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Results in insurance : a bank moves forward, another moves back

by

Aurélia Morvan

August 29, 2019 09:30

Photo : Freepik

In the end of the month of August, the canadian banks to publish their financial results for the third quarter of 2019, which took place from 1 may to 31 July 2019. As well, the Toronto-Dominion Bank (TD), the Bank of Montreal (BMO) and the Royal Bank of Canada (RBC) have disclosed their results in insurance.

The insurance increased at RBC

RBC, bank present in insurance of persons and damage to property, declares a net profit of 3.3 billion dollars (G$) for the third quarter of 2019. For its only activities in life insurance, the bank recorded a net profit of 204 million dollars (M$). The insurance division represents 6 % of the total net profit reported by the financial institution. The net income realized in insurance in the third quarter of 2019 is a 29% increase compared to the third quarter of 2018, when RBC reported net income in insurance of$158 Million.

The bank explains this increase ” primarily due to losses related to the investment more favorable and the impact of new contracts for the reinsurance of the longevity risk “. However, it states that ” these factors were partially offset by higher costs of claims related to the portfolios of disability insurance and retrocession life and by the renegotiations of contracts of reinsurance fruitful during the preceding fiscal year “.

Difficult quarter for BMO

BMO financial Group, present in life insurance, has announced a net profit of$ 1.6 billion for the third quarter of 2019. For its only division BMO wealth Managementnet income accounting amounted to$ 249 Million for the third quarter of 2019. On these$ 249 Million, approximately$ 225 Million are attributable to the activities of traditional wealth management.

The$ 24 Million of net income remaining are attributable to the insurance operations, which represent 1.5 % of the total net profit declared by BMO financial Group. The net profit of the insurance activities of BMO in the third quarter of 2019, is down 73 % compared to the third quarter of 2018, when it was$ 89 Million. This is explained by the decrease related to the reinsurance and the adverse effect of market movements during the current year, whereas last year, the market movements had a favourable effect, ” says BMO.

Compensation rises at TD

The TD Bank Group, present in the property and casualty insurance, has reported a net profit of$ 3.2 billion for the third quarter of 2019. For its retail service in Canada, the only market for which the group is present in insurance, the net earnings amounted to$ 1.9 billion, an increase of$ 38 Million, or 2 %, compared to the same period last year. This increase was driven by ” higher revenue “, which can be explained by an increase in insurance premiums “. This revenue increase was however partially offset by an increase in non-interest expense “, which is explained by ” the increase of insurance compensations “.

Insurance compensations and related expenses amounted to 712 Million during the third quarter of 2019, compared to$ 627 Million in the third quarter of 2018, an increase of$ 85 Million, or 13.6 %. This increase “reflects the increase in the business volume, the increase of claims during the period and the changes in the fair value of the investments supporting the liabilities related to insurance, all partially offset by the decrease in the number of weather events, the violent, and the more favourable development of claims incurred in previous years,” says TD.

The financial results published by the National Bank of Canada (BNC), by the canadian imperial Bank of commerce (CIBC) and Scotiabank for the third quarter of 2019 did not mention the results recorded by these financial institutions in insurance.

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