Desjardins Group has released its financial results, indicating a drop in profitability for the year and final quarter, but growth in key segments is pointing at a rosier outlook for the future.
The general insurance provider has posted $2.419 billion in surplus earnings before member dividends for the fiscal year ending in December 2020, representing a $179 million, or 6.9%, decrease from the previous year. However, adjusted surplus earnings were up $130 million, a 5.7% rise during the period.
For the fourth quarter, surplus earnings before member dividends were $876 million, down $59 million, or 6.3%, year-on-year. In contrast, adjusted surplus earnings increased $250 million, a 39.9% ascent in the last three months of 2019.
The insurer attributed the increase to strong performances of its caisse network, property and casualty insurance business, and brokerage subsidiary Desjardins Securities Inc.
However, the rise was offset by the $498 million jump in the provision for credit losses, primarily due to a significant deterioration in the economic outlook and the expected impacts on credit quality, and a $43 million increase in costs related to travel insurance brought about by the COVID-19 pandemic.
“Desjardins Group posted strong financial performance for fiscal 2020, despite the negative impacts of the pandemic,” said Guy Cormier, president and chief executive officer at Desjardins. “Adjusted surplus earnings were up, our membership continued to grow, and our capital base is once again very robust.”
Cormier also lauded the firm’s efforts to support its members and clients “so they can stay on solid financial footing” during these challenging times.
The amount returned to members and the community totalled $445 million for the fiscal year, which included a $330 million provision for member dividends, $72 million in sponsorships, donations and scholarships, and $43 million in Desjardins Member Advantages. A total of $42 million in commitments were also allocated to the Goodspark Fund to support the regions on social and economic plans.
The insurer also implemented several relief measures since the onset of the pandemic, including $155 million in auto insurance premiums refunded to more than 2.1 million policyholders, raising of contactless payment limit from $100 to $250, temporary reduction in annual interest rate to 10.9% for credit card holders who were granted a payment deferral, offering personal members and clients a loan of last resort of up to $3,000 at a special interest rate of 4.97%, and raising the insurance coverage limit for people working from home.
