Motorists should expect an increase in their insurance premiums: the rise in repair costs and the increase in accidents have eaten away at Desjardins’ profitability in 2022, according to the CEO of the cooperative movement, Guy Cormier.
Earnings before patronage refunds fell $892 million to $2.05 billion, according to results released Wednesday. This decrease is “largely attributable” to an increase in claims incurred in the property and casualty insurance sector, in automobile and property insurance.
With the easing of health measures, households have resumed their journeys and the number of road accidents has returned to a certain normality. The scarcity of parts, the rise in repair costs and the increase in thefts have made the business environment more difficult for insurers. “In all the claims that we have compensated, we are talking about an inflation of costs which is sometimes 10%, 15%, 20%”, specified Mr. Cormier during a press conference on the results. of Desjardins Group.
To illustrate the explosion of repair costs, the manager gave the example of repairing the mirrors of a car. “10 or 15 years ago, you replaced the mirror and it was over. Today there is a camera, there is a motion detector, the mirror is heated. Listen, just a mirror hanging on a street is already thousands of dollars. »
This context will have an effect on premiums, he admits, giving the example of the price of butter. “Well, the butter croissants have gone up in price, too. So we are caught in this same dilemma. »
The P&C segment’s contribution to combined surplus was $450 million in 2022, compared to $1.2 billion in the prior year.
Not a surprise
The decrease in profits is not a surprise, assures the big boss of Desjardins. He replied that he expected this decrease and that he was “very happy” with the results “meeting expectations”. The insurance sector represents an important part of the cooperative’s activities.
This sector is more volatile, and a comparison with the major Canadian banks is not the most appropriate way to analyze the results of Desjardins, he believes.
For fiscal 2022, patronage refunds increased by $16 million, or 4.1%, to $403 million. If we include donations, sponsorships and scholarships, Desjardins deployed $518 million in the community, which represents an increase of 4.2%.
Desjardins was still able to bank on a rather vigorous end to the year, with the recording of a profit before patronage refunds of 576 million in the fourth quarter, up 46.6% compared to that of 393 million revealed for the same period a year earlier. Operating revenue stood at 6.32 billion for the quarter ended December 31, showing a growth of 14.9% compared to those of 5.5 billion collected during the last three months of 2021.
The financial cooperative attributed the growth of its surplus in the last quarter to a favorable effect stemming from revisions to actuarial assumptions related to life and health insurance activities, as well as to the increase in net interest income and other income from exploitation. This increase was mitigated by the increase in claims incurred in the property and casualty insurance sector. The contribution of the latter sector to the combined surplus was 116 million in the fourth quarter, down sharply from that of 330 million for the same period a year earlier.
Provision for credit losses was quintupled in the fourth quarter compared to the last three months of 2021, from 16 million to 80 million. For the year as a whole, it amounted to 277 million, against 69 million a year earlier.
Total assets reached $407.1 billion as of December 31, up 2.5% from the last day of 2021.
With Duty