Canadian P&C insurer Intact Financial said it expected quarterly results would be hurt by losses from a train derailment and fiery explosion in a Quebec town and storm and flood damage in Canada’s oil capital, Calgary, and Toronto, the country’s largest city.
The Toronto-based insurer also hinted on Monday that it may seek to raise premiums, or alter coverage offered to its clients following damage caused by the flooding and torrential rain in June and early July.
“The scope of the damage and destruction that we have witnessed in recent weeks is a stark reminder that we must adapt the protection offered to Canadians to ensure it remains sustainable in light of the greater prevalence and severity of weather events,” Chief Executive Charles Brindamour said in a statement.
The floods in the Western Canadian province of Alberta last month shut down Calgary, displaced more than 100,000 and left the core of the oil city without power for days. Separately, a severe rainstorm in Toronto in early July caused flooding, power cuts and transit chaos across the city, Canada’s largest.
The company estimates that the cost of helping its Alberta customers restore their homes, autos and businesses following the devastating storms and flooding will amount to more than C$300 million (US$290 million).
This will result in an after-tax impact of C$105 million [US$101.6 million], or 79 Canadian cents a share, after adjusting for recoveries from reinsurance. These costs will be booked in the company’s second quarter financial results, which will be released on July 31.
In total, the insurer is set to record after-tax catastrophe losses of C$123 million [US$119 million], or 92 Canadian cents per share, net of reinsurance, in its second quarter results.
THIRD-QUARTER HIT
The inferno caused by the train derailment in the town of Lac-Mégantic, Quebec, on July 6 and the severe storm that hit Toronto and surrounding areas on July 8, will result in losses that will be recorded in its third quarter results, the company said.
The derailment and explosion in Lac-Mégantic will result in a C$25 million [US$24.2 million] hit to the company’s third quarter results.
The disaster, which killed 50 people, occurred when a runaway train barreled down a hill and derailed in the heart of the lakeside town, with some of the 72 oil tanker cars it was hauling exploding into a wall of fire.
Separately, Intact said it pegs insurable damage caused by the rainstorm that affected thousands of its clients in the Greater Toronto Area at about C$170 million [US$164 million]. The total losses from the two separate flood events is around US$454 million.
Intact estimates that the catastrophic events in July, will negatively impact its after-tax third quarter results by C$134 million [US$129.7 million], or C$1.01 per share, net of reinsurance.
The warning prompted GMP Securities analyst Stephen Boland to trim his earnings estimates and price target on the company.
“While the recent estimated impact from weather related events were more severe than expected, Intact continues to be a best in class operator,” said Boland, who retained his “buy” rating on the stock, but lowered his price target on the stock to C$67 from C$70.50 [US$64.84 from US$68.23] .
Shares of the insurer, which fell more than 1 percent at the open on Monday, were up more than 1 percent at $58.16 [US$56.284] at 0955 ET (1355 GMT) on the Toronto Stock Exchange.
Topics USA Profit Loss Flood Canada
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