net Income and Operating Net Income
- Net income attributable to common shareholders was
$103.8 million in Q2 2024 and
$209.0 million year to date, compared
to $71.6 million in Q2 2023 and
$172.5 million in 2023 year to date.
The increase was due primarily to an increase in operating net
income.
- Operating net income was $109.1
million in Q2 2024 compared to $65.1
million in Q2 2023. The increase was due to higher
underwriting, distribution, and net investment income. Year to
date, operating net income was $185.2
million compared to $129.2
million in 2023.
- Operating ROE was 10.8% for the twelve-month period
ended June 30, 2024 compared to 9.9%
for the twelve-month period ended June 30,
2023.
1
|
This is a supplementary
financial measure, non-GAAP financial measure, or a non-GAAP ratio.
Refer to Supplementary financial measures and non-GAAP financial
measures and ratios in this news release, and Section 11 –
Supplementary financial measures and non-GAAP financial measures
and ratios in the Q2 2024 Management's Discussion and Analysis
dated August 1, 2024 for further details, which is hereby
incorporated by reference and is available on the Company's website
at www.definityfinancial.com and on SEDAR+ at
www.sedarplus.ca.
|
Line of Business Results
(in millions of
dollars, except as otherwise noted)
|
|
Q2
2024
|
Q2
2023
|
Change
|
|
2024
YTD
|
2023
YTD
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
insurance
|
|
|
|
|
|
|
|
|
|
|
|
Gross written
premiums1
|
|
|
|
|
|
|
|
|
|
|
|
Auto
|
|
|
|
|
528.4
|
442.1
|
19.5 %
|
|
941.9
|
799.9
|
17.8 %
|
Property
|
|
|
|
|
323.1
|
301.8
|
7.1 %
|
|
559.6
|
527.1
|
6.2 %
|
Total
|
|
|
|
|
851.5
|
743.9
|
14.5 %
|
|
1,501.5
|
1,327.0
|
13.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
ratio1
|
|
|
|
|
|
|
|
|
|
|
|
Auto
|
|
|
|
|
95.2 %
|
97.6 %
|
(2.4)
pts
|
|
96.1 %
|
99.2 %
|
(3.1)
pts
|
Property
|
|
|
|
|
86.0 %
|
102.5 %
|
(16.5)
pts
|
|
88.4 %
|
96.9 %
|
(8.5)
pts
|
Total
|
|
|
|
|
91.6 %
|
99.6 %
|
(8.0)
pts
|
|
93.1 %
|
98.3 %
|
(5.2)
pts
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
insurance
|
|
|
|
|
|
|
|
|
|
|
|
Gross written
premiums1
|
|
|
|
|
388.2
|
341.2
|
13.8 %
|
|
693.8
|
605.0
|
14.7 %
|
Combined
ratio1
|
|
|
|
|
86.6 %
|
84.3 %
|
2.3
pts
|
|
89.3 %
|
87.5 %
|
1.8
pts
|
Personal Insurance
- Personal lines GWP increased 14.5% in Q2 2024 (13.1%
year to date), with strong growth in our broker channel. Direct
channel GWP was $103.8 million in Q2
2024, an increase of 2.0% compared to $101.8
million in Q2 2023. Direct channel GWP was $199.8 million year to date, an increase of 1.9%
compared to $196.1 million in
2023.
- Personal auto GWP increased 19.5% in Q2 2024 (17.8% year
to date), reflecting an increase in average written premiums as
approved rate increases take hold in a firm market environment, the
return to unit growth in Q2 2024, and the benefit of portfolio
transfers. The combined ratio was 95.2% in Q2 2024, an improvement
compared to 97.6% in Q2 2023 reflecting a decrease in both the
expense ratio, due to active expense management, and an improvement
in the core accident year claims ratio. The core accident year
claims ratio continues to benefit from higher earned rates but
continued to be impacted by heightened levels of theft and
volatility from industry pools. The improvements in the combined
ratio were partially offset by lower favourable claims development.
Year to date, the personal auto combined ratio improved due to the
same factors that impacted the second quarter.
- Personal property GWP increased 7.1% in Q2 2024 (6.2%
year to date), benefitting from continued firm market conditions
driving increases in average written premiums. This was partially
offset by lower levels of portfolio transfers than the same period
in 2023 and actions to address risk concentration in geographies
with a higher propensity to peril events. The combined ratio in Q2
2024 was 86.0% compared to 102.5% in Q2 2023. The significant
improvement was largely driven by lower catastrophe losses which
impacted the combined ratio by 2.6 percentage points in Q2 2024
compared to 17.0 percentage points in Q2 2023. The combined ratio
also benefitted from a decrease in the expense ratio and higher
favourable claims development. Year to date, the personal property
combined ratio improved due to the same factors that impacted the
second quarter.
Commercial Insurance
- Strong growth in commercial lines continued in Q2 2024
driven by targeted growth across strategic segments. GWP increased
13.8% in Q2 2024 (14.7% year to date), driven by strong retention
and rate achievement in a firm market environment in our core
segments, and further expansion of our small business and specialty
capabilities.
- Commercial lines benefitted from continued focus on
underwriting execution with a strong combined ratio of 86.6% in Q2
2024 compared to 84.3% in Q2 2023. The change in the combined ratio
was driven by reductions in the core accident year claims ratio and
the expense ratio, which were more than offset by a release of
COVID-19-related provisions in Q2 2023 (impact of 4.8 percentage
points) and higher non-weather-related catastrophe losses,
reflective of the product expansion and mix of business shift in
the commercial insurance business. Year to date, the commercial
lines combined ratio was also strong at 89.3%. The marginal
increase was driven by the same factors that impacted the second
quarter.
1
|
This is a supplementary
financial measure, non-GAAP financial measure, or a non-GAAP ratio.
Refer to Supplementary financial measures and non-GAAP financial
measures and ratios in this news release, and Section 11 –
Supplementary financial measures and non-GAAP financial measures
and ratios in the Q2 2024 Management's Discussion and Analysis
dated August 1, 2024 for further details, which is hereby
incorporated by reference and is available on the Company's website
at www.definityfinancial.com and on SEDAR+ at
www.sedarplus.ca.
|
Financial Position
(in millions of
dollars)
|
As at
June
30,
2024
|
As at
December 31,
2023
|
Change
|
|
|
|
|
Financial
position
|
|
|
|
Equity attributable to
common shareholders
|
3,007.1
|
2,847.7
|
159.4
|
Financial
capacity1
|
1,351.6
|
1,269.6
|
82.0
|
Note: Financial
capacity as at December 31, 2023 is shown pro forma for the CBCA
continuance effective January 1, 2024.
|
- Our capital position as of June 30,
2024 remains strong and well in excess of our capital
targets.
- Equity attributable to common shareholders increased by
$159.4 million, or 5.6%, as at
June 30, 2024, due primarily to the
net income generated in 2024.
- The increase in financial capacity as at June 30, 2024 relates primarily to capital
generated from operating net income and recognized gains on
investments. These were partially offset by capital deployed in
continuing acquisitions in our national broker platform, and
disciplined deployment to support our organic growth and external
dividend priorities.
Dividend
- On August 1, 2024, our Board of
Directors declared a $0.16 per share
dividend, payable on September 27,
2024 to shareholders of record at the close of business on
September 13, 2024.
Normal Course Issuer Bid ("NCIB")
- On May 9, 2024, our Board of
Directors approved the renewal of the NCIB. Under the NCIB, we are
authorized to purchase up to 3,476,781 common shares, representing
3% of our issued and outstanding common shares during the period
commencing May 31, 2024 and ending
May 30, 2025. As at June 30, 2024, no common shares had been
repurchased and cancelled under the previous or current NCIB.
Conference Call
Definity will conduct a conference call to review information
included in this news release and related matters at 11:00 a.m. ET on August 2,
2024. The conference call will be available simultaneously
and in its entirety to all interested investors and the news media
at www.definityfinancial.com. A transcript will be made available
on Definity's website within two business days.
About Definity Financial Corporation
Definity Financial Corporation ("Definity", which includes its
subsidiaries where the context so requires) is one of the leading
property and casualty insurers in Canada, with approximately $4.3 billion in gross written premiums for the 12
months ended June 30, 2024 and over
$3.0 billion in equity attributable
to common shareholders as at June 30,
2024.
1
|
This is a supplementary
financial measure, non-GAAP financial measure, or a non-GAAP ratio.
Refer to Supplementary financial measures and non-GAAP financial
measures and ratios in this news release, and Section 11 –
Supplementary financial measures and non-GAAP financial measures
and ratios in the Q2 2024 Management's Discussion and Analysis
dated August 1, 2024 for further details, which is hereby
incorporated by reference and is available on the Company's website
at www.definityfinancial.com and on SEDAR+ at
www.sedarplus.ca.
|
Cautionary Note Regarding Forward-Looking Information
This news release contains "forward-looking information" within
the meaning of applicable securities laws in Canada. Forward-looking information may relate
to our future business, financial outlook and anticipated events or
results and may include information regarding our financial
position, business strategy, growth strategies, addressable
markets, budgets, operations, financial results, taxes, dividend
policy, plans and objectives. Particularly, information regarding
our expectations of future results, performance, achievements,
prospects or opportunities or the markets in which we operate is
forward-looking information. In some cases, forward-looking
information can be identified by the use of forward-looking
terminology such as "plans", "targets", "expects" or "does not
expect", "is expected", "an opportunity exists", "budget",
"scheduled", "estimates", "forecasts", "projection", "prospects",
"strategy", "intends", "anticipates", "does not anticipate",
"believes", or variations of such words and phrases or statements
that certain actions, events or results "may", "could", "would",
"might", "will", "will be taken", "occur" or "be achieved". In
addition, any statements that refer to expectations, intentions,
projections or other characterizations of future events or
circumstances contain forward-looking information. Statements
containing forward-looking information are not historical facts but
instead represent management's expectations, estimates and
projections regarding possible future events or circumstances.
Forward-looking information in this news release is based on our
opinions, estimates and assumptions in light of our experience and
perception of historical trends, current conditions and expected
future developments, as well as other factors that we currently
believe are appropriate and reasonable in the circumstances.
Despite a careful process to prepare and review the forward-looking
information, there can be no assurance that the underlying
opinions, estimates and assumptions will prove to be correct.
Forward-looking information is necessarily based on a number of
opinions, estimates and assumptions that we considered appropriate
and reasonable as at the date such statements are made, and are
subject to many factors that could cause our actual results,
performance or achievements, or other future events or
developments, to differ materially from those expressed or implied
by the forward-looking statements, including, without limitation,
the following factors:
- Definity's ability to continue to offer competitive pricing or
product features or services that are attractive to customers;
- Definity's ability to appropriately price its insurance
products to produce an acceptable return, particularly in provinces
where the regulatory environment requires auto insurance rate
increases to be approved or that otherwise impose regulatory
constraints on auto insurance rates;
- Definity's ability to accurately assess the risks associated
with the insurance policies that it writes;
- Definity's ability to assess and pay claims in accordance with
its insurance policies;
- Definity's ability to obtain adequate reinsurance coverage to
transfer risk;
- Definity's ability to accurately predict future claims
frequency or severity, including the frequency and severity of
weather-related events and the impact of climate change;
- Definity's ability to address inflationary cost pressures
through pricing, supply chain, or cost management actions;
- the occurrence of unpredictable catastrophe events;
- litigation and regulatory actions, including potential claims
in relation to demutualization and our IPO and unclaimed
demutualization benefits, and COVID-19-related class-action
lawsuits that have arisen and which may arise, together with
associated legal costs;
- Definity's ability to predetermine the amount of unclaimed
demutualization benefits upon the expiry of the benefit claim
deadline, whether in the form of cash or common shares, and the tax
treatment thereof;
- unfavourable capital market developments, interest rate
movements, changes to dividend policies or other factors which may
affect our investments or the market price of our common
shares;
- changes associated with the transition to a low-carbon economy,
including reputational and business implications from stakeholders'
views of our climate change approach, that of our industry, or that
of our customers;
- Definity's ability to successfully manage credit risk from its
counterparties;
- foreign currency fluctuations;
- Definity's ability to meet payment obligations as they become
due;
- Definity's ability to maintain its financial strength rating or
credit rating;
- Definity's dependence on key people;
- Definity's ability to attract, develop, motivate, and retain an
appropriate number of employees with the necessary skills,
capabilities, and knowledge;
- Definity's ability to appropriately collect, store, transfer,
and dispose of information;
- Definity's reliance on information technology systems and
internet, network, data centre, voice or data communications
services and the potential disruption or failure of those systems
or services, including as a result of cyber security risk;
- failure of key service providers or vendors to provide services
or supplies as expected, or comply with contractual or business
terms;
- Definity's ability to obtain, maintain and protect its
intellectual property rights and proprietary information or prevent
third parties from making unauthorized use of our technology;
- compliance with and changes in legislation or its
interpretation or application, or supervisory expectations or
requirements, including changes in the scope of regulatory
oversight, effective income tax rates, risk-based capital
guidelines, and accounting standards;
- failure to design, implement and maintain effective controls
over financial reporting and disclosure which could have a material
adverse effect on our business;
- deceptive or illegal acts undertaken by an employee or a third
party, including fraud in the course of underwriting
insurance or administering insurance claims;
- Definity's ability to respond to events impacting its ability
to conduct business as normal;
- Definity's ability to implement its strategy or operate its
business as management currently expects;
- general business, economic, financial, political, and social
conditions, particularly those in Canada;
- the emergence or continuation of widespread health emergencies
or pandemics, and their impact on local, national, or international
economies, as well as their heightening of certain risks that may
affect our business or future results;
- the competitive market environment and cyclical nature of the
P&C insurance industry;
- the introduction of disruptive innovation or alternative
business models by current market participants or new market
entrants;
- distribution channel risk, including Definity's reliance on
brokers to sell its products;
- Definity's dividend payments being subject to the discretion of
the Board and dependent on a variety of factors and conditions
existing from time to time;
- the discontinuance, modification, or failure to renew or
complete Definity's normal course issuer bid;
- Definity's dependence on the results of operations of its
subsidiaries and the ability of the subsidiaries to pay
dividends;
- Definity's ability to manage and access capital and liquidity
effectively;
- Definity's ability to successfully identify, complete,
integrate and realize the benefits of acquisitions or manage the
associated risks;
- management's estimates and judgments in respect of IFRS 17 and
its impact on various financial metrics;
- periodic negative publicity regarding the insurance industry,
Definity, or Definity Insurance Foundation; and
- management's estimates and expectations in relation to
interests in the broker distribution channel and the resulting
impact on growth, income, and accretion in various financial
metrics.
If any of these risks or uncertainties materialize, or if the
opinions, estimates or assumptions underlying the forward-looking
information prove incorrect, actual results or future events might
vary materially from those anticipated in the forward-looking
information. The opinions, estimates or assumptions referred to
above and described in greater detail in the "12 – Risk Management
and Corporate Governance" section of the Management's Discussion
and Analysis for the year ended December 31,
2023 should be considered carefully by readers.
Although we have attempted to identify important factors that
could cause actual results to differ materially from those
contained in forward-looking information, the factors above are not
intended to represent a complete list and there may be other
factors not currently known to us or that we currently believe are
not material that could also cause actual results or future events
to differ materially from those expressed in such forward-looking
information. There can be no assurance that such forward-looking
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
information. Accordingly, readers should not place undue reliance
on forward-looking information, which speaks only as at the date
made. The forward-looking information contained in this news
release represents our expectations as at the date of this news
release (or as at the date they are otherwise stated to be made)
and are subject to change after such date. However, we disclaim any
intention or obligation or undertaking to update or revise any
forward-looking information whether as a result of new information,
future events or otherwise, except as required under applicable
securities laws in Canada.
All of the forward-looking information contained in this news
release is expressly qualified by the foregoing cautionary
statements.
Supplementary Financial Measures and Non-GAAP Financial
Measures and Ratios
We measure and evaluate performance of our business using a
number of financial measures. Among these measures are the
"supplementary financial measures", "non-GAAP financial measures",
and "non-GAAP ratios" (as such terms are defined under Canadian
Securities Administrators' National Instrument 52-112 – Non-GAAP
and Other Financial Measures Disclosure), and in each case are not
standardized financial measures under GAAP. The supplementary
financial measures, non-GAAP financial measures, and non-GAAP
ratios in this news release may not be comparable to similar
measures presented by other companies. These measures should not be
considered in isolation or as a substitute for analysis of our
financial information reported under GAAP. These measures are used
by financial analysts and others in the P&C insurance industry
and facilitate management's comparisons to our historical operating
results in assessing our results and strategic and operational
decision-making. For more information about these supplementary
financial measures, non-GAAP financial measures, and non-GAAP
ratios, including (where applicable) definitions and explanations
of how these measures provide useful information, refer to Section
11 – Supplementary financial measures and non-GAAP financial
measures and ratios in the Q2 2024 Management's Discussion and
Analysis dated August 1, 2024, which
is available on our website at www.definityfinancial.com and on
SEDAR+ at www.sedarplus.ca.
Below are quantitative reconciliations of non-GAAP measures for
the three and six months ended June 30,
2024 and June 30, 2023:
Distribution income
(in millions of
dollars)
|
|
Q2
2024
|
Q2
2023
|
2024
YTD
|
2023
YTD
|
Distribution
revenues1
|
|
48.4
|
32.0
|
88.8
|
57.5
|
Distribution business
expenses2
|
|
(31.2)
|
(22.2)
|
(61.6)
|
(38.2)
|
Distribution
income
|
|
17.2
|
9.8
|
27.2
|
19.3
|
1
|
Distribution revenues
includes commissions on policies underwritten by external insurance
companies.
|
2
|
Included in Other
(expenses) income in our interim consolidated financial statements.
These amounts exclude amortization of intangible assets recognized
in business combinations and acquisition-related
expenses.
|
Net claims and adjustment expenses
(in millions of
dollars)
|
|
Q2
2024
|
Q2
2023
|
2024
YTD
|
2023
YTD
|
Claims and adjustment
expenses1,2
|
|
616.8
|
613.5
|
1,251.6
|
1,171.0
|
Impact of onerous
insurance contracts3
|
|
(1.8)
|
(1.3)
|
(3.6)
|
(2.5)
|
Claims recoverable from
reinsurers for incurred claims2,4
|
|
(45.6)
|
(53.1)
|
(112.2)
|
(84.3)
|
Net claims and
adjustment expenses
|
|
569.4
|
559.1
|
1,135.8
|
1,084.2
|
1
|
Included in Insurance
service expenses and Other (expenses) income in our interim
consolidated financial statements.
|
2
|
Excludes the impact of
discounting and risk adjustment.
|
3
|
Included in Insurance
service expenses.
|
4
|
Included in Net
expenses from reinsurance contracts held in our interim
consolidated financial statements.
|
Net commissions
(in millions of
dollars)
|
|
Q2
2024
|
Q2
2023
|
2024
YTD
|
2023
YTD
|
Commissions1
|
|
152.5
|
140.6
|
300.6
|
277.1
|
Commissions earned on
ceded reinsurance2
|
|
(15.9)
|
(13.2)
|
(30.2)
|
(24.9)
|
Net
commissions
|
|
136.6
|
127.4
|
270.4
|
252.2
|
1
|
Included in Insurance
service expenses in our interim consolidated financial
statements.
|
2
|
Included in Net
expenses from reinsurance contracts held in our interim
consolidated financial statements.
|
Net underwriting revenue
(in millions of
dollars)
|
|
Q2
2024
|
Q2
2023
|
2024
YTD
|
2023
YTD
|
Insurance
revenue
|
|
1,046.1
|
954.9
|
2,038.0
|
1,862.4
|
Earned reinsurance
premiums ceded1
|
|
(96.7)
|
(77.4)
|
(183.3)
|
(145.8)
|
Net underwriting
revenue
|
|
949.4
|
877.5
|
1,854.7
|
1,716.6
|
1
|
Included in Net
expenses from reinsurance contracts held in our interim
consolidated financial statements.
|
Operating net income, Operating income, Non-operating gains
(losses)
Net income attributable to common shareholders is the most
directly comparable GAAP financial measure disclosed in our interim
consolidated financial statements to operating net income,
operating income, and non-operating gains (losses), which are
considered non-GAAP financial measures.
(in millions of
dollars)
|
|
Q2
2024
|
Q2
2023
|
2024
YTD
|
2023
YTD
|
Net income attributable
to common shareholders
|
|
103.8
|
71.6
|
209.0
|
172.5
|
Remove: income tax
expense
|
|
34.9
|
22.2
|
69.6
|
52.8
|
Income before income
taxes
|
|
138.7
|
93.8
|
278.6
|
225.3
|
|
|
|
|
|
|
Remove: non-operating
gains (losses)
|
|
|
|
|
|
Recognized
gains (losses) on FVTPL investments
|
|
8.9
|
(62.7)
|
33.9
|
29.0
|
Discounting1
|
|
36.7
|
52.0
|
65.4
|
68.4
|
Risk
adjustment1
|
|
(1.3)
|
3.7
|
3.7
|
6.0
|
Finance (expenses)
income from insurance contracts issued
|
|
(54.2)
|
18.6
|
(71.0)
|
(45.9)
|
Finance income
(expenses) from reinsurance contracts held
|
|
4.7
|
(1.6)
|
6.1
|
4.0
|
Interest on
restricted cash, less demutualization and IPO-related
expenses2
|
|
1.2
|
2.5
|
2.4
|
4.1
|
Amortization of intangible assets recognized in business
combinations2
|
|
(6.2)
|
(3.9)
|
(12.7)
|
(7.1)
|
Other2,3
|
|
2.7
|
(0.2)
|
4.3
|
(0.1)
|
Non-operating
(losses) gains
|
|
(7.5)
|
8.4
|
32.1
|
58.4
|
Operating
income
|
|
146.2
|
85.4
|
246.5
|
166.9
|
Operating income tax
expense
|
|
(37.1)
|
(20.3)
|
(61.3)
|
(37.7)
|
Operating net
income
|
|
109.1
|
65.1
|
185.2
|
129.2
|
1
|
Included in Insurance
service expenses and Net expenses from reinsurance contracts held
in our interim consolidated financial statements.
|
2
|
Included in Other
(expenses) income in our interim consolidated financial
statements.
|
3
|
Other represents
miscellaneous expenses or revenues that in the view of management
are not part of our insurance operations and are individually and
in the aggregate not material, such as gains or losses pertaining
to fintech venture capital funds, and acquisition-related
expenses.
|
Prior year claims development
(in millions of
dollars)
|
|
Q2
2024
|
Q2
2023
|
2024
YTD
|
2023
YTD
|
Changes in fulfilment
cash flows relating to the liabilities for incurred
claims1
|
|
(26.0)
|
(32.7)
|
(19.5)
|
(43.5)
|
Changes to amounts
recoverable for incurred claims2
|
|
0.9
|
(9.3)
|
(18.8)
|
(6.2)
|
Remove: discounting
included above
|
|
-
|
4.9
|
(17.0)
|
(11.1)
|
Remove: risk adjustment
included above
|
|
10.0
|
14.7
|
28.8
|
30.7
|
Prior year claims
development
|
|
(15.1)
|
(22.4)
|
(26.5)
|
(30.1)
|
1
|
Included in Insurance
service expenses in our interim consolidated financial
statements.
|
2
|
Included in Net
expenses from reinsurance contracts held in our interim
consolidated financial statements.
|
Net underwriting expenses
(in millions of
dollars)
|
|
Q2
2024
|
Q2
2023
|
2024
YTD
|
2023
YTD
|
Net
commissions
|
|
136.6
|
127.4
|
270.4
|
252.2
|
Operating
expenses
|
|
113.1
|
116.0
|
229.5
|
234.4
|
Premium
taxes
|
|
36.6
|
33.8
|
70.5
|
65.1
|
Net underwriting
expenses
|
|
286.3
|
277.2
|
570.4
|
551.7
|
Underwriting income
(in millions of
dollars)
|
|
Q2
2024
|
Q2
2023
|
2024
YTD
|
2023
YTD
|
Net underwriting
revenue
|
|
949.4
|
877.5
|
1,854.7
|
1,716.6
|
Less:
|
|
|
|
|
|
Net claims and
adjustment expenses
|
|
569.4
|
559.1
|
1,135.8
|
1,084.2
|
Net
commissions
|
|
136.6
|
127.4
|
270.4
|
252.2
|
Operating
expenses
|
|
113.1
|
116.0
|
229.5
|
234.4
|
Premium
taxes
|
|
36.6
|
33.8
|
70.5
|
65.1
|
Underwriting
income
|
|
93.7
|
41.2
|
148.5
|
80.7
|
Below are quantitative reconciliations of non-GAAP ratios
for the periods ended June 30, 2024
and June 30, 2023:
ROE
|
For the 12 months
ended
June 30,
|
(in millions of
dollars, except as otherwise noted)
|
2024
|
2023
|
Net income attributable
to common shareholders
|
386.6
|
393.2
|
Equity attributable to
common shareholders1
|
3,007.1
|
2,696.2
|
Adjusted equity
attributable to common shareholders
|
3,007.1
|
2,696.2
|
Average adjusted equity
attributable to common shareholders2
|
2,851.7
|
2,543.1
|
ROE
|
13.6 %
|
15.5 %
|
1
|
Equity attributable to
common shareholders is as at June 30, 2024 and June 30,
2023.
|
2
|
Average adjusted equity
attributable to common shareholders is the average of adjusted
equity attributable to common shareholders (equity attributable to
common shareholders as shown on our consolidated balance sheets,
adjusted for significant capital transactions or other unusual
adjustments to equity, if applicable) at the end of the period and
the end of the preceding 12-month period. Equity attributable to
common shareholders and adjusted equity attributable to common
shareholders as at June 30, 2022 was $2,389.9 million (restated for
the impacts of IFRS 17 – Insurance Contracts ("IFRS 17") and
IFRS 9 – Financial Instruments ("IFRS 9")).
|
Operating ROE
|
For the 12 months
ended
June 30,
|
(in millions of
dollars, except as otherwise noted)
|
2024
|
2023
|
Operating net
income
|
304.3
|
252.4
|
Equity attributable to
common shareholders, excluding AOCI1
|
3,019.2
|
2,729.4
|
Adjustment for
unrealized gains on FVTPL equity instruments
|
(93.5)
|
(22.3)
|
Adjusted equity
attributable to common shareholders, excluding
AOCI2
|
2,925.7
|
2,707.1
|
Average adjusted equity
attributable to common shareholders, excluding
AOCI3
|
2,816.4
|
2,549.0
|
Operating
ROE
|
10.8 %
|
9.9 %
|
1
|
Equity attributable to
common shareholders, excluding accumulated other comprehensive
(loss) income ("AOCI") is as at June 30, 2024 and June 30,
2023.
|
2
|
Adjusted equity
attributable to common shareholders, excluding AOCI, is equity
attributable to common shareholders and AOCI each as shown on our
consolidated balance sheets, adjusted for significant capital
transactions or other unusual adjustments to equity, if applicable,
and excluding unrealized gains or losses on FVTPL equity
instruments.
|
3
|
Average adjusted equity
attributable to common shareholders, excluding AOCI, is the average
of adjusted equity attributable to common shareholders, excluding
AOCI at the end of the period and the end of the preceding 12-month
period. Adjusted equity attributable to common shareholders,
excluding AOCI, as at June 30, 2022 was $2,391.0 million (restated
for the impacts of IFRS 17 and IFRS 9).
|
SOURCE Definity Financial Corporation