Intact Financial Corp. recently posted its quarterly operating profit results for the fourth quarter of 2016, revealing earnings below expected numbers due to the weak performance of its auto insurance business.
The company’s net operating income dropped to $212 million ($1.58 per share) in the fourth quarter ending Dec. 31, 2016, from $265 million ($1.97 per share) in the same period in 2015.
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On average, analysts had expected Intact’s net operating income per share to reach $1.75 for the quarter, reported Thomson Reuters.
“Intact reported a significant miss against expectations on the back of ongoing weakness in auto lines (both personal and commercial),” Barclays’ analyst John Aiken explained.
The company’s report detailed that its personal auto business made an underwriting loss of $9 million in Q4 2016, versus the $28 million income it had posted the year before for the same period. The report explained that the performance was impacted by more claims involving inclement weather. Intact’s commercial auto business also took an underwriting loss of $3 million.
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In the report, Intact said that it would increase its quarterly dividend by six cents to 64 cents per share.
“Although we anticipate pressure on Intact’s valuation today, we would not expect it to be long lived as IFC’s underlying operations appear to be strong and a 10% hike in the dividend illustrates faith in its operations and outlook,” Aiken said.
The company’s overall underwriting income fell 30.8% to $153 million in the quarter.
Intact’s combined ratio climbed to 92.5%, from 88.6% in 2015, largely thanks to its auto business’s weak results.
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