that Desjardins Group fell for the fourth quarter in a row.
For all its operations, the financial institution declares a profit before member dividends of $478 million (M$) in the third quarter of 2022 compared to $816 M in the third quarter of 2021.
This decrease of 41.4% or $338 million is “mainly explained by an increase in claims incurred in the property and casualty insurance sector, which particularly reflects the impact of inflation and the increase in the rate of claims”, explains the financial institution. “The third quarter of 2022 is also marked by the occurrence of two major events, namely heavy rain in Quebec and hurricane Fiona in the Atlantic provinces and Quebec,” says Desjardins.
The decrease in profits is also explained “by the increase in the allocation to provisions for credit losses, mainly as a result of the deterioration of the macroeconomic outlook, by the acceleration of the amounts invested, especially in projects set out in the strategic guidelines, as well as the increase in personnel costs”.
These items were partially offset “by the increase in net interest income and other operating income”.
Thus, for its property and casualty insurance sector, Desjardins reports a net profit of $83 million in the third quarter of 2022 compared to $289 million in the third quarter of 2021. This is a decrease of 71.3% or $206 million.
The combined ratio worsened by 28 points. It stands at 103.6% in Q3 2022 compared to 75.6% in Q3 2021.
Asset management and personal insurance
For its wealth management and life and health insurance sectors, Desjardins reports a net profit of $155 million in the third quarter of 2022 compared to $109 million in the third quarter of 2021. This increase of 42.2% or $46 million is explained by a “ generally more favorable experiences than the comparison quarter, mainly within group insurance” as well as “gains on disposal of securities greater than realized in the third quarter of 2021”.
This was partially offset by an “increase in non-interest expenses, mainly due to the growth of personnel costs to support the growth of activities and the improvement of the service offer to members and customers, as well as the acceleration of the amounts invested in strategic projects, in particular in terms of digital transformation and security”.
Expenses related to claims, benefits, annuities and changes to insurance contracts increased by 28.7% or $491 million in the third quarter of 2022 to reach $2.2 billion (B$). Desjardins points out that this increase is “partially offset by a corresponding change in the investment income (loss) item.
In detail, we note that expenses increased by 50.1% or $382 million in non-life insurance due to the deterioration of the claims ratio. This was partially offset by the “favorable effect of the increase in the discount rates used to estimate the higher claims provision than that recognized in the third quarter of 2021”.
They increased by 11.6% or $111 million in wealth management and life and health insurance due to “the increase of $68 million in technical provisions included in the item ‘insurance contract liabilities'” and the “increased benefits resulting from business growth and increasing pharmaceutical and health costs”.
They increased by $2 million for “other” headline.
Desjardins reports investment income of $186 million in the third quarter of 2022, compared to investment losses of $114 million in the third quarter of 2021. This is an improvement of $300 million.
Desjardins earned $381 million more on investments in its wealth management and personal insurance sector and $73 million more in its non-life insurance sector.
Desjardins’ total net premiums were $2.7 billion in the third quarter of 2022. They were down 5.4% or $158 million.
Net premiums for the wealth management and life and health insurance sectors decreased by 11.4% or $168 million. This is explained by the 58.4% or $225 million decrease in net premiums in the annuity sub-sector, “primarily from group annuities, particularly linked to the addition of two large groups in the comparable quarter of 2021”. A decrease that was partially offset by an increase of 3.4% or $8 million. in the individual insurance sub-sector and 5.7% or $49 million. in the group insurance sub-sector.
Premiums in the “other” sector also fell by $9 million.
Conversely, property and casualty net premiums increased by 1.3%, or $19 million, “primarily due to growth in the business.”
Desjardins’ total operating income totaled $5.3 billion in the third quarter of 2022, an increase of 0.9% or $45 million.
The property and casualty insurance sector recorded operating income of $1.5 billion in the third quarter of 2022, an increase of 3.3% or $49 million.
The wealth management and life and health insurance segment recorded operating income of $1.7 billion in the third quarter of 2022, down 10.2% or $189 million.